<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1995
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From ______ To ______
Commission File Number 1-7080
RELIANCE FINANCIAL SERVICES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 51-0113548
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
Park Avenue Plaza
55 East 52nd Street
New York, New York 10055
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 909-1100
The Registrant meets the requirements and conditions set forth in General
Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this Form with
reduced disclosure as permitted thereunder.
Indicate by check mark whether the 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 ___
As of August 1, 1995, 1,000 shares of common stock of Reliance Financial
Services Corporation were outstanding.
RELIANCE FINANCIAL SERVICES CORPORATION AND SUBSIDIARIES
I N D E X
Page
No.
----
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated Statement of Income for the Quarters and Six-Month
Periods Ended June 30, 1995 and 1994 (Unaudited). . . . . . . . . . . 2
Consolidated Balance Sheet at June 30, 1995 (Unaudited) and
December 31, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statement of Changes in Shareholder's Equity for the
Six-Month Period Ended June 30, 1995 (Unaudited). . . . . . . . . . . 4
Consolidated Condensed Statement of Cash Flows for the Six-Month
Periods Ended June 30, 1995 and 1994 (Unaudited). . . . . . . . . . . 5
Notes to Consolidated Financial Statements (Unaudited) . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of the Consolidated
Statement of Income. . . . . . . . . . . . . . . . . . . . . . . 8
PART II. OTHER INFORMATION, AS APPLICABLE. . . . . . . . . . . . . . . . . . 12
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
<PAGE>
RELIANCE FINANCIAL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
Quarter Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
--------------------------------------------------------------------------------
(In thousands)
Revenues:
Premiums earned........................ $599,957 $734,588 $1,204,623 $1,420,473
Net investment income.................. 66,362 64,603 135,740 127,253
Gain on sales of investments........... 7,669 1,672 15,955 5,309
Interest income from parent company.... 5,362 3,046 10,279 5,964
Other.................................. 40,657 37,109 78,474 68,584
-------- -------- ---------- ----------
720,007 841,018 1,445,071 1,627,583
-------- -------- ---------- ----------
Claims and expenses:
Policy claims and settlement expenses.. 304,809 360,735 628,564 729,309
Policy acquisition costs............... 106,068 98,043 199,373 201,216
Interest............................... 5,256 5,024 10,444 9,930
Other insurance expenses............... 200,744 286,419 402,843 542,050
Other.................................. 36,941 36,402 74,863 67,797
-------- -------- ---------- ----------
653,818 786,623 1,316,087 1,550,302
-------- -------- ---------- ----------
Income before income taxes, minority
interests and equity in investee
company.............................. 66,189 54,395 128,984 77,281
Provision for income taxes............. (22,000) (14,923) (41,500) (21,690)
Minority interests..................... (202) (622) (849) (1,364)
Equity in investee company............. 2,399 2,505 4,153 4,790
-------- -------- ---------- ----------
Income before extraordinary item....... 46,386 41,355 90,788 59,017
Extraordinary item - early
extinguishment of debt............... (3,363) - (3,363) -
-------- -------- ---------- ----------
Net income............................. $43,023 $41,355 $ 87,425 $ 59,017
======== ======== ========== ==========
See notes to consolidated financial statements
-2-
<PAGE>
RELIANCE FINANCIAL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
June 30 December 31
ASSETS 1995 1994
--------------------------------------------------------------------------------
(Dollars in thousands, except per-share amount)
Marketable securities:
Fixed maturities held for investment - at
amortized cost (quoted market $1,216,259
and $1,053,551)............................... $1,207,725 $1,166,020
Fixed maturities available for sale - at
quoted market (amortized cost $1,779,792
and $1,945,919)................................. 1,793,315 1,839,312
Equity securities - at quoted market (cost
$446,115 and $482,529).......................... 622,616 564,636
Short-term investments............................ 222,402 229,906
Cash................................................... 70,604 46,814
Premiums receivable.................................... 1,143,578 1,079,393
Other accounts and notes receivable.................... 177,197 179,903
Reinsurance recoverables............................... 3,180,003 2,928,533
Federal and foreign income taxes, including deferred
taxes............................................. 69,770 161,013
Notes receivable from parent company................... 187,708 187,065
Investments in real estate - at cost, less accumulated
depreciation...................................... 286,284 289,465
