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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[XX] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-7461
ACCEPTANCE INSURANCE COMPANIES INC.
(Exact name of registrant as specified in its charter)
Delaware 31-0742926
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
222 South 15th St., Suite 600 N.
Omaha, Nebraska 68102
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(402) 344-8800
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 XX NO
---- ----
The number of shares of each class of the Registrant's common
stock outstanding on May 5, 1995 was:
Class of Common Stock No. of Shares Outstanding
Common Stock, $.40 Par Value 15,095,404
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<PAGE>
ACCEPTANCE INSURANCE COMPANIES INC.
FORM 10-Q
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets
March 31, 1995 (unaudited) and December 31, 1994
(audited)
Consolidated Statements of Operations (unaudited)
Three Months Ended March 31, 1995 and 1994
Consolidated Statements of Cash Flows (unaudited)
Three Months Ended March 31, 1995 and 1994
Notes to Interim Consolidated Financial Statements
(unaudited)
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
ACCEPTANCE INSURANCE COMPANIES INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31, December 31,
1995 1994
--------- ------------
(unaudited) (audited)
<S> <C> <C>
ASSETS
Investments:
Fixed maturities available for sale $218,592 $190,180
Marketable equity securities -
preferred stock 9,550 6,758
Marketable equity securities -
common stock 9,879 5,772
Mortgage loans and other investments 1,653 1,869
Real estate 3,887 3,891
Short-term investments, at cost,
which approximates market 49,037 56,273
------- -------
292,598 264,743
Cash 3,883 9,339
Equity investment in Major Realty
Corporation 5,005 5,079
Receivables, net 71,006 76,993
Reinsurance recoverable on unpaid
loss and adjustment expenses 75,208 79,811
Prepaid reinsurance premiums 31,075 25,988
Property and equipment, net 4,912 4,572
Deferred policy acquisition costs 21,787 19,834
Excess of cost over acquired net
assets 37,856 38,142
Deferred income tax 10,272 13,025
Other assets 9,304 5,561
------- -------
Total assets $562,906 $543,087
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Losses and loss adjustment expenses $222,912 $221,325
Unearned premiums 109,140 97,170
Amounts payable to reinsurers 20,532 19,309
Accounts payable and accrued
liabilities 14,008 16,529
Bank borrowings 29,000 29,000
------- -------
Total liabilities 395,592 383,333
<PAGE>
Contingencies - -
Stockholders' equity:
Preferred stock, no par value,
5,000,000 shares authorized,
none issued - -
Common stock, $.40 par value,
20,000,000 shares authorized;
15,130,168 and 15,128,846 shares
issued 6,052 6,052
Capital in excess of par value 194,691 194,674
Unrealized gain (loss) on available-
for-sale securities, net of tax (9,145) (13,705)
Accumulated deficit (20,020) (23,003)
------- -------
171,578 164,018
Less:
Treasury stock, at cost, 35,559
shares (1,564) (1,564)
Contingent stock, 240,000 shares (2,700) (2,700)
------- -------
Total stockholders' equity 167,314 159,754
------- -------
Total liabilities and
stockholders' equity $562,906 $543,087
======= =======
<FN>
The accompanying notes are an integral part of the
interim consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ACCEPTANCE INSURANCE COMPANIES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
for the three months ended March 31, 1995 and 1994
(in thousands, except per share data)
(unaudited)
1995 1994
------- -------
<S> <C> <C>
Revenues:
Insurance premiums earned $51,276 $37,978
Insurance agency commissions 873 853
Net investment income 4,421 2,637
Net realized capital gains 434 237
------ ------
57,004 41,705
------ ------
Costs and expenses:
Cost of revenues:
Insurance losses and loss
adjustment expenses 34,606 26,220
Insurance agency costs 710 812
Insurance underwriting expenses 16,116 11,897
General and administrative expenses 599 303
------ ------
52,031 39,232
------ ------
Operating profit 4,973 2,473
------ ------
Other income (expense):
Interest expense (513) (328)
Share of net loss of investee (74) (83)
Other, net 40 (13)
------ ------
(547) (424)
------ ------
Income before income taxes and
minority interests 4,426 2,049
Income tax expense:
Current 225 -
Deferred 1,218 -
Minority interests in net income
of consolidated subsidiaries - 80
------ ------
Net income $ 2,983 $ 1,969
====== ======
<PAGE>
Earnings per share:
Primary $ .20 $ .20
====== =======
Fully diluted $ .20 $ .19
====== =======
<FN>
The accompanying notes are an integral part of the
interim consolidated financial statements.
