-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KcGe/NUROHoAZjPLNcsNmlfV8S+8kOEf++8SagDmIPTqrMdbbzWeUv5r4dX4m5+h KDRyRnp8ov3YwXijiMBoKw== 0000893220-99-000908.txt : 19990812 0000893220-99-000908.hdr.sgml : 19990812 ACCESSION NUMBER: 0000893220-99-000908 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANNUITY & LIFE RE HOLDINGS LTD CENTRAL INDEX KEY: 0001051628 STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-23625 FILM NUMBER: 99683945 BUSINESS ADDRESS: STREET 1: VICTORIA HALL STREET 2: VICTORIA STREET, PO BOX HM 1262 CITY: HAMILTON, HM BERMUDA BUSINESS PHONE: 4412951422 MAIL ADDRESS: STREET 1: VICTORIA HALL, VICTORIA STREET STREET 2: PO BOX HM 1262, HAMILTON, HM FX CITY: BERMUDA 10-Q 1 FORM 10-Q ANNUITY AND LIFE RE (HOLDINGS), LTD. 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ------------------------ FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER 0-23625 ANNUITY AND LIFE RE (HOLDINGS), LTD. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) BERMUDA NOT APPLICABLE (STATE OR OTHER JURISDICTION OF (IRS EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
CUMBERLAND HOUSE, VICTORIA STREET, HAMILTON, BERMUDA (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) 441-296-7667 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] The number of the Registrant's Common Shares (par value $1.00 per share) outstanding as of August 3, 1999 was 25,499,999. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 INDEX TO FORM 10-Q PART I -- FINANCIAL INFORMATION
PAGE ---- ITEM 1. Unaudited Consolidated Financial Statements Consolidated Balance Sheets June 30, 1999 (unaudited) and December 31, 1998............. 3 Unaudited Consolidated Statements of Operations Three and Six Months ended June 30, 1999 and 1998........... 4 Unaudited Consolidated Statements of Comprehensive Income Three and Six Months ended June 30, 1999 and 1998........... 5 Unaudited Consolidated Statements of Cash Flows Six Months ended June 30, 1999 and 1998..................... 6 Unaudited Consolidated Statements of Changes in Stockholders' Equity Six Months ended June 30, 1999 and 1998..................... 7 Notes to Unaudited Consolidated Financial Statements........ 8 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................................... 9-12 PART II -- OTHER INFORMATION ITEM 4. Submission of Matters to a Vote of Security Holders......... 13 ITEM 6. Exhibits and Reports on Form 8-K............................ 13 Signatures........................................................... 15 Exhibits............................................................. 16
2 3 ANNUITY AND LIFE RE (HOLDINGS), LTD. CONSOLIDATED BALANCE SHEETS UNAUDITED (EXPRESSED IN UNITED STATES DOLLARS)
JUNE 30, 1999 DECEMBER 31, 1998 -------------- ----------------- ASSETS Cash and cash equivalents................................... $ 22,600,413 $ 66,586,267 Fixed maturity investments, available for sale, at fair value (amortized cost of $295,074,024 at June 30, 1999: December 31, 1998 $272,305,333)........................... 289,473,103 276,027,927 Funds withheld at interest.................................. 1,504,811,966 1,200,101,268 Accrued investment income................................... 4,182,309 3,812,062 Receivable for investments sold............................. 1,963,430 Deferred policy acquisition costs........................... 204,307,669 159,582,286 Other assets................................................ 3,300,190 400,370 -------------- -------------- Total Assets...................................... $2,030,639,080 $1,706,510,180 ============== ============== LIABILITIES Reserves for future policy benefits......................... $ 28,432,276 $ 22,026,409 Interest-sensitive contracts liabilities.................... 1,607,049,869 1,283,675,809 Other reinsurance liabilities............................... 7,166,026 22,455,437 Payable for investments purchased (Investment pending settlement)............................................... 2,912,642 -- Accounts payable and accrued expenses....................... 3,728,987 3,012,279 -------------- -------------- Total Liabilities................................. $1,649,289,800 $1,331,169,934 -------------- -------------- STOCKHOLDERS' EQUITY Preferred Shares (par value $1.00; 50,000,000 shares authorized; no shares outstanding)........................ $ -- $ -- Common Shares (par value $1.00; 100,000,000 shares authorized; 25,499,999 shares outstanding)................ 25,499,999 25,499,999 Additional paid-in capital.................................. 329,517,104 329,517,104 Notes receivable from stock sales........................... (1,247,042) (1,391,068) Accumulated other comprehensive (loss) income............... (5,600,921) 3,722,594 Retained earnings........................................... 33,180,140 17,991,617 -------------- -------------- Total Stockholders' Equity........................ $ 381,349,280 $ 375,340,246 -------------- -------------- Total Liabilities and Stockholders' Equity........ $2,030,639,080 $1,706,510,180 ============== ==============
