-----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, JDDgAKfUrJRi/IoNjfBFuPtGfZVQnK6VjWWjFL7UQb9HsswhjRt+sfkkIX+xm/7r xlm8UUsTDMRXc2/ZxwRwjQ== 0000898080-98-000093.txt : 19980518 0000898080-98-000093.hdr.sgml : 19980518 ACCESSION NUMBER: 0000898080-98-000093 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980515 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: 98625194 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 PAGE 1 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 March 31, 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 March 31, 1998 ----- -------------------- Common Stock, no par-value 2,000 Participating Stock, no par-value 29,100 -1- PAGE 2 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, March 31, 1998 and December 31, 1997. 2. Statements of Income and Retained Earnings for the three month periods ended March 31, 1998 and 1997. 3. Statements of Cash Flows for the three month periods ended March 31, 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- PAGE 3 MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED BALANCE SHEETS (Expressed in U.S. Dollars)
March 31, 1998 December 31, (unaudited) 1997 -------------- ------------ ASSETS Investments $ 86,196,800 $ 88,585,513 Cash and cash equivalents 6,699,267 5,645,482 Accrued investment income 1,684,069 3,178,446 Due from Motors Insurance Corporation 3,659,705 841,927 Deferred acquisition costs 25,928,588 24,813,918 Prepaid expenses 3,189 - ----------- ------------ Total Assets $124,171,618 $123,065,286 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Unearned premiums $ 99,741,133 $ 95,454,588 Loss reserves 4,651,288 5,421,160 Accrued liabilities 132,760 123,569 ------------ ------------ Total liabilities 104,525,181 100,999,317 ------------ ------------ 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 - 29,100 shares as of March 31, 1998 and 28,200 shares as of December 31, 1997 2,182,500 2,115,000 ------------ ------------ 2,382,500 2,315,000 Retained Earnings 17,172,333 18,615,768 Unrealized appreciation on investments 91,604 1,135,201 ------------ ------------ Total Stockholders' Equity 19,646,437 22,065,969 ------------ ------------ Total Liabilities and Stockholders' Equity $124,171,618 $123,065,286 ============ ============
-3- PAGE 4 MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED STATEMENTS OF INCOME AND RETAINED EARNINGS FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1998 AND MARCH 31, 1997 (UNAUDITED) (Expressed in U.S. Dollars) Three Month Periods Ended March 31, 1998 1997 ------------ ----------- INCOME Reinsurance premiums assumed $17,579,710 $12,778,711 Increase in unearned premiums 4,286,545 2,585,859 ----------- ----------- Premiums earned 13,293,165 10,192,852 ----------- ----------- Investment income Interest earned 1,360,633 1,215,397 Realized gains (losses) on investments 1,279,397 (566,108) ----------- ----------- Investment income 2,640,030 649,289 ----------- ----------- TOTAL INCOME 15,933,195 10,842,141 ----------- ----------- EXPENSES Acquisition costs 3,456,533 2,649,915 Losses paid 9,384,199 6,287,926 (Decrease) increase in loss reserves (769,872) 163,902 Administrative expenses - Related Parties 52,644 56,663 - Other 81,170 101,555 ----------- ----------- TOTAL EXPENSES 12,204,674 9,259,961 ----------- ----------- NET INCOME 3,728,521 1,582,180 RETAINED EARNINGS, beginning of period 18,615,768 14,913,053 LESS: DIVIDENDS (5,171,956) (4,196,730) ----------- ----------- RETAINED EARNINGS, end of period $17,172,333 $12,298,503 =========== =========== -4- PAGE 5 MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED STATEMENTS OF CASH FLOWS FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1998 AND MARCH 31, 1997 (UNAUDITED) (Expressed in U.S. Dollars)
Three Month Periods Ended March 31, 1998 1997 ------------ ------------ Cash flows from operating activities: Reinsurance premiums collected $12,554,630 $12,497,461 Losses and acquisition expenses paid (11,735,610) (9,349,941) Administrative expenses paid (142,302) (127,667) Investment income received 2,857,010 1,475,351 ------------ ------------ Net cash provided by operating activities 3,533,728 4,495,204 ------------ ------------ Cash flows from investing activities: Purchases of investments (97,764,585) (103,071,845) Sales and maturities of investments 100,389,098 94,741,543 ------------ ----------- Net cash invested 2,624,513 (8,330,302) ------------ ----------- Cash flows from financing activities: Proceeds from issuance of Participating Stock 67,500 60,000 Dividends paid (5,171,956) (4,196,730) ------------ ------------ Net cash (used in) provided by financing activities (5,104,456) (4,136,730) ----------- ------------ Increase (decrease) in cash and cash equivalents 1,053,785 (7,971,828) Cash and cash equivalents, beginning of period 5,645,482 12,926,272 ------------ ------------ Cash and cash equivalents, end of period $ 6,699,267 $ 4,954,444 ============ ============ Reconciliation of net income to net cash provided by operating activities: Net income 3,728,521 1,582,180 Realized (gains) losses on investments (1,279,397) 566,108 Change in: Accrued investment income 1,494,377 257,954 Due from Motors Insurance Corporation (2,817,778) (37,524) Deferred acquisition costs (1,114,670) (672,589) Prepaid expenses (3,189) (32,045) Unearned premiums 4,286,545 2,585,859 Loss reserves (769,872) 163,902 Accrued liabilities 9,191 81,359 ------------ ------------ Net cash provided by operating activities $ 3,533,728 $ 4,495,204 ============ ============
