UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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, 1999
- - --------------------------------------------------------------------------------
Commission file number 001-14067
LINCOLN HERITAGE CORPORATION
(Exact name of registrant as specified in its charter)
Texas 36-3427454
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or
organization)
1250 Capital of TX Hwy, Bldg. 3, Suite 100
Austin, TX 78746
(Address of principal executive offices)
(Zip Code)
(512) 328-0075
(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 |X| Yes |_| No
Number of shares
Title of class outstanding as of April 19, 1999
- - ----------------------------------- ------------------------------------------
Common stock, $0.01 par value 4,520,200
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Condensed Financial Statements
LINCOLN HERITAGE CORPORATION
CONSOLIDATED BALANCE SHEETS
<CAPTION>
(Unaudited)
March 31, December 31,
1999 1998
--------------- ---------------
ASSETS
<S> <C> <C>
Fixed maturities available-for-sale at
fair value(amortized cost $72,673,393
and $68,201,939, respectively) $ 76,748,949 $ 65,628,083
Equity securities at fair value
(cost $5,360,657 and $7,939,451
respectively) 4,492,931 7,121,000
Policyholder loans 18,509,957 17,257,122
Deposits to support hedging transactions 627,270 -
Cash and cash equivalents 30,253,667 43,824,537
-------------- --------------
Total cash and investments 130,632,774 133,830,742
Accrued investment income 735,377 463,616
Accounts receivable 2,500,000 -
Accounts receivable from related party 1,979,577 1,535,926
Funds withheld by ceding company 526,434 526,434
Deferred policy acquisition costs, net 16,634,568 16,881,478
Fixed assets, net 1,258,435 1,218,352
Cost of policies acquired, net 3,485,757 3,833,659
Goodwill, net 1,400,726 1,413,550
Deferred tax assets, net 2,803,545 3,364,638
Other assets 1,136,005 1,004,118
-------------- --------------
Total $ 163,093,198 $ 164,072,513
============== ==============
<CAPTION>
The accompanying notes are an integral part of
these consolidated condensed financial
statements.
<PAGE>
LINCOLN HERITAGE CORPORATION
CONSOLIDATED BALANCE SHEETS
(CONTINUED)
(Unaudited)
March 31, December 31,
1999 1998
---------------- ---------------
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Policy liabilities:
Future policy benefits $ 105,582,407 $ 104,201,323
Policyholder deposits 43,262,991 47,163,465
Claims and benefits payable 1,773,135 650,000
Premiums received in advance 565,475 409,937
-------------- --------------
Total policy liabilities 151,184,008 152,424,725
Income tax payable 49,800 49,800
Accounts payable and accrued expenses 278,869 656,089
Accounts payable to related party 123,257 163,292
Other liabilities 1,641,198 1,964,045
-------------- --------------
Total liabilities 153,277,132 155,257,951
Shareholders' equity:
Preferred stock ($.01 par value;
1,000,000 shares authorized, none issued) - -
Common stock ($.01 par value; 10,000,000
shares authorized, 4,520,000 shares
issued and outstanding) 45,200 45,200
Additional paid-in capital 4,734,350 4,734,350
Retained earnings 4,864,178 6,273,924
Accumulated other comprehensive income (loss) 172,338 (2,238,912)
-------------- ---------------
Total shareholders' equity 9,816,066 8,814,562
-------------- --------------
Total $ 163,093,198 $ 164,072,513
============== ==============
<CAPTION>
The accompanying notes are an integral part of these
consolidated condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
LINCOLN HERITAGE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
1999 1998
<S> <C> <C>
REVENUES
Life premiums $ 9,713,272 $ 7,256,760
Net investment income 2,798,908 2,252,156
Realized investment gains(losses), net (685,123) 450,914
Other revenue 75,286 53,164
-------------- --------------
Total revenues 11,902,343 10,012,994
BENEFITS AND EXPENSES
Death benefits 5,650,925 3,956,769
Surrender benefits 316,413 66,131
Increase in future policy benefits 1,381,085 1,840,030
Interest paid on policyholder deposits 359,000 527,037
Commissions 4,035,384 2,956,131
General expenses 2,086,518 1,512,586
General expenses reimbursed by related party (709,446) (555,757)
Taxes, licenses and fees 323,631 167,679
Amortization of cost of policies purchased 347,902 297,854
