SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
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(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the quarterly period ended March 31, 1998 or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 for the transition
period from to .
For the Quarter Ended March 31, 1998 Commission file number 1-12502
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Chartwell Re Corporation
(Exact name of registrant as specified in its charter)
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Delaware 41-1652573
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Four Stamford Plaza,
P. O. Box 120043
Stamford, Connecticut 06912-0043
(Address of principal executive offices) (zip code)
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Registrant's telephone number, including area code (203) 705-2500
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 the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
Common Stock - $.01 par value 9,625,649
- ----------------------------- ------------
Description of Class Shares Outstanding
as of May 12, 1998
<PAGE>
Chartwell Re Corporation
Index To Form 10-Q
PART I FINANCIAL INFORMATION
Item 1 - Page
----
Condensed Consolidated Balance Sheets at March 31, 1998 and
December 31, 1997..................................................... 1
Condensed Consolidated Statements of Operations for the three months
ended March 31, 1998 and 1997.......................................... 2
Condensed Consolidated Statements of Cash Flows for the three
months ended March 31, 1998 and 1997................................... 3
Notes to Condensed Consolidated Financial Statements................... 4
Item 2 -
Management's Discussion and Analysis of Financial Condition and
Results of Operations.................................................. 5
PART II..OTHER INFORMATION
Item 6 -
Exhibits and Reports on Form 8-K ................................ 10
Signatures ...................................................... 11
i
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1 - Financial Statements
CHARTWELL RE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share amounts)
March 31, December 31,
1998 1997
----------- ------------
ASSETS: (Unaudited)
Investments:
Fixed maturities:
Held to maturity (market value 1998,
$37,922;1997, $37,421)........................$ 37,008 $ 36,630
Available for sale (amortized cost 1998,
$646,101; 1997, $645,108)..................... 658,616 657,973
Other investments................................. 42,756 38,043
Cash and cash equivalents........................... 31,728 31,607
--------- ---------
Total investments and cash................ 770,108 764,253
Accrued investment income........................... 9,364 10,677
Premiums in process of collection................... 145,372 126,537
Reinsurance recoverable: on paid losses............. 20,702 34,502
on unpaid losses........... 235,149 202,593
Prepaid reinsurance................................. 43,585 29,929
Goodwill............................................ 61,460 61,006
Deferred policy acquisition costs................... 23,080 26,100
Deferred income taxes............................... 32,730 33,298
Deposits............................................ 19,539 19,040
Other assets........................................ 71,192 67,549
--------- ---------
$ 1,432,281 $ 1,375,484
============ ===========
LIABILITIES:
Loss and loss adjustment expenses...................$ 818,949 $ 788,240
Unearned premiums................................... 112,598 111,149
Contingent interest notes........................... 30,343 29,747
Other reinsurance balances.......................... 42,418 33,723
Accrued expenses and other liabilities.............. 49,578 47,967
Long term debt...................................... 109,190 104,126
---------- ----------
Total liabilities........................ 1,163,076 1,114,952
--------- ---------
COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST................................... 35 35
----------- ----------
STOCKHOLDERS' EQUITY
Preferred stock, par value $1.00 per share;
authorized 5,000,000 shares; no shares
issued or outstanding............................
Common stock, par value $0.01 per share; authorized
20,000,000 shares; shares issued and outstanding
9,623,653 and 9,609,799 in 1998 and 1997,
respectively..................................... 96 96
Additional paid-in capital........................ 212,128 211,864
Net unrealized appreciation of investments........ 9,505 8,741
Foreign currency translation adjustment........... 1,020 348
Retained earnings................................. 46,421 39,448
---------- ---------
Total stockholders' equity................ 269,170 260,497
---------- ---------
$ 1,432,281 $ 1,375,484
============= ============
See notes to consolidated financial statements.
