<PAGE> 1
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 the period ended JUNE 30, 1996
or
[ ] 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: 333-2796
--------
CERULEAN COMPANIES, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Georgia 58-2217138
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3350 Peachtree Road, N.E., Atlanta, Georgia 30326
(Address of principal executive offices) (Zip Code)
</TABLE>
(404) 842-8000
(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
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class: Class A Convertible Common Stock, no par value, $0.01 stated value.
Outstanding as of August 9, 1996 - 800,000 shares
<PAGE> 2
CERULEAN COMPANIES, INC.
FORM 10-Q
JUNE 30, 1996
INDEX
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of
June 30, 1996 and December 31, 1995 Page 3
Consolidated Statements of Income for the three months and six months
ended June 30, 1996 and 1995 Page 4
Consolidated Statements of Cash Flow for the six months
ended June 30, 1996 and 1995 Page 5
Notes to Consolidated Financial Statements Page 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations Page 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings Page 11
Item 2. Changes in Securities Page 11
Item 3. Defaults Upon Senior Securities Page 11
Item 4. Submission of Matters to a Vote of Security Holders Page 11
Item 5. Other Information Page 11
Item 6. Exhibits and Reports on Form 8-K Page 11
Signatures Page 12
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
CERULEAN COMPANIES, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30,
1996 DECEMBER 31,
(UNAUDITED) 1995
------------ ------------
<S> <C> <C>
ASSETS
Investments:
Fixed maturities:
Available-for-sale, at fair value (amortized cost: $151,652,466; $151,124,327 $131,055,098
$126,115,087)
Equity securities, at fair value (cost: $46,518,766; $39,657,474) 53,608,965 42,729,087
Short-term investments, at fair value (cost: $675,000; $932,958) 623,788 905,383
------------ ------------
Total investments 205,357,080 174,689,568
Cash and cash equivalents 75,397,952 49,304,688
Reimbursable portion of estimated benefit liabilities 106,130,300 102,132,300
Accounts receivable 42,012,660 36,063,899
FEP assets held by agent 12,533,497 12,137,107
Property and equipment 33,154,371 33,952,436
Other assets 8,197,817 8,798,587
------------ ------------
Total assets $482,783,677 $417,078,585
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Estimated benefit liabilities $183,102,701 $175,846,250
Unearned premiums 8,179,796 7,289,126
FEP stabilization reserve 12,533,497 12,137,107
Accounts payable and accrued expenses 23,938,156 16,635,534
Payables to other plans 2,599,287 2,442,748
Other liabilities 25,352,458 27,688,394
Note payable 3,000,000 2,000,000
------------ ------------
Total liabilities 258,705,895 244,039,159
------------ ------------
Mandatorily redeemable preferred stock:
Class B Convertible Preferred Stock, no par value; liquidation
preference, $1,000 per share; mandatory redemption, $900 per share.
Authorized, issued and outstanding, 49,900 shares 46,633,000 -
------------ ------------
Shareholders' equity:
Blank Preferred Stock, no par value.
Authorized and unissued 100,000,000 shares - -
Class A Convertible Common Stock, no par value, $0.01, stated value.
Authorized 50,000,000 shares; issued and outstanding 800,000 shares - -
Common Stock, no par value.
Authorized and unissued 100,000,000 shares - -
Net unrealized appreciation on securities 5,347,469 6,429,375
Retained earnings 172,097,313 166,610,051
------------ ------------
Total shareholders' equity 177,444,782 173,039,426
------------ ------------
Total liabilities and shareholders' equity $482,783,677 $417,078,585
============ ============
</TABLE>
See accompanying notes.
3
<PAGE> 4
CERULEAN COMPANIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
----------------------------------- -------------------------------
1996 1995 1996 1995
------------ --------------- ------------ -------------
<S> <C> <C> <C> <C>
Revenues:
Premiums $324,748,103 $284,471,062 $648,753,115 $565,317,179
Investment and other income 3,323,782 2,792,080 6,521,087 5,644,453
Realized gains 810,643 578,767 900,350 2,334,014
------------ ------------ ------------ ------------
Total revenues 328,882,528 287,841,909 656,174,552 573,295,646
Benefits expense 290,013,467 257,440,068 579,051,439 507,350,774
Operating expenses, net of expense reimbursements
of $20,753,641, $16,680,667, $41,202,481, and
$32,814,692, respectively 33,894,750 31,854,449 68,348,324 61,826,481
------------ ------------ ------------ ------------
Operating income (loss) 4,974,311 (1,452,608) 8,774,789 4,118,391
Non-operating income 1,275,000 - 1,275,000 -
------------ ------------ ------------ ------------
Income (loss) before income taxes and minority 6,249,311 (1,452,608) 10,049,789 4,118,391
interest
Income tax expense (benefit) 1,131,829 (905,967) 1,946,651 753,158
Minority interest (121,140) - (304,009) -
------------ ------------ ------------ ------------
Net income (loss) $ 4,996,342 ($546,641) $ 7,799,129 $ 3,365,233
============ ============ ============ ============
</TABLE>
See accompanying notes.
