<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1995
( ) TRANSITION REPORT, PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-7801
ORION CAPITAL CORPORATION
--------------------------
(Exact name of registrant as specified in its charter)
Delaware 95-6069054
--------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
600 Fifth Avenue
New York, New York 10020 - 2302
---------------------------------------- -----------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 332-8080
--------------
Former name, former address and former fiscal year if changed since
last report.
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
---- ----
14,077,965 shares of Common Stock, $1.00 par value, of the registrant
were outstanding on August 3, 1995.
Page 1 of 28
Exhibit Index Appears at Page 24
<PAGE>
ORION CAPITAL CORPORATION
FORM 10-Q INDEX
For the Quarter Ended June 30, 1995
Page
Number
------
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements:
Consolidated Balance Sheet at June 30, 1995
(Unaudited) and December 31, 1994....................... 3 - 4
Consolidated Statement of Earnings for the three and six-
month periods ended June 30, 1995 and 1994 (Unaudited).. 5
Consolidated Statement of Stockholders' Equity for the
six-month periods ended June 30, 1995 and 1994
(Unaudited), and for the year ended December 31, 1994... 6
Consolidated Statement of Cash Flows for the six-month
periods ended June 30, 1995 and 1994 (Unaudited) ....... 7 - 8
Notes to Consolidated Financial Statements (Unaudited) ... 9 - 12
Independent Accountants' Review Report ................... 13
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ............... 14 - 20
PART II. OTHER INFORMATION .................................. 21
Page 2
<PAGE>
<TABLE>
<CAPTION>
PART 1. FINANCIAL INFORMATION
ORION CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
ASSETS
(000s omitted)
June 30, 1995 December 31,
(Unaudited) 1994
------------- ------------
<S> <C> <C>
Investments:
Fixed maturities at amortized cost
(market $373,101 - 1995 and $358,915 -
1994) .................................. $ 365,270 $ 367,417
Fixed maturities at market (amortized
cost $598,130 - 1995 and $565,880 - 1994) 605,513 530,424
Common stocks at market (cost $116,578 -
1995 and $116,078 - 1994) .............. 155,522 141,919
Non-redeemable preferred stocks at
market (cost $138,616 - 1995 and
$134,851 - 1994) ....................... 134,608 122,515
Other long-term investments .............. 55,022 52,564
Short-term investments ................... 129,490 104,201
---------- ----------
Total investments ..................... 1,445,425 1,319,040
Cash ....................................... 5,464 6,201
Accrued investment income .................. 17,768 17,364
Investments in and advances to affiliates .. 119,339 108,510
Accounts and notes receivable .............. 140,607 125,132
Reinsurance recoverables and prepaid
reinsurance .............................. 318,182 336,032
Deferred policy acquisition costs .......... 73,463 70,137
Property and equipment ..................... 30,154 25,157
Excess of cost over fair value of net
assets acquired .......................... 50,620 29,415
Deferred federal income taxes .............. 16,017 42,008
Other assets ............................... 36,474 33,765
---------- ----------
Total assets .......................... $2,253,513 $2,112,761
========== ==========
<FN>
See Notes to Consolidated Financial Statements (Unaudited)
Page 3
<PAGE>
<CAPTION>
ORION CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
(000s omitted - except for share data)
June 30, 1995 December 31,
(Unaudited) 1994
------------- ------------
<S> <C> <C>
Liabilities:
Policy liabilities -
Losses ...................................... $ 974,984 $ 952,531
Loss adjustment expenses .................... 243,455 228,798
Unearned premiums ........................... 260,354 256,855
Policyholders' dividends .................... 14,835 12,651
---------- ----------
Total policy liabilities .................. 1,493,628 1,450,835
Federal income taxes payable .................. 14,140 14,829
Notes payable ................................. 159,388 152,382
Other liabilities ............................. 145,929 129,627
---------- ----------
Total liabilities ......................... 1,813,085 1,747,673
---------- ----------
Contingencies (Note F)
Stockholders' equity:
Preferred stock, authorized 5,000,000 shares -
issued and outstanding - none
Common stock, $1 par value; authorized
30,000,000 shares; issued 15,337,650 shares.. 15,338 15,338
Capital surplus ............................... 147,762 147,598
Net unrealized investment gains (losses), net
of federal income taxes (benefit) of $10,555 -
1995 and ($14,146) - 1994 ................... 34,704 (11,498)
Net unrealized foreign exchange translation
losses, net of federal income tax benefits of
$478 - 1995 and $553 - 1994 ................. (3,822) (3,959)
Retained earnings ............................. 270,391 242,908
Treasury stock, at cost (1,268,685 shares -
1995 and 1,296,834 shares - 1994) ........... (21,615) (22,451)
Deferred compensation on restricted stock ..... (2,330) (2,848)
---------- ----------
Total stockholders' equity ................ 440,428 365,088
---------- ----------
Total liabilities and stockholders' equity. $2,253,513 $2,112,761
========== ==========
<FN>
See Notes to Consolidated Financial Statements (Unaudited)
Page 4
<PAGE>
<CAPTION>
ORION CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(UNAUDITED)
(000s omitted-except for per common share data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Premiums earned .............................. $186,709 $162,443 $361,767 $329,538
Net investment income ........................ 24,435 20,601 48,288 41,369
Realized investment gains .................... 726 178 3,286 711
Other income ................................. 241 415 567 717
-------- -------- -------- --------
212,111 183,637 413,908 372,335
-------- -------- -------- --------
Expenses:
Losses incurred .............................. 99,810 95,150 194,555 192,148
Loss adjustment expenses ..................... 29,653 24,399 57,505 49,170
Amortization of deferred policy acquisition
costs ...................................... 48,150 38,835 93,366 78,878
Other insurance expenses ..................... 4,144 4,478 10,208 8,823
Dividends to policyholders ................... 5,149 3,235 8,465 6,871
Interest expense ............................. 3,472 3,441 7,034 6,765
Other expenses ............................... 3,389 2,159 5,310 3,559
-------- -------- -------- --------
193,767 171,697 376,443 346,214
-------- -------- -------- --------
Earnings before equity in earnings of
affiliates and federal income taxes .......... 18,344 11,940 37,465 26,121
Equity in earnings of affiliates ............... 2,722 3,106 5,817 6,138
-------- -------- -------- --------
Earnings before federal income taxes ........... 21,066 15,046 43,282 32,259
Federal income taxes ........................... 5,017 3,479 10,171 7,452
-------- -------- -------- --------
Net earnings ................................. $ 16,049 $ 11,567 $ 33,111 $ 24,807
======== ======== ======== ========
Net earnings per common share ................ $ 1.13 $ .80 $ 2.33 $ 1.72
======== ======== ======== ========
<FN>
See Notes to Consolidated Financial Statements (Unaudited)
Page 5
<PAGE>
<CAPTION>
ORION CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(000s omitted)
Six Months Ended
June 30, Year Ended
(Unaudited) December 31,
------------------- ------------
