UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
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 0-23430
South Dakota State Medical Holding Company, Incorporated
(Exact name of registrant as specified in its charter)
South Dakota 46-0401087
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1323 South Minnesota Avenue, Sioux Falls, South Dakota 57105
(Address of principal executive office)
(Zip Code)
(605) 334-4000
(Registrant's telephone number, including area code)
______________________________
(Former name, former address, and former fiscal year, if changed
since last report)
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
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at May 03, 1999
Class C Common Stock 1,465,345
<PAGE>
SOUTH DAKOTA STATE MEDICAL HOLDING COMPANY, INCORPORATED
FORM 10-Q
INDEX
<TABLE>
<S> <C>
Page Number
Part 1. Financial Information (unaudited)
Item 1. Financial Statements
Consolidated Balance Sheets at
March 31, 1999 and December 31, 1998 2
Consolidated Statements of Operations for
the Three Months Ended March 31, 1999 and 1998 3
Consolidated Statement of Stockholders' Equity
for the Three Months Ended March 31, 1999 4
Consolidated Statements of Cash Flows
for the Three Months Ended March 31, 1999 and 1998 5
Notes to Consolidated Financial Statements 6-7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 7-10
Item 3. Quantitative and Qualitative Disclosures
about Market Risk 10
Part II. Other Information 11
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Default Upon Senior Securities 11
Item 4. Submission of Matters to a Vote
of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 11
</TABLE>
1
<PAGE>
PART 1: FINANCIAL INFORMATION
Item 1. Financial Statements
SOUTH DAKOTA STATE MEDICAL HOLDING
COMPANY, INCORPORATED d/b/a DAKOTACARE
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<S> <C> <C>
March 31, December 31,
ASSETS 1999 1998
Cash and cash equivalents $ 5,714,750 $ 5,372,457
Investments in securities held to maturity 406,918 405,094
Certificates of deposit 500,000 575,000
Receivables 1,084,953 1,252,780
Prepaids and other assets 121,724 153,930
Deferred income taxes 679,000 647,000
------------- -------------
Total current assets $ 8,507,345 $ 8,406,261
------------- -------------
Investment in securities held to maturity $ 3,574,630 $ 3,567,422
Investments in securities available for sale 304,800 305,700
Pledged certificates of deposit 500,000 500,000
Certificate of deposit 50,000 50,000
Cash surrender value of life insurance 106,000 100,000
------------- -------------
Total long-term investments $ 4,535,430 $ 4,523,122
------------- -------------
Property and equipment, net of accum. depreciation $ 1,012,397 $ 913,006
------------- -------------
Deferred income taxes $ 436,000 $ 435,000
------------- -------------
$ 14,491,172 $ 14,277,389
============= =============
LIABILITIES
Reported and unreported claims payable $ 4,272,124 $ 4,409,622
Unearned premiums and administration fees 1,097,588 839,043
Accounts payable and accrued expenses 944,369 727,925
Contingency reserves payable 1,300,000 1,300,000
------------- -------------
Total current liabilities $ 7,614,081 $ 7,276,590
Contingency reserves payable 1,720,667 1,390,568
------------- -------------
Total liabilities $ 9,334,748 $ 8,667,158
------------- -------------
Minority interest in subsidiary $ 352,086 $ 350,606
------------- -------------
STOCKHOLDERS' EQUITY
Class A preferred stock, issued 1,121 shares $ 11,210 $ 11,050
Class B preferred stock, issued 1,300 shares 1,300 1,300
Class C common stock, issued 1,505,760 shares 15,058 15,058
Additional paid-in capital 3,749,342 3,749,342
Retained earnings 1,319,041 1,771,993
Accumulated other comprehensive income (11,133) (8,638)
Treasury Stock, Class C common stock (280,480) (280,480)
------------- -------------
$ 4,804,338 $ 5,259,625
------------- -------------
$ 14,491,172 $ 14,277,389
============= =============
</TABLE>
See Notes to Consolidated Financial Statements. 2
<PAGE>
SOUTH DAKOTA STATE MEDICAL HOLDING
COMPANY, INCORPORATED d/b/a DAKOTACARE
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<S> <C> <C>
Three Months Ended March 31,
1999 1998
Revenues:
Premiums, net of reins. ceded $ 8,281,038 $ 9,220,983
Third party administration fees 772,650 827,294
Investment income 125,310 147,631
Other income 139,511 154,643
------------- -------------
Total revenues $ 9,318,509 $ 10,350,551
------------- -------------
Operating expenses:
Claims incurred,
net of reins. recoveries $ 7,656,802 $ 8,003,850
Personnel expense 1,024,092 942,705
Commissions 361,084 395,930
Professional fees expense 259,164 257,551
Office expense 175,807 137,168
Advertising 109,578 138,413
Occupancy expense 175,998 161,937
State insurance taxes 92,271 113,774
Other general and
administrative expenses 92,918 80,900
------------- -------------
Total operating expenses $ 9,947,714 $ 10,232,228
------------- -------------
Income (loss) before income taxes
and minority interest $ (629,205) $ 118,323
Income taxes (credits) (251,000) 40,000
------------- -------------
Income (loss) before minority
interest $ (378,205) $ 78,323
Minority interest in income
(loss) of subsidiary 1,480 (1,800)
------------- -------------
Net income (loss) $ (379,685) $ 80,123
============= =============
Earnings (loss) per common share $ (0.26) $ 0.05
============= =============
Weighted average number of
common shares outstanding 1,465,345 1,505,760
============= =============
</TABLE>
See Notes to Consolidated Financial Statements.
3
<PAGE>
SOUTH DAKOTA STATE MEDICAL HOLDING
COMPANY, INCORPORATED d/b/a DAKOTACARE
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
THREE MONTHS ENDED MARCH 31, 1999
(Unaudited)
<TABLE>
<S> <C> <C> <C> <C> <C>
Accumulated
Additional Other
Capital Paid-In Retained Comprehensive Treasury
Stock Capital Earnings Income Stock Total
Balance,
December 31, 1998 $27,408 $3,749,342 $1,771,993 $ (8,638) $(280,480) $5,259,625
Issuance of Class A
preferred stock 160 -- -- -- -- 160
Redemption of Class A
preferred stock -- -- -- -- -- --
Treasury stock
purchased at cost -- -- -- -- -- --
Dividends paid on
Class C common
stock -- -- (73,267) -- -- (73,267)
Comprehensive income:
Net income (loss) -- -- (379,685) -- --
Net change in un-
realized loss on
securities avail-
able for sale -- -- -- (2,495) --
Comprehensive income -- -- -- -- -- (382,180)
-------- ----------- ----------- --------- ---------- -----------
Balance,March 31, 1999 $27,568 $3,749,342 $1,319,041 $(11,133) $(280,480) $4,804,338
======== =========== =========== ========= ========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
4
<PAGE>
SOUTH DAKOTA STATE MEDICAL HOLDING
COMPANY, INCORPORATED d/b/a DAKOTACARE
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<S> <C> <C>
Three Months Ended March 31,
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (379,685) $ 80,123
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation 76,539 71,806
Minority interest in income (loss)
of subsidiary 1,480 (1,800)
Amortization of discounts and premiums
on investments, net (34,856) (35,515)
Loss on disposal of equipment -- --
(Increase) decrease in receivables 167,827 (260,319)
Decrease in prepaids and other assets 32,206 15,896
(Increase) decrease in deferred income taxes (33,000) 49,000
Increase (decrease) in reported and
unreported claims payable (137,498) 5,821
Increase in accounts payable and accrued
expenses 258,545 187,514
Increase (decrease) in unearned premiums
and administration fees 216,444 (434,115)
Increase (Decrease) in contingency reserve
payable 330,099 (102,634)
------------- -------------
Net cash provided by (used in) operating activities $ 498,101 $ (424,223)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of securities available for sale $ (1,595) $ (1,433)
Held to maturity securities:
Matured -- 185,000
Purchased -- --
Repayments on collateralized mortgage obligations 25,824 31,095
Proceeds from maturities of certificates of deposit 475,000 600,000
Purchase of certificates of deposit (400,000) (500,000)
(Increase) in cash surrender value of life insurance (6,000) (9,000)
Purchase of property and equipment (175,930) (62,053)
Proceeds from the sale of property and equipment -- --
------------- -------------
Net cash provided by(used in) investing activities $ (82,701) $ 246,609
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of capital stock $ 160 $ 460
Redemption of capital stock -- --
Payment of dividends (73,267) --
Purchase of treasury stock -- --
------------- -------------
Net cash provided by(used in) financing activities $ (73,107) $ 460
------------- -------------
Increase (decrease) in cash and cash equivalents $ 342,293 $ (177,154)
CASH AND CASH EQUIVALENTS
Beginning 5,372,457 4,467,754
------------- -------------
Ending $ 5,714,750 $ 4,290,600
============= =============
</TABLE>
See Notes to Consolidated Financial Statements.
5
<PAGE>
SOUTH DAKOTA STATE MEDICAL HOLDING COMPANY, INCORPORATED
D/B/A DAKOTACARE
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The consolidated financial statements of South Dakota State Medical Holding
Company, Incorporated, d/b/a DAKOTACARE, (the "Company") and its
wholly-owned subsidiaries, DAKOTACARE Administrative Services, Incorporated
(DAS), and DAKOTACARE Insurance Ltd. (DIL), and its 50.11% owned subsidiary,
Dakota Health Plans, Incorporated (DHP), contained in this report are
unaudited but reflect all adjustments, consisting only of normal recurring
adjustments, which, in the opinion of management, are necessary for a fair
presentation of the financial information for the periods presented and are
not necessarily indicative of the results to be expected for the full year.
2. EARNINGS PER COMMON SHARE
Earnings per common share is calculated by dividing net income by the weighted
average number of Class C common shares outstanding during the period.
3. TREASURY STOCK
As a service to the Company's shareholders to facilitate liquidity for Class
C common Stock (Common Stock) in the event of death, disability, or retirement
of a shareholder, the Company's Board of Directors adopted a Stock Repurchase
Program (Program) in February 1998. Participation in the Program is
voluntary. No shareholder is required to sell his or her shares of Common
Stock under the Program nor is the Company required to purchase any Common
Stock under the Program. The purchase and sale of Common Stock under the
Program is subject to repurchase conditions as described in the Program. The
Board of Directors of the Company may, at any time, modify or terminate the
Program. The Company may also, at its discretion, offer to repurchase shares
of Common Stock outside the Program in compliance with applicable laws.
4. SEGMENT INFORMATION
The Company has three reportable segments: Health Maintenance Organization
(HMO), Third Party Administration (TPA) and Reinsurance. The HMO segment
consists of the operations of the Company. The Company is a South Dakota
licensed HMO engaged in the development of comprehensive health care delivery
systems. The TPA segment consists of the operations of DAS and DHP. DAS and
DHP are TPA's of health care plans for independent employer companies. The
reinsurance segment consists of the operations of DIL. DIL's primary
activity is in providing reinsurance quota share excess medical stop loss
coverage to DAS and DHP's self funded customers.
The Company evaluates performance and allocates resources based on net income
determined under generally accepted accounting principles. The accounting
policies of the reportable segments are the same as those described in the
summary of significant accounting policies. The Company allocates payroll
costs incurred based on the activities of admitting new enrollees and in
adjudicating claims. The HMO segment profit includes the equity in earnings
(loss) of the TPA and reinsurance segments. Intersegment revenues primarily
relate to equipment rental charges which are based on the respective
segment's underlying cost.
6
<PAGE>
The Company's reportable segments are derived from the operations of the
Company and subsidiaries that offer different products. The reportable
segments are managed separately because they provide distinct services.
Period Ended March 31, 1999
<TABLE>
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------
HMO TPA Reinsurance Totals
----------------------------------------------------------
Revenues from external sources $ 8,332,448 $ 815,481 $ 170,580 $ 9,318,509
Segment profit (loss) (379,685) (63,464) (7,722) (450,871)
Segment assets 13,772,000 1,934,471 494,896 16,201,367
</TABLE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The South Dakota State Medical Holding Company, Incorporated, markets its
products under the tradename of DAKOTACARE. Its products include group
managed health care products such as HMO products and cafeteria plan
administration and workers compensation managed care services. Its
subsidiaries' (DAS and DHP) products are managed care and claims
administration services for self-insured employer groups. Its subsidiary,
DIL, accepts reinsurance risk on some of DAS's and DHP's self-funded and
insured customers' life and stop-loss insurance policies. The Company
and subsidiaries DAS and DHP, market their products through a network of
independent insurance agents throughout South Dakota.
The Company contracts with over 98% of the physicians in the state
of South Dakota, 100% of the hospitals in the state of South Dakota,
and many other health care providers to provide medical services to
its enrollees. At March 31, 1999, the Company's HMO enrollment is
approximately 22,500 enrollees, while its subsidiary DAS has enrollment
of approximately 55,100 enrollees under their Administrative Services
Only (ASO) business. DHP currently has no enrollees and is in the
process of formally dissolving. All the enrollees from DHP's former
clients have been enrolled as DAS clients.
This discussion and analysis contains certain forward-looking
terminology such as "believes," "anticipates," "will," and "intends,"
or comparable terminology. Such statements are subject to certain
risks and uncertainties that could cause actual results to differ
materially from those projected. Potential purchasers of the
Company's securities are cautioned not to place undue reliance on
such forward-looking statements which are qualified in their entirety
by the cautions and risks described herein and in other reports filed
by the Company with the Securities and Exchange Commission.
COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 1999 AND MARCH 31, 1998
General
The Company's net income decreased $459,808 to a net loss of $379,685 for
the three months ended March 31, 1999, as compared to net income of $80,123
for the three months ended March 31, 1998. This decrease was primarily due
to a decrease in total revenues of $1,032,042, which was offset by a net
decrease of $572,234 in operating expenses and income taxes.
7
<PAGE>
Revenues
Total revenues decreased $1,032,042, or 9.98%, for the three months ended
March 31, 1999, as compared to March 31, 1998. The revenues from the
net premiums generated by the health maintenance organization decreased
$967,026, or 10.65%. This decrease is attributable to a 13.52% decrease
in the number of enrollees, but was partially offset by a 3.32% increase in
the premiums earned per enrollee for the three months ended March 31, 1999,
as compared to March 31, 1998. Revenues from the third party
administration(TPA) fees decreased by $54,644 due to the net decrease in
revenues earned per enrollee.
Operating Expenses
Total operating expenses decreased $284,514, or 2.78%, for the three
months ended March 31, 1999, as compared to March 31, 1998. This was due
to a decrease in claims incurred, commissions, state insurance premiums,
and advertising, but was offset by an increase in personnel, occupancy
expense, and office expense.
Net claims expense decreased by $347,048, or 4.34%. Average claims
per enrollee increased by 10.92% for the three months ended March 31, 1999,
as compared to March 31, 1998. The number of enrollees decreased by 13.52%,
which caused an overall decrease in claims expense. Commissions, state
insurance premiums and advertising decreased $85,184, or 15.13%, for the
three months ended March 31, 1999, as compared to March 31, 1998.
Commissions and state insurance premiums are directly related to premiums
received and thus decreased because of the decreased revenues. Advertising
decreased due to the timing of the advertising. The overall budget for 1999
for advertising is similar to that of 1998. Personnel, occupancy expense
and office expense increased by $134,087, or 10.80%, for the three months
ended March 31, 1999, as compared to March 31, 1998. Personnel expenses
increased $81,387 to $1,024,092 for the three months ended March 31, 1999
as compared to March 31, 1998. About half of the increase was due to normal
annual payroll adjustments which were implemented June 1, 1998. In addition,
various computer projects were initiated since March 31, 1998, which created
need for additional computer technicians. Occupancy expense increased less
than 10% and no unusual items specifically caused the small increase.
Office expense increased $38,639 to $175,807 for the three months ended
March 31, 1999 as compared to March 31, 1998. Most of the increase was
attributable to postage and telephone. Neither expense account had unusual
items causing the increase.
Income Taxes
Income tax credit or expense represents 39.89% and 33.81% of income before
income taxes and minority interest for the three months ended March 31, 1999
and 1998, respectively. The Company does not anticipate income to surpass
the top income tax bracket. As a result of the availability of recoverable
income taxes paid in recent years, no valuation allowance is required for
recorded deferred tax assets.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal sources of cash have been premium revenue,
collection of premiums in advance of the claims cost associated with them,
and an agreement with participating physicians in which a percentage of
fees for services is withheld for cash flows of the Company. The Company
in the past has had borrowings from banks and affiliated companies, but
currently does not need to borrow for liquidity purposes.
8
<PAGE>
Net cash provided by operating activities increased by $922,324 to
$498,101 for the three months ended March 31, 1999, as compared to
March 31, 1998. The increase in cash provided by operations was mainly
attributable to a decrease in receivables, an increase in accounts payable
and accrued expenses, an increase in unearned premiums and administration
fees, and an increase in contingency reserves payable for the three months
ended March 31, 1999 as compared to March 31, 1998. There was no payment
of contingency reserves payable to Class A stockholders for the three months
ended March 31, 1999, which caused the increase in the balance for
contingency reserves payable. The other accounts which changed are all a
factor of billing and payment cycles which fluctuate, but are not unusual
in nature. Cash flows have been provided from proceeds on the maturities of
certificates of deposits. Most of the certificates of deposits which matured
were reinvested into new certificates of deposits, which offset most of the
cash flow received on the maturities. The purchase of property and equipment
also offset the cash flows.
The Company is not contractually obligated to pay out the contingency
reserve withheld but has historically elected to pay out a majority of
the amounts withheld. Dividends paid on Class C stock was $73,267 for the
three months ended March 31, 1999. Future dividend payment is dependent
on operations and liquidity of the Company. The Company believes that
cash flow generated by operations, withholding of contingency reserve
payables, cash on hand, and short-term investment balances will be
sufficient to fund operations, pay out the projected contingency reserves
payable, and pay dividends on the Class C common stock.
OUTLOOK, TRENDS, EVENTS, OR UNCERTAINTIES
The Company identifies the following important factors which could
cause the Company's actual financial and enrollment results to differ
materially from any such results which might be projected, forecast,
estimated, or budgeted by the Company in forward-looking statements
or valuation analysis: the intensification of price competition; the
entry of new competitors; the introduction of new products by new and
existing competitors; adverse state and federal legislation and
regulation; increases in medical costs, including increases in
utilization and costs of medical services and the effects of actions
by competitors or groups of providers; termination of provider contracts
or renegotiation at less cost-effective rates or terms of payment;
price increases in pharmaceuticals; failure to obtain new customers,
retain existing customers, or reductions in force by existing customers;
adverse publicity and news coverage; the selection by employers and
individuals of higher copayment/deductible/coinsurance plans with
relatively lower premiums; the migration of employers from insured
to self-funded coverage resulting in reduced margins to the Company;
higher general and administrative expenses occasioned by the need for
additional advertising, professional services, administrative, or
management information systems expenditures; changes in interest rates
causing a reduction of net investment income; and increases by
regulatory authorities of minimum capital, reserve, and other financial
viability requirements.
The Year 2000 issue is whether computer systems will properly recognize
date-sensitive information when the year changes to 2000. Systems that do not
properly recognize such information could generate erroneous data or cause a
system to fail. The Company is heavily dependent on computer processing in its
business activities and the Year 2000 issue creates risk for the Company from
unforeseen problems in the Company's computer system and from third parties with
9
<PAGE>
whom the Company processes financial information. Such failures of the Company's
computer system and/or third parties' computer systems could have a material
impact on the Company's ability to conduct its business. In accordance with its
remediation plan to resolve the Year 2000 issue, the Company completed a review
of its computer systems to identify the systems that could be affected by the
Year 2000 issue. In 1999, the Company installed new operations systems software
which the vendor has represented to be Year 2000 compliant. Final Year 2000
compliance testing is expected to be completed April 1999 for mission critical
systems and by September 1999 for non-mission critical systems.
