-----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, GTw4C1hNiKdRH6iZQnEboxfAHjDPmjMdK14Jb3Zxg3AHYvU2EW7rXTtVcK/PAX6c xoXK2uJz1AsZaopiKEoQ2w== 0000893220-96-001473.txt : 19960829 0000893220-96-001473.hdr.sgml : 19960829 ACCESSION NUMBER: 0000893220-96-001473 CONFORMED SUBMISSION TYPE: U-1 PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 19960827 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COLUMBIA GAS SYSTEM INC CENTRAL INDEX KEY: 0000022099 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS TRANSMISSION & DISTRIBUTION [4923] IRS NUMBER: 131594808 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: U-1 SEC ACT: 1935 Act SEC FILE NUMBER: 070-08905 FILM NUMBER: 96621601 BUSINESS ADDRESS: STREET 1: 20 MONTCHANIN RD CITY: WILMINGTON STATE: DE ZIP: 19807 BUSINESS PHONE: 3024295000 U-1 1 FORM U-1, THE COLUMBIA GAS SYSTEM, INC. 1 File No. 70- SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 Form U-1 APPLICATION-DECLARATION UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 THE COLUMBIA GAS SYSTEM, INC. 12355 Sunrise Valley Drive, Suite 300 Reston, VA 20191-3420 - -------------------------------------------------------------------------------- (Names of company or companies filing this statement and addresses of principal executive offices) T. S. Bindra, Associate General Counsel and Assistant Secretary The Columbia Gas System, Inc. 12355 Sunrise Valley Drive, Suite 300 Reston, VA 20191-3420 - -------------------------------------------------------------------------------- (Name and address of agent for service) 2 PAGE 2 Item 1. Description of Proposed Transaction (a) Furnish a reasonably detailed and precise description of the proposed transaction, including a statement of the reasons why it is desired to consummate the transaction and the anticipated effect thereof. If the transaction is part of a general program, describe the program and its relation to the proposed transaction The Columbia Gas System, Inc. ("Columbia"), a Delaware corporation, and a holding company registered under the Public Utility Holding Company Act of 1935 (the "Act"), is the Applicant-Declarant. Columbia requests authorization to establish a direct subsidiary ("Captive") to engage in the business of reinsuring certain levels of predictable risk for Columbia and its affiliates (including project companies in which Columbia subsidiaries have an equity interest) as described herein. As will be discussed, Columbia estimates that it can significantly reduce its cost of purchasing commercial insurance for "predictable" losses by using its own 10-year loss experience to actuarially identify its "predictable" losses for automobile, general liability and "all-risk" property losses and underwriting such losses through the Captive. Such an arrangement should result in an immediate reduction in insurance premiums and in other advantages discussed herein. However, an understanding of how the current insurance program functions is helpful prior to a discussion of the details of the operations of the Captive. CURRENT PROGRAM Columbia deems the Risk Management function to be a key corporate function in providing for the protection of physical and financial assets thereby permitting each company in 3 PAGE 3 the Columbia system to carry out its strategic goals and objectives. As such, risk management is co-ordinated by the Columbia Gas System Service Corporation ("Service Corporation"). One of the Service Corporation's Risk Management Department's primary responsibilities is the procurement of a broad array of insurance coverages and services. To maximize cost effectiveness, Risk Management purchases such services and insurance on behalf of the entire organization, including Columbia and all direct and indirect subsidiaries (referred to collectively as the "System"). On an annual basis, the System spends approximately $30,000,000 for the purchase of commercial insurance and related services (including the reimbursement of the self-insurance level). (Exhibits I-1 and I-2 hereto set forth loss history and premiums paid for each direct operating subsidiary in the System for the last five years in the areas initially to be covered by the Captive). This is a significant expenditure. In view of the rapid pace of deregulation and the intensifying competitive nature of the System's business, it is important for the System to maintain and enhance its competitive situation by continuing to aggressively monitor and manage the cost for insurance and related services. (Columbia's leading edge in insurance activities is demonstrated by Columbia's equity participation in ACE, an industry-captive insurance company. (See File No. 70-7261).) Under the current insurance program, Columbia maintains an underlying deductible of $200,000 per event for automobile and general liability coverage, and $50,000 per event for "all-risk" property coverage. In excess of these deductibles, Columbia purchases commercial insurance. Subsidiaries of Columbia, regardless of size and business needs, have no choice as to deductibles. 4 PAGE 4 Commercial premiums are then allocated to subsidiaries based on such factors as number of automobiles, total property values, revenues, product throughput, etc. in accordance with the allocation filed with and approved by the Commission. A subsidiary's individual loss experience is not considered for purposes of allocating premium expenses. Columbia believes that this "one size fits all" approach is no longer the best way to maximize cost effectiveness and does not provide the operating units with the required flexibility to meet their strategic goals and objectives. For example, a smaller company might prefer a smaller deductible to stabilize its costs, whereas a large company might select a larger deductible if they had a choice. Under the current program, the choice is not available. PROPOSED CAPTIVE INSURANCE PROGRAM STRUCTURE: Columbia proposes to establish Captive as a new direct subsidiary which would be authorized to operate as an insurance company in Bermuda and would reinsure certain commercial insurance bought by Columbia, its subsidiaries and affiliates from commercial insurance companies such as Travelers Insurance Companies. Although Captive will initially focus on providing three major coverages: 1) automobile liability, 2) "all-risk" property and 3) general liability, Captive will entertain underwriting, at some future time, such areas as workers' compensation, director and officer liability, legal malpractice for employee attorneys, performance bonds, as well as various warranty programs planned to be 5 PAGE 5 offered to consumers (See File No. 70-8775). These programs do not involve material exposure compared to the three areas in which the Captive will initially operate. Captive would not be an admitted commercial insurer in the states of the United States, but instead would work through admitted commercial insurers, as described below. Although the regulated utility companies(1) would not be dealing with an affiliate directly, it is Columbia's intention to review the Captive arrangements with the utility commissions in each state in which the utility subsidiaries operate. No additional staff would be required for the operation of the Captive. Instead, as in the case with most captives, a Bermuda management company will be retained to provide administrative services. Columbia employees will be directors of the Captive. Employees of the Service Corporation will be principle officers and will provide all administrative functions. Time and expenses will be billed to the Captive and recovered in premiums. Funding of the Captive is proposed at $3,000,000, with the first $1,000,000 in capital contributions and/or cash from Columbia in exchange for Captive common stock $25 par value and an additional $2,000,000 in letters of credit under Columbia's bank facility previously approved by this Commission (See File No. 70-8627). If payment is required under a letter of credit, Columbia would reimburse the Bank and the amount paid would be treated as a capital contribution to the Captive. All funds will be deposited with the Captive's bank in Bermuda and will be managed by an investment manager in accordance with Rule 40 promulgated under the Act as such Rule may be amended from time to time or until the effective date of any legislation repealing the Act. - -------------------- (1) Columbia Gas of Kentucky, Inc.; Columbia Gas of Maryland, Inc.; Columbia Gas of Ohio, Inc.; Columbia Gas of Pennsylvania, Inc. and Commonwealth Gas Services, Inc. 6 PAGE 6 OPERATIONS: The Captive would assume the risk of the more predictable loss layer from the commercial insurers, for losses between zero and $2,000,000 for automobile and general liability losses and between zero and $750,000 for "all-risk" property losses.