<TABLE> <S> <C>
<ARTICLE> 7
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 0
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 97,713
<EQUITIES> 15,520
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 118,924
<CASH> 355
<RECOVER-REINSURE> 8,884
<DEFERRED-ACQUISITION> 18,838
<TOTAL-ASSETS> 182,708
<POLICY-LOSSES> 39,604
<UNEARNED-PREMIUMS> 36,624
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 14,500
0
0
<COMMON> 34
<OTHER-SE> 53,590
<TOTAL-LIABILITY-AND-EQUITY> 182,708
21,781
<INVESTMENT-INCOME> 1,605
<INVESTMENT-GAINS> 348
<OTHER-INCOME> 5
<BENEFITS> 7,983
<UNDERWRITING-AMORTIZATION> 10,151
<UNDERWRITING-OTHER> 3,269
<INCOME-PRETAX> 1,858
<INCOME-TAX> 544
<INCOME-CONTINUING> 1,314
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,314
<EPS-PRIMARY> 0.39
<EPS-DILUTED> 0.39
<RESERVE-OPEN> 42,009
<PROVISION-CURRENT> 11,269
<PROVISION-PRIOR> 3,675
<PAYMENTS-CURRENT> 4,055
<PAYMENTS-PRIOR> 13,294
<RESERVE-CLOSE> 39,604
<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 June 30, 1997
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.)
5230 Las Virgenes Rd.
Calabasas, California 91302
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (818) 871-2000
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 August 12, 1997, 3,379,590 shares of common stock, $.01 par
value, were outstanding.
<PAGE>
AMWEST INSURANCE GROUP, INC. AND SUBSIDIARIES
INDEX
Part I. FINANCIAL INFORMATION:
Item 1
Consolidated Statements of Operations for the three
and six months ended June 30, 1997 and 1996 3
Consolidated Balance Sheets as of June 30, 1997
and December 31, 1996 4
Consolidated Statements of Cash Flows for the three
and six months ended June 30, 1997 and 1996 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 Ho1ders 13
Item 5
Other Information 13
Item 6
Exhibits and Reports on Form 8-K 14
<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 Six months ended
June 30, June 30,
-------- --------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Underwriting revenues:
Net premiums written $ 26,227 $ 22,979 $ 46,687 $ 43,444
Net change in unearned premiums (4,446) (1,444) (3,460) (74)
---------------- ---------------- ---------------- ----------------
Net premiums earned 21,781 21,535 43,227 43,370
---------------- ---------------- ---------------- ----------------
Underwriting expenses:
Losses and loss adjustment expenses 9,364 12,810 16,017 23,273
Reinsurance recoveries (1,381) (980) (967) (1,372)
---------------- ---------------- ---------------- ----------------
Net losses and loss adjustment expenses 7,983 11,830 15,050 21,901
Policy acquisition costs 10,151 9,069 20,973 18,556
General operating costs 3,269 3,287 6,172 7,115
---------------- ---------------- ---------------- ----------------
Total underwriting expenses 21,403 24,186 42,195 47,572
---------------- ---------------- ---------------- ----------------
Underwriting income (loss) 378 (2,651) 1,032 (4,202)
Interest expense (478) (598) (879) (1,192)
Merger expense - - - (710)
Lease termination expense - (1,300) - (1,300)
Net investment income 1,605 1,679 3,286 3,486
Net realized investment gains 348 516 985 1,541
Commissions and fees 5 80 5 223
---------------- ---------------- ---------------- ----------------
Income (loss) before income taxes 1,858 (2,274) 4,429 (2,154)
Provision (benefit) for income taxes:
Current (122) (55) 402 21
Deferred 666 (908) 928 (950)
---------------- ---------------- ---------------- ----------------
Total provision (benefit) for income taxes 544 (963) 1,330 (929)
---------------- ---------------- ---------------- ----------------
Net income (loss) $ 1,314 $ (1,311) $ 3,099 $ (1,225)
================ ================ ================ ================
Earnings (loss) per common share:
Net income (loss) $ 0.39 $ (0.39) $ 0.92 $ (0.37)
================ ================ ================ ================
Weighted average shares outstanding 3,395 3,353 3,376 3,348
</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>
June 30, December 31,
1997 1996
--------------------- ---------------------
(unaudited)
<S> <C> <C>
Investments:
Fixed maturities, available-for-sale (amortized cost of $96,915 and $101,799 at
June 30, 1997 and December 31, 1996,
respectively) $ 97,713 $ 102,494
Common equity securities, available-for-sale (cost of $7,221 and $7,217 at June
30, 1997 and December 31, 1996, respectively)
10,470 9,779
Preferred equity securities, available-for-sale (cost of $4,557 and $3,971 at
June 30, 1997 and December 31, 1996,
respectively) 5,050 4,253
Other invested assets (cost of $3,500 and $2,667 at June 30,
1997 and December 31, 1996, respectively) 4,110 2,849
Short-term investments 1,581 890
--------------------- ---------------------
Total investments 118,924 120,265
