<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 September 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 IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
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 November 13, 1996
4,466,406
<PAGE>
NOBEL INSURANCE LIMITED
CONSOLIDATED BALANCE SHEETS
(EXPRESSED IN UNITED STATES DOLLARS)
<TABLE>
SEPTEMBER 30, DECEMBER 31,
1996 1995
- ---------------------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Investments:
Trading portfolio, at fair value:
Fixed maturity securities (amortized cost: $486 at
September 30, 1996 and $105 at December 31, 1995) $ 493 $ 188
Equity securities (cost: $2,261 at September 30, 1996 and
$4,881 at December 31, 1995) 3,646 6,847
Other investments (cost: $731 at September 30, 1996 and
$763 at December 31, 1995) 809 925
Securities available for sale, at fair value:
Fixed maturity securities (amortized cost: $101,529 at
September 30, 1996 and $102,588 at December 31,1995) 101,007 105,601
Equity securities (cost $363 at September 30, 1996 and $0 at
December 31, 1995) 363 0
Short-term investments, at cost, which approximates fair
value 14,198 13,798
-------- --------
Total investments 120,516 127,359
Cash 2,009 1,507
Funds held by reinsurance companies 1,988 3,341
Premiums and other receivables less allowance for
doubtful accounts ($378 at September 30, 1996 and $398
at December 31, 1995) 33,013 23,897
Accrued interest income 1,627 1,418
Reinsurance recoverable on paid and unpaid claims 20,310 22,588
Prepaid reinsurance premiums 12,147 12,826
Property and equipment less accumulated depreciation
($1,951 at September 30, 1996 and $1,840 at December 31, 1995) 4,070 3,642
Deferred policy acquisition costs 4,806 3,129
Net deferred tax asset 3,036 2,112
Other assets 1,986 1,569
-------- --------
Total assets $205,508 $203,388
-------- --------
-------- --------
</TABLE>
(See Accompanying Notes to Consolidated Financial Statements)
1
<PAGE>
NOBEL INSURANCE LIMITED
CONSOLIDATED BALANCE SHEETS
(EXPRESSED IN UNITED STATES DOLLARS)
(CONTINUED)
SEPTEMBER 30, DECEMBER 31,
1996 1995
- ------------------------------------------------------------------------
(IN THOUSANDS, EXCEPT SHARE DATA)
LIABILITIES
Reserve for claims and claims expenses $ 83,927 $ 81,675
Unearned premiums 41,962 38,106
Accounts payable and accrued liabilities 14,754 9,907
Reinsurance premiums payable 7,820 7,138
Other liabilities 5,020 1,654
--------- ---------
Total liabilities 153,483 138,480
--------- ---------
SHAREHOLDERS' EQUITY
Capital shares (Authorized 20,000,000
shares; $1 par value; issued 7,732,958
shares at September 30, 1996 and 7,626,725
shares at December 1995; outstanding
4,466,406 shares at September 30, 1996 and
5,542,363 shares at December 31, 1995) 7,733 7,627
Contributed surplus 44,466 44,081
Unrealized gain (loss) on investments (587) 2,093
Retained earnings 29,948 26,612
Treasury stock, at cost (3,266,552
shares at September 30, 1996 and
2,084,362 shares at December 31, 1995) (29,535) (15,505)
--------- ---------
Total shareholders' equity 52,025 64,908
--------- ---------
Total liabilities and shareholders' equity $205,508 $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 NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
- -----------------------------------------------------------------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
REVENUES:
Premiums written $21,697 $21,825 $64,329 $51,857
Reinsurance purchased (3,230) (6,426) (14,465) (16,140)
------- ------- ------- -------
Net premiums written $18,467 $15,399 $49,864 $35,717
------- ------- ------- -------
------- ------- ------- -------
Premiums earned $20,665 $16,184 $60,472 $46,034
Premiums ceded (2,847) (5,335) (15,144) (15,104)
------- ------- ------- -------
Net premiums earned 17,818 10,849 45,328 30,930
Interest income, net of investment
expense and interest expense of $741
at September 30, 1996 and $493 at
September 30, 1995, respectively 1,517 1,701 4,709 5,377
Net investment gains 101 354 501 1,048
Claim adjusting fees earned 2,980 2,246 8,726 7,239
------- ------- ------- -------
Total revenues 22,416 15,150 59,264 44,594
------- ------- ------- -------
EXPENSES:
Claims and claims expenses 10,115 12,659 33,042 33,735
Reinsurance recoveries 1,339 (3,124) (2,880) (10,110)
------- ------- ------- -------
