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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal year Ended December 31, 1997
Commission File Number 0-24800
THE TENERE GROUP, INC.
(Exact name of Registrant as specified in its charter)
MISSOURI 43-1675969
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
1903 E. Battlefield, Springfield, MO 65804
(Address of principal executive offices) (Zip Code)
417-889-1010
(Registrant's Telephone Number Including Area Code)
Securities Registered Pursuant To Section 12(b) of the Act: None
Securities Registered Pursuant To Section 12(g) of the Act:
Common Stock, $.01 par value
(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 II of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value as of March 27, 1998 of the voting stock held
by non-affiliates of the Registrant cannot be determined since there is no
market at this time for the stock.
As of March 27, 1998 there were 1,999,774 shares outstanding of the
Registrant's common stock, $.01 par value.
DOCUMENTS INCORPORATED BY REFERENCE
As provided herein, portions of the following documents are incorporated herein
by reference.
Document Part of 10-K
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1997 Annual Report to Stockholders II
Proxy Statement for the 1998 Annual Meeting of Stockholders III
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THE TENERE GROUP, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
ITEM PAGE
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PART I
1. Business....................................................................................................... 3
2. Properties..................................................................................................... 11
3. Legal Proceedings.............................................................................................. 11
4. Submission of Matters to a Vote of Security Holders............................................................ 11
PART II
5. Market for the Registrant's Common Stock and Related Stockholder
Matters........................................................................................................ 12
6. Selected Financial Data........................................................................................ 12
7. Management's Discussion and Analysis of Financial Condition and
Results of Operation........................................................................................... 12
8. Financial Statements and Supplementary Data.................................................................... 12
9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures.......................................................................................... 13
PART III
10. Directors and Executive Officers............................................................................... 13
11. Executive Compensation......................................................................................... 13
12. Security Ownership of Certain Beneficial Owners and Management................................................. 13
13. Certain Relationships and Related Transactions................................................................. 14
PART IV
14. Exhibits, Financial Statement Schedules and Reports on Form 8-K................................................. 14
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PART I
ITEM 1. BUSINESS
HISTORY
Risk Control Associates, Inc., an assessable mutual property and
casualty insurance company, was organized in 1976 under Chapter 383 of
the Revised Missouri Statutes (RSMo) to provide professional liability
coverage to physicians and dentists practicing in the State of
Missouri. In 1991, the Company reorganized under Section 379.010 of
the RSMo and became a non-assessable mutual property and casualty
insurance company and its name was changed to RCA Mutual Insurance
Company (RCA). In 1995, the Company converted from a mutual to a stock
property and casualty insurance company and its name was changed to
Intermed Insurance Co. (Intermed). Effective with the demutualization,
Intermed became a wholly-owned subsidiary of The Tenere Group, Inc.
(Tenere), a Missouri holding company formed during the demutualization
process, and the policyholders of RCA became the stockholders of
Tenere.
Tenere has two principal operating subsidiaries, Intermed, which writes
medical and dental malpractice insurance, and Interlex Insurance
Company (Interlex) which writes legal malpractice insurance. Interlex
was formed in 1994 when RCA merged two of its subsidiaries, Insurance
Risks, Ltd., a Cayman Island corporation , into Springfield Casualty
Company, a Missouri corporation. Tenere operates its businesses
through a wholly-owned management company, Insurance Services, Inc.
(ISI), pursuant to a management contract between Intermed, Interlex and
ISI. Neither Tenere, Intermed nor Interlex have employees and all
persons conducting the businesses of these companies are employees of
ISI. The management contract with ISI is, in effect, a cost
reimbursement so that ISI makes neither a profit nor a loss.
PRODUCTS
Intermed currently writes medical and dental malpractice insurance in
the States of Missouri, Kansas and, through two purchasing groups,
Texas. Since the formation in 1976 of a predecessor company, medical
and dental malpractice insurance has been its only line of business.
Insurance is written on two policy forms, occurrence and claims-made.
Prior to September 1, 1995, Intermed also wrote business on a
claims-paid policy form. Estimates of losses and loss adjustment
expenses on occurrence coverages are charged to income as claims are
incurred. Estimates of losses and loss adjustment expenses on
claims-made coverages are charged to income as claims are reported.
Claims-paid coverages insured against claims which were reported and
paid during the period the policy was in effect. Intermed's
obligation to defend and pay claims ended upon expiration of a
claims-paid policy. Claims-paid losses were incurred at the time of
payment so no reserves were required on open claims. Intermed,
however, was contractually liable for claims that had been reported
during the claims-paid policy period if the Company chose not to renew
a claims-paid policy.
Intermed ceased writing claims-paid policies effective September 1,
1995. As these policies expired over the twelve-month period ending
August 31, 1996, claims-paid policyholders were given the opportunity
to convert to a claims-made policy. Reserves for all reported claims
on claims-paid policies which were non-renewed during the period
September 1, 1995 through August 31, 1996 totaled $995,000 at December
31, 1997, net of reinsurance.
At December 31, 1997, Intermed had 1,476 insureds: 501 occurrence and
975 claims-made. This was an increase of 248 from the prior year end.
Interlex writes legal malpractice insurance on a claims-made policy
form. At December 31, 1997, the Company had 693 insureds, an increase
of 265 over the prior year end.
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MARKETING
Intermed sells its products through salaried employees and independent
agents. For the calendar year 1997, salaried employees wrote 63% and
agents wrote 37% of total premiums written. Intermed will continue to
market its products through salaried employees and agents, with primary
emphasis on direct sales.
During 1996, Intermed formed a purchasing group, Intermedical of Texas,
Inc., and commenced operations offering medical malpractice insurance
to physicians in the State of Texas. Employees of ISI staff the
purchasing group from an office in Austin, Texas. During the first
quarter of 1997, a second purchasing group, Dental Defense Specialists,
Inc., was organized for the purpose of marketing malpractice insurance
to dentists in Texas.
Interlex also markets legal malpractice insurance through salaried
employees and independent agents. In calendar year 1997, salaried
employees produced 87% of total premiums written and agents 13%.
Interlex plans to continue distributing its products through salaried
employees and agents, with primary emphasis on direct sales. A
purchasing group for lawyers, Lawyers' Liability Association, Inc., has
been organized but has not commenced operations.
COMPETITION
The insurance business is highly competitive. In both Missouri and
Kansas, Intermed and Interlex compete with both regional and national
companies. In 1996, the last year for which statistics are available
from the Missouri Department of Insurance, there were 54 companies
writing medical malpractice insurance in the state. The top five
writers had 60.54% of the market. The largest market share was 20.07%.
