<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
----------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
X For the quarterly period ended March 31, 1996
- ---
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
- ---
Commission File Number 0-16748
------------------------------
INTERCARGO CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 36-3414667
(State or other jurisdiction (IRS Employer
of incorporation) Identification No.)
1450 East American Lane, 20th Floor, Schaumburg, Illinois 60173
(Address of principal executive office and zip code)
Registrant's telephone number, including area code: (847) 517-2510
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Class Outstanding at May 14, 1996
- -------------------------- ---------------------------
Common Stock, $1 par value 7,640,981 shares
<PAGE> 2
INTERCARGO CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1996
INDEX
<TABLE>
<CAPTION>
PAGE
PART I. FINANCIAL INFORMATION NUMBER
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets at March 31, 1996
(unaudited) and December 31, 1995 3
Consolidated Statements of Income for the three
months ended March 31, 1996 (unaudited) and
March 31, 1995 (unaudited) 4
Consolidated Statements of Stockholders' Equity
for the three months ended March 31, 1996 (unaudited)
and March 31, 1995 (unaudited) 5
Consolidated Statements of Cash Flows for the three
months ended March 31, 1996 (unaudited) and
March 31, 1995 (unaudited) 6
Notes to Consolidated Financial Statements (unaudited) 7
Summary Statement of Income of Kingsway Financial Services,
Inc. for the three months ended March 31, 1996 (unaudited) and
March 31, 1995 (unaudited) 8
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Position 9
PART II. OTHER INFORMATION 11
SIGNATURES 12
EXHIBITS 13
</TABLE>
2
<PAGE> 3
INTERCARGO CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
----------- -------------
(unaudited)
<S> <C> <C>
ASSETS
Investments
Fixed maturities at fair value $ 48,798 44,769
Equity securities at fair value 2,817 3,474
Investee at cost plus cumulative undistributed earnings 12,150 11,898
-------- -------
Total investments 63,765 60,141
Cash and cash equivalents 10,540 16,478
Premiums receivable 17,410 14,920
Accrued investment income 788 804
Deferred policy acquisition costs 5,208 4,898
Reinsurance recoverable on loss and loss expense:
Paid claims 892 1,192
Unpaid claims 2,632 2,964
Prepaid reinsurance premiums 1,974 2,089
Notes receivable 313 349
Income tax recoverable 672 1,092
Deferred income tax 1,362 822
Equipment, at cost less accumulated depreciation 1,975 1,738
Goodwill 2,381 2,468
Other assets 6,196 6,211
-------- -------
Total assets $116,108 116,166
======== =======
LIABILITIES
Losses and loss adjustment expenses $ 35,367 36,293
Unearned premiums 19,252 17,691
Funds held by Company 484 748
Supplemental duty deposits 2,547 2,669
Accrued expenses and other liabilities 5,501 5,409
Notes payable 9.735 9,735
-------- -------
Total liabilities 72,886 72,545
-------- -------
Commitments and Contingencies -- --
STOCKHOLDERS' EQUITY
Common stock--$1 par value; authorized 20,000,000 shares; issued and
outstanding, 7,640,981 shares in 1996 and in 1995 7,641 7,641
Additional paid-in capital 24,104 24,104
Net unrealized loss of foreign currency translation (1,170) (1,179)
Net unrealized gain (loss) on available - for sale securities (269) 567
Retained earnings 12,916 12,488
-------- -------
Total stockholders' equity 43,222 43,621
-------- -------
Total liabilities and stockholders' equity $116,108 116,166
======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
INTERCARGO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------
1996 1995
------ ------
REVENUES
<S> <C> <C>
Insurance premium income $14,740 21,516
Net investment income 990 1,337
Commission income 166 123
Other income 7 190
------- ------
Total 15,903 23,166
LOSSES AND EXPENSES
Losses and loss adjustment expenses 7,292 11,531
Policy acquisition costs 4,610 5,156
Other underwriting expenses 3,013 3,500
Interest expense 217 219
------- ------
Total 15,132 20,406
Operating income 771 2,760
------- ------
Income tax expense 207 685
------- ------
Net income before equity in net income of investee 564 2,075
Equity in net income of investee 552 -
------- ------
Net Income $ 1,116 2,075
======= ======
Average number of shares of common
stock and equivalents outstanding 7,663 7,657
