UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
EXCHANGE ACT
For the transition period from ----------- to --------------
Commission file number 0-14451
Acap Corporation
(Exact name of small business issuer as specified in its charter)
State of Incorporation: IRS Employer Id.:
Delaware 25-1489730
Address of Principal Executive Office:
10555 Richmond Avenue
Houston Texas 77042
Issuer's telephone number: (713) 974-2242
Check whether the issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 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. [x] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
CLASS OUTSTANDING AUGUST 11,1998
----- --------------------------
Common Stock, Par Value $.10 7,251
This Form 10-QSB contains a total of 14 pages, including any exhibits.
<PAGE>
ACAP CORPORATION AND SUBSIDIARIES
FORM 10-QSB
INDEX
Page No.
Part I. Financial Information:
Item 1. Financial Statements
Condensed Consolidated Balance
Sheet - June 30, 1998 (Unaudited) 3
Condensed Consolidated Statements of
Operations - Six Months Ended
June 30, 1998 and 1997 (Unaudited) 5
Condensed Consolidated Statements of
Operations - Three Months Ended
June 30, 1998 and 1997 (Unaudited) 6
Condensed Consolidated Statements of
Cash Flows - Six Months Ended
June 30, 1998 and 1997 (Unaudited) 7
Notes to Condensed Consolidated
Financial Statements (Unaudited) 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 11
Part II. Other Information:
Item 6. Exhibit 27-Financial Data Schedule 14
<PAGE>
PART I. ITEM 1. FINANCIAL INFORMATION
ACAP CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1998
(UNAUDITED)
ASSETS
Investments:
Fixed maturities available for sale $ 35,519,377
Mortgage loans 1,981,379
Policy loans 7,073,482
Short-term investments 1,225,127
------------
Total investments 45,799,365
Accrued investment income 524,874
Reinsurance receivable 105,720,356
Accounts receivable (less allowance
for uncollectible accounts of $88,497) 268,530
Deferred acquisition costs 1,513,662
Property and equipment
(less accumulated depreciation of $423,201) 256,102
Costs in excess of net assets of
acquired business (less accumulated
amortization of $1,071,959) 1,601,817
Other assets 1,252,617
-----------
$156,937,323
===========
See accompanying notes to consolidated financial statements.
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Policy liabilities:
Future policy benefits $139,280,032
Contract claims 1,659,756
-----------
Total policy liabilities 140,939,788
Other policyholders' funds 2,664,224
Deferred tax liability 842,537
Deferred gain on reinsurance 2,512,273
Deferred gain on sale of real estate 428,800
Note payable 687,500
Other liabilities 1,135,310
-----------
Total liabilities 149,210,432
-----------
Stockholders' equity:
Series A preferred stock, par value
$.10 per share, authorized, issued
and outstanding 74,000 shares
(involuntary liquidation value $2,035,000) 1,850,000
Common stock, par value $.10 per share,
authorized 10,000 shares, issued
8,754 shares 876
Additional paid-in capital 6,259,189
Accumulated deficit (905,172)
Treasury stock, at cost, 1,503 shares (492,721)
Accumulated other comprehensive income
Net unrealized gains on securities,
net of taxes of $424,854 1,038,680
Reclassification adjustment, net of taxes of $11,121 (23,961)
-----------
1,014,719
-----------
Total stockholders' equity 7,726,891
-----------
$156,937,323
===========
See accompanying notes to consolidated financial statements.
