May 15, 1996
Via EDGAR
Securities and Exchange Commission
450 5th Street, NW
Washington, DC 20549
Re: Commission File No. 0-14391
Quarterly Report on Form 10-Q
For the Quarter Ended March 31, 1996
To whom it may concern:
Transmitted via EDGAR, for filing, is the Form 10-Q Quarterly
Report of American Travellers Corporation (the "Company") for
the quarter ended March 31, 1996 (the "Form 10-Q"). Manually
signed signature pages for the Form 10-Q will be retained by
the Company for a period of five years.
If you have any questions regarding this filing, please call
the undersigned at (215) 244-1600.
Sincerely yours,
/s/ Benedict J. Iacovetti
Benedict J. Iacovetti
Treasurer and Chief Financial Officer
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(x) Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarter ended March 31, 1996
or
( ) Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ____________ to ______________
Commission File Number 0-14391
AMERICAN TRAVELLERS CORPORATION
(Exact name of Registrant as specified in its charter)
Pennsylvania 23-1738097
(State or other jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
3220 Tillman Drive, Bensalem, Pennsylvania 19020
(Address of Principal Executive Offices) (Zip Code)
(215) 244-1600
(Registrant's telephone number, including area code)
Indicate by checkmark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15 (d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to
such filing requirement for the past 90 days.
Yes ( x ) No ( )
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the
issuer's classes of common stock as of the latest
practicable date.
As of May 8, 1996, there were 16,242,196 shares of the
registrant's common stock, $.01 par value, outstanding. The
registrant has no other classes of common stock.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICAN TRAVELLERS
CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
March December
31, 31,
<TABLE>
<S> <C> <C>
1996 1995
ASSETS
Investments-
Bonds, available for sale, at fair value (cost $624,963 $582,621
$630,050 and $566,859)
Mortgage loan 443 447
Total investments 625,406 583,068
Cash and cash equivalents 35,819 70,214
Accrued investment income 8,124 6,781
Premiums due and unpaid 7,119 7,027
Deferred acquisition costs 152,645 144,767
Value of business acquired (net of accumulated 11,460 12,846
amortization of $14,051 and $12,619)
Property and equipment, at cost (net of accumulated 4,128 4,176
depreciation of $3,880 and $3,682)
Other assets 7,897 7,262
Total assets $852,598 $836,141
LIABILITIES AND SHAREHOLDERS' EQUITY
Policy liabilities-
Future policy benefit reserves $260,585 $247,562
Claim reserves 219,733 210,073
Unearned premium reserves 62,494 60,477
Total policy liabilities 542,812 518,112
Other liabilities 9,634 7,785
Current and deferred income taxes 27,299 35,939
6.5% convertible subordinated debentures 103,500 103,500
Total liabilities 683,245 665,336
Shareholders' equity-
Preferred stock, $.01 par value; 5,000,000 shares -- --
authorized; no shares issued
Common stock, $.01 par value; 37,500,000 shares -- --
authorized; 16,242,196 and 162 161
16,053,105 shares issued
Capital in excess of par value 63,268 59,961
Net unrealized gain/(loss) on investments (3,306) 10,245
Retained earnings 109,229 101,187
Less: shares of common stock held in treasury, at -- (749)
cost (200,159 shares)
Total shareholders' equity 169,353 170,805
Total liabilities and shareholders' equity $852,598 $836,141
All share and per share amounts have been adjusted to reflect a three-for-two stock split
paid on April 10, 1996.