</FN>
/TABLE
<PAGE>
<TABLE>
<CAPTION>
ACCEPTANCE INSURANCE COMPANIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the three months ended March 31, 1995 and 1994
(in thousands)
(unaudited)
1995 1994
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,983 $ 1,969
Net adjustment to reconcile net
income to net cash provided by
operating activities 13,786 799
------- ------
Net cash provided by operating
activities 16,769 2,768
------- -------
Cash flows from investing activities:
Proceeds from sales of investments - 55
Proceeds from sales of investments
available for sale 29,879 13,189
Proceeds from maturities of
investments 6,279 462
Proceeds from maturities of
investments available for sale 3,066 6,596
Purchases of investments (16,881) (608)
Purchases of investments available
for sale (61,933) (22,096)
Purchases of property and equipment (722) (223)
------- --------
Net cash used for investing
activities (40,312) (2,625)
------- --------
Cash flows from financing activities:
Repayments of bank borrowing - (18,597)
Proceeds from bank borrowings - 25,000
Repayments of other borrowings - (160)
Minority interests - 7
Proceeds from issuance of
common stock 17 149
------- --------
Net cash provided by financing
activities 17 6,399
------- --------
<PAGE>
Net increase (decrease) in cash and
short-term investments (23,526) 6,542
Cash and short-term investments at
beginning of period 50,236 17,561
------- --------
Cash and short-term investments at
end of period $ 26,710 $ 24,103
======= ========
Supplemental disclosure of cash flow
information:
Cash paid during the period for
interest $ 388 $ 345
======= ========
Cash paid during the period for
income taxes $ 1,143 $ -
======= ========
<FN>
The accompanying notes are an integral part of the
interim consolidated financial statements.
</FN>
</TABLE>
<PAGE>
ACCEPTANCE INSURANCE COMPANIES INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Summary of Significant Accounting Policies:
Principles of Consolidation
The Company's consolidated financial statements include the
accounts of Acceptance Insurance Companies Inc. and its
majority owned subsidiaries (the "Company"). All
significant intercompany transactions have been eliminated.
Management's Opinion
The accompanying consolidated financial statements reflect
all adjustments, consisting only of normal recurring
adjustments except as otherwise disclosed, which in the
opinion of management are considered necessary to fairly
present the Company's financial position as of March 31,
1995 and December 31, 1994, and the results of operations
for the three months ended March 31, 1995 and 1994 and cash
flows for the three months ended March 31, 1995 and 1994.
Statements of Cash Flows
The Company aggregates cash and short-term investments with
maturity dates of three months or less from the date of
purchase for purposes of reporting cash flows. As of March
31, 1995 approximately $26,210,000 of short-term investments
had a maturity date at acquisition of greater than three
months.
Recent Statements of Financial Accounting Standards
On January 1, 1995 the Company adopted Statement of
Financial Accounting Standards No. 114 and 118, "Accounting
by Creditors for Impairment of a Loan." As of January 1,
1995 and March 31, 1995 the Company has no material loans
that are considered impaired.
Reclassifications
Certain prior year accounts have been reclassified to
conform with current period presentation.
2. Per Share Data:
Primary and fully diluted earnings per share are based on
the weighted average shares outstanding of approximately
15.0 million and 15.2 million, respectively, for the three
months ended March 31, 1995 and approximately 13.2 million
and 13.4 million, respectively, for the three months ended
March 31, 1994. Included in weighted average shares
outstanding in 1994 is the assumed exercise of all
outstanding options and warrants utilizing the modified
treasury stock method, since average outstanding options and
warrants during the period exceeded 20% of the outstanding
stock. Under this method, appropriate adjustment to net
income is made to reflect the assumed use of the proceeds of
the exercise.