<PAGE>
ACAP CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
1998 1997
Revenues:
Premiums and other considerations $1,157,302 1,247,434
Net investment income 1,048,742 615,191
Net realized investment gains (losses) 85,909 (3,117)
Reinsurance expense allowance 2,585,952 1,013,785
Amortization of deferred gain on reinsurance 91,205 102,753
Other income 21,960 28,081
--------- ---------
Total revenues 4,991,070 3,004,127
--------- ---------
Benefits and expenses:
Death benefits 506,104 469,866
Other benefits 659,225 804,749
Commissions and general expenses 3,161,625 1,297,228
Interest expense 41,353 46,617
Amortization of deferred acquisition costs 56,306 48,939
Amortization of costs in excess of net
assets of acquired business 119,831 119,831
---------- ---------
Total benefits and expenses 4,544,444 2,787,230
--------- ---------
Income before federal income tax expense 446,626 216,897
Federal income tax expense (benefit):
Current 144,495 50,019
Deferred (121,811) (90,685)
--------- ---------
Net income $ 423,942 257,563
--------- ---------
Other comprehensive income:
Net unrealized holding gains (losses) arising
during period, net of tax of $44,081
in 1998 and $22,805 in 1997 94,967 (51,657)
Less: reclassification adjustment for net
gains included in net income, net of tax
of $21,191 in 1998 and 0 in 1997 (45,659) 0
--------- ---------
Comprehensive income $ 473,250 205,906
========= =========
Earnings per share:
Net income per share-basic $ 44.13 21.67
--------- ---------
Net income per share-diluted $ 35.39 19.20
--------- ---------
See accompanying notes to consolidated financial statements.
<PAGE>
ACAP CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
1998 1997
Revenues:
Premiums and other considerations $633,045 562,162
Net investment income 541,083 293,715
Net realized investment gains (losses) 66,617 (1,946)
Reinsurance expense allowance 1,216,268 479,852
Amortization of deferred gain on reinsurance 42,165 46,270
Other income 11,979 15,802
--------- ---------
Total revenues 2,511,157 1,395,855
--------- ---------
Benefits and expenses:
Death benefits 226,603 181,680
Other benefits 380,326 405,220
Commissions and general expenses 1,503,847 592,454
Interest expense 17,796 21,922
Amortization of deferred acquisition costs 25,639 24,768
Amortization of costs in excess of net
assets of acquired business 59,915 59,915
--------- ---------
Total benefits and expenses 2,214,126 1,285,959
--------- ---------
Income before federal income tax expense 297,031 109,896
Federal income tax expense (benefit):
Current 52,065 18,822
Deferred (1,947) (39,923)
--------- ---------
Net income $ 246,913 130,997
--------- ---------
Other comprehensive income:
Net unrealized holding gains arising
during period, net of tax of $51,111
in 1998 and $149,067 in 1997 110,715 291,276
Less: reclassification adjustment for
net gains included in net income, net
of tax of $21,401 in 1998 and 0 in 1997 (46,108) 0
--------- ---------
Comprehensive income $ 311,520 422,273
========= =========
Earnings per share:
Net income per share-basic $ 26.91 11.25
--------- ---------
Net income per share-diluted $ 26.33 8.86
--------- ---------
See accompanying notes to consolidated financial statements.
<PAGE>
ACAP CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1998 AND 1997
INCREASE (DECREASE) IN CASH (UNAUDITED)
1998 1997
Cash flows from operating activities:
Net income from operations $ 423,942 257,563
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 30,510 131,877
Realized (gains) losses on investments (85,909) 3,117
Deferred federal income tax benefit (121,811) (90,685)
Decrease in reinsurance receivables 304,326 943,226
Decrease in accrued investment income 27,329 6,691
Increase in accounts receivable (67,315) (43,505)
Decrease (increase) in other assets 329,172 (823,304)
Decrease in future policy benefit
liability (1,225,468) (476,961)
Decrease in contract claim liability (83,946) (35,124)
Increase (decrease) in other
policyholders' funds liability (13,902) 16,352
Increase (decrease) in other liabilities (603,592) 40,959
----------- ----------
Net cash used in operating activities (1,086,664) (69,794)
----------- ----------
Cash flows from investing activities:
Proceeds from sales of investments
available for sale and principal
repayments on mortgage loans 6,206,437 769,106
Purchases of investments available for sale (4,253,136) (1,265,590)
Net (increase) decrease in policy loans 210,793 (6,391)
Net (increase) decrease in short-term
investments (345,024) 828,504
Purchase of property and equipment (101,176) (36,891)
----------- ----------
Net cash provided by investing
activities 1,717,894 288,738
----------- ----------
Cash flows from financing activities:
Principal payments on note payable (125,000) (125,000)
Deposits on policy contracts 558,892 861,634
Withdrawals from policy contracts (1,065,710) (897,119)
Preferred dividends paid (97,126) (94,812)
----------- ----------
Net cash used in financing activities (728,944) (255,297)
----------- ----------
Net decrease in cash (97,714) (36,353)
Cash at beginning of year 97,714 36,353
----------- ----------
Cash at end of period $ 0 0
=========== ==========
See accompanying notes to consolidated financial statements.
