<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM 10-Q
(Mark One)
[ X ] Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 1996 or
[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Transition period from ________________ to __________________
Commission file number 1-12922
AMERICAN EAGLE GROUP, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 75-2100622
(State or other jurisdiction of incorporation or (I.R.S. Employer Identification No.)
organization)
12801 North Central Expressway, Suite 800, Dallas, Texas 75243
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code (214) 448-1400
-----------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last year.)
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
----------- -----------
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of April 30, 1996, the number of shares outstanding of each of the
issuer's classes of common stock was as follows:
Common Stock . . . . . . . . 7,050,098 shares, par value $.01 per share
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AMERICAN EAGLE GROUP, INC.
INDEX TO FORM 10-Q
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Page
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed consolidated balance sheets as of
March 31, 1996 (unaudited) and
December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . 3
Condensed consolidated statements of operations
for the three months ended March 31, 1996
(unaudited) and March 31, 1995 (unaudited) . . . . . . . . . 4
Condensed consolidated statements of cash flows
for the three months ended March 31, 1996
(unaudited) and March 31, 1995 (unaudited) . . . . . . . . . 5
Notes to condensed consolidated financial
statements (unaudited) . . . . . . . . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . . . . 7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . 10
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
2
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AMERICAN EAGLE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
(Unaudited)
ASSETS December 31, March 31,
1995 1996
------------ -----------
<S> <C> <C>
Cash and investments $106,792 $ 87,880
Accounts receivable 56,890 55,064
Reinsurance recoverable, net 101,125 101,158
Deferred policy acquisition costs 15,296 16,138
Deferred reinsurance premiums 19,829 17,941
Other assets 18,337 19,021
-------- --------
Total assets $318,269 $297,202
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Reserve for losses and loss adjustment expenses $136,528 $139,892
Unearned premiums 79,605 77,553
Other policy liabilities 20,196 4,194
Agency payables to insurance companies 1,736 438
Note payable 11,250 11,250
Accounts payable and other liabilities 13,859 12,842
-------- --------
Total liabilities 263,174 246,169
-------- --------
Commitments and contingent liabilities
Series B Cumulative Preferred Stock, $.01 par value; 162,857 shares
authorized, 162,857 shares issued and outstanding 1,629 1,629
Stockholders' equity:
Common Stock, $.01 par value, 21,000,000 shares authorized, 7,124,180 shares
issued 71 71
Additional paid-in-capital 45,532 45,540
Unrealized apprec.(deprec.) on investment securities, net of deferred taxes 1,029 15
Retained earnings 6,921 3,865
Less - 73,882 shares of common stock held in the treasury, at cost (87) (87)
-------- --------
Total stockholders' equity 53,466 49,404
-------- --------
Total liabilities and stockholders' equity $318,269 $297,202
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
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AMERICAN EAGLE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE PERIODS ENDED
(UNAUDITED)
(IN THOUSANDS EXCEPT SHARE DATA)
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<CAPTION>
Three Months Ended
March 31, March 31,
1995 1996
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<S> <C> <C>
Revenues
Earned premiums, net of reinsurance $20,649 $32,834
Agency operations, net 251 (33)
Investment income, net 1,344 1,403
Realized investment gains, net 6 153
--------- ---------
Total revenues 22,250 34,357
--------- ---------
Expenses
Losses and loss adjustment expenses, net of
reinsurance 13,605 27,519
Policy acquisition and other underwriting
expenses 6,953 10,758
Interest expense 240 250
--------- ---------
Total expenses 20,798 38,527
--------- ---------
Income (loss) before income tax expense 1,452 (4,170)
Income tax expense (benefit) 465 (1,418)
--------- ---------
Net income (loss) $987 ($2,752)
========= =========
Net income (loss) available for common stockholders (1) $963 ($2,776)
========= =========
Weighted average number of common shares
outstanding 7,055,298 7,050,548
========= =========
Net income (loss) per share of common stock (1) $0.14 ($0.39)
(1) After deduction of preferred dividends
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
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AMERICAN EAGLE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
March 31, March 31,
1995 1996
--------- ---------
<S> <C> <C>
Cash and cash equivalents derived from:
Total provided by (used in) operating activities $3,001 $(16,795)
Investing activities-
Net proceeds (purchases) of short-term investments (1,034) 24,730
Purchases of fixed income securities (3,672) (14,587)
Proceeds from sales of fixed income securities 1,819 6,119
Proceeds from maturities of fixed income securities 2,249 100
Purchases of property and equipment (257) (325)
--------- ---------
Total provided by (used in) investing activities (895) 16,037
--------- ---------
Financing activities-
Dividends paid on Series B and C Cumulative Preferred Stock (24) (24)
Dividends paid on common stock (212) (282)
Proceeds of note payable 1,000 -----
Increase in common stock outstanding 10 -----
--------- ---------
Total provided by (used in) financing activities 774 (306)
--------- ---------
Net change in cash and cash equivalents 2,880 (1,064)
Cash and cash equivalents, beginning of period 1,530 2,922
--------- ---------
Cash and cash equivalents, end of period $4,410 $1,858
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
AMERICAN EAGLE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED
MARCH 31, 1995 AND 1996
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
the American Eagle Group, Inc. (the "Company") and subsidiaries for the
three months ended March 31, 1996 and 1995 have been prepared in accordance
with the instructions to the Form 10-Q and do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
In the opinion of management, all adjustments (consisting of only normal
recurring accruals) considered necessary for a fair presentation of the
results for the interim period have been included. Operating results for
the three months ended March 31, 1996 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1996. These
statements should be read in conjunction with the financial statements and
notes thereto for the year ended December 31, 1995 included in the
Company's Annual Report.
2. CASH DIVIDENDS
On February 23, 1996, the Company's Board of Directors approved a cash
dividend of $0.04 per share of common stock, to be paid on April 19, 1996,
to stockholders of record on April 5, 1996.
