SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended Commission File
March 31, 1997 No. 1-1569
AMERICAN PREMIER UNDERWRITERS, INC.
Incorporated under IRS Employer I.D.
the Laws of Pennsylvania No. 23-6000765
One East Fourth Street, Cincinnati, Ohio 45202
(513) 579-6600
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, and (2) has been
subject to such filing requirements for the past 90 days. Yes X
No ___
As of May 1, 1997, there were 47,000,000 shares of the
Registrant's Common Stock outstanding, 38,000,000 of which were owned
by American Financial Corporation and 9,000,000 of which were owned
by American Financial Group, Inc.
Page 1 of 13
<PAGE>
AMERICAN PREMIER UNDERWRITERS, INC. 10-Q
PART I
FINANCIAL INFORMATION
AMERICAN PREMIER UNDERWRITERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Dollars In Millions)
March 31, December 31,
1997 1996
Assets:
Cash and short-term investments $ 86.5 $ 68.5
Investments:
Bonds and redeemable preferred stocks:
Held to maturity - at amortized cost
(market - $282.9 and $292.0) 286.6 291.3
Available for sale - at market
(amortized cost - $1,455.8 and $1,454.6) 1,414.7 1,441.0
Other stocks - principally at market
(cost - $77.1 and $77.0) 80.6 76.3
Investment in investee 38.4 36.6
Loans receivable 24.6 30.8
Real estate and other investments 2.1 2.1
Total investments 1,847.0 1,878.1
Accrued investment income 27.4 29.0
Agents' balances and premiums receivable 304.7 269.1
Amounts due from affiliates 94.9 151.8
Recoverables from reinsurers and prepaid
reinsurance premiums 65.5 67.6
Other receivables 29.0 45.5
Deferred acquisition costs 86.3 76.3
Cost in excess of net assets acquired 378.3 378.2
Deferred tax asset 162.9 154.7
Other assets 155.1 150.4
$3,237.6 $3,269.2
Liabilities and Shareholders' Equity:
Unpaid losses and loss adjustment expenses $1,013.2 $1,048.8
Unearned premiums 424.7 379.8
Policyholder dividends 21.6 23.8
Long-term debt:
Parent Company 159.9 160.5
Subsidiaries 8.1 8.3
Amounts due to affiliates 221.0 178.0
Accounts payable and other liabilities 343.3 425.5
Total liabilities 2,191.8 2,224.7
Shareholders' Equity:
Common Stock, $1 par value
47,000,000 shares outstanding 47.0 47.0
Capital surplus 580.0 580.4
Retained earnings 443.2 426.3
Net unrealized losses on marketable securities (24.4) (9.2)
Total shareholders' equity 1,045.8 1,044.5
$3,237.6 $3,269.2
2
<PAGE>
AMERICAN PREMIER UNDERWRITERS, INC. 10-Q
AMERICAN PREMIER UNDERWRITERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(In Millions)
Three months ended
March 31,
1997 1996
Income:
Property and casualty insurance premiums $317.3 $339.8
Net investment income 34.1 53.8
Realized gains (losses) on sales of securities (.9) 4.8
Equity in net earnings of investee 2.0 1.2
Gain on sales of subsidiaries - 53.0
Other income 1.5 3.9
354.0 456.5
Costs and Expenses:
Property and casualty insurance:
Losses and loss adjustment expenses 237.3 262.0
Commissions and other underwriting expenses 71.7 79.5
Interest charges on borrowed money 7.8 9.8
Other operating and general expenses 9.7 9.7
326.5 361.0
Earnings before income taxes 27.5 95.5
Provision for income taxes 10.6 37.9
Net earnings before extraordinary item 16.9 57.6
Extraordinary item - loss on prepayment of debt,
net of tax benefit - (1.9)
Net Earnings $ 16.9 $ 55.7
3
<PAGE>
AMERICAN PREMIER UNDERWRITERS, INC. 10-Q
AMERICAN PREMIER UNDERWRITERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(In Millions)
Three months ended
March 31,
1997 1996
Operating Activities:
Net earnings $ 16.9 $ 55.7
Adjustments:
Deferred federal income tax - 33.0
Extraordinary loss on prepayment of debt - 1.9
Depreciation and amortization 6.8 7.4
Equity in net earnings of investee (2.0) (1.2)
Realized (gains) losses on investing activities .9 (58.1)
Decrease (increase) in receivables (22.2) 8.5
Increase in other assets (16.9) (22.6)