<PAGE>
ACAP CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated balance sheet as of June 30, 1998 and the
condensed consolidated statements of operations and cash flows for the six
month periods ended June 30, 1998 and 1997, have been prepared by Acap
Corporation (the "Company"), without audit. In the opinion of management,
all adjustments (which, except as may be noted below, include only normal
recurring adjustments) necessary to present fairly the financial position,
results of operations, and changes in cash flows at June 30, 1998 and for
all periods presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
condensed consolidated financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's
December 31, 1997 Annual Report to Stockholders. The results of operations
for the six month periods ended June 30, 1998 and 1997 are not necessarily
indicative of the operating results for the full year.
2. ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards (SFAS) No. 130 "Reporting
Comprehensive Income." SFAS No. 130, which must be adopted for both
interim and fiscal periods beginning after December 15, 1997, establishes
standards for reporting and displaying comprehensive income and its
components (revenue, expenses, gains, and losses) in a full set of general
purpose financial statements. SFAS 130 requires that all items that are
required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed
with the same prominence as other financial statements.
Effective January 1, 1998, the Company adopted SFAS No. 130. The Company's
only components of other comprehensive income are unrealized gains and
losses on investments. As those items were previously presented as direct
charges or credits to the Company's stockholders' equity, the only impact
of adopting this standard is to reflect an additional presentation of those
items.
3. EARNINGS PER SHARE
Basic earnings per common share is computed by dividing net income (less
dividends paid on preferred stock of $97,126 and $94,812 for June 30, 1998
and 1997, respectively) by the weighted average common shares outstanding
(7,406 at June 30, 1998 and 7,512 at June 30, 1997).
Earnings per common share on a diluted basis is computed by dividing net
income (less dividends paid on preferred stock of $97,126 and $94,812 for
June 30, 1998 and 1997, respectively, and less the income statement effect
of stock options as if exercised of $58,976 and $17,188 for June 30, 1998
and 1997, respectively) by the weighted average common shares outstanding
as if such stock options were exercised (7,569 at June 30, 1998 and 7,580
at June 30, 1997).
4. STOCKHOLDERS' EQUITY
During the six months ended June 30, 1998, stockholders' equity changed for
the following items: Increase in net unrealized investment gains of
$70,997; net income of $423,942; cash dividends paid on preferred stock of
$97,126; and a net increase in treasury stock of $42,240.
5. UNIVERSAL TRANSACTION
On March 5, 1998, American Capitol Insurance Company ("American Capitol"),
a wholly owned subsidiary of Acap Corporation, closed a coinsurance
transaction with Universal Life Insurance Company ("Universal"). Pursuant
to the coinsurance agreement (the "Coinsurance Agreement"), American
Capitol coinsured 100% of the individual life insurance policies of
Universal in force at January 1, 1998. The effective date of the
Coinsurance Agreement was January 1, 1998. American Capitol paid Universal
an initial ceding commission of approximately $13 million. Universal
transferred approximately $40 million in assets to American Capitol in
connection with the coinsurance.
Contemporaneous with the signing of the Coinsurance Agreement, the parties
executed an administrative agreement (the "Administration Agreement")
whereby American Capitol agreed to provide specified administrative
functions for the 246,011 coinsured Universal policies. American Capitol
started administering the policies beginning July 1, 1998. Between
January 1, 1998 and July 1, 1998, Universal continued to administer the
policies, and American Capitol paid Universal the expense allowance
stipulated in the Administration Agreement.
