<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 10-Q
X Quarterly Report Under 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
----------------------
Commission File Number 0-4604
CINCINNATI FINANCIAL CORPORATION
--------------------------------
(Exact name of registrant as specified in its charter)
An Ohio Corporation 31-0746871
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6200 South Gilmore Road
Fairfield, Ohio 45014-5141
(Address of principal executive offices)
Registrant's telephone number, including area code: 513/870-2000
* 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 .
--- ---
Securities registered pursuant to Section 12(g) of the Act:
$2.00 Par Common--167,170,440 shares outstanding at June 30, 1998
(Shares outstanding reflect the effects of a 3-for-1 stock
split effective to shareholders of record on April 24, 1998.)
$52,849,000 of 5.5% Convertible Senior Debentures Due 2002
$419,594,000 of 6.9% Senior Debentures Due 2028
<PAGE> 2
PART I
ITEM 1. FINANCIAL STATEMENTS
CINCINNATI FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(000's omitted)
(Unaudited)
June 30, December 31,
1998 1997
---- ----
<S> <C> <C>
ASSETS
Investments
Fixed maturities (cost: 1998--$2,616,085;
1997--$2,571,549)........................................ $ 2,795,411 $ 2,751,219
Equity securities (cost: 1998--$1,837,781;
1997--$1,725,855)........................................ 6,798,396 5,999,271
Other invested assets...................................... 50,277 46,560
Cash ........................................................ 144,327 80,168
Investment income receivable.................................. 75,511 74,520
Finance receivables........................................... 32,405 31,715
Premiums receivable........................................... 172,931 158,539
Reinsurance receivable........................................ 128,098 109,110
Prepaid reinsurance premiums.................................. 25,048 23,612
Deferred acquisition costs pertaining to unearned
premiums and to life policies in force..................... 137,549 135,313
Land, buildings and equipment for Company use (at cost
less accumulated depreciation)............................. 55,481 52,559
Other assets.................................................. 68,613 30,839
------------ -----------
Total assets $ 10,484,047 $ 9,493,425
============ ===========
LIABILITIES
Insurance reserves:
Losses and loss expenses................................... $ 2,026,745 $ 1,936,534
Life policy reserves....................................... 509,973 482,447
Unearned premiums............................................. 448,356 443,054
Notes payable ................................................ 1,406 280,558
6.9% senior debentures due 2028............................... 419,594 0
5.5% convertible senior debentures due 2002................... 52,849 58,430
Federal income taxes
Current.................................................... 1,653 24,335
Deferred .................................................. 1,648,285 1,406,478
Other liabilities............................................. 107,103 144,624
------------ -----------
Total liabilities 5,215,964 4,776,460
------------ -----------
SHAREHOLDERS' EQUITY
Common stock, $2 per share; authorized 200,000
shares; issued 1998--170,219; 1997--169,391
shares; outstanding 1998--167,170; 1997--166,356
shares..................................................... 340,438 338,782
Paid-in capital .............................................. 215,078 203,282
Retained earnings............................................. 1,433,552 1,341,730
Accumulated other comprehensive income........................ 3,352,211 2,905,756
------------ -----------
5,341,279 4,789,550
Less treasury shares at cost (1998--3,049 shares;
1997--3,035 shares)......................................... (73,196) (72,585)
------------ -----------
Total shareholders' equity.............................. 5,268,083 4,716,965
------------ -----------
Total liabilities and shareholders' equity........... $ 10,484,047 $ 9,493,425
============ ===========
</TABLE>
Common Stock, Paid-In-Capital and Share figures reflect the effects of a 3-for-1
stock split effective to shareholders of record on April 24, 1998.
Accompanying notes are an integral part of these financial statements.