6
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
FIRST QUARTER OF 1996 COMPARED TO THE FIRST QUARTER OF 1995
Gross Premiums Produced
Gross premiums produced for the first quarter of 1996 compared to the first
quarter of 1995 were as follows (in millions):
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FIRST QUARTER
1995 1996
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Gross premiums produced $41.6 $42.4
For other companies (3.3) (2.6)
Assumed from other companies 1.2 1.6
----- -----
Gross premiums written 39.5 41.4
Ceded premiums (13.2) (8.7)
----- -----
Net premiums written $26.3 $32.7
===== =====
</TABLE>
Gross premiums produced increased 1.9% to $42.4 million for the first
quarter of 1996 from $41.6 million in the first quarter of 1995. Of this
increase, 1.5% was produced by the Aviation Division and 2.3% was produced
by the Marine Division, while the Property & Casualty Division (the "P&C
Division") had a decrease of 1.9%. The increases in the Aviation and
Marine Divisions resulted primarily from an increase in policies inforce.
The decrease in the P&C Division is due to the discontinued underwriting of
the franchised auto dealer business late in 1995.
The gross premiums produced for other companies decreased 23.2% to $2.6
million in the first quarter of 1996 from $3.3 million in the first quarter
of 1995.
The gross premiums assumed from other companies increased 27.5% to $1.6
million in the first quarter of 1996 from $1.2 million in the first quarter
of 1995.
Gross premiums written increased 4.8% to $41.4 million in the first quarter
of 1996 from $39.5 million in the first quarter of 1995 as a result of the
increase in gross premiums produced for the Company and its subsidiaries.
Ceded premiums decreased 34.0% to $8.7 million in the first quarter of
1996, compared to $13.2 million in the first quarter of 1995. This
decrease is primarily a result of a decline in business written in the
airport segment that is placed with other companies under a facultative
reinsurance agreement, and a decrease in ceded excess of loss premium rates
for both Aviation and P&C Divisions under the terms of the 1995 reinsurance
treaties.
7
<PAGE> 8
Net premiums written increased 24.3% to $32.7 million in the first three
months of 1996, compared to $26.3 million in the first three months of
1995.
Revenues
Earned premiums, net of reinsurance, increased 59.0% to $32.8 million in
the first quarter of 1996 from $20.6 million in the first quarter of 1995.
Of this increase, 49.5% was related to the Aviation Division, 6.7% to the
P&C Division, and 2.8% to the Marine Division. The higher rate of growth in
earned premiums, net of reinsurance, in comparison to written premiums, net
of reinsurance, is due to a higher rate of growth in written premiums in
earlier quarters, which is now becoming earned premiums.
Agency operations, net, decreased $0.28 million to a minimal loss in the
first quarter of 1996 from a gain of $0.25 million in the first quarter of
1995.
Investment income, net, increased 4.4% to $1.4 million in the first quarter
of 1996 from $1.3 million in the first quarter of 1995. The net
tax-effected investment yield on average invested assets for the first
quarter of 1996 increased to 5.9% from 5.5% in the comparable quarter of
1995. Average invested assets decreased $2.8 million in the first quarter
of 1996, compared to the first quarter of 1995, primarily as a result of
cash flow used in operating activities, as discussed below.
Realized investment gains, net, were insignificant in the first quarter of
1996 and 1995.
Operating Expenses
Losses and loss adjustment expenses, net of reinsurance, were 83.8% of
earned premiums, net of reinsurance, in the first quarter of 1996, compared
to 65.9% in the first quarter of 1995. The first quarter of 1996 results
were largely driven by an increase in reported claims for the
transportation portion of the P&C Division. In addition, weather-related
losses in both the Aviation and P&C Divisions negatively affected the
quarter's results, with catastrophe hail storm losses in Louisiana alone
accounting for losses of $0.5 million, net of reinsurance. The first
quarter of 1995 includes $0.5 million of flood losses in California. The
Aviation Division loss ratio increased 5.0 percentage points to 71.3% in
the first quarter 1996, from 66.3% in the first quarter of 1995, and the
P&C Division loss ratio increased 55.1 percentage points to 120.3% in the
first quarter of 1996, from 65.2% in the first quarter of 1995. The Marine
Division loss ratio in the first quarter of 1996 was 49.1%.
Policy acquisition and other underwriting expenses were 32.8% of earned
premiums in the first quarter of 1996 and 33.7% of earned premiums in the
first quarter of 1995. The decrease in the expense ratio results from the
increase in earned premiums, net of reinsurance.
The Company's combined ratio increased 17.0 percentage points to 116.6% in
the first quarter of 1996 from 99.6% in the first quarter of 1995 as a
result of the factors discussed above. A combined ratio below 100%
generally indicates profitable underwriting prior to the consideration of
investment income. Management believes that there has been a seasonality
8
<PAGE> 9
pattern in both the Aviation and P&C Divisions' loss ratio. Losses have
historically been higher in the first half of the year and then declined in
the second half, with the highest losses in the first quarter and the
lowest losses in the fourth quarter. The Company believes that this
pattern results primarily from weather-related factors which contribute to
a higher loss frequency in the first two quarters of the year. The first
quarter Aviation Division results are consistent with historical first
quarter loss levels and with management's expectations for the quarter. In
the P&C Division, higher levels of premiums are recorded in the second half
of the year. Historically, the expense ratio has also been higher earlier
in the year primarily as a result of the growth in earned premiums in the
latter part of the year.
Interest expense increased 4.2% to $0.25 million in the first quarter of
1996, from $0.24 million in the first quarter of 1995, due to an increase
in the Company's note payable of $1.0 million.
Income
Income tax benefit was 34.0% of loss before tax benefit in the first
quarter of 1996 and income tax expense was 32.0% of income before tax
expense in the first quarter of 1995. The increase in the first quarter of
1996 tax rate is due, in part, to a decrease in tax-exempt interest income.
The first quarter of 1996 net loss was ($2.8) million, as compared to net
income of $1.0 million in the first quarter of 1995.
Net income (loss) available for common stockholders in the first quarter of
1996 was ($2.8) million, or ($0.39) per share, as compared to net income of
$1.0 million, or $0.14 per share, in the first quarter of 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company's consolidated cash flow used by operations was $16.8 million
in the first quarter of 1996, compared to cash flow provided by operations
of $3.0 million in the first quarter of 1995. The majority of the funds
used in the first three months of 1996 relate to the settlement of a large
claim incurred during 1995, and the reduction of balances due reinsurers.
9
<PAGE> 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
See Index to Exhibits attached hereto and incorporated herein
by reference.