Concurrent with the coinsurance of the Universal policies, American Capitol
retroceded all of the coinsured Universal policies with an unaffiliated
reinsurer. The reinsurer paid American Capitol an initial ceding
commission of approximately $13.5 million. So, while Universal transferred
$40 million to American Capitol in connection with the coinsurance,
American Capitol transferred $39.6 million in assets to the reinsurer in
connection with the retrocession. Once the reinsurer has recovered the
initial ceding commission, the reinsurer may, at American Capitol s option,
retrocede back to American Capitol 100% of the policies. Upon this
retrocession, American Capitol then pays the reinsurer 30% of the profits
generated by the policies, retaining the other 70% of the profits. In
addition, American Capitol has the right to recapture the retrocession
under certain terms and conditions. While the retrocession is in effect,
American Capitol receives an expense allowance from the reinsurer.
6. SUPPLEMENTAL INFORMATION REGARDING CASH FLOWS
Cash payments of $185,177 and $57,961 for federal income taxes were made
for the six months ended June 30, 1998 and 1997, respectively.
Cash payments of $37,522 and $48,452 for interest expense were made during
the six months ended June 30, 1998 and 1997, respectively.
The following reflects assets acquired and liabilities assumed relative to
the coinsurance agreement for the policies of Universal, the consideration
given for such coinsurance and the net cash flow relative to such
coinsurance on January 1, 1998.
Assets acquired. . . . . . . . . . . . . . . . . . . . . $ 39,972,696
Liabilities assumed. . . . . . . . . . . . . . . . . . . (53,085,774)
-----------
Cost of coinsurance. . . . . . . . . . . . . . . . . . . $(13,113,078)
===========
Cash paid for coinsurance. . . . . . . . . . . . . . . . $(13,113,078
===========
Net cash from coinsurance:
Cash acquired. . . . . . . . . . . . . . . . . . . . . . $ 38,597,840
Cash paid for coinsurance. . . . . . . . . . . . . . . . (13,113,078)
-----------
Net cash provided from coinsurance . . . . . . . . . . . $ 25,484,762
===========
The following reflects assets and liabilities transferred in connection
with a coinsurance treaty whereby all policies assumed from Universal were
100% retroceded to an unaffiliated reinsurer, the ceding commission
received and the net cash flow related to the coinsurance treaty on
January 1, 1998.
Assets transferred . . . . . . . . . . . . . . . . . . . $(39,580,339)
Liabilities transferred. . . . . . . . . . . . . . . . . 53,080,339
-----------
Net transferred. . . . . . . . . . . . . . . . . . . . . $ 13,500,000
===========
Ceding commission received . . . . . . . . . . . . . . . $ 13,500,000
===========
Net cash from coinsurance:
Cash paid. . . . . . . . . . . . . . . . . . . . . . . . (38,984,762)
Cash received from coinsurance . . . . . . . . . . . . . 13,500,000
-----------
Net cash provided from coinsurance . . . . . . . . . . . $(25,484,762)
===========
Net proceeds from coinsurance agreements . . . . . . . . $ 0
===========
<PAGE>
ACAP CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
UNIVERSAL LIFE INSURANCE COMPANY TRANSACTION
On March 5, 1998, American Capitol Insurance Company ("American Capitol"),
a wholly owned subsidiary of Acap Corporation, closed a coinsurance
transaction with Universal Life Insurance Company ("Universal"). Pursuant
to the coinsurance agreement (the "Coinsurance Agreement"), American
Capitol coinsured 100% of the individual life insurance policies of
Universal in force at January 1, 1998. The effective date of the
Coinsurance Agreement was January 1, 1998. American Capitol paid Universal
an initial ceding commission of approximately $13 million. Universal
transferred approximately $40 million in assets to American Capitol in
connection with the coinsurance.
