<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number: 0-3565
CAPSURE HOLDINGS CORP.
(Exact name of Registrant as specified in its Charter)
<TABLE>
<S> <C>
DELAWARE 34-1010356
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
TWO NORTH RIVERSIDE PLAZA, CHICAGO, ILLINOIS 60606
(Address of principal executive offices) (Zip Code)
</TABLE>
(312) 879-1900
(Registrant's telephone number, including area code)
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
-- --
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
15,824,308 shares of Common Stock, $.05 par value as of April 30, 1997.
<PAGE> 2
CAPSURE HOLDINGS CORP. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page
<S> <C>
Part I. Financial Information (Unaudited):
Item 1. Condensed Consolidated Financial Statements:
Consolidated Balance Sheets at March 31, 1997 and December 31, 1996 3
Consolidated Statements of Income for the Three Months Ended
March 31, 1997 and 1996 4
Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 1997 and 1996 5
Notes to Consolidated Financial Statements at March 31, 1997 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
Part II. Other Information:
Item 1. Legal Proceedings 13
Item 2. Changes in the Rights of the Company's Security Holders 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
</TABLE>
-2-
<PAGE> 3
CAPSURE HOLDINGS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
-------- --------
ASSETS
<S> <C> <C>
Invested assets and cash:
Fixed maturities, at fair value (amortized cost: $141,553; $135,420) .. $140,339 $135,895
Equity securities, at fair value (cost: $2,758; $3,687) ............... 3,313 4,526
Short-term investments, at cost which approximates fair value.......... 18,365 19,416
Other investments, at fair value....................................... 2,821 2,695
Cash .................................................................. 1,543 2,736
-------- --------
166,381 165,268
Deferred policy acquisition costs .......................................... 30,221 28,523
Reinsurance receivable ..................................................... 6,458 5,642
Intangible assets, net of amortization ..................................... 13,747 14,024
Excess cost over net assets acquired, net of amortization .................. 61,506 61,932
Deferred income taxes, net of valuation allowance .......................... 14,304 16,019
Other assets ............................................................... 22,872 21,731
-------- --------
Total assets ......................................................... $315,489 $313,139
======== ========
LIABILITIES
Reserves:
Unpaid losses and loss adjustment expenses .............................. $38,405 $38,874
Unearned premiums ....................................................... 72,922 69,570
-------- --------
111,327 108,444
Long-term debt ............................................................. 59,000 60,000
Other liabilities .......................................................... 20,031 22,112
-------- --------
Total liabilities .................................................... 190,358 190,556
-------- --------
Commitments and contingencies
STOCKHOLDERS' EQUITY
Preferred stock, par value $.01 per share, 5,000,000 shares authorized;
none issued and outstanding ............................................. -- --
Common stock, par value $.05 per share, 25,000,000 shares authorized;
15,807,622 shares issued at March 31, 1997;
15,804,749 shares issued at December 31, 1996 ........................... 790 790
Additional paid-in capital ................................................. 118,426 118,413
Retained earnings .......................................................... 6,110 2,297
Unrealized gain (loss) on securities, net of deferred income taxes ......... (195) 1,083
-------- --------
Total stockholders' equity ........................................... 125,131 122,583
-------- --------
$315,489 $313,139
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE> 4
CAPSURE HOLDINGS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------
1997 1996
--------- ---------
<S> <C> <C>
Revenues:
Net earned premiums ................................ $ 22,296 $ 23,349
Net investment income .............................. 3,126 5,034
Net investment gains ............................... 87 523
--------- ---------
25,509 28,906
--------- ---------
Expenses:
Net losses and loss adjustment expenses ............ 1,228 3,396
Net commissions, brokerage and other underwriting .. 15,377 14,756
Interest expense ................................... 1,003 506
Amortization of goodwill and intangibles ........... 698 713
Other expenses, net ................................ 668 618
--------- ---------
18,974 19,989
--------- ---------
Income before income taxes .......................... 6,535 8,917
Income taxes ........................................ 2,722 3,397
--------- ---------
