SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 1O-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 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 1-11238.
NYMAGIC, INC.
(Exact name of registrant as specified in its charter)
New York 13-3534162
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
330 Madison Avenue, New York, NY 10017
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 551-0600
---------
Securities registered pursuant to Section 12(b) of the Act:
Name of each
Title of each class: exchange on which registered:
Common Stock, $1.00 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
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 by check mark if disclosure of delinquent filers pursuant to Rule 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [_]
The aggregate market value of voting stock held by non-affiliates of the
registrant, as of March 1, 1999, was approximately $57,150,292.
The number of shares outstanding of each of the registrant's classes of common
stock, as of March 1, 1999, was 9,685,492 shares of common stock, $1.00 par
value.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company's Proxy Statement for the 1999 Annual Meeting of
Shareholders are incorporated by reference in Part III.
1
<PAGE>
Part I
Item 1. Business.
General
NYMAGIC, INC., a New York corporation (the "Company" or "NYMAGIC"), is a
holding company which owns and operates the following insurance companies, risk
bearing entities and insurance underwriters and managers:
Insurance Companies and Lloyd's Corporate Capital Vehicle:
New York Marine And General Insurance Company - ("New York Marine")
Gotham Insurance Company - ("Gotham")
MMO UK, Ltd.
Insurance Underwriters and Managers:
Mutual Marine Office, Inc. - ("MMO")
Pacific Mutual Marine Office, Inc. - ("PMMO")
Mutual Marine Office of the Midwest, Inc. - ("Midwest")
MMO Underwriting Agency, Ltd.
all of which are collectively referred to hereinafter as the "Company."
The Company's insurance company subsidiaries, New York Marine and Gotham,
each maintain an A.M. Best insurance rating of A+.
NYMAGIC, through its subsidiaries, specializes in underwriting ocean marine,
inland marine, aviation and other liability insurance through insurance pools
managed by MMO, PMMO, and Midwest (collectively referred to as "MMO and
affiliates") since 1964. MMO and affiliates were acquired by NYMAGIC in January
1991. In addition to managing the insurance pools, NYMAGIC participates in the
risks underwritten for the pools through two insurance company subsidiaries, New
York Marine and Gotham. All premiums, losses and expenses are pro-rated among
pool members in accordance with their pool participation percentages.
On December 31, 1997, the Company acquired ownership of Highgate Managing
Agencies, Ltd. which subsequently changed its name to MMO Underwriting Agency,
Ltd. MMO Underwriting Agency Ltd. is a Lloyd's managing agency which commenced
underwriting in 1998 for the Company's wholly owned subsidiary MMO UK, Ltd.
which is a Lloyd's corporate capital vehicle providing 100% of the capital for
Syndicate 1265 (collectively referred to as "Syndicate 1265").
The Company has approximately 119 employees of whom 22 are underwriters.
This report contains certain forward-looking statements concerning the
Company's operations, economic performance and financial condition, including,
in particular the likelihood of the Company's success in developing and
expanding its business and Year 2000 compliance. These statements are based upon
a number of assumptions and estimates which are inherently subject to
significant uncertainties and contingencies, many of which are beyond the
control of the Company, and reflect future business decisions which are subject
to change. Some of these assumptions inevitably will not materialize, and
unanticipated events will occur which will affect the Company's results.
Such statements are made under the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. These statements may include, but are
not limited to, projections of premium revenue, investment income, other
revenue, losses, expenses, earnings, cash flows, plans for future operations,
common stockholders' equity, investments, capital plans, dividends, plans
relating to products or services of, plans for Year 2000 compliance, and
estimates concerning the effects of litigation or other disputes, as well as
assumptions of any of the foregoing and are generally expressed with words such
as "believes," "estimates", "expects," "anticipates," "plans," "projects,"
"forecasts," "goals", "could have," "may have" and similar expressions.
2
<PAGE>
The Pools
MMO, located in New York, PMMO, located in San Francisco and Midwest,
located in Chicago (the "Manager" or the "Managers"), manage the insurance pools
in which the Company participates.
The Manager accepts, on behalf of the pools, insurance risks brought to
the pools by brokers and others. All premiums, losses and expenses are prorated
among the pool members in accordance with their percentage participations in the
pools. Pursuant to the pool management agreements, the pool members have agreed
not to accept ocean marine insurance (other than ocean marine reinsurance)
unless received through the Manager and have authorized the Manager to accept
risks on behalf of the pool members and to effect all transactions in connection
with such risks, including the issuance of policies and endorsements and the
adjustment of claims. As compensation for its services, the Manager receives a
fee of 5.5% of gross premiums written by the pools and a contingent commission
of 10% on net underwriting profits, subject to adjustment.
Inception to date underwriting results for various reinsurance treaties
are used to calculate reinsurance contingent commissions on an earned basis in
the period in which the related profit commission is billed. Adjustments to
commissions, resulting from revisions in coverage, retroactive or audit
adjustments, are recorded in the period when realized. Subject to review by the
reinsurers, the Managers determine the profitability of all contingent
commission agreements placed with various reinsurance companies.
The Company participation in the business underwritten for the pools by
the Manager has increased over the years and, since January 1, 1997, the Company
has had a 100% participation in all lines of business produced by the pools.
Two former pool members, Utica Mutual Insurance Company and Arkwright
Mutual Insurance Company withdrew from the pools and retained liability for
their effective pool participation for all loss reserves, including IBNR and
unearned premium reserves, incurred on policies effective prior to their
withdrawal from the pools.
The Company is not aware of any uncertainties with respect to any possible
defaults by either Arkwright or Utica Mutual with respect to their pool
obligations which might impact liquidity or results of operations.
Assets and liabilities resulting from the insurance pools are allocated to
the members of the insurance pools based upon the pro-rata participation of each
member of each pool which is set forth in the management agreement entered into
by and between the pool participants and the Managers.
Investment Policy
The Company follows an investment policy which is reviewed quarterly and
revised periodically. For the years ended December 31, 1998 and 1997, the yield
on the Company's investment portfolio (computed on the basis of average monthly
cost of investment and statutory investment income) was 5.4% and 5.7%,
respectively. At December 31, 1998, the weighted average maturity of fixed
maturity investments was 6.4 years.
The investment policy for New York Marine as of December 31, 1998, was as
follows:
1. Liquid Funds - Minimum 7-1/2% of Investable Funds. In cash,
certificates of deposit, prime bankers acceptances, prime commercial
paper, tax-exempts rated Aa3/AA- or MIG 2 or better, tax-exempts
rated Aa3 or AA- by one service and unrated by the other, not to
exceed $5,000,000 par value in any one institution; obligations of
the U.S. Government and its agencies due one year or less;
tax-exempt notes with a split A1/AA- or Aa3/A+ rating not to exceed
$500,000 in any one institution.
3
<PAGE>
2. Bond Funds
A) Tax-exempt securities and obligations of private corporations
rated A3/A- or better by each service which provides a rating,
not to exceed $5,000,000 maturity value per issuing entity;
maturities not to exceed December 31 of the 20th year from the
purchase date, to include:
1) Pollution - control bonds guaranteed by industrial
corporations rated A3/A- or better.
2) Pre-refunded bonds.
3) Housing issues sponsored by the U.S. Government and its
agencies secured by underlying mortgage securities with
maturities not in excess of 30 years and average
maturities not in excess of 20 years.
B) Preferred stocks with sinking funds, rated A3/A- or better,
limited to $500,000 par value per issuer for new issues; to
$500,000 purchase price for outstanding issues.
C) Obligations of the U.S. Government and its agencies.
3. A) Equities (including convertible securities) - Not more than 25%
of policyholders' surplus, and investment in any one institution is
not to exceed five percent (5%) of policyholders' surplus at the
time of purchase as last reported to the New York State Insurance
Department.
B) Subsidiaries - the Company's investments in subsidiary
companies are excluded from the requirements of the Company's
Investment Program.
The investment policy of Gotham is similar to that of New York Marine
except that Gotham is limited to $2,000,000 maturity value for its bond
investments and $1,000,000 for short-term investments.
The investments of the Company's subsidiaries must also conform to the
requirements contained in the New York State Insurance Law and Regulations.
The Company's investments are monitored by the Finance Committee of the
Board of Directors. New York Marine's fixed income portfolio is managed by J.P.
Morgan Investment Management, Inc. ("JPMIM"). New York Marine's equity portfolio
is managed by JPMIM and, in part, by Groupama Asset Management. Gotham has its
fixed income portfolio managed by JPMIM and its equity portfolio managed by
Rorer Asset Management. The Company's U.K. operations have investments managed
by Aberdeen Asset Managers Ltd. See "Subsidiaries".
As of December 31, 1998, The Company's invested assets were invested as
follows:
(In thousands)
New York Marine Gotham Syndicate 1265
--------------- ------ --------------
Bonds Rated A- or better .. $271,501 $ 77,901 $4,001
Bonds Rated below A- ...... -0- -0- -0-
Equities .................. $ 56,295 $ 17,123 -0-
4
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Lines of Insurance
The Company writes ocean marine, inland marine, aircraft and non-marine
liability lines of insurance. These lines of business are considered, for
operational purposes, as the Company's main segments for analyzing underwriting
income. Ocean marine insurance covers a broad range of classes, including marine
hull, primary and excess marine liabilities, drilling rig, marine cargo, war
risks and assumed reinsurance. Inland marine insurance includes, among other
things, differences in condition ("DIC"), excess property packages,
miscellaneous property insurance and assumed reinsurance. DIC insurance covers
those perils not included with a fire and extended coverage policy, including
burglary, collapse, flood, volcano and earthquake. Aircraft insurance includes
hull and engine insurance as well as liability insurance. Non-marine liability
insurance includes, among other things, umbrella (excess casualty) insurance,
and excess and surplus line risks written primarily through Gotham.
The following tables set forth the pools' gross and net written premiums
including business from Syndicate 1265. Insurance premiums written on a calendar
year basis may be attributable to various policy years. Thus, some of the
calendar year premiums written may arise from policies incepting in 1996 and
prior when the Company had a different participation in the pools. Therefore,
the Company's gross and net written premiums cannot be obtained by multiplying
the amounts below by the Company's percentage participation in each year.
However, the tables below, which set forth calendar year premiums, do reflect
the size and mix of business produced by the Managers for the years so
indicated.
Year Ended December 31,
-------------------------------------------------------
Gross Premiums Written by
Line of Business 1998(a) 1997 1996
- - ---------------------- --------- --------- --------
(In thousands)
Ocean marine ......... $ 78,768 60% $ 72,995 59% $ 87,519 56%
Inland marine ........ 1,321 1% 1,117 1% 1,651 1%
Aircraft ............. 36,594 28% 45,853 37% 61,067 39%
Other liability ...... 3,176 2% 3,897 3% 5,309 4%
Other.(b) ............ 12,337 9% 207 -- 358 --
--------- --- --------- --- --------- ---
Total ................ $ 132,196 100% $ 124,069 100% $ 155,904 100%
========= === ========= === ========= ===
Year Ended December 31,
-------------------------------------------------------
Net Premiums Written by
Line of Business 1998(a) 1997 1996
- - ---------------------- ---------- --------- --------
(In thousands)
Ocean marine ......... $ 58,800 82% $ 49,666 79% $ 58,771 59%
Inland marine ........ (355) -- (217) -- (2,087) (2%)
Aircraft ............. (551) -- 9,568 15% 37,682 38%
Other liability ...... 2,977 4% 3,864 6% 5,325 5%
Other.(b) ............ 10,587 14% 207 -- 374 --
--------- --- --------- --- --------- ---
Total ................ $ 71,954 100% $ 63,088 100% $ 100,065 100%
========= === ========= === ========= ===
(a) Includes gross ocean marine premiums written and net ocean marine premiums
written from Syndicate 1265 of $17,817 and $16,832, respectively. This
represents approximately 23% and 29% of ocean marine premiums on a gross
and net basis, respectively.
(b) In 1998, includes a one-time assumption of miscellaneous casualty premiums
of $12,313 and $10,563 on a gross and net basis, respectively.
5
<PAGE>
Reinsurance Ceded
A reinsurance transaction takes place when an insurance company transfers
(cedes) a portion or all of its exposure on insurance written by it to another
insurer. The reinsurer assumes the exposure in return for a portion or all of
the premium. The ceding of reinsurance does not legally discharge the insurer
from its primary liability for the full amount of the policies, and the ceding
company is required to pay the loss if the assuming company fails to meet its
obligations under the reinsurance agreement. The Company, through the pools,
cedes the greater part of its reinsurance through annual reinsurance agreements
(treaties) with other insurance companies. These treaties, which are drawn by
lines or classes of insurance, allow the Company to automatically reinsure risks
without having to cede insurance on a risk by risk (facultative) basis, although
facultative reinsurance is utilized on occasion.
Generally, the Managers place reinsurance with companies which have an
A.M. Best rating greater than B+ or which have sufficient financial strength, in
management's opinion, to warrant being used for reinsurance protections. The
Managers also examine financial statements of reinsurers and review such
statements for profitability, reasonable leverage and adequate surplus. In
addition, the Company, through the pools, withholds funds and may obtain letters
of credit under reinsurance treaties. The Company continues to monitor the
financial status of all reinsurers on an annual basis, as well as the timely
receipt of cash, to assess the ability of reinsurers to pay reinsurance claims.
The Company, through the pools, attempts to limit its exposure from losses
on any one occurrence through the use of various excess of loss, quota share and
facultative reinsurance arrangements and to minimize the risk of default by a
reinsurer by reinsuring risks with many different reinsurers. The Company
utilizes many separate reinsurance treaties each year with a range of 8 to 20
reinsurers participating on each treaty. Many reinsurers participate on multiple
treaties. The Company utilizes quota share reinsurance treaties in which the
reinsurers participate on a set proportional basis in both the premiums and
losses. Additionally, the Company utilizes excess of loss reinsurance treaties
in which the reinsurers, in exchange for a minimum premium, subject to upward
adjustment based upon premium volume, agree to pay for that part of each loss in
excess of an agreed upon amount. The Company's retention of exposure, net of
these treaties, varies between its different classes of business and from year
to year, depending on several factors including the pricing environment on both
the direct and ceded book of business and the availability of reinsurance. In
general, reinsurance is obtained for each line of business when necessary to
reduce the Company's exposure to a maximum of $2 million for any one insured on
any one occurrence. The Company can and does, from time to time, carry a maximum
exposure in excess of $2 million for any one insured on any one occurrence. Such
instances, when they occur, generally reflect a business decision regarding the
cost of further reductions in the Company's exposure and/or the availability of
reinsurance.
The Company attempts to limit its exposure from catastrophes through the
purchase of general excess of loss reinsurance which provides coverage in the
event that multiple insureds incur losses arising from the same occurrence.
These coverages require the Company to pay a minimum premium, subject to upward
adjustment based upon premium volume. The treaties, which extend in general for
a twelve month period, obligate the reinsurers to pay for the portion of the
Company's aggregate losses (net of specific reinsurance) which fall within each
treaty's layer or exposure. The Company's retention on any one catastrophic
occurrence, after it obtains the benefit of its excess of loss reinsurance, has
not exceeded $4 million during the past three years. In the event of a
catastrophe loss, the Company would incur additional reinstatement premium
charges for its excess of loss reinsurance, to the extent that such treaties
incur a portion of the loss and in an amount not greater than the original cost
of the reinsurance.
6
<PAGE>
The Company reinsures risks with several domestic and foreign reinsurers
as well as syndicates including Lloyd's of London ("Lloyd's"). The Company's
largest reinsurers as of December 31, 1998, were Arkwright, Lloyd's and Utica
Mutual, with aggregate net recoverables of $36 million, $19 million and $13
million, respectively. The 1998 A.M. Best ratings for Arkwright and Utica Mutual
are each rated A, respectively. Lloyd's of London maintains a trust fund which
was established for the benefit of all United States ceding companies. In 1995,
as part of a reconstruction process, the trust fund was expanded to include
certain obligations on a gross basis. In 1996, Equitas was formed to handle the
run-off of years 1992 and prior for Lloyd's. For the three most recent years for
which Lloyd's has reported results, 1995, 1994 and 1993, Lloyd's reported gains
for each of those years. The Company has not experienced difficulties in
collecting amounts due from Lloyd's and the timing of cash receipts has not
materially affected the Company's liquidity. However, given the uncertainty
surrounding the sufficiency of assets in Equitas to meet its ultimate
obligations, there is a reasonable possibility that the Company's collection
efforts relating to its Lloyd's recoverables might be adversely affected in the
future. At December 31, 1998, the Company's net exposure to reinsurers, other
than Arkwright, Lloyd's and Utica Mutual, was approximately $109 million,
including amounts recoverable for paid losses, outstanding losses, IBNR and
unearned premium reserves. This amount is recoverable collectively from
approximately 800 reinsurers or syndicates, no single one of which was liable to
the Company for an unsecured amount in excess of approximately $4.4 million.
Operating Ratios
Premium to Surplus Ratio. The following table shows, for the periods
indicated, the Company's consolidated domestic insurance company's statutory
ratios of net premiums written (gross premiums less premiums ceded) to
policyholders' surplus:
Year Ended December 31,
----------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
(Dollars in thousands)
Net premiums written .... $ 45,333 $ 62,221 $ 90,513 $ 97,817 $100,907
Policyholders' surplus .. 196,745 181,844 160,929 148,785 133,813
-------- -------- -------- -------- --------
Ratio ................... 23 to 1 .34 to 1 .56 to 1 .66 to 1 .75 to 1
While there are no statutory requirements applicable to the Company which
establish permissible premium to surplus ratios, guidelines established by the
National Association of Insurance Commissioners provide that the statutory net
premiums written to surplus ratio should be no greater than 3 to 1. The Company
is well within those guidelines. Syndicate 1265 maintained a capacity to write
approximately a U.S. dollar equivalent of $24.9 million in 1998.
Combined Loss and Expense Ratios. The underwriting experience of the
Company is indicated by its "combined ratio," which is the sum of (l) the ratio
of losses and loss adjustment expenses incurred to net premiums earned (the
"loss ratio") and (2) the ratio of policy acquisition costs and other
underwriting expenses to net premiums written (the "expense ratio"). The
Company's consolidated loss ratios, expense ratios and combined ratios, on a
statutory basis, are shown in the following table:
Year Ended December 31,
----------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
Loss Ratio ............. 50.4% 58.7% 62.6% 69.0% 80.2%
Expense Ratio .......... 37.3% 31.7% 31.9% 30.3% 28.5%
----- ----- ----- ----- -----
Combined Ratio ......... 87.7% 90.4% 94.5% 99.3% 108.7%
The ratios set forth above have been calculated on a statutory basis which
reflect the operating results of NYMAGIC's two domestic insurance company
subsidiaries, New York Marine and Gotham.
7
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GAAP Combined Loss and Expense Ratios. The underwriting experience of the
Company is indicated by its "combined ratio," which is the sum of (1) the ratio
of losses and loss adjustment expenses incurred to net premiums earned (the
"loss ratio") and (2) the ratio of policy acquisition costs and other
underwriting expenses to net premiums earned (the "expense ratio").
The Company's consolidated loss ratios, expense ratios and combined
ratios, on a GAAP basis, are shown in the following table:
Year Ended December 31,
----------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
Loss Ratio ............. 66.4% 58.0% 61.2% 67.4% 78.1%
Expense Ratio .......... 27.1% 31.5% 32.3% 31.9% 34.4%
----- ----- ----- ----- -----
Combined Ratio ......... 93.5% 89.5% 93.5% 99.3% 112.5%
The ratios set forth above have been calculated on a GAAP basis which
reflect the operating results of NYMAGIC's insurance company subsidiaries, New
York Marine, Gotham and Syndicate 1265's operations.
The GAAP loss ratio differs from the statutory loss ratio mainly as a
result of including the operations of Syndicate 1265 which commenced in 1998, an
assumption of premium transaction which was commuted in 1998, amortization of
the deferred income in connection with the assumption of loss reserves from
Pennsylvania National and Lumber Mutual, reserves for uncollectible reinsurance
recoverables and an adjustment for certain management commissions charged as
unallocated loss adjustment expenses. The GAAP expense ratio differs from the
statutory expense ratio primarily as a result of amortization of deferred policy
acquisition costs for GAAP and receivable write-offs which are reflected in
income for GAAP. In 1998, two assumption of premium transactions had the effect
of reducing the expense ratio for GAAP purposes. In 1998, the expense ratio also
includes amounts from Syndicate 1265's operations.
Reserves
The applicable insurance laws under which the Company operates require
that reserves be maintained for the payment of losses and loss adjustment
expenses with respect to both reported and IBNR claims under its insurance
policies. IBNR claims are those losses, based upon historical experience and
other relevant data, that the Company estimates will be reported or ultimately
develop on risks undertaken by the Company. The Company maintains a conservative
policy in establishing reserves, especially in the year the policy is written.
Case loss reserves are determined by evaluating reported claims on the basis of
the type of loss involved, knowledge of the circumstances surrounding the claim,
and the policy provisions relating to the type of loss. IBNR claims are
estimated on the basis of statistical information with respect to the probable
number and nature of claims arising from occurrences which have not yet been
reported. The establishment of reserves acts to reduce income while the downward
adjustment or reduction of reserves increases income.
The loss settlement period on insurance claims may be many years and
during this period it often becomes necessary to adjust the estimate of
liability on a claim either upward or downward. Among the classes of marine,
aviation and non-marine liability insurance written by the Company are liability
classes which historically have had long lead times between occurrence of an
insurable event, reporting of the claim to the Company and final settlement. In
such cases, the Company is forced to estimate reserves over long periods of
time, with the possibility of several adjustments. Other classes of insurance,
such as property and claims-made non-marine liability classes, historically have
had shorter lead times between occurrence of an insurable event, reporting of
the claim to the Company and final settlement. The reserves with respect to such
classes are less likely to be readjusted.
The Company, from time to time, has increased its participation in the
pools. The effect of each such increase is prospective in nature and does not
affect the loss reserves herein set forth for the years prior to the effective
date of any such change in participation percentage.
8
<PAGE>
The insurance pools participated in the issuance of umbrella casualty
insurance for various Fortune 1000 companies in the period from 1978 to 1983.
Depending on the accident year, the insurance pools' maximum retention per
occurrence ranged from $250,000 to $500,000. The Company's effective pool
participation on such risks varied from 11% in 1978 to 30% in 1983. At December
31, 1998 and 1997, the Company's gross, ceded and net loss and loss adjustment
expense reserves for Asbestos/Pollution policies amounted to $24.3 million,
$15.3 million and $9.0 million, and $25.0 million, $16.0 million and $9.0
million, respectively. As of December 31, 1998, the Company had approximately
400 policies which had at least one claim relating to Asbestos/Pollution
exposures. The Company believes that the uncertainty surrounding
Asbestos/Pollution exposures, including issues as to insureds' liabilities,
ascertainment of loss date, definitions of occurrence, scope of coverage, policy
limits and application and interpretation of policy terms, including exclusions,
all affect the estimation of ultimate losses. Under such circumstances, it is
difficult to determine the ultimate loss for Asbestos/Pollution related claims.
Given the uncertainty in this area, losses from Asbestos/Pollution related
claims are likely to develop adversely. However, the Company believes that, in
aggregate, the unpaid loss and loss adjustment expense reserves as of December
31, 1998, allow for an adequate provision and that the ultimate resolution of
the Asbestos/Pollution claims will not have a material impact on the Company's
financial position.
The following table sets forth NYMAGIC's net case reserve experience for
Asbestos/Pollution policies for each of the past three years:
1998 1997 1996
------- ------- -------
(In thousands)
------------------------------
Asbestos
Case Reserves at beginning of period .......... $ 1,067 $ 1,103 $ 1,307
Incurred loss and loss adjustment expenses .... (27) 52 (186)
Payments ...................................... (238) (88) (18)
------- ------- -------
Case Reserves at end of period ................ $ 802 $ 1,067 $ 1,103
======= ======= =======
1998 1997 1996
------- ------- -------
(In thousands)
------------------------------
Pollution
Case Reserves at beginning of period .......... $ 1,417 $ 2,323 $ 2,141
Incurred loss and loss adjustment expenses .... 351 (486) 975
Payments ...................................... (613) (420) (793)
------- ------- -------
Case Reserves at end of period ................ $ 1,155 $ 1,417 $ 2,323
======= ======= =======
The following table sets forth NYMAGIC's net loss and loss adjustment expense
experience for Asbestos/Pollution policies for each of the past three years:
1998 1997 1996
------- ------- -------
(In thousands)
------------------------------
Asbestos/Pollution
Unpaid loss and loss adjustment expenses
(Including IBNR) at beginning of period ...... $ 9,029 $ 8,500 $ 7,041
Incurred loss and loss adjustment expenses .... 839 1,037 2,270
Payments ...................................... (851) (508) (811)
------- ------- -------
Unpaid loss and loss adjustment expenses
(Including IBNR) at end of period ............ $ 9,017 $ 9,029 $ 8,500
======= ======= =======
The loss and loss adjustment payments related to the Company's
Asbestos/Pollution exposures have not been material in relation to the Company's
total loss and loss adjustment expense payments as shown in the table below:
1998 1997 1996
------- ------- -------
(In thousands)
------------------------------
Total loss and loss adjustment expense
payments for the year ended December 31, ..... $58,983 $55,483 $61,524
Asbestos/Pollution loss and loss
adjustment expense payments for the
year ended December 31, ...................... 851 508 811
9
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The insurance pools have written primary insurance relating to products
liability since 1985. The insurance pools' maximum loss per risk is generally
limited to $1,000,000 and the Company's participation percentage ranges from 59%
to 100% based upon policy year. The Company believes that, based upon the
maximum amount per risk and the Company's conservative reserving posture, the
reserves currently established are adequate to cover the ultimate resolution of
all product liability claims.
The following table shows changes in reserves in subsequent years (the
development) from the prior loss estimates based upon experience as of the end
of each succeeding year. The estimate is increased or decreased as more
information becomes known about the frequency and severity of losses for
individual years. A redundancy means the original estimate of the Company's
consolidated liability was higher than the current estimate; a deficiency means
that the current estimate is higher than the original estimate.
The first line of the table presents, for each of the last ten years, the
estimated liability for unpaid losses and loss adjustment expenses at the end of
the year, including the reserve for incurred but not reported losses. The first
section of the table shows, by year, the cumulative amounts of losses and loss
adjustment expenses paid as of the end of each succeeding year, expressed as a
percentage of the estimated liability for such amounts.
The second section sets forth the re-estimates in later years of incurred
losses, including payments, as a percentage of the estimate for the years
indicated. The cumulative redundancy represents as of December 31, 1998, the
aggregate change in the estimates over all prior years. The redundancies have
been reflected in income over the periods shown.
10
<PAGE>
The Company makes no specific provision for inflation in connection with
reserve estimates, but does each year consider the adjustment of outstanding
case reserves and current inflationary indices in determining the adequacy of
the overall loss reserve. The Company monitors historical loss payments to
determine the sufficiency of this provision.
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------------------------
1988 1989 1990 1991 1992 1993
---- ---- ---- ---- ---- ----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Estimated Liability
for Net Unpaid Losses and
Loss Adjustment Expenses. 116,089 138,920 156,533 170,744 203,735 208,366
Cumulative Amount of Net Liability
Paid As a Percentage of
Estimate Through:
1 Year Later 17% 17% 18% 19% 20% 22%
2 Years Later 27% 32% 36% 37% 37% 37%
3 Years Later 39% 46% 49% 52% 48% 49%
4 Years Later 49% 57% 62% 61% 58% 57%
5 Years Later 55% 66% 69% 69% 64% 64%
6 Years Later 61% 72% 75% 74% 70%
7 Years Later 65% 75% 78% 78%
8 Years Later 68% 77% 81%
9 Years Later 69% 79%
10 Years Later 71%
Net Liability Reestimated including
Cumulative Net Paid Losses and
Loss Adjustment Expenses As
a Percentage of Estimate As of:
1 Year Later 96% 96% 100% 99% 99% 99%
2 Years Later 90% 98% 100% 99% 97% 96%
3 Years Later 89% 96% 98% 99% 95% 95%
4 Years Later 86% 94% 98% 97% 95% 93%
5 Years Later 83% 91% 96% 98% 94% 94%
6 Years Later 80% 90% 96% 96% 95%
7 Years Later 79% 91% 95% 97%
8 Years Later 80% 90% 97%
9 Years Later 80% 92%
10 Years Later 82%
Net Cumulative Redundancy 20,764 11,786 5,201 4,714 10,883 12,128
Gross Unpaid Losses an Loss Adjustment Expenses $407,321
Reinsurance Recoverable on Unpaid Losses and
Loss Adjustment Expenses 198,955
Reserve Re-estimated Gross 374,966
Reserve Re-estimated Reinsurance Recoverable 181,142
Gross Cumulative Redundancy 32,355
<CAPTION>
Year Ended December 31,
---------------------------------------------------------------------------------------
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Estimated Liability
for Net Unpaid Losses and
Loss Adjustment Expenses... 212,377 229,916 227,370 222,335 213,589
Cumulative Amount of Net Liability
Paid As a Percentage of
Estimate Through:
1 Year Later 20% 20% 17% 19%
2 Years Later 34% 32% 30%
3 Years Later 44% 42%
4 Years Later 53%
5 Years Later
6 Years Later
7 Years Later
8 Years Later
9 Years Later
10 Years Later
Net Liability Reestimated including
Cumulative Net Paid Losses and
Loss Adjustment Expenses As
a Percentage of Estimate As of:
1 Year Later 97% 94% 90% 91%
2 Years Later 95% 87% 87%
3 Years Later 91% 86%
4 Years Later 91%
5 Years Later
6 Years Later
7 Years Later
8 Years Later
9 Years Later
10 Years Later
Net Cumulative Redundancy 19,336 32,607 28,868 19,466
Gross Unpaid Losses an Loss Adjustment Expenses $435,072 $417,795 $411,837 $388,402 $401,584
Reinsurance Recoverable on Unpaid Losses and
Loss Adjustment Expenses 222,695 187,879 184,467 166,066 187,995
Reserve Re-estimated Gross 398,105 384,859 360,676 385,896
Reserve Re-estimated Reinsurance Recoverable 205,873 185,912 155,180 183,026
Gross Cumulative Redundancy 36,966 32,936 51,161 2,506
</TABLE>
The following table provides a reconciliation of the consolidated
liability for losses and loss adjustment expenses at the beginning and end of
1998, 1997 and 1996:
Year ended December 31,
---------------------------------
1998 1997 1996
------- ------- -------
(In thousands)
Net liability for losses and loss adjustment
expenses at beginning of year ............ $ 222,335 $ 227,370 $ 229,916
Provision for losses and loss adjustment
expenses occurring in current year ....... 69,703 72,322 71,731
Decrease in estimated losses and loss
adjustment expenses for claims occurring
in prior years (1) ....................... (19,466) (21,874) (12,753)
Deferred income-loss portfolio
assumption(2) ............................ 275 320 381
Total losses and loss adjustment expenses
incurred ................................. 50,512 50,768 59,359
--------- --------- ---------
Less:
Losses and loss adjustment expense payments
for claims occurring during:
current year ......................... 17,407 17,029 15,012
prior years .......................... 41,576 38,454 46,512
58,983 55,483 61,524
Plus:
Deferred income-loss portfolio assumption(2) (275) (320) (381)
--------- --------- ---------
Net liability for losses and loss adjustment
expenses at year end ..................... 213,589 222,335 227,370
--------- --------- ---------
Ceded unpaid losses and loss adjustment
expenses ................................. 187,995 166,067 184,467
--------- --------- ---------
Gross unpaid losses and loss adjustment
expenses at year end ..................... $ 401,584 $ 388,402 $ 411,837
========= ========= =========
(1) The adjustment to the consolidated liability for losses and loss
adjustment expenses for losses occurring in prior years reflects the net effect
of the resolution of losses for other than full reserve value and subsequent
readjustments of loss values.
(2) Deferred income-loss portfolio assumption represents the difference
between cash received and unpaid loss reserves assumed as a result of the buyout
of Pennsylvania National's and Lumber's net pool obligations which was initially
capitalized and will be amortized over the payout period of the related losses.
The principal differences between the consolidated liability for unpaid
losses and loss adjustment expenses as reported in the Annual Statement filed
with state insurance departments in accordance with statutory accounting
principles and the liability based on generally accepted accounting principles
shown in the above tables is due to the reserve for the Company's pro rata share
of the pool obligations of Mutual Fire, a former pool member, the assumption of
Pennsylvania National's and Lumber's loss reserves arising from their former
participation in the MMO insurance pools, the Company's Syndicate 1265, and
unpaid unallocated loss adjustment expenses based upon management commissions
payable to the Managers which are eliminated on a consolidated basis. The loss
reserves shown in the above tables reflect in each year salvage and subrogation
accruals of approximately 1% to 6%. The estimated accrual for salvage and
subrogation is based on the line of business and historical salvage and
subrogation recovery data. In neither statutory nor generally accepted
accounting principles are loss and loss adjustment expense reserves discounted.
11
<PAGE>
The following table sets forth the reconciliation of the consolidated net
liability for losses and loss adjustment expenses based on statutory accounting
principles for the domestic insurance companies and based on generally accepted
accounting principles as of December 31, 1998, 1997 and 1996:
<TABLE>
<CAPTION>
Year ended December 31,
---------------------------------------
1998 1997 1996
--------- --------- ---------
(In thousands)
<S> <C> <C> <C>
Liability for losses and loss adjustment expenses
reported based on statutory accounting principles .................................. $ 193,680 $ 217,016 $ 222,953
Liability for losses and loss adjustment expenses assumed
from Lumber Mutual and Pennsylvania National ....................................... 4,529 4,469 4,508
(excludes $4,636, $5,580 and $6,653 at December 31, 1998, 1997 and 1996,
accounted for in the statutory liability for losses and loss adjustment
expenses)
UK operations ........................................................................ 13,504 -- --
Other, net ........................................................................... 1,876 850 (91)
--------- --------- ---------
Net liability for losses and loss adjustment expenses reported
based on generally accepted accounting principles .................................. 213,589 222,335 227,370
Ceded liability for unpaid losses and loss adjustment expenses ....................... 187,995 166,067 184,467
--------- --------- ---------
Gross liability for unpaid losses and loss adjustment expenses ....................... $ 401,584 $ 388,402 $ 411,837
========= ========= =========
</TABLE>
Regulation
The Company is regulated by the insurance regulatory agencies of the
states in which it is authorized to do business. New York Marine is licensed to
engage in the insurance business in all states.
Gotham is permitted to write excess and surplus lines insurance on a
non-admitted basis in all of the states except Arkansas, Massachusetts, Nevada,
New Jersey, New Hampshire and Vermont. Gotham is licensed to engage in the
insurance business in the state of New York and, as such, cannot write excess
and surplus business in that state.
Many aspects of the Company's insurance business are subject to
regulation. For example, minimum capitalization must be maintained; certain
forms of policies must be approved before they may be offered; reserves must be
established in relation to the amounts of premiums earned and losses incurred;
and, in some cases, schedules of premium rates must be approved.
The domestic insurance company subsidiaries also file statutory financial
statements with each state in the format requested by the National Association
of Insurance Commissioners (the "NAIC"). The NAIC provides accounting guidelines
for companies to report and provides minimum solvency standards for all
companies in the form of risk-based capital requirements. The Company believes
that the surplus of each of the insurance companies are above the minimum amount
required by the NAIC.
The NAIC's project to codify statutory accounting principles, which will
ultimately change currently prescribed statutory accounting principles, was
approved by the NAIC in March 1998. The approval included a provision for
commissioner discretion in determining appropriate statutory accounting for
insurers in their state. The NAIC indicated that codification will become
effective on January 1, 2001. The Company is examining how implementation will
affect its statutory financial statements.
The Company is subject to an examination by the Insurance Department of
the State of New York. The insurance companies' most recent examination was for
the year ended December 31, 1995. There were no significant adjustments which
resulted from that examination.