See accompanying notes to unaudited consolidated financial statements 3 4 ANNUITY AND LIFE RE (HOLDINGS), LTD. CONSOLIDATED STATEMENTS OF OPERATIONS UNAUDITED (EXPRESSED IN UNITED STATES DOLLARS)
3 MONTHS ENDED 3 MONTHS ENDED 6 MONTHS ENDED 6 MONTHS ENDED JUNE 30, 1999 JUNE 30, 1998 JUNE 30, 1999 JUNE 30, 1998 -------------- -------------- -------------- -------------- REVENUES Net premiums......................... $18,372,285 $ -- $36,619,297 $ -- Investment income, net of related expenses........................... 20,677,325 4,299,615 38,836,385 4,299,615 Net realized investment gains (losses)........................... (157,755) 148,674 105,703 148,674 Other................................ 149,262 -- 388,963 -- ----------- ---------- ----------- ---------- Total Revenues............. $39,041,117 $4,448,289 $75,950,348 $4,448,289 ----------- ---------- ----------- ---------- BENEFITS AND EXPENSES Claims and policy benefits........... $15,507,499 $ -- $31,273,368 $ -- Net cost of interest sensitive contract liabilities............... 3,948,668 -- 7,825,497 -- Policy acquisition costs and other insurance expenses................. 8,991,772 -- 16,397,110 -- Operating expenses................... 1,846,935 845,853 3,225,850 1,253,225 Organizational expenses.............. -- 27,425 -- 69,039 ----------- ---------- ----------- ---------- Total Benefits and Expenses.......... $30,294,874 $ 873,278 $58,721,825 $1,322,264 ----------- ---------- ----------- ---------- Net Income......................... $ 8,746,243 $3,575,011 $17,228,523 $3,126,025 =========== ========== =========== ========== NET INCOME PER COMMON SHARE (NOTE 3): Basic................................ $ 0.34 $ 0.17 $ 0.68 $ -- Diluted.............................. $ 0.32 $ 0.16 $ 0.63 $ --
See accompanying notes to unaudited consolidated financial statements 4 5 ANNUITY AND LIFE RE (HOLDINGS), LTD. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME UNAUDITED (EXPRESSED IN UNITED STATES DOLLARS)
3 MONTHS ENDED 3 MONTHS ENDED 6 MONTHS ENDED 6 MONTHS ENDED JUNE 30, 1999 JUNE 30, 1998 JUNE 30, 1999 JUNE 30, 1998 -------------- -------------- -------------- -------------- Net Income for period................ $ 8,746,243 $3,575,011 $17,228,523 $3,126,025 Other comprehensive (loss) income: Unrealized holding losses (gains) on securities arising during period... (5,711,437) 912,354 (9,586,973) 912,354 Reclassification adjustment for (losses) gains realized in net income............................. (157,756) -- 263,458 -- ----------- ---------- ----------- ---------- Other comprehensive (loss) income.... (5,869,193) 912,354 (9,323,515) 912,354 ----------- ---------- ----------- ---------- Total comprehensive income........... $ 2,877,050 $4,487,365 $ 7,905,008 $4,038,379 ----------- ---------- ----------- ----------
See accompanying notes to unaudited consolidated financial statements 5 6 ANNUITY AND LIFE RE (HOLDINGS), LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED (EXPRESSED IN UNITED STATES DOLLARS)
6 MONTHS ENDED 6 MONTHS ENDED JUNE 30, 1999 JUNE 30, 1998 -------------- -------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income.................................................. $ 17,228,523 $ 3,126,025 Adjustments to reconcile net income to cash flow from operating activities Net realized investment gains............................... (105,703) (148,674) Changes in: Accrued investment income................................... (370,247) (4,637,335) Deferred policy acquisition costs........................... (44,725,383) -- Other assets................................................ (2,899,820) (24,597) Reserves for future policy benefits......................... 6,405,867 -- Interest sensitive contracts, net of funds withheld......... 18,633,361 -- Other reinsurance liabilities............................... (15,289,411) -- Accounts payable............................................ 