SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended Commission File No.
June 30, 1998 0-671
MOTOR CLUB OF AMERICA
(Exact name of registrant as specified in its charter)
New Jersey 22-0747730
(State of Incorporation) (I.R.S. Employer
Identification No.)
95 Route 17 South, Paramus, New Jersey 07653
(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code (201) 291-2000
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 .
2,116,429 shares of Common Stock were outstanding as of
August 13, 1998
1 of 19
MOTOR CLUB OF AMERICA
FORM 10-Q
JUNE 30, 1998
PART I PAGE
ITEM 1. FINANCIAL STATEMENTS 3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS 9
PART II
ITEM 5. OTHER INFORMATION 18
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 19
<TABLE>
<CAPTION>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
MOTOR CLUB OF AMERICA
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<S> <C> <C>
June 30, December 31,
1998 1997
ASSETS
Investments $67,447,184 $64,503,999
Cash and cash equivalents 1,760,712 222,761
Premiums receivable 8,349,793 7,809,567
Reinsurance recoverable on
paid & unpaid losses and
loss expenses 17,879,776 18,666,066
Notes and accounts receivable
- net 139,669 124,669
Deferred policy acquisition costs 5,796,754 5,858,650
Fixed assets - at cost, less
accumulated depreciation 1,554,949 1,586,649
Prepaid reinsurance premiums 571,846 695,245
Deferred tax asset - 657,362
Other assets 1,050,367 1,221,723
Total Assets $104,551,050 $101,346,691
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Losses and loss expenses $52,205,966 $50,246,778
Unearned premiums 19,209,083 19,285,757
Other liabilities 7,482,695 8,800,272
Federal income taxes
payable - current 10,588 12,851
Deferred tax liability 224,831 -
Total Liabilities 79,133,163 78,345,658
Shareholders' Equity:
Common Stock, par value $.50 per share:
(Authorized - 10,000,000 shares;
issued and outstanding - 2,116,429
(1998) and 2,094,429 (1997)) 1,058,215 1,047,215
Paid in additional capital 1,996,954 1,950,204
Unfunded accumulated benefit
obligation in excess of Plan assets (4,529,100) (4,529,100)
Net unrealized gains
on debt securities, net of
deferred taxes 797,392 597,758
Retained earnings 26,094,426 23,934,956
Total Shareholders' Equity 25,417,887 23,001,033
Total Liabilities and
Shareholders' Equity $104,551,050 $101,346,691
</TABLE>
(Financial statements should be read in
conjunction with the accompanying notes)
<TABLE>
<CAPTION>
MOTOR CLUB OF AMERICA
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<S> <C> <C> <C> <C>
For the Six Months Ended For the Three Months Ended
June 30, 1998 June 30,1997 June 30,1998 June 30,1997
Revenues:
Insurance premiums (net of
premiums ceded totaling
$3,373,178, $3,553,484
$1,794,878 and $1,879,521) $26,122,699 $25,578,958 $13,113,746 $12,714,619
Net investment income 2,077,842 1,706,920 1,036,556 856,275
Realized gains on sales
of investments 28,341 - 2,441 -
Other revenues 90,261 119,082 44,162 53,740
Total revenues 28,319,143 27,404,960 14,196,905 13,624,634
Losses and Expenses:
Insurance losses and
loss expenses incurred
(net of reinsurance recoveries
totaling $1,156,632, $794,461,
$267,296 and $324,234) 17,040,737 16,498,307 8,706,413 8,178,794
Amortization of deferred policy
acquisition costs 7,250,570 7,601,640 3,460,351 3,777,955
Other operating expenses 1,027,834 928,023 462,842 501,027
Total losses and expenses 25,319,141 25,027,970 12,629,606 12,457,776
Income before Federal
income taxes 3,000,002 2,376,990 1,567,299 1,166,858
Provision for Federal
income taxes: current 61,337 52,441 32,123 25,104
deferred 779,195 534,016 400,237 273,214
Total provision for Federal
income taxes 840,532 586,457 432,360 298,318
Net income $ 2,159,470 $ 1,790,533 $ 1,134,939 $ 868,540
Net income per common share:
Basic $1.03 $ .87 $.54 $.42
Diluted $1.02 $ .86 $.54 $.42
Weighted average common and potential common shares outstanding:
Basic 2,100,888 2,056,111 2,106,393 2,064,719
Diluted 2,122,604 2,090,282 2,118,913 2,084,451
</TABLE>
(Financial statements should be read in
