SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of report: December 22, 1997
(Date of earliest event reported)
NORTH EAST INSURANCE COMPANY
(Exact name of registrant as specified in its charter)
Maine 0-11184 01-0278387
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File No.) Identification No.)
482 Payne Road, Scarborough, Maine 04074
(Address of principal executive offices) (Zip code)
Registrant's telephone number: (207) 883-2232
Item 5. Other Events.
North East Insurance Company ("NEIC") on December 22, 1997 announced
significant adjustments to its reinsurance arrangements. These adjustments
have a material favorable effect on previously reported net earnings and
statutory surplus of the company. A copy of NEIC's press release is filed
herewith as an exhibit.
Item 6. Financial Statements and Exhibits.
(c) Exhibits.
99.1 Press release dated December 22, 1997, announcing
change in reinsurance arrangements
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
NORTH EAST INSURANCE COMPANY
Date: December 22, 1997 By: /s/ Robert G. Schatz
President and Chief
Executive Officer
INDEX TO EXHIBITS
Exhibit
Number Description
- ------ -----------
99.1 Press release dated December 22, 1997,
announcing change in reinsurance arrangements
Exhibit 99.1
NORTH EAST INSURANCE COMPANY
P.O. Box 1418
Scarborough, Maine 04070-1418
Tel - 207/883-2232 Fax - 207/883-1564
FOR IMMEDIATE RELEASE
Contact: Robert G. Schatz
President/Chief Executive Officer
SCARBOROUGH, MAINE, December 22, 1997 -- NORTH EAST INSURANCE COMPANY
(NASDAQ Symbol: NEIC) today announced that it had successfully negotiated
significant adjustments to its reinsurance treaties with MIC Re. These
adjustments will have a positive effect on the Company's statutory capital
position and its financial results for 1997.
Robert G. Schatz, President and Chief Executive Officer of North East
stated: "During the third quarter, it became apparent to both us and our
reinsurer that the new reinsurance treaties that we negotiated in early 1997
were not providing expected loss recoveries. The combined effect of the two
treaties was such that North East was being penalized for otherwise
favorable underwriting results. Once this became known, we alerted the
reinsurer and commenced discussions aimed at diagnosing the problem and then
working out an arrangement that more closely reflected the parties' original
expectations. It took until early December to bring this complex process to
a successful conclusion."
The principal benefit to North East comes from an adjustment to the
first layer of excess of loss treaty. Under an endorsement to that treaty,
North East is entitled to premium credits if certain aggregate targets are
met or exceeded.
If applied to the Company's financial results for the third quarter,
these adjustments would increase previously reported net income by $480,000,
or 16 cents per share. Therefore, the Company would have reported a pre-tax
profit of $538,156 or 18 cents per share through nine months, as compared to
the pre-tax loss of $190,901 or 6 cents per share that the Company
previously reported on the basis of information available at the time.
Management also expects that these adjustments will favorably affect the
Company's fourth quarter results.
Said Mr. Schatz, "This experience has demonstrated to us that North
East has a very good relationship with its reinsurer. We are pleased by the
support we received from MCI Re in resolving what could have been a real
issue for us."