4
<PAGE> 5
CERULEAN COMPANIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-----------------------------------
1996 1995
------------- -------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 7,799,129 $ 3,365,233
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Items that did not use cash:
Depreciation 4,410,980 4,003,596
Amortization 161,137 234,183
Uncollectible receivables 1,109,240 556,799
(Gain) on sale of investments (900,350) (2,334,014)
Loss on sale of property and equipment 14,568 38,082
(Increase) decrease in certain assets:
Reimbursable portion of estimated benefit liabilities (3,998,000) (5,295,000)
Accounts receivable (7,058,001) (6,182,273)
Other assets 984,490 (902,613)
Increase (decrease) in certain liabilities:
Estimated benefit liabilities 7,256,451 3,003,383
Unearned premiums 890,670 2,964,999
Accounts payable and accrued expenses 7,302,622 (6,877,037)
Payables to other plans 156,539 (849,011)
Other liabilities (4,639,337) (3,339,816)
------------- --------------
Net cash provided by (used in) operating activities 13,490,138 (11,613,489)
INVESTING ACTIVITIES
Investments available-for-sale:
Investments purchased (65,545,875) (87,255,829)
Investments sold or matured 34,143,484 83,397,705
Investments held-to-maturity:
Investments purchased - (99,750)
Investments matured - 2,352,005
Property and equipment purchased (4,252,672) (4,187,619)
Property and equipment sold 625,189 9,097
------------- --------------
Net cash used in investing activities (35,029,874) (5,784,391)
FINANCING ACTIVITIES
Proceeds from note payable 1,000,000 -
Proceeds from the issuance of preferred stock 46,633,000 -
------------- --------------
Net cash provided by financing activities 47,633,000 -
------------- --------------
Increase (decrease) in cash and cash equivalents 26,093,264 (17,397,880)
Cash and cash equivalents at beginning of period 49,304,688 25,484,560
------------- --------------
$ 75,397,952 $ 8,086,680
============= ==============
</TABLE>
See accompanying notes.
5
<PAGE> 6
CERULEAN COMPANIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
UNAUDITED
1. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Cerulean Companies, Inc. (the "Company") was incorporated under the laws of the
State of Georgia on February 2, 1996 to act as the holding company for Blue
Cross and Blue Shield of Georgia, Inc. ("Georgia Blue") and its subsidiaries,
and for other lawful purposes. On February 2, 1996, the Company acquired all
of the outstanding capital stock of Georgia Blue, following Georgia Blue's
conversion from a not-for-profit corporation to a for-profit corporation
pursuant to a Plan of Conversion approved by the Georgia Commissioner of
Insurance on December 27, 1995 (the "Conversion"). In connection with the
Conversion, the Company issued 49,900 shares of Class B Convertible Preferred
Stock ("Preferred Stock") to raise $49.9 million in capital. After deducting
offering costs, the net proceeds to the Company were $46.6 million.
Although the Company did not become a holding company for Georgia Blue until
the Conversion on February 2, 1996, the consolidated results of operations
include the historical operations of Georgia Blue and its subsidiaries prior to
February 2, 1996 and the Company (including Georgia Blue and its subsidiaries
on a consolidated basis) from the period February 2, 1996 through June 30,
1996.
Effective May 14, 1996, the Company's registration of its Class A Convertible
Common Stock (the "Class A Stock") with the Securities and Exchange Commission
became effective. As part of the Conversion, the Company agreed to offer to
each of Georgia Blue's approximately 160,000 eligible subscribers five shares
of Class A Stock at no cost. The Company issued 800,000 shares of Class A
Stock to an Escrow Agent for distribution to eligible subscribers. All shares
which eligible subscribers have rejected, or have been deemed to be rejected,
at the termination of the offer will be transferred by the Escrow Agent to the
Company for cancellation. Currently, the Class A Stock is not publicly traded.
BASIS OF PRESENTATION
The Company's accompanying unaudited consolidated financial statements have
been prepared in conformity with generally accepted accounting principles
("GAAP") and require the use of management's estimates. As to the Company's
managed care, health and life insurance operations, GAAP varies in some
respects from statutory accounting practices permitted or prescribed by
insurance regulatory authorities. The Company's health care plan subsidiary,
its health maintenance organization and its life insurance subsidiary are
subject to regulation by the Georgia Insurance Department, including minimum
capital and surplus requirements and restrictions on payment of dividends.