Cash and cash equivalents 355 6,434
Accrued investment income 1,334 1,399
Agents balances and premiums receivable (less allowance for doubtful accounts of
$446 at June 30, 1997 and December 31,
1996) 14,976 10,882
Reinsurance recoverable:
Paid loss and loss adjustment expenses 2,420 2,749
Unpaid loss and loss adjustment expenses 6,464 6,443
Ceded unearned premiums 1,074 1,849
<CAPTION>
Deferred policy acquisition costs 18,838 16,101
Furniture, equipment and improvements, net 5,391 4,747
Income taxes recoverable 1,818 2,802
Other assets 11,114 7,747
--------------------- ---------------------
Total assets $ 182,708 $ 181,418
===================== =====================
</TABLE>
<PAGE>
AMWEST INSURANCE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
(Dollars in thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
--------------------- ---------------------
(unaudited)
<S> <C> <C>
Liabilities:
Unpaid losses and loss adjustment expenses $ 39,604 $ 42,009
Unearned premiums 36,624 33,939
Funds held as collateral 26,148 29,928
Bank indebtedness 14,500 12,500
Amounts due to reinsurers 288 345
Deferred Federal income taxes 3,205 1,842
Other liabilities 8,715 10,923
--------------------- ---------------------
Total liabilities 129,084 131,486
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: 3,369,577 at
June 30, 1997 and 3,326,002 at December 31, 1996 34 33
Additional paid-in capital 17,216 16,827
Net unrealized appreciation of investments carried at market,
net of income taxes 3,399 2,456
Retained earnings 32,975 30,616
--------------------- ---------------------
Total stockholders' equity 53,624 49,932
--------------------- ---------------------
Total liabilities and stockholders' equity $ 182,708 $ 181,418
===================== =====================
</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 Six months ended
June 30, June 30,
-------- --------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 1,314 $ (1,311) $ 3,099 $ (1,225)
Adjustments to reconcile net income to cash provided
by operating activities:
Change in agents' balances and premiums
receivable and unearned premiums 1,200 (269) (1,409) (3,936)
Change in accrued investment income 88 82 65 135
Change in unpaid losses and loss adjustment
expenses 582 1,652 (2,405) 4,308
Change in reinsurance recoverable on paid and
unpaid losses and loss adjustment expenses
and ceded unearned premiums (288) (2,296) 1,083 (2,461)
Change in amounts due to/from reinsurers (324) (851) (57) (511)
Change in other assets and other liabilities (2,847) 739 (5,575) 3,744
Change in income taxes, net 333 (1,355) 1,861 (1,908)
Change in deferred policy acquisition costs (2,625) (1,103) (2,737) (909)
Net realized gain on sale of investments (348) (505) (985) (1,657)
Net realized (gain)loss on sale of fixed assets (7) - (5) 1
Provision for depreciation and amortization 316 325 661 655
------------ ------------- ------------ --------------
Net cash used by operating activities (2,606) (4,892) (6,404) (3,764)
Cash flows from investing activities:
Cash received from investments sold, matured,
called or repaid:
Investments available-for-sale 15,304 12,885 28,362 35,305
Cash paid for investments acquired:
Investments available-for-sale (12,335) (11,961) (24,579) (27,274)
Amortization of discount on bonds (30) 46 (28) 83
Capital expenditures, net (1,187) (585) (1,300) (1,305)
------------ ------------- ------------ --------------
Net cash provided by investing activities 1,752 385 2,455 6,809
</TABLE>
<PAGE>
AMWEST INSURANCE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
-------- --------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Cash flows from financing activities:
Proceeds from issuance of long term debt 2,000 - 2,000
Proceeds from issuance of common stock 164 19 390 265
Change in funds held as collateral (1,043) (602) (3,780) (5,974)
Dividends paid (371) (468) (740) (729)
------------ ------------- ------------ --------------
Net cash provided (used) by financing activities 750 (1,051) (2,130) (6,438)
------------ ------------- ------------ --------------
Net decrease in cash and cash equivalents (104) (5,558) (6,079) (3,393)
Cash and cash equivalents at beginning of period 459 7,397 6,434 5,232
------------ ------------- ------------ --------------
Cash and cash equivalents at end of period $ 355 $ 1,839 $ 355 $ 1,839
============ ============= ============ ==============
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 478 $ 598 $ 879 $ 1,192
Income taxes 212 748 256 1,312
Cash received during the period on:
Investments sold prior to maturity $13,594 $ 11,885 $23,765 $ 34,005
Investments held to maturity 1,710 1,000 4,597 1,300
</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, 1996.