716,708 275,438 ------------- ------------- Net cash used by operating activities....................... $ (20,376,105) $ (1,409,143) ------------- ------------- CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sales of fixed maturity securities............ $ 123,298,230 $ 160,662,501 Purchase of fixed maturity securities....................... (145,012,005) (455,001,423) ------------- ------------- Net cash used by investing activities....................... (21,713,775) (294,338,922) ------------- ------------- CASH FLOWS FROM FINANCING ACTIVITIES Net proceeds from sale of company stock..................... -- 353,419,413 Repayment of Notes Receivable, less Interest accrued........ 144,026 -- Dividends paid to stockholders.............................. (2,040,000) -- ------------- ------------- Net cash (used) provided by financing activities............ (1,895,974) 353,419,413 ------------- ------------- (Decrease) increase in cash and cash equivalents............ (43,985,854) 57,671,348 Cash and cash equivalents, beginning of period.............. 66,586,267 250,000 ------------- ------------- Cash and cash equivalents, end of period.................... $ 22,600,413 $ 57,921,348 ============= =============
See accompanying notes to unaudited consolidated financial statements. 6 7 ANNUITY AND LIFE RE (HOLDINGS), LTD. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY UNAUDITED (EXPRESSED IN UNITED STATES DOLLARS)
6 MONTHS ENDED 6 MONTHS ENDED JUNE 30, 1999 JUNE 30, 1998 -------------- -------------- PREFERRED SHARES PAR VALUE $1.00 Balance at beginning and end of period...................... $ -- $ -- ------------ ------------ COMMON SHARES PAR VALUE $1.00 Balance of beginning of period.............................. $ 25,499,999 $ 12,000 Issuance of shares.......................................... -- 25,499,999 Retirement of shares........................................ -- (12,000) ------------ ------------ Balance at end of period.................................... $ 25,499,999 $ 25,499,999 ------------ ------------ ADDITIONAL PAID-IN CAPITAL Balance at beginning of period.............................. $329,517,104 $ 238,000 Issuance of shares.......................................... -- 334,049,964 Direct equity offering expenses............................. -- (4,774,238) ------------ ------------ Balance at end of period.................................... $329,517,104 $329,513,726 ------------ ------------ NOTES RECEIVABLE FROM STOCK SALES Balance at beginning of period.............................. $ (1,391,068) $ -- Notes issued................................................ -- (1,325,000) Repayments.................................................. 174,950 -- Accrued interest during period.............................. (30,924) (19,312) ------------ ------------ Balance at end of period.................................... $ (1,247,042) $ (1,344,312) ------------ ------------ ACCUMULATED OTHER COMPREHENSIVE INCOME Balance at beginning of period.............................. $ 3,722,594 $ -- Net unrealized holding gains on securities.................. (9,323,515) 912,354 ------------ ------------ Balance at end of period.................................... $ (5,600,921) $ 912,354 ------------ ------------ RETAINED EARNINGS Balance at beginning of period.............................. $ 17,991,617 $ -- Net income.................................................. 17,228,523 3,126,025 Stockholder Dividends....................................... (2,040,000) -- ------------ ------------ Balance at end of period.................................... $ 33,180,140 $ 3,126,025 ------------ ------------ TOTAL STOCKHOLDERS' EQUITY.................................. $381,349,280 $357,707,792 ============ ============
See accompanying notes to unaudited consolidated financial statements. 7 8 ANNUITY AND LIFE RE (HOLDINGS), LTD. NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 1. ORGANIZATION Annuity and Life Re (Holdings), Ltd. ("Holdings") was incorporated on December 2, 1997 under the laws of Bermuda to provide annuity and life reinsurance to insurers and reinsurers through its wholly-owned subsidiary, Annuity and Life Reassurance, Ltd. ("Annuity Reassurance" and, together with Holdings, the "Company"). Annuity Reassurance is licensed under the insurance laws of Bermuda as a long term insurer. 2. BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles for interim financial information and in accordance with Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company's Form 10K for the fiscal year ended December 31, 1998. In the opinion of management, all adjustments considered necessary for a fair presentation have been included in these financial statements. It should be noted that, in view of the Company's limited operating history, the financial data included herein is not necessarily indicative of the results of operations or financial condition of the Company in the future. EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share. The Company was nominally capitalized with 12,000 common shares of par value $1.00 each during the period from its incorporation to the date of its initial public offering and did not commence operations until April 17, 1998. For this reason earnings per share for the six months ended June 30, 1998 is not presented as, in the opinion of management, it is not meaningful.
THREE MONTHS ENDED ------------------------------ SIX MONTHS ENDED JUNE 30, 1999 JUNE 30, 1998 JUNE 30, 1999 ------------- ------------- ---------------- Net Income............................... $ 8,746,242 $ 3,575,011 $17,228,523 Net average number of common shareholders outstanding............................ 25,499,999 21,016,483 25,499,999 Weighted average number of common shares outstanding including shares issuable from exercise of options and warrants............................... 27,114,771 22,405,132 27,148,654 Earnings per share....................... $ 0.34 $ 0.17 $ 0.68 Earnings per share assuming dilution..... $ 0.32 $ 0.16 $ 0.63
4. ACCOUNTING STANDARDS In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133 "Accounting for Derivative Instruments and Hedging Activities". This Statement is effective for all fiscal quarters of fiscal years beginning after June 15, 2000. The Company is currently reviewing the impact of this standard on its financial reporting. 8 9 ANNUITY AND LIFE RE (HOLDINGS), LTD. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 1. GENERAL Annuity and Life Re (Holdings), Ltd. ("Holdings") was incorporated on December 2, 1997 under the laws of Bermuda to provide annuity and life reinsurance to insurers and reinsurers through its wholly-owned subsidiary, Annuity and Life Reassurance, Ltd. ("Annuity Reassurance" and together with Holdings, the "Company"). Annuity Reassurance is licensed under the insurance laws of Bermuda as a long term insurer. 2. OPERATING RESULTS Net Income. For the six-month period ending June 30,1999, the Company had consolidated net income of approximately $17,229,000 or $0.68 per common share, $0.63 per common share on a fully diluted basis. For the three month period ending June 30, 1999, the Company had consolidated net income of approximately $8,746,000, or $0.34 per common share, $0.32 per common share on a fully diluted basis, compared with $0.17 per common share and $0.16 per common share on a fully diluted basis for the three months ended June 30, 1998. The Company began its insurance operations on April 17,1998 following the completion of its initial public offering and direct sales of its Common Shares. Net operating income. In addition to net income, the Company reports net operating income which excludes realized investment gains and losses. Net operating income is commonly used in the insurance industry as a measure of on-going earnings performance. Net operating income for the six month period ending June 30, 1999 was approximately $17,123,000 or $0.67 per common share, $0.63 per common share on a fully diluted basis. Net operating income for the three month period ending June 30,1999 was approximately $8,904,000 or $0.35 per common share, $0.33 per common share on a fully diluted basis, compared with $0.16 per common share, $0.15 per common share on a fully diluted basis for the three months ended June 30,1998. Net Premiums. Net premium revenue was approximately $36.6 million for the six-month period ending June 30, 1999. All premium revenue was derived from ordinary life reinsurance. At June 30, 1999 the total face amount of life insurance in force was approximately $31.2 billion compared with approximately $22.5 billion at December 31, 1998, an increase of 38.7%. This increase reflects the level of new business written by the Company which became effective during the period. The Company expects premium revenue to follow the level and growth of the face amount of insurance in-force. Net Investment Income. Total Net investment income for the six month period ending June 30, 1999 was approximately $38.8 million. This includes approximately $28.2 million in income earned on funds withheld under modified coinsurance agreements related to the