<PAGE>
--------------------------------------------------------------------
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, 2000
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 0-23181
PAULA FINANCIAL
(Exact name of registrant as specified in its charter)
DELAWARE 95-4640368
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification number)
PAULA FINANCIAL
300 NORTH LAKE AVENUE, SUITE 300
PASADENA, CA 91101
(Address of principle executive offices)
(626) 304-0401
(Registrant's telephone number, including area 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 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. Number of shares of Common
Stock, $.01 par value, outstanding as of close of business on April 28, 2000:
5,586,867 shares.
- --------------------------------------------------------------------------------
<PAGE>
PAULA FINANCIAL
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
<S> <C>
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Condensed consolidated balance sheets as of
March 31, 2000 and December 31, 1999 (unaudited) .......................2
Condensed consolidated statements of operations for the three
months ended March 31, 2000 and 1999 (unaudited)........................3
Condensed consolidated statements of comprehensive income (loss) for
the three months ended March 31, 2000 and 1999 (unaudited)..............4
Condensed consolidated statements of cash flows for the three months
ended March 31, 2000 and 1999 (unaudited)...............................5
Notes to condensed consolidated financial statements for the three
months ended March 31, 2000 (unaudited) ................................6
Item 2. Management's Discussion and Analysis of Consolidated Financial
Condition and Results of Operations.....................................7
Item 3. Quantitative and Qualitative Disclosures About Market Risks.....................10
PART II. OTHER INFORMATION
Item 5. Other Information......................................................11
Item 6. Exhibits and Reports on Form 8-K.......................................11
SIGNATURE................................................................................12
</TABLE>
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PAULA FINANCIAL AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 2000 1999
------------------ -----------------
(Unaudited) (*)
<S> <C> <C>
Investments:
Fixed maturities, available for sale, at market
(amortized cost: 2000, $143,804; 1999, $138,294) $ 136,199 $ 130,703
Equity securities, at market
Preferred stock (cost: 2000, $999; 1999, $999) 820 828
Common stock (cost: 2000, $3,252; 1999, $3,252) 2,585 2,357
Invested cash, at cost (approximates market) 27,400 948
Total investments --------- ---------
167,004 134,836
--------- ---------
Cash (restricted: 2000, $3,145; 1999, $2,204) 8,574 6,323
Accounts receivable, net of allowance for uncollectible
accounts (2000, $735; 1999, $758) 31,264 28,196
Reinsurance settlement receivable -- 41,989
Reinsurance recoverable on paid and unpaid losses and
loss adjustment expenses 11,301 11,519
Deferred income taxes 18,057 17,547
Other assets 20,230 19,408
--------- ----------
$ 256,430 $ 259,818
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Unpaid losses and loss adjustment expenses $ 153,725 $ 158,944
Unearned premiums 26,368 21,213
Accrued policyholder dividends 479 237
Accounts payable and accrued expenses 9,356 10,599
Notes payable 15,692 16,632
--------- ---------
205,620 207,625
--------- ---------
STOCKHOLDERS' EQUITY:
Preferred Stock, $0.01 par value. Authorized 4,058,823
shares, none issued and outstanding -- --
Common stock, $0.01 par value
(Authorized 15,000,000 shares, issued: 2000,
6,338,167; 1999, 6,338,767) 63 63
Additional paid-in-capital 67,386 67,386
Accumulated deficit (5,521) (4,488)
Accumulated other comprehensive income (loss):
Net unrealized gain on investments (5,578) (5,715)
--------- ---------
56,350 57,246
Treasury stock, at cost (2000, 751,300 ; 1999, 631,300 shares) (5,540) (5,053)
--------- ---------
50,810 52,193
--------- ---------
$ 256,430 $ 259,818
========= =========
</TABLE>
* Derived from audited financial statements.
See notes to condensed consolidated financial statements.
2
<PAGE>
PAULA FINANCIAL AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
2000 1999
------------ ------------
(Unaudited)
<S> <C> <C>
INCOME:
Net premiums earned:
Workers' compensation $27,415 $16,502
Group medical and life 211 185
Commissions 1,421 832
Net investment income 2,507 2,740
Net realized investment gains (losses) (117) 101
Other 268 207
------------ ------------
31,705 20,567
------------ ------------
EXPENSES:
Losses and loss adjustment
expenses incurred 23,426 11,238
Dividends provided for policyholders 248 151
Operating 9,545 7,176
------------ ------------
33,219 18,565
------------ ------------
Equity in net loss of unconsolidated
affiliate (94) (84)
------------ ------------
Income (loss) before income taxes (1,608) 1,918
Income tax expense (benefit) (575) 639
------------ ------------
NET INCOME (LOSS) ($1,033) $1,279
============ ============
Earnings per share ($0.18) $0.22
Weighed average shares outstanding 5,636,977 5,928,995
Earnings per share - assuming dilution ($0.18) $0.22
Weighted average shares outstanding -
assuming dilution 5,636,977 5,937,049
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
PAULA FINANCIAL AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
2000 1999
----------- ----------
(Unaudited)
<S> <C> <C>
Net income (loss) ($1,033) $1,279
Other comprehensive income (loss),
net of tax
Unrealized gains on investments:
Unrealized holding gains (losses)
arising during period (tax impact:
2000, $45; 1999, $570) 86 (1,106)
Reclassifications adjustment for
gains included in net income
(tax impact: 2000, $26;
1999, $101) 51 (197)
----------- ----------
137 (1,303)
----------- ----------
COMPREHENSIVE INCOME (LOSS) ($896) ($24)
=========== ==========
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
PAULA FINANCIAL AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
2000 1999
----------- -----------
(Unaudited)
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income (loss) ($1,033) $1,279
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES:
Depreciation and amortization 433 395
Amortization of fixed maturity premium, net 165 139
Equity in net loss of unconsolidated affiliate 94 84
Loss on sale of property and equipment 5 4
Loss (gain) on sales and calls of investments 117 (101)
Decrease (increase) in receivables 39,071 (9,839)
(Increase) decrease in deferred income taxes (581) 623
(Decrease) increase in unpaid losses and loss adjustment expenses (5,219) 1,487
Increase in accrued policyholder dividends 242 151
Decrease in accounts payable and accrued expenses (1,243) (2,905)
Increase in unearned premiums 5,155 1,607
Other, net (934) (338)
----------- -----------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 36,272 (7,414)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of available for sale fixed maturities 1,033 14,146
Proceeds from maturities and calls of available for sale fixed
maturities 1,034 2,728
Proceeds from sale of property and equipment 5 15
Purchase of available for sale fixed maturities (7,857) (4,980)
Purchase of property and equipment (357) (490)
Purchase of book of business -- (105)
Investment in unconsolidated affiliate -- (5,500)
----------- -----------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (6,142) 5,814
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings (repayments) under line of credit agreement, net (940) 5,500
Payments on notes payable -- (25)
Dividends paid -- (237)
Repurchase of common stock (487) --
Issuance of common stock -- 2
----------- -----------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (1,427) 5,240
----------- -----------
NET INCREASE IN CASH AND INVESTED CASH 28,703 3,640
Cash and invested cash at beginning of period 7,271 6,717
----------- -----------
CASH AND INVESTED CASH AT END OF PERIOD $35,974 $10,357
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE>
PAULA FINANCIAL AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 (UNAUDITED)
NOTE A - BASIS OF PRESENTATION
PAULA Financial and subsidiaries (the "Company") is an integrated insurance
organization specializing in the production, underwriting and servicing of
workers' compensation and accident and health insurance primarily for
agribusiness clients in California, Arizona, Oregon, Idaho, Alaska, Texas,
Florida, New Mexico and Nevada.
The accompanying unaudited condensed consolidated financial statements of the
Company have been prepared in accordance with generally accepted accounting
principles ("GAAP") 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 GAAP for complete financial
statements. In the opinion of management, all adjustments, including normally
occurring accruals, considered necessary for a fair presentation have been
included.
Operating results for the three months ended March 31, 2000 are not necessarily
indicative of the results to be expected for the year ended December 31, 2000.
For further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1999.
NOTE B - NEW ACCOUNTING STANDARDS NOT YET ADOPTED
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"). SFAS 133 is effective for fiscal years
beginning after June 15, 2000 and establishes standards for the reporting for
derivative instruments. It requires changes in the fair value of a derivative
instrument and the changes in fair value of assets or liabilities hedged by that
instrument to be included in income. To the extent that the hedge transaction is
effective, income is equally offset by both investments. Currently changes in
fair value of derivative instruments and hedged items are reported in net
unrealized gain (loss) on securities. The Company has not yet adopted SFAS 133.
However, the effect of adoption on the condensed consolidated financial
statements at March 31, 2000 would not be material.
6
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
The Company is a California-based specialty underwriter and distributor of
commercial insurance products which, through its subsidiary PAULA Insurance
Company ("PICO"), is one of the largest underwriters specializing in workers'
compensation insurance products and services for the agribusiness industry. The
Company sells complementary products through the Company's insurance agency
subsidiaries (collectively "Pan Am"), including group health and life products
provided by the Company's subsidiary PAULA Assurance Company ("PACO").
The Company's revenues have consisted primarily of premiums earned from workers'
compensation insurance underwriting, premiums earned from group medical
insurance, commission income, net investment income and other income. Premiums
earned during a period represent the portion of direct premiums written for
which all or a portion of the coverage period has expired, net of reinsurance.
Gross premiums written for the three months ended March 31, 2000 and 1999, were
$33.5 million and $29.5 million, respectively. Commission income is earned from
Pan Am's distribution of insurance for insurers other than PICO and PACO. Net
investment income represents earnings on the Company's investment portfolio,
less investment expenses. Other income consists of third party administration
fees and other miscellaneous items.
The Company's expenses have consisted of losses and loss adjustment expenses
incurred, dividends provided for policyholders and operating expenses. Losses
include reserves for future payments for medical care and rehabilitation costs
and indemnity payments for lost wages. Loss adjustment expenses include expenses
incurred in connection with services provided by third parties, including
expenses of independent medical examinations, surveillance costs, and legal
expenses as well as staff and related expenses incurred to administer and settle
claims. Loss and loss adjustment expenses are offset in part by estimated
recoveries from reinsurers under reinsurance treaties. Operating expenses
include commission expenses to third party insurance agencies and other expenses
that vary with premium volume, such as premium taxes, state guaranty fund
assessments and underwriting and marketing expense, as well as general and
administrative expenses, which are less closely related to premium volume.
The Company's revenues are seasonal, and have historically tended to be highest
in the second and third quarters of each year. This is due primarily to the
seasonality of the size of the workforce employed by the Company's agribusiness
clients.
7
<PAGE>
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THE
THREE MONTHS ENDED MARCH 31, 1999:
GROSS PREMIUMS WRITTEN. The Company's premiums written for the three months
ended March 31, 2000 increased 13.3% to $33.5 million from $29.5 million for the
comparable 1999 period. The increase in gross premiums written relates primarily
growth in states outside of California, principally Texas.
NET PREMIUMS EARNED. The Company's net premiums earned for the three months
ended March 31, 2000 increased 65.6% to $27.6 million from $16.7 million for
comparable 1999 period. Net premiums earned in 1999 was reduced by $10.5 million
in premiums ceded under a reinsurance arrangement that was not in effect in the
first quarter of 2000.
COMMISSION INCOME. For the three months ended March 31, 2000 commission income
increased 70.8% to $1.4 million compared to $0.8 million for the comparable 1999
period. The increase is primarily a result of increased premiums placed with
insurance carriers other than PICO and PACO. Commissions paid to Pan Am on PICO
and PACO business are eliminated in the Company's consolidated financial
statements.
NET INVESTMENT INCOME. Net investment income decreased 8.5% to $2.5 million for
the three months ended March 31, 2000 from $2.7 million for the comparable 1999
period. Average invested assets decreased to $159.5 million for the three months
ended March 31, 2000 from $172.4 million for the comparable period in 1999. The
Company's average yield on its portfolio was 6.3% for the three month period in
2000 and 6.4% for the three month period in 1999.
LOSSES AND LOSS ADJUSTMENT EXPENSES INCURRED. The Company's net loss ratio for
the three months ended March 31, 2000 increased to 84.8% from 67.4% for the
comparable 1999 period. The 1999 loss ratio was impacted by a reinsurance
arrangement that was not in effect in the first quarter of 2000.
DIVIDENDS PROVIDED FOR POLICYHOLDERS. Dividends provided for policyholders as a
percentage of premiums earned for the three months ended March 31, 2000 and 1999
was 0.9%.
OPERATING EXPENSES. Operating expenses increased 33.0% to $9.5 million for the
three months ended March 31, 2000 from $7.2 million for the comparable 1999
period. Operating expenses in 1999 included the benefit of $2.2 million in
ceding commissions received in conjunction with a reinsurance arrangement that
was not in effect in 2000.
INCOME TAXES. Income tax benefit for the three months ended March 31, 2000 was
$0.6 million compared to income tax expense of $0.6 million for the comparable
1999 period. The effective combined income tax rates for the three months ended
March 31, 2000 and 1999 were 35.8% and 33.3%, respectively.
EQUITY IN NET LOSS OF UNCONSOLIDATED AFFILIATE. The equity in net loss of
unconsolidated affiliate represents the Company's share of the net loss of
Montlake Insurance Holdings, LLC. The Company is accounting for this investment
using the equity method.
8
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES:
As a holding company, PAULA Financial's principal sources of funds are dividends
and expense reimbursements from its operating subsidiaries, proceeds from the
sale of its capital stock and income from its investment portfolio. PAULA
Financial's principal uses of funds are capital contributions to its
subsidiaries, payment of operating expenses, investments in new ventures,
dividends to its stockholders and repurchase of Company common stock.
On January 27, 2000, PICO received a $42.0 million cash settlement related to
various reinsurance treaties which were settled and commuted effective September
30, 1999.
California law places significant restrictions on the ability of the insurance
subsidiaries to pay dividends to PAULA Financial. Based on these restrictions
and the Company's results for the year ended December 31, 1999, PAULA Financial
would be able to receive $1.9 million in dividends in 2000 from its insurance
subsidiaries without obtaining prior regulatory approval from the California
Department of Insurance ("DOI"). No dividends were paid by the insurance
subsidiaries to PAULA Financial during the three months ended March 31, 2000.
In March 1997, PAULA Financial entered into the Credit Agreement with a
commercial bank providing the Company with a revolving credit facility of $15.0
million until December 31, 1999. On December 31, 1999, PAULA Financial elected
to convert all the borrowings into a term loan payable in quarterly installments
and maturing on December 31, 2001. Balances outstanding under the term loan bear
interest at 8.5%. At the date of conversion, the line of credit had an
outstanding balance of $15.0 million. This use of the Credit Agreement was for
repurchase of the Company's common stock and investments in new ventures.
Since December 31, 1999, the Company has been out of compliance with certain of
its debt covenants. As a result, the bank has the right to call the note and
demand its immediate payment under the terms of the Credit Agreement. PAULA
Financial is current on the term loan's regularly scheduled principal and
interest payments. The Company continues to be engaged in negotiations with the
bank to obtain the waivers with respect to its non-compliance and to amend the
Credit Agreement, including modifications of certain covenants. If these
covenants are not amended, it is probable that the Company will continue to be
out of compliance with these covenants on measurements dates at least through
December 31, 2000. Each of PAULA Financial's non-insurance subsidiaries has
guaranteed all obligations of PAULA Financial under the Credit Agreement.
The Company's investments consist primarily of taxable and tax-exempt United
States government and other investment grade securities and investment grade
fixed maturity commercial paper and, to a lesser extent, equity securities. The
Company does not generally invest in below investment grade fixed maturity
securities, mortgage loans or real estate.
As of March 31, 2000, the carrying value of the Company's fixed maturity
securities portfolio was $136.2 million of which $135.9 million was rated. Of
the rated fixed maturities portfolio 94.2% was rated "A" or better by S&P,
Moody's or Fitch.
