-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GufTMz8rjPhyJipl8eQZbDadVBSHDi8c8Tbm/YT9tPvDcsN4C/b4dAA07PzUzsOG 68ZukmtkMBAzJMAiOp/XcA== 0000914039-97-000174.txt : 19970515 0000914039-97-000174.hdr.sgml : 19970515 ACCESSION NUMBER: 0000914039-97-000174 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970514 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRENWICK GROUP INC CENTRAL INDEX KEY: 0000787952 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 061152790 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14737 FILM NUMBER: 97603612 BUSINESS ADDRESS: STREET 1: ONE STATION PL STREET 2: METRO CENTER CITY: STAMFORD STATE: CT ZIP: 06902 BUSINESS PHONE: 2033535500 10-Q 1 FORM 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1997 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period to . --------------- ---------------- Commission file number 0-14737 TRENWICK GROUP INC. (Exact name of registrant as specified in its charter) Delaware 06-1152790 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Metro Center One Station Place Stamford, Connecticut 06902 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (203) 353-5500 None (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ..[x]... NO ... Indicate the number of shares outstanding of each of the issuer's classes of common stock. Class Outstanding at April 30, 1997 Common Stock, $.10 par value 11,936,432 2 TRENWICK GROUP INC. INDEX Page PART I. Financial Information Number Consolidated Balance Sheet March 31, 1997 and December 31, 1996 3 Consolidated Statement of Income Three Months Ended March 31, 1997 and 1996 4 Consolidated Statement of Changes in Common Stockholders' Equity Three Months Ended March 31, 1997 and 1996 5 Consolidated Statement of Cash Flows Three Months Ended March 31, 1997 and 1996 6 Notes to Consolidated Financial Statements 7-10 Management's Discussion and Analysis 11-15 of Financial Condition and Results of Operations PART II. Other Information Item 6. Exhibits and Reports on Form 8-K 16 Signatures 17 3 TRENWICK GROUP INC. CONSOLIDATED BALANCE SHEET (UNAUDITED)
March 31, December 31, 1997 1996 ---- ---- (dollars in thousands) Assets Securities available for sale at fair value: Debt securities (amortized cost: $762,980 and $700,476) $ 765,863 $ 713,998 Equity securities (cost: $26,989 and $21,346) 29,700 25,959 Cash and cash equivalents 29,924 14,253 ----------- --------- Total investments and cash 825,487 754,210 Accrued investment income 10,848 10,386 Receivables from ceding insurers 77,533 62,689 Reinsurance recoverable balances, net 52,247 47,772 Deferred policy acquisition costs 23,522 21,805 Net deferred income taxes 24,136 20,231 Other assets 7,289 3,711 ----------- --------- Total assets $ 1,021,062 $ 920,804 =========== ========= Liabilities and Stockholders' Equity Liabilities: Unpaid claims and claims expenses $ 481,974 $ 467,177 Unearned premium income 79,960 71,448 Convertible debentures -- 103,500 Other liabilities 26,654 12,926 ----------- --------- Total liabilities 588,588 655,051 ----------- --------- Company-obligated mandatorily redeemable preferred capital securities of subsidiary trust holding solely junior subordinated debentures of Trenwick 110,000 -- ----------- --------- Common stockholders' equity: Common stock, $.10 par value, 22,500,000 shares authorized; 11,936,442 and 10,087,826 shares outstanding 1,194 1,009 Additional paid-in capital 153,406 94,423 Retained earnings 165,411 159,512 Net unrealized appreciation of securities available for sale, net of income taxes 3,635 11,789 Deferred compensation under stock award plan (1,172) (980) ----------- --------- Total common stockholders' equity 322,474 265,753 ----------- --------- Total liabilities and stockholders' equity $ 1,021,062 $ 920,804 =========== =========
All share and per share information reflects a 3 for 2 stock split, paid on April 15, 1997. The accompanying notes are an integral part of these statements. 3 4 TRENWICK GROUP INC. CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
