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 March 31, 1999
[ ] 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, 2ND Floor
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 MAY 5, 1999
Common Stock, Par Value $.10 7,238
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 - March 31, 1999 (Unaudited) 3
Condensed Consolidated Statements of
Operations - Three Months Ended
March 31, 1999 and 1998 (Unaudited) 5
Condensed Consolidated Statements of
Cash Flows - Three Months Ended
March 31, 1999 and 1998 (Unaudited) 6
Notes to Condensed Consolidated
Financial Statements (Unaudited) 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 10
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
MARCH 31, 1999
(UNAUDITED)
ASSETS
Investments:
Fixed maturities available for sale $ 36,951,263
Mortgage loans 1,867,328
Policy loans 6,850,920
Short-term investments 2,003,950
-----------
Total investments 47,673,461
Cash 126,421
Accrued investment income 677,784
Reinsurance receivable 104,403,848
Accounts receivable (less allowance
for uncollectible accounts of $88,508) 314,993
Deferred acquisition costs 2,376,547
Property and equipment
(less accumulated depreciation of $489,014) 408,164
Costs in excess of net assets of acquired business
(less accumulated amortization of $1,251,707) 1,422,071
Other assets 1,395,518
-----------
$158,798,807
===========
See accompanying notes to condensed consolidated financial statements.
continued . . .
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Policy liabilities:
Future policy benefits $139,190,406
Contract claims 2,467,414
------------
Total policy liabilities 141,657,820
Other policyholders' funds 2,884,099
Deferred tax liability 1,128,007
Deferred gain on reinsurance 2,354,654
Deferred gain on sale of real estate 367,059
Note payable 1,500,000
Other liabilities 1,948,497
------------
Total liabilities 151,840,136
------------
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 8,759 shares 876
Additional paid-in capital 6,259,589
Accumulated deficit (1,229,928)
Treasury stock, at cost, 1,517 shares (501,122)
Accumulated other comprehensive income net unrealized
gains, net of taxes of $507,576 579,256
-------------
Total stockholders' equity 6,958,671
------------
$158,798,807
------------
See accompanying notes to condensed consolidated financial statements.
<PAGE>
ACAP CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(UNAUDITED)
1999 1998
Revenues:
Premiums and other considerations $1,085,315 524,257
Net investment income 482,062 507,659
Net realized investment gains 21,843 19,291
Reinsurance expense allowance 1,106,602 1,369,684
Amortization of deferred gain on reinsurance 38,344 49,040
Other income 8,444 9,982
---------- ---------
Total revenues 2,742,610 2,479,913
---------- ---------
Benefits and expenses:
Policy benefits 993,648 558,400
Commissions and general expenses 1,292,811 1,657,778
Interest expense 8,846 23,557
Amortization of deferred acquisition costs 83,635 30,668
Amortization of costs in excess of net
assets of acquired business 59,916 59,916
---------- ----------
Total benefits and expenses 2,438,856 2,330,319
---------- ----------
Income before federal income tax expense (benefit) 303,754 149,594
Federal income tax expense (benefit):
Current 71,164 92,430
Deferred (23,965) (119,864)
---------- ----------
Net income $ 256,555 177,028
---------- ----------
Other comprehensive income:
Net unrealized holding losses arising
during period, net of tax of $24,182
in 1999 and $5,115 in 1998 (635,529) (11,623)
Comprehensive income (loss) ($ 378,974) 165,405
---------- ---------
Earnings per share:
Net income per share-basic $ 29.05 17.26
--------- ---------
Net income per share-diluted $ 20.18 9.14
---------- ---------
See accompanying notes to condensed consolidated financial statements.
