<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, 1999.
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, 1999 was 43,306,765.
<PAGE>
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, 1999 and 1998 3
Unaudited Consolidated Balance Sheets at March 31, 1999
and December 31, 1998 4
Unaudited Consolidated Statements of Cash Flows for the
three month periods ended March 31, 1999 and 1998 5
Unaudited Consolidated Statements of changes in Shareholders'
Equity at March 31, 1999 and December 31, 1998 6
Notes to Unaudited Consolidated Financial Statements at
March 31, 1999 7-8
Item 2. Management's Discussion and Analysis of Financial 9-13
Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures about 13
Market Risk
PART II. Other Information:
Item 2. Changes in Securities 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
Exhibits
Exhibit 11 - Computation of Net Earnings per Common Share and
Common Share Equivalents
Exhibit 27 - Financial Data Schedules
<PAGE>
MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
Three Months Ended March 31
1999 1998(a)
---- -------
REVENUES
Fee income $ 45,493,875 $ 35,824,441
Premiums earned 38,784,638 28,929,194
Net investment income 7,220,648 8,064,492
Realized capital gains (losses) 502,376 (212,653)
Other losses (108,941) (131,302)
------------ ------------
Total Revenues 91,892,596 72,474,172
------------ ------------
EXPENSES
Losses and loss expenses incurred 26,229,412 21,498,990
Acquisition costs 13,495,211 8,095,869
Operating expenses 29,100,135 23,343,867
Interest expense 1,602,073 1,727,333
Other expenses 660,168 366,312
------------ ------------
Total Expenses 71,086,999 55,032,371
------------ ------------
INCOME BEFORE INCOME TAXES AND 20,805,597 17,441,801
MINORITY INTEREST
Income taxes 2,014,284 2,267,296
------------ ------------
INCOME BEFORE MINORITY INTEREST 18,791,313 15,174,505
Minority interest 7,625 --
------------ ------------
Net income available to
common shareholders 18,798,938 15,174,505
Other comprehensive income, net of tax:
Unrealized losses on investments, net of
reclassification adjustment (3,492,048) (228,470)
------------ ------------
COMPREHENSIVE INCOME $ 15,306,890 $ 14,946,035
============ ============
EARNINGS PER COMMON SHARE:
Net income available to Common Shareholders:
Basic EPS $ 0.44 $ 0.38
============ ============
Diluted EPS $ 0.40 $ 0.34
============ ============
Dividends per share $ 0.06 $ 0.05
============ ============
Weighted average number of Common
Shares outstanding - basic 42,634,135 39,948,605
============ ============
Weighted average number of Common
Shares outstanding - diluted 50,411,359 49,762,929
============ ============
(a) Prior period results have been restated to reflect a pooling of
interests following the acquisition of Captive Resources, Inc.,
CompFirst, Inc. and the International Advisory Services Group of
Companies.
See Accompanying Notes to Unaudited Consolidated Financial Statements
3
<PAGE>
MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998(a)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 82,987,813 $ 117,422,652
Investments : Held in available for sale account at
fair value (Amortized cost $473,467,650;
1998 - $455,648,153) 473,805,513 460,624,263
-------------- --------------
Total marketable investments 556,793,326 578,046,915
Other investments 23,224,060 22,473,945
Investment income due and accrued 5,113,375 5,252,341
Accounts receivable 398,451,999 353,869,570
Reinsurance receivables 1,162,044,763 1,079,562,857
Deferred expenses 31,477,271 27,215,385
Prepaid reinsurance premiums 208,573,471 206,486,764
Fixed assets 21,324,883 19,671,107
Deferred tax benefit 1,731,832 898,853
Goodwill 52,239,165 52,901,100
Other assets 5,196,239 5,615,792
Assets held in separate accounts 718,393,130 722,262,819
-------------- --------------
Total Assets $3,184,563,514 $3,074,257,448
============== ==============
LIABILITIES & SHAREHOLDERS' EQUITY
LIABILITIES
Reserve for losses and loss expenses $1,267,337,720 $1,190,425,877
Reserve for unearned premiums 248,982,995 241,893,089
Pension fund reserves 77,933,168 79,753,421
Claims deposit liabilities 42,247,536 37,447,768
Accounts payable 247,579,873 243,418,491
Accrued expenses 14,455,830 12,051,758
Taxes payable 17,633,412 14,849,898
Loans payable 3,732,729 3,537,671
Prepaid fees 48,265,444 47,126,199
Debentures 113,016,314 125,485,201
Other liabilities 10,652,496 12,839,258
Liabilities related to separate accounts 718,393,130 722,262,819
-------------- --------------
Total Liabilities 2,810,230,647 2,731,091,450
-------------- --------------
SHAREHOLDERS' EQUITY
Common Shares - Authorized 60,000,000 (par value $0.01)
Issued 43,306,765 (1998 - 42,205,596) 433,068 422,056
Additional paid-in capital 134,282,500 114,916,045
Accumulated other comprehensive income 964,733 4,456,781
Retained earnings 238,652,566 223,371,116
-------------- --------------
Total Shareholders' Equity 374,332,867 343,165,998
-------------- --------------
Total Liabilities & Shareholders' Equity $3,184,563,514 $3,074,257,448
============== ==============
</TABLE>
(a) Prior period results have been restated to reflect a pooling of
interests following the acquisition of Captive Resources, Inc.
