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, 1996
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, 1996, 1,000 shares of common stock of Reliance Financial
Services Corporation were outstanding.
<PAGE>
RELIANCE FINANCIAL SERVICES CORPORATION AND SUBSIDIARIES
INDEX
Page
No.
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated Statement of Operations for the Quarters and Six-Month
Periods Ended June 30, 1996 and 1995 (Unaudited)................. 2
Consolidated Balance Sheet at June 30, 1996 (Unaudited) and
December 31, 1995................................................ 3
Consolidated Statement of Changes in Shareholder's Equity for the
Six-Month Period Ended June 30, 1996 (Unaudited)................. 4
Consolidated Condensed Statement of Cash Flows for the Six-Month
Periods Ended June 30, 1996 and 1995 (Unaudited)................. 5
Notes to Consolidated Financial Statements (Unaudited).............. 6
Item 2. Management's Discussion and Analysis of the Consolidated
Statement of Operations ................................... 8
PART II. OTHER INFORMATION, AS APPLICABLE................................. 12
SIGNATURES................................................................ 13
<PAGE>
RELIANCE FINANCIAL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30 June 30
1996 1995 1996 1995
============================================================================================================
(In thousands)
<S> <C> <C> <C> <C>
Revenues:
Premiums earned................................ $ 636,752 $ 599,957 $1,246,619 $1,204,623
Net investment income.......................... 70,443 66,362 141,160 135,740
Gain on sales of investments................... 18,936 7,669 23,404 15,955
Interest income from parent company............ 5,144 5,362 10,098 10,279
Other.......................................... 40,048 40,657 77,597 78,474
--------- --------- ---------- ----------
771,323 720,007 1,498,878 1,445,071
--------- --------- ---------- ----------
Claims and expenses:
Policy claims and settlement expenses.......... 440,360 304,809 757,067 628,564
Policy acquisition costs....................... 104,449 106,068 200,019 199,373
Interest....................................... 5,084 5,458 10,208 11,293
Other insurance expenses....................... 230,246 200,744 440,171 402,843
Other.......................................... 39,573 36,941 76,719 74,863
--------- --------- ---------- ----------
819,712 654,020 1,484,184 1,316,936
--------- --------- ---------- ----------
Income (loss) before income taxes and equity
in investee company........................ (48,389) 65,987 14,694 128,135
Income tax (provision) benefit................. 19,800 (22,000) 100 (41,500)
Equity in investee company..................... 2,912 2,399 4,936 4,153
--------- --------- ---------- ----------
Income (loss) before extraordinary item........ (25,677) 46,386 19,730 90,788
Extraordinary item - early extinguishment
of debt.................................... - (3,363) - (3,363)
--------- --------- ---------- ----------
Net income (loss).............................. $ (25,677) $ 43,023 $ 19,730 $ 87,425
========= ========= ========== ==========
</TABLE>
See notes to consolidated financial statements
-2-
<PAGE>
RELIANCE FINANCIAL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
June 30 December 31
ASSETS 1996 1995
===========================================================================================
(Dollars in thousands, except per-share amount)
<S> <C> <C>
Marketable securities:
Fixed maturities held for investment - at amortized cost
(quoted market $771,303 and $791,459)................ $ 773,314 $ 753,563
Fixed maturities available for sale - at quoted market
(amortized cost $2,445,725 and $2,299,510............ 2,423,934 2,371,995
Equity securities - at quoted market (cost $434,755
and $408,054)........................................ 710,652 672,668
Short-term investments.................................. 256,452 500,284
Cash......................................................... 39,880 50,848
Premiums receivable.......................................... 1,228,956 1,075,226
Other accounts and notes receivable.......................... 133,304 130,555
Reinsurance recoverables..................................... 3,365,620 3,163,073
Federal and foreign income taxes, including deferred taxes... 49,315 9,784
Notes receivable from parent company......................... 199,826 184,108
Investments in real estate - at cost, less accumulated
depreciation............................................ 276,342 278,510
Investment in investee company............................... 158,247 156,404
Deferred policy acquisition costs............................ 207,315 194,648
Other assets................................................. 336,368 354,254
----------- ----------
$10,159,525 $9,895,920
=========== ==========
LIABILITIES AND SHAREHOLDER'S EQUITY
