- ----------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________
FORM 10-Q
___________
|X| Quarterly Report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended September 30, 1996
OR
|_| Transition report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
___________
Commission File Number 0-3722
ATLANTIC AMERICAN CORPORATION
Incorporated pursuant to the laws of the State of Georgia
___________
Internal Revenue Service-- Employer Identification No.
58-1027114
Address of Principal Executive Offices:
4370 Peachtree Road, N.E., Atlanta, Georgia 30319
(404) 266-5500
Indicate by check mark whether 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 |_|
The total number of shares of the registrant's Common Stock, $1 par value,
outstanding on November 4, 1996, was 18,670,782.
- ----------------------------------------------------------------
<PAGE>
ATLANTIC AMERICAN CORPORATION
INDEX
Part 1. Financial Information Page No.
- ------------------------------ --------
Item 1. Financial Statements:
Consolidated Balance Sheets -
December 31, 1995 and September 30, 1996 2
Consolidated Statements of Operations -
Three months and nine months ended
September 30, 1995 and 1996 3
Consolidated Statements of Cash Flows -
Nine months ended September 30, 1995
and 1996 4
Notes to Consolidated Financial
Statements 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6-8
Part II. Other Information
- ---------------------------
Item 6. Exhibits and report on Form 8-K 9
Signature 10
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
ATLANTIC AMERICAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(In thousands, except share and per share data)
September 30, December 31,
1996 1995
------------- -------------
Cash, including short-term investments of
$23,127 and $12,498 $ 28,434 $ 15,069
------------- -------------
Investments:
Bonds (cost: $105,142 and $112,915) 104,246 113,313
Common and preferred stocks (cost:
$23,030 and $26,925) 38,895 42,116
Mortgage loans 6,842 6,952
Policy and student loans 4,626 5,690
Real estate 46 46
------------- -------------
Total investments 154,655 168,117
------------- -------------
Receivables:
Reinsurance 26,859 22,467
Other (net of allowance for bad debts:
$1,540 and $1,260) 23,523 18,567
Deferred acquisition costs 16,031 14,899
Other assets 4,029 4,125
Goodwill 2,137 2,250
------------- -------------
Total assets $ 255,668 $ 245,494
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Insurance reserves and policy funds:
Future policy benefits $ 36,607 $ 36,305
Unearned premiums 28,153 24,140
Losses and claims 86,197 79,514
Other policy liabilities 3,897 3,888
------------- -------------
Total policy liabilities 154,854 143,847
------------- -------------
Accounts payable and accrued expenses 7,965 8,010
Debt payable ($1,058 and $6,358 due to
affiliates) 37,921 44,921
Net obligation to discontinued operations - 953
Minority interest - 1,285
------------- ------------
Total liabilities 200,740 199,016
------------- ------------
Commitments and contingencies
Shareholders' equity:
Preferred stock, $1 par, 4,000,000 shares
authorized;
Series A preferred, 30,000 shares
issued and outstanding, $3,000
redemption value 30 30
Series B preferred, 134,000 shares
issued and outstanding, $13,400
redemption value 134 134
Common stock, $1 par, 30,000,000 shares
authorized; 18,712,167 shares issued in
1996 and 1995 18,712 18,712
Additional paid-in capital 54,442 46,531
Accumulated deficit (33,128) (34,446)
Net unrealized investment gains 14,968 15,589
Treasury stock, at cost, 69,416 shares in
1996 and 32,767 shares in 1995 (230) (72)
------------- -------------
Total shareholders' equity 54,928 46,478
------------- -------------
Total liabilities and
shareholders' equity $ 255,668 $ 245,494
============= =============
The accompanying notes are an integral part of these financial statements.
