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 quarterly period ended March 31, 1994
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 33-6534
Motors Mechanical Reinsurance Company, Limited
(Exact name of registrant as specified in its charter)
Barbados NA
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Bishops Court Hill, St. Michael, Barbados NA
(Address of principle executive offices) (Zip Code)
(809) 436-4895
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of
the issuer's classes of common stock as of the latest practicable
date.
Class As of March 31, 1994
Common Stock, no par-value 2,000
Participating Stock, no par-value 19,900
This quarterly report, filed pursuant to Rule 13a-13 of the
General Rules and Regulations under the Securities Exchange Act
of 1934, consists of the following information as specified in
Form 10-Q:
Part 1. FINANCIAL INFORMATION
Item 1. Financial Statements
1. Balance Sheets, March 31, 1994 and December 31,
1993.
2. Statements of Income and Retained Earnings for the
three month periods ended March 31, 1994 and March
31, 1993.
3. Statements of Cash Flows for the three month
periods ended March 31, 1994 and March 31, 1993.
In the opinion of Management, the accompanying financial
statements reflect all adjustments, consisting of normal
recurring accruals, which are necessary for a fair presentation
of the results for the interim periods presented.
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MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED
BALANCE SHEETS
(Expressed in U.S. Dollars)
March 31,
1994 December 31,
(unaudited) 1993
ASSETS
Investments $34,903,388 $29,882,488
Cash and cash equivalents 3,043,379 6,788,771
Accrued investment income 901,057 861,190
Due from ceding company 3,535,158 2,331,978
Deferred acquisition costs 11,599,267 10,495,206
Prepaid expenses 1,875 0
Total Assets $53,984,124 $50,359,633
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Unearned premiums 44,657,483 40,413,058
Loss reserves 2,097,239 1,910,030
Accrued liabilities 165,573 107,181
Total liabilities 46,920,295 42,430,269
STOCKHOLDERS' EQUITY
Share Capital
Common Stock - no par value;
Authorized - 2,000 shares;
issued and outstanding -
2,000 shares 200,000 200,000
Participating Stock - no par
value; Authorized - 100,000
shares; issued and outstand-
ing - 19,900 shares as of
March 31, 1994 and
18,900 shares as of
December 31, 1993 1,492,500 1,417,500
1,692,500 1,617,500
Retained Earnings 6,534,796 6,211,978
Unrealized appreciation
(depreciation) on
investments (1,163,467) 99,886
Total Stockholders' Equity 7,063,829 7,929,364
Total Liabilities and
Stockholders' Equity $53,984,124 $50,359,633
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MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED
STATEMENTS OF INCOME AND RETAINED EARNINGS FOR THE THREE
MONTH PERIODS ENDED MARCH 31, 1994 AND MARCH 31, 1993
(UNAUDITED)
(Expressed in U.S. Dollars)
Three Month Periods Ended
March 31,
1994 1993
INCOME
Reinsurance premiums assumed $8,816,331 $5,389,885
Increase in unearned premiums 4,244,425 1,817,057
Premiums earned 4,571,906 3,572,828
Investment income
Interest earned 570,692 461,529
Realized gains (losses)
on investments (303,389) 378,444
Investment income -
net 267,303 839,973
TOTAL INCOME 4,839,209 4,412,801
EXPENSES
Acquisition costs 1,188,209 928,266
Losses paid 3,001,850 2,627,016
Increase (decrease)
in loss reserves 187,209 (15,861)
Administrative
expenses 139,123 140,255
TOTAL EXPENSES 4,516,391 3,679,676
NET INCOME 322,818 733,125
RETAINED EARNINGS,
beginning of period 6,211,978 5,528,775
RETAINED EARNINGS,
end of period 6,534,796 6,261,900
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MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED
STATEMENTS OF CASH FLOWS FOR THE THREE MONTH PERIODS ENDED
MARCH 31, 1994 AND MARCH 31, 1993 (UNAUDITED)
(Expressed in U.S. Dollars)
Three month periods ended
March 31,
1994 1993
Cash flows from operating activities:
Reinsurance premiums assumed $7,062,145 $6,216,413
Losses and underwriting
expenses paid (4,730,167) (3,859,806)
Administrative expenses paid (95,553) (75,302)
Investment income received 227,436 1,333,671
Net cash provided by
operating activities 2,463,861 3,614,976
Cash flows from investing activities:
Purchases of marketable securities (25,508,046) (23,807,944)
Sales and maturities of
marketable securities 19,223,793 22,461,238
Net cash invested (6,284,253) (1,346,706)
Cash flows from financing activities:
