<PAGE>
As filed with the Securities and Exchange Commission on July 22, 1999
Registration No. 333-69537
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
POST-EFFECTIVE AMENDMENT NO. 1
TO FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
NCRIC GROUP, INC.
(Name of Small Business Issuer in Its Charter)
<TABLE>
<S> <C> <C>
District of Columbia 6331 52-2134774
(State or other jurisdiction (Primary standard industrial (I.R.S. employer
of incorporation or organization) classification code number) identification number)
</TABLE>
1115 30th Street, N.W.
Washington, D.C. 20007
(202) 969-1866
(Address and telephone number of principal
executive offices and principal place of business)
R. Ray Pate, Jr.
President and Chief Executive Officer
1115 30th Street, N.W.
Washington, D.C. 20007
(202) 969-1866
(Name, address and telephone number of agent for service)
Copies to:
James B. Halpern, Esq. John J. Gorman, Esq.
John P. Foley, Esq. Robert I. Lipsher, Esq.
Arent Fox Kintner Plotkin & Kahn, PLLC Luse Lehman Gorman Pomerenk &
1050 Connecticut Avenue, N.W. Schick, P.C.
Washington, D.C. 20036-5339 5335 Wisconsin Avenue, N.W., Suite 400
(202) 857-6246 Washington, D.C. 20015
(202) 274-2000
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
<TABLE>
<CAPTION>
Item 27. Exhibits
<S> <C>
Exhibit No. Description
1.1**......................... Engagement Letter
1.2**......................... Agency Agreement
2.1**......................... Plan of Reorganization
2.2**......................... Purchase Agreement Relating to
HealthCare Consulting and HCI Ventures
2.3**......................... Purchase Agreement Relating to
Employee Benefits Services
3.1**......................... Articles of incorporation of NCRIC Group
3.2**......................... Bylaws of NCRIC Group
5.1**......................... Opinion of Arent Fox Kintner Plotkin &
Kahn, PLLC
10.1**........................ Lease
10.2**........................ Amendment to Lease
10.3**........................ Stock Option Plan
10.4**........................ Employee Stock Ownership Plan
10.5**........................ Stock Award Plan
10.6**........................ Employment Agreement between National
Capital Underwriters, Inc. and R. Ray Pate, Jr.
10.7**........................ Amendment to Employment Agreement
between NCRIC, Inc. and R. Ray Pate, Jr.
10.8**........................ Employment Agreement between National
Capital Underwriters, and Stephen S. Fargis
10.9**........................ Employment Agreement between NCRIC,
Inc. and Rebecca B. Crunk
10.10**....................... Employment Agreement between NCRIC MSO, Inc. and
L.E. Shepherd, Jr.
10.11**....................... Employment Agreement between NCRIC MSO, Inc. and William A.
HunterJr.
10.12**....................... Employment Agreement between NCRIC MSO, Inc. and Barry S.
Pill
10.13**....................... Administrative Services Agreement
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
10.14**........................ Tax Sharing Agreement
10.15**........................ Operating Agreement among NCRIC Group, NCRIC MSO, Inc.,
HealthCare Consulting, HCI Ventures, L.E. Shepherd, Jr.,
William A. Hunter and Barry S. Pillow
21.1**......................... Subsidiaries
23.1**......................... Consent of Arent Fox Kintner Plotkin & Kahn, PLLC -
included in Exhibit 5.1
23.2**......................... Consent of Deloitte & Touche LLP
23.3**......................... Consent of RP Financial regarding Initial Valuation Report
and Updated Valuation Report
23.4*.......................... Consent of RP Financial regarding Final Valuation Report
24.1**......................... Power of Attorney
27.1**......................... Financial Data Schedule for 1997
27.2**......................... Financial Data Schedule for nine months ended September 30, 1998
27.3**......................... Financial Data Schedule for 1998
99.1**......................... Initial Valuation Report prepared by RP Financial
99.2**......................... Updated Valuation Report of RP Financial
99.3*.......................... Final Valuation Report prepared by RP Financial
99.4**......................... Letter on Subscription Rights prepared by RP Financial
99.5**......................... Agreement - Power of Attorney
99.6**......................... Internal Revenue Service Private Letter Ruling
</TABLE>
- --------------------------
* Filed herewith.
** Previously filed.
II-2
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this post-effective
amendment to be signed on its behalf by the undersigned, in Washington, D.C. on
July ___, 1999.
NCRIC GROUP, INC.
By: /s/ R. Ray Pate, Jr.
-------------------------------------
R. Ray Pate, Jr.
President and Chief Executive Officer
In accordance with the requirements of the Securities Act, this
amendment has been signed by the following persons in the capacities and on the
dates stated:
Signature Title Date
* Chair of the Board July ___, 1999
- ------------------------------
Nelson P. Trujillo, M.D. of Directors
/s/ R. Ray Pate, Jr. President, Chief Executive July ___, 1999
- ------------------------------
R. Ray Pate, Jr. Officer and Director
Principal Executive
Officer
/s/ Rebecca B. Crunk Chief Financial Officer July ___, 1999
- ------------------------------
Rebecca B. Crunk Principal Financial and
Accounting Officer
* Director July ___, 1999
- ------------------------------
Vincent C. Burke, III
* Director July ___, 1999
- ------------------------------
Pamela W. Coleman, M.D.
II-3
<PAGE>
* Director July ___, 1999
- ------------------------------
Charles H. Epps, Jr., M.D.
* Director July ___, 1999
- ------------------------------
Leonard M. Glassman, M.D.
* Director July ___, 1999
- ------------------------------
J. Paul McNamara
* Director July ___, 1999
- ------------------------------
Leonard Parver, M.D.
* Director July ___, 1999
- ------------------------------
Raymond Scalettar, M.D.
* Director July ___, 1999
- ------------------------------
David M. Seitzman, M.D.
*By: /s/ R. Ray Pate, Jr. July ___, 1999
--------------------------------
R. Ray Pate, Jr.
Attorney-in-fact
II-4
<PAGE>
EXHIBIT 23.4
July ___, 1999
We consent to the inclusion of our Final Valuation Report in this Post-
Effective Amendment No. 1 of NCRIC Group, Inc.
RP FINANCIAL, LC.
<PAGE>
Exhibit 99.3
-------------------------------------
PRO FORMA VALUATION UPDATE REPORT
MUTUAL HOLDING COMPANY
STOCK OFFERING
NCRIC Group, INC.
Washington, DC
Dated As Of:
July 16, 1999
------------------------------------
Prepared By:
RP Financial, LC.
1700 North Moore Street
Suite 2210
Arlington, Virginia 22209
<PAGE>
[LETTERHEAD OF RP FINANCIAL, L.C. APPEARS HERE]
July 16, 1999
Board of Directors
NCRIC Group, Inc.
1115 30th Street, N.W.
Washington, DC 20007
Members of the Board:
At your request, we have completed and hereby provide an updated
independent appraisal ("Update") of the estimated pro forma market value of the
Common Stock which is to be offered in connection with the common stock offering
described below. This Appraisal may be relied upon by the Department of
Insurance and Securities Regulation of the District of Columbia (the
"Department") in its review of the offering.
Our original appraisal report, dated December 4, 1998 (the "Original
Appraisal"), and the updated appraisal, dated February 12, 1999 (the "First
Update"), are incorporated herein by reference. As in the preparation of our
Original Appraisal and First Update, we believe the data and information used
herein is reliable; however, we cannot guarantee the accuracy and completeness
of such information.
Description of Mutual Holding Company Structure and Stock Issuance Plan
- -----------------------------------------------------------------------
On December 31, 1998, the National Capital Reciprocal Insurance Company
(the "Reciprocal") reorganized into a stock insurance company with a mutual
holding company parent (the "Reorganization"). Pursuant to a Plan of
Reorganization (the "Plan"), the Reciprocal formed a mutual insurance holding
company called NCRIC, A Mutual Holding Company ("Mutual Holding Company"). The
Reciprocal continued its corporate existence as a stock insurance company by
adopting articles of incorporation which authorized the issuance of capital
stock. Through a series of share transfers, two newly-formed intermediate stock
holding companies, NCRIC Holdings, Inc. ("Holdings") and NCRIC Group, Inc.
("Group"), were formed between the Mutual Holding Company and NCRIC, Inc.
Immediately after the Reorganization, the Mutual Holding Company directly owned
Holdings, which directly owned Group, which directly owned NCRIC, Inc.
Hereinafter, NCRIC, Inc. and Group are collectively referred to as "NCRIC" or
the "Company" unless specifically noted otherwise.
The Reorganization permits NCRIC Group to issue capital stock as long as
the Mutual Holding Company retains direct or indirect control of at least a
majority of the outstanding shares of NCRIC, Inc. The number of shares of common
stock sold to the public through the current offering will equal approximately
40 percent of the shares of NCRIC Group outstanding, resulting in approximately
60 percent ownership by the Mutual Holding Company.
<PAGE>
Board of Directors
July 16, 1999
Page 2
Immediately following the offering, the primary assets of Group will be the
capital stock of NCRIC, Inc., the capital stock of NCRIC MSO and the net
offering proceeds after deducting amounts utilized to fund the ESOP and Stock
Award Plan stock purchases and repay the $2.2 million indebtedness incurred in
connection with recently completed acquisitions.
Shares of NCRIC common stock were first offered through a subscription
offering to: (1) NCRIC's insureds and extended reporting endorsement holders as
of March 15, 1999; (2) the ESOP and Stock Award Plan; and (3) directors,
officers and employees of the Mutual Holding Company and its subsidiaries.
Remaining shares were then sold in the community offering with the following
preferences: (1) holders of policies originally issued after March 15, 1999;
(2) providers of goods and services to the Company; and (3) residents of the
District of Columbia and the states of Virginia and Maryland (the "Local
Community").
RP Financial, LC.
- -----------------
RP Financial, LC. ("RP Financial") is a financial consulting firm serving
the financial services industry nationwide that, among other things, specializes
in financial valuations and analyses of business enterprises and securities,
including the pro forma valuation for companies undertaking the demutualization
process including mutual savings institutions and insurance companies. The
background and experience of RP Financial is detailed in Exhibit V-1. We believe
that, except for the fee we will receive for our appraisal, we are independent
of NCRIC and the other parties engaged by the Company to assist in the stock
issuance process.
Limiting Factors and Considerations
- -----------------------------------
As described in the Original Appraisal, a valuation update would be
prepared prior to closing to reflect, among other things, significant
developments or changes in the Company's financial performance and condition in
relation to the Peer Group, conditions in the equity markets for the shares of
insurers and the results of the Company's offering. Our valuation is not
intended, and must not be construed, as a recommendation of any kind as to the
advisability of purchasing shares of the Common Stock. Moreover, because such
valuation is necessarily based upon estimates and projections of a number of
matters, all of which are subject to change from time to time, no assurance can
be given that persons who purchase shares of common stock in the offering will
thereafter be able to buy or sell such shares at prices related to the foregoing
valuation of the pro forma market value thereof.
RP Financial's updated valuation incorporates the financial condition and
operations of the Company as of March 31, 1999, as provided in the prospectus
supplement dated June 7, 1999, as well as the most recent financial results for
the peer group and market conditions through the date hereof, July 16, 1999. In
addition, we have incorporated the results of the Company's offering.
RP Financial is not a seller of securities within the meaning of any
federal and state securities laws and any report prepared by RP Financial shall
not be used as an offer or
<PAGE>
Board of Directors
July 16, 1999
Page 3
solicitation with respect to the purchase or sale of any securities. RP
Financial maintains a policy which prohibits the company, its principals or
employees from purchasing stock of its client institutions.
Financial Results
- -----------------
The updated financial information through March 31, 1999 (see Table 1)
reflects the January 4, 1999 consummation of the acquisition of Healthcare
Consulting, Inc. ("HCI"), HCI Ventures, LLC. ("HCIV"), and the assets of
Employee Benefits Services, Inc. ("EBSI").
Growth Trends
-------------
Total assets increased by $14.1 million to $148.5 million over the three
months ended March 31, 1999, reflecting the ongoing expansion of the Company's
business and the completed acquisitions.
Liabilities increased as loss and loss adjustment expenses ("LAE")
increased modestly, unearned premiums grew sharply and borrowings were utilized
to partially fund the recently completed acquisitions.
Equity diminished over the most recent quarter ended as interim earnings
were more than offset by a negative $2.423 million valuation adjustment on
securities classified as available for sale ("AFS"), net of the $824,000 tax
impact.
Balance Sheet
-------------
Investment Securities
---------------------
As of March 31, 1999, NCRIC's investment portfolio totaled $98.6
million, or 66.42 percent of assets, comprised of $93.4 million in bonds and
$5.2 million in preferred stocks.
Over the last three fiscal years, the structure of the investment
portfolio has changed modestly as the Company emphasized after-tax returns in
formulating the investment strategy, which led to an increased level of tax-
advantaged securities. Currently, all investment securities are classified as
AFS in order to maximize flexibility with respect to portfolio management, and
there was only a small change in portfolio composition during the quarter.
Reinsurance Recoverable
-----------------------
The Company establishes a reinsurance recoverable asset reflecting the
actuarial established value of funds to be recovered from reinsurance treaties
(or contracts) pursuant to SFAS No. 113. As of March 31, 1999, the reinsurance
recoverable assets totaled $25.8 million, or 17.4 percent of total assets. The
reinsurance recoverable assets are reviewed at least semi-annually by both
management and the independent actuaries, Tillinghast-Towers Perrin. Management
believes the reinsurance recoverable assets are collectible in full.
<PAGE>
RP Financial, LC.
Table 1
National Capital Reciprocal Insurance Company and Subsidiaries
Historical Balance Sheets
<TABLE>
<CAPTION>
At December 31, 1998 At March 31, 1999
----------------------- ----------------------
% of % of
Amount Assets Amount Assets
-------- -------- -------- --------
($000) (%) ($000) (%)
<S> <C> <C> <C> <C>
ASSETS
------
INVESTMENTS:
Securities Available for Sale, At Fair Value:
Bonds and U.S. Treasury Notes $ 91,135 67.85% $ 93,429 62.92%
Preferred Stocks 5,213 3.88% 5,184 3.49%
-------- ------- -------- -------
Total Securities Available for Sale $ 96,348 71.73% $ 98,613 66.41%
Investments in Management Service Organizations - 0.00% 18 0.01%
-------- ------- -------- ------
Total Investments $ 96,348 71.73% $ 98,631 66.42%
OTHER ASSETS:
Cash and Cash Equivalents 6,083 4.53% 8,514 5.73%
Reinsurance Recoverable 24,944 18.57% 25,777 17.36%
Goodwill - 0.00% 5,096 3.43%
Deferred Federal Income Taxes 2,742 2.04% 3,511 2.36%
Other Assets 4,209 3.13% 6,957 4.69%
-------- ------- -------- ------
TOTAL ASSETS $134,326 100.00% $148,486 100.00%
======== ======= ======== ======
LIABILITIES & EQUITY
--------------------
LIABILITIES:
Losses and Loss Adjustment Expenses:
Losses $ 60,127 44.76% $ 62,787 42.28%
Loss Adjustment Expenses 27,573 20.53% 27,919 18.80%
-------- ------- -------- -------
Total Losses and Loss Adjustment Expenses $ 87,700 65.29% $ 90,706 61.09%
Other Liabilities:
Retrospective Premium Accrued Under Reinsurance Treaties 6,492 4.83% 7,613 5.13%
Unearned Premiums 3,348 2.49% 12,083 8.14%
Bank Debt - 0.00% 2,200 1.48%
Other Liabilities 5,775 4.30% 6,173 4.16%
-------- ------- -------- -------
TOTAL LIABILITIES $103,315 76.91% $118,775 79.99%
EQUITY $ 31,011 23.09% $ 29,711 20.01%
TOTAL LIABILITIES & EQUITY $134,326 100.00% $148,486 100.00%
======== ======= ======== =======
</TABLE>
Source: NCRIC and subsidiaries audited and unaudited financial statements.
<PAGE>
Board of Directors
July 16, 1999
Page 5
Goodwill
--------
The Company's balance sheet reflects $5.096 million of goodwill as of
March 31, 1999, or 3.43 percent of assets, reflecting the previously referenced
acquisitions. The goodwill is being amortized over 20 years on a straight-line
basis, and the goodwill related to the HCI acquisition is not a tax-deductible
expense.
Other Assets
------------
The Company's other assets, consisting of cash and cash equivalents,
deferred income taxes, premium receivables, property and equipment, and various
other miscellaneous accruals and assets, reflecting growth during the quarter,
in part reflecting the acquisitions.
Losses and Loss Adjustment Expenses
-----------------------------------
Losses and LAE continue to comprise the largest segment of
liabilities, equal to $90.7 million, or 61.1 percent of assets, as of March 31,
1999, reflecting growth relative to year end. Favorable prior year loss
development in the first quarter of fiscal 1999 was offset by an increase in
direct loss reserve for current year experience, and direct loss payments were
in amounts not exceeding the threshold of the reinsurance layer. The Company
has continued to build policy reserves due to the sale of new and/or expanded
policies.
Retrospective Premiums Accrued
------------------------------
Retrospective premiums accrued equaled $7.6 million, or 5.1 percent of
total assets, as of March 31, 1999, representing estimated future premiums due
under swing rated reinsurance treaties. Management continually evaluates the
adequacy of the reinsurance liabilities and the current balance reflects a $1.1
million increase relative to the prior quarter end.
Other Liabilities
-----------------
Other liabilities consist of renewal credit dividends to policyholders
and a small amount of other miscellaneous liabilities. The renewal policy
dividend credit is the result of the Company's practice of paying discretionary
dividends to physician policyholders in the form of premium credits. The
Company accrues for such credits on an interim basis and credits the policy at
the time of renewal. As of March 31, 1999, other liabilities totaled $6.2
million, equal to 4.2 percent of total assets.
Equity
------
The Company's equity declined from $31.0 million, as of December 31,
1998, to $29.7 million, as of March 31, 1999, reflecting the adverse impact of
rising market interest rates on the Company's AFS investment securities.
The offering proceeds will strengthen NCRIC's capital position, and
facilitate the business plan which is focused on growth and diversification of
revenues and earnings. As of March 31, 1999, the Company's capital included
$5.1 million of intangible assets, resulting in a tangible capital/assets ratio
equal to 16.58 percent. Additional intangible assets may be potentially created
subject to the earnout provisions of the principals of HCI, HCIV and EBSI.
<PAGE>
Board of Directors
July 16, 1999
Page 6
Income and Expense Trends
-------------------------
NCRIC's earnings increased modestly based on updated financial data
(see Table 2), with the increase principally attributable to net underwriting
results and anticipated earnings from recently acquired businesses. Overall, net
income for the trailing 12 months increased to $2.9 million, equal to 2.22
percent of average assets and 10.73 percent of total revenues, with $101,000 net
income contributed during the first quarter from the completed acquisitions.
Premium Income
--------------
Net premiums earned have increased over the most recent quarter to
equal $19.5 million, amounting to 14.84 percent of average assets and 71.74
percent of total revenues. The premium growth realized in the most recent
quarter is principally the result of two factors: (1) a higher level of
premiums written owing to the successful marketing efforts by the Company; and
(2) favorable loss development on swing rated reinsurance.
Net Investment Income
---------------------
Net investment income, consisting of dividends and interest on
investment securities, declined despite slight growth in investments reflecting
generally lower interest rates. The recent uptick in interest rates may
partially mitigate such trends.
Net Realized Investment Gains
-----------------------------
Investment gains and losses have generally not been a significant
earnings component as the investment portfolio is managed with a long-term
perspective, and thus the Company does not actively engage in trading or seek to
realize short-term gains at the expense of long-term earnings. For the 12
months ended March 31, 1999, investment gains totaled $183,000, equal to 0.14
percent of average assets, as compared to $159,000, or 0.12 percent of average
assets for the prior 12 months.
Other Revenue
-------------
Other income consists of other miscellaneous fees, including revenues
from subsidiaries, and reflects limited change based on updated financial data,
equaling $374,000 for the most recent 12 months, or 0.28 percent of average
assets and 1.37 percent of total revenues. The Company realized a new source of
revenues beginning in 1999 as a result of the acquisitions, approximating $1.243
million for the quarter. On a full year basis, this revenue component is
expected to become a more significant contributor to earnings.
Losses and Loss Adjustment Expenses
-----------------------------------
Losses and LAE increased modestly as a result of the growth in the
number of insureds, both in terms of numbers and the aggregate dollar value of
policies in effect, notwithstanding favorable loss experience. Losses and LAE
equaled $16.1 million, or 12.25 percent of average assets and 59.19 percent of
total revenues, for the 12 months ended March 31, 1999. Despite such increase,
the loss ratio (i.e., losses and LAE as a percent of net premiums
<PAGE>
RP Financial, L.C.
Table 2
National Capital Reciprocal Insurance Company and Subsidiaries
Historical Income Statements
<TABLE>
<CAPTION>
For the For the
Fiscal Year Ended Twelve Months Ended
December 31 ,1998 March 31, 1999
------------------------------ ----------------------------------
% of Avg. % of % of Avg. % of
Amount Assets Revenues Amount Assets Revenues
------- ------ -------- ------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
($000) (%) (%) ($000) (%) (%)
REVENUES:
Premium Income:
Premiums Written $19,214 15.00% 76.71% $17,335 13.18% 63.72%
Premiums Ceded 4,089 3.19% 16.32% 3,844 2.92% 14.13%
Change in Unearned Premiums (2,945) -2.30% -11.76% 155 0.12% 0.57%
Renewal Credit Dividends to Policyholders (1,899) -1.48% -7.58% (1,816) -1.38% -6.67%
------- ----- ------ ------- ----- ------
Net Premiums Earned 18,459 14.41% 73.69% 19,518 14.84% 71.74%
Net Investment Income (less investment expenses of
$540,000 in 1997, $551,000 in 1996 & $403,000 in 1995) 5,996 4.68% 23.94% 5,888 4.48% 21.64%
Net Realized Investment Gains 159 0.12% 0.63% 183 0.14% 0.67%
Practice Management and Related Income - 0.00% 0.00% 1,243 0.95% 4.57%
Other Income 435 0.34% 1.74% 374 0.28% 1.37%
------- ----- ------ ------- ----- ------
Total Revenues 25,049 19.56% 100.00% 27,206 20.69% 100.00%
EXPENSES:
Losses and Loss Adjustment Expenses $15,677 12.24% 62.59% $16,102 12.25% 59.19%
Other Underwriting and Operating Expenses 5,746 4.49% 22.94% 6,936 5.28% 25.49%
------- ----- ------ ------- ----- ------
Total Expenses 21,423 16.73% 85.52% 23,038 17.52% 84.68%
------- ----- ------ ------- ----- ------
INCOME BEFORE INCOME TAXES $ 3,626 2.83% 14.48% $ 4,168 3.17% 15.32%
Total Income Tax (Benefit) Provision 1,079 0.84% 4.31% 1,249 0.95% 4.59%
NET INCOME $ 2,547 1.99% 10.17% $ 2,919 2.22% 10.73%
======= ===== ====== ======= ===== ======
Expense Ratio 31.13% 29.82%
Loss Ratio 84.93% 82.50%
------- -------
Combined Ratio 116.06% 112.32%
</TABLE>
(1) Excludes practice management expenses of $1.1 million.
Source: NCRIC and subsidiaries audited and unaudited financial statements.
<PAGE>
Board of Directors
July 16, 1999
Page 8
earned) diminished from 85 percent for the fiscal year ended December 31, 1998,
to 83 percent for the 12 months ended March 31, 1999, reflecting a continuation
of previous trends.
Other Underwriting and Operating Expenses
-----------------------------------------
Other underwriting expenses, consisting of all the other
administrative expenses, increased to $6.9 million for 12 months ended March 31,
1999, from $5.7 million for the previous 12 months, reflecting increased
compensation costs, rent on the new administrative office facility and higher
premium taxes. Other operating expenses have increased due to the operating
costs of the MSO, and expenses attributable to acquired companies and the
amortization of goodwill. Another factor was $206,000 in litigation costs
pertaining to a lawsuit filed by NCRIC PO, relating to non-performance on a
third-party contract -- the ultimate outcome and potential recovery, if any, is
not determinable at this time.
Notwithstanding the increase in operating expenses, the expense
ratio decreased to 29.82 percent for the most recent 12 months, which coupled
with the interim decline in the loss ratio led to a decline in the combined
ratio to 112.32 percent.
Income Taxes
------------
As a result of growth in pre-tax income, the Company's tax
expense increased modestly to total $1.2 million, equal 0.95 percent of average
assets and 4.59 percent of total revenues. The effective tax rate for the most
recent 12 months remained relatively constant at just below 30 percent.
