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 September 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
---- ----
14,045,748 shares of Common Stock, $1.00 par value, of the registrant
were outstanding on October 31, 1995
Page 1 of 28
Exhibit Index Appears at Page 24
<PAGE>
ORION CAPITAL CORPORATION
FORM 10-Q INDEX
For the Quarter Ended September 30, 1995
Page
Number
------
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements:
Consolidated Balance Sheet at September 30, 1995
(Unaudited) and December 31, 1994 .................... 3 - 4
Consolidated Statement of Earnings for the three
and nine-month periods ended September 30, 1995
and 1994 (Unaudited) ................................. 5
Consolidated Statement of Stockholders' Equity for
the nine-month periods ended September 30, 1995
and 1994 (Unaudited), and for the year ended
December 31, 1994 .................................... 6
Consolidated Statement of Cash Flows for the nine-month
periods ended September 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 - 21
PART II. OTHER INFORMATION ................................ 22
Page 2
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<TABLE>
<CAPTION>
PART 1. FINANCIAL INFORMATION
ORION CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
ASSETS
(000s omitted)
September 30, 1995 December 31,
(Unaudited) 1994
------------------ ------------
<S> <C> <C>
Investments:
Fixed maturities at amortized cost
(market $379,573 - 1995 and $358,915 -
1994) .................................. $ 370,714 $ 367,417
Fixed maturities at market (amortized
cost $611,514 - 1995 and $565,880 - 1994) 625,795 530,424
Common stocks at market (cost $111,617 -
1995 and $116,078 - 1994) .............. 155,417 141,919
Non-redeemable preferred stocks at
market (cost $147,308 - 1995 and
$134,851 - 1994) ....................... 145,499 122,515
Other long-term investments .............. 57,516 52,564
Short-term investments ................... 192,177 104,201
---------- ----------
Total investments ..................... 1,547,118 1,319,040
Cash ....................................... 6,657 6,201
Accrued investment income .................. 17,200 17,364
Investments in and advances to affiliates .. 117,806 108,510
Accounts and notes receivable .............. 160,670 125,132
Reinsurance recoverables and prepaid
reinsurance .............................. 324,205 336,032
Deferred policy acquisition costs .......... 80,124 70,137
Property and equipment ..................... 31,695 25,157
Excess of cost over fair value of net
assets acquired .......................... 50,176 29,415
Deferred federal income taxes .............. 12,751 42,008
Other assets ............................... 40,069 33,765
---------- ----------
Total assets .......................... $2,388,471 $2,112,761
========== ==========
<FN>
See Notes to Consolidated Financial Statements (Unaudited)
Page 3
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<CAPTION>
ORION CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
(000s omitted - except for share data)
September 30, 1995 December 31,
(Unaudited) 1994
------------------ ------------
<S> <C> <C>
Liabilities:
Policy liabilities -
Losses ....................................... $ 989,230 $ 952,531
Loss adjustment expenses ..................... 254,314 228,798
Unearned premiums ............................ 289,393 256,855
Policyholders' dividends ..................... 17,602 12,651
---------- ----------
Total policy liabilities ................... 1,550,539 1,450,835
Federal income taxes payable ................... 16,344 14,829
Notes payable .................................. 209,131 152,382
Other liabilities .............................. 148,618 129,627
---------- ----------
Total liabilities .......................... 1,924,632 1,747,673
---------- ----------
Contingencies (Notes G and H)
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 ................................ 147,444 147,598
Net unrealized investment gains (losses), net
of federal income taxes (benefit) of $15,986 -
1995 and ($14,146) - 1994 .................... 44,279 (11,498)
Net unrealized foreign exchange translation
losses, net of federal income tax benefits of
$376 - 1995 and $553 - 1994 .................. (3,633) (3,959)
Retained earnings .............................. 284,411 242,908
Treasury stock, at cost (1,269,416 shares -
