2) Net income per share is based on the weighted average number of ordinary shares and ordinary share equivalents outstanding for each period as required by Statement of Financial Accounting Standard No. 128.
4) The underwriting expense ratio is the sum of acquisition expenses and operating expenses divided by net premiums earned. Operating expenses relating to the corporate segment have not been included for purposes of calculating the underwriting expense ratio.
The following is a discussion of the Company's results of operations and financial condition. Prior period information presented is the combination of the results formerly presented by XL Capital and NAC, as required for a business combination accounted for by the pooling of interests method, which assumes NAC had always been a part of the Company. It is also based upon the Company's new fiscal year end of December 31. See Note 6 "Business Combinations" of the audited Consolidated Financial Statements for further details. The Company's results of operations and financial condition for 1998 were significantly impacted by the acquisition of Mid Ocean in August 1998, which was accounted for as a purchase business combination.
CONSOLIDATED BALANCE SHEETS AS AT DECEMBER 31, 1999 AND 1998 (U.S. dollars in thousands, except share amounts)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 (U.S. dollars in thousands)
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 (U.S. dollars in thousands)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31 1999, 1998 and 1997
1. HISTORY (CONTINUED) and commissions in respect of underwriting services it provides to syndicates. In the fourth quarter of 1999, Brockbank sold its two motor insurance businesses, Admiral and Zenith. The Company expects there to be decreases in premiums, fee income and certain costs, however it does not expect the overall profitability of its Lloyd's operations to be materially affected by such sales.
In 1999, the Company made strategic minority investments in two investment management firms. The Company acquired minority investments in Highfields Capital Management L.P., a global equity investment firm, and MKP Capital Management, a New York-based fixed income investment manager specializing in mortgage-backed securities.
The Company formed Reeve Court Insurance, a Bermuda company organized as a joint venture with such company's management for the purpose of providing life insurance to high net worth individuals in 1998.
In 1997, the Company acquired a 75% holding in Latin America Re, a Bermuda reinsurance company.
In the normal course of business, the Company seeks to reduce the loss that may arise from events that could cause unfavorable underwriting results by reinsuring certain levels of risk in various areas of exposure with other insurance enterprises or reinsurers. Reinsurance premiums ceded are expensed and the commissions recorded thereon are earned on a monthly pro-rata basis over the period the reinsurance coverage is provided. Amounts recoverable from reinsurers are estimated in a manner consistent with the claim liability associated with the reinsured policy. Provision is made for estimated unrecoverable reinsurance.
Assets and liabilities of foreign operations whose functional currency is other than the U.S. dollar are translated at year end exchange rates. Revenue and expenses of such foreign operations are translated at average exchange rates during the year. The effect of the translation adjustments for foreign operations is recorded, net of applicable deferred income taxes, as a separate component of accumulated other comprehensive income in shareholders' equity.
The reserve for losses incurred but not reported has been estimated by management in consultation with independent actuaries and is based on loss development patterns determined by reference to the Company's underwriting practices, the policy form and the experience of the relevant industries.
Short duration contracts entered into by the Company which are not deemed to transfer significant underwriting and/or timing risk are accounted for as deposits, whereby liabilities are recorded for the same amount of premium received. The Company will periodically re-assess the amount of the deposit liabilities. Changes are recorded in the period they are determined as either interest income where the contract does not transfer underwriting risk, or net losses and loss expenses incurred where the contract does not transfer significant timing risk.
The Financial Accounting Standards Board issued Statement ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities," which is required to be adopted in years beginning after June 15, 2000. The Company has not yet completed its assessment of the effect of the adoption of this standard on results of operations, financial condition or liquidity, but believes it will not be significant.
The Company's reinsurance business is primarily written by NAC Re and XL Mid Ocean Re. Business written includes treaty and facultative reinsurance to primary insurers of casualty risks, principally: general liability; professional liability; automobile and workers' compensation; commercial and personal property risks; specialty risks including fidelity and surety and ocean marine; property catastrophe; property excess of loss; property pro rata; marine and energy; aviation and satellite; and various other reinsurance to insurers on a worldwide basis. The Company endeavors to manage its exposures to catastrophic events by limiting the amount of its exposure in each geographic zone worldwide and requires that its property catastrophe contracts provide for aggregate limits and varying attachment points.
