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 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: 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 August 4, 1998
Common Stock, $0.10 par value 15,576,276 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 For the Six
Months Ended June 30, Months Ended June 30,
1998 1997 1998 1997
Revenues:
<S> <C> <C> <C> <C>
Gross premiums earned $ 16,295 $ 15,669 $ 33,251 $ 29,049
Ceded premiums earned (2,723) (2,957) (5,664) (5,521)
---------- ---------- ---------- ---------
Net premiums earned 13,572 12,712 27,587 23,528
Net investment income 1,935 2,462 4,274 4,989
Net realized investment gains 87 -- 124 2,206
Other income 243 156 421 305
--------- --------- --------- ---------
Total revenues 15,837 15,330 32,406 31,028
--------- --------- --------- ---------
Losses and expenses:
Gross losses and loss adjustment expenses 11,143 13,445 23,130 23,770
Ceded losses and loss adjustment expenses (1,521) (4,101) (3,575) (6,690)
---------- ---------- ---------- ---------
Net losses and loss adjustment expenses 9,622 9,344 19,555 17,080
Policyholder dividends 91 8 203 15
Policy acquisition expenses 3,285 3,226 6,602 6,155
General and administrative expenses 2,522 2,216 4,879 4,799
--------- --------- --------- ---------
Total losses and expenses 15,520 14,794 31,239 28,049
--------- --------- --------- ---------
Income before provision for income taxes 317 536 1,167 2,979
Income tax provision 10 13 53 19
--------- --------- --------- ---------
Net income $ 307 $ 523 $ 1,114 $ 2,960
========= ========= ========= =========
Earnings per share of Common Stock
Basic $ .02 $ .03 $ .07 $ .19
========= ========== ========== =========
Diluted $ .02 $ .03 $ .07 $ .18
========= ========== ========== =========
</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>
June 30, 1998 December 31,
(Unaudited) 1997
<S> <C> <C>
Assets:
Fixed maturities, available for sale at fair value
(Cost: $115,720 and $139,089) $ 117,846 $ 140,899
Equity securities, at fair value (Cost: $20,314 and $363) 17,859 813
Short term investments, at cost which
approximates fair value 1,100 1,111
-------- ---------
Total investments 136,805 142,823
Cash 45 707
Accrued investment income 1,450 2,006
Premiums and fees receivable, net of allowances
of $142 and $179 9,041 5,438
Reinsurance recoverable on paid losses, net of allowances
of $374 and $374 9,038 8,523
Reinsurance recoverable on unpaid losses, net of
allowances of $529 and $499 19,090 20,185
Prepaid reinsurance premiums 1,716 1,681
Property and equipment, net of accumulated depreciation
of $7,930 and $7,690 2,196 2,499
Deferred acquisition costs 2,128 1,550
Other assets 2,181 2,361
-------- ---------
Total assets $ 183,690 $ 187,773
========== ==========
Liabilities and Stockholders' Equity:
Unpaid losses and loss adjustment expenses $ 99,374 $ 105,947
Unearned premiums 12,890 10,249
Policyholder dividends 267 411
Reinsurance premiums payable 2,207 1,244
Funds withheld on ceded reinsurance 1,412 1,254
Other liabilities 5,095 4,748
-------- ---------
Total liabilities 121,245 123,853
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 15,576,276 and 15,576,287 shares) 1,559 1,559
Additional paid-in capital 46,673 46,673
Accumulated other comprehensive income:
net unrealized gain (loss) on securities (329) 2,260
Retained earnings 14,608 13,494
Treasury stock (Cost of 10,718 and 10,707 shares) (66) (66)
-------- ---------
Total stockholders' equity 62,445 63,920
-------- ---------
Total liabilities and stockholders' equity $ 183,690 $ 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
Six Months Ended
June 30, 1998 June 30, 1998
------------- -------------
<S> <C> <C>
Retained earnings
Balance, beginning of year $ 13,494
Net income 1,114 1,114
--------
Balance, end of period 14,608
Accumulated other comprehensive income
Balance, beginning of year 2,260
Net unrealized loss on available-for-sale securities (1) (2,589) (2,589)
--------- ---------
Balance, end of period (329) (1,475)
=======
Common stock
Balance, beginning of year $ 1,559
--------
Balance, end of period 1,559
--------
Additional paid-in capital 46,673
Balance, beginning of year --------
Balance, end of period 46,673
--------
