<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM 10-K/A
Amendment No. 1 to
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
---------------------------
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 COMMISSION FILE NO. 1-12922
AMERICAN EAGLE GROUP, INC.
(Exact Name of registrant as Specified in its Charter)
DELAWARE 75-2100622
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
12801 NORTH CENTRAL EXPRESSWAY
SUITE 800
DALLAS, TEXAS 75243
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (972) 448-1400
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- -------------------
COMMON STOCK, $0.01 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 Item
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. [ X ]
The aggregate market value of the voting stock held by non-affiliates of
the Registrant as of March 21, 1997 was $12,501,152 based upon a closing price
of $4.00 per share.
As of March 21, 1997, there were 7,047,098 shares of the Registrant's
Common Stock, $.01 par value per share, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Certain exhibits to Registrant's Form S-1 filed with the S.E.C. and
effective May 11, 1994 (File No. 33-75490) are incorporated by reference into
Part IV.
<PAGE> 2
The purpose of this Form 10-K/A is to refile pages 23, 36 and 43 of the
Form 10-K for the fiscal year ended December 31, 1996 of American Eagle Group,
Inc. to correct typographical errors contained in the EDGAR filing of such
Form 10-K.
<PAGE> 3
AMERICAN EAGLE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(In Thousands Except Per Share Data)
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Earned Premiums, Net $ 107,217 $ 102,447 $ 82,725
Agency Operations, Net 424 396 919
Investment Income, Net 4,470 5,497 4,106
Realized Investment Gains (Losses), Net (74) 496 (33)
----------- ----------- -----------
Total Revenues 112,037 108,836 87,717
----------- ----------- -----------
Expenses:
Losses and Loss Adjustment Expenses, Net of Reinsurance 107,473 90,933 52,729
Policy Acquisition and Other Underwriting Expenses 47,848 37,292 23,694
Interest Expense 1,132 987 800
----------- ----------- -----------
Total Expenses 156,453 129,212 77,223
----------- ----------- -----------
Income (Loss) Before Income Tax Provision (Benefit) (44,416) (20,376) 10,494
Income Tax Provision (Benefit) -- (7,300) 3,351
Net Income (Loss) $ (44,416) $ (13,076) $ 7,143
=========== =========== ===========
Net Income (Loss) Available for Common Stockholders $ (44,514) $ (13,174) $ 6,588
=========== =========== ===========
Net Income (Loss) Per Common Share (Primary and Fully Diluted) $ (6.32) $ (1.87) $ 1.16
=========== =========== ===========
Weighted Average Number of Common Shares Outstanding
(Primary and Fully Diluted) 7,048,898 7,052,998 5,684,386
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
36
<PAGE> 4
ITEM 6: SELECTED FINANCIAL DATA
(Dollars in Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
FOR THE YEAR 1990 1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Gross premiums produced (1) $ 94,565 $ 103,752 $ 114,750 $ 139,847 $ 167,207 $ 181,561 $ 151,182
Net premiums written $ 7,350 $ 30,895 $ 51,250 $ 71,869 $ 95,997 $ 120,957 $ 96,229
Earned premiums $ 6,874 $ 16,592 $ 43,725 $ 66,091 $ 82,725 $ 102,447 $ 107,217
Net investment income $ 4,784 $ 3,299 $ 2,880 $ 2,918 $ 4,106 $ 5,497 $ 4,470
Realized investment gains
(losses) $ 202 $ 1,719 $ 1,622 $ 1,414 $ (33) $ 496 $ (74)
Interest expense $ 1,465 $ 682 $ 462 $ 708 $ 800 $ 987 $ 1,132
Operating income (loss) $ 3,653 $ 1,530 $ 3,145 $ 4,799 $ 7,164 $ (13,394) $ (44,342)
Income (loss) before
extraordinary items and
cumulative effect of
change in accounting
principle $ 3,784 $ 2,694 $ 4,199 $ 5,718 $ 7,143 $ (13,076) $ (44,416)
Net income (loss) $ 3,784 $ 3,624 $ 6,079 $ 5,718 $ 7,143 $ (13,076) $ (44,416)
Net income (loss) available
for common stockholders(2) $ 3,784 $ 3,467 $ 4,781 $ 4,420 $ 6,588 $ (13,174) $ (44,514)
Weighted average shares
outstanding 3,091,493 3,469,448 3,469,448 3,469,448 5,684,386 7,052,998 7,048,898
Loss and LAE Ratio 83.6% 55.7% 57.7% 62.3% 63.7% 88.8% 100.2%
Expense Ratio 65.7% 49.4% 38.2% 29.8% 28.6% 36.4% 44.6%
-------- --------- --------- --------- --------- --------- -----------
Combined Ratio 149.3% 105.1% 95.9% 92.1% 92.3% 125.2% 144.8%
======== ========= ========= ========= ========= ========= ===========
PER COMMON SHARE
Operating income $ 1.18 $ 0.44 $ 0.91 $ 1.38 $ 1.26 $ (1.90) $ (6.29)
Operating income (loss) for
common stockholders (2) $ 1.18 $ 0.40 $ 0.53 $ 1.01 $ 1.16 $ (1.91) $ (6.30)