Decrease in unpaid losses and loss
adjustment expenses (35.7) (29.5)
Decrease in policyholder dividends (2.2) (9.9)
Increase (decrease) in unearned premiums 44.9 (9.0)
Increase (decrease) in other liabilities (76.7) 22.5
Dividends from investee .2 .2
Other, net (.2) (.2)
(86.2) (1.3)
Investing Activities:
Purchases of and additional investments in:
Fixed maturity investments (203.6) (122.8)
Equity securities (.2) (.2)
Affiliates and subsidiaries (5.0) -
Property and equipment (1.4) (1.8)
Maturities and redemptions of fixed maturity
investments 19.1 32.4
Sales of:
Fixed maturity investments 196.2 82.3
Equity securities .1 .8
Affiliates and subsidiaries - 66.2
Real estate, property and equipment .1 .8
Cash of subsidiaries acquired (sold) .1 (4.6)
Increase in other investments (.1) -
5.3 53.1
Financing Activities:
Reductions of debt (.9) (38.5)
Issuance of debt - 11.0
Net advances (to) from affiliates 99.9 (73.0)
Other, net (.1) -
98.9 (100.5)
Net Increase (Decrease) in Cash and Short-term
Investments 18.0 (48.7)
Cash and short-term investments at beginning of period 68.5 116.4
Cash and short-term investments at end of period $ 86.5 $ 67.7
4
<PAGE>
AMERICAN PREMIER UNDERWRITERS, INC. 10-Q
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Accounting Policies
Basis of Presentation In April 1995, American Premier
Underwriters, Inc. ("APU") became a wholly-owned subsidiary of
American Financial Group, Inc. ("AFG"), a new corporation formed
by APU for the purpose of acquiring all of the common stock of APU
and American Financial Corporation (the "Mergers"). As a result
of the Mergers, all of the common stock of APU and American
Financial Corporation ("AFC") was owned by AFG and AFG became
APU's successor as the issuer of publicly held common stock. At
the close of business on December 31, 1996, AFG contributed to AFC
81% of the Common Stock of APU.
The accompanying consolidated financial statements for APU are
unaudited; however, management believes that all adjustments
(consisting only of normal recurring accruals unless otherwise
disclosed herein) necessary for fair presentation have been made.
The results of operations for interim periods are not necessarily
indicative of results to be expected for the year. The financial
statements have been prepared in accordance with the instructions
to Form 10-Q and therefore do not include all information and
footnotes necessary to be in conformity with generally accepted
accounting principles.
Certain reclassifications have been made to prior years to conform
to the current year's presentation. All significant intercompany
balances and transactions have been eliminated. All acquisitions
have been treated as purchases. The results of operations of
companies since their formation or acquisition are included in the
consolidated financial statements.
The preparation of the financial statements requires management to
make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Changes in
circumstances could cause actual results to differ materially from
those estimates.
Investments Debt securities are classified as "held to
maturity" and reported at amortized cost if APU has the positive
intent and ability to hold them to maturity. Debt and equity
securities are classified as "available for sale" and reported at
fair value with unrealized gains and losses reported as a
separate component of shareholders' equity if the securities are
not classified as held to maturity or bought and held principally
for selling in the near term. Only in certain limited
circumstances, such as significant issuer credit deterioration or
if required by insurance or other regulators, may a company
change its intent to hold a certain security to maturity without
calling into question its intent to hold other debt securities to
maturity in the future.