Change in deferred acquisition costs, net 246,910 (637,019)
------------ --------------
Total benefits and expenses 14,038,322 10,131,441
Income (loss) before federal income taxes (2,135,979) (118,447)
Provision (benefit) for income taxes
Current - 25,000
Deferred (726,233) (34,292)
-------------- --------------
Total income taxes (726,233) (9,292)
Net loss (1,409,746) (109,155)
============== ===============
Basic loss per share $ (0.31) $ (.03)
============== ==============
Diluted loss per share $ (0.31) $ (.03)
============== ==============
Weighted average shares outstanding:
Basic 4,520,000 4,000,000
Diluted 4,520,000 4,000,000
<CAPTION>
The accompanying notes are an integral part of these
consolidated condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
LINCOLN HERITAGE CORPORATION
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(UNAUDITED)
<CAPTION>
Acumulated
Additional Other
Common Paid-In Comprehensive Retained
Total Stock Capital Income Earnings
<S> <C> <C> <C> <C> <C>
Balance,
December 31, 1998 $8,814,562 $ 45,200 $4,734,350 $(2,238,912) $6,273,924
Comprehensive income,
net of tax:
Net loss (1,409,746) - - (1,409,746) -
Change in unrealized
losses on available
-for-sale and equity
securities, net of
applicable income tax
benefit of
$1,242,159 2,411,250 - - 2,411,250 -
-----------
Total comprehensive
income 1,001,504 - - - -
----------- --------- ---------- -------- -----------
Balance,
March 31, 1999 $9,816,066 $ 45,200 $4,734,350 $172,338 $4,864,178
=========== ========= ========== ======== ===========
Balance
December 31, 1997 $6,882,711 $ 10,000 $2,075,576 $538,870 $4,258,265
Comprehensive loss,
net of tax:
Net loss (109,155) - - - (109,155)
Change in unrealized
losses on available
-for-sale and equity
securities, net of
applicable income tax
benefit of
$859,836 (1,624,304) - - (1,624,304) -
-----------
Total comprehensive
(loss) (1,733,459) - - - -
---------- -------- --------- ----------- ---------
Balance,
March 31, 1998 $ 5,149,252 $10,000 $2,075,576 $(1,085,434) $4,149,110
========== ======== ========== ============ =========
<CAPTION>
The accompanying notes are an integral part of these
consolidated condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
LINCOLN HERITAGE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(UNAUDITED)
<CAPTION>
1999 1998
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (1,409,746) $ (109,155)
Adjustments to reconcile net income to
cash provided by (used in) operating activities:
Realized investment gains 685,123 (450,914)
Accretion of discount on investments (127,524) (149,200)
Depreciation and amortization 427,778 350,641
Deferred income taxes (681,067) 61,606
Changes in operating assets and liabilities
Accrued investment income (271,760) 171,181
Accounts receivable (2,500,000) -
Accounts receivable from related party (483,686) (69,597)
Deferred policy acquisition costs 246,910 (637,019)
Other assets (131,887) (713,584)
Future policy benefits and deposit funds (2,519,390) (1,825,716)
Claims and benefits payable 1,123,135 -
Premiums received in advance 155,538 35,434
Federal income tax payable - (1,950,165)
Accounts payable and accrued expenses (377,220) (42,370)
Other liabilities (322,847) (139,367)
--------------- ---------------
Net cash provided (used) by operating activities (6,186,643) (5,468,225)
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of available for sale
investments 22,722,696 55,639,406
Purchase of available for sale investments (28,746,953) (86,441,090)
Purchase of fixed assets (107,135) -
Decrease (increase) in policyholder loans issued (1,252,835) (3,204,766)
Other, net - -
-------------- --------------
Net cash provided (used) by investing activities (7,384,227) (34,006,450
--------------- --------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (13,570,870) (39,474,675)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 43,824,537 62,667,707
--------------- --------------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 30,253,667 $ 23,193,032
=============== ==============
SUPPLEMENTAL CASH FLOW INFORMATION
FEDERAL INCOME TAXES PAID $ - $ 1,975,165
=============== ==============
<CAPTION>
The accompanying notes are an integral part of these
consolidated condensed financial statements.