See Accompanying Notes to Unaudited Consolidated Financial Statements
4
<PAGE>
MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended March 31,
1999 1998(a)
---- -------
<S> <C> <C>
NET CASH FLOW FROM OPERATING ACTIVITIES
Net income $ 18,798,938 $ 15,174,505
Items not affecting cash:
Depreciation 1,746,282 1,409,886
Amortization of investments (264,541) 1,422,956
Net (gain) loss on sale of investments (134,274) 162,643
Other investment (gains) losses (360,916) --
Amortization of convertible debentures 1,552,569 1,674,682
Deferred tax benefit 313,218 (1,708,130)
Other items 505,909 470,122
Net changes in non-cash balances relating
to operations:
Accounts receivable (44,582,429) (32,384,532)
Reinsurance receivables (82,481,906) (66,762,534)
Investment income due and accrued 138,966 (42,252)
Deferred expenses (4,261,886) 3,506,270
Prepaid reinsurance premiums (2,086,707) (11,416,926)
Other assets 419,553 (181,179)
Reserve for losses and loss expenses 76,911,843 79,642,043
Prepaid fees 1,139,245 115,848
Reserve for unearned premium 7,089,906 10,006,714
Accounts payable 4,161,382 11,148,768
Taxes payable 2,783,514 2,587,771
Accrued expenses 2,404,072 (1,195,822)
Other liabilities (2,314,977) 764,239
------------- -------------
NET CASH (APPLIED TO) FROM OPERATING ACTIVITIES (18,522,239) 14,395,072
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of investments -
Available for sale 15,887,952 7,607,112
Proceeds from maturity of investments -
Available for sale 14,473,986 17,304,258
Fixed assets purchased (3,407,834) (3,344,631)
Investments purchased - Available for sale (47,782,620) (36,206,326)
Acquisitions and other investments (801,687) (3,111,592)
Proceeds from sale of other investments 576,522 --
Other items 12,269 1,776
------------- -------------
NET CASH APPLIED TO INVESTING ACTIVITIES (21,041,412) (17,749,403)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Loan repayment & interest received -- 388,683
Loan received 195,058 295,167
Proceeds from shares issued 5,343,511 2,671,491
Claims deposit liabilities 4,799,768 (300,165)
Pension fund reserves (1,820,253) --
Dividends paid (3,389,272) (2,354,610)
------------- -------------
NET CASH FROM FINANCING ACTIVITIES 5,128,812 700,566
------------- -------------
Net decrease in cash and cash equivalents (34,434,839) (2,653,765)
Cash and cash equivalents at beginning of
period 117,422,652 82,706,146
------------- -------------
Cash and cash equivalents at end of period $ 82,987,813 $ 80,052,381
============= =============
Supplemental cash flow information:
Interest paid $ 49,504 $ 52,651
============= =============
Income taxes paid, net $ 0 $ 734,816
============= =============
</TABLE>
(a) Prior period results have been restated to reflect a pooling of
interests following the acquisition of Captive Resources, Inc.,
CompFirst, Inc. and the International Advisory Services Group of
Companies.
See Accompanying Notes to Unaudited Consolidated Financial Statements
5
<PAGE>
MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common
Change in Share Dividend
Opening Shares Unrealized Net Dividends Acquired
Balance Issued Gain(Loss)(1) Income Declared(2) Companies(3)
<S> <C> <C> <C> <C> <C> <C>
Three Months Ended March 31, 1999
Common Shares $ 422,056 $ 11,012 $ -- $ -- $ -- $ --
Additional paid-in capital 114,916,045 19,366,455 -- -- -- --
Accumulated other
Comprehensive income 4,456,781 -- (3,492,048) -- -- --
Retained earnings 223,371,116 -- -- 18,798,938 (2,626,552) (890,936)
------------------------------------------------------------------------------------
Total Shareholders' Equity
at March 31, 1999 $343,165,998 $19,377,467 $(3,492,048) $18,798,938 $(2,626,552) $(890,936)
====================================================================================
Year Ended December 31, 1998 (4)(5)
Common Shares $ 398,795 $ 23,261 $- $- $- $-
Additional paid-in capital 89,339,040 25,577,005 -- -- -- --
Accumulated other comprehensive
income 4,035,397 -- 421,384 -- -- --
Retained earnings 169,801,514 -- -- 64,527,198 (8,827,418) (2,130,178)
------------------------------------------------------------------------------------
Total Shareholders' Equity
at December 31, 1998 $263,574,746 $25,600,266 $ 421,384 $64,527,198 $(8,827,418) $(2,130,178)
====================================================================================
<CAPTION>
Closing
Balance
<S> <C>
Three Months Ended March 31, 1999
Common Shares $ 433,068
Additional paid-in capital 134,282,500
Accumulated other
Comprehensive income 964,733
Retained earnings 238,652,566
------------
Total Shareholders' Equity
at March 31, 1999 $374,332,867
============
Year Ended December 31, 1998 (4)(5)
Common Shares $ 422,056
Additional paid-in capital 114,916,045
Accumulated other comprehensive
income 4,456,781
Retained earnings 223,371,116
------------
Total Shareholders' Equity
at December 31, 1998 $343,165,998
============
</TABLE>
(1) Net of reclassification adjustment, net of tax (See Note 2).