conjunction with the accompanying notes)
<TABLE>
<CAPTION>
MOTOR CLUB OF AMERICA
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<S> <C> <C>
For the Six Months Ended
June 30, 1998 June 30, 1997
Operating activities:
Net income $ 2,159,470 $1,790,533
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and net amortization 307,300 281,804
Gain on sale of investments (28,341) -
Changes in:
Deferred policy
acquisition costs 61,896 229,684
Premiums receivable (540,226) 122,865
Notes and accounts
receivable (15,000) 115,275
Other assets 171,052 62,109
Losses and loss expenses 1,959,188 (1,291,198)
Unearned premiums (76,674) (802,810)
Federal income tax - current (2,263) (36,259)
Federal income tax - deferred 779,195 534,016
Other liabilities (1,317,577) (611,078)
Reinsurance recoverable on
paid and unpaid losses 786,290 3,485,451
Prepaid reinsurance premiums 123,399 252 449
Net cash provided by
operating activities $4,367,709 $4,132,841
Investing activities:
Investments purchased (95,420,568) (42,799,465)
Fixed assets purchased (215,908) (83,328)
Proceeds from sales of investments 92,748,968 38,785,965
Net cash used in
investing activities (2,887,508) (4,096,828)
Financing activities:
Common stock issued 57,750 235,284
Net cash provided by financing activities 57,750 235,284
Net decrease in cash and
cash equivalents 1,537,951 271,297
Cash and cash equivalents at
beginning of period 222,761 3,476,948
Cash and cash equivalents at
end of period $1,760,712 $3,748,245
Supplemental Disclosures of Cash Flow Information
Interest paid $ 2,640 $ 5,013
Federal income taxes paid $ 63,600 $ 88,700
</TABLE>
Non Cash Investing Activities:
Invested assets and shareholders' equity increased by $199,634 and decreased by
$220,445 in 1998 and 1997, respectively, as a result of changes in market value
pertaining to the Registrant's application of SFAS No. 115 - Accounting for
Certain Investments in Debt and Equity Securities.
(Financial statements should be read in
conjunction with the accompanying notes)
<TABLE>
<CAPTION>
MOTOR CLUB OF AMERICA
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
<S> <C> <C> <C> <C>
For the Six Months Ended For the Three Months Ended
June 30, 1998 June 30,1997 June 30,1998 June 30,1997
Net income $2,159,470 $1,790,533 $1,134,939 $ 868,540
Other comprehensive income (loss):
Unrealized gains(losses)on
securities, net of tax:
Unrealized holding gains (losses)
arising during the period 218,339 (220,445) 165,486 415,694
Less: reclassification adjustment
for gains included in earnings (18,705) - 7,195 -
Other comprehensive income (loss) 199,634 (220,445) 172,681 415,694
Comprehensive income $2,359,104 $1,570,088 1,307,620 $1,284,234
</TABLE>
(Financial statements should be read in
conjunction with the accompanying notes)
MOTOR CLUB OF AMERICA
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Preparation and Presentation
The accompanying condensed consolidated financial
statements of Motor Club of America (the "Registrant") include
its accounts and those of its subsidiary companies and, in the
opinion of management, contain all adjustments necessary to
present fairly the Registrant's consolidated financial position,
results of operations and cash flows.
These statements should be read in conjunction with the
Summary of Significant Accounting Policies and other notes
included in the Notes to Financial Statements in the Registrant's
1997 Annual Report on Form 10-K.
2. Shareholders' Equity
Shareholders' equity at June 30, 1998 and December 31, 1997
include the undistributed GAAP net income of Motor Club of
America Insurance Company ("Motor Club") and Preserver Insurance
Company ("Preserver") (collectively referred to as the "Insurance
Companies"), the net assets of which exceed the consolidated net
assets of the Registrant.
3. Per Share Data
Basic earnings per share are computed based upon the
weighted average number of common shares outstanding during each
year. Diluted earnings per share are computed based upon the
weighted average number of common shares outstanding including
outstanding stock options.
