Certain Other Relationships and Related
Transactions
As of January 1, 2000, Wind River Investment
Corporation owed $3.5 million to Wind River Investment,
LLC, an affiliate of the Ball family trusts, which included a
note receivable of $3.5 million and interest receivable of
$28,455 under a promissory note. The annual rate of interest on
this note was 6.0%. During 2001, United National Insurance
Company purchased this promissory note from Wind River
Investments, LLC for $3.9 million, which included a note
receivable of $3.5 million and interest receivable of
$0.4 million. During 2002, United National Insurance
Company sold this promissory note to American Manufacturing
Corporation (Delaware), an affiliate of the Ball family trusts,
for $4.2 million, which included a note receivable of
$3.9 million and interest receivable of $0.4 million.
No gain or loss was recognized on the sale to American
Manufacturing Corporation (Delaware). On August 18, 2003,
in anticipation of the sale of Wind River Investment
Corporation, the Ball family trusts assumed this debt owed to
American Manufacturing Corporation (Delaware). A total of
$4.3 million was assumed, which included a note receivable
of $3.9 million and interest receivable of
$0.5 million.
During 2001, United National Group purchased a
promissory note from Wind River Investments, LLC for
$1.4 million. The promissory note was a loan to The AMC
Group, L.P., an affiliate of the Ball family trusts. The annual
rate of interest on this note was 6.0%. Between 2001 and 2003
United National Group received principal payments of
$0.7 million and interest payments of $0.1 million. In
April 2003, United National Group sold this promissory note to
American Manufacturing Corporation (Delaware) for
$0.6 million (the amortized value as of April 30,
2003). No gain or loss was recognized on the sale to American
Manufacturing Corporation (Delaware).
During 2001, United National Group purchased a
promissory note from Philadelphia Gear Corporation, an affiliate
of the Ball family trusts, for $2.4 million. The promissory
note was a loan to 181 Properties, LP, an affiliate of the Ball
family trusts. The annual rate of interest on this note was
6.3%. During 2001, United National Group received interest
payments of $74,784. In April 2003, it sold this promissory note
to American Manufacturing Corporation (Delaware) for
$2.6 million, which included a
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note receivable of $2.4 million and interest
receivable of $0.2 million. No gain or loss was recognized
on the sale to American Manufacturing Corporation (Delaware).
During 2001, United National Group purchased a
mortgage from Wind River Investment, LLC for $1.3 million.
The annual rate of interest on this mortgage was 7.8%. During
2003, this mortgage loan was repaid in full.
During 2000, Little Round Top Inc., a real estate
company that at the time was a wholly owned subsidiary of Wind
River Investment Corporation, but which was distributed to the
Ball family trusts before the sale of Wind River Investment
Corporation to United National Group, established a demand
promissory note with American Manufacturing Corporation
(Pennsylvania), an affiliate of the Ball family trusts. The
interest rate on this promissory note was variable and was equal
to the applicable United States federal rate at the end of each
month. Between 2000 and 2003, United National Group borrowed
$0.6 million, made principal payments of $32,801, and made
interest payments of $81.
During 2000, Robert Strouse, President of The AMC
Group, L.P., issued a promissory note to Little Round Top. The
annual interest rate on this promissory note was 6.39%. During
2000, United National Group loaned Mr. Strouse
$0.3 million under the promissory note. During 2002 and
2003 United National Group received interest payments of $32,642
and $20,577, respectively.
During 2000, United National Group issued a
demand promissory note to Wind River Investment, LLC. The annual
rate of interest on this note was 6%. Between 2000 and 2003
United National Group borrowed $0.1 million, made principal
payments of $20,000, and made interest payments of $7,173. On
August 28, 2003, United National Group paid $96,113 to Wind
River Investment, LLC to satisfy this loan in full, which
included principal of $92,436 and interest of $3,677.
During 2001, Little Round Top issued a promissory
note to American Manufacturing Corporation (Delaware). The
annual rate of interest on this note was 10%. Between 2001 and
2003, United National Group borrowed $1.6 million under
this promissory note.
On August 18, 2003, Wind River Investment
Corporation distributed its investment in Little Round Top to
the Ball family trusts in anticipation of United National
Group’s acquisition of Wind River Investment Corporation.
On August 25, 2003, Wind River Investment
Corporation sold a series of limited partnership interests to
Wind River Investments, LLC. Proceeds from the sale of these
investments totaled $6.0 million.
During the time that Wind River Investment
Corporation was owned by the Ball family trusts, United National
Group’s employees were eligible for participation in the
health and welfare and retirement benefits packages offered by
American Manufacturing Corporation (Pennsylvania). In
conjunction therewith, American Manufacturing Corporation
(Pennsylvania) provided services such as selection of vendors,
maintenance of plan documents, legal compliance, record keeping,
coordination of actuarial studies and plan audits, and
preparation of all required regulatory filings.
On September 5, 2003, United National Group
paid Fox Paine & Company a fee of $13.2 million,
of which $12.0 million was a management fee related to the
acquisition of Wind River Investment Corporation and
$1.2 million was a management fee for services that will be
rendered for the one-year period starting September 6,
2003, payable pursuant to the Management Agreement among United
National Group, Fox Paine & Company, and The AMC Group,
L.P. On September 5, 2003, United National Group paid Fox
Paine & Company $0.5 million as reimbursement for
expenses related to the acquisition of Wind River Investment
Corporation.
On September 5, 2003, United National Group
paid The AMC Group, L.P., a management fee of $0.3 million
for services that will be rendered for the one-year period
starting September 6, 2003.
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