-----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, OTS97oRJzlXlRx0oXBW/j2Xk4/LDvSTS1SbGvRSluDxHBk1koLiuWLfibpPAP5bO JxMu+v5hQu6xF17z2BJTVQ== 0000950130-97-002389.txt : 19970515 0000950130-97-002389.hdr.sgml : 19970515 ACCESSION NUMBER: 0000950130-97-002389 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970514 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MUTUAL RISK MANAGEMENT LTD CENTRAL INDEX KEY: 0000826918 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 000000000 STATE OF INCORPORATION: D0 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10760 FILM NUMBER: 97605180 BUSINESS ADDRESS: STREET 1: 44 CHURCH ST STREET 2: BERMUDA CITY: HAMILTON HM 12 BERMU STATE: D0 BUSINESS PHONE: 4412955688 MAIL ADDRESS: STREET 1: PO BOX 2064 STREET 2: BERMUDA CITY: HAMILTON HM HX STATE: D0 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] Quarterly report under section 13 or 15(d) of the Securities Exchange Act of 1934. For the 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 1-10760 MUTUAL RISK MANAGEMENT LTD. - -------------------------------------------------------------------------------- (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) BERMUDA NOT APPLICABLE - -------------------------------------------------------------------------------- (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 44 CHURCH STREET, HAMILTON HM 12, BERMUDA - -------------------------------------------------------------------------------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (441) 295-5688 - -------------------------------------------------------------------------------- (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) NOT APPLICABLE - -------------------------------------------------------------------------------- (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 [_] The number of outstanding shares of the registrant's Common Stock, $0.01 par value, as of March 31, 1997 was 19,096,107. MUTUAL RISK MANAGEMENT LTD. I N D E X PART I. FINANCIAL INFORMATION: ITEM 1. FINANCIAL STATEMENTS: Unaudited Consolidated Statements of Income for the three month periods ended March 31, 1997 and 1996 3 Consolidated Balance Sheets at March 31, 1997 (unaudited) and December 31, 1996 4 Unaudited Consolidated Statements of Cash Flows for the three month periods ended March 31, 1997 and 1996 5 Consolidated Statements of Shareholders' Equity at March 31, 1997 (unaudited) and December 31, 1996 6 Notes to Unaudited Consolidated Financial Statements at March 31, 1997 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 8-11 CONDITION AND RESULTS OF OPERATIONS PART II. OTHER INFORMATION: ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 12 SIGNATURES 13 EXHIBITS Exhibit 11 - Computation of Net Earnings per Common Share and Common Share Equivalents Exhibit 27 - Financial Data Schedule MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31 1997 1996 REVENUES Fee income $23,936,629 $19,666,747 Premiums earned 17,952,608 11,753,974 Net investment income 5,987,912 5,189,679 Realized capital (losses) gains (774,267) 4,968 Other income 84,270 77,437 ----------- ----------- TOTAL REVENUES 47,187,152 36,692,805 ----------- ----------- EXPENSES Losses and loss expenses incurred 7,663,380 7,139,924 Acquisition costs 10,604,741 4,671,124 Operating expenses 14,130,334 11,250,340 Interest expense 1,591,150 1,522,173 Other expenses 236,424 108,231 ----------- ----------- TOTAL EXPENSES 34,226,029 24,691,792 ----------- ----------- INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 12,961,123 12,001,013 Income taxes 2,276,100 2,612,222 ----------- ----------- INCOME FROM CONTINUING OPERATIONS 10,685,023 9,388,791 Minority interest 0 (207,186) ----------- ----------- NET INCOME 10,685,023 9,181,605 Preferred share dividends 41,510 40,588 ----------- ----------- NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $10,643,513 $ 9,141,017 =========== =========== EARNINGS PER COMMON SHARE Primary EPS $0.54 $0.48 =========== =========== Fully diluted EPS $0.53 $0.47 =========== =========== Dividends per share $0.09 $0.08 =========== =========== Weighted average number of Common Shares outstanding 19,611,317 19,039,953 =========== ===========
