<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1997 Commission File Number 0-10071
NOBEL INSURANCE LIMITED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ISLANDS OF BERMUDA 98-0076395
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
FALCONER HOUSE NONE
GROUND LEVEL (Zip Code)
108 PITTS BAY ROAD HMAX
HAMILTON, BERMUDA
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (441) 292-7104.
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 the filing
requirements for the past 90 days.
YES /X/ NO / /
Number of Common Shares, $1.00 Par Value, outstanding at May 9, 1997
4,498,856
<PAGE>
NOBEL INSURANCE LIMITED
CONSOLIDATED BALANCE SHEETS
(EXPRESSED IN UNITED STATES DOLLARS)
<TABLE>
MARCH 31, DECEMBER 31,
1997 1996
- --------------------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Investments:
Trading portfolio, at fair value:
Fixed maturity securities (amortized cost: $488 March 31,
1997 and $487 December 31, 1996) $ 503 $ 502
Equity securities (cost: $3,562 at March 31, 1997 and $2,611
at December 31, 1996) 4,846 4,057
Other investments (cost: $504 at March 31, 1997 and $722
at December 31, 1996) 571 835
Securities available for sale, at fair value:
Fixed maturity securities (amortized cost: $98,417 at March
31, 1997 and $100,340 at December 31,1996) 97,012 100,970
Equity securities (cost: $3,645 at March 31, 1997 and $2,045
at December 31, 1996 3,867 2,293
Short-term investments, at cost, which approximates fair
value 13,237 12,880
--------- --------
Total investments 120,036 121,537
Cash 1,109 1,905
Funds held by reinsurance companies 1,798 1,702
Premiums and other receivables less allowance for doubtful
accounts ($298 at March 31, 1997 and at December 31, 1996) 26,803 30,693
Accrued interest income 1,481 1,484
Reinsurance recoverable on paid and unpaid claims 28,386 26,361
Prepaid reinsurance premiums 22,982 27,316
Property and equipment less accumulated depreciation ($1,790
at March 31, 1997 and $2,119 at December 31, 1996) 3,884 4,045
Deferred policy acquisition costs 1,809 700
Net deferred tax asset 4,374 4,774
Other assets 2,223 2,261
-------- --------
Total assets $214,885 $222,778
-------- --------
-------- --------
</TABLE>
(See Accompanying Notes to Consolidated Financial Statements)
1
<PAGE>
NOBEL INSURANCE LIMITED
CONSOLIDATED BALANCE SHEETS
(EXPRESSED IN UNITED STATES DOLLARS)
(CONTINUED)
<TABLE>
MARCH 31, DECEMBER 31,
1997 1996
- -----------------------------------------------------------------------------------------------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C>
LIABILITIES
Reserve for claims and claims expenses $ 83,708 $ 88,397
Unearned premiums 38,705 40,389
Accounts payable and accrued liabilities 11,714 13,180
Reinsurance premiums payable 23,687 22,733
Other liabilities 4,765 4,892
-------- --------
Total liabilities 162,579 169,591
-------- --------
SHAREHOLDERS' EQUITY
Capital shares (Authorized 20,000,000 shares; $1 par value; issued
7,793,128 shares at March 31, 1997; 7,743,458 shares at December 31,
1996; outstanding 4,490,356 shares at March 31, 1997 and 4,471,106
shares at December 31, 1996) 7,793 7,743
Contributed surplus 44,780 44,499
Unrealized gain on investments (1,510) 551
Retained earnings 31,206 29,996
Treasury stock, at cost (3,302,772 shares at March 31, 1997 and
3,272,352 shares at December 31, 1996) (29,963) (29,602)
-------- --------
Total shareholders' equity 52,306 53,187
-------- --------
Commitments and Contingencies
Total liabilities and shareholders' equity $214,885 $222,778
-------- --------
-------- --------
</TABLE>
(See Accompanying Notes to Consolidated Financial Statements)
2
<PAGE>
NOBEL INSURANCE LIMITED
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(EXPRESSED IN UNITED STATES DOLLARS)
<TABLE>
THREE MONTHS ENDED
MARCH 31,
(IN THOUSANDS, EXCEPT PER SHARE DATA) 1997 1996
- -------------------------------------------------------------------------------------------
<S> <C> <C>
REVENUES:
Premiums written $19,733 $18,701
Reinsurance purchased (8,446) (4,314)
------- -------
Net premiums written $11,287 $14,387
------- -------
------- -------
Premiums earned $21,417 $19,055
Premiums ceded (12,779) (5,739)
------- -------
Net premiums earned 8,638 13,316
Interest income, net of investment expenses of
$383 at March 31, 1997 and $177 at March 31,
1996, respectively 1,329 1,678
Net investment gains 131 212
