-----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, ThXVZphW6IiJdiFXfzF1jrYzmibS3KnOnysQq3PmMNsWBrbGPwu4K4HgaqEaqIrk wSP/l373LSwciIomj6TnaQ== 0000950130-98-002613.txt : 19980515 0000950130-98-002613.hdr.sgml : 19980515 ACCESSION NUMBER: 0000950130-98-002613 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980514 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: SEC FILE NUMBER: 001-10760 FILM NUMBER: 98619597 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, 1998. 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, 1998 was 39,054,526. MUTUAL RISK MANAGEMENT LTD. I N D E X PART I. FINANCIAL INFORMATION: ITEM 1. FINANCIAL STATEMENTS: Unaudited Consolidated Statements of Income and Comprehensive Income for the three month periods ended March 31, 1998 and 1997 3 Consolidated Balance Sheets at March 31, 1998 (unaudited) and December 31, 1997 4 Unaudited Consolidated Statements of Cash Flows for the three month periods ended March 31, 1998 and 1997 5 Consolidated Statements of Shareholders' Equity at March 31, 1998 (unaudited) and December 31, 1997 6 Notes to Unaudited Consolidated Financial Statements at March 31, 1998 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 8-11 CONDITION AND RESULTS OF OPERATIONS ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT 11 MARKET RISK 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 AND COMPREHENSIVE INCOME
THREE MONTHS ENDED MARCH 31 1998 1997 REVENUES Fee income $31,555,510 $23,936,629 Premiums earned 28,929,194 17,952,608 Net investment income 7,947,293 5,987,912 Realized capital losses (212,653) (774,267) Other (losses) income (131,302) 84,270 ----------- ----------- TOTAL REVENUES 68,088,042 47,187,152 ----------- ----------- EXPENSES Losses and loss expenses incurred 21,498,990 7,663,380 Acquisition costs 8,095,869 10,604,741 Operating expenses 19,672,045 14,130,334 Interest expense 1,674,682 1,591,150 Other expenses 363,183 236,424 ----------- ----------- TOTAL EXPENSES 51,304,769 34,226,029 ----------- ----------- INCOME BEFORE INCOME TAXES 16,783,273 12,961,123 Income taxes 2,251,839 2,276,100 ----------- ----------- NET INCOME 14,531,434 10,685,023 Preferred share dividends - 41,510 ----------- ----------- NET INCOME AVAILABLE TO COMMON SHAREHOLDERS 14,531,434 10,643,513 Other comprehensive income, net of tax: Unrealized loss on investments 228,470 4,271,718 ----------- ----------- COMPREHENSIVE INCOME $14,302,964 $ 6,371,795 =========== =========== EARNINGS PER COMMON SHARE: Net income available to Common Shareholders: Basic EPS $0.38 $0.29 =========== =========== Diluted EPS $0.34 $0.26 =========== =========== Dividends per share $0.05 $0.04 =========== =========== Weighted average number of Common
3 Shares outstanding - basic 37,946,018 37,168,166 =========== =========== Weighted average number of Common Shares outstanding - diluted 47,760,342 46,201,434 =========== =========== See Accompanying Notes to Unaudited Consolidated Financial Statements 4 MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31, 1998 1997 (UNAUDITED) ASSETS Cash and cash equivalents $ 74,546,466 $ 78,938,489 Investments : Held in available for sale account at fair value (Amortized cost $399,001,653; 1997 - $389,292,297) 404,088,495 395,143,321 -------------- -------------- TOTAL MARKETABLE INVESTMENTS 478,634,961 474,081,810 Other investments 13,139,219 9,428,142 Investment income due and accrued 3,803,640 3,768,168 Accounts receivable 189,939,289 160,364,395 Reinsurance receivables 697,459,176 630,696,642 Deferred expenses 26,485,996 29,992,266 Prepaid reinsurance premiums 167,434,408 156,017,482 Fixed assets 15,366,955 13,373,439 Deferred tax benefit 5,559,398 4,607,251 Goodwill 33,041,409 32,915,932 Other assets 7,041,724 6,698,466 Assets held in separate accounts 652,693,630 625,216,561 -------------- -------------- TOTAL ASSETS $2,290,599,805 $2,147,160,554 ============== ============== LIABILITIES, REDEEMABLE COMMON SHARES & SHAREHOLDERS' EQUITY LIABILITIES Reserve for losses and loss expenses $ 795,539,100 $ 715,699,133 Reserve for unearned premiums 198,395,380 188,388,666 Claims deposit liabilities 42,144,735 