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 September 30, 1997
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: 1-6732
Danielson Holding Corporation
(Exact Name of Registrant as Specified in its Charter)
Delaware 95-6021257
(State of Incorporation) (I.R.S. Employer Identification No.)
767 Third Avenue, New York, New York 10017-2023
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (212) 888-0347
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
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at November 5, 1997
Common Stock, $0.10 par value 15,576,287 shares
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
DANIELSON HOLDING CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except share and per share information)
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Gross premiums earned $ 17,795 $ 12,457 $ 46,844 $ 38,406
Ceded premiums earned (3,054) (3,683) (8,575) (11,506)
---------- ---------- ---------- ----------
Net premiums earned 14,741 8,774 38,269 26,900
Net investment income 2,428 2,458 7,417 8,083
Net realized investment gains (losses) (33) (3) 2,173 66
Other income 221 222 526 710
---------- ---------- ---------- ----------
Total revenues 17,357 11,451 48,385 35,759
---------- ---------- ---------- ----------
Losses and expenses:
Gross losses and loss adjustment expenses 12,475 10,327 36,245 30,876
Ceded losses and loss adjustment expenses (2,390) (3,796) (9,080) (10,884)
----------- ----------- ---------- ----------
Net losses and loss adjustment expenses 10,085 6,531 27,165 19,992
Policyholder dividends 729 -- 743 88
Policy acquisition expenses 3,588 2,245 9,743 7,191
Expenses in connection with terminated
proposed acquisition -- (471) -- 1,849
Nonrecurring compensation -- 1,272 -- 1,272
General and administrative expenses 2,379 2,035 7,179 6,367
---------- ----- ---------- ----------
Total losses and expenses 16,781 11,612 44,830 36,759
---------- ---------- ---------- ----------
Income (loss) from continuing operations
before provision for income taxes 576 (161) 3,555 (1,000)
Income tax provision 15 17 34 36
---------- ---------- ---------- ----------
Income (loss) from continuing operations $ 561 $ (178) $ 3,521 $ (1,036)
Discontinued operations:
Net loss from operations -- (389) -- (634)
Loss on disposal -- (1,271) -- (1,271)
---------- ----------- ---------- -----------
Net income (loss) $ 561 $ (1,838) $ 3,521 $ (2,941)
========= ========== ========= =======
Earnings (loss) per share of Common Stock
and common equivalent share:
Continuing operations $ .03 $ (.01) $ .22 $ (.07)
Discontinued operations:
Loss from operations -- (.03) -- (.04)
Loss on disposal -- (.08) -- (.08)
--------- ----------- ---------- ----------
Net income (loss) $ .03 $ (.12) $ .22 $ (.19)
======== ========== ========= =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
DANIELSON HOLDING CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share and per share information)
<TABLE>
<CAPTION>
September 30, 1997 December 31,
(Unaudited) 1996
----------- ----
<S> <C> <C>
Assets:
Fixed maturities, available-for-sale at fair value
(Cost: $137,355 and $143,424) $ 138,467 $ 143,330
Equity securities, at fair value (Cost: $363 and $257) 802 2,697
Short term investments, at cost which
approximates fair value 3,403 5,528
-------- ---------
Total investments 142,672 151,555
Cash 1,576 1,155
Accrued investment income 1,766 2,397
Premiums and fees receivable, net of allowances
of $138 and $230 5,104 5,597
Reinsurance recoverable on paid losses, net of allowances
of $309 and $316 8,656 3,071
Reinsurance recoverable on unpaid losses, net of
allowances of $425 and $425 20,179 23,546
Prepaid reinsurance premiums 1,918 2,417
Property and equipment, net of accumulated depreciation
of $7,505 and $7,102 2,664 2,968
Deferred acquisition costs 1,726 957
Other assets 2,511 2,756
-------- ---------
Total assets $ 188,772 $ 196,419
========== ==========
Liabilities and Stockholders' Equity:
Unpaid losses and loss adjustment expenses $ 107,680 $ 120,651
Unearned premiums 11,306 8,294
Reinsurance premiums payable 866 1,765
Funds withheld on ceded reinsurance 1,479 1,479
Other liabilities 5,191 5,377
-------- ---------
Total liabilities 126,522 137,566
Preferred stock ($0.10 par value; authorized
10,000,000 shares; none issued and outstanding) -- --
Common stock ($0.10 par value; authorized
20,000,000 shares; issued 15,586,994 and 15,370,894 shares;
outstanding 15,576,287and 15,360,238 shares) 1,559 1,537
Additional paid-in capital 46,780 46,131
Net unrealized gain on available-for-sale securities 1,551 2,346
