UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
{X} Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the period ended September 30, 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: 000-22142
OMNI INSURANCE GROUP, INC.
(Exact name of registrant as specified in its charter)
Georgia 58-1680624
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1000 Parkwood Circle, Atlanta, Georgia 30339
(Address of principal executive offices) (Zip Code)
(770) 952-4500
(Registrant's telephone number, including area code)
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 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:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class: Common Stock, par value $.01
Issued and outstanding as of: September 30, 1996 - 5,700,150 shares
OMNI INSURANCE GROUP, INC.
Form 10-Q
September 30, 1996
Table of Contents
Page
PART I. Financial Information Number
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets at
September 30, 1996 and December 31, 1995 3
Consolidated Statements of Earnings -
Three and nine months ended
September 30, 1996 and 1995 4
Consolidated Statements of Cash Flows -
Nine months ended September 30, 1996 and 1995 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II. Other Information
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults by the Company on its Senior Securities 11
Item 4. Submission of Matters to a Vote of Security
Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 14
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
OMNI INSURANCE GROUP, INC.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------ ------------
(Unaudited)
<S> <C> <C>
Assets
Investments:
Fixed maturities, at fair value $ 72,241,257 $ 75,540,655
Equity securities, at fair value 190,225 201,763
Invested cash 10,481,280 6,349,402
----------- -----------
Total investments 82,912,762 82,091,820
Accrued investment income 1,347,935 1,392,261
Accounts receivable, principally premiums 42,771,308 32,207,999
Reinsurance recoverables 1,131,635 1,019,551
Prepaid reinsurance premiums 4,393,041 985,013
Deferred policy acquisition costs 8,623,573 7,672,865
Deferred income taxes 1,463,000 795,000
Property and equipment, net 2,108,880 2,260,351
----------- -----------
Total assets $144,752,134 $128,424,860
=========== ===========
Liabilities and Stockholders' Equity
Liabilities:
Unpaid losses and loss adjustment expenses $ 35,731,936 $ 35,822,327
Unearned premiums 45,638,110 34,606,009
Funds held for reinsurance - 4,832
Accounts payable and accrued expenses 4,792,224 2,821,321
Drafts payable 5,465,013 4,674,154
Federal income taxes payable 633,878 797,878
Reserve for premium tax assessment 1,460,000 1,460,000
Other liabilities 396,101 239,551
----------- -----------
Total liabilities 94,117,262 80,426,072
----------- -----------
Stockholders' equity:
Common stock, par value $.01, authorized
15,000,000 shares; issued 5,700,150 shares 57,002 57,002
Additional paid-in capital 28,937,173 28,937,173
Net unrealized (depreciation) appreciation
of securities (289,495) 674,182
Retained earnings 21,930,192 18,330,431
----------- -----------
Total stockholders' equity 50,634,872 47,998,788
Commitments and contingencies (note 2)
----------- -----------
Total liabilities and stockholders' equity $144,752,134 $128,424,860
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
OMNI INSURANCE GROUP, INC.
Consolidated Statements of Earnings
Unaudited
<TABLE>
<CAPTION>
Three months ended September 30, Nine months ended September 30,
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Operating Data:
Gross premiums written $ 32,113,289 $ 24,024,074 $ 82,482,958 $ 71,987,155
=========== =========== =========== ===========
Net premiums written $ 28,833,150 $ 23,288,495 $ 72,475,917 $ 70,221,100
=========== =========== =========== ===========
Revenues:
Net premiums earned $ 23,058,409 $ 22,734,512 $ 64,851,843 $ 65,558,440
Net investment income 1,016,762 1,066,991 3,047,838 3,175,600
Realized capital gains (losses) (1,622) - 25,916 (2,913)
Other income (loss) 18,458 (2,447) 22,504 7,506
----------- ----------- ----------- -----------
Total revenues 24,092,007 23,799,056 67,948,101 68,738,633
----------- ----------- ----------- -----------
Losses and expenses:
Losses and loss adjustment expenses, net 17,266,964 16,829,714 47,783,498 50,359,826
Acquisition and operating expenses, net 5,137,689 5,508,876 15,249,843 15,403,393
Reserve for premium tax assessment - - - 1,460,000
----------- ----------- ----------- -----------
Total losses and expenses 22,404,653 22,338,590 63,033,341 67,223,219
----------- ----------- ----------- -----------
Earnings before income taxes 1,687,354 1,460,466 4,914,760 1,515,414
----------- ----------- ----------- -----------
Income taxes (benefit):
Current 512,000 331,000 1,486,000 29,000
Deferred (59,000) 37,000 (171,000) 134,000
----------- ----------- ----------- -----------
Total income taxes 453,000 368,000 1,315,000 163,000
----------- ----------- ----------- -----------
Net earnings $ 1,234,354 $ 1,092,466 $ 3,599,760 $ 1,352,414
=========== =========== =========== ===========
Net earnings per share $ 0.22 $ 0.19 $ 0.63 $ 0.24
=========== =========== =========== ===========
Weighted average shares outstanding 5,700,150 5,700,150 5,700,150 5,700,150
=========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
OMNI INSURANCE GROUP, INC.
