<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1998
[ ] 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 001-11462
DELPHI FINANCIAL GROUP, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
Delaware (302) 478-5142 13-3427277
- ------------------------------- ------------------------------- -------------------------------
(State or other jurisdiction of (Registrant's telephone number, (I.R.S. Employer Identification
incorporation or organization) including area code) Number)
</TABLE>
1105 North Market Street, Suite 1230, Wilmington, Delaware 19899
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
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 filing requirements
for the past 90 days:
Yes [X] No [ ]
As of April 24, 1998, the Registrant had 13,191,149 shares of Class A Common
Stock and 5,941,024 shares of Class B Common Stock outstanding.
<PAGE> 2
DELPHI FINANCIAL GROUP, INC.
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Consolidated Statements of Income for the
Three Months Ended March 31, 1998 and 1997............................................ 3
Consolidated Balance Sheets at March 31, 1998 and
December 31, 1997..................................................................... 4
Consolidated Statements of Shareholders' Equity for the
Three Months Ended March 31, 1998 and 1997............................................ 5
Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 1998 and 1997............................................ 6
Notes to Consolidated Financial Statements............................................... 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations................................................... 9
PART II. OTHER INFORMATION........................................................................ 11
</TABLE>
-2-
<PAGE> 3
PART I. FINANCIAL INFORMATION
DELPHI FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------
1998 1997
-------- --------
<S> <C> <C>
Revenue:
Insurance premiums and policyholder fees ................................... $ 97,376 $ 87,937
Net investment income ...................................................... 45,708 46,898
Net realized investment gains .............................................. 28,122 4,236
-------- --------
171,206 139,071
-------- --------
Benefits and expenses:
Benefits, claims and interest credited to policyholders .................... 78,545 74,382
Commissions ................................................................ 7,493 6,850
Amortization of cost of business acquired .................................. 6,372 7,797
Other operating expenses ................................................... 15,029 14,997
-------- --------
107,439 104,026
-------- --------
Operating income .................................................... 63,767 35,045
Interest expense ................................................................ 3,912 4,298
-------- --------
Income before income tax expense and dividends on
Capital Securities of Delphi Funding L.L.C .................... 59,855 30,747
Income tax expense .............................................................. 20,100 10,331
-------- --------
Income before dividends on Capital Securities of Delphi Funding L.L.C 39,755 20,416
Dividends on Capital Securities of Delphi Funding L.L.C ......................... 1,513 118
-------- --------
Net income .......................................................... $ 38,242 $ 20,298
======== ========
Basic net income per share of common stock ...................................... $ 1.95 $ 1.07
Diluted net income per share of common stock .................................... $ 1.87 $ 1.01
</TABLE>
See notes to consolidated financial statements.
-3-
<PAGE> 4
DELPHI FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
---------- ----------
<S> <C> <C>
Assets:
Investments:
Fixed maturity securities, available for sale ............................. $2,381,385 $2,165,069
Cash and cash equivalents ................................................. 68,608 50,580
Other investments ......................................................... 245,827 264,753
---------- ----------
2,695,820 2,480,402
Cost of business acquired ........................................................ 91,663 92,931
Reinsurance receivables .......................................................... 345,711 234,746
Other assets ..................................................................... 198,265 322,985
Assets held in separate account .................................................. 76,804 72,649
---------- ----------
Total assets .............................................................. $3,408,263 $3,203,713
========== ==========
Liabilities and Shareholders' Equity:
Future policy benefits ........................................................... $ 452,900 $ 436,021
Unpaid claims and claim expenses ................................................. 548,409 531,409
Policyholder account balances .................................................... 684,773 689,542
Corporate debt ................................................................... 197,706 178,769
Advances from Federal Home Loan Bank ............................................. 201,057 201,057
Other liabilities and policyholder funds ......................................... 606,243 494,082
Liabilities related to separate account .......................................... 66,978 63,347
---------- ----------
Total liabilities ......................................................... 2,758,066 2,594,227
---------- ----------
Company-obligated mandatorily redeemable Capital Securities of Delphi
Funding L.L.C. holding solely junior subordinated deferrable interest
debentures of the Company ................................................. 100,000 100,000
---------- ----------
Shareholders' equity:
Preferred Stock, $.01 par; 10,000,000 shares authorized ................... -- --
Class A Common Stock, $.01 par; 40,000,000 shares authorized;
13,141,714 and 12,884,188 shares issued and outstanding, respectively 131 129
Class B Common Stock, $.01 par; 20,000,000 shares authorized;
5,941,024 and 6,156,787 shares issued and outstanding, respectively . 59 62
Additional paid-in capital ................................................ 266,611 262,963
Net unrealized appreciation on investments ................................ 39,367 40,545
Retained earnings ......................................................... 244,029 205,787
---------- ----------
Total shareholders' equity .......................................... 550,197 509,486
---------- ----------
Total liabilities and shareholders' equity ................... $3,408,263 $3,203,713
========== ==========
</TABLE>
See notes to consolidated financial statements.
