FORM 10-K/A*
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
* Amendment No. 1 to Form 10-K for the fiscal year ended December 31, 1996
(MARK ONE)
( X ) Annual Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the year ended December 31, 1996.
( ) 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: 000-24366
GORAN CAPITAL INC.
(Exact name of registrant as specified in its charter)
CANADA Not Applicable
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
181 University Avenue, Suite 1101 M5H 3M7
Toronto, Ontario Canada
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (416) 594-1155 (Canada)
(317) 259-6300 (U.S.A.)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Shares
(Title of Class)
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein and will not be contained, to the best
of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. (X)
The aggregate market value of the Issuer's Common Stock held by nonaffiliates,
as of March 25, 1997 was $128,101,996 (US).
The number of shares of Common Stock of the Registrant, without par value,
outstanding as of March 25, 1997 was 5,569,652.
Documents Incorporated By Reference:
Portions of the Annual Report to Shareholders and the Proxy Statement for the
1997 Annual Meeting of Shareholders are incorporated into Parts II and III. [ ]
Exchange Rate Information
The accounts and financial statements of Goran Capital Inc. (the "Company") are
maintained in U.S. Dollars. In this Report all dollar amounts are expressed in
U.S. Dollars except where otherwise indicated.
The following table sets forth, for each period indicated, the average exchange
rates for U.S. Dollars expressed in Canadian Dollars on the last day of each
month during such period, the high and the low exchange rate during that period
and the exchange rate at the end of such period, based upon the noon buying rate
in New York City for cable transfers in foreign currencies, as certified for
customs purposes by the Federal Reserve Bank of New York (the "Noon Buying
Rate").
Foreign Exchange Rates
U.S. to Canadian Dollars
For The Years Ended December 31,
1996 1995 1994 1993 1992
Average .7339 .7287 .7322 .7733 .8342
Period End .7301 .7325 .7129 .7544 .7865
High .7472 .7465 .7642 .8046 .8757
Low .7270 .7099 .7097 .7439 .7761
Accounting Principles
The financial information contained in this document is stated in U.S. Dollars
and is expressed in accordance with Canadian Generally Accepted Accounting
Principles unless otherwise stated.
GORAN CAPITAL INC.
ANNUAL REPORT ON FORM 10-K/A
December 31, 1996
PART I
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
PART II
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
SIGNATURES
PART I
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted during the last quarter of fiscal year 1996 to a vote
of security holders of the Registrant, through the solicitation of proxies or
otherwise.
PART II
ITEM 6 - SELECTED FINANCIAL DATA
Selected Financial Data of the Company follows:
GORAN CAPITAL INC.
Selected Financial Data
As of the Year Ended December 31,
(In Thousands of U.S. Dollars)
1996 1995 1994 1993 1992
Gross Premium Revenue $307,634 $151,717 $126,978 $114,135 $128,440
Reported Net Earnings 31,296 7,171 3,940 1,397 4,413
US/Canada GAAP
Differences:
Discounting on
Outstanding Claims 62 (161) 88 49 143
Deferred Income Taxes (64) (344) 1,180 562 0
Revised Net Earnings 31,294 6,666 5,208 2,008 4,556
Earnings Per Share $ 5.47 $ 1.20 $ 0.96 $ 0.38 $ 0.94
EPS-Before
Unusual Item $ 5.47 $ 1.20 $ 0.96 $ 0.38 $ 0.94
EPS-Fully Diluted $ 2.48 $ 1.20 $ 0.96 $ 0.38 $ 0.94
Dividends Per Share $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
Reported Total Assets 381,342 160,816 115,240 128,690 96,573
US/Canada GAAP
Differences:
Loans to Purchase
Shares (595) (563) (593) (741) (774)
Deferred Income
Taxes 1,357 1,466 1,742 548 0
Outstanding Claims
Ceded 0 0 0 0 0
Unearned Premiums
Ceded 0 0 0 0 0
Unrealized gain (loss)
on Investments 1,225 (221) (1,383) 0 0
Revised Total Assets 383,329 161,498 115,006 128,497 95,799
Long Term Bonds and
Debentures 0 9,237 10,787 12,936 14,633
Reported Shareholders'
Equity 47,258 12,622 5,067 1,088 (739)
US/Canada GAAP
Differences:
Deferred Income
Taxes 1,357 1,466 1,742 548 0
Discounting on
claims (1,261) (1,327) (1,134) (1,292) (1,396)
Loans to Purchase
Shares (595) (563) (593) (741) (774)
Unrealized Gain (Loss)
on Investments 1,225 (221) (1,383) 0 0
Revised Shareholders'
Equity 47,984 11,977 3,699 (397) (2,909)
Shares Outstanding 5,724,476 5,567,644 5,399,463 5,242,101 4,834,160
Activity in the liability for unpaid losses and loss adjustment expenses is
summarized as follows: (In Thousands of U.S. Dollars)(1)
1996 1995 1994
-------- ------- -------
Balance at January 1 $ 59,421 $29,269 $54,143
Less reinsurance recoverables 37,798 12,542 36,891
-------- ------- -------
Net balance at January 1 21,623 16,727 17,252
-------- ------- -------
Reserves required in
connection with the
Superior Acquisition 44,423 0 0
-------- ------- -------
Incurred related to:
Current year 183,618 35,184 26,268
Prior years (1,509) 787 202
-------- ------- -------
Total Incurred 137,109 35,971 26,470
Paid related to:
Current year 102,713 21,057 16,647
Prior years 28,182 10,018 10,348
-------- ------- -------
Total paid 130,895 31,075 26,995
-------- ------- -------
Net balance at December 31 72,260 21,623 16,727
Plus reinsurance recoverables 29,459 37,798 12,542
-------- ------- -------
Balance at December 31 $101,719 $59,421 $29,269
======== ======= =======
The foregoing reconciliation shows that the (redundancies) deficiencies of
$(1,509), $787, and $202 in the December 31, 1996, 1995 and 1994 reserves,
respectively, emerged in the following year. These (redundancies) deficiencies
resulted from (lower) higher than anticipated losses resulting from a change in
settlement costs relating to those estimates.
