<TABLE> <S> <C>
<ARTICLE> 7
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JUL-1-1995
<PERIOD-END> SEP-30-1995
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 82,165
<DEBT-CARRYING-VALUE> 15,473
<DEBT-MARKET-VALUE> 0
<EQUITIES> 7,439
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 106,469
<CASH> 5,028
<RECOVER-REINSURE> 1,846
<DEFERRED-ACQUISITION> 14,393
<TOTAL-ASSETS> 150,761
<POLICY-LOSSES> 10,207
<UNEARNED-PREMIUMS> 34,431
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 12,500
<COMMON> 24
0
0
<OTHER-SE> 41,978
<TOTAL-LIABILITY-AND-EQUITY> 150,761
16,937
<INVESTMENT-INCOME> 880
<INVESTMENT-GAINS> 620
<OTHER-INCOME> 0
<BENEFITS> 5,482
<UNDERWRITING-AMORTIZATION> 8,555
<UNDERWRITING-OTHER> 2,917
<INCOME-PRETAX> 1,483
<INCOME-TAX> 442
<INCOME-CONTINUING> 1,041
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,041
<EPS-PRIMARY> .43
<EPS-DILUTED> .43
<RESERVE-OPEN> 8,900
<PROVISION-CURRENT> 13,629
<PROVISION-PRIOR> 2,310
<PAYMENTS-CURRENT> 9,879
<PAYMENTS-PRIOR> 4,754
<RESERVE-CLOSE> 10,207
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____
Commission file number: 1-9580
AMWEST INSURANCE GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 95-2672141
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6320 Canoga Avenue, Suite 300
Woodland Hills, California 91367
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (818) 704-1111
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 .
As of November 13, 1995, 2,360,464 shares of common stock, $.01 par
value, were outstanding.
THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING
SUBMITTED PURSUANT TO RULE 300(d) OF REGULATION S-T
<PAGE>
AMWEST INSURANCE GROUP, INC. AND SUBSIDIARIES
INDEX
Part I. FINANCIAL INFORMATION:
Item 1
Consolidated Statements of Operations for the three
months and nine months ended September 30, 1995 and 1994 3
Consolidated Balance Sheets as of September 30, 1995
and December 31, 1994 4
Consolidated Statements of Cash Flows for the three
months and nine months ended September 30, 1995 and 1994 6
Notes to Interim Consolidated Financial Statements 8
Item 2
Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Part II. OTHER INFORMATION:
Item 1
Legal Proceedings 13
Item 2
Changes in Securities 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
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1
AMWEST INSURANCE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
------------- -------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Underwriting revenues:
Premiums written $ 18,826 $ 20,059 $ 54,302 $ 53,704
Premiums ceded (1,538) (305) (4,374) (2,197)
--------- --------- --------- ---------
Net premiums written 17,288 19,754 49,928 51,507
Change in unearned premiums:
Direct (597) (3,262) (758) (6,802)
Ceded 246 (656) 1,308 (631)
--------- --------- --------- ---------
Net premiums earned 16,937 15,836 50,479 44,074
--------- --------- --------- ---------
Underwriting expenses:
Losses and loss adjustment expenses 5,472 5,176 16,402 12,614
Reinsurance (recoveries) refunds 10 (789) 38 (1,591)
---------- --------- --------- ---------
Net losses and loss adjustment expenses 5,482 4,387 16,440 11,023
Policy acquisition costs 8,555 8,946 25,302 23,120
General operating costs 2,917 2,833 8,927 9,452
--------- --------- --------- ---------
Total underwriting expenses 16,954 16,166 50,668 43,595
--------- --------- --------- ---------
Underwriting income (loss) (17) (330) (190) 479
Net investment income 1,564 1,477 4,787 4,104
Net realized investment gains (losses) 620 35 1,229 (214)
Interest expense (257) (224) (805) (597)
Collateral interest expense (427) (520) (1,305) (1,507)
--------- --------- --------- ---------
Income before income taxes 1,483 438 3,717 2,265
Provision (benefit) for income taxes:
Current 338 (462) 868 (336)
Deferred 103 524 (90) 767
--------- --------- --------- ---------
Total provision for income taxes 442 62 777 431
--------- --------- --------- ---------
Net income $ 1,041 $ 376 $ 2,940 $ 1,834
========= ========= ========= =========
Earnings per common share:
Net income $ 0.43 $ 0.16 $ 1.22 $ 0.76
========= ========= ========= =========
Weighted average number of common
shares outstanding 2,404 2,408 2,402 2,411
</TABLE>
See accompanying notes to interim consolidated
financial statements.
