Haverford (Bermuda) Ltd. Condensed General Purpose Financial Statemets. For the financial year from. January 1, 2017.

Transcription

1 Haverford (Bermuda) Ltd Condensed General Purpose Financial Statemets For the financial year from January 1, 2017 December 31, 2017

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4 Contents Haverford (Bermuda) Ltd As at December 31, Contents 2 Balance Sheet 3 Income Statement 4 Statement of Capital and Surplus 5 Notes to the Condensed General Purpose Financial Statements

5 CONDENSED CONSOLIDATED BALANCE SHEET Haverford (Bermuda) Ltd As at December 31, 2017 United States Dollars LINE No CASH AND CASH EQUIVALENTS 2,968,924 1,726, QUOTED INVESTMENTS: (a) Bonds and Debentures i. Held to maturity - - ii. Other - (b) Total Bonds and Debentures - - (c) Equities i. Common stocks - ii. Preferred stocks - iii. Mutual funds - (d) Total equities - - (e) Other quoted investments - - (f) Total quoted investments UNQUOTED INVESTMENTS: (a) Bonds and Debentures i. Held to maturity - ii. Other - (b) Total Bonds and Debentures - - (c) Equities i. Common stocks - ii. Preferred stocks 16,334 16,334 iii. Mutual funds 4,180,160 5,518,580 (d) Total equities 4,196,494 5,534,914 (e) Other unquoted investments 595, ,571 (f) Total unquoted investments 4,792,065 6,130, INVESTMENTS IN AND ADVANCES TO AFFILIATES (a) Unregulated entities that conduct ancillary services - (b) Unregulated non-financial operating entities - (c) Unregulated financial operating entities - (d) Regulated non-insurance financial operating entities - (e) Regulated insurance financial operating entities - (f) Total investments in affiliates - - (g) Advances to affiliates 15,300,000 7,700,000 (h) Total investments in and advances to affiliates 15,300,000 7,700, INVESTMENTS IN MORTGAGE LOANS ON REAL ESTATE: (a) First liens - (b) Other than first liens - (c) Total investments in mortgage loans on real estate POLICY LOANS - 7. REAL ESTATE: (a) Occupied by the company (less encumbrances) - (b) Other properties (less encumbrances) - (c) Total real estate COLLATERAL LOANS - 9. INVESTMENT INCOME DUE AND ACCRUED ACCOUNTS AND PREMIUMS RECEIVABLE: (a) In course of collection - - (b) Deferred - not yet due - (c) Receivables from retrocessional contracts 3,611,129 7,046,239 (d) Total accounts and premiums receivable 3,611,129 7,046, REINSURANCE BALANCES RECEIVABLE: (a) Foreign affiliates - - (b) Domestic affiliates - - (c) Pools & associations - - (d) All other insurers - - (e) Total reinsurance balance receivable FUNDS HELD BY CEDING REINSURERS 1,531,606 7,523,886