Treasury stock (66)
Balance, beginning of year --------
Balance, end of period (66)
--------
Total stockholders' equity $ 62,445
========
Common stock, shares 15,586,994
Balance, beginning of year ----------
Balance, end of period 15,586,994
==========
Treasury stock, shares
Balance, beginning of year 10,707
Purchased during period 11
--------
Balance, end of period 10,718
======
<FN>
<F1>
(1) Disclosure of reclassification amount:
Unrealized holding losses arising during the period $(2,465)
Less: reclassification adjustment for gains included in 124
net income --------
Net unrealized loss on available-for-sale securities $(2,589)
</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 Six
Months Ended June 30,
1998 1997
------------- ---------
<S> <C> <C>
Cash flows from operating activities:
Income from continuing operations $ 1,114 $ 2,960
Adjustments to reconcile net income to net cash
used in operating activities:
Net realized investment gains (124) (2,206)
Depreciation and amortization 369 507
Change in accrued investment income 556 213
Change in premiums and fees receivable (3,603) 440
Change in reinsurance recoverables (515) (5,920)
Change in reinsurance recoverable on unpaid losses 1,095 3,020
Change in prepaid reinsurance premiums (35) 234
Change in deferred acquisition costs (578) (792)
Change in unpaid losses and loss adjustment expenses (6,573) (9,637)
Change in unearned premiums 2,641 3,441
Change in reinsurance payables and funds withheld 1,121 386
Change in policyholder dividends payable (144) (152)
Other, net 423 (704)
-------- ----------
Net cash used in operating activities (4,253) (8,210)
--------- ---------
Cash flows from investing activities:
Proceeds from sales:
Fixed income maturities available-for-sale 17,714 9,445
Equity securities -- 2,159
Investments, matured or called:
Fixed income maturities available-for-sale 17,189 100
Investments, purchased:
Fixed income maturities available-for-sale (11,325) (6,648)
Equity securities (19,952) (129)
Proceeds from sale of property and equipment 6 --
Purchases of property and equipment (52) (109)
Net cash provided by investing activities -------- ---------
3,580 4,818
-------- ---------
Cash flows from financing activities:
Proceeds from exercise of options to purchase Common Stock -- 671
-------- ---------
Net cash provided by financing activities -- 671
-------- ---------
Net decrease in cash and short term investments (673) (2,721)
Cash and short term investments at beginning of period 1,818 6,683
-------- ---------
Cash and short term investments at end of period $ 1,145 $ 3,962
======= ========
</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
six months ended June 30, 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
16,177,757 and 16,171,268 for the three and six months ended June 30, 1998,
respectively, and 16,052,945 and 16,145,858 for the three and six months ended
June 30, 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
15,576,285 and 15,576,286 for the three and six months ended June 30, 1998,
respectively, and 15,407,865 and 15,384,217 for the three and six months ended
June 30, 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.
4) FOREIGN CURRENCY TRANSLATION AND FOREIGN INVESTMENTS
During 1998, NAICC invested approximately $10.3 million in Japanese yen
based equity securities. In order to hedge the currency risk of these
investments, during the second quarter NAICC purchased a foreign currency option
to sell Japanese yen at a fixed price on a given date in 1999. The foreign
currency option is considered a derivative investment. The Company recorded an
unrealized loss on the Japanese yen based equity securities of $1.1 million, of
which $649,782 was a result of changes in foreign currency exchange rates,
included in net unrealized gain (loss) on securities in the accompanying
consolidated balance sheets.
<PAGE>
Investments in equity securities denominated in foreign currencies are
translated into U.S. dollars using current rates of exchange and the related
translation adjustments are recorded in net unrealized gain (loss) as a
component of equity net of the unrealized exchange gain or loss associated with
any related foreign exchange hedging instruments.
