|
|
|
|
|
|
|
|
|
|
|
|
|
|
Previous: HORIZON GROUP INC, 8-K, 1997-11-14 |
Next: PRIME RETAIL INC, 8-K, 1997-11-14 |
<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
Quarterly report under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarter ended September 30, 1997
PROFESSIONAL BENEFITS INSURANCE COMPANY
--------------------------------------------------------
(Exact Name of Small Business as Specified in Its Charter)
TEXAS 74-2072635
(State or other (IRS Employer
jurisdiction incorporation Identification Number)
or organization)
COMMISSION FILE NUMBER: 0-22344
10835 ROCKLEY ROAD
HOUSTON, TEXAS 77099
- -------------- -----
(Address or principal executive office) (Zip Code)
(281)721-1800
(Registrant's telephone number)
Check mark whether the Issuer (1) filed all reports required by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO [ ]
--- ---
The number of shares of Class A common stock the Registrant, par value
$1.22 per share, issued and outstanding at September 30, 1997 was
587,129. The number of shares of Class B common stock the Registrant,
par value $1.22 per share, issued and outstanding at September 30,
1996 was 73,524.
Traditional Small Business Disclosure Format: Yes [ ] No X
---
<PAGE> 2
PROFESSIONAL BENEFITS INSURANCE COMPANY
INDEX TO FORM 10-QSB
<TABLE>
<CAPTION>
Page
<S> <C> <C>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements.
Balance Sheets - September 30, 1997 and December 31, 1996............................. 3
Income Statements - Three Months Ended and Nine Months
Ended September 30, 1997 and 1996.................................................. 5
Statements of Cash Flows - Three Months Ended and Nine Months
Ended September 30, 1997 and 1996.................................................. 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 Upon 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............................................................................................ 12
INDEX TO EXHIBITS..................................................................................... 13
</TABLE>
2
<PAGE> 3
PART I, ITEM 1. FINANCIAL STATEMENTS.
PROFESSIONAL BENEFITS INSURANCE COMPANY
BALANCE SHEETS
SEPTEMBER 30, 1997 AND DECEMBER 31, 1996
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997 DECEMBER 31, 1996*
(UNAUDITED)
------------ ------------
<S> <C> <C>
INVESTMENTS
Fixed maturities, at market (amortized
cost of $667,420 - 1997 and
$1,935,408 - 1996) $ 668,634 $ 1,927,526
Short-term investments, at cost 738,536 830,898
----------- ------------
Total Investments 1,407,170 2,758,424
CASH 233,025 729,252
REINSURANCE RECOVERABLE 891,184
Current recoverable 132,382
Future recoverable 708,551
ACCRUED INVESTMENT INCOME 1,846 10,763
PREMIUM DUE AND UNCOLLECTED 100,069 179,836
ACCOUNTS AND NOTE RECEIVABLE 8,667 58,051
LAND AND BUILDING, At Cost
(net of accumulated depreciation of
$483,568 - 1997 and $454,906 - 1996) 469,220 497,882
FURNITURE AND EQUIPMENT, At Cost
(net of accumulated depreciation of
$373,975 - 1997 and $328,861 - 1996) 232,343 226,940
GUARANTY FUND ASSESSMENTS 1,582 3,654
DEFERRED TAX BENEFIT 21,500 28,000
FEDERAL INCOME TAX RECEIVABLE 887,847 294,000
OTHER ASSETS, At Cost 20,260 20,008
----------- ------------
Total Assets $ 4,224,462 $ 5,697,994
=========== ============
</TABLE>
* The amounts for December 31, 1996 were derived from amounts included in the
audited financial statements filed as part of the Company's 1996 Form
10-KSB/A.
3
<PAGE> 4
PART I, ITEM 1. FINANCIAL STATEMENTS. (CONTINUED)
PROFESSIONAL BENEFITS INSURANCE COMPANY
BALANCE SHEETS (cont'd.)
SEPTEMBER 30, 1997 AND DECEMBER 31, 1996
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997 DECEMBER 31, 1996*
(UNAUDITED)
------------------ ------------------
<S> <C> <C>
LIABILITIES
Future policy benefits $ 927,282 $ 1,048,334
Policy claims 2,013,060 2,160,000
Premium received in advance 172,719 185,706
Unearned premium 40,998 56,324
----------- ------------
3,154,059 3,450,364
Reinsurance payable 27,874 57,463
Other liabilities 304,455 311,397
----------- ------------
Total Liabilities 3,486,388 3,819,224
----------- ------------
STOCKHOLDERS' EQUITY
Common stock
Class A voting, $1.22 par value; 1,022,668
authorized shares; 587,129 and issued and
outstanding in 1997 and 1996 716,297 716,297
Class B nonvoting, $1.22 par value; 136,720
authorized shares; 73,524 issued and
outstanding in 1997 and 1996 89,699 89,699
Additional paid-in capital 536,214 536,214
Unrealized gain(loss) on investments
(net of deferred income tax benefits of
$3,800 - 1997 and $2,600 - 1996) 7,520 (5,182)
Retained earnings (611,656) 541,742
----------- ------------
Total Stockholders' Equity 738,074 1,878,770
----------- ------------
Total Liabilities and Stockholders' Equity $ 4,224,462 $ 5,697,994
=========== ============
</TABLE>
* The amounts for December 31, 1996 were derived from amounts included in the
audited financial statements filed as part of the Company's 1996 Form
10-KSB/A.