<PAGE>
AMWEST INSURANCE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
(unaudited)
<S> <C> <C>
Investments:
Fixed maturities, at amortized cost (market value of $15,724
and $14,469 at September 30, 1995 and December 31, 1994,
respectively) $ 15,473 $ 15,120
Fixed maturities, at market value (amortized cost of $81,548
and $88,056 at September 30, 1995 and December 31, 1994,
respectively) 82,165 84,503
Common equity securities, at market value (cost of $3,995
and $4,814 at September 30, 1995 and December 31, 1994,
respectively) 5,630 5,300
Preferred equity securities, at market value (cost of $1,788
and $1,500 at September 30, 1995 and December 31, 1994,
respectively) 1,809 1,417
Other invested assets 333 -
Short-term investments 1,059 25
--------- ---------
Total investments 106,469 106,365
Cash and cash equivalents 5,028 3,948
Accrued investment income 1,267 1,450
Agents balances and premiums receivable (less allowance for
doubtful accounts of $385 and $375 at September 30, 1995 and
December 31, 1994, respectively) 9,311 7,000
Reinsurance recoverable:
Paid loss and loss adjustment expenses 1,078 1,352
Unpaid loss and loss adjustment expenses 768 1,267
Ceded unearned premiums 2,959 1,666
Deferred policy acquisition costs 14,393 15,250
Current Federal income taxes 668 -
Furniture, equipment and improvements, net 2,324 1,853
Other assets 6,496 6,562
--------- ---------
Total assets $ 150,761 $ 146,713
========= =========
</TABLE>
<PAGE>
AMWEST INSURANCE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
(Dollars in thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
(unaudited)
<S> <C> <C>
Liabilities:
Unpaid losses and loss adjustment expenses $ 10,207 $ 8,900
Unearned premiums 34,431 33,689
Funds held as collateral 41,435 46,926
Current Federal income taxes - 313
Deferred Federal income taxes 4,010 2,014
Bank indebtedness 12,500 12,500
Amounts due to reinsurers 345 183
Other liabilities 5,831 6,194
--------- ---------
Total liabilities 108,759 110,719
Stockholders' equity:
Preferred stock, $.01 par value, 1,000,000
shares authorized; issued and outstanding: none - -
Common stock, $.01 par value, 10,000,000
shares authorized, issued and outstanding: 2,360,464 at
September 30, 1995 and 2,334,089 at December 31, 1994 24 24
Additional paid-in capital 9,358 9,221
Net unrealized appreciation (depreciation) of investments
carried at market, net of income taxes 1,554 (2,080)
Retained earnings 31,066 28,829
--------- ---------
Total stockholders' equity 42,002 35,994
--------- ---------
Total liabilities and stockholders' equity $ 150,761 $ 146,713
========= =========
</TABLE>
See accompanying notes to interim consolidated
financial statements.
