<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly report under section 13 or 15(d) of the Securities Exchange Act
of 1934. For the period ended March 31, 1998.
or
Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934. For the transition period from _____________ to
_____________ .
Commission File Number 1-10760
MUTUAL RISK MANAGEMENT LTD.
- --------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
BERMUDA NOT APPLICABLE
- --------------------------------------------------------------------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
44 Church Street,
Hamilton HM 12, Bermuda
- --------------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(441) 295-5688
- --------------------------------------------------------------------------------
(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 [ ]
The number of outstanding shares of the registrant's Common Stock, $0.01 par
value, as of March 31, 1998 was 39,054,526.
<PAGE>
MUTUAL RISK MANAGEMENT LTD.
I N D E X
PART I. FINANCIAL INFORMATION:
ITEM 1. FINANCIAL STATEMENTS:
Unaudited Consolidated Statements of Income and Comprehensive Income
for the three month periods ended March 31, 1998 and 1997 3
Consolidated Balance Sheets at March 31, 1998 (unaudited)
and December 31, 1997 4
Unaudited Consolidated Statements of Cash Flows for the
three month periods ended March 31, 1998 and 1997 5
Consolidated Statements of Shareholders' Equity at
March 31, 1998 (unaudited) and December 31, 1997 6
Notes to Unaudited Consolidated Financial Statements at
March 31, 1998 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 8-11
CONDITION AND RESULTS OF OPERATIONS
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT 11
MARKET RISK
PART II. OTHER INFORMATION:
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 12
SIGNATURES 13
EXHIBITS
Exhibit 11 - Computation of Net Earnings per Common
Share and Common Share Equivalents
Exhibit 27 - Financial Data Schedule
<PAGE>
MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31
1998 1997
<S> <C> <C>
REVENUES
Fee income $31,555,510 $23,936,629
Premiums earned 28,929,194 17,952,608
Net investment income 7,947,293 5,987,912
Realized capital losses (212,653) (774,267)
Other (losses) income (131,302) 84,270
----------- -----------
TOTAL REVENUES 68,088,042 47,187,152
----------- -----------
EXPENSES
Losses and loss expenses incurred 21,498,990 7,663,380
Acquisition costs 8,095,869 10,604,741
Operating expenses 19,672,045 14,130,334
Interest expense 1,674,682 1,591,150
Other expenses 363,183 236,424
----------- -----------
TOTAL EXPENSES 51,304,769 34,226,029
----------- -----------
INCOME BEFORE INCOME TAXES 16,783,273 12,961,123
Income taxes 2,251,839 2,276,100
----------- -----------
NET INCOME 14,531,434 10,685,023
Preferred share dividends - 41,510
----------- -----------
NET INCOME AVAILABLE TO
COMMON SHAREHOLDERS 14,531,434 10,643,513
Other comprehensive income, net of tax:
Unrealized loss on investments 228,470 4,271,718
----------- -----------
COMPREHENSIVE INCOME $14,302,964 $ 6,371,795
=========== ===========
EARNINGS PER COMMON SHARE:
Net income available to Common Shareholders:
Basic EPS $0.38 $0.29
=========== ===========
Diluted EPS $0.34 $0.26
=========== ===========
Dividends per share $0.05 $0.04
=========== ===========
Weighted average number of Common
</TABLE>
3
<PAGE>
Shares outstanding - basic 37,946,018 37,168,166
=========== ===========
Weighted average number of Common
Shares outstanding - diluted 47,760,342 46,201,434
=========== ===========
See Accompanying Notes to Unaudited Consolidated Financial Statements
4
<PAGE>
MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
(UNAUDITED)
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 74,546,466 $ 78,938,489
Investments : Held in available for sale account at fair value
(Amortized cost $399,001,653; 1997 - $389,292,297) 404,088,495 395,143,321
-------------- --------------
TOTAL MARKETABLE INVESTMENTS 478,634,961 474,081,810
