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 September 30, 2000
Commission File Number 1-8538
ASCENT ASSURANCE, INC.
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(Exact name of Registrant as specified in its Charter)
DELAWARE 73-1165000
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(State of Incorporation) (I.R.S. Employer Identification No.)
110 West Seventh Street, Suite 300, Fort Worth, Texas 76102
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(Address of Principal Executive Offices) (Zip Code)
817-878-3300
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(Registrant's Telephone Number, including Area Code)
N/A
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(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
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Common Stock - Par Value $.01 6,500,000 Shares Outstanding at November 14, 2000
<PAGE>
ASCENT ASSURANCE, INC.
INDEX TO FORM 10-Q
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PART 1 - FINANCIAL INFORMATION Page No.
------------------------------ --------
Item 1 - Financial Statements
Ascent Assurance, Inc. Condensed Consolidated Balance Sheets at
September 30, 2000 and December 31, 1999 2
Ascent Assurance, Inc. Condensed Consolidated Statements of Operations
for the Three Months Ended September 30, 2000 and 1999, the Nine Months
Ended September 30, 2000 and the Six Months Ended September 30, 1999 3
Westbridge Capital Corp. Condensed Consolidated Statement of Operations
for the Three Months ended March 31, 1999 4
Ascent Assurance, Inc. Condensed Consolidated Statements of
Comprehensive Income for the Three Months Ended September 30, 2000 and
1999, the Nine Months Ended September 30, 2000 and the Six Months Ended
September 30, 1999 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 September 30, 2000 and 1999, the Nine Months
Ended September 30, 2000 and the Six Months Ended September 30, 1999 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 Nine Months Ended September 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 6 - Exhibits and Reports on Form 8-K 22
<PAGE>
ASCENT ASSURANCE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2000 1999
(Unaudited) (Audited)
------------- ------------
(in thousands,
except per share data)
Assets
Investments:
Fixed Maturities:
Available-for-sale, at market value
(amortized cost $108,807 and $103,436) $ 103,724 $ 97,563
Equity securities, at market (cost $1,365) 1,309 1,313
Other investments 430 413
Short-term investments 11,490 10,904
------------- ------------
Total Investments 116,953 110,193
Cash 6,063 5,110
Accrued investment income 1,820 2,030
Receivables from agents, net of allowance
for doubtful accounts of $5,806 and $6,060 8,422 7,062
Deferred policy acquisition costs 25,286 19,393
Deferred tax asset, net 7,917 7,086
Property and equipment, net of accumulated
depreciation of $2,435 and $1,546 6,506 6,272
Other assets 6,379 6,544
------------- ------------
Total Assets $ 179,346 $ 163,690
============= ============
Liabilities, Preferred Stock and Stockholders' Equity
Liabilities:
Policy liabilities and accruals:
Future policy benefits $ 60,953 $ 57,119
Claim reserves 42,998 38,776
------------- ------------
Total policy liabilities and accruals 103,951 95,895
Accounts payable and other liabilities 20,351 13,592
Notes payable 9,651 7,162
------------- ------------
Total liabilities 133,953 116,649
------------- ------------
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 27,534 27,338
Accumulated other comprehensive loss,
net of tax (3,392) (3,851)
Retained (deficit) earnings (3,944) 232
------------- ------------
Total Stockholders' Equity 20,263 23,784
------------- ------------
Total Liabilities, Preferred Stock
and Stockholders' Equity $ 179,346 $ 163,690
============= ============
See the Notes to the Condensed Consolidated Financial Statements.