Net claim and claim expenses 11,454 9,535 30,162 23,625
Service fees and commissions 5,496 1,613 11,481 5,140
General and administrative expenses 4,989 3,809 13,466 11,597
------- ------- ------- -------
Total expenses 21,939 14,957 55,109 40,362
------- ------- ------- -------
Net income before income taxes 477 193 4,155 4,232
Income tax expense (benefit):
Current (173) --- 208 ---
Deferred --- --- (70) ---
------- ------- ------- -------
Income tax expense (benefit) (173) --- 138 ---
------- ------- ------- -------
Net income 650 193 4,017 4,232
Retained earnings at beginning of period 29,522 24,986 26,612 21,536
Dividends paid on capital shares (224) (285) (681) (874)
------- ------- ------- -------
Retained earnings at end of period $29,948 $24,894 $29,948 $24,894
------- ------- ------- -------
------- ------- ------- -------
EARNINGS PER CAPITAL SHARE:
Net income per capital share $.14 $.03 $.86 $.71
------- ------- ------- -------
------- ------- ------- -------
Average number of capital shares 4,598 5,885 4,690 5,957
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
(See Accompanying Notes to Consolidated Financial Statements)
3
<PAGE>
NOBEL INSURANCE LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(EXPRESSED IN UNITED STATES DOLLARS)
<TABLE>
NINE MONTHS ENDED
SEPTEMBER 30,
1996 1995
- -------------------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,017 $ 4,232
Adjustments to reconcile net income to net cash from
operating activities:
Depreciation and amortization 877 1,029
Change in deferred acquisition costs (1,677) (905)
Deferred tax benefit (70) ---
Increase in reserve for claims and claims expenses 2,252 15,379
Increase in unearned premiums 3,856 5,823
Increase (decrease) in accounts payable and accrued liabilities 4,847 (1,525)
Increase in deferred service fee income 90 79
(Increase) decrease in premiums receivable (8,369) 3,061
(Increase) in accrued interest income (209) (385)
(Increase) decrease in reinsurance recoverables 2,278 (8,465)
(Increase) decrease in prepaid reinsurance premiums 679 (1,035)
Decrease in other assets 183 354
(Increase) decrease in funds held by reinsurance companies 1,353 (38)
Net dispositions from trading portfolio investments 3,351 3,273
Net realized investment gains (501) (1,048)
Losses on disposal of other assets 15 9
------- -------
Net cash provided from operating activities 12,972 19,838
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from investments sold or matured:
Fixed maturities, available for sale 29,059 30,393
Purchase of investments:
Fixed maturities, available for sale (28,003) (41,807)
Equity securities available for sale (363) ---
Payments on acquisitions (3) (1,206)
Purchase of software, property and equipment (1,820) (3,106)
------- -------
Net cash used by investing activities (1,130) (15,726)
------- -------
</TABLE>
(See Accompanying Notes to Consolidated Financial Statements)
4
<PAGE>
NOBEL INSURANCE LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(EXPRESSED IN UNITED STATES DOLLARS)
(CONTINUED)
<TABLE>
NINE MONTHS ENDED
SEPTEMBER 30,
1996 1995
- -------------------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable 6,142 1,512
Proceeds from issuance of capital shares 491 214
Repayment of notes payable and capital lease obligation (2,862) (544)
Purchase of treasury stock (14,030) (2,706)
Dividends paid to shareholders (681) (874)
------- -------
Net cash used by financing activities (10,940) (2,398)
------- -------
Net increase in cash and cash equivalents 902 1,714
Cash and cash equivalents at beginning of year 15,305 12,476
------- -------
Cash and cash equivalents at end of year $16,207 $14,190
------- -------
------- -------
</TABLE>
(See Accompanying Notes to Consolidated Financial Statements)
5
<PAGE>
NOBEL INSURANCE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Balance Sheets at September 30, 1996, and Consolidated
Statements of Income and Retained Earnings for the nine months ended
September 30, 1996 and Consolidated Statements of Cash Flows for the nine
months ended September 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 $(742,000) and $8,000 from trading
portfolio investments were included in 1996 nine month and third quarter
earnings, respectively, compared to $775,000 and $302,000 in the nine
months and third quarter of 1995.
