<PAGE> 1
UNITED STATES
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 0-19439
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 March 31, 2000, there were 23,404,865 shares of the registrant's common
stock outstanding.
Page 1 of 15
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Table of Contents
<TABLE>
<S> <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 Changes in Capital...............................4
Condensed Consolidated Statements of Income...........................................5
Condensed Consolidated Statements of Cash Flows.......................................6
Notes to Condensed Consolidated Financial Statements..................................7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations........................................10
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K.....................................................15
Signatures........................................................................................15
</TABLE>
<PAGE> 3
MEDICAL ASSURANCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
2000 1999
------------ ------------
<S> <C> <C>
ASSETS
Investments:
Fixed maturities available for sale, at fair value $ 647,961 $ 640,064
Equity securities available for sale, at fair value 58,199 48,013
Real estate, net 11,177 11,349
Short-term investments 53,286 62,492
------------ ------------
Total investments 770,623 761,918
Cash and cash equivalents 13,751 19,409
Premiums receivable 62,805 52,749
Receivable from reinsurers 182,933 179,508
Prepaid reinsurance premiums 11,383 15,663
Deferred taxes 33,247 34,071
Other assets 57,695 54,350
------------ ------------
$ 1,132,437 $ 1,117,668
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Policy liabilities and accruals:
Reserve for losses and loss adjustment expenses $ 664,661 $ 665,792
Unearned premiums 86,140 70,925
Reinsurance premiums payable 34,800 34,921
------------ ------------
Total policy liabilities 785,601 771,638
Other liabilities 13,094 20,306
------------ ------------
Total liabilities 798,695 791,944
Commitments and contingencies -- --
Stockholders' equity:
Common stock, par value $1 per share; 100,000,000
shares authorized; 25,103,368 and 25,102,901
shares issued, respectively 25,103 25,103
Additional paid-in capital 231,949 231,941
Accumulated other comprehensive loss, net of
deferred tax benefits of $(2,794) and $(2,920), respectively (5,189) (5,424)
Retained earnings 119,652 111,957
------------ ------------
371,515 363,577
Less treasury stock at cost, 1,698,503 and 1,701,577 shares,
respectively (37,773) (37,853)
------------ ------------
Total stockholders' equity 333,742 325,724
------------ ------------
$ 1,132,437 $ 1,117,668
============ ============
</TABLE>
See accompanying notes.
3
<PAGE> 4
MEDICAL ASSURANCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
ACCUMULATED
OTHER OTHER
COMPREHENSIVE RETAINED CAPITAL
TOTAL INCOME (LOSS) EARNINGS ACCOUNTS
---------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Balance at December 31, 1999 $ 325,724 $ (5,424) $ 111,957 $ 219,191
Comprehensive income
Net income 7,695 7,695
Other comprehensive income, net of tax
Unrealized gain on securities, net of
reclassification adjustment of $246
for gains included in net income 235 235
----------
Comprehensive income 7,930
Common stock issued for compensation 19 19
Sale of treasury stock 69 69
---------- ---------- ---------- ----------
Balance at March 31, 2000 $ 333,742 $ (5,189) $ 119,652 $ 219,279
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Accumulated
Other Other
Comprehensive Retained Capital
Total Income (Loss) Earnings Accounts
---------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Balance at December 31, 1998 $ 324,180 $ 12,277 $ 91,622 $ 220,281
Comprehensive income
Net income 11,452 11,452
Other comprehensive (loss), net of tax
Unrealized losses on securities, net of
reclassification adjustment of $669
for gains included in net income (3,063) (3,063)
----------
Comprehensive income 8,389
Common stock issued for compensation 13 13
Net purchases of treasury stock (3,523) (3,523)
---------- ---------- ---------- ----------
Balance at March 31, 1999 $ 329,059 $ 9,214 $ 103,074 $ 216,771
========== ========== ========== ==========
</TABLE>
See accompanying notes.