42,444,900 Accounts payable 144,094,441 135,145,220 Accrued expenses 6,249,164 7,398,174 Taxes payable 17,592,299 14,994,581 Prepaid fees 17,524,863 19,268,277 Debentures 130,385,961 128,711,279 Other liabilities 8,846,480 8,166,599 Liabilities related to separate accounts 652,693,630 625,216,561 -------------- -------------- TOTAL LIABILITIES 2,013,466,053 1,885,433,390 -------------- -------------- REDEEMABLE COMMON SHARES Common Shares subject to redemption - 937,168 Common Shares (par value $0.01, redemption value $1.75 subscription loans receivable - $383,761, plus interest received) - 1,929,032 -------------- -------------- TOTAL REDEEMABLE COMMON SHARES - 1,929,032 -------------- -------------- SHAREHOLDERS' EQUITY Common Shares - Authorized 60,000,000 (par value $0.01) Issued 39,054,526 (1997 - 37,876,883) 390,545 378,769 Additional paid-in capital 92,079,396 87,101,966 Other Comprehensive income - Unrealized gain on investments - net of tax 3,806,927 4,035,397 Retained earnings 180,856,884 168,282,000 -------------- -------------- TOTAL SHAREHOLDERS' EQUITY 277,133,752 259,798,132 -------------- -------------- TOTAL LIABILITIES, REDEEMABLE COMMON SHARES & SHAREHOLDERS' EQUITY $2,290,599,805 $2,147,160,554 ============== ==============
See Accompanying Notes to Unaudited Consolidated Financial Statements 5 MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1998 1997 NET CASH FLOW FROM OPERATING ACTIVITIES Net income $ 14,531,434 $ 10,685,023 Items not affecting cash: Depreciation 1,282,641 842,026 Amortization of investments and net gain on sales 1,585,599 431,991 Amortization of Convertible Debentures 1,674,682 1,590,106 Deferred tax benefit (1,708,130) (1,901,168) Other items 466,994 132,155 Net changes in non-cash balances relating to operations: Accounts receivable (29,574,894) (24,505,709) Reinsurance receivables (66,762,534) (30,448,652) Investment income due and accrued (35,472) 917,415 Deferred expenses 3,506,270 (4,538,189) Prepaid reinsurance premiums (11,416,926) (16,472,284) Other assets (343,258) 1,988,106 Reserve for losses and loss expenses 79,839,967 36,486,523 Prepaid fees (1,743,415) 1,636,260 Reserve for unearned premium 10,006,714 24,478,012 Accounts payable 8,949,221 12,514,183 Taxes payable 2,597,717 3,508,674 Accrued expenses (1,149,010) (1,615,270) Other liabilities 664,945 222,145 ------------ ------------ NET CASH FLOW FROM OPERATING ACTIVITIES 12,372,545 15,951,347 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of investments - Available for sale 7,607,112 94,983,103 Proceeds from maturity of investments - Available for sale 17,304,258 10,250,576 Fixed assets purchased (3,278,376) (2,749,673) Investments purchased - Available for sale (36,206,326) (45,234,707) Investment in affiliates and other investments (2,555,251) (14,488) Goodwill purchased (456,160) (7,937,953) Other items 1,776 6,537 ------------ ------------ NET CASH FLOW (APPLIED TO) FROM INVESTING ACTIVITIES (17,582,967) 49,303,395 ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES Loan repayment & interest received 388,683 10,188 Proceeds from shares issued 2,671,491 1,348,082 Claims deposit liabilities (300,165) (1,619,040) Dividends paid (1,941,610) (1,756,088) ------------ ------------ NET CASH FLOW FROM (APPLIED TO) FINANCING ACTIVITIES ------------ ------------------- 818,399 (2,016,858) ------------ ------------ Net (decrease) increase in cash and cash equivalents (4,392,023) 63,237,884 Cash and cash equivalents at beginning of period 78,938,489 52,242,353 ------------ ------------ Cash and cash equivalents at end of period $ 74,546,466 $115,480,237 ============ ============ SUPPLEMENTAL CASH FLOW INFORMATION: Interest paid $ 0 $ 1,044 ============ ============ Income taxes paid, net $ 734,816 $ 0 ============ ============