1995 1994 1994
---- ---- ----
<S> <C> <C> <C>
Common stock ............................. $ 15,338 $ 15,338 $ 15,338
======== ======== ========
Capital surplus:
Balance, beginning of period ........... $147,598 $148,167 $148,167
Issuance of common stock ............... 152 - -
Exercise of stock options and issuance
(cancellation) of restricted stock ... 12 (371) (569)
-------- -------- --------
Balance, end of period ................. $147,762 $147,796 $147,598
======== ======== ========
Net unrealized investment gains (losses):
Balance, beginning of period ........... $(11,498) $ 49,566 $ 49,566
Change in unrealized investment gains
(losses), net of taxes ............... 46,202 (41,641) (61,064)
-------- -------- --------
Balance, end of period ................. $ 34,704 $ 7,925 $(11,498)
======== ======== ========
Net unrealized foreign exchange
translation losses:
Balance, beginning of period ........... $ (3,959) $ (3,665) $ (3,665)
Change in unrealized foreign exchange
translation losses, net of taxes ..... 137 (285) (294)
-------- -------- --------
Balance, end of period ................. $ (3,822) $ (3,950) $ (3,959)
======== ======== ========
Retained earnings:
Balance, beginning of period ........... $242,908 $198,491 $198,491
Net earnings ........................... 33,111 24,807 55,245
Dividends declared ..................... (5,628) (5,164) (10,828)
-------- -------- --------
Balance, end of period ................. $270,391 $218,134 $242,908
======== ======== ========
Treasury stock:
Balance, beginning of period ........... $(22,451) $(12,182) $(12,182)
Issuance of common stock ............... 728 - -
Exercise of stock options and issuance
of restricted stock .................. 108 637 3,476
Acquisition of treasury stock .......... - (2,525) (13,745)
-------- -------- --------
Balance, end of period ................. $(21,615) $(14,070) $(22,451)
======== ======== ========
Deferred compensation on restricted stock:
Balance, beginning of period ........... $ (2,848) $ (1,520) $ (1,520)
(Issuance) cancellation of restricted
stock ................................ (76) 25 (2,247)
Amortization of deferred compensation on
restricted stock ..................... 594 364 919
-------- -------- --------
Balance, end of period ................. $ (2,330) $ (1,131) $ (2,848)
======== ======== ========
<FN>
See Notes to Consolidated Financial Statements (Unaudited)
Page 6
<PAGE>
<CAPTION>
ORION CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(000s omitted)
Six Months Ended June 30,
-------------------------
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Premiums collected ............................. $ 349,560 $ 342,284
Net investment income collected ................ 46,367 42,836
Losses and loss adjustment expenses paid ....... (201,301) (213,268)
Policy acquisition costs paid .................. (106,324) (89,865)
Dividends paid to policyholders ................ (6,281) (7,503)
Interest paid .................................. (6,891) (6,575)
Federal income tax payments .................... (8,267) (7,541)
Other receipts (payments) ...................... (4,603) 4,227
--------- ---------
Net cash provided by operating activities .... 62,260 64,595
--------- ---------
Cash flows from investing activities:
Maturities of fixed maturity investments ....... 23,989 54,768
Sales of fixed maturity investments ............ 115,420 82,383
Sales of equity securities ..................... 31,296 29,851
Investments in fixed maturities ................ (157,974) (139,915)
Investments in equity securities ............... (27,376) (57,916)
Acquisition of McGee ........................... (22,177) -
Effect on cash of consolidating McGee .......... 349 -
Net purchases of short-term investments ........ (25,915) (17,907)
Other payments ................................. (2,027) (3,175)
--------- ---------
Net cash used in investing activities ........ (64,415) (51,911)
--------- ---------
Cash flows from financing activities:
Proceeds from issuance of notes payable ........ 12,000 -
Proceeds from exercise of stock options ........ - 229
Dividends paid to stockholders ................. (5,623) (5,179)
Repayment of notes payable ..................... (5,000) (4,000)
Purchases of common stock ...................... - (3,000)
Other payments ................................. (16) (81)
--------- ---------
Net cash provided by (used in) financing
activities ................................. 1,361 (12,031)
--------- ---------
Effect of foreign exchange rate changes on cash... 57 -
--------- ---------
Net increase (decrease) in cash .............. (737) 653
Cash balance, beginning of period ................ 6,201 6,433
--------- ---------
Cash balance, end of period ...................... $ 5,464 $ 7,086
========= =========
<FN>
See Notes to Consolidated Financial Statements (Unaudited)
Page 7
<PAGE>
<CAPTION>
ORION CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS - (Continued)
(UNAUDITED)
(000s omitted)
Six Months Ended June 30,
-------------------------
1995 1994
---- ----
<S> <C> <C>
Reconciliation of net earnings to net
cash provided by operating activities:
Net earnings ..................................... $ 33,111 $ 24,807
-------- --------
Adjustments:
Depreciation and amortization .................. 2,593 2,529
Amortization of excess of cost over fair
value of net assets acquired ................. 586 585
Deferred federal income taxes .................. 2,597 3,387
Amortization of fixed maturity investments ..... 1,205 712
Non-cash investment income ..................... (4,961) (1,555)
Equity in earnings of affiliates ............... (5,817) (6,138)
Dividends received from affiliates ............. 1,638 1,656
Realized investment gains ...................... (3,286) (711)
Foreign exchange transaction adjustment ........ (111) 73
Other .......................................... (20) (18)
Change in assets and liabilities (net of effects
of acquiring McGee):
Decrease (increase) in accrued investment
income ....................................... (404) 1,402
Increase in accounts and notes receivable ...... (14,897) (15,496)
Decrease in reinsurance recoverables and
prepaid reinsurance .......................... 17,850 36,717
Increase in deferred policy acquisition costs... (3,326) (8,130)
Decrease (increase) in other assets ............ (636) 600
Increase in losses ............................. 22,453 10,900
Increase in loss adjustment expenses ........... 14,657 10,003
Increase in unearned premiums .................. 3,499 4,306
Increase (decrease) in policyholders' dividends. 2,184 (632)
Decrease in other liabilities .................. (6,655) (402)
-------- --------
Total adjustments and changes ................ 29,149 39,788
-------- --------
Net cash provided by operating activities ........ $ 62,260 $ 64,595
======== ========
<FN>
See Notes to Consolidated Financial Statements (Unaudited)
Page 8
</TABLE>
<PAGE>
ORION CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Six Months Ended June 30, 1995 and 1994
Note A - Basis of Financial Statement Presentation
The consolidated financial statements and notes thereto are prepared
in accordance with generally accepted accounting principles for property
and casualty insurance companies. The consolidated financial statements
include Orion Capital Corporation ("Orion") and its wholly-owned
subsidiaries (collectively the "Company"). The Company's investments in
unconsolidated affiliates are accounted for using the equity method. All
material intercompany balances and transactions have been eliminated.
