-----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, GUROYPN3jNftZjMCewzZ2tAmhPFR9NfX5JWAYhJMPNBqQfY3AHPRUiLFsMB8zXgP VxNix75PTPrCeP0DljNEUA== 0000009346-04-000010.txt : 20040507 0000009346-04-000010.hdr.sgml : 20040507 20040506174534 ACCESSION NUMBER: 0000009346-04-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20040331 FILED AS OF DATE: 20040507 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BALDWIN & LYONS INC CENTRAL INDEX KEY: 0000009346 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 350160330 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-05534 FILM NUMBER: 04786283 BUSINESS ADDRESS: STREET 1: 1099 N MERIDIAN ST STREET 2: STE 700 CITY: INDIANAPOLIS STATE: IN ZIP: 46204 BUSINESS PHONE: 3176369800 MAIL ADDRESS: STREET 1: 1099 NORTH MERIDIAN ST STREET 2: STE 700 CITY: INDIANAPOLIS STATE: IN ZIP: 46204 FORMER COMPANY: FORMER CONFORMED NAME: BALDWIN H C AGENCY INC DATE OF NAME CHANGE: 19720309 10-Q 1 r10q0033104.txt BALDWIN & LYONS, INC. FIRST QUARTER FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Quarterly Report Under Section 13 or 15 (d) of the Securities Exchange Act of 1934 ------------------------------------------------------ For Quarter Ended Commission file number March 31, 2004 0-5534 BALDWIN & LYONS, INC. (Exact name of registrant as specified in its charter) INDIANA 35-0160330 ------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 1099 NORTH MERIDIAN STREET, INDIANAPOLIS, INDIANA 46204 - ------------------------------------------------- ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (317) 636-9800 -------------- 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, and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes X No ------ ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock as of May 5, 2004: TITLE OF CLASS NUMBER OF SHARES OUTSTANDING Common Stock, No Par Value: Class A (voting) 2,666,666 Class B (nonvoting) 11,955,642 Index to Exhibits located on page 13. Page 1 of a total of 20 pages 2 PART I - FINANCIAL INFORMATION ITEM 1 FINANCIAL STATEMENTS
BALDWIN & LYONS, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE DATA) MARCH 31 December 31 2004 2003 ---------------- ----------------- ASSETS Investments: Fixed maturities $ 322,216 $ 321,193 Equity securities 126,637 130,139 Short-term and other 32,043 36,545 ---------------- ----------------- 480,896 487,877 Cash and cash equivalents 58,926 30,078 Accounts receivable 40,644 37,333 Reinsurance recoverable 192,384 185,457 Notes receivable from employees 3,599 4,828 Other assets 18,627 17,634 ---------------- ----------------- $ 795,076 $ 763,207 ================ ================= LIABILITIES AND SHAREHOLDERS' EQUITY Reserves for losses and loss expenses $ 358,650 $ 343,724 Reserves for unearned premiums 43,221 36,803 Accounts payable and accrued expenses 45,137 44,005 Current federal income taxes 5,179 901 Deferred federal income taxes 14,298 13,200 ---------------- ----------------- 466,485 438,633 Shareholders' equity: Common stock-no par value 623 623 Additional paid-in capital 35,518 35,419 Unrealized net gains on investments 45,240 44,837 Retained earnings 247,210 243,695 ---------------- ----------------- 328,591 324,574 ---------------- ----------------- $ 795,076 $ 763,207 ================ ================= Number of common and common equivalent shares outstanding 14,751 14,752 Book value per outstanding share $22.28 $22.00
See notes to condensed consolidated financial statements. 3
BALDWIN & LYONS, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS, EXCEPT PER SHARE DATA) Three Months Ended March 31 ------------------------------ 2004 2003 ------------- ------------- REVENUES Net premiums earned $ 38,497 $31,701 Net investment income 3,172 3,373 Realized net gains (losses) on investments 5,818 (2,452) Other income 1,906 1,502 ------------- ------------- 49,393 34,124 EXPENSES Losses and loss expenses incurred 25,246 20,511 Other operating expenses 8,089 6,983 ------------- ------------- 33,335 27,494 ------------- ------------- INCOME BEFORE FEDERAL INCOME TAXES 16,058 6,630 Federal income taxes 5,159 2,098 ------------- ------------- NET INCOME $ 10,899 $ 4,532 ============= ============= PER SHARE DATA: DILUTED EARNINGS $ .74 $ .31 ============= ============= BASIC EARNINGS $ .75 $ .31 ============= ============= DIVIDENDS PAID TO SHAREHOLDERS $ .50 $ .10 ============= ============= RECONCILIATION OF SHARES OUTSTANDING: Average shares outstanding - basic 14,603 14,554 Dilutive effect of options outstanding 212 102 ------------- ------------- Average shares outstanding - diluted 14,815 14,656 ============= =============