(b) Reports on Form 8-K
None.
10
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERICAN EAGLE GROUP, INC.
Date: May 10, 1996 By: /s/ M. Philip Guthrie
----------------------------------------
M. Philip Guthrie, Chairman of the
Board and Chief Executive Officer
Date: May 10, 1996 By: /s/ Richard M. Kurz
----------------------------------------
Richard M. Kurz, Senior Vice President and
Chief Financial Officer (Principal
Financial and Accounting Officer)
11
<PAGE> 12
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- - ------ -------
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4.1 -- Specimen Certificate for shares of Common Stock, $.01 par value, of American Eagle (Previously
filed on May 11, 1994 with Registrant's Amendment No. 2 to Registration Statement on Form S-1,
File No. 33-75490, and incorporated herein by reference).
4.2 -- Registration Rights Agreement, dated as of March 21, 1995, by and among American Eagle, Mason
Best and Nelson Hurst (Previously filed on March 29, 1994 with Registrant's Amendment No. 1 to
Registration Statement on Form S-1, File No. 33-75490, and incorporated herein by reference).
10.1 -- American Eagle Group, Inc. 1991 Non-Qualified Stock Option Plan (Previously filed on February 18,
1994 with Registrant's Registration Statement on Form S-1, File No. 33-75490, and incorporated
herein by reference).
10.2 -- Amended and Restated P&C Stock Option Plan - Wise (Previously filed on February 18, 1994 with
Registrant's Registration Statement on Form S-1, File No. 33-75490, and incorporated herein by
reference).
10.3 -- Amended and Restated P&C Stock Option Plan - Hill (Previously filed on February 18, 1994 with
Registrant's Registration Statement on Form S-1, File No. 33-75490, and incorporated herein by
reference).
10.4 -- Amended and Restated P&C Stock Option Plan - Perkins (Previously filed on February 18, 1994 with
Registrant's Registration Statement on Form S-1, File No. 33-75490, and incorporated herein by
reference).
10.5 -- Amendment No. 1 to Amended and Restated P&C Stock Option Plan - Perkins, dated as of August 16,
1994, between American Eagle and J.B. Perkins (Previously filed on March 30, 1995 with
Registrant's Annual Report on Form 10-K, File No. 1-12922, and incorporated herein by reference).
10.6 -- American Eagle Group, Inc. 1994 Stock Incentive Plan (Previously filed on March 29, 1994 with
Registrant's Amendment No. 1 to Registration Statement on Form S-1, File No. 33-75490, and
incorporated herein by reference).
10.7 -- American Eagle Group, Inc. 1994 Directors' Stock Option Plan, as amended. (Previously filed on
November 11, 1995 with Registrant's Quarterly Report on Form 10-Q, File No. 1-12922, and
incorporated herein by reference.)
10.8 -- American Eagle Group, Inc. 1994 Employee Restricted Stock Plan (Previously filed on March 29,
1994 with Registrant's Amendment No. 1 to Registration Statement on Form S-1, File No. 33-75490,
and incorporated herein by reference).
10.9 -- American Eagle Group, Inc. Employee Profit Sharing and Savings Plan (Previously filed on February
18, 1994 with Registrant's Registration Statement on Form S-1, File No. 33-75490, and
incorporated herein by reference).
10.10 -- American Eagle Group, Inc. Employee Stock Purchase Plan (Previously filed on March 30, 1995 with
Registrant's Annual Report on Form 10-K, File No. 1-12922, and incorporated herein by reference.
10.11 -- Amended and Restated Credit Agreement dated as of December 29, 1994 (the "Restated Credit
Agreement"), among American Eagle, the Lenders and The First National Bank of Chicago, as Agent
(Previously filed on March 30, 1995 with Registrant's Annual Report on Form 10-K, File No. 1-
12922, and incorporated herein by reference).
</TABLE>
E-1
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- - ------ -------
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10.12 -- Amendment to the Restated Credit Agreement dated as of February 23, 1996 by and between American
Eagle and The First National Bank of Chicago, individually and as agent. (Previously filed on
March 28, 1996 with Registrant's Annual Report on Form 10-K, File No. 1-12922, and incorporated
herein by reference).
10.13 -- Employment Agreement, dated as of December 31, 1994, between American Eagle and M. Philip Guthrie
(Previously filed on March 30, 1995 with Registrant's Annual Report on Form 10-K, File No. 1-
12922, and incorporated herein by reference).
10.14 -- Employment Agreement, dated as of December 31, 1994, between American Eagle and George F. Cass
(Previously filed on March 30, 1995 with Registrant's Annual Report on Form 10-K, File No. 1-
12922, and incorporated herein by reference).
10.15 -- Employment Agreement, dated as of December 31, 1994, between AEIC and George C. Hill (Previously
filed on March 30, 1995 with Registrant's Annual Report on Form 10-K, File No. 1-12922, and
incorporated herein by reference).
10.16 -- Employment Agreement, dated as of December 31, 1994, between AEIC and David O. Daniels
(Previously filed on March 30, 1995 with Registrant's Annual Report on Form 10-K, File No. 1-
12922, and incorporated herein by reference).
10.17 -- Employment Agreement, dated as of December 31, 1994, between American Eagle and Frederick G.
Anderson (Previously filed on March 30, 1995 with Registrant's Annual Report on Form 10-K, File
No. 1-12922, and incorporated herein by reference).
10.18 -- Employment Agreement, dated as of December 31, 1994, between American Eagle and Richard M. Kurz
(Previously filed on March 30, 1995 with Registrant's Annual Report on Form 10-K, File No. 1-
12922, and incorporated herein by reference).
10.19 -- Employment Agreement, dated as of December 31, 1994, between American Eagle and Allen N. Walton
III (Previously filed on March 30, 1995 with Registrant's Annual Report on Form 10-K, File No. 1-
12922, and incorporated herein by reference).
10.20 -- Consulting Agreement, dated as of December 24, 1992, between American Eagle and Don D. Hutson
(Previously filed on February 18, 1994 with Registrant's Registration Statement on Form S-1, File
No. 33-75490, and incorporated herein by reference).
10.21 -- Agreement dated as of February 15, 1991, between Luther King Capital Management Corporation and
AEIC (Previously filed on February 18, 1994 with Registrant's Registration Statement on Form S-1,
File No. 33-75490, and incorporated herein by reference).