See Accompanying Notes to Unaudited Consolidated Financial Statements 3 MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31, 1997 1996 (UNAUDITED) ASSETS Cash and cash equivalents $ 115,480,237 $ 52,242,353 Investments : Held in available for sale account at fair value (Amortized cost $339,440,144; 1996 - 333,990,336 400,191,211 $399,871,107) -------------- -------------- TOTAL MARKETABLE INVESTMENTS 449,470,573 452,433,564 Investments in affiliates 633,374 535,504 Other investments 2,432,325 2,432,325 Investment income due and accrued 4,058,730 4,976,145 Accounts receivable 148,462,186 123,956,477 Reinsurance receivables 380,766,358 350,317,706 Deferred expenses 25,150,904 20,612,715 Prepaid reinsurance premiums 90,060,204 73,587,920 Fixed assets 11,283,997 9,382,000 Deferred tax benefit 6,760,934 3,361,571 Goodwill 22,678,316 14,956,786 Other assets 3,418,071 5,406,177 Assets held in separate accounts 587,102,064 576,711,687 -------------- -------------- TOTAL ASSETS $1,732,278,036 $1,638,670,577 ============== ============== LIABILITIES, REDEEMABLE PREFERRED & COMMON SHARES & SHAREHOLDERS' EQUITY LIABILITIES Reserve for losses and loss expenses $ 455,462,016 $ 418,975,493 Reserve for unearned premiums 118,219,100 93,741,088 Claims deposit liabilities 44,069,753 45,688,793 Accounts payable 145,779,259 133,265,076 Accrued expenses 4,093,016 5,708,286 Taxes payable 12,770,359 9,261,685 Prepaid fees 14,867,728 13,231,468 Debentures 123,801,097 122,210,991 Other liabilities 7,650,923 7,422,743 Liabilities related to separate 587,102,064 576,711,687 accounts -------------- -------------- TOTAL LIABILITIES 1,513,815,315 1,426,217,310 -------------- -------------- REDEEMABLE PREFERRED & COMMON SHARES Preferred Shares - Series B non-voting Redeemable - authorized and issued 2,951,835 (par value and redemption value $1.00) 2,951,835 2,951,835 Common Shares subject to redemption - 468,584 Common Shares (par value $0.01, redemption value $3.50 less subscription loans receivable - $767,522, plus interest received) 1,520,732 1,510,544 TOTAL REDEEMABLE PREFERRED & COMMON -------------- -------------- SHARES 4,472,567 4,462,379 -------------- -------------- SHAREHOLDERS' EQUITY Common Shares - Authorized 60,000,000 (par value $0.01) Issued 18,627,523 (1996 - 18,563,269) 186,275 185,633 Additional paid-in capital 81,345,359 79,997,919 Unrealized (loss) gain on investments (4,224,036) 47,682 - net of tax Retained earnings 136,682,556 127,759,654 -------------- -------------- TOTAL SHAREHOLDERS' EQUITY 213,990,154 207,990,888 -------------- -------------- TOTAL LIABILITIES, REDEEMABLE PREFERRED & COMMON SHARES & SHAREHOLDERS' EQUITY $1,732,278,036 $1,638,670,577 ============== ==============
See Accompanying Notes to Unaudited Consolidated Financial Statements 4 MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1997 1996 NET CASH FLOW FROM OPERATING ACTIVITIES Net income $ 10,685,023 $ 9,181,605 Items not affecting cash: Depreciation 842,026 651,611 Amortization of investments and net 431,991 (313,721) gain on sales Amortization of Convertible Debentures 1,590,106 1,509,801 Deferred tax benefit (1,901,168) 456,107 Other items 132,155 17,942 Net changes in non-cash balances relating to operations: Accounts receivable (24,505,709) 10,345,538 Reinsurance receivables (30,448,652) (12,882,953) Investment income due and accrued 917,415 (105,418) Deferred expenses (4,538,189) 167,132 Prepaid reinsurance premiums (16,472,284) (4,352,548) Other assets 1,988,106 375,529 Reserve for losses and loss expenses 36,486,523 7,400,449 Prepaid fees 1,636,260 717,737 Reserve for unearned premium 24,478,012 2,455,756 Accounts payable 12,514,183 1,796,892 Taxes payable 3,508,674 485,878 Accrued expenses (1,615,270) (1,687,789) Other liabilities 222,145 398,750 ------------ ------------ NET CASH FLOW FROM OPERATING ACTIVITIES 15,951,347 16,618,298 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of investments - Available for sale 94,983,103 9,628,959 Proceeds from maturity of investments - Available for sale 10,250,576 13,424,578 Fixed assets purchased (2,749,673) (1,401,909) Investments purchased - Available for sale (45,234,707) (37,773,048) Investment in affiliates and other investments (14,488) (258,593) Goodwill purchased (7,937,953) (3,562,474) Swap expense 0 (3,147,055) Other items 6,537 27,078 ------------ ------------ NET CASH FLOW FROM (APPLIED TO) 49,303,395 (23,062,464) INVESTING ACTIVITIES ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES Loan repaid 0 (30,633) Loan repayment & interest received 10,188 15,266 Proceeds from shares issued 1,348,082 3,277,710 Claims deposit liabilities (1,619,040) 5,237,190 Dividends paid (1,756,088) (1,598,702) ------------ ------------ NET CASH FLOW (APPLIED TO) FROM FINANCING ACTIVITIES (2,016,858) 6,900,831 ------------ ------------ Net increase in cash and cash equivalents 63,237,884 456,665 Cash and cash equivalents at beginning of period 52,242,353 79,669,981 ------------ ------------ CASH AND CASH EQUIVALENTS AT END OF PERIOD $115,480,237 $ 80,126,646 ============ ============ SUPPLEMENTAL CASH FLOW INFORMATION: Interest paid $ 1,044 $ 12,372 ============ ============ Income taxes paid, net $ 0 $ 0 ============ ============
See Accompanying Notes to Unaudited Consolidated Financial Statements 5 MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
SERIES B PREFERRED COMMON CHANGE IN SHARE SHARE OPENING SHARES UNREALIZED NET DIVIDENDS DIVIDENDS CLOSING BALANCE ISSUED GAIN (LOSS) INCOME DECLARED (1) DECLARED (2) BALANCE THREE MONTHS ENDED MARCH 31, 1997 (UNAUDITED) - --------------------------- Common Shares $ 185,633 $ 642 $ - $ - $ - $ - $ 186,275 Additional paid-in capital 79,997,919 1,347,440 - - - - 81,345,359 Unrealized gain (loss) on investments 47,682 - (4,271,718) - - - (4,224,036) Retained earnings 127,759,654 - - 10,685,023 (41,510) (1,720,611) 136,682,556 ------------ ----------- ----------- ----------- --------- ----------- ------------ TOTAL SHAREHOLDERS' EQUITY AT MARCH 31, 1997 $207,990,888 $ 1,348,082 $(4,271,718) $10,685,023 $ (41,510) $(1,720,611) $213,990,154 ============ =========== =========== =========== ========= =========== ============ YEAR ENDED DECEMBER 31, 1996 (3) - --------------------------- Common Shares $ 178,051 $ 7,582 $ - $ - $ - $ - $ 185,633 Additional paid-in capital 65,396,652 14,601,267 - - - - 79,997,919 Unrealized (loss) gain on investments 1,154,823 - (1,107,141) - - - 47,682 Retained earnings 98,773,622 - - 37,198,137 (166,041) (8,046,064) 127,759,654 ------------ ----------- ----------- ----------- --------- ----------- ------------ TOTAL SHAREHOLDERS' EQUITY AT DECEMBER 31, 1996 $165,503,148 $14,608,849 $(1,107,141) $37,198,137 $(166,041) $(8,046,064) $207,990,888 ============ =========== =========== =========== ========= =========== ============
(1) Dividend per share amounts were $.01 for the three months ended March 31, 1997 and $.06 for the year ended December 31, 1996. (2) Dividend per share amounts were $.09 for the three months ended March 31, 1997 and $.32 for the year ended December 31, 1996 (restated for stock split). (3) Effective May 31, 1996 the Company effected a four - for - three stock split recorded in the form of a stock dividend. 4,438,974 Common Shares were issued in respect of this split. Prior periods have been restated. See Accompanying Notes to Unaudited Consolidated Financial Statements 6 MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1997 1. INTERIM ACCOUNTING POLICY In the opinion of management of the Company, the accompanying unaudited consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position of the Company and the results of operations and cash flows for the three months ended March 31, 1997 and 1996. Although the Company believes that the disclosure in these financial statements is adequate to make the information presented not misleading certain information and footnote information normally included in financial statements prepared in accordance with generally accepted accounting principles has been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. Results of operations for the three months ended March 31, 1997 are not necessarily indicative of what operating results may be for the full year. 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996 The results of operations for the three months ended March 31, 1997, reflect a continuation of growth in Fee income and Net income due to the addition of new accounts, increased investment income and the inclusion of Small Business Underwriters ("SBU") for the first time in 1997. Net income available to common shareholders amounted to $10.6 million or $0.53 per Common Share for the three months ended March 31, 1997 on a fully diluted basis representing an increase of 13% over the corresponding period as shown in the tables below.