<PAGE> 3
CINCINNATI FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
(000's omitted except per share data)
Six Months Ended June 30, Three Months Ended June 30,
------------------------- ---------------------------
REVENUES 1998 1997 1998 1997
------ ------ ------ -----
<S> <C> <C> <C> <C>
Premiums earned:
Property and casualty.................................. $ 758,459 $ 716,984 $ 380,059 $ 359,484
Life ................................................. 30,397 27,437 16,269 13,904
Accident and health.................................... 4,135 3,954 2,072 2,004
---------- --------- --------- ---------
Net premiums earned................................. 792,991 748,375 398,400 375,392
Investment income, less expenses......................... 181,386 170,921 91,086 86,690
Realized gain on investments............................. 52,763 44,291 27,121 19,988
Other income............................................. 3,991 4,352 1,971 2,132
---------- --------- --------- ---------
Total revenues......................................... 1,031,131 967,939 518,578 484,202
---------- --------- --------- ---------
BENEFITS & EXPENSES
Insurance losses and policyholder benefits.............. 591,339 525,690 321,208 259,192
Commissions............................................. 138,050 140,879 67,839 73,436
Other operating expenses................................ 73,532 67,165 37,411 34,030
Taxes, licenses & fees ................................ 25,837 24,954 13,016 12,972
Increase in deferred acquisition costs
pertaining to unearned premiums
and to life policies in force....................... (2,236) (2,413) (2,245) (2,240)
Interest expense ....................................... 11,482 9,778 6,143 4,742
Other expenses.......................................... 3,881 3,267 2,292 1,729
---------- --------- --------- ---------
Total benefits & expenses.............................. 841,885 769,320 445,664 383,861
---------- --------- --------- ---------
INCOME BEFORE INCOME TAXES................................ 189,246 198,619 72,914 100,341
---------- --------- --------- ---------
PROVISION FOR INCOME TAXES
Current ................................................. 44,810 45,946 12,883 25,710
Deferred ................................................ 1,408 2,796 1,181 (1,199)
---------- --------- --------- ---------
Total provision for income taxes....................... 46,218 48,742 14,064 24,511
---------- --------- --------- ---------
NET INCOME................................................ $ 143,028 $ 149,877 $ 58,850 $ 75,830
========== ========= ========= ========
Average shares outstanding................................ 166,768 166,081 166,933 165,730
Average shares outstanding (diluted)...................... 172,272 172,548 172,384 172,363
PER COMMON SHARE
Net income................................................ $ .86 $ .90 $ .35 $ .46
Net income (diluted)...................................... $ .84 $ .88 $ .35 $ .45
Cash dividends declared................................... $ .31 $ .27 $ .15 $ .14
</TABLE>
Per share amounts reflect the effects of a 3-for-1 stock split effective to
shareholders of record on April 24, 1998.
Accompanying notes are an integral part of these financial statements.
<PAGE> 4
CINCINNATI FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE I - ACCOUNTING POLICIES
The consolidated financial statements include the accounts of the Company and
all of its subsidiaries, each of which is wholly owned, and are presented in
conformity with generally accepted accounting principles. All significant
inter-company investments and transactions have been eliminated in
consolidation. The December 31, 1997 consolidated balance sheet amounts are
derived from the audited financial statements but do not include all disclosures
required by generally accepted accounting principles.
INVESTMENTS--Fixed maturities and equity securities have been classified as
available for sale and are carried at fair values at June 30, 1998 and December
31, 1997.
UNREALIZED GAINS AND LOSSES (000's omitted)--The increases (decreases) in
unrealized gains for fixed maturities and equity securities (net of income tax
effect) for the six-month and three-month periods ended June 30 are as follows:
Fixed Equity
Maturities Securities Total
---------- ---------- -----
Six-Month Periods Ended
June 30, 1998 $ (224) $ 446,679 $ 446,455
June 30, 1997 $ 7,525 $ 507,013 $ 514,538
Three-Month Periods Ended
June 30, 1998 $ 902 $ 162,156 $ 163,058
June 30, 1997 $ 24,409 $ 248,758 $ 273,167
Such amounts are included as additions to and deductions from shareholders'
equity.
REINSURANCE (000's omitted)--Premiums earned are net of premiums on ceded
business, and insurance losses and policyholder benefits are net of reinsurance
recoveries in the accompanying statements of income for the six-month and
three-month periods ended June 30 as follows:
Ceded Reinsurance
Premiums Recoveries
-------- ----------
Six-Month Periods Ended
June 30, 1998 $ 48,980 $ 35,252
June 30, 1997 $ 48,593 $ 13,314
Three-Month Periods Ended
June 30, 1998 $ 24,926 $ 23,298
June 30, 1997 $ 24,388 $ 304
NOTE II - STOCK OPTIONS
The Company has primarily qualified stock option plans under which options are
granted to employees of the Company at prices which are not less than market
price at the date of grant and which are exercisable over ten-year periods. On
June 30, 1998, outstanding options for Stock Option Plan No. III totalled 49,614
shares with a purchase price of $7.34, outstanding options for Stock Plan No. IV
totalled 2,688,456 shares with purchase prices ranging from a low of $7.46 to a
high of $42.88 and outstanding options for Stock Plan V totalled 1,393,905
shares with purchase prices ranging from a low of $20.48 to a high of $45.38.