-4-
<PAGE> 5
DELPHI FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Unrealized
Class A Class B Additional (Depreciation)
Common Common Paid-in Appreciation Retained
Stock Stock Capital on Investments Earnings Total
--------- --------- --------- -------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1997 ....... $ 118 $ 63 $ 240,203 $ (17,949) $ 144,530 $ 366,965
---------
Net income ..................... -- -- -- -- 20,298 20,298
Increase in net unrealized
depreciation on investments -- -- -- (29,976) -- (29,976)
---------
Comprehensive loss ............. (9,678)
Issuance of stock and exercise
of stock options .......... 1 -- 253 -- -- 254
--------- --------- --------- --------- --------- ---------
Balance, March 31, 1997 ........ $ 119 $ 63 $ 240,456 $ (47,925) $ 164,828 $ 357,541
========= ========= ========= ========= ========= =========
Balance, January 1, 1998 ....... $ 129 $ 62 $ 262,963 $ 40,545 $ 205,787 $ 509,486
---------
Net income ..................... -- -- -- -- 38,242 38,242
Decrease in net unrealized
appreciation on investments -- -- -- (1,178) -- (1,178)
---------
Comprehensive income ........... 37,064
Issuance of stock, exercise
of stock options and
conversion of shares ...... 2 (3) 3,648 -- -- 3,647
--------- --------- --------- --------- --------- ---------
Balance, March 31, 1998 ........ $ 131 $ 59 $ 266,611 $ 39,367 $ 244,029 $ 550,197
========= ========= ========= ========= ========= =========
</TABLE>
See notes to consolidated financial statements.
-5-
<PAGE> 6
DELPHI FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
1998 1997
----------- -----------
<S> <C> <C>
Operating activities:
Net income ...................................................................... $ 38,242 $ 20,298
Adjustments to reconcile net income to net cash provided by operating activities:
Net change in future policy benefits, unpaid claims and claim expenses,
reinsurance receivables and policyholder accounts .................... 24,225 12,080
Group employee benefit product reserves ceded to Oracle Reinsurance Ltd. ... (100,000) --
Amortization, principally the cost of business acquired and investments .... (4,598) 7,234
Deferred costs of business acquired ........................................ (8,966) (8,611)
Net realized gains on investments .......................................... (28,122) (4,236)
Net change in trading account securities ................................... 16,409 (11,954)
Other ...................................................................... (3,873) 5,216
----------- -----------
Net cash provided by operating activities ............................ (66,683) 20,027
----------- -----------
Investing activities:
Securities available for sale:
Purchases of investments and loans made .................................... (1,185,321) (273,692)
Sales of investments and receipts from repayment of loans .................. 1,211,550 243,982
Maturities of investments .................................................. 17,803 7,903
Change in deposit in separate account ........................................... (524) (202)
----------- -----------
Net cash used by investing activities ...................................... 43,508 (22,009)
----------- -----------
Financing activities:
Deposits to policyholder accounts ............................................... 9,348 17,450
Withdrawals from policyholder accounts .......................................... (22,754) (17,158)
Proceeds from issuance of common stock and exercise of stock options ............ 327 254
Net proceeds from issuance of Capital Securities of Delphi Funding L.L.C ........ -- 98,750
Borrowings under Credit Agreement ............................................... 34,000 --
Principal payments under Credit Agreement ....................................... (15,000) (52,000)
Change in liability under reverse repurchase agreements ......................... 35,282 (46,344)
----------- -----------
Net cash provided by financing activities .................................. 41,203 952
----------- -----------
Increase (decrease) in cash and cash equivalents ...................................... 18,028 (1,030)
Cash and cash equivalents at beginning of period ...................................... 50,580 89,711
----------- -----------
Cash and cash equivalents at end of period ................................. $ 68,608 $ 88,681
=========== ===========
</TABLE>
See notes to consolidated financial statements.
-6-
<PAGE> 7
DELPHI FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A - SIGNIFICANT ACCOUNTING POLICIES
The financial statements included herein were prepared in conformity with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
Such principles were applied on a basis consistent with those reflected in the
Company's report on Form 10-K for the year ended December 31, 1997. The
information furnished includes all adjustments and accruals of a normal
recurring nature which are, in the opinion of management, necessary for a fair
presentation of results for the interim periods. Operating results for the three
months ended March 31, 1998 are not necessarily indicative of the results that
may be expected for the year ended December 31, 1998. Certain reclassifications
have been made in the 1997 financial statements to conform with the 1998
presentation. For further information refer to the consolidated financial
statements and footnotes thereto included in the Company's report on Form 10-K
for the year ended December 31, 1997. Capitalized terms used herein without
definition have the meanings ascribed to them in the Company's report on Form
10-K for the year ended December 31, 1997.
As of January 1, 1998, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 130, "Reporting Comprehensive Income." SFAS No. 130
establishes new rules for the reporting and display of comprehensive income and
its components; however, the adoption of SFAS No. 130 had no impact on the
Company's net income or shareholders' equity. SFAS No. 130 requires unrealized
gains and losses on the Company's available-for-sale securities, which are
reported as a separate component of shareholders' equity, to be included as a
component of comprehensive income. Prior year financial statements have been
reclassified to conform to the requirements of SFAS No. 130.
NOTE B - INVESTMENTS
At March 31, 1998, the Company had fixed maturity securities available for sale
with a carrying value and a fair value of $2,381.4 million and an amortized cost
of $2,316.6 million. At December 31, 1997, the Company had fixed maturity
securities available for sale with a carrying value and a fair value of $2,165.1
million and an amortized cost of $2,101.9 million.
NOTE C - REINSURANCE AGREEMENT
In January 1998, an offering was completed whereby shareholders and
optionholders of the Company received, at no cost, rights to purchase shares of
Delphi International, a newly-formed, independent Bermuda insurance holding
company. Subsequent to the completion of the rights offering, the Company
entered into various reinsurance agreements with Oracle Re, a wholly-owned
subsidiary of Delphi International. Pursuant to these agreements, approximately
$100.0 million of group employee benefit reserves ($35.0 million of long-term
disability insurance reserves and $65.0 million of excess workers' compensation
and casualty insurance reserves) were ceded to Oracle Re. The Company has
received collateral security from Oracle Re in an amount sufficient to support
the ceded reserves. These agreements are not expected to have a material effect
on the Company's financial condition, liquidity or results of operations.
-7-
<PAGE> 8
DELPHI FINANCIAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
NOTE D - COMPUTATION OF NET INCOME PER SHARE
The Company's Board of Directors declared a 2% stock dividend on April 1, 1998,
payable on May 4, 1998 to stockholders of record on April 20, 1998. Results per
share and applicable share amounts have been restated to reflect the stock
dividend. Prior period results per share and applicable share amounts have also
been restated to reflect the adoption of Statement of Financial Accounting
Standards No. 128, "Earnings Per Share." The following table sets forth the
computation of basic and diluted results per share (dollars in thousands, except
per share data):
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1998 1997
------- -------
<S> <C> <C>
Numerator:
Net income .................................................. $38,242 $20,298
======= =======
Denominator:
Weighted average common shares outstanding .................. 19,614 18,952
Effect of dilutive securities ............................... 786 1,157
------- -------
Weighted average common shares outstanding, assuming dilution 20,400 20,109
======= =======
Basic net income per share of common stock ......................... $ 1.95 $ 1.07
Diluted net income per share of common stock ....................... $ 1.87 $ 1.01
</TABLE>
-8-
<PAGE> 9
DELPHI FINANCIAL GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The following is an analysis of the results of operations and financial
condition of Delphi Financial Group, Inc. (the "Company," which term includes
the Company and its consolidated subsidiaries unless the context specifies
otherwise) . This analysis should be read in conjunction with the Consolidated
Financial Statements and related notes included in this document, as well as the
Company's report on Form 10-K for the year ended December 31, 1997. Capitalized
terms used herein without definition have the meanings ascribed to them in the
Company's report on Form 10-K for the year ended December 31, 1997.
RESULTS OF OPERATIONS
Insurance Premiums and Policyholder Fees. Insurance premiums and policyholder
fees for the three months ended March 31, 1998 were $97.4 million as compared to
$87.9 million for the three months ended March 31, 1997, an increase of 11%.
This increase is primarily attributable to the Company's group employee benefit
product line and reflects strong production of new business, normal growth in
employment and salary levels for the Company's existing customer base and
expansion within the alternative risk transfer market. Deposits from the
Company's single premium deferred annuity products, including the Company's
market value adjusted annuity product, were $8.2 million for the three months
ended March 31, 1998 as compared to $16.7 million for the comparable period of
1997. Deposits for these products, which are long-term in nature, are not
recorded as premiums; instead, the deposits are recorded as a liability. The
decrease in deposits is principally attributable to a decline in the demand for
fixed annuity products due to the low interest rate environment.
Net Investment Income. Net investment income for the three months ended March
31, 1998 was $45.7 million as compared to $46.9 million for the three months
ended March 31, 1997. A decrease in the weighted average annualized yield was
partially offset by an increase in average invested assets. The weighted average
annualized yield on invested assets, excluding realized and unrealized
investment gains and losses, was 8.6% on average invested assets of $2,139.4
million for the first quarter of 1998 as compared to 9.1% on average invested
assets of $2,057.3 million for the comparable period of 1997. The investment
results for the first quarter of 1997 reflect above average performance from all
sectors of the Company's investment portfolio, including the Company's
independent investment managers.
Net Realized Investment Gains. Net realized investment gains were $28.1 million
for the three months ended March 31, 1998 as compared to $4.2 million for the
three months ended March 31, 1997. The Company's investment strategy results in
periodic sales of securities and the recognition of realized investment gains
and losses.
Benefits and Expenses. Policyholder benefits and expenses for the three months
ended March 31, 1998 were $107.4 million as compared to $104.0 million for the
three months ended March 31, 1997, an increase of 3%. Benefits and expenses for
group employee benefit products for the first quarter of 1998 increased by $7.9
million as compared to the same period of 1997 principally due to growth in this
product line. The combined ratio (loss ratio plus expense ratio) for group
employee benefit products decreased from 98.1% for the three months ended March
31, 1997 to 96.4% for the three months ended March 31, 1998. This decrease was
primarily attributable to the low level of expenses associated with the products
being offered in the alternative risk transfer market. Benefits and interest
credited on asset accumulation products decreased by $1.2 million primarily due
to a decrease in average funds under management from $679.0 million for first
quarter of 1997 to $639.7 million for the first quarter of 1998. The weighted
average annualized crediting rate on asset accumulation products for the three
months ended March 31, 1998 and 1997 was 5.3% in both periods. In addition, the
amortization of cost of business acquired was accelerated by $1.5 million during
the first quarter of 1997 due to better than expected investment results. There
was no acceleration or deceleration of cost of business acquired related to
investment income in the first quarter of 1998.
Operating Income. Operating income before interest and income tax expense and
dividends for the three months ended March 31, 1998 was $63.7 million as
compared to $35.0 million for the three months ended March 31, 1997, an increase
of 82%. The increase was primarily due to the increase in net realized
investment gains in the first quarter of 1998.
-9-
<PAGE> 10
Interest Expense. Interest expense for the three months ended March 31, 1998 was
$3.9 million as compared to $4.2 million for the three months ended March 31,
1997. The decrease was primarily due to a decrease in the weighted average
outstanding borrowings under the Credit Agreement.
Income Taxes. Income tax expense for the three months ended March 31, 1998 was
$20.1 million as compared to $10.3 million for the three months ended March 31,
1997. The increase was primarily due to the $28.7 million increase in operating
income. The effective tax rate for the first quarter of 1998 and 1997 was 33.6%
in both periods.
Dividends on Capital Securities. Dividends on the Capital Securities were $1.5
million for the three months ended March 31, 1998 as compared to $0.1 million
for the three months ended March 31, 1997. The Capital Securities were issued on
March 25, 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company had approximately $249.5 million of financial resources available
at the holding company level at March 31, 1998 which was primarily comprised of
investments in the common stock of its non-insurance subsidiaries and fixed
maturity securities. The assets of the non-insurance subsidiaries are primarily
invested in fixed maturity securities, balances with independent investment
managers and marketable securities. Substantially all of the amounts invested
with independent investment managers are withdrawable at least annually,
subject to applicable notice requirements. A shelf registration is also in
effect under which up to $49.2 million in securities may be issued by the
Company.
Other sources of liquidity at the holding company level include interest and
principal payments made on the Surplus Debenture issued by RSLIC-Texas to the
Company, dividends paid from insurance subsidiaries, primarily generated from
operating cash flows and investments, and borrowings available under the Credit
Agreement. The Company's insurance subsidiaries are permitted, without prior
regulatory or other approval, to make dividend payments of $47.0 million during
1998, of which $8.5 million has been paid during the first quarter of 1998. Of
the unused portion of the Credit Agreement facility of $133.0 million, $98.0
million is restricted for use in connection with, among other things,
acquisitions or the redemption of the SIG Senior Notes.
The Company's current liquidity needs, in addition to funding operating
expenses, include distributions on the Capital Securities and principal and
interest payments on outstanding borrowings under the Credit Agreement, the
Senior Notes and the SIG Senior Notes. The Junior Debentures underlying the
Capital Securities are not redeemable prior to March 25, 2007, and, at the
Company's current level of borrowings, no principal repayments would be required
under the Credit Agreement until October 1, 2002. The Senior Notes mature in
their entirety on October 1, 2003 and are not subject to any sinking fund
requirements nor are they redeemable prior to maturity. The SIG Senior Notes
amortize in $9.0 million annual installments beginning in May 1999. Sources of
liquidity available to the Company and its subsidiaries are expected to exceed
their cash requirements on both a short-term and long-term basis.
Operating activities increased cash and cash equivalents by $33.3 million,
excluding the one-time effect of the cession of $100.0 million of group employee
benefit product reserves to Oracle Re (see Note C to the Consolidated Financial
Statements), in the first quarter of 1998. Cash flows from purchases and sales
of investments for the first three months of 1998 reflect the repositioning of a
portion of the Company's portfolio into selected categories of fixed maturity
securities to take advantage of opportunities in the marketplace to increase
investment returns while maintaining the Company's investment objectives of
safety and liquidity. There were no significant changes in the credit quality of
the Company's investment portfolio as a result of this investment activity.
A significant aspect of the Company's continued profitability is its ability to
manage risks associated with interest-sensitive assets and liabilities. The
Company prices its annuity products based on assumptions concerning prevailing
and expected interest rates and other factors to achieve a positive difference,
or spread, between its expected return on investments and the crediting rate.