(2) Commercial insurance would continue to be purchased for "unpredictable" losses above $2,000,000 and $750,000, respectively, just as is done under the current program. Premiums for the first year which were actuarially determined to equal the aggregate predictable loss plus administrative expenses (determined in accordance with Rule 91 but without a return on equity(3)) are estimated at $4,200,000, which when aggregated with $3 million of funding, give the Captive a total of $7,200,000 plus interest to respond to claims during the first year.(4) Each subsidiary would be given a choice of deductible and premiums would be based on that choice and the subsidiary's own prior loss experience so that a subsidiary with a historical lower loss experience would be rewarded with lower premiums. With this exception, premium allocations would continue to be made using the bases of allocation previously filed with the Commission under the current program. Under the current program, a premium increase caused by a significant loss or a higher frequency of losses was allocated on bases that did not take the loss or frequency of loss into account. Under the new program, the source of the loss would be a - -------------------- (2) The projections attached hereto are based on assumed minimum deductibles of $200,000 for automobile and general liability and $100,000 for all-risk property losses. (3) Should Columbia seek to provide insurance for third parties, Rule 91 would not apply. Also, in the future premiums may include a return on equity in accordance with Rule 91. (4) Exhibit I-2 shows all premiums for the three areas of insurance. The predictable loss portion which will be placed with the Captive totals only $4,200,000 out of the $10,105,127 premiums shown. 7 PAGE 7 basis of allocation. However, due to the lower administrative costs and efficiency of the program, premiums will be lower. Attached hereto is a projection of the results of operations for the first five years of the Captive's operations.(5) To the extent that premiums and interest earned exceed current claims and expenses, an appropriate reserve would be accumulated to respond in years when claims and expenses exceed premiums. To the extent that losses over the long term are lower than projected, premiums would be appropriately reduced. Excess cash would be invested in accordance with System's investment guidelines. In addition, to assure the financial strength and integrity of the Captive, which must comply with strict Bermuda capital to premium requirements of $1 of capital for every $5 of net premium, aggregate "stop loss" protection will be arranged from a commercial insurer. Using actuarial models with a high confidence factor, it is expected that the Captive would not experience losses in excess of $7,200,000 in the first year of operation. As noted above, the Captive's available funding is designed to meet this level of loss. In the unlikely event of losses exceeding this amount, however, commercial insurance will respond to any claim(s) in excess of the aggregate and retention. This ensures coverage will be available to the Columbia subsidiaries. BENEFITS OF CAPTIVE: 1) Significant reduction in the 30% to 40% overhead charge for commercial insurers underwriting "predictable" risk. - -------------------- (5) Premiums for affiliated project companies are initially projected to be sufficient to qualify the captive as an insurance company for tax purposes. However, to be conservative in the cash flow projections, the attached projections assume that the captive does not qualify as an insurance company for tax purposes. This assumption raises the cash required for taxes. 8 PAGE 8 Commercial insurers charge insurance premiums based on actuarially projected "predictable" losses plus a 30% to 40% overhead charge. Therefore, for every $1.00 in projected loss, a commercial insurer charges an additional $.40 for administrative charges/overhead. In contrast, the Captive would only add the actual cost of administration. This will result in substantial savings. In the first year this is expected to result in a savings in premiums of approximately $1,500,000. (See Exhibit I-2.) 2) Provide direct access to global reinsurers to ensure the most competitive and cost-effective pricing for Columbia's "unpredictable" commercial insurance exposures. This could result in savings in premiums above the $1,500,000 level. Reinsurers are generally only accessible by commercial insurers and brokers who charge a fee. A captive insurance company provides Columbia direct access to reinsurance markets, avoiding the fee and permits access to the same group of "elite" reinsurers which most Fortune 500 companies already access. These "elite" reinsurers, Munich RE, Zurich RE and Swiss RE are not only part of the world's largest and most innovative insurers, they are among the most competitively priced. 9 PAGE 9 3) Permit subsidiaries to select deductibles consistent with their business needs and objectives. Higher deductibles foster an increased awareness for loss prevention programs at the subsidiary level with the likely prospect of reduced losses in the future, as well as lower future premiums. The better the loss experience, the lower the premium. 4) Provide Columbia companies with greater control and input over the claim management process. Under current arrangements, commercial insurers determine if and when to settle claims; use of a captive places this responsibility on the System through the Captive. 5) Less reliance on the commercial insurance market for insuring "predicable" risk resulting in less volatility of future premiums. Commercial insurers base premiums not only on a company's loss history, but also on the results in the industry, subjecting companies to possible dramatic changes in insurance rates from year to year. To the extent that the Captive reduces reliance on commercial insurers, the vulnerability to such changes is lessened. The portion of the System's insurance premiums that are paid to the Captive would be based on a company's loss experience solely and would not be subject to industry-driven volatility. 10 PAGE 10 Sixty percent of the Fortune 500 companies presently utilize a captive insurance company to more effectively control and manage their insurance costs.(6) Columbia strongly believes a captive insurance company will be very important in "leveling the playing field" and in providing access to the most competitive global insurance markets, thereby resulting in reduced cost for insurance and related services. CERTIFICATES OF NOTIFICATION Applicant will file as an Exhibit to its Annual Report on Form U5-S, a statement of all premiums received by Captive by affiliate from which received and a balance sheet as of December 31st of the previous year and an income statement for the year ended on the preceding December 31st. AUTHORIZATION REQUESTED Columbia requests authorization to create and fund Captive through the purchase through December 31, 1996 of up to $1,000,000 of common stock of Captive, $25 par value per share, at a purchase price at or above par value and to provide to the Captive up to $2,000,000 of letters of credit under Columbia's bank facility previously approved, which if called upon, would be converted to capital advances to the extent called. - -------------------- (6) Other natural gas systems with captive insurance companies include the Williams companies, Inc., Enserch Corporation, Enron Corporation, Panhandle Eastern Corporation, Coastal Corporation, Tenneco, Inc., Sonat Inc, Midcon Corporation and UGI Corporation. 11 PAGE 11 Item 2. Fees, Commissions and Expenses (a) State (1) the fees, commissions and expenses paid or incurred, or to be paid or incurred, directly or indirectly, in connection with the proposed transaction by the applicant or declarant or any associate company thereof, and (2) if the proposed transaction involves the sale of securities at competitive bidding, the fees and expenses to be paid to counsel selected by applicant or declarant to act for the successful bidder. Columbia Gas System Service Corporation has provided certain services in connection with the preparation of this filing as follows: Securities and Exchange Commission Filing Fee . . . . . . . . . . . $ 2,000 Services of Columbia Gas System Service Corporation in connection with the preparation of the Application-Declaration. . * Services of LeBoeuf, Lamb, Leiby & MacRae . . . . . . . . . . . . . * Services of Alexander & Alexander (?) . . . . . . . . . . . . . . . * Total . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,000