In the opinion of management, the accompanying consolidated financial
statements reflect all adjustments (consisting solely of normal recurring
adjustments) necessary to present fairly the Company's results of
operations, financial position and cash flows for all periods presented.
Although these consolidated financial statements are unaudited, they have
been reviewed by the Company's independent accountants, Deloitte & Touche
LLP, for conformity with accounting requirements for interim financial
reporting. Their report on such review is included herein. These
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the
Company's 1994 annual report on Form 10-K.
Note B - Acquisition of Wm. H. McGee & Co., Inc.
On June 30, 1995, Orion purchased all of the capital stock of Wm. H.
McGee & Co., Inc. ("McGee") for $22,000,000 in cash. McGee is an
underwriting management company that specializes in underwriting ocean
marine, inland marine and property insurance. The Company has agreed to
increase its rate of participation in the United States and Canadian
underwriting pools managed by McGee from 7% and 15%, respectively, to at
least 47.5% by 1997. The excess of cost over the estimated fair value of
the net assets acquired approximates the purchase price, and will be
amortized over a 30 year period. The consolidated results of the Company's
operations on a proforma basis, as if the purchase had been made as of the
beginning of each of the three and six month periods ended June 30, 1995
and 1994, would not be materially different than reported herein.
Note C - Investments in Affiliates
The Company owns 46.3% of the common stock of Guaranty National
Corporation ("Guaranty National") and 20.0% of Intercargo Corporation
("Intercargo"), both publicly-held companies. The Company records its
share of Intercargo's operating results in the subsequent quarter, after
Intercargo has reported its financial results. Summarized financial
information of the Company's affiliates for the three-month and six-month
periods ended June 30, 1995 and 1994 is as follows:
Page 9
<PAGE>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1995 1994 1995 1994
---- ---- ---- ----
(000s omitted)
Revenues:
Premiums earned .................... $103,120 $ 95,196 $202,579 $170,527
Realized investment gains (losses).. (210) 563 359 1,708
Investment and other income ........ 8,562 7,259 16,603 13,124
-------- -------- -------- --------
111,472 103,018 219,541 185,359
-------- -------- -------- --------
Expenses:
Insurance expenses ................. 100,653 92,041 197,591 165,659
Interest and other ................. 1,484 1,879 2,844 2,737
-------- -------- -------- --------
102,137 93.920 200,435 168,396
-------- -------- -------- --------
Earnings before federal income taxes.. 9,335 9,098 19,106 16,963
Federal income taxes ................. 2,409 2,163 4,758 3,958
-------- -------- -------- --------
Net earnings ......................... $ 6,926 $ 6,935 $ 14,348 $ 13,005
======== ======== ======== ========
The Company's proportionate share .... $ 2,722 $ 3,106 $ 5,817 $ 6,138
======== ======== ======== ========
The Company's investments in and advances to affiliates were as follows:
June 30, December 31,
1995 1994
--------- ------------
(000s omitted)
Book value ................................ $119,339 $108,510
Market value .............................. 146,566 138,786
Guaranty National shares held ............. 6,554 6,004
- Book value of shares held ............. $ 91,780 $ 72,564
- Market value of shares held ........... 121,246 110,320
Intercargo shares held .................... 1,526 1,526
- Book value of shares held ............. $ 19,030 $ 18,750
- Market value of shares held ........... 16,791 12,593
In June 1995 Guaranty National sold 1,550,000 shares of its common stock
in an offering under Regulation S of the Securities Act of 1933, as amended.
The Company converted $8,667,000 of Guaranty National subordinated notes into
550,000 shares of Guaranty National common stock at $15.75 per share based on
the net price received from the offering. The Company also agreed to convert
its remaining $12,229,000 of Guaranty National subordinated notes into 776,098
shares of common stock, subject to Guaranty National shareholder approval.
The sale of stock and conversion of the subordinated notes increased the
stockholders' equity of Guaranty National and facilitated the procurement of
financing for Guaranty National's acquisition of Viking Insurance Holdings,
Inc. in July 1995.
