-----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, EruxEOq2glZ9/o9GBkbJABKhGKzMaxPSkLUgnDMwN2DoxQzNJF2i9FFV3HyWwIyG SPqnyvfqf2IeI45at7xAsQ== 0000818155-95-000019.txt : 19951119 0000818155-95-000019.hdr.sgml : 19951119 ACCESSION NUMBER: 0000818155-95-000019 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 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: 95589532 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: September 30, 1995 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, York, PA 17402 (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 October 31, 1995: Common stock - $.01 Par Value 3,695,007 shares WALSHIRE ASSURANCE COMPANY AND SUBSIDIARIES INDEX PAGE NUMBER Part I FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets as of September 30, 1995 (unaudited) and December 31, 1994. . . . . . . . . . 2 Consolidated Statements of Income for the three months ended September 30, 1995 and 1994 (unaudited). . . . . . . . . . . . . . . . . . . . . 4 Consolidated Statements of Income for the nine months ended September 30, 1995 and 1994 (unaudited) . . . . 5 Consolidated Statements of Cash Flows for the nine months ended September 30, 1995 and 1994 (unaudited). 6 Notes to Consolidated Financial Statements (unaudited) . . . . . . . . . . . . . . . . . . . . 7 Item 2. Management s Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . 7 Part II OTHER INFORMATION . . . . . . . . . . . . . . . . . 9 Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . 9 Item 2. Changes in Securities . . . . . . . . . . . . . . . 9 Item 3. Defaults Upon Senior Securities . . . . . . . . . . 9 Item 4. Submission of Matters to Vote of Security Holders. . 9 Item 5. Other Information . . . . . . . . . . . . . . . . . 9 Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . 9 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 1 WALSHIRE ASSURANCE COMPANY AND SUBSIDIARIES Consolidated Balance Sheets (In thousands, except per share data) September 30, December 31, Assets 1995 1994 (Unaudited) Investments Held to maturity: Fixed maturities (market $18,349 and $16,140) . . . . . . . . . . . . . . . . $18,043 $16,508 Available for sale: Fixed maturities (cost $23,761 and $22,588) . . . . . . . . . . . . . . . . 23,740 21,664 Equity securities (cost: $8,638 and $8,263). . . . . . . . . . . . . . . . . 9,147 7,611 Short-term investments . . . . . . . . . . . . 2,126 3,889 Other investments. . . . . . . . . . . . . . . 1,609 868 Total investments . . . . . . . . . . . . . 54,665 50,540 Cash. . . . . . . . . . . . . . . . . . . . . . . 127 184 Accrued investment income receivable. . . . . . . 895 895 Amounts receivable from reinsurers. . . . . . . . 3,606 2,644 Amounts receivable from reinsured company . . . . 1,468 1,325 Agents balances (net of allowance for doubtful accounts of $100). . . . . . . . . . . . . . . 4,473 3,627 Installment premiums receivable . . . . . . . . . 3,648 3,633 Agents balances and installment premiums receivable from related parties. . . . . . . . 3,214 2,258 Premium finance receivable (net of unearned finance charges and allowance for credit losses of $136 and $123) . . . . . . . . . . . 5,608 4,678 Reinsurance receivable. . . . . . . . . . . . . . 6,794 6,355 Deferred acquisition costs. . . . . . . . . . . . 4,195 3,791 Property and equipment, (net of accumulated depreciation of $1,228 and $1,054) . . . . . . 3,352 2,656 Other assets. . . . . . . . . . . . . . . . . . . 157 482 Total assets. . . . . . . . . . . . . . . . $92,202 $83,068 See accompanying notes to consolidated financial statements. 2 WALSHIRE ASSURANCE COMPANY AND SUBSIDIARIES Consolidated Balance Sheets, Continued (In thousands, except per share data) Liabilities and Shareholders Equity September 30, December 31 1995 1994 (Unaudited) Liabilities: Unpaid claims, claim settlement expenses and claims drafts . . . . . . . . . . . . $18,048 $14,292 Unearned premiums. . . . . . . . . . . . . . 23,272 21,065 Short-term notes payable . . . . . . . . . . 