<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, 1997 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, 1997, there were 21,100,353 shares outstanding of the
registrant's Common Stock, $.10 par value.
<PAGE> 2
GAINSCO, INC. AND SUBSIDIARIES
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements:
Consolidated Balance Sheets as of March 31, 1997
(unaudited) and December 31, 1996 3
Consolidated Statements of Operations for the Three Months
Ended March 31, 1997 and 1996 (unaudited) 5
Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 1997 and 1996 (unaudited) 6
Notes to Consolidated Financial Statements
March 31, 1997 and 1996 (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
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
GAINSCO, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31
1997 December 31
Assets (unaudited) 1996
------ ---------- -----------
<S> <C> <C>
Investments
Fixed maturities:
Bonds held to maturity, at amortized cost (fair
value: $104,136,354 - 1997, $105,725,155 - 1996) $ 104,209,345 104,930,347
Bonds available for sale, at fair value (Amortized cost:
$76,400,886 - 1997, $76,879,562 - 1996) 76,264,062 77,643,677
Certificates of deposit, at cost (which approximates
fair value) 595,000 595,000
Short-term investments, at cost (which approximates
fair value) 20,683,194 20,662,282
------------- ------------
Total investments 201,751,601 203,831,306
Cash 3,738,338 1,044,740
Accrued investment income 3,564,364 4,308,185
Premiums receivable (net of allowance for doubtful
accounts: $101,000 - 1997 and 1996) 14,402,355 15,824,543
Reinsurance balances receivable 3,167,345 2,156,326
Ceded unpaid claims and claim adjustment expenses 25,217,296 26,713,154
Ceded unearned premiums 19,624,106 16,280,013
Deferred policy acquisition costs 11,891,303 12,633,938
Property and equipment (net of accumulated depreciation
and amortization: $5,036,613 - 1997, $4,778,524 -
1996) 7,020,045 6,981,380
Current Federal income taxes - 424,148
Deferred Federal income taxes recoverable (note 1) 3,211,219 2,956,510
Management contract 1,775,070 1,787,570
Other assets 2,645,353 1,903,963
------------- -----------
Total assets $ 298,008,395 296,845,776
============= ===========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
GAINSCO, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31
1997 December 31
Liabilities and Shareholders' Equity (unaudited) 1996
------------------------------------ ----------- -----------
<S> <C> <C>
Liabilities:
Unpaid claims and claim adjustment expenses $ 106,905,701 105,691,588
Unearned premiums 65,369,974 65,255,153
Commissions payable 203,718 2,689,337
Accounts payable 3,582,539 4,670,947
Reinsurance balances payable 3,150,738 1,057,923
Deferred revenue 963,503 593,300
Drafts payable 4,906,758 6,219,044
Dividends payable (note 3) 316,505 316,312
Other liabilities 437,369 999,590
Current Federal income taxes payable (note 1) 429,949 -
------------- -----------
Total liabilities 186,266,754 187,493,194
------------- -----------
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, 21,690,315 issued at March 31, 1997
and 21,670,369 issued at December 31, 1996) 2,169,032 2,167,037
Additional paid-in capital 87,651,137 87,610,379
Net unrealized gain (loss) on fixed maturities (note 1) (88,936) 496,675
Retained earnings 27,511,531 24,517,265
Treasury stock (589,962 shares at March 31, 1997 and
582,962 shares at December 31, 1996) (5,501,123) (5,438,774)
------------- -----------
Total shareholders' equity 111,741,641 109,352,582
------------- -----------
Total liabilities and shareholders' equity $ 298,008,395 296,845,776
============= ===========
</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
------------------------------------------
1997 1996
----------- ------------
Revenues:
<S> <C> <C>
Premiums earned (note 2) $ 25,875,402 26,148,370
Net investment income 2,286,976 2,204,104
Net realized gains (note 1) 41,511 54,981
Insurance services 591,031 553,235
------------ -----------
Total revenues 28,794,920 28,960,690
------------ -----------
Expenses:
Claims and claim adjustment expenses
(note 2) 15,207,636 13,315,986
Commissions 4,734,804 5,474,405
Change in deferred policy acquisition costs 742,635 539,273
Underwriting and operating expenses 3,884,358 3,854,499