(b) If any person to whom fees or commissions have been or are to be paid in connection with the proposed transaction is an associate company or an affiliate of any applicant or declarant, or is an affiliate of an associate company, set forth the facts with respect thereto. Columbia Gas System Service Corporation is a wholly owned subsidiary of Columbia and has performed certain services at cost as set forth in Item 2(a) (1) above. - ------------------ * To be filed by Amendment. 12 PAGE 12 Item 3. Applicable Statutory Provisions. (a) State the section of the Act and the rules thereunder believed to be applicable to the proposed transaction. If any section or rule would be applicable in absence of a specific exemption, state the basis of exemption. The issuance of new securities by Captive will be pursuant to Sections 6(a) and 7 and Rule 43. Sections 9(a), 10 and 12(f) is deemed applicable to the acquisition by Columbia of the capital stock of Captive. The letters of credit provided by Columbia are made pursuant to Section 12(b) and Rule 45. The request for authorization to invest assets of the Captive pursuant to guidelines attached hereto is made pursuant to Section 9(c)(3) of the Act. Columbia does not own, nor operate nor is it an equity participant in any Exempt Wholesale Generator or any Foreign Utility Company and will not be a company that owns, operates or has an equity participation in an Exempt Wholesale Generator or Foreign Utility Company as a result of the approvals requested herein. Columbia does not have any rights, nor will it have any rights or obligations under a service, sales or construction contract with an Exempt Wholesale Generator or Foreign Utility Company as a result of the proposed transactions. To the extent that the proposed transactions are considered by the Commission to require authorization, approval or exemption under any section of the Act or any provision of the rules and regulations other than those specifically referred to herein, a request for such authorization, approval or exemption is hereby made. (b) If any applicant is not a registered holding company or a subsidiary thereof, state the name of each public utility company of which it is an affiliate, or of which it will become an affiliate as a result of the proposed transaction, and the reasons why it is or will become such an affiliate. Not applicable 13 PAGE 13 Item 4. Regulatory Approval. (a) State the nature and extent of the jurisdiction of any State commission or any Federal commission (other than the Securities and Exchange Commission) over the proposed transaction. Not applicable. Although it is Columbia's view that no State public utility commission has jurisdiction over the formation of Captive and the reinsurance program described above, it is Columbia's intention to review the program with the utility commission in each state in which a Columbia utility operates. For the avoidance of doubt, filings were made with Virginia and Pennsylvania Public Utility Commissions because these states have jurisdiction over affiliate contracts and transactions. Virginia public utility commission has issued an order disclaiming jurisdiction over the Captive program. In Pennsylvania a filing is pending which seeks concurrence as to the absence of jurisdiction, or in the alternative, approval of the Pennsylvania public utility commission. (b) Describe the action taken or proposed to be taken before any Commission named in answer to Paragraph (a) of this item in connection with the proposed transaction. Not applicable. Item 5. Procedure. (a) State the date when Commission action is requested. If the date is less than 40 days from the date of the original filing, set forth the reasons for acceleration. It is respectfully requested that the Commission issue its notice by August 28, 1996 and its order on or by September 18, 1996. (b) State (i) whether there should be a recommended decision by a hearing officer, (ii) whether there should be a recommended decision by any other responsible officer of the Commission, (iii) whether the Division of Investment Management may assist in the preparation of the Commission's decision, and (iv) whether there should be a 30-day waiting period between the issuance of the Commission's order and the date on which it is to become effective. 14 PAGE 14 The Applicants hereby (i) waive a recommended decision by a hearing officer, (ii) waive a recommended decision by any other responsible officer of the Commission, (iii) specify that the Division of Investment Management may assist in the preparation of the Commission's decision, and (iv) specifies that there should not be a 30-day waiting period between the issuance of the Commission's order and the date on which it is to become effective. Item 6. Exhibits and financial Statements. (a) Exhibits A Form of Subsidiary Common Stock Certificate (Exhibit A-2 to Joint-Application Declaration (File No. 70-7276) is hereby incorporated by reference. F Opinion of Counsel (to be filed by amendment). G Financial Data Schedules. H Draft Notice. I-1 Five Year History of Losses by Subsidiary I-2 Five Year History of Premiums by Subsidiary J 5 year Projections (b) Financial Statements (1) The Columbia Gas System, Inc. and Subsidiaries (a) Balance Sheets as of June 30, 1996 (actual and pro forma). (b) Statements of Capitalization as of June 30 1996 (actual and pro forma). 15 PAGE 15 (c) Statements of Income for the Twelve Months ended June 30 1996 (actual and pro forma). (d) Statements of Common Stock Equity as of June 30 1996 (actual and pro forma). (2) The Columbia Gas System, Inc. (a) Balance Sheets as of June 30 1996 (actual and pro forma). (b) Statements of Capitalization as of June 30 1996 (actual and pro forma). (c) Statements of Income for the Twelve Months ended June 30 1996 (actual and pro forma). (d) Statements of Common Stock Equity as of June 30 1996 (actual and pro forma). (e) Pro forma entries. (3) Captive (a) Balance Sheets as of June 30 1996 (actual and pro forma). (b) Statements of Capitalization as of June 30 1996 (actual and pro forma). (c) Statements of Income for the Twelve Months ended June 30 1996 (actual and pro forma). (d) Statements of Common Stock Equity as of June 30 1996 (actual and pro forma). (e) Pro forma entries. There have been no material changes, not in the ordinary course of business, since the date of the financial statements filed herewith. 16 PAGE 16 Item 7. Information as to Environmental Effects. (a) Describe briefly the environmental effects of the proposed transaction in terms of the standards set forth in Section 102(2)(C) of the National Environmental Policy Act (42 U.S.C. 4232(2)(C)). If the response to this item is a negative statement as to the applicability of Section 102(2)(C) in connection with the proposed transaction, also briefly state the reasons for that response. As more fully described in Item 1, the proposed transactions relate only to establishment of a subsidiary company and have no environmental impact in and of themselves. (b) State whether any other federal agency has prepared or is preparing an environmental impact statement ("EIS") with respect to the proposed transaction. If any other federal agency has prepared or is preparing an EIS, state which agency or agencies and indicate the status of that EIS preparation. No federal agency has prepared or is preparing an EIS with respect to the proposed transaction. 17 PAGE 17 SIGNATURE Pursuant to the requirements of the Public Utility Holding Company Act of 1935, each of the undersigned companies has duly caused this Declaration to be signed on its behalf by the undersigned thereunto duly authorized. THE COLUMBIA GAS SYSTEM, INC. Date: August 27, 1996 By: /s/ T. S. Bindra ------------------------------ T. S. Bindra Associate General Counsel and Assistant Secretary 18 THE COLUMBIA GAS SYSTEM, INC. AND SUBSIDIARIES UNAUDITED (b)(1)(a) (1 of 2) CONSOLIDATED BALANCE SHEET ACTUAL and PRO FORMA As of June 30, 1996 ($000)
