<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
-------------
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE PERIOD ENDED SEPTEMBER 30, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-14094
MEADOWBROOK INSURANCE GROUP, INC.
(Exact name of registrant as specified in its charter)
MICHIGAN 38-2626206
(State of Incorporation) (IRS Employer Identification No.)
26600 TELEGRAPH ROAD, SOUTHFIELD, MICHIGAN 48034
(Address, zip code of principal executive offices)
(810) 358-1100
(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
--- ---
The aggregate number of shares of the Registrant's Common Stock, $.01 par
value, outstanding on November 11, 1996 was 8,649,846.
Total number of Pages: 14
----
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<PAGE> 2
TABLE OF CONTENTS
PAGE
----
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
Condensed Consolidated Statements of Income 3-4
Condensed Consolidated Balance Sheet 5
Condensed Consolidated Statement of Cash Flows 6
Management Representation 7
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 8-12
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K 13
SIGNATURES 14
2
<PAGE> 3
PART I - FINANCIAL STATEMENT
ITEM 1 - FINANCIAL STATEMENTS
MEADOWBROOK INSURANCE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
(UNAUDITED)
<TABLE>
<CAPTION>
ACTUAL PRO FORMA*
1996 1995 1995
--------------- --------------- --------------
<S> <C> <C> <C>
Revenues:
Net premium earned $ 63,797,509 $ 60,043,804 $ 60,043,804
Commissions and fees 11,931,839 - 11,247,710
Net investment income 5,940,090 3,632,710 3,805,575
Other 26,971 86,254 86,254
--------------- --------------- --------------
Total Revenues 81,696,409 63,762,768 75,183,343
Expenses:
Loss and loss adjustment expenses 47,561,403 46,661,299 44,921,285
Reinsurance recoveries (16,368,801) (12,576,725) (12,576,725)
--------------- --------------- --------------
Net loss and loss adjustment expenses 31,192,602 34,084,574 32,344,560
Other operating costs 24,548,519 23,686,407 19,500,551
Salaries and wages 18,045,985 - 14,143,492
Interest on notes payable - 256,059 428,212
--------------- --------------- --------------
Total Expenses 73,787,106 58,027,040 66,416,815
Income before income taxes 7,909,303 5,735,728 8,766,528
Federal income taxes:
Current 734,096 993,856 2,024,328
Deferred 796,124 195,427 195,427
--------------- --------------- --------------
Total income taxes 1,530,220 1,189,283 2,219,755
--------------- --------------- --------------
Net income $ 6,379,083 $ 4,546,445 $ 6,546,773
=============== =============== ==============
Primary and fully diluted earnings per share $ .70 $ .99 $ .97
Weighted average number of common shares and common 9,176,342 4,576,004 6,780,674
share equivalents outstanding.
</TABLE>
*Pro forma information is presented as if the combination of Meadowbrook, Inc.
and Star Holding Company had occurred on January 1, 1995.
3
<PAGE> 4
PART I - FINANCIAL STATEMENT
ITEM 1 - FINANCIAL STATEMENTS
MEADOWBROOK INSURANCE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE QUARTER ENDED SEPTEMBER 30,
(UNAUDITED)
<TABLE>
<CAPTION>
ACTUAL PRO FORMA*
1996 1995 1995
-------------- --------------- -------------
<S> <C> <C> <C>
Revenues:
Net premium earned $ 22,428,764 $ 22,311,087 $ 22,311,087
Commissions and fees 3,290,997 - 3,027,111
Net investment income 1,945,561 1,287,222 1,347,456
Other 61,036 67,250 65,121
-------------- --------------- --------------
Total Revenues 27,726,358 23,665,559 26,750,775
Expenses:
Losses and loss adjustment expense 16,239,474 16,280,940 15,683,670
Reinsurance recoveries (4,502,105) (4,211,797) (4,211,797)
-------------- --------------- --------------
Net losses and loss adjustment expense 11,737,369 12,069,143 11,471,873
Other operating costs 9,392,259 8,494,506 6,176,040
Salaries and wages 6,292,564 - 5,201,021
Interest on notes payable - 85,143 171,767
-------------- --------------- --------------
Total Expenses 27,422,192 20,648,792 23,020,701
Income before income taxes 304,166 3,016,767 3,730,074
Federal income taxes:
Current (330,710) 295,303 514,653
Deferred 141,686 407,600 407,600
-------------- --------------- --------------
Total income taxes (189,024) 702,903 922,253
-------------- --------------- --------------
Net income $ 493,190 $ 2,313,864 $ 2,807,821
============== =============== ==============
Primary and fully diluted earnings per share $ .05 $ .51 $ .41
Weighted average number of common shares and common 9,183,681 4 ,580,524 6,785,311
share equivalents outstanding
</TABLE>
*Pro forma information is presented as if the combination of Meadowbrook, Inc.