1,230 3,435 Long-term notes payable. . . . . . . . . . . 1,601 1,921 Deposits by insureds . . . . . . . . . . . . 1,252 747 Commissions payable to agents. . . . . . . . 606 571 Commissions payable to related parties . . . 395 214 Other liabilities. . . . . . . . . . . . . . 1,047 809 Total liabilities . . . . . . . . . . . . 47,451 43,054 Shareholders equity Preferred stock, par value $.01 per share; 2,000 shares authorized; 142 shares issued and outstanding. . . . . . . . . . 1 1 Common stock, par value $.01 per share; 10,000 shares authorized; 3,678 and 3,638 shares issued and outstanding . . . 37 36 Additional paid-in capital . . . . . . . . . 26,057 25,751 Unrealized gain (loss) on investments available for sale (net of deferred tax expense (benefit) of $177 and ($534)) . . 311 ( 1,042) Retained earnings. . . . . . . . . . . . . . 18,345 15,268 Net shareholders equity. . . . . . . . . 44,751 40,014 Total liabilities and shareholders equity . $92,202 $83,068 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 September 30, 1995 1994 (Unaudited)(Unaudited) Revenues: Premiums earned . . . . . . . . . . . . . . . . . $11,452 $ 9,417 Premiums ceded. . . . . . . . . . . . . . . . . . ( 2,669) ( 1,883) Net premiums earned . . . . . . . . . . . . . . . 8,783 7,534 Net investment income . . . . . . . . . . . . . . 705 591 Net realized gains on investments . . . . . . . . 108 262 Other . . . . . . . . . . . . . . . . . . . . . . 183 151 Total revenues . . . . . . . . . . . . . . . . 9,779 8,538 Expenses: Claims and claim settlement expenses. . . . . . . 5,054 4,471 Reinsurance recoveries. . . . . . . . . . . . . . ( 129) ( 108) Net claims and claims settlement expenses . . . . 4,925 4,363 Amortization of deferred acquisition costs. . . . 891 1,461 Underwriting, general and administrative expenses. . . . . . . . . . . . . . . . . . . . 1,953 1,357 Interest. . . . . . . . . . . . . . . . . . . . . 65 55 Total expenses . . . . . . . . . . . . . . . . 7,834 7,236 Income before income taxes . . . . . . . . . . . . . 1,945 1,302 Provision for income taxes . . . . . . . . . . . . . 411 301 Net income . . . . . . . . . . . . . . . . . . . . . 1,534 1,001 Less dividends on convertible preferred stock. . . . 115 115 Net income available for common stock. . . . . . . . $ 1,419 $ 886 Net income per common share and common equivalent share: Primary: Net income . . . . . . . . . . . . . . . . . . $ .37 $ .24 Weighted average shares outstanding. . . . . . 3,874 3,740 Fully diluted: Net income . . . . . . . . . . . . . . . . . . $ .35 $ .24 Weighted average shares outstanding. . . . . . 4,406 3,740 See accompanying notes to consolidated financial statements. 4 WALSHIRE ASSURANCE COMPANY AND SUBSIDIARIES Consolidated Statements of Income (In thousands, except per share data) Nine Months Ended September 30, 1995 1994 (Unaudited)(Unaudited) Revenues: Premiums earned . . . . . . . . . . . . . . . . . $33,348 $26,277 Premiums ceded. . . . . . . . . . . . . . . . . . ( 7,523) ( 5,210) Net premiums earned . . . . . . . . . . . . . . . 25,825 21,067 Net investment income . . . . . . . . . . . . . . 2,040 1,639 Net realized gains on investments . . . . . . . . 247 658 Other . . . . . . . . . . . . . . . . . . . . . . 531 551 Total revenues . . . . . . . . . . . . . . . . 28,643 23,915 Expenses: Claims and claim settlement expenses. . . . . . . 16,040 12,893 Reinsurance recoveries. . . . . . . . . . . . . . ( 1,359) ( 983) Net claims and claims settlement expenses . . . . 14,681 11,910 Amortization of deferred acquisition costs. . . . 3,399 4,375 Underwriting, general and administrative expenses. . . . . . . . . . . . . . . . . . . . 5,115 4,031 Interest. . . . . . . . . . . . . . . . . . . . . 212 160 Total expenses . . . . . . . . . . . . . . . . 23,407 20,476 Income before income taxes . . . . . . . . . . . . . 5,236 3,439 Provision for income taxes . . . . . . . . . . . . . 1,100 792 Net income . . . . . . . . . . . . . . . . . . . . . 