<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1995 Commission file No. 0-6764
----------------- ------
Mobile America Corporation
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
FLORIDA 59-1218935
------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Fortune Parkway
Jacksonville, Florida 32256
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (904) 363-6339
--------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
None None
- ----------------------------- ----------------------------
Securities Registered pursuant to Section 12(g) of the Act:
Common Stock $.025 par value
- --------------------------------------------------------------------------------
(Title of Class)
- --------------------------------------------------------------------------------
(Title of Class)
The aggregate market value of the voting stock held by non-affiliates
of the Registrant at March 1, 1996: $28,531,995
-----------
Common Stock ($.025 Par value) outstanding at March 1, 1996: 6,260,040 Shares
----------------
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
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this form 10-K or any amendment to
this form 10-K. [X]
<PAGE> 2
PART 1
Item 1. Business
Introduction
Mobile America Corporation (the "Registrant"), and its two (2) principal
wholly owned subsidiaries, Mobile America Insurance Group, Inc. ("MAIG"), a
managing general agent for the Registrant's insurance company subsidiaries, and
Fortune Insurance Company ("Fortune"), a Florida domiciled property and
casualty insurance company, both engage primarily in the underwriting and
marketing of minimum requirement automobile insurance in Florida. This business
has accounted for more than 90% of the Registrant's consolidated revenues in
each of the last five (5) years.
The Registrant's other significant wholly owned subsidiaries are as
follows:
Fortune Life Insurance Company ("Fortune Life"), an Arizona domiciled
company, is engaged in the business of writing life insurance coverages
primarily in Florida and Louisiana.
Pegasus Insurance Company ("Pegasus"), an Oklahoma domiciled property and
casualty insurance company, acquired in 1993 to operate as an excess and
surplus lines insurer in Florida.
Fortune Financial Corporation ("Fortune Financial") acts as a servicing
provider for Fortune Insurance Company which is a servicing carrier for the
Florida Property Residential and Casualty Joint Underwriting Association
(FRPCJUA) and the Florida Automobile Joint Underwriting Associations (FAJUA).
Big Gorilla, Inc., a licensed Florida premium finance company, provides a
policy financing source for MAIG's brokers.
Operations
The Registrant and its subsidiaries are primarily engaged in insurance and
insurance related services with the bulk of the business being minimum
requirement automobile insurance coverages in the State of Florida. The
insurance operations of the Registrant generated gross insurance premiums
earned of $102.7 million during 1995, an increase from $94.7 million in 1993.
Insurance premiums earned, net of reinsurance cessions, have decreased from
$41.6 million in 1993 to $37.6 million in 1995.
Automobile Insurance
In 1980, Fortune began to market automobile insurance, placing emphasis on
physical damage, personal injury protection, and in recent years property
damage liability coverage in the private passenger automobile market. Because
of the nature of private passenger and commercial automobile insurance, Fortune
carefully monitors underwriting results in these lines. Fortune's marketing and
underwriting results have been favorable to date, and the Registrant will
continue to emphasize and actively market these lines.
Personal Property Insurance
The Registrant's two property and casualty insurance subsidiaries, have
continued to write homeowners and dwelling fire policies throughout the State
of Florida. As of December 31, 1995, these companies insured nearly 6,000
property risks, with a total premium for all property lines of $2.2 million.
The Registrant is considering taking out 10,000 additional policies from the
FRPCJUA beginning in April of 1996. This addition could increase the Fortune
book to nearly $6.5 million. The Registrant will continue to be active in this
line of business, however, extreme caution will be exercised with respect to
rates, profitability and the competitive market.
I-1
<PAGE> 3
Commercial Lines
The Registrant's two property and casualty insurance subsidiaries write
Special Multi-peril insurance on restaurants, small offices and businesses, and
churches, all in Florida. In 1995, gross written premiums totaled approximately
$432,000. This represents .4% of total gross written premium for these two
subsidiaries.
Life Insurance
Fortune Life sells annual renewable term life insurance with limited first
year benefits. During 1995, total life insurance premiums were $20,000.
Excess and Surplus Lines Insurance
In 1993, the Registrant purchased Pegasus Insurance Company, an Oklahoma
domiciled property and casualty insurance company, which was subsequently
admitted on an excess and surplus lines basis in Florida during December 1993.
In September 1994, Pegasus marketed its first insurance program, a commercial
general liability (CGL) policy for artisan contractors. Pegasus wrote $133,000
in premiums in 1995 and plans to further expand its premium writings in 1996
and has subsequently marketed homeowners and commercial multiperil products.
Fee for Service Operations
In 1993, Fortune Financial was formed to act as a servicing provider for
Fortune Insurance Company, who was selected as one of eight servicing carriers
for the FRPCJUA, the first residential underwriting association in the nation.
This association was formed to function as an insurance pool for individuals
who, because of Hurricane Andrew, either lost their homeowners insurance or
cannot obtain homeowners insurance.
Since 1993 Fortune Financial has written in excess of $27 million in
premiums on 84,000 policies for the FRPCJUA and currently services more than
500 agents for the FRPCJUA. As a servicing provider, Fortune Financial
underwrites and pays claims with no risk of loss because the FRPCJUA provides
the funds for claim payments. For providing this service, Fortune Financial
retains 20% of the gross written premiums generated from the policies it
services.
In October of 1995 Fortune Financial renewed their FAJUA contract, for a
period of one year. Fortune has been servicing this business since October of
1994. Fortune Financial is currently servicing approximately 800 agents,
processing in excess of 350 applications per week.
In November 1994, Fortune was selected by the Federal Insurance
Administrative as a writer of the Federal Government's Write Your Own Flood
Program. Fortune wrote $27,000 in gross written premium during 1995.
Premium Finance
The Registrant's premium finance company subsidiary, now entering it's
third year in the Premium Finance business, will provide some 215 broker agents
a source for financing their policy premiums. In 1995 the subsidiary financed
nearly 9,000 policies and thus far in 1996, are writing about 1,300 contracts
per month. The subsidiary is planning for significant growth in this area as
95% of their insureds utilize this method of financing.
Property Rentals and Sales
The Registrant engaged in the leasing and sales of modular office units
for over 20 years and finally discontinued this small, but profitable segment
in December 1995 with the sale of the modular office equipment.
I-2
<PAGE> 4
Financial Information about Industry Segments
The financial information about the Registrant's Industry segments
presented in Note 10 of Notes to Consolidated Financial Statements for the
three years ended December 31, 1995, is incorporated herein by reference.
Competitive Conditions
The insurance industry is a highly competitive industry. Many of its
competitors have substantially greater financial resources than the Registrant.
Since the Registrant's insurance operations are modest compared to several of
its significant competitors (the Registrant employed 283 people at year end),
management is continuing to focus its marketing and other operations on
specialized insurance coverages. Additionally, since the Registrant's
insurance subsidiaries transact their business in a heavily regulated
industry, they are sensitive to both adverse legislation and administrative
directives.
Loss and Loss Adjustment Expense Reserves
Reserves for unpaid claims and adjustment expenses are maintained to cover
the probable ultimate cost of settling all losses incurred including those not
yet reported. Reserves for losses incurred in prior years may be adjusted by
review or by payment which could result in either a redundancy or deficiency to
the reserve reported at the end of the prior year. Such changes are reflected
in current operations.
The Registrant's insurance subsidiaries have entered into several
reinsurance agreements covering specific lines of business, which provide
reinsurance protection on a quota share or excess of loss basis.
Adverse loss and loss adjustment expense development is generally
experienced in liability lines where settlements may not be reached until
several years following the initial claim. Claims adjustment costs consisting
primarily of legal expenses, are traditionally high on these particular losses.
The following statutory tables present loss and loss adjustment expense on
a paid and incurred basis for the past three one year periods, and also a table
that presents development of losses and loss expenses over the past ten years,
all net of reinsurance.
Losses and Loss Adjustment Expenses
<TABLE>
<CAPTION>
Unpaid Incurred Related to Payments Related to Unpaid
Beginning Current Prior Total Current Prior End of
of Year Year Years Incurred Year Years Year
- ----------- -------------------------- ----------- --------------------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1995:
- -----------------------------
$19,103,286 $30,737,734 $ 188,772 $30,926,506 $15,949,259 $13,272,506 $20,808,027
Year ended December 31, 1994:
- -----------------------------
$19,410,271 $26,623,447 $ (17,878) $26,605,569 $13,271,556 $13,640,997 $19,103,286
Year ended December 31, 1993:
- -----------------------------
$17,206,899 $33,152,926 $(719,753) $32,433,173 $16,923,378 $13,306,423 $19,410,271
</TABLE>
I-3
<PAGE> 5
Analysis of Loss and Loss Adjustment Expense Development
(In Thousands)
<TABLE>
<CAPTION>
Year Ended December 31, 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
- ----------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Liability for Unpaid Losses
And Loss Adjustment
Expenses $3,870 $6,242 $7,194 $7,981 $13,577 $14,996 $14,906 $17,207 $19,410 $19,103 $20,808
Paid (Cumulative) As of:
End of Year - - - - - - - - - - -
One Year Later 2,132 2,916 3,275 3,792 6,311 8,583 9,245 13,306 13,641 13,273
Two Years Later 3,109 4,021 4,525 4,528 8,854 10,899 11,806 15,520 16,292
Three Years Later 3,531 4,807 4,419 5,173 9,772 11,918 12,380 16,355
Four Years Later 3,915 4,574 4,671 5,459 10,297 12,170 12,783
Five Years Later 3,584 4,666 4,820 5,603 10,390 12,313
Six Years Later 3,597 4,726 4,872 5,632 10,455
Seven Years Later 3,630 4,787 4,891 5,636
Eight Years Later 3,664 4,808 4,891
Nine Years Later 3,680 4,800
Ten Years Later 3,670
Liability Reestimated as of:
End of Year 3,870 6,242 7,194 7,981 13,577 14,996 14,906 17,207 19,410 19,103 20,808
One Year Later 3,914 5,898 6,108 7,090 10,173 12,653 12,434 16,488 19,392 19,292
Two Years Later 4,163 5,225 5,901 5,555 10,496 12,203 12,916 17,507 18,856
Three Years Later 4,043 5,389 4,925 5,674 10,204 12,332 13,111 17,235
Four Years Later 4,166 4,687 4,922 5,605 10,396 12,382 13,009
Five Years Later 3,629 4,742 4,879 5,626 10,464 12,373
Six Years Later 3,640 4,762 4,891 5,675 10,487
Seven Years Later 3,647 4,805 4,924 5,655
Eight Years Later 3,674 4,841 4,910
Nine Years Later 3,705 4,819
Ten Years Later 3,681
Redundancy (Deficiency) 189 1,423 2,284 2,326 3,090 2,623 1,897 (28) 554 (189)
</TABLE>
I-4
<PAGE> 6
Item 2. Properties
The executive and general offices of the Registrant and its subsidiaries,
consisting of approximately 22,915 square feet, are located at 100 Fortune
Parkway, Jacksonville, Florida. The space is leased by the Registrant for a
period ending January 31, 1997, at an initial aggregate annual rental of
$179,195 increasing to $202,110. The Registrant also leases a retail mobile
home sales facility in Jacksonville, Florida, at an annual rental totaling
approximately $16,800.
The Registrant's subsidiaries, Fortune Insurance Company and Fortune Life
Insurance Company own property in Jacksonville, Florida for which there are no
definite plans for development at this time. Fortune Insurance Company
purchased land in 1987 and 1986 for $165,000 and $140,000 respectively. During
1982, Fortune Life Insurance Company purchased land and a building for $88,000.
Item 3. Legal Proceedings
There are no material pending legal proceedings, other than ordinary
routine litigation incidental to the business, to which the Registrant or any
of its subsidiaries is a party or of which any of their property is the
subject.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of the fiscal
year covered by this report.
I-5
<PAGE> 7
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
Market Information
The Registrant's common stock is traded on the over-the-counter market,
under the stock symbol MAME.
The following table shows the range of high and low bid and asked
quotations for the Registrant's common stock for each of the last eight
quarters ended December 31, 1995, as obtained from the National Association of
Securities Dealers.