Net income (loss) $ 1.22 $ 1.04 $ 1.75 $ 1.65 $ 1.26 $ (1.85) $ (6.30)
Net income (loss) for
common stockholders (2) $ 1.22 $ 1.00 $ 1.38 $ 1.27 $ 1.16 $ (1.87) $ (6.32)
Stockholders' equity $ 4.34 $ 5.63 $ 7.00 $ 8.27 $ 9.12 $ 7.58 $ 1.06
Dividends declared $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.09 $ 0.13 $ 0.08
AT YEAR END
Total cash and investments $ 65,741 $ 67,436 $ 48,064 $ 87,262 $ 98,181 $ 106,792 $ 89,087
Total assets $183,917 $ 211,646 $ 219,028 $ 299,622 $ 337,103 $ 318,269 $ 261,959
Reserve for loss and loss
adjustment expenses $ 96,954 $ 102,979 $ 95,074 $ 122,342 $ 142,768 $ 136,528 $ 138,133
Note payable $ 9,945 $ 3,295 $ 10,000 $ 10,000 $ 9,250 $ 11,250 -
Total liabilities $167,226 $ 180,470 $ 183,114 $ 259,285 $ 271,139 $ 263,174 $ 219,670
Redeemable preferred stock $ 1,629 $ 11,629 $ 11,629 $ 11,629 $ 1,629 $ 1,629 $ 34,793
Stockholders' equity $ 15,062 $ 19,547 $ 24,285 $ 28,708 $ 64,335 $ 53,466 $ 7,496
Total debt to equity 76.8% 76.3% 89.1% 75.3% 16.9% 24.1% 464.2%
Return on average equity 34.1% 20.0% 21.8% 16.7% 14.2% (22.2)% (145.7)%
SELECTED STATUTORY DATA
Policyholders' surplus $ 28,376 $ 31,471 $ 40,204 $ 44,752 $ 65,107 $ 50,465 $ 20,351
Net premiums written to
surplus 0.3x 0.9x 1.1x 1.6x 1.3x 2.3x 5.2x
Loss and LAE Ratio 71.4% 53.7% 57.9% 63.1% 64.2% 89.8% 100.2%
Expense Ratio 55.4% 38.2% 41.2% 30.0% 33.7% 34.9% 43.5%
-------- --------- --------- --------- --------- --------- -----------
Combined Ratio 126.8% 91.9% 99.1% 93.2% 97.9% 124.7% 143.7%
======== ========= ========= ========= ========= ========= ===========
</TABLE>
(1) For a discussion of gross premiums produced, see "Management's Discussion
of Financial Condition and Results of Operations."
(2) After deduction of preferred dividends.
23
<PAGE> 5
3. INSURANCE OPERATIONS:
Reinsurance Transactions
In the ordinary course of business, AEIC and AMIC purchase reinsurance for the
purpose of limiting their retained loss exposure and maintaining required
statutory surplus amounts.
Reinsurance does not relieve the Company from its liabilities under the
original policies to the extent that the reinsuring companies fail to meet
their obligations under reinsurance contracts. Management evaluates the
financial condition of its reinsurers and monitors concentrations of credit
risk arising from similar geographic regions, activities, or economic
characteristics of the reinsurers to minimize its exposure to significant
losses from reinsurer insolvencies. Management believes that the allowances at
December 31, 1996, are adequate to cover known and anticipated losses. At
December 31, 1996 and 1995, the Company's consolidated balance sheets reflected
the following reinsurance recoverable balances and the related allowances for
doubtful accounts:
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Reinsurance recoverable $ 70,622 $ 101,941
Allowance for doubtful accounts (1,380) (816)
--------- ---------
Reinsurance recoverable, net $ 69,242 $ 101,125
========= =========
The effect of reinsurance on premiums written and earned for the
insurance operations is as follows:
Written Earned
--------- ---------
For the year ended December 31, 1996-
Direct premiums $ 130,198 $ 153,817
Reinsurance assumed 12,622 8,543
Reinsurance ceded (46,591) (55,143)
--------- ---------
Net premiums $ 96,229 $ 107,217
========= =========
Percentage assumed of net 13% 8%
========= =========
For the year ended December 31, 1995-
Direct premiums $ 166,001 $ 152,579
Reinsurance assumed 6,235 7,164
Reinsurance ceded (51,279) (57,296)
--------- ---------
Net premiums $ 120,957 $ 102,447
========= =========
Percentage assumed of net 5% 7%
========= =========
For the year ended December 31, 1994-
Direct premiums $ 151,875 $ 136,445
Reinsurance assumed 7,268 5,040
Reinsurance ceded (63,146) (58,760)
--------- ---------
Net premiums $ 95,997 $ 82,725
========= =========
Percentage assumed of net 8% 6%
========= =========
</TABLE>
The Company makes quarterly deposits for reinsurance contracts in the normal
course of business. At December 31, 1996 and 1995, the Company had entered into
reinsurance contracts with future deposits totaling $17,550 and $ 32,064,
respectively. These deposits are generally payable in the first nine months of
the subsequent year.
43
<PAGE> 6
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.
Dated: June 25, 1997 AMERICAN EAGLE GROUP, INC.
BY: /s/ M. Philip Guthrie
-------------------------------
M. Philip Guthrie, Chairman of the
Board, Chief Executive
Officer and President
73
