SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended June 30, 2000
Commission File Number 1-8538
ASCENT ASSURANCE, INC.
----------------------
(Exact name of Registrant as specified in its Charter)
DELAWARE 73-1165000
-------- ----------
(State of Incorporation) (I.R.S. Employer Identification No.)
110 West Seventh Street, Suite 300, Fort Worth, Texas 76102
----------------------------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
817-878-3300
(Registrant's Telephone Number, including Area Code)
N/A
(Former Name, Address and Former Fiscal Year, if changed since Last Report)
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 X NO
Indicate, by check mark whether the Registrant has filed all reports required to
be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934
subsequent to the distribution of securities under a plan confirmed by a court.
YES X NO
Common Stock - Par Value $.01 6,500,000 Shares Outstanding at May 12, 2000
<PAGE>
ASCENT ASSURANCE, INC.
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
PART 1 - FINANCIAL INFORMATION Page No.
------------------------------ --------
Item 1 - Financial Statements
<S> <C>
Ascent Assurance, Inc. Condensed Consolidated Balance Sheets at June 30, 2000 and
December 31, 1999 2
Ascent Assurance, Inc. Condensed Consolidated Statements of Income for the Three
Months Ended June 30, 2000 and 1999 and the Six Months Ended June 30, 2000
3
Westbridge Capital Corp. Condensed Consolidated Statement of Income for the Three
Months ended March 31, 1999 4
Ascent Assurance, Inc. Condensed Consolidated Statements of Comprehensive Income for the
Three Months Ended June 30, 2000 and 1999 and the Six Months Ended June 30, 2000 5
Westbridge Capital Corp. Consolidated Statement of Comprehensive Income for the Three
Months Ended March 31, 1999 6
Ascent Assurance, Inc. Condensed Consolidated Statements of Cash Flows for the Three
Months Ended June 30, 2000 and 1999 and the Six Months Ended June 30, 2000 7
Westbridge Capital Corp. Condensed Consolidated Statement of Cash Flows for the Three
Months Ended March 31, 1999 8
Ascent Assurance, Inc. Consolidated Statement of Changes in Stockholders' Equity for
the Six Months Ended June 30, 2000 9
Notes to Condensed Consolidated Financial Statements 10
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of
Operations
General 13
Business Overview 13
Operating Results 14
Financial Condition 16
Liquidity, Capital Resources and Statutory Capital and Surplus 18
Forward-Looking Statements 20
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders 22
Item 6 - Exhibits and Reports on Form 8-K 23
</TABLE>
<PAGE>
ASCENT ASSURANCE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
(Unaudited) (Audited)
--------------- ----------------
Assets (in thousands, except per share data)
------
Investments:
Fixed Maturities:
Available-for-sale, at market value (amortized
<S> <C> <C>
cost $106,166 and $103,436) $ 99,708 $ 97,563
Equity securities, at market (cost $1,365) 1,200 1,313
Other investments 430 413
Short-term investments 14,798 10,904
--------------- ----------------
Total Investments 116,136 110,193
Cash 3,665 5,110
Accrued investment income 2,023 2,030
Receivables from agents, net of allowance for doubtful
accounts of $5,809 and $6,060 7,827 7,062
Deferred policy acquisition costs 23,331 19,393
Deferred tax asset, net 8,035 7,086
Property and equipment, net of accumulated depreciation
of $2,010 and $1,546 6,604 6,272
Other assets 7,373 6,544
--------------- ----------------
Total Assets $ 174,994 $ 163,690
=============== ================
Liabilities, Preferred Stock and Stockholders' Equity
Liabilities:
Policy liabilities and accruals:
Future policy benefits $ 61,064 $ 57,119
Claim reserves 44,809 38,776
--------------- ----------------
Total policy liabilities and accruals 105,873 95,895
Accounts payable and other liabilities 14,495 13,592
Notes payable 8,770 7,162
--------------- ----------------
Total liabilities 129,138 116,649
--------------- ----------------
Redeemable Convertible Preferred Stock 25,130 23,257
--------------- ----------------
Stockholders' Equity:
Common stock ($.01 par value, 30,000,000 shares
authorized; 6,500,000 shares issued) 65 65
Capital in excess of par value 27,538 27,338
Accumulated other comprehensive loss, net of tax (4,371) (3,851)
Retained (deficit) earnings (2,506) 232
--------------- ----------------
Total Stockholders' Equity 20,726 23,784
--------------- ----------------
Total Liabilities, Preferred Stock and Stockholders'Equity $ 174,994 $ 163,690
=============== ================
</TABLE>
See the Notes to the Condensed Consolidated Financial Statements.
<PAGE>
ASCENT ASSURANCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
June 30, June 30,
--------------------------- ------------
2000 1999 2000
----------- ----------- ------------
(in thousands, except per share data)
Revenues:
Premiums:
<S> <C> <C> <C>
First-year $ 7,230 $ 3,903 $ 13,939
Renewal 21,998 25,671 44,294
----------- ----------- ------------
29,228 29,574 58,233
Net investment income 2,266 2,333 4,344
Fee and service income 5,294 4,196 10,190
Net realized loss on investments (254) (63) (237)
----------- ----------- ------------
36,534 36,040 72,530
----------- ----------- ------------
Benefits, claims and expenses:
Benefits and claims 22,962 21,733 46,644
Amortization of deferred policy
acquisition costs 641 392 1,221
Commissions 4,409 4,937 9,380
General and administrative expenses 7,775 5,945 14,521
Taxes, licenses and fees 1,513 1,293 2,704
Interest expense on notes payable 152 119 236
----------- ----------- ------------
37,452 34,419 74,706
(Loss) income before income taxes (918) 1,621 (2,176)
Federal income tax benefit (expense) 312 (567) 740
----------- ----------- ------------
Net (loss) income $ (606) $ 1,054 $ (1,436)
=========== =========== ============
Preferred stock dividends 651 647 1,302
----------- ----------- ------------
(Loss)income applicable to common stockholders $ (1,257) $ 407 $ (2,738)
=========== =========== ============
Basic and diluted (loss) earnings per
common share $ (.19) $ .06 $ (.42)
=========== =========== ============
Weighted average shares outstanding:
Basic 6,500 6,500 6,500
=========== =========== ============
Diluted 6,500 6,530 6,500
=========== =========== ============
</TABLE>
See the Notes to the Condensed Consolidated Financial Statements.