Other investments 13,139,219 9,428,142
Investment income due and accrued 3,803,640 3,768,168
Accounts receivable 189,939,289 160,364,395
Reinsurance receivables 697,459,176 630,696,642
Deferred expenses 26,485,996 29,992,266
Prepaid reinsurance premiums 167,434,408 156,017,482
Fixed assets 15,366,955 13,373,439
Deferred tax benefit 5,559,398 4,607,251
Goodwill 33,041,409 32,915,932
Other assets 7,041,724 6,698,466
Assets held in separate accounts 652,693,630 625,216,561
-------------- --------------
TOTAL ASSETS $2,290,599,805 $2,147,160,554
============== ==============
LIABILITIES, REDEEMABLE COMMON SHARES & SHAREHOLDERS' EQUITY
LIABILITIES
Reserve for losses and loss expenses $ 795,539,100 $ 715,699,133
Reserve for unearned premiums 198,395,380 188,388,666
Claims deposit liabilities 42,144,735 42,444,900
Accounts payable 144,094,441 135,145,220
Accrued expenses 6,249,164 7,398,174
Taxes payable 17,592,299 14,994,581
Prepaid fees 17,524,863 19,268,277
Debentures 130,385,961 128,711,279
Other liabilities 8,846,480 8,166,599
Liabilities related to separate accounts 652,693,630 625,216,561
-------------- --------------
TOTAL LIABILITIES 2,013,466,053 1,885,433,390
-------------- --------------
REDEEMABLE COMMON SHARES
Common Shares subject to redemption - 937,168 Common Shares
(par value $0.01, redemption value $1.75 subscription loans
receivable - $383,761, plus interest received) - 1,929,032
-------------- --------------
TOTAL REDEEMABLE COMMON SHARES - 1,929,032
-------------- --------------
SHAREHOLDERS' EQUITY
Common Shares - Authorized 60,000,000 (par value $0.01)
Issued 39,054,526 (1997 - 37,876,883) 390,545 378,769
Additional paid-in capital 92,079,396 87,101,966
Other Comprehensive income - Unrealized gain on investments - net
of tax 3,806,927 4,035,397
Retained earnings 180,856,884 168,282,000
-------------- --------------
TOTAL SHAREHOLDERS' EQUITY 277,133,752 259,798,132
-------------- --------------
TOTAL LIABILITIES, REDEEMABLE COMMON SHARES
& SHAREHOLDERS' EQUITY $2,290,599,805 $2,147,160,554
============== ==============
</TABLE>
See Accompanying Notes to Unaudited Consolidated Financial Statements
5
<PAGE>
MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1998 1997
NET CASH FLOW FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income $ 14,531,434 $ 10,685,023
Items not affecting cash:
Depreciation 1,282,641 842,026
Amortization of investments and net gain on sales 1,585,599 431,991
Amortization of Convertible Debentures 1,674,682 1,590,106
Deferred tax benefit (1,708,130) (1,901,168)
Other items 466,994 132,155
Net changes in non-cash balances relating to operations:
Accounts receivable (29,574,894) (24,505,709)
Reinsurance receivables (66,762,534) (30,448,652)
Investment income due and accrued (35,472) 917,415
Deferred expenses 3,506,270 (4,538,189)
Prepaid reinsurance premiums (11,416,926) (16,472,284)
Other assets (343,258) 1,988,106
Reserve for losses and loss expenses 79,839,967 36,486,523
Prepaid fees (1,743,415) 1,636,260
Reserve for unearned premium 10,006,714 24,478,012
Accounts payable 8,949,221 12,514,183
Taxes payable 2,597,717 3,508,674
Accrued expenses (1,149,010) (1,615,270)
Other liabilities 664,945 222,145
------------ ------------
NET CASH FLOW FROM OPERATING ACTIVITIES 12,372,545 15,951,347
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of investments - Available for sale 7,607,112 94,983,103
Proceeds from maturity of investments - Available for sale 17,304,258 10,250,576
Fixed assets purchased (3,278,376) (2,749,673)
Investments purchased - Available for sale (36,206,326) (45,234,707)
Investment in affiliates and other investments (2,555,251) (14,488)
Goodwill purchased (456,160) (7,937,953)
Other items 1,776 6,537
------------ ------------
NET CASH FLOW (APPLIED TO) FROM INVESTING ACTIVITIES (17,582,967) 49,303,395
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Loan repayment & interest received 388,683 10,188
