<PAGE>
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 quarterly period ended MARCH 31, 1997
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 2-39621
UNITED FIRE & CASUALTY COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
IOWA 42-0644327
- - ------------------------ --------------------------------
(State of Incorporation) (IRS Employer Identification No.)
118 Second Avenue, S.E.
CEDAR RAPIDS, IOWA 52407
- - --------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (319) 399-5700
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 May 7, 1997, 10,727,322 shares of common stock were outstanding.
<PAGE>
UNITED FIRE & CASUALTY COMPANY
AND SUBSIDIARIES
TABLE OF CONTENTS
PART I: FINANCIAL INFORMATION
Report of Independent Public Accountants 1
Consolidated Balance Sheets as of March 31, 1997 and December 31, 1996 2
Unaudited Consolidated Statements of Operations - Three-Month
Periods Ended March 31, 1997 and 1996 3
Unaudited Consolidated Statements of Cash Flows - Three-Month
Periods Ended March 31, 1997 and 1996 4
Notes to Unaudited Consolidated Financial Statements 5
Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Signatures 10
Exhibit 11. Computation of Net Income Per Common Share 11
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors of
United Fire & Casualty Company:
We have reviewed the accompanying consolidated balance sheet of UNITED FIRE &
CASUALTY COMPANY (an Iowa corporation) AND SUBSIDIARIES as of March 31, 1997,
and the related consolidated statements of operations and cash flows for the
three-month periods ended March 31, 1997 and 1996. These financial statements
are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the financial statements referred to above for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of United Fire & Casualty Company and
Subsidiaries as of December 31, 1996, and, in our report dated February 20,
1997, we expressed an unqualified opinion on that statement. In our opinion,
the information set forth in the accompanying consolidated balance sheet as of
December 31, 1996, is fairly stated, in all material respects, in relation to
the consolidated balance sheet from which it has been derived.
/s/ Arthur Andersen LLP
-------------------------------
ARTHUR ANDERSEN LLP
Chicago, Illinois
May 7, 1997
<PAGE>
UNITED FIRE & CASUALTY COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1997 AND DECEMBER 31, 1996
- - ------------------------------------------------------------------------------
(Dollars in Thousands)
- - ------------------------------------------------------------------------------
ASSETS 1997 1996
UNAUDITED AUDITED
- - ------------------------------------------------------------------------------
INVESTMENTS
Fixed maturities
Held-to-maturity, at amortized cost (market
value $672,895 in 1997 and $668,541 in 1996) $ 666,752 $ 651,138
Available-for-sale, at market (cost $75,935
in 1997 and $69,317 in 1996) 72,793 67,902
Equity securities (cost $25,906 in 1997
and $25,898 in 1996) 93,848 91,314
Mortgage loans 2,937 2,959
Policy loans 7,685 7,591
Other long-term investments, at market (cost
$8,682 in 1997 and $8,395 in 1996) 10,593 9,970
Short-term investments 15,682 29,330
- - ------------------------------------------------------------------------------
$ 870,290 $ 860,204
CASH AND CASH EQUIVALENTS 20,169 14,389
ACCRUED INVESTMENT INCOME 12,650 12,195
ACCOUNTS RECEIVABLE 46,097 43,433
DEFERRED POLICY ACQUISITION COSTS 57,825 56,083
PROPERTY AND EQUIPMENT 12,298 12,630
REINSURANCE RECEIVABLES 13,015 12,490
PREPAID REINSURANCE PREMIUMS 4,273 4,229
INTANGIBLES 1,272 1,335
INCOME TAXES RECEIVABLE -- 709
OTHER ASSETS 6,543 7,138
- - ------------------------------------------------------------------------------
TOTAL ASSETS $1,044,432 $1,024,835
- - ------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Future policy benefits and losses, claims
and settlement expenses
Property and casualty insurance $ 223,699 $ 221,207
Life insurance 439,969 431,582
Unearned premiums 107,379 105,008
Accrued expenses and other liabilities 16,714 19,721
Employee benefit obligations 7,129 6,764
Income taxes payable 1,644 --
Deferred income taxes 13,503 12,694
- - ------------------------------------------------------------------------------
TOTAL LIABILITIES $ 810,037 $ 796,976
- - ------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Common stock $ 35,759 $ 35,759
Additional paid-in capital 9,342 9,342
Retained earnings 145,727 139,933
Net unrealized appreciation, net of applicable
income taxes of $23,143 in 1997 and $22,750 in 1996 43,567 42,825
- - ------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY $ 234,395 $ 227,859
- - ------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,044,432 $1,024,835
- - ------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------
The Notes to Unaudited Consolidated Financial Statements are an integral
part of these statements.