Consolidated Statements of Cash Flows
Unaudited
<TABLE>
<CAPTION>
Nine months ended September 30,
1996 1995
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 3,599,760 $ 1,352,414
Adjustments to reconcile net earnings to net cash
provided from operating activities:
Amortization and depreciation 860,663 678,293
Increase in accounts receivable, principally premiums (10,563,309) (5,152,301)
(Increase) decrease in reinsurance recoverables (112,084) 707,537
(Increase) decrease in prepaid reinsurance premiums (3,408,028) 3,302,537
Increase in deferred policy acquisition costs (950,708) (1,499,204)
Deferred income tax (benefit) expense (171,000) 134,000
(Decrease) increase in unpaid losses and loss adjustment
expenses (90,391) 1,380,663
Increase in unearned premiums 11,032,101 1,360,123
Decrease in funds held for reinsurance (4,832) (1,742,690)
Increase in accounts payable and accrued expenses 1,202,918 166,711
Increase in drafts payable 790,859 121,301
Change in federal income taxes (164,000) (271,000)
Increase in reserve for premium tax assessment - 1,460,000
Other, net 174,957 (199,433)
---------- ----------
Net cash provided from operating activities 2,196,906 1,798,951
---------- ----------
Cash flows from investing activities:
Purchases of investments (7,122,888) (8,421,156)
Maturities, calls, and paydowns of fixed maturities 5,370,912 1,346,344
Sales of investments 3,157,068 88,500
(Increase) decrease in invested cash (4,131,878) 5,334,293
Purchases of property and equipment (394,633) (924,382)
Sales of property and equipment 156,529 130,790
---------- ----------
Net cash used in investing activities (2,964,890) (2,445,611)
---------- ----------
Cash flows from financing activities:
Cash overdraft 767,984 646,660
---------- ----------
Net cash provided by financing activities 767,984 646,660
---------- ----------
Net decrease in cash - -
Cash at beginning of period - -
---------- ----------
Cash at end of period $ - $ -
========== ==========
Supplemental cash flow information - cash payments
during year for:
Income taxes $ 1,650,000 $ 300,000
========== ==========
Supplemental schedule of noncash investing and
financing activities:
Retirement of treasury stock $ - $ 7,400,000
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
OMNI INSURANCE GROUP, INC.
Notes to Consolidated Financial Statements
September 30, 1996
(1) Basis of Presentation
The unaudited consolidated financial statements include the accounts of Omni
Insurance Group, Inc. ("Company"), a holding company, and its wholly owned
insurance subsidiary, Omni Insurance Company ("Omni Insurance"). Omni
Insurance owns all the issued and outstanding common stock of Omni Indemnity
Company and Omni General Agency, Inc. All significant intercompany balances
and transactions have been eliminated in consolidation.
The unaudited consolidated financial statements have been prepared in
conformity with generally accepted accounting principles (GAAP). However, all
of the footnotes required by GAAP have not been included and reference should
be made to the "Notes to Consolidated Financial Statements" included in the
Company's 1995 Annual Report. In the opinion of management, all necessary
adjustments have been reflected for a fair presentation of the results of
operations, financial position and cash flows in the accompanying unaudited
consolidated financial statements. The results for the periods are not
necessarily indicative of the result for the entire year.
Certain items in the prior period financial statements have been reclassified
to conform to the current presentation.
(2) Contingencies
As previously disclosed, the Florida Department of Revenue ("Department") has
conducted an audit of the premium tax returns filed by Omni Insurance for the
years 1987 through 1991. The Department made adjustments to these returns that
increase the premium tax liability, including penalties and interest. No audit
has been conducted for years 1992 and 1993; however, similar issues may exist
for these two years which could result in an additional assessment. Due to the
redomestication of Omni Insurance, no similar exposure exists after 1993.
Omni Insurance administratively protested the assessment proposed by the
Department for the years 1987 through 1991. In May 1995, Omni Insurance
received notice from the Department that it had denied Omni Insurance's protest
and issued a notice of final assessment. As a result, Omni Insurance filed
suit against the Department to further contest the assessment. Following the
July 1995 filing of such suit, a Florida trial court rendered a decision in
another case involving similar issues. This decision was adverse to the
taxpayer, after the taxpayer had initially been granted summary judgment in its
favor. The taxpayer appealed that case and filed a brief on appeal of the
verdict previously rendered. During the quarter ended June 30, 1996, the
Appeals Court rendered a decision that was adverse to the taxpayer, denied its
claim for rehearing and denied its request to be heard by the Florida Supreme
Court.
Omni Insurance strongly disagreed with the decision of the trial court and
filed an Amicus Brief supporting the unrelated taxpayer's position. Based on
the trial court verdict, Omni management considered it prudent and necessary to
establish a reserve to cover any possible loss exposure related to this issue.