10.22 -- Investment Management Agreement, dated as of June 17, 1994, between American Eagle Insurance
Company and Aon Advisors, Inc. (Previously filed on March 30, 1995 with Registrant's Annual
Report on Form 10-K, File No. 1-12922, and incorporated herein by reference).
</TABLE>
E-2
<PAGE> 14
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- - ------ -------
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10.23 -- Agreement for the Purchase of all of the Outstanding Capital Stock of Aviation Office of America,
Inc. and American Eagle Insurance Company dated as of May 7, 1986, among Folmar Corporation, Crum
and Forster, Inc. and United States Fire Insurance Company (the "Purchase Agreement") (Previously
filed on March 29, 1994 with Registrant's Amendment No. 1 to Registration Statement on Form S-1,
File No. 33-75490, and incorporated herein by reference).
10.24 -- Amendment to Purchase Agreement dated as of June 6, 1987 (Previously filed on March 29, 1994 with
Registrant's Amendment No. 1 to Registration Statement on Form S-1, File No. 33-75490, and
incorporated herein by reference).
10.25 -- Amendment to Purchase Agreement dated as of December 11, 1987 (Previously filed on March 29, 1994
with Registrant's Amendment No. 1 to Registration Statement on Form S-1, File No. 33-75490, and
incorporated herein by reference).
10.26 -- General Aviation Variable Quota Share Treaty Reinsurance Agreement ARA #4158
1993 Final Placement Slip (Previously filed on March 29, 1994 with Registrant's Amendment No. 1
to Registration Statement on Form S-1, File No. 33-75490, and incorporated herein by reference).
10.27 -- General Aviation Hull Excess of Loss Reinsurance Agreement ARA #4076-1993 Final Placement Slip
(Previously filed on March 29, 1994 with Registrant's Amendment No. 1 to Registration Statement
on Form S-1, File No. 33-75490, and incorporated herein by reference).
10.28 -- Hull Catastrophe Excess of Loss Reinsurance Agreement ARA #4077-1993 Final Placement Slip
(Previously filed on March 29, 1994 with Registrant's Amendment No. 1 to Registration Statement
on Form S-1, File No. 33-75490, and incorporated herein by reference).
10.29 -- Hull Catastrophe Second Excess of Loss Reinsurance Agreement ARA #4112-1993 Final Placement Slip
(Previously filed on March 29, 1994 with Registrant's Amendment No. 1 to Registration Statement
on Form S-1, File No. 33-75490, and incorporated herein by reference).
10.30 -- Hull Catastrophe Second Excess of Loss of Reinsurance Agreement ARA #4172-1993 Final Placement
Slip (Previously filed on March 29, 1994 with Registrant's Amendment No. 1 to Registration
Statement on Form S-1, File No. 33-75490, and incorporated herein by reference).
10.31 -- First Through Seventh General Aviation Liability Excess of Loss Reinsurance Agreement ARA #4155-
1993 Final Placement Slip (Previously filed on March 29, 1994 with Registrant's Amendment No. 1
to Registration Statement on Form S-1, File No. 33-75490, and incorporated herein by reference).
10.32 -- Sixth and Seventh General Aviation Liability Excess of Loss Reinsurance Agreement ARA #4156-1993
Final Placement Slip (Previously filed on March 29, 1994 with Registrant's Amendment No. 1 to
Registration Statement on Form S-1, File No. 33-75490, and incorporated herein by reference).
</TABLE>
E-3
<PAGE> 15
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- - ------ -------
<S> <C>
10.33 -- Fourth, Fifth, Sixth and Seventh General Aviation Liability Excess of Loss Reinsurance Agreement
ARA #4157-1993 Final Placement Slip (Previously filed on March 29, 1994 with Registrant's
Amendment No. 1 to Registration Statement on Form S-1, File No. 33-75490, and incorporated herein
by reference).
10.34 -- Seventh Liability Excess of Loss Run-Off Reinsurance Agreement ARA #4099-1993 Final Placement
Slip (Previously filed on March 29, 1994 with Registrant's Amendment No. 1 to Registration
Statement on Form S-1, File No. 33-75490, and incorporated herein by reference).
10.35 -- Seventh Liability Excess of Loss Run-Off Reinsurance Agreement ARA #4159-1993 Final Placement
Slip (Previously filed on March 29, 1994 with Registrant's Amendment No. 1 to Registration
Statement on Form S-1, File No. 33-75490, and incorporated herein by reference).
10.36 -- General Aviation Obligatory Hull Surplus Treaty Agreement ARA #4075-1992 Final Placement Slip
(Previously filed on March 29, 1994 with Registrant's Amendment No. 1 to Registration Statement
on Form S-1, File No. 33-75490, and incorporated herein by reference).
10.37 -- General Aviation Obligatory Hull Surplus Reinsurance Agreement ARA #4075 (Previously filed on
March 29, 1994 with Registrant's Amendment No. 1 to Registration Statement on Form S-1, File No.
33-75490, and incorporated herein by reference).
10.38 -- Interests and Liabilities Agreement attached to General Aviation Obligatory Hull Surplus
Reinsurance Agreement ARA #4075 (Previously filed on March 29, 1994 with Registrant's Amendment
No. 1 to Registration Statement on Form S-1, File No. 33-75490, and incorporated herein by
reference).
10.39 -- Hull Excess of Loss Agreement ARA #4076-1992 Final Placement Slip (Previously filed on March 29,
1994 with Registrant's Amendment No. 1 to Registration Statement on Form S-1, File No. 33-75490,
and incorporated herein by reference).
10.40 -- General Aviation Obligatory Hull Excess of Loss Reinsurance Agreement ARA #4076 (Previously filed
on March 29, 1994 with Registrant's Amendment No. 1 to Registration Statement on Form S-1, File
No. 33-75490, and incorporated herein by reference).
10.41 -- Interests and Liabilities Agreement attached to General Aviation Hull Excess of Loss Reinsurance
Agreement ARA #4076 (Previously filed on March 29, 1994 with Registrant's Amendment No. 1 to
Registration Statement on Form S-1, File No. 33-75490, and incorporated herein by reference).