<PAGE>
WESTBRIDGE CAPITAL CORP.
(now, Ascent Assurance, Inc.)
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Audited)
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1999
------------------
(in thousands, except
per share data)
Revenues:
Premiums:
<S> <C>
First-year $ 3,121
Renewal 26,827
----------------
Total Premiums 29,948
Net investment income 2,562
Fee and service income 4,263
Net realized gain on investments 41
----------------
36,814
----------------
Benefits, claims and expenses:
Benefits and claims 21,799
Amortization of deferred policy acquisition costs 286
Commissions 6,134
General and administrative expenses 6,635
Taxes, licenses and fees 1,059
Interest expense on notes payable 119
Interest expense on retired/canceled debt 507
----------------
36,539
----------------
Income before income taxes 275
Federal income tax expense (67)
----------------
Net income $ 208
================
Basic and diluted earnings per common share $ .03
================
Basic and diluted weighted average shares outstanding 7,032
================
</TABLE>
See the Notes to the Condensed Consolidated Financial Statements.
<PAGE>
ASCENT ASSURANCE, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
June 30, June 30,
----------------------- -----------
2000 1999 2000
---------- ---------- -----------
(in thousands, except per share data)
<S> <C> <C> <C>
Net (loss) income $ (606) $ 1,054 $ (1,436)
Other comprehensive (loss) income:
Unrealized holding loss arising during
period, net of tax (841) (2,013) (677)
Reclassification adjustment of loss on
sales of investments included in net
income, net of tax 168 41 157
---------- ---------- -----------
Comprehensive loss $ (1,279) $ (918) $ (1,956)
========== ========== ===========
</TABLE>
See the Notes to the Condensed Consolidated Financial Statements.
<PAGE>
WESTBRIDGE CAPITAL CORP.
(now, Ascent Assurance, Inc.)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Audited)
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1999
-------------------
(in thousands)
<S> <C>
Net income $ 208
Other comprehensive loss:
Unrealized holding loss arising during
period, net of tax (1,959)
Reclassification adjustment of gain on
sales of investments included in
net income, net of tax (27)
-------------------
Comprehensive loss $ (1,778)
===================
</TABLE>
See the Notes to the Condensed Consolidated Financial Statements.
<PAGE>
ASCENT ASSURANCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
June 30, June 30,
------------------------- -----------
2000 1999 2000
---------- ---------- -----------
(in thousands, except per share data)
Cash Flow From Operating Activities:
<S> <C> <C> <C>
Net (loss) income $ (606) $ 1,054 $ (1,436)
Adjustments to reconcile net income to cash
provided by (used for) operating activities
(Increase) decrease in accrued investment income (138) 13 7
Amortization of deferred policy acquisition costs 641 864 1,221
(Increase) decrease in receivables from agents (1,138) 1,244 (765)
Addition to deferred policy acquisition costs (2,870) (2,208) (5,159)
Decrease (increase) in other assets 187 1,053 (829)
Increase (decrease) in policy liabilities and
accruals 7,193 (1,660) 9,978
Increase (decrease) in accounts payable and other
liabilities 3,540 (2,552) 903
Increase in deferred income taxes, net (665) (1,027) (949)
Other, net 449 1,405 2,001
---------- ---------- -----------
Net Cash Provided By (Used For) Operating Activities 6,593 (1,814) 4,972
---------- ---------- -----------
Cash Flow From Investing Activities:
Proceeds from investments sold:
Fixed maturities, called or matured 1,125 807 1,998
Fixed maturities, sold 2,808 6,563 3,714
Other investments, sold or matured - 58 3,041
Cost of investments acquired (12,977) (2,927) (15,958)
Property and equipment purchased (285) (1,163) (820)
---------- ---------- -----------
Net Cash (Used For) Provided By Investing Activities (9,329) 3,338 (8,025)
---------- ---------- -----------
Cash Flow From Financing Activities:
Issuance of notes payable 1,146 1,408 1,888
Repayment of notes payable (140) (2,987) (280)
---------- ---------- -----------
Net Cash Provided By Financing Activities 1,006 (1,579) 1,608
---------- ---------- -----------
Decrease In Cash During Period (1,730) (55) (1,445)
Cash At Beginning Of Period 5,395 2,210 5,110
---------- ---------- -----------
Cash At End Of Period $ 3,665 $ 2,155 $ 3,665
========== ========== ===========
</TABLE>
See the Notes to the Condensed Consolidated Financial Statements.
<PAGE>
WESTBRIDGE CAPITAL CORP.
(now, Ascent Assurance, Inc.)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Audited)
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1999
-----------------
(in thousands)
Cash Flow From Operating Activities:
<S> <C>
Net income $ 208
Adjustments to reconcile net income to cash
provided by (used for)operating activities:
Amortization of deferred policy acquisition costs 286
Decrease in receivables from agents 1,678
Addition to deferred policy acquisition costs (1,148)
Increase in other assets (1,007)
Decrease in policy liabilities and accruals (2,181)
Increase in accounts payable and other liabilities 4,428
Increase in deferred income taxes, net (1,070)
Other, net 1,308
-----------------
Net Cash Provided By Operating Activities 2,502
-----------------
Cash Flow From Investing Activities:
Proceeds from investments sold:
Fixed maturities, called or matured 2,215
Fixed maturities, sold 4,904
Other investments, sold or matured 139
Cost of investments acquired (5,851)
Other (873)
-----------------
Net Cash Provided By Investing Activities 534
-----------------
Cash Flow From Financing Activities:
Retirement of senior subordinated debentures (15,167)
Issuance of Preferred Stock 15,167
Issuance of notes payable 911
Repayment of notes payable (2,015)
-----------------
Net Cash Used For Financing Activities (1,104)
-----------------
Increase In Cash During Period 1,932
Cash At Beginning Of Period 278
-----------------
Cash At End Of Period $ 2,210
=================
</TABLE>
See the Notes to the Condensed Consolidated Financial Statements.