Investment in investee company......................... 154,754 147,513
Deferred policy acquisition costs...................... 192,049 181,938
Other assets........................................... 358,226 336,254
---------- ----------
$9,666,231 $9,337,765
========== ==========
LIABILITIES AND SHAREHOLDER'S EQUITY
--------------------------------------------------------------------------------
Unearned premiums...................................... $1,303,574 $1,288,454
Unpaid claims and related expenses..................... 6,023,749 5,809,546
Accounts payable and accrued expenses.................. 568,210 650,374
Reinsurance ceded premiums payable..................... 302,321 291,844
Senior reset notes..................................... 40,312 80,596
Term loans and short-term debt......................... 185,286 129,355
Minority interests - redeemable preferred stock of a
subsidiary........................................ - 23,517
---------- ----------
8,423,452 8,273,686
---------- ----------
Contingencies and commitments
Shareholder's equity:
Common stock, par value $.10 per share, 1,000 shares
authorized, issued and outstanding............. - -
Additional paid-in capital........................ 678,642 678,502
Retained earnings................................. 466,849 434,676
Net unrealized gain (loss) on investments......... 117,657 (27,881)
Net unrealized loss on foreign currency
translation..................................... (20,369) (21,218)
---------- ----------
1,242,779 1,064,079
---------- ----------
$9,666,231 $9,337,765
========== ==========
See notes to consolidated financial statements
-3-
<PAGE>
RELIANCE FINANCIAL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY (UNAUDITED)
<TABLE>
<CAPTION>
Net
Unrealized
Net Loss on
Additional Unrealized Foreign
Common Paid-In Retained Gain (Loss) on Currency Shareholder's
Stock Capital Earnings Investments Translation Equity
----------------------------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1995.... $ - $ 678,502 $ 434,676 $ (27,881) $ (21,218) $1,064,079
Transactions of investee
company ............... 140 3,441 3,581
Net income.................. 87,425 87,425
Loss on early extinguishment
of redeemable preferred
stock of a subsidiary.. (252) (252)
Dividends................... (55,000) (55,000)
Appreciation after deferred
income taxes........... 142,097 142,097
Foreign currency translation 849 849
----- --------- --------- ---------- ---------- ----------
Balance, June 30, 1995...... $ - $ 678,642 $ 466,849 $ 117,657 $ (20,369) $1,242,779
===== ========= ========= ========== ========== ==========
</TABLE>
See notes to consolidated financial statements
-4-
<PAGE>
RELIANCE FINANCIAL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)
Six Months Ended June 30 1995 1994
--------------------------------------------------------------------------------
(In thousands)
CASH FLOWS (USED BY) FROM OPERATING ACTIVITIES...... $ (90,432) $ 69,770
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of fixed maturities available
for sale....................................... 265,736 221,236
Proceeds from sales of fixed maturities held for
investment..................................... 14,419 15,405
Proceeds from redemptions of fixed maturities
available for sale............................. 18,060 35,963
Proceeds from redemptions of fixed maturities
held for investment............................ 667 13,384
Proceeds from sales of equity securities............ 170,522 146,399
Decrease in short-term investments - net............ 4,760 192,646
Purchases of fixed maturities available for sale.... (110,903) (312,912)
Purchases of fixed maturities held for investment... (57,413) (201,984)
Purchases of equity securities...................... (128,745) (107,576)
Other - net......................................... 948 (26,809)
--------- ---------
178,051 (24,248)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in notes receivable from parent company.... (643) (17,128)
Increase in term loans.............................. 75,146 5,133
Increase (decrease) in short-term debt-net.......... (16,474) 143
Repayments of term loans............................ (2,741) (30,964)
Repurchases of senior reset notes................... (40,348) -
Dividends........................................... (55,000) (35,000)
Redemption of redeemable preferred stock of a
subsidiary..................................... (23,769) (3,360)
--------- ---------
(63,829) (81,176)
--------- ---------
Increase (decrease) in cash......................... 23,790 (35,654)
Cash, beginning of period........................... 46,814 91,608
--------- ---------
Cash, end of period................................. $ 70,604 $ 55,954
========= =========
Supplemental disclosures of cash flow information:
Interest paid....................................... $ 8,300 $ 7,800
========= =========
Income taxes paid................................... $ 24,300 $ 1,700
========= =========
Supplemental disclosure of non-cash financing activity:
In 1994, non-cash dividends of $20,000,000 were recorded as a reduction
in notes receivable from parent company.