<TABLE>
<CAPTION>
Quarterly Period Ended Bid Quotation Asked Quotation
--------------------- High Low High Low
---- --- ---- ---
<S> <C> <C> <C> <C>
March 31, 1994 13.50 10.25 15.00 12.00
June 30, 1994 10.50 10.00 12.25 11.52
September 30, 1994 10.00 8.50 11.50 9.50
December 31, 1994 8.50 5.00 9.50 5.25
March 31, 1995 8.50 5.25 9.13 6.00
June 30, 1995 9.63 7.25 10.00 7.75
September 30, 1995 11.50 7.75 11.88 8.50
December 31, 1995 11.50 9.75 12.00 10.25
</TABLE>
Holders
At March 1, 1996, the Registrant had 340 record holders of its common
stock.
Dividends
In January, 1993 the Registrant declared and paid a dividend of $.335 per
share on each of its shares of $.025 par value common stock.
In September, 1993 the Registrant declared and paid a dividend of $.10 per
share on each of its shares of $.025 par value common stock.
In January, 1994 the Registrant declared and paid a dividend of $.21 per
share on each of its shares of $.025 par value common stock.
In January, 1995 the Registrant declared and paid a dividend of $.18 per
share on each of its shares of $.025 par value common stock.
In January, 1996 the Registrant declared and paid a dividend of $.35 per
share on each of its shares of $.025 par value common stock.
II-1
<PAGE> 8
Item 6. Selected Financial Data
Mobile America Corporation & Subsidiaries
Years Ended December 31, 1995, 1994, 1993, 1992, and 1991
<TABLE>
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Total Revenues 52,925,874 43,767,330 50,300,201 40,704,618 34,221,460
- --------------
Net Income 5,999,694 4,048,446 4,565,307 6,361,350 5,845,680
- ----------
Earnings Per Share .96 .65 .73 1.01 .93
- ------------------
Total Assets at Year-End 182,771,162 143,815,295 134,939,579 129,793,367 105,721,392
- ------------------------
Long-Term Obligations 12,000,000 - - - -
- ---------------------
Cash Dividends Per Common Share .18 .21 .435 .40 .25
- -------------------------------
</TABLE>
Earnings per share and cash dividends per share amounts have been changed
to conform with the stock splits discussed in Note 11.
Total revenues and net income amounts have been restated to conform with
the new accounting standard for realized gains and losses as discussed in
Note 12.
Total assets at year end amounts have been restated to conform with the
new accounting standard for accounting and reporting for reinsurance.
II-2
<PAGE> 9
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
1995 Compared to 1994
Operations
Total consolidated revenues of $52,925,874 for 1995 increased 21% from
consolidated revenues of $43,767,330 for 1994.
Insurance premiums earned increased by 10% in 1995 as a result of
increases in the automobile segments primarily generated by increased
assumptions of business from state mandated assigned risk pools. Reduced
reinsurance cessions and regulatory assessments during 1995 also contributed to
this overall increase in revenues. Material rate increases introduced in the
fourth quarter of 1995 to the major private passenger automobile segment have
provided increased premium writings and will provide generous assistance to the
overall profitability of this segment.
Service fees earned in 1995 increased 100% from 1994 due to the strong
volume of policies administered for the State of Florida; FRPCJUA AND FAJUA as
well as growth in the Registrant's premium financing subsidiary. Investment
income increased 34% as a result of the continued conversion of funds available
for investment from tax advantaged vehicles to taxable securities with their
inherent higher yields.
Total consolidated expenses of $44,340,175 for 1995 increased 15% from
consolidated expenses of $38,514,858 for 1994.
Loss and loss adjustment expenses increased 16% as a result of
increases in losses assumed from the state mandated assigned risk pools and
reserve strengthening of the Registrant's voluntary business as indicated by
actuarial reviews of the automobile segment's loss trending patterns. Policy
acquisition costs decreased as a result of reduced commissions allowed to the
producers of the Company's automobile business together with increased ceding
commissions received on the increased premiums written during the year.
Loss and loss adjustment expense as a percentage of earned premium was
77.6% in 1993, 77.0% in 1994 and 81.6% in 1995. The Company believes that its
current reserves are adequate and proper. The Company has continued corrective
action, specifically in the form of substantial rate increases in the fourth
quarter of 1995, to reduce the ratio of loss and loss adjustment expense to
earned premium. However, additional reserve strengthening may be required in
the future. The Company continues to have comprehensive independent actuarial
reviews of its reserves. At year end 1995 the Company's loss reserves are
within a range which the Company's independent actuary deems appropriate but is
approximately 7.1% below the midpoint of that range.
The increasing loss and loss adjustment expense experienced on the
business which the Company originates and cedes to its reinsurers may also
adversely affect the Company's profitability in the future. If the Company's
ratio of loss and loss adjustment expense to earned premium does not improve or
should continue to deteriorate, it is likely that over time the Company's cost
of reinsurance would increase, and it is possible that the Company could not
obtain reinsurance on economically viable terms.
Salaries and wages and general and administrative expenses increased
41% as a result of the increased costs associated with the growth in the fee for
service segment.
II-3
<PAGE> 10
1995 Compared to 1994
Financial Condition
The Registrant consummated a $12,000,000 loan in the fourth quarter of
1995 with the proceeds to be used for additional capital infusion into the
insurance subsidiaries to absorb planned growth. A very sound financial
condition was maintained in 1995 with a 48% increase in earnings per share.
Cash dividend and capital expenditure requirements continue to be provided from
funds generated from operations. Liquidity is substantial for new operational
or investment opportunities.
II-4
<PAGE> 11
1994 Compared to 1993
Operations
Total consolidated revenues of $43,767,330 for 1994 decreased 13% from
consolidated revenues of $50,300,201 for 1993.
Insurance premiums earned decreased by 17% as a result of more selective
underwriting prerequisites in effect throughout 1994 and periodic review and
cancellation of unprofitable producers. Increased reinsurance cessions
effective in 1994 also contributed to the decrease in insurance premiums while
providing relief in losses incurred and policy acquisition costs. Material
rate modifications introduced in late 1993 and 1994 to the company's core
automobile product have resulted in lower premiums written and an indication of
prospective improvement in profitability as measured by actuarial models of the
expected loss costs. Continued increasing catastrophe reinsurance costs and
regulatory assessments on the personal property lines have also contributed to
reductions in both premiums earned and profitability in this particular
segment.
Investment income decreased by 11% as a direct result of lower interest
rates on funds available for investment during the year. Recent market changes
with prevailing interest rate increases will provide a more stabilized yield
for 1995 as the Company is now converting much of its positive cash flow to
taxable securities which yield a higher after-tax return.
The substantial increase in net realized gains in 1994 resulted primarily
from the opportunity to dispose of appreciated equity securities.
Since its introduction in 1993, the fee for service subsidiary has shown a
momentum of growing profitability and revenues have increased from $182,297 to
$1,329,269 primarily for services provided to the FRPCJUA. With the addition
of the FAJUA business as well as recent approval to participate in the National
Flood Insurance Program, it is expected that this segment will continue to
contribute considerably to both revenues and profitability during 1995.
Total consolidated expenses decreased by 12% from $38,514,858 to
$44,340,175.
Loss and loss adjustment expenses decreased by 18% as a result of
increased reinsurance recoveries resulting from revised cessions in effect
during 1994. Loss ratios as measured against insurance premiums earned have
stabilized as a result of the underwriting changes and rate increases effected
during the year which have offset any reserve strengthening indicated by
actuarial loss development trends and patterns. Policy acquisition costs
decreased as a result of additional ceding commissions received from the
revised reinsurance cessions.
Loss and loss adjustment expense as a percentage of earned premium was
69.3% in 1992, 77.6% in 1993 and 77.0% in 1994. The Company believes that its
current reserves are adequate and proper, and that several steps have been
taken in the last fifteen months which should reduce the ratio of loss and loss
adjustment expense to earned premium. However, additional reserve
strengthening may be required in the future. The Company continues to have
comprehensive independent actuarial review of its reserves. At year end 1994
the Company's loss reserves are in a range which the independent actuary deems
appropriate but approximately 7.5% below the midpoint of that range.
II-5
<PAGE> 12
1994 Compared to 1993
The increasing loss and loss adjustment expense experienced on the
business which the company originates and cedes to reinsurers may also
adversely affect the Company's profitability in the future. If the Company's
ratio of loss and loss adjustment expense to earned premium does not improve or
should continue to deteriorate, it is likely that over time the Company's cost
of reinsurance would increase, and it is possible that the Company could not
obtain reinsurance on economically viable terms.
Financial Condition
Funds generated from operations have continued to provide a very favorable
cash flow. Liquidity remains adequate enough to position the Company for
market opportunities.
II-6
<PAGE> 13
Item 8. Financial Statements and Supplementary Data
<TABLE>
<S> <C>
Index to Financial Statements and Supplementary Data
Report of Independent Certified Public Accountants II-8
Consolidated Balance Sheets, December 31, 1995 and 1994 II-9
Consolidated Statements of Operations II-10
Years ended December 31, 1995, 1994 and 1993
Consolidated Statements of Cash Flows II-11
Years ended December 31, 1995, 1994 and 1993
Consolidated Statements of Changes in Stockholders' Equity II-12
Years ended December 31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements II-13-31
</TABLE>
Item 9. Disagreements on Accounting and Financial Disclosure
None.
II-7
<PAGE> 14
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors
and Stockholders
Mobile America Corporation
Jacksonville, Florida
We have audited the accompanying consolidated balance sheets of Mobile
America Corporation and Subsidiaries as of December 31, 1995 and 1994, and the
related consolidated statements of operations, changes in stockholders' equity
and cash flows for each of the three years in the period ended December 31,
1995. These financial statements and schedules referred to below are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Mobile
America Corporation and Subsidiaries as of December 31, 1995 and 1994, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1995, in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in the
accompanying Index in Item 14(a)2 of this Form 10-K are presented for purposes
of complying with the Securities and Exchange Commission's rules and are not
part of the basic financial statements. These schedules have been subjected to
the auditing procedures applied in the audits of the basic financial statements
and, in our opinion, fairly state in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
As discussed in Notes 1 and 12 to the consolidated financial statements,
the company adopted the provisions of the Financial Accounting Standards
Board's Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," and No. 113, "Accounting
and Reporting for Reinsurance of Short-Duration and Long-Duration Contracts,"
in 1994.
Also discussed in Notes 1 and 12 to the consolidated financial statements,
the company adopted the provisions of the Financial Accounting Standards
Board's Statement of Financial Accounting Standards No. 109," Accounting for
Income Taxes," in 1993.
CHERRY, BEKAERT & HOLLAND, L.L.P.