and Star Holding Company had occurred on January 1, 1995.
4
<PAGE> 5
MEADOWBROOK INSURANCE GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
(UNAUDITED)
SEPTEMBER 30, DECEMBER 31,
1996 1995
----------------- -----------------
<S> <C> <C>
Investments:
Debt securities held to maturity, at amortized cost
(fair value of $125,883,401 and $107,555,077) $ 124,545,111 $ 105,014,287
Debt securities available for sale, at fair value
(cost of $2,835,523 and $0) 2,834,443 -
Equity securities available for sale, at fair value
(cost of $2,149,687 and $2,219,606) 2,017,631 2,056,268
Cash and cash equivalents 24,250,164 41,906,577
----------------- -----------------
Total investments and cash and cash equivalents 153,647,349 148,977,132
Premium and agent balances receivable 24,335,087 29,935,087
Reinsurance recoverable on:
Paid losses 6,973,765 3,264,911
Unpaid losses 25,770,766 22,317,717
Deferred policy acquisition costs 9,913,396 9,063,989
Prepaid reinsurance premiums 10,514,070 9,826,733
Other assets 17,963,047 18,378,642
----------------- -----------------
Total assets $ 249,117,480 $ 241,764,211
================= =================
</TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<S> <C> <C>
LIABILITIES:
Losses and loss adjustment expense $ 93,485,546 $ 86,985,614
Unearned premium 43,733,705 44,392,973
Other liabilities 13,793,736 18,169,458
Commitments and contingencies - -
----------------- -----------------
Total liabilities 151,012,987 149,548,045
----------------- -----------------
SHAREHOLDERS' EQUITY:
Common stock, $.01 stated value; authorized 20,000,000 shares;
8,649,846 and 8,619,916 shares issued and outstanding 86,498 86,200
Additional paid-in capital 72,875,456 72,868,651
Retained earnings 25,230,409 19,369,118
Unrealized depreciation on available for sale securities,
net of deferred federal income taxes (87,870) (107,803)
----------------- -----------------
Total shareholders' equity 98,104,493 92,216,166
----------------- -----------------
Total liabilities and shareholders' equity $ 249,117,480 $ 241,764,211
================= =================
</TABLE>
5
<PAGE> 6
MEADOWBROOK INSURANCE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
----------------- ----------------
<S> <C> <C>
Net cash provided by operating activities $ 6,723,004 $ 15,282,601
Cash flows from investing activities:
Purchase of debt securities held to maturity (26,506,680) (27,372,359)
Purchase of debt securities available for sale (2,834,919) -
Purchase of equity securities available for sale - (29,062)
Proceeds from maturity of debt securities held to maturity 7,172,691 5,790,719
Proceeds from sale of debt securities available for sale - -
Proceeds from sale of equity securities available for sale 69,918 24,747
Proceeds from the sale of fixed assets 1,000 -
Capital expenditures (2,072,434) -
----------------- ----------------
Net cash used in investing activities (24,170,424) (21,585,955)
----------------- ----------------
Cash flows from financing activities:
Use of proceeds from public offering (51,193) -
Dividends (344,800) -
Issuance of common stock - (27,655)
Issuance of preferred shares 187,000 417,995
----------------- ----------------
Net cash (used in) provided by financing activities (208,993) 390,340
----------------- ----------------
Decrease in cash and cash equivalents (17,656,413) (5,913,014)
Cash and cash equivalents, beginning of period 41,906,577 19,018,810
----------------- ----------------
Cash and cash equivalents, end of period $ 24,250,164 $ 13,105,796
================= ================
</TABLE>
6
<PAGE> 7
MANAGEMENT REPRESENTATION
In the opinion of management, the financial statements reflect all adjustments
of a normal recurring nature necessary for a fair presentation of the interim
periods. Preparation of financial statements under GAAP requires management to
make estimates. Actual results could differ from those estimates. Interim
results are not necessarily indicative of results expected for the entire year.