Accordingly, a reserve of $1,460,000 was established during 1995. Omni
Insurance's suit is still pending.
(3) Redomestication
During the quarter ended September 30, 1996, Omni Indemnity Company received
approval to redomesticate from Georgia to Illinois. The effective date of
redomestication was June 10, 1996.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Effective January 1, 1996, the Company entered into a catastrophe reinsurance
treaty with a reinsurer rated A+ by A.M. Best (hereinafter, the "new
reinsurance treaty"). This treaty reinsures 80% of all comprehensive premiums
and provides protection in the event of a large weather-related loss. The
commencement of this treaty impacted a number of the accounts and ratios of the
Company during 1996 but resulted in a decrease in net income of only
approximately $0.01 and $0.03 per share for the three and nine months ended
September 30, 1996, respectively.
Financial Condition
September 30, 1996, Compared to December 31, 1995
Total investments increased to $82.9 million at September 30, 1996 from $82.1
million at December 31, 1995. This increase was the result of positive
operating cash flow for the nine months ended September 30, 1996. Partially
offsetting this increase was an unrealized loss of approximately $1.5 million
in the investment portfolio which resulted in an after tax decrease of
$1.0 million to stockholders' equity. The unrealized loss was a result of an
increase in interest rates and the requirements of Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities".
The increase in accounts receivable to $42.8 million and unearned premiums to
$45.6 million at September 30, 1996 is the result of the increase in gross
premiums written and changes in payment plans offered to and utilized by
insureds compared to December 31, 1995.
Prepaid reinsurance premiums and deferred policy acquisition costs were
impacted by the new reinsurance treaty. Prepaid reinsurance premiums increased
to $4.4 million at September 30, 1996 from $1.0 million at December 31, 1995
due primarily to the cession of the unearned premium reserve on the new
reinsurance treaty. The increase in deferred policy acquisition costs to
$8.6 million at September 30, 1996 from $7.7 million at December 31, 1995 was
primarily attributable to the increase in deferrable acquisition expenses
resulting from the larger volume of gross premiums written for the quarter
ended September 30, 1996, compared to the quarter ended December 31, 1995.
The increase in deferred policy acquisition costs was partially offset by the
deferral of the unearned portion of commission on the new reinsurance treaty.
Unpaid losses and loss adjustment expenses decreased to $35.7 million at
September 30, 1996 from $35.8 million at December 31, 1995. The decrease is
attributable to a reduction in our loss ratio and our ability to speed the
claims settlement process through the use of staff adjusters.
Results of Operations
Three Months Ended September 30, 1996, Compared to Three Months Ended
September 30, 1995
Gross premiums written increased 33.7% to $32.1 million for the three months
ended September 30, 1996 from $24.0 million for the three months ended
September 30, 1995. As previously disclosed, the Company began writing
business in Texas in the third quarter of 1995. Since that time, the Company's
Texas premiums have grown steadily. For the three months ended September 30,
1996, Texas accounted for approximately 16% of the Company's gross premiums
written. A sizable portion of the Texas business has been written through an
agency which has multiple branch offices, but these branch offices are
controlled by common ownership.
Net premiums written increased 23.8% to $28.8 million for the three months
ended September 30, 1996 from $23.3 million for the three months ended
September 30, 1995. This increase was partially offset by the new reinsurance
treaty whereby approximately $2.3 million in premiums were ceded to the
reinsurer.
Net premiums earned increased 1.4% to $23.1 million during the three months
ended September 30, 1996 from $22.7 million during the three months ended
September 30, 1995. Without the new reinsurance treaty, net premiums earned
would have been $24.7 million.
Net investment income decreased slightly to $1.0 million for the three months
ended September 30, 1996 from $1.1 million for the three months ended September
30, 1995. This was the result of a decrease in average investable assets and
a decrease in the average investment yield as higher yielding securities have
matured and been replaced by lower yielding securities.
Losses and loss adjustment expenses were $17.3 million for the three months
ended September 30, 1996 with a net loss ratio of 74.9%, compared to $16.8
million for the three months ended September 30, 1995 with a net loss ratio of
74.0%. Without the new reinsurance treaty, the net loss ratio would have
decreased to 73.4% for the three months ended September 30, 1996. This is due
to the premiums ceded having a lower loss and loss adjustment expense ratio
than the Company has in the aggregate. The Company continues to closely
monitor the adequacy of its rates and loss reserves and takes action when
necessary.
Acquisition and operating expenses decreased to $5.1 million for the three
months ended September 30, 1996 from $5.5 million for the three months ended
September 30, 1995, and the net expense ratio decreased to 22.3% from 24.2%
for these same periods. This decrease was primarily due to the new reinsurance
treaty. Without the new reinsurance treaty, the Company's net expense ratio
would have been 23.6%.