4. Federal Income Taxes
The Registrant and its subsidiaries file a consolidated
Federal income tax return. In the three and six month periods
ended June 30, 1998 and 1997, the provision for Federal income
taxes resulted in effective tax rates different from the expected
statutory Federal income tax rates, principally as a result of
(i) certain adjustments, principally those enacted under the Tax
Reform Act of 1986; and (ii) utilization of Net Operating Loss
("NOL") carryforwards. The Registrant's NOL carryforwards at
June 30, 1998 are approximately $8.6 million.
5. Comprehensive Income
Effective January 1, 1998, the Registrant adopted Statement
of Financial Accountant Standards ("SFAS") No. 130, "Reporting
Comprehensive Income." SFAS No. 130 requires disclosure of
comprehensive income in interim periods and additional
disclosures of the components of comprehensive income on an
annual basis. Comprehensive income includes all changes in
equity during a period except those resulting from investments by
and distributions to the Registrant's stockholders. The
Registrant's comprehensive income is comprised of net income,
unrealized gains or losses on securities and minimum pension
liability adjustments. For the three and six month periods ended
June 30, 1998 and 1997, there were no adjustments to the minimum
pension liability.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Overview of Business Operations
The Registrant and a group of affiliated corporations
provide property and casualty insurance related services. One
hundred percent of the Registrant's insurance operations are in
the State of New Jersey. The Registrant has two subsidiaries
which are domiciled in the State of New Jersey and write property
and casualty insurance, Motor Club and Preserver.
The Registrant seeks to increase its identification as a
provider of small commercial lines insurance. The Registrant
also seeks to expand and diversify its insurance operations
outside the State of New Jersey. The Registrant believes that
both of these objectives can be attained through the acquisition
of other insurance companies which present opportunities to write
these product lines in different geographic areas. The
Registrant expects to pursue these objectives during 1998 and
beyond.
The Registrant anticipates continuing revenue growth in the
State of New Jersey through small commercial and ancillary
coverages written by Preserver as well as through new private
passenger automobile ("PPA") writings by Motor Club.
The Registrant also anticipates continued reductions in its
operating expenses, namely through the implementation of
operating efficiencies which should reduce other overhead
expenditures.
New Jersey Private Passenger Automobile Insurance
The New Jersey PPA market has historically been subject to
regulatory and legislative volatility which has, at times,
adversely affected the profitability of this line of business,
despite New Jersey having among the highest average premium rate
in the United States. New Jersey insurance law presently
requires insurers to write all eligible personal automobile
coverage presented to them from drivers with eight points or less
on their driving record. This is commonly referred to as "take-all-comers".
The New Jersey Department of Banking and Insurance ("NJ
DOBI") may grant an insurer relief, by written notification, from
writing new PPA pursuant to the take-all-comers provisions of New
Jersey law if a showing finds that the insurer's premium to
surplus ("leverage") ratio exceeds 3 to 1. Motor Club's present
applicable leverage ratio for the twelve months ended June 30,
1998 is 2.67 to 1.
In June 1997, the State of New Jersey enacted PPA
legislation, which principally: (1) repealed the annual "flex"
rate increase available to insurers, which was required by law to
be no less than 3%, and replaced it with an expedited prior
approval rate filing process for rate increase requests up to 3%
on an overall basis. Subsequent to the enactment of this
legislation, the Commissioner of the NJ DOBI froze all personal
auto insurance rates until March 1998, but has not yet
promulgated the regulations required for insurers to file for an
expedited rate increase; (2) restricted the ability of insurers
to non-renew at their discretion up to 2% of their policies; (3)
repealed the ability of insurers to non-renew one policy for
every two new policies written in each rating territory; and (4)
replaced the current rating system which assesses surcharges to
insureds' policies for specific driving violations and accidents
with a broader-based tier rating system. The Registrant's tier
rating system was approved by the NJ DOBI and will be implemented
on all PPA policies with effective dates on and after November 1,
1998.
