-----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, R4vZ5jzkV0r5jFcZr9rA5rfJ5SJiyGj16cyZbkHMdLhdRqRYwGB2Lo0dVv/kgt0m Jf5LFkQFs1WDxCk6diF1wQ== 0000818155-96-000012.txt : 19960517 0000818155-96-000012.hdr.sgml : 19960517 ACCESSION NUMBER: 0000818155-96-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 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: 96565146 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, 1996 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 April 30, 1996: Common stock - $.01 Par Value 4,099,166 shares WALSHIRE ASSURANCE COMPANY AND SUBSIDIARIES INDEX PAGE NUMBER Part I FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets as of March 31, 1996 (unaudited) and December 31, 1995. . . . . . . . . . 2 Consolidated Statements of Income for the three months ended March 31, 1996 and 1995 (unaudited) . . 4 Consolidated Statements of Cash Flows for the three months ended March 31, 1996 and 1995 (unaudited) . . 5 Notes to Consolidated Financial Statements (unaudited) . . . . . . . . . . . . . . . . . . . . 6 Item 2. Management s Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . 6 Part II OTHER INFORMATION . . . . . . . . . . . . . . . . . 7 Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . 7 Item 2. Changes in Securities . . . . . . . . . . . . . . . 7 Item 3. Defaults Upon Senior Securities . . . . . . . . . . 7 Item 4. Submission of Matters to Vote of Security Holders. . 7 Item 5. Other Information . . . . . . . . . . . . . . . . . 7 Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . 7 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 1 WALSHIRE ASSURANCE COMPANY AND SUBSIDIARIES Consolidated Balance Sheets (In thousands, except per share data) March 31, December 31, Assets 1996 1995 (Unaudited) Investments: Held to maturity: Fixed maturities (fair value $15,738 and $15,712) . . . . . . . . . . . . . . . . $ 15,671 $ 15,217 Available for sale: Fixed maturities (cost $29,421 and $27,007) . . . . . . . . . . . . . . . . 29,214 27,215 Equity securities (cost $9,171 and $8,189). . . . . . . . . . . . . . . . . 9,872 8,720 Short-term investments . . . . . . . . . . . . 1,928 5,191 Other investments. . . . . . . . . . . . . . . 2,093 1,867 Total investments . . . . . . . . . . . . . 58,778 58,210 Cash. . . . . . . . . . . . . . . . . . . . . . . 281 99 Accrued investment income receivable. . . . . . . 864 864 Amounts receivable from reinsurers. . . . . . . . 2,997 3,315 Amounts receivable from reinsured company . . . . 663 595 Agents balances (net of allowance for doubtful accounts of $100). . . . . . . . . . . . . . . 6,930 5,501 Installment premiums receivable . . . . . . . . . 5,976 5,965 Agents balances and installment premiums receivable from related parties. . . . . . . . 3,581 3,694 Premium finance receivables (net of unearned finance charges and allowance for credit losses of $146 and $135) . . . . . . . . . . . 6,650 6,534 Reinsurance receivable. . . . . . . . . . . . . . 10,034 8,615 Deferred acquisition costs. . . . . . . . . . . . 4,969 4,831 Property and equipment (net of accumulated depreciation of $1,406 and $1,284) . . . . . . 3,233 3,270 Other assets. . . . . . . . . . . . . . . . . . . 864 134 Total assets. . . . . . . . . . . . . . . . $105,820 $101,627 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 1996 1995 (Unaudited) Liabilities: Unpaid claims and claim settlement expenses. $ 23,462 $ 20,153 Unearned premiums. . . . . . . . . . . . . . 28,392 27,555 Short-term notes payable . . . . . . . . . . 2,477 2,250 Long-term notes payable. . . . . . . . . . . 1,361 1,481 Deposits by insureds . . . . . . . . . . . . 2,047 1,488 Commissions payable to agents. . . . . . . . 930 1,049 Commissions payable to related parties . . . 