<PAGE>
ASCENT ASSURANCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
Three Months Nine Months Six Months
Ended Ended Ended
September 30, September 30, September 30,
------------------------------ ------------- -------------
2000 1999 2000 1999
------------- ------------- ------------- -------------
(in thousands, except per share data)
Revenues:
Premiums:
<S> <C> <C> <C> <C>
First-year $ 8,419 $ 4,810 $ 22,358 $ 8,713
Renewal 22,412 23,702 66,706 49,373
------------- ------------- ------------- -------------
30,831 28,512 89,064 58,086
Net investment income 2,626 2,222 6,970 4,555
Fee and service income 5,207 4,506 15,397 8,702
Net realized gain (loss) on investments 28 (107) (209) (170)
------------- ------------- ------------- -------------
38,692 35,133 111,222 71,173
------------- ------------- ------------- -------------
Benefits, claims and expenses:
Benefits and claims 24,516 22,619 71,160 44,352
Amortization of deferred policy acquisition
costs 780 502 2,001 894
Commissions 5,062 4,859 14,442 9,796
General and administrative expenses 8,094 6,042 22,614 11,987
Taxes, licenses and fees 1,235 1,190 3,939 2,483
Interest expense on notes payable 198 85 435 204
Resolution of pre-confirmation contingencies - (1,235) - (1,235)
------------- ------------- ------------- -------------
39,885 34,062 114,591 68,481
(Loss) income before income taxes (1,193) 1,071 (3,369) 2,692
Federal income tax benefit (expense) 406 (364) 1,146 (931)
------------- ------------- ------------- -------------
Net (loss) income $ (787) $ 707 $ (2,223) $ 1,761
============= ============= ============= =============
Preferred stock dividends 651 596 1,953 1,243
------------- ------------- ------------- -------------
(Loss) income applicable to common stockholders $ (1,438) $ 111 $ (4,176) $ 518
============= ============= ============= =============
Basic and diluted (loss) earnings per
common share $ (.22) $ .02 $ (.64) $ .08
============= ============= ============= =============
Weighted average shares outstanding:
Basic 6,500 6,500 6,500 6,500
============= ============= ============= =============
Diluted 6,500 6,500 6,500 6,515
============= ============= ============= =============
</TABLE>
See the Notes to the Condensed Consolidated Financial Statements.
<PAGE>
WESTBRIDGE CAPITAL CORP.
(now, Ascent Assurance, Inc.)
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Audited)
Three Months Ended
March 31, 1999
---------------------
(in thousands, except
per share data)
Revenues:
Premiums:
First-year $ 3,121
Renewal 26,827
---------------------
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
=====================
See the Notes to the Condensed Consolidated Financial Statements.
<PAGE>
ASCENT ASSURANCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
<TABLE>
Three Months Nine Months Six Months
Ended Ended Ended
September 30, September 30, September 30,
------------------------------- ------------- -------------
2000 1999 2000 1999
------------- ------------- ------------- -------------
(in thousands)
<S> <C> <C> <C> <C>
Net (loss) income $ (787) $ 707 $ (2,223) $ 1,761
Other comprehensive income (loss):
Unrealized holding gain (loss)
arising during period, net of tax 997 (855) 321 (2,869)
Reclassification adjustment of
(gain) loss on sales of investments
included in net income, net of tax (18) 70 138 111
------------- ------------- ------------- -------------
Comprehensive gain (loss) $ 192 $ (78) $ (1,764) $ (997)
============= ============= ============= =============
</TABLE>
See the Notes to the Condensed Consolidated Financial Statements.
<PAGE>
WESTBRIDGE CAPITAL CORP.
(now, Ascent Assurance, Inc.)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Audited)
Three Months Ended
March 31, 1999
-------------------
(in thousands)
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)
===================
See the Notes to the Condensed Consolidated Financial Statements.