Company's interest sensitive contract liabilities. Total assets increased approximately 19% from December 31, 1998. The average yield rate earned on an annualized basis on the invested assets, excluding the funds withheld, for this period was approximately 6.31%. Realized Investment Gains. Realized investment gains were approximately $105,000 for the six months ended June 30, 1999 resulting from activity within the Company's investment portfolios. At June 30, 1999 the Company's portfolio of fixed maturity securities had unrealized losses of approximately $5.6 million. Due to the increase in interest rates during the six month period ending June 30, 1999 the Company incurred unrealized losses of approximately $9.3 million which were included in Other Comprehensive Income. Realized gains and losses are not considered by the Company to be recurring components of earnings. The Company makes decisions concerning the sales of invested assets based on a variety of market, business and other factors. Claims and Policy Benefits. Claims and policy benefits were approximately $31.3 million for the period ending June 30, 1999. This represents 85% of the net premium revenue. The Company expects mortality to be 9 10 fairly constant over long periods of time, but to fluctuate from period to period. Reserve levels will in part be determined by the Company's experience and overall mortality trends. Policy Acquisition and Other Insurance Expenses. Policy acquisition and other insurance expenses, consisting primarily of allowances and amortization of deferred policy acquisition costs, were approximately $16.4 million for the period ending June 30, 1999. Of this amount approximately $14.1 million is related to the Company's annuity reinsurance product line and approximately $2.3 million to the life reinsurance product line. Generally, policy acquisition costs and other insurance expenses fluctuate with product mix and business volumes. Other Operating Expenses. Operating expenses for the six month period ending June 30, 1999 were approximately $3.2 million or 4.3% of total revenue. The operating expense level is considered by Company Management to be very low by industry standards and is in line with the Company's plan to be a low cost provider. 3. FINANCIAL CONDITION Investments Invested assets, including cash and cash equivalents, amounted to approximately $312.1 million at June 30,1999. Net unrealized losses on invested assets total $5.6 million at June 30,1999 and generally reflect the increase in interest rates during the period. The Company's investment policy is designed to achieve above average risk adjusted returns, maintain a high quality portfolio, maximize current income, maintain an adequate level of liquidity and match the cash flows of the portfolio to the required cash flows for the related liabilities. Funds Withheld at Interest -- Interest-Sensitive Contracts Liabilities Assets with a carrying value of approximately $1,504.8 million relate to an annuity reinsurance agreement and are held by and managed by the ceding company in segmented portfolios. The liability for the annuity reinsurance is included on the Company's Balance Sheet as Interest Sensitive Contracts Liabilities. During the six month period ending June 30, 1999 these assets and liabilities each grew approximately 25% primarily due to the level of new deposits accepted by the Company under the reinsurance agreement. Liquidity and Capital Resources The Company's liquidity and capital resources are a measure of the overall financial strength of the Company and its ability to generate cash flows from its operations to meet operating and growth needs. The Company's principal sources of funds are premiums received, net investment income, proceeds from investments called, redeemed or sold, cash and short term investments. The principal obligations and uses of the funds are the payment of policy benefits, acquisition and operating costs and the purchase of investments. For the six month period ended June 30, 1999 the Company used approximately $20.4 million in its operating activities. This is primarily related to initial costs associated with writing new life reinsurance and annuity reinsurance business. The funds to meet these obligations were provided by the cash and cash equivalent balances held at December 31, 1998. The Company's capital structure currently consists entirely of equity. At June 30, 1999 total capitalization of the Company after deducting certain loans to management and including retained earnings and