AMERICAN PREMIER UNDERWRITERS, INC.
One East Fourth Street
Cincinnati, Ohio 45202
Telephone (513) 579-6660
Facsimile (513) 579-0110
Robert F. Amory
Vice President and Controller
August 12, 1994
1934 Act Filing Desk
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: American Premier Underwriters, Inc.
Form 10-Q Quarterly Report for the Quarter
Ended June 30, 1994
Dear Sir or Madam:
Transmitted for filing on behalf of American Premier
Underwriters, Inc. is Form 10-Q Quarterly Report for the Quarter
Ended June 30, 1994.
If you have any questions concerning this filing, please
telephone the undersigned at the number indicated above.
Very truly yours,
Robert F. Amory
<PAGE>
Part I - Financial Information
1. FINANCIAL STATEMENT
AMERICAN PREMIER UNDERWRITERS, INC. AND CONSOLIDATED SUBSIDIARIES
INCOME STATEMENT
(In Millions, Except Per Share Amounts)
<TABLE>
<CAPTION> Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Revenues
Insurance operations
Premiums earned $ 391.3 $ 312.9 $ 748.7 $ 584.0
Net investment income 31.7 28.1 62.2 55.0
Net realized gains 1.3 8.3 1.8 13.7
Other operations
Net sales 37.1 48.0 75.1 100.9
Interest and dividend income 8.5 13.6 15.6 27.5
Loss on sale of General
Cable Corporation notes - - (75.8) -
Net realized gains - 15.7 .1 15.7
469.9 426.6 827.7 796.8
Expenses
Insurance operations
Losses 236.9 177.9 434.5 335.6
Loss adjustment expenses 37.3 32.9 73.6 62.4
Commissions and other insurance
expenses 88.8 70.9 169.8 131.5
Policyholder dividends 18.9 23.9 51.9 41.0
Other operations
Cost of sales 17.4 25.0 35.8 46.5
Operating expenses 20.3 24.2 39.0 53.4
Corporate and administrative expenses 5.0 4.9 10.2 9.5
Interest and debt expense 13.2 17.1 26.8 34.4
Realized loss on sale of subsidiaries - - - 1.7
Other expense (income), net 3.5 4.1 4.5 8.5
441.3 380.9 846.1 724.5
Income (loss) from continuing operations
before income taxes 28.6 45.7 (18.4) 72.3
Income tax (expense) benefit (12.0) 29.3 (20.9) 33.8
Income (loss) from continuing operations 16.6 75.0 (39.3) 106.1
Discontinued operations:
Income from discontinued operations - - - 2.8
Loss on disposal (1.4) - (1.4) -
Net income (loss) $ 15.2 $ 75.0 $ (40.7) $ 108.9
Primary earnings(loss) per share data:
Continuing operations $ .35 $ 1.60 $ (.81) $ 2.27
Discontinued operations (.03) - (.03) .06
$ .32 $ 1.60 $ (.84) $ 2.33
Weighted average number of common
shares 48.1 46.8 48.2 46.7
Fully diluted earnings (loss) per share data:
Continuing operations $ .35 $ 1.55 $ (.81) $ 2.21
Discontinued operations (.03) - (.03) .06
$ .32 $ 1.55 $ (.84) $ 2.27
Weighted average number of common
shares 48.1 48.4 48.2 48.0
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- 1 -
<PAGE>
AMERICAN PREMIER UNDERWRITERS, INC. AND CONSOLIDATED SUBSIDIARIES
BALANCE SHEET
(In Millions)
<TABLE>
<CAPTION> June 30, December 31,
1994 1993
<S> <C> <C>
Assets
Investments held by insurance operations
Fixed maturity securities
Held for investment-stated at amortized
cost (market $1,205.2 and $1,173.0) $1,240.8 $1,113.0
Available for sale-stated at market
(cost $425.5 and $408.7) 414.9 432.8
Short-term investments 34.9 56.9
1,690.6 1,602.7
Parent Company investments
Fixed maturity securities
Held for investment-stated at amortized
cost (market $278.5 and $251.7) 282.3 248.9
Short-term investments 597.3 387.9
General Cable Corporation notes - 286.8
Equity in affiliates 10.7 20.1
890.3 943.7
Cash 41.0 32.4
Accrued investment income 41.0 43.4
Agents' balances and premiums receivable 342.7 289.9
Reinsurance receivable 48.6 47.6
Other receivables 39.3 51.4
Deferred policy acquisition costs 87.8 77.4
Property, plant and equipment 64.7 95.2
Cost in excess of net assets acquired 400.2 406.8
Deferred tax asset 286.1 295.8
Net assets of discontinued operations 10.0 9.8
Other assets 126.5 153.5
Total $4,068.8 $4,049.6
Liabilities And Common Shareholders' Equity
Unpaid losses and loss adjustment expenses $1,032.9 $ 961.4
Policyholder dividends 119.4 111.8
Unearned premiums 418.6 352.3
Debt 503.5 523.2
Minority interests in subsidiaries 4.2 15.1
Accounts payable and other liabilities 359.3 363.5
Total liabilities 2,437.9 2,327.3
Common Stock 47.6 47.4
Capital surplus 745.7 746.2
Retained earnings (from October 25, 1978) 848.5 912.3
Net unrealized gains (losses) on investments (10.9) 16.4
Total common shareholders' equity 1,630.9 1,722.3
Total $4,068.8 $4,049.6
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- 2 -
<PAGE>
AMERICAN PREMIER UNDERWRITERS, INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENT OF CASH FLOWS
(In Millions)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1994 1993
<S> <C> <C>
Cash flows of operating activities:
Income (loss) from continuing operations $ (39.3) $ 106.1
Adjustments to reconcile income from continuing
operations to net cash provided by continuing
activities
Deferred Federal income tax 18.5 (35.7)
Depreciation, depletion and amortization 14.5 16.3
Net (gain) loss on disposals of businesses, investments
and property, plant and equipment 70.9 (28.5)
Changes in assets and liabilities, excluding effects of
acquisitions and divestitures of businesses
Increase in receivables (47.0) (68.5)
Increase in other assets (5.5) (21.0)
Increase (decrease) in accounts payable and
other liabilities (11.5) 7.3
Increase in unpaid losses and loss
adjustment expenses 69.2 52.1
Increase in policyholder dividends 7.6 9.6
Increase in unearned premiums 60.6 64.3
Litigation settlement - 15.6
Other, net (.2) (.2)
Net cash flows of operating activities 137.8 117.4
Cash flows of investing activities:
Purchases of available for sale investments (52.6) (67.4)
Maturities and sales of available for sale investments 36.9 107.3
Purchases of held for investment securities (236.7) (290.8)
Maturities and sales of held for investment securities 105.1 250.7
Net increase in temporary investments (111.6) (66.2)
Proceeds from sale of businesses 33.4 -
Proceeds from sale of General Cable Corporation notes 146.9 -