<PAGE>
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Net premiums earned remained relatively constant at $21,535,000 and
$43,370,000 for the three months and six months ended June 30, 1996,
respectively, as compared to $21,781,000 and $43,227,000 for the three
months and six months ended June 30, 1997, respectively. The Company
generally earns premiums ratably over the assigned bond terms for the
surety operations and the policy term for the specialty property and
casualty operations.
Net losses and loss adjustment expenses decreased 33% and 31% from
$11,830,000 and $21,901,000 for the three months and six months ended
June 30, 1996, respectively, to $7,983,000 and $15,050,000 for the
three months and six months ended June 30, 1997, respectively. The loss
ratio for the surety operations decreased from 45% and 41% for the
three months and six months ended June 30, 1996, respectively, to 29%
and 27% for the three months and six months ended June 30, 1997,
respectively. This improved loss ratio is reflective of decreased loss
severity primarily in the contract performance and payment product
line. The loss ratio for the property and casualty operations also
decreased from 85% and 79% for the three months and six months ended
June 30, 1996, respectively, to 58% for each of the three months and
six months ended June 30, 1997, primarily due to improved results on
business written under the Arizona private passenger automobile
program.
Policy acquisition costs increased as a percentage of net premiums
earned from 42%, or $9,069,000, and 43%, or $18,556,000, for the three
months and six months ended June 30, 1996, respectively, to 47%, or
$10,151,000, and 49%, or $20,973,000, for the three months and six
months ended June 30, 1997, respectively. Such increase is primarily
attributable to increased costs of the Company's branch office network
without a corresponding increase in premiums earned on business written
through the Company's branches, as well as a decline in contingent
commissions earned by the Company due to changes in its reinsurance
treaties.
General operating costs remained relatively steady as a percentage of
net premiums earned at 15%, or $3,287,000, and 16%, or $7,115,000, for
the three months and six months ended June 30, 1996, respectively, as
compared to 15%, or $3,269,000, and 14%, or $6,172,000, for the three
months and six months ended June 30, 1997, respectively. The
improvement in general and administrative expenses for the six months
ended June 30, 1997 is reflective of operational efficiencies
associated with the merger with Condor Services, Inc. which was
consumated on March 14, 1996.
Underwriting results were losses of $2,651,000 and $4,202,000 for the
three months and six months ended June 30, 1996, respectively, and
income of $378,000 and $1,032,000 for the three months and six months
ended June 30, 1997, respectively. The combined ratio decreased from
112% and 110% for the three months and six months ended June 30, 1996,
respectively, to 98% for each of the three months and six months ended
June 30 1997.
Interest expense decreased 20% and 26% from $598,000 and $1,192,000 for
the three months and six months ended June 30, 1996, respectively, to
$478,000 and $879,000 for the three months and six months ended June
30, 1997, respectively. The decrease is attributable to a decrease in
the interest rate on the bank indebtedness from an average 8.7% for the
six months ended June 30, 1996 to an average rate of 7.1% for the six
months ended June 30, 1997. The decrease is also attributed to an
overall reduction in average funds held as collateral from $31,977,000
and $34,663,000 for the three months and six months ended June 30,
1996, respectively, to $26,670,000 and $28,038,000 for the three months
and six months ended June 30, 1997, respectively. Collateral rates are
adjusted at various times throughout the year in accordance with
general market conditions.