1995 and 1,296,834 shares - 1994) ............ (21,700) (22,451)
Deferred compensation on restricted stock ...... (2,300) (2,848)
---------- ----------
Total stockholders' equity ................. 463,839 365,088
---------- ----------
Total liabilities and stockholders' equity.. $2,388,471 $2,112,761
========== ==========
<FN>
See Notes to Consolidated Financial Statements (Unaudited)
Page 4
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<CAPTION>
ORION CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(UNAUDITED)
(000s omitted - except for per common share data)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Premiums earned .............................. $183,902 $180,703 $545,669 $510,241
Net investment income ........................ 25,572 22,550 73,860 63,919
Realized investment gains .................... 5,885 1,197 9,171 1,908
Other income ................................. 6,862 341 7,429 1,058
-------- -------- -------- --------
222,221 204,791 636,129 577,126
-------- -------- -------- --------
Expenses:
Losses incurred .............................. 95,155 101,318 289,710 293,466
Loss adjustment expenses ..................... 28,851 27,874 86,356 77,044
Amortization of deferred policy acquisition
costs ...................................... 48,985 44,269 142,351 123,147
Other insurance expenses ..................... 4,964 5,576 15,172 14,399
Dividends to policyholders ................... 5,507 3,096 13,972 9,967
Interest expense ............................. 4,447 3,439 11,481 10,204
Other expenses ............................... 9,954 1,452 15,264 5,011
-------- -------- -------- --------
197,863 187,024 574,306 533,238
-------- -------- -------- --------
Earnings before equity in earnings (loss) of
affiliates and federal income taxes .......... 24,358 17,767 61,823 43,888
Equity in earnings (loss) of affiliates ........ (1,713) 2,577 4,104 8,715
-------- -------- -------- --------
Earnings before federal income taxes ........... 22,645 20,344 65,927 52,603
Federal income taxes ........................... 5,388 5,015 15,559 12,467
-------- -------- -------- --------
Net earnings ................................. $ 17,257 $ 15,329 $ 50,368 $ 40,136
======== ======== ======== ========
Net earnings per common share ................ $ 1.21 $ 1.07 $ 3.55 $ 2.78
======== ======== ======== ========
<FN>
See Notes to Consolidated Financial Statements (Unaudited)
Page 5
<PAGE>
<CAPTION>
ORION CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(000s omitted)
Nine Months Ended
September 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 ...... (306) (191) (569)
-------- -------- --------
Balance, end of period .................. $147,444 $147,976 $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 ................ 55,777 (46,808) (61,064)
-------- -------- --------
Balance, end of period .................. $ 44,279 $ 2,758 $(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 ...... 326 324 (294)
-------- -------- --------
Balance, end of period .................. $ (3,633) $ (3,341) $ (3,959)
======== ======== ========
Retained earnings:
Balance, beginning of period ............ $242,908 $198,491 $198,491
Net earnings ............................ 50,368 40,136 55,245
Dividends declared ...................... (8,865) (8,018) (10,828)
-------- -------- --------
Balance, end of period .................. $284,411 $230,609 $242,908
======== ======== ========
Treasury stock:
Balance, beginning of period ............ $(22,451) $(12,182) $(12,182)
Issuance of common stock ................ 770 - -
Exercise of stock options and issuance/
cancellation of restricted stock ...... 866 2,790 3,476
Acquisition of treasury stock ........... (885) (8,103) (13,745)
-------- -------- --------
Balance, end of period .................. $(21,700) $(17,495) $(22,451)
======== ======== ========
Deferred compensation on restricted stock:
Balance, beginning of period ............ $ (2,848) $ (1,520) $ (1,520)
Issuance/cancellation of restricted stock (272) (2,276) (2,247)
Amortization of deferred compensation on
restricted stock ...................... 820 581 919
-------- -------- --------
Balance, end of period .................. $ (2,300) $ (3,215) $ (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)
Nine Months Ended September 30,
-------------------------------
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Premiums collected .......................... $ 536,589 $ 522,006
