<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended JUNE 30, 1997 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 0-19439
Medical Assurance, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 63-1137505
- ------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation of organization)
100 Brookwood Place, Birmingham, AL 35209
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(205) 877-4400
-------------------------------
(Registrant's telephone number,
including area code)
Indicate by check mark whether the registrant (l) 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 .
--- ---
As of June 30, 1997, there were 10,231,198 shares of the registrant's common
stock outstanding.
Page 1 of 14
<PAGE> 2
Table of Contents
<TABLE>
<S> <C> <C>
Part I - Financial Information
Item l. Condensed Consolidated Financial Statements (Unaudited)
of Medical Assurance, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets.............................................................3
Condensed Consolidated Statements of Income.......................................................4
Condensed Consolidated Statements of Cash Flows...................................................5
Notes to Condensed Consolidated Financial Statements..............................................6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.....................................................9
Part II - Other Information
Item 4. Submission of Matters to a Vote of Security Holders..............................................14
Item 6. Exhibits and Reports on Form 8-K.................................................................14
Signatures....................................................................................................14
</TABLE>
<PAGE> 3
Medical Assurance, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
JUNE 30 December 31
1997 1996
----------------------
<S> <C> <C>
ASSETS
Investments:
Fixed maturities available for sale, at market value $ 586,730 $ 564,938
Equity securities available for sale, at market value 37,041 33,036
Real estate, net 12,238 12,352
Investment in unconsolidated affiliate 35 30
Short-term investments 48,850 56,403
--------- ---------
Total investments 684,894 666,759
Cash and cash equivalents 11,873 14,033
Premiums receivable 63,352 33,896
Receivable from reinsurers 130,399 108,692
Prepaid reinsurance premiums 10,112 14,152
Deferred taxes 37,414 36,132
Other assets 36,722 31,644
--------- ---------
$ 974,766 $ 905,308
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Policy liabilities and accruals:
Reserve for losses and loss adjustment expenses $ 585,408 $ 548,742
Unearned premiums 66,196 54,920
Reinsurance premiums payable 40,020 31,789
--------- ---------
Total policy liabilities 691,624 635,451
Income taxes payable 1,113 2,852
Other liabilities 21,750 22,440
--------- ---------
Total liabilities 714,487 660,743
Commitments and contingencies -- --
Stockholders' equity:
Common stock, par value $1 per share; 100,000,000
shares authorized; 10,339,712 and 10,339,245
shares issued, respectively 10,340 10,339
Additional paid-in capital 123,233 123,218
Net unrealized gains on securities available for sale, net of
deferred taxes of $4,506 and $4,392, respectively 8,368 8,157
Retained earnings 120,222 103,027
--------- ---------
262,163 244,741
Less treasury stock at cost, 108,514 and 57,214 shares,
respectively (1,884) (176)
--------- ---------
Total stockholders' equity 260,279 244,565
--------- ---------
$ 974,766 $ 905,308
========= =========
</TABLE>
See accompanying notes.
3
<PAGE> 4
Medical Assurance, Inc. and Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
-------------------- --------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Direct and assumed
premiums written $ 39,446 $ 28,988 $ 91,536 $ 71,586
======== ======== ======== ========
Premiums earned $ 37,788 $ 29,867 $ 74,905 $ 58,885
Premiums ceded (8,650) (9,034) (17,365) (16,975)
-------- -------- -------- --------
Net premiums earned 29,138 20,833 57,540 41,910
Net investment income 9,426 7,196 18,884 15,919
Other income 128 866 739 1,325
-------- -------- -------- --------
Total revenues 38,692 28,895 77,163 59,154
Expenses:
Losses and loss
adjustment expenses 28,694 22,154 58,869 47,561
Reinsurance recoveries (9,487) (8,844) (19,425) (18,219)
-------- -------- -------- --------
Net losses and loss
adjustment expenses 19,207 13,310 39,444 29,342
Underwriting, acquisition
and insurance expenses 8,052 5,173 15,192 10,907
-------- -------- -------- --------
Total expenses 27,259 18,483 54,636 40,249
-------- -------- -------- --------
Income before income taxes
and minority interests 11,433 10,412 22,527 18,905
Provision for income taxes:
Current expense 3,423 1,550 6,728 4,222
Deferred expense (benefit) (771) 1,165 (1,396) 98
-------- -------- -------- --------
2,652 2,715 5,332 4,320
-------- -------- -------- --------
Income before minority
interests 8,781 7,697 17,195 14,585
Minority interests -- (36) -- (68)
-------- -------- -------- --------
Net income $ 8,781 $ 7,661 $ 17,195 $ 14,517
======== ======== ======== ========
Earnings per share:
Net Income $ 0.86 $ 0.77 $ 1.68 $ 1.46
======== ======== ======== ========
Weighted average number of
common shares outstanding 10,238 9,931 10,256 9,931
======== ======== ======== ========
</TABLE>
See accompanying notes.
4
<PAGE> 5
Medical Assurance, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30
--------------------
1997 1996
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 17,195 $ 14,517
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 705 605
Amortization (2,385) (768)
Net realized gain on sale of investments (30) (542)
Deferred income taxes (benefit) (1,396) 98
Other 15 (33)
Changes in assets and liabilities:
Premiums receivable (29,457) (14,919)
Income taxes receivable/payable (1,740) 1,551
Receivable from reinsurers (21,707) (16,468)
Prepaid reinsurance premiums 4,041 (8,943)
Other assets (2,263) 2,727
Reserve for losses and loss adjustment expenses 36,666 24,292
Unearned premiums 11,276 15,989
Reinsurance premiums payable 8,231 9,251
Other liabilities (687) 2,921
-------- --------
Net cash provided by operating activities 18,464 30,278
INVESTING ACTIVITIES
Purchases of fixed maturities available for sale (99,574) (74,245)
Purchases of equity securities available for sale (6,361) (3,209)
Proceeds from sale or maturities of fixed
maturities available for sale 75,697 53,657
Proceeds from sale of equity securities available for sale 4,278 1,000
Net decrease in short-term investments 7,670 9,087
Other (625) (481)
-------- --------
Net cash used in investing activities (18,915) (14,191)
FINANCING ACTIVITIES
Purchase of treasury stock (1,709) --
-------- --------
Net cash used by financing activities (1,709) --
-------- --------
(Decrease) increase in cash and cash equivalents (2,160) 16,087
Cash and cash equivalents at beginning of period 14,033 4,238
-------- --------
Cash and cash equivalents at end of period $ 11,873 $ 20,325
======== ========
</TABLE>
See accompanying notes.
5
<PAGE> 6
Medical Assurance, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements include
the accounts of Medical Assurance, Inc. and its subsidiaries, together referred
to as the Company. The financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and notes required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjust ments, consisting of normal recurring
accruals, considered necessary for a fair presentation have been included.
Operating results for the six month period ended June 30, 1997 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1997. For further information, refer to the December 31, 1996
audited consolidated financial statements and accompanying notes.
Medical Assurance, Inc. has 100 million shares of authorized common stock and 50
million shares of authorized preferred stock. The Board of Directors has the
authorization to determine the provisions for the issuance of shares of the
preferred stock, including the number of shares to be issued and the
designations, powers, preferences and rights, and the qualifications,
limitations or restrictions of such shares. At June 30, 1997, the Board of
Directors had not authorized the issuance of any preferred stock nor determined
any provisions for the preferred stock.
2. NEW ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement No. 128, Earnings per share, which is required to be adopted on
December 31, 1997. The Statement requires a change in the method currently used
to compute earnings per share and the restatement of all prior periods
disclosed. The Company does not expect Statement 128 to materially affect the
Company's earnings per share as disclosed in the accompanying financial
statements.
In June 1997, FASB issued Statement 130, "Reporting Comprehensive Income," which
establishes standards for the reporting and display of comprehensive income and
its components in a full set of general purpose financial statements. The new
rules require that enterprises classify items of other comprehensive income
separately from retained earnings and additional paid-in-capital in the equity
section of the balance sheet. This Statement is effective for fiscal years
beginning after December 15, 1997. The impact of Statement 130, when adopted on
January 1, 1998, on the Company's financial condition or results of operations
has not been determined at this time.
FASB Statement 131, "Disclosures About Segments of an Enterprise and Related
Information" was issued in June 1997. This Statement changes the way public
companies report segment information in annual financial statements and requires
public companies to report selected segment information in interim financial
reports to shareholders. Under the Statement's "management approach," public
companies are to report financial and descriptive information about their
operating segments. Operating segments are revenue-producing components of an
enterprise for which
6
<PAGE> 7
Medical Assurance, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
2. NEW ACCOUNTING STANDARDS (CONTINUED)
separate financial information is produced internally and are subject to
evaluation by the chief operating decision maker in deciding how to allocate
resources to segments. The impact of Statement 130, when adopted on January 1,
1998, on the Company's financial condition or results of operations has not been
determined at this time.
3. INCOME TAXES
Income tax expense differs from the normal relationship to financial statement
income principally because of tax-exempt interest income.
4. RESERVES FOR LOSSES AND LOSS ADJUSTMENT EXPENSES
The reserves for losses and loss adjustment expenses represent management's best
estimate of the ultimate cost of all losses incurred but unpaid. Incurred losses
and loss adjustment expenses for the six month periods ending June 30, 1997 and
1996 were principally based on the application of an expected loss ratio to
premiums earned. These loss ratios take into consideration prior loss
experience, loss trends, the Company's loss retention levels, changes in
frequency and severity of claims and rates charged.
5. INVESTMENTS
Proceeds from sales of investments in fixed maturities and equities available
for sale were $34,313,000 and $34,332,000 for the six months ended June 30, 1997
and 1996, respectively. Gross realized gains on such sales were $297,000 and
$947,000 at June 30, 1997 and 1996; gross realized losses on such sales were
$265,000 and $243,000 at June 30, 1997 and 1996, respectively. Realized gains
and losses are included as a component of other income. The amortized cost of
fixed maturities and equity securities available for sale was $610,897,000 and
$585,425,000 at June 30, 1997 and December 31, 1996, respectively.
6. EARNINGS PER SHARE
On December 4, 1996 the Board of Directors declared a 6% stock dividend. Cash
was paid to shareholders for fractional shares. Earnings per share data for 1996
has been restated as if the above dividend had been declared on January 1, 1996.
Shares issued as part of the Company's December 1996 purchase of MOMED Holding
Company affect only the 1997 earnings computation.
7
<PAGE> 8
Medical Assurance, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
7. DEFERRED POLICY ACQUISITION COSTS
Costs that vary with and are directly related to the production of new and
renewal premiums (primarily premium taxes, commissions and underwriting
salaries) are deferred to the extent they are recoverable against unearned
premiums and are amortized as related premiums are earned. Amortization of
deferred acquisition costs amounted to approximately $6,641,000 and $3,957,000
for the six months ended June 30, 1997 and 1996, respectively.
8. COMMITMENTS AND CONTINGENCIES
The Company is involved in various legal actions arising primarily from claims
made under insurance policies; these legal actions have been considered by the
Company in establishing its reserves. While the outcome of all legal actions is
not presently determinable, the Company's management and its legal counsel are
of the opinion that the settlement of these actions will not have a material
adverse effect on the Company's financial position or results of operations.
9. BUSINESS EXPANSION
Effective December 20, 1996 the Company purchased MOMED Holding Company (MOMED).
MOMED is the parent company of Missouri Medical Insurance Company, which is a
provider of medical malpractice insurance. The accompanying 1996 condensed
consolidated statements of income do not include any amounts attributable to
MOMED.
8
<PAGE> 9
ITEM. 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
For purposes of this management discussion and analysis, the term
"Company" refers to Medical Assurance, Inc. and its subsidiaries. The
consolidated subsidiaries consist principally of operating insurance companies.
LIQUIDITY AND CAPITAL RESOURCES
The payment of losses, loss adjustment expenses, and operating expenses
in the ordinary course of business is currently the Company's principal need for
liquid funds. Cash used to pay these items has been provided by operating
activities. Cash provided from these activities was sufficient during the first
six months of 1997 to meet the Company's operating needs, and the Company
believes those sources will be sufficient to meet its cash needs for operating
purposes for at least the next twelve months. Prolonged and increasing levels of
inflation could cause increases in the dollar amount of losses and loss
adjustment expenses and may therefore adversely affect future reserve
development. To minimize such risk, the Company (i) maintains what its
management considers to be strong and adequate reinsurance, (ii) conducts
regular actuarial reviews to ensure, among other things, that reserves do not
become deficient, and (iii) maintains adequate asset liquidity.
