<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
FORM 11-K
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the plan year ended September 30, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Transition Period from to
--------- ---------
Commission File Number: 0-18786
A. Full title of the plan and the address of the plan, if
different from that of the issuer named below:
PICO HOLDINGS, INC. EMPLOYEES 401(K) RETIREMENT PLAN AND TRUST
B. Name of issuer of the securities held pursuant to the plan and
the address of its principal executive office:
PICO HOLDINGS, INC.
875 PROSPECT STREET, SUITE 301
LA JOLLA, CALIFORNIA 92037
Index to Exhibits appears on Page 17
Page 1 of 18 pages
<PAGE> 2
REQUIRED INFORMATION
--------------------
The following financial statements and schedules for PICO Holdings, Inc.
Employees 401(k) Retirement Plan and Trust are being filed herewith:
Signature
Independent Auditors' Report
Financial Statements:
Statements of Net Assets Available for Plan Benefits, September 30,
1998 and 1997
Statements of Changes in Net Assets Available for Benefits, with
Supplemental Information by Fund, for the Year Ended September 30, 1998
Notes to the Financial Statements
Supplemental Schedules:
Item 27(a) - Schedule of Assets Held for Investment Purposes, September
30, 1998
Item 27(d) - Schedule of Reportable Transactions for the Year Ended
September 30, 1998
Index to Exhibits
Exhibit 1 - Consent of Independent Auditors
2
<PAGE> 3
SIGNATURE
---------
The Plan. Pursuant to the requirements of the Securities Exchange Act
of 1934, the trustees (or other persons who administer the employee benefit
plan) have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
PICO HOLDINGS, INC. EMPLOYEES 401(K)
RETIREMENT PLAN AND TRUST
/s/ Gary W. Burchfield
-------------------------------------
Date: August 31, 1999 Chief Financial Officer and Treasurer
3
<PAGE> 4
INDEPENDENT AUDITORS' REPORT
PICO Holdings, Inc.
Employees 401(k) Retirement Plan and Trust
Columbus, Ohio:
We have audited the accompanying statements of net assets available for benefits
of PICO Holdings, Inc. Employees 401(k) Retirement Plan and Trust (the "Plan")
as of September 30, 1998 and 1997, and the related statement of changes in net
assets available for benefits for the year ended December 31, 1998. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements, referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
September 30, 1998 and 1997, and the changes in net assets available for
benefits for the year ended September 30, 1998 in conformity with generally
accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules identified in
the index are presented for the purpose of additional analysis and are not a
required part of the basic financial statements, but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The supplemental information by fund in the statements of net assets
available for benefits and the statement of changes in net assets available for
benefits is presented for the purpose of additional analysis rather than to
present the net assets available for benefits and changes in net assets
available for benefits of the individual funds. The supplemental schedules and
supplemental information by fund is the responsibility of the Plan's management.
Such supplemental schedules and supplemental information by fund have been
subjected to the auditing procedures applied in our audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects when considered in relation to the basic financial statements taken as
a whole.
DELOITTE & TOUCHE LLP
Columbus, Ohio
July 14, 1999
4
<PAGE> 5
PICO HOLDINGS, INC.
EMPLOYEES 401(K) RETIREMENT PLAN AND TRUST
<TABLE>
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS,
WITH SUPPLEMENTAL INFORMATION BY FUND, SEPTEMBER 30, 1998 AND 1997
- --------------------------------------------------------------------------------
<CAPTION>
ASSETS 1998 1997
<S> <C> <C>
Investments:
Participant directed at contract value:
Separate Account A $ 873,390 $1,203,883
Separate Account B 416,694 714,628
Participant directed at fair value:
American Century Select Fund 788,320 350,740
American Century Ultra Fund 698,598 232,901
Benham Short Term Government Fund 58,277 108,464
American Century Balanced Fund 148,537 212,902
Benham Cash Reserve 143,430
Benham Prime Money Market 177,357
Guaranteed Fund 1,500,360 760,699
Huntington Treasury Market Fund IV 19,810
PICO Stock Fund 339,750
---------- ----------
Total participant directed investments 5,021,093 3,727,647
Non-Participant directed profit sharing:
Separate Account B - at contract value 528,786 651,238
Guaranteed Fund - at fair value 723,387 451,067
---------- ----------
Total non-participant directed investments 1,252,173 1,102,305
Participant loans 28,711
---------- ----------
Total investments 6,301,977 4,829,952
---------- ----------
Receivables:
Employer's matching contributions 16,337
Participants' contributions 19,947
Profit sharing contribution 617,925 300,187
---------- ----------
Total receivables 654,209 300,187
---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $6,956,186 $5,130,139
========== ==========
</TABLE>
See notes to financial statements.
