SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1998 .
----------------------
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 0-14697
---------------
HARLEYSVILLE GROUP INC.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 51-0241172
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
355 Maple Avenue, Harleysville, Pennsylvania 19438-2297
------------------------------------------------------------
(Address of principal executive offices, including zip code)
(215) 256-5000
---------------------------------------------------
(Registrant's telephone number, including area code)
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 (or
for such shorter period that the registrant was required to file
such reports) and (2) has been subject to such filing requirements
for the past 90 days.
Yes X . No .
----- -----
At November 4, 1998, 29,126,825 shares of common stock of
Harleysville Group Inc. were outstanding.
1
<PAGE>
HARLEYSVILLE GROUP INC. AND SUBSIDIARIES
INDEX
PAGE NUMBER
-----------
Part I - Financial Information
Consolidated Balance Sheets - September 30, 1998
and December 31, 1997 3
Consolidated Statements of Income - For the three
months ended September 30, 1998 and 1997 4
Consolidated Statements of Income - For the nine
months ended September 30, 1998 and 1997 5
Consolidated Statement of Shareholders' Equity -
For the nine months ended September 30, 1998 6
Consolidated Statements of Cash Flows - For the
nine months ended September 30, 1998 and 1997 7
Notes to Consolidated Financial Statements 8
Management's Discussion and Analysis of Results
of Operations and Financial Condition 11
Part II - Other Information 15
2
<PAGE>
HARLEYSVILLE GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- ------------
(Unaudited)
ASSETS
------
Investments:
Fixed maturities:
Held to maturity, at amortized
cost (fair value $693,341
and $643,951) $ 645,272 $ 611,604
Available for sale, at fair value
(amortized cost $695,483
and $660,911) 738,442 689,806
Equity securities, at fair value
(cost $88,098 and $79,221) 141,005 121,830
Short-term investments, at cost,
which approximates fair value 20,016 28,350
---------- ----------
Total investments 1,544,735 1,451,590
Cash 23,584 1,460
Receivables:
Premiums 91,114 83,948
Reinsurance 91,440 78,750
Accrued investment income 21,079 21,253
---------- ----------
Total receivables 203,633 183,951
Deferred policy acquisition costs 80,342 72,076
Prepaid reinsurance premiums 12,082 14,504
Property and equipment, net 24,542 24,778
Deferred income taxes 11,159 18,906
Other assets 34,863 33,930
---------- ----------
Total assets $1,934,940 $1,801,195
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Liabilities:
Unpaid losses and loss settlement
expenses $ 905,288 $ 868,393
Unearned premiums 324,213 298,625
Accounts payable and accrued expenses 101,749 72,427
Debt 97,140 97,440
Due to affiliate 4,532 17,795
---------- ----------
Total liabilities 1,432,922 1,354,680
---------- ----------
Shareholders' equity:
Preferred stock, $1 par value, authorized
1,000,000 shares; none issued
Common stock, $1 par value, authorized
80,000,000 shares; issued and
outstanding 29,115,456 and
28,821,973 shares 29,115 28,822
Additional paid-in capital 118,715 113,646
Accumulated other comprehensive income 62,313 46,478
Retained earnings 291,875 257,569
---------- ----------
Total shareholders' equity 502,018 446,515
---------- ----------
Total liabilities and
shareholders' equity $1,934,940 $1,801,195
========== ==========
See accompanying notes to consolidated financial statements.
3
<PAGE>
HARLEYSVILLE GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(dollars in thousands, except per share data)
1998 1997
---------- ----------
Revenues:
Premiums earned $165,735 $152,560
Investment income, net of
investment expenses 21,546 20,302
Realized investment gains 2,162 4,376
Other income 3,202 2,655
-------- --------
Total revenues 192,645 179,893
-------- --------
Losses and expenses:
Losses and loss settlement expenses 116,075 104,823
Amortization of deferred policy
acquisition costs 42,377 38,360
Other underwriting expenses 13,987 14,110
Interest expense 1,624 1,654
Other expenses 1,138 636
-------- --------
Total expenses 175,201 159,583
-------- --------
Income before income taxes 17,444 20,310
Income taxes 3,291 4,480
-------- --------
Net income $ 14,153 $ 15,830
======== ========
Per common share:
Basic earnings $ .49 $ .55
======== ========
Diluted earnings $ .48 $ .54
======== ========
Cash dividend $ .125 $ .115
======== ========
See accompanying notes to consolidated financial statements.
