-----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, GGD6yW6OV0zFru5/upl885ozY+HMPXq0ZxaKyfRPNwpKQIYDTGh8AXUaDJW8S6xI dGw1cu3Jz10k2r+dMZdeJA== 0000950117-98-002017.txt : 19981116 0000950117-98-002017.hdr.sgml : 19981116 ACCESSION NUMBER: 0000950117-98-002017 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FRONTIER INSURANCE GROUP INC CENTRAL INDEX KEY: 0000797496 STANDARD INDUSTRIAL CLASSIFICATION: SURETY INSURANCE [6351] IRS NUMBER: 141681606 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-10584 FILM NUMBER: 98747980 BUSINESS ADDRESS: STREET 1: 195 LAKE LOUISE MARIE RD CITY: ROCK HILL STATE: NY ZIP: 12775 BUSINESS PHONE: 9147962100 MAIL ADDRESS: STREET 1: 195 LAKE LOUISE MARIE RD CITY: ROCK HILL STATE: NY ZIP: 12775 FORMER COMPANY: FORMER CONFORMED NAME: FRONTIER FINANCIAL CORP /DE/ DATE OF NAME CHANGE: 19860904 10-Q 1 FRONTIER INSURANCE GROUP, INC. ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 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 September 30, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to COMMISSION FILE NUMBER 0-15022 FRONTIER INSURANCE GROUP, INC. (Exact name of Registrant as specified in its charter) DELAWARE 14-1681606 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 195 LAKE LOUISE MARIE ROAD, ROCK HILL, NEW YORK 12775-8000 (Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (914) 796-2100 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. [x] Yes [ ] No The aggregate number of shares of the Registrant's Common Stock, $.01 par value, outstanding on November 10, 1998 was 37,020,565. ================================================================================ Page 1 of 21 pages FRONTIER INSURANCE GROUP, INC.
INDEX PAGE ----- ---- PART I - FINANCIAL INFORMATION Item 1. Consolidated Financial Statements Consolidated Balance Sheets at September 30, 1998 (Unaudited) and December 31, 1997................................... 3-4 Consolidated Statements of Income and Comprehensive Income (Unaudited) for the Three Months and Nine Months Ended September 30, 1998 and 1997 ................ 5 Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 1998 and 1997.................................. 6 Notes to Consolidated Financial Statements (Unaudited)................................. 7-10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.......................................... 11-19 PART II - OTHER INFORMATION Item 1. Legal Proceedings...................................................................... 20 Item 2. Changes in Securities.................................................................. 20 Item 3. Defaults upon Senior Securities........................................................ 20 Item 4. Submission of Matters to a Vote of Security Holders.................................... 20 Item 5. Other Information...................................................................... 20 Item 6. Exhibits and Reports on Form 8-K....................................................... 20 Signature....................................................................................... 21
-2- PART I - FINANCIAL INFORMATION Item 1. Consolidated Financial Statements FRONTIER INSURANCE GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS (in thousands)
September 30, December 31, 1998 1997 ------------- ------------ (Unaudited) Investments: Securities, available for sale--at fair value: Fixed maturities (amortized cost: 1998--$1,149,589; 1997--$950,015) $1,194,566 $ 1,079,740 Equity securities (cost: 1998--$57,674; 1997--$28,998); 57,479 20,281 Limited investment partnerships 24,818 17,758 Equity investees 14,519 14,108 Short-term investments 79,045 117,568 ---------- ---------- TOTAL INVESTMENTS 1,370,427 1,249,455 Cash 39,074 11,804 Premiums receivable, less allowances for doubtful accounts (1998--$2,925; 1997--$2,791) 120,294 96,196 Net reinsurance recoverables less allowances for doubtful accounts (1998--$246; 1997--$464) 474,930 391,168 Accrued investment income 16,271 14,970 Federal income taxes recoverable 7,002 7,292 Deferred policy acquisition costs 101,504 55,634 Deferred federal income tax asset 8,987 29,045 Home office building, property and equipment--at cost, less accumulated depreciation and amortization (1998-$18,650; 1997--$14,060) 59,250 48,298 Intangible assets, less accumulated amortization (1998-$15,497; 1997--$5,088) 54,357 29,885 Other assets 43,567 41,966 ---------- ---------- TOTAL ASSETS $2,295,663 $1,975,713 ========== ==========
See notes to consolidated financial statements (unaudited). -3- FRONTIER INSURANCE GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS--Continued LIABILITIES AND CAPITAL (dollar amounts in thousands, except per share data)
September 30, December 31, 1998 1997 ------------- ------------ (Unaudited) LIABILITIES Policy liabilities: Unpaid losses $ 705,832 $ 635,719 Unpaid loss adjustment expenses 146,548 144,325 Unearned premiums 529,028 404,042 ---------- ---------- TOTAL POLICY LIABILITIES 1,381,408 1,184,086 Funds held under reinsurance contracts 153,379 111,879 Bank debt 16,000 Cash dividend payable to shareholders 2,620 2,375 Other liabilities 70,344 56,965 ---------- ---------- TOTAL LIABILITIES 1,623,751 1,355,305 COMMITMENTS AND CONTINGENCIES GUARANTEED PREFERRED BENEFICIAL INTEREST IN COMPANY'S CONVERTIBLE SUBORDINATED DEBENTURES 166,839 166,703 SHAREHOLDERS' EQUITY-- Preferred Stock, par value $.01 per share; authorized and unissued--1,000,000 shares Common Stock, par value $.01 per share (shares authorized: 150,000,000, shares issued: 1998-37,591,382;1997--37,419,298) 376 340 Additional paid-in capital 449,232 367,914 Accumulated other comprehensive income, net of tax 29,761 20,238 Retained earnings 28,188 65,995 --------- ---------- SUBTOTAL 507,557 454,487 Less treasury stock--at cost (1998-232,932; 1997--99,495 shares) 2,484 782 ---------- ---------- TOTAL SHAREHOLDERS' EQUITY 505,073 453,705 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,295,663 $1,975,713 ========== ========== Book value per share $13.52 $12.39 ====== ======
See notes to consolidated financial statements (unaudited). -4- FRONTIER INSURANCE GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (in thousands, except per share data)