(2) Dividend per share amounts were $.06 and $.21 for the quarter
ended March 31, 1999 and the year ended December 31, 1998.
(3) Prior to the mergers, International Advisory Services and
Captive Resources paid dividends of $1.12 and $.84 in 1998 and
1999 respectively based on the equivalent number of Common
Shares that would have been outstanding on the dividend dates
after giving effect to the pooling of interests.
(4) Prior period results have been restated to reflect a pooling of
interests following the acquisition of Captive Resources, Inc.
(5) See Note 3.
See Accompanying Notes to Unaudited Consolidated Financial Statements
6
<PAGE>
MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1999
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, 1999
and 1998. 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,
1999 are not necessarily indicative of what operating results may be
for the full year.
2. COMPREHENSIVE INCOME
Statement 130 requires unrealized gains or losses on the Company's
available for sale investments, to be included in Other comprehensive
income.
(In thousands) Before tax Tax Net of tax
Three months ended March 31, 1999 Amount --- Amount
- --------------------------------- ------ ------
Net unrealized (losses) gains on available for
sale investments arising during the period. $(4,504) 1,114 $(3,390)
Less: reclassification adjustment for gains
realized in net income (134) 32 (102)
------- ------ -------
Other comprehensive income $(4,638) $1,146 $(3,492)
======= ====== =======
Three months ended March 31, 1998 Before Tax Tax Net of Tax
- ---------------------------------- Amount --- Amount
------ ------
Net unrealized (losses) gains on available for
sale investments arising during the year. $365 $(661) $(296)
Less: reclassification adjustment for losses
realized in net income 163 (95) 68
---- ----- -----
Other comprehensive income $528 $(756) $(228)
==== ===== =====
7
<PAGE>
3. ACQUISITIONS
On March 1, 1999, the Company acquired Captive Resources, Inc. ("CRI") in
a business combination accounted for as a pooling of interests. CRI
became a wholly-owned subsidiary of the Company through the exchange
of 1,058,766 Common Shares for 100% of its outstanding stock.
(In thousands) Three months ended
March 31, 1998
--------------
Revenues $70,615
MRM (1) 1,859
-------
Acquired company $72,474
=======
As restated
Net Income available to common shareholders
MRM (1) $14,905
Acquired company 270
-------
As restated $15,175
=======
(1) As previously-reported in footnote 19 of the December 31, 1998 Form 10-K.
Shareholders' equity at January 1, 1998 was restated as follows:
(In thousands) As previously Acquired As restated
reported company
Common shares $ 388 $ 11 $ 399
Additional paid-in capital 89,349 (10) 89,339
Accumulated other
comprehensive income 4,035 -- 4,035
Retained earnings 169,517 285 169,802
-------- ----- --------
Total shareholders' equity $263,289 $ 286 $263,575
======== ===== ========
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
For the Quarter Ended March 31, 1999 and 1998
The results of operations for the quarter ended March 31, 1999 reflect a
continuation of growth in Fee income and Net income due to both the addition of
new accounts and the growth of existing accounts. The Program Business and
Financial Services segments drove this continued strong performance, achieving
growth of 41% and 52% respectively. Net income available to common shareholders
amounted to $18,799 million or $0.40 per Common Share on a diluted basis for the
quarter ended March 31, 1999 representing an increase of 18% on a per share
basis over the 1998 period as shown in the tables below.
TABLE 1 - EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended March 31,
1999 1998(a)
------------------------- --------------------------
($ thousands except per share data)
PER PER
COMMON SHARE COMMON SHARE
------------ ------------
Basic Diluted Basic Diluted
<S> <C> <C> <C> <C> <C> <C>
Net income available to
Common Shareholders $18,799 $0.44 $0.40 $15,175 $0.38 $0.34
======= ===== ===== ======= ===== =====
Average number of
shares outstanding (000's) 42,634 50,411 39,949 49,763
------ ------ ------ ------
</TABLE>
(a) Prior period results have been restated to reflect a pooling of
interests following the acquisitions of Captive Resources, Inc.,
CompFirst, Inc. and the International Advisory Services Group of
Companies.
Total revenues amounted to $91.9 million for the quarter ended March 31, 1999
representing an increase of 27% over the corresponding 1998 period. Table II
shows the major components of Revenues for these periods.
TABLE II - REVENUES
Three Months Ended March 31,
1999 1998 Increase
---- ---- --------
Fee income $ 45,494 $ 35,824 27%
Premiums earned 38,785 28,929 34%
Net investment income 7,221 8,064 (10%)
Realized capital gains (losses) 502 (213) N/M
Other losses (109) (130) N/M
-------- -------- ---
Total $ 91,893 $ 72,474 27%
======== ======== ===
9
<PAGE>
Fee income grew by 27% in the first quarter to $45.5 million, as compared to
$35.8 million in 1998. Pre-tax profit margins were 36% for the first quarter as
compared to 35% in 1998.
