1
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 September 30, 1997
Commission file number 0-5537
Gryphon Holdings Inc.
(Exact name of registrant as specified in its charter)
Delaware 13-3287060
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
30 Wall Street, New York, New York 10005-2201
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code:(212) 825-1200
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15 (d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes x No
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest
practicable date.
Class Outstanding at September 30, 1997
Common stock, par value $.01 6,688,340
Gryphon Holdings Inc.
TABLE OF CONTENTS
Part I. FINANCIAL INFORMATION Page
Item 1. Financial Statements
Consolidated Balance Sheets at
September 30, 1997 and December 31, 1996 3
Consolidated Statements of Income
for the three and nine months ended
September 30, 1997 and 1996 4
Consolidated Statements of Cash Flows
for the nine months ended
September 30, 1997 and 1996 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 13
EXHIBIT 27
Financial Data Schedule 14
Gryphon Holdings Inc. and Subsidiaries
Consolidated Balance Sheets
September 30, December 31,
1997 1996
Assets (Dollars in thousands)
Investments:
Fixed maturities, available for sale, at fair value
(amortized cost: 9/30/97 - $268,870;
12/31/96 - $274,515) $275,600 $280,164
Short-term investments, at cost,
which approximates market 307 307
Total investments 275,907 280,471
Cash and cash equivalents 29,552 23,398
Accrued investment income 3,647 3,919
Premiums receivable 17,246 18,509
Reinsurance recoverable on paid losses 24,445 14,326
Reinsurance recoverable on unpaid losses 162,590 137,952
Prepaid reinsurance premiums 13,622 18,965
Deferred policy acquisition costs 13,646 12,415
Deferred income taxes 9,777 10,282
Other assets 9,019 6,747
Total assets $559,451 $526,984
Liabilities and Stockholders' Equity
Policy liabilities:
Unpaid losses and loss
adjustment expenses $343,782 $309,259
Unearned premiums 66,385 68,683
Total policy liabilities 410,167 377,942
Reinsurance balances payable 12,267 16,207
Income taxes payable 1,444 55
Long-term debt 22,000 24,625
Other liabilities 9,311 13,019
Total liabilities 455,189 431,848
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value;
1,000,000 shares authorized;
none issued or outstanding
Common stock, $.01 par value;
15,000,000 shares authorized;
8,148,050 shares issued 81 81
Additional paid-in capital 30,753 30,847
Foreign currency translation
adjustment, net of tax (228) (219)
Net unrealized investment gains, net of tax 4,370 3,672
Deferred compensation (226) (257)
Retained earnings 94,306 86,271
Treasury stock, at cost;
shares 1997:1,459,710; 1996:1,487,075 (24,794) (25,259)
Total stockholders' equity 104,262 95,136
Total liabilities and stockholders' equity$559,451 $526,984
See accompanying notes to consolidated financial statements.
These statements are subject to year-end audit.
Gryphon Holdings Inc. and Subsidiaries
Consolidated Statements of Income
Three months ended Nine months ended
September 30, September 30,
1997 1996 1997 1996
(Dollars and shares in thousands,
except per-share data)
Revenues
Gross premiums written $37,290 $44,807 $113,688 $118,743
Net premiums written 28,223 28,165 79,855 71,963
Net premiums earned 27,783 22,292 76,801 65,423
Net investment income 4,344 4,065 12,829 12,145
Realized gains on investments 2,601 4 2,630 616
Other income 296 389 794 944
Total revenues 35,024 26,750 93,054 79,128
Expenses
Losses and loss
adjustment expenses 17,895 13,958 47,862 41,913
Underwriting, acquisition,
and insurance expenses 11,712 10,099 33,730 29,285
Interest expense 398 444 1,228 1,317
Total expenses 30,005 24,501 82,820 72,515
Income before income taxes 5,019 2,249 10,234 6,613
Provision for income taxes (benefit):
Current 872 262 2,070 1,214
Deferred 450 1 129 (429)
Total income taxes 1,322 263 2,199 785
______ ______ ______ ______
Net income $3,697 $1,986 $8,035 $5,828
Net income per-share data
Net income $0.55 $0.30 $1.20 $0.88
Weighted average shares
outstanding 6,688 6,660 6,680 6,655
See accompanying notes to consolidated financial statements.
