<PAGE> 1
United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended March 31, 1998 or [ ] Transition
report pursuant to Section 13 or 15(d) of the Securities Exchange Act of1934
for the transaction period from
____________to ___________.
Commission file number 1-11983
FPIC Insurance Group, Inc.
(Exact name of registrant as specified in its charter)
Florida 59-3359111
(State or other jurisdiction (IRS Employer
of incorporation of organization) Identification No.)
1000 Riverside Avenue, Suite 800, Jacksonville, FL 32204(Address of principal
executive offices) (Zip Code)
(904) 354-5910
(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 ______
As of April 17, 1998 there were 9,209,031 shares of the registrant's common
stock outstanding.
<PAGE> 2
Table of Contents
<TABLE>
<S> <C>
Part I - Financial Information
Item 1. Consolidated Financial Statements (unaudited)
of FPIC Insurance Group, Inc. and Subsidiaries:
Consolidated Balance Sheets.................................. 3
Consolidated Statements of Income............................ 4
Consolidated Statements of Cash Flows........................ 5
Notes to the Consolidated Financial Statements............... 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations............... 10
Part II - Other Information
Item 1. Legal Proceedings.................................. 13
Item 2. Changes in Securities.............................. 13
Item 3. Defaults Upon Senior Securities.................... 13
Item 4. Submission of Matters to a Vote of Security Holders.13
Item 5. Other Information.................................. 13
Item 6. Exhibits and Reports on Form 8-K................... 13
Signatures........................................................... 14
</TABLE>
2
<PAGE> 3
FPIC Insurance Group, Inc.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
3/31/98 12/31/97
========================= ========================
(unaudited)
<S> <C> <C>
Assets
Bonds and U.S. Government securities:
Available-for-sale, at fair value ........................ $284,203,320 $259,574,210
Common stocks, at fair value ................................. 2,583,502 2,540,735
Real estate investments ...................................... 4,796,916 4,571,465
Other invested assets ........................................ 2,000,000 2,000,000
------------------------- ------------------------
Total Investments 293,583,738 268,686,410
Cash and cash equivalents ................................... 4,165,319 7,679,822
Premiums receivable, net .................................... 22,281,342 17,924,658
Accrued investment income ................................... 5,016,217 3,740,979
Reinsurance recoverable on paid losses ...................... 1,003,183 866,149
Due from reinsurers on unpaid losses and advance premiums ... 13,666,044 14,115,000
Deposits with reinsurers .................................... 403,089 18,070,341
Property and equipment, net of accumulated depreciation ..... 2,221,413 1,982,898
Deferred policy acquisition costs ........................... 1,852,058 1,411,420
Deferred income taxes ....................................... 9,061,201 8,937,094
Finance charge receivable ................................... 448,973 281,217
Prepaid expenses ............................................ 385,566 423,328
Intangible assets ........................................... 7,068,849 7,173,841
Other assets ................................................ 1,558,696 1,556,594
------------------------- ------------------------
Total Assets $362,715,688 $352,849,751
========================= ========================
Liabilities and Shareholders' Equity
Liabilities
Loss and loss adjustment expense reserves .................. $190,490,000 $188,086,000
Unearned premiums .......................................... 36,947,299 28,217,537
Paid in advance and unprocessed ............................ 1,070,686 4,782,835
Short term debt ............................................ 2,000,000 2,000,000
Federal income tax payable ................................. 2,858,812 2,735,527
Accrued expenses and other liabilities ..................... 4,196,481 6,963,432
------------------------- ------------------------
Total Liabilities 237,563,278 232,785,331
------------------------- ------------------------
Shareholders' Equity
Preferred stock, $.10 par value, 50,000,000 shares authorized;
no shares issued and outstanding ..................... - -
Common stock, $.10 par value: 25,000,000 shares authorized;
9,209,031 and 9,179,581 shares issued and outstanding
in 1998 and 1997, respectively ....................... 920,903 917,958
Additional paid-in capital ................................ 26,064,940 25,789,144
Accumulated total other comprehensive income, net
unrealized gain on investments ...................... 3,658,440 3,634,299
Retained earnings ......................................... 94,508,127 89,723,019
------------------------- ------------------------
Total Shareholders' Equity 125,152,410 120,064,420
------------------------- ------------------------
Total Liabilities and Shareholders' Equity $362,715,688 $352,849,751
========================= ========================
</TABLE>
See accompanying notes.