SEGMENT ANALYSIS
The components of Fee income by business segment are illustrated in Table
III.
TABLE III - FEE INCOME BY BUSINESS SEGMENT
Three Months Ended March 31,
1999 1998 Increase
---- ---- --------
Program business fees $22,908 $16,207 41%
Corporate risk management fees 15,025 14,702 2%
Specialty brokerage fees 3,141 2,013 56%
Financial services fees 4,420 2,902 52%
------- ------- --
Total $45,494 $35,824 27%
======= ======= ==
Program Business
Program Business involves replacing traditional insurers and acting as a conduit
between producers of specialty books of business and reinsurers wishing to write
that business. The segment accounted for 50% of total Fee Income in the quarter
compared to 45% in the corresponding 1998 period. Program Business fees
increased by 41% in the first quarter to $22.9 million as compared to $16.2
million in 1998. This resulted from the continued expansion of this business
segment both through the growth of existing programs and the addition of new
programs. Profit margins were 36% for both quarters.
Gross premiums written increased 27% to $231.9 million for 1999 as compared to
$182.4 million in 1998, 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 34% to
$38.8 million in the first quarter of 1999, as compared to $28.9 million in the
corresponding 1998 period. These increases in Premiums earned were also
primarily due to the growth within the Program Business segment.
Corporate Risk Management
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 33% of total Fee income in the first three months of 1999, down
from 41% in 1998. Corporate Risk Management fees increased by 2% in the first
quarter to $15.0 million. Profit margins were 44% in the first quarter as
compared to 45% in 1998.
Specialty Brokerage
The Company's Specialty Brokerage business segment provides access to
Alternative Risk Transfer insurers and reinsurers in Bermuda and Europe. The
segment produced $3.1 million of total Fee income in the first three months of
1999 representing 7% of total Fee income. Specialty Brokerage fees grew by 56%
in the first quarter as a result of increased business placed in Bermuda and
London. Profit margins
10
<PAGE>
were 49% in the first quarter, as compared to 15% in the corresponding 1998
period as a result of the increased revenues in 1999.
Financial Services
Financial Services, the Company's newest business segment, provides
administrative services to offshore mutual funds and other companies. The
segment accounted for 10% of total Fee income for the first quarter of 1999.
Fees from Financial Services increased in the quarter by 52% to $4.4 million
over the 1998 corresponding period, primarily as a result of an increase in the
number of mutual funds under administration to 205 from 150. Profit margins in
the Financial Services segment were adversely affected in 1998 and 1999 by the
previously announced revised executive incentive plan and staff expansion costs
to service new business, but increased to 3% for the first three months of 1999.
Excluding the effect of the revised executive incentive plan, the profit margins
in this segment would have been 15% for the quarter as compared to 12% in 1998.
Investment Income
Gross investment income decreased by $.5 million or 5.1% to $8.7 million in the
first quarter of 1999 over 1998. Net investment income decreased by 10% to $7.2
million in the first three months of 1999 as compared to $8.1 million in 1998
due primarily to the strong investment performance in the first quarter of 1998.
Investment yields were 6.7 % in the first quarter of 1999 as compared to 7.9% in
the corresponding 1998 period.
TABLE IV - EXPENSES Three Months Ended March 31,
1999 1998 Increase
---- ---- --------
Operating expenses $29,100 $23,344 25%
Total insurance costs 39,724 29,595 34%
Interest expense 1,602 1,727 (7%)
Other expenses 661 366 80%
------- ------- --
Total $71,087 $55,032 29%
======= ======= ==
Operating expenses increased 25% to $29.1 million for the quarter, compared to
$23.3 million in the first quarter of last year. The increase in Operating
expenses is attributable to recent acquisitions, growth in personnel and other
expenses resulting from the increased business.
The fluctuations in Total insurance costs are the direct result of the
fluctuations in Premiums earned during the quarter.
The effective tax rate was 9.7% in the quarter compared to 13% in the
corresponding 1998 period. The decrease in the rate is due mainly to an increase
in earnings outside of the United States. This plus the Company's investment in
tax-exempt municipal securities, offset by state income taxes and foreign taxes,
are the major causes of the difference between the expected federal income tax
rate in the United States of 35% plus state income taxes and the Company's
effective rates.
11
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Total assets increased to $3.2 billion at March 31, 1999 from $3.1 billion at
December 31, 1998. Assets held in separate accounts which are principally
managed assets attributable to participants in the Company's IPC Programs
accounted for approximately 23% of Total assets at March 31, 1999 and December
31, 1998. Total Shareholders' equity increased to $374 million at March 31, 1999
from $343 million at December 31, 1998 primarily as a result of Net income in
the year and the issuance of Common Shares on the conversion of Debentures
offset by the payment of dividends. Return on equity was 21% for the quarter.
CASH FLOW
Cash flow from operations has historically provided the Company its principal
source of liquidity. The negative cash flow from operating activities in the
first quarter was due primarily to the Company's Program Business segment not
producing the expected levels of cash flow during the quarter but the Company
believes it will return to a positive cash flow during the year and will be able
to meet its liquidity requirements.