NET INCOME PER SHARE $ 0.15 0.27
======= ======
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
INTERCARGO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Net Net
Unrealized Unrealized
(Loss) Gain
Number Additional On Foreign (Loss)
of Common Paid-in Currency on Retained Stockholders'
Shares Stock Capital Translation Investments Earnings Equity
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995 7,641 $7,641 24,104 (1,179) 567 12,488 43,621
Net Income -- -- -- -- -- 1,116 1,116
Change in foreign currency translation -- -- -- 9 -- -- 9
Change in unrealized gain (loss) on
equity securities -- -- -- -- (836) -- (836)
Dividends paid to stockholders -- -- -- -- -- (688) (688)
------ ------ ---------- ----------- ----------- -------- -------------
Balance at March 31, 1996 7,641 $7,641 24,104 (1,170) (269) 12,916 43,222
====== ====== ========== =========== =========== ======== =============
Balance at December 31, 1994 7,641 $7,641 24,104 (2,002) (1,546) 11,724 39,921
Net income -- -- -- -- -- 2,075 2,075
Change in foreign currency translation -- -- -- (59) -- -- (59)
Change in unrealized gain (loss) on
marketable securities -- -- -- -- 796 -- 796
Dividends paid to stockholders -- -- -- -- -- (688) (688)
------ ------ ---------- ----------- ----------- -------- -------------
Balance at March 31, 1995 7,641 $7,641 24,104 (2,061) (750) 13,111 38,008
====== ====== ========== =========== =========== ======== =============
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
INTERCARGO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three months ended March 31,
------------------------------
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,116 2,075
Adjustments to reconcile net income to net cash
provided from operating activities:
Realized Gains (171) (15)
Depreciation and amortization 185 285
Amortization of premiums (discounts) on
investments 32 (268)
Undistributed earnings of affiliate (552) -
Decrease (increase) in premiums receivable (2,490) 246
Decrease (increase) in deferred policy
acquisition costs (310) 12
Decrease (increase) in reinsurance recoverables 747 (53)
Change in income tax accounts 311 965
Increase (decrease) in liability for losses and loss
adjustment expenses (926) 2,730
Increase (decrease) in unearned premiums 1,561 (739)
Increase (decrease) in funds held (265) 574
Decrease in supplemental duty deposits (122) 5
Other, net 131 (1,773)
-------- -------
Net cash provided from (used in) operating activities (753) 4,044
CASH FLOWS FROM INVESTING ACTIVITIES:
Fixed maturities:
Purchases (11,333) (7,051)
Sales 4,106 65
Maturities and calls 1,660 3,562
Equity securities:
Purchases - (854)
Sales 514 967
Calls - -
Net sales (purchases) of short-term investments 510 (6,417)
Sale of Kingsway common stock 412 -
Purchase of property and equipment, net (366) (252)
-------- -------
Net cash used in investing activities (4,497) (9,980)
CASH FLOWS USED IN FINANCING ACTIVITIES:
Proceeds from notes payable - 793
Dividends paid to stockholders (688) (688)
-------- -------
Net cash used in financing activities (688) 105
-------- -------
Net increase (decrease) in cash and cash equivalents 5,938 (5,831)
Cash and cash equivalents:
Beginning of the period 16,478 19,011
-------- -------
End of the period $10,540 13,180
======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE> 7
INTERCARGO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Basis of Presentation
The consolidated financial statements of the Company have been prepared
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and note disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. The Company believes
that the accompanying consolidated financial statements contain all
adjustments (consisting of normal recurring accruals) necessary to present
fairly the Company's consolidated financial position as of March 31, 1996,
and December 31, 1995, and the consolidated results of operations and the
consolidated cash flows for the three month periods ended March 31, 1996, and
1995.
The results of operations for the three month period ended March 31, 1996,
are not necessarily indicative of the results to be expected for the full
year.
These consolidated unaudited interim financial statements should be read in
conjunction with the financial statements and notes thereto contained in the
December 31, 1995 Form 10-K filed by the Company.