Intermed, the seventh largest writer in 1996 in the state, had a
market share of 6.08%.
Ten companies wrote legal malpractice insurance in the State of
Missouri in 1996 according to the Missouri Department of Insurance.
One company, sponsored by the Missouri Bar Association, had a market
share of 71.75%; Interlex, which commenced operations in October 1994,
had a market share of 4.26% and was the fifth largest writer.
A number of hospitals in Missouri have begun purchasing the medical
practices of fee-for-service physicians and hiring the physicians as
employees of the hospital or a corporate entity affiliated with the
hospital. A number of such physicians formerly purchased their own
professional liability insurance through smaller insurance companies
such as Intermed . As a result of the consolidation, many of the
hospitals purchasing the practices of physicians have self-insured or
seek professional liability insurance from professional liability
carriers with capital and surplus greater than that of Intermed and at
premiums lower than those currently offered by Intermed.
The insurance industry is impacted by legislative changes, judicial
interpretations, market competition, inflation and other statutory
requirements. The insurance industry is subject to cyclical patterns
varying between "hard" and "soft" markets. The usual duration of the
cycle from one "hard" market through a "soft" market to another "hard"
market is approximately six to seven years. During the "hard" part of
the cycle, insurance is more difficult to obtain and the price of the
product is higher. It is possible to characterize this segment as a
"seller's" market. The "soft" part of the cycle is characterized with
ready availability of insurance products and commensurately lower
prices for the product. This segment could be characterized as a
"buyer's" market. During the soft portion of the cycle there is a
downward pressure on pricing, thereby subjecting Intermed to increased
pricing pressures which may have an adverse impact on its business and
operations. At the present time, the insurance industry has generally
been in the
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soft portion of the cycle for approximately ten years. While the
industry has been in the soft portion of the cycle for an unusually
long period, no assurance can be given that the industry will enter a
hard market in the near future. Intermed currently has excess capacity
and could double its current premium volume while maintaining required
premium to surplus ratios.
UNDERWRITING
Underwriting for both Intermed and Interlex is performed by an
experienced staff at the Company's home office in Springfield,
Missouri. This is augmented by Underwriting Committees composed of
physicians and dentists for Intermed and lawyers for Interlex. Because
these Committees are geographically broad-based, there is, in most
instances, personal knowledge of applicants and renewals. This
structure has enabled the Intermed and Interlex to maintain uniformly
high underwriting standards.
REGULATION
The activities of Intermed and Interlex are regulated by the Missouri
Department of Insurance. The companies are subject to examination by
the Department on a periodic basis. Such examinations pertain to many
aspects of the companies' operations and financial condition, including
loss reserves, investments, licensing and rates.
A financial examination and a limited market conduct examination were
conducted by the Missouri Department of Insurance during 1996. There
were no material adverse findings or material recommendations for
changes in Intermed's or Interlex's business operations.
LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES
Loss reserves are the amounts reserved by Intermed and Interlex to
provide funds for payment of policyholders' claims in the future. An
insurance company must accumulate substantial loss reserves because
policies provide for payments of substantial amounts in the future for
claims that have occurred in prior contract periods. These loss
reserves are established as balance sheet liabilities representing
estimates of future amounts needed to pay claims and related expenses
with respect to insured events which have occurred, including events
that have not yet been reported.
Loss reserves associated with professional liability coverage tend to
be relatively higher than other types of property and casualty
insurance for primarily two reasons: the "tail" and the "trend." The
time between the occurrence and settlement of a claim is the "tail."
Property coverage is generally a "short tail" line of business where
loss reserves represent only those claims in the adjustment or
reporting stages of the claim and which will, for the most part, be
settled within the next year. Liability coverage is generally a "long
tail" line and the reserves represent claims that can take up to five
to seven years to settle due to the fact that discovery of the injury
can take several years and because of the complexity of the issues
inherent in the claims. This means that while property loss reserves
may represent as little as a few months to a year of losses,
professional liability loss reserves may represent five to seven or
more years of losses at any one time. Also, professional liability
loss reserves, due to the length of time before settlement, are more
sensitive than property lines to changes in external factors such as
increased medical costs, increased jury awards and changes in the
litigation environment. These external factors are used to calculate
the "trend," which is the yearly change in the overall costs of
coverage. The trend is factored into the calculation of the loss
reserves and has generally contributed to higher reserves for
professional liability coverages.
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Intermed employs an independent consulting actuary to make
recommendations in the establishment of loss reserves and to render an
opinion regarding the adequacy of Intermed's statutory loss reserves.
The quantification of reserves is complex and subjective as a result of
the need to project future contingent events and other factors
previously mentioned which are related to medical professional
liability claims. In determining reserve levels, the actuaries rely
primarily on historical loss experience, adjusted for changing
circumstances as deemed appropriate. This reliance is based on the
assumption that historical loss experience provides a good indication
of future loss experience despite uncertainties in loss cost trends and
delays in reporting and settling claims. These uncertainties are
increased by changes in normal inflation, changing propensities of
individuals to file claims and new causes of action. Despite these
uncertainties in the determination of reserve levels, management
believes that the methods used by Intermed and Interlex in
establishing reserves are reasonable and appropriate.
As additional information becomes available and is reviewed, estimates
reflected in earlier reserves may be revised upward or downward. Any
such increases could have an adverse effect on results for the period
in which adjustments are made. The uncertainties inherent in
estimating ultimate losses on the basis of past experience have grown
significantly in recent years as a result of judicial expansion of
liability standards and expansive interpretations of insurance
contracts.
Reserves for losses and loss adjustment expenses are estimated based on
Tenere's consolidated historical loss and loss adjustment expense
experience supplemented by insurance industry loss data. The reserves
are reported on a present value basis discounted at the rate of 2% in
1997, 3% in 1996, 4% in 1995 and 5% in 1994. At the direction of the
Missouri Department of Insurance, the discount will be eliminated
ratably over the five-year period ending December 31, 1998. The table
that follows presents the development of net balance sheet liabilities
of Tenere and subsidiaries for reserves for losses and loss adjustment
expenses for 1987 through 1997:
- Net Liability. The first row of data shows the
estimated net liability for reserves for losses and loss
adjustment expenses at December 31 for each year from 1987 to
1997. The liability includes both case and IBNR reserves as of
each year-end date, net of anticipated recoveries from
reinsurers. The rows immediately following the first row of
data show cumulative paid data at December 31, as of one year,
two years, etc., through up to 10 years of subsequent payments.