Net income .......................................... $ 3,813 $ 5,520
========= =========
Weighted average shares outstanding:
Primary ............................................ 16,584 15,906
========= =========
Fully diluted ...................................... 16,599 15,907
========= =========
Earnings per share:
Primary ............................................ $ .23 $ .35
========= =========
Fully diluted ...................................... $ .23 $ .35
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE> 5
CAPSURE HOLDINGS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------
1997 1996
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income ...................................................................... $ 3,813 $ 5,520
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization ................................................. 1,095 1,208
Accretion of bond discount, net ............................................... (39) (231)
Net investment gains .......................................................... (87) (523)
Changes in:
Reserve for unpaid losses and loss adjustment expenses ........................ (469) (121)
Reserve for unearned premiums ................................................. 3,352 5,604
Deferred income taxes, net .................................................... 2,397 3,064
Other assets and liabilities .................................................. (5,297) (6,736)
--------- ---------
Net cash provided by operating activities ......................................... 4,765 7,785
--------- ---------
INVESTING ACTIVITIES:
Securities available-for-sale:
Purchases - fixed maturities .................................................. (13,317) (15,331)
Sales - fixed maturities ...................................................... -- 30,984
Maturities - fixed maturities ................................................. 7,233 15,771
Purchases - equity securities ................................................. -- (190)
Sales - equity securities ..................................................... 1,007 15,367
Receivable for securities sold ................................................ -- (7,319)
Change in short-term investments ................................................ 1,051 (29,514)
Change in other investments ..................................................... (126) (56)
Capital expenditures, net ....................................................... (814) (414)
--------- ---------
Net cash (used in) provided by investing activities ............................... (4,966) 9,298
--------- ---------
FINANCING ACTIVITIES:
Principal payments on long-term debt ............................................ (1,000) (16,000)
Exercise of stock options ....................................................... 8 5
--------- ---------
Net cash used in financing activities ............................................. (992) (15,995)
--------- ---------
Increase (decrease) in cash ....................................................... (1,193) 1,088
Cash at beginning of period ....................................................... 2,736 3,001
--------- ---------
Cash at end of period ............................................................. $ 1,543 $ 4,089
========= =========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest ...................................................................... $ 1,028 $ 441
Income taxes, net of refunds .................................................. $ 48 $ 265
</TABLE>
The accompanying notes are an integral part of these financial statements.
-5-
<PAGE> 6
CAPSURE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
These unaudited Consolidated Financial Statements should be read in
conjunction with the Consolidated Financial Statements and Notes thereto
included in Capsure Holdings Corp.'s ("Capsure" or the "Company") 1996 Annual
Report on Form 10-K. The following Notes to the Consolidated Financial
Statements highlight significant changes to the Notes included in the 1996
Annual Report on Form 10-K and such interim disclosures as required by the
Securities and Exchange Commission. Certain financial information that is
normally included in annual financial statements prepared in accordance with
generally accepted accounting principles but is not required for interim
reporting purposes has been condensed or omitted. The accompanying unaudited
Consolidated Financial Statements reflect, in the opinion of management, all
adjustments necessary for a fair presentation of the interim financial
statements. All such adjustments are of a normal and recurring nature. The
financial results for interim periods may not be indicative of financial
results for a full year. Certain reclassifications have been made to the 1996
Consolidated Financial Statements to conform with the presentation in the 1997
Consolidated Financial Statements.
