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Nevada	98-0577859
(State or other jurisdiction of incorporation or organization)	(IRS Employee Identification No.)

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o	Smaller reporting company x

 

					PAGE
Cautionary Statement Concerning Forward-Looking Statements
PART I		FINANCIAL INFORMATION
Item 1.		Consolidated Balance Sheets at June 30, 2009 (unaudited) and December 31, 2008 (audited)		1
		Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2009 and 2008 (unaudited)		2
		Consolidated Statement of Stockholders’ Deficit for the Twelve Months Ended December 31, 2008 and Six Months Ended June 30, 2009 (unaudited)		3
		Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2009 and 2008 (unaudited)		4
		Notes to Unaudited Consolidated Financial Statements		5
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		15
Item 3.		Quantitative and Qualitative Disclosures About Market Risk		26
Item 4T.		Controls and Procedures		26
PART II		OTHER INFORMATION
Item 1.		Legal Proceedings		27
Item 1A.		Risk Factors		27
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds		27
Item 3.		Defaults Upon Senior Securities		27
Item 4.		Submission of Matters to a Vote of Security Holders		27
Item 5.		Other Information		27
Item 6.		Exhibits		27
Signatures

·	there is limited historical information available for investors to evaluate Amalphis’ performance or a potential investment in its shares;

·	Our subsidiary, Amalphis currently issues reinsurance to only one insurer;

·	Our subsidiary, Amalphis’ results of operations will fluctuate from period to period and may not be indicative of its long-term prospects;

·	Our subsidiary, Amalphis’ investment strategy may subject it to greater risk of loss;

·	established competitors with greater resources may make it difficult for our subsidiary, Amalphis to effectively market its products or offer its products at a profit;

·	the property and casualty insurance and reinsurance markets may be affected by cyclical trends;

·	the current state of the economy and capital markets increases the possibility of adverse effects on our financial position and results of operations;

·	if our subsidiary, Amalphis loses or is unable to retain its senior management or other key personnel and are unable to attract qualified personnel, its ability to implement its business strategy could be delayed or hindered, which, in turn, could significantly and negatively affect its business;

 

·	Our subsidiary, Amalphis may need additional capital in the future in order to operate its business, and such capital, if available, could dilute your ownership interest in Amalphis and may cause the market price of the shares to decline;

·	Our subsidiary, Amalphis’ property and property catastrophe reinsurance operations may make it vulnerable to losses from catastrophes and may cause its results of operations to vary significantly from period to period;

·	Our subsidiary, Amalphis sometimes depends on its insurance company clients’ evaluations of the risks associated with their insurance underwriting, which may subject it to reinsurance losses;

·	Our subsidiary, Amalphis’ inability to purchase or collect upon certain indemnity coverage it seeks to obtain in order to limit its reinsurance risks could adversely affect its business, financial condition and results of operations;

 

·	any suspension or revocation of our subsidiary, Amalphis’ insurance license would materially impact its ability to do business and implement its business strategy;

·	Our subsidiary, Amalphis is subject to the risk of possibly becoming an investment company under U.S. federal securities law;

·	insurance regulators in the United States or elsewhere may review our subsidiary, Amalphis’ activities and claim that it is subject to that jurisdiction’s licensing requirements;

·	current legal and regulatory activities relating to certain insurance products could affect our subsidiary, Amalphis’ business, results of operations and financial condition;

·	the outcome of recent industry investigations and regulatory proposals could adversely affect our subsidiary, Amalphis’ financial condition and results of operations and cause the price of its shares to be volatile;

·	Our subsidiary, Amalphis’ investment portfolio has represented a significant portion of its revenues and income;

·	the performance of Amalphis’ investment portfolio may suffer as a result of adverse capital market developments or other factors and impact its liquidity, which could in turn adversely affect its financial condition and results of operations;

·	Our subsidiary, Amalphis may trade on margin and use other forms of financial leverage, which could potentially adversely affect its revenues;