1
<PAGE>
CHARTWELL RE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except share amounts)
(Unaudited)
Three Month Periods
Ended March 31,
----------------------------
1998 1997
------------ -----------
UNDERWRITING OPERATIONS:
Premiums earned.................................... $ 52,743 $ 61,785
Net investment income.............................. 11,644 9,831
Net realized capital gains (losses)................ 99 (20)
------------ ----------
Total revenues................................. 64,486 71,596
------------ ---------
Loss and loss adjustment expenses.................. 31,924 42,035
Policy acquisition costs........................... 14,945 17,120
Other expenses..................................... 4,269 3,694
------------ ---------
Total expenses................................ 51,138 62,849
------------ ---------
Income before taxes - underwriting operations...... 13,348 8,747
------------ ---------
SERVICE OPERATIONS:
Service and other revenue.......................... 3,348 7,534
Equity in net earnings of investees................ 748 1,146
Net investment income.............................. 208 248
------------ ----------
Total revenues................................ 4,304 8,928
------------ ----------
Other expenses..................................... 2,686 4,878
Amortization of goodwill........................... 566 517
------------ ----------
Total expenses................................ 3,252 5,395
------------ ----------
Income before taxes - service operations........... 1,052 3,533
------------ ----------
CORPORATE:
Net investment income.............................. 40 131
General and administrative expenses................ 624 401
Interest expense................................... 3,074 2,705
Amortization expense............................... 305 241
------------ ----------
Loss before taxes - corporate...................... (3,963) (3,216)
------------ ----------
Consolidated income before taxes................... 10,437 9,064
Income tax expense................................. 3,070 2,577
------------ ----------
Net income......................................... $ 7,367 $ 6,487
============= ==========
Per Share Data:
Basic earnings per share........................... $ 0.77 $ 0.68
============= ==========
Weighted average number of common shares
outstanding..................................... 9,623,351 9,596,172
============= ==========
Diluted earnings per share......................... $ 0.73 $ 0.66
============== ==========
Weighted average number of common and common
equivalent shares outstanding................... 10,042,368 9,841,477
============== ===========
See notes to consolidated financial statements.
2
<PAGE>
CHARTWELL RE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
Three Month Periods
Ended March 31,
--------------------------
1998 1997
------------ ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net premiums collected....................... $ 33,460 $ 41,854
Net losses and loss adjustment expenses...... (33,772) (44,091)
Overhead expenses............................ (9,572) (13,398)
Service and other revenue.................... 301 6,060
Net income taxes paid........................ (212) (612)
Interest received on investments............. 12,144 11,688
Interest paid................................ (3,480) (3,411)
Other, net................................... 595 (3,243)
------------ ----------
Net cash used in operating activities..... (536) (5,153)
------------ ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available for sale securities.... (43,089) (26,272)
Maturities of available for sale securities... 4,125 7,876
Sales of available for sale securities........ 35,104 20,512
------------ ----------
Net cash provided by (used in)
investing activities...................... (3,860) 2,116
------------ ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of long-term debt...................... 5,045 1,486
Repayment of long-term debt..................... (389) -
Dividends paid.................................. (394) (383)
Other, net...................................... 264 -
------------ ----------
Net cash provided by financing activities.. 4,526 1,103
------------ ----------
Effect of exchange rate on cash............ (9) (567)
------------ ----------
Net increase (decrease) in cash and
cash equivalents.................................. 121 (2,501)
Cash and cash equivalents at beginning of period..... 31,607 51,134
------------ ----------
Cash and cash equivalents at end of period........... $ 31,728 $ 48,633
============ ==========
RECONCILIATION OF NET INCOME TO NET CASH
USED IN OPERATING ACTIVITIES:
Net income....................................... $ 7,367 $ 6,487
Adjustments to reconcile net income to net cash
used in operating activities:
Equity in net earnings of investees........ (748) (1,146)
Net realized capital (gains) losses........ (99) 20
Contingent interest........................ 596 528
Deferred policy acquisition costs.......... 3,020 (2,462)
Unpaid loss and loss adjustment expenses... 30,709 10,345
Unearned premiums.......................... 1,449 14,897
Other reinsurance balances................. (4,961) 981
Reinsurance recoverable.................... (20,628) (10,911)
Net change in receivables and payables..... (18,648) (25,378)
Other, net................................. 1,407 1,486
----------- ----------
Net cash used in operating activities... $ (536) $ (5,153)
=========== ==========
See notes to consolidated financial statements.