4
<PAGE> 5
MEDICAL ASSURANCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
March 31
----------------------------
2000 1999
---------- ----------
<S> <C> <C>
Revenues:
Direct and assumed
premiums written $ 61,954 $ 78,070
========== ==========
Premiums earned $ 46,742 $ 51,752
Premiums ceded (9,466) (10,410)
---------- ----------
Net premiums earned 37,276 41,342
Net investment income 9,765 9,611
Other income 883 1,395
---------- ----------
Total revenues 47,924 52,348
Expenses:
Losses and loss
adjustment expenses 37,014 35,420
Reinsurance recoveries (7,359) (9,045)
---------- ----------
Net losses and loss
adjustment expenses 29,655 26,375
Underwriting, acquisition
and insurance expenses 8,679 10,672
---------- ----------
Total expenses 38,334 37,047
---------- ----------
Income before income taxes 9,590 15,301
Provision for income taxes:
Current expense 1,198 4,886
Deferred expense (benefit) 697 (1,037)
---------- ----------
1,895 3,849
---------- ----------
Net income $ 7,695 $ 11,452
========== ==========
Earnings per share:
Net Income--basic and diluted $ 0.33 $ 0.47
========== ==========
Weighted average number
of common shares
outstanding--basic and diluted 23,403 24,430
========== ==========
</TABLE>
See accompanying notes.
5
<PAGE> 6
MEDICAL ASSURANCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
March 31
--------------------------
2000 1999
---------- ----------
<S> <C> <C>
OPERATING ACTIVITIES
Net cash provided by operating activities $ 5,498 $ 12,598
INVESTING ACTIVITIES
Purchases of fixed maturities available for sale (25,688) (82,481)
Purchases of equity securities available for sale (13,588) (1,145)
Proceeds from sale or maturities of fixed
maturities available for sale 18,120 59,294
Proceeds from sale of equity securities available for sale 3,049 7,721
Net decrease in short-term investments 9,206 11,012
Other (2,255) (200)
---------- ----------
Net cash used by investing activities (11,156) (5,799)
FINANCING ACTIVITIES
Purchases of treasury stock -- (3,172)
---------- ----------
Net cash used by financing activities -- (3,172)
---------- ----------
(Decrease) increase in cash and cash equivalents (5,658) 3,627
Cash and cash equivalents at beginning of period 19,409 9,022
---------- ----------
Cash and cash equivalents at end of period $ 13,751 $ 12,649
========== ==========
</TABLE>
See accompanying notes.
6
<PAGE> 7
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 adjustments, consisting of normal recurring
accruals, considered necessary for a fair presentation have been included.
Operating results for the three month period ended March 31, 2000 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2000. For further information, refer to the December 31, 1999
audited consolidated financial statements and accompanying notes.
2. SEGMENT INFORMATION
The Company operates in the United States of America and in only one
reportable industry segment, which is providing professional and general
liability insurance for physicians and surgeons, dentists, hospitals, and
others engaged in the delivery of health care.
3. INVESTMENTS
Proceeds from sales of investments in fixed maturities and equities
available for sale were approximately $3.9 million and $43.0 million for the
three month periods ended March 31, 2000 and 1999, respectively. Gross realized
gains on such sales were approximately $0.9 million and $2.0 million at March
31, 2000 and 1999, respectively; gross realized losses on such sales were
approximately $0.6 million and $1.0 million at March 31, 2000 and 1999,
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 $714.1 million and $696.4 million at March 31, 2000 and December
31, 1999, respectively.
7
<PAGE> 8
4. RESERVES FOR LOSSES AND LOSS ADJUSTMENT EXPENSES
The reserves for losses and loss adjustment expenses at March 31, 2000
and December 31, 1999 represent management's best estimate of the ultimate cost
of all losses incurred but unpaid and are evaluated at least annually by
independent consulting actuaries. Actual incurred losses may vary from
estimated amounts due to the inherent difficulty in estimating development of
long-tailed lines of business. Losses incurred and the related reserves are
established utilizing a combination of two components: a) the application of
expected loss factors to earned exposures for the current accident year, and b)
actuarial re-evaluation of incurred loss levels for prior accident years. These
components take into consideration prior loss experience, loss trends, and
changes in the frequency and severity of claims. Any adjustments related to
previously established amounts are included in current operations.
5. 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, net of ceding commissions earned, amounted to
approximately $4.0 million and $5.8 million for the three months ended March
31, 2000 and 1999, respectively.