-5- PAGE 6 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. On February 27, 1998, the Board of Directors authorized the payment of dividends to eligible holders of Participating Shares aggregating $5,171,956. Capital Resources. During the quarter ended March 31, 1998, 9 new series of Shares were added bringing the total number of series issued and outstanding to 291 as of the end of the quarter. As of March 31, 1998, the share capital of the Company was $2,382,500 (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 $2,182,500(compared with $2,115,000 as of December 31, 1997). In addition, the Company had surplus from retained earnings in the amount of $17,172,333 as of March 31, 1998 compared with $18,615,768 as of December 31, 1997. The net decrease in retained earnings is attributable to the dividend paid on February 27, 1998. Results of Operations. During the quarter ended March 31, 1998, the Company had net income of $3,728,521, compared with net income of $1,582,180 for the quarter ended March 31, 1997. The increase in net income for the quarter ended March 31, 1998 compared to the comparable period of 1997 is the result of realised gains on the sale of investment securities, as discussed below, and favourable loss reserve development as advised by the ceding company. Premiums earned increased to $13,293,165 during the quarter ended March 31, 1998 compared to $10,192,852 for the same period in 1997. Expenses incurred during the quarter ended March 31, 1998 were $12,204,674 compared to $9,259,961 for the comparable quarter of 1997. Net underwriting income for the quarter ended March 31, 1998 was $1,088,491 compared to $932,891 for the comparable period in 1997. The ratio of losses incurred to premiums earned for the quarter under review was 64.8% compared to 63.3% for the comparable period in 1997. -6- PAGE 7 Investment income for the quarter ended March 31, 1998 was $2,640,030 compared to $649,289 for the comparable period of 1997. During the quarter under review, the Company realised gains on the sale of investment securities of $1,279,397, compared to losses of $566,108 during the comparable period of 1997. As of March 31, 1998, the Company had net unrealized appreciation of $91,604 on its investments compared to unrealized appreciation of $1,135,201 as of December 31, 1997. The gains on the sale of investment assets during the quarter under review compared to the corresponding losses in 1997 and the change in the amount of the unrealized position on the portfolio as of March 31, 1998 compared to December 31, 1997 are in large part attributable to declines in long term U.S. interest rates during the quarter under review compared to increases in long term interest rates for the comparable quarter in the prior year. For the quarter ended March 31, 1998 the Company had interest income of $1,360,633 compared to $1,215,397 for the comparable period of 1997. These increases were largely attributable to increases in the amount of assets under management. PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security-Holders At the annual meeting of shareholders of the Company held on March 23, 1998, (the "Annual Meeting") the holder of the Common Stock re-elected five directors, William B. Noll, Louis S. Carrio, Jr., Bernard J. Buselmeier, John J. Dunn, Jr., and Peter R.P. Evelyn. The holders of Participating Shares unanimously elected the sixth director, William Bradshaw. The holder of the Common Stock also re-elected Robert E. Capstack as alternative director for Mr. Carrio. At the Annual Meeting, the shareholders of the Company unanimously approved amendments to the Company's Restated Articles of Incorporation to (i) provide that no operating expenses shall be allocated to the Subsidiary Capital Account for a series of Participating Shares for the first four fiscal quarters that end after issuance of the Shares, and (ii) alter the method for calculating Restricted Earned Surplus to provide that deficits shall be allocated to the Subsidiary Capital Account for the Common Stock during the rolling five year period used to calculate Restricted Earned Surplus only to the extent that such deficits relate to premiums allocated to the Subsidiary Capital Account for the Common Stock during such five year period. 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- PAGE 8 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: May 12, 1998 -8- EX-27 2 FINANCIAL DATA SCHEDULE
7 This schedule contains summary financal information extracted from the unaudited financial statements contained in the Company's quarterly report on Form 10-Q for the quarter ended March 31, 1998 and is qualified in its entirety by references to such financial statements. 3-MOS DEC-31-1998 JAN-01-1998 MAR-30-1996 86,196,800 0 0 0 0 0 86,196,800 6,699,267 0 25,928,588 124,171,618 4,651,288 99,741,133 0 0 0 0 0 200,000 19,446,437 124,171,618 13,293,165 1,360,633 1,279,397 0 8,614,327 3,456,533 133,814 3,728,521 0 3,728,521 0 0 0 3,728,521 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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