These statements are subject to year-end audit.
Gryphon Holdings Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Nine months ended September 30,
1997 1996
(Dollars in thousands)
Operating activities
Net income $8,035 $5,828
Adjustments to reconcile net
income to net cash provided
by operating activities:
Increase in net policy liabilities 2,811 23,744
Decrease (increase) in
premiums receivable 1,263 (4,946)
Increase in deferred
policy acquisition costs (1,231) (1,461)
Deferred income tax provision 129 (429)
Decrease (increase) in other
assets and liabilities (4,160) 2,313
Amortization and depreciation 573 445
Amortization of bond discount, net 352 736
Realized gains on investments (2,630) (616)
Decrease in reinsurance
balances payable (3,940) (9,117)
(Increase) decrease in accrued
investment income 272 (89)
Net cash provided by
operating activities 1,474 16,408
Investing activities
Sales of fixed maturities 304,542 183,008
Purchases of fixed maturities (298,471) (204,130)
Maturities or calls of fixed maturities 1,800 2,200
Capital expenditures (959) (1,950)
Net cash provided by (used in)
investing activities 6,912 (20,872)
Financing activities
Principal payment on long-term debt (2,625)
Issuance of common stock 342 69
Deferred compensation 60 48
Net cash provided by (used in)
financing activities (2,223) 117
Effect of exchange rate changes on cash (9) 7
Increase (decrease) in cash
and cash equivalents 6,154 (4,340)
Cash and cash equivalents
at beginning of period 23,398 27,337
Cash and cash equivalents
at end of period $29,552 $22,997
Supplemental disclosure of cash flow information
Income taxes paid $530 $1,701
Interest paid 1,228 1,317
See accompanying notes to consolidated financial statements.
These statements are subject to year-end audit.
1. Basis of Presentation
Gryphon Holdings Inc. (the "Company") operates through its
main subsidiary, Gryphon Insurance Group Inc., as a specialty
property and casualty underwriting organization. The Company's
wholly owned insurance company subsidiaries are Associated
International Insurance Company and Calvert Insurance Company.
The accompanying financial statements include, for all periods
presented, the accounts and operations of Gryphon Holdings Inc.
and its subsidiaries.
2. Principles of Consolidation
The accompanying consolidated financial statements have been
prepared on the basis of generally accepted accounting principles,
which as to the two wholly owned insurance company subsidiaries
differ from the statutory accounting practices prescribed or
permitted by regulatory authorities, and include the accounts of
the Company and its subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation.
3. Investments
Fair values are based on quoted market prices, when
available, or estimates based on market prices for similar
securities, when quotes are not available. Short-term investments
are carried at cost, which approximates their fair value.
Realized gains and losses from the sales or liquidation of
investments are determined on the basis of the specific
identification method and are included in net income. Investment
income is recognized when earned. The amortization of premium and
accretion of discount for fixed maturity securities are computed
utilizing the interest method.
The major components of net investment income are summarized
as follows:
For the three months For the nine months
ended September 30, ended September 30,
1997 1996 1997 1996
(Dollars in thousands)
Fixed maturities $4,151 $4,007 $12,212 $12,057
Cash, cash equivalents
and short-term investments 441 279 1,353 869
Total investment income 4,592 4,286 13,565 12,926
Less related expenses 248 221 736 781
Net investment income $4,344 $4,065 $12,829 $12,145
The gross realized gains and losses from sales of fixed
income securities are as follows:
For the three months For the nine months
ended September 30, ended September 30,
1997 1996 1997 1996
(Dollars in thousands)
Gross realized gains $2,711 $244 $3,879 $2,150
Gross realized losses (110) (240) (1,249) (1,534)
Net realized gain on sales $2,601 $4 $2,630 $616
At September 30, 1997 and December 31, 1996, the amortized
cost and estimated fair values of investments in fixed maturities,
by categories of securities, and short-term investments were as
follows:
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
(Dollars in thousands)
September 30, 1997
U.S. Treasury securities
and obligations of U.S.