Acquisitions of businesses, net of cash acquired - (41.7)
Capital expenditures (14.3) (7.0)
Other, net (.5) (.1)
Net cash flows of investing activities (93.4) (115.2)
Cash flows of financing activities:
Repayment of debt (17.1) (1.6)
Common Stock dividends (20.3) (19.0)
Exercise of stock options and conversion of
Career Shares 13.9 12.3
Purchases of Company Common Stock (16.3) (1.1)
Other, net 4.0 .1
Net cash flows of financing activities (35.8) (9.3)
Net cash flows from continuing operations 8.6 (7.1)
Net cash from discontinued operations - 6.7
Increase (decrease) in cash 8.6 (.4)
Cash - beginning of year 32.4 36.2
Cash - end of period $ 41.0 $ 35.8
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
- 3 -
<PAGE>
AMERICAN PREMIER UNDERWRITERS, INC. AND CONSOLIDATED
SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES AND BASIS OF PRESENTATION
Effective March 25, 1994, the Company changed its corporate
name from The Penn Central Corporation to American Premier
Underwriters, Inc. in order to better reflect its new identity as
a property and casualty insurance specialist.
In the opinion of management, the accompanying unaudited
financial statements of American Premier Underwriters, Inc. and
Consolidated Subsidiaries (the "Company") include all
adjustments, which are of a normal recurring nature, necessary to
present fairly the Company's results of operations, financial
position and cash flows. As permitted by the rules and
regulations of the Securities and Exchange Commission ("SEC"),
the financial statements do not include all of the accounting
information normally included with financial statements prepared
in accordance with generally accepted accounting principles.
Accordingly, these financial statements should be read in
conjunction with the financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1993. Results for the three months and six
months ended June 30, 1994 are not necessarily indicative of the
results for any other interim period or for the year as a whole.
Certain amounts for the three months and six months ended June
30, 1993 have been reclassified to conform to the current
presentation.
Accounting for Certain Investments in Debt and Equity Securities
Effective January 1, 1994, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 115, "Accounting for
Certain Investments in Debt and Equity Securities". The adoption
of SFAS No. 115 did not have a material effect on the Company's
financial position or results of operations.
2. ACQUISITIONS AND DIVESTITURES
On June 9, 1994, as part of an agreement for the purchase of
all of the outstanding shares of General Cable Corporation
("General Cable") by Wassall PLC ("Wassall"), the Company
received proceeds of $169.8 million and $6.9 million,
respectively, for the $253.5 million principal amount of General
Cable subordinated notes (the "Notes") and the 1.15 million
shares of General Cable common stock owned by the Company. Also
as part of the agreement, the Company assumed responsibility for
certain actual and potential environmental and other liabilities
principally associated with General Cable's recent sales of
Marathon LeTourneau Company and Indiana Steel and Wire Company,
in consideration of a payment from Wassall of $27.4 million, less
$8.2 million of payments made by General Cable for such
liabilities from January 1, 1994 through the closing date (the
"Indemnity Payment"). For further information regarding such
liabilities, see Note 9. At the closing of the transaction, the
Company received cash for its General Cable shares and short-term
notes of Wassall (the "Wassall Notes") for the General Cable
Notes and the Indemnity Payment. As of June 30, 1994, the
Company had received $146.9 million in cash as partial payment on
the Wassall Notes. The remaining balance on the Wassall Notes
plus accrued interest of $49.2 million in the aggregate was
received in cash on July 1, 1994. Accordingly, at June 30, 1994,
the unpaid balance of the Wassall Notes was classified as Parent
Company short-term investments. Immediately prior to the sale of
General Cable to Wassall, American Financial Corporation ("AFC"),
which owned 40.5% of the Company's common stock, also owned 45.6%
of the outstanding common stock of General Cable. The Chairman
of the Board and Chief Executive Officer of the Company was the
Chairman of the Board of General Cable. The transaction was
approved by the Company's Board of Directors based on the
recommendation of a special committee of the Company's
- 4 -<PAGE>
independent directors. In making its recommendation, the special
committee relied on an opinion from Donaldson, Lufkin & Jenrette
Securities Corp. that the aggregate consideration to be received
by the Company in the transaction is fair to the Company from a
financial point of view. The Company recorded a pre-tax loss of
approximately $75.8 million in the first quarter of 1994 for the
anticipated disposition of the Notes and General Cable stock, and
the Company did not accrue interest income on the Notes during
the six months ended June 30, 1994.
On February 14, 1994, General Cable delivered to the Company
cash and promissory notes issued by a subsidiary of Rowan
Companies, Inc. ("Rowan") totalling $52.1 million as a partial
payment of the General Cable Notes. The cash portion of the
payment was $10.4 million. The Rowan notes, which are guaranteed
by Rowan, have a face value of $41.7 million, an interest rate of
7 percent and are due in 1999. Quarterly interest payments are
payable in cash beginning March 31, 1994. The receipt of the
cash and Rowan notes resulted from the sale by General Cable of
its Marathon LeTourneau unit to Rowan. As a result of these
receipts, the Company credited General Cable with $48.1 million
of principal and interest payments on the General Cable Notes.
The non-cash portion of this transaction is not included in the
statement of cash flows.