See Accompanying Notes to Unaudited Consolidated Financial Statements 6 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, 1998 (unaudited) - --------------------------- Common Shares $ 378,769 $ 11,776 $ - $ - $ - $ - $ 390,545 Additional paid-in capital 87,101,966 4,977,430 - - - - 92,079,396 Other comprehensive income - Unrealized gain on investments - net of tax 4,035,397 - (228,470) - - - 3,806,927 Retained earnings 168,282,000 - - 14,531,434 - (1,956,550) 180,856,884 ------------ ----------- ------------ -------------- ---------- ------------- ------------ Total Shareholders' Equity AT MARCH 31, 1998 $259,798,132 $4,989,206 $ (228,470) $14,531,434 $ - $(1,956,550) $277,133,752 ============ =========== =========== =========== ============ ============ ============ Year Ended December 31, 1997 (3) - --------------------------------- Common Shares $ 371,265 $ 7,504 $ - $ - $ - $ - $ 378,769 Additional paid-in capital 79,812,287 7,289,679 - - - - 87,101,966 Other comprehensive income - Unrealized gain on investments - net of tax 47,682 - 3,987,715 - - - 4,035,397 Retained earnings 127,759,654 - - 47,938,424 (104,929) (7,311,149) 168,282,000 ------------ ------------- ------------- ----------- ----------- ----------- ------------ TOTAL SHAREHOLDERS' EQUITY AT DECEMBER 31, 1997 $207,990,888 $7,297,183 $3,987,715 $47,938,424 $(104,929) $(7,311,149) $259,798,132 ============ =========== ============== ============= ========== ============== ============
(1) Dividend per share amounts were $ nil for the three months ended March 31, 1998 and $.04 for the year ended December 31, 1997. (2) Dividend per share amounts were $.05 for the three months ended March 31, 1998 and $.19 for the year ended December 31, 1997 (restated for stock split). (3) Effective September 26, 1997 the Company effected a two - for - one stock split recorded in the form of a stock dividend. 18,741,121 Common Shares were issued in respect of this split. Prior periods have been restated. See Accompanying Notes to Unaudited Consolidated Financial Statements 7 MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1998 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, 1998 and 1997. 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, 1998 are not necessarily indicative of what operating results may be for the full year. 2. COMPREHENSIVE INCOME During the first quarter of 1998 the Company adopted Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income. Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from nonowner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. Specifically, the Company has reported the change in unrealized gains and losses on investments as a deduction from net income to arrive at comprehensive income of $14.3 million for the first quarter of 1998, compared to $6.4 million for the first quarter of 1997. The deductions are net of a tax charge of $.8 million in 1998 and a credit of $1.5 million in 1997. 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS FOR THE QUARTERS ENDED MARCH 31, 1998 AND 1997 The results of operations for the quarter ended March 31, 1998, reflect a continuation of growth in Fee income and Net income due to the strong growth in the Program Business segment and, increased investment income. Net income available to common shareholders amounted to $14.5 million or $0.34 per Common Share for the quarter ended March 31, 1998 on a diluted basis representing an increase of 26% over the corresponding 1997 period.
THREE MONTHS ENDED MARCH 31, 1998 1997 --------------------------- ---------------------------- ($ thousands except per share data) PER PER COMMON SHARE COMMON SHARE(b) ------------ ------------ BASIC DILUTED BASIC DILUTED Net income excluding realized capital losses $14,648 $ 0.39 $ 0.34 $11,158 $ 0.30 $ 0.27 Realized capital losses (a) (116) (0.01) - (514) (0.01) (0.01) ------- ------- ------- ------- ------- ------- Net income available to Common Shareholders $14,532 $ 0.38 $ 0.34 $10,644 $ 0.29 $ 0.26 ======= ======= ======= ======= ======= ======= Average number of shares outstanding (000's) 37,946 47,760 37,168 46,201 ------- ------- ------- -------
(a) Net of tax. (b) 1997 per share amounts have been adjusted to reflect the two-for-one stock split which was effected on September 26, 1997. Total revenues amounted to $68.1 million representing an increase of 44% over the corresponding 1997 period. The following table shows the major components of Revenues for the period.