Financial services premiums are written by XL Insurance through XL Capital Products. Business written includes insurance and reinsurance solutions for complex financial risks. These include financial insurance and reinsurance, credit enhancement swaps and other collateralized transactions. While each of these are unique and are tailored for the specific needs of the insured, they are typically multi-year policies. Due to the nature of these types of policies, premium volume as well as profit margin can vary significantly from period to period. The Company has approached this market on a "net-line" basis, but may cede a portion of some policies to third parties from time to time. In 1999, the Company also commenced assuming large loss portfolios as part of its new asset accumulation strategy.
The Company evaluates performance of each segment based on underwriting profit or loss. Other items of revenue and expenditure of the Company are not evaluated at the segment level. In addition, management does not consider the allocation of assets by segment. The following is an analysis of the underwriting profit or loss by segment together with a reconciliation of underwriting profit or loss to net income:
3. SEGMENT INFORMATION (CONTINUED) (1) Net losses and loss expenses exclude an increase to loss reserves of $95.0 million associated with the merger with NAC.
(2) Net losses and loss expenses for the insurance segment include, and the reinsurance segment exclude, $100.0 million relating to an intercompany stop loss agreement. Total results are not affected. The loss and loss expense ratio would have been 45.2% and 76.6% and the underwriting profit (loss) would have been $125 million and $(115) million in the insurance and reinsurance segments, respectively, had this stop loss agreement not been in place.
4. INVESTMENTS (CONTINUED) The following represents an analysis of realized and the change in unrealized appreciation on investments:
Through its subsidiaries, the Company has two facilities available for the issuance of letters of credit collateralized against the Company's investment portfolio, which were up to a value of $791.4 million at December 31, 1999. At December 31, 1999 and 1998, approximately $591.0 million and $348.9 million, respectively, of letters of credit were issued and outstanding under these facilities.
In 1999, the Company acquired minority investments in Highfields Capital Management L.P., a global equity investment firm, and MKP Capital Management, a New York-based fixed income investment manager specializing in mortgage-backed securities, and invested in the closed end funds they manage.
5. INVESTMENTS IN AFFILIATES (CONTINUED) In 1998, the Company and FSA formed FSA International, a Bermuda company. At December 31, 1999, the Company owned 20% of FSA International.
The Company owned approximately 25% of Mid Ocean until July 31, 1998. Subsequent to this date, Mid Ocean was acquired by the Company and has been consolidated.
On June 18, 1999, the Company merged with NAC in an all-stock transaction. Shareholders of NAC received 0.915 Company shares for each NAC share in a tax free exchange. Approximately 16.9 million of the Company's Class A ordinary shares were issued in this transaction. The merger transaction has been accounted for as a pooling of interests under U.S. GAAP.
The following table presents a reconciliation of the total revenues, net income, and earnings per share of the Company as previously reported as adjusted for the change in fiscal year end, combined with the results of NAC:
(1) After giving effect to the exchange of 0.915 Company shares for each NAC Share
In August 1998, the Company merged with Mid Ocean. Shareholders of Mid Ocean received 1.0215 Company shares for each Mid Ocean share subject to a cash election option which was taken up of $96 million. The merger with Mid Ocean was accounted for as a purchase under U.S. GAAP and results of operations of Mid Ocean are included from August 1, 1998. The total purchase price was $2.2 billion; the fair value of Mid Ocean's net assets not already owned by the Company was $0.9 billion with the balance of $1.3 billion representing goodwill which is
Cash and cash equivalents totaling $137 million is included in other assets. Cash acquired as a result of this merger was $41 million.
In June 1997, the Company acquired GCR Holdings Limited in an all-cash transaction. The acquisition was accounted for as a purchase under U.S. GAAP. The total purchase price was $667 million, the fair value of GCR's net assets was $402 million, with the balance of $265 million representing goodwill which is being amortized over 20 years. Cash and cash equivalents of approximately $7 million were acquired.
7. LOSSES AND LOSS EXPENSES (CONTINUED) quarter of 1999 generated approximately $135 million of catastrophic losses to the Company, of which the European storms in December account for the major part. The Company also experienced a number of smaller catastrophe losses in 1999 that totaled approximately $50 million. These losses included the Turkey earthquakes, the Sydney hailstorms and the Oklahoma tornadoes. By comparison, the Company incurred approximately $60 million in catastrophe losses relating to Hurricane Georges and the SwissAir disaster in 1998. These losses were incurred in the reinsurance operations.