5
<PAGE> 6
PICO HOLDINGS, INC.
EMPLOYEES 401(K) RETIREMENT PLAN AND TRUST
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS,
WITH SUPPLEMENTAL INFORMATION BY FUND, FOR THE YEAR ENDED SEPTEMBER 30, 1998
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SUPPLEMENTAL INFORMATION BY FUND
PARTICIPANT DIRECTED
----------------------------------------------------------------------------------
HUNTINGTON AMERICAN
TREASURY PICO CENTURY
SEPARATE SEPARATE GUARANTEED MARKET STOCK SELECT
ACCOUNT A ACCOUNT B FUND FUND IV FUND FUND
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS (DEDUCTIONS) TO NET
ASSETS ATTRIBUTED TO:
Investment income
Net appreciation (depreciation) in
fair value of investments $ (195,743) $(101,556) $(150,538) $(12,386)
Interest and dividend income 49,490 1,266 1,976
Capital gains 79,293
---------- --------- ---------- --------- --------- --------
Total (195,743) (101,556) 49,490 1,266 (150,538) 68,883
---------- --------- ---------- --------- --------- --------
Employer contributions 96,050 32,528 55,477 59,196 34,931
Participant contributions 109,244 35,622 56,621 65,897 39,404
---------- --------- ---------- --------- --------- --------
Total 205,294 68,150 112,098 125,093 74,335
---------- --------- ---------- --------- --------- --------
Total additions (deductions) 9,551 (33,406) 161,588 1,266 (25,445) 143,218
---------- --------- ---------- --------- --------- --------
Benefits paid to participants 97,539 80,711 368,909 10,046 47,301
Administrative expenses 13,022 6,670 10
---------- --------- ---------- --------- --------- --------
Total deductions 110,561 87,381 368,909 10,046 47,311
---------- --------- ---------- --------- --------- --------
TRANSFERS IN FROM CITATION PLAN
---------- --------- ---------- --------- --------- --------
NET INCREASE (DECREASE) PRIOR TO
INTERFUND TRANSFERS (101,010) (120,787) (207,321) 1,266 (35,491) 95,907
INTERFUND TRANSFERS (221,509) (171,789) 952,983 24,966 375,241 344,677
---------- --------- ---------- --------- --------- --------
Net increase (decrease) (322,519) (292,576) 745,662 26,232 339,750 440,584
NET ASSETS AVAILABLE FOR BENEFITS:
BEGINNING OF YEAR 1,203,883 714,628 760,699 0 0 350,740
---------- --------- ---------- --------- --------- --------
END OF YEAR $ 881,364 $ 422,052 $1,506,361 $ 26,232 $ 339,750 $791,324
========== ========= ========== ========= ========= ========
</TABLE>
6
<PAGE> 7
PICO HOLDINGS, INC.