<PAGE>
Premiums and discounts on mortgage-backed securities are
amortized over their expected average lives using the interest
method. Gains or losses on sales of securities are recognized at
the time of disposition with the amount of gain or loss
determined on the specific identification basis. When a decline
in the value of a specific investment is considered to be other
than temporary, a provision for impairment is charged to earnings
and the carrying value of that investment is reduced.
APU's investments in equity securities of companies that are 20%-
to 50%-owned by AFG and its subsidiaries are carried at cost,
adjusted for a proportionate share of their undistributed
earnings or losses.
5
<PAGE>
AMERICAN PREMIER UNDERWRITERS, INC. 10-Q
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
APU's investment in investee corporation reflects APU's 6% ownership
(3.2 million shares) of the common stock of Chiquita Brands
International, Inc. which is accounted for under the equity method.
AFG and its other subsidiaries own an additional 37% of the common stock
of Chiquita. Chiquita is a leading international marketer, producer and
distributor of bananas and other quality fresh and processed food
products. The market value of APU's investment in Chiquita was
approximately $50.2 million at March 31, 1997.
Short-term investments are carried at cost; loans receivable are
stated primarily at the aggregate unpaid balance.
Cost in Excess of Net Assets Acquired The excess of cost of
subsidiaries over APU's equity in the underlying net assets
("goodwill") is being amortized over 40 years.
APU's management continually monitors whether significant changes
in certain industry and regulatory conditions or prolonged trends
of declining profitability have occurred which would lead APU to
question the recoverability of the carrying value of its goodwill.
APU's evaluation of its recorded goodwill would be based primarily
on estimates of future earnings, as well as all other available
factors which may provide additional evidence relevant to the
assessment of recoverability of its goodwill.
Insurance As discussed under "Reinsurance" below, unpaid losses
and loss adjustment expenses and unearned premiums have not been
reduced for reinsurance receivable.
Reinsurance In the normal course of business, APU's insurance
subsidiaries cede reinsurance to other companies to diversify risk
and limit maximum loss arising from large claims. To the extent
that any reinsuring companies are unable to meet obligations under
the agreements covering reinsurance ceded, APU's insurance
subsidiaries would remain liable. Amounts recoverable from
reinsurers are estimated in a manner consistent with the claim
liability associated with the reinsurance policies. APU's
insurance subsidiaries report as assets (a) the estimated
reinsurance recoverable on unpaid losses, including an estimate
for losses incurred but not reported, and (b) amounts paid to
reinsurers applicable to the unexpired terms of policies in force.
APU's insurance subsidiaries also assume reinsurance from other
companies. Income on reinsurance assumed is recognized based on
reports received from ceding reinsurers.
Deferred Acquisition Costs Policy acquisition costs (principally
commissions, premium taxes and other underwriting expenses)
related to the production of new business are deferred. The
deferral of acquisition costs is limited based upon their
recoverability without any consideration for anticipated
investment income. Deferred policy acquisition costs are charged
against income ratably over the term of the related policies.
<PAGE>
Unpaid Losses and Loss Adjustment Expenses The net liabilities
stated for unpaid claims and for expenses of investigation and
adjustment of unpaid claims are based upon (a) the accumulation of
case estimates for losses reported prior to the close of the
accounting period on the direct business written; (b) estimates
received from ceding reinsurers and insurance pools and
associations; (c) estimates of unreported losses based on past
experience and (d) estimates based on experience of expenses for
investigating and adjusting claims.
6
<PAGE>
AMERICAN PREMIER UNDERWRITERS, INC. 10-Q
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
These liabilities are subject to the impact of changes in claim
amounts and frequency and other factors. In spite of the
variability inherent in such estimates, management believes that
the liabilities for unpaid losses and loss adjustment expenses are
adequate. Changes in estimates of the liabilities for losses and
loss adjustment expenses are reflected in the Statement of
Earnings in the period determined.
