The total number of sequentially numbered pages in this manually signed original
is 9. Exhibit Index is sequential page no. 4.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 1, 1997
---------------------
INTEGON CORPORATION
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 001-10997 13-3559471
- -------------- ------------------------ -------------------
(State or Other (Commission File Number) (I.R.S. Employer
Jurisdiction of Incorporation) Identification No.)
500 West Fifth Street
Winston-Salem, North Carolina 27152
----------------------------------------
(Address of Principal Executive Offices)
(910) 770-2000
---------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
Not Applicable
---------------------------------------------------
(Former name or former address, if changed since last report.)
Page 1 of 9
Exhibit Index is on Page 4
<PAGE>
Item 5. Other Events
On August 1, 1997, Integon Corporation (the "Company") issued a press
release concerning second quarter 1997 results. A copy of the press release is
attached hereto as Exhibit 99.1.
Item 7. Financail Statements and Exhibits
(a) Financial Statements of Businesses Acquired
None
(b) Pro Forma Financial Information
None
(c) Exhibits.
Exhibit Number Description
-------------- ------------
99.1 Press Release dated
August 1, 1997 issued
by the Company.
Page 2
<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 hereunto duly authorized.
INTEGON CORPORATION
August 4, 1997 By: /s/ Donald F. McKee
------------- ---------------------
Date Donald F. McKee
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
Page 3
<PAGE>
Exhibit Index
-------------
Exhibit Number Description Page No.
- -------------- ----------- --------
99.1 Press Release dated August 1, 1997 5
issued by the Company
Page 4
<PAGE>
Exhibit 99.1
------------
PRESS RELEASE DATED AUGUST 1, 1997
ISSUED BY THE COMPANY
Page 5
<PAGE>
[GRAPHIC OMITTED]
Integon Corporation
Winston-Salem, NC 27152
Analysts' Contact:
Gay Huntsman (910) 770-8434
Media Contact:
Turner Coley (910) 760-3000
Integon Corporation Announces Second Quarter 1997 Results
WINSTON-SALEM, NC, August 1, 1997 - Integon Corporation (NYSE:IN) today
announced results for the second quarter ended June 30, 1997. The Company
reported a net loss of $3.4 million, or (30) cents per share for the quarter
compared to a net loss of $33.4 million or $(2.21) per share for the quarter
ended March 31, 1997. Included in the second quarter results were after-tax net
realized losses on investments, certain expenses related to the previously
announced merger and expenses associated with making Integon's systems
accommodate processing for the year 2000.
Commenting on the Company's performance, Integon President and Chief
Executive Officer John B. McKinnon stated, "Rate increases and other
underwriting actions that have been taken over the last nine months have had the
expected impact of improving underwriting results and slowing premium growth.
While financial results are still not profitable, we are pleased with the
progress made to date."
The GAAP combined ratio for the second quarter 1997 was 103.2 percent
compared to 127.7 percent for the first quarter 1997. The first quarter results
included a $42.0 million increase to loss reserves as well as a write off of
deferred policy acquisition
(MORE)
Page 6
<PAGE>
Integon Corporation
Page 2
costs of $3.7 million. Without these adjustments, the combined ratio would have
been 104.4 percent in the first quarter 1997. There was no need to increase loss
reserves for prior accident periods during second quarter 1997. These results
reflect the positive impact of rate increases, other underwriting actions, and
slower growth.
Regarding Integon's pending merger with GMAC, Mr. McKinnon said,
"Integon and GMAC are working together to complete all regulatory filings with
respect to the merger and we anticipate that the merger will be closed within
the next two to three months. We believe this merger is in the best interest of
Integon's shareholders, agents, policyholders and employees and we are excited
by the prospect of this association with GMAC."
Integon Corporation, through its wholly owned property and casualty
insurance subsidiaries, specializes in the underwriting and marketing of
nonstandard and other specialty automobile insurance products to individuals.
The Company, headquartered in Winston-Salem, North Carolina, markets its
products through approximately 13,000 independent agencies in 31 states.
Page 7
<PAGE>
Page 3
Integon Corporation
August 1, 1997
<TABLE>
<CAPTION>
INTEGON CORPORATION AND SUBSDIARIES
STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended Six Months Ended
------------------ ------------------
06/30/97 06/30/96 (1) Change 06/30/97 06/30/96 (1) Change
--------- ----------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Direct premiums written ......................... $ 225,463 $ 229,262 -1.7% $ 471,942 $ 458,926 2.8%
========= ========= ========= =========
Net premiums written ............................ $ 185,909 $ 197,811 -6.0% $ 388,463 $ 392,073 -0.9%
Change in unearned premium ...................... 12,559 (17,571) 171.5% 6,122 (47,018) 113.0%
--------- --------- --------- ---------
Premiums earned ................................. 198,468 180,240 10.1% 394,585 345,055 14.4%
Net investment income (2) ....................... 10,270 7,858 30.7% 19,313 15,611 23.7%
Net realized investment gains (losses) .......... (1,592) (857) -85.8% (2,073) 1,220 -269.9%
Other income .................................... 4,660 4,035 15.5% 9,200 8,210 12.1%
--------- --------- --------- ---------
TOTAL REVENUES .................................. 211,806 191,276 10.7% 421,025 370,096 13.8%
--------- --------- --------- ---------
Loss and loss adjustment expenses ............... 156,173 134,032 16.5% 355,411 264,590 34.3%
Policy acquisition and other underwritin ........ 48,658 37,094 31.2% 99,801 72,065 38.5%
Other expenses .................................. 5,170 3,322 55.6% 9,917 7,371 34.5%
Amortization of goodwill ........................ 764 770 -0.8% 1,528 1,539 -0.7%
Interest expense ................................ 3,687 3,724 -1.0% 7,454 7,355 1.3%
--------- --------- --------- ---------
TOTAL EXPENSES .................................. 214,452 178,942 19.8% 474,111 352,920 34.3%
--------- --------- --------- ---------
INCOME (LOSS) FROM OPERATIONS BEFORE
FEDERAL INCOME TAX (BENEFIT) AND DISTRIBUTIONS
ON CAPITAL SECURITIES OF SUBSIDIARY TRUST ....... (2,646) 12,334 -121.5% (53,086) 17,176 -409.1%
Federal income tax (benefit) .................... (993) 4,037 -124.6% (19,035) 5,494 -446.5%
Income (loss) before distributions on capital --------- --------- --------- ---------
securities of subsidiary trust .................. (1,653) 8,297 -119.9% (34,051) 11,682 -391.5%
Distributions on capital securities of subsidiary
trust, net of federal income tax
benefit of $940, $-, $1,473 and $- .............. (1,747) -- (2,737) --
--------- --------- --------- ---------
NET INCOME (LOSS) ............................... (3,400) 8,297 -141.0% (36,788) 11,682 -414.9%
Preferred stock dividends ....................... 1,392 1,392 0.0% 2,785 2,785 0.0%
Net income (loss) available to --------- --------- --------- ---------
common stockholders ............................. ($ 4,792) $ 6,905 -169.4% ($ 39,573) $ 8,897 -544.8%
========= ========= ========= =========
Operating earnings (loss) ....................... ($ 2,366) $ 8,854 -126.7% ($ 35,441) $ 10,889 -425.5%
Net realized investment gains (losses)
(net of taxes) .................................. (1,034) (557) -85.6% (1,347) 793 -269.9%
--------- --------- --------- ---------
Net income (loss) ............................... ($ 3,400) $ 8,297 -141.0% ($ 36,788) $ 11,682 -414.9%
========= ========= ========= =========
PER SHARE:
Primary
Operating earnings (loss) ....................... ($ 0.24) $ 0.47 -151.1% ($ 2.43) $ 0.51 -576.5%
Net realized investment gains (losses)
(net of taxes) .................................. (0.06) (0.03) -100.0% (0.08 0.05 -260.0%
--------- --------- --------- ---------
Net income (loss) ............................... ($ 0.30) $ 0.44 -168.2% ($ 2.51) $ 0.56 -548.2%
========= ========= ========= =========
Fully diluted
Operating earnings (loss) ....................... ($ 0.24) $ 0.45 -153.3% ($ 2.43) $ 0.51 -576.5%
Net realized investment gains (losses)
(net of taxes) .................................. (0.06) (0.03) -100.0% (0.08) 0.05 -260.0%
--------- --------- --------- ---------
Net income (loss) ............................... ($ 0.30) $ 0.42 -171.4% ($ 2.51) $ 0.56 -548.2%
========= ========= ========= =========
Weighted average shares outstanding
Primary ......................................... 15,751 15,815 15,745 15,863
========= ========= ========= =========
Fully diluted ................................... 15,751 19,654 15,745 15,863
========= ========= ========= =========
(1)As originally reported. 1996 financial results do not include loss reserve adjustments recorded
in first quarter 1997 and fourth quarter 1996 relating to the 1996 accident year.