The intended divestitures of businesses announced in
December 1992 included five small diversified industrial
companies, two of which were sold during 1993. Two of such
companies were sold during the first six months of 1994 for
aggregate proceeds of $22.9 million resulting in a pre-tax gain
of $3.2 million. The results for the three and six month periods
ended June 30, 1994 include sales of $15.0 million and $32.2
million, respectively, and pre-tax losses of $3.3 million and
$6.5 million, respectively, from the operations sold during 1994
and the remaining operation to be sold. At June 30, 1994, the
aggregate book value of the business remaining to be sold was
$18.3 million.
On June 2, 1994, the Company sold its 53.5 percent interest
in operations which provide onshore oil and gas contract drilling
and well workover services for $14.5 million in cash. No gain
or loss was recognized on the transaction.
3. INSURANCE OPERATIONS
Investments of Insurance Operations
Amortized cost, gross unrealized gains and losses and market
values of the insurance operations' investments in fixed maturity
securities are presented in the table below.
At June 30, 1994, the insurance operations' investments
included unrated or less than investment grade corporate
securities with a carrying value of $124.6 million (market value
$120.0 million). Investments of insurance operations include a
net receivable for securities sold but not settled of $.2 million
at June 30, 1994.
- 5 -
<PAGE>
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Market
June 30, 1994 Cost Gains Losses Value
(In Millions)
<S> <C> <C> <C> <C>
Held for investment
Corporate securities $ 936.6 $ 10.5 $ 36.4 $ 910.7
Public utilities 213.6 1.5 10.5 204.6
Mortgage-backed securities 82.3 .6 2.1 80.8
State and local obligations 8.3 .8 - 9.1
Total held for investment 1,240.8 13.4 49.0 1,205.2
Available for sale
Corporate securities 251.3 3.9 10.0 245.2
Public utilities 21.8 .2 1.1 20.9
Mortgage-backed securities 58.0 1.1 1.5 57.6
U.S. government securities 62.1 .9 1.9 61.1
State and local obligations 4.6 - - 4.6
Foreign securities 27.5 - 2.2 25.3
Total available for sale 425.3 6.1 16.7 414.7
Total fixed maturity
securities $1,666.1 $ 19.5 $ 65.7 $1,620.1
</TABLE>
At June 30, 1994, the carrying value of short-term
investments, principally U.S. Treasury securities and commercial
paper, approximates market value.
Investment Income of Insurance Operations
Investment income consists of the following:
<TABLE>
<CAPTION>
(In Millions)
Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Income from fixed maturity
securities $ 32.7 $ 28.7 $ 63.9 $ 55.9
Income from equity securities - .3 - .5
Gross investment income 32.7 29.0 63.9 56.4
Investment expenses (1.0) (.9) (1.7) (1.4)
Net investment income $ 31.7 $ 28.1 $ 62.2 $ 55.0
</TABLE>
Income from fixed maturity securities includes income from short-
term investments.
- 6 -
<PAGE>
Realized gains (losses) consist of the following:
<TABLE>
<CAPTION>
(In Millions)
Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Gross realized gains on:
Fixed maturity securities $ 1.9 $ 5.6 $ 2.7 $11.1
Equity securities - 2.8 - 2.8
Gross realized losses on:
Fixed maturity securities (.6) (.1) (.9) (.2)
Equity securities - - - -
Net realized gains $ 1.3 $ 8.3 $ 1.8 $13.7
</TABLE>
For the three months and six months ended June 30, 1994, proceeds
from sales of fixed maturity securities, excluding proceeds from sales at
or near maturity, totalled $29.7 million and $39.7 million, respectively,
of which $23.8 million and $28.1 million, respectively, were from
securities classified as available for sale and $5.9 million and $11.6
million, respectively, were from securities classified as held for
investment. All of the held for investment securities were sold as a
result of deterioration in the issuers' credit rating. The gross
realized gains (losses) attributable to these sales were:
<TABLE>
<CAPTION>
Fixed Maturity Securities
Three Months Ended Six Months Ended
June 30, 1994 June 30, 1994
Available Held For Available Held for
for Sale Investment for Sale Investment
<S> <C> <C> <C> <C>
Gross realized gains $ .7 $ 1.1 $ .8 $ 1.3
Gross realized losses (.6) - (.7) (.1)
Net realized gains $ .1 $ 1.1 $ .1 $ 1.2
</TABLE>
Proceeds from sales of investments in fixed maturity securities for
the six months ended June 30, 1993, excluding proceeds from sales at or
near maturity, totaled $105.7 million.
- 7 -
<PAGE>
Reinsurance
The insurance operations assume and cede a portion of their
written business with other insurance companies in the normal course
of business. To the extent that any reinsuring companies are unable
to meet their obligations under agreements covering reinsurance
ceded, the Company's insurance subsidiaries would remain liable.
Amounts deducted from insurance losses and loss adjustment expenses
and net written and earned premiums in connection with reinsurance
ceded to affiliates and non-affiliated companies, as well as amounts
included in net written and earned premiums for reinsurance assumed
from affiliates and non-affiliated companies, were as follows:
<TABLE>
<CAPTION>
(In Millions)
Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Reinsurance ceded:
Premiums written $ 5.2 $ 2.5 $ 9.9 $ 4.3
Premiums earned 5.8 2.1 9.5 3.8
Incurred losses and loss
adjustment expenses 5.8 (.3) 7.5 (1.1)
Reinsurance assumed:
Premiums written 54.0 37.5 104.9 76.1
Premiums earned 47.1 31.1 87.7 57.0
Substantially all of the premiums written in the workers'
compensation insurance operations during 1994 and 1993 were from
policies eligible for policyholder dividend consideration.
4. PARENT COMPANY INVESTMENTS
Amortized cost, gross unrealized gains and losses and market
values of the Parent Company investments in fixed maturity securities
held for investment are presented in the table below.
At June 30, 1994 the carrying value of unrated or less than
investment grade corporate securities, other than the Rowan notes,
totalled $17.6 million, substantially all of which did not have
readily available market values.
</TABLE>
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Market
June 30, 1994 Cost Gains Losses Value
(In Millions)
<S> <C> <C> <C> <C>
Corporate securities $ 193.4 $ 1.0 $ 4.0 $ 190.4
Public utilities 19.9 - .5 19.4
U.S. government securities 41.8 - .3 41.5
Mortgage-backed securities .7 - - .7
Other debt securities 26.5 - - 26.5
Total fixed maturity
securities $ 282.3 $ 1.0 $ 4.8 $ 278.5
</TABLE>
The carrying value of short-term investments, principally U.S.