Page 10
<PAGE>
Note D - Reinsurance
In the normal course of business, the Company's insurance subsidiaries
reinsure certain risks, generally on an excess-of-loss or pro rata basis, with
other companies to limit exposure to losses. Reinsurance does not discharge the
primary liability of the original insurer. The table below summarizes certain
reinsurance information:
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -----------------
1995 1994 1995 1994
---- ---- ---- ----
(000s omitted)
Direct premiums written .............. $190,709 $164,406 $365,864 $330,225
Reinsurance assumed .................. 33,878 27,659 64,447 57,639
-------- -------- -------- --------
Gross premiums written ............... 224,587 192,065 430,311 387,864
Reinsurance ceded .................... (33,987) (27,875) (63,619) (35,527)
-------- -------- -------- --------
Net premiums written ................. $190,600 $164,190 $366,692 $352,337
======== ======== ======== ========
Direct premiums earned ............... $186,928 $164,052 $360,248 $324,222
Reinsurance assumed .................. 35,399 26,787 66,815 59,336
-------- -------- -------- --------
Gross premiums earned ................ 222,327 190,839 427,063 383,558
Reinsurance ceded .................... (35,618) (28,396) (65,296) (54,020)
-------- -------- -------- --------
Net premiums earned .................. $186,709 $162,443 $361,767 $329,538
======== ======== ======== ========
Loss and loss adjustment expenses
recoverable from reinsurers ........ $ 21,000 $ 9,322 $ 32,013 $ 22,120
======== ======== ======== ========
Note E - Earnings Per Common Share
Primary earnings per common share are computed using the weighted average
common and dilutive common equivalent shares outstanding for the three-month
and six-month periods ended June 30, 1995 and 1994. The weighted average
common shares amounted to 14,198,000 and 14,439,000 shares for the three
months ended June 30, 1995 and 1994, respectively, and 14,191,000 and
14,459,000 shares for the six months ended June 30, 1995 and 1994,
respectively.
Note F - Contingencies
Orion and its subsidiaries are routinely engaged in litigation incidental
to their businesses. Management believes that there are no significant legal
proceedings pending against the Company or its subsidiaries which, net of
reserves established therefor, are likely to result in judgments for amounts
that are material to the financial condition, liquidity or results of
operations of Orion and its consolidated subsidiaries, taken as a whole. (See
also Note I to the 1994 consolidated financial statements).
Page 11
<PAGE>
Note G - Subsequent Event
On July 17, 1995, Orion issued 7 1/4% Senior Notes due 2005 with a face
value of $100,000,000 in a public offering. The net proceeds from the
offering was approximately $98,113,000, of which $46,500,000 was used to repay
Orion's debt under its bank loan agreement and the balance will be used for
general corporate purposes.
Page 12
<PAGE>
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
Board of Directors
Orion Capital Corporation
New York, New York
We have reviewed the accompanying consolidated balance sheet of Orion
Capital Corporation and subsidiaries (the "Company") as of June 30, 1995, and
the related consolidated statements of earnings for the three-month and six-
month periods ended June 30, 1995 and 1994 and the statements of stockholders'
equity and cash flows for the six-month periods ended June 30, 1995 and 1994.
These financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and of making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to such consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of Orion Capital
Corporation and subsidiaries as of December 31, 1994, and the related
consolidated statements of earnings, stockholders' equity and cash flows for
the year then ended; and in our report dated February 24, 1995, we expressed
an unqualified opinion on those consolidated financial statements. The
consolidated statements of earnings and cash flows for the year ended
December 31, 1994 are not presented herein. In our opinion, the information
set forth in the accompanying consolidated balance sheet as of December 31,
1994 and related consolidated statement of stockholders' equity for the year
then ended is fairly stated, in all material respects, in relation to the
consolidated financial statements from which it has been derived.
DELOITTE & TOUCHE LLP
Hartford, Connecticut
July 28, 1995
Page 13
<PAGE>
ORION CAPITAL CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Six Months Ended June 30, 1995 and 1994
RESULTS OF OPERATIONS
Orion Capital Corporation ("Orion") and its wholly-owned subsidiaries
(collectively the "Company") operate principally in the property and casualty
insurance business which is reported as three segments - Regional Operations,
Reinsurance/Special Programs and Guaranty National Companies. Regional
Operations provides workers compensation insurance products through EBI
Companies and Nations' Care. Reinsurance/Special Programs includes (i) DPIC
Companies ("DPIC"), which markets professional liability insurance, (ii)
Connecticut Specialty Insurance Group ("Connecticut Specialty"), which writes
specialty insurance programs, (iii) SecurityRe Companies ("SecurityRe"), a
reinsurer and (iv) a 20.0% interest in Intercargo Corporation ("Intercargo")
which underwrites insurance coverages for international trade. The third
segment consists of the Company's interest in Guaranty National Corporation,
which specializes in nonstandard commercial and personal automobile insurance.
The miscellaneous income and expenses (primarily interest, general and
administrative expenses and other consolidating elimination entries) of the
parent company are reported as a fourth segment.
On June 30, 1995, Orion purchased all of the capital stock of Wm. H.
McGee & Co., Inc. ("McGee") for $22,000,000 in cash. McGee is an underwriting
management company that specializes in underwriting ocean marine, inland
marine and property insurance. McGee has been managing ocean marine, inland
marine and cargo insurance underwriting pools on behalf of its member carriers
for over 108 years, and Orion's Security Insurance Company of Hartford
subsidiary has been a pool member for over 100 years. The Company has agreed
to increase its rate of participation in the United States and Canadian
underwriting pools managed by McGee from 7% and 15%, respectively, to at least
47.5% by 1997.
Earnings (loss) by segment before federal income taxes are summarized as
follows for the quarterly and six-month periods ended June 30, 1995 and 1994:
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
1995 1994 1995 1994
---- ---- ---- ----
(000s omitted)
Regional Operations ............... $12,598 $13,070 $27,081 $21,330
Reinsurance/Special Programs ...... 9,954 4,564 19,173 13,739
Guaranty National Corporation ..... 2,419 3,034 5,295 6,066
------- ------- ------- -------
Total ........................... 24,971 20,668 51,549 41,135
Other ............................. (3,905) (5,622) (8,267) (8,876)
------- ------- ------- -------
$21,066 $15,046 $43,282 $32,259
======= ======= ======= =======
Page 14
<PAGE>
The following table sets forth certain ratios of insurance operating
expenses to premiums earned for the Company.