Based on the Company's review of its computer systems, management believes the
cost of the remediation effort to make the systems Year 2000 compliant is
approximately $175,000, which includes approximately 1,850 to 2,100 hours
expected to be incurred by Company personnel related to Year 2000 issues with a
projected cost of approximately $106,000. Such costs will be charged against
income as they are incurred. Total Year 2000 costs incurred through March 31,
1999 were approximately $136,000.
Currently, no contingency plan has been finalized, but planning is in process.
A finalized plan is estimated to be in place by July, 1999.
LITIGATION
During 1998, a substantial claim was filed against the Company in circuit
court which alleges wrongful non-renewal of a sales agency contract and seeks
compensatory and punitive damages. As of May 1999, the lawsuit is in the
discovery stage. Management believes the lawsuit is without merit and the
Company will vigorously defend itself in this matter.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The Company does not have any material risk as defined by Item 305 of
Regulation S-K. The Company has market risk with its cash and investments,
but due to the conservative nature of the invested assets, management feels
that the market risk is limited.
10
<PAGE>
PART II: OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Default Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) No exhibits are attached.
(b) No reports on Form 8-K have been filed during the quarter for
which this report is filed.
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.
South Dakota State Medical Holding Company, Incorporated
(Registrant)
Date:_04/13/1999___ By: _/s/Robert D. Johnson__
Robert D. Johnson
Chief Executive Officer
(Duly Authorized Officer)
Date:_04/13/1999___ By: _/s/Kirk J. Zimmer_____
Kirk J. Zimmer
Senior Vice President
(Principal Financial Officer)
11
<PAGE>
[ARTICLE] 7
<TABLE>
<S> <C>
[PERIOD-TYPE] 3-MOS
[FISCAL-YEAR-END] DEC-31-1999
[PERIOD-END] MAR-31-1999
[DEBT-HELD-FOR-SALE] 0
[DEBT-CARRYING-VALUE] 5,031,548
[DEBT-MARKET-VALUE] 5,135,353
[EQUITIES] 304,800
[MORTGAGE] 0
[REAL-ESTATE] 0
[TOTAL-INVEST] 5,336,348
[CASH] 5,714,750
[RECOVER-REINSURE] 48,500
[DEFERRED-ACQUISITION] 0
[TOTAL-ASSETS] 14,491,172
[POLICY-LOSSES] 4,272,124
[UNEARNED-PREMIUMS] 1,097,588
[POLICY-OTHER] 0
[POLICY-HOLDER-FUNDS] 0
[NOTES-PAYABLE] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 12,510
[COMMON] 15,058
[OTHER-SE] 4,776,770
[TOTAL-LIABILITY-AND-EQUITY] 14,491,172
[PREMIUMS] 8,281,038
[INVESTMENT-INCOME] 125,310
[INVESTMENT-GAINS] 0
[OTHER-INCOME] 981,937
[BENEFITS] 7,656,802
[UNDERWRITING-AMORTIZATION] 0
[UNDERWRITING-OTHER] 361,084
[INCOME-PRETAX] (629,205)
[INCOME-TAX] (251,000)
[INCOME-CONTINUING] (379,685)
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (379,685)
[EPS-PRIMARY] (.26)
[EPS-DILUTED] (.26)
[RESERVE-OPEN] 4,409,622
[PROVISION-CURRENT] 7,437,783
[PROVISION-PRIOR] 219,019
[PAYMENTS-CURRENT] 4,429,284
[PAYMENTS-PRIOR] 4,347,865
[RESERVE-CLOSE] 4,272,124
[CUMULATIVE-DEFICIENCY] 291,019
</TABLE>
