<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1996 Commission File Number 0-10071
NOBEL INSURANCE LIMITED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ISLANDS OF BERMUDA 98-0076395
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
FALCONER HOUSE NONE
GROUND LEVEL (Zip Code)
108 PITTS BAY ROAD HMDX
HAMILTON, BERMUDA
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (809)292-7104.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to the filing
requirements for the past 90 days.
YES /X/ NO / /
Number of Common Shares, $1.00 Par Value, outstanding at August 13, 1996
4,466,406
<PAGE>
NOBEL INSURANCE LIMITED
CONSOLIDATED BALANCE SHEETS
(EXPRESSED IN UNITED STATES DOLLARS)
JUNE 30, DECEMBER 31,
1996 1995
- ----------------------------------------------------------------------------
(IN THOUSANDS)
ASSETS
Investments:
Trading portfolio, at fair value:
Fixed maturity securities (amortized
cost: $0 June 30, 1996 and $105 at
December 31, 1995) $ --- $ 188
Equity securities (cost: $2,194 at
June 30, 1996 and $4,881 at
December 31, 1995) 3,564 6,847
Other investments (cost: $731 at
June 30, 1996 and $763 at December
31, 1995) 822 925
Fixed maturity securities available for sale,
at fair value (amortized cost: $101,871 at
June 30, 1996 and $102,588 at December 31,1995) 100,762 105,601
Short-term investments, at cost, which
approximates fair value 12,320 13,798
-------- --------
Total investments 117,468 127,359
Cash 974 1,507
Funds held by reinsurance companies 3,226 3,341
Premiums and other receivables less allowance
for doubtful accounts ($389 at June 30, 1996
and $398 at December 31, 1995) 30,367 23,897
Accrued interest income 1,421 1,418
Reinsurance recoverable on paid and unpaid claims 23,584 22,588
Prepaid reinsurance premiums 11,764 12,826
Property and equipment less accumulated
depreciation ($1,775 at June 30, 1996 and
$1,840 at December 31, 1995) 4,046 3,642
Deferred policy acquisition costs 4,828 3,129
Net deferred tax asset 3,036 2,112
Other assets 1,930 1,569
-------- --------
Total assets $202,644 $203,388
-------- --------
-------- --------
(See Accompanying Notes to Consolidated Financial Statements)
1
<PAGE>
NOBEL INSURANCE LIMITED
CONSOLIDATED BALANCE SHEETS
(EXPRESSED IN UNITED STATES DOLLARS)
(CONTINUED)
JUNE 30, DECEMBER 31,
1996 1995
- -----------------------------------------------------------------------------
(IN THOUSANDS, EXCEPT SHARE DATA)
LIABILITIES
Reserve for claims and claims expenses $ 86,018 $ 81,675
Unearned premiums 40,932 38,106
Accounts payable and accrued liabilities 9,908 9,907
Reinsurance premiums payable 9,893 7,138
Other liabilities 3,699 1,654
-------- --------
Total liabilities 150,450 138,480
-------- --------
SHAREHOLDERS' EQUITY
Capital shares (Authorized 20,000,000
shares; $1 par value; issued 7,732,958
shares at June 30, 1996; 7,626,725 shares
at December 1995; outstanding 4,571,756
shares at June 30, 1996 and 5,542,363
shares at December 31, 1995) 7,733 7,627
Contributed surplus 44,466 44,081
Unrealized gain on investments (1,175) 2,093
Retained earnings 29,522 26,612
Treasury stock, at cost (3,161,202 shares
at June 30, 1996 and 2,084,362 shares
at December 31, 1995) (28,352) (15,505)
-------- --------
Total shareholders' equity 52,194 64,908
-------- --------
Commitments and Contingencies
Total liabilities and shareholders' equity $202,644 $203,388
-------- --------
-------- --------
(See Accompanying Notes to Consolidated Financial Statements)
2
<PAGE>
NOBEL INSURANCE LIMITED
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(EXPRESSED IN UNITED STATES DOLLARS)
<TABLE>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
(IN THOUSANDS, EXCEPT PER SHARE DATA) 1996 1995 1996 1995
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES:
Premiums written $ 23,931 $ 18,826 $ 42,632 $ 30,032
Reinsurance purchased (6,921) (6,085) (11,235) (9,714)
-------- -------- -------- --------
Net premiums written 17,010 12,741 31,397 20,318
-------- -------- -------- --------
-------- -------- -------- --------
Premiums earned 20,752 14,749 39,807 29,850
Premiums ceded (6,558) (4,951) (12,297) (9,769)
-------- -------- -------- --------
Net premiums earned 14,194 9,798 27,510 20,081
Interest income, net of investment
expenses of $472 at June 30,
1996 and $256 at June 30, 1995,
respectively 1,514 1,936 3,192 3,771
Net investment gains 188 694 400 694
Claim adjusting fees earned 2,189 2,999 5,746 4,993
-------- -------- -------- --------
Total revenues 18,085 15,427 36,848 29,539
-------- -------- -------- --------
