U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from: to
Commission file number 0-23178
Equisure, Inc.
(Exact name of small business issuer as specified in its charter)
Minnesota 41-1309882
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
701 Fourth Avenue South, Minneapolis, Minnesota 55415
(Address of principal executive offices)
(612) 338-3738
(Issuer's telephone number)
527 Marquette Avenue, Suite 1800
Minneapolis, Minnesota 55402
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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
As of May 19, 1997, there were 11,151,666 shares of the issuer's common stock,
par value $0.001 per share.
Transitional Small Business Disclosure Format (check one):
Yes ___; No _X_
EQUISURE, INC. AND SUBSIDIARIES
INDEX
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Required by Form 10-QSB 2
Condensed Consolidated Balance Sheets of Equisure, Inc.
and Subsidiaries of March 31, 1997 and December
31, 1996 3
Condensed Consolidated Statements of Operations
of Equisure, Inc. and Subsidiaries for the Three
Months Ended March 31, 1997 and 1996 4
Condensed Consolidated Statement of Stockholders'
Equity for the Three Months Ended March 31, 1997 5
Condensed Consolidated Statements of Cash Flows of
Equisure, Inc. and Subsidiaries for the Three
Months Ended March 31, 1997 and 1996 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition 15
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 18
Item 2. Changes in Securities 18
Item 3. Defaults upon Senior Securities 18
Item 4. Submission of Matters to a Vote of Security Holders 18
Item 5. Exhibits and Reports 18
Item 6. Other Information 19
Signatures 20
EQUISURE, INC. AND SUBSIDIARIES
PART I
FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS REQUIRED BY FORM 10-QSB
EQUISURE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31,
1997 1996
------------ ------------
(Unaudited)
ASSETS
Assets:
Investments, available for sale $ 42,287,106 $ 39,743,785
Cash and cash equivalents 14,042,524 20,489,623
Accrued interest and dividends 145,211 158,162
Premiums receivable 4,935,423 2,246,581
Prepaid reinsurance 5,124,363 765,834
Due from related parties 12,365,346 12,972,037
Deferred acquisition costs 447,145 292,870
Other assets -- 22,878
Intangible assets 359,169 --
------------ ------------
Total assets $ 79,706,287 $ 76,691,770
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Loss reserves $ 31,343,540 $ 30,033,795
Unearned premiums 2,731,106 2,209,994
Reinsurance premiums payable 324,925 --
Due to related parties 2,055,975 5,169,092
Income taxes payable 655,000 200,000
Accounts payable and accrued expenses 977,930 837,943
Deferred income taxes 2,204,000 1,210,000
------------ ------------
Total liabilities 40,292,476 39,660,824
------------ ------------
Stockholders' equity:
Common stock, par value $0.001, authorized
50,000,000 shares, issued and outstanding
11,151,666 11,152 11,152
Additional paid-in capital 35,635,084 35,635,084
Retained earnings 4,337,262 2,953,153
Net unrealized depreciation on investments
available for sale, net of deferred taxes (569,687) (1,568,443)
------------ ------------
Total stockholders' equity 39,413,811 37,030,946
------------ ------------
Total liabilities and
stockholders' equity $ 79,706,287 $ 76,691,770
============ ============
See Notes to Condensed Consolidated Financial Statements.
EQUISURE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED
MARCH 31,
----------------------------
1997 1996
------------ ------------
(Unaudited)
Revenues:
Earned premiums assumed $ 4,292,879 $ 1,116,953
Ceded premiums (463,677)
------------ ------------
Net premiums 3,829,202 1,116,953
Realized gains on investments 142,362 --
Net investment income 320,712 468,279
Brokerage income 35,222 --
------------ ------------
Total revenues 4,327,498 1,585,232
------------ ------------
Expenses:
Losses incurred 461,570 --
Net acquisition costs 460,713 111,695
Administrative expenses 1,000,411 787,205
Foreign currency exchange loss 159,607 253,904
Amortization of goodwill 6,088 --
------------ ------------
Total expenses 2,088,389 1,152,804
------------ ------------
Income before income taxes 2,239,109 432,428
Income taxes (855,000) --
------------ ------------
Net income $ 1,384,109 $ 432,428
============ ============
Net income per share $ .12 $ .04
============ ============
Weighted average number of common
shares outstanding 11,151,666 10,544,082
============ ============
See Notes to Condensed Consolidated Financial Statements.