These financial statements should be read in conjunction with the Company's
1995 Annual Report to Shareholders, as filed on Form 10-K to the Securities and
Exchange Commission.
7
<PAGE> 8
PART I - FINANCIAL INFORMATION
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE PERIODS ENDED SEPTEMBER 30, 1996 AND 1995
The results of operations for Meadowbrook Insurance Group, Inc. (the Company)
are presented on a pro forma basis as if the combination of Meadowbrook, Inc.
and Star Holding Company had occurred on January 1, 1995. This pro forma
presentation is intended to provide historical results in a manner that is
comparable to the combined Company results that will be presented in the
future.
RESULTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
Net income for the nine months ended September 30, 1996 was $6.4 million, a
decrease of nearly $0.2 million, or 2.6% from $6.5 million for same period in
1995. This decrease was the result of poor performance of the Surety Bond book
of business, offset in part by additional investment income earned from
increased invested assets from the Company's initial public offering.
REVENUES
Revenues for the nine months ended September 30, 1996 were $81.7 million, or an
increase of $6.5 million, or 8.7%, from 1995's revenue of $75.2 million. The
details of this increase are reflected below:
<TABLE>
<CAPTION>
Nine Month Period Ended September 30,
--------------------------------------
1996 1995
--------- ---------
<S> <C> <C>
(In Thousands)
Risk management fees & commissions 11,932 11,248
Net earned premiums 63,798 60,044
Net investment income 5,940 3,805
Other 26 86
--------- ---------
81,696 75,183
</TABLE>
Risk Management Fees and Commissions
The Company's risk management fees and commission income generated from its
managed program operations and retail agency consist of the following:
<TABLE>
<CAPTION>
Nine Month Period Ended September 30,
-------------------------------------
1996 1995
------ ------
<S> <C> <C>
(In Thousands)
Commissions 3,987 3,376
Management fees 4,167 4,520
Claims fees 2,097 1,607
Loss control fees 1,038 1,050
Reinsurance placement 625 690
Miscellaneous fees & charges 18 5
------ ------
11,932 11,248
</TABLE>
8
<PAGE> 9
Fees and commission income increased by $0.7 million or 6.1%, to $11.9 million
for the nine month period ended September 30, 1996 from $11.2 million for the
same period in 1995. Fees related to the management of programs decreased by
$0.4 million or 7.8%, to $4.2 million from $4.5 million for the nine month
period ended September 30, 1995. The financial statements reflect an
artificial decline in management fees from 1995 as a result of the Company's
risk management subsidiary accruing approximately $0.6 million less in fees than
were expensed by the insurance subsidiaries (and therefore improperly
eliminated). This deficit was partially offset by additional management fees,
including increases in fees from existing long-term contracts, fees from newly
formed captives, and increased activity with pre-existing clients. Claims fees
increased $0.5 million due to the handling of workers' compensation claims, in
addition to the other lines processed, for an existing client since June of
1995. Loss control fees were relatively consistent at $1.0 million from $1.1
million for the same period in 1995.
Insurance Premiums
The Company's gross premiums written declined $5.7 million, or 6.3%, to $85.0
million for the period ended September 30, 1996 from $90.7 million for the same
period in 1995. Approximately $2.0 million of this decline was from
retrospectively-rated programs. One retrospectively-rated program changed into
a self-insured program. Self-insured programs are serviced by the Company's
risk management subsidiary and therefore included in fee revenue, rather than
premium revenue. Another retrospectively-rated program had unusually high
premiums written in the first half of 1995 as a result of audit premiums from
prior years. Due to the nature of both of these programs, only financial
classifications were impacted and net income was not. Another reason for the
decrease in gross written premiums was a $1.7 million reduction in the accrual
for residual market loads. This resulted from a decrease in the dollar amount
assessed for Workers' Compensation involuntary pools. The Company also
consciously decreased its writings in unprofitable programs, which accounted
for a $3.1 million decline in written premiums. Finally, there was a $2.6
million decrease from other discontinued programs. If all of the unusual items
mentioned above were excluded from the results, premiums would have grown by
$3.7 million, or 5.2% from the prior year.
