<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 SEPTEMBER 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
------- ---------
AMERICAN BANKERS INSURANCE GROUP, INC.
11222 QUAIL ROOST DRIVE
MIAMI, FLORIDA 33157
(305) 253-2244
Commission File Number: 0-9633
State of Incorporation: Florida
I.R.S. Employer Identification Number: 59-1985922
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 report), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
----- -----
Common Stock - Par Value $1.00
20,198,399 Shares Outstanding on October 25, 1995
<PAGE> 2
Form 10-Q
Company or group of companies for which report is filed:
AMERICAN BANKERS INSURANCE GROUP, INC.
This quarterly report, filed pursuant to Rule 13A-13 of the General Rules and
Regulations under the Securities Exchange Act of 1934, consists of the
following information as specified in Form 10-Q.
Part I - Financial Information
Item 1 - Financial Statements
1. Consolidated Balance Sheets, September 30, 1995 and December 31,
1994.
2. Consolidated Statements of Income for the three months ended
September 30, 1995 and 1994.
3. Consolidated Statements of Income for the nine months ended
September 30, 1995 and 1994.
4. Consolidated Statements of Cash Flows for the nine months ended
September 30, 1995 and 1994.
5. Notes to Consolidated Financial Statements.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Part II - Other Information
Item 1 - Legal Proceedings
Item 4 - Submission of matters to a vote of security holders
Item 6 - Exhibits and Reports
a. Exhibits.
The following exhibits are included herein:
(11) Statement re: computation of earnings per share.
(27) Financial Data Schedule (for SEC use only).
b. Report on Form 8-K.
The Company filed a Form 8-K dated October 24, 1995.
2
<PAGE> 3
Form 10-Q
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.
AMERICAN BANKERS
INSURANCE GROUP, INC.
November 10, 1995
Date
/s/ Arthur W. Heggen
--------------------------
Arthur W. Heggen
Vice President
and Treasurer
3
<PAGE> 4
PART I
FINANCIAL INFORMATION
4
<PAGE> 5
AMERICAN BANKERS INSURANCE GROUP, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1994
-------- --------
Assets (unaudited)
- ------
<S> <C> <C>
Investments
Held-to-Maturity securities, at amortized cost $ 621,831 $ 555,576
Available-for-Sale securities, at approximate market value 691,723 488,266
Equity securities, at approximate market value 102,003 65,432
Mortgage loans on real estate 12,341 13,787
Policy loans 7,569 6,841
Short-term and other investments 198,678 134,968
------------ -------------
Total investments 1,634,145 1,264,870
Cash 16,169 89,536
Accounts receivable, net of allowance for doubtful
accounts of $6,558 in 1995 and $5,861 in 1994 125,974 105,556
Reinsurance receivable 145,953 130,938
Accrued investment income 19,723 16,062
Deferred policy acquisition costs 299,590 229,581
Prepaid reinsurance premiums 448,667 396,796
Other assets 187,687 199,160
------------ -------------
Total assets $ 2,877,908 $ 2,432,499
============ =============
Liabilities, Common Stock and
- -----------------------------
Other Stockholders' Equity
--------------------------
Policy liabilities $ 270,928 $ 266,221
Unearned premiums 1,110,018 903,279
Claim liabilities 388,110 333,113
------------ -------------
1,769,056 1,502,613
Other policyholders' funds 7,003 13,221
Notes payable 235,512 197,789
Deferred income taxes 21,994 -
Accrued commissions and other expenses 129,772 98,819
Other liabilities 231,519 214,182
------------ -------------
Total liabilities 2,394,856 2,026,624
------------ -------------
Commitments and Contingencies (Note 4)
Common Stock and Other Stockholders' Equity
- -------------------------------------------
Common stock of $1 par value. Authorized 35,000 shares.