- Net Liability Re-estimated. The middle rows of data
show the re-estimated amount for previously reported net
liability based on experience as of the end of each subsequent
calendar year's results. This estimate is changed as more
information becomes known about the underlying claims for
individual years. The cumulative redundancy (deficiency) shown
in the table is the aggregate net change in estimates over the
period of years subsequent to the calendar year reflected at the
top of the respective columns. The amount in the line titled
"Redundancy (Deficiency) at December 31, 1997," represents for
each calendar year (the "Base Year") the aggregate change in (i)
the Company's original estimate of net liability for reserves
for losses and loss adjustment expenses for all years prior to
and including the Base Year compared to (ii) the Company's
re-estimate as of December 31, 1997, of net liability for
reserves for losses and loss adjustment expenses for all years
prior to and including the Base Year. A redundancy means that
the original estimate was greater than the re-estimate and a
deficiency means that the original estimate was less than the
re-estimate. By way of example, the deficiency for the year
1990, calculated as of December 31, 1997, represents a
deficiency in the Company's original estimate of unpaid claims
and claim expenses for 1990 and prior years.
- The last seven lines of data present the development of reserves
on a "gross of reinsurance" basis, reconciled to the "net of
reinsurance" basis shown in the immediately preceding tables.
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CHANGES IN HISTORICAL RESERVES FOR LOSSES AND LOSS ADJUSTMENT EXPENSES
FOR THE LAST TEN YEARS - GAAP BASIS AS OF DECEMBER 31, 1997
Year Ended December 31
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(in thousands) 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
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Net liability for losses
and loss adjustment
expenses $21,310 27,120 29,389 21,737 17,070 25,021 25,304 25,695 25,461 25,788 21,080
Paid (cumulative) as of:
One year later 1,870 2,893 6,787 7,771 6,598 5,740 4,761 4,720 8,399 8,773
Two years later 4,646 9,546 14,200 14,060 12,093 9,830 9,088 11,342 14,263
Three years later 7,082 16,636 19,851 18,030 15,096 13,476 14,375 14,924
Four years later 11,496 21,949 23,262 20,433 18,160 18,441 17,003
Five years later 15,097 24,731 24,523 21,863 21,922 20,388
Six years later 16,844 25,251 25,250 23,926 23,228
Seven years later 17,303 25,738 27,258 24,648
Eight years later 17,704 26,542 27,972
Nine years later 18,450 27,103
Ten years later 19,001
Net liability re-estimated
as of:
One year later 17,612 26,765 28,186 22,351 26,877 26,277 25,850 23,759 26,876 24,627
Two years later 19,467 26,217 26,147 28,462 28,436 27,023 23,824 23,550 25,236
Three years later 18,904 24,660 28,835 28,711 28,861 25,280 23,253 22,149
Four years later 17,824 26,899 30,947 29,360 27,309 24,303 22,060
Five years later 18,565 30,275 31,136 28,567 26,094 24,070
Six years later 20,485 30,131 30,822 26,883 25,790
Seven years later 20,418 29,201 29,592 26,292
Eight years later 19,949 28,101 29,317
Nine years later 19,335 28,119
Ten years later 19,647
Redundancy (Deficiency)
at December 31, 1997 1,663 (999) 72 (4,555) (8,720) 951 3,244 3,546 225 1,161
Gross liability-end of year 21,310 27,120 29,389 21,737 17,070 25,021 25,304 26,280 26,623 32,887 31,030
Reinsurance recoverables - - - - - - - 585 1,162 7,099 9,950
Net liability-end of year 21,310 27,120 29,389 21,737 17,070 25,021 25,304 25,695 25,461 25,788 21,080
Gross re-estimated
liability-latest 19,647 28,119 29,317 26,301 25,791 24,071 22,132 22,753 30,578 31,944
Re-estimated reinsurance
recoverables - - - 9 1 1 72 604 5,342 7,317
Net re-estimated liability-latest 19,647 28,119 29,317 26,292 25,790 24,070 22,060 22,149 25,236 24,627
Gross redundancy (deficiency) 1,663 (999) 72 (4,564) (8,721) 950 3,172 3,527 (3,955) 943
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A summary of the reserves for losses and loss adjustment expenses follows:
December 31, December 31,
1997 1996
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Undiscounted reserves for losses and loss
adjustment expenses $ 31,990,412 35,051,777
Less discount (see note 1) (960,000) (2,164,370)
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Discounted reserves for losses and loss
adjustment expenses $ 31,030,412 32,887,407
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Following is the activity in the reserves for losses and loss adjustment
expenses:
1997 1996 1995
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Balance at January 1 $ 32,887,407 26,623,138 26,279,977
Less reinsurance recoverable on reserves for
losses and loss adjustment expenses (7,099,463 (1,162,495) (584,913)
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25,787,944 25,460,643 25,695,064
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Incurred related to:
Current year 5,646,863 9,812,694 9,612,075
Prior Year (1,168,439) 1,413,767 (1,935,587)
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Total incurred 4,478,424 11,226,461 7,676,488
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Paid related to:
Current year 413,191 2,499,788 3,190,397
Prior Year 8,773,277 8,399,372 4,720,512
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Total paid 9,186,468 10,899,160 7,910,909
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Net balance at December 31 21,079,900 25,787,944 25,460,643
Plus reinsurance recoverable on reserves for
losses and loss adjustment expenses 9,950,512 7,099,463 1,162,495
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Balance at December 31 $ 31,030,412 32,887,407 26,623,138
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The reserves for losses and loss adjustment expenses are estimated
based on development information available at each reporting date. As
a result of the nature of the risks underwritten, claims development may
occur over an extended period of time. The changes in the incurred
amounts disclosed above related to prior years are the result of
utilizing improved claim development information as that information
becomes available.
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Tenere's claim philosophy is to defend fully all claims in which an
evaluation reveals little or no negligence. For those claims in which
liability exists, Tenere moves promptly to settle the claim early in
order to minimize indemnity and loss adjustment expenses.
The Claim Department is staffed with experienced claims specialists and
is supervised by the Vice President-Claims/General Counsel of Tenere.
The case load per claim specialist is approximately 200 cases. This
allows for intensive scrutiny of each claim, close tracking of the
progress of each claim and containment of loss adjustment expenses
through constant monitoring.
In 1997, 83% of the claims closed by Intermed were without the payment
of indemnity and 17% were closed with payments averaging $177,500.