Three Months Nine Months Ended September 30, Ended September 30, ------------------- ------------------- 1998 1997 1998 1997 ---- ---- ---- ---- REVENUES Premiums written $221,325 $189,715 $652,160 $424,697 Premiums ceded (71,813) (68,201) (229,033) (134,724) -------- -------- -------- -------- NET PREMIUMS WRITTEN 149,512 121,514 423,127 289,973 Increase in net unearned premiums (21,511) (18,298) (55,338) (32,933) -------- -------- -------- -------- NET PREMIUMS EARNED 128,001 103,216 367,789 257,040 Net Investment income 18,798 14,555 56,492 39,273 Realized capital gains (3,273) 231 607 1,446 -------- -------- -------- -------- TOTAL NET INVESTMENT INCOME 15,525 14,786 57,099 40,719 Net proceeds from company held life insurance policy 4,400 -------- -------- -------- -------- TOTAL REVENUES 143,526 118,002 429,288 297,759 EXPENSES Losses 55,829 39,973 164,217 97,194 Loss adjustment expenses 17,290 15,657 54,294 40,145 Amortization of policy acquisition costs 31,748 21,075 88,354 56,986 Underwriting and other expenses 17,468 16,583 48,262 35,008 Minority interest in income of consolidated subsidiary trust 2,780 2,725 8,244 8,116 Interest expense 261 515 575 986 -------- -------- -------- -------- TOTAL EXPENSES 125,376 96,528 363,946 238,435 -------- -------- -------- -------- INCOME BEFORE INCOME TAXES 18,150 21,474 65,342 59,324 INCOME TAXES State 893 479 1,806 889 Federal 3,064 6,237 14,135 16,354 -------- -------- -------- -------- TOTAL INCOME TAXES 3,957 6,716 15,941 17,243 -------- -------- -------- -------- NET INCOME 14,193 14,758 49,401 42,081 OTHER COMPREHENSIVE INCOME, NET 6,873 9,850 9,523 11,791 -------- -------- -------- -------- TOTAL COMPREHENSIVE INCOME $ 21,066 $ 24,608 $ 58,924 $ 53,872 ======== ======== ======== ======== PER SHARE DATA: Primary earnings per common share $.38 $.42 $1.32 $1.27 ==== ==== ===== ===== Fully diluted earnings per common share $.35 $.38 $1.20 $1.15 ==== ==== ===== ===== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (in thousands): Primary 37,482 34,851 37,399 33,143 Fully diluted 45,699 42,945 45,644 41,237
See notes to consolidated financial statements (unaudited). -5- FRONTIER INSURANCE GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Nine Months Ended September 30, -------------------------- 1998 1997 -------- -------- OPERATING ACTIVITIES Net income $ 49,401 $ 42,081 Adjustments to reconcile net income to net cash provided by operating activities: Increase in policy liabilities 132,084 92,749 Increase in reinsurance balances (21,989) (57,642) Increase in agents' balances and premiums receivable (23,479) (16,565) Increase in deferred policy acquisition costs (45,871) (16,639) (Increase) decrease in accrued investment income (1,068) 171 Deferred income tax expense 11,988 8,824 Depreciation and amortization 13,838 3,875 Realized capital gains (607) (1,446) Other, net 2,205 29,708 --------- --------- NET CASH PROVIDED BY OPERATING ACTIVITIES 116,502 85,116 INVESTING ACTIVITIES Proceeds from sales of fixed maturities 76,273 50,839 Proceeds from calls, paydowns and maturities of fixed maturities 158,059 71,754 Proceeds from sales of equity securities 12,296 13,458 Purchases of fixed maturities (303,056) (195,471) Purchases of equity securities (49,706) (27,682) Net sales (purchases) of short-term investments 64,880 (33,987) Additions and improvements to home office building, and purchases of property and equipment (14,902) (10,594) Purchase of wholly-owned subsidiary, net of cash acquired (28,112) (89,056) Investments in limited investment partnerships (6,948) Investments in equity investees (2,172) Other, net (4,533) (9,530) ---------- ----------- NET CASH USED IN INVESTING ACTIVITIES (97,921) (230,269) FINANCING ACTIVITIES Proceeds from borrowings 16,000 62,000 Repayment of borrowings (62,000) Cash dividends paid (7,141) (5,866) Issuance of common stock 1,918 145,901 Additional costs related to public common stock offering (397) Net (purchase) reissuance of treasury stock (1,691) 20 ----------- ----------- NET CASH PROVIDED BY FINANCING ACTIVITIES 8,689 140,055 ----------- ----------- INCREASE (DECREASE) IN CASH 27,270 (5,098) CASH AT BEGINNING OF YEAR 11,804 8,332 ---------- ---------- CASH AT END OF PERIOD $ 39,074 $ 3,234 ========= =========
See notes to consolidated financial statements (unaudited). -6- FRONTIER INSURANCE GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X and, accordingly, do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements and should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1997. In the opinion of management, all adjustments (consisting of only normal, recurring accruals) considered necessary for a fair presentation have been included. Certain amounts in the 1997 financial statements have been reclassified to conform to the 1998 presentation. All share and per share information presented in the accompanying financial statements and these notes thereto have been adjusted to give effect to stock dividends and stock splits. Operating results for the nine-month period ended September 30, 1998 are not necessarily indicative of the results that may be expected for the year ending December 31, 1998. 2. In the first quarter of 1997, the Company adopted Financial Accounting Standards Board Statement 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities" ("FASB 125"), which provides accounting and reporting standards for sales, securitizations, and servicing of receivables and other financial assets, secured borrowing and collateral transactions, and the extinguishments of liabilities. The adoption excluded the provisions that deal with securities lending, repurchase and dollar repurchase agreements, and the recognition of collateral, which will be adopted in 1998 pursuant to the proposed amendment. The adoption of FASB 125 did not have a material impact to the Company's financial position or results of operations. In June 1997, the Financial Accounting Standards Board issued Statement 131, "Disclosures and Segments of an Enterprise and Related Information." Statement 131 is effective for the years beginning after December 15, 1997 and establishes new disclosure requirements related to products and services, geographic areas and major customers on an annual and quarterly basis. Statement 131 requires companies to disclose qualitative and quantitative segment data on the basis that is used by management for evaluating segment performance and deciding how to allocate resources. Although early application is encouraged, segment information is not required to be reported in interim financial statements in the first year of application. The Company is currently evaluating what its meaningful reporting segments will be under Statement 131. In October 1997, the Financial Accounting Standards Board issued Statement 128, "Earnings per Share", which establishes standards for computing and presenting earnings per share ("EPS"). Statement 128 replaced the calculation of primary and fully diluted earnings per share with basic and diluted earnings per share. Unlike primary earnings per share, basic earnings per share excludes any dilutive