3
<PAGE> 4
FPIC Insurance Group, Inc.
Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Three months ended March 31
======================================================
1998 1997
========================= ========================
<S> <C> <C>
Revenues
Net premiums earned ............................................... $17,855,299 $15,490,017
Net investment income ............................................. 4,339,754 4,060,746
Net realized investment losses .................................... (14,722) (12,927)
Claims administration fees ........................................ 2,589,999 1,823,981
Commission income ................................................. 226,104 202,834
Other income ...................................................... 490,246 457,096
------------------------- ------------------------
Total revenues .................................... 25,486,680 22,021,747
------------------------- ------------------------
Expenses
Net losses and loss adjustment expenses ........................... 14,517,950 13,161,836
Other operating expenses .......................................... 1,817,188 1,674,723
Claims administration expenses .................................... 2,448,125 1,868,822
------------------------- ------------------------
Total expenses ................................... 18,783,263 16,705,381
------------------------- ------------------------
Income before income taxes ........................................ 6,703,417 5,316,366
Income taxes ...................................................... 1,918,309 1,525,800
------------------------- ------------------------
Net income ...................................... $4,785,108 $3,790,566
========================= ========================
Basic earnings per common share .................. $0.52 $0.42
========================= ========================
Diluted earnings per common share ................ $0.50 $0.41
========================= ========================
Basic weighted average shares outstanding ........ 9,199,975 9,007,357
========================= ========================
Diluted weighted average shares outstanding ...... 9,646,467 9,313,028
========================= ========================
</TABLE>
See accompanying notes.
4
<PAGE> 5
FPIC Insurance Group, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three months ended March 31
======================================================
1998 1997
========================= ========================
<S> <C> <C>
Cash flows from operating activities
Net income $4,785,108 $3,790,566
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization expense 442,860 553,908
Realized losses on investments 14,722 12,927
Net earnings from equity investment (24,612) 0
Deferred income taxes (137,106) 486,401
Changes in assets and liabilities:
Premiums receivable (4,356,684) (6,242,505)
Accrued investment income (1,275,238) (973,363)
Reinsurance recoverable on paid losses (137,034) (144,409)
Due from reinsurers on unpaid losses
and advance premiums 448,956 663,224
Deposits with reinsurers 17,667,252 (730,659)
Deferred policy acquisition costs (440,638) (486,541)
Other assets (2,102) (487,881)
Prepaid expenses and finance charge receivable (129,994) 164,654
Loss and loss adjustment expense reserves 2,404,000 6,965,000
Unearned premiums 8,729,762 10,780,015
Paid in advance and unprocessed (3,712,149) (4,147,047)
FIGA accrual 0 (536,311)
Federal income tax payable 123,285 0
Accrued expenses and other liabilities (2,766,951) (725,753)
------------------------- ------------------------
Net cash provided by operating activities 21,633,437 8,942,226
------------------------- ------------------------
Cash flows from investing activities
Proceeds from sale or maturity of securities available-for-sale 14,941,748 27,597,845
Purchase of securities available-for-sale (39,741,183) (36,505,692)
Purchase of goodwill 0 (960,616)
Purchase of real estate investments (251,378) (150,140)
Purchase of subsidiary's net other assets 0 (289,384)
Purchase of property and equipment, net (375,868) (124,988)
------------------------- ------------------------
Net cash used in investing activities (25,426,681) (10,432,975)
------------------------- ------------------------
Cash flows from financing activities
Issuance of common stock, net 278,741 29,699
------------------------- ------------------------
Net cash provided by financing activities 278,741 29,699
------------------------- ------------------------
Net decrease in cash (3,514,503) (1,461,050)
Cash and cash equivalents, beginning of period 7,679,822 5,463,096
------------------------- ------------------------
Cash and cash equivalents, end of period $4,165,319 $4,002,046
========================= ========================
Supplemental disclosure of cash flow information:
Federal income taxes paid $1,975,000 $975,356
Interest paid $53,654 $0
</TABLE>
See accompanying notes.
5
<PAGE> 6
FPIC INSURANCE GROUP, INC.