Net premiums written decreased by $7.5 million, or 10.8%, to $61.7 million for
the period ended September 30, 1996 from $69.2 million for the same period in
1995. This decline was the result of the program changes mentioned above and
the formation of an agent-owned captive for the Massachusetts workers'
compensation program. This captive increased ceded premiums by $3.5 million,
thereby reducing net written premiums by the same amount. If all of the unusual
items mentioned above were excluded from the results, premiums would have grown
by $2.2 million, or 4.7% from the prior year.
Net premiums earned increased by $3.8 million, or 6.3%, to $63.8 million for
the period ended September 30, 1996 from $60.0 million for the same period in
1995. This increase was due to the earning of the earlier rapid surety bond
growth ($6.3 million) and the Massachusetts workers' compensation program
growth ($1.5 million). The earned premium decrease corresponding to the
retrospectively-rated programs, residual market loads, and discontinued
programs amounted to $8.3 million.
Net Investment Income
Net investment income increased by $2.1 million, or 56.1%, to $5.9 million for
the nine months ended September 30, 1996 from $3.8 million for the same period
in 1995. This was the result of an overall increase in cash and invested assets
of $47.5 million, principally from the Initial Public Offering proceeds. Due
to the Company's investment philosophy of maximizing after-tax earnings,
generally the investment yield should be analyzed on an after-tax basis. The
weighted average
9
<PAGE> 10
yield on invested assets on an after-tax basis was 4.59%, which is relatively
unchanged from the same period in the prior year.
EXPENSES
Total expenses increased $7.4 million, or 11.1%, to $73.8 million at September
30, 1996 from $66.4 million for the same period in 1995.
<TABLE>
<CAPTION>
Nine Month Period Ended September 30,
--------------------------------------
(In Thousands) 1996 1995
------ ------
<S> <C> <C>
Loss and loss adjustment expenses incurred 31,193 32,345
Salaries & employee benefits 18,046 14,143
Other operating expenses 24,548 19,501
Interest on notes payable - 428
------ ------
73,787 66,417
</TABLE>
Loss and Loss Adjustment Expenses (LAE) Incurred
Loss and LAE incurred decreased by $1.2 million, or 3.6%, to $31.2 million for
the nine months ended September 30, 1996 from $32.3 million for the same period
in 1995. The loss and LAE ratio for the current period was 52.0% as compared to
56.8% for the same period in 1995. One reason for the decline in the loss and
LAE ratio was the reduction of the residual market participation. The
Company's direct business was also favorably impacted by the elimination of one
program, the reduction in writings in another program and favorable experience
in several core programs. These improvements were partially offset by increases
in the Surety Bond program. Due to the nature of the bond business, losses
tend to be lower and expenses tend to be higher than other types of insurance
business. However, a lower Surety Bond loss and LAE ratio was not realized due
to adverse development on old and discontinued business. Excluding surety, the
GAAP combined ratio would have been 92.5% in 1996 and 96.7% in 1995, as opposed
to the actual ratios of 97.6% and 96.2%, respectively.
Salaries and Employee Benefits
Salaries and employee benefits increased by $3.9 million, or 27.6%, to $18.0
million for the nine months ended September 30,1996 compared to $14.1 million
for the same period in 1995. A major reason for this was the expansion of the
bond operation that began in mid-1995. While overall payroll increased at a
relatively high rate, the average salaries and wages per person remained
relatively consistent for the first nine months of 1996 compared to the same
period in 1995.
