SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
________________________
Form 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended September 30, 1996
or
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
______________________
Commission File Number 0-8636
AMERICAN INDEMNITY FINANCIAL CORPORATION
__________________________________________
(Exact name of registrant as specified in its charter)
Delaware 510119643
_________ ___________
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
One American Indemnity Plaza, Galveston, Texas 77550
_______________________________________________ _______
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code - (409) 766-4600
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
___ ___
As of November 8, 1996, 1,948,110 shares of registrant's common stock,
$3.33 1/3 par value, were outstanding.
PAGE 1 OF 12 PAGES
<PAGE>
AMERICAN INDEMNITY FINANCIAL CORPORATION
AND SUBSIDIARIES
ITEM 1. FINANCIAL STATEMENTS
Consolidated Statements of Operations for the
Three Months Ended September 30, 1996 and 1995
Unaudited
1996 1995
______ ______
PREMIUMS AND OTHER INCOME:
Premiums earned $16,634,182 $17,243,770
Net investment income (net of investment
expenses of $100,733 in 1996 and $94,433
in 1995) 1,179,821 968,835
Realized investment gains 425,092 88,098
Interest on premium bills receivable and
other income 192,258 185,342
____________ ____________
TOTAL 18,431,353 18,486,045
____________ ____________
EXPENSES:
Losses and loss adjustment expenses 11,409,360 12,490,046
Policy acquisition costs 6,336,561 6,310,921
Retrospective premium adjustments on workers'
compensation policies (11,499) 375,568
____________ ____________
TOTAL 17,734,422 19,176,535
____________ ____________
INCOME (LOSS) BEFORE FEDERAL INCOME TAX 696,931 (690,490)
CREDIT FOR FEDERAL INCOME TAX:
Current (13,088)
Deferred
____________ ____________
TOTAL (13,088)
____________ ____________
NET INCOME (LOSS) $ 696,931 $ (677,402)
AVERAGE SHARES OUTSTANDING 1,948,610 1,946,843
EARNINGS PER SHARE:
NET INCOME (LOSS) $ .36 $ (.34)
DIVIDENDS DECLARED PER SHARE $ .075 $ .075
See Notes to Consolidated Financial Information
PAGE 2 OF 12 PAGES
<PAGE>
AMERICAN INDEMNITY FINANCIAL CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Operations for the
Nine Months Ended September 30, 1996 and 1995
Unaudited
1996 1995
______ ______
PREMIUMS AND OTHER INCOME:
Premiums earned $49,644,191 $51,158,487
Net investment income (net of investment
expenses of $294,793 in 1996 and $290,622
in 1995) 3,411,671 2,965,137
Realized investment gains (losses) 648,917 7,212
Interest on premium bills receivable and
other income 548,352 549,530
____________ ____________
TOTAL 54,253,131 54,680,366
EXPENSES:
Losses and loss adjustment expenses 35,526,326 38,544,783
Policy acquisition costs 18,163,866 18,939,513
Retrospective premium adjustments on
workers' compensation policies (32,807) 955,030
____________ ____________
TOTAL 53,657,385 58,439,326
____________ ____________
INCOME (LOSS) BEFORE FEDERAL INCOME TAX 595,746 (3,758,960)
PROVISION (CREDIT) FOR FEDERAL INCOME TAX:
Current (13,088)
Deferred
____________ _____________
TOTAL (13,088)
NET INCOME (LOSS) $ 595,746 $ (3,745,872)
AVERAGE SHARES OUTSTANDING 1,947,910 1,946,754
EARNINGS PER SHARE:
NET INCOME (LOSS) $ .31 $ (1.92)
DIVIDENDS DECLARED PER SHARE $ .225 $ .21
See Notes to Consolidated Financial Information
PAGE 3 OF 12 PAGES
<PAGE>
AMERICAN INDEMNITY FINANCIAL CORPORATION
AND SUBSIDIARIES
Consolidated Balance Sheets
September 30, 1996 and December 31, 1995
Unaudited
ASSETS 1996 1995
_______ _______
Investments:
Fixed maturities - bonds:
Available for sale $ 73,862,163 $ 72,578,178
Preferred stocks 1,454,762 2,289,472
Common stocks 10,432,919 11,895,516
Mortgage loans on real estate 20,980 24,604
Short-term investments 50,000 60,000
_____________ _____________
Total Investments 85,820,824 86,847,770
Cash and Cash Equivalents 4,001,710 4,781,566
Accrued Investment Income 824,723 711,185
Premiums in Course of Collection 6,132,474 4,293,569
Direct Premium Bills Receivable 9,586,258 8,267,740
Reinsurance Balances Receivable 13,038,618 12,167,759
Prepaid Reinsurance Premiums 646,408 716,632
Property and Equipment - Less accumulated deprecia-
tion of $4,954,633 in 1996 and $4,614,370 in 1995 4,110,319 4,202,742
Deferred Policy Acquisition Costs 9,555,199 8,841,705
Deferred Income Taxes 4,498,000 4,498,000