Claim adjusting fees earned 1,360 3,557
------- -------
Total revenues 11,458 18,763
------- -------
EXPENSES:
Claims and claims expenses 11,158 14,776
Reinsurance recoveries (6,996) (5,664)
------- -------
Net claim and claim expenses 4,162 9,112
Service fees and commissions 1,236 3,943
General and administrative expenses 4,202 4,180
------- -------
Total expenses 9,600 17,235
------- -------
Net income before income taxes 1,858 1,528
Income tax expense (benefit):
Current 248 175
Deferred 400 (53)
------- -------
Income tax expense 648 122
------- -------
Net income 1,210 1,406
Retained earnings at beginning of period 29,996 26,612
------- -------
Retained earnings at end of period $31,206 $28,018
------- -------
------- -------
EARNINGS PER CAPITAL SHARE:
Net income per capital share $ .26 $ .29
------- -------
------- -------
Average number of capital shares 4,583 4,830
------- -------
------- -------
(See Accompanying Notes to Consolidated Financial Statements)
3
<PAGE>
NOBEL INSURANCE LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(EXPRESSED IN UNITED STATES DOLLARS)
THREE MONTHS ENDED
MARCH 31,
(IN THOUSANDS, EXCEPT PER SHARE DATA) 1997 1996
- -------------------------------------------------------------------------------------------
(IN THOUSANDS)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,210 $ 1,406
Adjustments to reconcile net income to net cash from
operations activity:
Depreciation and amortization 378 167
Change in deferred acquisition costs (1,109) (1,161)
Deferred tax benefit 400 (35)
Increase (decrease) in reserve for claims and claims expenses (4,689) 3,825
Decrease in unearned premiums (1,684) (356)
Decrease in accounts payable and accrued liabilities (1,466) (27)
(Decrease) in deferred service fee income (68) (65)
(Increase) decrease in net premiums receivable 4,844 (173)
(Increase) decrease in accrued interest income 3 (105)
(Increase) in reinsurance recoverables (2,025) (3,755)
Decrease in prepaid reinsurance premiums 4,334 1,426
Decrease in other assets 97 105
(Increase) in funds held by reinsurance companies (96) (230)
Net (additions to) dispositions from trading portfolio investments (626) 3,608
Net realized investment gains (131) (212)
(Gains) losses on disposal of other assets (4) 9
-------- --------
Net cash provided (used) from operating activities (632) 4,427
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from Investments sold or matured:
Fixed maturities, available for sale 34,684 13,218
Equity securities, available for sale 199 ---
Purchase of investments:
Fixed maturities, available for sale (32,579) (13,820)
Equity securities, available for sale (1,780) ---
Payments on acquisitions (6) ---
Purchase of software, property and equipment (241) (556)
------- -------
Net cash provided (used by) investing activities 277 (1,158)
------- -------
(See Accompanying Notes to Consolidated Financial Statements)
4
<PAGE>
NOBEL INSURANCE LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(EXPRESSED IN UNITED STATES DOLLARS)
(CONTINUED)
THREE MONTHS ENDED
MARCH 31,
1997 1996
- -------------------------------------------------------------------------------------------
(IN THOUSANDS)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable --- 2,500
Proceeds from issuance of capital shares 331 398
Repayment of notes payable and capital lease obligation (54) (131)
Purchase of treasury stock (361) (12,743)
------- --------
Net cash (used by) financing activities (84) (9,976)
------- -------
Net (decrease) in cash and cash equivalents (439) (6,707)
Cash and cash equivalents at beginning of year 14,785 15,305
------- -------
Cash and cash equivalents at end of year $14,346 $ 8,598
------- -------
------- -------
</TABLE>
(See Accompanying Notes to Consolidated Financial Statements)
5
<PAGE>
NOBEL INSURANCE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Balance Sheets at March 31, 1997, and Consolidated
Statements of Income and Retained Earnings for the three months ended March
31, 1997 and Consolidated Statements of Cash Flows for the three months ended
March 31, 1997, have not been examined by independent accountants, but, in
the opinion of Nobel Insurance Limited ("Company"), all adjustments
(consisting only of normal accruals) necessary for a fair presentation of the
financial position and results of operations for the periods indicated have
been included.