<PAGE>
ASCENT ASSURANCE, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Accumulated
Capital Other Retained Total
Common Stock in Excess Comprehensive (Deficit) Stockholders'
Shares Amount of Par Value Loss Earnings Equity
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1999 6,500,000 $ 65 $ 27,338 $ (3,851) $ 232 $ 23,784
Net loss (1,436) (1,436)
Preferred Stock dividend (1,302) (1,302)
Other comprehensive loss, net of tax (520) (520)
Amortization of unearned compensation 200 200
----------- ------- ------------- -------------- ----------- ------------
Balance at June 30, 2000 6,500,000 $ 65 $ 27,538 $ (4,371) $ (2,506) $ 20,726
=========== ======= ============= ============== =========== ============
</TABLE>
See the Notes to the Condensed Consolidated Financial Statements.
<PAGE>
ASCENT ASSURANCE, INC.
(formerly, Westbridge Capital Corp.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - DESCRIPTION OF BUSINESS
Ascent Assurance, Inc. ("Ascent"), a Delaware company incorporated in 1982, is
an insurance holding company engaged in the development, marketing, underwriting
and administration of medical expense and supplemental health insurance
products, primarily to self-employed individuals and small business owners.
Ascent adopted its corporate name on March 24, 1999, the date its predecessor,
Westbridge Capital Corp. ("Westbridge"), emerged from Chapter 11 reorganization
proceedings (see Note 6). References herein to the "Company" shall mean for all
periods on or prior to March 31, 1999, Westbridge and its subsidiaries, and for
all periods on or after the close of business on March 31, 1999, Ascent and its
subsidiaries.
The Company's revenues result primarily from premiums and fees from the
insurance products sold by its wholly owned subsidiaries National Foundation
Life Insurance Company ("NFL"), Freedom Life Insurance Company of America
("FLICA"), National Financial Insurance Company ("NFIC") and American Insurance
Company of Texas ("AICT", and together with NFL, NFIC and FLICA, collectively,
the "Insurance Subsidiaries") and marketed by NationalCare(R) Marketing, Inc.
("NCM"), also a wholly owned subsidiary. To a lesser extent the Company derives
revenue from (i) telemarketing services, (ii) printing services, and (iii)
renewal commissions received by the Company for sales of insurance products
underwritten primarily by unaffiliated managed care organizations (such sales
have been significantly curtailed).
NOTE 2 - ACCOUNTING PRINCIPLES
Basis of Presentation. The accompanying unaudited condensed consolidated
financial statements of the Company have been prepared in accordance with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X and do not include
all of the information and footnotes required by accounting principles generally
accepted in the United States ("GAAP") for complete financial statements.
Financial statements prepared in accordance with GAAP require the use of
management estimates. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Certain reclassifications have been made to 1999 amounts in order
to conform to the 2000 financial statement presentation. The financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 1999.
Fresh Start Adjustments. In accordance with the American Institute of Certified
Public Accountants' Statement of Position 90-7 ("SOP 90-7"), "Financial
Reporting by Entities in Reorganization Under the Bankruptcy Code," Ascent
adopted fresh start reporting effective March 31, 1999. Fresh start reporting
requires the new reporting entity created on the reorganization effective date
to determine a reorganization book value. The reorganization book value is
allocated to the fair value of assets and liabilities similar to the purchase
method of accounting under APB 16. As a result of the application of fresh start
reporting, the consolidated financial statements of Ascent issued subsequent to
the adoption of fresh start reporting will not be comparable with those of
Westbridge prepared before adoption of fresh start reporting, including the
historical consolidated financial statements of Westbridge in this quarterly
report.
NOTE 3 - EARNINGS PER SHARE ("EPS")
Under GAAP there are two measures of Earnings Per Share: "Basic Earnings Per
Share" and "Diluted Earnings Per Share". Basic EPS is computed by dividing
income applicable to common shareholders by the weighted average number of
common shares outstanding ("average shares") during the period. To obtain net
income applicable to common shareholders for EPS computations, Preferred Stock
dividends are deducted from net income. EPS for the three months ended March 31,
1999 is computed based upon the capital structure of Westbridge prior to the
Effective Date of the Plan. As the accrual of Preferred Stock dividends was
suspended on September 16, 1998, no Preferred Stock dividends were deducted in
the computation of EPS for the three months ended March 31, 1999. Diluted EPS
reflects the potential dilution of average shares that could occur if securities
or other contracts to issue common stock were converted or exercised. For the
periods shown below, the impact of common stock options and convertible notes
were anti-dilutive and were not included in the calculation of EPS. The
following table reflects the calculation of basic and diluted EPS:
<TABLE>
<CAPTION>
Ascent Westbridge
-------------------------------------- ------------
Three Months Six Months Three Months
Ended Ended Ended
June 30, June 30, March 31,
------------------------ ---------- ------------
(amounts in 000's, except per share 2000 1999 2000 1999
amounts)
<S> <C> <C> <C> <C>
Net (loss) income $ (606) $ 1,054 $ (1,436) $ 208
Preferred Stock dividends (651) (647) (1,302) -
----------- ----------- ---------- ------------
(Loss)income applicable to common
shareholders $ (1,257) $ 407 $ (2,738) $ 208
=========== =========== ========== ============
Weighted average shares outstanding:
Basic 6,500 6,500 6,500 7,032
Diluted 6.500 6,530 6,500 7,032
Basic and diluted (loss) earnings per share $ (.19) $ .06 $ (.42) $ .03
=========== =========== ========== ============
</TABLE>
NOTE 4 - PREFERRED STOCK
Effective January 31, 2000, the Company declared and paid the contractual
dividend of $1,873,965 on its Redeemable Convertible Preferred Stock ("Preferred
Stock"), which was accrued at December 31, 1999. The dividend was paid through
the issuance of 1,873 additional shares of Preferred Stock and a $965
distribution of cash. Dividends on the Company's Preferred Stock are payable in
cash or through issuance of additional shares of Preferred Stock, at the
Company's option.
NOTE 5 - COMMITMENTS AND CONTINGENCIES
In the normal course of its business operations, the Company is involved in
various claims and other business related disputes. In the opinion of
management, the Company is not a party to any pending litigation the disposition
of which would have a material adverse effect on the Company's business,
financial position or its results of operations.disposition of which would have
a material adverse effect on the Company's business, financial position or its
results of operations.
