<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO 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
--------------- --------------------
Commission file number 0-3658
------
THE FIRST AMERICAN FINANCIAL CORPORATION
---------- -------------------------------------------
(Exact name of registrant as specified in its charter)
Incorporated in California 95-1068610
- ------------------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
114 East Fifth Street, Santa Ana, California 92701-4699
- -------------------------------------------- ----------------------
(Address of principal executive offices) (Zip Code)
(714)558-3211
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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
---- ----
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports to be filed by Section 12,13 or 15(d) of the Securities Exchange Act of
1934 subsequent to the distribution of securities under a plan confirmed by a
court.
Yes No
---- ----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
$1 par value - 11,412,069 as of November 7, 1995
<PAGE>
INFORMATION INCLUDED IN REPORT
------------------------------
Part I: Financial Information
Item 1. Financial Statements
A. Condensed Consolidated Statements of Income
B. Condensed Consolidated Balance Sheets
C. Condensed Consolidated Statements of Cash Flows
D. Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Part II: Other Information
Item 6. Exhibits and Reports on Form 8-K
Items 1 - 5 have been omitted because they are not applicable with
respect to the current reporting period.
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.
THE FIRST AMERICAN FINANCIAL CORPORATION
----------------------------------------
(Registrant)
/s/ Thomas A. Klemens
----------------------------------------
Thomas A. Klemens
Vice President, Chief Financial Officer
(Principal Financial Officer and Duly
Authorized to Sign on Behalf of
Registrant)
Date: November 10, 1995
1
<PAGE>
Part I: Financial Information
---------------------
Item 1. Financial Statements
--------------------
THE FIRST AMERICAN FINANCIAL CORPORATION
AND SUBSIDIARY COMPANIES
------------------------
Condensed Consolidated Statements of Income
-------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30 September 30
----------------------------------- -----------------------------------
1995 1994 1995 1994
------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
Revenues
Operating revenues $ 326,355,000 $ 329,802,000 $ 869,391,000 $1,062,537,000
Investment and other income 4,973,000 5,068,000 16,331,000 13,780,000
------------- ------------- -------------- --------------
331,328,000 334,870,000 885,722,000 1,076,317,000
------------- ------------- -------------- --------------
Expenses
Salaries and other personnel costs 110,860,000 102,311,000 314,597,000 322,309,000
Premiums retained by agents 104,502,000 131,292,000 289,149,000 420,984,000
Other operating expenses 66,031,000 55,945,000 189,297,000 173,591,000
Provision for title losses and other claims 23,405,000 27,232,000 67,130,000 88,830,000
Depreciation and amortization 4,736,000 5,238,000 13,531,000 14,846,000
Interest 1,570,000 1,430,000 4,822,000 4,405,000
Minority interests 863,000 719,000 1,406,000 2,521,000
------------- ------------- -------------- --------------
311,967,000 324,167,000 879,932,000 1,027,486,000
------------- ------------- -------------- --------------
Income before premium and income taxes 19,361,000 10,703,000 5,790,000 48,831,000
Premium taxes 3,841,000 3,613,000 9,942,000 11,809,000
------------- ------------- -------------- --------------
Income (loss) before income taxes 15,520,000 7,090,000 (4,152,000) 37,022,000
Income taxes 6,200,000 2,300,000 (1,900,000) 15,200,000
------------- ------------- -------------- --------------
Net income (loss) $ 9,320,000 $ 4,790,000 $ (2,252,000) $ 21,822,000
============= ============= ============== ==============
Net income (loss) per share $ .81 $ .42 $ (.20) $ 1.91
============= ============= ============== ==============
Cash dividends per share $ .15 $ .15 $ .45 $ .45
============= ============= ============== ==============
Weighted average number of shares 11,394,000 11,464,000 11,405,000 11,453,000
============= ============= ============== ==============
</TABLE>
2
<PAGE>
THE FIRST AMERICAN FINANCIAL CORPORATION
AND SUBSIDIARY COMPANIES
------------------------
Condensed Consolidated Balance Sheets
-------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
September 30, 1995 December 31, 1994
------------------ -----------------
<S> <C> <C>
Assets
Cash and cash equivalents $127,334,000 $154,234,000
------------------ -----------------
Accounts and accrued income receivable, net 70,604,000 47,103,000
------------------ -----------------
