ESG Re Limited
Condensed Consolidated Balance Sheets
(U.S. dollars in thousands except share and per share
data)
March 31, December
2003 31,
(unaudited) 2002
--------------------
U.S. dollars in
thousands except
shares and share
data
ASSETS
Investments $72,056 $82,325
Cash and cash equivalents 26,567 13,653
Other investments 4,093 7,446
--------------------
Total investments and cash 102,716 103,424
Accrued investment income 977 826
Management fees receivable 468 697
Reinsurance balances receivable 144,935 180,173
Reinsurance recoverable on incurred losses 13,988 36,685
Funds retained by ceding companies 29,345 27,661
Prepaid reinsurance premiums 246 26
Deferred acquisition costs 27,869 35,723
Fair value of Foreign currency forward contracts -- 1,796
Other assets 8,294 8,567
Cash and cash equivalents held in a fiduciary
capacity 1,570 1,320
--------------------
TOTAL ASSETS $330,408 $396,898
--------------------
LIABILITIES
Unpaid losses and loss expenses $132,800 $162,676
Unearned premiums 54,593 78,371
Acquisition costs payable 25,413 37,065
Reinsurance balances payable 59,950 51,434
Fair value of foreign currency forward contracts 473 --
Payable for Securities purchased 2,308 4,367
Accrued expenses, accounts payable, and other
liabilities 10,153 14,991
Fiduciary liabilities 1,570 1,320
--------------------
Total liabilities 287,260 350,224
--------------------
SHAREHOLDERS' EQUITY
Common shares, par value $1 per share; 100,000,000
shares authorized; 11,100,678 shares issued and
outstanding for 2003 and 11,100,678 shares issued
and outstanding for 2002 11,101 11,101
Additional paid-in capital 208,756 208,721
Foreign currency translation adjustments (2,437) (2,305)
Unrealized gains/(losses) on securities 1,617 3,255
--------------------
Accumulated other comprehensive income (820) 950
--------------------
Retained deficit (175,889)(174,098)
--------------------
Total shareholders' equity 43,148 46,674
--------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $330,408 $396,898
--------------------
ESG RE LIMITED
Condensed Consolidated Statements of Operations
(U.S. dollars in thousands except share and per share
data)
(Unaudited)
Three Months Ended
March 31, March 31,
2003 2002 (as
restated)
------------------------
REVENUES
Net premiums written $(7,978) $25,907
Change in unearned premiums 24,089 13,031
------------------------
Net premiums earned 16,111 38,938
Management fee revenue 362 507
Net investment income 970 1,848
Net realized investment gain (loss) 798 (1,077)
------------------------
18,241 40,216
------------------------
EXPENSES
Losses and loss expenses 7,422 25,286
Acquisition costs 6,166 13,214
Administrative expenses 6,444 7,245
------------------------
20,032 45,745
------------------------
NET LOSS BEFORE TAXES (1,791) (5,529)
Income tax expense -- --
------------------------
NET LOSS AFTER TAXES $(1,791) $(5,529)
========================
PER SHARE DATA
Basic net loss per share $(0.16) $(0.47)
Diluted net loss per share $(0.16) $(0.47)
========================
Weighted average shares outstanding
Basic 11,100,678 11,831,068
Diluted 11,100,678 11,831,068
========================
ESG RE LIMITED
Product Mix (Gross Written Premium)
ESG Reinsurance Segment
The distribution of gross premiums written, by line of
business after excluding the write down of estimated premiums in the quarter
ended March 31, 2003, for the three months ended March 31, 2003 and 2002 and
for the year ended December 31, 2002 was as follows:
Three months Three months Year ended
ended ended December 31,
March 31, March 31, 2002 2002
2003
----------------------------------------------------------------------
Medical 0.0% 60.3% 82.5%
Personal Accident 67.5% 38.3% 15.9%
Credit 26.0% (1.0)% (1.4)%
Life 2.0% 1.1% 0.7%
Other 4.5% 1.3% 2.3%
-------------------------------------------------------
