<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 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: 001-12099
The Centris Group, Inc.
-----------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 33-0097221
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
650 Town Center Drive, Suite 1600, Costa Mesa, CA 92626
-------------------------------------------------------
(Address of principal executive offices) (Zip code)
(714) 549-1600
--------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
--------------
(Former name, former address and former fiscal year, if changed since last
report.)
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
------- ------
Number of shares outstanding of each class of the Registrant's Common Stock as
of November 7, 1997:
Common Stock, par value $.01 per share: 6,027,148
Common Stock Purchase Rights: 6,027,148
1
<PAGE>
INDEX
Part I FINANCIAL INFORMATION
Item 1. FINANCIAL INFORMATION
Unaudited Condensed Consolidated Financial Statements:
Balance Sheets at September 30, 1997 and
December 31, 1996........................................3
Income Statements for the Quarters and Nine Months Ended
September 30, 1997 and 1996..............................4
Statements of Cash Flows for the Nine Months Ended
September 30, 1997 and 1996..............................5
Notes to Condensed Consolidated Financial Statements..........6
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS....................................................7
Part II OTHER INFORMATION
Item 6. EXHIBITS and REPORTS ON FORM 8-K.............................14
SIGNATURES...................................................................16
2
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. FINANCIAL INFORMATION
Unaudited Condensed Consolidated Financial Statements:
The Centris Group, Inc.
Condensed Consolidated Balance Sheets
(Dollars in Thousands)
<TABLE>
ASSETS
<CAPTION>
September 30, 1997 December 31, 1996
------------------ -----------------
(Unaudited)
<S> <C> <C>
Investments, at market (amortized cost
$205,580 at September 30,1997, $185,472
at December 31,1996) $211,996 $194,352
Cash and invested cash 11,827 11,132
Restricted cash and short term investments 27,721 23,771
Accrued investment income 2,552 2,653
Receivables:
Reinsurance losses and reserves 26,446 23,975
Premiums 18,309 16,841
Prepaid reinsurance premiums 8,054 6,495
Deferred policy acquisition costs 4,697 3,644
Other assets 11,820 5,880
-------- --------
Total assets $323,422 $288,743
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Insurance liabilities:
Amounts due insurance companies $ 32,757 $ 27,148
Losses and loss adjustment expenses 112,626 94,669
Unearned premiums 31,099 22,936
Note payable 33,125 35,000
Accounts payable and accrued expenses 2,297 6,626
--------- ---------
Total liabilities 211,904 186,379
Stockholders' Equity 111,518 102,364
--------- ---------
Total liabilities and stockholders' equity $323,422 $288,743
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
The Centris Group, Inc.
Condensed Consolidated Income Statements
(Dollars in Thousands, except per share data)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30 September 30
------------ ------------
1997 1996 1997 1996
---- ---- ---- ----
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Revenues:
Premiums earned $ 38,733 $ 31,047 $116,119 $ 89,906
Commissions and fees 7,728 6,578 23,910 19,472
Net investment income 2,711 2,570 8,114 7,538
Realized investment gains 9,767 330 10,022 1,056
-------- -------- -------- ----------
Total revenues 58,939 40,525 158,165 117,972
-------- -------- -------- ----------
Operating Expenses:
Losses and loss adjustment expenses
incurred 36,698 21,953 92,220 63,647
Policy acquisition expenses 10,962 9,111 33,954 26,803
General and administrative expenses 4,819 3,755 13,720 10,679
Interest 615 615 1,843 1,994
--------- --------- -------- ---------
Total operating expenses 53,094 35,434 141,737 103,123
--------- --------- -------- ---------
Income before income taxes 5,845 5,091 16,428 14,849
Income tax expense 1,819 1,382 4,994 3,747
--------- --------- -------- ---------
Net income $ 4,026 $ 3,709 $ 11,434 $ 11,102
========= ========= ======== =========
Net income per common and common
equivalent share $ .66 $ .62 $ 1.88 $ 1.86
========= ========= ======== =========
Weighted average number of common and common
equivalent shares outstanding during period 6,136 5,987 6,098 5,970
========= ========= ======== =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
The Centris Group, Inc.
Condensed Consolidated Statements of Cash Flows
(Dollars in Thousands)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
1997 1996
---- ----
(unaudited)
<S> <C> <C>
Cash provided by operating activities $ 13,792 $ 24,240
---------- ----------
Cash flows from investing activities:
Purchases of fixed maturity investments (44,927) (31,268)
Purchases of equity securities (13,976) (4,420)
Proceeds from sales of investment securities 48,990 20,549
Net purchases of short term
investments 197 (4,665)
Purchases of property and equipment (916) (1,603)
----------- -----------
Cash used in investing activities (10,632) (21,407)
----------- -----------
Cash flows from financing activities:
Payment on note payable (1,875) --
Dividends paid (1,076) (1,055)
Exercise of stock options 486 1,320
----------- -----------
Cash (used in) provided by financing activities (2,465) 265
----------- -----------
Net (decrease) increase in cash and invested cash 695 3,098
Cash and invested cash at beginning of period 11,132 8,165
----------- -----------
Cash and invested cash at end of period $ 11,827 $ 11,263
========= =========
Supplemental disclosure of cash flow information:
Interest paid $ 1,747 $ 1,904
========= =========
Income taxes paid, net $ 4,001 $ 2,770
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
The Centris Group, Inc.
Notes to Condensed Consolidated Financial Statements
1. General
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles and with
the instructions to Form 10-Q. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting only of normal recurring accruals) considered necessary for a fair
presentation have been included. The results of operations for the nine months
ended September 30, 1997, are not necessarily indicative of the results to be
expected for the full year. For further information, refer to the consolidated
financial statements and footnotes thereto for the year ended December 31, 1996
included in the 1996 Annual Report to Stockholders of The Centris Group, Inc.,
formerly known as US Facilities Corporation, (the "Company").
2. Other
SFAS No. 128, "Earnings per Share" and SFAS No. 129, "Disclosure of Information
about Capital Structure" will be adopted by the Company for the year ended
December 31, 1997. Adoption of these pronouncements is not expected to have a
material effect on the financial statements or the related disclosures of the
Company.
3. Acquisitions
Effective as of January 1, 1997, the Company acquired the medical stop loss
business of Global Excess Re, Inc. Effective as of August 1, 1997, the Company
acquired Interra Reinsurance Group which focuses on niche and special risk
accident and health insurance products and reinsurance products and services. On
September 30, 1997, the Company's wholly-owned subsidiary USF RE INSURANCE
COMPANY acquired the operations of Allmerica Re from The Hanover Insurance
Company. Each of these transactions were accounted for as purchases. The
purchase transactions were not material to the financial statements of the
Company. The results of operations of each entity since the effective
acquisition dates are included in the accompanying condensed consolidated
financial statements.
6
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results Of Operations
- ---------------------
Consolidated revenues of The Centris Group, Inc., formerly known as US
Facilities Corporation, (the "Company") increased 45% to $58,939,000 for the
third quarter ended September 30, 1997 from $40,525,000 in the 1996 third
quarter, and increased 34% to $158,165,000 for the first nine months of 1997
from $117,972,000 for the 1996 nine month period. Increases in premiums earned
and commission and fee income in the 1997 periods as compared to the 1996
periods were primarily attributable to growth in the property/casualty segment,
additional medical stop-loss business resulting from the acquisition of Global
Excess Re in January 1997, and increased production of provider excess coverage.
Increases in net investment income in the 1997 periods result from higher levels
of invested assets. To lessen its exposure to stock market volatility, the
Company realized $9,610,000 in pre-tax gains from its equity portfolio during
the quarter.
Consolidated net income increased 8% to $4,026,000 for the third quarter of 1997
from $3,709,000 in the third quarter of 1996, and was $11,434,000 for the first
nine months of 1997 as compared to $11,102,000 in the 1996 nine month period.
Net income for the 1997 periods as compared to the 1996 periods reflects the
changes in revenues noted above, an increase in medical lines reserves of
$8,000,000 resulting from additional development on medical lines business
written during the second half of 1996 and the first half of 1997 and increases
in income tax expenses. General and administrative expenses remained below 10%
of revenues in all periods presented as the Company continued its focus on
productivity and expense control.
Income taxes as a percentage of pre-tax income fluctuate depending on the
proportion of tax exempt investment income to total pre-tax income, the effect
of other permanent differences and the proportion of total income subject to
state income taxes.
Insurance and reinsurance companies establish reserves for losses incurred but
not yet paid in order to match such losses with the related premiums earned. The
process of establishing loss reserves is subject to uncertainties that are a
normal, recurring aspect of the insurance business which requires the use of
informed judgments and estimates. Loss and loss adjustment expense reserve
development is reviewed on a regular basis, incorporating analysis of current
trends, market changes in the Company's business segments and historical
experience to analyze the Company's actuarial assumptions. As additional
experience and other data becomes available, the Company's actuarial estimates
may be revised. Such revisions may impact earnings. Policy acquisition expenses
vary on the basis of market conditions and mix of business.
The statutory combined ratio is the traditional indicator of the potential
underwriting profitability of an insurance company's business. Statutory
7
<PAGE>
combined ratios are presented in conformity with rating agency and industry
association presentations which include insurance company net management fee
revenues in calculating such ratios. The Company's statutory combined ratios
were 106.4 and 97.9 for the nine month periods ended September 30, 1997 and
1996, respectively.
Acquisitions
- ------------
During the third quarter of 1997, the Company acquired INTERRA Reinsurance
Group, an Indianapolis based company which focuses on niche and special risk
accident and health insurance products and reinsurance products and services. It
is anticipated that INTERRA will bring fee income and underwriting opportunities
for the Company's risk assumption businesses in one of the fastest growing
sectors of the reinsurance industry -- international accident and health
reinsurance. INTERRA will serve as an accident and health reinsurance manager on
behalf of the Company's wholly-owned subsidiary USF RE INSURANCE COMPANY ("USF
RE"), as well as provide risk management services across the entire enterprise.
There has been an accelerating demand for private healthcare throughout the
world as nationalized healthcare systems can no longer afford to provide quality
care for their growing populations. INTERRA's track record in providing accident
and health related products and services to clients in Europe, South America and
South Africa will accelerate the Company's ability to implement its strategic
initiative in this dynamic industry sector. INTERRA managed in excess of $35
million of premium and generated in excess of $2 million of fee and commission
revenue in 1996.
In late September, 1997, USF RE acquired the operations of Allmerica Re from The
Hanover Insurance Company, a subsidiary of the Allmerica Financial Corporation.
The addition of an east coast USF RE treaty branch office through the Allmerica
Re acquisition will enhance the growth and development of the property/casualty
treaty reinsurance business. The acquisition also brings to the Company
underwriting expertise in marine and international reinsurance which will be
areas of future growth for USF RE. This acquisition is expected to add
approximately $24 million of premium in 1998 as the existing business is renewed
in USF RE, and will give USF RE an immediate presence in the eastern United
States.
The Company continues to actively pursue accretive acquisition opportunities in
complementary business lines.
8
<PAGE>
Business Segments
- -----------------
The Company conducts business in two segments:
Medical lines which includes medical stop-loss and provider excess coverages
underwritten by the Company's subsidiary, USBenefits Insurance Services, Inc.
("USBenefits") on behalf of The Continental Insurance Company ("Continental"),
one of the CNA Insurance Companies, as well as reinsurance of 50% of such
business by the Company's USF RE INSURANCE COMPANY ("USF RE") subsidiary.