2
<PAGE>
UNITED FIRE & CASUALTY COMPANY
AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE-MONTH PERIODS ENDED MARCH 31, 1997 AND 1996
- - ------------------------------------------------------------------------------
(Dollars in Thousands Except
Per Share Data and Number
of Shares)
- - ------------------------------------------------------------------------------
1997 1996
- - ------------------------------------------------------------------------------
Revenues
Net premiums earned $ 59,256 $ 55,593
Investment income, net 15,037 14,020
Realized investment gains and other income 696 4,057
Commission and policy fee income 441 431
- - ------------------------------------------------------------------------------
75,430 74,101
- - ------------------------------------------------------------------------------
Benefits, Losses and Expenses
Losses and settlement expenses 36,965 35,737
Increase in liability for future policy benefits 1,263 1,053
Amortization of deferred policy acquisition costs 11,723 12,740
Other underwriting expenses 9,807 7,488
Interest on policyholders' accounts 5,499 5,115
- - ------------------------------------------------------------------------------
65,257 62,133
- - ------------------------------------------------------------------------------
Income before income taxes 10,173 11,968
Federal income taxes 2,770 3,213
- - ------------------------------------------------------------------------------
Net Income $ 7,403 $ 8,755
- - ------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------
Net Income per common share $ 0.69 $ 0.81
- - ------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------
Weighted average common shares outstanding 10,727,712 10,829,448
- - ------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------
Cash dividends declared per common share $ 0.15 $ 0.15
- - ------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------
The Notes to Unaudited Consolidated Financial Statements are an integral
part of these statements.
3
<PAGE>
UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE-MONTH PERIODS ENDED MARCH 31, 1997 AND 1996
- - -------------------------------------------------------------------------------
(Dollars in Thousands)
- - -------------------------------------------------------------------------------
1997 1996
- - -------------------------------------------------------------------------------
Cash Flows From Operating Activities
Net income $ 7,403 $ 8,755
- - -------------------------------------------------------------------------------
Adjustments to reconcile net income to net cash
provided by operating activities
Net bond discount accretion (1) (199)
Depreciation and amortization 712 597
Realized investment gains (696) (2,000)
Changes in:
Accrued investment income (455) 63
Accounts receivable (2,664) (5,611)
Deferred policy acquisition costs (1,742) (423)
Reinsurance receivables (525) (939)
Prepaid reinsurance premiums (44) (183)
Income taxes receivable/payable 2,353 3,741
Other assets 595 (1,756)
Future policy benefits and losses, claims and
settlement expenses 3,079 5,340
Unearned premiums 2,371 3,037
Accrued expenses and other liabilities (1,398) (3,915)
Employee benefit obligations 365 177
Deferred income taxes 416 (265)
- - -------------------------------------------------------------------------------
Total adjustments $ 2,366 $ (2,336)
- - -------------------------------------------------------------------------------
Net cash provided by operating activities $ 9,769 $ 6,419
- - -------------------------------------------------------------------------------
Cash Flows From Investing Activities
Proceeds from sale of available-for-sale investments $ 617 $ 9,169
Proceeds from call and maturity of held-to-
maturity investments 10,101 17,364
Proceeds from call and maturity of available-
for-sale investments 1,797 4,297
Proceeds from sale of other investments 22,983 15,359
Purchase of investments held-to-maturity (25,566) (34,888)
Purchase of investments available-for-sale (8,491) (10,264)
Purchase of other investments (9,695) (1,399)
Proceeds from sale of property and equipment -- 91
Purchase of property and equipment (317) (502)
- - -------------------------------------------------------------------------------
Net cash used in investing activities $(8,571) $ (773)
- - -------------------------------------------------------------------------------
Cash Flows From Financing Activities
Policyholders' account balances
Deposits to investment and universal life type contracts $26,930 $ 23,385
Withdrawals from investment and universal life
type contracts (19,130) (26,350)
Purchase and retirement of common stock -- (2)
Payment of cash dividends (3,218) (3,248)
- - -------------------------------------------------------------------------------
Net cash provided by (used in) financing activities $ 4,582 $ (6,215)
- - -------------------------------------------------------------------------------
Increase (Decrease) in Cash and Cash Equivalents $ 5,780 $ (569)
Cash and Cash Equivalents at Beginning of Year 14,389 6,998
- - -------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Period $ 20,169 $ 6,429
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
The Notes to Unaudited Consolidated Financial Statements are an integral
part of these statements.
