SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 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: 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 May 11, 1998
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 per share information)
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
1998 1997
Revenues:
<S> <C> <C>
Gross premiums earned $ 16,956 $ 13,380
Ceded premiums earned (2,941) (2,564)
------ ------
Net premiums earned 14,015 10,816
Net investment income 2,339 2,527
Net realized investment gains 37 2,206
Other income 178 149
------ ------
Total revenues 16,569 15,698
------ ------
Losses and expenses:
Gross losses and loss adjustment expenses 11,987 10,325
Ceded losses and loss adjustment expenses (2,054) (2,589)
------ ------
Net losses and loss adjustment expenses 9,933 7,736
Policyholder dividends 112 7
Policy acquisition expenses 3,317 2,929
General and administrative expenses 2,357 2,583
------ ------
Total losses and expenses 15,719 13,255
------ ------
Income before provision for income taxes 850 2,443
Income tax provision 43 6
------ ------
Net income $ 807 $ 2,437
========== ==========
Earnings per share of Common Stock:
Basic $ .05 $ .16
========== ==========
Diluted $ .05 $ .15
========== ==========
</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>
March 31, 1998 December 31,
(Unaudited) 1997
<S> <C> <C>
Assets:
Fixed maturities, available for sale at fair value
(Cost: $126,799 and $139,089) $ 128,527 $ 140,899
Equity securities, at fair value (Cost: $13,019 and $363) 13,594 813
Short term investments, at cost which
approximates fair value 3,676 1,111
------ ------
Total investments 145,797 142,823
Cash 9,117 707
Accrued investment income 1,553 2,006
Premiums and fees receivable, net of allowances
of $ 162 and $179 7,849 5,438
Reinsurance recoverable on paid losses, net of allowances
of $374 and $374 9,715 8,523
Reinsurance recoverable on unpaid losses, net of
allowances of $514 and $499 20,193 20,185
Prepaid reinsurance premiums 1,800 1,681
Property and equipment, net of accumulated depreciation
of $7,818 and $7,690 2,332 2,499
Deferred acquisition costs 1,953 1,550
Other assets 2,286 2,361
------ ------
Total assets $ 202,595 $ 187,773
=========== ===========
Liabilities and Stockholders' Equity:
Unpaid losses and loss adjustment expenses $ 104,764 $ 105,947
Unearned premiums 12,110 10,249
Policyholder dividends 273 411
Reinsurance premiums payable 2,693 1,244
Funds withheld on ceded reinsurance 1,168 1,254
Payable for securities purchased 12,657 --
Other liabilities 4,160 4,748
------ ------
Total liabilities 137,825 123,853
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 shares;
outstanding 15,576,287 shares) 1,559 1,559
Additional paid-in capital 46,673 46,673
Accumulated other comprehensive income:
net unrealized gain on securities 2,303 2,260
Retained earnings 14,301 13,494
Treasury stock (Cost of 10,707 shares) (66) (66)
------ ------ ------
Total stockholders' equity 64,770 63,920
------ ------
Total liabilities and stockholders' equity $ 202,595 $ 187,773
=========== ===========
</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>
Comprehensive
Income for the
Three Months Ended
March 31, 1998 March 31, 1998
<S> <C> <C>
Retained earnings
Balance, beginning of year $ 13,494
Net income 807 807
------
Balance, end of period 14,301
Accumulated other comprehensive income
Balance, beginning of year 2,260
Net unrealized gain on available-for-sale securities <F1> 43 43
------ ------
Balance, end of period 2,303 850
====== ======
Common stock
Balance, beginning of year $ 1,559
------
Balance, end of period 1,559
------
Additional paid-in capital
Balance, beginning of year 46,673
------
Balance, end of period 46,673
------
Treasury stock
Balance, beginning of year (66)
------
Balance, end of period (66)
------
Total stockholders' equity $ 64,770
===========
Common stock, shares
Balance, beginning of year 15,586,994
----------
Balance, end of period 15,586,994
==========
Treasury stock, shares
Balance, beginning of year 10,707
------
Balance, end of period 10,707
======
<FN>
<F1> Disclosure of reclassification amount:
Unrealized holding gains arising during the period $ 80
Less: reclassification adjustment for gains included in
net income (37)
---
Net unrealized gain on available-for-sale securities $ 43
====
</FN>
</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 Three
Months Ended March 31,
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Income from continuing operations $ 807 $ 2,437
Adjustments to reconcile income from continuing operations
to net cash used in operating activities:
Net realized investment gains (37) (2,206)
Depreciation and amortization 185 240
Change in accrued investment income 453 546
Change in premiums and fees receivable (2,411) (600)
Change in reinsurance recoverables (1,192) (1,083)