Premium Recognition Premiums are earned over the terms of the
policies on a pro rata basis. Unearned premiums represent that
portion of premiums written which is applicable to the unexpired
terms of policies in force. On reinsurance assumed from other
insurance companies or written through various underwriting
organizations, unearned premiums are based on reports received
from such companies and organizations.
Policyholder Dividends Dividends payable to policyholders
represent management's estimate of amounts payable on
participating policies which share in favorable underwriting
results. The estimate is accrued during the period in which the
related premium is earned. Changes in estimates are included in
the Statement of Earnings in the period determined. Policyholder
dividends do not become legal liabilities unless and until
declared by the boards of directors of the insurance companies.
Income Taxes APU has filed consolidated federal income tax
returns which include all 80%-owned U.S. subsidiaries. As a
result of the Mergers, AFG (parent) has been included in APU's
consolidated return for 1995 and 1996. At the close of business
on December 31, 1996, AFG contributed 81% of the common stock of
APU to AFC. Accordingly, AFC and APU will file a single
consolidated return for 1997.
Deferred income taxes are calculated using the liability method.
Under this method, deferred income tax assets and liabilities are
determined based on differences between financial reporting and
tax bases and are measured using enacted tax rates. Deferred tax
assets are recognized if it is more likely than not that a tax
benefit will be realized.
<PAGE>
Benefit Plans APU provides retirement benefits to qualified
employees of participating companies through contributory and
noncontributory defined contribution plans. In addition, APU
sponsored employee savings plans under which APU matched a
specified portion of contributions made by eligible employees.
Contributions to benefit plans and savings plans are charged
against earnings in the year for which they are declared. APU had
Employee Stock Ownership Retirement Plans ("ESORP"). In 1997,
these ESORP plans were combined into a new plan. Like the ESORP
plans, the new plan is a noncontributory, qualified plan invested
in securities of AFG and affiliates for the benefit of employees.
APU and many of its subsidiaries provide health care and life
insurance benefits to eligible retirees. APU also provides
postemployment benefits to former or inactive employees (primarily
those on disability) who were not deemed retired under other
company plans. The projected future cost of providing these
benefits is expensed over the period the employees qualify for
such benefits.
7
<PAGE>
AMERICAN PREMIER UNDERWRITERS, INC. 10-Q
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Capital Surplus Adjustments to claims and contingencies arising
from events or circumstances preceding APU's 1978 reorganization
are reflected in capital surplus if the adjustments are not
clearly attributable to post-reorganization events or
circumstances. Such pre-reorganization claims and contingencies
consist principally of personal injury claims by former employees
of APU's predecessor and claims relating to the generation,
disposal or release into the environment of allegedly hazardous
substances arising out of railroad operations disposed of prior to
the 1978 reorganization.
Statement of Cash Flows For cash flow purposes, "investing
activities" are defined as making and collecting loans and
acquiring and disposing of debt or equity instruments and property
and equipment. "Financing activities" include obtaining resources
from owners and providing them with a return on their investments,
borrowing money and repaying amounts borrowed. All other
activities are considered "operating". Short-term investments
having original maturities of three months or less when purchased
are considered to be cash equivalents for purposes of the
financial statements.
B. Divestitures
In March 1996, APU sold the stock of a subsidiary, Buckeye
Management Company ("Buckeye"), to an investment group consisting
of members of Buckeye's management and employees for
approximately $60 million in cash, net of transaction costs.
Buckeye held, directly and indirectly, a 2% general partnership
interest in Buckeye Partners, L.P. which, through its subsidiary
entities, was an independent pipeline common carrier of refined
petroleum products. APU recorded a pretax gain of approximately
$53 million from the sale. The Chairman of the Board and Chief
Executive Officer of Buckeye was also a director of APU, until
resigning in March 1996.