2. Earnings per Share
Earnings per share are computed based on the weighted average number of
shares outstanding which includes common stock equivalents (if dilutive)
relating to outstanding options.
The Company's common stock at March 31, 1996, consists of 7.6 million shares
outstanding $1.00 par value per share. The Company also has 191 thousand
outstanding stock options.
3. Long Term Debt
The Company's $10.0 million bank line of credit had an outstanding balance
amounting to $9.7 million at March 31, 1996 and December 31, 1995.
7
<PAGE> 8
Kingsway Financial Services, Inc.
Summary Statement of Income
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three months ended March 31,
------------------------------
1996 1995
------- -----
<S> <C> <C>
REVENUES:
Net premiums earned $11,453 7,580
Other revenues 1,177 642
------- -----
Total revenues 12,630 8,222
EXPENSES:
Claims incurred 7,409 5,203
Other expenses 3,352 2,305
------- -----
Total expenses 10,761 7,508
Income before income taxes 1,869 714
Income taxes 704 322
------- -----
NET INCOME $ 1,165 392
======= =====
</TABLE>
8
<PAGE> 9
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
POSITION
OPERATING RESULTS
Beginning in December 1995, the Company sold 660,000 shares of Kingsway
Financial Services Inc. stock and Kingsway sold additional shares to raise
capital. As a result, Kingsway is no longer a wholly owned subsidiary and its
results of operations and financial position are not consolidated at March 31,
1996. Prior year amounts have not been restated and include Kingsway on a
consolidated basis.
Consolidated earned premium for the first quarter of 1996 decreased 31.5% to
$14.7 million compared to a 37.4% increase to $21.5 million for the comparable
period in 1995. Included in the results for 1995 is $7.6 million relating to
Kingsway. Earned premium for U.S. and U.K. operations increased $805 thousand
or 5.8% in the first quarter of 1996 as compared to a 38.2% increase to $13.9
million for first quarter 1995.
Consolidated net investment income for the first quarter of 1996 declined 26.0%
to $990 thousand as compared to a 16.3% increase to $1.3 million for the first
quarter of 1995. Included in the results for 1995 is $499 thousand relating to
Kingsway. Net investment income from U.S. and U.K. operations increased $101
thousand or 11.4% in the first quarter of 1996 over 1995. This increase is
attributable to the higher average invested balances in the three month period
ended March 31, 1996 compared to the comparable period in 1995.
Consolidated other income declined 96.3% to $7 thousand in the first quarter as
compared to a decrease of 37.1% to $190 thousand in the first quarter of 1995.
Included in the 1995 results is $142 thousand of premium financing income
relating to Kingsway.
Consolidated losses and loss adjustment expenses for the first quarter of 1996
declined 36.8% to $7.3 million as compared to an increase of 32.0% to $11.5
million for the first quarter of 1995. The 1995 results include $5.2 million
relating to Kingsway. Losses and loss adjustment expenses for U.S. and U.K.
operations for first quarter 1996 increased $964 thousand or 15.2%. This
increase is a result of using more conservative loss ratios.
Consolidated policy acquisition costs for the first quarter of 1996 decreased
$546 thousand or 10.6% as compared to an increase of $540 thousand or 11.7% for
the comparable period of 1995. Included in the results for 1995 is $1.3
million relating to Kingsway. U.S. and U.K. policy acquisition costs increased
$734 thousand to $4.6 million in the first quarter of 1996. This increase is
attributable to increased premium volume and a lower deferral rate due to the
more conservative loss ratios.
Consolidated other underwriting expenses decreased 13.9% to $3.0 million in the
first quarter of 1996. This compares to an increase of 20.1% in the first
quarter of 1995. The 1995 results include $959 thousand relating to Kingsway.
U.S. and U.K. other underwriting expenses increased $498 thousand during the
three month period ended March 31, 1996. This increase is consistent with the
increase in premium volume.
Consolidated net income for the first quarter of 1996 decreased 46.2% to $1.1
million . This compares to an increase of 141.4% to $2.1 million in the first
quarter of 1995. Earnings per share were $0.15 for the first quarter of 1996
as compared to $0.27 for the first quarter of 1995. There were 7.7 million
shares outstanding for both periods for purposes of computing net income per
share.
