<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended........................March 31, 1997
OR
[ ] 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...........................0-13591
PROVIDENT AMERICAN CORPORATION
--------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2214195
-------------- ------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2500 DeKalb Pike, Norristown, Pennsylvania 19404
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code: (610) 279-2500
Former name, former address and former fiscal year,
if changed since last report: N/A
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 ___
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: 10,106,960 shares of common
stock, par value $.10, outstanding as of May 9, 1997.
Page 1 of 13 Pages
<PAGE>
PROVIDENT AMERICAN CORPORATION
INDEX
Page No.
---------
Part I. FINANCIAL INFORMATION
Item 1. Condensed Financial Statements
Consolidated Statements of Operations 3
Consolidated Balance Sheets 4
Consolidated Statements of Cash Flows 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition 8
Part II. OTHER INFORMATION
Items 1- 5 12
Reports on form 8-K 12
SIGNATURES 13
Exhibit 11
Exhibit 27
Page 2 of 13 Pages
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Condensed Financial Statements
Provident American Corporation and Subsidiaries
Consolidated Statements of Operations
<TABLE>
<CAPTION>
(Dollars in thousands, except per share data) 3 Months Ended March 31,
1997 1996
------------- --------------
<S> <C> <C>
Revenue:
Premium: Accident and health, gross $ 18,255 $ 11,658
Life and annuity, gross 2,409 2,961
------------- --------------
Total gross premium 20,664 14,619
------------- --------------
Accident and health reinsurance ceded 8,361 5,142
Life and annuity reinsurance ceded 145 96
------------- --------------
Total reinsurance ceded 8,506 5,238
------------- --------------
Net premium 12,158 9,381
Net investment income 923 709
Realized gains on investments 998 130
Other revenue 500 214
Litigation settlement, net of expenses 22,400
------------- --------------
Total revenue 14,579 32,834
------------- --------------
Benefits and expenses:
Death and other policy benefits:
Life 1,588 1,297
Accident and health, net of reinsurance 6,172 3,876
Annuity and other 229 200
Increase in liability for future policy benefits 396 2,078
Depreciation and amortization of goodwill 150 56
Premium taxes, licenses and fees 653 477
Commissions, net of ceding allowance and deferred acquisition costs 440 1,307
Other operating expenses, net of deferred acquisition costs 3,623 2,706
Amortization of deferred policy acquisition costs 369 26
------------- --------------
Total benefits and expenses 13,620 12,023
------------- --------------
Income before income taxes 959 20,811
Provision for income taxes (benefit):
Current (525) 5,350
Deferred 669 400
------------- --------------
Total income taxes 144 5,750
------------- --------------
Net income 815 15,061
Dividends on preferred stock 37 83
------------- --------------
Net income applicable to common stock $ 778 $ 14,978
============= ==============
Income per share of common stock $ 0.07 $ 1.41
============= ==============
Common shares and equivalents used in
computing income per share 11,587 10,640
See notes to condensed consolidated financial statements.
