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, 1999 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, 1999 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 9,641,893
- ----------------------------- ------------------
Description of Class Shares Outstanding
as of May 11, 1999
<PAGE>
Chartwell Re Corporation
Index To Form 10-Q
PART I FINANCIAL INFORMATION
Item 1 - Financial Statements Page
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Condensed Consolidated Balance Sheets at March 31, 1999
and December 31, 1998........................................ 1
Condensed Consolidated Statements of Operations for the
three months ended March 31, 1999 and 1998.................... 2
Condensed Consolidated Statements of Cash Flows for the
three months ended March 31, 1999 and 1998.................... 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
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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,
1999 1998
---------- ------------
(Unaudited)
ASSETS:
Investments:
Fixed maturities:
Held to maturity (market value 1999,
$30,295; 1998, $31,786).......................... $29,394 $ 30,539
Available for sale (amortized cost 1999;
$631,527; 1998, $637,747)........................ 645,362 659,752
Other investments.................................... 48,326 36,358
Investments held by managed syndicates............... 107,583 89,228
Cash and cash equivalents.............................. 50,759 49,657
Cash and cash equivalents held by managed syndicates... 9,639 10,931
--------- ----------
Total investments and cash....................... 891,063 876,465
Accrued investment income.............................. 9,187 10,723
Premiums in process of collection...................... 145,917 143,879
Reinsurance recoverable: on paid losses.............. 28,225 19,746
on unpaid losses............ 290,427 239,059
Prepaid reinsurance.................................... 49,932 40,933
Goodwill............................................... 61,200 58,467
Deferred policy acquisition costs...................... 25,742 24,084
Deferred income taxes.................................. 30,450 27,129
Deposits............................................... 20,180 19,975
Other assets........................................... 71,928 76,349
========== ============
Total assets....................................$1,624,251 $1,536,809
========== ============
LIABILITIES:
Loss and loss adjustment expenses...................... $933,828 $878,617
Unearned premiums...................................... 120,580 108,495
Contingent interest notes.............................. 32,772 32,130
Other reinsurance balances............................. 94,604 53,323
Accrued expenses and other liabilities................. 52,485 62,888
Long term debt......................................... 104,120 108,477
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Total liabilities................................1,338,389 1,243,930
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COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST...................................... 16 16
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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
9,641,893 and 9,627,891 in 1999 and 1998,
respectively...................................... 96 96
Additional paid-in capital............................. 212,433 212,156
Accumulated other comprehensive income:
Net unrealized appreciation of investments........... 6,364 12,534
Foreign currency translation adjustment.............. (905) 362
Retained earnings...................................... 67,858 67,715
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Total stockholders' equity....................... 285,846 292,863
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Total liabilities and stockholders' equity.......$1,624,251 $1,536,809
=========== ============
See notes to condensed consolidated financial statements.
1
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CHARTWELL RE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except share amounts)
(Unaudited)
Three Month Periods
Ended March 31,
-----------------------------
1999 1998
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UNDERWRITING OPERATIONS:
Premiums earned.................................... $69,664 $52,743
Net investment income.............................. 12,562 11,644
Net realized capital gains......................... 243 99
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Total revenues............................... 82,469 64,486
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Loss and loss adjustment expenses.................. 51,848 31,924
Policy acquisition costs........................... 19,320 14,945
Other expenses..................................... 6,197 4,269
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Total expenses............................... 77,365 51,138
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Income before taxes - underwriting operations...... 5,104 13,348
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SERVICE OPERATIONS:
Service and other revenue.......................... 2,553 3,348
Equity in net earnings of investees................ 41 748
Net investment income.............................. 245 208
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Total revenues............................... 2,839 4,304
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Other expenses..................................... 2,305 2,686
Amortization of goodwill........................... 466 566
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Total expenses............................... 2,771 3,252
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Income before taxes - service operations........... 68 1,052
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CORPORATE:
Net investment income.............................. 37 40
General and administrative expenses................ 680 624
Interest expense................................... 3,059 3,074
Amortization expense............................... 706 305
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Loss before taxes - corporate...................... (4,408) (3,963)
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Consolidated income before taxes................... 764 10,437
Income tax expense................................. 236 3,070
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Net income......................................... $528 $7,367
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Per Share Data:
Basic earnings per share........................... $0.05 $0.77
============ =============
Weighted average number of common shares
outstanding................................... 9,641,626 9,623,351
============ =============
Diluted earnings per share......................... $0.05 $0.73
============ =============
Weighted average number of common and common
equivalent shares outstanding................. 9,683,250 10,042,368
============ =============
See notes to condensed consolidated financial statements.