3. Investments:
The amortized cost and related market values of fixed
maturities and equity securities in the accompanying balance
sheets are as follows (in thousands):
<PAGE>
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
March 31, 1995:
Fixed maturities available
for sale:
U.S. Treasury and
government securities $ 68,095 $ 411 $ 1,211 $ 67,295
States, municipalities and
political subdivisions 59,940 549 753 59,736
Mortgage-backed securities 76,978 50 12,562 64,466
Other debt securities 27,550 158 613 27,095
-------- --------- --------- --------
$ 232,563 $ 1,168 $ 15,139 $ 218,592
======== ========= ========= ========
Marketable equity securities -
preferred stock $ 10,179 $ 5 $ 634 $ 9,550
======== ========= ========= ========
Marketable equity securities -
common stock $ 9,313 $ 1,162 $ 596 $ 9,879
======== ========= ========= ========
December 31, 1994:
Fixed maturities available for
sale:
U.S. Treasury and government
securities $ 68,308 $ 4 $ 2,225 $ 66,087
States, municipalities and
political subdivisions 39,544 8 1,957 37,595
Mortgage-backed securities 73,024 - 13,949 59,075
Other debt securities 28,199 100 876 27,423
-------- --------- -------- --------
$ 209,075 $ 112 $ 19,007 $ 190,180
======== ========= ======== ========
Marketable equity securities -
preferred stock $ 7,803 $ 4 $ 1,049 $ 6,758
======== ========= ======== ========
Marketable equity securities -
common stock $ 5,960 $ 530 $ 718 $ 5,772
======== ========= ======== ========
</TABLE>
<PAGE>
4. Insurance Premiums and Claims
Insurance premiums written and earned by the Company's
insurance subsidiaries for the three months ended March 31,
1995 and 1994 are as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Direct premiums written $102,300 $ 74,270
Assumed premiums written 465 1,149
Ceded premiums written (44,606) (27,932)
------- -------
Net premiums written $ 58,159 $ 47,487
======= =======
Direct premiums earned $ 89,606 $ 62,782
Assumed premiums earned 1,189 903
Ceded premiums earned (39,519) (25,707)
------- -------
Net premiums earned $ 51,276 $ 37,978
======= =======
</TABLE>
Insurance loss and loss adjustment expenses have been
reduced by recoveries recognized under reinsurance contracts
of approximately $27,451,000 and $17,134,000 for the three
months ended March 31, 1995 and 1994, respectively.
5. Bank Borrowings, Term Debt and Other Borrowings:
The Company's borrowing arrangements with its bank lenders
provides a $35 million line of credit with interest payable
quarterly at the prime rate or LIBOR plus a margin of 1% to
1.75%, depending on the Company's debt to equity ratio. On
March 31, 1995, the Company had $29 million outstanding
under this arrangement. On April 6, 1995 the Company
elected LIBOR plus 1% percent or 7.25% through June 5, 1995.
In May of 1995, the Company's bank lenders agreed to a new
$75 million line of credit facility to replace its existing
$35 million line of credit. The $75 million facility will
be utilized primarily to capitalize the Company's insurance
company subsidiaries. The Company is continuing
negotiations to increase the new credit facility to an
aggregate of $100 million.
It is anticipated that the final loan agreement will be
completed by June of 1995. Generally, the new agreement
provides for a three year revolving line of credit which,
with the consent of the banks, can be renewed annually for
three years. Further, the Company will select its interest
rate as either the prime rate or LIBOR plus a margin of .5%
to 1.5% depending on the Company's debt to equity ratio.