</TABLE>
Page 3 of 13 Pages
<PAGE>
Provident American Corporation and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
(Dollars in thousands) March 31, December 31,
1997 1996
---------------- ---------------
<S> <C> <C>
Assets
Investments:
Bonds, amortized cost $57,153 and $55,258 $55,780 $54,985
Equity securities, cost $1,773 and $3,901 1,690 4,930
Real estate, at cost, less accumulated depreciation of $164 and $158 936 942
Policy loans 515 526
Other invested assets 564 559
---------------- ---------------
Total Investments 59,485 61,942
Cash and cash equivalents 4,331 6,218
Premium due and uncollected 1,485 1,318
Amounts due from reinsurers 9,697 9,240
Loans receivable from officer and directors 468 461
Accrued investment income 895 836
Federal income taxes recoverable 615 90
Property and equipment, at cost, less accumulated depreciation of $1,345 and $1,261 4,786 4,711
Deferred tax asset 154
Unamortized deferred policy acquisition costs 5,271 3,140
Goodwill 3,100 3,166
Other assets 1,591 1,778
---------------- ---------------
Total Assets $91,724 $93,054
================ ===============
Liabilities and Stockholders' Equity
Future policy benefits:
Life 38,818 38,459
Annuity and other 6,046 6,354
Policy claims 13,446 15,438
Premium received in advance and unearned 2,634 2,348
Amounts due to reinsurers 818 705
Accrued commissions and expenses 4,306 4,179
Notes payable 183 298
Current income taxes 957 463
Deferred income taxes 194
Other liabilities 2,842 2,757
---------------- ---------------
Total Liabilities 70,244 71,001
Commitments and Contingencies
Stockholders' Equity
Preferred stock, par value $1: authorized 5,000,000 shares:
Series A Cumulative Convertible, issued 580,250 580 580
Series B Cumulative Convertible, none issued
Common stock, par value $.10: authorized 25,000,000, issued 10,105,960 and 10,078,710 1,011 1,008
Common stock, Class A, par value $.10: authorized 2,500,000, none issued
Additional paid-in capital 13,029 12,945
Net unrealized depreciation of bonds (893) (177)
Net unrealized appreciation (depreciation) of equity securities (54) 668
Retained earnings 7,883 7,105
---------------- ---------------
21,556 22,129
Less common stock held in treasury, at cost, 36,300 shares (76) (76)
---------------- ---------------
Total Stockholders' Equity 21,480 22,053
---------------- ---------------
Total Liabilities and Stockholders' Equity $91,724 $93,054
================ ===============
See notes to condensed consolidated financial statements.
</TABLE>
Page 4 of 13 Pages
<PAGE>
Provident American Corporation and Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
(Dollars in thousands) 3 Months Ended March 31,
1997 1996
---------------- ----------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 815 $ 15,061
Adjustments to reconcile net income
to net cash from operating activities:
Equity securities received from litigation settlement (22,400)
Change in future policy benefits and policy claims (1,641) 2,487
Change in premium due and uncollected and
premium received in advance and unearned 119 (17)
Change in amounts due to/from reinsurers (344) (1,600)
Change in accrued investment income (59) 40
Change in accrued commissions and expenses 127 677
Change in other assets, current and deferred
income taxes and other liabilities 1,364 5,172
Depreciation and amortization 158 55
Deferred policy acquisition costs, net (2,131) (165)
Net realized gain on investments (998) (130)
---------------- ----------------
Net cash from operating activities (2,590) (820)
---------------- ----------------
INVESTING ACTIVITIES
Purchases of bonds (3,530) (7,470)
Purchases of equity securities and other investments (1,010) (155)
Sale of bonds 796 8,602
Sale of equity securities 4,086
Maturity of investments and loans 892 86
Acquisition of property and equipment (159)
Decrease in loans receivable 19
Increase in loans receivable from officer and directors (7)
---------------- ----------------
Net cash from investing activities 1,068 1,082
---------------- ----------------
FINANCING ACTIVITIES
Deposits and interest credited to
contractholder deposit funds 84 173
Withdrawals from contractholder deposit funds (384) (802)
Issuance of common stock 87 33
Dividends paid on preferred stock (37) (83)
Repayment of note payable (115) (113)
---------------- ----------------
Net cash from financing activities (365) (792)
---------------- ----------------
Decrease in cash and cash equivalents (1,887) (530)
Cash and cash equivalents, beginning of period 6,218 2,162
---------------- ----------------
Cash and cash equivalents, end of period $ 4,331 $ 1,632
---------------- ----------------
Supplemental disclosure of cash flow information:
Interest paid $ 4 $ 19
Income taxes paid (refunded), net $ (942) $ 1
See notes to condensed consolidated financial statements.
</TABLE>
Page 5 of 13 Pages
<PAGE>
Provident American Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands)
(1) General
The condensed consolidated financial statements included herein have been
prepared by Provident American Corporation (the "Company") without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission
and reflect all adjustments which, in the opinion of the Company, are necessary
to present fairly results for the interim periods. Certain financial information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, although the Company believes
that the accompanying disclosures are adequate to make the information presented
not misleading. Results of operations for the three-month period ended March 31,
1997 are not necessarily indicative of the results that may be expected for the
year ending December 31, 1997.