The anticipated effect of inflation is implicitly considered when estimating
liabilities for losses and LAE. While anticipated price increases due to
inflation are considered in estimating the ultimate claim costs, the increase in
average severities of claims is caused by a number of factors that vary with the
individual type of policy written. Future average severities are projected based
on historical trends adjusted for implemented changes in underwriting standards,
policy provisions, and general economic trends. Those anticipated trends are
monitored based on actual development and are modified if necessary.
Liabilities for loss and loss adjustment expenses have been established when
sufficient information has been developed to indicate the involvement of a
specific insurance policy. In addition, a liability has been established to
cover additional exposure on both known and unasserted claims. These liabilities
are reviewed and updated continually.
(1) Such information relates only to Symons International Group, Inc. and
does not include any information with respect to any other insurance
subsidiaries of the Company.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF 0PERATIONS
The discussion entitled "Management Discussion and Analysis of Financial
Condition and Results of Operations" and "Overview" in the 1996 Annual Report on
pages 5 through 13, and in the 1995 Annual Report on pages 4 through 11, both
included as Exhibit 13, is incorporated herein by reference.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements included in the 1996 Annual Report and in
the 1995 Annual Report, both included as Exhibit 13, and listed in Item 14 of
this Report are incorporated herein by reference.
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item regarding Directors of the Company is
incorporated herein by reference to the Company's definitive management proxy
circular for its 1997 annual meeting of common stockholders included as Exhibit
99.1 (the "1997 Proxy Circular"). G. Gordon Symons, Chairman of the Board of the
Company, is the father of Alan G. Symons, the President and Chief Executive
Officer and a director of the Company, and Douglas H. Symons, the Vice President
and Chief Operating Officer and a director of the Company.
ITEM 11 - EXECUTIVE COMPENSATION
The information required by this Item is incorporated herein by reference to the
Company's 1997 Proxy Circular.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated herein by reference to the
Company's 1997 Proxy Circular and to the section captioned "Voting Securities
and Beneficial Owners" in the definitive proxy statement of Symons International
Group, Inc ("SIG") for the 1997 annual meeting of common stockholders of SIG
(the "1997 SIG Proxy Statement"), which section is included as Exhibit 99.2
hereof. The SIG Proxy Statement was originally included as Exhibit 99 of SIG's
Annual Report on Form 10-K for the year ended December 31, 1996.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated herein by reference to the
sections captioned "Interest of Insiders in Material Transactions" and
"Indebtedness of Officers and Directors of the Corporation" in the Company's
1997 Proxy Circular, and to the sections captioned "Indebtedness of Management"
on pages 13 through 14 and "Certain Relationships/Related Transactions" on pages
15 through 16 of the 1997 SIG Proxy Statement. The latter two sections are
included as Exhibits 99.3 and 99.4, respectively, hereof.
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
The documents listed below are filed as a part of this Report except as
otherwise indicated:
1. Financial Statements. The following described consolidated financial
statements found on pages 14 through 33 of the 1996 Annual Report indicated
below are incorporated into Item 8 of this Report by reference.
Description of Financial Statement Item
Report of Independent Accountants
Consolidated Balance Sheets, December 31,
1996 and 1995
Consolidated Statements of Earnings, Years
Ended December 31, 1996 and 1995
Consolidated Statements of Retained Earnings
(Deficit), Years Ended December 31,
1996 and 1995
Consolidated Statements of Changes in Cash Resources,
Years Ended December 31, 1996 and 1995
Notes to Consolidated Financial Statements,
Years Ended December 31, 1996 and 1995
The following described consolidated financial statements found on pages 12
through 23 of the 1995 Annual Report indicated below are incorporated into Item
8 of this Report by reference.
Description of Financial Statement Item
Report of Independent Accountants
Consolidated Balance Sheets, December 31,
1995 and 1994
Consolidated Statements of Operations, Years
Ended December 31, 1995 and 1994
Consolidated Statements of Deficit,
Years Ended December 31, 1995 and 1994
Consolidated Statements of Changes in Cash Resources,
Years Ended December 31, 1995 and 1994
Notes to Consolidated Financial Statements,
Years Ended December 31, 1995 and 1994
2. Financial Statement Schedules.
The following financial statement schedules are included herein.
Description of Financial Statement Item
Report of Independent Accountant On Differences
Between Canadian and United States Generally
Accepted Accounting Principles and
Supplementary Schedules
Differences Between Canadian And United States
Generally Accepted Accounting Principles
Exhibit 1 - Consolidated Statement of Changes
In Cash Resources
Exhibit 2 - Summary of Investments That Exceed
10% Of Shareholders' Equity
Exhibit 3 - Summary of Non Income Producing
Investments
Exhibit 4 - Amounts Due From Insurance Companies
In Excess of 10% of Shareholders' Equity
Exhibit 5 - Analysis Of Changes In Shareholders'
Equity
Schedule I - Summary Of Investments Other Than
Investments In Related Parties
Schedule II - Condensed Financial Information
Of Registrant
Schedule IV - Reinsurance
Schedule V - Valuation And Qualifying Accounts
Schedule VI - Supplemental Information Concerning
Property-Casualty Insurance Operations
Schedules other than those listed above have been omitted because the required
information is contained in the financial statements and notes thereto or
because such schedules are not required or applicable.
3. Exhibits. The Exhibits set forth on the Index to Exhibits are incorporated
herein by reference.
4. Reports on Form 8-K. Registrant filed no reports on Form 8-K during the
quarter ended December 31, 1996.
GORAN CAPITAL INC.