</TABLE>
AMERICAN TRAVELLERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Quarter ended March 31,
1996 1995
Revenues-
Accident and health premiums $91,365 $59,500
Life premiums 2,016 1,959
Net investment income 10,475 3,856
Net realized investment gains 1,296 --
Total revenues 105,152 65,315
Benefits and expenses-
Benefits to policyholders
Paid claims 41,821 22,865
Change in claim reserves 9,660 7,690
Change in future policy
benefit reserves 13,023 6,187
Total benefits to
policyholders 64,504 36,742
Commissions 23,937 18,413
General and administrative 7,162 5,687
Premium taxes 2,248 1,556
Amortization of value of 1,386 434
business acquired
Amortization of deferred 4,457 5,457
acquisition costs
Less: policy acquisition costs (12,335) (10,978)
deferred
Interest expense 1,778 429
Total expenses 28,633 20,998
Total benefits and expenses 93,137 57,740
Income before provision for income 12,015 7,575
taxes
Provision for income taxes 3,973 2,350
Net income $8,042 $5,225
Primary number of shares
outstanding 16,771 16,382
Primary earnings per common share $0.48 $0.32
Net income for primary earnings $8,042 $5,225
per share
Add: interest on convertible 1,136 --
debentures (net of tax)
Net income for fully diluted
earnings per common share $9,178 $5,225
Primary number of shares 16,771 16,382
outstanding
Add: incremental shares on stock 17 --
option plans
Add: shares issuable on 6,825 --
convertible debentures
Fully diluted number of shares
outstanding 23,613 16,382
Fully diluted earnings per common
share $0.39 $0.32
All share and per share amounts have been adjusted to reflect a three-for-
two stock split paid on April 10, 1996.
AMERICAN TRAVELLERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Quarter ended March 31,
Cash flows-operating activities 1996 1995
Net income $8,042 $5,225
Adjustments to reconcile net income to cash
provided by operating activities-
Amortization of deferred policy acquisition 4,457 5,457
costs
Amortization of value of business acquired 1,386 434
Depreciation and amortization (527) 610
Realized securities (gains) losses (1,296) --
Increase (decrease) in current and deferred 623 (650)
income taxes
Increase in reserves 24,700 15,781
Increase in other liabilities 1,847 262
Deferred policy acquisition costs (12,335) (10,978)
(Increase) decrease in other assets (2,187) (88)
Total adjustments 16,668 10,828
Net cash provided by operating activities 24,710 16,053
Cash flows-investing activities
Proceeds from sales of investments 105,613 --
Proceeds from calls and maturities on 113,518 4,235
investments
Purchase of investments (280,174) (15,486)
Purchase (sale) of fixed assets (151) 540
Net cash used in investing activities (61,194) (10,711)
Cash flows-financing activities
Exercise of stock options 2,089 84
Net cash provided by financing activities 2,089 84
Net (decrease) increase in cash and cash (34,395) 5,426
equivalents
Cash and cash equivalents, beginning of
quarter 70,214 9,133
Cash and cash equivalents, end of quarter $ 35,819 $ 14,559
Supplemental disclosure of cash flow
information:
Cash paid for during the quarter:
Interest $ 0 $ 416
Inncome Taxes $ 3,000 $ 3,000
AMERICAN TRAVELLERS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(In thousands, except share data)
(Unaudited)
(1) Basis of Presentation:
The accompanying unaudited consolidated financial statements
have been prepared in accordance with generally accepted
accounting principles ("GAAP") for interim financial
information and the instructions to Form 10-Q and Article 10
of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted
accounting principles for annual financial statements. In
the opinion of management, all adjustments considered
necessary for a fair representation have been included. All
adjustments were of a normal recurring nature, unless
otherwise noted in the Management's Discussion and Analysis
and the Notes to the Consolidated Financial Statements.
Operating results for the quarter ended March 31, 1996, are
not necessarily indicative of the results that may be
expected for the year ending December 31, 1996. For further
information, refer to the consolidated financial statements
and footnotes included in the Company's Annual Report on Form
10-K for the year ended December 31, 1995.
Certain amounts in the 1995 financial statements have been
reclassified to conform to the 1996 financial statement
presentation
(2) Summary of significant accounting policies:
Principles of consolidation-
The accompanying consolidated financial statements include
the accounts of American Travellers Corporation ("ATC") and
its wholly owned subsidiaries, American Travellers Life
Insurance Company ("ATL"), United General Life Insurance
Company ("UGL"), American Travellers Insurance Company of New
York ("ATICNY") and American Travellers Insurance Services
Company, Inc. ("ATIS"). ATC, ATL, UGL, ATICNY and ATIS are
collectively referred to as the "Company." All material
intercompany accounts and transactions have been eliminated
in consolidation.