2
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CHARTWELL RE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
Three Month Periods
Ended March 31,
-------------------------
1999 1998
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net premiums collected............................... $82,162 $33,460
Net losses and loss adjustment expenses paid......... (49,022) (33,772)
Overhead expenses.................................... (9,592) (9,572)
Service and other revenue, net of related expenses... (618) 301
Net income taxes paid................................ 0 (212)
Interest received on investments..................... 13,738 12,144
Interest paid........................................ (3,449) (3,480)
Other, net........................................... (6,349) 595
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Net cash provided by (used in)
operating activities............................. 26,870 (536)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available for sale securities........... (52,639) (43,089)
Maturities of available for sale securities.......... 5,500 4,125
Maturities of held to maturity securities............ 1,020
Sales of available for sale securities............... 22,529 35,104
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Net cash used in investing activities............ (23,590) (3,860)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of long term debt........................... 5,045
Repayment of long term debt.......................... (3,659) (389)
Dividends paid....................................... (385) (394)
Other, net........................................... 277 264
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Net cash provided by (used in)
financing activities............................. (3,767) 4,526
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Effect of exchange rate on cash.................. 297 (9)
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Net increase (decrease) in cash and
cash equivalents................................. (190) 121
Cash and cash equivalents at beginning of period..... 60,588 31,607
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Cash and cash equivalents at end of period........... $60,398 $31,728
============ ==========
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY
(USED IN) OPERATING ACTIVITIES:
Net income........................................... $528 $7,367
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Equity in net earnings of investees.............. 862 (748)
Net realized capital gains....................... (243) (99)
Contingent interest.............................. 642 596
Deferred policy acquisition costs................ (1,658) 3,020
Unpaid loss and loss adjustment expenses......... 59,193 30,709
Unearned premiums................................ 12,085 1,449
Other reinsurance balances....................... 32,281 (4,961)
Reinsurance recoverable.......................... (59,847) (20,628)
Amortization of goodwill......................... 836 587
Deferred income taxes............................ (3,321) 568
Net change in receivables and payables........... (9,137) (18,648)
Other, net....................................... (5,351) 252
============== ==========
Net cash provided by (used in)
operating activities........................... $26,870 $(536)
============== ==========
See notes to condensed consolidated financial statements.
3
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CHARTWELL RE CORPORATION
Notes to Condensed Consolidated Financial Statements
March 31, 1999
(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 1998 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.
NOTE 2 - COMPREHENSIVE INCOME
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, 1999 and 1998 was $(6,909,000) and $8,803,000,
respectively.
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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 Chartwell Managing Agents Limited
("CMA"). Chartwell Re Corporation and its subsidiaries are collectively referred
to as the Company.
Results of Operations - Three Months Ended March 31, 1999 Compared With Three
Months Ended March 31, 1998:
Revenues: Total revenues for the three months ended March 31, 1999
increased 24.0% to $85.3 million, compared to $68.8 million for the comparable
period in 1998.
The accompanying table summarizes gross and net premiums written and
total revenues for the periods indicated:
Three Month Periods
Ended March 31,
----------------------------
1999 1998
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(in thousands)
Gross premiums written $123,622 $81,859
=========== ===========
Net premiums written $72,751 $41,562
=========== ===========
Premiums earned $69,664 $52,743
Net investment income 12,844 11,892
Net realized capital gains 243 99
Service and other revenue 2,553 3,348
Equity in net earnings of investees 41 748
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Total Revenues $85,345 $68,830
=========== ===========
Underwriting Operations
Gross Premiums Written; Net Premiums Written; Net Premiums Earned.
