-----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, KFRJOO1X+xoWYyQELpvfnQr2EnDHFlmFVKQgu9eoTZWnD10/KrhxnXyVPquIT2Dt iQ9Prnkngzqv/WeWc/FauA== 0000898080-98-000178.txt : 19980817 0000898080-98-000178.hdr.sgml : 19980817 ACCESSION NUMBER: 0000898080-98-000178 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980814 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: SEC FILE NUMBER: 033-06534 FILM NUMBER: 98689031 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 June 30, 1998 ___ 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 N/A (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Bishops Court Hill, St. Michael, Barbados N/A (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 June 30, 1998 Common Stock, no par-value 2,000 Participating Stock, no par-value 30,700 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: -1- Part 1. FINANCIAL INFORMATION Item 1. Financial Statements 1. Balance Sheets, June 30, 1998 and December 31, 1997. 2. Statements of Income and Retained Earnings for the three month periods ended June 30, 1998 and 1997 and the six month periods ended June 30, 1998 and 1997. 3. Statements of Cash Flows for the six month periods ended June 30, 1998 and 1997. 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. -2-
MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED BALANCE SHEETS (Expressed in U.S. Dollars) June 30, 1998 December 31, (unaudited) 1997 ------------- ------------- ASSETS Investments $ 90,543,992 $ 88,585,513 Cash and cash equivalents 7,839,371 5,645,482 Accrued investment income 1,717,091 3,178,446 Due from Motors Insurance Corporation 3,425,754 841,927 Deferred acquisition costs 27,007,839 24,813,918 Prepaid expenses 35,686 0 ------------ ------------ Total Assets $130,569,733 $123,065,286 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Unearned premiums $103,890,284 $ 95,454,588 Loss reserves 4,854,766 5,421,160 Accrued liabilities 161,171 123,569 ------------ ------------ Total liabilities 108,906,221 100,999,317 ------------ ------------ 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 - 30,700 shares as of June 30, 1998 and 28,200 shares as of December 31, 1997 2,302,500 2,115,000 ------------ ------------ 2,502,500 2,315,000 Retained Earnings 18,356,403 18,615,768 Unrealized appreciation on investments 804,609 1,135,201 ------------ ------------ Total Stockholders' Equity 21,663,512 22,065,969 ------------ ------------ Total Liabilities and Stockholders' Equity $130,569,733 $123,065,286 ============ ============
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MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED STATEMENTS OF INCOME AND RETAINED EARNINGS FOR THE THREE MONTH PERIODS ENDED JUNE 30, 1998 AND JUNE 30, 1997 AND THE SIX MONTH PERIODS ENDED JUNE 30, 1998 AND JUNE 30, 1997 (UNAUDITED) (Expressed in U.S. Dollars) Three Month Periods Six Month Periods Ended June 30, Ended June 30, 1998 1997 1998 1997 ------------ ------------ ------------ ------------ INCOME Reinsurance premiums assumed $18,478,223 $15,112,998 $36,057,933 $27,891,709 Increase in unearned premiums 4,149,151 3,719,483 8,435,696 6,305,342 ---------- ---------- ---------- ---------- Premiums earned 14,329,072 11,393,515 27,622,237 21,586,367 ---------- ---------- ---------- ---------- Investment income Interest earned 1,445,457 1,259,529 2,806,090 2,474,926 Realized gains/(losses) on investments (173,662) (45,149) 1,105,735 (611,257) ---------- ---------- ---------- ---------- Investment income 1,271,795 1,214,380 3,911,825 1,863,669 ---------- ---------- ---------- ---------- TOTAL INCOME 15,600,867 12,607,895 31,534,062 23,450,036 ---------- ---------- ---------- ---------- EXPENSES Acquisition costs 3,606,295 2,961,947 7,062,828 5,611,862 Losses paid 10,432,562 7,009,616 19,816,761 13,297,542 Increase in loss reserves 203,478 524,760 (566,394) 688,662 Administrative expenses - Related Parties 57,588 54,915 110,232 111,578 - Other 116,874 61,289 198,044 162,844 ---------- ---------- ---------- ---------- TOTAL EXPENSES 14,416,797 10,612,527 26,621,471 19,872,488 ---------- ---------- ---------- ---------- NET INCOME 1,184,070 1,995,368 4,912,591 3,577,548 RETAINED EARNINGS, beginning of period 17,172,333 12,298,503 18,615,768 14,913,053 LESS: DIVIDENDS 0 0 (5,171,956) (4,196,730) ---------- ----------- ---------- ---------- RETAINED EARNINGS, end of period $18,356,403 $14,293,871 $18,356,403 $14,293,871 ========== ========== ========== ==========
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MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED STATEMENTS OF CASH FLOWS FOR THE SIX MONTH PERIODS ENDED JUNE 30, 1998 AND JUNE 30, 1997 (UNAUDITED) (Expressed in U.S. Dollars) Six Month Periods Ended June 30, 1998 1997 ------------ ------------ Cash flows from operating activities: Reinsurance premiums collected $30,134,340 $25,276,172 Losses and acquisition expenses paid (25,691,013) (18,960,372) Administrative expenses paid (351,091) (327,770) Investment income received 4,269,445 2,793,370 ----------- ----------- Net cash provided by operating activities 8,361,681 8,781,400 ----------- ----------- Cash flows from investing activities: Purchases of investments (154,108,002) (181,563,781) Sales and maturities of investments 152,924,666 175,749,235 ----------- ----------- Net cash invested (1,183,336) (5,814,546) ----------- ----------- Cash flows from financing activities: Proceeds from issuance of Participating Stock 187,500 127,500 Redemption of participating stock 0 0 Dividends paid (5,171,956) (4,196,730) ----------- ---------- Net cash (used in) provided by financing activities (4,984,456) 4,069,230 ----------- ---------- (Decrease) increase in cash and cash equivalents 2,193,889 (1,102,376) Cash and cash equivalents, beginning of period 5,645,482 12,926,272 ----------- ----------- Cash and cash equivalents, end of period $ 7,839,371 $11,823,896 =========== =========== Reconciliation of net income to net cash provided by operating activities: Net income 4,912,591 3,577,548 Realized losses(gains) on investments (1,105,735) 611,257 Change in: Accrued investment income 1,461,355 314,444 Due from Motors Insurance Corporation (2,583,827) (1,080,770) Deferred acquisition costs (2,193,921) (1,640,067) Prepaid expenses (35,686) (32,958) Unearned premiums 8,435,696 6,405,342 Loss reserves (566,394) 688,661 Accrued liabilities 37,602 37,943 ----------- ----------- Net cash provided by operating activities $ 8,361,681 $ 8,781,400 =========== ===========