<PAGE>
ACAP CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
INCREASE (DECREASE) IN CASH (UNAUDITED)
1999 1998
Cash flows from operating activities:
Net income from operations $ 256,555 177,028
Adjustments to reconcile net income to
net cash provided by (used in) operating activities:
Depreciation and amortization 119,514 29,285
Net realized investment gains on investments (21,843) (19,291)
Deferred federal income tax benefit (23,965) (119,864)
Decrease (increase) in reinsurance receivables 751,436 (815,188)
Increase in accrued investment income (134,479) (47,485)
Decrease (increase) in accounts receivable 248,252 (4,488)
Increase in other assets (1,024,533) (664,162)
Increase (decrease) in future policy benefit
liability (264,907) 532,634
Increase (decrease) in contract claim liability 70,195 (16,891)
Decrease in other policyholders' funds liability 33,139 17,757
Decrease in other liabilities 218,072 351,728
----------- ----------
Net cash provided by (used in) operating activities 227,436 (578,937)
----------- ----------
Cash flows from investing activities:
Proceeds from sales of investments available for sale
and principal repayments on mortgage loans 754,678 3,197,435
Purchases of investments available for sale (1,324,755) (24,876)
Net (increase) decrease in policy loans (39,071) 101,493
Net increase in short-term investments (430,320) (2,324,353)
Purchase of property and equipment (31,459) (4,153)
----------- ----------
Net cash provided by (used in) investing activities (1,070,927) 945,546
----------- ----------
Cash flows from financing activities:
Proceeds from issuance of note payable 1,500,000 0
Principal payments on note payable (562,500) (62,500)
Deposits on policy contracts 321,757 287,813
Withdrawals from policy contracts (362,947) (595,473)
Preferred dividends paid (46,250) (48,563)
Treasury stock purchases (480) (45,600)
----------- ----------
Net cash provided by (used in) financing activities 849,580 (464,323)
----------- ----------
Net increase (decrease) in cash 6,089 (97,714)
Cash at beginning of year 120,332 97,714
----------- ----------
Cash at end of period $ 126,421 0
=========== ==========
See accompanying notes to condensed 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 March 31, 1999 and the
condensed consolidated statements of operations and cash flows for the
three month periods ended March 31, 1999 and 1998, 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
March 31, 1999 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, 1998 Annual Report to Stockholders. The
results of operations for the three month periods ended March 31, 1999
and 1998 are not necessarily indicative of the operating results for the
full year.
2. ACCOUNTING STANDARDS
In September 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 $46,250 and $48,563 for the three
months ended March 31, 1999 and 1998, respectively) by the weighted
average common shares outstanding (7,240 at March 31, 1999 and 7,441 at
March 31, 1998).
Earnings per common share on a diluted basis is computed by dividing net
income (less dividends paid on preferred stock of $46,250 and $48,563 for
the three months ended March 31, 1999 and 1998, respectively, and less
the income statement effect of stock options as if exercised of $58,976
and $58,976 for March 31, 1999 and 1998, respectively) by the weighted
average common shares outstanding as if such stock options were exercised
(7,500 at March 31, 1999 and 7,604 at March 31, 1998).
4. STOCKHOLDERS' EQUITY
During the three months ended March 31, 1999, stockholders' equity
changed for the following items: Decrease in net unrealized investment
gains of $635,529; net income of $256,555; cash dividends paid on
preferred stock of $46,250 and a net increase in treasury stock of $480.
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 $0 and $32,677 for federal income taxes were made for
the three months ended March 31, 1999 and 1998, respectively.
Cash payments of $19,913 and $19,726 for interest expense were made
during the three months ended March 31, 1999 and 1998, 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
===========
7. NOTE PAYABLE
On March 31, 1999, the Company repaid the $500,000 balance on its note
from Central National Bank ("CNB") by borrowing $1,500,000 from CNB. The
note is renewable by the bank each April 30 until fully repaid. The note
bears interest at a rate equal to the base rate of a bank. Principal
payments on the note of $62,500 are due quarterly (a six year
amortization) beginning April 30, 1999. The loan agreement contains
certain restrictions and financial covenants. Without the written
consent of the bank, Acap may not incur any debt, pay common stock
dividends or sell any substantial amounts of assets. Also, American
Capitol is subject to minimum statutory earnings and capital and surplus
requirements during the loan term. The Company is in compliance with all
of the terms of the loan as of March 31, 1999.