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
1995 1994 1995 1994
---- ---- ---- ----
Loss and loss adjustment expenses.. 69.3% 73.6% 69.7% 73.2%
Policy acquisition costs and other
insurance expenses .............. 28.0 26.6 28.6 26.6
----- ----- ----- -----
Total before policyholders'
dividends ................... 97.3 100.2 98.3 99.8
Policyholders' dividends .......... 2.8 2.0 2.3 2.1
----- ----- ----- -----
Total after policyholders'
dividends ................... 100.1% 102.2% 100.6% 101.9%
===== ===== ===== =====
REVENUES
Premiums written and premiums earned
------------------------------------
Net premiums written increased 16.1% ($26,410,000) to $190,600,000 in the
second quarter of 1995 versus $164,190,000 in the second quarter of 1994, and
4.1% ($14,355,000) to $366,692,000 in the first six months of 1995 from
$352,337,000 in the first half of 1994. The results by segment are as
follows:
- Regional Operations' premiums written increased 19.4% ($13,150,000) to
$81,090,000 in the second quarter of 1995 from $67,940,000 in the second
quarter of 1994 and 11.2% ($16,164,000) in the first half of 1995 to
$159,884,000 versus $143,720,000 in 1994. Premiums written increased in
new territories where the Company believes it will benefit from its
service oriented approach. The increases were partially offset by the
impact of legislative reforms in certain states which have led to lower
premium rates and a reduction in losses and commission expenses,
resulting in higher profit margins. The increases in this segment were
also mitigated by the shift towards high-deductible workers compensation
products.
- Reinsurance/Special Programs' premiums written during the second quarter
of 1995 increased 13.8% ($13,260,000) to $109,510,000 from $96,250,000
in the 1994 second quarter, and decreased 0.9% ($1,809,000) to
$206,808,000 in the first half of 1995 from $208,617,000 in 1994.
Premiums written by DPIC for professional liability insurance, the
largest special program, decreased 8.0% ($7,223,000) to $82,558,000 for
the first six months of 1995 from $89,781,000 for the first half of 1994.
Premiums written in the first quarter of 1994 included a premium refund
of $13,704,000 from the cancellation of a reinsurance contract.
Excluding this refund, DPIC premiums written year-to-date increased 7.2%
from the 1994 period. Premium volume for Connecticut Specialty increased
2.1% ($1,818,000) to $86,954,000 in the first six months of
Page 15
<PAGE>
1995 from $85,136,000 in the 1994 period. The increase resulted from the
introduction of an additional marine program, increased premiums written
in professional liability and truck liability programs and an increase
in participation in McGee's underwriting pools, offset in part by the
cancellation in the second half of 1994 of a personal injury protection
program in Florida and a physical damage program in Texas, where the
Company had unfavorable loss experience. The percentage of treaty and
facultative reinsurance premiums assumed to total net premiums written
for Reinsurance/Special Programs amounted to 18.0% and 16.2% in the first
half of 1995 and 1994, respectively.
Premiums earned increased 14.9% ($24,266,000) to $186,709,000 in the
second quarter of 1995 compared to $162,443,000 in the second quarter of 1994,
and 9.8% ($32,229,000) to $361,767,000 in the first six months of 1995 from
$329,538,000 in 1994. The reinsurance contract cancelled by DPIC in 1994 did
not impact earned premiums for this comparison.
Net investment income
---------------------
Pre-tax net investment income increased 18.6% ($3,834,000) to
$24,435,000 for the second quarter of 1995 versus $20,601,000 for the second
quarter of 1994, and 16.7% ($6,919,000) to $48,288,000 for the first six
months of 1995 as compared to $41,369,000 for 1994. The pre-tax yields on the
average investment portfolio were 7.1% for the first six months of 1995 and
6.5% for the first half of 1994, and the after-tax yields were 5.5% and 5.1%,
respectively. The increase in net investment income reflects earnings from
limited partnership investments of $4,688,000 for the first six months of 1995
as compared to $618,000 for the 1994 period, as well as a higher investment
base and a higher average portfolio yield. Earnings from limited partnership
investments were $2,513,000 for the second quarter of 1995 versus a loss of
$540,000 from these investments in 1994's second quarter. Earnings from
limited partnership investments can vary considerably from quarter to quarter;
however, the Company's long-term experience with these investments has been
quite favorable.
Fixed maturity investments which the Company has both the positive intent
and the ability to hold to maturity are recorded at amortized cost.
Investments which may be sold in response to, among other things, changes in
interest rates, prepayment risk, income tax strategies or liquidity needs are
classified as available-for-sale and are carried at market value, with
unrealized gains and losses reported in a separate component of stockholders'
equity. The carrying value of fixed maturity and short-term investments
amounted to $1,100,273,000 and $1,002,042,000 at June 30, 1995 and December
31, 1994, respectively, or approximately 75.9% and 75.6% of the Company's cash
and investments.
The Company's investment philosophy is to achieve a superior rate of
return after taxes and maintain a high degree of safety and liquidity. The
Company invests primarily in investment grade securities and strives to
enhance the average return of its portfolio through limited investment in a
Page 16
<PAGE>
diversified group of non-investment grade fixed maturity securities or
securities that are not rated. The risk of loss due to default is generally
considered greater for non-investment grade securities than for investment
grade securities because the former, among other things, are often
subordinated to other indebtedness of the issuer and are often issued by
highly leveraged companies. At June 30, 1995 and December 31, 1994, the
Company's investments in non-investment grade and unrated fixed maturity
securities were carried at $132,844,000 and $119,853,000 with market values
of $132,628,000 and $119,277,000, respectively. These investments represent
a total of 9.2% and 9.0% of cash and investments and 5.9% and 5.7% of total
assets at June 30, 1995 and December 31, 1994, respectively.