Average allocated loss adjustment expenses for claims closed in 1997 was
$11,900. In 1996, 80% of claims closed by Intermed were without payment
of indemnity and 20% were closed with payments averaging $165,000.
Average allocated loss adjustment expenses for claims closed in 1996 was
approximately $11,000.
Interlex completed its third full year of operation in 1997 and claims
statistics for that company are not comparable due to its limited
history.
REINSURANCE
Intermed had three reinsurance treaties in place during 1997:
(1) Effective October 1, 1996, Intermed renewed a multi-year excess of
loss reinsurance agreement through September 30, 1999. This
agreement provides excess of loss coverage on Intermed's
claims-paid, occurrence and claims-made policies up to $1,600,000
in excess of $400,000 on each claim, with an aggregate recoverable
of 300% of the ceded premiums earned. The maximum premium ceded
under the contract, assuming the contract remains in effect for the
full three-year period, is 20% of direct premiums earned. In
addition to the above, the treaty provides coverage for the
difference between $2,000,000 each loss and/or $4,000,000 in the
aggregate and $1,000,000 and/or $3,000,000 in the aggregate each
policy where applicable, with an aggregate recoverable of
$5,000,000. In 1997, Intermed ceded earned premiums of
approximately $3,294,000 and losses and allocated loss adjustment
expenses of approximately $2,682,000. This type of reinsurance
provides protection during periods when losses are both frequent
and severe and is not intended to cover all losses.
(2) A "catastrophic awards made" excess of loss reinsurance with
Lloyd's Underwriters of London with limits of $5,000,000 excess of
$250,000 over original policy limits for claims made after October
1, 1993 and excess of $1,000,000 for claims made prior to that
date, net of all other reinsurance. The period covered by the
treaty is through September 30, 1998 at an annual premium of 1.6%
of gross net premiums written. In 1997, ceded earned premiums were
approximately $146,000 and losses were $-0-. This type of insurance
covers the reassured for awards made in excess of policyholder's
original policy limit for which the policyholder is able to hold
the reassured responsible. It also covers claims related to
extra-contractual obligations.
(3) Effective January 1, 1996, Intermed entered into an Accident Year
Excess of Loss Reinsurance Agreement with American Re-Insurance
Company. Under Section A of this Agreement, the reinsurer is
responsible for 100% of the Company's aggregate ultimate net loss
from claims-paid coverages in 1996 in excess of $4,176,000. The
reinsurers' maximum liability is limited to $4,800,000. In 1997,
ceded earned premiums were $-0-. At December 31, 1997, Intermed
had ceded cumulative loss and allocated loss adjustment expenses of
$3,707,600.
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Under Section B of this Agreement, the reinsurer also agreed to
indemnify Intermed for the aggregate ultimate net loss on
occurrence and claims-made coverages in excess of Intermed's
accident year loss ratio for the four years commencing January 1,
1996 and ending December 31, 1999. The accident year loss ratio
for 1996 was 75% and 85% for 1997. For subsequent years, the loss
ratio is a weighted average loss ratio for the three accident years
immediately preceding the accident year for which the computation
is being made plus 2%-5% as mutually agreed to by the reinsurer and
the Company. Intermed ceded losses of $2,000,000 and $310,266 in
1996 and 1997, respectively, under this section of the agreement.
In 1997, Intermed ceded earned premiums of $800,000.
Interlex had three reinsurance treaties in place during 1997:
(1) A primary excess of loss reinsurance treaty with Lloyd's
Underwriters of London. The treaty covers the period October 1,
1997 through September 30, 1998 with limits of $700,000 excess of
$300,000 subject to a maximum recoverable of $2,100,000. However,
if the ceded premiums written exceed $500,000, the maximum
recoverable shall increase to $3,500,000. The premium is 7.5% of
gross net premiums written for policy limits of $300,000 or less,
16.5% of gross net premiums written for policies with limits of
$500,000 and 36% of gross net written premiums for policies with
limits of $1,000,000. In 1997, Interlex ceded earned premiums of
approximately $261,000 and losses of $-0-.
(2) A prior agreement excess of loss reinsurance treaty with Lloyd's
Underwriters of London covering the period October 1, 1997 through
September 30, 1998. Limits of the treaty are $5,000,000 with a
minimum underlying of $1,000,000 for each insured and $3,000,000
in the aggregate each policy where applicable. Ceded premium is
equal to 100% of the policy premium less a 10% ceding commission.
In 1997, Interlex ceded earned premiums of approximately $128,000.
(3) Effective October 1, 1996, the "catastrophic awards made" treaty
with Lloyd's Underwriters of London was expanded to include
Interlex Insurance Company under the same terms outlined above.
Management has confidence in the financial strength of the Lloyd's
syndicates and American Re-Insurance Company with which it reinsures,
and believes that amounts shown as due from reinsurers are fully
recoverable.
INVESTMENTS
Both Intermed and Interlex employ Boatmen's Capital Management, Inc.
(Boatmen's), headquartered in St. Louis, Missouri, to manage their
investment portfolios. Boatmen's operates under general investment
guidelines which are adopted by the Boards of Directors of Intermed and
Interlex and reviewed periodically to assure that they are consistent
with the companies' philosophy and income requirements. Under the
companies' current guidelines, investments will be in U.S. Treasuries,
U.S. Agencies, high grade (Moody's and Standard & Poor's rated A or
better) corporate debt, and municipal tax-exempt debt rated Aa or better
by Moody's and Standard & Poor's. No security purchased shall have a
final maturity longer than ten years. Additionally, the following
guidelines are followed to ensure diversification of the portfolio:
- direct or guaranteed obligations of the U.S. Government and its
agencies may be held without limit.
- corporate debt shall not exceed 10% of the portfolio. No more
than 2% will be invested in any one issuer.
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- municipal (tax-exempt) debt shall not exceed 15% of the portfolio.
No more than 2% will be invested in any one issuer.
- portfolio investments are limited to U.S. dollar denominated
securities.
At December 31, 1997, investments totaled $47,386,000. During 1997,
$16,500,000 was reinvested at a yield of approximately 7%. Tenere also
disposed of $4,186,000 in low-yielding bonds without realizing a
significant loss. Proceeds from these sales, as well as from other
sales and maturities, were invested short-term pending an anticipated
increase in interest rates in early 1998.
The fair value of bonds held available-for-sale and carried at market
at December 31, 1997 was $40,931,000 and there was a net unrealized gain
of $1,068,000. At prior year end, the fair value of bonds held
available for sale was $252,000 above amortized cost.
