<PAGE> 1
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. . . . . . . . June 30, 1998
or
/ / Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the Transition Period from ____ to ____.
Commission File Number 0-7849
W. R. BERKLEY CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 22-1867895
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
165 Mason Street, Greenwich, Connecticut 06836-2518
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(203) 629-3000
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
None
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if
changed since last report.
Indicate by check mark whether the registrant (1) 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 and (2) has been subject to such filing requirements for
the past 90 days.
Yes /X/ No / /
Number of shares of common stock, $.20 par value, outstanding as of August 3,
1998: 28,208,175.
<PAGE> 2
W. R. Berkley Corporation and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
----------- -----------
(Unaudited)
<S> <C> <C>
Assets
Investments:
Invested cash $ 536,854 $ 417,967
Fixed maturity securities:
Held to maturity, at cost (fair value
$186,690 and $194,919) 174,065 182,172
Available for sale at fair value (cost $2,154,402
and $2,240,901) 2,237,115 2,322,971
Equity securities, at fair value:
Available for sale (cost $69,758 and $76,134) 77,202 86,243
Trading account (cost $419,152 and $301,136) 425,434 311,969
Cash 17,393 21,669
Premiums and fees receivable 387,975 331,774
Due from reinsurers 476,247 432,516
Accrued investment income 36,655 36,930
Prepaid reinsurance premiums 83,161 72,148
Deferred policy acquisition costs 161,972 145,737
Real estate, furniture & equipment at cost, less accumulated depreciation 135,054 126,831
Excess of cost over net assets acquired 72,047 73,142
Other assets 37,011 37,215
----------- -----------
$ 4,858,185 $ 4,599,284
=========== ===========
Liabilities, Reserves, Debt and
Stockholders' Equity
Liabilities and reserves:
Reserves for losses and loss expenses $ 2,011,465 $ 1,909,688
Unearned premiums 652,437 589,384
Due to reinsurers 113,363 95,140
Deferred Federal income taxes 20,421 32,887
Trading securities sold but not yet purchased at fair value
(proceeds $312,786 and $162,360) 309,819 159,456
Other liabilities 218,356 242,721
----------- -----------
3,325,861 3,029,276
----------- -----------
Long-term debt 386,279 390,415
----------- -----------
Company-obligated mandatorily redeemable capital securities of a
subsidiary trust holding solely 8.197% junior subordinated debentures
of the Corporation due December 15, 2045 207,966 207,944
Minority interest 24,017 24,357
----------- -----------
Stockholders' equity:
Preferred stock, par value $.10 per share:
Authorized 5,000,000 shares:
7 3/8% Series A Cumulative Redeemable Preferred
Stock 653,952 shares issued and outstanding 65 65
Common stock, par value $.20 per share:
Authorized 80,000,000 shares, issued and
outstanding, net of treasury shares,
28,206,950 and 29,568,335 shares 7,281 7,281
Additional paid-in capital 429,328 428,760
Retained earnings 601,847 569,160
Accumulated other comprehensive income 56,278 58,206
Treasury stock, at cost, 8,197,117 and
6,835,510 shares (180,737) (116,180)
----------- -----------
914,062 947,292
----------- -----------
$ 4,858,185 $ 4,599,284
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE> 3
W. R. Berkley Corporation and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
(Amounts in thousands except per share data)
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
--------------------------- ---------------------------
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues:
Net premiums written $ 339,826 $ 300,759 $ 673,658 $ 584,769
Increase in net unearned premiums (20,838) (28,843) (52,037) (55,569)
--------- --------- --------- ---------
Premiums earned 318,988 271,916 621,621 529,200
Net investment income 52,384 47,587 108,778 92,418
Management fees and commission income 17,775 17,890 36,363 35,420
Realized gains (losses) on investments 7,090 (2,146) 10,507 7,194
Other income 673 679 2,916 1,516
--------- --------- --------- ---------
Total revenues 396,910 335,926 780,185 665,748
Operating costs and expenses:
Losses and loss expenses (217,578) (181,267) (422,780) (350,860)
Other operating costs and expenses (139,043) (116,498) (272,223) (226,511)
Interest expense (12,158) (12,237) (24,331) (24,455)
--------- --------- --------- ---------
Income before income taxes and
minority interest 28,131 25,924 60,851 63,922