Peer Group Financial Comparisons
- --------------------------------
Tables 3 through 6 present summary balance sheet and income statement
details for NCRIC and the Peer Group of publicly-traded insurance companies
established in our Original Appraisal (more detailed financial data for the Peer
Group companies is included as Exhibit I-1). NCRIC's and the Peer Group's ratios
are based on financial data through March 31, 1999.
Financial Condition
-------------------
In general, the updated financial condition ratios do not suggest
major differences from previous analyses. NCRIC continued to maintain a higher
balance of cash and investments while reinsurance assets were also higher; the
Company maintains a more limited scope of operations.
Policy reserves increased for the Company to 61.1 percent of assets,
which is above the Peer Group average of 57.1 percent. NCRIC's updated debt
ratio of 1.5 percent of assets reflects interim funding for the recently
completed acquisitions; the Peer Group's debt ratio averaged 5.5 percent of
total assets. Other liabilities for NCRIC (17.4 percent of assets) continued to
exceed the Peer Group average (10.4 percent of assets).
NCRIC's equity base of 20.1 percent remained below the Peer Group's
average equity ratio of 26.2 percent; however, with the addition of stock
proceeds, the Company's pro
<PAGE>
RP Financial, LC.
Table 3
Balance Sheet Composition and Growth Rates
Peer Group Analysis
As of and for the Twelve Months Ended March 31, 1999
<TABLE>
<CAPTION>
Peer Group Companies
NCRIC Peer Group --------------------------
Balance Sheet 3/31/99 Average MMI SKP MAI
- ------------- -------- --------- ------ -------- --------
<S> <C> <C> <C> <C> <C>
Cash & Investments 72.2% 66.1% 60.7% 87.7% 68.8%
Reinsurance Assets 17.4% 15.0% 18.7% 2.4% 17.1%
Deferred Policy Acqstn.Co 0.0% 1.3% 2.0% 0.0% 0.0%
Intangibles 3.4% 2.7% 2.2% 0.8% 0.0%
Separate Accounts 0.0% 0.0% 0.0% 0.0% 0.0%
Other Assets 7.0% 14.9% 16.4% 9.0% 14.1%
-------- --------- ------ -------- --------
Total Assets 100.0% 100.0% 100.0% 100.0% 100.0%
Policy Reserves 61.1% 57.1% 67.9% 54.4% 65.7%
Debt 1.5% 5.5% 0.0% 0.0% 0.0%
Other Liabilities 17.4% 10.4% 6.7% 3.2% 6.1%
-------- --------- ------ -------- --------
Total Liabilities 80.0% 73.0% 74.6% 57.7% 71.9%
Minority Interest 0.0% 0.0% 0.0% 0.0% 0.0%
Trust Preferred Securities 0.0% 1.9% 5.8% 0.0% 0.0%
Preferred Equity 0.0% 0.0% 0.0% 0.0% 0.0%
Common Equity 20.0% 25.1% 19.6% 42.3% 28.1%
-------- --------- ------ -------- --------
Total Equity 20.0% 25.1% 19.6% 42.3% 28.1%
Tangible Equity 16.6% 22.4% 17.4% 41.5% 28.1%
Annual Growth Rates
- -------------------
Cash & Investments 6.99% 34.76% 2.68% -1.77% 7.30%
Reinsurance Assets 37.89% 197.27% 12.11% -2.39% 15.84%
Deferred Policy Acqstn. Costs .00% 17.05% 2.60% -100.00% -100.00%
Intangibles N.A. 130.88% 22.72% N.A. N.A.
Separate Accounts 0.00% N.A. N.A. N.A. N.A.
Other Assets 43.77% 69.33% -7.54% 21.46% 0.62%
-------- --------- ------ -------- --------
Total Assets 16.92% 52.69% 2.80% -0.34% 6.93%
Policy Reserves 16.06% 63.63% 2.25% -4.99% 7.53%
Debt N.A. 1353.20% N.A. N.A. N.A.
Other Liabilities 28.38% 85.12% 24.57% 45.61% -11.45%
-------- --------- ------ -------- --------
Total Liabilities 19.90% 73.61% 3.93% -3.12% 5.60%
Minority Interest 0.00% N.A. N.A. N.A. N.A.
Redeemable Pfd. Equity 0.00% N.A. N.A. N.A. N.A.
Trust Preferred Securities 0.00% 28.60% 0.07% N.A. N.A.
Preferred Equity 0.00% 17.10% N.A. N.A. N.A.
Common Equity and Ret. Eam 6.39% 27.50% -0.52% 3.71% 10.49%
-------- --------- ------ -------- --------
Total Equity 6.39% 27.49% -0.52% 3.71% 10.49%
<CAPTION>
Peer Group Companies
--------------------------------------------
Balance Sheet FMT FPIC SPC FTR PEGI
- ------------- -------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C>
Cash & Investments 74.2% 62.0% 70.9% 56.6% 61.6%
Reinsurance Assets 11.5% 9.7% 11.7% 25.0% 0.0%
Deferred Policy Acqstn. 0.7% 0.5% 2.3% 4.0% 3.3%
Intangibles 2.0% 13.1% 1.5% 2.2% 7.7%
Separate Accounts 0.0% 0.0% 0.0% 0.0% 0.0%
Other Assets 11.6% 14.8% 13.6% 12.1% 27.3%
-------- ------- ------ ----- ------
Total Assets 100.0% 100.0% 100.0% 100.0% 100.0%
Policy Reserves 31.9% 57.6% 66.5% 63.1% 35.9%
Debt 17.9% 10.0% 3.9% 4.1% 19.0%
Other Liabilities 36.9% 3.4% 12.0% 11.8% 23.1%
-------- ------- ------ ------ ------
Total Liabilities 86.7% 71.0% 82.3% 79.0% 78.0%
Minority Interest 0.0% 0.0% 0.0% 0.0% 0.0%
Trust Preferred Securit 1.2% 0.0% 1.3% 6.5% 0.0%
Preferred Equity 0.0% 0.0% 0.0% 0.0% 0.0%
Common Equity 12.1% 29.0% 16.3% 14.5% 22.0%
-------- ------- ------ ------ ------
Total Equity 12.1% 29.0% 16.4% 14.5% 22.0%
Tangible Equity 10.1% 15.9% 14.9% 12.3% 14.2%
Annual Growth Rates
- -------------------
Cash & Investments 30.32% 21.55% 83.99% 8.60% 61.08%
Reinsurance Assets 49.88% 274.22% 120.80% 54.05% N.A.
Deferred Policy Acqstn. 37.34% 44.98% 135.51% 50.47% 94.39%
Intangibles 9.87% 983.39% 45.48% -1.33% -4.66%
Separate Accounts N.A. N.A. N.A. N.A. N.A.
Other Assets 10.32% 111.36% 69.63% 30.11% 264.39%
-------- ------- ------- ------ -------
Total Assets 29.10% 61.06% 85.66% 21.04% 79.96%
Policy Reserves 5.19% 47.90% 86.68% 25.11% 100.43%
Debt 89.22% 2808.90% 132.75% 2040.00% N.A.
Other Liabilities 43.83% 145.43% 217.61% 60.72% 31.10%
-------- -------- ------- -------- -------
Total Liabilities 32.48% 74.48% 100.60% 36.33% 119.69%
Minority Interest N.A. N.A. N.A. N.A. N.A.
Redeemable Pfd. Equity N.A. N.A. N.A. N.A. N.A.
Trust Preferred Securit 0.00% N.A. 142.85% 0.28% N.A.
Preferred Equity N.A. N.A. 17.10% N.A. N.A.
Common Equity and Ret. 12.01% 35.60% 33.35% -20.37% 9.54%
-------- -------- ------ -------- -------
Total Equity 12.01% 35.60% 33.30% -20.37% 9.54%
<CAPTION>
Peer Group Companies
-------- ----------------------------------
Balance Sheet PFCO RTWI AGII SNPL ZNT
- ------------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Cash & Investments 65.8% 70.2% 78.0% 42.5% 60.0%
Reinsurance Assets 13.8% 14.8% 11.5% 37.5% 21.7%
Deferred Policy Acqstn. 1.1% 1.1% 0.3% 0.8% 0.6%
Intangibles 0.0% 0.0% 2.0% 2.0% 1.4%
Separate Accounts 0.0% 0.0% 0.0% 0.0% 0.0%
Other Assets 19.3% 14.0% 8.1% 17.2% 16.4%
-------- ------- ------- ------- -------
Total Assets 100.0% 100.0% 100.0% 100.0% 100.0%
Policy Reserves 61.3% 65.5% 52.3% 63.9% 56.2%
Debt 3.1% 1.4% 0.0% 6.1% 5.5%
Other Liabilities 7.3% 1.7% 4.6% 11.0% 7.4%
-------- ------- ------- ------- -------
Total Liabilities 71.7% 68.6% 56.9% 81.1% 69.1%
Minority Interest 0.0% 0.0% 0.0% 0.0% 0.0%
Trust Preferred Securit 0.0% 0.0% 0.0% 5.9% 4.4%
Preferred Equity 0.0% 0.0% 0.0% 0.0% 0.0%
Common Equity 28.3% 31.4% 43.1% 13.1% 26.5%
-------- ------- ------- ------- -------
Total Equity 28.3% 31.4% 43.1% 13.1% 26.5%
Tangible Equity 28.3% 31.4% 41.1% 11.0% 25.1%
Annual Growth Rates
- -------------------
Cash & Investments 12.87% -2.28% -7.40% 221.21% 13.81%
Reinsurance Assets 372.55% 344.38% -0.81% 894.51% 232.12%
Deferred Policy Acqstn. -18.44% 1.49% -4.82% 132.57% -54.48%
Intangibles N.A. N.A. -7.45% -0.97% N.A.
Separate Accounts N.A. N.A. N.A. N.A. N.A.
Other Assets 14.04% 39.96% -16.74% 347.81% 15.93%
------- ------- ------- ------- -------
Total Assets 25.88% 16.04% -7.53% 330.36% 34.08%
Policy Reserves 44.48% 35.35% -13.65% 466.72% 24.14%
Debt 4448.60% -49.53% N.A. N.A. 2.44%
Other Liabilities 78.99% -1.14% -1.87% 338.40% 134.77%
-------- ------- ------- ------- -------
Total Liabilities 53.99% 29.64% -12.80% 487.64% 28.47%
Minority Interest N.A. N.A. N.A. N.A. N.A.
Redeemable Pfd. Equity N.A. N.A. N.A. N.A. N.A.
Trust Preferred Securit N.A. N.A. N.A. -0.19% N.A.
Preferred Equity N.A. N.A. N.A. N.A. N.A.
Common Equity and Ret. -13.89% -5.57% 0.46% 265.40% 27.28%
-------- ------- ------- ------- -------
Total Equity -13.89% -5.57% 0.46% 265.40% 27.28%
</TABLE>
Source: Audited and unaudited financial statements. Corporate reports and
offring circulars.
The information provided in this table has been obtained from sources we
believe are reliable, but we cannot guarantee the accuracy or completeness of
such information.
<PAGE>
Board of Directors
July 16, 1999
Page 10
forma equity position is expected to approach the Peer Group's ratio. NCRIC's
tangible assets ratio of 3.4 percent exceeds the Peer Group's intangible assets
ratio of 2.7 percent of assets. Accordingly, NCRIC's tangible equity/assets
ratio of 16.6 percent (pre-offering) falls well below the Peer Group's average
ratio of 22.4 percent -- NCRIC's pro forma ratio is expected to approach the
Peer Group's average ratio.
Both the Company's and the Peer Group's equity ratios continued to
reflect equity surpluses relative to statutory requirements.
Updated balance sheet growth rates for the Company and the Peer Group
reflect increased growth levels relative to the trends noted in the First Update
(the Company's growth rates are annualized rates for the fifteen months ended
March 31, 1999, while the Peer Group's growth rates are for the 12 months ended
March 31, 1999). Despite the Company's acquisitions, the Peer Group's growth
has been greater (also reflecting acquisition activity). The Peer Group's
equity ratio continued to show faster growth than the Company, with both
reflecting the adverse impact of higher interest rates on AFS securities.
Income and Expenses
-------------------
NCRIC's updated operating performance relative to the Peer Group (see
Tables 4 and 5) has improved, largely attributable to operating losses sustained
by four Peer Group companies which were formerly profitable (MMI Companies,
Inc., Frontier, RTW, Inc., and Superior National). The principal factors
leading to the decline in the Peer Group's earnings levels were higher average
policy expenses and other underwriting costs. Overall, NCRIC's return on
average assets equaled 2.21 percent versus 1.55 percent for the Peer Group on
average. Updated income as a percent of total revenues equaled 10.73 percent
for the Company versus an average of 6.86 percent for the Peer Group.
The combined ratio diminished for NCRIC and increased for the Peer
Group. As referenced above, the principal factor leading to the higher combined
ratio for the Peer Group is a higher expense ratio, which increased from 47.04
percent in the First Update to 57.74 percent for the most recent trailing 12
month period. The loss ratio also increased for the Peer Group, albeit to a
lesser extent, from 72.87 percent to 76.03 percent. As a result of the
foregoing, NCRIC's pre-tax operating margin and underwriting profit margin
improved in comparison to the Peer Group average.
As noted in earlier valuations, the long-tail nature of the business
of the Company and the Peer Group suggests quarter-to-quarter fluctuations in
earnings results are less meaningful than term trends.
Risk Factors
------------
NCRIC continues to operate with a higher loss ratio (82.5 percent for
the Company versus 76.0 percent for the Peer Group), as shown in Table 6, while
losses and LAE for the most recent 12 month period are relatively lower in
comparison to policy reserves (17.8 percent for NCRIC versus an average of 28.0
percent for the Peer Group). Policy reserves as a percent of equity and assets
have increased relative to Peer Group average.
11
<PAGE>
RP Financial, LC.
Table 4
Income and Expenses As A Percent of Average Assets
Peer Group Analysis
For the Twelve Months Ended March 31, 1999
<TABLE>
<CAPTION>
NCRIC Peer Group Peer Group Companies
-----------------------------------------------------------------------
3/31/99 Average MMI SKP MAI FMT FPIC SPC FTR PEGI
------- ------- --- --- --- --- ---- --- --- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Policy Revenues 14.84% 22.59% 12.49% 17.47% 13.29% 8.12% 21.98% 19.70% 21.92% 31.27%
Net Investment Income 4.48% 3.89% 2.86% 4.31% 2.95% 6.47% 3.91% 4.56% 3.17% 3.59%
Net Realized Gains 0.14% 0.48% 0.09% 1.64% 0.96% 0.00% 0.06% 0.62% 0.09% 0.00%
Non-Recurring Revenues 0.00% 0.71% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Other Revenues 1.23% 6.53% 1.93% 0.06% 0.74% 0.75% 3.90% 1.12% 0.00% 72.21%
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Revenues 20.69% 34.19% 11.89% 23.48% 17.93% 15.33% 29.85% 26.00% 25.18% 107.07%
Policy Expenses 12.25% 17.72% 10.57% 14.51% 8.73% 4.71% 15.83% 16.81% 19.04% 16.25%
Other Expenses 5.28% 13.88% 6.50% 3.10% 3.22% 5.30% 6.66% 9.30% 9.90% 84.22%
Interest Expense 0.00% 0.50% 0.39% 0.00% 0.00% 2.45% 0.27% 0.00% 0.09% 2.03%
Non-Recurring Expenses 0.00% 0.01% 0.00% 0.00% 0.00% 0.00% 0.09% 0.00% 0.00% 0.00%
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Expenses 17.52% 32.10% 11.17% 17.62% 11.94% 12.46% 22.84% 26.11% 29.02% 102.49%
Net Income Before Taxes 3.17% 2.08% -0.10% 5.87% 5.99% 2.87% 7.01% -0.11% -3.84% 4.58%
Provision for Taxes 0.95% 0.45% -0.11% 1.53% 1.61% 0.93% 1.89% -0.37% -1.66% 0.90%
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Inc. Before Adj. & Min.Int. 2.22% 1.63% 0.00% 4.34% 4.38% 1.94% 5.12% 0.26% -2.18% 3.68%
Plus: After-Tax Adjust 0.00% -0.06% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Less: Minority Interest Exp. 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Income Before Extraordinary 2.22% 1.57% 0.00% 4.34% 4.38% 1.94% 5.12% 0.26% -2.18% 3.68%
Extraordinary Items 0.00% -0.02% -0.18% 0.00% 0.00% 0.00% 0.00% -0.09% 0.00% 0.00%
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Income (ROA) 2.22% 1.55% -0.18% 4.34% 4.38% 1.94% 5.12% 0.17% -2.18% 3.68%
Return on Average Equity 14.57% 5.85% -0.88% 10.45% 15.80% 14.79% 15.98% 0.96% -11.52% 15.02%
Combined Ratio Analysis
- -----------------------
Loss Ratio 82.50% 76.03% 84.67% 83.07% 65.66% 58.03% 72.00% 85.35% 86.83% 51.96%
Expense Ratio 29.82% 57.74% 52.08% 17.77% 24.20% 65.30% 30.29% 47.22% 45.14% 269.37%
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Combined Ratio 112.32% 133.77% 136.75% 100.84% 89.87% 123.32% 102.29% 132.57% 131.97% 321.33%
Pre-Tax Underwriting Profit Margin 18.03% -33.77% -36.75% -0.84% 10.13% -23.32% -2.29% -32.57% -31.97% -221.33%
Pre-Tax Operating Profit Margin 15.42% 9.90% -0.61% 26.85% 35.28% 18.71% 23.53% -0.44% -15.32% 4.28%
<CAPTION>
------------------------------------------
PFCO RTWI AGII SNPL ZNT
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Policy Revenues 49.64% 47.02% 7.29% 11.97% 31.45%
Net Investment Income 4.32% 4.55% 4.17% 2.39% 3.25%
Net Realized Gains 0.75% 0.67% 0.55% 0.20% 0.62%
Non-Recurring Revenues 0.00% 0.00% 0.00% 0.00% 9.22%
Other Revenues 1.74% 0.00% 0.00% 0.00% 2.40%
------ ------ ------ ------ ------
Total Revenues 56.46% 52.24% 12.02% 14.56% 46.94%
Policy Expenses 44.52% 41.34% 4.84% 9.92% 23.27%
Other Expenses 15.29% 15.40% 4.18% 4.46% 12.96%
Interest Expense 0.00% 0.29% 0.00% 0.52% 0.40%
Non-Recurring Expenses 0.00% 0.00% 0.00% 0.00% 0.00%
------ ------ ------ ------ ------
Total Expenses 59.81% 57.03% 9.01% 14.90% 36.63%
Net Income Before Taxes -3.35% -4.79% 3.00% -0.34% 10.32%
Provision for Taxes -1.40% -1.86% 1.02% -0.18% 3.60%
------ ------ ------ ------ ------
Net Inc. Before Adj. & Min.Int. -1.95% -2.93% 1.98% -0.16% 6.72%
Plus: After-Tax Adjust 0.00% 0.00% 0.00% -0.79% 0.00%
Less: Minority Interest Exp. 0.00% 0.00% 0.00% 0.00% 0.00%
------ ------ ------ ------ ------
Net Income Before Extraordinary -1.95% -2.93% 1.98% -0.95% 6.72%
Extraordinary Items 0.00% 0.00% 0.00% 0.00% 0.00%
------ ------ ------ ------ ------
Net Income (ROA) -1.95% -2.93% 1.98% -0.95% 6.72%
Return on Average Equity -5.96% -8.37% 4.79% -6.96% 31.91%
Combined Ratio Analysis
- -----------------------
Loss Ratio 89.67% 87.93% 66.31% 82.86% 73.99%
Expense Ratio 30.80% 32.75% 57.27% 37.24% 41.20%
------ ------ ------ ------ ------
Combined Ratio 120.47% 120.67% 123.58% 120.09% 115.19%
Pre-Tax Underwriting Pr0fit Margin -20.47% -20.67% -23.58% -20.09% -15.19%
Pre-Tax Operating Profit Margin -6.02% -9.29% 26.21% -2.34% 27.81%
</TABLE>
Source: Audited and unaudited financial statements, corporate reports and
offering circulars.
The information provided in this table has been obtained from sources we
believe are reliable, but we cannot guarantee the accuracy or completeness of
such information.
<PAGE>
RP Financial, LC.
Table 5
Income and Expenses As A Percent of Trailing Twelve Month Revenues
Peer Group Analysis
For the Twelve Months Ended March 31, 1999
<TABLE>
<CAPTION>
NCRIC Peer Group Peer Group Companies
-------------------------------------------------------------------------------
3/31/99 Average MMI SKP MAI FMT FPIC SPC FTR PEGI PFCO
------- ------- --- --- --- --- ---- --- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Policy Revenues 71.74% 71.30% 71.93% 74.39% 74.11% 52.96% 73.63% 75.75% 87.07% 29.20% 87.93%
Net Investment Income 21.64% 16.49% 16.46% 18.37% 16.44% 42.17% 13.10% 17.54% 12.57% 3.36% 7.66%
Net Realized Gains 0.67% 1.98% 0.53% 6.96% 5.34% -0.01% 0.21% 2.40% 0.36% 0.00% 1.33%
Non-Recurring Revenues 0.00% 1.51% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Other Revenues 5.95% 8.72% 11.09% 0.27% 4.11% 4.88% 13.06% 4.31% 0.00% 67.44% 3.08%
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Revenues 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Policy Expenses 59.19% 55.88% 60.90% 61.80% 48.66% 30.73% 53.02% 64.66% 75.60% 15.17% 78.85%
Other Expenses 25.49% 32.98% 37.46% 13.22% 17.94% 34.58% 22.30% 35.77% 39.30% 78.66% 27.08%
Interest Expense 0.00% 2.03% 2.24% 0.00% 0.00% 15.98% 0.90% 0.00% 0.36% 1.89% 0.00%
Non-Recurring Expenses 0.00% 0.02% 0.00% 0.00% 0.00% 0.00% 0.29% 0.00% 0.00% 0.00% 0.00%
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Expenses 84.68% 90.91% 100.60% 75.02% 66.60% 81.29% 76.51% 100.43% 115.26% 95.72% 105.94%
Net Income Before Taxes 15.32% 9.09% -0.60% 24.98% 33.40% 18.71% 23.49% -0.43% -15.26% 4.28% -5.94%
Provision for Taxes 4.59% 2.23% -0.62% 6.52% 8.98% 6.07% 6.32% -1.42% -6.60% 0.84% -2.48%
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Inc. Before Adj. 10.73% 6.86% 0.01% 18.47% 24.42% 12.64% 17.16% 0.99% -8.66% 3.44% -3.46%
& Min. Int.
Plus: After-Tax 0.00% -0.42% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Adjustments
Less: Minority 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Interest Exp.
Net Income Before 10.73% 6.44% 0.01% 18.47% 24.42% 12.64% 17.16% 0.99% -8.66% 3.44% -3.46%
Extraordinary
Extraordinary Items 0.00% -0.11% -1.05% 0.00% 0.00% 0.00% 0.00% -0.33% 0.00% 0.00% 0.00%
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Margin 10.73% 6.33% -1.03% 18.47% 24.42% 12.64% 17.16% 0.66% -8.66% 3.44% -3.46%
Combined Ratio Analysis
- -----------------------
Loss Ratio 82.50% 76.03% 84.67% 83.07% 65.66% 58.03% 72.00% 85.35% 86.83% 51.96% 89.67%
Expense Ratio 29.82% 57.74% 52.08% 17.77% 24.20% 65.30% 30.29% 47.22% 45.14% 269.37% 30.80%
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Combined Ratio 112.32% 133.77% 136.75% 100.84% 89.87% 123.32% 102.29% 132.57% 131.97% 321.33% 120.47%
Pre-Tax Underwriting
Profit Margin -18.03% -33.77% -36.75% -0.84% 10.13% -23.32% -2.29% -32.57% -31.97% -221.33% -20.47%
Pre-Tax Operating
Profit Margin 15.42% 9.90% -0.61% 26.85% 35.28% 18.71% 23.53% -0.44% -15.32% 4.28% -6.02%
<CAPTION>
---------------------------------
RTWI AGII SNPL ZNT
---- ---- ---- ---
<S> <C> <C> <C> <C>
Policy Revenues 90.00% 60.69% 82.22% 66.99%
Net Investment Income 8.72% 34.71% 16.41% 6.93%
Net Realized Gains 1.28% 4.60% 1.37% 1.31%
Non-Recurring Revenues 0.00% 0.00% 0.00% 19.65%
Other Revenues 0.00% 0.00% 0.00% 5.11%
------ ------ ------ ------
Total Revenues 100.00% 100.00% 100.00% 100.00%
Policy Expenses 79.13% 40.24% 68.12% 49.57%
Other Expenses 29.47% 34.76% 30.61% 27.60%
Interest Expense 0.56% 0.00% 3.57% 0.85%
Non-Recurring Expenses 0.00% 0.00% 0.00% 0.00%
------ ------ ------ ------
Total Expenses 09.17% 75.00% 102.31% 78.02%
Net Income Before Taxes -9.17% 25.00% -2.31% 21.98%
Provision for Taxes -3.57% 8.50% -1.23% 7.67%
------ ------ ------ ------
Net Inc. Before Adj.