<PAGE>
ASCENT ASSURANCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
Three Months Nine Months Six Months
Ended Ended Ended
September 30, September 30, September 30,
------------------------------ ------------- -------------
2000 1999 2000 1999
------------- ------------- ------------- -------------
(in thousands)
Cash Flow From Operating Activities:
<S> <C> <C> <C> <C>
Net (loss) income $ (787) $ 707 $ (2,223) $ 1,761
Adjustments to reconcile net income to cash
provided by (used for) operating activities
Decrease in accrued investment income 203 152 210 165
Amortization of deferred policy acquisition costs 780 502 2,001 894
(Increase) decrease in receivables from agents (595) 58 (1,360) 1,302
Addition to deferred policy acquisition costs (2,735) (1,917) (7,894) (3,653)
Decrease (increase) in other assets 994 (2,011) 165 (945)
(Decrease) increase in policy liabilities and accruals (1,922) (434) 8,056 (2,094)
Increase (decrease) in accounts payable and other
liabilities 5,856 (5,486) 6,759 (8,038)
Decrease (increase) in deferred income taxes, net 118 1,923 (831) 896
Other, net (726) 883 1,275 2,275
------------- ------------- ------------- -------------
Net Cash Provided By (Used For) Operating Activities 1,186 (5,623) 6,158 (7,437)
------------- ------------- ------------- -------------
Cash Flow From Investing Activities:
Purchases of fixed maturity investments (10,369) (498) (19,375) (3,994)
Sales of fixed maturity investments 6,433 1,993 10,147 8,556
Maturities and calls of fixed maturity investments 1,285 1,420 3,283 2,227
Net decrease (increase) in short term and other
investments 3,308 2,050 (603) 2,677
Property and equipment purchased (326) (2,046) (1,146) (3,209)
------------- ------------- ------------- -------------
Net Cash Provided By (Used For) Investing Activities 331 2,919 (7,694) 6,257
------------- ------------- ------------- -------------
Cash Flow From Financing Activities:
Issuance of notes payable 974 4,650 2,862 6,058
Repayment of notes payable (93) (1,691) (373) (4,678)
------------- ------------- ------------- -------------
Net Cash Provided By Financing Activities 881 2,959 2,489 1,380
------------- ------------- ------------- -------------
Increase In Cash During Period 2,398 255 953 200
Cash At Beginning Of Period 3,665 2,155 5,110 2,210
------------- ------------- ------------- -------------
Cash At End Of Period $ 6,063 $ 2,410 $ 6,063 $ 2,410
============= ============= ============= =============
</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)
Three Months Ended
March 31, 1999
------------------
(in thousands)
Cash Flow From Operating Activities:
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
=================
See the Notes to the Condensed Consolidated Financial Statements.
<PAGE>
ASCENT ASSURANCE, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
(in thousands, except share data)
<TABLE>
Accumulated
Common Stock Capital Other Retained Total
------------ 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 (2,223) (2,223)
Preferred Stock dividend (1,953) (1,953)
Other comprehensive gain, net of tax 459 459
Amortization of unearned compensation 196 196
----------- -------- ------------ ------------- ----------- -------------
Balance at September 30, 2000 6,500,000 $ 65 $ 27,534 $ (3,392) $ (3,944) $ 20,263
=========== ======== ============ ============= =========== =============
</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 of reorganization. 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>
Ascent Westbridge
------------------------------------------------------ ------------
Three Months Nine Months Six Months Three Months
Ended Ended Ended Ended
September 30, Sept. 30, Sept. 30, March 31,
------------------------ ----------- ----------- ------------
2000 1999 2000 1999 1999
(amounts in 000's, except per share amounts)
<S> <C> <C> <C> <C> <C>
Net (loss) income $ (787) $ 707 $ (2,223) $ 1,761 $ 208
Preferred Stock dividends 651 596 1,953 1,243 -
---------- ---------- ----------- ----------- ------------
(Loss) income applicable to common
shareholders $ (1,438) $ 111 $ (4,176) $ 518 $ 208
========== ========== =========== =========== ============
Weighted average shares outstanding:
Basic 6,500 6,500 6,500 6,500 7,032
Diluted 6,500 6,500 6,500 6,515 7,032
Basic and diluted (loss) earnings per share $ (.22) $ .02 $ (.64) $ .08 $ .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.
<PAGE>
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.
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 Department of the State of Domicile
of the Company's Insurance Subsidiaries has 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 SFAS No. 133, an amendment of SFAS 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.