Contemporaneous with the signing of the Coinsurance Agreement, the parties
executed an administrative agreement (the "Administration Agreement")
whereby American Capitol agreed to provide specified administrative
functions for the 246,011 coinsured Universal policies. American Capitol
started administering the policies beginning July 1, 1998. Between January
1, 1998 and July 1, 1998, Universal continued to administer the policies,
and American Capitol paid Universal the expense allowance stipulated in the
Administration Agreement.
Concurrent with the coinsurance of the Universal policies, American Capitol
retroceded all of the coinsured Universal policies with an unaffiliated
reinsurer. The reinsurer paid American Capitol an initial ceding
commission of approximately $13.5 million. So, while Universal transferred
$40 million to American Capitol in connection with the coinsurance,
American Capitol transferred $39.6 million in assets to the reinsurer in
connection with the retrocession. Once the reinsurer has recovered the
initial ceding commission, the reinsurer may, at American Capitol s option,
retrocede back to American Capitol 100% of the policies. Upon this
retrocession, American Capitol then pays the reinsurer 30% of the profits
generated by the policies, retaining the other 70% of the profits. In
addition, American Capitol has the right to recapture the retrocession
under certain terms and conditions. While the retrocession is in effect,
American Capitol receives an expense allowance from the reinsurer.
RESULTS OF OPERATIONS
Premiums and other considerations were 7% lower during the six months ended
June 30, 1998 in comparison to the comparable period in 1997. From June 1,
1996 through July 31, 1997, American Capitol coinsured, and did not
retrocede, 91.4% of the policies written during that period by World
Service Life Insurance Company of America ("World Service"). The policies
written by World Service were mostly single premium whole life. Therefore,
premiums for the first half of 1997 include the premiums on such policies
while premiums for the first half of 1998 do not.
Premiums and other considerations were 13% higher during the three months
ended June 30, 1998 in comparison to the comparable period in 1997. The
volume of premiums from World Service declined significantly during the
second quarter of 1997 as World Service wound down its new business
production. Premiums in Texas Imperial Life Insurance Company, the wholly
owned subsidiary of American Capitol through which the company markets
final expense life insurance and insurance-funded prepaid funeral service
contracts, were 90% higher during the three months ended June 30, 1998 in
comparison to the comparable period in 1997. The increase in Texas
Imperial s premiums more than offset the absence of the World Service
premiums during the three months ended June 30, 1998 (in comparison to the
comparable period in 1997).
Net investment income was 70% higher during the six months ended June 30,
1998 in comparison to the comparable period in 1997 and was 84% higher
during the three months ended June 30, 1998 in comparison to the comparable
period in 1997. Effective August 1, 1997, American Capitol acquired,
through assumption reinsurance, the World Service policies. World Service
transferred American Capitol approximately $2.5 million in assets in
connection with the assumption. Thus, net investment income throughout the
six months ended June 30, 1998 includes the earnings on the transferred
assets while net investment income for the six months ended June 30, 1997
does not. Also, on November 21, 1997, American Capitol sold its home
office building and adjacent land to an unrelated third party. During the
first half of 1997, the home office building was a negative factor in the
determination of net investment income, as the expenses associated with the
property exceeded rental income. During the first half of 1998, net
investment income includes the earnings from the investment of the proceeds
of the sale of the property.
The Company receives an expense allowance for administering certain blocks
of reinsured policies. The expense allowance for the six months ended June
30, 1998 was 155% higher than the expense allowance for the comparable
period in 1997 and was 153% higher during the three months ended June 30,
1998 in comparison to the comparable period in 1997. The increase in the
expense allowance during 1998 is due to the expense allowance attributable
to the retrocession of the Universal policies discussed above under
"Universal Life Insurance Company Transaction."
As a result of the above factors, total revenue was 66% higher during the
six months ended June 30, 1998 in comparison to the comparable period in
1997. Total revenue was 80% higher during the three months ended June 30,
1998 in comparison to the comparable period in 1997.