·

it is our intention to reincorporate in the British Virgin Islands with the same capital structure as we currently have as a Nevada corporation.  If we consummate such reincorporation, we will become subject to the laws of the British Virgin Islands which may have an adverse impact on the rights of our shareholders;

·	provisions of our subsidiary’s proposed Articles, the Companies Law of the British Virgin Islands and our corporate structure may each impede a takeover or a merger, which could adversely affect the value of our shares;

·	our ability to pay dividends will be subject to certain restrictions; and

·	holders of shares may have difficulty obtaining or enforcing a judgment against us, or face difficulties in protecting their interests;

 

 

 

RINEON GROUP, INC.
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2009 AND DECEMBER 31, 2008
		June 30, 2009				December 31, 2008
ASSETS		(Unaudited)				(Audited)
Current Assets
Cash		$	881,655			$	629,429
Investments			37,713,662				29,244,338
Accrued interest			28,725				27,408
Insurance premium receivable			3,406,790				3,276,725
Total current assets			42,030,832				33,177,900
GOODWILL			16,521,500				-
TOTAL ASSETS		$	58,552,332			$	33,177,900
LIABILITIES AND STOCKHOLDERS' EQUITY:
LIABILITIES
Accounts payable		$	34,632			$	58,801
Due to related party							14,400
Unearned premium reserve			5,342				17,671
Loss reserves			3,568,673				3,266,402
Total liabilities			3,608,647				3,357,274
COMMITMENTS AND CONTINGENCIES			-				-
MINORITY INTEREST			2,686,604				1,100,970
STOCKHOLDERS' EQUITY:
Common stock, $0.01 par value, 100,000,000 shares
authorized; 2,010,000 shares issued and outstanding			2,010				31,375
Preferred stock, $1000.00 par value, 10,000,000 shares
authorized; 36,000 shares issued and outstanding			36,000,000
Additional paid-in-capital			4,444,490				23,893,625
Retained earnings			11,810,580				4,794,656
Total stockholders' equity			52,257,080				28,719,656
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	58,552,332			$	33,177,900

 

 

RINEON GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2009
AND JUNE 30, 2008
		Three Months Ended (Unaudited)								Six Months Ended  (Unaudited)
		June 30, 2009				June 30, 2008				June 30, 2009				June 30, 2008
Net premiums earned		$	3,393,696				2,497,212			$	6,787,391				4,994,424
Investment income			873				6,186				1,532				12,372
Net realized and unrealized gains (loss) on securities			2,798,167				1,250,751				8,469,324				2,900,293
Total revenues			6,192,736				3,754,149				15,258,247				7,907,089
Expenses:
Losses and loss adjustment expenses			2,153,504				1,701,417				4,307,009				3,402,833
Policy acquisition costs			1,166,276				720,879				2,332,553				1,441,758
General and administrative expense			17,806				40,423				47,692				50,502
Total expense			3,337,587				2,462,719				6,687,254				4,895,093
Income from operations before investment income and
provision for (benefit from) income tax			2,855,149				1,291,431				8,570,993				3,011,996
Provision for (benefit from) income tax			-				-				-				-
Minority interest			(528,203	)			(238,915	)			(1,585,634	)			(557,219	)
Net income		$	2,326,947			$	1,052,516			$	6,985,360			$	2,454,777
Weighted Average Common Shares Outstanding:
Basic and diluted			4,422,747				7,000,000				5,704,254				7,000,000
Earnings per share:
Basic and diluted		$	0.53			$	0.15			$	1.22			$	0.35

 