===========================================================================================
Unearned premiums............................................ $ 1,396,879 $1,299,465
Unpaid claims and related expenses........................... 6,324,153 6,100,129
Accounts payable and accrued expenses........................ 571,785 586,902
Reinsurance ceded premiums payable........................... 354,347 325,246
Senior reset notes........................................... 40,324 40,318
Term loans and short-term debt............................... 193,171 176,101
----------- ----------
8,880,659 8,528,161
----------- ----------
Contingencies and commitments
Shareholder's equity:
Common stock, par value $.10 per-share, 1,000 shares
authorized, issued and outstanding................... -- --
Additional paid-in capital.............................. 678,201 678,349
Retained earnings....................................... 461,569 496,839
Net unrealized gain on investments...................... 164,087 219,356
Net unrealized loss on foreign currency translation..... (24,991) (26,785)
----------- ----------
1,278,866 1,367,759
----------- ----------
$10,159,525 $9,895,920
=========== ==========
</TABLE>
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 on Currency Shareholder's
Stock Capital Earnings Investments Translation Equity
=============================================================================================================================
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1996 ...... $ - $ 678,349 $ 496,839 $ 219,356 $ (26,785) $ 1,367,759
Transactions of investee
company .................. (148) (562) (710)
Net income .................... 19,730 19,730
Dividends ..................... (55,000) (55,000)
Depreciation after deferred
income taxes ............. (54,707) (54,707)
Foreign currency translation .. 1,794 1,794
-------- ------------ ------------ ------------- ------------- -----------
Balance, June 30, 1996 ........ $ - $ 678,201 $ 461,569 $ 164,087 $ (24,991) $ 1,278,866
======== ============ ============ ============= ============= ===========
</TABLE>
See notes to consolidated financial statements
-4-
<PAGE>
RELIANCE FINANCIAL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30 1996 1995
============================================================================================
(In thousands)
<S> <C> <C>
CASH FLOWS USED BY OPERATING ACTIVITIES ............................ $ (20,837) $ (89,432)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of fixed maturities available for sale ......... 526,810 265,736
Proceeds from sales of fixed maturities held for investment ........ - 14,419
Proceeds from redemptions of fixed maturities available for sale ... 45,317 18,060
Proceeds from redemptions of fixed maturities held for investment .. 24,790 667
Proceeds from sales of equity securities ........................... 214,307 170,522
Decrease in short-term investments - net ........................... 250,256 4,760
Purchases of fixed maturities available for sale ................... (724,354) (110,903)
Purchases of fixed maturities held for investment .................. (42,976) (57,413)
Purchases of equity securities ..................................... (202,061) (128,745)
Other - net......................................................... (28,549) 948
--------- ---------
63,540 178,051
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in notes receivable from parent company ................... (15,718) (643)
Increase in term loans ............................................. 30,894 110,146
Decrease in short-term debt - net .................................. (3,606) (11,474)
Repayments of term loans ........................................... (10,241) (42,741)
Repurchases of senior reset notes .................................. -- (40,348)
Debt issuance costs ................................................ -- (1,000)
Dividends .......................................................... (55,000) (55,000)
Redemption of redeemable preferred stock of a subsidiary ........... -- (23,769)
--------- ---------
(53,671) (64,829)
--------- ---------
Increase (decrease) in cash ........................................ (10,968) 23,790
Cash, beginning of period .......................................... 50,848 46,814
--------- ---------
Cash, end of period ................................................ $ 39,880 $ 70,604
========= =========
Supplemental disclosures of cash flow information:
Interest paid ...................................................... $ 7,800 $ 8,300
========= =========
Income taxes paid .................................................. $ 14,700 $ 24,300
========= =========
</TABLE>
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,
1996, 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, 1995) and additional financial information, see the Company's
Annual Report on Form 10-K for the year ended December 31, 1995.
