<PAGE> 1
July 31, 2000
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, NW
Washington, DC
USA 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
File No. 70-9371
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,
2000 through June 30, 2000 period.
1. Provide a general description of loss exposure/experience for automobile,
"all-risk" property, and general liability insurance coverage.
CICL was licensed in 1996 to reinsure certain of the "all risks" property,
general and automobile liability risks at Columbia Energy Group ("Columbia"),
its subsidiaries and associates. It continues to write these risks under
reinsurance agreements with qualified primary insurance carriers. At June 30,
1999 the General and Automobile Liability reinsurance agreement was renewed at
existing terms and conditions. At July 1, 1999 a new All Risks Property
reinsurance agreement was negotiated, with retentions remaining the same as in
the prior period. Details of the coverages and limits reinsured, by line of
business and underwriting year, are provided as Exhibit 1.
As further discussed under point 2 below, CICL's loss experience under each of
the reinsurance agreements continues to fall within the "expected" range, based
on the actuarial analysis of its losses. There have been 19 losses reported and
$4,619,387 in paid claims since inception - $1,614,938 for the period under
review.
<PAGE> 2
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.
For the period under review CICL's incurred loss to earned premium ratios were
as follows:
Earned Premium Incurred Loss Ratio
(incl. IBNR)
All Risk Property US $1,200,000 $ 952,072 79%
General/ Auto Liability US $1,520,000 $2,000,000 132%
The above ratios reflect a conservative reserving position, as is appropriate
for a company in its early years of writing business.
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.
Reported beginning-of-period loss reserves and end-of-period loss reserves on
CICL's programs as at December 31, 1999 and June 30, 2000 were $15,334,004 and
$16,542,134, respectively. Detail of incurred and paid losses, by line of
business and underwriting year, is provided in Exhibit 2.
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.
As of the latest renewal, CICL has implemented a premium allocation model based
on exposure and experience of each subsidiary. Exhibit 3 highlights the model
which uses an 80%/20% weighting for experience/exposure to derive premium. The
GL premium paid to CICL was reduced by 4.7% for the 1999/00 period based on
positive experience through the first policy periods. The all-risk premium was
increased by 22% due to an increased loss activity. The model is presented in
Exhibit 4.
5. Provide a statement of actual savings achieved by Columbia as a result of
the operations of CICL.
Exhibit 5 gives the estimated cost of purchasing guaranteed cost (commercial)
coverage for the layers of insurance reinsured to CICL for 1996/97, 1997/98,
1998/99 and 1999/2000, compared to the actual premium paid to CICL, for the
period from its incorporation to June 30, 2000. The comparison is made using
market quotes obtained for commercial coverage. As shown in the exhibit, in the
current period Columbia has realized immediate pre-tax savings of approximately
13% by reinsuring certain of the risks to CICL. Cumulatively, taking into
account investment income earned on reserves, savings could be as high as 14%.
<PAGE> 3
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
----------------------------
N. A. Parillo, President
<PAGE> 4
EXHIBIT 1
COLUMBIA INSURANCE CORPORATION, LTD.
INTERIM REPORT RULE 24 - FILE NO. 70-8905
DESCRIPTION OF CURRENT BUSINESS WRITTEN THROUGH: 6/30/00
<TABLE>
<CAPTION>
ALL RISK PROPERTY LIMITS
FRONT
PERIOD PER OCC/ AGGREGATE DEDUCTIBLE FRONTER
COMPANY
<S> <C> <C> <C>
6/30/96-97 $500,000-$650,000/$3MM $100,000-250,000 Arkwright
6/30/97-98 $5000,000-$650,000,000/$3MM $100,000-250,000 Arkwright
6/30/98-99 $500,000-$650,000/$3MM $100,000-250,000 Hartford Steam Boiler
6/30/99-00 $500,000-$650,000/$3MM $100,000-250,000 Hartford Steam Boiler
GENERAL/AUTO LIABILITY
LAYER PER OCC/AGG LIMIT ATTACHMENT FRONTER
7/1/96-97 Primary US$800,000/3,000,000 $200,000 AEGIS
Excess US$1,000,000/1,000,000 $1,000,000 AEGIS
7/1/97-98 Primary US$800,000/3,800,000* $200,000 AEGIS
Excess US$1,000,000/1,500,000* $1,000,000 AEGIS
7/1/98-99 Primary US$800,000/3,000,000 $200,000 AEGIS
Excess US$1,000,000/1,000,000 $1,000,000 AEGIS
7/1/99-00 Primary US$800,000/3,000,000 $200,000 AEGIS
Excess US$1,000,000/1,000,000 $1,000,000 AEGIS
</TABLE>
* Limits for the 1997/98 reinsurance were changed retroactively. There was no
change in 1998-99 limits.
<PAGE> 5
COLUMBIA INSURANCE CORPORATION LTD.
