<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
/x/ QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1995
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT
For the transition period from ____________ to ____________
Commission file number 0-6869
Fortune National Corporation
(Exact name of small business issuer as specified in its charter)
State of Incorporation: IRS Employer Id.:
Pennsylvania 25-1229620
Address of Principal Executive Office:
10555 Richmond Avenue
Houston, Texas 77042
Issuer's telephone number: (713) 974-2242
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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.
[x] Yes / / 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 NOVEMBER 9, 1995
----- -------------------------------
Common Stock, Par Value $1.00 2,616,984
This Form 10-QSB contains a total of 14 pages, including any exhibits.
<PAGE>
FORTUNE NATIONAL CORPORATION AND SUBSIDIARIES
FORM 10-QSB
INDEX
<TABLE>
<CAPTION>
Page No.
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<S> <C>
Part I. Financial Information:
Item 1. Financial Statements
Condensed Consolidated Balance
Sheet - September 30, 1995 (Unaudited) 3
Condensed Consolidated Statements of
Operations - Nine Months Ended
September 30, 1995 and 1994 (Unaudited) 5
Condensed Consolidated Statements of
Operations - Three Months Ended
September 30, 1995 and 1994 (Unaudited) 6
Condensed Consolidated Statements of
Cash Flows - Nine Months Ended
September 30, 1995 and 1994 (Unaudited) 7
Notes to Condensed Consolidated
Financial Statements (Unaudited) 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 10
Part II. Other Information:
Item 6. Exhibit 27-Financial Data Schedule 14
</TABLE>
2
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PART I. ITEM 1. FINANCIAL INFORMATION
FORTUNE NATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1995
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments:
Fixed maturities available for sale $29,746,651
Equity securities (at market) 11,699
Mortgage loans 755,053
Real estate 1,946,644
Policy loans 6,723,699
Short-term investments 924,619
-----------
Total investments 40,108,365
Accrued investment income 481,882
Reinsurance receivable 33,810,993
Accounts receivable (less allowance
for uncollectible accounts of
$82,868) 116,424
Deferred policy acquisition costs 1,810,190
Property and equipment
(less accumulated depreciation of
$534,272) 74,374
Costs in excess of net assets of
acquired business (less accumulated
amortization of $1,599,237) 3,184,690
Other assets 1,136,289
-----------
$80,723,207
===========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
<TABLE>
<S> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Policy liabilities:
Future policy benefits $65,048,981
Contract claims 736,520
-----------
65,785,501
Other policyholders' funds 1,740,804
Other liabilities 869,094
Federal income tax payable:
Current 260,076
Deferred 970,106
Deferred gain on reinsurance 2,149,199
Note payable 1,375,000
-----------
Total liabilities 73,149,780
-----------
Minority interest 1,765,006
-----------
Preferred stock of subsidiary 1,850,000
-----------
STOCKHOLDERS' EQUITY:
Common stock, par value $1 per share,
authorized 4,000,000 shares,
issued 2,804,445 shares 2,804,445
Additional paid-in capital 5,136,435
Accumulated deficit (4,384,579)
Treasury stock, at cost, 187,461 shares (147,465)
Net unrealized investment gains, net of
taxes of $377,268 549,585
-----------
Total stockholders' equity 3,958,421
----------
$80,723,207
===========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
FORTUNE NATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
------------ ----------
<S> <C> <C>
REVENUES:
Premiums and other considerations $1,284,056 586,817
Net investment income 1,083,647 1,055,381
Net realized investment gains 146,954 1,467,244
Reinsurance expense allowance 1,441,974 1,230,759
Amortization of deferred gain (loss)
on reinsurance 208,519 (80,934)
Other income 77,577 36,258
---------- ---------
Total revenues 4,242,727 4,295,525
---------- ---------
BENEFITS AND EXPENSES:
Death benefits 456,355 190,441
Other benefits 991,115 637,561
Commissions and general expenses 2,012,519 1,467,133
Interest expense 137,822 16,742
Amortization of deferred policy
acquisition costs 84,665 33,457
Amortization of costs in excess of net
acquired business 160,159 133,891
---------- ---------
Total benefits and expenses 3,842,635 2,479,225
---------- ---------
Income before federal income tax
expense (benefit) and minority
interest in earnings of subsidiary 400,092 1,816,300
Federal income tax expense (benefit):
Current 987,803 283,970
Deferred (616,006) 213,880
---------- ---------
Income before minority interest
in earnings of subsidiary 28,295 1,318,450