Orlando, Florida
March 21, 1996
II-8
<PAGE> 15
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1995 AND 1994
<TABLE>
<CAPTION>
ASSETS 1995 1994
------ ---- ----
<S> <C> <C>
Investments:
Securities held to maturity $52,460,555 $ 70,287,568
at amortized cost
(fair value $52,785,561
and $69,817,915)
Securities available for
(amortized cost $34,644,650
and $0) 35,690,835 -
Equity Securities, at market - 1,929,557
(cost $0 and $2,087,656)
Notes receivable less 2,655 5,012
unearned discount of $74
and $379
Short-term investments 22,470,314 14,369,810
------------ ------------
Total investments
110,624,354 86,591,947
------------ ------------
Cash 6,510,457 5,479,899
Receivables:
Insurance premiums 2,563,715 712,658
Accrued investment income
and other 1,971,356 1,460,572
Reinsurance 33,822,126 24,832,401
------------ ------------
Total receivables 38,357,197 27,005,631
------------ ------------
Income taxes:
Currently receivable - 178,413
Deferred 760,025 607,398
------------ ------------
Total income taxes 760,025 785,811
------------ ------------
Prepaid reinsurance premiums 24,260,694 22,412,328
Inventory of mobile homes 39,545 39,545
Deferred policy acquisition costs (4,209,840) (3,774,978)
Property and Equipment:
Land, at cost 356,970 356,970
Modular office equipment,
at cost less accumulated
depreciation of $7,982
and $320,470 3,000 12,883
Equipment and leasehold improvements
at cost less accumulated
depreciation and amortization of
$1,953,916 and $1,725,426 630,458 727,104
------------ ------------
Total property and equipment: 990,428 1,096,957
------------ ------------
Equity in Pools and Associations 4,912,334 4,077,462
Other Assets 525,968 100,693
------------ ------------
$182,771,162 $143,815,295
============ ============
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1994
---- ----
<S> <C> <C>
Insurance loss reserves, including
future policy benefits $ 54,645,686 $ 43,950,469
Unearned premiums 39,535,149 34,639,680
Reinsurance funds withheld and
balance payable 26,120,505 29,061,872
Accrued expenses and other liabilities 15,639,062 9,351,078
Deferred income tax on net unrealized
gains on securities available for sale 355,000 -
Unearned service fees 2,610,902 1,197,905
Note payable 12,000,000 -
Current income taxes payable 551,868 -
------------ ------------
Total liabilities $151,458,172 $118,201,004
------------ ------------
Stockholders' equity:
Common stock, $.025 par value per share
Authorized - 18,000,000 shares
Issued - 6,720,396 168,010 168,010
Preferred stock, $.10 per value per share
Authorized - 500,000 shares
Issued and outstanding - none
Capital in excess of par value 2,686,060 2,686,060
Net unrealized appreciation on securities
available for sale net of deferred
income taxes 691,185 -
Net unrealized gains/(losses) on equity
securities net of taxes - (158,099)
Treasury Stock at cost, 460,356 and
456,356 shares (420,944) (388,441)
Retained Earnings 28,188,679 23,306,761
------------ ------------
Total stockholders' equity 31,312,990 25,614,291
------------ ------------
$182,771,162 $143,815,295
============ ============
</TABLE>
See notes to consolidate financial statements
II-9
<PAGE> 16
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Revenues:
Insurance premiums earned net of
premiums ceded of $65,079,149
$53,349,540 and $53,094,842 $37,642,846 $34,372,185 $41,561,149
Service fees earned 8,624,931 4,301,521 3,537,776
Investment income 5,562,074 4,146,956 4,660,908
Equipment rentals 67,510 79,830 94,176
Others 670,876 65,268 537,596
Sales of modular office equipment 105,484 50,525 19,025
Net realized gains (losses) on investments 252,153 751,045 (110,429)
----------- ----------- -----------
Total revenues 52,925,874 43,767,330 50,300,201
----------- ----------- -----------
Expenses:
Losses and loss adjustment expenses net of
reinsurance recoveries of $59,612,492
$38,638,934 and $41,083,836 30,728,626 26,466,443 32,231,060
Policy acquisition costs 862,004 2,980,950 4 225,972
Salaries and wages 5,478,820 4,562,057 3,935,256
Interest on note 156,375 - -
General and administrative 7,106,897 4,491,958 3,539,532
Cost of sales of modular office equipment 7,453 12,650 1,531
----------- ----------- -----------
Total expenses 44,340,175 38,514,858 43,933,351
----------- ----------- -----------
Income before provision for income taxes 8,585,699 5,252,472 6,366,850
----------- ----------- -----------
Provision and (benefit) for income taxes:
Current 2,268,942 1,203,026 1,808,111
Deferred 317,063 (79,000) (6,568)
----------- ----------- -----------
Total provision for income taxes 2,586,005 1,204,026 1,801,543
----------- ----------- -----------
Net income $ 5,999,694 $ 4,048,446 $ 4,565,307
=========== =========== ===========
Earnings per share:
Net income $ .96 $ .65 $ .73
=========== =========== ===========
Weighted average number of common stock and
common stock equivalents 6,260,040 6,264,040 6,269,040
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
II-10
<PAGE> 17
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 5,999,694 $ 4,048,446 $ 4,565,307
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 231,449 281,674 317,521
(Gain) Loss on sale of investments (252,153) (751,045) 110,429
(Increase) in insurance premiums receivable (2,685,929) (1,551,594) (689,986)
(Increase) decrease in accrued investment
income and other (510,784) 129,813 (100,719)
(Increase) decrease in prepaid reinsurance
premiums (1,848,366) (3,982,131) 725,594
(Increase) in reinsurance receivable (8,989,725) (1,912,013) (4,395,348)
(Increase) decrease in deferred policy
acquisition costs 434,862 1,498,843 (51,344)
(Increase) decrease and other assets (425,275) (98,497) 1,036,507
Increase in insurance loss reserves 10,695,217 1,602,836 6,599,532
Increase (decrease) in unearned premium 4,895,469 817,035 (1,431,597)
Increase (decrease) in reinsurance funds held and
balances payable (2,941,367) 1,993,911 (890,058)
Increase (decrease) in accrued expenses
and other liabilities 6,287,984 1,690,086 (1,728,059)
Increase (decrease) in current income taxes 730,281 1,248,700 (1,149,757)
(Decrease) in deferred income taxes (152,627) (79,000) (6,568)
Increase in unearned service fees 1,412,997 938,880 259,025
----------- ----------- -----------
Net cash provided by
operating activities $12,881,727 $ 5,875,944 $ 3,170,479
----------- ----------- -----------
Cash Flows from Investing Activities:
Net change in short term investments (8,100,504) (6,535,827) 7,610,456
Purchase of equity securities (2,754,451) (2,082,178) (2,360,265)
Sales of equity securities 3,152,539 3,477,732 1,915,082
Purchase of property and equipment (135,362) (214,947) (254,056)
Sale of modular offices and equipment 10,442 11,564 1,531
Purchase of fixed maturities (38,753,011) (26,356,581) (34,829,607)
Sale of fixed maturities 5,595,785 7,006,649 1,067,878
Maturities of fixed maturities 18,281,310 20,984,994 26,400,814
Notes receivable 2,362 5,718 7,133
----------- ----------- -----------
Net cash used in investing
activities (22,700,890) (3,702,876) (441,034)
----------- ----------- -----------
Cash Flows from Financing Activities:
Proceeds from Note payable 12,000,000 - -
Purchase of Treasury Stock (32,503) (51,875) -
Dividends paid to stockholders (1,117,776) (1,304,142) (2,706,625)
----------- ----------- -----------
Net cash provided by (used in)
financing activities 10,849,721 (1,356,017) (2,706,625)
----------- ----------- -----------
Net increase in cash 1,030,558 817,051 22,820
Cash, beginning year $ 5,479,899 $ 4,662,848 $ 4,640,028
----------- ----------- -----------
Cash, end of year $ 6,510,457 $ 5,479,899 $ 4,662,848
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
II-11
<PAGE> 18
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Common Stock:
No change during year $ 168,010 $ 168,010 $ 168,010
----------- ----------- -----------
Preferred Stock:
No change during year - - -
----------- ----------- -----------
Capital in excess of par value:
No change during year 2,686,060 2,686,060 2,686,060
----------- ----------- -----------
Net unrealized appreciation on securities
available for sale:
Balance at beginning of year - - -
Increase 1,046,185 - -
Deferred taxes on unrealized gains (355,000) - -
----------- ----------- -----------
Balance at end of year 691,185 - -
----------- ----------- -----------
Net unrealized investment gains (losses)
on equity securities:
Balance at beginning of year (158,099) 513,362 222,675
Increase (decrease) 158,099 (671,461) 478,687
Deferred taxes on unrealized gains - - (188,000)
----------- ----------- -----------
Balance at end of year - (158,099) 513,362
----------- ----------- ----------
Treasury Stock:
Balance at beginning of year (388,441) (336,556) (336,556)
Purchases of 4,000, 5,000 and -0- 32,503 51,885 -
----------- ----------- -----------
Balance at end of year (420,944) (388,441) (336,556)
----------- ----------- -----------
Retained earnings:
Balance at beginning of year 23,306,761 20,562,457 18,703,775
Net income 5,999,694 4,048,446 4,565,307
Cash dividends $.18, $.21
and $.435 per share (1,117,776) (1,304,142) (2,706,625)
----------- ----------- -----------
Balance at end of year 28,188,679 23,306,761 20,562,457
----------- ----------- -----------
Total stockholders' equity at
end of year $31,312,990 $25,614,291 $23,593,333
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
II-12
<PAGE> 19
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. Summary of Significant Accounting Policies
(a) Basis of Financial Statement Presentation
The consolidated financial statements have been prepared on the basis of
generally accepted accounting principles which vary from statutory reporting
practices prescribed or permitted for insurance companies by regulatory
authorities.
(b) Principles of Consolidation
The accompanying consolidated financial statements include Mobile America
Corporation (the Company) and its subsidiaries, all of which are wholly-owned.
All significant intercompany transactions have been eliminated in
consolidation.
(c) Estimates
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
(d) Basis of Inventory Valuation
Inventories are valued at the lower of cost or market, with cost being
determined primarily under the specific identification method.
(e) Method of Valuing Investments
The Company implemented Statement of Financial Accounting Standards (SFAS)
No. 115, "Accounting for Certain Investments in Debt and Equity Securities" as
of January 1, 1994. The Company classified its entire fixed maturity
investment portfolio as "held to maturity". Accordingly, these investments are
reported at amortized cost, adjusted for amortization of premiums or discounts
and other than temporary declines in fair value. At December 29, 1995, the
Company reassessed the appropriateness of the classifications of all securities
held at that time and reclassified from the held to maturity category a portion
of the Company's fixed maturity portfolio to the available for sale category.
Classifying these securities as available for sale did not impact net income.
Common Stock, redeemable preferred stock, bonds and notes not classified
II-13
<PAGE> 20
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
as held to maturity are reported at fair value, with unrealized gains and
losses reported as a separate component of stockholders' equity. Fair values
are based on quoted market prices or dealer quotes, if available. If a quoted
market price is not available, fair value is estimated using quoted market
prices for similar securities.
(f) Realized Investment Gains and Loses
The cost of securities sold is based upon the specific identification
method and any gains or losses are reflected in the accompanying statements of
operations.
(g) Deferred Policy Acquisition Costs
The costs associated with acquiring new insurance contracts have been
deferred. Such costs are being amortized over the premium paying period or in
proportion to premiums earned on those contracts.
(h) Property and equipment
Property and equipment is carried at cost and is depreciated principally
under the straight-line method over the estimated useful lives of the
respective assets.
Maintenance and repairs are charged to expenses as incurred; additions and
major betterments are capitalized and depreciated. At the time of retirement
or other disposition of modular offices, equipment and leasehold improvements,
the accounts are relieved of the cost and the related accumulated depreciation
and any gains or losses are reflected in the consolidated statements of
operations.
(i) Insurance Contracts
The insurance contracts accounted for in these financial statements
include both short-duration contracts and long-duration contracts.
Short-duration contracts provide insurance protection for a fixed period of
short-duration and enable the insurer to cancel the contract or to adjust the
provisions at the end of any contract period. Most property-liability
insurance contracts and certain term life insurance contracts generally are not
subject to unilateral changes in their provisions and require the
II-14
<PAGE> 21
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
performance of various functions and services, including insurance
protection, for an extended period. Long-duration contracts include whole-life
contracts and guaranteed renewable term life contracts. The Company has not
issued any participating policies.
(j) Insurance Loss Reserves
The liability for future policy benefits of long-duration contracts has
been provided for on a net level premium method based on estimated investment
yields, withdrawals, mortality, terminations, morbidity, and other assumptions
which were appropriate at the time the contracts were issued.
Estimates of future policy benefits were based on past experience as
adjusted to provide for possible adverse deviation from the estimates.
Interest assumptions are based on historical assumptions and experience, and
range from 3% to 4.5% at December 31, 1995.
The liabilities for unpaid claims of short-duration contracts and related
adjustment expenses are determined using case basis evaluations and statistical
analysis and represent estimates of the ultimate net cost of all reported and
unreported claims relating to insured events which are unpaid at year-end. The
liabilities include estimates of future trends in claims severity and frequency
and other factors which could vary as the claims are ultimately settled.
Although such estimates may vary, management believes that the liabilities for
unpaid claims and related adjustment expenses are adequate. The estimates are
continually reviewed, and as adjustments to these liabilities become necessary,
they are reflected in current operations.
(k) Recognition of Premium Revenues and Related Expenses
Premiums for long-duration contracts are recognized as revenues when due
from the policyholders. A liability for the expected costs relating to such
long-duration contracts is accrued over the current and expected renewal
periods.
II-15
<PAGE> 22
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Premiums for short-duration contracts are recognized as revenues over the
period of the contract in proportion to the amount and duration of insurance
protection provided.
Earned premiums are stated after reduction for related premiums ceded to
reinsurers. The Company considers anticipated investment income in determining
if a premium deficiency exists on short-duration contracts.
(l) Earnings per Share
Earnings per share are computed on the basis of the weighted average
number of common shares outstanding during each year. The effect of stock
options is not material to the computation of earnings per share.
(m) Cash and Short-term Investments
For purposes of the consolidated statement of cash flows, cash includes
balances in bank deposit accounts maintained with high credit quality financial
institutions. Short-term investments are stated at cost, and consist primarily
of certificates of deposits, money market accounts and commercial paper and
repurchase agreements. For purposes of the consolidated statement of cash
flows, the Company does not consider short-term investments to be cash
equivalents as they generally have original maturities in excess of three
months.
