UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON. D.C. 20549
-----------
FORM 10-Q
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
- ----- Exchange Act of 1934
For quarterly period ended March 31, 2003
------------------
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 033-06534
---------
Motors Mechanical Reinsurance Company, Limited
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Barbados N/A
- ----------------------------------------- -------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Financial Place,
Collymore Rock
St. Michael, Barbados, W.I. N/A
- ----------------------------------------- -------------------------------------
(Address of principal executive offices) (Zip Code)
(246) 436-4895 (Registrant's
--------------------------------------
telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed 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
----- -----
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act)
Yes No X
----- -----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.
Class As of March 31, 2003
----- --------------------
Common Stock, no par-value 2,000
Participating Stock, no par-value 23,100
This quarterly report, filed pursuant to Rule 13a-13 of the General Rules
and Regulations under the Securities Exchange Act of 1934, consists of the
following information as specified in Form 10-Q:
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
1. Balance Sheets as of March 31, 2003 and December 31, 2002.
2. Statements of Operations and Retained Earnings for the three
month periods ended March 31, 2003 and 2002.
3. Statements of Cash Flows for the three month periods ended March
31, 2003 and 2002.
In the opinion of management, the accompanying financial statements reflect
all adjustments, consisting of normal recurring accruals, which are necessary
for a fair presentation of the results for the interim periods presented. The
information furnished for the three month period ended March 31, 2003 may not be
indicative of results for the full year.
-2-
MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED
BALANCE SHEETS
(Expressed in U.S. Dollars)
March 31, December 31,
2003 2002
(unaudited) (audited)
------------ ------------
ASSETS
Investments.......................................... $ 87,192,849 $ 86,991,416
Cash and cash equivalents............................ 219,742 257,303
Accrued investment income............................ 589,072 572,241
Due from Motors Insurance Corporation................ 0 379,634
Deferred acquisition costs........................... 19,080,395 19,810,917
Advances to Shareholders............................. 447,304 323,206
Prepaid expenses..................................... 1,875 44,779
------------ ------------
Total Assets......................................... $107,531,237 $108,379,496
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Unearned premiums.................................. $ 81,560,033 $ 83,482,170
Reserves for unpaid losses......................... 3,486,792 3,650,641
Accrued liabilities................................ 310,035 180,205
Due to Motors Insurance Corporation................ 473,933 0
------------ ------------
Total liabilities.................................. 85,830,793 87,313,016
------------ ------------
STOCKHOLDERS' EQUITY
Share Capital
Common Stock-no par value;
Authorized - 2,000 shares; issued and
outstanding - 2,000 shares..................... 200,000 200,000
Participating Stock-no par value;
Authorized - 100,000 shares; Issued
and outstanding - 23,100 shares as of
March 31, 2003 and 23,300 shares as of
December 31, 2002.............................. 1,732,500 1,747,500
------------ ------------
1,932,500 1,947,500
Retained Earnings.................................. 22,084,057 20,276,888
Accumulated other comprehensive Loss............... (2,316,113) (1,157,908)
------------ ------------
Total Stockholders' Equity......................... 21,700,444 21,066,480
------------ ------------
Total Liabilities and Stockholders' Equity......... $107,531,237 $108,379,496
============ ============
-3-
MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS FOR THE
THREE MONTH PERIODS ENDED MARCH 31, 2003 AND 2002
(Expressed in U.S. Dollars)
Three Month Periods
Ended March 31,
2003 2002
(unaudited) (unaudited)
------------ ------------
INCOME
Reinsurance premiums assumed......................... $ 9,701,443 $ 10,886,397
Decrease in unearned premiums........................ 1,922,137 1,670,846
------------ ------------
Premiums earned...................................... 11,623,580 12,557,243
------------ ------------
Investment income
Interest earned................................... 943,032 1,154,743
Realized gains on investments-net................. 287,093 259,176