effects of options, warrants and convertible securities. Diluted earnings per share is very similar to the previously reported fully diluted earnings per share. All earnings per share amounts for all periods have been presented and where appropriate have been restated to conform to the Statement 128 requirements. -7- Item 1. Notes to Consolidated Financial Statements (Unaudited)--Continued In December 1997, the American Institute of Certified Public Accountants issued Statement of Position No. 97-3 "Accounting by Insurance and Other Enterprises for Insurance-related Assessments" ( "SOP 97-3"). SOP 97-3 establishes standards for accounting for guaranty-fund and certain other insurance related assessments. SOP 97-3 is effective for fiscal years beginning after December 15, 1998 and requires any impact of adoption to be reported as a change in accounting principle. The adoption of this statement is not expected to have a material effect on the Company's results of operations or financial condition. As of January 1, 1998, the Company adopted Financial Accounting Standards Board's statement 130, "Reporting Comprehensive Income." Statement 130 establishes new rules for the reporting and display of comprehensive income and its components; however, the adoption of this statement has no impact on the Company's net income or shareholders' equity. Statement 130 requires unrealized gains or losses on the Company's available-for sale securities and foreign currency translation adjustments, which prior to adoption were reported separately in shareholders' equity to be included in other comprehensive income. Prior year financial statements have been reclassified to conform to the requirements of Statement 130. The components of comprehensive income for the three months ended September 30, 1998 and 1997, and the nine months ended September 30, 1998 and 1997 are as follows:
Three Months Nine Months Ended September 30, Ended September 30, ---------------------- -------------------- 1998 1997 1998 1997 ---- ---- ---- ---- (in thousands) Net income $14,193 $14,758 $49,401 $42,081 Other comprehensive income Unrealized gains, net of tax 6,873 9,850 9,523 11,791 ------- ------- ------- ------- Total comprehensive income $21,066 $24,608 $58,924 $53,872 ======= ======= ======= =======
The components of accumulated other comprehensive income, net of related tax at September 30, 1998 and December 31, 1997 are as follows:
September 30, 1998 December 31, 1997 ------------------ ----------------- (in thousands) Unrealized gains on securities, net of tax $29,761 $20,238
-8- Item 1. Notes to Consolidated Financial Statements (Unaudited)--Continued 3. Dividends have been declared by the Board of Directors and paid by the Company during the periods presented in the accompanying financial statements, as follows:
Declaration Record Payment Type of Cash Number of Date Date Date Dividend Paid Shares Issued ----------- ------- -------- -------------------- ----- ------------- 11/21/96 12/27/96 01/14/97 $.065 per share cash $1,904 N/A 02/27/97 03/24/97 04/18/97 $.065 per share cash $1,905 N/A 05/22/97 06/30/97 07/21/97 100% stock N/A 14,735,962 05/22/97 06/30/97 07/21/97 $.07 per share cash $2,057 N/A 08/14/97 09/30/97 10/17/97 $.07 per share cash $2,374 N/A 11/13/97 12/31/97 01/20/97 $.07 per share cash $2,375 N/A 02/06/98 03/31/98 04/21/98 $.07 per share cash $2,376 N/A 06/01/98 06/30/98 07/20/98 $.07 per share cash $2,384 N/A 06/01/98 07/01/98 07/20/98 10% stock $ 7(1) 3,414,296 09/14/98 09/30/98 10/20/98 $.07 per share cash $2,620 N/A
(1) Cash in lieu of fractional shares. 4. At September 30, 1998, options to purchase 912,256 shares of Common Stock, at per share exercise prices ranging from $8.57 to $30.63, were outstanding, compared to options to purchase 896,598 shares of Common Stock, at per share exercise prices ranging from $9.43 to $26.69, outstanding at September 30, 1997 under the Company's stock option plans (the "Plans"). Options to purchase 310,337 and 240,675 shares of Common Stock were exercisable at September 30,1998 and September 30,1997, respectively, under the Plans. In 1998, the Company granted the President and Chairman of the Board, and an Executive Vice President, separate stock options outside the Plans to purchase 990,000 and 495,000 shares, respectively, of the Company's Common Stock at prices ranging from $30.00 to $50.00 per share, exercisable at any time through December 31, 2004. In August 1998, the Executive Vice President resigned and under the terms of the option grant, the 495,000 shares were forfeited and cancelled. Accordingly, 990,000 options were outstanding at September 30, 1998. In 1998, the Company granted the then President and Chairman of the Board, since deceased, a separate stock option outside the Plans to purchase 275,000 shares of the Company's Common Stock at $36.36 per share at any time through December 31, 2001, which options were outstanding at September 30, 1998. In 1998, the Company also granted the Executive Vice President of Finance and Strategic Planning a separate stock option outside the Plans to purchase 235,000 shares of the Company's Common Stock at prices ranging from $17.00 to $42.50 exercisable at any time, which options were outstanding at September 30, 1998. During 1993, the Company granted the President and Chairman of the Board, and a Vice President, separate stock options outside of the Plans to purchase 825,000 and 148,500 shares, respectively, of the Company's Common Stock at $22.73 per share at any time through December 31, 1999, which options were outstanding at September 30, 1998. The number of shares subject to options and the per share option prices have been adjusted to reflect stock dividends. Exercisable options are nondilutive to earnings per share presented in the accompanying financial statements. -9- Item 1. Notes to Consolidated Financial Statements (Unaudited)--Continued 5. Contingent reinsurance commissions are accounted for on an earned basis and are accrued, in accordance with the terms of the applicable reinsurance agreement, based on the estimated level of profitability relating to such reinsured business. During the three months ended September 30, 1998 and 1997, such earned commissions accrued were $(605,000) and $506,000, respectively. During the nine months ended September 30, 1998 and 1997, such earned commissions accrued were $(624,000) and $419,000, respectively. The estimated profitability of the reinsured business is continually reviewed and as adjustments become necessary, such adjustments are reflected in current operations. 6. The components of the net reinsurance recoverables balances in the accompanying balance sheets were as follows:
September 30, 1998 December 31, 1997 ------------------ ----------------- (in thousands) Ceded paid losses recoverable $ 28,253 $ 21,460 Ceded unpaid losses and LAE 346,979 291,734 Ceded unearned premiums 136,485 111,927 Ceded reinsurance payable (36,787) (33,953) -------- -------- TOTAL $474,930 $391,168 ======== ========
The reinsurance ceded components of the amounts relating to the accompanying income statements were as follows:
Nine Months Ended September 30, ---------------------------------- 1998 1997 ---- ---- (in thousands) Ceded premiums earned $212,079 $131,571 Ceded incurred losses 136,393 89,865 Ceded incurred LAE 18,909 17,390
The effect of reinsurance on premiums written and earned at September 30, 1998 and 1997 was as follows:
Nine Months Ended September 30, ------------------------------------------------------------------------- 1998 1997 Premiums Premiums ---------------------------- --------------------------- Written Earned Written Earned ------- ------ ------- ------ (in thousands) Direct $612,013 $546,135 $410,931 $371,941 Assumed 40,147 33,733 13,766 16,670 Ceded (229,033) (212,079) (134,724) (131,571) -------- -------- -------- -------- Net $423,127 $367,789 $289,973 $257,040 ======== ======== ======== ========
-10- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations "SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: This Quarterly Report, on Form 10-Q, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 which are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. Such risks and uncertainties include the following: general economic conditions and conditions specific to the property and casualty insurance industry including its cyclical nature, regulatory changes and conditions, rating agency policies and practices, competitive factors, claims development and the impact thereof on loss reserves and the Company's reserving policies, the adequacy of the Company's reinsurance programs, developments in the securities markets and the impact on the Company's investment portfolio, the success of the Company's acquisition program, changes in generally accepted accounting principles and the risk factors listed from time to time in the Company's Securities and Exchange Commission filings. Accordingly, there can be no assurance that the actual results will conform to the forward-looking statements in this Quarterly Report. The following discussion and analysis should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this Report and with the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1997. Three Months Ended September 30, 1998 Compared to Three Months Ended September 30, 1997 The following table sets forth the net premiums earned by the principal lines of insurance written by the Company for the periods indicated and the dollar amount and percentage of change therein from period to period:
Three Months Increase (Decrease) Ended September 30, 1997 to 1998 ------------------------ ------------------------ 1998 1997 Amount % ------ ----- ------ --- (dollar amounts in thousands) General liability $ 31,477 $ 29,713 $ 1,764 5.9 Medical malpractice 28,495 27,101 1,394 5.1 Surety 18,761 13,483 5,278 39.1 Specialty personal lines 16,417 11,913 4,504 37.8 Credit related products 18,712 11,430 7,282 63.7 Commercial earthquake 2,135 1,481 654 44.2 Workers' compensation 1,484 2,113 (629) (29.8) Other 10,520 5,982 4,538 75.9 -------- -------- ------- Total $128,001 $103,216 $24,785 24.0 ======== ======== =======
The following table sets forth the Company's combined ratio calculated on a statutory basis ("Statutory Combined Ratio") and on the basis of generally accepted accounting principles ("GAAP Combined Ratio") for the periods indicated:
Statutory Combined Ratio GAAP Combined Ratio ------------------------ ------------------- Three Months Three Months Ended September 30, Ended September 30, ------------------------ --------------------- 1998 1997 1998 1997 ---- ---- ---- ---- Losses 45.3% 38.7% 43.6% 38.7% Loss adjustment expenses (LAE) 14.6 15.2 13.5 15.2 ---- ---- ---- ---- Losses and LAE 59.9 53.9 57.1 53.9 Acquisition, underwriting and other expenses 39.5 33.6 38.4 36.5 ---- ---- ---- ---- Total combined ratio 99.4% 87.5% 95.5% 90.4% ==== ==== ==== ====
-11- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations-Continued A variety of factors accounted for the 24.0% growth in net premiums earned, the principal factors being increases in the Company's core and new program business, and the acquisitions of Lyndon Property Insurance Company ("Lyndon") in June 1997, Western Indemnity Insurance Company ("Western") and Environmental Commercial Insurance Agency("ECI") in December 1997, and Acceleration Life Insurance Company ("Accel") in January 1998. This increase was partially offset by a decrease in commercial earthquake business due to an increased amount of reinsurance coverage purchased and a decrease in the number of risks insured, increased premiums ceded under an aggregate excess of loss reinsurance treaty, and the planned decrease in a general liability program for apartment owners. Net premiums earned in the general liability line increased primarily because of increases in various programs, including continued growth in social services, artisans contractor, demolition contractors, and excess employers' liability programs, and in the environmental programs underwritten by United Capitol. These increases were partially offset by a decrease in net premiums earned in the umbrella and liability programs for apartment owners. The increase in medical malpractice net premiums earned was primarily attributable to an increase in the number of physicians insured in the programs for psychiatrists and alternative risks, growth in the dental program endorsed by the Academy of General Dentistry and the acquisition of Western, partially offset by the sale of the Florida medical malpractice business effective December 1, 1997. Growth in surety net premiums earned continued in 1998, primarily attributable to expanded writings of license and permit bonds, landfill bonds and miscellaneous bonds. Net premiums earned for the workers' compensation line decreased, primarily as a result of a lesser required participation in the National Workers' Compensation Reinsurance Pools, partially offset by increased workers' compensation premiums written in the alternative risk program, and the acquisition of Western. Net premiums earned for the specialty personal lines increased primarily due to increased volume in the mobile homeowners' program and auto physical damage insurance attributable, in part, to the acquisition of Lyndon. Net premiums earned