EXPENSES:
Claims and claims expenses 7,763 8,912 22,927 20,492
Reinsurance recoveries 1,445 (2,523) (4,219) (6,986)
-------- -------- -------- --------
Net claim and claim expenses 9,208 6,389 18,708 13,506
Service fees and commissions 2,043 1,703 5,985 3,527
General and administrative expenses 4,684 4,444 8,477 8,467
-------- -------- -------- --------
Total expenses 15,935 12,536 33,170 25,500
-------- -------- -------- --------
Net income before income taxes 2,150 2,891 3,678 4,039
Income tax expense (benefit):
Current 206 --- 381 ---
Deferred (17) --- (70) ---
-------- -------- -------- --------
Income tax expense 189 --- 311 ---
-------- -------- -------- --------
Net income 1,961 2,891 3,367 4,039
Retained earnings at beginning of
period 28,018 22,388 26,612 21,536
Dividends paid on capital shares (457) (293) (457) (589)
-------- -------- -------- --------
Retained earnings at end of period $ 29,522 $24,986 $ 29,522 $ 24,986
-------- -------- -------- --------
-------- -------- -------- --------
EARNINGS PER CAPITAL SHARE:
Net income per capital share $ .42 $ .48 $ .71 $ .67
-------- -------- -------- --------
-------- -------- -------- --------
Average number of capital shares 4,696 5,960 4,734 6,000
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
(See Accompanying Notes to Consolidated Financial Statements)
3
<PAGE>
NOBEL INSURANCE LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(EXPRESSED IN UNITED STATES DOLLARS)
SIX MONTHS ENDED
JUNE 30,
1996 1995
- --------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES: (IN THOUSANDS)
Net income $ 3,367 $ 4,039
Adjustments to reconcile net income to
net cash from operations activity:
Depreciation and amortization 392 639
Change in deferred acquisition costs (1,699) (294)
Deferred tax benefit (70) ---
Increase in reserve for claims and claims expenses 4,343 8,646
Decrease in unearned premiums 2,826 182
Increase (decrease) in accounts payable and
accrued liabilities 1 (616)
(Decrease) in deferred service fee income (148) (156)
(Increase) decrease in premiums receivable (3,715) 3,095
(Increase) in accrued interest income (3) (218)
(Increase) in reinsurance recoverables (996) (5,985)
Decrease in prepaid reinsurance premiums 1,062 55
Decrease in other assets 87 87
Decrease in funds held by reinsurance companies 115 105
Net (additions to) dispositions from trading
portfolio investments 3,760 2,873
Net realized investment gains (400) (694)
Losses on disposal of other assets 14 6
------- -------
Net cash provided from operating activities 8,936 11,764
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from Investments sold or matured:
Fixed maturities, available for sale 20,986 20,715
Purchase of investments:
Fixed maturities, available for sale (20,115) (24,815)
Payments on acquisitions --- (1,206)
Purchase of software, property and equipment (1,327) (2,749)
------- -------
Net cash (used by) investing activities (456) (8,055)
------- -------
(See Accompanying Notes to Consolidated Financial Statements)
4
<PAGE>
NOBEL INSURANCE LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(EXPRESSED IN UNITED STATES DOLLARS)
(CONTINUED)
SIX MONTHS ENDED
JUNE 30,
1996 1995
---------------------------------------------------------------------
(IN THOUSANDS)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable 2,500 1,275
Proceeds from issuance of capital shares 491 156
Repayment of notes payable and capital
lease obligation (178) (229)
Purchase of treasury stock (12,847) (2,146)
Dividends paid shareholders (457) (589)
-------- -------
Net cash (used by) financing activities (10,491) (1,533)
-------- -------
Net increase (decrease) in cash and cash
equivalents (2,011) 2,176
Cash and cash equivalents at beginning
of year 15,305 12,476
-------- -------
Cash and cash equivalents at end of year $ 13,294 $14,652
-------- -------
-------- -------
(See Accompanying Notes to Consolidated Financial Statements)
5
<PAGE>
NOBEL INSURANCE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Balance Sheets at June 30, 1996, and Consolidated
Statements of Income and Retained Earnings for the Six months ended June 30,
1996 and Consolidated Statements of Cash Flows for the Six months ended June 30,
1996, have not been examined by independent accountants, but, in the opinion of
Nobel Insurance Limited ("Company"), all adjustments (consisting only of normal
accruals) necessary for a fair presentation of the financial position and
results of operations for the periods indicated have been included.