------------ ------------
Investment income.................................... 1,230,125 1,413,919
------------ ------------
TOTAL INCOME........................................... 12,853,705 13,971,162
------------ ------------
EXPENSES
Acquisition costs.................................... 2,855,009 3,207,604
Losses paid.......................................... 8,057,087 9,405,810
Decrease in reserves for unpaid losses............... (163,850) (153,721)
Administrative expenses
- Related Parties................................. 62,147 56,039
- Other........................................... 158,750 112,956
------------ ------------
TOTAL EXPENSES......................................... 10,969,143 12,628,688
------------ ------------
NET INCOME............................................. 1,884,562 1,342,474
RETAINED EARNINGS, beginning of period................. 20,276,888 18,521,974
LESS: DIVIDENDS........................................ 0 (4,318,225)
LESS: REDEMPTION OF PARTICIPATING STOCK................ (77,393) (112,925)
------------ ------------
RETAINED EARNINGS, end of period....................... $ 22,084,057 15,433,298
============ ============
-4-
MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED
STATEMENTS OF CASH FLOWS FOR THE THREE MONTH PERIODS ENDED
MARCH 31, 2003 AND 2002
(Expressed in U.S. Dollars)
Three Month Periods
Ended March 31,
2003 2002
(unaudited) (unaudited)
------------ ------------
Cash flows from operating activities:
Reinsurance premiums collected...................... $ 11,133,050 $ 14,094,604
Losses and acquisition expenses paid................ (10,844,169) (12,662,120)
Administrative expenses recovered/(paid)............ 54,382 (42,004)
Investment income received.......................... 908,212 1,241,607
(Advances to)/Repayments by Shareholders............ (124,098) 90,000
------------- ------------
Net cash provided by operating activities.............. 1,127,377 2,722,087
------------- ------------
Cash flows from investing activities:
Purchases of investments............................ (123,195,494) (35,744,063)
Sales and maturities of investments................. 122,122,949 37,435,314
------------- ------------
Net cash (used in)/provided by investing activities.... (1,072,545) 1,691,251
------------- ------------
Cash flows from financing activities:
Redemption of Participating Stock................... (92,393) (135,425)
Dividends paid...................................... 0 (4,318,225)
------------- ------------
Net cash used in financing activities.................. (92,393) (4,453,650)
------------- ------------
Decrease in cash and cash equivalents.................. (37,561) (40,312)
Cash and cash equivalents, beginning of period......... 257,303 142,992
------------- ------------
Cash and cash equivalents, end of period............... $ 219,742 $ 102,680
Reconciliation of net income to net cash provided by
operating activities:
Net income.......................................... 1,884,562 1,342,474
Realized gains on investments....................... (287,093) (259,176)
Change in:
Accrued investment income......................... (16,831) 101,243
Deferred acquisition costs........................ 730,522 819,040
Advances to Shareholders.......................... (124,098) 90,000
Prepaid expenses.................................. 42,904 (1,875)
Unearned premiums................................. (1,922,137) (1,670,846)
Reserves for unpaid losses........................ (163,849) (153,721)
Accrued liabilities............................... 129,830 44,505
Due to Motors Insurance Corporation............... 853,567 2,410,443
------------- ------------
Net cash provided by operating activities.............. $ 1,127,377 $ 2,722,087
-============ ============
-5-
Item 2. Management's Discussion And Analysis of Financial Condition And Results
of Operations
Critical Accounting Policies. During the quarter ended March 31, 2003, Motors
Mechanical Reinsurance Company, Limited (the "Company") had no change in its
critical accounting policies as previously disclosed within the Company's Annual
Report on Form 10-K for the year ended December 31, 2002.
Liquidity. It is anticipated that the Company will generate sufficient funds
from operations to meet current liquidity needs. Premiums generated by the
Company's reinsurance business combined with investment earnings plus proceeds
from the sale of Participating Shares will continue to be the principal sources
of funds for investment by the Company. Such funds will be available to meet the
Company's liquidity requirements. No capital expenditures are expected in the
foreseeable future.
On April 7, 2003, the Board of Directors authorized the payment of dividends to
eligible holders of Participating Shares aggregating $4,930,473.