Treasury securities and commercial paper, approximates market
value.
- 8 -
<PAGE>
5. DEBT
On March 25, 1994, the Company redeemed all of the
outstanding $16.2 million principal amount of its 9 1/2 percent
subordinated debentures due August 1, 2002 at the redemption price
of 100 percent of the principal amount of each debenture plus
accrued and unpaid interest to the redemption date.
6. CHANGES IN COMMON SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Unrealized
Gains
Common Stock Capital Retained (Losses) On
(Dollars in Millions) Shares Amount Surplus Earnings Investments Total
<S> <C> <C> <C> <C> <C> <C>
Balance,
December 31, 1993 47,446,094 $ 47.4 $746.2 $912.3 $16.4 $1,722.3
Net income (loss) - - (40.7) - (40.7)
Dividends declared on
Common Stock - - (20.9) - (20.9)
Purchases of Company
Common Stock (590,225) (.6) (15.7) - - (16.3)
Exercise of stock options 687,591 .7 13.4 - - 14.1
Issuance of Common Stock
under ESPP 10,939 - .3 - - .3
Change in net unrealized gains
(losses) on investments - - - (27.3) (27.3)
Adjustment to distribution
of equity to shareholders
from spin-off of General
Cable Corporation - - (2.2) - (2.2)
Other, net .1 1.5 - - 1.6
Balance, June 30, 1994 47,554,399 $ 47.6 $745.7 $848.5 $(10.9) $1,630.9
</TABLE>
During the second quarter of 1994, the Company settled a
dispute with former employees of a business that was acquired in
1990 and subsequently included in the spin-off of General Cable
to shareholders in July 1992.
7. EARNINGS PER SHARE
Primary and fully diluted earnings per share for the three
and six month periods ended June 30, 1994 are calculated on the
basis of the weighted average number of shares of common stock
outstanding during the period and the dilutive effect of assumed
conversion of common stock equivalents (stock options and career
shares). For the three months and six months ended June 30,
1993, primary earnings per share is based on the weighted average
shares outstanding during the period. For these same periods,
fully diluted earnings per share is based on the weighted average
shares outstanding during the period and the dilutive effect of
the assumed exercise of outstanding stock options and conversion
of outstanding career shares, using the treasury stock method,
assuming the proceeds from such issuance would be used to
repurchase common stock at the market price at the close of the
period.
- 9 -
<PAGE>
<PAGE>
8. INCOME TAXES
The Company's substantial tax loss carryforwards and
temporary differences give rise to deferred tax assets. Based on
an analysis of the likelihood of realizing the Company's gross
deferred tax asset (taking into consideration applicable
statutory carryforward periods), the Company has determined that
the recognition criteria set forth in SFAS No. 109, "Accounting
For Income Taxes", are not met for the entire gross deferred tax
asset and, accordingly, the gross deferred tax asset is reduced
by a valuation allowance. The analysis of the likelihood of
realizing the gross deferred tax asset is reviewed and updated
periodically. Any required adjustments to the valuation
allowance are made in the period in which the developments on
which they are based become known. Results for the three and six
months ended June 30, 1993 include tax benefits of $45 million
and $60 million, respectively, attributable to such adjustments.
Components of the provision for income tax benefit (expense)
were as follows:
<TABLE>
<CAPTION>
(In Millions)
Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Current
Federal $ (.6) $ (.8) $ (1.3) $ (1.4)
Foreign, state & local (.8) (.3) (1.1) (.5)
Total current (1.4) (1.1) (2.4) (1.9)
Deferred
Federal (10.6) 30.4 (18.5) 35.7
Foreign, state & local - - - -
Total deferred (10.6) 30.4 (18.5) 35.7
Total $(12.0) $ 29.3 $(20.9) $ 33.8
</TABLE>
Consolidated income tax benefit (expense) differs from the amount
computed using the United States statutory income tax rate for the
reasons set forth in the following table:
<TABLE>
<CAPTION>
(In Millions)
Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Income (loss) before income
taxes $ 28.6 $ 45.7 $(18.4) $ 72.3
Expected tax benefit (expense)
at U.S. statutory income
tax rate $(10.1) $(15.6) $ 6.4 $(24.6)
Amortization of goodwill (1.1) (.8) (2.0) (1.7)
Revision to valuation
allowance - 45.0 - 60.0
Loss disallowance 4.6 - (20.0) -
Other, net (5.4) .7 (5.3) .1
Consolidated income tax
benefit (expense) $(12.0) $ 29.3 $(20.9) $ 33.8
</TABLE>
- - 10 -
<PAGE>
9. COMMITMENTS AND CONTINGENCIES
On May 26, 1994, USX Corporation ("USX") and its former
subsidiary, Bessemer and Lake Erie Railroad Company ("B&LE"),
filed actions against the Company, as successor to the railroad
business operated by Penn Central Transportation Company ("PCTC")
prior to 1976, seeking indemnification and contribution for all or
a portion of the approximately $600 million that USX paid on
B&LE's behalf in satisfaction of a judgment entered in 1991
against B&LE in certain litigation in federal court that has been
upheld on appeal and become final. The Company believes that
these actions are without merit. For further information
regarding these actions, see "Legal Proceedings" under Item 1 of
Part II of this Report.
Claims are pending against the Company for reimbursement of
clean-up costs under the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA") for alleged
contamination caused by release of polychlorinated biphenyls at
the Paoli, Pennsylvania railyard ("Paoli Yard") formerly owned by
PCTC. A Record of Decision was issued by the U.S. Environmental
Protection Agency on July 21, 1992 presenting a final selected
remedial action for the Paoli Yard in accordance with CERCLA
having an estimated cost of approximately $28.3 million. In March
1992, the Company filed a lawsuit seeking to enjoin the U.S.