The effective income tax rate for the three months ended September 30, 1996 was
26.8% compared to 25.2% for the three months ended September 30, 1995. The
increase is primarily attributable to a decrease in tax exempt interest as a
percentage of total earnings before tax.
As a result of the foregoing factors, net earnings increased to $1.2 million
for the three months ended September 30, 1996 from $1.1 million for the three
months ended September 30, 1995, and earnings per share increased to $0.22 per
share from $0.19 per share for the same periods, respectively.
Nine Months Ended September 30, 1996, Compared to Nine Months Ended
September 30, 1995
Gross premiums written increased 14.6% to $82.5 million for the nine months
ended September 30, 1996 from $72.0 million for the nine months ended
September 30, 1995. As previously disclosed, the Company began writing
business in Texas in the third quarter of 1995. Since that time, the Company's
Texas premiums have grown steadily, and for the nine months ended September
30, 1996, Texas accounted for approximately 19% of the Company's gross premiums
written. A sizable portion of the Texas business has been written through an
agency which has multiple branch offices, but these branch offices are
controlled by common ownership.
Net premiums written increased 3.2% to $72.5 million for the nine months ended
September 30, 1996 from $70.2 million for the nine months ended September 30,
1995. This increase was partially offset by the new reinsurance treaty whereby
$7.6 million in premiums were ceded to the reinsurer.
Net premiums earned decreased 1.1% to $64.9 million during the nine months
ended September 30, 1996 from $65.6 million during the nine months ended
September 30, 1995. Without the new reinsurance treaty, net premiums earned
would have been $69.3 million.
Net investment income decreased slightly to $3.0 million for the nine months
ended September 30, 1996 from $3.2 million for the nine months ended September
30, 1995. This was the result of a decrease in average investable assets and a
decrease in the average investment yield as higher yielding securities have
matured and been replaced by lower yielding securities.
Losses and loss adjustment expenses were $47.8 million for the nine months
ended September 30, 1996 with a net loss ratio of 73.7%, compared to $50.4
million for the nine months ended September 30, 1995 with a net loss ratio of
76.8%. Without the new reinsurance treaty, the net loss ratio would have
decreased to 72.5% for the nine months ended September 30, 1996. This is due
to the premiums ceded having a lower loss and loss adjustment expense ratio
than the Company has in the aggregate. These decreases are primarily
attributable to improvement in the Florida personal injury protection business
due to previous rate increases and agency management steps taken. Also aiding
in the reduction of the net loss ratio was our ability to use Omni staff
appraisers to adjust more of our auto damage claims. For the nine months ended
September 30, 1996, the Company experienced adverse development of
approximately $2.0 million on its prior to 1996 accident year loss reserves.
The majority of this development was on accident years prior to 1995. The
Company continues to closely monitor the adequacy of its rates and loss
reserves and takes action when necessary.
Acquisition and operating expenses decreased slightly to $15.2 million for the
nine months ended September 30, 1996 from $15.4 million for the nine months
ended September 30, 1995, while the net expense ratio remained constant at
23.5% for these same periods. These results were affected by the new
reinsurance treaty. Without the new reinsurance treaty, the Company's net
expense ratio would have been 24.6%. The Company's operating expenses have
increased due primarily to increased staffing levels and certain other
volume-related expenses.
During the nine month period ending September 30, 1995, the Company established
a reserve for the premium tax assessment by the Florida Department of Revenue
in the amount of $1.5 million. The net impact on earnings was $999,000 or $0.18
per share. See Note (2) in the "Notes to Consolidated Financial Statements."
The effective income tax rate for the nine months ended September 30, 1996 was
26.8% compared to 21.0%, before the reserve for the premium tax assessment, for
the nine months ended September 30, 1995. The increase is primarily
attributable to a decrease in tax exempt interest as a percentage of total
earnings before tax.
As a result of the foregoing factors, net earnings increased to $3.6 million
for the nine months ended September 30, 1996 from $1.4 million for the nine
months ended September 30, 1995, and earnings per share increased to $0.63 per
share from $0.24 per share for the same periods, respectively.
Liquidity and Capital Resources
The Company's major sources of operating funds are dividends from Omni
Insurance and payments received pursuant to a tax-sharing agreement between the
Company and its subsidiaries. Therefore, the Company's liquidity will be
dependent upon the earnings of Omni Insurance and the subsidiaries' ability to
pay dividends and make tax-sharing payments to the Company.
The principal sources of funds for the insurance subsidiaries result from the
collection of net premiums written, investment income and proceeds from
investments that have been sold, matured or repaid.
The Company's principal uses of funds are the payment of general corporate
expenses. The principal uses of funds for the insurance subsidiaries are the
payment of claims, acquisition and operating expenses and the purchase of
investments.