Other Assets 3,285,412 2,785,268
_____________ _____________
TOTAL $141,499,945 $138,113,936
LIABILITIES AND STOCKHOLDERS' EQUITY
____________________________________
Losses and Loss Adjustment Expenses $ 52,256,326 $ 51,165,424
Unearned Premiums 36,824,032 34,489,378
Reinsurance Balances Held or Payable 3,364,847 2,844,698
Notes Payable to Bank 535,745
Accounts Payable and Other Accrued Liabilities 9,561,443 9,085,322
_____________ _____________
Total Liabilities 102,542,393 97,584,822
_____________ _____________
Stockholders' Equity:
Preferred stock, authorized 2,000,000 shares;
none outstanding
Common stock, $3.33 1/3 par value; authorized
2,500,000 shares; outstanding shares 1,949,110
in 1996 and 1,947,110 in 1995 6,497,018 6,490,351
Paid-in surplus 13,053,178 13,047,085
Unrealized appreciation in market value of
investments 642,703 2,384,456
Retained earnings 18,764,653 18,607,222
_____________ _____________
Total Stockholders' Equity 38,957,552 40,529,114
_____________ _____________
TOTAL $141,499,945 $138,113,936
See Notes to Consolidated Financial Information
PAGE 4 OF 12 PAGES
<PAGE>
AMERICAN INDEMNITY FINANCIAL CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 1996 and 1995
Unaudited
OPERATING ACTIVITIES: 1996 1995
_______ _______
Net income (loss) $ 595,746 $ (3,745,872)
Adjustments to reconcile net income (loss) to
net cash flow from operating activities:
Decrease (Increase) in:
Premiums in course of collection (1,838,905) (1,050,161)
Direct premium bills receivable (1,318,518) (1,125,126)
Reinsurance balances receivable (870,859) (1,112,636)
Prepaid reinsurance premiums 70,224 570,856
Deferred policy acquisition costs (713,494) (383,505)
Other assets (500,144) (206,063)
Increase (Decrease) in:
Unpaid losses and loss adjustment expenses 1,090,902 1,613,324
Unearned premiums 2,334,654 1,839,955
Reinsurance balances held or payable 520,149 (661,759)
Accounts payable and other accrued
liabilities 476,121 1,321,628
Realized investment gains (648,917) (7,212)
Depreciation 340,263 285,705
Other (10,752) (23,894)
_____________ _____________
Net cash flow from operating activities (473,530) (2,684,760)
_____________ _____________
INVESTING ACTIVITIES:
Sale of bonds 6,939,258 5,166,266
Maturity of bonds 7,119,196 3,263,596
Sale of preferred stocks 184,396 49,338
Redemption of preferred stocks 605,368 170,018
Sale of common stocks 2,881,265 5,431,904
Maturity of long-term certificates of deposit 10,000
Purchase of bonds (16,856,177) (11,308,905)
Purchase of common stocks (1,000,606) (248,500)
Purchase of property and equipment (302,840) (605,622)
Other 3,624 3,281
_____________ _____________
Net cash flow from investing activities (416,516) 1,921,376
_____________ _____________
FINANCING ACTIVITIES:
Proceeds received from bank loan 580,500
Payments on bank loan (44,755)
Cash dividends paid to stockholders (438,315) (408,811)
Proceeds received from exercise of stock
options 12,760 2,552
_____________ _____________
Net cash flow from financing activities 110,190 (406,259)
_____________ _____________
Net Decrease in Cash and Cash Equivalents (779,856) (1,169,643)
Cash and Cash Equivalents, January 1 4,781,566 4,937,544
_____________ _____________
Cash and Cash Equivalents, September 30 $ 4,001,710 $ 3,767,901
See Notes to Consolidated Financial Information
PAGE 5 OF 12 PAGES
<PAGE>
AMERICAN INDEMNITY FINANCIAL CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL INFORMATION
(UNAUDITED)
______________________________________________________________________
(1)The consolidated financial statements include the accounts of
American Indemnity Financial Corporation (the "Company"), American
Indemnity Company and American Indemnity Company's wholly-owned
subsidiaries, American Fire and Indemnity Company, Texas General
Indemnity Company and American Computing Company. All material
intercompany balances and transactions have been eliminated in
consolidation. The financial information included herein is
unaudited but, in the opinion of management, all adjustments
(consisting of normal recurring accruals) necessary for a fair
presentation have been included. These interim consolidated
financial statements should be read in conjunction with the
Company's report on Form 10-K for the year ended December 31,
1995. The results of operations for this interim period are not
necessarily indicative of results for the full year.