Three Months Ended March 31, ----------------------- 1997 1996 -------- ------ (in thousands except per share data) Revenues: Net premiums earned $ 53,914 $47,691 Net investment income 11,729 9,869 Net realized investment gains 1,915 50 -------- ------- Total revenues 67,558 57,610 -------- ------- Expenses: Claims and claims expenses incurred 30,804 29,199 Policy acquisition costs 17,377 12,242 Underwriting expenses 3,989 4,028 Interest expense 2,507 1,624 -------- ------- Total expenses 54,677 47,093 -------- ------- Income before income taxes and extraordinary item 12,881 10,517 Income taxes 3,080 2,335 -------- ------- Income before extraordinary item 9,801 8,182 Extraordinary loss on debt redemption, net of $558 income tax benefit 1,037 -- -------- ------- Net income $ 8,764 $ 8,182 ======== ======= PRIMARY EARNINGS PER SHARE Income before extraordinary item $ .89 $ .80 Extraordinary loss (.10) -- -------- ------- Net income $.79 $ .80 ======== ======= FULLY DILUTED EARNINGS PER SHARE (assuming conversion of dilutive convertible debentures) Income before extraordinary item $ .81 $ .69 Extraordinary loss (.06) -- -------- ------- Net income $ .75 $ .69 ======== ======= DIVIDENDS PER COMMON SHARE $ .24 $ .21 ======== =======
The accompanying notes are an integral part of these statements. All share and per share information reflects a 3-for-2 stock split, paid on April 15, 1997. 4 5 TRENWICK GROUP INC. CONSOLIDATED STATEMENT OF CHANGES IN COMMON STOCKHOLDERS' EQUITY (UNAUDITED)
Three Months Ended March 31, --------- 1997 1996 ---- ---- (dollars in thousands) Common stockholders' equity, beginning of year $ 265,753 $ 240,776 Common stock, $.10 par value, and additional paid-in capital: Conversion of debentures (1,783,926) 57,780 -- Exercise of employer stock options (60,000 and 12,000 shares) 756 158 Income tax benefits from additional compensation deductions allowable for income tax purposes 476 94 Restricted common stock awarded (9,782 and 9,293 shares) 328 320 Common stock purchased and retired (5,091 and 5,226 shares) (171) (180) Retained earnings: Net income 8,764 8,182 Cash dividends (2,865) (2,046) Net unrealized appreciation of securities available for sale: Change in unrealized appreciation (12,541) (11,967) Change in applicable deferred income taxes 4,387 4,188 Deferred compensation under stock award plan: Restricted common stock awarded (328) (320) Compensation expense recognized 135 133 --------- --------- Common stockholders' equity, end of period $ 322,474 $ 239,338 ========= =========
All share and per share information reflects a 3-for-2 stock split, paid on April 15, 1997. The accompanying notes are an integral part of these statements. 5 6 TRENWICK GROUP INC. CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Three Months Ended March 31, --------- 1997 1996 ---- ---- (in thousands) Cash flows from operating activities: Premiums collected $ 37,391 $ 45,465 Ceded premiums paid (464) (1,663) Claims and claims expenses paid (31,581) (19,951) Claims and claims expenses recovered 700 636 Underwriting expenses paid (5,141) (5,130) --------- -------- Cash provided by underwriting activities 905 19,357 Net investment income received 11,863 10,647 Interest expense paid (496) -- Income taxes paid (recovered) (2,158) 89 --------- -------- Cash provided by operating activities 10,114 30,093 --------- -------- Cash flows for investing activities: Purchases of debt securities (98,189) (22,216) Sales of debt securities 31,966 5,025 Maturities of debt securities 15,947 10,707 Purchases of equity securities (8,351) (72) Sales of equity securities 4,621 21 Additions to premises and equipment (51) (137) --------- -------- Cash used for investing activities (54,057) (6,672) --------- -------- Cash flows for financing activities: Issuance of mandatorily redeemable preferred capital securities 110,000 -- Redemption of convertible debentures (46,997) -- Issuance costs of capital securities (1,280) -- Issuance of common stock 756 158 Dividends paid (2,865) (2,046) --------- -------- Cash provided (used) by financing activities 59,614 (1,888) --------- -------- Change in cash and cash equivalents 15,671 21,533 Cash and cash equivalents, beginning of period 14,253 6,760 --------- -------- Cash and cash equivalents, end of period $ 29,924 $ 28,293 ========= ========
The accompanying notes are an integral part of these statements. 6 7 TRENWICK GROUP INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The interim consolidated financial statements included those of Trenwick Group Inc. and its subsidiaries and have been prepared in conformity with generally accepted accounting principles applied on a basis consistent with prior periods. Certain items in the financial statements have been reclassified to conform with the 1997 presentation. Management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The interim consolidated financial statements are unaudited; however, in the opinion of management, the interim consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim periods. These interim statements should be read in conjunction with the 1996 audited financial statements and related notes. Earnings Per Share Primary earnings per share are computed based on the weighted average number of shares of common stock and common stock equivalents outstanding during each year. Primary weighted average shares outstanding are adjusted to reflect as outstanding, throughout each year presented, common stock equivalents pursuant to the assumed exercise of stock options. Fully diluted earnings per share are computed based on the assumption that the convertible debentures are converted into common shares. Supplemental earnings per share reflect primary earnings per share adjusted as if the conversion was consummated as of the beginning of the period. 