3
<PAGE>
CHARTWELL RE CORPORATION
Notes to Condensed Consolidated Financial Statements
March 31, 1998
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim Condensed Consolidated Financial
Statements of Chartwell Re Corporation (the "Company") have been prepared in
accordance with generally accepted accounting principles for interim financial
information, the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and notes required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for fair presentation have been included.
Operating results for any interim period are not necessarily indicative of
results that may be expected for the full year. These interim statements should
be read in conjunction with the 1997 consolidated financial statements and notes
thereto included in the Company's Annual Report on Form 10-K as filed with the
Securities and Exchange Commission.
Certain account balances from the prior year's presentation have been
reclassified to conform to the current year's presentation.
NOTE 2 - NEW ACCOUNTING STANDARD
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS
No. 130"), which became effective for the Company on January 1, 1998. SFAS No.
130 establishes standards for reporting and display of comprehensive income and
its components (revenues, expenses, gains and losses) in a full set of
general-purpose financial statements. This statement requires that all items
that are required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements. It does not require a
specific format for that financial statement but requires that an enterprise
display an amount representing total comprehensive income for the period in that
financial statement.
The components of the Company's comprehensive income are net income, changes in
foreign currency translation adjustments and changes in unrealized appreciation
of investments. Total comprehensive income (loss) for the three month periods
ended March 31, 1998 and 1997 was $8,803,000 and ($3,546,000), respectively.
4
<PAGE>
ITEM 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations
Chartwell Re Corporation
Chartwell Re Corporation is an insurance holding company with global
underwriting and service operations, conducting its business in the United
States and in the Lloyd's market through its principal operating subsidiaries,
Chartwell Reinsurance Company ("Chartwell Reinsurance"), The Insurance
Corporation of New York ("INSCORP") and Archer Group Holdings plc ("Archer").
Chartwell Re Corporation and its subsidiaries are collectively referred to as
the Company.
Results of Operations - Three Months Ended March 31, 1998 Compared With Three
Months Ended March 31, 1997:
Revenues: Total revenues for the three months ended March 31, 1998
decreased 14.7% to $68.8 million, compared to $80.7 million for the comparable
period in 1997.
The accompanying table summarizes gross and net premiums written and
total revenues for the periods indicated:
Three Month Periods
Ended March 31,
---------------------------------------
1998 1997
--------------- ------------
(in thousands)
Gross premiums written $81,859 $96,676
======= =======
Net premiums written $41,562 $69,912
======= =======
Premiums earned $52,743 $61,785
Net investment income 11,892 10,210
Net realized capital gains (losses) 99 (20)
Service and other revenue 3,348 7,534
Equity in net earnings of investees 748 1,146
------- -------
Total Revenues $68,830 $80,655
======= =======
Underwriting Operations
Gross Premiums Written; Net Premiums Written; Net Premiums Earned.
Gross premiums written for the first quarter of 1998 were $81.9 million, a
decrease of 15.3% compared to the same period in 1997. The distribution of the
Company's gross premiums written among its business segments was as follows:
Three Month Periods
Ended March 31,
------------------------
1998 1997 % Change
----------- --------- --------
Gross Premiums Written from
Reinsurance Operations $44,438 $74,034 -40.0%
Gross Premiums Written from
Specialty Insurance Operations 37,421 22,642 65.3%
------- -------
Total $81,859 $96,676 -15.3%
======= =======
The decrease in gross premiums written from reinsurance operations is
primarily attributable to the non-renewal of several large treaties written in
1997. Certain of the treaties were non-renewed at the Company's option because
the price fell below levels at which the Company was willing to write business,
and others were not renewed because the ceding companies were directly affected
by consolidation activity in the industry. Pro forma for the elimination of
these contracts, gross premiums written from reinsurance operations for the
three months ended March 31, 1998 were $38.4 million, a decrease of 7.5% from
$41.6 million for the same period in 1997.