6. Income Taxes:
As of March 31, 1995, management believes it is more likely
than not that the Company will realize a portion of the
deferred tax asset. The valuation allowance at March 31,
1995 primarily relates to capital loss items whose
realization is uncertain. The net deferred tax asset is as
follows (in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
--------- ------------
<S> <C> <C>
Unpaid losses and loss adjustment
expenses 7,440 7,263
Unearned premiums 5,465 4,840
Allowances for doubtful accounts 517 449
Other 1,810 1,599
Unrealized loss on marketable
equity securities 22 419
Unrealized loss on fixed
maturities available for sale 4,890 6,424
Major Realty basis difference 7,883 7,632
------ ------
Deferred tax asset 28,027 28,626
------ ------
Deferred policy acquisition costs (7,625) (6,744)
Other (2,102) (681)
------ ------
Deferred tax liability (9,727) (7,425)
------ ------
18,300 21,201
Valuation allowance (8,028) (8,176)
------ ------
Net deferred tax asset $10,272 $13,025
====== ======
</TABLE>
<PAGE>
Income taxes computed by applying statutory rates to income
before income taxes are reconciled to the provision for
income taxes set forth in the consolidated financial
statements as follows for the three months ended March 31,
1995 (in thousands):
<TABLE>
<S> <C>
Computed U.S. federal income taxes $ 1,549
Nondeductible amortization of goodwill and
other intangibles 134
Tax-exempt interest income (196)
Dividends received deduction (66)
Other 22
------
Income taxes provided $ 1,443
======
</TABLE>
<PAGE>
PART I.
Item 2.
ACCEPTANCE INSURANCE COMPANIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of financial condition
and results of operations of the Company and its consolidated
subsidiaries is based upon the Company's interim consolidated
financial statements and the notes thereto included in this
report.
RESULTS OF OPERATIONS
Three months ended March 31, 1995
Compared to three months ended March 31, 1994
The Company's net income increased by 51.5% to $3.0 million
during the three months ended March 31, 1995 from $2.0 million
during the same period in 1994. The principal components of this
increase in earnings were an increase in insurance premiums
earned, improved underwriting results and an increase in
investment income. These positive changes were offset by
increases in general and administrative expenses as well as
interest expense. In addition, during the first three months of
1995, the Company's pre-tax income was no longer sheltered from
taxation by net operating loss carryforwards as it had been
during the same period in 1994.
The Company's net premiums earned increased by $13.3 million or
35.0% during the first quarter of 1995 as compared to the same
period a year earlier. This increase was principally
attributable to growth in the direct premiums written by the
Company's General Agency and Program Divisions, offset in part by
declining premium revenues in the Non-Standard Automobile
Division. Coupled with this increase in premium revenues was an
improvement in the Company's loss ratio. The Company's loss
ratio fell from 69.0% during the first three months of 1994 to
67.5% during the first three months of 1995. This decrease in
the loss ratio was primarily a result of continued excellent
results in the Company's Program Division as the premium income
of this division grew as a percentage of the Company's total
earned premium. The Company's underwriting expense ratio
remained relatively constant during the first quarter of 1994 and
1995. Thus, increased premium revenues and an improved loss
ratio during the first three months of 1995 led to an
underwriting profit of $554,000 as compared to an underwriting
loss of $139,000 experienced by the Company in the first three
months of 1994.
The Company's investment income and realized capital gains
increased 67.7% and 83.1% respectively during the first three
months of 1995 as compared to the first three months of 1994.
The increase in investment income resulted from both an increase
in the average size of the Company's investment portfolio, $291.8
million during the three months ended March 31, 1995 as compared
to $186.8 million during the three months ended March 31, 1994,
and an improvement in the annualized investment yield of the
portfolio from 5.7% during the first three months of 1994 to 6.1%
during the first three months of 1995. The size of the
investment portfolio increased from retained earnings,
approximately $53.4 million in proceeds from the exercise of
warrants in December of 1994 and continued positive cash flows
from operations. Investment yields increased in the two compared
periods due to the overall higher interest rate environment
present during the first quarter of 1995 as compared to the same
period a year earlier.
Offsetting improved underwriting and investment results were
higher general and administrative and interest expenses during
the first three months of 1995 as compared to the first three
months of 1994. The main component of the increase in general
and administrative expenses were expenses associated with a
proposed offering of convertible debentures which was withdrawn
by the Company in May of 1995. Interest expense increased in
1995 principally from increased bank borrowings in order to
support premium growth and nominally from higher interest rates
which increased with the higher overall interest rate
environment.