(2)Deferred income taxes reflect the net tax effects of (a) temporary
differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income
tax purposes, and (b) operating loss carryforwards. The tax
effects of significant items comprising the Company's net deferred
income taxes as of September 30, 1996 and December 31, 1995 are as
follows:
September 30, 1996 December 31, 1995
____________________ ___________________
Deferred tax liabilities:
Deferred policy acquisition costs $ (3,248,768) $ (3,006,180)
Differences between book and tax (325,741) (300,935)
basis of property
Unrealized investment gains (218,519) (810,715)
Other (412,533) (403,926)
_____________ _____________
(4,205,561) (4,521,756)
Deferred tax assets:
Reserves not currently deductible 5,646,920 6,013,565
Operating loss carryforwards 12,212,277 11,824,122
_____________ _____________
17,859,197 17,837,687
Net Asset 13,653,636 13,315,931
Valuation allowance (9,155,636) (8,817,931)
_____________ _____________
Net deferred tax assets $ 4,498,000 $ 4,498,000
The provision for income tax for the nine months ended September
30, 1996 was $-0-. The Company paid $15,000 in federal income
taxes during the first nine months of 1996, whereas the Company
did not pay any federal income taxes during the first nine months
of 1995. The provision for federal income tax for the nine months
ended September 30, 1995 is related to taxes arising under the
alternative minimum tax system which is based on reported income,
adjusted for differences arising in revenue or expense items, per
applicable tax laws and regulations, between reported income and
taxable income.
PAGE 6 OF 12 PAGES
<PAGE>
The Company has a net operating loss carryforward for tax purposes
of $35,918,462, which expires if not previously utilized, in 1998-
$3,163,998; 1999-$7,384,546; 2000-$5,712,421; 2001-$4,927,522;
2002-$2,271,256; 2003-$621,205; 2004-$4,596,950; 2005-$1,246,728;
2006-$118,137; 2007-$43,352; 2008-$13,450; 2009-$13,410; 2010-
$4,663,854 and 2011-$1,141,633.
(3)The Company paid total interest expense of $28,372 for the nine
months ended September 30, 1996 and paid no interest for the nine
months ended September 30, 1995.
(4)In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 123,
"Accounting for Stock-Based Compensation," which is effective for
the Company on January 1, 1996. SFAS No. 123 permits, but does
not require, a fair value based method of accounting for employee
stock option plans which results in compensation expense being
recognized in the results of operations when stock options are
granted. The Company decided not to change its method of
accounting for stock-based compensation; therefore, the adoption
of this statement will not have any impact on the financial
statements of the Company.
PAGE 7 OF 12 PAGES
<PAGE>
AMERICAN INDEMNITY FINANCIAL CORPORATION
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
______________________________________________
LIQUIDITY
The Company has consistently been able to generate adequate
amounts of cash to meet its needs and management is unaware of any
trends, demands or commitments which will or are reasonably likely to
have a significant effect on the Company's liquidity.
Operating Activities
The net cash flow from operating activities for the nine months
ended September 30, 1996 was negative primarily as a result of
unfavorable underwriting results. Although the underwriting results
for the first nine months of 1996 improved compared with the first
nine months of 1995, cash flow from operating activities was
insufficient to cover the payment of claims and underwriting expenses.
Weather-related natural catastrophes occurring during the nine months
ended September 30, 1996 improved significantly over the same period
in 1995. Nevertheless, the unfavorable underwriting results during
the first nine months of 1996 were caused primarily by several weather-
related catastrophes during the second quarter of 1996. For the first
nine months of 1996, weather-related natural catastrophes resulted in
losses of approximately $3,039,000 compared with $5,696,000 for the
nine months ended September 30, 1995.