accumulated other comprehensive (loss) income amounted to approximately $381.3 million. Management believes this level of capital is sufficient to support the Company's insurance writings and growth for the near future. At June 30, 1999 the Company had no outstanding debt. At June 30, 1999 letters of credit totaling approximately $51.2 million issued in the ordinary course of the Company's business have been issued by the Company's bankers in favor of certain ceding insurance companies; these letters of credit are fully collateralized by investments of the Company. The Company may incur indebtedness in the future in 10 11 connection with possible acquisitions of, investments in, joint ventures with or strategic alliances with companies whose businesses compliment the Company's business. On April 17, 1998 the Company completed an initial public offering of 19,640,579 common shares; total proceeds received net of underwriting discounts and commissions were approximately $276.9 million. Simultaneous with the initial closing of the public offering, direct sales of 5,859,420 common shares and 397,500 Class B warrants were made to strategic investors, certain members of the Board of Directors and Company management; total net proceeds were approximately $82.6 million. Substantially all of the net proceeds from these offerings were used to provide working capital and to capitalize the operating subsidiary, Annuity and Life Reassurance, Ltd. On February 11, 1999 and April 29, 1999 the Board of Directors declared quarterly stockholder dividends of $.04 per share payable to shareholders of record on March 10, 1999 and May 20,1999, respectively. The continued payment of dividends is dependent on the ability of Annuity and Life Reassurance, Ltd., to achieve satisfactory underwriting and investment results and other factors determined to be relevant by the Company's Board of Directors. The Company currently has no material commitments for capital expenditures. 4. YEAR 2000 Many existing computer programs use only two digits to identify a year in the date field. These programs, if not corrected, could fail or create erroneous results by or at the year 2000. This "Year 2000" issue is believed to affect virtually all companies and organizations. All of the Company's data processing and related systems were purchased after April 17, 1998. Therefore, the Company believes that its exposure with respect to its own computer systems to Year 2000-related problems will not be significant. The Company does not expect to incur any material costs in connection with Year 2000-related issues. However, the Company will be exposed to the risk that its third-party service providers and client companies may be exposed to Year 2000-related problems. The Company has no direct control over the Year 2000 compliance efforts of its third party service providers and client companies. The Company is monitoring whether such parties will be Year 2000 compliant on a timely basis and has received assurances that they will be. There can be no assurance, however, that the Company's operations will not experience material disruptions due to the failure of the Company's third-party service providers or client companies to become fully Year 2000 compliant in a timely manner or that such failure will not otherwise have an adverse effect on the Company. Furthermore, the Company's interaction with third-party service providers and client companies outside the United States may subject the Company to additional Year 2000 risk as foreign entities have in general not addressed Year 2000 compliance issues as comprehensively as their United States counterparts. The Company will continue to monitor developments relating to the issue, including the development of additional contingency plans to supplement its current contingency plan, which provides for the replacement of existing third-party service providers which are not Year 2000 compliant with comparable third-party service providers which are Year 2000 compliant, and including the development of contingency plans for providing back-up services in the event of a systems failure. 