Federal income tax expense (6,503) (5,564) (13,700) (15,359)
--------- --------- --------- ---------
Income before minority interest 21,628 20,360 47,151 48,563
Minority interest 1,115 273 1,265 614
--------- --------- --------- ---------
Net income before preferred dividends 22,743 20,633 48,416 49,177
Preferred dividends (1,887) (2,008) (3,774) (4,125)
--------- --------- --------- ---------
Net income before extraordinary loss 20,856 18,625 44,642 45,052
Extraordinary loss on early extinguishment of
long-term debt (net of taxes of $1,390 and $2,701) (2,582) -- (5,017) --
--------- --------- --------- ---------
Net income attributable to common stockholders $ 18,274 $ 18,625 $ 39,625 $ 45,052
========= ========= ========= =========
Earning per share:
Basic:
Net income before extraordinary loss $ .73 $ .63 $ 1.54 $ 1.53
Extraordinary loss on early extinguishment of
long-term debt (.09) -- (.17) --
--------- --------- --------- ---------
Net income attributable to common stockholders $ .64 $ .63 $ 1.37 $ 1.53
========= ========= ========= =========
Diluted:
Net income before extraordinary loss $ .70 $ .62 $ 1.48 $ 1.50
Extraordinary loss on early extinguishment of
long-term debt (.09) -- (.17) --
--------- --------- --------- ---------
Net income attributable to common stockholders $ .61 $ .62 $ 1.31 $ 1.50
========= ========= ========= =========
Average shares outstanding:
Basic 28,469 29,480 29,024 29,471
========= ========= ========= =========
Diluted 29,734 30,025 30,271 30,018
========= ========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 4
W. R. Berkley Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
---------------------------
1998 1997
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income before preferred dividends and extraordinary items $ 48,416 $ 49,177
Adjustments to reconcile net income to cash
flows from operating activities:
Minority interest (1,264) (614)
Increase in reserves for losses
and loss expenses, net of due to/from reinsurers 76,269 54,587
Depreciation and amortization 12,423 2,396
Change in unearned premiums and
prepaid reinsurance premiums 52,040 55,569
Increase in premiums and fees receivable (77,376) (66,704)
Change in Federal income taxes (2,132) (5,916)
Change in deferred acquisition cost (16,235) (17,535)
Realized gains on investments (10,507) (7,194)
Other, net (25,815) 6,266
--------- ---------
Net cash flows from operating activities
before trading account sales 55,819 70,032
Trading account sales, net 92,454 2,305
--------- ---------
Net cash flows from operating activities 148,273 72,337
--------- ---------
Cash flows from (used in) investing activities:
Proceeds from sales, excluding trading account:
Fixed maturity securities available for sale 384,936 279,303
Equity securities 23,538 24,398
Proceeds from maturities and prepayments of
fixed maturity securities 86,456 57,094
Cost of purchases, excluding trading account:
Fixed maturity securities available for sale (418,935) (419,201)
Equity securities (13,871) (20,475)
Change in balances due to/from security brokers 6,128 17,569
Net additions to real estate, furniture & equipment (15,623) (7,770)
Other, net (290) (10,259)
--------- ---------
Net cash flows from (used in) investing activities 52,339 (79,341)
--------- ---------
Cash flows used in financing activities:
Net proceeds from issuance of long-term debt 39,834 --
Purchase of treasury shares (66,044) --
Retirement of long-term debt (49,104) --
Cash dividends to common stockholders (6,803) (5,502)
Cash dividends to preferred stockholders (3,658) (4,923)
Repurchase of preferred stock -- (33,785)
Other, net (226) 10,987
--------- ---------
Net cash flows used in financing activities (86,001) (33,223)
--------- ---------
Net increase (decrease) in cash and invested cash 114,611 (40,227)
Cash and invested cash at beginning of year 439,636 346,485
--------- ---------
Cash and invested cash at end of period $ 554,247 $ 306,258
========= =========
Supplemental disclosure of cash flow information:
Interest paid $ 23,855 $ 22,855
========= =========
Federal income taxes paid, net $ 15,825 $ 20,883
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 5
W. R. Berkley Corporation and Subsidiaries
Notes to Consolidated Financial Statements
June 30, 1998
(Unaudited)
The accompanying consolidated financial statements should be read in
conjunction with the following notes and with the Notes to Consolidated
Financial Statements included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1997.