4
<PAGE>
HARLEYSVILLE GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(dollars in thousands, except per share data)
1998 1997
---------- ---------
Revenues:
Premiums earned $494,201 $464,192
Investment income, net of
investment expenses 64,124 61,084
Realized investment gains 9,512 5,374
Other income 9,335 8,179
-------- --------
Total revenues 577,172 538,829
-------- --------
Losses and expenses:
Losses and loss settlement expenses 346,791 329,382
Amortization of deferred policy
acquisition costs 125,522 116,860
Other underwriting expenses 40,925 36,089
Interest expense 4,889 4,949
Other expenses 3,110 2,162
-------- --------
Total expenses 521,237 489,442
-------- --------
Income before income taxes 55,935 49,387
Income taxes 11,328 9,561
-------- --------
Net income $ 44,607 $ 39,826
======== ========
Per common share:
Basic earnings $ 1.54 $ 1.40
======== ========
Diluted earnings $ 1.51 $ 1.38
======== ========
Cash dividend $ .355 $ .325
======== ========
See accompanying notes to consolidated financial statements.
5
<PAGE>
HARLEYSVILLE GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(Unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(dollars in thousands)
<TABLE>
ACCUMULATED
COMMON STOCK ADDITIONAL OTHER
PAID-IN COMPREHENSIVE RETAINED
SHARES AMOUNT CAPITAL INCOME EARNINGS TOTAL
--------- ------- ---------- ------------- -------- -------
<CAPTION>
<S>
Balance,
Dec. 31,
<C> <C> <C> <C> <C> <C> <C>
1997 28,821,973 $28,822 $113,646 $46,478 $257,569 $446,515
--------
Net income 44,607 44,607
Other compre-
hensive income,
net of tax:
Unrealized
investment
gains,
net of
reclassifi-
cation
adjustment 15,835 15,835
--------
Comprehensive
income 60,442
--------
Issuance of
common stock 293,483 293 5,069 5,362
Cash dividend
paid (10,301) (10,301)
---------- ------- -------- ------- -------- --------
Balance,
Sept. 30,
1998 29,115,456 $29,115 $118,715 $62,313 $291,875 $502,018
========== ======= ======== ======= ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
HARLEYSVILLE GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(in thousands)
1998 1997
---------- ----------
Cash flows from operating activities:
Net income $ 44,607 $ 39,826
Adjustments to reconcile net income
to net cash provided by operating
activities:
Change in receivables, unearned
premiums, prepaid reinsurance
and due to affiliate (7,860) 1,623
Increase in unpaid losses and
loss settlement expenses 24,503 11,050
Deferred income taxes (780) (934)
Increase in deferred policy
acquisition costs (8,266) (1,399)
Amortization and depreciation 1,826 1,144
Gain on sale of investments (9,512) (5,374)
Other, net 28,066 (2,642)
Cash provided from change in
pooling agreement 14,962 29,002
--------- ---------
Net cash provided by operating
activities 87,546 72,296
--------- ---------
Cash flows from investing activities:
Fixed maturity investments:
Purchases (156,658) (117,201)
Sales or maturities 89,748 76,704
Equity securities:
Purchases (19,344) (30,541)
Sales 19,076 12,624
Net (purchases) sales of short-term
investments 8,334 (7,981)
Purchase of property and equipment (1,339) (730)
--------- ---------
Net cash used by investing
activities (60,183) (67,125)
--------- ---------
Cash flows from financing activities:
Issuance of common stock 5,362 5,802
Payment of debt (300) (275)
Dividends paid (10,301) (9,280)
--------- ---------
Net cash used by
financing activities (5,239) (3,753)
--------- ---------
Increase in cash 22,124 1,418
Cash at beginning of period 1,460 2,120
--------- ---------
Cash at end of period $ 23,584 $ 3,538
========= =========
See accompanying notes to consolidated financial statements.
7
<PAGE>
HARLEYSVILLE GROUP INC. AND SUBSIDIARIES
(Unaudited)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1 - Basis of Presentation
The financial information for the interim periods included
herein is unaudited; however, such information reflects all
adjustments, consisting of normal recurring adjustments, which are,
in the opinion of management, necessary to a fair presentation of
the financial position, results of operations, and cash flows for
the interim periods. The results of operations for interim periods
are not necessarily indicative of results to be expected for the
full year.
These financial statements should be read in conjunction with
the financial statements and notes for the year ended December 31,
1997 included in the Company's 1997 Annual Report filed with the
Securities and Exchange Commission on Form 10-K.