6 CONDENSED CONSOLIDATED BALANCE SHEET Haverford (Bermuda) Ltd As at December 31, 2017 United States Dollars LINE No SUNDRY ASSETS: (a) Derivative instruments - (b) Segregated accounts companies - long-term business - variable annuities - (c) Segregated accounts companies - long-term business - other - (d) Segregated accounts companies - general business - (e) Deposit assets - (f) Deferred acquisition costs - (g) Net receivables for investments sold - (h) Loan Receivable 1,026,351 2,268,096 (i) Prepaid Expenses 16,270 20,990 (j) Other Sundry Assets (Specify) - (k) Total sundry assets 1,042,621 2,289, LETTERS OF CREDIT, GUARANTEES AND OTHER INSTRUMENTS (a) Letters of credit - (b) Guarantees - (c) Other instruments - (e) Total letters of credit, guarantees and other instruments TOTAL 29,246,345 32,416,379 TOTAL INSURANCE RESERVES, OTHER LIABILITIES AND STATUTORY CAPITAL AND SURPLUS 16. UNEARNED PREMIUM RESERVE (a) Gross unearned premium reserves (b) Less: Ceded unearned premium reserve i. Foreign affiliates ii. Domestic affiliates iii. Pools & associations iv. All other insurers (c) Total ceded unearned premium reserve - - (d) Net unearned premium reserve LOSS AND LOSS EXPENSE PROVISIONS: (a) Gross loss and loss expense provisions 3,280,066 6,314,824 (b) Less : Reinsurance recoverable balance i. Foreign affiliates 2,195,477 ii. Domestic affiliates iii. Pools & associations iv. All other reinsurers (c) Total reinsurance recoverable balance - 2,195,477 (d) Net loss and loss expense provisions 3,280,066 4,119, OTHER GENERAL BUSINESS INSURANCE RESERVES 19. TOTAL GENERAL BUSINESS INSURANCE RESERVES 3,280,066 4,119,347 LONG-TERM BUSINESS INSURANCE RESERVES 20. RESERVE FOR REPORTED CLAIMS 21. RESERVE FOR UNREPORTED CLAIMS 22. POLICY RESERVES - LIFE 23. POLICY RESERVES - ACCIDENT AND HEALTH 24. POLICYHOLDERS' FUNDS ON DEPOSIT 25. LIABILITY FOR FUTURE POLICYHOLDERS' DIVIDENDS 26. OTHER LONG-TERM BUSINESS INSURANCE RESERVES 27. TOTAL LONG-TERM BUSINESS INSURANCE RESERVES (a) Total Gross Long-Term Business Insurance Reserves - - (b) Less: Reinsurance recoverable balance on long-term business (i) Foreign Affiliates (ii) Domestic Affiliaties (iii) Pools and Associations (iv) All Other Insurers (c) Total Reinsurance Recoverable Balance - - (d) Total Net Long-Term Business Insurance Reserves - - OTHER LIABILITIES 28. INSURANCE AND REINSURANCE BALANCES PAYABLE - 2,420, COMMISSIONS, EXPENSES, FEES AND TAXES PAYABLE

7 CONDENSED CONSOLIDATED BALANCE SHEET Haverford (Bermuda) Ltd As at December 31, 2017 United States Dollars LINE No LOANS AND NOTES PAYABLE 31. (a) INCOME TAXES PAYABLE (b) DEFERRED INCOME TAXES 32. AMOUNTS DUE TO AFFILIATES 33. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 26,112 29, FUNDS HELD UNDER REINSURANCE CONTRACTS: 35. DIVIDENDS PAYABLE 36. SUNDRY LIABILITIES: (a) Derivative instruments (b) Segregated accounts companies (c) Deposit liabilities (d) Net payable for investments purchased (e) Other sundry liabilities (specify) (f) Other sundry liabilities (specify) (g) Other sundry liabilities (specify) (h) Total sundry liabilities LETTERS OF CREDIT, GUARANTEES AND OTHER INSTRUMENTS: (a) Letters of credit (b) Guarantees (c) Other instruments (d) Total letters of credit, guarantees and other instruments - -

8 CONDENSED CONSOLIDATED BALANCE SHEET Haverford (Bermuda) Ltd As at December 31, 2017 United States Dollars LINE No TOTAL OTHER LIABILITIES 26,112 2,450, TOTAL INSURANCE RESERVES AND OTHER LIABILITIES 3,306,178 6,569,461 CAPITAL AND SURPLUS 40. TOTAL CAPITAL AND SURPLUS 25,940,167 25,846, TOTAL 29,246,345 32,416,379 TRUE TRUE - -

