-----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, NhBe/BJiCj5/2gz7x0TPjim5bbDju+SDAU84TiEb4R/lZ60utWFWw6fz4lcys7uy 5hABhAQqSMtmHJVJY5rysQ== 0000914804-95-000005.txt : 19951120 0000914804-95-000005.hdr.sgml : 19951120 ACCESSION NUMBER: 0000914804-95-000005 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951115 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST FORTIS LIFE INSURANCE CO CENTRAL INDEX KEY: 0000914804 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 132699219 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 033-71690 FILM NUMBER: 95593395 BUSINESS ADDRESS: STREET 1: 220 SALINA MEADOWS PARKWAY STREET 2: P O BOX 3209 CITY: SYRACUSE STATE: NY ZIP: 13220 BUSINESS PHONE: 3154510066 MAIL ADDRESS: STREET 1: P O BOX 3209 STREET 2: 220 SALINA MEADOWS PARKWAY CITY: SYRACUSE STATE: NY ZIP: 13220 10-Q/A 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended: September 30, 1995 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: 33-71690 FIRST FORTIS LIFE INSURANCE COMPANY (Exact name of registrant as specified in its charter) NEW YORK State or other jurisdiction of incorporation or organization) 13-2699219 (I.R.S. Employer Identification No.) 220 SALINA MEADOWS PARKWAY, SUITE 255, SYRACUSE, NEW YORK 13220 (Address of principal executive offices) (315) 451-0066 (Registrant's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No First Fortis Life Insurance Company Balance Sheets September 30, December 31, 1995 1994 (Unaudited) Assets Investments: Fixed maturities, at fair value (amortized cost 1995--$107,006,473; 1994 -- $102,195,927) $109,404,757$ 97,337,464 Short-term investments 700,000 1,900,000 110,104,757 99,237,464 1,825,136 483,075 Cash Receivables: Uncollected premiums, less allowance of $100,000 5,323,067 4,595,706 Reinsurance recoverable on unpaid and paid losses 9,438,474 8,875,349 Prepaid federal income taxes and other 1,930,093 2,215,328 16,691,634 15,686,383 Accrued investment income 1,882,464 1,945,610 Deferred policy acquisition costs 3,209,000 4,595,000 Property and equipment at cost, less accumulated depreciation (1995-$1,134,124; 1994-$766,831 1,308,975 1,360,471 Goodwill 611,000 646,000 Total Assets $135,632,966 $123,954,003 Reserves, liabilities, and shareholder's equity Policy reserves and liabilities: Future policy benefit reserves: Life insurance $ 22,772,001 $ 21,233,643 Accident and health 56,951,440 52,844,913 79,723,441 74,078,566 Other policy claims and benefits payable 12,715,198 17,974,419 Other liabilities 10,849,472 5,860,473 Total policy reserves and liabilities 103,288,111 97,913,448 Shareholder's equity: Common stock, $20 par value 100,000 shares authorized, issued, and outstanding 2,000,000 2,000,000 Additional paid-in capital 30,440,000 30,440,000 Retained deficit (1,678,012) (1,540,982) Unrealized appreciation (depreciation) of investment securities, net 1,582,867 (4,858,463) Total shareholder's equity 32,344,855 26,040,555 Total reserves, liabilities, and shareholder's equity $135,632,966 $123,954,003 See notes to financial statements. First Fortis Life Insurance Company Statements of Operations (Unaudited) Three months ended September 30, 1995 1994 Revenues Insurance operations: Life insurance premiums $ 5,092,793 $ 4,336,162 Accident and health premiums 14,318,558 18,072,844 Net investment income 1,765,857 1,605,976 Realized gains (losses) on investments 1,620,033 (338,876) Other income 136,818 32,100 Total revenues 22,934,059 23,708,206 Benefits and expenses Benefits to policyholders: Life insurance 5,857,045 2,617,948 Accident and health 11,026,159 18,435,957 Amortization of deferred policy acquisition costs 462,000 454,000 Insurance commissions 1,385,461 1,349,533 General and administrative expenses 3,231,214 3,283,757 Total benefits and expenses 21,961,879 26,141,195 Income (loss) before federal income taxes 972,180 (2,432,989) Federal income taxes (benefit) 288,209 (1,038,308) Net income (loss) $ 683,971 $ (1,394,681) See notes to financial statements. First Fortis Life Insurance Company Statements of Operations (Unaudited) Nine months ended September 30, 1995 1994 Revenues Insurance operations: Life insurance premiums $ 14,026,054 $ 15,103,530 Accident and health premiums 48,588,034 54,021,265 Net investment income 5,370,296 4,579,214 Realized gains (losses) on investments 2,000,296 (507,830) Other income 180,615 253,160 Total revenues 70,165,295 73,449,339 Benefits and expenses Benefits to policyholders: Life insurance 11,890,619 12,517,182 Accident and health 42,919,160 50,686,103 Amortization of deferred policy acquisition costs 1,386,000 1,362,000 Insurance commissions 4,085,807 4,109,489 General and administrative expenses 10,245,712 9,452,037 Total benefits and expenses 70,527,298 78,126,811 Loss before federal