& Min. Int. -5.60% 16.50% -1.08% 14.31%
Plus: After-Tax
Adjustments 0.00% 0.00% -5.42% 0.00%
Less: Minority 0.00% 0.00% 0.00% 0.00%
------ ------ ------ ------
Interest Exp.
Net Income Before
Extraordinary -5.60% 16.50% -6.51% 14.31%
Extraordinary Items 0.00% 0.00% 0.00% 0.00%
------ ------ ------ ------
Net Margin -5.60% 16.50% -6.51% 14.31%
Combined Ratio Analysis
- -----------------------
Loss Ratio 87.93% 66.31% 82.86% 73.99%
Expense Ratio 32.75% 57.27% 37.24% 41.20%
------ ------ ------ ------
Combined Ratio 120.67% 123.58% 120.09% 115.19%
Pre-Tax Underwriting
Profit Margin -20.67% -23.58% -20.09% -15.19%
Pre-Tax Operating
Profit Margin -9.29% 26.21% -2.34% 27.81%
</TABLE>
Source: Audited and unaudited financial statements, corporate reports and
offering circulars.
The information provided in this table has been obtained from sources
we believe are reliable, but we cannot guarantee the accuracy or completeness of
such information.
<PAGE>
RP Financial, LC. Table 6
Analysis of Risk Factors
Peer Group Analysis
<TABLE>
<CAPTION>
NCRIC Peer Group Peer Group Companies
-------------------------------------------------------
3/31/99 Average MMI SKP MAI FMT FPIC SPC
------- ------- --- --- --- --- ---- ---
Losses and LAE as a Percent of
- ------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Premiums Earned (Loss Ratio) 82.5% 76.0% 84.7% 83.1% 65.7% 58.0% 72.0% 85.4%
Policy Reserves 17.8% 28.0% 15.2% 27.0% 12.9% 12.9% 21.3% 22.4%
Policy Reserves as a Percent of
- -------------------------------
Assets 61.1% 57.1% 67.9% 54.4% 65.7% 31.9% 57.6% 66.5%
Equity 305.3% 263.3% 345.9% 128.6% 233.8% 263.6% 198.2% 405.8%
A.M. Best, Inc. Rating A- N.M. A A A A- A- A+
------------------------------------------------------------
FTR PEGI PFCO RTWI AGII SNPT ZNT
--- ---- ---- ---- ---- ---- ---
Losses and LAE as a Percent of
- ------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Premiums Earned (Loss Ratio) 86.8% 52.0% 89.7% 87.9% 66.3% 82.9% 74.0%
Policy Reserves 27.5% 38.3% 66.0% 58.8% 9.7% 8.3% 43.5%
Policy Reserves as a Percent of
- -------------------------------
Assets 63.1% 35.9% 61.3% 65.5% 52.3% 63.9% 56.2%
Equity 436.1% 163.7% 216.4% 208.3% 121.2% 489.2% 211.8%
A.M. Best, Inc. Rating A- N.A. B++ N.A. A+ B+ A+
</TABLE>
Source: Audited and unaudited financial statements, corporate reports and
offering circulars.
The information provided in this table has been obtained from sources we
believe are reliable, but we cannot guarantee the accuracy or completness of
such information.
<PAGE>
Board of Directors
July 16, 1999
Page 14
The one area of underwriting risk to which the Company is subject to
greater exposure is the Company's concentration in the District of Columbia, a
jurisdiction which has not experienced tort reform and where damage awards are
typically high in comparison to areas of the country where the Peer Group
companies operate. While the Company seeks to offset such risk through
conservative underwriting and reserve policies and effective claims processing,
and reinsurance including catastrophic loss coverage, we believe that the
Company's earnings continue to be exposed to a greater level of volatility as a
result of this factor.
Stock Market Conditions
- -----------------------
Since the First Update, the performance of the overall stock market has
been largely bullish, with the moderate trading range in early Spring giving way
to a significant rally both in the Dow Jones Industrial Average ("DJIA") and in
the technology sector. On July 16, 1999, the DJIA closed at 11210, an increase
of 20.9 percent since the date of the First Update of 9275. Financial and
cyclical stocks gained favor in mid-April, based on expectations of the global
economic recovery gaining strength and lower interest rates. The recovery in
cyclical stocks gained momentum through most of April, reflecting a shift in
leadership from technology stocks to economically sensitive stocks. Cyclical
stocks carried the DJIA above the 11000 mark in early-May, while financial and
technology stocks declined on growing concerns of inflation re-emerging and
higher interest rates. Stocks in general slumped in mid- and late-May,
reflecting inflation worries and indications by the Federal Reserve that they
were leaning towards raising interest rates. Especially hard hit were internet
stocks which had recorded strong increases in previous periods. Such concerns
about interest rates continued into June, as the investment community continued
to anticipate the actions of the Fed during meetings held at the end of the
month. Subsequent to the Fed rate hike in late June, the market rallied based
on the Fed's neutral stance about the prospects for further interest rate
increases.
Over the same period, the insurance sector has paralleled the broader
market averages. On July 16, 1999, the Dow Jones Insurance Index had increased
12.9 percent since the First Update (from 1196 to 1350). Table 7 charts the
performance of the Dow Jones Insurance Index versus the Dow Jones Industrial
average. While the Dow Jones Insurance Index provides some insight into the
insurance sector, the Index is market value weighted, reflects all insurance
sectors and is comprised of full stock companies. Thus we have primarily relied
on the Peer Group pricing in the valuation given the relative comparability of
the Peer Group companies to NCRIC.
As shown in Table 8 below, the changes in the median pricing ratios of the
Peer Group were mixed, with the Price/Earnings and Price/1999 Estimated Earnings
declining modestly (by 5.8 percent and 2.2 percent, respectively) while the
Price/Core Earnings multiple increased by 17.4 percent based on the median.
Likewise, the Price/Book ratio increased by 13.6 percent while the median
Price/Tangible Book Value ratio decreased by 3.3 percent. The median ratios for
the medical malpractice specialist subgroup showed little to a small positive
change since the First Update.
<PAGE>
[CHART APPEARS HERE]
<PAGE>
Board of Directors
July 16, 1999
Page 16
Table 8
Median Pricing Characteristics of Peer Groups
<TABLE>
<CAPTION>
February 12, July 16, %
1999 1999 Change
------------ -------- -------
<S> <C> <C> <C>
Peer Group
- ----------
Price/Earnings (x) 14.60x 13.76x (5.8)%
Price/Core Earnings (x) 15.16 17.80 17.4
Price/1999 Estimated Earnings (x) 12.12 11.85 (2.2)
Price/Book (%) 109.1% 123.91% 13.6
Price/Tangible Book (%) 132.8 128.38 (3.3)
Price/Assets (%) 29.1 26.2 (10.0)
Medical Malpractice Sub Group
- -----------------------------
Price/Earnings (x) 17.36x 17.38x 0.1%
Price/Core Earnings (x) 17.65 18.39 4.2
Price/1999 Estimated Earnings (x) 12.67 13.30 5.0
Price/Book (%) 151.0% 151.9% 0.6
Price/Tangible Book (%) 151.0 152.8 1.2
Price/Assets (%) 48.3 49.5 2.5
</TABLE>
As discussed in the Original Appraisal and First Update, the new issue
market for demutualizing insurers is also an important consideration in
determining the Company's pro forma market value, and there have only been two
demutualizations completed since the date of First Update (StanCorp Financial
Group and MEEMIC Holdings). These demutualization structures have been very
different than the Company's mutual holding company structure involving a
subscription offering and thus are not directly comparable.
StanCorp Financial Group undertook a full demutualization and conducted a
simultaneous IPO which was priced at $23.75 per share in April 1999,
representing approximately 88 percent of pro forma book value and 10.24 times
earnings. StanCorp Financial Group traded up by approximately 2 percent on the
first trading day and closed at a price of $26.50 per share as of July 16, 1999.
MEEMIC Holdings demutualized on July 1, 1999, was priced at $10.00 per
share in April 1999, representing approximately 81 percent of pro forma book
value. MEEMIC Holdings traded up in the aftermarket and closed at a price of
$15.63 per share as of July 16, 1999. The relevance of MEEMIC Holdings'
demutualization and pricing to NCRIC's pro forma valuation is rendered less
meaningful by the controlling stock ownership by another insurance company.
The MIIX Group, a holding company for the largest medical malpractice
liability insurer in New Jersey, has not yet completed its demutualization and
IPO, and thus no new information is available.
<PAGE>
Board of Directors
July 16, 1999
Page 17
Results of the Offering
- -----------------------
The offering commenced May 10, 1999, during which the Company conducted an
extensive marketing effort among its policyholders, vendors, and other investors
in the markets in which it operates, holding a total of 20 meetings in the
Washington, DC area and 3 meetings in the markets served by HCI. In this regard,
numerous community meetings were held at hospitals, at NCRIC's headquarters, and
other areas with a concentration of NCRIC insureds. Data provided by NCRIC's
marketing agent, Sandler O'Neill & Partners, L.P. ("Sandler O'Neill"), indicates
that total orders through the June 30, 1999 end of the subscription offering
totaled approximately $3.8 million, or 547,407 shares at $7.00 per share,
approximately 40 percent of the offering range minimum. The relatively modest
subscription interest is believed to be partially attributable to the limited
number of NCRIC policyholders (slightly over 1,200 at year end).
Following the close of the Subscription Offering, the Community Offering
remained open. Sandler O'Neill conducted presentations and meetings, in
conjunction with the Company's management, with Sandler O'Neill's broker force
and with various institutional and professional investors in New York and
Boston. These meetings generated interest in the issue at the lower end of the
offering range only. The total orders actually received in the offering totaled
1,480,000 shares, equal to $10,360,000 at an offering price of $7.00 per share,
which falls between the minimum and midpoint of the offering range. A summary of
the orders received is set forth in Table 9 below.
Table 9
Results of the Offering
<TABLE>
<CAPTION>
Total Number of Average % of
Category Shares Orders Order Total
- -------- --------- --------- ---------- ------
<S> <C> <C> <C> <C>
Orders Through June 30, 1999
- ----------------------------
Category One 169,470 82 2,067 11.5%
ESOP and Stock Award Plan(1) 222,000 2 111,000 15.0
Category Three 82,250 49 1,679 5.6
Community
Named Insureds of NCRIC & Vendors 1,830 4 458 0.1
Residents of DC, MD and VA 11,942 16 746 0.8
Other Community 59,915 10 5,992 4.0
--------- --- ------ ----
Total Orders Through 6/30/99 547,407 163 3,358 37.0%
Community Orders Received After 6/30/99 932,593 181 5,152 63.0
--------- --- ------ ------
Total Orders 1,480,000 344 4,302(2) 100.0%
</TABLE>
(1) The ESOP will subscribe for 10 percent of the offering and the Stock Award
Plan will subscribe for 5 percent of the offering.
(2) Excluding the ESOP and Stock Award Plan, the average order equaled 3,678
shares.
Source: Sandler O'Neill.
<PAGE>
Board of Directors
July 16, 1999
Page 18
Summary of Adjustments
- ----------------------
Based on the foregoing, we have not changed the valuation parameters as set
forth in the First Update as shown below.
<TABLE>
<CAPTION>
Key Valuation Parameters Valuation Adjustment
------------------------ --------------------
<S> <C>
Financial Condition Slight Upward
Profitability, Growth and Viability of Earnings Moderate Downward
Risk Assessment Slight Downward
Primary Market and Growth Slight Downward
Dividends Slight Downward
Liquidity of the Shares Moderate Downward
Marketing of the Issue Moderate Downward
Organization Slight Downward
Regulatory Environment Slight Downward
</TABLE>
Taking into account the updated financial information for the Company and
the Peer Group, we have concluded that the valuation adjustments for financial
condition and profitability, growth, and viability of earnings should remain
unchanged from those applied in the First Update. The factors concerning the
valuation parameters of risk assessment, primary market area, dividends,
liquidity of the shares, organization and regulatory environment did not change
since the First Update. Accordingly, those parameters were not discussed further
in this update.
In view of the limited change in overall pricing of the Peer Group and no
change in valuation adjustments, we are confirming that the previously
determined valuation and resulting range of value continues to be appropriate.
In view of the modest investor response in both the subscription and community
offerings, the proposed closing of the offering in the lower portion of the
valuation range is consistent with this updated valuation.
Valuation Approaches
- --------------------
In applying the pro forma market value approach, we considered the three
key pricing ratios in valuing NCRIC's to-be-issued stock -- P/E, P/B and
price/assets ("P/A") approaches -- all performed on a pro forma basis including
the effects of the stock offering proceeds assuming a full demutualization
(refer to Original Appraisal for a complete methodology discussion). In
computing the pro forma impact of the demutualization and the related pricing
ratios, we have continued to incorporate the assumptions in NCRIC's prospectus
for effective tax rate and stock benefit plans (summarized in Exhibits 2 and 3
herein).
We have also considered the pro forma impact of the acquisitions in the
calculation of pro forma pricing, as set forth in the prospectus. Specifically,
we have incorporated the estimated incremental expenses and revenues and
reduction to compensation expenses. The
<PAGE>
Board of Directors
July 16, 1999
Page 19
estimated reinvestment benefit of the stock proceeds continues to reflect a 5
percent pre-tax reinvestment rate.
Based on the foregoing, we have concluded that: (1) the range of value
concluded in the First Update continues to be appropriate; and, (2) the
Company's intention to accept all the orders, totaling $10,360,000, in closing
the offering is consistent with the current range of value. Specifically, RP
Financial concluded that the pro forma market value of an offering pursuant to a
full demutualization, taking into account the dilutive impact of the 42,857
shares issued to the shareholders of the Acquired Companies at the completion of
the offering, of $26,199,999, or 3,742,857 shares at $7.00 per share, is
consistent with the current range of value.
1. P/E. The application of the P/E valuation method requires
---
calculating the Company's pro forma market value by applying a valuation P/E
multiple (fully demutualized basis) to the pro forma earnings base. Ideally, the
pro forma earnings base is composed principally of the Company's recurring
earnings base, that is, earnings adjusted to exclude any one-time non-operating
items, plus the estimated after-tax earnings benefit of the reinvestment of net
offering proceeds. NCRIC's reported earnings were $2,919,000 for the 12 months
ended March 31, 1999, which included a modest amount of gains ($183,000). We
also excluded gains from the core earnings base on a tax-effected basis to
derive a core earnings figure of $2,809,000. We have factored in the estimated
earnings benefit of $436,000 from the Acquired Companies (as reflected in the
prospectus) adjusted for $101,000 earned during the first quarter after taxes
and amortization of goodwill, in developing a valuation earnings base of
$3,254,000 and $3,144,000, respectively, based on reported and core earnings.
Based on the proposed closing value of $26.2 million, including the
42,857 acquisition shares, the Company's pro forma P/E multiple based on a fully
demutualized basis was 6.79 and 6.99 times reported and core earnings,
respectively. The discounts have increased relative to the fully demutualized
midpoint value in the First Update as a result of interim earnings improvement
for the Company, softer earnings on average for the Peer Group and the
completion of the offering below the midpoint value.
2. P/B. The application of the P/B valuation method requires
---
calculating the Company's pro forma market value by applying a valuation P/B
ratio to NCRIC's pro forma book value (fully demutualized basis). In applying
the P/B approach, we also considered tangible book value (i.e., book value net
of intangible assets) because historically the market has not generally given
credit for intangible assets.
At the proposed closing value, NCRIC exhibited pro forma reported and
tangible P/B ratios (fully demutualized basis) equal to 51.38 percent and 57.09
percent, respectively, compared to the Peer Group's median reported and tangible
P/B ratios of 123.91 percent and 128.38 percent, respectively. Accordingly, the
Company's pro forma reported and tangible P/B ratios are discounted by 58.5
percent and 55.5 percent respectively. The closing P/B discounts relative to the
Peer Group are generally consistent with the discounts reflected in the First
Update.
Additionally, the Company's pro forma P/B is consistent with the
recent market for new issues of demutualized insurance companies, including MONY
Group, Standard
<PAGE>
Board of Directors
July 16, 1999
Page 20
Financial Group and MEEMIC Holdings, after taking into account the unique
aspects of NCRIC's mutual holding company structure and the relatively smaller
size of the Company.
3. P/A. The P/A valuation methodology determines market value by
---
applying a valuation P/A ratio (fully demutualized basis) to the Company's pro
forma asset base. At the proposed closing value, NCRIC's full demutualization
value equaled 15.43 percent of pro forma assets. Comparatively, the Peer Group
companies exhibited a median P/A ratio of 26.16 percent, which implies a 41.0
percent discount being applied to the Company's pro forma P/A ratio (fully
demutualized basis). We placed less weight on this valuation methodology, as
size is a less important valuation criteria to the investment community.
Conclusion
- ----------
We have concluded in this updated valuation that the range of value
pursuant to a full demutualization determined in the First Update continues to
be appropriate as of July 16, 1999, as set forth in the table below.
<TABLE>
<CAPTION>
Total Shares Aggregate Market Value(1)
------------------------------------- -----------------------------------------
Offering Acquisition Total Offering Acquisition Market
Shares(1) Shares Shares(2) Amount(1) Shares Value(2)
---------- ------------ ---------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Minimum 3,400,000 42,857 3,442,857 $23,800,000 $299,999 $24,099,999
Midpoint 4,000,000 42,857 4,042,857 28,000,000 299,999 28,299,999
Maximum 4,600,000 42,857 4,642,857 32,200,000 299,999 32,499,999
</TABLE>
(1) Pursuant to a full stock demutualization.
(2) Based on a $7.00 per share price.
The Board of Directors has established a public offering range such that
the public ownership of Group will constitute a 40 percent ownership interest of
the shares, before the 42,857 shares issued in the Acquisitions; the Mutual
Holding Company will own the balance of the shares. The proposed closing value
is $10.66 million, reflecting the acceptance of all subscription and community
orders, and the 42,857 acquisition shares issued publicly. Based on a $7.00 per
share offering price, the number of shares issued to the public will be
1,522,857. Accordingly, the distribution of shares over the range of value and
at the proposed closing value is as follows:
<PAGE>
Board of Directors
July 16, 1999
Page 21
<TABLE>
<CAPTION>
Total Public Shares Market Value of Public Shares
------------------- -----------------------------
Total Total
MHC Offering Acquisition Public Offering Acquisition Public
Shares Shares Shares Shares Shares Shares Shares
--------- --------- ----------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Minimum 2,040,000 1,360,000 42,857 1,402,857 $ 9,520,000 $299,999 $ 9,819,999
Midpoint 2,400,000 1,600,000 42,857 1,642,857 11,200,000 299,999 11,499,999
Maximum 2,760,000 1,840,000 42,857 1,882,857 12,880,000 299,999 13,179,999
Closing Value 2,220,000 1,480,000 42,857 1,522,857 10,360,000 299,999 10,659,999
</TABLE>
The pricing ratios with the mutual holding company in place are shown in
Table 11 and the pro forma calculations are included in Exhibits 4 and 5.
Respectfully submitted,
RP FINANCIAL, LC.
/s/ Ronald S. Riggins
Ronald S. Riggins
President and Managing Director
/s/ James P. Hennessey
James P. Hennessey
Senior Vice President
<PAGE>
RP Financial, LC
Table 10
Public Market Pricing
NCRIC and the Peer Group
As of July 16, 1999
<TABLE>
<CAPTION>
Market Capitalization Per Share Data
----------------------- --------------------------------------------------
Price/ Shares Market T.T. Mo. Earnings Book Value
---------------------- ---------------
Share Out. Value Actual Core 1999 Est. Rep. Tang. Assets
----- ---- ----- ----- ---- --------- ---- ----- ------
($) (000) ($Mil) ($) ($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NCRIC Group, Inc. (1)
---------------------
Maximum 7.00 4,643 32.50 0.89 0.86 ---- 12.08 10.98 37.66
Midpoint 7.00 4,043 28.30 0.99 0.97 ---- 13.03 11.77 42.41
Minimum 7.00 3,443 24.10 1.14 1.10 ---- 14.32 12.84 48.82
Proposed Closing Value 7.00 3,743 26.20 1.06 1.03 ---- 13.62 12.26 45.36
Comparable Group
----------------
Average $21.78 36,797 $1,601 $1.22 $0.61 $1.69 $17.42 $15.65 $76.21
Median --- --- --- --- --- --- -- --- --- ---
Comparable Group
- ----------------
MMI MMI Companies, Inc. 16.00 19,028 304 0.26 0.38 1.50 21.24 18.88 108.23
SKP SCPIE Holdings, Inc. 31.06 11,732 364 3.37 2.61 2.62 32.46 31.81 76.64
MAI Medical Assurance, Inc. 29.50 23,196 684 2.14 1.86 2.00 14.19 14.19 50.45
FMT Fremont General Corporation 19.31 70,056 1,353 1.94 1.94 2.00 13.83 11.51 114.38
FPIC FPIC Insurance Group, Inc. 49.38 9,842 486 2.35 2.36 2.91 17.24 9.46 59.36
SPC St. Paul Companies, Inc. 33.00 227,300 7,501 0.26 (0.18) 2.60 28.26 25.71 172.56
FTR Frontier Insurance Group, Inc. 14.75 34,927 515 (1.47) (1.51) 1.60 10.70 9.05 73.89
PEGI Preferred Employers Holdings, Inc. 5.00 5,247 26 0.36 0.36 0.61 2.57 1.66 11.70
PFCO PAULA Financial 8.75 5,929 52 (0.78) (0.96) 1.28 12.44 12.44 43.94
RTWI RTW, Inc. 5.50 12,285 68 (0.39) (0.44) 0.30 4.44 4.44 14.12
AGII Argonaut Group, Inc. 24.31 24,018 584 1.48 1.23 1.50 30.63 29.18 71.03
SNTL Superior National Insurance Group, Inc. 21.25 17,683 376 (0.50) (0.56) 1.90 12.77 10.77 97.72
ZNT Zenith National Insurance Corp. 25.31 17,116 433 6.82 0.83 1.15 25.65 24.30 96.74
Medical Malpractice Specialist Sub-Group
- ----------------------------------------
Average $31.49 15,950 $460 $2.03 $1.80 $2.26 $21.28 $18.58 $73.67
Median 28.13 18,964 390 --- --- --- -- --- --- ---
Medical Malpractice Specialist Sub-Group
- ----------------------------------------
MMI MMI Companies, Inc. 16.00 19,028 304 0.257 0.384 1.50 21.239 18.879 108.23
SKP SCPIE Holdings, Inc. 31.06 11,732 364 3.370 2.608 2.62 32.457 31.809 76.64
MAI Medical Assurance, Inc. 29.50 23,196 684 2.143 1.862 2.00 14.186 14.186 50.45
FPIC FPIC Insurance Group, Inc. 49.38 9,842 486 2.351 2.358 2.91 17.242 9.4609 59.36
<CAPTION>
Pricing Ratios Dividends
-------------------------------------------------------- --------------------
Earnings Book Value Amt./ Payout
----------------------------- -----------------
Actual Core 1999 Est. Reported Tangible Assets Share Yield Ratio
------ ---- ---------- -------- -------- ------ ----- ----- -----
(x) (x) (x) (%) (%) (%) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NCRIC Group, Inc. (1)
--------------------
Maximum 8.10 8.33 ---- 57.94% 63.73% 18.59% 0.00 0.00 0.00
Midpoint 7.24 7.44 ---- 53.71% 59.46% 16.50% 0.00 0.00 0.00
Minimum 6.33 6.51 ---- 48.90% 54.53% 14.34% 0.00 0.00 0.00
Proposed Closing Value 6.79 6.99 ---- 51.38% 57.09% 15.43% 0.00 0.00 0.00
Comparable Group
----------------
Average 30.66 20.54 12.97 137.92% 173.14% 33.59% 0.39 1.7% 76.50%
Median 13.76 17.80 11.85 123.91% 128.38% 26.16% 0.28 1.7% 14.65%
Comparable Group
- ----------------
MMI MMI Companies, Inc. 62.23 41.64 10.67 75.3% 84.8% 14.8% 0.36 2.3% 140.0%
SKP SCPIE Holdings, Inc. 9.22 11.91 11.85 95.7% 97.6% 40.5% 0.32 1.0% 9.5%
MAI Medical Assurance, Inc. 13.76 15.84 14.75 208.0% 208.0% 58.5% 0.00 0.0% 0.0%
FMT Fremont General Corporation 9.97 9.97 9.66 139.6% 167.8% 16.9% 0.32 1.7% 16.5%
FPIC FPIC Insurance Group, Inc. 21.00 20.94 16.97 286.4% 521.9% 83.2% 0.00 0.0% 0.0%
SPC St. Paul Companies, Inc. 125.92 N.M. 12.69 116.8% 128.4% 19.1% 1.04 3.2% 396.8%
FTR Frontier Insurance Group, Inc. N.M. N.M. 9.22 137.9% 162.9% 20.0% 0.28 1.9% N.M.