2) Net unrealized losses of $587,000 and net unrealized gains of
$2,093,000 from portfolio investments classified as available for sale
were included in shareholders' equity at September 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
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 NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
- -------------------------------------------------------------------------------------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C>
Net income before income taxes - consolidated $ 477 $ 193 $4,155 $4,232
Foreign - not subject to tax 2,099 339 2,202 917
------- ------ ------ ------
U.S. - subject to tax $(1,622) $ (146) $1,953 $3,315
Computed "expected" tax expense at 34% $ (551) $ (51) $ 664 $1,160
Reduction for tax-exempt interest (86) --- (260) ---
Non-allowed meals and entertainment 9 --- 26 ---
Amortization of goodwill --- 38 --- 123
Change in deferred tax valuation allowance (227) (90) (680) (1,379)
------- ------ ------ ------
Other items, net 682 103 388 96
------- ------ ------ ------
Income tax expense (benefit) $ (173) $ --- $ 138 $ ---
------- ------ ------ ------
------- ------ ------ ------
</TABLE>
(See Accompanying Notes to Consolidated Financial Statements)
6
<PAGE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at September
30, 1996 and December 31, 1995 are presented below:
SEPTEMBER 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 .............. (1,634) (1,064)
Unrealized gains bonds available for sale ...... --- (920)
Other .......................................... (443) (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 September 30, 1996 was a decrease of $907,000 based on a quarterly
calculation of taxes on an annualized basis. At 12/31/95 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.
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:
<TABLE>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
- ------------------------------------------------------------------------------------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C>
Average common shares outstanding 4,489 5,705 4,584 5,811
Shares applicable to common
stock equivalents 109 180 106 146
----- ----- ----- -----
Average primary shares outstanding 4,598 5,885 4,690 5,957
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
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 professional actuaries and changes are reflected in current
operations for the period in which they are determined.
7
<PAGE>
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.
At September 30, 1996 and 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 outstanding balances for casualty and other coverages reserves for
incurred but not reported and development of known claims, net of reinsurance
recoverables, were (in thousands):
<TABLE>
RESERVE BALANCE INCOME EFFECT
PERIOD ENDING GROSS NET GROSS NET
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
At September 30, 1996 ................. $32,568 $21,733
Nine months ended September 30, 1996... $(3,459) $ (799)
At December 31, 1995 .................. $36,027 $22,532
At September 30, 1995 ................. $37,190 $24,579
Nine months ended September 30, 1995... $ 7,688 $3,545
</TABLE>
An allowance for doubtful receivables is established when it becomes
evident collection is doubtful. Allowances of $378,000 and $398,000 were
established as of September 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 September 30, 1996 ................. $32,930
Nine months ended September 30, 1996... $56
At December 31, 1995 .................. $33,615
At September 30, 1995 ................. $33,216
Nine months ended September 30, 1995... $2,487
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, payment of dividends, 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 funds 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 cash 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 September 30, 1996 is $19,101,000.
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
September 30, 1996, the collateral consisted of short-term bank deposits and
AAA-rated fixed income securities which require a 5% margin. At September
30, 1996, the Company had cash and investments of $122,525,000 of which
$24,660,000 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 September 30,
1996, the Company sold $4,278,000 of trading portfolio investments with
$1,143,000 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 nine months of
1996 was $12,972,000 compared to $19,838,000 for the first nine months of
1995. Net cash used by investing activities was $1,130,000 for the first
nine months of 1996, as opposed to $15,726,000 for the same period of 1995.
Cash used by financing activities included the purchase of 1,182,190 shares
of treasury stock at an
9
<PAGE>
average cost of $11.87, less net proceeds from notes payable of $3,280,000
plus cash dividend of $681,000, less proceeds from issuance of capital stock
491,000 to produce net financing cash used of $10,940,000, compared to cash
used of $2,398,000 for the first nine months of 1995, when the Company
purchased 280,754 shares of Treasury stock, at an average cost of $9.64.