10.42 -- Hull Catastrophe Excess of Loss Agreement ARA #4077-1992 Final Placement Slip (Previously filed
on March 29, 1994 with Registrant's Amendment No. 1 to Registration Statement on Form S-1, File
No. 33-75490, and incorporated herein by reference).
10.43 -- General Aviation Obligatory Hull Catastrophe Excess of Loss Reinsurance Agreement ARA #4077
(Previously filed on March 29, 1994 with Registrant's Amendment No. 1 to Registration Statement
on Form S-1, File No. 33-75490, and incorporated herein by reference).
</TABLE>
E-4
<PAGE> 16
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
------ -------
<S> <C>
10.44 -- Hull Catastrophe Second Excess of Loss Agreement ARA #4112-1992 Final Placement Slip (Previously
filed on March 29, 1994 with Registrant's Amendment No. 1 to Registration Statement on Form S-1,
File No. 33-75490, and incorporated herein by reference).
10.45 -- General Aviation Obligatory Hull Catastrophe Second Excess of Loss Reinsurance Agreement ARA
#4112 (Previously filed on March 29, 1994 with Registrant's Amendment No. 1 to Registration
Statement on Form S-1, File No. 33-75490, and incorporated herein by reference).
10.46 -- Interests and Liabilities Agreement attached to General Aviation Obligator Hull Catastrophe
Second Excess of Loss Agreement ARA #4112 (Previously filed on March 29, 1994 with Registrant's
Amendment No. 1 to Registration Statement on Form S-1, File No. 33-75490, and incorporated herein
by reference).
10.47 -- First Through Second Liability Excess of Loss Agreement ARA #4078-1992 Final Placement Slip
(Previously filed on March 29, 1994 with Registrant's Amendment No. 1 to Registration Statement
on Form S-1, File No. 33-75490, and incorporated herein by reference).
10.48 -- First Through Second Liability Excess of Loss Agreement ARA #4078 (Previously filed on March 29,
1994 with Registrant's Amendment No. 1 to Registration Statement on Form S-1, File No. 33-75490,
and incorporated herein by reference).
10.49 -- Interests and Liabilities Agreement attached to General Aviation Liability Excess of Loss
Reinsurance Agreement ARA #4078 (Previously filed on March 29, 1994 with Registrant's Amendment
No. 1 to Registration Statement on Form S-1, File No. 33-75490, and incorporated herein by
reference).
10.50 -- Fourth Liability Excess of Loss Agreement ARA #4100-1992 Final Placement Slip (Previously filed
on March 29, 1994 with Registrant's Amendment No. 1 to Registration Statement on Form S-1, File
No. 33-75490, and incorporated herein by reference).
10.51 -- Fourth General Aviation Liability Excess of Loss Agreement ARA #4100 (Previously filed on March
29, 1994 with Registrant's Amendment No. 1 to Registration Statement on Form S-1, File No. 33-
75490, and incorporated herein by reference).
10.52 -- Interests and Liabilities Agreement attached to Fourth General Aviation Liability Excess of Loss
Agreement ARA #4100 (Previously filed on March 29, 1994 with Registrant's Amendment No. 1 to
Registration Statement on Form S-1, File No. 33-75490, and incorporated herein by reference).
10.53 -- Fourth Liability Excess of Loss Agreement ARA #4096-1992 Final Placement Slip (Previously filed
on March 29, 1994 with Registrant's Amendment No. 1 to Registration Statement on Form S-1, File
No. 33-75490, and incorporated herein by reference).
10.54 -- Fourth General Aviation Liability Excess of Loss Reinsurance Agreement ARA #4096 (Previously
filed on March 29, 1994 with Registrant's Amendment No. 1 to Registration Statement on Form S-1,
File No. 33-75490, and incorporated herein by reference).
</TABLE>
E-5
<PAGE> 17
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- - ------ -------
<S> <C>
10.55 -- Interests and Liabilities Agreement attached to Fourth General Aviation Liabilityxcess of Loss
Agreement ARA #4096 (Previously filed on March 29, 1994 with Registrant's Amendment No. 1 to
Registration Statement on Form S-1, File No. 33-75490, and incorporated herein by reference).
10.56 -- Special Fourth Liability Excess of Loss Agreement ARA #4097-1992 Final Placement Slip (Previously
filed on March 29, 1994 with Registrant's Amendment No. 1 to Registration Statement on Form S-1,
File No. 33-75490, and incorporated herein by reference).
10.57 -- Fourth General Aviation Liability Excess of Loss Reinsurance Agreement ARA #4097 (Previously filed
on March 29, 1994 with Registrant's Amendment No. 1 to Registration Statement on Form S-1, File
No. 33-75490, and incorporated herein by reference).
10.58 -- Fifth and Sixth Liability Excess of Loss Agreement ARA #4101-1992 Final Placement Slip (Previously
filed on March 29, 1994 with Registrant's Amendment No. 1 to Registration Statement on Form S-1,
File No. 33-75490, and incorporated herein by reference).
10.59 -- General Aviation Liability Excess of Loss Agreement ARA #4101 (Fifth and Sixth Layers) (Previously
filed on March 29, 1994 with Registrant's Amendment No. 1 to Registration Statement on Form S-1,
File No. 33-75490, and incorporated herein by reference).
10.60 -- Interests and Liabilities Agreement attached to General Aviation Liability Excess of Loss
Agreement ARA #4101 (Fifth and Sixth Layers) (Previously filed on March 29, 1994 with Registrant's
Amendment No. 1 to Registration Statement on Form S-1, File No. 33-75490, and incorporated herein
by reference).
10.61 -- Fifth and Sixth Liability Excess of Loss Agreement ARA #4098-1992 Final Placement Slip (Previously
filed on March 29, 1994 with Registrant's Amendment No. 1 to Registration Statement on Form S-1,
File No. 33-75490, and incorporated herein by reference).
10.62 -- General Aviation Liability Excess of Loss Reinsurance Agreement ARA #4098 (Fifth and Sixth Layers)
(Previously filed on March 29, 1994 with Registrant's Amendment No. 1 to Registration Statement on
Form S-1, File No. 33-75490, and incorporated herein by reference).