The net cash flow from operating activities for the nine months
ended September 30, 1995 was negative primarily as a result of an
increase in the amount of funds required for the payment of claims, an
increase in policy acquisition costs and a decrease in net investment
income. The negative effect on cash flow of these items was offset
somewhat by an increase in net premiums written. The amount of funds
required for claim payments increased primarily due to increased
weather-related losses and the settlement of several large commercial
automobile liability claims during the first nine months of 1995. The
increase in policy acquisition costs resulted from increases in
amortization of deferred policy acquisition costs, expenses related to
commissions and overhead expenses. Net investment income decreased
primarily as a result of reduced yields on the Company's derivative
securities discussed below.
Investing Activities
During the first nine months of 1996, management invested a
portion of available cash balances and the proceeds received from the
disposition of investments into investment grade bonds and common
stocks. The net cash flow from investing activities was negative in
the first nine months of 1996 as total investment purchases exceeded
total investment sales and maturities.
During the first nine months of 1996, unrealized investment
losses decreased stockholders' equity by approximately $1,742,000.
These unrealized losses are comprised of unrealized losses of
approximately $1,529,000 from debt securities and unrealized losses of
approximately $213,000 from equity securities. These unrealized
investment losses were primarily the result of the negative effects of
increased interest rates on the market value of the Company's debt
securities during the first nine months of 1996.
Approximately $361,000 of the $1,529,000 unrealized investment
losses on debt securities was related to nine derivative issues
purchased by the Company in 1993. On September 30, 1996, the value
carried in the Company's balance sheet for these six issues was
approximately $18,718,000. The Company's debt and equity securities
are reported on the Company's balance sheet at their respective market
values which fluctuate based upon a variety of market factors. Such
PAGE 8 OF 12 PAGES
<PAGE>
fluctuations will result in changes to the Company's unrealized
investment gains or losses and will have corresponding impacts on the
Company's stockholders' equity. The derivative securities mentioned
above are known as inverse floaters as their yields, which are
adjusted periodically, vary inversely to certain LIBOR rates. These
derivative securities will probably exacerbate swings in unrealized
investment gains and losses and stockholders' equity in the event of
significant movement in interest rates, particularly LIBOR rates.
Additionally, the yield formulas for these securities will result in
commensurate swings in investment income. At current yield rates and
considering future yield resets for these securities and the guarantee
(see discussion below) that was obtained in 1995 with respect to
certain of these securities, net investment income for the final
quarter of 1996 should be increased by approximately $96,000 as
compared to the corresponding period in 1995. This is subject to
change, either positively or negatively, depending on future
investment market conditions.
Because these derivative securities were issued by government
agencies, the Company believes that their principal is assured at
maturity. Barring unforeseen circumstances, the Company has the
ability to hold these debt securities until their stated maturity.
However, if conditions are favorable for their disposition, the
Company may dispose of all or a portion of these securities prior to
maturity. During the first nine months of 1996, the Company was able
to reduce its exposure in such securities by the sale of $750,000 par
value of one issue of the derivative securities. As a matter of
investment policy, the Company no longer invests in inverse floating
rate securities.
In connection with an arbitration proceeding in 1995, the Company
received an agreement, effective December 8, 1995, guaranteeing the
yield rate on the largest derivative issue held by it (Guarantee Yield
Security). The Guaranteed Yield Security has a par value of
$11,000,000 and matures in March 1998. The yield rate that is
guaranteed will equal the weekly average yield rate for three month
treasury bills during each interest period of the security. The
maximum amount guaranteed is $1,500,000 and the guarantee will
terminate no later than the security's maturity date. This guarantee
is secured by two letters of credit. One letter of credit is in the
amount of $500,000 and expires two years from its issue date. The
second letter of credit is also in the amount of $500,000 and expires
in one year, provided that, in the event of certain defaults in
financial covenants, an additional letter of credit is provided in the
amount of $250,000 for a second twelve month period. At September 30,
1996 the stated interest rate for the Guaranteed Yield Security was
0.039% and the guaranteed yield rate was 5.03%. Based on such
guarantee yield rate, net investment income earned by this security
during the final quarter of 1996 should be increased by approximately
$105,000 compared to the corresponding period in 1995. The amount may
increase or decrease, however, depending on changes in the average
yield rate of the three month treasury bill that determines the
guaranteed yield on this security.