Differences Between Canadian And United States General Accepted Accounting
Principles For The Years Ended December 31, 1996, 1995 and 1994
A reconciliation of financial statement amounts from Canadian Generally Accepted
Accounting Principles to U.S. Generally Accepted Accounting Principles is as
follows:
1996 1995 1994
Net Earnings In Accordance
With Canadian Generally
Accepted Accounting Principles $31,296 $7,171 $3,940
Add Effect Of Difference In
Accounting For:
Deferred Income Taxes
(See Note (e)) (64) (344) 1,180
Outstanding Claims
(See Note (f)) 62 (161) 88
Net Earnings In Accordance
With United States Generally
Accepted Accounting Principles $31,294 $6,666 $5,208
Applying United States Generally Accepted Accounting Principles, deferred income
tax assets would be increased by $1,357, $1,466 and $1,742, outstanding claims
would be increased by $1,261, $1,327 and $1,134 and cumulative translation
adjustment would be increased by $41, $36, and $14, as at December 31, 1996,
1995 and 1994, respectively. As a result of these adjustments, retained earnings
would be increased by $96, $139 and $608 as at December 31, 1996, 1995 and 1994,
respectively. The effect of the above noted differences on other individual
balance sheet items and on working capital is not significant.
B. Earnings Per Share
Earnings per share, as determined in accordance with United States Generally
Accepted Accounting Principles, are set out below. Primary earnings per share
are computed based on the weighted average number of common shares outstanding
during the year plus common share equivalents consisting of stock options and
warrants. Primary and fully diluted earnings per share are calculated using the
Treasury Stock method and assume conversion of securities when the result is
dilutive.
The following average number of shares were used for the compilation of primary
and fully diluted earnings per share:
1996 1995 1994
Primary $5,724,476 $5,567,644 $5,399,463
Fully Diluted 5,724,476 5,567,644 5,399,463
Earnings per share, as determined in accordance with U.S. Generally
Accepted Accounting Principles, are as follows:
1996 1995 1994
Primary Earnings Per Share $5.47 $1.20 $0.96
Fully Diluted Earnings Per Share 5.47 1.20 0.96
C. Statement Of Changes In Cash Resources
U.S. Generally Accepted Accounting Principles require that the components of the
changes in cash resources, in most cases, be reported on a gross basis.
Exhibit 1 is a Statement of Cash Resources that incorporates the necessary added
disclosure detail.
D. Supplemental Cash Flow Information
Cash paid for interest and income taxes is summarized as follows:
1996 1995 1994
Cash Paid For Interest $4,005 $1,548 $1,773
Cash Paid For Income Taxes,
Net of Refunds 9,825 1,953 166
E. Income Taxes
The difference in accounting for deferred income taxes reflects the adoption for
U.S. Generally Accepted Accounting Principles, effective January 1, 1993, of
Statement of Financial Accounting Standards No. 109 ("SFAS" No. 109"),
"Accounting for Income Taxes". This standard requires an asset and liability
approach that takes into account changes in tax rates when valuing the deferred
tax amounts to be reported in the balance sheet.
Deferred tax assets recognized under Canadian Generally Accepted Accounting
Principles and Accounting Principles Board Opinion No. 11, which require
realization beyond a reasonable doubt in order to record the assets, amounted to
$NIL, $73 and $214 at December 31, 1996, 1995 and 1994, respectively, and
pertained to Canadian operations only.
The adoption of SFAS No. 109 results in additional deferred tax assets
recognized for deductible temporary differences and loss carry-forwards in the
amount of $3,531, $2,581 and $2,375 net of valuation allowances of $NIL, $69 and
$260 and deferred tax liabilities recognized for taxable temporary differences
in the amount of $2,174, $1,114 and $633 at December 31, 1996, 1995 and 1994,
respectively.
F. Outstanding Claims
The difference in accounting for outstanding claims reflects the application for
U.S. Generally Accepted Accounting Principles of SEC Staff Accounting Bulletin
No. 62, "Discounting By Property/Casualty Insurance Companies". This standard
does not allow discounting of unpaid claim liabilities by public companies,
except in specific circumstances that are not applicable to the Company.
G. Receivables From Sale Of Capital Stock
The SEC Staff Accounting Bulletins require that accounts or notes receivable
arising from transactions involving capital stock should be presented as
deductions from shareholders' equity and not as assets. Accordingly, in order to
comply with U.S. Generally Accepted Accounting Principles, shareholders' equity
would be reduced by $595, $563 and $593 at December 31, 1996, 1995 and 1994,
respectively, to reflect the loans due from certain shareholders which relate to
the purchase of common shares of the Company.
H. Concentration Of Investments
U.S. Generally Accepted Accounting Principles require that disclosure be made of
significant concentrations of investments and of investments that are non-income
producing. The Company considers investments whose value exceeds 10% of
shareholders' equity to be significant. The relevant disclosures are provided in
Exhibits 2 and 3, respectively.
I. Concentrations of Credit Risk
U.S. Generally Accepted Accounting Principles require disclosure of significant
concentrations of credit risk. The Company's credit risk is with respect to
amounts receivable from other insurance companies. The Company considers credit
risks in excess of 10% of shareholders' equity to be significant. The relevant
disclosure is provided in Exhibit 4.
J. Unrealized Loss On Investments
U.S. Generally Accepted Accounting Principles require that unrealized losses on
investment portfolios be included as a component in determining shareholders'
equity. In addition, SFAS No. 115 permits prospective recognition of unrealized
gains on investment portfolios for year-ends commencing after December 15, 1993.
As a result, shareholders' equity would be increased by $1,225 as at December
31, 1996 and reduced by $221 and $1,383 as at December 31, 1995 and 1994,
respectively.
K. Changes In Shareholders' Equity
An analysis of the components of the change in shareholders' equity, determined
in accordance with Canadian Generally Accepted Accounting Principles, is
provided in Exhibit 5.