9 CONDENSED CONSOLIDATED STATEMENT OF INCOME Haverford (Bermuda) Ltd As at December 31, 2017 United States Dollars LINE No GENERAL BUSINESS UNDERWRITING INCOME 1. GROSS PREMIUMS WRITTEN (a) Direct gross premiums written (b) Assumed gross premiums written 776,174 4,799,372 (c) Total gross premiums written 776,174 4,799, REINSURANCE PREMIUMS CEDED - 1,647, NET PREMIUMS WRITTEN 776,174 3,151, INCREASE (DECREASE) IN UNEARNED PREMIUMS 5. NET PREMIUMS EARNED 776,174 3,151, OTHER INSURANCE INCOME - 7. TOTAL GENERAL BUSINESS UNDERWRITING INCOME 776,174 3,151,580 GENERAL BUSINESS UNDERWRITING EXPENSES 8. NET LOSSES INCURRED AND NET LOSS EXPENSES INCURRED 237,324 1,780, COMMISSIONS AND BROKERAGE 200, , TOTAL GENERAL BUSINESS UNDERWRITING EXPENSES 437,597 2,637, NET UNDERWRITING PROFIT (LOSS) - GENERAL BUSINESS 338, ,094 LONG-TERM BUSINESS INCOME 12. GROSS PREMIUMS AND OTHER CONSIDERATIONS: (a) Direct gross premiums and other considerations (b) Assumed gross premiums and other considerations (c) Total gross premiums and other considerations PREMIUMS CEDED 14. NET PREMIUMS AND OTHER CONSIDERATIONS: (a) Life (b) Annuities (c) Accident and health (d) Total net premiums and other considerations OTHER INSURANCE INCOME 16. TOTAL LONG-TERM BUSINESS INCOME - - LONG-TERM BUSINESS DEDUCTIONS AND EXPENSES 17. CLAIMS - LIFE 18. POLICYHOLDERS' DIVIDENDS 19. SURRENDERS 20. MATURITIES 21. ANNUITIES 22. ACCIDENT AND HEALTH BENEFITS 23. COMMISSIONS 24. OTHER 25. TOTAL LONG-TERM BUSINESS DEDUCTIONS AND EXPENSES INCREASE (DECREASE) IN POLICY RESERVES (ACTUARIAL LIABILITIES): (a) Life (b) Annuities

10 CONDENSED CONSOLIDATED STATEMENT OF INCOME Haverford (Bermuda) Ltd As at December 31, 2017 United States Dollars LINE No (c) Accident and health (d) Total increase (decrease) in policy reserves TOTAL LONG-TERM BUSINESS EXPENSES NET UNDERWRITING PROFIT (LOSS) - LONG-TERM BUSINESS COMBINED NET UNDERWRITING RESULTS BEFORE THE UNDERNOTED ITEMS 338, ,094 UNDERNOTED ITEMS 30. COMBINED OPERATING EXPENSE (a) General and administration 209, ,614 (b) Personnel cost (c) Other 900,000 (d) Total combined operating expenses 1,109, , COMBINED INVESTMENT INCOME - NET 377,423 (1,056,894) 32. COMBINED OTHER INCOME (DEDUCTIONS) 33. COMBINED INCOME BEFORE TAXES (393,533) (926,414) 34. COMBINED INCOME TAXES (IF APPLICABLE): (a) Current (b) Deferred (c) Total COMBINED INCOME BEFORE REALIZED GAINS (LOSSES) (393,533) (926,414) 36. COMBINED REALIZED GAINS (LOSSES) 653, COMBINED INTEREST CHARGES 38. NET INCOME 259,794 (926,414)

11 CONDENSED CONSOLIDATED STATEMENT OF CAPITAL AND SURPLUS Haverford (Bermuda) Ltd As at December 31, 2017 United States Dollars LINE No CAPITAL: (a) Capital Stock (i) Common Shares 28,396,423 28,396,423 authorized 50,000,000 shares of par value $ each issued and fully paid 28,396,423 shares (ii) (A) Preferred shares: - - authorized 50,000,000 shares of par value $ each issued and fully paid shares aggregate liquidation value for (B) Preferred shares issued by a subsidiary: authorized shares of par value each issued and fully paid shares aggregate liquidation value for (iii) Treasury Shares repurchased value shares of par each issued (b) Contributed surplus - - (c) Any other fixed capital (i) Hybrid capital instruments (ii) Guarantees and others (iii) Total any other fixed capital - - (d) Total Capital 28,396,423 28,396, SURPLUS: (a) Surplus - Beginning of Year (2,549,505) (1,878,593) (b) Add: Income for the year 259,794 (926,414) (c) Less: Dividends paid and payable (d) Add (Deduct) change in unrealized appreciation (depreciation) of investments (166,545) 255,502 (e) Add (Deduct) change in any other surplus - (f) Surplus - End of Year (2,456,256) (2,549,505) 3. MINORITY INTEREST 4. TOTAL CAPITAL AND SURPLUS 25,940,167 25,846,918