Change in reinsurance recoverable on unpaid losses (8) (263)
Change in prepaid reinsurance premiums (119) 189
Change in deferred acquisition costs (403) (438)
Change in unpaid losses and loss adjustment expenses (1,183) (3,999)
Change in unearned premiums 1,861 2,211
Change in reinsurance payables and funds withheld 1,363 35
Change in policyholder dividends payable (138) (19)
Other, net (563) (283)
------ ------
Net cash used in operating activities (1,385) (3,233)
------ ------
Cash flows from investing activities:
Proceeds from sales:
Fixed income maturities available-for-sale 295 5,633
Equity securities -- 2,159
Investments, matured or called:
Fixed income maturities available-for-sale 23,268 100
Investments, purchased:
Fixed income maturities available-for-sale (11,175) (5,345)
Equity securities -- (129)
Proceeds from sale of property and equipment 6 --
Purchases of property and equipment (34) (5)
------ ------
Net cash provided by investing activities 12,360 2,413
------ -----
Cash flows from financing activities:
Proceeds from exercise of options to purchase Common Stock -- 41
------ ------
Net cash provided by financing activities -- 41
------ ------
Net increase in cash and short term investments 10,975 (779)
Cash and short term investments at beginning of year 1,818 6,683
------ ------
Cash and short term investments at end of period $ 12,793 $ 5,904
======== =========
</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
three months ended March 31, 1998 are not necessarily indicative of the results
that may be expected for the year ending December 31, 1998. 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, 1997.
2) PER SHARE DATA
Per share data is 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. Diluted 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 were
16,164,082 and 16,219,909 for the three months ended March 31, 1998 and 1997,
respectively. Basic earnings per share are 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 were 15,576,287 and
15,360,306 for the three months ended March 31, 1998 and 1997, respectively.
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 franchise
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, 1997.
<PAGE>
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.
This Management's Discussion and Analysis of Financial Condition and
Results of Operations contains forward-looking statements, including statements
concerning capital adequacy, adequacy of reserves, goals, future events or
performance and underlying assumptions and other statements which are other than
statements of historical facts. Such forward-looking statements may be
identified, without limitation, by the use of the words "believes",
"anticipates", "expects", "intends", "plans" and similar expressions. All such
statements represent only current estimates or expectations as to future results
and are subject to risks and uncertainties which could cause actual results to
materially differ from current estimates or expectations. See "RISK FACTORS THAT
MAY AFFECT FUTURE RESULTS".
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 March 31, 1998, NAICC had a B++ rating from A.M. Best
Company ("Best").
Property and Casualty Insurance Operations
Net premiums earned were $14.0 million and $10.8 million for
the three months ended March 31, 1998 and 1997, respectively. The increase in
net premiums earned is directly related to increases in net premiums written.
Net premiums written were $15.8 million and $13.2 million for the three months
ended March 31, 1998 and 1997, respectively.
The increase in 1998 over the comparable period in 1997 is attributable
to the premium growth in the commercial automobile line of business. Net
premiums written in the non-standard commercial automobile line increased by
$2.7 million while net premiums written in the non-standard private passenger
automobile line declined slightly over the comparable period in 1997 and net
premiums written in the workers' compensation line increased slightly compared
to the prior year. The increase in commercial automobile net premiums written is
due to NAICC's continued increased marketing efforts in that line.
Net investment income was $2.2 million and $2.4 million for the three
months ended March 31, 1998 and 1997, respectively. The decline is reflective of
a slight decrease in average portfolio yield for the 1998 period.
Net losses and loss adjustment expenses ("LAE") were $9.9 million and
$7.7 million for the three months ended March 31, 1998 and 1997, respectively.
The resulting net loss and LAE ratios for the corresponding periods were 70.9
percent and 71.5 percent, respectively. The decrease in the net loss and LAE
ratio in the first quarter of 1998 over the first quarter of 1997 is due to
growth in the commercial automobile line, which has a lower loss and LAE expense
ratio than does the workers' compensation line.
