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February 1, 1999
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
13880 Dulles Corner Lane
Herndon, VA 20171-4600
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 July 1, 1998
through December 31, 1998 period.
1. Provide a general description of loss exposure / experience for automobile,
"all-risk" property, and general liability insurance coverage.
Effective July 1, 1998, 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$4,300,000 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, 1998, 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.
In total, CICL has entered into six such reinsurance agreements since
1996 As such, the combined aggregate exposure for all 6 coverages reinsured by
CICL as of December 31, 1998 is US$15,300,000 and 12 loss reserves had been
reported to CIGL 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.
CICL has had 12 losses reported to it and has paid $140,871 in 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.
CICL has paid $140.871 in claims in the period under review. Reported
lead-in loss reserves and end-of-period loss reserves on CICL's programs as at
June 30, 1998 and December 31, 1998, respectively, were $9,037,000 and
$8,600,000.
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, with only one loss paid and 12 losses reported to CICL, 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, 1997/98 and
1998/99 to the actual costs of CICL for the period from its incorporation to
December 31, 1998 reveals that Columbia has realized pre-tax savings of
$3,257,335 by reinsuring certain of the risks to CICL in the period from
incorporation to December 31, 1998, including $622,007 for the six months ended
December 31,1998.
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
Balance Sheet
As of December 31, 1998
($000)
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<S> <C>
ASSETS
Investment and other assets 11,787
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Current Assets
Cash and temporary cash investments 2,536
Accounts receivable, net
Customers --
Intercompany 603
Other 31
Prepayments 77
Other --
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Total Current Assets 3,247
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Deferred Charges 646
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TOTAL ASSETS 15,680
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Columbia Insurance Corporation, LTD
Balance Sheet
As of December 31, 1998
($000)
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<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 126
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Total common stock equity 1,126
Long-term debt --
Total Capitalization 1,126
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Current Liabilities
Accounts and drafts payable 22
Intercompany accounts payable (59)
Accrued taxes --
Other 2,575
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Total Current Liabilities 2,538
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Other Liabilities and Deferred Credits
Income taxes, noncurrent --
Other 12,016
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Total Other Liabilities and Deferred Credits 12,016
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TOTAL CAPITALIZATION AND LIABILITIES 15,680
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Columbia Insurance Corporation, LTD
Income Statement
Year-to-Date, December 31, 1998
($000)
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<S> <C>
Operating Revenues 5,010
Operating Expenses
Products purchased --
Operation 6,053
Other taxes --
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Total Operating Expenses 6,053
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Operating Income (Loss) (1,043)
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Other Income (Deductions)
Interest income and other, net 623
Interest expense and related charges --
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Total Other Income (Deductions) 623
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Income (Loss) Before Income Taxes (420)
Income Taxes (90)
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Net Income (Loss) (330)
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