In addition, additional PPA legislation was enacted in 1998
which will: 1) allow insureds to reduce levels of compulsory
coverages, including the option to reduce their coverage for
Personal Injury Protection ("PIP") to as low as $15,000, from the
presently required $250,000; 2) revise the PIP policy form to set
forth the medical treatments and services, valid diagnostic tests
and appropriate health care protocols which are eligible to be
paid; 3) seek to limit lawsuits by claimants by redefining of the
type of injury which would be grounds for litigation; 4) replace
the present PIP arbitration system which utilizes part-time
arbitrators who render only oral decisions without consulting
medical professionals with one using full-time dispute resolution
professionals who may refer questions of medical necessity or
diagnosis to medical review organizations and who must render
written decisions; 5) appoint a special fraud prosecutor to
increase enforcement of fraudulent acts committed against
insurance companies; 6) remove the system of territorial rating
caps which have been in place since 1983, enabling insurers to
modify (as appropriate) rates charged in various rating
territories, which will be redefined; and 7) require up to a 15%
reduction in rates on all PPA policies.
The Registrant believes that implementation of most of the
provisions of the 1998 legislation (with one exception) will
likely occur in 1999. The only exception is the redefinition of
the territories and removal of the territorial rating caps, which
will be implemented in 2000. The Registrant also believes that
the legislation would have a modest net negative effect on Motor
Club's PPA operations and profitability, as the mandated rate
reductions do not appear to be completely cost justified (based
on information presently available) by the cost savings proposed
in the legislation.
Results of Operations
Net income for the three and six months ended June 30, 1998
was reduced by $156,200 and $269,000, respectively, for the
accrual of annual employee incentive awards, net of applicable
taxes. In prior years, these awards were accrued in the fourth
quarter for the entire year. The Registrant has begun to accrue
these awards over the entire year given its continuing
profitability.
Excluding these accruals, net income increased $423,000 or
$.19 basic net income per share and $638,000 or $.29 basic net
income per share in the three and six months ended June 30, 1998
as compared to the same periods in 1997, respectively, primarily
due to a lower expense ratio and improved investment income. The
combined ratio (as adjusted) for the three and six months ended
June 30, 1998 was 94.8% and 95.5% as compared to 98.0% and 97.8%
for the same periods in 1997, respectively.
Revenues
Insurance Premiums
Insurance premiums increased $399,000 or 3% and $544,000 or
2% in the three and six months ended June 30, 1998, compared to
the same periods in 1997, respectively, the result of increases
in new business written, along with lower reinsurance costs.
The following table details the changes in Insurance
Premiums for the three and six month periods ended June 30, 1998
as compared to the same period in 1997:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Three Months Ended Six Months Ended
June 30, 1998 June 30, 1998
Change in Change in
Net Net
Class of Business Premium Percent Premium Percent
Private Passenger Automobile $ 63,000 1% ($133,000) (1%)
Commercial Lines 74,000 5% 262,000 8%
Personal Property 262,000 21% 415,000 17%
Total $399,000 3% $544,000 2%
</TABLE>
The increases in Commercial Lines and Personal Property were
enhanced by $208,000 and $412,000 in savings on reinsurance
programs for the three and six month periods ended June 30, 1998,
respectively, which principally affected Preserver and were
implemented effective July 1, 1997. Preserver also increased its
retention for property excess of loss reinsurance at that date
from $75,000 to $100,000, which contributed to the reduction in
rate.
Effective July 1, 1998, Motor Club is converting its
existing six month policies, which constitute 98% of its personal
automobile book of business, to twelve month policies. This
measure will further improve the Registrant's operating
efficiency and service levels, and reduce expenses. The
Registrant believes this is particularly important since the NJ
DOBI has not proposed or adopted regulations which would provide
for expedited prior approval rate increases, as required by
legislation passed by the New Jersey Legislature in 1997. While
conversion to twelve month policies will, for a one year period
commencing July 1, 1998, temporarily increase the amount of
premiums written by the Registrant, it will not effect the amount
of premium earned.
During the first quarter of 1998, Preserver introduced its
new workers' compensation product. The Registrant believes the
introduction of this product, along with other product
improvements made in 1997, enable Preserver to offer a broad,
competitive product line which will grow steadily in the future.
Preserver produced $362,000 in direct written premium in its
workers' compensation program through June 30, 1998.
Net Investment Income
Net investment income increased $180,000 or 21% and $371,000
or 22% for the three and six months ended June 30, 1998 as
compared to the same periods in 1997, respectively. Average
invested assets for the six months period ended June 30, 1998
were $64,466,000 as compared to $51,297,000 for the same period
in 1997. The investment portfolio (including short-term
investments and excluding realized capital gains) yielded 6.45%
for the six months ended June 30, 1998 as compared to 6.25% for
the same period in 1997, despite a generally lower interest rate
environment.