USBenefits is the managing general underwriter and marketing organization for
medical lines coverages issued by Continental. Medical stop-loss coverage is a
form of insurance that protects employers that self-insure their employee
healthcare plans by limiting their exposure from the risk of loss to a
pre-established amount. Provider excess coverage limits the financial risks
healthcare providers face from medical plans that prepay the providers fixed
sums per plan participant (capitated fees) or provide specified rates for
services. USBenefits also markets other employee benefits related products on
behalf of several national life insurance companies. Medical lines products are
marketed through a network of unaffiliated third party administrators, insurance
agents, brokers and consultants ("Producers"). Producers have non-exclusive
arrangements with USBenefits that enable them to submit requests for coverage
quotations.
Property/Casualty reinsurance and insurance underwriting is conducted by USF RE
and its wholly-owned subsidiary, USF Insurance Company ("USFIC"). These
subsidiaries both carry an A (Excellent) rating from A.M. Best Company and USF
RE is assigned a claims paying ability rating of Aq by Standard & Poor's.
Insurance companies purchase reinsurance in order to control and manage the risk
they accept when they issue policies. USF RE assumes, primarily through
reinsurance intermediaries, facultative and treaty reinsurance from unaffiliated
insurance companies. Facultative is reinsurance of an individual risk; while
reinsurance treaties cover risks written or assumed by another insurer in a
particular class or classes of business. USF RE concentrates its casualty
writings in general liability, commercial auto liability and products liability.
It also provides a broad range of coverages for most types of property
exposures. USFIC writes surplus lines insurance on commercial property/casualty
risks which are marketed through independent excess and surplus lines brokers.
The tables set forth below present pre-tax operating information by business
segment and holding company operations (including realized gains) for the
quarters and nine month periods ended September 30, 1997 and 1996, respectively.
9
<PAGE>
Medical lines
- -------------
(Dollars in Thousands)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30 September 30
------------ ------------
1997 1996 %Change 1997 1996 %Change
---- ---- ------- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Premiums earned $ 24,076 $ 21,215 13% $ 74,646 $ 61,422 22%
Commissions and fees 7,728 6,578 17% 23,910 19,472 23%
Investment income 900 856 5% 2,651 2,453 8%
-------- -------- -------- --------
Total revenues 32,704 28,649 14% 101,207 83,347 21%
-------- -------- -------- ---------
Expenses:
Losses and loss adjustment 25,372 15,116 68% 61,482 42,511 45%
Policy acquisition 8,075 7,132 13% 25,644 20,851 23%
General and administrative 3,443 2,493 38% 10,036 7,277 38%
-------- -------- -------- --------
Total expenses 36,890 24,741 49% 97,162 70,639 38%
-------- -------- -------- --------
Income before income taxes $ (4,186) $ 3,908 -- $ 4,045 $ 12,708 -68%
========= ======= ========= ========
</TABLE>
Increases in revenues for the 1997 periods are due to growth in the provider
excess line and additional medical stop loss business from the acquisition of
Global Excess Re in January 1997. As a result, medical lines segment production
increased in the 1997 periods over the 1996 periods, generating the changes
noted above in premiums earned and commissions and fees revenues.
The change in medical lines pre-tax income reflects third quarter additions of
$8 million to medical lines reserves. The Company continually reviews its
reserves as new information becomes known and claim trends become more fully
developed. The Company's third quarter reserve review indicated additional
development on medical lines business written during the second half of 1996 and
the first half of 1997. In addition, continuing competitive industry conditions
resulted in less improvement in premium rate levels than expected. This factor,
combined with the first half increases in the severity and frequency of specific
and aggregate claims, resulted in the increase in medical lines reserves.
During the third quarter, the Company implemented a variety of pricing and
underwriting actions to support the underwriting profitability of this line of
business. The principal component of these actions is to obtain rate increases
in line with claims experience. Since healthcare costs vary depending on the
size and nature of the claim and the geographic region, the Company also
reviewed its geographic distribution which resulted in rating actions in
specific regions of the country where appropriate. In addition, the Company
reviewed its producer network and reduced the amount of business written through
10
<PAGE>
producers whose books of business have been less profitable. These actions may
result in a lower case count, but higher premiums per case, and are not expected
to materially affect overall total premium production. The Company expects to
continue reserving prudently in recognition that the market will remain
competitive and expects that these actions will enhance the stability and
long-term profitability of the medical lines business.
Policy acquisition expenses vary due to the level of production activity, mix of
business and market conditions. Increases in general and administrative expenses
in the 1997 periods primarily result from expenses related to the operations of
the January acquisition of Global Excess Re.
Property/Casualty
- -----------------
(Dollars in Thousands)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30 September 30
------------- ------------
1997 1996 % Change 1997 1996 % Change
---- ---- -------- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Premiums earned $ 14,657 $ 9,832 49% $ 41,473 $ 28,484 46%
Investment income 1,801 1,700 6% 5,427 5,039 8%
-------- -------- -------- --------
Total revenues 16,458 11,532 43% 46,900 33,523 40%
-------- -------- -------- --------
Expenses:
Losses and loss adjustment 11,326 6,837 66% 30,738 21,136 45%
Policy acquisition 2,887 1,979 46% 8,310 5,952 40%
General and administrative 1,111 1,057 5% 2,922 2,779 5%
-------- -------- -------- -------
Total expenses 15,324 9,873 55% 41,970 29,867 41%
-------- -------- -------- -------
Income before income taxes $ 1,134 $ 1,659 -32% $ 4,930 $ 3,656 35%
======= ======= ======= =======
</TABLE>
Revenue growth in property/casualty lines in the 1997 periods as compared to the
1996 periods was the result of the treaty reinsurance operations' continued
expansion and increased marketing efforts. Facultative property and casualty
lines also grew, but at a slower rate due to an increasingly competitive
marketplace. Increases in premium earned from facultative reinsurance lines
reflects a focus on low layer excess accounts and program business.
The increase in policy acquisition expenses in the 1997 periods as compared to
1996 results from the continued growth of the property/casualty business lines
and changes in the mix of business.
11
<PAGE>
Differences in pre-tax income between the quarters primarily reflect increases
in treaty writings which carry a higher formula loss ratio than facultative
business.
Holding Company
- ---------------
(Dollars in Thousands)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30 September 30
------------ ------------
1997 1996 % Change 1997 1996 %Change
---- ---- -------- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Investment income $ 10 $ 14 -29% $ 36 $ 46 -22%
Realized gains 9,767 330 -- 10,022 1,056 --
------- ------ -------- ------
Total revenues 9,777 344 -- 10,058 1,102 --
------- ------ -------- ------
Expenses:
General and administrative 265 205 29% 762 623 22%
Interest 615 615 -- 1,843 1,994 -8%
------- ------ -------- ------
Total expenses 880 820 7% 2,605 2,617 --
------- ------ -------- ------
Gain (loss) before income taxes $ 8,897 $ (476) -- $ 7,453 $(1,515) --
======= ======= ======= ========
</TABLE>
Increases in general and administrative expenses result from higher
infrastructure costs in the 1997 periods to support the growth of the Company's
business lines. Declines in interest expenses in the 1997 nine-month period
result from quarterly reductions in the outstanding balance of bank debt,
principal payments on which commenced March 31, 1997, and changes in the
variable interest rate charged on the outstanding balance.
Inflation
- ---------
Inflation can negatively impact insurance and reinsurance operations by causing
higher claims settlements than may have originally been estimated, while not
necessarily allowing an immediate increase in premiums to a level necessary to
maintain profit margins. Historically, the Company has made no explicit
provisions for inflation, but trends are considered when setting underwriting
terms and claim reserves. Such reserves are subjected to a continual internal
and external review process to assess their adequacy and are adjusted as deemed
appropriate. Overall economic trends also affect interest rates, which in turn
affect investment income and the market value of the Company's investment
portfolio.
12
<PAGE>
Liquidity and Capital Resources
- -------------------------------
The Company utilizes cash from operations and maturing investments to meet its
insurance obligations to policyholders and claimants, as well as to meet
operating costs. Primary sources of cash from operations include premium
collections, investment income and commissions and fees. The principal uses of
cash from operations are for premium payments to insurance companies, payments
of claims under USF RE's and USFIC's reinsurance and insurance contracts, debt
reduction, and operating expenses such as salaries, commissions, taxes and
general overhead. The Credit Agreement with the Company's lender contains
certain covenants, restrictions and dividend payment limitations with which the
Company was in compliance at September 30, 1997.
The Company anticipates that it will continue to generate sufficient cash flow
from operations to cover its short-term (1-18 months) and long-term (18 months
to 3 years) liquidity needs. While the Company currently has no immediate plans
for significant capital outlays, from time to time it contemplates acquisition
opportunities that complement its business operations.
The Company's investment portfolio reflects a current allocation of
approximately 94% in fixed-income investments, both taxable and tax preferenced,
and 6% in equities, with an "AA" average fixed income portfolio rating. The
portfolio is not exposed to real estate investments, derivatives, high yield
bonds, private placements or mortgage loans. All such securities are carried at
quoted market values at the latest balance sheet date.
Forward Looking Statements
- --------------------------
Some of the statements included within Management's Discussion and Analysis of
Financial Condition and Results of Operations and the Consolidated Financial
Statements and related Notes may be considered to be forward looking statements
(as that term is defined in the Private Securities Litigation Reform Act of
1995), and which are subject to certain risks and uncertainties. Among those
factors which could cause the actual results to differ materially from those
suggested by such statements are: catastrophe losses in the Company's insurance
lines or a material aggregation of losses; changes in federal or state law
affecting an employer's ability to self-insure; availability of adequate
retrocessional insurance coverage at appropriate prices; a downturn in the
general economy; uncertain acceptance of the Company's products; the effects of
competitive market pressures within the medical lines or property/casualty
marketplaces; the effect of changes required by generally accepted accounting
practices or statutory accounting practices; and other risks which are described
from time to time in the Company's filings with the Securities and Exchange
Commission.
13
<PAGE>
PART II OTHER INFORMATION
Item 6. EXHIBITS and REPORTS ON FORM 8-K.
(a) The following is a list of exhibits required to be filed as part of
this Form 10-Q by Item 601 of Regulation S-K:
3.1, 4.1 Restated Certificate of Incorporation, as
amended, as presently in effect. Filed as Exhibits
3.1 and 3.1.1 to the Company's Form S-1 Registration
Statement declared effective by the Securities and
Exchange Commission on October 31, 1986 (the
"Registration Statement"), and incorporated herein by
this reference; as Exhibit 3 to the Company's Current
Report on Form 8-K dated May 24, 1990, and
incorporated herein by this reference; and as Exhibit
3(i) to the Company's Current Report on Form 8-K
dated May 14, 1997, and incorporated herein by this
reference.
3.2, 4.2 Bylaws of the Company, as amended, as presently
in effect. Filed under the Company's former name as
Exhibit 4.2 to the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 1994, and
incorporated herein by this reference.
4.3 Common Stock Certificate of The Centris Group, Inc.
Filed as Exhibit 4.3 to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30,
1997, and incorporated herein by this reference.
4.4 Rights Agreement. Filed as Exhibit 2 to the Company's
Current Report on Form 8-K dated May 24, 1990, and
incorporated herein by this reference.
4.5 First Amendment to Rights Agreement. Filed as
Exhibit 1 to the Company's Current Report on Form 8-K
dated January 16, 1992, and incorporated herein by
this reference.
4.6 Second Amendment to Rights Agreement. Filed as
Exhibit 10.1 to the Company's Current Report on Form
8-K dated April 29, 1994, and incorporated herein by
this reference.
4.7 Third Amendment to Rights Agreement. Filed as
Exhibit 4 to the Company's Current Report on Form
8-K dated September 28, 1995, and incorporated herein
by this reference.
14
<PAGE>
4.8 Fourth Amendment to Rights Agreement. Filed as
Exhibit 1 to the Company's Current Report on Form
8-K dated July 23, 1997, and incorporated herein by
this reference.