------------ -----------
Total expenses 24,569,433 23,184,163
------------ -----------
Income before Federal income taxes 4,225,487 5,776,527
Federal income taxes:
Current expense 1,000,831 1,322,106
Deferred expense 60,619 179,907
------------ -----------
Total taxes 1,061,450 1,502,013
------------ -----------
Net income $ 3,164,037 4,274,514
============ ==========
Net income per share .15 .20
=== ===
</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
-------------------------------
1997 1996
---------- ----------
Cash flows from operating activities:
<S> <C> <C>
Net income $ 3,164,037 4,274,514
Adjustments to reconcile net income to cash provided by
operating activities:
Depreciation and amortization 1,217,568 1,176,713
Change in deferred Federal income taxes recoverable 60,619 179,907
Change in accrued investment income 743,821 1,072,766
Change in premiums receivable 1,422,188 2,232,879
Change in reinsurance balances receivable (1,011,019) (2,233,782)
Change in ceded unpaid claims and claim adjustment
expenses 1,495,858 (952,426)
Change in ceded unearned premiums (3,344,093) (3,626,228)
Change in deferred policy acquisition costs 742,635 539,273
Change in management contract 12,500 12,500
Change in other assets (741,390) 23,830
Change in unpaid claims and claim adjustment
expenses 1,214,113 2,463,489
Change in unearned premiums 114,821 1,741,216
Change in commissions payable (2,485,619) (1,218,429)
Change in accounts payable (1,088,408) (1,295,508)
Change in reinsurance balances payable 2,092,815 876,975
Change in deferred revenue 370,203 319,222
Change in drafts payable (1,312,286) 991,547
Change in other liabilities (562,221) (459,494)
Change in current Federal income taxes payable 1,000,831 440,169
----------- ---------
Net cash provided by operating activities $ 3,106,973 6,559,133
----------- ---------
</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
------------------------------------
1997 1996
--------- ---------
<S> <C> <C>
Cash flows from investing activities:
Bonds held to maturity:
Matured $ 432,052 4,816,500
Bonds available for sale:
Sold 5,906,577 3,754,704
Matured 4,932,129 632,400
Purchased (11,030,559) (7,002,710)
Property and equipment purchased (296,754) (241,152)
Net change in short-term investments (20,912) (8,889,034)
------------ ----------
Net cash used for investing activities (77,467) (6,929,292)
------------ ----------
Cash flows from financing activities:
Cash dividends paid (316,312) (269,066)
Proceeds from exercise of stock options 42,753 -
Treasury stock acquired (62,349) -
------------- ----------
Net cash used by financing activities (335,908) (269,066)
------------- ----------
Net increase (decrease) in cash 2,693,598 (639,225)
Cash at beginning of period 1,044,740 1,774,608
------------- ----------
Cash at end of period $ 3,738,338 1,135,383
============= ==========
</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, 1997, the results of operations and
the statements of cash flows for the three months ended March 31,
1997 and 1996, on the basis of generally accepted accounting
principles. The December 31, 1996 balance sheet included herein
is derived from the consolidated financial statements included in
the Company's 1996 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, 1996 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 loss of $88,936 at
March 31, 1997, net of the deferred tax benefit of $47,888, and
an unrealized gain at December 31, 1996 of $721,267 net of the
deferred tax expense of $388,375.
Proceeds from the sale of bond securities totalled $5,906,577 and
$3,754,704 for the three months ended March 31, 1997 and 1996,
respectively. Realized gains were $50,884 and $54,981 for the
three months ended March 31, 1997 and 1996, respectively.
Realized losses were $9,373 and $0 for the three months ended
March 31, 1997 and 1996, respectively.
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 no income taxes during
the three months ended March 31, 1997 and $881,937 during the
three months ended March 31, 1996.
(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, 1997 and 1996, the weighted average number of common
shares outstanding was 21,087,144 and 21,525,221, respectively,
and common stock equivalents were 249,225 and 308,529,
respectively.
