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, 1997
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 N/A
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Bishops Court Hill, St. Michael, Barbados N/A
(Address of principle executive offices) (Zip Code)
(246) 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, 1997
Common Stock, no par-value 2,000
Participating Stock, no par-value 26,200
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, 1997 and December 31,
1996.
2. Statements of Income and Retained Earnings for the
three month periods ended March 31, 1997 and 1996.
3. Statements of Cash Flows for the three month
periods ended March 31, 1997 and 1996.
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.
MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED
BALANCE SHEETS
(Expressed in U.S. Dollars)
March 31, 1997 December 31,
(unaudited) 1996
ASSETS
Investments $ 73,091,794 $ 66,647,930
Cash and cash equivalents 4,954,444 12,926,272
Accrued investment income 1,195,737 1,453,691
Due from Motors Insurance Corporation 3,195,588 3,158,064
Deferred acquisition costs 22,527,796 21,855,207
Prepaid expenses 32,045 0
----------- -----------
Total Assets $104,997,404 $106,041,164
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Unearned premiums $ 86,670,729 $ 84,084,870
Loss reserves 4,448,206 4,284,304
Accrued liabilities 191,775 110,416
----------- ------------
Total liabilities 91,310,710 88,479,590
----------- ------------
STOCKHOLDERS' EQUITY
Share Capital
Common Stock-no par value;
Authorized - 2,000 shares;
issued and outstanding -
2,000 200,000 200,000
Participating Stock-no par value;
Authorized - 100,000 shares;
issued and outstanding -
26,200 shares as of March 31,
1997 and 25,400 shares as of
December 31, 1996 1,965,000 1,905,000
--------- ---------
2,165,000 2,105,000
Retained Earnings 12,298,503 14,913,053
Unrealized (depreciation)
appreciation on investments (776,809) 543,521
------------ ------------
Total Stockholders' Equity 13,686,694 17,561,574
------------ ------------
Total Liabilities and Stockholders'
Equity $104,997,404 $106,041,164
============ ============
MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED
STATEMENTS OF INCOME AND RETAINED EARNINGS FOR THE THREE
MONTH PERIODS ENDED MARCH 31, 1997 AND MARCH 31, 1996
(UNAUDITED)
(Expressed in U.S. Dollars)
Three Month Periods
Ended March 31,
1997 1996
INCOME
Reinsurance premiums assumed $12,778,711 $11,112,677
Increase in unearned premiums 2,585,859 2,875,326
----------- ------------
Premiums earned 10,192,852 8,237,351
----------- ------------
Investment income
Interest earned 1,215,397 984,112
Realized (losses) gains
on investments (566,108) 753,461
----------- ------------
Investment income 649,289 1,737,573
----------- ------------
TOTAL INCOME 10,842,141 9,974,924
----------- ------------
EXPENSES
Acquisition costs 2,649,915 2,141,294
Losses paid 6,287,926 5,534,349
Increase in loss reserves 163,902 112,127
Administrative expenses
- Related Parties 56,663 48,791
- Other 101,555 121,995
----------- ------------
TOTAL EXPENSES 9,259,961 7,958,556
----------- ------------
NET INCOME 1,582,180 2,016,368
RETAINED EARNINGS,
beginning of period 14,913,053 11,517,542
LESS: DIVIDENDS (4,196,730) 0
----------- ------------
RETAINED EARNINGS,
end of period $ 12,298,503 $13,533,910
=========== ============
MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED
STATEMENTS OF CASH FLOWS FOR THE THREE MONTH PERIODS ENDED
MARCH 31, 1997 AND MARCH 31, 1996 (UNAUDITED)
(Expressed in U.S. Dollars)
Three Month Periods Ended
March 31,
1997 1996
Cash flows from operating activities:
Reinsurance premiums collected $12,497,461 $11,119,421
Losses and acquisition expenses paid (9,349,941) (8,091,789)
Administrative expenses paid (127,667) (133,654)
Investment income received 1,475,351 2,333,344
----------- -----------
Net cash provided by operating activities 4,495,204 5,227,322
----------- -----------
Cash flows from investing activities:
Purchases of investments (103,071,845) (54,464,499)
Sales and maturities of investments 94,741,543 55,895,132
----------- -----------
Net cash invested (8,330,302) 1,430,633
----------- -----------
Cash flows from financing activities:
Proceeds from issuance of Participating
Stock 60,000 37,500
Dividends paid (4,196,730) 0
----------- -----------
Net cash (used in) provided by
financing activities (4,136,730) 37,500
----------- -----------
(Decrease) increase in cash and cash
equivalents (7,971,828) 6,695,455
Cash and cash equivalents, beginning
of period 12,926,272 7,093,106
----------- -----------
Cash and cash equivalents, end
of period $ 4,954,444 $13,788,561
=========== ===========
Reconciliation of net income to net cash
provided by operating activities:
Net income 1,582,180 2,016,368
Realized losses (gains) on investments 566,108 (753,461)
Change in:
Accrued investment income 257,954 1,348,241
Due from Motors Insurance Corporation (37,524) 322,866
Deferred acquisition costs (672,589) (748,036)
Prepaid expenses (32,045) 0
Unearned premiums 2,585,859 2,875,326
Loss reserves 163,902 112,127
Accrued liabilities 81,359 53,891
----------- -----------
Net cash provided by operating activities $ 4,495,204 $5,227,322
=========== ===========
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 in the forseeable future.