While the 26% increase in average invested assets
principally contributed to the increase in investment income, the
increase in investment yield during 1998 as compared to 1997 is
primarily due to changes in the Registrant's investment policy
made effective January 1, 1998, which are discussed in Liquidity
and Capital Resources.
Losses and Expenses
Losses and Loss Expenses Incurred
Losses and loss expenses incurred increased $528,000 or 7%
and $542,000 or 3% in the three and six months ended June 30,
1998 as compared to the same periods in 1997, respectively.
The Registrant had slightly higher loss ratios during the
1998 second quarter, although year to date loss ratios remain
stable compared to 1997:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Three Months Ended Six Months Ended
June 30, 1998 June 30, 1997 June 30, 1998 June 30, 1997
Motor Club 66.9% 65.0% 68.3% 65.7%
Preserver 64.8% 62.1% 55.8% 60.2%
Total 66.4% 64.3% 65.2% 64.5%
</TABLE>
The personal automobile loss ratio for Motor Club remains in
line with expectations which consider the increased amounts of
new personal automobile written since 1995. The Preserver loss
ratio reflects the generally positive trends which Preserver has
experienced over the last two years (including lower reinsurance
costs).
Despite the higher loss and loss expense ratios for Motor
Club on a comparative basis, no significant adverse trends were
experienced or identified during the three and six month periods
ended June 30, 1998.
Amortization of Deferred Policy Acquisition Costs and Other
Operating Expenses
As noted previously, other operating expenses in the three
and six month periods ended June 30, 1998 included $204,000 and
$374,000, respectively, relating to the Registrant's accrual of
employee incentive awards. In prior years, these awards were
accrued in the fourth quarter for the entire year.
Excluding these charges, expenses decreased $559,000 or 13%
and $625,000 or 7% in the three and six months ended June 30,
1998 as compared to the same periods in 1997, respectively,
primarily due to the elimination of certain statutory assessments
and lower operating expenses, particularly salaries. The
decrease in expenses (as adjusted) allowed for a decrease in the
expense ratio to 28.4% and 30.3% for the three and six month
periods ended June 30, 1998 as compared to 33.7% and 33.3% for
the same periods in 1997.
The Registrant remains committed to reducing its expense
ratio by increasing revenues while limiting increases in its
overhead expenditures.
Financial Condition, Liquidity and Capital Resources
The Registrant's book value increased to $12.01 per share at
June 30, 1998 from $10.98 per share at December 31, 1997. The
principal sources of the net increase were: (1) net income of
$2,159,000 or $1.02 per share described previously; and (2) an
increase of $199,000 or $.09 per share (net of deferred taxes) in
the market value of fixed maturity investments accounted for as
available-for-sale securities under SFAS No. 115.
These increases in book value were offset by the dilutive
effects ($.08 per share) of the issuance of 22,000 shares of
common stock upon exercise of employee stock options granted
under the 1987 and 1992 Stock Option plans. See Note M of the
Registrant's 1997 Consolidated Financial Statements for
additional information regarding the Company's stock options
plans.
The Insurance Companies' need for liquidity arises primarily
from the obligation to pay claims. The primary sources of
liquidity are premiums received, collections from reinsurers and
proceeds from investments.
Reserving assumptions and payment patterns of the Insurance
Companies did not materially change from the prior year and there
were no unusually large retained losses resulting from claim
activity. Unpaid losses are not discounted.
Operating and Investing Activities
Net cash provided by operating activities were $4,368,000
and $4,133,000 in the six months ended June 30, 1998 and 1997,
respectively. Cash flow provided by operating activities in the
six months ended June 30, 1998 reflects the growth in the
Insurance Companies' premium revenue, combined with the reduction
in overhead expenses described previously.
Net cash utilized in investing activities was $2,888,000 in
1998 and $4,097,000 in 1997. The amounts used reflect the
investment of cash provided by operating activities.
No unusual or nonrecurring operating expenditures have been
incurred over these periods. Additionally, the payout ratio of
losses has not fluctuated substantially over these periods.
