IMPLEMENTATION OF RATE INCREASES AND PRODUCT CANCELLATIONS: As indicated above, due to the adverse loss ratio development in the Company's old Medical Expense and Medicare Supplement lines of business, the Company has requested rate increases on those lines of business in order to mitigate the effect of such claims experience. In addition, consistent with federal and state law, the Company is pursuing the cancellation of certain blocks of policy forms that have irreversible excessive loss ratios.
Company-issued policies: First-year premiums $ 18,847 $ 37,104 $ 59,937 Renewal premiums 77,230 78,261 44,607 -------- -------- -------- Total company-issued policy premiums 96,077 115,365 104,544 -------- -------- --------
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. The preceding statements and certain other statements contained in ITEM 1 - "Business," ITEM 7 - "Management's Discussion and Analysis of Results of Operation and Financial Condition," and Notes to the Consolidated Financial Statements are forward-looking statements. These forward-looking statements are based on the intent, belief or current expectations of the Company and members of its senior management team. While the Company believes that its expectations are based on reasonable assumptions within the bounds of its knowledge of its business and operations, prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance, and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. Important factors known to management that could cause actual results to differ materially from those contemplated by the forward-looking statements in this Report include, but are not limited to, the effect of economic and market conditions, further adverse developments with respect to the Company's liquidity position or operations of the Company's various businesses, actions that may be taken by insurance regulatory authorities, adverse developments in the timing or results of the Company's current strategic business plan, the difficulty in controlling health care costs and integrating new operations, the ability of the Company to realize anticipated general and administrative expense savings and overhead reductions presently contemplated, the ability of the Company to return the Company's operations to profitability, the level and nature of any restructuring charges, and the possible negative effects of prospective health care reform. Additional factors that would cause actual results to differ materially from those contemplated within this report can also be found in the Company's reports to the Securities and Exchange Commission ("SEC") on Form 8-K during 1999 and 1998 and Form 10-Q for the quarters ended September 30, 1998, June 30, 1998 and March 31, 1998. Subsequent written or oral statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements in this Report and those in the Company's reports previously filed with the SEC. Copies of these filings may be obtained by contacting the Company or the SEC.
WESTBRIDGE CAPITAL CORP. CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA)
NATURE OF OPERATIONS. The Company, through its subsidiaries and affiliates, is licensed to market accident and health insurance products in 40 states and the District of Columbia. The major underwritten product lines currently marketed by the Company are Medical Expense products and Specified Disease products. In the past, the Company also underwrote a significant amount of Medicare Supplement products. The Company also markets certain managed care and senior products, which are underwritten by other non-affiliated managed care organizations.
The amortized cost and estimated market value of investments in available-for-sale fixed maturities as of December 31, 1998, are shown below, in thousands, summarized by year to contractual maturity. Mortgage-backed securities are listed separately. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties.
WFC's obligations under the Credit Agreement have been guaranteed by Westbridge under the Guaranty Agreement, and the Company has pledged all of the issued and outstanding shares of the capital stock of WFC, NFL and NFIC as collateral for that guaranty. As of December 31, 1998, the Company had placed $2.5 million of cash in a cash collateral account in connection with this Credit Agreement. The maintenance of this cash collateral account allows WFC to borrow against the Credit Agreement and purchase agent advance receivables at face value.
As of the Effective Date, shares of Old Preferred Stock were canceled, extinguished and retired. Holders of Old Preferred Stock will receive their pro rata share of 4% of the New Common Stock issued on the Effective Date and New Warrants to purchase their pro rata share of up to 2% of the number of shares of New Common Stock issued and outstanding on the Effective Date, on a fully diluted basis, subject to the completion of the exchange of securities contemplated by the Plan.