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July 30, 1998
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, NW
Washington, DC 20549
Interim Report Under Rule 24 of the
Public Utility Holding Company Act of 1935
Columbia Insurance Corporation, Ltd
12355 Sunrise Valley Drive
Suite 300
Reston, VA 20191-3458
File No. 70-8905
Gentlemen:
In compliance with the terms and conditions of Rule 24 under the Public Utility
Holding Company Act of 1935, and the Order of the Commission dated October 25,
1996 authorizing the financing transactions and business activities as more
fully described in the Joint Application/Declaration, as amended (the
"application"), the undersigned hereby submits the following information
applicable to Columbia Insurance Corporation, Ltd ("CICL") for the January 1,
1998 through June 30, 1998 period.
1. Provide a general description of loss exposure / experience for automobile,
"all-risk" property, and general liability insurance coverage.
Effective July 1, 1997, CICL entered into a new reinsurance
arrangement with a United States insurer with respect to General Liability
coverage provided by that insurer to Columbia Energy Group ("Columbia"), its
subsidiaries and associates. CICL s exposure under the General Liability
reinsurance arrangement is limited to US$800,000 per occurrence excess of a
Self Insured Retention of US$200,000 per occurrence and subject to an aggregate
limit of exposure of US$3,000,000 and to a further US$1,000,000 per occurrence
excess of US$800,000 per occurrence excess of a Self Insured Retention of
US$200,000 per occurrence and subject to a separate aggregate limit of exposure
of US$1,000,000.
Effective June 30, 1997, CICL entered into a new reinsurance
agreement with a United States insurer with respect to All Risk coverage
provided by that insurer to Columbia, its subsidiaries and associates. CICL's
exposure under the All Risk reinsurance agreement is limited depending on the
type of loss, to between US$500,000 and US$650,000 per occurrence excess of
applicable deductibles and is also subject to an aggregate limit of exposure of
US$3,000,000.
Only four loss reserves have been reported to CICL by the end of this
reporting period.
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2. Provide an analysis by subsidiary or associate company of auto liability,
general liability, and property losses and expenses incurred during the
six-month period as compared to premiums paid.
As noted above, CICL has had four losses reported to it but has paid
no claims in the period under review.
3. Provide an analysis by subsidiary or associate company of claims paid by
CICL on behalf of such subsidiary or associate company and include the
lead-in reserve available to CICL and end-of-period reserve balance.
As noted above, no claims have been paid in the period under review.
4. Provide a listing that illustrates the increases and decreases to premiums
for each subsidiary or associate company as a result of the operations of
CICL and loss experience of each subsidiary as a result of operations of
CICL.
At this very early stage in the development of each loss program
reinsured, only four losses have been reported to CICL and it has paid no
claims and therefore, premium payments have been unaffected by actual loss
experience.
5. Provide a statement of actual savings achieved by Columbia as a result of
the operations of CICL.
A comparison of the estimated cost of purchasing guaranteed cost
coverage for the layers of insurance reinsured to CICL for 1996/97 and 1997/98
to the actual costs of CICL for the period from its incorporation to June 30,
1998 reveals that Columbia has made pre-tax savings of $2,635,328 by reinsuring
certain of the risks to CICL in the period from incorporation to June 30, 1998.
6. Provide a copy of CICL's income statement and balance sheet, including any
notes thereto.
CICL's income statement and balance sheet including any notes are
attached.
Very truly yours,
COLUMBIA INSURANCE CORPORATION, LTD
By: //s// N. A. Parillo
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N. A. Parillo, President
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Columbia Insurance Corporation, LTD
Income Statement
Quarter Ending, June 30, 1998
($000)
<TABLE>
<S> <C>
Operating Revenues 1,217
Operating Expenses
Products purchased -
Operation 1,304
Other taxes -
----------
Total Operating Expenses 1,304
----------
Operating Income (Loss) (87)
----------
Other Income (Deductions)
Interest income and other, net 197
Interest expense and related charges -
----------
Total Other Income (Deductions) 197
----------
Income (Loss) Before Income Taxes 110
Income Taxes 38
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Net Income 72
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</TABLE>
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Columbia Insurance Corporation, LTD
Balance Sheet
As of June 30, 1998
($000)
<TABLE>
<S> <C>
ASSETS
Investment and other assets 7,701
-------------
Current Assets
Cash and temporary cash investments 1,825
Accounts receivable, net
Customers -
Intercompany 453
Other 27
Prepayments 33
Other -
-------------
Total Current Assets 2,338
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Deferred Charges 664
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TOTAL ASSETS 10,703
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</TABLE>
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Columbia Insurance Corporation, LTD
Balance Sheet
As of June 30 ,1998
($000)
<TABLE>
<S> <C>
CAPITALIZATION AND LIABILITIES
Capitalization
Common Stock Equity
Common stock, $25 par value (4,800 shares
outstanding) 120
Additional paid in capital 880
Retained earnings 431
------------
Total common stock equity 1,431
Long term debt -
Total Capitalization 1,431
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Current Liabilities
Accounts and drafts payable 34
Intercompany accounts payable 201
Accrued taxes -
Other -
------------
Total Current Liabilities 235
------------
Other Liabilities and Deferred Credits
Income taxes, noncurrent -
Other 9,037
============
Total Other Liabilities and Deferred Credits 9,037
------------
TOTAL CAPITALIZATION AND LIABILITIES 10,703
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</TABLE>