While the Company's operating profit increased by 101.1% from
$2.5 million in the first quarter of 1994 to $5.0 million in the
first quarter of 1995, the Company's net income increased only
51.5% due to a tax expense of $1.4 million in 1995 while all of
the Company's 1994 tax expense was offset by net operating losses
from prior years in 1994.
Recent Statement of Financial Accounting Standards
On January 1, 1995 the Company adopted Statement of Financial
Accounting Standards No. 114 and 118, "Accounting by Creditors
for Impairment of a Loan." As of January 1, 1995 and March 31,
1995 the Company has no material loans that are considered
impaired.
LIQUIDITY AND CAPITAL RESOURCES
The Company has included a discussion of the liquidity and
capital resources requirements of the Company and the Company's
insurance subsidiaries.
The Company - Parent Only
As an insurance holding company, the Company's assets consist
primarily of the capital stock of its subsidiaries, a surplus
note issued by one of its insurance company subsidiaries and
investments held at the holding company level. The Company's
primary sources of liquidity are dividends and other
distributions from subsidiaries, interest payments on the surplus
note, tax sharing payments from its subsidiaries and net
investment income from, and proceeds from the sale of, holding
company investments. The Company's liquidity needs are primarily
to service debt, pay operating expenses and taxes and make
investments in subsidiaries.
Dividends from the insurance subsidiaries of the Company are
regulated by the state regulatory authorities of the states in
which each subsidiary is domiciled. The laws of such states
generally restrict dividends from insurance companies to parent
companies to certain statutorily approved limits. As of March
31, 1995, the statutory limitations on dividends from insurance
company subsidiaries to the parent without further insurance
department approval were approximately $6.0 million. In addition
to dividends, the parent company receives additional liquidity
from cash flows from agency and claims service operations of its
noninsurance company subsidiaries.
The Company currently holds a surplus note issued by one of its
insurance company subsidiaries in the amount of $20.0 million,
bearing interest at the rate of 9% per annum, payable quarterly.
Although repayment of all or part of the principal of this
surplus note requires prior insurance department approval, no
prior approval of interest payments is currently required.
At March 31, 1995, the Company held approximately $8.5 million of
cash and investments available to meet liquidity needs.
The Company is also a party to a Revolving Credit Facility with a
group of bank lenders which is secured by substantially all of
the Company's assets. The maximum amount that may be borrowed
under the facility is $35.0 million. Interest is payable
quarterly at a rate selected by the Company equal to either the
prime rate or LIBOR plus a margin of 1.0% to 1.75% depending on
the Company's debt-to-equity ratio. The facility expires on
March 31, 1998 and may be extended for an additional year with
the lenders consent. At March 31, 1995, the outstanding balance
under the facility was $29.0 million, bearing interest at
7.4375%. In May of 1995, the Company's bank lenders agreed to a
new $75.0 million bank facility which would have similar interest
rate terms as the current facility but which would mature in
three years with one year extensions available annually with the
lenders' consent. In addition, the Company is negotiating with
its lenders to provide an additional $25.0 million of borrowing
capacity under certain circumstances, but the Company has no
assurance that this additional capacity will be available. The
Company expects to close on the new bank facility in June of
1995. Borrowings under the new facility will be used primarily
to repay current borrowings and to provide additional capital for
the Company's insurance company subsidiaries.
<PAGE>
Insurance Companies
The principal liquidity needs of the insurance companies are to
fund losses and loss adjustment expense payments, to pay
underwriting expenses including commissions to agents, to pay
interest under the surplus note described above and to make tax
payments. Available sources for these requirements are premiums
received and cash flows from investment activities. Together,
these sources historically have been adequate to meet the
described requirements on a timely basis. The Company monitors
the cash flows of its insurance company subsidiaries and attempts
to maintain sufficient cash to meet current operating expenses
and to structure its investment portfolio of a duration which
approximates the estimated cash requirements for the payment of
loss and loss adjustment expense.
Changes in Financial Condition
The Company's stockholders' equity increased by approximately
$7.6 million at March 31, 1995 as compared to December 31, 1994
principally as a result of the net income described above and a
decrease in the unrealized loss, net of tax, in the Company's
available for sale securities from $13.7 million to $9.1 million.