Net investment income collected ............. 68,188 64,546
Losses and loss adjustment expenses paid .... (303,146) (323,664)
Policy acquisition costs paid ............... (160,630) (139,138)
Dividends paid to policyholders ............. (9,021) (9,839)
Interest paid ............................... (12,530) (11,295)
Federal income tax payments ................. (13,714) (8,144)
Other receipts .............................. 4,413 11,625
--------- ---------
Net cash provided by operating activities.. 110,149 106,097
--------- ---------
Cash flows from investing activities:
Maturities of fixed maturity investments .... 38,108 70,489
Sales of fixed maturity investments ......... 140,252 79,753
Sales of equity securities .................. 51,259 36,004
Investments in fixed maturities ............. (224,938) (172,071)
Investments in equity securities ............ (49,910) (78,663)
Acquisition of McGee ........................ (22,333) -
Effect on cash of consolidating McGee ....... 349 -
Net sales (purchases) of short-term
investments ............................... (85,752) (15,620)
Purchase of property and equipment .......... (6,579) (4,106)
Other receipts (payments) ................... 2,797 (1,056)
--------- ---------
Net cash used in investing activities ..... (156,747) (85,270)
--------- ---------
Cash flows from financing activities:
Proceeds from issuance of notes payable ..... 110,485 -
Proceeds from exercise of stock options ..... 246 259
Dividends paid to stockholders .............. (8,437) (7,754)
Repayment of notes payable .................. (54,500) (6,000)
Purchases of common stock ................... (843) (8,215)
Other payments .............................. (18) (222)
--------- ---------
Net cash provided by (used in) financing
activities .............................. 46,933 (21,932)
--------- ---------
Effect of foreign exchange rate changes on cash 121 -
--------- ---------
Net increase (decrease) in cash ........... 456 (1,105)
Cash balance, beginning of period ............. 6,201 6,433
--------- ---------
Cash balance, end of period ................... $ 6,657 $ 5,328
========= =========
<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)
Nine Months Ended September 30,
-------------------------------
1995 1994
---- ----
<S> <C> <C>
Reconciliation of net earnings to net
cash provided by operating activities:
Net earnings .................................. $ 50,368 $ 40,136
-------- --------
Adjustments:
Depreciation and amortization ............... 4,004 3,584
Amortization of excess of cost over fair
value of net assets acquired .............. 1,062 879
Deferred federal income taxes ............... 330 6,996
Amortization of fixed maturity investments .. 1,231 1,044
Non-cash investment income .................. (9,567) (1,758)
Equity in earnings of affiliates ............ (4,104) (8,715)
Dividends received from affiliates .......... 2,595 2,544
Realized investment gains ................... (9,171) (1,908)
Other ....................................... 42 342
Change in assets and liabilities (net of
effects of acquiring McGee):
Decrease in accrued investment income ....... 220 2,336
Increase in accounts and notes receivable ... (34,961) (19,651)
Decrease in reinsurance recoverables and
prepaid reinsurance ....................... 11,827 41,256
Increase in deferred policy acquisition costs (9,987) (11,725)
Increase in other assets .................... (4,193) (464)
Increase in losses .......................... 36,699 16,138
Increase in loss adjustment expenses ........ 25,516 18,855
Increase in unearned premiums ............... 32,538 6,596
Increase in policyholders' dividends ........ 4,951 128
Increase in other liabilities ............... 10,749 9,484
-------- --------
Total adjustments and changes ............. 59,781 65,961
-------- --------
Net cash provided by operating activities ..... $110,149 $106,097
======== ========
<FN>
See Notes to Consolidated Financial Statements (Unaudited)
Page 8
</TABLE>
<PAGE>
ORION CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Nine Months Ended September 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 majority-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 is being 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 nine
month periods ended September 30, 1995 and 1994, would not be materially
different than reported herein.