2. EQUITY IN INVESTEE COMPANY
Equity income in Zenith National Insurance Corp. was $2.9 million and $4.9
million for the second quarter and first six months of 1996 compared to $2.4
million and $4.2 million in the corresponding 1995 periods.
Summarized financial information for Zenith National Insurance Corp. is as
follows:
<TABLE>
<CAPTION>
Six Months Ended June 30 1996 1995
===========================================================================================================
(In thousands, except per-share amounts)
<S> <C> <C>
Revenues ............................................$ 268,227 $ 258,010
Income from continuing operations
before income taxes ............................... 35,065 17,975
Net income........................................... 23,100 17,100
Net income per-share................................. 1.30 .91
</TABLE>
-6-
<PAGE>
3. REINSURANCE
The reconciliation of property and casualty insurance direct premiums to net
premiums is as follows (in thousands):
<TABLE>
Caption>
Six Months Ended June 30
------------------------
1996 1995
---- ----
Premiums Premiums Premiums Premiums
Written Earned Written Earned
------- ------ ------- ------
<S> <C> <C> <C> <C>
Direct .......................... $ 1,464,406 $ 1,394,503 $ 1,322,851 $ 1,323,347
Assumed .......................... 181,028 163,302 201,811 188,878
Ceded .......................... (730,179) (678,993) (619,607) (617,862)
----------- ----------- ----------- -----------
Net Premiums....................... $ 915,255 $ 878,812 $ 905,055 $ 894,363
=========== =========== =========== ===========
</TABLE>
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):
<TABLE>
<CAPTION>
Six Months Ended
June 30
-----------------------------
1996 1995
------------- -------------
<S> <C> <C>
Gross...................................... $ 1,120,321 $ 1,004,698
Reinsurance recoveries..................... (395,067) (403,186)
------------ ----------
Net policy claims and settlement expenses... $ 725,254 $ 601,512
============ ===========
</TABLE>
For the six months ended June 30, 1996, gross policy claims and settlement
expenses include a charge of $134.5 million and net policy claims and settlement
expenses include a charge of $134.0 million to increase property and casualty
insurance loss reserves for asbestos-related and environmental pollution claims
for business written in 1987 and prior years.
-7-
<PAGE>
RELIANCE FINANCIAL SERVICES CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONSOLIDATED STATEMENT OF OPERATIONS
================================================================================
OVERVIEW
The Company had a loss from operations, before gains on sales of investments, of
$38.0 million and income from operations of $4.5 million in the second quarter
and first six months of 1996. These results include a second quarter after-tax
charge of $87.1 million to increase property and casualty insurance net loss
reserves for asbestos-related and environmental pollution claims for business
written in 1987 and prior years. This charge more than offset the otherwise
positive underwriting results of the Company's property and casualty insurance
operations and the improved results of its title insurance operations. Excluding
the effects of this charge, income from operations was $49.1 million and $91.6
million in the quarter and six months ended June 30, 1996 compared to $39.7
million and $78.7 million in the corresponding 1995 periods. After-tax gains on
sales of investments were $12.3 million and $15.2 million in the second quarter
and first six months of 1996 compared to $6.7 million and $12.1 million in the
corresponding 1995 periods, which included a second quarter gain of $1.7 million
related to the sale of certain consulting operations.
For the second quarter and first six months of 1996, the Company had a net loss
of $25.7 million and net income of $19.7 million, respectively. Net income was
$43.0 million and $87.4 million in the second quarter and first six months of
1995. In the second quarter of 1995, the early extinguishment of debt resulted
in an extraordinary loss of $3.4 million.
PROPERTY AND CASUALTY INSURANCE OPERATIONS
Net premiums written in the quarter and six months ended June 30, 1996 were
$439.8 million and $915.3 million compared to $444.1 million and $905.1 million
in the corresponding 1995 periods. The decline in net premiums written in the
second quarter of 1996, when compared to the corresponding 1995 period,
primarily reflects lower net premiums in workers' compensation business
resulting from the shift by insureds to high deductibles, captive insurance
programs and other arrangements that reduce net premium retention, as well as a
decline in premiums in the general liability line. These declines were partially
offset by growth in commercial automobile and reinsurance lines. Net premiums
earned in the quarter and six months ended June 30,1996 were $439.0 million and
$878.8 million compared to $442.6 million and $894.4 million in the
corresponding 1995 periods.
