<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number: 000-10071
NOBEL INSURANCE LIMITED
(Exact name of registrant as specified in its charter)
ISLANDS OF BERMUDA 98-0076395
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
VALLIS BUILDING
58 PAR-LA-VILLE ROAD
HAMILTON, BERMUDA HM 11 N/A
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (441) 295-5063
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 such
filing requirements for the past 90 days. Yes No X
--- ---
4,630,542 Capital Shares, $0.05 par value, were outstanding at June 30,
1999.
<PAGE>
PART I-- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NOBEL INSURANCE LIMITED
IN MEMBERS VOLUNTARY LIQUIDATION
CONSOLIDATED STATEMENTS OF NET ASSETS IN LIQUIDATION
(EXPRESSED IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
------- ------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $13,970 $13,550
Income taxes receivable -- 217
Accrued interest income 259 454
------- -------
14,229 14,221
------- -------
LIABILITIES
Accounts payable and accrued liabilities 177 169
Note payable 8,894 8,894
Interest on note payable 248 248
Estimated costs to complete liquidation 150 150
------- -------
9,469 9,461
------- -------
NET ASSETS IN LIQUIDATION AT END OF PERIOD $ 4,760 $ 4,760
======= =======
</TABLE>
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1
<PAGE>
NOBEL INSURANCE LIMITED
IN MEMBERS VOLUNTARY LIQUIDATION
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS IN LIQUIDATION
(LIQUIDATION BASIS)
(EXPRESSED IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JULY 11, 1998-
JUNE 30, 1999 DECEMBER 31, 1998
----------------- -----------------
<S> <C> <C>
NET ASSETS IN LIQUIDATION, BEGINNING OF PERIOD $ 4,760 $ 64,732
Partial liquidating distributions to shareholders -- (60,197)
Net income -- 225
-------- --------
NET ASSETS IN LIQUIDATION, END OF PERIOD $ 4,760 $ 4,760
======== ========
</TABLE>
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2
<PAGE>
NOBEL INSURANCE LIMITED
IN MEMBERS VOLUNTARY LIQUIDATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(EXPRESSED IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
(LIQUIDATION BASIS) (GOING CONCERN BASIS) (LIQUIDATION BASIS) (GOING CONCERN BASIS)
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, 1999 JUNE 30, 1998 JUNE 30, 1999 JUNE 30, 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
REVENUES:
Premiums written $ -- $ 19,173 $ -- $ 36,974
Reinsurance purchased -- (1,934) -- (10,526)
-------- -------- -------- --------
Net premiums written -- $ 17,239 $ -- $ 26,448
======== ======== ======== ========
Premiums earned $ -- $ 17,988 $ -- $ 39,480
Premiums ceded -- (5,177) -- (18,541)
-------- -------- -------- --------
Net premiums earned -- 12,811 -- 20,939
Net investment income 316 1,111 497 2,378
Net investment gains -- 1,522 -- 2,169
Claim adjusting fees earned -- 1,995 -- 3,480
-------- -------- -------- --------
Total revenues 316 17,439 497 28,966
-------- -------- -------- --------
EXPENSES:
Claims and claims expenses -- 23,593 -- 40,024
Reinsurance recoveries -- (1,147) -- (11,334)
-------- -------- -------- --------
Net claims and claims expenses -- 22,446 -- 28,690
Net service fees and commissions -- 3,089 -- 5,555
General and administrative expenses 223 5,910 240 9,857
-------- -------- -------- --------
Total expenses 223 31,445 240 44,102
-------- -------- -------- --------
Net income before disposal of
operations and income taxes -- (14,006) -- (15,136)
Gain in disposal of U.S. operations -- 29,012 -- 29,012
-------- -------- -------- --------
Net income before income taxes 93 15,006 257 13,876
-------- -------- -------- --------
Income tax expenses (benefit)
Current (220) 344 (220) 344
Deferred -- 4,875 -- 4,335
-------- -------- -------- --------
Income tax expenses (benefit) (220) 5,219 (220) 4,679
-------- -------- -------- --------
Net income before adjustment
to liquidation basis 313 9,787 477 9,197
Adjustment to liquidation basis
of accounting (313) -- (477) --
-------- -------- -------- --------
NET INCOME $ -- $ 9,787 $ -- $ 9,197
======== ======== ======== ========
PER SHARE DATA:
Earnings per share:
Basic $ -- $ 2.14 $ -- $ 2.02
======== ======== ======== ========
Diluted $ -- $ 2.14 $ -- $ 2.02
======== ======== ======== ========
</TABLE>
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3
<PAGE>
NOBEL INSURANCE LIMITED
IN MEMBERS VOLUNTARY LIQUIDATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(EXPRESSED IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