EQUISURE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
Net Unrealized
Appreciation
(Depreciation) Net
Common Stock Additional On Investments, Retained
------------------------- Paid-In Available Earnings
Shares Amount Capital For Sale (Deficit) Total
---------- ---------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, January 1, 1997 11,151,666 $ 11,152 $35,635,084 $(1,568,443) $ 2,953,153 $37,030,946
Change in unrealized
appreciation on
investments, available
for sale -- -- -- 998,756 -- 998,756
Net income -- -- -- -- 1,384,109 1,384,109
---------- ---------- ----------- ---------- ----------- -----------
BALANCE, March 31, 1997 11,151,666 $ 11,152 $35,635,084 $ (569,687) $ 4,337,262 $39,413,811
========== ========== =========== =========== =========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
EQUISURE, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------------
1997 1996
------------ ------------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,384,109 $ 432,428
Adjustments to reconcile net income to net
cash flows from operating activities:
Amortization of goodwill 6,088 --
Gains on sale of investments (142,362) --
Foreign currency exchange loss 159,607 253,904
Deferred income taxes 300,000 --
Change in:
Premiums receivable (2,688,842) 1,392,981
Prepaid reinsurance (4,358,529) --
Underwriting reserves 1,309,745 3,256,067
Due from/due to related parties (2,506,426) (1,562,298)
Premiums payable 324,925 (902,056)
Accrued income taxes 455,000 --
Other 519,775 (148,564)
------------ ------------
Net cash flows from operating activities (5,236,910) 2,722,462
------------ ------------
Cash flows from investing activities:
Proceeds from sale of investments 3,220,885 --
Purchases of investments (3,929,088) --
Acquisition of subsidiary (342,379) --
------------ ------------
Net cash flows from investing activities (1,050,582) --
------------ ------------
Effect of foreign currency exchange rate
changes on cash (159,607) (253,904)
------------ ------------
Net change in cash and
cash equivalents (6,447,099) 2,468,558
Cash and cash equivalents, beginning of period 20,489,623 32,216,805
------------ ------------
Cash and cash equivalents, end of period $ 14,042,524 $ 34,685,363
============ ============
</TABLE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying condensed consolidated financial statements have been
prepared by the Company. Certain information and note disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted. In the opinion of the Company's management, the disclosures
made are adequate to make the information presented not misleading, and
the condensed consolidated financial statements contain all adjustments
(consisting of normal recurring accruals) necessary to present fairly
the financial position as of March 31, 1997, results of operations for
the three months ended March 31, 1997 and 1996 and cash flows for the
three months ended March 31, 1997 and 1996.
The results of operations for the three months ended March 31, 1997 are
not necessarily indicative of the results to be expected for the full
year.
The condensed consolidated financial statements are stated in United
States dollars and are prepared in conformity with accounting
principles generally accepted in the United States of America.
The preparation of condensed consolidated financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the condensed consolidated financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Principles of Consolidation
The condensed consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiary, Equihot Herverzekering
N.V., and partly owned subsidiary Aviation Maritime Transportation
(Insurance Brokers)S.A.M. in which the Company has a 65% holding. The
financial statements of Aviation Maritime Transportation (Insurance
Brokers) S.A.M. are included in total in the consolidated financial
statements of the Company ,less provision for the minority interest. To
the extent that a subsidiary reports a loss, losses are allocated until
the minority interest is nil. Goodwill arising on consolidation is
amortized on a straight line basis over 15 years. All material
inter-company transactions have been eliminated.
Investments
Investments consist primarily of marketable equity securities available
for sale representing approximately 49% of total assets and a holding
of certificates of gold deposit available for sale representing less
than 4% of total assets (see Note 4). They are carried at fair value
based on quoted market prices. Unrealized appreciation (depreciation)
is excluded from operations and reported as a separate component of
stockholders' equity. Realized gains and losses are determined on the
specific identification method.