12 NOTES TO THE CONDENSED GENERAL PURPOSE FINANCIAL STATEMENTS Haverford (Bermuda) Ltd As at December 31, 2017 Matters to be set forth in a General Note to the Financial Statements 1. General information Haverford (Bermuda) Ltd. (the Company or HBL ) was incorporated under the laws of Bermuda on July 9, The Company was incorporated as an openended limited liability investment company. Effective July 18, 2001, the Company obtained a Class 3 license and a Long-Term Business license under The Insurance Act, 1978 of Bermuda and related regulations, which enables the Company to write all classes of property and casualty reinsurance and long term reinsurance. Pursuant to Section 4 of the Insurance Act 1978 as amended by the Insurance Amendment Act 1995, the Bermuda Monetary Authority duly registered the Company as a Class 3A Insurer, effective January 27, Haverford Investment Holdings (Cayman) Ltd. is a subsidiary company, which was incorporated on April 19, 2005 to hold the investments in Haverford Investment Management (GP) Limited and Haverford Investment Advisers (Cayman) Limited. These two companies are respectively Investment Manager and Investment Adviser of Haverford Capital Partners (Cayman) Limited, a private-equity fund which intends to invest primarily in securities issued by insurance related companies. All subsidiaries were dormant during the years ended December 31, 2017 and 2016, and held no assets or liabilities. 2. Nature of Business Effective January 1, 2014, the Company entered into a Catastrophe Quota Share Reinsurance Agreement with Hannover Rück Se, E+ES Rückversicherung AG and Hannover Re (Bermuda) Ltd. This comprises of geographic catastrophe excess of loss treaty reinsurance business, including natural perils, aviation and marine and energy. Prior to this the company did not write any insurance business. 3. The condensed general purpose financial statements have been prepared in conformity with the financial reporting provisions of the Insurance Act 1978, amendments thereto and the Insurance Account Rules 2016 with respect to Condensed General Purpose Financial Statements (the Legislation ). The condensed general purpose financial statements are based upon accounting principles generally accepted in the United States ("US GAAP") of America but are adjusted for reporting requirements of the Legislation, which varies in certain respects from US GAAP. The more significant variances are as follows: A statement of cash flows is not included; A statement of comprehensive income is not included; The presentation and classification of financial statement line items is in accordance with Schedules IX and XI of the Insurance Account Rules 2016 and differ from the expected presentation and classification under US GAAP; and The notes included in the condensed general purpose financial statements have been prepared in accordance with Schedule X of the Insurance Account Rules 2016 and exclude certain information required under US GAAP. 4. Significant Accounting Polices a) The liability for losses and loss expenses includes an amount determined from loss reports of individual cases and an additional amount, based on past experience, for losses incurred but not reported. These estimates are periodically continually reviewed and are subject to the impact of future changes in such factors as claim severity and frequency. While management believes that the amount is adequate, the ultimate liability may be materially in excess of, or less than, the amounts provided and any adjustment will be reflected in the periods in which they become known.