Income tax receivable 4,869,000 7,324,000
------------------ -----------------
Investments:
Deposits with savings and loan associations
and banks 18,796,000 18,538,000
Debt securities 133,170,000 149,190,000
Equity securities 20,390,000 21,813,000
Other long-term investments 26,211,000 25,224,000
------------------ -----------------
198,567,000 214,765,000
------------------ -----------------
Loans receivable, net 44,805,000 40,546,000
------------------ -----------------
Property and equipment, at cost 188,999,000 175,214,000
Less - accumulated depreciation (71,703,000) (64,659,000)
------------------ -----------------
117,296,000 110,555,000
------------------ -----------------
Title plants and other indexes 79,281,000 54,781,000
------------------ -----------------
Assets acquired in connection with claim
settlements (net of valuation reserves of
$11,369,000 and $12,354,000) 26,347,000 27,223,000
------------------ -----------------
Deferred income taxes 42,174,000 43,726,000
------------------ -----------------
Goodwill and other intangibles, net 70,935,000 61,322,000
------------------ -----------------
Deferred policy acquisition costs 24,881,000 26,060,000
------------------ -----------------
Other assets 45,466,000 41,010,000
------------------ -----------------
$852,559,000 $828,649,000
================== =================
Liabilities and Stockholders' Equity
Demand deposits $ 40,830,000 $ 38,695,000
------------------ -----------------
Accounts payable and accrued liabilities 72,694,000 60,806,000
------------------ -----------------
Deferred revenue 105,651,000 117,828,000
------------------ -----------------
Reserve for known and incurred but not reported
claims 233,225,000 206,743,000
------------------ -----------------
Notes and contracts payable 83,366,000 89,600,000
------------------ -----------------
Minority interests in consolidated subsidiaries 23,850,000 22,867,000
------------------ -----------------
Stockholders' equity:
Preferred stock, $1 par value
Authorized - 500,000 shares;
Outstanding - None
Common stock, $1 par value
Authorized - 24,000,000 shares
Outstanding - 11,428,000 and 11,395,000
shares 11,428,000 11,395,000
Additional paid-in capital 44,358,000 44,013,000
Retained earnings 234,966,000 242,356,000
Net unrealized gain (loss) on securities 2,191,000 (5,654,000)
------------------ -----------------
292,943,000 292,110,000
------------------ -----------------
$852,559,000 $828,649,000
================== =================
</TABLE>
3
<PAGE>
THE FIRST AMERICAN FINANCIAL CORPORATION
AND SUBSIDIARY COMPANIES
------------------------
Condensed Consolidated Statements of Cash Flows
-----------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30
--------------------------------
1995 1994
------------ ----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (2,252,000) $ 21,822,000
Adjustments to reconcile net income (loss) to cash
provided by operating activities-
Provision for title losses and other claims 67,130,000 88,830,000
Depreciation and amortization 13,531,000 14,846,000
Minority interests in net income 1,406,000 2,521,000
Other, net 1,444,000 1,413,000
Changes in assets and liabilities excluding effects of
company acquisitions and noncash transactions-
Claims paid, including assets acquired,
net of recoveries (49,073,000) (68,221,000)
Net change in income tax accounts 1,837,000 (16,391,000)
(Increase) decrease in accounts and accrued
income receivable (18,586,000) 12,669,000
Increase (decrease) in accounts payable and
accrued liabilities 6,058,000 (6,280,000)
(Decrease) increase in deferred revenue (12,252,000) 11,053,000
Other, net (2,297,000) (9,866,000)
------------ ------------
Cash provided by operating activities 6,946,000 52,396,000
------------ ------------
Cash flows from investing activities:
Net cash effect of company acquisitions (31,336,000) (9,145,000)
Net decrease in deposits with banks 742,000 3,189,000
Net increase in loans receivable (4,259,000) (7,998,000)
Purchases of debt and equity securities (13,203,000) (75,356,000)
Proceeds from sales of debt and equity securities 34,972,000 31,467,000
Proceeds from maturities of debt securities 13,038,000 33,105,000
Net decrease (increase) in other investments 524,000 (2,830,000)
Capital expenditures (16,748,000) (28,695,000)
Proceeds from sale of property and equipment 384,000 673,000
------------ ------------
Cash used for investing activities (15,886,000) (55,590,000)
------------ ------------
Cash flows from financing activities:
Net change in demand deposits 2,135,000 5,767,000
Repayment of debt (13,099,000) (10,433,000)
Purchase of Company shares (1,858,000) (2,091,000)
Cash dividends (5,138,000) (5,159,000)
------------ ------------
Cash used for financing activities (17,960,000) (11,916,000)
------------ ------------