7 8 The weighted average shares of common stock outstanding and net income per share amounts are as follows:
1997 1996 ---- ---- WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING: Primary 11,066 10,250 Supplemental 12,077 12,034 Fully diluted 12,083 13,451 PER SHARE AMOUNTS: Primary $.79 $.80 === === Supplemental $.75 $.73 === === Fully diluted $.75 $.69 === ===
Issuance costs of capital securities The issuance costs associated with the issuance of the capital securities are being amortized over the term of the junior subordinated debentures. 2. REINSURANCE Trenwick purchases reinsurance to reduce its exposure to catastrophe losses and the frequency of large losses in all lines of business. Trenwick, however, remains liable in the event that its retrocessionaires do not meet their contractual obligations. The effects of reinsurance on premiums written, premiums earned and claims and claims expenses incurred is as follows (in thousands):
Premiums Written Three Months Ended March 31, --------------------- 1997 1996 ------- -------- Assumed $72,737 $64,031 Ceded (13,179) (5,148) -------- -------- Net $59,558 $58,883 ======= =======
8 9
Premiums Earned Three Months Ended March 31, --------------------- 1997 1996 ------- -------- Assumed $64,225 $52,835 Ceded (10,311) (5,144) -------- -------- Net $53,914 $47,691 ======= =======
Claims and Claims Expenses Incurred Three Months Ended March 31, --------------------- 1997 1996 ------- ------- Assumed $46,517 $36,348 Ceded (15,713) (7,149) -------- -------- Net $30,804 $29,199 ======= =======
3. MANDATORILY REDEEMABLE PREFERRED CAPITAL SECURITIES On January 28, 1997, Trenwick completed a private offering of $110 million in 8.82% Subordinated Capital Income Securities ("Capital Securities") through Trenwick Capital Trust I ("Trust"), a Delaware statutory business trust. Trenwick owns all the common securities of the Trust ("Common Securities"). Concurrently with the issuance of the Capital Securities, the Trust invested the proceeds their sale, together with the consideration paid to the Trust by Trenwick for the Common Securities, in Trenwick's Junior Subordinated Debentures, whose terms are similar to those of the Capital Securities. The Trust was formed for the sole purpose of issuing the Capital Securities and the Common Securities, investing the proceeds thereof in the Junior Subordinated Debentures and making distributions to the holders of the Capital Securities. The Capital Securities mature on February 1, 2037; require preferential cumulative cash distributions at an annual rate of 8.82%, payable semi-annually on February 1 and August 1 (beginning August 1, 1997) from the payment of interest on the Junior Subordinated Debentures; and are guaranteed by Trenwick, within certain limits, as to the payment of distributions and liquidation or redemption payments. They are subject to mandatory redemption, (i) in whole but not in part at maturity, upon repayment of the Junior Subordinated Debentures, at a redemption price equal to the principal amount plus accrued and unpaid interest; (ii) in whole but not in part at any time, contemporaneously with the optional prepayment of the Junior Subordinated Debentures upon the occurrence and continuation of certain events, at a redemption price equal to the greater of the principal amount or the present value of principal and 9 10 interest payable to February 1, 2007, plus accrued and unpaid interest and possible additional sums; and (iii) in whole or in part, after February 1, 2007, contemporaneously with the optional prepayment of the Junior Subordinated Debentures, at a redemption price equal to the principal amount plus accrued and unpaid interest and possible additional sums. Upon the occurrence and continuation of an event of default with respect to the Junior Subordinated Debentures, the Capital Securities shall have a preference over the Common Securities. Upon the occurrence of an event of default (A) with respect to the Junior Subordinated Debentures which is attributable to Trenwick's failure to make required payments or (B) with respect to Trenwick's guarantee, the holders of the Capital Securities may institute a direct action against Trenwick. 