13 b) Commission income and expense Commissions are recorded on an accruals basis and recognized as income or expense on a pro-rata basis over the policy period. c i) Investment in non-listed securities The Company s investments in unquoted entities and funds for which there is no readily available market value. Private equity investments are recorded at cost, less impairment if any. Investments in funds are recorded using the net asset valuation as provided by the fund administrator. Investments in partnerships is recorded using the equity method. Income (loss) arising from investments is recorded in the consolidated statement of operations on an accrual basis. cii) Fair value of financial instruments Fair value estimates are made at a point in time, based on relevant market data as well as the best information available about the financial instrument. Fair value estimates for financial instruments for which no or limited observable market data is available are based on judgments regarding current economic conditions, liquidity discounts, currency, credit, and interest rate risks, loss experience and other factors. These estimates involve significant uncertainties and judgments and cannot be determined with precision. As a result, such calculated fair value estimates may not be realizable in a current sale or immediate settlement of the instrument. In addition, changes in the underlying assumptions used in the fair value measurement technique, including discount rates, liquidity risks, and estimates of future cash flows, could significantly affect these fair value estimates. d) Premiums Premiums are recognized as revenue on a pro-rata basis over the periods of the respective policies or contracts of reinsurance

14 Significant Accounting Polices (continued) e) Cash and cash equivalents Cash and cash equivalents comprise highly liquid instruments such as demand deposit accounts and money market funds. Carry amounts equal fair value due to the immediate maturity of these instruments. Restricted cash and cash equivalents are separately recorded in the balance sheet. The Company considers all highly liquid investments purchased with maturity dates of ninety days or less to be cash equivalents. f) Acquisition cost Commissions and other cost incurred in the acquisition of business are deferred and amortized over the terms of the policies to which they relate. 5 Basis of recognition of Premium, Investment and Commission Income Refer to Note 4 b, c and d Not Applicable

15 13 Fair value measurement hierarchy The following tables provide the fair value measurement hierarchy of the Company's assets A review of fair value hierarchy classifications is conducted on an ongoing basis. Changes in the observability of valuation inputs may result in a reclassification for certain financial assets and liabilities. Reclassifications between the fair value hierarchy are reported as transfers in/out of the category as of the beginning of the year in which the reclassifications occur. Fair value measurement hierarchy for assets as at 31 December 2017: Fair value measurement using Quoted prices in Total active markets (Level 1) Investments in Funds $ 4,180,161 - Significant observable inputs (Level 2) Significant unobservable inputs (Level 3) $ $ - $ 4,180,161 Partnership 595, ,571 - Private Companies 16, ,334 $ 4,792,066 $ - $ 595,571 $ 4,196,495 Fair value measurement hierarchy for assets as at 31 December 2016: Investments in Funds $ 5,518,580 $ - $ - $ 5,518,580 Partnership 595, ,571 - Private Companies 16, ,334 $ 6,130,485 $ - $ 595,571 $ 5,534,914 The investments in Funds are all entities that calculate net asset value per share. The Fund s aim is to achieve long-term capital appreciation through equity and equity related investments in businesses that deliver quality and affordable products and services to low-income and financially excluded people, with a primary focus on microinsurance. The following table presents the movement in level 3 instruments for the year ended 31-Dec Dec-16 Balance, beginning of year $ 595,571 $ 564,601 Change in unrealized gain on investments - 30,970 Balance, end of year $ 595,571 $ 595, Not Applicable 15. Related party transactions Haverford Investments Holdings (Cayman) Ltd. is a subsidiary company incorporated on April 19, 2005, which made a $3 million capital commitment to invest in Haverford Capital Partners (Cayman) Limited, through its investment in Haverford Investment Management (GP) Limited. As at December 31, 2017, the Company had shares in Haverford Investment Holdings valued at $nil (2016: $nil). As at December 31, 2017, a total of $15,300,000 (net of allowance of $900,000 in anticipation of Haverford (Bermuda) Limited not being able to collect the full amount of $16,300,000 (2016: $7,700,000)) was due from the Company s shareholder, Haverford Holdings Limited. These advances are not subject to interest and are payable on demand. On January 1, 2014, the Company entered into a reinsurance agreement with St. Bernard Assure Ltd. ( SBAL ), a party related through common ownership, whereby SBAL assumed all obligation and rights of a portion of the Quota Share Reinsurance Agreements HBL has with Hannover Rück Se, E+ES Rückversicherung AG and Hannover Re (Bermuda) Ltd. HBL is to transfer any profits received in relation to this treaty to SBAL within 30 days of receipt. This relationship ended on 23rd November 2015, when SBAL was sold to a third party. During 2016 Haverford (Bermuda) Limited successfully novated $3,000,000 of the $4,500,000 1:250 K-QS retrocessional reinsurance quota share agreement to SBAL effective January 1, Not Applicable

