<TABLE> <S> <C>
<ARTICLE> 7
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-1-1998
<PERIOD-END> Mar-31-1998
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 98,240
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 15,156
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 123,482
<CASH> 6,705
<RECOVER-REINSURE> 7,906
<DEFERRED-ACQUISITION> 21,603
<TOTAL-ASSETS> 195,378
<POLICY-LOSSES> 39,056
<UNEARNED-PREMIUMS> 41,864
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 14,500
0
0
<COMMON> 38
<OTHER-SE> 60,386
<TOTAL-LIABILITY-AND-EQUITY> 195,378
27,124
<INVESTMENT-INCOME> 1,577
<INVESTMENT-GAINS> 820
<OTHER-INCOME> 0
<BENEFITS> 8,908
<UNDERWRITING-AMORTIZATION> 14,146
<UNDERWRITING-OTHER> 3,155
<INCOME-PRETAX> 2,907
<INCOME-TAX> 851
<INCOME-CONTINUING> 2,056
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,056
<EPS-PRIMARY> .54
<EPS-DILUTED> .53
<RESERVE-OPEN> 39,523
<PROVISION-CURRENT> 8,894
<PROVISION-PRIOR> 1,074
<PAYMENTS-CURRENT> 3,255
<PAYMENTS-PRIOR> 7,180
<RESERVE-CLOSE> 39,056
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
UNITED STATES
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 March 31, 1998
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 Road 91302
Calabasas, California (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 May 13, 1998, 3,835,841 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 months ended March
31, 1998 and 1997 3
Consolidated Balance Sheets as of March 31, 1998 and December 31, 1997 4
Consolidated Statements of Cash Flows for the three months ended March
31, 1998 and 1997 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 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
March 31,
1998 1997
<S> <C> <C>
Premiums written ............................................................................. $ 29,342 $ 21,610
Premiums ceded ............................................................................... (2,398) (1,149)
-------- --------
Net premiums written ...................................................................... 26,944 20,461
Change in unearned premiums:
Direct .................................................................................... 148 1,644
Ceded ..................................................................................... 32 (659)
-------- --------
Net premiums earned .................................................................... 27,124 21,446
-------- --------
Underwriting expenses:
Losses and loss adjustment expenses .......................................................... 9,492 6,653
Reinsurance (recoveries) refunds ............................................................. (584) 415
-------- --------
Net losses and loss adjustment expenses ................................................... 8,908 7,068
Policy acquisition costs ..................................................................... 14,146 10,821
General operating costs ...................................................................... 3,155 2,903
-------- --------
Total underwriting expenses ............................................................... 26,209 20,792
-------- --------
Underwriting income .................................................................... 915 654
Interest expense ................................................................................. (405) (401)
Net investment income ............................................................................ 1,577 1,681
Net realized gains ............................................................................... 820 637
-------- --------
Income before income taxes ................................................................... 2,907 2,571
Provision for income taxes:
Current ...................................................................................... 700 524
Deferred ..................................................................................... 151 262
-------- --------
Total provision for income taxes .......................................................... 851 786
-------- --------
Net income ............................................................................. $ 2,056 $ 1,785
======== ========
Earnings per common share:
Basic ........................................................................................ $ 0.54 $ 0.49
======== ========
Diluted ...................................................................................... $ 0.53 $ 0.48
======== ========
</TABLE>
See accompanying notes to interim consolidated
financial statements.