12
<PAGE>
Syndicate 1265 operates in a highly regulated environment within the
overall Lloyd's of London market. Lloyd's of London maintains regulatory
departments that review the management and operation of all agencies and
syndicates to ensure that business is conducted in accordance with Lloyd's
standards. Syndicates are required to maintain trust funds for insurance
transactions with strict guidelines on withdrawals from such funds. Annual
solvency tests are conducted whereby syndicates must maintain minimum capital
requirements in accordance with ratios prescribed by Lloyd's.
The domestic insurance company subsidiaries are limited under New York law
in the amount of dividends they can pay to the parent company, NYMAGIC, without
prior approval of the New York State Insurance Department.
NYMAGIC's principal source of income is dividends from its subsidiaries,
which is used for payment of operating expenses, including interest expense,
loan repayments and payment of dividends to NYMAGIC's shareholders. The maximum
amount of dividends that may be paid to NYMAGIC by the domestic insurance
company subsidiaries is limited to the lesser of 10% of statutory surplus or
100% of net investment income, as defined under New York insurance law. The
maximum amount which could be paid to the Company out of December 31, 1998
domestic insurance companies' surplus was approximately $19,675,000.
Insurance companies are being regulated more strictly by the various
states in recent years. Many states have also increased regulation of surplus
lines insurance thereby requiring stricter standards for authorization. Several
states have established guaranty funds which serve to provide the assured with
payment due under policies issued by insurance companies that have become
insolvent. Insurance companies that are authorized to write in states are
assessed a fee, normally based on direct writings in a particular state, to
cover any payments drawn from insolvency funds. The Company is subject to such
assessments in the various states.
Subsidiaries
NYMAGIC's largest insurance company subsidiary is New York Marine And
General Insurance Company which was formed in 1972. NYMAGIC was formed in 1989
to serve as a holding company for the subsidiary insurance companies. Prior
thereto, New York Marine And General Insurance Company was the parent company
and shares of its common stock, $1.00 par value, were traded publicly. NYMAGIC
became the holding company, and New York Marine its subsidiary, effective
October 2, 1989, following regulatory and shareholder approval.
NYMAGIC's other domestic insurance company subsidiary, Gotham Insurance
Company, was organized in 1986 as a means of expanding into the excess and
surplus lines marketplace. New York Marine and Gotham entered into a Reinsurance
Agreement, effective January 1, 1987, under terms of which Gotham will cede 100%
of its gross direct writings to New York Marine and assume 15% of New York
Marine's total retained business, beginning with the 1987 policy year.
Accordingly, for policy year 1987 and subsequent, Gotham's underwriting
statistics are similar to New York Marine's. As of December 31, 1998, 75% and
25% of Gotham's common stock is owned by New York Marine and NYMAGIC,
respectively.
Gotham does not assume or cede business to or from other insurance
companies. As of December 31, 1998, New York Marine had aggregate recoverables
due from Gotham of approximately $33 million or 18% of New York Marine's
statutory surplus. Gotham had aggregate recoverables due from New York Marine as
of December 31, 1998, of approximately $31 million or 53% of Gotham's statutory
surplus.
New York Marine's and Gotham's combined net income on a GAAP basis
represented substantially all of the consolidated net income of the Company for
each of the years ended December 31, 1998, 1997 and 1996.
Mutual Marine Office, Inc. was acquired in 1991 and was formed in 1964 to
underwrite a book of ocean marine insurance. MMO's activities expanded over the
years and it now underwrites a book of ocean marine, inland marine, aviation and
other liability insurance.
13
<PAGE>
On December 31, 1997, the Company acquired ownership of Highgate Managing
Agencies, Ltd. which subsequently changed its name to MMO Underwriting Agency,
Ltd. MMO Underwriting Agency Ltd. is a Lloyd's managing agency which commenced
underwriting in 1998 for the Company's wholly owned subsidiary MMO UK, Ltd.
which is a Lloyd's corporate capital vehicle providing 100% of the capital for
Syndicate 1265.
Mutual Marine Office of the Midwest, Inc. was acquired in 1991 and was
formed in 1978 to underwrite a varied book of business located in the Midwest
region.
Pacific Mutual Marine Office, Inc. was acquired in 1991 and was formed in
1975 to underwrite a varied book of business in the West Coast region.
Competition
The insurance industry is highly competitive and the companies, both
domestic and foreign, against which the Company competes are often larger with
greater capital resources than the Company and the pools. The principal methods
of competition are pricing and responsiveness to the individual insured's
coverage requirements. The competitive nature of the business intensified from
1995 through 1998 as rates softened in the aviation and ocean marine lines.
Competition remains intense as a result of excess capacity in the casualty
market. Accordingly, the Company is not planning to renew those policies which
would result in an underwriting loss.
The Company believes it can successfully compete against other companies
in the insurance market due to its philosophy of underwriting quality insurance,
its reputation as a conservative well-capitalized insurer and its willingness to
forego unprofitable business.
Employees
The Company currently employs approximately 119 persons, of whom 22 are
insurance underwriters.
Item 2. Properties.
The Company does not own, directly or indirectly, any real estate. The
Company leases office space for day to day operations in the following cities:
New York - 37,000 square feet
Chicago - 3,500 square feet
San Francisco - 4,050 square feet
London - 1,450 square feet
The Company's principal executive offices are approximately 37,000 sq. ft.
in size and are located in New York City. In 1993 the Company moved into its
location at 330 Madison Avenue, New York, New York, which was renovated and is
in excellent condition. The lease for the Company's principal executive offices
expires December 30, 2003. The minimum annual rent under the lease is $1,184,000
from 1999 until the expiration of the lease. The lease included an initial cash
payment by the lessor to the Company of $1,853,000 of which the benefit was
deferred and amortized over the lease term.
Item 3. Legal Proceedings.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
14
<PAGE>
PART II
Item 5. Market for Registrant's Common Stock and Related Stockholder Matters.
The Company's common stock trades on the New York Stock Exchange (NYSE
Symbol: NYM). The following table sets forth representative high and low closing
prices for the periods indicated.
1998 1997
--------------- ---------------
High Low High Low
First Quarter........... $30.06 $24.38 $21.13 $18.00
Second Quarter ......... 34.25 27.00 20.88 18.38
Third Quarter .......... 28.63 21.75 26.06 20.63
Fourth Quarter ......... 25.25 19.75 29.81 25.50
As of March 1, 1999, there were 83 shareholders of record. However,
management believes there are in excess of 2,500 beneficial owners of NYMAGIC's
common stock.
Dividend Policy
A cash dividend of ten (10) cents per share was declared and paid to
shareholders of record as of March 31, June 30, September 30, and December 31,
1998 and 1997. For a description of restrictions on the ability of the Company's
insurance subsidiaries to transfer funds to the Company in the form of
dividends, see "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Liquidity and Capital Resources."
Item 6. Selected Financial Data.
OPERATING DATA Year Ended December 31,
----------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
(In thousands, except per share amounts)
Revenues:
Net premiums earned ...... $ 76,023 $ 87,537 $ 97,036 $103,461 $ 79,255
Net investment income .... 20,803 21,325 21,270 21,659 18,854
Commission income ........ 591 1,439 1,981 3,438 2,052
Realized investment gains 8,615 10,425 4,589 4,111 2,992
Other income ............. 396 293 690 661 420
-------- -------- -------- -------- --------
Total revenues ........... $106,428 $121,019 $125,566 $133,330 $103,573
======== ======== ======== ======== ========
Expenses:
Losses and loss adjustment
expenses incurred ...... $ 50,512 $ 50,768 $ 59,359 $ 69,716 $ 61,900
Policy acquisition expenses 10,107 16,583 18,828 21,017 14,260
General and administrative
expenses ............... 21,531 16,763 16,168 16,236 16,742
Interest expense ......... 1,374 1,450 1,035 438 495
-------- -------- -------- -------- --------
Total expenses ........... $ 83,524 $ 85,564 $ 95,390 $107,407 $ 93,397
======== ======== ======== ======== ========
15
<PAGE>
Selected Financial Data (continued)
Year Ended December 31,
----------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
(In thousands, except per share amounts)
Income before income taxes 22,904 35,455 30,176 25,923 10,176
-------- -------- -------- -------- --------
Income taxes
Current ................ 5,250 8,962 7,495 5,393 2,306
Deferred ............... (869) 125 56 410 (1,827)
-------- -------- -------- -------- --------
Total income taxes ....... 4,381 9,087 7,551 5,803 479
-------- -------- -------- -------- --------
Net income ............... $ 18,523 $ 26,368 $ 22,625 $ 20,120 $ 9,697
======== ======== ======== ======== ========
BASIC EARNINGS PER SHARE(1):
Weighted average shares
outstanding ............ 9,679 9,849 10,499 11,299 11,379
Basic earnings per share . $ 1.91 $ 2.68 $ 2.15 $ 1.78 $ .85
====== ======== ======== ======== ========
DILUTED EARNINGS PER SHARE(1):
Weighted average shares
outstanding ............ 9,705 9,872 10,524 11,341 11,392
Diluted earnings per share $ 1.91 $ 2.67 $ 2.15 $ 1.77 $ .85
====== ======== ======== ======== ========
Dividends declared per share $ .40 $ .40 $ .40 $ .40 $ .40
====== ======== ======== ======== ========
BALANCE SHEET DATA
AT PERIOD END:
Year Ended December 31,
----------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
(In thousands)
Total investments ........ $443,022 $438,591 $409,209 $403,306 $341,643
Total assets ............. 730,320 707,903 714,949 722,250 730,744
Unpaid losses and loss
adjustment expenses ... 401,584 388,402 411,837 417,795 435,072
Notes payable ............ 17,458 22,458 20,438 12,727 7,020
Total shareholders' equity $228,180 $206,519 $188,852 $182,717 $164,313
For a description of factors that materially affect the comparability of
the information reflected in the Selected Financial Data, see "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
- - ----------
(1) Earnings per share data prior to 1997 have been restated as required under
Statement of Financial Accounting Standards No. 128, "Earnings Per Share".
16
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations
The Company participates in pools of insurance covering ocean marine,
inland marine, aircraft and non-marine liability insurance managed by MMO and
affiliates. The Company's participation in the other liability and inland marine
pools increased to 100% effective July 1, 1994, and its participation in the
ocean marine and aviation pools increased to 90% at the same time. Effective
January 1, 1997, the Company's participation in the ocean marine and aviation
pools increased to 100%. These lines of businesses are considered, for
operational purposes, as the Company's main segments for purposes of analyzing
underwriting income.
Year Ended December 31,
NYMAGIC Net Premiums Written ----------------------------------
Line of Business 1998(a) 1997 1996
- - ---------------------- ----------------- ----------------- -----------------
(In thousands)
Ocean marine ......... $ 59,231 81% $ 48,658 78% $ 54,093 60%
Inland marine ........ (350) -- 146 -- (1,658) (2%)
Aircraft ............. 82 -- 9,354 15% 32,482 36%
Other liability ...... 2,969 4% 3,856 6% 5,238 6%
Other (b) ............ 10,796 15% 207 1% 358 --
--------- ---- --------- ---- --------- ----
Total ................ $ 72,728 100% $ 62,221 100% $ 90,513 100%
========= ==== ========= ==== ========= ====
Year Ended December 31,
NYMAGIC Net Premiums Earned ---------------------------------
Line of Business 1998(a) 1997 1996
- - ---------------------- ----------------- ----------------- -----------------
(In thousands)
Ocean marine ......... $ 60,219 79% $ 49,984 57% $ 52,483 54%
Inland marine ........ (393) -- 443 1% 2,408 3%
Aircraft ............. 2,005 3% 32,566 37% 35,416 36%
Other liability ...... 3,393 4% 4,328 5% 6,355 7%
Other (b) ............ 10,799 14% 216 -- 374 --
--------- ---- --------- ---- --------- ----
Total ................ $ 76,023 100% $ 87,537 100% $ 97,036 100%
========= ==== ========= ==== ========= ====
(a) Includes net ocean marine premiums written and earned from Syndicate 1265
of $16,832 and $14,832, respectively.
(b) In 1998, includes a one-time assumption of miscellaneous casualty net
written and earned premiums of $10,563, respectively.
Unlike many types of property and casualty insurance, ocean marine, inland
marine, aviation and other liability premium rates are not strictly regulated by
governmental authorities. Consequently, the Company is able to adjust premium
rates quickly in response to competition, varying degrees of risk and other
factors. In addition, the Company, by virtue of its underwriting flexibility, is
able to emphasize specific lines of business in response to advantageous premium
rates and the anticipation of positive underwriting results.
The Company's general and administrative expenses consist primarily of
compensation expense, employee benefits and rental expense for office
facilities. The Company's policy acquisition costs include both brokerage
commissions and premium taxes which are primarily based on a percentage of
premiums written. Such costs have generally changed in proportion with changes
in premium volume. Losses and loss adjustment expenses incurred in connection
with insurance claims in any particular year depend upon a variety of factors
including the rate of inflation, accident or claim frequency, the occurrence of
natural catastrophes and the number of policies written.
17
<PAGE>
The Company estimates reserves each year based upon, and in conformity
with, the factors discussed under "Business-Reserves". The Company maintains a
conservative policy for establishing reserves, especially in the year a policy
is written. Changes in estimates of reserves are reflected in operating results
in the year in which the change occurs.
1998 as Compared to 1997
Net income decreased to $18.5 million for the year ended December 31,
1998, from $26.4 million for the prior year. Diluted earnings per share
decreased to $1.91 in 1998 as compared to $2.67 in 1997. Operating income, which
excludes realized investment gains, was $12.9 million in 1998 compared to $19.6
million in 1997. Operating earnings per share on a diluted basis was $1.33 in
1998 compared with $1.98 in 1997.
The Company's net premiums earned decreased to $76.0 million in 1998 as
compared to $87.5 million in 1997. Premiums earned in 1998 reflect very
competitive markets across all lines of business, premiums from Syndicate 1265
and the effects of two transactions involving the assumption of premiums.
Ocean marine earned premiums for this segment increased by 20% in 1998
compared to 1997. The increase resulted from a reinsurance transaction involving
a one-time assumption of approximately $14.2 million of premiums that emanated
from Syndicate 1265, which commenced operations in the current year. Syndicate
1265 contributed an additional $3.6 million in gross direct ocean marine
writings in 1998. The domestic insurance companies reported a 9% decrease in
earned premiums as competition remained intense and adversely affected premium
rates. The outlook for 1999 indicates that pricing pressures will remain intact
as the over capacity within this market still exists. Syndicate 1265 will also
continue to write at a cautious pace.
Other liability and other premiums earned for this segment were $14.0
million in 1998 compared to $4.3 million in 1997. The increase resulted from the
second reinsurance transaction in 1998 that included a one-time assumption of
approximately $10.5 million of miscellaneous casualty net premiums. Excluding
the effect of this transaction, premiums earned would have decreased
approximately 22% in 1998 as a result of the soft casualty market which led to a
decline in premium production. The Company expects the casualty market to remain
competitive in 1999 with premiums likely to decline further.
The aviation segment of business was most affected by the competitive
market, with gross writings down by 20%, and coupled with the purchase of
additional reinsurance protection resulted in premiums earned decreasing to $2.0
million in 1998 compared with $32.6 million in 1997. Obtaining additional
reinsurance protection is consistent with the Company's strategy of minimizing
risk and preserving capital as the underwriting climate for gross premiums
remains soft. In addition, large aviation gross losses resulted in additional
reinsurance reinstatement costs of approximately $3.7 million that further
contributed to the decline in premiums. The Company expects this underwriting
environment to remain competitive in 1999.
Inland marine gross premium writings for this segment increased 15% to
$1.3 million in 1998 due in large part to writing policies that are ancillary to
its ocean marine risks. Earned premiums were negative due to reinsurance costs
for catastrophe protection, reinstatement costs, and quota share reinsurance
which collectively amounted to approximately $1.6 million. This underwriting
strategy is expected to remain in place for 1999.
Losses and loss adjustment expenses incurred as a percentage of net
premiums earned were 66.4% for the year ended December 31, 1998 as compared to
58.0% for the prior year.
The ocean marine loss ratio for Syndicate 1265's assumption of premiums in
1998 was approximately 94% and had the effect of increasing the overall loss
ratio significantly. Absent such business, the ocean marine loss ratio for this
segment would have been approximately 54% as compared to 57% for the prior year.
The domestic insurance companies recorded favorable net loss experience in the
Company's core ocean marine line largely due to lower retention levels per loss.
18
<PAGE>
The other liability loss ratio for this segment increased to 96% from 91%
in 1997. The assumption of miscellaneous net casualty premiums in 1998 was
subsequently commuted in the fourth quarter of 1998 at a loss ratio of 77%.
Excluding this business, the loss ratio would have been approximately 152%.
Adverse development from prior year losses contributed to the increase.
An improvement in the frequency of losses and favorable net loss
development contributed to a lower loss ratio in the aviation line in 1998.
Policy acquisition costs as a percentage of net premiums earned for the
year ended December 31, 1998 were 13.3% as compared with 18.9% of the prior
year. The reduction in the ratio is due to the two transactions involving an
assumption of premiums in 1998. Excluding the effect of such business, the ratio
would have been approximately 19.7% for 1998. This ratio approximates the ocean
marine line of business ratio as those premiums represent a larger percentage of
total premiums in 1998 than in 1997.
Net investment income in 1998 decreased by 2% to $20.8 million from $21.3
million in 1997 as a result of a decrease in investment yield in the Company's
fixed maturity portfolio caused by additional purchases of tax-exempt securities
and lower overall interest rates. Although investment yield was lower in 1998,
Syndicate 1265's operations contributed to a larger average invested asset base
during the current year.
Commission income in 1998 was $591,448 as compared to $1,438,606 for the
same period of 1997. The prior year included larger profit commissions from
reinsurance transactions in the aviation and ocean marine lines of business.
General and administrative expenses increased by 28% in 1998 over 1997.
The increase included operating expenses from Syndicate 1265. Also, certain
one-time expenses were incurred in connection with the assumption of premiums
and the formation of Syndicate 1265. Lastly, contributing to the overall
increase were expenses associated with two employee benefit plans adopted by the
Board of Directors in 1998.
Interest expense decreased 5% for the year ended December 31,1998 to $1.4
million primarily as a result of a decrease in average loan principal
outstanding.
The Company was able to realize investment gains of $8.6 million in 1998
mainly as a result of the sale of appreciated equity securities in 1998.
The Company's effective tax rate at December 31,1998 was 19.1% as compared
to 25.6% in 1997. Taxable income was greater in 1997 as a result of larger
underwriting profits and realized investment gains. The decrease in the
effective rate was also due to increased tax-exempt income as a percentage of
pre-tax income in 1998.
Reinsurance receivables at December 31, 1998 were $199.7 million or 14%
greater than the prior year's amount. Large gross aviation losses, which were
ceded under various reinsurance agreements, accounted for the increase.
Accumulated other comprehensive income, which includes unrealized
appreciation of investments and foreign currency translation adjustments, at
December 31, 1998 was $19.4 million as compared to $12.9 million as of December
31, 1997. Increases in unrealized appreciation of both fixed and equity
securities accounted for most of the increase.
1997 as Compared to 1996
The Company's net premiums earned decreased by 10% in 1997 as compared to
1996. The decrease in premiums earned occurred in all major lines of business.
Inland marine premiums recorded the largest percentage decline at 82% in
1997. The Company decided in the prior year to withdraw from writing property
risks of the larger assureds with multiple locations after years of unprofitable
results brought about mainly by large catastrophe losses. In 1997, the Company
concentrated on writing risks that are ancillary to its ocean marine risks.
19
<PAGE>
Ocean marine premiums earned fell by 5% in 1997 mainly due to falling
premium rates as competition remained intense during 1997. All classes within
the ocean marine line experienced declines except for the energy class which saw
increases in production. In 1997, the Company wrote additional marine liability
accounts with assureds that have smaller amounts of exposure. Also, net premium
writings did not decline at the same rate as gross premiums primarily due to
cheaper reinsurance costs.
Although net premiums earned in the aviation line decreased by only 8%,
gross written and net written premiums decreased by 25% and 71%, respectively. A
softening of rates in the aviation line, resulting from excess industry
capacity, initially started in 1996 and continued into 1997 and accounted for a
reduction in gross aviation premiums written in 1997. During this soft
underwriting cycle, the Company sought to reduce overall retention levels in
order to avoid the negative impact of any one loss on net income. As a
consequence of purchasing additional reinsurance, net writings fell at a greater
percentage.
Other liability earned premiums decreased by 32%. The casualty market has
been severely competitive for many years. Consequently, the Company continued to
underwrite this line very selectively.
Premiums earned did benefit, however, from the Company's increased pool
participation in the Mutual Marine Office, Inc. ocean marine and aviation pools
from 90% to 100% effective for policies incepting on or after January 1, 1997.
Losses and loss adjustment expenses as a percentage of premiums earned
were 58.0% in 1997 as compared to 61.2% in 1996. Improved net loss experience in
the other liability and inland lines contributed to the overall decline in the
loss ratios. In addition, despite an increase in the frequency of losses in the
aviation line, this loss ratio actually improved from the prior year as a result
of lower retention levels on losses and favorable loss development on prior year
reserves. An increase in severity losses in the ocean marine line contributed to
its higher loss ratio in 1997.
Policy acquisition costs as a percentage of net premiums earned for the
year ended December 31, 1997 were 18.9% as compared to 19.4% for the prior year.
The Company saw an improvement in the acquisition ratio in the aviation line as
a result of obtaining ceding override commissions on reinsurance placed. This
had the effect of reducing overall net commissions at a greater rate than the
decline in premiums.
Net investment income for the year ended December 31, 1997 was flat as
compared to the same period of 1996 as a result of a decrease in the investment
yield in the Company's fixed maturity portfolio. The investment income generated
from a larger invested asset base was offset by a decrease in investment yield
in the Company's fixed maturity portfolio as a result of additional purchases of
tax-exempt securities and lower interest rates overall.
Commission income for the year ended December 31, 1997 was $1.4 million as
compared to $2.0 million for the same period of 1996. Commission income includes
management and contingent commissions charged by Mutual Marine Office, Inc. for
operating the insurance pools. As gross writings decreased and the Company
increased its MMO pool participation in the ocean marine and aviation pools from
90% to 100% effective for policies incepting on or after January 1, 1997,
management commission income from a non-affiliated member of the insurance pools
declined.
General and administrative expenses increased by 4% in 1997 primarily as a
result of increased personnel and administrative costs to further strengthen
support services.
Interest expense increased to $1.4 million for the year ended December
31,1997 from $1.0 million for the same period of the prior year primarily as a
result of an increase in average loan principal outstanding.
The Company was able to realize investment gains of $10.4 million in 1997
mainly as a result of the sale of appreciated equity securities.
Net income increased by 17% to $26.4 million for the year ended December
31, 1997, from $22.6 million for the prior year. Diluted earnings per share
increased to $2.67 in 1997 as compared to $2.15 in 1996.
Accumulated other comprehensive income as of December 31, 1997 included
gross unrealized gains and losses on equity securities of $12.3 million and $0.9
million respectively, and gross unrealized gains on fixed
20
<PAGE>
maturities available for sale of $8.6 million. Unrealized gains were recorded in
fixed and equity securities resulting from decreases in interest rates and a
strong stock market in 1997, respectively.
Notes payable increased to $22.4 million as of December 31, 1997 and
resulted from loans obtained to repurchase the Company's common stock. This also
contributed to the increase in treasury stock, at cost, in 1997.
Prepaid reinsurance premiums increased 131% to $24.4 million at December
31, 1997 however the reserve for unearned premiums decreased in 1997 by 17%. The
decline in gross writings in 1997 is consistent with the change in the reserve
for unearned premiums. The Company, however, reduced its net retention per loss
in the aviation line which prompted prepaid reinsurance premiums, as well as
ceded reinsurance payable balances, to increase accordingly.
Liquidity and Capital Resources
The Company monitors cash and short-term investments in order to have an
adequate level of funds available to satisfy claims and expenses as they become
due. As of December 31, 1998, the Company's assets included approximately $17.8
million in cash and short-term investments. The primary sources of the Company's
liquidity are funds generated from insurance premiums, investment income and
maturing or liquidating investments.
Historically, cash provided by operating activities was used in investing
and financing activities. In 1997 and 1996 cash inflows increased as premium
rates were higher in the ocean marine and aviation lines. Cash was used in
operating activities in 1998 as further declines in premium rates and increases
in ceded reinsurance premiums negatively affected cash from operations. The
Company's maturing book of casualty business also adversely affected cash flows.
Investing and financing activities increased further as a result of the
Company entering into a $10,000,000 revolving credit agreement which increased
to $25,000,000 in 1996 with the same bank. Additional borrowings of
approximately $9,520,000 and $9,200,000 were made in 1997 and 1996,
respectively, to repurchase the Company's Common Stock. Repayments were made
quarterly generally at $1,250,000 per quarter.
The Company has an unsecured credit facility with a bank that allows for a
maximum credit of $5,000,000. This facility was reduced in 1997 from a
$10,000,000 amount available in 1996. The use of this credit facility will
assist the Company as a source of short-term liquidity. In 1998 and 1996,
amounts were borrowed to assist the insurance pools managed by the Company in
the payment of gross losses. The amounts borrowed under the line of credit were
fully repaid after collecting recoverables due from reinsurers on such losses.
The Company adheres to investment guidelines set by the Finance Committee
of the Board of Directors. The investment guidelines are conservatively designed
to provide the Company with adequate capital growth and sufficient liquidity to
meet existing obligations. Such guidelines consider many factors including
anticipated tax position and regulatory requirements.
The Company's largest investments are in bonds from various states and
municipalities. Such securities receive favorable tax treatment under existing
tax laws. Our investment position is monitored regularly as the Company has been
affected by the alternative minimum tax. As net earnings were affected by
several catastrophe losses in the mid 1990's the Company further bolstered its
taxable investment position. As the Company's tax position changed with improved
earnings in 1995, additional investments were made in tax-exempt securities
through 1998 to improve after tax investment yield.
21
<PAGE>
Under the Common Stock Repurchase Plan, the Company may purchase up to
$55,000,000 of the Company's issued and outstanding shares of common stock on
the open market. As of December 31, 1998, the Company had repurchased a total of
2,116,442 shares of common stock at a total cost of approximately $38,583,101 at
market prices ranging from $16.50 to $26.88 per share.
NYMAGIC's principal source of cash flow is dividends from its insurance
company subsidiaries which is used to fund operating expenses, including
interest expense, loan repayments and payment of dividends to shareholders. The
Company's domestic insurance company subsidiaries are limited by statute in the
amount of dividends that may be declared or paid during a year. The limitation
restricts dividends paid or declared to the lower of 10% of policyholders'
surplus or 100% of net investment income as defined under New York insurance
law. The limitations on dividends from the insurance company subsidiaries are
not expected to have an impact on the Company's ability to meet current cash
obligations or materially limit the current payment of dividends to the
Company's shareholders. Dividends can be paid from Syndicate 1265 to the extent
solvency margins are maintained and after the closing of a calendar year, which
occurs three years following each calendar year.
Impact of Year 2000
The Company's computer systems and electronic devices which are based on
software programs which process dates with two digits rather than four to define
the applicable year may assume that all years occur only in the 20th century.
This could cause a system failure or miscalculation causing disruptions of
operations controlled by such systems or devices, including, among other things,
an inability to process transactions, send invoices, engage in actuarial
analyses, compute and track payment schedules, control equipment or engage in
similar normal business activities. The Company's exposure to this potential
phenomenon is concentrated principally in its legacy hardware system, insurance
business operations software, financial applications software (accounts payable,
general ledger and other packages), business relations, and potential
underwriting losses arising from claims by insureds under the Company's
insurance policies for relief for losses resulting from the Year 2000
phenomenon.
The following discussion is based on management's best estimates, which
were derived using numerous assumptions of future events, including, without
limitation, the continuing availability of basic utilities and other resources,
the availability of trained personnel at reasonable cost, and the ability of
third parties to replace or upgrade noncompliant software and hardware at
reasonable cost. There can be no guarantee that these assumptions will prove
accurate, and, accordingly, actual results may materially differ from those
anticipated.
Readiness and Compliance Plan
The Company separated its Year 2000 compliance plan into three major
phases: (1) Information Technology; (2) Compliance by Vendors and Business
Relations; and (3) Potential Underwriting Losses. These three phases are
considered the most critical components of the Year 2000 efforts for the
Company.
Information Technology
In 1996, the Company commenced overhauling its existing legacy mainframe
computer hardware and software systems in order to improve employee productivity
and financial reporting. The Company extended the project to cover Year 2000
concerns.
In June, 1998, the Company replaced its computer hardware system with
client-server architecture which is Year 2000 compliant. The Company also
successfully upgraded its insurance business operations software so that such
software now functions with the new Year 2000 compliant operating system. The
upgraded operations software was modified subsequently to be Year 2000
compliant. The Company is currently testing and evaluating the Year 2000
compliant version of its insurance business operations software. Based upon the
status of its testing, which is currently on schedule, the Company expects the
testing of its business operations software to be completed by June 30, 1999.
22
<PAGE>
The Company expects that its remaining software (which includes financial
applications for accounts payable, general ledger and other packages) will be
Year 2000 compliant by June 30, 1999. The Company has identified Year 2000
compliant systems and is evaluating and testing data to insure compliance of the
remaining software systems. The Company is approximately 25% complete with
respect to this phase of its Year 2000 evaluation efforts and is currently on
schedule with its compliance plans. In the event such systems cannot be upgraded
or remedied, the Company would purchase and/or license replacement software
which is Year 2000 compliant.
Compliance by Vendors and Business Relations
In connection with the Company's Year 2000 plan, the Company is in the
process of communicating with its various business relationships and vendors to
determine the extent of their Year 2000 compliance. The Company mailed
questionnaires to approximately 300 companies which the Company considers to
have an important relationship with the Company. To date, the Company received
responses from approximately 200 of such companies indicating that they are in
the process of becoming Year 2000 compliant before January 1, 2000. In 1999, the
Company selected the 10 largest producers for the Company, which accounts for
approximately 64% of the Company's gross writings for the domestic insurance
companies as of December 31, 1998, and requested additional information to
evidence their Year 2000 Compliance. Also, the Company is soliciting the
non-responding companies to determine the extent of their compliance. The
Company is current with its timetable on this phase of its compliance plan and
believes that it will complete analyzing the Year 2000 compliance of its
business relationships by July 1999. In the event that a business relationship
does not respond to the Company or does not demonstrate that its own systems are
Year 2000 compliant, then such business relationships may need to be terminated
which may result in a material and adverse effect on the Company's business,
assets, prospects, liquidity and financial condition.
Potential Underwriting Losses
Property/casualty insurance companies may have an underwriting exposure
related to the Year 2000 phenomenon. Although the Company has not received any
claims for coverage from insureds based on losses resulting from Year 2000
issues, there can be no assurance that insureds will be free from losses of this
type or that the Company will be free from claims made under the Company's
insurance policies. If any claims are made, coverage, if any, will depend on the
facts and circumstances of the claim and the provisions of the subject insurance
policy. The Company, in certain instances, has been able to include Year 2000
exclusions in its policy forms. Also, the Company is requesting information from
certain insureds as to the extent of their Year 2000 compliance. The Company
will continue to monitor policies throughout the 1999 year as a result of
compliance under this phase of its Year 2000 evaluation efforts. At this time,
the Company is unable to determine whether the adverse impact and/or extent of
underwriting losses, if any, in connection with the foregoing circumstances
would be material to the Company.
Cost of Year 2000 Compliance
The Company estimates, based on its evaluations and actions taken to date,
that the aggregate cost of its information technology project, including the
cost of achieving Year 2000 compliance, will be approximately $1,400,000 of
which approximately $1,100,000 has been expended through December 31, 1998.
These costs (excluding internal personnel expenses) are comprised of outside
consulting service costs for evaluation and upgrade of systems, acquisition
costs for new equipment and componentry, and licensing and purchase fees for new
and upgraded software. This process has not had a material impact on the status
of other internal technology projects.
Contingency Plan; Actual Results May Differ
The Company is in the beginning stages of developing a contingency plan in
the event that its insurance business operation software is not placed into use.
This plan, which has not been finalized, includes a combination of purchasing
personal computers and utilizing manual systems. The contingency plan also
addresses Year 2000 issues relating to environmental concerns. This includes
telephone and security systems, copiers, electrical availability, etc.
23
<PAGE>
Actual results may differ materially from those anticipated. Specific
factors that might cause such material differences include, but are not limited
to, the availability and cost of personnel trained in this area, the ability to
locate suitable cost efficient replacements (or upgrades to) computer hardware
and software which are Year 2000 compliant, and the ability to correct all
relevant computer codes and similar uncertainties. There can be no assurance
that the Company will be immune from underwriting losses arising from Year 2000;
and such losses may result in a material and adverse effect on the Company's
business, assets, liquidity and financial condition.
Market risk
Market risk includes the potential for future losses due to reasonably
possible changes in the fair value of financial instruments which relates mainly
to the Company's investment portfolio. Those risks associated with the
investment portfolio include the effects of exposure to adverse changes in
interest rates, credit quality, equity prices and foreign exchange rates.
The largest market risk to the Company relates to interest rate risk.
Interest rate risk includes the changes in the fair value of fixed maturities
based upon changes in interest rates. This risk is considered when developing
our benchmarks for evaluating our portfolio. Such benchmarks are tied into the
overall duration of the Company's loss reserves. Through the matching of cash
flows from future maturing investments and the ultimate payout pattern of loss
reserves, the Company can minimize the effect of interest rate risk.
The following tabular presentation outlines the expected cash flows of
fixed maturities available for sale for each of the next five years and the
aggregate cash flows expected for the remaining years thereafter based upon
maturity dates. Fixed maturities include taxable and tax-exempt securities with
applicable weighted average interest rates. Taxables also include mortgage
backed securities that have prepayment features which may cause actual cash
flows to differ from those based on maturity date.
Future cash flows of expected principal amounts
(in millions)
Total Total
There- Amortized Fair
Fixed maturities 1999 2000 2001 2002 2003 after Cost Value
- - ---------------- ---- ---- ---- ---- ---------- ---- -----
Tax-exempt ............. $ 15 $ 11 $ 15 $ 18 $ 32 $161 $252 $260
Average interest rate 5.9% 6.5% 6.0% 5.7% 5.8% 6.2% -- --
Taxables ............... 15 3 16 -- 9 48 91 93
Average interest rate 7.0% 7.8% 6.8% -- 5.4% 7.1% -- --
---- ---- ---- ---- ---------- ---- -----
Total .................. $ 30 $ 14 $ 31 $ 18 $ 41 $209 $343 $353
Credit quality risk includes the risk of default by issuers of debt
securities. The Company's investment guidelines are conservatively designed and
prevent the investment in securities below an A rating. Overall, the Company has
maintained fixed maturities with an average credit quality rating of AA as of
December 31, 1998. The Company's exposure to credit risk is considered minimal.
Foreign currency risk includes exposure to changes in foreign exchange
rates on the market value and interest income of foreign denominated
investments. Syndicate 1265 operations maintain an equivalent of $2.9 million in
investments in British Pounds Sterling to the extent business is derived from
transactions in such currency. The investment of cash flows from business
written in Pounds Sterling in securities of the same foreign currency, will
ultimately mitigate the risk associated with changes in foreign exchange rates.
Equity risk includes the potential loss from changes in the fair value of
equity securities. The Company's equity securities are traded on major stock
exchanges and are highly liquid. These securities are limited by investment
guidelines to 25% of statutory surplus in order to minimize the impact of large
changes in the stock market.
The Company monitors market risks on a regular basis through meetings with
investment advisors, examining the existing portfolio and reviewing potential
changes in investment guidelines. The overall effect of
24
<PAGE>
which is to allow management to make informed decisions concerning the impact
that market risks have on the portfolio.