These financial statements should be read in conjunction with the financial
statements and notes thereto contained in the Company's Annual Report on Form
10-K for the year ended December 31, 1996.
Certain prior year amounts have been reclassified to conform with the
current presentation.
The Company is a Pennsylvania corporation which was organized in 1982 and
is regulated as an insurance holding company by the 42 states in which its
principal insurance subsidiaries, Provident Indemnity Life Insurance Company
("PILIC") and Provident American Life and Health Insurance Company ("PALHIC"),
both Pennsylvania stock life insurance companies, are licensed. The Company
markets and underwrites group life and accident and health coverages as well as
individual life insurance policies through independent agents and brokers. The
Company's major line of combined group life and health business is written
through several association groups and discretionary group trusts.
(2) Bonds and Marketable Securities at Fair Market Value
The Company has classified all of its debt and equity securities as
"available-for-sale" and accordingly, at December 31, 1996, recorded as a
separate component of stockholders' equity an unrealized gain amounting to
approximately $756, net of $265 applicable to deferred federal income taxes. At
March 31, 1997, the Company recorded an unrealized loss of $1,373 on bonds net
of $480 applicable to deferred federal income taxes and an unrealized loss of
$83 on equity securities, net of $29 applicable to deferred federal income
taxes. The net effect on stockholders' equity as a result of this fair market
value accounting method was to decrease stockholders' equity by $947 for the
three months ended March 31, 1997. The cumulative change in aggregate fair
market values of bonds is a direct result of the overall change in interest
rates.
Page 6 of 13 Pages
<PAGE>
(3) Earnings per share of common stock
Primary earnings per share has been computed by dividing net income
applicable to common stock by the weighted average number of common shares and
equivalents outstanding. Common share equivalents included in the computation
represent shares issuable upon assumed exercise of stock options which would
have a dilutive effect in periods where there are earnings.
Common shares and equivalents used in computing loss per share for 1996
have been restated to include 610,000 shares issued to acquire REF & Associates,
Inc. in 1996 accounted for as a "Pooling of Interests."
(4) Reinsurance Impact on Benefits and Expenses
Accident and health policy benefits and Commissions are net of the
following ceded reinsurance amounts:
3 Months Ended
March 31,
1997 1996
---------------- ----------------
Accident and health benefits
Gross before reinsurance ceded $11,847 $7,431
Reinsurance ceded 5,675 3,555
---------------- ----------------
Net of reinsurance $6,172 $3,876
================ ================
Commissions
Gross before reinsurance ceded $3,193 $3,034
Reinsurance ceded 2,753 1,727
---------------- ----------------
Net of reinsurance $440 $1,307
================ ================
(5) Accounting standards not yet adopted:
In 1997 the Company will adopt the recently issued SFAS No. 128 "Earnings
Per Share", establishing standards for computing and presenting earnings per
share (EPS). This Statement simplifies the previous standards for computing
earnings per share and replaces the presentation of primary EPS with a
presentation of basic EPS. It also requires dual presentation of basic and
diluted EPS on the face of the income statement. Basic EPS excludes dilution and
is computed by dividing income available to common stockholders by the
weighted-average number of common shares outstanding for the period. Diluted EPS
reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock or
resulted in the issuance of common stock that then shared in the earnings of the
entity. Diluted EPS is computed similarly to fully diluted EPS. This Statement
is effective for periods ending after December 15, 1997, including interim
periods; earlier application is not permitted. This statement requires
restatement of all prior-period EPS data presented. The effect of the
pronouncement on the financial statements has not been quantified.