Page 9
<PAGE>
Note C - Investment in Affiliates
As of September 30, 1995 the Company owned 46.2% 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 nine-month
periods ended September 30, 1995 and 1994 is as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
1995 1994 1995 1994
---- ---- ---- ----
(000s omitted)
Revenues:
Premiums earned .................... $132,780 $100,968 $335,359 $271,495
Realized investment gains .......... 2,536 598 2,895 2,306
Investment and other income ........ 10,290 7,931 26,893 21,055
-------- -------- -------- --------
145,606 109,497 365,147 294,856
-------- -------- -------- --------
Expenses:
Insurance expenses ................. 148,392 100,424 345,983 266,083
Interest and other ................. 2,152 1,367 4,996 4,104
-------- -------- -------- --------
150,544 101,791 350,979 270,187
-------- -------- -------- --------
Earnings (loss) before federal income
taxes (benefit) .................... (4,938) 7,706 14,168 24,669
Federal income taxes (benefit) ....... (2,900) 2,000 1,858 5,958
-------- -------- -------- --------
Net earnings (loss) .................. $ (2,038)$ 5,706 $ 12,310 $ 18,711
======== ======== ======== ========
The Company's proportionate share .... $ (1,713)$ 2,577 $ 4,104 $ 8,715
======== ======== ======== ========
The Company's investments in and advances to affiliates were as follows:
September 30, December 31,
1995 1994
------------ ------------
(000s omitted)
Book value ................................ $117,806 $108,510
Market value .............................. 138,094 138,786
Guaranty National shares held ............. 6,554 6,004
- Book value of shares held ............. $ 89,858 $ 72,564
- Market value of shares held ........... 108,957 110,320
Intercargo shares held .................... 1,526 1,526
- Book value of shares held ............. $ 19,419 $ 18,750
- Market value of shares held ........... 20,608 12,593
Page 10
<PAGE>
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
which was received on October 30, 1995, thereby increasing the Company's
ownership of Guaranty National to 49.0%. 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.
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 Nine Months Ended
September 30, September 30,
------------------ -----------------
1995 1994 1995 1994
---- ---- ---- ----
(000s omitted)
Direct premiums written ........... $233,536 $172,919 $599,400 $503,144
Reinsurance assumed ............... 35,177 37,343 99,624 94,982
-------- -------- -------- --------
Gross premiums written ............ 268,713 210,262 699,024 598,126
Reinsurance ceded ................. (61,169) (27,569) (124,788) (63,096)
-------- -------- -------- --------
Net premiums written .............. $207,544 $182,693 $574,236 $535,030
======== ======== ======== ========
Direct premiums earned ............ $206,261 $165,673 $566,509 $489,895
Reinsurance assumed ............... 33,162 42,298 99,977 101,634
-------- -------- -------- --------
Gross premiums earned ............. 239,423 207,971 666,486 591,529
Reinsurance ceded ................. (55,521) (27,268) (120,817) (81,288)
-------- -------- -------- --------
Net premiums earned ............... $183,902 $180,703 $545,669 $510,241
======== ======== ======== ========
Loss and loss adjustment expenses
recoverable from reinsurers ..... $ 25,067 $ 12,857 $ 57,080 $ 34,977
======== ======== ======== ========
Note E - Notes Payable
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 were approximately $98,113,000, of which $46,500,000 was used to
repay Orion's debt under its bank loan agreement and the balance was used for
general corporate purposes.
Page 11
<PAGE>
The Company's debt is scheduled to be repaid as follows:
(000s omitted)
September 1, 2002 ................... $110,000
July 15, 2005 ....................... 100,000
--------
$210,000
Less unamortized discount ........... 869
--------
$209,131
========
Note F - Stockholders' Equity and Earnings Per Common Share
The Company repurchased 22,140 shares of its common stock at an aggregate
cost of $885,000 in the first nine months of 1995. On October 31, 1995, the
Board of Directors authorized an additional $5,000,000 for the stock
repurchase program. Since September 30, 1995, the Company repurchased an
additional 22,000 shares for $912,000. The remaining authorization as of
October 31, 1995 is $5,380,000.
Earnings per common share are computed using the weighted average common
and dilutive common equivalent shares outstanding for the three-month and
nine-month periods ended September 30, 1995 and 1994. The weighted average
common shares amounted to 14,220,000 and 14,378,000 shares for the three
months ended September 30, 1995 and 1994, respectively, and 14,200,000 and
14,430,000 shares for the nine months ended September 30, 1995 and 1994,
respectively.
Note G - 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 and Note H below).