As a result of this guarantee, the yield of the Guaranteed Yield
Security is similar to that of a floating rate instrument whose coupon
yield resets weekly to the average three month treasury bill yield
rate during each interest period. The market value of this security
at September 30, 1996 was determined based upon the market values of
other securities with similar yield resets and similar maturity dates.
As a result, the market value for this security as carried on the
Company's balance sheet September 30, 1996 was approximately
$10,959,000.
PAGE 9 OF 12 PAGES
<PAGE>
During the first nine months of 1995, management invested funds
which were generated from the disposition of investments, together
with a portion of available cash balances, into investment grade bonds
and common stocks. The net cash flow from investing activities was
positive for the first nine months of 1995 as total investment sales
and maturities exceeded total investment purchases.
Financing Activities
In January, 1996, the Company received $580,500 proceeds from a
loan from United States National Bank. The Company is required to
make seventy-two monthly payments at an interest rate of 8.75% until
the maturity date of February 1, 2002. The Company may pre-pay
without penalty all or a portion of the principal. These funds were
obtained to finance the purchase of computer software designed to
provide policy processing, claims administration, billing and
collection and reinsurance and management reporting needed as part of
the Company's ongoing effort to enhance its technology and reengineer
its business process. As a result of this loan, the net cash flow
from financing activities was positive for the first nine months of
1996. The net cash flow from financing activities was negative for
the first nine months of 1995 as a result of cash dividends paid to
stockholders.
CAPITAL RESOURCES
The activities of insurance companies are regulated by state
authorities and adequate levels of reserves and equity capital are
required to be maintained to ensure that enough capital is retained in
the business to provide sufficient funds to meet its obligations.
Management believes that the Company has met all statutory and
regulatory requirements and that sufficient funds have been retained
to meet its obligations. The Company has no current commitments or
plans for debt or equity financing other than the loan discussed under
"Liquidity-Financing Activities".
RESULTS OF OPERATIONS
Premiums earned decreased 3.5% and 3.0%, respectively, for three
months and nine months ended September 30, 1996 compared with the
corresponding 1995 periods. Net premiums written decreased 6.7% and
2.8%, respectively, for the three months and nine months ended
September 30, 1996 compared with the same 1995 periods. The decrease
in premiums is primarily attributable to decreases in new business for
the commercial lines of business and the personal automobile line of
business and increased rates charged to the Company on renewal of
certain of its reinsurance contracts. The decreases in new business
are primarily the result of strong competition in a soft market and
the Company's conservative pricing and strict underwriting standards.
Primarily as a result of the unrealized gains in market value of
investments experienced in 1995, average invested assets at September
30, 1996 increased approximately $4,087,000 compared with
September 30, 1995. Additionally, net investment income increased
21.8% and 15.1%, respectively, for the three months and nine months
ended September 30, 1996 compared with the same 1995 periods,
primarily as a result of increased yields on the Company's derivative
securities. This increase in net investment income increased the
Company's average investment yield to 5.27% for the nine months ended
September 30, 1996 compared with 4.81% for the nine months ended
September 30, 1995. Based on the guaranteed yield rate at September
30, 1996 on the $11,000,000 par value derivative security discussed
above, net investment income earned by this security should be
increased by approximately $105,000 during the final quarter of 1996
compared to the corresponding period in 1995. This is subject to
change, either positively or negatively, depending on changes in the
average three month treasury bill yield that determines the guaranteed
yield rate.
PAGE 10 OF 12 PAGES
<PAGE>
In an effort to maximize the overall return on the Company's
investment portfolio, management elected to take advantage of
favorable market conditions and sold several issues of common and
preferred stocks and fixed maturity bonds which were held in the
investment portfolio. As a result, realized investment gains
increased for the three months and nine months ended September 30,
1996 compared with the same 1995 comparison periods.
The loss and loss adjustment expense ratio was 68.6% for the
three months ended September 30, 1996 compared with 72.4% for the
three months ended September 30, 1995 and was 71.6% for the nine
months ended September 30, 1996 compared with 75.3% for the nine
months ended September 1995. This decrease was primarily the result
of a smaller number and decreased severity of weather-related natural
catastrophes during the first nine months of 1996 compared with the
first nine months of 1995. Claims from weather-related natural
catastrophes resulted in approximately $525,000 in losses for the
third quarter ended September 30, 1996, compared with approximately
$1,028,000 for the third quarter ended September 30, 1995. For the
nine months ended September 30, 1996, weather-related natural
catastrophes resulted in losses of approximately $3,039,000 compared
with $5,696,000 for the nine months ended September 30, 1995.