The Lloyd's operations experienced loss deterioration on the U.K. motor business written by Brockbank, principally relating to its 1999 and 1998 underwriting years of approximately $20 million. 1999 incurred losses also include an increase to reinsurance loss reserves of $95 million for NAC when it merged with the Company in June 1999. In addition, the acquisition of Intercargo in June 1999 also added approximately $30 million to total incurred losses.
The decrease in prior year incurred losses is driven primarily by the Company's insurance liability excess of loss reserves. The basis for establishing IBNR is unlike most insurance companies due to the lack of industry data. Consequently, the Company estimates loss reserves through actuarial models based upon its own experience. When the Company commenced writing this type of business in 1986, limited data was available and the Company made its best estimate of loss reserves at that time. Over time, the amount of data has increased, providing a larger statistical base for estimating reserves. Redundancies in prior year loss reserves have occurred where loss experience has developed more favorably than expected.
The increase in paid losses in 1999 and 1998 reflects the acquisition of Mid Ocean and Brockbank in 1998. In addition, the source of the Company's high excess of loss liability and catastrophe business can result in loss payments that are both irregular and significant. Similarly, adjustments to reserves for individual years can be irregular and significant. Such adjustments are part of the normal course of business for the Company. Conditions and trends that have affected development of liability in the past may not necessarily occur in the future. Accordingly, it is inappropriate to extrapolate future redundancies or deficiencies based upon historical experience. See generally "Management's Discussion and Analysis of Results of Operations and Financial Condition - Cautionary Note Regarding Forward-looking Statements".
Except for certain workers' compensation unpaid losses, the Company does not discount its liabilities for unpaid losses and loss expenses. The Company utilizes tabular reserving for workers' compensation unpaid losses that are considered fixed and determinable and discounts such losses using an interest rate of 7% for financial statements prepared in accordance with GAAP and a 5% interest rate for U.S. statutory accounting purposes. The tabular reserving methodology results in applying a uniform and consistent criteria for establishing expected future indemnity and medical payments (including an explicit factor for inflation) and the use of mortality tables to determine expected payment periods. Tabular unpaid losses and loss expenses, net of reinsurance, at December 31, 1999, 1998 and 1997 were $85.7 million, $61.3 million and $42.4 million, respectively. The related discounted unpaid losses and loss expenses were $28.1 million, $20.7 million and $16.1 million as of December 31, 1999, 1998 and 1997, respectively.
A reconciliation of the opening and closing unpaid losses and loss expenses related to asbestos and environmental exposure claims for the years indicated is as follows:
Incurred but not reported ("IBNR") losses, net of reinsurance, included in the above table was $16.1 million in 1999, $17.0 million in 1998 and $16.6 million in 1997. Unpaid losses recoverable are net of potential uncollectable amounts.
The Company utilizes reinsurance and retrocession agreements principally to increase aggregate capacity and to reduce the risk of loss on business assumed. The Company's reinsurance and retrocession agreements provide for recovery of a portion of loss and loss expenses from reinsurers and reinsurance recoverables are recorded as assets. The Company is liable if the reinsurers are unable to satisfy their obligations under the agreements.
The Company recorded reinsurance recoveries on loss and loss expenses incurred of $390.9 million, $294.0 million and $166.3 million for the years ended December 31, 1999, 1998 and 1997, respectively. The Company is the beneficiary of letters of credit, trust accounts and funds withheld in the aggregate amount of $228.9 million at December 31, 1999, collateralizing reinsurance recoverables with respect to certain retrocessionnaires.
Increases in all of the above balances in 1999 over 1998 and in 1998 over 1997 is primarily due to the acquisition of Mid Ocean in 1998.
During 1999, the Company entered into a contract that transfers insufficient risk to be accounted for as reinsurance under SFAS No. 113. This contract has been recorded as a deposit liability and is matched by an equivalent amount of investments. At December 31, 1999, total deposit liabilities are $310.4 million.