Effect of recent accounting pronouncements
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities", ("SFAS 133") was issued by the
Financial Accounting Standards Board in June 1998. SFAS 133 requires derivatives
to be recorded on the balance sheet at fair value. Derivatives not considered as
hedges must be recorded at fair value with adjustments recorded in the income
statement. For derivatives that qualify as a hedge, changes in the fair value of
the derivative are offset against changes in the fair value of the hedged assets
or liabilities and are recognized in the income statement or in other
comprehensive income depending on the nature of the hedge. SFAS 133 is effective
for years beginning after June 15, 1999.
The Company uses derivatives, in the form of an interest rate swap, for
hedging purposes as part of its interest rate management. The Company has not
yet determined the effect of SFAS 133 on its financial statements.
Inflation
Periods of inflation have prompted the pools, and consequently the
Company, to react quickly to actual or potential imbalances between costs,
including claim expenses, and premium rates. These imbalances have been
corrected mainly through improved underwriting controls, responsive management
information systems and frequent review of premium rates and loss experience.
Inflation also affects the final settlement costs of claims which may not
be paid for several years. The longer a claim takes to settle, the more
significant the impact of inflation on final settlement costs. The Company
periodically reviews outstanding claims and adjusts reserves for the pools based
on a number of factors, including inflation.
Item 8. Financial Statements and Supplementary Data.
The consolidated financial statements required in response to this item
are included as part of Item 14(a) of this report.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
25
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant.
The information required by this Item is incorporated by reference herein
from the "Compensation and Other Information" section of the Company's Proxy
Statement for the 1999 Annual Meeting of Shareholders.
Item 11. Executive Compensation.
The information required by this Item is incorporated by reference herein
from the "Compensation and Other Information" section of the Company's Proxy
Statement for the 1999 Annual Meeting of Shareholders.
Item 12. Security Ownership of Certain
Beneficial Owners and Management.
The information required by this Item is incorporated by reference herein
from the "Compensation and Other Information" section of the Company's Proxy
Statement for the 1999 Annual Meeting of Shareholders.
Item 13. Certain Relationships and Related Transactions.
The information required by this Item is incorporated by reference herein
from the "Compensation and Other Information" section of the Company's Proxy
Statement for the 1999 Annual Meeting of Shareholders.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) 1. Financial Statements
The list of financial statements appears in the accompanying
index on page 31.
2. Financial Statement Schedules
The list of financial statement schedules appears in the
accompanying index on page 31.
3. Exhibits
3.1. Charter. (Incorporated by reference to Exhibit 3-1 to the
Registrant's Registration Statement No. 33-27665).
3.3. By-laws.
4.0. Specimen Certificate of common stock (Incorporated by
reference to Exhibit 4 to the Registrant's Registration Statement
No. 33-27665).
10.2. Restated Management Agreement dated as of January 1,
1986, by and among Mutual Marine Office, Inc. and Arkwright-Boston
Manufacturers Mutual Insurance Company, Utica Mutual Insurance
Company, Lumber Mutual Insurance Company, the Registrant and
Pennsylvania National Mutual Casualty Insurance Company
(Incorporated by reference to Exhibit 10.2 of the Registrant's
Annual Report Form 1O-K for the fiscal year ended December 31,
1986.)
10.2.2. Amendment to Restated Management Agreement, dated as
of December 30, 1988, and among Mutual Marine Office, Inc. and
Arkwright Mutual Insurance Company, Utica Mutual Insurance Company,
Lumber Mutual Insurance Company, the Registrant and Pennsylvania
National Mutual Casualty Insurance Company. (Incorporated by
reference to Exhibit 10.2.2. of the Registrant's Report on Form 8-K
dated January 6, 1989.)
10.2.3. Amendment to Restated Management Agreement, dated as
of December 31, 1990, and among Mutual Marine Office, Inc. and
Arkwright Mutual Insurance Company, Utica Mutual Insurance
26
<PAGE>
Company, the Registrant and Pennsylvania National Mutual Casualty
Insurance Company. (Incorporated by reference to Exhibit 10.2.3. of
the Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1992.)
10.4. Restated Management Agreement dated as of January 1,
1986, by and among Mutual Inland Marine Office, Inc. and
Arkwright-Boston Manufacturers Mutual Insurance Company, Utica
Mutual Insurance Company, Lumber Mutual Insurance Company, the
Registrant and Pennsylvania National Mutual Casualty Insurance
Company (Incorporated by reference to Exhibit 10.4 of the
Registrant's Annual Report Form 10-K for the fiscal year ended
December 31, 1986.)
10.4.2. Amendment to Restated Management Agreement, dated as
of December 30, 1988, and among Mutual Inland Marine Office, Inc.
and Arkwright Mutual Insurance Company, Utica Mutual Insurance
Company, Lumber Mutual Insurance Company, the Registrant and
Pennsylvania National Mutual Casualty Insurance Company
(Incorporated by reference to Exhibit 10.4.2 of the Registrant's
Report on Form 8-K, dated January 6, 1989.)
10.4.3. Amendment to Restated Management Agreement, dated as
of December 31, 1990, by and among Mutual Inland Marine Office, Inc.
and Arkwright Mutual Insurance Company, Utica Mutual Insurance
Company, the Registrant and Pennsylvania National Mutual Casualty
Insurance Company. (Incorporated by reference to Exhibit 10.4.3. of
the Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1992.)
10.6. Restated Management Agreement dated as of January 1,
1986, by and among Mutual Marine Office of the Midwest, Inc. and
Arkwright-Boston Manufacturers Mutual Insurance Company, Utica
Mutual Insurance Company, Lumber Mutual Insurance Company, the
Registrant and Pennsylvania National Mutual Casualty Insurance
Company. (Incorporated by reference to Exhibit 10.6 of the
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1986.)
10.6.2. Amendment to Restated Management Agreement dated as of
December 30, 1988, by and among Mutual Marine Office of the Midwest,
Inc. and Arkwright Mutual Insurance Company, Utica Mutual Insurance
Company, Lumber Mutual Insurance Company, the Registrant and
Pennsylvania National Mutual Casualty Insurance Company.
(Incorporated by reference to Exhibit 10.6.2 of the Registrant's
Report on Form 8-K, dated January 6, 1989.)
10.6.3. Amendment to Restated Management Agreement dated as of
December 31, 1990, by and among Mutual Marine Office of the Midwest,
Inc. and Arkwright Mutual Insurance Company, Utica Mutual Insurance
Company, the Registrant and Pennsylvania National Mutual Casualty
Insurance Company. (Incorporated by reference to Exhibit 10.6.3. of
the Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1992.)
10.8. Restated Management Agreement dated as of January 1,
1986, by and among Pacific Mutual Marine Office, Inc. and
Arkwright-Boston Manufacturers Mutual Insurance Company, Lumber
Mutual Insurance Company, Utica Mutual Insurance Company, the
Registrant and Pennsylvania National Mutual Casualty Insurance
Company. (Incorporated by reference to Exhibit 10.8 of the
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1986.)
10.8.2. Amendment to Restated Management Agreement dated as of
December 30, 1988, by and among Pacific Mutual Marine Office, Inc.
and Arkwright Mutual Insurance Company, Lumber Mutual Insurance
Company, Utica Mutual Insurance Company, the Registrant and
Pennsylvania National Mutual Casualty Insurance Company.
(Incorporated by reference to Exhibit 10.8.2 of the Registrant's
Report on Form 8-K, dated January 6, 1989.)
10.8.3. Amendment to Restated Management Agreement dated as of
December 31, 1990, by and among Pacific Mutual Marine Office, Inc.
and Arkwright Mutual Insurance Company, Utica Mutual Insurance
Company, the Registrant and Pennsylvania National Mutual Casualty
Insurance Company. (Incorporated by reference to Exhibit 10.8.3. of
the Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1992.)
10.9 Employment Agreement between Vincent T. Papa and the
Company.
21. Subsidiaries of the Registrant.
27
<PAGE>
23. Consent of KPMG LLP.
27. Financial Data Schedule
28. Schedule P as of December 31, 1998.
(b) Reports on Form 8-K
None.
28
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
NYMAGIC, INC.
(Registrant)
By: /s/ Sergio B. Tobia
------------------------
Sergio B. Tobia
Chairman of the Board
Date: March 31, 1999
------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
Name Title Date
- - ---- ----- ----
Director March __, 1999
- - ----------------------------
John N. Blackman, Jr.
Director March __, 1999
- - ----------------------------
Mark W. Blackman
/s/ Thomas J. Condon Director March 31, 1999
- - ----------------------------
Thomas J. Condon
/s/ Jean H. Goulding Director March 31, 1999
- - ----------------------------
Jean H. Goulding
/s/ John Kean, Jr. Director March 31, 1999
- - ----------------------------
John Kean, Jr.
/s/ James A. Lambert Director, General Counsel, March 31, 1999
- - ---------------------------- Chief Operating Officer
James A. Lambert and Secretary
29
<PAGE>
Name Title Date
- - ---- ----- ----
/s/ Charles A. Mitchell Director and Vice President March 31, 1999
- - ----------------------------
Charles A. Mitchell
/s/ Michael S. Shaffet Director March 31, 1999
- - ----------------------------
Michael S. Shaffet
/s/ William R. Scarbrough Director March 31, 1999
- - ----------------------------
William R. Scarbrough
/s/ Richard T. Soper Director March 31, 1999
- - ----------------------------
Richard T. Soper
/s/ William A. Thorne Director March 31, 1999
- - ----------------------------
William A. Thorne
/s/ Sergio B. Tobia Chairman of the Board and March 31, 1999
- - ---------------------------- Director
Sergio B. Tobia
/s/ Louise B. Tollefson Director March 31, 1999
- - ----------------------------
Louise B. Tollefson
/s/ Thomas J. Iacopelli Principal Accounting Officer March 31, 1999
- - ---------------------------- and Chief Financial Officer
Thomas J. Iacopelli
/s/ Vincent T. Papa President and Chief March 31, 1999
- - ---------------------------- Executive Officer
Vincent T. Papa
30
<PAGE>
NYMAGIC, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Independent Auditors' Report .............................................. 32
Consolidated Balance Sheets ............................................... 33
Consolidated Statements of Income ......................................... 34
Consolidated Statements of Shareholders' Equity ........................... 35
Consolidated Statements of Cash Flows ..................................... 36
Notes to Consolidated Financial Statements ................................ 37
Financial Statement Schedule II ........................................... 58
Financial Statement Schedule V ............................................ 60
Financial Statement Schedule VI ........................................... 61
31
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
NYMAGIC, INC.:
We have audited the accompanying consolidated balance sheets of NYMAGIC,
INC. and subsidiaries as of December 31, 1998 and 1997, and the related
consolidated statements of income, shareholders' equity, and cash flows for each
of the years in the three-year period ended December 31, 1998. In connection
with our audits of the consolidated financial statements, we have also audited
the financial statement schedules as listed in the accompanying index. These
consolidated financial statements and financial statement schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and financial statement
schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
NYMAGIC, INC. and subsidiaries as of December 31, 1998 and 1997, and the
consolidated results of their operations and their cash flows for each of the
years in the three-year period ended December 31, 1998 in conformity with
generally accepted accounting principles. Also, in our opinion, the related
financial statement schedules, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly, in all
material respects, the information set forth therein.
KPMG LLP
New York, New York
February 16, 1999
32
<PAGE>
NYMAGIC, INC.
CONSOLIDATED BALANCE SHEETS
December 31,
------------------------------
1998 1997
------------- -------------
ASSETS
Investments:
Fixed maturities available for sale at
fair value (amortized cost
$342,583,525 and $352,696,745) ............. $ 353,403,303 $ 361,249,758
Equity securities at fair value
(cost $54,368,172 and $47,925,798) ........ 73,418,473 59,258,608
Short-term investments ....................... 16,200,606 18,082,540
------------- -------------
Total investments ......................... 443,022,382 438,590,906
------------- -------------
Cash ......................................... 1,583,390 1,042,310
Accrued investment income .................... 6,189,866 6,322,370
Premiums and other receivables, net .......... 41,422,913 40,635,164
Reinsurance receivables ...................... 199,730,802 175,657,952
Deferred policy acquisition costs ............ 4,277,430 5,567,488
Prepaid reinsurance premiums ................. 19,393,546 24,414,620
Deferred income taxes ........................ 5,811,741 8,436,768
Property, improvements & equipment, net ...... 2,341,021 2,365,653
Other assets ................................. 6,547,403 4,869,609
------------- -------------
Total assets .............................. $ 730,320,494 $ 707,902,840
============= =============
LIABILITIES
Unpaid losses and loss adjustment expenses ... $ 401,584,146 $ 388,401,548
Reserve for unearned premiums ................ 46,878,550 55,188,281
Ceded reinsurance payable .................... 23,795,992 27,307,129
Notes payable ................................ 17,458,413 22,458,413
Other liabilities ............................ 11,454,977 7,062,095
Dividends payable ............................ 968,549 966,031
------------- -------------
Total liabilities ........................ 502,140,627 501,383,497
------------- -------------
SHAREHOLDERS' EQUITY
Common stock ................................. 15,017,892 14,991,992
Paid-in capital .............................. 28,029,410 27,529,877
Accumulated other comprehensive income ....... 19,436,591 12,931,785
Retained earnings ............................ 208,198,204 193,547,346
------------- -------------
270,682,097 249,001,000
Treasury stock, at cost, 5,332,400
and 5,331,686 shares ....................... (42,502,230) (42,481,657)
------------- -------------
Total shareholders' equity ............... 228,179,867 206,519,343
------------- -------------
Total liabilities and shareholders' equity $ 730,320,494 $ 707,902,840
============= =============
The accompanying notes are an integral part of
these consolidated financial statements.
33
<PAGE>
<TABLE>
NYMAGIC, INC.
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Year ended December 31,
--------------------------------------------------------------
1998 1997 1996
------------- ------------ ------------
<S> <C> <C> <C>
Revenue:
Net premiums earned .................................... $ 76,022,663 $ 87,536,906 $ 97,036,021
Commission income ...................................... 591,448 1,438,606 1,980,632
Net investment income .................................. 20,803,433 21,325,065 21,270,194
Realized investment gains .............................. 8,615,058 10,425,133 4,589,133
Other income ........................................... 395,560 292,918 689,641
------------- ------------ ------------
Total revenues ....................................... 106,428,162 121,018,628 125,565,621
------------- ------------ ------------
Expenses:
Losses and loss adjustment expenses
incurred .............................................. 50,512,063 50,768,248 59,358,857
Policy acquisition expenses ............................ 10,107,327 16,582,623 18,827,794
General and administrative expenses .................... 21,531,287 16,763,699 16,168,162
Interest expense ....................................... 1,373,408 1,449,770 1,035,058
------------- ------------ ------------
Total expenses ....................................... 83,524,085 85,564,340 95,389,871
------------- ------------ ------------
Income before income taxes ............................... 22,904,077 35,454,288 30,175,750
------------- ------------ ------------
Income tax provision:
Current ................................................ 5,250,123 8,962,799 7,494,593
Deferred ............................................... (869,462) 123,749 56,539
------------- ------------ ------------
Total income taxes ................................... 4,380,661 9,086,548 7,551,132
------------- ------------ ------------
Net income ............................................. $ 18,523,416 $ 26,367,740 $ 22,624,618
============= ============ ============
Weighted average number of shares of
common stock outstanding-basic ......................... 9,678,802 9,848,959 10,499,366
============= ============ ============
Basic earnings per share ................................. $ 1.91 $ 2.68 $ 2.15
============= ============ ============
Weighted average number of shares of
common stock outstanding-diluted ....................... 9,705,433 9,871,586 10,523,996
============= ============ ============
Diluted earnings per share ............................... $ 1.91 $ 2.67 $ 2.15
============= ============ ============
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
34
<PAGE>
<TABLE>
NYMAGIC, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<CAPTION>
Year ended December 31,
---------------------------------------------------------------------------------------
1998 1997 1996
--------------------------- --------------------------- ---------------------------
<S> <C> <C> <C> <C> <C> <C>
Retained earnings:
Balance, beginning of period ........... $193,547,346 $171,089,462 $152,646,915
Net income ............................. 18,523,416 $ 18,523,416 26,367,740 $ 26,367,740 22,624,618 $ 22,624,618
------------ ------------ ------------
Dividends declared ..................... (3,872,558) (3,909,856) (4,182,071)
------------ ------------ ------------
Balance, end of period .......... 208,198,204 193,547,346 171,089,462
============ ============ ============
Accumulated other comprehensive income:
Balance, beginning of period ........... 12,931,785 8,150,910 9,865,486
Unrealized gain (loss) on securities,
net of reclassification adjustment .. 6,489,767 4,774,875 (1,714,576)
Foreign currency translation adjustments 15,039 6,000
------------ ------------ ------------
Other comprehensive income (loss) ...... 6,504,806 6,504,806 4,780,875 4,780,875 (1,714,576) (1,714,576)
------------ ------------ ------------ ------------ ------------ ------------
Comprehensive income ................... $ 25,028,222 $ 31,148,615 $ 20,910,042
============ ============ ============
Balance, end of period .......... 19,436,591 12,931,785 8,150,910
============ ============ ============
Common stock:
Balance, beginning of period ........... 14,991,992 14,911,992 14,749,192
Shares issued .......................... 25,900 80,000 162,800
------------ ------------ ------------
Balance, end of period .......... 15,017,892 14,991,992 14,911,992
============ ============ ============
Paid-in capital:
Balance, beginning of period ........... 27,529,877 26,258,259 23,933,587
Shares issued .......................... 499,533 1,271,618 2,324,672
------------ ------------ ------------
Balance, end of period .......... 28,029,410 27,529,877 26,258,259
============ ============ ============
Treasury stock:
Balance, beginning of period ........... (42,481,657) (31,558,897) (18,478,576)
Net repurchase of common stock ......... (20,573) (10,922,760) (13,080,321)
------------ ------------ ------------
Balance, end of period .......... $(42,502,230) $(42,481,657) $(31,558,897)
============ ============ ============
<CAPTION>
Number of Shares
----------------
<S> <C> <C> <C>
Common stock, par value $1 each:
Issued, beginning of period ............ 14,991,992 14,911,992 14,749,192
Shares Issued .......................... 25,900 80,000 162,800
------------ ------------ ------------
Issued, end of period .................. 15,017,892 14,991,992 14,911,992
============ ============ ============
Common stock, authorized shares,
par value $1 each ...................... 30,000,000 30,000,000 30,000,000
============ ============ ============
Common stock, shares outstanding ....... 9,685,492 9,660,306 10,143,052
============ ============ ============
Dividends declared per share ........... $ .40 $ .40 $ .40
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
35
<PAGE>
<TABLE>
NYMAGIC, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Year ended December 31,
------------------------------------------------------------
1998 1997 1996
------------ ------------- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income ................................................. $ 18,523,416 $ 26,367,740 $ 22,624,618
------------ ------------- -------------
Adjustments to reconcile net income to
net cash (used in) provided by operating
activities:
Provision for deferred taxes .............................. (869,462) 123,749 56,539
Realized investment gains ................................. (8,615,058) (10,425,133) (4,589,133)
Net bond amortization ..................................... 2,220,565 1,895,355 1,933,151
Depreciation and other, net ............................... 733,950 582,126 442,945
Changes in:
Premiums and other receivables ............................ (787,749) 22,404,229 6,641,818
Reinsurance receivables ................................... (24,072,850) 22,330,121 (592,384)
Ceded reinsurance payable ................................. (3,511,137) 7,553,186 3,327,596
Accrued investment income ................................. 132,504 (362,173) 150,205
Deferred policy acquisition costs ......................... 1,290,058 5,336,753 756,662
Prepaid reinsurance premiums .............................. 5,021,074 (13,852,407) 6,394,228
Other assets .............................................. (1,677,794) (1,523,783) 80,157
Unpaid losses and loss adjustment
expenses ................................................ 13,182,598 (23,435,433) (5,957,544)
Reserve for unearned premiums ............................. (8,309,731) (11,463,652) (12,917,022)
Foreign currency translation adjustments .................. 15,039 6,000 --
Other liabilities ......................................... 4,392,882 660,632 (5,546,174)
------------ ------------- -------------
Total adjustments ..................................... (20,855,111) (170,430) (9,818,956)
------------ ------------- -------------
Net cash (used in) provided by operating
activities ................................................. (2,331,695) 26,197,310 12,805,662
------------ ------------- -------------
Cash flows from investing activities:
Fixed maturities acquired ................................. (77,604,001) (205,891,607) (231,515,433)
Equity securities acquired ................................ (51,440,490) (50,578,073) (37,880,911)
Net sale of short-term investments ........................ 1,890,059 178,516 22,458,421
Fixed maturities matured .................................. 34,682,127 25,059,072 36,302,944
Fixed maturities sold ..................................... 51,905,388 167,867,245 171,112,392
Equity securities sold .................................... 52,514,190 49,858,725 33,637,805
Acquisition of property & equipment, net .................. (709,318) (840,692) (276,494)
------------ ------------- -------------
Net cash provided by (used in) investing
activities ................................................. 11,237,955 (14,346,814) (6,161,276)
------------ ------------- -------------
Cash flows from financing activities:
Proceeds from stock issuance .............................. 525,433 1,351,618 2,487,472
Cash dividends paid to stockholders ....................... (3,870,040) (3,958,130) (4,236,947)
Net repurchase of common stock ............................ (20,573) (10,922,760) (13,080,321)
Proceeds from borrowings .................................. 5,000,000 9,520,000 14,211,472
Loan principal payments ................................... (10,000,000) (7,500,000) (6,500,000)
------------ ------------- -------------
Net cash used in financing activities ....................... (8,365,180) (11,509,272) (7,118,324)
------------ ------------- -------------
Net increase (decrease) in cash ............................. 541,080 341,224 (473,938)
Cash at beginning of year ................................. 1,042,310 701,086 1,175,024
------------ ------------- -------------
Cash at end of year ....................................... $ 1,583,390 $ 1,042,310 $ 701,086
============ ============= =============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
36
<PAGE>
NYMAGIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Summary Of Significant Accounting Policies:
Nature of Operations
NYMAGIC, through its subsidiaries, specializes in underwriting ocean
marine, inland marine, aviation and other liability insurance through insurance
pools managed by Mutual Marine Office, Inc. - ("MMO"), Pacific Mutual Marine
Office, Inc. - ("PMMO"), and Mutual Marine Office of the Midwest, Inc. -
("Midwest"). MMO, located in New York, PMMO located in San Francisco, and
Midwest, located in Chicago, manage the insurance pools in which the Company's
insurance subsidiaries, New York Marine and General Insurance Company - ("New
York Marine") and Gotham Insurance Company ("Gotham"), participate. All
premiums, losses and expenses are prorated among pool members in accordance with
their pool participation percentages. Effective July 1, 1994, the Company
increased to 90.00% its participation in the ocean marine and aviation business
produced by the pools and to 100% its participation in the other liability and
inland marine business produced by the pools. Effective January 1, 1997, the
Company increased to 100% its participation in the ocean marine and aviation
business produced by the pools.
On December 31, 1997, the Company acquired 100% of the stock of Highgate
Managing Agency, a Lloyd's of London underwriting agent for a nominal amount and
renamed the Company MMO Underwriting Agency Ltd (MMO UA). The acquisition was
accounted for under the purchase method of accounting. In 1997, the Company
formed MMO EU Ltd, a holding company, and MMO UK LTD, a Lloyd's of London
corporate vehicle for Lloyd's Syndicate #1265. The assets and liabilities and
results of operations of MMO EU, MMO UK and MMO UA (collectively referred to as
"Syndicate 1265") are included in the consolidated financial statements.
Basis of Reporting
The consolidated financial statements have been prepared on the basis of
generally accepted accounting principles which differ in certain material
respects from the accounting principles prescribed or permitted by state
insurance regulatory authorities for the Company's two insurance subsidiaries.
The principal differences recorded under generally accepted accounting
principles are deferred policy acquisition costs, an allowance for doubtful
accounts, fixed maturities held for sale are carried at fair value and deferred
income taxes.
The preparation of financial statements require management to make
estimates that affect the reported amounts of assets, liabilities, revenues and
expenses. Actual amounts could differ from those amounts previously estimated.
Consolidation
The consolidated financial statements include the accounts of the Company,
two insurance subsidiaries, New York Marine and Gotham, three agency
subsidiaries collectively referred to as ("MMO") and the Company's UK
operations. Gotham is owned 25% by the Company and 75% by New York Marine. All
other subsidiaries are wholly owned. All intercompany accounts and transactions
have been eliminated in consolidation.
37
<PAGE>
NYMAGIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Investments
Fixed maturities held for sale are carried at fair value and include those
bonds where the Company's intent to carry such investments to maturity may be
affected in future periods by changes in market interest rates or tax position.
Equity securities (common stocks and non-redeemable preferred stocks) are
carried at fair value. Short-term investments are carried at cost which
approximates fair value. Fair value is based upon quotes obtained from
independent sources.
Realized investment gains and losses (determined on the basis of specific
identified cost), also include any declines in value which are considered to be
other than temporary. Unrealized appreciation or depreciation of investments,
net of related deferred income taxes, is reflected in accumulated other
comprehensive income in shareholders' equity.
Derivatives
In 1998, an interest rate agreement was entered into for purposes of
hedging interest rate risk on the Company's existing note payable. Cash flows as
a result of the hedge are recorded as adjustments to interest expense.
Premium and policy acquisition cost recognition
Premiums and policy acquisition costs are reflected in income and expense
on a monthly pro rata basis over the terms of the respective policies.
Accordingly, unearned premium reserves are established for the portion of
premiums written applicable to unexpired policies in force, and acquisition
costs, consisting mainly of net brokerage commissions, and premium taxes
relating to these unearned premiums are deferred to the extent recoverable. The
Company has provided an allowance for uncollectible premium receivables of
$650,000 and $700,000 as of December 31, 1998 and 1997, respectively. The
determination of acquisition costs to be deferred considers historical and
current loss and loss adjustment expense experience. Consideration is also given
to anticipated investment income in measuring the carrying value of deferred
policy acquisition costs.
Revenue recognition
Management commission income on policies written by the MMO insurance pools
is recognized primarily as of the effective date of the policies issued.
Adjustments to the policies, resulting principally from changes in coverage and
audit adjustments, are recorded in the period reported.
Contingent profit commission revenue derived from the reinsurance
transactions of the insurance pools is recognized when such amount becomes
billable to the respective reinsurers.
Reinsurance
The Company's insurance subsidiaries participate in various reinsurance
agreements on both an assumed and ceded basis through the MMO insurance pools.
The Company uses various types of reinsurance including quota-share, excess of
loss and facultative agreements to spread the risk of loss among several
reinsurers and to limit its exposure from losses on any one occurrence. Any
recoverable due from reinsurers is recorded in the period in which the related
gross liability is established.
The Company accounts for all reinsurance recoverables and prepaid
reinsurance premiums as assets.
38
<PAGE>
NYMAGIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Depreciation
Property, equipment and leasehold improvements are depreciated using both
straightline and accelerated methods over their useful lives.
Income Taxes
The Company and its subsidiaries file a consolidated Federal tax return.
The Company provides deferred income taxes on temporary differences between the
financial reporting basis and the tax basis of the Company's assets and
liabilities based upon enacted tax rates. The effect of a change in tax rates is
recognized in income in the period of change.
Fair Values of Financial Instruments
The fair value of the Company's fixed maturity investments is disclosed in
Note 2. The Company's other financial instruments include short-term
receivables, notes payable and other payables which are recorded at the
underlying transaction value and approximate fair value.
Goodwill
The excess of purchase price over the fair value of net assets acquired is
amortized to income on a straight-line basis over five years.
Foreign currency translation
The assets and liabilities of the Company's UK operations, recorded in
Pounds Sterling, are translated to U.S. dollars at exchange rates in effect at
the balance sheet date and the resulting adjustments are recorded in accumulated
other comprehensive income in shareholders' equity. Revenues and expenses are
translated to U.S. dollars using the average exchange rates for the year.
Incurred losses
Unpaid losses are based on individual case estimates for losses reported. A
provision is also included, based on past experience, for losses incurred but
not reported, salvage and subrogation recoveries and for loss adjustment
expenses. The method of making such estimates and for establishing the resulting
reserves is continually reviewed and updated and any changes resulting therefrom
are reflected in operating results currently.
39
<PAGE>
NYMAGIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Basic and diluted earnings per share
Basic EPS is calculated by dividing net income by the weighted average
number of common shares outstanding during the year. Diluted EPS is calculated
by dividing net income by the weighted average number of common shares
outstanding during the year and the dilutive effect of assumed stock option
exercises. See Note 12 for a reconciliation of the shares outstanding in
determining basic and diluted EPS.
Reclassification
Certain accounts in the prior year's financial statements have been
reclassified to conform to the 1998 presentation.
Effects of recent accounting pronouncements
The FASB issued SFAS No. 130, "Reporting Comprehensive Income," ("SFAS
130"), in June 1997 which establishes standards for the reporting and
presentation of comprehensive income and its components. Comprehensive income
encompasses all changes in shareholders' equity, except those arising from
transactions with owners, and includes net income, net unrealized capital gains
or losses on available for sale securities and foreign currency translation
adjustments. The Company adopted SFAS 130 in 1998 and has disclosed information
pertaining to SFAS 130 in the consolidated statements of shareholders' equity
and in Note 11.
The FASB issued SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information," ("SFAS 131"), in June 1997 which establishes standards
for the reporting of information relating to operating segments in annual
financial statements, as well as disclosure of selected information in interim
financial reports. Operating segments are defined as components of a company for
which separate financial information is available and is used by management to
allocate resources and assess performance. The statement supersedes SFAS No. 14,
"Financial Reporting for Segments of a Business Enterprise," which requires
reporting segment information by industry and geographic area. This statement is
effective for year-end 1998 financial statements, and interim financial
information will be required beginning in 1999. Information pertaining to the
various segments is reported pursuant to SFAS 131 in Note 14.
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities ", ("SFAS 133") was issued by the
Financial Accounting Standards Board in June 1998. SFAS 133 requires derivatives
to be recorded on the balance sheet at fair value. Derivatives not considered as
hedges must be recorded at fair value with adjustments recorded in the income
statement. For derivatives that qualify as a hedge, changes in the fair value of
the derivative are offset against changes in the fair value of the hedged assets
or liabilities and are recognized in the income statement or in other
comprehensive income depending on the nature of the hedge. SFAS 133 is effective
for years beginning after June 15, 1999.
The Company uses derivatives, in the form of an interest rate swap, for
hedging purposes as part of its interest rate management. Management is
assessing the impact of SFAS 133 on the Company's consolidated financial
position and results of operation.
40
<PAGE>
NYMAGIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
(2) Investments:
A summary of investment components at December 31, 1998 consists of the
following:
Amount
at which
Fair shown in the
Type of Investment Cost Value balance sheet
- - ------------------ ------------ ------------ ------------
Fixed maturities available
for sale:
Bonds:
United States Government and
government agencies and
authorities .................. $ 55,934,951 $ 57,451,902 $ 57,451,902
States, municipalities and
political subdivisions ......... 252,371,231 260,408,800 260,408,800
Public utilities ............... 15,456,885 16,223,000 16,223,000
All other corporate bonds ...... 18,820,458 19,319,601 19,319,601
------------ ------------ ------------
Total fixed maturities
available for sale ........... 342,583,525 353,403,303 353,403,303
------------ ------------ ------------
Equity securities:
Common stocks:
Public utilities ................... 3,273,626 4,161,364 4,161,364
Banks, trusts and insurance
companies ........................ 6,708,311 7,354,216 7,354,216
Industrial, miscellaneous and
all other ........................ 44,386,235 61,902,893 61,902,893
------------ ------------ ------------
Total equity securities .......... 54,368,172 73,418,473 73,418,473
------------ ------------ ------------
Short term investments ............. 16,200,606 16,200,606 16,200,606
------------ ------------ ------------
Total investments ................ $413,152,303 $443,022,382 $443,022,382
============ ============ ============
Unrealized depreciation or appreciation of investments (before applicable
income taxes) at December 31, 1998 and 1997 included gross unrealized gains on
equity securities of $19,915,191 and $12,276,631, respectively; and gross
unrealized losses on equity securities of $864,890 and $943,821, respectively;
and gross unrealized gains on fixed maturities available for sale of $10,841,711
and $8,601,011 at December 31, 1998 and 1997, respectively; and gross unrealized
losses on fixed maturities available for sale of $21,933 and $47,998 as of
December 31, 1998 and 1997, respectively.
Included in investments at December 31, 1998 are bonds on deposit with
various regulatory authorities as required by law with a fair value of
$9,037,650.
There were no non-income producing fixed maturity investments for each of
the years ended December 31, 1998, 1997 and 1996.
All mortgage backed securities available as of December 31, 1998 and 1997
are obligations of various U.S. Government agencies and consist of GNMA, FHLMC
or FNMA pass through securities. These securities are readily marketable.
41
<PAGE>
NYMAGIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
The gross unrealized gains and losses on debt securities as of December 31,
1998 and 1997 are as follows:
<TABLE>
<CAPTION>
1998
-------------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Fixed maturities available for sale:
US Treasury securities and
obligations of US government
corporations and agencies ....................... $ 55,934,951 $ 1,521,904 $ (4,953) $ 57,451,902
Obligations of states and
political subdivisions .......................... 252,371,231 8,054,549 (16,980) 260,408,800
Corporate securities .............................. 34,277,343 1,265,258 -- 35,542,601
------------ ------------ ------------ ------------
Totals ................................... $342,583,525 $ 10,841,711 $ (21,933) $353,403,303
============ ============ ============ ============
<CAPTION>
1997
-------------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Fixed maturities available for sale:
US Treasury securities and
obligations of US government
corporations and agencies ....................... $101,491,865 $ 1,483,761 $ (29,681) $102,945,945
Obligations of states and
political subdivisions .......................... 219,788,108 6,257,453 (950) 226,044,611
Corporate securities .............................. 31,416,772 859,797 (17,367) 32,259,202
------------ ------------ ------------ ------------
Totals ................................... $352,696,745 $ 8,601,011 $ (47,998) $361,249,758
============ ============ ============ ============
</TABLE>
42
<PAGE>
NYMAGIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
The amortized cost and fair value of debt securities at December 31, 1998,
by contractual maturity, are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.
Fixed maturities available
for sale
--------------------------------
Amortized Fair
Cost Value
------------ ------------
Due in one year or less ................ $ 30,081,115 $ 30,301,713
Due after one year
through five years ..................... 102,721,452 106,139,463
Due after five years
through ten years ...................... 102,072,965 105,988,562
Due after ten years .................... 72,345,669 74,705,248
------------ ------------
307,221,201 317,134,986
Mortgage backed securities ............. 35,362,324 36,268,317
------------ ------------
Totals ............................... $342,583,525 $353,403,303
============ ============
The investment portfolio has exposure to market risks which includes the
effect of adverse changes in interest rates, credit quality, equity prices and
foreign exchange rates on the portfolio. Interest rate risk includes the changes
in the fair value of fixed maturities based upon changes in interest rates.
Credit quality risk includes the risk of default by issuers of debt securities.
Foreign currency risk includes exposure to changes in foreign exchange rates on
the market value and interest income of foreign denominated investments. Equity
risk includes the potential loss from changes in the fair value of equity
securities.
43
<PAGE>
NYMAGIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Proceeds from sales of investments in debt securities during 1998, 1997 and
1996 were $51,905,388, $167,867,245 and $171,112,392, respectively. Gross gains
of $1,105,100, $1,365,460 and $1,121,305 and gross losses of $ 14,246, $ 868,944
and $ 1,437,369 were realized on the those sales in 1998, 1997 and 1996,
respectively.
