-----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, IlY/ygc4HS6v8Tq8dXJHfTdo9VRj6j2uqDl00pWNmVSvbRofO7GZmGpOkFTp+2K9 nGCvJzj4bLUdfNHWRFTd5Q== 0000818155-97-000007.txt : 19970520 0000818155-97-000007.hdr.sgml : 19970520 ACCESSION NUMBER: 0000818155-97-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: WALSHIRE ASSURANCE COMPANY CENTRAL INDEX KEY: 0000818155 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 232023240 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-16267 FILM NUMBER: 97608775 BUSINESS ADDRESS: STREET 1: 3350 WHITEFORD RD STREET 2: PO BOX 3849 CITY: YORK STATE: PA ZIP: 17402 BUSINESS PHONE: 7177570000 MAIL ADDRESS: STREET 1: 3350 WHITEFORD RD STREET 2: PO BOX 3849 CITY: YORK STATE: PA ZIP: 174020138 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 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 OR ( ) 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 0-16267 WALSHIRE ASSURANCE COMPANY (Exact name of registrant as specified in its charter) Pennsylvania 23-2023240 (State or other jurisdiction of (I.R.S. Employer incorporation or organization Identification Number) 3350 Whiteford Road, P. O. Box 3849, York, PA 17402-0138 (Address of principal executive offices) (Zip code) (717)757-0000 (Registrant s telephone number, including area code) (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, as of the latest practical date. Class: Outstanding at May 13,1997: Common stock - $.01 Par Value 4,672,145 shares WALSHIRE ASSURANCE COMPANY AND SUBSIDIARIES INDEX PAGE NUMBER Part I FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets as of March 31, 1997 (unaudited) and December 31, 1996. . . . . . . . . . 2 Consolidated Statements of Income for the three months ended March 31, 1997 and 1996 (unaudited) . . 4 Consolidated Statements of Cash Flows for the three months ended March 31, 1997 and 1996 (unaudited) . . 5 Notes to Consolidated Financial Statements (unaudited) . . . . . . . . . . . . . . . . . . . . 6 Item 2. Management s Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . 7 Part II OTHER INFORMATION . . . . . . . . . . . . . . . . . 8 Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . 8 Item 2. Changes in Securities . . . . . . . . . . . . . . . 8 Item 3. Defaults Upon Senior Securities . . . . . . . . . . 8 Item 4. Submission of Matters to a Vote of Security Holders. 8 Item 5. Other Information . . . . . . . . . . . . . . . . . 8 Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . 8 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 1 WALSHIRE ASSURANCE COMPANY AND SUBSIDIARIES Consolidated Balance Sheets (In thousands, except per share data) March 31, December 31, Assets 1997 1996 (Unaudited) Investments: Held to maturity: Fixed maturities (fair value $19,521 and $18,158) . . . . . . . . . . . . . . . . $ 19,500 $ 17,923 Available for sale: Fixed maturities (cost $34,427 and $37,512) . . . . . . . . . . . . . . . . 33,780 37,356 Equity securities (cost $9,350 and $8,711). . . . . . . . . . . . . . . . . 9,283 8,930 Short-term investments . . . . . . . . . . . . 8,985 4,758 Other investments. . . . . . . . . . . . . . . 2,049 2,051 Total investments . . . . . . . . . . . . . 73,597 71,018 Cash. . . . . . . . . . . . . . . . . . . . . . . 232 637 Accrued investment income receivable. . . . . . . 905 847 Amounts receivable from reinsurers. . . . . . . . 2,050 1,837 Amounts receivable from reinsured company . . . . 578 563 Agents balances (net of allowance for doubtful accounts of $120). . . . . . . . . . . . . . . 7,518 8,501 Installment premiums receivable . . . . . . . . . 9,439 8,514 Agents balances and installment premiums receivable from related parties. . . . . . . . 2,613 3,073 Premium finance receivables (net of unearned finance charges and allowance for credit losses of $111 and $109) . . . . . . . . . . . 5,071 4,836 Reinsurance receivable. . . . . . . . . . . . . . 20,394 19,699 Deferred acquisition costs. . . . . . . . . . . . 5,449 5,193 Property and equipment (net of accumulated depreciation of $1,834 and $1,725) . . . . . . 4,489 4,526 Other assets. . . . . . . . . . . . . . . . . . . 2,140 1,692 Total assets. . . . . . . . . . . . . . . . $134,475 $130,936 See accompanying notes to consolidated financial statements. 