See notes to consolidated financial statements
-5-
<PAGE>
RELIANCE FINANCIAL SERVICES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. Unaudited Consolidated Financial Statements
In the opinion of management, the accompanying unaudited consolidated financial
statements include all adjustments (consisting of normal recurring accruals
only) considered necessary to present fairly the financial position at June 30,
1995, and the results of operations, changes in shareholder's equity and cash
flows for all periods presented. The results of operations for the interim
periods are not necessarily indicative of the results that may be expected for
any other interim period or for the entire year.
For a summary of significant accounting policies (which have not changed from
December 31, 1994) and additional financial information, see the Company's
Annual Report on Form 10-K for the year ended December 31, 1994.
On April 26, 1995, the Company extended its revolving credit facility through
March 31, 2000 from December 31, 1998. In addition, the Company increased term
loan borrowings to $137.5 million from $62.5 million and extended the maturity
dates of the term loan borrowings through March 31, 2000. The additional $75.0
million of borrowings under the term loan were used to redeem $25.0 million of
the Company's 10.36% senior reset notes and $25.0 million of 9.48% senior reset
notes, including $9.7 million of notes held by Reliance Insurance Company.
These transactions resulted in an after-tax extraordinary loss of $3.4 million.
In addition, in the second quarter of 1995, the Company redeemed all of the
outstanding redeemable preferred stock of Reliance Insurance Company ($23.8
million). The cost of the early redemption in excess of the carrying value of
the preferred stock, $252,000, was charged directly to shareholder's equity.
2. Equity In Investee Company
Equity income in Zenith National Insurance Corp. was $2.4 million and $4.2
million for the second quarter and first six months of 1995 compared to $2.5
million and $4.8 million in the corresponding 1994 periods.
Summarized financial information for Zenith National Insurance Corp. is as
follows:
Six Months Ended June 30 1995 1994
------------------------------------------------------------------------
(In thousands, except per-share amounts)
Revenues . . . . . . . . . . . . . . . . . . . . $302,623 $289,577
Income before income taxes . . . . . . . . . . . 26,023 28,751
Net income . . . . . . . . . . . . . . . . . . . 17,100 19,100
Net income per share . . . . . . . . . . . . . . .91 1.00
-6-
<PAGE>
3. Reinsurance
The reconciliation of property and casualty insurance direct premiums to net
premiums is as follows (in thousands):
Six Months Ended June 30
-----------------------------------------------
1995 1994
--------------------- -----------------------
Premiums Premiums Premiums Premiums
Written Earned Written Earned
-------- -------- -------- --------
Direct . . . . . . . . $1,322,851 $1,323,347 $1,360,423 $1,337,567
Assumed. . . . . . . . 201,811 188,878 178,592 180,076
Ceded. . . . . . . . . (619,607) (617,862) (568,787) (579,413)
---------- ---------- ---------- ----------
Net Premiums . . . . . $ 905,055 $ 894,363 $ 970,228 $ 938,230
========== ========== ========== ==========
The reconciliation of property and casualty insurance gross policy claims and
settlement expenses to net policy claims and settlement expenses is as follows
(in thousands):
Six Months Ended
June 30
----------------
1995 1994
---- ----
Gross. . . . . . . . . . . . . . . . . . . . . $1,004,698 $1,104,732
Reinsurance recoveries . . . . . . . . . . . . (403,186) (418,363)
---------- ----------
Net policy claims and settlement expenses. . . $ 601,512 $ 686,369
========== ==========
Effective January 1, 1995, the Company has entered into an aggregate excess of
loss reinsurance agreement. This agreement indemnifies the Company for ultimate
net property and casualty insurance losses in excess of a specified retention
for the 1995 accident year up to a maximum aggregate limit of $100 million.