374 473 Other liabilities. . . . . . . . . . . . . . _ 719 1,164 Total liabilities . . . . . . . . . . . . 59,762 55,613 Shareholders equity: Preferred stock, par value $.01 per share; 2,000 shares authorized; 142 shares issued; 133 and 138 shares outstanding. . 1 1 Common stock, par value $.01 per share; 10,000 shares authorized; 4,099 and 4,064 shares issued and outstanding . . . 41 41 Additional paid-in capital . . . . . . . . . 32,070 31,918 Unrealized gain on investments available for sale (net of deferred taxes of $168 and $181) . . . . . . . . . . . . . . . . 326 558 Retained earnings. . . . . . . . . . . . . . 13,620 13,496 Shareholders equity. . . . . . . . . . . 46,058 46,014 Total liabilities and shareholders equity . $105,820 $101,627 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,_____ 1996 1995 (Unaudited)(Unaudited) Revenues: Premiums earned . . . . . . . . . . . . . . . . . $13,791 $ 10,540 Premiums ceded. . . . . . . . . . . . . . . . . . ( 3,055) ( 2,302) Net premiums earned . . . . . . . . . . . . . . . 10,736 8,238 Net investment income . . . . . . . . . . . . . . 731 662 Net realized gains on investments . . . . . . . . 67 66 Other . . . . . . . . . . . . . . . . . . . . . . 175 168 Total revenues . . . . . . . . . . . . . . . . 11,709 9,134 Expenses: Claims and claim settlement expenses. . . . . . . 8,387 4,860 Reinsurance recoveries. . . . . . . . . . . . . . ( 737) ( 98) Net claims and claim settlement expenses. . . . . 7,650 4,762 Amortization of deferred acquisition costs. . . . 1,662 1,196 Underwriting, general and administrative expenses. . . . . . . . . . . . . . . . . . . . 1,813 1,518 Interest. . . . . . . . . . . . . . . . . . . . . 82 78 Total expenses . . . . . . . . . . . . . . . . 11,207 7,554 Income before income taxes . . . . . . . . . . . . . 502 1,580 Provision for income taxes . . . . . . . . . . . . . 5 332 Net income . . . . . . . . . . . . . . . . . . . . . 497 1,248 Less dividends on convertible preferred stock. . . . 108 115 Net income available for common stock. . . . . . . . $ 389 $ 1,133 Net income per common share and common equivalent share: Primary: Net income . . . . . . . . . . . . . . . . . . $ .09 $ .27 Weighted average shares outstanding. . . . . . 4,328 4,147 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, _______ 1996 1995 (Unaudited) (Unaudited) Cash flows from operating activities: Net income . . . . . . . . . . . . . . . . . . . . $ 497 $ 1,248 Adjustments to reconcile net income to net cash provided by operating activities Net realized gains on investments. . . . . . . ( 67) ( 66) Decrease (increase) in assets: Accrued investment income receivable. . . . . - ( 12) Amounts receivable from reinsurers. . . . . . 318 285 Amounts receivable from reinsured company . . ( 68) ( 115) Agents balances and installment premiums receivable . . . . . . . . . . . . . . . . . (1,440) ( 624) Agents balances and installment premiums receivable from related parties. . . . . . . 113 ( 324) Premium finance receivables . . . . . . . . . ( 116) ( 874) Reinsurance receivables . . . . . . . . . . . (1,419) 224 Deferred acquisition costs. . . . . . . . . . ( 138) ( 104) Other, net. . . . . . . . . . . . . . . . . . ( 607) 121 (Decrease) increase in liabilities: Unpaid claims, claim settlement expenses and claim drafts outstanding . . . . . . . . . . 3,309 638 Unearned premiums . . . . . . . . . . . . . . 837 920 Deposits by insureds. . . . . . . . . . . . . 559 219 Other, net. . . . . . . . . . . . . . . . . . ( 654) ( 94) Net cash provided by operating activities. . . . . 1,124 1,442 Cash flows from investing activities: Purchase of investments: Held to maturity . . . . . . . . . . . . . . . . (1,377) ( 902) Available for sale . . . . . . . . . . . . . . . (4,575) (1,888) Sale of investments: Available for sale . . . . . . . . . . . . . . . 