ESG Re Limited Reports 2002 Third Quarter Results.Business Editors HAMILTON Hamilton, city, Bermuda Hamilton, city (1990 est. pop. 3,100), capital of Bermuda, on Bermuda Island. It is a port at the head of Great Sound, a huge lagoon and deepwater harbor protected by coral reefs. , Bermuda--(BUSINESS WIRE)--Nov. 8, 2002 ESG ESG Enterprise Strategy Group (Veritas) ESG Emergency Shelter Grant (Florida, USA) ESG Expeditionary Strike Group ESG Electronic Service Guide (used in DVB) Re Limited (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : ESREF) today reported its results for the quarter ended September September: see month. 2002. The Technical result was a profit of $3.4 million. This represents a technical profit on continuing business of $3.8 million and a loss of $0.4 million on discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: business. Investment income amounted to $1.5 million for the quarter representing a yield of 5.0% on the average portfolio of $120 million. Management Fee income amounted to $0.6 million. At September 30, 2002 shareholders equity increased to $72.9 million from $71.8 million at June June: see month. 30, 2002. This represents an increase in book value per share by $0.08 to $6.12. This results primarily from an increase in unrealized gains Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. on the investment portfolio of $2.2 million in the quarter. In addition to operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. of $6.8 million, there was a foreign exchange loss of $0.6 million. The quarter resulted in an overall net loss of $1.4 million or $0.11 per share. Alasdair Davis, CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. commented, "We are assessing our cash flow and the impact of a share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. on cash flow and our U.S. tax status. We expect to complete this assessment by year end". In addition, he stated, "We continue to correspond with the SEC over the downward adjustment to our Foreign Currency Translation account and restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. of our Financial Statements for the year ended December December: see month. 31, 2001 and the quarter ended March 31, 2002 as reported in our press release of August 15, 2002." Comparative Results For the three months ended September 30, 2002, we had a net loss of $1.4 million compared to a net income of $0.1 million for the third quarter of 2001. The net loss per share for the three months ended September 30, 2002 was $0.11 compared with a net income per share of $0.01 for the third quarter 2001. The net operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. for the third quarter 2002, which excludes realized investment gains, was $0.15 per share. Net operating loss for the third quarter 2001, which excludes realized investment gains and losses and loss on equity investments, was $0.01 per share. For the nine months ended September 30, 2002, we had a net loss of $26.1 million compared to a net loss of $9.8 million for the nine months ended of 2001. The net loss per share for the nine months ended September 30, 2002 was $2.20 compared with a net loss per share of $0.83 for the comparable period in 2001. The net operating loss for the nine months ended 2002, which excludes realized investment losses, was $2.11 per share. Net operating loss for the nine months ended 2001, which excludes realized investment gains and losses and loss on equity investments, was $0.61 per share. Premiums For the three months ended September 30, 2002, we underwrote a book of $26.3 million of gross premiums, of which $(14.1) million related to co-reinsurers and $2.3 million retroceded, thereby assuming $38.1 million for its own account. For the comparable three-month period ended September 30, 2001, ESG underwrote $43.3 million, of which it assumed $8.9 million for its own account. The increase in net written premiums over its comparable period in 2001, is primarily due to the impact, in the third quarter of last year, of a 50% co-reinsurance management agreement between ESG Re North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. Ltd., a subsidiary of ESG, and Ace Capital Re Overseas Ltd. Entered into on November November: see month. 1, 2001, with effect from January January: see month. 