10.63 -- Seventh Liability Excess of Loss Agreement ARA #4099-1992 Final Placement Slip (Previously filed
on March 29, 1994 with Registrant's Amendment No. 1 to Registration Statement on Form S-1, File
No. 33-75490, and incorporated herein by reference).
10.64 -- Seventh General Aviation Liability Excess of Loss Agreement ARA #4099 (Previously filed on March
29, 1994 with Registrant's Amendment No. 1 to Registration Statement on Form S-1, File No. 33-
75490, and incorporated herein by reference).
10.65 -- Interests and Liabilities Agreement attached to Seventh General Aviation Liability Excess of Loss
Reinsurance Agreement #4099 (Previously filed on March 29, 1994 with Registrant's Amendment No. 1
to Registration Statement on Form S-1, File No. 33-75490, and incorporated herein by reference).
</TABLE>
E-6
<PAGE> 18
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- - ------ -------
<S> <C>
10.66 -- Casualty First and Second Excess of Loss Reinsurance Agreement ARA #4038 Final Placement Slip
(Previously filed on March 29, 1994 with Registrant's Amendment No. 1 to Registration Statement on
Form S-1, File No. 33-75490, and incorporated herein by reference).
10.67 -- Casualty Cessions Agreement ARA #4103 Final Placement Slip (Previously filed on March 29, 1994
with Registrant's Amendment No. 1 to Registration Statement on Form S-1, File No. 33-75490, and
incorporated herein by reference).
10.68 -- Property First and Second Excess of Loss Reinsurance Agreement ARA #4039 Final Placement Slip
(Previously filed on March 29, 1994 with Registrant's Amendment No. 1 to Registration Statement on
Form S-1, File No. 33-75490, and incorporated herein by reference).
10.69 -- Two-Layer Property Catastrophe Excess of Loss Agreement ARA #4068-94-1995 Final Placement Slip
(Previously filed on March 29, 1994 with Registrant's Amendment No. 1 to Registration Statement on
Form S-1, File No. 33-75490, and incorporated herein by reference).
10.70 -- Property/Casualty Single Location Clash Excess of Loss Reinsurance Agreement ARA #4093-94-1995
Final Placement Slip (Previously filed on March 29, 1994 with Registrant's Amendment No. 1 to
Registration Statement on Form S-1, File No. 33-75490, and incorporated herein by reference).
10.71 -- Casualty First Excess of Loss Agreement Final Placement Slip (Previously filed on March 29, 1994
with Registrant's Amendment No. 1 to Registration Statement on Form S-1, File No. 33-75490, and
incorporated herein by reference).
10.72 -- Casualty Second Excess of Loss Agreement Final Placement Slip (Previously filed on March 29, 1994
with Registrant's Amendment No. 1 to Registration Statement on Form S-1, File No. 33-75490, and
incorporated herein by reference).
10.73 -- Casualty Cessions Agreement ARA #4103 Final Placement Slip (Previously filed on March 29, 1994
with Registrant's Amendment No. 1 to Registration Statement on Form S-1, File No. 33-75490, and
incorporated herein by reference).
10.74 -- Casualty Excess Cessions Reinsurance Agreement ARA #4103 (Previously filed on March 29, 1994 with
Registrant's Amendment No. 1 to Registration Statement on Form S-1, File No. 33-75490, and
incorporated herein by reference).
10.75 -- Interests and Liabilities Agreement attached to Casualty Cessions Agreement ARA #4103 (Previously
filed on March 29, 1994 with Registrant's Amendment No. 1 to Registration Statement on Form S-1,
File No. 33-75490, and incorporated herein by reference).
10.76 -- Property First Excess of Loss Agreement Final Placement Slip (Previously filed on March 29, 1994
with Registrant's Amendment No. 1 to Registration Statement on Form S-1, File No. 33-75490, and
incorporated herein by reference).
</TABLE>
E-7
<PAGE> 19
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- - ------ -------
<S> <C>
10.77 -- Property Second Excess of Loss Agreement Final Placement Slip (Previously filed on March 29, 1994
with Registrant's Amendment No. 1 to Registration Statement on Form S-1, File No. 33-75490, and
incorporated herein by reference).
10.78 -- Two-Layer Property Catastrophe Excess of Loss Agreement ARA #4068-93 (Previously filed on March
29, 1994 with Registrant's Amendment No. 1 to Registration Statement on Form S-1, File No. 33-
75490, and incorporated herein by reference).
10.79 -- First and Second Property Catastrophe Excess of Loss Agreement ARA #4068-93 (Previously filed on
March 29, 1994 with Registrant's Amendment No. 1 to Registration Statement on Form S-1, File No.
33-75490, and incorporated herein by reference).
10.80 -- Interests and Liabilities Agreement attached to First and Second Property Catastrophe Excess of
Loss Reinsurance Agreement #4068-93 (Previously filed on March 29, 1994 with Registrant's
Amendment No. 1 to Registration Statement on Form S-1, File No. 33-75490, and incorporated herein
by reference).
10.81 -- Property/Casualty Single Location Clash Excess of Loss Reinsurance Agreement Final Placement Slip
(Previously filed on March 29, 1994 with Registrant's Amendment No. 1 to Registration Statement on
Form S-1, File No. 33-75490, and incorporated herein by reference).
10.82 -- Property/Casualty Single Location Clash Excess of Loss Reinsurance Agreement ARA #4093-93
(Previously filed on March 29, 1994 with Registrant's Amendment No. 1 to Registration Statement on
Form S-1, File No. 33-75490, and incorporated herein by reference).
10.83 -- First through Fifth General Aviation Liability Excess of Loss Reinsurance Agreement AR #4222 1994
Final Placement Slip (Previously filed on March 30, 1995 with Registrant's Annual Report on Form
10-K, File No. 1-12922, and incorporated herein by reference).
10.84 -- Casualty First and Second Excess of Loss Reinsurance Agreement AR #4038-94 1994 Final Placement
Slip (Previously filed on March 30, 1995 with Registrant's Annual Report on Form 10-K, File No. 1-
12922, and incorporated herein by reference).
10.85 -- Special Underlying General Aviation Liability Excess of Loss Reinsurance Agreement AR #4221 1994
Final Placement Slip (Previously filed on March 30, 1995 with Registrant's Annual Report on Form
10-K, File No. 1-12922, and incorporated herein by reference).