for the credit-related products increased as a result of the acquisitions of Lyndon and Accel. Net premiums earned in the commercial earthquake program increased primarily due to a decrease in the amount of premiums ceded. Net premiums earned for the other lines of business increased primarily due to an increase in volume in commercial package and ocean marine programs. Net investment income increased 29.2%, primarily as a result of the increased funds available for investments from the cash flow from regular operations and the contribution to investment income from the 1997 acquisitions, partially offset by the interest charge on funds held by the Company for the benefit of the reinsurer of the aggregate excess of loss reinsurance treaty. Total net investment income increased 5.0% due to the increase in net investment income, partially offset by realized capital losses of $3.3 million, of which $.7 million was attributable to the alternative investment portfolio and $2.6 million to other investments, including investments in equity investees. The average annual pre-tax yield on investments, excluding the interest charge on funds held under the aggregate excess loss of reinsurance treaty and realized capital gains and losses, was 6.6% compared to 6.3% for the 1997 period. The -12- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations-Continued average annual after-tax yield on investments, excluding the interest charge on funds held under the aggregate excess of loss reinsurance treaty and realized capital gains and losses, was 4.7% compared to 4.8% for the 1997 period. Total revenues increased 21.6% as a result of the above. Total expenses increased by 29.9%, compared to the 24.0% increase in net premiums earned. Losses and loss adjustment expenses ("LAE") increased at a 31.4% rate as a result of a 39.7% increase in losses and a 10.4% increase in LAE. The increase in losses and LAE was disproportionate to that of net premiums earned, resulting in a loss and LAE component of the GAAP Combined Ratio 3.2 percentage points higher than in the comparable 1997 period. The 1998 third quarter losses were negatively impacted by hurricane catastrophe losses of $1.2 million. The 1.9% increase in the amortization of policy acquisition costs, underwriting and other expenses was attributable primarily to an increase in direct commission expense resulting from growth in programs with higher commission rates, increased staffing and marketing expenses related to expansion, salary increases and the total expenses attributable to Lyndon, Western and ECI, partially offset by the recognition of $1.8 million of the amortization of the excess of net assets over the purchase price associated with the Lyndon acquisition. As the non-claim related component of the GAAP Combined Ratio increased at a greater rate than premiums earned, the non-claim component was 1.9 percentage points higher than in the comparable 1997 period. The total GAAP Combined Ratio increased by 5.1 percentage points to 95.5 % as a result of the above. The foregoing changes resulted in income before taxes of $18.2 million for the 1998 quarter, a 15.5% decrease over the comparable 1997 quarter. Net income for the quarter decreased by $.5 million, or 3.8%, from the 1997 quarter. Nine Months Ended September 30, 1998 Compared to Nine Months Ended September 30, 1997 The following table sets forth the net premiums earned by the principal lines of insurance written by the Company for the periods indicated and the dollar amount and percentage of change therein from period to period:
Nine Months Increase (Decrease) Ended September 30, 1997 to 1998 ----------------------------- --------------------- 1998 1997 Amount % -------- ------- -------- ---- (dollar amounts in thousands) General liability $ 95,161 $ 80,500 $ 14,661 18.2 Medical malpractice (including dental malpractice) 83,342 80,845 2,497 3.1 Surety 49,581 40,497 9,084 22.4 Specialty personal lines 44,808 18,019 26,789 148.7 Credit related products 38,948 14,286 24,662 172.6 Workers' compensation 6,872 3,606 3,266 90.6 Commercial earthquake 4,668 6,181 (1,513) (24.5) Other 44,409 13,106 31,303 238.8 -------- -------- -------- Total $367,789 $257,040 $110,749 43.1 ======== ======== ========
-13- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations-Continued The following table sets forth the Company's combined ratio calculated on a statutory basis ("Statutory Combined Ratio") and on the basis of generally accepted accounting principles ("GAAP Combined Ratio") for the periods indicated:
Statutory Combined Ratio GAAP Combined Ratio -------------------------- ---------------------- Nine Months Ended September 30, ---------------------------------------------------------- 1998 1997 1998 1997 -------- -------- -------- ------ Losses 46.3% 37.8% 44.6% 37.8% Loss adjustment expenses (LAE) 16.1 15.6 14.8 15.6 ---- ---- ---- ---- Losses and LAE 62.4 53.4 59.4 53.4 Acquisition, underwriting, and other expenses 36.1 35.0 37.1 35.8 ---- ---- ---- ---- Total combined ratio 98.5% 88.4% 96.5% 89.2% ==== ==== ==== ====
A variety of factors accounted for the 43.1% growth in net premiums earned, the principal factor being increases in the Company's core and new program businesses and the acquisitions of Lyndon in June 1997, Western and ECI in December 1997, and Accel in January 1998. This increase was partially offset by a decrease in commercial earthquake business due to an increased amount of reinsurance coverage purchased and a decrease in the number of risks insured, increased premiums ceded under the aggregate excess of loss reinsurance treaty, and the planned decrease in a general liability program for apartment owners. The increase in medical malpractice net premiums earned was primarily attributable to an increase in the number of physicians insured in the programs for psychiatrists and alternative risks, growth in the dental program endorsed by the Academy of General Dentistry and the acquisition of Western, partially offset by the sale of the Florida medical malpractice business, effective December 1, 1997. Net premiums earned for the general liability line increased primarily because of increases in various programs, including continued growth in the social services, artisans contractor, demolition contractors, and excess employers' liability programs, and in the environmental programs underwritten by United Capitol. These increases were partially offset by a decrease in net premiums earned in the umbrella and liability programs for apartment owners. Growth in surety net premiums earned continued in 1998, primarily attributable to expanded writings of license and permit bonds, landfill