1, 2001. For the nine months ended September 30, 2002, we underwrote a book of $90.3 million of gross premiums, of which $(8.3) million was placed with co-reinsurers and $12.4 million retroceded, thereby assuming $86.2 million for our own account. For the comparable nine month period ended September 30, 2001, we underwrote $122.0 million, of which we assumed $75.7 million for our own account. Revenues Total revenues for the three months ended September 30, 2002 were $48.3 million, consisting of net premiums earned of $45.7 million, net investment income of $1.5 million, net realized investment gains of $0.5 million and management fee revenue of $0.7 million. For the three months ended September 30, 2001, total revenues were $29.8 million, consisting of net premiums earned of $27.2 million, net investment income of $2.5 million, realized investment gains of $0.2 million, management fee revenue of $(0.1) million. Total revenues for the nine months ended September 30, 2002 were $111.8 million, consisting of net premiums earned of $105.6 million, net investment income of $5.5 million, net realized investment losses of $1.2 million and management fee revenue of $1.8 million. For the nine months ended September 30, 2001, total revenues were $115.0 million, consisting of net premiums earned of $108.0 million, net investment income of $9.2 million, realized investment losses of $2.5 million, management fee revenue of $0.3 million and loss on equity investments of less than $0.1 million. Expenses For the three months ended September 30, 2002, ESG's expenses were $49.6 million, consisting of $25.2 million of losses and loss expense, $17.1 million of acquisition costs, and $7.4 million of operating expenses. Total expenses for the three months ended September 30, 2001 were $29.7 million, consisting of $14.8 million of losses and loss expenses, $8.6 million of acquisition costs, and $6.4 million of operating expenses. For the nine months ended September 30, 2002, ESG's expenses were $137.9 million, consisting of $78.2 million of losses and loss expense, $34.6 million of acquisition costs, and $25.2 million of operating expenses. Total expenses for the nine months ended September 30, 2001 were $124.8 million, consisting of $71.0 million of losses and loss expenses, $33.6 million of acquisition costs, and $20.2 million of operating expenses. The increase in operating expenses for the three months and nine months ended September 30, 2002, is primarily due to unrealized foreign exchange losses incurred on the revaluation Revaluation A calculated adjustment to a country's official exchange rate relative to a chosen baseline. The baseline can be anything from wage rates to the price of gold to a foreign currency. In a fixed exchange rate regime, only a decision by a country's government (i.e. of assets and liabilities denominated in foreign currencies for reporting purposes. During the quarter we initiated a foreign exchange hedging hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market. strategy and policy designed to minimize In a graphical environment, to hide an application that is currently displayed on screen. For example, in Windows and Mac, the application's window is removed from the screen and represented by an icon on the Windows Taskbar. In the Mac, the icon is placed in the Dock. See Win Minimize windows. the impact of currency rate fluctuations on our statement of operations See Income statement. . Book Value At September 30, 2002, total assets were $427.3 million and shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. was $72.9 million, or $6.12 per common share. At December 31, 2001, shareholders' equity per common share was $8.04. Operating Ratios Operating Ratio A ratio that shows the efficiency of management by comparing operating expense to net sales: ESG Reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. The loss and acquisition expense ratios for the three months ended September 30, 2002 and 2001, were 94.9% and 87.8%, respectively. The combined ratio for the three months ended September 30, 2002 was 108.1%, compared to 108.7% for the three months ended September 30, 2001. The operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. ratio for the third quarter 2002 was 13.2%, compared to 20.9% for the third quarter 2001. The loss and acquisition expense ratios for the nine months ended September 30, 2002 and 2001, were 114.2% and 100.4%, respectively. The combined ratio for the nine months ended September 30, 2002 was 135.4%, compared to 116.1% for the nine months ended September 30, 2001. The operating expense ratio for the third quarter 2002 was 21.2%, compared to 