<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) June 12, 1997
PICO HOLDINGS, INC.
(Exact name of registrant as specified in charter)
California 0-18786 94-2723335
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
875 Prospect Street, Suite 301, La Jolla, California 92037
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (619) 456-6022
-------------------------------------------------------------
(Former name or former address, if changed since last report)
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The Registrant amends Item 7, FINANCIAL STATEMENTS AND EXHIBITS, to read
in full as follows:
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
16.1 Letter regarding change in Certifying Accountant from Coopers
& Lybrand L.L.P., independent auditors.
</TABLE>
2
<PAGE> 3
SIGNATURES
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 hereunto duly authorized.
PICO HOLDINGS, INC.
Date: June 26, 1997 By: /s/ Gary W. Burchfield
------------------------------------------------
Gary W. Burchfield, Chief Financial
Officer and Treasurer
3
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
16.1 Letter regarding change in Certifying Accountant from Coopers
& Lybrand L.L.P., independent auditors.
</TABLE>
4
<PAGE> 1
EXHIBIT 16.1
June 26, 1997
Securities and Exchange Commission
450 5th Street, NW
Washington, D.C. 20549
Gentlemen:
We have read the statements made by PICO HOLDINGS, INC. (the "Registrant"),
which we understand have been filed with the Commission, pursuant to Item 4 of
Form 8-K, as part of the Registrant's Form 8-K report dated June 12, 1997 (the
"Form 8-K")(copy attached). In addition to the matters reported in the Form 8-K,
with which we agree, additional matters that should have been reported by the
Company follow:
In describing our opinions under Item 304(a)(ii) of Regulation S-K (identified
by the Registrant as Item 4(a)(i)), please note that with respect to items (i)
and (ii) thereunder, which deal, respectively, with the Registrant's reflection
of its investment in an affiliate using the equity method of accounting for the
year ended December 31, 1995, and the reclassification of the Registrant's
results of its medical professional liability insurance business that was sold
to continuing operations, our opinion dated April 15, 1996 was modified for the
year ended December 31, 1995 only in conjunction with the filing of the
Registrant's Form S-4 dated October 2, 1996.
In describing the disagreement under Item 304(a)(l)(iv) of Regulation S-K
(identified by the Registrant as Item 4(a)(ii)), the Registrant did not explain
the reason for the disagreement. The agreements related to the reverse
acquisition of Citation Insurance Group ("Citation") by Physicians Insurance
Company of Ohio ("PICO") as described in the Form 8-K ("the Merger"), required a
reapproval of the Merger by Citation's board upon the occurrence of a specified
decline in the share value of PICO prior to closing the Merger. Because such a
decline did, in fact, occur, Citation's board did reconsider and reapprove the
Merger at the same exchange ratio. Because of the triggering of the required
reapproval process, our opinion was and is that the value exchanged should be
measured as of the reapproval date rather than as of the original agreement
date. As stated in the Form 8-K, the Registrant ultimately agreed.
Very truly yours,
COOPERS & LYBRAND L.L.P.
<PAGE> 2
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) June 5, 1997
PICO HOLDINGS, INC.
-------------------
(Exact name of registrant as specified in charter)
California 0-18786 94-2723335
---------- ------- ----------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
875 Prospect Street, Suite 301, La Jolla, California 92037
- ---------------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (619) 456-6022
-------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE> 3
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
(a) (i) Coopers & Lybrand L.L.P. ("Coopers"), independent auditors of
the Registrant, was dismissed by the Registrant as its
principal accountant effective as of June 5, 1997. Coopers'
report on the Registrant's Financial Statements for fiscal
years 1996 and 1995 contained no adverse opinions or
disclaimers of opinion and were not qualified or modified as
to uncertainty or audit scope; however, Coopers' reports for
fiscal years 1996 and 1995 were modified related to (i) the
Company's reflection of its investment in an affiliate using
the equity method of accounting for the year ended December
31, 1995 rather than consolidating the affiliate as was
previously reported ; (ii) the reclassification of the
Company's results of its medical professional liability
insurance business that was sold to continuing operations;
(iii) the Company's change in its method of accounting for
investments in debt and equity securities effective January
1, 1994 to conform with SFAS No. 115; (iv) the Company's
change in its method of accounting for reinsurance effective
January 1, 1993 to conform with SFAS No. 113; and (v) the
Company's change in its discount rate used to record loss and
loss adjustment expense reserves and related reinsurance
balances in 1994. The decision to change auditors was
recommended by the Registrant's Audit Committee ("Audit
Committee"), and approved by the Board of Directors of the
Registrant on June 5, 1997.
(ii) Except for one instance related to the reporting of the
Registrant's financial results for the year ended December
31, 1996, which is described below, since January 1, 1995,
the Registrant had not had any disagreements with Coopers on
any matter of accounting principles or practices, financial
statement disclosure or auditing scope of procedure.
The disagreement referenced above arose when a few days prior
to the March 31, 1997 due date of the Registrant's December
31, 1996 Form 10-K, Coopers notified Registrant's management
("Management") of an unanticipated change in the method of
accounting for the reverse acquisition of the Citation
Insurance Group ("Citation") acquired in the November 20,
1996 reverse merger (the "Merger") with Physicians Insurance
Company of Ohio ("Physicians"). This change resulted in an
approximate $7 million change in the cost basis of Citation
as compared to the cost basis calculated prior to the change.
The change also resulted in the creation of negative
goodwill. Approximately $6.3 million in negative goodwill
was recorded related to the Merger. Coopers was asked to
explain to Management and the Audit Committee the reasons for
their last minute changes in accounting for the Merger, and
why the accounting differed from the original accounting as
shown in the pro forma financial statements contained in the
original Form S-4 registration statement. Management believed
that the original accounting treatment continued to be the
appropriate accounting treatment. Based upon Coopers'
explanation of the relevant accounting principles giving rise
to the change in valuation, Management and the Audit
Committee agreed that the accounting treatment proposed by
Coopers was the appropriate accounting treatment. At the same
time, Management and the Audit Committee expressed to Coopers
their displeasure at the lack of communication and at not
having been informed of the change in accounting treatment
much sooner, since the conditions giving rise to the change
had occurred months earlier.
(iii) None of the events described in Item 304(a)(1)(v) of
Regulation S-K have occurred since January 1, 1995 and
require disclosure. The Registrant has requested that Coopers
furnish it with a letter addressed to the SEC stating whether
or not it agrees with the above statements.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Exhibit *16.1 Letter regarding Change in Certifying Accountant from
Coopers and Lybrand L.L.P., independent auditors.
* To be filed by amendment
2
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SIGNATURES
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 hereunto duly authorized.
PICO HOLDINGS, INC.
Date: June 12, 1997 By: /s/ Gary W. Burchfield
-------------------------------
Gary W. Burchfield, Chief Financial
Officer and Treasurer
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