<PAGE>
C. Long-term Debt
The carrying value of long-term debt consisted of the following
(in millions):
March 31, December 31,
1997 1996
Parent Company:
Subordinated notes, 10-7/8%, due 2011 $ 16.8 $ 16.8
Subordinated notes, 10-5/8%, due 2000 51.7 52.0
Subordinated notes, 9-3/4%, due 1999 91.4 91.7
159.9 160.5
Subsidiaries:
Other 8.1 8.3
Total $168.0 $168.8
In 1995, Pennsylvania Company ("Pennco"), a wholly-owned
subsidiary of APU, entered into a collateralized five-year
reducing revolving credit agreement with several banks, under
which it can borrow up to $75 million. There were no
borrowings outstanding under this agreement at March 31, 1997
or December 31, 1996.
8
<PAGE>
AMERICAN PREMIER UNDERWRITERS, INC. 10-Q
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
D. Common Stock
APU is authorized to issue 200,000,000 shares of Common Stock. At
March 31, 1997, there were 47,000,000 shares of Common Stock outstanding,
38,000,000 of which were owned by AFC and 9,000,000 of which were owned
by AFG.
E. Cash Flows - Fixed Maturity Investments
"Investing activities" related to fixed maturity investments in APU's
Statement of Cash Flows consisted of the following (in millions):
Maturities
and Gross Gross
Purchases Redemptions Sales Gains Losses
1997
Held to Maturity $ .1 $10.8 $ - $ - $ -
Available for Sale 203.5 8.3 196.2 .3 (1.2)
Total $203.6 $19.1 $196.2 $ .3 ($1.2)
1996
Held to Maturity $ 8.6 $17.8 $ - $ - $ -
Available for Sale 114.2 14.6 82.3 4.2 (.2)
Total $122.8 $32.4 $ 82.3 $4.2 (.2)
F. Contingencies
There have been no significant changes to the matters discussed in
Note K - "Contingencies" in APU's Annual Report on Form 10-K for 1996.
9
<PAGE>
AMERICAN PREMIER UNDERWRITERS, INC. 10-Q
ITEM 2
Management's Discussion and Analysis
of Financial Condition and Results of Operations
LIQUIDITY AND CAPITAL RESOURCES
Ratios The ratio of APU's (parent-only) long-term debt to total capital was
13% at both March 31, 1997 and December 31, 1996. APU's ratio of earnings
to fixed charges on a total enterprise basis was 3.92 for the first three
months of 1997 compared to 8.92 for the entire year of 1996.
Sources of Funds APU is organized as a holding company with almost all
of its operations being conducted by subsidiaries. The parent corporation,
however, has continuing cash needs for administrative expenses, the payment
of principal and interest on borrowings and dividends on Common Stock.
Thus, APU relies primarily on dividends and tax payments from its
subsidiaries for funds to meet its obligations.
Management believes APU has sufficient resources to meet its liquidity
requirements through operations in the short-term and long-term future. If
funds generated from operations, including dividends from subsidiaries, are
insufficient to meet fixed charges in any period, APU would be required to
generate cash through borrowings, sales of securities or other assets, or
similar transactions.
APU has a credit agreement with AFG under which APU and AFG could make loans
of up to $200 million available to each other. In January 1997, the amount
of available loans was increased to $250 million. The balance outstanding
under the credit line bears interest at a variable rate of one percent over
LIBOR and is payable on December 31, 2010. Principal amounts payable to AFG
under the credit agreement totaled $217.5 million (plus $3.5 million of
accrued interest) at March 31, 1997 and $175.5 million (plus $2.5 million of
accrued interest) at December 31, 1996.
APU and Pennco also have separate revolving credit agreements with two AFC
subsidiaries under which aggregate loans are available to those subsidiaries
of up to $170 million. Loans made under the credit lines bear interest at
floating rates based on prime or LIBOR. Aggregate amounts outstanding under
the credit lines totaled $38.5 million (plus $.8 million of accrued interest)
at March 31, 1997 and $96.5 million (plus $1.0 million of accrued interest)
at December 31, 1996.