Underwriting losses for the second quarter and first six months of 1996 were
$140.7 million and $150.8 million. Included in the 1996 underwriting results is
a second quarter pretax charge of $134.0 million to increase net loss reserves
for asbestos-related and environmental pollution claims for business written in
1987 and prior years. In the second quarter of 1996, the Company completed a
study of its asbestos-related and environmental
-8-
<PAGE>
pollution reserves. The study entailed an extensive and detailed review of the
Company's claims, analysis of new industry data, review of policies and
classes of business written by the Company and industry at large, and new
actuarial methodologies for projecting ultimate losses based on payment
patterns and claims analyses. The loss reserve levels established represent
the Company's best estimate of its ultimate losses, based on the most current
information and actuarial methodologies available.
Excluding the effects of this pretax charge, underwriting losses were $6.7
million and $16.8 million in the second quarter and first six months of 1996
compared to $7.9 million and $13.1 million in the corresponding prior-year
periods. Underwriting results in the second quarter of 1996, when compared to
the corresponding 1995 period, reflect improvements in general liability and
fire and allied lines offset by increased underwriting losses in the commercial
automobile line. Underwriting results for the first six months of 1996 reflect
losses resulting from the harsh winter conditions in the first quarter. For the
second quarter and first six months of 1996, the combined ratios (calculated on
a GAAP basis), after policyholders' dividends, were 131.6% and 116.8% (101.1%
and 101.6% excluding the effects of the $134.0 million pretax charge) compared
to 101.3% in both the second quarter and first six months of 1995.
PROPERTY AND CASUALTY INSURANCE INVESTMENT RESULTS
Net investment income of the property and casualty insurance operations
increased to $63.0 million and $126.3 million in the three-month and six-month
periods ended June 30,1996 from $59.5 million and $121.9 million in the
corresponding 1995 periods. These increases resulted from growth in the size of
the fixed maturity investment portfolio.
Gains on sales of investments increased to $19.9 million and $23.8 million in
the second quarter and first six months of 1996 from $7.7 million and $15.7
million in the corresponding 1995 periods, reflecting increased gains on sales
of equity securities.
TITLE INSURANCE OPERATIONS
Premiums and fees in the second quarter and first six months of 1996 were $197.7
million and $367.8 million compared to $157.4 million and $310.3 million in the
corresponding 1995 periods. The increase in premium and fees in 1996 resulted
from growth in residential resale and refinancing activity as well as increased
commercial real estate transactions.
As a result of increased agency revenues, agency commissions in the second
quarter and first six months of 1996 increased to $88.7 million and $164.5
million from $71.3 million and $146.5 million in the corresponding 1995 periods.
Other expenses were $90.9 million and $174.7 million in the second quarter and
first half of 1996 compared to $77.9 million and $153.5 million in the
corresponding 1995 periods. The expense ratios of the title insurance operations
(which includes agent commissions) were 90.2% and 91.5% in the
-9-
<PAGE>
second quarter and first six months of 1996 compared to 93.6% and 96.2% in the
corresponding 1995 periods. The improvement in the expense ratios resulted
from the increase in direct title insurance premiums. The provision for claim
losses was $17.2 million and $31.8 million in the three-month and six-month
periods ended June 30, 1996 compared to $13.8 million and $27.1 million in the
corresponding 1995 periods.