15.7% for the nine months ended 2001. ESG Direct The loss and acquisition expense ratios for the three months ended September 30, 2002 and 2001, were 78.0% and 74.1% respectively. The combined ratio for the three months ended September 30, 2002 was 110.8%, compared to 109.5% for the three months ended September 30, 2001. The operating expenses ratio for the third quarter 2002 was 32.8%, compared to 35.4% for the third quarter 2001. The loss and acquisition expense ratios for the nine months ended September 30, 2002 and 2001 were 68.9% and 71.5% respectively. The combined ratio for the nine months ended September 30, 2002 was 104.5%, compared to 109.3% for the nine months ended September 30, 2001. The operating expense ratio for the third quarter 2002 was 35.6%, compared to 37.8% for the nine months ended 2001. Recent Developments Resignation of Director Anthony J. Hobson Hobson may refer to: People with the surname Hobson:
Changes in Personnel Margaret Margaret, 1930–2002, British princess, second daughter of King George VI and sister of Queen Elizabeth II, b. Glamis, Scotland. In 1960 she married a commoner, the photographer Antony Armstrong-Jones, who was created earl of Snowdon in 1961. L. Webster Webster, town (1990 pop. 16,196), Worcester co., S Mass., near the Conn. line; settled c.1713, set off from Dudley and Oxford and inc. 1832. The chief manufactures are footwear, fabrics, and textiles. , currently our Chief Administrative Officer A chief administrative officer (CAO) is responsible for administrative management of private, public or governmental corporations. The CAO is one of the highest ranking members of an organization, managing daily operations and usually reporting directly to the chief executive and General Counsel, has been appointed ap·point tr.v. ap·point·ed, ap·point·ing, ap·points 1. To select or designate to fill an office or a position: appointed her the chief operating officer of the company. 2. Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. , General Counsel and Corporate Secretary, effective immediately. In addition to her current responsibilities she will manage ESG's financial functions. Joe Quinn Joe Quinn can refer to:
At the end of September, 2002, Conor Conor is an Irish male first name that may have been derived either from the Irish name Conchubhair. The name "Conchobhar" literally translates as "Consciousness like a Barr (top of a hill or a hill fort) (in modern spelling Conchúr or Cnochúr Heery, who had been serving as Group Controller, left ESG to join a family-owned business outside Dublin Dublin, city, Republic of Ireland Dublin, Irish Baile Átha Cliath, county borough (1991 pop. 915,516), Leinster, capital of the Republic of Ireland, on Dublin Bay at the mouth of the Liffey River. . Aodh O'Murchu, a Chartered Accountant char·tered accountant n. Chiefly British Abbr. CA A member of one of the institutes of accountants granted a royal charter. of 15 years experience gained primarily in International Insurance/Reinsurance and other financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. industries, has been appointed Group Controller effective immediately. He has been Assistant Controller for ESG for 1.5 years. Further Information ESG officers will respond to questions submitted in relation to these third quarter results. Please contact Investor Relations Investor relations The process by which the corporation communicates with its investors. . ESG Re Ltd provides medical, personal accident, credit life, disability and special risks re-insurance RE-INSURANCE, mar. contr. An insurance made by a former insurer, his executors, administrators, or assigns, to protect himself and his estate from a risk to which they were liable by the first insurance. 2. It differs from a double insurance (q.v. to insurers and selected re-insurers on a worldwide basis. The company distinguishes itself from its competition by offering re-insurance products and services that help its ceding cede tr.v. ced·ed, ced·ing, cedes 1. To surrender possession of, especially by treaty. See Synonyms at relinquish. 