Government, Consolidated Rail Corporation ("Conrail") and other
parties from prosecuting claims against the Company for such
clean-up costs on the grounds that the Paoli Yard environmental
claims are barred by: (1) the terms by which the Paoli Yard was
transferred by PCTC to Conrail "as is" in 1976 pursuant to the
Regional Rail Reorganization Act of 1973 (the "Rail Act"); (2) the
1980 settlement of the Valuation Case proceedings to determine
compensation to be paid by the U.S. Government for the railroad
properties transferred by PCTC pursuant to the Rail Act; and (3)
the U.S. Constitution. In addition, the Company believes that it
has other substantial defenses to claims for clean-up costs at the
Paoli Yard, including its position that other parties are
responsible for substantial percentages of such clean-up costs,
and the Company intends to make claims against certain insurance
carriers for reimbursement of any clean-up costs that the Company
may incur. Claims are also pending seeking to hold the Company
responsible for clean-up costs, estimated at approximately $8
million in the aggregate, at two other sites that were transferred
to Conrail in 1976. The Company believes that its defenses with
respect to the Paoli Yard, including its position that other
parties are responsible for substantial portions of the clean-up
costs, also apply to these other two sites. The Company has not
established any accrual for potential liability for clean-up costs
at the Paoli Yard or the other two sites.
There are certain other claims involving the Company,
relating to the generation, disposal or release into the
environment of allegedly hazardous substances and personal injury
claims, that allege or involve amounts that are potentially
substantial in the aggregate. The Company has established loss
accruals in its financial statements that it believes are adequate
to cover its anticipated liability for such claims.
The USX and Paoli Yard litigations and the preponderance of
the other claims arose out of railroad operations disposed of by
PCTC prior to its 1978 reorganization and, accordingly, any
ultimate liability resulting therefrom in excess of previously
established loss accruals would be attributable to such pre-
reorganization events and circumstances. In accordance with the
Company's reorganization accounting policy, any such ultimate
liability will reduce the Company's capital surplus and
shareholders' equity, but will not be charged to income.
- 11 -
<PAGE>
In an environmental matter arising out of the Company's post-
reorganization operations, the Company's potential exposure could
exceed its related loss accruals by $1 million to $4 million,
which range depends upon the method of remediation, if any,
required. The Company believes that the relevant regulatory
authority will permit such remediation to be deferred until there
is a change in the use of the facility, which the Company believes
is unlikely to occur.
In connection with the Company's sale on June 9, 1994 of its
General Cable Notes and common stock as described in Note 2, the
Company assumed responsibility for certain actual and potential
environmental and other liabilities principally associated with
General Cable's recent sales of Marathon LeTourneau Company and
Indiana Steel and Wire Company, in consideration of the payment to
the Company of an Indemnity Payment of $19.2 million. The Company
has established a loss accrual in that amount in its financial
statements. Although it is difficult to estimate future
environmental remediation costs accurately, the Company believes
that the Indemnity Payment will provide sufficient funds to permit
the Company to discharge such liabilities as they become payable
over time.
In management's opinion, the outcome of the foregoing matters
will not, individually or in the aggregate, have a material
adverse effect on the financial condition or results of operations
of the Company. In making this assessment, management has taken
into account previously established loss accruals in its financial
statements and probable recoveries from insurance carriers and
other third parties.
10. STATEMENT OF CASH FLOWS
During the six month periods ended June 30, 1994 and 1993,
state and other income taxes paid were $4.4 million and $3.6
million, respectively. For the same periods, interest paid was
$26.8 million and $34.1 million, respectively.
On June 30, 1993, General Cable elected to pay 100 percent,
or $19.1 million, of the interest due on that date on its
subordinated note (the "General Cable Note") with an additional
9.98 percent subordinated note ("Interest Note") in lieu of cash.
This non-cash transaction, which increased the Parent Company's
investments and decreased accrued interest receivable, was not
included in the statement of cash flows.
On July 2, 1993, General Cable repaid the $36.9 million
Short-Term Note which was issued to the Company in connection with
the General Cable spin-off, with accrued interest of $2.3 million.
Accordingly, at June 30, 1993, such amounts were reclassified to
Parent Company short-term investments from Other assets and
Accrued investment income. This reclassification was accounted
for as a non-cash transaction in the 1993 second quarter and is
not included in the statement of cash flows.
- 12 -
<PAGE>
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
The following discussion and analysis is provided to assist
the reader in understanding the Company's financial condition as
of June 30, 1994 and December 31, 1993 and its results of
operations for the three months and six months ended June 30,
1994 and 1993. Amounts presented in the discussion and analysis
relate only to continuing operations unless otherwise indicated.
LIQUIDITY AND CAPITAL RESOURCES
(Dollars in millions,
except per share amounts)
June 30, December 31,
1994 1993
Cash, Parent Company short-term investments
and Parent Company fixed maturity
securities $ 920.6 $ 669.2
Deduct items not readily available for
corporate purposes:
Cash held by the insurance operations (39.5) (23.2)
Securities held in bank escrow
accounts (22.0) (20.2)
Private placement notes (26.5) (14.6)
Cash, temporary investments and marketable
securities $ 832.6 $ 611.2
Total debt as a percentage of total
capital 23% 23%
Book value per share of Common Stock $ 34.30 $ 36.30
The Company's Federal income tax loss carryforward is
available to offset taxable income and, as a result, the
Company's requirement to pay current Federal income tax is
substantially eliminated. The $221.4 million increase during the
six months ended June 30, 1994 in the cash, temporary investments
and marketable securities included in the preceding table was
principally attributable to proceeds from the Company's sale of
its General Cable Notes and common stock and proceeds from the
divestiture of three of the Company's non-insurance businesses.
At June 30, 1994, the Company's total debt to total capital
ratio of 23 percent was unchanged from year-end 1993. Total
capital as defined for this ratio consists of debt, minority
interests in subsidiaries and common shareholders' equity.