Cash and Cash Equivalents
For the purpose of presentation in the Company's condensed consolidated
statements of cash flows, cash equivalents are short-term, highly
liquid investments that are both (1) readily converted into known
amounts of cash and (2) so near to maturity that they present
insignificant risk of changes in value due to changing interest rates.
Premiums and Determination of Underwriting Results and Reserves
Premium income on short-duration reinsurance contracts is accounted for
using the periodic method. Premiums that commence within the current
underwriting year are taken into revenues as earned. Retrocession and
acquisition costs together with claims incurred are matched against
premiums. Calculations are made to determine the unearned premiums and
deferred acquisition costs as necessary.
The Company reviews short duration contracts to establish whether
premium deficiencies exists. No account is taken of anticipated
investment income in this review.
Long-duration foreign reinsurance contracts are accounted for using the
open-year method. Premiums, retrocession and acquisition costs together
with claims incurred are allocated to underwriting year accounts
according to the inception of the contracts. The aggregation of the
underwriting year accounts form the basis of the underwriting reserves
on the balance sheet. The loss reserves, relating to the open year
method, will be disaggregated and reported on the statement of
operations as premiums, claims and expenses only when earned premiums
become reasonably determinable. If at any time an underwriting year or
class of business within an underwriting year shows a deficiency, this
loss will be recognized immediately.
Reinsurance Ceded
In the normal course of business, the Company seeks to reduce the loss
that may arise from events that cause unfavorable underwriting results
by reinsuring (ceding) certain levels of risk in various areas of
exposure with other reinsurance enterprises.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Deferred Acquisition Costs
Commissions and other costs of acquiring insurance that vary with and
are primarily related to the production of new and renewal business are
deferred and amortized over the terms of the policies or reinsurance
treaties to which they relate.
Loss Reserves
The liability for losses and loss adjustment expenses includes amounts
determined from loss reports and individual cases and amounts, based on
past experience, for losses incurred but not reported. Such liabilities
are necessarily based on estimates and, while management believes that
the amount is adequate, the ultimate liability may be in excess of or
less than the amounts provided. The methods for making such estimates
and for establishing the resulting liability are continually reviewed,
and any adjustments are reflected in earnings currently.
Income Taxes
Income tax provisions are based on the asset and liability method.
Deferred income taxes have been provided for temporary differences
between the tax bases of assets and liabilities and their reported
amounts in the condensed consolidated financial statements. Such
differences relate principally to the unrealized appreciation
(depreciation) on investments, available for sale and differences in
the recognition of premiums, losses and acquisition costs.
2. INTANGIBLE ASSETS
Intangible assets consist of goodwill arising on consolidation in
respect of the acquisition of Aviation Maritime Transportation
(Insurance Brokers) S.A.M. This comprises the following:
Purchase price in excess of identifiable assets 365,257
Less amortization (6,088)
---------
$ 359,169
=========
3. INVESTMENTS, AVAILABLE FOR SALE
The aggregate fair value, gross unrealized holding gains, gross
unrealized holding losses and cost are as follows:
March 31, December 31,
1997 1996
------------ ------------
Marketable equity securities:
Cost $ 39,791,762 $ 38,941,200
Gross unrealized holding gains 2,344,051 615,012
Gross unrealized holding losses (2,982,507) (3,137,027)
------------ ------------
Fair value 39,153,306 36,419,185
------------ ------------
Marketable certificates of gold deposit:
Cost 3,461,028 3,461,028
Gross unrealized holding losses (327,228) (136,428)
------------ ------------
Fair value 3,133,800 3,324,600
------------ ------------
Total fair value $ 42,287,106 $ 39,743,785
============ ============
4. LOSS RESERVES
Loss reserves consisted of the following:
March 31, December 31,
1997 1996
------------ ------------
Balance at January 1 $ 30,033,795 $ 18,227,498
------------ ------------
Add - provision for losses incurred:
Current claim years 3,623,165 11,898,357
Prior claim years -- --
------------ ------------
3,623,165 11,898,357
------------ ------------
Less - paid losses:
Current claim years -- (92,060)
Prior claim years (2,313,420) --
------------ ------------
(2,313,420) --
------------ ------------
Balance at March 31, 1997 $ 31,343,540 $ 30,033,795
============ ============
Included in loss reserves in respect of transactions under the open
year method are the following:
March 31, December 31,
1997 1996
----------- -----------
Written premiums assumed $78,844,065 $70,836,550
Ceded premiums (39,396,807) (35,531,807)
Acquisition costs (7,918,430) (6,937,510)
Paid losses (2,312,420) --
----------- -----------
$29,216,408 $28,367,233
=========== ===========
5. INCOME TAXES
March 31, December 31,
1997 1996
----------- -----------
Current:
Foreign $ 555,000 $ 200,000
Federal, net of foreign
tax credit -- --
----------- -----------
555,000 200,000
----------- -----------
Deferred:
Federal 276,000 2,108,000
State 24,000 192,000
----------- -----------
300,000 2,300,000
----------- -----------
$ 855,000 $ 2,500,000
=========== ===========
The Company is subject to corporate income taxes in Belgium. Effective
May 10, 1996, the Company became subject to United States federal
income taxes.
Prior to May 10, 1996 there are no tax liabilities or deferred taxes
because of expenses for tax purposes in Belgium that are considered
equity transactions for financial reporting purposes in the United
States.
Amounts for deferred income tax assets and liabilities are as follows:
March 31, December 31,
1997 1996
----------- -----------
Deferred income tax assets:
Unearned premiums 7,200,000 5,800,000
Unrealized loss on investments 396,000 1,090,000
----------- -----------
Net deferred tax assets 7,596,000 6,890,000
Deferred tax liabilities:
Loss reserves (9,800,000) (8,100,000)
----------- -----------
Deferred income taxes $(2,204,000) $(1,210,000)
=========== ===========
6. RELATED PARTY TRANSACTIONS
Transactions or balances with related parties included in the condensed
consolidated financial statements are as follows:
Statements of Operations
Earned premiums assumed and ceded premiums include transactions with
Equihot Verzekering N.V. Net acquisition costs include transactions
with Equihot Verzekering N.V. and Equihot Delfstoffen N.V.
Balance Sheets
All amounts due from and due to related parties represent non-interest
bearing obligations, receivable from or payable to either Equihot
Delfstoffen N.V. or one of its wholly-owned subsidiaries, and are due
within one year.
7. FAIR VALUES OF FINANCIAL INSTRUMENTS
Cash and cash equivalents are carried at their face amount.
Investments, available for sale are carried at fair value as determined
based on quoted market prices.
8. SUBSEQUENT EVENT
On April 25, 1997 the Company announced a 1 for 20 stock dividend
effective for stockholders of record on May 15, 1997 and will be
distributed on May 30 1997.
9. CONTINGENCIES
Loss reserves are provisions for the future losses based on individual
underwriting years. To the extent that an open underwriting year
becomes fully developed and earned premiums can be ascertained, credit
can be taken to the income statement comprising the loss provision no
longer required.
Belgian fiscal authorities have examined the records for the year ended
December 31, 1994, the first year of activity as a reinsurer. By their
letter on May 13, 1996, they contested the basis on which the Company
has compiled its underwriting reserves. Directors believe that the
authorities have misunderstood the nature and the time frame of the
risks provided against. A formal rejection of authorities' assertions
was drawn up and submitted. The authorities have not initiated any
further correspondence.
In the unlikely event of the total underwriting reserve for 1994 of
$8,488,697 being deemed to be profit by the tax authorities, a tax
charge of some $4,200,000 would arise. However, if the authorities
accept the Directors' assertions, taxation will in any event become due
in 1998 if the underwriting reserve of 1994 suffers no losses. Based on
current tax rates, the amount payable at that time would be $3,600,000.
Similar considerations may apply to the 1995 and 1996 underwriting
years.
Any change in the revenues recognition policy for tax purposes would
result in gross temporary timing differences, the proposed adjustments
would be substantially offset by deferred income taxes and would not be
material to the condensed consolidated financial statements taken as a
whole.
PART I
FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
The following information should be read in conjunction with the unaudited
condensed consolidated financial statements included herein, see Item 1.
Overview
Equisure, Inc. has a wholly-owned subsidiary, Equihot Herverzekering N.V., a
Belgian reinsurer, incorporated in Belgium and operating principally from
Antwerp, the main commercial Flemish city of Belgium. The word "Herverzekering"
is Dutch-Flemish for reinsurance.
Equisure, Inc has acquired a 65% investment in a new subsidiary, Aviation
Maritime Transportation (Insurance Brokers) S.A.M., an insurance and reinsurance
broker. Equisure will utilize the reinsurance brokering services of AMT to
replace the Company's existing outsourced underwriting administration services.
This will become effective during the second quarter of 1997.
Equihot Herverzekering N.V. has been underwriting reinsurance since January 1,
1994, and specializes in financial risk and political risk reinsurance, as well
as underwriting a general reinsurance account.
The Company at present limits its business to the following classes of risk:
Political, Financial, Marine, Aviation, Accident & Health, and Casualty.
Political and financial risks are primarily located in African countries with
new accounts in the financial risk sector emanating from North America and
Europe. Other classes of risk are located in North America, South America and
Europe.
Substantially all political and financial risk reinsurance written to date
emanates from the trading activities of Equihot Delfstoffen NV ("ED"), the
Company's former parent. While the Company believes that the percentage of its
business connected with the former parent's activities will decrease as the
Company's business expands, it expects that such business will continue to
represent a significant portion of the Company's business.
The majority of financial risk business is at present obtained from African
historic sources and is renewable. The Company believes that there is potential
for growth in this sector from new sources and new accounts have been written,
emanating from Europe and North America.
Equihot Verzekering N.V. (EV), an insurance company which is owned 100% by ED,
fronts for the insurance which the Company provides with respect to ED's trading
activities. Since a reinsurer does not directly insure the underlying risk, a
reinsurer must enter into fronting arrangements with other insurance companies.
Fronting arrangements are defined as reinsurance in which the ceding
(reinsuring) insurance company issues a policy and reinsures all or
substantially all of the insurance risk with the reinsurer. EV provides this
fronting service for a fee (2.5% on net ceded reinsurance premiums written for
EV for periods prior to December 31, 1996 and 5% on such premiums from January
1, 1997 to December 31, 2005). By agreement the increase in the fronting fee has
been delayed to April 1, 1997.
Related party transactions with the former parent, Equihot Delfstoffen N.V. are
commission payments on business introduced. This agreement is in keeping with
market levels of 10%, and will continue up until December 31, 2005.
The majority of other general business written for the first quarter of 1997 was
aviation and casualty. This business, together with that of marine and accident
& health, is located in North America, South America and Europe.
The Company is continuing to focus on broadening its portfolio of mixed
commercial reinsurance business in specific areas that fall within the Company's
established criteria of risk management. This will also contribute to
establishing a balanced book of business to minimize dependence upon any one
particular area or class.
The Company has continued to increase its operational profitability with
increases in written premiums assumed. Premiums written in the three months to
March 31, 1997 totalled $12,821,506, of which $3,396,486 related to short term
policies and is credited to income and $9,425,020 relates to long term policies
and is therefore credited to loss reserves.
Liquidity and Capital Resources
The capacity of a reinsurance company to write reinsurance is based upon
maintaining liquidity and capital resources sufficient to pay claims and
expenses as they become due. The Company has historically generated adequate
capital resources to support its current operations and believes it will
continue to do so for the foreseeable future. The primary sources of the
Company's liquidity are funds generated from reinsurance premiums and investment
income. The principal application of such funds are payments of losses and loss
adjustment expenses, acquisition of investments and operating expenses.
Cash outflows from operating activities of $5,236,910 for the three months ended
March 31, 1997 compared with cash flows of $2,722,462 for the three months ended
March 31, 1996 reflect payments for reinsurance protections for the forthcoming
year and the payment of claims. No such payments were made for the comparative
quarter.
Cash outflows from investing activities reflect the Company's policy of
increasing quoted investments and also the purchase of Aviation Maritime
Transportation (Insurance Brokers) S.A.M.
Results of Operations
Three Months Ended March 31, 1997, Compared to Three Months Ended March 31, 1996
Reinsurance income assumed on the completion of short-duration reinsurance
contracts for the three months ended March 31, 1997, of $4,292,879 showed a 284%
increase on the comparative quarters figure of $1,116,953 and is reflective of
the continued growth of business in respect of short term reinsurance contracts.
Ceded premiums in the first quarter of 1997 of $463,677, compared to nil in the
comparative quarter is due to retrocession protection now being sought as a
matter of Company policy.
Realized gains on the sale of selected quoted investments produced $142,362. No
such disposals were made in the comparative period in 1996.
Net investment income, comprising dividend and interest income showed a decrease
to $320,712 for the three months ended March 31, 1997 from $468,279 for the
three months ended March 31, 1996. This is primarily due to the reduction in the
amounts held as cash and cash equivalents in favour of quoted marketable
securities.
Brokerage income of $35,222 for the three months ended March 31, 1997 appears
for the first time emanating from the activities of Aviation Maritime
Transportation (Insurance Brokers) S.A.M., a subsidiary acquired during the
period.
Losses incurred comprising claims paid, outstanding claims and estimates of
future liabilities of $461,570 are provided for the three months ended March 31,
1997. No such provision was necessary for the three months ended March 31, 1996
as no losses were incurred.
Net acquisition costs of $460,713 for the three months ended March 31, 1997 were
up by 312% compared to $111,695 for the comparative period. This is primarily
due to the 284% increase in premiums written and an increase within this of the
general reinsurance business, which generally has higher acquisition costs than
that of the political and financial risk sector.
Administrative expenses for the current quarter are up 27% at $1,000,411,
compared with $787,205 for the three months ended March 31, 1996. This increase
is attributable to expansion of business generally and to the increased costs of
regulatory compliance.
Foreign currency exchange gains and losses occur due to the fluctuations in the
rate of exchange between the U.S. dollar and other major currencies, where
transactions occur and where balances are held in those currencies.
Amortization of goodwill arising on consolidation of $6,088 for the three months
ended 31 March, 1997 is in respect of the acquisition of Aviation Maritime
Transportation (insurance Brokers) S.A.M. on February 14, 1997. A full three
months provision has been made.
Income taxes of $855,000 are provided in respect of the results for the three
months ended March 31, 1997. No income taxes are due in respect of the results
for the three months ended March 31, 1996, as this quarter represents the
results of Equihot Herverzekering N.V. prior to the reverse purchase acquisition
and no income taxes were payable in Belgium.
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. EXHIBITS AND REPORTS
Exhibit 27. During the quarter ended March 31, 1997, the Company was
not required to file any reports on Form 8-K.
ITEM 6. OTHER INFORMATION
On April 25, 1997 the Company announced a 1 for 20 stock dividend
effective for stockholders of record on May 15, 1997 and will be
distributed on May 30, 1997.
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: May 19, 1997
/S/ Barrie Harding
<TABLE> <S> <C>
<ARTICLE> 7
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<DEBT-HELD-FOR-SALE> 0
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 39,153,306
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 42,287,106
<CASH> 14,042,524
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 447,145
<TOTAL-ASSETS> 79,706,287
<POLICY-LOSSES> 31,343,540
<UNEARNED-PREMIUMS> 2,731,106
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 0
0
0
<COMMON> 11,152
<OTHER-SE> 39,402,659
<TOTAL-LIABILITY-AND-EQUITY> 79,706,287
3,829,202
<INVESTMENT-INCOME> 320,712
<INVESTMENT-GAINS> 142,632
<OTHER-INCOME> 35,222
<BENEFITS> 461,570
<UNDERWRITING-AMORTIZATION> 320,712
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> 2,239,109
<INCOME-TAX> 855,000
<INCOME-CONTINUING> 1,384,109
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,384,109
<EPS-PRIMARY> .12
<EPS-DILUTED> 0
<RESERVE-OPEN> 30,033,795
<PROVISION-CURRENT> 3,623,165
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 2,313,420
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 31,343,540
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