4
<PAGE> 5
PART I. ITEM 1. FINANCIAL STATEMENTS. (CONTINUED)
PROFESSIONAL BENEFITS INSURANCE COMPANY
CONSOLIDATED INCOME STATEMENTS
QUARTERS ENDING SEPTEMBER 30, 1997 AND SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
1997 1996
----------------------------- -----------------------------
3 MONTHS 9 MONTHS 3 MONTHS 9 MONTHS
ENDED 9/30/97 ENDED 9/30/97 ENDED 9/30/96 ENDED 9/30/96
(UNAUDITED) (UNAUDITED)
----------------------------- -----------------------------
<S> <C> <C> <C> <C>
REVENUES
Premiums earned $ 2,705,659 $ 9,216,819 $ 2,496,869 $ 6,910,492
Less reinsurance ceded 175,677 534,203 135,572 372,015
------------ ------------- ------------ ------------
Net premiums earned 2,529,982 8,682,616 2,361,297 6,538,477
Net investment income 39,501 124,950 68,038 141,013
Other income 9,889 19,287 31,229 79,563
------------ ------------- ------------ ------------
Total Revenues 2,579,372 8,826,853 2,460,564 6,759,053
------------ ------------- ------------ ------------
BENEFITS, CLAIMS AND EXPENSES
Benefits and claims 3,135,127 8,857,394 1,825,815 4,949,668
Less reinsurance recoverable 482,924 843,646 12,160 162,899
------------ ------------- ------------ ------------
Net benefits and claims 2,652,203 8,013,748 1,813,655 4,786,769
Commissions 279,411 905,801 189,102 409,214
Underwriting, acquisition, insurance, and
administrative expenses 415,177 1,403,037 403,681 1,239,173
Taxes, licenses, and fees 71,045 251,840 27,235 186,841
------------ ------------- ------------ ------------
Total Benefits, Claims and Expenses 3,417,836 10,574,426 2,433,673 6,621,997
------------ ------------- ------------ ------------
INCOME BEFORE INCOME TAXES (838,464) (1,747,573) 26,891 137,056
INCOME TAX PROVISION (285,162) (594,175) 18,644 56,100
------------ ------------- ------------ ------------
NET INCOME (LOSS) ($553,302) ($1,153,398) $ 8,247 $ 80,956
============ ============= ============ ============
NET INCOME (LOSS) PER SHARE
(Based on Weighted Average Shares of
Common Stock Outstanding during the
year 660,653 - 1997; 660,653 - 1996) ($0.84) ($1.75) $0.01 $0.12
</TABLE>
5
<PAGE> 6
PART I. ITEM 1. FINANCIAL STATEMENTS. (CONTINUED)
PROFESSIONAL BENEFITS INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
QUARTERS ENDING SEPTEMBER 30, 1997 AND SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
1997
-----------------------------
3 MONTHS 9 MONTHS
ENDED 9/30/97 ENDED 9/30/97
(UNAUDITED) (UNAUDITED)
-----------------------------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Premiums $ 2,659,086 $ 8,704,480
Net investment income 52,814 140,883
Other income 9,889 19,401
Benefits and claims (3,235,567) (8,231,489)
Commissions (278,411) (843,524)
Underwriting, acquisition, insurance, and
administrative expenses (475,413) (1,598,901)
----------- -------------
Net cash provided by (used in) operating activities (1,267,602) (1,809,150)
----------- -------------
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from the sale or maturing of investments 1,676,559 1,698,756
Purchase of investments (14,583) (335,316)
Proceeds from sale of fixed assets 0 2,794
Purchase of furniture and equipment (5,484) (53,311)
----------- -------------
Net cash provided by (used in) investing activities 1,656,492 1,312,923
----------- -------------
CASH FLOW FROM FINANCING ACTIVITIES
Principal payments on capital lease payable 0 0
----------- ------------
Net cash provided by (used in) investing activities 0 0
----------- ------------
INCREASE(DECREASE) IN CASH 388,890 (496,227)
CASH, BEGINNING OF PERIOD (155,865) 729,252
----------- ------------
CASH, END OF PERIOD $ 233,025 $ 233,025
=========== ============
<CAPTION>
1996
----------------------------
3 MONTHS 9 MONTHS
ENDED 9/30/96 ENDED 9/30/96
(UNAUDITED) (UNAUDITED)
----------------------------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Premiums 2,304,587 $ 6 ,774,845
Net investment income 6,934 39,576
Other income 36,748 97,828
Benefits and claims (1,724,559) (5,029,230)
Commissions (157,895) (413,996)
Underwriting, acquisition, insurance, and 0
administrative expenses (349,128) (1,410,883)
------------ ------------
Net cash provided by (used in) operating activities 116,687 58,140
------------ ------------
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from the sale or maturing of investments 0 200,000
Purchase of investments (15,000) (15,000)
Proceeds from sale of fixed assets 0 0
Purchase of furniture and equipment (15,743) (58,108)
------------ ------------
Net cash provided by (used in) investing activities (30,743) 126,892
------------ ------------
CASH FLOW FROM FINANCING ACTIVITIES
Principal payments on capital lease payable (2,749) (10,172)