NOTE 6 - REORGANIZATION EFFECTIVE MARCH 24, 1999
On September 16, 1998, Westbridge commenced its reorganization by filing a
voluntary petition for relief under Chapter 11, Title 11 of the United States
Code in the United States Bankruptcy Court for the District of Delaware (the
"Bankruptcy Court"), along with a disclosure statement (as amended, the
"Disclosure Statement") and a proposed plan of reorganization (as amended, the
"Plan"). The filing of the Disclosure Statement and Plan culminated months of
negotiations between Westbridge and an ad hoc committee (the "Creditors'
Committee") of holders of its 11% Senior Subordinated Notes due 2002 (the
"Senior Notes") and its 7-1/2% Convertible Subordinated Notes due 2004 (the
"Convertible Notes"). The Disclosure Statement was approved by entry of an order
by the Bankruptcy Court on October 30, 1998. Following the approval of the Plan
by the holders of allowed claims and equity interests, the Bankruptcy Court
confirmed the Plan on December 17, 1998. The Plan became effective March 24,
1999 (the "Effective Date"). On the Effective Date, Westbridge's certificate of
incorporation and by-laws were amended and restated in their entirety and
pursuant thereto, Westbridge changed its corporate name to "Ascent Assurance,
Inc.".
The Plan provided for the recapitalization of certain old debt and equity
interests in Westbridge and the issuance of new equity securities and warrants.
Additional information regarding the reorganization is disclosed in the
Company's 1999 Report on Form 10-K.
NOTE 7 - IMPLEMENTATION OF NEW ACCOUNTING PRONOUNCEMENTS
In 1998, the National Association of Insurance Commissioners ("NAIC") adopted
the Codification of Statutory Accounting Principles guidance, which will replace
the current Accounting Practices and Procedures manual as the NAIC's primary
guidance on statutory accounting. The Codification provides guidance for areas
where statutory accounting has been silent and changes current statutory
accounting in certain areas. The Insurance Departments of the States of Domicile
of the Company's Insurance Subsidiaries have adopted the Codification effective
January 1, 2001. The Company does not expect Codification guidance to materially
impact statutory surplus.
In June, 1998 the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). This statement, as amended by
SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of FASB Statement No. 133 - an amendment of FASB
Statement 133" and SFAS No. 138, "Accounting for Certain Derivative Instruments
and Certain Hedging Activities - an amendment of FASB Statement No. 133," is
effective for fiscal years beginning after June 15, 2000. The pronouncement
established accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts and for
hedging activities. As the Company has not participated in derivative or hedging
activities, the Company's financial statements are not affected by SFAS 133.
<PAGE>
ASCENT ASSURANCE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Ascent Assurance, Inc. ("Ascent"), adopted its corporate name on March 24, 1999,
the date its predecessor, Westbridge Capital Corp. ("Westbridge") emerged from
Chapter 11 reorganization proceedings. References herein to the "Company" shall
mean for all periods on or prior to March 31, 1999, Westbridge and its
subsidiaries, and for all periods on or after the close of business on March 31,
1999, Ascent and its subsidiaries. For additional information regarding the
reorganization and adoption of fresh start accounting, see Notes 2 and 6 to the
Condensed Consolidated Financial Statements included at Part 1, Item I.
The following discussion provides management's assessment of financial condition
at June 30, 2000 as compared to December 31, 1999 and results of operations for
the three and six months ended June 30, 2000 as compared to the comparable 1999
periods for the Company. This discussion updates the "Management's Discussion
and Analysis of Financial condition and Results of Operations" in the Company's
1999 Report on Form 10-K and should be read in conjunction therewith. Statements
contained in this analysis and elsewhere in this document that are not based on
historical information are forward-looking statements and are based on
management's projections, estimates and assumptions. Management cautions readers
regarding its forward-looking statements (see "Forward-Looking Statements").
BUSINESS OVERVIEW
The Company's revenues result primarily from premiums and fees from the
insurance products sold by its wholly owned subsidiaries National Foundation
Life Insurance Company ("NFL"), Freedom Life Insurance Company of America
("FLICA"), National Financial Insurance Company ("NFIC") and American Insurance
Company of Texas ("AICT", and together with NFL, NFIC and FLICA, collectively,
the "Insurance Subsidiaries") and marketed by NationalCare(R) Marketing, Inc.
("NCM"), also a wholly owned subsidiary. To a lesser extent the Company derives
revenue from (i) telemarketing services, (ii) printing services, and (iii)
renewal commissions received by the Company for sales of insurance products
underwritten primarily by unaffiliated managed care organizations (such sales
have been significantly curtailed).
The product lines currently marketed and underwritten by the Company's Insurance
Subsidiaries are Medical Expense products and Specified Disease products.
Medical Expense products are generally designed to reimburse insureds for
eligible expenses incurred for hospital confinement, surgical expenses,
physician services, outpatient services and the cost of medicines. Specified
Disease products include indemnity policies for hospital confinement and
convalescent care for treatment of specified diseases and "event specific"
policies, which provide fixed benefits or lump sum payments upon diagnoses of
certain types of internal cancer or other catastrophic diseases. Historically,
the Company's Insurance Subsidiaries have also underwritten a significant amount
of Medicare Supplement products. The underwriting of Medicare Supplement
products was curtailed due to the relatively low margins for these products.