Gross premiums written for the first quarter of 1999 were $123.6 million, an
increase of 51.0% compared to the same period in 1998. The distribution of the
Company's gross premiums written among its business segments was as follows:
Three Month Periods
Ended March 31, % Change
------------------- --------
1999 1998
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Gross Premiums Written from Reinsurance
Operations $44,900 $44,438 1.0%
Gross Premiums Written from Specialty
Insurance Operations 78,722 37,421 110.4%
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Total $123,622 $81,859 51.0%
======== ======== ========
Net premiums written for the three months ended March 31, 1999
increased 75.0% to $72.8 million compared to $41.6 million for the same period
in 1998. The increase in both gross and net premiums written principally
reflects the Company's continued growth of underwriting participation on
syndicates managed by CMA, which contributed $42.2 million and $28.0 million of
premiums on a gross and net basis, respectively, in the first quarter of 1999
compared to $5.6 million and $5.0 million gross and net premiums, respectively,
in the first quarter of 1998. In addition, gross and net written premiums
emanating from the Controlled Source Insurance segment increased 14.8% and 1.2%,
respectively, to $36.5 million and $12.2 million, respectively, for the three
months ended March 31, 1999 from the same period in 1998. Net premiums earned
for the three months ended March 31, 1999 were $69.7 million, an increase of
32.1% compared to $52.7 million for the same period in 1998.
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Loss and Loss Adjustment Expenses. The Company's principal expense,
loss and loss adjustment expenses ("LAE") related to the settlement of claims,
was $51.8 million for the three months ended March 31, 1999, a 62.4% increase
compared to $31.9 million for the comparable period in 1998. Net losses and LAE
expressed as a percentage of net premiums earned (the loss and LAE ratio) is
74.4% for the three months ended March 31, 1999, up from 60.5% recorded for the
same period in 1998.
The increase in loss and LAE and the loss and LAE ratio for the three
months ended March 31, 1999 is principally attributable to the recognition in
the first quarter of adverse loss development in respect of automobile insurance
and extended warranty reinsurance previously written through Lloyd's syndicates
managed by CMA. CMA sold the Lloyd's syndicate which wrote the automobile
insurance in October of 1998 and discontinued the underwriting of the extended
warranty business for the 1999 year of account.
Policy Acquisition Costs. Policy acquisition costs, consisting primarily
of commissions paid to ceding companies and agents and brokerage fees paid to
intermediaries, less commissions received on business ceded to other reinsurers,
were $19.3 million for the three months ended March 31, 1999 compared to $14.9
million for the same period in 1998. Policy acquisition costs expressed as a
percentage of net premiums earned (the acquisition expense ratio) decreased to
27.7% from 28.3% in the first quarter of 1998.
Other Expenses. Other expenses related to underwriting operations,
which include underwriting and administrative expenses, were $6.2 million for
the three months ended March 31, 1999 compared to $4.3 million for the same
period in 1998. The increase principally reflects an increased share of expenses
related to Chartwell's underwriting participation on syndicates managed by CMA.
Other expenses expressed as a percentage of net premiums earned increased to
8.9% for the three months ended March 31, 1999 compared to 8.1% for the same
period in 1998.
Net Underwriting Results. For the three months ended March 31, 1999 the
Company's net underwriting result (net premiums earned minus losses, LAE and
underwriting expenses) was a loss of $7.7 million compared to a net underwriting
profit of $1.6 million for the same period in 1998. The deterioration in the
underwriting result is principally attributable to the adverse development on
business written through CMA's managed syndicates, as mentioned above. The
combined ratio for the three months ended March 31, 1999, computed in accordance
with generally accepted accounting principles, increased to 111.0% compared to
96.9% for the same period in 1998.
Service Operations
Revenue from service operations decreased to $2.8 million for the three
months ended March 31, 1999 compared to $4.3 million for the same period in
1998, principally reflecting a reduction in profit commissions and equity in the
earnings of investee companies, in each case associated with CMA's syndicates.
Corporate
Interest and Amortization. Interest and amortization expenses were $3.8
million for the three months ended March 31, 1999 compared to $3.4 million for
the same period in 1998. The increase was due principally to amortization of
goodwill related to recent acquisitions of Lloyd's corporate capital vehicles.
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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, 1999 was $9.0 million, compared to
$8.4 million for the same period in 1998. The carrying value of the Company's
invested assets and cash increased to $891.1 million at March 31, 1999 from
$876.5 million at December 31, 1998 primarily due to an increase in the
Company's share of the operating cash flow of syndicates managed by CMA. The
average annual tax equivalent yield on invested assets after investment expenses
decreased to 5.82% for the first quarter of 1999 compared to 6.64% for the same
period in 1998.
The Company realized net capital gains of $243,000 for the quarter
ended March 31, 1999 compared to net capital gains of $99,000 for the three
months ended March 31, 1998.