</TABLE>
<PAGE>
NOTE 1 -- BASIS OF PRESENTATION
The accompanying consolidated condensed financial statements include the
accounts of Lincoln Heritage Corporation (the "Company") and its direct and
indirect wholly owned subsidiaries, Memorial Service Life Insurance Company, New
Life Insurance Company, and Lincoln Memorial Life Insurance Company. These
consolidated condensed financial statements have been prepared in accordance
with generally accepted accounting principles ("GAAP") for interim financial
information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X,
which differ from statutory accounting practices prescribed or permitted by
regulatory authorities. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. All intercompany accounts and transactions have been
eliminated in consolidation. Certain prior period amounts have been reclassified
to conform with the current period presentation.
The accompanying consolidated condensed financial statements and notes thereto
as of March 31, 1999 are unaudited and should be read in conjunction with the
Company's audited financial statements included in the Company's Form 10-K filed
with the Securities and Exchange Commission. The unaudited interim consolidated
condensed financial statements have been prepared on the same basis as the
annual consolidated financial statements and, in the opinion of management,
reflect all adjustments, which include only normal recurring adjustments,
necessary to present fairly the Company's financial position, results of
operations and cash flows as of March 31, 1999 and for the three months ended
March 31, 1999 and 1998. The results for the three months ended March 31, 1999
are not necessarily indicative of the results to be expected for the year ending
December 31, 1999.
NOTE 2 -- STOCK SPLITS AND EARNINGS PER SHARE
On April 6, 1998, the Company effected a 3.2-for-1 stock split, in the form of a
stock dividend, and on August 18, 1998, the Company declared and paid a 25%
stock dividend. The earnings per share of the Company for all periods presented
have been computed as if these stock splits and dividends occurred at January 1,
1998. The diluted earnings per share is computed using the treasury stock method
unless the effect is anti-dilutive.
NOTE 3 -- INVESTMENTS
In the three month period ended March 31, 1999, the Company recognized losses
for declines in market value associated with the Company's investment in
Autobond Acceptance Corporation ("Autobond"). Management believes that the
decline in market value is other than temporary and due to reasons other than
market fluctuations. Further, Autobond's auditors have issued a going concern
opinion. The Company has not recognized a loss sufficient to bring the Company's
investment in Autobond to current market value. However, management is
monitoring this situation carefully and the recognition of additional losses may
be necessary during the second quarter of 1999.
NOTE 4 -- SUBSEQUENT EVENTS
On April 30, 1999, the Company entered into an agreement to purchase all the
outstanding shares of Funeral Security Life Insurance Company ("FSLife") for $5
million. FSLife has approximately $31 million in assets and $30 million in
liabilities. The completion of the purchase is subject to regulatory approval
and is expected to be accounted for using the purchase method.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operation
Overview
The Company is a holding company for operating subsidiaries that
consist primarily of life insurance companies. The life insurance companies
primarily write policies sold by the Company's affiliate, National Prearranged
Services, Inc. ("NPS"), in connection with NPS's sale of prearranged funeral
contracts. As a result of the growth in the number of pre-arranged funeral
contracts sold by NPS over the past three years, the Company's revenues have
increased significantly. The Company's growth also resulted, to a lesser extent,
from the 1997 and 1998 acquisitions of a block of life insurance and annuity
policies from Woodmen Accident and Life Company (the "Woodmen Block") and World
Insurance Company (the "World Block"), respectively.
The Company's revenues are derived primarily from premiums on insurance
policies generated by NPS. In the event of a decline in NPS's preneed sales, the
Company's future revenue growth could be impacted if the Company could not
replace the NPS sales force with its own or another marketing entity's sales
force on a cost-effective or timely basis. Net investment income and realized
investment gains also have contributed significantly to total revenues as the
Company's invested assets have grown.