See notes to condensed consolidated financial statements. 4
BALDWIN & LYONS, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN THOUSANDS) Three Months Ended March 31 2004 2003 ------------- ------------- Net cash provided by operating activities $ 18,569 $ 9,218 Investing activities: Purchases of long-term investments (41,605) (46,204) Proceeds from sales or maturities of long-term investments 52,778 49,473 Net sales of short-term investments 5,476 989 Decrease in notes receivable from employees 1,093 75 Other investing activities (222) (576) ------------- ------------- Net cash provided by investing activities 17,520 3,757 Financing activities: Dividends paid to shareholders (7,304) (1,457) Proceeds from sales of common stock 63 1 ------------- ------------- Net cash used in financing activities (7,241) (1,456) ------------- ------------- Increase in cash and cash equivalents 28,848 11,519 Cash and cash equivalents at beginning of period 30,078 41,699 ------------- ------------- Cash and cash equivalents at end of period $58,926 $53,218 ============= =============
See notes to condensed consolidated financial statements. NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (1) BASIS OF PRESENTATION: The accompanying unaudited condensed financial statements have been prepared in accordance with the instructions to Form 10Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. Operating results for the interim periods are not necessarily indicative of the results that may be expected for the year ended December 31, 2004. Interim financial statements should be read in conjunction with the Company's annual audited financial statements and other disclosures included in the Company's most recent Form 10K. 5 NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (2) FORWARD-LOOKING STATEMENTS: Forward-looking statements in this report are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve inherent risks and uncertainties. Readers are encouraged to review the Company's annual report for its full statement regarding forward-looking information. (3) REINSURANCE: The following table summarizes the Company's transactions with reinsurers for the 2004 and 2003 comparative periods.
2004 2003 ---------------- ---------------- Quarter ended March 31: Premiums ceded to reinsurers $ 19,248 $ 17,713 Losses and loss expenses ceded to reinsurers 17,948 21,093 Commissions from reinsurers 5,202 4,825
(4) COMPREHENSIVE INCOME OR LOSS: The Company refers to comprehensive income or loss as realized and unrealized income or loss which is composed of net income or loss and changes in unrealized gains or losses on investments for the periods presented. Total realized and unrealized income for the quarter ended March 31, 2004 was $11,223 and compares to total realized and unrealized income of $3,638 for the quarter ended March 31, 2003. 6 NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (5) REPORTABLE SEGMENTS - PROFIT AND LOSS: The following table provides certain profit and loss information for each reportable segment. All amounts presented are computed based upon generally accepted accounting principles. In addition, segment profit for fleet trucking includes the direct marketing agency operations conducted by the parent company and is computed after elimination of inter-company commissions and, accordingly, segment profit presented here will not agree with statutory underwriting gains for this segment which may be quoted elsewhere in the Company's financial statements.