Capital Resources. During the quarter ended March 31, 2003, no new series of
Participating Shares were issued and 2 series were redeemed, bringing the total
number of series issued and outstanding to 231 as of the end of the quarter. As
of March 31, 2003, the share capital of the Company was $1,932,500 (compared
with $1,947,500 as of December 31, 2002) comprised of paid in capital with
respect to the Common Stock of $200,000 and paid in capital with respect to
Participating Shares of $1,732,500 (compared to paid in capital with respect to
Common Stock of $200,000 and paid in capital with respect to Participating
Shares of $1,747,500 as of December 31, 2002). In addition, the Company had
retained earnings in the amount of $22,084,057 as of March 31, 2003 compared
with $20,276,888 as of December 31, 2002. The net increase in retained earnings
is primarily attributable to investment income earned during the three months
ended March 31, 2003 combined with continued improvement in underwriting
performance as discussed more fully below.
Results of Operations. During the quarter ended March 31, 2003, the Company had
net income of $1,884,562, compared with net income of $1,342,474 for the same
period in 2002. As discussed below, the increase in net income for the quarter
ended March 31, 2003 compared to the same period in 2002 was primarily a result
of improvements in the underwriting performance of the Company as reflected by
the reductions in incurred loss ratios for the periods in question. Premiums
earned decreased to $11,623,580 during the quarter ended March 31, 2003 compared
to $12,557,243 for the same period in 2002. Expenses incurred during the quarter
ended March 31, 2003 were $10,969,143 compared to $12,628,688 for the same
period in 2002. The Company experienced net underwriting income for the quarter
ended March 31, 2003 of $654,437, compared to an underwriting loss of $71,445
for the same period in 2002. The ratio of losses incurred to premiums earned for
the quarter under review was 68%, compared to 74% for the same period in 2002.
Other than as noted above, there were no material items to report for the three
months ended March 31, 2003.
-6-
The decreases in earned premiums and expenses for the quarter ended March 31,
2003, compared to the same period in 2002, were in large part attributable to
the decline in the number of Participating Shares outstanding and an increasing
number of policies reinsured by the Company are reaching a fully earned
position.
The fluctuation in loss ratio for the quarter ended March 31, 2003 compared to
the same period in 2002 is a function of the number of claims and the severity
of the individual claims and may not represent a trend or recur in future
quarters.
Investment income for the quarter ended March 31, 2003 was $1,230,125, compared
to $1,413,919 for the same period in 2002. Investment income is derived solely
from the Company's investments in fixed income securities, equities and short
term cash and cash equivalents. During the quarter ended March 31, 2003, the
Company realized gains on the sale of investment securities of $287,093,
compared to realized gains of $259,176 during the same period in 2002. The
Company realized gains on the sale of investment securities during the quarter
ended March 31, 2003 and March 31, 2002 as a result of sales of fixed income
securities, the value of which had increased as a result of decreases in market
interest rates.
Also, during the three month period ended March 31, 2003, the cash flows from
purchases and sales of investments increased significantly from the comparable
period of 2002 due to increased activity by the investment manager in buying and
selling securities in the Company's fixed income portfolio to realize gains
resulting from increased market values and a result of management's decision to
take advantage of favorable market conditions. The increased activity in
purchases and sales of investments does not constitute a change in the
underlying nature of the Company's investment policy. Investments continue to be
held and accounted for as "available for sale".
The unrealized loss on investments was $2,316,113 at March 31, 2003, compared to
an unrealized loss of $1,157,908 at December 31, 2002. This increase in
unrealized losses is mainly due to a decrease in the market value of the
Company's investment in an international equity fund, the ("Fund"). As of March
31, 2003, the Fund had an unrealized loss position of $4,652,668, compared to an
unrealized loss of $3,771,295 at December 31, 2002. The Company's fixed income
portfolio had a net unrealized gain of $2,336,555 at March 31, 2003, compared to
a net unrealized gain of $2,613,387 at December 31, 2002.