CGS Pro Forma CGS Actual Entries Pro Forma ------------ ------------ ----------- ASSETS Property, Plant and Equipment Gas utility and other plant, at original cost .... 6,834,224 - 6,834,224 Accumulated depreciation and depletion ........... (3,292,497) - (3,292,497) ------------ ------------ ----------- Net Gas Utility and Other Plant .................. 3,541,727 - 3,541,727 ------------ ------------ ----------- Oil and gas producing properties, full cost method 517,170 - 517,170 Accumulated depletion ............................ (151,821) - (151,821) ------------ ------------ ----------- Net Oil and Gas Producing Properties ............. 365,349 - 365,349 ------------ ------------ ----------- Net Property, Plant, and Equipment ................. 3,907,076 - 3,907,076 ------------ ------------ ----------- Investments and Other Assets Accounts receivable - noncurrent ................. 76,983 - 76,983 Unconsolidated affiliates ........................ 66,941 - 66,941 Other ............................................ 16,978 - 16,978 ------------ ------------ ------------ Total Investments and Other Assets ................. 160,902 - 160,902 ------------ ------------ ------------ Investments in Subsidiaries Capital stock .................................... - - - Equity in undistributed retained earnings ........ - - - Installment promissory notes receivable .......... - - - Other investments ................................ - - - ------------ ------------ ------------ Total Investments in Subsidiaries .................. - - - ------------ ------------ ------------ Current Assets Cash and temporary cash investments .............. 75,372 - 75,372 Accounts receivable, net Customers ...................................... 331,154 - 331,154 Affiliated ..................................... - - - Other .......................................... 27,200 - 27,200 Gas inventory .................................... 149,112 - 149,112 Other inventory at average cost .................. 45,962 - 45,962 Prepayments ...................................... 61,396 - 61,396 Current regulatory assets ........................ 66,745 - 66,745 Other ............................................ 251,401 - 251,401 ------------ ------------ ------------ Total Current Assets ............................... 1,008,342 - 1,008,342 ------------ ------------ ------------ Deferred Charges ................................... 51,440 - 51,440 Long term regulatory assets ........................ 422,279 - 422,279 ------------ ------------ ------------ Total Assets ....................................... 5,550,039 - 5,550,039 ============ ============ ============
19 THE COLUMBIA GAS SYSTEM, INC. AND SUBSIDIARIES UNAUDITED (b)(1)(a) (2 of 2) BALANCE SHEET ACTUAL and PRO FORMA As of June 30, 1996 ($000)
CGS Pro Forma CGS Actual Entries Pro Forma ------------ ------------ ----------- CAPITALIZATION AND LIABILITIES Capitalization Stockholder's equity ............................. 1,499,682 - 1,499,682 Long-term debt ................................... 2,004,127 - 2,004,127 ------------ ------------ ----------- Total Capitalization ............................... 3,503,809 - 3,503,809 ------------ ------------ ----------- Current Liabilities Current maturities of long term debt ............. 484 - 484 Short-term debt .................................. - - - Debtor in possession financing ................... - - - Accounts and drafts payable ...................... 184,762 - 184,762 Affiliated accounts payable ...................... - - - Accrued taxes .................................... 267,734 - 267,734 Accrued interest ................................. 23,605 - 23,605 Estimated rate refunds ........................... 94,864 - 94,864 Estimated supplier obligations ................... 129,198 - 129,198 Current regulatory liabilities ................... 9,200 - 9,200 Deferred income taxes - current .................. - - - Other ............................................ 354,498 - 354,498 ------------ ------------ ----------- Total Current Liabilities .......................... 1,064,345 - 1,064,345 ------------ ------------ ----------- Liabilities Subject to Chapter 11 Proceedings ...... - - - ------------ ------------ ----------- Other Liabilities and Deferred Credits Deferred income taxes, noncurrent ................ 530,085 - 530,085 Deferred investment tax credit ................... 37,862 - 37,862 Postretirement benefits other than pensions ...... 180,502 - 180,502 Long term regulatory liabilities ................. 44,642 - 44,642 Other ............................................ 188,794 - 188,794 ------------ ------------ ----------- Total Other Liabilities and Deferred Credits ....... 981,885 - 981,885 ------------ ------------ ----------- Total Capitalization and Liabilities ............... 5,550,039 - 5,550,039 ============ ============ ===========
20 THE COLUMBIA GAS SYSTEM, INC. AND SUBSIDIARIES UNAUDITED (b)(1)(b) STATEMENT OF CAPITALIZATION ACTUAL and PRO FORMA As of June 30, 1996 ($000)
CGS Pro Forma CGS Actual Entries Pro Forma ------------ ------------ ------------ Stockholder's Equity Common Stock, $10 par value, authorized 100,000,000 shares, outstanding 55,065,869 shares .......................................... 550,658 - 550,658 Additional paid in capital ....................... 736,762 - 736,762 Retained earnings ................................ 213,721 - 213,721 Unearned employee compensation ................... (1,459) - (1,459) ------------ ------------ ------------ Total Stockholder's Equity ......................... 1,499,682 - 1,499,682 ------------ ------------ ------------ Long-Term Debt Long term debt ................................... 2,004,127 - 2,004,127 Installment promissory notes payable ............. - - - ------------ ------------ ------------ Total Long-Term Debt ............................... 2,004,127 - 2,004,127 ------------ ------------ ------------ Total Capitalization ............................... 3,503,809 - 3,503,809 ============ ============ ============
21 THE COLUMBIA GAS SYSTEM, INC. AND SUBSIDIARIES UNAUDITED (b)(1)(c) STATEMENT OF INCOME ACTUAL and PRO FORMA Twelve Months Ended June 30, 1996 ($000)
CGS Pro Forma CGS Actual Entries Pro Forma ------------ ------------ ----------- Operating Revenues Gas Sales ........................................ 2,223,113 - 2,223,113 Transportation ................................... 508,136 - 508,136 Other ............................................ 204,013 - 204,013 ------------ ------------ ----------- Total Operating Revenues ........................... 2,935,262 - 2,935,262 ------------ ------------ ----------- Operating Expenses Products purchased ............................... 1,048,411 - 1,048,411 Operation ........................................ 838,202 - 838,202 Maintenance ...................................... 114,410 - 114,410 Depreciation and depletion ....................... 245,368 - 245,368 Other taxes ...................................... 211,283 - 211,283 ------------ ------------ ----------- Total Operating Expenses ........................... 2,457,674 - 2,457,674 ------------ ------------ ----------- Operating Income (Loss) ............................ 477,588 - 477,588 ------------ ------------ ----------- Other Income (Deductions) Interest income and other, net ................... (50,111) - (50,111) Interest expense and related charges ............. (1,059,149) - (1,059,149) Reorganization items, net ........................ (19,072) - (19,072) ------------ ------------ ----------- Total Other Income (Deductions) .................... (1,128,332) - (1,128,332) ------------ ------------ ----------- Income (Loss) before Income Taxes and Extraordinary Item ............................... (650,744) - (650,744) Income Taxes ....................................... (218,268) - (218,268) ------------ ------------ ----------- Income (Loss) before Extraordinary Item ............ (432,476) - (432,476) Extraordinary Item ................................. 71,575 - 71,575 ------------ ------------ ----------- Net Income (Loss) .................................. (360,901) - (360,901) ============ ============ ===========
