<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
Quarterly Report under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For Quarter Ended March 31, 1996 Commission File Number 1-9828
GAINSCO, INC.
(Exact name of registrant as specified in its charter)
Texas 75-1617013
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
500 Commerce Street Fort Worth, Texas 76102
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (817) 336-2500
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 twelve (12) months, and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
As of March 31, 1996, there were 21,525,221 shares outstanding of the
registrant's Common Stock, $.10 par value.
<PAGE> 2
GAINSCO, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements:
Consolidated Balance Sheets as of March 31, 1996
(unaudited) and December 31, 1995 3
Consolidated Statements of Operations for the Three Months
Ended March 31, 1996 and 1995 (unaudited) 5
Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 1996 and 1995 (unaudited) 6
Notes to Consolidated Financial Statements
March 31, 1996 and 1995 (unaudited) 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K. 15
SIGNATURE 16
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
GAINSCO, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31
1996 December 31
Assets (unaudited) 1995
------ ------------- -----------
<S> <C> <C>
Investments
Fixed maturities:
Bonds held to maturity, at amortized cost (fair
value: $91,949,832 - 1996, $98,421,877 - 1995) $ 91,648,584 97,301,350
Bonds available for sale, at fair value (Amortized cost:
$79,983,134 - 1996, $77,478,359 - 1995) 81,092,775 79,130,048
Certificates of deposit, at cost (which approximates
fair value) 620,000 620,000
Short-term investments, at cost (which approximates
fair value) 14,864,446 5,975,412
----------- -----------
Total investments 188,225,805 183,026,810
Cash 1,135,383 1,774,608
Accrued investment income 3,466,470 4,539,236
Premiums receivable (net of allowance for doubtful
accounts: $101,000 - 1996, $101,000 - 1995) 13,680,855 15,913,734
Reinsurance balances receivable 5,739,600 3,505,818
Ceded unpaid claims and claim adjustment expenses 25,603,032 24,650,606
Ceded unearned premiums 9,634,415 6,008,187
Deferred policy acquisition costs 11,575,408 12,114,681
Property and equipment (net of accumulated depreciation
and amortization: $4,042,591 - 1996, $3,812,976 -
1995) 6,573,329 6,561,792
Deferred Federal income taxes recoverable (note 1) 2,588,524 2,578,714
Management contract 1,825,070 1,837,570
Other assets 1,620,023 1,643,853
----------- -----------
Total assets $ 271,667,914 264,155,609
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
GAINSCO, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31
1996 December 31
Liabilities and Shareholders' Equity (unaudited) 1995
------------------------------------ ------------- -----------
<S> <C> <C>
Liabilities:
Unpaid claims and claim adjustment expenses $ 97,474,952 95,011,463
Unearned premiums 55,266,539 53,525,323
Commissions payable 988,924 2,207,353
Accounts payable 3,340,207 4,635,715
Reinsurance balances payable 2,694,031 1,817,056
Deferred revenue 811,615 492,393
Drafts payable 3,560,812 2,569,265
Note payable 1,750,000 1,750,000
Dividends payable (note 3) 269,066 269,066
Other liabilities 928,604 1,388,098
Current Federal income taxes payable (note 1) 1,488,150 1,047,981
----------- -----------
Total liabilities 168,572,900 164,713,713
----------- -----------
Shareholders' Equity (note 6):
Preferred stock ($100 par value, 10,000,000 shares
authorized, none issued) - -
Common stock ($.10 par value, 250,000,000 shares
authorized, 21,637,481 issued at March 31, 1996
and December 31, 1995) 2,163,748 2,163,748
Additional paid-in capital 87,543,175 87,543,175
Net unrealized gain on fixed maturities (note 1) 721,267 1,073,597
Retained earnings 13,679,416 9,673,968
Treasury stock (112,260 shares at March 31, 1996 and
December 31, 1995) (1,012,592) (1,012,592)
----------- -----------
Total shareholders' equity 103,095,014 99,441,896
----------- -----------
Total liabilities and shareholders' equity $ 271,667,914 264,155,609
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
GAINSCO, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Quarter ended March 31
------------------------------------------