Note H - Subsequent Event
On November 2, 1995, the terms of a Stipulation and Consent Order between
the Department of Insurance of the State of California ("the Department") and
the Company were adopted by the Commissioner of the Department. Pursuant to
that order, the Company has no premium rollback liability under Proposition
103. Further, the Department acknowledged that premium rates charged by the
Company in California since the passage of Proposition 103 have been in
compliance with the requirements of the California Insurance Code.
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
September 30, 1995, and the related consolidated statements of earnings
for the three-month and nine-month periods ended September 30, 1995 and
1994 and the statements of stockholders' equity and cash flows for the
nine-month periods ended September 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
November 2, 1995
Page 13
<PAGE>
ORION CAPITAL CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Nine Months Ended September 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, (iv) Wm. H. McGee & Co., Inc. ("McGee"), an underwriting management
company that specializes in ocean marine, inland marine and property insurance
and (v) 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 McGee for
$22,000,000 in cash. 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.
The Company continues to make excellent progress in reducing its combined
ratio. For the third quarter of 1995, the combined ratio was under 100%, at
99.8%, for the first time in Orion's history.
Page 14
<PAGE>
Earnings (loss) by segment before federal income taxes are summarized as
follows for the quarterly and nine-month periods ended September 30, 1995 and
1994.
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
1995 1994 1995 1994
---- ---- ---- ----
(000s omitted)
Regional Operations ................. $15,828 $10,409 $42,909 $31,739
Reinsurance/Special Programs ........ 13,625 10,622 32,798 24,361
Guaranty National Corporation ....... (2,016) 2,581 3,279 8,647
------- ------- ------- -------
Total ............................. 27,437 23,612 78,986 64,747
Other ............................... (4,792) (3,268) (13,059) (12,144)
------- ------- ------- -------
$22,645 $20,344 $65,927 $52,603
======= ======= ======= =======
The following table sets forth certain ratios of insurance operating
expenses to premiums earned for the Company.
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
1995 1994 1995 1994
---- ---- ---- ----
Loss and loss adjustment expenses ... 67.4% 71.5% 68.9% 72.6%
Policy acquisition costs and other
insurance expenses ................ 29.4 27.6 28.9 27.0
----- ----- ----- -----
Total before policyholders'
dividends ..................... 96.8 99.1 97.8 99.6
Policyholders' dividends ............ 3.0 1.7 2.5 1.9
----- ----- ----- -----
Total after policyholders'
dividends ..................... 99.8% 100.8% 100.3% 101.5%
===== ===== ===== =====
REVENUES
Premiums written and premiums earned
- ------------------------------------
Net premiums written increased 13.6% ($24,851,000) to $207,544,000 in the
third quarter of 1995 versus $182,693,000 in the third quarter of 1994, and
7.3% ($39,206,000) to $574,236,000 in the first nine months of 1995 from
$535,030,000 in the first three quarters of 1994. The results by segment are
as follows:
- Regional Operations' premiums written increased 17.9% ($12,439,000) to
$82,114,000 in the third quarter of 1995 from $69,675,000 in the third
quarter of 1994 and 13.4% ($28,603,000) to $241,998,000 in the first nine
months of 1995 as compared to 213,395,000 in 1994. The premiums written
increases were 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
Page 15
<PAGE>
segment were also mitigated by the shift towards high-deductible workers
compensation products.
- Reinsurance/Special Programs' premiums written increased 11.0%
($12,412,000) to $125,430,000 in the third quarter of 1995 from
$113,018,000 in the 1994 third quarter, and 3.3% ($10,603,000) to
$332,238,000 in the first three quarters of 1995 from $321,635,000 in
1994. Premiums written by DPIC for professional liability insurance, the
largest special program, increased 8.4% ($10,875,000) to $141,012,000 for
the first nine months of 1995 from $130,137,000 for the same period of
1994. The increase is primarily attributable to growth in DPIC's program
for engineers. Premiums written in the first quarter of 1994 includes
a $13,704,000 premium refund from the cancellation of a reinsurance
contract. Excluding this refund, DPIC premiums written year-to-date
increased 18.9% from the 1994 period. Premium volume for Connecticut
Specialty decreased 0.9% ($1,212,000) to $135,695,000 in the first nine
months of 1995 from $136,907,000 in the 1994 period. The decrease
resulted from 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 has had unfavorable loss experience. The
reduction in these programs was offset by 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. The percentage of treaty and facultative
reinsurance premiums assumed to total net premiums written for
Reinsurance/Special Programs amounted to 16.7% and 17.0% in the first
three quarters of 1995 and 1994, respectively.