Effective January 1, 1998, the Registrant modified its
investment policy to include certain investment grade asset-backed securities
and allow for a higher percentage of investments in investment grade corporate
bonds and mortgage-backed securities. The Registrant's duration for its
investment portfolio was 3.40 years at June 30, 1998 as compared to 3.09
years at December 31, 1997. As part of the transition to this
revised investment policy, the Registrant may periodically
recognize limited realized gains and losses from sales of
investments which are not deemed to be within the modified
policy's guidelines. Management anticipates maintaining this
approach to investing for the foreseeable future.
Financing Activities
The Registrant paid no dividend on its common stock in 1998
or 1997.
The Registrant has no material outstanding capital
commitments which would require additional financing.
Recent Accounting Pronouncements
In June 1998, Statement of Financial Accounting Standards
(SFAS) No. 133, "Accounting for Derivative Instruments and
Hedging Activities", was issued and established standards for
accounting and reporting of derivative instruments and hedging
activities. The Statement is effective for all fiscal quarters
of fiscal years beginning after June 15, 1999. The Registrant is
in the process of determining the effect, if any, of this
Statement on its financial statements.
Safe Habor Statement Under the Private Securities Litigation Reform Act of 1995
This Report on Form 10-Q contains statements that are not
historical facts and are considered "forward-looking statements"
(as defined in the Private Securities Litigation Reform Act of
1995), which can be identified by terms such as "believes",
"expects", "may", "will", "should", "anticipates", the negatives
thereof, or by discussions of strategy. Certain statements
contained herein are forward-looking statements that involve
risks, uncertainties, opinions and predictions, and no assurance
can be given that the future results will be achieved since
events or results may differ materially as a result of risks
facing the Registrant. These include, but are not limited to,
economic, market or regulatory conditions as well as risks
associated with Motor Club of America's entry into new markets;
diversification; catastrophic events; and state regulatory and
legislative actions which can affect the profitability of certain
lines of business and impede Motor Club of America's ability to
charge adequate rates. Accordingly, Motor Club of America's
premium growth and underwriting results have been and will
continue to be potentially materially affected by these factors.
PART II
OTHER INFORMATION
Item 5. Other Information
Stockholder Proposal Deadline
If a stockholder who plans to present a matter at the 1999
Annual Meeting of Stockholders fails to provide notice of
the matter to the Secretary of the Registrant by March 23,
1999, it is the intention of the Registrant that, pursuant
to CFR section 240.14a-4(c) (1), the persons authorized
under management proxies will have discretionary authority
to vote and act according to their best judgement on said
matter.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
None
b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned thereunto duly authorized.
MOTOR CLUB OF AMERICA
By: Stephen A. Gilbert
President
s/Patrick J. Haveron
By: Patrick J. Haveron
Executive Vice President
Chief Financial Officer
and Chief Accounting Officer
Dated: August 14, 1998
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
These schedules contain summary financial information extracted from Motor Club
of America's Consolidated Balance Sheets for the period ending June 30, 1998 and
the Consolidated Statements of Operations for the six months then ended and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<DEBT-HELD-FOR-SALE> 64,065,073
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 382,111
<REAL-ESTATE> 0
<TOTAL-INVEST> 67,447,184
<CASH> 1,760,712
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 5,796,754
<TOTAL-ASSETS> 104,551,050
<POLICY-LOSSES> 52,205,966
<UNEARNED-PREMIUMS> 19,209,083
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 0
0
0
<COMMON> 1,058,215
<OTHER-SE> 24,359,672
<TOTAL-LIABILITY-AND-EQUITY> 104,551,050
26,122,699
<INVESTMENT-INCOME> 2,077,842
<INVESTMENT-GAINS> 28,341
<OTHER-INCOME> 90,261
<BENEFITS> 17,040,737
<UNDERWRITING-AMORTIZATION> 7,250,570
<UNDERWRITING-OTHER> 1,027,834
<INCOME-PRETAX> 3,000,002
<INCOME-TAX> 840,532
<INCOME-CONTINUING> 2,159,470
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,159,470
<EPS-PRIMARY> 1.03
<EPS-DILUTED> 1.02
<RESERVE-OPEN> 50,246,778
<PROVISION-CURRENT> 18,397,248
<PROVISION-PRIOR> (199,879)
<PAYMENTS-CURRENT> 4,853,873
<PAYMENTS-PRIOR> 11,384,308
<RESERVE-CLOSE> 52,205,966
<CUMULATIVE-DEFICIENCY> (199,879)
</TABLE>