Total 100.0% 100.0 % 100.0 %
----------------------------------------------------------------------
ESG Direct Segment
The distribution of gross premiums written by line of
business for the three months ended March 31, 2003 and 2002 and for the year
ended December 31, 2002 was as follows:
Three months Three months Year ended
ended ended December 31, 2002
March 31, 2003 March 31, 2002
----------------------------------------------------------------------
Personal Accident 57.8% 85.1% 83.3%
Credit 42.2% 14.9% 16.7%
----------------------------------------------------------------------
Total 100.0% 100.0% 100.0%
----------------------------------------------------------------------
Geographic Mix (Gross Written Premium)
The distribution of gross premiums written, by
geographic region, after excluding the write down of estimated premiums in the
quarter ended March 31, 2003, for the three months ended March 31, 2003 and
2002 and for the year ended December 31, 2002 was as follows:
ESG Reinsurance
Three months ended Three months ended Year ended
March 31, 2003 March 31, 2002 December 31, 2002
----------------------------------------------------------------------
Western Europe 76.8% 18.4% 4.2%
North America 0.6% 62.1% 62.4%
Latin America 16.1% 17.5% 4.9%
Asia 6.5% 0.1% -
Other 0.0% 1.9% 28.5%
----------------------------------------------------------------------
Total 100.0% 100.0 % 100.0 %
----------------------------------------------------------------------
ESG Direct
Three months ended Three months ended Year ended
March 31, 2003 March 31, 2002 December 31, 2002
----------------------------------------------------------------------
Western Europe 42.2% 14.9% 16.7%
Asia 57.8% 85.1% 83.3%
----------------------------------------------------------------------
Total 100.0 % 100.0% 100.0 %
----------------------------------------------------------------------
Historic Development of the Portfolio;
Technical Result by Business Segment by Underwriting
Year
The technical profit by business segment underwriting
year for the financial years ended December 31, 1998 through 2002 and for the
quarter ended March 31, 2003 are as follows;
Reinsurance Segment
Technical Results ($'m) Underwriting Year
Financial Year ended 1997 1998 1999 2000 2001 2002 2003 Total
----------------------------------------------
1998 n/a 10.8 - - - - - 10.8
1999 n/a (11.2) (5.0) - - - - (16.2)
2000 n/a (18.1) (6.6) (6.8) - - - (31.5)
2001 n/a 0.3 (7.9) 3.5 2.1 - - (2.0)
2002 (1.7) (9.3)(12.8) 0.2 1.9 4.6 - (17.1)
2003 0.0 2.3 1.0 (0.3)(1.8) 0.5 0.2 1.9
----------------------------------------------
Total (1.7) (25.2)(31.3) (3.4) 2.2 5.1 0.2 (54.1)
Direct Segment
Technical Results ($'m) Underwriting Year
Financial Year ended 1999 2000 2001 2002 2003 Total
----------------------------------------------
1999 0.0 - - - - -
2000 0.2 2.1 - - - 2.3
2001 0.1 0.3 4.4 - - 4.8
2002 (0.2) 0.3 0.5 0.1 - 0.7
2003 0.0 (0.1) (0.7) 0.3 1.1 0.6
----------------------------------------------
Total 0.1 2.6 4.2 0.4 1.1 8.4
Loss & Acquisition Ratios by Underwriting Year
The loss and acquisition cost ratios by underwriting
year for the financial years ended December 31, 1998 through 2002 and for the
quarter ended March 31, 2003 are as follows:
L&A Ratio (%) Underwriting Year
1998 1999 2000 2001 2002 2003
-----------------------------------------
L&A at 31 Dec. 1998 89% - - - - -
L&A at 31 Dec. 1999 102% 102% - - - -
L&A at 31 Dec. 2000 110% 105% 104% - - -
L&A at 31 Dec. 2001 112% 107% 100% 76% - -
L&A at 31 Dec. 2002 119% 112% 101% 88% 72% -
L&A at 31 Mar 2003 118% 112% 101% 90% 75% 66%
Loss & Acquisition Ratios by Business Segment by
Underwriting Year
The loss and acquisition cost ratios by business
segment by underwriting year for the financial years ended December 31, 1998
through 2002 and for the quarter ended March 31, 2003 are as follows;