Realized investment gains
-------------------------
Net realized investment gains increased $548,000 and $2,575,000 to
$726,000 and $3,286,000 in the second quarter and first six months of 1995,
respectively, from gains of $178,000 and $711,000 in the respective periods
of 1994. Realized investment gains in the second quarters of 1995 and 1994
are net of $1,000,000 and $294,000, respectively, of provisions for losses on
securities deemed to be other than temporarily impaired. Such provisions were
$1,500,000 and $1,088,000 for the six-month periods ended June 30, 1995 and
1994, respectively. Realized gains (losses) vary from period to period,
depending on market conditions relative to the Company's investment holdings,
the timing of investment sales generating gains and losses, the occurrence of
events which give rise to other than temporary impairment of investments, and
other factors.
EXPENSES AND OTHER
Operating ratios
----------------
The ratio of loss and loss adjustment expenses to premiums earned (the
"loss ratio") was 69.3% and 69.7% in the second quarter and first six months
of 1995, respectively, compared to 73.6% and 73.2% in the same periods of
1994. The decrease in the 1995 year-to-date loss ratio is attributable to
improvements in both the Regional Operations and Reinsurance/Special Programs
segments. Adverse development of prior years' losses amounted to $9,245,000
in the first six months of 1995 compared with $10,554,000 in the first half
of 1994. Management believes that the Company's reserves for losses and loss
adjustment expenses make reasonable and sufficient provision for the ultimate
cost of all losses on claims incurred.
The loss ratio for the Regional Operations segment was 65.1% in the 1995
second quarter and 64.9% in the 1994 second quarter. In the first half of
1995 the loss ratio was 64.1% as compared to 67.3% in 1994. The loss ratio
in the second quarter of 1995 was consistent with the 1994 level. The
decrease in the six-month loss ratio reflects the continued success of the
Company's service oriented approach for workers compensation insurance, and
the growth in high-deductible policies where experience has been favorable.
Page 17
<PAGE>
The second quarter 1995 and 1994 loss ratios for Reinsurance/Special
Programs amounted to 72.4% and 79.5%, respectively. The loss ratios for the
six-month periods ended June 30, 1995 and 1994 were 73.7% and 77.4%,
respectively. The improvement in the 1995 loss ratios for this segment is
primarily the result of the cancellation of two Connecticut Specialty programs
which had unfavorable loss experience in 1994.
The ratio of deferred policy acquisition costs and other insurance
expenses to premiums earned (the "expense ratio") was 28.6% in the first six
months of 1995 as compared to 26.6% in 1994. The increase in the expense
ratio in 1995 is attributable to a number of factors including opening offices
in new territories, a change in the mix of business toward policies with lower
premiums and losses relative to policyholder servicing expenses and general
inflationary increases in fixed operating expenses. The ratio of
policyholders' dividends to premiums earned (the "dividend ratio") was 2.3%
and 2.1% during the first six months of 1995 and 1994, respectively. The
combined ratio was 100.6% in the first half of 1995 and 101.9% for the same
period of 1994.
Interest expense
----------------
Interest expense increased to $3,472,000 in the second quarter of 1995
from $3,441,000 in 1994, and increased to $7,034,000 in the first six months
of 1995 versus $6,765,000 in 1994. The 4.0% increase in year-to-date interest
expense reflects higher interest rates in 1995 as compared to 1994, offset in
part by lower average debt outstanding. Interest expense is expected to
increase in the second half of 1995 due to the issuance of $100,000,000 of
7 1/4% Senior Notes by Orion on July 17, 1995 (see discussion below).
Equity in earnings of affiliates
--------------------------------
Equity in earnings of affiliates includes the Company's portion of
earnings from Guaranty National and Intercargo. Earnings of $303,000 and
$522,000 were recorded from the Intercargo investment in the second quarter
and first six months of 1995, respectively, and $72,000 was recorded in the
six months ended June 30, 1994, all in the second quarter. The Company's
portion of Guaranty National's net earnings was $2,419,000 and $5,295,000 for
the second quarter and first six-months of 1995, respectively, and $3,034,000
and $6,066,000 for the corresponding periods of 1994, based on Guaranty
National's earnings of $4,851,000 and $6,075,000 for the second quarters of
1995 and 1994, respectively, and $10,619,000 and $12,145,000 for the six-month
periods ended June 30, 1995 and 1994, respectively. Guaranty National's gross
premiums written increased to $190,371,000 for the first six months of 1995
from $178,733,000 for the 1994 period. Guaranty National's overall combined
ratio was 98.3% and 96.5% for the first half of 1995 and 1994, respectively.
In June 1995 Guaranty National sold 1,550,000 shares of its common stock
in an offering under Regulation S of the Securities Act of 1933, as amended.
The Company converted $8,667,000 of Guaranty National subordinated notes into
550,000 shares of Guaranty National common stock at $15.75 per share based on
Page 18
<PAGE>
the net price received from the offering. The Company also agreed to convert
its remaining $12,229,000 of Guaranty National subordinated notes into 776,098
shares of common stock, subject to Guaranty National shareholder approval.
The sale of stock and conversion of the subordinated notes increased the
stockholders' equity of Guaranty National and facilitated the procurement of
financing for Guaranty National's acquisition of Viking Insurance Holdings,
Inc. in July 1995.
Federal income taxes
--------------------
Federal income taxes on pre-tax operating results and the related
effective tax rates amounted to $5,017,000 (23.8%) and $3,479,000 (23.1%) in
the second quarters of 1995 and 1994, respectively. The corresponding amounts
for the first six months of 1995 and 1994 were $10,171,000 (23.5%) and
$7,452,000 (23.1%), respectively. The Company's effective tax rate is less
than the statutory tax rate of 35% primarily because of income derived from
tax-advantaged securities.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operating activities decreased by $2,335,000 for the
first six months of 1995 from $64,595,000 in 1994 to $62,260,000 in 1995.
Cash flow for 1995 included a disbursement of $7,800,000 under a
retrospectively rated program written by DPIC. In 1994 operating cash flow
included a $10,223,000 receipt from DPIC's discontinuation of a reinsurance
contract. Excluding these one-time items, operating cash flow increased
approximately $15,700,000 from 1994 to 1995. This increase was the result of
an increase in premiums collected, net investment income received and lower
paid losses, offset in part by higher payments for policy acquisition costs.