<PAGE>
AMWEST INSURANCE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
ASSETS
March 31, December 31,
1998 1997
--------- ---------
(unaudited)
<S> <C> <C>
Investments, available-for-sale:
Fixedmaturities, at market value (amortized cost of $95,915 and $96,516 at
March 31, 1998 and December 31, 1997,
respectively) .................................................................. $ 98,240 $ 98,746
Common equity securities, at market value (cost of $6,775 and $6,856 at March
31, 1998 and December 31, 1997, respectively)
11,339 10,297
Preferred equity securities, at market value (cost of $3,797 and $2,664 at March
31, 1998 and December 31, 1997, respectively)
4,177 2,894
Other invested assets (cost of $6,250 and $5,816 at March 31,
1998 and December 31, 1997, respectively) ..................................... 7,645 6,455
Short-term investments .............................................................. 2,081 2,281
--------- ---------
Total investments ................................................................... 123,482 120,673
Cash and cash equivalents ........................................................... 6,705 3,807
Accrued investment income ........................................................... 1,423 1,366
Agents balances and premiums receivable (less allowance for doubtful accounts of
$967 and $467 at March 31, 1998 and
December 31, 1997) ............................................................. 15,829 12,511
Reinsurance recoverable:
Paid loss and loss adjustment expenses ......................................... 1,424 2,524
Unpaid loss and loss adjustment expenses ....................................... 6,482 6,185
Ceded unearned premiums ............................................................. 2,071 2,039
Deferred policy acquisition costs ................................................... 21,603 21,299
Furniture, equipment and improvements, net .......................................... 5,348 5,355
Current Federal income taxes ........................................................ (778) 1,581
Other assets ........................................................................ 11,789 13,179
--------- ---------
Total assets ............................................................... $ 195,378 $ 190,519
========= =========
</TABLE>
<PAGE>
AMWEST INSURANCE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
(Dollars in thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
-------- --------
(unaudited)
<S> <C> <C>
Liabilities:
Unpaid losses and loss adjustment expenses ...................................... $ 39,056 $ 39,523
Unearned premiums ............................................................... 41,864 42,013
Funds held as collateral ........................................................ 26,491 23,116
Deferred Federal income taxes ................................................... 4,131 3,925
Bank indebtedness ............................................................... 14,500 14,500
Amounts due to reinsurers ....................................................... 599 455
Other liabilities ............................................................... 8,313 9,808
-------- --------
Total liabilities ........................................................... 134,954 133,340
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: 3,818,624 at
March 31, 1998 and 3,798,141 at December 31, 1997 ........................... 38 34
Additional paid-in capital ...................................................... 23,809 18,209
Net unrealized appreciation of investments carried at market,
net of income taxes ......................................................... 5,707 4,316
Retained earnings ............................................................... 30,870 34,620
-------- --------
Total stockholders' equity .................................................. 60,424 57,179
-------- --------
Total liabilities and stockholders' equity ......................... $195,378 $190,519
======== ========
</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
March 31,
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net income ....................................................................................... $ 2,056 $ 1,785
Adjustments to reconcile net income to cash provided by operating
activities:
Change in agents' balances and premiums receivable and
unearned premiums ......................................................................... (3,467) (2,608)
Change in accrued investment income ........................................................... (57) (22)
Change in unpaid losses and loss adjustment expenses .......................................... (467) (2,987)
Change in reinsurance recoverable on paid and unpaid losses and loss
adjustment expenses and ceded unearned premiums
771 1,311
Change in amounts due to reinsurers ........................................................... 144 326
Change in other assets and other liabilities .................................................. 495 (2,217)
Change in income taxes, net ................................................................... 1,848 1,556
Change in deferred policy acquisition costs ................................................... (304) (112)
Net realized (gain) on sale of investments .................................................... (819) (637)
Net realized loss on sale of fixed assets ..................................................... 2 1
Provision for depreciation and amortization ................................................... 393 346
-------- --------
Net cash provided (used) by operating activities ........................................ 595 (3,258)
Cash flows from investing activities:
Cash received from investments sold prior to maturity ............................................ 16,753 10,171
Cash received from investments matured or called ................................................ 3,561 2,887
Cash paid for investments acquired ............................................................... (20,229) (12,244)
Amortization of discount on bonds ................................................................ 33 (26)
Capital expenditures, net ........................................................................ (388) (113)
Acquisition of agencies, net ..................................................................... (600) --
Mortgage and other loans, net .................................................................... -- (510)
-------- --------
Net cash provided (used) by investing activities ............................................. (870) 165
Cash flows from financing activities:
Proceeds from issuance of common stock ............ 179 226
Change in funds held as collateral ................ 3,375 (2,738)
Dividends paid .................................... (381) (369)
------- -------
Net cash provided (used) by financing activities 3,173 (2,881)
------- -------
Net (decrease) in cash and cash equivalents ............ 2,898 (5,974)
Cash and cash equivalents at beginning of period ....... 3,807 6,433
------- -------
Cash and cash equivalents at end of period ............. $ 6,705 $ 459
======= =======
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest .......................................... $ 405 $ 401
Income taxes ...................................... 162 44
</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, 1997.
(2) Stock Dividend
The Company paid a 10% stock dividend to stockholders of record as of
March 31, 1998. The dividend was charged to retained earnings in the
amount of $5,424,000, which was based on the closing price of $15.625
per share of Common Stock on the declaration date. All share and per
share amounts included in the accompanying consolidated financial
statements and notes are based on the increased number of shares giving
retroactive effect to the stock dividend.