A reconciliation of shareholders' equity from Canadian Generally Accepted
Accounting Principles to U.S. Generally Accepted Accounting Principles
is as follows:
1996 1995 1994
Shareholders' Equity In Accordance
With Canadian Generally
Accepted Accounting Principles $47,258 $12,622 $ 5,067
Add (deduct) Effect Of Difference
In Accounting For:
Deferred Income Taxes (See
Note (a)) 1,357 1,466 1,742
Outstanding Claims (See
Note (a)) (1,261) (1,327) (1,134)
Receivables From Sale Of
Capital Stock (See Note (g)) (595) (563) (593)
Unrealized Gain (Loss) On
Investments (See Note (j)) 1,225 (221) (1,383)
Shareholders' Equity (Deficiency)
In Accordance With U.S.
Generally Accepted
Accounting Principles $47,984 $11,977 $ 3,699
GORAN CAPITAL INC.
Consolidated Statement of Changes
In Cash Resources
For the Year Ended December 31,
(In Thousands of U.S. Dollars)
1996 1995 1994
Cash Provided By Operating
Activities:
Net income for the period $ 31,296 $7,171 $3,941
Items Not Affecting Cash
Resources:
Amortization 2,438 693 566
Minority Interest In Net
Income Of Consolidated
Subsidiary 2,801 (16) 16
Loss (gain) On Sale Of
Investments 637 198 (358)
Loss (gain) On Sale Of Capital
Assets (4) (7) (1)
Increase in Unearned Premiums 13,178 9,247 (7,037)
Increase (Decrease) In
Outstanding Losses (4,545) 29,289 (18,341)
Decrease (Increase) In Deferred
Policy Acquisition Costs 1,649 (3,058) (864)
Decrease In Deferred Income
Taxes 73 147 214
Decrease In Goodwill 0 0 0
Decrease (Increase) in
Reinsurance Recoverable on
outstanding claims 8,464 (25,930) 22,259
Decrease (Increase) in prepaid
reinsurance premiums (8,785) 916 (3,548)
Decrease (Increase) In Other
Assets (2,433) (470) 78
Items Not Involving Cash 13,473 11,009 7,058
Increase (Decrease) In Accounts
Payable 5,576 (2,291) 1,352
Decrease (Increase) In Accounts
Receivable (19,448) (6,252) (13,775)
Changes In Operating Working
Capital (13,872) (8,543) (12,423)
30,897 9,637 (1,424)
Financing Activities:
Issue Of Share Capital 599 303 34
Reduction Of Subordinated
Debenture (11,085) (1,462) (1,047)
Increase (Decrease) Of
Borrowed Funds 42,189 220 722
Increase (Decrease) in
Contributed Surplus 2,775 0 0
Increase (Decrease) in
Minority Interest 38,225 0 0
Investing Activities:
Net (Purchase) Sale Of
Marketable Securities (11,996) (4,147) 2,118
Acquisition of subsidiary (66,590) 0 0
Proceeds On Sale Of Capital
Assets 14 11 5
Net Purchase Of Capital Assets (2,473) (1,692) (634)
Other 563 155 (401)
Change In Cash Resources
During The Year 23,118 3,025 (627)
Cash Resources, Beginning Of Year 10,613 7,588 8,215
Cash Resources, End Of Year 33,731 10,613 7,588
Cash Resources Are Comprised Of:
Cash 4,679 4,171 (116)
Short-Term Investments 29,052 6,442 7,704
33,731 10,613 7,588
GORAN CAPITAL INC.
CONSOLIDATED SUMMARY OF INVESTMENTS
THAT EXCEED 10% OF SHAREHOLDERS' EQUITY
For The Year Ended December 31, 1996
(In Thousands of U.S. Dollars)
Fixed Short-Term Total
Maturities Investments Investment
Federal Home
Loan Bank $ 9,770 $ $ 9,770
Federal
National
Mortgage
Association $14,885 $ $14,885
U.S.
Treasury
Notes $26,318 $ $26,318
U.S.
Treasury
Bills $ $10,292 $61,265
GORAN CAPITAL INC.
Consoldiated Shareholders' Equity In Accordance
With United States GAAP
As At December 31, 1996
(In Thousands of U.S. Dollars)
Consolidated Shareholders' Equity
in Accordance with U.S. GAAP $47,983,000
Threshold (Rounded) 4,798,300
GORAN CAPITAL INC.
Concentration of Credit Risk
Amounts Due From Other Insurance
Companies Paid and Unpaid Claims
As At December 31, 1996
(In Thousands of U.S. Dollars)
Company Name Amount
Centre Reinsurance (Bermuda) Limited $16,764
Federal Crop Insurance Corporation $21,800
Total $38,564
Notes: Accounts listed above are amounts greater than $4,798,000 (U.S.) which is
approximately 10% of Shareholders' Equity at December 31, 1996. Amounts are net
of trust accounts posted as collateral with original cedents, with respect to
certain retrocession agreements in which the Company is a retrocessionnaire.
GORAN CAPITAL INC.