Statement of Financial Accounting Standards ("FAS") 115 "Disclosures About
Fair Value of Financial Instruments" was adopted in 1994 and impacted the
Company's financial statements as follows:
1) Net unrealized gains (losses) of $(750,000) and $88,000 from trading
portfolio investments were included in 1996 six month and second quarter
earnings, respectively, compared to $473,000 and $391,000 in the six
months and second quarter of 1995.
2) Net unrealized losses of $1,175,000 and net unrealized gains of
$2,093,000 from portfolio investments classified as available for sale
were included in shareholders' equity at June 30, 1996 and December 31, 1995
respectively.
The Company is a foreign corporation not, in management's opinion, engaged
in a trade or business in any jurisdiction requiring the payment of taxes on
income except for its United States subsidiaries (the "U.S. Group") who may
ultimately pay United States taxes on their income.
The U.S. Group is domiciled in the United States and is subject to United
States taxes on income. At December 31, 1995, the U.S. Group had
consolidated net operating losses of approximately $3,000,000 which may be
carried forward for U.S. Federal income tax purposes. It is anticipated that
these net operating losses will be fully utilized during 1996.
FAS 109, "Accounting for Income Taxes", was adopted by the Company in
1993 on a prospective basis. The effect of income taxes on operations is
presented below:
<TABLE>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1996 1995 1996 1995
- -------------------------------------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS) (DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Net income before income taxes - consolidated $2,150 $2,891 $3,678 $4,039
Foreign - not subject to tax 96 511 103 578
------ ------ ------ ------
U.S. - subject to tax $2,054 $2,380 $3,575 $3,461
Computed "expected" tax expense @ 34% $ 699 $ 833 $1,216 $1,211
Reduction for tax-exempt interest (110) --- (174) ---
Non-allowed meals and entertainment 8 --- 17 ---
Amortization of goodwill --- 38 --- 85
Change in deferred tax valuation allowance (340) (857) (453) (1,289)
Other items, net (68) (14) (295) (7)
------ ------ ------ ------
Income tax expense $ 189 $ --- $ 311 $ ---
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
6
<PAGE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at June 30,
1996 and December 31, 1995 are presented below:
JUNE 30, DECEMBER 31,
1996 1995
- --------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
Deferred tax assets:
Accounts receivable, principally due to
allowance for doubtful accounts $ 80 $ 83
Claims reserves, principally due to discounting
for tax 2,634 2,243
Unearned premium adjustment 1,983 1,719
Net operating loss carryforwards --- 717
Other 416 378
------- -------
Total gross deferred tax assets 5,113 5,140
Less valuation allowance --- (907)
------- -------
Net deferred tax assets 5,113 4,233
------- -------
Deferred tax liabilities:
Deferred policy acquisition costs (1,642) (1,064)
Unrealized gains bonds available for sale --- (920)
Other (435) (137)
------- -------
Total gross deferred tax liabilities (2,077) (2,121)
------- -------
Net deferred tax balance $ 3,036 $ 2,112
------- -------
------- -------
The valuation allowance for deferred tax assets as of December 31, 1995
was $907,000. The net change in the total valuation allowance for the period
ended June 30, 1996 was a decrease of $907,000 based on a quarterly
calculation of taxes on an annualized basis. The Company has offset the
deferred tax asset with a valuation allowance that it feels establishes the
realizability of the deferred tax asset at this date. Future changes in
estimate of this valuation allowance will be reflected in operations in the
period in which they are determined.