2. INVESTMENTS
The cost and estimated fair value of investments at March 31, 1997 were as
follows (dollars in thousands):
<TABLE>
<CAPTION>
Amortized Gross Gross Estimated
Cost Unrealized Unrealized Fair
or Cost Gains Losses Value
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Available-For-Sale Securities
Fixed maturities:
U.S. Treasury securities and obligations of
U.S. Government corporations and agencies:
U.S. Treasury notes .............................. $ 7,018 $ 52 $ (33) $ 7,037
Collateralized mortgage obligations .............. 36,549 164 (513) 36,200
Mortgage pass-through securities ................. 39,384 45 (410) 39,019
Obligations of states and political subdivisions .. 2,697 8 (42) 2,663
Non-agency collateralized mortgage obligations..... 20,599 36 (129) 20,506
Asset-backed securities:
Second mortgages/home equity loans ............... 28,422 56 (281) 28,197
Other underlying assets .......................... 6,884 23 (190) 6,717
-------- --------- ---------- ---------
Total fixed maturities ........................ 141,553 384 (1,598) 140,339
Equity securities ................................. 2,758 555 -- 3,313
-------- --------- ---------- ---------
Total available-for-sale securities ........... $144,311 $ 939 $ (1,598) $ 143,652
======== ========= ========== =========
</TABLE>
-6-
<PAGE> 7
3. REINSURANCE
The effect of reinsurance on premiums written and earned for the three
months ended March 31, 1997 and 1996 was as follows (dollars in thousands):
<TABLE>
<CAPTION>
1997 1996
---------------- ----------------
Written Earned Written Earned
------- ------- ------- -------
<S> <C> <C> <C> <C>
Direct ........ $26,737 $24,172 $33,018 $28,059
Assumed ....... -- -- 94 121
Ceded ......... (1,089) (1,876) (6,241) (4,831)
------- ------- ------- -------
Net premiums .. $25,648 $22,296 $26,871 $23,349
======= ======= ======= =======
</TABLE>
The effect of reinsurance on losses and loss adjustment expenses incurred
for the three months ended March 31, 1997 and 1996 was as follows (dollars in
thousands):
<TABLE>
<CAPTION>
1997 1996
------ -------
<S> <C> <C>
Gross losses and loss adjustment expenses .. $1,898 $4,552
Reinsurance recoveries ..................... (670) (1,156)
------ -------
Net losses and loss adjustment expenses .... $1,228 $3,396
====== =======
</TABLE>
-7-
<PAGE> 8
CAPSURE HOLDINGS CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
MARCH 31, 1997
GENERAL
The following is a discussion and analysis of the operating results,
financial condition, liquidity, and capital resources of Capsure Holdings Corp.
and subsidiaries ("Capsure" or the "Company") for the three months ended March
31, 1997 compared to the corresponding period in 1996.
The Company, through its principal subsidiaries, Western Surety Company
("Western Surety"), acquired in August 1992, and Universal Surety of America
("Universal Surety"), acquired in September 1994, provides surety and fidelity
bonds in all 50 states through a combined network of 120,000 independent agents.
On May 22, 1996, the Company closed on the sale of United Capitol
Holding Company ("UCHC") and its subsidiaries, United Capitol Insurance Company
("United Capitol"), United Capitol Managers, Inc. and Fischer Underwriting
Group, Incorporated, to a subsidiary of Frontier Insurance Group, Inc. The
operating results of UCHC and its subsidiaries are reflected in Capsure's
results through the closing date.
PENDING BUSINESS COMBINATION
On December 19, 1996, Capsure and certain direct and indirect
subsidiaries of CNA Financial Corporation ("CNAF") entered into a definitive
Reorganization Agreement pursuant to which Capsure will merge with a
wholly-owned subsidiary of CNA Surety Corporation ("CNA Surety"). CNAF, through
its subsidiaries, will be the majority stockholder of CNA Surety, owning 61.75
percent of the shares on a fully diluted basis. The remaining shares will be
issued to the existing Capsure stockholders (a portion of these shares will be
reserved for issuance to the existing holders of Capsure options who will
receive CNA Surety options in the merger) in a tax-free exchange for their
Capsure shares on a one-for-one basis. The CNA Surety shares are expected to be
traded on the New York Stock Exchange. Equity Capsure Limited Partnership,
Capsure's largest stockholder with a 25.6 percent ownership interest, and
Messrs. Dammeyer and Esselborn have agreed to vote their shares in favor of the
merger. The agreement and the transactions contemplated thereby are subject to
several conditions, including ratification by the affirmative vote of Capsure
stockholders and approval by governmental and insurance regulatory authorities.
The Company has obtained antitrust clearance from the Federal Trade
Commission, and all insurance regulatory filings are at various stages of the
review process. The Company has filed a preliminary merger proxy
statement/prospectus with the Securities and Exchange Commission on a
confidential basis.