-7-
<PAGE>
RELIANCE FINANCIAL SERVICES CORPORATION AND SUBSIDIARIES MANAGEMENT'S
DISCUSSION AND ANALYSIS OF THE CONSOLIDATED STATEMENT OF INCOME
Overview
The Company had income from operations, before gain on sales of investments and
certain consulting operations, of $39.7 million and $78.7 million in the second
quarter and first six months of 1995 compared to $40.3 million and $55.6
million in the corresponding 1994 periods. Operating income in the second
quarter of 1995 reflects stronger underwriting results in the property and
casualty insurance operations, offset by lower results in title insurance
operations and a higher effective income tax rate. For the first half of 1995
strong underwriting results in property and casualty insurance more than offset
the lower title insurance results and a higher effective income tax rate. In
the second quarter and first six months of 1995, the early extinguishment of
debt resulted in an after-tax extraordinary loss of $3.4 million. Net income
in the second quarter and first six months of 1995 was $43.0 million and $87.4
million which included an after-tax gain on sales of investments and certain
consulting operations of $6.7 million and $12.1 million. Net income in the
second quarter and first six months of 1994 was $41.4 million and $59.0 million
which included an after-tax gain on sales of investments of $1.1 million and
$3.5 million.
Property and Casualty Insurance Operations
Net premiums written declined in the quarter and six months ended June 30, 1995
to $444.1 million and $905.1 million from $473.9 million and $970.2 million in
the corresponding 1994 periods. Net premiums earned also declined in the
quarter and six months ended June 30, 1995 to $442.6 million and $894.4 million
from $477.6 million and $938.2 million in the corresponding 1994 periods.
These declines in net written and net earned premiums in 1995 reflects lower
writings in workers' compensation business resulting from the trend towards
high deductible insurance and captive insurance programs, both of which result
in lower premiums and lower losses. Workers' compensation premiums also reflect
an increase in return premiums on retrospectively rated policies due to improved
loss experience. The decline in workers' compensation net premiums written was
partially offset by growth in general liability, surety and inland and ocean
marine lines of business.
Underwriting losses for the second quarter and first six months of 1995 were
$7.9 million and $13.1 million compared to $16.7 million and $61.0 million in
the corresponding 1994 periods. The improved underwriting results reflect
record underwriting profits in the surety line of business of $13.6 million and
$25.0 million in the second quarter and first six months of 1995 compared to
$6.1 million and $12.2 million in the corresponding 1994 periods. Underwriting
results in 1995 also reflect increased underwriting profits in workers'
compensation business, partially offset by higher underwriting losses in
commercial
-8-
<PAGE>
multiple peril lines. Underwriting results in 1995 have also benefitted from a
lower level of catastrophe losses which totalled $4.0 million and $7.3 million
in the quarter and six months ended June 30, 1995 compared to $6.7 million and
$35.4 million in the corresponding 1994 periods. Catastrophe losses in the
first six months of 1994 arose primarily from the January 1994 California
earthquake. The combined ratio (calculated on a GAAP basis), after
policyholders' dividends, was 101.3% in both the second quarter and first six
months of 1995, (100.4% and 100.5%, excluding the effects of catastrophes)
compared to 103.0% and 106.1% in the corresponding 1994 periods (101.6% and
102.3%, excluding the effects of catastrophes).
Property and Casualty Insurance Investment Results
Net investment income of the property and casualty insurance operations
increased to $59.5 million and $121.9 million in the three-month and six-month
periods ended June 30, 1995 from $58.1 million and $114.1 million in the
corresponding 1994 periods. These increases resulted from growth in the size
of the fixed maturity investment portfolio and an increase in interest rates.