16 Matters to be set forth in notes to The Statement Of Capital And Surplus 1(a). Share Capital At December 31, 2017, the Company had authorized share capital of $100 million (2016: $100 million) divided into 50 million (2016: 50 million) Preference Shares and 50 million (2016: 50 million) Common Shares, both with a par value of $1 each. The Preference Shares are non-voting, redeemable at the sole discretion of the Company and are entitled to a fixed cumulative dividend payable out of available earnings which is calculated at the rate of 6 Month LIBOR plus 3.5% per annum. The dividend rate was set initially on December 31, 2003 and reset on June 30 and December 31 in each year thereafter. Common Shares are entitled to one vote per share. Dividends are approved by the Board of Directors and the Common Shares may not be redeemed by the Company unless dividends due on Preference Shares are current. At December 31, 2017, share capital was comprised entirely of common shares, totaling $28,396,423 (2016: $28,396,423). 1(b). 2(c). Not applicable Not applicable Matters to be set forth in Notes to the Balance Sheet 1. Cash and Cash Equivalents Cash held at banks and on hand HSBC Bermuda $ 2,968,924 $ 1,726,683 Total $ 2,968,924 $ 1,726, Not Applicable 3. Quoted investments Investments are valued using Fair Value as set out in Note Not Applicable 9. Investment Income due and accrued The investment income accrued at the financial year end is that accrued in relation to the investment Not Applicable 13. Loan Receivable This represents an unsecured loan to a non-related party with simple interest of 6% per annum, which is payable annually. There is no set maturity date.

17 17-21 The provision for unpaid claims and claims expenses includes losses reported at the balance sheet date and an amount for losses incurred but not reported. Management believes that the provision for unpaid claims and claims expenses will be adequate to cover the ultimate net costs of losses incurred to the balance sheet date, but the provision is necessarily an estimate and may ultimately be settled for a greater or lesser amount. Any subsequent differences are recorded in the period in which they are determined Net loss and loss expense provision at beginning of year 4,119,347 2,793,783 Incurred losses related to: Current year 728,743 2,044,382 Prior years (408,245) (57,200) Total net incurred losses and loss expenses 320,498 1,987,182 Net losses and loss expenses paid or payable related to: Current year (119,934) (248,798) Prior year (1,039,845) (412,820) Total losses and loss expenses paid or payable Net losses and loss expenses paid related to: Net loss and loss expense provisions at end of year Add: Reinsurance recoverable at end of year* Gross loss and loss expense provisions at end of year (1,159,779) (661,618) 3,280,066 4,119,347-2,195,477 3,280,066 6,314,824 * The condensed income statement line 8 includes reinstatement premiums of $83,172 for 2017 (2016: $207,066). Reinsurance recoverable was Nil at December 31, 2017 due to the Novation of a portion of the K- QS retrocessional reinsurance quota share agreement to SBAL which was effective January 1, Not Applicable Income taxes payable - Not applicable Amount due to affiliates - Not applicable

18 33. Accounts and accrued liabilities balance as at December 31, 2017 includes the following: Directors fees $ 7,500 $ - Payroll Tax - 9,687 Audit fees 18,612 19,425 Social Insurance Total $ 26,112 $ 29, Not Applicable 6, 15 and 32 Not Applicable Matters to be set forth in Notes to the Statement of Income 36. Combined realized gains (losses) Total gains (losses) included in the statement of income for the period Investments in Funds $ 653,327 $ - $ 653,327 $ -