<PAGE>
AMWEST INSURANCE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
------------- -------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income $ 1,041 $ 376 $ 2,940 $ 1,834
Adjustments to reconcile net income to cash provided
by operating activities:
Change in agents' balances and premiums
receivable and unearned premiums 869 2,666 (1,569) 3,633
Change in accrued investment income 18 98 183 348
Change in unpaid losses and loss adjustment
expenses (718) 972 1,307 413
Change in reinsurance recoverable on paid and
unpaid losses and loss adjustment expenses
and ceded unearned premiums 416 1,331 (520) 1,743
Change in amounts due to reinsurers 36 85 162 197
Change in reinsurance funds held, net - (778) - (2,115)
Change in other assets and other liabilities 2,918 1,086 (297) 1,882
Change in income taxes, net (439) (10) (857) (484)
Change in deferred policy acquisition costs 416 (802) 857 (3,129)
Net realized (gain) loss on sale of fixed
maturities (226) (11) (758) 161
Net realized (gain) loss on sale of equity
securities (394) - (571) 4
Net realized loss on sale of fixed assets - 1 4 1
Provision for depreciation and amortization 225 359 780 1,095
--------- --------- --------- ---------
Net cash provided (used) by operating
activities 4,162 5,373 1,661 5,583
Cash flows from investing activities:
Cash received from investments sold, matured,
called or repaid:
Investments held-to-maturity 1,473 - 1,521 -
Investments available-for-sale 22,042 9,460 64,550 55,943
Cash paid for investments acquired:
Investments held-to-maturity (1,789) - (1,949) (1,527)
Investments available-for-sale (23,557) (12,495) (56,638) (66,193)
Amortization of discount on bonds 25 59 (753) 421
Capital expenditures, net (414) (245) (1,255) (559)
--------- --------- --------- ---------
Net cash provided (used) by investing activities (2,220) (3,221) 5,476 (11,915)
</TABLE>
<PAGE>
AMWEST INSURANCE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
------------- -------------
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Cash flows from financing activities:
Proceeds from issuance of common stock 139 57 137 104
Change in funds held as collateral (1,077) 2,662 (5,491) 8,469
Dividends paid (237) (213) (703) (638)
--------- --------- --------- ---------
Net cash provided (used) by financing activities (1,175) 2,506 (6,057) 7,935
--------- --------- --------- ---------
Net increase (decrease) in cash and cash equivalents 767 4,658 1,080 1,603
Cash and cash equivalents at beginning of period 4,261 3,668 3,948 6,723
--------- --------- --------- ---------
Cash and cash equivalents at end of period $ 5,028 $ 8,326 $ 5,028 $ 8,326
========= ========= ========= =========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 684 $ 744 $ 2,110 $ 2,104
Income taxes 880 423 1,848 942
Cash received during the period on:
Investments sold prior to maturity $ 19,969 $ 8,760 $ 48,397 $ 54,416
Investments held to maturity 3,546 700 17,674 1,527
</TABLE>
See accompanying notes to interim consolidated
financial statements.
<PAGE>
AMWEST INSURANCE GROUP, INC. AND SUBSIDIARIES
Notes to Interim Consolidated Financial Statements
(unaudited)
(1) Basis of Presentation
The interim consolidated financial statements presented herein are
unaudited and, in the opinion of management, reflect all adjustments
necessary for a fair presentation of results for such periods. All such
adjustments are of a normal, recurring nature. The results of
operations for any interim period are not necessarily indicative of
results for the full year. These consolidated financial statements
should be read in conjunction with the consolidated financial
statements and notes thereto contained in the Company's Annual Report
on Form 10-K for the year ended December 31, 1994.
(2) Reclassifications
Certain reclassifications have been made from amounts reported in prior
years in order to be consistent with the current year's presentation.
(3) Investments
Proceeds from the sale of fixed maturities, held-to-maturity during
three months ended September 30, 1995 were $420,244. The proceeds
resulted from the sale of a municipal bond with an amortized cost of
$412,505. The municipal bond was purchased by the Company as a special
deposit to be held by the California Department of Insurance. The
California Department of Insurance subsequently rejected the municipal
bond and the Company liquidated the security. The Company purchased two
new municipal bonds at $390,530 for the California Department of
Insurance to hold as special deposits. Such rejection, which led to
liquidation of the security, was not foreseeble by the Company.
<PAGE>
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Premiums written decreased 6% from $20,059,000 for the three months
ended September 30, 1994, to $18,826,000 for the three months ended
September 30, 1995. This decrease is attributed to a reduction in
premiums written in all major product lines. Premiums written increased
1% from $53,704,000 for the nine months ended September 30, 1994, to
$54,302,000 for the nine months ended September 30, 1995.
Despite a decrease in premiums written of 6% for the three months and
an increase of only 1% for the nine months, net premiums earned
increased 7% and 15% from $15,836,000 and $44,074,000 for the three
months and nine months ended September 30, 1994, respectively, to
$16,937,000 and $50,479,000 for the three months and nine months ended
September 30, 1995, respectively. This increase in premiums earned is
due to the significant increase in written premiums during the last six
months of 1994. The Company generally earns premiums ratably over the
assigned bond terms.
Net losses and loss adjustment expenses increased 25% and 49% from
$4,387,000 and $11,023,000 for the three months and nine months ended
September 30, 1994, respectively, to $5,482,000 and $16,440,000 for the
three months and nine months ended September 30, 1995, respectively.