In March 2000, the FASB issued FASB Interpretation No. 44, "Accounting for
Certain Transactions Involving Stock Compensation - an interpretation of APB
Opinion No. 25" ("FIN 44"). The Company adopted FIN 44 on a prospective basis
effective July 1, 2000. The adoption of FIN 44 did not have a material impact on
the Company's results of operations, liquidity or financial position.
<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 September 30, 2000 as compared to December 31, 1999 and results of operations
for the three and nine months ended September 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
September 30, 2000 and 1999 and for the nine months ended September 30, 2000.
Results for the nine months ended September 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>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- -------------------------------
2000 1999 2000 1999
------------ ------------ ------------ ---------------
Ascent Ascent Ascent Proforma Ascent
<S> <C> <C> <C> <C>
Premiums $ 30,831 $ 28,512 $ 89,064 $ 88,034
Other 960 506 2,455 1,055
------------ ------------ ------------ ---------------
Total insurance operating revenue 31,791 29,018 91,519 89,089
Benefits and claims 24,516 22,619 71,160 66,151
Commissions 3,515 2,944 9,463 9,427
Amortization of deferred policy acquisition costs 780 502 2,001 1,180
General and administrative expense 6,257 4,846 17,222 14,987
Taxes licenses and fees 988 1,190 3,448 3,542
------------ ------------ ------------ ---------------
Total insurance operating expenses 36,056 32,101 103,294 95,287
------------ ------------ ------------ ---------------
Insurance operating results (4,265) (3,083) (11,775) (6,198)
------------ ------------ ------------ ---------------
Fee and service income 4,247 4,000 12,942 11,910
Fee and service expenses (3,631) (3,111) (10,862) (10,138)
------------ ------------ ------------ ---------------
Fee and service results 616 889 2,080 1,772
------------ ------------ ------------ ---------------
Net investment income 2,626 2,222 6,970 7,117
Net realized gain (loss) on investments 28 (107) (209) (129)
Interest expense on notes payable (198) (85) (435) (323)
Resolution of pre-confirmation contingencies - 1,235 - 1,235
------------ ------------ ------------ ---------------
(Loss) income before income taxes (1,193) 1,071 (3,369) 3,474
Income tax benefit (expense) 406 (364) 1,146 (1,216)
------------ ------------ ------------ ---------------
Net (loss) income $ (787) $ 707 $ (2,223) $ 2,258
============ ============ ============ ===============
Insurance operating ratios*
Benefits and claims 79.5% 79.3% 79.9% 75.1%
Commissions 11.4% 10.3% 10.6% 10.7%
Amortization of deferred policy acquisition costs 2.5% 1.8% 2.2% 1.3%
General and administrative expense 19.7% 16.7% 18.8% 16.8%
Taxes, licenses and fees 3.2% 4.2% 3.9% 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 third quarter of 2000, the Company incurred a loss before
income taxes of $1.2 million compared to $1.1 million of income before income
taxes for the corresponding 1999 period. The unfavorable variance in pre-tax
income was principally attributable to a 3.0 percentage point increase in
general and administrative expenses which reduced insurance operating results by
$0.9 million. In addition, pre-tax income for the third quarter of 1999 included
$1.2 million of non-recurring income relative to the favorable resolution of
pre-confirmation contingencies.
For the first nine months ended September 30, 2000, the loss before income taxes
was $3.4 million, compared to a $3.5 million income for the corresponding 1999
period. The principal contributors to the decline in pre-tax income were a 4.8
percentage point increase in the benefits and claim ratio, a 2.0 percentage
point increase in the general and administrative expense ratio and the
non-recurring prior years' income from the favorable resolution of
pre-confirmation contingencies.
The following narratives discuss the principal components of insurance operating
results.