(LIQUIDATION BASIS) (GOING CONCERN BASIS)
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1999 JUNE 30, 1998
------------------- ---------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ -- 9,197
Adjustments to reconcile net income to net cash
from operating activities:
Depreciation and amortization -- 2,098
Net realized investment gains -- (859)
Decrease (increase) in deferred policy
acquisition costs -- (1,105)
Deferred tax expense (benefit) -- 4,335
Increase (decrease) in reserve for claims and
claims expenses -- 5,618
Increase (decrease) in unearned premiums -- (2,507)
Increase (decrease) in accounts payable and
accrued liabilities 8 416
Increase (decrease) in deferred service fee
income -- (277)
Decrease (increase) in net premiums receivable -- (31,971)
Decrease (increase) in accrued interest income 195 368
Increase in reinsurance recoverable -- (3,951)
Decrease (increase) in prepaid reinsurance
premiums -- 8,016
Decrease (increase) in other assets 217 2,128
Decrease in funds held by reinsurance companies -- 936
Net (additions) dispositions from trading portfolio
investments -- (1,188)
Proceeds from sale of U.S. operations,
net of cash sold -- 47,129
(Gains) from sale of U.S. operations -- (29,012)
(Gains) on disposal of other assets -- (36)
------- -------
Net cash provided from (used by) operating
activities 420 9,335
------- -------
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
4
<PAGE>
NOBEL INSURANCE LIMITED
IN MEMBERS VOLUNTARY LIQUIDATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(EXPRESSED IN THOUSANDS OF U.S. DOLLARS)
(LIQUIDATION BASIS) (GOING CONCERN BASIS)
SIX MONTHS ENDED SIX MONTHS ENDED
June 30, 1999 June 30, 1998
------------------- ---------------------
<S> <C> <C>
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from investments sold or matured:
Fixed maturities, available for sale -- 42,751
Equity securities, available for sale -- --
Purchase of investments:
Fixed maturities, available for sale -- (15,869)
Equity securities, available for sale -- --
Payments on acquisitions -- (1)
Purchase of software, property and equipment -- 55
-------- --------
Net cash provided from investing activities -- 26,936
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable -- 8,894
Proceeds from issuance of capital shares -- 980
Repayment of notes payable and capital
lease obligation -- (4,493)
-------- --------
Net cash (used by) provided from financing activities -- 5,381
-------- --------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS 420 41,652
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 13,550 17,858
-------- --------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 13,970 $ 59,510
======== ========
</TABLE>
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
5
<PAGE>
NOBEL INSURANCE LIMITED
IN MEMBERS VOLUNTARY LIQUIDATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Statement of Net Assets in Liquidation at June 30,
1999, Consolidated Statement of Changes in net Assets in Liquidation for the six
months ended June 30, 1999, Consolidated Statements of Operations for the three
months ended June 30, 1999 and 1998, and for the six months ended June 30, 1999
and 1998, and Consolidated Statements of Cash Flows for the six months ended
June 30, 1999 and 1998 have not been examined by independent accountants, but,
in the opinion of Nobel Insurance Limited (the "Company"), all adjustments
necessary for a fair presentation of the financial position and results of
operations for the periods indicated have been included.
The Company was incorporated on December 15, 1978 under the laws of the
Islands of Bermuda and commenced operations on January 1, 1979. Prior to
entering into Liquidation as discussed below, the Company and its subsidiaries'
operations consisted of reinsuring and insuring certain property, fidelity,
surety, general and automobile liability and automobile physical damage risks
and providing services in connection therewith, which constituted one industry
segment (property and casualty insurance).
On June 18, 1998, the Company's shareholders approved the sale of its
United States operating assets to a wholly owned subsidiary of Renaissance Re
Holdings Ltd., an Islands of Bermuda company ("RenaissanceRe"), and approved and
adopted the Plan of Liquidation of the Company. On June 25, 1998, the Company
completed the sale of its operating assets.