EMPLOYEES 401(K) RETIREMENT PLAN AND TRUST
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS,
WITH SUPPLEMENTAL INFORMATION BY FUND, FOR THE YEAR ENDED SEPTEMBER 30, 1998, CONTINUED
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
SUPPLEMENTAL INFORMATION BY FUND
PARTICIPANT DIRECTED
---------------------------------------------------------------------------
CENTURY SHORT-TERM CENTURY BENHAM PRIME
ULTRA GOVERNMENT BALANCED CASH MONEY
FUND FUND FUND RESERVE MARKET VIRTUOSO 3
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS (DEDUCTIONS) TO NET
ASSETS ATTRIBUTED TO:
Investment income
Net appreciation (depreciation) in
fair value of investments $(35,310) $ 1,978 $ (9,477)
Interest and dividend income 138 4,574 4,001 4,859 472 27,016
Capital gains 73,492 14,929
-------- -------- -------- -------- --------- --------
Total 38,320 6,552 9,453 4,859 472 27,016
-------- -------- -------- -------- --------- --------
Employer contributions 51,423
Participant contributions 63,765
-------- -------- -------- -------- --------- --------
Total 115,188
-------- -------- -------- -------- --------- --------
Total additions (deductions) 153,508 6,552 9,453 4,859 472 27,016
-------- -------- -------- -------- --------- --------
Benefits paid to participants 101,335 24,830 18,641 10,567 175,460
Administrative expenses 3,226
-------- -------- -------- -------- --------- --------
Total deductions 104,561 24,830 18,641 10,567 175,460
-------- -------- -------- -------- --------- --------
TRANSFERS IN FROM CITATION PLAN 153,010 558,150
-------- -------- -------- -------- --------- --------
NET INCREASE (DECREASE) PRIOR TO
INTERFUND TRANSFERS 201,957 (18,278) (9,188) (5,708) 472 409,706
INTERFUND TRANSFERS 271,265 (31,909) (55,177) (137,722) 176,885 (409,706)
-------- -------- -------- -------- --------- --------
Net increase (decrease) 473,222 (50,187) (64,365) (143,430) 177,357
NET ASSETS AVAILABLE FOR BENEFITS:
BEGINNING OF YEAR 232,901 108,464 212,902 143,430 0 0
-------- -------- -------- -------- --------- --------
END OF YEAR $706,123 $ 58,277 $148,537 $ 0 $ 177,357 $ 0
======== ======== ======== ======== ========= ========
</TABLE>
7
<PAGE> 8
PICO HOLDINGS, INC.
EMPLOYEES 401(K) RETIREMENT PLAN AND TRUST
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS,
WITH SUPPLEMENTAL INFORMATION BY FUND, FOR THE YEAR ENDED SEPTEMBER 30, 1998, CONTINUED
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
SUPPLEMENTAL INFORMATION BY FUND
PARTICIPANT DIRECTED
------------------------------------------------------------------------
BOND FUND FIDELITY NATIONWIDE
OF ASSETS FIDELITY FIDELITY MONEY OPPENHEIMER
AMERICA MANAGER MAGELLAN PURITAN ASSETS GLOBAL
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS (DEDUCTIONS) TO NET
ASSETS ATTRIBUTED TO:
Investment income
Net appreciation (depreciation) in
fair value of investments $ 4,831 $ 16,593 $ 149,646 $ 5,453 $ 13 $ 24,424
Interest and dividend income
Capital gains
--------- --------- --------- -------- ------ ---------
Total 4,831 16,593 149,646 5,453 13 24,424
--------- --------- --------- -------- ------ ---------
Employer contributions
Participant contributions
--------- --------- --------- -------- ------ ---------
Total
--------- --------- --------- -------- ------ ---------
Total additions (deductions) 4,831 16,593 149,646 5,453 13 24,424
--------- --------- --------- -------- ------ ---------
Benefits paid to participants 54,256 69,367 255,621 19,724 119 62,937
Administrative expenses 2,859 4,088 16,521 1,110 3,701
--------- --------- --------- -------- ------ ---------
Total deductions 57,115 73,455 272,142 20,834 119 66,638
--------- --------- --------- -------- ------ ---------
TRANSFERS IN FROM CITATION PLAN 172,593 220,662 813,147 62,744 377 200,208
--------- --------- --------- -------- ------ ---------
NET INCREASE (DECREASE) PRIOR TO
INTERFUND TRANSFERS 120,309 163,800 690,651 47,363 271 157,994
INTERFUND TRANSFERS (120,309) (163,800) (690,651) (47,363) (271) (157,994)
--------- --------- --------- -------- ------ ---------
Net increase (decrease)
NET ASSETS AVAILABLE FOR BENEFITS:
BEGINNING OF YEAR 0 0 0 0 0 0
--------- --------- --------- -------- ------ ---------
END OF YEAR $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
========= ========= ========= ======== ====== =========
</TABLE>
8
<PAGE> 9
PICO HOLDINGS, INC.