In December 1999, the Company entered into a contract reinsuring a portfolio of life and annuity business that has been accounted for as an investment contract under SFAS No. 97, with a corresponding liability for estimated future policy benefits in the amount of $635.6 million. The Company has contracted to transfer liabilities of $108.1 million to a third party for an equivalent consideration
10. NOTES PAYABLE AND DEBT AND FINANCING ARRANGEMENTS (CONTINUED) In 1995, the Company issued $100.0 million of 7.15% Senior Notes due November 15, 2005 through a public offering at a price of $99.9 million.
$100.0 million of 5.25% Convertible Subordinated Debentures due December 15, 2002 were issued in December 1992 through a private offering. The Debentures were called in June 1999 and converted to approximately 1.8 million of the Company's shares.
The Company uses foreign exchange contracts to manage its exposure to the effects of fluctuating foreign currencies on the value of its foreign currency fixed maturities and equity investments. These contracts are not designated as specific hedges for financial reporting purposes and therefore, realized and unrealized gains and losses recognized on them are recorded in income in the period in which they occur. These contracts generally have maturities of three months or less. In addition, where the Company's investment managers are of the opinion that potential gains exist in a particular currency, then a forward contract will not be entered into. At December 31, 1999 and 1998, forward foreign exchange contracts with notional principal amounts totaling $339.3 million and $322.4 million, respectively, were outstanding. The fair value of these contracts as at December 31, 1999 was $341.1 million (1998: $316.2 million) with unrealized losses of $1.8 million (1998: $6.2 million). Losses of $2.7 million and gains of $17.0 million were realized during 1999 and 1998, respectively.
In addition, the Company also enters into foreign exchange contracts to buy and sell foreign currencies in the course of trading its foreign currency investments. These contracts are not designated as specific hedges for financial reporting purposes, and generally have maturities of two weeks or less. As such, any realized or unrealized gains or losses are recorded in income in the period in which they occur. At December 31, 1999 and 1998, the value of such contracts outstanding was not significant.
Derivative investments are also utilized to add value to the portfolio where market inefficiencies are believed to exist. At December 31, 1999, bond and stock index futures outstanding were $241.1 million (1998: $235.6 million), with underlying investments having a market value of $2.5 billion (1998: $2.1 billion). All managers are prohibited by the Company's investment guidelines from leveraging their positions.
The Company's investment portfolio is managed by external managers in accordance with guidelines that have been tailored to meet specific investment strategies, including standards of diversification which limit the allowable holdings of any single issue. The Company did not have an aggregate investment in a single entity, other than the U.S. government, in excess of 10% of shareholders' equity at December 31, 1999 and 1998.
The Company has committed to invest in several limited partnerships as part of its overall corporate strategy. The primary purpose of these partnerships is to invest capital provided by the partners in various insurance and reinsurance ventures. The Company had invested $99.7 million and $33.0 million as at December 31, 1999 and 1998, respectively, with commitments to invest a further $131.8 million over the next ten years. The Company
11. COMMITMENTS AND CONTINGENCIES (CONTINUED) received income from its investments of $9.4 million and $3.6 million for the years ended December 31 1999 and 1998, respectively. The Company continually reviews the performance of the partnerships to ensure there is no decrease in the values of its investments. The Company is a limited partner and, as such, does not actively participate in the management of the partnerships.
The Company rents space for its principal executive offices under leases which expire up to 2009. Total rent expense for the years ended December 31, 1999, 1998 and 1997 was approximately $13 million, $9 million and $7 million, respectively. Future minimum rental commitments under existing leases are expected to be as follows:
The authorized share capital is 999,990,000 ordinary shares of a par value of $0.01 each. Holders of Class A shares are entitled to one vote for each share held while Class B shares are not entitled to vote. In all other respects, Class A and B shares rank PARI PASSU.
The following table is a summary of shares issued and outstanding:
The issue of shares in 1998 was in exchange for Mid Ocean shares and FSA shares.
The Company has had several stock repurchase plans in the past as part of its capital management. In June 1999, the Board of Directors rescinded the Company's share repurchase plans. On January 9, 2000 the Board of Directors authorized the repurchase of shares up to $500 million.