Realized and unrealized investment appreciation (depreciation) on fixed
maturities and equity securities for the years ended December 31, 1998, 1997 and
1996 are as follows:
Year ended December 31,
--------------------------------------------
1998 1997 1996
--------------------------------------------
Realized gains (losses) on sale
of investments
Fixed maturities ............. $ 1,090,854 $ 496,516 $ (316,064)
Equity securities ............ 7,516,080 10,044,741 4,931,909
Short-term investments ....... 8,124 (116,124) (26,712)
------------ ------------ ------------
Realized investments gains ... 8,615,058 10,425,133 4,589,133
Less: applicable income taxes (3,015,270) (3,648,797) (1,606,197)
------------ ------------ ------------
Net realized investment gains .. $ 5,599,788 $ 6,776,336 $ 2,982,936
============ ============ ============
Change in unrealized investment
appreciation (depreciation)
of securities:
Fixed maturities ............. $ 2,266,766 $ 4,200,177 $ (5,017,118)
Equity securities ............ 7,717,489 3,145,784 2,379,308
------------ ------------ ------------
Unrealized investment
gains (losses) ............. 9,984,255 7,345,961 (2,637,810)
Less: applicable deferred
income taxes .......... (3,494,488) (2,571,086) 923,234
------------ ------------ ------------
Net unrealized investment
gains (losses) ............. $ 6,489,767 $ 4,774,875 $ (1,714,576)
============ ============ ============
Net investment income from each major category of investments for the years
indicated is as follows:
Year ended December 31,
--------------------------------------------
1998 1997 1996
--------------------------------------------
Fixed maturities ............... $ 18,740,628 $ 20,192,031 $ 19,938,840
Short-term investments ......... 2,021,670 1,089,128 1,316,992
Equity securities .............. 846,610 814,341 734,939
------------ ------------ ------------
Total investment income ...... 21,608,908 22,095,500 21,990,771
Investment expenses ............ (805,475) (770,435) (720,577)
------------ ------------ ------------
Net investment income ........ $ 20,803,433 $ 21,325,065 $ 21,270,194
============ ============ ============
44
<PAGE>
NYMAGIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
(3) Fiduciary Funds:
The Company's insurance agency subsidiaries maintain separate underwriting
accounts which record all the underlying insurance transactions of the insurance
pools which they manage. These transactions primarily include collecting
premiums from the insured, collecting paid recoverables from reinsurers, paying
claims as losses become payable, paying reinsurance premiums to reinsurers and
remitting net account balances to member insurance companies in the pools which
MMO manages. Unremitted amounts to members of the insurance pools are held in a
fiduciary capacity and interest income earned on such funds inure to the benefit
of the members of the insurance pools based on their pro-rata participation in
the pools.
A summary of the pools' underwriting accounts as of December 31, 1998 and
1997 is as follows:
December 31,
-----------------------------
1998 1997
-----------------------------
Cash and short-term investments ............ $ 5,264,642 $ 3,276,115
Premiums receivable ........................ 36,384,613 41,537,562
Reinsurance and other recoverables ......... 27,525,077 23,942,068
----------- -----------
Total Assets ............................... $69,174,332 $68,755,745
=========== ===========
Due to insurance pool members .............. $29,705,029 $27,251,208
Reinsurance payable ........................ 26,500,070 31,984,380
Funds withheld from reinsurers ............. 6,447,912 5,043,576
Other liabilities .......................... 6,521,321 4,476,581
----------- -----------
Total Liabilities .......................... $69,174,332 $68,755,745
=========== ===========
A portion of the pools' underwriting accounts above have been included in
the Company's insurance subsidiaries operations based upon their pro-rata
participation in the MMO insurance pools.
45
<PAGE>
NYMAGIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
(4) Insurance Operations:
Reinsurance Transactions
Approximately 45%, 50% and 42% of the Company's insurance subsidiaries'
direct and assumed gross premiums written for the years ended December 31, 1998,
1997 and 1996, respectively, have been reinsured by the pools with other
companies on both a treaty and a facultative basis.
In the event that all or any of the pool companies might be unable to meet
their obligations to the pools, the remaining companies would be liable for such
defaulted amounts on a pro rata pool participation basis. A contingent liability
also exists with respect to reinsurance ceded since such transactions generally
do not relieve the Company of its primary obligation to the policyholder and
such reinsurance ceded would become a liability of the Company's insurance
subsidiaries in the event that any reinsurer might be unable to meet the
obligations assumed under the reinsurance agreements. All reinsurers must meet
certain minimum standards of financial condition as established by the pools.
The Company's largest reinsurers at December 31, 1998, were Arkwright Mutual
Insurance Company ("Arkwright"), Lloyd's of London ("Lloyd's") and Utica Mutual
Insurance Company ("Utica Mutual"), with aggregate recoverables of $36 million,
$19 million and $13 million, respectively. The 1998 A.M. Best ratings for
Arkwright and Utica Mutual are each rated A, respectively. Lloyd's of London
maintains a trust fund which was established for the benefit of all United
States ceding companies. Lloyd's has reported substantial losses in recent
years; however, the Company has not experienced difficulty in collecting amounts
due from Lloyd's and the settlement of recoverables due the Company has not
materially impacted its liquidity. In 1996 Equitas was formed to handle the
run-off of years 1992 and prior for Lloyd's. However, given the uncertainty
surrounding the sufficiency of assets in Equitas to meet its ultimate
obligations, there is a reasonable possibility that the Company's collection
efforts relating to its Lloyd's recoverables might be adversely affected in the
future. The Company's exposure to reinsurers, other than Arkwright, Lloyds and
Utica Mutual include reinsurance recoverables collectively from approximately
800 reinsurers or syndicates, and as of December 31, 1998, no single one of
which was liable to the Company for an unsecured amount in excess of
approximately $4.4 million.
Funds withheld and letters of credit obtained under various reinsurance
treaties amounted to approximately $89 million as of December 31, 1998.
Reinsurance receivables as of December 31, 1998 and 1997 included an allowance
for uncollectible reinsurance recoverables of $6,823,000 and $5,785,000
respectively.
In 1998, the Company entered into a reinsurance transaction involving the
assumption of approximately $14.2 million in ocean marine premiums that emanated
from the Company's Syndicate 1265. In addition, a second reinsurance transaction
involving the assumption of approximately $10.5 million in miscellaneous
casualty net premiums was written by the Company's domestic insurance company
subsidiary in 1998. The second transaction was subsequently commuted in the
fourth quarter of 1998 resulting in total payments of approximately $8.1
million.
46
<PAGE>
NYMAGIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Reinsurance ceded and assumed relating to premiums written were as follows:
Gross Ceded Assumed
(direct) to other from other
Year Ended amount companies companies Net amount
---------- ------------ ------------ ------------ ------------
December 31, 1998 $ 85,489,133 $ 59,408,755 $ 46,647,604 $ 72,727,982
December 31, 1997 89,396,181 61,728,408 34,553,074 62,220,847
December 31, 1996 113,566,184 64,752,583 41,699,626 90,513,227
Reinsurance ceded and assumed relating to premiums earned were as follows:
Gross Ceded Assumed Percentage
(direct) to other from other of assumed
Year Ended amount companies companies Net amount to net
- - ---------- -------- --------- --------- ---------- ----------
December 31, 1998 $ 93,908,920 $64,431,374 $46,545,117 $76,022,663 61%
December 31, 1997 97,920,323 47,875,999 37,492,582 87,536,906 43%
December 31, 1996 128,483,112 71,146,813 39,699,722 97,036,021 41%
Losses and loss adjustment expenses incurred are net of ceded reinsurance
recoveries amounting to $83,487,279, $26,912,355, and $62,516,373 for the years
ended December 31, 1998, 1997, and 1996, respectively.
Unpaid Losses
Unpaid losses are based on individual case estimates for losses reported
and include a provision for losses incurred but not reported and for loss
adjustment expenses. The following table provides a reconciliation of the
consolidated liability for losses and loss adjustment expenses at the beginning
and end of 1998, 1997 and 1996:
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------------------
1998 1997 1996
--------- --------- ---------
(in thousands)
<S> <C> <C> <C>
Net liability for losses and loss adjustment
expenses at beginning of year ........................................ $ 222,335 $ 227,370 $ 229,916
--------- --------- ---------
Provision for losses and loss adjustment
expenses occurring in current year .................................... 69,703 72,322 71,731
Decrease in estimated losses and loss
adjustment expenses for claims occurring
in prior years (1) ................................................... (19,466) (21,874) (12,753)
Deferred income-loss portfolio
assumption(2) ........................................................ 275 320 381
--------- --------- ---------
Total losses and loss adjustment expenses incurred ..................... 50,512 50,768 59,359
--------- --------- ---------
Less:
Losses and loss adjustment expense payments for claims occurring during:
current year ..................................................... 17,407 17,029 15,012
prior years ...................................................... 41,576 38,454 46,512
--------- --------- ---------
58,983 55,483 61,524
Add:
Deferred income-loss portfolio assumption (2) .......................... (275) (320) (381)
--------- --------- ---------
Net Liability for losses and loss adjustment
expenses at year end ................................................. 213,589 222,335 227,370
--------- --------- ---------
Ceded unpaid loss and loss adjustment
expenses .............................................................. 187,995 166,067 184,467
--------- --------- ---------
Gross unpaid losses and loss adjustment
expenses at year end ................................................. $ 401,584 $ 388,402 $ 411,837
========= ========= =========
</TABLE>
47
<PAGE>
NYMAGIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
(1) The adjustment to the consolidated liability for losses and loss
adjustment expenses for losses occurring in prior years reflects the net effect
of the resolution of losses for other than full reserve value and subsequent
readjustments of loss values. The decrease in estimated losses is attributable
to the ocean marine and aviation lines of business as a result of favorable
payout trends in part due to lower retention levels per loss.
(2) Deferred income loss portfolio assumption represents the difference
between cash received and unpaid loss reserves assumed as a result of the buyout
of Pennsylvania National's and Lumber Mutual's net pool obligations which was
initially capitalized and will be amortized over the payout period of the
related losses.
The insurance pools participated in the issuance of umbrella casualty
insurance for various Fortune 1000 companies in the period from 1978 to 1983.
Depending on the accident year, the insurance pools' maximum retention per
occurrence ranged from $250,000 to $500,000. The Company's effective pool
participation on such risks varied from 11% in 1978 to 30% in 1983. At December
31, 1998 and 1997, the Company's gross, ceded and net loss and loss adjustment
expense reserves for Asbestos/Pollution policies amounted to $24.3 million,
$15.3 million and $9.0 million, and $25.0 million, $16.0 million and $9.0
million, respectively. Net paid losses resulting from Asbestos/Pollution losses
during 1998, 1997 and 1996 amounted to $851,000, $508,000 and $811,000,
respectively. As of December 31, 1998, the Company had approximately 400
policies which had at least one claim relating to Asbestos/Pollution exposures.
Unpaid losses and loss adjustment expenses are recorded for reported claims
regarding Asbestos/Pollution exposures, including the cost of litigation
expenses, when sufficient information is present to indicate the involvement of
a specific insurance policy and the Company can reasonably estimate this
liability. The Company believes that the uncertainty surrounding
Asbestos/Pollution exposures, including issues as to insureds' liabilities,
ascertainment of loss date, definitions of occurrence, scope of coverage, policy
limits and application and interpretation of policy terms, including exclusions,
all affect the estimation of ultimate losses. Under such circumstances, it is
difficult to determine the ultimate loss for Asbestos/Pollution related claims.
Given the uncertainty in this area, losses from Asbestos/Pollution related
claims are likely to adversely impact the Company's results from operations in
future years and may vary materially from such reserves reported as of December
31, 1998. However, the Company believes that, in aggregate, the unpaid loss and
loss adjustment expense reserves as of December 31, 1998, allow for an adequate
provision and that the ultimate resolution of the Asbestos/Pollution claims will
not have a material impact on the Company's financial position.
Salvage and Subrogation
Estimates of salvage and subrogation recoveries on paid and unpaid losses
have been recorded as a reduction of unpaid losses amounting to $6,354,281 and
$6,833,720 at December 31, 1998 and 1997, respectively.
Deferred Policy Acquisition Costs
Deferrable acquisition costs amortized to income amounted to $10,107,327,
$16,582,623 and $18,827,794 for the years ended December 31, 1998, 1997 and
1996, respectively.
48
<PAGE>
NYMAGIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
(5) Property, Improvements and Equipment, Net:
Property improvements and equipment, net at December 31, 1998 and 1997
include the following.
1998 1997
----------- -----------
Office furniture and equipment ............... $ 1,492,011 $ 1,452,923
Computer equipment ........................... 2,373,363 1,726,591
Leasehold improvements ....................... 2,433,141 2,409,683
----------- -----------
6,298,515 5,589,197
Less: accumulated depreciation
and amortization ................. (3,957,494) (3,223,544)
----------- -----------
Property, improvements and equipment, net .... $ 2,341,021 $ 2,365,653
=========== ===========
Depreciation and amortization expense for the years ended December 31,
1998, 1997 and 1996 amounted to $733,950, $582,126 and $442,945, respectively.
(6) Income Taxes:
The components of deferred tax assets and liabilities as of December 31,
1998 and 1997 are as follows:
December 31,
---------------------------
1998 1997
----------- -----------
Deferred Tax Assets:
Loss reserve discounting ....................... $13,128,970 $13,549,308
Unearned premiums .............................. 1,923,950 2,154,156
Equity securities write-down ................... 764,692 198,901
State and local income tax carryforward ........ 1,826,839 423,300
Deferred rent liability ........................ 374,215 410,237
Bad debt reserve ............................... 2,615,459 2,269,750
Other .......................................... 272,841 121,044
----------- -----------
Deferred tax assets ............................ 20,906,966 19,126,696
----------- -----------
Less: Valuation allowance ...................... 1,187,445 --
----------- -----------
Total deferred tax assets ...................... 19,719,521 19,126,696
----------- -----------
49
<PAGE>
NYMAGIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Deferred Tax Liabilities:
December 31,
---------------------------
1998 1997
----------- -----------
Deferred policy acquisition costs .............. $ 1,497,101 $ 1,948,621
Unrealized appreciation of investments ......... 10,454,527 6,960,037
Deferred income-loss portfolio assumption ...... 144,167 240,279
Discount on accrued salvage and subrogation .... 348,111 374,378
Other .......................................... 1,463,874 1,166,613
----------- -----------
Total deferred tax liabilities ................. 13,907,780 10,689,928
----------- -----------
Net deferred tax assets ........................ $ 5,811,741 $ 8,436,768
=========== ===========
The last year for which the state and local income tax carryforward of
$1,826,839 as of December 31, 1998 can be carried forward against future state
and local tax liabilities is the year 2018.
The Company's valuation allowance account with respect to the deferred tax
asset and the change in the account is as follows:
1998 1997 1996
---------- ---------- ----------
Balance, beginning of year ......... $ -- $ 516,716 $ 712,706
Change in valuation allowance ...... 1,187,445 (516,716) (195,990)
---------- ---------- ----------
Balance, end of year ............... $1,187,445 $ -- $ 516,716
========== ========== ==========
The Company believes that the total deferred tax asset net of the recorded
valuation allowance account as of December 31, 1998 will more likely than not be
fully realized.
Income tax provisions differ from the amounts computed by applying the
Federal statutory rate to income before income taxes as follows:
Year ended December 31,
----------------------------
1998 1997 1996
------ ------ ------
Income taxes at the Federal statutory rate .... 35.0% 35.0% 35.0%
Tax exempt interest ........................... (21.7) (12.5) (12.8)
Valuation allowance ........................... 5.2 (1.5) (0.7)
State taxes ................................... (3.9) (0.5) 0.2
Net bond amortization ......................... 3.3 1.9 1.8
Investment income proration ................... 2.9 1.7 1.7
Other, net .................................... (1.7) 1.5 (0.2)
------ ------ ------
Income tax provisions ......................... 19.1% 25.6% 25.0%
====== ====== ======
50
<PAGE>
NYMAGIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
Federal income tax payments amounted to $5,328,181, $9,335,632 and
$7,339,913 for the years ended December 31, 1998, 1997 and 1996, respectively.
Federal income taxes recoverable at December 31, 1998 included in other
assets amounted to $181,667. Federal income tax payable at December 31, 1997
included in other liabilities amounted to $386,970.
(7) Statutory Income and Surplus:
The Company's domestic insurance subsidiaries are limited, based on the
lesser of 10% of statutory basis surplus or 100% of net investment income, as
defined under New York Insurance Law, in the amount of dividends they could pay
without regulatory approval. The maximum amount which may be paid to the holding
company out of December 31, 1998 surplus is approximately $19,675,000.
Consolidated statutory net income, surplus and dividends paid of the
Company's domestic insurance subsidiaries were as follows for the periods
indicated:
Consolidated Consolidated Dividends
Statutory Statutory Paid
net income surplus To Parent
------------ ------------ ------------
December 31, 1998 ........ $ 30,223,000 $196,745,000 $ 18,367,000
December 31, 1997 ........ 36,758,000 181,844,000 17,850,262
December 31, 1996 ........ 26,542,000 160,929,000 12,950,071
51
<PAGE>
NYMAGIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
(8) Employee Retirement Plans:
The Company maintains two retirement plans for the benefit of employees.
Both plans provide for 100% vesting upon completion of two years of service. The
Money Purchase Plan provides for a contribution equal to 7-1/2% of an employee's
cash compensation, including bonuses, for each year of service during which the
employee has completed 1000 hours of service and is employed on the last day of
the plan year. The Profit Sharing plan does not require any specific
contribution but any contribution made is subject to the restrictions set forth
above for the Money Purchase Plan. Contribution and related administration
expenses for the years ended December 31, 1998, 1997 and 1996 amounted to
$1,017,551, $978,997 and $991,469, respectively.
In 1998, management approved two employee benefit plans for bonuses and
severance payments which resulted in expenses of $3,533,432 in 1998.
(9) Debt:
In 1994 the Company and a bank entered into a $10,000,000 credit agreement
which was subsequently amended in 1996 to $25,000,000. The interest rate on the
loan is fixed, at the Company's option, for a period of one to six months. The
Company has elected to pay interest at an effective rate of approximately 5.9%
on the outstanding principal balance of the loan at December 31, 1998 of
$17,458,413. The interest rate was equal to the bank's Adjusted London Interbank
Offered Rate at the time of the interest rate adjustment period, plus .65 of 1%.
Principal repayments are paid quarterly in equal installments of $1,250,000 and
end on June 30, 2002. The Company has the option to prepay amounts in excess of
the required repayments. At the Company's option, the interest rate may be based
on either (a) the higher of the bank's prime rate or the applicable Federal
Funds Rate, plus 1/2 of 1%, (b) the bank's adjusted certificate of deposit rate,
plus .775 of 1%, or (c) the bank's adjusted London Interbank offered rate, plus
.65 of 1%.
The bank loan agreement requires the Company to maintain a minimum net
worth of $125,000,000 plus 50% of net profits earned during each year on a
cumulative basis. In addition, other significant covenants include limitations
on total indebtedness, investment purchases, pledging and sales of assets and
requires the Company's insurance subsidiaries to maintain a certain statutory
surplus, gross and net premiums written to surplus ratios and total liabilities
to surplus ratio. The Company was in compliance with all financial covenants as
stipulated in the bank loan agreement as of December 31, 1998. The credit
agreement provides for a facility fee of .15 of 1% on the outstanding balance.
The Company has an unsecured credit facility with the same bank that allows
the Company to borrow up to $5,000,000. Interest is based on the bank's
international short-term lending rate. The credit facility provides for a
commitment fee of 1/8 of 1% on the average unused available credit balance. No
amounts were outstanding under this credit facility as of December 31, 1998 and
1997, respectively.
Interest paid amounted to $1,347,653, $1,464,240 and $1,020,737 for the
years ended December 31, 1998, 1997 and 1996.
In 1998, the Company entered into an interest rate swap agreement (the
"agreement") with a bank for purposes of hedging its interest rate risk on its
existing bank loan. The agreement requires the Company to pay interest to the
bank at a rate of 6.50% on the original notional amount outstanding of
$22,500,000 which is subsequently adjusted quarterly by notional reductions of
$1,250,000. The bank is required to pay the Company, on the same notional
amounts outstanding, an amount equal to the three month US Dollar London
Interbank Offered Rate plus .65% which is reset on a quarterly basis. Interest
expense recorded under the agreement was $44,719 in 1998.
52
<PAGE>
NYMAGIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
(10) Commitments:
The Company maintains various non-cancelable operating leases to occupy
office space. The lease terms expire on various dates through December 30, 2003.
The aggregate minimum annual rental payments under various operating leases
for office facilities as of December 31, 1998 are as follows:
Amount
----------
1999 ................................................. $1,318,118
2000 ................................................. 1,297,828
2001 ................................................. 1,297,828
2002 ................................................. 1,297,828
thereafter ........................................... 1,297,828
----------
Total ................................................ $6,509,430
==========
The operating leases also include provisions for additional payments based
on certain annual cost increases. Rent expense for the years ended December 31,
1998, 1997 and 1996 amounted to $1,131,951, $1,049,119 and $1,001,295.
As of December 31, 1998, the Company is not involved in any litigation
which would require disclosure in the financial statements or would have a
material effect on the Company's financial statements.
In connection with the formation of MMO UK LTD, in 1997, as corporate
capital for Lloyd's Syndicate 1265, the Company obtained an unsecured letter of
credit from a bank in pounds sterling with a US dollar equivalent of
approximately $19,090,000 as of December 31, 1998.
53
<PAGE>
NYMAGIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
(11) Comprehensive Income:
The accumulated balances for each classification of other comprehensive
income are as follows:
Total
Unrealized Accumulated
Gains Other
Foreign (Losses) on Comprehensive
Currency Securities Income
------------ ------------ ------------
Beginning balance, January 1, 1996 $ -- $ 9,865,486 $ 9,865,486
Current period change ............ -- (1,714,576) (1,714,576)
------------ ------------ ------------
Ending balance, December 31, 1996 -- 8,150,910 8,150,910
============ ============ ============
Beginning balance, January 1, 1997 -- 8,150,910 8,150,910
Current period change ............ 6,000 4,774,875 4,780,875
------------ ------------ ------------
Ending balance, December 31, 1997 6,000 12,925,785 12,931,785
============ ============ ============
Beginning balance, January 1, 1998 6,000 12,925,785 12,931,785
Current period change ............ 15,039 6,489,767 6,504,806
------------ ------------ ------------
Ending balance, December 31, 1998 $ 21,039 $ 19,415,552 $ 19,436,591
============ ============ ============
The related tax effects allocated to each component of other comprehensive
income are as follows:
<TABLE>
<CAPTION>
Year ended December 31,
--------------------------------------------
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Foreign currency translation adjustments:
Before-tax amount ................................. $ 15,039 $ 6,000 $ --
Tax (expense) benefit ............................. -- -- --
------------ ------------ ------------
Net-of-tax amount ................................. 15,039 6,000 --
------------ ------------ ------------
Unrealized gains (losses) on securities:
Holding gains arising during period:
Before-tax amount ................................. 18,599,313 17,771,094 1,951,323
Tax (expense) ..................................... (6,509,758) (6,219,883) (682,963)
------------ ------------ ------------
Net-of-tax amount ................................. 12,089,555 11,551,211 1,268,360
------------ ------------ ------------
Less: reclassification adjustment for realized gains:
Before-tax amount ................................. 8,615,058 10,425,133 4,589,133
Tax (expense) ..................................... (3,015,270) (3,648,797) (1,606,197)
------------ ------------ ------------
Net-of-tax amount ................................. 5,599,788 6,776,336 2,982,936
------------ ------------ ------------
Net unrealized gains (losses):
Before-tax amount ................................. 9,984,255 7,345,961 (2,637,810)
Tax (expense) benefit ............................. (3,494,488) (2,571,086) 923,234
------------ ------------ ------------
Net-of-tax amount ................................. 6,489,767 4,774,875 (1,714,576)
------------ ------------ ------------
Other comprehensive income (loss):
Before-tax amount ................................. 9,999,294 7,351,961 (2,637,810)
Tax (expense) benefit ............................. (3,494,488) (2,571,086) 923,234
------------ ------------ ------------
Net-of-tax amount ................................. $ 6,504,806 $ 4,780,875 $ (1,714,576)
============ ============ ============
</TABLE>
54
<PAGE>
NYMAGIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
(12) Common Stock Repurchase Plan and Shareholders' Equity:
The Company has a common stock repurchase plan which authorizes the
repurchase of up to $55,000,000, at prevailing market prices, of the Company's
issued and outstanding shares of common stock on the open market. As of December
31, 1998, the Company had repurchased a total of 2,116,442 shares of common
stock under this plan at a total cost of $38,583,101 at market prices ranging
from $16.50 to $26.88 per share.
In connection with the acquisition of MMO in 1991, the Company also
acquired 3,215,958 shares of its own common stock available by MMO and recorded
such shares as treasury stock at MMO's original cost of $3,919,129.
A reconciliation of basic and diluted EPS for each of the years ended
December 31, 1998, 1997 and 1996 is as follows:
<TABLE>
<CAPTION>
(In thousands except for per share amounts)
1998 1997 1996
------------------------------- ------------------------------- ------------------------------
Weighted Weighted Weighted
Average Average Average
Net Shares Per Net Shares Per Net Share Per
Income Outstanding Share Income Outstanding Share Income Outstanding Share
------ ----------- ----- ------ ----------- ----- ------ ----------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Basic EPS: ......... $18,523 9,679 $1.91 $26,368 9,849 $2.68 $22,625 10,499 $2.15
Effect of
Dilutive Securities:
Stock Options ...... -- 26 -- -- 23 (.01) -- 25 --
------- ------- ----- ------- ------- ----- ------- ------- -----
Diluted EPS ........ $18,523 9,705 $1.91 $26,368 9,872 $2.67 $22,625 10,524 $2.15
======= ======= ===== ======= ======= ===== ======= ======= =====
</TABLE>
(13) Stock Option Plans:
The Company has a stock option plan, which was approved by shareholders in
1991, and provides a means whereby the Company, through the grant of
non-qualified stock options to key officers, may attract and retain persons of
ability as officers to exert their best efforts on behalf of the Company. The
plan authorizes the issuance of options to purchase up to 500,000 shares of the
Company's common stock at not less than 95 percent of the fair market value at
the date of grant. Options are exercisable over a period as determined in each
option agreement and expire at a maximum term of ten years.
55
<PAGE>
NYMAGIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
A summary of activity under the stock option plans for the years ended
December 31, 1998, 1997 and 1996 follows:
<TABLE>
<CAPTION>
1998 1997 1996
----------------------------------------------------------------------------------------
Number Option Number Option Number Option
Shares Under of Price of Price of Price
Option Shares Per Share Shares Per Share Shares Per Share
------ ------ --------- ------ --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Outstanding,
beginning of
year 243,100 $13.78-$22.92 373,200 $13.78-$22.92 528,500 $13.00-$22.92
Granted 30,000 $20.25 -- -- -- 20,000 $17.22-$17.58
Exercised (25,900) $13.78-$15.79 (80,000) $13.78-$15.79 (162,800) $13.00-$15.56
(Forfeited) (19,000) $15.56-$15.79 (50,100) $15.56-$22.92 (12,500) $15.79-$22.33
-------- -------- --------
Outstanding,
end of year 228,200 $13.78-$22.92 243,100 $13.78-$22.92 373,200 $13.78-$22.92
======== ======== ========
Exercisable,
end of year 115,367 $13.78-$22.92 95,356 $13.78-$22.92 135,389 $13.78-$22.92
======== ======== ========
</TABLE>
The Company has elected to measure compensation expense for employee stock
options under APB No. 25 as permitted by SFAS 123, "Accounting for Stock Based
Compensation." Under SFAS 123, the Company is required to disclose the pro forma
effects on net income of applying a fair value method of measuring compensation
expense.
The pro forma effect on the years ended December 31, 1998, 1997 and 1996 is
as follows:
1998 1997 1996
----------- ----------- -----------
Net income - as reported .... $18,523,416 $26,367,740 $22,624,618
Net income - pro forma ...... $18,414,657 $26,261,229 $22,513,184
Diluted EPS - as reported ... $ 1.91 $ 2.67 $ 2.15
Diluted EPS - pro forma ..... $ 1.90 $ 2.66 $ 2.14
In determining the pro forma effect on net income, the fair value of
options granted in 1998, 1996 and 1995 was estimated at the grant date using the
Black-Scholes option-pricing model with the following weighted average
assumptions in 1998, 1996 and 1995, respectively; dividend yield of 1.9%, 2.2%
and 2.4%; expected volatility of 28%, 25% and 28%; expected lives of 5 years for
each year and a risk-free interest rate of 4.56%, 6.00% and 5.38%. There were no
options granted in 1997.
The full impact of calculating compensation expense for stock options under
SFAS 123 is not reflected in the pro forma net income amounts presented above
because options granted prior to January 1, 1995 are not considered in the
determination of the compensation expense.
56
<PAGE>
NYMAGIC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
(14) Segment Information:
The insurance company and agency subsidiaries underwrite commercial
insurance in four major lines of business. The Company considers ocean marine,
aviation, other liability and inland marine as appropriate segments for purposes
of evaluating the Company's overall performance. The Company evaluates revenues
and income or loss by line of business. Revenues include premiums earned and
commission income. Income or loss includes premiums earned and commission income
less the sum of losses incurred, policy acquisition costs and other expenses.
Investment income represents a material component of the Company's revenues
and income. The Company does not maintain its investment portfolio by segment
because management does not consider revenues and income by segment as being
derived from the investment portfolio. Accordingly, an allocation of
identifiable assets, investment income and realized investment gains is not
considered practicable. As such, other income, interest expense, certain
corporate expenses and income taxes are not considered by management for
purposes of providing segment information.
The financial information by segment is as follows:
<TABLE>
<CAPTION>
1998 1997 1996
------------------------- ------------------------ ------------------------
(in thousands)
Income Income Income
Revenue (Loss) Revenue (Loss) Revenue (Loss)
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Segments
- - --------
Ocean marine(a) ...................... $ 60,621 $ 980 $ 51,012 $ 3,782 $ 54,230 $ 12,136
Aviation ............................. 2,242 (4,092) 32,976 1,892 35,689 (594)
Other liability ...................... 14,144 (736) 4,545 (797) 6,722 (5,383)
Inland marine ........................ (393) 854 443 794 2,376 (848)
--------- --------- --------- --------- --------- ---------
Subtotal ............................. 76,614 (2,994) 88,976 5,671 99,017 5,311
Other income ......................... 396 396 293 293 690 690
Net investment income ................ 20,803 20,803 21,325 21,325 21,270 21,270
Realized investment gains ............ 8,615 8,615 10,425 10,425 4,589 4,589
Corporate expenses ................... -- (2,543) -- (809) -- (649)
Interest expense ..................... -- (1,373) -- (1,450) -- (1,035)
Income taxes ......................... -- (4,381) -- (9,087) -- (7,551)
--------- --------- --------- --------- --------- ---------
Total ................................ $ 106,428 $ 18,523 $ 121,019 $ 26,368 $ 125,566 $ 22,625
========= ========= ========= ========= ========= =========
</TABLE>
(a) 1998 includes approximately $14,838 in revenues and $(2,692) in loss from
the Company's Syndicate 1265.
57
<PAGE>
<TABLE>
FINANCIAL STATEMENT SCHEDULES
SCHEDULE II-CONDENSED FINANCIAL INFORMATION OF REGISTRANT
NYMAGIC, INC.
Balance Sheets
(Parent Company)
<CAPTION>
December 31,
-----------------------------------------
1998 1997
------------- -------------
<S> <C> <C>
Assets:
Cash ....................................................................... $ 47,116 $ 205,516
Short term investments ..................................................... -- 6,000,000
Investment in subsidiaries ................................................. 229,680,280 218,563,990
Due from subsidiaries and MMO insurance pools .............................. 14,664,300 2,666,372
Other assets ............................................................... 2,471,346 2,663,530
------------- -------------
Total assets ...................................................... $ 246,863,042 $ 230,099,408
============= =============
Liabilities:
Notes payable .............................................................. $ 17,458,413 $ 22,458,413
Dividends payable .......................................................... 968,549 966,031
Other liabilities .......................................................... 256,213 155,621
------------- -------------
Total Liabilities ...................................................... 18,683,175 23,580,065
------------- -------------
Shareholders' equity:
Common stock ............................................................... $ 15,017,892 $ 14,991,992
Paid in capital ............................................................ 28,029,410 27,529,877
Accumulated other comprehensive income ..................................... 19,436,591 12,931,785
Retained earnings .......................................................... 208,198,204 193,547,346
Treasury stock ............................................................. (42,502,230) (42,481,657)
------------- -------------
Total shareholders' equity ........................................ 228,179,867 206,519,343
------------- -------------
Total liabilities and shareholders' equity ........................ $ 246,863,042 $ 230,099,408
============= =============
</TABLE>
Statements of Income
(Parent Company)
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------------
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Revenues:
Cash dividends from subsidiary ....................... $ 18,367,000 $ 17,850,262 $ 12,950,071
Net investment income ................................ 74,122 21,070 676
------------ ------------ ------------
18,441,122 17,871,332 12,950,747
------------ ------------ ------------
Expenses:
Operating expenses ................................... 5,200,857 2,197,039 1,552,852
Income tax benefit ................................... (1,661,488) (754,480) (561,073)
------------ ------------ ------------
3,539,369 1,442,559 991,779
------------ ------------ ------------
Income before equity income .......................... 14,901,753 16,428,773 11,958,968
Equity in undistributed earnings
of subsidiaries ...................................... 3,621,663 9,938,967 10,665,650
------------ ------------ ------------
Net income ........................................... $ 18,523,416 $ 26,367,740 $ 22,624,618
============ ============ ============
</TABLE>
58
<PAGE>
<TABLE>
SCHEDULE II-CONDENSED FINANCIAL INFORMATION OF REGISTRANT
NYMAGIC, INC.
Statements of Cash Flows
(Parent Company)
<CAPTION>
Year Ended December 31,
----------------------------------------------------------
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income .................................................... $ 18,523,416 $ 26,367,740 $ 22,624,618
------------ ------------ ------------
Adjustments to reconcile net income
to cash provided by operating activities:
Equity in undistributed earnings of
subsidiaries ......................................... (3,621,663) (9,938,967) (10,665,650)
Decrease (increase) in other assets ....................... 192,184 (834,339) (359,403)
(Increase)decrease in due from subsidiaries ............... (11,997,928) (439,365) 527,868
(Decrease) increase in other liabilities .................. 100,592 19,219 (11,312)
------------ ------------ ------------
Net cash provided by operating activities ..................... 3,196,601 15,174,288 12,116,121
------------ ------------ ------------
Cash flows from investing activities:
Short term investments acquired ........................... (2,870,000) (13,800,000) (5,000,000)
Short term investments matured ............................ 8,870,000 12,800,000 --
Investment in subsidiaries ................................ (989,821) (2,476,500) --
------------ ------------ ------------
Net cash provided by (used in) investing
activities ........................................... 5,010,179 (3,476,500) (5,000,000)
------------ ------------ ------------
Cash flows from financing activities:
Proceeds from stock options exercised ..................... 525,433 1,351,618 2,487,472
Cash dividends paid to stockholders ....................... (3,870,040) (3,958,130) (4,236,947)
Repurchase of common stock ................................ (20,573) (10,922,760) (13,080,321)
Proceeds from borrowings .................................. 5,000,000 9,520,000 14,211,472
Loan principal payments ................................... (10,000,000) (7,500,000) (6,500,000)
------------ ------------ ------------
Net cash used in financing activities ..................... (8,365,180) (11,509,272) (7,118,324)
------------ ------------ ------------
Net increase (decrease) in cash ............................... (158,400) 188,516 (2,203)
Cash at beginning of period ................................... 205,516 17,000 19,203
------------ ------------ ------------
Cash at end of period ......................................... $ 47,116 $ 205,516 $ 17,000
============ ============ ============
</TABLE>
The condensed financial information of NYMAGIC, INC. for the years ended
December 31, 1998, 1997 and 1996 should be read in conjunction with the
consolidated financial statements of NYMAGIC, INC. and subsidiaries and notes
thereto.
59
<PAGE>
<TABLE>
NYMAGIC, INC.