The Company's expenses consist principally of benefits paid or accrued,
commissions on the sale of policies and general and administrative costs
associated with life insurance company operations. The Company anticipates that
benefit costs and commissions will continue to increase as the Company executes
its growth plans. Although general and administrative costs have increased in
accordance with the growth in the Company's business, the Company believes its
infrastructure will support increasing levels of internal revenue growth without
the need for general and administrative expenses to increase at a similar rate.
The Company's insurance subsidiaries are subject to a high degree of
regulation from various state insurance administrators. Such regulation governs
(among other things): investment policies; financial reporting; capital
adequacy; terms of policies; and the ability of the Company's subsidiaries to
pay dividends and management fees to the Company. In addition, NPS's activities
in selling prearranged funeral contracts are highly regulated in the states in
which NPS does business. These regulatory aspects and future changes therein
could materially affect the Company's financial condition and results of
operations.
The Company's strategy is to increase shareholder value by growing its
insurance business through: (i) selected acquisitions of life insurance
companies and in-force life insurance policies and annuities; and (ii) increases
in life insurance policies arising out of prearranged funeral contracts sold by
NPS. The Company's ability to acquire such companies and policies will be
dependent upon (among other things) its ability to identify, negotiate and
complete transactions of favorable values, arrange necessary financing and
integrate and manage the acquisitions after completion, including preserving
customer relationships. There can be no assurance that the Company will
successfully execute its strategy.
Results of Operations
Premium income increased approximately $2.5 million, or 34%, in the
three-month period ended March 31, 1999 as compared to the three months ended
December 31, 1998. The increase was attributable to higher sales volumes. New
policies issued increased significantly for both limited pay and single pay
policies.
Net investment income increased approximately $547,000, or 24%, in the
three-month period ended March 31, 1999 as compared to the three months ended
December 31, 1998. This increase was attributable to a higher level of invested
assets.
Net realized losses were approximately $685,000 in the three-month
period ended March 31, 1999 as compared to realized gains of $425,000 for the
three months ended December 31, 1998. The most significant loss was attributed
to management's recognition of a decline in market value associated with the
Company's investment in Autobond Acceptance Corporation ("Autobond"). Management
believes that the decline in market value is other than temporary and due to
reasons other than market fluctuations. Further, Autobond's auditors have issued
a going concern opinion. The Company has not recognized a loss sufficient to
bring the Company's investment in Autobond to current market value. However,
management is monitoring this situation carefully and the recognition of
additional losses may be necessary during the second quarter of 1999.
Benefits increased approximately $1.3 million, or 21%, in the
three-month period ended March 31, 1999 as compared to the three months ended
December 31, 1998. This increase was due to increases in death benefits and
surrender benefits partially offset by a decline in an increase in future policy
benefits. The most significant increase in benefits was due to a much greater
than anticipated increase in death claims.
Commissions increased approximately $1.1 million, or 37%, in the
three-month period ended March 31, 1999 as compared to the three months ended
December 31, 1998. The increase was attributable to higher sales volumes.
General expenses, net of reimbursements, increased approximately
$420,000, or 44%, in the three-month period ended March 31, 1999 as compared to
the three months ended December 31, 1998. The increase was attributable to
higher policy administration expenses as a result of the increased volume of
business from new policies written and acquisitions of blocks of policies, and
increased expenses related to acquisition activities and increased regulatory
reporting requirements. Such increases in expenses over 1998 produced an
infrastructure that the Company believes will support increasing levels of
internal revenue growth without the need for expenses to increase at a similar
rate.
The increase in the change in deferred acquisition costs of
approximately $884,000 in the three-month ended March 31, 1999 as compared to
the three months ended December 31, 1998, was due to higher levels of death
claims, policy lapses, and changes in the mix of new business issued.
Liquidity and Capital Resources
The Company's insurance subsidiaries generally generate sufficient cash
receipts from premium collections and investment income to satisfy the Company's
obligations. The Company believes that the investment portfolios of its
insurance subsidiaries provide sufficient liquidity to meet its operating cash
requirements.