A. FEDERAL INCOME TAXES
The Federal income tax provision has been computed based on the
Company's estimated annual effective tax rate, which differs from the Federal
income tax rate of 35% principally because of tax-exempt investment income.
B. REINSURANCE CEDED
The amounts of ceded reinsurance included in the statements of
operations are as follows (amounts in thousands):
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
---------------------- ------------------------
1998 1997 1998 1997
------- ------- -------- --------
<S> <C> <C> <C> <C>
Ceded premiums written $67,616 $65,441 $132,998 $120,520
======= ======= ======== ========
Ceded premiums earned $63,965 $59,286 $125,870 $113,964
======= ======= ======== ========
Ceded losses and loss expenses $41,620 $38,768 $ 94,825 $ 64,013
======= ======= ======== ========
</TABLE>
C. PER SHARE DATA
Basic per share data is based upon the weighted average number of
shares outstanding during the year. Diluted per share data reflects the
potential dilution that would occur if employee stock based compensation plans
were exercised.
4
<PAGE> 6
D. Comprehensive Income
In June 1997, the Financial Accounting Standard Board issued statement
No. 130, "Reporting Comprehensive Income", which requires enterprises to
disclose comprehensive income and its components. The differences between
comprehensive income and net income are unrealized foreign exchange gains
(losses) as well as unrealized gains (losses) on securities. The following is a
reconciliation of comprehensive income (amounts in thousands):
<TABLE>
<CAPTION>
For the three months For the six months
Ended June 30, Ended June 30,
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net income attributable to common stockholders $ 18,274 $ 18,625 $ 39,625 $ 45,052
-------- -------- -------- --------
Other comprehensive income:
Unrealized holding gains(losses)on investment
securities arising during the period (4,344) 27,598 (7,991) 5,951
Less: Reclassification adjustment for gains (losses)
included in net income, net of tax 4,609 (1,395) 6,830 4,676
-------- -------- -------- --------
Net change in unrealized gains during the period 265 26,203 (1,161) (1,275)
Change in unrealized foreign exchange gains (losses) 225 -- (766) --
-------- -------- -------- --------
Other comprehensive income 490 26,203 (1,927) (1,275)
-------- -------- -------- --------
Comprehensive income $ 18,764 $ 44,828 $ 37,698 $ 43,777
======== ======== ======== ========
</TABLE>
E. STOCK OPTION PLAN
The Company adopted the W.R. Berkley Corporation 1992 Stock Option Plan
("the Stock Option Plan") under which 2,625,000 shares of Common Stock were
reserved for issuance. In May 1997, the Corporation restated the Stock Option
Plan to increase the number of shares of Common Stock authorized for issuance
under the Stock Option Plan from 2,625,000 to 7,125,000. In May 1998, the
Corporation issued 1,009,875 options to management of the corporation and its
subsidiaries. Pursuant to the Plan, options may be granted at prices determined
by the Board of Directors but not less than fair market value on the date of
grant. To date, options have been granted with an exercise price equal to the
average of the high and low market price on the date of grant.