INTERIM REPORT RULE 24 FILE NO. 70-8905 EXHIBIT 2
INCURRED AND PAID LOSSES FOR THE PERIOD 1/1/00 - 6/30/00
<TABLE>
<CAPTION>
PAID MOVEMENT
LEAD-IN LOSS LOSSES IN OSLR AT IBNR AT TOTAL TOTAL FROM
POLICY YEAR COVERAGE RESERVES PERIOD 6/30/00 6/30/00 RESERVE INCURRED 12/31/99
<S> <C> <C> <C> <C> <C> <C> <C> <C>
7/1/96-97 General Liability 2,056,000 726,613 - 1,329,387 1,329,387 2,056,000 -
7/1/97-98 General Liability 3,989,000 271,136 550,000 3,167,864 3,717,864 3,989,000 -
7/1/98-99 General Liability 3,751,000 - 800,000 3,200,000 4,000,000 4,000,000 249,000
7/1/99-00 General Liability 2,000,000 - 1,450,000 2,550,000 4,000,000 4,000,000 2,000,000
6/30/96-97 All Risk 650,000 - - - - - (650,000)
6/30/97-98 All Risk 462,000 - 1,017,000 - 1,017,000 1,017,000 555,000
6/30/98-99 All Risk 926,004 - 593,000 50,000 643,000 643,000 (283,004)
6/30/99-00 All Risk 1,500,000 617,189 1,784,883 50,000 1,834,883 2,452,072 952,072
-----------------------------------------------------------------------------------------
15,334,004 1,614,938 6,194,883 10,347,251 16,542,134 18,157,072 2,823,068
=========================================================================================
</TABLE>
INCEPTION TO DATE
PAID LOSSES
7/1/96-97 General Liability 726,613
7/1/97-98 General Liability 1,571,136
7/1/98-99 General Liability -
7/1/99-00 General Liability -
6/30/96-97 All Risk -
6/30/97-98 All Risk 401,309
6/30/98-99 All Risk 1,303,140
6/30/99-00 All Risk 617,189
---------------
- 4,619,387
===============
<PAGE> 6
COLUMBIA INSURANCE CORPORATION, LTD. EXHIBIT 3
INTERIM REPORT RULE 24 FILE NO. 70-8905
PREMIUM ALLOCATION MODEL FOR THE PERIOD 1/1/00 -6/30/00
TOTAL CICL PREMIUM ALLOCATION
Line of Business Liability All-Risk Total
-------------------------------------
Premium Account 3,041,000 2,400,000 5,441,000
-------------------------------------
Weighting Weighting
--------------------------
Exposure 80.00% 80.00%
Loss 20.00% 20.00%
<TABLE>
<CAPTION>
LIABILITY ALL-RISK TOTAL
CODE OPERATING COMPANY PREMIUM PREMIUM PREMIUM
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
12 COLUMBIA ENERGY GROUP SERVICE CORP. 23,955 46,235 70,190
14 COLUMBIA GULF TRANSMISSION 161,880 517,772 679,652
15 COLUMBIA ENERGY SERVICES CORPORATION 304,955 26,897 331,852
16 ATLANTIC ENERGY, INC. - 11,730 11,730
16 COLUMBIA PROPANE CORPORATION 310,476 126,383 436,859
17 COLUMBIA ELECTRIC CORPORATION 2,888 213,107 215,995
18 COLUMBIA LNG CORPORATION 4,074 190,607 194,681
20 COLUMBIA NETWORK SERVICES 2,433 172 2,605
32 COLUMBIA GAS OF KENTUCKY, INC. 89,699 5,782 95,481
34 COLUMBIA GAS OF OHIO, INC. 918,205 90,993 1,009,198
35 COLUMBIA GAS OF MARYLAND, INC. 21,253 1,935 23,188
37 COLUMBIA GAS OF PENNSYLVANIA, INC. 502,894 19,976 522,870
38 COLUMBIA GAS OF VIRGINIA, INC. 119,006 13,298 132,304
51 COLUMBIA GAS TRANSMISSION 546,685 1,132,860 1,679,545
53 COLUMBIA NATURAL RESOURCES 27,731 2,253 29,984
11 COLUMBIA ENERGY GROUP 2,433 - 2,433
CTC 2,433 - 2,433
----------------------------------------------------------------------------------------------------------------
3,041,000 2,400,000 5,441,000
================================================================================================================
</TABLE>
<PAGE> 7
COLUMBIA INSURANCE CORPORATION LTD.
