<PAGE>
Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
For Quarter Ended June 30, 1998 Commission File No. 2-35669
SOUTHERN SECURITY LIFE INSURANCE COMPANY
(Exact name of registrant as specified in its charter)
Florida 59-1231733
(State of incorporation) (I.R.S. tax number)
755 Rinehart Road, Lake Mary, FL 32746
Registrant's telephone number, including area code: (407) 321-7113
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of Each Class Which Registered
None None
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all annual,
quarterly and other reports required to be filed with the Commission during the
preceding 12 months and (2) has been subject to the filing requirements for at
least the past 90 days.
Yes X No
The number of Registrant's shares outstanding as of the close of the period
covered by this report is as follows:
Number Outstanding at
Title of class June 30, 1998
Class A Common Shares 1,907,989
$1.00 per share
<PAGE>
SOUTHERN SECURITY LIFE INSURANCE COMPANY
Part I
FINANCIAL INFORMATION
INDEX
ITEM 1
FINANCIAL STATEMENTS
Balance sheets -December 31, 1997 and
June 30, 1998 3-4
Statements of Income and Retained Earnings -
Six Months Ended June 30, 1998 and 1997 5
Statement of Cash Flows -June 30, 1998
and 1997 6-7
Notes to Financial Statements 8-10
ITEM 2
Management's Discussion and Analysis of the
Financial Condition of Operations June 30, 1998 11-15
Signature Page 16
2
<PAGE>
SOUTHERN SECURITY LIFE INSURANCE COMPANY
Balance Sheets
June 30, 1998 and December 31, 1997
<TABLE>
<CAPTION>
June 30, 1998 December 31,
Assets (unaudited) 1997
<S> <C> <C>
Investments:
Fixed maturities held to maturity
(fair value, $6,566,275 and
$10,631,003 at June 30, 1998
and December 31, 1997 respectively) $6,463,733 $10,501,712
Securities available for sale,
at fair value:
Fixed maturities (cost of
$31,528,373 at June 30, 1998 and
$30,880,390 at December 31,
1997) 32,137,481 31,483,324
Equity securities (cost, $202,422
and $800,000 at June 30, 1998 and
December 31, 1997, respectively) 244,559 839,973
Policy and student loans 8,087,378 7,945,381
Short-term investments 100,000 100,000
--------- -------
47,033,151 50,870,390
Cash and cash equivalents 7,815,167 2,448,994
Accrued investment income 695,438 637,460
Deferred policy acquisition costs 14,555,051 15,451,689
Policyholders' account balances on
deposit with reinsurer 8,691,422 8,667,241
Reinsurance receivable 336,194 359,688
Receivables:
Agent balances 585,498 590,368
Other 555,880 324,752
Refundable income taxes 21,890 121,680
Property and equipment, net, at cost 2,636,635 2,670,203
---------- ---------
$82,926,326 $82,142,465
============ ===========
</TABLE>
See accompanying notes to condensed financial statements
3
<PAGE>
SOUTHERN SECURITY LIFE INSURANCE COMPANY
Balance Sheets (continued)
June 30, 1998 and December 31, 1997
<TABLE>
<CAPTION>
June 30, 1998 December 31,
Liabilities and Shareholders' Equity (unaudited) 1997
<S> <C> <C>
Liabilities:
Policy liabilities and accruals $1,702,916 $1,409,031
Future policy benefits:
Policyholders' account balances 52,889,916 52,335,511
Unearned premiums 6,644,842 7,108,662
Other policy claims and benefits payable 677,336 427,649
Other Policyholders' funds, dividend
and endowment accumulations 62,974 59,686
Funds held by reinsurance treaties
with reinsurers 1,399,241 1,339,927
Note payable to related party 1,000,000 1,000,000
Due to affiliated insurance agency 31,648 68,646
General expenses accrued 937,444 897,627
Unearned investment income 311,246 313,018
Other liabilities 164,164 100,990
Deferred income taxes 952,839 949,700
------- -------
66,774,566 66,010,447
---------- ----------
Shareholders' equity:
Common stock, $1 par, authorized
3,000,000 shares; issued and out-
standing, 1,907,989 shares 1,907,989 1,907,989
Capital in excess of par 4,011,519 4,011,519
Accumulated other comprehensive income 271,540 266,340
Retained earnings 9,960,712 9,946,170
---------- ---------
16,151,760 16,132,018
Commitments and contingencies - -
-------- ------
$82,926,326 $82,142,465
=========== ==========
</TABLE>
See accompanying notes to condensed financial statements
4
<PAGE>
SOUTHERN SECURITY LIFE INSURANCE COMPANY
Statements of Income (unaudited)
For The Six Months Ended June 30, 1998 and 1997
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
1998 1997 1998 1997