-2-
<PAGE>
ATLANTIC AMERICAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- -------------------
(In thousands, except per
share data)
1996 1995 1996 1995
---- ---- ---- ----
Revenue:
Insurance premiums $ 22,542 $ 11,085 $ 65,384 $ 32,000
Investment income 2,711 1,600 8,269 4,830
Realized investment gains, net 322 903 1,004 1,441
Other income 106 - 211 -
---------- -------- --------- ----------
Total revenue 25,681 13,588 74,868 38,271
---------- -------- --------- ----------
Benefits and expenses:
Insurance benefits and losses
incurred 14,903 6,317 42,948 19,043
Commissions and underwriting
expenses 6,393 3,951 19,041 11,000
Interest expense 766 557 2,491 1,690
Other 1,450 1,556 4,393 4,380
---------- -------- --------- ----------
Total benefits and expenses 23,512 12,381 68,873 36,113
---------- -------- --------- ----------
Income before income tax expense
and discontinued operations 2,169 1,207 5,995 2,158
Income tax expense (101) - (160) (9)
---------- -------- --------- ----------
Income from continuing operations 2,068 1,207 5,835 2,149
Loss from discontinued operations - (1,404) (4,447) (4,384)
---------- -------- --------- ----------
Net income (loss) $ 2,068 (197) 1,388 (2,235)
========== ======== ========= ==========
Net income (loss) per common
share data:
Continuing operations $ 0.09 $ 0.06 $ 0.25 $ 0.11
Discontinued operations - (0.07) (0.24) (0.24)
---------- -------- --------- ----------
Net income (loss) $ 0.09 $ (0.01) $ 0.01 $ (0.13)
========== ======== ========= ==========
Weighted average common shares
outstanding 18,869 18,732 18,860 18,627
========== ======== ========= ==========
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE>
ATLANTIC AMERICAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended
September 30,
----------------------
1996 1995
----------------------
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 1,388 $ (2,235)
Adjustments to reconcile net income (loss) to
net cash provided (used) by operating activities:
Amortization of deferred acquisition costs 6,243 2,924
Acquisition costs deferred (7,375) (2,591)
Realized investment gains (1,004) (1,441)
Increase in insurance reserves 10,998 3,282
Loss from discontinued operations - 4,384
Depreciation and amortization 875 402
Alternative minimum taxes 89 9
Deferred income taxes - 1,115
Minority interest - (46)
Increase in receivables, net (9,348) (2,087)
Increase (decrease) in other liabilities 196 (114)
Other, net 1,659 449
---------- ----------
Net cash provided by continuing operations 3,721 4,051
Net cash used by discontinued operations - (7,136)
---------- ----------
Net cash provided (used) by operating
activities 3,721 (3,085)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from investments sold or matured 65,141 22,974
Investments purchased (50,799) (20,759)
Additions to property and equipment (593) (871)
Sale of Leath 4,550 -
---------- ----------
Net cash provided by investing activities 18,299 1,344
Net cash used by discontinued operations - (1,836)
---------- ----------
Net cash provided (used) by investing activities 18,299 (492)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Preferred stock dividends (237) (237)
Proceeds from exercise of stock options 44 600
Repurchase of treasury shares (338) (124)
Repurchase of minority shares (814) -
Repayments of debt (7,310) (675)
---------- ----------
Net cash used by continuing operations (8,655) (436)
Net cash provided by discontinued operations - 6,909
---------- ----------
Net cash (used) provided by financing activities (8,655) 6,473
---------- ----------
Net increase in cash and cash equivalents 13,365 2,896
Cash and cash equivalents at beginning of period:
Continuing operations 15,069 4,016
Discontinued operations - 2,383
---------- ----------
Total 15,069 6,399
---------- ----------
Cash and cash equivalents at end of period:
Continuing operations 28,434 8,975
Discontinued operations - 320
---------- ----------
Total $ 28,434 $ 9,295
========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest $ 2,491 $ 1,811
========== ==========
Cash paid for income taxes $ 71 $ 128
========== ==========
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE>
ATLANTIC AMERICAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands)
Note 1. Basis of presentation.
- -------
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with 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 complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. All significant intercompany accounts and transactions have been
eliminated in consolidation and the interests of minority shareholders have been
recognized. Operating results for the nine month period ended September 30,
1996, are not necessarily indicative of the results that may be expected for the
year ending December 31, 1996. These operating results include American Southern
Insurance Company for the first, second, and third quarters of 1996, whereas
comparable 1995 operating results do not. For further information, refer to the
financial statements and footnotes thereto included in the Company's annual
report on Form 10-K for the year ended December 31, 1995.