Net cash provided by operating activities was $2.2 million for the nine months
ending September 30, 1996 compared with net cash provided of $1.8 million for
the nine months ending September 30, 1995. Cash flow for the prior year period
was impacted by the receipt of $3.6 million from the cancellation of a
reinsurance treaty. Absent the $3.6 million receipt in 1995, the Company's
cash from operations for the nine months ended September 30, 1996 improved by
approximately $4.0 million. This improvement is due to the Company's lower net
loss ratio compared to the prior year and the increase in gross premiums
written.
Net funds used in investing activities was $3.0 million for the nine months
ending September 30, 1996 compared with $2.4 million for the nine months ending
September 30, 1995. Company estimates of policy liabilities generally develop
and are resolved over a period of less than three years; therefore, the Company
has a relatively predictable schedule of cash needs. The Company also manages
its investment activities to maintain adequate liquidity for operating purposes
and to protect its policyholders and stockholders (that is, by attempting to
match its liquidity with cash requirements). The Company's portfolio is
heavily weighted toward intermediate fixed maturity securities, substantially
all of which are investment grade. The Company has no real estate investments
or mortgage loans. Historically, the Company has not experienced any
"mismatches" related to liquidity management and none are anticipated. There
are no foreseeable requirements to liquidate any investments prior to their
scheduled maturities.
Illinois (Omni Insurance's state of domicile) insurance laws and regulations
impose certain restrictions on the amount of dividends that a company domiciled
in the state may pay without prior regulatory approval. As a result, the
maximum amount of dividends that Omni Insurance may pay without prior
regulatory approval is the greater of (i) ten percent of the statutory
policyholders' surplus as of the preceding December 31, or (ii) the statutory
net income for the preceding calendar year, including a portion of its capital
gains for such year, provided that dividends may only be paid to the extent of
earned surplus. Omni Insurance has the ability to pay approximately $3.5
million of dividends to the Company during 1996.
See accompanying notes to consolidated financial statements.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults by the Company on its Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Filed Herewith (*),
Nonapplicable (NA), or
Incorporated by Reference from
OMGR
Exhibit Registration No. Exhibit
Number or Report Number
- ------ ---------------- -------
<S> <S> <S> <S>
2.0 Plan of acquisition, reorganization, arrangement,
liquidation or succession NA
3.1 Articles of Incorporation of the Company, as amended 33-64346 3.1
3.2 Bylaws of the Company, as amended 33-64346 3.2
4.1 Specimen certificate of the Registrant's Common Stock 33-64346 4.1
10.1 Charter of Omni Insurance Company 33-64346 10.1
10.2 By-Laws of Omni Insurance Company 33-64346 10.2
10.3 Amended and Restated Loan Agreement between Omni
Insurance Group, Inc. and Dresdner Bank A.G., Grand
Cayman Branch, dated September 8, 1988 33-64346 10.3
10.4 Promissory Note in the original principal amount of
$5,500,000 payable by the Company, Dudley L.