Retained earnings 12,426 8,905
Treasury stock (Cost of 10,707 shares and 10,656 shares) (66) (66)
--------- ---------
Total stockholders' equity 62,250 58,853
-------- ---------
Total liabilities and stockholders' equity $ 188,772 $ 196,419
========== ==========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
DANIELSON HOLDING CORPORATION AND SUBSIDIARIES
Consolidated Statement of Stockholders' Equity
(In thousands, except share amounts)
(Unaudited)
<TABLE>
<CAPTION>
September 30, 1997
------------------
<S> <C>
Common stock
Balance, beginning of year $ 1,537
Exercise of options to purchase Common Stock 22
--------
Balance, end of period 1,559
--------
Additional paid-in capital
Balance, beginning of year 46,131
Exercise of options to purchase Common Stock 649
--------
Balance, end of period 46,780
--------
Net unrealized gain (loss) on available-for-sale
securities
Balance, beginning of year 2,346
Net decrease (795)
---------
Balance, end of period 1,551
--------
Retained earnings
Balance, beginning of year 8,905
Net income 3,521
--------
Balance, end of period 12,426
--------
Treasury stock
Balance, beginning of year (66)
---------
Balance, end of period (66)
Total stockholders' equity $ 62,250
========
Common stock, shares
Balance, beginning of year 15,370,894
Exercise of options to purchase Common Stock 216,100
-------
Balance, end of period 15,586,994
==========
Treasury stock, shares
Balance, beginning of year 10,656
Purchased during period 51
--------
Balance, end of period 10,707
======
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
DANIELSON HOLDING CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30,
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) from continuing operations $ 3,521 $ (1,036)
Adjustments to reconcile net income to net cash
used in operating activities:
Net realized investment gains (2,173) (66)
Depreciation and amortization 633 654
Change in accrued investment income 631 725
Change in premiums and fees receivable 493 2,642
Change in reinsurance recoverables (5,585) (1,310)
Change in reinsurance recoverable on unpaid losses 3,367 (1,348)
Change in prepaid reinsurance premiums 499 (300)
Change in deferred acquisition costs (769) 141
Change in unpaid losses and loss adjustment expenses (12,971) (22,460)
Change in unearned premiums 3,012 (413)
Change in reinsurance payables and funds withheld (899) 268
Other, net (83) 942
--------- --------
Net cash used in operating activities (10,324) (21,561)
--------- --------
Cash flows from investing activities:
Proceeds from sales:
Fixed income maturities available-for-sale 300 8,038
Equity securities 2,159 --
Investments, matured or called:
Fixed income maturities available-for-sale 19,176 25,945
Investments purchased:
Fixed income maturities available-for-sale (13,448) (16,547)
Equity securities (129) --
Acquisition of Valor Insurance Company (net of cash and short
term investments of $1,461) -- (1,450)
Proceeds from sale of property and equipment -- 110
Purchases of property and equipment (109) (128)
--------- --------
Net cash provided by investing activities 7,949 15,968
--------- --------
Cash flows from financing activities:
Proceeds from exercise of options to purchase Common Stock 671 --
--------- --------
Net cash provided by financing activities 671 --
--------- --------
Net cash used in continuing operations (1,704) (5,593)
Net cash used in discontinued operations -- (120)
--------- ---------
Net decrease in cash and short term investments (1,704) (5,713)
Cash and short term investments at beginning of year 6,683 8,803
--------- --------
Cash and short term investments at end of period $ 4,979 $ 3,090
========= ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
DANIELSON HOLDING CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
1) BASIS OF PRESENTATION
The accompanying unaudited Consolidated Financial Statements of Danielson
Holding Corporation ("DHC" or "Registrant") and subsidiaries (collectively with
DHC, the "Company") have been prepared in accordance with generally accepted
accounting principles. However, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
consolidated financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the nine months ended
September 30, 1997 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1997. For further information,
reference is made to the Consolidated Financial Statements and footnotes thereto
included in DHC's Annual Report on Form 10-K for the year ended December 31,
1996. Certain prior year amounts have been reclassified to conform to current
year presentation.