(n) Supplemental Cash Flow Information
Interest and Income Taxes Paid - The Company paid interest of $156,375 in
1995, $ 0 in 1994, and $ 0 in 1993. Income taxes paid totaled $2,008,351 in
1995, $34,326 in 1994 and $2,932,361 in 1993.
II-16
<PAGE> 23
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(o) Reclassifications
Certain fees earned previously reported as a reduction in policy
acquisition costs were reclassified in our 1993 and 1994 financial statements
to conform to 1995 presentation. These reclassifications had no effect on net
income, or shareholders' equity, as previously reported for those years.
(p) Income Taxes
Effective in 1993, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes". Accordingly, income
tax provisions are based on the asset and liability method. Deferred income
taxes have been provided for temporary differences between the tax basis of
assets and liabilities and their reported amounts in the consolidated financial
statements.
Note 2. Investments
Major categories of investment income are summarized as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Fixed Maturities $4,382,034 $3,707,095 $4,162,602
Equity Securities 94,330 109,932 133,882
Short Term Investments 1,085,222 328,957 362,869
Notes Receivable 488 972 1,555
---------- ---------- ----------
$5,562,074 $4,146,956 $4,660,908
========== ========== ==========
</TABLE>
Net realized gains (losses) and net unrealized appreciation (depreciation)
on fixed maturities and equity securities are summarized as follows:
<TABLE>
<CAPTION>
Fixed Equity
1995 Maturities Securities Total
---------- ---------- ---------- ---------
<S> <C> <C> <C>
Realized $ 48,330 $ 203,823 $ 252,153
Unrealized 1,305,503 65,688 1,371,191
---------- --------- ----------
Combined $1,353,833 $ 269,511 $1,623,344
========== ========= ==========
Fixed Equity
1994 Maturities Securities Total
---------- ---------- ---------- ----------
Realized $ (141,818) $ 892,863 $ 751,045
Unrealized (469,653) (158,099) (627,752)
---------- --------- ----------
Combined $ (611,471) $ 734,764 $ 123,293
========== ========= ==========
</TABLE>
II-17
<PAGE> 24
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Fixed Equity
1993 Maturities Securities Total
---------- ---------- ---------- ----------
<S> <C> <C> <C>
Realized $ (166,592) $ 56,163 $ (110,429)
Unrealized 925,316 701,362 1,626,678
---------- ---------- ----------
Combined $ 758,724 $ 757,525 $1,516,249
========== ========== ==========
</TABLE>
The aggregate fair value, gross unrealized gains, gross unrealized losses
and amortized cost for available for sale and held to maturity securities by
major security type at December 31, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains (Losses) Value
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Held to maturity securities:
December 31, 1995
U. S. Government and
government agencies $19,513,231 $ 133,395 $ (18,391) $19,628,235
States, municipalities
and political
subdivisions 26,579,614 225,402 (28,811) 26,776,205
Corporate debt securities 4,156,465 26,195 (13,778) 4,168,882
Mortgage backed securities 2,211,245 14,549 (13,555) 2,212,239
----------- ---------- --------- -----------
$52,460,555 399,541 $ (74,535) $52,785,561
=========== ========== ========= ===========
Held to maturity securities:
December 31, 1994
U. S. Government and
government agencies $20,529,231 $ - $(373,323) $20,155,908
States, municipalities and
political subdivisions 41,274,053 364,113 (283,677) 41,354,489
Corporate debt securities 5,854,973 6,430 (183,196) 5,678,207
Mortgage backed securities 2,629,311 - - 2,629,311
----------- ---------- --------- ----------
$70,287,568 370,543 $(840,196) $69,817,915
=========== ========== ========= ===========
Available for sale securities:
December 31, 1995
U. S. Government and
government agencies $ 9,610,964 $ 190,609 $ - $ 9,801,573
States, municipalities and
political subdivisions 18,241,313 644,659 (260) 18,885,712
Corporate debt securities 4,898,978 145,489 - 5,044,467
Equity securities 1,893,395 131,116 (65,428) 1,959,083
----------- ---------- --------- -----------
$34,644,650 1,111,873 $ (65,688) $35,690,835
=========== ========== ========= ===========
</TABLE>
II-18
<PAGE> 25
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The scheduled maturities of available for sale and held to maturity
securities at December 31, 1995 are as follows. Expected maturities may differ
from contractual maturities because borrowers may have the right to call or
prepay obligations without penalties.
<TABLE>
<CAPTION>
Amortized Fair
Cost Value
---------- -----------
Held to maturity securities:
<S> <C> <C>
Due in one year or less $10,125,652 $10,178,372
Due after one through five years 29,368,126 29,591,577
Due after five years through ten years 6,735,694 6,762,167
Due after ten years 4,019,838 4,041,206
Mortgage backed securities 2,211,245 2,212,239
----------- -----------
$52,460,555 $52,785,561
=========== ===========
Amortized Fair
Cost Value
----------- -----------
Available for sale securities:
Due in one year or less $ 1,402,035 $ 1,421,995
Due after one through five years 23,368,419 24,046,353
Due after five years through ten years 5,999,777 6,243,267
Due after ten years 1,981,024 2,020,137
----------- -----------
$32,751,255 $33,731,752
=========== ===========
</TABLE>
Proceeds from sales of investments in debt maturities and related gross
realized gains and losses were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Proceeds from sales $5,595,785 $7,006,649 $1,067,878
Gross realized gains 66,206 25,168 65,941
Gross realized losses 17,876 166,986 232,533
</TABLE>
The Company's three insurance subsidiaries, Fortune Insurance Company,
Fortune Life Insurance Company, and Pegasus Insurance Company maintain certain
deposits with state regulatory agencies as a statutory licensing requirement.
The carrying value of the investments on deposit was $1,544,762 at December 31,
1995 and $1,505,549 at December 31, 1994 and these deposits are included in the
investment tables and exhibits of this report.
II-19
<PAGE> 26
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company's two finance companies also maintain certain deposits with
state regulatory agencies as a statutory licensing requirement. The carrying
value of these investments was $70,000 at December 31, 1995 and 1994.
Note 3. Deferred Policy Acquisition Costs
Costs deferred, principally commissions, are primarily related to the
production of new business and are deferred and amortized as summarized below:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fortune 1995 1994 1993
- ------- ----------- ----------- ----------
Balance at beginning of year $ (438,658) 1,084,099 $ 1,070,465
Commissions and other Costs
deferred 7,496,662 9,150,797 11,021,661
Charged to expense (8,479,053) (10,673,554) (11,008,027)
----------- ----------- -----------
Balance at end of year $(1,421,049) $ (438,658) $ 1,084,099
=========== =========== ===========
Mobile America Insurance Group 1995 1994 1993
- ------------------------------ ----------- ----------- -----------
Balance at beginning of year $(3,343,007) $(3,377,269) (3,429,647)
Commissions and other Costs
deferred (7,113,083) (7,677,052) (6,791,529)
Charged to expense 7,643,569 7,711,314 6,843,907
----------- ----------- -----------
Balance at end of year $(2,812,521) $(3,343,007) $(3,377,269)
=========== =========== ===========
Fortune Life 1995 1994 1993
- ------------ ----------- ----------- -----------
Balance at beginning of year $ 4,566 $ 17,035 $ 31,703
Commissions and other Costs
deferred 10,221 5,319 47,185
Charged to expense (7,097) (17,788) (61,853)
----------- ----------- -----------
Balance at end of year $ 7,690 $ 4,566 $ 17,035
========== =========== ===========
Pegasus Insurance Company 1995 1994 1993
- ------------------------- ----------- ----------- -----------
Balance at beginning of year $ 2,121 $ - $ -
Commissions and other Costs
deferred 33,341 3, 043 -
Charged to expense (19,422) (922) -
----------- ----------- -----------
Balance at end of year $ 16,040 $ 2,121 $ -
=========== =========== ===========
Consolidated Totals $(4,209,840) $(3,774,978) $(2,276,135)
=========== =========== ===========
</TABLE>
Several of the automobile insurance lines written by Fortune have been
reinsured on a quota share basis, whereby a reinsurer provides ceding
commission to the Company in return for ceded premium. In some instances these
ceding commissions received
II-20
<PAGE> 27
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
actually exceed the costs to the Company of soliciting new business, thereby
generating credits to commission expense and deferred policy acquisition costs.
Note 4. Modular Office Units, Land and Equipment and Leasehold
Improvements
The cost and annual rates of depreciation and amortization for the major
classifications of property, equipment and leasehold improvements are as
follows:
<TABLE>
<CAPTION>
December 31,
------------------------
Annual Rates 1995 1994
Modular Office Units: ------------ -------- ---------
<S> <C> <C> <C>
Modular office units 12%-20% $ 10,982 $ 333,353
Less accumulated depreciation (7,982) (320,470)
-------- ---------
$ 3,000 $ 12,883
======== =========
Land: $356,970 $ 356,970
======== =========
</TABLE>
<TABLE>
<CAPTION>
December 31,
----------------------
Annual Rates 1995 1994
------------ -------- ----------
<S> <C> <C> <C>
Equipment and leasehold improvements:
Transportation equipment 25%-33% $ 214,630 $ 191,907
Building 5% 35,000 35,000
Office furniture, fixtures and
leasehold improvements 5%-33% 2,334,744 2,225,623
---------- ----------
2,584,374 2,452,530
Less accumulated depreciation (1,953,916) (1,725,426
---------- ---------
$ 630,458 $ 727,104
========== ==========
</TABLE>
Note 5. Reinsurance
The Company's insurance subsidiaries have various reinsurance agreements
which significantly affect their operations. Risks are reinsured to limit loss
size and to increase writing capacity, although the Company is primarily liable
to the extent that the reinsurer cannot meet its obligations.
II-21
<PAGE> 28
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fortune Insurance Company and Pegasus Insurance Company have limited their
property and liability losses to a maximum of $40,000 per occurrence.
Additionally, with several of the automobile insurance lines, Fortune has
reinsured various percentages of its liability on a quota share basis. On
catastrophe losses up to $5,000,000, Fortune Insurance Company has limited its
liability to 5% of the loss in excess of $400,000 in a treaty year.
Fortune Life Insurance Company has entered into various reinsurance
agreements which limit its loss to $10,000 per individual risk.
Reinsurance transactions were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
(in Thousands)
<S> <C> <C> <C>
Ceded Premiums Earned $65,079 $53,350 $53,094
Recovered on Paid Losses 50,623 36,727 36,688
Recoverable on Unpaid Losses 33,822 24,832 22,920
Unearned Premiums Ceded 24,261 22,412 18,430
Ceding Commissions Received 15,694 13,756 13,960
</TABLE>
Note 6. Regulatory Restrictions
Fortune Insurance Company, Fortune Life Insurance Company and Pegasus
Insurance Company are subject to regulation by the insurance departments of the
state in which they are licensed. Under the regulations, cash dividends may
only be paid out of accumulated surplus funds derived from net operating
profits and capital gains, or out of earned surplus even though total surplus
may be less than capital stock and paid in capital. Fortune Insurance Company,
which is subject to Florida law, may not pay unless otherwise approved by the
State Insurance Commissioner, dividends in any one year which exceed the
greater of (a) 10% of such surplus funds or (b) the total amount of such funds
derived during the immediate preceding year.
II-22
<PAGE> 29
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following represent reconciliations of net income and stockholder's
equity of Fortune, Fortune Life and Pegasus Insurance Company from a statutory
basis to those presented on a GAAP basis for the year ended December 31, 1995:
<TABLE>
<CAPTION>
Fortune
Fortune Life Pegasus
----------- -------- --------
<S> <C> <C> <C>
Net gain(loss) from operations -
statutory basis $(3,335,411) $ 112,249 $ 13,426
----------- ---------- ----------
Other (196,728) (2,121) 1
Change in deferred acquisition costs (208,906) 3,124 13,919
Change in deferred ceding commissions (773,484) - -
Deferred income taxes 636,000 - -
Change in reserves - (4,068) -
----------- ---------- ----------
(543,118) (3,065) 13,920
----------- ---------- ----------
Net gain(loss) from operations -
GAAP basis $(3,878,529) $ 109,184 $ 27,346
=========== ========== ==========
Stockholder's equity -
statutory basis $16,644,807 $3,858,390 $3,581,237
----------- ---------- ----------
Other 349,851 (15,609) 12,001
Deferred acquisition costs 8,877,675 7,690 16,040
Deferred ceding commissions (10,298,723) - -
Adjustments to reserves - (5,325) 2,647
Deferred income taxes 1,370,526 (20,702) -
Non-admitted assets 320,658 2,650 -
Non-ledger assets - (93,000) -
Unrealized gains 15,017 - -
Mandatory securities valuation
reserve - 54,082 -
----------- ---------- ----------
635,004 (70,214) 30,688
----------- ---------- ----------
Stockholder's equity - GAAP basis $17,279,811 $3,788,176 $3,611,925
=========== ========== ==========
</TABLE>
II-23
<PAGE> 30
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 7. Pension Plan
During 1982, the Company adopted a defined contribution pension plan
covering substantially all full-time employees, for which contributions are
based on employee earnings. Total contributions made by the Company during
1995, 1994, and 1993 were $210,000, $170,000, and $141,000 respectively.