The loss ratio for the three months and nine months ended September 30,
1994, respectively, was 28% and 25%, compared to 32% and 33 % for the
three months and nine months ended September 30, 1995, respectively.
The increase in the loss ratio is primarily attributable to increased
loss severity in the contract performance product line.
Policy acquisition costs as a percentage of net premiums earned
decreased from 57%, or $8,946,000, for the three months ended September
30, 1994, to 51%, or $8,555,000, for the three months ended September
30, 1995. Such decrease is primarily attributable to an increase in the
amount of contingent commissions earned by the Company under its
reinsurance treaties during the quarter. The policy acquisition cost
ratio declined slightly from 52%, or $23,120,000 for the nine months
ended September 30, 1994, as compared to 50%, or $25,302,000 for the
nine months ended September 30, 1995.
General operating costs as a percentage of net premiums earned
decreased slightly from 18%, or $2,833,000, and 21%, or $9,452,000, for
the three months and nine months ended September 30, 1994,
respectively, as compared to 17%, or $2,917,000, and 18%, or
$8,927,000, for the three months and nine months ended September 30,
1995, respectively. This improvement in the general operating cost
ratio is a continuation of the Company's ability to service increased
writings without corresponding increases in home office expenses.
The Company's underwriting loss decreased from $330,000 for the three
months ended September 30, 1994, to $17,000 for the three months ended
September 30, 1995. The combined ratio decreased slightly from 102% for
the three months ended September 30, 1994 to 100% for the three months
ended September 30, 1995. Underwriting income decreased from income of
$479,000 for the nine months ended September 30, 1994, to a loss of
$190,000 for the nine months ended September 30, 1995. The combined
ratio increased from 99% for the nine months ended September 30, 1994
to 100% for the nine months ended September 30, 1995.
<PAGE>
Interest expense increased 15% and 35% from $224,000 and $597,000 for
the three months and nine months ended September 30, 1994,
respectively, to $257,000 and $805,000 for the three months and nine
months ended September 30, 1995, respectively due to an increase in the
interest rate on bank indebtedness. The average interest rate on bank
indebtedness for the nine months ended September 30, 1994 and 1995 was
6.3% and 8.1%, respectively. Collateral interest expense decreased from
$520,000 and $1,507,000 for the three months and nine months ended
September 30, 1994, respectively, to $427,000 and $1,305,000 for the
three months and nine months ended September 30, 1995, respectively.
This decrease is attributed to an overall reduction in average funds
held as collateral from $51,528,000 and $48,625,000 for the three
months and nine months ended September 30, 1994, respectively, to
$41,974,000 and $44,181,000 for the three months and nine months ended
September 30, 1995, respectively. Rates paid on collateral balances are
adjusted at various times throughout the year in accordance with
general market conditions.
Net investment income increased 6% and 17% from $1,477,000 and
$4,104,000 for the three months and nine months ended September 30,
1994, respectively, to $1,564,000 and $4,787,000 for the three months
and nine months ended September 30, 1995, respectively. The increases
are primarily attributed to higher investment yields received due to
general increases in interest rates during 1994 which benefit has a
greater impact on 1995 yields. Net realized investment gains/losses
also increased from a realized gain of $35,000 and a realized loss of
$214,000 for the three months and nine months ended September 30, 1994,
respectively, to realized gains of $620,000 and $1,229,000 for the
three months and nine months ended September 30, 1995, respectively.
The investment portfolio experienced significant market value gains
during 1995 due to a decline in interest rates during 1995 and market
value gains in common stocks. The Company has realized some of the
gains on fixed income and common equity securities.
Income before income taxes increased from $438,000 and $2,265,000 for
the three months and nine months ended September 30, 1994,
respectively, to $1,483,000 and $3,717,000 for the three months and
nine months ended September 30, 1995, respectively, due to the factors
outlined above.
The effective tax rate was 14% and 19% for the three months and nine
months ended September 30, 1994 as compared to effective tax rates of
30% and 21% for the three months and nine months ended September 30,
1995. The higher effective tax rate for the three months ended
September 30 is primarily due to less tax advantaged investment income
as a percentage of total income for the 1995 third quarter as compared
to the corresponding 1994 period.