IMPACT OF THE YEAR 2000 ISSUE
The Company began assessing the impact of the Year 2000 issue on its computer
hardware and software systems in 1997. Certain systems have been identified for
replacement before year-end 1999 due to normal business requirements. The
replacement systems will be assessed for Year 2000-related problems. Remediation
is expected to continue through the end of the 1999 third quarter at a cost that
is not expected to be material to the Company. Currently management has
inventoried and is conducting a review of all such systems. As of March 31,
1999, the Company's historical Year 2000 remediation costs have not been
material. The Company's lack of legacy systems is fortunate, most of its
applications are PC databases, some networked but most from a programming stand
point, easily corrected. As of this disclosure date, management has not
identified any hardware or software computer system within the Company with a
significant Year 2000 compliance problem that is expected to have a materially
adverse effect on the Company's financial condition or results of operations. As
the Company regularly updates its hardware and software the pure additional cost
for Year 2000 compliance should not be material.
The Company continues to assess the Year 2000 compliance of its critical
business operations and products that could potentially be affected by the Year
2000 problem. The purpose of this review is to determine what impact, if any,
the Year 2000 issue may have on the Company and its significant customers,
suppliers, and others, and whether that impact will be material to the Company's
financial condition or results of operations. The Company is in the process of
contacting its critical customers, reinsurance intermediaries, managing general
agents, suppliers, and others to determine the nature and extent of their Year
2000 compliance efforts and to assess whether their failure to resolve their own
Year 2000 issues would have a material adverse affect on the Company's financial
condition or results of operations. Based on these assessments, management will
take such further action as they deem appropriate including, but not limited to,
the development of contingency plans.
The extent to which the Company's financial condition or results of operations
may be materially affected by the Year 2000 problems of third parties depends on
a variety of factors including, but not limited to, whether these third parties
can resolve their own Year 2000 issues; whether their remediated systems remain
compatible with the Company's systems; and the nature and extent to which the
Company's systems may be affected by the third party's non compliant systems.
Significant failures of certain essential services including, but not limited
to, the telecommunications, utility, banking, securities, and transportation
industries, due to their own Year 2000 problems are generally beyond the
Company's
12
<PAGE>
control and could have an adverse material impact on the Company's financial
condition or results of operations.
SAFE HARBOR DISCLOSURE FOR FORWARD-LOOKING STATEMENTS
In connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995 (the "1995 Act"), the Company sets forth below
cautionary statements identifying important factors that could cause the
Company's actual results to differ materially from those which might be
projected, forecasted, or estimated or otherwise implied in the Company's
forward-looking statements, as defined in the 1995 Act, made by or on behalf of
the Company in press releases, written statements or documents filed with the
Securities and Exchange Commission, or in its communications and discussions
with investors and analysts in the normal course of business through meetings,
telephone calls and conference calls. Such statements may include, but are not
limited to, projections of Fee income, Premiums earned, Net investment income,
Other income, Losses and loss expenses incurred, Acquisition costs, Operating
expenses, Other expenses, earnings (including earnings per share), cash flows,
plans for future operations, Shareholders' equity, financing needs, capital
plans, dividends, plans relating to products or services of the Company, and
estimates concerning the effects of litigation or other disputes, as well as
assumptions for any of the foregoing and are generally expressed with words such
as "believes", "estimates", "expects", "anticipates", "could have", "may have",
and similar expressions.
Forward-looking statements are inherently subject to risks and uncertainties.
The Company cautions that factors which may cause the Company's results to
differ materially from such forward-looking statements include, but are not
limited to, the following: (a) Changes in the level of competition in the
reinsurance or primary insurance markets that adversely affect the volume or
profitability of the Company's business. These changes include, but are not
limited to, the intensification of price competition, the entry of new
competitors, existing competitors exiting the market, and the development of new
products by new and existing competitors; (b) Changes in the demand for
reinsurance, including changes in ceding companies' retentions, and changes in
the demand for primary and excess and surplus lines insurance coverages; (c) The
ability of the company to execute its business strategies and its reliance on
key personnel; (d) Adverse development on claims and claims expense liabilities
related to business and the failure of clients, reinsurers or others to meet
their obligations to the Company in connection with such losses.
ACQUISITIONS
On March 1, 1999, the Company acquired Captive Resources, Inc. ("CRI"), a
provider of services to member-owned group captive insurance companies. CRI has
long-term contracts with more than 20 well established captives.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
No material changes since December 31, 1998 Form 10-K.
13
<PAGE>
PART II - OTHER INFORMATION
Item 2. Changes in Securities
During the quarter ended March 31, 1999, Registrant issued the following
securities in the following transactions which were not registered under the
Securities Act of 1933, as amended (the "Act"):
1. (a) Securities Sold: 1,058,766 Common Shares of the Registrant on March
1, 1999.