2004 2003 -------------------------------------------- ------------------------------------------- DIRECT AND Direct and ASSUMED NET PREMIUM SEGMENT Assumed Net Premium Segment PREMIUM EARNED AND PROFIT Premium Earned and Profit WRITTEN FEE INCOME (LOSS) Written Fee Income (Loss) -------------- --------------- ----------- --------------- -------------- ---------- THREE MONTHS ENDED MARCH 31: PROTECTIVE PRODUCTS: Fleet trucking $ 39,171 $ 21,267 $ 6,321 $ 34,438 $ 18,107 $ 6,879 Reinsurance assumed 2,918 3,074 1,907 2,823 2,559 483 SAGAMORE PRODUCTS: Personal division 15,180 11,228 1,350 13,737 9,243 636 Commercial division: Small fleet trucking 3,865 2,524 332 3,577 1,792 153 Workers' compensation 2,788 1,945 (229) 2,192 1,132 (10) -------------- --------------- ----------- --------------- -------------- ---------- Total Commercial division 6,653 4,469 103 5,769 2,924 143 All other 241 242 (80) 103 99 158 -------------- --------------- ----------- --------------- -------------- ---------- Totals $ 64,163 $ 40,280 $ 9,601 $ 56,870 $ 32,932 $ 8,299 ============== =============== =========== =============== ============== ==========
(6) REPORTABLE SEGMENTS - RECONCILIATION TO CONSOLIDATED REVENUE AND CONSOLIDATED PROFIT OR LOSS: The following tables are reconciliations of reportable segment revenues and profit or loss to the Company's consolidated revenue and income from continuing operations before federal income taxes, respectively.
Three Months Ended March 31 2004 2003 ---------------- ----------------- REVENUE: Net premium earned and fee income $ 40,280 $ 32,932 Net investment income 3,172 3,373 Realized net gains (losses) on investments 5,818 (2,452) Other 123 271 ---------------- ----------------- TOTAL CONSOLIDATED REVENUE $ 49,393 $ 34,124 ================ ================= PROFIT: Segment profit $ 9,601 $ 8,299 Net investment income 3,172 3,373 Realized net gains (losses) on investments 5,818 (2,452) Corporate expenses (2,533) (2,590) ---------------- ----------------- INCOME BEFORE FEDERAL INCOME TAXES $ 16,058 $ 6,630 ================ =================
7 NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (7) LOANS TO EMPLOYEES: In 2000, 2001 and 2002 the Company provided loans to certain key employees for the sole purpose of purchasing the Company's Class B common stock in the open market. $7,260 of such full-recourse loans were issued and $3,599 remain outstanding at March 31, 2004 and carry interest rates of between 4.75% and 6%, payable annually on the loan anniversary date. The underlying securities serve as collateral for these loans, which must be repaid no later than 10 years from the date of issue. No additional loans will be made under this program. 8 ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF - ----------------------------------------------- FINANCIAL CONDITION AND RESULTS OF OPERATIONS - --------------------------------------------- LIQUIDITY AND CAPITAL RESOURCES The Company generally experiences positive cash flow from operations resulting from the fact that premiums are collected on insurance policies in advance of the disbursement of funds in payment of claims. Operating costs of the property/casualty insurance subsidiaries, other than loss and loss expense payments and commissions paid to related agency companies, generally average between 25% and 35% of premiums earned and the remaining amount is available for investment for varying periods of time pending the settlement of claims relating to the insurance coverage provided. The Company's cash flow relating to premiums is significantly affected by reinsurance programs in effect from time-to-time whereby the Company cedes both premium and risk to other insurance and reinsurance companies. These programs vary significantly among products and overall premium ceded rates, net of ceding commission allowances, have generally decreased since 2001, reflective of the effect of the provisions of reinsurance agreements currently in place. For the three months ended March 31, 2004, the Company experienced positive cash flow from operations totaling $18.6 million and compares to positive cash flow of $9.2 million for the three months ended March 31, 2003. The majority of this change resulted from a $2.0 million decrease in reinsurance recoverable on paid claims during the current quarter compared to a $5.6 million increase in such recoverables during the prior year first quarter. For several years, the Company's investment philosophy has emphasized the purchase of relatively short-term instruments with maximum quality and liquidity. The average life of the Company's fixed income (bond and short-term investment) portfolio was approximately 2.6 years at March 31, 2004 compared