THREE MONTHS ENDED MARCH 31, 1997 1996 ---------------------------- ------------------------ ($ thousands except per share data) PER PER COMMON SHARE COMMON SHARE ------------------ ------------------- FULLY FULLY PRIMARY DILUTED PRIMARY DILUTED Net income excluding realized capital (losses) gains $11,158 $ 0.57 $ 0.55 $9,140 $ 0.48 $ 0.47 Realized capital (losses) gains (a) (514) (0.03) (0.02) 1 0.00 0.00 ------- ------- ------- ------ ------- ------- Net income available to Common Shareholders $10,644 $ 0.54 $ 0.53 $9,141 $ 0.48 $ 0.47 ======= ======= ======= ====== ======= ======= Average number of shares outstanding (000's) 19,611 23,101 19,040 22,529 ------- ------- ------- -------
(a) Net of tax. (b) 1996 per share amounts have been adjusted to reflect the four-for-three stock split which was effected May 31, 1996. Total revenues amounted to $47.2 million for the quarter ended March 31, 1997 representing an increase of 29% over the corresponding 1996 period. The following table shows the major components of Revenues for these periods.
(In thousands) TOTAL REVENUES THREE MONTHS ENDED MARCH 31, 1997 1996 INCREASE ------- ------- -------- Fee income $23,937 $19,667 22% Premiums earned 17,952 11,754 53% Net investment income 5,988 5,190 15% Realized capital (losses) gains (774) 5 N/M Other income 84 77 9% ------- ------- $47,187 $36,693 29% ======= ======= ==
Total Fee income increased 22% to $23.9 million for the first three months of 1997 as compared to $19.7 million in 1996. Pre-tax profit margins were 41% for the first quarter of 1997 as compared to 43% in the 1996 first quarter. Excluding the underwriting management portion of the Program Business segment 8 and the Financial Services segment, which generally have lower margins, pre-tax profit margins were 45% for the quarter as compared to 46% in 1996. The components of Fee income are illustrated by business segment in the following table:
(In thousands) FEE INCOME BY BUSINESS SEGMENT THREE MONTHS ENDED MARCH 31, 1997 1996 INCREASE ---- ---- -------- Corporate risk management fees $11,450 48% $12,600 64% (9%) Program business fees 9,168 38% 4,133 21% 122% Specialty brokerage fees 1,588 7% 1,425 7% 11% Financial services fees 1,731 7% 1,509 8% 15% ------- ---- ------- ---- --- Total $23,937 100% $19,667 100% 22% ======= ==== ======= ==== ===
Corporate Risk Management, the Company's original business segment, involves providing services to businesses and associations seeking to insure a portion of their risk in a loss sensitive Alternative Market structure. This segment, which accounted for 48% of total Fee income for the first three months of 1997 down from 64% in the corresponding 1996 period, has been the most affected by the extremely soft insurance market cycle for commercial risks. Corporate risk management fees decreased by 9% in the quarter to $11.5 million compared to $12.6 million in 1996 as a result of a continuation of the extremely soft market. Profit margins decreased to 44% for the first three months of 1997 compared to 46% in 1996. Program Business, the fastest growing segment, involves the Company replacing traditional insurers and acting as a conduit between producers of specialty books of business and reinsurers wishing to write that business. Program Business accounted for 38% of total Fee income for the first three months of 1997 compared to 21% in the corresponding 1996 period. Program Business fees increased by 122% in the first quarter to $9.2 million compared to $4.1 million in the first quarter of 1996 as a result of the continued expansion in this business and the acquisition of SBU on February 1, 1997. Profit margins, excluding underwriting