Date of report (Date of earliest event reported)
|
January 17, 2006 | |
Bermuda | 1-16561 | 66-0619270 | |||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
Cumberland House, 1 Victoria Street, Hamilton, Bermuda | HM 11 | |
(Address of Principal Executive Offices) | (Zip Code) |
Registrants telephone number, including area code:
|
(441) 296-7667 | |
Item 1.01. | Entry Into a Definitive Material Agreement. |
Item 2.01. | Completion of Acquisition or Disposition of Assets. |
Item 9.01. | Financial Statements and Exhibits. |
Reported | Adjustments | Pro Forma | ||||||||||
Assets |
||||||||||||
Cash & invested assets |
$ | 92,899,685 | $ | (32,490,788 | )(A) | $ | 60,408,897 | |||||
Funds withheld at interest |
50,962,885 | (50,962,885 | )(B) | | ||||||||
Accrued investment income |
677,662 | 677,662 | ||||||||||
Receivable for reinsurance ceded |
77,016,411 | 1,237,429 | )(C) | 78,253,840 | ||||||||
Other reinsurance receivables |
3,021,878 | (2,586,522 | )(D) | 435,356 | ||||||||
Deferred policy acquisition costs |
5,592,316 | (5,592,316 | )(E) | | ||||||||
Other assets |
401,850 | 401,850 | ||||||||||
Total assets |
$ | 230,572,687 | $ | (90,395,082 | ) | $ | 140,177,605 | |||||
Liabilities |
||||||||||||
Reserves for future policy benefits |
$ | 103,758,582 | $ | (24,626,061 | )(F) | $ | 79,132,521 | |||||
Interest sensitive contracts liability |
50,691,337 | (50,691,337 | )(G) | | ||||||||
Other reinsurance liabilities |
13,202,482 | (5,767,747 | )(H) | 7,434,735 | ||||||||
Accounts payable and accrued expenses |
2,867,363 | (49,145 | )(I) | 2,818,218 | ||||||||
Total liabilities |
$ | 170,519,764 | $ | (81,134,290 | ) | $ | 89,385,474 | |||||
Stockholders Equity |
||||||||||||
Total Stockholders Equity |
$ | 60,052,923 | $ | (9,260,792 | )(J) | $ | 50,792,131 | |||||
Total Liabilities and Stockholders Equity |
$ | 230,572,687 | $ | (90,395,082 | ) | $ | 140,177,605 | |||||
(A) | To record the transfer of cash and invested assets to the Wilton Subsidiaries. | |
(B) | To record the transfer of Funds withheld at interest to the Wilton Subsidiaries. | |
(C) | To record ceded benefit reserves related to reinsurance agreements transferred to the Wilton Subsidiaries. | |
(D) | To record the transfer of premiums receivable related to the life reinsurance agreements novated to the Wilton Subsidiaries. | |
(E) | To write-off the Deferred policy acquisition costs associated with the Treaties novated to the Wilton Subsidiaries and to record Deferred policy acquisition costs related to life reinsurance agreements coinsured by the Wilton Subsidiaries. | |
(F) | To record the transfer of benefit reserves associated with the life reinsurance agreements novated to the Wilton Subsidiaries. | |
(G) | To record the transfer of Interest sensitive contracts liabilities associated with the annuity reinsurance agreement novated to one of the Wilton Subsidiaries. | |
(H) | To record the transfer of Other reinsurance liabilities associated with the life reinsurance agreements novated to the Wilton Subsidiaries. | |
(I) | To record the transfer of excise tax payable associated with the life reinsurance agreements novated to the Wilton Subsidiaries. | |
(J) | To record to net effect of the novation and coinsurance transactions with the Wilton Subsidiaries in Stockholders equity. |
Wilton | ||||||||||||
Transaction | ||||||||||||
Reported | Adjustments | Pro Forma | ||||||||||
Revenues |
||||||||||||
Net premiums |
$ | 12,001,008 | $ | (11,325,272 | )(A) | $ | 675,736 | |||||
Investment income, net of related expenses |
4,806,689 | (1,938,486 | )(B) | 2,868,203 | ||||||||
Net realized investment gains |
500,650 | | 500,650 | |||||||||
Net change in fair value of embedded derivatives |
1,105,853 | (1,105,853 | )(C) | | ||||||||
Surrender fees and other revenues |
94,887 | (94,887 | )(D) | | ||||||||
Total Revenues |
$ | 18,509,087 | $ | (14,464,498 | ) | $ | 4,044,589 | |||||
Benefits and Expenses |
||||||||||||
Claims and policy benefits |
$ | 10,781,404 | $ | (12,675,325 | )(E) | $ | (1,893,921 | ) | ||||
Interest credited to interest sensitive products |
985,614 | (985,614 | )(F) | | ||||||||
Policy acquisition costs and other insurance expenses |
3,079,459 | (2,370,965 | )(G) | 708,494 | ||||||||
Operating expenses |
7,599,723 | | 7,599,723 | |||||||||
Total Benefits and Expenses |
$ | 22,446,200 | $ | (16,031,904 | ) | $ | 6,414,296 | |||||