2 WALSHIRE ASSURANCE COMPANY AND SUBSIDIARIES Consolidated Balance Sheets, Continued (In thousands, except per share data) March 31, December 31, Liabilities and Shareholders Equity 1997 1996 (Unaudited) Liabilities: Unpaid claims and claim settlement expenses. $ 40,250 $ 36,551 Unearned premiums. . . . . . . . . . . . . . 33,193 33,250 Short-term notes payable . . . . . . . . . . 8,136 7,293 Long-term notes payable. . . . . . . . . . . 948 1,076 Deposits by insureds . . . . . . . . . . . . 2,273 2,380 Commissions payable to agents. . . . . . . . 1,614 1,681 Commissions payable to related parties . . . 255 401 Other liabilities. . . . . . . . . . . . . . _ 1,159 1,470 Total liabilities . . . . . . . . . . . . 87,828 84,102 Shareholders equity: Preferred stock, par value $.01 per share; 2,000 shares authorized; 128 shares issued and outstanding. . . . . . . . . . 1 1 Common stock, par value $.01 per share; 10,000 shares authorized; 4,663 and 4,651 shares issued and outstanding . . . 47 47 Additional paid-in capital . . . . . . . . . 38,727 38,648 Unrealized gains (losses) on investments available for sale (net of deferred taxes of $(230) and $21). . . . . . . . . . . . ( 484) 42 Retained earnings. . . . . . . . . . . . . . 8,356 8,096 Shareholders equity. . . . . . . . . . . 46,647 46,834 Total liabilities and shareholders equity . $134,475 $130,936 See accompanying notes to consolidated financial statements. 3 WALSHIRE ASSURANCE COMPANY AND SUBSIDIARIES Consolidated Statements of Income (In thousands, except per share data) Three Months Ended March 31,_____ 1997 1996 (Unaudited)(Unaudited) Revenues: Premiums earned . . . . . . . . . . . . . . . . . $15,646 $ 13,791 Premiums ceded. . . . . . . . . . . . . . . . . . ( 3,499) ( 3,055) Net premiums earned . . . . . . . . . . . . . . . 12,147 10,736 Net investment income . . . . . . . . . . . . . . 982 731 Net realized gains on investments . . . . . . . . 636 67 Other . . . . . . . . . . . . . . . . . . . . . . 163 175 Total revenues . . . . . . . . . . . . . . . . 13,928 11,709 Expenses: Claims and claim settlement expenses. . . . . . . 10,813 8,387 Reinsurance recoveries. . . . . . . . . . . . . . ( 1,720) ( 737) Net claims and claim settlement expenses. . . . . 9,093 7,650 Amortization of deferred acquisition costs. . . . 1,600 1,662 Underwriting, general and administrative expenses. . . . . . . . . . . . . . . . . . . . 2,236 1,813 Interest. . . . . . . . . . . . . . . . . . . . . 190 82 Total expenses . . . . . . . . . . . . . . . . 13,119 11,207 Income before income taxes . . . . . . . . . . . . . 809 502 Provision for income taxes . . . . . . . . . . . . . 142 5 Net income . . . . . . . . . . . . . . . . . . . . . 667 497 Less dividends on convertible preferred stock. . . . 104 108 Net income available for common stock. . . . . . . . $ 563 $ 389 Net income per common share and common equivalent share: Primary: Net income . . . . . . . . . . . . . . . . . . $ .12 $ .08 Weighted average shares outstanding. . . . . . 4,839 4,761 See accompanying notes to consolidated financial statements. 4 WALSHIRE ASSURANCE COMPANY AND SUBSIDIARIES Consolidated Statements of Cash Flows (In thousands) Three Months Ended March 31, _______ 1997 1996 (Unaudited) (Unaudited) Cash flows from operating activities: Net income . . . . . . . . . . . . . . . . . . . . $ 667 $ 497 Adjustments to reconcile net income to net cash provided by operating activities Net realized gains on investments. . . . . . . ( 636) ( 67) Decrease (increase) in assets: Accrued investment income receivable. . . . . ( 58) - Amounts receivable from reinsurers. . . . . . ( 213) 318 Amounts receivable from reinsured company . . ( 15) ( 68) Agents balances and installment premiums receivable . . . . . . . . . . . . . . . . . 58 (1,440) Agents balances and installment premiums receivable from related parties. . . . . . . 460 113 Premium finance receivables . . . . . . . . . ( 235) ( 116) Reinsurance receivables . . . . . . . . . . . ( 695) (1,419) Deferred acquisition costs. . . . . . . . . . ( 256) ( 138) Other, net. . . . . . . . . . . . . . . . . . ( 278) ( 607) (Decrease) increase in liabilities: Unpaid claims and claim settlement expenses . 3,699 3,309 Unearned premiums . . . . . . . . . . . . . . ( 57) 837 Deposits by insureds. . . . . . . . . . . . . ( 107) 559 Other, net. . . . . . . . . . . . . . . . . . ( 530) ( 654) Net cash provided by operating activities. . . . . 