10.1* Agreement of Employment between the Company and Mark
A. Carney effective as of September 6, 1997.
10.2* Severance Agreement dated September 7, 1997 between
the Company and Mark A. Carney.
10.3* Severance Agreement dated July 23, 1997 between the
Company and Charles M. Caporale.
11* The Centris Group, Inc. and Subsidiaries Computation
of Earnings Per Share.
15* Independent Auditors' Review Report regarding
unaudited interim financial information.
27* Financial Data Schedules
(b) During the third quarter of 1997 the Company filed with the
Securities and Exchange Commission a Current Report on Form
8-K dated July 23, 1997, reporting that effective as of July 23,
1997, the Company and American Stock Transfer & Trust Company,
as Rights Agent, adopted a Fourth Amendment to the Rights
Agreement adopted by the Company on May 24, 1990, and as
subsequently amended. For a detailed description of the
foregoing Fourth Amendment reference is made to aforenoted Form
8-K.
* Describes exhibits filed with this Quarterly Report on Form 10-Q.
15
<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.
The Centris Group, Inc.
Date: November 12, 1997 By: /S/DAVID L. CARGILE
--------------------
DAVID L. CARGILE
Chairman of the Board, President and
Chief Executive Officer
Date: November 12, 1997 By: /S/CHARLES M. CAPORALE
----------------------
CHARLES M. CAPORALE
Senior Vice President, Chief
Financial Officer and Treasurer
(Principal Financial and Accounting
Officer)
16
<PAGE>
<PAGE>
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
BETWEEN
MARK A. CARNEY
AND
THE CENTRIS GROUP, INC.
This Agreement is made at Costa Mesa, California, this 6th day of
September, 1997, between The Centris Group, Inc., a Delaware corporation (the
"Company"), and Mark. A. Carney (the "Executive").
In consideration of the respective promises and mutual covenants and
agreements which are set forth herein, and intending to be legally bound
thereby, the parties hereto agree as follows:
Section 1 - Employment.
----------
The Company hereby agrees to employ the Executive and the Executive
hereby agrees to be employed by and to serve the Company on the terms and
conditions as set forth in this Agreement.
Section 2 - Term of Employment.
------------------
This Agreement will commence and be effective as of September 6, 1997,
and shall continue thereafter to and including December 31, 2001.
Section 3 - Position and Duties.
-------------------
The Executive shall serve the Company as a Senior Vice President and as
the President and Chief Operating Officer of INTERRA Reinsurance Group, Inc.
("INTERRA"), which is being acquired by the Company concurrently herewith from
Executive pursuant to that certain Stock Purchase Agreement of even date
herewith by and between the Company and Executive. Executive shall have all the
duties, responsibilities, authority, rights and privileges which normally attach
to those offices. Notwithstanding the foregoing, the Executive shall have such
1
<PAGE>
additional or other duties, responsibilities and authority as may be delegated
or assigned to Executive from time to time by the Company's Board of Directors
or by its Chief Executive Officer. Executive's services shall be performed on
behalf of the Company consistent with the policies and procedures of the
Company, and Executive shall be subject at all times to the supervision,
direction and control of the Company's Chief Executive Officer and its Board of
Directors. Executive agrees that the Company may at any time change or alter
Executive's duties, responsibilities, authority, rights, privileges or titles as
may be deemed warranted or in the best interests of the Company; provided,
however, that such changes or alterations are consistent with the activities of
a Senior Vice President of the Company.
Section 4 - Devotion of Time and Best Efforts.
---------------------------------
Executive agrees that during the period of his employment he will
devote his working and productive time, attention, energies, abilities, skill
and efforts exclusively to the business affairs of the Company. In this
connection, Executive agrees that he will diligently exert his best efforts to
the promotion, development and best interest of the Company and its affiliates,
particularly the maximization of its income and the retention and servicing of
the business and operations ("Business") of Executive's former employer,
INTERRA, and that he will faithfully and diligently perform all of the duties
incident to his position. Executive agrees that he will not directly or
indirectly, promote, participate or engage in any activities, whether as a
partner, employee, creditor, shareholder or otherwise, in any business which
shall in any way be, directly or indirectly, in competition with any aspect of
the Company's business, nor will Executive own, other than as a mere passive
equity investor, more than 10% in any other business enterprise without prior
written approval of the Company. The Company acknowledges that as of the date
hereof Executive owns 5% of the stock of Specialty Risk International, Inc.,
("SRI") a company which has a business relationship with INTERRA. Executive
agrees that he will not participate in the management and affairs of SRI, nor
will he increase his ownership in SRI without the prior written approval of the
Company.
Section 5 - Place of Performance.
--------------------
In connection with Executive's employment by the Company, the Executive
shall be based at the Company's Indianapolis, Indiana offices, except for such
2
<PAGE>
travel as may be required to be undertaken on behalf of the Company's business.
In the event the Company ceases operations at such location or moves that office
to another location, the Company shall be entitled to relocate Executive to the
new location. Executive shall be entitled to reimbursement of his relocation
expenses in accordance with the Company's customary policies and procedures.
Section 6 - Compensation.
------------
6.01 Salary: The Company shall pay to the Executive a salary at the
------
rate of One Hundred Ninety Thousand Dollars ($190,000) per annum, in equal
installments as nearly as practicable, in accordance with the Company's
prevailing payroll practices and policies which are in effect from time to time.
6.02 Bonus: In addition to the salary specified in Section 6.01 above,
-----
the Executive will be eligible to earn a bonus calculated as provided herein.
The bonuses shall be 40% of the following two (2) sources described in Sections
A and B below.
(A) The after tax profit attributable to the continuing operations of
INTERRA as a managing general underwriter, reinsurance broker and administrative
services provider, after giving effect to the amortization of the excess amount
paid by the Company for the purchase of the INTERRA stock over the agreed upon
value of INTERRA's net realizable assets at the Inception Date (the "Brokerage
Operating Bonus" or "BOP");
(B) The pre-tax underwriting gain or loss on accident and health
business placed or written by or through INTERRA into or with the Company's USF
RE INSURANCE COMPANY ("USF RE") subsidiary (the "Underwriting Profit Bonus" or
"UPB").
3
<PAGE>
(C) Such bonuses shall be distributable and allocable as follows:
(1) The first fifty percent (50%) will be eligible for
deferral into the Company's Non-Qualified Deferred Compensation Plan
("Deferred Plan") at the Executive's discretion in accordance with Plan
provisions; and
(2) The next 25% will be paid to Executive within forty-five
(45) days after the end of the period; and
(3) The remaining 25% will be escrowed by the Company (the
"Escrowed Bonus") until the final bonus calculation is made for the
December 31, 2001 bonus period as indicated in Paragraph E(4) below.
Any funds withheld by the Company will be held as part of the Company's
general assets and not in a trust or segregated account. Interest will
be credited on these withheld funds annually at the rate earned by the
Company on its short-term funds as reported by Great Northern Capital,
the Company's investment advisor.
(D) The bonus periods are as follows:
(1) The "First Period" which shall be from the inception date
of this Agreement through December 31, 1998; and
(2) The "Second Period" through the "Fourth Period" shall be
the calendar years 1999, 2000 and 2001.
(E) Bonuses shall be determined as follows:
(1) For the First Period the Executive shall be paid the BOP.
The bonus shall be distributed and allocated as set forth in paragraph
C above.
(2) For the Second Period the Executive shall be paid a bonus
equal to the BOP for the Second Period, plus or minus the UPB with
respect to business written during the First Period. The bonus shall be
distributed and allocated as set forth in paragraph C above. Any
4
<PAGE>
deficit for the Second Period due to the UPB deficit exceeding the BOP
shall be reduced by the Escrowed Bonus previously earned, and the
remaining deficit, if any, shall be carried forward to the Third
Period.
(3) For the Third Period, the Executive shall be paid a bonus
equal to the BOP for the Third Period, plus or minus the UPB with
respect to business written during the Second Period and less any
deficit from the Second Period. The bonus shall be distributed and
allocated as set forth in paragraph C above. Any deficit for the Third
Period due to the UPB deficit exceeding the BOP shall be reduced by the
Escrowed Bonus previously earned and the remaining deficit, if any,
shall be carried forward to the Fourth Period.
(4) For the Fourth Period the Executive shall be paid a bonus
equal to the UPB with respect to business written during the Third
Period, plus the Escrowed Bonus, less any deficit from the Third
Period. The bonus shall be distributed and allocated as set forth in
paragraph C above, except that Executive shall be paid all funds in the
Escrow Bonus.
(E) For purposes of the bonus calculations under this Section 6.02, the
amortization period of the excess paid over the value of the assets shall be
three (3) years. In calculating the after tax profit, the Company will not
allocate corporate overhead or credit investment income to the results of
INTERRA's operations. For purposes of calculating underwriting gain or loss on
business placed or written by or through INTERRA into or with USF RE, Executive
agrees that the Company shall have the sole right to determine the loss reserves
applicable to such business. Underwriting gain (loss) shall be calculated as the
difference between net earned reinsurance premium and (1) incurred losses; (2)
commission expenses, including INTERRA's fees and commissions; and (3) the
reinsurer's underwriting expense calculated at 2.5% of net earned reinsurance
premium.
5
<PAGE>
6.03 Death or Disability: In the event of the death or disability of
--------------------
Executive during the period of his employment, the Company will pay to
Executive, his estate, or any other person whom the Executive shall have
designated in writing for such purpose, (i) the amount of salary due to
Executive under Section 6.01, to a maximum of one year; and (ii) any bonus
payments that would be due to Executive under Section 6.02 through December 31,
2001, which bonus payments shall be calculated and distributed in accordance
with the formula set forth in Section 6.02. "Disability" for purposes of this
Agreement shall be the inability of Executive to perform services under the
Agreement for a period of 60 days during any 120 day period.
Section 7 - Benefits.
--------
7.01 General: Executive shall be entitled to participate in employee
-------
benefit plans generally available to other employees of the Company, including
group health, life and disability insurance, paid vacation, sick leave and any
stock option, savings and retirement plans and shall be entitled to an
automobile allowance of $500 per month. In addition to the bonus described in
Section 6.02 above, the Executive shall be entitled to participate in the
Company's annual cash bonus plan. The terms of such participation shall be
determined following the execution of this Agreement.
7.02 Club membership: Subject to approval by the Company's Chief
----------------
Executive Officer, the Company shall reimburse Executive for membership in a
business club. The Company will pay monthly and annual dues as well as any
charges for entertainment at such club when the entertainment is related to the
performance of Executive's services on behalf of the Company.
7.03 Expense Reimbursement: Executive is authorized to incur ordinary
----------------------
and necessary expenses in connection with the promotion, operation and
furtherance of the business affairs of the Company, consistent with the
Company's policies as applicable to all employees. Executive shall be reimbursed
by the Company for duly incurred business expenditures upon presentation by the
Executive to the Company of an itemized account of such expenditures, together
6
<PAGE>
with appropriate receipts and vouchers. The itemized account shall be submitted
not less often than monthly on the Company's forms and in accordance with its
procedures.
7.04 Severance Agreement: Subject to approval by the Company's Board of
-------------------
Directors, the Company and the executive will enter into a Severance Agreement
providing certain benefits to Executive in connection with a "Change in Control"
of the Company, upon terms and conditions comparable to Severance Agreements
with other Senior Vice Presidents of the Company. Executive agrees that in the
event he is terminated while this Agreement is in effect and under circumstances
that would entitle him to a payment under the Severance Agreement, if in effect,
Executive shall be entitled to receive either (i) the salary and bonus
termination payments as provided for in this Agreement, or (ii) the salary and
bonus termination payments provided for in the Severance Agreement, whichever
are greater. Under no conditions shall Executive be entitled to receive salary
and bonus termination payments under this Agreement and the Severance Agreement.