TRENDS
Tenere's most significant costs are losses and loss adjustment expenses
and the impacts of regulatory changes, increases in medical costs and
jury awards and changes in the litigation environment as discussed
above.
EFFECT OF INFLATION
Inflation has an effect on Tenere's general and administration expenses
through higher wages and the costs of goods and services. Inflation
also impacts loss adjustment expenses as attorneys and other
consultants pass on their increased costs through increased fees.
EMPLOYEES
Neither Tenere, Intermed nor Interlex had employees during 1997.
Insurance Services had 23 employees at December 31, 1997 and these
employees provided all services required by Tenere and its two
insurance subsidiaries under management contracts approved by each
company's Board of Directors.
ITEM 2. PROPERTIES
Neither Tenere nor any of its subsidiaries owned any real estate at
December 31, 1997. ISI, a wholly-owned subsidiary of Intermed, leases
the Company's home office for approximately $90,000 per year to June
30, 2000 and approximately $95,000 per year thereafter through June 30,
2002. The lease commenced on July 1, 1995 for a period of seven years
with an option to renew for an additional three years. ISI also leases
office space in Austin, Texas at a current rate of $28,000 which will
increase to $29,000 on May 7, 1998.
ITEM 3. LEGAL PROCEEDINGS
Neither Tenere nor any of its subsidiaries are subject to any
material pending legal proceedings other than ordinary routine
litigation incidental to its business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Tenere did not submit any matters to a vote of its security holders
during the quarter ended December 31, 1997.
11
12
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
Tenere Common Stock is not listed on any securities exchange or quoted
on any automated quotation system such as the National Association of
Securities Dealers Automated Quotations System ("NASDAQ"). There has
been no independent market for Tenere Common Stock and no assurance can
be given that an independent market will develop. As of March 16, 1998,
there were approximately 1,132 holders of record of shares of Tenere
Common Stock. Tenere has not paid a dividend since inception. However,
the Company's Board of Directors will, from time to time, consider the
issue based upon Tenere's then current financial condition, results of
operations and capital requirements.
ITEM 6. SELECTED FINANCIAL DATA
Selected Financial Data is included on Page 26 of Tenere's 1997 Annual
Report to Stockholders and is incorporated by reference herein.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results
of Operations is included on Pages 4 through 7 of Tenere's 1997 Annual
Report to Stockholders and is incorporated by reference herein.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following Consolidated Financial Statements of Tenere are included
on the following pages of Tenere's 1997 Annual Report to Stockholders
and are incorporated by reference herein.
Annual Report
Page(s)
------
Independent Auditors' Report 8
Consolidated Balance Sheets at
December 31, 1997 and 1996 9
Consolidated Statements of Operations
Years ended December 31, 1997, 1996 and 1995 10
Consolidated Statements of Stockholders' Equity/Policyholders'
Surplus Years ended December 31, 1997, 1996 and 1995 11
Consolidated Statements of Cash Flows
Years ended December 31, 1997, 1996 and 1995 12
Notes to Consolidated Financial Statements 13
Statement of Management's Responsibility 25
12
13
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
The information regarding Directors set forth under the caption
"Election of Directors" of the Registrant's Proxy Statement for its 1998
annual meeting of stockholders is incorporated herein by reference. The
other executive officers of Tenere, their ages and principal offices
held in Tenere, Intermed, Interlex and ISI are set forth below:
ANDREW K. BENNETT, age 46, serves as Vice President - Claims and
General Counsel of Tenere, Intermed, Interlex and ISI. He also serves
as a Director of ISI. Mr. Bennett joined Tenere in June, 1994 as
Corporate Counsel and was elected to his current positions in May 1995.
Prior to joining Tenere, Mr. Bennett practiced law in Springfield,
Missouri for 17 years. He is a member of the Missouri Bar.
ANDREW C. FISCHER, age 47, serves as Vice President - Underwriting and
Policy Services of Tenere, Intermed, Interlex and ISI. He also serves
as a Director and Secretary of ISI. Mr. Fischer joined Tenere in 1987
as Chief Operating Officer and was elected to his current positions in
May 1995.
CLIFTON R. STEPP, age 35, serves as Vice President - Marketing of
Tenere, Intermed, Interlex and ISI. Mr. Stepp joined Tenere in 1990 as
Marketing Director and was elected to his current positions in May
1995.
JOSEPH D. WILLIAMS, CPA, age 61, serves as Vice President - Finance
and Chief Financial Officer of Tenere, Intermed, Interlex and ISI. He
also serves as Assistant Treasurer of Tenere, Intermed and ISI and as
Treasurer of Interlex. Mr. Williams joined Tenere in October 1994 as
Chief Financial Officer and was elected to his current positions in May
1995. Prior to joining Tenere, Mr. Williams served as Senior Vice
President and Controller of ITT Lyndon Insurance Group from 1987 to
1993 and as Senior Vice President and Deputy Controller of ITT
Diversified Financial Corporation from 1990 to 1991.
ITEM 11. EXECUTIVE COMPENSATION
Information regarding executive compensation is included in Tenere's
Proxy Statement for the 1998 Annual Meeting of Stockholders under the
caption "Compensation of Executive Officers" and is incorporated by
reference herein.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information regarding security ownership of certain beneficial owners
and management is included in Tenere's Proxy Statement for the 1998
Annual Meeting of Stockholders under the captions "Voting Securities
and Principal Holders Thereof" and "Security Ownership by Management,"
which is incorporated herein by reference.
13
14
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth under the caption, "Certain Transactions" of
the Registrant's Proxy Statement for its 1998 Annual Meeting of
Stockholders is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS OF FORM 8-K
(A) FINANCIAL STATEMENTS AND SCHEDULES
(1) The financial statements incorporated by reference herein are listed
in PART II - Item 8 hereof.
(2) The financial statement schedules and independent auditors' report
thereon included herein are listed below:
Form 10-K
Page No.
--------
Independent Auditors' Report on Financial
Statement Schedules 16
Schedule II Condensed Financial Information of Registrant 17
Schedule III Supplemental Information Concerning Property-
Casualty Insurance Operations 21
Schedules other than listed above are omitted because they are either
not required or not applicable or because the information is presented
in the consolidated financial statements or notes thereto.
(B) EXHIBITS
See exhibit index
(C) REPORTS ON FORM 8-K
There were no reports on Form 8-K filed by Tenere during the three
months ended December 31, 1997.
14
15
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereto duly authorized.
THE TENERE GROUP, INC.
By: /s/ Raymond A. Christy
---------------------------------------
Date: March 18, 1998 Raymond A. Christy, M.D.