2. clients to manage their risks more effectively. ESG provides solutions to specific underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. problems, actuarial ac·tu·ar·y n. pl. ac·tu·ar·ies A statistician who computes insurance risks and premiums. [Latin support, product design and loss prevention. ESG is building on its reinsurance expertise by developing its direct marketing business. ESG will deliver innovative business opportunities and client focused solutions to its affinity The relationship that a person has to the blood relatives of a spouse by virtue of the marriage. The doctrine of affinity developed from a Maxim of Canon Law that a Husband and Wife were made one by their marriage. There are three types of affinity. partners using distribution methods such as direct mail, telemarketing telemarketing, the practice of selling goods or services to customers by means of the telephone or of surveying consumer preferences in telephone conversations. and bancassurance Bancassurance A French term referring to the selling of insurance through a bank's established distribution channels. Notes: The result is a bank that can offer banking, insurance, lending, and investment products to a customer. . Uncertainties related to forward looking statements: Certain statements and information included in this Press Release constitute "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , and Section 21E of the Securities Exchange Act of 1934 as amended. These statements express our intentions, strategies, or predictions for the future. Forward looking statements in this Press Release include, among other things, statements regarding: (1) the assessment of the impact of a share repurchase on ESG's cash flows and U.S. tax status, (2)ESG's ability to hedge currency rate fluctuations in its statement of operations, (3) ESG's ability to distinguish itself from competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. , and (4) the development of ESG's direct marketing business. These forward looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of ESG to be materially different from any future results, performance or achievements expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by the forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . These factors include, among other things: the economic recession, volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the in the insurance industry, inadequate loss reserves, medical cost increases, credit risks, loss of key clients, direct marketing risks, competition, competitive pricing practices, credit rating downgrade Downgrade A negative change in the rating of a security. Notes: For example, an analyst may downgrade a stock from strong buy to buy, or a bond rating agency may downgrade a bond from AAA to AA. , loss of key employees, interest rate fluctuations, investment risks, foreign currency exchange risks, inflation, legislative and regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. changes, tax exposure, litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. risks, and cyclical cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. changes in the market. A further discussion of factors that could affect ESG's results is included in reports filed by ESG with the Securities and Exchange Commission, including ESG's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2001 and Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the quarter ended June 30, 2002. ESG RE LIMITED Condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. Consolidated Balance Sheets consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. (U.S. dollars in thousands except share and per share data) (Unaudited)
September 30, December 31,
2002 2001
----------------------------
ASSETS (Unaudited)
------------------------------------------
Investments available for sale, at
fair value (cost: $95,990 and $146,369) $99,290 $144,844
Cash and cash equivalents 9,998 3,915
Other investments 7,044 6,172
----------------------------
Total investments and cash 116,332 154,931
Accrued investment income 1,464 2,028
Management fees receivable 650 296
Reinsurance balances receivable 181,311 190,526
Reinsurance recoverable on incurred
losses 46,394 28,630
Funds retained by ceding companies 30,236 24,629
Prepaid reinsurance premiums 996 1,523
Deferred acquisition costs 39,317 40,308
Receivable for securities sold -- 2,318
Deferred tax asset 1,354 1,339
Other assets 8,339 7,277
Cash and cash equivalents held in
a fiduciary capacity 879 1,724
----------------------------
TOTAL ASSETS $427,272 $455,529
------------------------------------------============================
LIABILITIES
------------------------------------------
Unpaid losses and loss expenses $166,763 $146,383
Unearned premiums 85,363 104,395
Acquisition costs payable 40,622 43,110
Reinsurance balances payable 50,343 51,927