Through 1995, APU has filed consolidated federal income tax returns and will
do so again for 1996. APU's federal income tax loss carryforward had been
available to offset taxable income and, as a result, APU's obligation to pay
federal income tax for 1996 is substantially eliminated. At the close of
business on December 31, 1996, AFG contributed 81% of the common stock of APU
to AFC. Accordingly, beginning with the 1997 federal tax return, APU and
its 80%-owned U.S. subsidiaries will join AFC's consolidated federal tax
return. Under tax allocation agreements, APU's insurance subsidiaries
generally compute tax provisions as if filing separate returns with the
resulting provision (or credit) currently payable to (or receivable from) APU.
10
<PAGE>
AMERICAN PREMIER UNDERWRITERS, INC. 10-Q
Management's Discussion and Analysis
of Financial Condition and Results of Operations - Continued
Investments Approximately 94% of the bonds and redeemable preferred stocks
held by APU were rated "investment grade" (credit rating of AAA to BBB) by
nationally recognized rating agencies at March 31, 1997. Investment grade
securities generally bear lower yields and lower degrees of risk than those
that are unrated and non-investment grade. Management believes that the high
quality investment portfolio should generate a stable and predictable
investment return.
RESULTS OF OPERATIONS
General Pretax earnings for the three months ended March 31, 1997 were
$27.5 million, a decrease of $68.0 million from the comparable 1996 period.
Results for 1996 include a $53 million gain from the sale of Buckeye
Management Company. Excluding the Buckeye gain and net gains and losses
realized on sales of securities, pretax earnings decreased $9.3 million due
primarily to an $18.9 million decrease in investment income (including equity
in net earnings of investee), partially offset by a $10.0 million improvement
in underwriting results and a $2.0 million decrease in interest expense.
Property and Casualty Insurance APU manages and operates its property and
casualty business as two major sectors. The nonstandard automobile insurance
companies ("NSA Group") insure risks not typically accepted for standard
automobile coverage because of the applicant's driving record, type of
vehicle, age or other criteria. Republic Indemnity is engaged in the sale of
workers' compensation insurance in California and, to a lesser extent, in
Arizona. Workers' compensation policies provide coverage for prescribed
benefits that employers are required to pay employees who are injured in the
course of employment and for an employer's liability for losses suffered by
its employees which are not included within the prescribed workers'
compensation coverage.
Underwriting profitability is measured by the combined ratio which is a sum of
the ratios of underwriting losses, loss adjustment expenses, underwriting
expenses and policyholder dividends to premiums. When the combined ratio is
under 100%, underwriting results are generally considered profitable; when
the ratio is over 100%, underwriting results are generally considered
unprofitable. The combined ratio does not reflect investment income, other
income or federal income taxes.
<PAGE>
Net written premiums and combined ratios for APU's insurance subsidiaries are
as follows (dollars in millions):
Three months ended
March 31,
1997 1996
Net Written Premiums (GAAP)
NSA Group $304.1 $271.3
Republic Indemnity 57.9 59.3
$362.0 $330.6
Combined Ratios (GAAP)
NSA Group 97.2% 102.1%
Republic Indemnity 98.4% 92.4%
Aggregate 97.4% 100.6%
11
<PAGE>
AMERICAN PREMIER UNDERWRITERS, INC. 10-Q
Management's Discussion and Analysis
of Financial Condition and Results of Operations - Continued
NSA Group For the first quarter of 1997, net written premiums of
the NSA Group increased 12% from the comparable 1996 period due
primarily to volume increases in California resulting from enactment
of legislation requiring drivers to provide proof of insurance
coverage in order to obtain a valid permit. The improvement in the
combined ratio reflects rate increases in various states over the
last couple of years.