8. SUBSEQUENT EVENT
On April 20, 1999, the life subsidiaries of the Company, American Capitol
and Texas Imperial, along with Statesman, the Texas Department of
Insurance ("TDI"), and the National Organization of Life and Health
Insurance Guaranty Associations ("NOLHGA") signed a document (the "Term
Sheet") entitled "Term Sheet for a Liquidation Plan RE: Statesman
National Life Insurance Company ("Statesman National")." The Term Sheet
outlines a plan of liquidation for Statesman under which American Capitol
and Texas Imperial would assume all of the Medicare supplement insurance
policies in force in Statesman. Participating NOLHGA guaranty
associations would fund the transaction with a combination of cash and
promissory notes. In determining the funding amount, among other things,
the Company would receive credit in an amount equal to the $800,000
surplus debenture Texas Imperial purchased from Statesman during 1998 and
which Texas Imperial wrote off at December 31, 1998. The plan
contemplates that at a prescribed point three years after the closing of
the proposed transaction, the actual results during the three year period
of the Medicare supplement policies in question will be compared to the
projected results for that same period and, if the actual results have
been better than projected, the participating NOLHGA guaranty
associations will be entitled to a refund in an amount prescribed by a
formula set out in the plan of liquidation. While at this point it
appears favorable that the transactions contemplated by the Term Sheet
will be consummated, probably during the second quarter of 1999, there is
no guarantee that any of the transactions contemplated by the Term Sheet
will in fact be consummated.
<PAGE>
ACAP CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Premiums and other considerations were 107% lower during the three months
ended March 31, 1999 in comparison to the comparable period in 1998.
Effective October 31, 1998, the Company's wholly-owned subsidiary,
American Capitol Insurance Company ("American Capitol"), acquired through
100% coinsurance certain Medicare supplement policies issued by Statesman
National Life Insurance Company ("Statesman"). Premiums for the first
quarter of 1999 include approximately $543,000 in premiums related to the
coinsurance, whereas premiums for the first quarter of 1998 had no such
premiums. Also, as a result of new business, premiums in American
Capitol's wholly-owned subsidiary, Texas Imperial Life Insurance Company
("Texas Imperial"), were approximately $106,000 higher during the three
months ended March 31, 1999 in comparison to the comparable period in
1998. The Medicare supplement premiums and Texas Imperial's new business
premiums exceeded the reduction in premiums from normal policy attrition.
The Company receives an expense allowance for administering certain
blocks of reinsured policies. The expense allowance for the three months
ended March 31, 1999 was 19% lower than the expense allowance for the
comparable period in 1998. The decrease in the expense allowance during
1999 is due to attrition in the reinsured policies.
Primarily as a result of the above factors, total revenue was 11% higher
during the three months ended March 31, 1999 in comparison to the
comparable period in 1998.
Total policy benefits (i.e., death benefits and other benefits) were 92%
of premiums and other considerations during the three months ended March
31, 1999 in comparison to 107% of premiums and other considerations
during the comparable period in 1998. The lower benefit to premium
ratio during the first quarter of 1999 is largely attributable to the
Medicare supplement business coinsured from Statesman, which had a lower
benefit to premium ratio than the balance of the Company business.
Total expenses (i.e., total benefits and expenses less total policy
benefits) were 53% of total revenue during the three months ended March
31, 1999 in comparison to 71% of total revenue during the comparable
period in 1998. General expenses for 1998 included an unusually high
level of expenses associated with the coinsurance of a block of policies
from Universal Life Insurance Company ("Universal"). While the
coinsurance of the Universal policies was effective January 1, 1998,
Universal continued to administer the coinsured policies until July 1,
1998 at which time American Capitol began administration of the policies.
American Capitol paid Universal a fee for administering the policies.
General expenses for the first quarter of 1998 also included a one-time
broker's fee of $227,500 associated with the Universal coinsurance.