2) PER SHARE DATA
Earnings per share are based on the weighted average number of shares of
common stock of DHC, par value $0.10 per share ("Common Stock"), outstanding
during a particular year or other relevant period. Earnings per share
computations, as calculated under the treasury stock method, include the average
number of shares of additional outstanding Common Stock issuable for stock
options, whether or not currently exercisable. Such average shares outstanding
were 16,296,091 for the three months ended September 30, 1997 and 16,252,854 for
the nine months ended September 30, 1997. Loss per share is calculated using
only the average number of outstanding shares of Common Stock and disregarding
the average number of shares issuable for stock options. Such average shares
outstanding were 15,360,252 and 15,360,254 for the three and nine months ended
September 30, 1996, respectively.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128").
SFAS 128 establishes standards for computing and presenting earnings per share
and requires presentation of both basic earnings per share and diluted earnings
per share on the face of the income statement. SFAS 128 is effective for
financial statements issued for periods ending after December 15, 1997 and
requires restatement of all prior-period earnings per share data presented.
According to the provisions of SFAS 128, the pro forma basic and diluted
earnings per share are as follows:
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Basic earnings per share .04 (.12) .23 (.19)
Diluted earnings per share .03 (.12) .22 (.19)
</TABLE>
Basic earnings per share is calculated using only the average number of
outstanding shares of Common Stock and disregarding the average number of shares
issuable for stock options. Such average shares outstanding were 15,576,287 and
15,448,944 for the three and nine months ended September 30, 1997, respectively.
Diluted earnings per share is calculated using the same number of average shares
outstanding as is used for the current presentation of earnings per share on the
income statement.
<PAGE>
3) INCOME TAXES
DHC files a Federal consolidated income tax return with its subsidiaries
and with certain trusts that assumed various former liabilities of certain
present and former subsidiaries of DHC. The Company records its interim tax
provisions based upon estimated effective tax rates for the year.
The Company has made provisions for certain state and local taxes. Tax
filings for these jurisdictions do not consolidate the activities of the trusts
referred to above. For further information, reference is made to Note 11 of the
Notes to Consolidated Financial Statements included in DHC's Annual Report on
Form 10-K for the year ended December 31, 1996.
4) REINSURANCE
During April, 1997, NAICC settled a claim involving environmental damage.
NAICC paid $5.6 million in loss and loss adjustment expenses, of which $5
million was ceded to its reinsurers. NAICC has submitted its claim for
reinsurance to its reinsurers, primarily Lloyd's of London and London market
reinsurers and is in the process of responding to their inquiries. Management
believes that its reinsurance claim is in accordance with the terms of its
reinsurance contracts and that any amount which ultimately may not be collected
will not be material.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
1. GENERAL
Danielson Holding Corporation ("DHC") is organized as a holding company
with substantially all of its operations conducted by subsidiaries (collectively
with DHC, the "Company"). DHC, on a parent-only basis, has limited continuing
expenditures for rent and administrative expenses and derives revenues primarily
from investment returns on portfolio securities. Therefore, the analysis of the
Company's financial condition is generally done on an operating subsidiary
basis.
2. RESULTS OF NAICC'S OPERATIONS
The operations of DHC's principal subsidiary, National American Insurance
Company of California ("NAICC"), are primarily in specialty property and
casualty insurance. At September 30, 1997, NAICC had a B++ rating from A.M. Best
Company.
Property and Casualty Insurance Operations
Net premiums written were $14.6 million and $41.7 million for the three and
nine months ended September 30, 1997, respectively. Net premiums written were
$8.4 million and $26.2 million for the three and nine months ended September 30,
1996, respectively. The increase in net premiums written in the first nine
months of 1997 from the same period in 1996 is attributable to an increase in
all lines of business, although primarily in the non-standard automobile
businesses, as discussed below. Net premiums earned for the three and nine
months ended September 30, 1997 were $14.7 million and $38.3 million,
respectively. Net premiums earned for the three and nine months ended September
30, 1996 were $8.8 million and $26.9 million, respectively. The increase in net
premiums earned is directly related to increases in net premiums written.
<PAGE>
In the workers' compensation line of business, net premiums written were
$13.0 million and $11.6 million for the nine months ended September 30, 1997 and
1996, respectively. The California workers' compensation line of business
continued to decrease during the third quarter of 1997 due to continued price
competition, which decrease was offset by increases in workers' compensation
business outside of California, primarily in Montana. As a result, NAICC's
aggregate new workers' compensation business, which decreased significantly in
1996, has shown a slight increase during the first nine months of 1997.