ANALYSIS OF CHANGES IN SHAREHOLDERS' EQUITY
As at December 31,
(In Thousands of U.S. Dollars)
1996 1995 1994
Capital Stock $16,875 $ 16,126 $ 16,091
Contributed Surplus 0 0 0
Deficit (3,895) (11,066) (15,007)
Cumulative Translation Adjustment (358) 7 (173)
Shareholders' Equity -
Opening Balance $12,622 $ 5,067 $ 911
Activity For The Year
Issue Of Share Capital 541 749 35
Contributed Surplus 2,775 0 0
Net Income For The Year 31,296 7,171 3,941
Translation Adjustment for The Year 24 (365) 180
Shareholders' Equity -
Ending Balance 47,258 12,622 5,067
Comprised Of:
Capital Stock 17,416 16,875 16,126
Contributed Surplus 2,775 0 0
Retained Earnings (Deficit) 27,401 (3,895) (11,066)
Cumulative Translation Adjustment (334) (358) 7
Shareholders' Equity -
Ending Balance 47,258 12,622 5,067
GORAN CAPITAL INC. - CONSOLIDATED
SCHEDULE I - SUMMARY OF INVESTMENTS -
OTHER THAN INVESTMENTS IN RELATED PARTIES
As at December 31, 1996
(In Thousands of U.S. Dollars)
Estimated Amount On
Type of Investment Cost Market Value Balance Sheet
Fixed Maturities:
Bonds:
Government and Government
Agencies $ 57,804 $ 57,826 $ 57,804
States and Municipalities 3,587 3,651 3,587
Public Utilities 350 379 350
All Other Corporate Bonds 76,071 76,527 76,071
Total Fixed Maturities $137,812 $138,383 $137,812
Equity Securities:
Common Stocks $ 28,075 $ 28,729 $ 28,075
Preferred Stocks 0 0 0
Total Equity Securities $ 28,075 $ 28,729 $ 28,075
Mortgage Loans on Real Estate 2,430 2,430 2,430
Real Estate 4,548 4,548 4,548
Other Long-Term Investments 75 75 75
Short Term Investments 29,052 29,052 29,052
Total Investments $201,992 $203,217 $201,992
GORAN CAPITAL INC. - CONSOLIDATED
SCHEDULE II - CONDENSED FINANCIAL INFORMATION
OF REGISTRANT (Parent Company)
Balance Sheet
As At December 31,
(In Thousands U.S. Dollars)
1995 1996
Assets
Cash $ 319 $ 812
Accounts Receivable 419 379
Capital and Other Assets 543 750
Investment In Subsidiaries 10,772 10,807
Total Assets $ 12,054 $ 12,748
Liabilities and Shareholders' Equity
Accounts Payable $ 9,758 $ 1,225
Other Payables 973 757
Subordinated Debenture 0 11,084
Total Liabilities 10,731 13,066
Shareholders' Equity
Common Shares 18,473 18,002
Deficit (17,150) (18,320)
Total Shareholders' Equity 1,323 (318)
Total Liabilities and Shareholders' Equity $12,054 $12,748
GORAN CAPITAL INC.
Statement of Earnings (Loss)
For The Years Ended December 31,
(In Thousands of U.S. Dollars)
1996 1995 1994
Revenues
Management Fees $ 352 $ 796 $ 901
Royalty Income 0 0 69
Dividend Income 3,500 0 0
Other Income 0 0 1,449
Net Investment Income 264 448 399
Total Revenues 4,116 1,244 2,818
Expenses
Debenture Interest Expense 868 998 1,089
Amortization 200 114 160
General, Administrative And
Acquisition Expenses 1,879 1,338 1,170
Total Expenses 2,946 2,450 2,419
Net Income (Loss) $ 1,170 $ (1,206) 399
Deficit, beginning of year (18,320) (17,114) (17,513)
Deficit, end of year (17,150) (18,320) (17,114)
GORAN CAPITAL INC. - CONSOLIDATED
SCHEDULE II - CONDENSED FINANCIAL INFORMATION
OF REGISTRANT
For The Years Ended December 31, 1994, 1995
and 1996
(In Thousands of U.S. Dollars)
1994 1995 1996
Cash Flows From Operations:
Net Income (Loss) $ 1,170 $ (1,206) $ 399
Items Not Involving Cash:
Amortization 199 114 160
Gain on Sale of Capital Assets (4) (7) 0
Decrease (Increase) in Accounts
Receivable (40) 1,822 40
Decrease (Increase) in Other
Assets (3) (29) (2)
Increase (Decrease) in Accounts
Payable 8,533 1,227 (164)
Increase (Decrease) in Other
Payables 0 (141) (214)
Net Cash Provided (Used) by Operations 10,071 1,780 219
Cash Flows From Financing Activities:
Redemption of Share Capital by
Subsidiary 0 0 623
Proceeds on Sale of Capital
Assets 14 11 0
Issue of Common Shares 599 305 35
Net Cash Provided By Financing
Activities 613 316 658
Cash Flows From Investing Activities:
Purchase of Fixed Assets 0 (3) 0
Other, net (93) 3 0
Reduction of Debentures (11,084) (1,454) (1,076)
Net Cash Used by Investing Activities: (11,177) (1,454) (1,076)
Net Increase (Decrease) in Cash (493) 642 (199)
Cash at Beginning of Year 812 170 369
Cash At End of Year 319 812 170
Cash Resources are Comprised of:
Cash 187 109 (29)
Short-Term Investments 132 703 199
319 812 170
GORAN CAPITAL INC. - CONSOLIDATED
SCHEDULE II - CONDENSED FINANCIAL
INFORMATION OF REGISTRANT
For The Years Ended December 31, 1994, 1995
and 1996
Basis of Presentation
The condensed financial information should be read in conjunction with the
consolidated financial statements of Goran Capital Inc. The condensed financial
information includes the accounts and activities of the Parent Company which
acts as the holding company for the insurance subsidiaries.