These amounts reflect the effects of a 3-for-1 stock split effective to
shareholders of record on April 24, 1998.
<PAGE> 5
NOTE III - INTERIM ADJUSTMENTS
The preceding summary of financial information for Cincinnati Financial
Corporation and consolidated subsidiaries is unaudited, but the Company believes
that all adjustments (consisting only of normal recurring accruals) necessary
for fair presentation have been made. The results of operations for this interim
period is not necessarily an indication of results to be expected for the
remaining six months of the year.
NOTE IV - FINANCIAL ACCOUNTING PRONOUNCEMENTS
SEGMENT INFORMATION--SFAS No. 131 "Disclosures About Segments of an Enterprise
and Related Information" is effective for the Company in 1998 and will require
additional disclosures for the Company's operating segments in the annual
consolidated financial statement. Beginning in 1999, certain segment information
is required to be reported quarterly.
NOTE V - COMPREHENSIVE INCOME
In the first half of 1998, the Company experienced less unrealized gains in
equity securities than in the first half of 1997, resulting in comprehensive
income of $589,483 in 1998, compared to $664,415 in 1997 and second quarter 1998
comprehensive income of $221,908 compared to $348,997 in second quarter of 1997.
<PAGE> 6
CINCINNATI FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
(000's omitted )
SIX MONTHS ENDED JUNE 30, 1997 AND 1998
Accumulated
Other Total
Common Stock Treasury Paid-In Retained Comprehensive Shareholders'
Shares Amount Stock Capital Earnings Income Equity
-------- ------ ------ ------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Bal. Dec. 31,
1996 167,486 $334,972 $ (11,217) $ 178,547 $1,132,880 $ 1,527,707 $3,162,889
----------
Net income 149,877 149,877
Change in unreal.
gains net of
inc. taxes of
$277,059 514,538 514,538
--------
Comprehensive
income 664,415
Div. declared (45,297) (45,297)
Purchase/issuance of
treasury shares (43,515) 20 (43,495)
Stock options
exercised 53 106 2,031 2,137
Conversion of
debentures 16 32 688 720
------- -------- --------- --------- ----------- ----------- ----------
Bal. June 30,
1997 167,555 $335,110 $ (54,732) $ 181,286 $ 1,237,460 $ 2,042,245 $3,741,369
======= ======== ========= ========= =========== =========== ==========
Bal. Dec. 31,
1997 169,391 $338,782 $ (72,585) $ 203,282 $ 1,341,730 $ 2,905,756 $4,716,965
----------
Net income 143,028 143,028
Change in unreal.
gains net of
inc. taxes of
$240,399 446,455 446,455
--------
Comprehensive
income 589,483
Div. declared (51,206) (51,206)
Purchase/issuance of
treasury shares (611) 19 (592)
Stock options
exercised 453 906 6,946 7,852
Conversion of
debentures 375 750 4,831 5,581
------- -------- --------- --------- ----------- ----------- ----------
Bal. June 30,
1998 170,219 $ 340,438 $ (73,196) $ 215,078 $ 1,433,552 $ 3,352,211 $5,268,083
======= ========= ========= ========= =========== =========== ==========
</TABLE>
Common Stock, Paid-In-Capital and Share figures reflect the effects of a 3-for-1
stock split effective to shareholders of record on April 24, 1998.
Accompanying notes are an integral part of these financial statements.
<PAGE> 7
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Premiums earned for the six months ended June 30, 1998 have increased $44,616
(6%) over the six months ended June 30, 1997. Also, premiums earned have
increased $23,008 (6%) for the three months ended June 30, 1998 over the three
months ended June 30, 1997. For the six-month and three-month periods ended June
30, 1997, the growth rate of our property and casualty subsidiaries is less than
last year on both a gross written and earned premium basis. These growth rates
were less than last year because the increases in new business and some rate
increases on personal lines business were offset by the continued softness of
the commercial lines market and by lower premiums on workers' compensation
coverages. The premium growth of our life and health subsidiary has increased
10% for the six months ended June 30, 1998 and 15% for the three months ended
June 30, 1998 compared to the comparable periods of 1997. The premium growth in
our life subsidiary is mainly attributable to increased sales of both
traditional and interest-sensitive products. For the six-month and three-month
periods ended June 30, 1998, investment income, net of expenses, has increased
$10,465 (6%) and $4,396 (5%) when compared with the first six months and second
three months of 1997, respectively. This increase is the result of the growth of
the investment portfolio because of investing cash flows from operations and
dividend increases from equity securities.