10.86 -- General Aviation Hull Special Underlying Excess of Loss Reinsurance Agreement AR #4227 1994 Final
Placement Slip (Previously filed on March 30, 1995 with Registrant's Annual Report on Form 10-K,
File No. 1-12922, and incorporated herein by reference).
</TABLE>
E-8
<PAGE> 20
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- - ------ -------
<S> <C>
10.87 -- First Through Fifth General Aviation Liability Excess of Loss Reinsurance Agreement AR #4222 1995
Final Placement Slip (Previously filed on March 28, 1996 with Registrant's Annual Report on Form
10-K, File No. 1-12922, and incorporated herein by reference).
10.88 -- Special Underlying General Aviation Liability Excess of Loss Reinsurance Agreement AR #4221 1995
Final Placement Slip (Previously filed on March 28, 1996 with Registrant's Annual Report on Form
10-K, File No. 1-12922, and incorporated herein by reference).
10.89 -- General Aviation Hull Special Underlying Excess of Loss Reinsurance Agreement AR #4227 1995 Final
Placement Slip (Previously filed on March 28, 1996 with Registrant's Annual Report on Form 10-K,
File No. 1-12922, and incorporated herein by reference).
10.90 -- First and Second Property Excess of Loss Reinsurance Agreement--ARA #4039-91 (subject to a
request for confidential treatment) (Previously filed on March 28, 1996 with Registrant's Annual
Report on Form 10-K, File No. 1-12922, and incorporated herein by reference).
10.91 -- First and Second Casualty Excess of Loss Reinsurance Agreement--ARA #4038-91 (subject to a
request for confidential treatment) (Previously filed on March 28, 1996 with Registrant's Annual
Report on Form 10-K, File No. 1-12922, and incorporated herein by reference).
10.92 -- Casualty First and Second Excess of Loss Reinsurance Agreement--AR #4038-95 (subject to a request
for confidential treatment) (Previously filed on March 28, 1996 with Registrant's Annual Report
on Form 10-K, File No. 1-12922, and incorporated herein by reference).
10.93 -- First and Second Casualty Excess of Loss Reinsurance Agreement--AR #4038-95 (subject to a request
for confidential treatment) (Previously filed on March 28, 1996 with Registrant's Annual Report
on Form 10-K, File No. 1-12922, and incorporated herein by reference).
10.94 -- General Aviation Hill Special Underlying Excess of Loss Reinsurance Agreement--AR #4227-94
(subject to a request for confidential treatment) (Previously filed on March 28, 1996 with
Registrant's Annual Report on Form 10-K, File No. 1-12922, and incorporated herein by reference).
10.95 -- Special Underlying General Aviation Liability Excess of Loss Reinsurance Agreement--AR #4221-94
(subject to a request for confidential treatment) (Previously filed on March 28, 1996 with
Registrant's Annual Report on Form 10-K, File No. 1-12922, and incorporated herein by reference).
10.96 -- First Through Fifth General Aviation Liability
Excess of Loss Reinsurance Agreement--AR #4222-94 (subject to a request for confidential
treatment) (Previously filed on March 28, 1996 with Registrant's Annual Report on Form 10-K, File
No. 1-12922, and incorporated herein by reference).
</TABLE>
E-9
<PAGE> 21
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- - ------ -------
<S> <C>
10.97 -- Amendment to the Restated Credit Agreement, as amended, dated as of March 18, 1996, by and between
American Eagle and The First National Bank of Chicago, individually and as Agent (Previously filed
on March 28, 1996 with Registrant's Annual Report on Form 10-K, File No. 1-12922, and incorporated
herein by reference).
10.98 -- Amendment to the Restated Credit Agreement, as amended, dated as of May 3, 1996,
by and between American Eagle and The First National Bank of Chicago, individually and as Agent.
27 -- Financial Data Schedule
</TABLE>
E-10
<PAGE> 1
EXHIBIT 10.98
AMENDMENT
This Amendment (the "Amendment") is entered into as of May 3, 1996 by and
between American Eagle Group, Inc. (the "Borrower") and The First National Bank
of Chicago, individually and as Agent.
W I T N E S S E T H :
WHEREAS, the Borrower and The First National Bank of Chicago, as the sole
Lender (the "Lender") and as Agent (in such capacity, the "Agent"), are parties
to that certain Amended and Restated Credit Agreement dated as of December 29,
1994, as amended as of February 23, 1996 and March 18, 1996 (as so amended, the
"Agreement"); and
WHEREAS, the Borrower and the Lender desire to amend certain provisions of
the Agreement as more fully described hereinafter;
NOW, THEREFORE, in consideration of the premises herein contained, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. Defined Terms. Capitalized terms used herein and not otherwise
defined herein shall have the meanings attributed to such terms in the
Agreement.
2. Amendment.
2.1. The first sentence of Section 7.10 of the Agreement is hereby
amended to read in its entirety as follows:
"The Borrower will maintain Consolidated Tangible Net Worth of not
less than (i) at all times prior to June 30, 1996, $44,500,000, (ii) at all
times during the period from June 30, 1996 to and including December 30,
1996, $46,500,000, (iii) at all times during the period from December 31,
1996 to and including December 30, 1997, $50,000,000, and (iv) at all times
thereafter, $55,000,000."
2.2. The first sentence of Section 7.12 of the Agreement is hereby
amended to read in its entirety as follows:
"The Borrower will not permit the total Statutory Capital and Surplus of
American Eagle to be less than (i) $49,000,000 at any time during the
period from October 1, 1995 to and including December 31, 1995, (ii)
$46,000,000 at any time during the period from January 1, 1996 to and
including June 29, 1996, (iii) $48,000,000 at any time during the period
from June 30, 1996 to and including December 30, 1996, (iv) $51,500,000 at
any time during the period from December 31, 1996 to and including December
30, 1997 and (v) $60,000,000 at any time thereafter."
2.3. Section 7.14 of the Agreement is hereby amended by inserting,
immediately after the phrase "or, in the case of the fiscal quarter ending
December 31, 1995 only, 2.35 to 1.0",
<PAGE> 2
the phrase "or, in the case of each fiscal quarter during the fiscal year
ending December 31, 1996, 2.75 to 1.0".