Statement of Financial Accounting Standards ("FAS") 115 "Disclosures
About Fair Value of Financial Instruments" was adopted in 1994 and impact
the Company's financial statements as follows:
1) Net unrealized (losses) of $(208,000) and $(838,000) from trading
portfolio investments were included in first quarter earnings for 1997 and
1996 respectively.
2) Net unrealized gains (losses) of $(1,510,000) and $551,000 from
portfolio investments classified as available for sale were included in
shareholders' equity at March 31, 1997 and December 31, 1996, respectively.
The Company is a foreign corporation not, in management's opinion, engaged
in a trade or business in any jurisdiction requiring the payment of taxes on
income except for its United States subsidiaries (the "U.S. Group") who may
ultimately pay United States taxes on their income.
The U.S. Group is domiciled in the United States and is subject to United
States taxes on income. At December 31, 1996, the U.S. Group had
consolidated net operating (losses) of approximately $(4,452,000) which may
be carried forward for U.S. Federal income tax purposes. Such loss
carryforwards expire beginning in 2004.
FAS 109, "Accounting for Income Taxes", was adopted by the Company in 1993
on a prospective basis. The effect of income taxes on operations is
presented below:
THREE MONTHS ENDED
MARCH 31
1997 1996
-----------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
Net income before income taxes - consolidated $1,858 $1,528
Foreign - not subject to tax (325) 7
------ ------
U.S. - subject to tax $2,183 $1,521
------ ------
------ ------
Computed "expected" tax expense @ 34% $ 742 $ 517
Reduction for tax exempt interest (84) ---
Change in deferred tax valuation allowance --- 113
Other items, net (10) (508)
------ ------
Tax expense (benefit) $ 648 $ 122
------ ------
------ ------
6
<PAGE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at March 31,
1997 and December 31, 1996 are presented below:
MARCH 31, DECEMBER 31,
1997 1996
- ------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
Deferred tax assets:
Accounts receivable, principally due to
allowance for doubtful accounts $ 49 $ 49
Claims reserves, principally due to discounting
for tax 2,825 2,887
Unearned premium adjustment 1,602 889
Net operating loss carryforwards 1,189 1,853
Other 508 508
------- -------
Total deferred tax assets 6,173 6,186
------- -------
Deferred tax liabilities:
Deferred policy acquisition costs (615) (238)
Unrealized gains bonds available for sale (327) (327)
Other (857) (847)
------- -------
Total gross deferred tax liabilities (1,799) (1,412)
------- -------
Net deferred tax balance $4,374 $4,774
------- -------
------- -------
Earnings per share was determined by dividing net income by average
primary shares outstanding which, includes common and common equivalent
shares outstanding attributable to outstanding stock options as follows:
THREE MONTHS ENDED
MARCH 31
1997 1996
- --------------------------------------------------------------------------------
(IN THOUSANDS)
Average common shares outstanding 4,481 4,699
Shares applicable to common
stock equivalents 102 131
----- -----
Average primary shares outstanding 4,583 4,830
----- -----
----- -----
Insurance companies are required to provide reserves for the settlement and
expense of investigation of all reported and unreported claims. Such
provisions are necessarily based on estimates. The estimates, and the
methods used to arrive at them, are periodically reviewed by the Company in
consultation with professional actuaries and changes are reflected in current
operations for the period in which they are determined.