22 THE COLUMBIA GAS SYSTEM, INC. AND SUBSIDIARIES UNAUDITED (b)(1)(d) STATEMENTS OF COMMON STOCK EQUITY ACTUAL and PRO FORMA Twelve Months Ended June 30, 1996 ($000)
CGS Pro Forma CGS Actual Entries Pro Forma ------------ ------------ ------------ COMMON STOCK Balance at July 1, 1995 ............................ 505,734 - 505,734 Common stock issued - Subsidiaries ..................................... - - - Leveraged employee stock ownership plan (LESOP) .. - - - Dividend reinvestment plan ....................... - - - Long-term incentive plan ......................... 1,586 - 1,586 Public offering .................................. 43,338 - 43,338 ------------ ------------ ------------ Balance at June 30, 1996 ........................... 550,658 - 550,658 ------------ ------------ ------------ PREFERRED STOCK Balance at July 1, 1995 ............................ - - - Preferred stock issued ............................. - - - ------------ ------------ ------------ Balance at June 30, 1996 ........................... - - - ------------ ------------ ------------ ADDITIONAL PAID IN CAPITAL Balance at July 1, 1995 ............................ 602,026 - 602,026 Common stock issued - Subsidiaries ..................................... - - - Leveraged employee stock ownership plan (LESOP) .. (7,903) - (7,903) Dividend reinvestment plan ....................... - - - Long-term incentive plan ......................... 5,135 - 5,135 Public offering .................................. 137,504 - 137,504 Preferred stock issued ............................. - - - ------------ ------------ ------------ Balance at June 30, 1996 ........................... 736,762 - 736,762 ------------ ------------ ------------ RETAINED EARNINGS Balance at July 1, 1995 ............................ 590,265 - 590,265 Net income ......................................... (360,901) - (360,901) Common stock dividends - - - - CG ............................................... (15,643) - (15,643) Subsidiaries (to CG) ............................. - - - Other .............................................. - - - ------------ ------------ ------------ Balance at June 30, 1996 ........................... 213,721 - 213,721 ------------ ------------ ------------ UNEARNED EMPLOYEE COMPENSATION Balance at July 1, 1995 ............................ (69,966) - (69,966) Adjustment ......................................... 68,507 - 68,507 ------------ ------------ ------------ Balance at June 30, 1996 ........................... (1,459) - (1,459) ------------ ------------ ------------ TOTAL COMMON STOCK EQUITY .......................... 1,499,682 - 1,499,682 ============ ============ ============
23 THE COLUMBIA GAS SYSTEM, INC. UNAUDITED (b)(2)(a) (1 of 2) BALANCE SHEET ACTUAL and PRO FORMA As of June 30, 1996 ($000)
CG Pro Forma CG Actual Entries Pro Forma ------------ ------------ ------------ ASSETS Investments and Other Assets Accounts receivable - noncurrent ................. 4,183 - 4,183 Unconsolidated affiliates ........................ - - - ------------ ------------ ------------ Total Investments and Other Assets ................. 4,183 - 4,183 ------------ ------------ ------------ Investments in Subsidiaries Capital stock .................................... 2,388,963 1,000 2,389,963 Equity in undistributed retained earnings ........ (315,744) - (315,744) Installment promissory notes receivable .......... 566,002 - 566,002 Other investments ................................ 643,000 - 643,000 ------------ ------------ ------------ Total Investments in Subsidiaries .................. 3,282,221 1,000 3,283,221 ------------ ------------ ------------ Current Assets Cash and temporary cash investments .............. 48,964 (1,000) 47,964 Accounts receivable, net Customers ...................................... - - - Affiliated ..................................... 252,864 - 252,864 Other .......................................... 1,879 - 1,879 Prepayments ...................................... 130 - 130 Other ............................................ 24,899 - 24,899 ------------ ------------ ------------ Total Current Assets ............................... 328,736 (1,000) 327,736 ------------ ------------ ------------ Deferred Charges ................................... 9,601 - 9,601 ------------ ------------ ------------ Total Assets ....................................... 3,624,741 - 3,624,741 ============ ============ ============
24 THE COLUMBIA GAS SYSTEM, INC. UNAUDITED (b)(2)(a) (2 of 2) BALANCE SHEET ACTUAL and PRO FORMA As of June 30, 1996 ($000)
CG Pro Forma CG Actual Entries Pro Forma ------------ ------------ ------------ CAPITALIZATION AND LIABILITIES Capitalization Stockholder's equity ............................. 1,499,682 - 1,499,682 Long-term debt ................................... 2,000,056 - 2,000,056 ------------ ------------ ------------ Total Capitalization ............................... 3,499,738 - 3,499,738 ------------ ------------ ------------ Current Liabilities Short-term debt .................................. - - - Debtor in possession financing ................... - - - Accounts and drafts payable ...................... 2,657 - 2,657 Affiliated accounts payable ...................... 359 - 359 Accrued taxes .................................... 69,899 - 69,899 Accrued interest ................................. 25,049 - 25,049 Deferred income taxes - current .................. - - - Other ............................................ 13,917 - 13,917 ------------ ------------ ------------ Total Current Liabilities .......................... 111,881 - 111,881 ------------ ------------ ------------ Liabilities Subject to Chapter 11 Proceedings ...... - - - ------------ ------------ ------------ Other Liabilities and Deferred Credits Deferred income taxes, noncurrent ................ - - - Postretirement benefits other than pensions ...... 8,075 - 8,075 Other ............................................ 5,047 - 5,047 ------------ ------------ ------------ Total Other Liabilities and Deferred Credits ....... 13,122 - 13,122 ------------ ------------ ------------ Total Capitalization and Liabilities ............... 3,624,741 - 3,624,741 ============ ============ ============
25 THE COLUMBIA GAS SYSTEM, INC. UNAUDITED (b)(2)(b) STATEMENT OF CAPITALIZATION ACTUAL and PRO FORMA As of June 30, 1996 ($000)
CG Pro Forma CG Actual Entries Pro Forma ------------ ------------ ------------ Stockholder's Equity Common Stock, $10 par value, authorized 100,000,000 shares, outstanding 55,065,869 shares .......................................... 550,658 - 550,658 Additional paid in capital ....................... 736,762 - 736,762 Retained earnings ................................ 213,721 - 213,721 Unearned employee compensation ................... (1,459) - (1,459) ------------ ------------ ------------ Total Stockholder's Equity ......................... 1,499,682 - 1,499,682 ------------ ------------ ------------ Long-Term Debt Long term debt ................................... 2,000,056 - 2,000,056 Installment promissory notes payable.............. - - - ------------ ------------ ------------ Total Long-Term Debt ............................... 2,000,056 - 2,000,056 ------------ ------------ ------------ Total Capitalization ............................... 3,499,738 - 3,499,738 ============ ============ ============