PEGI Preferred Employers Holdings, Inc. 13.70 13.70 8.20 194.7% 300.6% 42.7% 0.00 0.0% 0.0%
PFCO PAULA Financial N.M. N.M. 6.84 70.3% 70.3% 19.9% 0.16 1.8% N.M.
RTWI RTW, Inc. N.M. N.M. 18.33 123.9% 123.9% 38.9% 0.00 0.0% N.M.
AGII Argonaut Group, Inc. 16.45 19.75 16.21 79.4% 83.3% 34.2% 1.64 6.7% 111.0%
SNTL Superior National Insurance Group, Inc. N.M. N.M. 11.18 166.4% 197.2% 21.7% 0.00 0.0% N.M.
ZNT Zenith National Insurance Corp. 3.71 30.57 22.01 98.7% 104.2% 26.2% 1.00 4.0% 14.7%
Medical Malpractice Specialist Sub-Group
- ----------------------------------------
Average 26.55 22.58 13.56 166.3% 228.1% 49.2% 0.17 0.8% 37.4%
Median 17.38 18.39 13.30 151.9% 152.8% 49.5% --- --- ---
Medical Malpractice Specialist Sub-Group
- ----------------------------------------
MMI MMI Companies, Inc. 62.2339 41.636 10.67 75.3% 84.8% 14.8% 0.36 2.3% 140.0%
SKP SCPIE Holdings, Inc. 9.22 11.91 11.85 95.7% 97.6% 40.5% 0.32 1.0% 9.5%
MAI Medical Assurance, Inc. 13.7641 15.842 14.75 208.0% 208.0% 58.5% 0.00 0.0% 0.0%
FPIC FPIC Insurance Group, Inc. 21.00 20.939 16.97 286.4% 521.9% 83.2% 0.00 0.0% 0.0%
<CAPTION>
Last Twelve Mos.
-----------------
ROA ROE
--- ---
(%) (%)
<S> <C> <C>
NCRIC Group, Inc. (1)
---------------------
Maximum 2.30 7.16
Midpoint 2.28 7.42
Minimum 2.27 7.73
Proposed Closing Value 2.27 7.57
Comparable Group
----------------
Average 1.55% 5.85%
Median 1.94% 4.79%
Comparable Group
- ----------------
MMI MMI Companies, Inc. -0.18% -0.88%
SKP SCPIE Holdings, Inc. 4.34% 10.45%
MAI Medical Assurance, Inc. 4.38% 15.80%
FMT Fremont General Corporation 1.94% 14.79%
FPIC FPIC Insurance Group, Inc. 5.12% 15.98%
SPC St. Paul Companies, Inc. 0.17% 0.96%
FTR Frontier Insurance Group, Inc. -2.18% 11.52%
PEGI Preferred Employers Holdings, Inc. 3.68% 15.02%
PFCO PAULA Financial -1.95% -5.96%
RTWI RTW, Inc. -2.93% -8.37%
AGII Argonaut Group, Inc. 1.98% 4.79%
SNTL Superior National Insurance Group, Inc. -0.95% -6.96%
ZNT Zenith National Insurance Corp. 6.72% 31.91%
Medical Malpractice Specialist Sub-Group
- ----------------------------------------
Average 3.41% 10.34%
Median --- ---
Medical Malpractice Specialist Sub-Group
- ----------------------------------------
MMI MMI Companies, Inc. -0.18% -0.88%
SKP SCPIE Holdings, Inc. 4.34% 10.45%
MAI Medical Assurance, Inc. 4.38% 15.80%
FPIC FPIC Insurance Group, Inc. 5.12% 15.98%
</TABLE>
(1) Pro forma basis based on results through March 31, 1999.
<PAGE>
RP Financial, LC
Table 11
Public Market Pricing
NCRIC and the Peer Group
As of July 16, 1999
<TABLE>
<CAPTION>
Market Capitalization Per Share Data
-------------------------- --------------------------------------------
Price/ Shares Market T.T. Mo. Earnings Book Value
------------------------ -------------
Share Out. Value Actual Core 1999 Est. Rep. Tang. Assets
----- ---- ----- ------ ---- --------- ---- ----- ------
($) (000) ($Mil) ($) ($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NCRIC Group, Inc. (1)
---------------------
Maximum 7.00 4,643 32.50 0.76 0.74 --------- 8.59 7.49 34.17
Midpoint 7.00 4,043 28.30 0.86 0.84 --------- 9.52 8.26 38.90
Minimum 7.00 3,443 24.10 1.00 0.97 --------- 10.78 9.30 45.28
Proposed Closing Value 7.00 3,743 26.20 0.93 0.90 --------- 10.10 8.74 41.83
Comparable Group
----------------
Average $21.78 36,797 $1,601 $1.22 $0.61 $1.69 $17.42 $15.65 $76.21
Median ------ ------ ------ ----- ----- ----- --- ------ ------ ------
Comparable Group
- ----------------
MMI MMI Companies, Inc. 16.00 19,028 304 0.26 0.38 1.50 21.24 18.88 108.23
SKP SCPIE Holdings, Inc. 31.06 11,732 364 3.37 2.61 2.62 32.46 31.81 76.64
MAI Medical Assurance, Inc. 29.50 23,196 684 2.14 1.86 2.00 14.19 14.19 50.45
FMT Fremont General Corporation 19.31 70,056 1,353 1.94 1.94 2.00 13.83 11.51 114.38
FPIC FPIC Insurance Group, Inc. 49.38 9,842 486 2.35 2.36 2.91 17.24 9.46 59.36
SPC St. Paul Companies, Inc. 33.00 227,300 7,501 0.26 (0.18) 2.60 28.26 25.71 172.56
FTR Frontier Insurance Group, Inc. 14.75 34,927 515 (1.47) (1.51) 1.60 10.70 9.05 73.89
PEGI Preferred Employers Holdings, Inc. 5.00 5,247 26 0.36 0.36 0.61 2.57 1.66 11.70
PFCO PAULA Financial 8.75 5,929 52 (0.78) (0.96) 1.28 12.44 12.44 43.94
RTWI RTW, Inc. 5.50 12,285 68 (0.39) (0.44) 0.30 4.44 4.44 14.12
AGII Argonaut Group, Inc. 24.31 24,018 584 1.48 1.23 1.50 30.63 29.18 71.03
SNTL Superior National Insurance Group, 21.25 17,683 376 (0.50) (0.56) 1.90 12.77 10.77 97.72
ZNT Zenith National Insurance Corp. 25.31 17,116 433 6.82 0.83 1.15 25.65 24.30 96.74
Medical Malpractice Specialist Sub-Group
- ----------------------------------------
Average $31.49 15,950 $460 $2.03 $1.80 $2.26 $21.28 $18.58 $73.67
Median 28.13 18,964 390 ----- ----- ----- --- ------ ------ ------
Medical Malpractice Specialist Sub-Group
- ----------------------------------------
MMI MMI Companies, Inc. 16.00 19,028 304 0.257 0.384 1.50 21.239 18.879 108.23
SKP SCPIE Holdings, Inc. 31.06 11,732 364 3.371 2.608 2.62 32.457 31.809 76.64
MAI Medical Assurance, Inc. 29.50 23,196 684 2.143 1.862 2.00 14.186 14.186 50.45
FPIC FPIC Insurance Group, Inc. 49.38 9,842 486 2.351 2.358 2.91 17.242 9.4609 59.36
<CAPTION>
Pricing Ratios Dividends
----------------------------------------------------- -------------------
Earnings Book Value Amt./ Payout
----------------------- -----------------
Actual Core 1999 Est. Reported Tangible Assets Share Yield Ratio
------ ---- --------- -------- -------- ------ ------ ------ -------
($) (x) (x) (%) (%) (%) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NCRIC Group, Inc. (1)
---------------------
Maximum 9.21 9.50 ---- 81.47% 93.40% 20.48% 0.00 0.00 0.00
Midpoint 8.11 8.38 ---- 73.51% 84.73% 17.99% 0.00 0.00 0.00
Minimum 6.99 7.22 ---- 64.95% 75.30% 15.46% 0.00 0.00 0.00
Proposed Closing Value 7.56 7.81 ---- 69.31% 80.11% 16.73% 0.00 0.00 0.00
Comparable Group
----------------
Average 30.66 20.54 12.97 137.92% 173.14% 33.59% 0.39 1.7% 76.50%
Median 13.76 17.80 11.85 123.91% 128.38% 26.16% 0.28 1.7% 14.65%
Comparable Group
- ----------------
MMI MMI Companies, Inc. 62.23 41.64 10.67 75.3% 84.8% 14.8% 0.36 2.3% 140.0%
SKP SCPIE Holdings, Inc. 9.22 11.91 11.85 95.7% 97.6% 40.5% 0.32 1.0% 9.5%
MAI Medical Assurance, Inc. 13.76 15.84 14.75 208.0% 208.0% 58.5% 0.00 0.0% 0.0%
FMT Fremont General Corporation 9.97 9.97 9.66 139.6% 167.8% 16.9% 0.32 1.7% 16.5%
FPIC FPIC Insurance Group, Inc. 21.00 20.94 16.97 286.4% 521.9% 83.2% 0.00 0.0% 0.0%
SPC St. Paul Companies, Inc. 125.92 N.M. 12.69 116.8% 128.4% 19.1% 1.04 3.2% 396.8%
FTR Frontier Insurance Group, Inc. N.M. N.M. 9.22 137.9% 162.9% 20.0% 0.28 1.9% N.M.
PEGI Preferred Employers Holdings, Inc. 13.70 13.70 8.20 194.7% 300.6% 42.7% 0.00 0.0% 0.0%
PFCO PAULA Financial N.M. N.M. 6.84 70.3% 70.3% 19.9% 0.16 1.8% N.M.
RTWI RTW, Inc. N.M. N.M. 18.33 123.9% 123.9% 38.9% 0.00 0.0% N.M.
AGII Argonaut Group, Inc. 16.45 19.75 16.21 79.4% 83.3% 34.2% 1.64 6.7% 111.0%
SNTL Superior National Insurance Group, N.M. N.M. 11.18 166.4% 197.2% 21.7% 0.00 0.0% N.M.
ZNT Zenith National Insurance Corp. 3.71 30.57 22.01 98.7% 104.2% 26.2% 1.00 4.0% 14.7%
Medical Malpractice Specialist Sub-Group
- ----------------------------------------
Average 26.55 22.58 13.56 166.3% 228.1% 49.2% 0.17 0.8% 37.4%
Median 17.38 18.39 13.30 151.9% 152.8% 49.5% ---- --- ----
Medical Malpractice Specialist Sub-Group
- ----------------------------------------
MMI MMI Companies, Inc. 2.2339 41.64 10.67 75.3% 84.8% 14.8% 0.36 2.3% 140.0%
FCKP SCPIE Holdings, Inc. 9.22 11.91 11.85 95.7% 97.6% 40.5% 0.32 1.0% 9.5%
MAI Medical Assurance, Inc. 3.7641 15.84 14.75 208.0% 208.0% 58.5% 0.00 0.0% 0.0%
FPIC FPIC Insurance Group, Inc. 21.00 20.94 16.97 286.4% 521.9% 83.2% 0.00 0.0% 0.0%
<CAPTION>
Last Twelve Mos.
ROA ROE
--- ---
(%) (%)
<S> <C> <C>
NCRIC Group, Inc. (1)
---------------------
Maximum 2.22 8.8
Midpoint 2.22 9.0
Minimum 2.21 9.2
Proposed Closing Value 2.21 9.1
Comparable Group
----------------
Average 1.55% 5.85
Median 1.94% 4.79
Comparable Group
- ---------------- -0.18% -0.88
MMI MMI Companies, Inc. 4.34% 10.45
SKP SCPIE Holdings, Inc. 4.38% 15.80
MAI Medical Assurance, Inc. 1.94% 14.79%
FMT Fremont General Corporation 5.12% 15.98
FPIC FPIC Insurance Group, Inc. 0.17% 0.96
SPC St. Paul Companies, Inc. -2.18% -11.52
FTR Frontier Insurance Group, Inc. 3.68% 15.02%
PEGI Preferred Employers Holdings, Inc. -1.95% -5.96
PFCO PAULA Financial -2.93% -8.37
RTWI RTW, Inc. 1.98% 4.79%
AGII Argonaut Group, Inc. -0.95% -6.96
SNTL Superior National Insurance Group
ZNT Zenith National Insurance Corp. 6.72% 31.91%
Medical Malpractice Specialist Sub-Group
- ----------------------------------------
Average
Median 3.41% 10.34%
---- -----
Medical Malpractice Specialist Sub-Group
- ----------------------------------------
MMI Companies, Inc. -0.18% -0.88%
SKP SCPIE Holdings, Inc. 4.34% 10.45%
MAI Medical Assurance, Inc. 4.38% 15.80%
FPIC FPIC Insurance Group, Inc. 5.12% 15.98%
</TABLE>
(1) Pro forma basis based on results through March 31, 1999.
<PAGE>
EXHIBITS
<PAGE>
RP Financial, LC.
LIST OF EXHIBITS
Exhibit
Number Description
- ------ -----------
1 Peer Group Financial Data: July 16, 1999
2 Pro Forma Analysis Sheet: Fully Demutualized Basis
3 Pro Forma Effect of Offering Proceeds: Fully Demutualized Basis
4 Pro Forma Analysis Sheet: Minority Stock Offering
5 Pro Forma Effects: Minority Stock Offering
6 Firm Qualifications Statement
<PAGE>
EXHIBIT 1
Peer Group Financial Data
As of July 16, 1999
<PAGE>
<TABLE>
<CAPTION>
MMI Companies, Inc.
-------------------------------------------------------------------------------------
For the Quarter Ended
Dec-97 Mar-98 Jun-98 Sep-98 Dec-98 Mar-99
------ ------ ------ ------ ------ ------
($000) ($000) ($000) ($000) ($000) ($000)
<S> <C> <C> <C> <C> <C> <C>
Cash & Investments $ 1,237,498 $ 1,217,264 $ 1,262,850 $ 1,291,762 $ 1,272,745 $ 1,249,869
Reinsurance Assets 321,591 343,790 346,291 361,448 357,750 385,406
Deferred Policy Acqstn. Costs 26,539 40,701 39,625 32,780 28,301 41,761
Intangibles 37,257 36,590 38,887 40,294 43,018 44,905
Separate Accounts 0 0 0 0 0 0
Other Assets 261,182 364,994 307,168 282,034 257,596 337,475
----------------------------------------------------------------------
Total Assets $ 1,884,067 $ 2,003,339 $ 1,994,821 $ 2,008,318 $ 1,959,410 $ 2,059,416
Policy Reserves 1,268,057 1,367,002 1,347,728 1,369,719 1,326,338 1,397,787
Debt 0 0 0 0 0 0
Other Liabilities 98,284 111,288 111,397 108,305 101,326 138,627
----------------------------------------------------------------------
Total Liabilities 1,366,341 1,478,290 1,459,125 1,478,024 1,427,664 1,536,414
Minority Interest 0 0 0 0 0 0
Redeemable Pfd. Equity 0 0 0 0 0 0
Trust Preferred Securities 118,724 118,790 118,825 118,778 118,817 118,869
Preferred Equity 0 0 0 0 0 0
Common Equity 399,002 406,259 416,871 411,516 412,928 404,133
----------------------------------------------------------------------
Total Equity 399,002 406,259 416,871 411,516 412,928 404,133
Book Value Per Share $ 21.16 $ 21.52 $ 21.99 $ 21.67 $ 21.67 $ 21.24
Book Value, Net of FAS 115 $ 19.87 $ 20.26 $ 20.63 $ 19.85 $ 20.14 $ 20.13
Shares Outstanding 18,857,000 18,880,000 18,964,000 18,991,000 19,059,000 19,028,000
Price Per Share $ 25.125 $ 24.063 $ 23.125 $ 17.938 $ 16.750 $ 15.375
Price/Book (%) 11874.00% 111.82% 105.16% 82.78% 77.30% 72.39%
Policy Revenues $ 102,546 $ 75,091 $ 77,467 $ 91,631 $ 81,258
Net Investment Income 18,772 18,966 19,372 19,446 18,460
Net Realized Gains 829 204 957 688 189
Non-Recurring Revenues 0 0 0 0 0
Other Revenues 12,312 13,061 11,853 11,698 15,053
----------------------------------------------------------------------
Total Revenues $ 134,459 $ 107,322 $ 109,649 $ 123,463 $ 114,960
Policy Expenses $ 83,101 $ 58,211 $ 81,981 $ 68,188 $ 61,819
Other Expenses 38,573 36,972 41,754 44,420 44,206
Interest Expense 2,435 2,462 2,491 2,777 2,536
Non-Recurring Expenses 0 0 0 0 0
----------------------------------------------------------------------
Total Expenses $ 124,109 $ 97,645 $ 126,226 $ 115,385 $ 108,561
Net Income Before Taxes $ 10,350 $ 9,677 ($16,577) $ 8,078 $ 6,399
Provision for Taxes 1,655 1,193 (3,574) 890 533
----------------------------------------------------------------------
Net Inc. Before Adj. & Min. Int. $ 8,695 $ 8,484 ($13,003) $ 7,188 $ 5,866
Plus: After-Tax Adjustments 0 0 0 0 0
Less: Minority Interest Exp. 0 0 0 0 0
----------------------------------------------------------------------
Net Income Before Extraordinary $ 8,695 $ 8,484 ($13,003) $ 7,188 $ 5,866
Extraordinary Items 0 0 0 0 (3,643)
----------------------------------------------------------------------
Net Income $ 8,695 $ 8,484 ($13,003) $ 7,188 $ 2,223
Diluted EPS Before Extraordinary $ 0.45 $ 0.44 ($0.69) $ 0.37 $ 0.31
Diluted EPS After Extraordinary $ 0.45 $ 0.44 ($0.69) $ 0.37 $ 0.12
Operating Income $ 8,156 $ 8,351 ($13,625) $ 6,741 $ 5,743
Operating EPS $ 0.42 $ 0.43 ($0.72) $ 0.35 $ 0.30
Dividend Per Share $ 0.0800 $ 0.0800 $ 0.0800 $ 0.0080 $ 0.0900
Average Diluted Shares 19,431,000 19,431,000 18,967,000 19,279,000 19,270,000
Average Assets 1,960,742 1,972,636 1,969,991 2,005,061
Average Equity 407,377 408,412 409,315 410,341
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCPIE Holdings Inc.
------------------------------------------------------------------------------------------------------
For the Quarter Ended
Jun-97 Sep-97 Dec-97 Mar-98 Jun-98 Sep-98 Dec-98 Mar-99
------ ------ ------ ------ ------ ------ ------ ------
($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cash & Investments $ 749,643 $ 778,408 $ 798,916 $ 802,950 $ 807,793 $ 822,785 $ 805,921 $ 788,737
Reinsurance Assets 16,738 14,211 21,531 22,344 23,087 23,309 24,899 21,811
Deferred Policy Acqstn. Costs 581 528 520 10,267 9,344 8,845 8,051 0
Intangibles 0 0 4,641 0 0 0 7,811 7,604
Separate Accounts 0 0 0 0 0 0 0 0
Other Assets 72,437 65,697 67,482 66,728 72,443 69,016 74,787 81,050
------------------------------------------------------------------------------------------------------
Total Assets $ 839,399 $ 858,844 $ 893,090 $ 902,289 $ 912,667 $ 923,955 $ 921,469 $ 899,202
Policy Reserves 486,060 480,810 477,043 515,290 510,144 506,693 502,222 489,556
Debt 0 0 0 0 0 0 0 0
Other Liabilities 17,566 28,395 50,291 19,814 28,537 33,430 32,729 28,851
------------------------------------------------------------------------------------------------------
Total Liabilities 503,626 509,205 527,334 535,104 538,681 540,123 534,951 518,407
Minority Interest 0 0 0 0 0 0 0 0
Redeemable Pfd. Equity 0 0 0 0 0 0 0 0
Trust Preferred Securities 0 0 0 0 0 0 0 0
Preferred Equity 0 0 0 0 0 0 0 0
Common Equity 335,773 349,639 361,115 367,185 373,986 383,822 386,518 380,795
------------------------------------------------------------------------------------------------------
Total Equity 335,773 349,639 361,115 367,185 373,986 383,822 386,518 380,795
Book Value Per Share $ 27.31 $ 28.48 $ 29.41 $ 30.05 $ 30.81 $ 30.87 $ 32.54 $ 32.46
Book Value, Net of FAS 115 $ 27.01 $ 27.59 $ 28.22 $ 28.91 $ 29.50 $ 28.95 $ 30.97 $ 31.91
Shares Outstanding 12,294,652 12,290,091 12,276,691 12,220,891 12,136,591 12,434,791 11,878,791 11,732,191
Price Per Share $ 27.813 $ 30.750 $ 28.938 $ 31.000 $ 33.875 $ 31.125 $ 30.313 $ 27.188
Price/Book (%) 101.84% 107.97% 98.40% 103.16% 109.95% 96.75% 93.15% 83.76%
Policy Revenues $ 32,687 $ 32,972 $ 31,783 $ 39,686 $ 39,794 $ 38,289 $ 40,207 $ 41,018
Net Investment Income 10,637 10,798 10,709 10,503 10,123 9,768 9,973 9,476
Net Realized Gains 1,975 989 2,426 2,320 1,741 3,269 3,799 6,102
Non-Recurring Revenues 0 0 0 0 0 0 0 0
Other Revenues 150 154 108 38 232 158 61 137
------------------------------------------------------------------------------------------------------
Total Revenues $ 45,449 $ 44,913 $ 45,026 $ 52,547 $ 51,890 $ 51,484 $ 54,040 $ 56,733
Policy Expenses $ 30,201 $ 31,578 $ 28,055 $ 33,431 $ 33,945 $ 31,931 $ 32,901 $ 33,563
Other Expenses 4,388 4,024 5,380 7,099 6,841 6,767 7,504 7,194
Interest Expense 0 0 0 0 0 0 0 0
Non-Recurring Expenses 0 0 0 0 0 0 0 0
------------------------------------------------------------------------------------------------------
Total Expenses $ 34,589 $ 35,602 $ 33,435 $ 40,530 $ 40,786 $ 38,698 $ 40,405 $ 40,757
Net Income Before Taxes $ 10,860 $ 9,311 $ 11,591 $ 12,017 $ 11,104 $ 12,786 $ 13,635 $ 15,976
Provision for Taxes 2,856 1,991 2,860 2,993 2,711 3,374 3,488 4,384
------------------------------------------------------------------------------------------------------
Net Inc. Before Adj. & Min.
Int. $ 8,004 $ 7,320 $ 8,731 $ 9,024 $ 8,393 $ 9,412 $ 10,147 $ 11,592
Plus: After-Tax
Adjustments 0 0 0 0 0 0 0 0
Less: Minority Interest
Exp. 0 0 0 0 0 0 0 0
------------------------------------------------------------------------------------------------------
Net Income Before
Extraordinary $ 8,004 $ 7,320 $ 8,731 $ 9,024 $ 8,393 $ 9,412 $ 10,147 $ 11,592
Extraordinary Items 0 0 0 0 0 0 0 0
------------------------------------------------------------------------------------------------------
Net Income $ 8,004 $ 7,320 $ 8,731 $ 9,024 $ 8,393 $ 9,412 $ 10,147 $ 11,592
Diluted EPS Before
Extraordinary $ 0.65 $ 0.60 $ 0.71 $ 0.74 $ 0.69 $ 0.79 $ 0.85 $ 0.98
Diluted EPS After
Extraordinary $ 0.65 $ 0.60 $ 0.71 $ 0.74 $ 0.69 $ 0.78 $ 0.85 $ 0.98
Operating Income $ 6,720 $ 6,677 $ 7,154 $ 7,516 $ 7,261 $ 7,287 7,678 7,626
Operating EPS $ 0.55 $ 0.54 $ 0.58 $ 0.61 $ 0.60 $ 0.61 $ 0.64 $ 0.65
Dividend Per Share $ 0.0500 $ 0.0500 $ 0.0500 $ 0.0600 $ 0.0600 $ 0.0600 $ 0.0600 $ 0.0080
Average Diluted Shares 12,294,652 12,291,047 12,286,589 12,228,331 12,213,225 11,995,873 11,913,108 11,807,563
Average Assets 881,258 898,169 910,694 911,916
Average Equity 357,540 367,149 374,525 378,461
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Medical Assurance, Inc.