Notes to the Consolidated Financial Statements
(Unaudited)
1. Basis of Presentation
FPIC Insurance Group, Inc. (the Company) is a Florida corporation formed by
Florida Physicians Insurance Company, Inc. (FPIC) to serve as a holding
corporation for FPIC and other subsidiaries. On June 11, 1996, FPIC and the
Company consummated a Reorganization which generally provided that each share of
common stock of FPIC, par value $1 per share, would be exchanged for five shares
of common stock of the Company, par value $.10 per share.
The accompanying unaudited consolidated financial statements include the
accounts of the Company and its subsidiaries, FPIC, FPIC Insurance Agency, and
McCreary Corporation, including its subsidiary, Employers Mutual, Inc., and have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with instructions to Form 10-Q and Article 10
of Regulation S-X. Accordingly, they do not include all of the information and
notes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments, consisting
of normal recurring accruals, considered necessary for a fair presentation have
been included. Operating results for the three-month period ended March 31, 1998
are not necessarily indicative of the results that may be expected for the year
ending December 31, 1998. These consolidated financial statements and notes
should be read in conjunction with the financial statements and notes included
in the audited consolidated financial statements of the Company for the year
ended December 31, 1997, which were filed with the Securities and Exchange
Commission on Form 10-K on March 26, 1998.
2. Loss and Loss Adjustment Expense Liability
The liability for loss and loss adjustment expenses represents management's best
estimate of the ultimate cost of all losses incurred but unpaid. The estimated
liability is continually reviewed and any adjustments which become necessary are
included in current income. Incurred losses and loss adjustment expenses for the
three-month periods ended March 31, 1998 and 1997 were principally determined by
considering prior loss experience, loss trends, the Company's loss retention
levels, and changes in frequency and severity of claims.
3. Income Taxes
Income taxes were accounted for under the asset and liability method. Income tax
expense differs from the normal relationship to financial statement income
principally because of tax exempt interest income.
6
<PAGE> 7
4. Investments
Proceeds from sales of investments available-for-sale were $14,941,748 and
$27,597,845 during the three months ended March 31, 1998 and 1997, respectively.
Gross realized gains and (losses) from sales of debt securities based on
specific identification, were $81 and ($14,803); and $20,268 and ($33,195)for
the three months ended March 31, 1998 and 1997, respectively.
The amortized cost of investments in securities available-for-sale was
$281,200,397 and $256,523,717 as of March 31, 1998 and December 31, 1997,
respectively.
5. Business Acquisitions
On July 1, 1995, McCreary Corporation acquired the assets of McCreary
Enterprises, Inc., a Florida third party administrator, for a cost of $2,000,000
plus certain additional payments based upon earnings. The acquisition agreement
specified additional payments, based upon earnings, to be made to the seller
from 1996 through 2000. Since projected earnings were attained for the
twelve-month period ended June 30, 1997, the Company paid an additional $900,000
in 1997.
On January 17, 1997, McCreary Corporation acquired all of the outstanding common
stock of Employers Mutual, Inc. (EMI), a Florida third party administrator, for
a cost of $1,250,000 plus certain additional payments based upon earnings. The
acquisition agreement specified additional payments, based upon earnings, to be
made to the selling shareholders from 1997 through 2000. Since the projected
earnings for EMI were attained for the twelve-month period ended December 31,
1997, the Company paid an additional $250,000 in 1998.
The remaining payments for these two acquisitions are as follows:
<TABLE>
<CAPTION>
McCreary EMI
<S> <C> <C>
1998 800,000 0
1999 700,000 250,000
2000 600,000 250,000
2001 0 250,000
</TABLE>
These payments are subject to adjustment in accordance with the agreements based
on attainment of projected annual earnings from the date of acquisition through
2000. No individual annual payment will exceed the annual earnings, and may be
reduced if the projected earnings are not attained for that year. The agreements
allow for an additional final payment based on the aggregate earnings compared
to the aggregate projected earnings during the earnout period. The effect of
these subsequent payments is to increase the original purchase price and the
recorded goodwill.
On July 1, 1997, the Company purchased 20% of the common stock of APS Insurance
Services, Inc. (APS), a Texas insurance service corporation, for a cost of
$2,000,000. The purchase agreement provides an option to purchase an additional
35% of the common stock of APS after two years, allowing the Company 55%
ownership. This investment is accounted for under the equity method.