------------------------------------ --------------------------------
<S> <C> <C> <C> <C>
Revenues:
Premium and policy
charges $2,386,691 2,099,810 $4,267,231 $4,598,850
Less reinsurance ceded (269,160) (387,029) (386,273) (785,637)
--------- -------- -------- --------
Net insurance revenue 2,117,531 1,712,781 3,880,958 3,813,213
Net investment income 934,259 857,920 1,867,987 1,719,001
Realized gain (losses)
on investments 81,901 165,595 414,184 51,241
------ ------- ------- ------
$3,133,691 $2,736,296 $6,163,129 $5,583,455
Benefits, losses & expenses:
Annuity, death, surrender
and other benefits 1,231,297 1,258,452 2,317,699 2,353,332
Increase in future policy
benefits 98,098 39,221 226,953 30,608
Amortization of deferred
policy acquisitions
costs 799,512 642,189 1,726,723 1,590,222
Operating expenses 1,039,077 1,006,449 1,825,162 1,906,842
Interest expense with
related party 22,500 22,500 45,000 45,000
------- ------- ------ ------
$3,190,484 $2,968,811 $6,141,537 $5,926,004
---------- ---------- --------- ---------
Income (loss) before
income taxes (56,793) (232,515) 21,592 (342,549)
Income tax expense
(benefit) (22,345) (97,355) 7,049 (128,455)
------ ------ ----- --------
Net income (loss) $(34,448) $(135,160) $14,543 $(214,094)
======= ======== ====== ========
Basic net income (loss) per
share of common stock (.02) (.07) $.01 (.04)
=== === === ===
Diluted net income (loss) per
share of common stock (.02) (.07) $.01 (.04)
=== ==== === ===
</TABLE>
See accompanying notes to condensed financial statements
5
<PAGE>
SOUTHERN SECURITY LIFE INSURANCE COMPANY
Statements of Cash Flows
For Six Months Ended June 30, 1998 And 1997
<TABLE>
<CAPTION>
1998 1997
---- ----
(unaudited) (unaudited)
----------- -----------
<S> <C> <C>
Cash flows provided by (used in) operating activities:
Net income (including net realized
gains and losses on investments) $14,542 $(214,094)
Adjustments to reconcile net cash provided by
(used in) operating activities:
Depreciation 139,152 109,424
Net realized (gains) or
losses on investments (414,184) (48,314)
Loss on disposal of property,
plant and equipment 2,956 99
Amortization of deferred
policy acquisition costs 1,726,723 1,590,222
Acquisition costs deferred (830,085) (664,247)
Change in assets and liabilities affecting
cash provided by operations:
Accrued investment income (57,978) (19,019)
Accounts receivable (226,258) (147,984)
Reinsurance Receivable 23,494 (7,769)
Other policy claims and
future benefits payable 543,572 589,179
Policyholders' Account Balances 1,147,233 1,183,006
Funds held under reinsurance 59,314 83,684
Unearned premiums (463,820) (609,420)
Dividend and endowment accumulations 3,288 8,979
Payable to affiliated insurance agent (36,998) (33,411)
Income tax payable - (70,164)
Other liabilities 101,219 159,438
Income tax receivable 99,790 (76,595)
------- -------
Net cash provided by
operating activities 1,831,961 1,833,014
</TABLE>
(continued)
See accompanying notes to condensed financial statements
6
<PAGE>
SOUTHERN SECURITY LIFE INSURANCE COMPANY
Statements of Cash Flows
For Six Months Ended June 30, 1998 And 1997
<TABLE>
<CAPTION>
1998 1997
---- ----
(unaudited) (unaudited)
----------- -----------
<S> <C> <C>
Cash flows from investing activities:
Purchase of investments:
Purchase of investments available
for sale (Equity & Fixed Maturity) (6,782,600) (26,347,052)
Proceeds from maturity of held to maturity 4,042,975 1,000,000
Proceeds from maturity of available for
sale securities 299,281 438,831
Proceeds from sale of available for sale
securities (equity and fixed maturity) 6,779,007 19,289,181
Proceeds from sale of held to maturity - 1,472,528
Net change in short term investments - 4,439,106
Net change in policy and student loans (141,997) (41,965)
Acquisition of property & equipment (45,445) (12,916)
------- -------
Net cash provided by investing activities 4,151,221 237,713
--------- -------
Cash flows from financing activities:
Receipts from universal life and certain
annuity policies credited to policyholder
account balances 1,716,589 1,916,157
Return of policyholder account balances on
universal life and certain annuity policies (2,333,598) (2,809,475)
---------- ----------
Net cash used in financing activities (617,009) (893,318)
-------- --------
Increase in cash and
Cash equivalents 5,366,173 1,177,409
Cash and cash equivalents at