4. COMMON STOCKHOLDERS' EQUITY Stock Options and Benefit Plans For the three months ended March 31, 1997, Trenwick awarded key employees an aggregate of 9,782 shares of common stock under the terms of the 1989 Stock Plan, valued at an average of $33.50 per share (approximately $328,000). Trenwick is recognizing compensation expense determined by the value of the shares, amortized over a five year vesting period. During the three month period, 5,091 shares were repurchased at an average of $33.50 per share (approximately $171,000) in connection with the satisfaction of withholding taxes payable upon the vesting of shares previously awarded under the plan. Common Stock Split On March 6, 1997, Trenwick's Board of Directors approved a three-for-two stock split payable on April 15, 1997 to stockholders of record at the close of business on March 18, 1997. An amount equal to the par value of the additional shares issued have been transferred from additional paid-in capital to common stock. In this report, all share and per share data have been retroactively restated to reflect the stock split. 10 11 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW Trenwick ("Trenwick") is a holding company whose principal subsidiary, Trenwick America Reinsurance Corporation ("Trenwick America Re") reinsures property and casualty risks written by U.S. insurance companies. Substantially all of Trenwick America Re's business is produced by reinsurance brokers. Trenwick America Re divides its business into three categories: treaty, specialty and facultative. OPERATING RESULTS Trenwick reported an increase in its first quarter income before extraordinary item of 20% to $9.8 million, compared to $8.2 million for the first quarter of 1996. Fully diluted per share income before extraordinary item increased 17% to $.81, compared to $.69 in the prior year first quarter. Net income for the first quarter of 1997 was $8.8 million or $.75 per fully-diluted share. In the first quarter of 1997, Trenwick recorded an extraordinary loss of $1.0 million associated with the redemption of $45.8 million principal amount of its 6% convertible debentures. There were no extraordinary items in the first quarter of 1996. Realized after-tax investment gains in the first quarter of 1997 were $1.2 million or approximately $.11 per share, compared to $33,000 or $.01 per share for the same period in 1996. 11 12 PREMIUMS Trenwick's gross premium writings in the quarter increased 14%, consisting of a 21% increase in casualty business, offset by a 20% decline in property business. However, Trenwick's net premiums written increased only nominally to $59.6 million in the first quarter of 1997 compared to $58.9 million in the same period in 1996, primarily because the Company elected to purchase additional stop loss reinsurance protection on casualty business effective January 1, 1997. The decision to increase the Company's stop loss protection was driven by the continued general deterioration in reinsurance pricing and the opportunity to buy additional protection at more favorable terms than in prior years. The distribution of the Company's net premiums written by type for the three months ended March 31, 1997 was as follows (in thousands):
1997 1996 % Change ---- ---- -------- CASUALTY Treaty $34,250 $37,280 8% Specialty 15,620 9,851 59 Facultative 1,307 1,354 (3) --------- --------- -- 51,177 48,485 6 PROPERTY 8,381 10,398 (19) -------- -------- -- Total $59,558 $58,883 1% ======= ======= ==
Trenwick's premium growth in casualty business in the first quarter of 1997 resulted from an increase in specialty treaty business, due to several new accounts underwritten in the second half of 1996. Casualty treaty business declined primarily as a result of an increase in retention by a ceding company on business which renewed January 1, 1997. Property business continued to decline primarily as a result of the Company's direct and indirect withdrawal from catastrophe business, caused by the prolonged deterioration in pricing. New casualty business increased 27% in the quarter over the same period in 1996 and represented approximately 29% of total premium writings during the period. Continuing casualty business increased 18% in the quarter over the same period in 1996. Continuing casualty business represented 59% of the total premium writings during the period. The Company's property business represented approximately 12% of total premium writings for the quarter ended March 31, 1997. 