Section 8 - Termination.
-----------
8.01 Termination for Cause: At any time during the period covered by
----------------------
this Agreement the Company may terminate the Executive from his employment under
this Agreement for cause. The term "cause" in this Agreement for purposes of
termination shall include, but not be limited to: (i) the commission by
Executive of any act of fraud or dishonesty; (ii) a conviction of Executive of a
felony in either a state or federal court proceedings; (iii) the material breach
or violation by Executive of any term or condition of this Agreement, including,
but not limited to, the failure by Executive to diligently and faithfully carry
out his duties under this Agreement and the failure of Executive to act in
accordance with the Company's policies and procedures (including any
underwriting guidelines) or as instructed by the Company's Chief Executive
Officer or any other duly authorized representatives of the Company; (iv) the
failure by Executive to devote sufficient time to the performance of his duties
under this Agreement; (v) Executive taking action, directly or indirectly, for
himself or for others, to establish or participate in other business enterprises
(other than as a mere passive equity investor of less than 10% of the stock of
another corporation), whether or not such enterprises are in competition with
the Company; (vi) Executive's failure to follow the Company's business
7
<PAGE>
practices, including but not limited to, its underwriting and rating guidelines,
its marketing practices and its claims handling and settlement procedures; or
(vii) Executive engaging in activities which place Executive in a direct or
indirect conflict of interest with the Company including, but not limited to,
being involved or associated with, directly or indirectly, an individual,
company, firm or other entity that is in competition with the Company's business
activities. In the event of termination of Executive for cause, the Company will
pay to the Executive the accrued but unpaid salary or other compensation due to
Executive under the terms of this Agreement to the date of such termination, but
shall have no obligation to make any further payments of salary, bonus payments
under Section 6 hereof or any other compensation. Such payment shall be made to
Executive either in a lump sum or in accordance with the Company's normal
payroll policies and procedures, at the discretion of the Company.
8.02 Involuntary Termination (Without Cause): The Company shall have
-----------------------------------------
the right to terminate the Executive involuntarily and without any cause or any
reason by paying to the Executive (i) all salary payments which would be due and
payable to the Executive pursuant to the provisions of Section 6.02 of this
Agreement for the remainder of the term of this Agreement; (ii) any accrued but
unpaid expense reimbursements, vacation pay or other compensation due to
Executive through the date of termination; and (iii) any bonus payments that
would be due to Executive under Section 6.02. Payments of salary and other
compensation shall be made to Executive either in a lump sum or in accordance
with the Company's normal payroll policies and procedures, at the discretion of
the Company. Bonus payments shall be computed and distributed as set forth in
Section 6.02 and shall be paid to Executive only at the time of and to the
extent that such bonuses are deemed earned, in accordance with the formulas set
forth in Section 6.02.
Section 9 - Covenants of Non-Competition, Non-Solicitation and
--------------------------------------------------
Non-Disclosure.
--------------
9.1 Term of Covenants: It is the intent, understanding and agreement of
-----------------
the parties to this Agreement that these covenants of non-competition,
non-solicitation and non-disclosure are to run for the period commencing from
8
<PAGE>
the date of Executive's employment under this Agreement and continuing for a
period of three (3) years after termination of such employment, and that all
provisions of whatever nature contained in these covenants shall be binding upon
the Executive during such applicable period and shall inure to the benefit of
Company; provided, however, that in the event that Executive's employment is
terminated by the Company "without cause" pursuant to Section 8.02 hereof, then
the term of the covenants of non-competition and non-solicitation shall expire
twelve months from the effective date of such termination. The term of the
covenant of non-disclosure shall not be effected by such termination.
9.2 Covenant of Non-Competition: Executive shall not during such
-----------------------------
aforementioned term, either directly or indirectly, for himself or another
person, firm, corporation or business, whether as a sole owner, shareholder,
officer, director, employee, agent, consultant or otherwise (except as a less
than 10% shareholder only of a publicly held corporation and as the owner of 5%
of the stock of SRI) engage in or be involved in any business that, through
marketing, sales, underwriting, claims handling, consulting or through other
means or devices is engaged in offering or selling the classes or lines of
insurance and reinsurance in which INTERRA or the Company are engaged at the
closing of the acquisition of INTERRA by the Company. The covenants contained in
this Section 9.2 shall specifically refer to those counties in the states in
which INTERRA conducted its business prior to the Company's acquisition of
INTERRA from Executive, and to those counties in the states in which INTERRA and
the Company carry on their business operations following the date of this
Agreement. It is agreed that for purposes of this Section 9.2, the Company and
INTERRA are deemed to be conducting business in those counties of any state
where business operations are conducted by producers with whom the Company and
INTERRA have a business relationship.
9.03 Covenant of Non-Solicitation: Executive agrees that during the
-----------------------------
term of these covenants he shall not, either directly or indirectly, for himself
or another person, firm, corporation or business, solicit or cause to be
solicited the customers of the Company or its affiliates, nor shall he, during
9
<PAGE>
such period, either directly or indirectly, for himself or for others, employ or
assist any competitor of the Company or its affiliates in the employment of any
employee of the Company.
9.04 Confidential Information: During the course of his future
-------------------------
association with the Company and by virtue of Executive's former position with
and his ownership of the stock of his former employer, INTERRA, Executive has
had and shall have access to a wide variety of confidential information of the
Company, its affiliates and INTERRA and their accounts and methods of operation,
including, but not limited to, the following specified items and information and
the following general classes of information:
(i) "Customer Lists" which consist of current and former
insureds and current and former clients of the Company and INTERRA;
(ii) The Company's and INTERRA's criteria, their methodology
for accepting clients and their operating criteria which are unique to the
Company and INTERRA and have been developed or acquired strictly for their own
use;
(iii) Computer programs and systems of the Company and INTERRA
used or which may be used in the conduct of the Company's and INTERRA's business
which are unique to the Company and INTERRA and have been developed or acquired
strictly for their own use;
(iv) All information respecting the Company's and INTERRA's
underwriting methodology and systems for accepting, issuing and renewing its
insurance or reinsurance products;
(v) Lists of the Company's and INTERRA's brokers, agents
and third-party administrators, referral sources and other producers of their
business;
(vi) Agreements of the Company and INTERRA; and
10
<PAGE>
(vii) All other information relating to the Company's and
INTERRA's business and methods of operation which are unique to the Company and
INTERRA which have been developed or acquired strictly for their own use.
It is acknowledged and agreed by Executive that all such information as
described above is confidential information and property of the Company and
INTERRA and constitutes "Trade Secrets" of the Company and INTERRA. Executive
further acknowledges and agrees that the trade secrets of INTERRA are an asset
of INTERRA which the Company is acquiring as of the date of this Agreement, and
that as a stockholder of INTERRA, Executive will receive consideration from the
Company for its purchase of INTERRA and its assets, including its trade secrets.
9.05 Covenant of Non-Disclosure: Executive agrees that the items and
---------------------------
information classified hereinabove as "Trade Secrets" are of a confidential
nature, that such Trade Secrets are vital and essential to the continuing
well-being of the Company and INTERRA and that such Trade Secrets shall not be
disclosed to any parties other than as set forth herein. Executive acknowledges
that such Trade Secrets are not known to the general public nor are they known
by or disclosed to competitors of the Company and INTERRA, that disclosure of
such Trade Secrets can be advantageous to the Company's competitors and harmful
to the Company, and have been or will be disclosed to Executive because of his
position as a former owner of INTERRA and as a continuing employee of the
Company. Executive agrees not to make any such disclosure unless authorized in
writing to do so by the Company or unless required by applicable law, and
acknowledges that it is his responsibility to the Company that such Trade
Secrets not be disclosed by him to third parties since such a disclosure,
particularly to competitors of the Company, will adversely and materially affect
the Company's ability to do business and will cause substantial and irreversible
damage to the Company's economic well-being.
9.06 Enforcement of Covenants: It is the intention of the parties
--------------------------
hereto that the provisions of these covenants shall be enforced to the fullest
extent permissible under the laws and public policies of the State of California
and the State of Indiana. However, it is further agreed that the provisions of
these covenants will not preclude the Executive from engaging in a profession,
trade or business except as contemplated by the covenants of this Section 9,
which covenants are necessary to protect the legitimate interests of the Company
and INTERRA in their Trade Secrets and business.
9.07 Remedies:
--------
(i) The parties acknowledge and agree that given the
irreparable harm which could result to the Company from violations by Executive
of any of the provisions of these covenants, damages would be an inadequate
remedy at law for any such breach and that, in addition to any other rights or
remedies which the Company may have, the Company may enforce the provisions of
these covenants and may obtain relief for any breach or threatened breach of
these covenants, if necessary, by use of a temporary restraining order, a
preliminary injunction, permanent injunction, or specific performance.
(ii) For purposes of this Agreement, the Executive agrees that
any of the following shall be deemed per se to constitute irreparable injury to
the Company for which the Company shall be entitled to injunctive relief: (A)
use, misuse or disclosure of Trade Secrets, (B) solicitation of existing
customers; or (C) breach of any of the provisions related to covenants not to
solicit or to disclose Trade Secrets.
(iii) Any dispute arising out of or in connection with
this Section 9 will be resolved as provided in Section 10 hereof.
9.08 Severability of Covenants: The unenforceability (or the
---------------------------
modification to conform with such laws and public policies) of any provision of
these covenants shall not render unenforceable or impair the remainder of the
covenants. Accordingly, if any provisions of these covenants shall be determined
to be invalid or unenforceable, either in whole or in part, these covenants
shall be amended to delete or modify, as necessary, the offending provisions or
offending portions of said provisions and to alter the balance of these
covenants in order to render the same valid and enforceable. Without limiting
12
<PAGE>
the generality of the foregoing, the parties agree that if the area covered by
these covenants, i.e., any state where the Company is presently carrying on its
business or where it may carry on its business during the term of these
covenants, or if the term of the covenants is deemed by a court or other body
having jurisdiction to be unreasonably broad, there shall be automatically
substituted for such area or term, such area of coverage or such length of time
as such court or other body having jurisdiction deems to be reasonable and
sufficient to protect the Company's interests herein.
Section 10 - Settlement of Disputes:
----------------------
10.1 Other than disputes arising under Section 9 hereof, any dispute
arising as a result of this Agreement or regarding the interpretation or
application of this Agreement, or any act which allegedly has or would violate
any provision of this Agreement must be submitted as a general reference
pursuant to California Code of Civil Procedure Section 638(1) to arbitration in
Orange County, California in accordance with the rules of Judicial Arbitration
and Mediation Service as the exclusive remedy for such claim or dispute. Either
party may make this request by serving on the other, in writing, a request to
arbitrate. Within 30 days after such service, either party may institute
proceedings in State Court to enforce this clause by filing appropriate papers.
If the parties cannot mutually select a judge from the arbitration panel, the
Court shall make the selection. The decision of the arbitrator will be final,
and it may then be entered as a superior court judgment (CCP 644) from which
either party may appeal pursuant to CCP 645.
10.2 The parties may agree on limited discovery. However, in the
absence of an agreement, each party shall (i) take not more than four
depositions, totaling not more than 12 hours cumulatively; (ii) propound not
more than four sets of interrogatories, not to exceed 40 single questions each;
(iii) serve not more than 10 requests for admissions; and (iv) propound not to
exceed 15 requests to produce documents, all as may be "reasonable," as measured
by circumstances and amount in dispute between the parties. Any disagreements
between the parties regarding discovery matters shall be resolved by the
Referee.