Pre-tax operating income (excluding net realized investment gains) was
$281,911 during the three months ended March 31, 1999 in comparison to
$130,303 during the comparable period in 1998, a 116% increase.
YEAR 2000 STATUS
The Year 2000 issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Any of
the Company's computer programs or hardware that have date-sensitive
software or embedded chips may recognize a date using "00" as the year
1900 rather than the year 2000. This could result in a system failure or
miscalculations causing disruptions of normal business activities. To
date, the Company has fully completed its assessment of all systems that
could be significantly affected by the Year 2000 issue. In addition, the
Company has gathered information about the Year 2000 compliance status of
material third parties with whom the Company conducts business and
continues to monitor their compliance.
The Company's policies are administered on three policy administration
systems. One of the policy administration systems was internally
developed. The Company's assessment of that system found that minor
corrections were necessary to make the system Year 2000 compliant. Those
corrections have been completed, tested, and implemented. Based on the
testing performed, the Company believes that the system is now Year 2000
compliant. The other two policy administration systems are vendor
developed and supported systems. The vendors have represented that the
systems are Year 2000 compliant. With all three policy administration
systems Year 2000 compliant, the Company is positioned to perform all
basic policy transactions without disruption.
The Company used two general ledger and accounts payable systems. One of
the systems is not longer supported by the vendor who developed the
system. The Company's assessment of that system found that extensive
modifications were needed to make the system Year 2000 complaint. The
other general/ledger accounts payable system is currently supported by
the vendor. While the version of that system in production at the
Company is not Year 2000 compliant, the vendor has an updated version
that is Year 2000 compliant. The Company plans on installing the updated
version of that system during the second quarter of 1999 and converting
to exclusive use of that system for general ledger and accounts payable
functions by the end of the third quarter of 1999.
The system used for claims processing of the Medicare supplement policies
coinsured from Statesman is not Year 2000 compliant. The Company has
completed the assessment of the changes needed to make the claims system
Year 2000 compliant. The claims system will either be remediated or
replaced by October 31, 1999.
Certain of the Company's minor subsystems are not currently year 2000
compliant and will be remediated. The Company has completed the Year
2000 assessment of these subsystems and is approximately 70% through the
remediation of these subsystems. The Company believes that the
remediation, testing, and implementation of the subsystems will be
completed by the end of the third quarter of 1999.
As assessment of the Company's operating equipment has determined that
certain of the Company's personal computers will need to be replaced
prior to January 1, 2000.
To date, the Company has used existing internal resources to remediate
the systems that are not Year 2000 compliant, and the costs thus incurred
have not been significant. Other than approximately $20,000 to upgrade
the general ledger/accounts payable systems and the replacement of some
personal computers, it is expected that existing internal resources will
be used to complete the Company's Year 2000 project.
Management of the Company believes that it has an effective program in
place to resolve the Year 2000 issue in a timely manner. As noted above,
the Company has not yet completed all necessary phases of the Year 2000
program. In the event that the Company does not complete any additional
phases, the Company would not be able to use its general ledger system or
the system used to pay Medicare supplement claims.
The Company has contingency plans for certain critical applications and
is working on such plans for other applications. These contingency plans
involve, among other actions, manual workarounds and adjusting staffing
strategies.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1999, there was a decrease in net unrealized investment
gains since December 31, 1998 of $635,529. The decrease in invested
asset values was primarily the result of a increase in market interest
rates during the first quarter of 1999. It is not anticipated that the
Company will need to liquidate investments prior to their projected
maturities in order to meet cash flow requirements.
On March 31, 1999, the Company repaid the $500,000 balance on its note
from Central National Bank ("CNB") by borrowing $1,500,000 from CNB. The
note is renewable by the bank each April 30 until fully repaid. The note
bears interest at a rate equal to the base rate of a bank. Principal
payments on the note of $62,500 are due quarterly (a six year
amortization) beginning April 30, 1999. The loan agreement contains
certain restrictions and financial covenants. With the written consent
of the bank, Acap may not incur any debt, pay common stock dividends or
sell any substantial amounts of assets. Also, American Capitol is
subject to minimum statutory earnings and capital and surplus
requirements during the loan term. The Company is in compliance with all
of the terms of the loan as of March 31, 1999.