(In thousands) TOTAL REVENUES THREE MONTHS ENDED MARCH 31, 1998 1997 INCREASE ------- ------- -------- Fee income $31,556 $23,937 32% Premiums earned 28,929 17,952 61% Net investment income 7,947 5,988 33% Realized capital gains (losses) (213) (774) N/M Other (losses) income (131) 84 N/M ------- ------- Total $68,088 $47,187 44% ======= =======
9 Total Fee income increased 32% to $31.6 million for the first quarter of 1998 as compared to $23.9 million in 1997. Pre-tax profit margins were 38% for the quarter as compared to 41% in the first quarter of 1997. Excluding the underwriting management portion of the Program Business segment and the Financial Services segment, which generally have lower margins, pre-tax profit margins were 47% for the quarter as compared to 45% in the first quarter of 1997. 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, 1998 1997 INCREASE ------- ------- -------- Program business fees $15,516 $ 9,168 69% Corporate risk management fees 11,343 11,450 (1%) Specialty brokerage fees 1,794 1,588 13% Financial services fees 2,902 1,730 68% ------- ------- Total $31,556 $23,937 32% ======= =======
The Program Business segment, the fastest growing business segment, involves 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 49% of total Fee income for the first three months of 1998 compared to 38% in the corresponding 1997 period. Fees from Program Business increased 69% in the first quarter to $15.5 million compared to $9.2 million in the first quarter of 1997 as a result of the continued expansion in this business both through the growth of existing programs and the addition of new programs. Program Business profit margins were 40% in both periods. Gross premiums written increased 38% to $182 million for the first three months of 1998 as compared to $132 million in 1997, primarily as a result of the growth within the Program Business segment. Program Business generally involves greater premium volume per unit than Corporate Risk Management business. Premiums earned increased 61% to $28.9 million in the first three months of 1998, as compared to $18.0 million in 1997. This increase was also primarily due to the growth within the Program Business segment. 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 accounted for 36% of total Fee income for the first three months of 1998, down from 48% in the corresponding 1997 period. Corporate Risk Management fees decreased by 1% in the quarter to $11.3 million compared to $11.5 million in 1997 as a result of a continuation of the extremely soft commercial insurance market. Profit margins, however, increased to 48% for the first three months of 1998 compared to 44% in 1997. The Company added 4 new corporate accounts in the first quarter as opposed to 17 in the corresponding 1997 quarter. Renewal rates, also reflecting the soft market cycle, dropped to 56% from 83% in 1997. The Company's Specialty Brokerage business segment provides access to Alternative Risk Transfer insurers and reinsurers in Bermuda and Europe. The segment produced $1.8 million of total Fee income in the first quarter representing 6% of total Fee income. Specialty Brokerage fees grew by 13% in the first three months of 1998 from $1.6 million in the corresponding 1997 period. Renewal rates remained high in this segment at 91% for the first three months of 1998 as compared to 82% in 1997. Profit margins, however, decreased to 22% in the first quarter from 40% for the 1997 first quarter 10 primarily as a result of declining premium rates in Bermuda on new and renewal business and the effects of a small start up operation in the U.S. Financial Services, the Company's newest business segment, is being built on the acquisition of Hemisphere, which provides administrative services to offshore mutual funds and other companies. The segment accounted for 9% of total Fee income for the first three months of 1998 up from 7% in the corresponding 1997 period. Fees from Financial Services increased in the quarter by 68% to $2.9 million primarily as a result of an increase in the number of mutual funds under management from 98 at March 31, 1997 to 150 a year later. Renewal rates were 100% for the first three months of 1998 as compared to 99% in 1997. Profit margins were adversely affected in 1998 by a revised executive incentive plan and staff expansion costs to service new business and declined to (6%) in the quarter as opposed to 25% in the 1997 first quarter. During the first quarter, the Company replaced the existing executive incentive program at Hemisphere with a revised long term plan. The prior plan, which was put in place in 1996 when the Company acquired Hemisphere, called for a one time payment in 1999 based on meeting performance targets. Due to the success of Hemisphere since its acquisition, that payment was likely to amount to the maximum possible of $5 million. The new plan replaces this potential bonus payable in 1999 with a current bonus arrangement payable over three years and a revised set of performance targets. The new incentive program will give Hemisphere the opportunity to continue the rapid growth that it has experienced since its acquisition and will facilitate its expansion into the United States and Europe. This revised executive incentive program will, however, affect the segment's operating expenses by $600,000 per quarter, adversely affecting the margins of the Financial Services segment in the short run. Gross investment income increased by $2.1 million or 31% to $9.1 million in the first quarter of 1998 over the same period of 1997 as a result of an increase of 4% in gross invested assets to $473.5 million and an 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 33% during the quarter as a result of an increase of 4% in net invested assets to $407.5 million and an increase in the yield on these assets to 7.9% from 6.2% in the first quarter of 1997.