Note 8. Stock Options
The Company's incentive plan adopted in 1995 provides for the issuance to
key employees and directors of a maximum of 200,000 shares of common stock for
options, stock appreciation rights and other stock-based awards as defined
under current tax laws. Incentive stock options for employees are exercisable
for periods of up to ten years from the date of the grant at a price equal to
the fair market value on the date of the grant. In the case of an incentive
option granted to an individual who owns at least 10% of the total combined
voting power of the Company, the exercise price must be at least 110% of the
fair market value of the common stock on the date of grant and the option term
cannot exceed five years. Stock appreciation rights entitle the recipient to
receive the difference between the fair market value of the common stock on the
date of exercise and the stock appreciation right price, in cash or in shares
of common stock, or a combination. Restricted stock awards entitle the
recipient to receive shares of common stock subject to forfeiture restrictions
that lapse over time or upon the occurrence of specific events. During 1995,
103,750 stock options were granted at a price of $9.62 each, of which 11,250
were canceled due to terminated employment. The Company has 107,500 shares
available for future grants.
II-24
<PAGE> 31
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 9. Income Taxes
The following analysis reconciles the statutory Federal income tax rate to
the effective tax rates:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
(S) <C> <C> <C>
Statutory Federal rate 34% 34% 34%
Increase (reductions) in effective tax
rate resulting from:
Tax exempt interest (8.0) (12.5) (11.5)
Dividends received deduction (.2) (.4) (.4)
Special life insurance
company deductions (.1) (.5) (.4)
State income taxes 7.4 5.6 5.9
Other (3.0) (1.8) .8
---- ---- ----
Effective tax rate 30.1% 24.4% 28.4%
==== ==== ====
</TABLE>
Consolidated deferred tax expense (credit) results from timing differences
in the recognition of revenue and expense for tax and financial statement
purposes. The source of these differences and their tax effect are summarized
as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Increase (decrease) in deferred
acquisition costs $619 $(518) $ 5
Increase (decrease) in deferred
insurance premiums (204) 215 46
Various (98) 224 (57)
---- ----- ----
$317 $ (79) $ (6)
==== ===== ====
</TABLE>
Consolidated deferred taxes receivable resulting from temporary
differences in the recognition of revenue and expense for tax and financial
statement purposes are summarized as follows (in thousands).
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Discounted loss and loss adjustment
expense reserves $ 733 $ -
Deferred acquisition costs - 150
Deferred insurance premiums 1,033 830
Various (273) (373)
------ -----
$1,493 $ 607
Valuation allowance (733) -
------ -----
$ 760 $ 607
====== =====
</TABLE>
II-25
<PAGE> 32
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Deferred taxes payable of $355,000 for 1995 are provided on unrealized
gains (net of capital loss carryforwards) on equity securities and fixed
maturities available for sale.
A portion of pre-1984 life insurance income is not taxable unless it
exceeds certain statutory limitations or is distributed to shareholders and
thereby becomes taxable at ordinary corporate rates. The balance of this
untaxed income was approximately $98,000 at December 31, 1995. Deferred income
taxes applicable to this portion of income are not required for financial
reporting purposes because under existing or foreseeable circumstances
management is of the opinion that no federal income tax payments applicable to
such distributions will be required.
The Company and its non-life insurance subsidiaries file a consolidated
federal income tax return, while the life insurance subsidiary generally files
a separate return.
Note 10. Business Segments
The Company and its subsidiaries operate principally in six business
segments, primarily in the state of Florida, consisting of automobile insurance,
personal property insurance, commercial lines insurance, life insurance,
property rentals and sales and fee for service. The four insurance segments
furnish various forms of property, liability and life insurance marketed through
independent insurance agents. The property rentals and sales segment is
provided by the Company's modular office leasing division. The Company acts as a
servicing carrier for the Florida Residential Property and Casualty Joint
Underwriting Association and performs various underwriting and claims services
for a fee.
II-26
<PAGE> 33
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Sales to Unaffiliated Customers 1995 1994 1993
------------ ------------ ------------
Automobile Insurance $100,426,747 $ 84,872,980 $ 90,546,445
Personal Property Insurance 1,807,125 2,315,126 3,446,729
Commercial Lines Insurance 432,468 494,571 548,219
Life Insurance 14,193 34,092 114,192
Property Rentals and Sales 176,894 143,955 117,101
Fee for service 8,624,931 4,301,521 3,537,776
Other 960,591 807,669 423,673
Adjustments and Eliminations (65,079,149) (53,349,540) (53,094,842)
Investment Income 5,562,074 4,146,956 4,660,908
------------ ------------ ------------
Consolidated Revenues $ 52,925,874 $ 43,767,330 $ 50,300,201
============ ============ ============
Operating Profit (or loss) 1995 1994 1993
------------ ------------ ------------
Automobile Insurance $ 3,673,684 $ 3,047,568 $ 5,591,454
Personal Property Insurance (110,955) (715,676) (470,566)
Commercial Lines Insurance (99,874) 385,396 243,730
Life Insurance 100,439 110,720 119,499
Property Rentals and Sales 140,692 71,549 19,735
Fee for service 2,843,555 808,930 101,759
Other 1,537,273 1,192,427 311,051
Investment Income 1,137,990 804,299 823,927
Corporate Expenses (637,105) (452,741) (373,739)
------------ ------------ -------------
Income before income taxes $ 8,585,699 $ 5,252,472 $ 6,366,850
============ ============ =============
Identifiable Assets 1995 1994 1993
------------ ------------ ------------
Automobile Insurance $137,386,763 $115,571,674 $104,971,157
Personal Property Insurance 8,095,427 5,643,680 9,361,210
Commercial Lines Insurance 1,574,928 2,413,416 1,754,066
Life Insurance 3,864,996 3,725,599 3,617,582
Property Rentals and Sales 25,541 107,801 118,527
Fee for service 7,116,795 2,035,622 259,843
Other 15,568,154 7,126,738 8,123,984
General Corporate Assets 9,138,558 7,190,765 6,734,028
------------ ------------ ------------
Total Assets $182,771,162 $143,815,295 $134,939,579
============ ============ ============
</TABLE>
Note 11. Stock Split
At a special meeting held on September 24, 1993, Shareholders of the
Company approved an amendment to the Company's Articles of Incorporation which
increased the number of shares of common stock the Company is authorized to
have outstanding from 6,000,000 to 18,000,000 shares, and the par value thereof
was also decreased from $.05 per share to $.025 per share, thereby creating a
two for
II-27
<PAGE> 34
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
one split for those shares issued. The rights of the common stock before
and after the splits are identical and the capital accounts on the Company's
financial statements have remained unchanged. All per share amounts in the
financial statements have been adjusted to give effect to the two for one
split.
Note 12. New Accounting Standards
A Financial Accounting Standard Board's standard for accounting for equity
and debt securities was adopted as of January 1, 1994 under which fixed
maturities were classified as held to maturity. At December 29, 1995, the
appropriateness of this classification was reassessed and fixed maturities were
reclassified into held to maturity and available for sale categories. The
resulting unrealized net appreciation on securities available for sale in the
amount of $647,947 was credited to stockholder's equity.
A Financial Accounting Standards Board's standard for accounting for
income taxes was adopted in 1993 under which new principles for calculating and
reporting the effects of federal income taxes apply. No significant
adjustments were necessary as a result of implementing FASB Statement No. 109.
A Financial Accounting Standards Board's standard for accounting and
reporting for reinsurance of short-duration and long-duration contracts was
adopted in 1993. This standard specifies the accounting by insurance
enterprises for reinsuring of insurance contracts. It amends Statement No. 60,
Accounting and Reporting by Insurance Enterprises, to eliminate the practice of
reporting assets and liabilities relating to reinsured contracts net of the
effects of reinsurance. It requires reinsurance recoverables and prepaid
reinsurance premiums to be reported as assets. No significant adjustments were
necessary as a result of implementing FASB No. 113.
II-28
<PAGE> 35
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 13. Operating Leases
The Company conducts much of its operations from office space leased under
an agreement beginning February 1, 1992 and which expires January 31, 1997.
Terms of the agreement provide for an initial annual rental of $179,195
increasing to $202,110.
Modular office unit sales and leasing are conducted from property leased
under an agreement dated May 14, 1995 and which expires May 14, 1996 at an
annual rental of $16,800.
Future minimum rental payments during the term of these leases are as
follows:
1996 201,632
1997 16,842
Rent for the years ended December 31, 1995, 1994 and 1993 were $297,597,
$263,649 and $233,500.
Note 14. Concentrations of Credit Risk
Financial instruments which potentially subject the company to
concentration of credit risk consist principally of short-term investments and
cash. The Company maintains short-term investments and cash balances at
several financial institutions located in Florida and Arizona. Accounts at
each institution are insured by the Federal Deposit Insurance Corporation up to
$100,000. Uninsured balances aggregate to approximately $5,747,000 and
$6,686,000 at December 31, 1995 and 1994. As of December 31, 1995 and 1994 the
Company has a repurchase agreements with a financial institution located in
Florida for $8,937,000 and $2,242,000, respectively.
II-29
<PAGE> 36
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 15. Note Payable
On October 24, 1995 the Company obtained a bank loan in the amount of
$12,000,000, for which the proceeds have been used primarily as additional
regulatory capital for the Company's insurance subsidiaries. This note accrues
interest at the 90 day LIBOR rate plus 275 basis points. Interest only is paid
through January 24, 1998 with the first principal payment due on the twenty
seventh month interest payment date and quarterly thereafter in the amount of
$600,000 each payment. The entire unpaid principal balance, together with
accrued interest thereon is due and payable on the loan maturity date October
24, 2002.
The note was collateralized by the assignment of the capital stock of the
Registrant's subsidiaries on October 24, 1995 as well as the execution of
guaranty agreements between the bank and certain subsidiaries of the Registrant.
The following is a schedule of the required annual principal payments:
<TABLE>
<CAPTION>
<S> <C>
1996 $ -
1997 -
1998 2,400,000
1999 2,400,000
2000 and thereafter 7,200,000
-----------
$12,000,000
===========
</TABLE>
Loan acquisition costs are being amortized on a straight-line basis over
the term of the loan and are being included in the other asset section of the
consolidated balance sheet as of December 31, 1995.
<TABLE>
<CAPTION>
<S> <C>
Loan acquisition cost $435,920
Less accumulated amortization 10,380
--------
Net loan acquisition costs $425,540
========
</TABLE>
II-30
<PAGE> 37
Note 16. Insurance Loss Reserves
Reserves for unpaid losses and loss adjustment expenses are maintained to
cover the probable ultimate cost of settling all losses incurred including
those not yet reported. Reserves for losses incurred in prior years may be
adjusted by review or by payment which could result in either a redundancy or
deficiency to the reserve reported at the end of the prior year. Such changes
are reflected in current operations.
Activity in the liability for insurance loss reserves is summarized as
follows:
1995 1994
----------- -----------
<TABLE>
<CAPTION>
<S> <C> <C>
Balance at beginning of year $43,950,469 $42,347,633
Less reinsurance recoverables 24,832,401 22,920,388
----------- -----------
Net Balance at beginning of year 19,118,068 19,427,245
Incurred related to:
Current year 30,539,854 26,484,321
Prior years 188,772 (17,878)
----------- -----------
Total incurred 30,728,626 26,466,443
=========== ===========
Paid related to:
Current year 15,750,628 13,134,623
Prior years 13,272,506 13,640,997
----------- -----------
Total paid 29,023,134 26,775,620
=========== ===========
Net Balance at end of year 20,823,560 19,118,068
Plus reinsurance recoverables 33,822,126 24,832,401
----------- -----------
Balance at end of year $54,645,686 $43,950,469
=========== ===========
</TABLE>
II-31
<PAGE> 38
Part III
Items 10, 11, 12, and 13 have been omitted pursuant to instructions to
Form 10-K. The Registrant intends to file with the Securities and Exchange
Commission not later than April 30, 1996 a definitive proxy statement to be
used in connection with its Annual Meeting of Shareholders, at which time
directors will be elected for the ensuing year.