Premiums. Premium revenue, in thousands, for each major product line is set
forth below:
<TABLE>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- ----------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
Ascent Ascent Ascent Proforma
Ascent
Medical Expense:
<S> <C> <C> <C> <C>
First-year $ 7,158 $ 4,320 $ 20,005 $ 10,683
Renewal 10,301 9,446 27,609 31,047
------------ ------------ ------------ ------------
Subtotal 17,459 13,766 47,614 41,730
------------ ------------ ------------ ------------
Specified Disease:
First-year 325 342 1,051 979
Renewal 6,573 6,804 19,867 21,139
------------ ------------ ------------ ------------
Subtotal 6,898 7,146 20,918 22,118
------------ ------------ ------------ ------------
Medicare Supplement:
First-year - 10 - 32
Renewal 5,330 7,325 18,404 23,616
------------ ------------ ------------ ------------
Subtotal 5,330 7,335 18,404 23,648
------------ ------------ ------------ ------------
Other 1,144 265 2,128 538
------------ ------------ ------------ ------------
Total Premium Revenue $ 30,831 $ 28,512 $ 89,064 $ 88,034
============ ============ ============ ============
</TABLE>
Total premiums increased by $2.3 million, or 8%, in the third quarter of 2000 as
compared to the third quarter of 1999 and $1.0 million, or 1%, for the nine
months of 2000 as compared to the corresponding 1999 period as new business
production exceeded 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 increase in the ratio of benefits
and claims to premiums for the first nine months of 2000 compared to the
corresponding 1999 period was 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. In July 2000,
the Company began marketing a new medical expense policy in all significant
marketing regions and discontinued selling the principal medical expense policy
sold since 1998. The new medical expense policy is designed to produce a
substantially lower benefits and claims to premium ratio than the Company's
discontinued products.
General and Administrative expense. For the third quarter of 2000 and the nine
months ended September 30, 2000, general and administrative expenses increased
over the comparable 1999 period due principally to non-recurring expenses of
$650,000 related to the implementation in May, 2000 of the Company's new policy
administration and claims data processing systems.
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>
September 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) $ 10,097 9.7 $ 10,688 11.0
Finance 23,661 22.8 23,950 24.5
Public utilities 6,420 6.2 9,128 9.4
Mortgage-backed and asset-backed 17,050 16.5 7,725 7.9
States, municipalities and political
subdivisions 1,905 1.8 1,867 1.9
All other corporate bonds 44,591 43.0 44,205 45.3
-------------- --------- -------------- ---------
Total fixed maturity securities $ 103,724 100.0 $ 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
above) and NAIC 2 fixed maturity securities have been classified as "BBB".
<TABLE>
September 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 $ 22,603 21.8 $ 18,414 18.9
AAA 5,828 5.6 1,865 1.9
AA 8,781 8.5 10,277 10.5
A 37,365 36.0 35,823 36.7
BBB 28,050 27.1 29,732 30.5
Non-Investment grade:
BB 642 0.6 1,133 1.2
B and below 455 0.4 319 0.3
-------------- --------- ------------- ---------
Total fixed maturity securities $ 103,724 100.0 $ 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 September 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>
September 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 $ 5,842 5.6 $ 4,012 4.1
Due after one year through five years 27,980 27.0 33,311 34.2
Due after five years through ten years 28,802 27.8 26,367 27.0
Due after ten years 24,050 23.2 26,148 26.8
Mortgage-backed and asset-backed securities 17,050 16.4 7,725 7.9
-------------- --------- -------------- ---------
Total fixed maturity securities $ 103,724 100.0 $ 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 $43.0 million at September 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. As a result of the
implementation of a new claims administration system in May 2000, the Company's
claims payment pattern has accelerated. 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
$61.0 million at September 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 and advances from non-insurance 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 to its Insurance Subsidiaries of $2.0 million and
$4.8 million during the three and nine months ended September 30, 2000,
respectively, as compared to $3.0 million and $3.4 million for the corresponding
prior year periods. 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 and meet
minimum statutory capital and surplus requirements. As of September 30, 2000,
Ascent held approximately $6.9 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 accrued for 1999 were paid in
January 2000 through the issuance of 1,873 additional shares of Preferred Stock
and a $965 distribution of cash. For the three and nine months ended September
30, 2000, preferred stock dividends of $651,000 amd $1,953,000, respectively,
were accrued.
