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, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from_________to_________
Commission file number 0-16267
WALSHIRE ASSURANCE COMPANY
__________________________
(Exact name of registrant as specified in its charter)
Pennsylvania 23- 2023242
_______________________________ ___________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3350 Whiteford Road, York, PA 17402
_____________________________ _____
(Address of principal executive offices) (Zip code)
(717) 757-0000
______________
(Registrant's telephone number, including area code)
____________________________________________________
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X NO
________ ________
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date.
Class: Outstanding at April 28, 1995:
_________ ________________________________
Common stock - $.01 Par Value 3,652,672 shares
WALSHIRE ASSURANCE COMPANY
AND SUBSIDIARIES
INDEX
Page
Number
______
Part I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of
March 31, 1995 (unaudited) and
December 31, 1994. . . . . . . . . . . . . . . . . . . . . 2
Consolidated Statements of Income
for the three months ended March 31, 1995
and 1994 (unaudited) . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows
for the three months ended March 31, 1995
and 1994 (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 a Vote of
Security Holders . . . . . . . . . . . . . . . . . . . . . 7
Item 5. Other Information. . . . . . . . . . . . . . . . . . . . . 7
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . 7
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
WALSHIRE ASSURANCE COMPANY
AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands,
except per share data)
March 31, December 31,
Assets 1995 1994
______ ____ ____
(Unaudited)
Investments:
Held to maturity:
Fixed maturities (market $17,025 and $16,140). . . . . . . . . . . $16,882 $16,508
Available for sale:
Fixed maturities (cost $23,546 and $22,588). . . . . . . . . . . . 23,232 21,664
Equity securities (cost $8,021 and $8,263) . . . . . . . . . . . . 7,670 7,611
Short-term investments. . . . . . . . . . . . . . . . . . . . . . . . 456 3,889
Other investments . . . . . . . . . . . . . . . . . . . . . . . . . . 848 868
______ ______
Total investments. . . . . . . . . . . . . . . . . . . . . . . . . 49,088 50,540
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293 184
Accrued investment income receivable . . . . . . . . . . . . . . . . . . 907 895
Amounts receivable from reinsurers . . . . . . . . . . . . . . . . . . . 2,359 2,644
Amounts receivable from reinsured company. . . . . . . . . . . . . . . . 1,440 1,325
Agents' balances (net of allowance for doubtful accounts of $100). . . . 4,251 3,627
Installment premiums receivable. . . . . . . . . . . . . . . . . . . . . 3,701 3,633
Agents' balances and installment premiums receivable from related
parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,514 2,258
Premium finance receivables (net of unearned finance charges and
allowance for credit losses of $134 and $123) . . . . . . . . . . . . 5,552 4,678
Reinsurance receivable . . . . . . . . . . . . . . . . . . . . . . . . . 6,131 6,355
Deferred acquisition costs . . . . . . . . . . . . . . . . . . . . . . . 3,895 3,791
Property and equipment (net of accumulated depreciation of $1,067
and $1,054) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,703 2,656
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 468 482
______ ______
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . $83,302 $83,068
====== ======
See accompanying notes to consolidated financial statements.
WALSHIRE ASSURANCE COMPANY
AND SUBSIDIARIES
Consolidated Balance Sheets, Continued
(In thousands,
except per share data)
March 31, December 31,
Liabilities and Shareholders' Equity 1995 1994
____________________________________ ____ ____
(Unaudited)
Liabilities:
Unpaid claims, claim settlement expenses and claims drafts . . . . . $14,930 $14,292
Unearned premiums . . . . . . . . . . . . . . . . . . . . . . . . . . 21,985 21,065
Short-term notes payable. . . . . . . . . . . . . . . . . . . . . . . 480 3,435
Long-term notes payable . . . . . . . . . . . . . . . . . . . . . . . 1,841 1,921
Deposits by insureds. . . . . . . . . . . . . . . . . . . . . . . . . 966 747
Commissions payable to agents . . . . . . . . . . . . . . . . . . . . 491 571
Commissions payable to related parties. . . . . . . . . . . . . . . . 209 214
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 808 809
______ ______
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . 41,710 43,054
______ ______
Shareholders' equity
Preferred stock, par value $.01 per share; 2,000 shares
authorized; 142 shares issued and outstanding. . . . . . . . . . . 1 1
Common stock, par value $.01 per share; 10,000 shares
authorized; 3,649 and 3,638 shares issued and outstanding . . . . 36 36
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . 25,830 25,751
Unrealized loss on investments available for sale (net of
deferred tax benefits of $226 and $534 . . . . . . . . . . . . . . ( 439) ( 1,042)
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . 16,164 15,268
______ ______
Net shareholders' equity . . . . . . . . . . . . . . . . . . . . . 41,592 40,014
______ ______
Total liabilities and shareholders' equity . . . . . . . . . . . . $83,302 $83,068
====== ======
See accompanying notes to consolidated financial statements.