Net Cash Provided by Operating Activities
During the six months ended June 30, 1994, cash provided by
continuing operating activities was $137.8 million, an increase
of $20.4 million as compared with the same period in 1993. This
increase resulted primarily from an increase in the insurance
operations' operating cash flow at the non-standard private
passenger automobile insurance companies (the "NSA Group") and,
to a lesser extent, the workers' compensation insurance
operations ("Republic Indemnity") primarily due to continued
growth in written premiums. Also contributing to the favorable
comparison are payments made during the first quarter of 1993 on
assumed losses on a reinsurance contract that was terminated at
the end of 1993, lower interest payments due to debt reductions
in 1993 and higher interest receipts on the Parent Company
investment portfolio. These favorable variances were partially
offset by lower operating cash flow from the Company's non-
insurance operations. Also, during the second quarter of 1993,
the Company received net proceeds of $15.6 million resulting from
the settlement of certain litigation relating to a previously
owned subsidiary which was included in the General Cable spin-
off. Management
- 13 -
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES (Continued)
expects that the Company's operating cash flow and financial
resources will continue to be adequate to meet its operating
needs in the short-term and long-term (i.e. more than twelve
months) future. Cash flow of the Company may be influenced by a
variety of factors, including changes in the property and
casualty insurance industry, the insurance regulatory environment
and general economic conditions.
During the six months ended June 30, 1994, the insurance
operations generated $169.4 million of operating cash flow, 78
percent of which was retained by the insurance companies to
purchase investments, principally marketable debt securities.
The remainder of the cash provided by the insurance operations
was paid to the Parent Company primarily through intercorporate
tax allocation payments. During the same period in 1993, the
insurance operations generated $142.5 million of operating cash
flow, 74 percent of which was retained by the insurance companies
to purchase investments and for the acquisition of Leader
National Insurance Company ("Leader"), with the remainder of the
cash being paid to the Parent Company under intercorporate tax
allocation agreements.
The Company's insurance operations are subject to state
regulations which limit, by reference to specified measures of
statutory operating results and policyholders' surplus, the
dividends that can be paid to the Parent Company without prior
regulatory approval. Under these restrictions, the maximum
amount of dividends which can be paid to the Parent Company
during 1994 by these subsidiaries is $96.5 million.
Investing and Financing Activities
During the six months ended June 30, 1994, net purchases of
investments for the Parent Company investment portfolio totalled
$148.8 million. The Company also used $16.2 million to redeem
all of its outstanding 9 1/2 percent subordinated debentures,
$16.3 million for purchases of shares of Company Common Stock and
$20.3 million for the payment of Common Stock dividends. During
this same period, the Company received $146.9 million as partial
consideration from the previously announced sale of its General
Cable Notes and stock to Wassall. The remaining cash
consideration of approximately $49.2 million, including
the cash consideration for the Indemnity Payment, was received by
the Company on July 1, 1994. For a description of this
transaction, see Note 2 of Notes to Financial Statements. In
addition, the Company received $34.9 million from the sale of
three of its non-insurance businesses. The Company's insurance
operations made net purchases of investments of $110.1 million
during the first six months of 1994.
During the same 1993 period, the sale of the Parent
Company's limited partnership units of Buckeye Partners
L.P.("Buckeye Units") and maturities of the Parent Company
investment portfolio (net of purchases of investments) provided
$10.6 million of cash and the Company received $12.3 million from
the issuance of shares of Company Common Stock pursuant to the
exercise of stock options. During this same period, the Company
used $38.0 million in cash to acquire Leader, which was partially
funded by a $15 million capital contribution from the Parent
Company to the insurance operations, $19.0 million for the
payment of Common Stock dividends and $3.7 million for the
purchase of an investment in an insurance company located in the
United Kingdom. During the first six months of 1993, the
Company's insurance operations made net purchases of investments
of $77.0 million.
- 14 -
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES (Continued)
At June 30, 1994, the Parent Company investment portfolio
held unrated or less than investment grade corporate debt
securities, excluding the Rowan notes, with carrying values of
$17.6 million. At that date, the Company's insurance operations
held $124.6 million of such unrated or less than investment grade
debt securities and preferred stocks. The Company continues to
limit its investment in unrated or less than investment grade
securities of any one issuer and regularly monitors the condition
of the issuers and their industries. At June 30, 1994, the
largest investment of the Company and its insurance operations in
such securities of any one issuer, excluding the Rowan notes,
totaled $10.5 million.
During the six months ended June 30, 1994, the Company's
continuing operations did not have large capital spending
requirements. The Company presently has no plans or commitments
for material capital expenditures.
RESULTS OF OPERATIONS
Analysis of Continuing Operations
The Company reported income from continuing operations for
the 1994 second quarter of $16.6 million, or $.35 per share, and
a loss from continuing operations for the six months ended June
30, 1994 of $39.3 million, or $.81 per share. For the six months
ended June 30, 1994, income from continuing operations includes
a net realized capital loss of $73.5 million, or $1.52 per
share, principally from the disposal of the General Cable Notes
which were previously owned by the Company and tax adjustments
related primarily to the disposal of certain subsidiaries. The
Company's 1994 earnings do not include any accrued interest
income on the General Cable Notes. Income from continuing
operations for the three and six months ended June 30, 1994,
excluding net realized capital gains and losses and the above-
mentioned tax adjustments, was $16.7 million, or $.35 per share,
and $34.2 million, or $.71 per share, respectively.
Income from continuing operations for the 1993 second
quarter was $75.0 million, or $1.60 per share ($1.55 per share
assuming full dilution). Income from continuing operations for
the six months ended June 30, 1993 was $106.1 million, or $2.27
per share ($2.21 per share assuming full dilution). Results for
the three and six month periods ended June 30, 1993 include net
realized capital gains from sales of investments and subsidiaries
of $15.8 million and $18.1 million, respectively, and tax
benefits of $45.0 million and $60.0 million, respectively,
attributable to increases in the estimated realizable value of
the Company's net deferred tax asset. Net realized gains for the
1993 periods include a pre-tax gain of $18.5 million from the
sale of all of the Company's Buckeye Units. Excluding realized
capital gains and the deferred tax benefits, income from
continuing operations for the three and six months ended June 30,
1993 was $14.2 million, or $.29 per share (assuming full
dilution), and $28.0 million, or $.58 per share (assuming full
dilution), respectively. In addition, in the 1993 first and
second quarters, the Company recognized approximately $6.4
million of interest in each quarter on the General Cable Notes.
- 15 -
<PAGE>
Revenues in the Insurance segment of $424.3 million and
$812.7 million for the three and six month periods ended June
30, 1994, respectively, increased as compared with revenues of
$349.3 million and $652.7 million for the same periods in 1993.