Premiums earned increased 1.8% ($3,199,000) to $183,902,000 in the third
quarter of 1995 compared to $180,703,000 in the third quarter of 1994, and
6.9% ($35,428,000) to $545,669,000 in the first nine months of 1995 from
$510,241,000 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 13.4% ($3,022,000) to
$25,572,000 for the third quarter of 1995 versus $22,550,000 for the third
quarter of 1994, and 15.6% ($9,941,000) to $73,860,000 for the first nine
months of 1995 as compared to $63,919,000 for 1994. The pre-tax yields on the
average investment portfolio were 7.2% for the first nine months of 1995 and
6.6% for the first three quarters of 1994, and the after-tax yields were 5.6%
and 5.2%, respectively. The increase in net investment income reflects
earnings from limited partnership investments of $7,438,000 for the first nine
months of 1995 as compared to $1,623,000 for the 1994 period, as well as a
higher average portfolio yield on a higher investment base. Earnings from
limited partnership investments were $2,750,000 for the third quarter of 1995
versus $1,005,000 in 1994's third 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.
Page 16
<PAGE>
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 $1,188,686,000 and $1,002,042,000 at September 30, 1995 and
December 31, 1994, respectively, or approximately 76.5% and 75.6% of the
investment portfolio.
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
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 September 30, 1995 and December 31, 1994, the
Company's investments in non-investment grade and unrated fixed maturity
securities were carried at $145,429,000 and $119,853,000 with market values
of $145,250,000 and $119,277,000, respectively. These investments represent
a total of 9.4% and 9.0% of cash and investments and 6.1% and 5.7% of total
assets at September 30, 1995 and December 31, 1994, respectively.
Realized investment gains
- -------------------------
Net realized investment gains increased $4,688,000 and $7,263,000 to
$5,885,000 and $9,171,000 in the third quarter and first nine months of 1995,
respectively, from gains of $1,197,000 and $1,908,000 in the respective
periods of 1994. Realized investment gains in the third quarters of 1995 and
1994 are net of $1,300,000 and $44,000, respectively, of provisions for losses
on securities deemed to be other than temporarily impaired. Such provisions
were $2,800,000 and $1,132,000 for the nine-month periods ended September 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.
Page 17
<PAGE>
EXPENSES AND OTHER
Operating ratios
- ----------------
The ratio of loss and loss adjustment expenses to premiums earned (the
"loss ratio") was 67.4% and 68.9% in the third quarter and first nine months
of 1995, respectively, compared to 71.5% and 72.6% in the corresponding
periods of 1994. The decrease in the 1995 loss ratios was attributable to
improvements in both the Regional Operations and Reinsurance/Special Programs
segments. Adverse development of prior years' losses amounted to $12,159,000
in the first nine months of 1995 compared with $13,557,000 in the first three
quarters 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 60.2% in the 1995
third quarter and 67.7% in the 1994 third quarter. In the first nine months
of 1995 the loss ratio was 62.7% as compared to 67.5% in 1994. These
decreases reflect 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.
The third quarter 1995 and 1994 loss ratios for Reinsurance/Special
Programs amounted to 73.1% and 74.0%, respectively. The loss ratios for the
nine-month periods ended September 30, 1995 and 1994 were 73.5% and 76.1%,
respectively. The improvement in the 1995 loss ratios for this segment is
primarily the result of favorable loss experience for DPIC and 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 28.9% in the first nine
months of 1995 as compared to 27.0% 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 2.5%
and 1.9% in 1995 and 1994, respectively. The combined ratio was 100.3% in the
first nine months of 1995 and 101.5% for the same period of 1994.