13
<PAGE>
10.3 Other than a dispute arising under Section 9 hereof, the Referee
may resolve any claim or dispute arising out of, or in connection with, or based
upon this Agreement, whether or not such claim is described as breach of
contract or tort. Damages, however, shall be limited to those based on actual
damages and punitive damages may not be awarded. The prevailing party of any
such dispute or litigation shall be entitled to receive from the losing party
all costs and expenses, including reasonable counsel fees, incurred by the
prevailing party.
10.4 Any dispute arising out of or in connection with Section 9 of this
Agreement shall be brought in the Orange County Superior Court of the State of
California, or in the United States District Court for the Central District of
California, and by execution of this Agreement both the Company and Executive
accept the exclusive jurisdiction of such courts for disputes under Section 9
hereof, and hereby irrevocably agree to be bound by any judgment rendered
thereby in connection with this Agreement relating to such issues.
Section 11 - Setoff.
------
Amounts payable to Executive under this Agreement, whether they be
salary, benefits or other compensation, shall be subject to the Company's right
to setoff against any amounts which the Executive owes to the Company.
Section 12 - Non-Assignability.
-----------------
This Agreement is a personal service contract and the rights and duties
of the parties hereunder shall not be assignable, except in accordance with the
provisions of Section 13 of this Agreement. Any attempted assignment or transfer
not permitted by the terms of Section 13 shall be void and of no force and
effect.
Section 13 - Successors and Assigns.
----------------------
If the Company shall at any time be merged or consolidated into or with
any other corporation, or if substantially all of the assets of the Company are
transferred to another corporation or party, the provisions of this Agreement
shall be binding upon and inure to the benefit of the entity or successors
14
<PAGE>
resulting from such merger or consolidation or to which such assets shall be
transferred. To the extent applicable, this Agreement shall be binding on the
devises, heirs, next of kin, executors and administrators of the Executive.
Section 14 - Notice.
------
(a) All notices, demands or other communications required or desired to
be given hereunder by any party shall be in writing and shall be validly given
or made to the other party if served personally on such other party or if
deposited in the United States mail, certified or registered, postage prepaid,
return receipt requested or by an express courier service generating a receipt,
e.g. Federal Express. If such notice, demand or other communication be served
personally, service shall be deemed made at the time of such personal service.
If such notice, demand or other communication be given by mail or courier
service, such notice shall be conclusively deemed given forty-eight (48) hours
after the deposit thereof in the United States mail or delivery to the courier
service, addressed to the party to whom such notice, demand or other
communication is to be given as hereinafter provided.
Notice shall be given to the Company at the following address:
The Centris Group, Inc.
650 Town Center Drive, Suite 1600
Costa Mesa, California 92626
Attention: Jose A. Velasco, Senior Vice President,
Chief Administrative Officer, Secretary and
General Counsel
With copies to: R.W. Loeb, Esq.
R.W. Loeb, Prof. Corp.
865 South Figueroa Street, Suite 2500
Los Angeles, California 90017-2567
Notice shall be given to the Executive at the following address:
Mark A. Carney
848 Wedgewood Lane
Carmel, Indiana 46033
15
<PAGE>
With copies to: Clifford A. Holleran, Esq.
4630 West Jefferson Boulevard, Suite 11A
Fort Wayne, Indiana 46804
Any party hereto may change his address for purposes of receiving notices,
demands or other communications as herein provided by a written notice given in
the manner described above to the other party hereto.
Section 15 - Applicable Governing Law.
------------------------
This Agreement, having been negotiated, executed and delivered in the
State of California, which is the Company's state of incorporation, shall be
construed in accordance with the laws of the State of California; and the
validity, interpretation, performance and enforcement of this Agreement shall be
governed by the laws of the State of California, including its laws and
decisions relating to conflict of laws.
Section 16 - Severability.
------------
Every provision in this Agreement is intended to be severable. If any
term or provision hereof is illegal or invalid, for any reason whatsoever, such
illegality or invalidity shall not affect the validity or enforceability of the
remainder hereof.
Section 17 - Captions.
--------
The captions or headings in this Agreement are inserted for convenience
and identification only and are in no way intended to describe, interpret,
define or limit the scope, extent or intent of this Agreement or any provisions
hereof.
Section 18 - Amendments/Waivers.
------------------
No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing signed by
Executive and the President of the Company. No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time.
16
<PAGE>
Section 19 - Entire Agreement.
----------------
Except as otherwise provided in Section 7.04 hereto, this Agreement
expresses the entire agreement of the parties hereto, and supersedes all prior
written or oral promises, representations, understandings, arrangements and
agreements between these parties with respect to the subject matter herein. The
parties hereto further acknowledge and agree that neither of them has made any
representation to induce the execution and delivery of this Agreement, except
those as specifically set forth herein.
Section 20 - Signatures.
----------
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officers, and the Executive has signed this
Agreement as indicated below, as of the day and year first written above.
THE CENTRIS GROUP, INC.
By /S/ DAVID L. CARGILE
----------------------
David L. Cargile,
Chairman of the Board, President and
Chief Executive Officer
EXECUTIVE:
/S/ MARK A. CARNEY
- ------------------
Mark A. Carney
17
<PAGE>
<PAGE>
EXHIBIT 10.2
SEVERANCE AGREEMENT
THIS AGREEMENT is made and entered into as of this 7th day of
September, 1997, by and between THE CENTRIS GROUP, INC., a Delaware corporation
(the "Company"), and MARK A. CARNEY ("Executive").
RECITALS
WHEREAS, the Executive is currently employed by the Company and is
considered a key employee of the Company; and
WHEREAS, the Company desires to retain the services of the Executive;
and
WHEREAS, the Company and the Executive desire to set forth the amounts
payable and benefits to be provided by the Company to the Executive in the event
of a termination of the Executive's employment with the Company under the
circumstances set forth herein after the happening of a Change in Control (as
defined herein);
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, and intending to be legally bound hereby, the
parties agree as follows:
AGREEMENT
1. Continued Employment. In reliance upon the promises of the Company
---------------------
hereinafter contained, the Executive agrees that, for a period of not less than
six (6) months commencing on the date set forth above, and subject to reasonable
absences for illness, holiday and vacation or personal leave of absence in
accordance with the Company's policies and practices in effect on the date
1
<PAGE>
hereof, the Executive will continue his employment with the Company and shall
devote his best efforts to such duties as may be assigned to him by the Company
from time to time.
2. Other Severance Arrangements. Except to the extent specifically set
----------------------------
forth herein, in the event of the termination of the Executive's employment with
the Company, the Executive shall be entitled to receive any Company benefits
payable under any employee benefit plan, program, policy or arrangement as such
may then be in effect, including all such termination arrangements with
Executive that may be described in any employment agreement.
3. Effective Date. This Agreement shall be effective as of the date
---------------
first above written ("Effective Date") and shall continue and remain in full
force and effect until the termination of Executive's employment with the
Company, unless this Agreement is earlier terminated by the parties in writing.
The completion of six (6) months of employment with the Company by the Executive
as set forth in Section 1 shall not be a condition precedent to the
effectiveness of this Agreement or to the payments of amounts or provision of
benefits hereunder in the event the Executive's employment with the Company is
terminated under the circumstances described in Section 4(b).
4. Termination of Employment.
-------------------------
(a) Events Requiring No Payments Under Section 5: In the event
the Executive's employment with the Company is terminated under any of the
following circumstances, no payments shall be or become due and owing, and the
Company shall have no other obligations under Section 5 of this Agreement:
(i) By either party for any reason prior to the happening
of a Change in Control (as hereinafter defined);
(ii) By either party for any reason at any time more than
two (2) years after a Change in Control;
2
<PAGE>
(iii) By the Company at any time, whether prior to,
contemporaneous with or subsequent to a Change in Control, for reason of
"Cause" (as hereinafter defined) or due to the request or demand of any
regulatory authority; or
(iv) By the Executive at any time, whether prior to,
contemporaneous with or subject to a Change in Control, upon his
retirement or resignation for reasons other than "Good Reason" (as
hereinafter defined).
Notwithstanding the foregoing, nothing contained in this Section 4(a) shall
prevent the Executive or his spouse, heirs, estate or personal representative
from receiving any amounts payable under any other plan, program, policy or
arrangement that is not a severance plan, program, policy or arrangement.
(b) Events Requiring Payments Under Section 5: In the event
the Executive's employment with the Company is terminated under any of the
following circumstances set forth in (i) and (ii) below, the Company shall make
the payments and provide the benefits as set forth in Section 5:
(i) By the Company, contemporaneously with or
within two (2) years after the happening of a Change in Control, for any
reason other than (1) for Cause or (2) due to the request or demand of any
regulatory authority; or
(ii) By the Executive, contemporaneously with
or within two (2) years after a Change in Control, for Good Reason.
(c) For purposes of this Agreement, the term "Cause" shall
mean (i) the commission by Executive of any material act of fraud or dishonesty;
(ii) a final conviction of Executive of a felony in either a state or federal
court proceeding; (iii) intentional and willful failure by Executive to
faithfully carry out his duties and responsibilities as an employee of the
3
<PAGE>
Company, after reasonable notice in writing to and discussion thereafter with
Executive; and (iv) Executive engaging in activities which place Executive in a
direct or indirect conflict with the Company or its interests. The decision as
to the existence of "Cause," as described in (i), (iii) and (iv) above, shall be
determined by a majority of the Company's nonemployee Directors; provided,
however, if there is a change in the composition of the Board such that those
persons who served as nonemployee Directors on the Effective Date of this
Agreement represent less than fifty percent (50%) of the total number of
nonemployee Directors, then "Cause" shall be determined by use of the Settlement
of Disputes provisions set forth in Section 8 of this Agreement.
(d) For purposes of this Agreement, the term "Good Reason"
shall mean the following five (5) events; provided, however, that Executive may
waive in writing his objection to the occurrence of any such event, in which
case such event will no longer constitute "Good Reason":
(i) Any material breach by the Company of its
obligations contained in this Agreement;
(ii) The assignment to the Executive of any
duties inconsistent with the status of his position with the Company as
such duties and position existed on the day immediately preceding the
happening of a Change in Control, or an alteration in the nature or
status of the Executive's duties and responsibilities that renders
the Executive's position to be of less dignity, responsibility or
scope from that which existed on the day immediately preceding the
happening of a Change in Control; provided, however, it shall not be an
event of Good Reason if the Executive is assigned additional duties for
the Company or any affiliate or subsidiary of the Company which are not
inconsistent with the duties described in Section 1 hereof so long as the
aggregate of all duties assigned to the Executive in connection with his
service with the Company, its affiliates or subsidiaries do not require
the Executive to devote, on a consistent and sustained basis,
substantially more time than other senior level executives of the Company
are required to devote to their duties;
4
<PAGE>
(iii) A reduction by the Company in the
Executive's annual base salary as was in effect on the day immediately
preceding the happening of a Change in Control or as the same may be
increased from time to time;
(iv) The failure of the Company to continue
in effect of the benefits enjoyed by the Executive under the Company's
1988 Employee Stock Plan or its 1991 Employee Stock Option Plan or under
the Company's Incentive Compensation Program, or any other compensation
plan, program or arrangement, or any of the Company's pension, retirement,
profit sharing, savings, life insurance, medical, health-and-accident,
disability or other employee benefit plans, programs or arrangements as
they existed on the day immediately preceding the happening of a Change in
Control, or the failure of the Company to continue the Executive's
participation therein; or the failure by the Company to provide the
Executive with the number of paid vacation days to which he is entitled
on the basis of years of service and position with the Company in
accordance with the Company's normal vacation policy, or the failure of
the Company to continue or if the Company adversely changes or reduces
other specific contractual benefits or perquisites provided to Executive
as they existed on the day immediately preceding the happening of a Change
in Control, including, but not limited to, providing an automobile or an
automobile allowance, club memberships, and dues for professional
associates for Executive;
(v) The assignment of the Executive to an office
which is located more than 50 miles from the office at which the Executive
was primarily performing his duties on the day immediately preceding the
happening of a Change in Control.