OPERATING RESULTS
Results of operations for Ascent are reported for the three months ended June
30, 2000 and 1999 and for the six months ended June 30, 2000. Results for the
six months ended June 30, 1999 are reported on a pro forma basis as if Ascent
and Westbridge adopted fresh start accounting on January 1, 1999 and operated as
a single entity. (In thousands except insurance operating ratios.)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------ --------------------------------
2000 1999 2000 1999
------------- ------------ -------------- ---------------
Ascent Ascent Ascent Proforma Ascent
<S> <C> <C> <C> <C>
Premiums $ 29,228 $ 29,574 $ 58,233 $ 59,522
Other 810 325 1,495 549
------------- ------------ -------------- ---------------
Total insurance operating revenue 30,038 29,899 59,728 60,071
Benefits and claims 22,962 21,733 46,644 43,532
Commissions 2,838 2,961 5,948 6,483
Amortization of deferred policy acquisition costs 641 392 1,221 678
General and administrative expense 5,843 4,662 10,965 10,141
Taxes licenses and fees 1,269 1,293 2,460 2,352
------------- ------------ -------------- ---------------
Total insurance operating expenses 33,553 31,041 67,238 63,186
------------- ------------ -------------- ---------------
Insurance operating results (3,515) (1,142) (7,510) (3,115)
------------- ------------ -------------- ---------------
Fee and service income 4,484 3,871 8,695 7,910
Fee and service expenses (3,747) (3,259) (7,232) (7,027)
------------- ------------ -------------- ---------------
Fee and service results 737 612 1,463 883
------------- ------------ -------------- ---------------
Net investment income 2,266 2,333 4,344 4,895
Net realized loss on investments (254) (63) (237) (22)
Interest expense on notes payable (152) (119) (236) (238)
------------- ------------ -------------- ---------------
(Loss) income before income taxes (918) 1,621 (2,176) 2,403
Income tax benefit (expense) 312 (567) 740 (841)
------------- ------------ -------------- ---------------
Net (loss) income $ (606) $ 1,054 $ (1,436) $ 1,562
============= ============ ============== ===============
Insurance operating ratios*
Benefits and claims 78.6% 73.5% 80.1% 73.1%
Commissions 9.7% 10.0% 10.2% 10.9%
Amortization of deferred policy acquisition costs 2.2% 1.3% 2.1% 1.1%
General and administrative expense 19.5% 15.6% 18.4% 16.9%
Taxes, licenses and fees 4.3% 4.4% 4.2% 4.0%
</TABLE>
*Ratios are calculated as a percent of premium with the exception of the general
and administrative expense ratio which is calculated as a percent of total
insurance operating revenue.
<PAGE>
Overview. For the second quarter of 2000, the Company incurred a loss before
income taxes of $0.9 million compared to $1.6 million of income before income
taxes for the second quarter of 1999. The unfavorable trend in pre-tax income
was principally attributable to the 5.1 percentage point increase in the
benefits and claims ratio and a 3.9 percentage point increase in general and
administrative expenses which reduced insurance operating results and pre-tax
income by $1.5 million and $1.2 million, respectively.
For the first six months of 2000, the pre-tax loss was $2.2 million, compared to
$2.4 million of pre-tax income for the six months ended June 30, 1999. A 7.0
percentage point increase in the benefits and claims ratio was the principal
contributor to the decline in pre-tax income.
The following narratives discuss the principal components of insurance operating
results and net investment income.
Premiums. Premium revenue, in thousands, for each major product line is set
forth below:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
Ascent Ascent Ascent Proforma
Ascent
Medical Expense:
<S> <C> <C> <C> <C>
First-year $ 6,629 $ 3,566 $ 12,847 $ 6,363
Renewal 8,514 10,316 17,308 21,601
---------- ---------- ---------- ----------
Subtotal 15,143 13,882 30,155 27,964
---------- ---------- ---------- ----------
Specified Disease:
First-year 352 340 726 637
Renewal 6,468 7,067 13,294 14,335
---------- ---------- ---------- ----------
Subtotal 6,820 7,407 14,020 14,972
---------- ---------- ---------- ----------
Medicare Supplement:
First-year - - - 22
Renewal 6,574 8,152 13,074 16,291
---------- ---------- ---------- ----------
Subtotal 6,574 8,152 13,074 16,313
---------- ---------- ---------- ----------
Other 691 133 984 273
---------- ---------- ---------- ----------
Total Premium Revenue $ 29,228 $ 29,574 $ 58,233 $ 59,522
========== ========== ========== ==========
</TABLE>
Total premiums decreased slightly by $0.3 million, or 1%, in the second quarter
of 2000 as compared to the second quarter of 1999 as new business production
almost fully offset the expected decline in renewal premiums from older, closed
blocks of business. The Company is principally marketing medical expense
products. No medicare supplement products are being marketed.
Benefits and Claims. Benefits and claims are comprised of (1) claims paid, (2)
changes in claim reserves for claims incurred (whether or not reported), and (3)
changes in future policy benefit reserves. The increases in the ratio of
benefits and claims to premiums for the second quarter of 2000 and the first six
months of 2000 compared to the comparable 1999 periods were due primarily to
unfavorable paid claims experience in the Medical Expense line of business for
both first-year and renewal business. The Company continues to pursue
initiatives to reduce its benefits and claims to premium ratio including
increased production of profitable products and active premium rate increase
management.
General and Administrative expense. For the second quarter of 2000 and the six
months ended June 30, 2000, general and administrative expenses increased over
the comparable 1999 period due to expenses related to the implementation in May,
2000 of the Company's new policy administration and claims data processing
systems and increased new business production.
Net investment income. For the six months ended June 30, 2000, net investment
income decreased $0.6 million, or 11%, as compared to the same period in 1999
primarily due to a 10% decrease in average invested assets.
FINANCIAL CONDITION
Investments. The following table summarizes the Company's fixed maturity
securities, excluding short-term investments and certificates of deposit. All of
the Company's fixed maturity securities are classified as available-for-sale and
are carried at estimated market value. Estimated market value represents the
closing sales prices of marketable securities. Investments in the debt
securities of corporations are principally in publicly traded bonds.
<TABLE>
<CAPTION>
June 30, 2000 December 31, 1999
-------------------- --------------------
Market Market
Fixed Maturity Securities Value % Value %
--------------------------------------------- ---------- ------- ---------- -------
(in thousands) (in thousands)
U.S. Government and governmental
agencies and authorities (except
<S> <C> <C> <C> <C>
mortgage-backed) $ 9,522 9.5 $ 10,688 11.0
Finance 23,321 23.4 23,950 24.5
Public utilities 6,353 6.4 9,128 9.4
Mortgage-backed 13,548 13.6 7,725 7.9
States, municipalities and political
subdivisions 1,877 1.9 1,867 1.9
All other corporate bonds 45,087 45.2 44,205 45.3
---------- ------- ---------- -------
Total fixed maturity securities $ 99,708 100.0 $ 97,563 100.0
========== ======= ========== =======
</TABLE>
The following table indicates by rating the composition of the Company's fixed
maturity securities portfolio, excluding short-term investments and certificates
of deposit. Ratings are the lower of those assigned by Standard & Poor's and
Moody's, when available, and are shown in the table using the Standard & Poor's
rating scale. Unrated securities are assigned ratings based on the applicable
NAIC's designation or the rating assigned to comparable debt outstanding of the
same issuer. NAIC 1 fixed maturity securities have been classified as "A" and
NAIC 2 fixed maturity securities have been classified as "BBB".