1996 1995
----------- ------------
<S> <C> <C>
Revenues:
Premiums earned (note 2) $ 26,148,370 22,417,241
Net investment income 2,204,104 1,914,202
Net realized gains (note 1) 54,981 -
Insurance services 553,235 478,936
---------- ----------
Total revenues 28,960,690 24,810,379
---------- ----------
Expenses:
Claims and claim adjustment expenses
(note 2) 13,315,986 11,448,553
Commissions 5,474,405 5,044,332
Change in deferred policy acquisition costs 539,273 (455,602)
Underwriting and operating expenses 3,854,499 3,536,116
---------- ----------
Total expenses 23,184,163 19,573,399
---------- ----------
Income before Federal income taxes 5,776,527 5,236,980
Federal income taxes:
Current expense 1,322,106 1,153,512
Deferred expense 179,907 190,069
---------- ----------
Total taxes 1,502,013 1,343,581
---------- ----------
Net income $ 4,274,514 3,893,399
========== ==========
Net income per share .20 .18
=== ===
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
GAINSCO, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Quarter ended March 31
---------------------------------
1996 1995
----------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 4,274,514 3,893,399
Adjustments to reconcile net income to cash provided by
operating activities:
Depreciation and amortization 1,176,713 1,089,695
Change in deferred Federal income taxes recoverable 179,907 190,069
Change in accrued investment income 1,072,766 1,112,991
Change in premiums receivable 2,232,879 (1,033,459)
Change in reinsurance balances receivable (2,233,782) (1,497,138)
Change in ceded unpaid claims and claim adjustment
expenses (952,426) (907,648)
Change in ceded unearned premiums (3,626,228) 1,300,335
Change in deferred policy acquisition costs 539,273 (455,602)
Change in management contract 12,500 12,500
Change in other assets 23,830 136,120
Change in unpaid claims and claim adjustment
expenses 2,463,489 3,332,747
Change in unearned premiums 1,741,216 203,345
Change in commissions payable (1,218,429) (1,590,480)
Change in accounts payable (1,295,508) (1,292,360)
Change in reinsurance balances payable 876,975 (2,060,530)
Change in deferred revenue 319,222 222,332
Change in drafts payable 991,547 (610,237)
Change in other liabilities (459,494) (604,222)
Change in current Federal income taxes payable 440,169 1,077,525
--------- ---------
Net cash provided by operating activities $ 6,559,133 2,519,382
--------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
(continued)
6
<PAGE> 7
GAINSCO, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Quarter ended March 31
-----------------------------------------
1996 1995
------------- -----------
<S> <C> <C>
Cash flows from investing activities:
Bonds held to maturity:
Matured $ 4,816,500 20,958,800
Bonds available for sale:
Sold 3,754,704 -
Matured 632,400 -
Purchased (7,002,710) (20,981,977)
Property and equipment purchased (241,152) (159,834)
Net change in short-term investments (8,889,034) (1,824,757)
------------ -----------
Net cash used for investing activities (6,929,292) (2,007,768)
------------ -----------
Cash flows from financing activities:
Cash dividends paid (269,066) (195,095)
Proceeds from exercise of stock options - 7,130
------------ -----------
Net cash used by financing activities (269,066) (187,965)
------------ -----------
Net increase (decrease) in cash (639,225) 323,649
Cash at beginning of period 1,774,608 520,515
------------ -----------
Cash at end of period $ 1,135,383 844,164
============ ===========
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE> 8
GAINSCO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
(1) Summary of Accounting Policies
(a) Basis of Consolidation
In the opinion of management, the accompanying consolidated
financial statements contain all adjustments, consisting only
of normal recurring adjustments, necessary to present fairly
the financial position of GAINSCO, INC. and subsidiaries (the
"Company") as of March 31, 1996, the results of operations and
the statements of cash flows for the three months ended March
31, 1996 and 1995, on the basis of generally accepted
accounting principles. The December 31, 1995 balance sheet
included herein is derived from the consolidated financial
statements included in the Company's 1995 Annual Report to
Shareholders.