Proceeds from issuance of
Participating stock 75,000 52,500
Net cash provided by financing
activities 75,000 52,500
Increase (decrease)
in cash and cash equivalents (3,745,392) 2,320,770
Cash and cash equivalents, beginning
of period 6,788,771 1,710,738
Cash and cash equivalents, end
of period $ 3,043,379 $ 4,031,508
Reconciliation of net income to net cash
provided by operating activities:
Net income 322,818 733,125
Change in:
Accrued investment income (39,867) 492,399
Due from ceding company (1,203,180) 995,342
Deferred acquisition costs (1,104,061) (473,126)
Prepaid expenses (1,875) (1,875)
Unearned premiums 4,244,425 1,817,057
Loss reserves 187,209 (15,861)
Accrued liabilities 58,392 67,915
Net cash provided by
operating activities $ 2,463,861 $ 3,614,976
Item 2. Management's Discussion And Analysis of Financial
Condition And Results of Operations
Liquidity. It is anticipated that the Company will continue to
be able to generate sufficient funds from operations to meet
current liquidity needs. Premiums generated by the Company's
reinsurance business combined with investment earnings plus
proceeds from the sale of Shares will continue to be the
principal sources of funds for investment by the Company. Such
funds will be available to meet the Company's liquidity
requirements. No capital expenditures are expected during the
next few years.
On April 8, 1994, the Board of Directors authorized the payment
of dividends to eligible holders of Participating Shares
aggregating $2,156,304.
Capital Resources. As of March 31, 1994, the share capital of
the Company was $1,692,500 (compared with $1,617,500 as of
December 31, 1993) comprised of paid in capital with respect to
the Common Stock of $200,000 and paid in capital with respect to
Participating Shares of $1,492,500 (compared with $1,417,500 as
of December 31, 1993). In addition, the Company had surplus from
retained earnings in the amount of $6,534,796 compared with
$6,211,978 as of December 31, 1993.
Results of Operations. Net Premium volume continues to increase
as additional participants are added to the program. During the
quarter ended March 31, 1994, 10 new series of Shares were added
bringing the total number of series approved to 199. Premiums
earned increased by $999,078 over the comparable period of 1993.
The ratio of losses incurred to premiums earned for the quarter
under review is 69.8% as compared to 73.1% for the quarter ended
March 31, 1993.
Expenses increased by $836,715 to $4,516,391 in the quarter ended
March 31, 1994 from $3,679,676 in the first quarter of 1993. Net
underwriting income in the quarter ended March 31, 1994 increased
$162,363 to $55,515 compared with an underwriting loss of
$106,848 in the 1993 quarter. The increase in net underwriting
income, however, was offset by a decline in investment income of
$572,670, from $839,973 in the first quarter of 1993 to $267,303
in the comparable period of 1994, due to realized losses on the
sale of invested assets. The Company has reported net income for
the three month period ended March 31, 1994 of $322,818 compared
to net income of $733,125 for the three month period ended March
31, 1993.
Changes in interest rates in the quarter ended March 31, 1994
adversely affected the market values of the Company's investment
portfolio at that date and its investment income in the quarter
then ended as compared with the quarter ended March 31, 1993.
Realized losses on the sale of investment securities in the
quarter ended March 31, 1994 were $303,389 compared to realized
gains of $378,444 in the quarter ended March 31, 1993.
Unrealized losses on investment securities held at March 31, 1994
were $1,163,467 compared to unrealized gains at December 31, 1993
of $99,886. The Company's investment guidelines do not permit
the use of financial instrument derivatives in managing interest
rate risk.
Cash, cash equivalents and investments valued at market have
increased from $36,671,259 at the beginning of the year to
$37,946,767 at March 31, 1994.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
No reports on Form 8-K were filed during the quarter for
which this report is filed.
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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.
MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED (Registrant)
By: s/Ronald W. Jones
Ronald W. Jones
Vice President
Signing on behalf of
the Registrant, and
Principal Financial Officer
Dated: May 6, 1994