<PAGE>
A non-recurring $1,300,000 pre-tax charge for the costs associated with
accelerating the lease termination date on the Company's former home
office from July 31, 1998 to June 30, 1997 was charged to operations
during the second quarter of 1996. During the second quarter of 1997,
the Company moved its home office to Calabasas, CA. The new home office
has allowed the Company to consolidate the operations of its surety
subsidiaries, Amwest Surety Insurance Company and Far West Insurance
Company, with the operations of its property and casualty subsidiary,
Condor Insurance Company.
Net investment income decreased 4% and 6% from $1,679,000 and
$3,486,000 for the three months and six months ended June 30, 1996,
respectively, to $1,605,000 and $3,286,000 for the three months and six
months ended June 30, 1997, respectively. The decrease is primarily due
to a decrease in the amount of invested assets from $121,356,000 at
June 30, 1996 to $118,924,000 at June 30, 1997.
Net realized investment gains decreased from $516,000 and $1,541,000
for the three months and six months ended June 30, 1996, respectively,
to $348,000 and $985,000 for the three months and six months ended June
30, 1997, respectively. The investments sold during the three months
and six months ended June 30, 1997 were primarily equity securities and
certain fixed income investments including mortgage-backed and
municipal bond securities.
Income before income taxes increased from losses of $2,274,000 and
$2,154,000 for the three months and six months ended June 30, 1996,
respectively, to income of $1,858,000 and $4,429,000 for the three
months and six months ended June 30, 1997, respectively, due to the
factors outlined above.
The effective tax benefit was 42% and 43% for the three months and six
months ended June 30, 1996 as compared to an effective tax rate of 29%
and 30% for the three months and six months ended June 30, 1997. The
primary reason for the variance from the corporate income tax rate of
34% is tax advantaged income received on a portion of the Company's
investment portfolio.
Net income increased from net losses of $1,311,000 and $1,225,000 for
the three months and six months ended June 30, 1996, respectively, to
net income of $1,314,000 and $3,099,000 for the three months and six
months ended June 30, 1997, respectively, due to the factors outlined
above.
Liquidity and Capital Resources
As of June 30, 1997, the Company held total cash and cash equivalents
and invested assets of $119,279,000. This amount includes an aggregate
of $26,148,000 in funds held as collateral which is shown as a
liability on the Company's consolidated balance sheets. As of June 30,
1997, the Company's invested assets consisted of $97,713,000 in fixed
maturities, $10,470,000 in common equity securities, $5,050,000 in
preferred equity securities, $4,110,000 in other invested assets and
$1,581,000 in short-term investments, including certificates of deposit
with original maturities less than one year.
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 respective domicilary state of each of
the insurance subsidiaries regulates, through the Office of the
Insurance Commissioner, the amount of dividends which can be paid by a
domestic insurance company utilizing various formula methodology.
<PAGE>
On August 6, 1993, the Company entered into a revolving credit
agreement with Union Bank for $12,500,000. The loan was amended on
April 24, 1995 and again on July 10, 1996 to increase the amount
available under the revolving line of credit from $12,500,000 to
$15,000,000. The loan has a variable rate based upon fluctuations in
the London Interbank Offered Rate (LIBOR) with amortizing credit line
reduction each September 30, ultimately maturing on September 30, 2001.
On June 30, 1997, the Company increased its outstanding balance by
$2,000,000 to $14,500,000. On September 30, 1997, the revolving credit
line is scheduled to be reduced to $12,000,000. The interest rate at
June 30, 1997 was 7.1%. The credit agreement contains certain financial
covenants with respect to capital expenditures, business acquisitions,
liquidity ratio, leverage ratio, tangible net worth, net profit and
dividend payments.