<PAGE>
<TABLE>
<CAPTION>
June 30, 2000 December 31, 1999
-------------------- --------------------
Composition of Fixed Maturity Market Market
Securities by Rating Value % Value %
--------------------------------------------- ---------- ------- ---------- -------
(in thousands) (in thousands)
Ratings
-------
Investment grade:
<S> <C> <C> <C> <C>
U.S. Government and agencies $ 23,070 23.1 $ 18,414 18.9
AAA 2,029 2.0 1,865 1.9
AA 9,090 9.1 10,277 10.5
A 36,319 36.5 35,823 36.7
BBB 27,883 28.0 29,732 30.5
Non-Investment grade:
BB 1,006 1.0 1,133 1.2
B and below 311 0.3 319 0.3
---------- ------- ---------- -------
Total fixed maturity securities $ 99,708 100.0 $ 97,563 100.0
========== ======= ========== =======
</TABLE>
The scheduled contractual maturities of the Company's fixed maturity securities,
excluding short-term investments and certificates of deposit, at June 30, 2000
and December 31, 1999 are shown in the table below. Expected maturities may
differ from contractual maturities because borrowers may have the right to call
or prepay obligations with or without penalties.
<TABLE>
<CAPTION>
June 30, 2000 December 31, 1999
-------------------- --------------------
Composition of Fixed Maturity Market Market
Securities by Maturity Value % Value %
--------------------------------------------- ---------- ------- ---------- -------
(in thousands) (in thousands)
Scheduled Maturity
<S> <C> <C> <C> <C>
Due in one year or less $ 4,790 4.8 $ 4,012 4.1
Due after one year through five years 26,963 27.0 33,311 34.2
Due after five years through ten years 29,120 29.2 26,367 27.0
Due after ten years 25,287 25.4 26,148 26.8
Mortgage-backed securities 13,548 13.6 7,725 7.9
---------- ------- ---------- -------
Total fixed maturity securities $ 99,708 100.0 $ 97,563 100.0
========== ======= ========== =======
</TABLE>
Claim Reserves. Claim reserves are established by the Company for benefit
payments which have already been incurred by the policyholder but which have not
been paid by the Company. Claim reserves totaled $44.8 million at June 30, 2000
as compared to $38.8 million at December 31, 1999. The process of estimating
claim reserves involves the active participation of experienced actuarial
consultants with input from the underwriting, claims, and finance departments.
The inherent uncertainty in estimating claim reserves is increased when
significant changes occur. Examples of such changes include: (1) changes in
economic conditions; (2) changes in state or federal laws and regulations,
particularly insurance reform measures; (3) changes in production sources for
existing lines of business; (4) writings of significant blocks of new business
and (5) significant changes in claims payment patterns. Because claim reserves
are estimates, management monitors reserve adequacy over time, evaluating new
information as it becomes available and adjusting claim reserves as necessary.
Such adjustments are reflected in current operations.
Management considers many factors when setting reserves including: (1)
historical trends; (2) current legal interpretations of coverage and liability;
(3) loss payments and pending levels of unpaid claims; and (4) product mix.
Based on these considerations, management believes that adequate provision has
been made for the Company's claim reserves. Actual claims paid may deviate,
perhaps substantially, from such reserves.
Future Policy Benefit Reserves. Future policy benefit reserves are established
by the Company for benefit payments that have not been incurred but which are
estimated to be incurred in the future. Future policy benefit reserves totaled
$61.1 million at June 30, 2000 as compared to $57.1 million at December 31,
1999. Future policy benefit reserves are calculated according to the net level
premium reserve method and are equal to the discounted present value of the
Company's expected future policyholder benefits minus the discounted present
value of its expected future net premiums. These present value determinations
are based upon assumed fixed investment yields, the age of the insured(s) at the
time of policy issuance, expected morbidity and persistency rates, and expected
future policyholder benefits.
In determining the morbidity, persistency rate, claim cost and other assumptions
used in determining the Company's future policy benefit reserves, the Company
relies primarily upon its own benefit payment history and upon information
developed in conjunction with actuarial consultants and industry data. The
Company's persistency rates have a direct impact upon its policy benefit
reserves because the determinations for this reserve are, in part, a function of
the number of policies in force and expected to remain in force to maturity. If
persistency is higher or lower than expected, future policyholder benefits will
also be higher or lower because of the different than expected number of
policies in force, and the policy benefit reserves will be increased or
decreased accordingly.
In accordance with GAAP, the Company's actuarial assumptions are generally
fixed, and absent materially adverse benefit experience, they are not generally
adjusted. The Company monitors the adequacy of its policy benefit reserves on an
ongoing basis by periodically analyzing the accuracy of its actuarial
assumptions. The adequacy of the Company's policy benefit reserves may also be
impacted by the development of new medicines and treatment procedures which may
alter the incidence rates of illness and the treatment methods for illness and
accident (such as out-patient versus in-patient care) or prolong life
expectancy. Changes in coverage provided by major medical insurers or government
plans may also affect the adequacy of the Company's reserves if, for example,
such developments had the effect of increasing or decreasing the incidence rate
and per claim costs of occurrences against which the Company insures. An
increase in either the incidence rate or the per claim costs of such occurrences
could result in the Company needing to post additional reserves, which could
have a material adverse effect upon its business, financial condition or results
of operations.
LIQUIDITY, CAPITAL RESOURCES AND STATUTORY CAPITAL AND SURPLUS
Ascent. Ascent's principal assets consist of the capital stock of its operating
subsidiaries and invested assets. Accordingly, Ascent's sources of funds are
primarily comprised of dividends from its operating subsidiaries, advances and
management fees from non-insurance subsidiaries, and tax payments under a tax
sharing agreement among Ascent and its subsidiaries. The Company's principal
uses of cash are for capital contributions to its Insurance Subsidiaries and
general and administrative expenses. The Company funded capital contributions of
$0.8 million in the second quarter of 2000 and $2.0 million in the first quarter
of 2000 to its Insurance Subsidiaries. The Company expects to make additional
contributions to its Insurance Subsidiaries to support planned growth in 2000
and 2001. Continued adverse paid claims experience in Medical Expense products
could have a material adverse impact on the Company's ability to provide
sufficient capital contributions to its Insurance Subsidiaries to support
planned growth. As of June 30, 2000, Ascent held approximately $6.2 million in
unrestricted cash and invested assets as compared to $8.7 million at December
31, 1999.