Restricted stock awards issued under the 1991 Performance Incentive Program plan vest over a five year period from the date of grant. These shares contained certain restrictions, for said period, relating to, among other things, forfeiture in the event of termination of employment and transferability. As the shares are issued, deferred compensation equivalent to the difference between the issue price and the estimated fair market value on the date of the grant is charged to shareholders' equity and subsequently amortized over the five-year restriction period. Restricted stock issued under the plan totaled 113,100 shares, 147,836 shares and 91,000 shares in 1999, 1998 and 1997, respectively. Restricted stock awards granted by NAC prior to the merger amounted to 3,627 shares, 23,700 shares and 65,300 shares for the same respective periods. Vesting for such shares generally occurs over a six year period.
The Company also has stock plans in place for its non-employee directors. The "Stock and Option Plan" issues non-qualified options to the directors - 4,000 shares at the commencement of their directorship and 2,000 shares each year thereafter. On December 3, 1997, 5,000 options were granted to each director. All options vest immediately on the grant date. Effective April 11, 1997, all options granted to non-employee directors are granted under the 1991 Performance Incentive Program. Directors may also may make an irrevocable election preceding the beginning of each fiscal year to defer cash compensation that would otherwise be payable as his or her annual retainer in increments of $5,000. The deferred payments are credited in the form of shares calculated by dividing 110% of the deferred payment by the market value of the Company's stock at the beginning of the fiscal year. Each anniversary thereafter, 20% of these shares are distributed. Shares issued under the plan totaled nil, 2,737 and 3,048 in 1999, 1998 and 1997, respectively.
12. SHARE CAPITAL (CONTINUED) granted in 1999, 1998 and 1997, and net income and earnings per share would have been reduced to the pro-forma amounts indicated below:
Total stock based compensation recognized in net income was $7.7 million in 1999, $5.8 million in 1998 and $5.2 million in 1997.
Rights to purchase Ordinary Shares were distributed as a dividend at the rate of one Right for each outstanding Ordinary Share held of record as of the close of business on October 31, 1998. Each Right entitles holders of XL Ordinary Shares to buy one ordinary share at an exercise price of $350. The Rights would be exercisable, and would detach from the Ordinary Shares, only if a person or group were to acquire 20% or more of XL's outstanding Ordinary Shares, or were to announce a tender or exchange offer that, if consummated, would result in a person or group beneficially owning 20% or more of XL's Ordinary Shares. Upon a person or group without prior approval of the Board acquiring 20% or more of XL's Ordinary Shares, each Right would entitle the holder (other than such an acquiring person or group) to purchase XL Ordinary Shares (or, in certain circumstances, Ordinary Shares of the acquiring person) with a value of twice the Rights exercise price upon payment of the Rights exercise price. XL will be entitled to redeem the Rights at $0.01 per Right at any time until the close of business on the tenth day after the Rights become exercisable. The Rights will expire at the close of business on September 30, 2008. The Company has initially reserved 119,073,878 Ordinary Shares being authorized and unissued for issuance upon exercise of the Rights.
NAC also maintains a qualified contributory defined contribution plan for substantially all its U.S. employees and a qualified non-contributory defined contribution plan for all its U.K. employees.
The Company's U.S. subsidiaries are subject to federal, state and local corporate income taxes and other taxes applicable to U.S. corporations. The provision for federal income taxes has been determined on the basis of the income of each of the Company's U.S. subsidiaries as if a tax return had been prepared on an individual Company basis. Should the U.S. subsidiaries pay a dividend to the Company, withholding taxes will apply.
U.S. and Non-U.S. taxes paid in the years ended December 31, 1999, 1998 and 1997 were approximately $30 million, $31 million and $38 million, respectively. The Company's current tax liability is included in "other liabilities" in the accompanying financial statements and amounted to $11 million in 1999 and $26 million in 1998.
Significant components of the Company's deferred tax assets and liabilities, which principally relate to U.S. subsidiaries, as of December 31, 1999 and 1998 were as follows:
The Company's ability to pay dividends is subject to certain regulatory restrictions on the payment of dividends by its subsidiaries. The payment of such dividends is restricted by applicable laws of Bermuda, Ireland, U.S. and United Kingdom, including Lloyd's. The Company relies primarily on cash dividends from XL Insurance and Mid Ocean.