III-1
<PAGE> 39
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8K
(a) 1. Financial Statements
<TABLE>
<CAPTION>
The following financial statements are included in Part II, Item 8: Page
----
<S> <C>
Report of Independent Certified Public Accountants II-8
Consolidated Balance Sheets, December 31, 1995 and 1994 II-9
Consolidated Statements of Operations II-10
Years ended December 31, 1995, 1994 and 1993
Consolidated Statements of Cash Flows II-11
Years ended December 31, 1995, 1994 and 1993
Consolidated Statements of Changes in Stockholders' Equity II-12
Years ended December 31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements II-13-31
</TABLE>
2. Financial Statements Schedules
The following financial schedules are included in Part IV of
this report:
<TABLE>
<CAPTION>
<S> <C> <C>
Schedule I. Summary of Investments - Other than Investments in
Related Parties IV-11
December 31, 1995 and 1994
Schedule III. Condensed Financial Information of Registrant IV-12-14
Years ended December 31, 1995, 1994 and 1993
Schedule V. Supplementary Insurance Information IV-15-17
Years ended December 31, 1995, 1994 and 1993
Schedule VI. Supplementary Insurance Information - Reinsurance IV-18
Years ended December 31, 1995, 1994 and 1993
Schedule X. Supplementary Insurance Information -
Consolidated Property-Casualty Entities IV-19
Years ended December 31, 1995, 1994 and 1993
</TABLE>
All other schedules are omitted as the required information is not
applicable or the required information is otherwise presented in the financial
statements or notes thereto.
IV-1
<PAGE> 40
(a) 3. Exhibits
<TABLE>
<CAPTION>
<S> <C>
3.3 The Articles of Incorporation and By-Laws of the Company originally filed on Form S-1
Registration Statement No. 2-42438, effective March 3, 1972 are hereby incorporated herein by
reference.
The Amendment to the Articles of Incorporation filed as Exhibit C to the
Registrant's form 10-Q for the quarter ended September 30, 1980, is also hereby
incorporated herein by reference.
The Amendment to the Articles of Incorporation filed as Exhibit 4 to the
Registrant's Form 10-Q for the quarter ended September 30, 1987, is also hereby
incorporated by reference.
The Amendment to the Articles of Incorporation filed as Exhibit 4 to the
Registrant's Form 10-Q for the quarter ended September 30, 1993 is also hereby
incorporated by reference.
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Exhibit 11 Earnings Per Share Computations IV-13
Exhibit 21 Subsidiaries of Registrant IV-14
Exhibit 99 Information from reports furnished to state insurance
regulatory authorities IV-15-20
</TABLE>
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the fourth quarter of the
year ended December 31, 1995.
IV-2
<PAGE> 41
MOBILE AMERICA CORPORATION AND SUBSIDIARIES SCHEDULE I
SUMMARY OF INVESTMENTS - OTHER THAN RELATED PARTIES
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Amount
which carried
in balance Market
Consolidated Cost sheet Value
- ------------ ------------ ------------ ------------
<S> <C> <C> <C>
Industrial Bonds $ 9,203,128 $ 9,200,932 $ 9,213,349
Municipal Bonds 45,566,345 45,465,326 45,661,917
U.S. Government Bonds 31,403,018 31,526,049 31,642,047
------------ ------------ ------------
Total Bonds 86,172,491 86,192,307 86,517,313
------------ ------------ ------------
Common Stock 1,465,517 1,523,814 1,523,814
Preferred Stock 427,878 435,269 435,269
------------ ------------ ------------
Total Stocks 1,893,395 1,959,083 1,959,083
------------ ------------ ------------
Notes Receivable 2,650 2,650 2,650
------------ ------------ ------------
Certificates of Deposit 12,475,297 12,475,297 12,475,297
Industrial Bonds 3,248,256 3,241,255 3,241,697
Municipal Bonds 301,929 301,431 302,040
U.S. Government Bonds 6,432,753 6,452,331 6,464,603
------------ ------------ ------------
Total Short Term Investments 22,458,235 22,470,314 22,483,637
------------ ------------ ------------
Total Investments $110,526,771 $110,624,354 $110,962,683
============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1994
-----------------
Amount
which carried
in balance Market
Consolidated Cost sheet Value
- ------------ ----------- ------------ ------------
<S> <C> <C> <C>
Industrial Bonds $ 5,944,373 $ 5,854,973 $ 5,678,207
Municipal Bonds 42,380,908 41,274,053 41,354,489
U.S. Government Bonds 23,274,634 23,158,542 22,785,219
----------- ----------- -----------
Total Bonds 71,599,915 70,287,568 69,817,915
----------- ----------- -----------
Common Stock 1,442,769 1,341,620 1,341,620
Preferred Stock 644,887 587,937 587,937
----------- ----------- ------------
Total Stocks 2,087,656 1,929,557 1,929,557
----------- ----------- -----------
Notes Receivable 5,012 5,012 5,012
----------- ----------- -----------
Certificates of Deposit 11,180,492 11,180,492 11,180,492
Industrial Bonds 229,712 229,665 229,665
Municipal Bonds 49,309 49,337 49,337
U.S. Government Bonds 2,904,143 2,910,316 2,910,316
----------- ----------- -----------
Total Short Term Investments 14,363,656 14,369,810 14,369,810
----------- ----------- -----------
Total Investments $88,056,239 $86,591,947 $86,122,294
=========== =========== ===========
</TABLE>
IV-3
<PAGE> 42
MOBILE AMERICA CORPORATION AND SUBSIDIARIES SCHEDULE III
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
DECEMBER 31, 1995 AND 1994
PARENT COMPANY - BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Cash $ 2,219,791 $ 72,858
Receivables:
Accrued investment income and other 247,517 157,491
Intercompany receivables 7,848,778 1,751,871
----------- -----------
Total receivables 8,096,295 1,909,362
----------- -----------
Inventory of mobile homes 11,667 11,667
Investments:
Short term investments 2,999,903 1,001,690
Securities - held to maturity at
amortized cost 4,002,976 4,853,529
Securities - available for sale at market 4,128,891 -
Common stock at market - 379,182
----------- -----------
Total investments 11,131,770 6,234,401
----------- -----------
Investments in subsidiaries 22,087,957 16,409,836
Other assets 525,540 100,000
Deferred income taxes 320,627 -
Modular office equipment less
accumulated depreciation - 9,883
Equipment less accumulated depreciation 24,374 27,618
----------- -----------
$44,418,021 $26,775,625
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Note payable $12,000,000 $ -
Income taxes payable 58,528 109,000
Accrued expenses and other liabilities 27,269 33,100
Intercompany payables 1,019,234 1,019,234
----------- -----------
Total liabilities 13,105,031 1,161,334
----------- -----------
Stockholders equity
Common Stock 168,010 168,010
Capital in excess of par 2,686,060 2,686,060
Net unrealized appreciation on
securities available for sale
net of deferred taxes 691,185 -
Net unrealized investment gains (losses)
on equity securities - (158,099)
Treasury stock, at cost (420,944) (388,441)
Retained earnings 28,188,679 23,306,761
----------- -----------
Total stockholders equity 31,312,990 25,614,291
----------- -----------
$44,418,021 $26,775,625
=========== ===========
Cash dividends paid by consolidated subsidiaries to parent 1995 $ 3,744,319
1994 1,453,000
1993 5,432,000
</TABLE>
IV-4
<PAGE> 43
SCHEDULE III
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
DECEMBER 31, 1995, 1994 AND 1993
PARENT COMPANY - STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Revenues:
Investment Income $ 382,764 $ 284,905 $ 220,453
Rental Income 67,510 79,830 94,176
Other 246,273 134,458 12,050
Realized gains (losses) 7,017 804,516 (11,486)
Sales of modular office equipment 105,484 60,525 19,025
Service fees 170,826 259,755 -
------------ ------------ ------------
Total revenues 979,874 1,623,989 334,218
------------ ------------ ------------
Expenses:
General and administrative 505,186 285,305 342,764
Cost of sales of modular office equipment 7,453 15,652 1,531
------------ ------------ ------------
Total expenses 512,639 300,957 344,295
------------ ------------ ------------
Income (loss) before taxes 467,235 1,323,032 (10,077)
Deferred taxes 149,063 - -
Current taxes (credit) 45,076 409,000 (73,000)
------------ ------------ ------------
194,139 409,000 (73,000)
Income before equity in
earnings of subsidiaries 273,096 914,032 62,923
Equity in earnings of subsidiaries 5,726,598 3,134,414 4,502,384
----------- ------------ ------------
Net income $ 5,999,694 $ 4,048,446 $ 4,565,307
=========== ============ ============
</TABLE>
IV-5
<PAGE> 44
SCHEDULE III
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
PARENT COMPANY - STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 5,999,694 $ 4,048,446 $ 4,565,307
Adjustments to reconcile net income to net
cash provided by operating activities:
(Gain) on sale of investments (7,017) (804,516) -
Provisions for depreciation 5,674 21,534 35,988
Equity in earnings of subsidiaries (5,726,598) (3,134,414) (4,502,384)
(Increase) in accrued investment
income and other (90,026) (47,089) (11,631)
(Increase) decrease in prepaid and
other assets (425,540) (100,000) 1,036,038
(Increase) decrease in intercompany
balances (6,096,907) (350,460) 23,293
Decrease in inventory
of mobile homes - - 2,000
Increase (decrease) in current
income taxes (50,472) 182,000 (31,900)
Increase (decrease) in accrued
expenses and other liabilities (5,831) (7,751) 194
(Decrease) in deferred taxes (320,627) - -
----------- ----------- -----------
Net cash provided by (used in)
operating activities (6,717,650) (192,250) 1,116,905
----------- ----------- -----------
Cash Flows from Investing Activities:
Dividends from subsidiaries 3,744,319 1,453,000 5,432,000
Investment in subsidiary (1,000,000) - (2,567,174)
Net change in short term investments (1,998,213) (838,638) 261,337
Purchase of common and preferred stocks (381,327) (632,721) (195,688)
Sale of common and preferred stocks 489,766 1,470,591 85,700
Purchase of modular offices and equipment - (33,151) -
Sale of modular offices and equipment 7,453 14,563 1,531
Purchase of fixed maturities (5,148,959) (2,243,737) (2,703,630)
Sale of bonds 2,301,823 2,369,363 1,324,491
Notes receivable - - 1,942
----------- ----------- -----------
Net cash provided by (used in)
investing activities (1,985,138) 1,559,270 1,640,509
----------- ----------- -----------
Cash Flows from Financing Activities:
Proceeds from note payable 12,000,000 - -
Purchase of Treasury Stock (32,503) (51,875) -
Dividends paid to stockholders (1,117,776) (1,304,142) (2,706,625)
----------- ----------- -----------
Net cash provided by (used in)
financing activities 10,849,721 (1,356,017) (2,706,625)
----------- ----------- -----------
Net increase in cash 2,146,933 11,003 50,789
Cash, beginning year $ 72,858 $ 61,855 $ 11,066
----------- ----------- -----------
Cash, end of year $ 2,219,791 $ 72,858 $ 61,855
=========== =========== ===========
</TABLE>
IV-6
<PAGE> 45
SCHEDULE V
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INSURANCE INFORMATION
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
Premiums
---------------------------------------------------------------
Unearned Unearned Premiums
premiums Net premiums earned
beginning premiums end of during
Lines of Insurance of period written period period
- ------------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Year ended December 31, 1995
Fortune Insurance Company
Homeowners $ 556,850 $ 1,443,579 $ 791,308 $ 1,209,121