26 THE COLUMBIA GAS SYSTEM, INC. UNAUDITED (b)(2)(c) STATEMENT OF INCOME ACTUAL and PRO FORMA Twelve Months Ended June 30, 1996 ($000)
CG Pro Forma CG Actual Entries Pro Forma ------------ ------------ ------------ Operating Revenues Gas Sales ........................................ - - - Transportation ................................... - - - Other ............................................ - - - ------------ ------------ ------------ Total Operating Revenues ........................... - - - ------------ ------------ ------------ Operating Expenses Products purchased ............................... - - - Operation ........................................ 21,509 - 21,509 Maintenance ...................................... - - - Depreciation and depletion ....................... - - - Other taxes ...................................... 367 - 367 ------------ ------------ ------------ Total Operating Expenses ........................... 21,876 - 21,876 ------------ ------------ ------------ Operating Income (Loss) ............................ (21,876) - (21,876) ------------ ------------ ------------ Other Income (Deductions) Interest income and other, net ................... 387,130 - 387,130 Interest expense and related charges ............. (1,088,111) - (1,088,111) Reorganization items, net ........................ (18,430) - (18,430) ------------ ------------ ------------ Total Other Income (Deductions) .................... (719,411) - (719,411) ------------ ------------ ------------ Income (Loss) before Income Taxes .................. (741,287) - (741,287) Income Taxes ....................................... (380,386) - (380,386) ------------ ------------ ------------ Net Income (Loss) .................................. (360,901) - (360,901) ============ ============ ============
27 THE COLUMBIA GAS SYSTEM, INC. UNAUDITED (b)(2)(d) STATEMENTS OF COMMON STOCK EQUITY ACTUAL and PRO FORMA Twelve Months Ended June 30, 1996 ($000)
CG Pro Forma CG Actual Entries Pro Forma ------------ ------------ ------------ COMMON STOCK Balance at July 1, 1995 ............................ 505,734 - 505,734 Common stock issued - Subsidiaries ..................................... - - - Leveraged employee stock ownership plan (LESOP) .. - - - Dividend reinvestment plan ....................... - - - Long-term incentive plan ......................... 1,586 - 1,586 Public offering .................................. 43,338 - 43,338 ------------ ------------ ------------ Balance at June 30, 1996 ........................... 550,658 - 550,658 ------------ ------------ ------------ PREFERRED STOCK Balance at July 1, 1995 ............................ - - - Preferred stock issued ............................. - - - ------------ ------------ ------------ Balance at June 30, 1996 ........................... - - - ------------ ------------ ------------ ADDITIONAL PAID IN CAPITAL Balance at July 1, 1995 ............................ 602,026 - 602,026 Common stock issued - Subsidiaries ..................................... - - - Leveraged employee stock ownership plan (LESOP) .. (7,903) - (7,903) Dividend reinvestment plan ....................... - - - Long-term incentive plan ......................... 5,135 - 5,135 Public offering .................................. 137,504 - 137,504 Preferred stock issued ............................. - - - ------------ ------------ ------------ Balance at June 30, 1996 ........................... 736,762 - 736,762 ------------ ------------ ------------ RETAINED EARNINGS Balance at July 1, 1995 ............................ 590,265 - 590,265 Net income ......................................... (360,901) - (360,901) Common stock dividends - CG ............................................... (15,643) - (15,643) Subsidiaries (to CG) ............................. - - - Other .............................................. - - - ------------ ------------ ------------ Balance at June 30, 1996 ........................... 213,721 - 213,721 ------------ ------------ ------------ UNEARNED EMPLOYEE COMPENSATION Balance at July 1, 1995 ............................ (69,966) - (69,966) Adjustment ......................................... 68,507 - 68,507 ------------ ------------ ------------ Balance at June 30, 1996 ........................... (1,459) - (1,459) ------------ ------------ ------------ TOTAL COMMON STOCK EQUITY .......................... 1,499,682 - 1,499,682 ============ ============ ============
28 THE COLUMBIA GAS SYSTEM, INC. UNAUDITED (b)(2)(e) PRO FORMA ENTRIES ($000)
Debit Credit 1. Investment in Subsidiaries - Capital Stock 1,000 Cash and Temporary Cash Investments 1,000 To record CG's purchase of 4,800 shares of Captive common stock at $208.33 per share ($25 par value).
29 CAPTIVE INSURANCE COMPANY UNAUDITED (b)(3)(a) (1 of 2) BALANCE SHEET ACTUAL and PRO FORMA As of June 30, 1996 ($000)
CIC Pro Forma CIC Actual Entries Pro Forma ------------ ------------ ----------- ASSETS Property, plant and equipment Gas utility and other plant ...................... - - - Accumulated depreciation and depletion ........... - - - ------------ ------------ ------------ Net Gas Utility and Other PP&E ..................... - - - ------------ ------------ ----------- Investments and Other Assets Accounts Receivable - noncurrent ................. - - - Unconsolidated affiliates ........................ - - - Investment in Subsidiaries ....................... - - - Other ............................................ - - - ------------ ------------ ------------ Total Investments and Other Assets ................. - - - ------------ ------------ ------------ Current Assets Cash and temporary cash investments .............. - 1,000 1,000 Accounts receivable, net Customers ...................................... - - - Affiliated ..................................... - - - Other .......................................... - - - Prepayments ...................................... - - - Other ............................................ - - - ------------ ------------ ------------ Total Current Assets ............................... - 1,000 1,000 ------------ ------------ ------------ Deferred Charges ................................... - - - ------------ ------------ ------------ Total Assets ....................................... - 1,000 1,000 ============ ============ ============
30 CAPTIVE INSURANCE COMPANY UNAUDITED (b)(3)(a) (2 of 2) BALANCE SHEET ACTUAL and PRO FORMA As of June 30, 1996 ($000)
CIC Pro Forma CIC Actual Entries Pro Forma ------------ ------------ ----------- CAPITALIZATION AND LIABILITIES Capitalization Stockholder's equity ............................. - 1,000 1,000 Long term debt ................................... - - - ------------ ------------ ----------- Total Capitalization ............................... - 1,000 1,000 ------------ ------------ ----------- Current Liabilities Short-term debt .................................. - - - Accounts and drafts payable ...................... - - - Affiliated accounts payable ...................... - - - Accrued taxes .................................... - - - Accrued interest ................................. - - - Deferred income taxes - current .................. - - - Other ............................................ - - - ------------ ------------ ----------- Total Current Liabilities .......................... - - - ------------ ------------ ----------- Other Liabilities and Deferred Credits Deferred income taxes, noncurrent ................ - - - Postretirement benefits other than pensions ...... - - - Other ............................................ - - - ------------ ------------ ----------- Total Other Liabilities and Deferred Credits ....... - - - ------------ ------------ ----------- Total Capitalization and Liabilities ............... - 1,000 1,000 ============ ============ ===========
31 CAPTIVE INSURANCE COMPANY UNAUDITED (b)(3)(b) STATEMENT OF CAPITALIZATION ACTUAL and PRO FORMA As of June 30, 1996 ($000)
