Fresh Start Accounting (Tables)

9 Months Ended

Sep. 30, 2012

Assets and Liabilities at Fair Value

Adjustments recorded to the Predecessor, after giving effect to the implementation of the Plan and to record assets and liabilities at fair value pursuant to the adoption of fresh start accounting are summarized below (dollars in thousands):

	Predecessor March 19, 2012		Reorganization Adjustments  (a)			Fair Value Adjustments (b)			Successor March 19, 2012
ASSETS
Investments held in trust, at fair value:
Fixed-maturity securities	$	303,169	$	—		$	—		$	303,169
Cash equivalents held in trust		26,249		—			—			26,249
Total investments held in trust		329,418		—			—			329,418
Cash and cash equivalents		7,014		75,000	(c)		—			82,014
Fixed-maturity securities, at fair value		6,049		—			—			6,049
Accrued investment income		2,313		—			—			2,313
Other assets		3,389		210,000	(d)		(210,000	) (i)		3,389
Total assets	$	348,183	$	285,000		$	(210,000	)	$	423,183
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Notes payable—principal	$	—	$	130,000	(e)	$	—		$	130,000
Losses and loss adjustment reserves		141,010		—			—			141,010
Losses payable		7,585		—			—			7,585
Unearned premiums		409		—			—			409
Accrued ceding commissions		466		—			—			466
Loss contract fair market value reserve		—		—			63,064	(j)		63,064
Other liabilities		27,156		(23,109	) (f)		2	(f)		4,049
Total liabilities		176,626		106,891			63,066			346,583
Shareholders’ equity:
Common stock, $.00001 par value; 500,000,000 authorized, 200,000,000 shares issued and outstanding		—		2	(g)		—			2
Common stock, $1 par value, 1,000 shares issued and outstanding		1		—			(1	) (k)		—
Additional paid-in capital (Predecessor)		69,879		—			(69,879	) (l)		—
Additional paid-in capital Successor		—		154,998	(g)		(78,400	) (m)		76,598
Retained earnings		101,677		23,109	(h)		(124,786	) (n)		—
Total shareholders’ equity		171,557		178,109			(273,066	)		76,600
Total liabilities and shareholders’ equity	$	348,183	$	285,000		$	(210,000	)	$	423,183

Adjustment in Fair Value and Reorganization

Predecessor retained earnings	$	101,677
Adjustment for carve-out allocations		23,109
Predecessor adjusted retained earnings		124,786
Predecessor additional paid-in capital		69,879
Predecessor common stock eliminated in consolidation		(1	)
Predecessor equity value		194,664
Fair market value of WMMRC		131,600
Loss contract fair market reserve allowance	$	63,064

Adjustment Reflects the Elimination of Adjusted Retained Earnings

Predecessor retained earnings	$	101,677
Adjustment for carve-out allocations		23,109
Predecessor adjusted retained earnings		124,786
Predecessor additional paid-in capital		69,879
Predecessor common stock eliminated in consolidation		(1	)
Predecessor equity value		194,664
Fair market value of WMMRC		131,600
Loss contract fair market reserve allowance	$	63,064

(k) This adjustment reflects the elimination of common stock of the Predecessor.

(l) This adjustment reflects the elimination of additional paid-in capital of the Predecessor.

(m) This adjustment reflects the reduction of equity value resulting from fresh start accounting. It is comprised of a reduction (relative to Court assigned FMV) in WMMRC’s FMV totaling $8.4 million and the elimination of the Court assigned value of $70 million related to NOLs. Although the Company has substantial NOLs they are subject to a 100 percent valuation allowance as described in Note 7: Federal Income Taxes, and there can be no assurance the Company will be able to realize any benefit from the NOLs.

Fair market value of WMMRC (Court assigned)	$	140,000
Fair market value of WMMRC		131,600
Fair market value reduction		8,400
Elimination of Court assigned value related to NOLs		70,000
Total change in fair market value affecting Equity Value	$	78,400
Court assigned Equity Value recorded as additional paid-in capital	$	154,998
Total change in fair market value affecting Equity Value		78,400
Additional paid-in capital at March 19, 2012	$	76,598

(n) This adjustment reflects the elimination of adjusted retained earnings of the Predecessor.

Predecessor retained earnings	$	101,677
Adjustment for carve-out allocations		23,109
Predecessor adjusted retained earnings	$	124,786

Adjustment Reflects the Reduction of Equity Value Resulting from Fresh Start Accounting

Fair market value of WMMRC (Court assigned)	$	140,000
Fair market value of WMMRC		131,600
Fair market value reduction		8,400
Elimination of Court assigned value related to NOLs		70,000
Total change in fair market value affecting Equity Value	$	78,400
Court assigned Equity Value recorded as additional paid-in capital	$	154,998
Total change in fair market value affecting Equity Value		78,400
Additional paid-in capital at March 19, 2012	$	76,598