9
<PAGE> 10
LIQUIDITY AND CAPITAL RESOURCES
The Company's total assets at March 31, 1996 remain unchanged from December 31,
1995 at $116 million. Stockholders' equity has decreased slightly to $43.2
million during the first quarter of 1996 from the $43.6 million at December 31,
1995. The net income from operations was more than offset by the decrease in
the investment portfolio and the dividend payment. The Company declared and
paid a dividend of $0.09 per share on March 15, 1996 to holders of record as of
March 13, 1996.
The Company's operations generated cash flow of ($753 thousand) and $4.0
million for the three month periods ended March 31, 1996 and 1995,
respectively. To supplement existing working capital, the Company utilizes a
bank line of credit of $10.0 million. This line is used to fund expansion and
for general corporate purposes.
10
<PAGE> 11
RESULTS BY LINE
The following table illustrates the premium earned (dollars in thousands) for
each major line of business for the three month periods ended March 31, 1996
and 1995. It also sets forth the percentage of total premium for each period
as well as the combined ratios by line and in the aggregate for the Company.
U.S. AND U.K. OPERATIONS
<TABLE>
<CAPTION>
OTHER
BOND MARINE E&O PROPERTY & CASUALTY TOTAL
Earned Combined Earned Combined Earned Combined Earned Combined Earned Combined
Premium Ratio Premium Ratio Premium Ratio Premium Ratio Premium Ratio
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Three months ended March 31,
1996 $ 6,756 87.2 $ 6,151 110.7 $ 733 155.4 $1,100 125.3 $14,740 103.2
1995 6,199 83.0 5,586 95.8 917 94.9 1,233 90.1 13,935 89.6
Year ended December 31,
1995 $24,700 83.5 $20,808 124.7 $3,069 160.3 $5,498 146.8 $54,075 110.2
1994 23,019 80.4 14,996 114.2 2,377 195.4 3,362 106.3 43,754 100.2
1993 19,739 104.4 12,154 90.8 1,681 169.8 772 141.5 34,346 103.6
1992 17,720 102.3 10,773 80.9 2,090 126.8 566 163.7 31,149 97.7
1991 15,415 92.2 8,062 92.2 2,284 161.2 117 44.4 25,878 98.1
</TABLE>
11
<PAGE> 12
RESULTS BY LINE (CONT.)
Net earned premium on the Company's U.S. and U.K. operations for the first
three months of 1996 has increased $805 thousand or 5.8% over the comparable
period in 1995. Marine earned premium tallied the largest increase at $565
thousand, followed by bond earned premium at $557 thousand. Professional
liability and other property and casualty earned premium together decreased
$317 thousand. Management attributes the decrease to the effects of rate
adjustments and closer underwriting.
The combined ratios for all lines of business have increased in the first
quarter of 1996 over the same period for 1995. The combined ratio increases as
more conservative loss ratios are used and as limitations are placed on the
deferral of certain underwriting expenses.
12
<PAGE> 13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings - There have been no material developments in the
legal proceedings addressed in the Company's Form 10-K or new legal
proceedings during the fiscal quarter covered by this report on
form 10-Q.
Item 2. Changes in Securities - Not Applicable.
Item 3. Defaults Upon Senior Securities - Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders - Not Applicable.
Item 5. Other Information - Not Applicable.
Item 6(a) Exhibits - See Exhibit Index immediately following the signature
page.
Item 6(b) Reports on Form 8-K - The Company filed a Form 8-K dated January 2,
1996 reporting its sale of Kingsway shares pursuant to Item 5
therein.
13
<PAGE> 14
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.
Date: May 14, 1996.
INTERCARGO CORPORATION
(Registrant)
By: /s/ James R. Zuhlke
--------------------------------------
James R. Zuhlke
Chairman of the Board
President and Chief Executive Officer
By: /s/ Lawrence P. Goecking
--------------------------------------
Lawrence P. Goecking
Treasurer and Chief Financial Officer
14
<PAGE> 15
EXHIBIT INDEX
10 Employment agreement between the Company and Robert S. Kielbas dated
February 16, 1996.