to 2.8 years at December 31, 2003. The decrease in the average life resulted from management's belief that meaningful long term interest rate increases are imminent. The Company's assets at March 31, 2004 included $58.9 million in investments classified as short-term or cash equivalents that were readily convertible to cash without significant market penalty. An additional $90.2 million of fixed maturity investments will mature within the twelve-month period following March 31, 2004. The Company believes that these liquid investments are more than sufficient to provide for projected claim payments and operating cost demands even before consideration of current positive cash flows. Consolidated shareholders' equity is composed largely of GAAP shareholder's equity of the insurance subsidiaries. As such, there are statutory restrictions on the transfer of portions of this equity to the parent holding company. At March 31, 2004, $47.0 million may be transferred by dividend or loan to the parent company without approval by, or prior notification to, regulatory authorities. An additional $198.8 million of shareholder's equity of the insurance subsidiaries may be advanced or loaned to the parent holding company with prior notification to, and approval from, regulatory authorities. The Company believes that these restrictions pose no material liquidity concerns to the Company. The financial strength and stability of the subsidiaries would permit ready access by the parent company to short-term and long-term sources of credit. The parent company had cash and marketable securities valued at $48.0 million at March 31, 2004. The Company's annualized premium writing to surplus ratio for the first quarter of 2004 was approximately 46%. Regulatory guidelines generally allow for writings of at least 200% of surplus. Accordingly, the Company can continue to increase premium writings significantly with no need to raise additional capital. Further, the Insurance Subsidiaries' individual capital levels are several times higher than the minimum amounts designated by the National Association of Insurance Commissions. 9 RESULTS OF OPERATIONS --------------------- COMPARISONS OF FIRST QUARTER, 2004 TO FIRST QUARTER, 2003 --------------------------------------------------------- Net premiums earned during the first quarter of 2004 increased $6.8 million (21%) as compared to the same period of 2003. The increase is due primarily to an 18% increase in premiums from the Company's fleet trucking program as the market has allowed the Company to maintain rate levels while continuing to add new accounts. In addition, premiums from the Company's small business workers' compensation, small fleet trucking and private passenger automobile programs increased 68%, 35% and 20%, respectively, due largely to rate increases by competitors, which allow Sagamore's pricing to be more competitive. Direct premiums written and assumed increased approximately 13% to $64.2 million from $56.9 million reported a year earlier. All divisions, excluding voluntary reinsurance assumed, experienced direct premium growth ranging from 8% to 27% when compared to the first quarter of 2003. Premium ceded to reinsurers averaged 31.6% of direct premium production for the current quarter compared to 32.8% a year earlier. Net investment income, before tax, during the first quarter of 2004 was 6% lower than the first quarter of 2003 due primarily to the continuing historically low level of investment yields. The short-term nature of the Company's fixed income investment portfolio has been negatively impacted by the numerous interest rate reductions by the Federal Reserve Board since January 1, 2001. Pre-tax yields dropped 50 basis points from the prior year quarter. After tax yields posted a smaller decline as the Company holds a larger percentage of tax-exempt securities in its fixed income portfolio. The average life of the Company's fixed income portfolio decreased from 2.8 years at the prior year end to 2.6 years at March 31, 2004. The first quarter 2004 net realized gain of $5.8 consisted of net gains on equity securities, fixed maturities and short-term investments of $4.9 million, $.6 million and $.2 million, respectively. Losses and loss expenses incurred during the first quarter of 2004 increased $4.7 million from that experienced during the first quarter of 2003, which is consistent with the increase in premium volume previously discussed. Loss ratios for each of the Company's major product lines were as follows:
2004 2003 ---- ---- Large and medium fleet trucking 75.6% 67.6% Private passenger automobile 59.9 63.2 Small fleet trucking 57.6 53.7 Voluntary reinsurance assumed 11.8 66.2 Small business workers' compensation 82.4 60.5 All lines 65.6 64.7