The Company estimates claims and claims expenses based on historical
experience and payment and reporting patterns for the type of risk involved.
The anticipated effect of inflation is implicitly considered when estimating
claims and claims expenses. The difference between the U.S. insurance
subsidiary's reserves on a statutory basis and on the basis of generally
accepted accounting principles is not material.
7
<PAGE>
Inherent in the estimates of ultimate claims are expected trends in claim
severity, frequency and other factors that may vary as claims are settled.
The amount of uncertainty in the estimates is affected by such factors as the
amount of historical claims experience relative to the development period for
the type of risk, knowledge of the actual facts and circumstances, and the
amount of insurance risk retained.
At March 31, 1997 and December 31, 1996, the Company recorded reserves for
incurred but not reported and development of known claims ("IBNR") which
represented the Company's best estimate of the reserve for claims and claims
expense.
The outstanding balances for casualty and other coverages reserves for
incurred but not reported and development of known claims, net of reinsurance
recoverable, were (in thousands):
RESERVE BALANCE EFFECT EFFECT
PERIOD ENDING GROSS NET GROSS NET
- -------------------------------------------------------------------------------
At March 31, 1997 $29,255 $15,828
Three months ended
March 31, 1997 $(6,611) $(4,847)
At December 31, 1996 $35,866 $20,675
At March 31, 1996 $39,232 $23,283
Three months ended
March 31, 1996 $ 3,205 $ 751
An allowance for doubtful receivables is established when it becomes
evident collection is doubtful. An allowance of $ 298,000 was established as
of March 31, 1997 and December 31, 1996, respectively.
Net income and shareholder's equity of the U.S. insurance subsidiary, as
filed with regulatory authorities on the basis of statutory accounting
practices, were as follows (in thousands):
STATUTORY STATUTORY
SHAREHOLDERS' NET
PERIOD EQUITY INCOME (LOSS)
- ------------------------------------------------------------------------------
At March 31, 1997 $36,915
Three months ended March 31, 1997 $1,602
At December 31, 1996 $35,513
At March 31, 1996 $32,095
Three months ended March 31, 1996 $ (319)
8
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The principal cash requirements of the Company consist of claims payments
and operating expenses.
The Nobel U.S. Group's non-insurance operations incur substantially all of
the administrative expenses. The principal sources of cash to pay the
expenses for the non-insurance operations are claim adjusting fees, and
administrative service fees from the Domestic Company and the Parent Company.
The source of liquidity for claims payments consists of net premiums,
after deduction for expenses, plus investment income on the balances of such
premiums prior to their use to pay claims. These invested balances are also
used for collateral to secure certain ceding insurers' reinsurance reserves.
United States insurance regulations require the ceding insurers to maintain
approved collateral for reinsurance balances, including reserves for unearned
premiums and unpaid claims and claims expenses ceded to non-admitted
reinsurers.
The collateral requirements for reinsurance ceded to the Parent Company by
INA is being satisfied by a combination of letters of credit and trust
balances. The settlement of all claims and claims expenses is being
withdrawn from the trust account. The combined amount of letters of credit
and market value of trust assets at March 31, 1997 is $14,693,000.
The terms of the Parent Company's letter of credit facility requires
collateral equal to the amount of letters of credit issued plus a negotiated
market value margin for investments other than short-term investments. At
March 31, 1997, the collateral consisted of short-term bank deposits and
AAA-rated fixed income securities which require a 5% margin. At March 31,
1997, the Company had cash and investments of $121,145,000 of which
$20,586,000 was collateralized or pledged to secure the U.S. insurers that
have ceded reinsurance to the Company, and to maintain security deposits in
the U.S. with various state insurance departments.
Effective January 1, 1994, the Company adopted Financial Accounting
Standard 115. The Company carries its investments designated as trading
portfolio investments at market value. Year to date as of March 31, 1997,
the Company sold $779,000 of trading portfolio investments with $107,000 gain
realized. The Company classified its fixed income security investments,
principally bonds, as available for sale, and accordingly, carries these
investments at market value. The Company's investment guidelines prescribe a
portfolio structure of maturities to provide adequate liquidity to settle
claims liabilities. The portfolio continues to be conservatively invested in
high quality securities.