The Company's cash requirements for 1999 and in the future will depend
upon mortality experience, acquisitions, timing of expansion plans and capital
expenditures. Pursuant to its initial public offering in November 1998, the
Company issued 520,000 shares of common stock and realized net proceeds of $2.6
million. The Company believes that interest earned on the net proceeds and
anticipated revenue from operations should be adequate for the Company's working
capital requirements of its existing business over the next twelve months. In
the event that the Company's plans or assumptions change, or if its resources
available to meet unanticipated changes in business conditions prove to be
insufficient to fund operations, the Company could be required to seek
additional financing prior to that time. On April 30, 1999, the Company entered
into an agreement to purchase all the outstanding shares of Funeral Security
Life Insurance Company ("FSLife") for $5 million. The purchase is expected to be
funded from existing working capital.
Total cash and investments decreased approximately $3.2 million from
$133.8 million at December 31, 1998 to $130.6 million at March 31, 1999. Changes
in the separate components of investment assets were due to the portfolio mix of
the Company's investment assets and changes in the fair value of balances in
actively managed fixed maturity and equity securities.
Accounts receivable of $2.5 million at March 31, 1999 represents
amounts due on proceeds from sales of investments.
Receivables from related parties increased approximately $444,000 from
$1.5 million at December 31, 1998 to $2.0 million at March 31, 1999 due
primarily to receivables due under the Company's cost sharing arrangement.
Cost of policies acquired, net, decreased approximately $348,000
from $3.8 million at December 31, 1998 to $3.5 million at March 31, 1999 due to
amortization of costs.
Policyholder deposits decreased approximately $3.9 million from $47.2
million at December 31, 1998 to $43.3 million at March 31, 1999. Policyholder
deposits are comprised primarily of annuities acquired with the Woodmen Block
and the World Block. The decrease was due to cancellations of policies and the
absence of the issuance of new annuity policies.
Unpaid claims increased approximately $1.1 million from $650,000 at
December 31, 1998 to $1.8 million at March 31, 1999 due primarily to the timing
of cash payments.
Accounts payable and accrued expenses and other liabilities decreased
$700,000 from December 31, 1998 to March 31, 1999 due primarily to the timing of
cash payments.
The increase in shareholders' equity for the first three months of 1999
reflects the increase in net unrealized appreciation on securities of $2.4
million partially offset by a net loss from operations of approximately $1.4
million.
Factors Affecting the Company's Business and Prospects
Seasonality
Historically, the Company's revenues and operating results have varied
from quarter to quarter and are expected to continue to fluctuate in the future.
These fluctuations have been due to a number of factors, including a higher
mortality rate of the Company's insureds during the winter months.
Year 2000 Issues
Many current installed computer systems and software products are coded
to accept only two-digit entries in the date code field and cannot reliably
distinguish dates beginning on January 1, 2000 from dates prior to the year
2000. Many companies' software and computer systems may need to be upgraded or
replaced in order to correctly process dates beginning in 2000.
Company Readiness
The Company's information technology personnel recently assessed the
Company's readiness to manage Year 2000 issues. This included a review of all
current computer systems in use, as well as communications with significant
vendors and other third parties to determine the extent to which the Company's
operations are vulnerable to third parties' failure to correct their own Year
2000 issues. Based on the overall assessment performed, the Company has
determined that it will not need to significantly modify or replace any of its
current systems in order to comply with Year 2000 issues. In addition, based
upon communications with significant vendors and other third parties, the
Company is not aware of any material impact on their systems relating to the
transition to the Year 2000. However, the Company has no means of ensuring that
these entities will be Year 2000 ready. The inability of third parties to
complete their Year 2000 programs in a timely manner could materially impact the
Company. The effect of non-compliant third parties is not determinable.
Year 2000 Costs
The Company's total costs of Year 2000 efforts to date and future
anticipated costs have not been and are not expected to be material.
Risks Associated with the Company's Year 2000 Issues
The Company expects its internal systems to be Year 2000 compliant and
believes that the worst case scenario would result from vendors or other third
parties failing to achieve Year 2000 compliance. Due to the general uncertainty
inherent in the Year 2000 problem, the Company cannot predict whether the
consequence of Year 2000 failures will have a material adverse effect on the
Company's business, financial condition or results of operations. However, based
on the Company's assessment of its internal systems, communications with
significant vendors and other third parties, the Company does not expect Year
2000 problems to result in a material adverse effect on the Company's financial
position, results of operations or cash flows. In the event significant vendors
are not Year 2000 compliant, the Company will have backup power supply and
internal resources on standby to address Year 2000 problems.
