<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
Commission file number 0-24800
THE TENERE GROUP, INC.
(Exact name of Registrant as specified in its charter)
Missouri 43-1675969
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
1903 E. Battlefield, Springfield, MO 65804
(Address of principal executive offices) (Zip code)
417-889-1010
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant 1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such 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 March 31, 1997 there were 1,999,774 shares of Common Stock, $.01 par
value, issued and outstanding.
<PAGE> 2
THE TENERE GROUP, INC.
PAGE NO.
--------
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements (unaudited)
Consolidated Balance Sheets -
March 31, 1997 and December 31, 1996
Consolidated Statements of Operations -
Three Months ended March 31, 1997 and 1996
Consolidated Statements of Cash Flows -
Three months ended March 31, 1997 and 1996
Notes to Consolidated Financial Statements
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II. OTHER INFORMATION
ITEM 5. Other Information
ITEM 6. Exhibits and Reports on Form 8-K
SIGNATURES
EXHIBIT INDEX
2
<PAGE> 3
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE TENERE GROUP, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 1997 and December 31, 1996
<TABLE>
<CAPTION>
UNAUDITED
Assets 1997 1996
------ ---- ----
<S> <C> <C> <C>
Investments:
Bonds held available for sale, at market value (amortized cost -
$29,104,110 in 1997; $29,117,835 in 1996) $28,652,247 $29,370,067
Common stock 8,241 340
----------- -----------
Total investments 28,660,488 29,370,407
Other assets:
Cash and cash equivalents, including interest-bearing
deposits of $15,774,458 in 1997 and $29,614,311 in 1996 16,198,618 16,935,122
Premiums receivable 2,885,636 2,580,691
Reinsurance recoverable 7,599,876 7,458,298
Prepaid reinsurance premiums 500,000 750,000
Accrued investment income 439,659 527,139
Deferred policy acquisition costs 97,928 84,550
Deferred income taxes 2,509,149 2,098,792
Income taxes recoverable 1,345,101 1,680,190
Other 1,067,791 1,084,992
----------- -----------
Total other assets 32,643,758 33,199,774
----------- -----------
$61,304,246 $62,570,181
=========== ===========
Liabilities and Stockholders' Equity
------------------------------------
Liabilities:
Reserves for losses and loss adjustment expenses $32,503,148 $32,887,407
Unearned premium reserve 6,475,064 6,300,111
Reinsurance premium payable 1,113,696 1,256,381
Other 607,485 736,579
----------- -----------
Total liabilities 40,699,393 41,180,478
Stockholders' equity:
Common stock, $.01 par value; 7,000,000 shares authorized;
1,999,774 shares issued and outstanding 19,998 19,998
Contributed capital 21,940,828 21,940,828
Retained earnings (accumulated deficit) (1,355,973) (571,123)
----------- -----------
Total stockholders' equity 20,604,853 21,389,703
----------- -----------
$61,304,246 $62,570,181
=========== ===========
</TABLE>
See notes to consolidated financial statements
3
<PAGE> 4
THE TENERE GROUP, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended March 31, 1997 and 1996
UNAUDITED
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Revenues:
Direct premiums written $2,192,064 $1,529,668
Premiums ceded to reinsurers 646,824 490,032
----------- -----------
Net premiums written 1,545,240 1,039,636
(Increase) decrease in unearned premium reserve (141,006) 1,248,639
----------- -----------
Net premiums earned 1,404,234 2,288,275
Net investment income 641,256 699,752
----------- -----------
Total revenues 2,045,490 2,988,027
Losses and expenses:
Sales and marketing expenses 410,256 316,330
Other underwriting expenses 538,072 518,305
Losses and loss adjustment expenses 1,595,961 1,900,072
Dividends to policyholders -- (10,733)
----------- -----------
Total losses and expenses 2,544,289 2,723,974
----------- -----------
Income (loss) before income taxes (498,799) 264,053
Income tax (benefit) expense (173,437) 90,196
----------- -----------
Net income (loss) ($325,362) $ 173,857
=========== ===========
Net income (loss) per share ($0.16) $0.09
=========== ===========
Stockholders' equity:
Beginning of period $21,389,703 $24,537,278
Change in unrealized investment gains (losses) (459,488) (431,448)
Net income (loss) (325,362) 173,857
----------- -----------
End of period $20,604,853 $24,279,687
=========== ===========
</TABLE>