beginning of period 2,448,994 206,056
--------- -------
Cash and cash equivalents at
end of period $7,815,167 $1,383,465
========== ==========
</TABLE>
7
<PAGE>
SOUTHERN SECURITY LIFE INSURANCE COMPANY
Notes to Condensed Financial Statements (unaudited)
For Six Months Ended June 3, 1998
1. Unaudited Financial Statements:
The accompanying financial statements have been prepared by management in
conformity with generally accepted accounting principles for interim
financial statements and with instructions to Form 10-Q and Regulation
S-X. Accordingly, they do not include all the disclosures required by
generally accepted accounting principles for complete financial
statements. All adjustments and accruals considered necessary for fair
presentation of financial information have been included in the opinion
of management, and are of a normal recurring nature. Quarterly results of
operations are not necessarily indicative of annual results. These
statements should be read in conjunction with the consolidated financial
statements and the notes thereto included in the Southern Security Life
Insurance Company 1997 Annual Report on Form 10-K for the fiscal year
ended December 31, 1997.
2. Comprehensive Income:
The company adopted Statement of Financial Accounting Standards No.130,
"Reporting Comprehensive Income". This statement establishes standards
for reporting and display of comprehensive income and its components.
Adoption of this Statement had no impact on the Company's net income or
stockholder's equity. Statement 130 requires unrealized gains and losses
on the Company's available-for-sale securities to be included in other
comprehensive income. Prior to adoption, unrealized gains and losses
related to available-for-sale securities were reported separately in
stockholders' equity.
Total comprehensive income was $19,743 and $(68,936), for the six months
ended June 30, 1998 and 1997, respectively.
3. New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (Statement 133). Statement 133
establishes accounting and reporting standards for derivative instru-
ments, including certain derivative instruments embedded in other
contracts,(collectively referred to as derivatives) and for hedging
activities. It requires that an entity recognize all derivatives as either
assets or liabilities in the
8
<PAGE>
SOUTHERN SECURITY LIFE INSURANCE COMPANY
Notes to Condensed Financial Statements (unaudited)
For Six Months Ended June 30, 1998
3. New Accounting Pronouncements
statement of financial position and measure those instruments at fair
value. Statement 133 is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999. The Company is currently reviewing Statement
133 to see what impact, if any it will have on the Company.
4. Subsequent Event
Consolidare Enterprises, Inc., a Florida corporation ("Consolidare") owns
approximately 57.4% of the outstanding shares of common stock of the
Company. Security National Financial Corporation, a Utah Corporation
("Security National") has entered into an Acquisition Agreement dated as of
April 24, 1998 (the "Agreement") with Consolidare and certain shareholders
of Consolidare which provides for the merger of Consolidare and Security
National. Security National is a life insurance holding company which is
also engaged in mortgage lending and the ownership and operation of
cemeteries, mortuaries and office buildings. Security National's Class A
common stock is traded on the NASDAQ National Market System under the
symbol "SNFCA."
As consideration for the acquisition of Consolidare, Security National will
pay to security holders of Consolidare an aggregate of $11,356,400,
together with an amount equal to the current assets of Consolidare as of
the closing date, plus additional consideration as provided in the
agreement. For purposes of the agreement, current assets of Consolidare are
defined as cash and cash equivalents (with interest earned through the
closing date) and accrued commissions and interest due to Insuradyne and
Consolidare from the Company. In addition to the purchase consideration,
Security National is required to cause the company to pay, on the closing
date, $1,050,000 to George Pihakis, who is currently President and Chief
Executive Officer of the Company, as a lump sum settlement of the executive
compensation agreement between the Company and Mr. Pihakis.