The accompanying consolidated financial statements are
prepared in conformity with generally accepted accounting
principles. The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results
could differ from those estimates.
Reference is made to the Company's annual consolidated
financial statements for the year ended December 31, 1995 for
a description of all other accounting policies.
(b) Investments
Bonds are stated at amortized cost, bonds available for sale
are stated at fair value. Short-term investments are stated
at cost. The "specific identification" method is used to
determine costs of investments sold. Since investments not
available for sale are generally held until maturity or
recovery of fair value, provisions for possible losses are
recorded only when the values have experienced impairment
considered "other than temporary". The bonds available for
sale had an unrealized gain of $721,267 at March 31, 1996, net
of the deferred tax expense of $388,375, and an unrealized
gain at December 31, 1995 of $1,073,597 net of the deferred
tax expense of $578,091.
Proceeds from the sale of debt securities totalled $3,754,704
for the three months ended March 31, 1996. There were no
sales of debt securities during the three months ended March
31, 1995. Realized gains were $54,981 for the three months
ended March 31, 1995. There were no realized gains for the
three months ended March 31, 1995 and no realized losses for
any period presented.
8
<PAGE> 9
GAINSCO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
(c) Federal Income Taxes
The Company and its subsidiaries file a consolidated Federal
income tax return. Deferred income tax items are accounted
for under the deferred method which provides for timing
differences between the reporting of earnings for financial
statement purposes and for tax purposes, primarily deferred
policy acquisition costs, the discount on unpaid claims and
claim adjustment expenses and the nondeductible portion of the
change in unearned premiums. The Company paid income taxes of
$881,937 and $75,986 during the three months ended March 31,
1996 and 1995, respectively.
(d) Earnings Per Share
The computation of earnings per share, as adjusted, is based
on the weighted average number of common shares outstanding,
including common stock equivalents. For the three months
ended March 31, 1996 and 1995, the weighted average number of
common shares outstanding was 21,525,221 and 21,511,260
respectively, and common stock equivalents were 308,529 and
308,405, respectively. The calculations were made after
giving retroactive effect to the stock dividends and stock
splits granted to shareholders.
(2) Reinsurance
The amounts deducted in the Consolidated Statements of Operations for
reinsurance ceded for the three months ended March 31, 1996 and 1995,
respectively, are set forth in the following table.
Premiums and claims ceded to the commercial automobile plans of
Arkansas, California, Louisiana, Mississippi and Pennsylvania are
designated as "plan servicing".
<TABLE>
<CAPTION>
Three months
ended March 31
-----------------------------------------------
1996 1995
----------- ---------
<S> <C> <C>
Premiums earned $ 503,140 1,779,568
Premiums earned - plan
servicing $ 1,439,491 1,243,270
Premiums earned -
fronting arrangements $ 1,778,761 -
Claims and claim
adjustment expenses $ 1,264,506 3,794,628
Claims and claim
adjustment expenses -
plan servicing $ 2,354,949 907,517
Claims and claim
adjustment expenses -
fronting arrangements $ 1,375,852 -
</TABLE>
9
<PAGE> 10
GAINSCO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
The amounts included in the Consolidated Balance Sheets for
reinsurance ceded to the commercial automobile plans of Arkansas,
California, Louisiana, Mississippi and Pennsylvania and the fronting
arrangements as of March 31, 1996 and December 31, 1995 were as
follows:
<TABLE>
<CAPTION>
1996 1995
----------- ----------
<S> <C> <C>
Unearned premiums $ 2,412,216 2,836,492
Unearned premiums -
fronting arrangements $ 6,774,174 2,544,837
Unpaid claims and claim
adjustment expenses $ 9,690,220 9,842,815
Unpaid claims and claim
adjustment expenses -
fronting arrangements $ 1,066,058 266,720
</TABLE>
The Company remains directly liable to its policyholders for all
policy obligations and the reinsuring companies are obligated to the
Company to the extent of the reinsured portion of the risks. The
Company does not have a provision for uncollectible reinsurance and
does not feel one is warranted since all of the reinsurers on its
working treaties are rated "A" or better by A.M. Best Company and/or
the Company is adequately collateralized on existing and anticipated
claim recoveries.