See notes to consolidated financial statements
4
<PAGE> 5
THE TENERE GROUP, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 1997 and 1996
UNAUDITED
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Net income (loss) ($325,362) $173,857
Adjustments to reconcile net income (loss) to net cash
from operating activities:
Depreciation and amortization expense 39,352 40,092
Net change in deferred acquisition costs (13,378) 45,494
Deferred income tax (benefit) (173,652) (71,161)
Net amortization of discount on bonds 13,726 33,619
Change in operating assets and liabilities:
Premiums receivable (304,945) 793,502
Reinsurance balances (34,263) (760,141)
Accrued investment income 87,480 118,995
Income taxes recoverable (payable) 335,089 (62,085)
Other assets 10,314 (410,304)
Reserve for losses and loss adjustment expenses (384,259) 75,766
Unearned premium reserve 174,953 (1,273,802)
Policyholder dividends payable -- (107,170)
Other liabilities (129,094) (261,242)
---------- -----------
Net cash used in operating activities (704,039) (1,664,580)
========== ===========
Cash flows from investing activities:
Maturity of bonds held to maturity or available for sale -- 1,700,000
Purchase of bonds held to maturity or available for sale -- (3,582,168)
Purchase of furniture and equipment (32,465) (41,101)
---------- -----------
Net cash provided by (used in) investing activities (32,465) (1,923,269)
---------- -----------
Net decrease in cash and cash equivalents (736,504) (3,587,849)
Cash and cash equivalents at beginning of period 16,935,122 31,180,925
----------- -----------
Cash and cash equivalents at end of period $16,198,618 $27,593,076
=========== ===========
</TABLE>
See notes to consolidated financial statements
5
<PAGE> 6
THE TENERE GROUP, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements are prepared
in accordance with the rules and regulations of the Securities and
Exchange Commission with regard to interim financial statements. In the
opinion of management, all adjustments necessary for a fair presentation
of such financial statements have been made. Such adjustments consisted
of only normal recurring items. The results of operations for the three
months ended March 31, 1997 are not necessarily indicative of the results
which may occur for the full year. The accompanying unaudited financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto included in the 1996 Annual Report.
(2) INVESTMENTS
The amortized cost and estimated market values of investments in bonds as
of March 31, 1997 and December 31, 1996 are as follows:
<TABLE>
<CAPTION>
March 31, 1997 Gross Gross Estimated
Amortized unrealized unrealized market
Type of Investment cost gains losses value
- ------------------ --------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
Available-for-sale:
United States government,
government agencies and
authorities $27,235,736 28,125 (478,836) 26,785,025
States, municipalities and
political subdivisions 1,868,374 486 (1,638) 1,867,222
----------- -------- --------- -----------
Total available-for-sale $29,104,110 28,611 (480,474) 28,652,247
=========== ======== ========= ===========
December 31, 1996 Gross Gross Estimated
Amortized unrealized unrealized market
Type of Investment cost gains losses value
- ------------------ --------- ---------- ---------- ----------
Available-for-sale:
United States government,
government agencies and
authorities $27,246,527 364,640 (136,238) 27,474,929
States, municipalities and
political subdivisions 1,871,308 23,830 -- 1,895,138
----------- --------- --------- -----------
Total available-for-sale $29,117,835 388,470 (136,238) 29,370,067
=========== ========= ========= ===========
</TABLE>
6
<PAGE> 7
The amortized cost and market values of debt securities at March 31,
1997, by contractual maturity, are shown below. Expected maturities may
differ from contractual maturities because borrowers may have the right
to prepay.
<TABLE>
<CAPTION>
Amortized Market
cost value
--------- ---------
<S> <C> <C>
Due in one year or less $ 1,500,983 1,503,795
Due after one year through five years 6,485,902 6,370,194
Due after five years through ten years 21,117,224 20,778,257
------------ ----------
$ 29,104,109 28,652,246
============ ==========
</TABLE>
Proceeds from sales of available for sale securities for the three months
ended March 31, 1996 were $1,700,000. Gross losses on those sales were $919 in
1996.