(2) Reinsurance
The amounts deducted in the Consolidated Statements of Operations for
reinsurance ceded for the three months ended March 31, 1997 and 1996,
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
------------------------------------------------
1997 1996
-------------- --------------
<S> <C> <C>
Premiums earned $ 407,566 503,140
Premiums earned - plan
servicing $ 1,091,317 1,439,491
Premiums earned -
fronting arrangements $ 7,186,843 1,778,761
Claims and claim
adjustment expenses $(1,294,952) 1,264,506
Claims and claim
adjustment expenses -
plan servicing $ 1,023,773 2,354,949
Claims and claim
adjustment expenses -
fronting arrangements $ 4,676,189 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, 1997 and December 31, 1996 were as follows:
<TABLE>
<CAPTION>
1997 1996
------------ -----------
<S> <C> <C>
Unearned premiums $ 2,025,774 2,149,286
Unearned premiums -
fronting arrangements $17,126,537 13,625,619
Unpaid claims and claim
adjustment expenses $10,171,881 11,012,699
Unpaid claims and claim
adjustment expenses -
fronting arrangements $ 5,020,155 4,321,085
</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- (Excellent)" 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, 1997 there were 348,443 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 and 984,397
options at an average exercise price of $10.57 per share, that have been
granted to officers and directors of the Company under the 1995 Stock
Option Plan.
In July 1996, the Board of Directors authorized the repurchase of up to
500,000 shares of the
10
<PAGE> 11
GAINSCO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
Company's common stock. In November, 1996, the Board of Directors
authorized the repurchase of an additional 500,000 shares of the
Company's common stock. As of December 31, 1996, the Company had
purchased 470,702 shares at a cost of $4,426,182. During the first
quarter of 1997, the Company purchased 7,000 shares at a cost of
$62,349.
The Company's policy is to pay a quarterly cash dividend of $.015 per
share every quarter until further action is taken by the Board of
Directors. A cash dividend of $316,505 was paid on April 15, 1997.
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 1997 were approximately
$23,020,000 versus $24,588,000 for the comparable period of 1996. The
following table presents, for each major product line, gross premiums written
for the periods indicated.
<TABLE>
<CAPTION>
Three months
ended March 31
------------------------------------------------------------------------------
1997 1996
------------------------------ ------------------------------
(Amounts in thousands)
<S> <C> <C> <C> <C>
Commercial auto $ 13,758 60% $ 14,043 57%
Auto garage 5,112 22% 6,488 26%
General liability 3,871 17% 3,838 16%
Other lines 279 1% 219 1%
------ --- ------ ---
Total $ 23,020 100% $ 24,588 100%
====== === ====== ===
</TABLE>
COMMERCIAL AUTO is down 2% for the first quarter of 1997 largely due to
continued competition in Texas. AUTO GARAGE is down 21% for the first quarter
of 1997 with the larger production states recording decreases. GENERAL
LIABILITY is flat for the first quarter of 1997 with Texas contributing a 5
point increase, but California largely offsetting this with a decrease. For
the first quarter of 1997, gross premium written percentages by state/product
line are as follows: Texas commercial auto (20%), Kentucky commercial auto
(9%), Texas general liability (7%), Pennsylvania commercial auto (6%), and
Florida auto garage (5%) with no other state/product line comprising 5% or
more. The persistency rate increased from 41% to 44% in 1997.
Net investment income increased 4% in the first quarter of 1997 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, 1997, 86% of
the Company's investments were in investment grade tax-exempt bonds with an
average maturity of approximately 3.4 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
6.3% for 1997 and 6.6% for 1996. 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, 1997, 4% of the Company's investments were in U.S. Treasury
securities and 10% 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 1997 were $37,796 above the
first quarter of 1996. The following table presents the components.
<TABLE>
<CAPTION>
Three months
ended March 31
------------------------------------------------
1997 1996
--------- --------
<S> <C> <C>
Plan servicing $ 269,313 347,477
Fee income 142,216 32,757
Computer software 92,838 80,882
Premium finance 79,794 83,754
Other income 6,870 8,365
--------- -------
Total $ 591,031 553,235
========= =======
</TABLE>
Plan servicing revenues from commercial automobile plans decreased 22% from the
comparable 1996 period with the Louisiana plan accounting for most of the
decrease. The Company is continuing to pursue management contracts with other
states to administer their commercial automobile plans and is attempting to
increase its participation in existing plans.