Net decrease in cash and cash equivalents (26,900,000) (15,110,000)
Cash and cash equivalents - Beginning of year 154,234,000 130,298,000
------------ ------------
- End of third quarter $127,334,000 $115,188,000
============ ============
Supplemental information:
Cash paid during the first nine months for:
Interest $ 4,552,000 $ 4,253,000
Premium taxes $ 11,241,000 $ 15,122,000
Income taxes $ 3,597,000 $ 35,381,000
Noncash investing and financing activities:
Shares issued for stock bonus plan $ 1,128,000 $ 1,910,000
Liabilities incurred in connection with company
acquisitions $ 20,021,000 $ 12,649,000
Net unrealized gain (loss) on securities $ 7,845,000 $ (5,098,000)
Company acquisitions in exchange for common stock $ 1,108,000 $ 2,284,000
Debt incurred in connection with the purchase
of real property $ 3,750,000
Debt incurred in connection with the purchase
of other investments $ 2,900,000
Increase in equity due to reduction of
long-term debt of ESOT $ 1,949,000
</TABLE>
4
<PAGE>
THE FIRST AMERICAN FINANCIAL CORPORATION
AND SUBSIDIARY COMPANIES
------------------------
Notes to Condensed Consolidated Financial Statements
----------------------------------------------------
(Unaudited)
Note 1 - Basis of Condensed Consolidated Financial Statements
-------------------------------------------------------------
The condensed consolidated financial information included in this report has
been prepared in conformity with the accounting principles and practices
reflected in the consolidated financial statements included in the annual
report filed with the Commission for the preceding calendar year. All
adjustments are of a normal recurring nature and are, in the opinion of
management, necessary to a fair statement of the consolidated results for the
interim periods. Certain 1994 interim amounts have been reclassified to
conform with the 1995 interim presentation. This report should be read in
conjunction with the Company's 1994 Annual Report to Stockholders and the
Company's Annual Report on Form 10-K for the year ended December 31, 1994.
Note 2 - Acquisitions
---------------------
On January 3, 1995, the Company completed the acquisitions of Credco, Inc., a
national mortgage credit reporting company and Flood Data Services, Inc.
("FDSI"), a nationwide flood certification firm, for a combined purchase price
of $32 million in cash and notes.
These acquisitions have been accounted for by the purchase method of
accounting and, accordingly, the purchase price of each has been allocated to
their respective assets acquired and liabilities assumed based on estimated
fair values at the date of acquisition. The excess purchase price of $5.5
million over the estimated fair value of the net assets of Credco, Inc. has
been recorded as goodwill and is being amortized over a 40-year period. The
primary asset of FDSI is an index of maps and other records with a fair value
of $21.0 million which provides information as to whether or not a property is
in a governmentally delineated Special Flood Hazard Area. Since this properly
maintained index has an indefinite life and will not diminish in value with
the passage of time, no provision will be made for depreciation. Accordingly,
this index has been included with title plants in the Company's Condensed
Consolidated Balance Sheet at September 30, 1995.
5
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations
---------------------
RESULTS OF OPERATIONS
Three and nine months ended September 30:
OVERVIEW
Beginning in the second quarter 1994, increased mortgage interest rates caused
a downward trend in new title orders and closings as refinance transactions
came to a virtual halt. Due to seasonal considerations, this condition
intensified at yearend 1994 resulting in a low inventory of new title orders
going into the first quarter 1995. As a result, the Company reported a first
quarter 1995 net loss. During the second quarter 1995, lower interest rates
and an improved real estate economy resulted in a return to profitability for
the Company. These conditions continued into the third quarter 1995 and
remained the primary factors contributing to increased profits in the current
quarter as compared with the same quarter of the prior year. Net income for
the current quarter increased to $9.3 million, or $0.81 per share, compared
with net income of $4.8 million, or $0.42 per share, for the same period of
the prior year. Title orders increased to 244,200 orders opened and 185,000
orders closed, increases of 20% and 12%, respectively, when compared with the
same periods of the prior year. The Company is currently experiencing a
seasonal reduction in new title orders. Despite this downturn, the Company is
anticipating a profitable fourth quarter 1995 leading into traditionally
slower first quarter 1996 business.