Proceeds from shares issued 2,671,491 1,348,082
Claims deposit liabilities (300,165) (1,619,040)
Dividends paid (1,941,610) (1,756,088)
------------ ------------
NET CASH FLOW FROM (APPLIED TO) FINANCING ACTIVITIES
------------ -------------------
818,399 (2,016,858)
------------ ------------
Net (decrease) increase in cash and cash equivalents (4,392,023) 63,237,884
Cash and cash equivalents at beginning of period 78,938,489 52,242,353
------------ ------------
Cash and cash equivalents at end of period $ 74,546,466 $115,480,237
============ ============
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 0 $ 1,044
============ ============
Income taxes paid, net $ 734,816 $ 0
============ ============
</TABLE>
See Accompanying Notes to Unaudited Consolidated Financial Statements
6
<PAGE>
MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
SERIES B
Preferred Common
Change in Share Share
Opening Shares Unrealized Net Dividends Dividends Closing
Balance Issued Gain (Loss) Income Declared (1) Declared (2) Balance
Three Months Ended March
31, 1998 (unaudited)
- ---------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Common Shares $ 378,769 $ 11,776 $ - $ - $ - $ - $ 390,545
Additional paid-in capital 87,101,966 4,977,430 - - - - 92,079,396
Other comprehensive income
-
Unrealized gain on
investments - net of tax 4,035,397 - (228,470) - - - 3,806,927
Retained earnings 168,282,000 - - 14,531,434 - (1,956,550) 180,856,884
------------ ----------- ------------ -------------- ---------- ------------- ------------
Total Shareholders' Equity
AT MARCH 31, 1998 $259,798,132 $4,989,206 $ (228,470) $14,531,434 $ - $(1,956,550) $277,133,752
============ =========== =========== =========== ============ ============ ============
Year Ended December 31, 1997 (3)
- ---------------------------------
Common Shares $ 371,265 $ 7,504 $ - $ - $ - $ - $ 378,769
Additional paid-in capital 79,812,287 7,289,679 - - - - 87,101,966
Other comprehensive income
-
Unrealized gain on
investments - net of tax 47,682 - 3,987,715 - - - 4,035,397
Retained earnings 127,759,654 - - 47,938,424 (104,929) (7,311,149) 168,282,000
------------ ------------- ------------- ----------- ----------- ----------- ------------
TOTAL SHAREHOLDERS' EQUITY
AT DECEMBER 31, 1997 $207,990,888 $7,297,183 $3,987,715 $47,938,424 $(104,929) $(7,311,149) $259,798,132
============ =========== ============== ============= ========== ============== ============
</TABLE>
(1) Dividend per share amounts were $ nil for the three months ended March 31,
1998 and $.04 for the year ended December 31, 1997.
(2) Dividend per share amounts were $.05 for the three months ended March 31,
1998 and $.19 for the year ended December 31, 1997 (restated for stock
split).
(3) Effective September 26, 1997 the Company effected a two - for - one stock
split recorded in the form of a stock dividend. 18,741,121 Common Shares
were issued in respect of this split. Prior periods have been restated.
See Accompanying Notes to Unaudited Consolidated Financial Statements
7
<PAGE>
MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
1. INTERIM ACCOUNTING POLICY
In the opinion of management of the Company, the accompanying unaudited
consolidated financial statements include all adjustments, consisting only of
normal recurring adjustments, necessary to present fairly the financial position
of the Company and the results of operations and cash flows for the three months
ended March 31, 1998 and 1997. Although the Company believes that the
disclosure in these financial statements is adequate to make the information
presented not misleading certain information and footnote information normally
included in financial statements prepared in accordance with generally accepted
accounting principles has been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission. Results of operations
for the three months ended March 31, 1998 are not necessarily indicative of what
operating results may be for the full year.