Republic Indemnity Following significant declines during 1995 and
1996 as a result of mandatory premium rate reductions and an
extremely competitive pricing environment in the California workers'
compensation market, net written premiums for Republic Indemnity have
stabilized in 1997 at approximately the same level as in the 1996
first quarter. Underwriting results for the 1996 first quarter
included reductions in loss, loss adjustment expense and policyholder
dividend reserves prompted by fundamental changes in the California
workers' compensation market and actuarial evaluations. Excluding
the effects of such reserve reductions, Republic Indemnity's 1997
first quarter underwriting results improved moderately as compared to
1996 due primarily to a decrease in the frequency and severity of
claims.
Investment Income Investment income decreased $19.7 million (37%)
due primarily to a decrease in funds advanced to affiliates. In
December 1996, APU paid a dividend to AFG of $675 million consisting
of amounts then outstanding under APU's credit line with AFC.
Investment income includes $2.8 million and $20.0 million earned in
the first quarter of 1997 and 1996, respectively, on amounts due from
affiliates.
Investee Corporations Equity in net earnings of investee
corporations represents APU's proportionate share of the earnings of
Chiquita Brands International, Inc.
Interest on Borrowed Money Excluding interest expense of $3.5
million in 1997 on amounts due to AFG, interest expense for the three
month period decreased by $5.5 million (56%) from the comparable 1996
period. The decrease reflects a reduction in long-term debt
resulting from the repurchase of subordinated notes during 1996.
12
<PAGE>
AMERICAN PREMIER UNDERWRITERS, INC. 10-Q
PART II
OTHER INFORMATION
ITEM 6
Exhibits and Reports on Form 8-K
(a) Exhibits:
Number Description
27 Financial Data Schedule - Included in Report filed
electronically with the Securities and Exchange
Commission.
(b) Report on Form 8-K: None
______________________________________________________________
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934,
American Premier Underwriters, Inc. has duly caused this Report to be
signed on its behalf by the undersigned duly authorized.
American Premier Underwriters, Inc.
May 12, 1997 BY: /s/ Fred J. Runk
Fred J. Runk
Senior Vice President and Treasurer
13
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
This schedule contains summary financial information extracted from American
Premier Underwriters, Inc. 10-Q for the three months ended March 31, 1997 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<DEBT-HELD-FOR-SALE> $1,414,700
<DEBT-CARRYING-VALUE> 286,600
<DEBT-MARKET-VALUE> 282,900
<EQUITIES> 119,000<F1>
<MORTGAGE> 0
<REAL-ESTATE> 1,500
<TOTAL-INVEST> 1,847,000<F2>
<CASH> 86,500
<RECOVER-REINSURE> 8,800
<DEFERRED-ACQUISITION> 86,300
<TOTAL-ASSETS> 3,237,600
<POLICY-LOSSES> 1,013,200
<UNEARNED-PREMIUMS> 424,700
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 21,600
<NOTES-PAYABLE> 168,000
0
0
<COMMON> 47,000
<OTHER-SE> 998,800
<TOTAL-LIABILITY-AND-EQUITY> 3,237,600
317,300
<INVESTMENT-INCOME> 34,100
<INVESTMENT-GAINS> (900)
<OTHER-INCOME> 3,500<F3>
<BENEFITS> 237,300
<UNDERWRITING-AMORTIZATION> 0
<UNDERWRITING-OTHER> 70,900
<INCOME-PRETAX> 27,500<F4>
<INCOME-TAX> 10,600
<INCOME-CONTINUING> 16,900
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,900
<EPS-PRIMARY> 0<F5>
<EPS-DILUTED> 0<F5>
<RESERVE-OPEN> 1,049,000
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
<FN>
<F1>Includes an investment in investee of $38.4 million.
<F2>Includes loans receivable of $24.6 million and other investments of $.6
million.
<F3>Includes equity in net earnings of investee of $2.0 million and other income of
$1.5 million.
<F4>Includes policyholder dividends of $.8 million, interest charges on borrowed
money of $7.8 million and other operating and general expenses of $9.7 million.
<F5>Not applicable since all common shares are owned by American Financial
Corporation and American Financial Group, Inc.
</FN>
</TABLE>