EMPLOYEES 401(K) RETIREMENT PLAN AND TRUST
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS,
WITH SUPPLEMENTAL INFORMATION BY FUND, FOR THE YEAR ENDED SEPTEMBER 30, 1998
- -----------------------------------------------------------------------------------
<CAPTION>
SUPPLEMENTAL INFORMATION BY FUND
--------------------------------------
NON
PARTICIPANT
DIRECTED
------------------------
PROFIT PARTICIPANT
SHARING LOAN TOTAL
<S> <C> <C> <C>
ADDITIONS (DEDUCTIONS) TO NET
ASSETS ATTRIBUTED TO:
Investment income
Net appreciation (depreciation) in
fair value of investments $ (112,158) $ (414,230)
Interest and dividend income 40,535 134,327
Capital gains 167,714
---------- ------- ----------
Total (71,623) (112,189)
---------- ------- ----------
Employer contributions 617,925 947,530
Participant contributions 370,553
---------- ------- ----------
Total 617,925 1,318,083
---------- ------- ----------
Total additions (deductions) 546,302 1,205,894
---------- ----------
Benefits paid to participants 134,932 1,532,295
Administrative expenses 8,420 59,627
---------- ------- ----------
Total deductions 143,352 1,591,922
---------- ------- ----------
TRANSFERS IN FROM CITATION PLAN 31,184 2,212,075
---------- ------- ----------
NET INCREASE (DECREASE) PRIOR TO
INTERFUND TRANSFERS 402,950 31,184 1,826,047
INTERFUND TRANSFERS 64,656 (2,473)
---------- ------- ----------
Net increase (decrease) 467,606 28,711 1,826,047
NET ASSETS AVAILABLE FOR BENEFITS:
BEGINNING OF YEAR 1,402,492 0 5,130,139
---------- ------- ----------
END OF YEAR $1,870,098 $28,711 $6,956,186
========== ======= ==========
</TABLE>
9
<PAGE> 10
PICO HOLDINGS, INC.
EMPLOYEES 401(K) RETIREMENT PLAN AND TRUST
NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
1. DESCRIPTION OF PLAN
The following description of the PICO Holdings, Inc. Employees 401(k)
Retirement Plan and Trust (the "Plan") provides only general
information. Participants should refer to the Plan document for a more
complete description of the Plan's provisions.
GENERAL - The Plan is a defined contribution 401(k) profit sharing plan
covering eligible employees, as defined in the Plan Agreement, of PICO
Holdings, Inc. (the Plan Sponsor). The Plan was adopted effective
October 1, 1989, to provide retirement benefits to employees of the
Plan Sponsor. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA) and the Retirement
Equity Act of 1984 and has been determined to be qualified for tax
exempt status by the Internal Revenue Service (IRS). The Plan has been
amended since receiving the IRS determination letter. However, the Plan
Sponsor believes that the Plan is designed and is currently being
operated in compliance with the applicable requirements of the Internal
Revenue Code.
CONTRIBUTIONS - Each year, participants may contribute up to 5% of
pretax annual compensation, as defined in the Plan, not to exceed
$8,000. The Plan Sponsor matches 100% of the elective deferral of base
compensation that a participant contributes to the Plan. Effective
October 1997, the Plan Sponsor's matching contribution does not begin
until the first day of the quarter after an employee completes one year
of service. Additional amounts which represent profit sharing, as
defined in the Plan, may be contributed at the option of the Plan
Sponsor's Board of Directors.
PARTICIPANT ACCOUNTS - For investments held under the investment
contract, each participant's account is credited with the participant's
contributions, employer matching contributions, and withdrawals, as
applicable, and allocations of (a) the Plan Sponsor's discretionary
profit sharing contributions and (b) Plan earnings, and debited with an
allocation of administrative expenses. Allocations are based on
participant compensation or account balances, as defined. Forfeited
balances of terminated participants' nonvested accounts are used to
first reinstate previously forfeited account balances of reemployed
participants and any remainder will be used to reduce the Plan
Sponsor's discretionary profit sharing contribution for the current or
subsequent Plan year in which the forfeiture occurs.