RINEON GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2009 AND JUNE 30, 2008
		For The Six				For The Six
		Months Ended				Months Ended
		June 30, 2009				June 30, 2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	6,985,360			$	2,454,777
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Realized and unrealized gains on investments			(8,469,324	)			(2,900,293	)
Changes in assets and liabilities:
(Increase) decrease in insurance premium receivable			(130,065	)			(149,833	)
Increase (decrease) in accounts payable			(24,169	)			(12,826	)
Increase (decrease) in related party payables			(14,400	)			5,300
Increase (decrease) in unearned premium reserve			(12,329	)			-
Increase (decrease) in loss reserves			302,271				-
Net cash provided by operating activities			(1,362,656	)			(602,875	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investments			(36,000,000	)			-
Minority interest			1,585,634				557,219
Proceeds from forgiveness of debt			30,565				-
Accrued interest from investments			(1,317	)			(7,681	)
Net cash provided by (used in)  investing activities			(34,385,118	)			549,538
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of preferred stock			36,000,000				-
Net cash used in financing activities			36,000,000				-
INCREASE IN CASH			252,226				(53,337	)
CASH, BEGINNING OF YEAR			629,429				505,374
CASH, END OF PERIOD		$	881,655			$	452,037
Supplemental Disclosures
Cash paid during the year for interest		$	-			$	-
Cash paid during the year for taxes		$	-			$	-

·	the existing members of the board of directors of Amalphis cannot be changed nor may any vacancies on or additions to such board of directors be filled;

·	no additional shares of capital stock of Amalphis may be issued;

·	Amalphis may not incur indebtedness over $0.5 million at any one time or $2.5 million in the aggregate;

·	Amalphis may not change the fundamental nature of its business;

·	Amalphis shall not make any material change in its senior executive officers or management; and

·	Amalphis shall not acquire the securities or assets of any other person, firm or corporation.

Asset Category		Depreciation/ Amortization Period
Furniture and Fixture		3 Years
Office equipment		3 Years
Leasehold improvements		5 Years

 

June 30, 2009

 

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

·	the existing members of the board of directors of Amalphis cannot be changed nor may any vacancies on or additions to such board of directors be filled;

·	no additional shares of capital stock of Amalphis may be issued;

·	Amalphis may not incur indebtedness over $0.5 million at any one time or $2.5 million in the aggregate;

·	Amalphis may not change the fundamental nature of its business;

·	Amalphis shall not make any material change in its senior executive officers or management; and

·	Amalphis shall not acquire the securities or assets of any other person, firm or corporation.

•

Level 1:  Inputs are unadjusted, quoted prices in active markets for identical instruments at the measurement date (e.g., U.S. Government securities and active exchange-traded equity securities).

•

Level 2:  Inputs (other than quoted prices included within Level 1) that are observable for the instrument either directly or indirectly (e.g., certain corporate and municipal bonds and certain preferred stocks). This includes: (i) quoted prices for similar instruments in active markets, (ii) quoted prices for identical or similar instruments in markets that are not active, (iii) inputs other than quoted prices that are observable for the instruments, and (iv) inputs that are derived principally from or corroborated by observable market data by correlation or other means.

•

Level 3:  Inputs that are unobservable. Unobservable inputs reflect the reporting entity’s subjective evaluation about the assumptions market participants would use in pricing the financial instrument (e.g., certain structured securities and privately held investments).

	Level 1 Fair Value				Level 2 Fair Value				Level 3 Fair Value				Total Fair Value				Cost
Equity securities			37,058,272				-				-				37,058,272				21,895,000
Corporate debt							655,390								655,390				655,390
		$	37,058,272			$	655,390			$	-			$	37,713,662			$	22,550,390

		Fair				Original				Realized				Unrealized
Investment		Value				Cost				Gain				Gain				Total
Equity Securities		$	37,058,272			$	21,895,000			$	-			$	15,163,272			$	37,058,272

The Company’s investment in corporate debt securities consisted of the following as of June 30, 2009:

 

 

Balance at beginning of period		$	-
Amount charged to cost and expense			320,703
Balance as of December 31, 2007			320,703
Amount charged to cost and expense during 2008			2,945,699
Balance as of December 31, 2008			3,266,402
Amount charged to cost and expense through June 2009			302,271
Balance as of June 30, 2009		$	3,568,673

 

·	the existing members of the board of directors of Amalphis cannot be changed nor may any vacancies on or additions to such board of directors be filled;

·	no additional shares of capital stock of Amalphis may be issued;

·	Amalphis may not incur indebtedness over $0.5 million at any one time or $2.5 million in the aggregate;

·	Amalphis may not change the fundamental nature of its business;

·	Amalphis shall not make any material change in its senior executive officers or management; and

·	Amalphis shall not acquire the securities or assets of any other person, firm or corporation.