The following table summarizes option information, including options
granted under both the 1992 and prior plans:
<TABLE>
<CAPTION>
For the period from For the period from
January 1, 1998 to January 1, 1997 to
June 30, 1998 December 31, 1997
----------------------------- ----------------------------
Weighted Weighted
Average Average
Exercise Exercise
Shares Price Shares Price
------ ----- ------ -----
<S> <C> <C> <C> <C>
Outstanding at beginning of period 3,218,762 29.52 2,491,222 $26.03
Granted 1,012,875 47.37 1,154,354 34.68
Exercised 87,491 23.49 280,498 20.87
Canceled 8,739 28.73 146,316 27.42
--------- ----- --------- -----
Outstanding at end of period 4,135,407 34.02 3,218,762 22.66
========= ===== ========= =====
Options exercisable at end of
period 659,095 558,210
========= =========
Options available for future grant 2,888,303 3,892,439
========= =========
</TABLE>
5
<PAGE> 7
E. STOCK OPTION PLAN (Continued)
In accordance with FAS 123 the fair value of the options granted is
estimated on the date of grant using the Black-Scholes option pricing model with
the following weighted average assumptions for 1998 and 1997, respectively: (a)
dividend yield of 1%, (b) expected volatility of 20%, (c) risk free interest
rate of 5.81% and 6.70% (d) expected life of 7.5 years. The weighted average
fair value of options granted during the period were $15.16 and $12.97 for the
six months ended June 30, 1998 and for the year ended December 31, 1997,
respectively.
Had compensation costs for the Company's 1998 and 1997 grants been
determined under the cost recognition alternative of FAS 123, the effect on the
Company's net income and net income attributable to common shareholders would
have been:
<TABLE>
<CAPTION>
For the Six For the Six
Months Ended Months Ended
June 30, 1998 June 30, 1997
------------- -------------
<S> <C> <C>
As reported:
Net Income before preferred dividends $48,416 $49,177
======= =======
Net Income attributable
to Common Shareholders $39,625 $45,052
======= =======
Pro forma:
Net Income before preferred dividends $47,017 $48,337
======= =======
Net Income attributable
to Common Shareholders $38,226 $44,412
======= =======
</TABLE>
F. RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, Statement of Financial Accounting Standards (SFAS) No.
133, "Accounting for Derivative Instruments and Hedging Activities", was issued
and established standards for accounting and reporting of derivative instruments
and hedging activities. The statement is effective for all fiscal quarters of
fiscal years beginning after June 15, 1999. The Company is currently evaluating
the requirements but does not expect this statement to have a material impact on
it's financial position or results of operation.
G. OTHER MATTERS
Reclassifications have been made in the 1997 financial statements as
originally reported to conform them to the presentation of the 1998 financial
statements.
In the opinion of management, the summarized financial information
reflects all adjustments, which are necessary for a fair presentation of
financial position and results of operations for the interim periods. The
Company's results of operations are affected by seasonal weather variations.
Accordingly, results reflected for any interim period are not necessarily
indicative of those to be expected for the entire year.
6
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Net income attributable to common stockholders ("net income") was $18.3
million, ($.61 diluted per share) for the second quarter of 1998, in comparison
with $18.6 million, ($.62 diluted per share), for the 1997 period. Net income
was $39.6 million, ($1.31 diluted per share) for the six months of 1998, in
comparison with $45.1 million, ($1.50 diluted per share) for the 1997 period.
Operating income, which we define as net income before realized
investment gains (losses) and extraordinary items, was $16.2 million, ($.55
diluted per share), in the second quarter of 1998 in comparison with $20.0
million, ($.67 diluted per share), earned in the corresponding 1997 period.
Operating income was $37.8 million, ($1.25 diluted per share), in the six months
of 1998, in comparison with $40.4 million, ($1.35 diluted per share), earned in
the corresponding 1997 period.
Second quarter net income included capital gains, net of taxes, of $4.6
million, or $.15 per share diluted, compared with capital losses of $1.4
million, or $.05 per share diluted, for the same period last year. For the first
six months of 1998 capital gains were $6.8 million or $.23 per share diluted
compared with $4.7 million or $.15 per share diluted recorded during the
corresponding 1997 period.
The Company also reported an extraordinary loss of $2.6 million and
$5.0 million for the second quarter and first six months of 1998, respectively,
related to the repurchase and retirement of $34.7 million (face amount) of
long-term debt. There were no comparable extraordinary items in 1997.
Operating Results for the Six months of 1998
As compared to the Six months of 1997
Net premiums written during the first six months of 1998 increased by
15% to $673.7 million from $584.8 million written in the comparable 1997 period.