4
<PAGE>
UNITED FIRE & CASUALTY COMPANY
AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1.
In the opinion of the management of United Fire & Casualty Company and
Subsidiaries (the "Company"), the accompanying unaudited consolidated financial
statements contain all adjustments (consisting of normal recurring adjustments)
necessary to present fairly the financial position, the results of operations,
and cash flows for the periods presented. The results for the interim periods
are not necessarily indicative of the results of operations that may be expected
for the year. The financial statements contained herein should be read in
conjunction with the Company's annual report on Form 10-K for the year ended
December 31, 1996. The review report of Arthur Andersen LLP accompanies the
unaudited consolidated financial statements included in Item 1 of Part I.
NOTE 2.
The Company maintains its records in conformity with the accounting
practices prescribed or permitted by the Insurance Department of the State of
Iowa. To the extent that certain of these practices differ from generally
accepted accounting principles ("GAAP"), adjustments have been made in order to
present the accompanying financial statements on the basis of GAAP.
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Certain amounts included in the financial statements for the previous year
have been reclassified to conform with the financial statement presentation at
March 31, 1997.
NOTE 3.
For purposes of reporting cash flows, cash and cash equivalents include
cash and non-negotiable certificates of deposit with original maturities of
three months or less. Income taxes paid, net of refunds for the three month
periods ended March 31, 1997 and 1996 were $0, and $(263,000), respectively.
There were no significant payments of interest through March 31, 1997 and 1996,
other than interest credited to policyholders' accounts.
NOTE 4.
Included in realized gains and other income for the three month period
ended March 31, 1996, is $2,057,000 in interest in connection with the
settlement of a Federal income tax Revenue Agent Review for previous tax years.
5
<PAGE>
UNITED FIRE & CASUALTY COMPANY
AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5.
A reconciliation of the amortized cost to fair values of investments
in held-to-maturity and available-for-sale fixed maturities, marketable equity
securities and other long-term investments as of March 31, 1997 is as follows.
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
- - -----------------------------------------------------------------------------------------------------------------
MARCH 31, 1997 Gross Gross
Amortized Unrealized Unrealized Fair
TYPE OF INVESTMENT Cost Appreciation Depreciation Value
- - -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HELD-TO-MATURITY
Fixed Maturities
Bonds
United States Government,
government agencies and authorities
Collateralized mortgage obligations $ 27,514 $ 282 $ 1,227 $ 26,569
Mortgage-backed securities 21,933 1,665 3 23,595
All others 3,358 232 51 3,539
States, municipalities and political subdivisions 206,090 7,001 1,496 211,595
Foreign 6,839 115 87 6,867
Public utilities 90,073 94 2,662 87,505
Corporate bonds
Collateralized mortgage obligations 97,211 2,249 1,438 98,022
All other corporate bonds 213,734 4,586 3,117 215,203
- - -----------------------------------------------------------------------------------------------------------------
Total held-to-maturity $666,752 $16,224 $10,081 $672,895
- - -----------------------------------------------------------------------------------------------------------------
- - -----------------------------------------------------------------------------------------------------------------
AVAILABLE-FOR-SALE
Fixed Maturities
Bonds
United States Government,
government agencies and authorities
Collateralized mortgage obligations $ 53,614 $ 370 $ 2,398 $ 51,586
Mortgage-backed securities 61 4 -- 65
All others 9,678 -- 146 9,532
Public utilities 206 -- 4 202
Corporate bonds
Collateralized mortgage obligations 11,858 61 1,031 10,888
All other corporate bonds 518 9 7 520
- - -----------------------------------------------------------------------------------------------------------------
Total available-for-sale fixed maturities $ 75,935 $ 444 $ 3,586 $ 72,793
- - -----------------------------------------------------------------------------------------------------------------
Equity securities
Common stocks
Public utilities $ 3,525 $ 4,593 $ -- $ 8,118
Banks, trust and insurance companies 11,903 45,232 -- 57,135
All other common stocks 9,628 18,274 212 27,690
Nonredeemable preferred stocks 850 58 3 905
- - -----------------------------------------------------------------------------------------------------------------
Total equity securities $ 25,906 $68,157 $ 215 $ 93,848
- - -----------------------------------------------------------------------------------------------------------------
Total available-for-sale $101,841 $68,601 $ 3,801 $166,641
- - -----------------------------------------------------------------------------------------------------------------
- - -----------------------------------------------------------------------------------------------------------------
Other long-term investments $ 8,682 $ 1,921 $ 10 $ 10,593
- - -----------------------------------------------------------------------------------------------------------------
- - -----------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
UNITED FIRE & CASUALTY COMPANY
AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
The amortized cost and fair value of held-to-maturity and
available-for-sale fixed maturities at March 31, 1997 by contractual maturity
are shown below. Expected maturities will differ from contractual maturities
because borrowers may have the right to call or prepay obligations with or
without call or prepayment penalties.
