EXHIBIT 99
FINANCIAL SECURITY ASSURANCE INC.
AND SUBSIDIARIES
Condensed Consolidated Financial Statements
March 31, 2000
FINANCIAL SECURITY ASSURANCE INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
INDEX
FINANCIAL STATEMENTS:
Condensed Consolidated Balance Sheets 1
Condensed Consolidated Statements of Income
and Comprehensive Income 2
Condensed Consolidated Statements of Cash Flows 3
Notes to Condensed Consolidated Financial Statements 4
The New York State Insurance Department recognizes only statutory accounting
practices for determining and reporting the financial condition and results of
operations of an insurance company, for determining its solvency under the New
York Insurance Law, and for determining where its financial condition warrants
the payment of a dividend to its stockholders. No consideration is given by the
New York State Insurance Department to financial statements prepared in
accordance with generally accepted accounting principles in making such
determinations.
FINANCIAL SECURITY ASSURANCE INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
MARCH 31, DECEMBER 31,
ASSETS 2000 1999
---- ----
Bonds at market value (amortized cost of $1,806,653 and
$1,903,932) $ 1,801,753 $ 1,837,085
Equity investments at market value (cost of $10,100) 9,755 9,768
Short-term investments 154,867 257,030
----------- -----------
Total investments 1,966,375 2,103,883
Cash 3,765 4,153
Deferred acquisition costs 197,604 198,048
Prepaid reinsurance premiums 294,812 285,105
Reinsurance recoverable on unpaid losses 9,710 9,492
Receivable for securities sold 67,765 40,635
Other assets 161,176 145,837
----------- -----------
TOTAL ASSETS $ 2,701,207 $ 2,787,153
=========== ===========
LIABILITIES AND MINORITY INTEREST AND SHAREHOLDER'S EQUITY
Deferred premium revenue $ 842,684 $ 844,146
Losses and loss adjustment expenses 89,504 87,309
Deferred federal income taxes 74,346 53,357
Ceded reinsurance balances payable 35,583 36,387
Payable for securities purchased 83,884 239,295
Long-term debt 120,000 120,000
Minority interest 33,914 32,945
Accrued expenses and other liabilities 60,570 78,768
----------- -----------
TOTAL LIABILITIES AND MINORITY INTEREST 1,340,485 1,492,207
----------- -----------
Common stock (500 shares authorized, issued and
outstanding; par value of $30,000 per share) 15,000 15,000
Additional paid-in capital 841,036 832,556
Accumulated other comprehensive income (net of deferred
income tax benefit of $1,836 and $23,513) (3,409) (43,666)
Accumulated earnings 508,095 491,056
----------- -----------
TOTAL SHAREHOLDER'S EQUITY 1,360,722 1,294,946
----------- -----------
TOTAL LIABILITIES AND MINORITY INTEREST AND
SHAREHOLDER'S EQUITY $ 2,701,207 $ 2,787,153
=========== ===========
See notes to condensed consolidated financial statements.
1
FINANCIAL SECURITY ASSURANCE INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(DOLLARS IN THOUSANDS)
THREE MONTHS ENDED MARCH 31,
2000 1999
---- ----
REVENUES:
Net premiums written (net of premiums ceded of
$29,931 and $28,424) $ 36,936 $ 49,910
Decrease (increase) in deferred premium revenue 10,648 (8,616)
-------- --------
Premiums earned (net of premiums ceded of
$19,896 and $15,441) 47,584 41,294
Net investment income 27,998 21,491
Net realized gains (losses) (26,812) 3,468
Other income 58 43
-------- --------
TOTAL REVENUES 48,828 66,296
-------- --------
EXPENSES:
Losses and loss adjustment expenses (net of
reinsurance recoveries of $55 and $194) 1,781 2,175
Policy acquisition costs 9,681 9,917
Other operating expenses 19,743 8,145
-------- --------
TOTAL EXPENSES 31,205 20,237
-------- --------
Minority interest and equity earnings (379) (584)
-------- --------
INCOME BEFORE INCOME TAXES 17,244 45,475
Provision for income taxes 205 11,570
-------- --------
NET INCOME 17,039 33,905
-------- --------
Other comprehensive income (loss), net of tax: Unrealized losses
on securities:
Holding gains (losses) arising during period 22,409 (8,831)
Less: reclassification adjustment for gains (losses)
included in net income (17,849) 2,254
-------- --------
Other comprehensive income (loss) 40,258 (11,085)
-------- --------
COMPREHENSIVE INCOME $ 57,297 $ 22,820
======== ========
See notes to condensed consolidated financial statements.
2
FINANCIAL SECURITY ASSURANCE INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
THREE MONTHS ENDED MARCH 31,
2000 1999
---- ----
Cash flows from operating activities:
Premiums received, net $ 28,377 $ 43,967
Policy acquisition and other operating expenses
paid, net (31,394) (34,990)
Recoverable advances paid (709) (1,265)
Loss and LAE recovered (paid), net 679 (723)
Net investment income received 28,079 20,633
Federal income taxes paid (10,949) (1,889)
Interest paid (1,500)
Other, net (2,354) (1,903)
--------- ---------
Net cash provided by operating activities 10,229 23,830
--------- ---------
Cash flows from investing activities:
Proceeds from sales of bonds 694,871 395,309
Purchases of bonds (806,855) (372,420)
Purchases of property and equipment (2,291) (154)
Net decrease (increase) in short-term securities 103,647 (40,005)
Other investments, net 11 10
--------- ---------
Net cash used for investing activities (10,617) (17,260)
--------- ---------
Net increase (decrease) in cash (388) 6,570
Cash at beginning of period 4,153 2,729
--------- ---------
Cash at end of period $ 3,765 $ 9,299
========= =========
See notes to condensed consolidated financial statements.
3
FINANCIAL SECURITY ASSURANCE INC.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
1. ORGANIZATION AND OWNERSHIP
Financial Security Assurance Inc. (the Company), a wholly owned
subsidiary of Financial Security Assurance Holdings Ltd. (the Parent), is an
insurance company domiciled in the State of New York. The Company is
primarily engaged in the business of providing financial guaranty insurance
on asset-backed and municipal obligations.
2. BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements have been
prepared by the Company and are unaudited. 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, 2000 and for all periods presented, have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with accounting principles
generally accepted in the United States have been condensed or omitted. These
statements should be read in conjunction with the Company's December 31, 1999
consolidated financial statements and notes thereto. The year-end condensed
balance sheet was derived from audited financial statements, but does not
include all disclosures required by accounting principles generally accepted
in the United States. The results of operations for the periods ended March
31, 2000 and 1999 are not necessarily indicative of the operating results for
the full year.
3. MERGER
On March 14, 2000, the Parent announced that it had entered into a merger
agreement pursuant to which the Parent would become a wholly owned subsidiary of
Dexia S.A., a publicly held Belgian corporation, subject to shareholder approval
and satisfaction of regulatory and other closing conditions.
4