The closing of the Agreement is contingent upon regulator approvals,
including the approval of the Florida Department of Insurance, compliance
or waiver of compliance under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, approval of the Agreement by the affirmative vote of a
9
<PAGE>
SOUTHERN SECURITY LIFE INSURANCE COMPANY
Notes to Condensed Financial Statements (unaudited)
For Six Months Ended June 30, 1998
4. Subsequent Event continued
majority of the Consolidare shareholders with no Consolidare shareholders
exercising their rights as dissenting shareholders under Section 607.1320
of the Florida statutes, as well as the satisfactory performance of certain
covenants and the accuracy of the parties' respective representations and
warranties at closing.
(The remainder of this page is intentionally left blank)
10
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operation.
Overview.
This analysis of the results of operations and financial condition of
Southern Security Life should be read in conjunction with the Condensed
Financial Statements and Notes to the Condensed Financial Statements included in
this report.
In recent years the Company has primarily issued one type of insurance
product, universal life. Universal life provides insurance coverage with
flexible premiums, within limits, which allow policyholders to accumulate cash
values. These accumulated cash values are credited with tax-deferred interest,
as adjusted by the Company on a periodic basis. Deducted from these cash
accumulations are administrative charges and mortality costs. Should a policy
surrender in its early years, the Company assesses a surrender fee against these
same cash accumulations, based on issue age of the insured, smoker verses
non-smoker status, sex of the insured and the duration of the policy at the time
of surrender.
Pursuant to the accounting methods prescribed by Statement of Financial
Accounting Standards No. 97 (SFAS 97), premiums received from policyholders on
universal life products are credited to policyholder account balances, a
liability, rather than income. Revenues on such products result from the
mortality and administrative fees charged to policyholder balances in addition
to surrender charges assessed at the time of surrender as explained above. Such
costs of insurance, expense charges, and surrender fees are recognized as
revenue as earned. In addition, the Company has adopted policy designs with the
characteristic of having higher expense charges during the first policy year
than in renewal years. Under SFAS 97, the excess of these charges are reported
as unearned revenue. The unearned revenue is then amortized into income over the
life of the policy using the same assumptions and factors used to amortize
capitalized acquisition costs. Interest credited to policyholder balances is
shown as a part of benefit expenses.
In accordance with generally accepted accounting principles, certain
costs directly associated with the issuance of new policies are deferred and
amortized over the lives of the policies. These costs are defined as deferred
policy acquisition costs and are shown in the asset section of the balance sheet
of the Company. Capitalized acquisition costs are amortized over the life of the
business at a constant rate, based on the present value of the estimated gross
profits expected to be realized over the life of the business. SFAS 97 requires
that estimates of expected gross profits used as a basis for amortization be
evaluated on a regular basis, and the total amortization to date be adjusted as
a charge or credit to earnings if actual experience or other evidence suggests
that earlier estimates be revised. Thus, variations in the amortization of the
deferred policy acquisition costs, from one period to the next, are a normal
aspect of universal life insurance business and are generally attributed to the
recognition of current and emerging experience in accordance with the principles
of SFAS 97.
11
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operation.
Overview, continued
Annuity products, of which the Company currently has a minor amount,
are recorded in similar fashion to universal life products. Considerations
received by the Company are credited to the annuity account balances which are
shown as a liability in the balance sheet. Interest is credited to these
accounts as well and shown as an expense of the Company. Income is derived
primarily from surrender charges on this type product.
An additional source of income to the Company is investment revenue.
The Company invests those funds deposited by policyholders of universal life and
annuity products in debt and equity securities in order to earn interest and
dividend income, a portion of which is credited back to the policyholders.
Interest rates and maturities of the Company's investment portfolio play a part
in determining the interest rates credited to policyholders.
Product profitability is affected by several different factors, such as
mortality experience ( actual versus expected), interest rate spreads (excess
interest earned over interest credited to policyholders) and controlling policy
acquisition costs and other costs of operation. The results of any one reporting
period may be significantly affected by the level of death claims or other
policyholder benefits incurred due to the Company's relatively small size.