bonds and miscellaneous bonds. Net premiums earned for the specialty personal lines increased primarily due to increased volume in the mobile homeowners' program and auto physical damage insurance attributable, in part, to the acquisition of Lyndon. Net premiums earned for credit-related products increased as a result of the acquisitions of Lyndon and Accel. Net premiums earned for the workers' compensation line increased, primarily as a result of a greater required participation in the National Workers' Compensation Reinsurance Pools, workers' compensation premiums written in the alternative risk program, and the acquisition of Western. Net premiums earned for the commercial earthquake program decreased, primarily due to the planned decrease in this line of business. -14- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations-Continued Net premiums earned in the other lines of business increased, primarily due to an increase in volume in commercial package and ocean marine programs. Net investment income increased 43.8%, primarily as a result of the increased funds available for investments from the cash flow from regular operations and the contribution to investment income from the 1997 acquisitions, partially offset by the interest charge on funds held by the Company for the benefit of the reinsurer of the aggregate excess of loss reinsurance treaty. Total net investment income increased 40.2% due to the increase in net investment income from the 1997 third quarter, partially offset by a decrease in realized capital gains. The average annual pre-tax yield on investments, excluding the interest charge on funds held under the aggregate excess loss of reinsurance treaty and realized capital gains and losses, was 6.5% compared to 6.3% for the 1997 period. The average annual after-tax yield on investments, excluding the interest charge on funds held under the aggregate excess of loss reinsurance treaty and realized capital gains and losses, was 4.8% unchanged from the comparable 1997 period. Total revenues increased 44.2% as a result of the above. Total expenses increased by 52.6%, compared to the 43.1% increase in net premiums earned. Losses and loss adjustment expenses ("LAE") increased at a 59.1% rate as a result of a 69% increase in losses and a 35.2% increase in LAE. The increase in losses and LAE was disproportionate to that of net premiums earned due to a $6.8 million addition to reserves in the first quarter of 1998, predominantly in the medical malpractice line of business for accident years prior to 1995, substantially offset by a one-time gain of $4.4 million from the proceeds of an insurance policy on the life of the Company's late President and Chief Executive Officer, resulting in a loss and LAE component of the GAAP Combined Ratio 6 percentage points higher than in the comparable 1997 period. The .8% decrease in LAE resulted from a change in the line of business mix to those having a lower percentage relationship of LAE to losses partially offset by the $6.8 million addition to reserves, of which $2.0 million was allocated to LAE. The 1.3% increase in the amortization of policy acquisition costs, underwriting and other expenses was attributable primarily to an increase in direct commission expense resulting from growth in programs with higher commission rates, increased staffing and marketing expenses related to expansion, salary increases and the total expenses attributable to Lyndon, Western and ECI, partially offset by the recognition of $6.5 million of the amortization of the excess of net assets over the purchase price associated with the Lyndon acquisition. As the non-claim related component of the GAAP Combined Ratio increased at a greater rate than premiums earned, the non-claim component was 1.3 percentage points higher than in the comparable 1997 period. The total GAAP Combined Ratio increased by 7.3 percentage points to 96.5% as a result of the above. The foregoing changes resulted in income before taxes of $65,342 for the nine months ended September 30, 1998, a 10.1% increase from the comparable 1997 period. Net income for the period increased by $7,320 or 17.4%, from the 1997 period to $49,401. Liquidity and Capital Resources The Company is a holding company, receiving cash principally through sales of equities, borrowings, and dividends from its subsidiaries, most of which are subject to dividend restrictions. The ability of insurance and reinsurance companies to underwrite insurance and reinsurance is based on maintaining liquidity and capital resources sufficient to pay claims and expenses as they become due. The primary sources of liquidity for the Company's subsidiaries are funds generated from insurance and reinsurance premiums, investment income, commission and fee income, capital contributions from the Company and -15- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations-Continued proceeds from sales and maturities of portfolio investments. The principal expenditures of the Company are for payment of losses and LAE, operating expenses, commissions, and dividends to shareholders. At September 30, 1998, $2.3 billion in total assets were comprised of the following: 61.4% cash and investments, 20.7% net reinsurance recoverables, 5.2% premiums receivable, 2.6% home office building and equipment, 4.8% deferred expenses (federal income taxes and policy acquisition costs), and 5.3% other assets. The Company's subsidiaries maintain liquid operating positions and follow investment guidelines that are intended to provide for an acceptable return on investment while preserving capital, maintaining sufficient liquidity to meet their obligations and, as to the Company's insurance subsidiaries, maintaining a sufficient margin of capital and surplus to ensure their unimpaired ability to write insurance and assume reinsurance. The following table provides a profile of the Company's fixed maturities investment portfolio by rating at September 30, 1998:
Amount Market Reflected on Percent of S&P's/Moody's Rating Value Balance Sheet Portfolio -------------------- ------ ------------- ---------- (dollar amounts in thousands) AAA/Aaa (including U.S. Treasuries of $46,441) $ 637,849 $ 637,849 53.4% AA/Aa 206,672 206,672 17.3 A/A 240,764 240,764 20.2 BBB/Baa 77,848 77,848 6.5 All other 31,433 31,433 2.6 ---------- ---------- ----- Total $1,194,566 $1,194,566 100.0% ========== ========== =====