Preferred dividends of subsidiary 95,705 72,888
Minority interest in earnings of
subsidiary (39,485) (508,793)
---------- ---------
Net income (loss) $ (106,895) 736,769
========== =========
Net income (loss) per common share: $(.04) .28
========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
FORTUNE NATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
----------- ----------
<S> <C> <C>
REVENUES:
Premiums and other considerations $ 293,311 254,739
Net investment income 343,738 481,531
Net realized investment gains 141,095 1,435,545
Reinsurance expense allowance 470,702 419,212
Amortization of deferred gain (loss)
on reinsurance 25,275 (27,692)
Other income 19,584 2,565
---------- ---------
Total revenues 1,293,705 2,565,900
---------- ---------
BENEFITS AND EXPENSES:
Death benefits 248,217 147,129
Other benefits 78,422 200,306
Commissions and general expenses 609,962 508,863
Interest expense 36,399 16,742
Amortization of deferred policy
acquisition costs 27,926 14,254
Amortization of costs in excess of
net acquired business 53,385 49,694
---------- ---------
Total benefits and expenses 1,054,311 936,988
---------- ---------
Income before federal income tax expense
(benefit) and minority interest in
(earnings) losses of subsidiary 239,394 1,628,912
Federal income tax expense (benefit):
Current (31,061) 234,444
Deferred 422,013 (12,896)
---------- ---------
Income (loss) before minority interest
in (earnings) losses of subsidiary (151,558) 1,407,364
Preferred dividends of subsidiary 32,393 25,771
Minority interest in (earnings) losses
of subsidiary 45,734 (521,213)
---------- ---------
Net income (loss) $ (138,217) 860,380
========== =========
Net income (loss) per common share: $(.05) .33
========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
FORTUNE NATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
INCREASE (DECREASE) IN CASH (UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) from operations $ (106,895) 736,769
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 64,321 370,785
Realized gains on sales of investments (146,954) (1,467,244)
Deferred federal income tax expense
(benefit) (616,006) 213,880
Increase (decrease) in accrued investment
income 107,567 (5,700)
Decrease in reinsurance receivable 923,818 742,074
Decrease (increase) in accounts receivable (94,319) 5,875
Decrease (increase) in other assets (168,915) 490,459
Increase in future policy benefits 229,304 39,376
Increase (decrease) in contract claims 54,933 (142,366)
Increase (decrease) in other
policyholders' funds 57,803 (12,855)
Increase (decrease) in other liabilities (27,857) 283,780
Increase (decrease) in minority interest (15,118) 467,206
----------- -----------
Net cash provided by operating activities 261,682 1,722,039
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of investments and
principal repayments on mortgage loans 2,515,710 4,097,085
Purchases of investments (5,959,178) (10,769,098)
Net decrease in policy loans 228,914 141,585
Net decrease in short-term investments 12,208,451 6,262,740
Purchases of property and equipment (24,746) (14,497)
Purchase of subsidiary, net of cash
acquired (1,952,300) 564,355
----------- -----------
Net cash provided by investing activities 7,016,851 282,170
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of note payable 1,500,000 --
Principal payments on notes payable (8,425,000) --
Deposits on policy contracts 1,015,983 754,624
Withdrawals from policy contracts (1,754,802) (1,329,221)
----------- -----------
Net cash used in financing activities (7,663,819) (574,597)
----------- -----------
Net increase (decrease) in cash (385,286) 1,429,612
Cash at beginning of period 385,286 62,564
----------- -----------
Cash at end of period $ -- 1,492,176
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE>
FORTUNE NATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated balance sheet as of September 30, 1995 and the
condensed consolidated statements of operations and cash flows for the three and
nine month periods ended September 30, 1995 and 1994, have been prepared by
Fortune National Corporation (the "Company"), without audit. In the opinion of
management, all adjustments (which, except as may be noted below, include only
normal recurring adjustments) necessary to present fairly the financial
position, results of operations, and changes in cash flows at September 30, 1995
and for all periods presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these condensed
consolidated financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's December 31, 1994 Annual
Report to Stockholders. The results of operations for the three and nine month
periods ended September 30, 1995 and 1994 are not necessarily indicative of the
operating results for the full year.