Under The Insurance Act, 1978, (as amended by the Insurance Act Amendment 1995) amendments thereto and related regulations of Bermuda, XL Insurance and XL Mid Ocean Re are required to prepare statutory financial statements and to file in Bermuda a statutory financial return. The Act also requires these companies to maintain certain measures of solvency and liquidity during the year.
XL Insurance's and XL Mid Ocean Re's statutory capital and surplus, statutory net income and the minimum statutory capital and surplus required by the Act were as follows:
Under the Act, XL Insurance and XL Mid Ocean Re are classified as a Class 4 insurer and reinsurer, respectively. Therefore they are restricted to the payment of dividends in any one financial year of 25% of the prior year's statutory capital and surplus, unless their directors attest that such dividends will not cause the company to fail to meet its relevant statutory requirements. XL Insurance and XL Mid Ocean Re have not been affected by this.
Consolidated statutory net income and surplus of NAC Re, as reported to the insurance regulatory authorities, differs in certain respects from the amounts as prepared in accordance with GAAP. The main differences between statutory net income and GAAP income relates to deferred acquisition costs and deferred income taxes. The main differences between statutory surplus and shareholders' equity, in addition to deferred acquisition costs and deferred income tax net assets, are intangible assets, unrealized appreciation on investments, and any unauthorized/authorized reinsurance charges.
NAC Re is subject to New York insurance law, which imposes certain restrictions on the payment of cash dividends and tax reimbursements. Generally, NAC Re may pay cash dividends only out of statutory earned surplus. However, the maximum amount of dividends that may be paid in any twelve month period without the prior approval of the New York Insurance Department is the lesser of net investment income or 10% of statutory surplus as such terms are defined in the New York insurance law. Statutory earned surplus at December 31, 1999 is $(27.7) million and consequently, NAC Re cannot make a dividend distribution. In addition, the Company was required to make a commitment to New York State insurance regulators not to pay dividends out of NAC Re for two years without prior regulatory approval. Statutory earned surplus at December 31, 1998 was $231.9 million and the maximum amount NAC Re was able to pay without such regulatory approval, based on 10% of statutory surplus as of December 31, 1998 was approximately $73.7 million.
Brockbank, via Lloyd's, is a licensed insurer in the states of Illinois, Kentucky and the U.S. Virgin Islands ("USVI"). It is also an eligible surplus lines writer in all states other than Kentucky and USVI, and an accredited reinsurer in every state other than Michigan, Kansas and Arizona. Brockbank Insurance Services, Inc., is licensed in California as a fire and casualty broker, surplus lines broker and special lines surplus lines broker.
XL Europe is permitted to cover risks throughout the European Community (subject to certain restrictions) pursuant to the "Third Directive" relating to non-life insurance. Its head office is in Ireland and it is subject to regulation under Irish regulatory authority. The principal legislation and regulations governing the insurance activities of Irish insurance companies are the Insurance Acts 1909 to 1990 (the "Irish Acts") and a comprehensive network of
18. STATUTORY FINANCIAL DATA (CONTINUED) regulations and statutory provisions empowering the making of regulations of which the most relevant are the European Communities (Non-Life Insurance) Regulations, 1976, the European Communities (Non-Life Insurance Accounts) Regulations, 1995, the European Communities (Non-Life Insurance) Framework Regulations, 1994 and related administrative rules (the "Irish Regulations".)
The United Kingdom Financial Services Authority ("U.K. FSA") regulates reinsurance entities that are "effecting and carrying on" insurance business in the United Kingdom. Both XL Mid Ocean Re, through its London branch and NAC Re, through its London subsidiary, "effect and carry on" business in the United Kingdom and are therefore regulated by the U.K. FSA.
(2) 1998 and 1997 reflect the assumed conversion of the NAC 5.25% Convertible Subordinated Debentures due 2000. The Debentures were called in June 1999 and the actual conversion is reflected in 1999.
On January 17, 2000, the Company entered into a stock repurchase agreement with Risk Capital Holdings. Under this agreement, in exchange for its shares in Risk Capital and $3.6 million in cash, the Company will receive the effective remaining ownership in Latin America Re and 1.4 million shares and 100,000 warrants in Annuity & Life Re, in which the Company has an existing 7% position. The total value of the transaction was $62.8 million.
The following is a summary of the unaudited quarterly financial data for 1999 and 1998 based upon the Company's amended year end of December 31 and the pooling with NAC: