<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 September 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 November 1, 1996, 1,000 shares of common stock of Reliance Financial
Services Corporation were outstanding.
<PAGE>
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 Nine-Month
Periods Ended September 30, 1996 and 1995 (Unaudited).......... 2
Consolidated Balance Sheet at September 30, 1996 (Unaudited) and
December 31, 1995.............................................. 3
Consolidated Statement of Changes in Shareholder's Equity for the
Nine-Month Period Ended September 30, 1996 (Unaudited)......... 4
Consolidated Condensed Statement of Cash Flows for the Nine-Month
Periods Ended September 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 Income ..................................... 8
PART II. OTHER INFORMATION, AS APPLICABLE............................... 13
SIGNATURES.............................................................. 14
<PAGE>
RELIANCE FINANCIAL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30 September 30
1996 1995 1996 1995
==========================================================================================================
(In thousands)
<S> <C> <C> <C> <C>
Revenues:
Premiums earned ................................. $ 661,980 $ 618,831 $ 1,908,599 $ 1,823,454
Net investment income ........................... 72,040 68,727 213,200 204,467
Gain on sales of investments .................... 16,542 10,187 39,946 26,142
Interest income from parent company ............. 5,437 5,166 15,535 15,445
Other ........................................... 41,608 36,512 119,205 114,986
----------- ----------- ----------- -----------
797,607 739,423 2,296,485 2,184,494
----------- ----------- ----------- -----------
Claims and expenses:
Policy claims and settlement expenses ........... 326,612 319,068 1,083,679 947,632
Policy acquisition costs ........................ 101,521 102,172 301,540 301,545
Interest ........................................ 5,316 5,280 15,524 16,573
Other insurance expenses ........................ 238,010 206,623 678,181 609,466
Other ........................................... 41,479 35,388 118,198 110,251
----------- ----------- ----------- -----------
712,938 668,531 2,197,122 1,985,467
----------- ----------- ----------- -----------
Income before income taxes and equity
in investee company ......................... 84,669 70,892 99,363 199,027
Provision for income taxes ...................... (26,900) (22,500) (26,800) (64,000)
Equity in investee company ...................... 2,488 2,072 7,424 6,225
----------- ----------- ----------- -----------
Income from continuing operations ............... 60,257 50,464 79,987 141,252
Loss on disposal of discontinued operations of
investee company ............................ -- (4,497) -- (4,497)
----------- ----------- ----------- -----------
Income before extraordinary item ................ 60,257 45,967 79,987 136,755
Extraordinary item - early extinguishment
of debt...................................... -- -- -- (3,363)
----------- ----------- ----------- -----------
Net income ...................................... $ 60,257 $ 45,967 $ 79,987 $ 133,392
=========== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements
-2-
<PAGE>
RELIANCE FINANCIAL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
September 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 $776,759 and $791,459) .................. $ 776,457 $ 753,563
Fixed maturities available for sale - at quoted market
(amortized cost $2,530,735 and $2,299,510) ............. 2,528,576 2,371,995
Equity securities - at quoted market (cost $424,039
and $408,054) .......................................... 688,917 672,668
Short-term investments ................................... 266,575 500,284
Cash ........................................................ 32,725 50,848
Premiums receivable ......................................... 1,214,318 1,075,226
Other accounts and notes receivable ......................... 133,215 130,555
Reinsurance recoverables .................................... 3,646,711 3,163,073
Federal and foreign income taxes, including deferred taxes .. 27,817 9,784
Notes receivable from parent company ........................ 199,099 184,108
Investments in real estate - at cost, less accumulated
depreciation ............................................. 275,940 278,510
Investment in investee company .............................. 157,698 156,404
Deferred policy acquisition costs ........................... 214,100 194,648
Other assets ................................................ 362,316 354,254
------------ -----------
$ 10,524,464 $ 9,895,920
============ ===========
<CAPTION>
LIABILITIES AND SHAREHOLDER'S EQUITY
===========================================================================================
<S> <C> <C>
Unearned premiums ........................................... $ 1,542,129 $ 1,299,465
Unpaid claims and related expenses .......................... 6,498,610 6,100,129
Accounts payable and accrued expenses ....................... 565,530 586,902
Reinsurance ceded premiums payable .......................... 362,130 325,246
Senior reset notes .......................................... 40,327 40,318
Term loans and short-term debt .............................. 192,581 176,101
------------ -----------
9,201,307 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 ............................... 677,954 678,349
Retained earnings ........................................ 501,826 496,839
Net unrealized gain on investments ....................... 168,801 219,356
Net unrealized loss on foreign currency translation ...... (25,424) (26,785)
------------ -----------
1,323,157 1,367,759
------------ -----------
$ 10,524,464 $ 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 ................... (395) (1,646) (2,041)
Net income...................... 79,987 79,987
Dividends....................... (75,000) (75,000)
Depreciation after deferred
income taxes............... (48,909) (48,909)
Foreign currency translation.... 1,361 1,361
-------- ------------ ----------- ----------- ---------- -------------
Balance, September 30, 1996..... $ - $ 677,954 $ 501,826 $ 168,801 $ (25,424) $ 1,323,157
======== ============ =========== =========== ========== =============
</TABLE>
See notes to consolidated financial statements
-4-
<PAGE>
RELIANCE FINANCIAL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended September 30 1996 1995
===========================================================================================
(In thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES ............................ $ 79,632 $ 16,816
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of fixed maturities available for sale ...... 561,938 358,728
Proceeds from sales of fixed maturities held for investment ..... 28,910 39,218
Proceeds from redemptions of fixed maturities available for sale 88,505 20,640
Proceeds from redemptions of fixed maturities held for investment 28,602 17,811
Proceeds from sales of equity securities ........................ 283,607 350,508
Decrease (increase) in short-term investments - net ............. 244,423 (209,403)
Purchases of fixed maturities available for sale ................ (881,509) (256,386)
Purchases of fixed maturities held for investment ............... (75,431) (95,012)
Purchases of equity securities .................................. (263,559) (146,126)
Other - net ..................................................... (36,806) (11,954)
--------- ---------
(21,320) 68,024
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
(Increase) decrease in notes receivable from parent company ..... (14,991) 13,229
Increase in term loans .......................................... 40,977 120,222
Decrease in short-term debt - net ............................... (2,058) (11,179)
Repayments of term loans ........................................ (25,363) (67,862)
Repurchases of senior reset notes ............................... -- (40,348)
Debt issuance costs ............................................. -- (1,000)
Dividends ....................................................... (75,000) (75,000)
Redemption of redeemable preferred stock of a subsidiary ........ -- (23,769)
--------- ---------
(76,435) (85,707)
--------- ---------
Decrease in cash ................................................ (18,123) (867)
Cash, beginning of period ....................................... 50,848 46,814
--------- ---------
Cash, end of period ............................................. $ 32,725 $ 45,947
========= =========
Supplemental disclosures of cash flow information:
Interest paid ................................................... $ 10,800 $ 11,600
========= =========
Income taxes paid ............................................... $ 23,500 $ 42,700
========= =========
</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 September
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. ("Zenith") was $2.5 million and
$7.4 million for the third quarter and first nine months of 1996 compared to
$2.1 million and $6.2 million in the corresponding 1995 periods. In addition, in
the third quarter and first nine months of 1995, the Company recognized an
after-tax loss of $4.5 million on the disposal of discontinued life insurance
operations by Zenith.
Summarized financial information for Zenith is as follows:
Nine Months Ended September 30 1996 1995
------------------------------------------------------------------------
(In thousands, except per-share amounts)
Revenues.................................... $ 405,293 $ 388,328
Income from continuing operations
before income taxes ..................... 48,811 26,449
Loss on disposal of discontinued operations. - (19,000)
Net income.................................. 32,200 5,300
Net income per-share........................ 1.81 .29
-6-
<PAGE>
3. REINSURANCE
The reconciliation of property and casualty insurance direct premiums to net
premiums is as follows (in thousands):
Nine Months Ended September 30
--------------------------------------------------
1996 1995
----------------------- -------------------------
Premiums Premiums Premiums Premiums
Written Earned Written Earned
---------- ----------- ----------- -----------
Direct.............. $2,242,993 $ 2,135,825 $ 2,027,009 $ 2,027,769
Assumed............. 248,527 244,052 264,566 268,665
Ceded............... (1,105,855) (1,047,258) (928,255) (954,874)
---------- ----------- ----------- -----------
Net premiums........ $1,385,665 $ 1,332,619 $ 1,363,320 $ 1,341,560
========== =========== =========== ===========
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):
Nine Months Ended
September 30
1996 1995
----------- -----------
Gross....................................... $ 1,707,396 $ 1,472,419
Reinsurance recoveries...................... (671,178) (566,697)
----------- -----------
Net policy claims and settlement expenses... $ 1,036,218 $ 905,722
=========== ===========
For the nine months ended September 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 or before 1987.
-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 continuing operations, before gains on sales of
investments, of $49.5 million in the third quarter of 1996 compared to $43.8
million in the corresponding 1995 period. The improved results reflect increased
title insurance operating income and the continued strong performance of the
property and casualty insurance operations. The Company had income from
continuing operations of $54.0 million for the first nine months of 1996, which
included 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 or before 1987. Excluding the effects
of this charge, income from continuing operations increased to $141.1 million
for the first nine months of 1996 from $122.6 million in the corresponding prior
year period reflecting improved results in title insurance operations and the
continued strong performance of the property and casualty insurance operations.
After-tax gains on sales of investments were $10.8 million and $26.0 million in
the third quarter and first nine months of 1996 compared to $6.6 million and
$18.7 million in the corresponding 1995 periods.
Net income was $60.3 million and $80.0 million in the third quarter and first
nine months of 1996 compared to $46.0 million and $133.4 million in the
corresponding 1995 periods. In the third quarter and first nine months of 1995,
the Company recognized an after-tax loss of $4.5 million on the disposal of
discontinued life insurance operations by Zenith National Insurance Corp.
("Zenith"), an investee company. In the first nine months of 1995, the early
extinguishment of debt resulted in an after-tax extraordinary loss of $3.4
million.
PROPERTY AND CASUALTY INSURANCE OPERATIONS
Net premiums written in the quarter and nine months ended September 30, 1996
were $470.4 million and $1.39 billion compared to $458.3 million and $1.36
billion in the corresponding 1995 periods. The increase in net premiums written
in 1996 reflects increases in commercial multiple peril, surety, reinsurance and
ocean and inland marine lines of business partially offset by lower net premiums
in workers' compensation business resulting from the shift by insureds to
captive insurance programs and other arrangements that reduce net premium
retention. Net premiums earned in the quarter and nine months ended September
30, 1996 were $453.8 million and $1.33 billion compared to $447.2 million and
$1.34 billion in the corresponding 1995 periods.
Underwriting loss for the third quarter of 1996 was $10.8 million compared to
$10.9 million in the corresponding period of 1995. Underwriting results reflect
improvements in general liability, commercial multiple peril and reinsurance
lines offset by continued but lower profits from workers' compensation business
and an increase in losses from catastrophes.
-8-
<PAGE>
Underwriting loss for the first nine months of 1996 was $161.6 million compared
to $24.0 million in the corresponding 1995 period. Included in the underwriting
results for the first nine months of 1996, 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 or before 1987. In the
second quarter of 1996, the Company completed a study of its asbestos-related
and environmental 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.
For the third quarter and first nine months of 1996, the combined ratios
(calculated on a GAAP basis), after policyholders' dividends, were 101.7% and
111.7% (101.6% for the first nine months of 1996 excluding the effects of the
$134.0 million pretax charge) compared to 101.8% and 101.5% in the corresponding
prior year periods.
PROPERTY AND CASUALTY INSURANCE INVESTMENT RESULTS
Net investment income of the property and casualty insurance operations
increased to $64.2 million and $190.5 million in the three-month and nine-month
periods ended September 30, 1996 from $61.7 million and $183.7 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 $15.7 million and $39.6 million in
the third quarter and first nine months of 1996 from $10.1 million and $25.9
million in the corresponding 1995 periods. Gains on sales of investments in 1996
primarily resulted from sales of equity securities.
TITLE INSURANCE OPERATIONS
Premiums and fees in the third quarter and first nine months of 1996 were $208.2
million and $576.0 million compared to $171.6 million and $481.9 million in the
corresponding 1995 periods. The increase in premiums and fees in 1996 resulted
from growth in residential resale and new home sale activity as well as
increased commercial real estate transactions.
As a result of increased agency revenues, agency commissions in the third
quarter and first nine months of 1996 increased to $98.7 million and $263.1
million from $75.0 million and $221.5 million in the corresponding 1995 periods.
Other expenses were $88.8 million and $263.6 million in the third quarter and
first nine months of 1996 compared to $81.6 million and $235.0 million in the
corresponding 1995 periods. The expense ratios of the
-9-
<PAGE>
title insurance operations (which includes agent commissions) were 89.5% and
90.8% in the third quarter and first nine months of 1996 compared to 90.7% and
94.2% in the corresponding 1995 periods. The improvement in the expense ratios
resulted from the increase in direct title insurance premiums and effective
expense control. The provision for claim losses was $15.6 million and $47.5
million in the three-month and nine-month periods ended September 30, 1996
compared to $14.9 million and $41.9 million in the corresponding 1995 periods.
INVESTMENT PORTFOLIO
At September 30, 1996, the Company's investment portfolio aggregated $4.03
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 September 30, 1996, the carrying values of
non-investment grade securities and securities not rated by Standard & Poor's
were $488.7 million (14% of the fixed income portfolio) and $80.7 million (2% 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 $41.6 million and $119.2 million in the third quarter and first nine months
of 1996 compared to $36.5 million and $115.0 million in the corresponding 1995
periods which included, in the first nine months of 1995, $14.5 million 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. The
increase in revenues in 1996 resulted from continued growth in the information
technology business. RCG's operating expenses were $41.1 million and $116.9
million in the third quarter and first nine months of 1996 compared to $34.9
million and $108.0 million in the corresponding 1995 periods which included, in
the first nine months of 1995, $11.0 million 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 income.
-10-
<PAGE>
At September 30, 1996, the Company's real estate operations had holdings with a
carrying value of $275.9 million, which includes nine shopping centers with an
aggregate carrying value of $127.8 million, office buildings and other
commercial properties, with an aggregate carrying value of $86.0 million, and
undeveloped land with a carrying value of $62.1 million.
EQUITY IN INVESTEE COMPANY
Equity in investee company income was $2.5 million and $7.4 million in the third
quarter and the first nine months of 1996 compared to $2.1 million and $6.2
million in the corresponding 1995 periods from the Company's investment in
Zenith. These increases reflect Zenith's improved property and casualty
insurance underwriting results.
OTHER MATTERS
The Company has a revolving credit facility with various banks providing for
aggregate maximum outstanding borrowings of $100 million. At September 30, 1996,
borrowings aggregating $31 million were outstanding under this facility. On
November 8, 1996, the Company increased term loan borrowings by $25 million to
$162.5 million. The additional borrowings were used to redeem all outstanding
($25 million face amount) 9.48% senior reset notes due 2000.
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 September 30, 1996, the partnership's total outstanding debt was $172.6
million. As of September 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.
-11-
<PAGE>
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.
-12-
<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 September
30, 1996.
-13-
<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: November 13, 1996 /s/ George E. Bello
----------------- ---------------------------------------
George E. Bello
Executive Vice President and Controller
(Chief Accounting Officer)
-14-
<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>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<DEBT-HELD-FOR-SALE> 2,528,576
<DEBT-CARRYING-VALUE> 776,457
<DEBT-MARKET-VALUE> 776,759
<EQUITIES> 688,917
<MORTGAGE> 0
<REAL-ESTATE> 275,940
<TOTAL-INVEST> 4,536,465
<CASH> 32,725
<RECOVER-REINSURE> 3,646,711
<DEFERRED-ACQUISITION> 214,100
<TOTAL-ASSETS> 10,524,464
<POLICY-LOSSES> 6,498,610
<UNEARNED-PREMIUMS> 1,542,129
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 232,908
0
0
<COMMON> 0
<OTHER-SE> 1,323,157
<TOTAL-LIABILITY-AND-EQUITY> 10,524,464
1,908,599
<INVESTMENT-INCOME> 213,200
<INVESTMENT-GAINS> 39,946
<OTHER-INCOME> 134,740
<BENEFITS> 1,083,679
<UNDERWRITING-AMORTIZATION> 301,540
<UNDERWRITING-OTHER> 678,181
<INCOME-PRETAX> 99,363
<INCOME-TAX> 26,800
<INCOME-CONTINUING> 79,987
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 79,987
<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>