9
<PAGE>
California workers' compensation insurance companies are required to maintain
some of their investments on deposit with the California DOI for the protection
of policyholders. Other states in which PICO is licensed have also required PICO
to post deposits for the protection of those states' policyholders. Pursuant to
applicable state laws, PICO had, as of March 31, 2000, securities with a par
value of $124.3 million held by authorized depositories pursuant to these
deposit requirements. In addition to the deposits, the Company's insurance
company operating subsidiaries must maintain regulated levels of capital and
surplus in relation to premiums written and the risks retained by the
subsidiaries.
FORWARD-LOOKING STATEMENTS
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 to recognize the existence of certain forward-looking
statements 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, 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 in
general, such as the economic and interest rate environment, legislative and
regulatory developments and market pricing and competitive trends, and those
relating specifically to the Company and its businesses, such as the level of
its insurance premiums and fee income, the claims experience of its insurance
products, the performance of its investment portfolio, acquisitions of companies
or blocks of business, and the ratings by major rating organizations of its
insurance subsidiaries. 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.
Item 3: Quantitative and Qualitative Disclosures About Market Risk.
There have been no significant changes since the annual report Form 10-K filed
for the year ended December 31, 1999.
10
<PAGE>
PART II. OTHER INFORMATION
Item 5: Other Information
In March 2000, the Board of Directors made the decision to reduce the number of
directors from eight to six. Consequently, Mr. Gerard Vecchio and Mr. R. Steven
Clark, both outside directors, resigned as directors for the Company. Neither
resignation was a result of any disagreement with the Company, its management or
the Board of Directors.
Item 6: Exhibits and Reports on Form 8-K:
(a) Exhibits.
11. Computation of Earnings Per Share.
27. Financial Data Schedule.
(b) Reports on Form 8-K.
There were no reports filed on Form 8-K during the three
months ended March 31, 2000.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this Quarterly Report on Form 10-Q to be signed
on its behalf by the undersigned thereunto duly authorized.
Date: May 12, 2000 PAULA FINANCIAL
By: /S/ JAMES A. NICHOLSON
----------------------
Senior Vice President and
Chief Financial Officer
12
<PAGE>
Exhibit 11
PAULA FINANCIAL AND SUBSIDIARIES
COMPUTATION OF BASIC AND DILUTED EARNINGS PER SHARE
(In thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
2000 1999
------------- --------------
<S> <C> <C>
Net income (loss) ($1,033) $ 1,279
============= ==============
Weighted average shares outstanding for calculating
basic earnings per share 5,637 5,929
Options - 8
------------- --------------
Total shares for calculating diluted earnings
per share 5,637 5,937
============= ==============
Basic earnings per share ($0.18) $0.22
============= ==============
Diluted earnings per share ($0.18) $0.22
============= ==============
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANICAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31,
2000, 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-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<DEBT-HELD-FOR-SALE> 136,199
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 3,405
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 167,004
<CASH> 8,574
<RECOVER-REINSURE> 176
<DEFERRED-ACQUISITION> 2,405
<TOTAL-ASSETS> 256,430
<POLICY-LOSSES> 153,725
<UNEARNED-PREMIUMS> 26,368
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 479
<NOTES-PAYABLE> 15,692
0
0
<COMMON> 63
<OTHER-SE> 50,747
<TOTAL-LIABILITY-AND-EQUITY> 256,430
27,626
<INVESTMENT-INCOME> 2,507
<INVESTMENT-GAINS> (117)
<OTHER-INCOME> 1,689
<BENEFITS> 23,426
<UNDERWRITING-AMORTIZATION> 9,545
<UNDERWRITING-OTHER> 248
<INCOME-PRETAX> (1,608)
<INCOME-TAX> (575)
<INCOME-CONTINUING> (1,033)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,033)
<EPS-BASIC> (0.18)
<EPS-DILUTED> (0.18)
<RESERVE-OPEN> 147,425
<PROVISION-CURRENT> 22,985
<PROVISION-PRIOR> 441
<PAYMENTS-CURRENT> 2,195
<PAYMENTS-PRIOR> 26,056
<RESERVE-CLOSE> 142,600
<CUMULATIVE-DEFICIENCY> 0
</TABLE>