As is common practice within the industry, reinsurance ceding
commissions are deducted from underwriting, acquisition and insurance expenses
and amounted to $1.0 million and $2.5 million for the three months ended March
31, 2000 and 1999, respectively.
6. INCOME TAXES
Income tax expense differs from the normal relationship to financial
statement income principally because of tax-exempt interest income.
8
<PAGE> 9
7. STOCKHOLDERS' EQUITY AND EARNINGS PER SHARE
On December 8, 1999 the Board of Directors declared a 5% stock
dividend. Cash was paid to shareholders for fractional shares. Earnings per
share data for 1999 has been restated as if this dividend had been declared on
January 1, 1999.
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 March 31, 2000, the Board of
Directors had not authorized the issuance of any preferred stock nor determined
any provisions for the preferred stock.
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
<PAGE> 10
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 operating activities was
sufficient during the first three months of 2000 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.
The Company did not borrow any funds during the three months ended
March 31, 2000 and 1999, and currently has no requirements indicating a need to
borrow significant funds in the next twelve months. The Company continues to
have available through a lending institution a line of credit in the amount of
$40 million. The Company is not charged a fee nor is it required to maintain
compensating balances in connection with this line of credit.
The Company continues to investigate the feasibility of growth through
acquisition or other business combinations; a significant acquisition or
combination could create a need for additional capital.
IMPACT OF YEAR 2000
To date, the Company has experienced no Year 2000 related disruptions
in mission critical information technology and non-information technology
systems and believes those systems successfully responded to the Year 2000 date
change.
The Company is not aware of any material problems resulting from Year
2000 issues as respects its internal systems, or the products and services of
third parties, nor is the Company aware of any claims against its insureds
resulting from Year 2000 related matters. The Company will continue to monitor
its mission critical computer applications to ensure that any latent Year 2000
matters that may arise are addressed promptly.
10
<PAGE> 11
RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE
MONTHS ENDED MARCH 31, 1999
Premiums
The following table presents information related to consolidated
written, earned and ceded premiums (in thousands):
<TABLE>
<CAPTION>
Three months ended
March 31
------------------------ Increase
2000 1999 (Decrease)
------------------------- ----------
<S> <C> <C> <C>
Direct and assumed premiums written $ 61,954 $ 78,070 $ (16,116)
========== ========== ==========
Direct and assumed premiums earned $ 46,742 $ 51,752 $ (5,010)
Less: Premiums ceded 9,466 10,410 (944)
---------- ---------- ----------
Net premiums earned $ 37,276 $ 41,342 $ (4,066)
========== ========== ==========
</TABLE>
The change in direct and assumed premiums written was comprised in
part of a decrease in accident and health premiums of $11.1 million. Although
accident and health premiums are likely to continue to decrease, the decline is
not expected to have a significant impact on the Company's retained business
because they are heavily ceded. The remainder of the decrease in 1999 premiums
for the quarter was due primarily medical malpractice premiums. Medical
malpractice premiums for 1999 included $4.2 million of one-time additional
premiums related to the January 1, 1999 purchase of a book of business. When
these "purchased" premiums are excluded from 1999 premiums, medical malpractice
premiums for 2000 increased slightly compared to the first quarter of 1999.
The change in direct and assumed premiums earned for the quarter ended
March 31, 2000 as compared to the quarter ended March 31, 1999 is due primarily
to decreased accident and health premiums of $2.8 million and decreased assumed
reinsurance of $3.0 million. Medical malpractice premiums earned were
relatively unchanged between the quarters; however, in the same manner as
discussed above, 1999 earned premiums included $1.9 million of earned premiums
related to the acquisition of the book of business discussed above that had no
counterpart in 2000. Thus, when these premiums are excluded from the 1999
earned premiums, medical malpractice premiums for the quarter increased by $2.0
million.
The Company believes that price increases are warranted based on
current loss trends (see discussion under "Losses"). As such increases are
implemented, the Company may experience a loss of insureds. However, the
average premium per exposure will increase. As regulatory approval is required
for price increases in many states, and premiums are earned over the policy
period, usually one year, it will be at least 2001 before the full effect of
the price increases are reflected in earned premiums.
