The Company neither owns nor maintains any office space or facilities. Rather,
the business office for the Company is provided by the Manager and is located
Company believes that these facilities are adequate for its current and
anticipated future needs. In addition, the Manager supplies all equipment for
1993, 1992, 1991, the eleven month period ended December 31, 1990 and the
fiscal year ended January 31, 1990 have been derived from financial statements
1993 and 1992 and for each of the three years in the period ended December 31,
Premiums Assumed $27,779,063 $19,386,455 $16,784,405 $12,957,759 $10,032,140 Premiums Earned 15,429,611 13,005,184 10,292,788 8,177,525 5,183,768 Net Investment Income 2,700,242 2,522,712 1,792,947 843,021 727,844 Total Income 18,129,853 15,527,896 12,085,735 9,020,546 5,911,612 Less Losses and Expenses 15,425,146 12,020,682 10,165,350 8,280,612 5,297,836 Net Income* 2,704,707 3,507,214 1,920,385 739,934 613,776 Dividends Per Common Share 0 0 0 0 0 Total Assets 50,359,633 36,847,490 28,124,056 18,759,382 12,507,645 Total Policy Reserves and Other Liabilities 42,430,269 29,777,783 23,148,003 16,347,245 11,238,143 Stockholders' Equity 7,929,364 7,069,707 4,976,053 2,412,137 1,269,502 Dividends Paid on Participating Shares 2,021,504 1,021,705 150,317 114,376 0
business, combined with proceeds from the sale of Shares, will continue to be
the principal sources of funds for investment by the Company. Such funds, and
investment earnings thereon, will be available to meet the Company's liquidity
requirements. No capital expenditures are expected during the next few years.
comprised of paid-in capital with respect to the Common Stock of $200,000,
paid-in capital with respect to the Shares of $1,417,500 (compared with
the Company has the right to reduce the business related to a Subsidiary
Company's required capital and surplus. At January 1, 1994, the Company's
required minimum net assets computed in accordance with Barbados law was
Results of Operations. The Company became operational during the fiscal year
fiscal year ended January 31, 1989. In May of 1990, the Company changed its
fiscal year end from January 31 to December 31. A full 12 months of
presented. The results of operations for the 11-month period ended December
expense. Accordingly, results for the 11-month period ended December 31, 1990
December 31, 1992 and 1991, respectively. Increased premium income has been
to an increase in assets under management which were partially offset by lower
December 31, 1993 of $15,425,146 compared with $12,020,682 and $10,165,350 for
$503,178. Losses incurred in 1992 and 1991 were $8,164,449 and $7,018,928,
respectively. The ratio of losses incurred to premiums earned for the fiscal
year ended December 31, 1993 was 70.7% compared to 62.8% and 68.2% for the
31, 1993 of $503,178 compared to $478,475 for the fiscal year ended December
the Common Stock. In previous years, these expenses had been paid by MIC
pursuant to an agreement by which MIC agreed to pay the costs of issuing shares
Account for the Common Stock, were $74,461 compared to $80,298 for the
Policies. As of December 31, 1993, the Company had furnished such a letter of
FASB Statement No. 115, "Accounting for Certain Investments in Debt and Equity
(trading, available for sale, and held to maturity). The Company intends to
adopt Statement No. 115 in 1994 and believes that the Statement will not have a
material effect on the Company's financial position and results of operations.
3. Statements of Income and Retained Earnings for the years ended December 31, 1993, 1992 and 1991............. __
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Motors Mechanical Reinsurance Company, Limited as of December 31, 1993 and 1992 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1993 in accordance with the accounting principles generally accepted in the United States of America.
MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED BALANCE SHEETS DECEMBER 31, 1993 AND 1992
RETAINED EARNINGS, end of period $ 6,211,978 $ 5,528,775 $ 3,043,266
Net cash provided by operating activities $12,422,648 $ 7,598,500 $ 5,386,977
The Company is incorporated under the laws of Barbados and is a licensed insurer under the Exempt Insurance Act, 1983.
The financial statements are stated in United States dollars and are prepared generally in conformity with accounting principles generally accepted within the United States of America. Reinsurance premiums assumed by the Company represent policies ceded by MIC during the twelve months ended December 31 of each fiscal year.
Investments are comprised of interest-bearing marketable securities which are carried at fair value, based on quoted market prices and dealer quotes obtained from an external pricing service. Investments with original maturities of less than 90 days are classified as cash equivalents. Unrealized appreciation (depreciation) is included in stockholders' equity.
The Company provides for unsettled, reported losses based on estimates of the final settlement, with an experience factor added to provide for losses incurred but not reported. The final settlement may be greater or less than the amounts provided. Any such differences, when they become known, are recognized in current operations.
No amount has been reported as earnings per share as the earnings applicable to the Participating Stockholders vary with the underwriting results of each series. Retained earnings applicable to the Common Stockholder include allocated investment income and operating expenses and amounts restricted for advances to Participating Stockholders (see Note 7).
The cost and estimated fair value of investments in debt securities are as follows: Gross Gross Estimated Unrealized Unrealized Fair Cost Appreciation Depreciation Value
The cost and estimated fair value of debt securities at December 31, 1993, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
Proceeds from sales of investments in debt securities during the years ended December 31, 1993 and 1992 were $44,166,497 and $52,166,918 respectively. In 1993, gross gains of $964,613 and gross losses of $92,326 were realized. In 1992, gross gains of $1,008,932 and gross losses of $144,650 were realized. In 1991, gross gains of $538,996 and gross losses of $46,652 were realized.
The investment portfolio is comprised of diverse U.S. dollar- denominated debt securities which do not result in any concentration in credit risks.
All of the Company's Common Stock is held by MIC. A prospectus dated June 4, 1993 is offering 26,500 shares of Participating Stock to persons certified by owners of certain motor vehicle franchises. The offering consists of 265 series of 100 shares each at a price of $75 per share.
The holders of Participating Stock as a class are entitled to elect one director. Generally, liquidation of the Company requires approval by at least 75% of the outstanding shares of this class. Any redemption of a series of shares requires a vote of the Board provided that the director representing holders of the Participating Stock votes in favor of the redemption. Any changes in the Company's Articles or By-Laws require the approval of a majority of the holders of Participating Stock present and voting together with a majority of the holders of Common Stock.
Under the provisions of the retrocession agreement, the Company will receive additional cessions of 13,471,019 ($9,354,534 at December 31, 1992) relating to premiums written by the ceding insurer but unearned at the respective period ends. The amounts will be received as the premiums are earned, net of related acquisition costs.
Dividends may be declared and paid at the discretion of the Company's Board of Directors, except that dividends may not be paid out of unrealized investment gains. Barbados law requires that the Company maintain a minimum capitalization based generally on the amount of premiums earned in the preceding fiscal year. On January 1, 1994 the Company's required minimum capital computed in accordance with Barbados law was approximately $2,042,961.