Gain on sales of investments was $7.7 million and $15.7 million in the second
quarter and first six months of 1995 compared to $1.5 million and $4.7 million
in the corresponding 1994 periods.
Title Insurance Operations
Premiums and fees in the second quarter and first six months of 1995 declined
to $157.4 million and $310.3 million from $257.0 million and $482.2 million in
the comparable 1994 periods. These declines resulted from lower levels of
residential real estate activity in the first half of 1995 when compared to the
first half of 1994. The 1994 periods benefitted from strong agency revenues
resulting from the typical reporting lag of 60-90 days and reflected the strong
market conditions that existed in early 1994 and late 1993.
As a result of lower agency revenues, agency commissions in the second quarter
and first six months of 1995 declined to $71.3 million and $146.5 million from
$140.2 million and $250.2 million in the corresponding 1994 periods. The
expense ratio of the title insurance operations (which includes agency
commissions) was 93.6% and 96.2% in the second quarter and first six months of
1995 compared to 88.5% and 89.4% in the corresponding 1994 periods. The
increase in the 1995 expense ratios resulted from the decline in premiums.
Other expenses were $77.9 million and $153.5 million in the three-month and
six-month periods ended June 30, 1995 compared to $89.9 million and $183.7
million in the corresponding 1994 periods. These declines reflect various cost
control programs, including staff reductions undertaken by the Company. As a
result of lower premiums, the provision for claim losses declined to $13.8
million and $27.1 million in the second quarter
-9-
<PAGE>
and first six months of 1995 from $22.7 million and $42.9 million in the
corresponding 1994 periods.
Investment Portfolio
At June 30, 1995, the Company's investment portfolio aggregated $3.72 billion
(at cost) of which 12% was invested in equity securities. The Company seeks
to maintain a diversified and balanced fixed maturity portfolio representing a
broad spectrum of industries and types of securities. At June 30, 1995, no
one issuer comprised more than 2.5% of the fixed maturity and short-term
investment portfolio. Furthermore, the Company holds virtually no investments
in commercial real estate mortgages in its investment portfolio. Purchases of
fixed maturity securities are researched individually based on in-depth
analysis and objective predetermined investment criteria and the portfolio is
managed to achieve a proper balance of safety, liquidity and investment
yields.
The Company's fixed maturity portfolio consists of investment grade securities
(those rated "BBB" or better by Standard & Poor's) and, to a lesser extent,
non-investment grade and non-rated securities. The risk of default is
generally considered to be greater for non-investment grade securities, when
compared to investment grade securities since these issues may be more
susceptible to severe economic downturns. At June 30, 1995, the carrying
values of non-investment grade securities and securities not rated by Standard
& Poor's were $322.5 million (10% of the fixed income portfolio) and $86.5
million (3% of the fixed income portfolio), respectively. Substantially all
of the Company's non-investment grade and non-rated securities are classified
as available for sale and, accordingly, are carried at market value.
Other Operations
The Company's consulting and technical services operations provide services in
the information technology and energy fields. Revenues for these operations
were $40.7 million and $78.5 million in the second quarter and first six
months of 1995, which included a pre-tax gain of $2.6 million resulting from
the second quarter sales of certain consulting operations. These sales are
not expected to have a material effect on the Company's operations. Revenues
in the second quarter and first six months of 1994 were $37.1 million and
$68.6 million. Operating expenses were $36.3 million and $73.2 million in the
three-month and six-month periods ending June 30, 1995 compared to $35.4
million and $66.1 million in the corresponding 1994 periods. Revenues and
expenses of these operations are included in other revenues and other expenses
in the accompanying statement of income.
At June 30, 1995, the Company's real estate holdings had a carrying value of
$286.3 million, which includes 11 shopping centers with an aggregate carrying
value of $135.8 million, office buildings and other commercial properties,
with an aggregate carrying value of $89.5 million, and undeveloped land with a
carrying value of $61.0 million.
