-----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, LaCxqs+uFdEHY9Ht7PE1yl79i/zn6EKi7Om0UGLlAwYZ45oimcMd+eoKAtY7yJd9 8KLiQU/gMECU7MKx+dHC0Q== 0000898080-96-000175.txt : 19961111 0000898080-96-000175.hdr.sgml : 19961111 ACCESSION NUMBER: 0000898080-96-000175 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961108 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MOTORS MECHANICAL REINSURANCE CO LTD CENTRAL INDEX KEY: 0000790381 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-06534 FILM NUMBER: 96656549 BUSINESS ADDRESS: STREET 1: TRIDENT HOUSE CITY: BRIDGETOWN BARBADOS STATE: C8 ZIP: 00000 BUSINESS PHONE: 8094364895 MAIL ADDRESS: STREET 1: SUTHERLAND ASBILL & STREET 2: 1275 PENNSYLVANIA AVE N W CITY: WASHINGTON STATE: DC ZIP: 20004-2404 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON. D.C. 20549 FORM 10-Q X Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For quarterly period ended September 30, 1996 Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission File Number 33-6534 Motors Mechanical Reinsurance Company, Limited (Exact name of registrant as specified in its charter) Barbados NA (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Bishops Court Hill, St. Michael, Barbados NA (Address of principle executive offices) (Zip Code) (246) 436-4895 (Registrant's telephone number, including area code) 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 as of the latest practicable date. Class As of September 30, 1996 Common Stock, no par-value 2,000 Participating Stock, no par-value 25,100 This quarterly report, filed pursuant to Rule 13a-13 of the General Rules and Regulations under the Securities Exchange Act of 1934, consists of the following information as specified in Form 10-Q: Part 1. FINANCIAL INFORMATION Item 1. Financial Statements 1. Balance Sheets, September 30, 1996 and December 31, 1995. 2. Statements of Income and Retained Earnings for the three month periods ended September 30, 1996 and 1995 and the nine month periods ended September 30, 1996 and 1995. 3. Statements of Cash Flows for the nine month periods ended September 30, 1996 and 1995. In the opinion of Management, the accompanying financial statements reflect all adjustments, consisting of normal recurring accruals, which are necessary for a fair presentation of the results for the interim periods presented. Certain amounts in the 1995 financial statements have been reclassified to conform with the 1996 presentation. MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED BALANCE SHEETS (Expressed in U.S. Dollars) September 30, 1996 December 31, (Unaudited) 1995 ------------------ ------------ ASSETS Investments $71,311,446 $59,898,265 Cash and cash equivalents 3,722,725 7,093,106 Accrued investment income 1,019,916 2,532,813 Due from Motors Insurance Corporation 2,709,101 3,095,587 Deferred acquisition costs 21,153,276 18,907,205 Prepaid expenses 625 0 ----------- ----------- Total Assets $99,917,089 $91,526,976 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Unearned premiums $81,386,325 $72,752,532 Loss reserves 4,048,296 3,480,334 Accrued liabilities 134,453 117,447 ----------- ----------- Total liabilities 85,569,074 76,350,313 ----------- ----------- STOCKHOLDERS' EQUITY Share Capital Common Stock - no par value; Authorized - 2,000 shares; issued and outstanding - 2,000 200,000 200,000 Participating Stock - no par value; Authorized - 100,000 shares; issued and outstanding - 25,100 shares as of September 30, 1996 and 24,100 shares as of December 31, 1995 1,882,500 1,807,500 ----------- ----------- 2,082,500 2,007,500 Retained Earnings 12,222,613 11,517,542 Unrealized appreciation on investments 42,902 1,651,621 ----------- ----------- Total Stockholders' Equity 14,348,015 15,176,663 ----------- ----------- Total Liabilities and Stockholders' Equity $99,917,089 $91,526,976 =========== =========== MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED STATEMENTS OF INCOME AND RETAINED EARNINGS FOR THE THREE MONTH PERIODS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995 AND THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995 (UNAUDITED) (Expressed in U.S. Dollars) Three Month Periods Nine Month Periods Ended September 30, Ended September 30, INCOME 1996 1995 1996 1995 ----------- ----------- ----------- ----------- Reinsurance premiums assumed $11,888,323 $12,559,368 $34,912,576 $32,965,532 Increase in unearned premiums 2,619,252 4,965,323 8,633,792 12,210,450 ----------- ----------- ----------- ----------- Premiums earned 9,269,071 7,594,045 26,278,784 20,755,082 ----------- ----------- ----------- ----------- Investment income Interest earned 1,696,455 875,827 4,055,783 2,752,222 Realized gains (losses) on investments (622,769) 655,822 (591,667) 1,248,108 ----------- ----------- ----------- ----------- Investment income 1,073,686 1,531,649 3,464,116 4,000,330 ----------- ----------- ----------- ----------- TOTAL INCOME 10,342,757 9,125,694 29,742,900 24,755,412 EXPENSES Acquisition costs 2,409,510 1,974,023 6,831,299 5,394,966 Losses paid 6,143,524 4,908,187 17,133,296 13,410,259 Increase in loss reserves 221,887 322,583 567,963 645,967 Administrative expenses - Related Parties 50,937 30,676 159,366 141,846 - Other 53,987 70,305 286,893 318,858 ----------- ----------- ----------- ----------- TOTAL EXPENSES 8,879,845 7,305,774 24,978,817 19,911,896 ----------- ----------- ----------- ----------- NET INCOME 1,462,912 1,819,920 4,764,083 4,843,516 RETAINED EARNINGS, beginning of period 10,759,701 7,631,714 11,517,542 5,796,732 LESS: DIVIDENDS 0 0 (4,007,483) (1,188,614) LESS: REDEMPTIONS OF PARTICIPATING STOCK 0 7,500 (51,529) 7,500 ----------- ----------- ----------- ----------- RETAINED EARNINGS, end of period $12,222,613 $9,459,134 $12,222,613 $9,459,134 =========== ========== =========== ========== MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED STATEMENTS OF CASH FLOWS FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995 (UNAUDITED) (Expressed in U.S. Dollars) Nine Month Periods Ended September 30, 1996 1995 ------------ ------------ Cash flows from operating activities: Reinsurance premiums assumed $34,143,674 $30,259,260 Losses and underwriting expenses paid (25,067,930) (20,425,770) Administrative expenses paid (418,202) (435,624) Investment income received 5,116,370 2,112,248 ------------ ------------ Net cash provided by operating activities 13,773,912 11,510,114 ------------ ------------ Cash flows from investing activities: Purchases of investment securities (191,038,040) (139,957,512) Sales and maturities of investment securities 177,877,759 130,500,713 ------------ ------------ Net cash invested (13,160,281) (9,456,799) ------------ ------------ Cash flows from financing activities: Proceeds from issuance of Participating stock 23,471 112,500 Redemptions of Participating stock 0 0 Dividends paid (4,007,483) (1,188,614) ------------ ------------ Net cash used in financing activities (3,984,012) (1,076,114) ------------ ------------ Increase in cash and cash equivalents (3,370,381) 977,201 Cash and cash equivalents, beginning of period 7,093,106 3,303,060 ------------ ------------ Cash and cash equivalents, end of period $ 3,722,725 $ 4,280,261 ============ ============ Reconciliation of net income to net cash provided by operating activities: Net income 4,764,083 4,843,516 Realized losses/(gains) on investments 116,287 (1,162,950) Foreign exchange losses/(gains) on investments 22,094 (85,157) Change in: Accrued investment income 1,512,897 (645,016) Due from Motors Insurance Corporation 386,486 (1,130,055) Deferred acquisition costs (2,246,071) (3,176,161) Prepaid expenses (625) (625) Unearned premiums 8,633,793 12,210,450 Loss reserves 567,962 645,967 Accrued liabilities 17,006 10,145 ------------ ------------ Net cash provided by operating activities $13,773,912 $11,510,114 ============ ============ Item 2. Management's Discussion And Analysis of Financial Condition And Results of Operations Liquidity. It is anticipated that the Company will continue to be able to generate sufficient funds from operations to meet current liquidity needs. Premiums generated by the Company's reinsurance business combined with investment earnings plus proceeds from the sale of Shares will continue to be the principal sources of funds for investment by the Company. Such funds will be available to meet the Company's liquidity requirements. No capital expenditures are expected in the foreseeable future. Capital Resources. During the quarter ended September 30, 1996, 6 new series of Shares were added bringing the total number of series issued and outstanding to 251 as of the end of the quarter. As of September 30, 1996, the share capital of the Company was $2,082,500 (compared with $2,007,500 as of December 31, 1995) comprised of paid in capital with respect to the Common Stock of $200,000 and paid in capital with respect to Participating Shares of $1,882,500 (compared with $1,807,500 as of December 31, 1995). In addition, the Company had surplus from retained earnings in the amount of $12,222,613 as of September 30, 1996 compared with $11,517,542 as of December 31, 1995. Results of Operations. During the quarter ended September 30, 1996, the Company had net income of $1,462,912, compared with net income of $1,819,920 for the quarter ended September 30, 1995. For the nine month period ended September 30, 1996, the Company