Net premiums written by the regional segment increased by $31.2 million or 10%,
approximately half of this increase was due to Continental Western; the balance
of the increase was generated by several of the regional units. Specialty net
premiums written increased by $17.1 million or 16% due to increases in the
commercial transportation and excess and surplus sectors. Net premiums written
by the reinsurance operations increased by $21.4 million or 20% mainly due to an
increase in prorata treaty volume. Alternative Markets net premiums written
increased $1.6 million or 3% due to the commencement of operations of Key Risk
Insurance Company (which underwrote business previously managed on behalf of a
self-insurance association). This increase more than offset a decline in
premiums written by Midwest Employers Casualty Company. International net
premiums written increased $17.6 million or 95% primarily due to a 1997
acquisition.
For the six months ended June 30, 1998, pre-tax investment income
increased by 18% to $108.8 million. This increase was primarily due to higher
earnings in our trading portfolio. In addition, an increase in average
investable assets due to cash flow from operations contributed to the growth in
investment income. These increases more than offset the reinvestment of funds at
lower yields. (See "Liquidity and Capital Resources").
Management fees and commission income ("Management fees") consist
primarily of revenues earned by the Alternative Markets segment. During the six
months of 1998, management fees increased 3% from the comparable 1997 amount,
principally due to the addition of a significant new account.
Realized gains increased to $10.5 million from $7.2 million earned in
the comparable 1997 period. Realized gains on fixed income securities result
primarily from the Company's strategy of maintaining an appropriate balance
between the duration of its fixed income portfolio and the duration of its
liabilities; realized gains on equity securities arise primarily as a result of
a variety of factors which influence the Company's valuation criteria. The
majority of the 1998 realized gains were attributable to the sale of fixed
maturity securities while the majority of the 1997 realized gains resulted from
the sale of equity securities.
7
<PAGE> 9
The combined ratio (on a statutory basis) of the Company's insurance
operations increased to 102.5% for the six months ended June 30, 1998 from
100.2% in the comparable 1997 period due to increases in the consolidated loss
ratio and expense ratio. The consolidated loss ratio (losses and loss expenses
incurred expressed as a percentage of premiums earned) increased to 67.8% in
1998 from 66.4% in 1997 due to an increase in weather related losses as well as
an increase in current year experience due to the effects of increased rate
competition. These factors more than offset a reduction in losses incurred from
significant reserve releases due to better than expected experience on business
written in prior years.
Other operating costs and expenses, which consist of the expenses of
the Company's operating units as well as the Company's corporate and investment
expenses, increased by 20% to $272.2 million. The increase in other operating
costs and expenses is primarily due to substantial growth in premium volume
which in turn results in an increase in underwriting expenses. The consolidated
expense ratio (underwriting expenses expressed as a percentage of premiums
written) increased slightly to 34.3% from 33.4%. This increase resulted from a
higher growth rate in international operations, which operate at a higher
expense ratio than domestic operations.
Federal income tax expense in 1998 was $13.7 million (23% effective
rate) as compared to a $15.4 million (24% effective rate) for the comparable
1997 period. The decrease in the effective tax rate in 1998 is due primarily to
an increase in the percentage of pre-tax income that is tax-exempt. (See
"Liquidity and Capital Resources").
Operating Results for the Second Quarter of
1998 as Compared to the Second Quarter of 1997
For the second quarter of 1998 as compared to the corresponding 1997
period, net premiums written increased 13%; net investment income increased 10%;
and management fees and commission income decreased 1%, all for the reasons
discussed above.
The combined ratio (on a statutory basis) of the Company's insurance
operations increased to 102.6% for the three months ended June 30, 1998 from
100.4% in the comparable 1997 period due to an increase in the consolidated loss
ratio and an increase in the consolidated expense ratio. The consolidated loss
ratio (losses and loss expenses incurred expressed as a percentage of premiums
earned) increased to 67.8% in 1998 from 66.6% in 1997 for the reasons discussed
above.