Cash used in investment activities increased to $64,415,000 for the first
six months of 1995 from $51,911,000 in 1994. Cash is used in investment
activities primarily for purchases of investments, which are funded by
maturities and sales of investments, as well as by the net cash from positive
operating cash flows after payments made to fund financing activities. In
June 1995 Orion paid $22,000,000 plus acquisition costs to acquire McGee (see
discussion above).
Cash provided by financing activities was $1,361,000 for the first half
of 1995 and cash used in financing activities during the same period of 1994
was $12,031,000. Orion borrowed $12,000,000 under its bank line of credit to
finance part of the McGee acquisition. Cash was used for dividend payments
and scheduled debt repayments in both years, and in 1994, for payments related
to the Company's stock repurchase program. The Company increased its
quarterly dividend rate by 11.1% in the third quarter of 1994.
Orion's uses of cash consist of debt service, dividends to stockholders
and overhead expenses. These cash uses are funded from existing available
cash, financing transactions and receipt of dividends, reimbursement of
overhead expenses and amounts in lieu of federal income taxes from Orion's
Page 19
<PAGE>
insurance subsidiaries. Payments of dividends by Orion's insurance
subsidiaries must comply with insurance regulatory limitations concerning
stockholder dividends and capital adequacy. State insurance regulators have
broad discretionary authority with respect to limitations on the payment of
dividends by insurance companies. Limitations under current regulations are
well in excess of Orion's cash requirements.
Orion's insurance subsidiaries maintain liquidity in their investment
portfolios substantially in excess of that required to pay claims and
expenses. The insurance subsidiaries held cash and short-term investments
of $123,936,000 and $96,572,000 at June 30, 1995 and December 31, 1994,
respectively. Orion's insurance subsidiaries had consolidated policyholders'
surplus of $507,879,000 at June 30, 1995 and $458,676,000 at December 31,
1994, and statutory operating leverage ratios of trailing twelve months net
premiums written to policyholders' surplus of 1.4:1 at June 30, 1995 and 1.6:1
at December 31, 1994.
On July 17, 1995, Orion issued 7 1/4% Senior Notes due 2005 with a face
value of $100,000,000 in a public offering pursuant to a shelf registration
filed with the Securities and Exchange Commission in 1994. The senior notes
issued are non-callable to maturity, and were sold at 99.23% of par to yield
7.36% per annum. The net proceeds from the offering was approximately
$98,113,000, of which $46,500,000 was used to repay all of Orion's debt under
its bank loan agreement. The balance is available for general corporate
purposes.
Page 20
<PAGE>
PART II. OTHER INFORMATION
Items 1 - 3.
------------
None.
Item 4. Submission of Matters to a Vote of Security Holders
-------------------------------------------------------------
At the Orion Annual Meeting of Stockholders held on May 31, 1995 ("Annual
Meeting"), 14,072,001 shares of Orion Common Stock were outstanding and
entitled to vote (the "Outstanding Common Stock"), and 13,606,682 shares of
Outstanding Common Stock or 96.6%, consisting of a quorum, were represented
at the Annual Meeting in person or by proxy.
At that Annual Meeting, the directors nominated were elected by the following
votes:
Number of Shares Number of Shares
Voted For Withheld
----------------- -----------------
Bertram J. Cohn 13,573,812 32,870
John C. Colman 13,574,993 31,689
Alan R. Gruber 13,575,502 31,180
Larry D. Hollen 13,575,553 31 129
Robert H. Jeffrey 13,573,067 33,615
Warren R. Lyons 13,569,772 36,910
James K. McWilliams 13,573,328 33,354
Ronald W. Moore 13,572,506 34,176
Robert B. Sanborn 13,575,246 31,436
William J. Shepherd 13,575,283 31,399
John R. Thorne 13,574,445 32,237
Roger B. Ware 13,574,367 32,315
No director received fewer than 13,569,772 votes or 96.4% of the Outstanding
Common Stock (99.7% of the shares voted at the Annual Meeting).
At the Annual Meeting, the approval of the adoption of the 1994 Stock Option
Plan for Non-Employee Directors was ratified by a vote of 12,316,289 shares
or 87.5% of the Outstanding Common Stock (90.5% of the shares voted at the
Annual Meeting). Holders of 613,862 shares or 4.4% of the Outstanding Common
Stock voted against the ratification and holders of 676,531 shares or 4.8% of
the Outstanding Common Stock abstained from voting.
At the Annual Meeting, the selection of Deloitte & Touche LLP, independent
certified public accountants, as auditors for Orion for the year 1995 was
ratified by a vote of 13,557,970 shares or 96.3% of the Outstanding Common
Stock (99.6% of the shares voted at the Annual Meeting). Holders of 19,613
shares or approximately 0.1% of the Outstanding Common Stock voted against the
ratification and holders of 29,099 shares or approximately 0.2% of the
Outstanding Common Stock abstained from voting.
There were no "broker non-votes" on any of the proposals presented at the
Annual Meeting.
Page 21
<PAGE>
Item 5. Other
--------------
On June 30, 1995, in a private transaction, Orion purchased from Sun Alliance
USA, for $22 million in cash, all the capital stock of Wm. H. McGee & Co.,
Inc., an underwriting management company that specializes in underwriting
ocean marine, inland marine and property insurance. McGee has been a manager
of underwriting pools of such insurance on behalf of its members for over 108
years and Orion's subsidiary, Security Insurance Company of Hartford, has been
a member of the McGee pool for over 100 years. See Note B to the Consolidated
Financial Statements included herein.
On July 17, 1995, Orion completed the sale of $100,000,000 of its 7 1/4%
Senior Notes due 2005 ("7 1/4% Notes"). The 7 1/4% Notes, which are non-
callable to maturity, were sold at 99.23% of par to yield 7.36% per annum.