Business Owners Package 236,931 215,687 161,624 290,994
Automobile Physical
Damage 519,485 4,664,818 1,856,644 3,327,659
Automobile Liability 10,892,355 34,234,855 12,388,788 32,738,422
Other - - - -
------------ ------------ ------------ ------------
$ 12,205,621 $ 40,558,939 $ 15,198,364 $ 37,566,196
------------ ------------ ------------ ------------
Fortune Life Insurance Company
Individual Credit Life $ 834 $ - $ 541 $ 293
Ordinary Life 5,471 19,821 11,392 13,900
Accident and Health - - - -
------------ ------------ ------------ ------------
$ 6,305 $ 19,821 $ 11,933 $ 14,193
------------ ------------ ------------ ------------
Pegasus Insurance Company
Homeowners $ - $ 83,089 $ 48,058 $ 35,031
Business Owners Package 953 4,399 2,094 3,258
Other Liability 14,473 23,701 14,006 24,168
------------ ------------ ------------ ------------
$ 15,426 $ 111,189 $ 64,158 $ 62,457
------------ ------------ ------------ ------------
Eliminations - - - -
------------ ------------ ------------ ------------
Consolidated Totals $ 12,227,352 $ 40,689,949 $ 15,274,455 $ 37,642,846
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Losses, Claims and Policy Acquisition Costs
-------------------------------------------
Commissions
and
Losses Losses brokerage
outstanding incurred incurred
end of during during
period period period
------------ ------------ ------------
<S> <C> <C> <C>
Year ended December 31, 1995
Fortune Insurance Company
Homeowners $ 387,357 $ 803,827 $ 393,467
Business Owners Package 285,881 295,557 72,813
Automobile Physical
Damage 876,910 3,096,325 775,274
Automobile Liability 19,224,250 26,704,606 7,238,035
Other 7,636 200 (535)
---------- ----------- ----------
$20,782,034 $30,900,515 $8,479,054
----------- ----------- ----------
Fortune Life Insurance Company
Individual Credit Life $ - $ - $ 96
Ordinary Life 15,540 30,758 7,001
Accident and Health - - -
---------- ----------- -----------
$ 15,540 $ 30,758 $ 7,097
----------- ----------- ----------
Pegasus Insurance Company
Homeowners $ 10,509 $ 10,509 $ 13,404
Business Owners Package 977 977 894
Other Liability 14,500 14,500 5,124
----------- ----------- -----------
$ 25,986 $ 25,986 $ 19,422
----------- ----------- -----------
Eliminations - (228,633) (7,643,569)
----------- ----------- -----------
Consolidated Totals $20,823,560 $30,728,626 $ 862,004
</TABLE>
IV-7
<PAGE> 46
SCHEDULE V
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INSURANCE INFORMATION
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
Premiums
---------------------------------------------------------------
Unearned Unearned Premiums
premiums Net premiums earned
beginning premiums end of during
Lines of Insurance of period written period period
- ------------------ ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
Year ended December 31, 1994
Fortune Insurance Company
Homeowners $ 1,238,909 $ 358,465 $ 556,850 $ 1,040,524
Business Owners Package 232,269 326,381 236,931 321,719
Automobile Physical Damage 392,460 941,392 519,485 814,367
Automobile Liability 13,499,136 29,547,599 10,892,355 32,154,380
Other - 89 - 89
----------- ----------- ----------- -----------
$15,362,774 $31,173,926 $12,205,621 $34,331,079
----------- ----------- ----------- -----------
Fortune Life Insurance Company
Individual Credit Life $ 1,453 $ - $ 834 $ 619
Ordinary Life 27,671 11,277 5,471 33,477
Accident and Health - - - -
----------- ----------- ----------- -----------
$ 29,124 $ 11,277 $ 6,305 $ 34,096
----------- ----------- ----------- -----------
Pegasus Insurance Company
Homeowners $ 550 $ $ $ 550
Business Owners Package 3,001 953 2,048
Other Liability 18,885 14,473 4,412
----------- ----------- ----------- -----------
$ 550 $ 21,886 $ 15,426 $ 7,010
----------- ----------- ----------- -----------
Eliminations - - - -
----------- ----------- ----------- -----------
Consolidated Totals $15,392,448 $31,207,089 $12,227,352 $34,372,185
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Losses, Claims and Policy Acquisition Costs
---------------------------------------------
Commissions
and
Losses Losses brokerage
outstanding incurred incurred
end of during during
period period period
------------ ------------ ------------
<S> <C> <C> <C>
Year ended December 31, 1994
Fortune Insurance Company
Homeowners $ 548,707 $ 1,242,612 $ 484,902
Business Owners Package 225,388 65,279 89,172
Automobile Physical Damage 208,296 429,201 231,114
Automobile Liability 18,112,927 24,866,966 9,868,348
Other 7,968 1,511 18
----------- ----------- -----------
$19,103,286 $26,605,569 $10,673,554
----------- ----------- -----------
Fortune Life Insurance Company
Individual Credit Life $ - $ 240 $ 260
Ordinary Life 14,782 16,558 17,528
Accident and Health - - -
----------- ----------- -----------
$ 14,782 $ 16,798 $ 17,788
----------- ----------- -----------
Pegasus Insurance Company
Homeowners $ - $ - $ 55
Business Owners Package - - 210
Other Liability - - 657
----------- ----------- -----------
$ - $ - $ 922
----------- ----------- -----------
Eliminations - (155,924) (7,711,314)
----------- ----------- -----------
Consolidated Totals $19,118,068 $26,466,443 $ 2,980,950
=========== =========== ===========
</TABLE>
IV-8
<PAGE> 47
SCHEDULE V
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INSURANCE INFORMATION
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
Premiums
---------------------------------------------------------------
Unearned Unearned Premiums
premiums Net premiums earned
beginning premiums end of during
Lines of Insurance of period written period period
- ------------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Year ended December 31, 1993
Fortune Insurance Company
Homeowners $ 904,077 $ 2,590,761 $ 1,238,909 $ 2,255,929
Business Owners Package 226,127 296,374 232,269 290,232
Automobile Physical Damage 374,619 1,160,277 392,460 1,142,436
Automobile Liability 14,537,595 36,719,901 13,499,136 37,758,360
Other - - - -
------------ ------------ ------------ ------------
$ 16,042,418 $ 40,767,313 $ 15,362,774 $ 41,446,957
------------ ------------ ------------ ------------
Fortune Life Insurance
Company
Individual Credit Life $ 2,688 $ - $ 1,453 $ 1,235
Ordinary Life 53,304 87,283 27,671 112,916
Accident and Health 41 - - 41
------------ ------------ ------------ ------------
$ 56,033 $ 87,283 $ 29,124 $ 114,192
------------ ------------ ------------ ------------
Pegasus Insurance Company
Homeowners $ - 550 550 -
------------ ------------ ------------ ------------
$ - $ 550 $ 550 $ -
------------ ------------ ------------ ------------
Eliminations - - - -
------------ ------------ ------------ ------------
Consolidated Totals $ 16,098,451 $ 40,855,146 $ 15,392,448 $ 41,561,149
============ ============ ============ ============
</TABLE>
<TABLE>
<Captio>
Losses, Claims and Policy Acquisition Costs
-------------------------------------------
Commissions
and
Losses Losses brokerage
outstanding incurred incurred
end of during during
period period period
------------ ------------ ------------
<S> <C> <C> <C>
Year ended December 31, 1993
Fortune Insurance Company
Homeowners $ 443,074 $ 1,898,296 $ 762,010
Business Owners Package 318,233 81,239 93,465
Automobile Physical Damage 163,372 976,873 319,603
Automobile Liability 18,477,860 29,475,069 9,832,949
Other 7,732 1,695 -
------------ ----------- -----------
$ 19,410,271 $32,433,172 $11,008,027
------------ ----------- -----------
Fortune Life Insurance Company
Individual Credit Life $ - $ - $ 544
Ordinary Life 16,974 28,686 61,282
Accident and Health - - 26
------------ ----------- -----------
$ 16,974 $ 28,686 $ 61,852
------------ ----------- -----------
Pegasus Insurance Company
Homeowners - - -
------------ ----------- -----------
$ - $ (230,798) $ -
------------ ----------- -----------
Eliminations - - (6,843,907)
------------ ----------- -----------
Consolidated Totals $ 19,427,245 $32,231,060 $ 4,225,972
============ =========== ===========
</TABLE>
IV-9
<PAGE> 48
Schedule VI
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INSURANCE INFORMATION - REINSURANCE
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION> Percentage
Ceded to Assumed of Amount
Gross Other From Other Assumed
Amount Companies Companies Net Amount to Net
------------ ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1995
- ----------------------------
Life insurance in force $ 1,304,702 $ 12,500 $ - $ 1,292,202 $ -
=========== ============ ============= ============ =============
Insurance premiums earned:
Life insurance $ 14,661 $ 468 $ - $ 14,193 $ -
Property and Casualty 102,707,334 65,078,681 - 37,628,653 -
------------ ------------- -------------- ------------ -------------
$102,721,995 $ 65,079,149 $ - $ 37,642,846 $ -
============ ============ ============= ============ =============
Year ended December 31, 1994
- ----------------------------
Life insurance in force $ 740,296 $ 12,500 $ - $ 727,796 $ -
============ ============ ============= ============ =============
Insurance premiums earned:
Life insurance $ 34,547 $ 451 $ - $ 34,096 $ -
Property and Casualty 87,687,178 53,349,089 - 34,338,089 -
------------ ------------ ------------- ------------ -------------
$ 87,721,725 $ 53,349,540 $ - $ 34,372,185 $ -
============ ============ ============= ============ =============
Year ended December 31, 1993
- ----------------------------
Life insurance in force $ 5,869,794 $ 12,500 $ - $ 5,857,294 $ -
============ ============ ============= ============ =============
Insurance premiums earned:
Life insurance $ 114,557 $ 406 $ - $ 114,151 $ -
Accident and Health 41 - - 41 -
Property and Casualty 94,541,393 53,094,436 - 41,446,957 -
------------ ------------ ------------- ------------ -------------
$ 94,655,991 $ 53,094,842 $ - $ 41,561,149 $ -
============ ============ ============= ============ =============
</TABLE>
IV-10
<PAGE> 49
SCHEDULE X
MOBILE AMERICA CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INSURANCE INFORMATION
CONSOLIDATED PROPERTY-CASUALTY ENTITIES
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
Reserves for Discount
Deferred Unpaid Claims if any, de-
Policy and Claim ducted in Net
Acquisition Adjustment previous Unearned Earned Investment
Costs Expenses column Premiums Premiums Income
- ------------ ------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Year Ended December 31, 1995
$ (1,405,008) $ 20,808,027 $ - $15,262,522 $37,628,653 $4,337,330
Year Ended December 31, 1994
$ (436,537) $ 19,103,286 $ - $12,221,047 $34,338,089 $3,334,414
Year Ended December 31, 1993
$ 1,084,099 $ 19,410,271 $ - $15,363,324 $41,446,957 $3,961,610
</TABLE>
Claims and Claim
Adjustment Expenses Paid
Incurred Related to Amortization Claims
(1) (2) of Deferred and Claim
Current Priors Policy Acquisi- Adjustment Premium
Year Years tion Costs Expenses Written
- ------------ ------------ ------------ ------------ -----------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Year Ended December 31, 1995
$30,737,734 $188,772 $ (8,498,476) $29,221,765 $40,670,127
Year Ended December 31, 1994
$26,623,447 $(17,878) $(10,674,476) $26,912,554 $31,195,812
Year Ended December 31, 1993
$33,152,926 $719,753) $(11,008,027) $30,229,800 $40,767,863
</TABLE>
The Registrant has no affiliations with unconsolidated
subsidiaries or 50%-or-less owned equity investees.