Income Before Income Taxes. Income before income taxes decreased to
$764,000 for the three months ended March 31, 1999 compared to $10.4 million for
the same period in 1998. The decrease resulted principally from the decline in
net underwriting results and the reduction in income from service operations,
each as discussed above.
Income Tax Expense. The provision for Federal income taxes for the
three months ended March 31, 1999 decreased to $236,000 compared with $3.1
million for the same period in 1998. The effective tax rate was 30.9% and 29.4%
for the three months ended March 31, 1999 and 1998, respectively. For both
periods, the effective rate is below the statutory rate of 35% due to the
benefit of investments in tax-advantaged securities, offset in part by goodwill
amortization.
Net Income. The Company realized a net profit of $528,000 for the three
months ended March 31, 1999 compared with a net profit of $7.4 million for the
comparable 1998 period because of the factors discussed above. Diluted earnings
per share decreased to $0.05 for the three months ended March 31, 1999 from
$0.73 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
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. On February 24, 1999,
Chartwell Reinsurance paid a $5.5 million dividend to its parent company,
Chartwell Re Holdings Corporation. On May 5, 1999, Chartwell Reinsurance's Board
of Directors declared a dividend of $3.0 million payable to Chartwell Re
Holdings Corporation on May 26, 1999. Neither dividend was an "extraordinary
dividend" under Minnesota law and up to $21.8 million remains available under
Minnesota law for the payment of dividends by Chartwell Reinsurance without
regulatory approval in 1999.
Cash flow from operations for the first quarter of 1999 was $26.9
million compared to cash used in operations of $536,000 for the first quarter of
1998.
The Company paid a quarterly cash dividend of $0.04 per share on March
3, 1999. On May 5, 1999, the Company's Board of Directors declared a quarterly
cash dividend of $0.04 per share which is payable on June 2, 1999.
Sales of available for sale investments were $22.5 million and $35.1
million for the three months ended March 31, 1999 and 1998, respectively. There
was no unusual trading activity in either period.
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The Company's investment portfolio consists primarily of
investment-grade fixed maturity debt securities. At March 31, 1999,
approximately 90.3% of the Company's bond portfolio was rated A or better ("A-1"
for commercial paper) by Moody's Investors Service. 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
(excluding the Company's pro rata share of investments held by CMA managed
syndicates) at March 31, 1999 was comprised primarily of U.S. Treasury and
government agency, mortgage pass-through securities and corporate and municipal
bonds.
Stockholders' equity decreased approximately 2.4% to $285.8 million at
March 31, 1999 from $292.9 million at December 31, 1998. GAAP book value per
share decreased to $29.65 at March 31, 1999 from $30.42 at December 31, 1998.
The declines in stockholders' equity and GAAP book value per share are due
principally to a reduction in unrealized appreciation of the Company's
investment portfolio as a result of higher interest rates.
The Company's outstanding long-term debt as of March 31, 1999 consists
of Contingent Interest Notes due June 30, 2006, Senior Notes due 2004, Loan
Notes due June 2002 and credit facilities agented by First Union National Bank
("First Union"). As of March 31, 1999, the Company's Loan Notes due June 2002
constituted approximately $5.3 million (denominated in pounds sterling) of
indebtedness and the Company had outstanding $47.7 million of indebtedness under
the credit facilities with First Union. The Company's ratio of long-term debt to
total capitalization at March 31, 1999 was 26.7% (exclusive of its Contingent
Interest Notes due June 30, 2006), relatively unchanged from December 31, 1998.
Year 2000 Compliance
The Year 2000 issue is the result of computer programs being written
using two digits rather than four to define the applicable year. The Company's
computer equipment, software and devices with imbedded technology that are time
sensitive may recognize a date using "00" as the year 1900 rather than the year
2000. This could result in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions or engage in other normal business activities. The
consequences to the Company of such failures could include business
interruption, lost revenue or illiquidity. The magnitude of the financial impact
of such potential failures on the Company is not known at this time.
The Company believes that it has identified all significant computer
hardware and software applications and devices with imbedded time sensitive
technology that are employed by the Company in its operations that will require
modification to ensure Year 2000 Compliance. The Company is using both internal
and external resources to test all significant computer systems and applications
and to make the modifications necessary for Year 2000 Compliance. The testing
and modification process, which is proceeding on schedule, is 97% complete and
is expected to be fully completed by June 30, 1999. The testing and modification
process has not materially interfered with the Company's Information Technology
operations or the operations of the Company.