Interest expense
- ----------------
Interest expense increased to $4,447,000 in the third quarter of 1995
versus $3,439,000 in 1994, and to $11,481,000 in the first nine months of 1995
from $10,204,000 in 1994. The increases of 29.3% and 12.5%, respectively, are
due to higher average debt outstanding after the issuance of $100,000,000 of
Senior Notes by Orion on July 17, 1995.
Other expenses
- --------------
Other expenses were $9,954,000 and $15,264,000 in the three-month and
nine-month periods ended September 30, 1995, respectively, versus $1,452,000
and $5,011,000 in the respective 1994 periods. The increases in both other
income and other expenses for 1995 are primarily attributable to the inclusion
Page 18
<PAGE>
of the revenue and expenses of McGee after it was acquired by the Company on
June 30, 1995.
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
$825,000 were recorded from the Intercargo investment in the third quarter and
first nine months of 1995, respectively, while a loss of $4,000 and earnings
of $68,000 were recorded for Intercargo in the respective 1994 periods. The
Company's portion of Guaranty National's net earnings was a loss of $2,016,000
for the third quarter and earnings of $3,279,000 for the first nine-months of
1995, and earnings of $2,581,000 and $8,647,000 for the corresponding periods
of 1994, based on Guaranty National's loss of $4,113,000 and earnings of
$5,167,000 for the third quarters of 1995 and 1994, respectively, and earnings
of $6,506,000 and $17,312,000 for the nine-month periods ended September 30,
1995 and 1994, respectively. Guaranty National's gross premiums written
increased to $319,056,000 for the first nine months of 1995 from $274,137,000
for the 1994 period. Guaranty National's overall combined ratio was 105.4%
and 97.2% for the first three quarters of 1995 and 1994, respectively. The
loss incurred by Guaranty National in the third quarter of 1995, and the
higher loss ratio for this quarter, are due to Guaranty National strengthening
its loss reserves in response to adverse claim trends in the first half of the
year. Decisive measures have been initiated by Guaranty National to improve
results, including tightening underwriting standards and rate increases.
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
which was received on October 30, 1995, thereby increasing the Company's
ownership of Guaranty National from 46.2% to 49.0%. 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 $5,388,000 (23.8%) and $5,015,000 (24.7%) in
the third quarters of 1995 and 1994, respectively. The corresponding amounts
for the first nine months of 1995 and 1994 were $15,559,000 (23.6%) and
$12,467,000 (23.7%), 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.
Page 19
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operating activities increased by $4,052,000 for the
first nine months of 1995 from $106,097,000 in 1994 to $110,149,000 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 $22,100,000 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 $156,747,000 for the
first nine months of 1995 from $85,270,000 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 and after cash provided by or used in financing
activities. In June 1995 Orion paid $22,000,000 in cash plus acquisition
costs to acquire McGee (see discussion above).
Cash provided by financing activities was $46,933,000 for the first nine
months of 1995 and cash used in financing activities during the same period
of 1994 was $21,932,000. Orion borrowed $12,000,000 under its bank line of
credit in June 1995 to finance part of the McGee acquisition. In July 1995
Orion issued $100,000,000 of senior debt (discussed below) and repaid all of
its outstanding bank debt. Cash was used in both 1994 and 1995 for dividend
payments, scheduled debt repayments and to repurchase Orion's common stock.
Orion increased its quarterly dividend rate by 11.1% in the third quarter of
1994 and by 15.0% in 1995's third quarter.
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
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
$141,662,000 and $96,572,000 at September 30, 1995 and December 31, 1994,
respectively. Orion's insurance subsidiaries had consolidated policyholders'
surplus of $520,709,000 at September 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 September 30, 1995 and
1.6:1 at December 31, 1994.
Page 20
<PAGE>
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 were 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.
The Company repurchased 22,140 shares of its common stock at an aggregate
cost of $885,000 in the first nine months of 1995. The Company's remaining
stock purchase authorization from its Board of Directors amounted to
$1,292,000 at September 30, 1995. On October 31, 1995, the Board of Directors
authorized an additional $5,000,000 for the stock repurchase program. Since
September 30, 1995, the Company repurchased an additional 22,000 shares for
$912,000. The remaining authorization as of October 31, 1995 is $5,380,000.