management, were 48% for the first three months of both 1997 and 1996. Including underwriting management, profit margins were 40% for the quarter compared to 41% in 1996. Legion Insurance Company and Legion Indemnity, the Company's policy-issuing subsidiaries, added 35 new accounts in the first quarter of 1997 as compared to 31 in the first quarter of 1996. Legion's renewal rate was 86% for the first three months of 1997 as compared to 77% in the corresponding 1996 period. In California these companies added 4 new accounts in 1997 and their renewal rate increased to 88% as compared to 62% in the 1996 first quarter. They had 309 active accounts at March 31, 1997, including 30 in California, as compared to 254 at March 31, 1996, of which 20 were in California. Gross premiums written increased 130% to $131.8 million for the first three months of 1997 as compared to $57.3 million in 1996 primarily as a result of the number of Program Business accounts written. Program Business generally involves greater premium volume per unit than Corporate Risk Management business. Premiums earned increased 53% to $18.0 million in the first three months of 1997, as compared to $11.8 million in 1996, this increase was also primarily due to the expansion in the Program Business segment. 9 The Company's Specialty Brokerage business segment provides access to Alternative Risk Transfer insurers and reinsurers in Bermuda and Europe. Specialty Brokerage produced $1.6 million of total Fee income in the first quarter representing 7% of total Fee income. Specialty Brokerage fees grew by 11% in the first three months of 1997 from $1.4 million in the corresponding 1996 period. Renewal rates remained high in this segment at 82% for the first three months of 1997 as compared to 87% in 1996. Profit margins decreased to 40% in the first quarter from 46% for the 1996 first quarter primarily as a result of the Company's acquisition of all of the minority interest in one of these businesses in the second quarter of 1996. Although accretive to earnings per share, this acquisition lowered the business's profit margin by replacing a charge for minority interest, which is not part of the profit margin calculation, with a bonus expense which is. Financial Services, the Company's newest business segment, is built on the 1996 acquisition of MRM Financial Services Ltd., (formerly The Hemisphere Group Limited) which provides administrative services to offshore mutual funds and other companies. Financial Services fees accounted for 7% of total Fee income for the first three months of 1997 as opposed to 8% in the corresponding 1996 period. Fees from Financial Services increased in the quarter by 15% to $1.7 million over the 1996 corresponding period primarily as a result of an increase in the number of mutual funds under management from 70 at March 31, 1996 to 98 a year later. Renewal rates remained very high in this business segment at 99% for the first three months of 1997 as compared to 98% in 1996. Profit margins improved in 1997 to 25% in the quarter as opposed to 18% in the 1996 first quarter. Gross investment income increased by $0.6 million or 9% to $6.9 million in the first quarter of 1997 over the corresponding 1996 period as a result of an increase of 2% in gross invested assets to $454.9 million and a slight increase in the yield on these assets. Net investment income, after adjusting for investment income which is not included in the earnings of the Company, increased by 15% in the first quarter as a result of an increase of 10% in net invested assets to $391.2 million and an increase in the yield on these assets to 6.2% from 5.9% in the first quarter of 1996.