5
<PAGE>
Net premiums written for the three months ended March 31, 1998
decreased 40.6% to $41.6 million compared to $69.9 million for the same period
in 1997. The decrease in both gross and net premiums written reflects the
Company's response to the persistence of intense price competition in the
reinsurance operations, offset in part by the continued growth of the Controlled
Source Insurance business, which increased 40.6% and 116.3% in gross and net
premiums written, respectively, as well as the addition of premiums from the
Company's dedicated corporate capital vehicles which participate on syndicates
managed by Archer (the "Dedicated Vehicles"), amounting to almost $5.6 million
for the first quarter of 1998. Net premiums earned for the three months ended
March 31, 1998 were $52.7 million, a decrease of 14.6% compared to $61.8 million
for the same period in 1997.
Loss and Loss Adjustment Expenses. The Company's principal expense,
loss and loss adjustment expenses ("LAE") related to the settlement of claims,
was $31.9 million for the three months ended March 31, 1998, a 24.1% decrease
compared to $42.0 million for the comparable period in 1997. The decrease is
principally attributable to the decrease in net premiums earned noted above and
the decrease in the loss ratio noted below. Net losses and LAE expressed as a
percentage of net premiums earned (the loss and LAE ratio) improved to 60.5% for
the three months ended March 31, 1998 from 68.0% recorded for the same period in
1997. The improvement of 7.5 percentage points in the loss and LAE ratio for the
three months ended March 31, 1998 was a result of a change in the mix of
business as well as the benefits of new reinsurance programs, including
aggregate excess of loss reinsurance treaties, and the enhancement of existing
reinsurance programs.
Policy Acquisition Costs. Policy acquisition costs, consisting
primarily of commissions paid to ceding companies and brokerage fees paid to
intermediaries, less commissions received on business ceded to other reinsurers,
were $14.9 million for the three months ended March 31, 1998 compared to $17.1
million for the same period in 1997. Policy acquisition costs expressed as a
percentage of net premiums earned (the acquisition expense ratio) increased to
28.3% from 27.7% in the first quarter of 1997. The increase is due to a change
in the Company's mix of business.
Other Expenses. Other expenses related to underwriting operations,
which include underwriting and administrative expenses, were $4.3 million for
the three months ended March 31, 1998 compared to $3.7 million for the same
period in 1997. Other expenses expressed as a percentage of net premiums earned
increased to 8.1% for the three months ended March 31, 1998 compared to 6.0% for
the same period in 1997 reflecting the reduced level of premium volume. In
addition, 1998 overhead expenses include a pro rata share of expenses related to
participation by the Dedicated Vehicles which, in general, are proportionately
greater relative to premium volume than overhead expenses for the Company's
other business segments.
Net Underwriting Results. For the three months ended March 31, 1998 the
Company's net underwriting result (net premiums earned minus losses, LAE and
underwriting expenses) was $1.6 million compared to a net underwriting loss of
$1.1 million for the same period in 1997. The combined ratio for the three
months ended March 31, 1998 computed in accordance with generally accepted
accounting principles improved to 96.9% compared to 101.7% for the same period
in 1997. Although the loss ratio component improved to 60.5% for the three
months ended March 31, 1998 from 68.0% recorded for the same period in 1997, the
expense ratio increased to 36.4% for the three months ended March 31, 1998 from
the 33.7% recorded for the same period in 1997, for the reasons noted above.
6
<PAGE>
Service Operations
Revenue from service operations decreased to $4.3 million for the three
months ended March 31, 1998 compared to $8.9 million for the same period in
1997, principally reflecting a reduction in profit commissions due to declining
underwriting profitability at Archer as a result of competitive market
conditions at Lloyd's.
Corporate
Interest and Amortization. Interest and amortization expenses were $3.4
million for the three months ended March 31, 1998 compared to $2.9 million for
the same period in 1997. The increase was due principally to fees for letters of
credit supporting the Company's corporate capital at Lloyd's, interest on a
capital lease entered into in the second quarter of 1997 and an increase in
interest rates on debt denominated in pounds sterling.