(e) For purposes of this Agreement, a "Change in Control"
shall mean the occurrence, after the Effective Date hereof, of any of the
following events if such events are not approved by the Board of Directors of
the Company prior to their occurrence:
5
<PAGE>
(i) At any time during the term of this
Agreement, any "Person" (as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act")
and the regulations of the Securities and Exchange Commission (the
"SEC") thereunder, each as in effect on the Effective Date of this
Agreement (including any such Persons that may be deemed to be acting
in concert with respect to the Company or the acquisition,
ownership or voting of Company securities) becomes, directly or
indirectly, the "Beneficial Owner" (as defined in Rule 13d-3 under the
Exchange Act and the regulations of the SEC thereunder, each as in effect
on the Effective Date of this Agreement), without the prior approval of
the Board of Directors of the Company, of outstanding securities of the
Company representing 15% or more of the combined voting power of the
Company's then outstanding securities; provided, however, that the concept
of any Person becoming the owner of 15% or more of the combined voting
shares shall not include: (A) the Company, any wholly owned subsidiary of
the Company, any employee benefit plan of the Company or of a subsidiary
of the Company, or any Person holding voting shares for or pursuant to the
terms of any such employee benefit plan; or (B) any Person if such Person
would not otherwise be a 15% stockholder but for a reduction in the number
of outstanding voting shares resulting from a stock repurchase program or
other similar plan instituted by the Company or from a self-tender offer
of the Company, which stock repurchase plan or Company self-tender offer
commenced on or after the Effective Date of this Agreement; provided,
however, that the concept of becoming the owner of 15% or more of the
combined voting shares shall include such Beneficial Owner after the first
date upon which (x) such Person, since the date of commencement of such
stock repurchase plan or Company self-tender offer, shall have acquired
Beneficial Ownership of, in the aggregate, additional voting shares of the
Company representing 1% or more of the voting shares then outstanding, and
(y) such Person, together with all affiliates and associates of such
Person, shall Beneficially Own 15% or more of the voting shares of the
Company then outstanding. In calculating the percentage of outstanding
voting shares that are Beneficially Owned by a Person for purposes of this
subsection, voting shares that are Beneficially Owned by such Person shall
6
<PAGE>
be deemed outstanding, and voting shares that are not Beneficially Owned
by such Person and that are subject to issuance upon the exercise or
conversion of outstanding conversion rights, exchange rights, warrants or
options shall not be deemed outstanding. The Board of Directors shall have
the sole and absolute authority to make a final determination as to
whether any Person is or is not to be considered a 15% Stockholder for
purposes of this Agreement, which determination shall be conclusive for
all purposes and shall be binding upon the Company and upon the Executive;
(ii) At any time during the term of this
Agreement the composition of the Board of Directors of the Company is
changed such that persons who were directors of the Company as of the
Effective Date, or persons nominated or elected as directors by a
majority of such persons who were directors as of the Effective Date, do
not continue to comprise a majority of the members of such Board of
Directors of the Company;
(iii) At any time during the term of this
Agreement the stockholders of the Company approve a merger or
consolidation of the Company with, or a reorganization transaction
involving the Company and, any other entity, other than a merger,
consolidation or reorganization which would result in the voting
securities of the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) at least 50% of the combined
voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation; or
(iv) At any time during the term of this
Agreement the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of more than 50% of its consolidated assets.
5. Obligations of the Company Upon Termination of Employment. Upon
------------------------------------------------------------
termination of Executive's employment with the Company under the circumstances
7
<PAGE>
set forth in Section 4(b), the Executive shall be entitled to receive,
notwithstanding such termination, the following payments and to be provided the
following benefits:
(a) Salary and Bonus: Subject to the limitations set forth in
Section 7 hereof, the Company shall pay to the Executive that amount which is
equal to his regular base salary, at the rate then in effect, for a period of
two (2) years, plus a bonus in an amount which shall be equal to the largest
cash bonus actually received by Executive during his term of employment with the
Company; provided, however, that if Executive shall have entered into an
Employment Agreement with the Company which is in effect at the time of
Executive's termination, then and in that event the Company and Executive hereby
agree that upon Executive's termination Executive shall be entitled to receive
either (i) the salary and bonus termination payments under this Section 5(a), or
(ii) the salary and bonus terminations payments provided for in such Employment
Agreement, whichever salary and bonus termination payment is the greater; but
under no conditions shall Executive be entitled to receive upon termination both
the salary and bonus termination payments under this Severance Agreement and the
salary and bonus termination payments under any such Employment Agreement.
(b) Method of Payment: The payments due to Executive
under Section 5(a) of this Agreement shall be made as follows:
(i) The Company shall pay to the Executive his
regular base salary in installments consistent with the Company's payroll
practices then in effect, or in a single lump sum payment, whichever
method is selected by Executive, in his sole discretion;
(ii) The Company shall pay to Executive the
bonus payments in a single lump sum; and
(iii) Any lump sum payments due to Executive shall
be paid to Executive on the Effective Date of his termination of
employment.
8
<PAGE>
(c) Other Benefits: The Company shall continue in force for
Executive for a period of two (2) years after Executive's termination the life
insurance, medical, health-and-accident and disability benefit plans or programs
then in effect on the date of Executive's termination from the Company;
provided, however, that such other benefits as are set forth in this Section
5(c) shall not be required to be available to Executive if subsequent employment
by Executive with another employer offers to Executive similar plans or programs
in which the benefits equal or exceed the benefits which Executive could receive
under the Company's plans or programs as provided herein.
6. No Duty to Mitigate. The Executive shall not be required to mitigate
-------------------
the amount of any payment required hereunder by seeking other employment or
otherwise, nor shall the amount paid hereunder be reduced or offset by any
compensation earned or received by the Executive as a result of employment with
another employer, self-employment or any amount received from any other plan,
program, policy or arrangement of the Company.
7. Nonapplicability of Excise Tax. The parties intend that this
---------------------------------
Agreement shall govern the rights an obligations of the parties with respect to
severance payments payable upon a termination of Executive's employment with the
Company, and that the excise tax as now provided in Section 280G of the Internal
Revenue Code shall not be applicable to payments under this Agreement.
Accordingly, the parties agree that the aggregate amount which shall be paid to
Executive under this Agreement shall be $1.00 less than that amount which would
make such payment to Executive an "excess parachute payment" under the
provisions of Sections 280G of the Internal Revenue Code, and to which an excise
tax would be applicable.
8. Settlement of Disputes.
----------------------
(a) It is specifically agreed that any controversy or dispute
between the parties to this Agreement involving the construction,
interpretation, application, performance or breach of the terms, covenants or
conditions of this Agreement or in any way arising under this Agreement shall,
on demand of one of the parties by written notice hereto served on the other in
the manner prescribed in Section 9(a) hereof, be determined pursuant to the
general reference procedures prescribed by California Code of Civil Procedure
Sections 638(1), et seq., as they may be amended from time to time, by a retired
or former judge of the Superior Court for the County of Orange, State of
California. The parties intend this general reference agreement to be
specifically enforceable in accordance with said Section 638(1).
(b) The reference may be commenced by any party hereto by the
filing in the Superior Court of the State of California for the County of Orange
of a petition or a motion for a general reference proceeding.
(c) The petition or motion may designate as a sole referee a
retired judge working with JAMS who is acceptable to that party. If the parties
to the reference proceeding are unable to mutually agree upon a referee, the
Presiding Judge or any judge of the Orange County Superior Court to whom the
matter is assigned shall appoint a retired or former Orange County Superior
Court Judge from those listed with JAMS as available to act as a referee.
(d) The petition and any opposition or response thereto shall
recite in a clear and meaningful manner the factual basis of the controversy
between the parties and identify the issues to be submitted to the referee for
decision.
(e) The parties acknowledge that this Agreement is
specifically enforceable and that the decision by the referee is tantamount to a
judgment by a trial court (CCP ss. 644) and is subject to review in accordance
with CCP ss. 645, and that any judgment rendered in the trial court is
appealable in the same manner as any other trial court judgment.
(f) The parties may agree on limited discovery. However, in
the absence of an agreement, each party may: (i) take up to three depositions
not totaling more than six hours cumulatively; (ii) propound one set of
interrogatories, not to exceed 20 single questions; (iii) serve not more than 10
10
<PAGE>
requests for admissions; and (iv) propound not to exceed 15 requests to produce
documents, all as may be "reasonable," as measured by the circumstances and
amount in dispute between the parties. Any disagreements between the parties
regarding discovery matters shall be resolved by the referee.
(g) The hearing shall be held within 60 days after the referee
is selected. The referee shall issue a written memorandum of decision setting
forth his findings of fact and conclusions of law.
9. Miscellaneous.
-------------
(a) Notices: All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been duly given if delivered personally or sent by certified
mail, return receipt requested, first-class postage prepaid, to the parties to
this Agreement at the following addresses:
If to the Company: The Centris Group, Inc.
650 Town Center Drive, Suite 1600
Costa Mesa, California 92626
Attention: Chief Executive Officer
If to Executive: Mark A. Carney
848 Wedgewood Lane
Carmel, Indiana 46804
or to such other address as either party to this Agreement shall have last
designated by notice to the other party. All such notices and communications
shall be deemed to have been received on the earlier of the date of receipt or
the third business day after the date of mailing thereof.
(b) Binding Effect; Benefits: This Agreement shall be binding
upon and inure to the benefit of the parties to this Agreement and their
respective successors and assigns. Nothing in this Agreement, express or
implied, is intended or shall be construed to give any person, other than the
11
<PAGE>
parties to this Agreement or their respective successors or assigns, any legal
or equitable right, remedy or claim under or in respect of any agreement or any
provision contained herein.
(c) Waiver: Either party hereto may by written notice to the
other (i) extend the time for the performance of any of the obligations or other
actions of the other under this Agreement; (ii) waive compliance with any of the
conditions or covenants of the other contained in this Agreement; and (iii)
waive or modify performance of any of the obligations of the other under this
Agreement. Except as provided in the preceding sentence, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties, covenants
or agreements contained herein. The waiver by any party hereto of a breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any preceding or succeeding breach, and no failure by either party to exercise
any right or privilege hereunder shall be deemed a waiver of such party's rights
or privileges hereunder or shall be deemed a waiver of such party's rights to
exercise the same any subsequent time or times hereunder.
(d) Amendment: This Agreement may be terminated,
amended, modified or supplemented only by a written instrument executed
by the Executive and the Company.
(e) Nonassignability: Neither this Agreement nor any
right, remedy, obligation or liability arising hereunder or by reason hereof
shall be assignable by either the Company or the Executive without the prior
written consent of the other party.
(f) Governing Law: This Agreement shall be governed by
and construed in accordance with the laws of the State of California,
regardless of the law that might be applied under principles of conflict of
laws.
12
<PAGE>
(g) Section and Other Headings: The section and other
headings contained in this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of this Agreement.
(h) Withholding of Taxes: The Company may withhold
from amounts required to be paid to the Executive hereunder any applicable
federal, state, local and other taxes with respect thereto; provided, however,
that the Company shall promptly pay over the amounts so withheld to the
appropriate taxing bodies and provide to the Executive appropriate statements
on forms proscribed for such purposes on the amounts so withheld.
