(1) Adjusted to reflect a four-into-one reverse stock split effective as of May 24, 1995. (2) In 1991, several liabilities were revised upward including property and casualty and workers' compensation claims and claim adjustment expense of $22.6 million, policyholders dividends of $7.1 million, and employee severance of $1.2 million. In addition, premiums receivables were written down by $4.0 million. (3) The Company's losses from discontinued operations resulted principally from contractors' and developers' liability business underwritten from 1986 to 1991.
GENERAL. The Company's net income was $1,963,000 for the year ended December 31, 1996 as compared to $371,000 for the same period in 1995. Net income per share for the year ended December 31, 1996 was $0.40 versus $0.11 in 1995. Income before preferred securities accretion, discontinued operations, and extraordinary loss was $3,630,000 for the year ended December 31, 1996 versus $11,701,000 in 1995. The decrease in the 1996 period is due principally to a $5.3 million fee for reinsurance, as well as an increase of $1.7 million from 1995 in claims and claims adjustment expense. Income before preferred securities accretion, discontinued operations, and extraordinary loss, excluding the above discussed adjustments, was $10,630,000 for the year ended December 31, 1996 as compared to $11,701,000 for the comparable period in 1995.
Selected financial data as reported for the twelve months ended December 31, 1996 and 1995 are presented below.
NET INVESTMENT INCOME decreased $2 million or 20% in 1996 as compared to 1995. The decrease is attributable to a decrease in the average investable assets of $11.3 million, and a decline in the average portfolio investment yield as a result of generally lower market interest rates in 1996 as compared to 1995. See the discussion in LIQUIDITY AND CAPITAL RESOURCES below. The Chase financing, discussed above, substantially increased the size of the investment portfolio on which SNIC retains the investment income. However, that transaction took place too late in 1996 to have a material effect on 1996 net investment income results.
STEVEN D. GERMAIN was elected to the Company's Board of Directors in April 1995. From 1988 to 1994 he served as General Counsel to the Centre Reinsurance Group of Companies. Since 1994 he has served as Managing Director of Centre ReSource Limited, a company that provides management services to the Centre Reinsurance Group of Companies. Mr. Germain continues to serve as a director and as Senior Vice President, General Counsel and Secretary to Centre Re and as a director, Senior Vice President and Secretary of CentreLine. Mr. Germain is also a director, President and Chief Executive Officer of Home Holdings, Inc. and a director of certain of its subsidiaries.
William L. Gentz 56 President and Chief Executive Officer 1994 J. Chris Seaman 42 Executive Vice President and 1991 Chief Financial Officer Arnold J. Senter 54 Executive Vice President and 1997 Chief Operating Officer Joseph P. Wolonsky 50 Senior Vice President 1989 Thomas I. Boggs, Jr. 50 Senior Vice-President- 1995 Underwriting, SNIC Karl O. Johnson 65 Senior Vice President, SNIC 1989 Douglas R. Roche 57 Senior Vice President 1990 Robert E. Nagle 48 Senior Vice President, General 1996 Counsel and Secretary James L. Cinney 56 Senior Vice President, SNIC 1994 Matthew Natalizio 41 Vice President 1994 Sue A. Binder 49 Vice President, SNIC 1992 Harold J. Fedora 46 Vice President, SNIC 1993 Curtis H. Carson 36 Vice President, SNIC 1997 Jack W. Solomon 63 Resident Vice President, SNIC 1991 Robert J. Niebur 61 Resident Vice President, SNIC 1995
In addition to the rights described above with respect to Mr. Gentz and Mr. Senter, the only change-in-control arrangement in place is in connection with the Company's stock incentives. Under the terms of the 1986 Non-Statutory Stock Option and 1986 Non-Statutory Stock Purchase Plan (the "1986 Plan"), upon a change of control of the Company, unless replacement options to purchase stock in the new or recapitalized entity are offered, all option holders will have thirty days to exercise their outstanding options, excluding those that have then not yet vested. Under the terms of the 1995 Stock Incentive Plan (the "1995 Plan"), under similar circumstances, the Option Committee of the Board of Directors (the "Option Committee") may, in its discretion, allow each person holding an option or restricted stock who did not receive a replacement equity incentive grant to exercise that option without regard to its vesting provisions, or to retain that restricted stock without regard to the Company's repurchase right, as applicable.
Assumes that $100 was invested on June 30, 1995 (the date on which the Company's registration statement under Section 12 of the Exchange Act became effective) in each of the Company's Common Stock, the Nasdaq Stock Market (U.S. Companies) Index, and the Nasdaq Insurance Stocks Index, and that all dividends were reinvested.
C.L. Pecchenino . . . . . . . . . . . . . . . 14,250 *
Robert A. Spass . . . . . . . . . . . . . . . 16,591(8) *
Steven D. Germain . . . . . . . . . . . . . . 1,053,947(11) 23.44%
10.1 Employment agreement, dated 1st of June 1994, by and between Mr. William L. Gentz, President and Chief Executive Officer of the Company, and the Company* 10.2 Employment agreement, dated February 17, 1997, by and between Mr. Arnold J. Senter, Executive Vice President and Chief Operating Officer of the Company, and the Company 10.3 1986 Non-Statutory Stock Option and Non-Statutory Stock Purchase Plan*** 10.4 1995 Stock Incentive Plan***