Loss before cumulative effect of a change in accounting principal |
$ | (3,937,113 | ) | $ | 1,567,406 | $ | (2,369,707 | ) | ||||
Cumulative effect of a change in accounting principal |
| | | |||||||||
Net Loss |
$ | (3,937,113 | ) | $ | 1,567,406 | $ | (2,369,707 | ) | ||||
Loss per common share before cumulative effect of change in accounting
principal per common share: |
||||||||||||
Basic |
$ | (0.16 | ) | $ | 0.06 | $ | (0.09 | ) |
Wilton | ||||||||||||
Transaction | ||||||||||||
Reported | Adjustments | Pro Forma | ||||||||||
Diluted |
$ | (0.16 | ) | $ | 0.06 | $ | (0.09 | ) | ||||
Cumulative effect of a change in accounting principal per common share: |
||||||||||||
Basic |
$ | | $ | | ||||||||
Diluted |
$ | | $ | | ||||||||
Net loss per common share: |
||||||||||||
Basic |
$ | (0.16 | ) | $ | 0.06 | $ | (0.09 | ) | ||||
Diluted |
$ | (0.16 | ) | $ | 0.06 | $ | (0.09 | ) |
(A) | To reflect reduced Premiums as if the life reinsurance treaties novated to or coinsured by the Wilton Subsidiaries did not exist during the first nine months of 2005. | |
(B) | To reflect reduced Net investment income as if the annuity reinsurance treaty novated to one of the Wilton Subsidiaries did not exist during the first nine months of 2005. | |
(C) | To reflect no embedded derivative as if the annuity reinsurance treaty novated to one of the Wilton Subsidiaries did not exist during the first nine months of 2005. | |
(D) | To reflect reduced Surrender fees as if the annuity reinsurance treaty novated to one of the Wilton Subsidiaries did not exist during the first nine months of 2005. | |
(E) | To reflect reduced Claim and Policy Benefits as if the life reinsurance treaties novated to or coinsured by the Wilton Subsidiaries did not exist during the first nine months of 2005. | |
(F) | To reflect reduced Interest credited to interest sensitive products as if the annuity reinsurance treaty novated to one of the Wilton Subsidiaries did not exist during the first nine months of 2005. | |
(G) | To reflect reduced Policy acquisition costs and other insurance expenses as if the Treaties novated to or coinsured by the Wilton Subsidiaries did not exist during the first nine months of 2005. |
Pro Forma | ||||||||||||||||||||
(as adjusted | ||||||||||||||||||||
for the 2004 | ||||||||||||||||||||
Pro Forma | Adjustments | transactions | ||||||||||||||||||
Adjustments | (as adjusted | (for the | and the | |||||||||||||||||
(for the 2004 | for the 2004 | Wilton | Wilton | |||||||||||||||||
Reported | transactions) | transactions) | transaction) | transaction) | ||||||||||||||||
Revenues |
||||||||||||||||||||
Net premiums |
$ | 48,297,706 | $ | (30,325,348 | )(A) | $ | 17,972,358 | $ | (15,898,984 | )(H) | $ | 2,073,374 | ||||||||
Investment income, net of related expenses |
21,697,563 | (13,439,098 | )(B) | 8,258,465 | (2,923,139 | )(I) | 5,335,326 | |||||||||||||
Net realized investment gains |
439,536 | | 439,536 | 439,536 | ||||||||||||||||
Net change in fair value of embedded derivatives |
2,181,070 | | 2,181,070 | (2,181,070 | )(J) | | ||||||||||||||
Surrender fees and other revenues |
4,475,691 | (4,257,721 | )(C) | 217,970 | (217,970 | )(K) | | |||||||||||||
Total Revenues |
$ | 77,091,566 | $ | (48,022,167 | ) | $ | 29,069,399 | $ | (21,221,163 | ) | $ | 7,848,237 | ||||||||
Benefits and Expenses |
||||||||||||||||||||
Claims and policy benefits |
$ | 14,101,129 | (306,552 | )(D) | $ | 13,794,577 | (13,990,062 | )(L) | (195,485 | ) | ||||||||||
Interest credited to interest sensitive products |
5,399,460 | (3,530,883 | )(E) | 1,868,577 | (1,868,577 | )(M) | | |||||||||||||
Policy acquisition costs and other insurance expenses |
110,922,948 | (105,602,277 | )(F) | 5,320,671 | (3,987,088 | )(N) | 1,333,583 | |||||||||||||
Operating expenses |
14,628,524 | | 14,628,524 | 14,628,524 | ||||||||||||||||
Total Benefits and Expenses |
$ | 145,052,061 | (109,439,712 | ) | $ | 35,612,349 | $ | (19,845,727 | ) | $ | 15,766,622 | |||||||||
Pro Forma | ||||||||||||||||||||
(as adjusted | ||||||||||||||||||||
for the 2004 | ||||||||||||||||||||
Pro Forma | Adjustments | transactions | ||||||||||||||||||
Adjustments | (as adjusted | (for the | and the | |||||||||||||||||
(for the 2004 | for the 2004 | Wilton | Wilton | |||||||||||||||||
Reported | transactions) | transactions) | transaction) | transaction) | ||||||||||||||||
Loss before cumulative effect of a change in