(The remainder of this page is intentionally left blank)
12
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operation.
Overview, continued
The following table sets forth certain percentages reflecting financial
data and results of operations (a) for 1998, 1997 and 1996 premium and
investment revenues and (b) for period to period increases and (decreases).
<TABLE>
<CAPTION>
Relationships to Total Revenues Period to Period
Period Ended June 30, (Increase or Decrease)
1998 1997 1996 98-97 97-96
------ ------ ------ ------- ------
<S> <C> <C> <C> <C> <C>
Insurance revenues 63% 68% 71% 2% (11%)
Net investment income 37 32 29 29% (4%)
Other income - - - - -
---- ---- ----- ---- --
Total Revenues 100% 100% 100% 10% (7%)
Losses, claims and loss
adjustment expenses 41% 46% 35% 7% 14%
Acquisition costs 27 28 27 5% 2%
Other operating costs and
expenses 32 35 26 1% 26%
--- ----- --
Total expenses 100% 106% 88% 4% 14%
Income before income taxes 0% (6%) 12% 106% (148%)
Provision for income taxes 0 2 5% 105% (148%)
- -- -- --- ---
Net income (loss) 0% (4%) 7% 107% (148%)
== == = === ===
</TABLE>
Results of Operations.
Total reveunues increased by $580,000, or 10% to $6,163,000 for the six
months ended June 30, 1998, from $5,583,000 for the six months ended June 30,
1997. Contributing to this increase was a $68,000 increase in net insurance
revenues, a $149,000 increase in net investment income and a $363,000 increase
in realized gain on investments.
Net incsurance revenues increased by $68,000, or 2%, to $3,881,000 for the
six months ended June 30, 1998, from $3,813,000 for the comparable period in
1997. This increase was primarily due to new policicies placed in force and a
decrease in policy terminations (lapses & surrenders) of 14% as compared to the
same period in 1997. New policies placed in force in 1997 and 1998 have a lesser
face value and are not required to be reinsured. Conservation of in-force
policies has a positive effect to maintain premium revenues. These two factors
attributed to the increase in net insurance revenues.
13
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operation.
Results of Operations, continued
Net investment income increased by $149,000, or 9% to $1,868,000 for the
six months ended June 30, 1998, from $1,719,000 for the comparable period of
1997. The increase was attributable to the revised investment strategies the
Company made in 1997 to increase its earned interest rate.
Since the restructuring, and with a favorable market in the stock market
mutual funds, the Company realized gains on investments of $414,000 for the six
months ended June 30, 1998 as compared to $51,000 for the same period of 1997.
Annuity, death, surrender and other benefits and increase in future policy
benefits increased by $161,000, or 7% to $2,545,000 for the six months ended
June 30, 1998, from $2,384,000 for the comparable period in 1997. The increase
was due primarily to increased ordinary benefits and future policy reserves for
new in-force policies.
Pursuant to GAAP, the initial costs directly associated with selling,
underwriting, and processing traditional ordinary insurance products are
deferred and amortized over the premium-paying period of the related policies.
for interest-sensitive products, these costs are amortized over the lives of the
policies in relation to the present value of estimated gross profits from
surrender charges and investment, mortality, and expense margins. These costs
increase as the amount of sales and insurance in-force increase. The charge to
earnings for amortization of deferred policy acquisitions costs increased by
$136,500, or 2% to $1,727,000 for the six months ended June 30, 1998, from
$1,590,000 for the comparable period in 1997. The increase in amortization
expenses was primarily due to increased amortization from the growth of business
in-force and the cost of business acquired.
The increase in net income for the six months ended June 30, 1998 was
$228,000. This increase was attibuted to an increase in total revenues of
$580,000 of which $363,000 represents realized gains on investments, $68,000
increase in net insurance revenue, $149,000 increase in net investment income.
The revenue increase is offset by an increase of benefits, losses, expenses and
taxes of $352,000.
Liquidity and Capital Resources.
Statement of Financial Accounting Standards No. 115 ("SFAS 115"),
"Accounting for Certain Investments in Debt and Equity Securities" requires
investments in all debt securities and those equity securities with readily
determinable market values be classified into one of three categories:
held-to-maturity, trading or available-for-sale. Classification of investments
is based upon management's current intent. Debt securities which management has
a positive
14
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operation.