SCHEDULE V-VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- - ------------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION Balance at Balance
beginning close of
of period Additions Deductions period
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
December 31, 1998:
Allowance for
doubtful accounts .................... $6,485,000 $1,456,160 $ (468,421) $7,472,739
December 31, 1997:
Allowance for
doubtful accounts .................... 4,825,000 1,930,261 (270,261) 6,485,000
</TABLE>
60
<PAGE>
<TABLE>
NYMAGIC, INC.
SCHEDULE VI - SUPPLEMENTARY INFORMATION CONCERNING PROPERTY/CASUALTY INSURANCE OPERATIONS.
(In Thousands)
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
RESERVE AMORTIZA-
FOR CLAIMS AND CLAIMS TION OF
DEFERRED UNPAID EXPENSES INCURRED DEFFERED PAID
POLICY CLAIMS RELATED TO POLICY CLAIMS
AFFILIATION ACQUISI- AND UNEARNED NET NET ----------------- ACQUISI- AND
WITH TION CLAIMS PREMIUM EARNED INVESTMENT CURRENT PRIOR TION CLAIMS PREMIUMS
REGISTRANT COSTS EXPENSES DISCOUNT RESERVE PREMIUMS INCOME YEAR YEAR COSTS EXPENSES WRITTEN
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DECEMBER 31, 1998 ....... $ 4,277 $401,584 -- $ 46,879 $ 76,023 $ 20,803 $ 69,703 ($19,466) $ 10,107 $ 58,984 $ 72,728
CONSOLIDATED SUBSIDIARIES
DECEMBER 31, 1997 ....... 5,567 388,402 -- 55,188 87,537 21,325 72,322 (21,874) 16,583 55,483 62,221
CONSOLIDATED SUBSIDIARIES
DECEMBER 31, 1996 ....... 10,904 411,837 -- 66,652 97,036 21,270 71,731 (12,753) 18,828 61,524 90,513
CONSOLIDATED SUBSIDIARIES
</TABLE>
61
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of this 10th day of March, 1999, by and between
NYMAGIC, INC., a New York corporation (the "Company") whose principal executive
offices are located at 330 Madison Avenue, New York, New York 10017, and VINCENT
T. PAPA, an individual residing at 12 Thicket Drive, Cold Spring Harbor, New
York 11724 (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company seeks to employ the Executive and the Executive seeks
to be employed by the Company; and
WHEREAS, both parties desire that the terms and conditions of the
Executive's employment with the Company be governed by the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the promises and the mutual covenants
herein contained, the parties hereto hereby agree as follows:
1. Employment and Duties.
(a) General. The Company hereby employs the Executive, effective as of
March 19, 1999 ( the "Effective Date"), and the Executive agrees, upon the terms
and conditions herein set forth, to serve, effective as of the Effective Date,
as President and Chief Executive Officer of the Company. In such capacities, the
Executive shall report directly and only to the Board of Directors of the
Company (the "Board"). The Executive's principal place of business shall be in
the Company's New York offices and he shall perform all of the duties
commensurate to the positions of President and Chief Executive Officer.
(b) Services and Duties. For so long as the Executive is employed
hereunder, he shall devote his full business time to the performance of his
duties hereunder; shall faithfully serve the Company; shall in all respects
conform to and comply with the lawful and good faith directions and instructions
given to him by the Board as the same are consistent with his status and the
terms hereof; and shall use his best efforts to promote and serve the interests
of the Company.
(c) Board Membership. The Company agrees to nominate the Executive for
membership on the Board at the next meeting of shareholders and shall use all
reasonable efforts to cause the Executive to be elected to the Board at such
meeting.
(d) No Other Employment. For so long as the Executive is employed by the
Company, he shall not, directly or indirectly, render services to any other
person or organization for which he receives compensation without the prior
approval of the Board. No such approval
<PAGE>
will be required if the Executive seeks to perform inconsequential services
without direct compensation therefor in connection with the management of
personal investments or in connection with the performance of charitable and
civic activities, provided that such activities do not contravene the provisions
of Section 6 hereof.
2. Term of Employment. The term of the Executive's employment under this
Agreement (the "Term") shall commence on the Effective Date and continue until
the third anniversary date of the Effective Date. On the third anniversary date
of the Effective Date (and on each subsequent anniversary date thereafter), the
Term shall automatically renew for an additional one-year period unless, within
six months prior to the applicable anniversary date, either party shall have
given the other party hereto written notice of its intention not to extend the
Term.
3. Compensation and Other Benefits. Subject to the provisions of this
Agreement, the Company shall pay and provide the following compensation and
other benefits to the Executive during the Term as compensation for all services
rendered hereunder:
(a) Salary. The Company shall pay to the Executive an annual salary
(the "Salary") at the initial rate of $425,000, payable to the Executive
in accordance with the normal payroll practices of the Company for its
executive officers as are in effect from time to time. The amount of the
Executive's Salary shall be reviewed annually by the Board and may be
increased, but not decreased below such amount, on the basis of such
review.
(b) Signing Bonus. The Company shall pay the Executive a one time
sign-on bonus of $225,000, less applicable withholding taxes. The sign-on
bonus will be paid within one week of the Effective Date.
(c) Annual Bonus. During the Term, the Executive shall be eligible,
for each calendar year that begins within the Term, to participate in an
annual incentive bonus program established by the Company in accordance
with the terms and conditions as may be approved annually by the
Compensation Committee of the Board (the "Compensation Committee"). Under
the terms of the annual incentive bonus program, the Executive will be
afforded the opportunity to earn a bonus (the "Bonus") of up to 100% of
his Salary in effect for the applicable calendar year based on the
Company's achievement of the performance targets established by the
Compensation Committee for that year. For each year during the Term, the
Executive's target Bonus will be set at 50% of his Salary and will be
earned based upon the ratio that the return on capital (the "ROC") for the
relevant year bears to the average ROC achieved by the Company for the
five preceding years (the "Five-Year ROC"). The target Bonus will be
adjusted in proportion to the Company's level of achievement of the
Five-Year ROC. For the purpose of this Agreement, the ROC and the
Five-Year ROC will be calculated by dividing net operating income by the
average shareholders' equity for the relevant period as determined by the
Company's auditors in accordance with Generally Accepted Accounting
Principals. Attached hereto as Exhibit A is a chart depicting the Bonus
amount payable to the Executive based on the
2
<PAGE>
Company's achievement of various ROC rates. For calendar year 1999, the
Executive will be entitled to a minimum bonus of $212,500.
(d) Stock Options. Effective as of the Effective Date, the Company
shall grant the Executive an option (the "Option") to purchase 80,000
shares of the common stock of the Company pursuant to the terms of the
Company's 1991 Stock Option Plan (the "Option Plan"). The per share
exercise price of the Option shall equal 95% of the fair market value of a
share of the Company's common stock on the first trading day immediately
preceding the Effective Date, as determined in accordance with the terms
of the Option Plan. The Option shall vest and become exercisable with
respect to 25% of the shares of common stock subject thereto on each of
the first through fourth anniversaries of the Effective Date provided that
the Executive has remained in the continuous full-time employment of the
Company through the applicable anniversary date. The Option shall be
subject to the terms of the Option Plan and to such other terms and
conditions as may be specified by the Compensation Committee in the form
of a standard option agreement between the Company and the Executive,
which is attached hereto as Exhibit B.
(e) Welfare, Benefit and Retirement Programs. The Executive will be
included in the Company's Profit Sharing Plan and Money Purchase Plan, and
will vest in 100% of the contributions to such plans on the second
anniversary of each such contribution. In addition, the Executive shall be
eligible to participate in the Company's benefit plans for executives as
in effect from time to time, which currently provide life insurance for
the Executive and medical and dental coverage for the Executive and his
eligible dependents.
(f) Expenses. The Company shall pay or reimburse the Executive for
all reasonable out-of-pocket expenses incurred by the Executive in
connection with his employment hereunder. Such expenses shall be paid upon
the periodic submission of invoices and shall be paid reasonably promptly
after the date of such invoice. The reimbursement of expenses under this
Section 3(f) shall be subject to the Executive's providing the Company
with such documentation of the expenses as the Company may from time to
time reasonably request.
(g) Vacation. In addition to the usual public and bank holidays, the
Executive shall be entitled to twenty days' paid vacation annually, which
shall be taken at such times as are approved by the Board. The Executive
shall also be entitled to personal and sick days in accordance with the
Company's policies for executives as in effect from time to time.
(h) Parking Space. The Company shall pay or reimburse the Executive
for the cost of a parking space in a garage located in or near the
Executive's primary place of employment.
4. Termination of Employment. Subject to the notice and other provisions
of this Section 4, the Company shall have the right to terminate the Executive's
employment hereunder, and he shall have the right to resign, at any time for any
reason or for no stated reason.
3
<PAGE>
(a) Termination for Cause; Resignation Without Good Reason. (i) If,
prior to the expiration of the Term, the Executive's employment is
terminated by the Company for Cause or if the Executive resigns from his
employment hereunder other than for Good Reason, he shall be entitled to
payment of the pro rata portion of his Salary and Bonus, through and
including the date of termination or resignation as well as any
unreimbursed expenses. Except to the extent required by the terms of any
applicable compensation or benefit plan or program or as otherwise
required by applicable law, the Executive shall have no rights under this
Agreement or otherwise to receive any other compensation or to participate
in any other plan, program or arrangement after such termination or
resignation of employment with respect to the year of such termination or
resignation and later years.
(ii) Termination for "Cause" shall mean termination of the
Executive's employment with the Company because of (A) the willful
or persistently repeated material non-performance of duties to the
Company (other than by reason of the incapacity of the Executive due
to physical or mental illness) and, after 30 days written notice by
the Board of such failure, the Executive's non-performance and
continued, willful or persistently repeated material non-performance
of such duties, (B) the conviction of the Executive for a felony
offense, (C) the commission by the Executive of a material fraud
against the Company or any willful misconduct that brings the
reputation of the Company into serious disrepute or causes the
Executive to cease to be able to perform his duties, or (D) any
other material breach by the Executive of any material term of this
Agreement.
(iii) Termination of the Executive's employment for Cause
shall be communicated by delivery to the Executive of a written
notice from the Company stating that the Executive has been
terminated for Cause, specifying the particulars thereof and the
effective date of such termination. The date of a resignation by the
Executive without Good Reason shall be the date specified in a
written notice of resignation from the Executive to the Company. The
Executive shall provide at least 90 days' advance written notice of
resignation without Good Reason.
(b) Involuntary Termination. (i) If, prior to the expiration of the
Term, the Company terminates the Executive's employment for any reason
other than Disability or Cause or the Executive resigns from his
employment hereunder for Good Reason (collectively hereinafter referred to
as an "Involuntary Termination"), the Company shall pay to the Executive
his Salary and Bonus accrued up to and including the date of such
Involuntary Termination, as well as any unreimbursed expenses in
accordance with Section 3(f). In addition, the Company shall pay the
Executive as severance, periodic payments at a rate equal to 150% of his
Salary (at the rate in effect on the date of such termination) for the
longer of (i) the remainder of the Term and (ii) one year following such
termination (the later being the "Severance Period"), at such intervals as
the same would have been paid had the Executive remained employed by the
Company during the Severance Period.
(ii) Resignation for "Good Reason". For the purpose of this
Agreement,
4
<PAGE>
resignation for Good Reason shall mean resignation by the Executive
because of (A) a demonstrably adverse and material change in the
Executive's duties, titles or reporting responsibilities, (B) a
material breach by the Company of any material term of this
Agreement, (C) a reduction in the Executive's Salary or Bonus
opportunity or the failure of the Company to pay the Executive any
material amount of compensation when due, (D) a relocation of the
Executive's principal place of business to a location outside of New
York City without his prior written consent, or (E) a Change in
Control of the Company (as defined below). The Executive shall
provide the Company with written notice of his intention to resign
for Good Reason within 90 days after the Executive knows of the
occurrence of an event that constitutes Good Reason. The Company
shall have 30 business days from the date of receipt of such notice
to effect a cure of the material breach described therein and, upon
cure thereof by the Company to the reasonable satisfaction of the
Executive, such material breach shall no longer constitute Good
Reason for purposes of this Agreement.
(iii) The date of termination of employment without Cause
shall be the date specified in a written notice of termination to
the Executive. The date of resignation for Good Reason shall be the
date specified in a written notice of resignation from the Executive
to the Company; provided, however, that no such written notice shall
be effective unless the cure period specified in Section 4(b)(ii)
above has expired without the Company having corrected, to the
reasonable satisfaction of the Executive, the event or events
subject to cure.
(c) Termination Due to Disability. In the event of the Executive's
Disability (as hereinafter defined), the Company shall be entitled to
terminate his employment upon providing the Executive with six months'
prior written notice. If the Company terminates the Executive's employment
due to Disability, the Executive shall be entitled to receive, for the
remainder of the Term, his Salary at the rate in effect immediately prior
to the Disability, plus his maximum Bonus as described in Section 3(c),
less any amounts paid to the Executive under any disability plan of the
Company. As used in this Section 4(c), the term "Disability" shall mean a
physical or mental incapacity that substantially prevents the Executive
from performing his duties hereunder and that has continued for at least
six of the last twelve months and that can reasonably be expected to
continue indefinitely. Any dispute as to whether or not the Executive is
disabled within the meaning of the preceding sentence shall be resolved by
a physician reasonably satisfactory to the Executive and the Company, and
the determination of such physician shall be final and binding upon both
the Executive and the Company.
(d) Termination Due to Death. In the event of the Executive's death,
the Executive's Beneficiary shall be entitled to receive within 30 days a
lump sum payment in an amount equal to the Executive's Salary, at the rate
in effect immediately prior to his death, plus his maximum Bonus as
described in Section 3(c), in each case for the remainder of the Term,
less any death benefits which are provided to the Executive's Beneficiary
under the terms of any plan, program or arrangement for the benefit of the
Executive at the time of death.
(e) Beneficiary. For purposes of this Agreement, "Beneficiary" shall
mean
5
<PAGE>
the person or persons designated in writing by the Executive to receive
benefits under a plan, program or arrangement or to receive the balance of
the Severance Payments, if any, in the event of the Executive's death, or,
if no such person or persons are designated by the Executive, the
Executive's estate. No Beneficiary designation shall be effective unless
it is in writing and received by the Company prior to the date of the
Executive's death.
(f) Change in Control. For purposes of this Agreement, "Change in
Control" shall mean the occurrence of any of the following events:
(i) any "person" (within the meaning of Section 13(d) of the
Securities and Exchange Act of 1934, as amended (the "Exchange Act")
is or becomes the beneficial owner within the meaning of Rule 13d-3
under the Exchange Act (a "Beneficial Owner"), directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such person any securities acquired
from the Company or its affiliates) representing 25% or more of the
combined voting power of the Company's then outstanding securities,
excluding any person who becomes such a Beneficial Owner in
connection with a transaction described in clause (A) of paragraph
(iii) below; provided, however, that with respect to the beneficial
ownership of securities by John N. Blackman, Jr., Mark W. Blackman
and Louise B. Tollefson and their respective heirs, executors, and
assigns and any trust formed by any of the Blackman Shareholders for
the purpose of estate and/or tax planning (including the Louise B.
Tollefson Florida Intangible Tax Trust) (collectively, the "Blackman
Shareholders"), the reference to 25% in this Section 4(f)(i) shall
be changed to 45%;
(ii) the following individuals cease for any reason to
constitute a majority of the number of directors then serving:
individuals who, on the date hereof, constitute the Board and any
new director (other than a director whose initial assumption of
office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation,
relating to the election of directors of the Company) whose
appointment or election by the Board or nomination for election by
the Company's stockholders was approved or recommended by a vote of
at least a two thirds (2/3) of the directors then still in office
who either were directors on the date hereof or whose appointment,
election or nomination for election was previously so approved or
recommended; or
(iii) there is consummated a merger or consolidation of the
Company or any direct or indirect wholly-owned subsidiary of the
Company with any other corporation, other than (A) a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity or any parent thereof), in combination with the
ownership of any trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any subsidiary of the
Company, at least 50% of the combined voting power
6
<PAGE>
of the securities of the Company or such surviving entity or any
parent thereof outstanding immediately after such merger or
consolidation, or (B) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction)
in which no person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing 25% or more of
the combined voting power of the Company's then outstanding
securities; provided, however, that with respect to the beneficial
ownership of securities by the Blackman Shareholders, the reference
to 25% in this Section 4(f)(iii)(B) shall be changed to 45%; or
(iv) the stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company or there is
consummated an agreement for the sale or disposition by the Company
of all or substantially all of the Company's assets, other than a
sale or disposition by the Company of all or substantially all of
the Company's assets to an entity, at least 50% of the combined
voting power of the voting securities of which are owned by
stockholders of the Company in substantially the same proportions as
their ownership of the Company immediately prior to such sale.
Notwithstanding the foregoing, a "Change in Control" shall not be deemed
to have occurred by virtue of the consummation of any transaction or
series of integrated transactions immediately following which the record
holders of the common stock of the Company immediately prior to such
transaction or series of transactions continue to have substantially the
same proportionate ownership in an entity which owns all or substantially
all of the assets of the Company immediately following such transaction or
series of transactions.
5. Additional Payment.
(a) Gross-Up Payment. Notwithstanding anything herein to the contrary, if
it is determined that any Payment (as defined herein) would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended, or any interest or penalties with respect to such excise tax (such
excise tax, together with any interest or penalties thereon, is herein referred
to as an "Excise Tax"), then the Executive shall be entitled to an additional
cash payment (a "Gross-Up Payment") in an amount that will place the Executive
in the same after-tax economic position that the Executive would have enjoyed if
the Excise Tax had not applied to the Payment. The amount of the Gross-Up
Payment shall be determined by the Accounting Firm (as defined herein) in
accordance with such formula as the Accounting Firm deems appropriate. No
Gross-Up Payments shall be payable hereunder if the Accounting Firm determines
that the Payments are not subject to an Excise Tax. The Accounting Firm shall be
paid by the Company for services performed hereunder.
(b) Determination of Gross-Up Payment. Subject to the provisions of
Section 5(c), all determinations required under this Section 5, including
whether a Gross-Up Payment is required, the amount of the Payments constituting
excess parachute payments, and the amount of the Gross-Up Payment, shall be made
by the Accounting Firm, which shall
7
<PAGE>
provide detailed supporting calculations both to the Executive and the Company
within fifteen days of any date reasonably requested by the Executive or the
Company on which a determination under this Section 5 is necessary or advisable.
The Company shall pay the Executive in cash the initial Gross-Up Payment within
five days of the receipt by the Executive and the Company of the Accounting
Firm's determination. If the Accounting Firm determines that no Excise Tax is
payable by the Executive, the Company shall cause the Accounting Firm to provide
the Executive with an opinion that the Accounting Firm has substantial authority
under the Code and the Regulations not to report an Excise Tax on the
Executive's federal income tax return. Any determination by the Accounting Firm
shall be binding upon the Executive and the Company. If the initial Gross-Up
Payment is insufficient to completely place the Executive in the same after-tax
economic position that the Executive would have enjoyed if the Excise Tax had
not applied to the Payments (hereinafter an "Underpayment"), the Company, after
exhausting its remedies under Section 5(c) below, shall promptly pay the
Executive in cash an additional Gross-Up Payment in respect of the Underpayment.
(c) Procedures. The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service (the "IRS") that, if successful, would
require the payment by the Company of a Gross-Up Payment. Such notice shall be
given as soon as practicable after the Executive knows of such claim and shall
apprise the Company of the nature of the claim and the date on which the claim
is requested to be paid. The Executive agrees not to pay the claim until the
expiration of the thirty-day period following the date on which the Executive
notifies the Company, or such shorter period ending on the date the Taxes with
respect to such claim are due (the "Notice Period"). If the Company notifies the
Executive in writing prior to the expiration of the Notice Period that it
desires to contest the claim, the Executive shall: (i) give the Company any
information reasonably requested by the Company relating to the claim; (ii) take
such action in connection with the claim as the Company may reasonably request,
including, without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the Company and reasonably
acceptable to the Executive; (iii) cooperate with the Company in good faith in
contesting the claim; and (iv) permit the Company to participate in any
proceedings relating to the claim. The Executive shall permit the Company to
control all proceedings related to the claim and, at its option, permit the
Company to pursue or forgo any and all administrative appeals, proceedings,
hearings, and conferences with the taxing authority in respect of such claim. If
requested by the Company, the Executive agrees either to pay the tax claimed and
sue for a refund or contest the claim in any permissible manner and to prosecute
such contest to a determination before any administrative tribunal, in a court
of initial jurisdiction and in one or more appellate courts as the Company shall
determine; provided, however, that, if the Company directs the Executive to pay
such claim and pursue a refund (or if the IRS or other taxing authority requires
the Executive to make any payments), the Company shall advance the amount of
such payment to the Executive on an after-tax and interest-free basis (the
"Advance"). The Company's control of the contest related to the claim shall be
limited to the issues related to the Gross-Up Payment and the Executive shall be
entitled to settle or contest, as the case may be, any other issues raised by
the IRS or other taxing authority. If the Company does not notify the Executive
in writing prior to the end of the Notice Period of its desire to contest the
claim, the Company shall pay the Executive in cash an additional Gross-Up
Payment
8
<PAGE>
in respect of the excess parachute payments that are the subject of the claim,
and the Executive agrees to pay the amount of the Excise Tax that is the subject
of the claim to the applicable taxing authority in accordance with applicable
law.
(d) Repayments. If, after receipt by the Executive of an Advance, the
Executive becomes entitled to a refund with respect to the claim to which such
Advance relates, the Executive shall pay the Company the amount of the refund
(together with any interest paid or credited thereon after Taxes applicable
thereto). If, after receipt by the Executive of an Advance, a determination is
made that the Executive shall not be entitled to any refund with respect to the
claim and the Company does not promptly notify the Executive of its intent to
contest the denial of refund, then the amount of the Advance shall not be
required to be repaid by the Executive and the amount thereof shall offset the
amount of the additional Gross-Up Payment then owing to the Executive.
(e) Further Assurances. The Company shall indemnify the Executive and hold
the Executive harmless, on an after-tax basis, from any costs, expenses,
penalties, fines, interest or other liabilities ("Losses") incurred by the
Executive with respect to the exercise by the Company of any of its rights under
this Section 3, including, without limitation, any Losses related to the
Company's decision to contest a claim or any imputed income to the Executive
resulting from any Advance or action taken on the Executive's behalf by the
Company hereunder. The Company shall pay all legal fees and expenses incurred
under this Section 5, and shall promptly reimburse the Executive for the
reasonable expenses incurred by the Executive in connection with any actions
taken by the Company or required to be taken by the Executive hereunder. The
Company shall also pay all of the fees and expenses of the Accounting Firm,
including, without limitation, the fees and expenses related to the opinion
referred to in Section 5(b).
(f) Definitions. For the purpose of this Section 5, the following terms
shall have the following meanings:
(i) "Accounting Firm" shall mean Deloitte and Touche or, if such
firm is unable or unwilling to perform such calculations, such other
national accounting firm as shall be designated by agreement between the
Executive and the Company.
(ii) "Payment" means (i) any amount due or paid to the Executive
under this Agreement, (ii) any amount that is due or paid to the Executive
under any plan, program or arrangement of the Company and its
subsidiaries, and (iii) any amount or benefit that is due or payable to
the Executive under this Agreement or under any plan, program or
arrangement of the Company and its subsidiaries not otherwise covered
under clause (i) or (ii) hereof which must reasonably be taken into
account under Section 280G of the Code and the Regulations in determining
the amount of the "parachute payments" received by the Executive,
including, without limitation, any amounts which must be taken into
account under the Code and Regulations as a result of (x) the acceleration
of the vesting of options, restricted stock or other equity awards, (y)
the acceleration of the
9
<PAGE>
time at which any payment or benefit is receivable by the Executive or (z)
any contingent severance or other amounts that are payable to the
Executive.
(iii) "Regulations" means the proposed, temporary and final
regulations under Section 280G of the Code or any successor provision
thereto.
(iv) "Taxes" means the federal, state and local income taxes to
which the Executive is subject at the time of determination, calculated on
the basis of the highest marginal rates then in effect, plus any
additional payroll or withholding taxes to which the Executive is then
subject.
6. Protection of the Company's Interests.
(a) No Competing Employment. For so long as the Executive is employed by
the Company and, in circumstances where the Executive's employment is terminated
pursuant to Sections 4(a) or 4(c), continuing until the later of (i) the
remainder of the Term or (ii) one year following termination (such period being
referred to hereinafter as the "Restricted Period"), the Executive shall not,
without the prior written consent of the Board, directly or indirectly, own an
interest in, manage, operate, join, control, lend money or render financial or
other assistance to or participate in or be connected with, as an officer,
employee, partner, stockholder, consultant or otherwise, any individual,
partnership, firm, corporation or other business organization or entity that
competes with the Company by providing any goods or services provided or under
development by the Company at the effective date of the Executive's termination
of employment under this Agreement; provided, however, that this Section 6(a)
shall not proscribe the Executive's ownership, either directly or indirectly, of
either less than five percent of any class of securities which are listed on a
national securities exchange or quoted on the automated quotation system of the
National Association of Securities Dealers, Inc. or any limited partnership
investment over which the Executive has no control.
(b) No Interference. If, during the Restricted Period, the Executive's
employment is terminated pursuant to Sections 4(a), 4(b) or 4(c), the Executive
shall not, whether for his own account or for the account of any other
individual, partnership, firm, corporation or other business organization (other
than the Company), intentionally endeavor to entice away from the Company, or
otherwise interfere with the relationship of the Company with, any senior person
who is employed by or otherwise engaged to perform services for the Company or
any senior person or entity who is, or was within the then most recent
twelve-month period, a customer, client or supplier of the Company.
(c) Secrecy. The Executive recognizes that the services to be performed by
him hereunder are special, unique and extraordinary in that, by reason of his
employment hereunder, he may acquire confidential information and trade secrets
concerning the operation of the Company or its affiliates or subsidiaries, the
use or disclosure of which could cause the
10
<PAGE>
Company or its affiliates or subsidiaries substantial losses and damages which
could not be readily calculated and for which no remedy at law would be
adequate. Accordingly, the Executive covenants and agrees with the Company that
he will not at any time, except in performance of the Executive's obligations to
the Company hereunder or with the prior written consent of the Board, directly
or indirectly disclose to any person any secret or confidential information that
he may learn or has learned by reason of his association with the Company or its
affiliates or subsidiaries. The term "confidential information" means any
material information not previously disclosed to the public or to the trade by
the Company with respect to the Company's or any of affiliates' or
subsidiaries', products, facilities and methods, trade secrets and other
intellectual property, systems, procedures, manuals, confidential reports,
product price lists, customer lists, financial information (including the
revenues, costs or profits associated with any of the Company's products),
business plans, prospects or opportunities.
(d) Exclusive Property. The Executive confirms that all confidential
information is and shall remain the exclusive property of the Company. All
business records, papers and documents kept or made by the Executive relating to
the business of the Company shall be and remain the property of the Company.
Upon the termination of his employment with the Company or upon the request of
the Company at any time, the Executive shall promptly deliver to the Company,
and shall not without the consent of the Board retain copies of, any written
materials not previously made available to the public, or records and documents
made by the Executive or coming into his possession concerning the business or
affairs of the Company or any of its affiliates and subsidiaries; provided,
however, that subsequent to any such termination, the Company shall provide the
Executive with copies (the cost of which shall be borne by the Executive) of any
documents which are requested by the Executive and which the Executive has
determined in good faith are (i) required to establish a defense to a claim that
the Executive has not complied with his duties hereunder or (ii) necessary to
the Executive in order to comply with applicable law.
(e) Injunctive Relief. Without intending to limit the remedies available
to the Company, the Executive acknowledges that a breach of any of the covenants
contained in this Section 6 may result in material irreparable injury to the
Company or its subsidiaries or affiliates for which there is no adequate remedy
at law, that it will not be possible to measure damages for such injuries
precisely and that, in the event of such a breach or threat thereof, the Company
shall be entitled to obtain a temporary restraining order and/or a preliminary
or permanent injunction restraining the Executive from engaging in activities
prohibited by this Section 6 or such other relief as may be required to
specifically enforce any of the covenants in this Section 6. Without intending
to limit the remedies available to the Executive, the Executive shall be
entitled to seek specific performance of the Company's obligations under this
Agreement.
(g) The Executive shall comply, during the continuance of his employment
(and shall procure that his spouse or partner and his minor children shall
comply), with all applicable rules of law, stock exchange regulations and codes
of conduct applicable to employees, officers and directors of the Company in
relation to dealings in the shares, debentures and other securities of the
Company or any member of the Company or any unpublished
11
<PAGE>
share price sensitive information affecting the securities of any other company
with which the Company has dealings (provided that the Executive shall be
entitled to exercise any options granted to him under any share option scheme
established by the Company or any member of the Company, subject to the rules of
such scheme).
7. General Provisions.
(a) Source of Payments. All payments provided under this Agreement, other
than payments made pursuant to a plan which provides otherwise, shall be paid in
cash from the general funds of the Company, and no special or separate fund
shall be established, and no other segregation of assets made, to assure
payment. The Executive shall have no right, title or interest whatever in or to
any investments which the Company may make to aid the Company in meeting its
obligations hereunder. To the extent that any person acquires a right to receive
payments from the Company hereunder, such right shall be no greater than the
right of an unsecured creditor of the Company; provided, however, that this
provision shall not be deemed to waive or abrogate any preferential or other
rights to payment accruing to the Executive under applicable bankruptcy laws by
virtue of the Executive's status as an employee of the Company.
(b) No Other Severance Benefits. Except as specifically set forth in this
Agreement, the Executive covenants and agrees that he shall not be entitled to
any other form of severance benefits from the Company, including, without
limitation, benefits otherwise payable under any of the Company's regular
severance policies, in the event his employment hereunder ends for any reason
and, except with respect to obligations of the Company expressly provided for
herein, the Executive unconditionally releases the Company and its subsidiaries
and affiliates, and their respective directors, officers, employees and
stockholders, or any of them, from any and all claims, liabilities or
obligations under this Agreement or under any severance or termination
arrangements of the Company or any of its subsidiaries or affiliates for
compensation or benefits in connection with his employment or the termination
thereof.
(c) Tax Withholding. Payments to the Executive of all compensation
contemplated under this Agreement shall be subject to all applicable tax
withholding.
(d) Notices. Any notice hereunder by either party to the other shall be
given in writing by personal delivery, or certified mail, return receipt
requested, or (if to the Company) by telex or facsimile, in any case delivered
to the applicable address set forth below:
(i) To the Company: NYMAGIC, Inc.
330 Madison Avenue
New York, New York 10017
Attn: General Counsel
With a copy to: Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
12
<PAGE>
Attn.: John J. Cannon, III, Esq.
(ii) To the Executive: Vincent T. Papa
12 Thicket Drive
Cold Spring Harbor, NY 11724
With a copy to: Reilly & Reilly
146 Old Country Road
Suite 106
Mineola, New York 11501
Attn: John Reilly
or to such other persons or other addresses as either party may specify to the
other in writing.
(e) Representation by the Executive. The Executive represents and warrants
that his entering into this Agreement does not, and that his performance under
this Agreement and consummation of the transactions contemplated hereby will
not, violate the provisions of any noncompetition agreement or other agreement,
policy, or instrument to which the Executive is a party, or any decree, judgment
or order to which the Executive is subject, and that this Agreement constitutes
a valid and binding obligation of the Executive in accordance with its terms.
Breach of this representation will render all of the Company's obligations under
this Agreement void ab initio.
(f) Limited Waiver. The waiver by the Company or the Executive of a
violation of any of the provisions of this Agreement, whether express or
implied, shall not operate or be construed as a waiver of any subsequent
violation of any such provision.
(g) Assignment; Assumption of Agreement. No right, benefit or interest
hereunder shall be subject to assignment, encumbrance, charge, pledge,
hypothecation or setoff by the Executive in respect of any claim, debt,
obligation or similar process; provided, however, that upon the Executive's
death, the Beneficiary or the Executive's estate is entitled to enforce the
provisions of this Agreement. The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company to assume expressly
and to agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession had taken
place.
(h) Amendment; Actions by the Company. This Agreement may not be amended,
modified, canceled or discharged except by written agreement of the Executive
and the Company. Any and all determinations, judgments, reviews, verifications,
adjustments, approvals, consents, waivers or other actions of the Company
required or permitted under this Agreement shall be effective only if undertaken
by the Company pursuant to authority granted by a resolution duly adopted by the
Board; provided, however, that by resolution duly adopted in
13
<PAGE>
accordance with this Section 7(h), the Board may delegate its responsibilities
hereunder to one or more of its members other than the Executive.
(i) Severability. If any term or provision hereof is determined to be
invalid or unenforceable in a final court or arbitration proceeding, (i) the
remaining terms and provisions hereof shall be unimpaired and (ii) the invalid
or unenforceable term or provision shall be deemed replaced by a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision.
(j) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the state of New York (determined without regard to
the choice of law provisions thereof).
(k) Entire Agreement. This Agreement sets forth the entire agreement and
understanding of the parties hereto with respect to the matters covered hereby
and supersedes all prior agreements and understandings of the parties, with
respect to the subject matter hereof.
(l) Headings. The headings and captions of the sections of this Agreement
are included solely for convenience of reference and shall not control the
meaning or interpretation of any provisions of this Agreement.
(m) Counterparts. This Agreement may be executed by the parties hereto in
counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same document.
14
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the day and year first written above.
NYMAGIC, INC.
By: /s/ Sergio Tobia
----------------------------
Sergio Tobia
Chief Executive Officer
EXECUTIVE
/s/ Vincent T. Papa
-------------------------------
Vincent T. Papa
15
<PAGE>
EXHIBIT A
Sample Annual Bonus Amounts
- - --------------------------------------------------------------------------------
Annual Return on Capital(1) Bonus Amount
(as a percentage of 5 year ROC) (as a percentage of Salary)
- - --------------------------------------------------------------------------------
0% 0%
- - --------------------------------------------------------------------------------
25% 12.5%
- - --------------------------------------------------------------------------------
50% 25%
- - --------------------------------------------------------------------------------
75% 37.5%
- - --------------------------------------------------------------------------------
100% 50%
- - --------------------------------------------------------------------------------
125% 62.5%
- - --------------------------------------------------------------------------------
150% 75%
- - --------------------------------------------------------------------------------
175% 87.5%
- - --------------------------------------------------------------------------------
200% or more 100%
- - --------------------------------------------------------------------------------
(1) This column refers to the return on capital for the most current year, the
year for which the Bonus is to be paid.
A-1
<PAGE>
EXHIBIT B
Form of Option Agreement
------------------------
B-1
SUBSIDIARIES
NEW YORK MARINE AND GENERAL INSURANCE COMPANY
GOTHAM INSURANCE COMPANY
MUTUAL MARINE OFFICE, INC.
PACIFIC MUTUAL MARINE OFFICE, INC.
MUTUAL MARINE OFFICE OF THE MIDWEST, INC.
MMO UNDERWRITING AGENCY, LTD.
MMO UK, LTD.
MMO EU, LTD.
CONSENT OF INDEPENDENT AUDITORS'
The Board of Directors
NYMAGIC, INC.:
We consent to incorporation by reference in registration statements (No.
33-10780, 2-94924 and 33-88342) on Form S-8 of NYMAGIC, INC. of our report dated
February 16, 1999 relating to the consolidated balance sheets of NYMAGIC, INC.
and subsidiaries as of December 31, 1998 and 1997, and the related consolidated
statements of income, shareholders' equity and cash flows for each of the years
in the three-year period ended December 31, 1998, and related financial
statement schedules, which report appears in the December 31, 1998 Annual Report
on Form 10-K of NYMAGIC, INC.