2. EARNINGS PER SHARE
Earnings per common share is computed by dividing net income (loss) by the
weighted average number of shares of common stock outstanding (2,616,984 at
September 30, 1995 and September 30, 1994).
3. STOCKHOLDERS' EQUITY
During the nine months ended September 30, 1995, stockholders' equity changed
for the following items: increase in net unrealized investment gains of
$1,069,612; and net loss of $106,895.
4. ACQUISITIONS
On February 2, 1995, the Company acquired 100% of the common stock of Oakley-
Metcalf Insurance Company ("Oakley-Metcalf"), a Texas-domiciled life insurance
company. The consideration paid for the stock of Oakley-Metcalf was cash in the
amount of $2,559,516. Concurrent with the acquisition of Oakley-Metcalf, the
Company fully reinsured all of Oakley-Metcalf's policies (approximately 3,000
policies) with an unaffiliated life insurance company. The obligations of this
reinsurer under the related reinsurance agreement are secured by a trust
containing a $450,000 letter of credit. In connection with the reinsurance
agreement, Oakley-Metcalf transferred assets of $560,683 and liabilities of
$653,006 and recognized a deferred gain on reinsurance of $92,323.
8
<PAGE>
FORTUNE NATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
5. NOTE PAYABLE
On January 31, 1995, as a source of funds to repay the $5 million surplus
debenture issued in connection with the acquisition of Family Life Insurance
Company ("Family"), the Company's subsidiary, Acap Corporation ("Acap") borrowed
$1.5 million from Central National Bank of Waco, Texas. The note is renewable
by the bank each April 30 until fully repaid. The note bears interest at a rate
equal to the base rate of a bank plus 1%. Principal payments on the note of
$62,500 are due quarterly beginning April 30, 1995. The note is secured by the
Company's pledge of all the outstanding shares of Acap's subsidiary, American
Capitol Insurance Company ("American Capitol"). The loan agreement contains
certain restrictions and financial covenants. Without the written consent of
the bank, Acap may not incur any debt, pay common stock dividends or sell any
substantial amounts of assets. Also, American Capitol is subject to minimum
statutory earnings and capital and surplus requirements during the loan term.
6. REINSURANCE
On January 4, 1995, Family increased the amount of reinsurance on each of its
life policies in force from 20% to 100%. The Company recorded a deferred gain
on reinsurance of $2,518,234 and an increase in the reinsurance receivable of
$2,809,418 on the transaction.
7. SUPPLEMENTAL INFORMATION REGARDING CASH FLOWS
Cash payments of $766,439 and $234,444 for federal income taxes were made for
the nine months ended September 30, 1995 and 1994.
Cash payments of $384,662 for interest expense were made during the nine months
ended September 30, 1995.
The following reflects assets acquired and liabilities assumed relative to the
acquisition of Oakley-Metcalf by the Company, the consideration given for such
acquisition and the net cash flow relative to such acquisition on February 2,
1995.
<TABLE>
<CAPTION>
<S> <C>
Assets of acquired subsidiary $ 4,393,403
Liabilities of acquired subsidiary (1,833,887)
-----------
Cost of acquisition $ 2,559,516
===========
Cash paid for acquisition $ 2,559 516
===========
Net cash from acquisition:
Cash paid for acquisition $ 2,559,516
Cash of acquired company (607,216)
-----------
Net cash required by acquisition $ 1,952,300
===========
</TABLE>
The reinsurance agreements entered into by the Company with an unaffiliated
reinsurer covering 100% of each of Oakley-Metcalf's policies and the increase in
the Family life policies from 20% to 100% were non cash transactions. The
Company transferred assets of $2,023,654 and liabilities of $4,634,211 and
recognized a deferred gain on the reinsurance of $2,610,557 to be amortized over
the life of the policies.
9
<PAGE>
FORTUNE NATIONAL CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SIGNIFICANT TRANSACTIONS
As noted in the 1994 Annual Report to Stockholders, the Company acquired three
life insurance companies during 1994. One of the acquisitions, which was
completed on August 31, 1994, was a material transaction.
On January 4, 1995, the Company increased the reinsurance on each of the life
policies in force in the life insurance subsidiary acquired August 31, 1994 from
20% to 100%. The Company recorded a deferred gain on reinsurance of $2,518,234
and an increase in the reinsurance receivable of $2,809,418 on the transaction.