The policy acquisition cost ratio was 38.1% for the three months
ended September 30, 1996 compared with 36.6% for the three months
ended September 30, 1995. The increase in this ratio was primarily
the result of policy acquisition costs remaining essentially unchanged
with a decrease of 3.5% in premiums earned during the third quarter of
1996 compared with the third quarter of 1995. The policy acquisition
cost ratio was 36.6% for the nine months ended September 30, 1996,
compared with 37.0% for the nine months ended September 30, 1995. The
decrease in this ratio was a result of an increase in deferral of
policy acquisition costs during the first nine months of 1996 compared
with the first nine months of 1995.
The net income of the Company was approximately $697,000 for the
three months ended September 30, 1996 compared with net loss of
$677,000 for the three months ended September 30, 1995. The net
income of the Company was approximately $596,000 for the nine months
ended September 30, 1996 compared with net loss of $3,746,000 for the
nine months ended September 30, 1995. This improvement resulted
primarily from the decrease in claims from weather-related natural
catastrophes, the increase in net investment income, and the realized
investment gains during the three months and nine months ended
September 30, 1996 compared with the same 1995 comparison periods.
PAGE 11 OF 12 PAGES
<PAGE>
AMERICAN INDEMNITY FINANCIAL CORPORATION
AND SUBSIDIARIES
Item 6. (a) Exhibit 11 - Computation of Fully Diluted Net
Income per Common and Common Equivalent Share.
Exhibit 27 - Financial Data Schedule.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the
quarter for which this report is filed.
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.
AMERICAN INDEMNITY FINANCIAL CORPORATION
________________________________________
(Registrant)
Date NOVEMBER 12, 1996 PHILLIP E. APGAR
_______________________ __________________________________________
PHILLIP E. APGAR
VICE PRESIDENT-TREASURER - CHIEF
FINANCIAL OFFICER
(PRINCIPAL FINANCIAL & ACCOUNTING OFFICER)
PAGE 12 OF 12 PAGES
AMERICAN INDEMNITY FINANCIAL CORPORATION EXHIBIT 11
AND SUBSIDIARIES
COMPUTATION OF FULLY DILUTED NET INCOME
PER COMMON AND COMMON EQUIVALENT SHARE
NINE NINE THREE THREE
MONTHS MONTHS MONTHS MONTHS
ENDED ENDED ENDED ENDED
09-30-96 09-30-95 09-30-96 09-30-95
________ ________ ________ ________
PRIMARY EARNINGS PER SHARE
Weighted average shares of
common stock outstanding 1,947,910 1,946,754 1,948,610 1,946,843
Stock options (treasury
stock method) (1) 6,605 6,951 6,605 6,951
_________ __________ __________ __________
Weighted average shares out-
standing for primary earnings
per share computation 1,954,515 1,953,705 1,955,215 1,953,794
Net income (loss) $.30 $(1.92) $.36 $(.35)
FULLY DILUTED EARNINGS PER SHARE
Weighted average shares of
common stock outstanding 1,947,910 1,946,754 1,948,610 1,946,843
Stock options (treasury
stock method) (1) 6,605 9,119 6,605 9,119
_________ _________ _________ _________
Weighted average shares out-
standing for fully diluted
computation 1,954,515 1,955,873 1,955,215 1,955,962
Net income (loss) $.30 $(1.92) $.36 $(.35)
(1)This calculation is submitted in accordance with Regulation S-K
item 601(b)(11) although not required by footnote 2 to paragraph
14 of APB Opinion No. 15 because it results in dilution of less
than 3%.
<TABLE> <S> <C>
<ARTICLE> 7
<CIK> 0000005227
<NAME> AMERICAN INDEMNITY FINANCIAL CORP
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<DEBT-HELD-FOR-SALE> 73,862,163
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 11,887,681
<MORTGAGE> 20,980
<REAL-ESTATE> 0
<TOTAL-INVEST> 85,820,824
<CASH> 4,001,710
<RECOVER-REINSURE> 13,038,618
<DEFERRED-ACQUISITION> 9,555,199
<TOTAL-ASSETS> 141,499,945
<POLICY-LOSSES> 52,256,326
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0
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