-5- 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 June 30, 1998, 16 new series of Shares were added bringing the total number of series issued and outstanding to 307 as of the end of the quarter. As of June 30, 1998, the share capital of the Company was $2,502,500 (compared with $2,315,000 as of December 31, 1997) comprised of paid in capital with respect to the Common Stock of $200,000 and paid in capital with respect to Participating Shares of $2,302,500 (compared with $2,115,000 as of December 31, 1997). In addition, the Company had surplus from retained earnings in the amount of $18,356,403 as of June 30, 1998 compared with $18,615,768 as of December 31, 1997. Results of Operations. During the quarter ended June 30, 1998, the Company had net income of $1,184,070, compared with net income of $1,995,368 for the quarter ended June 30, 1997. For the six month period ended June 30, 1998, the Company had net income of $4,912,591, compared with net income of $3,577,548 for the comparable period in 1997. As discussed below the decrease in net income for the quarter ended June 30, 1998 compared to the comparable period of 1997 is primarily attributable to less favourable underwriting performance. The increase in net income for the six months ended June 30, 1998 compared to the comparable period of 1997 is primarily attributable to improved investment results which were partially offset by a decline in underwriting performance. Premiums earned increased to $14,329,072 during the quarter ended June 30, 1998 compared to $11,393,515 for the same period in 1997. Expenses incurred during the quarter ended June 30, 1998 were $14,416,797 compared to $10,612,527 for the comparable quarter of 1997. The Company experienced a net underwriting loss for the quarter ended June 30, 1998 of $87,725 compared to an underwriting gain of $780,988 for the comparable period in 1997. The ratio of losses incurred to premiums earned for the quarter ended June 30, 1998 was 74.2% compared to 66.1% for the comparable period in 1997 primarily as a result of increases in losses paid. Losses emerging during the current financial year arise from contracts issued by the ceding company during the preceding 6 year period. The increase in the loss ratio of the Company during 1998 reflects pricing actions taken by the ceding company during that 6 year period. For the six month period ended June 30, 1998, the Company had earned premiums of $27,622,237 compared to $21,586,367 for the comparable period of 1997. Expenses incurred during the six month period ended June 30, 1998 were $26,621,471 compared to $19,872,488 for the comparable period in 1997. Net -6- underwriting income for the Company was $1,000,766 for the six month period ended June 30, 1998 compared to $1,713,879 for the comparable period in 1997. The loss ratio for the six month period ended June 30, 1998 was 69.7%, compared to 64.8% for the six month period ended June 30, 1997. Investment income for the quarter ended June 30, 1998 was $1,271,795 compared to $1,214,380 for the comparable period of 1997. Investment income for the six month period ended June 30, 1998 was $3,911,825 compared to $1,863,669 for the comparable period of 1997. During the quarter ended June 30, 1998, the Company realised losses on the sale of investment securities of $173,662, compared to realised losses of $45,149 during the comparable period of 1997. The Company realized losses on the sale of investment securities during the quarter and the six month period ended June 30, 1997, as a result of sales made in anticipation of higher interest rates. The Company realised gains on sales of securities during the six months ended June 30, 1998 in response to declining interest rates in the U.S. During the quarter ended June 30, 1998 the unrealised appreciation on investments increased from $91,604 at March 31, 1998 to $804,609 at June 30, 1998. The increase in the unrealised position during the quarter ended June 30, 1998 resulted primarily from unrealised gains on non US dollar denominated securities purchased during the quarter. As of June 30, 1998, the Company had net unrealised appreciation of $804,609 on its investments compared to unrealised appreciation of $1,135,201 as of December 31, 1997. For the quarter ended June 30, 1998, the Company had interest income of $1,445,457 compared to $1,259,529 for the comparable period of 1997. For the six month period ended June 30, 1998, the Company had interest income of $2,806,090 compared to $2,474,926 for the comparable period of 1997. These increases were largely attributable to an increase in funds available for investment. 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. -7- 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: August 14, 1998 -8- 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 JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCES TO SUCH FINANCIAL STATEMENTS. 6-MOS DEC-31-1998 JAN-01-1998 JUN-30-1998 90,543,992 0 0 0 0 0 90,543,992 7,839,371 0 27,007,839 130,569,733 4,854,766 103,890,284 0 0 0 0 0 200,000 21,463,512 130,569,733 27,622,237 2,806,090 1,105,735 0 19,250,367 7,062,828 308,276 4,912,591 0 4,912,591 0 0 0 4,912,591 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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