Page 7 of 13 Pages
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations
For the three months ended March 31, 1997 (the quarter), the Company's
Consolidated Statement of Operations was impacted by increasing sales, the
assumption of approximately 3,500 in-force "HealthQuest" medical policies in May
of 1996 and realized investment gains. Premium revenue increased as a result of
sales growth and the HealthQuest policies. Net income applicable to common stock
for the quarter was $0.8 million or $0.07 per share compared to $15.0 million
($1.41 per share) the three months ended March 31, 1996 (same quarter last
year). Net income for the same quarter last year includes a $16.6 million
litigation settlement, net of tax. Excluding the litigation settlement, the
Company's Net income for the quarter improved from the same quarter last year
due to realized gains on the sale of investments and lower expenses as a
percentage of net earned premium.
Accident and health gross premium was $18.3 million for the quarter
compared to $11.7 million for the same quarter last year and Accident and health
ceded premium was $8.4 million for the quarter as compared to $5.1 million for
the same quarter last year with both increases a result of increased new
business from "The Provident Solution" one-life managed-care health insurance
product introduced in the fourth quarter of 1995 and premium related to the
purchased HealthQuest book of business and new sales .
At March 31, 1997 and 1996, annualized accident and health premium in force
on small group and managed-care business amounted to $76.2 million and $47.8
million, respectively, consisting of approximately 41,000 and 23,000 certificate
holders, respectively. The $28.4 million net increase in annualized premium
resulted from new business issued of $57.0 million plus $6.5 million premium
acquired as a result of the Healthquest Book, plus premium rate increases
of approximately $8.5 million less lapses amounting to approximately $43.6
million.
The group accident and health insurance annualized premium lapse ratios
were 43.9% and 56.1% for the quarter and the same quarter last year,
respectively. The group accident and health premium lapse ratios declined due to
lower premium lapsation of the Company's newer managed care products in
comparison to the Company's older indemnity health products. The Provident
Solution and HealthQuest products make up 71% and 35% of annualized premium
inforce as of March 31, 1997 and 1996, respectively.
Life and annuity net premium, consisting primarily of group life and
individual pre-need and final expense business, decreased $0.6 million, to $2.3
million for the quarter. Sales volume was insufficient to offset lapsation. The
individual life insurance premium lapse ratios on an annualized basis for the
three months ended March 31, 1997 and 1996 were 11.2% and 12.7%, respectively.
The higher 1996 lapse ratio resulted primarily from an increase in the
non-renewal of final expense policies.
Net investment income was $0.9 million for the quarter, up $0.2 million
from the same quarter last year due to increased bond investments. The gross
average book yield on bond investments which accounted for 94% and 95% of total
investments at March 31, 1997 and 1996, respectively increased from 6.3% at
March 31, 1996, to 6.5% at March 31, 1997.
Page 8 of 13 Pages
<PAGE>
Accident and health policy benefits represent 62.4% of accident and health
earned premium for the quarter compared to 59.5% for the same quarter last year.
The increase in the loss ratio is the result of less first duration business
where underwriting and policy provisions tend to produce loss ratios that are
lower than subsequent durations.
Increase in liability for future policy benefits of $0.4 million declined
from $2.1 million from the same quarter last year in part due to a declining
life premium volume and a non recurring charge in 1996 related the Company's
recapture of reinsurance ceded on certain multi-pay pre-need life insurance
policies of approximately $1 million.
Commissions, net of ceding allowance and deferred acquisition costs of $0.4
million for the quarter declined from $1.3 million from the same quarter last
year due to the deferral of acquisition cost related to the Company's managed
care products in the quarter of $0.9 million and declining life commissions as a
result of declining life premium. The Company commenced deferring acquisition
costs in the third quarter of 1996 relating to managed care products. Prior to
the third quarter of 1996, acquisition costs for all managed care products were
expensed as incurred.
Other expenses for the quarter of $3.6 million increased $0.9 million
compared to $2.7 million for the same quarter last year due to increased policy
administration expenses caused by increased new sales volume and policy
administration expenses associated with the acquired HealthQuest book of
business partially offset by managed care deferred policy acquisition costs.
Deferred costs represent policy issue, underwriting and marketing costs. As
previously discussed, the Company commenced deferring acquisition costs in the
third quarter of 1996 relating to managed care products. Prior to the third
quarter of 1996, acquisition costs for all managed care products were expensed
as incurred.