INTERIM REPORT RULE 24 FILE NO. 70-8905 EXHIBIT 4
ALL-RISK PREMIUM ALLOCATION FOR THE PERIOD 1/00 -6/30/00
-------------
Allocated Premium Amount: 2,400,000
-------------
Actual Premium Amount: 2,400,000
-------------
Weighting Factors
------------
Exposure 80.00%
------------
Loss 20.00%
<TABLE>
<CAPTION>
-------------
EXPOSURE EXPOSURE LOSS SELECTED
BASE EXPOSURE BASED LOSS BASED W/AVG
CODE OPERATING COMPANY FACTOR % PREMIUM % PREMIUM PREMIUM
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
12 COLUMBIA ENERGY GROUP SERVICE CORP. 90,463 2.56% 61,469 0.00% - 46,235
14 COLUMBIA GULF TRANSMISSION 680,635 19.27% 462,483 37.65% 903,573 517,772
15 COLUMBIA ENERGY SERVICES CORPORATION 52,627 1.49% 35,759 0.00% - 26,897
16 ATLANTIC ENERGY, INC. 22,951 0.65% 15,595 0.00% - 11,730
16 COLUMBIA PROPANE CORPORATION 122,489 3.47% 83,230 0.00% - 126,383
17 COLUMBIA ELECTRIC CORPORATION 200,879 5.69% 136,495 24.47% 587,322 213,107
18 COLUMBIA LNG CORPORATION 372,944 10.56% 253,411 0.00% - 190,607
20 COLUMBIA NETWORK SERVICES 337 0.01% 229 0.00% - 172
32 COLUMBIA GAS OF KENTUCKY, INC. 11,314 0.32% 7,687 0.00% - 5,782
34 COLUMBIA GAS OF OHIO, INC. 178,038 5.04% 120,975 0.00% - 90,993
35 COLUMBIA GAS OF MARYLAND, INC. 3,787 0.11% 2,573 0.00% - 1,935
37 COLUMBIA GAS OF PENNSYLVANIA, INC. 39,085 1.11% 26,557 0.00% - 19,976
38 COLUMBIA GAS OF VIRGINIA, INC. 26,018 0.74% 17,679 0.00% - 13,298
51 COLUMBIA GAS TRANSMISSION 1,726,096 48.87% 1,172,861 37.88% 909,105 1,132,860
53 COLUMBIA NATURAL RESOURCES 4,409 0.12% 2,996 0.00% - 2,253
------------------------------------------------------------------------------------------------------
Total Exposure Base 3,532,072 100.00% 2,400,000 100.00% 2,400,000 2,400,000
======================================================================================================
</TABLE>
<PAGE> 8
COLUMBIA INSURANCE CORPORATION, LTD.
INTERIM REPORT RULE 24 EXHIBIT 5
ESTIMATED SAVINGS - CAPTIVE COMPARED TO COMMERCIAL INSURANCE
<TABLE>
<CAPTION>
CICL OPTION
POLICY PERIOD 1996-97 1997-98 1998-99 1999-00 CUM PREMIUM
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
GL/AL $ 3,250,672 $ 3,949,662 $ 3,190,770 $ 3,041,000
All-Risk $ 1,397,203 $ 1,618,057 $ 1,960,760 $ 2,400,000
-----------------------------------------------------------------------
Total $ 4,647,875 $ 5,567,719 $ 5,151,530 $ 5,441,000 $ 20,808,124
Investment Income (1,500,000)
Pre-tax saving $ 602,125 $ 179,511 $ 79,149 $ 784,100
Total Cost 19,308,124
</TABLE>
<TABLE>
<CAPTION>
GUARANTEED COST OPTION
POLICY PERIOD 1996-97 1997-98 1998-99 1999-00
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
GL/AL $ 2,750,000 $ 3,159,730 $ 2,552,616 $ 3,345,100
All-risk $ 2,500,000 $ 2,587,500 $ 2,678,063 $ 2,880,000
-----------------------------------------------------------------------
Total $ 5,250,000 $ 5,747,230 $ 5,230,679 $ 6,225,100 $ 22,453,009
ANNUAL SAVINGS 11% 3% 2% 13%
CUMULATIVE SAVINGS 14%
(INCL. INVESTMENT INCOME)
</TABLE>
<PAGE> 9
Columbia Insurance Corporation, LTD
Income Statement
Year-to-Date, June 30, 2000
($000)
<TABLE>
<S> <C>
Operating Revenues 2,721
------
Operating Expenses
Operation & maintenance 3,067
Other taxes --
------
Total Operating Expenses 3,067
------
Operating Income (Loss) (346)
------
Other Income (Deductions)
Interest income and other, net 506
Interest expense and related charges --
------
Total Other Income (Deductions) 506
------
Income (Loss) Before Income Taxes 160
Income Taxes 56
------
Net Income (Loss) 104
======
</TABLE>
<PAGE> 10
Columbia Insurance Corporation, LTD
Balance Sheet
As of June 30, 2000
($000)
<TABLE>
<S> <C>
ASSETS
Investment and other assets 11,464
-------
Current Assets
Cash and temporary cash investments 4,797
Accounts receivable, net
Customers --
Intercompany 291
Other 202
Prepayments 41
Other --
-------
Total Current Assets 5,331
-------
Deferred Charges 1,081
-------
TOTAL ASSETS 17,876
=======
CAPITALIZATION AND LIABILITIES
Capitalization
Common Stock Equity
Common stock, $25 par value (4,800 shares outstanding) 120
Additional paid-in capital 880
Retained earnings 248
-------
Total Capitalization 1,248
-------
Current Liabilities
Accounts and drafts payable 20
Intercompany accounts payable 264
Accrued taxes (198)
Other --
-------
Total Current Liabilities 86
-------
Other Liabilities and Deferred Credits 16,542
-------
TOTAL CAPITALIZATION AND LIABILITIES 17,876
=======
</TABLE>