-10-
<PAGE>
Other Matters
The Company has a revolving credit facility with various banks providing for
aggregate maximum outstanding borrowings of $100.0 million. At June 30, 1995,
borrowings aggregating $30.0 million were outstanding under this facility. On
April 26, 1995, the Company extended the revolving credit facility through
March 31, 2000 from December 31, 1998. In addition, the Company increased
term loan borrowings to $137.5 million from $62.5 million and extended the
maturity dates of the term loan borrowings through March 31, 2000. The
additional $75.0 million of borrowings under the term loan were used to redeem
$25.0 million of the Company's 10.36% senior reset notes and $25.0 million of
9.48% senior reset notes, including $9.7 million of notes held by Reliance
Insurance Company. These transactions resulted in an after-tax extraordinary
loss of $3.4 million. In addition, in the second quarter of 1995, the Company
redeemed all of the outstanding redeemable preferred stock of Reliance
Insurance Company ($23.8 million). The cost of the early redemption in excess
of the carrying value of the preferred stock, $252,000, was charged directly
to shareholder's equity.
The National Association of Insurance Commissioners has adopted a risk-based
capital requirement for the property and casualty insurance industry,
effective in 1995, based on 1994 annual statutory financial statements.
Risk-based capital refers to the determination of the amount of statutory
capital required for an insurer based on the risks assumed by the insurer
(including, for example, investment risks, credit risks relating to
reinsurance recoverables and underwriting risks) rather than just the amount
of net premiums written by the insurer. A formula that applies prescribed
factors to the various risk elements in an insurer's business is used to
determine the minimum statutory capital requirement for the insurer. An
insurer having less statutory capital than the formula calculates would be
subject to varying degrees of regulatory intervention, depending on the level
of capital inadequacy. All of the Company's statutory insurance companies
have statutory capital in excess of the minimum required risk-based capital.
Maintaining appropriate levels of statutory surplus is considered important by
the Company's management, state insurance regulatory authorities and the
agencies that rate insurers' claims-paying abilities and financial strength.
Failure to maintain certain levels of statutory capital and surplus could
result in increased scrutiny or, in some cases, action taken by state
regulatory authorities and/or downgrades in an insurer's ratings.
-11-
<PAGE>
RELIANCE FINANCIAL SERVICES CORPORATION AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
27. Financial Data Schedule
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended
June 30, 1995.
-12-
<PAGE>
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 thereunto duly authorized.
RELIANCE FINANCIAL SERVICES CORPORATION
---------------------------------------
(Registrant)
Date: August 11, 1995 /s/ George E. Bello
---------------------------------------
George E. Bello
Executive Vice President and Controller
(Chief Accounting Officer)
-13-
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
Exhibit 27
This schedule contains summary financial information extracted from the
Company's Consolidated Balance Sheet and the Consolidated Statement of Income
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<DEBT-HELD-FOR-SALE> 1,793,315
<DEBT-CARRYING-VALUE> 1,207,725
<DEBT-MARKET-VALUE> 1,216,259
<EQUITIES> 622,616
<MORTGAGE> 0
<REAL-ESTATE> 286,284
<TOTAL-INVEST> 4,132,342
<CASH> 70,604
<RECOVER-REINSURE> 3,180,003
<DEFERRED-ACQUISITION> 192,049
<TOTAL-ASSETS> 9,666,231
<POLICY-LOSSES> 6,023,749
<UNEARNED-PREMIUMS> 1,303,574
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 225,598
0
0
<COMMON> 0
<OTHER-SE> 1,242,779
<TOTAL-LIABILITY-AND-EQUITY> 9,666,231
1,204,623
<INVESTMENT-INCOME> 135,740
<INVESTMENT-GAINS> 15,955
<OTHER-INCOME> 88,753
<BENEFITS> 628,564
<UNDERWRITING-AMORTIZATION> 199,373
<UNDERWRITING-OTHER> 402,843
<INCOME-PRETAX> 128,984
<INCOME-TAX> (41,500)
<INCOME-CONTINUING> 90,788
<DISCONTINUED> 0
<EXTRAORDINARY> (3,363)
<CHANGES> 0
<NET-INCOME> 87,425
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