------------ ------------
Net cash provided by (used in) investing activities (2,749) (10,172)
------------ ------------
INCREASE(DECREASE) IN CASH 83,195 174,860
CASH, BEGINNING OF PERIOD 128,917 37,252
------------ ------------
CASH, END OF PERIOD $ 212,112 $ 212,112
============ ============
</TABLE>
6
<PAGE> 7
PROFESSIONAL BENEFITS INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1: BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited financial statements
contain all adjustments necessary to present fairly the Company's financial
position as of September 30, 1997 and December 31, 1996, the results of
operations and its cash flow for the periods ended September 30, 1997 and
September 30, 1996, and are of a normal recurring nature.
7
<PAGE> 8
PART I, ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Change in revenue for the 3rd Quarters, 1997 and 1996 are shown below:
<TABLE>
<CAPTION>
========================================================================================================
3 Mths Ended 9 Mths Ended 3 Mths Ended 9 Mths Ended
9/30/97 9/30/97 9/30/96 9/30/96
========================================================================================================
<S> <C> <C> <C> <C>
Total Revenue $2,579,372 $8,826,853 $2,428,747 $6,828,386
--------------------------------------------------------------------------------------------------------
Increase(Decrease) in
Revenue Compared to
Preceding Period $150,625 $1,998,467 $256,897 $355,633
--------------------------------------------------------------------------------------------------------
Percentage of Change
Compared to Preceding
Period 6.2% 29.3% 11.8% 5.5%
========================================================================================================
</TABLE>
The primary components of revenue are premium and net investment income. The
increase in revenue from 1996 is primarily due to increases in premium income
which is the result of new association business and increased sales of accident
and health insurance.
Change in premium revenue for the 3rd Quarters, 1997 and 1996 are shown below:
<TABLE>
<CAPTION>
========================================================================================================
3 Mths Ended 9 Mths Ended 3 Mths Ended 9 Mths Ended
9/30/97 9/30/97 9/30/96 9/30/96
========================================================================================================
<S> <C> <C> <C> <C>
Net Earned Premiums $2,529,982 $8,682,616 $2,329,480 $6,607,810
--------------------------------------------------------------------------------------------------------
Increase(Decrease) in
Premium Compared to
Preceding Period $200,502 $2,074,806 $253,805 $453,071
--------------------------------------------------------------------------------------------------------
Percentage of Change
Compared to Preceding
Period 8.6% 31.4% 12.2% 7.4%
========================================================================================================
</TABLE>
In the 3rd Quarter, 1997 premium increased by $200,502 from the 3rd Quarter,
1996. This increase in premium is due to increasing sales of accident and
health insurance, group dental insurance and the addition of new associations
and groups which the Company contracted with to provide major medical
insurance.
8
<PAGE> 9
PART I, ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
Change in net investment income for the 3rd Quarters, 1997 and 1996 are shown
below:
<TABLE>
<CAPTION>
=========================================================================================================
3 Mths Ended 9 Mths Ended 3 Mths Ended 9 Mths Ended
9/30/97 9/30/97 9/30/96 9/30/96
=========================================================================================================
<S> <C> <C> <C> <C>
Total Net Investment
Income $39,501 $124,950 $68,038 $141,013
---------------------------------------------------------------------------------------------------------
Increase(Decrease) in Net
Investment Income Compared
to Preceding Period
$(28,537) $(16,063) $1,146 $(72,619)
---------------------------------------------------------------------------------------------------------
Percent Change in Net
Investment Income (41.9)% (11.4)% 1.7% (34.0%)
=========================================================================================================
</TABLE>
In the nine months ending September 30, 1997 investments experienced a 11.4%
decrease in total net investment income due to the decreasing amount of
invested assets earning investment income. This has resulted in a decrease in
the interest income on the portfolio.