For investments held in mutual funds, each participant's account is
credited with an allocation of earnings, based on shares owned, and
debited by withdrawals, as applicable.
VESTING - Participants are immediately vested in their contributions,
the employer matching contributions, plus earnings thereon. Vesting in
the Plan Sponsor's discretionary profit sharing contribution portion of
their accounts plus actual earnings thereon is based on years of
credited service in accordance with the following schedule:
<TABLE>
YEARS OF SERVICE PERCENTAGE
---------------- ----------
<S> <C>
Less than three 0%
3 20%
4 40%
5 60%
6 80%
7 or more 100%
</TABLE>
10
<PAGE> 11
INVESTMENT OPTIONS - Upon enrollment in the Plan, a participant may
direct the employee contributions and the matching contributions in 25%
increments into any of the following investment options: Separate
Account A, Separate Account B, or the Guaranteed Fund, which are
offered to the Plan through an investment contract with American
Physicians Life Insurance Company (APL), an indirectly wholly-owned
subsidiary of the Plan Sponsor (see Note 3) and a Plan custodian.
Effective October 1997, the Plan began offering two additional
investment options to plan participants: PICO Holdings, Inc. common
stock ("PICO Stock Fund") and Mutual Funds.
Separate Account A has an investment objective to invest in individual
securities that are selected on the basis of assessment of their
relative undervaluation and their prospects for long term appreciation.
Elements such as dividend income and volatility of the security are
important but secondary considerations. Separate Account B has an
investment objective that is a more conservative approach with varying
use of fixed income and/or high dividend securities to lower volatility
and increase predictability of income. The amounts allocated to the
Guaranteed Fund are retained in the general funds of APL, without
requirements as to segregation of investments, and are credited with a
guaranteed rate of return of 4%. The Plan Sponsor's discretionary
profit sharing contributions are automatically allocated 50% to the
Guaranteed Fund and 50% to Separate Account B. Participants may change
their investment options quarterly.
LOANS TO PARTICIPANTS - Loans to participants are not permitted under
the Plan. However, under Citation Insurance Group Salary Reduction
Profit Sharing Plan (the "Citation Plan") which was approved to merge
into the Plan effective December 31, 1997 (see Note 3), participant
loans were permitted.
PAYMENT OF BENEFITS - Upon termination of service, a participant may
elect to receive either a lump-sum amount equal to the value of the
participant's vested interest in his or her account, or annual
installments. If the value of the participants' account is $3,500 or
less, the Trustee shall distribute the entire vested account to the
participant. Amounts payable to such participants at September 30, 1998
and 1997 were $300,016 and $3,855, respectively.
PLAN TERMINATION - While the Plan Sponsor has not expressed any intent
to discontinue the Plan or their contributions thereto, they have the
right to do so at any time, subject to the provisions of ERISA. In the
event of partial or total termination of the Plan, participants'
account balances become fully vested and the disposition of the net
assets must be made for the benefit of the participants or their
beneficiaries.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION - The accounting records of the Plan are
maintained on the accrual basis. Purchases and sales of securities are
recorded on the trade date. Interest income is recorded as earned and
dividend income is recorded on the ex-dividend date.
INVESTMENT VALUATION - Investments are valued as follows: Investments
held through the investment contract are valued at the contract value
(see Note 3). Mutual funds and money market funds are valued at quoted
market prices.
ADMINISTRATIVE EXPENSES - The Plan's expenses are paid by the Plan, as
provided by the Plan document.