7
<PAGE> 8
On September 22, 1997, the Company entered into an agreement with Frontier
Insurance Group, Inc. (Frontier) to combine their medical professional liability
businesses in Florida. Beginning December 1, 1997, and continuing for 12 months
thereafter, the Company's subsidiary, FPIC, began underwriting Frontier's
Florida book of business. The cost of the transaction was $3.2 million, and was
paid in the Company's common stock, with a cash adjustment based on actual
results at the end of one year. The excess of the purchase price over tangible
assets is included in intangible assets and will be amortized over the expected
life of this book of business, considering the Company's historical policy
renewal rate. In addition, the two companies will establish a jointly-owned
claims entity in two locations in Florida.
On April 15, 1998, the Company signed a definitive agreement to acquire
Anesthesiologists' Professional Assurance Company (APAC), a Florida-domiciled
risk retention group with a $10 million book of anesthesiologist professional
liability business. The cost of the transaction will be $18 million to be paid
in a combination of cash, Company stock, and assumption of debt. In connection
with this transaction, the Company will also acquire a 9.9% interest in American
Professional Assurance Ltd., a reinsurance company and an affiliate of APAC, for
$5.5 million in cash and $3.5 million in non-compete agreements and other fees.
6. Reinsurance
The Company presently has excess of loss reinsurance contracts that serve to
limit the Company's maximum loss to $500,000 per occurrence. To the extent that
any reinsurer is unable to meet its obligations, the Company would be liable for
such defaulted amounts not covered by letters of credit, which the Company
obtains from reinsurers that are not designated as authorized reinsurers by the
Florida Department of Insurance.
7. Commitments and Contingencies
The Company is involved in numerous legal actions arising primarily from claims
made insurance policies. The legal actions arising from claims made insurance
policies have been considered by the Company in establishing its reserves. While
the outcomes of all legal actions are not presently determinable, the Company's
management is of the opinion that the settlement of these actions will not have
a material adverse effect on the Company's financial position or results of
operations.
8. Borrowing Arrangements
The Company maintains a $10,000,000 revolving credit facility. The credit
facility agreement terminates on May 31, 1999. The Company is not required to
maintain compensating balances in connection with this credit facility. As of
March 31, 1998, $2,000,000 had been borrowed under this agreement.
8
<PAGE> 9
9. Reconciliation of Basic and Diluted Earnings Per Share
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
3/31/98 3/31/97
<S> <C> <C>
Net income and Income from continuing
operations $4,785,108 $3,790,566
Basic weighted average shares outstanding 9,199,975 9,007,357
Common stock equivalents 446,492 305,671
--------- ---------
Diluted weighted average shares outstanding 9,646,467 9,313,028
Basic earnings per share $0.52 $0.42
Diluted earnings per share $0.50 $0.41
</TABLE>
10. Comprehensive Income
The Company adopted SFAS No. 130 "Reporting Comprehensive Income" on
January 1,1998. Comprehensive income is divided into net income and other
comprehensive income. The following represents other comprehensive income for
the three months ended March 31, 1998 and 1997.
<TABLE>
<CAPTION>
3/31/98 3/31/97
<S> <C> <C>
Unrealized gains (losses) on investments,
net of tax:
Unrealized holding gains (losses) arising
during period (net of tax of $7,845
in 1998 and $844,643 in 1997) $ 14,572 $ (1,639,603)
Less: reclassification adjustment for
losses realized in net income
(net of tax of $5,153 in 1998 and
$4,395 in 1997) 9,569 8,532
-------- -----------
Net unrealized gains (losses) (net of tax of
$12,998 in 1998 and $849,038 in 1997) $ 24,141 $ (1,631,071)
Other comprehensive income $ 24,141 $ (1,631,071)
</TABLE>
The tax rate used in the presentation above was 34% in 1997 and 35% in 1998.
11. Reclassification of 1997 presentation
Certain amounts for 1997 have been reclassified to conform with the
1998 presentation.
9
<PAGE> 10
FPIC Insurance Group, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
For purposes of this management discussion and analysis, "Company" refers to
FPIC Insurance Group, Inc., a holding company, and its consolidated
subsidiaries, "FPIC" refers only to Florida Physicians Insurance Company, Inc.,
and "McCreary" refers to McCreary Corporation and its wholly-owned subsidiary,
Employers Mutual, Inc. (EMI). EMI was acquired on January 17, 1997. All amounts
in this management discussion and analysis have been rounded to the nearest
$100,000.