Other Operating Expenses
Other operating expenses increased $5.0 million, or 25.9%, to $24.5 million for
the nine months ended September 30, 1996 from $19.5 million for the same period
in 1995. The largest single cause was the increase in expenses associated with
the Surety Bond program. Other notable increases were a $0.3 million
consulting charge for an information technology study and increased
depreciation expense of $0.5 million, as a result of fixed asset purchases made
for the Company's future growth.
10
<PAGE> 11
Federal Income Taxes
The provision for income taxes was $1.5 million for the nine months ended
September 30, 1996, and $2.2 million for the same period in 1995, representing
effective tax rates of 19.3% and 25.3%, respectively. This decline in the
Company's effective tax rate was in part due to the $0.9 million over-accrual
of tax expense in the first quarter of 1995. The primary reason for the
effective rate decrease was significantly higher tax-free investment income in
1996, resulting in a larger portion of total gross income which was tax-exempt.
The Initial Public Offering proceeds received at the end of 1995, were invested
predominately in tax-exempt securities
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
Net income for the quarter ended September 30, 1996 was $0.5 million, a
decrease of $2.3 million, or 82.4% from $2.8 million for the same period in
1995. As previously mentioned this decrease was the result of poor performance
on the Surety Bond book of business.
REVENUES
Revenues increased by $1.0 million, or 3.6%, to $27.7 million for the quarter
ended September 30, 1996 compared to $26.7 million for the same period in 1995.
Earned premium was relatively unchanged, while management fees and commission
increased 8.7%, and investment income increased 44.0% for the quarter. As
previously mentioned, the increase in management fees and commissions was the
result of growth in fees from existing long-term contracts, fees from newly
formed captives, and increased activity with pre-existing clients. The increase
in investment income was generated from an overall increase in invested assets
from the proceeds of the Company's initial public offering in November 1995.
EXPENSES
The most significant increase in expenses was in other operating costs which
was $9.4 million for the quarter ended September 30, 1996, an increase of $3.2
million, or 52.0%, from $6.2 million for the same period in 1995. Salaries &
employee benefits also increased by $1.1 million. As previously mentioned, the
expenses related to the bond operation as well as additional staff and related
expenses to sustain growth caused both of these expense categories to increase.
FEDERAL INCOME TAXES
The provision for income taxes decreased $1.1 million, or 120.5%, to a $0.2
million benefit for the quarter ended September 30, 1996 from a $0.9 million
provision for the same period in 1995. This represents effective tax rates of
(62.1)% and 24.7%, respectively. The decline in the tax rate was due to the
significant decline in underwriting results, coupled with an increase in
tax-exempt investment income.
LIQUIDITY AND CAPITAL RESOURCES
The principal sources of funds for the Company are premiums, investment income,
proceeds from the maturity of invested assets from insurance operations, risk
management fees and commissions from clients and client captives, and agency
commissions from the Company's risk management operations. Funds are primarily
used for the payments of claims, commissions, salaries and employee benefits
and other operating expenses. In addition, the Company has a high volume of
11
<PAGE> 12
intercompany transactions due to the insurance operations paying management
fees to the risk management operations. These fees are subject to regulatory
approval by state insurance departments.
Cash flow from operations for the nine months ended September 30, 1996 was $6.7
million as compared to $15.3 million for the same period in 1995. The
Company's positive cash flow is supplemented by $24.3 million in cash and cash
equivalents. In addition, the Company has no debt outstanding. The
combination of these factors continues to demonstrate the Company's strong
liquidity.
12
<PAGE> 13
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8K
(A) The following documents are filed as part of this Report:
Exhibit
No. Description
--- -----------
11 Statement re computation of per share earnings
27 Financial Data Schedules
(B) Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant during the quarter ended
September 30, 1996.
13
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MEADOWBROOK INSURANCE GROUP, INC.