(i) Severability: If, for any reason, any provision of
this Agreement is held invalid, such invalidity shall not affect any other
provision of this Agreement not held so invalid, and each such other provision
shall, to the full extent consistent with law, continue in full force and
effect. If any provision of this Agreement shall be held invalid in part, such
invalidity shall in no way affect the rest of such provision not held so
invalid, and the rest of such provision, together with all other provisions of
this Agreement, shall to the full extent consistent with law continue in full
force and effect. If this Agreement is held invalid or cannot be enforced, then
to the full extent permitted by law, any prior agreement on the subject matter
of this Agreement between the Company (or any predecessor thereof) and the
Executive shall be deemed reinstated as if this Agreement had not been executed.
(j) Counterparts: This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of
which together shall be deemed to be one and the same instrument.
13
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by a duly authorized officer, and the Executive has signed this
Agreement, all as of the date first above written.
Company: THE CENTRIS GROUP, INC.
-------
By /S/ DAVID L. CARGILE
---------------------
DAVID L. CARGILE
President and Chief Executive Officer
Executive:
---------
/S/ MARK A. CARNEY
------------------
MARK A. CARNEY
14
<PAGE>
<PAGE>
EXHIBIT 10.3
SEVERANCE AGREEMENT
THIS AGREEMENT is made and entered into as of this 23rd day of July,
1997, by and between THE CENTRIS GROUP, INC., a Delaware corporation (the
"Company"), and CHARLES M. CAPORALE ("Executive").
RECITALS
WHEREAS, the Executive is currently employed by the Company and is
considered a key employee of the Company; and
WHEREAS, the Company desires to retain the services of the Executive;
and
WHEREAS, the Company and the Executive desire to set forth the amounts
payable and benefits to be provided by the Company to the Executive in the event
of a termination of the Executive's employment with the Company under the
circumstances set forth herein after the happening of a Change in Control (as
defined herein);
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, and intending to be legally bound hereby, the
parties agree as follows:
AGREEMENT
1. Continued Employment. In reliance upon the promises of the Company
---------------------
hereinafter contained, the Executive agrees that, for a period of not less than
six (6) months commencing on the date set forth above, and subject to reasonable
absences for illness, holiday and vacation or personal leave of absence in
1
<PAGE>
accordance with the Company's policies and practices in effect on the date
hereof, the Executive will continue his employment with the Company and shall
devote his best efforts to such duties as may be assigned to him by the Company
from time to time.
2. Other Severance Arrangements. Except to the extent specifically set
----------------------------
forth herein, in the event of the termination of the Executive's employment with
the Company, the Executive shall be entitled to receive any Company benefits
payable under any employee benefit plan, program, policy or arrangement as such
may then be in effect, including all such termination arrangements with
Executive that may be described in any employment agreement.
3. Effective Date. This Agreement shall be effective as of the date
---------------
first above written ("Effective Date") and shall continue and remain in full
force and effect until the termination of Executive's employment with the
Company, unless this Agreement is earlier terminated by the parties in writing.
The completion of six (6) months of employment with the Company by the Executive
as set forth in Section 1 shall not be a condition precedent to the
effectiveness of this Agreement or to the payments of amounts or provision of
benefits hereunder in the event the Executive's employment with the Company is
terminated under the circumstances described in Section 4(b).
4. Termination of Employment.
-------------------------
(a) Events Requiring No Payments Under Section 5: In the event
the Executive's employment with the Company is terminated under any of the
following circumstances, no payments shall be or become due and owing, and the
Company shall have no other obligations under Section 5 of this Agreement:
(i) By either party for any reason prior to the
happening of a Change in Control (as hereinafter defined);
(ii) By either party for any reason at any time more
than two (2) years after a Change in Control;
2
<PAGE>
(iii) By the Company at any time, whether prior to,
contemporaneous with or subsequent to a Change in Control, for reason of
"Cause" (as hereinafter defined) or due to the request or demand of any
regulatory authority; or
(iv) By the Executive at any time, whether prior to,
contemporaneous with or subject to a Change in Control, upon his
retirement or resignation for reasons other than "Good Reason" (as
hereinafter defined).
Notwithstanding the foregoing, nothing contained in this Section 4(a) shall
prevent the Executive or his spouse, heirs, estate or personal representative
from receiving any amounts payable under any other plan, program, policy or
arrangement that is not a severance plan, program, policy or arrangement.
(b) Events Requiring Payments Under Section 5: In the event
the Executive's employment with the Company is terminated under any of the
following circumstances set forth in (i) and (ii) below, the Company shall make
the payments and provide the benefits as set forth in Section 5:
(i) By the Company, contemporaneously with or
within two (2) years after the happening of a Change in Control, for any
reason other than (1) for Cause or (2) due to the request or demand of any
regulatory authority; or
(ii) By the Executive, contemporaneously with or
within two (2) years after a Change in Control, for Good Reason.
(c) For purposes of this Agreement, the term "Cause" shall
mean (i) the commission by Executive of any material act of fraud or dishonesty;
(ii) a final conviction of Executive of a felony in either a state or federal
court proceeding; (iii) intentional and willful failure by Executive to
3
<PAGE>
faithfully carry out his duties and responsibilities as an employee of the
Company, after reasonable notice in writing to and discussion thereafter with
Executive; and (iv) Executive engaging in activities which place Executive in a
direct or indirect conflict with the Company or its interests. The decision as
to the existence of "Cause," as described in (i), (iii) and (iv) above, shall be
determined by a majority of the Company's nonemployee Directors; provided,
however, if there is a change in the composition of the Board such that those
persons who served as nonemployee Directors on the Effective Date of this
Agreement represent less than fifty percent (50%) of the total number of
nonemployee Directors, then "Cause" shall be determined by use of the Settlement
of Disputes provisions set forth in Section 8 of this Agreement.
(d) For purposes of this Agreement, the term "Good Reason"
shall mean the following five (5) events; provided, however, that Executive may
waive in writing his objection to the occurrence of any such event, in which
case such event will no longer constitute "Good Reason":
(i) Any material breach by the Company of its
obligations contained in this Agreement;
(ii) The assignment to the Executive of any duties
inconsistent with the status of his position with the Company as such
duties and position existed on the day immediately preceding the happening
of a Change in Control, or an alteration in the nature or status of the
Executive's duties and responsibilities that renders the Executive's
position to be of less dignity, responsibility or scope from that which
existed on the day immediately preceding the happening of a Change in
Control; provided, however, it shall not be an event of Good Reason if the
Executive is assigned additional duties for the Company or any affiliate
or subsidiary of the Company which are not inconsistent with the duties
described in Section 1 hereof so long as the aggregate of all duties
assigned to the Executive in connection with his service with the Company,
its affiliates or subsidiaries do not require the Executive to devote, on
a consistent and sustained basis, substantially more time than other
senior level executives of the Company are required to devote to their
duties;
4
<PAGE>
(iii) A reduction by the Company in the
Executive's annual base salary as was in effect on the day immediately
preceding the happening of a Change in Control or as the same may be
increased from time to time;
(iv) The failure of the Company to continue in
effect of the benefits enjoyed by the Executive under the Company's
1988 Employee Stock Plan or its 1991 Employee Stock Option Plan or under
the Company's Incentive Compensation Program, or any other compensation
plan, program or arrangement, or any of the Company's pension,
retirement, profit sharing, savings, life insurance, medical,
health-and-accident, disability or other employee benefit plans, programs
or arrangements as they existed on the day immediately preceding the
happening of a Change in Control, or the failure of the Company to
continue the Executive's participation therein; or the failure by the
Company to provide the Executive with the number of paid vacation days to
which he is entitled on the basis of years of service and position with
the Company in accordance with the Company's normal vacation policy, or
the failure of the Company to continue or if the Company adversely changes
or reduces other specific contractual benefits or perquisites provided to
Executive as they existed on the day immediately preceding the happening
of a Change in Control, including, but not limited to, providing an
automobile or an automobile allowance, club memberships, and dues for
professional associates for Executive;
(v) The assignment of the Executive to an
office which is located more than 50 miles from the office at which the
Executive was primarily performing his duties on the day immediately
preceding the happening of a Change in Control.
5
<PAGE>
(e) For purposes of this Agreement, a "Change in Control"
shall mean the occurrence, after the Effective Date hereof, of any of the
following events if such events are not approved by the Board of Directors of
the Company prior to their occurrence;
(i) At any time during the term of this Agreement, any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") and the regulations
of the Securities and Exchange Commission (the "SEC") thereunder, each as
in effect on the Effective Date of this Agreement (including any such
persons that may be deemed to be acting in concert with respect to the
Company or the acquisition, ownership or voting of Company securities)
becomes, directly or indirectly, the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act and the regulations of the SEC
thereunder, each as in effect on the Effective Date of this Agreement) of
outstanding securities of the Company representing 15% or more of the
combined voting power of the Company's then outstanding securities. For
purposes of this subsection (i) of Section 4(e) of the Agreement, a person
becomes, directly or indirectly, the beneficial owner of outstanding
securities of the Company representing 15% or more of the combined
voting power of the Company's outstanding securities when such person,
together with all affiliates and associates of such person, acquires
beneficial ownership of, in the aggregate, a number of voting shares of
the Company equal to 1% or more of the voting shares then outstanding,
and thereupon or thereafter beneficially owns (as defined in the
aforenoted Rule 13d-3 under the Exchange Act) 15% or more of the voting
shares of the Company then outstanding; provided, however, that the
concept of any person becoming the owner of 15% or more of the combined
voting shares shall not include: (A) the Company, any wholly owned
subsidiary of the Company, any employee benefit plan of the Company or of
a subsidiary of the Company, or any person holding voting shares for or
pursuant to the terms of any such employee benefit plan; or (B) any person
if such person would not otherwise be a 15% stockholder but for a
reduction in the number of outstanding voting shares resulting from a
stock repurchase program or other similar plan instituted by the Company
or from a self-tender offer of the Company, which plan or tender offer
6
<PAGE>
commenced on or after the Effective Date of this Agreement; provided,
however, that the concept of becoming the owner of 15% or more of the
combined voting shares shall include such beneficial owner after the
first date upon which (x) such person, since the date of commencement of
such plan or tender offer, shall have acquired beneficial ownership of,
in the aggregate, a number of voting shares of the Company equal to 1% or
more of the voting shares then outstanding, and (y) such person, together
with all affiliates and associates of such person, shall beneficially own
15% or more of the voting shares of the Company then outstanding.
In calculating the percentage of the person for purposes of this
subsection, voting shares that are beneficially owned by such person shall
be deemed outstanding, and voting shares that are not beneficially owned
by such person and that are subject to issuance upon the exercise or
conversion of outstanding conversion rights, exchange rights, rights
(other than rights), warrants or options shall not be deemed outstanding.
The Board of Directors shall have the absolute authority to make a final
determination as to whether any Person is or is not to be considered a 15%
Stockholder for purposes of this Agreement, which determination shall be
conclusive for all purposes and shall be binding upon the Company and
upon the Executive.
(ii) At any time during the term of this Agreement the
composition of the Board of Directors of the Company is changed such that
persons who were directors of the Company as of the Effective Date, or
persons nominated or elected as directors by a majority of such persons
who were directors as of the Effective Date, do not continue to comprise
a majority of the members of such Board of Directors of the Company;
(iii) At any time during the term of this Agreement the
stockholders of the Company approve a merger or consolidation of the
Company with, or a reorganization transaction involving the Company and,
any other entity, other than a merger, consolidation or reorganization
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) at least 50% of the combined voting power of the voting
7
<PAGE>
securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation; or
(iv) At any time during the term of this Agreement the
stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of more
than 50% of its consolidated assets.