OPERATING REVENUES
Set forth below is a summary of operating revenues for each of the Company's
segments.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
--------------------------------------- ------------------------------------------
($000) ($000)
1995 % 1994 % 1995 % 1994 %
-------- --- -------- --- -------- --- ---------- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Title Insurance:
Direct operations $143,718 44 $133,825 41 $374,377 43 $ 438,882 41
Agency operations 130,707 40 163,108 49 362,129 42 518,948 49
-------- --- -------- --- -------- --- ---------- ---
274,425 84 296,933 90 736,506 85 957,830 90
Real Estate Information 39,826 12 22,444 7 98,806 11 75,546 7
Home Warranty 8,575 3 7,548 2 23,794 3 20,572 2
Trust and Banking 3,529 1 2,877 1 10,285 1 8,589 1
-------- --- -------- --- -------- --- ---------- ---
Total $326,355 100 $329,802 100 $869,391 100 $1,062,537 100
======== === ======== === ======== === ========== ===
</TABLE>
TITLE INSURANCE. Operating revenues from direct title operations increased
7.4% and decreased 14.7% for the three and nine months ended September 30,
1995, respectively, when compared with the same periods of the prior year.
The increase for the current three month period was primarily attributable to
the increase in the number of title orders closed by the Company's direct
operations, partially offset by a decline in the average revenues per order
closed. Average revenues per closing were $777 for the current quarter, as
compared with $810 for the same period of the prior year. This decrease was
primarily due to a higher than usual average revenue per closing for the prior
year period attributable to the significant decline in lower margin refinance
business. In addition, the average revenues for the current quarter were
negatively impacted by a reduction (primarily in California) in the average
value of an insured transaction. The decrease in operating revenues for the
nine month period was primarily due to the lower year-to-date number of title
orders closed by the Company's direct operations. The Company's direct
operations closed 486,100 title orders during the nine month period ended
September 30, 1995, a decrease of 15.0% when compared with same period of the
prior year.
Operating revenues from agency operations decreased 19.9% and 30.2% for the
three and nine months ended September 30, 1995, respectively, when compared
with the same periods of the prior year. These decreases were primarily due
to the same factors affecting direct operations, compounded by the inherent
delay in reporting by agents.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations (continued)
---------------------------------
REAL ESTATE INFORMATION. Real estate information operating revenues increased
77.4% and 30.8% for the three and nine months ended September 30, 1995,
respectively, when compared with same periods of the prior year. These
increases were primarily attributable to $18.3 million and $41.5 million of
operating revenues contributed by new acquisitions for the respective periods,
partially offset by the same economic factors affecting title insurance
mentioned above.
HOME WARRANTY. Home warranty operating revenues increased 13.6% and 15.7% for
the three and nine months ended September 30, 1995, respectively, when
compared with the same periods of the prior year. These increases were
primarily due to improvements in certain of the residential resale markets in
which this business operates, an increase in renewals and successful
geographic expansion.
INVESTMENT AND OTHER INCOME
Investment and other income decreased 1.9% and increased 18.5% for the three
and nine months ended September 30, 1995, respectively, when compared with the
same periods of the prior year. The decrease for the current three month
period was primarily attributable to a 17.7% reduction in the average
investment portfolio balance, offset in part by a 0.4% increase in investment
income yields, as well as an increase in equity in earnings of affiliates and
gains on the sale of certain investments. The increase for the current nine
month period was due primarily to $0.7 million fire insurance recovery, gains
on the sale of certain investments and first quarter 1994 capital losses of
$0.4 million.
TOTAL OPERATING EXPENSES
TITLE INSURANCE. Title insurance salaries and other personnel costs were
$90.1 million and $256.6 million for the three and nine months ended September
30, 1995, respectively, representing an increase of 1.0% and a decrease of
9.0% when compared with the same periods of the prior year. The slight
increase for the current quarter was primarily attributable to personnel
expenses incurred processing the increase in title order volume, offset in
part by personnel efficiencies. The decrease for the current nine month
period reflected personnel reductions that commenced during the beginning of
the second quarter 1994, resulting in a 12.3% reduction in the average number
of title employees for the current nine month period when compared with the
same period of the prior year, offset in part by modest salary increases.