The increase in the Large and Medium Fleet Trucking ratio is due to higher frequency and severity of reported claims compared to the prior year quarter. The 2004 Small Business Workers' Compensation loss ratio reflects high current year loss experience on a very small book of business. The low loss ratio for reinsurance assumed reflects the lack of major catastrophes this quarter. Other operating expenses for the first quarter of 2004 increased 16% from the first quarter of 2003. Adjusted for ceding allowances, operating expenses increased only 13% from the first quarter of 2003 and compare favorably with the 21% increase in premiums earned from the 2003 quarter as many of the Company's expenses do not vary directly with premium volume. Ceding allowances as a percentage of direct expenses have declined due to changes in the Company's 10 reinsurance structure whereby the Company now retains a greater percentage of the risk compared to prior periods, particularly within the Large and Medium Fleet trucking products. In addition, ceding allowance rates are slightly lower under current reinsurance agreements compared to rates in effect under prior period agreements. Available capacity within each of the Company's divisions has allowed for the expansion of business with only minimal additions to personnel and other fixed costs over the past year. Management believes that significant additional capacity exists before most divisions would be obliged to incur meaningful increases in personnel or other fixed costs. The Company cedes a large portion of its direct premiums to reinsurers and these reinsurance premiums carry significant expense offsets. Ceding allowances totaled $5.2 million for the 2004 quarter compared to $4.8 million for the 2003 quarter. The ratio of consolidated other operating expenses to operating revenue was 18.6% during the first quarter of 2004 compared to 19.1% for the 2003 first quarter. The effective federal tax rate for consolidated operations for the first quarter of 2004 was 32.1% and is less than the statutory rate primarily because of tax exempt investment income. As a result of the factors mentioned above, principally the change in net realized capital gains, net income increased $6.4 million (140.5%) during the first quarter of 2004 as compared with the 2003 first quarter. FORWARD-LOOKING INFORMATION --------------------------- Any forward-looking statements in this report, including without limitation, statements relating to the Company's plans, strategies, objectives, expectations, intentions and adequacy of resources, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties including without limitation the following: (i) the Company's plans, strategies, objectives, expectations and intentions are subject to change at any time at the discretion of the Company; (ii) the Company's business is highly competitive and the entrance of new competitors into or the expansion of the operations by existing competitors in the Company's markets and other changes in the market for insurance products could adversely affect the Company's plans and results of operations; (iii) other risks and uncertainties indicated from time to time in the Company's filings with the Securities and Exchange Commission; and (iv) other risks and factors which may be beyond the control or foresight of the Company. CRITICAL ACCOUNTING POLICIES ---------------------------- There have been no changes in the Company's critical accounting policies as disclosed in the Form 10K filed for the year ended December 31, 2003. ITEM 4. CONTROLS AND PROCEDURES - ------------------------------- Baldwin & Lyons, Inc. management, including the Chief Executive Officer and Chief Financial Officer, have conducted an evaluation of the effectiveness of disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures are effective in ensuring that all material information required to be filed in this quarterly report has been made known to them in a timely fashion. There have been no significant changes in internal controls, or in factors that could significantly affect internal controls, subsequent to the date the Chief Executive Officer and Chief Financial Officer completed their evaluation. 