Unrealized loss on forward exchange
contracts 19 --
Accrued expenses, accounts payable,
and other liabilities ($54 and $85
due to related parties) 10,425 12,920
Fiduciary liabilities 879 1,724
----------------------------
Total liabilities 354,414 360,459
----------------------------
SHAREHOLDERS' EQUITY
------------------------------------------
Preference shares, 50,000,000 shares
authorized; no shares issued and
outstanding for 2002 and 2001 -- --
Class B common shares, 100,000,000
shares authorized; no shares issued
and outstanding for
2002 and 2001 -- --
Common shares, par value $1 per share;
100,000,000 shares authorized;
11,906,605
shares issued and outstanding for 2002
and 11,831,063 shares issued
and outstanding for 2001 11,907 11,831
Additional paid-in capital 208,430 208,221
Unearned compensation (288) (333)
Accumulated other comprehensive income:
Foreign currency translation adjustments,
net of tax Unrealized gains on
securities,
net of reclassification adjustments and (1,434) (201)
tax 3,300 (1,525)
----------------------------
Accumulated other comprehensive income 1,866 (1,726)
----------------------------
Retained (deficit) (149,057) (122,923)
----------------------------
Total shareholders' equity 72,858 95,070
----------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $427,272 $455,529
------------------------------------------============================
ESG RE LIMITED
Condensed Consolidated Statements of Operations
(U.S. dollars in thousands except share and per share data)
(Unaudited)
Three Months Ended Nine Months Ended
------------------------------------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2002 2001 2002 2001
------------------------------------------------
REVENUES
----------------------
Net premiums
written $38,170 $8,898 $86,149 $75,763
Change in unearned
premiums 7,492 18,334 19,463 32,260
------------------------------------------------
Net premiums earned 45,662 27,232 105,612 108,023
Management fee
revenue 652 (132) 1,831 288
Net investment
income 1,501 2,512 5,462 9,247
Loss on equity
investments -- -- -- (29)
Net realized
investment gains
(losses) 459 215 (1,155) (2,517)
------------------------------------------------
48,274 29,827 111,750 115,012
------------------------------------------------
EXPENSES
----------------------
Losses and loss
expenses 25,178 14,762 78,177 70,985
Acquisition costs 17,076 8,561 34,552 33,564
Administrative
expenses 7,383 6,407 25,155 20,225
------------------------------------------------
49,637 29,730 137,884 124,774
------------------------------------------------
NET (LOSS) /INCOME
BEFORE TAXES (1,363) 97 (26,134) (9,762)
----------------------
Income tax expense -- -- -- --
================================================
NET (LOSS) /INCOME
AFTER TAXES $(1,363) $97 $(26,134) $(9,762)
----------------------================================================
PER SHARE DATA
----------------------
Basic net
(loss)/income per
share $(0.11) $0.01 $(2.20) $(0.83)
Diluted net
(loss)/income per
share $(0.11) $0.01 $(2.20) $(0.83)
================================================
Weighted average
shares outstanding
Basic 11,862,241 11,787,725 11,862,241 11,786,000
Diluted 11,862,241 11,787,725 11,862,241 11,786,000
================================================
Dividends declared per
share $ -- $ -- $ -- $ --
================================================
ESG RE LIMITED
Product Mix (Gross Written Premium)
Group Split by Segment and Line of Business
The distribution of gross written premium by business segment and line
of business for the three months ended September 30, 2002 was as
follows;
Total ESG Reinsurance ESG Direct
Three months ended Three months ended Three months
Sept. 30, 2002 Sept. 30, 2002 ended Sept.
30, 2002
----------------------------------------------------------------------
Medical 76.1% 76.1% 0.0%
Personal Accident 14.6% 0.8% 13.8%
Credit 1.1% (2.0)% 3.1%
Life -- -- 0.0%
Other 8.2% 8.2% 0.0%
-------------------------------------------------------
Total 100.0% 83.1% 16.9%
----------------------------------------------------------------------
ESG Reinsurance Segment
The distribution of gross premiums written by line of business for the
three months ended September 30, 2002 and 2001 and for the year ended
December 31, 2001 was as follows:
Three months ended Three months ended Twelve months
September 30, 2002 September 30, 2001 ended
December
31, 2001
----------------------------------------------------------------------