The completion of the merger pursuant to the Reorganization Agreement
will cause an ownership change under Section 382 of the Internal Revenue Code of
1986, as amended (the "Code"), and significantly limits the future utilization
of Capsure's net operating tax loss carryforwards ("NOLs"). If the
Reorganization Agreement and transactions contemplated thereby are approved by
the Capsure shareholders at a special meeting to be held to vote on the
transaction, they also will be asked to approve an amendment to the Company's
Certificate of Incorporation to delete a provision designed to facilitate the
Company's ability to preserve and utilize its NOLs.
-8-
<PAGE> 9
RESULTS OF OPERATIONS
The components of net income for each period are summarized as follows
(dollars in thousands):
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1997 1996
------ ------
<S> <C> <C>
Underwriting income..................... $5,691 $5,197
Net investment income................... 3,126 5,034
Net investment gains.................... 87 523
Interest expense........................ (1,003) (506)
Amortization of goodwill and intangibles (698) (713)
Other expenses, net..................... (668) (618)
------ ------
Income before income taxes.............. 6,535 8,917
Income taxes............................ 2,722 3,397
------ ------
Net income......................... $3,813 $5,520
====== ======
</TABLE>
INSURANCE UNDERWRITING
Underwriting results for the three months ended March 31, 1997 and 1996 are
summarized in the following table (dollars in thousands):
<TABLE>
<CAPTION>
Surety and Fidelity Excess and Surplus Lines Consolidated
------------------------- ---------------------------- ----------------------
1997 1996 1997 1996 1997 1996
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Gross written premiums ....... $ 26,737 $ 25,593 $ -- $ 7,519 $ 26,737 $ 33,112
========= ========= ========= ========= ========= =========
Net written premiums ......... $ 25,648 $ 24,378 $ -- $ 2,493 $ 25,648 $ 26,871
========= ========= ========= ========= ========= =========
Net earned premiums .......... $ 22,296 $ 21,377 $ -- $ 1,972 $ 22,296 $ 23,349
--------- --------- --------- --------- --------- ---------
Net losses and loss adjustment 1,228 2,965 -- 431 1,228 3,396
Underwriting expenses ........ 15,377 14,839 -- (83) 15,377 14,756
--------- --------- --------- --------- --------- ---------
Total losses and expenses .... 16,605 17,804 -- 348 16,605 18,152
--------- --------- --------- --------- --------- ---------
Underwriting income .......... $ 5,691 $ 3,573 $ -- $ 1,624 $ 5,691 $ 5,197
========= ========= ========= ========= ========= =========
Loss ratio ................... 5.5% 13.9% -- 21.8% 5.5% 14.5%
Expense ratio ................ 69.0 69.4 -- (4.2) 69.0 63.2
--------- --------- --------- --------- --------- ---------
Combined ratio ............... 74.5% 83.3% -- 17.6% 74.5% 77.7%
========= ========= ========= ========= ========= =========
</TABLE>
Surety and fidelity represents the combined results and are the
principal lines of business of Western Surety and Universal Surety. Excess and
surplus lines represented the results of United Capitol through May 22, 1996.
United Capitol's principal lines of business were other liability, product
liability and commercial property primarily written on an excess and surplus
lines basis.
Gross written premiums decreased 19.3%, or $6.4 million, for the three
months ended March 31, 1997. Surety and fidelity gross written premiums
increased 4.5%, or $1.1 million due to a 4.4% increase in Western Surety's core
miscellaneous surety bond business, largely due to public official bonds, and
continued strong growth in the contract surety and insurance agents' and
brokers' errors and omissions business. Public official bond premiums were
$0.4 million higher than in 1996, as expected, since writings for this product
typically increase every other year following the November elections. United
Capitol contributed $7.5 million in gross written premiums in the first quarter
of 1996.
-9-
<PAGE> 10
Net earned premiums decreased 4.5%, or $1.1 million, for the three
months ended March 31, 1997. Surety and fidelity net earned premiums increased
4.3%, or $0.9 million, in 1997 compared to 1996, primarily due to increased
contract surety premium volume. United Capitol contributed $2.0 million in net
earned premiums in the first quarter of 1996.