5. FORWARD-LOOKING AND CAUTIONARY STATEMENTS The Company and its representatives may from time to time make written or oral forward-looking statements, including those contained in the foregoing Management's Discussion and Analysis. In order to take advantage of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, the Company is hereby identifying certain important factors which could cause the Company's actual results, performance or achievement to differ materially from those that may be contained in or implied by any forward-looking statement made by or on behalf of the Company. The factors that could cause such forward- looking statements not to be realized include, without limitation, acceptance in the market of the Company's reinsurance products; pricing competition; the amount of underwriting capacity from time to time in the market; general economic conditions and conditions specific to the reinsurance and investment markets in which the Company operates; material fluctuations in interest rate levels; regulatory changes and conditions; 11 12 rating agency policies and practices; claims development; and loss of key executives. The Company cautions that the foregoing list of important factors is not intended to be, and is not, exhaustive. The Company does not undertake to update any forward-looking statement that may be made from time to time by or on behalf of the Company. 12 13 PART II OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS (1) Annual Meeting of Shareholders The Annual Meeting of Shareholders of the Company was held on April 29, 1999. The following matters were voted upon at the Annual Meeting, and received the votes set forth below: (a) All of the following persons nominated were elected to serve as directors and received the number of votes set forth opposite their respective names:
FOR WITHHELD ---------- -------- Robert Clements....................................... 19,248,761 817,110 Lee M. Gammill, Jr. .................................. 19,249,761 816,110 Frederick S. Hammer................................... 19,163,176 902,695 Jon W. Yoskin, II..................................... 19,249,461 816,410
(b) A proposal to approve and adopt an amendment to the Company's Initial Stock Option Plan authorizing 2% of the outstanding Common Shares of the Company to be available for issuance thereunder was approved and received 14,791,437 votes FOR and 3,648,118 votes AGAINST, with 269,060 abstentions and 1,357,256 broker non-votes. (c) A proposal to appoint KPMG Peat Marwick as independent accountants for the Company for the 1999 fiscal year was approved and received 20,061,886 votes FOR and 2,425 votes AGAINST, with 1,560 abstentions and 0 broker non-votes. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits -- The following exhibits are filed as part of this report on Form 10-Q: 11 Computation of Earnings per share 27 Financial Data Schedule (b) Reports on Form 8-K -- There were no reports on Form 8-K filed during the period ended June 30, 1999. 13 14 ANNUITY AND LIFE RE (HOLDINGS), LTD. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Annuity and Life Re (Holdings), Ltd. Date: ---------------------------------- ------------------------------------------------- Name: Lawrence S. Doyle Title: President and Chief Executive Officer (Principal Executive Officer) Date: ---------------------------------- ------------------------------------------------- Name: William W. Atkin Title: Chief Financial Officer and Treasurer (Principal Accounting and Financial Officer)
14 EX-11 2 COMPUTATION OF EARNINGS PER SHARE 1 EXHIBIT 11 ANNUITY AND LIFE RE (HOLDINGS), LTD. STATEMENT OF COMPUTATION OF NET INCOME PER COMMON SHARE UNAUDITED (EXPRESSED IN UNITED STATES DOLLARS EXCEPT FOR SHARE AMOUNTS)
THREE MONTHS ENDED SIX MONTHS ENDED ------------------------------ ---------------- JUNE 30, 1999 JUNE 30, 1998 JUNE 30,1999 ------------- ------------- ---------------- Net Income:...................................... $ 8,746,242 $ 3,575,011 $17,228,523 Net average number of common shareholders outstanding.................................... 25,499,999 21,016,483 25,499,999 Weighted average number of common shares outstanding including shares issuable from exercise of options and warrants............... 27,114,771 22,405,132 27,148,654 Earnings per share............................... $ 0.34 $ 0.17 $ 0.68 Earnings per share assuming dilution............. $ 0.32 $ 0.16 $ 0.63
16 EX-27 3 FINANCIAL DATA SCHEDULE
7 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1999 AND THE CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS DEC-31-1999 JAN-01-1999 JUN-30-1999 289,473,103 0 0 0 0 0 289,473,103 22,600,413 0 204,307,669 2,030,639,080 28,432,276 0 0 1,607,049,869 0 0 0 25,499,999 355,849,281 2,030,639,080 36,619,297 38,836,385 105,703 388,963 39,098,865 16,397,110 0 17,228,523 0 0 0 0 0 17,228,523 0.68 0.63 0 0 0 0 0 0 0
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