-------------- President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1934, this report has
been signed by the following persons on behalf of the Registrant in the
capacities and on the dates indicated:
NAME TITLE DATE
---- ----- ----
/s/ Thomas E. Ashley
-------------------------
Thomas E. Ashley, M.D. Director and
Vice President March 23, 1998
--------------
/s/ Gary O. Baker
-------------------------
Gary O. Baker, D.D.S. Director March 18, 1998
--------------
/s/ Albert J. Bonebrake
-------------------------
Albert J. Bonebrake, M.D. Director March 20, 1998
--------------
/s/ Raymond A. Christy
-------------------------
Raymond A. Christy, M.D. Director, President
and Chief Executive Officer March 18, 1998
------------------
/s/ Harry O. Cole
-------------------------
Harry O. Cole, M.D. Chairman of the Board of
Directors March 19, 1998
--------------
/s/ C. Richard Gulick
-------------------------
C. Richard Gulick, M.D. Director March 19, 1998
--------------
/s/ Michael D. Hoeman
-------------------------
Michael D. Hoeman, M.D. Director, Secretary
and Treasurer March 20, 1998
--------------
/s/ Christopher H. Jung
-------------------------
Christopher H. Jung, M.D. Director March 19, 1998
--------------
/s/ Carroll R. Wetzel
-------------------------
Carroll R. Wetzel, D.O. Director March 24, 1998
--------------
/s/ J. D. Williams
-------------------------
Joseph D. Williams,CPA Vice President-Finance,
Chief Financial Officer and March 18, 1998
Principal Accounting Officer --------------
15
16
INDEPENDENT AUDITORS' REPORT
The Board of Directors
The Tenere Group, Inc.:
Under date of March 17, 1998, we reported on the consolidated balance sheets of
The Tenere Group, Inc. and subsidiaries as of December 31, 1997 and 1996, and
the related consolidated statements of operations, stockholders'
equity/policyholders' surplus and cash flows for each of the years in the
three-year period ended December 31, 1997, as contained in the 1997 annual
report to stockholders. These consolidated financial statements and our report
thereon are incorporated by reference in the annual report on Form 10-K for the
year 1997. In connection with our audits of the aforementioned consolidated
financial statements, we also audited the related consolidated financial
statement schedules, as listed in the accompanying index. These financial
statement schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statement schedules
based on our audits.
In our opinion, such financial statement schedules, when considered in relation
to the basic consolidated financial statements taken as a whole, present fairly,
in all material respects, the information set forth therein.
/s/ KPMG Peat Marwick LLP
Kansas City, Missouri
March 17, 1998
16
17
SCHEDULE II
THE TENERE GROUP, INC. (PARENT ONLY)
CONDENSED FINANCIAL STATEMENTS OF THE REGISTRANT
Balance Sheets
December 31, 1997 and 1996
Assets 1997 1996
------ ----------- ----------
Investment in subsidiaries, at equity $21,741,059 21,561,303
Deferred income taxes 392,288 88,400
----------- ----------
Total assets $22,133,347 21,649,703
=========== ==========
Liabilities and Stockholders' Equity
------------------------------------
Liabilities:
Deferred compensation payable $ 561,887 260,000
Deferred retirement benefit 591,901 -
----------- ----------
Total liabilities 1,153,788 260,000
Stockholders' equity
Common stock, $.01 par value; 7,000,000 shares authorized;
1,999,774 shares issued and outstanding 19,998 19,998
Contributed capital 21,940,828 21,940,828
Accumulated deficit (1,690,370) (737,596)
Unrealized gain on subsidiaries' investments, net of tax 709,103 166,473
Commitments and contingencies
----------- ----------
Total stockholders' equity 20,979,559 21,389,703
-----------------------
Total liabilities and stockholders' equity $22,133,347 21,649,703
=========== ==========
See note to condensed financial statements of the registrant
17
18
SCHEDULE II
THE TENERE GROUP, INC. (PARENT ONLY)
CONDENSED FINANCIAL STATEMENTS OF THE REGISTRANT
Statements of Operations
For the Years Ended December 31, 1997, 1996 and 1995
1997 1996 1995
---- ---- ----
Expenses
Deferred compensation $ 301,887 260,000 -
Deferred retirement benefit 591,901 - -
----------- ---------- ----------
Total expenses 893,788 260,000 -
Loss before income taxes (893,788) (260,000) -
Income tax benefit 303,888 88,400 -
----------- ---------- ----------
Net loss (parent only) (589,900) (171,600) -
Equity in net income (loss) of subsidiaries (362,874) (2,762,886) 2,509,856
----------- ---------- ----------
Consolidated net income (loss) $ (952,774) (2,934,486) 2,509,856
=========== ========== ==========
Basic and diluted net income (loss) per share $ (0.48) (1.47) 1.26
=========== ========== ==========
See note to condensed financial statements of the registrant
18
19
SCHEDULE II
THE TENERE GROUP, INC. (PARENT ONLY)
CONDENSED FINANCIAL STATEMENTS OF THE REGISTRANT
Statements of Cash Flows
For the Years Ended December 31, 1997, 1996 and 1995
1997 1996 1995
---- ---- ----
Net loss (parent only) $ (589,900) (171,600) -
Adjustments to reconcile net loss to net cash
from operating activities:
Deferred income tax benefit (303,888) (88,400) -
Change in deferred compensation payable 301,887 260,000 -
Change in deferred retirement benefit 591,901 - -
----------- --------- -----
Net cash provided by operating activities - - -
Net increase in cash and short-term investments - - -
Cash and short-term investments at beginning of year - - -
----------- --------- -----
Cash and short-term investments at end of year $ - - -
=========== ========= =====
See note to condensed financial statements of the registrant
19
20
SCHEDULE II
THE TENERE GROUP, INC. (PARENT ONLY)
NOTE TO CONDENSED FINANCIAL STATEMENTS OF THE REGISTRANT
BASIS OF PRESENTATION
In accordance with the requirements of Regulation S-X of the Securities and
Exchange Commission, the financial statements of the registrant are condensed
and omit many disclosures presented in the consolidated financial statement and
notes thereto.
Tenere is an insurance holding company with no operation of its own. Its
businesses are conducted through two property and casualty insurance
subsidiaries, Intermed Insurance Co. and Interlex Insurance Co.
The condensed financial statements and note thereto are representations of the
Company's management, which is responsible for their integrity and objectivity.
The condensed financial statements have been prepared on the basis of generally
accepted accounting principles.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
20
21
SCHEDULE III
THE TENERE GROUP, INC.