had net income of $4,764,083, compared with net income of $4,843,516 for the comparable period in 1995. As discussed below, the decrease in net income for the quarter ended September 30, 1996 compared to the comparable period of 1995 is the result of losses on the sale of investment securities which offset increases in interest earned and underwriting income. Premiums earned increased to $9,269,071 during the quarter ended September 30, 1996 compared to $7,594,045 for the same period in 1995. Expenses incurred during the quarter ended September 30, 1996 were $8,879,845 compared to $7,305,774 for the comparable quarter of 1995. Net underwriting income for the quarter ended September 30, 1996 was $389,226 compared to $288,271 for the comparable period in 1995. The ratio of losses incurred to premiums earned for the quarter under review was 68.7% compared to 68.9% for the comparable period in 1995. For the nine month period ended September 30, 1996, the Company had earned premiums of $26,278,784 compared to $20,755,082 for the comparable period of 1995. Expenses incurred during the nine month period under review were $24,978,817 compared to $19,911,896 for the comparable period in 1995. The increase in expenses is attributable to increased policy acquisition costs resulting from increased premium volume. As a result, net underwriting income for the Company was $1,299,967 for the nine month period under review compared to $843,186 for the comparable period in 1995. The loss ratio for the nine month period ended September 30, 1996 was 67.4%, compared to 67.7% for the nine month period ended September 30, 1995. Investment income for the quarter ended September 30, 1996 was $1,073,686 compared to $1,531,649 for the comparable period of 1995. Investment income for the nine month period under review was $3,464,116 compared to $4,000,330 for the comparable period of 1995. During the quarter under review, the Company incurred losses on the sale of investment securities of $622,769, compared to gains of $655,822 during the comparable period of 1995. During the nine month period under review, the Company realized net losses on the sale of investment securities of $591,667 compared to gains of $1,248,108 during the comparable period of 1995. As of September 30, 1996, the Company had net unrealized appreciation of $42,902 on its investments compared to unrealized appreciation of $1,651,621 as of December 31, 1995. The losses on the sale of investment assets during the quarter under review and the decrease in net gains during the nine month period under review compared to the corresponding periods in 1995 and the change in the amount of unrealized appreciation as of September 30, 1996 compared to December 31, 1995 are in large part attributable to increases in long term interest rates during the respective reporting periods which resulted in decreases in the market value of the Company's investment portfolio. For the quarter ended September 30, 1996, the Company had interest income of $1,696,455 compared to $875,827 for the comparable period of 1995. For the nine month period under review, the Company had interest income of $4,055,783 compared to $2,752,222 for the comparable period of 1995. These increases were largely attributable to increases in the amount of assets under management combined with higher interest rates. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits (27) Financial Data Schedule (b) No reports on Form 8-K were filed during the quarter for which this report is filed. 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. MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED (Registrant) By: s/ Ronald W. Jones Ronald W. Jones Vice President, Finance Signing on behalf of the Registrant, and Principal Financial Officer Dated: October 17, 1996 EX-27 2 FINANCIAL DATA SCHEDULE
7 This schedule contains summary financial information extracted from the unaudited financial statements contained in the Company's quarterly report on Form 10-Q for the quarter ended September 30, 1996 and is qualified in its entirety by references to such financial statements. 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 71,311,446 0 0 0 0 0 71,311,446 3,722,725 0 21,153,276 99,917,089 4,048,296 81,386,325 0 0 0 0 0 200,000 14,148,015 99,917,089 26,278,784 4,055,783 (591,667) 0 17,701,259 6,831,299 446,259 4,764,083 0 4,764,083 0 0 0 4,764,083 0 0 0 0 0 0 0 0 0 Information as to earnings per share is not provided inasmuch as the results for each series of stock will vary with the underwriting experience attributable to each Subsidiary Capital Account established with respect to that series.
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