CIC Pro Forma CIC Actual Entries Pro Forma ------------ ------------ ------------ Stockholder's Equity Common Stock, $25 par value, authorized 4,800 shares, outstanding 4,800 shares .......... - 120 120 Additional paid in capital ....................... - 880 880 Retained earnings ................................ - - - ------------ ------------ ------------ Total Stockholder's Equity ......................... - 1,000 1,000 ------------ ------------ ------------ Long-Term Debt ..................................... - - - ------------ ------------ ------------ Total Capitalization ............................... - 1,000 1,000 ============ ============ ============
32 CAPTIVE INSURANCE COMPANY UNAUDITED (b)(3)(c) STATEMENT OF INCOME ACTUAL and PRO FORMA Twelve Months Ended June 30, 1996 ($000)
CIC Pro Forma CIC Actual Entries Pro Forma ------------ ------------ ----------- Operating Revenues Gas Sales ........................................ - - - Transportation ................................... - - - Other ............................................ - - - ------------ ------------ ----------- Total Operating Revenues ........................... - - - ------------ ------------ ----------- Operating Expenses Products purchased ............................... - - - Operation ........................................ - - - Maintenance ...................................... - - - Depreciation and depletion ....................... - - - Other taxes ...................................... - - - ------------ ------------ ----------- Total Operating Expenses ........................... - - - ------------ ------------ ----------- Operating Income ................................... - - - ------------ ------------ ----------- Other Income (Deductions) Interest income and other, net ................... - - - Interest expense and related charges ............. - - - ------------ ------------ ----------- Total Other Income (Deductions) .................... - - - ------------ ------------ ----------- Income before Income Taxes ......................... - - - ------------ ------------ ----------- Income taxes ....................................... - - - ------------ ------------ ----------- Net Income ......................................... - - - ============ ============ ===========
33 CAPTIVE INSURANCE COMPANY UNAUDITED (b)(3)(d) STATEMENTS OF COMMON STOCK EQUITY ACTUAL and PRO FORMA Twelve Months Ended June 30, 1996 ($000)
CIC Pro Forma CIC Actual Entries Pro Forma ------------ ------------ ------------ COMMON STOCK Balance at July 1, 1995 ............................ - - - Common stock issued - Subsidiaries ..................................... - 120 120 Leveraged employee stock ownership plan (LESOP) .. - - - Dividend reinvestment plan ....................... - - - Long-term incentive plan ......................... - - - Public offering .................................. - - - ------------ ------------ ------------ Balance at June 30, 1996 ........................... - 120 120 ------------ ------------ ------------ PREFERRED STOCK Balance at July 1, 1995 ............................ - - - Preferred stock issued ............................. - - - ------------ ------------ ------------ Balance at June 30, 1996 ........................... - - - ------------ ------------ ------------ ADDITIONAL PAID IN CAPITAL Balance at July 1, 1995 ............................ - - - Common stock issued - Subsidiaries ..................................... - 880 880 Leveraged employee stock ownership plan (LESOP) .. - - - Dividend reinvestment plan ....................... - - - Long-term incentive plan ......................... - - - Public offering .................................. - - - Preferred stock issued ............................. - - - ------------ ------------ ------------ Balance at June 30, 1996 ........................... - 880 880 ------------ ------------ ------------ RETAINED EARNINGS Balance at July 1, 1995 ............................ - - - Net income ......................................... - - - Common stock dividends - CG ............................................... - - - Subsidiaries (to CG) ............................. - - - Other .............................................. - - - ------------ ------------ ------------ Balance at June 30, 1996 ........................... - - - ------------ ------------ ------------ UNEARNED EMPLOYEE COMPENSATION Balance at July 1, 1995 ............................ - - - Adjustment ......................................... - - - ------------ ------------ ------------ Balance at June 30, 1996 ........................... - - - ------------ ------------ ------------ TOTAL COMMON STOCK EQUITY .......................... - 1,000 1,000 ============ ============ ============
34 CAPTIVE INSURANCE COMPANY UNAUDITED (b)(3)(e) PRO FORMA ENTRIES ($000)
Debit Credit 1. Cash 1,000 Common Stock 120 Additional Paid In Capital 880 To record the issuance of 4,800 shares of $25 par value common stock at $208.33 per share.
35 PAGE 1 EXHIBIT INDEX (a) Exhibits A Form of Subsidiary Common Stock Certificate (Exhibit A-2 to Joint-Application Declaration (File No. 70-7276) is hereby incorporated by reference) F Opinion of Counsel (to be filed by amendment). G Financial Data Schedules H Draft Notice I-1 Five Year History of Losses by Subsidiary I-2 Five Year History of Premiums by Subsidiary J 5 year Projections EX-27.1 2 FINANCIAL DATA SCHEDULE - CGS WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
OPUR1 0000022099 1 CGS 1,000 12-MOS 12-MOS DEC-31-1996 DEC-31-1996 JUL-01-1995 JUL-01-1995 JUN-30-1996 JUN-30-1996 PER-BOOK PRO-FORMA 3,541,727 3,541,727 526,251 526,251 1,008,342 1,008,342 51,440 51,440 422,279 422,279 5,550,039 5,550,039 550,658 550,658 736,762 736,762 213,721 213,721 1,499,682 1,499,682 0 0 0 0 2,004,127 2,004,127 0 0 0 0 0 0 484 484 0 0 2,673 2,673 0 0 2,046,230 2,046,230 5,550,039 5,550,039 2,935,262 2,935,262 (218,268) (218,268) 2,457,674 2,457,674 2,457,674 2,457,674 477,588 477,588 (69,183) (69,183) 408,405 408,405 1,059,149 1,059,149 (360,901) (360,901) 0 0 (360,901) (360,901) 0 0 0 0 0 0 (6.99) (6.99) (6.99) (6.99)
EX-27.2 3 FINANCIAL DATA SCHEDULE - CG WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
OPUR1 0000022099 2 CG 1,000 12-MOS 12-MOS DEC-31-1996 DEC-31-1996 JUL-01-1995 JUL-01-1995 JUN-30-1996 JUN-30-1996 PER-BOOK PRO-FORMA 0 0 3,286,404 3,287,404 328,736 327,736 9,601 9,601 0 0 3,624,741 3,624,741 550,658 550,658 736,762 736,762 213,721 213,721 1,499,682 1,499,682 0 0 0 0 2,000,056 2,000,056 0 0 0 0 0 0 0 0 0 0 0 0 0 0 125,003 125,003 3,624,741 3,624,741 0 0 (380,386) (380,386) 21,876 21,876 21,876 21,876 (21,876) (21,876) 368,700 368,700 346,824 346,824 1,088,111 1,088,111 (360,901) (360,901) 0 0 (360,901) (360,901) 0 0 0 0 0 0 (6.99) (6.99) (6.99) (6.99)
EX-27.3 4 FINANCIAL DATA SCHEDULE - CIC WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
OPUR1 0000022099 3 CIC 1,000 12-MOS 12-MOS DEC-31-1996 DEC-31-1996 JUL-01-1995 JUL-01-1995 JUN-30-1996 JUN-30-1996 PER-BOOK PRO-FORMA 0 0 0 0 0 1,000 0 0 0 0 0 1,000 0 120 0 880 0 0 0 1,000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1,000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.00 0.00 0.00 0.00
EX-99.H 5 DRAFT NOTICE 1 PAGE 1 EXHIBIT H SECURITIES AND EXCHANGE COMMISSION (Release No. ) The Columbia Gas System, Inc. ("Columbia"), a holding company registered under the Public Utility Holding Company Act of 1935 (the "Act"), located at 12355 Sunrise Valley Drive, Reston, VA 20191-3420, has filed an application-declaration under section 6(a), 7, 9(a), 10, and 12(b) and (f), of the Act and rules 43 and 45 thereunder. Columbia requests authorization to form a subsidiary to engage in the business of reinsuring certain predictable risks for the benefit of affiliates, including project companies in which subsidiaries of Columbia have an equity interest. Columbia seeks authorization to fund the new subsidiary by making cash, capital contributions and/or through the purchase of up to $1 million dollars of equity and the provision of $2,000,000 in letters of credit. If any letter of credit should be drawn upon, a capital contribution from Columbia would result. Under the new program, subsidiaries will be able to choose deductibles appropriate to their business and premiums will be allocated based on these deductibles and bases of allocation which have been previously approved by the Commission. Loss histories will also be taken