Medical 91.6% 99.9% 95.1%
Personal Accident 0.9% 7.1% 9.5%
Credit (2.5)% (0.9)% (5.3)%
Life n/m (8.2)% (1.2)%
Other 10.0% 2.1% 1.9%
------------------------------------------------------
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 September 30, 2002 and 2001 and for the year ended
December 31, 2001 was as follows:
Three months ended Three months Year ended
September 30, 2002 ended December 31,
September 30, 2001
2001
----------------------------------------------------------------------
Personal Accident 81.6% n/m 69.8%
Credit 18.4% n/m 30.2%
----------------------------------------------------------------------
Total 100.0% n/m 100.0%
----------------------------------------------------------------------
Geographic Mix (Gross Written Premium)
The distribution of gross premiums written by geographic region for
the three months ended September 30, 2002 and 2001 and for the year
ended December 31, 2001 was as follows:
ESG Reinsurance
Three months ended Three months ended Year ended
September 30, 2002 September 30, 2001 December 31,
2001
----------------------------------------------------------------------
Western Europe 20.6% 0.5% (11.2)%
North America 64.5% 83.7% 100.3%
Latin America 12.9% 6.2% 17.8%
Asia 0.8% (4.3)% 0%
Other 1.2% 13.9% (6.9)%
----------------------------------------------------------------------
Total 100.0 % 100.0 % 100.0 %
----------------------------------------------------------------------
ESG Direct
Three months ended Three months Year ended
September 30, 2002 ended December 31,
September 30, 2001
2001
------------------------------------ ---------------- --------------
Western Europe 18.4% n/m 30.2%
Asia 81.6% n/m 69.8%
------------------------------------ ---------------- --------------
Total 100.0 % n/m 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 2001 and for the
period ended September 30, 2002 are as follows;
Technical Result Underwriting Year
($'m)
1997 1998 1999 2000
Financial Year ended Reins Reins Direct Reins Direct Reins
--------------------------------------------------
1998 n/a 10.8 - - - -
1999 n/a (11.2) 0.0 (5.0) - -
2000 n/a (18.1) 0.2 (6.6) 2.1 (6.8)
2001 n/a 0.3 0.1 (7.9) 0.3 3.5
2002 (year to date) (1.1) (9.0) 0.0 (9.0) 0.3 2.7
--------------------------------------------------
Total (1.1) (27.2) 0.3 (28.5) 2.7 (0.6)
2001 2002
Financial Year ended Direct Reins Direct Reins Total
--------------------------------------------------
1998 - - - - 10.8
1999 - - - - (16.2)
2000 - - - - (29.2)
2001 4.4 2.1 - - 2.8
2002 (year to date) 0.5 1.0 4.6 2.9 (7.1)
--------------------------------------------------
Total 4.9 3.1 4.6 2.9 (38.9)
Loss & Acquisition Ratios by Underwriting Year
The loss and acquisition cost ratios by underwriting year for the
financial years ended December 31, 1998 through 2001 and for the
period ended September 30, 2002 are as follows:
L&A Ratio (%) Underwriting Year
1998 1999 2000 2001 2002
--------------------------------------------------
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 30 Sept. 2002 117% 110% 99% 88% 67%
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 2001 and for the period ended September 30, 2002 are as
follows;
L&A Ratio (%) Underwriting Year
1998 1999 2000
Direct Reins Direct Reins Direct Reins
-------------------------------------------------
L&A at 31 Dec. 1998 n/a 89% - - - -
L&A at 31 Dec. 1999 n/a 102% 86% 102% - -
L&A at 31 Dec. 2000 n/a 110% 46% 104% 58% 107%
L&A at 31 Dec. 2001 n/a 112% 42% 107% 53% 102%
L&A at 30 Sept. 2002 n/a 117% 37% 110% 43% 101%
2001 2002
Direct Reins Direct Reins
-------------------------------------------------
L&A at 31 Dec. 1998 - - - -
L&A at 31 Dec. 1999 - - - -
L&A at 31 Dec. 2000 - - - -
L&A at 31 Dec. 2001 74% 92% - -
L&A at 30 Sept. 2002 51% 96% 45% 89%
ESG RE LIMITED
Reinsurance Operating Ratios (Net Earned Premium)
The key operating ratios for the Reinsurance Segment for the three and
nine months ended September 30, 2002 and 2001 are as follows;
Three months ended Personal
September 30, 2002 Medical Accident Credit Life Other Total
-------------------------------- -------------------------------------
Loss ratio 61.1% (71.7)% 0.6% 513.0% 104.4% 62.9%
Acquisition expense ratio 30.3% 41.3% 9.3% 17.0% 41.6% 32.0%
-------------------------------- -------------------------------------
Loss and Acquisition
Expense Ratio 91.4% (30.4)% 9.9% 530.0% 146.0% 94.9%
-------------------------------- -------------------------------------
Operating expense ratio 13.2%
-------
Combined ratio 108.1%