4,136 2,647 Less dividends on convertible preferred stock. . . . 345 259 Net income available for common stock. . . . . . . . $ 3,791 $ 2,388 Net income per common share and common equivalent share: Primary: Net income . . . . . . . . . . . . . . . . . . $ .99 $ .64 Weighted average shares outstanding. . . . . . 3,825 3,722 Fully diluted: Net income . . . . . . . . . . . . . . . . . . $ .94 $ .64 Weighted average shares outstanding. . . . . . 4,386 3,734 See accompanying notes to consolidated financial statements. 5 WALSHIRE ASSURANCE COMPANY AND SUBSIDIARIES Consolidated Statements of Cash Flows (In thousands) Nine Months Ended September 30, 1995 1994 (Unaudited) (Unaudited) Cash flows from operating activities: Net income . . . . . . . . . . . . . . . . . . . . $ 4,136 $ 2,647 Adjustments to reconcile net income to net cash provided by operating activities Net realized gains on investments. . . . . . . ( 247) ( 658) Increase (Decrease) in assets: Accrued investment income receivable. . . . . - 2 Amounts receivable from reinsurers. . . . . . ( 962) ( 891) Amounts receivable from reinsured company . . ( 143) 35 Agents balances and installment premiums receivable . . . . . . . . . . . . . . . . . ( 846) ( 796) Agents balances and installment premiums receivable from related parties. . . . . . . ( 971) ( 161) Premium finance receivables . . . . . . . . . ( 930) 6 Reinsurance receivables . . . . . . . . . . . ( 439) ( 895) Deferred acquisition costs. . . . . . . . . . ( 404) ( 260) Other, net. . . . . . . . . . . . . . . . . . 669 306 Increase (Decrease) in liabilities: Unpaid claims, claim settlement expenses and claim drafts . . . . . . . . . . . . . . . . 3,756 2,911 Unearned premiums . . . . . . . . . . . . . . 2,207 1,778 Deposits by insureds. . . . . . . . . . . . . 505 ( 246) Other, net. . . . . . . . . . . . . . . . . . 460 ( 80) Net cash provided by operating activities. . . . . 6,791 3,698 Cash flows from investing activities: Purchase of investments: Held to maturity . . . . . . . . . . . . . . . . (2,410) ( 5,711) Available for sale . . . . . . . . . . . . . . . (5,440) (11,911) Sale of investments: Available for sale . . . . . . . . . . . . . . . 3,929 7,542 Maturity of investments. . . . . . . . . . . . . . 785 1,925 Net (purchase) sale of short term and other investments. . . . . . . . . . . . . . . . . . . 1,042 ( 775) Purchase of property and equipment . . . . . . . . (1,176) ( 280) Sale of property and equipment . . . . . . . . . . 136 15 Other, net . . . . . . . . . . . . . . . . . . . . ( 436) 651 Net cash used in investing activities. . . . . . (3,570) ( 8,544) Cash flows from financing activities: Cash dividends paid. . . . . . . . . . . . . . . . (1,060) ( 764) Issuance of common stock . . . . . . . . . . . . . 307 233 Issuance of preferred stock. . . . . . . . . . . . - 6,777 Proceeds from notes payable. . . . . . . . . . . . 750 - Payment of notes payable . . . . . . . . . . . . . (3,275) ( 1,240) Net cash provided by (used in) financing activities . . . . . . . . . . . . . . . . . . (3,278) 5,006 Net increase (decrease) in cash . . . . . . . . . . ( 57) 160 Cash at beginning of the period. . . . . . . . . . . 184 56 Cash at end of the period. . . . . . . . . . . . . . $ 127 $ 216 See accompanying notes to consolidated financial statements. 6 W ALSHIRE AND SUBSIDIARIES N OTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. The consolidated balance sheet as of September 30, 1995, the consolidated statements of income for the three and nine months ended September 30, 1995 and 1994, and the consolidated statements of cash flows for the nine 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 September 30, 1995 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 1994 Annual Report dated March 3, 1995. The results of operation for the period ended September 30, 1995 are not necessarily indicative of the results of operations for the full year. 3. Primary net income per 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. Fully