-------------------------------------------------------------------------------------------------
For the Quarter Ended
Jun-97 Sep-97 Dec-97 Mar-98 Jun-98 Sep-98 Dec-98 Mar-99
------ ------ ------ ------ ------ ------ ------ ------
($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cash & Investments $ 696,767 $ 719,409 $ 732,450 $ 750,713 $ 768,173 $ 808,324 $ 800,601 $ 805,489
Reinsurance Assets 140,511 154,711 168,178 172,508 190,908 195,666 193,357 199,832
Deferred Policy Acqstn. Costs 0 0 7,304 7,270 0 0 13,020 0
Intangibles 0 0 0 0 0 0 0 0
Separate Accounts 0 0 0 0 0 0 0 0
Other Assets 137,488 142,387 155,241 163,981 177,333 138,994 125,261 164,992
-------------------------------------------------------------------------------------------------
Total Assets $ 974,766 $ 1,016,507 $ 1,063,173 $ 1,094,472 $ 1,136,414 $ 1,142,984 $ 1,132,239 $ 1,170,313
Policy Reserves 651,604 671,225 694,429 715,511 738,672 748,228 736,869 769,392
Debt 0 0 0 0 0 0 0 0
Other Liabilities 62,883 70,698 81,556 81,155 91,094 79,273 71,190 71,862
-------------------------------------------------------------------------------------------------
Total Liabilities 714,487 741,923 775,985 796,666 829,766 827,501 808,059 841,254
Minority Interest 0 0 0 0 0 0 0 0
Redeemable Pfd. Equity 0 0 0 0 0 0 0 0
Trust Preferred Securities 0 0 0 0 0 0 0 0
Preferred Equity 0 0 0 0 0 0 0 0
Common Equity 260,279 274,584 287,188 297,806 306,648 315,483 324,180 329,059
-------------------------------------------------------------------------------------------------
Total Equity 260,279 274,584 287,188 297,806 306,648 315,483 324,180 329,059
Book Value Per Share $ 12.11 $ 12.78 $ 13.36 $ 13.86 $ 14.27 $ 14.84 $ 13.91 $ 14.19
Book Value, Net of FAS 115 $ 11.72 $ 12.19 $ 12.68 $ 13.14 $ 13.64 $ 14.14 $ 13.38 $ 13.79
Shares Outstanding 21,485,516 21,491,422 21,499,361 21,492,104 21,486,376 21,256,989 23,312,950 23,196,037
Price Per Share $ 19.346 $ 27.500 $26.786 $ 28.938 $ 27.750 $ 26.500 33.063 28.000
Price/Book (%) 159.75% 215.18% 200.49% 208.79% 194.46% 178.57 237.69% 197.32%
Policy Revenues $ 29,138 $ 30,774 $ 30,653 $ 31,764 $ 34,579 $ 37,676 $ 37,297 $ 41,342
Net Investment Income 9,426 8,649 9,202 9,688 8,237 5,805 9,825 9,611
Net Realized Gains (168) 874 835 413 1,495 4,352 5,021 0
Non-Recurring Revenues 0 0 0 0 0 0 0 0
Other Revenues 296 1,283 1,309 474 1,900 4,899 178 1,395
-------------------------------------------------------------------------------------------------
Total Revenues $ 38,692 $ 41,580 $ 41,999 $ 42,339 $ 46,211 $ 52,732 $ 52,321 $ 52,348
Policy Expenses $ 19,207 $ 21,306 $ 16,924 $ 21,186 $ 23,090 $ 25,866 $ 23,751 $ 26,375
Other Expenses 8,052 7,656 11,054 8,127 8,319 8,387 9,143 10,672
Interest Expense 0 0 0 0 0 0 0 0
Non-Recurring Expenses 0 0 0 0 0 0 0 0
-------------------------------------------------------------------------------------------------
Total Expenses $ 27,259 $ 28,962 $ 27,978 $ 29,313 $ 31,409 $ 34,253 $ 32,894 $ 37,047
Net Income Before Taxes $ 11,433 $ 12,618 $ 14,021 $ 13,026 $ 14,802 $ 18,479 $ 19,427 $ 15,301
Provision for Taxes 2,652 2,724 3,652 3,070 3,776 4,974 5,695 3,849
-------------------------------------------------------------------------------------------------
Net Inc. Before Adj. & Min. Int. $ 8,781 $ 9,894 $ 10,369 $ 9,956 $ 11,026 $ 13,505 $ 13,732 $ 11,452
Plus: After-Tax Adjustments 0 0 0 0 0 0 0 0
Less: Minority Interest Exp. 0 0 0 0 0 0 0 0
-------------------------------------------------------------------------------------------------
Net Income Before Extraordinary $ 8,781 $ 9,894 $ 10,369 $ 9,956 $ 11,026 $ 13,505 $ 13,732 $ 11,452
Extraordinary Items 0 0 0 0 0 0 0 0
-------------------------------------------------------------------------------------------------
Net Income $ 8,781 $ 9,894 $ 10,369 $ 9,956 $ 11,026 $ 13,505 $ 13,732 $ 11,452
Diluted EPS Before
Extraordinary $ 0.41 $ 0.46 $ 0.48 $ 0.46 $ 0.51 $ 0.63 0.59 0.49
Diluted EPS After
Extraordinary $ 0.41 $ 0.46 $ 0.48 $ 0.46 $ 0.51 $ 0.63 0.59 0.49
Operating Income $ 8,890 $ 9,326 $ 9,827 $ 9,688 $ 10,054 $ 10,676 $ 10,672 $ 0
Operating EPS $ 0.41 $ 0.43 $ 0.46 $ 0.45 $ 0.47 $ 0.50 0.46 0.48
Dividend Per Share $ 0.0000 $ 0.0000 $ 0.0000 $ 0.0000 $ 0.0000 $ 0.0000 $ 0.0000 $ 0.0000
Average Diluted Shares 21,492,000 21,487,000 21,493,000 21,494,000 21,492,000 21,468,000 23,313,000 23,268,000
Average Assets 1,057,066 1,090,710 1,113,856 1,135,284
Average Equity 285,301 296,342 306,261 314,635
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Fremont General Corporation
------------------------------------------------------------------
For the Quarter Ended
Jun-97 Sep-97 Dec-97 Mar-98 Jun-98
------ ------ ------ ------ ------
($000) ($000) ($000) ($000) ($000)
<S> <C> <C> <C> <C> <C>
Cash & Investments $ 3,608,547 $ 4,815,942 $ 4,491,487 $ 4,563,367 $ 4,691,927
Reinsurance Assets 427,293 573,737 543,215 615,635 706,883
Deferred Policy Acqstn. Costs 28,078 34,626 38,014 38,344 38,956
Intangibles 78,834 178,449 149,321 147,802 146,046
Separate Accounts 0 0 0 0 0
Other Assets 578,514 895,099 868,590 841,906 837,575
-----------------------------------------------------------------
Total Assets $ 4,721,266 $ 6,497,853 $ 6,090,627 $ 6,207,054 $ 6,421,387
Policy Reserves 1,517,039 2,625,692 2,460,550 2,428,246 2,386,407
Debt 805,196 1,162,662 717,358 755,991 851,156
Other Liabilities 1,609,951 1,854,935 1,979,904 2,057,867 2,187,547
-----------------------------------------------------------------
Total Liabilities 3,932,186 5,643,289 5,157,812 5,242,104 5,425,110
Minority Interest 0 0 0 0 0
Redeemable Pfd. Equity 0 0 0 0 0
Trust Preferred Securities 100,000 100,000 100,000 100,000 100,000
Preferred Equity 0 0 0 0 0
Common Equity 689,080 754,564 832,815 864,950 896,277
-----------------------------------------------------------------
Total Equity 689,080 754,564 832,815 864,950 896,277
Book Value Per Share $ 21.11 $ 22.86 $ 24.09 $ 24.88 $ 25.71
Book Value, Net of FAS 115 $ 20.70 $ 21.50 $ 22.56 $ 23.30 $ 24.13
Shares Outstanding 32,649,000 33,013,000 34,571,000 34,766,000 34,855,000
Price Per Share $ 40.250 $ 47.750 $ 54.750 $ 59.000 $ 54.563
Price/Book (%) 190.67% 208.88% 227.27% 237.14% 212.22%
Policy Revenues $ 120,802 $ 168,436 $ 196,717 $ 154,162 $ 119,368
Net Investment Income 78,587 91,712 99,888 98,004 103,301
Net Realized Gains (498) (456) (479) (458) (466)
Non-Recurring Revenues 0 0 0 0 0
Other Revenues 7,264 7,580 10,007 11,631 16,148
-----------------------------------------------------------------
Total Revenues $ 206,155 $ 267,272 $ 306,133 $ 263,339 $ 238,351
Policy Expenses $ 76,180 $ 105,092 $ 134,832 $ 103,256 $ 70,233
Other Expenses 62,453 83,557 89,499 79,713 84,012
Interest Expense 31,380 36,397 37,099 33,237 35,922
Non-Recurring Expenses 0 0 0 0 0
-----------------------------------------------------------------
Total Expenses $ 170,013 $ 225,046 $ 261,430 $ 216,206 $ 190,167
Net Income Before Taxes $ 36,142 $ 42,226 $ 44,703 $ 47,133 $ 48,184
Provision for Taxes 11,204 13,407 14,527 15,481 15,601
-----------------------------------------------------------------
Net Inc. Before Adj. & Min. Int. $ 24,938 $ 28,819 $ 30,176 $ 31,652 $ 32,583
Plus: After-Tax Adjustments 0 0 0 0 0
Less: Minority Interest Exp. 0 0 0 0 0
-----------------------------------------------------------------
Net Income Before Extraordinary $ 24,938 $ 28,819 $ 30,176 $ 31,652 $ 32,583
Extraordinary Items 0 0 0 0 0
-----------------------------------------------------------------
Net Income $ 24,938 $ 28,819 $ 30,176 $ 31,652 $ 32,583
Diluted EPS Before Extraordinary $ 0.38 $ 0.43 $ 0.44 $ 0.46 $ 0.47
Diluted EPS After Extraordinary $ 0.38 $ 0.43 $ 0.44 $ 0.46 $ 0.47
Operating Income $ 25,262 $ 29,115 $ 30,487 $ 31,950 $ 32,886
Operating EPS $ 0.74 $ 0.84 $ 0.88 $ 0.91 $ 0.94
Dividend Per Share $ 0.1500 $ 0.1500 $ 0.1500 $ 0.1500 $ 0.1500
Average Diluted Shares 34,253,000 34,460,000 34,630,000 35,025,000 35,083,000
Average Assets 5,987,637
Average Equity 807,537
<CAPTION>
-----------------------------------------
Sep-98 Dec-98 Mar-99
------ ------ ------
($000) ($000) ($000)
<S> <C> <C> <C>
Cash & Investments $ 5,092,800 $ 5,424,808 $ 5,946,775
Reinsurance Assets 803,950 844,803 922,744
Deferred Policy Acqstn. Costs 40,267 44,996 52,662
Intangibles 168,678 164,467 162,389
Separate Accounts 0 0 0
Other Assets 870,958 890,538 928,749
----------------------------------------
Total Assets $ 6,976,653 $ 7,369,612 $ 8,013,319
Policy Reserves 2,628,013 2,571,027 2,554,188
Debt 950,585 1,078,708 1,430,486
Other Liabilities 2,394,467 2,668,965 2,959,852
----------------------------------------
Total Liabilities 5,973,065 6,318,700 6,944,526
Minority Interest 0
Redeemable Pfd. Equity 0
Trust Preferred Securities 100,000 100,000 100,000
Preferred Equity 0 0 0
Common Equity 903,588 950,912 968,793
----------------------------------------
Total Equity 903,588 950,912 968,793
Book Value Per Share $ 25.95 $ 13.60 $ 13.83
Book Value, Net of FAS 115 $ 25.07 $ 13.04 $ 13.43
Shares Outstanding 34,816,000 69,939,000 70,056,000
Price Per Share $ 48.000 $ 25.188 $ 19.063
Price/Book (%) 187.97% 185.20% 137.83%
Policy Revenues $ 125,515 $ 153,033 $ 170,343
Net Investment Income 111,209 115,129 122,869
Net Realized Gains (139) 458 25
Non-Recurring Revenues 0 0 0
Other Revenues 16,490 14,212 5,542
----------------------------------------
Total Revenues $ 253,075 $ 282,832 $ 298,779
Policy Expenses $ 71,354 $ 90,607 $ 97,541
Other Expenses 88,802 98,891 99,353
Interest Expense 42,321 42,537 50,674
Non-Recurring Expenses 0 0 0
----------------------------------------
Total Expenses $ 202,477 $ 232,035 $ 247,568
Net Income Before Taxes $ 50,598 $ 50,797 $ 51,211
Provision for Taxes 16,411 16,255 16,900
----------------------------------------
Net Inc. Before Adj. & Min. Int. $ 34,187 $ 34,542 $ 34,311
Plus: After-Tax Adjustments 0 0
Less: Minority Interest Exp. 0 0 0
----------------------------------------
Net Income Before Extraordinary $ 34,187 $ 34,542 $ 34,311
Extraordinary Items 0 0 0
----------------------------------------
Net Income $ 34,187 $ 34,542 $ 34,311
Diluted EPS Before Extraordinary $ 0.49 0.49 0.49
Diluted EPS After Extraordinary $ 0.49 0.49 0.49
Operating Income $ 34,277 $ 34,542 $ 34,295
Operating EPS $ 0.98 0.49 0.49
Dividend Per Share $ 0.1500 $ 0.0800 $ 0.0800
Average Diluted Shares 35,053,000 70,280,000 69,821,000
Average Assets 6,438,715 6,613,067 6,997,605
Average Equity 850,439 889,708 916,904
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FPIC Insurance Group, Inc.
-------------------------------------------------------------------------------------
For the Quarter Ended
Jun-97 Sep-97 Dec-97 Mar-98 Jun-98 Sep-98 Dec-98 Mar-99
------ ------ ------ ------ ------ ------ ------ ------
($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cash & Investments $ 256,768 $ 268,608 $ 276,366 $ 297,749 $ 301,134 $ 349,470 $ 352,067 $ 361,923
Reinsurance Assets 29,043 29,923 33,051 15,072 17,022 33,702 45,290 56,403
Deferred Policy Acqstn. Costs 2,062 1,803 1,411 1,852 1,807 1,630 2,001 2,685
Intangibles 2,985 3,318 7,174 7,069 6,978 17,272 16,586 76,585
Separate Accounts 0 0 0 0 0 0 0 0
Other Assets 34,475 32,478 34,847 40,973 49,573 53,784 63,434 86,600
-------------------------------------------------------------------------------------
Total Assets $ 325,332 $ 336,131 $ 352,850 $ 362,716 $ 376,514 $ 455,858 $ 479,378 $ 584,196
Policy Reserves 214,387 217,714 216,304 227,437 231,384 274,871 286,687 336,374
Debt 0 2,000 2,000 2,000 4,000 23,750 27,165 58,178
Other Liabilities 6,244 5,730 14,482 8,126 10,512 9,585 14,596 19,944
-------------------------------------------------------------------------------------
Total Liabilities 220,630 225,444 232,785 237,563 245,896 308,206 328,448 414,496
Minority Interest 0 0 0 0 0 0 0 0
Redeemable Pfd. Equity 0 0 0 0 0 0 0 0
Trust Preferred Securities 0 0 0 0 0 0 0 0
Preferred Equity 0 0 0 0 0 0 0 0
Common Equity 104,702 110,687 120,064 125,152 130,618 147,652 150,931 169,701
-------------------------------------------------------------------------------------
Total Equity 104,702 110,687 120,064 125,152 130,618 147,652 150,931 169,701
Book Value Per Share $ 11.60 $ 12.26 $ 13.08 $ 13.59 $ 14.17 $ 15.62 $ 15.86 $ 17.24
Book Value, Net of FAS 115 $ 11.54 $ 12.01 $ 12.68 $ 13.19 $ 13.73 $ 14.84 $ 15.27 $ 16.77
Shares Outstanding 9,027,418 9,028,918 9,179,581 9,209,031 9,215,697 9,453,514 9,518,679 9,842,197
Price Per Share $ 22.500 $ 29.500 $ 29.125 $ 32.250 $ 33.875 $ 27.750 $ 47.813 $ 41.500
Price/Book (%) 193.97% 240.62% 222.67% 237.31% 239.06% 177.66% 301.47% 240.72%
Policy Revenues $ 16,093 $ 16,188 $ 17,732 $ 17,855 $ 22,955 $ 22,986 $ 25,766 $ 27,583
Net Investment Income 3,891 3,758 3,586 4,340 4,372 4,259 4,578 4,452
Net Realized Gains (41) 8 78 (15) (32) 0 9 304
Non-Recurring Revenues 0 0 0 0 0 0 0 0
Other Revenues 2,686 3,751 3,465 3,306 3,165 3,586 3,191 7,669
-------------------------------------------------------------------------------------
Total Revenues $ 22,629 $ 23,705 $ 24,861 $ 25,486 $ 30,460 $ 30,831 $ 33,544 $ 40,008
Policy Expenses $ 13,541 $ 14,014 $ 13,293 $ 14,518 $ 18,164 $ 17,506 $ 17,173 $ 18,649
Other Expenses 3,465 3,689 5,164 4,266 5,261 5,602 8,200 11,011
Interest Expense 0 0 0 0 0 0 371 843
Non-Recurring Expenses 0 0 0 0 0 395 0 0
-------------------------------------------------------------------------------------
Total Expenses $ 17,006 $ 17,703 $ 18,457 $ 18,784 $ 23,425 $ 23,503 $ 25,744 $ 30,503
Net Income Before Taxes $ 5,623 $ 6,001 $ 6,404 $ 6,703 $ 7,035 $ 7,328 $ 7,800 $ 9,505
Provision for Taxes 1,712 1,722 1,827 1,918 1,989 1,847 2,418 2,271
-------------------------------------------------------------------------------------
Net Inc. Before Adj. & Min. Int. $ 3,910 $ 4,278 $ 4,577 $ 4,785 $ 5,046 $ 5,481 $ 5,382 $ 7,234
Plus: After-Tax Adjustments 0 0 0 0 0 0 0 0
Less: Minority Interest Exp. 0 0 0 0 0 0 0 0
-------------------------------------------------------------------------------------
Net Income Before Extraordinary $ 3,910 $ 4,278 $ 4,577 $ 4,785 $ 5,046 $ 5,481 $ 5,382 $ 7,234
Extraordinary Items 0 0 0 0 0 0 0 0
-------------------------------------------------------------------------------------
Net Income $ 3,910 $ 4,278 $ 4,577 $ 4,785 $ 5,046 $ 5,481 $ 5,382 $ 7,234
Diluted EPS Before Extraordinary $ 0.42 $ 0.46 $ 0.48 $ 0.50 $ 0.52 $ 0.55 $ 0.54 $ 0.70
Diluted EPS After Extraordinary $ 0.42 $ 0.46 $ 0.48 $ 0.50 $ 0.52 $ 0.55 $ 0.54 $ 0.70
Operating Income $ 3,937 $ 4,273 $ 4,526 $ 4,795 $ 5,067 $ 5,482 $ 5,374 $ 7,036
Operating EPS $ 0.42 $ 0.46 $ 0.48 $ 0.50 $ 0.52 $ 0.55 $ 0.54 $ 0.68
Dividend Per Share $ 0.0000 $ 0.0000 $ 0.0000 $ 0.0000 $ 0.0000 $ 0.0000 $ 0.0000 $ 0.0000
Average Diluted Shares 9,337,521 9,382,477 9,452,181 9,646,467 9,719,184 9,970,882 9,903,126 10,398,147
Average Assets 350,709 376,814 405,463 451,732
Average Equity 118,245 126,835 134,883 144,811
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
St. Paul Companies, Inc.