WALSHIRE ASSURANCE COMPANY
AND SUBSIDIARIES
Consolidated Statements of Income
(In thousands,
except per share data)
Three Months Ended
March 31,
_________________________
1995 1994
(Unaudited) (Unaudited)
Revenues:
Premiums earned . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,540 $ 8,136
Premiums ceded . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,302) (1,618)
_______ _______
Net premiums earned . . . . . . . . . . . . . . . . . . . . . . . . . 8,238 6,518
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . 662 500
Net realized gains on investments . . . . . . . . . . . . . . . . . . 66 328
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168 242
_____ _____
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . 9,134 7,588
_____ _____
Expenses:
Claims and claim settlement expenses. . . . . . . . . . . . . . . . . 4,860 4,787
Reinsurance recoveries. . . . . . . . . . . . . . . . . . . . . . . . ( 98) ( 834)
_____ _____
Net claims and claims settlement expenses . . . . . . . . . . . . . . 4,762 3,953
Amortization of deferred acquisition costs . . . . . . . . . . . . . 1,196 1,486
Underwriting, general and administrative expenses . . . . . . . . . . 1,518 1,280
Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 55
_____ _____
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 7,554 6,774
_____ _____
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . 1,580 814
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . 332 191
_____ _____
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,248 623
Less dividends on convertible preferred stock. . . . . . . . . . . . . . 115 29
_____ _____
Net income available for common stock. . . . . . . . . . . . . . . . . . $ 1,133 $ 594
===== =====
Net income per common share and common equivalent share:
Primary:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ .30 $ .16
===== =====
Weighted average shares outstanding. . . . . . . . . . . . . . . . 3,770 3,604
===== =====
See accompanying notes to consolidated financial statements.
WALSHIRE ASSURANCE COMPANY
Consolidated Statements of Cash Flows
(In thousands)
Three Months Ended
March 31,
_________________________
1995 1994
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,248 $ 623
Adjustments to reconcile net income to net cash provided
by operating activities
Net realized gains on investments. . . . . . . . . . . . . . . . . ( 66) ( 328)
Decrease (increase) in assets:
Accrued investment income receivable . . . . . . . . . . . . . ( 12) ( 14)
Amounts receivable from reinsurers . . . . . . . . . . . . . . 285 637
Amounts receivable from reinsured company . . . . . . . . . . . ( 115) ( 2)
Agents balances and installment premiums receivable . . . . . . ( 624) ( 355)
Agents' balances and installment premiums
receivable from related parties . . . . . . . . . . . . . . . ( 324) ( 141)
Premium finance receivables . . . . . . . . . . . . . . . . . ( 874) 333
Reinsurance receivable . . . . . . . . . . . . . . . . . . . 224 ( 262)
Deferred acquisition costs . . . . . . . . . . . . . . . . . . ( 104) ( 32)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . 121 217
(Decrease) increase in liabilities:
Unpaid claims, claim settlement expenses and
claim drafts outstanding . . . . . . . . . . . . . . . . . . 638 1,041
Unearned premiums . . . . . . . . . . . . . . . . . . . . . . . 920 129
Deposits by insureds . . . . . . . . . . . . . . . . . . . . . 219 ( 155)
Other, net. . . . . . . . . . . . . . . . . . . . . . . . . . . ( 94) ( 203)
________ ________
Net cash provided by operating activities. . . . . . . . . . . . . 1,442 1,488
Cash flows from investing activities: ________ ________
Purchase of investments:
Held-to-maturity . . . . . . . . . . . . . . . . . . . . . . . . . ( 902) ( 671)
Available-for-sale . . . . . . . . . . . . . . . . . . . . . . . . ( 1,888) ( 4,129)
Sale of investments:
Available-for-sale . . . . . . . . . . . . . . . . . . . . . . . . 1,192 2,032
Maturity of investments . . . . . . . . . . . . . . . . . . . . . . 486 236
Net (purchase) sale of short term and other investments . . . . . . 3,466 ( 5,598)
Purchase of property and equipment . . . . . . . . . . . . . . . . . ( 185) ( 84)
Sale of property and equipment . . . . . . . . . . . . . . . . . . . 31 14
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( 224) 362
________ ________
Net cash provided by (used in) investing activities . . . . . . . 1,976 ( 7,838)
Cash flows from financing activities: ________ ________
Cash dividends paid . . . . . . . . . . . . . . . . . . . . . . . . ( 352) ( 235)
Issuance of common stock . . . . . . . . . . . . . . . . . . . . . . 79 10
Issuance of preferred stock . . . . . . . . . . . . . . . . . . . . . - 6,778
Payment of notes payable . . . . . . . . . . . . . . . . . . . . . . ( 3,036) ( 224)
________ ________
Net cash provided by (used in) financing activities . . . . . . . ( 3,309) 6,329
________ ________
Net increase (decrease) in cash . . . . . . . . . . . . . . . . . . . . 109 ( 21)
Cash at beginning of the period . . . . . . . . . . . . . . . . . . . . 184 56
________ ________
Cash at end of the period . . . . . . . . . . . . . . . . . . . . . . . $ 293 $ 35
======== ========
See accompanying notes to consolidated financial statements.