diluted net income per share was determined on the assumption that the convertible preferred stock was converted and the outstanding stock options were exercised on January 1, 1995. As to the preferred stock, net income was adjusted for dividends declared. As to the options, outstanding shares were increased as described above except that purchases of common stock are assumed to have been made at the higher of the period-end price or 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. Item 2. Management s Discussion and Analysis of Financial Condition and Results of Operations Revenues for the three and nine month periods ended September 30, 1995 increased $1.2 million and $4.7 million, or 14.5% and 19.8%, respectively, from revenues for the three and nine month periods ended September 30, 1994. These increases were primarily the results of increases in premiums earned. Direct premiums written increased 13.7% and 27.0% in the three and nine month periods ended September 30, 1995 when compared to the same periods in 1994. The following tables set forth the direct premiums written by the insurance subsidiaries of the Company for the three and nine month periods ended September 30, 1995 and 1994 by line of business. 7 (In thousands) Three months ended September 30, 1995 1994 %Change Auto liability $ 4,532 $ 3,793 19.5% Auto physical damage 4,458 4,245 5.0% Workers Compensation 768 531 44.6% Inland marine 545 487 11.9% Other 269 239 12.6% Total $10,572 $ 9,295 13.7% (In thousands) Nine months ended September 30, 1995 1994 %Change Auto liability $15,927 $12,207 30.5% Auto physical damage 13,540 12,458 8.7% Workers Compensation 3,316 1,092 203.7% Inland marine 1,912 1,541 24.1% Other 684 549 24.6% Total $35,379 $27,847 27.0% Expenses for the three and nine month periods ended September 30, 1995 increased $.6 million and $2.9 million, or 8.3% and 14.3%, respectively, over expenses for the three and nine month periods ended September 30, 1994. The increases were primarily the results of increases in net claims and claim settlement expenses and underwriting, general and administrative expenses, offset, in part, by a decrease in amortization of deferred acquisition costs. Increases in net claims and claim settlement expenses were primarily the result of increases in earned premiums. The statutory loss ratio for the three month period ended September 30, 1995, was 57.7%, a slight decrease from 59.5% for the same period in 1994. The statutory loss ratio for the nine month period ended September 30, 1995 was 59.3%, a slight increase from 58.1% for the same period in 1994. Increases in underwriting, general and administrative expenses were primarily the result of increases in premiums written. The decrease in the amortization of deferred acquisition costs was primarily the result of the increase in ceding commissions, offset, in part, by an increase in net premiums earned. The statutory combined ratio for the three and nine month periods ended September 30, 1995 were 87.3% and 87.1%, a decrease from 91.3% and 91.5% for the three and nine month periods ended September 30, 1994. 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 and investment income. 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. 8 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 Matter to a Vote of Security Holders None Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K None 9 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: November 6, 1995 /s/ Kenneth R. Taylor Kenneth R. Taylor President and Chief Executive Officer DATE: November 6, 1995 /s/ Gary J. Orndorff Gary J. Orndorff Vice President/Treasurer and Chief Financial Officer 10 EX-27 2
7 9-MOS DEC-31-1995 SEP-30-1995 23,740 18,043 18,349 9,147 119 0 54,665 127 5,074 4,195 92,202 18,048 23,272 0 1,252 2,831 37 0 1 44,713 92,202 25,825 2,040 247 531 14,681 3,399 5,115 5,236 1,100 0 0 0 0 4,136 .99 .94 14,292 0 0 0 0 0 0
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