General-
The Company's operations consist of the underwriting and sale
of life and accident and health insurance. The Company is
principally a marketer and underwriter of long term care
insurance. The Company's long term care products consist of
both nursing home and home health care policies which provide
limited benefit payments primarily to senior citizens. The
Company also markets and underwrites other supplemental
accident and health insurance policies, as well as life
insurance.
The preparation of financial statements in conformity with
GAAP requires the use of estimates requires management to
make estimates and assumptions that effect 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
expenses during the reporting period. Actual results could
differ from those estimates.
Investments-
The Company adopted the provisions of Statement of Financial
Accounting Standards ("SFAS"), Accounting for Certain
investments in Debt and Equity Securities (SFAS 115), as of
January 1, 1994. Under SFAS 115, investments in equity and
debt securities are classified in three categories and
accounted for based upon the classification. In December
1995, the Company transferred its investments from the "held
to maturity" classification to the "available for sale"
classification pursuant to SFAS 115 and has recorded such
investments at fair value with unrealized gains and losses
reported as a component of shareholders' equity, net of tax.
Earnings per share-
Primary earnings per common share are based on the weighted
average number of shares outstanding during the period and
the dilutive effect of stock options and other common stock
equivalents. Fully diluted earnings per common share are
based on the weighted average number of shares outstanding,
the dilutive effect of common stock equivalents, and the
assumed conversion of the 6.5% convertible subordinated
debenture. Net income is increased by the interest on the
debenture, net of related income taxes.
Stock split-
On March 4, 1996, the board of directors declared a three-for-
two stock split for security holders of record as of March
20, 1996, which was paid on April 10, 1996. Share and per
share amounts have been retroactively adjusted to reflect
this split for all periods presented.
(3) Investments:
As of December 31, 1994 the Company classified all of its
investments as "held to maturity" pursuant to the provisions
of SFAS 115. As a result of changes in the investment
portfolio and strategy and as a result of the acquisition
discussed in Note 15 to the December 31, 1995 consolidated
financial statements and other factors, the Company changed
the classification of its investments to "available for
sale," effective December 1995.
Pursuant to the requirements of SFAS 115, "available for
sale" securities are reported at fair value with unrealized
gains and losses reported net of tax as a separate component
of shareholders' equity. As a result of this change the
reported value of the investment portfolio, at March 31,
1996, decreased $5,087 from amortized cost, with
corresponding decreases in shareholders' equity of $3,306 and
deferred income taxes of $1,781, as compared with an
increase of $15,762 from amortized cost, with corresponding
increases in shareholders' equity of $10,245 and deferred
income tax of $5,517 at December 31, 1995.
ITEM 2. MANAGEMENT'S DISCUSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Revenues
Premiums increased by $31.9 million or 51.9% to $93.4 million
for the first quarter of 1996, compared to $61.5 million for
the first quarter of 1995. This increase reflects the
continued expansion of the Company's policyholder base, as
well as the acquisition of the J.C. Penney Insurance
Companies ("JCP") long term care insurance business in 1994
and the acquisition of the Transport Holdings Inc.
("Transport") long term care insurance business in 1995.
Premiums include $5.0 million attributable to JCP and $23.5
million attributable to Transport for the first quarter of
1996, and $6.4 million attributable to JCP for first the
quarter of 1995.