accounting principal |
$ | (67,960,495 | ) | 61,417,545 | $ | (6,542,950 | ) | $ | (1,375,436 | ) | $ | (7,918,386 | ) | |||||||
Cumulative effect of a change in accounting principal |
(365,960 | ) | 365,960 | (G) | | | | |||||||||||||
Net Loss |
$ | (68,326,455 | ) | $ | 61,783,505 | $ | (6,542,950 | ) | $ | (1,375,436 | ) | $ | (7,918,386 | ) | ||||||
Loss per common share before cumulative effect of
change in accounting principal per common share: |
||||||||||||||||||||
Basic |
$ | (2.63 | ) | $ | 2.38 | $ | (0.25 | ) | $ | (0.05 | ) | $ | (0.31 | ) | ||||||
Diluted |
$ | (2.63 | ) | $ | 2.38 | $ | (0.25 | ) | $ | (0.05 | ) | $ | (0.31 | ) | ||||||
Cumulative effect of a change in accounting principal
per common share: |
||||||||||||||||||||
Basic |
$ | (0.01 | ) | $ | 0.01 | $ | 0.00 | $ | 0.00 | $ | 0.00 | |||||||||
Diluted |
$ | (0.01 | ) | $ | 0.01 | $ | 0.00 | $ | 0.00 | $ | 0.00 | |||||||||
Net loss per common share: |
||||||||||||||||||||
Basic |
$ | (2.64 | ) | $ | 2.39 | $ | (0.25 | ) | $ | (0.05 | ) | $ | (0.31 | ) | ||||||
Diluted |
$ | (2.64 | ) | $ | 2.39 | $ | (0.25 | ) | $ | (0.05 | ) | $ | (0.31 | ) |
(A) | To reflect reduced Premiums as if the Scottish Re Limited (Scottish Re) and Fidelity and Guaranty Life Insurance Company (F&G) life reinsurance agreements novated to Transamerica Occidental Life Insurance Company (Transamerica) and as if the guaranteed minimum death benefits (GMDB) and guaranteed minimum income benefits (GMIB) agreement recaptured by Connecticut General Life Insurance Company (CIGNA) did not exist in 2004 | |
(B) | To reflect reduced Net investment income as if the Transamerica annuity agreement did not exist in 2004. | |
(C) | To reflect reduced Surrender fees and other revenues as if the Transamerica annuity agreement did not exist in 2004. | |
(D) | To reflect reduced Claim and Policy Benefits as if the Scottish Re and F&G life reinsurance agreements novated to Transamerica and as if the GMDB/ GMIB agreement recaptured by CIGNA did not exist in 2004. | |
(E) | To reflect reduced Interest credited to interest sensitive products as if the Transamerica annuity agreement did not exist in 2004. Includes the release of interest sensitive contracts liability net of funds withheld at interest and the termination premium of $14,000,000 paid to Transamerica in consideration of the termination of this agreement as of December 1, 2004. | |
(F) | To reflect reduced Policy acquisition costs and other insurance expenses as if the Transamerica annuity agreement, the Scottish Re and F&G life reinsurance agreements novated to Transamerica and the GMDB/ GMIB agreement recaptured by CIGNA did not exist in 2004. Includes the write down of deferred acquisition costs of approximately $63,100,000 associated with the termination of the Transamerica annuity agreement and approximately $24,900,000 associated with the novation of Scottish Re and F&G life agreements as of December 31, 2004. | |
(G) | To reflect the reversal of the application of SOP 03-1 to the GMDB/ GMIB agreement recaptured by CIGNA and the Transamerica annuity agreement as if those agreements did not exist in 2004. | |
(H) | To reflect reduced Premiums as if the life reinsurance agreements novated to or coinsured by Wilton did not exist in 2004. | |
(I) | To reflect reduced Net investment income as if the annuity reinsurance agreement novated to one of the Wilton Subsidiaries did not exist in 2004. | |
(J) | To reflect no embedded derivative as if the annuity reinsurance treaty novated to one of the Wilton Subsidiaries did not exist in 2004. | |
(K) | To reflect reduced Surrender fees as if the annuity reinsurance agreement novated to one of the Wilton Subsidiaries did not exist in 2004. | |
(L) | To reflect reduced Claim and Policy Benefits as if the life reinsurance agreements novated to or coinsured by the Wilton Subsidiaries did not exist in 2004. | |
(M) | To reflect reduced Interest credited to interest sensitive products as if the annuity reinsurance agreement novated to one of the Wilton Subsidiaries did not exist during in 2004. | |
(N) | To reflect reduced Policy acquisition costs and other insurance expenses as if the Treaties novated to or coinsured by the Wilton Subsidiaries did not exist in 2004. |
ANNUITY AND LIFE RE (HOLDINGS), LTD. |
||||
Date: January 18, 2006 | By: | /s/ John W. Lockwood | ||
John W. Lockwood | ||||
Chief Financial Officer |