2 - Earnings Per Share
The computation of basic and diluted earnings per share is as
follows:
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
1998 1997 1998 1997
---------- ---------- ---------- ----------
(in thousands,
except per share data)
Numerator for basic
and diluted earnings
earnings per share:
Net income $14,153 $15,830 $44,607 $39,826
======= ======= ======= =======
Denominator for basic
earnings per share --
weighted average
shares outstanding 29,086 28,649 28,995 28,504
Effect of stock
incentive plans 392 452 494 375
------- ------- ------- -------
Denominator for
diluted earnings
per share 29,478 29,101 29,489 28,879
======= ======= ======= =======
Basic earnings
per share $ .49 $ .55 $ 1.54 $ 1.40
======= ======= ======= =======
Diluted earnings
per share $ .48 $ .54 $ 1.51 $ 1.38
======= ======= ======= =======
8
<PAGE>
HARLEYSVILLE GROUP INC. AND SUBSIDIARIES
(Unaudited)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
3 - Reinsurance
Premiums earned are net of amounts ceded of $9,876,000 and
$21,646,000 for the three and nine months ended September 30, 1998,
respectively, and $6,368,000 and $19,467,000 for the three and nine
months ended September 30, 1997, respectively. The ceded earned
premiums for the nine months ended September 30, 1998 are net of a
$8,217,000 refund of premiums previously ceded to the Michigan
Catastrophic Claims Association. Such premiums were refunded to
Harleysville Group which were then immediately refunded to
policyholders and thus had no effect on net premiums. Losses and
loss settlement expenses are net of amounts ceded of $17,945,000
and $49,494,000 for the three and nine months ended September 30,
1998, respectively, and $4,170,000 and $11,273,000 for the three
and nine months ended September 30, 1997, respectively. Such
amounts do not include the reinsurance transactions with Mutual
under the pooling arrangement, but do include the reinsurance
described in the following paragraph.
Harleysville Group has a reinsurance agreement with
Harleysville Mutual Insurance Company (Mutual) whereby Mutual
reinsures accumulated catastrophe losses in a quarter up to
$16,200,000 ($15,750,000 in 1997) in excess of $1,800,000
($1,750,000 in 1997) in return for a reinsurance premium. The
agreement excludes catastrophe losses resulting from earthquakes or
hurricanes, and supplements the existing external catastrophe
reinsurance program. Harleysville Group ceded to Mutual premiums
earned of $789,000 and $680,000 and losses incurred of $7,506,000
and $711,000 for the three months ended September 30, 1998 and
1997, respectively. Harleysville Group ceded to Mutual premiums
earned of $2,271,000 and $1,984,000 and losses incurred of
$27,431,000 and $1,456,000 for the nine months ended September 30,
1998 and 1997, respectively.
Harleysville Group cedes business to and assumes business from
Mutual under a reinsurance pooling agreement. Because this
agreement does not relieve Harleysville Group of primary liability
as the originating insurer, there is a concentration of credit risk
arising from business ceded to Mutual. However, the reinsurance
pooling agreement provides for the right of offset and the net
balance with Mutual is a liability at September 30, 1998 and
December 31, 1997. Mutual has an A. M. Best rating of "A"
(Excellent) and, in accordance with certain state regulatory
requirements, maintained $322.6 million (fair value) of investments
in a trust account to secure liabilities under the reinsurance
pooling agreement at September 30, 1998.
9
<PAGE>
HARLEYSVILLE GROUP INC. AND SUBSIDIARIES
(Unaudited)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
4 - Cash Flows
Net cash tax payments of $12,175,000 and $7,214,000 were made
in the first nine months of 1998 and 1997, respectively. Cash
interest payments of $3,516,000 and $3,572,000 were made in the
first nine months of 1998 and 1997, respectively.
5 - Comprehensive Income
Comprehensive income consisted of the following (all amounts
are net of taxes):
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
1998 1997 1998 1997
---------- ---------- ---------- ----------
(in thousands)
Net income $14,153 $15,830 $44,607 $39,826
Other comprehensive
income:
Unrealized investment
holding gains
arising during
period 3,910 14,056 21,960 25,848
Less:
Reclassification
adjustment for
gains included
in net income (1,402) (2,795) (6,125) (3,329)
------- ------- ------- -------
Net unrealized
investment gains 2,508 11,261 15,835 22,519
------- ------- ------- -------
Comprehensive income $16,661 $27,091 $60,442 $62,345
======= ======= ======= =======
10
<PAGE>
HARLEYSVILLE GROUP INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations
Effective January 1, 1998, Harleysville Group's pooling
agreement with Mutual was amended to include Minnesota Fire and
Casualty Company (Minnesota Fire), a wholly-owned subsidiary of
Harleysville Group Inc. that writes insurance primarily in
Minnesota and neighboring states. In addition, Harleysville
Group's participation increased from 70% to 72%.