Other operating costs and expenses increased 19% to $139.0 million for
the three months ended June 30, 1998 and the consolidated expense ratio of the
Company's insurance operations (underwriting expenses expressed as a percentage
of premiums written) increased to 34.3% for the 1998 period from 33.4% for the
comparable 1997, for the reasons discussed above.
Liquidity and Capital Resources
Cash flow from operating activities before trading account sales, was
$55.8 million for the first six months of 1998 compared with $70.0 million for
the same period in 1997. The lower level of cash flow was due to the effects of
a higher combined ratio.
The net investment portfolio, on a cost basis, decreased by $54.0
million to $2,976.3 million at June 30, 1998 from $3,030.3 million at December
31, 1997 as the purchase of treasury stock and the retirement of debt more than
offset cash flow from operations.
The composition of the Company's net investment portfolio distribution
at June 30, 1998 as compared with December 31, 1997 was: tax-exempt securities
remained at 34%; U.S. Government securities and cash equivalents (excluding
trading cash) remained at 23%; corporate bonds remained at 15%; mortgage-backed
securities decreased to 16% from 17%; the net trading account investments
increased to 10% from 8%; and equity securities represented the balance.
8
<PAGE> 10
In February 1998 the Company repurchased $16.3 million face value of
its 9.875% and 8.7% senior notes and debentures for $19.7 million and issued
$20.2 of short-term debt to finance these purchases. In April 1998 the Company
repurchased an additional $18.4 million of its 9.875% and 8.7% senior debentures
for $22.1 million. In April 1998 the Company issued $40 million face value
6.375% medium-term notes due April 15, 2005. The proceeds from the issuance of
the medium-term notes were used to repay the short-term debt issued in
connection with the repurchased debentures. In addition, a portion of the
proceeds from the medium-term notes was used to retire $10 million face value of
its 8.95% senior notes, which matured on May 20, 1998.
For the first six months of 1998 the Company purchased 1,450,226 shares
of its Common Stock leaving a balance of 1,983,074 shares available for
repurchase under its current authorization.
For the first six months of 1998, Stockholders' Equity decreased by
approximately $33.2 million. The decrease in Stockholders' Equity is
attributable to the repurchase of Common Stock, which was partially offset by an
increase in Retained Earnings. Accordingly, the Company's total capitalization
decreased to $1,508.2 million at June 30, 1998 and the percentage of the
Company's capital attributable to debt remained at 26%.
For background information concerning a further discussion of the
Company's Liquidity and Capital Resources, see the Company's Annual Report on
Form 10-K.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
None
(b) Reports on Form 8-K
None
9
<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.
W. R. BERKLEY CORPORATION
WILLIAM R. BERKLEY
--------------------------
William R. Berkley
Chairman of the Board and
Chief Executive Officer
ANTHONY J. DEL TUFO
--------------------------
Anthony J. Del Tufo
Senior Vice President,
Chief Financial Officer
and Treasurer
10
<TABLE> <S> <C>
<ARTICLE> 7
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 2,237,115
<DEBT-CARRYING-VALUE> 174,065
<DEBT-MARKET-VALUE> 186,690
<EQUITIES> 502,637
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 2,913,817
<CASH> 554,247
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 161,972
<TOTAL-ASSETS> 4,858,185
<POLICY-LOSSES> 2,011,465
<UNEARNED-PREMIUMS> 652,437
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 594,245
0
65
<COMMON> 7,281
<OTHER-SE> 906,716
<TOTAL-LIABILITY-AND-EQUITY> 4,858,185
621,621
<INVESTMENT-INCOME> 108,778
<INVESTMENT-GAINS> 10,507
<OTHER-INCOME> 2,916
<BENEFITS> 422,780
<UNDERWRITING-AMORTIZATION> 0
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> 60,851
<INCOME-TAX> 13,700
<INCOME-CONTINUING> 44,642
<DISCONTINUED> 0
<EXTRAORDINARY> (5,017)
<CHANGES> 0
<NET-INCOME> 39,625
<EPS-PRIMARY> 1.37
<EPS-DILUTED> 1.31
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