The Company did not borrow any funds during the six months ended June
30, 1997 and 1996, and currently has no requirements indicating a need to borrow
significant funds in the next twelve months. However, the need for additional
capital may arise in order to achieve the Company's ultimate goal of expansion,
as discussed in subsequent paragraphs. The Company continues to have available
through a lending institution a line of credit in the amount of $40 million that
could be used for these additional capital requirements. The Company is not
charged a fee nor is it required to maintain compensating balances in connection
with this line of credit.
The Company's Board of Directors has authorized the purchase of up to
$15 million of its common stock in the open market. At June 30, 1997,
approximately $6.7 million remains available for purposes of purchasing its own
common stock in the open market.
BUSINESS EXPANSION
The Company, through Mutual Assurance, Inc. (Mutual Assurance), has
been developing a marketing strategy to address the insurance needs of hospitals
and vertically integrated health care providers. The Company expects
organizations such as these to represent increasing market opportunities for
professional liability and related insurance products because of the trend
toward the consolidation of health care providers. In certain instances, Mutual
Assurance's surplus is a competitive factor in this "large account" market
because its principal competitors are larger than those with whom Mutual
Assurance has historically had to compete.
To further its expansion, the Company is offering certain insurance and
reinsurance products including, without limitation, medical malpractice
reinsurance, excess medical malpractice insurance, managed care liability
insurance, provider stop loss insurance, accident and health insurance, and
workers' compensation insurance. The Company also intends to expand through the
acquisition of, or combination with, medical professional liability insurers
that have a significant presence in states other than Alabama. This expansion
effort led to the acquisition of the Missouri Medical Insurance Company
(Momedico), which was effective December 20, 1996.
9
<PAGE> 10
RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS
ENDED JUNE 30, 1996
Premiums
The following table presents information related to consolidated
written and earned premiums and reinsurance expense (dollars in thousands):
<TABLE>
<CAPTION>
Six months ended
June 30
-------------------- Increase
1997 1996 (Decrease)
-------------------- --------
<S> <C> <C> <C>
Direct and assumed premiums written $ 91,536 $ 71,586 $ 19,950
======== ======== ========
Premiums earned $ 74,905 $ 58,885 $ 16,020
Premiums ceded (17,365) (16,975) 390
-------- -------- --------
Net premiums earned $ 57,540 $ 41,910 $ 15,630
======== ======== ========
</TABLE>
Of the $19,950,000 increase in written premiums, $4,432,000 is
attributable to the inclusion in 1997 of Momedico premiums, and another
$4,649,000 is principally medical malpractice premiums. The remaining increase
is attributable to other related lines of business (see Business Expansion),
which includes (1) a $4,628,000 increase in workers compensation premiums, and
(2) for 1997, $6,241,000 in accident and health premiums.
Investment Income
The Company had consolidated net investment income of $18,884,000 for
the six months ended June 30,1997, as compared to $15,919,000 for the six months
ended June 30, 1996. The increased investment income from June 30, 1996 to June
30, 1997 is a result of an increase in the amount of investments held by the
Company, including $75,072,000 held by Momedico; this increase is somewhat
offset by a reduction in the average rate of return on investments, from 6.2% at
June 30, 1996 to 5.9% at June 30, 1997.
For the purposes of the above discussion, invested assets are comprised
of fixed maturities, and equity securities at amortized cost, short-term
investments and investment in unconsolidated affiliate; the earnings on such
invested assets constitute the related net investment income. The Company
calculates the yield on invested assets by dividing the related investment
income (annualized for interim periods) by the monthly average of invested
assets at amortized cost.
The principal investment objective of the Company is to achieve a high
level of after-tax income while minimizing risk. Although fixed maturity
securities are purchased with the initial intent to hold such securities until
their maturity, disposals of securities prior to their respective maturities may
occur if management believes such disposals are consistent with the Company's
overall investment objectives, including maximizing after-tax yields.
Equity securities of $37,041,000 at June 30, 1997 and $33,036,000 at
December 31, 1996 are primarily fixed rate preferred stocks.
10
<PAGE> 11
Losses
Consolidated losses and loss adjustment expenses (Losses) and the
related loss ratios are summarized in the following table (dollars in
thousands). The ratio for losses below is based on premiums earned; the ratio
for net losses is based on net premiums earned.
<TABLE>
<CAPTION>
Six months ended
June 30, 1997 June 30, 1996
--------------------- --------------------
Loss Loss
Losses Ratio Losses Ratio
--------------------- --------------------
<S> <C> <C> <C> <C>
Losses $ 58,869 79% $ 47,561 81%
== ==
Reinsurance recoveries (19,425) (18,219)
-------- --------
Net losses $ 39,444 69% $ 29,342 70%
======== == ======== ==
</TABLE>
The Company's losses for the six months ended June 30, 1997 reflect a
loss ratio of 79% compared to a loss ratio of 81% for the six months ended June
30, 1996. Losses for both periods are principally based on the application of
expected loss ratios to premiums earned. These loss ratios take into
consideration prior loss experience, loss trends, the Company's loss retention
levels, changes in frequency and severity of claims, and rates charged.
The increase in reinsurance recoveries primarily results from the
increase in losses and loss adjustment expenses and the increased cessions to
reinsurers.
Other Income
Other income decreased by $586,000 for the six months ended June 30,
1997 compared to the six months ended June 30, 1996. The decrease is principally
a result of a decrease in capital gains realized from sales or other
dispositions of securities during the first six months of 1997 compared to the
first six months of 1996.
Underwriting, Acquisition, and Insurance Expenses
Consolidated expenses increased by $4,285,000 for the six months ended
June 30, 1997 compared to the six months ended June 30, 1996. Expenses incurred
by Momedico during the six months ended June 30, 1997 account for $1,214,000 of
this increase. The remainder of the increase results primarily from policy
acquisition costs associated with new business, along with the other costs
associated with the Company's current business strategy. This strategy calls for
the Company to continue investigating potential acquisition and expansion
opportunities.
Income Taxes
The Company's effective tax rate of 24% and 23% for the six months
ended June 30, 1997 and 1996, respectively, are lower than the statutory rate of
35%. The principal reason for the Company's lower effective tax rate is the
effect of tax exempt investment income.
11
<PAGE> 12
RESULTS OF OPERATIONS - THREE MONTHS ENDED JUNE 30, 1997 COMPARED TO THREE
MONTHS ENDED JUNE 30, 1996
Premiums
The following table presents information related to consolidated
written and earned premiums and reinsurance expense (dollars in thousands):
<TABLE>
<CAPTION>
Three months ended
June 30 Increase
1997 1996 (Decrease)
-------------------- --------
<S> <C> <C> <C>
Direct and assumed premiums written $ 39,446 $ 28,988 $ 10,458
======== ======== ========
Premiums earned $ 37,788 $ 29,867 $ 7,921
Premiums ceded (8,650) (9,034) (384)
-------- -------- --------
Net premiums earned $ 29,138 $ 20,833 $ 8,305
======== ======== ========
</TABLE>
The increase in premiums written and earned for the quarter ended June
30, 1997 as compared to the quarter ended June 30, 1996 is due primarily to the
same items as discussed in the six month comparison.
Investment Income
The Company had consolidated net investment income of $9,426,000 for
the three months ended June 30, 1997, as compared to $7,196,000 for the three
months ended June 30, 1996, reflecting an increase of $2,230,000. The increase
in investment income is due primarily to the same items as discussed in the six
month comparison.
Losses
Consolidated losses and loss adjustment expenses (Losses) and the
related loss ratios are summarized in the following table (dollars in
thousands). The ratio for losses below is based on premiums earned; the ratio
for net losses is based on net premiums earned.
<TABLE>
<CAPTION>
Three months ended
June 30, 1997 June 30, 1996
-------------------- ---------------------
Loss Loss
Losses Ratio Losses Ratio
-------------------- ---------------------
<S> <C> <C> <C> <C>
Losses $28,694 76% $22,154 74%
== ==
Reinsurance recoveries (9,487) (8,844)
------- -------
Net losses $19,207 66% $13,310 64%
======= == ======= ==
</TABLE>
The Company's losses in the three months ended June 30, 1997 reflect a
loss ratio of 76% as compared to a loss ratio of 74% for the three months ended
June 30, 1996. Losses for both periods are principally based on the application
of expected loss ratios to premiums earned. These loss ratios take into
consideration prior loss experience, loss trends, the Company's loss retention
levels, changes in frequency and severity of claims, and rates charged.