Consolidated
Net Investment Income and Net Realized Capital Gains. Consolidated
after-tax net investment income, exclusive of realized and unrealized capital
gains, for the three months ended March 31, 1998 was $8.4 million, compared to
$7.3 million for the same period in 1997. The carrying value of the Company's
invested assets and cash increased to $770.1 million at March 31, 1998 from
$764.3 million at December 31, 1997 primarily due to the Company's draw-down on
its revolving credit facility. The average annual tax equivalent yield on
invested assets after investment expenses increased to 6.64% for the first
quarter of 1998 compared to 6.34% for the same period in 1997. The Company's pro
rata share of investment income from the Dedicated Vehicles is excluded from
this calculation because the related invested assets are not included in the
Company's consolidated balance sheet.
The Company realized net capital gains of $99,000 for the quarter ended
March 31, 1998 compared to net capital losses of $20,000 for the three months
ended March 31, 1997.
Income Before Income Taxes. Income before income taxes increased to
$10.4 million for the three months ended March 31, 1998 compared to $9.1 million
for the same period in 1997. The increase resulted primarily from the
improvement in net underwriting results discussed above, offset, in part, by the
reduction in income from service operations.
Income Tax Expense. The provision for Federal income taxes for the
three months ended March 31, 1998 increased to $3.1 million compared with $2.6
million for the same period in 1997. The effective tax rate was 29.4% and 28.4%
for the three months ended March 31, 1998 and 1997, respectively. The principal
factor in the decline below the statutory rate of 35% for both periods was the
benefit of investments in tax-advantaged securities.
Net Income. The Company realized a net profit of $7.4 million for the
three months ended March 31, 1998 compared with a net profit of $6.5 million for
the comparable 1997 period because of the factors discussed above. Diluted
earnings per share increased 10.6% to $0.73 for the three months ended March 31,
1998 from $0.66 per share reported a year ago.
Liquidity and Capital Resources
As a holding company, the Company's assets consist primarily of the
stock of its direct and indirect subsidiaries. The Company's cash flow,
therefore, depends largely on dividends and other statutorily permissible
payments from its operating subsidiaries whose principal sources of funds
7
<PAGE>
consist of net premiums, reinsurance recoveries, investment income and proceeds
from sales and redemptions of investments. Funds are applied primarily to
payments of claims, operating expenses and income taxes and to the purchase of
investments, largely fixed income securities. Cash and short-term investments
are maintained for the payment of claims and expenses.
Cash flow used by operations for the first quarter of 1998 was
$536,000 compared to $5,153,000 for the three months ended March 31, 1997.
The Company paid a quarterly cash dividend of $0.04 per share on March
4, 1998. On May 1, 1998, the Company's Board of Directors declared a quarterly
cash dividend of $0.04 per share which is payable on June 3, 1998.
Sales of available for sale investments were $35.1 million and $20.5
million for the three months ended March 31, 1998 and 1997, respectively. There
was no unusual trading activity in either period.
The Company's investment portfolio consists primarily of
investment-grade fixed maturity debt securities. At March 31, 1998,
approximately 92.8% of the bond portfolio was rated A or better ("A-1" for
commercial paper) by Moody's. While uncertainties exist regarding interest rates
and inflation, the Company attempts to minimize such risks and exposures by
balancing the duration of insurance and reinsurance liabilities with the
duration of assets in its investment portfolio. The current market value of the
Company's fixed maturity investments is not necessarily indicative of their
future valuation. The Company does not have any investments in real estate or
high-yield bonds and does not have any non-income producing fixed income
investments. The Company's fixed income securities portfolio at March 31, 1998
was comprised primarily of U.S. Treasury and government agency, mortgage
pass-through securities and corporate and municipal bonds.
Stockholders' equity increased approximately 3.3% to $269.2 million at
March 31, 1998 from $260.5 million at December 31, 1997. GAAP book value per
share increased to $27.97 at March 31, 1998 from $27.11 at December 31, 1997.