Moore, Jr. and Hannover Holdings, Inc. to Dresdner
Bank A.G., Grand Cayman Branch dated September 8, 1988 33-64346 10.4
10.5 Lease Agreement between Omni Insurance Group, Inc. and
Boston Parkwood Company dated August 21, 1991, as
amended by letter agreement dated January 30, 1992 33-64346 10.5
10.5A First Amendment to Lease between Omni Insurance Group,
Inc. and Boston Parkwood Company dated August 21, 1991,
and amended by letter agreement dated January 30, 1992 1994 Form 10-K 10.5A
10.5B Second Amendment to Lease between Omni Insurance Group,
Inc. and Boston Parkwood Company dated August 21, 1991,
and amended by letter agreement dated January 30, 1992 1994 Form 10-K 10.5B
10.5C Sublease between Omni Insurance Company and Suburban
Lodges of America, Inc. *
10.6 Employment Agreement between Omni Insurance Group, Inc.
and J. Paul Kennedy dated April 28, 1986 as amended 33-64346 10.6
10.7 Stock Purchase Agreement among the Company, Dudley L.
Moore, Jr. and Hannover Holdings, Inc. dated May 19, 1993 33-64346 10.7
10.8 Promissory Note of the Company payable to First Union
National Bank of North Carolina in the principal amount
of $10,500,000 dated June 8, 1993 33-64346 10.8
10.9 Loan Agreement between Omni Insurance Group, Inc. and
First Union National Bank of North Carolina dated
June 8, 1993 33-64346 10.9
10.10 Pledge Agreement between Dudley L. Moore, Jr. and First
Union National Bank of North Carolina dated June 8, 1993 33-64346 10.10
10.11 Pledge Agreement between J. Paul Kennedy and First Union
National Bank of North Carolina dated June 8, 1993 33-64346 10.11
10.12 Share Transfer Agreement effective March 31, 1993 among
Dudley L. Moore, Jr., J. Paul Kennedy and the Company 33-64346 10.12
10.13 Omni Insurance Group 401(k) Retirement Plan 33-64346 10.13
10.14 1993 Incentive Stock Option Plan of the Company 33-64346 10.14
10.15 1993 Nonqualified Stock Option Plan of the Company 33-64346 10.15
10.16 1993 Nonemployee Director Nonqualified Stock Option
Plan of the Company 33-64346 10.16
10.17 Executive Split-Dollar Insurance Plan of the Company 33-64346 10.17
10.18 Agreement of Reinsurance between General Reinsurance
Corporation and Omni Insurance Company 33-64346 10.18
10.19 Private Passenger Automobile Quota Share Reinsurance
Agreement between Omni Insurance Company and
Transatlantic Reinsurance Company 33-64346 10.19
10.20 Cover Note No. CT 1297-95 regarding reinsurance
agreements between Omni Insurance Company and Reliance
Insurance Company 1994 Form 10-K 10.20
10.20A Quota Share Reinsurance Agreement between Omni Insurance
Company and Reliance Insurance Company 1995 Form 10-K 10.20A
10.21 Not used
10.22 Agency Agreement between Omni General Agency, Inc. and September 30,1995
Gainsco County Mutual Insurance Company Form 10-Q 10.22
10.22A Amendment 1 to the Agency Agreement between Omni General June 30, 1996
Agency, Inc. and Gainsco County Mutual Insurance Company Form 10-Q 10.22A
10.23 Quota Share Reinsurance Agreement between Gainsco County September 30,1995
Mutual Insurance Company and Omni Insurance Company Form 10-Q 10.23
10.23A Amendment 2 to the Quota Share Reinsurance Agreement
between Gainsco County Mutual Insurance Company and June 30, 1996
Omni Insurance Company Form 10-Q 10.23A
10.24 Management and Service Agreement between Omni General September 30,1995
Agency, Inc. and Omni Insurance Company Form 10-Q 10.24
10.25 Trust Agreement between Gainsco County Mutual Insurance
Company, Omni Insurance Company and The Northern Trust September 30,1995
Company Form 10-Q 10.25
10.26 Split-Dollar Insurance Agreement between Omni Insurance
Company and D. Jack Sawyer, Jr. as Trustee under March 31,1996
The DLMB Family Trust Form 10-Q 10.26
10.27 Cover Note CT1350-96 regarding reinsurance agreement
between Omni Insurance Company and Transatlantic March 31, 1996
Reinsurance Company Form 10-Q 10.27
10.27A Automobile Physical Damage Quota Share Reinsurance
Agreement between Omni Insurance Company, Omni Indemnity June 30, 1996
Company and Transatlantic Reinsurance Company Form 10-Q 10.27A
10.28 Executive Incentive Common Stock Plan of Omni Insurance June 30, 1996
Group, Inc. Form 10-Q 10.28
11.0 Statement regarding computation of per share earnings NA
15.0 Letter regarding unaudited interim financial information NA
18.0 Letter regarding change in accounting principles NA
19.0 Report furnished to security holders NA
22.0 Published report regarding matters submitted to vote of
security holders NA
23.0 Consents of accountants, experts and counsel NA
24.0 Power of attorney NA
27.1 Financial data schedule (electronic filers only) *
99.0 Additional exhibits NA
</TABLE>
(b) Reports on Form 8-K.
None
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.
OMNI INSURANCE GROUP, INC.
Registrant
Date: November 13, 1996 /s/ J. Paul Kennedy
------------------- ----------------------------------
J. Paul Kennedy, President & Chief
Operating Officer
Date: November 13, 1996 /s/ Susan H. Scalf
------------------- ----------------------------------
Susan H. Scalf, Senior Vice
President & Treasurer
SUBLEASE
1. PARTIES
This Sublease, dated August 9, 1996, is made between Omni Insurance
Company ("Sublessor") and Suburban Lodges of America, Inc.
("Sublessee").
2. MASTER LEASE
Sublessor is the lessee under a written lease dated August 21, 1991,
leased to Sublessor the real property located in the County of Cobb,
State of Georgia described as approximately 22,975 rentable square feet at
1000 Parkwood Circle, Atlanta, Georgia 30339 ("Master Premises"). Said
lease has been amended by the following amendments: First Amendment, dated
July 1, 1994 and Second Amendment dated November 4, 1994. Master Lease and
the First and Second Amendments are attached hereto at Exhibit "A:".
3. PREMISES
Sublessor hereby subleases to Sublessee on the terms and conditions set
forth in this Sublease the following portion of the Master Premises
("Premises"): 7749 Rentable Square Feet on the 8th floor of 1000 Parkwood
Circle, Atlanta, Georgia 30339, as outlined in "red" and attached hereto
as Exhibit "B".
4. WARRANTY BY SUBLESSOR
Sublessor warrants and represents to Sublessee that the Master Lease has
not been amended or modified except as expressly set forth herein, that
Sublessor is not now, and as of the commencement of the Term hereof will
not be, in default or breach of any of the provisions of the Master Lease,
and that Sublessor has no knowledge of any claim by Lessor that Sublessor
is in default or breach of any of the provisions of the Master Lease.