Liquidity and Capital Resources, continued
intent and ability to hold until maturity are classified as securities
held-to-maturity and are carried at amortized cost. Unrealized holding gains and
losses on securities held-to-maturity, are not reflected in the financial
statements. Debt and equity securities that are purchased for short-term resale
are classified as trading securities. Trading securities are carried at market
value, with unrealized holding gains and losses included in earnings. All other
debt and equity securities not included in the above two categories are
classified as securities available-for- sale. Securities available-for-sale are
carried at market value, with unrealized holding gains and losses reported as a
separate component of other comprehensive income, net of tax and a valuation
allowance against deferred acquisition costs.
The Company's insurance operations have historically provided adequate
positive cash flow enabling the Company to continue to meet operational needs as
well as increase its investment-grade securities to provide ample protection for
policyholders. Except as otherwise provided herin, management believes that
cash flow levels in future periods will be such that the Company will be able to
continue its prior growth patterns in writing life insurance policies and meet
normal operating expenses.
The National Association of Insurance Commissioners, in order to enhance
the regulation of insurer solvency, issued a model law to implement risk-based
capital (RBC) requirements for life insurance companies, which are designed to
assess capital adequacy. Pursuant to the model law, insurers having less
statutory surplus than required by the RBC calculation will be subject to
varying degrees of regulatory action. At June 30, 1998, and December 31, 1997,
the Company had statutory surplus well in excess of any RBC action level
requirements.
The Company has no material commitments for capital expenditures throughout
the balance of the year 1998 as all rentable space on the first floor of its
office building is fully leased.
The Company is aware of potential problems all computer systems face with
respect to the year 2000, and has investigated various solutions. Present plans
call for the conversion to be completed by the end of 1998. It is estimated to
cost approximately $200,000, which would not have a material impact on the
Company.
Testing for hardware problems will be done during the second quarter of
1999, although the Company is not expecting any problems which could not be
solved before December 31, 1999.
15
<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 duly authorized.
SOUTHERN SECURITY LIFE INSURANCE COMPANY
BY: /s/ George Pihakis
---------------------
George Pihakis
President, Chief Executive Officer and Director
Date:
August 25, 1998 BY: /s/ David C. Thompson
---------------------
David C. Thompson
Executive Vice-President, Secretary, Treasurer,
Chief Operating Officer and Director
16
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 7
<S> <C> <C>
<PERIOD-TYPE> 6-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-END> JUN-30-1998 DEC-31-1997
<DEBT-HELD-FOR-SALE> 32,137,481 31,483,324
<DEBT-CARRYING-VALUE> 6,463,733 10,501,712
<DEBT-MARKET-VALUE> 6,566,275 10,631,003
<EQUITIES> 244,559 839,973
<MORTGAGE> 0 0
<REAL-ESTATE> 0 0
<TOTAL-INVEST> 47,033,151 50,870,390
<CASH> 7,815,167 2,448,994
<RECOVER-REINSURE> 336,194 359,688
<DEFERRED-ACQUISITION> 14,555,051 15,451,689
<TOTAL-ASSETS> 82,926,326 82,142,465
<POLICY-LOSSES> 1,702,916 1,409,031
<UNEARNED-PREMIUMS> 6,644,842 7,108,662
<POLICY-OTHER> 677,336 427,649
<POLICY-HOLDER-FUNDS> 62,974 59,686
<NOTES-PAYABLE> 1,000,000 1,000,000
0 0
0 0
<COMMON> 1,907,989 1,907,989
<OTHER-SE> 4,011,519 4,011,519
<TOTAL-LIABILITY-AND-EQUITY> 82,926,326 82,142,465
3,880,958 7,643,650
<INVESTMENT-INCOME> 1,867,987 3,545,311
<INVESTMENT-GAINS> 414,184 506,795
<OTHER-INCOME> 0 0
<BENEFITS> 2,544,652 4,431,474
<UNDERWRITING-AMORTIZATION> 1,726,723 3,542,617
<UNDERWRITING-OTHER> 1,825,162 3,382,255
<INCOME-PRETAX> 21,592 249,410
<INCOME-TAX> 7,049 54,200
<INCOME-CONTINUING> 14,543 195,210
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 14,543 195,210
<EPS-PRIMARY> .01 .10
<EPS-DILUTED> .01 .10
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