12 13 UNDERWRITING EXPERIENCE The combined ratio is one means of measuring the profitability of a property and casualty company. The combined ratio reflects underwriting experience, but does not reflect income from investments or provisions for income taxes. A combined ratio below 100% indicates profitable underwriting and a combined ratio exceeding 100% indicates unprofitable underwriting. Although a reinsurer may have unprofitable underwriting results, the reinsurer may still be profitable because of investment income earned on the accumulated invested assets. The following table sets forth Trenwick's combined ratios and the components thereof calculated on a GAAP basis for the period indicated, together with Trenwick America Re's combined ratio calculated on a statutory basis:
Three Months Ended March 31, --------- 1997 1996 ---- ---- Claims and claims expense ratio 57.1% 61.2% ---- ---- Expense ratio: Policy acquisition expense ratio 32.2 25.7 Underwriting expense ratio 7.4 8.4 ----- ----- Total expense ratio 39.6% 34.1% ---- ---- Combined ratio (GAAP basis) 96.7% 95.3% ---- ---- Trenwick America Re statutory combined ratio 95.9% 93.8% ---- ----
As indicated, Trenwick's claims and claims expense ratio improved in the first quarter of 1997 compared to the same period in 1996. The claims and claims expense ratio in the first quarter of 1997 includes favorable development of $2 million, offset by $1.2 million of profit commissions, on business written in prior years. 13 14 INVESTMENT INCOME Net investment income of $11.7 million in the first quarter of 1997 increased 19% compared to $9.9 million for the same period in 1996. Pre-tax yields on invested assets, excluding equity securities, averaged 6.4% in both 1997 and 1996. This growth resulted primarily from funds received of $29.7 million from the aggregate excess of loss commutation recorded in December 1996, coupled with approximately $61 million of funds received in January 1997 from Trenwick's previously reported private offering of $110 million 8.82% Subordinated Capital Income Securities. The remaining proceeds were used to redeem $46 million principal amount of the Company's convertible debentures, plus accrued interest. After-tax net investment income in the first quarter of 1997 was $9.1 million compared to $7.7 million for the comparative period in 1996. The effective tax rate on net investment income for the three months ended was approximately 22.5% in 1997, versus 21.8% in 1996. LIQUIDITY AND CAPITAL RESOURCES As of March 31, 1997, Trenwick's consolidated investments and cash totaled $825.5 million, as compared to $754.2 million at December 31, 1996. The fair value of the Company's debt securities portfolio exceeded amortized cost of $763.0 million and $700.5 million by $2.9 million and $13.5 million at March 31, 1997 and December 31, 1996, respectively. At March 31, 1997 and at December 31, 1996, the fair value of the Company's equity securities exceeded cost of $27.0 million and $21.3 million by $2.7 million and $4.6 million, respectively As of March 31, 1997, Trenwick's consolidated stockholders' equity totaled $322.5 million or $27.02 per share, as compared to $265.8 million or $26.34 per share at December 31, 1996. This $56.7 million increase resulted primarily from the conversion of $57.7 million in debentures into approximately 1.8 million shares partially offset by a decrease in the unrealized appreciation on the debt and equity investments. Since December 31, 1996, the unrealized appreciation of debt and equity investments declined $8.2 million, net of tax, or $.68 per share, primarily as a result of the increase in interest rates. In January 1997, the Company made a private offering of $110,000,000 in 8.82% Subordinated Capital Income Securities due February 20, 2037 through Trenwick Capital Trust I, a Delaware statutory business trust. In connection with this offering, the Company called for redemption all $103,500,000 aggregate principal amount of the Company's 6% convertible debentures due December 15, 1999, on February 20, 1997, at a redemption price of 102.57% principal amount plus accrued interest to the redemption date. Of the $103,500,000 principal amount of debentures outstanding on that date, $45,819,000 principal amount were redeemed and $57,681,000 principal amount were converted into an aggregate of 1,783,926 shares of the Company's common stock, par value $.10 per share. The remaining net proceeds from the offering of the Capital Securities will be used for general corporate purposes, which may include investments in and advances to subsidiaries, the financing of growth and expansion, the financing of possible future acquisitions and other corporate purposes. Statutory surplus of Trenwick America Re was $294.2 million as of March 31, 1997, compared to $286.3 million as of December 31, 1996. 