Page 21
<PAGE>
PART II. OTHER INFORMATION
Items 1 - 4.
- --------------------------
None.
Item 5. Other Information
- ---------------------------
On November 2, 1995, the terms of a Stipulation and Consent Order
between the Department of Insurance of the State of California ("the
Department") and the Company were adopted by the Commissioner of the
Department. Pursuant to that order, the Company has no premium
rollback liability under Proposition 103. Further, the Department
acknowledged that premium rates charged by the Company in California
since the passage of Proposition 103 have been in compliance with the
requirements of the California Insurance Code.
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
re Unaudited Interim Financial Information
Exhibit 27: Financial Data Schedule
(b) Reports on Form 8-K.
No reports on Form 8-K have been filed during the quarter.
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: November 3, 1995 By: /s/ Alan R. Gruber
---------------------------------
Chairman of the Board
and Chief Executive Officer
Date: November 3, 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 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 Nine months ended
September 30, September 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 ............................. 14,071 14,253 14,069 14,307
Dilutive effect of stock options .......... 149 125 131 123
------- ------- ------- -------
Weighted average number of common and
equivalent shares ....................... 14,220 14,378 14,200 14,430
======= ======= ======= =======
Net earnings attributable to common
stockholders .............................. $17,257 $15,329 $50,368 $40,136
======= ======= ======= =======
Net earnings per common share ............... $ 1.21 $ 1.07 $ 3.55 $ 2.78
======= ======= ======= =======
FULLY DILUTED
Weighted average number of shares
outstanding ............................. 14,071 14,253 14,069 14,307
Dilutive effect of stock options .......... 163 125 139 123
------- ------- ------- -------
Weighted average number of common and
equivalent shares ....................... 14,234 14,378 14,208 14,430
======= ======= ======= =======
Net earnings attributable to common
stockholders .............................. $17,257 $15,329 $50,368 $40,136
======= ======= ======= =======
Net earnings per common share ............... $ 1.21 $ 1.07 $ 3.55 $ 2.78
======= ======= ======= =======
Page 25
</TABLE>
<PAGE>
EXHIBIT 15
November 2, 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 September 30, 1995 and 1994, as
indicated in our report dated November 2, 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 September 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 NINE MONTHS ENDED
SEPTEMBER 30, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-1-1995
<PERIOD-END> SEP-30-1995
<DEBT-HELD-FOR-SALE> 625,795
<DEBT-CARRYING-VALUE> 370,714
<DEBT-MARKET-VALUE> 379,573
<EQUITIES> 300,916
<MORTGAGE> 2,303
<REAL-ESTATE> 0
<TOTAL-INVEST> 1,547,118
<CASH> 6,657
<RECOVER-REINSURE> 288,526
<DEFERRED-ACQUISITION> 80,124
<TOTAL-ASSETS> 2,388,471
<POLICY-LOSSES> 1,243,544
<UNEARNED-PREMIUMS> 289,393
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 17,602
<NOTES-PAYABLE> 209,131
<COMMON> 162,782
0
0
<OTHER-SE> 301,057
<TOTAL-LIABILITY-AND-EQUITY> 2,388,471
545,669
<INVESTMENT-INCOME> 73,860
<INVESTMENT-GAINS> 9,171
<OTHER-INCOME> 7,429
<BENEFITS> 376,066
<UNDERWRITING-AMORTIZATION> 142,351
<UNDERWRITING-OTHER> 29,144
<INCOME-PRETAX> 65,927
<INCOME-TAX> 15,559
<INCOME-CONTINUING> 50,368
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 50,368
<EPS-PRIMARY> 3.55
<EPS-DILUTED> 3.55
<RESERVE-OPEN> 891,542
<PROVISION-CURRENT> 363,907
<PROVISION-PRIOR> 12,159
<PAYMENTS-CURRENT> 88,242
<PAYMENTS-PRIOR> 214,904
<RESERVE-CLOSE> 964,462
<CUMULATIVE-DEFICIENCY> 12,159
</TABLE>