GORAN CAPITAL INC. - CONSOLIDATED
SCHEDULE IV - REINSURANCE
For The Years Ended December 31,
(In Thousands of U.S. Dollars)
1996 1995 1994
Direct Amount $102,178 $122,088 $298,596
Assumed From Other
Companies $ 24,800 $ 29,629 $ 9,038
Ceded To Other
Companies $ 68,505 65,356 87,202
Net Amount $ 58,473 $ 86,361 $220,432
Percentage Of Amount
Assumed To Net 42.4% 34.3% 4.1%
GORAN CAPITAL INC. - CONSOLIDATED
SCHEDULE V - VALUATION AND QUALIFYING ACCOUNTS
For The Years Ended December 31,
(In Thousands of U.S. Dollars)
1994-Allowance 1995-Allowance 1996-Allowance
for Doubtful for Doubtful for Doubtful
Accounts Accounts Accounts
Additions:
Balance At Beginning
Of Period $1,179 $1,209 $ 927
Charged To Costs
And Expenses (1) (86) 2,523 5,034
Charged to Other
Accounts - - - - - - 0
Deductions From
Reserves (116) (2) 2,805 (2) 4,981 (2)
Balance At End
Of Period $1,209 $ 927 $1,480
(1) In 1993, the Company began to direct bill policyholders rather than agents
for premiums. Therefore, bad debt expenses in 1993 increased accordingly.
During late 1994 and into 1995, the Company experienced an increase in
premiums written. During 1995, the Company further evaluated the
collectibility of this business and incurred a bad debt expense of approxi-
mately $2.5 million. The Company continually monitors the adequacy of its
allowance for doubtful accounts and believes the balance of such allowance
at December 31, 1993, 1994 and 1995 was adequate.
(2) Uncollectible accounts written off, net of recoveries.
GORAN CAPITAL INC. - CONSOLIDATED
SCHEDULE VI - SUPPLEMENTAL INFORMATION CONCERNING
PROPERTY - CASUALTY INSURANCE OPERATIONS
For The Years Ended December 31,
(In Thousands of U.S. Dollars)
1996 1995 1994
Deferred Policy
Acquisition Costs $ 12,800 $ 2,379 $ 1,479
Reserves for Losses and
Loss Adjustment Expenses 101,719 59,421 29,269
Unearned Premiums 87,825 17,497 14,416
Earned Premiums 191,759 49,641 32,126
Net Investment Income 6,738 1,173 1,241
Losses And Loss Adjustment
Expenses Incurred Related To:
Current Years 137,895 35,184 26,268
Prior Years (570) 787 202
Paid Losses And Loss
Adjustment Expenses 130,895 31,075 26,995
Amortization Of Deferred
Policy Acquisition Costs 27,657 7,150 4,852
Premiums Written 305,499 $124,634 $103,134
Note: All amounts in the above table are net of the effects of reinsurance and
related commission income, except for net investment income regarding which
reinsurance is not applicable, premiums written liabilities for losses and loss
adjustment expenses, and unearned premiums which are stated on a gross basis.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this amended report to
be signed on its behalf by the undersigned, thereto duly authorized.
GORAN CAPITAL INC.
April 29, 1997 By: /s/ Alan G. Symons
------------------------------------
Alan G. Symons,
President and Chief Executive Officer
EXHIBIT INDEX
Reference to
Regulation S-K
Exhibit No. Document
1 Final Draft of the Underwriting Agreement dated November 4
1996 among Registrant, Symons International Group, Inc.,
Advest, Inc. and Mesirow Financial, Inc.
3.1 The Registrant's Articles of Incorporation are incorporated
by reference to Exhibit 1 of the Registrant's Form 20-F,
filed October 31, 1994.
3.2 Registrant's Restated Bylaw 1
4.1 Sample Share Certificate and Articles of Amalgamation
defining rights attaching to common shares are incorporated
by reference to Exhibit 2 of Registrant's Form 20-F filed
October 31, 1994.
10.1 The Stock Purchase Agreement among Registrant, Symons
International Group, Inc., Fortis, Inc. and Interfinancial,
Inc. dated January 31, 1996 is incorporated by reference to
Exhibit 10.1 of Symons International Group, Inc.'s
Registration Statement on Form S-1, Reg. No. 333-9129.
10.2(1) The Stock Purchase Agreement among GGS Management Holdings,
Inc., GS Capital Partners II, L.P., Registrant and Symons
International Group, Inc. dated January 31, 1996 is
incorporated by reference to Exhibit 10.2(1) of Symons
International Group, Inc.'s Registration Statement on Form
S-1, Reg. No. 333-9129.
10.2(2) The First Amendment to the Stock Purchase Agreement by and
among GGS Management Holdings, Inc., GS Capital Partners II,
L.P., Registrant and Symons International Group, Inc. dated
March 28, 1996 is incorporated by reference to Exhibit
10.2(2) of Symons International Group, Inc.'s Registration
Statement on Form S-1, Reg. No. 333-9129.
10.2(3) The Second Amendment to the Stock Purchase Agreement by and
among GGS Management Holdings, Inc., GS Capital Partners II,
L.P., Registrant and Symons International Group, Inc. dated
April 30, 1996 is incorporated by reference to Exhibit
10.2(3) of Symons International Group, Inc.'s Registration
Statement on Form S-1, Reg. No. 333-9129.
10.2(4) The Third Amendment to the Stock Purchase Agreement by and
among GGS Management Holdings, Inc., GS Capital Partners II,
L.P., Registrant, Symons International Group, Inc. and Pafco
General Insurance Company dated September 24, 1996 is
incorporated by reference to Exhibit 10.2(4) of Symons
International Group, Inc.'s Registration Statement on Form
S-1, Reg. No. 333-9129.
10.3(1) The Stockholders Agreement among GGS Management Holdings,
Inc., GS Capital Partners II, L.P., Symons International
Group, Inc. and Registrant dated April 30, 1996 is
incorporated by reference to Exhibit 10.3(1) of the Symons
International Group, Inc.'s Registration Statement on Form
S-1, Reg. No. 333-9129.
10.3(2) The Amended and Restated Stockholder Agreement among GGS
Management Holdings, Inc., GS Capital Partners II, L.P.,
Symons International Group, Inc. and Registrant dated
September 24, 1996 is incorporated by reference to Exhibit
10.3(2) of Symons International Group, Inc.'s Registration
Statement on Form S-1, Reg. No. 333-9129.
