<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 March 31, 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
March 31, 1999.
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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>
MARCH 31, DECEMBER 31,
1999 1998
--------- ------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 13,642 $ 13,550
Income taxes receivable 217 217
Accrued interest income 273 454
-------- --------
14,132 14,221
-------- --------
LIABILITIES
Accounts payable and accrued liabilities 80 169
Note payable 8,894 8,894
Interest on note payable 248 248
Estimated costs to complete liquidation 150 150
-------- --------
9,372 9,461
-------- --------
NET ASSETS IN LIQUIDATION AT END OF PERIOD $ 4,760 $ 4,760
======== ========
</TABLE>
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1
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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>
THREE MONTHS ENDED JULY 11, 1998-
MARCH 31, 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
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<TABLE>
<CAPTION>
NOBEL INSURANCE LIMITED
IN MEMBERS VOLUNTARY LIQUIDATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(EXPRESSED IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE AMOUNTS)
(LIQUIDATION BASIS) (GOING CONCERN BASIS)
THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, 1999 MARCH 31, 1998
-------------------- ----------------------
<S> <C> <C>
REVENUES:
Premiums written $ -- $ 17,800
Reinsurance purchased -- (8,592)
-------- --------
Net premiums written -- $ 9,208
======== ========
Premiums earned -- $ 21,492
Premiums ceded -- (13,364)
-------- --------
Net premiums earned -- 8,128
Net investment income 181 1,267
Net investment gains -- 647
Claim adjusting fees earned -- 1,485
-------- --------
Total revenues 181 11,527
-------- --------
EXPENSES:
Claims and claims expenses -- 16,431
Reinsurance recoveries -- (10,187)
-------- --------
Net claims and claims expenses -- 6,244
Net service fees and commissions -- 2,466
General and administrative expenses 17 3,947
-------- --------
Total expenses 17 12,657
-------- --------
Net income before income taxes 164 (1,130)
-------- --------
Income tax expenses
Current -- --
Deferred -- (540)
-------- --------
Income tax expenses (benefit) -- (540)
-------- --------
Net income before adjustment to liquidation basis 164 (590)
Adjustment to liquidation basis of accounting (164) --
-------- --------
NET INCOME $ -- $ (590)
======== ========
PER SHARE DATA:
Earnings per share:
Basic $ -- $ (0.13)
======== ========
Diluted $ -- $ (0.13)
======== ========
</TABLE>
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3
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<TABLE>
<CAPTION>
NOBEL INSURANCE LIMITED
IN MEMBERS VOLUNTARY LIQUIDATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(EXPRESSED IN THOUSANDS OF U.S. DOLLARS)
(LIQUIDATION BASIS) (GOING CONCERN BASIS)
THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, 1999 MARCH 31, 1998
----------------------- -----------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ -- (590)
Adjustments to reconcile net income to net cash
from operating activities:
Depreciation and amortization -- 475
Net realized investment gains -- (647)
Decrease (increase) in deferred policy
acquisition costs -- (555)
Deferred tax expense (benefit) -- (540)
Increase (decrease) in reserve for claims and
claims expenses -- (1,694)
Increase (decrease) in unearned premiums -- (3,692)
Increase (decrease) in accounts payable and
accrued liabilities (89) (2,820)
Increase (decrease) in deferred service fee
income -- (65)
Decrease (increase) in net premiums receivable -- 3,131
Decrease (increase) in accrued interest income 181 38
Increase in reinsurance recoverable -- (7,162)
Decrease (increase) in prepaid reinsurance
premiums -- 4,772
Decrease (increase) in other assets -- 148
Decrease in funds held by reinsurance companies -- 865
Net (additions) dispositions from trading portfolio
investments -- (781)
------ ------
Net cash provided from (used by) operating
activities 92 (9,117)
------ ------
</TABLE>
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
4
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<TABLE>
<CAPTION>
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)
THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, 1999 MARCH 31, 1998
----------------------- ----------------------
<S> <C> <C>
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from investments sold or matured:
Fixed maturities, available for sale -- 30,500
Equity securities, available for sale -- --
Purchase of investments:
Fixed maturities, available for sale -- (14,829)
Equity securities, available for sale -- --
Payments on acquisitions -- (1)
Purchase of software, property and equipment -- --
-------- --------
Net cash provided from investing activities -- 15,670
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of capital shares -- 250
Repayment of notes payable and capital
lease obligation -- (19)
-------- --------
Net cash (used by) provided from financing activities -- 231
-------- --------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS 92 6,784
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 13,550 17,858
-------- --------
CASH AND CASH EQUIVALENTS,
END OF PERIOD 13,642 $ 24,642
======== ========
</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 March 31,
1999, Consolidated Statement of Changes in net Assets in Liquidation for the
three months ended March 31, 1999, Consolidated Statements of Operations for
the three months ended March 31, 1999 and 1998 and Consolidated Statements of
Cash Flows for the three months ended March 31, 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 ended March 31, 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 ended
March 31, 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 March 31, 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 ended
March 31, 1999 all show decreases in comparison to the three months ended
March 31, 1998 due to the disposal of the insurance operations in the second
quarter of 1998. During the three months ended March 31, 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 March 31, 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
--------------------------------
Exhibit 27 Financial Data Schedule
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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<DEBT-HELD-FOR-SALE> 0
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 0
<CASH> 13,642
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 0
<TOTAL-ASSETS> 14,132
<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> 181
<INVESTMENT-GAINS> 0
<OTHER-INCOME> 0
<BENEFITS> 0
<UNDERWRITING-AMORTIZATION> 0
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> 164
<INCOME-TAX> 0
<INCOME-CONTINUING> 164
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (164)
<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>