Insurance Subsidiaries. The primary sources of cash for the Insurance
Subsidiaries are premiums, sales and maturities of invested assets and
investment income while the primary uses of cash are benefits and claims,
commissions, general and administrative expenses, and taxes, licenses and fees.
During 2000, cash contributions of $4.8 million have been provided by Ascent to
its Insurance Subsidiaries to maintain statutory surplus (see "Ascent"
discussion above). The Company's Insurance Subsidiaries have recorded combined
statutory losses of $10.0 million for the nine months ended September 30, 2000
as compared to $5.3 million for the corresponding 1999 period. The increased
statutory losses resulted from i) higher than expected claims and benefits for
Medical Expense products and ii) costs associated with increased new business
production which must be expensed under statutory accounting (for GAAP
accounting, such costs are deferred and amortized as related premiums are
recorded).
Dividends paid by the Company's insurance subsidiaries are determined by and are
subject to the regulations of the insurance laws and practices of the insurance
departments of their respective states of domicile. During the third quarter of
2000, NFL and FLICA redomesticated from the states of Delaware and Mississippi,
respectively, to the state of Texas. As a result, NFL, FLICA, NFIC and AICT are
Texas domestic companies and are subject to regulation under Texas insurance
laws. The Insurance Subsidiaries are precluded from paying dividends during 2000
without prior approval of the Texas Insurance Commissioner as the companies'
earned surplus is negative. On September 29, 2000, NFL transferred its 100%
ownership of FLICA to Ascent through an extraordinary dividend approved by the
Texas Department of Insurance.
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 $1.2 million and $(5.6) million for the third quarter of 2000
and 1999, respectively. The increase in cash flow from operations was primarily
attributable to an increase in accounts payable and other liabilities related to
the disbursement of claim payments.
Net cash provided by investing activities for the third quarter of 2000 and 1999
totaled $0.3 million and $2.9 million, respectively. Cash provided by investing
activities for the third quarter of 1999 was used to fund operational activities
compared to the corresponding quarter of 2000 where operations were
self-funding.
Net cash provided by financing activities totaled $0.9 million and $3.0 million
for the third quarter of 2000 and 1999, respectively. Financing activities
during the third quarter of 2000 include $1.0 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 corresponding
period in 1999 included $1.7 million of repayments and $1.4 million of new
borrowings related to the Company's receivables financing program and $3.3
million in new borrowings under the term loan facility.
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
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 September 30, 2000,
approximately $6.7 million was outstanding under the Credit Agreement. Under the
terms of the Credit Agreement, agent advances made by the Company within six
months of the expiration date (after December 5, 2000) are not eligible for
financing. LaSalle has provided the Company with a commitment letter stating
that the expiration date of the Credit Agreement will be extended until June 5,
2002. 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, FLICA and NFIC as
collateral for that guaranty (the "Guaranty Agreement").
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 September 30, 2000, approximately $2.9 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:
|X| the effect of economic and market conditions
|X| further adverse developments with respect to the Company's liquidity
position or operations of the Company's various businesses
|X| actions that may be taken by insurance regulatory authorities
|X| adverse developments in the timing or results of the Company's current
strategic business plan
|X| the difficulty in controlling health care costs and integrating new
operations
|X| the ability of the Company to realize anticipated general and
administrative expense savings and overhead reductions from system
replacement initiatives
|X| the ability of management to return the Company's operations to
profitability, and
|X| 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 June 30, 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 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 (incorporated by
reference to Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2000).
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 (incorporated by reference to Exhibit 10.8 to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 2000).
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
(incorporated by reference to Exhibit 10.9 to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 2000).
10.10 Fourth Amendment to Guaranty Agreement dated August 10, 2000 between
Ascent Assurance, Inc. and LaSalle Bank National Association.
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 September 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
November 20, 2000