-5-
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Atlantic American Corporation's (the "Company" or "Parent Company") net income
from continuing operations for the third quarter of 1996 was $2.1 million, or
$0.09 per share, compared to net income of $1.2 million, or $0.06 per share, for
the third quarter of 1995. The Company's net income from continuing operations
year-to-date for 1996 was $5.8 million, or $0.25 per share, compared to net
income of $2.1 million, or $0.11 per share, in 1995. The primary reason for the
increase in earnings for the third quarter and year-to-date was mainly due to
inclusion of the income of American Southern Insurance Company ("American
Southern") in the Company's income beginning January 1, 1996. American Southern
accounted for $12.5 million of the $25.7 million of revenue for the quarter and
$35.1 million of the $74.9 million of revenue year-to-date.
At September 30, 1996, the Company had a net cumulative deferred tax asset of
zero. The net cumulative deferred tax asset consists of $30.5 million of
deferred tax assets, offset by $9.2 million of deferred tax liabilities, and a
$21.3 million valuation allowance. SFAS No. 109 requires that a valuation
allowance be recorded against tax assets which are not likely to be realized.
Specifically, the Company's carryforwards expire at specific future dates and
utilization of certain carryforwards is limited to specific amounts each year.
However, due to the uncertain nature of their ultimate realization based upon
past performance and expiration dates, the Company has established a full
valuation allowance against these carryforward benefits and recognizes the
benefits only as reassessment demonstrates they are realizable. The Company's
ability to generate taxable income from operations is dependent upon various
factors, many of which are beyond management's control. Accordingly, there can
be no assurance that the Company will generate future taxable income. Therefore,
the realization of the deferred tax assets will be assessed periodically based
on the Company's current and anticipated results of operations.
American Southern had income before taxes of $1.8 million in the third quarter
of 1996 and $4.7 million year-to-date. As American Southern was purchased
December 31, 1995, no income information is included for 1995.
Georgia Casualty & Surety Company ("Georgia Casualty") had income before taxes
of $94,000 in the third quarter of 1996 and $1.2 million year-to-date, compared
to $823,000 in the third quarter and $1.5 million year-to-date in 1995. The
decrease in operating income was largely due to a decline from 1995 in realized
investment gains of $293,000 in the third quarter and $356,000 year-to-date and
an increase of $397,000 in insurance benefits and losses incurred in the third
quarter.
Atlantic American Life Insurance Company and Bankers Fidelity Life Insurance
Company (collectively the "Life and Health Division") had net income of $884,000
and $2.4 million for the third quarter and year-to-date, respectively, for 1996,
compared to $1.1 million and $2.5 million, respectively, for 1995. This somewhat
flat net income was the result of premium revenue increases of $283,000 and
$730,000 for the third quarter and year-to-date, respectively, which were offset
mainly by increased life insurance policy reserves.
As previously reported, the sale of Leath Furniture, LLC ("Leath"), which had
been reported as discontinued operations beginning with the fourth quarter of
1995, was completed on April 8, 1996. Therefore, the third quarter of 1996
reported no results related to Leath, compared to a net loss of $1.4 million, or
$0.07 per share, for the previous third quarter. Results of discontinued
operations for each of the nine month periods, ending September 30, 1995 and
1996, excluding losses previously accrued, were a net loss of $4.4 million, or
$0.24 per share, which, in each case, was attributable to Leath for the period
prior to its sale.
RESULTS OF OPERATIONS
Total revenue increased to $25.7 million and $74.9 million in the third quarter
and first nine months, respectively, of 1996 from $13.6 million and $38.3
million, respectively, for the comparable periods in 1995. Total revenue
increased in the third quarter and first nine months of 1996 mainly due to an
increase in premium revenue of $11.5 million and $33.4 million, respectively.