The Company achieves this spread by active portfolio management focusing on
matching the durations of invested assets and related liabilities to minimize
the exposure to fluctuations in interest rates and by the adjustment of the
crediting rate on annuity products. The results of this asset/liability matching
are analyzed periodically through cash flow analysis under multiple interest
rate scenarios. The Company believes that it will continue to achieve a positive
spread and that the amount of lapses and surrender rates will remain consistent
with those assumed in the pricing of the products.
-10-
<PAGE> 11
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
In connection with, and because it desires to take advantage of, the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995, the
Company cautions readers regarding certain forward-looking statements in the
foregoing discussion and elsewhere in this Form 10-Q and in any other statement
made by, or on behalf of, the Company, whether or not in future filings with the
Securities and Exchange Commission. Forward-looking statements are statements
not based on historical information and which relate to future operations,
strategies, financial results or other developments. Some forward-looking
statements may be identified by the use of terms such as "expects," "believes,"
"anticipates," "intends" or "judgment." Forward-looking statements are
necessarily based upon estimates and assumptions that are inherently subject to
significant business, economic and competitive uncertainties and contingencies,
many of which are beyond the Company's control and many of which, with respect
to future business decisions, are subject to change. Examples of such
uncertainties and contingencies include, among other important factors, those
affecting the insurance industry generally, such as legislative and regulatory
developments and market pricing and competitive trends, and those relating
specifically to the Company's business, such as the level of its insurance
premium production, the claims experience of its insurance products and the
performance of its investment portfolio. These uncertainties and contingencies
can affect actual results and could cause actual results to differ materially
from those expressed in any forward-looking statements made by, or on behalf of,
the Company. The Company disclaims any obligation to update forward-looking
information.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11 - Computation of Earnings Per Share of Common Stock
(incorporated herein by reference to Note D to the
Consolidated Financial Statements included elsewhere
herein)
27 - Financial Data Schedule
(b) Reports on Form 8-K
None
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.
DELPHI FINANCIAL GROUP, INC. (Registrant)
/s/ ROBERT ROSENKRANZ
--------------------------------------------
Robert Rosenkranz
Chairman of the Board, President and
Chief Executive Officer
(Principal Executive Officer)
/s/ LAWRENCE E. DAURELLE
--------------------------------------------
Lawrence E. Daurelle
Vice President and Treasurer of RSLIC
(Principal Accounting and Financial Officer)
Date: May 1, 1998
-11-
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1998 (UNAUDITED) AND THE CONSOLIDATED
STATEMENT OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 1998 (UNAUDITED) AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<DEBT-HELD-FOR-SALE> 2,381,385
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 2,627,212
<CASH> 68,608
<RECOVER-REINSURE> 345,711
<DEFERRED-ACQUISITION> 91,663
<TOTAL-ASSETS> 3,408,263
<POLICY-LOSSES> 1,001,309
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 684,773
<NOTES-PAYABLE> 197,706
100,000<F1>
0
<COMMON> 190
<OTHER-SE> 550,007
<TOTAL-LIABILITY-AND-EQUITY> 3,408,263
97,376
<INVESTMENT-INCOME> 45,708
<INVESTMENT-GAINS> 28,122
<OTHER-INCOME> 0
<BENEFITS> 78,545
<UNDERWRITING-AMORTIZATION> 6,372
<UNDERWRITING-OTHER> 26,434
<INCOME-PRETAX> 59,855
<INCOME-TAX> 20,100
<INCOME-CONTINUING> 39,755
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 38,242
<EPS-PRIMARY> 1.95<F2>
<EPS-DILUTED> 1.87<F2>
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
<FN>
<F1>Represents Company-obligated mandatorily redeemable Capital Securities of
Delphi Funding L.L.C. holding solely junior subordinated deferrable interest
debentures of the Company.
<F2>The Company's Board of Directors declared a 2% stock dividend on April 1,
1998, payable on May 4, 1998 to stockholders of record on April 20, 1998.
Financial Data Schedules for prior periods have not been restated to reflect
the stock dividend.
</FN>
</TABLE>