- - --------------------------------------------------------------------------------
(Dollars in Thousands)
- - --------------------------------------------------------------------------------
MARCH 31, 1997 Held-to-maturity Available-for-sale
- - --------------------------------------------------------------------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
- - --------------------------------------------------------------------------------
Due in one year or less $ 10,135 $ 10,274 $ 50 $ 50
Due after one year through five years 91,953 94,759 707 708
Due after five years through ten years 187,150 188,988 6,310 6,192
Due after ten years 230,856 230,688 3,335 3,304
Mortgage-backed securities 21,933 23,595 61 65
Collateralized mortgage obligations 124,725 124,591 65,472 62,474
- - --------------------------------------------------------------------------------
$666,752 $672,895 $75,935 $72,793
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
NOTE 6.
In February, 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share."
This statement is effective for both interim and annual periods ending after
December 15, 1997. In management's opinion, the adoption of this statement will
not have a material impact on the Consolidated Financial Statements.
7
<PAGE>
UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
ASSETS
The Company considers itself a long-term investor, and classifies a
majority of its fixed maturity securities as held-to-maturity.
Available-for-sale fixed maturities comprise 10% of the total fixed maturity
portfolio, and the Company holds no trading securities. Between March 31,
1997 and December 31, 1996, total fixed income securities increased
$20,505,000 or 3%. Those that were held as available-for-sale generated a net
unrealized loss of $3,142,000, compared to a net unrealized loss at December
31, 1996 of $1,415,000.
Approximately 25% of the current fixed maturities are collateralized
mortgage obligations ("CMOs"), compared to 26% at December 31, 1996. The
Company minimizes its prepayment risk by buying most issues priced at a
slight discount. While buying at a discount does not prevent prepayment, the
yield is not penalized as is the case when a premium is paid. In addition,
although the stated maturity is longer than the average life of the issues,
the Company is concentrating on buying issues with expected maturity in the
seven-to-twelve-year range.
The Company also invests in readily marketable common and preferred
stocks, all of which are classified as available-for-sale. Other long-term
investments are primarily holdings in limited partnership funds investing in
banks. Net unrealized appreciation on stocks and other long-term investments
increased between March 31, 1997 and December 31, 1996 by $2,862,000 or 4%.
The Company's short-term investments, comprised of money market accounts,
overnight repurchase agreements and fixed maturities are utilized to meet
anticipated short-term cash requirements. In addition, the Company also
maintains a $5 million line of credit with a local bank, which was not
utilized through March 31, 1997, or during 1996. Short-term investments has
decreased from $29,330,000 at December 31, 1996 to $15,682,000 in 1997, due
to purchases of fixed maturity securities.
Accounts receivable are balances due from property and casualty insurance
agents and brokers for premiums written less commissions, and losses
receivable from assumed brokers. In 1997, this asset grew by $2,664,000 or
6%, due to premium growth and the Company's deferred payment plan.
The Company's deferred policy acquisition costs ("DAC") are expenses such
as commissions, premium taxes and other costs associated with procuring
insurance policies. The asset is established at the beginning of the policy
periods and is then amortized over the lives of the respective policy terms
to achieve a matching of expenses to revenue. The Company's premium growth
has created a corresponding increase in deferred policy acquisition costs.
Reinsurance receivables are losses, expenses and reserves that are due
the Company from reinsurers. The balance in this asset increased by $525,000
or 4% through March 31, 1997, when compared to December 31, 1996. The Company
does not anticipate collection problems with regard to any of its reinsurance
receivables.
8
<PAGE>
UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LIABILITIES
The property and casualty segment's gross liability before reinsurance
for losses and settlement expenses increased $2,492,000 or 1% between 1997
and 1996. Gross reserves remaining on the 1994 Northridge earthquake were
$4,373,000 as of March 31, 1997, compared to $4,599,000 at December 31, 1996.
The Company is not aware of any significant contingent liabilities as far
as environmental issues are concerned. Because of the type of business the
Company writes, i.e. property coverage, there exists the potential for
exposure for environmental pollution and asbestos claims. The Company's
underwriters are aware of these exposures and use limited riders or
endorsements to limit exposure.