The NAIC has released its Risk Based Capital (RBC) formula for
property and casualty insurance companies. The Company's
insurance company subsidiaries have reviewed and applied this RBC
formula for the 1994 year and have exceeded the requirements of
such formula.
Consolidated Cash Flow
Cash flows from operating activities increased from $2.8 million
in the first three months of 1994 to $16.8 million in the first
three months of 1995. The largest component of this increase was
an $11.6 million profit sharing payment based upon 1994 results
received from the federal government under the Company's Multi
Peril Crop Insurance program.
Inflation
The Company does not believe that inflation has had a material
impact on its financial condition or the results of operation.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
See Exhibit Index.
(b) No reports on Form 8-K were filed by the registrant
during the quarter for which this report is filed.
<PAGE>
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.
ACCEPTANCE INSURANCE COMPANIES INC.
May 12, 1995 /s/ KENNETH C. COON
-----------------------------------
Kenneth C. Coon
Chairman and Chief Executive
Officer
May 12, 1995 /s/ GEORGIA M. MACE
-----------------------------------
Georgia M. Mace
Treasurer and Chief Accounting
Officer
<PAGE>
ACCEPTANCE INSURANCE COMPANIES INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE THREE MONTHS ENDED MARCH 31, 1995
EXHIBIT INDEX
NUMBER EXHIBIT DESCRIPTION
10.1 $35,000,000 Credit Agreement By and Among the
Registrant, NBD Bank, N.A., First National Bank of
Omaha, FirsTier Bank, N.A., Comerica Bank and NBD Bank,
N.A., As Agent, dated as of March 31, 1994.
Incorporated by reference to Exhibit 10.1 to the
Registrant's Quarterly Report on Form 10-Q for the
three months ended March 31, 1994.
10.2 Intercompany Federal Income Tax Allocation Agreement
between Acceptance Insurance Holdings Inc. and its
subsidiaries and the Registrant dated April 12, 1990,
and related agreements. Incorporated by reference to
Exhibit 10i to the Registrant's Annual Report on Form
10-K for the fiscal year ended August 31, 1990.
10.3 Amended and Restated Registration Rights Agreement,
dated April 9, 1990, between the Registrant and
Patricia Investments, Inc. Incorporated by reference
to Exhibit 10d to the Registrant's Quarterly Report on
Form 10-Q for the period ended May 31, 1990.
10.4 Warrants to purchase a total of 389,507 shares of
common stock ($.10 par value) of the Registrant dated
April 10, 1992, issued by the Registrant to the various
purchasers of the Floating Rate Secured Subordinated
Notes, due 1993, Series A and B. Incorporated by
reference to Exhibit 10.41 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December
31, 1991.
10.5 Employment Agreement dated February 19, 1990 between
Acceptance Insurance Holdings Inc., the Registrant and
Kenneth C. Coon. Incorporated by reference to Exhibit
10.65 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1991.
10.6 Employment Agreement dated July 2, 1993 between the
Registrant and John P. Nelson. Incorporated by
reference to Exhibit 10.6 to the Registrant's Quarterly
Report on Form 10-Q for the period ended September 30,
1994.
10.7 Employment Agreement dated July 2, 1993 between the
Registrant and Richard C. Gibson. Incorporated by
reference to Exhibit 10.6 to the Registrant's Quarterly
Report on Form 10-Q for the period ended September 30,
1994.
11 Computation of Income per share.
27 Financial Data Schedule.
99.1 The Registrant's 1992 Incentive Stock Option Plan
effective as of December 22, 1992. Incorporated by
reference to Exhibit 10.1 to the Registrant's
Registration Statement on Form S-1, Registration No.
33-53730.
99.2 The Registrant's Employee Stock Purchase Plan,
effective as of December 22, 1992. Incorporated by
reference to Exhibit 10.2 to the Registrant's
Registration Statement on Form S-1, Registration No.
33-53730.
99.3 The Registrant's Employee Stock Ownership and Tax
Deferred Savings Plan as merged, amended and restated
effective October 1, 1990. Incorporated by reference
to Exhibit 10.4 to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended November 30, 1990.