KPMG LLP
New York, New York
March 30, 1999
<TABLE> <S> <C>
<ARTICLE> 7
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<DEBT-HELD-FOR-SALE> 353,403
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 73,418
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 443,022
<CASH> 1,583
<RECOVER-REINSURE> 199,730
<DEFERRED-ACQUISITION> 4,277
<TOTAL-ASSETS> 730,320
<POLICY-LOSSES> 0
<UNEARNED-PREMIUMS> 46,879
<POLICY-OTHER> 401,584
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 17,458
0
0
<COMMON> 15,017
<OTHER-SE> 213,162
<TOTAL-LIABILITY-AND-EQUITY> 730,320
76,023
<INVESTMENT-INCOME> 20,803
<INVESTMENT-GAINS> 8,615
<OTHER-INCOME> 396
<BENEFITS> 50,512
<UNDERWRITING-AMORTIZATION> 10,107
<UNDERWRITING-OTHER> 21,531
<INCOME-PRETAX> 22,904
<INCOME-TAX> 4,381
<INCOME-CONTINUING> 18,523
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,523
<EPS-PRIMARY> 1.91
<EPS-DILUTED> 1.91
<RESERVE-OPEN> 222,335
<PROVISION-CURRENT> 69,703
<PROVISION-PRIOR> (19,466)
<PAYMENTS-CURRENT> 17,407
<PAYMENTS-PRIOR> 41,576
<RESERVE-CLOSE> 213,589
<CUMULATIVE-DEFICIENCY> (19,466)
</TABLE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE NEW YORK MARINE AND GENERAL INSURANCE
COMPANY (COMBINED)
SCHEDULE P - ANALYSIS OF LOSSES AND EXPENSES
SCHEDULE P - PART 1 - SUMMARY
($000 Omitted)
<TABLE>
<CAPTION>
====================================================================================================================================
Premiums Earned Loss and Loss Expense Payments
(1) -------------------------------------------------------------------------------------------------------------------
Years in (2) (3) (4) Loss Payments Allocated Loss Unallocated Loss
Which Expense Payments Expense Payments
Premiums ------------------------------------------------------------------------------
Were Earned (5) (6) (7) (8) (9) (10)
and Losses Direct Net Direct And Direct And Direct And
Were Incurred Assumed Ceded (Cols. 2-3) Assumed Ceded Assumed Ceded Assumed Ceded
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior XXX XXX XXX 2,943 1,273 1,088 323 54 7
2. 1989 165,195 93,434 71,761 184,831 142,382 16,346 7,595 259 15
3. 1990 166,056 101,563 64,493 114,017 79,739 12,727 4,601 221 14
4. 1991 179,573 115,157 64,416 71,183 42,666 10,346 3,053 204 28
5. 1992 161,162 102,887 58,275 76,344 51,209 5,621 1,563 200 22
6. 1993 165,180 99,903 65,277 87,702 53,842 5,506 1,984 2,005 30
7. 1994 180,033 100,778 79,255 128,222 94,945 5,884 3,088 2,463 69
8. 1995 197,192 93,731 103,461 59,453 27,103 2,701 572 2,287 14
9. 1996 168,183 71,146 97,037 55,525 22,466 2,644 1,450 2,317 73
10. 1997 135,414 47,877 87,537 2,701 30,663 516 (27) 2,258 196
11. 1998 112,828 62,207 50,621 23,032 15,640 106 (125) 237 157
- - ------------------------------------------------------------------------------------------------------------------------------------
12. TOTALS xxx xxx xxx 861,715 561,928 63,485 24,077 12,505 625
====================================================================================================================================
<CAPTION>
==================================================================
(1) (13)
Years in --------------------------
Which (11) (12) Number of
Premiums Total Claims
Were Earned Salvage and Paid (Cols. Reported
and Losses Subrogation 5-6+7-8 Direct and
Were Incurred Received -9-10) Assumed
- - ------------------------------------------------------------------
<S> <C> <C> <C>
1. Prior 173 2,482 XXX
2. 1989 2,717 51,444 XXX
3. 1990 2,704 42,611 XXX
4. 1991 2,112 35,986 XXX
5. 1992 844 29,371 XXX
6. 1993 1,099 39,357 XXX
7. 1994 2,397 38,467 XXX
8. 1995 1,335 36,752 XXX
9. 1996 1,066 36,897 XXX
10. 1997 453 30,005 XXX
11. 1998 130 7,703 XXX
- - ------------------------------------------------------------------
12. TOTALS 15,030 351,075 XXX
==================================================================
</TABLE>
<TABLE>
<CAPTION>
====================================================================================================================================
Losses Unpaid Allocated Loss Expenses Unpaid Unallocated Loss Expenses Unpaid
-----------------------------------------------------------------------------------------------------------------------------
CASE BASIS BULK + IBNR CASE BASIS BULK + IBNR (22) (23)
--------------------------------------------------------------------------------------------------
(14) (15) (16) (17) (18) (19) (20) (21)
Direct and Direct and Direct and Direct and Direct and
Assumed Ceded Assumed Ceded Assumed Ceded Assumed Ceded Assumed Ceded
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. 23,348 13,152 5,739 1,078 0 0 699 362 1,812 0
2. 3,532 1,725 3,252 960 0 0 539 300 296 0
3. 7,578 4,157 4,617 1,323 0 0 777 413 171 0
4. 5,884 3,659 7,251 1,778 0 0 922 459 166 0
5. 5,356 2,356 7,559 2,084 0 0 1,206 305 194 0
6. 4,611 740 8,506 2,262 0 0 1,428 306 313 0
7. 26,075 20,077 12,589 3,672 0 0 2,469 433 383 0
8. 9,766 5,543 19,360 6,066 0 0 3,451 419 436 0
9. 12,012 6,019 24,346 7,159 0 0 3,942 338 813 0
10. 30,613 24,972 31,049 11,245 0 0 5,744 831 1,061 0
11. 51,893 38,732 28,132 8,393 0 0 4,612 489 985 0
- - ------------------------------------------------------------------------------------------------------------------------------------
12. 180,668 121,132 152,400 46,020 0 0 25,789 4,655 6,630 0
====================================================================================================================================
<CAPTION>
====================================================
(24) (25) (26)
Number of
Total Net Claims
Salvage and Losses and Outstanding
Subrogation Expenses Direct and
Anticpated Unpaid Assumed
- - ----------------------------------------------------
<S> <C> <C> <C>
1. 311 17,006 XXX
2. 131 4,634 XXX
3. 208 7,250 XXX
4. 145 8,327 XXX
5. 182 9,570 XXX
6. 290 11,550 XXX
7. 548 17,334 XXX
8. 699 20,985 XXX
9. 997 27,597 XXX
10. 1,165 31,419 XXX
11. 1,682 38,008 XXX
- - ----------------------------------------------------
12. 6,358 193,680 XXX
====================================================
</TABLE>
<TABLE>
<CAPTION>
=============================================================================================================================
Losses and Loss Expenses Percentage Nontabular (35)
Total Losses and Loss Expenses Incurred (Incurred/Premiums Earned) Discount
-----------------------------------------------------------------------------------------------------
Inter-Company
(27) (28) (29) (30) (31) (32) (33) (34) Pooling
Direct and Direct and Loss Participation
Assumed Ceded Net Assumed Ceded Net Loss Expense Percentage
- - -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. XXX XXX XXX XXX XXX XXX 0 0 XXX
2. 209,055 152,977 56,078 126.6 163.7 78.1 0 0 50.0
3. 140,108 90,247 49,861 84.4 88.9 77.3 0 0 58.9
4. 95,956 51,643 44,313 53.4 44.8 68.8 0 0 66.9
5. 96,480 57,539 38,941 59.9 55.9 66.8 0 0 77.3
6. 110,071 59,164 50,907 66.6 59.2 78.0 0 0 81.5
7. 178,085 122,284 55,801 98.9 121.3 70.4 0 0 84.0
8. 97,454 39,717 57,737 49.4 42.4 55.8 0 0 90.0
9. 101,999 37,505 64,494 60.6 52.7 66.5 0 0 95.0
10. 129,304 67,880 61,424 95.5 141.8 70.2 0 0 95.0
11. 108,997 63,286 45,711 96.6 101.7 90.3 0 0 100.0
- - -----------------------------------------------------------------------------------------------------------------------------
12. XXX XXX XXX XXX XXX XXX 0 0 XXX
- - -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
====================================
Net Balance Sheet
Reserves After Discount
-------------------------
(36) (37)
Losses Loss Expenses
Unpaid Unpaid
- - ------------------------------------
<S> <C> <C>
1. 14,857 2,149
2. 4,099 535
3. 6,715 535
4. 7,698 629
5. 8,475 1,095
6. 10,115 1,435
7. 14,915 2,419
8. 17,517 3,468
9. 23,180 4,417
10. 25,445 5,974
11. 32,900 5,108
- - ------------------------------------
12. 165,916 27,764
- - ------------------------------------
</TABLE>
Note: Parts 2 and 4 are gross of all dicounting, including tabular discounting.
Part 1 is gross of only nontabular discounting, which is reported in Columns 33
and 34 of Part 1 The tabular discount, if any, is reported in the Noted to
Financial Statements which will reconcile Part 1 with Parts 2 and 4.
<PAGE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE NEW YORK MARINE AND GENERAL INSURANCE
COMPANY (COMBINED)
SCHEDULE P - PART 2 - SUMMARY
<TABLE>
<CAPTION>
============================================================================================================================
(1) INCURRED LOSSES AND ALLOCATED EXPENSES REPORTED AT YEAR END ($000 OMITTED)
-----------------------------------------------------------------------------------------------------------
Years in Which (2) (3) (4) (5) (6) (7) (8) (9) (10)
Losses Were
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997
- - ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 96,569 88,586 86,617 81,234 77,216 72,394 70,776 72,787 72,496
2. 1989 53,563 54,047 58,399 59,626 60,030 58,538 58,683 57,273 55,566
3. 1990 XXX 50,795 47,279 49,348 49,352 51,990 50,500 50,210 49,497
4. 1991 XXX XXX 45,344 43,866 45,953 46,206 45,467 46,135 45,534
5. 1992 XXX XXX XXX 48,868 46,024 42,127 40,235 40,098 38,462
6. 1993 XXX XXX XXX XXX 54,969 52,929 52,621 50,223 48,699
7. 1994 XXX XXX XXX XXX XXX 64,065 63,601 60,317 55,403
8. 1995 XXX XXX XXX XXX XXX XXX 75,620 67,489 58,128
9. 1996 XXX XXX XXX XXX XXX XXX XXX 71,753 66,845
10. 1997 XXX XXX XXX XXX XXX XXX XXX XXX 68,039
11. 1998 XXX XXX XXX XXX XXX XXX XXX XXX XXX
- - ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
=================================================================
(1) DEVELOPMENT
------------------------------------------------
Years in Which (11) (12) (13)
Losses Were
Incurred 1998 One Year Two Year
- - -----------------------------------------------------------------
<S> <C> <C> <C>
1. Prior 74,118 1,622 1,331
2. 1989 55,538 (28) (1,735)
3. 1990 49,483 (14) (727)
4. 1991 43,971 (1,563) (2,164)
5. 1992 38,569 107 (1,529)
6. 1993 48,619 (80) (1,604)
7. 1994 53,024 (2,379) (7,293)
8. 1995 55,028 (3,100) (12,461)
9. 1996 61,437 (5,408) (10,316)
10. 1997 58,301 (9,738) XXX
11. 1998 44,646 XXX XXX
- - -----------------------------------------------------------------
12. Totals (20,581) (36,498)
------------------------------
</TABLE>
<TABLE>
<CAPTION>
====================================================================================================================================
(1) CUMULATIVE PAID LOSSES AND ALLOCATED EXPENSES AT YEAR END ($000 OMITTED)
-------------------------------------------------------------------------------------------------------------------
Years in Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
Losses Were
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 11,740 25,888 29,662 37,210 45,127 51,325 54,684 56,489 58,924
2. 1989 5,299 16,469 23,496 29,398 38,031 44,021 47,018 49,494 50,584 51,200
3. 1990 XXX 2,184 8,747 13,360 21,530 29,030 33,343 37,038 40,614 42,404
4. 1991 XXX XXX 2,047 5,055 13,818 20,500 24,862 30,416 33,556 35,810
5. 1992 XXX XXX XXX 2,756 9,790 14,140 19,226 23,585 25,752 29,193
6. 1993 XXX XXX XXX XXX 4,431 17,339 24,714 29,327 34,223 37,382
7. 1994 XXX XXX XXX XXX XXX 11,186 21,765 28,937 32,980 36,073
8. 1995 XXX XXX XXX XXX XXX XXX 10,044 24,994 30,016 34,479
9. 1996 XXX XXX XXX XXX XXX XXX XXX 15,012 27,628 34,653
10. 1997 XXX XXX XXX XXX XXX XXX XXX XXX 16,913 27,943
11. 1998 XXX XXX XXX XXX XXX XXX XXX XXX XXX 7,623
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
====================================================
(1) (12) (13)
------------------------------
Number of Number of
Years in Which Claims Claims
Losses Were Closed With Without
Incurred Loss Payment Loss Payment
- - ----------------------------------------------------
<S> <C> <C>
1. Prior XXX XXX
2. 1989 XXX XXX
3. 1990 XXX XXX
4. 1991 XXX XXX
5. 1992 XXX XXX
6. 1993 XXX XXX
7. 1994 XXX XXX
8. 1995 XXX XXX
9. 1996 XXX XXX
10. 1997 XXX XXX
11. 1998 XXX XXX
- - ----------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
====================================================================================================================================
(1) BULK AND INCURRED BUT NOT REPORTED RESERVES ON LOSSES ALLOCATED EXPENSES AT YEAR END ($000 OMITTED)
---------------------------------------------------------------------------------------------------------------------
Years in Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
Losses Were
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 54,628 35,379 23,568 16,071 11,112 7,127 6,216 6,675 6,780 4,998
2. 1989 38,132 24,234 16,024 11,451 8,506 6,589 5,465 4,024 3,035 2,531
3. 1990 XXX 39,863 26,182 17,966 13,671 9,935 8,107 5,780 4,609 3,658
4. 1991 XXX XXX 34,420 25,773 18,745 14,270 12,104 9,247 7,694 5,936
5. 1992 XXX XXX XXX 38,439 26,128 18,334 14,054 10,840 7,981 6,376
6. 1993 XXX XXX XXX XXX 39,236 24,199 18,552 13,585 9,852 7,366
7. 1994 XXX XXX XXX XXX XXX 43,640 30,938 21,375 15,920 10,953
8. 1995 XXX XXX XXX XXX XXX XXX 52,032 35,285 23,200 16,326
9. 1996 XXX XXX XXX XXX XXX XXX XXX 45,536 30,011 20,791
10. 1997 XXX XXX XXX XXX XXX XXX XXX XXX 37,936 24,717
11. 1998 XXX XXX XXX XXX XXX XXX XXX XXX XXX 23,862
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
70
<PAGE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE NEW YORK MARINE AND GENERAL INSURANCE
COMPANY (COMBINED)
SCHEDULE P - PART 1C
COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL
($000 Omitted)
<TABLE>
<CAPTION>
====================================================================================================================================
Premiums Earned Loss and Loss Expense Payments
(1) -------------------------------------------------------------------------------------------------------------------
Years in (2) (3) (4) Loss Payments Allocated Loss Unallocated Loss
Which Expense Payments Expense Payments
Premiums ------------------------------------------------------------------------------
Were Earned (5) (6) (7) (8) (9) (10)
and Losses Direct Net Direct And Direct And Direct And
Were Incurred Assumed Ceded (Cols. 2-3) Assumed Ceded Assumed Ceded Assumed Ceded
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior XXX XXX XXX 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0
3. 1990 0 0 0 0 0 0 0 0 0
4. 1991 0 0 0 0 0 0 0 0 0
5. 1992 0 0 0 0 0 0 0 0 0
6. 1993 0 0 0 0 0 0 0 0 0
7. 1994 0 0 0 0 0 0 0 0 0
8. 1995 36 3 33 13 5 2 1 0 0
9. 1996 4 2 2 1 0 1 0 0 0
10. 1997 0 0 0 0 0 0 0 0 0
11. 1998 0 0 0 0 0 0 0 0 0
- - ------------------------------------------------------------------------------------------------------------------------------------
12. TOTALS XXX XXX XXX 14 5 3 1 0 0
====================================================================================================================================
<CAPTION>
=======================================================================
(1) (13)
Years in ----------------------------
Which (11) (12) Number of
Premiums Total Claims
Were Earned Salvage and Paid (Cols. Reported
and Losses Subrogation 5-6 Direct and
Were Incurred Received +7-8+9-10) Assumed
- - -----------------------------------------------------------------------
<S> <C> <C> <C>
1. Prior 0 0 XXX
2. 1989 0 0 0
3. 1990 0 0 0
4. 1991 0 0 0
5. 1992 0 0 0
6. 1993 0 0 0
7. 1994 0 0 0
8. 1995 0 9 3
9. 1996 0 2 1
10. 1997 0 0 0
11. 1998 0 0 0
- - -----------------------------------------------------------------------
12. TOTALS 0 11 XXX
=======================================================================
</TABLE>
<TABLE>
<CAPTION>
====================================================================================================================================
Losses Unpaid Allocated Loss Expenses Unpaid Unallocated Loss Expenses Unpaid
-----------------------------------------------------------------------------------------------------------------------------
Case Basis Bulk + IBNR Case Basis Bulk + IBNR (22) (23)
--------------------------------------------------------------------------------------------------
(14) (15) (16) (17) (18) (19) (20) (21)
Direct and Direct and Direct and Direct and Direct and
Assumed Ceded Assumed Ceded Assumed Ceded Assumed Ceded Assumed Ceded
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. 0 0 0 0 0 0 0 0 0 0
2. 0 0 0 0 0 0 0 0 0 0
3. 0 0 0 0 0 0 0 0 0 0
4. 0 0 0 0 0 0 0 0 0 0
5. 0 0 0 0 0 0 0 0 0 0
6. 0 0 0 0 0 0 0 0 0 0
7. 0 0 0 0 0 0 0 0 0 0
8. 0 0 0 0 0 0 0 0 0 0
9. 0 0 0 0 0 0 0 0 0 0
10. 0 0 0 0 0 0 0 0 0 0
11. 0 0 0 0 0 0 0 0 0 0
- - ------------------------------------------------------------------------------------------------------------------------------------
12. 0 0 0 0 0 0 0 0 0 0
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
===============================================
(24) (25) (26)
Number of
Total Net Claims
Salvage and Losses and Outstanding
Subrogation Expenses Direct and
Anticpated Unpaid Assumed
- - -----------------------------------------------
<S> <C> <C> <C>
1. 0 0 0
2. 0 0 0
3. 0 0 0
4. 0 0 0
5. 0 0 0
6. 0 0 0
7. 0 0 0
8. 0 0 0
9. 0 0 0
10. 0 0 0
11. 0 0 0
- - -----------------------------------------------
12. 0 0 0
- - -----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
====================================================================================================================================
Losses and Loss Expenses Percentage Nontabular (35)
Total Losses and Loss Expenses Incurred (Incurred/Premiums Earned) Discount
------------------------------------------------------------------------------------------------------
Inter-Company
(27) (28) (29) (30) (31) (32) (33) (34) Pooling
Direct and Direct and Loss Participation
Assumed Ceded Net Assumed Ceded Net Loss Expense Percentage
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. XXX XXX XXX XXX XXX XXX 0 0 XXX
2. 0 0 0 0.0 0.0 0.0 0 0 0.0
3. 0 0 0 0.0 0.0 0.0 0 0 0.0
4. 0 0 0 0.0 0.0 0.0 0 0 0.0
5. 0 0 0 0.0 0.0 0.0 0 0 0.0
6. 0 0 0 0.0 0.0 0.0 0 0 0.0
7. 0 0 0 0.0 0.0 0.0 0 0 0.0
8. 15 6 9 41.7 200.0 27.3 0 0 100.0
9. 2 0 2 50.0 0.0 100.0 0 0 100.0
10. 0 0 0 0.0 0.0 0.0 0 0 0.0
11. 0 0 0 0.0 0.0 0.0 0 0 0.0
- - ------------------------------------------------------------------------------------------------------------------------------------
12. XXX XXX XXX XXX XXX XXX 0 0 XXX
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
==============================
Net Balance Sheet
Reserves After Discount
-------------------------
(36) (37)
Losses Loss Expenses
Unpaid Unpaid
- - ------------------------------
<S> <C> <C>
1. 0 0
2. 0 0
3. 0 0
4. 0 0
5. 0 0
6. 0 0
7. 0 0
8. 0 0
9. 0 0
10. 0 0
11. 0 0
- - ------------------------------
12. 0 0
- - ------------------------------
</TABLE>
<PAGE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE NEW YORK MARINE AND GENERAL INSURANCE
COMPANY (COMBINED)
SCHEDULE P - PART 1G - SPECIAL LIABILITY
(OCEAN, MARINE, AIRCRAFT (ALL PERILS),
BOILER AND MACHINERY)
($000 Omitted)
<TABLE>
<CAPTION>
====================================================================================================================================
(1) Premiums Earned Losses and Loss Expense Payments
Years in ----------------------------------------------------------------------------------------------------------------
Which (2) (3) (4) LOSS PAYMENTS ALLOCATED LOSS EXPENSE PAYMENTS UNALLOCATED LOSS
Premiums ---------------------------------------------------------------------------
Were Earned (5) (6) (7) (8) (9) (10)
and Losses Direct and Net Direct and Direct and Direct and
Were Incurred Assumed Ceded (Cols. 2-3) Assumed Ceded Assumed Ceded Assumed Ceded
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior XXX XXX XXX 448 341 102 (6) 38 0
2. 1989 90,050 50,496 39,554 122,767 94,530 6,028 2,716 233 6
3. 1990 83,386 54,096 29,290 69,242 49,744 3,445 1,355 189 0
4. 1991 105,852 76,884 28,968 51,406 37,883 3,187 1,748 167 2
5. 1992 102,056 72,237 29,819 50,997 34,733 2,268 982 175 7
6. 1993 112,791 71,326 41,465 48,812 26,245 2,050 898 1,455 4
7. 1994 131,909 69,343 62,566 55,600 31,193 1,526 563 1,996 20
8. 1995 161,865 78,258 83,607 41,474 21,065 1,606 413 2,046 5
9. 1996 154,620 66,721 87,899 52,533 21,468 2,241 1,410 2,261 62
10. 1997 129,376 46,826 82,550 57,884 30,664 389 (21) 2,163 185
11. 1998 107,915 60,530 47,385 22,989 15,631 103 (120) 229 150
- - ------------------------------------------------------------------------------------------------------------------------------------
12. TOTALS XXX XXX XXX 574,152 363,497 22,945 9,938 10,952 441
====================================================================================================================================
<CAPTION>
==========================================================
(1) (13)
Years in
Which (11) (12) Number of
Premiums Total Claims
Were Earned Salvage and Net Paid Reported
and Losses Subrogation (Cols.5-6 Direct and
Were Incurred Received +7-8+9-10) Assumed
- - ----------------------------------------------------------
<S> <C> <C> <C>
1. Prior 152 253 XXX
2. 1989 1,694 31,776 XXX
3. 1990 1,383 21,777 XXX
4. 1991 1,532 15,127 XXX
5. 1992 643 17,718 XXX
6. 1993 673 25,170 XXX
7. 1994 2,112 27,346 XXX
8. 1995 1,109 23,643 XXX
9. 1996 946 34,095 XXX
10. 1997 429 29,608 XXX
11. 1998 128 7,660 XXX
- - ----------------------------------------------------------
12. TOTALS 10,801 234,173 XXX
==========================================================
</TABLE>
<TABLE>
<CAPTION>
====================================================================================================================================
Losses Unpaid Allocated Loss Expenses Unpaid Unallocated Loss Expenses Unpaid
-----------------------------------------------------------------------------------------------------------------------------
Case Basis Bulk + IBNR Case Basis Bulk + IBNR (22) (23)
--------------------------------------------------------------------------------------------------
(14) (15) (16) (17) (18) (19) (20) (21)
Direct and Direct and Direct and Direct and Direct and
Assumed Ceded Assumed Ceded Assumed Ceded Assumed Ceded Assumed Ceded
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. 4,314 1,795 893 22 0 0 167 5 608 0
2. 1,937 608 651 203 0 0 83 2 167 0
3. 5,019 3,009 867 304 0 0 157 5 72 0
4. 3,161 2,789 1,250 346 0 0 220 7 79 0
5. 2,967 2,146 2,054 645 0 0 529 20 106 0
6. 1,761 351 3,698 1,067 0 0 567 34 170 0
7. 17,276 14,112 8,213 2,615 0 0 1,415 89 251 0
8. 8,094 5,471 15,000 4,973 0 0 2,591 174 352 0
9. 9,819 5,762 20,380 6,159 0 0 3,323 213 718 0
10. 29,864 24,846 28,262 11,001 0 0 4,920 670 954 0
11. 51,297 38,716 25,394 8,178 0 0 3,920 346 943 0
- - ------------------------------------------------------------------------------------------------------------------------------------
12. 135,509 99,605 106,662 35,513 0 0 17,892 1,565 4,420 0
====================================================================================================================================
<CAPTION>
==============================================
(24) (25) (26)
Number of
Total Net Claims
Salvage and Losses and Outstanding
Subrogation Expenses Direct and
Anticpated Unpaid Assumed
- - ----------------------------------------------
<S> <C> <C> <C>
1. 176 4,160 500
2. 100 2,025 138
3. 145 2,797 60
4. 67 1,568 67
5. 111 2,845 90
6. 218 4,744 144
7. 470 10,339 212
8. 635 15,419 295
9. 910 22,106 596
10. 1,125 27,483 792
11. 1,646 34,314 775
- - ----------------------------------------------
12. 5,603 127,800 3,669
==============================================
</TABLE>
<TABLE>
<CAPTION>
====================================================================================================================================
Loss and Loss Expenses Percentage Nontabular (35)
Total Losses and Loss Expenses Incurred (Incurred/Premiums Earned) Discount
-----------------------------------------------------------------------------------------------------
Inter-Company
(27) (28) (29) (30) (31) (32) (33) (34) Pooling
Direct and Direct and Loss Participation
Assumed Ceded Net Assumed Ceded Net Loss Expense Percentage
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. XXX XXX XXX XXX XXX XXX 0 0 XXX
2. 131,866 98,065 33,801 146.4 194.2 85.5 0 0 58.9
3. 78,991 54,417 24,574 94.7 100.6 83.9 0 0 66.9
4. 59,470 42,775 16,695 56.2 55.6 57.6 0 0 69.7
5. 59,096 38,533 20,563 57.9 53.3 69.0 0 0 71.5
6. 58,513 28,599 29,914 51.9 40.1 72.1 0 0 76.5
7. 86,277 48,592 37,685 65.4 70.1 60.2 0 0 85.7
8. 71,163 32,101 39,062 44.0 41.0 46.7 0 0 90.0
9. 91,275 35,074 56,201 59.0 52.6 63.9 0 0 90.0
10. 124,436 67,345 57,091 96.2 143.8 69.2 0 0 100.0
11. 104,875 62,901 41,974 97.2 103.9 88.6 0 0 100.0
- - ------------------------------------------------------------------------------------------------------------------------------------
12. XXX XXX XXX XXX XXX XXX 0 0 XXX
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
==============================
Net Balance Sheet
Reserves After Discount
-------------------------
(36) (37)
Losses Loss Expenses
Unpaid Unpaid
- - ------------------------------
<S> <C> <C>
1. 3,390 770
2. 1,777 248
3. 2,573 224
4. 1,276 292
5. 2,230 615
6. 4,041 703
7. 8,762 1,577
8. 12,650 2,769
9. 18,278 3,828
10. 22,279 5,204
11. 29,797 4,517
- - ------------------------------
12. 107,053 20,747
==============================
</TABLE>
<PAGE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE NEW YORK MARINE AND GENERAL INSURANCE
COMPANY (COMBINED)
SCHEDULE P - PART 1H - SECTION 1
OTHER LIABILITY - OCCURRENCE
($000 Omitted)
<TABLE>
<CAPTION>
==============================================================================================================================
(1) Premiums Earned Loss and Expense Payments
Years in ----------------------------------------------------------------------------------------------------------
Which (2) (3) (4) Loss Payments Allocated Loss Expense Payments Unallocated Loss
Premiums ---------------------------------------------------------------------
Were Earned (5) (6) (7) (8) (9)
and Losses Direct and Net Direct and Direct and Direct and
Were Incurred Assumed Ceded (Cols. 2-3) Assumed Ceded Assumed Ceded Assumed
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior XXX XXX XXX 2,394 848 916 295 11
2. 1989 30,497 14,177 16,320 14,019 6,411 5,105 1,483 13
3. 1990 29,819 10,899 18,920 15,110 5,614 6,626 1,818 17
4. 1991 25,877 5,962 19,915 15,760 3,218 6,051 832 31
5. 1992 17,471 2,251 15,220 6,322 401 2,302 95 17
6. 1993 12,003 1,329 10,674 5,301 440 1,964 137 82
7. 1994 7,739 857 6,882 2,628 111 1,226 90 125
8. 1995 4,517 224 4,293 1,578 4 480 10 21
9. 1996 3,305 92 3,213 289 0 68 (9) 21
10. 1997 2,053 36 2,017 123 0 8 (8) 38
11. 1998 1,733 12 1,721 25 0 3 (5) 6
- - ------------------------------------------------------------------------------------------------------------------------------
12. TOTALS XXX XXX XXX 63,549 17,047 24,749 4,738 382
- - ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
=================================================================================
(1) (13)
Years in -------------------
Which EXPENSE PAYMENTS (11) (12) Number of
Premiums ------------------- Total Claims
Were Earned (10) Salvage and Net Paid Reported
and Losses Subrogation (Cols.5-6 Direct and
Were Incurred Ceded Received +7-8+9-10) Assumed
- - ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Prior 7 16 2,171 XXX
2. 1989 9 335 11,234 781
3. 1990 12 284 14,309 796
4. 1991 26 297 17,766 811
5. 1992 13 192 8,132 535
6. 1993 24 171 6,746 313
7. 1994 12 40 3,766 228
8. 1995 8 16 2,057 108
9. 1996 9 53 378 76
10. 1997 8 12 169 38
11. 1998 6 0 33 42
- - ---------------------------------------------------------------------------------
12. TOTALS 134 1,416 66,761 XXX
- - ---------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
====================================================================================================================================
Losses Unpaid Allocated Loss Expenses Unpaid Unallocated Loss Expenses Unpaid
-----------------------------------------------------------------------------------------------------------------------------
Case Basis Bulk + IBNR Case Basis Bulk + IBNR (22) (23)
--------------------------------------------------------------------------------------------------
(14) (15) (16) (17) (18) (19) (20) (21)
Direct and Direct and Direct and Direct and Direct and
Assumed Ceded Assumed Ceded Assumed Ceded Assumed Ceded Assumed Ceded
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. 13,929 8,800 4,723 967 0 0 532 357 961 0
2. 475 170 1,427 263 0 0 387 271 52 0
3. 1,216 391 2,366 522 0 0 554 389 50 0
4. 1,555 328 4,649 1,196 0 0 617 433 69 0
5. 2,350 201 4,315 1,279 0 0 505 244 64 0
6. 2,497 212 3,540 1,000 0 0 559 160 97 0
7. 2,819 192 2,765 692 0 0 652 170 76 0
8. 1,457 17 2,465 607 0 0 293 67 42 0
9. 631 0 2,043 496 0 0 344 79 37 0
10. 307 0 1,506 155 0 0 559 128 21 0
11. 467 0 1,443 152 0 0 420 99 36 0
- - ------------------------------------------------------------------------------------------------------------------------------------
12. 27,703 10,311 31,244 7,329 0 0 5,422 2,397 1,505 0
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
===============================================
(24) (25) (26)
Number of
Total Net Claims
Salvage and Losses and Outstanding
Subrogation Expenses Direct and
Anticpated Unpaid Assumed
- - -----------------------------------------------
<S> <C> <C> <C>
1. 85 10,021 724
2. 15 1,637 39
3. 29 2,884 38
4. 52 4,933 52
5. 59 5,510 48
6. 55 5,321 73
7. 54 5,258 57
8. 38 3,566 32
9. 25 2,480 28
10. 19 2,112 16
11. 20 2,115 27
- - -----------------------------------------------
12. 451 45,837 1,134
- - -----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
==============================================================================================================================
Loss and Loss Expenses Percentage Nontabular (35)
Total Losses and Loss Expenses Incurred (Incurred/Premiums Earned) Discount
-----------------------------------------------------------------------------------------------------
Inter-Company
(27) (28) (29) (30) (31) (32) (33) (34) Pooling
Direct and Direct and Loss Participation
Assumed Ceded Net Assumed Ceded Net Loss Expense Percentage
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. XXX XXX XXX XXX XXX XXX 0 0 XXX
2. 21,478 8,607 12,871 70.4 60.7 78.9 0 0 58.7
3. 25,939 8,746 17,193 87.0 80.2 90.9 0 0 66.9
4. 28,732 6,033 22,699 111.0 101.2 114.0 0 0 89.7
5. 15,875 2,233 13,642 90.9 99.2 89.6 0 0 91.5
6. 14,040 1,973 12,067 117.0 148.5 113.1 0 0 91.5
7. 10,291 1,267 9,024 133.0 147.8 131.1 0 0 95.7
8. 6,336 713 5,623 140.3 318.3 131.0 0 0 100.0
9. 3,433 575 2,858 103.9 625.0 89.0 0 0 100.0
10. 2,564 283 2,281 124.9 786.1 113.1 0 0 100.0
11. 2,400 252 2,148 138.5 2,100.0 124.8 0 0 100.0
- - ------------------------------------------------------------------------------------------------------------------------------
12. XXX XXX XXX XXX XXX XXX 0 0 XXX
- - ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
=====================================
Net Balance Sheet
Reserves After Discount
-------------------------
(36) (37)
Losses Loss Expenses
Unpaid Unpaid
- - -------------------------------------
<S> <C> <C>
1. 8,885 1,136
2. 1,469 168
3. 2,669 215
4. 4,680 253
5. 5,185 325
6. 4,825 496
7. 4,700 558
8. 3,298 268
9. 2,178 302
10. 1,660 452
11. 1,758 357
- - -------------------------------------
12. 41,307 4,530
- - -------------------------------------
</TABLE>
<PAGE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE NEW YORK MARINE AND GENERAL INSURANCE
COMPANY (COMBINED)
SCHEDULE P - PART 1H - SECTION 2
OTHER LIABILTY - CLAIMS-MADE
($000 Omitted)
<TABLE>
<CAPTION>
====================================================================================================================================
(1) Premiums Earned Loss and Loss Expense Payments
Years in ----------------------------------------------------------------------------------------------------------------
Which (2) (3) (4) Loss Payments Allocated Loss Expense Payments Unallocated Loss Expense
Premiums ---------------------------------------------------------------------------
Were Earned (5) (6) (7) (8) (9) (10)
and Losses Direct and Net Directand Direct and Direct and
Were Incurred Assumed Ceded (Cols. 2-3) Assumed Ceded Assumed Ceded Assumed Ceded
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior XXX XXX XXX 35 16 11 4 1 0
2. 1989 16,090 6,692 9,398 1,843 654 3,710 2,076 5 0
3. 1990 15,300 5,893 9,407 3,019 956 1,965 834 7 0
4. 1991 12,415 3,201 9,214 2,503 317 785 208 5 0
5. 1992 8,205 993 7,212 718 71 557 54 3 0
6. 1993 6,218 422 5,796 1,031 92 395 35 26 0
7. 1994 4,583 262 4,321 1,495 128 648 54 20 0
8. 1995 3,933 204 3,729 84 7 96 1 20 0
9. 1996 3,194 52 3,142 74 0 164 0 11 0
10. 1997 2,347 36 2,311 37 0 101 3 32 0
11. 1998 1,799 127 1,672 0 0 0 0 0 0
- - ------------------------------------------------------------------------------------------------------------------------------------
12. TOTALS XXX XXX XXX 10,839 2,241 8,432 3,269 130 0
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
========================================================================
(1) (13)
Years in -----------
Which Payments (11) (12) Number of
Premiums ----------- Total Claims
Were Earned Salvage and Net Paid Reported
and Losses Subrogation (Cols.5-6 Direct and
Were Incurred Received +7-8+9-10) Assumed
- - ------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Prior 4 27 XXX
2. 1989 2 2,828 112
3. 1990 701 3,201 154
4. 1991 200 2,768 113
5. 1992 5 1,153 71
6. 1993 72 1,325 59
7. 1994 173 1,981 41
8. 1995 44 192 50
9. 1996 5 249 27
10. 1997 7 167 28
11. 1998 0 0 2
- - ------------------------------------------------------------------------
12. TOTALS 1,213 13,891 XXX
- - ------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
====================================================================================================================================
Losses Unpaid Allocated Loss Expenses Unpaid Unallocated Loss Expenses Unpaid
-----------------------------------------------------------------------------------------------------------------------------
Case Basis Bulk + IBNR Case Basis Bulk + IBNR (22) (23)
--------------------------------------------------------------------------------------------------
(14) (15) (16) (17) (18) (19) (20) (21)
Direct and Direct and Direct and Direct and Direct and
Assumed Ceded Assumed Ceded Assumed Ceded Assumed Ceded Assumed Ceded
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. 2,898 1,329 26 17 0 0 0 0 153 0
2. 135 51 432 8 0 0 30 6 34 0
3. 55 15 641 10 0 0 32 0 23 0
4. 540 49 995 7 0 0 49 2 17 0
5. 16 1 956 8 0 0 106 8 23 0
6. 146 12 948 13 0 0 96 9 45 0
7. 166 14 989 12 0 0 66 6 51 0
8. 108 2 1,061 13 0 0 166 12 40 0
9. 285 1 1,119 15 0 0 181 15 57 0
10. 210 4 1,079 14 0 0 226 20 85 0
11. 101 2 1,162 17 0 0 192 20 5 0
- - ------------------------------------------------------------------------------------------------------------------------------------
12. 4,660 1,480 9,408 134 0 0 1,144 98 533 0
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
===============================================
(24) (25) (26)
Number of
Total Net Claims
Salvage and Losses and Outstanding
Subrogation Expenses Direct and
Anticpated Unpaid Assumed
- - -----------------------------------------------
<S> <C> <C> <C>
1. 16 1,731 20
2. 5 566 6
3. 6 726 4
4. 16 1,543 3
5. 9 1,084 4
6. 11 1,201 8
7. 12 1,240 9
8. 12 1,348 7
9. 14 1,611 10
10. 13 1,562 15
11. 13 1,421 1
- - -----------------------------------------------
12. 127 14,033 87
- - -----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
====================================================================================================================================
Loss and Loss Expenses Percentage Nontabular (35)
Total Losses and Loss Expenses Incurred (Incurred/Premiums Earned) Discount
-----------------------------------------------------------------------------------------------------
Inter-Company
(27) (28) (29) (30) (31) (32) (33) (34) Pooling
Direct and Direct and Loss Participation
Assumed Ceded Net Assumed Ceded Net Loss Expense Percentage
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. XXX XXX XXX XXX XXX XXX 0 0 XXX
2. 6,189 2,795 3,394 38.5 41.8 36.1 0 0 58.9
3. 5,742 1,815 3,927 37.5 30.8 41.7 0 0 66.9
4. 4,894 583 4,311 39.4 18.2 46.8 0 0 89.7
5. 2,379 142 2,237 29.0 14.3 31.0 0 0 91.5
6. 2,687 161 2,526 43.2 38.2 43.6 0 0 91.5
7. 3,435 214 3,221 75.0 81.7 74.5 0 0 95.7
8. 1,575 35 1,540 40.0 17.2 41.3 0 0 100.0
9. 1,891 31 1,860 59.2 59.6 59.2 0 0 100.0
10. 1,710 41 1,729 75.4 113.9 74.8 0 0 100.0
11. 1,460 39 1,421 81.2 30.7 85.0 0 0 100.0
- - ------------------------------------------------------------------------------------------------------------------------------------
12. XXX XXX XXX XXX XXX XXX 0 0 XXX
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
==============================
NET BALANCE SHEET
RESERVES AFTER DISCOUNT
-------------------------
(36) (37)
Losses Loss Expenses
Unpaid Unpaid
- - ------------------------------
<S> <C> <C>
1. 1,578 153
2. 508 58
3. 671 55
4. 1,479 64
5. 963 121
6. 1,069 132
7. 1,129 111
8. 1,154 194
9. 1,388 223
10. 1,271 291
11. 1,244 177
- - ------------------------------
12. 12,454 1,579
- - ------------------------------
</TABLE>
<PAGE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE NEW YORK MARINE AND GENERAL
INSURANCE COMPANY (COMBINED)
SCHEDULE P - PART 1I - SPECIAL PROPERTY (FIRE, ALLIED
LINES, INLAND MARINE, EARTHQUAKE, BURGLARY & THEFT)
($000 omitted)
<TABLE>
<CAPTION>
====================================================================================================================================
Premiums Earned Loss and Loss Expense Payments
(1) -------------------------------------------------------------------------------------------------------------------
Years in (2) (3) (4) Loss Payments Allocated Loss Unallocated Loss
Which Expense Payments Expense Payments
Premiums ------------------------------------------------------------------------------
Were Earned (5) (6) (7) (8) (9) (10)
and Losses Direct Net Direct And Direct And Direct And
Were Incurred Assumed Ceded (Cols. 2-3) Assumed Ceded Assumed Ceded Assumed Ceded
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior XXX XXX XXX 3,339 3,059 295 272 0 (9)
2. 1997 1,594 979 615 19 (1) 18 (1) 25 3
3. 1998 1,144 1,539 (395) 18 9 0 0 2 1
- - ------------------------------------------------------------------------------------------------------------------------------------
4. TOTALS XXX XXX XXX 3,376 3,067 313 271 27 (5)
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
===================================================================
(1) (13)
Years in --------------------------
Which (11) (12) Number of
Premiums Total Claims
Were Earned Salvage and Paid (Cols. Reported
and Losses Subrogation 5-6+7-8 Direct and
Were Incurred Received -9-10) Assumed
- - -------------------------------------------------------------------
<S> <C> <C> <C>
1. Prior 194 312 XXX
2. 1997 5 61 XXX
3. 1998 2 10 XXX