In June 1998 the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 is effective for
fiscal years beginning after June 15, 1999 and establishes standards for the
reporting for derivative instruments. It requires changes in the fair value of a
derivative instrument and the changes in fair value of the assets or liabilities
hedged by that instrument to be included in income. To the extent that the hedge
transaction is effective, income is equally offset by both investments.
Currently the changes in fair value of derivative instruments and hedged items
are reported in net unrealized gain (loss) on securities. The Company has not
adopted SFAS 133. However, the effect of adoption on the consolidated financial
statements at June 30, 1998 would 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.
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 June 30, 1998, NAICC had a B++ rating from A.M. Best
Company ("Best").
Property and Casualty Insurance Operations
Net premiums earned were $13.6 million and $27.6 million for
the three and six months ended June 30, 1998, respectively. Net premiums earned
were $12.7 million and $23.5 million for the three and six months ended June 30,
1997, respectively. The increase in net premiums earned is directly related to
increases in net premiums written. Net premiums written were $14.4 million and
$30.2 million for the three and six months ended June 30, 1998, respectively.
Net premiums written were $13.9 million and $27.2 million for the three and six
months ended June 30, 1997, respectively.
<PAGE>
The increase in 1998 over the comparable periods 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 $3.5 million while net premiums written in the non-standard private
passenger automobile line declined by $0.87 million over the comparable six
month period in 1997. 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 $1.8 million and $4.1 million for the three
and six months ended June 30, 1998, respectively. Net investment income was $2.3
million and $4.7 million for the three and six months ended June 30, 1997,
respectively. The decline is reflective of a slight decrease in average
portfolio yield on bonds for the 1998 periods, and the purchase of equity
securities during the first six months of 1998.
Net losses and loss adjustment expenses ("LAE") were $9.6 million and
$19.6 million for the three and six months ended June 30, 1998, respectively,
compared with $9.3 million and $17.1 million for the three and six months ended
June 30, 1997, respectively. The resulting net loss and LAE ratios for the
corresponding six month periods were 70.9 percent and 72.6 percent,
respectively. The modest decrease in the net loss and LAE ratio in 1998 over
1997 is due to slightly more favorable experience in all lines of business.
Policy acquisition costs were $3.3 million and $6.6 million for the
three and six months ended June 30, 1998, respectively. Policy acquisition costs
were $3.2 million and $6.2 million for the three and six months ended June 30,
1997, respectively. As a percentage of net premiums earned, policy acquisition
expenses were 23.9 percent and 26.2 percent for the six months ended June 30,
1998 and 1997, respectively. The decline in the policy acquisition expense ratio
in 1998 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 $3.6 million
for the three and six months ended June 30, 1998, respectively. General and
administrative expenses were $1.6 million and $3.5 million for the three and six
months ended June 30, 1997, respectively.
The combined ratios (which represent a ratio of losses and expenses to
net earned premiums in a particular period) were 108.5 percent and 113.6 percent
for the six months ended June 30, 1998 and 1997, respectively. Net income from
insurance operations for the three and six months ended June 30, 1998 was $0.9
million and $2.2 million, respectively. Net income from insurance operations for
the three and six months ended June 30, 1997 was $1 million and $4 million,
respectively. The decrease in net income from insurance operations during the
first six months of 1998 compared to the same period for 1997 is attributable
primarily 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 $3.2 million and $7.2 million for the six
months ended June 30, 1998 and 1997, respectively. The decrease in cash used in
operations is due to the continued decline in payments of losses and LAE related
to prior years and to an increase in premiums written. Overall cash and invested
assets, at market value, at June 30, 1998 were $129.0 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.
<PAGE>
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 1.3 to 1 for the six months ended June
30, 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 at
June 30, 1998. 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.
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 six months ended June 30, 1998 and 1997, cash used in
parent-only operating activities was $1.1 million and $1.0 million,
respectively. The increase in cash used was primarily attributable to the timing
of certain expense payments and interest receipts offset by 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 June 30, 1998, cash and investments of DHC were approximately $7.8
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
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 is effective for
fiscal years beginning after June 15, 1999 and establishes standards for the
reporting for derivative instruments. It requires changes in the fair value of a
derivative instrument and the changes in fair value of the assets or liabilities
hedged by that instrument to be included in income. To the extent that the hedge
transaction is effective, income is equally offset by both investments.