Net investment income for the three months ended March 31, 1997 and 1996 is
comprised of the following:
<TABLE>
<CAPTION>
March 31, March 31,
1997 1996
--------- ---------
<S> <C> <C>
Investment income:
Interest on cash equivalents
and repurchase agreements $210,287 $427,036
Interest on bonds 475,804 293,986
-------- --------
Gross investment income $686,091 $721,022
Investment expenses 44,835 21,270
-------- --------
Net investment income $641,256 $699,752
======== ========
</TABLE>
Bonds with an amortized cost of $1,790,079 at March 31, 1997 and
$1,790,138 at December 31, 1996 were on deposit with the Department of
Insurance of the State of Missouri. These bonds and the interest income
thereon are included in the above amounts.
The net change in unrealized investment gains (losses) are as follows:
<TABLE>
<CAPTION>
March 31, March 31,
1997 1996
----------- -----------
<S> <C> <C> <C>
Gross unrealized investment gains (losses) ($696,194) (653,707)
Federal income taxes (236,706) (222,259)
--------- ---------
($459,488) ($431,448)
========= =========
</TABLE>
7
<PAGE> 8
(3) RESERVE FOR LOSSES AND LOSS
ADJUSTMENT EXPENSES AND REINSURANCE
A summary of the reserves for losses and loss adjustment expenses
follows:
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
----------- ------------
<S> <C> <C>
Undiscounted reserve for losses and loss
adjustment expenses $34,795,887 $35,051,777
Less discount (2,292,739) (2,164,370)
----------- -----------
Discounted reserve for losses and loss
adjustment expenses $32,503,148 $32,887,407
=========== ===========
</TABLE>
Premiums, premium related reinsurance amounts and reinsurance recoveries
for the three months ended March 31, 1997 and 1996 are summarized as
follows:
<TABLE>
March 31, March 31,
1997 1996
--------- ---------
<S> <C> <C>
Ceded premiums on an earned basis $615,227 $518,627
======== ========
Ceded loss and loss adjustment expenses $208,420 $447,357
======== ========
</TABLE>
Activity in the reserve for loss and loss adjustment expenses during the
periods ended
March 31, 1997 and March 31, 1996 was:
<TABLE>
<CAPTION>
March 31, March 31,
1997 1996
----------- -----------
<S> <C> <C>
Balance at January 1 $32,887,407 $26,623,138
Less reinsurance recoverable on unpaid
loss and loss adjustment expenses 7,099,463 1,162,495
----------- -----------
$25,787,944 $25,460,643
Incurred related to:
Current year 1,495,656 2,438,776
Prior year 100,305 (538,704)
----------- -----------
Total incurred 1,595,961 1,900,072
----------- -----------
Paid related to:
Current year 93,817 293,983
Prior year 2,094,823 2,145,025
----------- -----------
Total paid 2,188,640 2,439,008
----------- -----------
Plus reinsurance recoverable on unpaid 25,195,265 24,921,707
loss and loss adjustment expenses 7,307,883 1,609,852
----------- -----------
Balance at end of period $32,503,148 $26,531,559
=========== ===========
</TABLE>
8
<PAGE> 9
(4) FEDERAL INCOME TAXES
The Company files a consolidated federal income tax return. Income tax
expense (benefit) varies from the amount which would be provided by
applying the federal income tax rates to income (loss) before income
taxes. The following reconciles the expected income tax expense
(benefit) using the federal statutory tax rate of 34% to the income tax
expense (benefit) reported herein for the three months ended March 31,
1997 and March 31, 1996:
<TABLE>
<CAPTION>
March 31, March 31,
1997 1996
---------- ---------
<S> <C> <C>
Expected tax expense (benefit) using
statutory rates ($167,146) $9,895
Other, net (6,291) 301
--------- -------
($173,437) $90,196
========= =======
</TABLE>
Income taxes consist of the following at March 31, 1997 and 1996:
<TABLE>
<CAPTION>
March 31, March 31,
1997 1996
---------- ---------
<S> <C> <C>
Current expense 215 $161,357
Deferred expense (benefit) (173,652) (71,161)
--------- --------
Income taxes ($173,437) $90,196
========= ========
</TABLE>
Deferred income taxes arise from temporary differences resulting from
income and expense items reported for financial accounting and tax
purposes in different periods. The sources of these differences and the
tax effect of each are as follows:
<TABLE>
<CAPTION>
March 31, March 31,
1997 1996
---------- ----------
<S> <C> <C>
Losses and loss adjustment expenses