Total expenses excluding death and other policy benefits but including
commissions, net of ceding allowance and deferred acquisition costs represents
43.1% of net premiums for the quarter which is down from 48.7% for the same
quarter last year due to increased policy administration expenses caused by
increased new sales volume and policy administration expenses associated with
the acquired HealthQuest book of business more than offset by the deferral of
managed care policy acquisition costs in the quarter with no corresponding
deferral in the same quarter last year.
Liquidity and Capital Resources
A major objective of the Company is to maintain sufficient liquidity to
fund growth, fulfill statutory requirements and meet all cash requirements with
Cash and short term equivalents plus funds generated from the cash flow from
operations. The primary sources of cash are premiums and investment income. The
primary uses of cash are operating costs and benefit payments to policyholders.
The Company anticipates that it will continue to fund surrenders and benefit
payments through cash flow of normal operations, scheduled investment maturities
and interest income. Excess cash flow from operations is transferred to the
investment portfolio where it is available for investment and future cash needs.
Page 9 of 13 Pages
<PAGE>
For the three months ended March 31, 1997 (the quarter), total cash and
cash equivalents decreased by approximately $1.9 million of which $2.6 million
was used by operating activities primarily due to the settlement of pending
accident and health benefit payments incurred in prior periods and increased
acquisition costs as a result of increased sales volume. The sales growth of the
Company's managed care products exceeded the Company's claim processing capacity
during 1996. The Company recently increased its claim payment capacity through
both increased staffing and outsourcing in order to reduce the backlog of
pending health claims resulting in high claim payment activity during the
quarter. The Company maintained a level of liquidity in anticipation of the
reduction of pending health claims during 1997.
$1.1 million was provided by net sales of investments (primarily Loewen
stock).
Management believes, under its present assessment of the Company's
insurance operations, that the Company has sufficient liquidity and capital to
meet the Company's short-term and long-term financial commitments. At March 31,
1997, the Company had stockholders' equity of $21.5 million with total assets of
$91.7 million. Total assets included cash and investments carried at market
value of $63.8 million which consisted of $55.8 million in bonds issued by the
U.S. Government or government agencies, public utilities and other corporations,
$1.7 million of equity securities, $2.0 million invested in policy loans, real
estate and other invested assets and $4.3 million in cash and cash equivalents.
The $55.8 million of bonds are investment-grade securities ranging in maturity
from one to twenty-nine years.
Because of the long-term nature of its life insurance and annuity
contracts, the Company expects to hold its bonds to maturity. However, all bonds
are considered to be "available-for-sale" and in order to maximize investment
income, Company policy presently is to purchase medium-term U.S. Treasury and
government agency bonds, rather than purchasing short-term securities, which
would provide for anticipated maturities up to ten years. This policy
necessitates periodic sales of securities prior to maturity when cash flow from
operations is not sufficient to meet current obligations. Changes in net
unrealized depreciation of bonds from December 31, 1996 to March 31, 1997 are
due to changes in interest rates.
The sale of life insurance policies requires substantial capital due to
acquisition costs incurred in the initial year of issuance and the necessity to
maintain sufficient surplus levels for regulatory purposes. In general, the
Company anticipates meeting these demands from premiums on new business,
investment income and income from current business in force.
Page 10 of 13 Pages
<PAGE>
The statutory capital and surplus of PILIC, which includes amounts related
to its subsidiary PALHIC, was $12.3 million at March 31, 1997, which includes
the benefits of certain permitted practices. The minimum statutory capital and
surplus requirement for life insurance companies domiciled in Pennsylvania is
currently $1,650. At December 31, 1996, PILIC calculated its "Risk Based
Capital" utilizing a formula required by the National Association of Insurance
Commissioners. The results of this computation indicate PILIC's adjusted
capital, amounting to approximately $14.8 million, exceeded the Company Action
Level amount required by approximately $8.3 million. PALHIC's results of this
computation indicate its adjusted capital, amounting to approximately $5.4
million, exceeded the Company Action Level amount required by approximately $5.3
million. In concept, Risk Based Capital standards are designed to measure the
acceptable amounts of capital an insurer should have based on inherent and
specific risks of the insurer's business. This formula is the primary
measurement as to the adequacy of total capital and surplus of life insurance
companies. Administrative rules and legal restrictions of state insurance
departments presently prevent payment of dividends by PILIC and PALHIC to their
respective parent companies without regulatory approval.