5. TERM
The term of this Sublease shall commence on October 1, 1996 or forty-five
(45) days following delivery to Sublessee of a fully executed Sublease
including Lessor's Consent ("Commencement Date"), and end on August 31,
2000 ("Termination Date"). Sublessor and Sublessee shall execute a
memorandum setting forth the actual date of commencement of the Term.
Possession of the Premises ("Possession") shall be delivered to Sublessee
upon receipt of Lessor's written consent. Notwithstanding the foregoing,
if Sublessor has not delivered Possession to Sublessee by September 7,
1996, then at any time thereafter and before delivery of Possession,
Sublessee may, but does not have the obligation to, give written notice to
Sublessor of Sublessee's intention to cancel this Sublease. Said notice
shall set forth an effective date for such cancellation which shall be at
least five (5) days after delivery of said notice to Sublessor. If
Sublessor delivers Possession to Sublessee on or before such effective
date, this Sublease shall remain in full force and effect. If Sublessor
fails to deliver Possession to Sublessee on or before such effective date,
this Sublease shall be cancelled, in which case all minimum rent
previously paid by Sublessee to Sublessor on account of this Sublease
shall be returned to Sublessee, this Sublease shall thereafter be of no
further force or effect, and Sublessor shall have no further liability to
Sublessee on account of such delay or cancellation. If Sublessor permits
Sublessee to take Possession prior to the commencement of the Term, such
early Possession shall not advance Termination Date and shall be subject
to the provisions of this Sublease, except that the obligation to pay rent
shall begin on the Commencement Date.
6. RENT
6.1 Minimum Rent
Sublessee shall pay to Sublessor as minimum rent, without deduction,
set off, notice, or demand, at Omni Insurance Company, Suite 1000,
1000 Parkwood Circle, Atlanta, GA 30339 or at such other place as
Sublessor shall designate from time to time by notice to Sublessee.
Such rent shall be due and payable in advance on the first day of
each month of the Term.
The following monthly minimum rent schedule shall apply:
10/1/96 - 8/31/97 $8,852.75
9/1/97 - 3/31/98 $11,300.63
4/1/98 - 8/31/98 $11,623.50
9/1/98 - 8/31/99 $11,946.38
9/1/99 - 8/3/00 $12,269.25
Sublessee shall pay to Sublessor upon execution of this Sublease the
sum of eight thousand eight hundred fifty-two and 75/100 dollars
($8,852.75) as rent for the first month. If the Term begins or ends
on a day other than the first or last day of a month, the rent for
the partial month shall be prorated on a per diem basis.
6.2 Operating Costs In accordance with the Master Lease, Sublessee
shall reimburse Sublessor for all increases in the expenses of
operating the building and/or project above the actual pro-rata costs
for operating the building for calendar year 1996. Such additional
rent shall be payable as and when Operating Costs are payable by
Sublessor to Lessor. If the Master Lease provides for the payment by
Sublessor for Operating Costs on the basis of an estimate thereof,
then as and when adjustments between estimated and actual Operating
Costs are made under the Master Lease, the obligations of Sublessor
and Sublessee hereunder shall be adjusted in a like manner; and if
any such adjustment shall occur after the expiration or earlier
termination of the Term, then the obligations of Sublessor and
Sublessee under this Subsection 6.2 shall survive such expiration or
termination. Sublessor shall, upon request by Sublessee, furnish
Sublessee with copies of all statements submitted by Lessor of actual
or estimated Operating Costs during the Term.
7. ITEM NOT USED
8. USE OF PREMISES
The Premises shall be used and occupied only for general administrative
and office purposes and for no other use or purpose.
9. ASSIGNMENT AND SUBLETTING
Sublessee shall not assign this Sublease or further sublet all or any part
of the Premises without the prior written consent of Sublessor, such
consent shall not be unreasonably withheld or delayed (and the consent
of Lessor, if such is required under the terms of the Master Lease).
Notwithstanding the aforementioned, Sublessee may sublease all or a
portion of the premises without Sublessor's prior written consent to any
of Sublessee's affiliates, subsidiaries or companies in which Sublessee
has a controlling interest, however, in the event of any sublease to an
affiliate, subsidiary or companies in which Sublessee has a controlling
interest, Sublessee will remain fully liable for the full and complete
performance of Sublessee's obligations hereunder.