------------------------------------------------------------------------
For the Quarter Ended
Jun-97 Sep-97 Dec-97 Mar-98 Jun-98
----- ------ ------ ------ ------
($000) ($000) ($000) ($000) ($000)
<S> <C> <C> <C> <C> <C>
Cash & Investments $ 14,638,532 $ 15,002,984 $ 15,058,742 $ 15,121,254 $ 26,135,774
Reinsurance Assets 2,130,792 2,120,966 2,155,406 2,070,066 4,513,137
Deferred Policy Acqstn. Costs 398,898 403,771 404,274 382,867 837,490
Intangibles 245,689 383,132 408,534 399,501 599,428
Separate Accounts 0 0 0 0 0
Other Assets 3,512,005 3,549,846 3,473,701 3,152,822 5,362,363
------------------------------------------------------------------------
Total Assets $ 20,925,916 $ 21,460,699 $ 21,500,657 $ 21,126,510 $ 37,448,192
Policy Reserves 14,161,827 14,258,705 14,197,336 13,964,533 25,915,458
Debt 705,740 762,450 782,825 654,663 1,075,895
Other Liabilities 1,643,951 1,784,303 1,686,786 1,480,959 3,465,267
------------------------------------------------------------------------
Total Liabilities 16,511,518 16,805,458 16,666,947 16,100,155 30,456,620
Minority Interest 0 0 0 0 0
Redeemable Pfd. Equity 0 0 0 0 0
Trust Preferred Securities 207,000 207,000 207,000 207,000 502,700
Preferred Equity 17,998 18,408 16,725 16,140 15,153
Common Equity 4,189,400 4,429,833 4,609,985 4,803,215 6,473,719
------------------------------------------------------------------------
Total Equity 4,207,398 4,448,241 4,626,710 4,819,355 6,488,872
Book Value Per Share $ 25.02 $ 26.50 $ 27.53 $ 28.58 $ 27.45
Book Value, Net of FAS 115 $ 21.96 $ 22.64 $ 23.49 $ 24.20 $ 23.78
Shares Outstanding 167,482,000 167,164,000 167,456,000 168,050,000 235,848,000
Price Per Share $ 38.125 $ 40.782 $ 41.032 $ 44.563 $ 42.063
Price/Book (%) 152.38% 153.89% 149.04% 155.92% 153.23%
Policy Revenues $ 1,165,297 $ 1,154,691 $ 1,125,015 $ 1,114,756 $ 1,752,167
Net Investment Income 217,570 223,528 226,453 219,299 397,656
Net Realized Gains 167,914 47,312 97,292 44,804 132,667
Non-Recurring Revenues 0 0 0 0 0
Other Revenues 69,930 71,517 95,551 88,298 94,326
------------------------------------------------------------------------
Total Revenues $ 1,620,711 $ 1,497,048 $ 1,544,311 $ 1,467,157 $ 2,376,816
Policy Expenses $ 845,485 $ 825,867 $ 804,938 $ 811,096 $ 1,724,012
Other Expenses 452,924 455,035 466,304 450,373 1,099,452
Interest Expense 13,925 13,576 10,493 12,479 0
Non-Recurring Expenses 0 0 0 0 0
------------------------------------------------------------------------
Total Expenses $ 1,312,334 $ 1,294,478 $ 1,281,735 $ 1,273,948 $ 2,823,464
Net Income Before Taxes $ 308,377 $ 202,570 $ 262,576 $ 193,209 ($ 446,648)
Provision for Taxes 77,853 39,166 75,580 39,209 (149,367)
------------------------------------------------------------------------
Net Inc. Before Adj. & Min. Int. $ 230,524 $ 163,404 $ 186,996 $ 154,000 ($ 297,281)
Plus: After-Tax Adjustments 0 0 0 0 0
Less: Minority Interest Exp. 0 0 0 0 0
------------------------------------------------------------------------
Net Income Before Extraordinary $ 230,524 $ 163,404 $ 186,996 $ 154,000 ($ 297,281)
Extraordinary Items 0 0 0 0 0
------------------------------------------------------------------------
Net Income $ 230,524 $ 163,404 $ 186,996 $ 154,000 ($ 297,281)
Diluted EPS Before Extraordinary $ 1.25 $ 0.89 $ 1.01 $ 0.83 ($ 1.28)
Diluted EPS After Extraordinary $ 1.25 $ 0.89 $ 1.01 $ 0.83 ($ 1.28)
Operating Income $ 120,816 $ 132,592 $ 147,509 $ 125,370 $ $0
Operating EPS $ 0.66 $ 0.72 $ 0.80 $ 0.68 $ 0.00
Dividend Per Share $ 0.2350 $ 0.2350 $ 0.2350 $ 0.2500 $ 0.2500
Average Diluted Shares 184,850,000 185,036,000 184,838,000 185,184,000 235,160,000
Average Assets 24,492,395
Average Equity 4,918,115
<CAPTION>
------------------------------------------
Sep-98 Dec-98 Mar-99
------ ------ ------
($000) ($000) ($000)
<S> <C> <C> <C>
Cash & Investments $ 26,354,474 $ 27,235,733 $ 27,821,500
Reinsurance Assets 4,446,388 4,423,380 4,570,700
Deferred Policy Acqstn. Costs 876,151 878,172 901,700
Intangibles 602,075 592,057 581,200
Separate Accounts 0 0 0
Other Assets 5,225,275 5,193,366 5,348,000
------------------------------------------
Total Assets $ 37,504,363 $ 38,322,708 $ 39,223,100
Policy Reserves 26,024,507 25,865,960 26,069,100
Debt 1,097,742 1,260,392 1,523,700
Other Liabilities 3,270,299 4,057,269 4,703,600
------------------------------------------
Total Liabilities 30,392,548 31,183,621 32,296,400
Minority Interest 0 0 0
Redeemable Pfd. Equity 0 0 0
Trust Preferred Securities 502,700 502,700 502,700
Preferred Equity 16,917 15,576 18,900
Common Equity 6,592,198 6,620,811 6,405,100
------------------------------------------
Total Equity 6,609,115 6,636,387 6,424,000
Book Value Per Share $ 27.83 $ 28.32 $ 28.18
Book Value, Net of FAS 115 $ 23.74 $ 23.93 $ 24.13
Shares Outstanding 235,733,012 233,749,778 227,300,000
Price Per Share $ 32.500 34.813 $ 31.063
Price/Book (%) 116.78% 122.93% 110.23%
Policy Revenues $ 1,698,787 $ 1,712,064 $ 1,676,300
Net Investment Income 390,601 399,834 395,500
Net Realized Gains 24,835 (5,654) 65,000
Non-Recurring Revenues 0 0 0
Other Revenues 97,034 89,892 107,500
------------------------------------------
Total Revenues $ 2,211,257 $ 2,196,136 $ 2,244,300
Policy Expenses $ 1,452,985 $ 1,367,829 $ 1,292,800
Other Expenses 726,259 710,286 693,600
Interest Expense 0 0 0
Non-Recurring Expenses 0 0 0
------------------------------------------
Total Expenses $ 2,179,244 $ 2,078,115 $ 1,986,400
Net Income Before Taxes $ 32,013 $ 118,021 $ 257,900
Provision for Taxes (31,789) (10,128) 63,100
------------------------------------------
Net Inc. Before Adj. & Min. Int. $ 63,802 $ 128,149 $ 194,800
Plus: After-Tax Adjustments 0 0 0
Less: Minority Interest Exp. 0 0 0
------------------------------------------
Net Income Before Extraordinary $ 63,802 $ 128,149 $ 194,800
Extraordinary Items 0 0 (29,900)
------------------------------------------
Net Income $ 63,802 $ 128,149 $ 164,900
Diluted EPS Before Extraordinary $ 0.25 $ 0.53 $ 0.79
Diluted EPS After Extraordinary $ 0.25 $ 0.53 $ 0.67
Operating Income $ 0 $ $0 $ 152,500
Operating EPS $ 0.00 $ 0.00 $ 0.62
Dividend Per Share $ 0.2500 $ 0.2500 $ 0.2600
Average Diluted Shares 256,527,000 256,527,000 249,300,000
Average Assets 27,808,084 31,180,486 34,724,975
Average Equity 5,398,459 5,836,088 6,195,546
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Frontier Insurance Group, Inc.
---------------------------------------------------------------------------------------
For the Quarter Ended
Jun-97 Sep-97 Dec-97 Mar-98 Jun-98 Sep-98 Dec-98 Mar-99
------ ------ ------ ------ ------ ------ ------ ------
($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cash & Investments $1,068,754 $1,197,495 $1,261,259 $1,345,724 $1,372,294 $1,409,501 $1,487,647 $1,461,395
Reinsurance Assets 317,096 349,259 391,168 419,374 446,004 474,930 616,840 646,042
Deferred Policy Acqstn. Costs 40,983 49,510 55,634 68,426 82,553 101,504 96,597 102,963
Intangibles 13,101 12,837 29,885 58,167 54,748 54,357 54,782 57,396
Separate Accounts 0 0 0 0 0 0 0 0
Other Assets 177,207 213,503 237,767 240,590 254,372 255,357 297,911 313,026
-----------------------------------------------------------------------------------------
Total Assets $1,617,141 $1,822,604 $1,975,713 $2,132,281 $2,209,971 $2,295,649 $2,553,777 $2,580,822
Policy Reserves 983,928 1,044,736 1,184,086 1,302,504 1,341,613 1,381,408 1,599,328 1,629,521
Debt 62,000 0 0 5,000 10,000 16,000 92,000 107,000
Other Liabilities 109,326 149,194 171,219 188,827 203,533 226,343 301,076 303,481
-----------------------------------------------------------------------------------------
Total Liabilities 1,155,254 1,193,930 1,355,305 1,496,331 1,555,146 1,623,751 1,992,404 2,040,002
Minority Interest 0 0 0 0 0 0 0 0
Redeemable Pfd. Equity 0 0 0 0 0 0 0 0
Trust Preferred Securities 166,970 166,643 166,703 166,736 166,787 166,839 167,153 167,201
Preferred Equity 0 0 0 0 0 0 0 0
Common Equity 294,917 462,031 453,705 469,214 488,038 505,073 394,220 373,619
-----------------------------------------------------------------------------------------
Total Equity 294,917 462,031 453,705 469,214 488,038 505,073 394,220 373,619
Book Value Per Share $9.12 $10.53 $12.16 $12.57 $13.03 $13.52 $10.70 $10.70
Book Value, Net of FAS 115 $8.91 $10.15 $11.62 $12.02 $12.42 $12.72 $9.98 $10.27
Shares Outstanding 32,319,324 37,303,63 337,319,506 37,331,771 37,466,577 37,358,450 36,827,797 34,927,402
Price Per Share $29.432 $34.545 $20.795 $25.114 $22.563 $13.250 $12.875 $11.875
Price/Book (%) 322.72% 328.06% 171.01% 199.79% 173.16% 98.00% 120.33% 110.98%
Policy Revenues $76,017 $103,216 $109,804 $117,212 $122,576 $128,001 $125,347 $140,255
Net Investment Income 12,825 14,555 16,849 18,566 19,128 18,798 17,070 19,530
Net Realized Gains 494 231 2,776 2,284 1,596 (3,273) 2,405 1,415
Non-Recurring Revenues 0 0 0 0 0 0 0 0
Other Revenues 0 0 0 4,400 0 0 0 0
-----------------------------------------------------------------------------------------
Total Revenues $89,336 $118,002 $129,429 $142,462 $143,300 $143,526 $144,822 $161,200
Policy Expenses $36,035 $55,630 $97,229 $77,023 $68,369 $73,119 $224,208 $82,518
Other Expenses 32,015 40,383 45,649 42,150 50,714 51,996 76,520 53,766
Interest Expense 284 515 26 76 238 261 310 1,305
Non-Recurring Expenses 0 0 0 0 0 0 0 0
-----------------------------------------------------------------------------------------
Total Expenses $68,334 $96,528 $142,904 $119,249 $119,321 $125,376 $301,038 $137,589
Net Income Before Taxes $21,002 $21,474 ($13,475) $23,213 $23,979 $18,150 ($156,216) $23,611
Provision for Taxes 5,583 6,716 (3,676) 5,470 6,514 3,957 (56,774) 7,191
-----------------------------------------------------------------------------------------
Net Inc. Before Adj. & Min. Int. $15,419 $14,758 ($9,799) $17,743 $17,465 $14,193 ($99,442) $16,420
Plus: After-Tax Adjustments 0 0 0 0 0 0
Less: Minority Interest Exp. 0 0 0 0 0 0
-----------------------------------------------------------------------------------------
Net Income Before Extraordinary $15,419 $14,758 ($9,799) $17,743 $17,465 $14,193 ($99,442) $16,420
Extraordinary Items 0 0 0 0 0 0 0 0
-----------------------------------------------------------------------------------------
Net Income $15,419 $14,758 ($9,799) $17,743 $17,465 $14,193 ($99,442) $16,420
Diluted EPS Before Extraordinary $0.42 $0.38 ($0.26) $0.43 $0.42 $0.35 -2.69 0.41
Diluted EPS After Extraordinary $0.42 $0.38 ($0.26) $0.43 $0.42 $0.35 -2.69 0.41
Operating Income $15,098 $14,608 ($11,603) $16,258 $16,428 $0 ($101,006) $15,500
Operating EPS $0.37 $0.38 ($0.25) $0.39 $0.36 $0.00 -2.73 0.39
Dividend Per Share $0.0636 $0.0636 $0.0636 $0.0636 $0.0636 $0.0700 $0.0700 $0.0700
Average Diluted Shares 40,396,000 0 45,709,400 45,773,200 45,883,000 45,699,000 36,975,000 44,694,000
Average Assets 1,951,542 2,087,244 2,233,478 2,354,500
Average Equity 433,581 475,612 462,050 446,033
</TABLE>
<PAGE>
Preferred Employers Holdings, Inc.
-------------------------------------------
For the Quarter Ended
<TABLE>
<CAPTION>
Jun-97 Sep-97 Dec-97 Mar-98 Jun-98 Sep-98 Dec-98 Mar-99
------ ------ ------ ------ ------ ------ ------ ------
($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cash & Investments $23,626 $25,687 $27,109 $23,471 $34,965 $34,007 $34,459 $37,806
Reinsurance Assets 0 0 0 0 0 0 0 0
Deferred Policy Acqstn. Costs 0 0 904 1,052 2,399 1,776 1,808 2,045
Intangibles 0 0 0 4,979 4,921 4,864 4,806 4,747
Separate Accounts 0 0 0 0 0 0 0 0
Other Assets 874 946 1,688 4,605 11,827 13,518 15,336 16,780
----------------------------------------------------------------------------------
Total Assets $24,500 $26,633 $29,701 $34,107 $54,112 $54,165 $56,409 $61,378
Policy Reserves 3,488 4,295 8,780 11,009 17,010 17,374 19,342 22,065
Debt 146 74 0 0 12,580 12,580 12,430 11,685
Other Liabilities 9,496 10,610 8,932 10,796 11,860 11,890 11,658 14,154
----------------------------------------------------------------------------------
Total Liabilities 13,130 14,979 17,712 21,805 41,450 41,844 43,430 47,904
Minority Interest 0 0 0 0 0 0 0 0
Redeemable Pfd. Equity 0 0 0 0 0 0 0 0
Trust Preferred Securities 0 0 0 0 0 0 0 0
Preferred Equity 0 0 0 0 0 0 0 0
Common Equity 11,371 11,654 11,988 12,302 12,661 12,322 12,977 13,476
----------------------------------------------------------------------------------
Total Equity 11,371 11,654 11,988 12,302 12,661 12,322 12,977 13,476
Book Value Per Share $2.41 $2.47 $2.54 $2.60 $2.68 $2.35 $2.48 $2.57
Book Value, Net of FAS 115 $2.41 $2.47 $2.54 $2.60 $2.68 $2.35 $2.48 $2.57
Shares Outstanding 4,725,000 4,725,000 4,725,000 4,725,000 4,725,000 5,242,085 5,242,085 5,247,085
Price Per Share $7.500 $10.000 $7.250 $8.000 $7.625 $7.000 10.25 9.50
Price/Book (%) 311.20% 404.86% 285.43% 307.69% 284.51% 297.87% 413.31% 369.65%
Policy Revenues $2,625 $3,368 $3,637 $3,067 $4,350 $4,264 $3,913 $3,742
Net Investment Income 506 384 291 386 506 445 484 435
Net Realized Gains 0 0 0 0 0 0 0 0
Non-Recurring Revenues 0 0 0 0 0 0 0 0
Other Revenues 640 787 724 2,093 5,508 9,993 10,706 11,369
----------------------------------------------------------------------------------
Total Revenues $3,771 $4,539 $4,652 $5,546 $10,364 $14,702 $15,103 $15,546
Policy Expenses $1,423 $1,831 $1,900 $1,656 $2,349 $2,197 $1,850 $2,058
Other Expenses 1,931 2,380 2,419 3,526 7,409 11,552 12,251 12,611
Interest Expense 5 3 1 0 155 325 294 281
Non-Recurring Expenses 0 0 0 0 0 0 0 0
----------------------------------------------------------------------------------
Total Expenses $3,359 $4,214 $4,320 $5,182 $9,913 $14,074 $14,395 $14,950
Net Income Before Taxes $412 $325 $332 $364 $451 $628 $708 $596
Provision for Taxes 41 42 (4) 50 92 181 53 142
----------------------------------------------------------------------------------
Net Inc. Before Adj. & Min. Int. $371 $283 $336 $314 $359 $447 $655 $454
Plus: After-Tax Adjustments 0 0 0 0 0 0 0 0
Less: Minority Interest Exp. 0 0 0 0 0 0 0 0
----------------------------------------------------------------------------------
Net Income Before Extraordinary $371 $283 $336 $314 $359 $447 $655 $454
Extraordinary Items 0 0 0 0 0 0 0 0
----------------------------------------------------------------------------------
Net Income $371 $283 $336 $314 $359 $447 $655 $454
Diluted EPS Before Extraordinary $0.08 $0.06 $0.07 $0.07 $0.08 $0.09 $0.13 $0.09
Diluted EPS After Extraordinary $0.08 $0.06 $0.07 $0.07 $0.08 $0.09 $0.13 $0.09
Operating Income $371 $283 $335 $314 $359 $447 $655 $454
Operating EPS $0.08 $0.06 $0.07 $0.07 $0.08 $0.09 0.13 0.09
Dividend Per Share $0.0000 $0.0000 $0.0000 $0.0000 $0.0000 $0.0000 $0.0000 $0.0000
Average Diluted Shares 4,725,000 4,725,000 4,725,000 4,725,000 5,306,044 6,417,085 6,417,085 6,415,085
Average Assets 33,811 39,744 45,699 52,034
Average Equity 11,995 12,185 12,450 12,748
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PAULA Financial
---------------------------------------------------------------------------------------------
For the Quarter Ended
Jun-97 Sep-97 Dec-97 Mar-98 Jun-98 Sep-98 Dec-98 Mar-99
----- ------ ------ ------ ------ ------ ------ ------
($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cash & Investments $ 100,021 $111,779 $ 142,634 $ 151,942 $ 163,889 $ 179,505 $ 181,768 $ 171,502
Reinsurance Assets 6,498 6,758 6,394 7,635 7,844 8,220 25,852 36,079
Deferred Policy Acqstn. Costs 0 2,056 2,191 3,368 3,315 2,909 2,533 2,747
Intangibles 1,652 0 1,468 0 0 0 1,447 0
Separate Accounts 0 0 0 0 0 0 0 0
Other Assets 33,749 32,966 35,577 43,997 48,814 46,133 43,348 50,176
---------------------------------------------------------------------------------------------
Total Assets $ 141,920 $153,559 $ 188,264 $ 206,942 $ 223,862 $ 236,767 $ 254,948 $ 260,504
Policy Reserves 78,336 83,039 93,174 110,499 135,670 147,590 156,550 159,644
Debt 11,468 12,029 456 179 139 0 2,667 8,142
Other Liabilities 23,798 27,161 9,814 10,582 10,437 12,661 21,695 18,941
---------------------------------------------------------------------------------------------
Total Liabilities 113,602 122,229 103,444 121,260 146,246 160,251 180,912 186,727
Minority Interest 0 0 0 0 0 0 0 0
Redeemable Pfd. Equity 14,905 23,663 0 0 0 0 0 0
Trust Preferred Securities 0 0 0 0 0 0 0 0
Preferred Equity 0 0 0 0 0 0 0 0
Common Equity 13,413 7,667 84,820 85,682 77,616 76,516 74,036 73,777
---------------------------------------------------------------------------------------------
Total Equity 13,413 7,667 84,820 85,682 77,616 76,516 74,036 73,777
Book Value Per Share $ 0.00 $ 0.00 $ 13.42 $ 13.54 $ 12.25 $ 12.57 $ 12.49 $ 12.44
Book Value, Net of FAS 115 $ 0.00 $ 0.00 $ 13.18 $ 13.29 $ 12.00 $ 12.32 $ 12.55 $ 12.72
Shares Outstanding 0 0 6,321,177 6,326,777 6,337,815 6,085,315 5,929,015 5,928,967
Price Per Share $ 0.000 $ 0.000 $ 23.000 $ 23.750 $ 20.125 $ 9.625 $ 9.375 $ 7.125
Price/Book (%) 0.00% 0.00% 171.39% 175.41% 164.29% 76.57% 75.06% 57.27%
Policy Revenues $ 24,142 $ 23,418 $ 27,639 $ 27,995 $ 37,235 $ 40,783 $ 22,757 $ 16,687
Net Investment Income 1,282 1,351 1,733 2,054 2,119 2,437 2,930 2,740
Net Realized Gains 0 173 (1) 30 (83) 1,784 (25) 101
Non-Recurring Revenues 0 0 0 0 0 0 0 0
Other Revenues 980 1,072 1,344 916 1,074 1,091 995 955
---------------------------------------------------------------------------------------------
Total Revenues $ 26,404 $ 26,014 $ 30,715 $ 30,995 $ 40,345 $ 46,095 $ 26,657 $ 20,483
Policy Expenses $ 16,797 $ 16,487 $ 20,150 $ 21,221 $ 42,820 $ 33,084 $ 18,035 $ 11,389
Other Expenses 7,935 7,620 8,369 8,632 9,922 10,954 8,128 7,176
Interest Expense 0 0 0 0 0 0 0 0
Non-Recurring Expenses 0 0 0 0 0 0 0 0
---------------------------------------------------------------------------------------------
Total Expenses $ 24,732 $ 24,107 $ 28,519 $ 29,853 $ 52,742 $ 44,038 $ 26,163 $ 18,565
Net Income Before Taxes $ 1,672 $ 1,907 $ 2,196 $ 1,142 ($12,397) $ 2,057 $ 494 $ 1,918
Provision for Taxes 294 636 602 119 (4,396) 423 27 639
---------------------------------------------------------------------------------------------
Net Inc. Before Adj. & Min. Int. $ 1,378 $ 1,271 $ 1,594 $ 1,023 ($8,001) $ 1,634 $ 467 $ 1,279
Plus: After-Tax Adjustments 0 0 0 0 0 0 0 0
Less: Minority Interest Exp. 0 0 0 0 0 0 0 0
---------------------------------------------------------------------------------------------
Net Income Before Extraordinary $ 1,378 $ 1,271 $ 1,594 $ 1,023 ($8,001) $ 1,634 $ 467 $ 1,279
Extraordinary Items 0 0 0 0 0 0 0 0
---------------------------------------------------------------------------------------------
Net Income $ 1,378 $ 1,271 $ 1,594 $ 1,023 ($8,001) $ 1,634 $ 467 $ 1,279
Diluted EPS Before Extraordinary $ 0.00 $ 0.00 $ 0.00 $ 0.15 ($1.26) $ 0.25 $ 0.08 $ 0.22
Diluted EPS After Extraordinary $ 0.00 $ 0.00 $ 0.00 $ 0.15 ($1.26) $ 0.25 $ 0.08 $ 0.22
Operating Income $ 1,378 $ 1,159 $ 1,595 $ 1,003 ($7,947) $ 474 $ 483 $ 1,213
Operating EPS $ 0.00 $ 0.00 $ 0.00 $ 0.15 ($1.26) $ 0.07 0.08 0.21
Dividend Per Share $ 0.0000 $ 0.0000 $ 0.0000 $ 0.0400 $ 0.0400 $ 0.0400 $ 0.0400 $ 0.0400
Average Diluted Shares 0 0 0 6,799,951 6,331,285 6,506,654 6,010,602 5,937,049
Average Assets 182,909 201,879 222,157 236,605
Average Equity 53,840 66,460 79,734 77,525
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RTW, Inc.
----------------------------------------------------------------------------------------------
For the Quarter Ended
Jun-97 Sep-97 Dec-97 Mar-98 Jun-98 Sep-98 Dec-98 Mar-99
------ ------ ------ ------ ------ ------ ------ ------
($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cash & Investments $ 109,012 $ 114,639 $ 118,092 $ 124,564 $ 128,567 $ 135,182 $ 127,331 $ 121,730
Reinsurance Assets 8,513 8,559 6,117 5,764 5,654 5,616 20,281 25,614
Deferred Policy Acqstn. Costs 1,782 1,722 1,559 1,816 1,775 1,778 1,501 1,843
Intangibles 0 0 0 0 0 0 0 0
Separate Accounts 0 0 0 0 0 0 0 0
Other Assets 17,523 16,271 16,218 17,386 18,576 17,120 21,832 24,333
---------------------------------------------------------------------------------------------------
Total Assets $ 136,830 $ 141,191 $ 141,986 $ 149,530 $ 154,572 $ 159,696 $ 170,945 $ 173,520
Policy Reserves 71,099 73,490 74,649 83,905 89,172 92,672 110,296 113,569
Debt 6,807 6,840 4,875 4,896 4,918 4,940 2,461 2,471
Other Liabilities 4,415 4,237 4,105 2,985 2,319 2,463 5,570 2,951
---------------------------------------------------------------------------------------------------
Total Liabilities 82,321 84,567 83,629 91,786 96,409 100,075 118,327 118,991
Minority Interest 0 0 0 0 0 0 0 0
Redeemable Pfd. Equity 0 0 0 0 0 0 0 0
Trust Preferred Securities 0 0 0 0 0 0 0 0
Preferred Equity 0 0 0 0 0 0 0 0
Common Equity 54,509 56,624 58,357 57,744 58,163 59,621 52,618 54,529
---------------------------------------------------------------------------------------------------
Total Equity 54,509 56,624 58,357 57,744 58,163 59,621 52,618 54,529
Book Value Per Share $ 4.60 $ 4.78 $ 4.93 $ 4.85 $ 4.87 $ 4.99 4.41 4.44
Book Value, Net of FAS 115 $ 4.60 $ 4.74 $ 4.85 $ 4.76 $ 4.81 4.79 4.26 4.34
Shares Outstanding 11,841,023 11,841,023 11,841,023 11,907,973 11,954,612 11,945,312 11,935,000 12,285,000
Price Per Share $ 8.000 $ 9.750 $ 6.000 $ 8.000 $ 7.625 $ 5.063 6.375 4.750
Price/Book (%) 173.91% 203.97% 121.70% 164.95% 156.57% 101.46% 144.56% 106.98%
Policy Revenues $ 19,652 $ 20,423 $ 21,765 $ 22,544 $ 21,185 $ 21,856 $ 15,807 $ 17,154
Net Investment Income 1,626 1,906 2,137 2,040 2,018 1,854 1,805 1,686
Net Realized Gains (16) 0 0 0 716 330 (3) 37
Non-Recurring Revenues 0 0 0 0 0 0 0 0
Other Revenues 0 0 0 0 0 0 0 0
---------------------------------------------------------------------------------------------------
Total Revenues $ 21,262 $ 22,329 $ 23,902 $ 24,584 $ 23,919 $ 24,040 $ 17,609 $ 18,877
Policy Expenses $ 12,886 $ 14,250 $ 15,427 $ 19,273 $ 17,938 $ 17,571 $ 20,512 $ 10,804
Other Expenses 5,864 5,205 6,743 6,927 5,194 6,807 6,415 6,473
Interest Expense 196 196 189 139 139 139 129 69
Non-Recurring Expenses 0 0 0 0 0 0 0 0
---------------------------------------------------------------------------------------------------
Total Expenses $ 18,946 $ 19,651 $ 22,359 $ 26,339 $ 23,271 $ 24,517 $ 27,056 $ 17,346
Net Income Before Taxes $ 2,316 $ 2,678 $ 1,543 ($1,755) $ 648 ($477) ($9,447) $ 1,531
Provision for Taxes 850 973 255 (638) 157 (339) (3,130) 298
---------------------------------------------------------------------------------------------------
Net Inc. Before Adj. & Min.