The liability for future policy benefits and interest on policyholders'
accounts saw an increase of $8,387,000 for 1997 due to the addition of new
premiums and growth in existing account balances.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
PROPERTY AND CASUALTY OPERATIONS
Property and casualty premiums earned increased 7% or $3,373,000 in 1997
when compared to 1996. Our direct business has provided a majority of the
growth, with much of the increase originating in Louisiana, Mississippi and
in several midwestern states.
Loss and settlement expenses incurred by the property and casualty
segment for 1997 increased a moderate 4% or $1,406,000 over 1996. Through
March, 1997, the Company has escaped severe weather related claims and the
frequency of frozen pipe claims and fire losses has decreased from a year ago.
An increase of $728,000 in property and casualty underwriting and
acquisition expenses was primarily due to an increase in commissions, premium
taxes and other policy issue expenses, associated with growth in premiums.
LIFE OPERATIONS
Premiums earned were relatively flat between the first quarters of 1997
and 1996. An 88% increase of $381,000 in A&H business was offset by a
corresponding increase in unearned premiums.
The change of $210,000 in increase in liability for future policy
benefits is primarily due to the addition of interest to the larger annuity
account balances which existed during the first quarter of 1997, compared to
the same period in 1996.
The increase of $374,000 in other underwriting expenses is due primarily
to an increase in commission expense.
INVESTMENT RESULTS
Growth in the Company's fixed maturity portfolio contributed to the 7%
increase in investment income. Included in realized gains and other income
for the first quarter of 1996 is $2,057,000 in interest in connection with
the settlement of a Federal income tax Revenue Agent Review for previous tax
years.
9
<PAGE>
UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits-Exhibit 11 - Computation of Net Income Per Common Share
(Page 11).
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.
UNITED FIRE & CASUALTY COMPANY
- - ----------------------------------------------------------------------------
(REGISTRANT)
MAY 7, 1997
- - ----------------------------------------------------------------------------
(DATE)
/s/
- - ----------------------------------------------------------------------------
K.G. BAKER, VICE PRESIDENT,
CHIEF FINANCIAL OFFICER AND PRINCIPAL
ACCOUNTING OFFICER, AUTHORIZED OFFICER OF THE REGISTRANT
10
<PAGE>
UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES
PART II - OTHER INFORMATION
Exhibit 11. Computation of Net Income Per Common Share
- - -------------------------------------------------------------------------------
(Dollars in Thousands Except Per Share Data)
- - -------------------------------------------------------------------------------
Weighted Average
Three-Month Periods Ended Number of Shares Net Earnings Per
March 31, Outstanding Income Common Share
- - -------------------------------------------------------------------------------
1997 10,727,712 $ 7,403 $ 0.69
1996 10,829,448 8,755 0.81
- - -------------------------------------------------------------------------------
Computation of weighted average number of common
and common equivalent shares:
- - -------------------------------------------------------------------------------
Three-Month Periods Ended March 31, 1997 1996
- - -------------------------------------------------------------------------------
Common shares outstanding beginning of the period 10,727,712 10,829,461
Weighted average of the common
shares purchased and retired or reissued -- (13)
- - -------------------------------------------------------------------------------
Weighted average number of common shares 10,727,712 10,829,448
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<DEBT-HELD-FOR-SALE> 72,793
<DEBT-CARRYING-VALUE> 666,752
<DEBT-MARKET-VALUE> 672,895
<EQUITIES> 93,848
<MORTGAGE> 2,937
<REAL-ESTATE> 0
<TOTAL-INVEST> 870,290
<CASH> 20,169
<RECOVER-REINSURE> 13,015
<DEFERRED-ACQUISITION> 57,825
<TOTAL-ASSETS> 1,044,432
<POLICY-LOSSES> 663,668
<UNEARNED-PREMIUMS> 107,379
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 0
0
0
<COMMON> 35,759
<OTHER-SE> 198,636
<TOTAL-LIABILITY-AND-EQUITY> 1,044,432
59,256
<INVESTMENT-INCOME> 15,037
<INVESTMENT-GAINS> 696
<OTHER-INCOME> 441
<BENEFITS> 38,228
<UNDERWRITING-AMORTIZATION> 11,723
<UNDERWRITING-OTHER> 15,306
<INCOME-PRETAX> 10,173
<INCOME-TAX> 2,770
<INCOME-CONTINUING> 7,403
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,403
<EPS-PRIMARY> .69
<EPS-DILUTED> .69
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