SUPPLEMENTARY INSURANCE INFORMATION
For the Years Ended December 31, 1997, 1996 and 1995
(in thousands)
1997 1996 1995
-------- ------- -------
Deferred policy acquisition costs $ 183 85 140
Reserves for unpaid losses and loss
adjustment expenses 31,030 32,887 26,623
Discount deducted from unpaid losses
and loss adjustment expenses 960 2,164 2,933
Unearned premiums 7,717 6,300 10,447
Earned premiums 4,498 7,646 11,901
Net investment income 2,623 2,627 2,654
Losses and loss adjustment expenses
incurred related to:
Current year 5,647 9,813 9,612
Prior year (1,169) 1,414 (1,936)
Amortization of deferred policy
acquisition costs 263 340 431
Other operating expenses 2,200 1,784 1,438
Paid losses and loss adjustment
expenses 9,186 10,899 7,911
Net premiums written 5,802 3,469 8,369
Discount rates utilized on reserves are as follows: 2% 3% 4%
21
22
EXHIBIT INDEX
EXHIBIT DESCRIPTION
NO.
- ------- --------------------
[S] [C]
3.1 Articles of Incorporation of the Registrant,filed as Exhibit 3.1
to the Registrant's Registration Statement on Forms S-1 (Reg. No.
33-78702) is incorporated herein by this reference.
3.2 Bylaws of the Registrant, filed as Exhibit 3.2 to the Registrant's
Registration Statement on Form S-1 (Reg. No. 33-78702) is
incorporated herein by this reference.
4.1 Form of common stock certificate, filed as Exhibit 4.1 to the
Registrant's Registration Statement on Form S-1 (Reg. No. 33-78702)
is incorporated herein by this reference.
10.1 Management Contract, dated July 8, 1994, by and between RCA Mutual
Insurance Company, Interlex Insurance Co. and Insurance Services,
Inc.
10.2 Lease Agreement, dated December 7, 1994, by and between
Georgetown Square II, Ltd. and Insurance Services, Inc., filed as
Exhibit 10.2 to the Registrant's Quarterly Report on Form
10-Q for the nine months ended September 30, 1995, is incorporated
herein by reference.
10.3 Medical Practitioners' Liability Primary Excess of Loss Reinsurance
Contract, dated October 1, 1993, by and between RCA Mutual
Insurance Company and Certain Reinsurers of Lloyd's of London,
filed as Exhibit 10.3 to the Registrant's Quarterly Report on Form
10-Q for the nine months ended September 30, 1995, is incorporated
herein by reference.
10.4 Addendum No. 1 to Medical Practitioners' Liability Primary Excess
of Loss Reinsurance Contract, dated February 1, 1996, by and
between RCA Mutual Insurance Company and Certain Reinsurers of
Lloyd's of London, filed as Exhibit 10.4 to the Registrant's
Quarterly Report on Form 10-Q for the nine months ended September
30, 1995, is incorporated herein by reference.
10.5 Addendum No. 2 to Medical Practitioners' Liability Primary Excess
of Loss Reinsurance Contract, effective April 27, 1996, by and
between RCA Mutual Insurance Company and Certain Reinsurers of
Lloyd's of London, filed as Exhibit 10.5 to the Registrant's
Quarterly Report on Form 10-Q for the nine months ended September
30, 1995, is incorporated herein by reference.
10.6 Reinsurance Cover Note: 95/1146/RM to Medical Practitioners'
Liability Primary Excess of Loss Reinsurance Contract, dated
October 16, 1996, by and between RCA Mutual Insurance Company and
Certain Reinsurers of Lloyd's of London, filed as Exhibit 10.6 to
the Registrant's Quarterly Report on Form 10-Q for the nine months
ended September 30, 1995, is incorporated herein by reference.
22
23
EXHIBIT DESCRIPTION
NO.
- ----------- --------------------
10.7 Reinsurance Cover Note: 95/1212/RM(A) to Catastrophe "Awards Made"
Excess of Loss Reinsurance Contract, dated October 16, 1995, by and
between RCA Mutual Insurance Company and Certain Reinsurers of
Lloyd's of London, filed as Exhibit 10.7 to the Registrant's
Quarterly Report on Form 10-Q for the nine months ended September
30, 1995, is incorporated herein by reference.
10.8 Catastrophe "Awards Made" Excess of Loss Reinsurance Contract,
commencing February 1, 1995, by and between RCA Mutual Insurance
Company and Certain Reinsurers of Lloyd's of London
including Amendment No. 1, effective April 27, 1995, filed as
Exhibit 10.8 to the Registrant's Quarterly Report on Form 10-Q for
the nine months ended September 30, 1995, is incorporated herein by
reference.
10.9 Reinsurance Cover Note: 95/1249/IP to Lawyers' Professional
Liability Primary Excess of Loss Reinsurance Treaty, dated October
16, 1995, by and between Interlex Insurance Company and Certain
Reinsurers of Lloyd's of London, filed as Exhibit 10.9 to the
Registrant's Quarterly Report on Form 10-Q for the nine months
ended September 30, 1995, is incorporated herein by reference.
10.10 Lawyers' Professional Liability Primary Excess of Loss Reinsurance
Contract, commencing July 1, 1995, by and between Interlex
Insurance Company and Certain Reinsurers of Lloyd's of London,
filed as Exhibit 10.10 to the Registrant's Quarterly Report on Form
10-Q for the nine months ended September 30, 1995, is incorporated
herein by reference.
10.11 Reinsurance Cover Note: 95/1250/IP to Prior Agreement Excess
of Loss Reinsurance Contract, dated October 16, 1996, by and
between Interlex Insurance Company and Certain Reinsurers of
Lloyd's of London, filed as Exhibit 10.11 to the Registrant's
Quarterly Report on Form 10-Q for the nine months ended September
30, 1995, is incorporated herein by reference.
10.12 Prior Agreement Excess of Loss Reinsurance Contract, commencing
July 1, 1996, by and between Interlex Insurance Company and
Certain Reinsurers of Lloyd's of London, filed as Exhibit 10.12
to the Registrant's Quarterly Report on Form 10-Q for the nine
months ended September 30, 1995, is incorporated herein by
reference.
10.13 Draft Reinsurance Slip by and between Intermed Insurance Company
and American Re-Insurance Company filed as Exhibit 10.13 to the
Registran'ts Quarterly Report on Form 10-Q for the three months
March 31, 1996, is incorporated herein by reference.