Int. $ 1,466 $ 1,705 $ 1,288 ($1,117) $ 491 ($138) ($6,317) $ 1,233
Plus: After-Tax Adjustments 0 0 0 0 0 0 0 0
Less: Minority Interest Exp. 0 0 0 0 0 0 0 0
---------------------------------------------------------------------------------------------------
Net Income Before
Extraordinary $ 1,466 $ 1,705 $ 1,288 ($1,117) $ 491 ($138) ($6,317) $ 1,233
Extraordinary Items 0 0 0 0 0 0 0 0
---------------------------------------------------------------------------------------------------
Net Income $ 1,466 $ 1,705 $ 1,288 ($1,117) $ 491 ($138) ($6,317) $ 1,233
Diluted EPS Before
Extraordinary $ 0.12 $ 0.14 $ 0.11 ($0.09) $ 0.04 ($0.01) ($0.53) $ 0.10
Diluted EPS After
Extraordinary $ 0.12 $ 0.14 $ 0.11 ($0.09) $ 0.04 ($0.01) ($0.53) $ 0.10
Operating Income $ 1,466 $ 1,705 $ 1,288 ($1,117) $ 491 ($138) ($6,315) $ 1,209
Operating EPS $ 0.12 $ 0.14 $ 0.11 ($0.09) $ 0.04 ($0.03) ($0.53) $ 0.10
Dividend Per Share $ 0.0000 $ 0.0000 $ 0.0000 $ 0.0000 $ 0.0000 $ 0.0000 $ 0.0000 $ 0.0000
Average Diluted Shares 12,081,000 12,166,115 12,063,000 11,868,000 12,249,000 11,955,000 11,944,000 12,336,224
Average Assets 144,822 149,395 155,346 161,653
Average Equity 57,079 58,102 57,301 56,535
</TABLE>
<PAGE>
Argonal Group, Inc.
-------------------------------------------------
For the Quarter Ended
<TABLE>
<CAPTION>
Jun-97 Sep-97 Dec-97 Mar-98 Jun-98 Sep-98 Dec-98 Mar-99
------ ------ ------ ------ ------ ------ ------ ------
($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cash & Investments $1,449,900 $1,436,600 $1,428,100 $1,436,900 $1,427,700 $1,410,700 $1,397,300 $1,330,500
Reinsurance Assets 230,200 233,900 211,000 198,300 205,200 204,400 197,000 196,700
Deferred Policy Acqstn. Costs 5,200 1,505 4,000 5,253 5,462 5,253 4,800 5,000
Intangibles 39,700 39,000 38,300 37,600 36,900 36,200 35,500 34,800
Separate Accounts 0 0 0 0 0 0 0 0
Other Assets 202,000 200,895 179,100 166,947 154,638 136,647 146,000 139,000
------------------------------------------------------------------------------------------
Total Assets $1,927,000 $1,911,900 $1,860,500 $1,845,000 $1,829,900 $1,793,200 $1,780,600 $1,706,000
Policy Reserves 1,133,900 1,105,400 1,062,700 1,032,500 1,013,800 975,200 930,200 891,600
Debt 0 0 0 0 0 0 0 0
Other Liabilities 93,100 86,900 79,900 80,200 78,100 75,800 96,000 78,700
------------------------------------------------------------------------------------------
Total Liabilities 1,227,000 1,192,300 1,142,600 1,112,700 1,091,900 1,051,000 1,026,200 970,300
Minority Interest 0 0 0 0 0 0 0 0
Redeemable Pfd. Equity 0 0 0 0 0 0 0 0
Trust Preferred Securities 0 0 0 0 0 0 0 0
Preferred Equity 0 0 0 0 0 0 0 0
Common Equity 700,000 719,600 717,900 732,300 738,000 742,200 754,400 735,700
------------------------------------------------------------------------------------------
Total Equity 700,000 719,600 717,900 732,300 738,000 742,200 754,400 735,700
Book Value Per Share $29.38 $30.18 $30.09 $30.63 $30.82 $30.99 $31.33 $30.63
Book Value, Net of FAS 115 $23.95 $23.93 $23.97 $25.08 $25.03 $25.05 $24.89 $24.87
Shares Outstanding 23,827,629 23,844,516 23,854,720 23,909,945 23,947,695 23,948,665 24,077,792 24,018,248
Price Per Share $29.500 $34.875 $33.875 $36.125 $31.625 $25.500 $24.500 $25.688
Price/Book (%) 100.41% 115.56% 112.58% 117.94% 102.61% 82.28% 78.20% 83.86%
Policy Revenues $37,700 $37,800 $43,800 $35,500 $36,700 $33,600 $32,700 $27,600
Net Investment Income 21,700 22,100 22,500 20,300 19,500 19,000 18,600 17,600
Net Realized Gains 1,300 400 1,400 42,200 100 7,800 1,100 900
Non-Recurring Revenues 0 0 0 0 0 0 0 0
Other Revenues 0 0 0 0 0 0 0 0
------------------------------------------------------------------------------------------
Total Revenues $60,700 $60,300 $67,700 $98,000 $56,300 $60,400 $52,400 $46,100
Policy Expenses $25,500 $26,200 $32,300 $24,200 $22,600 $25,800 $22,500 $15,700
Other Expenses 18,200 22,400 24,000 20,100 20,100 19,000 19,300 16,400
Interest Expense 0 0 0 0 0 0 0 0
Non-Recurring Expenses 0 0 0 0 0 0 0 0
------------------------------------------------------------------------------------------
Total Expenses $43,700 $48,600 $56,300 $44,300 $42,700 $44,800 $41,800 $32,100
Net Income Before Taxes $17,000 $11,700 $11,400 $53,700 $13,600 $15,600 $10,600 $14,000
Provision for Taxes 4,200 2,400 500 17,000 4,800 5,200 3,800 4,500
------------------------------------------------------------------------------------------
Net Inc. Before Adj. & Min. Int. $12,800 $9,300 $10,900 $36,700 $8,800 $10,400 $6,800 $9,500
Plus: After-Tax Adjustments 0 0 0 0 0 0 0 0
Less: Minority Interest Exp. 0 0 0 0 0 0 0 0
------------------------------------------------------------------------------------------
Net Income Before Extraordinary $12,800 $9,300 $10,900 $36,700 $8,800 $10,400 $6,800 $9,500
Extraordinary Items 0 0 0 0 0 0 0 0
------------------------------------------------------------------------------------------
Net Income $12,800 $9,300 $10,900 $36,700 $8,800 $10,400 $6,800 $9,500
Diluted EPS Before Extraordinary $0.53 $0.39 $0.45 $1.52 $0.36 $0.43 0.28 0.40
Diluted EPS After Extraordinary $0.53 $0.39 $0.45 $1.52 $0.36 $0.43 0.28 0.40
Operating Income $11,955 $9,040 $9,990 $9,270 $8,735 $5,330 $6,085 $9,000
Operating EPS $0.50 $0.38 $0.41 $0.39 $0.36 $0.22 0.25 0.38
Dividend Per Share $0.4100 $0.4100 $0.4100 $0.4100 $0.4100 $0.4100 $0.4100 $0.4100
Average Diluted Shares 24,013,900 23,840,831 0 23,887,700 24,169,800 24,091,347 23,976,925 23,976,925
Average Assets 1,874,860 1,848,100 1,821,840 1,790,940
Average Equity 721,560 730,000 736,960 740,520
</TABLE>
<PAGE>
Superior National Insurance Group, Inc.
---------------------------------------------
For the Quarter Ended
<TABLE>
<CAPTION>
Jun-97 Sep-97 Dec-97 Mar-98 Jun-98 Sep-98 Dec-98 Mar-99
------ ------ ------ ------ ------ ------ ------ ------
($000) ($000) ($000) ($000) ($000) ($000) ($000) ($000)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cash & Investments $244,326 $238,804 $242,116 $228,535 $193,349 $167,205 $867,401 $734,079
Reinsurance Assets 36,774 58,702 59,832 65,165 81,296 121,097 503,593 648,073
Deferred Policy Acqstn. Costs 5,184 5,834 5,879 5,987 5,422 5,422 17,136 13,924
Intangibles 14,868 25,766 35,887 35,583 35,248 34,912 33,821 35,238
Separate Accounts 0 0 0 0 0 0 0 0
Other Assets 78,651 68,086 72,855 66,238 69,860 76,209 297,691 296,619
---------------------------------------------------------------------------------------
Total Assets $379,803 $397,192 $416,569 $401,508 $385,175 $404,845 $1,719,642 $1,727,933
Policy Reserves 229,338 237,613 214,168 194,943 171,041 173,145 1,129,134 1,104,774
Debt 44,030 42,366 30 30 0 0 111,855 105,790
Other Liabilities 27,500 34,737 41,276 43,436 54,388 69,138 153,607 190,425
---------------------------------------------------------------------------------------
Total Liabilities 300,868 314,716 255,474 238,409 225,429 242,283 1,394,596 1,400,989
Minority Interest 0 0 0 0 0 0 0 0
Redeemable Pfd. Equity 24,945 25,672 0 0 0 0 0 0
Trust Preferred Securities 0 0 101,277 101,291 101,051 101,068 101,084 101,100
Preferred Equity 0 0 0 0 0 0 0 0
Common Equity 53,990 56,804 59,818 61,808 58,695 61,494 223,962 225,844
---------------------------------------------------------------------------------------
Total Equity 53,990 56,804 59,818 61,808 58,695 61,494 223,962 225,844
Book Value Per Share $9.25 $9.73 $10.19 $10.52 $9.99 $10.32 $12.68 $12.77
Book Value, Net of FAS 115 $9.18 $9.56 $9.96 $10.28 $9.78 $9.99 $12.61 $12.97
Shares Outstanding 5,837,173 5,837,173 5,871,279 5,874,379 5,876,399 5,961,497 17,662,314 17,683,087
Price Per Share $13.625 $14.625 $14.500 $18.750 $23.500 $0.000 $20.060 $19.000
Price/Book (%) 147.30% 150.31% 142.30% 178.23% 235.24% 0.00% 158.22% 148.79%
Policy Revenues $45,410 $34,760 $41,772 $30,587 $25,204 $10,746 $20,552 $54,595
Net Investment Income 3,425 3,696 3,432 4,253 3,133 3,421 3,575 12,047
Net Realized Gains 10 27 (2) 0 628 0 1,226 0
Non-Recurring Revenues 0 0 0 0 0 0 0 0
Other Revenues 0 0 0 0 0 0 0 0
---------------------------------------------------------------------------------------
Total Revenues $48,845 $38,483 $45,202 $34,840 $28,965 $14,167 $25,353 $66,642
Policy Expenses $34,724 $21,316 $24,136 $18,288 $15,399 $1,319 $33,336 $41,999
Other Expenses 11,322 10,549 10,495 10,474 7,163 6,609 17,157 10,439
Interest Expense 2,417 1,158 1,033 0 0 0 1,324 3,505
Non-Recurring Expenses 0 0 0 0 0 0 0 0
---------------------------------------------------------------------------------------
Total Expenses $48,463 $33,023 $35,664 $28,762 $22,562 $7,928 $51,817 $55,943
Net Income Before Taxes $382 $5,460 $9,538 $6,078 $6,403 $6,239 ($26,464) $10,699
Provision for Taxes 98 2,052 3,616 2,311 2,354 2,271 (8,435) 2,149
---------------------------------------------------------------------------------------
Net Inc. Before Adj. & Min. Int. $284 $3,408 $5,922 $3,767 $4,049 $3,968 ($18,029) $8,550
Plus: After-Tax Adjustments (453) (480) (1,682) (1,872) (1,852) (1,873) ($1,760) ($1,845)
Less: Minority Interest Exp. 0 0 0 0 0 0 0 0
---------------------------------------------------------------------------------------
Net Income Before Extraordinary ($169) $2,928 $4,240 $1,895 $2,197 $2,095 ($19,789) $6,705
Extraordinary Items (10,361) (796) (1,739) 0 0 0 0 0
---------------------------------------------------------------------------------------
Net Income ($10,530) $2,132 $2,501 $1,895 $2,197 $2,095 ($19,789) $6,705
Diluted EPS Before Extraordinary ($0.02) $0.38 $0.00 $0.24 $0.27 $0.27 ($2.79) $0.34
Diluted EPS After Extraordinary ($1.39) $0.28 $0.32 $0.24 $0.27 $0.27 ($2.79) $0.34
Operating Income ($176) $2,928 $4,240 $1,895 $1,789 $0 ($18,491) $6,705
Operating EPS ($0.02) $0.38 $0.32 $0.24 $0.22 $0.00 ($2.65) $0.34
Dividend Per Share $0.0000 $0.0000 $0.0000 $0.0000 $0.0000 $0.0000 $0.0000 $0.0000
Average Diluted Shares 7,546,380 0 0 7,781,614 7,984,453 7,712,676 6,759,598 6,759,598
Average Assets 396,049 401,058 665,548 927,821
Average Equity 58,223 59,724 93,155 126,361
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Zenith National Insurance Corp.
-----------------------------------------------------------
For the Quarter Ended
Jun-97 Sep-97 Dec-97 Mar-98
------ ------ ------ ------
($000) ($000) ($000) ($000)
<S> <C> <C> <C> <C>
Cash & Investments $ 867,806 $ 884,466 $ 892,477 $ 872,640
Reinsurance Assets 108,563 102,927 106,067 108,105
Deferred Policy Acqstn. Costs 21,778 22,129 20,840 20,319
Intangibles 0 0 4,992 0
Separate Accounts 0 0 0 0
Other Assets 256,314 257,078 227,780 233,905
-----------------------------------------------------------
Total Assets $ 1,254,461 $ 1,266,600 $ 1,252,156 $ 1,234,969
Policy Reserves 773,686 764,147 748,142 749,169
Debt 87,547 88,439 88,216 88,652
Other Liabilities 47,701 54,153 53,932 52,166
-----------------------------------------------------------
Total Liabilities 908,934 906,739 890,290 889,987
Minority Interest 0 0 0 0
Redeemable Pfd. Equity 0 0 0 0
Trust Preferred Securities 0 0 0 0
Preferred Equity 0 0 0 0
Common Equity 345,527 359,861 361,866 344,982
-----------------------------------------------------------
Total Equity 345,527 359,861 361,866 344,982
Book Value Per Share $ 19.53 $ 20.25 $ 20.31 $ 20.27
Book Value, Net of FAS 115 $ 19.50 $ 19.73 $ 19.79 $ 19.70
Shares Outstanding 17,688,000 17,773,000 17,819,000 17,022,000
Price Per Share $ 27.000 $ 28.563 $ 25.750 $ 28.938
Price/Book (%) 138.25% 141.05% 126.78% 142.76%
Policy Revenues $ 125,831 $ 120,475 $ 120,052 $ 118,784
Net Investment Income 13,406 13,272 13,206 12,343
Net Realized Gains 1,996 1,861 8,275 2,420
Non-Recurring Revenues 0 0 0 0
Other Revenues 11,174 11,480 12,802 11,748
-----------------------------------------------------------
Total Revenues $ 152,407 $ 147,088 $ 154,335 $ 145,295
Policy Expenses $ 89,180 $ 81,104 $ 90,114 $ 83,928
Other Expenses 50,188 52,494 55,149 49,676
Interest Expense 816 980 1,048 993
Non-Recurring Expenses 0 0 0 0
-----------------------------------------------------------
Total Expenses $ 140,184 $ 134,578 $ 146,311 $ 134,597
Net Income Before Taxes $ 12,223 $ 12,510 $ 8,024 $ 10,698
Provision for Taxes 4,323 4,510 2,924 3,598
-----------------------------------------------------------
Net Inc. Before Adj. & Min. Int. $ 7,900 $ 8,000 $ 5,100 $ 7,100
Plus: After-Tax Adjustments 0 0 0 0
Less: Minority Interest Exp. 0 0 0 0
-----------------------------------------------------------
Net Income Before Extraordinary $ 7,900 $ 8,000 $ 5,100 $ 7,100
Extraordinary Items 0 0 0 0
-----------------------------------------------------------
Net Income $ 7,900 $ 8,000 $ 5,100 $ 7,100
Diluted EPS Before Extraordinary $ 0.44 $ 0.45 $ 0.28 $ 0.42
Diluted EPS After Extraordinary $ 0.44 $ 0.45 $ 0.28 $ 0.42
Operating Income $ 6,603 $ 6,791 $ 394 $ 5,527
Operating EPS $ 0.37 $ 0.38 $ 0.02 $ 0.32
Dividend Per Share $ 0.2500 $ 0.2500 $ 0.2500 $ 0.2500
Average Diluted Shares 17,823,000 18,021,000 17,977,000 17,080,000
Average Assets
Average Equity
<CAPTION>
-----------------------------------------------------------
Jun-98 Sep-98 Dec-98 Mar-99
------ ------ ------ ------
($000) ($000) ($000) ($000)
<S> <C> <C> <C> <C>
Cash & Investments $ 1,029,933 $ 1,095,430 $ 1,050,679 $ 993,118
Reinsurance Assets 503,120 482,729 373,045 359,037
Deferred Policy Acqstn. Costs 22,031 21,885 23,941 9,249
Intangibles 81,526 83,438 25,744 23,213
Separate Accounts 0 0 0
Other Assets 336,576 324,577 345,317 271,170
-----------------------------------------------------------
Total Assets $ 1,973,186 $ 2,008,059 $ 1,818,726 $ 1,655,787
Policy Reserves 1,408,116 1,377,899 1,155,612 930,040
Debt 90,589 85,381 93,851 90,814
Other Liabilities 124,887 122,008 148,970 122,470
-----------------------------------------------------------
Total Liabilities 1,623,592 1,585,288 1,398,433 1,143,324
Minority Interest 0 0 0 0
Redeemable Pfd. Equity 0 0 0 0
Trust Preferred Securities 0 73,328 73,341 73,355
Preferred Equity 0 0 0 0
Common Equity 349,594 349,443 346,952 439,108
-----------------------------------------------------------
Total Equity 349,594 349,443 346,952 439,108
Book Value Per Share $ 20.50 $ 20.50 $ 20.23 $ 25.65
Book Value, Net of FAS 115 $ 19.91 19.85 $ 19.67 $ 25.51
Shares Outstanding 17,055,000 17,043,064 17,148,000 17,116,000
Price Per Share $ 28.188 $ 25.063 $ 23.125 $ 24.310
Price/Book (%) 137.50% 122.26% 114.31% 94.79%
Policy Revenues $ 137,554 $ 136,151 $ 137,366 $ 135,577
Net Investment Income 14,571 15,194 13,469 13,325
Net Realized Gains 3,754 2,164 3,264 1,534
Non-Recurring Revenues 0 0 0 160,335
Other Revenues 10,076 9,604 10,301 11,727
-----------------------------------------------------------
Total Revenues $ 165,955 $ 163,113 $ 164,400 $ 322,498
Policy Expenses $ 94,581 $ 101,690 $ 102,691 $ 105,490
Other Expenses 58,896 54,356 57,330 54,625
Interest Expense 515 1,908 2,512 2,020
Non-Recurring Expenses 0 0 0 0
-----------------------------------------------------------
Total Expenses $ 153,992 $ 157,954 $ 162,533 $ 162,135
Net Income Before Taxes $ 11,963 $ 5,159 $ 1,867 $ 160,363
Provision for Taxes 4,363 1,659 566 55,963
-----------------------------------------------------------
Net Inc. Before Adj. & Min. Int. $ 7,600 $ 3,500 $ 1,301 $ 104,400
Plus: After-Tax Adjustments 0 0 0 0
Less: Minority Interest Exp. 0 0 0 0
-----------------------------------------------------------
Net Income Before Extraordinary $ 7,600 $ 3,500 $ 1,301 $ 104,400
Extraordinary Items 0 0 0 0
-----------------------------------------------------------
Net Income $ 7,600 $ 3,500 $ 1,301 $ 104,400
Diluted EPS Before Extraordinary $ 0.44 $ 0.20 $ 0.08 $ 6.09
Diluted EPS After Extraordinary $ 0.44 $ 0.20 $ 0.08 $ 6.09
Operating Income $ 5,160 $ 2,093 ($ 821) ($ 932)
Operating EPS $ 0.30 $ 0.12 ($ 0.05) ($ 0.05)
Dividend Per Share $ 0.2500 $ 0.2500 $ 0.2500 $ 0.2500
Average Diluted Shares 17,269,000 17,168,000 17,113,000 17,152,000
Average Assets 1,396,274 1,546,994 1,657,419 1,738,145
Average Equity 352,366 353,149 350,567 366,016
</TABLE>
<PAGE>
EXHIBIT 2
Pro Forma Analysis Sheet: Fully Demutualized Basis
<PAGE>
PRO FORMA ANALYSIS SHEET
NCRIC Group, Inc.
Prices as of July 16, 1999
<TABLE>
<CAPTION>
Peer Group Med. Malpractice Subgroup
-------------------- -------------------------
Price Multiple Symbol Subject (1) Mean Median Mean Median
- -------------- ------ ----------- ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C>
Price-earnings ratio = P/E 6.79x 30.7x 13.8x 26.55x 17.38x
Price-book ratio = P/B 51.4% 137.9% 123.9% 166.3% 151.9%
Price-assets ratio = P/A 15.4% 33.6% 26.2% 49.2% 49.5%
</TABLE>
<TABLE>
<CAPTION>
Valuation Parameters
- --------------------
<S> <C> <C> <C>
Pre-Conversion Earnings (Y) $ 3,254,000 ESOP Stock Purchases (E) 10.00% (5)
Pre-Conversion Book Value (B) $ 29,711,000 Cost of ESOP Borrowings (S) 0.00% (4)
Pre-Conv. Tang. Book Value (B) $ 24,615,000 ESOP Amortization (T) 10.00 years
Pre-Conversion Assets (A) $148,486,000 Stock Award Plan Amount (M) 5.00%
Reinvestment Rate (2)(R) 3.00% Stock Award Plan Vesting (N) 5.00 years (5)
Est. Conversion Expenses (3)(X) 4.00% Acquisition Shares (F) 1.15%
Tax rate (TAX) 40.00% Acquisition Stock Issuance (Z) $300,000
Benefit Plan Adjustment (BP) 1.10%
Percentage Sold (PCT) 100.00%
</TABLE>
<TABLE>
<CAPTION>
Calculation of Pro Forma Value After Conversion
- -----------------------------------------------
<S> <C>
1. V= P/E * (Y) V= $26,197,595
----------------------------------------------
1 - P/E * PCT * ((1-X-E-M-F)*R - (1-TAX)*E/T - (1-TAX)*M/N+BP)
2. V= P/B * (B+Z) V= $26,199,083
------------------------------
1 - P/B * PCT * (1-X-E-M-F)
3. V= P/A * (A+Z) V= $26,199,814
--------------------------------
1 - P/A * PCT * (1-X-E-M-F)
</TABLE>
<TABLE>
<CAPTION>
Gross Shares Aggregate
Shares Sold to Price Per Offering Issued to Total Shares Market Value
Conclusion Public Share Proceeds HCI Principals Issued of Stock Issued
- ---------- ------ ----- -------- -------------- ------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Minimum 3,400,000 7.00 $ 23,800,000 42,857 3,442,857 $24,099,999
Midpoint 4,000,000 7.00 28,000,000 42,857 4,042,857 28,299,999
Maximum 4,600,000 7.00 32,200,000 42,857 4,642,857 32,499,999
Proposed Closing Value 3,700,000 7.00 25,900,000 42,857 3,742,857 26,199,999
</TABLE>
___________________________________
(1) Pricing ratios shown reflect the midpoint value.
(2) Net return reflects a reinvestment rate of 5.00 percent, and a tax rate of
40.00 percent.
(3) Offering expenses shown at estimated midpoint value.
(4) No cost is applicable since holding company will fund the ESOP loan.
(5) ESOP and Stock Award Plan amortize over 10 years and 5 years, respectively;
amortization expenses tax effected at 40.00 percent.
<PAGE>
EXHIBIT 3
Pro Forma Effects of Offering Proceeds: Fully Demutualized Basis
<PAGE>
PRO FORMA EFFECT OF OFFERING PROCEEDS
NCRIC Group, Inc.