By: /s/ Daniel G. Gibson
----------------------------
Chief Financial Officer
Dated: November 11, 1996
14
<PAGE> 15
EXHIBIT INDEX
Exhibit
No. Description
- ------- -----------
11 Statement re computation of per share earnings
27 Financial Data Schedule
<PAGE> 1
EXHIBIT 11
MEADOWBROOK INSURANCE GROUP, INC. AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
--------------------------------------
ACTUAL PRO FORMA
1996 1995 1995
---- ---- ----
<S> <C> <C> <C>
Primary:
Weighted average shares outstanding 8,623,690 4,510,001 6,315,832
Common stock equivalents 550,795 66,003 464,842
------------- ------------- ------------
9,174,485 4,576,004 6,780,674
============= ============= ============
Fully Diluted:
Weighted average shares outstanding 8,623,690 4,510,001 6,315,832
Common stock equivalents 552,652 66,003 464,842
------------- ------------- ------------
9,176,342 4,576,004 6,780,674
============= ============= ============
Income before extraordinary item and
preferred dividend requirement $ 6,379,083 $ 4,546,445 $ 6,546,773
Preferred dividend requirement - - -
------------- ------------- ------------
Income applicable to common shareholders
and before extraordinary item $ 6,379,083 $ 4,546,445 $ 6,546,773
Extraordinary item - - -
------------- ------------- ------------
Net income applicable to common
shareholders $ 6,379,083 $ 4,546,445 $ 6,546,773
============= ============= ============
Earnings per share:
Primary -
Net income before extraordinary item $ .70 $ .99 $ .97
Extraordinary item - - -
Net income .70 .99 .97
Fully Diluted -
Net income before extraordinary item .70 .99 .97
Extraordinary item - - -
Net income .70 .99 .97
</TABLE>
<PAGE> 2
EXHIBIT 11
MEADOWBROOK INSURANCE GROUP, INC. AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED SEPTEMBER 30,
----------------------------------
ACTUAL PRO FORMA
1996 1995 1995
---- ---- ----
<S> <C> <C> <C>
Primary:
Weighted average shares outstanding 8,631,029 4,514,521 6,320,469
Common stock equivalents 550,795 66,003 464,842
------------- ------------- ------------
9,181,824 4,580,524 6,785,311
============= ============= ============
Fully Diluted:
Weighted average shares outstanding 8,631,029 4,514,521 6,320,469
Common stock equivalents 552,652 66,003 464,842
------------- ------------- ------------
9,183,681 4,580,524 6,785,311
============= ============= ============
Income before extraordinary item and
preferred dividend requirement $ 493,190 $ 2,313,864 $ 2,807,821
Preferred dividend requirement - - -
------------- ------------- ------------
Income applicable to common shareholders
and before extraordinary item $ 493,190 $ 2,313,864 $ 2,807,821
Extraordinary item - - -
------------- ------------- ------------
Net income applicable to common
shareholders $ 493,190 $ 2,313,864 $ 2,807,821
============= ============= ============
Earnings per share:
Primary -
Net income before extraordinary item $ .05 $ .51 $ .41
Extraordinary item - - -
Net income .05 .51 .41
Fully Diluted -
Net income before extraordinary item .05 .51 .41
Extraordinary item - - -
Net income .05 .51 .41
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<DEBT-HELD-FOR-SALE> 2,834,443
<DEBT-CARRYING-VALUE> 124,545,111
<DEBT-MARKET-VALUE> 125,883,401
<EQUITIES> 2,017,631
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 129,397,185
<CASH> 24,250,164
<RECOVER-REINSURE> 6,973,765
<DEFERRED-ACQUISITION> 9,913,396
<TOTAL-ASSETS> 249,117,480
<POLICY-LOSSES> 93,485,546
<UNEARNED-PREMIUMS> 43,733,705
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 0
0
0
<COMMON> 86,498
<OTHER-SE> 98,017,995
<TOTAL-LIABILITY-AND-EQUITY> 249,117,480
63,797,509
<INVESTMENT-INCOME> 5,940,090
<INVESTMENT-GAINS> 0
<OTHER-INCOME> 11,958,810
<BENEFITS> 31,192,602
<UNDERWRITING-AMORTIZATION> (849,407)
<UNDERWRITING-OTHER> 42,594,504
<INCOME-PRETAX> 7,909,303
<INCOME-TAX> 1,530,220
<INCOME-CONTINUING> 6,379,083
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,379,083
<EPS-PRIMARY> 0.70
<EPS-DILUTED> 0.70
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