The increases were primarily due to an increase in earned
premiums at the NSA Group and, to a lesser extent, at Republic
Indemnity. During the same periods, investment income before
realized gains and losses on sales of investments in the
insurance operations' portfolio also increased due to higher
average investment balances, partially offset by a decrease in
the average yield. Operating income for the three and six months
ended June 30, 1994 was $42.4 million and $82.9 million,
respectively, as compared with $43.7 million and $82.2 million
for the same periods in 1993. The decrease in operating income
for the second quarter of 1994 is primarily due to lower net
realized gains, partially offset by higher investment income and
underwriting profit. For the first six months of 1994, the
increase in operating income resulted from higher investment
income and an increase in underwriting profit, partially offset
by lower net realized gains. Net realized gains from sales of
investment securities in the insurance operations' portfolio
totaled $1.3 million and $1.8 million for the second quarter and
first six months of 1994, respectively, compared with $8.3
million and $13.7 million for the same periods in 1993. The
combined ratio for the Insurance segment was 96.8 percent and
96.7 percent, respectively, for the three and six months ended
June 30, 1994, respectively, as compared with 96.5 percent and
96.6 percent for the same periods in 1993.
The following table presents certain information with
respect to the NSA Group's insurance operations.
<TABLE>
<CAPTION>
(Dollars in Millions)
Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net Written Premiums $289.1 $208.5 $ 564.4 $409.7
Net Earned Premiums $265.7 $189.9 $ 511.2 $357.2
Loss and Loss Adjustment
Expense ("LAE") 200.5 135.1 380.8 255.1
Underwriting Expenses 63.0 49.5 121.9 91.3
Underwriting Profit $ 2.2 $ 5.3 $ 8.5 $ 10.8
GAAP Ratios:
Loss and LAE Ratio 75.5% 71.1% 74.5% 71.4%
Underwriting Expense Ratio 23.7 26.1 23.8 25.6
Combined Ratio 99.2% 97.2% 98.3% 97.0%
</TABLE>
- - 16 -
<PAGE>
The growth in net written premiums of approximately 38
percent for the first six months of 1994 as compared to the 1993
period was principally due to increased market penetration in the
NSA Group's existing states. The decline in underwriting profit
for the second quarter and first half of 1994 was caused by
several factors, including losses resulting from hailstorm damage
in Texas as well as rate levels in several markets which have not
been adequate to maintain profitable underwriting results. These
factors were partially offset by underwriting profit from the
Company's start-up non-standard automobile insurance company in
the United Kingdom which began operations in the second quarter
of 1993 as well as improved underwriting margins in several of
the Company's markets, where the book of business has matured and
a greater portion of written premium is derived from renewal
policies. The expense ratio for the 1994 periods has declined as
growth in earned premiums continues to outpace associated
expenses.
Certain rate increases have been effected in several states
during 1994. As a result of these increases and competitive
pressures in the non-standard automobile insurance industry, the
rate of written and earned premium growth during the first six
months of 1994 may not be sustained for the remainder of 1994 and
into the future.
The following table presents certain information with respect
to Republic Indemnity's insurance operations.
<TABLE>
<CAPTION>
(Dollars in Millions)
Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net Written Premiums $123.4 $119.2 $ 243.4 $231.6
Net Earned Premiums $125.0 $120.3 $ 236.4 $221.3
Loss and Loss Adjustment
Expense ("LAE") 73.3 72.9 126.6 137.3
Underwriting Expenses 22.7 17.8 41.9 33.6
Policyholder Dividends 18.9 23.9 51.9 41.0
Underwriting Profit $ 10.1 $ 5.7 $ 16.0 $ 9.4
GAAP Ratios:
Loss and LAE Ratio 58.6% 60.6% 53.6% 62.0%
Underwriting Expense Ratio 18.2 14.8 17.7 15.2
Policyholder Dividend Ratio 15.1 19.9 21.9 18.6
Combined Ratio 91.9% 95.3% 93.2% 95.8%
</TABLE>
Republic Indemnity has continued to experience growth in
earned and net written premiums due to its favorable competitive
position in the industry. However, the rate of such growth has
declined relative to the 1993 periods partly due to mandatory
premium rate reductions of 7 percent on in-force policies and
12.7 percent on new and renewal policies which took effect July
16, 1993 and January 1, 1994, respectively. Because the January
1, 1994 rate reduction is applicable only to new and renewal
policies entered into on and after January 1, 1994, only a pro
rata impact of this reduction is reflected in the 1994 results to
date. Furthermore, competitive pressure in the California
workers' compensation insurance market has increased and there
can be no assurance that increases in written and earned premiums
will continue in 1994 or after the repeal of California's minimum
premium rate law becomes effective on January 1, 1995.
- 17 -
<PAGE>
For the three and six month periods ended June 30, 1994, the
decrease in Republic's loss ratio as compared with the 1993
periods was mainly attributable to favorable loss development
relating to prior years' claims activity. During these same
periods, the expense ratio has increased mainly due to higher
commission expenses coupled with the decline in the earned
premium growth rate.
Interest and Dividend Income
Interest and dividend income of the Parent Company
investments decreased $5.1 million and $11.9 million for the
three and six month periods ended June 30, 1994, respectively, as
compared with the same period in 1993, due primarily to the
exclusion of interest income on the General Cable Notes in 1994
as a result of their sale. For further information, see Note 2
of Notes to Financial Statements. Interest income on the General
Cable Notes for the three and six month periods ended June 30,
1993 was $6.4 million and $12.7 million, respectively.
Interest and Debt Expense
Interest expense decreased $3.9 million and $7.6 million for
the three and six month periods ended June 30, 1994, compared to
the same period in 1993, primarily due to the Company's
redemption of all $133.3 million principal amount of its 11
percent subordinated debentures during the 1993 third quarter.