<PAGE>
Policy acquisition costs were $3.3 million and $2.9 million for the
three months ended March 31, 1998 and 1997, respectively. As a percentage of net
premiums earned, policy acquisition expenses were 23.7 percent and 27.1 percent
for the three months ended March 31, 1998 and 1997, respectively. The decline in
the policy acquisition expense ratio in the first quarter of 1998 as compared to
the same period in 1997 is due primarily to the overall growth in premium volume
while fixed underwriting expenses of policy acquisition costs remained
relatively constant.
General and administrative expenses were $1.8 million and $1.9 million
for the three months ended March 31, 1998 and 1997, respectively. The decrease
in general and administrative expenses is attributable to reductions made in
operating expenses.
The combined ratios (which represent a ratio of losses and expenses to
net earned premiums in a particular period) were 108 percent and 116 percent for
the three months ended March 31, 1998 and 1997, respectively. Net income from
insurance operations for the three months ended March 31, 1998 and 1997 was $1.3
million and $3.0 million, respectively. The decrease in net income is
attributable to the recognition of a realized gain of $2.2 million in the first
quarter of 1997.
Cash Flow from Insurance Operations
Cash used in operations was $0.9 million and $2.7 million for the three
months ended March 31, 1998 and 1997, respectively. The decrease in cash used in
operations is primarily due to the decline in payments of losses and LAE related
to prior years and an increase in premiums written. Overall cash and invested
assets, at market value, net of payables for trades pending settlement, at March
31, 1998 were $133.9 million, compared to $134.8 million at December 31, 1997.
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. 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.
The two most common measures of capital adequacy for insurance
companies are premium-to-surplus ratios (which measure current operating risk)
and reserves-to-surplus ratios (which measure financial risk related to possible
changes in the level of loss and loss adjustment expense reserves). A commonly
accepted standard net written premium-to-surplus ratio is 3 to 1, although this
varies with different lines of business. NAICC's annualized net written
premiums-to-surplus ratio of 1.4 to 1 and 1.2 to 1 for the three months ended
March 31, 1998 and 1997, respectively, remains well under current industry
standards. A commonly accepted standard for the ratio of losses and loss
adjustment expense reserves-to-surplus ratio is 5 to 1, compared with NAICC's
ratio of 1.8 to 1. Given these relatively conservative financial security
ratios, management is confident that existing capital is adequate to support
continued higher than industry average premium growth for the foreseeable
future.
<PAGE>
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 three months ended March 31, 1998 and 1997, cash used in
parent-only operating activities was $471,000 and $518,000, respectively. The
decrease in cash used was primarily attributable to the expiration of certain
non-recurring compensation expense obligations. For information regarding DHC's
operating subsidiaries' cash flow from operations, see "2. RESULTS OF NAICC'S
OPERATIONS, Cash Flow from Insurance Operations."
Liquidity and Capital Resources
At March 31, 1998, cash and investments of DHC were approximately $8.3
million, compared to $8.7 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. 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
At March 31, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS 130").
SFAS 130 establishes standards for the reporting and display of comprehensive
income and its components in a full set of general-purpose financial statements.
Comprehensive income encompasses all changes in stockholders' equity (except
those arising from transactions with stockholders) and includes net income and
net unrealized capital gains or losses on available-for-sale securities. As this
new standard only relates to presentation of information, it has no impact on
the results of operations or financial condition of the Company. In accordance
with the provisions of SFAS 130, the Company has presented comprehensive income
in its Statement of Stockholders' Equity.
5. RISK FACTORS THAT MAY AFFECT FUTURE RESULTS
As noted above, the foregoing discussion may include forward-looking
statements that involve risks and uncertainties. In addition to other factors
and matters discussed elsewhere herein, some of the important factors that, in
the view of the Company, could cause actual results to differ materially from
those discussed in the forward-looking statements include the following:
1. The insurance products sold by the Company are subject to
intense competition from many competitors, many of whom have substantially
greater resources than the Company. There can be no assurance that the Company
will be able to successfully compete in these markets and generate sufficient
premium volume at attractive prices to be profitable.