Total policy benefits (i.e., death benefits and other benefits) were 101%
of premiums and other considerations during the six months ended June 30,
1998 in comparison to 102% of premiums and other considerations during the
comparable period in 1997. Total policy benefits were 96% of premiums and
other considerations during the three months ended June 30, 1998 in
comparison to 104% of premiums and other considerations during the
comparable period in 1997.
Total expenses (i.e., total benefits and expenses less total policy
benefits) were 68% of total revenue during the six months ended June 30,
1998 in comparison to 50% of total revenue during the comparable period in
1997. Total expenses were 64% of total revenue during the three months
ended June 30, 1998 in comparison to 50% of total revenue during the
comparable in 1997. As noted above under "Universal Life Insurance Company
Transaction," Universal administered the coinsured policies until July 1,
1998. General expenses for the six months ended June 30, 1998 include
approximately $1.3 million related to payments made to Universal for
administering the coinsured policies. General expenses for the three
months ended June 30, 1998 include approximately $600,000 related to
payments made to Universal for administering the coinsured policies.
General expenses for both the six months and the three months ended June
30, 1998 include expenses incurred by the Company in preparing to assume
the administration of the Universal policies. General expenses for the
first quarter of 1998 also include a one-time broker's fee of $227,500
associated with the Universal coinsurance.
YEAR 2000 STATUS
The Company's policies are administered on two policy administration
systems. One of the policy administration systems was internally
developed. The Company has performed what it believes to be a reasonable
degree of testing on the system and believes that the system is year 2000
compliant. Certain of the Company s subsystems are not currently year 2000
compliant and will either be remediated or replaced. The Company believes
that all of its systems will be year 2000 compliant by the end of 1998, and
that the cost to reach such compliance will not be material.
LIQUIDITY AND CAPITAL RESOURCES
As a part of the assets transferred to American Capitol from Universal in
connection with the Coinsurance Agreement, Universal transferred
approximately $3.5 million in mortgage loans. In addition to the
underlying real estate collateral, the mortgage loans were guaranteed by
Universal. Universal had the obligation to repurchase all of the mortgage
loans by June 30, 1998. On March 27, 1998, Universal repurchased
approximately $2.2 million of the mortgage loans. The remaining Universal
mortgage loans were repurchased on June 30, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Quarterly Report on Form 10-QSB for the
quarter ended June 30, 1998 to be signed on its behalf by the undersigned
thereunto duly authorized.
ACAP CORPORATION
(Registrant)
Date: August 11, 1998 By:\s\William F. Guest
---------------------------------
William F. Guest, President
Date: August 11, 1998 By:\s\John D. Cornett
---------------------------------
John D. Cornett, Treasurer
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JUNE 30,
1998 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<DEBT-HELD-FOR-SALE> 35,519,377
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 1,981,379
<REAL-ESTATE> 0
<TOTAL-INVEST> 45,799,365
<CASH> 0
<RECOVER-REINSURE> 105,720,356
<DEFERRED-ACQUISITION> 1,513,662
<TOTAL-ASSETS> 156,937,323
<POLICY-LOSSES> 139,280,032
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 1,659,756
<POLICY-HOLDER-FUNDS> 2,664,224
<NOTES-PAYABLE> 687,500
0
1,850,000
<COMMON> 876
<OTHER-SE> 5,876,015
<TOTAL-LIABILITY-AND-EQUITY> 156,937,323
1,157,302
<INVESTMENT-INCOME> 1,048,742
<INVESTMENT-GAINS> 85,909
<OTHER-INCOME> 21,960
<BENEFITS> 1,165,329
<UNDERWRITING-AMORTIZATION> 56,306
<UNDERWRITING-OTHER> 3,161,625
<INCOME-PRETAX> 446,626
<INCOME-TAX> 22,684
<INCOME-CONTINUING> 423,942
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 423,942
<EPS-PRIMARY> 44.13
<EPS-DILUTED> 35.39
<RESERVE-OPEN> 924,702
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 506,104
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</TABLE>
