<PAGE> 1
February 2, 2000
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
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 July 1, 1999
through December 31, 1999 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 of 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 15 losses
reported and $3,004,450 in paid claims since inception - $650,000 for the period
under review.
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.
<PAGE> 2
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 $1,500,000 125%
General/auto Liability US $1,520,500 $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 June 30, 1999 and December 31, 1999, were
$13,160,693 and $15,334,004, respectively. Detail of incurred and paid losses,
by line of business and underwriting year, is provided as 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 and 1998/99, compared to the actual premium paid to CICL, for the period
from Its incorporation to December 31, 1999. 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
COLUMBIA INSURANCE COMPANY LTD.
EXHIBIT 1
INTERIM REPORT RULE 24 - FILE NO. 70-8905
<TABLE>
<CAPTION>
DESCRIPTION OF CURRENT BUSINESS WRITTEN THROUGH: 12/31/99
ALL RISK PROPERTY LIMITS
FRONT
PERIOD PER OCC/AGGREGATE DEDUCTIBLE
COMPANY
<S> <C> <C>
6/30/96 - 97 $500,000-$650,000/$3MM $100,000-250,000
Arkwright
6/30/97 - 98 $500,000-$650,000/$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
</TABLE>
<TABLE>
<CAPTION>
GENERAL/AUTO LIABILITY LAYER PER OCC/AGG. LIMIT ATTACHMENT FRONT
<S> <C> <C> <C>
7/1 96 - 97 Primary U.S.$800,000/3,000,000 $200,000
AEGIS
Excess U.S.$1,000,000/1,000,000 $1,000,000
AEGIS
7/1/97 - 98 Primary U.S.$800,000/3,800,000* $200,000
AEGIS
Excess U.S.$1,000,000/1,500,000* $1,000,000
AEGIS
7/1/98 - 99 Primary U.S.$800,000/3,000,000 $200,000
AEGIS
Excess U.S.$1,000,000/1,000,000 $1,000,000
AEGIS
6/1/99 - 00 Primary U.S.$800,000/3,000,000 $200,000
AEGIS
Excess U.S.$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. EXHIBIT 2
INTERIM REPORT RULE 24 File No. 70-8905
INCURRED AND PAID LOSSES FOR THE PERIOD: 7/1/99 - 12/31/99
<TABLE>
<CAPTION>
POLICY LOSS RESERVE ENDING ENDING TOTAL RESERVE TOTAL MOVEMENT
YEAR COVERAGE @7/1/99 PAID LOSSES OSLR IBNR @12/31/99 INCURRED FOR PERIOD
<S> <C> <C> <C> <C> <C> <C> <C> <C>
7/1/96-97 General Liability 3,250,000 - 750,000 1,306,000 2,056,000 2,056,000 -1,194,000
7/1/97-98 General Liability 3,500,000 - 714,070 3,274,930 3,989,000 3,989,000 489,000
7/1/98-99 General Liability 4,000,000 - 500,000 3,251,000 3,751,000 3,751,000 -249,000
7/1/99-00 General Liability - - 800,000 1,200,000 2,000,000 2,000,000 2,000,000
6/30/96-97 All Risk 650,000 - 650,000 - 650,000 650,000 -
6/30/97-98 All Risk 453,073 - 412,000 50,000 462,000 462,000 8,927
6/30/98-99 All Risk 1,307,620 650,000 876,004 50,000 926,004 1,576,004 268,384
6/30/99-00 All Risk - - 1,300,000 200,000 1,500,000 1,500,000 1,500,000
13,160,693 650,000 6,002,074 9,331,930 15,334,004 15,984,004 2,823,311
INCEPTION TO DATE
Paid losses
7/1/96-97 General Liability -
7/1/97-98 General Liability 1,300,000
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 -
- 3,004,449
</TABLE>
<PAGE> 6
COLUMBIA INSURANCE CORPORATION LTD. EXHIBIT 3
INTERIM REPORT RULE 24 FILE NO. 70-8905
PREMIUM ALLOCATION MODEL FOR THE PERIOD 7/1/99 - 12/31/99
Total CICL Premium Allocation
Line of Business Liability All-Risk Total
-----------------------------------------
Premium Amount: 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 49,175 73,130
14 COLUMBIA GULF TRANSMISSION 161,880 550,701 712,582
15 COLUMBIA ENERGY SERVICES CORPORATION 304,955 28,607 333,562
16 ATLANTIC ENERGY, INC. 0 12,476 12,476
16 COLUMBIA PROPANE CORPORATION 310,476 66,584 377,060
17 COLUMBIA ELECTRIC CORPORATION 2,888 226,660 229,548
18 COLUMBIA LNG CORPORATION 4,074 202,729 206,803
20 COLUMBIA NETWORK SERVICES 2,433 183 2,616
32 COLUMBIA GAS OF KENTUCKY, INC. 89,699 6,150 95,849