The Company has not and does not intend to utilize retrospectively
rated reinsurance contracts with indefinite renewal terms. This form
of reinsurance is commonly known as a "funded cover". Under a funded
cover reinsurance arrangement, an insurance company essentially
deposits money with a reinsurer to help cover future losses and
records the "deposit" as an expense instead of as an asset; or, the
insurance company can borrow from a reinsurer recording the "loan" as
income instead of as a liability with the future "loan" payments
recorded as expense when the payments are made.
(3) Shareholders' Equity
As of March 31, 1996 there were 401,277 options, at an average
exercise price of $2.60 per share, that have been granted to officers
and directors of the Company under the 1990 Stock Option Plan. The
Company's policy is to pay a quarterly cash dividend of $.0125 per
share every quarter until further action is taken by the Board of
Directors. A cash dividend of $269,066 was paid on April 15, 1996.
10
<PAGE> 11
GAINSCO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
(4) Subsequent Event
On May 10, 1996, the Shareholders approved the 1995 Stock Option Plan
(Plan) under which 1,071,000 shares of the Company's $.10 par value
common stock are reserved for issuance pursuant to stock options
available for grant under the Plan. Options to purchase a total of
929,876 shares were granted at an exercise price of $10.625 per share
to officers and directors of the Company.
11
<PAGE> 12
GAINSCO, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations
Gross premiums written for the first quarter of 1996 were approximately
$24,588,000 versus $24,525,000 for the comparable period of 1995. The
following table presents, for each major product line, gross premiums written
for the periods indicated.
<TABLE>
<CAPTION>
Three months
ended March 31
----------------------------------------------------------------------------
1996 1995
------------------------------- -------------------------------
(Amounts in thousands)
<S> <C> <C> <C> <C>
Commercial auto $ 14,043 57% $ 14,478 59%
Auto garage 6,488 26% 5,589 23%
General liability 3,838 16% 4,135 17%
Other lines 219 1% 323 1%
------ --- ------ ---
Total $ 24,588 100% $ 24,525 100%
====== === ====== ===
</TABLE>
COMMERCIAL AUTO is down 3% for the first quarter of 1996 largely due to
competition in Texas. AUTO GARAGE is up 16% for the first quarter of 1996 with
each of the larger production states recording increases. GENERAL LIABILITY is
down 7% for the first quarter of 1996 as a result of increased competition in
Texas. For the first quarter of 1996, gross premium written percentages by
state/product line are as follows: Texas commercial auto (22%), Kentucky
commercial auto (8%), Pennsylvania commercial auto (7%), Texas general
liability (5%), and Florida auto garage (5%) with no other state/product line
comprising 5% or more.
Net investment income increased 15% in the first quarter of 1996 as a result of
growth in the portfolio. Because of the Company's profitability in the
underwriting operations, the Company achieves the highest after tax net income
by investing predominantly in tax-exempt securities. At March 31, 1996, 87% of
the Company's investments were in investment grade tax-exempt bonds with an
average maturity of approximately 3.3 years. Since the majority of the
Company's investments are tax-exempt, the yields appear lower than those of the
industry; however, the industry as a whole has a significantly greater
percentage of its investments in taxable securities with substantially longer
maturities. On a taxable equivalent basis the return on average investments is
6.6% for 1996 and 1995. The Company has the ability to hold its bond
securities until their maturity date. The Company does not actively trade its
bonds, however, it does classify certain bond securities as available for sale.