(In thousands) TOTAL EXPENSES THREE MONTHS ENDED MARCH 31, 1997 1996 INCREASE ------- -------- -------- Operating expenses $14,130 $11,250 26% Total insurance costs 18,268 11,811 55% Interest expense 1,591 1,522 5% Other expenses 237 109 118% ------- ------- --- Total $34,226 $24,692 39% ======= ======= ===
Total expenses increased 39% to $34.2 million for the three months as compared to $24.7 million in 1996. Operating expenses increased by 26% to $14.1 million for the three months from $11.3 million in the corresponding 1996 period partly as a result of the inclusion of SBU, for the first time in 1997, which added $.6 million or 6% of the increase in Operating expenses in the three months together with the growth in personnel and other expenses stemming from the increased business in each segment. The increase in Total insurance costs was the result of a 53% increase in Premiums earned in the first three months of 1997 over the corresponding 1996 period. The effective tax rate in the quarter was 17.6% compared to 21.8% in the corresponding 1996 period. This decline was due primarily to the tax benefit derived from the exercise of employee stock 10 options and an increase in earnings outside of the United States offset by a decrease in the Company's holding of tax exempt municipal bonds. FINANCIAL CONDITION AND LIQUIDITY Total assets increased to $1.7 billion at March 31, 1997 from $1.6 billion at December 31, 1996. Assets held in separate accounts which are principally managed assets attributable to participants in the Company's IPC Programs accounted for approximately 34% of Total assets at March 31, 1997 and 35% at December 31, 1996. Total Shareholders' equity increased to $214.0 million at March 31, 1997 from $208.0 million at December 31, 1996 primarily as a result of Net income in the quarter and the issuance of common stock offset by the movement on the unrealized loss on investments net of tax to $4.2 million at March 31, 1997 from an unrealized gain at December 31, 1996 of $.1 million. Return on equity was 20% for the first three months of 1997 compared to 22% in the corresponding 1996 period. 11 MUTUAL RISK MANAGEMENT LTD. PART II- OTHER INFORMATION Item 6. EXHIBITS AND REPORTS ON FORM 8-K A. Exhibit 11 - Computation of Net Earnings Per Common Share and Common Share Equivalents. Exhibit 27 - Financial Data Schedule B. Reports on Form 8-K. No reports on Form 8-K were filed during the three month period ended March 31, 1997. 12 SIGNATURES Pursuant to the rcquirements of the Securities Exchange Act of 1934, the Registrant has du1y caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MUTUAL RISK MANAGEMENT LTD. /s/ James C. Kelly -------------------------------------------- James C. Kelly SENIOR VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND AUTHORIZED SIGNATORY Date. May 12, 1997 13 EX-11 2 COMPUTATION OF EARNINGS PER SHARE Exhibit 11 MUTUAL RISK MANAGEMENT LTD. COMPUTATION OF EARNINGS PER SHARE
Three Months Ended March 31, 1997 1996 (In thousands except share and per share amounts) Net income available to common shareholders $ 10,644 $9,141 ======== ====== Weighted Averagc Common Shares Common shares outstanding 18,584,083 17,928,146 ---------- ---------- Common share equivalents associated with options and Redeemable Common Shares: Options 1,977,249 1,810,164 Redeemable Common Shares 468,584 468,584 --------- --------- 2,445,833 2,278,748 Common Shares purchased with proceeds from options exercised (1,418,599) (1,166,941) --------- --------- 1,027,234 1,111,807 ---------- ---------- Total Weighted Average Common Shares 19,611,317 19,039,953 ========== ========== Earnings Per Common Share: Net income available to common shareholders $O. 54 $0.48 ====== =====
EX-27 3 FINANCIAL DATA SCHEDULE
7 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MUTUAL RISK MANAGEMENT LTD.'S FINANCIAL STATEMENTS AS OF MARCH 31,1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000826918 MUTUAL RISK MANAGEMENT LTD. 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 333,990 0 0 0 0 0 333,990 115,480 380,766 25,151 1,732,278 455,462 118,219 0 44,070 123,801 2,952 0 186 213,804 1,732,278 17,952 5,988 (774) 24,021 7,663 10,605 15,958 12,961 2,276 10,685 0 0 0 10,644 0.54 0.53 0 0 0 0 0 0 0
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