Forward-Looking Statements
This report contains forward-looking statements within the meaning of
the "safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. Such forward-looking statements are based on the beliefs of the Company's
management as well as on assumptions made by and information currently available
to the Company at the time such statements were made. The Company can give no
assurance that the expectations indicated by such forward-looking statements
will be realized. If any of management's assumptions should prove incorrect, or
if any of the risks and uncertainties underlying such expectations should
materialize, the Company's actual results may differ materially from those
indicated by the forward-looking statements.
The following factors that are not within the Company's control and
that may have a direct bearing on operating results include, but are not limited
to: (i) general economic conditions and other factors, including prevailing
interest rate levels and stock market performance, which may affect the ability
of the Company to sell its products, the market value of the Company's
investments and the lapse rate and profitability of the Company's policies; (ii)
the Company's ability to achieve anticipated levels of operational efficiencies
at recently acquired companies, as well as through other cost-saving
initiatives; (iii) mortality, morbidity, and other factors which may affect the
profitability of the Company's insurance products; (iv) changes in the federal
income tax laws and regulations which may affect the cost of or demand for the
Company's products; (v) increasing competition in the sale of the Company's
products; (vi) regulatory changes or actions, including those relating to
regulation of financial services affecting (among other things) bank sales and
underwriting of insurance products, regulation of the sale, underwriting and
pricing of insurance products; (vii) the availability and terms of future
acquisitions; (viii) unanticipated events associated with Year 2000 compliance
relating to work on development or modification to computer systems and to
software, including work performed by suppliers or vendors; and (ix) the risk
factors or uncertainties listed in the Company's other filings with the
Securities and Exchange Commission.
Additionally, the Company may not be successful in identifying,
acquiring, and integrating additional start-up locations and possible
acquisitions, implementing improved management and accounting information
systems and controls and may be dependent upon additional capital and equipment
purchases for future growth. There may be other risks and uncertainties that
management is not able to predict.
When used in this report, the words "anticipate," "believe,"
"estimate," "expect," "intends," and similar expressions, as they relate to the
Company are intended to identify forward-looking statements, although there may
be certain forward-looking statements not accompanied by such expressions.
Item 3. Quantitative and Qualitative Disclosure About Market Risk.
There have been no material changes from the information
provided in the Company's Annual Report on Form 10-K for the year ended December
31, 1998.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities and Use of Proceeds
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
See Exhibit Index attached hereto.
(b) Reports on Form 8-K:
None.
<PAGE>
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.
LINCOLN HERITAGE CORPORATION
(Registrant)
May 17, 1998 By: /s/ Clifton Mitchell
President and Chief Executive Officer
(Principal Financial and Accounting Officer)
<PAGE>
<TABLE>
EXHIBIT INDEX
<CAPTION>
Ex. No. Description
<S> <C>
27.1 Financial Data Schedule for the three months ended March 31, 1999.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
The schedule below contains summary financial
information extracted from the Consolidated
Financial Statements of Lincoln Heritage
Corporation 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-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-01-1999
<DEBT-HELD-FOR-SALE> 76,749
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 4,493
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 100,379
<CASH> 30,254
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 16,635
<TOTAL-ASSETS> 163,093
<POLICY-LOSSES> 148,845
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 1,773
<POLICY-HOLDER-FUNDS> 566
<NOTES-PAYABLE> 0
0
0
<COMMON> 45
<OTHER-SE> 9,771
<TOTAL-LIABILITY-AND-EQUITY> 163,093
9,713
<INVESTMENT-INCOME> 2,799
<INVESTMENT-GAINS> (685)
<OTHER-INCOME> 75
<BENEFITS> 7,707
<UNDERWRITING-AMORTIZATION> 1,150
<UNDERWRITING-OTHER> 5,181
<INCOME-PRETAX> (2,136)
<INCOME-TAX> (726)
<INCOME-CONTINUING> (1,410)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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