income taxes (362,003) (4,677,472) Federal income taxes (benefit) (224,973) (1,944,308) Net loss $ (137,030) $ (2,733,164) See notes to financial statements. First Fortis Life Insurance Company Statements of Cash Flows (Unaudited) Nine months ended September 30, 1995 1994 Operating activities Net loss $ (137,030) $ (2,733,164) Adjustments to reconcile net loss to net cash provided by operating activities: Increase in future policy benefit reserves and other policy claims and benefits 385,664 4,746,534 Decrease in income taxes (224,953) (3,387,126) Amortization of policy acquisition costs 1,386,000 1,362,000 Increase (decrease) in other liabilities 4,988,999 (3,118,889) Depreciation and amortization 402,293 293,698 (Increase) decrease in uncollected premiums and accrued investment income (664,215) 1,864,126 (Increase) decrease in reinsurance recoverable (563,125) 571,811 Net realized (gains) losses on investments (2,000,296) 507,830 Other (305,229) (1,544,115) Net cash provided by (used in) operating activities 3,268,108 (1,437,295) Investing activities Purchases of fixed maturity investments (104,461,152) (64,889,262) Sales and maturities of fixed maturity investments 101,650,902 60,790,653 Decrease in equity securities and short-term investments 1,200,000 5,635,906 Purchase of property and equipment (315,797) (269,746) Net cash provided by (used in) investing activities (1,926,047) 1,267,551 Increase (decrease) in cash 1,342,061 (169,744) Cash at beginning of period 483,075 1,803,384 Cash at end of period $ 1,825,136 $ 1,633,640 See notes to financial statements.
First Fortis Life Insurance Company Notes to Financial Statements June 30, 1995 and 1994 (Unaudited) General The accompanying unaudited financial statements of First Fortis Life Insurance Company ("First Fortis" or "Company"), contain all adjustments necessary to present fairly the balance sheet as of September 30, 1995 and the related statements of operations for the three and nine months ended September 30, 1995 and 1994, and cash flows for the nine months ended September 30, 1995 and 1994. Investments The following is a summary of the amortized cost and fair value of fixed maturity securities: Gross Gross Amortized Unrealized Unrealized Fair Cost Gain Loss Value June 30, 1995: Governments $ 22,293,774 $ 531,265 $ (12,797) $ 22,812,242 States and municipal 1,115,478 71,502 - 1,186,980 Public utilities 4,949,630 134,191 (16,971) 5,066,850 Industrial and miscellaneous 78,647,591 1,912,843 (221,749) 80,338,685 Total $107,006,473 $2,649,801 $ (251,517) $109,404,757
The fair values for fixed maturity securities are based on quoted market prices, where available. For fixed maturity securities not actively traded, fair values are estimated using values obtained from independent pricing services or, in the case of private placements, are estimated by discounting expected future cash flows using a current market rate applicable to the yield, credit quality, and maturity of the investments. The amortized cost and fair value of fixed maturity securities at September 30, 1995, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Amortized Fair Cost Value Due in one year or less $ 2,987,193 $ 2,997,026 Due after one year through five years 26,477,228 26,819,163 Due after five years through ten years 53,263,046 54,207,479 Due after ten years 24,279,006 25,381,089 $107,006,473 $109,404,757
First Fortis Life Insurance Company Notes to Financial Statements (Continued) Investments (Continued) Proceeds from sales and maturities of fixed maturity securities were $101,650,902 and $60,790,653 for the nine month period ended September 30, 1995 and 1994, respectively. Gross gains of $2,688,576 and $514,368 and gross losses of $688,280 and $1,022,198 were realized on the sales during the nine month period ended September 30, 1995 and 1994. Net Investment Income and Net Realized Gains (Losses) on Investments Major categories of net investment income and realized gains (losses) on investments for the nine months ended September 30 were as follows: Net Net Realized Investment Gains (Losses) Income on Investments 1995 1994 1995 1994 Fixed maturities $5,569,236 $4,692,009 $2,000,296$ (512,313) Short-term investments 785 36,455 - 4,483 5,570,021 4,728,464 $2,000,296 (507,830) Expenses (199,725) (149,250) Net investment income $5,370,296 $4,579,214