Earnings per share was determined by dividing net income by average
primary shares outstanding which, includes common and common equivalent
shares outstanding attributable to outstanding stock options as follows:
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1996 1995 1996 1995
- --------------------------------------------------------------------------------
(IN THOUSANDS) (IN THOUSANDS)
Average common shares outstanding 4,565 5,810 4,632 5,866
Shares applicable to common
stock equivalents 131 150 102 134
----- ----- ----- -----
Average primary shares outstanding 4,696 5,960 4,734 6,000
----- ----- ----- -----
----- ----- ----- -----
Insurance companies are required to provide reserves for the settlement and
expense of investigation of all reported and unreported claims. Such provisions
are necessarily based on estimates. The estimates, and the methods used to
arrive at them, are periodically reviewed by the Company in consultation with
7
<PAGE>
professional actuaries and changes are reflected in current operations for
the period in which they are determined.
The Company estimates claims and claims expenses based on historical
experience and payment and reporting patterns for the type of risk involved.
The anticipated effect of inflation is implicitly considered when estimating
claims and claims expenses. The difference between the U.S. insurance
subsidiary's reserves on a statutory basis and on the basis of generally
accepted accounting principles is not material.
Inherent in the estimates of ultimate claims are expected trends in
claim severity, frequency and other factors that may vary as claims are
settled. The amount of uncertainty in the estimates is affected by such
factors as the amount of historical claims experience relative to the
development period for the type of risk, knowledge of the actual facts and
circumstances, and the amount of insurance risk retained.
Since 1989, the Company implemented strategies to reduce the amount of
underwriting risk and refine the claims data available for actuarial analysis
for its casualty coverages, and has strived to maintain a conservative
reserving philosophy to avoid recurrence of the adverse reserve development
experienced prior to 1989. Prior to the third quarter 1995, the Company
experienced favorable reserve development since 1989.
At December 31, 1995, the Company recorded reserves for incurred but not
reported and development of known claims ("IBNR") which represented the
Company's best estimate of the reserve for claims and claims expense. The
Company believes the reserves established at June 30, 1996 continue to
reflect a conservative reserving philosophy.
The outstanding balances for casualty and other coverages reserves for
incurred but not reported and development of known claims, net of reinsurance
recoverable, were (in thousands):
RESERVE BALANCE INCOME EFFECT
PERIOD ENDING GROSS NET GROSS NET
-----------------------------------------------------------------
At June 30, 1996 $39,973 24,579
Six months ended June 30, 1996 $3,946 $2,047
At December 31, 1995 $36,027 $22,532
At June 30, 1995 $33,202 $21,883
Six months ended June 30, 1995 $3,700 $849
An allowance for doubtful receivables is established when it becomes
evident collection is doubtful. An allowance of $389,000 and $398,000 was
established as of June 30, 1996 and December 31, 1995, respectively.
Net income and shareholder's equity of the U.S. insurance subsidiary, as
filed with regulatory authorities on the basis of statutory accounting
practices, were as follows (in thousands):
STATUTORY STATUTORY
SHAREHOLDERS' NET
PERIOD EQUITY INCOME (LOSS)
-------------------------------------------------------
At June 30, 1996 $33,319
Six months ended June 30, 1996 $1,559
At December 31, 1995 $33,615
At June 30, 1995 $34,190
Six months ended June 30, 1995 $3,230
8
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The principal cash requirements of the Company consist of claims
payments, operating expenses, and the acquisition of the companies treasury
stock in the open market.
The Nobel U.S. Group's non-insurance operations incur substantially all
of the administrative expenses. The principal sources of cash to pay the
expenses for the non-insurance operations are claim adjusting fees, and
administrative service fees from the Domestic Company and the Parent Company.