Realized gains on investments for the six months ended June 30, 1998 amounted to
$52,763 compared to $44,291 for the six-month period ended June 30, 1997, and
$27,121 for the three-month period ended June 30, 1998 compared to $19,988 for
the three-month period ended June 30, 1997. The realized gains are predominantly
the result of the sale of equity securities and management's decision to realize
the gains and reinvest the proceeds at higher yields.
Insurance losses and policyholder benefits (net of reinsurance recoveries)
increased $65,649 (12%) for the first six months of 1998 over the same period in
1997 and increased $62,016 for the second quarter when compared to the second
quarter of 1997. The losses and benefits of the property and casualty companies
have increased $64,655 for the six-month period and increased $61,897 for the
second quarter of 1998 compared to the comparable periods for 1997. The property
and casualty losses for the first six months and for the second quarter of 1998
have increased because of the increase in catastrophic losses. Catastrophe
losses were $57,289 and $14,485, respectively, for the first six months of 1998
and 1997 and were $54,226 and $8,723, respectively, for the second quarter of
1998 and 1997. These losses were substantially higher for the first six months
and second quarter of 1998 compared to the comparable periods of 1997 because of
higher incidence and severity of these weather-related claims. Policyholder
benefits of the life insurance subsidiary increased $994 for the first six
months of 1998 over the same period of 1997 and increased $119 for the second
quarter when compared to the second quarter of 1996. The majority of the
six-month and second quarter increase is the result of a higher incidence of
death claims and life related costs.
Commission expenses decreased $2,829 for the six-month period ended June 30,
1998 compared to the same period of 1997 and decreased $5,597 for the second
quarter of 1998 compared to the same period in 1997. The increase is
attributable to lower contingency commissions. Other operating expenses
increased $6,367 for the six-month period ended June 30, 1998 compared to the
same period for 1997 and increased $3,381 for the second quarter of 1998
compared to the same period in 1997. The increase is attributable to increases
in staff and costs associated to our investment in infrastructure to support
future growth. Interest expenses increased $1,704 for the six-month period ended
June 30, 1998 compared to the same period for 1997 and increased $1,401 for the
second quarter of 1998 compared to the same period in 1997. The increase is
attributable to a higher interest rate of the 30-year senior debentures compared
to the short-term debt, and an increase in debt of $139,900 in the second
quarter.
<PAGE> 8
Provision for income taxes, current and deferred, have decreased by $2,524 for
the first six months of 1998 compared to the first six months of 1997 and have
decreased $10,447 for the second quarter of 1998 compared to the second quarter
of 1997. The decrease in federal taxes is attributable to lower income before
income taxes and a decrease in the effective tax rate to 24.4% from 24.5% at
June 30, 1998 and 1997, respectively, and a decrease in the effective tax rate
to 19.3% from 24.4% for the second quarter of 1998 and 1997, respectively.
The Company issued $419,594 of 30-year, noncallable senior debentures. Proceeds
were used to pay off $279,694 of short-term debt as it matures and for future
general corporate purposes, including the expansion of the Company's
headquarters.
The Company believes that Year 2000 compliance issues have been initiated for
all of the computer systems. The property and casualty companies issue many
three- and five-year policies. Therefore, many systems are already Year 2000
compliant. Most other programs will be compliant by year-end in 1998, with the
balance completed by June 1999. Management believes this goal will be attained.
CFC's largest risk lies with Year 2000 compliance by its independent agencies,
which handle most of the customer billing and collections. CFC is proactively
contacting all agents regarding this issue and is monitoring each agency's
actions closely.
The Company could incur losses due to adverse changes in market rates and
prices. The Company's primary market risk exposures are to changes in price for
equity securities and changes in interest rates and credit ratings for fixed
maturity securities. The Company could alter the existing investment portfolios
or change the character of future investments to manage exposure to market risk.