Net income increased from $376,000, or $.16 per share and $1,834,000,
or $.76 per share for the three months and nine months ended September
30, 1994, respectively, to $1,041,000, or $.43 per share and
$2,940,000, or $1.22 per share for the three months and nine months
ended September 30, 1995, respectively, due to the factors outlined
above.
Liquidity and Capital Resources
As of September 30, 1995, the Company held total cash and cash
equivalents and invested assets of $111,497,000. This amount includes
an aggregate of $41,435,000 in funds held as collateral which is shown
as a liability on the Company's consolidated balance sheets. As of
September 30, 1995, the Company's invested assets consisted of
$15,473,000 in fixed maturities, held at amortized cost, $82,165,000 in
fixed maturities, held at market value, $5,630,000 in common equity
securities, $1,809,000 in preferred equity securities, $333,000 in
other invested assets and $1,059,000 in short-term investments,
including certificates of deposit with original maturities less than
one year.
<PAGE>
Because the Company depends primarily on dividends from its insurance
subsidiaries for its net cash flow requirements, absent other sources
of cash flow, the Company cannot pay dividends materially in excess of
the amount of dividends that could be paid by the insurance
subsidiaries to the Company. The Company's insurance subsidiaries are
subject to state regulations which restrict the amount of stockholder
dividends which may be paid within any one year without the approval of
the California Department of Insurance. The California Insurance Code
provides that amounts may be paid as dividends on an annual
noncumulative basis without prior approval up to a maximum of the
greater of (1) statutory net income for the preceding year or (2) 10%
of statutory surplus as regards policyholders as of the preceding
December 31.
On August 6, 1993, the Company entered into a revolving credit
agreement with Union Bank for $12,500,000. The debt agreement was
amended on April 24, 1995 to increase the amount available under the
revolving line of credit from $12,500,000 to $15,000,000. The amounts
available are reduced by $2,500,000 each year beginning on July 15,
1995 and ending on July 15, 2000. Accordingly at September 30, 1995,
$12,500,000 is available under the revolving line of credit, all of
which is currently utilized. The bank loan has a variable rate based
upon fluctuations in the London Interbank Offered Rate (LIBOR) with
amortizing principal payments. The annual interest rate at September
30, 1995 was 7.9%.
The Company is a party to a lease with Trillium/Woodland Hills
regarding its corporate headquarters. Such lease contains provisions
for scheduled lease charges and escalations in base rent over the lease
term. The Company's minimum lease commitment for the remainder of 1995
and 1996 is approximately $2,346,000. This lease expires in July 1998.
Other than the Company's obligations with respect to funds held as
collateral and the Company's obligation to pay claims as they arise,
the Company's commitments to pay principal and interest on the bank
debt and the payment of lease expenses as noted above, the Company has
no significant cash commitments.
The Company believes that its cash flows from operations and other
present sources of capital are sufficient to sustain its needs for at
least the remainder of 1995 and through 1996.
The Company generated $5,373,000 and $5,583,000 in cash from operating
activities for the three months and nine months ended September 30,
1994 as compared to generating $4,162,000 and $1,661,000 for the three
months and nine months ended September 30, 1995. The Company used
$3,221,000 and $11,915,000 in cash for investing activities for the
three months and nine months ended September 30, 1994 as compared to
using $2,220,000 and generating $5,476,000 for the three months and
nine months ended September 30, 1995. The Company generated $2,506,000
and $7,935,000 in cash from financing activities for the three months
and nine months ended September 30, 1994 as compared to using
$1,175,000 and $6,057,000 for the three months and nine months ended
September 30, 1995.