The change in the components of annualized premiums in force,
including JCP and Transport, is as follows:
Annualized Premiums in Force
(Dollars in millions)
March 31, Percentage Change
1996 1995 1996 v. 1995
Nursing home $264.3 $158.8 66.4%
Home health care 78.7 52.3 50.5%
Total long term care 343.0 211.1 62.5%
Medicare supplement 22.2 24.3 (8.6)%
Other accident and 8.4 9.3 (9.7)%
health
Life insurance 8.8 7.8 12.8%
Total premiums in $ 382.4 $ 252.5 51.4%
force
The Company's annualized long term care premiums in force
have grown significantly. Long term care insurance in force
includes $20.9 million related to JCP and $94.4 million
related to Transport at March 31, 1996, and $23.8 million
related to JCP at March 31, 1995. As of March 31, 1996, the
Company had $382.4 million of annualized premiums in force, a
51.4% increase from March 31, 1995. Partially offsetting the
growth in long term care premiums is a reduction in the
Company's Medicare supplement business. New sales of
Medicare supplement policies have been negligible since 1992
when management decided to de-emphasize this product line.
The change in the components of internally generated new
business premiums, excluding JCP and Transport, is as
follows:
New Business Premiums Collected
(Dollars in millions)
Quarter ended March 31, Percentage Change
1996 1995 1996 v.1995
Nursing home $12.7 $10.7 18.7%
Home health care 5.6 4.8 16.7%
Total long term care 18.3 15.5 18.1%
Other accident and 0.4 0.6 (33.3)%
health
Life insurance 0.5 1.0 (50.0)%
Total new business $19.2 $17.1 12.3%
The growth in new business premiums for the first quarter of
1996, as compared to the first quarter of 1995, is
attributable to an increase in the number of agents licensed
with the Company, which increased 15% to 21,048 at March 31,
1996, from 18,355 at March 31,1995, increased sales of a
newly introduced policy, the LTC-6 ("Presidential Plan"), the
Company's overall financial strength, including an increased
A.M Best rating to "A-" (Excellent) and the Company's strong
commitment to the long term care insurance industry.
Investment income, including securities gains of $1.3
million, increased $7.9 million or 205% for the first quarter
of 1996, as compared to the first quarter of 1995. This
reflects the availability of additional cash for investment
principally from premium growth, the $103.5 million 6.5%
convertible subordinated debenture offering in September
1995, the Transport acquisition in 1995 and the JCP
acquisition in 1994. As a result of these transactions,
investment income in future years will be a more significant
component of the Company's revenues and operating income.
The Company began purchasing tax-free municipal bonds in
1993. This practice was continued until the fourth quarter
of 1994, at which time the Company changed its investment
criteria to include the purchase of taxable securities in
response to its changing tax planning requirements. The
Company began to sell its municipal bonds in the first
quarter of 1996, during which time $24.6 million or 31.3% of
its municipal bond portfolio was sold. At March 31, 1996,
there are $54.3 million in municipal bonds remaining, which
will be reduced to zero by year-end 1996.
The Company invests in investment grade debt instruments. It
does not invest in high-yield debt securities, equities or
real estate. Although the Company's investment policy was to
hold its investments until maturity, in the fourth quarter of
1995, the Company changed its investment strategy and made
its entire portfolio available for sale. This will provide
the Company with the flexibility to adjust its investment
holdings in response to changing market conditions and other
factors. The Company has increased its holdings in mortgage-
backed securities to $193.2 million at March 31, 1996, as
compared to $180.9 at December 31, 1995, and $9.9 million at
March 31, 1995.
Benefits and Expenses
Benefits to policyholders (the sum of claims paid and changes
in reserves for claims and future policy benefits) increased
$27.8 million or 75.8% for the first quarter of 1996, as
compared to the first quarter of 1995. The change in the
components of benefits to policyholders is as follows:
Benefits to Policyholders
(Dollars in millions)
Quarter ended March 31, Percentage Change
1996 1995 1996 v. 1995
Paid claims $ 41.8 $ 22.8 83.3%
Change in claim 9.7 7.7 26.0%
reserves
Change in benefit
reserves 13.0 6.2 109.7%
Total benefits to
policyholders $64.5 $36.7 75.8%
Benefits to Policyholders
(As a % of total premiums)
Quarter ended March 31,
1996 1995
Paid claims 44.8% 37.1%
Change in claim reserves 10.3% 12.6%
Change in benefit reserves 14.0% 10.1%
Total benefits to 69.1% 59.8%
policyholders
The increase in benefits to policyholders for the first
quarter of 1996, as compared to the first quarter of 1995,
corresponds to the growth in the Company's long term care
business, including the JCP business for 1995 and the JCP and
Transport business for 1996. The Company actively monitors
claims and has its reserves reviewed annually by an
independent actuarial firm to ensure that claim and benefit
reserves are adequate and to make appropriate adjustments, if
necessary, in marketing strategy, product design and product
rates. Because of increased persistency, the change in
future policy benefit reserves for the first quarter of 1996
is more significant than in the first of 1995. This is
partially offset, however, by a reduction in the amortization
of deferred acquisition costs.