- - -------------------------------------------------------------------
4. TOTALS 201 383 XXX
- - -------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
====================================================================================================================================
Losses Unpaid Allocated Loss Expenses Unpaid Unallocated Loss Expenses Unpaid
-----------------------------------------------------------------------------------------------------------------------------
Case Basis Bulk + IBNR Case Basis Bulk + IBNR (22) (23)
--------------------------------------------------------------------------------------------------
(14) (15) (16) (17) (18) (19) (20) (21)
Direct and Direct and Direct and Direct and Direct and
Assumed Ceded Assumed Ceded Assumed Ceded Assumed Ceded Assumed Ceded
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. 12,536 9,600 4,753 2,923 0 0 1,212 558 170 0
2. 232 122 200 75 0 0 39 13 1 0
3. 28 14 133 46 0 0 80 24 1 0
- - ------------------------------------------------------------------------------------------------------------------------------------
4. 12,796 9,736 5,086 3,044 0 0 1,331 595 172 0
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
==============================================
(24) (25) (26)
Number of
Total Net Claims
Salvage and Losses and Outstanding
Subrogation Expenses Direct and
Anticpated Unpaid Assumed
- - ----------------------------------------------
<S> <C> <C> <C>
1. 166 5,590 661
2. 8 262 3
3. 3 158 5
- - ----------------------------------------------
4. 177 6,010 669
- - -----------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
Loss and Loss Expenses Percentage Nontabular (35)
Total Losses and Loss Expenses Incurred (Incurred/Premiums Earned) Discount
-----------------------------------------------------------------------------------------------------
Inter-Company
(27) (28) (29) (30) (31) (32) (33) (34) Pooling
Direct and Direct and Loss Participation
Assumed Ceded Net Assumed Ceded Net Loss Expense Percentage
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. XXX XXX XXX XXX XXX XXX 0 0 XXX
2. 534 211 323 33.5 21.6 52.5 0 0 100.0
3. 262 94 168 22.9 6.1 (42.5) 0 0 100.0
- - ------------------------------------------------------------------------------------------------------------------------------------
4. XXX XXX XXX XXX XXX XXX 0 0 XXX
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
==============================
Net Balance Sheet
Reserves After Discount
-------------------------
(36) (37)
Losses Loss Expenses
Unpaid Unpaid
- - ------------------------------
<S> <C> <C>
1. 4,766 824
2. 235 27
3. 101 57
- - ------------------------------
4. 5,102 908
- - ------------------------------
</TABLE>
81
<PAGE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE NEW YORK MARINE AND GENERAL
INSURANCE COMPANY (COMBINED)
SCHEDULE P - PART 1J - AUTO PHYSICAL DAMAGE
($000 omitted)
<TABLE>
<CAPTION>
====================================================================================================================================
Premiums Earned Loss and Loss Expense Payments
(1) ----------------------------------------------------------------------------------------------------------------
Years in Allocated Loss Unallocated Loss
Which (2) (3) (4) Loss Payments Expense Payments Expense Payments
Premiums ---------------------------------------------------------------------------
Were Earned (5) (6) (7) (8) (9) (10)
and Losses Direct and Net Direct and Direct and Direct and
Were Incurred Assumed Ceded (Cols. 2-3) Assumed Ceded Assumed Ceded Assumed Ceded
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior XXX XXX XXX 0 0 0 0 0 0
2. 1997 0 0 0 0 0 0 0 0 0
3. 1998 0 0 0 0 0 0 0 0 0
- - ------------------------------------------------------------------------------------------------------------------------------------
4. TOTALS XXX XXX XXX 0 0 0 0 0 0
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
===================================================================
(1) (13)
Years in --------------------------
Which (11) (12) Number of
Premiums Total Claims
Were Earned Salvage and Paid (Cols. Reported
and Losses Subrogation 5-6+7-8 Direct and
Were Incurred Received -9-10) Assumed
- - -------------------------------------------------------------------
<S> <C> <C> <C>
1. Prior 0 0 XXX
2. 1997 0 0 0
3. 1998 0 0 0
- - -------------------------------------------------------------------
4. TOTALS 0 0 XXX
- - -------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
====================================================================================================================================
Losses Unpaid Allocated Loss Expenses Unpaid Unallocated Loss Expenses Unpaid
-----------------------------------------------------------------------------------------------------------------------------
Case Basis Bulk + IBNR Case Basis Bulk + IBNR (22) (23)
--------------------------------------------------------------------------------------------------
(14) (15) (16) (17) (18) (19) (20) (21)
Direct and Direct and Direct and Direct and Direct and
Assumed Ceded Assumed Ceded Assumed Ceded Assumed Ceded Assumed Ceded
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. 0 0 0 0 0 0 0 0 0 0
2. 0 0 0 0 0 0 0 0 0 0
3. 0 0 0 0 0 0 0 0 0 0
- - ------------------------------------------------------------------------------------------------------------------------------------
4. 0 0 0 0 0 0 0 0 0 0
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
==============================================
(24) (25) (26)
Number of
Total Net Claims
Salvage and Losses and Outstanding
Subrogation Expenses Direct and
Anticpated Unpaid Assumed
- - ----------------------------------------------
<S> <C> <C> <C>
1. 0 0 0
2. 0 0 0
3. 0 0 0
- - ----------------------------------------------
4. 0 0 0
- - -----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
====================================================================================================================================
Loss and Loss Expenses Percentage Nontabular (35)
Total Losses and Loss Expenses Incurred (Incurred/Premiums Earned) Discount
-----------------------------------------------------------------------------------------------------
Inter-Company
(27) (28) (29) (30) (31) (32) (33) (34) Pooling
Direct and Direct and Loss Participation
Assumed Ceded Net Assumed Ceded Net Loss Expense Percentage
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. XXX XXX XXX XXX XXX XXX 0 0 XXX
2. 0 0 0 0.0 0.0 0.0 0 0 0.0
3. 0 0 0 0.0 0.0 0.0 0 0 0.0
- - ------------------------------------------------------------------------------------------------------------------------------------
4. XXX XXX XXX XXX XXX XXX 0 0 XXX
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
==============================
Net Balance Sheet
Reserves After Discount
-------------------------
(36) (37)
Losses Loss Expenses
Unpaid Unpaid
- - ------------------------------
<S> <C> <C>
1. 0 0
2. 0 0
3. 0 0
- - ------------------------------
4. 0 0
- - ------------------------------
</TABLE>
82
<PAGE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE NEW YORK MARINE AND GENERAL
INSURANCE COMPANY (COMBINED)
SCHEDULE P - PART 1N - REINSURANCE A
Nonproportional Assumed Property ($000 omitted)
<TABLE>
<CAPTION>
====================================================================================================================================
Premiums Earned Loss and Loss Expense Payments
(1) -------------------------------------------------------------------------------------------------------------------
Years in (2) (3) (4) Loss Payments Allocated Loss Unallocated Loss
Which Expense Payments Expense Payments
Premiums ------------------------------------------------------------------------------
Were Earned (5) (6) (7) (8) (9) (10)
and Losses Direct Net Direct And Direct And Direct And
Were Incurred Assumed Ceded (Cols. 2-3) Assumed Ceded Assumed Ceded Assumed Ceded
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior XXX XXX XXX 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0
3. 1990 0 0 0 0 0 0 0 0 0
4. 1991 0 0 0 0 0 0 0 0 0
5. 1992 0 0 0 0 0 0 0 0 0
6. 1993 0 0 0 0 0 0 0 0 0
7. 1994 25 0 25 143 0 0 0 4 0
8. 1995 110 1 109 0 0 0 0 0 0
9. 1996 282 2 280 0 0 0 0 0 (1)
10. 1997 44 0 44 0 0 0 0 0 0
11. 1998 237 (1) 238 0 0 0 0 0 0
- - ------------------------------------------------------------------------------------------------------------------------------------
12. TOTALS XXX XXX XXX 143 0 0 0 4 (1)
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
=======================================================================
(1) (13)
Years in ----------------------------
Which (11) (12) Number of
Premiums Total Claims
Were Earned Salvage and Paid (Cols. Reported
and Losses Subrogation 5-6 Direct and
Were Incurred Received +7-8+9-10) Assumed
- - -----------------------------------------------------------------------
<S> <C> <C> <C>
1. Prior 0 0 XXX
2. 1989 0 0 XXX
3. 1990 0 0 XXX
4. 1991 0 0 XXX
5. 1992 0 0 XXX
6. 1993 0 0 XXX
7. 1994 0 147 XXX
8. 1995 0 0 XXX
9. 1996 0 1 XXX
10. 1997 0 0 XXX
11. 1998 0 0 XXX
- - -----------------------------------------------------------------------
12. TOTALS 0 148 XXX
- - -----------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
====================================================================================================================================
Losses Unpaid Allocated Loss Expenses Unpaid Unallocated Loss Expenses Unpaid
-----------------------------------------------------------------------------------------------------------------------------
Case Basis Bulk + IBNR Case Basis Bulk + IBNR (22) (23)
--------------------------------------------------------------------------------------------------
(14) (15) (16) (17) (18) (19) (20) (21)
Direct and Direct and Direct and Direct and Direct and
Assumed Ceded Assumed Ceded Assumed Ceded Assumed Ceded Assumed Ceded
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. 0 0 0 0 0 0 0 0 0 0
2. 0 0 0 0 0 0 0 0 0 0
3. 0 0 0 0 0 0 0 0 0 0
4. 0 0 0 0 0 0 0 0 0 0
5. 0 0 0 0 0 0 0 0 0 0
6. 0 0 0 0 0 0 0 0 0 0
7. 0 0 0 0 0 0 0 0 0 0
8. 0 0 0 0 0 0 0 0 0 0
9. 0 0 0 0 0 0 0 0 0 0
10. 0 0 0 0 0 0 0 0 0 0
11. 0 0 0 0 0 0 0 0 0 0
- - ------------------------------------------------------------------------------------------------------------------------------------
12. 0 0 0 0 0 0 0 0 0 0
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
===============================================
(24) (25) (26)
Number of
Total Net Claims
Salvage and Losses and Outstanding
Subrogation Expenses Direct and
Anticpated Unpaid Assumed
- - -----------------------------------------------
<S> <C> <C> <C>
1. 0 0 XXX
2. 0 0 XXX
3. 0 0 XXX
4. 0 0 XXX
5. 0 0 XXX
6. 0 0 XXX
7. 0 0 XXX
8. 0 0 XXX
9. 0 0 XXX
10. 0 0 XXX
11. 0 0 XXX
- - -----------------------------------------------
12. 0 0 XXX
- - -----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
====================================================================================================================================
Loss and Loss Expenses Percentage Nontabular (35)
Total Losses and Loss Expenses Incurred (Incurred/premiums Earned) Discount
-----------------------------------------------------------------------------------------------------
Inter-Company
(27) (28) (29) (30) (31) (32) (33) (34) Pooling
Direct and Direct and Loss Participation
Assumed Ceded Net Assumed Ceded Net Loss Expense Percentage
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. XXX XXX XXX XXX XXX XXX 0 0 XXX
2. 0 0 0 0.0 0.0 0.0 0 0 0.0
3. 0 0 0 0.0 0.0 0.0 0 0 0.0
4. 0 0 0 0.0 0.0 0.0 0 0 0.0
5. 0 0 0 0.0 0.0 0.0 0 0 0.0
6. 0 0 0 0.0 0.0 0.0 0 0 0.0
7. 147 0 147 588.0 0.0 588.0 0 0 0.0
8. 0 0 0 0.0 0.0 0.0 0 0 100.0
9. 0 (1) 1 0.0 (50.0) 0.0 0 0 100.0
10. 0 0 0 0.0 0.0 0.0 0 0 100.0
11. 0 0 0 0.0 0.0 0.0 0 0 100.0
- - ------------------------------------------------------------------------------------------------------------------------------------
12. XXX XXX XXX XXX XXX XXX 0 0 XXX
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
==============================
Net Balance Sheet
Reserves After Discount
-------------------------
(36) (37)
Losses Loss Expenses
Unpaid Unpaid
- - ------------------------------
<S> <C> <C>
1. 0 0
2. 0 0
3. 0 0
4. 0 0
5. 0 0
6. 0 0
7. 0 0
8. 0 0
9. 0 0
10. 0 0
11. 0 0
- - ------------------------------
12. 0 0
- - ------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE NEW YORK MARINE AND GENERAL INSURANCE COMPANY (COMBINED)
SCHEDULE P -- PART 2A -- HOMEOWNERS/FARMOWNERS
====================================================================================================================================
(1) INCURRED LOSSES AND ALLOCATED EXPENSES AT YEAR END ($000 OMITTED) Development
Years in --------------------------------------------------------------------------------------- ------------------
Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13)
Losses Were
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 One Year Two Year
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 N O N E 0 0 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0 0 0
8. 1995 X X X X X X X X X X X X X X X X X X 0 0 0 0 0 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 X X X
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 X X X X X X
- - ------------------------------------------------------------------------------------------------------------------------------------
12. Totals 0 0
--------------------------
<CAPTION>
SCHEDULE P -- PART 2B
PRIVATE PASSENGER AUTO LIABILITY/MEDICAL
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 N O N E 0 0 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0 0 0
8. 1995 X X X X X X X X X X X X X X X X X X 0 0 0 0 0 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 X X X
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 X X X X X X
- - ------------------------------------------------------------------------------------------------------------------------------------
12. Totals 0 0
--------------------------
<CAPTION>
SCHEDULE P -- PART 2C
COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 0 0 0 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0 0 0
8. 1995 X X X X X X X X X X X X X X X X X X 37 24 9 9 0 (15)
9. 1996 X X X X X X X X X X X X X X X X X X X X X 2 2 2 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 X X X
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 X X X X X X
- - ------------------------------------------------------------------------------------------------------------------------------------
12. Totals 0 (15)
--------------------------
<CAPTION>
SCHEDULE P -- PART 2D -- WORKER'S COMPENSATION
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 N O N E 0 0 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0 0 0
8. 1995 X X X X X X X X X X X X X X X X X X 0 0 0 0 0 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 X X X
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 X X X X X X
- - ------------------------------------------------------------------------------------------------------------------------------------
12. Totals 0 0
--------------------------
<CAPTION>
SCHEDULE P -- PART 2E -- COMMERCIAL MULTIPLE PERIL
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 N O N E 0 0 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0 0 0
8. 1995 X X X X X X X X X X X X X X X X X X 0 0 0 0 0 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 X X X
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 X X X X X X
- - ------------------------------------------------------------------------------------------------------------------------------------
12. Totals 0 0
--------------------------
</TABLE>
87
<PAGE>
<TABLE>
<CAPTION>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE NEW YORK MARINE AND GENERAL INSURANCE COMPANY (COMBINED)
SCHEDULE P -- PART 2F -- SECTION 1
MEDICAL MALPRACTICE -- OCCURRENCE
====================================================================================================================================
(1) INCURRED PAID LOSSES AND ALLOCATED EXPENSES AT YEAR END ($000 OMITTED) DEVELOPMENT
Years in --------------------------------------------------------------------------------------- ------------------
Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13)
Losses Were
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 One Year Two Year
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 N O N E 0 0 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0 0 0
8. 1995 X X X X X X X X X X X X X X X X X X 0 0 0 0 0 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 X X X
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 X X X X X X
- - ------------------------------------------------------------------------------------------------------------------------------------
12. Totals 0 0
--------------------------
<CAPTION>
SCHEDULE P -- PART 2F -- SECTION 2
MEDICAL MALPRACTICE -- CLAIMS-MADE
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 N O N E 0 0 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0 0 0
8. 1995 X X X X X X X X X X X X X X X X X X 0 0 0 0 0 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 X X X
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 X X X X X X
- - ------------------------------------------------------------------------------------------------------------------------------------
12. Totals 0 0
--------------------------
<CAPTION>
SCHEDULE P -- PART 2G -- SPECIAL LIABILITY
(OCEAN MARINE, AIRCRAFT (ALL PERILS),
BOILER AND MACHINERY)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 59,798 56,993 56,172 52,668 49,047 43,359 41,206 40,426 39,186 39,134 (52) (1,292)
2. 1989 27,432 28,864 32,921 33,399 34,410 33,157 33,756 33,640 33,088 33,407 319 (233)
3. 1990 X X X 23,560 22,663 25,224 25,219 25,952 24,621 24,769 23,959 24,313 354 (456)
4. 1991 X X X X X X 20,396 20,130 21,867 19,201 17,859 17,226 16,947 16,451 (496) (775)
5. 1992 X X X X X X X X X 24,000 23,447 21,007 20,515 20,509 20,252 20,289 37 (220)
6. 1993 X X X X X X X X X X X X 34,720 32,498 32,593 30,094 28,629 28,293 (336) (1,801)
7. 1994 X X X X X X X X X X X X X X X 45,604 44,788 41,388 37,742 35,458 (2,284) (5,930)
8. 1995 X X X X X X X X X X X X X X X X X X 56,863 48,119 40,008 36,669 (3,339) (11,450)
9. 1996 X X X X X X X X X X X X X X X X X X X X X 63,413 58,460 53,284 (5,176) (10,129)
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 63,153 54,159 (8,994) X X X
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 40,952 X X X X X X
- - ------------------------------------------------------------------------------------------------------------------------------------
12. Totals (19,967) (32,286)
--------------------------
<CAPTION>
SCHEDULE P -- PART 2H -- SECTION 1
OTHER LIABILITY -- OCCURRENCE
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 15,441 16,958 16,643 16,789 17,458 18,786 19,447 22,580 23,351 25,054 1,703 2,474
2. 1989 13,135 12,692 12,877 13,859 14,138 14,888 14,792 14,000 12,916 12,815 (101) (1,185)
3. 1990 X X X 13,267 13,545 14,918 16,148 17,082 16,932 16,848 16,926 17,138 212 290
4. 1991 X X X X X X 15,891 17,084 18,229 21,968 23,002 23,999 23,863 22,625 (1,238) (1,374)
5. 1992 X X X X X X X X X 14,934 13,605 13,214 13,269 14,177 13,239 13,574 335 (603)
6. 1993 X X X X X X X X X X X X 10,653 9,823 9,759 10,811 10,805 11,912 1,107 1,101
7. 1994 X X X X X X X X X X X X X X X 6,665 6,850 8,053 8,095 8,835 740 782
8. 1995 X X X X X X X X X X X X X X X X X X 4,956 4,470 4,369 5,568 1,199 1,098
9. 1996 X X X X X X X X X X X X X X X X X X X X X 3,093 2,813 2,809 (4) (284)
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 2,664 2,230 (434) X X X
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 2,112 X X X X X X
- - ------------------------------------------------------------------------------------------------------------------------------------
12. Totals 3,519 2,299
--------------------------
<CAPTION>
SCHEDULE P -- PART 2H -- SECTION 2
OTHER LIABILITY -- CLAIMS-MADE
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 10,738 7,221 6,039 4,895 4,044 4,258 4,045 3,846 4,456 4,140 (316) 294
2. 1989 7,069 5,706 5,760 5,683 4,556 3,979 3,857 3,637 3,482 3,355 (127) (282)
3. 1990 X X X 7,126 5,868 4,697 3,768 4,788 4,558 4,221 4,198 3,897 (301) (324)
4. 1991 X X X X X X 6,302 4,570 4,179 3,734 3,726 4,194 4,040 4,289 249 95
5. 1992 X X X X X X X X X 5,206 4,867 4,423 3,536 2,730 2,434 2,211 (223) (519)
6. 1993 X X X X X X X X X X X X 3,314 3,578 3,366 3,024 2,875 2,455 (420) (569)
7. 1994 X X X X X X X X X X X X X X X 2,877 3,530 3,979 3,547 3,150 (397) (829)
8. 1995 X X X X X X X X X X X X X X X X X X 2,820 2,176 1,790 1,480 (310) (696)
9. 1996 X X X X X X X X X X X X X X X X X X X X X 2,591 1,994 1,792 (202) (799)
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 1,913 1,612 (301) X X X
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 1,416 X X X X X X
- - ------------------------------------------------------------------------------------------------------------------------------------
12. Totals (2,348) (3,629)
--------------------------
</TABLE>
93
<PAGE>
<TABLE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE NEW YORK MARINE AND GENERAL INSURANCE COMPANY (COMBINED)
SCHEDULE P -- PART 2I -- SPECIAL PROPERTY (FIRE,
ALLIED LINES, INLAND MARINE, EARTHQUAKE,
GLASS, BURGLARY, AND THEFT)
<CAPTION>
====================================================================================================================================
(1) INCURRED PAID LOSSES AND ALLOCATED EXPENSES REPORTED AT YEAR END ($000 OMITTED) DEVELOPMENT
Years in --------------------------------------------------------------------------------------- ------------------
Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13)
Losses Were
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 One Year Two Year
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior X X X X X X X X X X X X X X X X X X X X X 9,219 8,132 6,209 (1,923) (3,010)
2. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 309 300 (9) X X X
3. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 166 X X X X X X
- - ------------------------------------------------------------------------------------------------------------------------------------
4. Totals (1,932) (3,010)
--------------------------
<CAPTION>
SCHEDULE P -- PART 2J -- AUTO PHYSICAL DAMAGE
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0
2. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 X X X
3. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 X X X X X X
- - ------------------------------------------------------------------------------------------------------------------------------------
4. Totals 0 0
--------------------------
<CAPTION>
SCHEDULE P -- PART 2K - FIDELITY, SURETY
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0
2. 1997 X X X X X X X X X X X X X X X N O N E X X X X X X 0 0 0 X X X
3. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 X X X X X X
- - ------------------------------------------------------------------------------------------------------------------------------------
4. Totals 0 0
--------------------------
<CAPTION>
SCHEDULE P -- PART 2L -- OTHER
(INCLUDING CREDIT, ACCIDENT AND HEALTH)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0
2. 1997 X X X X X X X X X X X X X X X N O N E X X X X X X 0 0 0 X X X
3. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 X X X X X X
- - ------------------------------------------------------------------------------------------------------------------------------------
4. Totals 0 0
--------------------------
<CAPTION>
SCHEDULE P -- PART 2M -- INTERNATIONAL
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 N O N E 0 0 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0 0 0
8. 1995 X X X X X X X X X X X X X X X X X X 0 0 0 0 0 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 X X X
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 X X X X X X
- - ------------------------------------------------------------------------------------------------------------------------------------
12. Totals 0 0
--------------------------
</TABLE>
94
<PAGE>
<TABLE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE NEW YORK MARINE AND GENERAL INSURANCE COMPANY (COMBINED)
SCHEDULE P -- PART 2N -- REINSURANCE A
Nonproportional Assumed Property
<CAPTION>
====================================================================================================================================
(1) INCURRED LOSSES AND ALLOCATED EXPENSES AT YEAR END ($000 OMITTED) DEVELOPMENT
Years in --------------------------------------------------------------------------------------- ------------------
Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13)
Losses Were
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 One Year Two Year
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 0 0 0 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 143 143 143
8. 1995 X X X X X X X X X X X X X X X X X X 0 0 0 0 0 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 X X X
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 X X X X X X
- - ------------------------------------------------------------------------------------------------------------------------------------
12. Totals 143 143
--------------------------
<CAPTION>
SCHEDULE P -- PART 2O -- REINSURANCE B
Nonproportional Assumed Liability
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 0 0 0 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 N O N E 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0 0 0
8. 1995 X X X X X X X X X X X X X X X X X X 0 0 0 0 0 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 X X X
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 X X X X X X
- - ------------------------------------------------------------------------------------------------------------------------------------
12. Totals 0 0
--------------------------
<CAPTION>
SCHEDULE P -- PART 2P -- REINSURANCE C
Nonproportional Assumed Financial Lines
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 0 0 0 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 N O N E 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0 0 0
8. 1995 X X X X X X X X X X X X X X X X X X 0 0 0 0 0 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 X X X
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 X X X X X X
- - ------------------------------------------------------------------------------------------------------------------------------------
12. Totals 0 0
--------------------------
</TABLE>
95
<PAGE>
<TABLE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE NEW YORK MARINE AND GENERAL INSURANCE COMPANY (COMBINED)
SCHEDULE P -- PART 3A -- HOMEOWNERS/FARMOWNERS
<CAPTION>
====================================================================================================================================
CUMULATIVE PAID LOSSES AND ALLOCATED EXPENSES AT YEAR END ($000 OMITTED) (12) (13)
(1) --------------------------------------------------------------------------------------- --------------------------
Years in Number of Number of
Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) Claims Claims
Losses Were Closed With Without
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Loss Payment Loss Payment
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 0 N O N E 0 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0 0 0
8. 1995 X X X X X X X X X X X X X X X X X X 0 0 0 0 0 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 0
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SCHEDULE P -- PART 3B
PRIVATE PASSENGER AUTO LIABILITY/MEDICAL
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 0 N O N E 0 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0 0 0
8. 1995 X X X X X X X X X X X X X X X X X X 0 0 0 0 0 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 0
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SCHEDULE P -- PART 3C
COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 0 0 0 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0 0 0
8. 1995 X X X X X X X X X X X X X X X X X X 9 9 9 9 3 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 2 2 2 1 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 0
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SCHEDULE P -- PART 3D -- WORKER'S COMPENSATION
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 0 N O N E 0 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0 0 0
8. 1995 X X X X X X X X X X X X X X X X X X 0 0 0 0 0 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 0
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SCHEDULE P -- PART 3E -- COMMERCIAL MULTIPLE PERIL
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 0 N O N E 0 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0 0 0
8. 1995 X X X X X X X X X X X X X X X X X X 0 0 0 0 0 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 0
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
97
<PAGE>
<TABLE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE NEW YORK MARINE AND GENERAL INSURANCE COMPANY (COMBINED)
SCHEDULE P -- PART 3F -- SECTION 1
MEDICAL MALPRACTICE -- OCCURRENCE
<CAPTION>
====================================================================================================================================
CUMULATIVE PAID LOSSES AND ALLOCATED EXPENSES AT YEAR END ($000 OMITTED) (12) (13)
(1) ---------------------------------------------------------------------------------------
Years in Number of Number of
Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) Claims Claims
Losses Were Closed With Without
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Loss Payment Loss Payment
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 0 N O N E 0 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0 0 0
8. 1995 X X X X X X X X X X X X X X X X X X 0 0 0 0 0 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 0
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SCHEDULE P -- PART 3F -- SECTION 2
MEDICAL MALPRACTICE -- CLAIMS -- MADE
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 0 N O N E 0 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0 0 0
8. 1995 X X X X X X X X X X X X X X X X X X 0 0 0 0 0 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 0
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SCHEDULE P -- PART 3G -- SPECIAL LIABILITY
(OCEAN MARINE, AIRCRAFT (ALL PERILS),
BOILER AND MACHINERY)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior X X X 9,922 19,724 22,154 26,202 30,386 33,753 35,016 35,367 35,582 X X X X X X
2. 1989 4,687 13,043 18,129 21,312 25,434 27,928 29,299 30,676 31,146 31,549 X X X X X X
3. 1990 X X X 1,188 6,363 10,243 14,125 18,219 19,797 20,804 21,235 21,588 X X X X X X
4. 1991 X X X X X X 1,933 4,862 9,849 11,471 12,863 14,249 14,700 14,962 X X X X X X
5. 1992 X X X X X X X X X 1,781 6,642 9,583 12,285 14,372 15,440 17,550 X X X X X X
6. 1993 X X X X X X X X X X X X 4,093 12,546 17,525 20,223 22,675 23,719 X X X X X X
7. 1994 X X X X X X X X X X X X X X X 7,897 16,212 20,381 23,521 25,370 X X X X X X
8. 1995 X X X X X X X X X X X X X X X X X X 6,667 13,978 18,206 21,602 X X X X X X
9. 1996 X X X X X X X X X X X X X X X X X X X X X 13,287 25,299 31,896 X X X X X X
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 16,834 27,630 X X X X X X
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 7,581 X X X X X X
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SCHEDULE P -- PART 3H -- SECTION 1
OTHER LIABILITY -- OCCURRENCE
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 612 3,137 2,982 5,282 8,098 10,842 12,250 13,827 15,994 0 0
2. 1989 39 222 1,101 1,733 4,631 7,689 9,440 10,555 11,061 11,230 457 285
3. 1990 X X X 41 332 313 3,833 6,630 8,410 10,244 13,238 14,304 373 385
4. 1991 X X X X X X 56 (215) 2,985 7,392 10,285 14,191 16,151 17,761 377 382
5. 1992 X X X X X X X X X (100) 712 1,282 3,597 5,827 6,845 8,128 221 266
6. 1993 X X X X X X X X X X X X 20 169 841 2,637 4,863 6,688 143 97
7. 1994 X X X X X X X X X X X X X X X 42 175 1,654 2,620 3,653 84 87
8. 1995 X X X X X X X X X X X X X X X X X X 438 674 1,026 2,044 58 18
9. 1996 X X X X X X X X X X X X X X X X X X X X X 18 102 366 23 25
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 44 139 11 11
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 33 6 9
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SCHEDULE P -- PART 3H -- SECTION 2
OTHER LIABILITY -- CLAIMS MADE
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 187 882 1,657 2,013 2,234 2,198 2,494 2,536 2,562 0 0
2. 1989 0 45 573 2,094 2,486 2,764 2,788 2,794 2,795 2,823 43 63
3. 1990 X X X 13 81 401 920 1,058 1,762 2,502 2,749 3,194 43 107
4. 1991 X X X X X X 4 175 621 1,259 1,397 1,654 2,382 2,763 36 74
5. 1992 X X X X X X X X X 55 349 974 1,016 1,052 1,099 1,150 25 42
6. 1993 X X X X X X X X X X X X 9 456 997 1,095 1,301 1,299 34 17
7. 1994 X X X X X X X X X X X X X X X 8 513 1,609 1,803 1,961 16 16
8. 1995 X X X X X X X X X X X X X X X X X X 30 80 130 172 10 33
9. 1996 X X X X X X X X X X X X X X X X X X X X X 125 196 238 7 10
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 1 135 2 11
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 1
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
98
<PAGE>
<TABLE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE NEW YORK MARINE AND GENERAL INSURANCE COMPANY (COMBINED)
SCHEDULE P -- PART 3I -- SPECIAL PROPERTY (FIRE,
ALLIED LINES, INLAND MARINE, EARTHQUAKE,
GLASS, BURGLARY, AND THEFT)
<CAPTION>
====================================================================================================================================
CUMULATIVE PAID LOSSES AND ALLOCATED EXPENSES AT YEAR END ($000 OMITTED) (12) (13)
(1) --------------------------------------------------------------------------------------- --------------------------
Years in Number of Number of
Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) Claims Claims
Losses Were Closed With Without
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Loss Payment Loss Payment
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior X X X X X X X X X X X X X X X X X X X X X 0 0 0 485 789 X X X X X X
2. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 34 39 X X X X X X
3. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 9 X X X X X X
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SCHEDULE P -- PART 3J -- AUTO PHYSICAL DAMAGE
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0 0 0
2. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0 0
3. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SCHEDULE P -- PART 3K - FIDELITY/SURETY
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior X X X X X X X X X X X X X X X X X X X X X 0 0 0 0 0 X X X X X X
2. 1997 X X X X X X X X X X X X X X X N O N E X X X X X X 0 0 X X X X X X
3. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 X X X X X X
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SCHEDULE P -- PART 3L -- OTHER
(INCLUDING CREDIT, ACCIDENT AND HEALTH)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior X X X X X X X X X X X X X X X X X X X X X 0 0 0 X X X X X X
2. 1997 X X X X X X X X X X X X X X X N O N E X X X X X X 0 0 X X X X X X
3. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 X X X X X X
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SCHEDULE P -- PART 3M -- INTERNATIONAL
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0 0 X X X X X X
2. 1989 0 0 0 0 0 0 0 0 0 0 X X X X X X
3. 1990 X X X 0 0 0 0 0 0 0 0 0 X X X X X X
4. 1991 X X X X X X 0 0 0 0 0 0 0 0 X X X X X X
5. 1992 X X X X X X X X X 0 0 N O N E 0 0 0 0 X X X X X X
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0 X X X X X X
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0 X X X X X X
8. 1995 X X X X X X X X X X X X X X X X X X 0 0 0 0 X X X X X X
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0 X X X X X X
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X X X
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 X X X X X X
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
99
<PAGE>
<TABLE>
ANNUAL STATEMENT FOR THE YEAR 1997 OF THE NEW YORK MARINE AND GENERAL INSURANCE COMPANY (COMBINED)
SCHEDULE P -- PART 3N -- REINSURANCE A
Nonproportional Assumed Property
<CAPTION>
====================================================================================================================================
CUMULATIVE PAID LOSSES AND ALLOCATED EXPENSES AT YEAR END ($000 OMITTED) (12) (13)
(1) --------------------------------------------------------------------------------------- --------------------------
Years in Number of Number of
Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) Claims Claims
Losses Were Closed With Closed Without
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Loss Payment Loss Payment
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0 0 X X X X X X
2. 1989 0 0 0 0 0 0 0 0 0 0 X X X X X X
3. 1990 X X X 0 0 0 0 0 0 0 0 0 X X X X X X
4. 1991 X X X X X X 0 0 0 0 0 0 0 0 X X X X X X
5. 1992 X X X X X X X X X 0 0 0 0 0 0 0 X X X X X X
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0 X X X X X X
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 143 X X X X X X
8. 1995 X X X X X X X X X X X X X X X X X X 0 0 0 0 X X X X X X
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0 X X X X X X
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X X X
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 X X X X X X
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SCHEDULE P -- PART 3O -- REINSURANCE B
Nonproportional Assumed Liability
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0 0 X X X X X X
2. 1989 0 0 0 0 0 0 0 0 0 0 X X X X X X
3. 1990 X X X 0 0 0 0 0 0 0 0 0 X X X X X X
4. 1991 X X X X X X 0 0 0 0 0 0 0 0 X X X X X X
5. 1992 X X X X X X X X X 0 0 N O N E 0 0 0 0 X X X X X X
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0 X X X X X X
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0 X X X X X X
8. 1995 X X X X X X X X X X X X X X X X X X 0 0 0 0 X X X X X X
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0 X X X X X X
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X X X
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 X X X X X X
- - ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SCHEDULE P -- PART 3P -- REINSURANCE C
Nonproportional Assumed Financial Lines
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0 0 X X X X X X
2. 1989 0 0 0 0 0 0 0 0 0 0 X X X X X X
3. 1990 X X X 0 0 0 0 0 0 0 0 0 X X X X X X
4. 1991 X X X X X X 0 0 0 0 0 0 0 0 X X X X X X
5. 1992 X X X X X X X X X 0 0 N O N E 0 0 0 0 X X X X X X
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0 X X X X X X
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0 X X X X X X
8. 1995 X X X X X X X X X X X X X X X X X X 0 0 0 0 X X X X X X
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0 X X X X X X
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0 X X X X X X
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 X X X X X X
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