Issued and outstanding: 1995-20,323 shares; 1994-20,244 shares 20,323 20,244
Additional paid-in capital 213,830 212,139
Net unrealized investment and foreign exchange losses (2,375) (38,554)
Retained earnings 263,802 225,374
Less:
Treasury stock, at cost - 136 shares in 1995 and 106 shares in 1994 (2,516) (1,623)
Unamortized restricted stock (3,106) (3,205)
Collateralization of loan to Leveraged Employee
Stock Ownership Plan (6,906) (8,500)
------------ -------------
Total common stock and other stockholders' equity 483,052 405,875
------------ -------------
Total liabilities, common stock and other
stockholders' equity $ 2,877,908 $ 2,432,499
============ =============
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
5
<PAGE> 6
AMERICAN BANKERS INSURANCE GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(IN THOUSANDS EXCEPT PER COMMON SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Gross collected premiums $ 605,033 $ 460,937
============ =============
Premiums and other revenues:
Net premiums earned $ 325,919 $ 278,756
Net investment income 25,877 20,848
Realized investment gains (losses) 495 (476)
Other income 4,954 3,556
------------ -------------
Total premiums and other revenues 357,245 302,684
------------ -------------
Benefits and expenses:
Net benefits, claims, losses and settlement expenses 119,280 103,670
Credit bond losses and expenses 7,240 5,640
Commissions 137,364 115,140
Operating expense 64,526 57,197
Interest expense 3,748 3,100
------------ -------------
Total benefits and expenses 332,158 284,747
------------ -------------
Income before taxes 25,087 17,937
------------ -------------
Income tax expense:
Current 2,778 3,128
Deferred 3,625 2,170
------------ -------------
6,403 5,298
------------ -------------
Net Income $ 18,684 $ 12,639
============ =============
PER COMMON SHARE AND COMMON EQUIVALENT SHARE DATA
Primary:
Net Income $ .90 $ .61
============ ============
Weighted average number of shares outstanding 20,864 20,684
============ ============
Fully diluted:
Net Income $ .90 $ .61
============ ============
Weighted average number of shares outstanding 20,887 20,684
============ ============
Dividends per common share $ .19 $ .18
============ ============
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
6
<PAGE> 7
AMERICAN BANKERS INSURANCE GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(IN THOUSANDS EXCEPT PER COMMON SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Gross collected premiums $ 1,657,190 $ 1,291,756
============ =============
Premiums and other revenues:
Net premiums earned $ 907,591 $ 818,554
Net investment income 72,415 54,615
Realized investment (losses) gains (707) 2,196
Other income 13,928 10,671
------------ -------------
Total premiums and other revenues 993,227 886,036
------------ -------------
Benefits and expenses:
Net benefits, claims, losses and settlement expenses 335,234 328,266
Credit bond losses and expenses 10,198 6,989
Commissions 385,827 328,505
Operating expense 181,350 163,440
Interest expense 11,483 8,034
------------ -------------
Total benefits and expenses 924,092 835,234
------------ -------------
Income before taxes 69,135 50,802
------------ -------------
Income tax expense:
Current 13,243 12,783
Deferred 6,289 2,051
------------ -------------
19,532 14,834
------------ -------------
Net Income $ 49,603 $ 35,968
PER COMMON SHARE AND COMMON EQUIVALENT SHARE DATA
Primary:
Net Income $ 2.39 $ 1.74
============ =============
Weighted average number of shares outstanding 20,722 20,639
============ =============
Fully diluted:
Net Income $ 2.39 $ 1.74
============ =============
Weighted average number of shares outstanding 20,821 20,639
============ =============
Dividends per common share $ .56 $ .53
============ =============
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
7
<PAGE> 8
AMERICAN BANKERS INSURANCE GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
------------- --------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 49,603 $ 35,968
Adjustments to reconcile net income to net cash provided
by operating activities:
Change in policy liabilities, unearned premiums, claim
liabilities, reinsurance receivable and prepaid reinsurance premiums 198,567 52,615
Change in other assets and other liabilities 22,820 35,194
(Increase) decrease in accounts receivable (20,418) 21,393
Increase in accrued investment income (3,661) (1,265)
Increase (decrease) in accrued commission and expenses 30,953 (21,175)
(Decrease) increase in policyholders' funds (6,218) 9,111
Increase in policy loans (728) (151)
Amortization of deferred policy acquisition costs 309,290 252,480
Amortization of cost of insurance acquired 1,857 5,284
Policy acquisition costs deferred (379,299) (271,957)
Provision for amortization and depreciation 12,077 8,420
Provision for deferred income taxes 6,289 2,051
Net loss (gain) on sale of investments 707 (2,196)
Compensation on option plans shares exercised 983 934
Net cash flow from purchases and sales of trading securities (607) (1,516)
------------ --------------