As a result of adverse developments in international equity markets, the Company
continues to experience fluctuations in the value of its equity portfolio. The
Company's unrealized loss position could increase in the future. At March 31,
2003 the decline in the value of the Company's investment in the Fund is
considered to be temporary in nature and no provision for other than temporary
losses has been made. Management will continue to monitor the value of the
Company's investment in the Fund in order to determine if losses in value, which
could be considered other than temporary, have occurred.
For the quarter ended March 31, 2003 the Company had interest earned of
$943,032, compared to $1,154,743 for the same period in 2002 primarily as a
result of lower coupon rates on its fixed income investments.
-7-
During the first quarter of 2003, the Company did not record any realized loss
for other than temporary impairment for its fixed income and equity investments
held. To determine the amounts recorded for other than temporary impairment for
its fixed income investments, the Company evaluated, among other things, the
length of time and the extent that the security's market value has been valued
at less than cost; the financial health of the issuer, including any specific
events which may influence the issuer; the Company's intent and ability to hold
the investment; and the security's rating as determined by an independent rating
agency. If an investment's unrealized loss position was determined to be other
than temporary in nature, the underlying security's cost basis would have been
written down to the market value at the time that the impairment charge was
recorded.
The Company's investment in the Fund was reviewed using the applicable criteria
described above and such review also included the following procedures to
determine whether any charge for other than temporary impairment was necessary:
o Reviewed the relationship between the Fund's market value compared to
its historical cost since its purchase. This included examining the
period of time that the Fund was consecutively in an unrecognized loss
position.
o Reviewed the volatility of the Fund to determine if there has been a
demonstrated ability for it to recover from an unrealized loss
position.
o Examined the concentration of the Fund from a geographical, industry,
and individual security standpoint.
As of March 31, 2003, the Company's investment in the Fund was in an unrealized
loss position of $4,652,668. Utilizing the procedures described above, no charge
for other than temporary impairment was recorded in the first quarter of 2003
for the Company's investment in the Fund. This conclusion was based on the
procedures described above, the volatility of the Fund over the last year and
the ability to be able to recover from unrealized loss positions in a reasonable
period of time. As of April 30, 2003, the net unrealized loss position of the
Fund was $3,417,768 million or 20.9% of its historical cost. Management will
continue to monitor the unrealized loss position of this investment and may
record an impairment charge in a future period.
There are inherent uncertainties in applying methodology and procedures
described above with the primary uncertainty being the continued instability in
most international economies, geographic regions, and industries in which the
Fund invests. Should management determine in the future that a decline in the
value of any of its investment portfolio is other than temporary, the overall
impact on the Company's holdings of fixed income investments and its investment
in the Fund is estimated to be a gross loss of approximately $84,000 and
$4,653,000, respectively. This represents the gross unrealized loss position at
March 31, 2003 of the Company's fixed income and equity portfolio, respectively.
The fair value of the Company's investments that are in an unrealized loss
position at March 31, 2003 are as follows:
-8-
Unrealized
Expressed in ($000s) Unrealized Loss As %
Security Type Cost Market Loss of Cost
--------- --------- ---------- ----------
Equity Securities
Capital International Fund.... $16,390.1 $11,737.4 $(4,652.7) 28.4%
--------- --------- ---------- ----------
Fixed Income Securities
U.S. Government............... 2,175.6 2,172.3 (3.3) 0.2%
U.S. Government Agencies
& Asset Backed............. 11,803.3 11,773.3 (30.0) 0.3%
Corporate..................... 404.3 400.5 (3.8) 0.9%
Corporate Asset Backed........ 3,756.1 3,708.8 (47.3) 1.3%
--------- --------- ----------
Subtotal-Fixed Income Securities.. $18,139.3 $18,054.9 $ (84.4)
--------- --------- ----------
TOTAL............................. $34,529.4 $29,792.3 $(4,737.1)
========= ========= ==========
All of the fixed income securities included in the above table are considered
investment grade and have maturity dates ranging from April 2003 to February
2033. Excluding the Fund, the Company held positions in 22 fixed income
securities with an unrealized loss ranging from approximately $113 to $17,291
(or between 0.1% and 12.3% of cost) at March 31, 2003. Of the above, such
securities were in an unrealized loss position for less than 12 consecutive
months at March 31, 2003. The Fund has been in an unrealized loss position for
12 consecutive months at March 31, 2003 however, its unrealized loss position as
a percentage of historical cost has exceeded 20% for 4 consecutive months at
March 31, 2003. All of the other securities in an unrealized loss position at
March 31, 2003 were in such a position for 9 consecutive months or less.