On February 2, 1995, the Company, through one of its life insurance
subsidiaries, acquired a small life insurance company, Oakley-Metcalf Insurance
Company, for cash of approximately $2.6 million.
RESULTS OF OPERATIONS
Premiums and other considerations were 119% higher in the first nine months of
1995 in comparison to the first nine months of 1994. Premiums and other
considerations were 15% higher in the third quarter of 1995 in comparison to the
third quarter of 1994. The increase in premiums is primarily attributable to
the life insurance premiums, net of reinsurance, from the acquisitions noted
above. In addition, during the first half of 1995 the Company received
approximately $500,000 in single premiums related to the conversion of three
trust-funded prepaid funeral service plans to insurance-funded plans.
Net investment income was 3% higher in the first nine months of 1995 in
comparison to the first nine months of 1994. The increase in the invested asset
base resulting from the acquisitions noted above resulted in the higher level of
net investment income. Net investment income was 29% lower in the third quarter
of 1995 in comparison to the third quarter of 1994. The lower level of net
investment income is primarily due to changes that occurred during the third
quarter of 1994 regarding the Company's home office building. Until September
28, 1994, the Company had held a $2.3 million mortgage on the building earning
10%. On September 28, 1994, the owner sold the building to the Company for $1.1
million and paid off the remaining balance of the $2.3 million mortgage. The
cash the Company received was reinvested at a rate lower than the mortgage's 10%
rate. Also, to date the building has not yielded a 10% rate of return.
Further, during the third quarter of 1994 the owner of the building paid the
Company back interest due from the first half of 1994. This combination of
factors lead to higher investment income in the third quarter of 1994 than in
the third quarter of 1995.
The Company has entered into an earnest money contract to sell the home office
building and 4.4 acres of surrounding undeveloped land to a third party for
$1.55 million, the book value of the property on the Company's books. If the
transaction closes, it is expected that such closing will occur in December
1995. However, management cannot currently assess the likelihood of the
completion of the sale.
10
<PAGE>
As noted above, the $2.3 million mortgage on the Company's home office building
was fully repaid in the third quarter of 1994. The Company had been holding a
$1.45 million valuation allowance on the mortgage loan. The release of the
valuation allowance coincident with the repayment of the loan resulted in a
realized investment gain of $1.45 million.
During the third quarter of 1995, Trans-Western Life Insurance Company ("Trans-
Western"), a subsidiary of the Company, transferred most of its business to
Texas Imperial Life Insurance Company, another subsidiary of the Company. The
Trans-Western "shell" was then sold to an unaffiliated third party. The Company
realized a pre-tax investment gain of $50,000 on the sale of the Trans-Western
stock.
The amortization of the deferred gain on reinsurance increased by $289,453 in
the first nine months of 1995 in comparison to the first nine months of 1994 and
by $52,967 in the third quarter of 1995 in comparison to the third quarter of
1994. Of the four acquisitions noted above, the Company fully reinsured the
acquired life policies of three of the acquired companies with a reinsurance
company. The reinsurance transactions resulted in total deferred gains in
excess of $3 million. The amortization of these gains resulted in the increased
amortization income in 1995.
The Company retains the administration of the reinsured policies, for which it
receives an expense allowance from the reinsurance company. The reinsurance
transactions noted above resulted in a 17% increase in the reinsurance expense
allowance in the first nine months of 1995 compared to the first nine months of
1994 and a 12% increase in the reinsurance expense allowance in the third
quarter of 1995 compared to the third quarter of 1994.
Given the distortion to revenues caused by the large realized investment gain in
1994, references below to "total revenue" mean total revenue excluding realized
investment gains and losses.
Total policy benefits (i.e., death benefits and other benefits) were 35% of
total revenue for the first nine months of 1995 compared to 29% of total revenue
for the first nine months of 1994. The higher ratio of total policy benefits to
total revenue for the first nine months of 1995 is attributable in part to
increased mortality experience. Another significant factor in the higher ratio
is the composition of the acquired business. One of the acquired companies is
in the insurance-funded prepaid funeral services business. Higher reserve
requirements due to higher average attained ages in this type of business result
in a higher benefit to revenue ratio. Total policy benefits were 28% of total
revenue for the third quarter of 1995 compared to 31% of total revenue for the
third quarter of 1994. The decline in policy benefits is primarily attributable
to the release of reserves held on terminated policies.