The increase in premium revenue was attributed to the inclusion of American
Southern for the first time in 1996, which accounted for $11.3 million in the
third quarter and $31.7 million in the first nine months of 1996. The remaining
change in insurance premiums came from a $78,000 decrease in the third quarter
offset by a $947,000 increase for the first nine months of 1996 in Georgia
Casualty's premiums and increases of $283,000 and $730,000 in the third quarter
and first nine months of 1996, respectively, from the Life and Health Division.
-6-
<PAGE>
The decrease in Georgia Casualty's premiums for the quarter came from a decrease
in worker's compensation premiums of $564,000 offset by increases of $297,000 in
the business automobile market, $138,000 in the general liability market, and
$52,000 in the property market. The increase for the first nine months resulted
principally from an increase of $746,000 in the business automobile market. The
increase in the Life and Health Division's premiums was in the life line of
business which increased $453,000 for the quarter and $1.6 million for the first
nine months of 1996, offset by a decrease of $171,000 and $911,000 for the
quarter and nine months, respectively, in accident and health premiums. The
balance of the increase in revenue was due to an increase in investment income
of $1.1 million in the third quarter and $3.4 million year-to-date, of which
$1.1 million and $3.1 million in the third quarter and first nine months of
1996, respectively, were attributed to the inclusion of American Southern.
Insurance benefits and losses increased to $14.9 million for the third
quarter of 1996 from $6.3 million for the same quarter of 1995, and year-to-date
increased to $42.9 million from $19.0 million in 1995. Increases of $8.3 million
in the third quarter and $22.9 million in the first nine months of the year were
attributed to Georgia Casualty and American Southern (collectively the "Casualty
Division"), and $337,000 and $1.1 million increases in the third quarter and
first nine months of 1996, respectively, were attributed to the Life and Health
Division. The Casualty Division's increase was due to $7.9 million and $22.7
million additions in the third quarter and first nine months of 1996,
respectively, from the American Southern acquisition and Georgia Casualty's
increases of $397,000 and $170,000 in the third quarter and first nine months of
1996, respectively. The Life and Health Division's increase was mainly caused by
increased life premiums generating an increase in reserves, whereas 1995
reflected a decrease in reserves from the elimination of a block of funeral home
business.
As a percentage of premium revenue, insurance benefits and losses incurred
increased to 66.11% in the third quarter of 1996 from 56.99% in 1995 and to
65.68% year-to-date for 1996 compared to 59.51% for 1995. The percentage of
insurance benefits and losses incurred to premium revenue for the third quarter
and year-to date in the Life and Health Division was 54.11% and 54.86%,
respectively, for 1996 compared to 51.22% and 51.22% for the same periods,
respectively, for 1995; for Georgia Casualty, 73.38% and 67.45% for 1996
compared to 64.76% and 71.33% for 1995; and for American Southern, 70.20% for
the quarter and 71.57% year-to-date.
Commission and underwriting expenses in the first nine months rose to $19.0
million in 1996 from $11.0 million in 1995. This increase was primarily due to
an increase in commissions of $5.8 million, an increase in underwriting expenses
of $3.7 million, and a net deferral of acquisition costs of $1.5 million. These
changes were attributed to the inclusion of American Southern which had $4.9
million of commissions, $2.9 million of underwriting expenses, and $256,000 of
net deferral of acquisition costs. The balance of the nine month increase was
due to increased premiums causing commissions to increase for Georgia Casualty
by $446,000 and $390,000 in the Life and Health Division. Underwriting expenses
increased $292,000 for Georgia Casualty and $538,000 in the Life and Health
Division.
Interest expense increased to $766,000 and $2.5 million for the third
quarter and first nine months of 1996, respectively, from $557,000 and $1.7
million, respectively, for the comparable 1995 periods. The increases were
principally attributable to borrowings under the Company's new credit facility
with Wachovia Bank of Georgia, N.A., partially offset by a reduction in the
amount of outstanding debt to affiliates, which was canceled in exchange for the
issuance of preferred stock effective December 31, 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company's insurance subsidiaries reported a combined statutory income
of $1.4 million and $5.4 million in the third quarter and first nine months,
respectively, of 1996, compared to $1.3 million and $2.5 million for the same
periods, respectively, in 1995. These statutory results were due to income of
$237,000 in the Life and Health Division, $217,000 for Georgia Casualty, and
from the addition of American Southern, whose income was $1.0 million for the
third quarter of 1996. Statutory income for the first nine months of 1996 was
$711,000 in the Life and Health Division, $946,000 for Georgia Casualty, and
$3.7 million for American Southern. Statutory results approximate the previous
explanations of generally accepted accounting principles ("GAAP") results of
operations, with the exception of deferred acquisition costs and reserves in the
Life and Health Division.