Other expense (income) - net
Other expense (income) - net consists of the following:
<TABLE>
<CAPTION>
(In Millions)
Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Settlement of claims and
contingencies, net $ - $ - $ - $ 2.2
Taxes, other than income 1.8 1.6 3.5 3.3
Minority interests in earnings
of consolidated subsidiaries (.1) (.6) - (1.0)
Other 1.8 3.1 1.0 4.0
$ 3.5 $ 4.1 $ 4.5 $ 8.5
</TABLE>
Income Taxes
For the three and six months ended June 30, 1994, the Company
recorded income tax expense of $12.0 million and $20.9 million,
respectively, as compared with an income tax benefit of $29.3
million and $33.8 million, respectively, for the same period in
1993. The tax benefit for the three and six month periods in 1993
was attributable to an increase of $45.0 million and $60.0
million, respectively, in the Company's net deferred tax asset due
to revisions to the estimated future taxable income during the
Company's tax loss carryforward period.
- 18 -
<PAGE>
Management believes that it is more likely than not that the
net deferred tax asset at June 30, 1994 will be realized primarily
through the generation of taxable income during the loss
carryforward period. This belief derives from an analysis of
estimated future taxable income based on certain assumptions
concerning future events during the loss carryforward period. The
estimate of future taxable income used in determining the net
deferred tax asset is not necessarily indicative of the Company's
future results of operations. As is the case with any estimate of
future results, there will be differences between assumed and
actual economic and business conditions of future periods.
Moreover, the estimate may also be affected by unpredictable
future events, including but not necessarily limited to changes in
the Company's capital structure and future acquisitions and
dispositions. Therefore, the analysis of estimated future taxable
income will be reviewed and updated periodically, and any required
adjustments, which may increase or decrease the net deferred tax
asset, will be made in the period in which the developments on
which they are based become known.
- 19 -
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On May 26, 1994, USX Corporation ("USX") and its former
subsidiary, Bessemer and Lake Erie Railroad Company ("B&LE"),
filed actions in the U.S. District Court for the Western District
of Pennsylvania in Pittsburgh (the "Federal Action") and in the
Ohio state Court of Common Pleas for Cuyahoga County, Ohio (the
"Ohio Action") against the Company, as successor to the railroad
business operated by Penn Central Transportation Company ("PCTC")
prior to 1976. In both the Federal and the State Actions, USX
and B&LE seek indemnification and contribution for all or a
portion of the approximately $600 million that USX paid on B&LE's
behalf in satisfaction of a judgment entered in 1991 against B&LE
(the "B&LE Judgment") in certain litigation (the "Iron Ore
Litigation") before the U.S. District Court for the Eastern
District of Pennsylvania in Philadelphia that has been upheld on
appeal and become final. The B&LE Judgment was rendered against
B&LE for its participation in an alleged unlawful antitrust
conspiracy among certain railroads commencing in the 1950's and
continuing through the 1970's to deny competitive rail rates for
the transportation of iron ore from certain lower Lake Erie docks
to steel producing areas in the Midwest. USX and B&LE allege in
the Federal and Ohio Actions that B&LE's liability for the B&LE
Judgment was attributable to PCTC's activities in furtherance of
the alleged conspiracy.
The Company believes that the Federal and Ohio Actions are
without merit. The Company was originally, like B&LE, a co-
defendant in the Iron Ore Litigation. However, all claims
against the Company in the Iron Ore Litigation were dismissed in
the 1980's based on rulings that PCTC could not be held liable
for such claims because (1) any liability based on PCTC's
activities prior to October 24, 1978 was discharged by the
consummation order in PCTC's bankruptcy reorganization
proceedings (the "Bankruptcy Consummation Order") and (2) there
was no evidence that PCTC or the Company engaged in any
activities in furtherance of the alleged conspiracy during the
period following October 24, 1978. The Company believes that, as
a matter of law, USX and B&LE cannot avoid the effect of that
dismissal by bringing its actions for indemnification and
contribution, and that the Federal and Ohio Actions will also be
dismissed. In addition, the Company has other substantial
defenses which it believes are independent bases for dismissal of
the Federal and Ohio actions, including the jury findings in the
Iron Ore Litigation that B&LE's participation in the alleged
conspiracy was intentional, which the Company believes would bar
any claims for indemnification or contribution against the
Company.
The Company will contest the claims of USX and B&LE
vigorously. On June 23, 1994, the Company filed a petition in
the U.S. District Court for the Eastern District of Pennsylvania,
which had issued the Bankruptcy Consummation Order in 1978 and
was also the court that presided over the Iron Ore Litigation
against B&LE in 1991, for an order directing USX and B&LE to show
cause why they should not be directed to dismiss the Federal and
Ohio Actions and be held in contempt for violating the Bankruptcy
Consummation Order's injunction against the assertion of claims
against the Company based on PCTC's pre-consummation conduct. A
hearing on this petition was held on July 21, 1994, at which the
Federal and Ohio Actions were stayed, by agreement of the
parties, pending the Court's decision on the Company's petition.
- 20 -
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Shareholders was held on May
12, 1994, and there were two matters voted upon at such meeting:
(1) election of 11 directors and (2) ratification of the
appointment of Deloitte & Touche to audit the Company's 1994
consolidated financial statements.
With respect to the election of directors, the following
named persons received the votes set forth opposite their names
for election as directors:
Name For Withheld
Hugh F. Culverhouse 37,319,252 619,993
Theodore H. Emmerich 37,323,972 615,273
James E. Evans 37,321,448 617,797
Neil M. Hahl 37,750,276 188,969
Richard M. Haverland 37,752,506 186,739
Thomas M. Hunt 37,318,878 620,367
Carl H. Lindner 37,282,593 656,652
Carl H. Lindner III 37,736,616 202,629
S. Craig Lindner 37,706,343 232,902
Alfred W. Martinelli 37,746,066 193,179
Robert W. Olson 37,753,908 185,337
With respect to ratification of the appointment of Deloitte
& Touche to audit the Company's 1994 consolidated financial
statements, 37,731,464 shares voted for, 48,805 shares voted
against, 88,435 shares abstained and 70,541 shares were broker
non-votes, for an aggregate of 37,939,245 shares voted.
Item 6. Exhibit and Reports on Form 8-K
(a) Exhibits:
None
(b) Reports on Form 8-K filed during the quarter ended June 30,
1994:
None
- 21 -
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
AMERICAN PREMIER UNDERWRITERS, INC.
(Registrant)
Date: August 12, 1994 By /s/ R. F. Amory
R. F. Amory
Vice President and Corporate Controller
(Principal Accounting Officer and
duly Authorized Signatory)
<PAGE>