Currently the changes in fair value of derivative instruments and hedged items
are reported in net unrealized gain (loss) on securities. The Company has not
adopted SFAS 133. However, the effect of adoption on the consolidated financial
statements at June 30, 1998 would not be material.
As of January 1, 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.
<PAGE>
In June 1997, the Financial Accounting Standards Board 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
currently operates as one segment. Therefore, the adoption of this standard
would have no impact on the presentation of the Company's consolidated financial
statements.
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 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: August 14, 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 JUNE 30, 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> 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> 117,846
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 17,859
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 136,805
<CASH> 45
<RECOVER-REINSURE> 28,128 <F1>
<DEFERRED-ACQUISITION> 2,128
<TOTAL-ASSETS> 183,690
<POLICY-LOSSES> 99,374
<UNEARNED-PREMIUMS> 12,890
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 267
<NOTES-PAYABLE> 0
0
0
<COMMON> 1,559
<OTHER-SE> 60,886<F2>
<TOTAL-LIABILITY-AND-EQUITY> 183,690
27,587
<INVESTMENT-INCOME> 4,274
<INVESTMENT-GAINS> 124
<OTHER-INCOME> 421
<BENEFITS> 19,555
<UNDERWRITING-AMORTIZATION> 4,774
<UNDERWRITING-OTHER> 6,707
<INCOME-PRETAX> 1,167
<INCOME-TAX> 53
<INCOME-CONTINUING> 1,114
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,114
<EPS-PRIMARY> 0.07<F3>
<EPS-DILUTED> 0.07<F4>
<RESERVE-OPEN> 85,762
<PROVISION-CURRENT> 19,555
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 5,264
<PAYMENTS-PRIOR> 19,770
<RESERVE-CLOSE> 80,283
<CUMULATIVE-DEFICIENCY> (940)
<FN>
<F1> INCLUDES REINSURANCE RECOVERABLES ON UNPAID LOSSES OF 19,090 AND
REINSURANCE RECOVERABLES ON PAID LOSSES OF 9,038.
<F2> INCLUDES 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 PERIOD ENDED JUNE 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 140,040
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 629
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 142,667
<CASH> 1,964
<RECOVER-REINSURE> 29,517<F1>
<DEFERRED-ACQUISITION> 1,749
<TOTAL-ASSETS> 191,076
<POLICY-LOSSES> 111,014
<UNEARNED-PREMIUMS> 11,735
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 256
<NOTES-PAYABLE> 0
0
0
<COMMON> 1,559
<OTHER-SE> 58,368<F2>
<TOTAL-LIABILITY-AND-EQUITY> 191,076
23,528
<INVESTMENT-INCOME> 4,989
<INVESTMENT-GAINS> 2,206
<OTHER-INCOME> 305
<BENEFITS> 17,080
<UNDERWRITING-AMORTIZATION> 4,337
<UNDERWRITING-OTHER> 6,617
<INCOME-PRETAX> 2,979
<INCOME-TAX> 19
<INCOME-CONTINUING> 2,960
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,960
<EPS-PRIMARY> 0.19<F3>
<EPS-DILUTED> 0.18<F4>
<RESERVE-OPEN> 97,105
<PROVISION-CURRENT> 17,080
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 4,671
<PAYMENTS-PRIOR> 19,026
<RESERVE-CLOSE> 90,488
<CUMULATIVE-DEFICIENCY> (10,120)
<FN>
<F1> INCLUDES REINSURANCE RECOVERABLES ON UNPAID LOSSES OF 20,526 AND
REINSURANCE RECOVERABLES OF PAID LOSSES OF 8,991
<F2> INCLUDES TREASURY STOCK 66.
<F3> REPRESENTS EARNINGS PER SHARE-BASIC.
<F4> REPRESENTS EARNINGS PER SHARE-DILUTED.
</FN>
</TABLE>