USE OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting assets and the changes in
net assets during the reporting period and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
11
<PAGE> 12
3. INVESTMENT CONTRACTS WITH INSURANCE COMPANIES
In October 1989, the Plan entered into an investment contract with APL,
which was a wholly-owned subsidiary of The Physicians Investment
Company, which is a wholly-owned subsidiary of Physicians Insurance
Company of Ohio, which is a wholly-owned subsidiary of PICO Holdings,
Inc., the Plan Sponsor. Effective December 4, 1998, APL was sold to an
unrelated party. APL maintains the contributions in either a general
account or two pooled separate accounts. The accounts are credited with
earnings on the underlying investments and charged for Plan withdrawals
and administrative expenses incurred by APL. The contract accounts are
included in the financial statements at the defined contracted value,
because it is fully benefit responsive. For example, participants may
ordinarily direct the withdrawal or transfer of all or a portion of
their investment at contract value, which approximates fair value, as
reported to the Plan by APL. There are no reserves against contract
value for credit risk of the contract issue or otherwise. The interest
rate guaranteed for the Guaranteed fund is 4% annually and the
principal is guaranteed. There is no guarantee of principal and
interest in relation to Separate Account A and Separate Account B. The
Plan's assets in Separate Account A and Separate Account B represent
approximately 43.5% (1997-46.9%) and 28.1% (1997-31.6%) of the total
assets held by APL in the respective separate accounts.
Effective December 31, 1997, the Plan Sponsor authorized the merger of
the Citation Plan into the Plan. The net assets available for benefit
in the Citation Plan as of the effective date were valued at $2,212,075
in total. The Citation Plan's investment accounts were administered
under a previously established investment contract with Nationwide
Financial Services ("Nationwide"), which was also the custodian of the
Citation Plan assets. During the 1998 plan year the Citation Plan
continued to be administered by Nationwide and the 1998 earnings
continued to be allocated to participant accounts based on participant
compensation or account balance, as defined, until all funds were
either distributed to withdrawing participants or transferred to the
Plan. As of September 30, 1998, all Citation Plan funds had either been
paid to withdrawing participants or transferred into the Plan's
investment accounts.
4. RELATED PARTY TRANSACTIONS
The investments offered to the Plan through the investment contract
with APL qualify as party-in-interest transactions. Fees paid by the
Plan for the investment management services amounted to $28,112 for
1998.
5. INVESTMENTS
The Plan's investments which exceeded 5% of net assets available for
benefits as of September 30 consisted of the following:
<TABLE>
1998 1997
<S> <C> <C>
Separate Account A $ 873,390 $1,203,883
Separate Account B 416,694 714,628
Guaranteed Fund 1,500,360 760,699
Profit Sharing 1,252,173 1,102,305
American Century Select Fund 788,320 350,740
American Century Ultra Fund 698,598 232,901
PICO Stock Fund 339,750
</TABLE>
12
<PAGE> 13
6. CUSTODIAL ASSETS
The following is a summary of information regarding the Plan that was
prepared or derived from information provided by APL, custodian of
certain Plan assets, and furnished to the plan administrator. The plan
administrator has obtained certification from the custodian that such
information is complete and accurate:
<TABLE>
SEPTEMBER 30,
--------------------------
1998 1997
<S> <C> <C>
APL SEPARATE ACCOUNTS:
Investments at contract value - pooled separate accounts:
Separate Account A $ 2,008,207 $2,568,249
Separate Account B 3,358,717 4,320,336
Investments at fair value:
Guaranteed Fund 3,333,934 3,040,826
----------- ----------
TOTAL INVESTMENTS $ 8,700,858 $9,929,411
=========== ==========
INTEREST INCOME $ 167,046
===========
NET DEPRECIATION
IN FAIR VALUE OF INVESTMENTS $(1,209,273)
===========
PLAN'S SHARE OF APL SEPARATE ACCOUNTS:
Participant Directed:
Investments at contract value - pooled separate accounts:
Separate Account A $ 873,390 $1,203,883
Separate Account B 416,694 714,628
Investments at fair value:
Guaranteed Fund 1,500,360 760,699
Non-Participant Directed:
Profit Sharing:
Separate Account B - at contract value 528,786 651,238
Guaranteed Fund - at fair value 723,387 451,067
----------- ----------
TOTAL INVESTMENTS $ 4,042,617 $3,781,515
=========== ==========
INTEREST INCOME $ 90,025
===========
NET DEPRECIATION
IN FAIR VALUE OF INVESTMENTS $ (409,457)
===========
</TABLE>
13
<PAGE> 14
7. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits
per the financial statements to the Form 5500:
<TABLE>
SEPTEMBER 30,
------------------------
1998 1997
<S> <C> <C>
Net assets available for benefits per
the financial statements $6,956,186 $5,130,139
Amounts allocated to withdrawing
participants 300,016 3,855
---------- ----------
Net assets available for benefits per
the Form 5500 $6,656,170 $5,126,284
========== ==========
</TABLE>
The following is a reconciliation of benefits paid to participants per
the financial statements to the Form 5500:
<TABLE>
YEAR ENDED
SEPTEMBER 30,
1998
<S> <C>
Benefits paid to participants per the
financial statements $(1,532,295)
Add: Amounts allocated to withdrawing
participants at September 30, 1998 (300,016)
Less: Amounts allocated to withdrawing
participants at September 30, 1997 3,855
-----------
Benefits paid to participants per the Form 5500 $(1,828,456)
===========
</TABLE>
Amounts allocated to withdrawing participants are recorded on the Form
5500 for benefit claims that have been processed and approved for
payment prior to September 30, 1998 but not yet paid as of that date.