100
<PAGE>
<TABLE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE NEW YORK MARINE AND GENERAL INSURANCE COMPANY (COMBINED)
SCHEDULE P -- PART 4A -- HOMEOWNERS/FARMOWNERS
<CAPTION>
====================================================================================================================
(1) BULK AND INCURRED BUT REPORTED RESERVES ON LOSSES AND ALLOCATED EXPENSES AT YEAR END ($000 OMITTED)
Years in ----------------------------------------------------------------------------------------------------
Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
Losses Were
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- - --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 N O N E 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0
8. 1995 X X X X X X X X X X X X X X X X X X 0 0 0 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0
- - --------------------------------------------------------------------------------------------------------------------
<CAPTION>
SCHEDULE P -- PART 4B
PRIVATE PASSENGER AUTO LIABILITIES/MEDICAL
=======================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 N O N E 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0
8. 1995 X X X X X X X X X X X X X X X X X X 0 0 0 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0
- - -------------------------------------------------------------------------------------------------------
<CAPTION>
SCHEDULE P -- PART 4C
COMMERCIAL AUTO/TRUCK LIABILITIES/MEDICAL
=======================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prio 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 0 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0
8. 1995 X X X X X X X X X X X X X X X X X X 25 15 0 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0
- - -------------------------------------------------------------------------------------------------------
<CAPTION>
SCHEDULE P -- PART 4D -- WORKER'S COMPENSATION
=======================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 N O N E 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0
8. 1995 X X X X X X X X X X X X X X X X X X 0 0 0 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0
- - -------------------------------------------------------------------------------------------------------
<CAPTION>
SCHEDULE P -- PART 4E -- COMMERCIAL MULTIPLE PERIL
=======================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 N O N E 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0
8. 1995 X X X X X X X X X X X X X X X X X X 0 0 0 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0
- - -------------------------------------------------------------------------------------------------------
</TABLE>
102
<PAGE>
<TABLE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE NEW YORK MARINE AND GENERAL INSURANCE COMPANY (COMBINED)
SCHEDULE P -- PART 4F -- SECTION 1
MEDICAL MALPRACTICE -- OCCURRENCE
<CAPTION>
===================================================================================================================
(1) BULK AND INCURRED BUT NOT REPORTED RESERVES ON LOSSES AND ALLOCATED EXPENSES AT YEAR END ($000 OMITTED)
Years in ------------------------------------------------------------------------------------------------------
Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
Losses Were
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- - -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 N O N E 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0
8. 1995 X X X X X X X X X X X X X X X X X X 0 0 0 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0
- - -------------------------------------------------------------------------------------------------------------------
<CAPTION>
SCHEDULE P -- PART 4F -- SECTION 2
MEDICAL MALPRACTICE -- CLAIMS-MADE
=======================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 N O N E 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0
8. 1995 X X X X X X X X X X X X X X X X X X 0 0 0 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0
- - -------------------------------------------------------------------------------------------------------
<CAPTION>
SCHEDULE P -- PART 4G -- SPECIAL LIABILITY
(OCEAN MARINE, AIRCRAFT (ALL PERILS),
BOILER AND MACHINERY)
=======================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 26,471 15,953 10,075 6,222 3,834 1,756 1,301 1,227 1,324 1,033
2. 1989 16,022 8,493 4,840 3,132 2,089 1,349 982 746 645 529
3. 1990 X X X 16,059 8,978 5,512 3,984 2,382 1,707 1,199 1,046 715
4. 1991 X X X X X X 12,294 9,238 6,650 4,330 3,028 2,099 1,480 1,117
5. 1992 X X X X X X X X X 18,114 11,250 7,551 5,441 3,691 2,497 1,918
6. 1993 X X X X X X X X X X X X 23,771 14,120 10,131 7,170 4,959 3,164
7. 1994 X X X X X X X X X X X X X X X 30,864 21,693 14,830 10,634 6,924
8. 1995 X X X X X X X X X X X X X X X X X X 42,478 29,027 18,381 12,444
9. 1996 X X X X X X X X X X X X X X X X X X X X X 39,947 25,862 17,331
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 33,677 21,511
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 20,790
- - -------------------------------------------------------------------------------------------------------
<CAPTION>
SCHEDULE P -- PART 4H -- SECTION 1
OTHER LIABILITY -- OCCURRENCE
=======================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 11,120 10,558 7,101 6,279 4,997 4,026 3,693 4,553 4,874 3,931
2. 1989 11,967 9,390 6,440 5,509 4,456 3,769 3,182 2,290 1,468 1,280
3. 1990 X X X 12,350 10,020 8,344 6,754 5,495 4,734 3,403 2,426 2,009
4. 1991 X X X X X X 14,040 11,686 8,350 7,474 7,263 5,864 4,832 3,637
5. 1992 X X X X X X X X X 13,717 10,061 7,397 6,087 5,415 4,059 3,297
6. 1993 X X X X X X X X X X X X 9,575 6,742 5,858 4,511 3,240 2,939
7. 1994 X X X X X X X X X X X X X X X 6,240 4,489 3,493 2,991 2,555
8. 1995 X X X X X X X X X X X X X X X X X X 3,917 2,609 2,024 2,084
9. 1996 X X X X X X X X X X X X X X X X X X X X X 2,923 2,246 1,812
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 2,409 1,784
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 1,612
- - -------------------------------------------------------------------------------------------------------
<CAPTION>
SCHEDULE P -- PART 4H -- SECTION 2
OTHER LIABILITY -- CLAIMS-MADE
=======================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 9,499 5,015 3,340 1,912 1,221 767 770 577 452 9
2. 1989 6,541 4,189 3,326 1,904 1,317 855 847 621 567 448
3. 1990 X X X 6,600 5,006 2,866 2,002 1,317 1,117 792 759 663
4. 1991 X X X X X X 5,743 3,288 2,627 1,721 1,403 1,029 1,159 1,035
5. 1992 X X X X X X X X X 4,680 3,340 2,400 2,012 1,414 1,272 1,046
6. 1993 X X X X X X X X X X X X 3,213 2,137 1,744 1,350 1,285 1,022
7. 1994 X X X X X X X X X X X X X X X 2,213 1,816 1,491 1,354 1,037
8. 1995 X X X X X X X X X X X X X X X X X X 2,465 1,906 1,547 1,202
9. 1996 X X X X X X X X X X X X X X X X X X X X X 2,090 1,535 1,270
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 1,712 1,271
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 1,317
- - -------------------------------------------------------------------------------------------------------
</TABLE>
103
<PAGE>
<TABLE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE NEW YORK MARINE AND GENERAL INSURANCE COMPANY (COMBINED)
SCHEDULE P -- PART 4I -- SPECIAL PROPERTY (FIRE,
ALLIED LINES, INLAND MARINE, EARTHQUAKE,
GLASS, BURGLARY, AND THEFT)
<CAPTION>
===================================================================================================================
(1) BULK AND INCURRED NOT BUT REPORTED RESERVES ON LOSSES AND ALLOCATED EXPENSES AT YEAR END ($000 OMITTED)
Years in ------------------------------------------------------------------------------------------------------
Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
Losses Were
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- - -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior X X X X X X X X X X X X X X X X X X X X X 6,065 4,164 2,484
2. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 138 151
3. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 143
- - -------------------------------------------------------------------------------------------------------------------
<CAPTION>
SCHEDULE P -- PART 4J -- AUTO PHYSICAL DAMAGE
=======================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior X X X X X X X X X X X X X X X X X X X X X 0 0 0
2. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0
3. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0
- - -------------------------------------------------------------------------------------------------------
<CAPTION>
SCHEDULE P -- PART 4K - FIDELITY/SURETY
=======================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior X X X X X X X X X X X X X X X X X X 0 0 0
2. 1997 X X X X X X X X X X X X N O N E X X X X X X X X X 0 0
3. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0
- - -------------------------------------------------------------------------------------------------------
<CAPTION>
SCHEDULE P -- PART 4L -- OTHER
(INCLUDING CREDIT, ACCIDENT AND HEALTH)
=======================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior X X X X X X X X X X X X X X X X X X 0 0 0
2. 1997 X X X X X X X X X X X X N O N E X X X X X X X X X 0 0
3. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0
- - -------------------------------------------------------------------------------------------------------
<CAPTION>
SCHEDULE P -- PART 4M -- INTERNATIONAL
=======================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 N O N E 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0
8. 1995 X X X X X X X X X X X X X X X X X X 0 0 0 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0
- - -------------------------------------------------------------------------------------------------------
</TABLE>
104
<PAGE>
<TABLE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE NEW YORK MARINE AND GENERAL INSURANCE COMPANY (COMBINED)
SCHEDULE P -- PART 4N -- REINSURANCE A
Nonproportional Assumed Property
<CAPTION>
===================================================================================================================
(1) BULK AND INCURRED BUT REPORTED RESERVES ON LOSSES AND ALLOCATED EXPENSES AT YEAR END ($000 OMITTED)
Years in ---------------------------------------------------------------------------------------------------
Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
Losses Were
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- - -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 0 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0
8. 1995 X X X X X X X X X X X X X X X X X X 0 0 0 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0
- - -------------------------------------------------------------------------------------------------------------------
<CAPTION>
SCHEDULE P -- PART 4O -- REINSURANCE B
Nonproportional Assumed Liability
=======================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 N O N E 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0
8. 1995 X X X X X X X X X X X X X X X X X X 0 0 0 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0
- - -------------------------------------------------------------------------------------------------------
<CAPTION>
SCHEDULE P -- PART 4P -- REINSURANCE C
Nonproportional Assumed Financial Lines
=======================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 N O N E 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0
8. 1995 X X X X X X X X X X X X X X X X X X 0 0 0 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0
- - -------------------------------------------------------------------------------------------------------
</TABLE>
105
<PAGE>
<TABLE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE NEW YORK MARINE AND GENERAL INSURANCE COMPANY (COMBINED)
SCHEDULE P -- PART 5C -- COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL
SECTION 1
<CAPTION>
=======================================================================================================
(1) CUMULATIVE NUMBER OF CLAIMS CLOSED WITH LOSS PAYMENT DIRECT AND ASSUMED AT YEAR END
Years in ---------------------------------------------------------------------------------------
Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
Premiums
Were Earned
and
Losses Were
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- - -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 0 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0
8. 1995 X X X X X X X X X X X X X X X X X X 1 1 3 3
9. 1996 X X X X X X X X X X X X X X X X X X X X X 1 1 1
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0
- - -------------------------------------------------------------------------------------------------------
SECTION 2
<CAPTION>
=======================================================================================================
(1) NUMBER OF CLAIMS OUTSTANDING AND ASSUMED AT YEAR END
Years in ---------------------------------------------------------------------------------------
Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
Premiums
Were Earned
and
Losses Were
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- - -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 0 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0
8. 1995 X X X X X X X X X X X X X X X X X X 2 2 0 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0
- - -------------------------------------------------------------------------------------------------------
SECTION 3
<CAPTION>
=======================================================================================================
(1) CUMULATIVE NUMBER OF CLAIMS REPORTED DIRECT AND ASSUMED YEAR END
Years in ---------------------------------------------------------------------------------------
Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
Premiums
Were Earned
and
Losses Were
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- - -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 0 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0
8. 1995 X X X X X X X X X X X X X X X X X X 3 3 3 3
9. 1996 X X X X X X X X X X X X X X X X X X X X X 1 1 1
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0
- - -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE NEW YORK MARINE AND GENERAL INSURANCE COMPANY (COMBINED)
SCHEDULE P -- PART 5H -- OTHER LIABILITY -- OCCUERRENCE
SECTION 1A
<CAPTION>
=======================================================================================================
(1) CUMULATIVE NUMBER OF CLAIMS CLOSED WITH LOSS PAYMENT DIRECT AND ASSUMED AT YEAR END
Years in ---------------------------------------------------------------------------------------
Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
Premiums
Were Earned
and
Losses Were
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- - -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0
2. 1989 4 27 133 208 291 363 380 421 449 457
3. 1990 X X X 3 22 78 157 241 257 289 334 373
4. 1991 X X X X X X 1 29 91 160 206 281 343 377
5. 1992 X X X X X X X X X 2 25 64 111 161 195 221
6. 1993 X X X X X X X X X X X X 0 9 36 64 109 143
7. 1994 X X X X X X X X X X X X X X X 2 12 32 60 84
8. 1995 X X X X X X X X X X X X X X X X X X 24 36 49 58
9. 1996 X X X X X X X X X X X X X X X X X X X X X 3 16 23
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 3 11
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 6
- - -------------------------------------------------------------------------------------------------------
SECTION 2A
<CAPTION>
=======================================================================================================
(1) NUMBER OF CLAIMS OUTSTANDING DIRECT AND ASSUMED AT YEAR END
Years in ---------------------------------------------------------------------------------------
Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
Premiums
Were Earned
and
Losses Were
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- - -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 3,805 3,743 3,459 3,350 3,176 2,721 2,669 2,261 830 724
2. 1989 214 435 437 469 312 225 178 84 45 39
3. 1990 X X X 150 330 385 318 252 184 113 74 38
4. 1991 X X X X X X 171 350 324 323 265 152 85 52
5. 1992 X X X X X X X X X 144 217 235 194 120 78 48
6. 1993 X X X X X X X X X X X X 82 160 161 151 104 73
7. 1994 X X X X X X X X X X X X X X X 44 110 113 85 57
8. 1995 X X X X X X X X X X X X X X X X X X 27 53 37 32
9. 1996 X X X X X X X X X X X X X X X X X X X X X 32 25 28
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 18 16
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 27
- - -------------------------------------------------------------------------------------------------------
SECTION 3A
<CAPTION>
=======================================================================================================
(1) CUMULATIVE NUMBER OF CLAIMS REPORTED DIRECT AND ASSUMED YEAR END
Years in ---------------------------------------------------------------------------------------
Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
Premiums
Were Earned
and
Losses Were
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- - -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0
2. 1989 240 507 638 749 751 767 774 781 781 781
3. 1990 X X X 171 407 530 642 703 705 769 792 796
4. 1991 X X X X X X 187 448 565 663 786 811 811 811
5. 1992 X X X X X X X X X 154 326 408 504 535 535 535
6. 1993 X X X X X X X X X X X X 89 192 241 296 307 313
7. 1994 X X X X X X X X X X X X X X X 46 122 193 219 228
8. 1995 X X X X X X X X X X X X X X X X X X 51 97 103 108
9. 1996 X X X X X X X X X X X X X X X X X X X X X 37 64 76
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 22 38
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 42
- - -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE NEW YORK MARINE AND GENERAL INSURANCE COMPANY (COMBINED)
SCHEDULE P -- PART 5H -- OTHER LIABILITY -- CLAIMS-MADE
SECTION 1B
<CAPTION>
=======================================================================================================
(1) CUMULATIVE NUMBER OF CLAIMS CLOSED WITH LOSS PAYMENT DIRECT AND ASSUMED AT YEAR END
Years in ---------------------------------------------------------------------------------------
Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
Premiums
Were Earned
and
Losses Were
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- - -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0
2. 1989 0 1 3 12 17 25 29 36 41 43
3. 1990 X X X 0 1 8 16 23 31 36 38 43
4. 1991 X X X X X X 0 3 10 15 21 26 33 36
5. 1992 X X X X X X X X X 2 4 11 16 20 25 25
6. 1993 X X X X X X X X X X X X 0 9 18 23 29 34
7. 1994 X X X X X X X X X X X X X X X 2 7 10 14 16
8. 1995 X X X X X X X X X X X X X X X X X X 1 5 7 10
9. 1996 X X X X X X X X X X X X X X X X X X X X X 1 3 7
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 2
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0
- - -------------------------------------------------------------------------------------------------------
SECTION 2B
<CAPTION>
=======================================================================================================
(1) NUMBER OF CLAIMS OUTSTANDING DIRECT AND ASSUMED AT YEAR END
Years in ---------------------------------------------------------------------------------------
Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
Premiums
Were Earned
and
Losses Were
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- - -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 138 155 174 191 204 147 137 120 24 20
2. 1989 52 61 68 61 65 49 39 21 11 6
3. 1990 X X X 46 59 59 53 44 36 23 12 4
4. 1991 X X X X X X 28 47 45 38 31 20 6 3
5. 1992 X X X X X X X X X 27 46 36 30 21 5 4
6. 1993 X X X X X X X X X X X X 23 32 30 23 15 8
7. 1994 X X X X X X X X X X X X X X X 19 20 16 11 9
8. 1995 X X X X X X X X X X X X X X X X X X 21 26 16 7
9. 1996 X X X X X X X X X X X X X X X X X X X X X 11 7 10
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 14 15
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 1
- - -------------------------------------------------------------------------------------------------------
SECTION 3B
<CAPTION>
=======================================================================================================
(1) CUMULATIVE NUMBER OF CLAIMS REPORTED DIRECT AND ASSUMED YEAR END
Years in ---------------------------------------------------------------------------------------
Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
Premiums
Were Earned
and
Losses Were
- - -------------------------------------------------------------------------------------------------------
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- - -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0
2. 1989 52 62 71 73 82 91 101 112 112 112
3. 1990 X X X 46 60 67 69 73 109 152 154 154
4. 1991 X X X X X X 28 50 55 57 89 113 113 113
5. 1992 X X X X X X X X X 29 50 53 70 70 71 71
6. 1993 X X X X X X X X X X X X 24 44 54 55 57 59
7. 1994 X X X X X X X X X X X X X X X 22 29 37 39 41
8. 1995 X X X X X X X X X X X X X X X X X X 22 39 47 50
9. 1996 X X X X X X X X X X X X X X X X X X X X X 12 19 27
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 19 28
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 2
- - -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE NEW YORK MARINE AND GENERAL INSURANCE COMPANY (COMBINED)
SCHEDULE P -- PART 6C -- COMMERCIAL AUTO/TRUCK LIABILITY/MEDICAL
SECTION 1
<CAPTION>
====================================================================================================================
(1) CUMULATIVE PREMIUMS EARNED DIRECT AND ASSUMED AT YEAR END ($000 OMITTED)
Years in --------------------------------------------------------------------------------------- (12)
Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
Premiums
Were Earned Current
and Year
Losses Were Premiums
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Earned
- - --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 0 0 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0 0
8. 1995 X X X X X X X X X X X X X X X X X X 36 40 40 40 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0
12. Total X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0
13. Earned
Premiums
(Sch P-Pt 1) 0 0 0 0 0 0 36 4 0 0 X X X
- - --------------------------------------------------------------------------------------------------------------------
SECTION 2
<CAPTION>
====================================================================================================================
(1) CUMULATIVE PREMIUMS EARNED CEDED AT YEAR END ($000 OMITTED)
Years in --------------------------------------------------------------------------------------- (12)
Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
Premiums
Were Earned Current
and Year
Losses Were Premiums
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Earned
- - --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 0 0 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0 0
8. 1995 X X X X X X X X X X X X X X X X X X 3 5 5 5 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0
12. Total X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0
13. Earned
Premiums
(Sch P-Pt 1) 0 0 0 0 0 0 3 2 0 0 X X X
- - --------------------------------------------------------------------------------------------------------------------
SCHEDULE P -- PART 6D-- WORKER'S COMPENSATION
SECTION 1
<CAPTION>
====================================================================================================================
(1) CUMULATIVE PREMIUMS EARNED DIRECT AND ASSUMED AT YEAR END ($000 OMITTED)
Years in --------------------------------------------------------------------------------------- (12)
Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
Premiums
Were Earned Current
and Year
Losses Were Premiums
Losses Were Premiums
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Earned
- - --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 0 0 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0 0
8. 1995 X X X X X X X X X X X X N O N E X X X 0 0 0 0 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0
12. Total X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0
13. Earned
Premiums
(Sch P-Pt 1) 0 0 0 0 0 0 0 0 0 0 X X X
- - --------------------------------------------------------------------------------------------------------------------
SECTION 2
<CAPTION>
====================================================================================================================
(1) CUMULATIVE PREMIUMS EARNED CEDED AT YEAR END ($000 OMITTED)
Years in --------------------------------------------------------------------------------------- (12)
Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
Premiums
Were Earned Current
and Year
Losses Were Premiums
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Earned
- - --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 0 0 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0 0
8. 1995 X X X X X X X X X X X X N O N E X X X 0 0 0 0 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0
12. Total X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0
13. Earned
Premiums
(Sch P-Pt 1) 0 0 0 0 0 0 0 0 0 0 X X X
- - --------------------------------------------------------------------------------------------------------------------
</TABLE>
118
<PAGE>
<TABLE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE NEW YORK MARINE AND GENERAL INSURANCE COMPANY (COMBINED)
SCHEDULE P -- PART 6E -- COMMERCIAL MULTIPLE PERIL
SECTION 1
<CAPTION>
====================================================================================================================
(1) CUMULATIVE PREMIUMS EARNED DIRECT AND ASSUMED AT YEAR END ($000 OMITTED)
Years in --------------------------------------------------------------------------------------- (12)
Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
Premiums
Were Earned Current
and Year
Losses Were Premiums
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Earned
- - --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 0 0 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0 0
8. 1995 X X X X X X X X X X X X N O N E X X X 0 0 0 0 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0
12. Total X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0
13. Earned
Premiums
(Sch P-Pt 1) 0 0 0 0 0 0 0 0 0 0 X X X
- - --------------------------------------------------------------------------------------------------------------------
SECTION 2
<CAPTION>
====================================================================================================================
(1) CUMULATIVE PREMIUMS EARNED CEDED AT YEAR END ($000 OMITTED)
Years in --------------------------------------------------------------------------------------- (12)
Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
Premiums
Were Earned Current
and Year
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Earned
- - --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 0 0 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0 0
8. 1995 X X X X X X X X X X X X N O N E X X X 0 0 0 0 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0
12. Total X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0
13. Earned
Premiums
(Sch P-Pt 1) 0 0 0 0 0 0 0 0 0 0 X X X
- - --------------------------------------------------------------------------------------------------------------------
SCHEDULE P -- PART 6H -- OTHER LIABILITY -- OCCURRENCE
SECTION 1A
<CAPTION>
====================================================================================================================
(1) CUMULATIVE PREMIUMS EARNED DIRECT AND ASSUMED AT YEAR END ($000 OMITTED)
Years in --------------------------------------------------------------------------------------- (12)
Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
Premiums
Were Earned Current
and Year
Losses Were Premiums
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Earned
- - --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X X X X 0 0 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 4,979 9,435 9,690 9,722 9,722 9,811 89
7. 1994 X X X X X X X X X X X X X X X 3,532 6,104 6,239 6,239 6,239 0
8. 1995 X X X X X X X X X X X X X X X X X X 1,450 3,066 3,124 3,124 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 1,427 2,425 2,451 26
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 836 1,531 695
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 923 923
12. Total X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 1,733
13. Earned
Premiums
(Sch P-Pt 1) 30,497 29,819 25,877 17,471 12,003 7,739 4,517 3,305 2,053 1,733 X X X
- - --------------------------------------------------------------------------------------------------------------------
SECTION 2A
<CAPTION>
====================================================================================================================
(1) CUMULATIVE PREMIUMS EARNED CEDED AT YEAR END ($000 OMITTED)
Years in --------------------------------------------------------------------------------------- (12)
Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
Premiums
Were Earned Current
and Year
Losses Were Premiums
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Earned
- - --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X X X X 0 0 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 549 1,422 1,415 1,422 1,422 1,430 8
7. 1994 X X X X X X X X X X X X X X X 392 33 35 35 35 X X X
8. 1995 X X X X X X X X X X X X X X X X X X 38 106 106 106 X X X
9. 1996 X X X X X X X X X X X X X X X X X X X X X 5 26 30 4
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 26 X X X
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X
12. Total X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 12
13. Earned
Premiums
(Sch P-Pt 1) 14,177 10,899 5,962 2,251 1,329 857 224 92 36 12 X X X
- - --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE NEW YORK MARNE AND GENERAL INSURANCE COMPANY (COMBINED)
SCHEDULE P -- PART 6H -- OTHER LIABILITY -- CLAIMS-MADE
SECTION 1B
<CAPTION>
====================================================================================================================
(1) CUMULATIVE PREMIUMS EARNED DIRECT AND ASSUMED AT YEAR END ($000 OMITTED)
Years in --------------------------------------------------------------------------------------- (12)
Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
Premiums
Were Earned Current
and Year
Losses Were Premiums
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Earned
- - --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X X X X 0 0 0 0 0 0 3
6. 1993 X X X X X X X X X X X X 2,926 5,355 5,403 5,431 5,442 5,442 0
7. 1994 X X X X X X X X X X X X X X X 2,045 4,085 4,151 4,151 4,151 0
8. 1995 X X X X X X X X X X X X X X X X X X 1,820 3,482 3,543 3,564 21
9. 1996 X X X X X X X X X X X X X X X X X X X X X 1,415 2,523 2,581 58
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 1,160 1,883 723
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 994 994
12. Total X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 1,799
13. Earned X X X
Premiums
(Sch P-Pt 1) 16,090 15,300 12,415 8,205 6,218 4,583 3,933 3,194 2,347 1,799 X X X
- - --------------------------------------------------------------------------------------------------------------------
SECTION 2B
<CAPTION>
====================================================================================================================
(1) CUMULATIVE PREMIUMS EARNED CEDED AT YEAR END ($000 OMITTED)
Years in --------------------------------------------------------------------------------------- (12)
Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
Premiums
Were Earned Current
and Year
Losses Were Premiums
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Earned
- - --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 0 0 0 0 0 0 2
6. 1993 X X X X X X X X X X X X 250 457 455 462 462 462 0
7. 1994 X X X X X X X X X X X X X X X 143 191 193 194 194 0
8. 1995 X X X X X X X X X X X X X X X X X X 35 39 18 39 21
9. 1996 X X X X X X X X X X X X X X X X X X X X X 32 35 51 16
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 54 32 (22)
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 110 110
12. Total X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 127
13. Earned
Premiums
(Sch P-Pt 1) 6,692 5,893 3,201 993 422 262 204 52 36 127 X X X
- - --------------------------------------------------------------------------------------------------------------------
SCHEDULE P -- PART 6M-- INTERNATIONAL
SECTION 1
<CAPTION>
====================================================================================================================
(1) CUMULATIVE PREMIUMS EARNED DIRECT AND ASSUMED AT YEAR END ($000 OMITTED)
Years in --------------------------------------------------------------------------------------- (12)
Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
Premiums
Were Earned Current
and Year
Losses Were Premiums
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Earned
- - --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 0 0 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0 0
8. 1995 X X X X X X X X X X X X N O N E X X X 0 0 0 0 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0
12. Total X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0
13. Earned
Premiums
(Sch P-Pt 1) 0 0 0 0 0 0 0 0 0 0 X X X
- - --------------------------------------------------------------------------------------------------------------------
SECTION 2
<CAPTION>
====================================================================================================================
(1) CUMULATIVE PAID LOSSES AND ALLOCATED EXPENSES AT YEAR END ($000 OMITTED)
Years in --------------------------------------------------------------------------------------- (12)
Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
Premiums
Were Earned Current
and Year
Losses Were Premiums
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Earned
- - --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 0 0 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0 0
8. 1995 X X X X X X X X X X X X N O N E X X X 0 0 0 0 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0
12. Total X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0
13. Earned
Premiums
(Sch P-Pt 1) 0 0 0 0 0 0 0 0 0 0 X X X
- - --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
ANNUAL STATEMENT FOR THE YEAR 1998 OF THE NEW YORK MARNE AND GENERAL INSURANCE COMPANY (COMBINED)
SCHEDULE P -- PART 6N-- REINSURANCE B
Nonproportional Assumed Liability
SECTION 1
<CAPTION>
====================================================================================================================
(1) CUMULATIVE PREMIUMS EARNED DIRECT AND ASSUMED AT YEAR END ($000 OMITTED)
Years in --------------------------------------------------------------------------------------- (12)
Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
Premiums
Were Earned Current
and Year
Losses Were Premiums
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Earned
- - --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 0 0 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 25 24 24 24 50 26
8. 1995 X X X X X X X X X X X X X X X X X X 111 136 136 136 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 257 267 267 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 34 236 202
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 9 9
12. Total X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 237
13. Earned
Premiums
(Sch P-Pt 1) 0 0 0 0 0 25 110 282 44 237 X X X
- - --------------------------------------------------------------------------------------------------------------------
SECTION 2
<CAPTION>
====================================================================================================================
(1) CUMULATIVE PREMIUMS EARNED CEDED AT YEAR END ($000 OMITTED)
Years in --------------------------------------------------------------------------------------- (12)
Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
Premiums
Were Earned Current
and Year
Losses Were Premiums
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Earned
- - --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 0 0 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0 0
8. 1995 X X X X X X X X X X X X X X X X X X 0 0 0 0 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 2 2 1 (1)
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0
12. Total X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X (1)
13. Earned
Premiums
(Sch P-Pt 1) 0 0 0 0 0 0 1 2 0 (1) X X X
- - --------------------------------------------------------------------------------------------------------------------
SCHEDULE P -- PART 6O-- REINSURANCE B
Nonproportional Assumed Liability
SECTION 1
<CAPTION>
====================================================================================================================
(1) CUMULATIVE PREMIUMS EARNED DIRECT AND ASSUMED AT YEAR END ($000 OMITTED)
Years in --------------------------------------------------------------------------------------- (12)
Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
Premiums
Were Earned Current
and Year
Losses Were Premiums
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Earned
- - --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 0 0 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0 0
8. 1995 X X X X X X X X X X X X N O N E X X X 0 0 0 0 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0
12. Total X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0
13. Earned
Premiums
(Sch P-Pt 1) 0 0 0 0 0 0 0 0 0 0 X X X
- - --------------------------------------------------------------------------------------------------------------------
SECTION 2
<CAPTION>
====================================================================================================================
(1) CUMULATIVE PREMIUMS EARNED CEDED AT YEAR END ($000 OMITTED)
Years in --------------------------------------------------------------------------------------- (12)
Which (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
Premiums
Were Earned Current
and Year
Losses Were Premiums
Incurred 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Earned
- - --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Prior 0 0 0 0 0 0 0 0 0 0 0
2. 1989 0 0 0 0 0 0 0 0 0 0 0
3. 1990 X X X 0 0 0 0 0 0 0 0 0 0
4. 1991 X X X X X X 0 0 0 0 0 0 0 0 0
5. 1992 X X X X X X X X X 0 0 0 0 0 0 0 0
6. 1993 X X X X X X X X X X X X 0 0 0 0 0 0 0
7. 1994 X X X X X X X X X X X X X X X 0 0 0 0 0 0
8. 1995 X X X X X X X X X X X X N O N E X X X 0 0 0 0 0
9. 1996 X X X X X X X X X X X X X X X X X X X X X 0 0 0 0
10. 1997 X X X X X X X X X X X X X X X X X X X X X X X X 0 0 0
11. 1998 X X X X X X X X X X X X X X X X X X X X X X X X X X X 0 0
12. Total X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 0
13. Earned
Premiums
(Sch P-Pt 1) 0 0 0 0 0 0 0 0 0 0 X X X
- - --------------------------------------------------------------------------------------------------------------------
</TABLE>
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