EX-99 2 ex99.txt MANAGEMENT NEWSLETTER ================================================================================ MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED MANAGEMENT NEWSLETTER REPORTING PERIOD 3 MONTHS ENDED MARCH 31, 2004 No. 58 ================================================================================ SHAREHOLDER HIGHLIGHTS ---------------------- o The overall performance of the Company for the three month period ended March 31, 2004 continues to be positive. The Company recorded net income for this period of approximately $2.3 million, compared to net income of $1.9 million for the comparable period in 2003. o No new series of Participating Stock were added and 1 series was redeemed during the quarter bringing the total of series issued and outstanding at March 31, 2004 to 205. o The incurred loss ratio for the three month period ended March 31, 2004 was 66.7%, compared to 67.9% for the comparable period in 2003 and 64.7% for the year ended December 31, 2003. o The combined ratio (which represents incurred losses and expenses divided by earned premiums) for the three month period ended March 31, 2004 was 92.6%, compared to 94.4% for the comparable period in 2003 and 90.5% for the year ended December 31, 2003. o The total annualized realized investment return for the three month period ended March 31, 2004 was 8.9%, compared to 6.1% for the year ended December 31, 2003. Total annualized investment returns (including unrealized positions) for the three month period ended March 31, 2004 was 8.8%, compared to a return of 8.8% for the year ended December 31, 2003. o As a result of improvement in the equities markets, the Company's unrealized gain position in its equity portfolio at March 31, 2004 was $1.8 million, an improvement of approximately $437, 000 since December 31, 2003. o In reviewing the investment portfolio, management determined that no unrealized losses on fixed income securities were considered to be other than temporary. As a result, no realized losses were recorded with respect to these securities for the quarter ended March 31, 2004. o At a meeting of the Board of Directors held on March 3rd, 2004 the Board declared dividends totalling approximately $8.0 million to shareholders of record as of December 31, 2003. This was the highest dividend paid since the Company was formed. FINANCIAL HIGHLIGHTS -------------------- (All financial information expressed in US$ millions) ------------------------------------ ----------------------------------- BALANCE SHEET HIGHLIGHTS ENCLOSURES ------------------------------------ ----------------------------------- ------------------------------------------- Enclosed with this newsletter Period End 31 Mar 2004 31 Dec 2003 is the relevant shareholder's Cash & Investments $81.7 $89.1 Statement of Capital & Surplus Total Assets 98.6 106.7 and Reference Key together with Share Capital 1.7 1.7 a copy of the Company's 10Q report Retained Earnings 17.7 23.4 as filed with the Securities and ------------------------------------------- Exchange Commission (SEC) for the 3 months ended March 31, 2004. ------------------------------------------- INCOME STATEMENT HIGHLIGHTS ------------------------------------------- -------------------------------------------------------------------------------- Inception to Reporting Periods Ended 31/03/04 Quarter Year to Date Date -------------------------------------------------------------------------------- Premiums written by MIC subject to MMRC $6.3 $6.3 $612.6 reinsurance Reinsurance premiums assumed by MMRC 7.3 7.3 588.2 -------------------------------------------------------------------------------- Premiums Earned $10.2 $10.2 $515.0 Investment Income 1.6 1.6 60.9 Expenses and Losses (9.5) (9.5) (510.9) ------ ------ ------- Net Income $ 2.3 $ 2.3 $ 65.0 ====== ====== ======= --------------------------------------------------------------------------------
------------------------------------ OTHER STATISTICS ------------------------------------ ----------------------------------------------------------------------------------------------- Inception to Reporting Periods Ended 31/03/04 Quarter Year to Date Date ----------------------------------------------------------------------------------------------- Change in No. of Series Outstanding (1) (1) 205 ----------------------------------------------------------------------------------------------- Annualized Investment Returns - Realized 8.9% 8.9% 8.8% 8.8% - Realized & Unrealized ----------------------------------------------------------------------------------------------- Incurred Loss Ratios 66.7% 66.7% 72.0% ----------------------------------------------------------------------------------------------- Dividends Paid ($ Millions) $8.0 $8.0 $45.1 -----------------------------------------------------------------------------------------------
GENERAL INFORMATION --------------------------------------- --------------------------------------- OTHER THAN TEMPORARY IMPAIRMENT MAY BOARD MEETING OF ASSETS --------------------------------------- --------------------------------------- At a meeting of the Board of The Company performs a quarterly Directors on May 12, 2004 the Board review of its investment portfolio determined that the Company's to determine whether impairments in investment in the international the value of any of the Company's equity fund should be liquidated investments were deemed to be other and cash received be deposited with than temporary. Such reviews began the investment manager of the fixed in the 3rd Quarter 2002. income portfolio. For both fixed income and equity Also at the meeting, the Board investments of the Company, no directed the management of the impairment write-down was recorded Company to seek the termination of in the 1st Quarter 2004. the registration of the Company's participating shares under the Management will continue to Securities Exchange Act of 1934 as evaluate the Company's entire soon as possible. Significant cost investment portfolio on a regular savings are expected following such basis to determine if additional termination. charges are necessary to reflect impairments in value that are --------------------------------------- considered to be other than CHANGES IN ADDRESS temporary. --------------------------------------- In future periods if it is Shareholders should remember to determined that the unrealized loss advise the Company, at its offices position is other than temporary in in Barbados, of any changes in nature, the difference between information relative to their historical cost and market value at mailing address for receipt of that time will be treated as a reports and other company realized loss and reflected in the communications. Company's statement of operations and retained earnings. --------------------------------------- ANNUAL GENERAL MEETING --------------------------------------- At the Annual General Meeting of the Shareholders held on May 12, 2004 in Barbados the shareholders voted to approve the Board of Directors recommendations to restructure the Company in accordance with the information contained in the proxy statement mailed to shareholders prior to the meeting. Also at the meeting Mr. Donald (Bud) Urquhart, Jr. of U-J Chevrolet in Mobile, Alabama was elected to serve as Dealer-Director of the Company. The Board noted its appreciation to Mr. Harvey Koning for his service and contribution during his tenure as a Board member. The next AGM of the Shareholders of the Company has been scheduled for May 2005. The meetings will be held in Barbados.