1,804 1,124 Cash flows from investing activities: Purchase of investments: Held to maturity . . . . . . . . . . . . . . . . (2,334) (1,377) Available for sale . . . . . . . . . . . . . . . (3,773) (4,575) Sale of investments: Available for sale . . . . . . . . . . . . . . . 6,766 810 Maturity of investments. . . . . . . . . . . . . . 805 1,253 Net sale (purchase) of short term and other investments . . . . . . . . . . . . . . . . . . . (4,212) 3,049 Purchase of property and equipment . . . . . . . . ( 147) ( 86) Sale of property and equipment . . . . . . . . . . 13 - Other, net . . . . . . . . . . . . . . . . . . . . 288 97 Net cash used in investing activities. . . . . . (2,594) ( 829) Cash flows from financing activities: Cash dividends paid. . . . . . . . . . . . . . . . ( 407) ( 372) Issuance of common stock . . . . . . . . . . . . . 78 153 Proceeds from notes payable . . . . . . . . . . . 844 226 Payment of notes payable . . . . . . . . . . . . . ( 130) ( 120) Net cash provided by (used in) financing activities. . . . . . . . . . . . . . . . . . . 385 ( 113) Net increase (decrease) in cash. . . . . . . . . . . ( 405) 182 Cash at beginning of the period. . . . . . . . . . . 637 99 Cash at end of the period. . . . . . . . . . . . . . $ 232 $ 281 Se e accompanying notes to consolidated financial statements. 5 WALSHIRE ASSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. The consolidated balance sheet as of March 31, 1997, the consolidated statements of income for the three months ended March 31, 1997 and 1996 and the consolidated statements of cash flows for the three months then ended have been prepared by Walshire Assurance Company ( the Company ) without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at March 31, 1997 and for all periods presented, have been made. 2. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted. It is suggested that these unaudited consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company s 1996 Annual Report. The results of operations for the period ended March 31, 1997 are not necessarily indicative of the results of operations for the full year. 3. Net income per common share is computed after recognition of preferred stock dividend requirements and is based on the weighted average number of shares of common stock and common stock equivalents outstanding. The number of common shares was increased by the number of shares issuable on the exercise of options when the market price of the common stock exceeds the exercise price of the options. This increase in the number of common shares was reduced by the number of common shares that are assumed to have been purchased with the proceeds from the exercise of the options; these purchases were assumed to have been made at the average price of the common stock during that part of the year when the market price of the common stock exceeded the exercise price of the options. FASB Statement No. 128, Earnings Per Share (Statement 128) supersedes APB Opinion No. 15, Earnings Per Share, and specifies the computation, presentation, and disclosure requirements for earnings per share (EPS) for entities with publicly held common stock or potential common stock. Statement 128 was issued to simplify the computation of EPS and to make the U.S. standard more compatible with the EPS standards of other countries and that of the International Accounting Standards Committee (IASC). It also requires dual presentation of Basic EPS and Diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the Basic EPS computation to the numerator and denominator of the Diluted EPS computation. Basic EPS, unlike Primary EPS, excludes all dilution while Diluted EPS, like Fully Diluted EPS, reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. For many entities Basic EPS will be higher than Primary EPS and Diluted EPS will be approximately the same as Fully Diluted EPS. Statement 128 is effective for financial statements for both interim and annual periods ending after December 15, 1997. Management does not expect that the adoption of Statement 128 will have a material impact on its earnings per share. 