Underwriting income for the three months ended March 31, 1997 increased
9.5%, or $0.5 million, as compared to the prior year quarter despite reduced net
earned premiums. At the surety and fidelity operations, underwriting income
increased 59.3%, or $2.1 million, reflecting favorable loss development. The
consolidated combined ratio decreased to 74.5% in 1997 from 77.7% in 1996. The
consolidated loss ratio decreased to 5.5% in 1997 from 14.5% in 1996. The
surety and fidelity loss ratio decreased to 5.5% in 1997 from 13.9% in 1996,
reflecting the significant impact of $1.9 million in favorable loss reserve
development at Western Surety resulting from a recently completed actuarial
review.
The consolidated expense ratio increased to 69.0% in 1997, compared to
63.2% in 1996. The surety and fidelity expense ratio decreased slightly to
69.0% in 1997 from 69.4% in 1996. The consolidated expense ratio in 1996 was
favorably affected by the recognition of contingent commission income and ceding
commission income at United Capitol.
INVESTMENT INCOME
Net investment income for the three months ended March 31, 1997 and 1996
was $3.1 million and $5.0 million, respectively, reflecting a net decrease in
invested assets as a result of the sale of United Capitol. The average pretax
yields of the portfolio for the three months ended March 31, 1997 and 1996 were
7.6% and 6.8%, respectively. First quarter 1997 investment results were
favorably impacted by limited partnership income. Investment income related to
limited partnerships held at Western Surety was $0.4 million in the first
quarter of 1997 compared to $0.1 million in 1996.
Capsure's insurance companies invest funds provided by operations
predominantly in high-quality, short-duration, taxable fixed income securities.
The preservation of capital and utilization of the Company's available net
operating tax loss carryforwards ("NOLs") have been Capsure's principal
investment objectives.
ANALYSIS OF OTHER OPERATIONS
Net investment gains were $0.1 million and $0.5 million for the three
months ended March 31, 1997 and 1996, respectively, virtually all of which were
recognized at the insurance operations.
Amortization expense was $0.7 million for the three months ended March
31, 1997 and 1996. Amortization expense in the first quarter of both years
included $0.3 million of amortization of intangible assets and $0.4 million of
amortization of excess cost over net assets acquired related to the acquisitions
of Western Surety and Universal Surety. Excess cost over net assets acquired is
amortized substantially over 40 years. Other intangible assets are amortized
principally over 20 years.
Interest expense was $1.0 million and $0.5 million for the three months
ended March 31, 1997 and 1996, respectively. The Company's average debt
outstanding for the three months ended March 31, 1997 was approximately $59.4
million compared to $20.1 million in 1996. The weighted average interest rates
on outstanding balances were 6.5% and 6.3% for the three months ended March 31,
1997 and 1996, respectively.
-10-
<PAGE> 11
INCOME TAXES
Income taxes were $2.7 million and $3.4 million for the three months
ended March 31, 1997 and 1996, respectively. The effective income tax rates were
41.7% and 38.1%, respectively, reflecting a 1997 adjustment for certain prior
year tax items. The Company's income tax expense does not approximate actual
taxes paid, primarily due to the utilization of the Company's NOLs. Actual
income taxes paid were $0.1 million and $0.3 million for the three months ended
March 31, 1997 and 1996, respectively.
LIQUIDITY AND CAPITAL RESOURCES
The Company's insurance subsidiaries are highly liquid. The insurance
operations derive liquidity from net premium collections, reinsurance recoveries
and investment earnings and use these funds to pay claims and operating
expenses. The operations of an insurance company generally result in cash being
collected from customers in the form of premiums in advance of cash outlays for
claims. Each insurance company invests its collected premiums, generating
investment income, until such time cash is needed to pay claims and associated
expenses.
The Company believes total invested assets, including cash and
short-term investments, are sufficient in the aggregate and have suitably
scheduled maturities to satisfy all policy claims and other operating
liabilities, including anticipated income tax sharing payments of its insurance
operations. Management believes the duration of each insurance subsidiary's
portfolio is properly matched with the expected duration of its liabilities.