Dividends on Ascent's Redeemable Convertible Preferred Stock ("Preferred Stock")
may be paid in cash or by issuance of additional shares of Preferred Stock, at
the Company's option. Preferred Stock dividends for 1999 were paid in January
2000 through the issuance of 1,873 additional shares of Preferred Stock and a
$965 distribution of cash.
Dividends paid by the Insurance Subsidiaries are determined by and subject to
the regulations of the insurance laws and practices of the insurance departments
of their respective state of domicile. NFL, a Delaware domestic company, is
precluded from paying dividends in 2000 without the prior approval of the
Delaware Insurance Commissioner, as its earned surplus is negative. Further, NFL
has agreed to obtain prior approval for any future dividends. NFIC and AICT,
Texas domestic companies, are also precluded from paying dividends during 2000
without the prior approval of the Texas Insurance Commissioner as both
companies' earned surplus is negative. FLICA, a Mississippi domestic company, is
precluded from paying dividends during 2000 without the prior approval of the
Mississippi Insurance Commissioner as it recorded a net loss from operations for
the year ended December 31, 1999.
Insurance Subsidiaries. The primary sources of cash for the Insurance
Subsidiaries are premiums and income on invested assets. Additional cash is
periodically provided by capital contributions from the Company (see "Ascent"
discussion above) and from the sale of short-term investments and could, if
necessary, be provided through the sale of long-term investments and blocks of
business. The Insurance Subsidiaries' primary uses for cash are benefits and
claims, commissions, general and administrative expenses, and taxes, licenses
and fees.
Inflation will affect claim costs on the Company's Medicare Supplement and
Medical Expense products. Costs associated with a hospital stay and the amounts
reimbursed by the Medicare program are each determined, in part, based on the
rate of inflation. If hospital and other medical costs that are reimbursed by
the Medicare program increase, claim costs on the Medicare Supplement products
will increase. Similarly, as the hospital and other medical costs increase,
claim costs on the Medical Expense products will increase. The Company has
somewhat mitigated its exposure to inflation in incorporating certain
limitations on the maximum benefits which may be paid under its policies and by
filing for premium rate increases as necessary.
Consolidated. The Company's consolidated net cash provided by (used for)
operations totaled $6.6 million and $(1.8) million for the second quarter of
2000 and 1999, respectively. The $8.4 million increase in cash flow from
operations was primarily attributable to a decrease in the benefits and claims
paid during the second quarter of 2000, which resulted primarily from: (1) a
loss of five production days due to the March 28, 2000 tornado in downtown Fort
Worth where the Company's administrative offices are located and (2) a decrease
in claims paid per examiner due to the challenges inherent with the introduction
of the new data processing system for claim payments. The Company expects to
resume normal claims processing levels by the end of the third quarter of 2000.
Net cash (used for) provided by investing activities for the second quarter of
2000 and 1999 totaled $(9.3) million and $3.3 million, respectively. The
increase in net cash used for investment activities for 2000 was primarily for
the purchase of fixed maturity and short-term investments.
Net cash provided by (used for) financing activities totaled $1.0 million and
$(1.6) million for the second quarter of 2000 and 1999, respectively. Financing
activities during the second quarter of 2000 include $1.1 million in borrowings
related to the Company's receivable financing program, and $0.1 million in
repayments related to the term loan facility. Financing activities for the same
period in 1999 relate primarily to $3.0 million of repayments and $1.4 million
of new borrowings associated with the Company's receivables financing program.
In the ordinary course of business, the Company advances commissions on policies
written by its general agencies and their agents. The Company finances the
majority of its obligations to make commission advances through Ascent Funding,
Inc. ("AFI"), an indirect wholly owned subsidiary of Ascent which has entered
into a Credit Agreement (the "Credit Agreement") with LaSalle Bank N. A.
("LaSalle"). This Credit Agreement, as amended, provides AFI with a $7.5 million
three-year revolving loan facility which expires on June 5, 2001. The proceeds
of this facility are used to purchase agent advance receivables from the
Insurance Subsidiaries and certain affiliated marketing companies. At June 30,
2000, approximately $5.7 million was outstanding under the Credit Agreement.
AFI's obligations under the Credit Agreement are secured by liens upon
substantially all of AFI's assets. Furthermore, Ascent has guaranteed AFI's
obligations under the Credit Agreement, and has pledged all of the issued and
outstanding shares of the capital stock of AFI, NFL and NFIC as collateral for
that guaranty (the "Guaranty Agreement"). As of August 14, 2000, there were no
events of default under the Credit or Guaranty Agreements.
In July 1999, Ascent Management, Inc. ("AMI") entered into a $3.3 million term
loan facility with LaSalle, proceeds of which were used to fund system
replacement costs. Advances under the term loan facility are secured by
substantially all of AMI's assets and the Guaranty Agreement. Under the terms of
the loan, principal is payable in 60 equal monthly installments beginning
January 31, 2000. At June 30, 2000, approximately $3.0 million was outstanding
under the term loan facility.
FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements. The preceding statements and certain other
statements contained in Part 1, Item 1 - Financial Statements and Part 1, Item 2
- Management's Discussion and Analysis of Results of Operation and Financial
Condition, are forward-looking statements. These forward-looking statements are
based on the intent, belief or current expectations of the Company and members
of its senior management team. While the Company believes that its expectations
are based on reasonable assumptions within the bounds of its knowledge of its
business and operations, prospective investors are cautioned that any such
forward-looking statements are not guarantees of future performance, and involve
risks and uncertainties, and that actual results may differ materially from
those contemplated by such forward-looking statements.