810 1,192 Maturity of investments. . . . . . . . . . . . . . 1,253 486 Net sale of short term and other investments . . . 3,049 3,466 Purchase of property and equipment . . . . . . . . ( 86) ( 185) Sale of property and equipment . . . . . . . . . . - 31 Other, net . . . . . . . . . . . . . . . . . . . . 97 ( 224) Net cash provided by (used in) investing activities . . . . . . . . . . . . . . . . . . ( 829) 1,976 Cash flows from financing activities: Cash dividends paid. . . . . . . . . . . . . . . . ( 372) ( 352) Issuance of common stock . . . . . . . . . . . . . 153 79 Proceeds from notes payable . . . . . . . . . . . 226 - Payment of notes payable . . . . . . . . . . . . . ( 120) (3,036) Net cash used in financing activities. . . . . . ( 113) (3,309) Net increase in cash . . . . . . . . . . . . . . . . 182 109 Cash at beginning of the period. . . . . . . . . . . 99 184 Cash at end of the period. . . . . . . . . . . . . . $ 281 $ 293 Se e accompanying notes to consolidated financial statements. 5 WA LSHIRE ASSURANCE COMPANY AND SUBSIDIARIES NO TES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. The consolidated balance sheet as of March 31, 1996, the consolidated statements of income for the three months ended March 31, 1996 and 1995, 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, 1996 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 1995 Annual Report dated February 29, 1996. The results of operations for the period ended March 31, 1996 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. Item 2. Management s Discussion and Analysis of Financial Condition and Results of Operations Revenues for the three month period ended March 31, 1996 increased $2.6 million, or 28.2%, from revenues for the three month period ended March 31, 1995. This increase was primarily the result of an increase in premiums earned. Direct premiums written increased 26.7% in the three month period ended March 31, 1996 when compared to the same period in 1995. The following table sets forth the direct premiums written by the Company for the three month periods ended March 31, 1996 and 1995 by line of business. (In thousands) Three months ended March 31, 1996 1995 %Change Auto liability $ 6,165 $ 4,988 23.6 % Auto physical damage 5,532 4,285 29.1 % Workers compensation 1,788 1,215 47.2 % Inland marine 856 682 25.5 % Other 98 230 (57.4)% Total $14,439 $11,400 26.7 % 6 Expenses for the three month period ended March 31, 1996 increased $3.7 million, or 48.4%, 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, amortization of deferred acquisition costs 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 60.8% in 1995 to 72.6% in 1996. In the first quarter of 1996, claims were negatively impacted as a result of the most severe winter weather conditions in recent history. The increase in the amortization of deferred acquisition costs was primarily the result of the increase in net premiums earned. 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, 1996 was 101.9%, an increase from 88.0% for the three month period ended March 31, 1995. 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. 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 7 SIGNA TURES 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, 1996 /s/ Kenneth R. Taylor Kenneth R. Taylor President and Chief Executive Officer DATE: May 14, 1996 /s/ Gary J. Orndorff Gary J. Orndorff Vice President/Treasurer and Chief Financial Officer 8 EX-27 2
7 3-MOS DEC-31-1996 MAR-31-1996 29,214 15,671 15,738 9,872 114 0 58,778 281 3,660 4,969 105,820 23,462 28,392 0 2,047 3,837 41 0 1 46,016 105,820 13,791 731 67 175 7,650 1,662 1,813 502 5 0 0 0 0 497 .09 .09 13,148 7,344 306 2,327 3,631 23,353 0
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