The decline in gross premiums written by the Company was partially offset by an increase of $14.0 million in respect of gross premiums written in other non-property catastrophe lines. The increase was primarily due to increased gross premiums written by LaSalle Re Capital, which commenced underwriting as a corporate member of Lloyd's in January 1997, the second quarter of the 1997 fiscal year. For the year ended September 30, 1998, LaSalle Re Capital wrote gross premiums of $21.0 million compared to $14.1 million for the year ended September 30, 1997. Also, the Company increased the size of its terrorism and political risks book which accounted for approximately $1.0 million of gross premiums written for the year ended September 30, 1997 compared with approximately $4.4 million for the year ended September 30, 1998.
Premiums ceded for the year ended September 30, 1998 were $7.8 million compared to $7.7 million for the year ended September 30, 1997 and related to reinsurance protection purchased by LaSalle Re with effect from January 1, 1997 and to various reinsurance protections purchased by LaSalle Re Capital. Ceded premiums amortized increased from $1.9 million in the year ended September 30, 1997 to $6.1 million for the year ended September 30, 1998. This increase was due primarily to the reinsurance protections purchased by LaSalle Re Capital, which were amortized in line with the premiums earned by LaSalle Re Capital.
Earnings per Common Share were $5.55 for the year ended September 30, 1997 and $5.70 for the year ended September 30, 1996. Earnings per Common Share assuming dilution were $5.14 for the year ended September 30, 1997 and $5.40 for the year ended September 30, 1996. Following the Tender Offer, the adjusted weighted average number of Common Shares outstanding decreased from 23,967,870 for the year ended September 30, 1996 to 22,998,936 for the year ended September 30, 1997. This decrease generated a 6.6% accretive effect on the Company's 1997 net income per share.
The Company paid dividends on its Common Shares of $0.71 per share in October 1997 and $0.75 per share in January, April and July 1998. The Company paid a quarterly dividend of $0.5469 per share to holders of its Series A Preferred Shares in December 1997 and March, June and September 1998. As of September 30, 1998, dividends due but not yet declared on the Series A Preferred Shares amounted to $0.5 million.
For the purposes of the consolidated statements of cash flows, the Company considers all time deposits and certificates of deposit with an original maturity of 90 days or less as equivalent to cash.
Proceeds received from the sale of available for sale securities during the year ended September 30, 1998 were $389,170 (1997: $282,449; 1996: $170,296).
During the year ended September 30, 1998, 454,500 options to purchase Exchangeable Non-Voting Shares were exercised. This transaction had the effect of increasing the minority interest percentage in LaSalle Re to 22.8% from 21.1%.
In consideration for entering into an employment agreement with LaSalle Re, the Company's Chief Executive Officer (the "Executive") was granted a total of 340,872 Stock Appreciation Rights (SARs) during 1994. Upon exercise, the SARs entitle the Executive to a cash payment equal to the value of the SARs as of the exercise date. Alternatively, at the Company's sole discretion, the SARs will entitle the Executive to either (i) the number of Special Non-Voting Shares of LaSalle Re equal to the aggregate value of the SARs divided by the fair value of a Common Share at the exercise date, or (ii) upon payment of the base value for each SAR, the number of Special Non-Voting Shares of LaSalle Re equal to the number of SARs exercised.
To manage the Company's exposure to these risks, the Company may enter into foreign exchange contracts in the major currencies to which the Company is exposed. These contracts generally involve the exchange of one currency for another at some future date. The Company has a notional principal amount outstanding of approximately $5,518 (1997: $Nil; 1996: $25,192) in a contract to sell foreign currencies. The fair value of these contracts, based on quoted forward rates available for the maturity of the contracts as at September 30, 1998 is insignificant (1997: $Nil; 1996: ($571). Losses of $Nil (1997: $1,906, 1996: $294) are included in the consolidated statements of operations and comprehensive income with respect to foreign exchange contracts.
The Company has in place a $100 million committed line of credit from a syndicate of banks. The proceeds from the credit facility may only be used to buy preferred shares of LaSalle Re that, in turn, may use the proceeds of such purchase to meet current cash requirements. The facility matures December 1, 2000, and is secured by a pledge ("legal mortgage") of all the capital stock of LaSalle Re held by the Company, including any preferred shares that may be issued by LaSalle Re to the Company. As at September 30, 1998, the facility had not been utilized.
LaSalle Re Corporate Capital Ltd. is also subject to U.K. corporation tax, with the assessment made at the end of thirty six months. Given the inherent uncertainty in the results of the supported syndicates, the Company has not included a deferred tax asset or liability in these financial statements.