Fee income increased $109,459 as a result of significant growth in the fronting
reinsurance operation.
Revenues in the computer software operation are 15% above the comparable 1996
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 1997 are 5%
below the comparable 1996 period. Amounts financed were $1,197,000 versus
$1,147,000 for the comparable prior year period. Premium finance notes
receivable were approximately $2,039,000 at March 31, 1997 versus $1,930,000 at
March 31, 1996, and the average return was 16% for 1997 versus 17% in 1996.
Claims and claim adjustment expenses (C & CAE) increased $1,891,650 in the
first quarter of 1997 from the first quarter of 1996. The C & CAE ratio was
58.8% in the first quarter of 1997 versus 50.9% in the first quarter of 1996.
The increase in the C & CAE ratio was largely the result of development in the
commercial auto product line.
The ratio of commissions to gross premiums written is in a 21-22% range for
both quarterly periods presented. Commissions decreased in the 1997 period
from the 1996 period due to the decrease of premiums in 1997.
The change in deferred policy acquisition costs (DAC) resulted in a net
decrease to income of $742,635 and $539,273 for the first quarter of 1997 and
1996, respectively. 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
13
<PAGE> 14
ratio of DAC to net unearned premiums was 26% and 25% at March 31, 1997 and
1996, respectively.
Underwriting and operating expenses increased slightly in the first quarter of
1997 from the first quarter of 1996, while the ratio to operating revenues
remained in a 14.5 - 15.0% range.
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, 1997 the
Company held short-term investments and cash of $24,421,532 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 3 years which closely matches the average payout
period of claims. The fair value of the fixed maturity portfolio at March 31,
1997 was only $209,815 below amortized cost.
Accrued investment income is lower at March, 1997, than it was at December,
1996, 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 the fourth
quarter of 1996 than in the first quarter of 1997. 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 decreased due
to favorable development on claims under the excess casualty treaty. Ceded
unearned premiums have 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 26% of net unearned premiums at March 31, 1997 and
at December 31, 1996.
Unpaid claims and claim adjustment expenses have increased as a result of the
Company's growth. Commissions payable have decreased because of the annual
contingent commissions which were paid to the general agents in the first
quarter of 1997. Accounts payable have decreased primarily due to annual
contingent incentive payments made in the first quarter of 1997. Reinsurance
balances payable have increased because at March 31, 1997 three months of ceded
premiums were due to the reinsurers, whereas at December 31, 1996 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 1996 and cleared in
the first quarter of 1997. 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 losses on fixed maturities of $88,936 were recorded during the
first quarter of 1997 as a result of a decrease 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
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule
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, 1997
By /s/ Daniel J. Coots
------------------------------------
Daniel J. Coots
Senior Vice President, Treasurer and
Chief Financial Officer
16
<PAGE> 17
EXHIBIT INDEX
<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-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<DEBT-HELD-FOR-SALE> 76,264,062
<DEBT-CARRYING-VALUE> 104,209,345
<DEBT-MARKET-VALUE> 104,136,354
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 201,751,601
<CASH> 3,738,338
<RECOVER-REINSURE> 3,167,345
<DEFERRED-ACQUISITION> 11,891,303
<TOTAL-ASSETS> 298,008,395
<POLICY-LOSSES> 106,905,701
<UNEARNED-PREMIUMS> 65,369,974
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 0
0
0
<COMMON> 2,169,032
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 298,008,395
25,875,402
<INVESTMENT-INCOME> 2,286,976
<INVESTMENT-GAINS> 41,511
<OTHER-INCOME> 591,031
<BENEFITS> 15,207,636
<UNDERWRITING-AMORTIZATION> 742,635
<UNDERWRITING-OTHER> 3,884,358
<INCOME-PRETAX> 4,225,487
<INCOME-TAX> 1,061,450
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,164,037
<EPS-PRIMARY> .15
<EPS-DILUTED> .15
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