The Company terminated a portion of its lease with Trillium/Woodland
Hills on June 30, 1997. The Company is still responsible for
approximately 18,000 square feet through July 31, 1998. The Company is
a party to a new lease with Ahmanson Commercial Development Company for
its corporate headquarters. The lease commenced on May 27, 1997. The
new lease term is for 15 years and contains provisions for scheduled
lease charges. The Company's minimum lease commitment for the remainder
of 1997 is approximately $596,000. The Company also has the option to
purchase this new building and land three years into the lease period
at a predetermined rate for the building, with the value of land based
on then existing market rates.
Other than the Company's obligations with respect to funds held as
collateral, the Company's obligation to pay claims as they arise, the
Company's commitments to pay principal and interest on the bank debt
and 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 1997.
The Company used $4,892,000 and $3,764,000 in cash from operating
activities for the three months and six months ended June 30, 1996 as
compared to $2,606,000 and $6,404,000 for the three months and six
months ended June 30, 1997. The Company generated $385,000 and
$6,809,000 in cash from investing activities for the three months and
six months ended June 30, 1996 as compared to $1,752,000 and $2,455,000
for the three months and six months ended June 30, 1997. The Company
used $1,051,000 and $6,438,000 in cash from financing activities for
the three months and six months ended June 30, 1996 as compared to
generating $750,000 and using $2,130,000 for the three months and six
months ended June 30, 1997.
The table on the next page shows, for the periods indicated, the gross
premiums written, net premiums earned, net losses and loss adjustment
expenses and loss ratios for the Company's specialty property and
casualty operations and surety operations. The surety operations are
detailed by the Company's three 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 Six months ended Year ended
June 30, June 30, December 31,
Type of Bond 1997 1996 1997 1996 1996 1995
------------ ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Contract
Gross premiums written $ 15,059 $ 13,823 $ 24,678 $ 25,423 $ 49,782 $ 54,039
Net premiums earned 10,690 11,240 21,768 23,283 46,158 49,736
Net losses and loss adjustment
expenses 4,102 6,411 7,559 12,050 24,430 20,044
Loss ratio 38% 57% 35% 52% 53% 40%
Court
Gross premiums written $ 2,589 $ 2,588 $ 5,096 $ 5,172 $ 11,197 $ 7,669
Net premiums earned 2,352 2,449 4,994 5,126 10,897 7,816
Net losses and loss adjustment
expenses 73 185 7 734 835 323
Loss ratio 3% 8% 0% 14% 8% 4%
Commercial Surety
Gross premiums written $ 4,247 $ 2,918 $ 7,714 $ 4,625 $ 11,191 $ 8,374
Net premiums earned 3,206 2,409 5,558 4,591 8,407 9,746
Net losses and loss adjustment
expenses 583 638 1,115 887 2,553 1,767
Loss ratio 18% 26% 20% 19% 30% 18%
Total Surety
Gross premiums written $ 21,895 $ 19,329 $ 37,488 $ 35,220 $ 72,170 $ 70,082
Net premiums earned 16,248 16,098 32,320 32,999 65,462 67,298
Net losses and loss adjustment
expenses 4,758 7,234 8,681 13,671 27,818 22,134
Loss ratio 29% 45% 27% 41% 42% 33%
Property & Casualty
Gross premiums written $ $ 6,420 $ 12,296 $ 13,737 $ 25,172 $ 24,101
6,280
Net premiums earned 5,533 5,437 10,907 10,371 22,421 17,872
Net losses and loss adjustment
expenses 3,225 4,596 6,369 8,230 18,830 13,131
Loss ratio 58% 85% 58% 79% 84% 73%
Total Company
Gross premiums written $ 28,175 $ 25,749 $ 49,784 $ 48,957 $ 97,342 $ 94,183
Net premiums earned 21,781 21,535 43,227 43,370 87,883 85,170
Net losses and loss adjustment
expenses 7,983 11,830 15,050 21,901 46,648 35,265
Loss ratio 37% 55% 35% 50% 53% 41%
</TABLE>
<PAGE>
PART II - OTHER INFORMATION
AMWEST INSURANCE GROUP, INC. AND SUBSIDIARIES
Items 1-3: LEGAL PROCEEDINGS, CHANGE IN SECURITIES, DEFAULTS UPON SENIOR
SECURITIES
None
Item 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The annual meeting of stockholders was held on May
30, 1997.