incurred for financial reporting
purposes but not deductible for
tax purposes 78,005 ($153,962)
Unearned premiums not deductible for
tax purposes (9,589) 84,907
Deferred compensation (55,097) --
Net operating loss carryforward (188,461) --
Other, net 1,705 (2,106)
--------- --------
($173,437) ($71,161)
========= ========
</TABLE>
9
<PAGE> 10
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at March
31, 1997 and December 31, 1996 are presented below:
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
---------- ------------
<S> <C> <C>
Deferred tax assets:
Discounted unpaid loss reserves $1,775,214 1,853,219
Discounted unearned premium reserves 420,074 410,485
Investments adjusted to market value 150,947 88,400
Deferred commissions payable 29,974 26,916
Deferred compensation 143,497 --
Net operating loss carryforward 435,033 246,571
---------- ----------
Total gross deferred tax assets 2,954,739 2,625,591
Less valuation allowance (400,000) (400,000)
---------- ----------
Net deferred tax assets $2,554,739 $2,225,591
Deferred tax liabilities:
Investments adjusted to market value -- (85,758)
Deferred acquisition costs (33,296) (28,747)
Other (12,294) (12,294)
---------- ----------
Total gross deferred liabilities (45,590) (126,799)
---------- ----------
Net deferred tax asset $2,509,149 $2,098,792
========== ==========
</TABLE>
The valuation allowance for deferred tax assets at March 31, 1997 was
$400,000. Based on the Company's historical earnings, future
expectations of adjusted taxable income and its ability to change its
investment strategy, as well as reversing gross deferred tax liabilities,
management believes it is more likely than not that the Company will
fully realize the gross deferred tax assets less the valuation allowance.
However, there can be no assurances that the Company will generate the
necessary adjusted taxable income in any future period.
(5) RECONCILIATION TO STATUTORY ACCOUNTING
The Company's two wholly-owned insurance subsidiaries, Intermed Insurance
Co. and Interlex Insurance Co., are required to file statutory financial
statements with state regulatory authorities. Accounting principles used
to prepare the statutory financial statements differ from financial
statements prepared on the basis of generally accepted accounting
principles.
Reconciliations of statutory net income (loss), as determined using
statutory accounting principles, to the amounts included in the
accompanying consolidated financial statements for the three months
ended March 31, 1997 and 1996 are as follows:
10
<PAGE> 11
<TABLE>
<CAPTION>
March 31, March 31,
1997 1996
---- ----
<S> <C> <C>
Net income (loss) of insurance companies ($325,822) $170,190
Increase (decrease):
Deferred policy acquisition costs 13,372 (45,494)
Deferred income taxes 173,652 71,161
Deferred compensation (162,050) --
Other adjustments, net (24,514) (22,000)
--------- --------
Net income (loss) as reported herein ($325,362) $173,857
========= ========
</TABLE>
Reconciliations of statutory capital and surplus, as determined using
statutory accounting principles, to stockholders' equity included in the
accompanying consolidated financial statements at March 31, 1997 and
December 31, 1996 are as follows:
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
----------- ------------
<C> <C> <C>
Statutory capital and surplus of insurance companies $23,973,435 $24,305,304
Stockholder's equity of noninsurance subsidiaries 172,132 196,652
----------- -----------
Combined capital and surplus 24,145,568 24,501,956
Increase (decrease):
Deferred policy acquisition costs 97,928 84,550
Deferred income taxes 2,511,835 2,098,792
Net unrealized gain (loss) on investments booked at (293,015) 166,473
market
Deferred compensation (422,051) (260,000)
Non-admitted assets and other adjustments, net 450,346 799,624
Consolidating eliminations and adjustments (5,885,758) (6,001,692)
----------- -----------
Stockholders' equity as reported herein $20,604,853 $21,389,703
=========== ===========
</TABLE>
11
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis addresses the Company's financial
condition at March 31, 1997 as compared with December 31, 1996 and results of
operations for the three months ended March 31, 1997 and 1996.