Agents retained $104.5 million and $289.1 million of title premiums generated
by agency operations for the three and nine months ended September 30, 1995,
respectively, which compared with $131.3 million and $421.0 million for the
same periods of the prior year. The percentage of title premiums retained by
agents ranged from 79.8% to 81.1% due to regional variances (i.e., the agency
share varies from region to region and thus the geographical mix of agency
revenues accounts for this variation).
Other operating expenses were $47.7 million and $136.1 million for the three
and nine months ended September 30, 1995, respectively, an increase of 8.8%
and a decrease of 1.7% when compared with the same periods of the prior year.
The increase for the current year quarter was primarily due to the incremental
costs associated with processing the increase in order volume, as well as
general price level increases, offset in part by successful cost containment
programs. The decrease for the nine month period reflected the 3.5% reduction
in the year-to-date number of open orders, offset in part by general price
level increases.
The provision for title losses as a percentage of title insurance operating
revenues was 6.9% for the nine months ended September 30, 1995, and 7.9% for
the comparable period of the prior year. This decrease was primarily
attributable to a reduction in the Company's loss experience rate as well as a
decrease in major claims activity.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations (continued)
---------------------------------
REAL ESTATE INFORMATION. Real estate information personnel and other
operating expenses were $31.1 million and $86.4 million for the three and nine
months ended September 30, 1995, respectively, increases of 64.6% and 57.2%
when compared with same periods of the prior year. These increases were
primarily due to $12.3 million and $29.4 million of personnel and other
operating expenses for the three and nine months ended September 30, 1995,
respectively, attributable to company acquisitions, as well as increased costs
associated with developing the Company's electronic communications delivery
system to better service customers, partially offset by successful cost
containment programs.
HOME WARRANTY. Home warranty personnel and other operating expenses were $2.3
million and $7.1 million for the three and nine months ended September 30,
1995, respectively. The current three month period remained relatively
constant and the current nine month period increased 9.6% when compared with
the same periods of the prior year, primarily as the result of costs incurred
servicing the increase in business volume, as well as geographic expansion,
offset in part by successful cost containment programs. The provision for
home warranty losses expressed as a percentage of home warranty operating
revenues was 58.9% and 55.4% for the nine months ended September 30, 1995 and
1994, respectively. The increase in loss ratio was primarily due to an
increase in the average number of claims per contract.
PRETAX PROFITS
Set forth below is a summary of pretax profits for each of the Company's
segments.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
--------------------------------------------- -------------------------------------------
($000) ($000)
1995 % 1994 % 1995 % 1994 %
---------- --- ----------- --- --------- --- ---------- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Title Insurance $ 14,786 60 $ 9,441 67 $ 6,749 32 $ 37,209 61
Real Estate Information 7,398 30 2,755 19 7,542 35 17,735 29
Home Warranty 1,528 6 1,413 10 4,700 22 4,642 7
Trust and Banking 861 4 571 4 2,332 11 1,789 3
---------- --- ----------- --- --------- --- ---------- ---
Total before corporate 24,573 100 14,180 100 21,323 100 61,375 100
=== === === ===
Corporate 5,212 3,477 15,533 12,544
---------- ----------- --------- ----------
Total $ 19,361 $ 10,703 $ 5,790 $ 48,831
========== =========== ========= ==========
</TABLE>
In general, the title insurance business is a lower profit margin business
when compared to the Company's other segments. The lower profit margins
reflect the high fixed cost of producing title evidence whereas the
corresponding revenues are subject to regulatory and competitive pricing
restraints. Due to this relatively high proportion of fixed costs, title
insurance profit margins generally improve as closed order volumes increase.
In addition, title insurance profit margins are affected by the composition
(residential or commercial) and type (resale, refinancing or new construction)
of real estate activity. Profit margins from resale and new construction
transactions are generally higher than from refinancing transactions, and
profit margins from commercial transactions are generally higher than from
residential transactions. Title insurance profit margins are also affected by
the percentage of operating revenues generated by agency operations. Profit
margins from direct operations are generally higher than from agency
operations due primarily to the large portion of the premium that is retained
by the agent.