These statements should be read in conjunction with the Company's Prospectus
dated May 14, 1996 (which is a part of the Registration Statement filed on Form
S-1, Registration No. 333-2796, filed on March 27, 1996 and subsequent
amendments). Because of the nature of the Company's operations, the results
for interim periods are not necessarily indicative of results expected for the
entire year. In the opinion of management, all material adjustments necessary
for a fair presentation of the financial position and results of operations for
the interim periods have been made. All such adjustments are of a normal
recurring nature.
PRINCIPLES OF CONSOLIDATION
The Company's accompanying consolidated financial statements include the
accounts of the Company, Georgia Blue and its wholly-owned health maintenance
and life insurance subsidiaries, a non-insurance subsidiary and community
health partnership network joint ventures ("CHPNs") in which Georgia Blue has a
majority interest. All significant intercompany transactions and balances have
been eliminated in consolidation.
ACCOUNTING FOR A SALE OF STOCK BY A SUBSIDIARY
Gains (or losses) arising from a subsidiary issuing its own stock to third
parties are recorded as non-operating income and are presented as a separate
line item in the consolidated income statement.
6
<PAGE> 7
CERULEAN COMPANIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENT
JUNE 30, 1996
UNAUDITED
2. EARNINGS PER SHARE
Earnings per share are omitted because such data are not meaningful at the
present time; there is presently no market for Class A Stock or any equity
securities of the Company, and the Company does not anticipate development of
such a market in the foreseeable future.
3. NON-OPERATING INCOME
Community health partnership networks ("CHPNs"), are locally based equity
ventures between Georgia Blue, which own a 51% interest, and local physician
and/or hospital groups, which own the remaining equity interests in the CHPNs.
Clinical services are provided by the physician or hospital partners as well as
other providers with which the CHPNs maintain contracts, and Georgia Blue
provides sales, management and administrative services, including information
systems and data management services through service contracts with the CHPNs.
On May 23, 1996, a hospital purchased a 5% interest in one of Georgia Blue's
CHPN subsidiaries for $2.5 million and received in exchange 5.5682 shares of
Class C common stock of the CHPN subsidiary. In accordance with the CHPN
formation agreement, Georgia Blue's 51% equity interest in the CHPN subsidiary
was not diluted as a result of the transaction. Georgia Blue recorded
non-operating income of $1.3 million for the gain related to its portion of
this transaction and increased the minority interest liability for this CHPN by
$1.2 million. After deducting deferred income taxes of $0.3 million, net
income was favorably impacted by $1.0 million.
7
<PAGE> 8
CERULEAN COMPANIES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the consolidated
financial statements and notes thereto. The Company's actual future results
could differ materially from its historical results.
OVERVIEW
Cerulean Companies, Inc. (the "Company") was incorporated under the laws of the
State of Georgia on February 2, 1996 to act as the holding company for Blue
Cross and Blue Shield of Georgia, Inc. ("Georgia Blue") and its subsidiaries,
and for other lawful purposes. On February 2, 1996 the Company acquired all of
the outstanding capital stock of Georgia Blue, following Georgia Blue's
conversion from a not-for-profit corporation to a for-profit corporation
pursuant to a Plan of Conversion approved by the Georgia Commissioner of
Insurance on December 27, 1995 (the "Conversion"). In connection with the
Conversion, the Company issued 49,900 shares of Class B Convertible Preferred
Stock ("Preferred Stock") to raise $49.9 million in capital. After deducting
offering costs, the net proceeds to the Company were $46.6 million.
Effective May 14, 1996, the Company's registration of its Class A Convertible
Common Stock (the "Class A Stock") with the Securities and Exchange Commission
became effective. As part of the Conversion, the Company agreed to offer to
each of Georgia Blue's approximately 160,000 eligible subscribers five shares
of Class A Stock at no cost. The Company issued 800,000 shares of Class A
Stock to an Escrow Agent for distribution to eligible subscribers. All shares
which eligible subscribers have rejected, or have been deemed to be rejected,
at the termination of the offer will be transferred by the Escrow Agent to the
Company for cancellation. Currently, the Class A Stock is not publicly traded.
Because the Company was not organized until February 2, 1996 and did not become
a holding company for Georgia Blue and its subsidiaries until the Conversion on
February 2, 1996, the discussions below relate to the historical operations of
Georgia Blue prior to February 2, 1996 and to the Company (including Georgia
Blue and its subsidiaries on a consolidated basis) for the period from February
2, 1996 through June 30, 1996.