At the Minimum
<TABLE>
<S> <C> <C> <C> <C>
1. Offering Proceeds $ 23,800,000
Less: Estimated Offering Expenses 952,000
------------
Net Offering Proceeds $ 22,848,000
2. Estimated Additional Income from Offering Proceeds
Net Offering Proceeds $ 22,848,000
Less: Capital Expenditures 0
Less: Non-Cash Stock Purchases (1) 3,570,000
------------
Net Proceeds Reinvested $ 19,278,000
Estimated net incremental rate of return 3.00%
------------
Earnings Increase $ 578,340
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 142,800
Less: Stock Award Plan Vesting (4) 142,800
Plus: Pro Forma Benefit Plan Adjustments (5) 262,600
------------
Net Earnings Increase $ 555,340
Net
Before Earnings After
3. Pro Forma Earnings Offering Increase Offering
-------- -------- --------
12 Months ended March 31, 1999 (reported) $ 3,254,000 $555,340 $ 3,809,340
Estimated Core Earnings $ 3,144,000 $555,340 $ 3,699,340
Before Net Cash Acquisition Stock After
4. Pro Forma Net Worth Offering Proceeds Issuance Offering
-------- -------- -------- --------
March 31, 1999 $29,711,000 $19,278,000 $300,000 $ 49,289,000
March 31, 1999 (Tangible) $24,615,000 $19,278,000 $300,000 $ 44,193,000
Before Net Cash Acquisition Stock After
5. Pro Forma Assets Offering Proceeds Issuance Offering
-------- -------- -------- --------
March 31, 1999 $148,486,000 $19,278,000 $300,000 $168,064,000
</TABLE>
(1) Includes ESOP and Stock Award Plan stock purchases equal to 10.0 and 5.0
percent of the offering, respectively.
(2) ESOP and Stock Award Plan stock purchases are internally financed by a loan
from the holding company.
(3) ESOP borrowings are amortized over 10 years, amortization expense is tax-
effected at a 40.00 percent rate.
(4) Stock Award Plan is amortized over 5 years, and amortization expense is tax
effected at 40.00 percent.
(5) Reflects the pro forma benefit plan adjustment as set forth in the
prospectus.
<PAGE>
PRO FORMA EFFECT OF OFFERING PROCEEDS
NCRIC Group, Inc.
At the Midpoint
<TABLE>
<S> <C> <C> <C> <C>
1. Offering Proceeds $ 28,000,000
Less: Estimated Offering Expenses 1,120,000
------------
Net Offering Proceeds $ 26,880,000
2. Estimated Additional Income from Offering Proceeds
Net Offering Proceeds $ 26,880,000
Less: Capital Expenditures 0
Less: Non-Cash Stock Purchases (1) 4,200,000
------------
Net Proceeds Reinvested $ 22,680,000
Estimated net incremental rate of return 3.00%
------------
Earnings Increase $ 680,400
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 168,000
Less: Stock Award Plan Vesting (4) 168,000
Plus: Pro Forma Benefit Plan Adjustments (5) 313,000
------------
Net Earnings Increase $ 657,400
Net
Before Earnings After
3. Pro Forma Earnings Offering Increase Offering
-------- -------- --------
12 Months ended March 31, 1999 (reported) $ 3,254,000 $657,400 $ 3,911,400
Estimated Core Earnings $ 3,144,000 $657,400 $ 3,801,400
Before Net Cash Acquisition Stock After
4. Pro Forma Net Worth Offering Proceeds Issuance Offering
-------- -------- -------- --------
March 31, 1999 $ 29,711,000 $22,680,000 $300,000 $ 52,691,000
March 31, 1999 (Tangible) $ 24,615,000 $22,680,000 $300,000 $ 47,595,000
Before Net Cash Acquisition Stock After
5. Pro Forma Assets Offering Proceeds Issuance Offering
-------- -------- -------- --------
March 31, 1999 $148,486,000 $22,680,000 $300,000 $171,466,000
</TABLE>
(1) Includes ESOP and Stock Award Plan stock purchases equal to 10.0 and 5.0
percent of the offering, respectively.
(2) ESOP and Stock Award Plan stock purchases are internally financed by a loan
from the holding company.
(3) ESOP borrowings are amortized over 10 years, amortization expense is tax-
effected at a 40.00 percent rate.
(4) Stock Award Plan is amortized over 5 years, and amortization expense is tax
effected at 40.00 percent.
(5) Reflects the pro forma benefit plan adjustment as set forth in the
prospectus.
<PAGE>
PRO FORMA EFFECT OF OFFERING PROCEEDS
NCRIC Group, Inc.
At the Maximum
<TABLE>
<S> <C> <C> <C> <C>
1. Offering Proceeds $ 32,200,000
Less: Estimated Offering Expenses 1,288,000
------------
Net Offering Proceeds $ 30,912,000
2. Estimated Additional Income from Offering Proceeds
Net Offering Proceeds $ 30,912,000
Less: Capital Expenditures 0
Less: Non-Cash Stock Purchases (1) 4,830,000
------------
Net Proceeds Reinvested $ 26,082,000
Estimated net incremental rate of return 3.00%
------------
Earnings Increase $ 782,460
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 193,200
Less: Stock Award Plan Vesting (4) 193,200
Plus: Pro Forma Benefit Plan Adjustments (5) 363,400
------------
Net Earnings Increase $ 759,460
Net
Before Earnings After
3. Pro Forma Earnings Offering Increase Offering
-------- -------- --------
12 Months ended March 31, 1999 (reported) $ 3,254,000 $759,460 $ 4,013,460
Estimated Core Earnings $ 3,144,000 $759,460 $ 3,903,460
Before Net Cash Acquisition Stock After
4. Pro Forma Net Worth Offering Proceeds Issuance Offering
-------- -------- -------- --------
March 31, 1999 $ 29,711,000 $26,082,000 $300,000 $ 56,093,000
March 31, 1999 (Tangible) $ 24,615,000 $26,082,000 $300,000 $ 50,997,000
Before Net Cash Acquisition Stock After
5. Pro Forma Assets Offering Proceeds Issuance Offering
-------- -------- -------- --------
March 31, 1999 $148,486,000 $26,082,000 $300,000 $174,868,000
</TABLE>
(1) Includes ESOP and Stock Award Plan stock purchases equal to 10.0 and 5.0
percent of the offering, respectively.
(2) ESOP and Stock Award Plan stock purchases are internally financed by a loan
from the holding company.
(3) ESOP borrowings are amortized over 10 years, amortization expense is tax-
effected at a 40.00 percent rate.
(4) Stock Award Plan is amortized over 5 years, and amortization expense is tax
effected at 40.00 percent.
(5) Reflects the pro forma benefit plan adjustment as set forth in the
prospectus.
<PAGE>
PRO FORMA EFFECT OF OFFERING PROCEEDS
NCRIC Group, Inc.
At the Proposed Closing Value
<TABLE>
<S> <C> <C> <C> <C>
1. Offering Proceeds $ 25,900,000
Less: Estimated Offering Expenses 1,036,000
------------
Net Offering Proceeds $ 24,864,000
2. Estimated Additional Income from Offering Proceeds
Net Offering Proceeds $ 24,864,000
Less: Capital Expenditures 0
Less: Non-Cash Stock Purchases (1) 3,885,000
------------
Net Proceeds Reinvested $ 20,979,000
Estimated net incremental rate of return 3.00%
------------
Earnings Increase $ 629,370
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 155,400
Less: Stock Award Plan Vesting (4) 155,400
Plus: Pro Forma Benefit Plan Adjustments (5) 287,800
------------
Net Earnings Increase $ 606,370
Net
Before Earnings After
3. Pro Forma Earnings Offering Increase Offering
-------- -------- --------
12 Months ended March 31, 1999 (reported) $ 3,254,000 $606,370 $ 3,860,370
Estimated Core Earnings $ 3,144,000 $606,370 $ 3,750,370
Before Net Cash Acquisition Stock After
4. Pro Forma Net Worth Offering Proceeds Issuance Offering
-------- -------- -------- --------
March 31, 1999 $ 29,711,000 $20,979,000 $300,000 $ 50,990,000
March 31, 1999 (Tangible) $ 24,615,000 $20,979,000 $300,000 $ 45,894,000
Before Net Cash Acquisition Stock After
5. Pro Forma Assets Offering Proceeds Issuance Offering
-------- -------- -------- --------
March 31, 1999 $148,486,000 $20,979,000 $300,000 $169,765,000
</TABLE>
(1) Includes ESOP and Stock Award Plan stock purchases equal to 10.0 and 5.0
percent of the offering, respectively.
(2) ESOP and Stock Award Plan stock purchases are internally financed by a loan
from the holding company.
(3) ESOP borrowings are amortized over 10 years, amortization expense is tax-
effected at a 40.00 percent rate.
(4) Stock Award Plan is amortized over 5 years, and amortization expense is tax
effected at 40.00 percent.
(5) Reflects the pro forma benefit plan adjustment as set forth in the
prospectus.
<PAGE>
EXHIBIT 4
Pro Forma Analysis: Minority Stock Offering
<PAGE>
PRO FORMA ANALYSIS SHEET
NCRIC Group, Inc.
Prices as of July 16, 1999
<TABLE>
<CAPTION>
Peer Group Med. Malpractice Subgroup
--------------------- -------------------------
Price Multiple Symbol Subject (1) Mean Median Mean Median
- -------------- ------ ---------- ----- ------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Price-earnings ratio = P/E 7.56x 26.00x 14.31x 24.87 16.52x
Price-book ratio = P/B 69.31% 148.3% 116.5% 157.8% 151.8%
Price-assets ratio = P/A 16.73% 37.4% 26.1% 50.1% 48.9%
</TABLE>
<TABLE>
<CAPTION>
Valuation Parameters
- --------------------
<S> <C> <C> <C>
Pre-Conversion Earnings (Y) $ 3,254,000 ESOP Stock Purchases (E) 10.00% (5)
Pre-Conversion Book Value (B) $ 29,711,000 Cost of ESOP Borrowings (S) 0.00% (4)
Pre-Conv. Tang. Book Value (B) $ 24,615,000 ESOP Amortization (T) 10.00 years
Pre-Conversion Assets (A) $148,486,000 Stock Award Plan Amount (M) 5.00%
Reinvestment Rate (2)(R) 3.00% Stock Award Plan Vesting (N) 5.00 years (5)
Est. Conversion Expenses (3)(X) 9.81% Acquisition Shares (F) 1.15%
Tax rate (TAX) 40.00% Acquisition Stock Offering (Z) 300,000
Benefit Plan Adjustment (BP) 1.00%
Percentage Sold (PCT) 40.64%
</TABLE>
<TABLE>
<CAPTION>
Calculation of Pro Forma Value After Conversion
- -----------------------------------------------
<S> <C>
1. V= P/E * (Y) V= $26,276,985
-----------------------------------------------------
1 - P/E * PCT * ((1-X-E-M-F)*R - (1-TAX)*E/T - (1-TAX)*M/N+BP)
2. V= P/B * (B+Z) V= $26,398,848
-------------------------------------
1 - P/B * PCT * (1-X-E-M-F)
3. V= P/A * (A+Z) V= $26,239,866
-------------------------------------
1 - P/A * PCT * (1-X-E-M-F)
</TABLE>
<TABLE>
<CAPTION>
Shares Aggregate
Shares Sold to Price Per Gross Offering Issued to Total Shares Market Value
Conclusion MHC Shares Public Share Proceeds HCI Prin. Issued of Stock Issued
- ----------- ------------ -------------- --------- -------------- --------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Minimum 2,040,000 1,360,000 7.00 9,520,000 42,857 1,402,857 9,820,000
Midpoint 2,400,000 1,600,000 7.00 11,200,000 42,857 1,642,857 11,500,000
Maximum 2,760,000 1,840,000 7.00 12,880,000 42,857 1,882,857 13,180,000
Proposed Closing Value 2,220,000 1,480,000 7.00 10,360,000 42,857 1,522,857 10,660,000
</TABLE>
- -----------------------------------------------------------
(1) Pricing ratios shown reflect the midpoint value.
(2) Net return reflects a reinvestment rate of 5.00 percent, and a tax rate of
40.00 percent.
(3) Offering expenses shown at estimated midpoint value.
(4) No cost is applicable since holding company will fund the ESOP loan.
(5) ESOP and Stock Award Plan amortize over 10 years and 5 years, respectively;
amortization expenses tax effected at 40.00 percent.
<PAGE>
EXHIBIT 5
Pro Forma Effect of Offering Proceeds: Minority Stock Offering
<PAGE>
PRO FORMA EFFECT OF OFFERING PROCEEDS
NCRIC Group, Inc.
At the Minimum Pursuant to MHC Structure
Assumes Sale of 40% of Outstanding Shares
<TABLE>
<S> <C>
1. Offering Proceeds $9,520,000
Less: Estimated Offering Expenses 1,000,000
---------
Net Offering Proceeds $8,520,000
2. Estimated Additional Income from Offering Proceeds
Net Offering Proceeds $8,520,000
Less: Capital Expenditures 0
Less: Non-Cash Stock Purchases (1) 1,428,000
---------
Net Proceeds Reinvested $7,092,000
Estimated net incremental rate of return 3.00%
-----
Earnings Increase $212,760
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 57,120
Less: Stock Award Plan Vesting (4) 57,120
Plus: Pro Forma Benefit Plan Adjustment (5) 93,240
------
Net Earnings Increase $191,760
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Offering Increase Offering
-------- -------- --------
<S> <C> <C> <C>
12 Months ended March 31, 1999 (reported) $3,254,000 $191,760 $3,445,760
Estimated Core Earnings $3,144,000 $191,760 $3,335,760
<CAPTION>
Before Net Cash Acquisition Stock After
4. Pro Forma Net Worth Offering Proceeds Offering Offering
-------- -------- -------- --------
<S> <C> <C> <C> <C>
March 31, 1999 $29,711,000 $7,092,000 $300,000 $37,103,000
March 31, 1999 (Tangible) $24,615,000 $7,092,000 $300,000 $32,007,000
<CAPTION>
Before Net Cash Acquisition Stock After
5. Pro Forma Assets Offering Proceeds Offering Offering
-------- -------- -------- --------
<S> <C> <C> <C> <C>
March 31, 1999 $148,486,000 $7,092,000 $300,000 $155,878,000
</TABLE>
(1) Includes ESOP and Stock Award Plan stock purchases equal to 10.0 and 5.0
percent of the offering, respectively.
(2) ESOP stock purchases are internally financed by a loan from the holding
company.
(3) ESOP borrowings are amortized over 5 years, amortization expense is tax-
effected at a 40.00 percent rate.
(4) Stock Award Plan is amortized over 5 years, and amortization expense is
tax effected at 40.00 percent.
(5) Reflects the pro forma benefit plan adjustment as set forth in the
prospectus.
<PAGE>
PRO FORMA EFFECT OF OFFERING PROCEEDS
NCRIC Group, Inc.
At the Midpoint Pursuant to MHC Structure
Assumes Sale of 40% of Outstanding Shares
<TABLE>
<S> <C> <C> <C> <C>
1. Offering Proceeds $ 11,200,000
Less: Estimated Offering Expenses 1,034,000
------------
Net Offering Proceeds $ 10,166,000
2. Estimated Additional Income from Offering Proceeds
Net Offering Proceeds $ 10,166,000
Less: Capital Expenditures 0
Less: Non-Cash Stock Purchases (1) 1,680,000
------------
Net Proceeds Reinvested $ 8,486,000
Estimated net incremental rate of return 3.00%
------------
Earnings Increase $ 254,580
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 67,200
Less: Stock Award Plan Vesting (4) 67,200
Plus: Pro Forma Benefit Plan Adjustment (5) 113,400
------------
Net Earnings Increase $ 233,580
Net
Before Earnings After
3. Pro Forma Earnings Offering Increase Offering
-------- -------- --------
12 Months ended March 31, 1999 (reported) $3,254,000 $233,580 $ 3,487,580
Estimated Core Earnings $3,144,000 $233,580 $ 3,377,580
Before Net Cash Acquisition Stock After
4. Pro Forma Net Worth Offering Proceeds Offering Offering
-------- -------- -------- --------
March 31, 1999 $ 29,711,000 $8,486,000 $300,000 $ 38,497,000
March 31, 1999 (Tangible) $ 24,615,000 $8,486,000 $300,000 $ 33,401,000
Before Net Cash Acquisition Stock After
5. Pro Forma Assets Offering Proceeds Offering Offering
-------- -------- -------- --------
March 31, 1999 $148,486,000 $8,486,000 $300,000 $157,272,000
</TABLE>
(1) Includes ESOP and Stock Award Plan stock purchases equal to 10.0 and 5.0
percent of the offering, respectively.
(2) ESOP stock purchases are internally financed by a loan from the holding
company.
(3) ESOP borrowings are amortized over 5 years, amortization expense is tax-
effected at a 40.00 percent rate.
(4) Stock Award Plan is amortized over 5 years, and amortization expense is tax
effected at 40.00 percent.
(5) Reflects the pro forma benefit plan adjustment as set forth in the
prospectus.
<PAGE>
PRO FORMA EFFECT OF OFFERING PROCEEDS
NCRIC Group, Inc.
At the Maximum Pursuant to MHC Structure
Assumes Sale of 40% of Outstanding Shares
<TABLE>
<S> <C> <C> <C> <C>
1. Offering Proceeds $ 12,880,000
Less: Estimated Offering Expenses 1,067,000
------------
Net Offering Proceeds $ 11,813,000
2. Estimated Additional Income from Offering Proceeds
Net Offering Proceeds $ 11,813,000
Less: Capital Expenditures 0
Less: Non-Cash Stock Purchases (1) 1,932,000
------------
Net Proceeds Reinvested $ 9,881,000
Estimated net incremental rate of return 3.00%
------------
Earnings Increase $ 296,430
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 77,280
Less: Stock Award Plan Vesting (4) 77,280
Plus: Pro Forma Benefit Plan Adjustment (5) 133,560
------------
Net Earnings Increase $ 275,430
Net
Before Earnings After
3. Pro Forma Earnings Offering Increase Offering
-------- -------- --------
12 Months ended March 31, 1999 (reported) $3,254,000 $275,430 $ 3,529,430
Estimated Core Earnings $3,144,000 $275,430 $ 3,419,430
Before Net Cash Acquisition Stock After
4. Pro Forma Net Worth Offering Proceeds Offering Offering
-------- -------- -------- --------
March 31, 1999 $ 29,711,000 $9,881,000 $300,000 $ 39,892,000
March 31, 1999 (Tangible) $ 24,615,000 $9,881,000 $300,000 $ 34,796,000
Before Net Cash Acquisition Stock After
5. Pro Forma Assets Offering Proceeds Offering Offering
-------- -------- -------- --------
March 31, 1999 $148,486,000 $9,881,000 $300,000 $158,667,000
</TABLE>
(1) Includes ESOP and Stock Award Plan stock purchases equal to 10.0 and 5.0
percent of the offering, respectively.
(2) ESOP stock purchases are internally financed by a loan from the holding
company.
(3) ESOP borrowings are amortized over 5 years, amortization expense is tax-
effected at a 40.00 percent rate.
(4) Stock Award Plan is amortized over 5 years, and amortization expense is tax
effected at 40.00 percent.
(5) Reflects the pro forma benefit plan adjustment as set forth in the
prospectus.
<PAGE>
PRO FORMA EFFECT OF CONVERSION PROCEEDS
NCRIC Group, Inc.
At the Proposed Closing Value
Assumes Sale of 40% of Outstanding Shares
<TABLE>
<S> <C>
1. Offering Proceeds $10,360,000
Less: Estimated Offering Expenses 1,016,750
---------
Net Conversion Proceeds $9,343,250
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $9,343,250
Less: Capital Expenditures 0
Less: Non-Cash Stock Purchases (1) 1,554,000
---------
Net Proceeds Reinvested $7,789,250
Estimated net incremental rate of return 3.00%
-----
Earnings Increase $233,678
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 62,160
Less: Stock Award Plan Vesting (4) 62,160
Plus: Pro Forma Benefit Plan Adjustment (5) 103,320
-------
Net Earnings Increase $212,678
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Offering Increase Offering
-------- -------- --------
<S> <C> <C> <C>
12 Months ended March 31, 1999 (reported) $3,254,000 $212,678 $3,466,678
Estimated Core Earnings $3,144,000 $212,67 $3,356,678
<CAPTION>
Before Net Cash Acquisition Stock After
4. Pro Forma Net Worth Offering Proceeds Offering Offering
-------- -------- -------- --------
<S> <C> <C> <C> <C>
March 31, 1999 $29,711,000 $7,789,250 $300,000 $37,800,250
March 31, 1999 (Tangible) $24,615,000 $7,789,250 $300,000 $32,704,250
<CAPTION>
Before Net Cash Acquisition Stock After
5. Pro Forma Assets Offering Proceeds Offering Offering
-------- -------- -------- --------
<S> <C> <C> <C> <C>
March 31, 1999 $148,486,000 $7,789,250 $300,000 $156,575,250
</TABLE>
(1) Includes ESOP and Stock Award Plan stock purchases equal to 10.0 and 5.0
percent of the offering, respectively.
(2) ESOP stock purchases are internally financed by a loan from the holding
company.
(3) ESOP borrowings are amortized over 5 years, amortization expense is tax-
effected at a 40.00 percent rate.
(4) Stock Award Plan is amortized over 5 years, and amortization expense is tax
effected at 40.00 percent.
(5) Reflects the pro forma benefit plan adjustment as set forth in the
prospectus.
<PAGE>
EXHIBIT 6
RP Financial, LC.
Firm Qualifications Statement
<PAGE>
[LETTERHEAD OF RP FINANCIAL, LC. APPEARS HERE]
FIRM QUALIFICATION STATEMENT
RP Financial provides financial and management consulting and valuation services
to the financial services industry nationwide. RP Financial establishes long-
term client relationships through its wide array of services, emphasis on
quality and timeliness, hands-on involvement by our principals and senior
consulting staff, careful structuring of strategic plans and transactions and
providing sophisticated valuation analyses consistent with accepted valuation
practices. RP Financial's staff draws from backgrounds in consulting, regulatory
agencies and investment banking, thereby providing our clients with considerable
resources.
STRATEGIC AND CAPITAL PLANNING
RP Financial's strategic and capital planning services are designed to provide
effective workable plans with quantifiable results. Through a program known as
SAFE (Strategic Alternatives Financial Evaluations), RP Financial analyzes
strategic options to enhance shareholder value or other established objectives.
Our planning services involve conducting situation analyses; establishing
mission statements, strategic goals and objectives; and identifying strategies
for enhancement of franchise value, capital management and planning, earnings
improvement and operational issues. Strategy development typically includes the
following areas: capital formation and management, asset/liability targets,
profitability, return on equity and market value of stock. Our proprietary
financial simulation model provides the basis for evaluating the financial
impact of alternative strategies and assessing the feasibility/compatibility of
such strategies with regulations and/or other guidelines.
MERGER AND ACQUISITION SERVICES
RP Financial's merger and acquisition (M&A) services include targeting
candidates and potential acquirors, assessing acquisition merit, conducting
detailed due diligence, negotiating and structuring transactions, preparing
merger business plans and financial simulations, rendering fairness opinions and
assisting in implementing post-acquisition strategies. Through our financial
simulations, comprehensive in-house data bases, valuation expertise and
regulatory knowledge, RP Financial's M&A consulting focuses on structuring
transactions to enhance shareholder returns.
VALUATION SERVICES
RP Financial's extensive valuation practice includes valuations for a variety of
purposes including mergers and acquisitions, thrift mutual-to-stock conversions,
insurance company demutualizations, ESOPs, subsidiary companies, mark-to-market
transactions and various other corporation valuation requirements. Our
principals and staff are highly experienced in performing valuation appraisals
which conform with regulatory guidelines and appraisal industry standards. RP
Financial is the nation's leading valuation firm for mutual-to-stock conversions
of thrift institutions.
OTHER CONSULTING SERVICES AND DATA BASES
RP Financial offers a variety of other services including branching and/or
diversification strategies, feasibility studies and special research studies,
which are complemented by our quantitative and computer skills. RP Financial's
consulting services are aided by its in-house data base resources and
proprietary valuation and financial simulation models.
YEAR 2000 SERVICES
RP Financial, through a relationship with a computer research and development
company with a proprietary methodology, offers Year 2000 advisory and conversion
services to financial services companies which are more cost effective and less
disruptive than most other providers of such service.
RP Financial's Key Personnel (Years of Relevant Experience)
Ronald S. Riggins, Managing Director (19)
William E. Pommerening, Managing Director (15)
Gregory E. Dunn, Senior Vice President (17)
James P. Hennessey, Senior Vice President (14)
James J. Oren, Senior Vice President (12)