(b) No underwriters participated in the sale of the Common Shares. The
Common Shares were issued to each of the following:
NAME NUMBER OF COMMON SHARES
George Rusu 518,795
KVH Family Trust 539,971
(c) The Common Shares were issued at a deemed purchase price of $34.30
per share (aggregate price $36,315,673.80), based upon the market
value on the date of issuance. The Common Shares were issued as
consideration in connection with the acquisition by the Registrant
of Captive Resources, Inc., pursuant to an Agreement and Plan of
Merger dated February 26, 1999.
(d) An exemption from registration under the Act was claimed based upon
Section 4(2) as a sale by an issuer not involving a public offering.
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 Schedules
27.1 Current quarter ended Mar-31-1999
27.2 Restated FDS for fiscal year ended Dec-31-1998
27.3 Restated FDS for quarter ended Sep-30-1998
27.4 Restated FDS for quarter ended Jun-30-1998
27.5 Restated FDS for quarter ended Mar-31-1998
27.6 Restated FDS for fiscal year ended Dec-31-1997
27.7 Restated FDS for quarter ended Sep-30-1997
27.8 Restated FDS for quarter ended Jun-30-1997
27.9 Restated FDS for quarter ended Mar-31-1997
27.10 Restated FDS for fiscal year ended Dec-31-1996
B. Reports on Form 8-K. No reports on Form 8-K were filed during the
three month period ended March 31, 1999.
14
<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, 1999
15
<PAGE>
EXHIBIT 11.1
MUTUAL RISK MANAGEMENT LTD.
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended March, 31
1999 1998
(in thousands except share and per share amounts)
<S> <C> <C>
Basic
Income Available to Common Shareholders $ 18,799 $ 15,175
============ ============
Weighted Average Common Shares outstanding 42,634,135 39,948,605
------------ ------------
Basic earnings per Common Share
$ 0.44 $ 0.38
============ ============
Diluted
Income Available to Common Shareholders $ 18,799 $ 15,175
Debenture interest 1,553 1,675
------------ ------------
$ 20,352 $ 16,850
============ ============
Weighted Average Common Shares outstanding 42,634,135 39,948,605
------------ ------------
Common share equivalents associated with options, Redeemable Common Shares
and Convertible Debentures :
Options 4,507,170 4,140,943
Redeemable Common Shares 0 937,168
Convertible Debentures 5,743,704 6,978,800
------------ ------------
10,250,874 12,056,911
Common Shares purchased with proceeds from
options exercised (2,473,650) (2,242,587)
------------ ------------
7,777,224 9,814,324
------------ ------------
Total Weighted Average Common Shares 50,411,359 49,762,929
============ ============
Diluted earnings per Common Share $ 0.40 $ 0.34
============ ============
</TABLE>
<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, 1999 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000826918
<NAME> MUTUAL RISK MANAGEMENT LTD.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 473,806
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 473,806
<CASH> 82,988
<RECOVER-REINSURE> 1,162,045
<DEFERRED-ACQUISITION> 31,477
<TOTAL-ASSETS> 3,184,564
<POLICY-LOSSES> 1,267,338
<UNEARNED-PREMIUMS> 248,983
<POLICY-OTHER> 77,933
<POLICY-HOLDER-FUNDS> 42,248
<NOTES-PAYABLE> 116,749
0
0
<COMMON> 433
<OTHER-SE> 373,900
<TOTAL-LIABILITY-AND-EQUITY> 3,184,564
38,785
<INVESTMENT-INCOME> 7,221
<INVESTMENT-GAINS> 502
<OTHER-INCOME> 45,385
<BENEFITS> 26,229
<UNDERWRITING-AMORTIZATION> 13,495
<UNDERWRITING-OTHER> 31,363
<INCOME-PRETAX> 20,806
<INCOME-TAX> 2,014
<INCOME-CONTINUING> 18,791
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,799
<EPS-PRIMARY> 0.44
<EPS-DILUTED> 0.40
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MUTUAL RISK
MANAGEMENT LTD.'S FINANCIAL STATEMENTS AS OF DECEMBER 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
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 460,624
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 460,624
<CASH> 117,423
<RECOVER-REINSURE> 1,079,563
<DEFERRED-ACQUISITION> 27,215
<TOTAL-ASSETS> 3,074,257
<POLICY-LOSSES> 1,190,426
<UNEARNED-PREMIUMS> 241,893
<POLICY-OTHER> 79,753
<POLICY-HOLDER-FUNDS> 37,448
<NOTES-PAYABLE> 129,023
0
0
<COMMON> 422
<OTHER-SE> 342,744
<TOTAL-LIABILITY-AND-EQUITY> 3,074,257
101,913
<INVESTMENT-INCOME> 29,590
<INVESTMENT-GAINS> (1,003)