6 4. Forward Looking Statements. The information contained in this Quarterly Report contains forward looking statements (as such term is defined in the Securities Exchange Act of 1934 and the regulations thereunder), including without limitation, statements as to the allowances for doubtful accounts and credit losses, reserves for unpaid claims and claim settlement expenses, the classification of the Company's investment portfolio and other statements as to management's beliefs, expectations or opinions. Such forward looking statements are subject to risks and uncertainties and may be affected by various factors which may cause actual results to differ materially from those in the forward looking statements. Certain of these risks, uncertainties and other factors are discussed in this Quarterly Report or in the Company's Annual Report on Form 10-K for the year ended December 31, 1996, a copy of which may be obtained from the Company upon request and without charge (except for the exhibits thereto). 5. Investment Considerations. In analyzing whether to make, or to continue, an investment in the Company, investors should consider, among other factors, certain investment considerations more particularly described in the Company's Annual Report on Form 10-K for the year ended December 31, 1996. Item 2. Management s Discussion and Analysis of Financial Condition and Results of Operations Revenues for the three month period ended March 31, 1997 increased $2.2 million, or 19.0%, from revenues for the three month period ended March 31, 1996. This increase was primarily the result of an increase in net premiums earned and net realized gains on investments. Direct premiums written increased 13.4% in the three month period ended March 31, 1997 when compared to the same period in 1996. The following table sets forth the direct premiums written by the Company for the three month periods ended March 31, 1997 and 1996 by line of business. (In thousands) Three months ended March 31, 1997 1996 %Change Auto liability $ 7,626 $ 6,165 23.7 % Auto physical damage 4,898 5,532 ( 11.5)% Workers compensation 1,178 1,788 ( 34.2)% Inland marine 1,024 856 19.6 % Homeowners 590 - N/M Other 1,064 98 984.0 % Total $16,380 $14,439 13.4 % Expenses for the three month period ended March 31, 1997 increased $1.9 million, or 17.1%, over expenses for the three month period ended March 31, 1996. The increase was the result of increases in net claims and claim settlement expenses, and underwriting, general and administrative expenses. Increases in net claims and claim settlement expenses were the result of increases in earned premiums, as well as an increase in the statutory loss ratio from 72.6% in 1996 to 76.4% in 1997. Increases in underwriting, general and administrative expenses were primarily the result of increases in premiums written. The statutory combined ratio for the three month period ended March 31, 1997 was 107.8%, an increase from 101.9% for the three month period ended March 31, 1996. 7 Liquidity and Capital Resources Historically, the Company has generated funds sufficient to support its operations and has maintained a high degree of liquidity in its investment portfolio. The primary sources of funds to meet the demands of claim settlements and operating expenses are premiums, ceding commissions, investment income and existing lines of credit. The Company s funds generally are invested in securities with maturities intended to provide adequate funds to pay claims and expenses without the forced sale of investments. The Company believes that its current cash and short term investments, together with funds generated from operations, will be sufficient to meet its operating and capital requirements for the foreseeable future. Part II OTHER INFORMATION Item 1. Legal Proceedings None Item 2. Changes in Securities None Item 3. Defaults Upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K None 8 SIGNATURES Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. WALSHIRE ASSURANCE COMPANY (Registrant) DATE: May 14, 1997 /s/ Kenneth R. Taylor Kenneth R. Taylor President and Chief Executive Officer DATE: May 14, 1997 /s/ Gary J. Orndorff Gary J. Orndorff Vice President/Treasurer and Chief Financial Officer 9 EX-27 2
7 3-MOS DEC-31-1996 MAR-31-1997 33,780 19,500 19,521 9,283 105 0 73,597 232 2,628 5,449 134,475 40,250 33,193 0 2,273 9,084 47 0 1 46,599 134,475 12,147 982 636 163 9,093 1,600 2,236 809 142 0 0 0 0 667 .12 .12 22,342 8,612 318 2,311 4,770 40,250 0
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