Reinsurance Segment
L&A Ratio (%) Underwriting Year
1998 1999 2000 2001 2002 2003
-------------------------------------------
L&A at 31 Dec. 1998 89% - - - - -
L&A at 31 Dec. 1999 102% 102% - - - -
L&A at 31 Dec. 2000 110% 104% 107% - - -
L&A at 31 Dec. 2001 112% 107% 102% 92% - -
L&A at 31 Dec. 2002 119% 112% 102% 95% 90% -
L&A at 31 Mar. 2003 118% 112% 102% 97% 90% 93%
Direct Segment
L&A Ratio (%) Underwriting Year
1999 2000 2001 2002 2003
-------------------------------------------
L&A at 31 Dec. 1999 86% - - - -
L&A at 31 Dec. 2000 46% 58% - - -
L&A at 31 Dec. 2001 42% 53% 74% - -
L&A at 31 Dec. 2002 37% 43% 52% 49% -
L&A at 31 Mar. 2003 37% 44% 53% 49% 65%
ESG RE LIMITED
Reinsurance Operating Ratios (Net Earned Premium)
The key operating ratios for the Reinsurance Segment
for the three months ended March 31, 2003 and 2002 are as follows;
Three months ended Personal
March 31, 2003 Medical Accident Credit Life Other Total
----------------------------------------------------------------------
Loss ratio 409.4% (16.1)% n/m 63.4% 98.8% 52.0%
Acquisition expense ratio (55.5)% 44.5% n/m 11.9% 8.3% 27.2%
----------------------------------------------------------------------
Loss and Acquisition
Expense Ratio 353.9% 28.4% n/m 75.3% 107.1% 79.2%
----------------------------------------------------------------------
Operating expense ratio 34.7%
------
Combined ratio 113.9%
======
Three months ended Personal
March 31, 2002 Medical Accident Credit Life Other Total
----------------------------------------------------------------------
Loss Ratio 77.0% 60.7% 35.2% n/m 16.0% 73.5%
Acquisition expense Ratio 28.2% 33.1% 37.5% n/m 31.8% 29.7%
----------------------------------------------------------------------
Loss and Acquisition
Expense Ratio 105.2% 93.8% 72.7% n/m 47.8% 103.2%
----------------------------------------------------------------------
Operating expense Ratio 13.8%
-------
Combined Ratio 117.0%
=======
ESG RE LIMITED
Direct Marketing Operating Ratios (Net Earned Premium)
The key operating ratios for the Direct Marketing
segment for the three months ended March 31, 2003 and 2002 are as follows;
Three months ended Personal
March 31, 2003 Accident Credit Total
----------------------------------------------------------------------
Loss Ratio 32.4% 117.3% 38.2%
Acquisition expense Ratio 55.4% 19.7% 53.0%
----------------------------------------------------------------------
Loss and Acquisition
Expense Ratio 87.8% 137.0% 91.2%
----------------------------------------------------------------------
Operating expense Ratio 45.6%
-----------
Combined Ratio 136.8%
===========
Three months ended Personal
March 31, 2002 Accident Credit Total
----------------------------------------------------------------------
Loss Ratio 9.4% 12.4% 9.6%
Acquisition expense Ratio 61.8% 54.3% 61.3%
----------------------------------------------------------------------
Loss and Acquisition
Expense Ratio 71.2% 66.7% 70.9%
----------------------------------------------------------------------
Operating expense Ratio 47.7%
-------------
Combined Ratio 118.6%
=============
ESG RE LIMITED
Fixed Maturity Investment Portfolio at March 31, 2003
Average
U.S. dollars in thousands Fair Duration Market Credit
Value (Years) Yield Rating
----------------------------------------------------------------------
Corporate securities 7,989 1.7 2.5% AAA
U.S. treasury securities and
obligations of U.S. government AAA
corporations and agencies 27,929 1.6 1.4%
Mortgage & Asset backed securities 5,729 1.6 7.4% AAA
Obligations of states and political
subdivisions 7,674 2.0 3.6% AAA
Foreign currency debt securities 22,735 3.3 4.2% AAA
----------------------------------------------------------------------
Total 72,056 2.1 3.1%
----------------------------------------------------------------------