In addition, the Company has contacted all of its significant business
partners and service vendors to determine their Year 2000 Compliance readiness,
as well as the extent to which the Company is vulnerable to any third party Year
2000 issues. However, there can be no guarantee that the systems of other
companies on which the Company's systems rely will become Year 2000 compliant in
a timely manner, or that the failure by a third party to become Year 2000
compliant would not have a material adverse effect on the Company.
The Company is revising its existing disaster recovery contingency
plans to address issues specific to the Year 2000 problem. These revisions are
expected to be completed by September 30, 1999. Such plans are intended to
enable the Company to continue to operate by performing certain processes
manually, changing vendors and repairing or replacing existing systems, where
feasible.
8
<PAGE>
The total cost to the Company to test and modify all systems to be Year
2000 compliant has not been, and is not expected to be, material to its
financial position or results of operations in any given year. To date, the
Company has budgeted $50,000 to accomplish its Year 2000 testing and remediation
goals and approximately 75% of the amount budgeted has been expended.
Expenditures to fund Year 2000 testing and modification have to date and will
continue to be funded from operating cash flows.
The anticipated completion dates for Year 2000 compliance and the
Company's contingency plans and the cost estimates for the completion of the
Company's Year 2000 compliance program are based on management's best estimates
utilizing current data regarding available resources, coordination with third
parties and other relevant factors and information about systems conversion.
However, there can be no assurance that these estimates will be achieved, and
actual results could differ from the current plan.
In addition, the Company may also have material exposure in its
property and casualty operations to claims related to the Year 2000 issue. It is
not yet possible to determine whether such claims might be made against
insurance or reinsurance contracts in which the Company participates or if such
claims will be held to have merit.
Readers are cautioned that forward-looking statements contained in this
description of the Company's treatment of the Year 2000 issue should be read in
conjunction with the Company's disclosures under the heading "Cautionary Note
Regarding Forward-Looking Statements" below.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains statements that may be
considered to be "forward-looking statements" within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended.
Such statements may include, without limitation, insofar as they may be
considered to be forward-looking statements, certain statements in (i)
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Results of Operations Three Months Ended March 31, 1999 Compared
With Three Months Ended March 31, 1998" concerning (A) certain relationships
among gross premiums written, net premiums written and net premiums earned and
(B) the development of reserves in respect of all or a portion of the Company's
insurance and reinsurance business; (ii) "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Liquidity and Capital
Resources" concerning the potential effects of certain events on the Company's
indebtedness and portfolios of fixed income and equity instruments, foreign
currency exposure, derivatives positions and certain other types of instruments;
(iii) "Management's Discussion and Analysis of Financial Condition and Results
of Operations--Year 2000 Compliance" concerning the costs and effects of Year
2000 compliance; (iv) such other statements contained in this Quarterly Report
that may be considered to be forward-looking statements; and (v) variations of
the foregoing statements wherever they appear in this Quarterly Report.
All forward-looking statements address matters that involve risks and
uncertainties. Accordingly, there are or will be important factors that could
cause actual results to differ materially from those indicated in such
statements. The Company believes that these include the following non-exclusive
factors:
i. the impact of changing market conditions on the Company's business
strategy;
ii. the effects of increased competition on pricing, coverage terms, retention
of customers and ability to attract new customers;
iii. greater severity or frequency of the types of large or catastrophic losses
which the Company's subsidiaries insure or reinsure;
9
<PAGE>
iv. faster or more adverse loss development experience than that on which the
Company's underwriting, reserving and investment practices are based;
v. changes in the Company's retrocessional arrangements;
vi. developments in global financial markets which could adversely affect the
performance of the Company's investment portfolio;
vii. litigation, regulatory or tax developments that could adversely affect the
Company's business;
viii. risks associated with the introduction of new products and services; and
ix. the impact of mergers and acquisitions.
The facts set forth above should be considered in connection with any
forward-looking statement contained in this Quarterly Report. The important
factors that could affect such forward-looking statements are subject to change,
and the Company does not intend to update any forward-looking statement or the
foregoing list of important factors. By this cautionary note, the Company
intends to avail itself of the safe harbor from liability with respect of
forward-looking statements provided by Section 27A and Section 21E referred to
above.
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
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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
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
/s/ Richard B. Primerano
-------------------------------
Richard B. Primerano
Vice President and Controller
(Principal Accounting Officer)
Dated: May 14, 1999
11
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0
0
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69,664
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