Commission expense increased $5.5 million or 30% for the
first quarter of 1996, as compared to the first quarter of
1995. As a percentage of total premiums, commission expense
decreased to 25.6% for the first quarter of 1996, from 30.0%
for the first quarter of 1995. The change in the effective
commission rate is directly related to the change in the
relative level of new business (for which a higher commission
rate is payable) and renewal business. An increase in
renewal business relative to total business resulted in a
decrease in commission expense as a percentage of total
premiums in the first quarter of 1996, relative to the first
quarter of 1995.
General and administrative expenses increased $1.5 million or
25.9% for the first quarter of 1996, as compared to the first
quarter of 1995. The general and administrative expense
increase is due primarily to the incremental costs in
servicing a larger in force policyholder base. As a
percentage of total premiums, general and administrative
expenses decreased to 7.7% for the first quarter of 1996,
from 9.3% for the first quarter of 1995. As a percentage of
premiums, general and administrative costs have decreased as
the Company has been able to realize economies of scale.
Interest expense increased significantly for the first
quarter of 1996, as a result of the Company's issuance of
$103.5 million of 6.5% convertible subordinated debentures
due in 2005.
Amortization of deferred policy acquisition costs decreased
$1.0 million or 18.3% for the first quarter of 1996, as
compared to the first quarter of 1995. Amortization of
deferred acquisition costs varies with, and is directly
related to, the lapse rates of premiums in force. Improved
persistency has resulted in decreased amortization of
deferred acquisition costs. The reduction in amortization of
deferred acquisition costs for the first quarter of 1996, due
to the improved persistency, is offset by an increase in
future policy benefit reserves for this same period.
Amortization of the value of business acquired varies with,
and is directly related to, premiums in force attributable to
acquired business. The amortization of the value of business
acquired, primarily relating to acquisitions made in 1991 and
prior, for the first quarter of 1996 includes an additional
$1.0 million specifically relating to those unamortized costs
associated with previously acquired Medicare supplement
business.
Policy acquisition costs deferred increased $1.4 million or
12.4% in the first quarter of 1996, as compared to the first
quarter of 1995. Policy acquisition costs, which consist of
principally excess first year commissions and policy issue
and underwriting costs, vary with, and are directly related
to, new business premiums.
The provision for income taxes increased $1.7 million or 74%
for the first quarter of 1996, as compared to the first
quarter of 1995. The components of the income tax provision
are as follows:
Provision for Income Taxes
(Dollars in millions)
Quarter ended March 31,
1996 1995
Income before taxes $ 12.0 $ 7.5
Tax-free income (0.8) (0.9)
Taxable income 11.2 6.6
Provision for income tax $ 4.0 $ 2.3
Effective Tax Rate
(As a % of income before provision for taxes)
Quarter ended March 31,
1996 1995
Applicable tax rate 35.0% 35.0%
Tax-free income (1.9)% (4.0)%
Effective tax rate 33.1% 31.0%
The increased tax provision is directly attributable to the
increase in the Company's pre-tax earnings. The Company's
effective tax rate for financial reporting purposes was 33.1%
for the first quarter of 1996, and 31.0% for the first
quarter of 1995. The increase in the effective tax rate in
1996 as compared to 1995 is the result of a lower percentage
of income from municipal bonds. The Company began to sell
these tax-free municipal bonds in the first quarter of 1996,
during which time $24.6 million or 31.3% of the municipal
bond portfolio was sold.