IV-11
<PAGE> 50
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
<TABLE>
<CAPTION>
<S> <C>
MOBILE AMERICA CORPORATION
--------------------------
Registrant
March 27, 1996 By: /s/ Allan J. McCorkle
------------------------------
Allan J. McCorkle
President
March 27, 1996 By: /s/ Thomas L. Stinson
------------------------------
Thomas L. Stinson
Vice President Financial Reporting
</TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
By /s/ Allan J. McCorkle Chairman of the Board, March 27, 1996
- ---------------------------- and Director
Allan J. McCorkle
By /s/ Thomas J. McCorkle Director March 27, 1996
- ----------------------------
Thomas J. McCorkle
By /s/ R. Lee Smith Director March 27, 1996
- ----------------------------
R. Lee Smith
By /s/ Robert Thomas III Director March 27, 1996
- ----------------------------
Robert Thomas III
By /s/ Jack Horne Chambers Director March 27, 1996
- ----------------------------
Jack Horne Chambers
By /s/ John Michael Garrity Director March 27, 1996
- ----------------------------
John Michael Garrity
By /s/ Thomas Edwin Perry Director March 27, 1996
- ----------------------------
Thomas Edwin Perry
</TABLE>
IV-12
<PAGE> 1
Exhibit 11 Schedule of Computation of Per Share Earnings
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Net Income $5,999,694 $4,048,446 $4,565,307
========== ========== ==========
Common Shares outstanding - end of year 6,260,040 6,264,040 6,269,040
Effect of weighting treasury stock
acquired during the year - - -
---------- ---------- ----------
Common and common equivalent shares
used in computing earnings per share 6,260,040 6,264,040 6,269,040
========== ========== ==========
Per Share Amounts:
Net Income $ .96 $ .65 $ .73
========== ========== ==========
</TABLE>
IV-13
<PAGE> 1
Exhibit 21 Subsidiaries of Registrant
The following table lists the Registrant and its subsidiaries as of
December 31, 1995, the jurisdiction in which each subsidiary was organized, and
the percentage of voting securities of each subsidiary owned by the immediate
parent:
<TABLE>
<CAPTION>
Percentage of
Jurisdiction Voting Securities
Where Owned by Immediate
Name Organized Parent
---- ------------ ------------------
<S> <C> <C>
Mobile America Corporation Florida
Mobile America Insurance
Group, Inc. Florida 100%
Fortune Insurance
Company Florida 100%
Fortune Life
Insurance Company Arizona 100%
Pegasus Insurance Company Oklahoma 100%
Fortune Financial Corporation Florida 100%
</TABLE>
All of the above subsidiaries are included in the Consolidated Financial
Statements of the registrant and its subsidiaries. All unnamed subsidiaries
and other affiliates, when considered in the aggregate as a single subsidiary,
would not constitute a significant subsidiary.
IV-14
<PAGE> 1
INFORMATION FROM REPORTS FURNISHED TO STATE INSURANCE REGULATORY AUTHORITY
EXHIBIT 99
SCHEDULE P
DETAILED INFORMATION ON LOSSES AND LOSS EXPENSES
(IN THOUSANDS)
(1)
YEARS IN PREMIUMS EARNED
WHICH ----------------------------------
PREMIUMS
WERE
EARNED AND
LOSSES
WERE (2)
INCURRED DIRECT (4)
AND (3) NET
ASSUMED CEDED (2 - 3)
- ---------- ----------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PRIOR XX XX XX
1986 17,355 8,580 8,775
1987 19,201 8,787 10,414
1988 20,865 9,412 11,453
1989 31,658 13,998 17,660
1990 49,043 27,158 21,885
1991 61,555 33,228 28,327
1992 77,171 43,120 34,051
1993 94,541 53,094 41,447
1994 87,681 53,350 34,331
1995 102,623 65,057 37,566
TOTALS XXX XXX XXX
</TABLE>
<TABLE>
<CAPTION>
LOSS AND LOSS EXPENSE PAYMENTS
- -------------------------------------------------------------------------------------------
ALLOCATED LOSS
LOSS PAYMENTS EXPENSE PAYMENT
- ---------------------- ----------------------
(5) (7) (9) (10) (11)
DIRECT DIRECT SALVAGE AND UNALLOCATED TOTAL
AND (6) AND (8) SUBROGATION LOSS EXPENSE NET PAID
ASSUMED CEDED ASSUMED CEDED RECEIVED PAYMENTS (5-6+7-8+10)
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(10) 6 (4)
6,680 2,533 1,556 566 16 363 5,500
6,858 2,627 1,494 540 31 361 5,546
9,086 3,297 1,834 463 145 429 7,589
14,233 4,870 3,084 837 44 468 12,078
28,409 16,151 5,237 2,770 70 450 15,175
37,470 21,216 5,615 2,933 80 1,609 20,545
53,720 31,980 6,376 3,094 139 1,491 26,513
60,668 34,390 8,263 4,375 213 1,319 31,485
53,894 32,428 5,935 3,505 134 2,495 26,391
39,875 25,565 4,601 2,961 43 2,012 17,962
310,883 175,057 43,996 22,044 921 10,997 168,775
</TABLE>
The Registrant has no affiliations with unconsolidated subsidiaries or
50%-or-less owned equity investees.
IV-15
<PAGE> 2
INFORMATION FROM REPORTS FURNISHED TO STATE INSURANCE REGULATORY AUTHORITY
EXHIBIT 99
SCHEDULE P
DETAILED INFORMATION ON LOSSES AND LOSS EXPENSES
(IN THOUSANDS)
<TABLE>
<CAPTION>
(1) LOSSES UNPAID
YEARS IN ----------------------------------------------
WHICH
PREMIUMS CASE BASIS BULK + IBNR
WERE ------------------- --------------------
EARNED AND (13) (15)
LOSSES DIRECT DIRECT
WERE AND (14) AND (16)
INCURRED ASSUMED CEDED ASSUMED CEDED
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
PRIOR 140 133 - -
1986 8
1987
1988
1989 15 7 3 1
1990 7 4 44 27
1991 100 56 185 111
1992 186 89 788 409
1993 872 419 1,687 953
1994 3,047 1,721 3,394 2,152
1995 21,480 13,775 13,605 8,993
TOTALS 25,855 16,204 19,706 12,646
</TABLE>
<TABLE>
<CAPTION>
ALLOCATED LOSS EXPENSES UNPAID
- ----------------------------------------------
CASE BASIS BULK + IBNR
- ------------------- --------------------- (23)
(17) (19) (22) TOTAL
DIRECT DIRECT UNALLOCATED NET LOSSES
AND (18) AND (20) LOSS EXPENSES AND EXPENSES
ASSUMED CEDED ASSUMED CEDED UNPAID UNPAID
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- - - 4 11
8
3 1 2 1 - 13
2 1 9 6 2 26
30 18 65 37 9 167
56 30 250 130 29 651
324 188 655 370 77 1,685
881 559 972 631 225 3,456
2,575 1,718 1,922 1,282 951 14,765
3,871 2,515 3,875 2,457 1,297 20,782
</TABLE>
The Registrant has no affiliations with unconsolidated subsidiaries or
50%-or-less owned equity investees.
IV-16
<PAGE> 3
INFORMATION FROM REPORTS FURNISHED TO STATE INSURANCE REGULATORY AUTHORITY
EXHIBIT 99
SCHEDULE P
DETAILED INFORMATION ON LOSSES AND LOSS EXPENSES
(IN THOUSANDS)
<TABLE>
<CAPTION>
(1)
YEARS IN
WHICH TOTAL LOSSES AND LOSS AND LOSS EXPENSE PERCENTAGE
PREMIUMS EXPENSES INCURRED (Incurred/Premiums Earned)
WERE ------------------
AND (25) (28)
LOSSES DIRECT DIRECT
WERE AND (26) (27) AND (29) (30)
INCURRED ASSUMED CEDED NET ASSUMED CEDED NET
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PRIOR XX XX XX XX XX XX
1986 8,607 3,099 5,508 49.6 36.1 62.8
1987 8,713 3,167 5,546 45.4 36.0 53.3
1988 11,349 3,760 7,589 54.4 39.9 66.3
1989 17,808 5,717 12,091 56.3 40.8 68.5
1990 34,160 18,959 15,201 69.7 69.8 69.5
1991 45,083 24,371 20,712 73.2 73.3 73.1
1992 62,896 35,732 27,164 81.5 82.9 79.8
1993 73,865 40,695 33,170 78.1 76.6 80.0
1994 70,843 40,996 29,847 80.8 76.8 86.9
1995 87,201 54,294 32,907 84.8 83.5 87.1
TOTALS XX XX XX XX XX XX
</TABLE>
<TABLE>
<CAPTION>
TIME VALUE NET BALANCE SHEET
OF MONEY RESERVES AFTER DISCOUNT
- ------------- -------------------------
(33)
INTER-COMPANY (35)
(32) POOLING (34) LOSS
(31) LOSS PARTICIPATION LOSSES EXPENSES
LOSS EXPENSE PERCENTAGE UNPAID UNPAID
- -----------------------------------------------------------------------
<S> <C>
7 4
8
10 3
20 6
118 49
476 175
1,187 498
2,568 888
12,317 2,448
16,711 4,071
</TABLE>
IV-17
<PAGE> 4
INFORMATION FROM REPORTS FURNISHED TO STATE INSURANCE REGULATORY AUTHORITY
EXHIBIT 99
SCHEDULE P
HISTORY OF INCURRED LOSSES AND ALLOCATED EXPENSES
(IN THOUSANDS)
<TABLE>
<CAPTION>
INCURRED LOSSES AND ALLOCATED EXPENSES REPORTED AT YEAR END DEVELOPMENT
------------------------------------------------------------------------------ -------------------
(1)
YEARS IN WHICH (12) (13)
LOSSES WERE (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) ONE TWO
INCURRED 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 YEAR YEAR
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 1,781 1,960 1,842 1,963 1,488 1,491 1,500 1,534 1,562 1,536 (26) 2
1986 6,350 5,648 5,152 5,206 5,065 5,106 5,123 5,137 5,142 5,145 3 8
1987 6,103 5,895 5,573 5,330 5,268 5,212 5,181 5,176 5,185 9 4
1988 8,016 7,473 7,040 7,157 7,137 7,149 7,164 7,160 (4) 11
1989 12,521 11,367 11,561 11,377 11,559 11,578 11,623 45 64
1990 17,489 14,833 14,800 14,795 14,777 14,749 (28) (46)
1991 19,886 18,580 19,037 19,162 19,094 (68) 57
1992 25,323 24,973 25,777 25,644 (132) 671
1993 32,774 31,877 31,774 (103) (1,000)
1994 25,881 27,127 1,246 -
1995 29,764 - -
TOTALS 942 (229)
</TABLE>
The Registrant has no affiliations with unconsolidated subsidiaries
or 50%-or-less owned equity investees.
IV-18
<PAGE> 5
INFORMATION FROM REPORTS FURNISHED TO STATE INSURANCE REGULATORY AUTHORITY
EXHIBIT 99
SCHEDULE P
HISTORY OF CUMULATIVE PAID LOSSES AND ALLOCATED EXPENSES
(IN THOUSANDS)
<TABLE>
<CAPTION>
(12) (13)
NUMBER OF NUMBER OF
CUMULATIVE PAID LOSSES AND ALLOCATED EXPENSES AT YEAR END CLAIMS CLAIMS
-------------------------------------------------------------------------------------
(1) CLOSED CLOSED
YEARS IN WHICH WITH WITH
LOSSES WERE (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) LOSS LOSS
INCURRED 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 PAYMENT PAYMENT
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 969 1,392 1,775 1,444 1,459 1,491 1,524 1,542 1,530
1986 1,889 3,819 4,496 4,900 4,998 5,076 5,104 5,130 5,134 5,137
1987 2,206 4,375 4,841 4,940 5,101 5,189 5,179 5,176 5,185
1988 3,162 5,685 6,527 6,919 7,055 7,146 7,154 7,160
1989 2,996 8,571 10,469 11,099 11,485 11,550 11,610
1990 6,555 12,595 13,993 14,489 14,648 14,725
1991 9,886 16,815 18,355 18,677 18,936
1992 12,210 22,953 24,591 25,022
1993 16,925 28,351 30,166
1994 13,275 23,896
1995 15,950
</TABLE>
The Registrant has no affiliations with unconsolidated
subsidiaries or 50%-or-less owned equity investees.
IV-19
<PAGE> 6
INFORMATION FROM REPORTS FURNISHED TO STATE INSURANCE REGULATORY AUTHORITY
EXHIBIT 99
SCHEDULE P
HISTORY OF BULK AND INCURRED BUT NOT REPORTED RESERVES
(IN THOUSANDS)
<TABLE>
<CAPTION>
BULK AND INCURRED BUT NOT REPORTED RESERVES ON LOSSES AND ALLOCATED EXPENSES AT YEAR END
-----------------------------------------------------------------------------------------------------------------
(1)
YEARS IN WHICH
LOSSES WERE (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
INCURRED 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRIOR 679 284 341 549
1986 1,205 578 265 176 36
1987 452 430 458 283 134 16
1988 661 698 243 162 24 4
1989 3,749 806 707 164 35 16 3
1990 3,323 1,047 457 192 82 20
1991 3,635 697 403 303 102
1992 3,335 1,055 897 499
1993 4,475 2,165 1,019
1994 4,281 1,583
1995 5,252
</TABLE>
The Registrant has no affiliations with unconsolidated
subsidiaries or 50%-or-less owned equity investees.
IV-20
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF MOBILE AMERICA FOR THE YEAR ENDED DECEMBER 31, 1995, AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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37,642,846
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