 

In addition, Rineon has a right of first refusal to purchase any Amalphis shares of common stock that any of Amalphis common shareholders wish to sell. A copy of the Shareholders Agreement is attached hereto as exhibit 10.1.

 

 

 

	·	Paid Loss Development Method.    We estimate ultimate losses by calculating past paid loss development factors and applying them to exposure periods with further expected paid loss development. The paid loss development method assumes that losses are paid in a consistent pattern. It provides an objective test of reported loss projections because paid losses contain no reserve estimates. For many coverages, claim payments are made very slowly and it may take years for claims to be fully reported and settled.
	·	Reported Loss Development Method.    We estimate ultimate losses by calculating past reported loss development factors and applying them to exposure periods with further expected reported loss development. Since reported losses include payments and case reserves, changes in both of these amounts are incorporated in this method. This approach provides a larger volume of data to estimate ultimate losses than paid loss methods. Thus, reported loss patterns may be less varied than paid loss patterns, especially for coverage that have historically been paid out over a long period of time but for which claims are reported relatively early and case loss reserve estimates established.
	·	Expected Loss Ratio Method.    We estimate ultimate losses under the expected loss ratio method, by multiplying earned premiums by an expected loss ratio. We select the expected loss ratio using industry data, historical company data and its professional judgment. We use this method for lines of business and contracts where there are no historical losses or where past loss experience is not credible.
	·	Bornheutter-Ferguson Paid Loss Method.    We estimate ultimate losses by modifying expected loss ratios to the extent paid losses experienced to date differ from what would have been expected to have been paid based upon the selected paid loss development pattern. This method avoids some of the distortions that could result from a large development factor being applied to a small base of paid losses to calculate ultimate losses. We use this method for lines of business and contracts where there are limited historical paid losses.
	·	Bornheutter-Ferguson Reported Loss Method.   We estimate ultimate losses by modifying expected loss ratios to the extent reported losses experienced to date differ from what would have been expected to have been reported based upon the selected reported loss development pattern. This method avoids some of the distortions that could result from a large development factor being applied to a small base of reported losses to calculate ultimate losses. We use this method for lines of business and contracts where there are limited historical reported losses.

For each contract, we utilize each reserving methodology that its actuaries deem appropriate in order to calculate a best estimate, or point estimate, of reserves. In setting its reserves, we do not use a range of estimates that may be subject to adjustment. Accordingly, at the end of each period, we will establish reserves at a point estimate based upon all information then available. As of June 30, 2009, we had not adjusted any of its reserves since commencing underwriting operations in November 2007. Whether we use one methodology, a combination of methodologies or all methodologies depends upon the contract and the judgment of the actuaries responsible for the contract.

 

 

 

·	frequency business; and
·	severity business.

 

 

 

Exhibit No.	Exhibit Name
3.2	Certificate of Designation of Amalphis Series A Preferred Stock
10.1	Shareholders Agreement between Rineon Group, Inc., NatProv Holding Inc. and Amalphis Group Inc.
31.1	Certification of Chief Executive Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002.

31.2	Certification of Chief Financial Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002.

32.1	Certification of Chief Executive Officer pursuant to 18 United States Code Section 1350, as enacted by Section 906 of the Sarbanes-Oxley Act of 2002.

32.2	Certification of Chief Financial Officer pursuant to 18 United States Code Section 1350, as enacted by Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

 

Date: September 14, 2009	RINEON GROUP, INC.
	/s/ Tore Nag
	Tore Nag President and Chief Operating Officer (Principal Executive Officer)

	/s/ Michael Hlavsa
	Michael Hlavsa
	Chief Financial Officer and Secretary
	(Principal Accounting and Financial Officer)