CAUTIONARY STATEMENT
The 1995 Private Securities Litigation Reform Act provides issuers the
opportunity to make cautionary statements regarding forward-looking
statements. Accordingly, any forward-looking statement contained herein
or in any other oral or written statement by the Company or any of its
officers, directors or employees is qualified by the fact that actual
results of the Company may differ materially from such statement due to
the following important factors, among other risks and uncertainties
inherent in the Company's business: state insurance regulations, rate
competition, adverse changes in interest rates, unforeseen losses with
respect to loss and settlement expense reserves for unreported and
reported claims, and catastrophic events.
SUBSEQUENT EVENT
On April 20, 1999, the life subsidiaries of the Company, American Capitol
and Texas Imperial, along with Statesman, the Texas Department of
Insurance ("TDI"), and the National Organization of Life and Health
Insurance Guaranty Associations ("NOLHGA") signed a document (the "Term
Sheet") entitled "Term Sheet for a Liquidation Plan RE: Statesman
National Life Insurance Company ("Statesman National")." The Term Sheet
outlines a plan of liquidation for Statesman under which American Capitol
and Texas Imperial would assume all of the Medicare supplement insurance
policies in force in Statesman. Participating NOLHGA guaranty
associations would fund the transaction with a combination of cash and
promissory notes. In determining the funding amount, among other things,
the Company would receive credit in an amount equal to the $800,000
surplus debenture Texas Imperial purchased from Statesman during 1998 and
which Texas Imperial wrote off at December 31, 1998. The plan
contemplates that at a prescribed point three years after the closing of
the proposed transaction, the actual results during the three year period
of the Medicare supplement policies in question will be compared to the
projected results for that same period and, if the actual results have
been better than projected, the participating NOLHGA guaranty
associations will be entitled to a refund in an amount prescribed by a
formula set out in the plan of liquidation. While at this point it
appears favorable that the transactions contemplated by the Term Sheet
will be consummated, probably during the second quarter of 1999, there is
no guarantee that any of the transactions contemplated by the Term Sheet
will in fact be consummated.
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 March 31, 1999 to be signed on its behalf by the
undersigned thereunto duly authorized.
ACAP CORPORATION
(Registrant)
Date: May 11, 1999 By: \s\William F. Guest
--------------------------------
William F. Guest, President
Date: May 11, 1999 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 MARCH 31,
1999 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<DEBT-HELD-FOR-SALE> 36,951,363
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 1,867,328
<REAL-ESTATE> 0
<TOTAL-INVEST> 47,673,461
<CASH> 126,421
<RECOVER-REINSURE> 104,403,848
<DEFERRED-ACQUISITION> 2,376,547
<TOTAL-ASSETS> 158,798,807
<POLICY-LOSSES> 139,496,503
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 2,467,414
<POLICY-HOLDER-FUNDS> 2,884,099
<NOTES-PAYABLE> 1,500,000
0
1,850,000
<COMMON> 876
<OTHER-SE> 5,107,795
<TOTAL-LIABILITY-AND-EQUITY> 158,798,807
1,085,315
<INVESTMENT-INCOME> 482,062
<INVESTMENT-GAINS> 21,843
<OTHER-INCOME> 8,444
<BENEFITS> 993,648
<UNDERWRITING-AMORTIZATION> 83,635
<UNDERWRITING-OTHER> 1,292,811
<INCOME-PRETAX> 303,754
<INCOME-TAX> 47,199
<INCOME-CONTINUING> 256,555
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 256,555
<EPS-PRIMARY> 29.05
<EPS-DILUTED> 20.18
<RESERVE-OPEN> 1,659,756
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 348,437
<PAYMENTS-PRIOR> 279,501
<RESERVE-CLOSE> 2,467,414
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