Premiums earned increased $13.2 million and $30.0 million
during the three and nine months ended September 30, 1998. The
increases are primarily due to Minnesota Fire which was acquired on
October 1, 1997.
Investment income increased $1.2 million and $3.0 million for
the three and nine months ended September 30, 1998 resulting from
an increase in invested assets. Such increase was primarily
provided by a $15.0 million cash transfer received for various
insurance liabilities assumed January 1, 1998 in connection with
the increase in Harleysville Group's pool participation.
Realized investment gains decreased $2.2 million for the three
months ended September 30, 1998 due to lower sales of equity
securities. Realized investment gains increased $4.1 million for
the nine months ended September 30, 1998 primarily resulting from
greater sales of equity securities during the first half of 1998.
Income before income taxes decreased $2.9 million for the
three months ended September 30, 1998 primarily due to greater
losses incurred relative to premiums and lower realized investment
gains, offset by the higher investment income. Harleysville
Group's statutory combined ratio increased to 104.1% for the three
months ended September 30, 1998 from 102.7% for the three months
ended September 30, 1997. Hurricane Bonnie struck North and South
Carolina and Virginia during the third quarter of 1998 and caused
losses of $3.0 million ($.07 per basic share after taxes) and
adversely affected Harleysville Group's combined ratio by 1.9
points. Hurricane losses are not covered under the aggregate
catastrophe reinsurance agreement with Mutual. Excluding this
impact the statutory combined ratio improved 0.5 points primarily
due to improved results in the liability lines of business.
Income before income taxes increased $6.5 million for the nine
months ended September 30, 1998 primarily due to the higher
investment income and realized investment gains. Harleysville
Group's statutory combined ratio decreased to 103.5% for the nine
months ended September 30, 1998 from 103.9% for the nine months
11
<PAGE>
HARLEYSVILLE GROUP INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
(Continued)
ended September 30, 1997 primarily due to improved results in the
automobile lines of business, partially offset by the effect of
Hurricane Bonnie.
Losses ceded under the aggregate catastrophe reinsurance
agreement with Mutual increased by $6.8 million and $26.0 million
for the three and nine months ended September 30, 1998,
respectively, primarily due to several severe spring and summer
storms and a first quarter ice storm in upstate New York. It is
likely that the aggregate catastrophe reinsurance agreement with
Mutual will provide for a higher ceded premium or retention, or
both, in the event it is renewed January 1, 1999.
The income tax expense for the three and nine months ended
September 30, 1998 includes the tax benefit of $2.9 million and
$8.4 million, compared to $2.6 million and $7.8 million in the same
prior year periods, associated with tax-exempt investment income.
Liquidity and Capital Resources
Net cash provided by operating activities was $87.5 million
and $72.3 million for the nine months ended September 30, 1998 and
1997. The increase primarily is from an increase in other
liabilities due to $19.4 million of cash received as collateral for
security lending transactions, offset by the effect of amendments
to the pooling agreement with Mutual. Cash transfers of $15.0
million and $29.0 million were received effective January 1, 1998
and 1997, respectively, by Harleysville Group related to the
various liabilities assumed in connection with such amendments.
Net cash used by investing activities was $60.2 million and
$67.1 million for the nine months ended September 30, 1998 and
1997. The decrease is primarily due to the lower amount of cash
provided by the change in the pooling agreement participation.
Net cash used by financing activities increased $1.5 million
for the nine months ended September 30, 1998 primarily due to an
increase in dividends paid.
Harleysville Group Inc. maintained $8.6 million of cash and
marketable investments at the holding company level at September
30, 1998 which is available for general corporate business purposes
including dividends, debt service, capital contributions to
subsidiaries and acquisitions. The Company had no other material
commitments for capital expenditures as of September 30, 1998.
12
<PAGE>
HARLEYSVILLE GROUP INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
(Continued)
Year 2000
Harleysville Group began assessing its information technology
(IT) systems in 1996 and developed plans to ensure their
functionality with respect to the year 2000 millennium change.
These plans contain four major phases: remediation, certification
testing, enterprise testing and street testing.
The major part of the remediation phase involved modifying our
basic transaction processing systems that include the policy
issuance, billing and claims systems. The remediation phase was
90% complete as of September 30, 1998 and is expected to be 100%
complete during the fourth quarter of 1998.
The certification testing phase began in the third quarter of
1998 and is expected to be completed in the first quarter of 1999.
This phase involves testing each system using aged data and
critical future dates in a separate year 2000 compliant
environment.
The enterprise testing phase is scheduled to begin in the
first quarter of 1999 and involves testing production systems
running in concert with each other using aged data and critical
future dates. It is expected to be essentially complete during the
second quarter of 1999.