At March 31, 1996, approximately 5% of the Company's investments were in U.S.
Treasury securities and 8% were in short-term money market funds. The Company
has not invested and does not intend to invest in derivatives or high-yield
("junk") securities, nor in equity securities of "junk" debt issuers. The
Company does not have any non-performing fixed maturity securities.
12
<PAGE> 13
Insurance service revenues in the first quarter of 1996 were $74,299 above the
first quarter of 1995. The following table presents the components.
<TABLE>
<CAPTION>
Three months
ended March 31
-----------------------------------------------
1996 1995
--------- -------
<S> <C> <C>
Computer software $ 80,882 96,553
Premium finance 83,754 53,537
Plan servicing 347,477 322,890
Other income 41,122 5,956
------- --------
Total $ 553,235 478,936
======= =======
</TABLE>
Revenues in the computer software operation are 16% below the comparable 1995
period. Revenues are expected to show moderate increases for the year with
profitable results.
Revenues from the premium finance operation in the first quarter of 1996 are
56% above the comparable 1995 period. Amounts financed were $1,147,000 versus
$1,110,000 for the comparable prior year period. Premium finance notes
receivable were approximately $1,930,000 at March 31, 1996 versus $1,251,000 at
March 31, 1995.
Plan servicing revenues from commercial automobile plans increased 8% from the
comparable 1995 period with the California plan accounting for most of the
growth. The Company is continuing to pursue management contracts with other
states to administer their commercial automobile plans.
Claims and claim adjustment expenses (C & CAE) increased $1,867,433 in the
first quarter of 1996 from the first quarter of 1995. The C & CAE ratio at
50.9% in the first quarter of 1996 was comparable to the 51.1% in the first
quarter of 1995.
The ratio of commissions to gross premiums written is in a 21-22% range for
both quarterly periods presented. Commissions increased in the 1996 period
from the 1995 period due to the absence of commission income in the 1996
period. The ratio of commissions to premiums earned is 21% for the first
quarter of 1996 and 23% for the comparable 1995 period as a result of the
growth in premiums earned.
The change in deferred policy acquisition costs (DAC) resulted in a net
decrease to income of $539,273 for the first quarter of 1996, versus a net
increase of $455,602 for the first quarter of 1995. The change in the amount
of the increase or decrease in DAC between comparable periods is directly
related to the rate at which unearned premiums are increasing or decreasing as
a result of premium writings. Since DAC (asset) is a function of unearned
premiums (liability) the change in unearned premiums correlates to the change
in DAC. The ratio of DAC to net unearned premiums was 25% and 26% at March 31,
1996 and 1995, respectively.
Underwriting and operating expenses increased $318,383 in the first quarter of
1996 from the first quarter of 1995 primarily due to increases in personnel
costs resulting from additional staffing and annual merit increases.
13
<PAGE> 14
Net income is 10% above the first quarter of 1995. The GAAP combined ratio for
the insurance operations was 86.4% for the first quarter of 1996 versus 84.1%
for 1995.
Liquidity and Capital Resources
The primary sources of the Company's liquidity are funds generated from
insurance premiums, net investment income and maturing investments. The
short-term investments and cash are intended to provide adequate funds to pay
claims without selling the fixed maturity investments. At March 31, 1996 the
Company held short-term investments and cash of $15,999,829 which the Company
believes is adequate liquidity for the payment of claims and other short-term
commitments.
With regard to long term liquidity, the average duration of the investment
portfolio is approximately 2.7 years which closely matches the average payout
period of claims. The fair value of the fixed maturity portfolio at March 31,
1996 was $1,410,889 above amortized cost.