Net cash (used) from operating activities for the first three months of
1997 was $(632,000 compared to net cash provided of $4,427,000 for the first
three months of 1996, the difference was due to payment of the Petro Energy
claim for $5,320,000. Net cash provided by investing activities was $277,000
for the first three months of 1997, as opposed to cash (used) of $(1,158,000)
for the same
9
<PAGE>
period of 1996. Cash used by financing activities included the purchase of
30,420 shares of treasury stock for $361,000 or an average cost of $11.875,
plus repayment of $54,000 in notes payable less $331,000 received from
exercise of stock options to produce net financing cash (used) of $(84,000),
compared to net financing cash (used) of $(9,976,000) for the first three
months of 1996.
The insurance operations require capital to support premium writings. The
Company believes that its insurance subsidiary may need additional capital to
support planned business activities. Management has a term loan facility
available of $11,462,000 to meet the additional business opportunities
planned in 1997.
RESULTS OF OPERATIONS
THREE MONTHS 1997 VERSUS THREE MONTHS 1996
The composition of the net income for 1997 as compared to the net income
for 1996 by type of operation is as follows:
THREE MONTHS ENDED
MARCH 31
1997 1996
- ------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
Underwriting operations $1,080 $ (457)
Claim adjusting operations (286) 463
Corporate operations (396) (366)
Investment and other income 1,460 1,889
Federal income tax (648) (122)
------ ------
Net after tax $1,210 $1,407
------ ------
------ ------
There is significant seasonality in the Company's operating results, with
the first quarter generally weakest and the third quarter strongest.
Investment and other income for the three months of 1997 and 1996 was
impacted by reduced yield rates, the acquisition of treasury stock, loan
interest charges, and negative operating cash flow for the first quarter of
1997.
UNDERWRITING OPERATIONS. Premiums written increased $1,032,000, or 6%, over
1996. Reinsurance purchased increased $4,132,000, or 95% due to the
acquisition of several new reinsurance programs primarily in the Commercial
Casualty Division. As a result, net earned premiums decreased $4,678,000 or
35%. The comparability of reinsurance purchased is affected by changes in
the Company's major reinsurance agreements in 1996 and the first quarter of
1997. Effective December 31,1996, the Company entered into an 80% quota
share reinsurance agreement on the unearned premium reserve for its
commercial casualty business. The Company also entered into a $500,000 excess
of $500,000 facultative treaty for 13 of its largest trucking accounts during
the first quarter of 1997. Effective January 1, 1997, the Company increased
the limits on its surety excess of loss reinsurance treaty to $6,000,000 from
$4,000,000 and raised its retention per principal to $200,000 from $150,000
while maintaining its 5% participation. In addition, effective January 1,
1997, the Company purchased full coverage for the first layer ($2,500,000
excess of $2,500,000) of its catastrophe excess of loss treaty for personal
lines compared to 75% for 1996. The financial effect of these changes was
increased premiums and commissions ceded accompanied by decreased claims
exposure.
10
<PAGE>
The claims ratio to net earned premiums was 48% for the first three months
of 1997 compared to 69% in the same period of 1996. The decrease resulted
primarily from prior period claim reductions. The commercial casualty program
continues to experience competition and continued soft market conditions
especially for its trucking business. As a result, the Company changed its
pricing strategy for its trucking business by following an actuarial based
model which relates premiums more closely with expected costs and average
expenses. The Company had approximately $210,000 in net reserve reductions
including loss adjustment expense reserves in the first quarter 1997, which
reflect current actuarial indications of the ultimate cost of future claims
settlements. All of the decreases were for claims occurring in prior accident
years.