Federal Income Taxes As of September 30, 1995 and December 31, 1994, respectively, the Company had a deferred tax asset valuation allowance of $1,515,531 and $3,167,408 of which $-0- and $1,651,877 related to unrealized depreciation on investment securities. The $1,651,877 decrease in the deferred tax asset valuation allowance was recognized in the "unrealized appreciation (depreciation) of investment securities, net" component of shareholder's equity. Subsequent Event On October 24, 1995, the Company announced that it will cease selling its group medical products effective January 1, 1996. The Company will continue to renew and service existing medical business. Management is in the process of estimating costs related to this decision. Management's Discussion and Analysis of Financial Condition and Results of Operations As of and for the Three and the Nine Months Ended September 30, 1995 and 1994 REVENUES The decrease in 1995 year to date life insurance premiums as compared to 1994 resulted from the lapse of a minimum premium group life insurance account in mid-1994. This account did not have a significant impact on the Company's operating results. Total accident and health premium decreased in 1995 as compared to 1994. On-going marketing efforts have continued to increase First Fortis' disability income and dental premiums, whereas premium rate action on the Company's small-group medical business has contributed to a decline of approximately 50% of inforce fully insured medical lives and an $18 million decrease in annualized inforce premium since December 31, 1994. The Company continues to match investment portfolio composition to liquidity needs and capital requirements. Changes in interest rates resulted in recognition of realized gains in 1995. BENEFITS During the third quarter 1995, the Company's group life claims ratio was higher than expected as a result of increased mortality and larger average claim amounts. Improved recovery rates on existing group disability income claimants and premium rate increases resulting in the reduction of inforce fully insured medical lives have improved accident and health benefit results from 1994 to 1995. EXPENSES First Fortis continues to monitor its insurance commission rate structures, and, as indicated by market conditions, periodically adjusts rates paid. Rates paid vary by product type, group size and duration. Commission rate decreases were offset by changes in the mix of inforce business thus increasing the commissions to premium ratio from 1994 to 1995. Higher medical claims volume in the first six months of 1995 increased the Company's general and administrative expense to premium ratio as compared to 1994. Improved medical and disability income benefit experience in the third quarter 1995 reduced the associated claims handling expenses, thus reducing third quarter 1995 general and administrative expenses as compared to third quarter 1994, first quarter 1995 and second quarter 1995. Management's Discussion and Analysis of Financial Condition and Results of Operations As of and for the Three and the Nine Months Ended September 30, 1995 and 1994 (Continued) Liquidity and Capital Resources The liquidity requirements of the Company have been met by funds provided from operations, including investment income. Funds are principally used to provide for policy benefits, operating expenses, commissions and investment purchases. The Company expects its operating activities to continue to generate sufficient funds. The National Association of Insurance Commissioners' risk-based capital formula helps to establish guidelines for capital levels. At September 30, 1995, First Fortis' capital exceeded the minimum recommended risk-based capital level. As of September 30, 1995, 99.5% of the Company's fixed maturity securities consisted of investment grade bonds. Regulation First Fortis is subject to the laws and regulations established by the New York State Insurance Department governing insurance business conducted in New York State. Periodic audits are conducted by the New York Insurance Department related to the Company's compliance with these laws and regulations. To date there have been no adverse findings regarding First Fortis operations. Part II. Other Information Item 1: Legal Proceedings None Item 2: Changes in Securities None Item 3: Defaults Upon Senior Securities None Item 4: Submission of Matters to a Vote of Security Holders None Item 5: Other Information None Item 6: Exhibits and Reports on Form 8-K a) None b) No Forms 8-K have been filed during the quarter for which this report is filed. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. First Fortis Life Insurance Company (Registrant) Date: November 13, 1995 /s/ Larry M. Cains Larry M. Cains, Treasurer EX-27 2
7 0000914804 FIRST FORTIS LIFE INSURANCE COMPANY 1 9-MOS DEC-31-1995 JAN-01-1995 SEP-30-1995 109,404,757 0 0 0 0 0 110,104,757 1,825,136 9,438,474 3,209,000 135,632,966 79,723,441 0 12,715,198 0 0 2,000,000 0 0 30,344,855 135,632,966 62,614,088 5,370,296 2,000,296 180,615 54,809,779 0 1,386,000 (362,003) (224,973) (137,030) 0 0 0 (137,030) 0 0 66,136,369 0 0 0 0 0 0
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