On March 27, 1997, the Board of Directors authorized the payment of dividends to
eligible holders of Participating Shares aggregating $4,196,730.
Capital Resources. During the quarter ended March 31, 1997, 8 new series of
Shares were added bringing the total number of series issued and outstanding to
262 as of the end of the quarter. As of March 31, 1997, the share capital of the
Company was $2,165,000 (compared with $2,105,000 as of December 31, 1996)
comprised of paid in capital with respect to the Common Stock of $200,000 and
paid in capital with respect to Participating Shares of $1,965,000 (compared
with $1,905,000 as of December 31, 1996). In addition, the Company had surplus
from retained earnings in the amount of $12,298,503 as of March 31, 1997
compared with $14,913,053 as of December 31, 1996. The net decrease in retained
earnings is attributable to the dividend paid on March 27, 1997.
Results of Operations. During the quarter ended March 31, 1997, the Company had
net income of $1,582,180, compared with net income of $2,016,368 for the quarter
ended March 31, 1996. As discussed below, the decrease in net income for the
quarter ended March 31, 1997 compared to the comparable period of 1996 is the
result of realised losses on the sale of investment securities which offset
increases in interest earned and underwriting income.
Premiums earned increased to $10,192,852 during the quarter ended March 31, 1997
compared to $8,237,351 for the same period in 1996. Expenses incurred during the
quarter ended March 31, 1997 were $9,259,961 compared to $7,958,556 for the
comparable quarter of 1996. Net underwriting income for the quarter ended March
31, 1997 was $932,891 compared to $278,795 for the comparable period in 1996.
The ratio of losses incurred to premiums earned for the quarter under review was
63.3% compared to 68.6% for the comparable period in 1996.
Investment income for the quarter ended March 31, 1997 was $649,289 compared to
$1,737,573 for the comparable period of 1996. During the quarter under review,
the Company incurred losses on the sale of investment securities of $566,108,
compared to gains of $753,461 during the comparable period of 1996. As of March
31, 1997, the Company had net unrealized depreciation of $776,809 on its
investments compared to unrealized appreciation of $543,521 as of December 31,
1996. The losses on the sale of investment assets during the quarter under
review compared to the corresponding periods in 1996 and the change in the
amount of unrealized position on the portfolio as of March 31, 1997 compared to
December 31, 1996 are in large part attributable to increases in long term
interest rates which resulted in decreases in the market value of the Company's
investment portfolio.
For the quarter ended March 31, 1997 the Company had interest income of
$1,215,397 compared to $984,112 for the comparable period of 1996. These
increases were largely attributable to increases in the amount of assets under
management combined with higher interest rates.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders
At the annual meeting of shareholders of the Company held on
March 27, 1997, the holder of the Common Stock re-elected five
directors, William B. Noll, Louis S. Carrio, Jr., Bernard J.
Buselmeier, John J. Dunn, Jr., and Peter R.P. Evelyn. The holder
of Participating Shares unanimously elected the sixth director,
Gregory L. Greenwood. The holder of the Common Stock also re-
elected Robert E. Capstack as alternative director for Mr.
Carrio.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(27)Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter for which this
report is filed.
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, Finance
Signing on behalf of
the Registrant, and
Principal Financial Officer
Dated: May 8, 1997
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
This schedule contains summary financial information extracted
from the unaudited financial statements contained in the
Company's quarterly report on Form 10-Q for the quarter ended
March 31, 1997 and is qualified in its entirety by references
to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<DEBT-HELD-FOR-SALE> 73,091,794
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 73,091,794
<CASH> 4,954,444
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 22,527,796
<TOTAL-ASSETS> 104,997,404
<POLICY-LOSSES> 4,448,206
<UNEARNED-PREMIUMS> 86,670,729
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 0
0
0
<COMMON> 200,000
<OTHER-SE> 13,486,694
<TOTAL-LIABILITY-AND-EQUITY> 104,997,404
10,192,852
<INVESTMENT-INCOME> 1,215,397
<INVESTMENT-GAINS> (566,108)
<OTHER-INCOME> 0
<BENEFITS> 6,451,828
<UNDERWRITING-AMORTIZATION> 2,649,915
<UNDERWRITING-OTHER> 158,218
<INCOME-PRETAX> 1,582,180
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,582,180
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,582,180
<EPS-PRIMARY> 0<F1>
<EPS-DILUTED> 0<F1>
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
<FN>
<F1>Information as to earnings per share is not provided inasmuch as the results
for each series of stock will vary with the underwriting experience
attributable to each Subsidiary Capital Account established with respect to
that series.
</FN>
</TABLE>