Cash flow generated from operations for the nine-month periods ended September 30, 1998 and 1997 was $116.5 million, and $85.1 million, respectively, amounts adequate to meet all obligations during the periods. In April 1992, the Company commenced paying quarterly cash dividends to its shareholders. Cash dividends declared in the nine-month periods ended September 30, 1998 and 1997 were $7,387,000 and $5,866,000 respectively. On June 3, 1997, the Company obtained a five-year $100,000,000 revolving loan credit facility from Deutsche Bank AG, New York Branch and/or Cayman Islands Branch ("Deutsche Bank"), from which it borrowed $62,000,000 at an initial floating interest rate of 6.04%, based upon Eurodollar interest rates, payable quarterly, to fund a portion of the $92,000,000 purchase price for Lyndon. During 1998, the Company increased the facility to $150,000,000 and is currently working with Deutsche Bank to have the facility increased to $200,000,000. As of September 30, 1998, the Company had an outstanding principal balance of $16,000,000. Analysis of Medical Malpractice Business, Reserves and Reinsurance During the third quarter of 1998, the Company initiated an in-depth analysis of its medical malpractice business, including a detailed review by its internal and independent actuaries of the adequacy of the loss and loss adjustment expense reserves. This analysis and review should be completed by the end of the fourth quarter of 1998. Changes, if any, in reserves determined to be appropriate as a result of -16- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations-Continued the review, will be included in operating results in the fourth quarter of 1998. In addition to this analysis, the Company is also reviewing the reinsurance for its medical malpractice business in terms of adequacy and appropriateness, which review should also be completed by the end of the fourth quarter. Any resulting changes in such reinsurance would be effective January 1, 1999. Reinsurance Effective January 1, 1995, the Company entered into a stop loss reinsurance agreement with Zurich Reinsurance (North America), Inc. ("Zurich N.A."), formerly Centre Reinsurance Company of New York, for accident years' commencing 1995. Under the agreement, Zurich N.A. provides reinsurance protection within certain accident year and contract aggregate dollar limits for losses and LAE in excess of a predetermined ratio of these expenses to net premiums earned for a given accident year for specified classes of business. The loss and LAE ratio above which the reinsurance provides coverage is 66%, 65%, and 64% for accident years 1995 through 1997, respectively. The maximum amount recoverable for an accident year is 175% of the reinsurance premium paid for the accident year, or $162,500,000 in the aggregate for the three years. Effective January 1, 1998, the Company entered into an aggregate excess of loss (stop loss) reinsurance agreement with Zurich N.A. for the 1998 and 1999 accident years. The new agreement includes selected programs underwritten by United Capitol, Western, and selected core programs of Frontier Insurance and Frontier Pacific, which were part of the original 1995-1997 reinsurance agreements. Under the terms of the new agreement, Zurich N.A. provides reinsurance protection within certain contract aggregate dollar limits for losses and LAE in excess of a predetermined ratio of these expenses to earned premiums for a given accident year for subject insurance programs. The maximum amount recoverable for an accident year is 240% of the reinsurance premium paid for the accident year, or $230,000,000 in the aggregate for the two years. Litigation with the State of New York In December 1990, the New York State Court of Claims rendered a decision in favor of the Company holding that a State University of New York ("SUNY") medical school faculty member engaged in the clinical practice of medicine at a SUNY medical facility, corollary to such physician's faculty activities, was within the scope of such physician's employment by SUNY and was protected against malpractice claims arising out of such activity by the State of New York and not under the Company's medical malpractice policy. The decision was affirmed on appeal by the New York State Appellate Division in November 1991 and not appealed by the State. In July 1992, the State of New York enacted legislation eliminating medical school faculty members of SUNY engaged in the clinical practice of medicine at a SUNY medical facility from indemnification by the State with respect to malpractice claims arising out of such activity, retroactive to July 1, 1991. In an opinion filed on September 3, 1993 the Court of Claims of the State of New York held, inter alia, that the July 1992 legislation by the State of New York eliminating SUNY medical school faculty members engaged in the clinical practice of medicine, as part of their employment by SUNY, from indemnification by the State with respect to malpractice claims arising out of such activity, was not to be applied retroactively. This decision was affirmed by the New York State Appellate Division in April 1994. Subsequently, in February 1995, the Appellate Division granted leave to Frontier and the State of New York to have the issues of Frontier's entitlement to recover its costs of defense and its costs of settlement ruled on by the State's highest Court, the New York Court of Appeals. In December 1995, the New York Court of Appeals ruled on this issue and concluded that Frontier was entitled to recoveries from the State for such medical malpractice claims. In January 1997, the New York Court of Claims rendered a decision granting summary judgement to the Company on three SUNY cases that were previously paid by the Company. This decision has been appealed by the State of New York. As a result of this decision, the Company believes that it will benefit economically by not being ultimately -17- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations-Continued responsible for certain claims against SUNY physicians for whom it presently carries reserves is entitled to reimbursement of certain claims previously paid; accordingly, as of December 31, 1997, Frontier recorded subrogation recoverables of approximately $27,000,000, representing the amount of claims already paid and the reserves currently held by Frontier on cases that management believes are reimbursable by the State of New York. In January 1998, the New York Legislature approved a bill to eliminate the right of SUNY physicians to obtain indemnification from New York State for claims arising out of their clinical practice of medicine, retroactive to August 5, 1978, which bill was vetoed by the Governor in February 1998. Prior to the veto, the Company's management and members of the offices of the Governor and of the Attorney General held joint discussions for a comprehensive settlement of the amount of reimbursement