The Company's current tax provision was $3.0 million for the
first quarter of 1996, as compared to $3.0 million for the
first quarter of 1995. The amount of taxes currently payable
is influenced by many items, most of which are of a temporary
nature. These temporary differences may grow during 1996 and
1997. Although these differences will not increase the
Company's effective tax rate for financial reporting
purposes, they will result in a greater amount of taxes which
are currently payable. The reduction in the municipal bonds
will decrease tax-free income and, in turn, increase the
effective tax rate for financial reporting purposes.
Liquidity and Capital Resources
The Company's primary sources of cash are premiums and
investment income. Its primary uses of cash are payments of
policy benefits, policy acquisition costs, operating costs,
and income taxes. In December 1993, the Company utilized its
revolving credit line to make a $12.0 million surplus
contribution to ATL. In the third quarter of 1994, this
credit facility was increased to $20.0 million and an
additional $8.0 million was borrowed and utilized to make an
additional surplus contribution to ATL. In September 1995,
the Company issued $103.5 million in convertible subordinated
debentures, the net proceeds of which were used to pay down
the Company's outstanding borrowings under its credit
facility, to make a $58.0 million surplus contribution to ATL
and for general corporate purposes. The Company intends to
keep its credit facility available. The credit facility is
secured by the common stock of ATL and ATIS. There are no
other lines of credit currently in place. The Company will
be dependent on dividends from ATL to meet its debt service
requirements after the cash at the holding company is
exhausted. There are no other lines of credit currently in
place. At March 31, 1996, the Company had no material
commitments for any capital expenditures.
In December 1995, the Company received net cash of $253.3
million as a result of the Transport acquisition. The
transaction consisted of the acquisition of approximately
97,000 policies with annualized premiums of approximately
$96.0 million at the date of acquisition. This transaction
had the effect of significantly increasing cash and invested
assets in support of the policy liabilities assumed. In
October 1994, the Company received net cash of $29.4 million
as a result of the JCP acquisition. The transaction
consisted of the acquisition of approximately 20,000 policies
with annualized premiums of approximately $25.0 million at
the date of acquisition. As a result of these transactions,
future years' investment income will be a more significant
component of the Company's revenues and operating income.
State insurance laws and regulations require the insurance
company subsidiaries to maintain capital and surplus at
specific levels. During 1993, regulators began to utilize a
"risk-based" capital and surplus analysis as a guide to
determine the appropriate level of capital and surplus. At
March 31, 1996, the "adjusted" statutory capital and surplus
for the insurance company subsidiaries was above all required
capital levels. The Company must continue, however, to
increase its insurance subsidiaries' statutory capital and
surplus to support significant increases in sales of new
policies or acquisitions of other blocks of business. In
March 1996, the Company made an additional $8.1 million
surplus contribution to ATL. The Company has available a
revolving credit facility and other funding sources to
support future growth.
Management believes that the effect of inflation is
insignificant to its insurance operations, except with
respect to its Medicare supplement product line.
The Company holds no derivative financial instruments subject
to the provisions of SFAS No. 119, "Disclosure About
Derivative Financial Instruments and Fair Value of Financial
Instruments."
SFAS 121, "Accounting for the Impairment of Long-Lived Assets
and for Long Lived Assets to be Disposed of," was adopted by
the Company in the first quarter of 1996 with no material
impact the Company's financial statements. This statement
establishes accounting standards for the impairment of long
lived assets, certain identifiable intangibles and goodwill
related to (1) those assets to be held and used in the
business, and (2) assets to be disposed of.