=======
Three months ended Personal
September 30, 2001 Medical Accident Credit Life Other Total
-------------------------------- -------- ------ ------ ------- ------
Loss Ratio 16.4% 182.3% 54.1% 65.8% 136.3% 60.5%
Acquisition expense Ratio 30.3% 20.0% 186.8% (1.0)% (95.7)% 27.3%
-------------------------------- -------- ------ ------ ------- ------
Loss and Acquisition
Expense Ratio 46.7% 202.3% 240.9% 64.8% 40.6% 87.8%
-------------------------------- -------- ------ ------ ------- ------
Operating expense Ratio 20.9%
------
Combined Ratio 108.7%
======
Nine months ended Personal
September 30, 2002 Medical Accident Credit Life Other Total
--------------------------------- --------- ------- ---- ------ ------
Loss Ratio 71.7% 178.3% (46.9)% n/m 86.4% 87.6%
Acquisition expense Ratio 25.3% 29.6% 3.2% n/m 40.7% 26.6%
--------------------------------- --------- ------- ---- ------ ------
Loss and Acquisition
Expense Ratio 97.0% 207.9% (43.7)% n/m 127.1% 114.2%
--------------------------------- --------- ------- ---- ------ ------
Operating expense Ratio 21.2%
------
Combined Ratio 135.4%
======
Nine months ended Personal
September 30, 2001 Medical Accident Credit Life Other Total
------------------------------ -------- ------- ------- ------- ------
Loss Ratio 59.3% 101.8% 151.1% 181.3% 78.4% 72.2%
Acquisition expense
Ratio 31.3% 23.2% (58.9)% (12.3)% (38.8)% 28.2%
------------------------------ -------- ------- ------- ------- ------
Loss and Acquisition
Expense Ratio 90.6% 125.0% 92.2% 169.0% 39.6% 100.4%
------------------------------ -------- ------- ------- ------- ------
Operating expense Ratio 15.7%
------
Combined Ratio 116.1%
======
ESG RE LIMITED
Direct Marketing Operating Ratios (Net Earned Premium)
The key operating ratios for the Direct Marketing segment for the
three and nine months ended September 30, 2002 and 2001 are as
follows;
Three months ended Personal
September 30, 2002 Accident Credit Total
-------------------------------------------------------
Loss Ratio 5.7% 20.3% 7.7%
Acquisition expense Ratio 65.4% 101.9% 70.3%
-------------------------------------------------------
Loss and Acquisition
Expense Ratio 71.1% 122.2% 78.0%
-------------------------------------------------------
Operating expense Ratio 32.8%
---------
Combined Ratio 110.8%
=========
Three months ended Personal
September 30, 2001 Accident Credit Total
-------------------------------------------------------------------
Loss Ratio 20.6% 25.5% 20.8%
Acquisition expense Ratio 58.8% (62.2)% 53.3%
-------------------------------------------------------------------
Loss and Acquisition
Expense Ratio 79.4% ( 36.7)% 74.1%
-------------------------------------------------------------------
Operating expense Ratio 35.4%
--------------
Combined Ratio 109.5%
==============
Nine months ended Personal
September 30, 2002 Accident Credit Total
----------------------------------------------------------------
Loss Ratio 2.0% 33.2% 5.0%
Acquisition expense Ratio 64.2% 60.5% 63.9%
----------------------------------------------------------------
Loss and Acquisition
Expense Ratio 66.2% 93.7% 68.9%
----------------------------------------------------------------
Operating expense Ratio 35.6%
-------------
Combined Ratio 104.5%
=============
Nine months ended Personal
September 30, 2001 Accident Credit Total
-------------------------------------------------------------
Loss Ratio 19.9% 27.9% 20.4%
Acquisition expense Ratio 56.1% (19.7)% 51.1%
-------------------------------------------------------------
Loss and Acquisition
Expense Ratio 76.0% 8.2% 71.5%
-------------------------------------------------------------
Operating expense Ratio 37.8%
------------
Combined Ratio 109.3%
============
ESG RE LIMITED
Fixed Maturity Investment Portfolio at September 30, 2002
Average
U.S. dollars in thousands Fair Duration Market Credit
Value (Years) Yield Rating
---------------------------------------- --------- --------- --------
Corporate securities $33,166 3.6 4.7 % AA
U.S. treasury securities
and obligations of U.S. AAA
government corporations
and agencies 24,420 2.1 2.5 %
Mortgage & Asset backed AAA
securities 25,768 2.4 6.0 %
Obligations of states and
political subdivisions 10,023 1.9 5.0 % AAA
Foreign currency debt AAA
securities 5,913 1.8 3.4 %
---------------------------------------- --------- --------- --------
Total $99,280 2.4 4.3 %
---------------------------------------- --------- --------- --------
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