The Company's primary source of revenue is dividends from its subsidiaries. The
primary sources of revenues for these dividends are premium earned and
investment income derived from the insurance operations of FPIC, and fee and
commission income from McCreary and FPIC Insurance Agency. The Company
concentrates on liability insurance products for the healthcare community, with
medical professional liability (MPL) insurance for physicians and dentists as
its primary product. The Company, through FPIC, writes MPL insurance on a
claims-made basis, which provides protection to the insured against only those
claims that arise out of incidents occurring and of which notice to the insurer
is given while coverage is effective.
On January 17, 1997, McCreary acquired all of the outstanding stock of EMI, a
third party administrator of self-insured managed care health plans in Florida
and Texas, for $1,250,000, with additional payments up to $1,000,000 if
specified earnings targets are met over the next four years. EMI's primary
market consists of hospitals and provider-sponsored delivery organizations.
On July 1, 1997, the Company completed the purchase of a 20 percent interest in
APS Insurance Services, Inc. (APS) for $2 million, with the option to purchase
an additional 35 percent after two years. The primary source of revenue for APS
is fee income from its subsidiary that manages the business of a medical
professional liability company domiciled in Texas. This interest will allow FPIC
an opportunity to expand its market potential in Texas.
On December 1, 1997, the Company signed an agreement with Frontier Insurance
Group, Inc. (Frontier) to combine their medical professional liability
businesses in Florida. Beginning December 1, 1997, and continuing for 12 months
thereafter, the Company's subsidiary, FPIC, began underwriting Frontier's
Florida book of business. An initial purchase price of $3.2 million was set and
was paid in Company common stock, with a cash adjustment based on actual results
at the end of one year. In addition, the two companies will establish a
jointly-owned claims entity in two locations in Florida.
On April 15, 1998, the Company signed a definitive agreement to acquire
Anesthesiologists' Professional Assurance Company (APAC), a Florida domiciled
risk retention group with $10 million of anesthesiologist professional liability
business. The cost of the transaction will be $18 million to be paid in a
combination of cash, Company stock, and assumption of debt. In connection with
this transaction, the Company will also acquire a 9.9% interest in American
Professional Assurance Ltd., a reinsurance company and an affiliate of APAC,for
$5.5 million in cash and $3.5 million in non-compete agreements and other fees.
10
<PAGE> 11
The Company's financial position and results of operations are subject to
fluctuations due to a variety of factors. Unexpectedly high frequency or
severity of losses in any period, particularly in the Company's prior two policy
years, would have a material adverse effect on the Company. Additionally,
reevaluations of the Company's loss and loss adjustment expense (LAE) reserves
could result in an increase or decrease in reserves and a corresponding
adjustment to earnings. The Company's historical results of operations are not
necessarily indicative of future results.
Results of Operations - Three Months Ended March 31, 1998 Compared to Three
Months Ended March 31, 1997.
Premiums
Direct premiums written and assumed increased $2.2 million, or 7.9%, from $27.7
million for the three months ended March 31, 1997 to $29.9 million for the three
months ended March 31, 1998. Net premiums earned increased $2.4 million, or
15.5%, from $15.5 million for the three months ended March 31, 1997 to $17.9
million for the three months ended March 31, 1998. These increases were
primarily due to an increase in the number of insureds, a rate increase of 7.3%
on physician MPL premiums effective January 1, 1998, $1.7 million of new
premiums written in Texas and the addition of health premiums of approximately
$0.6 million.
Net Investment Income
Net investment income increased $0.2 million, or 4.9%,from $4.1 million for the
three months ended March 31, 1997 to $4.3 million for the three months ended
March 31, 1998. The increase is due to an increase in invested assets, primarily
in tax-exempt securities.
Claims Administration Fees and Commission Income
This income is generated by McCreary and its subsidiary, EMI. Claims
administration fees are revenues generated by McCreary's core business, which is
the administration of self-insured programs for large employers, primarily in
the health and workers compensation area. Neither McCreary nor the Company
assumes any risk on these products; the risk is assumed by each employer and any
excess coverage desired is placed by McCreary with various insurers and
reinsurers. All the commission income was generated from the placement of this
excess coverage by McCreary.
Claims administration fees and commission income increased $0.8 million, or 40%,
from $2.0 million for the three months ended March 31, 1997 to $2.8 million for
the three months ended March 31, 1998. This increase is attributable to the
addition of new contracts.