2. In order to implement its business plan, the Company has been
seeking to enter into strategic partnerships and/or make acquisitions of
businesses that would enable the Company to earn an attractive return on
investment. Restrictions on the Company's ability to issue additional equity in
order to finance any such transactions exist which could significantly affect
the Company's ability to finance any such transaction. The Company may have
limited other resources with which to implement its strategy and there can be no
assurance that any transaction will be successfully consummated.
3. The insurance industry is highly regulated and it is not
possible to predict the impact of future state and federal regulation on the
operations of the Company.
<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 and Use of Proceeds.
Not applicable
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 5. Other Information.
Not applicable
Item 6. Exhibits and Reports on Form 8-K.
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: May 15, 1998
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 MARCH 31, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<CIK> 0000225648
<NAME> DANIELSON HOLDING CORPORATION
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 140,773
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 622
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 145,332
<CASH> 1,967
<RECOVER-REINSURE> 27,963<F1>
<DEFERRED-ACQUISITION> 1,395
<TOTAL-ASSETS> 192,320
<POLICY-LOSSES> 116,652
<UNEARNED-PREMIUMS> 10,505
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 389
<NOTES-PAYABLE> 0
0
0
<COMMON> 1,538
<OTHER-SE> 55,407<F2>
<TOTAL-LIABILITY-AND-EQUITY> 192,320
10,816
<INVESTMENT-INCOME> 2,527
<INVESTMENT-GAINS> 2,206
<OTHER-INCOME> 149
<BENEFITS> 7,736
<UNDERWRITING-AMORTIZATION> 2,024
<UNDERWRITING-OTHER> 3,488
<INCOME-PRETAX> 2,443
<INCOME-TAX> 6
<INCOME-CONTINUING> 2,437
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,437
<EPS-PRIMARY> 0.16<F3>
<EPS-DILUTED> 0.15<F4>
<RESERVE-OPEN> 97,105
<PROVISION-CURRENT> 7,736
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 1,578
<PAYMENTS-PRIOR> 10,420
<RESERVE-CLOSE> 92,843
<CUMULATIVE-DEFICIENCY> (10,120)
<FN>
<F1> INCLUDED IN THIS CAPTION ARE REINSURANCE RECOVERABLES ON UNPAID LOSSES
OF 23,809 AND REINSURANCE RECOVERABLES ON PAID LOSSES OF 4,154.
<F2> INCLUDED IN STOCKHOLDERS' EQUITY-OTHER IS TREASURY STOCK OF 66.
<F3> REPRESENTS EARNINGS PER SHARE-BASIC
<F4> REPRESENTS EARNINGS PER SHARE-DILUTED
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM
10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 128,527
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 13,594
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 145,797
<CASH> 9,117
<RECOVER-REINSURE> 29,908<F1>
<DEFERRED-ACQUISITION> 1,953
<TOTAL-ASSETS> 202,595
<POLICY-LOSSES> 104,764
<UNEARNED-PREMIUMS> 12,110
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 273
<NOTES-PAYABLE> 0
0
0
<COMMON> 1,559
<OTHER-SE> 63,211<F2>
<TOTAL-LIABILITY-AND-EQUITY> 202,595
14,015
<INVESTMENT-INCOME> 2,339
<INVESTMENT-GAINS> 37
<OTHER-INCOME> 178
<BENEFITS> 9,933
<UNDERWRITING-AMORTIZATION> 2,397
<UNDERWRITING-OTHER> 3,277
<INCOME-PRETAX> 850
<INCOME-TAX> 43
<INCOME-CONTINUING> 807
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 807
<EPS-PRIMARY> 0.05<F3>
<EPS-DILUTED> 0.05<F4>
<RESERVE-OPEN> 85,762
<PROVISION-CURRENT> 9,933
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 1,841
<PAYMENTS-PRIOR> 9,284
<RESERVE-CLOSE> 84,570
<CUMULATIVE-DEFICIENCY> (940)
<FN>
<F1> INCLUDES REINSURANCE RECOVERABLES ON UNPAID LOSSES OF 20,193 AND
REINSURANCE RECOVERABLES ON PAID LOSSES OF 9,715.
<F2> INCLUDES TREASURY STOCK OF 66.
<F3> REPRESENTS EARNINGS PER SHARE-BASIC
<F4> REPRESENTS EARNINGS PER SHARE-DILUTED
</FN>
</TABLE>