10.4 The Registration Rights Agreement among GGS Management
Holdings, Inc., GS Capital Partners II, L.P., Registrant and
Symons International Group, Inc. dated April 30, 1996 is
incorporated by reference to Exhibit 10.4 of Symons
International Group, Inc.'s Registration Statement on Form
S-1, Reg. No. 333-9129.
10.5 The Management Agreement among Superior Insurance Company,
Superior American Insurance Company, Superior Guaranty
Insurance Company and GGS Management, Inc. dated April 30,
1996 is incorporated by reference to Exhibit 10.5 of Symons
International Group, Inc.'s Registration Statement on Form
S-1, Reg. No. 333-9129.
10.6 The Management Agreement between Pafco General Insurance
Company and Symons International Group, Inc. dated May 1,
1987, as assigned to GGS Management, Inc. effective April
30, 1996, is incorporated by reference to Exhibit 10.6 of
Symons International Group, Inc.'s Registration Statement on
Form S-1, Reg. No. 333-9129.
10.7 The Administration Agreement between IGF Insurance Company
and Symons International Group, Inc. dated February 26,
1990, as amended, is incorporated by reference to Exhibit
10.7 of the Symons International Group, Inc.'s Registration
Statement on Form S-1, Reg. No. 333-9129.
10.8 The Agreement between IGF Insurance Company and Symons
International Group, Inc. dated November 1, 1990 is
incorporated by reference to Exhibit 10.8 of Symons
International Group, Inc.'s Registration Statement on Form
S-1, Reg. No. 333-9129.
10.9(1) The Credit Agreement between GGS Management, Inc., various
Lenders and The Chase Manhattan Bank (National Association),
as Administrative Agent, dated April 30, 1996 is
incorporated by reference to Exhibit 10.11(1) of Symons
International Group, Inc.'s Registration Statement on Form
S-1, Reg. No. 333-9129.
10.9(2) The Pledge Agreement between GGS Management Holdings, Inc.
and Chase Manhattan Bank, N.A. dated April 30, 1996 is
incorporated by reference to Exhibit 10.11(2) of Symons
International Group, Inc.'s Registration Statement on Form
S-1, Reg. No. 333-9129.
10.9(3) The Pledge Agreement between GGS Management, Inc. and Chase
Manhattan Bank, N.A. dated April 30, 1996 is incorporated by
reference to Exhibit 10.11(3) of Symons International Group,
Inc.'s Registration Statement on Form S-1, Reg. No.
333-9129.
10.9(4) The First Amendment to the Credit Agreement between GGS
Management, Inc., various Lenders and Chase Manhattan Bank,
N.A., as Administrative Agent, dated September 26, 1996
10.9(5) The Second Amendment to the Credit Agreement between GGS
Management, Inc., various Lenders and Chase Manhattan Bank,
N.A., as Administrative Agent, dated December 31, 1996
10.9(6) The Third Amendment to the Credit Agreement between GGS
Management, Inc., various Lenders and Chase Manhattan Bank,
N.A., as Administrative Agent, dated March 26, 1997
10.10 The Registration Rights Agreement between Registrant and
Symons International Group, Inc. dated May 29, 1996 is
incorporated by reference to Exhibit 10.13 of Symons
International Group, Inc.'s Registration Statement on Form
S-1, Reg. No. 333-9129.
10.11(1) The License, Improvement and Support Agreement between
Tritech Financial Systems, Inc. and Symons International
Group, Inc. dated August 30, 1995 is incorporated by
reference to Exhibit 10.14(1) of Symons International Group,
Inc.'s Registration Statement on Form S-1, Reg. No.
333-9129.
10.11(2) The License of Computer Software between Tritech Financial
Systems, Inc. and Symons International Group, Inc. dated
August 30, 1995 is incorporated by reference to Exhibit
10.14(2) of Symons International Group, Inc.'s Registration
Statement on Form S-1, Reg. No. 333-9129.
10.12(1) The Agreement among Cliffstan Investments, Inc., Pafco
General Insurance Company and Gage North Holdings, Inc.
dated September 1, 1989 is incorporated by reference to
Exhibit 10.15(1) of Symons International Group, Inc.'s
Registration Statement on Form S-1, Reg. No. 333-9129.
10.12(2) The Purchase of Promissory Note and Assignment of Security
Agreement between Pafco General Insurance Company and
Granite Reinsurance Company, Ltd., dated September 30, 1992
is incorporated by reference to Exhibit 10.15(2) of Symons
International Group, Inc.'s Registration Statement on Form
S-1, Reg. No. 333-9129.
10.12(3) The Guarantee of Alan G. Symons dated April 22, 1994 is
incorporated by reference to Exhibit 10.15(3) of Symons
International Group, Inc.'s Registration Statement on Form
S-1, Reg. No. 333-9129.
10.12(4) The Share Pledge Agreement between Symons International
Group, Ltd. and Pafco General Insurance Company dated April
22, 1994 is incorporated by reference to Exhibit 10.15(4) of
Symons International Group, Inc.'s Registration Statement on
Form S-1, Reg. No. 333-9129.
10.13(1) The Employment Agreement between GGS Management Holdings,
Inc. and Alan G. Symons dated January 31, 1996 is
incorporated by reference to Exhibit 10.16(1) of Symons
International Group, Inc.'s Registration Statement on Form
S-1, Reg. No. 333-9129.
10.13(2) The Employment Agreement between GGS Management Holdings,
Inc. and Douglas H. Symons dated January 31, 1996 is
incorporated by reference to Exhibit 10.16(2) of Symons
International Group, Inc.'s Registration Statement on Form
S-1, Reg. No. 333-9129.
10.14(1) The Employment Agreement between IGF Insurance Company and
Dennis G. Daggett effective February 1, 1996 is incorporated
by reference to Exhibit 10.17(1) of Symons International
Group, Inc.'s Registration Statement on Form S-1, Reg. No.