The table on the next page shows, for the periods indicated, the net
premiums written, net premiums earned, net losses and loss adjustment
expenses and loss ratios for the Company's five major types of bonds:
<PAGE>
TABLE 1
AMWEST INSURANCE GROUP, INC. AND SUBSIDIARIES
SUMMARY OF PREMIUMS AND LOSSES BY PRODUCT LINE
(Dollars in thousands)
<TABLE>
<CAPTION>
Three months ended Nine months ended Year ended
September 30, September 30, December 31,
Type of Bond 1995 1994 1995 1994 1994 1993
------------ ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Contract performance
Net premiums written $ 12,817 $ 14,160 $ 36,994 $ 35,949 $ 46,638 $ 35,503
Net premiums earned 12,158 10,770 36,413 29,305 41,937 31,744
Net losses and loss adjustment
expenses 5,084 3,760 14,831 8,885 11,098 9,397
Loss ratio 42% 35% 41% 30% 27% 30%
Court
Net premiums written $ 2,333 $ 2,716 $ 6,396 $ 7,069 $ 9,531 $ 7,930
Net premiums earned 2,327 2,407 6,461 6,686 9,183 7,387
Net losses and loss adjustment
expenses 231 242 338 828 1,114 218
Loss ratio 10% 10% 5% 12% 12% 3%
Contractor's license
Net premiums written $ 370 $ $ 1,180 $ 1,667 $ 2,154 $ 1,722
489
Net premiums earned 469 453 1,443 1,358 1,833 1,680
Net losses and loss adjustment
expenses 57 72 403 301 477 364
Loss ratio 12% 16% 28% 22% 26% 22%
SBA
Net premiums written $ 284 $ $ 802 $ $ 1,213 $ 1,796
371 902
Net premiums earned 297 346 915 1,097 1,416 1,938
Net losses and loss adjustment
expenses (55) (11) 196 49 145 614
Loss ratio (19%) (3%) 21% 4% 10% 32%
Miscellaneous
Net premiums written $ 1,485 $ 2,018 $ 4,556 $ 5,920 $ 7,439 $ 7,380
Net premiums earned 1,686 1,860 5,247 5,628 7,460 7,341
Net losses and loss adjustment
expenses 165 324 672 960 1,261 1,316
Loss ratio 10% 17% 13% 17% 17% 18%
</TABLE>
<PAGE>
PART II - OTHER INFORMATION
AMWEST INSURANCE GROUP, INC. AND SUBSIDIARIES
Item 1: LEGAL PROCEEDINGS
California voters passed Proposition 103, an insurance
initiative which required a rollback in insurance rates for
policies (and bonds) written or renewed during the twelve
month period beginning November 8, 1988 and provided that
changes in insurance premiums after November 8, 1988 must be
submitted for approval of the California Insurance
Commissioner prior to implementation. While the Proposition
has the most significant impact on automobile insurance, its
provisions, as written, also apply to other property and
casualty insurers including surety insurers.
On August 26, 1991, The State of California enacted Insurance
Code Section 1861.135 ("Section 1861.135") exempting surety
insurance from the rate rollback and prior approval provisions
of Proposition 103. Section 1861.135 does not affect
Proposition 103's prohibition against excessive, inadequate or
discriminatory rates. Due to the enactment of Section
1861.135, the Company terminated a previously established
reserve for potential premium rebates.
Subsequently, the Department of Insurance ("Department") and
Voter Revolt brought a motion for writ of mandate challenging
the validity of Section 1861.135. On March 21, 1992, the Los
Angeles Superior Court concluded that Section 1861.135 did not
violate the California Constitution or the provisions of
Proposition 103. The Department and Voter Revolt appealed. On
December 7, 1993, the Second District Court of Appeal
overturned Section 1861.135 by a 2-1 vote. On February 24,
1994, the California Supreme Court agreed to hear the
Company's petition for review, thereby staying the Court of
Appeals opinion. Such hearing has been scheduled for December
5, 1995. The outcome of this appeal cannot be predicted;
however, if this appeal is not successful, it could have a
significant impact on the Company's earnings but is not
expected to have a material adverse impact on the Company's
financial position.
Items 2-5: CHANGE IN SECURITIES, DEFAULTS UPON SENIOR SECURITIES,
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS,
OTHER INFORMATION
None
Item 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
ee the Exhibit Index on page 15.
(b) Reports on Form 8-K
There were no reports filed on Form 8-K during the
three months ended September 30, 1995.
<PAGE>
SIGNATURES
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.
AMWEST INSURANCE GROUP, INC.