11 Computation of Earnings per share.
27 Financial Data Schedule
15
<PAGE> 1
EXHIBIT 10
16 February 1996
Mr. Robert S. Kielbas
1610 Galloway Drive
Barrington, IL 60010
Dear Mr. Kielbas:
1. SECONDMENT IN HONG KONG
This letter confirms the terms and conditions of your secondment to the
Intercargo Insurance Company H.K. Limited, the "Away Base Office," as Chief
Executive Officer and President.
2. SECONDMENT PERIOD
The secondment will take place from April 1, 1996, subject to you securing
the appropriate Hong Kong Visas and subject to operational requirements, and
will continue through March 31, 1998. The expression "Secondment Period" in
this letter means the period described herein.
3. TO WHOM RESPONSIBLE
You will be responsible to the Chairman of the Board and President of
Intercargo Corporation in the United States, or to such other official as he
may nominate.
4. EMPLOYMENT
Your employment while in Hong Kong will be by Intercargo Insurance Company
H.K. Limited and your terms and conditions of employment will be as specified
by this letter. It is a condition of secondment that you possess all necessary
residence papers and that you are medically fit to reside in Hong Kong.
5. AWAY BASE REMUNERATION
Your Away Base Salary will be paid in Hong Kong dollars at a rate of
$1,500,000 per annum inclusive of all foreign service and cost of living
allowances. For the avoidance of doubt, you should note that you will not be
reimbursed or indemnified for any Hong Kong tax liabilities arising from your
remuneration or from any non cash benefits which you may receive from the Away
Base Office as a part of your secondment package.
6. HOME BASE
<PAGE> 2
Your home base salary is not payable under this contract during the
Secondment Period. It will be reviewed on the same basis and at the same time
as if you had remained in the United States, so as to provide a notational U.S.
salary in line with your substantive position. Your home base salary bears no
direct relationship to your away base salary, but certain benefits are
contingent upon it.
7. PENSION
It is intended that you will remain a member of your home base pension
plan. This will be discussed with you under separate cover.
8. FAMILY STATUS
Your family status will be married.
9. FARES AND EXPENSES
At the beginning and end of the Secondment Period, Intercargo Corporation
will bear the cost of fares and other reasonable expenses involved for you and
your dependent family, in traveling between your place of residence in the U.S.
and your place of work in Hong Kong. Upon completion of the Secondment Period,
Intercargo Corporation will bear the cost of the return for you and your
dependent family.
10. LEAVE
Leave will accrue to you during the Secondment Period at the rate of
twenty-five working days per annum.
In addition, Intercargo Insurance Company H.K. Limited will pay return
leave business-class air fares for yourself and your dependent family to the
United States twice per year.
<PAGE> 3
11. ACCOMMODATION
The Away Base Office shall provide a furnished apartment, including
utilities and telephone expense, suitable for a person of your position in the
business community. Should the cost of accommodations exceed HK $55,000 per
month, inclusive of management lease and government rates, including utilities
and telephone expense, you will be expected to reimburse the Company for such
excess.
I. PROFESSIONAL ADVICE
The Away Base Office will pay up to a reasonable level for the costs of
any necessary professional advice you may need in connection with this
secondment.
13. MEDICAL
You and your dependent family will remain covered under your home base's
private health plan for the Secondment Period.
14. HOURS OF WORK AND REGULATIONS
The hours of work will be those established by the Away Base Office. You
will observe all rules and regulations of the Away Base Office to the extent
that the same are lawful and not inconsistent with the other terms of your
employment as varied by this letter.
15. LAWS OF COUNTRY
While you are in Hong Kong, you will be subject to the laws of that
country, including the laws that relate to personal taxation, and nothing
contained in this letter which may be inconsistent with such laws shall be
binding upon you or upon the Away Base Office.
Any of the provisions of the laws of Hong Kong which relate to employment
there and which are not contained in this letter, shall be deemed to be so
contained and shall be binding upon you and upon the Away Base Office now and
in the future.
16. TERMINATION OF SECONDMENT
Your secondment may be terminated by Intercargo Insurance Company H.K.
Limited at any time and on your return to duty with Intercargo Insurance
Company in the U.S. after the end of the Secondment Period, and after taking
any leave due to you, you will revert to the compensation used as a base for
purposes of the determination of your executive compensation plan in Intercargo
Insurance Company.