Total expenses (i.e., total benefits and expenses less total policy benefits)
were 58% of total revenue for both the first nine months of 1995 and the first
nine months of 1994. Total expenses were 63% of total revenue for the third
quarter of 1995 compared to 52% of total revenue for the third quarter of 1994.
LIQUIDITY AND CAPITAL RESOURCES
On January 31, 1995, the Company repaid a $5 million surplus debenture issued to
the seller of the life insurance company acquired by the Company on August 31,
1995. At the time it was
11
<PAGE>
acquired, the life insurance company had a $3.3 million note payable
outstanding. This note was also repaid on January 31, 1995.
The Company borrowed $1.5 million from a bank on January 31, 1995 as a source of
funds to repay the $5 million surplus debenture noted above. The note is
renewable by the bank each April 30 until fully repaid. The note bears interest
at a rate equal to the base rate of a bank plus 1%. Principal payments on the
note of $62,500 are due quarterly, with the first payment made April 30, 1995.
The note is secured by a pledge of all of the outstanding shares of American
Capitol Insurance Company ("American Capitol") owned by Acap Corporation
("Acap"). The loan agreement contains certain restrictions and financial
covenants. Without the written consent of the bank, Acap may not incur any
debt, pay common stock dividends or sell any substantial amounts of assets.
Also, American Capitol is subject to minimum statutory earnings and capital and
surplus requirements during the loan term.
The operating activity of the Company takes place within Acap and the insurance
subsidiaries. Fortune, at the parent level, has no independent source of funds
to meet its cash needs. Acap is covering certain expenses of Fortune that are
incurred prior to the year 1996. Fortune is exploring alternatives for meeting
its cash needs, which are typically quite small in any one year, arising in 1996
and beyond.
As noted in the 1994 Annual Report to Stockholders, the Company owned a
$1,000,000 note issued by Dixie National Corporation scheduled to mature during
1995. The note was repaid in full on October 3, 1995.
During the first nine months of 1995, there was an improvement in net unrealized
investment losses of $1,609,612. The improvement in invested asset values was
primarily the result of a decline in market interest rates during the quarter.
While the Company reported net unrealized investment gains of $549,585 at
September 30, 1995, it is not anticipated that the Company will liquidate
investments prior to their projected maturities in order to meet cash flow
requirements.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Quarterly Report of Form 10-QSB for the quarter
ended September 30, 1995 to be signed on its behalf by the undersigned thereunto
duly authorized.
FORTUNE NATIONAL CORPORATION
Date: November 9, 1995
By:/s/ William F. Guest
--------------------------------
William F. Guest, President
By:/s/ John D. Cornett
--------------------------------
John D. Cornett, Treasurer
(Principal Accounting Officer)
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEPTEMBER
30, 1995 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<DEBT-HELD-FOR-SALE> 29,746,651
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 11,699
<MORTGAGE> 755,053
<REAL-ESTATE> 1,946,644
<TOTAL-INVEST> 40,108,365
<CASH> 0
<RECOVER-REINSURE> 33,810,993
<DEFERRED-ACQUISITION> 1,810,190
<TOTAL-ASSETS> 80,723,207
<POLICY-LOSSES> 68,861,730
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 1,740,804
<NOTES-PAYABLE> 1,375,000
<COMMON> 2,804,445
0
0
<OTHER-SE> 1,153,976
<TOTAL-LIABILITY-AND-EQUITY> 80,723,207
1,284,056
<INVESTMENT-INCOME> 1,083,647
<INVESTMENT-GAINS> 146,954
<OTHER-INCOME> 77,577
<BENEFITS> 1,447,470
<UNDERWRITING-AMORTIZATION> 84,665
<UNDERWRITING-OTHER> 2,012,519
<INCOME-PRETAX> 160,698
<INCOME-TAX> 371,797
<INCOME-CONTINUING> (106,895)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (106,895)
<EPS-PRIMARY> .04
<EPS-DILUTED> 0
<RESERVE-OPEN> 672,987
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 456,355
<PAYMENTS-PRIOR> 190,441
<RESERVE-CLOSE> 736,520
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