PREMIUM TAXES
Premium taxes for the nine months ended September 30, 1995, were $9.9 million,
as compared with $11.8 million for the same period of the prior year. Premium
taxes as a percentage of title insurance operating revenues remained
relatively constant.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations (continued)
---------------------------------
INCOME TAX
The effective income tax rate for the nine months ended September 30, 1995,
and for the comparable period of the prior year was 45.8% and 41.1%,
respectively. The increase in effective rate was primarily attributable to
changes in the ratio of permanent differences to income before taxes.
NET INCOME
Net income (loss) for the three and nine months ended September 30, 1995, was
$9.3 million, or $0.81 per share, and $(2.3) million, or $(0.20) per share,
respectively. Net income for the three and nine months ended September 30,
1994, was $4.8 million, or $0.42 per share, and $21.8 million, or $1.91 per
share.
LIQUIDITY AND CAPITAL RESOURCES
Total cash and cash equivalents decreased $26.9 million and $15.1 million for
the nine months ended September 30, 1995 and 1994, respectively. The decrease
for the current year period was primarily due to acquisition activity,
purchases of debt and equity securities, capital expenditures and the
repayment of debt, partially offset by proceeds from the sale and maturity of
certain debt and equity securities. The decrease for the prior year period
was primarily attributable to purchases of debt and equity securities, capital
expenditures and the repayment of debt, offset in part by proceeds from the
sale and maturity of certain debt and equity securities and cash provided by
operating activities.
Notes and contracts payable as a percentage of total capitalization decreased
to 20.8% at September 30, 1995, from 22.1% at December 31, 1994. This
decrease was primarily due to a $6.2 million net reduction in notes and
contracts payable.
Management believes that all of its anticipated cash requirements for the
immediate future will be met from internally generated funds.
9
<PAGE>
Part II: Other Information
-----------------
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
(27) Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarterly period
covered by this report.
10
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
(27) Financial Data Schedule
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1994 DEC-31-1994
<PERIOD-START> JUL-01-1995 JAN-01-1995
<PERIOD-END> SEP-30-1995 SEP-30-1995
<DEBT-HELD-FOR-SALE> 133,170,000 0
<DEBT-CARRYING-VALUE> 0 0
<DEBT-MARKET-VALUE> 0 0
<EQUITIES> 20,390,000 0
<MORTGAGE> 0 0
<REAL-ESTATE> 0 0
<TOTAL-INVEST> 198,567,000 0
<CASH> 127,334,000 0
<RECOVER-REINSURE> 0 0
<DEFERRED-ACQUISITION> 24,881,000 0
<TOTAL-ASSETS> 852,559,000 0
<POLICY-LOSSES> 233,225,000 0
<UNEARNED-PREMIUMS> 0 0
<POLICY-OTHER> 0 0
<POLICY-HOLDER-FUNDS> 0 0
<NOTES-PAYABLE> 83,366,000 0
<COMMON> 11,428,000 0
0 0
0 0
<OTHER-SE> 281,515,000 0
<TOTAL-LIABILITY-AND-EQUITY> 852,559,000 0
326,355,000 869,391,000
<INVESTMENT-INCOME> 4,973,000 16,331,000
<INVESTMENT-GAINS> 0 0
<OTHER-INCOME> 0 0
<BENEFITS> 23,405,000 67,130,000
<UNDERWRITING-AMORTIZATION> 0 0
<UNDERWRITING-OTHER> 0 0
<INCOME-PRETAX> 15,520,000 (4,152,000)
<INCOME-TAX> 6,200,000 (1,900,000)
<INCOME-CONTINUING> 9,320,000 (2,252,000)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 9,320,000 (2,252,000)
<EPS-PRIMARY> 0.81 (0.20)
<EPS-DILUTED> 0 0
<RESERVE-OPEN> 0 0
<PROVISION-CURRENT> 0 0
<PROVISION-PRIOR> 0 0
<PAYMENTS-CURRENT> 0 0
<PAYMENTS-PRIOR> 0 0
<RESERVE-CLOSE> 0 0
<CUMULATIVE-DEFICIENCY> 0 0
</TABLE>