At March 31, 2003, the Company's investments are concentrated in the following
industries:
-9-
% of Mkt. % of Total
Number of Value of Mkt. Value
Holdings Investment of Portfolio
---------- ---------- ------------
Equity Securities:
CIF Mutual Fund (1):
Information Technology........................ 21.9%
Financial Services............................ 17.7%
Consumer Discretionary........................ 14.1%
Health Care................................... 13.2%
Energy........................................ 8.3%
Telecommunications............................ 6.9%
Cash & Equivalents............................ 2.9%
Industrials................................... 7.0%
Materials..................................... 5.1%
Consumer Staples.............................. 2.1%
Utilities..................................... 0.8%
---------- ---------- ------------
Subtotal-Equity Securities............................. 1 100.0% 13.5%
---------- ---------- ------------
Fixed Income Securities:
U.S. Government Agencies & Asset Backed........... 44 55.9% 48.4%
Corporate Asset Backed............................ 27 14.2% 12.3%
Corporate......................................... 83 17.7% 15.3%
U.S. Government Securities........................ 13 11.5% 9.9%
State & Municipal................................. 1 0.7% 0.6%
Other............................................. 2 0.0% 0.0%
---------- ---------- ------------
Subtotal - Fixed Income Securities..................... 157 100.0% 86.5%
---------- ---------- ------------
TOTAL INVESTMENT PORTFOLIO............................. 158 100.0%
========== ========== ============
(1) Represents a mutual fund called the Capital International Fund comprised of
numerous securities. The Company does not own individual positions in the
securities that comprise the Fund. At March 31, 2003 there were 209 different
securities comprising the Fund.
Reserves for Unpaid Losses
Reserves for unpaid losses are balance sheet liabilities representing estimates
of amounts needed in the future to pay claims under policies with respect to
insured events, which have occurred as of the balance sheet dates.
For purposes of establishing reserves for unpaid losses, the Company relies upon
the advice of MIC. At March 31, 2003 and December 31, 2002, the Company's
reserves for unpaid losses were calculated as a percentage of earned premiums
for the corresponding quarter. This calculation is compared to an acceptable
range for the reserves developed by actuaries of the ceding company. At March
31, 2003, and December 31, 2002, the reserves for unpaid losses were $3,486,792
and $3,650,641, respectively. At March 31, 2003, the estimated range of
-10-
reserves for unpaid losses prepared for the Company by the ceding company's
actuaries was as follows:
Low end of range: $2,096,468
High end of range: $3,133,468
Although the recorded reserves at March 31, 2003 are higher than the high-end of
the range of estimated reserves, there is inherent volatility in reserve
estimates. Management will continue to evaluate the estimates of reserves for
unpaid losses and will, if necessary, adjust them accordingly as trends fully
emerge and are confirmed by the underlying claim history.
Since the last reporting date (December 31, 2002), there have been no changes to
the key assumptions made to estimate the reserves for unpaid losses and there
has been no change in the nature and timing of the change in the estimate of
reserves for unpaid losses.
Key assumptions made in determining the actuarial range of reserves for unpaid
losses include the following:
o Loss development factors for the direct business of the ceding company
were utilized due to the larger volume and greater stability.
o The loss development factors were weighted based on the mix of new and
used vehicle business in the latest calendar year.
o Loss development factors were set equal to the weighted 12 month
averages in order to smooth the effects of seasonality, while still
reflecting the reductions due to efficiencies gained in the claims
payment process that have been realized over the past several years.
Such efficiencies resulted in the quicker payment of claims, resulting
in less open claims at a given point in time.