Other Income
Other income decreased by $738,000 for the quarter ended June 30, 1997
as compared to the quarter ended June 30, 1996. The decrease is principally
attributable to decreased capital gains
12
<PAGE> 13
realized upon the sale or other disposition of securities during the second
quarter of 1997 compared to the second quarter of 1996.
Underwriting, Acquisition, and Insurance Expenses
Consolidated expenses increased by $2,879,000 for the quarter ended
June 30, 1997 compared to the quarter ended June 30, 1996. Expenses incurred by
Momedico during the three months ended June 30, 1997 account for $678,000 of
this increase. The remainder of the increase is due to the same items described
in the six month comparison.
13
<PAGE> 14
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its 1997 Annual Meeting of Stockholders on May 21,
1997. At the meeting, the stockholders of the Company were asked to vote on the
two matters, each of which was described in the Proxy Statement accompanying the
Notice of the Meeting and filed with the Securities and Exchange Commission in
accordance with Rule 14a-6. The matters voted on at the meeting and the results
of the voting are described below.
1. Election of two directors to serve on the Board of Directors for a
three year term, two directors to serve on the Board of Directors
for a two year term, and one director to serve on the Board of
Directors for a one year term.
<TABLE>
<CAPTION>
FOR WITHHOLD AUTHORITY
--- ------------------
Three Year Terms:
-----------------
<S> <C> <C>
Paul R. Butrus 8,172,108 13,377
Paul D. Everest 8,169,892 15,593
Two Year Terms:
---------------
Richard V. Bradley 8,169,892 15,593
Norton E. Cowart 8,167,772 17,713
One Year Term:
--------------
John P. North, Jr. 8,166,488 18,997
</TABLE>
2. Approval of the Company's proposal to amend the Certificate of
Incorporation to change the name of the Company from "MAIC
Holdings, Inc." to "Medical Assurance, Inc."
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
--- ------- -------
<S> <C> <C>
8,099,867 17,025 68,593
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
Exhibit (27) required of Item 601 of Regulation SK-Financial Data
Schedule (for SEC use only).
(b) Reports on 8-K. 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 had duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Medical Assurance, Inc.
August 8, 1997 By: /s/ James J. Morello
--------------------------
James J. Morello, Treasurer
(duly authorized officer and
principal financial officer)
14
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) OF MEDICAL ASSURANCE,
INC. AND SUBSIDIARIES FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 586,730
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 37,041
<MORTGAGE> 0<F1>
<REAL-ESTATE> 12,238
<TOTAL-INVEST> 684,894
<CASH> 11,873
<RECOVER-REINSURE> 130,399
<DEFERRED-ACQUISITION> 0<F1>
<TOTAL-ASSETS> 974,766
<POLICY-LOSSES> 585,408
<UNEARNED-PREMIUMS> 66,196
<POLICY-OTHER> 40,020
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 0<F1>
0
0
<COMMON> 10,340
<OTHER-SE> 249,939
<TOTAL-LIABILITY-AND-EQUITY> 974,766
57,540
<INVESTMENT-INCOME> 18,884
<INVESTMENT-GAINS> 30
<OTHER-INCOME> 709
<BENEFITS> 39,444
<UNDERWRITING-AMORTIZATION> 6,641
<UNDERWRITING-OTHER> 8,551
<INCOME-PRETAX> 22,527
<INCOME-TAX> 5,332
<INCOME-CONTINUING> 17,195
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,195
<EPS-PRIMARY> 1.68
<EPS-DILUTED> 0
<RESERVE-OPEN> 548,742
<PROVISION-CURRENT> 74,983
<PROVISION-PRIOR> (16,114)
<PAYMENTS-CURRENT> (1,823)
<PAYMENTS-PRIOR> (20,380)
<RESERVE-CLOSE> 585,408
<CUMULATIVE-DEFICIENCY> (16,114)
<FN>
<F1>DEFERRED POLICY ACQUISITION COSTS AND MORTGAGE NOTES PAYABLE ARE NOT SEPARATELY
DISCLOSED IN FORM 10-Q BECAUSE ITEMS ARE IMMATERIAL FOR INDIVIDUAL DISCLOSURE.
DEFERRED POLICY ACQUISITION COSTS ARE INCLUDED AS A COMPONENT OF OTHER ASSETS,
AND MORTGAGE NOTES PAYABLE ARE INCLUDED AS A COMPONENT OF OTHER LIABILITIES.
</FN>
</TABLE>