333-9129.
10.14(2) The Employment Agreement between IGF Insurance Company and
Thomas F. Gowdy effective February 1, 1996 is incorporated
by reference to Exhibit 10.17(2) of Symons International
Group, Inc.'s Registration Statement on Form S-1, Reg. No.
333-9129.
10.15 The Employment Agreement between Superior Insurance Company
and Roger C. Sullivan, Jr. dated May 9, 1996 is incorporated
by reference to Exhibit 10.18 of Symons International Group,
Inc.'s Registration Statement on Form S-1, Reg. No.
333-9129.
10.16 The Employment Agreement between Registrant and Gary P.
Hutchcraft effective June 30, 1996 is incorporated by
reference to Exhibit 10.19 of Symons International Group,
Inc.'s Registration Statement on Form S-1, Reg. No.
333-9129.
10.17 The Goran Capital Inc. Stock Option Plan is incorporated by
reference to Exhibit 10.20 of Symons International Group,
Inc.'s Registration Statement on Form S-1, Reg. No.
333-9129.
10.18 The GGS Management Holdings, Inc. 1996 Stock Option Plan is
incorporated by reference to Exhibit 10.21 of Symons
International Group, Inc.'s Registration Statement on Form
S-1, Reg. No. 333-9129.
10.19 The Symons International Group, Inc. 1996 Stock Option Plan
is incorporated by reference to Exhibit 10.22 of Symons
International Group, Inc.'s Registration Statement on Form
S-1, Reg. No. 333-9129.
10.20 The Symons International Group, Inc. Retirement Savings Plan
is incorporated by reference to Exhibit 10.24 of Symons
International Group, Inc.'s Registration Statement on Form
S-1, Reg. No. 333-9129.
10.21 The Insurance Service Agreement between Mutual Service
Casualty Company and IGF Insurance Company dated May 20,
1996 is incorporated by reference to Exhibit 10.25 of Symons
International Group, Inc.'s Registration Statement on Form
S-1, Reg. No. 333-9129.
10.22(1) The Automobile Third Party Liability and Physical Damage
Quota Share Reinsurance. Contract between Pafco General
Insurance Company and Superior Insurance Company is
incorporated by reference to Exhibit 10.27(1) of Symons
International Group, Inc.'s Registration Statement on Form
S-1, Reg. No. 333-9129.
10.22(2) The Crop Hail Quota Share Reinsurance Contract and Crop
Insurance Service Agreement between Pafco General Insurance
Company and IGF Insurance Company is incorporated by
reference to Exhibit 10.27(2) of Symons International Group,
Inc.'s Registration Statement on Form S-1, Reg. No.
333-9129.
10.22(3) The Automobile Third Party Liability and Physical Damage
Quota Share Reinsurance Contract between IGF Insurance
Company and Pafco General Insurance Company is incorporated
by reference to Exhibit 10.27(3) of Symons International
Group, Inc.'s Registration Statement on Form S-1, Reg. No.
333-9129.
10.22(4) The Multiple Line Quota Share Reinsurance Contract between
IGF Insurance Company and Pafco General Insurance Company is
incorporated by reference to Exhibit 10.27(4) of Symons
International Group, Inc.'s Registration Statement on Form
S-1, Reg. No. 333-9129.
10.22(5) The Standard Revenue Agreement between Federal Crop
Insurance Corporation and IGF Insurance Company is
incorporated by reference to Exhibit 10.27(5) of Symons
International Group, Inc.'s Registration Statement on Form
S-1, Reg. No. 333-9129.
10.23 The Commitment Letter, effective October 24, 1996, between
Fifth Third Bank of Central Indiana and Symons International
Group, Inc. is incorporated by reference to Exhibit 10.28 of
Symons International Group, Inc.'s Registration Statement on
Form S-1, Reg. No. 333-9129.
10.24 The Reinsurance Agreement No. 1000-91 (Quota Share
Agreement) and Reinsurance agreement No. 1000-90 (Stop Loss
Reinsurance and Reserves Administration Agreement) are
incorporated by reference to Exhibit 3(c) of Registrant's
Form 20-F filed October 31, 1994.
10.25 The Form of Share Option Agreement is incorporated by
reference to Exhibit 10.05 of Registrant's Form 10-K for the
year ended December 31, 1994.
10.26 The Share Pledge Agreement between Symons International
Group, Ltd and Registrant is incorporated by reference to
Exhibit 10.06 of Registrant's Form 10-K for the year ended
December 31, 1994.
10.27 The MPCI Mulit-Year Stop Loss Reinsurance Agreement is
incorporated by reference to Exhibit 10.07 of Registrant's
Form 10-K for the year ended December 31, 1994.
10.28 The Automobile Liability and Physical Damage Quota Share
Reinsurance Agreement, as amended, is incorporated by
reference to Exhibit 10.08 of Registrant's Form 10-K for the
year ended December 31, 1994.
11 Statement re Computation of Per Share Earnings
13 Annual Report to Security Holders, 1996 and 1995
21 The Subsidiaries of the Registrant are incorporated by
reference to Footnote 1 of the Registrant's consolidated
financial statements contained in its 1996 Annual Report to
Security Holders filed hereunder as Exhibit 13.
99.1 Management Proxy Circular with respect to 1997 Annual
Meeting of Shareholders of Registrant
99.2 Section captioned "Voting Securities and Beneficial Owners"
in the definitive proxy statement of Symons International
Group, Inc. for the 1997 annual meeting of common
stockholders.
99.3 Section captioned "Indebtedness of Management" in the
definitive proxy statement of Symons International Group,
Inc. for the 1997 annual meeting of common stockholders.
99.4 Section captioned "Certain Relationships/Related
Transactions" in the definitive proxy statement of Symons
International Group, Inc. for the 1997 annual meeting of
common stockholders.