(3) Comprehensive Income
SFAS No. 130 "Reporting Comprehensive Income" was adopted by the
Company effective January 1, 1998. Comprehensive Income represents a
measure of all changes in equity of enterprises that result from
recognized transactions and other economic events of the period other
than transactions with owners in their capacity as owners.
Comprehensive income for the quarterly periods ended March 31, 1998 and
1997 was $3,447,000 and $473,000, respectively. The Company's
Comprehensive Income is comprised of net income for the period plus the
tax effected increase or decrease in unrealized gains occurring during
the period.
(4) Earnings Per Share
In February 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 128 ("FAS 128"),
"Earnings Per Share", which requires the presentation of "basic" and
"diluted" earnings per share("EPS") and is effective for periods ending
after December 15, 1997. Basic EPS is calculated based on the
weighted average number of common shares outstanding and diluted
EPS includes the effects of dilutive potential common shares. The
effect of this change on reported EPS data is as follows:
<TABLE>
<CAPTION>
Three months ended March 31,
Income Shares Per-Share
(Numerator) (Denominator) Amount
($ in thousands) (Dollars)
---------------- ------------- ---------
<S> <C> <C> <C>
Basic EPS:
1998 $ 2,056 3,801,735 $ .54
1997 $ 1,785 3,667,441 $ .49
Effect of Dilutive Securities:
1998 79,592
1997 25,416
Diluted EPS:
1998 $ 2,056 3,881,327 $ .53
1997 $ 1,785 3,692,857 $ .48
</TABLE>
<PAGE>
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Premiums written increased 36% from $21,610,000 for the three months
ended March 31, 1997 to $29,342,000 for the three months ended March
31, 1998.
The premium growth was primarily due to premium increases in the surety
product lines. Premiums for the surety division increased 44% from
$15,710,000 for the three months ended March 31, 1997 to $22,634,000
for the three months ended March 31, 1998. The Company believes that
the increase is attributable to the impact of regionalization of
contract surety underwriting function thereby allowing the Company to
respond on a more timely basis to bond requests coupled with continued
strong growth in the commercial surety operation.
Premiums for the property and casualty division also increased 14% from
$5,900,000 for the three months ended March 31, 1997 to $6,708,000 for
the three months ended March 31, 1998, primarily due to the
commencement of one specialty general agency program.
Net premiums earned increased 26% from $21,446,000 for the three months
ended March 31, 1997 to $27,124,000 for the three months ended March
31, 1998. 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 ratio remained constant at 33%,
or $7,068,000 for the three months ended March 31, 1997 and $8,908,000
for the three months ended March 31, 1998. The loss ratio for surety
operations improved from 25% in 1997 to 22% in 1998, primarily due to
improved loss experience in both contract and commercial surety
operations. The loss ratio for property and casualty operations
deteriorated from 58% in 1997 to 77% in 1998, primarily due to an
increase in claims activity for the commercial trucking operation
during the first quarter. The Company believes that the increase in
commercial trucking claims activity for the first quarter of 1998 is
primarily due to poor weather driving conditions in California caused
by significantly increased rainfall in 1998 versus the corresponding
1997 period.
Policy acquisition costs increased as a percentage of net premiums
earned from 50%, or $10,821,000 to 52%, or $14,146,000 for the three
months ended March 31, 1997 and 1998, respectively. This increase is
primarily attributable to expenses incurred by the property and
casualty division for additional programs which have not yet commenced.
General operating costs decreased as a percentage of net premiums
earned from 14%, or $2,903,000 for the three months ended March 31,
1997 to 12%, or $3,155,000 for the three months ended March 31, 1998.
The improvement in the general and administrative expense ratio is
reflective of increased net premiums earned.
The Company's underwriting income increased from $654,000 for the three
months ended March 31, 1997 to $915,000 for the three months ended
March 31, 1998. The combined ratio remained steady at 97% for the three
months ended March 31, 1997 and three months ended March 31, 1998, due
to a combination of the factors discussed above.
Interest expense increased from $401,000 for the three months ended
March 31, 1997 to $405,000 for the three months ended March 31, 1998.