14 15 Cash flow from operations of $10.1 million in the first quarter of 1997 decreased approximately 66% compared to cash flow from operations of $30.1 million in the first quarter of 1996. In the first quarter last year, the Company benefited from non-recurring premium collections of approximately $7 million and below average paid loss activity. In 1997, operating cash flow was reduced by a return premium on an expiring account and an acceleration in payment of interest costs associated with the redemption of the Company's 6% convertible debentures. Cash provided by financing activities in the first quarter of 1997 increased to $60.9 million compared to cash used for financing activities of $1.9 million in the first quarter of 1996. This increase primarily resulted from funds received from the aforementioned private offering partially offset by the debt redemption. Trenwick declared a first quarter dividend of $.24 per share in 1997, a 14% increase compared to $.21 in the first quarter of 1996. 15 16 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K a) Exhibits 11.0 Computation of Earnings Per Share 27.0 Financial Data Schedule b) Reports on Form 8-K None 16 17 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TRENWICK GROUP INC. ------------------- (Registrant) Date: May 14, 1997 JAMES F. BILLETT, JR. ------------- ----------------------------- James F. Billett, Jr. Chairman, President and Chief Executive Officer Date: May 14, 1997 ALAN L. HUNTE ------------ ------------------------ Alan L. Hunte Vice President, Chief Financial Officer and Treasurer 17 EX-11 2 EXHIBIT 11 1 TRENWICK GROUP INC. Exhibit 11.0 -- COMPUTATION OF EARNINGS PER SHARE (in thousands, except per share amounts)
Income Before Extraordinary Item Net Income -------------------------------- ---------- Three Months Ended Three Months Ended March 31, March 31, ------------------ ---------------- 1997 1996 1997 1996 ---- ---- ---- ---- INCOME AVAILABLE TO COMMON STOCKHOLDERS: Income before extraordinary item/net income (primary) $ 9,801 $ 8,182 $ 8,764 $ 8,182 Add interest on convertible debentures converted February 20, 1997 into common stock, net of applicable taxes 322 589 322 589 ------- ------- ------- ------- Income available (supplemental) 10,123 8,771 9,086 8,771 Add interest on convertible debentures redeemed - when dilutive to each of those 256 467 0 467 ------- ------- ------- ------- Income available (fully diluted) $10,379 $ 9,238 $ 9,086 $ 9,238 ======= ======= ======= ======= WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING: Average common shares outstanding 10,888 9,894 10,888 9,894 Equivalent shares associated with employee stock options 178 356 178 356 ------- ------- ------- ------- Weighted average common and common equivalent shares (primary) 11,066 10,250 11,066 10,250 Additional shares associated with convertible debentures converted February 20, 1997 1,011 1,784 1,011 1,784 ------- ------- ------- ------- Weighted average common and common equivalent shares (supplemental) 12,077 12,034 12,077 12,034 Additional shares associated with convertible debentures redeemed - when dilutive to each of these 803 1,417 0 1,417 Additional equivalent shares associated with employee stock options 6 0 6 0 Weighted average common and common ------- ------- ------- ------- equivalent shares (fully diluted) 12,886 13,451 12,083 13,451 ======= ======= ======= ======= PER SHARE AMOUNTS: Primary $ 0.89 $ 0.80 $ 0.79 $ 0.80 ======= ======= ======= ======= Supplemental $ 0.84 $ 0.73 $ 0.75 $ 0.73 ======= ======= ======= ======= Fully diluted $ 0.81 $ 0.69 $ 0.75 $ 0.69 ======= ======= ======= =======
EX-27 3 EXHIBIT 27
7 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS CONTAINED IN THE FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 1997 FOR TRENWICK GROUP INC. 1,000 U.S. DOLLARS 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 1 765,863 0 0 29,700 0 0 795,563 29,924 77,533 23,522 1,021,062 481,974 79,960 0 0 0 0 0 1,194 321,280 1,021,062 53,914 11,729 1,915 0 30,804 17,377 6,496 12,881 3,080 9,801 0 (1,037) 0 8,764 .79 .75 0 0 0 0 0 0 0 REPRESENTS NET REINSURANCE RECOVERABLE BALANCES AFTER OFFSET OF FUNDS HELD AND REINSURANCE BALANCES PAYABLE.
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