Net cash provided by operating activities 222,215 125,190
------------ --------------
INVESTING ACTIVITIES:
Purchase of investments
Held-to-maturity securities (130,379) (136,662)
Available-for-sale securities (259,003) (389,676)
Mortgage loans (648) (1)
Proceeds from sale of investments
Held-to-maturity securities - 158
Available-for-sale securities 57,554 215,956
Mortgage loans 2,103 2,507
Proceeds from maturities of investments
Held-to-maturity securities 65,008 69,783
Available-for-sale securities 16,520 53,959
(Increase) decrease in short-term investments (67,385) 14,530
Transactions related to capital assets
Capital expenditures (7,763) (4,995)
Sales of capital assets 275 229
------------ --------------
Net cash used in investing activities (323,718) (174,212)
------------ --------------
FINANCING ACTIVITIES:
Proceeds from issuance of debt 93,000 96,723
Repayment of debt (53,683) (50,683)
Dividends paid to shareholders (11,157) (10,681)
Proceeds from issuance of common stock 869 921
Purchase of treasury stock (893) -
------------ --------------
Net cash provided by financing activities 28,136 36,280
------------ --------------
Net decrease in cash (73,367) (12,742)
Cash at beginning of period 89,536 39,826
------------ --------------
Cash at end of period $ 16,169 $ 27,084
============ ==============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 9,207 $ 5,995
Income taxes $ 16,742 $ 17,549
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
8
<PAGE> 9
AMERICAN BANKERS INSURANCE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(UNAUDITED)
1. Financial Statements
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and footnotes required by generally
accepted accounting principles for complete 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 period ended September 30, 1995 are not
necessarily indicative of the results that may be expected for the year
ending December 31, 1995. These statements should be read in conjunction
with the financial statements and notes thereto included in the Company's
Annual Report to Shareholders and Form 10-K for the year ended December
31, 1994. Certain items have been reclassed to conform with 1995
presentation.
2. Translation of Foreign Currencies
Unrealized foreign exchange losses, totaling $10,579,000 and $9,440,000 as
of September 30, 1995 and December 31, 1994 respectively, are included in
Other Stockholders' Equity under the caption "Net unrealized investment
and foreign exchange losses."
3. Reinsurance
The Company accounts for reinsurance contracts under Financial Accounting
Standards Board's Statement 113. The Company recognizes the income on
reinsurance contracts principally on a pro-rata basis over the life of the
policies covered under the reinsurance agreements. Reinsurance
Recoverables on Unpaid Losses are included as an asset in the Balance
Sheet under the caption "Reinsurance Receivables". Ceded Unearned Premiums
are included as an asset in the Balance Sheet under the caption "Prepaid
Reinsurance Premiums".
The effect of reinsurance on premiums earned is as follows for the nine
months and three months ended September 30, 1995 and 1994:
<TABLE>
<CAPTION>
(in thousands)
Nine Months Ended
September 30, 1995 September 30, 1994
------------------ ------------------
<S> <C> <C>
Direct premiums $ 1,364,260 $ 1,122,732
Reinsurance assumed 122,032 109,646
Reinsurance ceded (578,701) (413,824)
------------- --------------
Net premiums earned $ 907,591 $ 818,554
============= ==============
</TABLE>
<TABLE>
<CAPTION>
(in thousands)
Three Months Ended
September 30, 1995 September 30, 1994
------------------ ------------------
<S> <C> <C>
Direct premiums $ 477,137 $ 377,789
Reinsurance assumed 48,362 48,549
Reinsurance ceded (199,580) (147,582)
------------- --------------
Net premiums earned $ 325,919 $ 278,756
============= ==============
</TABLE>
Reinsurance ceded incurred losses for the nine months ended September 30,
1995 and 1994 were $181,967,000 and $134,213,000 respectively. Reinsurance
ceded incurred losses for the three months ended September 30, 1995 and
1994 were $48,232,000 and $48,515,000 respectively.
9
<PAGE> 10
4. Commitments and Contingencies
For a comprehensive description of the Company's litigation, see Item III
of the Company's 1994 Form 10-K and Note 10, included in the Consolidated
Financial Statements in the 1994 Annual Report to Shareholders.
Credit Bond Litigation:
On October 24, 1995, the Company completed a settlement with the Federal
Deposit Insurance Corporation ("FDIC") of the only remaining lawsuit
against the Company relating to American Bankers' relationship with a
former client which filed for bankruptcy in 1987. This settlement included
the entry of orders by the Court dismissing all claims between American
Bankers and the FDIC with prejudice. The settlement, net of previously
established reserves, resulted in an after tax charge of $3.8 million for
the third quarter. Effective with this settlement, the Company has now
concluded all litigation ever initiated against it in connection with its
discontinued credit bond insurance business.