INVESTMENT PORTFOLIO
At June 30, 1996, the Company's investment portfolio aggregated $3.95 billion
(at cost), of which 11% 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. 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, 1996, the carrying values of
non-investment grade securities and securities not rated by Standard & Poor's
were $420.7 million (12% of the fixed income portfolio) and $47.6 million (1% of
the fixed income portfolio), respectively. At December 31, 1995, the carrying
values of non-investment grade and non-rated securities were $299.0 million (8%
of the fixed income portfolio) and $64.4 million (2% 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
RCG International, Inc. ("RCG"), a subsidiary of the Company, provides technical
services in the information technology and energy industries. RCG's revenues
were $40.0 million and $77.6 million in the second quarter and first half of
1996 compared to $40.7 million and $78.5 million in the corresponding 1995
periods, which included $7.4 million and $14.5 million, respectively, related to
certain consulting operations which were sold in the second quarter of 1995. The
sale of these operations resulted in a pretax gain of $2.6 million. Excluding
revenues pertaining to operations sold, revenues increased 20.2% and 21.4% in
the second quarter and first six months of 1996 compared to the corresponding
1995 periods, resulting from continued growth in the information technology
business. RCG's operating expenses were $39.2 million and $75.8 million in the
second quarter and first half of 1996 compared to $36.3 million and $73.2
million in the corresponding 1995 periods, which included $4.4 million and $11.0
million, respectively, related to the consulting operations sold during the
second quarter of 1995. RCG's revenues and expenses are included in other
revenues and other expenses in the accompanying consolidated statement of
operations.
-10-
<PAGE>
At June 30, 1996, the Company's real estate operations had holdings with a
carrying value of $276.3 million, which includes nine shopping centers with an
aggregate carrying value of $128.3 million, office buildings and other
commercial properties, with an aggregate carrying value of $86.1 million, and
undeveloped land with a carrying value of $61.9 million.
EQUITY IN INVESTEE COMPANY
Equity in investee company income was $2.9 million and $4.9 million in the
second quarter and the first six months of 1996 compared to $2.4 million and
$4.2 million in the corresponding 1995 periods from the Company's investment in
Zenith National Insurance Corp. ("Zenith"). These increases reflect Zenith's
improved property and casualty underwriting results.
OTHER MATTERS
A subsidiary of the Company, Saul P. Steinberg and other executives of the
Company are partners in a partnership which owns certain real estate properties.
At June 30, 1996, the partnership's total outstanding debt was $171.9 million.
As of June 30, 1996, the Company guaranteed $38 million of the partnership's
outstanding debt which matures on December 29, 1996. The Company believes that,
to the extent such debt cannot be fully refinanced at maturity, the partnership
will need to seek additional financing from other sources, which may include the
Company or Reliance Group Holdings, Inc. The Company receives a fee of .5% per
annum on the average outstanding debt covered by the guarantee.
The National Association of Insurance Commissioners has a risk-based capital
requirement for the property and casualty insurance industry. 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, 1996.
-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 13, 1996 /s/ George E. Bello
--------------- ---------------------------------------
George E. Bello
Executive Vice President and Controller
(Chief Accounting Officer)
<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
Operations and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<DEBT-HELD-FOR-SALE> 2,423,934
<DEBT-CARRYING-VALUE> 773,314
<DEBT-MARKET-VALUE> 771,303
<EQUITIES> 710,652
<MORTGAGE> 0
<REAL-ESTATE> 276,342
<TOTAL-INVEST> 4,440,694
<CASH> 39,880
<RECOVER-REINSURE> 3,365,620
<DEFERRED-ACQUISITION> 207,315
<TOTAL-ASSETS> 10,159,525
<POLICY-LOSSES> 6,324,153
<UNEARNED-PREMIUMS> 1,396,879
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 233,495
0
0
<COMMON> 0
<OTHER-SE> 1,278,866
<TOTAL-LIABILITY-AND-EQUITY> 10,159,525
1,246,619
<INVESTMENT-INCOME> 141,160
<INVESTMENT-GAINS> 23,404
<OTHER-INCOME> 87,695
<BENEFITS> 757,067
<UNDERWRITING-AMORTIZATION> 200,019
<UNDERWRITING-OTHER> 440,171
<INCOME-PRETAX> 14,694
<INCOME-TAX> 100
<INCOME-CONTINUING> 19,730
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,730
<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>