RESULTS OF OPERATIONS
Three Months Ended June 30, 1996 Compared to Three Months Ended June 30, 1995
Premium revenues increased 14% to $324.7 million for the three months ended
June 30, 1996 from $284.5 million for the three months ended June 30, 1995.
Premium revenues for Indemnity and PPO products increased $16.5 million to
$265.7 million for the three months ended June 30, 1996, as the result of a 4%
increase in enrollment. HMO and POS premiums increased 69% to $56.5 million
for the three months ended June 30, 1996 resulting from a 70% increase in
membership. New sales, in group growth, and to a lesser extent migrations from
traditional indemnity products into HMO and POS products, continued to drive
HMO and POS membership growth to 174,000 members at June 30, 1996 from 102,000
members at June 30, 1995.
Investment and other income increased 19% to $3.3 million for the three months
ended June 30, 1996 from $2.8 million for the same period in 1995 as a result
of an increase in the Company's cash and investment portfolio from proceeds
relating to the issuance of the Preferred Stock.
The medical loss ratio (benefits expense as a percentage of premium revenues)
decreased to 89.3% for the three months ended June 30, 1996 from 90.5% for the
three months ended June 30, 1995. The medical loss ratio for HMO and POS
products increased to 86.6% for the three months ended June 30, 1996 from 81.2%
for the three months ended June 30, 1995 due to higher levels of utilization in
non-CHPN markets in 1996. The medical loss ratio for the HMO and POS products
in 1995 was favorably impacted by adjustments to medical costs for prior
periods. The medical loss ratio for indemnity and PPO products decreased to
90.3% for the three months ended June 30, 1996 from 91.9% for the three months
ended June 30, 1995. During the three month period ended June 30, 1995, the
Company identified increasing medical cost trends in all markets of its
indemnity products which related to the third and fourth quarters of 1994. As
a result, the Company recorded an additional $5.6 million in benefits expense
in the 1995 period.
8
<PAGE> 9
CERULEAN COMPANIES, INC.
Operating expenses increased 6% to $33.9 million for the three months ended
June 30, 1996 from $31.9 million for the three months ended June 30, 1995;
however, the operating expense ratio (operating expenses as a percentage of
premium revenues) decreased to 10.4% during the 1996 period from 11.2% for the
1995 period. This was primarily the result of lower personnel costs as a
percentage of premium revenues due to operating efficiencies gained in 1996.
Non-operating income of $1.3 million for the three months ended June 30, 1996
related to a gain on the sale of a 5% interest in one of the Company's CHPN
subsidiaries to a third party.
The effective tax rates for the three months ended June 30, 1996 and June 30,
1995 were 18% and 62%, respectively. The second quarter of 1995 reflected
adjustments in that quarter for over accruals of income taxes for the prior
year not identified during the first three months of 1995. On a year-to-date
basis at the end of six months, the effective tax rate of 19% for the 1996
period is comparable to the effective tax rate of 18% for the 1995 period.
As a result of the foregoing factors, net income increased to $5.0 million for
the three months ended June 30, 1996 from a net loss of $0.5 million for the
three months ended June 30, 1995.
Six Months Ended June 30, 1996 Compared to Six Months Ended June 30, 1995
Premium revenues for the six months ended June 30, 1996 were $648.8 million, an
increase of 15% over the first six months of 1995 premium revenues of $565.3
million. Premium revenues for Indemnity and PPO products increased $32.1
million to $532.1 million for the six months ended June 30, 1996 from $500.0
million for the six months ended June 30, 1995, as the result of a 4% increase
in membership. HMO and POS premiums increased to $111.1 million for the six
months ended June 30, 1996, up from $61.9 million for the six months ended June
30, 1995, as a result of a 70% increase in membership. New sales, in group
growth, and to a lesser extent migrations from traditional indemnity products
into HMO and POS products, continued to drive HMO and POS membership growth to
174,000 members at June 30, 1996 from 102,000 members at June 30, 1995. HMO
and POS products account for 17% of total premiums at the end of the first half
of 1996, up from 12% of total premiums at the end of calendar year 1995.
Investment and other income increased 16% to $6.5 million for the six months
ended June 30, 1996 from $5.6 million for the same period in 1995 as a result
of an increase in the Company's cash and investment portfolio from proceeds
relating to the issuance of the Preferred Stock.
Realized gains on the sale of marketable securities of $0.9 million for the
first six months of 1996 were $1.4 million lower compared to the first six
months of 1995.