Other
The Company anticipates spending in 1997 approximately $2.5 million for an
approximately 18,000-square-foot addition to the Company's principal office
located in Norristown, Pennsylvania. Construction began in the second quarter of
1997 with completion anticipated in the third quarter of 1997.
Page 11 of 13 Pages
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Not applicable.
Item 2. Change in Securities.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
(b) Reports on Form 8-K:
No reports of Form 8-K were filed during the quarter ended March 31, 1997.
Page 12 of 13 Pages
<PAGE>
Signature
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.
Provident American Corporation
By: /s/ Alvin H. Clemens
----------------------------------------------------
Alvin H. Clemens, Chairman of the Board of Directors
and CEO
By: /s/ James O. Bowles
----------------------------------------------------
James O. Bowles, President
By: /s/ Anthony R. Verdi
----------------------------------------------------
Anthony R. Verdi, Treasurer and
Chief Financial Officer
Date: May 12, 1997
Page 13 of 13 Pages
<PAGE>
<TABLE>
<CAPTION>
PROVIDENT AMERICAN CORPORATION EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE
(In thousands except per share data) Three Months Ended March 31,
1997 1996
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Primary Earnings Per Share
NET INCOME APPLICABLE TO COMMON STOCK: $ 778 $ 14,978
- -------------------------------------------------------------------------------------------========================================
WEIGHTED AVERAGE SHARES:
Common stock 10,064 9,113
Common stock equivalents applicable to stock options and warrants 1,523 1,517
- -----------------------------------------------------------------------------------------------------------------------------------
Total 11,587 10,630
- -------------------------------------------------------------------------------------------========================================
NET INCOME PER SHARE: $ 0.07 $ 1.41
- -------------------------------------------------------------------------------------------========================================
Fully Diluted Earnings Per Share
NET INCOME APPLICABLE TO COMMON STOCK: $ 778 $ 14,978
- -------------------------------------------------------------------------------------------========================================
WEIGHTED AVERAGE SHARES:
Common stock 10,064 9,113
Common stock equivalents applicable to stock options and warrants 1,523 1,517
- -----------------------------------------------------------------------------------------------------------------------------------
Total 11,587 10,630
- -------------------------------------------------------------------------------------------========================================
NET INCOME PER SHARE: $ 0.07 $ 1.41
- -------------------------------------------------------------------------------------------========================================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<DEBT-HELD-FOR-SALE> 55,780
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 1,690
<MORTGAGE> 318
<REAL-ESTATE> 936
<TOTAL-INVEST> 59,485
<CASH> 4,331
<RECOVER-REINSURE> 9,697
<DEFERRED-ACQUISITION> 5,271
<TOTAL-ASSETS> 91,724
<POLICY-LOSSES> 38,818
<UNEARNED-PREMIUMS> 1,517
<POLICY-OTHER> 13,446
<POLICY-HOLDER-FUNDS> 6,046
<NOTES-PAYABLE> 183
0
580
<COMMON> 1,011
<OTHER-SE> 20,469
<TOTAL-LIABILITY-AND-EQUITY> 91,724
12,158
<INVESTMENT-INCOME> 923
<INVESTMENT-GAINS> 998
<OTHER-INCOME> 500
<BENEFITS> 8,385
<UNDERWRITING-AMORTIZATION> 150
<UNDERWRITING-OTHER> 5,085
<INCOME-PRETAX> 959
<INCOME-TAX> 144
<INCOME-CONTINUING> 815
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 815
<EPS-PRIMARY> 0.07
<EPS-DILUTED> 0.07
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
