the business office for the Company is provided by the Manager and is located at
financial statements for all periods presented. The results of operations for
the 11-month period ended December 31, 1990, however, include only 11 months'
month period ended December 31, 1990 are not fully comparable with results for
years in the period ended December 31, 1994 is included elsewhere herein.
Premiums Assumed $38,371,896 $27,779,063 $19,386,455 $16,784,405 $12,957,759 ___________ ___________ ___________ ___________ ___________ Premiums Earned 21,316,685 15,429,611 13,005,184 10,292,788 8,177,525 Net Investment Income 1,227,816 2,700,242 2,522,712 1,792,947 843,021 __________ ___________ ___________ ___________ __________ Total Income 22,544,501 18,129,853 15,527,896 12,085,735 9,020,546 Less Losses and Expenses 20,825,943 15,425,146 12,020,682 10,165,350 8,280,612 __________ ___________ ___________ ___________ __________ Net Income 1,718,558 2,704,707 3,507,214 1,920,385 739,934 __________ ___________ ___________ ___________ __________ Dividends Per Common Share 0 0 0 0 0 Total Assets 66,012,284 50,359,633 36,847,490 28,124,056 18,759,382 Total Policy Reserves and Other Liabilities 60,246,641 42,430,269 29,777,783 23,148,003 16,347,245 Stockholders' Equity 5,765,643 7,929,364 7,069,707 4,976,053 2,412,137 Dividends Paid on Participating Shares 2,156,304 2,021,504 1,021,705 150,317 114,376
increase due to the increased level of premiums assumed in each preceding year
$6,734,218 in 1992 and $11,550,335 in 1993 to $14,960,494 in 1994. The Company
1994, and $40,413,058 as of December 31, 1993. These amounts are attributable
unexpired portion of the original manufacturer's warranty at the time of
purchase of the vehicle. Because the Company has little risk of loss prior to
a discussion of dividends paid and legal restrictions on the payment of
On April 8, 1994, the Board of Directors authorized the payment of dividends to
Capital Resources. Capitalization of the Company, as of December 31, 1994, is
paid-in capital with respect to the Shares of $1,665,000 (compared with
$1,417,500 and $1,072,500 as of December 31, 1993 and 1992, respectively), and
that the Company's net assets equal at least the aggregate of $1,000,000 and 10%
fiscal year. If the Company's net assets are less than mandated by Barbados
permit the Subsidiary Capital Account to meet its pro rata share of the
Company's required capital and surplus. At January 1, 1995, the Company's
the fiscal years ended December 31, 1993 and 1992, respectively. The reduction
in net income during 1994 compared to the previous year is the result primarily
of realized losses on the sale of investments as discussed below. The reduction
The Company had net underwriting income of approximately $490,742 in 1994
compared to $4,465 and $984,502 during 1993 and 1992 respectively. During 1994,
the Company had earned premiums of $21,316,685 compared to $15,429,611 and
of Shares during the year ended December 31, 1994, and the continuing flow of
December 31, 1994 compared to 189 and 143 series of Shares outstanding at
The Company incurred losses and expenses during the fiscal year ended
comprised of provisions for losses incurred during the period of $14,830,166,
year ended December 31, 1994 was 69.6% compared to 70.7% and 62.8% for the
The expiration during 1992 of certain unlimited mileage mechanical plans that
favorable impact on 1992 loss experience. On the other hand, the reduction of
for the Common Stock. In 1994, MIC paid directly, $162,989 of costs to register
and issue shares. For fiscal years ended December 31, 1993 and 1992, share
The increase of net underwriting income during the year ended December 31, 1994
was offset by a decrease in investment income which declined in 1994 to
December 31, 1993 and 1992, respectively. The reduction in investment income
investment portfolio and resulted in realized losses on the sale of investment
52% during 1994 over the prior year, largely as a result of an increase in the
31, 1994 were $1,543,358 compared to realized gains of $872,313 and $864,282 for
1994 were $1,896,089 compared to unrealized gains at December 31, 1993 of
1995, substantially all of these unrealized losses were eliminated as a result
foreign denominated bonds, on a fully U.S. dollar-hedged basis, in situations
where the investment manager anticipates a higher rate of return (net of hedging
denominated bonds. The Company's investment guidelines do not permit the use of
collateral in the form of an irrevocable letter of credit of at least 12 months
adopted Statement No. 115 in 1994 and classified its securities portfolio as
available for sale. Adoption of the statement did not have a material effect on
4. Statements of Cash Flows for the years ended December 31, 1994, 1993 and 1992 ............ 30