RESULTS OF OPERATIONS
Net premiums written in the three-month period ended March 31, 1997 totaled
$1.5 million, an increase of $506,000 or 48.6% over the same period in 1996.
There were increases over the prior year period in both medical and legal
malpractice premiums as shown below:
PERIOD ENDED MARCH 31
<TABLE>
<CAPTION>
1997 1996 CHANGE
---------- --------- -------
MEDICAL
-------
<S> <C> <C> <C>
Direct premiums written $1,875,000 1,404,000 +33.5%
Premiums ceded to reinsurers 498,000 439,000 +13.4%
---------- --------- -------
Net premiums written $1,377,000 965,000 +42.7%
LEGAL
-----
Direct premiums written $ 317,000 125,000 +153.6%
Premiums ceded to reinsurers 149,000 51,000 +192.2%
---------- --------- -------
Net premiums written $168,000 74,000 +127.0%
</TABLE>
The increase in medical premiums is attributable to the Company's entry into
the State of Texas through a physician-sponsored purchasing group, Intermedical
of Texas, Inc., in late 1996. Premiums written in Texas during the first three
months of 1997 totaled $530,000. The sales goal for Texas medical malpractice
direct premiums written in 1997 is $4.0 million. The increase in legal
premiums is due to the continued success of the Company's direct market effort,
primarily in the State of Missouri. The number of insureds increased by 37 in
the first quarter of 1997, from 424 to 461. The sales goal for legal
malpractice direct premiums written in 1997 is $1.5 million. Both sales goals
appear attainable at this time.
Premiums ceded to reinsurers were $157,000 higher than the prior year period
due to an increase in losses ceded under the medical company's primary excess
of loss treaty with Lloyd's Underwriters.
There was an increase of $141,000 in the net unearned premium reserve (UPR) due
to the increase in premiums written in the quarter. Premiums are earned over
the twelve-month life of a policy.
12
<PAGE> 13
Net premiums earned in the first quarter of 1997 were 38.6% below the prior
year period despite the increase in premiums written because of the change in
the UPR. In the 1996 period, the UPR decreased by $1,249,000, increasing
earned premiums; in the current quarter, the UPR increased by $141,000,
decreasing earned premiums. Growth in the UPR is a positive sign because these
premiums will be earned over the following twelve months.
Net investment income in the first quarter of 1997 was $641,000, 8.4% below the
comparable period in 1996. Continued restructuring of the portfolio in 1996
was one factor as were changes in the amortization of premium and discount.
Sales and marketing expense were $410,000 in the three months ended March 31,
1997 compared to $316,000 in the prior year period, an increase of $94,000 or
approximately 30%. The increase was due to establishment of a sales office in
Austin, Texas in mid-1996 and to expansion of the Home Office direct marketing
staff. Other underwriting expenses increased approximately 4% from period to
period with small increases in a number of expense categories. The expense
ratio in the first quarter of 1997 was 43.3% compared to 54.6% in the first
quarter of 1996. The improvement in the ratio despite the increase in the
overall level of expenses was due to the significant increase in premiums
written discussed above.
Losses and loss adjustment expenses totaled $1,596,000 in the first quarter of
1997 compared to $1,900,000 in the comparable period of 1996, a decrease of
$304,000 or 16%. Ten claims were closed with indemnity in the first quarter of
1997 with an average indemnity of $140,000. In the same period of 1996, 14
claims were closed with an average indemnity of $112,000. Despite the
significant decrease in losses and loss adjustment expenses between periods,
the loss ratio increased from 83.0% in the first quarter of 1996 to 113.7% in
the current period because of the decrease in premiums earned discussed above.