SFAS 123, "Accounting for Stock-Based Compensation," will be
adopted by the Company in 1996. This statement provides
alternative methods for accounting for employee stock
compensation plans. A company can elect to use the new fair-
value-based method of accounting for employee stock
compensation plans, under which compensation cost is measured
and recognized in results of operations, or continue to
account for these plans under the current accounting
standards. Entities electing to remain with the present
accounting method must make disclosures of what net income
and earnings per share would have been if the fair-value-
based method of accounting had been applied. The Company
plans to continue to account for employee stock options using
the present accounting method and include the required
disclosures in the financial statements.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS-
EXHIBIT 11. SCHEDULE OF COMPUTATION OF NET INCOME PER SHARE
Quarter ended March 31,
PRIMARY - 1996 1995
Net income $8,042 $5,225
Weighted average number of common shares
outstanding during the quarter 16,771 16,382
Primary income per common share $0.48 $0.32
FULLY DILUTED -
Net income for primary earnings per $8,042 $5,225
share
Add: interest on 6.5% convertible
subordinated debentures due 2005 (net of 1,136 --
related income taxes)
Net income for fully diluted earnings $9,178 $5,225
per share
Primary number of shares outstanding 16,771 16,382
Add: Incremental shares representing-
Net effect of dilutive stock options
(based on the treasury stock method
using period-end market price, if higher 17 --
than average market price)
Shares issuable on 6.5% convertible
subordinated debentures 6,825 --
Fully diluted number of shares 23,613 16,382
outstanding
Fully diluted earnings per common share $0.39 $0.32
NOTE: This computation is required by Regulation S-K, Item
601, and is filed as an Exhibit under Item 6(a) of Form 10-Q.
Fully diluted earnings per share calculated above has been
presented on the face of the Company's Consolidated
Statements of Income.
EXHIBIT 27. FINANCIAL DATA SCHEDULE
The Financial Data Schedule is being submitted in the
electronic format prescribed by the EDGAR Filer Manual and
shall set forth the financial information in the applicable
table as it pertains to Article 7 Registrants (Insurance
Companies).
[ARTICLE] 7
<TABLE>
<S> <C>
[PERIOD-TYPE] 3-MOS
[FISCAL-YEAR-END] DEC-31-1996
[PERIOD-END] MAR-31-1996
[DEBT-HELD-FOR-SALE] 624,963,000
[DEBT-CARRYING-VALUE] 630,050,000
[DEBT-MARKET-VALUE] 624,963,000
[EQUITIES] 0
[MORTGAGE] 443,000
[REAL-ESTATE] 0
[TOTAL-INVEST] 625,406,000
[CASH] 35,819,000
[RECOVER-REINSURE] 0
[DEFERRED-ACQUISITION] 152,645,000
[TOTAL-ASSETS] 852,598,000
[POLICY-LOSSES] 219,733,000
[UNEARNED-PREMIUMS] 62,494,000
[POLICY-OTHER] 260,585,000
[POLICY-HOLDER-FUNDS] 542,812,000
[NOTES-PAYABLE] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] (162,000)
[OTHER-SE] (169,191,000)
[TOTAL-LIABILITY-AND-EQUITY] (852,598,000)
[PREMIUMS] (93,381,000)
[INVESTMENT-INCOME] (10,475,000)
[INVESTMENT-GAINS] (1,296,000)
[OTHER-INCOME] 0
[BENEFITS] (64,504,000)
[UNDERWRITING-AMORTIZATION] (12,335,000)
[UNDERWRITING-OTHER] 0
<INCOME-PRETAX (12,015,000)
[INCOME-TAX] 3,973,000
[INCOME-CONTINUING] (8,042,000)
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (8,042,000)
[EPS-PRIMARY] 0.48
[EPS-DILUTED] 0.39
[RESERVE-OPEN] 0
[PROVISION-CURRENT] 0
[PROVISION-PRIOR] 0
[PAYMENTS-CURRENT] 0
[PAYMENTS-PRIOR] 0
[RESERVE-CLOSE] 0
[CUMULATIVE-DEFICIENCY] 0
</TABLE>
(B) The following report on Form 8-K was filed during the
quarter ended March 31, 1996:
(i) NONE
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on is behalf by the
undersigned thereunto duly authorized.
DATE: May 15, 1996 AMERICAN TRAVELLERS CORPORATION
BY: /s/ John A. Powell
Chairman of the Board and Chief Executive Officer
BY: /s/ Benedict J. Iacovetti
Principal Financial Officer