Cash flow at the parent company level is derived principally from
dividend and tax sharing payments from its insurance subsidiaries. The
principal obligations at the parent company level are to service debt and pay
operating expenses.
The Company's consolidated net cash flow provided by operating
activities was $4.8 million and $7.8 million for the three months ended March
31, 1997 and 1996, respectively. Consolidated operating cash flow (pretax
income excluding net investment gains (losses) and amortization of goodwill and
intangibles) for the three months ended March 31, 1997, was $7.1 million as
compared to $9.1 million in 1996.
On March 29, 1994, the Company entered into a senior reducing revolving
credit agreement with a syndicate of banks for $135 million (the "Credit
Facility"). Concurrent with the sale of UCHC and its subsidiaries, Capsure and
its lenders entered into an agreement to amend and restate the Credit Facility.
The amendment reduced the commitment to $100 million from $135 million and
permitted an initial draw of up to $70 million for a special distribution to
stockholders. The remaining availability may be used for additional dividends,
stock repurchases, acquisitions, and for general corporate purposes.
Transaction costs totaled approximately $0.5 million. The credit available
under the Credit Facility reduces semi-annually commencing March 31, 1997 and
expires March 31, 2003. On March 31, 1997, total borrowings available were
reduced to $93.75 million. Interest on borrowings under the facility varies
based on leverage.
-11-
<PAGE> 12
Principal and interest payments required under the Credit Facility are
funded principally by dividend and income tax sharing payments received from
Capsure's insurance subsidiaries. Capsure received $3.1 million and $7.6
million in dividends from its surety and fidelity subsidiaries for the three
months ended March 31, 1997 and 1996, respectively. Capsure received tax
sharing payments from its subsidiaries of $0.6 million and $6.6 million in the
three months ended March 31, 1997 and 1996, respectively, of which $0.6 million
and $1.8 million were from its surety and fidelity subsidiaries.
On May 24, 1995, the Board of Directors of the Company approved a stock
repurchase plan. The plan authorizes the Company to repurchase up to 500,000
shares of its common stock. These shares may be purchased from time to time in
the public market or through privately negotiated transactions. As of March 31,
1997, no shares have been repurchased under this plan.
-12-
<PAGE> 13
CAPSURE HOLDINGS CORP. AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings - None.
ITEM 2. Changes in the Rights of the Company's Security Holders - None.
ITEM 3. Defaults Upon Senior Securities - None.
ITEM 4. Submission of Matters to a Vote of Security Holders - None.
ITEM 5. Other Information - None.
ITEM 6. Exhibits and Reports on Form 8-K:
(a) Exhibits:
27. Financial Data Schedule
(b) Reports on Form 8-K:
None.
- ---------------------------------------
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995:
The statements which are not historical facts contained in this Form 10-Q are
forward-looking statements that involve risks and uncertainties, including, but
not limited to, product and policy demand and market response risks, the effect
of economic conditions, the impact of competitive products, policies and
pricing, product and policy development, regulatory changes and conditions,
rating agency policies and practices, development of claims and the effect on
loss reserves, the performance of reinsurance companies under reinsurance
contracts with the Company, investment portfolio developments and reaction to
market conditions, the results of financing efforts, the actual closing of
contemplated transactions and agreements, the effect of the Company's
accounting policies, and other risks detailed in the Company's Securities and
Exchange Commission filings. No assurance can be given that the actual results
of operations and financial condition will conform to the forward-looking
statements contained herein.
-13-
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
CAPSURE HOLDINGS CORP.
(Registrant)
/s/ Mary Jane Robertson
--------------------------
Mary Jane Robertson
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
/s/ John S. Heneghan
--------------------------
John S. Heneghan
Vice President and Controller
(Principal Accounting Officer)
Date: May 12 , 1997
----------------------
-14-
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CAPSURE
HOLDINGS CORP. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AND RELATED
NOTES THERETO INCLUDED IN THIS QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<DEBT-HELD-FOR-SALE> 140,339
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 3,313
<MORTGAGE> 0
<REAL-ESTATE> 0
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0
0
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22,296
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</TABLE>