Reserves for unpaid losses are established after periodic actuarial reviews,
based on judgments of the effects of technological change, manufacturers'
warranties, and MIC's historical experience with mechanical motor vehicle
service agreements. Consequently, the determination of reserves for unpaid
losses is an estimate and a process inherently subject to a number of highly
variable factors. Ultimate losses could exceed reserves for unpaid losses and
cause the Company to adjust such reserves. Any adjustments to reserves for
unpaid losses are reflected in the operating results for the periods in which
they become known.
The Company's incurred loss ratios (losses incurred as a percentage of net
premium earned) on all business for the periods ended March 31, 2003 and 2002
were 68% and 74%, respectively.
The policies reinsured by the Company are written for multiple years (up to
seven years) and losses do not occur equally over the period for which the
policies are written, but tend to be clustered in the later years. Therefore,
loss experience for prior periods may not be indicative of that for future
periods.
-11-
Forward Looking Statements
This document contains "forward-looking statements" that anticipate results
based on management's plans that are subject to uncertainty. These statements
are made subject to the safe-harbor provisions of the Private Securities
Litigation Reform Act of 1995.
Forward-looking statements do not relate strictly to historical or current facts
and may be identified by their use of words like "plans," "will," "anticipates,"
"estimates," "intends," "believes" and other words with similar meanings. These
statements may address, among other things, our strategy for growth, product
development, regulatory approvals, market position, expenses, financial results
and reserves. Forward-looking statements are based on management's current
expectations of future events. We cannot guarantee that any forward-looking
statement will be accurate. However, we believe that our forward-looking
statements are based on reasonable, current expectations and assumptions.
Whether or not actual results differ materially from forward-looking statements
may depend on numerous foreseeable and unforeseeable risks and uncertainties,
some of which relate particularly to our business, such as our ability to set
adequate premium rates and maintain adequate reserves, our ability to compete
effectively, and our ability to grow our business through internal growth as
well as though acquisitions. Other risks and uncertainties may be related to the
insurance industry in general or the overall economy, such as regulatory
developments, industry consolidation and, general economic conditions and
interest rates. We assume no obligation to update any forward-looking statements
as a result of new information or future events or developments.
If the expectations or assumptions underlying our forward-looking statements
prove inaccurate or if risks or uncertainties arise, actual results could differ
materially from those predicted in our forward-looking statements.
Item 4. Controls and Procedures
The Company currently has in place systems relating to disclosure controls and
procedures (as defined in Rules 13a-14(c) and 15d-14(c) of the Securities
Exchange Act of 1934). The Company's principal executive officer and its
principal financial officer evaluated the effectiveness of these disclosure
controls and procedures in connection with the preparation of this report. They
concluded that the controls and procedures are effective and adequate at this
time. There were no significant changes in the Company's internal controls or in
other factors that could significantly affect the controls subsequent to the
date of their evaluation.
-12-
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 99.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 99.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(b) No reports on Form 8-K were filed during the quarter for which this report
is filed.
-13-
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.
MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED (Registrant)
By: /s/ Ronald W. Jones
---------------------------
Ronald W. Jones
Vice-President, Finance
Signing on behalf of
the Registrant, and
Principal Financial Officer
Dated: May 12, 2003
CERTIFICATION
I, William B. Noll, Chairman, Chief Executive Officer, President and Director of
Motors Mechanical Reinsurance Company, Limited, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Motors Mechanical
Reinsurance Company, Limited;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
the registrant's board of directors (or persons performing the equivalent
function):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 12, 2003 /s/ William B. Noll
------------------------------
William B. Noll
Chairman, Chief Executive
Officer, President and Director
CERTIFICATION
I, Ronald W. Jones, Vice-President, Finance and Principal Financial Officer of
Motors Mechanical Reinsurance Company, Limited, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Motors Mechanical
Reinsurance Company, Limited;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
the registrant's board of directors (or persons performing the equivalent
function):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 12, 2003 /s/ Ronald W. Jones
------------------------------
Ronald W. Jones
Vice-President, Finance and
Principal Financial Officer