11 PART II - OTHER INFORMATION ITEM 6 (a) EXHIBITS NUMBER AND CAPTION FROM EXHIBIT TABLE OF REGULATION S-K ITEM 601 EXHIBIT NO. - -------------------------------- ------------------------ (11) Statement regarding EXHIBIT 11 -- computation of per share earnings Computation of Per Share Earnings (99.1) Certification of CEO EXHIBIT 99.1 pursuant to Section 302 of the Certification of CEO Sarbanes-Oxley Act of 2002 And 18 U.S.C. 1350 (99.2) Certification of CFO EXHIBIT 99.2 pursuant to Section 302 of the Certification of CFO Sarbanes-Oxley Act of 2002 And 18 U.S.C. 1350 (99.3) Certification of CEO EXHIBIT 99.3 pursuant to Section 906 of the Certification of CEO Sarbanes-Oxley Act of 2002 And 18 U.S.C. 1350 (99.4) Certification of CFO EXHIBIT 99.4 pursuant to Section 906 of the Certification of CFO Sarbanes-Oxley Act of 2002 And 18 U.S.C. 1350 ITEM 6 (b) REPORTS ON FORM 8-K A Form 8-K was filed by the registrant on January 29, 2004 regarding its earnings announcement for the fourth quarter and year ended December 31, 2003. 12 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. BALDWIN & LYONS, INC. Date MAY 6, 2004 By /s/ Gary W. Miller ---------------------------------- Gary W. Miller, Chairman of the Board and Chief Executive Officer Date MAY 6, 2004 By /s/ G. Patrick Corydon ---------------------------------- G. Patrick Corydon, Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) 13 BALDWIN & LYONS, INC. Form 10-Q for the fiscal quarter ended March 31, 2004 INDEX TO EXHIBITS Begins on sequential page number of Form Exhibit Number 10-Q -------------- ----------------------------- EXHIBIT 11 Filed herewith electronically Computation of per share earnings EXHIBIT 99.1 Filed herewith electronically Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act and 18 U.S.C. 1350 EXHIBIT 99.2 Filed herewith electronically Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act and 18 U.S.C. 1350 EXHIBIT 99.3 Filed herewith electronically Certification of CEO pursuant to Section 906 of the Sarbanes-Oxley Act and 18 U.S.C. 1350 EXHIBIT 99.4 Filed herewith electronically Certification of CFO pursuant to Section 906 of the Sarbanes-Oxley Act and 18 U.S.C. 1350 EX-99.CERT 2 exh-9910304.txt CEO CERTIFICATION UNDER SECTION 302 15 Exhibit 99.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 CERTIFICATION I, Gary W. Miller, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Baldwin & Lyons, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to 16 materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: May 6, 2004 /s/ Gary W. Miller - ------------------------------ Gary W. Miller Chairman of the Board and Chief Executive Officer EX-99.CERT 3 exh-9920304.txt CFO CERTIFICATION UNDER SECTION 302 17 Exhibit 99.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 CERTIFICATION I, G. Patrick Corydon, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Baldwin & Lyons, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has 18 materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: May 6, 2004 /s/ G. Patrick Corydon - ----------------------------- G. Patrick Corydon Senior Vice President and Chief Financial Officer EX-99.906 4 exh-9930304.txt CEO CERTIFICATION UNDER SECTION 906 19 Exhibit 99.3 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Baldwin & Lyons, Inc. (the "Company") on Form 10-Q for the quarterly period ending March 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Gary W. Miller, Chairman of the Board and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to ss.906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Gary W. Miller - -------------------------------- Gary W. Miller Chairman of the Board and Chief Executive Officer May 6, 2004 EX-99.906 5 exh-9940304.txt CFO CERTIFICATION UNDER SECTION 906 20 Exhibit 99.4 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Baldwin & Lyons, Inc. (the "Company") on Form 10-Q for the quarterly period ending March 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, G. Patrick Corydon, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to ss.906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ G. Patrick Corydon - ------------------------------- G. Patrick Corydon Senior Vice President and Chief Financial Officer May 6, 2004 EX-11 7 exh-110304.txt EARNINGS PER SHARE 14
BALDWIN & LYONS, INC. FORM 10-Q, EXHIBIT 11 COMPUTATION OF EARNINGS PER SHARE THREE MONTHS ENDED MARCH 31 ----------------------------------------- 2004 2003 ------------------ ----------------- BASIC: Average number of shares outstanding 14,603,536 14,554,376 ================== ================= Net Income $10,899,074 $4,531,724 ================== ================= Per share amount $ .75 $ .31 ================== ================= DILUTED: Average number of shares outstanding 14,603,536 14,554,376 Dilutive stock options--based on treasury stock method using average market price 211,674 101,548 ------------------ ----------------- Totals 14,815,210 14,655,924 ================== ================= Net Income $10,899,074 $4,531,724 ================== ================= Per share amount $ .74 $ .31 ================== =================
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