10. OTHER PROVISIONS OF SUBLEASE
All applicable terms and conditions of the Master Lease are incorporated
into and made a part of this Sublease as if Sublessor were the lessor
thereunder, Sublessee the lessee thereunder, and the Premises the Master
Premises. Sublessee assumes and agrees to perform the lessee's obligations
under the Master Lease during the Term to the extent that such obligations
are applicable to the Premises, except that the obligation to pay rent to
Lessor under the Master Lease shall be considered performed by Sublessee
to the extent and in the amount rent is paid to Sublessor in accordance
with Section 6 of this Sublease. Sublessee and Sublessor shall not commit
or suffer any act or omission that will violate any of the provisions of
the Master Lease. Sublessor shall exercise due diligence in attempting to
cause Lessor to perform its obligations under the Master Lease for the
benefit of Sublessee. If the Master Lease terminates, this Sublease shall
terminate and the parties shall be relieved of any further liability or
obligation under this Sublease, provided however, that if the Master Lease
terminates as a result of a default or breach by Sublessor or Sublessee
under this Sublease and/or the Master Lease, then the defaulting party
shall be liable to the nondefaulting party for all damage suffered as a
result of such termination. Notwithstanding the foregoing, if the Master
Lease gives Sublessor any right to terminate the Master Lease in the event
of the partial or total damage, destruction, or condemnation of the Master
Premises or the building or project of which the Master Premises are a
part, the exercise of such right by Sublessor shall not constitute a
default or breach hereunder. If Sublessor exercises its option to renew
the premises, Sublessee shall have the automatic right/option to extend
the term of the sublease for two (2) thirty (30) day periods with written
notice to Sublessor no later than May 31, 2000. The minimum rent shall be
in an amount equal to the rent payable by the Sublessor in accordance with
the Sublessor's negotiated renewal terms.
11. BROKER
Sublessor and Sublessee warrant and represent that they have dealt with no
real estate broker in connection with this Sublease other than COLLIERS
CAUBLE & CO. ("Broker") and Alan Joel Properties, Inc. ("Co-Broker"), and
that no other broker is entitled to any commission on account of this
Sublease. Pursuant to Georgia Real Estate Commission Regulation 520-1-.08,
in this transaction, COLLIERS CAUBLE & CO. and Company as broker
represents the Sublessor, and Alan Joel Properties, Inc. as co-broker
represents Sublessee. Both Broker and Co-broker shall receive their
compensation from the Sublessor in accordance with Sublease Listing
Agreement dated January 11, 1996, by and between Colliers Cauble & Co.
(Broker) and Omni Insurance Company (Sublessor).
12. ATTORNEYS' FEES
If Sublessor, Sublessee, or Broker shall commence an action against the
other arising out of or in connection with this Sublease, the prevailing
party shall be entitled to recover its costs of suit and reasonable
attorney's fees.
13. TENANT IMPROVEMENTS
Improvements to the Sublease premises are subject to the prior written
approval of the Lessor. Sublessee shall improve the premises per the plans
attached as Exhibit "B" of this sublease, or as subsequently modified and
approved by Lessor. In consideration for such improvements being
completed, Sublessor shall contribute sixty-one thousand dollars
($61,000.00) to the Sublessee immediately upon presentation of bona-fide
invoice for such improvements.
14. SUBLESSEE'S DEFAULT
Sublessor shall provide sublessee ten (10) days prior written notice to
cure any monetary default. Sublessor shall provide sublessee thiry (30)
days written notice to cure any non-monetary default, plus any additional
time as is reasonably necessary in the event such non-monetary default
is incapable of being cured in thiry (30) days.
15. CONSENT BY LESSOR
This sublease shall be of no force or effect unless consented to by Lessor
within sixty (60) days after execution hereof, if such consent is required
under the terms of the Master Lease; which consent shall approve certain
conditions made by Sublessee.
Date: 8-8-96 Date: August 9, 1996
------------------------------------- ----------------------------
Sublessee: Suburban Lodges of America, Inc. Sublessee: Omni Insurance Company
--------------------------------- -----------------------
By: David Krischer By: Lowell E. Sims
---------------------------------------- ------------------------------
Title: President Title: Sr. Vice President
------------------------------------- ---------------------------
By: Terry Feldman By:
---------------------------------------- -----------------------------
Title: Vice President - CFO Title:
------------------------------------- --------------------------
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
This schedule contains summary financial information extracted from Omni
Insurance Group, Inc.'s September 30, 1996 financial statements and is qualifed
in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000906786
<NAME> OMNI INSURANCE GROUP INC
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<DEBT-HELD-FOR-SALE> 72,241
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 190
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 82,913
<CASH> 0
<RECOVER-REINSURE> 1,132
<DEFERRED-ACQUISITION> 8,624
<TOTAL-ASSETS> 144,752
<POLICY-LOSSES> 35,732
<UNEARNED-PREMIUMS> 45,638
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 0
0
0
<COMMON> 57
<OTHER-SE> 50,578
<TOTAL-LIABILITY-AND-EQUITY> 144,752
64,852
<INVESTMENT-INCOME> 3,048
<INVESTMENT-GAINS> 26
<OTHER-INCOME> 23
<BENEFITS> 47,783
<UNDERWRITING-AMORTIZATION> 0
<UNDERWRITING-OTHER> 15,250
<INCOME-PRETAX> 4,915
<INCOME-TAX> 1,315
<INCOME-CONTINUING> 3,600
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,600
<EPS-PRIMARY> 0.63
<EPS-DILUTED> 0.63
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