(2) Pre-tax yield ........... 6.1% 5.9% 6.0% 6.0%
After tax yield ............. 4.2% 4.1% 4.2% 4.2%
Average duration of portfolio 3.7 yrs 4.4 yrs n/a n/a
</TABLE>
Page 8
<PAGE>
Page 4
Integon Corporation
August 1, 1997
<TABLE>
<CAPTION>
INTEGON CORPORATION AND SUBSIDIARIES
BALANCE SHEETS
(In Thousands, Except Per Share Data)
(Unaudited)
06/30/97 12/31/96
----------- -----------
<S> <C> <C>
ASSETS
Fixed maturities available for sale
(amortized cost:$635,533 and $522,452) ............. $ 633,239 $ 521,311
Other long-term investments ........................ 1,098 2,743
Cash and short-term investments .................... 51,562 43,838
Reinsurance receivable ............................. 175,349 185,077
Premiums due and uncollected ....................... 238,395 248,537
Prepaid reinsurance premiums ....................... 49,833 48,909
Accounts and notes receivable ...................... 40,181 32,957
Accrued investment income .......................... 9,345 8,933
Deferred policy acquisition costs .................. 49,688 55,106
Property and equipment ............................. 77,596 68,271
Goodwill ........................................... 105,429 106,957
Deferred income taxes .............................. 26,823 22,044
Other .............................................. 25,899 12,116
----------- -----------
Total assets ....................................... $ 1,484,437 $ 1,356,799
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Unearned premiums .................................. $ 358,883 $ 364,081
Loss and LAE payable ............................... 531,027 478,031
Accrued expenses and other liabilities ............. 144,561 104,536
Short-term debt .................................... 26,000 44,000
Notes payable ...................................... 150,714 150,760
----------- -----------
Total liabilities .................................. 1,211,185 1,141,408
----------- -----------
Company-obligated mandatorily redeemable capital
secuities of subsidiary trust holding solely Integon
Corporation Junior Subordinated Debentures ......... 100,000 --
----------- -----------
STOCKHOLDERS' EQUITY
Convertible preferred stock ........................ 14 14
Common stock ....................................... 173 173
Additional paid-in capital ......................... 148,803 147,891
Net unrealized depreciation of securities .......... (1,345) (700)
Retained earnings .................................. 63,428 105,834
Treasury stock ..................................... (37,821) (37,821)
----------- -----------
Total stockholders' equity ......................... 173,252 215,391
----------- -----------
Total liabilities and stockholders' equity ......... $ 1,484,437 $ 1,356,799
=========== ===========
Book value per share ............................... $ 6.63 $ 9.33
Loss and LAE payable, net of reinsurance ........... 365,651 306,915
receivable
Estimated statutory surplus ........................ 273,714 245,919
Common shares outstanding .......................... 15,788 15,736
</TABLE>
Page 9
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND> This statement contains summary financial information
extracted from Integon Corporation's June 30, 1997
finacial statements and is qualified in its entirety
by references to such financial statements.
</LEGEND>
<CIK> 0000878660
<NAME> Integon Corporation
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 6-Mos
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-1-1997
<PERIOD-END> Jun-30-1997
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 633,239
<DEBT-CARRYING-VALUE> 633,239
<DEBT-MARKET-VALUE> 633,239
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 634,337
<CASH> 51,562
<RECOVER-REINSURE> 175,349
<DEFERRED-ACQUISITION> 49,688
<TOTAL-ASSETS> 1,484,437
<POLICY-LOSSES> 531,027
<UNEARNED-PREMIUMS> 358,883
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 150,714
0
14
<COMMON> 173
<OTHER-SE> 173,065
<TOTAL-LIABILITY-AND-EQUITY> 1,484,437
394,585
<INVESTMENT-INCOME> 19,313
<INVESTMENT-GAINS> (2,073)
<OTHER-INCOME> 9,200
<BENEFITS> 355,411
<UNDERWRITING-AMORTIZATION> 0
<UNDERWRITING-OTHER> 99,801
<INCOME-PRETAX> (57,296)
<INCOME-TAX> (20,508)
<INCOME-CONTINUING> (36,788)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (36,788)
<EPS-PRIMARY> (2.51)
<EPS-DILUTED> (2.51)
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