The primary sources of funds for the Company are dividends from its
subsidiaries and management fees and borrowings from affiliates of the Company.
The Company believes that additional funding would be available from certain of
-7-
<PAGE>
its affiliates to meet any additional liquidity needs, although currently there
are no other arranged sources of unused borrowing.
The Company provides certain administrative and other services to each of
its insurance subsidiaries. The amounts charged to and paid by the subsidiaries
in 1996 remained approximately the same as in 1995. The Company believes that
the fees and charges to its subsidiaries, dividends, and, if needed, borrowings
from affiliates will enable the Company to meet its liquidity requirements for
the foreseeable future. In addition, the Company has a formal tax-sharing
agreement between the Company and its insurance subsidiaries. It is anticipated
that this agreement will continue to provide the Company with additional funds
from profitable subsidiaries due to the subsidiaries' use of the Company's tax
loss carryforward. Approximately 93.0% of the investment assets of the insurance
subsidiaries are in marketable securities that can be converted into cash, if
required; however, use of such assets by the Company is limited by state
insurance regulations. Dividend payments to the Company by its insurance
subsidiaries are also limited by insurance regulations. At September 30, 1996,
Georgia Casualty had $7.7 million of accumulated statutory earnings, American
Southern had $16.6 million, Bankers Fidelity Life had $5.8 million, and Atlantic
American Life had an accumulated statutory deficit of $2.4 million. American
Southern paid the Company dividends totaling $900,000 in each quarter of 1996.
Atlantic American Life received approval in the second quarter of 1996 for
payment of $2.25 million in dividends to the Parent Company; this payment was
made during the third quarter.
On December 31, 1995, the Company acquired all of the outstanding stock of
American Southern for an aggregate purchase price of approximately $34.0
million, consisting of $22.6 million in cash and the execution of a note in
favor of the seller of $11.4 million. In connection with the acquisition, the
Company entered into a Credit Agreement with Wachovia Bank of Georgia, N.A. The
Credit Agreement provides for aggregate borrowings of approximately $34.0
million, of which $22.6 million was immediately drawn on December 31, 1995, to
finance the cash portion of the purchase price. Subsequent to September 30,
1996, the remaining $11.4 million of the Credit Agreement was borrowed on
October 11, 1996, in order to pay the balance due on the note to the seller. The
Company intends to repay its obligations under the Credit Agreement using
dividend payments received from American Southern. The Company repaid $2.0
million on the Credit Agreement in the first nine months of 1996, of which $1.8
million came from dividend payments from American Southern.
Net cash provided by continuing operations totaled $3.7 million for the
nine months ended September 30, 1996, compared to net cash provided by
continuing operations of $4.1 million for the same period of 1995. This decline
was the result of changes in the cash flows of the Parent Company, Georgia
Casualty, and the Life and Health Division. The Parent Company's net cash
provided by operations totaled $398,000, while net cash used by operations was
$1.0 million for the same period last year. This increase was due primarily to
the Parent Company's receipt of intercompany tax payments from American
Southern, Georgia Casualty, and Bankers Fidelity Life in the amount of $2.1
million, compared to receipts of $1.1 million for the same period in 1995. In
addition, Parent Company operating expenses declined from 1995 by $597,000.