(b) (i) The following directors were elected to serve
until the 2000 Annual Meeting of Stockholders or
until their successors have been duly elected and
qualified:
Richard H. Savage
Steven R. Kay
Charles L. Schultz
(ii) The other directors whose terms of office
continued after the meeting are:
John E. Savage
Guy A. Main
Arthur F. Melton
Thomas R. Bennett
Edgar L. Fraser
Bruce A. Bunner
Jonathan K. Layne
(c) (i) Of the 2,792,300 shares represented at the
meeting, the directors named in (b) (i)
above were elected by the following votes:
No. of Votes Received
------------------------
Withhold
Name For Authority
Richard H. Savage 2,784,759 7,541
Steven R. Kay 2,786,059 6,241
Charles L. Schultz 2,784,159 8,141
Item 5: OTHER INFORMATION
None
<PAGE>
Item 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
See the Exhibit Index on page 16.
(b) Reports on Form 8-K
There were no reports filed on Form 8-K during the
three months ended June 30, 1997.
<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: August 13, 1997 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 17
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
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Average shares outstanding for the six month period
ending June 30, 3,348,969 3,309,301 3,348,969 3,309,301
Incremental shares resulting from conversion
of common stock equivalents:
Options to purchase shares of common stock
at an exercise price of $6.14 - $14.875
(404,085 and 451,355 options at June 30,
1997 and 1996, respectively) (1) 26,876 38,839 38,674 38,839
----------------- ------------------ ------------------ -----------------
Total incremental shares resulting from
conversion of common stock equivalents
at June 30, 26,876 38,839 38,674 38,839
----------------- ------------------ ------------------ -----------------
Total shares and incremental shares resulting
from conversion of common stock equivalents
at June 30, 3,375,845 3,348,140 3,387,643 3,348,140
================= ================== ================== =================
Percentage of incremental shares resulting from
conversion of common stock equivalents at June 30, 0.80% 1.16% 1.14% 1.16%
================= ================== ================== =================
</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
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Average shares outstanding for the three month
period ending June 30, 3,363,900 3,321,080 3,363,900 3,321,080
Incremental shares resulting from conversion
of common stock equivalents:
Options to purchase shares of common stock
at an exercise price of $6.14 - $14.875
(404,085 and 451,355 options at June 30,
1997 and 1996, respectively) (1) 30,646 31,780 54,243 31,780
----------------- ------------------ ------------------ -----------------
Total incremental shares resulting from
conversion of common stock equivalents
at June 30, 30,646 31,780 54,243 31,780
----------------- ------------------ ------------------ -----------------
Total shares and incremental shares resulting
from conversion of common stock equivalents at
June 30, 3,394,546 3,352,860 3,418,143 3,352,860
================= ================== ================== =================
Percentage of incremental shares resulting from
conversion of common stock equivalents at June 30, 0.90% 0.95% 1.59% 0.95%
================= ================== ================== =================
</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 June 30, 1997 and
1996, respectively:
June 30, 1997 June 30, 1996
------------- -------------
Grant price: $6.14 3,025 3,025
Grant price: $6.82 - 1,650
Grant price: $8.375 - 32,250
Grant price: $9.00 5,050 5,550
Grant price: $9.10 4,785 5,005
Grant price: $9.213 - 8,500
Grant price: $9.875 10,500 10,500
Grant price: $9.90 - 1,650
Grant price: $10.375 3,000 3,000
Grant price: $10.50 4,550 4,850
Grant price: $10.625 12,750 12,750
Grant price: $10.75 25,500 27,000
Grant price: $11.125 12,000 12,000
Grant price: $11.55 - 1,650
Grant price: $11.825 10,000 10,000
Grant price: $12.50 17,500 17,500
Grant price: $12.75 4,000 4,000
Grant price: $13.375 94,575 101,000
Grant price: $13.875 62,700 67,950
Grant price: $14.02 1,650 1,650
Grant price: $14.125 17,500 -
Grant price: $14.25 107,500 112,375
Grant price: $14.875 7,500 7,500
----------- ------------
404,085 451,355
=========== ============
(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 six months ended June 30, 1997 and
1996, 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 June 30, 1997 and
1996, as reported on the American Stock Exchange.