to which the Company is entitled from the State. On July 21, 1998, the Company announced that it had reached an agreement with the State of New York pertaining to the 83 pending closed cases involving physicians in Frontier's SUNY program, for which the Company recorded subrogation recoveries of $14,500,000. Under the agreement, the State will pay the Company $15,000,000 and the Company will forego $5,100,000 in interest. On September 22, 1998, the Company received the $15,000,000 payment from the State, as stipulated in the agreement. Discussions are continuing, with respect to open cases, but to date no resolution has been reached. To the extent that the amount of the actual recovery varies from the recorded subrogation recoveries, such difference will be reported in the period recognized. The Company is continuing to defend all SUNY faculty members against malpractice claims that have been asserted and is maintaining reserves therefor adjusted for the anticipated recoveries. The Year 2000 The Company has formed a committee, which includes senior management personnel from each of its' subsidiaries, to develop and implement a Year 2000 compliance plan. All internal mission-critical systems are scheduled to be Year 2000 compliant by December 31, 1998. Processes and procedures are currently in place to ensure the following: that all future internal development and testing follow Year 2000 standards; that all projects undertaken in the interim deliver Year 2000 compliant solutions; that all future third-party hardware and software acquisitions are Year 2000 compliant; and that all commercial third-party service providers are queried regarding their Year 2000 compliance plans. In addition, the Company is actively working with government agencies to determine their 2000 compliance plans and has begun making Year 2000 changes based on their mandates. To date, the costs related to Year 2000 compliance have not been material and have been expensed as incurred. However, these costs may be adversely affected by the continued need for availability of personnel and system resources, as well as any failure by third-party vendors, service providers, and agencies to properly address the Year 2000 issues. A contingency plan is currently being developed which will delineate the Company's responsibilities in the event that Year 2000 compliance is not achieved due to internal and/or external factors. While the Company recognizes the need for a contingency plan, it anticipates all of its systems will be Year 2000 compliant by December 31, 1998. The first of three Year 2000 system compliance tests has been successfully performed by the Company. The Company has conducted a comprehensive review of its underwriting guidelines and is seeking regulatory approval of an endorsement to be added to all commercial property and casualty policies which would preclude the Company from losses resulting from Year 2000 non-compliance. Upon approval, this endorsement is being added to each policy at either policy issuance or renewal. Underwriting policy and protocol are currently being developed to address non-approving states and -18- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations-Continued business situations which cannot be endorsed. To date, the Company has received endorsement approval from 41 jurisdictions, including the District of Columbia. For these reasons, the Company believes that its exposure to Year 2000 claims will not be significant. However, due to social and legal trends, it is impossible to predict what, if any, exposure insurance companies may ultimately have relating to Year 2000 claims. Shareholder Litigation The Company is a defendant in a class action alleging violations of federal securities laws by the Company and certain of its officers and directors. The complaint relates to the Company's November 5, 1994 announcement of its third quarter financial results and alleges that the Company previously had omitted and/or misrepresented material facts with respect to its earnings and profits. The Company believes the suit is without merit and has retained special legal counsel to contest the suit vigorously and believes that the Company's exposure to liability under such lawsuit, if any, would not have a material adverse effect on the Company's financial condition. -19- PART II - OTHER INFORMATION Item 1. Legal Proceedings Not applicable. Item 2. Changes in Securities Not applicable. Item 3. Defaults upon Senior Securities Not applicable. Item 4. Submission of Matters to a Vote of Security Holders Not applicable. Item 5. Other Information Not applicable. Item 6. Exhibits and Reports on Form 8-K a. Exhibits. (11) Computation of Per Share Earnings (27) Financial Data Schedule -20- SIGNATURE 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. DATE: November 13, 1998 Frontier Insurance Group, Inc. ------------------------------ (Registrant) By: /s/ Mark H. Mishler ------------------------------------ Mark H. Mishler Vice President - Treasurer and Chief Financial Officer (Principal Financial and Accounting Officer and Duly Authorized Officer) -21- EX-11 2 EXHIBIT 11 FRONTIER INSURANCE GROUP, INC. SEPTEMBER 30, FORM 10-Q EXHIBIT 11 Computation of Per Share Earnings (in thousands, except per share dollar amounts)
Three Months Nine Months Ended September 30, Ended September 30, Primary earnings per share: 1998 1997 1998 1997 ------- ------- ------ ------ Net Income $14,193 $ 14,758 $49,401 $42,081 ======= ========= ======= ======= Weighted average shares of common stock outstanding (1) 37,482 34,851 37,399 33,143 ====== ====== ====== ====== Net income per share of common stock outstanding (1) $.38 $.42 $1.32 $1.27 ==== ==== ===== ===== Fully diluted earnings per share: Net Income $16,000 $16,529 $54,760 $47,356 ======= ======= ======= ======= Weighted average shares of common stock and common stock equivalents outstanding (1) 45,699 42,945 45,644 41,237 ====== ====== ====== ====== Net income per share of common stock and common stock equivalents outstanding (1) $.35 $.38 $1.20 $1.15 ==== ==== ===== =====
- ------------- (1) Weighted average shares of common stock outstanding have been adjusted to give effect to all Company's common stock dividends and stock splits. Accordingly, net income per share of common stock has been adjusted. EX-27 3 EXHIBIT 27
7 1,000 9-MOS DEC-31-1998 JAN-01-1998 SEP-30-1998 1,194,566 0 0 57,479 0 0 1,370,427 39,074 0 101,504 2,295,663 852,380 529,028 0 0 16,000 376 0 0 504,697 2,295,663 367,789 56,492 607 0 218,511 88,354 48,262 65,342 15,941 49,401 0 0 0 49,401 1.32 1.20 483,539 202,537 0 35,963 174,678 486,295 (10,860)
-----END PRIVACY-ENHANCED MESSAGE-----