The increase in investments is attributable to the positive cash flows
generated from operating activities. Accrued investment income is lower at
March, 1996, than it was at December, 1995, because the semi-annual interest
payment dates of the securities in the portfolio are skewed toward January and
July. The decrease in premiums receivable is a result of a larger level of
premium writings in December, 1995 than in March, 1996. Reinsurance balances
receivable increased primarily due to an increase in claims which were ceded to
the CAIP plan. Ceded unpaid claims and claim adjustment expense and ceded
unearned premiums have both increased primarily because of the fronting
arrangements the Company began in 1995 which generates fee income. Deferred
policy acquisition costs (DAC) decreased as a direct result of the decrease in
unearned premiums. DAC was 25% of net unearned premiums at March 31, 1996 and
26% of net unearned premiums at December 31, 1995.
Unpaid claims and claim adjustment expenses have increased as a result of the
Company's growth in writings. Unearned premiums have increased due to the
fronting arrangements mentioned previously. Commissions payable have decreased
because of the annual contingent commissions which are paid to the general
agents in the first quarter of 1996. Accounts payable have decreased primarily
due to annual contingent incentives payments made in the first quarter of 1996.
Reinsurance balances payable have increased because at March 31, 1996 three
months of ceded premiums were due to the reinsurers, whereas at December 31,
1995 only one month of ceded premiums were due. Drafts payable increased
because a large amount of drafts were issued late in the fourth quarter of 1995
and cleared in the first quarter of 1996. Other liabilities decreased
primarily as a result of various accruals for 1995 which were paid during the
first quarter of 1996. Current Federal income taxes payable increased because
estimated tax payments for the first quarter are paid in April, whereas
estimated tax payments for the fourth quarter are paid in December. The
Company's liquidity position remains strong as a result of cash flows from
underwriting and investment activities.
Net unrealized gains on fixed maturities of $721,267 were recorded during the
first quarter of 1996 as a result of an increase in the fair value of the bonds
available for sale.
The Company is not aware of any current recommendations by the regulatory
authorities, which if implemented, would have a material effect on the
Company's liquidity, capital resources or results of operations.
14
<PAGE> 15
PART II. OTHER INFORMATION
GAINSCO, INC. AND SUBSIDIARIES
Item 4. Submission of Matters to a Vote of Security Holders
(a) Meeting
The Annual Meeting of Shareholders held on May 10, 1996.
(b) Matters Voted Upon
The shareholders voted on ratification of the 1995 Stock
Option Plan. The vote resulted in 18,644,248 affirmative
votes, 585,040 negative votes and 212,973 abstentions.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The statement re computation of per share earnings is included
in the notes to consolidated financial statements.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter.
15
<PAGE> 16
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 to sign on behalf of the Registrant as
well as in his capacity as Chief Financial Officer.
GAINSCO, INC.
Date: May 13, 1996
By /s/ Daniel J. Coots
-------------------------------------
Daniel J. Coots
Senior Vice President, Treasurer and
Chief Financial Officer
16
<PAGE> 17
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- - ------- -----------
<S> <C>
27 - Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<DEBT-HELD-FOR-SALE> 81,092,775
<DEBT-CARRYING-VALUE> 91,648,584
<DEBT-MARKET-VALUE> 91,949,832
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 188,225,805
<CASH> 1,135,383
<RECOVER-REINSURE> 5,739,600
<DEFERRED-ACQUISITION> 11,575,408
<TOTAL-ASSETS> 271,667,914
<POLICY-LOSSES> 97,474,952
<UNEARNED-PREMIUMS> 55,266,539
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 1,750,000
<COMMON> 2,163,748
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 271,667,914
26,148,370
<INVESTMENT-INCOME> 2,204,104
<INVESTMENT-GAINS> 54,981
<OTHER-INCOME> 553,235
<BENEFITS> 13,315,986
<UNDERWRITING-AMORTIZATION> 539,273
<UNDERWRITING-OTHER> 3,854,499
<INCOME-PRETAX> 5,776,527
<INCOME-TAX> 1,502,013
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,274,514
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