CFC, with the Board of Directors, administers and oversees investment risk
through the Investment Committee, which provides executive oversight of
investment activities. The Company has specific investment guidelines and
policies that define the overall framework used daily by investment portfolio
managers to limit the Company's exposure to market risk.
On November 22, 1996, the Board authorized repurchase of up to three million of
the Company's outstanding shares. As of June 30, 1998 the Company has
repurchased 949 shares, before the 1998 three-for-one split, and plans to
repurchase the remaining 2,051 shares as management deems appropriate, over an
unspecified period of time.
<PAGE> 9
PART II
OTHER INFORMATION
ITEM 1. Legal Proceedings
The Company is involved in no material litigation other than routine litigation
incident to the nature of the insurance industry.
ITEM 2. Changes in Securities
There have been no material changes in securities during the second quarter.
ITEM 3. Defaults Upon Senior Securities
The Company has not defaulted on any interest or principal payment, and no
arrearage in the payment of dividends has occurred.
ITEM 4. Submission of Matters to a Vote of Security Holders
On April 4, 1998, the registrant held its Annual Meeting of Stockholders for
which the Board of Directors solicited proxies; all nominees named in the
Registrant's Proxy Statement were elected. A proposal to amend the Corporation's
Article of Incorporation to increase authorized shares of common stock to
200,000,000 shares was approved.
Shares
------
For Against/Abstain
--- ---------------
Michael Brown 46,912,295 271,663
John E. Field 46,976,141 207,817
William R. Johnson 47,004,406 179,552
Robert C. Schiff 46,966,351 217,607
Alan R. Weiler 46,974,762 209,196
John J. Schiff 46,940,355 243,603
Authorization of 200,000,000 shares: 46,570,034 613,924
(a) Exhibits included:
Exhibit 11--Statement re Computation of Per Share Earnings.
Exhibit 27--Financial Data Schedule
(b) The Company was not required to file any reports on Form 8-K
during the quarter ended June 30, 1998.
Signature
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.
CINCINNATI FINANCIAL CORPORATION
--------------------------------
(Registrant)
Date August 7, 1998
By /s/ T.F. Elchynski
-----------------------
T.F. Elchynski
Senior Vice President and Chief
Financial Officer
(Principal Financial Officer)
<PAGE> 10
CINCINNATI FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
(000's omitted )
Six Months Ended June 30,
-------------------------
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income........................................................... $ 143,028 $ 149,877
Adjustments to reconcile operating income to net cash
provided by operating activities:
Depreciation and amortization..................................... 5,285 4,848
Increase in investment income receivable.......................... (991) (3,312)
Increase in premiums receivable................................... (14,392) (1,327)
(Increase) decrease in reinsurance receivable..................... (18,988) 17,033
Increase in prepaid reinsurance premiums.......................... (1,436) (302)
Increase in deferred acquisition costs............................ (2,236) (2,413)
(Increase) decrease in accounts receivable........................ (274) 536
(Increase) decrease in other assets............................... (23,136) 19,203
Increase in loss and loss expense reserves........................ 90,211 23,582
Increase in life policy reserves.................................. 27,526 21,447
Increase in unearned premiums..................................... 5,302 3,021
(Decrease) increase in other liabilities.......................... (40,458) 7,941
(Increase) decrease in deferred income taxes...................... 1,408 (4,219)
Realized gains on investments..................................... (52,763) (44,291)
(Decrease) increase in current income taxes....................... (22,682) 12,473
Other............................................................. (13,876) 341
--------- ---------
Net cash provided by operating activities...................... 81,528 204,438
--------- ---------
Cash flows from investing activities:
Sale of fixed maturities.......................................... 26,302 70,669
Call or maturity of fixed maturities investments.................. 175,833 194,744
Sale of equity securities investments............................. 181,342 160,387
Collection of finance receivables................................. 7,180 5,648
Purchase of fixed maturities investments.......................... (242,643) (352,120)
Purchase of equity securities investments......................... (243,355) (189,995)
Investment in land, buildings and equipment....................... (9,737) (7,280)
Investment in finance receivables................................. (7,870) (9,228)
Investment in other invested assets............................... (3,850) (1,521)
--------- ---------
Net cash used in investing activities.......................... (116,798) (128,696)
--------- ---------
Cash flows from financing activities:
Debenture issue................................................... 419,594 -0-
Proceeds from stock options exercised............................. 7,852 2,137
Purchase/Issuance of treasury shares.............................. (592) (43,495)
(Decrease) increase in notes payable.............................. (279,152) 12,393
Payment of cash dividends to shareholders......................... (48,273) (43,273)
--------- ---------
Net cash used in financial activities.......................... 99,429 (72,238)
--------- ---------
Net decrease in cash.................................................... 64,159 3,504
Cash at beginning of period............................................. 80,168 59,933
--------- ---------
Cash at end of period................................................... $ 144,327 $ 63,437
========= =========
Supplemental disclosures of cash flow information
Interest paid........................................................ $ 23,119 $ 10,474
Income taxes paid.................................................... $ 65,301 $ 40,488
</TABLE>
Accompanying notes are an integral part of these financial statements.