2. COMPREHENSIVE INCOME
During the first quarter of 1998 the Company adopted Statement of Financial
Accounting Standards No. 130, Reporting Comprehensive Income. Comprehensive
income is defined as the change in equity of a business enterprise during a
period from transactions and other events and circumstances from nonowner
sources. It includes all changes in equity during a period except those
resulting from investments by owners and distributions to owners. Specifically,
the Company has reported the change in unrealized gains and losses on
investments as a deduction from net income to arrive at comprehensive income of
$14.3 million for the first quarter of 1998, compared to $6.4 million for the
first quarter of 1997. The deductions are net of a tax charge of $.8 million in
1998 and a credit of $1.5 million in 1997.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THE QUARTERS ENDED MARCH 31, 1998 AND 1997
The results of operations for the quarter ended March 31, 1998, reflect a
continuation of growth in Fee income and Net income due to the strong growth in
the Program Business segment and, increased investment income. Net income
available to common shareholders amounted to $14.5 million or $0.34 per Common
Share for the quarter ended March 31, 1998 on a diluted basis representing an
increase of 26% over the corresponding 1997 period.
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1998 1997
--------------------------- ----------------------------
($ thousands except per share data)
PER PER
COMMON SHARE COMMON SHARE(b)
------------ ------------
BASIC DILUTED BASIC DILUTED
<S> <C> <C> <C> <C> <C> <C>
Net income excluding
realized capital losses $14,648 $ 0.39 $ 0.34 $11,158 $ 0.30 $ 0.27
Realized capital losses (a) (116) (0.01) - (514) (0.01) (0.01)
------- ------- ------- ------- ------- -------
Net income available to
Common Shareholders $14,532 $ 0.38 $ 0.34 $10,644 $ 0.29 $ 0.26
======= ======= ======= ======= ======= =======
Average number of
shares outstanding (000's) 37,946 47,760 37,168 46,201
------- ------- ------- -------
</TABLE>
(a) Net of tax.
(b) 1997 per share amounts have been adjusted to reflect the two-for-one stock
split which was effected on September 26, 1997.
Total revenues amounted to $68.1 million representing an increase of 44% over
the corresponding 1997 period. The following table shows the major components of
Revenues for the period.
<TABLE>
<CAPTION>
(In thousands)
TOTAL REVENUES
THREE MONTHS ENDED MARCH 31,
<S> <C> <C> <C>
1998 1997 INCREASE
------- ------- --------
Fee income $31,556 $23,937 32%
Premiums earned 28,929 17,952 61%
Net investment income 7,947 5,988 33%
Realized capital gains (losses) (213) (774) N/M
Other (losses) income (131) 84 N/M
------- -------
Total $68,088 $47,187 44%
======= =======
</TABLE>
9
<PAGE>
Total Fee income increased 32% to $31.6 million for the first quarter of
1998 as compared to $23.9 million in 1997. Pre-tax profit margins were 38% for
the quarter as compared to 41% in the first quarter of 1997. Excluding the
underwriting management portion of the Program Business segment and the
Financial Services segment, which generally have lower margins, pre-tax profit
margins were 47% for the quarter as compared to 45% in the first quarter of
1997. The components of Fee income are illustrated by business segment in the
following table:
<TABLE>
<CAPTION>
(In thousands)
FEE INCOME BY BUSINESS SEGMENT
THREE MONTHS ENDED MARCH 31,
1998 1997 INCREASE
------- ------- --------
<S> <C> <C> <C>
Program business fees $15,516 $ 9,168 69%
Corporate risk management fees 11,343 11,450 (1%)
Specialty brokerage fees 1,794 1,588 13%
Financial services fees 2,902 1,730 68%
------- -------
Total $31,556 $23,937 32%
======= =======
</TABLE>
The Program Business segment, the fastest growing business segment,
involves replacing traditional insurers and acting as a conduit between
producers of specialty books of business and reinsurers wishing to write that
business. Program Business accounted for 49% of total Fee income for the first
three months of 1998 compared to 38% in the corresponding 1997 period. Fees
from Program Business increased 69% in the first quarter to $15.5 million
compared to $9.2 million in the first quarter of 1997 as a result of the
continued expansion in this business both through the growth of existing
programs and the addition of new programs. Program Business profit margins were
40% in both periods.
