SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
-------------------------------------------
For Quarter Ended Commission file number
March 31, 1999 0-5534
BALDWIN & LYONS, INC.
(Exact name of registrant as specified in its charter)
INDIANA 35-0160330
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1099 North Meridian Street, Indianapolis, Indiana 46204
- ------------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (317) 636-9800
--------------
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, 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 May 10, 1999:
TITLE OF CLASS NUMBER OF SHARES OUTSTANDING
Common Stock, No Par Value:
Class A (voting) 2,382,654
Class B (nonvoting) 11,137,196
PART I - FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
BALDWIN & LYONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
MARCH 31 December 31
1999 1998
------------ ------------
<S> <C> <C>
ASSETS
Investments:
Fixed maturities $ 263,936 $ 268,309
Equity securities 146,361 148,060
Short-term and other 18,293 22,448
----------- -----------
428,590 438,817
Cash and cash equivalents 14,284 16,955
Accounts receivable 21,631 20,056
Reinsurance recoverable 52,779 52,753
Current federal income taxes - 757
Other assets 16,029 15,031
----------- -----------
$ 533,313 $ 544,369
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Reserves for losses and loss expenses $ 191,633 $ 194,432
Reserves for unearned premiums 24,273 22,208
Accounts payable and accrued expenses 27,749 28,952
Deferred federal income taxes 6,701 10,185
Current federal income taxes 983 -
----------- -----------
251,339 255,777
Shareholders' equity:
Common stock-no par value 722 730
Additional paid-in capital 40,829 41,328
Unrealized net gains on investments 23,393 30,311
Retained earnings 217,030 216,223
----------- -----------
281,974 288,592
----------- -----------
$ 533,313 $ 544,369
=========== ===========
Number of common and common
equivalent shares outstanding 13,647 13,800
Book value per outstanding share $ 20.66 $ 20.91
See notes to condensed consolidated financial statements.
</TABLE>
BALDWIN & LYONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
--------------------------
1999 1998
----------- -----------
<S> <C> <C>
REVENUES
Net premiums earned $ 15,985 $ 16,985
Net investment income 4,668 4,623
Realized net gains on investments 2,645 2,339
Commissions and other income 563 315
----------- -----------
23,861 24,262
EXPENSES
Losses and loss expenses incurred 10,960 10,722
Other operating expenses 5,995 6,794
----------- -----------
16,955 17,516
----------- -----------
INCOME BEFORE FEDERAL INCOME TAXES 6,906 6,746
Federal income taxes 1,947 2,030
----------- -----------
NET INCOME $ 4,959 $ 4,716
=========== ===========
PER SHARE DATA - BASIC AND DILUTED:
Income before realized
net gains or losses $ .24 $ .23
Realized net gains on investments .12 .11
----------- -----------
NET INCOME $ .36 $ .34
=========== ===========
Dividends $ .10 $ .10
=========== ===========
RECONCILIATION OF SHARES OUTSTANDING:
Average shares outstanding - basic 13,630 13,696
Dilutive effect of options outstanding 130 178
----------- -----------
Average shares outstanding - diluted 13,760 13,874
=========== ===========
See notes to condensed consolidated financial statements.
</TABLE>
BALDWIN & LYONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
--------------------------
1999 1998
----------- -----------
<S> <C> <C>
Net cash provided by operating activities $ 810 $ 5,843
Investing activities:
Purchases of long-term investments (38,800) (40,253)
Proceeds from sales or maturities
of long-term investments 36,198 44,807
Net sales (purchases) of short-term investments 4,996 (7)
Other investing activities (1,195) (319)
----------- -----------
Net cash provided by (used in) investing activities 1,199 4,228
Financing activities:
Dividends paid to shareholders (1,364) (1,370)
Cost of treasury stock (3,318) (213)
Proceeds from sales of common stock 2 7
----------- -----------
Net cash used in financing activities (4,680) (1,576)
----------- -----------
Increase (decrease) in cash and cash equivalents (2,671) 8,495
Cash and cash equivalents at beginning of period 16,955 23,402
----------- -----------
Cash and cash equivalents at end of period $ 14,284 $ 31,897
=========== ===========
See notes to condensed consolidated financial statements.
</TABLE>
NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(1) The accompanying unaudited condensed financial statements have been prepared
in accordance with the instructions to Form 10Q and do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
fair presentation have been included. Operating results for the interim periods
are not necessarily indicative of the results that may be expected for the year
ended December 31, 1999. Interim financial statements should be read in
conjunction with the Company's annual audited financial statements.
(2) Forward-looking statements in this report are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Investors are cautioned that such forward-looking statements involve inherent
risks and uncertainties. Readers are encouraged to review the Company's annual
report for its full statement regarding forward-looking information.
(3) The following line items from the Statements of Income are presented net of
the reinsurance amounts shown below.
<TABLE>
<CAPTION>
Quarter Ending
March 31
--------------------------
1999 1998
----------- -----------
<S> <C> <C>
Net premiums earned $ 4,158 $ 2,304
Losses and loss expenses 1,108 130
Other operating expenses (1,415) (243)
</TABLE>
Deductions from losses and loss expenses shown above represent case basis
activity for the periods presented only and do not include changes in provisions
for incurred but not reported claims which will be ceded to reinsurers.
(4) The net realized and unrealized loss for the quarter ended March 31, 1999
was $1,972 and compares to total realized and unrealized income of $7,097 for
the quarter ended March 31, 1998.
(5) If the Company had adopted Financial Accounting Standards Board Statement
No. 123, Accounting for Stock-Based Compensation, net income for the 1999
quarter would have been approximately $254 lower ($.02 per share).
(6) The Company purchased 159,700 shares of treasury stock for approximately
$3.3 million under its continuing stock repurchase program.
(7) The following table provides certain profit and loss information for each
reportable segment:
<TABLE>
<CAPTION>
NON-STANDARD
PRIVATE VOLUNTARY
FLEET PASSENGER REINSURANCE
TRUCKING AUTOMOBILE ASSUMED ALL OTHER TOTALS
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
QUARTER ENDED MARCH 31:
1999:
Direct and assumed premium written $ 10,145 $ 8,990 $ 603 $ 2,365 $ 22,103
Net premium earned and fee income 6,158 7,687 926 1,596 16,367
Underwriting gain (loss) 2,211 (404) (95) (218) 1,494
1998:
Direct and assumed premium written 9,808 11,029 2,047 1,475 24,359
Net premium earned and fee income 7,372 6,325 2,643 793 17,133
Underwriting gain (loss) 1,989 (1,130) 229 21 1,109
</TABLE>
(8) The following tables are reconciliations of reportable segment revenues and
profits to the Company's consolidated revenue and income from continuing
operations before federal income taxes, respectively.
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
REVENUE:
Net premium earned and fee income $ 16,367 $ 17,133
Net investment income 4,668 4,623
Realized net gains on investments 2,645 2,339
Other income 181 167
----------- -----------
Total consolidated revenue $ 23,861 $ 24,262
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
PROFIT:
Underwriting gain $ 1,494 $ 1,109
Net investment income 4,668 4,623
Realized net gains on investments 2,645 2,339
Corporate expenses (1,901) (1,325)
----------- -----------
Income from continuing operations
before federal income taxes $ 6,906 $ 6,746
=========== ===========
</TABLE>
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- -------------------------------------------------------------------------------
OF OPERATIONS
- -------------
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
The Company generally experiences positive cash flow from operations resulting
from the fact that premiums are collected on insurance policies in advance of
the disbursement of funds in payment of claims. Operating costs of the
property/casualty insurance subsidiaries, other than loss and loss expense
payments and commissions paid to related agency companies, generally average
between 25% and 35% of premiums earned and the remaining amount is available for
investment for varying periods of time pending the settlement of claims relating
to the insurance coverage provided. For the three months ended March 31, 1999,
positive cash flow from operations totaled $.8 million, a decrease from $5.8
million generated during the first quarter of 1998. The decreased cash flows
resulted from an increase in premiums ceded to reinsurers under new treaty
arrangements effective June 1, 1998 with respect to the Company's trucking
liability insurance products and lower premiums assumed under catastrophe
retrocessions. The new reinsurance arrangements limit the Company's exposure to
loss and provide significant acquisition expense recovery which partially
offsets the reduction in net premiums retained on current policies. However, as
the Company continues to settle older claims, which carried higher retentions,
management expects cash flows will be decreased from historical levels when
reserves were established for such claims.
For several years, the Company's investment philosophy has emphasized the
purchase of relatively short-term instruments with maximum quality and
liquidity. The average life of the Company's fixed income (bond and short-term
investment) portfolio was less than 3 years at March 31, 1999.
The Company's assets at March 31, 1999 included $14.3 million in investments
classified as short-term or cash equivalents which were readily convertible to
cash without significant market penalty. In addition, fixed maturity
investments totaling $44.9 million will mature within the twelve month period
following March 31, 1999. The Company believes that these liquid investments
are more than sufficient to provide for projected claim payments and operating
cost demands.
Consolidated shareholders' equity totaled $282.0 million at March 31, 1999 and
includes $271.3 million representing GAAP shareholder's equity of insurance
subsidiaries, of which $38.3 million may be transferred by dividend or loan to
the parent company without approval by, or notification to, regulatory
authorities. An additional $166.9 million of shareholder's equity of such
insurance subsidiaries may be advanced or loaned to the Company with prior
notification to, and approval from, regulatory authorities. The Company
believes that these restrictions pose no material liquidity concerns to the
Company. The financial strength and stability of the subsidiaries would permit
ready access by the parent company to short-term and long-term sources of
credit, if necessary. In addition, the parent company had cash and marketable
securities valued at $25.1 million at March 31, 1999.
RESULTS OF OPERATIONS
---------------------
COMPARISONS OF FIRST QUARTER, 1999 TO FIRST QUARTER, 1998
---------------------------------------------------------
Net premiums earned during the first quarter of 1999 decreased $1.0 million as
compared to the same period of 1998. The decreased premium volume is primarily
attributable to declines in the Company's fleet trucking products and voluntary
reinsurance assumed from catastrophe pools. The decrease was offset partially by
continued growth in the Company's private passenger automobile and small fleet
trucking programs. Net premiums from voluntary reinsurance assumed and fleet
trucking declined $1.7 million and $1.2 million, respectively, while premiums
from private passenger automobile and small fleet trucking increased $1.2
million and $.6 million, respectively. While direct premiums from trucking
products increased $.4 million from the first quarter of 1998, lower net
premiums resulted from new treaty reinsurance arrangements, effective June 1,
1998, whereby the Company retains less risk exposure than under previous
treaties.
Net investment income during the first quarter of 1999 was level with the first
quarter of 1998. Overall pre-tax and after tax yields were consistent with the
first quarter of 1998.
The first quarter 1999 net realized gain of $2.6 million consisted primarily of
net gains on equity securities.
Losses and loss expenses incurred during the first quarter of 1999 were level
with the first quarter of 1998. Loss and loss expense ratios for the
comparative first quarters were as follows:
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Fleet trucking 57.4% 46.9%
Voluntary reinsurance assumed 105.6 67.3
Private passenger automobile 71.2 84.1
Small fleet trucking 67.6 70.6
All lines 68.6 63.1
</TABLE>
The fleet trucking loss ratio for the first quarter of 1998 was unusually low
due to favorable loss developments on prior year accidents and very low current
year loss activity. Loss developments for the first quarter of 1999 returned to
more historical levels. As a further comparison, the loss ratio for fleet
trucking for the first quarter of 1997 was 68.4%. The current quarter's ratio
was also impacted by the new reinsurance treaties effective June 1, 1998 whereby
the Company has significantly limited its exposure to loss while ceding off the
majority of its direct liability premium writings. The loss ratio
attributable to reinsurance assumed was impacted by late reported losses from
certain catastrophe pools related to Hurricane Georges. The lower loss ratio
for private passenger automobile reflects additional claims due to unfavorable
weather conditions during the first quarter of 1998 which were not repeated this
year.
Other operating expenses for the first quarter of 1999 decreased $.8 million
from the first quarter of 1998. The consolidated expense ratio of the Company's
insurance subsidiaries was 29.4% for the first quarter of 1999 compared to 34.1%
for the first quarter of 1998. The decrease in the consolidated expense ratio
reflects the effect of ceding commission income generated from new reinsurance
treaties effective June 1, 1998. The ratio of consolidated other operating
expenses to total revenue (adjusted for realized gains) decreased to 28.3%
during the first quarter of 1999 compared to 31.0% for the 1998 first quarter.
The effective federal tax rate for consolidated operations for the first quarter
of 1999 was 28.2% and is less than the statutory rate primarily because of tax
exempt investment income.
As a result of the factors mentioned above, net income increased $.2 million
(5%) during 1999 compared with the 1998 first quarter.
FORWARD-LOOKING INFORMATION
---------------------------
Any forward-looking statements in this report, including without limitation,
statements relating to the Company's plans, strategies, objectives,
expectations, intentions and adequacy of resources, are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Investors are cautioned that such forward-looking statements involve risks and
uncertainties including without limitation the following: (i) the Company's
plans, strategies, objectives, expectations and intentions are subject to change
at any time at the discretion of the Company; (ii) the Company's business is
highly competitive and the entrance of new competitors into or the expansion of
the operations by existing competitors in the Company's markets and other
changes in the market for insurance products could adversely affect the
Company's plans and results of operations; (iii) other risks and uncertainties
indicated from time to time in the Company's filings with the Securities and
Exchange Commission; and (iv) other risks and factors which may be beyond the
control or foresight of the company.
YEAR 2000
---------
NOTE: ANTICIPATED COSTS OF THE COMPANY'S YEAR 2000 PROJECT, AS PROVIDED IN THE
FOLLOWING DISCUSSION, ARE BASED ON MANAGEMENT'S ESTIMATES OF ULTIMATE TOTAL
COSTS AND PERCENTAGES OF COMPLETION WITH RESPECT TO EACH PHASE OF THE PROJECT.
THESE ANTICIPATED COSTS HAVE NOT BEEN AUDITED BY OUR INDEPENDENT AUDITORS.
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's
computer programs or hardware that have date-sensitive features may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result
in a system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices, or engage in normal business activities. The insurance industry
is especially aware of the Year 2000 concern given that the majority of its
products and services are time and date sensitive (e.g., policy effective
periods and loss occurrence dates).
The Company has been in the process of developing software for its new and
rapidly expanding products since 1995. All internally developed new product
software is Year 2000 compliant, with minor exceptions, and currently handles
approximately 95% of the Company's processed transactions. The Company is also
engaged in an ongoing analysis of its remaining systems to determine the nature
and extent of existing deficiencies and the appropriate corrective solutions.
The Company believes that with modifications to existing software and
conversions to new software, the Year 2000 Issue will not pose significant
operational problems for its computer systems. However, if such modifications
and conversions are not completed on a timely basis, the Year 2000 Issue could
have a significant impact on the operations of the Company.
The Company's plan to resolve the Year 2000 Issue involves the following four
phases: assessment, remediation, testing and implementation. To date, the
Company has completed its assessment of all mission critical systems and
continues to evaluate the needs to repair or replace non mission critical
systems. The completed assessment indicated that most of the Company's
significant information technology systems could be affected, particulary with
respect to policy and claim processing, billing, general ledger and cash
receipts and disbursements systems. To date, the Company's general ledger
system and the portions of the remaining systems that handle approximately 95%
of the Company's transactions are fully Year 2000 ready.
The Company has communicated with its significant suppliers and large customers
to determine the extent to which the Company's interface systems are vulnerable
to third party failures to remediate Year 2000 system deficiencies. Currently,
there is no known third party Year 2000 deficiency believed to pose a serious
threat to the Company's ability to conduct business. However, there can be no
assurance that other companies have accurately assessed their Year 2000 status
and reported it to the Company. It is believed that the Company's total Year
2000 project costs will not be significantly impacted by third party Year 2000
Issues based on presently available information. However, there can be no
guarantee that the systems of other companies on which the Company's systems
rely will be converted on a timely basis and would not have an adverse effect on
the Company's systems. The Company has determined it has no significant
exposure to contingencies related to the Year 2000 Issue for the products it has
sold.
The Company will continue to utilize existing staff and other internal resources
to reprogram and test its internally developed software, and to test its
purchased or licensed software, for Year 2000 compliance. Any internally
developed software that is deemed unworthy of Year 2000 conversion will be
replaced with new internally developed or purchased or licensed software that is
Year 2000 compliant. Any currently owned purchased or licensed software for
which Year 2000 upgrades are unavailable will also be replaced with purchased or
licensed software that is Year 2000 compliant. The Company anticipates
completing the Year 2000 project by June 30, 1999. The majority of the past and
future costs associated with the Year 2000 project can be attributed to internal
staffing requirements associated with the development of new product software
and would have largely been incurred regardless of the Year 2000 Issue. These
costs, and the costs associated with the acquisition of Year 2000 compliant
software from outside vendors, are not material with respect to the Company's
operations or financial position. The costs associated with the Year 2000
project can be categorized into three basic areas:
1) Internal resources, mainly programming and technical personnel, used to
modify internally developed software. The estimated total cost of this area is
anticipated to be approximately $2.5 million with approximately 15% of this
amount relating to future costs and approximately 85% already incurred.
2) Replacement or upgrade of purchased or licensed software. The estimated
total cost of this area is anticipated to be approximately $1.0 million with
approximately 5% of this amount relating to future costs and approximately 95%
already incurred.
3) Upgrading equipment. Most of the hardware replacements and upgrades to
date have not been due to the Year 2000 Issue. More than 95% of the Company's
network equipment has been replaced over the last twenty-one months and all
mainframe hardware is less than three years old. Future hardware costs should
not exceed $.1 million.
Management believes it has an effective program in place to resolve all Year
2000 issues in a timely manner. As noted above, the Company has not yet
completed all necessary phases of the Year 2000 project. In the unlikely event
that the Company does not complete all additional phases of this project, the
Company may be unable to process policy and claim transactions on certain of its
less transaction-volume-intensive products. Currently, the Company has no
contingency plans in place in the event this occurs. However, the Company will
evaluate the status of completion of its Year 2000 project by June 30, 1999 and
determine whether such a contingency plan is necessary.
The costs of the project and the date on which the Company believes it will
complete its Year 2000 effort are based on management's best estimates, which
were derived utilizing numerous assumptions of future events, including the
continued availability of certain resources, third party modification plans and
other factors. However, there can be no guarantee that these estimates will be
achieved and actual results could differ materially from those anticipated.
Specific factors that might cause such material differences include, but are not
limited to, the availability and cost of personnel trained in this area, the
ability to locate and correct all relevant computer codes, and similar
uncertainties.
PART II - OTHER INFORMATION
---------------------------
ITEM 6 (a) EXHIBITS
- --------------------
Number and caption from Exhibit
Table of Regulation S-K Item 601 Exhibit No.
- ------------------------------------ -------------------------
(11) Statement regarding computation EXHIBIT 11 --
of per share earnings Computation of Per Share
Earnings
Item 6 (b) REPORTS ON FORM 8-K
- -------------------------------
No reports on Form 8-K have been filed by the registrant during the three months
ended March 31, 1999.
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.
BALDWIN & LYONS, INC.
Date May 14, 1999 By /s/ Gary W. Miller
------------------------- --------------------------------
Gary W. Miller, Chairman and CEO
Date May 14, 1999 By /s/ G. Patrick Corydon
------------------------- --------------------------------
G. Patrick Corydon,
Vice President - Finance
(Principal Financial and
Accounting Officer)
BALDWIN & LYONS, INC.
Form 10-Q for the fiscal quarter
ended March 31, 1999
INDEX TO EXHIBITS
Begins on sequential
page number of Form
Exhibit Number 10-Q
-------------- --------------------
EXHIBIT 11 Filed herewith electronically
Computation of per share earnings
EXHIBIT 27 File herewith electronically
Financial Data Schedule
BALDWIN & LYONS, INC.
FORM 10-Q, EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
----------------------------
1999 1998
------------- -------------
<S> <C> <C>
Basic:
Average number of shares
outstanding 13,629,786 13,695,735
============ ============
Net Income $ 4,958,989 $ 4,716,081
============ ============
Per share amount $ .36 $ .34
============ ============
Diluted:
Average number of shares
Outstanding 13,629,786 13,695,735
Dilutive stock options--based on
treasury stock method using
average market price 130,027 178,129
------------ ------------
Totals 13,759,813 13,873,864
============ ============
Net Income $ 4,958,989 $ 4,716,081
============ ============
Per share amount $ .36 $ .34
============ ============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheets and consolidated statements of operations enclosed
herein electronically in Form 10Q for the year-to-date, 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-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<DEBT-HELD-FOR-SALE> 263,936
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 146,361
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 428,590
<CASH> 14,284<F1>
<RECOVER-REINSURE> 7,858
<DEFERRED-ACQUISITION> 3,554
<TOTAL-ASSETS> 533,313
<POLICY-LOSSES> 191,633
<UNEARNED-PREMIUMS> 24,273
<POLICY-OTHER> 2
<POLICY-HOLDER-FUNDS> 4,471
<NOTES-PAYABLE> 0
0
0
<COMMON> 722
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 533,313
15,985
<INVESTMENT-INCOME> 4,668
<INVESTMENT-GAINS> 2,645
<OTHER-INCOME> 563
<BENEFITS> 10,960
<UNDERWRITING-AMORTIZATION> 1,790
<UNDERWRITING-OTHER> 1,665
<INCOME-PRETAX> 6,906
<INCOME-TAX> 1,947
<INCOME-CONTINUING> 4,959
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,959
<EPS-PRIMARY> .36<F2>
<EPS-DILUTED> .36
<RESERVE-OPEN> 143,951<F3>
<PROVISION-CURRENT> 11,383<F3>
<PROVISION-PRIOR> (423)<F3>
<PAYMENTS-CURRENT> 4,718<F3>
<PAYMENTS-PRIOR> 9,208<F3>
<RESERVE-CLOSE> 140,985<F3>
<CUMULATIVE-DEFICIENCY> 0
<FN>
<F1>Includes money market cash equivalents.
<F2>Basic earnings per share.
<F3>All loss data is presented net of applicable reinsurance recoverable.
</FN>
</TABLE>