The source of liquidity for claims payments consists of net premiums,
after deduction for expenses, plus investment income received on the balances
of such premiums prior to their use to pay claims. These invested balances
are also used for collateral to secure certain ceding insurers' reinsurance
reserves. United States insurance regulations require the ceding insurers to
maintain approved collateral for reinsurance balances, including reserves for
unearned premiums and unpaid claims and claims expenses ceded to non-admitted
reinsurers.
The collateral requirements for reinsurance ceded to the Parent Company
by INA is being satisfied by a combination of letters of credit and trust
balances. The settlement of all claims and claims expenses is being withdrawn
from the trust account. The combined amount of letters of credit and market
value of trust assets at June 30, 1996 is $20,996,000.
The terms of the Parent Company's letter of credit facility requires
collateral equal to the amount of letters of credit issued plus a negotiated
market value margin for investments other than short-term investments. At
June 30, 1996, the collateral consisted of short-term bank deposits and
AAA-rated fixed income securities which require a 5% margin. At June 30,
1996, the Company had cash and investments of $118,442,000 of which
$26,475,000 was collateralized or pledged to secure the U.S. insurers that
have ceded reinsurance to the Company, and to maintain security deposits in
the U.S. with various state insurance departments.
Effective January 1, 1994, the Company adopted Financial Accounting
Standard 115. The Company carries its investments designated as trading
portfolio investments at market value. Year to date as of June 30, 1996, the
Company sold $2,951,000 of trading portfolio investments with $936,436 gain
realized. The Company classified its fixed income security investments,
principally bonds, as available for sale, and accordingly, carries these
investments at market value. The Company's investment guidelines prescribe a
portfolio structure of maturities to provide adequate liquidity to settle
claims liabilities. The portfolio continues to be conservatively invested in
high quality securities.
Net cash provided from operating activities for the first six months of
1996 was $8,936,000 compared to $11,764,000 for the first six months of 1995.
Net cash used by investing activities was $456,000 for the first six months
of 1996, as opposed to $8,055,000 for the same period of 1995. Cash used by
financing activities included the purchase of 1,076,840 shares of treasury
stock at an average cost of $11.93, less
9
<PAGE>
proceeds from notes payable of $2,500,000 to produce net financing cash used
of $10,491,000, compared to cash used of $1,533,000 for the first six months
of 1995, when the Company purchased 2,145,000 of Treasury stock.
The insurance operations require capital to support premium writings.
The Company believes that its insurance subsidiary may need additional
capital to support planned business activities. Management has finalized
outside financing to meet the additional business expansion opportunities
planned in 1996.
RESULTS OF OPERATIONS
SIX MONTHS 1996 VERSUS SIX MONTHS 1995
The composition of the net income for 1996 as compared to the net income
for 1995 by type of operation is as follows:
1996 1995
------------------------------------------------------
(DOLLARS IN THOUSANDS)
Underwriting operations $ 710 $ 432
Claim adjusting operations 209 145
Corporate operations (833) (1,003)
Investment and other income 3,592 4,465
Federal income tax (311) ---
------ -------
Net after tax $3,367 $ 4,039
------ -------
------ -------
There is seasonality in the Company's operating results, with the first
quarter generally weakest and the third quarter strongest. Investment and
other income for the six months of 1996 and 1995 was impacted by reduced
yield rates and the acquisition of treasury stock.
UNDERWRITING OPERATIONS. The first six months of 1996, premiums written
increased $12,600,000, or 42%, over the same period for 1995. Reinsurance
purchased increased $1,521,000, or 16%. Earned premiums for commercial
casualty programs gained 23% while market conditions remained competitive;
earned premiums for specialty lines' programs gained 62% due to surety bond
new business growth; and personal lines low-value dwelling program earned
premiums gained 166% due to increased retentions and geographic expansion.
The comparability of reinsurance purchased is affected by changes in two
major reinsurance programs in 1996 and 1995. Effective January 1,1996, the
low-value dwelling reinsurance program was restructured to provide 50% quota
share reinsurance, down from 75% in 1994. The financial effect was decreased
premiums ceded accompanied by decreased claims recoveries and ceding
commissions and increased net written and net earned premiums. Effective
July 1, 1994, the commercial casualty reinsurance program was restructured to
achieve lower reinsurance costs while maintaining a $500,000 retention. The
financial effect was decreased premiums ceded accompanied by decreased claims
recoveries and increased ceding commissions. Both reinsurance program
changes applied to the unearned premiums on the effective date.