Date: November 14, 1995 by: /s/ JOHN E. SAVAGE
--------------------------
John E. Savage
President, Co-Chief Executive
Officer
and Chief Operating Officer
(Principal Executive Officer)
by: /s/ STEVEN R. KAY
----------------------------
Steven R. Kay
Senior Vice-President,
Chief Financial Officer,
Treasurer and Director
(Principal Financial and
Principal Accounting Officer)
<PAGE>
AMWEST INSURANCE GROUP, INC. AND SUBSIDIARIES
EXHIBIT INDEX
Exhibit Number Description Location
2 Plan of acquisition, reorganization, arrangement,
liquidation or succession None
4 Instruments defining the rights of
securityholders, including indentures Not required
11 Statement re computation of per share earnings Page 16
15 Letter re unaudited interim financial information None
18 Letter re change in accounting principles None
19 Previously unfiled documents None
20 Report furnished to security holders None
23 Published report regarding matters submitted to
vote of security holders None
24 Consents of experts and counsel None
25 Power of attorney None
28 Additional exhibits None
EXHIBIT 11
AMWEST INSURANCE GROUP, INC. AND SUBSIDIARIES
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Primary (2) Fully diluted (3)
earnings per share earnings per share
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Average shares outstanding for the nine month
period ending September 30, 2,350,290 2,362,004 2,350,290 2,362,004
Incremental shares resulting from
conversion of common stock equivalents:
Options to purchase shares of common
stock at an exercise price of
$5.37- $15.675 (261,950 and 314,325
options at September 30, 1994 and
1995, respectively) (1) 51,320 48,912 54,452 48,912
--------- --------- --------- ---------
Total incremental shares resulting from
conversion of common stock equivalents
at September 30, 51,320 48,912 54,452 48,912
--------- --------- --------- ---------
Total shares and incremental shares resulting from
conversion of common stock equivalents at September
30, 2,401,610 2,410,916 2,404,742 2,410,916
========= ========= ========= =========
Percentage of incremental shares resulting from
conversion of common stock equivalents at
September 30, 2.14% 2.03% 2.26% 2.03%
========= ========= ========= =========
</TABLE>
<PAGE>
EXHIBIT 11 (continued)
AMWEST INSURANCE GROUP, INC. AND SUBSIDIARIES
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Primary (2) Fully diluted (3)
earnings per share earnings per share
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Average shares outstanding for the three month
period ending September 30, 2,354,203 2,366,643 2,354,203 2,366,643
Incremental shares resulting from
conversion of common stock equivalents:
Options to purchase shares of common
stock at an exercise price of
$5.37- $15.675 (261,950 and 314,325
options at September 30, 1994 and
1995, respectively) (1) 49,677 41,379 52,638 41,379
--------- --------- --------- ---------
Total incremental shares resulting from
conversion of common stock equivalents
at September 30, 49,677 41,379 52,638 41,379
--------- --------- --------- ---------
Total shares and incremental shares resulting from
conversion of common stock equivalents at September
30, 2,403,880 2,408,022 2,406,841 2,408,022
--------- --------- --------- ---------
Percentage of incremental shares resulting from
conversion of common stock equivalents at
September 30, 2.07% 1.72% 2.19% 1.72%
========= ========= ========= =========
</TABLE>
<PAGE>
EXHIBIT 11, (continued)
AMWEST INSURANCE GROUP, INC. AND SUBSIDIARIES
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(1) Outstanding options and warrants to purchase common stock.
Options to purchase shares of common stock as of September 30, 1995 and
1994, respectively:
September 30, September 30,
1995 1994
Grant price: $5.37 - 11,000
Grant price: $9.875 10,500 11,250
Grant price: $10.625 12,750 14,250
Grant price: $11.125 13,000 16,250
Grant price: $9.375 - 10,125
Grant price: $11.375 7,500 7,500
Grant price: $14.25 12,750 15,000
Grant price: $15.675 8,500 8,500
Grant price: $8.375 15,625 22,000
Grant price: $9.213 8,500 8,500
Grant price: $8.375 17,625 18,750
Grant price: $10.75 27,000 35,625
Grant price: $11.825 10,000 10,000
Grant price: $10.375 3,000 3,000
Grant price: $13.875 69,075 70,200
Grant price: $14.25 98,500 -
------- -------
314,325 261,950
======= =======
(2) Calculation of incremental shares resulting from conversion of common
stock equivalents, using the Treasury Stock Method for calculating
primary earnings per share, is based on the average of the closing
prices, for the three months and nine months ended September 30, 1995
and 1994, as reported on the American Stock Exchange.
(3) Calculation of incremental shares resulting from conversion of common
stock equivalents, using the Treasury Stock Method for calculating
fully diluted earnings per share, is based on the greater of the
average ending ask price or the closing ask price on September 30, 1995
and 1994, as reported on the American Stock Exchange.