into account in the allocation of premiums. Columbia asserts that use of a Captive will benefit the subsidiaries by eliminating the 30% to 40% administrative charge made by commercial insurers with respect to predictable losses, by allowing direct access to the reinsurer market and by giving Columbia greater control over the management and settlement of claims. The Captive will initially reinsure predictable losses under the automobile and general liability and "all risk" property coverages. At a later date, the Captive may also underwrite director and officer liability, Employee attorney liability, legal malpractice for employee attorneys, performance bonds and various warranty programs offered to consumers. The application-declaration and any amendments thereto are available for public inspection through the Commission's office of Public Reference. Interested persons wishing to comment or request a hearing should submit their views in writing by _______________________________________, 1996, to the Secretary, Securities and Exchange Commission, Washington, DC 20549, and serve a copy on the applicant-declarant at the address specified above. Proof of service (by affidavit or, in the case of an attorney-at-law, by certificate) should be filed with the request. Any request for hearing shall identify specifically the issues of fact or law that are disputed. A person who so requests will be notified of any hearing, if ordered, and will receive a copy of any notice or order issued in this matter. After said date, the application-declaration, as filed or as it may be amended, may be permitted to become effective. For the Commission by the Division of Investment Management, pursuant to delegated authority. Jonathan G. Katz Secretary EX-99.I1 6 FIVE YEAR HISTORY OF LOSSES BY SUBSIDIARY 1 EXHIBIT I-1 THE COLUMBIA GAS SYSTEM, INC. AUTO LIABILITY, GENERAL LIABILITY AND PROPERTY LOSSES 1991-1995
SUBSIDIARY SUBSIDIARY 1991 1992 1993 1994 1995 TOTAL =================================================================================================================================== CKY $ 3,916 $ 18,989 $ 363,048 $ 183,533 $ 12,821 $ 582,307 CMD $ - $ 4,380 $ 7,714 $ 709,837 $ 10,075 $ 732,006 COH $ 4,805,023 $ 695,825 $ 218,681 $ 3,053,744 $ 167,979 $ 8,941,252 CPA $ 48,626 $ 101,705 $ 62,180 $ 758,948 $ 98,132 $ 1,069,591 COS $ 18,159 $ 54,210 $ 36,364 $ 5,538 $ 51,978 $ 166,249 TCO $ 7,570,401 $ 737,328 $ 2,899,037 $ 864,676 $ 1,866,835 $ 13,938,277 CGT $ 915,771 $ 2,685,840 $ 6,939,561 $ 2,074,756 $ 3,083,762 $ 15,699,710 CNR $ 20,233 $ - $ 18,584 $ 750,000 $ 47,331 $ 836,148 TVC $ - $ - $ 1,232,295 $ - $ 1,103,784 $ 2,336,079 CGC $ - $ 156 $ - $ - $ - $ 156 CES $ - $ (58) $ - $ - $ - $ (58) CLG $ 133,004 $ 8,371 $ 2,382 $ - $ - $ 143,757 CPC $ 1,369 $ 6,442 $ 2,277 $ 29,679 $ 3,147 $ 42,914 CPI $ 31,915 $ 54,055 $ 55,443 $ 795,579 $ 68,062 $ 1,005,054 AE $ - $ 90 $ - $ - $ - $ 90 CS $ 500 $ 3,394 $ 3,665 $ 39 $ 2,720 $ 10,318 CG $ - $ (1,594) $ - $ - $ - $ (1,594) TOTAL $ 13,548,917 $ 4,369,133 $ 11,841,231 $ 9,226,329 $ 6,516,646
1 EX-99.I2 7 FIVE YEAR HISTORY OF PREMIUMS BY SUBSIDIARY 1 EXHIBIT I-2 COLUMBIA GAS SYSTEM, INC. 1991-1995 PREMIUMS (AUTO, LIABILITY, GENERAL LIABILITY & PROPERTY)
- --------------------------------------------------------------------------------------------------------------------------------- First Year Captive 1991 1992 1993 1994 1995 Premium Savings - --------------------------------------------------------------------------------------------------------------------------------- CKY 166,137 139,372 165,449 205,749 380,056 238,466 141,590 - --------------------------------------------------------------------------------------------------------------------------------- CMD 13,273 34,418 59,134 58,635 65,877 57,235 8,642 - --------------------------------------------------------------------------------------------------------------------------------- COH 1,316,625 1,594,275 1,675,537 1,807,258 2,462,535 2,194,717 267,818 - --------------------------------------------------------------------------------------------------------------------------------- CPA 423,621 469,429 489,319 589,287 778,622 691,879 86,743 - --------------------------------------------------------------------------------------------------------------------------------- COS 154,975 204,470 199,365 230,781 333,294 298,921 34,373 - --------------------------------------------------------------------------------------------------------------------------------- TCO 1,764,206 1,705,762 2,685,049 3,133,876 3,486,293 3,386,224 100,069 - --------------------------------------------------------------------------------------------------------------------------------- CGT 1,941,180 1,857,399 2,522,937 2,677,083 2,343,018 2,236,012 107,006 - --------------------------------------------------------------------------------------------------------------------------------- CNR 399,974 302,093 419,232 483,618 412,876 364,321 48,555 - --------------------------------------------------------------------------------------------------------------------------------- TVC 969,489 970,006 970,501 970,806 972,153 603,587 368,566 - --------------------------------------------------------------------------------------------------------------------------------- CGC 6,347 6,984 5,615 5,464 7,529 7,691 -162 - --------------------------------------------------------------------------------------------------------------------------------- CES 196,349 89,521 106,828 - --------------------------------------------------------------------------------------------------------------------------------- IGC 20,884 13,609 0 - --------------------------------------------------------------------------------------------------------------------------------- CLG 261,966 267,356 319,981 480,920 477,589 295,624 181,965 - --------------------------------------------------------------------------------------------------------------------------------- CPI 148,052 136,362 134,503 133,022 199,014 151,839 47,175 - ---------------------------------------------------------------------------------------------------------------------------------
2
- --------------------------------------------------------------------------------------------------------------------------------- First Year Captive 1991 1992 1993 1994 1995 Premium Savings - --------------------------------------------------------------------------------------------------------------------------------- CPC 36,143 36,371 29,786 44,521 54,861 40,333 14,528 - --------------------------------------------------------------------------------------------------------------------------------- AE 150,112 145,074 171,470 195,620 252,207 13,770 238,437 - --------------------------------------------------------------------------------------------------------------------------------- CS 163,418 70,694 101,283 114,796 115,100 99,622 15,478 - --------------------------------------------------------------------------------------------------------------------------------- CG 0 (47,134)* 34,714 3,558 4,948 5,813 -865 - --------------------------------------------------------------------------------------------------------------------------------- TOTAL 7,936,402 7,906,540 9,983,875 11,134,994 12,542,321 11,067,321 1,475,000 - ---------------------------------------------------------------------------------------------------------------------------------
* Premium refund due to discontinued operations. EX-99.J 8 5 YEAR PROJECTIONS 1 EXHIBIT J THE COLUMBIA GAS SYSTEM, INC. Captive Insurance Program Proforma Income Statement Policy Years One to Five
Year Year Year Year Year One Two Three Four Five --- --- ----- ---- ---- Commercial Premiums/Fees 7,437,000 7,883,000 8,355,000 8,856,000 9,387,000 Captive Premiums 4,244,000 4,499,000 4,769,000 5,055,000 5,358,000 Captive Projected Admin Expenses 108,000 114,000 120,000 127,000 134,000 ----------------------------------------------------------------------------- Total Premiums 11,789,000 12,496,000 13,244,000 14,038,000 14,879,000 Net Underwriting Income 0 0 0 0 0 Investment Income 338,000 557,000 780,000 976,000 1,151,000
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