The Company's outstanding debt as of March 31, 1998 includes $48.8
million in principal amount of 10 1/4% Senior Notes Due 2004 and $7.7 million
(disseminated in pounds sterling) of Loan Notes due June 2002 and $44.3 million
under credit facilities agented by First Union National Bank N. A. (the "First
Union Credit Facility"). The Loan Notes bear interest at a rate per annum equal
to one percent below the Sterling London Interbank Offered Rate. The First Union
Credit Facility provides term loans of approximately $50 million (a portion of
which is disseminated in pounds sterling) and a $60.0 million revolving credit
facility. The Company's ratio of long-term debt to total capitalization at March
31, 1998 was 28.9% (exclusive of its Contingent Interest Notes described below),
relatively unchanged from December 31, 1997.
The agreements governing the foregoing debt obligations significantly
restrict the ability of the Company's operating subsidiaries to make dividend
and other payments to the Company.
In addition to the foregoing debt obligations, the Company is the
obligor on $1.0 million in principal amount of Contingent Interest Notes due
June 30, 2006 (the "CI Notes"). The CI Notes accrue interest at a rate of 8% per
annum but do not require interest payments until maturity or earlier redemption.
In addition, the CI Notes will entitle the holders thereof to receive at
maturity in proportion to the principal amount of the CI Notes held by them, an
aggregate of from $10 million up to $55 million in contingent interest based on
the performance of a book of reinsurance business acquired by the Company in
connection with its merger with Piedmont Management Company Inc. Under certain
circumstances, the CI Notes may be settled by delivery of shares of the
Company's common stock.
Dividend payments by the Company's operating subsidiaries are subject
to limits under the laws of the States of Minnesota and New York, respectively.
Up to $26.3 million is available under the laws of the State of Minnesota for
the payment of dividends by Chartwell Reinsurance without regulatory approval in
1998. No dividends have been declared or paid by Chartwell Reinsurance in 1998.
Under New York law, the maximum dividend payable by INSCORP to Chartwell
Reinsurance in 1998 without regulatory approval is $11.4 million. Moreover,
8
<PAGE>
notwithstanding the receipt of any dividend from INSCORP, Chartwell Reinsurance
may make dividend payments only to the extent permitted under Minnesota law.
The maximum dividend permitted by law is not indicative of an insurer's
actual ability to pay dividends, which may be constrained by business and
regulatory considerations, such as the impact of dividends on surplus, which
could affect an insurer's ratings or competitive position, the amount of
premiums that can be written and the ability to pay future dividends.
Furthermore, beyond the limits described in the preceding paragraph, the
Minnesota and New York regulators have discretion to limit further the payment
of dividends by insurance companies domiciled in their states.
9
<PAGE>
PART II OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
27 - Financial Data Schedule
(b) Reports on Form 8-K
None
(c) Signatures
10
<PAGE>
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.
CHARTWELL RE CORPORATION
(Registrant)
/s/ Charles E. Meyers
---------------------------------
Charles E. Meyers
Duly Authorized Officer and Senior
Vice President and Chief Financial Officer
Dated: May 12, 1998
11
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<ARTICLE> 7
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-1-1998
<PERIOD-END> Mar-31-1998
<DEBT-HELD-FOR-SALE> 658,616
<DEBT-CARRYING-VALUE> 37,008
<DEBT-MARKET-VALUE> 37,922
<EQUITIES> 42,756
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 738,380
<CASH> 31,728
<RECOVER-REINSURE> 20,702
<DEFERRED-ACQUISITION> 23,080
<TOTAL-ASSETS> 1,432,281
<POLICY-LOSSES> 818,949
<UNEARNED-PREMIUMS> 112,598
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 139,533
0
0
<COMMON> 96
<OTHER-SE> 269,074
<TOTAL-LIABILITY-AND-EQUITY> 1,432,281
52,743
<INVESTMENT-INCOME> 11,892
<INVESTMENT-GAINS> 99
<OTHER-INCOME> 4,096
<BENEFITS> 31,924
<UNDERWRITING-AMORTIZATION> 14,945
<UNDERWRITING-OTHER> 4,269
<INCOME-PRETAX> 10,437
<INCOME-TAX> 3,070
<INCOME-CONTINUING> 7,367
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,367
<EPS-PRIMARY> 0.77
<EPS-DILUTED> 0.73
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
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