10
<PAGE>
The claims ratio to net earned premiums was 68% for the first six months
of 1996 compared to 67.3% in the same period of 1995. The increase resulted
primarily from increased reserves to recognize prior years required
strengthening, this segment continues to experience intense competition and
continued soft market conditions. Approximately $1,210,000 increased claims
reserves were recorded in the first half of 1996 to report the current
actuarial indications of the ultimate cost of future claims settlements,
primarily for the specialized hauler's program. All of the increase was
provision for claims occurring in prior accident years. After the
adjustment, the consolidated 1996 accident year loss ratio was 63%.
Expenses, which consist of net service fees and commissions and general
and administrative expenses, excluding the claim adjusting and corporate
operations, were 19% and 17% of net written premiums for the first six months
of 1996 and 1995, respectively. The following table shows the components of
net service fees and commissions:
1996 1995
---------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
Commissions, fronting, and taxes expense $ 8,771 $ 4,910
Ceding commission income (4,168) (3,537)
Service fee income --- (153)
Change in deferred acquisition costs (1,700) (294)
------- -------
2,903 926
Claim adjusting commission paid 3,082 2,601
------- -------
$ 5,985 $ 3,527
------- -------
------- -------
Commissions, fronting, and taxes expense was 27% of premiums written in
1996 compared to 24% in 1995. Ceding commission income was 13% of
reinsurance purchased for the first six months of 1996 compared to 17% for
the same period of 1995.
General and administrative expenses charged to operations increased by
$10,000 or 1% and were 27% of premiums written for the first six months of
1996 compared to 42% in the same period of 1995. The decrease general
expense is related to a refund from prior year.
CLAIM ADJUSTING OPERATIONS. Increased claim adjusting fees of $753,000 and
claim adjusting commissions of $481 resulted primarily from increased
catastrophe business activity.
INVESTMENT INCOME. Net interest income decreased by 579,000 or 15%, due to
lower yields on reduced investment balances due to the acquisition of
treasury stock during the first six months of 1996. Net realized investment
gains decreased by $294,000 during the first six months of 1996 versus 1995.
The effect of inflation on net income was not significant to the Company's
results during this period.
11
<PAGE>
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Not applicable.
Item 2. CHANGES IN SECURITIES
Not applicable.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
12
<PAGE>
SIGNATURES
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 thereunto
NOBEL INSURANCE LIMITED
/s/ Jeffry K. Amsbaugh /s/ Thomas D. Nimmo
- ---------------------------------- -----------------------------------
Jeffry K. Amsbaugh Thomas D. Nimmo
Chief Executive Officer Senior Vice President and Treasurer
August 14, 1996
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<DEBT-HELD-FOR-SALE> 100,762
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 3,564
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 117,468
<CASH> 13,294
<RECOVER-REINSURE> 23,584
<DEFERRED-ACQUISITION> 4,828
<TOTAL-ASSETS> 202,644
<POLICY-LOSSES> 86,018
<UNEARNED-PREMIUMS> 40,932
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 3,690
0
0
<COMMON> 7,733
<OTHER-SE> 44,461
<TOTAL-LIABILITY-AND-EQUITY> 202,644
39,807
<INVESTMENT-INCOME> 3,192
<INVESTMENT-GAINS> 400
<OTHER-INCOME> 5,746
<BENEFITS> 18,708
<UNDERWRITING-AMORTIZATION> 5,985
<UNDERWRITING-OTHER> 8,477
<INCOME-PRETAX> 3,678
<INCOME-TAX> 311
<INCOME-CONTINUING> 3,367
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,367
<EPS-PRIMARY> .71
<EPS-DILUTED> 0
<RESERVE-OPEN> 81,675
<PROVISION-CURRENT> 13,199
<PROVISION-PRIOR> (10,196)
<PAYMENTS-CURRENT> 4,117
<PAYMENTS-PRIOR> 11,588
<RESERVE-CLOSE> 86,018
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