In the non-standard private passenger automobile line of business, net
premiums written were $22.1 million and $11.1 million for the nine months ended
September 30, 1997 and 1996, respectively. In the first nine months of 1997, the
private passenger automobile line represented 53% of total net premiums written,
up from 42% in the first nine months of 1996. This increase was due to an
increase in direct premiums written of approximately 35% as well as NAICC's
amendment of its reinsurance agreement with a major reinsurance company to
reduce its cession of private passenger automobile business from 50% to 25%
effective January 1, 1997. The increase in direct written premiums is due in
part to legislation in California increasing the enforcement of mandatory
automobile insurance as well as continued marketing efforts of NAICC.
In the non-standard commercial automobile line of business, net premiums
written were $6.4 million and $3.5 million for the nine months ended September
30, 1997 and 1996, respectively. In the first nine months of 1997, the
non-standard commercial automobile line represented 15% of total net premiums
written, up from 13% for the same period in 1996. The increase in premium is the
result of increased marketing efforts by NAICC.
Net investment income was $7.0 million and $7.7 million for the nine months
ended September 30, 1997 and 1996, respectively. The decline is the result of a
decrease in NAICC's investment portfolio.
Net losses and loss adjustment expenses ("LAE") were $27.2 million and
$20.0 million for the nine months ended September 30, 1997 and 1996,
respectively. The resulting net loss and LAE ratios for the corresponding
periods were 71.0% and 74.3%, respectively. The decrease in the net loss and LAE
ratio in the first nine months of 1997 is due to the continued shift toward the
automobile line of business which has a lower loss and LAE ratio than the
workers' compensation line of business.
Policy acquisition costs were $9.7 million and $7.2 million for the nine
months ended September 30, 1997 and 1996, respectively. The increase is directly
related to the increase in net premiums earned. As a percentage of net earned
premiums, policy acquisition expenses were 25.4% and 26.7% for the nine months
ended September 30, 1997 and 1996, respectively. The decrease in the policy
acquisition expense ratio in the first nine months of 1997 as compared to the
same period in 1996 is due to the increase in net written premiums while making
reductions in the fixed underwriting expenses of policy acquisition costs.
Policyholder dividends for the nine months ended September 30, 1997 and
1996 were $743,000 and $88,000, respectively. The increase over 1996 is
attributable to Valor Insurance Company, Inc.'s ("Valor") operations, where a
significant amount of its workers' compensation business consists of
participating policies with favorable loss experience.
<PAGE>
General and administrative expenses were $5.3 million and $4.5 million for
the nine months ended September 30, 1997 and 1996, respectively. The increase in
1997 is primarily attributable to the addition of the operations of Valor. Valor
was acquired by NAICC in June 1996.
The combined ratios (which represent a ratio of losses and expenses to net
earned premiums in a particular period) were 112.2% and 120.0% for the nine
months ended September 30, 1997 and 1996, respectively. The decline in the
combined ratio is attributable to the growth of premium and the reductions of
certain fixed underwriting and general and administrative expenses. Net income
from insurance operations for the three and nine months ended September 30, 1997
was $1 million and $5 million, respectively, compared to $698,000 and $3 million
for the same periods in 1996. Net income in 1997 increased from the same periods
in 1996 due to the realization of gains on sales of investments and premium
growth.
Cash Flow from Insurance Operations
Cash used in operations was $8.9 million for the nine months ended
September 30, 1997 as compared to cash used in operations of $18.5 million for
the nine months ended September 30, 1996. The decrease in cash used in
operations is primarily due to premium growth. However, the payment of workers'
compensation losses and LAE related to prior years continues to result in a
negative cash flow for that line of business. Overall cash and invested assets,
at market value, at September 30, 1997 were $134.8 million, compared to $142.6
million at December 31, 1996.
Liquidity and Capital Resources
The Company's insurance subsidiaries require both readily liquid assets and
adequate capital to meet ongoing obligations to policyholders and claimants, as
well as to pay ordinary operating expenses. The primary sources of funds to meet
these obligations are premium revenues, investment income, recoveries from
reinsurance and, if required, the sale of invested assets. NAICC's investment
policy guidelines require that all liabilities be matched by a comparable amount
of investment grade invested assets. The ratios of (annualized) net written
premiums to statutory surplus were 1.31 to 1 and 0.7 to 1 for the nine months
ended September 30, 1997 and 1996, respectively. Management of NAICC believes
that NAICC has both adequate capital resources and sufficient reinsurance to
meet any unforeseen events such as natural catastrophes, reinsurer insolvencies
or possible reserve deficiencies.
3. RESULTS OF DHC'S OPERATIONS
Cash Flow from Parent-Only Operations
Operating cash flow of DHC on a parent-only basis is primarily dependent
upon the rate of return achieved on its investment portfolio and the payment of
general and administrative expenses incurred in the normal course of business.