Gross premiums written increased 38% to $182 million for the first three
months of 1998 as compared to $132 million in 1997, primarily as a result of the
growth within the Program Business segment. Program Business generally involves
greater premium volume per unit than Corporate Risk Management business.
Premiums earned increased 61% to $28.9 million in the first three months of
1998, as compared to $18.0 million in 1997. This increase was also primarily due
to the growth within the Program Business segment.
Corporate Risk Management, the Company's original business segment,
involves providing services to businesses and associations seeking to insure a
portion of their risk in a loss sensitive Alternative Market structure. This
segment accounted for 36% of total Fee income for the first three months of
1998, down from 48% in the corresponding 1997 period. Corporate Risk Management
fees decreased by 1% in the quarter to $11.3 million compared to $11.5 million
in 1997 as a result of a continuation of the extremely soft commercial insurance
market. Profit margins, however, increased to 48% for the first three months of
1998 compared to 44% in 1997. The Company added 4 new corporate accounts in the
first quarter as opposed to 17 in the corresponding 1997 quarter. Renewal
rates, also reflecting the soft market cycle, dropped to 56% from 83% in 1997.
The Company's Specialty Brokerage business segment provides access to
Alternative Risk Transfer insurers and reinsurers in Bermuda and Europe. The
segment produced $1.8 million of total Fee income in the first quarter
representing 6% of total Fee income. Specialty Brokerage fees grew by 13% in
the first three months of 1998 from $1.6 million in the corresponding 1997
period. Renewal rates remained high in this segment at 91% for the first three
months of 1998 as compared to 82% in 1997. Profit margins, however, decreased
to 22% in the first quarter from 40% for the 1997 first quarter
10
<PAGE>
primarily as a result of declining premium rates in Bermuda on new and renewal
business and the effects of a small start up operation in the U.S.
Financial Services, the Company's newest business segment, is being built
on the acquisition of Hemisphere, which provides administrative services to
offshore mutual funds and other companies. The segment accounted for 9% of
total Fee income for the first three months of 1998 up from 7% in the
corresponding 1997 period. Fees from Financial Services increased in the
quarter by 68% to $2.9 million primarily as a result of an increase in the
number of mutual funds under management from 98 at March 31, 1997 to 150 a year
later. Renewal rates were 100% for the first three months of 1998 as compared
to 99% in 1997. Profit margins were adversely affected in 1998 by a revised
executive incentive plan and staff expansion costs to service new business and
declined to (6%) in the quarter as opposed to 25% in the 1997 first quarter.
During the first quarter, the Company replaced the existing executive incentive
program at Hemisphere with a revised long term plan. The prior plan, which was
put in place in 1996 when the Company acquired Hemisphere, called for a one time
payment in 1999 based on meeting performance targets. Due to the success of
Hemisphere since its acquisition, that payment was likely to amount to the
maximum possible of $5 million. The new plan replaces this potential bonus
payable in 1999 with a current bonus arrangement payable over three years and a
revised set of performance targets. The new incentive program will give
Hemisphere the opportunity to continue the rapid growth that it has experienced
since its acquisition and will facilitate its expansion into the United States
and Europe. This revised executive incentive program will, however, affect the
segment's operating expenses by $600,000 per quarter, adversely affecting the
margins of the Financial Services segment in the short run.
Gross investment income increased by $2.1 million or 31% to $9.1 million in
the first quarter of 1998 over the same period of 1997 as a result of an
increase of 4% in gross invested assets to $473.5 million and an increase in the
yield on these assets. Net investment income, after adjusting for investment
income which is not included in the earnings of the Company, increased by 33%
during the quarter as a result of an increase of 4% in net invested assets to
$407.5 million and an increase in the yield on these assets to 7.9% from 6.2% in
the first quarter of 1997.