34 COLUMBIA GAS OF OHIO, INC. 918,205 96,780 1,014,985
35 COLUMBIA GAS OF MARYLAND, INC. 21,253 2,058 23,311
37 COLUMBIA GAS OF PENNSYLVANIA, INC. 502,894 21,246 524,140
38 COLUMBIA GAS OF VIRGINIA, INC. 119,005 14,143 133,149
51 COLUMBIA GAS TRANSMISSION 546,684 1,120,110 1,666,795
53 COLUMBIA NATURAL RESOURCES 27,731 2,397 30,128
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. EXHIBIT 4
INTERIM REPORT RULE 24 FILE NO. 70-8905
ALL-RISK PREMIUM ALLOCATION FOR THE PERIOD 7/1/99 - 12/31/99
------------------------
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> <C> <C>
12 COLUMBIA ENERGY GROUP SERVICE CORP. (4) 90,463 2.56% 61,469 0.00% 0 49,175
14 COLUMBIA GULF TRANSMISSION 680,635 19.27% 462,483 37.65% 903,573 550,701
15 COLUMBIA ENERGY SERVICES CORPORATION (5) 52,627 1.49% 35,759 0.00% 0 28,607
16 ATLANTIC ENERGY, INC. 22,951 0.65% 15,595 0.00% 0 12,476
16 COLUMBIA PROPANE CORPORATION (2) 122,489 3.47% 83,230 0.00% 0 66,584
17 COLUMBIA ELECTRIC CORPORATION 200,879 5.69% 136,495 24.47% 587,322 226,660
18 COLUMBIA LNG CORPORATION 372,944 10.56% 253,411 0.00% 0 202,729
20 COLUMBIA NETWORK SERVICES (5) 337 0.01% 229 0.00% 0 183
32 COLUMBIA GAS OF KENTUCKY, INC. 11,314 0.32% 7,687 0.00% 0 6,150
34 COLUMBIA GAS OF OHIO, INC. 178,038 5.04% 120,975 0.00% 0 96,780
35 COLUMBIA GAS OF MARYLAND, INC. 3,787 0.11% 2,573 0.00% 0 2,058
37 COLUMBIA GAS OF PENNSYLVANIA, INC. (3) 39,085 1.11% 26,557 0.00% 0 21,246
38 COLUMBIA GAS OF VIRGINIA, INC. 26,018 0.74% 17,679 0.00% 0 14,143
51 COLUMBIA GAS TRANSMISSION 1,726,096 48.87% 1,172,861 37.88% 909,105 1,120,110
53 COLUMBIA NATURAL RESOURCES (1) 4,409 0.12% 2,996 0.00% 0 2,397
- -----------------------------------------------------------------------------------------------------------------------------------
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. EXHIBIT 5
INTERIM REPORT RULE 24
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
GUARANTEED COST OPTION
Policy Period 1996-97 1997-98 1998-99 1999-00
- ---------------------------------------------------------------------------------------------------------------------
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 $22,453,008
ANNUAL SAVINGS 11% 3% 2% 13%
CUMULATIVE SAVINGS 14%
(INCL. INVESTMENT INCOME)
</TABLE>
<PAGE> 9
Columbia Insurance Corporation, LTD
Balance Sheet
As of December 31, 1999
($000)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investment and other assets 14,420
------
Current Assets
Cash and temporary cash investments 2,703
Accounts receivable, net
Customers --
Intercompany 485
Other 808
Prepayments 1
Other --
------
Total Current Assets 3,997
------
Deferred Charges 1,179
------
TOTAL ASSETS 19,596
======
</TABLE>
<PAGE> 10
Columbia Insurance Corporation, LTD
Balance Sheet
As of December 31, 1999
($000)
<TABLE>
<CAPTION>
<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 144
------
Total common stock equity 1,144
Long-term debt --
------
Total Capitalization 1,144
------
Current Liabilities
Accounts and drafts payable 127
Intercompany accounts payable 227
Accrued taxes 43
Other 2,721
------
Total Current Liabilities 3,118
------
Other Liabilities and Deferred Credits
Income taxes, noncurrent --
Other 15,334
------
Total Other Liabilities and Deferred Credits 15,334
------
TOTAL CAPITALIZATION AND LIABILITIES 19,596
======
</TABLE>
<PAGE> 11
Columbia Insurance Corporation, LTD
Income Statement
Year-to-Date, December 31, 1999
($000)
<TABLE>
<CAPTION>
<S> <C>
Operating Revenues 5,996
Operating Expenses
Products purchased --
Operation & maintenance 6,727
Other taxes --
------
Total Operating Expenses 6,727
------
Operating Income (Loss) (731)
------
Other Income (Deductions)
Interest income and other, net 758
Interest expense and related charges --
------
Total Other Income (Deductions) 758
------
Income (Loss) Before Income Taxes 27
Income Taxes 9
------
Net Income (Loss) 18
======
</TABLE>