Change in general and administrative expenses for the 3rd Quarters, 1997 and
1996 are shown below:
<TABLE>
<CAPTION>
=========================================================================================================
3 Mths Ended 9 Mths Ended 3 Mths Ended 9 Mths Ended
9/30/97 9/30/97 9/30/96 9/30/96
=========================================================================================================
<S> <C> <C> <C> <C>
General & Administrative
Expenses $415,177 $1,403,037 $403,681 $1,239,173
---------------------------------------------------------------------------------------------------------
Increase(Decrease) in
General & Admin. Expenses
Compared to Preceding
Period $11,496 $163,864 $(122,517) $(229,291)
---------------------------------------------------------------------------------------------------------
Percentage of Change
Compared to Preceding
Period 2.8% 13.2% (23.3%) (15.6%)
=========================================================================================================
</TABLE>
In the nine months ending September 30, 1997, general and administrative
expenses experienced an 13.2% increase, primarily due to expenses incurred
during the prospective acquisition of another company. The Company incurred
additional legal, accounting and actuarial fees associated with analyzing the
target company and requesting approval from the State Insurance Department.
Management subsequently decided not to proceed with the acquisition.
Additionally, the Company has paid additional actuarial fees associated with
premium rate increases which will take effect at various times in 1997.
9
<PAGE> 10
PART I ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
Change in commission expense for 3rd Quarters, 1997 and 1996 are shown below:
<TABLE>
<CAPTION>
========================================================================================================
3 Mths Ended 9 Mths Ended 3 Mths Ended 9 Mths Ended
9/30/97 9/30/97 9/30/96 9/30/96
========================================================================================================
<S> <C> <C> <C> <C>
Total Commission Expense
$279,411 $905,801 $189,102 $409,214
--------------------------------------------------------------------------------------------------------
Increase(Decrease) in
Commission Expense
Compared to Preceding
Period $90,309 $496,587 $118,915 $200,960
--------------------------------------------------------------------------------------------------------
Percentage of Change
Compared to Preceding
Period 47.8% 121.4% 169.4% 96.5%
========================================================================================================
</TABLE>
Commission rates vary depending on the type of insurance policy written as well
as first year and renewal year policies. The Company has written a large amount
of new business which has the higher first year commission rates. Additionally,
the increased volume in dental insurance has compounded the effect because
dental insurance has a higher commission structure than other lines of business
which the Company has marketed in prior years.
LIQUIDITY
All funds in excess of immediate cash needs are invested in short-term money
market funds, Federal Loan Mortgage bonds, and certificates of deposits.
The nine months ending September 30, 1997 cash flow decreased by $496,227.
This decrease is due to a high volume of claims.
The Company does not expect to declare any dividends on its stock in the
foreseeable future. No dividends have been declared or paid in the prior three
years.
CAPITAL RESOURCES
The Company currently does not have any outstanding debts.
10
<PAGE> 11
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON 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
None
11
<PAGE> 12
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
PROFESSIONAL BENEFITS INSURANCE COMPANY
Date /s/ Nov. 13, 1997 /s/ JERRY CAMPBELL
--------------------------- ------------------------------------------
Signature
Jerry Campbell - Vice-President
12
<PAGE> 13
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
13
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 7
<S> <C>
<PERIOD-TYPE> 3 MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<DEBT-HELD-FOR-SALE> 668,634
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 469,220
<TOTAL-INVEST> 1,407,170
<CASH> 971,561
<RECOVER-REINSURE> 132,382
<DEFERRED-ACQUISITION> 0
<TOTAL-ASSETS> 4,224,462
<POLICY-LOSSES> 927,282
<UNEARNED-PREMIUMS> 40,998
<POLICY-OTHER> 2,013,060
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 0
0
0
<COMMON> 805,996
<OTHER-SE> (67,922)
<TOTAL-LIABILITY-AND-EQUITY> 4,224,462
8,682,616
<INVESTMENT-INCOME> 124,950
<INVESTMENT-GAINS> 0
<OTHER-INCOME> 19,287
<BENEFITS> 8,013,748
<UNDERWRITING-AMORTIZATION> 0
<UNDERWRITING-OTHER> 1,654,877
<INCOME-PRETAX> (1,747,573)
<INCOME-TAX> (594,175)
<INCOME-CONTINUING> (1,153,398)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,153,398)
<EPS-PRIMARY> (1.75)
<EPS-DILUTED> (1.67)
<RESERVE-OPEN> 3,208,334
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 1,167,334
<PAYMENTS-PRIOR> 7,827,106
<RESERVE-CLOSE> 2,940,342
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
|
|