10.14 Employment Agreement dated May 6, 1996 between The Tenere Group,
Inc. and Raymond A. Christy, M.D., President and Chief
Executive Officer, filed as Exhibit 10.14 to the Registrant's
Quarterly Report on Form 10-Q for the nine months ended September
30, 1996, is incorporated herein by reference.
23
24
10.15 Employment Agreement dated May 6, 1996 between The Tenere Group,
Inc. and Andrew K. Bennett, Vice President-Claims and General
Counsel, filed as Exhibit 10.15 to the Registrant's Quarterly
Report on Form 10-Q for the nine months ended September 30, 1996,
is incorporated herein by reference.
10.16 Employment Agreement dated May 6, 1996 between The Tenere Group,
Inc. and Andrew C. Fischer, Vice President-Underwriti ng and Policy
Services, filed as Exhibit 10.16 to the Registrant's Quarterly
Report on Form 10-Q for the nine months ended September 30, 1996,
is incorporated herein by reference.
10.17 Employment Agreement dated May 6, 1996 between The Tenere Group,
Inc. and Clifton R. Stepp, Vice President-Marketing, filed as
Exhibit 10.17 to the Registrant's Quarterly Report on Form 10-Q for
the nine months ended September 30, 1996, is incorporated herein by
reference.
10.18 Employment Agreement dated May 6, 1996 between The Tenere
Group, Inc. and Joseph D. Williams, Vice President-Finance, Chief
Financial Officer and Assistant Treasurer filed, as Exhibit 10.18
to the Registrant's Quarterly Report on Form 10-Q for the nine
months ended September 30, 1996, is incorporated herein by
reference.
10.19 The Tenere Group, Inc. Retirement Plan for Directors effective
May 17, 1996, filed as Exhibit 10.19 to the Registrant's Quarterly
Report on Form 10-Q for the nine months ended September 30, 1996,
is incorporated herein by reference.
10.20 The Tenere Group, Inc. 1996 Long Term Incentive Plan effective
April 17, 1996, filed as Annex A to the Registrant's definitive
proxy statements for the 1996 Annual Meeting of Shareholders, is
incorporated herein by reference.
10.21 Amendment No. 1 to Employment Agreement, dated February 28, 1997,
between The Tenere Group, Inc. and Raymond A. Christy, M.D.,
President and Chief Executive Officer.
10.22 Amendment No. 1 to Employment Agreement, dated February 28, 1997,
between The Tenere Group, Inc. and Andrew K. Bennett, Vice
President-Claims and General Counsel.
10.23 Amendment No. 1 to Employment Agreement, dated February 28, 1997,
between The Tenere Group, Inc. and Andrew C. Fischer, Vice
President - Underwriting and Policy Services.
10.24 Amendment No. 1 to Employment Agreement dated February 28, 1997,
between The Tenere Group, Inc. and Clifton R. Stepp, Vice
President-Marketing.
10.25 Amendment No. 1 to Employment Agreement dated February 28, 1997,
between The Tenere Group, Inc. and Joseph D. Williams, Vice
President-Finance, Chief Financial Officer and Assistant Treasurer.
24
25
10.26 Reinsurance Cover Note: 96/1212/RM to Catastrophe "Awards Made"
Excess of Loss Reinsurance Contract, effective October 1, 1996, by
and between Intermed Insurance Company and/or Interlex Insurance
Company and certain Reinsurers of Lloyd's of London.
10.27 Addendum No. 2 to Catastrophe "Awards Made" Excess of Loss
Reinsurance Contract, effective October 1, 1996, by and between
Intermed Insurance Company and/or Interlex Insurance Company and
certain Reinsurers of Lloyd's of London.
10.28 Reinsurance Cover Note: 97/1212/RM to Catastrophe "Awards Made"
Excess of Loss Reinsurance Contract, effective October 1, 1997,
by and between Intermed Insurance Company and/or Interlex
Insurance Company and certain Reinsurers of Lloyd's of London.
10.29 Addendum No. 3 to Catastrophe "Awards Made" Excess of Loss
Reinsurance Contract, effective October 1, 1997, by and between
Intermed Insurance Company and/or Interlex Insurance Company and
certain Reinsurers of Lloyd's of London.
10.30 Reinsurance Cover Note: 94/1146/RM to Medical Practitioners'
Liability Primary Excess of Loss Reinsurance Contract, effective
October 1, 1994, by and between Intermed Insurance Company and
Certain Reinsurers of Lloyd's of London.
10.31 Medical Practitioners' Liability Primary Excess of Loss
Reinsurance Contract, effective October 1, 1996, by and between
Intermed Insurance Company and Certain Reinsurers of Lloyd's of
London.
10.32 Addendum No. 1 to Medical Practitioners' Liability Combined
Reinsurance Contract (formerly the Primary Excess of Loss
Reinsurance Contract), effective October 1, 1996, by and between
Intermed Insurance Company and Certain Reinsurers of Lloyd's of
London.
10.33 Addendum No. 2 to Medical Practitioners' Liability Combined
Reinsurance Contract (formerly the Primary Excess of Loss
Reinsurance Contract), effective October 1, 1997, by and between
Intermed Insurance Company and Certain Reinsurers of Lloyd's of
London.
10.34 Reinsurance Cover Note: 97/1146/RM to Medical Practitioners'
Liability Combined Reinsurance Contract (formerly the Primary
Excess of Loss Reinsurance Contract), effective October 1, 1997, by
and between Intermed Insurance Company and Certain Reinsurers of
Lloyd's of London.
10.35 Lawyers' Professional Liability Primary Excess of Loss
Reinsurance Contract, effective October 1, 1996, by and between
Interlex Insurance Company and Certain Reinsurers of Lloyd's of
London.
10.36 Lawyers' Professional Liability Primary Excess of Loss
Reinsurance Contract, effective October 1, 1997, by and between
Interlex Insurance Company and Certain Reinsurers of Lloyd's of
London.
10.37 Lawyers' Professional Liability Prior Agreement Excess
Reinsurance Contract, effective October 1, 1996, by and between
Interlex Insurance Company and Certain Reinsurers of Lloyd's of
London.
25
26
10.38 Lawyers' Professional Liability Prior Agreement Excess
Reinsurance Contract, effective October 1, 1997, by and between
Interlex Insurance Company and Certain Reinsurers of Lloyd's of
London.
13 1997 Annual Report to Shareholders
21 Subsidiaries of the Registrant, filed as Exhibit 21 to Registrant's
Annual Report on Form 10-K for the year ended December
31, 1995, is incorporated herein by reference.
27 Financial Data Schedules
26