The medical loss ratio for HMO and POS products increased to 86.5% for the six
months ended June 30, 1996 compared to 82.4% for the six months ended June 30,
1995 due to higher levels of utilization in non-CHPN markets in 1996. The 1995
loss ratio for HMO and POS products was favorably impacted by adjustments to
medical costs for prior periods. The medical loss ratio for indemnity and PPO
business decreased to 90.2% during the first six months of 1996 compared to
90.9% for the first six months of 1995. The Company has realized more
favorable medical loss ratio experience in its traditional indemnity products
during the first six months of 1996 compared to the same period in 1995.
Additionally, during the six month period ended June 30, 1995, the Company
experienced increasing medical cost trends in all markets of its indemnity
products which related to the third and fourth quarters of 1994. As a result,
an additional $5.6 million was recorded in medical expenses during the 1995
period. The combination of these factors resulted in a more favorable medical
loss ratio of 89.3% for the six months ended June 30, 1996 compared to 89.7%
for the six months ended June 30, 1995.
Operating expenses of $68.3 million for the six months ended June 30, 1996
increased by $6.5 million over the six month period in 1995; however, the
operating expense ratio improved slightly to 10.5% for the 1996 period from
10.9% for the 1995 period. Due to improved operating efficiencies, personnel
costs as a percentage of premiums were lower during the 1996 period.
Non-operating income of $1.3 million for the six months ended June 30, 1996
related to a gain on the sale of a 5% interest in one of the Company's CHPN
subsidiaries to a third party.
9
<PAGE> 10
CERULEAN COMPANIES, INC.
As a result of the foregoing factors, net income of $7.8 million for the six
months ended June 30, 1996 exceeded net income of $3.4 million for the same
period in 1995 by $4.4 million.
LIQUIDITY AND CAPITAL RESOURCES
Six Months Ended June 30, 1996 Compared to Six Months Ended June 30, 1995
The Company has both short-term and long-term liquidity needs and has
structured its investment portfolios accordingly. Over $177.5 million of the
Company's investment portfolio is held at Georgia Blue and is subject to
limitations prescribed by Georgia insurance statutes. Short-term liquidity
needs to fund its operating costs as well as the payment obligations to its
customers are met from funds invested primarily in institutional money market
accounts. Assets not required for short-term liquidity needs are transferred
to a portfolio of investments in the fixed income and equity markets. These
investments provide for reserves for future payment obligations and funds for
long-term liquidity needs. The Company's investment policies are designed to
provide liquidity to meet anticipated payment obligations, to preserve capital
and to maximize yield in conformance with all regulatory requirements.
Net cash provided by operating activities amounted to $13.5 million for the six
months ended June 30, 1996 compared to net cash used in operating activities of
$11.6 million for the same period in 1995. Cash used in operations in the 1995
period was primarily the result of an increase in claim payouts and a onetime
payout in January 1995 for unused vacation accumulated for prior years.
Because of the nature of the Company's business, the cash flows from operations
for interim periods are not necessarily indicative of cash flows from
operations expected for the entire year. The Company believes that its
long-term capital requirements can be met with its current resources, including
proceeds from the sale of the Preferred Stock.
In February 1996, the Company received $46.6 million in connection with its
Preferred Stock offering, net of estimated offering costs of $3.3 million
10
<PAGE> 11
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
27 Financial Data Schedule (for SEC use only).
</TABLE>
(b) Reports on Form 8-K
None
11
<PAGE> 12
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.
CERULEAN COMPANIES, INC.
Registrant
Date: August 12, 1996 By: /s/ Richard D. Shirk
---------------------------------
Richard D. Shirk, President and
Chief Executive Officer
Date: August 12, 1996 By: /s/ John A. Harris
---------------------------------
John A. Harris, Treasurer
12
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CERULEAN
COMPANIES, INC. ON FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<DEBT-HELD-FOR-SALE> 151,124,327
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 53,608,965
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 205,357,080
<CASH> 75,397,952
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 0
<TOTAL-ASSETS> 482,783,677
<POLICY-LOSSES> 183,102,701
<UNEARNED-PREMIUMS> 8,179,796
<POLICY-OTHER> 12,533,497
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 3,000,000
46,633,000
0
<COMMON> 0
<OTHER-SE> 177,444,782
<TOTAL-LIABILITY-AND-EQUITY> 482,783,677
648,753,115
<INVESTMENT-INCOME> 6,521,087
<INVESTMENT-GAINS> 900,350
<OTHER-INCOME> 0
<BENEFITS> 579,051,439
<UNDERWRITING-AMORTIZATION> 68,348,324
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> 10,049,789
<INCOME-TAX> 1,946,651
<INCOME-CONTINUING> 7,799,129
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,799,129
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