For the nine months ended September 30, 1997 and 1996, cash used in parent-only
operating activities was $1.4 million and $3.1 million, respectively. The
decrease in cash used was primarily attributable to the payment of expenses in
the first nine months of 1996 related to the termination of a proposed
acquisition, offset in part by the payment of non-recurring compensation expense
in the first nine months of 1997, that was incurred in 1996. For information
regarding DHC's operating subsidiaries' cash flow from operations, see "2.
RESULTS OF NAICC'S OPERATIONS, Cash Flow from Insurance Operations."
<PAGE>
Liquidity and Capital Resources
At September 30, 1997, cash and investments of DHC were approximately $9.4
million, compared to $10 million at December 31, 1996. As described above, the
primary use of funds was the payment of general and administrative expenses in
the normal course of business. DHC received $671,000 in the first nine months of
1997 from the exercise of stock options. For information regarding DHC's
operating subsidiaries' liquidity and capital resources, see "2. RESULTS OF
NAICC'S OPERATIONS, Liquidity and Capital Resources."
4. AUTHORITATIVE ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS
128"). SFAS 128 establishes standards for computing and presenting earnings per
share and requires presentation of both basic earnings per share and diluted
earnings per share on the face of the income statement. SFAS 128 is effective
for financial statements issued for periods ending after December 15, 1997 and
requires restatement of all prior-period earnings per share data presented. The
Company has presented pro forma disclosures of basic and diluted earnings per
share calculated in accordance with the provisions of SFAS 128. See Note 2 of
the Notes to Consolidated Financial Statements.
In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 130, "Reporting Comprehensive Income" ("SFAS 130"). SFAS 130 establishes
standards for reporting and display of comprehensive income and its components
in a full set of general-purpose financial statements. SFAS 130 is effective for
fiscal years beginning after December 15, 1997. The adoption of SFAS 130 is not
expected to have a significant impact on the financial reporting of the Company.
In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 131, "Disclosures about Segments of an Enterprise and Related Information"
("SFAS 131"). SFAS 131 establishes standards for the reporting of information
about operating segments in annual financial statements and requires the
reporting of select information about operating segments in interim financial
reports. SFAS 131 is effective for financial statements for periods beginning
after December 15, 1997. The Company is currently evaluating the segment
information disclosure pursuant to SFAS 131.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
NAICC is a party to various legal proceedings which are considered
routine and incidental to its business and are not material to the financial
condition and operation of its business. DHC is not a party to any legal
proceeding which is considered material to the financial condition and operation
of its business.
Item 2. Changes in Securities.
None
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.
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.
Date: November 14, 1997
DANIELSON HOLDING CORPORATION
(Registrant)
By: /s/ DAVID BARSE
------------------------------------------
David Barse
President & Chief Operating Officer
By: /s/ MICHAEL CARNEY
------------------------------------------
Michael Carney
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM
10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000225648
<NAME> DANIELSON HOLDING CORPORATION
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-1-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 138,467
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 802
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 142,672
<CASH> 1,576
<RECOVER-REINSURE> 28,835 <F1>
<DEFERRED-ACQUISITION> 1,726
<TOTAL-ASSETS> 188,772
<POLICY-LOSSES> 107,680
<UNEARNED-PREMIUMS> 11,306
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 199
<NOTES-PAYABLE> 0
0
0
<COMMON> 1,559
<OTHER-SE> 60,691 <F2>
<TOTAL-LIABILITY-AND-EQUITY> 188,772
38,269
<INVESTMENT-INCOME> 7,417
<INVESTMENT-GAINS> 2,173
<OTHER-INCOME> 526
<BENEFITS> 27,165
<UNDERWRITING-AMORTIZATION> 7,001
<UNDERWRITING-OTHER> 9,921
<INCOME-PRETAX> 3,555
<INCOME-TAX> 34
<INCOME-CONTINUING> 3,521
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,521
<EPS-PRIMARY> 0.22
<EPS-DILUTED> 0.22
<RESERVE-OPEN> 97,105
<PROVISION-CURRENT> 27,165
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 9,483
<PAYMENTS-PRIOR> 27,287
<RESERVE-CLOSE> 87,500
<CUMULATIVE-DEFICIENCY> (10,120)
<FN>
<F1> Includes reinsurance recoverables on unpaid losses of 20,179 and
reinsurance recoverables on paid losses of 8,656.
<F2> Includes treasury stock of 66.
</FN>
</TABLE>