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
1997.
RESULTS OF OPERATIONS
NINE MONTHS 1996 VERSUS NINE 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 $(3,012) $(2,012)
Claim adjusting operations 359 1
Corporate operations 1,598 (302)
Investment and other income 5,210 6,545
Federal income tax (138) 0
------- -------
Net after tax $ 4,017 $ 4,232
------- -------
------- -------
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 nine months of 1996 and 1995 was impacted by reduced
yield rates and the acquisition of treasury stock.
UNDERWRITING OPERATIONS. The first nine months of 1996, premiums written
increased $12,472,000, or 24%, over the same period for 1995. Reinsurance
purchased decreased $1,675, or 10%. Earned premiums for commercial casualty
programs gained 33% while market conditions remained competitive; earned
premiums for specialty lines' programs gained 68% due to surety bond new
business growth; and personal lines low-value dwelling program earned
premiums gained 167% 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 are 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 is 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 70% for the first nine months
of 1996 compared to 76% in the same period of 1995. The decrease resulted
primarily from increased writings in specialty and personal lines at lower
loss and LAE ratios. Approximately $6,090,000 of increased claim reserves
were recorded during first nine months of 1996 to reflect the current
actuarial indications of the ultimate cost of future claims settlements,
primarily for the specialized hauler's program. After the adjustment, the
consolidated 1996 accident year loss ratio was 77.5% for commercial auto
liability.
Expenses, which consist of net service fees and commissions and general
and administrative expenses, excluding the claim adjusting and corporate
operations, were 30% and 27% of net written premiums for the first nine
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 $13,073 $ 8,255
Ceding commission income (4,639) (5,988)
General and administrative 7,024 6,890
Change in deferred acquisition costs (1,677) (905)
------- -------
13,781 8,252
Corporate services 1,451 1,366
Net claim adjusting (359) 0
------- -------
$14,873 $ 9,618
------- -------
------- -------
Commissions, fronting, and taxes expense was 26% of premiums written in
1996 compared to 23% in 1995. Ceding commission income was 32% of
reinsurance purchased for the first nine months of 1996 compared to 37% for
the same period of 1995.
General and administrative expenses charged to operations increased by
$134,000 or 2% and were 14% of premiums written for the first nine months of
1996 compared to 19% in the same period of 1995.
CLAIM ADJUSTING OPERATIONS. Increased claim adjusting fees of $1,487 and
claim adjusting commissions of $945 resulted primarily from increased
catastrophe business activity.
INVESTMENT INCOME. Net interest income decreased by 668 or 12%, due to lower
yields on reduced investment balances due to the acquisition of treasury
stock during the first nine months of 1996, and investing new money in lower
yielding municipals. Net realized investment gains decreased by $547 during
the first nine 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
November 13, 1996
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<DEBT-HELD-FOR-SALE> 101,500
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 4,009
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 120,516
<CASH> 16,207
<RECOVER-REINSURE> 20,310
<DEFERRED-ACQUISITION> 4,806
<TOTAL-ASSETS> 205,508
<POLICY-LOSSES> 83,927
<UNEARNED-PREMIUMS> 41,962
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 4,648
0
0
<COMMON> 7,733
<OTHER-SE> 44,292
<TOTAL-LIABILITY-AND-EQUITY> 205,508
45,328
<INVESTMENT-INCOME> 4,709
<INVESTMENT-GAINS> 501
<OTHER-INCOME> 8,726
<BENEFITS> 30,162
<UNDERWRITING-AMORTIZATION> 11,481
<UNDERWRITING-OTHER> 13,466
<INCOME-PRETAX> 4,155
<INCOME-TAX> 138
<INCOME-CONTINUING> 4,017
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,017
<EPS-PRIMARY> .86
<EPS-DILUTED> 0
<RESERVE-OPEN> 81,675
<PROVISION-CURRENT> 22,954
<PROVISION-PRIOR> (18,193)
<PAYMENTS-CURRENT> 8,658
<PAYMENTS-PRIOR> 16,743
<RESERVE-CLOSE> 83,927
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