<PAGE> 1
EXHIBIT 11
CINCINNATI FINANCIAL CORPORATION
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(000's omitted except per share data)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
---------------- ------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Basic earnings per share:
Net income $ 143,028 $ 149,877 $ 58,850 $ 75,830
Average shares outstanding 166,768 166,081 166,933 165,730
Net income per common share $ .86 $ .90 $ .35 $ .46
Diluted earnings per share:
Net income $ 143,028 $ 49,877 $ 58,850 $ 75,830
Interest on convertible debentures--net of tax 981 1,421 484 708
--------- --------- -------- --------
Net income for per share calculation (diluted) $ 144,009 $ 151,298 $ 59,334 $ 76,538
========= ========= ======== ========
Average shares outstanding 166,768 166,081 166,933 165,730
Effective of dilutive securities:
5.5% convertible senior debentures 3,553 5,319 3,553 5,319
Stock options 1,951 1,148 1,898 1,314
--------- --------- -------- --------
Total dilutive shares 172,272 172,548 172,384 172,363
========= ========= ======== ========
Net income per common share--diluted $ .84 $ .88 $ .35 $ .45
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF INCOME AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<DEBT-HELD-FOR-SALE> 2,795,411
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 6,798,396
<MORTGAGE> 10,944
<REAL-ESTATE> 4,566
<TOTAL-INVEST> 9,644,084<F1>
<CASH> 144,327
<RECOVER-REINSURE> 1,599
<DEFERRED-ACQUISITION> 137,549
<TOTAL-ASSETS> 10,484,047<F2>
<POLICY-LOSSES> 2,493,833<F2>
<UNEARNED-PREMIUMS> 448,356
<POLICY-OTHER> 39,253<F3>
<POLICY-HOLDER-FUNDS> 16,827
<NOTES-PAYABLE> 473,849<F3>
0
0
<COMMON> 340,438<F4>
<OTHER-SE> 4,927,645<F4>
<TOTAL-LIABILITY-AND-EQUITY> 10,484,047
792,991
<INVESTMENT-INCOME> 181,386
<INVESTMENT-GAINS> 52,763
<OTHER-INCOME> 3,991
<BENEFITS> 591,339
<UNDERWRITING-AMORTIZATION> 165,756<F5>
<UNDERWRITING-OTHER> 84,790<F5>
<INCOME-PRETAX> 189,246
<INCOME-TAX> 46,218
<INCOME-CONTINUING> 143,028
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 143,028
<EPS-PRIMARY> .86
<EPS-DILUTED> .84
<RESERVE-OPEN> 1,776,648<F6>
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 1,846,001<F7>
<CUMULATIVE-DEFICIENCY> 0
<FN>
<F1>Equals the sum of Fixed Maturities, Equity Securities and other Invested
Assets
<F2>Equals the sum of Life Policy Reserves and Losses and Loss Expenses less the
Life Company liability for Supplementary Contracts without Life Contingencies
of $3,632 which is classified as Other Policyholder Funds
<F3>Equals the sum of Notes Payable, the 5.5% Convertible Senior Debenture and
the 6.9% Senior Debenture
<F4>Equals the Total Shareholders' Equity
<F5>Equals the Sum of Commissions, Other Operating Expenses, Taxes and
licenses and Fees, Increase in deferred acquisition costs, Interest expense and
other expenses
<F6>Equals the net reserve for unpaid claims for the property casualty
subsidiaries less loss checks payable as of December 31, 1997
<F7>Equals the net reserve for unpaid claims for the property casualty
subsidiaries less loss checks payable as of June 30, 1998
</FN>
</TABLE>