Important factors known to management that could cause actual results to differ
materially from those contemplated by the forward-looking statements in this
Report include, but are not limited to:
* the effect of economic and market conditions
* further adverse developments with respect to the Company's liquidity
position or operations of the Company's various businesses
* actions that may be taken by insurance regulatory authorities
* adverse developments in the timing or results of the Company's current
strategic business plan
* the difficulty in controlling health care costs and integrating new
operations
* the ability of the Company to realize anticipated general and
administrative expense savings and overhead reductions from system
replacement initiatives
* the ability of management to return the Company's operations to
profitability, and
* the possible negative effects of prospective health care reform.
Additional factors that would cause actual results to differ materially from
those contemplated within this report can also be found in the Company's reports
to the Securities and Exchange Commission ("SEC") on Form 10-K for the Year
Ended December 31, 1999 and Form 10-Q for the Three Months Ended March 31, 2000.
Subsequent written or oral statements attributable to the Company or persons
acting on its behalf are expressly qualified in their entirety by the cautionary
statements in this Report and those in the Company's reports previously filed
with the SEC. Copies of these filings may be obtained by contacting the Company
or the SEC.
<PAGE>
ASCENT ASSURANCE, INC.
PART II
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 11, 2000, Ascent Assurance, Inc. held its annual meeting of shareholders.
At the meeting, the shareholders elected two directors of the Company and
ratified the selection of PricewaterhouseCoopers LLP as the Company's
independent accountants.
The shareholders elected Richard H. Hershman and Robert A. Peiser to serve on
the Company's Board of Directors for a three year term expiring in 2003. The
following table reflects the votes cast at the annual meeting:
For Withheld
---------------- ----------------
Richard H. Hershman 6,293,376 15,347
Robert A. Peiser 6,293,376 15,347
Total Votes Cast 6,308,723
Directors whose terms continued and the years in which their term expires are as
follows:
Director Term Expiration
---------------------------- ----------------------
Patrick J. Mitchell 2001
James K. Steen 2001
Paul E. Suckow 2001
John H. Gutfreund 2002
Michael A. Kramer 2002
The Company's Board of Directors selected the firm of PricewaterhouseCoopers LLP
as the independent accountants of the Company for 2000. At the annual meeting,
the shareholders ratified the Board of Director's selection. Out of the total
votes cast; 6,293,775 voted for; 14,776 voted against; and 172 abstained from
voting.
<PAGE>
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following exhibits are filed herewith. Exhibits incorporated by reference
are indicated in the parentheses following the description.
2.1 First Amended Plan of Reorganization of Westbridge Capital Corp. Under
Chapter 11 of the Bankruptcy Code, dated as of October 30, 1998
(incorporated by reference to Exhibit 2 to the Company's Form 8-K filed on
September 21, 1998).
2.2 Amended Disclosure Schedule Accompanying the First Amended Plan of
Reorganization of Westbridge Capital Corp. under Chapter 11 of the
Bankruptcy Code (incorporated by reference to Exhibit 2 to the Company's
Form 8-K filed on September 21, 1998).
2.3 Findings of Fact, Conclusions of Law, and Order confirming the First
Amended Plan of Reorganization of Westbridge Capital Corp. dated October
30, 1998, as modified (incorporated by reference to Exhibit 2 to the
Company's Form 8-K filed on December 29, 1998).
3.1 Second Amended and Restated Certificate of Incorporation of the Company
filed with the Secretary of State of Delaware on March 24, 1999
(incorporated by reference to Exhibit 3.1 to the Company's Form 8-A filed
on March 25, 1999).
3.2 Amended and Restated By-Laws of the Company, effective as of March 24, 1999
(incorporated by reference to Exhibit 3.2 to the Company's Form 8-A filed
on March 25, 1999).
3.3 Amendment to the By-Laws of the Company, effective as of April 5, 2000.
4.1 Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1
to the Company's Form 8-A filed on March 25, 1999).
4.2 Form of Warrant Certificate, included in the Form of Warrant Agreement
(incorporated by reference to Exhibit 4.2 to the Company's Form 8-A filed
on March 25, 1999).
4.3 Form of Warrant Agreement dated as of March 24, 1999, between the Company
and LaSalle National Bank, as warrant agent (incorporated by reference to
Exhibit 4.3 to the Company's Form 8-A filed on March 25, 1999).
4.4 Form of Preferred Stock Certificate (incorporated by reference to Exhibit
4.4 to the Company's Annual Report on Form 10-K for the year ended December
31, 1998).
10.1 First Amendment to Guaranty Agreement dated as of March 24, 1999 between
Westbridge Capital Corp. in favor of LaSalle National Bank (incorporated by
reference to Exhibit 10.12 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1998).
10.2 Registration Rights Agreement dated as of March 24, 1999 between the
Company and Special Situations Holdings, Inc. - Westbridge (incorporated by
reference to Exhibit 10.13 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1998).
10.3 1999 Stock Option Plan dated as of March 24, 1999 (incorporated by
reference to the Company's Schedule 14A filed with the Commission on April
30, 1999)
10.4 Installment Note Agreement dated July 20, 1999 between Ascent Management,
Inc. and LaSalle Bank National Association (incorporated by reference to
Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1999).
10.5 Second Amendment to Credit Agreement dated August 12, 1999 between Ascent
Funding, Inc. and LaSalle Bank National Association (incorporated by
reference to Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1999).
10.6 Second Amendment to Guaranty Agreement dated July 20, 1999 between Ascent
Assurance, Inc. and LaSalle Bank National Association (incorporated by
reference to Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1999).
10.7 Third Amendment to Guaranty Agreement dated April 17, 2000 between Ascent
Assurance, Inc. and LaSalle Bank National Association.
10.8 Extension of Employment Agreement, dated as of September 15, 1998, by and
among the Company, Westbridge Management Corp. and Mr. Patrick J. Mitchell.
10.9 Extension of Employment Agreement, dated as of September 15, 1998, by and
among the Company, Westbridge Management Corp. and Mr. Patrick H. O'Neill.
27.1 Financial Data Schedule (included in electronic filing only).
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended June 30, 2000.
<PAGE>
Form 10-Q
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 duly authorized.
ASCENT ASSURANCE, INC.
/s/ Cynthia B. Koenig
----------------------
Cynthia B. Koenig
Senior Vice President,
Chief Financial Officer and Treasurer
(Principal Financial and
Accounting Officer)
Dated at Fort Worth, Texas
August 14, 2000