On July 10, 1998, pursuant to the Plan of Liquidation, the shareholders
of the Company approved the voluntary winding up of the Company (the
"Liquidation") in accordance with the laws of Bermuda and the appointment of
Malcolm Butterfield of the Bermuda office of KPMG Peat Marwick ("KPMG"),
Chartered Accountants, as the liquidator of the Company (in such capacity, the
"Liquidator") to act as Liquidator to oversee the Liquidation under the Bermuda
Companies Act. The Liquidation is currently in progress.
The consolidated financial statements include the accounts of the
Company and, for the three months and the six months ended June 30, 1998, the
Company's U.S. wholly owned subsidiaries. All intercompany transactions and
balances have been eliminated.
These consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America. The consolidated financial statements for the three months and the six
months ended June 30, 1998 were prepared on a going concern basis of accounting
that contemplates realization of assets and satisfaction of liabilities in the
normal course of business. Effective July 11, 1998 the Company has adopted the
liquidation basis of accounting for presenting its consolidated financial
statements. Under this basis of accounting, assets and liabilities are stated at
their net realizable value and estimated costs through the liquidation date are
provided to the extent reasonably determinable.
The consolidated financial statements present the Net Assets in
Liquidation of the Company as at June 30, 1999. The Net Assets in Liquidation
represents the estimated funds that may be remitted to the shareholders upon the
completion of the liquidation. These amounts are summarized as follows:
<TABLE>
<S> <C>
Final Liquidating distribution of $1.00 cash per Capital Share $ 4,631
Dividend Accrual to Stockholders 129
-------
$ 4,760
=======
</TABLE>
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Premiums written, reinsurance purchased, net premiums earned, net
claims and claims expenses and acquisition cost in the three months and the six
months ended June 30, 1999 all show decreases in comparison to the six months
ended June 30, 1998 due to the disposal of the insurance operations in the
second quarter of 1998. During the six months ended June 30, 1999, the Company
was engaged in the voluntary liquidation and winding up of its business and no
longer had the insurance and claims adjusting operations.
The only revenues during this period were from investments being held,
pending final distributions to creditors and shareholders. The only expenses
during the period were for the payment of items relating to the winding up of
the Company's business.
Given the sale of all operations and the voluntary liquidation
proceedings, additional comparisons between the periods would not be meaningful.
LIQUIDITY AND CAPITAL RESOURCES
The principal cash requirements of the Company as of June 30, 1999 were
payments of accounts payable and payment of liquidating and winding up of
Company expenses, payment of a final distribution of up to $1.00 per share to
the shareholders, and repayment of a limited recourse note to RenaissanceRe and
interest in accordance with the approved Plan of Liquidation.
YEAR 2000
Certain computer programs and/or software may recognize a date using
"00" as the year 1900 rather than the year 2000, which could result in
miscalculations or system failures. The Company has completed an assessment of
its business applications and computer systems, and believes that all critical
business applications and systems will function properly with respect to dates
in the year 2000 and thereafter.
During 1995 and 1996 the Company replaced its old systems with modern,
Windows-based, client server systems. The financial systems, policy and claims
systems, and the desktop systems are all prepared to handle the year 2000 and
beyond.
There can be no assurance that the systems of our vendors, or other
third parties the Company deals with, will be timely converted and would not
have an effect on the Company. The Company has no operations other than the
Liquidation. Accordingly, the Company believes that the potential for a loss due
to this exposure would be minimal, if any.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
7
<PAGE>
PART II--OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K
Current Report on Form 8-K dated April 19, 1999, and filed with the
Commission on June 3, 1999, with respect to the Company's engagement of new
certifying accountants
8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, as of
November 9, 1999.
NOBEL INSURANCE LIMITED
By: /s/ Malcolm Butterfield
---------------------------------
Malcolm Butterfield,
Liquidator
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> APR-01-1999
<PERIOD-END> JUN-30-1999
<DEBT-HELD-FOR-SALE> 0
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 0
<CASH> 13,970
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 0
<TOTAL-ASSETS> 14,229
<POLICY-LOSSES> 0
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 8,894
0
0
<COMMON> 232
<OTHER-SE> 4,528
<TOTAL-LIABILITY-AND-EQUITY> 0
0
<INVESTMENT-INCOME> 497
<INVESTMENT-GAINS> 0
<OTHER-INCOME> 0
<BENEFITS> 0
<UNDERWRITING-AMORTIZATION> 0
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> 257
<INCOME-TAX> (220)
<INCOME-CONTINUING> 477
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (477)
<NET-INCOME> 0
<EPS-BASIC> .00
<EPS-DILUTED> .00
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