******
14
<PAGE> 15
PICO HOLDINGS, INC.
EMPLOYEES 401(K) RETIREMENT PLAN AND TRUST
<TABLE>
ITEM 27a - SUPPLEMENTAL SCHEDULE OF ASSETS
HELD FOR INVESTMENT PURPOSES, SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
<CAPTION>
NUMBER FAIR
OF MARKET
DESCRIPTION SHARES COST VALUE
<S> <C> <C> <C>
American Century Select Fund 16,688 $ 730,281 $ 788,320
American Century Ultra Fund 23,396 713,570 698,598
Benham ST Government Fund 6,058 56,844 58,277
American Century Balanced Fund 7,822 131,471 148,537
Benham Prime Money Market 177,357 177,357 177,357
PICO Stock Fund 90,600 490,288 339,750
Huntington Treasury Market Fund IV 19,810 19,810 19,810
Guaranteed Fund 2,223,747 2,223,747 2,223,747
---------- ----------
TOTAL $4,594,348 $4,454,396
========== ==========
</TABLE>
15
<PAGE> 16
PICO HOLDINGS, INC.
EMPLOYEES 401(K) RETIREMENT PLAN AND TRUST
<TABLE>
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
SEPTEMBER 30, 1998
- ----------------------------------------------------------------------------------------------------
<CAPTION>
PURCHASES/ COST OF NET GAIN
TRANSFERS IN SALES ASSETS (LOSS)
<S> <C> <C> <C> <C>
IN SERIES (including individual transactions):
Guaranteed Fund $3,221,577 $2,209,596 $2,209,596 $ 0
American Century Select Fund 499,838 44,951 34,176 10,775
American Century Ultra Fund 735,299 233,442 198,957 34,485
PICO Stock Fund 490,288 0 0 0
Fidelity Magellan Fund 813,147 962,793 813,147 149,646
Virtuoso 2 585,166 585,166 585,166 0
</TABLE>
INDIVIDUAL:
There were no individual transactions which exceeded 5% of Net Assets
Available for Benefits.
16
<PAGE> 17
PICO HOLDINGS, INC.
EMPLOYEES 401(K) RETIREMENT PLAN & TRUST
ANNUAL REPORT ON FORM 11-K
FOR PLAN YEAR ENDED SEPTEMBER 30, 1998
INDEX TO THE EXHIBITS
---------------------
Exhibit Number Description
-------------- -----------
1 Consent of Deloitte & Touche LLP,
Independent Auditors
17
<PAGE> 1
Exhibit 1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statements No.
333-32045 and No. 333-36881 of PICO Holdings, Inc. on Form S-8 of our report
dated July 14, 1999, appearing in this Annual Report on Form 11-K of the PICO
Holdings, Inc. Employees 401(k) Retirement Plan and Trust for the year ended
September 30, 1998.
DELOITTE & TOUCHE LLP
Columbus, Ohio
August 16, 1999
18