There was a loss of $499,000 before federal income taxes (FIT) in the period
ended March 31, 1997 compared to a gain of $264,000 in the comparable period of
1996. The current period loss resulted in an income tax benefit of $173,000
compared to an FIT expense of $90,000 in the prior year period.
The net loss for the first quarter of 1997 was $325,000 compared to net income
of $174,000 in the first quarter of 1996.
FINANCIAL CONDITION
Total assets declined $1,266,000 in the first quarter of 1997, from $62,570,000
at December 31, 1996 to $61,304,000 at March 31, 1997. The primary reasons for
the decline were:
1. Total investments decreased by $710,000 in the current period due to a
change in the market value of bonds. All investments in bonds are
classified as available for sale and are carried at market. Changes in
the market values of bonds and common stocks are reflected in the equity
section net of income taxes. There was an unrealized loss of $444,000 at
March 31, 1997 compared to an unrealized gain of $252,000 at the prior
year end.
13
<PAGE> 14
2. Cash and cash equivalents declined $736,000 in the period due primarily
to a negative cash flow from operations of $704,000.
The increase in deferred income taxes in the first quarter of 1997 was due to
an increase in deferred compensation, unrealized gains and losses and an
increase in the net operating loss carryforward.
Total liabilities decreased by $481,000 or approximately 1% due primarily to a
$384,000 reduction in reserves for losses and loss adjustment expenses.
Stockholders' equity declined $785,000 in the quarter, from $21,390,000 at
December 31, 1996 to $20,605,000 at March 31, 1997. The decrease was due to
the net loss of $325,000 and a $459,000 change in the market value of bonds and
stocks, net of federal income taxes.
LIQUIDITY AND CAPITAL RESOURCES
Cash flow from operations in the first quarter of 1997 was a negative $704,000
compared to a negative cash flow of $1,665,000 in the prior year period. A
refund of $335,000 from the IRS and a $208,000 reduction in loss and expenses
payments were the primary factors in the improvement.
The Company anticipates that net investment income of $2.6 million in 1997 and
a cash position of $16.2 million at March 31, 1997 will provide sufficient
liquidity to fund operations without necessitating the sale of bonds or
obtaining alternative financing to meet cash requirements.
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
The FASB has issued Statement of Financial Accounting Standards No. 128 (SFAS
128), "Earnings per Share," which is effective for periods ending after
December 15, 1997, including interim periods. SFAS 128 establishes standards
for computing and presenting earnings per share and applies to all entities
with publicly held common stock or potential common stock. The company will
implement the statement in the required period.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: See Exhibit Index
(b) Reports on Form 8-K: None
14
<PAGE> 15
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.
THE TENERE GROUP, INC.
(Registrant)
May 13, 1997 /s/ J D Williams
- ------------ -------------------------------
Date Joseph D. Williams, CPA
Vice President - Finance,
Chief Financial Officer and
Principal Accounting Officer
15
<PAGE> 16
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- --------------------
3.1 Articles of Incorporation of the Registrant, filed as Exhibit 3.1
to the Registrant's Registration Statement on Forms S-1 (Reg. No.
33-78702) is incorporated herein by this reference.
3.2 Bylaws of the Registrant, filed as Exhibit 3.2 to the Registrant's
Registration Statement on Form S-1 (Reg. No. 33-78702) is
incorporated herein by this reference.
4.1 Form of common stock certificate, filed as Exhibit 4.1 to the
Registrant's Registration Statement on Form S-1 (Reg. No.
33-78702) is incorporated herein by this reference.
10.1 Management Contract, dated July 8, 1994, by and between RCA Mutual
Insurance Company, Interlex Insurance Co. and Insurance Services,
Inc., filed as Exhibit 10.1 to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1995, is incorporated
herein by reference.
10.2 Lease Agreement, dated December 7, 1994, by and between Georgetown
Square II, Ltd. and Insurance Services, Inc., filed as Exhibit
10.2 to the Registrant's Quarterly Report on Form 10-Q for the
nine months ended September 30, 1995, is incorporated herein by
reference.
10.3 Medical Practitioners' Liability Primary Excess of Loss Reinsurance
Contract, dated October 1, 1993, by and between RCA Mutual
Insurance Company and Certain Reinsurers of Lloyd's of London,
filed as Exhibit 10.3 to the Registrant's Quarterly Report on Form
10-Q for the nine months ended September 30, 1995, is incorporated
herein by reference.
10.4 Addendum No. 1 to Medical Practitioners' Liability Primary Excess
of Loss Reinsurance Contract, dated February 1, 1995, by and
between RCA Mutual Insurance Company and Certain Reinsurers of
Lloyd's of London, filed as Exhibit 10.4 to the Registrant's
Quarterly Report on Form 10-Q for the nine months ended September
30, 1995, is incorporated herein by reference.
10.5 Addendum No. 2 to Medical Practitioners' Liability Primary Excess
of Loss Reinsurance Contract, effective April 27, 1995, by and
between RCA Mutual Insurance Company and Certain Reinsurers of
Lloyd's of London, filed as Exhibit 10.5 to the Registrant's
Quarterly Report on Form 10-Q for the nine months ended September
30, 1995, is incorporated herein by reference.
10.6 Reinsurance Cover Note: 95/1146/RM to Medical Practitioners'
Liability Primary Excess of Loss Reinsurance Contract, dated
October 16, 1995, by and between RCA Mutual Insurance Company and
Certain Reinsurers of Lloyd's of London, filed as Exhibit 10.6 to
the Registrant's Quarterly Report on Form 10-Q for the nine months
ended September 30, 1995, is incorporated herein by reference.
16
<PAGE> 17
EXHIBIT DESCRIPTION
NO.
- ---
10.7 Reinsurance Cover Note: 95/1212/RM(A) to Catastrophe "Awards Made"
Excess of Loss Reinsurance Contract, dated October 16, 1995, by and
between RCA Mutual Insurance Company and Certain Reinsurers of Lloyd's
of London, filed as Exhibit 10.7 to the Registrant's Quarterly Report
on Form 10-Q for the nine months ended September 30, 1995, is
incorporated herein by reference.
10.8 Catastrophe "Awards Made" Excess of Loss Reinsurance Contract,
commencing February 1, 1995, by and between RCA Mutual Insurance
Company and Certain Reinsurers of Lloyd's of London including
Amendment No. 1, effective April 27, 1995, filed as Exhibit 10.8 to the
Registrant's Quarterly Report on Form 10-Q for the nine months ended
September 30, 1995, is incorporated herein by reference.
10.9 Reinsurance Cover Note: 95/1249/IP to Lawyers' Professional Liability
Primary Excess of Loss Reinsurance Treaty, dated October 16, 1995, by
and between Interlex Insurance Company and Certain Reinsurers of
Lloyd's of London, filed as Exhibit 10.9 to the Registrant's Quarterly
Report on Form 10-Q for the nine months ended September 30, 1995, is
incorporated herein by reference.
10.10 Lawyers' Professional Liability Primary Excess of Loss Reinsurance
Contract, commencing July 1, 1995, by and between Interlex Insurance
Company and Certain Reinsurers of Lloyd's of London, filed as Exhibit
10.10 to the Registrant's Quarterly Report on Form 10-Q for the nine
months ended September 30, 1995, is incorporated herein by reference.
10.11 Reinsurance Cover Note: 95/1250/IP to Prior Agreement Excess of Loss
Reinsurance Contract, dated October 16, 1995, by and between Interlex
Insurance Company and Certain Reinsurers of Lloyd's of London, filed
as Exhibit 10.11 to the Registrant's Quarterly Report on Form 10-Q for
the nine months ended September 30, 1995, is incorporated herein by
reference.
10.12 Prior Agreement Excess of Loss Reinsurance Contract, commencing July
1, 1995, by and between Interlex Insurance Company and Certain
Reinsurers of Lloyd's of London, filed as Exhibit 10.12 to the
Registrant's Quarterly Report on Form 10-Q for the nine months ended
September 30, 1995, is incorporated herein by reference.
10.13 Draft Reinsurance Slip by and between Intermed Insurance Company and
American Re-Insurance Company filed as Exhibit 10.13 to the
Registrant's Quarterly Report on Form 10-Q for the three months ended
March 31, 1996, is incorporated herein by reference.