<OTHER-INCOME> 157,414
<BENEFITS> 78,258
<UNDERWRITING-AMORTIZATION> 26,061
<UNDERWRITING-OTHER> 110,625
<INCOME-PRETAX> 72,970
<INCOME-TAX> 8,536
<INCOME-CONTINUING> 64,434
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 64,527
<EPS-PRIMARY> 1.56
<EPS-DILUTED> 1.42
<RESERVE-OPEN> 85,764
<PROVISION-CURRENT> 74,476
<PROVISION-PRIOR> 3,782
<PAYMENTS-CURRENT> 15,039
<PAYMENTS-PRIOR> 38,119
<RESERVE-CLOSE> 110,864
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MUTUAL RISK
MANGEMENT LTD.'S FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000826918
<NAME> MUTUAL RISK MANAGEMENT LTD.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 487,797
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 487,797
<CASH> 92,813
<RECOVER-REINSURE> 758,154
<DEFERRED-ACQUISITION> 29,315
<TOTAL-ASSETS> 2,654,300
<POLICY-LOSSES> 854,169
<UNEARNED-PREMIUMS> 234,222
<POLICY-OTHER> 87,908
<POLICY-HOLDER-FUNDS> 37,524
<NOTES-PAYABLE> 129,722
0
0
<COMMON> 419
<OTHER-SE> 325,572
<TOTAL-LIABILITY-AND-EQUITY> 2,654,300
73,993
<INVESTMENT-INCOME> 21,802
<INVESTMENT-GAINS> (1,099)
<OTHER-INCOME> 115,866
<BENEFITS> 51,637
<UNDERWRITING-AMORTIZATION> 24,042
<UNDERWRITING-OTHER> 79,984
<INCOME-PRETAX> 54,900
<INCOME-TAX> 6,579
<INCOME-CONTINUING> 48,321
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 48,363
<EPS-PRIMARY> 1.18
<EPS-DILUTED> 1.06
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MUTUAL RISK
MANGEMENT LTD.'S FINANCIAL STATEMENTS AS OF JUNE 30, 1998 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000826918
<NAME> MUTUAL RISK MANAGEMENT LTD.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 393,671
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 393,671
<CASH> 75,345
<RECOVER-REINSURE> 717,409
<DEFERRED-ACQUISITION> 26,541
<TOTAL-ASSETS> 2,498,650
<POLICY-LOSSES> 805,381
<UNEARNED-PREMIUMS> 240,845
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 43,420
<NOTES-PAYABLE> 128,356
0
0
<COMMON> 418
<OTHER-SE> 306,375
<TOTAL-LIABILITY-AND-EQUITY> 2,498,650
49,806
<INVESTMENT-INCOME> 15,223
<INVESTMENT-GAINS> (1,157)
<OTHER-INCOME> 73,755
<BENEFITS> 33,877
<UNDERWRITING-AMORTIZATION> 16,892
<UNDERWRITING-OTHER> 51,268
<INCOME-PRETAX> 35,590
<INCOME-TAX> 4,324
<INCOME-CONTINUING> 31,266
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 31,266
<EPS-PRIMARY> 0.77
<EPS-DILUTED> 0.69
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MUTUAL RISK
MANGEMENT 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
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 404,088
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 404,088
<CASH> 80,052
<RECOVER-REINSURE> 697,459
<DEFERRED-ACQUISITION> 26,486
<TOTAL-ASSETS> 2,356,572
<POLICY-LOSSES> 796,103
<UNEARNED-PREMIUMS> 198,395
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 42,145
<NOTES-PAYABLE> 132,860
0
0
<COMMON> 411
<OTHER-SE> 280,729
<TOTAL-LIABILITY-AND-EQUITY> 2,356,572
28,929
<INVESTMENT-INCOME> 8,064
<INVESTMENT-GAINS> (213)
<OTHER-INCOME> 35,694
<BENEFITS> 21,499
<UNDERWRITING-AMORTIZATION> 8,096
<UNDERWRITING-OTHER> 25,437
<INCOME-PRETAX> 17,442
<INCOME-TAX> 2,267
<INCOME-CONTINUING> 15,175
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,175
<EPS-PRIMARY> 0.38
<EPS-DILUTED> 0.34
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MUTUAL RISK
MANGEMENT LTD.'S FINANCIAL STATEMENTS AS OF DECEMBER 31, 1997 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000826918
<NAME> MUTUAL RISK MANAGEMENT LTD.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 395,143
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 395,143
<CASH> 82,706
<RECOVER-REINSURE> 630,697
<DEFERRED-ACQUISITION> 29,992
<TOTAL-ASSETS> 2,206,050
<POLICY-LOSSES> 716,461
<UNEARNED-PREMIUMS> 188,389
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 42,445
<NOTES-PAYABLE> 130,890
0
0
<COMMON> 399
<OTHER-SE> 263,176
<TOTAL-LIABILITY-AND-EQUITY> 2,206,050
84,200
<INVESTMENT-INCOME> 26,592
<INVESTMENT-GAINS> (1,609)
<OTHER-INCOME> 121,315
<BENEFITS> 49,857
<UNDERWRITING-AMORTIZATION> 35,816
<UNDERWRITING-OTHER> 84,716
<INCOME-PRETAX> 60,110
<INCOME-TAX> 10,632
<INCOME-CONTINUING> 49,477
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 49,372
<EPS-PRIMARY> 1.25
<EPS-DILUTED> 1.15
<RESERVE-OPEN> 69,419
<PROVISION-CURRENT> 50,301