Alabama Litigation:
Certain of the Company's subsidiaries have been sued in a number of
individual consumer lawsuits and class actions brought in the State of
Alabama. As has been widely reported in the press, the insurance and
finance industries have come under attack in Alabama by plaintiffs'
lawyers who enjoy a favorable judicial climate. A number of credit
insurers operating in the State of Alabama have been named in one or more
of these suits. In suits relating to the Company, it or a subsidiary has
generally been named as a co-defendant with one or several retailer or
finance companies who have sold the Company's product to a
consumer/plaintiff. Other insurers are named as co-defendants in many of
the suits.
Although these Alabama lawsuits generally involve relatively small amounts
of actual or compensatory damages, they typically assert claims requesting
substantial punitive awards. The Company denies any wrongdoing in any of
these suits and believes that it has not engaged in any conduct that would
warrant an award of punitive damages. The Company has been advised by
legal counsel that it has meritorious defenses to all claims being
asserted against it.
While no one case is necessarily significant in terms of risk to the
Company, the judicial climate in Alabama is such that the outcome of these
cases is extremely unpredictable. Without admitting any wrongdoing, the
Company has settled a number of these suits. The Company intends to
continue defend itself vigorously against all such suits.
10
<PAGE> 11
5. Segment Information
Gross collected premiums, net premiums earned and income (loss) before
federal income taxes are summarized as follows:
<TABLE>
<CAPTION>
(in thousands)
Nine Months Ended
September 30,
-------------
1995 1994
-------- --------
<S> <C> <C>
GROSS COLLECTED PREMIUMS:
Life $ 493,896 $ 84,816
Property and Casualty 1,163,294 906,940
------------ ----------
Total $ 1,657,190 $1,291,756
============ ==========
NET PREMIUMS EARNED:
Life $ 280,500 $ 254,783
Property and Casualty 627,091 563,771
------------ ----------
Total $ 907,591 $ 818,554
============ ==========
INCOME (LOSS) BEFORE INCOME TAXES:
Life $ 38,725 $ 22,505
Property and Casualty 53,376 44,588
Other (11,483) (8,257)
----------- ----------
80,618 58,836
Interest Expense 11,483 8,034
---------- ----------
Total Income $ 69,135 $ 50,802
============ ==========
</TABLE>
6. Accounting for Investments
The Company accounts for its investments according to the Financial
Accounting Standards Board's Statement 115 - Accounting for Certain
Investments in Debt and Equity Securities.
This Statement addresses the accounting and reporting for investments in
equity securities that have readily determinable fair values and for all
investments in debt securities. Those investments are to be classified
in three categories and accounted for as follows:
Held-to-Maturity - Securities for which the enterprise has the positive
intent and ability to hold to maturity. These securities are carried at
amortized cost.
Trading Securities - Securities that are bought and held principally for
the purpose of selling them in the near term. These securities are
carried at market value with the unrealized holding gain or loss included
in earnings.
Available-for-Sale - Securities not classified as trading or
held-to-maturity. These securities are carried at market value with the
unrealized holding gain or loss reported as a separate component of
equity, net of the income tax effect.
11
<PAGE> 12
The detail of Cost and Statement Value for the Fixed Maturities and Equity
Securities held at September 30, 1995 is as follows:
<TABLE>
<CAPTION>
(in thousands)
Amortized Statement
Cost Value
----------- ----------
<S> <C> <C>
Fixed Maturities
- ----------------
Held-to-Maturity Securities $ 621,831 $ 621,831
Available-for-Sale Securities 690,559 691,723
Trading Securities - -
------------ -----------
Total Fixed Maturities $ 1,312,390 $ 1,313,554
============ ===========
Net unrealized gain $ 1,164
===========
<CAPTION>
Market
Cost Value
----------- -----------
Equity Securities
- -----------------
<S> <C> <C>
Held-to-Maturity Securities $ - $ -
Available-for-Sale Securities 90,110 102,003
Trading Securities - -
------------ -----------
Total Equity Securities $ 90,110 $ 102,003
============ ===========
Net unrealized gain $ 11,893
===========
</TABLE>
The net unrealized loss for "Available-for-Sale Securities" decreased by
$35,963,000 (net of $17,919,000 in deferred income taxes) from December 31,
1994 to September 30, 1995. There were no unrealized gains and losses from
transfers of Held-to-Maturity Securities.