<TABLE>
<CAPTION>
(In thousands)
TOTAL EXPENSES
THREE MONTHS ENDED MARCH 31,
1998 1997 INCREASE
------- ------- --------
<S> <C> <C> <C>
Total Insurance Costs 29,595 18,268 62%
Operating expenses 19,672 14,130 39%
Interest expense 1,675 1,591 5%
Other expenses 363 237 54%
------- -------
Total $51,305 $34,226 50%
======= =======
</TABLE>
The increases in Total insurance costs were the direct result of the
increases in Premiums earned during the period.
Operating expenses increased by 39% to $19.7 million for the first quarter
from $14.1 million. The increase is attributable to the revised executive
incentive plan in Financial Services, recent acquisitions, and growth in
personnel and other expenses stemming from the increased business in each
segment. Excluding the effect of recent acquisitions and the revised executive
incentive plan, the increase in operating expenses would have been 30%.
11
<PAGE>
The effective tax rate was 13.4% in the quarter compared to 17.6% in the
corresponding 1997 period. The decrease in the quarterly rate is due mainly to
a restructuring of the taxable entities in both the United States and Europe,
and the tax benefit derived from the exercise of employee stock options.
FINANCIAL CONDITION AND LIQUIDITY
Total assets increased to $2.3 billion at March 31, 1998 from $2.1 billion
at December 31, 1997. Assets held in separate accounts, which are principally
managed assets attributable to participants in the Company's IPC Programs,
accounted for approximately 28% of Total assets at March 31, 1998 and 29% at
December 31, 1997. Total Shareholders' equity increased to $277 million at
March 31, 1998 from $260 million at December 31, 1997 primarily as a result of
Net income in the quarter and the issuance of Common Shares offset by the
payment of dividends. Return on equity was 22% for the first quarter of 1998
compared to 20% in the corresponding period of 1997.
The Company continues to produce a positive cash flow from operating
activities which is used to fund short term requirements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable
12
<PAGE>
MUTUAL RISK MANAGEMENT LTD.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. EXHIBIT 11 - Computation of Net Earnings Per Common Share and Common
Share Equivalents.
EXHIBIT 27 - Financial Data Schedule
B. REPORTS ON FORM 8-K. No reports on Form 8-K were filed during the three
month period ended March 31, 1998.
13
<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.
MUTUAL RISK MANAGEMENT LTD.
/s/ James C. Kelly
__________________________________________________
JAMES C. KELLY
SENIOR VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND
AUTHORIZED SIGNATORY
DATE: MAY 13, 1998
14
<PAGE>
EXHIBIT 11
MUTUAL RISK MANAGEMENT LTDM
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1998 1997
(in thousands except share and per share amounts)
<S> <C> <C>
BASIC
- -----
Income Available to Common Shareholders $ 14,531 $ 10,644
=========== ===========
Weighted Average Common Shares outstanding 37,946,018 37,168,166
----------- -----------
Basic earnings per Common Share $0.38 $ 0.29
=========== ===========
DILUTED
- -------
Income Available to Common Shareholders $ 14,531 $ 10,644
Debenture interest 1,675 1,591
----------- -----------
$ 16,206 $ 12,235
=========== ===========
Weighted Average Common Shares outstanding 37,946,018 37,168,166
----------- -----------
Common share equivalents associated with
options, Redeemable Common Shares and
Convertible Debentures:
Options 4,140,943 3,954,498
Redeemable Common Shares 937,168 937,168
Convertible Debentures 6,978,800 6,978,800
----------- -----------
12,056,911 11,870,466
Common Shares purchased with proceeds
from options exercised (2,242,587) (2,837,198)
9,814,324 9,033,268
----------- -----------
Total Weighted Average Common Shares 47,760,342 46,201,434
=========== ===========
Diluted earnings per Common Share $0.34 $ 0.26
=========== ===========
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE>7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MUTUAL RISK
MANAGEMENT LTD.'S FINANCIAL STATEMENTS AS OF MARCH 31, 1998 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000826918
<NAME> MUTUAL RISK MANAGEMENT LTD.
<MULTIPLIER> 1,000
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