<PROVISION-PRIOR> (444)
<PAYMENTS-CURRENT> (10,850)
<PAYMENTS-PRIOR> (22,662)
<RESERVE-CLOSE> 85,764
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MUTUAL RISK
MANGEMENT LTD.'S FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 1997 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000826918
<NAME> MUTUAL RISK MANAGEMENT LTD.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 377,031
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 377,031
<CASH> 98,810
<RECOVER-REINSURE> 453,556
<DEFERRED-ACQUISITION> 22,908
<TOTAL-ASSETS> 1,977,610
<POLICY-LOSSES> 538,575
<UNEARNED-PREMIUMS> 166,763
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 37,925
<NOTES-PAYABLE> 129,586
0
0
<COMMON> 395
<OTHER-SE> 247,049
<TOTAL-LIABILITY-AND-EQUITY> 1,977,610
62,530
<INVESTMENT-INCOME> 19,759
<INVESTMENT-GAINS> (1,083)
<OTHER-INCOME> 88,268
<BENEFITS> 37,125
<UNDERWRITING-AMORTIZATION> 26,412
<UNDERWRITING-OTHER> 61,497
<INCOME-PRETAX> 44,441
<INCOME-TAX> 8,003
<INCOME-CONTINUING> 36,438
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36,333
<EPS-PRIMARY> 0.92
<EPS-DILUTED> 0.85
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MUTUAL RISK
MANGEMENT LTD.'S FINANCIAL STATEMENTS AS OF JUNE 30, 1997 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000826918
<NAME> MUTUAL RISK MANAGEMENT LTD.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 401,508
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 401,508
<CASH> 64,037
<RECOVER-REINSURE> 401,463
<DEFERRED-ACQUISITION> 21,019
<TOTAL-ASSETS> 1,866,919
<POLICY-LOSSES> 481,295
<UNEARNED-PREMIUMS> 151,259
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 40,552
<NOTES-PAYABLE> 127,910
2,952
0
<COMMON> 394
<OTHER-SE> 233,227
<TOTAL-LIABILITY-AND-EQUITY> 1,866,919
35,183
<INVESTMENT-INCOME> 13,138
<INVESTMENT-GAINS> (1,471)
<OTHER-INCOME> 56,434
<BENEFITS> 19,216
<UNDERWRITING-AMORTIZATION> 16,688
<UNDERWRITING-OTHER> 39,590
<INCOME-PRETAX> 27,790
<INCOME-TAX> 4,928
<INCOME-CONTINUING> 22,862
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,779
<EPS-PRIMARY> 0.58
<EPS-DILUTED> 0.54
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MUTUAL RISK
MANGEMENT LTD.'S FINANCIAL STATEMENTS AS OF MARCH 31, 1997 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000826918
<NAME> MUTUAL RISK MANAGEMENT LTD.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 333,990
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 333,990
<CASH> 119,868
<RECOVER-REINSURE> 380,766
<DEFERRED-ACQUISITION> 25,151
<TOTAL-ASSETS> 1,785,459
<POLICY-LOSSES> 456,224
<UNEARNED-PREMIUMS> 118,219
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 44,070
<NOTES-PAYABLE> 126,645
2,952
0
<COMMON> 393
<OTHER-SE> 216,913
<TOTAL-LIABILITY-AND-EQUITY> 1,785,459
17,952
<INVESTMENT-INCOME> 6,067
<INVESTMENT-GAINS> (774)
<OTHER-INCOME> 27,472
<BENEFITS> 7,663
<UNDERWRITING-AMORTIZATION> 10,605
<UNDERWRITING-OTHER> 19,320
<INCOME-PRETAX> 13,129
<INCOME-TAX> 2,284
<INCOME-CONTINUING> 10,844
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,803
<EPS-PRIMARY> 0.28
<EPS-DILUTED> 0.26
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MUTUAL RISK
MANGEMENT LTD.'S FINANCIAL STATEMENTS AS OF DECEMBER 31, 1996 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000826918
<NAME> MUTUAL RISK MANAGEMENT LTD.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 400,191
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 400,191
<CASH> 56,821
<RECOVER-REINSURE> 350,318
<DEFERRED-ACQUISITION> 20,613
<TOTAL-ASSETS> 1,690,428
<POLICY-LOSSES> 419,737
<UNEARNED-PREMIUMS> 93,741
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 45,689
<NOTES-PAYABLE> 124,710
2,952
0
<COMMON> 391
<OTHER-SE> 210,952
<TOTAL-LIABILITY-AND-EQUITY> 1,690,428
56,413
<INVESTMENT-INCOME> 22,654
<INVESTMENT-GAINS> (2,002)
<OTHER-INCOME> 94,362
<BENEFITS> 32,435
<UNDERWRITING-AMORTIZATION> 24,185
<UNDERWRITING-OTHER> 68,341
<INCOME-PRETAX> 46,465
<INCOME-TAX> 8,142
<INCOME-CONTINUING> 38,322
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 37,900
<EPS-PRIMARY> 0.99
<EPS-DILUTED> 0.93
<RESERVE-OPEN> 59,011
<PROVISION-CURRENT> 35,456
<PROVISION-PRIOR> (3,021)
<PAYMENTS-CURRENT> (11,072)
<PAYMENTS-PRIOR> (10,955)
<RESERVE-CLOSE> 69,419
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