17. This contract shall be governed and construed according to the laws of Hong
Kong.
If you are in agreement with the contents of this letter, please sign
below, initial each page, and return the original to me retaining the copy for
your own records.
Very truly yours,
INTERCARGO CORPORATION
<PAGE> 4
James R. Zuhlke
I accept the above terms and conditions of Secondment.
/s/ Robert S. Kielbas
- -------------------------------
Robert S. Kielbas
Dated: February 16, 1996
-------------------------
<PAGE> 5
RIDER TO SECONDMENT AGREEMENT
THIS RIDER is made this 16th day of February, 1996 by and between Intercargo
Insurance Company H.K. Limited ("Employer") and ROBERT S. KIELBAS ("Employee").
RECITALS
A. The Employer and Employee entered into an employment agreement dated
February 16, 1996 relative to the Employee's employment in Hong Kong (the
"Secondment Agreement").
B. The Employer and Employee wish to amend the terms of the Secondment
Agreement pursuant to the terms of this Rider.
For good and valuable consideration, the receipt of which is hereby
acknowledged, Employer and Employee agree as follows:
1. In the event Employee is subject to any tax liabilities in Hong Kong
unforeseen by Employer and Employee prior to entering into the Secondment
Agreement, Employer agrees to amend the Employee's Away Base Remuneration
so that Employee's remuneration after tax is equivalent to U.S. $150,000.
All other terms of the Secondment Agreement shall remain the same. Where the
terms of this Rider conflict with the terms of the Secondment Agreement, this
Rider shall govern.
INTERCARGO INSURANCE
COMPANY H.K. LIMITED
BY: James R. Zuhlke /s/ Robert S. Kielbas
------------------------------ -------------------------------
ITS: Director ROBERT S. KIELBAS
-----------------------------
<PAGE> 6
AMENDMENT NO. 1
TO SECONDMENT AGREEMENT DATED FEBRUARY 16, 1996
BETWEEN
INTERCARGO INSURANCE COMPANY H.K. LIMITED
AND
ROBERT S. KIELBAS
In lieu of the Company's acquisition or rental of furnishings to satisfy
Company's obligations under Section 11. ACCOMMODATION and in recognition of Mr.
Kielbas' selection of a furnished apartment, Section 11. ACCOMMODATION shall be
amended to read as follows:
11. ACCOMMODATION
The Away Base Office shall provide a furnished apartment,
including utilities and telephone expense, suitable for a person
of your position in the business community. Should the cost of
accommodations exceed HK $60,000 per month, inclusive of
management lease and government rates, including utilities and
telephone expense, you will be expected to reimburse the Company
for such excess.
All other terms of the Secondment Agreement and Rider shall remain the same.
Where the terms of this Amendment conflict with the terms of the Secondment
Agreement and Rider, this Amendment shall govern.
INTERCARGO INSURANCE
COMPANY H.K. LIMITED
BY: James R. Zuhlke /s/ Robert S. Kielbas
- ------------------------------ -------------------------------
ITS: Director ROBERT S. KIELBAS
- -----------------------------
<PAGE> 1
EXHIBIT 11
INTERCARGO CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
(in thousand, except for per share data)
<TABLE>
<CAPTION>
For the three months
ended March 31,
1996 1995
------ -----
<S> <C> <C>
Primary
Net income $1,116 2,075
====== =====
Shares
Weighted average number of common shares outstanding 7,641 7,641
Additional dilutive effect of outstanding warrant and options
(as determined by the application of the treasury stock method) 22 16
------ -----
Weighted average number of common shares outstanding as adjusted 7,663 7,657
====== =====
Primary earnings per share $ .15 .27
====== =====
Fully diluted
Net income $1,116 2,075
====== =====
Shares
Weighted average number of common shares outstanding 7,641 7,641
Additional dilutive effect of outstanding warrant and options
(as determined by the application of the treasury stock method) 22 16
------ -----
Weighted average number of common shares outstanding as adjusted 7,663 7,657
====== =====
Fully diluted earnings per share $ .15 .27
====== =====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> JAN-01-1996
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0
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