(In thousands) TOTAL EXPENSES THREE MONTHS ENDED MARCH 31, 1998 1997 INCREASE ------- ------- -------- Total Insurance Costs 29,595 18,268 62% Operating expenses 19,672 14,130 39% Interest expense 1,675 1,591 5% Other expenses 363 237 54% ------- ------- Total $51,305 $34,226 50% ======= =======
The increases in Total insurance costs were the direct result of the increases in Premiums earned during the period. Operating expenses increased by 39% to $19.7 million for the first quarter from $14.1 million. The increase is attributable to the revised executive incentive plan in Financial Services, recent acquisitions, and growth in personnel and other expenses stemming from the increased business in each segment. Excluding the effect of recent acquisitions and the revised executive incentive plan, the increase in operating expenses would have been 30%. 11 The effective tax rate was 13.4% in the quarter compared to 17.6% in the corresponding 1997 period. The decrease in the quarterly rate is due mainly to a restructuring of the taxable entities in both the United States and Europe, and the tax benefit derived from the exercise of employee stock options. FINANCIAL CONDITION AND LIQUIDITY Total assets increased to $2.3 billion at March 31, 1998 from $2.1 billion at December 31, 1997. Assets held in separate accounts, which are principally managed assets attributable to participants in the Company's IPC Programs, accounted for approximately 28% of Total assets at March 31, 1998 and 29% at December 31, 1997. Total Shareholders' equity increased to $277 million at March 31, 1998 from $260 million at December 31, 1997 primarily as a result of Net income in the quarter and the issuance of Common Shares offset by the payment of dividends. Return on equity was 22% for the first quarter of 1998 compared to 20% in the corresponding period of 1997. The Company continues to produce a positive cash flow from operating activities which is used to fund short term requirements. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not Applicable 12 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, 1998. 13 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. MUTUAL RISK MANAGEMENT LTD. /s/ James C. Kelly __________________________________________________ JAMES C. KELLY SENIOR VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND AUTHORIZED SIGNATORY DATE: MAY 13, 1998 14 EX-11 2 COMPUTATION OF EARNINGS PER SHARE EXHIBIT 11 MUTUAL RISK MANAGEMENT LTDM COMPUTATION OF EARNINGS PER SHARE
THREE MONTHS ENDED MARCH 31, 1998 1997 (in thousands except share and per share amounts) BASIC - ----- Income Available to Common Shareholders $ 14,531 $ 10,644 =========== =========== Weighted Average Common Shares outstanding 37,946,018 37,168,166 ----------- ----------- Basic earnings per Common Share $0.38 $ 0.29 =========== =========== DILUTED - ------- Income Available to Common Shareholders $ 14,531 $ 10,644 Debenture interest 1,675 1,591 ----------- ----------- $ 16,206 $ 12,235 =========== =========== Weighted Average Common Shares outstanding 37,946,018 37,168,166 ----------- ----------- Common share equivalents associated with options, Redeemable Common Shares and Convertible Debentures: Options 4,140,943 3,954,498 Redeemable Common Shares 937,168 937,168 Convertible Debentures 6,978,800 6,978,800 ----------- ----------- 12,056,911 11,870,466 Common Shares purchased with proceeds from options exercised (2,242,587) (2,837,198) 9,814,324 9,033,268 ----------- ----------- Total Weighted Average Common Shares 47,760,342 46,201,434 =========== =========== Diluted earnings per Common Share $0.34 $ 0.26 =========== ===========
EX-27.1 3 FINANCIAL DATA SCHEDULE WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
7 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MUTUAL RISK MANAGEMENT LTD.'S FINANCIAL STATEMENTS AS OF MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000826918 MUTUAL RISK MANAGEMENT LTD. 1,000 3 MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 404,088 0 0 0 0 0 404,088 74,546 697,459 26,486 2,290,600 795,539 198,395 0 42,145 130,386 0 0 391 276,743 [TOTAL-LIABILITIES-AND-EQUITY] 2,290,600 28,929 7,947 (213) (131) 21,499 8,096 21,710 16,783 2,252 14,531 0 0 0 14,531 0.38 0.34 0 0 0 0 0 0 0
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