This increase is attributable to an increase in the outstanding balance
of bank indebtedness from $12,500,000 to $14,500,000 in June 1997 as
well as an increase in the interest rate on the bank indebtedness from
an average rate of 7.1% for the three months ended March 31, 1997 to an
average rate of 7.5% for the three months ended March 31, 1998. The
increase was partially offset by a reduction in average funds held as
collateral from $28,560,000 for the three months ended March 31, 1997
to $24,804,000 for the three months ended March 31, 1998. Collateral
rates are adjusted at various times throughout the year in accordance
with general market conditions.
Net investment income and realized investment gains increased 3% from
$2,318,000 for the three months ended March 31, 1997 to $2,396,000 for
the three months ended March 31, 1998. The increase is primarily due to
an increase in realized investment gains from $637,000 at March 31,
1997 to $819,000 at March 31, 1998. The investments sold during the
three months ended March 31, 1998 were primarily equity securities and
certain fixed income investments including mortgage-backed and
municipal bond securities.
Income before income taxes increased from $2,571,000 for the three
months ended March 31, 1997 to $2,907,000 for the three months ended
March 31, 1998 due to the factors outlined above.
The effective tax rate was 31% for the three months ended March 31,
1997 as compared to an effective rate of 29% for the three months ended
March 31, 1998. 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 $1,785,000 for the three months ended March
31, 1997 to $2,056,000 for the three months ended March 31, 1998 due to
the factors outlined above.
Liquidity and Capital Resources
As of March 31, 1998, the Company held total cash and cash equivalents
and invested assets of $130,187,000. This amount includes an aggregate
of $26,491,000 in funds held as collateral which is shown as a
liability on the Company's consolidated balance sheets. As of March 31,
1998, the Company's invested assets consisted of $98,240,000 in fixed
maturities, held at market value, $11,339,000 in common equity
securities, $4,177,000 in preferred equity securities, $7,645,000 in
other invested assets and $2,081,000 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 State of Nebraska 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.
On August 6, 1993, the Company entered into a revolving credit
agreement with Union Bank for $12,500,000 which refinanced a previous
loan. The debt agreement was amended on April 24, 1995, July 10, 1996
and again on September 30, 1997 to increase the amount available under
the revolving line of credit from $12,500,000 to $15,000,000 and to
change certain covenants and payment requirements. The bank loan has a
variable rate of interest based upon fluctuations in the London
Interbank Offered Rate (LIBOR) and has amortizing principal payments.
The interest rate at March 31, 1998 was 7.5%. 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 is a party to a lease with ACD2 for its corporate
headquarters. This lease has a term of 15 years and contains provisions
for scheduled lease charges. The Company's minimum commitment with
respect to this lease in 1998 is approximately $699,000. The Company
also has the option to purchase this new home office 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 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 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 1998.
The Company used $3,258,000 in cash from operating activities for the
three months March 31, 1997 as compared to generating $595,000 for the
three months ended March 31, 1998. The Company generated $165,000 in
cash for investing activities for the three months ended March 31, 1997
as compared to using $870,000 for the three months ended March 31,
1998. The Company used $2,881,000 in cash from financing activities for
the three months ended March 31, 1997 as compared to generating
$3,173,000 for the three months ended March 31, 1998.
Certain statements contained in this Form 10-Q regard matters which are
not historical facts and are forward looking statements. Because such
forward looking statements include risks and uncertainties, actual
results may differ materially from those expressed in or implied by
such forward looking statements. Factors that could cause actual
results to differ materially include, but are not limited to: a decline
in demand for surety bonds or specialty property and casualty
insurance, the ineffectiveness of certain management and reorganization
changes made, a deterioration in results of any of the Company's
product lines, adverse loss development and associated expense incurred
by the Company due to severity or frequency of claims filed with
respect to the Company's insurance products, or a general economic
decline. The Comany undertakes no obligation to release publicly the
results of any revisions to these forward looking statements that may
be made to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.