99.4 First Amendment to the Registrant's Employee Stock
Ownership and Tax Deferred Savings Plan. Incorporated
by reference to Exhibit 99.4 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December
31, 1993.
99.5 Second Amendment to the Registrant's Employee Stock
Ownership and Tax Deferred Savings Plan. Incorporated
by reference to Exhibit 99.5 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December
31, 1993.
99.6 The Registrant's Amended 1992 Incentive Stock Option
Plan. Incorporated by reference to the Registrant's
Proxy Statement filed on or about April 29, 1994.
99.7 The Registrant's Amended Employee Stock Purchase
Agreement. Incorporated by reference to the
Registrant's Proxy Statement filed on or about April
29, 1994.
<TABLE>
<CAPTION>
ACCEPTANCE INSURANCE COMPANIES INC.
COMPUTATION OF INCOME PER SHARE
for the three months ended March 31, 1995 and 1994
(in thousands, except per share data)
(unaudited)
Exhibit 11
Three Months
--------------------
1995 1994(a)
-------- --------
<S> <C> <C>
PRIMARY EARNINGS PER SHARE:
Net income $ 2,983 $ 1,969
Adjustment for interest expense
reduction and interest
income from assumed proceeds - 607
------ ------
Adjusted net income $ 2,983 $ 2,576
====== ======
Weighted average number of shares
outstanding 14,854 9,714
Adjustment for stock options 146 -
Adjustment for shares issuable - 3,491
------ ------
Adjusted weighted average number of
shares outstanding 15,000 13,205
====== ======
Primary earning per share $ .20 $ .20
====== =======
FULLY DILUTED EARNINGS PER SHARE:
Net income $ 2,983 $ 1,969
Adjustment for interest expense
reduction and interest
income from assumed proceeds - 597
------ ------
Adjusted net income $ 2,983 $ 2,566
====== ======
Weighted average number of shares
outstanding 15,094 9,954
Adjustment for stock options 146 -
Adjustment for shares issuable - 3,445
------ ------
Adjusted weighted average number of
shares outstanding 15,240 13,399
====== ======
Fully diluted earnings per share $ .20 $ .19
====== ======
<FN>
(a) As of March 31, 1994, the number of shares of the Company's
common stock obtainable on exercise of outstanding options and
warrants in the aggregate exceeds 20% of the common shares
outstanding. Therefore, the method of calculating earnings per
share has been adjusted accordingly as provided by APB Opinion
No. 15.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN THE FORM 10-Q AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<DEBT-HELD-FOR-SALE> 218,592
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 19,429
<MORTGAGE> 1,653
<REAL-ESTATE> 3,887
<TOTAL-INVEST> 292,598
<CASH> 3,883
<RECOVER-REINSURE> 10,639
<DEFERRED-ACQUISITION> 21,787
<TOTAL-ASSETS> 562,906
<POLICY-LOSSES> 222,912
<UNEARNED-PREMIUMS> 109,140
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 29,000
<COMMON> 6,052
0
0
<OTHER-SE> 161,262
<TOTAL-LIABILITY-AND-EQUITY> 562,906
51,276
<INVESTMENT-INCOME> 4,421
<INVESTMENT-GAINS> 434
<OTHER-INCOME> 873
<BENEFITS> 34,606
<UNDERWRITING-AMORTIZATION> (1,953)
<UNDERWRITING-OTHER> 18,069
<INCOME-PRETAX> 4,426
<INCOME-TAX> 1,443
<INCOME-CONTINUING> 2,983
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,983
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
<RESERVE-OPEN> 115,714
<PROVISION-CURRENT> 0<F1>
<PROVISION-PRIOR> 0<F1>
<PAYMENTS-CURRENT> 0<F1>
<PAYMENTS-PRIOR> 0<F1>
<RESERVE-CLOSE> 0<F1>
<CUMULATIVE-DEFICIENCY> 0<F1>
<FN>
<F1>This amount is presented on an annual basis. See 12/31/94 10-K for the most
recent reported amounts.
</FN>
</TABLE>