The Company cedes reinsurance to provide for greater diversification
of business, allow management to control exposure to potential losses arising
from large risks, and provide capacity for additional growth. Premiums ceded
are estimated based on the terms of the respective reinsurance agreements. The
estimated expense is continually reviewed and any adjustments that become
necessary are included in current operations. Amounts recoverable
11
<PAGE> 12
from reinsurers are estimated in a manner consistent with the loss liability
associated with the reinsured policies. The decrease in premiums ceded for the
three months ended March 31, 2000 as compared to the three months ended March
31, 1999 is due to the decrease in earned premiums. The Company continually
reviews the levels of coverages ceded and the related costs.
Investment Income
The Company had consolidated net investment income of $9.8 million for
the three months ended March 31, 2000, as compared to $9.6 million for the
three months ended March 31, 1999. The increase was due primarily to a slightly
higher yield offset by lower average invested assets. Average invested assets
for 2000 did not increase as compared to 1999 primarily due to $27.9 million of
treasury stock purchases in 1999; approximately $15.0 million of those
purchases occurred in the last 4 months of 1999. The annualized average pre-tax
investment yield for the quarter ended March 31, 2000 was 5.2% as compared to
5.1% for the quarter ended March 31, 1999.
Losses
Consolidated losses and loss adjustment expenses (losses) and the
related current year loss ratio are summarized in the following table (dollars
in thousands). The current year loss ratio is based on net premiums earned.
<TABLE>
<CAPTION>
March 31, 2000 March 31, 1999
---------------------- ----------------------
Loss Loss
Losses Ratio Losses Ratio
---------------------- ----------------------
<S> <C> <C> <C> <C>
Incurred loss related to:
Current year $ 39,655 106% $ 39,625 96%
======== ========
Prior years (10,000) (13,250)
-------- --------
Net incurred loss $ 29,655 $ 26,375
======== ========
</TABLE>
Losses incurred include two components: a) the application of expected
loss factors to earned exposures for the current accident year, and b)
actuarial re-evaluation of incurred loss levels for prior accident years. These
components take into consideration prior loss experience, loss trends, and
changes in the frequency and severity of claims. Any adjustments related to
previously established amounts are included in current operations.
Medical malpractice claims are resolved over an extended number of
years and a number of these claims are litigated. During this extended period
the legal environment and other factors may change such that actual results
vary from estimated amounts. Due to the inherent difficulty in predicting
ultimate losses, management has consistently utilized a conservative approach
in developing its best estimate of such losses. Given the large volume of loss
reserves at any balance sheet date, a small change in the estimate of those
reserves can have a significant effect on current operations.
12
<PAGE> 13
The current accident year loss ratio (current accident year net loss
divided by net premiums earned) increased to 106% from 96%. This change is due
to increasing trends in severity and frequency of claims recognized by the
Company during the first quarter of 2000. As a result of these same trends, the
per claim average ultimate payment of indemnity and loss adjustment expenses
for recent accident years appears likely to exceed comparable averages for
previous years. Although such per claim average remains within the level
contemplated by the previously established reserves, the effect was favorable
loss development during the quarter ended March 31, 2000 of $10.0 million
versus $13.2 million during the quarter ended March 31, 1999. If these trends
continue, the Company may experience higher levels of incurred losses in
subsequent periods.
Other Income
Other income decreased by $0.5 million for the quarter ended March 31,
2000 as compared to the quarter ended March 31, 1999. The decrease is
principally attributable to lower capital gains realized upon the sale of
securities during the first quarter of 2000 compared to the first quarter of
1999.
Underwriting, Acquisition, and Insurance Expenses
Underwriting, acquisition and insurance expenses are summarized in the
following table (in thousands):
<TABLE>
<CAPTION>
Three months ended
March 31
------------------------- Increase
2000 1999 (Decrease)
------------------------- ----------
<S> <C> <C> <C>
Underwriting, acquisition and insurance expenses
before reduction by ceding commissions earned $ 9,687 $ 13,138 $ (3,451)
Less: Ceding commissions earned 1,008 2,466 (1,458)
---------- ---------- ----------
Underwriting, acquisition and insurance expenses $ 8,679 $ 10,672 $ (1,993)
========== ========== ==========
</TABLE>
The decrease in underwriting, acquisition and insurance expenses is
primarily due to lower amortization of policy acquisition costs in 2000 as
compared to 1999. Policy acquisition costs are significantly higher related to
certain premiums, primarily due to commissions. The decrease in policy
acquisition costs for the first quarter of 2000 as compared to the first
quarter of 1999 is due both to an overall decrease in the total amount of
earned premiums and to changes in the mix of earned premiums between the
quarters.