ASSETS Investments 3,7 $42,903,056 $29,882,488 Cash and cash equivalents 7 3,303,060 6,788,771 Accrued investment income 1,559,195 861,190 Due from ceding company 3,315,506 2,331,978 Deferred acquisition costs 14,931,467 10,495,206 ___________ ___________
STOCKHOLDERS' EQUITY 5 Share capital Common stock - no par value; Authorized - 2,000 shares; issued and outstanding - 2,000 shares 200,000 200,000
Participating stock - no par value; Authorized - 100,000 shares; issued and outstanding - 22,200 shares at December 31, 1994 and 18,900 shares at December 31, 1993 1,665,000 1,417,500 ___________ ___________ 1,865,000 1,617,500
MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED STATEMENTS OF INCOME AND RETAINED EARNINGS FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
Reinsurance premiums assumed 6 $38,371,896 $27,779,063 $19,386,455 Increase in unearned premiums (17,055,211) (12,349,452) (6,381,271) ___________ ___________ __________
ADD: REDEMPTION OF PARTICIPATING STOCK 22,500 - - ___________ ___________ ___________
CASH FLOWS FROM OPERATING ACTIVITIES: Reinsurance premiums collected $35,580,944 $26,933,330 $17,624,088 Losses and underwriting expenses paid (22,168,851) (16,977,784) (11,898,682) Administrative expenses paid (527,767) (490,616) (429,735) Investment income received 2,076,168 2,085,405 1,438,547 ___________ ___________ ___________
Net cash provided by operating activities 14,960,494 11,550,335 6,734,218 ___________ __________ ___________
CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of investment securities (70,748,944) (49,834,608) (60,877,408) Sales of investment securities 54,189,043 45,038,810 53,031,200 ___________ ___________ ___________
CASH AND CASH EQUIVALENTS, end of year $ 3,303,060 $ 6,788,771 $ 1,710,738 ___________ ___________ ___________
NET CASH PROVIDED BY OPERATING ACTIVITIES $14,960,494 $11,550,335 $ 6,734,218 ___________ ___________ ___________
The financial statements are stated in United States dollars and are prepared in conformity with accounting principles generally accepted in 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.
The cost and estimated fair value of investments in debt securities are as follows:
Debt securities issued by foreign governments and their agencies $16,327,184 $72,332 $(135,761) $16,263,755
Due after five years through ten years 26,595,465 25,661,968 ___________ ___________
The following table sets forth an analysis of changes in the loss reserves for the years ended December 31, 1994, 1993 and 1992:
Prior claim years $ (63,724) $ (134,249) $ (297,535) ____________ ____________ __________
Ending balance in reserves for losses $ 2,660,270 $ 1,910,030 $1,622,855 ____________ ____________ __________
All of the Company's Common Stock is held by MIC. A prospectus dated July 14, 1994 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.
During 1994, 36 additional series of 100 shares of Participating Stock were issued as compared with 46 for the year ended December 31, 1993. In addition, in 1994 the Board of Directors redeemed 3 series of 100 shares each that had substantial accumulated deficits. As a result of the redemption, $22,500 was transferred from Participating Stock to retained earnings to eliminate the capital accounts and accumulated deficits of those series.
From time to time, funds are held in escrow on account of Participat- ing Stock applications. Such amounts are not included in cash and cash equivalents in the accompanying financial statements. At December 31, 1994, $7,500 was held in escrow and at December 31, 1993, there were no amounts held in escrow.
Items of income or loss and expenses attributable to insurance underwriting activities are determined as of the end of each calendar quarter and are allocated to the Participating Stockholders' capital accounts.
Dividends may be declared and paid at the discretion of the Company's Board of Directors subject to the right of holders of participating stock to receive minimum dividends. The minimum annual dividend payable on each share shall be such shares pro rata portion of an amount equal to twenty percent (20%) of the net income, if any, for the preceding fiscal year attributable to the subsidiary capital account associated with the series of which that share is part.
Barbados law requires that the Company maintain a minimum capitalization based generally on the amount of premiums earned in the preceding fiscal year. At January 1, 1995, the Company's required minimum capital computed in accordance with Barbados law was approximately $2,631,669.
Amounts of retained earnings applicable to the Common and Participating Stockholders are comprised of the following:
Balance (Deficit) December 31, 1994 $ (53,220) $5,849,952 $5,796,732 _________ __________ __________