11
<PAGE> 12
Net Losses and Loss Adjustment Expenses (LAE)
Net losses and LAE increased $0.3 million, or 2.3%, from $13.2 million for the
three months ended March 31, 1997 to $13.5 million for the three months ended
March 31, 1998, reflecting primarily an increase in insured exposures. The loss
and LAE ratios were 85.0% for the three months ended March 31, 1997 and 81.3%
for the three months ended March 31, 1998. The reserve for losses and LAE
represents management's conservative best estimates of the ultimate cost of all
losses incurred but unpaid. The estimated liability is continually reviewed and
any adjustments which become necessary are included in current operations.
Claims Administration Expenses
These expenses relate entirely to the operation of McCreary, and increased $0.5
million, or 26.3%, from $1.9 million for the three months ended March 31, 1997
to $2.4 million for the three months ended March 31, 1998. This increase was
primarily attributable to an increase in the core operations of McCreary.
Net Income
Net income increased $1.0 million, or 26.3%, from $3.8 million for the three
months ended March 31, 1997 to $4.8 million for the three months ended March 31,
1998. Diluted earnings per share increased $0.09, or 22.0%,from $0.41 per share
for the three months ended March 31, 1997 to $0.50 per share for the three
months ended March 31, 1998.
Liquidity and Capital Resources
The payment of losses, LAE, and operating expenses in the ordinary course of
business is the principal need for the Company's liquid funds. Cash used to pay
these items has been provided by operating activities. Cash provided from these
activities was $21.6 million during the three months ended March 31, 1998 and
was sufficient to meet the Company's needs. Of the $21.6 million, approximately
$17.7 million related to the expiration of a finite reinsurance contract on
December 31, 1997. The proceeds were received in the first quarter of 1998 and
were invested in fixed income securities. Management believes these sources will
be sufficient to meet the Company's cash needs for operating purposes for at
least the next twelve months. However, a number of factors could cause increases
in the dollar amount of losses and LAE paid and may, therefore, adversely affect
future reserve development and cash flow needs. Management believes these
factors include, among others, inflation, changes in medical procedures,
increasing influence of managed care and adverse legislative changes.
The Company maintains a $10 million revolving credit facility (credit facility)
with a Florida lending institution to meet certain non-operating cash needs as
they may arise. The credit facility terminates May 31, 1999. The Company is not
charged a fee nor is it required to maintain compensating balances in connection
with this credit facility. As of March 31, 1998, the Company had borrowed $2
million against the credit facility for non-operating purposes.
12
<PAGE> 13
Dividends payable by FPIC to the Company are subject to certain limitations
imposed by Florida law. In 1998, FPIC is permitted, within insurance regulatory
guidelines, to pay dividends to the Company of approximately $12.4 million
without regulatory approval.
Year 2000
The advent of the Year 2000 will pose significant issues for organizations
across the country and will require consideration of converting or replacing
millions of lines of code. The Year 2000 issue exists due to program developers
creating databases and programs to store and process a year as a two-digit
field. The Company converted its database and reprogrammed its system software
in 1994 and believes that it has made all necessary known changes to ensure
compliance with the Year 2000.
Important Considerations Related to Forward Looking Statements
This Form 10-Q contains certain forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements may be found under "Management's Discussion and
Analysis of Financial Condition and Results of Operations - General" and
"Liquidity and Capital Resources." These statements include or relate to, among
others, the Company having sufficient liquidity and working capital. These
statements are based on current expectations that involve a number of risks and
uncertainties that are discussed in the above sections. Primary risks to FPIC
are unexpected increases in frequency for the current policy year and unexpected
increases in severity for the current and prior two policy years.
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
Exhibit (27) - Financial Data Schedule (for SEC use only).
b. No reports on Form 8-K have been filed during the quarter for
which this report is filed.
13
<PAGE> 14
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.
FPIC Insurance Group, Inc.
___/s/ Robert B. Finch______
May 13, 1998 Robert B. Finch, Senior Vice President,
Chief Financial Officer and Treasurer
(a duly authorized officer and the principal
financial officer of the registrant)
14
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of FPIC Insurance Group, Inc. for the three months
ended March 31, 1998 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-01-1998
<PERIOD-END> Mar-31-1998
<DEBT-HELD-FOR-SALE> 284,203
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 2,584
<MORTGAGE> 0
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0
0
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17,855
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<PAYMENTS-CURRENT> 10
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</TABLE>