State guaranty fund assessments, which are also included in
underwriting, acquisition and insurance expenses, were $52,000 for the three
months ended March 31, 2000 as compared to $471,000 for the three months ended
March 31, 1999.
The decrease in ceding commissions earned for the quarter ended March
31, 2000 as compared to the quarter ended March 31, 1999 is principally due to
lower ceded accident and health premiums.
13
<PAGE> 14
Income Taxes
The Company's effective tax rate was 20% for the three months ended
March 31, 2000 and 25% for the three months ended March 31, 1999. These rates
are lower than the statutory rate of 35% principally due to the effect of
tax-exempt investment income. The effective rate for 2000 was lower than the
rate for 1999 because tax exempt income represented a larger portion of income
before income taxes.
FORWARD-LOOKING STATEMENTS
This discussion contains historical information, as well as
forward-looking statements that are based upon Medical Assurance's estimates
and anticipation of future events that are subject to certain risks and
uncertainties that could cause actual results to vary materially from the
expected results described in the forward-looking statements. The Company's
expectations regarding losses, the retention of current business, expansion of
product lines, development of business in new geographical areas, Year 2000
compliance, and market risks depend on a variety of factors, including
economic, legal, competitive and market conditions which may be beyond the
Company's control and are thus difficult or impossible to predict. In view of
the many uncertainties inherent in the forward-looking statements made in this
document, the inclusion of such information should not be taken as
representation by the Company or any other person that Medical Assurance's
objectives or plans will be realized.
14
<PAGE> 15
PART II - OTHER INFORMATION
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.
May 12, 2000 By: /s/ James J. Morello
--------------------------------
James J. Morello, Treasurer
(duly authorized officer and
principal financial officer)
15
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF MEDICAL ASSURANCE INC. FOR THE THREE MONTHS ENDED
MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 647,961
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 58,199
<MORTGAGE> 0
<REAL-ESTATE> 11,177
<TOTAL-INVEST> 770,623
<CASH> 13,751
<RECOVER-REINSURE> 182,933
<DEFERRED-ACQUISITION> 0<F1>
<TOTAL-ASSETS> 1,132,437
<POLICY-LOSSES> 664,661
<UNEARNED-PREMIUMS> 86,140
<POLICY-OTHER> 34,800
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 0
0
0
<COMMON> 25,103
<OTHER-SE> 308,639
<TOTAL-LIABILITY-AND-EQUITY> 1,132,437
37,276
<INVESTMENT-INCOME> 9,765
<INVESTMENT-GAINS> 378
<OTHER-INCOME> 505
<BENEFITS> 29,655
<UNDERWRITING-AMORTIZATION> 3,984
<UNDERWRITING-OTHER> 4,695
<INCOME-PRETAX> 9,590
<INCOME-TAX> 1,895
<INCOME-CONTINUING> 7,695
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,695
<EPS-BASIC> .33
<EPS-DILUTED> .33
<RESERVE-OPEN> 486,285
<PROVISION-CURRENT> 39,655
<PROVISION-PRIOR> (10,000)
<PAYMENTS-CURRENT> (2,535)
<PAYMENTS-PRIOR> (31,676)
<RESERVE-CLOSE> 481,729
<CUMULATIVE-DEFICIENCY> (10,000)
<FN>
<F1>DEFERRED POLICY ACQUISITION COSTS ARE NOT SEPARATELY DISCLOSED IN THE
FINANCIAL STATEMENTS INCLUDED IN FORM 10K BECAUSE THE AMOUNTS ARE IMMATERIAL.
SUCH AMOUNTS ARE INCLUDED AS A COMPONENT OF OTHER ASSETS.
</FN>
</TABLE>