Georgia Casualty's net cash used by operating activities was $697,000 for the
nine months ended September 30, 1996, compared to net cash provided by operating
activities of $3.3 million for the same period in 1995. This was the result of a
$1.2 million increase from 1995 in claims paid with a marginal increase of
$92,000 from 1995 in collected premiums. For the same period last year,
collected premiums increased by $2.4 million over the prior year combined with
an increase in claims paid of only $707,000 over the prior year. The Life and
Health Division's net cash provided by operating activities totaled $880,000,
compared to net cash provided by operating activities of $1.8 million for the
same period in 1995. This was primarily due to a slight decline from 1995 in
benefit expenses of $270,000. Bankers Fidelity Life experienced an additional
cash outflow due to costs incurred in acquiring the remaining publicly-held
shares of the company's stock, a transaction which was consummated on April 1,
1996. The total consideration to be paid in that transaction is approximately
$1.3 million, of which approximately $814,000 was paid during the second and
third quarters of 1996. Cash and short-term investments increased from $15.0
million at December 31, 1995, to $28.4 million at September 30, 1996. This
increase was due to American Southern's net investment proceeds of $11.8
million, generated mainly from the purchases and sales of bonds. Total
investments, excluding short-term investments, decreased to $154.7 million at
September 30, 1996, from $168.1 million at December 31, 1995, due primarily to
American Southern's sale of tax free investments which have not been reinvested
in long-term investments, but instead remain in short-term investments.
-8-
<PAGE>
PART II. OTHER INFORMATION
ATLANTIC AMERICAN CORPORATION AND SUBSIDIARIES
Item 6. Exhibits and Report on Form 8-K.
- -----------------------------------------
(a) The following exhibits are filed herewith:
Exhibit 11. Computation of net income (loss) per common share.
Exhibit 27. Financial data schedule.
(b) No reports on Form 8-K were filed with the Securities and Exchange
Commission during the third quarter of 1996.
-9-
<PAGE>
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.
ATLANTIC AMERICAN CORPORATION
-----------------------------
(Registrant)
Date: November 12, 1996 By: /s/
----------------- --------------------------------------------
John W. Hancock
Senior Vice President-Treasurer
(Principal Financial and Accounting Officer)
-10-
EXHIBIT 11
ATLANTIC AMERICAN CORPORATION AND SUBSIDIARIES
COMPUTATION OF NET INCOME (LOSS) PER COMMON SHARE
SUPPORTING SCHEDULE
Three Months Ended Nine Months Ended
September 30, September 30,
-----------------------------------------
(In thousands, except per share data) 1996 1995 1996 1995
---- ---- ---- ----
Net income (loss) $ 2,068 $ (197) $ 1,388 $ (2,235)
Less preferred dividends to
affiliates (380) (79) (1,141) (237)
--------- -------- --------- ---------
Net income (loss) available to
common shareholders $ 1,688 $ (276) $ 247 $ (2,472)
========= ======== ========= =========
Weighted average common shares
outstanding 18,869 18,732 18,860 18,627
========= ======== ========= =========
Net income (loss) per common share $ 0.09 $ (0.01) $ 0.01 $ (0.13)
========= ======== ========= =========
NOTE: Fully diluted earnings per common share are not
presented because the effect of convertible
subordinated notes and preferred stock is anti-dilutive.
<TABLE> <S> <C>
<ARTICLE> 7
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<DEBT-HELD-FOR-SALE> 0
<DEBT-CARRYING-VALUE> 104246
<DEBT-MARKET-VALUE> 104246
<EQUITIES> 38895
<MORTGAGE> 6842
<REAL-ESTATE> 46
<TOTAL-INVEST> 154655
<CASH> 28434
<RECOVER-REINSURE> 26859
<DEFERRED-ACQUISITION> 16031
<TOTAL-ASSETS> 255668
<POLICY-LOSSES> 122804
<UNEARNED-PREMIUMS> 28153
<POLICY-OTHER> 3897
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 37921
0
164
<COMMON> 18712
<OTHER-SE> 36052
<TOTAL-LIABILITY-AND-EQUITY> 255668
65384
<INVESTMENT-INCOME> 8269
<INVESTMENT-GAINS> 1004
<OTHER-INCOME> 211
<BENEFITS> 42948
<UNDERWRITING-AMORTIZATION> 6243
<UNDERWRITING-OTHER> 12798
<INCOME-PRETAX> 5995
<INCOME-TAX> (160)
<INCOME-CONTINUING> 5835
<DISCONTINUED> (4447)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1388
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