3. Representations and Warranties. In order to induce the Lender and
the Agent to enter into this Amendment, the Borrower represents and warrants
that:
3.1. The representations and warranties set forth in Article VI of the
Agreement are true and correct on the date hereof as if made on and as of the
date hereof, except to the extent any such representation or warranty is stated
to relate solely to an earlier date, in which case such representation or
warranty was true and correct on and as of such earlier date, and there exists
no Default or Unmatured Default on the date hereof.
3.2. The execution and delivery by the Borrower of this Amendment have
been duly authorized by proper corporate proceedings, and this Amendment and
the Agreement, as amended by this Amendment, constitute the legal, valid and
binding obligations of the Borrower, enforceable against the Borrower in
accordance with their terms, except as enforceability may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally.
3.3. Neither the execution and delivery by the Borrower of this
Amendment, nor the consummation of the transactions herein contemplated, nor
compliance with the provisions hereof will violate any law, rule, regulation,
order, writ, judgment, injunction, decree or award binding on the Borrower or
any of its Subsidiaries or the Borrower's or any of its Subsidiaries' articles
of incorporation or by-laws or the provisions of any indenture, instrument or
agreement to which the Borrower or any of its Subsidiaries is a party or is
subject, or by which it or its property is bound, or conflict with or
constitute a default thereunder. No consent, approval or authorization of any
Person is required to authorize, or is required in connection with the
execution, delivery and performance of, or the legality, validity, binding
effect or enforceability of, this Amendment or the Agreement, as amended by
this Amendment.
4. Effective Date. This Amendment shall become effective as of the
date first above written (the "Effective Date") upon receipt by the Agent of
the following:
(i) Counterparts of this Amendment duly executed by the Borrower and
the Lender.
(ii) Copies, certified by the Secretary or an Assistant Secretary of
the Borrower, of its Board of Directors' resolutions authorizing
the execution of this Amendment.
(iii) Such other documents, in each case in form and substance
satisfactory to the Agent, as the Agent may reasonably request.
5. Ratification. The Agreement, as amended hereby, shall remain in
full force and effect and is hereby ratified, approved and confirmed in all
respects.
6. Reference to Agreement. From and after the Effective Date, each
reference in the Agreement to "this Agreement", "hereof", or "hereunder" or
words of like import, and all references to the Agreement in any and all
agreements, instruments, documents, notes,
-2-
<PAGE> 3
certificates and other writings of every kind and nature shall be deemed to
mean the Agreement, as amended by this Amendment.
7. Costs and Expenses. The Borrower agrees to pay all reasonable
costs, fees and out-of-pocket expenses (including attorneys' fees and time
charges of attorneys for the Agent, which attorneys may be employees of the
Agent) incurred by the Agent in connection with the preparation, execution and
enforcement of this Amendment.
8. CHOICE OF LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS,
BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
9. Execution in Counterparts. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the Borrower, the Lender and the Agent have executed
this Amendment as of the date first above written.
AMERICAN EAGLE GROUP, INC.
By: /s/ M. PHILIP GUTHRIE
--------------------------------
Title: Chairman and Chief Executive
Officer
-----------------------------
THE FIRST NATIONAL BANK OF
CHICAGO, Individually and as Agent
By: /s/ JOSEPH M. MANZELLA
--------------------------------
Title: Corporate Banking Officer
-----------------------------
-3-
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
3/31/96, 12/31/95, AND 3/31/95 CONDENSED CONSOLIDATED BALANCE SHEET AND
CONDENSED CONSOLIDATED STATEMENT OF INCOME, AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH 3/21/96, 12/31/95, AND 3/31/95 10Q FILING.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS YEAR 3-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995 DEC-31-1995
<PERIOD-START> JAN-01-1996 JAN-01-1995 JAN-01-1995
<PERIOD-END> MAR-31-1996 DEC-31-1995 MAR-31-1995
<DEBT-HELD-FOR-SALE> 50,349 56,719 55,378
<DEBT-CARRYING-VALUE> 28,804 28,952 29,603
<DEBT-MARKET-VALUE> 28,437 28,889 28,334
<EQUITIES> 0 0 0
<MORTGAGE> 0 0 0
<REAL-ESTATE> 0 0 0
<TOTAL-INVEST> 86,022 103,870 98,834
<CASH> 1,858 2,922 4,410
<RECOVER-REINSURE> 20,002 22,449 12,445
<DEFERRED-ACQUISITION> 16,138 15,296 15,587
<TOTAL-ASSETS> 297,202 318,269 356,961
<POLICY-LOSSES> 139,892 136,528 153,512
<UNEARNED-PREMIUMS> 77,553 79,605 67,268
<POLICY-OTHER> 4,194 20,196 18,200
<POLICY-HOLDER-FUNDS> 438 1,736 18,755
<NOTES-PAYABLE> 11,250 11,250 10,250
<COMMON> 1,629 1,629 1,629
0 0 0
71 71 71
<OTHER-SE> 49,333 53,395 66,077
<TOTAL-LIABILITY-AND-EQUITY> 297,202 318,269 356,961
32,834 102,447 20,649
<INVESTMENT-INCOME> 1,403 5,497 1,344
<INVESTMENT-GAINS> 153 496 6
<OTHER-INCOME> (33) 396 251
<BENEFITS> 27,519 90,933 13,605
<UNDERWRITING-AMORTIZATION> 10,757 40,600 8,857
<UNDERWRITING-OTHER> 11,600 40,848 9,396
<INCOME-PRETAX> (4,170) (20,376) 1,452
<INCOME-TAX> (1,418) (7,300) 465
<INCOME-CONTINUING> (2,752) (13,076) 987
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> (2,752) (13,076) 987
<EPS-PRIMARY> (0.39) (1.87) 0.14
<EPS-DILUTED> (0.39) (1.87) 0.14
<RESERVE-OPEN> 57,852 50,451 50,451
<PROVISION-CURRENT> 18,388 30,006 5,380
<PROVISION-PRIOR> 40,348 27,846 23,740
<PAYMENTS-CURRENT> 5,856 42,066 7,313
<PAYMENTS-PRIOR> 20,778 41,466 27,623
<RESERVE-CLOSE> 58,736 57,852 29,120
<CUMULATIVE-DEFICIENCY> (3,274) (18,861) (912)
</TABLE>