WALSHIRE ASSURANCE COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. The consolidated balance sheet as of March 31, 1995, the consolidated
statements of income for the three months ended March 31, 1995 and 1994, 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, 1995 and for all periods
presented, have been made.
2. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been omitted. It is suggested that these
unaudited consolidated financial statements be read in conjunction with
the financial statements and notes thereto included in the Company's 1994
Annual Report dated March 3, 1995. The results of operation for the period
ended March 31, 1995 are not necessarily indicative of the results of
operations for the full year.
3. Net income per share is computed after recognition of preferred stock
dividend requirements and is based on the weighted average number of shares of
common stock and common stock equivalents outstanding. The number of common
shares was increased by the number of shares issuable on the exercise of
options when the market price of the common stock exceeds the exercise price of
the options. This increase in the number of common shares was reduced by the
number of common shares that are assumed to have been purchased with the
proceeds from the exercise of the options; these purchases were assumed to have
been made at the average price of the common stock during that part of the year
when the market price of the common stock exceeded the exercise price of the
options.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
_____________________________________________________________________________
Revenues for the three month period ended March 31, 1995 increased $1.5
million, or 20.4%, from revenues for the three month period ended
March 31, 1994. This increase was primarily the result of an increase in net
premiums earned, offset, in part, by a decrease in net realized gains on
investments. Direct premiums written increased 38.6% in the three month period
ended March 31, 1995 when compared to the same period in 1994. The following
table sets forth the direct premiums written by the Company, as well as the
percentage change, for the three month periods ended March 31, 1995 and 1994 by
line of business.
(In thousands)
Three months ended March 31,
____________________________
1995 1994 % Change
______ ______ ________
Auto liability $ 4,988 $ 3,748 33.1%
Auto physical damage 4,285 3,820 12.2%
Workers compensation 1,215 - N/M
Inland marine 682 485 40.6%
Other 230 170 34.7%
______ ______
Total $11,400 $ 8,223 38.6%
====== ======
Expenses for the three month period ended March 31, 1995 increased $.8
million, or 11.5%, over expenses for the three month period ended
March 31, 1994. The increase was primarily the result of increases in net
claims and claim settlement expenses and underwriting, general and
administrative expenses, offset, in part, by a decrease in amortization of
deferred acquisition costs. Increases in claims and claim settlement expenses
were the result of increases in earned premiums, offset, in part, by a decrease
in the statutory loss ratio from 62.2% in 1994 to 60.8% in 1995. In the first
quarter of 1994, claims were negatively impacted as a result of the severe
weather conditions. Increases in underwriting, general and administrative
expenses were primarily the result of increases in premiums written. The
decrease in the amortization of deferred acquisition costs were primarily the
result of the increase in ceding commissions, offset, in part, by an increase
in net premiums earned. The statutory combined ratio for the three month
period ended March 31, 1995 was 88.0%, a decrease from 99.5% for the three
month period ended March 31, 1994.
Liquidity and Capital Resources
_______________________________
Historically, the Company has generated funds sufficient to support its
operations and has maintained a high degree of liquidity in its investment
portfolio. The primary sources of funds to meet the demands of claim
settlements and operating expenses are premiums, ceding commissions and
investment income. The Company's funds generally are invested in securities
with maturities intended to provide adequate funds to pay claims and expenses
without the forced sale of investments. The Company believes that its current
cash and short term investments, together with funds generated from operations,
will be sufficient to meet its operating and capital requirements for the
foreseeable future.
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
SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WALSHIRE ASSURANCE COMPANY
__________________________
(Registrant)
DATE: May 8, 1995 /s/ Kenneth R. Taylor
__________________________
Kenneth R. Taylor
President and Chief
Executive Officer
DATE: May 8, 1995 /s/ Gary J. Orndorff
__________________________
Gary J. Orndorff
Vice President / Treasurer
and Chief Financial Officer