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 Year ended
March 31, December 31,
Type of Bond 1998 1997 1997 1996
- ------------------------------------------------------------------------------------ -------- -------- -------- --------
<S> <C> <C> <C> <C>
Contract
Gross premiums written ......................................................... $ 12,474 $ 9,619 $ 54,808 $ 49,782
Net premiums earned ............................................................ 13,388 11,077 46,741 46,158
Net losses and loss adjustment expenses ........................................ 3,735 3,456 15,738 24,430
Loss ratio ..................................................................... 28% 31% 34% 53%
Commercial Surety
Gross premiums written ......................................................... $ 7,277 $ 3,260 $ 16,694 $ 11,192
Net premiums earned ............................................................ 5,757 2,305 12,786 8,446
Net losses and loss adjustment expenses ........................................ 969 568 2,873 2,571
Loss ratio ..................................................................... 17% 25% 22% 30%
Court
Gross premiums written ......................................................... $ 2,883 $ 2,831 $ 11,109 $ 11,196
Net premiums earned ............................................................ 2,786 2,739 11,038 10,897
Net losses and loss adjustment expenses ........................................ 204 (66) 1,403 835
Loss ratio ..................................................................... 7% -2% 13% 8%
Total Surety
Gross premiums written ......................................................... $ 22,634 $ 15,710 $ 82,611 $ 72,335
Net premiums earned ............................................................ 21,931 16,121 70,566 65,501
Net losses and loss adjustment expenses ........................................ 4,908 3,958 20,013 27,836
Loss ratio ..................................................................... 22% 25% 28% 42%
Property & Casualty
Gross premiums written ......................................................... $ 6,708 $ 5,900 $ 25,481 $ 25,072
Net premiums earned ............................................................ 5,193 5,325 21,585 22,382
Net losses and loss adjustment expenses ........................................ 4,000 3,110 14,644 18,811
Loss ratio ..................................................................... 77% 58% 68% 84%
Total Company
Gross premiums written ......................................................... $ 29,342 $ 21,610 $108,091 $ 97,242
Net premiums earned ............................................................ 27,124 21,446 92,151 87,883
Net losses and loss adjustment expenses ........................................ 8,908 7,068 34,657 46,647
Loss ratio ..................................................................... 33% 33% 38% 53%
</TABLE>
<PAGE>
PART II - OTHER INFORMATION
AMWEST INSURANCE GROUP, INC. AND SUBSIDIARIES
Items 1-5: LEGAL PROCEEDINGS, 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
See 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 March 31, 1998.
<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: May 13, 1998 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
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 None
of security holders
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>
Basic Diluted (2)
earnings per share earnings per share
1998 1997(3) 1998 1997(3)
<S> <C> <C> <C> <C>
Average shares outstanding for the three month
period ending March 31, 3,801,735 3,667,441 3,801,735 3,667,441
Incremental shares resulting from
conversion of common stock equivalents:
Options to purchase shares of common stock
at an exercise price of $5.58- $13.52
(471,417 and 448,565
options at March 31, 1998 and 1997,
respectively) (1) 79,592 25,416
----------------- ------------------ ------------------ -----------------
Total incremental shares resulting from
conversion of common stock equivalents
at March 31, 79,592 25,416
----------------- ------------------ ------------------ -----------------
Total shares and incremental shares resulting from conversion of common stock
equivalents at March 31,
3,801,735 3,667,441 3,881,327 3,692,857
================= ================== ================== =================
Percentage of incremental shares resulting from
conversion of common stock equivalents at March 31,
2.05% 0.69%
================= ================== ================== =================
</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 March 31, 1998 and
1997, respectively:
March 31, 1998 March 31, 1997
-------------- --------------
Grant price $5.582 3,328 3,328
Grant price $7.614 16,913
Grant price $8.182 5,555 6,105
Grant price $8.273 5,264 5,264
Grant price $8.977 11,550
Grant price $9.432 3,300 3,300
Grant price $9.545 5,005 5,335
Grant price $9.659 11,000 14,025
Grant price $9.773 8,250 28,050
Grant price $10.114 12,100 13,200
Grant price $10.500 1,815
Grant price $10.750 11,000 11,000
Grant price $11.023 80,850
Grant price $11.364 19,250 19,250
Grant price $11.591 3,300 4,400
Grant price $12.159 95,920 105,270
Grant price $12.614 61,545 70,620
Grant price $12.745 1,815
Grant price $12.841 19,250
Grant price $12.955 118,250 119,075
Grant price $13.523 8,250 8,250
------------ ------------
471,417 448,565
============ ============
(2) Calculation of incremental shares resulting from conversion of common
stock equivalents, using the Treasury Stock Method for calculating
diluted earnings per share, is based on the greater of the average
ending ask price or the closing ask price on March 31, 1998 and 1997,
as reported on the American Stock Exchange.
(3) 1997 amounts are restated to reflect the 10% stock dividend paid to
stockholders of record as of March 31, 1998.