10.14 Employment Agreement dated May 6, 1996 between The Tenere Group, Inc.
and Raymond A. Christy, M.D., President and Chief Executive officer,
filed as Exhibit 10.14 to the Registrant's Quarterly Report on
Form 10-Q for the nine months ended September 30, 1996, is
incorporated herein by reference.
10.15 Employment Agreement dated May 6, 1996 between The Tenere Group, Inc.
and Andrew K. Bennett, Vice President-Claims and General Counsel, filed
as Exhibit 10.15 to the Registrant's Quarterly Report on Form 10-Q for
the nine months ended September 30, 1996, is incorporated herein by
reference.
17
<PAGE> 18
10.16 Employment Agreement dated May 6, 1996 between The Tenere Group, Inc.
and Andrew C. Fischer, Vice President-Underwriting and Policy Services,
filed as Exhibit 10.16 to the Registrant's Quarterly Report on Form
10-Q for the nine months ended September 30, 1996, is incorporated
herein by reference.
10.17 Employment Agreement dated May 6, 1996 between The Tenere Group, Inc.
and Clifton R. Stepp, Vice President-Marketing, filed as Exhibit 10.17
to the Registrant's Quarterly Report on Form 10-Q for the nine months
ended September 30, 1996, is incorporated herein by reference.
10.18 Employment Agreement dated May 6, 1996 between The Tenere Group, Inc.
and Joseph D. Williams, Vice President-Finance, Chief Financial Officer
and Assistant Treasurer filed as Exhibit 10.18 to the Registrant's
Quarterly Report on Form 10-Q for the nine months ended September 30,
1996, is incorporated herein by reference.
10.19 The Tenere Group, Inc. Retirement Plan for Directors effective May 17,
1996, filed as Exhibit 10.19 to the Registrant's Quarterly Report on
Form 10-Q for the nine months ended September 30, 1996, is incorporated
herein by reference.
10.20 The Tenere Group, Inc. 1996 Long Term Incentive Plan effective April 17,
1996 filed as Annex A to the Registrant's definitive proxy statements
for the 1996 Annual Meeting of Shareholders, is incorporated herein by
reference.
10.21 Amendment No. 1 to Employment Agreement, dated February 28, 1997,
between The Tenere Group, Inc. and Raymond A. Christy, M.D., President
and Chief Executive Officer, filed as Exhibit 10.21 to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1996, is
incorporated herein by reference.
10.22 Amendment No. 1 to Employment Agreement dated February 28, 1997,
between The Tenere Group, Inc. and Andrew K. Bennett, Vice
President-Claims and General Counsel, filed as Exhibit 10.22 to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1996, is incorporated herein by reference.
10.23 Amendment No. 1 to Employment Agreement dated February 28, 1997,
between The Tenere Group, Inc. and Andrew C. Fischer, Vice
President-Underwriting and Policy Services, filed as Exhibit 10.23 to
the Registrant's Annual Report on Form 10-K for the year ended December
31, 1996, is incorporated herein by reference.
10.24 Amendment No. 1 to Employment Agreement dated February 28, 1997,
between The Tenere Group, Inc. and Clifton R. Stepp, Vice
President-Marketing, filed as Exhibit 10.24 to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1996, is
incorporated herein by reference.
10.25 Amendment No. 1 to Employment Agreement dated February 28, 1997,
between The Tenere Group, Inc. and Joseph D. Williams, Vice
President-Finance, Chief Financial Officer and Assistant Treasurer,
filed as Exhibit 10.25 to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1996, is incorporated herein by
reference.
27 Financial Data Schedules
18
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-01-1997
<DEBT-HELD-FOR-SALE> 28,652,247
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<DEFERRED-ACQUISITION> 97,928
<TOTAL-ASSETS> 61,304,246
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0
0
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1,404,234
<INVESTMENT-INCOME> 641,256
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<INCOME-PRETAX> (498,799)
<INCOME-TAX> (173,437)
<INCOME-CONTINUING> (325,362)
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<EPS-PRIMARY> (0.16)
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