5. Obligations of the Company Upon Termination of Employment. Upon
------------------------------------------------------------
termination of Executive's employment with the Company under the circumstances
set forth in Section 4(b), the Executive shall be entitled to receive,
notwithstanding such termination, the following payments and to be provided the
following benefits:
(a) Salary and Bonus: Subject to the limitations set forth in
Section 7 hereof, the Company shall pay to the Executive that amount which is
equal to his regular base salary, at the rate then in effect, for a period of
two (2) years, plus a bonus in an amount which shall be equal to the largest
cash bonus actually received by Executive during his term of employment with the
Company; provided, however, that if Executive shall have entered into an
Employment Agreement with the Company which is in effect at the time of
Executive's termination, then and in that event the Company and Executive hereby
agree that upon Executive's termination Executive shall be entitled to receive
either (i) the salary and bonus termination payments under this Section 5(a), or
(ii) the salary and bonus terminations payments provided for in such Employment
Agreement, whichever salary and bonus termination payment is the greater; but
under no conditions shall Executive be entitled to receive upon termination both
the salary and bonus termination payments under this Severance Agreement and the
salary and bonus termination payments under any such Employment Agreement.
(b) Method of Payment: The payments due to Executive under Section
5(a) of this Agreement shall be made as follows:
8
<PAGE>
(i) The Company shall pay to the Executive his
regular base salary in installments consistent with the Company's payroll
practices then in effect, or in a single lump sum payment, whichever
method is selected by Executive, in his sole discretion;
(ii) The Company shall pay to Executive the bonus
payments in a single lump sum; and
(iii) Any lump sum payments due to Executive
shall be paid to Executive on the Effective Date of his termination of
employment.
(c) Other Benefits: The Company shall continue in force for
Executive for a period of two (2) years after Executive's termination the life
insurance, medical, health-and-accident and disability benefit plans or programs
then in effect on the date of Executive's termination from the Company;
provided, however, that such other benefits as are set forth in this Section
5(c) shall not be required to be available to Executive if subsequent employment
by Executive with another employer offers to Executive similar plans or programs
in which the benefits equal or exceed the benefits which Executive could receive
under the Company's plans or programs as provided herein.
6. No Duty to Mitigate. The Executive shall not be required to mitigate
-------------------
the amount of any payment required hereunder by seeking other employment or
otherwise, nor shall the amount paid hereunder be reduced or offset by any
compensation earned or received by the Executive as a result of employment with
another employer, self-employment or any amount received from any other plan,
program, policy or arrangement of the Company.
7. Nonapplicability of Excise Tax. The parties intend that this
---------------------------------
Agreement shall govern the rights an obligations of the parties with respect to
severance payments payable upon a termination of Executive's employment with the
Company, and that the excise tax as now provided in Section 280G of the Internal
Revenue Code shall not be applicable to payments under this Agreement.
9
<PAGE>
Accordingly, the parties agree that the aggregate amount which shall be paid to
Executive under this Agreement shall be $1.00 less than that amount which would
make such payment to Executive an "excess parachute payment" under the
provisions of Sections 280G of the Internal Revenue Code, and to which an excise
tax would be applicable.
8. Settlement of Disputes.
----------------------
(a) It is specifically agreed that any controversy or dispute
between the parties to this Agreement involving the construction,
interpretation, application, performance or breach of the terms, covenants or
conditions of this Agreement or in any way arising under this Agreement shall,
on demand of one of the parties by written notice hereto served on the other in
the manner prescribed in Section 9(a) hereof, be determined pursuant to the
general reference procedures prescribed by California Code of Civil Procedure
Sections 638(1), et seq., as they may be amended from time to time, by a retired
or former judge of the Superior Court for the County of Orange, State of
California. The parties intend this general reference agreement to be
specifically enforceable in accordance with said Section 638(1).
(b) The reference may be commenced by any party hereto by the
filing in the Superior Court of the State of California for the County of Orange
of a petition or a motion for a general reference proceeding.
(c) The petition or motion may designate as a sole referee a
retired judge working with JAMS who is acceptable to that party. If the parties
to the reference proceeding are unable to mutually agree upon a referee, the
Presiding Judge or any judge of the Orange County Superior Court to whom the
matter is assigned shall appoint a retired or former Orange County Superior
Court Judge from those listed with JAMS as available to act as a referee.
(d) The petition and any opposition or response thereto shall
recite in a clear and meaningful manner the factual basis of the controversy
between the parties and identify the issues to be submitted to the referee for
decision.
10
<PAGE>
(e) The parties acknowledge that this Agreement is
specifically enforceable and that the decision by the referee is tantamount to a
judgment by a trial court (CCP ss. 644) and is subject to review in accordance
with CCP ss. 645, and that any judgment rendered in the trial court is
appealable in the same manner as any other trial court judgment.
(f) The parties may agree on limited discovery. However, in
the absence of an agreement, each party may: (i) take up to three depositions
not totaling more than six hours cumulatively; (ii) propound one set of
interrogatories, not to exceed 20 single questions; (iii) serve not more than 10
requests for admissions; and (iv) propound not to exceed 15 requests to produce
documents, all as may be "reasonable," as measured by the circumstances and
amount in dispute between the parties. Any disagreements between the parties
regarding discovery matters shall be resolved by the referee.
(g) The hearing shall be held within 60 days after the referee
is selected. The referee shall issue a written memorandum of decision setting
forth his findings of fact and conclusions of law.
9. Miscellaneous.
-------------
(a) Notices: All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been duly given if delivered personally or sent by certified
mail, return receipt requested, first-class postage prepaid, to the parties to
this Agreement at the following addresses:
If to the Company: The Centris Group, Inc.
650 Town Center Drive, Suite 1600
Costa Mesa, California 92626
Attention: Chief Executive Officer
If to Executive: Charles M. Caporale
181 Rumson Road
Rumson, New Jersey 07760
11
<PAGE>
or to such other address as either party to this Agreement shall have last
designated by notice to the other party. All such notices and communications
shall be deemed to have been received on the earlier of the date of receipt or
the third business day after the date of mailing thereof.
(b) Binding Effect; Benefits: This Agreement shall be binding
upon and inure to the benefit of the parties to this Agreement and their
respective successors and assigns. Nothing in this Agreement, express or
implied, is intended or shall be construed to give any person, other than the
parties to this Agreement or their respective successors or assigns, any legal
or equitable right, remedy or claim under or in respect of any agreement or any
provision contained herein.
(c) Waiver: Either party hereto may by written notice to the
other (i) extend the time for the performance of any of the obligations or other
actions of the other under this Agreement; (ii) waive compliance with any of the
conditions or covenants of the other contained in this Agreement; and (iii)
waive or modify performance of any of the obligations of the other under this
Agreement. Except as provided in the preceding sentence, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties, covenants
or agreements contained herein. The waiver by any party hereto of a breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any preceding or succeeding breach, and no failure by either party to exercise
any right or privilege hereunder shall be deemed a waiver of such party's rights
or privileges hereunder or shall be deemed a waiver of such party's rights to
exercise the same any subsequent time or times hereunder.
(d) Amendment: This Agreement may be terminated,
amended, modified or supplemented only by a written instrument executed
by the Executive and the Company.
12
<PAGE>
(e) Nonassignability: Neither this Agreement nor any right,
remedy, obligation or liability arising hereunder or by reason hereof shall be
assignable by either the Company or the Executive without the prior written
consent of the other party.
(f) Governing Law: This Agreement shall be governed by and
construed in accordance with the laws of the State of California, regardless
of the law that might be applied under principles of conflict of laws.
(g) Section and Other Headings: The section and other
headings contained in this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of this Agreement.
(h) Withholding of Taxes: The Company may withhold from
amounts required to be paid to the Executive hereunder any applicable federal,
state, local and other taxes with respect thereto; provided, however, that the
Company shall promptly pay over the amounts so withheld to the appropriate
taxing bodies and provide to the Executive appropriate statements on forms
proscribed for such purposes on the amounts so withheld.
(i) Severability: If, for any reason, any provision of this
Agreement is held invalid, such invalidity shall not affect any other provision
of this Agreement not held so invalid, and each such other provision shall, to
the full extent consistent with law, continue in full force and effect. If any
provision of this Agreement shall be held invalid in part, such invalidity shall
in no way affect the rest of such provision not held so invalid, and the rest of
such provision, together with all other provisions of this Agreement, shall to
the full extent consistent with law continue in full force and effect. If this
Agreement is held invalid or cannot be enforced, then to the full extent
permitted by law, any prior agreement on the subject matter of this Agreement
between the Company (or any predecessor thereof) and the Executive shall be
deemed reinstated as if this Agreement had not been executed.
13
<PAGE>
(j) Counterparts: This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of
which together shall be deemed to be one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by a duly authorized officer, and the Executive has signed this
Agreement, all as of the date first above written.
Company: THE CENTRIS GROUP, INC.
-------
By /S/ DAVID L. CARGILE
--------------------
DAVID L. CARGILE
President and Chief Executive Officer
Executive:
---------
/S/ CHARLES M. CAPORALE
-----------------------
CHARLES M. CAPORALE
14
<PAGE>
<PAGE>
EXHIBIT 11
The Centris Group, Inc.
Computation of Earnings Per Share
The computation of per share income is based upon the weighted average number of
common and common equivalent shares outstanding during each of the quarters and
nine-month periods ended September 30 as follows:
(Dollars in Thousands)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30 September 30
------------ ------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Income $4,026 $3,709 $11,434 $11,102
====== ====== ======= =======
Weighted average shares outstanding during the period 5,990 5,878 5,972 5,850
Common stock equivalent shares 146 109 126 120
------ ------ ------- -------
Common and common stock equivalent shares
outstanding for purposes of calculating income
per share 6,136 5,987 6,098 5,970
Incremental shares to reflect full dilution --- 39 15 28
--- ------ ------ -------
Total shares for purpose of calculating fully
diluted income per share 6,136 6,026 6,113 5,998
===== ===== ===== =====
Net income per common and common
equivalent share $0.66 $ 0.62 $1.88 $ 1.86
===== ====== ===== ======
</TABLE>
<PAGE>
<PAGE>
EXHIBIT 15
Independent Auditors' Review Report
-----------------------------------
The Board of Directors and Shareholders
The Centris Group, Inc.:
We have reviewed the condensed consolidated balance sheet of The Centris Group,
Inc. (formerly US Facilities Corporation) and subsidiaries as of September 30,
1997, and the related condensed consolidated income statements for the quarters
and nine-month periods ended September 30, 1997 and 1996, and condensed
consolidated statements of cash flows for the nine-month periods ended September
30, 1997 and 1996. These condensed consolidated financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the condensed consolidated financial statements referred to above for
them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of The Centris Group, Inc. (formerly
US Facilities Corporation) and subsidiaries as of December 31, 1996, and the
related consolidated income statement, statements of stockholders' equity and
cash flows for the year then ended (not presented herein); and in our report
dated February 4, 1997, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth in
the accompanying condensed consolidated balance sheet as of December 31, 1996,
is fairly stated, in all material respects, in relation to the consolidated
balance sheet from which it has been derived.
/S/ KPMG PEAT MARWICK LLP
- -------------------------
Los Angeles, California
October 27, 1997
<PAGE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<DEBT-HELD-FOR-SALE> 0
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 211,996
<CASH> 39,548
<RECOVER-REINSURE> 18,309
<DEFERRED-ACQUISITION> 4,697
<TOTAL-ASSETS> 323,422
<POLICY-LOSSES> 112,626
<UNEARNED-PREMIUMS> 31,097
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 33,125
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 323,422
116,119
<INVESTMENT-INCOME> 8,114
<INVESTMENT-GAINS> 10,022
<OTHER-INCOME> 23,910
<BENEFITS> 92,220
<UNDERWRITING-AMORTIZATION> 33,954
<UNDERWRITING-OTHER> 15,563
<INCOME-PRETAX> 16,428
<INCOME-TAX> 4,994
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,434
<EPS-PRIMARY> 1.88
<EPS-DILUTED> 1.87
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