An analysis of the realized gains and losses of the Company for the nine months
ended September 30, 1995 is as follows:
<TABLE>
<CAPTION>
(in thousands)
<S> <C>
Gross realized gains from sales of Available-for-Sale Securities $ 4,512
Gross realized losses from sales of Available-for-Sale Securities (1,500)
Gross realized losses from sales of Held-to-Maturity Securities (168)
Gross realized gains from sales of Trading Securities 176
Gross realized losses from sales of Trading Securities ( 276)
----------
Net realized gain from investment activity 2,744
Net realized loss from other investment activity (3,451)
-----------
Total realized loss $ (707)
===========
</TABLE>
The Company uses the specific identification method to determine cost for
computing the realized gains and losses. There were no transfers of securities
from Available-for-Sale to Trading for the nine months ended September 30,
1995.
12
<PAGE> 13
AMERICAN BANKERS INSURANCE GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Gross collected premiums increased $144.1 million or 31% to $605.0 million for
the three months ended September 30, 1995, from $460.9 million for the same
period of 1994. The Company's largest product lines -- Credit Property and
Credit Life, Accident and Health and Unemployment contributed 63% or $90.4
million of the increase in gross collected premium. Also contributing to the
increase is the Company's extended service contract products that approximate
$38.4 million or 6% of the gross collected premium for the three months.
During the three months ended September 30, 1995, total premiums and other
revenues were $357.2 million, an increase of $54.5 million over total premiums
and other revenues of $302.7 million for the same period in 1994. The increase
includes a $47.2 million increase in net premiums earned resulting generally
from the premium growth experienced by the Company's existing clients. The
increase also includes $5.0 million additional investment income during the
third quarter of 1995 as compared to the same period of 1994 resulting from
higher interest rates and an overall increase in invested assets.
Operating results for the third quarter of 1995 include the settlement of the
final portion of the credit bond litigation that began in 1987. The results for
the quarter were negatively impacted by approximately $5.8 million pre-tax
related to this settlement. Last year's third quarter results were also
negatively impacted by a credit bond settlement approximating $4.5 million
pre-tax. Excluding these settlements the benefits and claims ratio improved
slightly to 37% for the three months ended September 30, 1995, compared to 38%
for the same period of 1994. The effective tax rate decreased from 29.5% for
the three months ended September 30, 1994, to 25.5% for the same period of
1995. This change resulted, in part, from increased earnings generated by
certain of the Company's foreign subsidiaries that have a lower effective tax
rate. Also contributing is an increased commitment to certain tax advantaged
investments by the US operating companies.
For the fourth quarter 1995, the Company expects to report net losses of
approximately $2.0 million related to Hurricane Opal.
Although the Company discontinued participation in reinsurance pools in or
prior to 1981 it continues to evaluate and review the adequacy of reserves held
for the losses experienced by the pools. The business is long tail in nature,
and losses have exceeded both Company and industry expectations. Lack of
historical development indicative of the ultimate claim cost and changing legal
definition of what the ultimate liability will be creates significant
uncertainty in the reserving process. At September 30, 1995, the Company held
$20.0 million of reserves related to the reinsurance pools including $2.0
million added to strengthen overall reserves during 1995.
The increase in interest expense from $3.1 million to $3.7 million reflects
primarily the effects of higher debt levels ($235.5 million at September 30,
1995 versus $203.3 million at September 30, 1994).
Financial Condition
Total assets at September 30, 1995 and December 31, 1994 were $2.9 billion and
$2.4 billion, respectively. Invested assets at the same dates were $1.6
billion and $1.3 billion, respectively. As of September 30, 1995, mortgage
loans and investment in real estate pertaining to Florida properties were $9.1
million, which represents 67% of the total mortgage loans and real estate
portfolio and .3% of total assets.
Liabilities were $2.4 billion and $2.0 billion at September 30, 1995 and
December 31, 1994, respectively, and were primarily comprised of insurance
liabilities of $1.8 billion and $1.5 billion respectively.
13
<PAGE> 14
Stockholders' Equity increased $77.1 million from $405.9 million at December
31, 1994, to $483.0 million at September 30, 1995. A reduction in the
unrealized investment losses recorded by the Company and the contribution of
net income after dividends of $38.4 million were the primary causes for the
increase. The reduction in unrealized investment losses was a result of the
impact of the interest rate environment on the market values of the Company's
investment portfolio.