The street testing phase involves testing Harleysville Group
IT systems with third parties and is scheduled for the second
quarter of 1999, but the exact timing is dependent upon the
readiness of the third parties. Harleysville Group has identified
and communicated with all of the third parties identified.
Harleysville Group has non-IT systems which include embedded
technology such as office equipment and building systems.
Harleysville Group has inventoried the non-IT systems and has
either tested or communicated with vendors and landlords regarding
year 2000 readiness for over 90% of the non-IT systems.
Harleysville Group currently does not expect any material impact to
its business, results of operations or financial condition from the
failure of non-IT systems.
13
<PAGE>
HARLEYSVILLE GROUP INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
(Continued)
Harleysville Group's expenses incurred since 1996 to address
year 2000 issues were approximately $2.3 million as of September
30, 1998 and consisted primarily of costs of internal resources.
Estimated costs to complete the year 2000 work are currently $1.0
million.
Harleysville Group's year 2000 plans provide for time to
correct problems encountered in the testing phases. Harleysville
Group is continually assessing the most reasonably likely worst
case year 2000 scenario which is currently believed to be if
problems encountered in testing are worse than expected and systems
readiness is delayed. Under such a scenario, the contingency plan
is to devote more internal resources to solving such problems in a
timely manner so that delays in processing transactions are avoided
or minimized.
Harleysville Group has risk that third parties will suffer
year 2000 problems. As most of Harleysville Group's computer
systems have been internally developed, Harleysville Group is not
significantly dependent on third party vendors for year 2000
compliance. Of the independent agents that interface
electronically with Harleysville Group, almost all either utilize,
or have access to, a system for which the remediation phase is
complete. Some information used in underwriting policies and
adjusting claims, such as motor vehicle reports, rating
information, and crime data bases is generally obtained
electronically. Investment portfolio pricing information and bank
statement information is obtained electronically. Harleysville
Group is communicating with and monitoring the year 2000 progress
of such third parties and will decide on contingency plans in mid-
1999.
This year 2000 disclosure contains statements which are
forward looking statements that involve risks and uncertainties and
qualify for the statutory safe harbor under Private Securities
Litigation Reform Act of 1995. Future year 2000 readiness
activities may not adhere to the anticipated schedule and cost
estimations because: more problems may be encountered than
anticipated in the various stages of testing and trained personnel
may not be available to work on internal systems in the time
required; or there may be unexpected problems with the readiness of
third party business partners and vendors who cannot produce
services; or utility companies may not be able to provide the vital
services required to maintain operations.
14
<PAGE>
HARLEYSVILLE GROUP INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings - None
ITEM 2. Changes in Securities - None
ITEM 3. Defaults Upon Senior Securities - None
ITEM 4. Submission of Matters to a Vote of Security Holders - None
ITEM 5. Other Information - None
ITEM 6. a. Exhibits - None
b. Reports on Form 8-K - None
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.
HARLEYSVILLE GROUP INC.
Date: November 6, 1998 /s/ BRUCE J. MAGEE
------------------ --------------------------------
Bruce J. Magee
Senior Vice President and
Chief Financial Officer
(principal financial officer and
principal accounting officer)
15
<TABLE> <S> <C>
<ARTICLE> 7
<CIK> 0000792013
<NAME> HARLEYSVILLE GROUP INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<DEBT-HELD-FOR-SALE> 738,442
<DEBT-CARRYING-VALUE> 645,272
<DEBT-MARKET-VALUE> 693,341
<EQUITIES> 141,005
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 1,544,735
<CASH> 23,584
<RECOVER-REINSURE> 6,479
<DEFERRED-ACQUISITION> 80,342
<TOTAL-ASSETS> 1,934,940
<POLICY-LOSSES> 905,288
<UNEARNED-PREMIUMS> 324,213
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 97,140
0
0
<COMMON> 29,115
<OTHER-SE> 472,903
<TOTAL-LIABILITY-AND-EQUITY> 1,934,940
494,201
<INVESTMENT-INCOME> 64,124
<INVESTMENT-GAINS> 9,512
<OTHER-INCOME> 9,335
<BENEFITS> 346,791
<UNDERWRITING-AMORTIZATION> 125,522
<UNDERWRITING-OTHER> 48,924
<INCOME-PRETAX> 55,935
<INCOME-TAX> 11,328
<INCOME-CONTINUING> 44,607
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 44,607
<EPS-PRIMARY> 1.54
<EPS-DILUTED> 1.51
<RESERVE-OPEN> 793,563
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 820,326
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