Expenses, which consist of net service fees, commissions, general and
administrative expenses, including the claim adjusting and corporate
operations, were 48% and 54% of net written premiums for the first three
months of 1997 and 1996, respectively. The following table shows the
components of net service fees and commissions:
THREE MONTHS ENDED
MARCH 31
1997 1996
- ----------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
Salary and general expense $ 4,202 $ 3,791
Commissions, fronting, and taxes expense 5,203 6,195
Ceding commission income (2,858) (1,090)
Change in deferred acquisition costs (1,109) (1,161)
------- -------
$ 5,438 $ 7,735
------- -------
------- -------
Commissions, fronting, and taxes expense was 26.4% of direct premiums
written in 1996 compared to 33.1% in 1995 due to the decrease in commercial
casualty business. Ceding commission income was 33.8% of reinsurance
purchased for the first three months of 1997 compared to 25.3% for the same
period of 1996 due to increased ceded premiums in the commercial casualty
area.
General and administrative expenses charged to operations increased by
$411,000 or 11%, and were 21.3% of direct premiums written for the first
three months of 1997 compared to 20.7% in the same period of 1996. The
increase is related to severance due to reorganization and bonus accrual
charge in the first quarter of 1997.
CLAIM ADJUSTING OPERATIONS. Decreased claim adjusting fees of $2,197,000
along with decreased claim adjusting commissions of $1,298,000 resulted
primarily from decreased catastrophe and storm activity in the first quarter
of 1997.
INVESTMENT INCOME. Net interest income decreased by $349,000 or 20%, due to
lower yields on reduced investment balances and negative cash flow from
operations for the first three months of 1997. Net realized investment gains
decreased by $81,000 during the first three months of 1997 versus 1996.
The effect of inflation on net income was not significant to the Company's
results during this period.
11
<PAGE>
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Not applicable.
Item 2. CHANGES IN SECURITIES
Not applicable.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
1. At the Company's Annual Meeting of Shareholders held on May 9,
1997, the following individuals were elected to the Board of Directors:
VOTES FOR VOTES WITHHELD
Jeffry K. Amsbaugh 3,429,952 1,312
Robert C. Duvall 3,429,913 1,351
Gregory E. Leonard 3,430,052 1,212
Thomas J. O'Shane 3,430,052 1,212
Roger T. Rankin 3,429,913 1,351
Robert B. Sanborn 3,430,052 1,212
AFFIRMATIVE NEGATIVE VOTES
VOTES VOTES WITHHELD
----- ---- --------
2.Approval of the employment of KPMG
Peat Marwick as independent auditors for
the fiscal year ended December 31, 1997. 3,400,064 30,600 600
12
<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
NOBEL INSURANCE LIMITED
/s/ Jeffry K. Amsbaugh /s/ Thomas D. Nimmo
- -------------------------------- -----------------------------------
Jeffry K. Amsbaugh Thomas D. Nimmo
Chief Executive Officer Senior Vice President and Treasurer
May 14, 1997
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<DEBT-HELD-FOR-SALE> 97,515
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 8,713
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 120,036
<CASH> 14,346
<RECOVER-REINSURE> 28,386
<DEFERRED-ACQUISITION> 1,809
<TOTAL-ASSETS> 214,885
<POLICY-LOSSES> 83,708
<UNEARNED-PREMIUMS> 38,705
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 4,551
0
0
<COMMON> 7,793
<OTHER-SE> 44,513
<TOTAL-LIABILITY-AND-EQUITY> 214,885
8,638
<INVESTMENT-INCOME> 1,329
<INVESTMENT-GAINS> 131
<OTHER-INCOME> 1,360
<BENEFITS> 4,162
<UNDERWRITING-AMORTIZATION> 1,236
<UNDERWRITING-OTHER> 4,202
<INCOME-PRETAX> 1,858
<INCOME-TAX> 648
<INCOME-CONTINUING> 1,210
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,210
<EPS-PRIMARY> .26
<EPS-DILUTED> 0
<RESERVE-OPEN> 88,397
<PROVISION-CURRENT> 3,629
<PROVISION-PRIOR> (8,819)
<PAYMENTS-CURRENT> 743
<PAYMENTS-PRIOR> 8,609
<RESERVE-CLOSE> 83,708
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