Liquidity and Capital Resources
On September 30, 1995, $1.6 billion or 57% of the Company's total assets were
comprised of securities, short-term investments and cash. The securities were
principally readily marketable and did not include any significant
concentration in private placements. As more fully described in Note 6 in the
Notes to Consolidated Financial Statements (pages 11 and 12), the Consolidated
Balance Sheet at September 30, 1995 reflects accounting for investments under
FASB Statement 115.
The Company does not hold significant investments in equity securities;
consequently, market changes in the equity securities markets do not
significantly affect the investment portfolio.
The Company expects to continue its policy of paying regular cash dividends;
however, future dividends are dependent on the Company's future earnings,
capital requirements and financial condition. In addition, the payment of
dividends is subject to the restrictions described in Note 7 to the
Consolidated Financial Statements in the 1994 Annual Report to Shareholders.
In April 1994, the Company filed a shelf registration with the Securities and
Exchange Commission for $200 million medium-term notes. The Company issued $50
million of these medium-term notes in April 1995. To date, $125 million of
these notes have been issued.
The Company has maintained a financing program for $140 million with a group of
banks which features a revolving line of credit, commercial paper and/or bid
loan facilities. The program is due to expire on March 1, 1996. At September
30, 1995, $86 million was outstanding under the program. The Company is
currently in the process of arranging a new financing program with a group of
banks to replace its existing program and expects it to be in place by the end
of the year.
14
<PAGE> 15
PART II
OTHER INFORMATION
15
<PAGE> 16
Item 1 - Legal Proceedings
Commitments and Contingencies information which appears on page 10 elsewhere in
this report is incorporated by reference in this item. Additional information
regarding litigation can be found in the Company's 1994 Annual Report to
Shareholders and on Form 10-K.
Item 4 - Submission of Matters to a Vote of Security Holders
None.
16
<PAGE> 1
ITEM 6 (A) EXHIBITS
EXHIBIT 11 - STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
(in thousands except per common share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
--------------------------------------------------------------
PRIMARY: 1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted average shares outstanding 20,864 20,684 20,722 20,639
======= ======= ======= =======
Net Income $18,684 $12,639 $49,603 $35,968
======= ======= ======= =======
Net Income - per share $ .90 $ .61 $ 2.39 $ 1.74
======= ======= ======= =======
FULLY DILUTED:
Weighted average of shares outstanding 20,864 20,684 20,722 20,639
Assumed conversion of common stock equivalents 23 - 99 -
------- ------- ------- -------
Total 20,887 20,684 20,821 20,639
======= ======= ======= =======
Net income $18,684 $12,639 $49,603 $35,968
Add convertible debenture interest, net of federal income 65 - 195 -
tax
------- ------- ------- -------
Total $18,749 $12,639 $49,798 $35,968
======= ======= ======= =======
Net income - per share $ .90 $ .61 $ 2.39 $ 1.74
======= ======= ======= =======
</TABLE>
ITEM 6 (b) REPORTS ON FORM 8-K
A Form 8-K dated October 24, 1995 has been filed reporting the
settlement of litigation with the Federal Deposit Insurance
Corporation. This previously disclosed litigation arose in connection
with the Company's discontinued credit bond business. See Note 4 --
page 10 of this report.
17
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF AMERICAN BANKERS INSURANCE GROUP, INC. FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 691,723
<DEBT-CARRYING-VALUE> 621,831
<DEBT-MARKET-VALUE> 0
<EQUITIES> 102,003
<MORTGAGE> 12,341
<REAL-ESTATE> 0
<TOTAL-INVEST> 1,634,145
<CASH> 16,169
<RECOVER-REINSURE> 145,953
<DEFERRED-ACQUISITION> 299,590
<TOTAL-ASSETS> 2,877,908
<POLICY-LOSSES> 270,928
<UNEARNED-PREMIUMS> 1,110,018
<POLICY-OTHER> 388,110
<POLICY-HOLDER-FUNDS> 7,003
<NOTES-PAYABLE> 235,512
<COMMON> 20,323
0
0
<OTHER-SE> 462,729
<TOTAL-LIABILITY-AND-EQUITY> 2,877,908
907,591
<INVESTMENT-INCOME> 72,415
<INVESTMENT-GAINS> (707)
<OTHER-INCOME> 13,928
<BENEFITS> 335,234
<UNDERWRITING-AMORTIZATION> 309,290
<UNDERWRITING-OTHER> 279,568
<INCOME-PRETAX> 69,135
<INCOME-TAX> 19,532
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 49,603
<EPS-PRIMARY> 2.39
<EPS-DILUTED> 2.39
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