Orion used approximately $46.5 million of the proceeds from the sale of the
7 1/4% Notes to repay all the outstanding indebtedness under its loan
agreement with six banks. The remainder of the proceeds will be used for
general corporate purposes. See also Note F to the Consolidated Financial
Statements as well as Management's Discussion and Analysis - "Liquidity and
Capital Resources" included herein.
Item 6. Exhibits and Reports on Form 8-K
------------------------------------------
(a) Exhibits
Exhibit 11: Computation of Earnings Per Common Share
Exhibit 15: Letter in Lieu of Consent of Deloitte & Touche LLP
re Unaudited Interim Financial Information
Exhibit 27: Financial Data Schedule
(b) Reports on Form 8-K.
A report on Form 8-K was filed on July 14, 1995 to report the offering
of $100,000,000 of Orion's 7 1/4% Notes. Included in the filing were copies
of (i) the Underwriting Agreement with respect to the 7 1/4% Notes (ii) the
7 1/4% Notes Indenture ("Indenture") between Orion and State Street Bank and
Trust Company of Connecticut, National Association, Trustee (iii) the First
Supplemental Indenture to the Indenture and (iv) the form of the global 7 1/4%
Note.
Page 22
<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.
ORION CAPITAL CORPORATION
Date: August 7, 1995 By: /s/ Alan R. Gruber
---------------------------------
Chairman of the Board
and Chief Executive Officer
Date: August 7, 1995 By: /s/ Daniel L. Barry
----------------------------------
Vice President, Controller
and Principal Accounting Officer
Page 23
<PAGE>
EXHIBIT INDEX
Page No.
Exhibit 11: Computation of Earnings 25
Per Common Share
Exhibit 15: Letter in Lieu of Consent of 26
Deloitte & Touche LLP re Unaudited
Interim Financial Information
Exhibit 27: Financial Data Schedule 27
Page 24
<TABLE>
<CAPTION>
EXHIBIT 11
ORION CAPITAL CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE
(UNAUDITED)
(000s omitted - except for per common share data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Computation of weighted average number of
common and equivalent shares outstanding:
PRIMARY -
Weighted average number of shares
outstanding ............................. 14,069 14,316 14,068 14,335
Dilutive effect of stock options .......... 129 123 123 124
------- ------- ------- -------
Weighted average number of common and
equivalent shares ....................... 14,198 14,439 14,191 14,459
======= ======= ======= =======
Net earnings attributable to common
stockholders .............................. $16,049 $11,567 $33,111 $24,807
======= ======= ======= =======
Net earnings per common share ............... $ 1.13 $ .80 $ 2.33 $ 1.72
======= ======= ======= =======
FULLY DILUTED
Weighted average number of shares
outstanding ............................. 14,069 14,316 14,068 14,335
Dilutive effect of stock options .......... 138 131 127 131
------- ------- ------- -------
Weighted average number of common and
equivalent shares ....................... 14,207 14,447 14,195 14,466
======= ======= ======= =======
Net earnings attributable to common
stockholders .............................. $16,049 $11,567 $33,111 $24,807
======= ======= ======= =======
Net earnings per common share ............... $ 1.13 $ .80 $ 2.33 $ 1.71
======= ======= ======= =======
Page 25
</TABLE>
<PAGE>
EXHIBIT 15
July 28, 1995
Orion Capital Corporation
600 Fifth Avenue
New York, New York
We have made a review, in accordance with standards established by the
American Institute of Certified Public Accountants, of the unaudited
interim financial information of Orion Capital Corporation and
subsidiaries for the periods ended June 30, 1995 and 1994, as indicated
in our report dated July 28, 1995; because we did not perform an audit,
we expressed no opinion on the information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended June 30, 1995, is
incorporated by reference in Registration Statements No. 2-65348 on Form
S-8 and S-16 relating to the Orion Capital Corporation 1976 and 1979
Stock Option Plans, No. 2-80636 on Form S-8 relating to the Orion Capital
Corporation 1982 Long-Term Performance Incentive Plan, No. 2-63344 on
Form S-8 relating to the Orion Capital Corporation Employees' Stock
Savings and Retirement Plan and No. 33-59847 on Form S-8.
We also are aware that the aforementioned report, pursuant to Rule 436(c)
under the Securities Act, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of
that Act.
DELOITTE & TOUCHE LLP
Hartford, Connecticut
Page 26
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
THIS FINANCIAL SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
ORION CAPITAL CORPORATION'S FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE
30, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-1-1995
<PERIOD-END> JUN-30-1995
<DEBT-HELD-FOR-SALE> 605,513
<DEBT-CARRYING-VALUE> 365,270
<DEBT-MARKET-VALUE> 373,101
<EQUITIES> 290,130
<MORTGAGE> 2,126
<REAL-ESTATE> 0
<TOTAL-INVEST> 1,445,425
<CASH> 5,464
<RECOVER-REINSURE> 288,151
<DEFERRED-ACQUISITION> 73,463
<TOTAL-ASSETS> 2,253,513
<POLICY-LOSSES> 1,218,439
<UNEARNED-PREMIUMS> 260,354
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 14,835
<NOTES-PAYABLE> 159,388
<COMMON> 163,100
0
0
<OTHER-SE> 277,328
<TOTAL-LIABILITY-AND-EQUITY> 2,253,513
361,767
<INVESTMENT-INCOME> 48,288
<INVESTMENT-GAINS> 3,286
<OTHER-INCOME> 567
<BENEFITS> 252,060
<UNDERWRITING-AMORTIZATION> 93,366
<UNDERWRITING-OTHER> 18,673
<INCOME-PRETAX> 43,282
<INCOME-TAX> 10,171
<INCOME-CONTINUING> 33,111
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 33,111
<EPS-PRIMARY> 2.33
<EPS-DILUTED> 2.33
<RESERVE-OPEN> 891,542
<PROVISION-CURRENT> 242,815
<PROVISION-PRIOR> 9,245
<PAYMENTS-CURRENT> 45,585
<PAYMENTS-PRIOR> 155,711
<RESERVE-CLOSE> 942,306
<CUMULATIVE-DEFICIENCY> 9,245
</TABLE>