government corporations
and agencies 59,613 738 (11) 60,340
Debt securities issued by
foreign governments 5,763 156 (1) 5,918
Tax-exempt obligations of states and
political subdivisions 113,659 4,709 (18) 118,350
Mortgage-backed securities 54,620 674 (32) 55,262
Corporate securities 35,215 630 (115) 35,730
268,870 6,907 (177) 275,600
Short-term investments 307 307
$269,177 $6,907 $(177) $275,907
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
(Dollars in thousands)
December 31, 1996
U.S. Treasury securities
and obligations of U.S.
government corporations
and agencies $55,845 $826 $(87) $56,584
Debt securities issued by
foreign governments 5,747 186 (10) 5,923
Tax-exempt obligations of states and
political subdivisions 141,686 4,718 (69) 146,335
Mortgage-backed securities 43,381 294 (214) 43,461
Corporate securities 27,856 345 (340) 27,861
274,515 6,369 (720) 280,164
Short-term investments 307 307
$274,822 $6,369 $(720) $280,471
4. Long-Term Debt
In September 1995, the Company purchased 1.5 million shares
of its common stock beneficially owned by Willis Corroon Group plc
for a purchase price of $25.5 million, including related expenses.
The Company financed its purchase through an unsecured term loan
from commercial lending institutions. This loan matures in
varying amounts through 2002 with interest payable at least
quarterly. The term loan interest rate is equivalent to either
the bank's prime rate or the London Interbank Offered Rate
("LIBOR") plus 1%, at the discretion of the Company. The term-
loan agreement contains certain restrictive covenants, including
restrictions on the Company's ability to declare or pay any cash
dividends to its shareholders. As of September 30, 1997, the
weighted average interest rate was 6.89 %, and the fair value of
the loan approximated the carrying value.
Principal payments due on the term loan are as follows:
Principal Amount
Year ending December 31, (Dollars in thousands)
1997 $875
1998 3,625
1999 4,125
2000 4,625
2001 5,000
Thereafter 3,750
Total $22,000
In October of 1995, the Company entered into an interest rate
swap agreement with a commercial lending institution in order to
reduce the impact of interest rate fluctuations on the Company's
term loan. The interest rate swap was effected with respect to
the first $15.5 million of scheduled principal amortizations of
the $25.5 million loan. The impact of the swap was to create an
effective fixed rate of 6.97% on the $15.5 million principal
amount. As of September 30, 1997, the fair value of the interest
rate swap approximated the carrying value.
5. Earnings Per Share
Earnings per common share are based on the average number of
shares outstanding during each period; the exercise of outstanding
stock options would have no significant dilutive effect on
earnings per share.
In February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards (SFAS) No. 128,
"Earnings Per Share", which will be effective for both interim and
annual periods ending after December 15, 1997. Earlier
application is not permitted. SFAS No. 128 establishes standards
for computing and presenting earnings per share. Primary earnings
per share will be replaced with basic earnings per share and
calculated by dividing income available to common stockholders by
weighted average number of outstanding common shares during the
period. Fully diluted earnings per share will be replaced by
diluted earnings per share and calculated by including additional
common shares that would have been outstanding if potential
dilutive shares had been issued during the period. The adoption
of SFAS No. 128 will have no material effect on the calculation of
the Company's earnings per share.
6. Recent Accounting Pronouncement
In June 1997, the Financial Accounting Standards Board issued
SFAS No. 130, "Reporting Comprehensive Income", which
establishes standards for the reporting and presentation of
comprehensive income and its components in a full set of
financial statements. Comprehensive income encompasses all
changes in shareholders' equity and includes net income, net
unrealized capital gains or losses on available for sale
securities and foreign currency translation adjustments. As
this new standard only requires additional information in a
financial statement, it will not affect the Company's
financial position or results of operations. SFAS No. 130 is
effective for fiscal years beginning after December 31, 1997,
with earlier application permitted. The Company is currently
evaluating the presentation alternatives permitted by the
statement.
7. Unaudited Consolidated Financial Statements
In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments
necessary to present fairly the results of operations and
financial position of the Company for the periods ended September
30, 1997 and 1996. The unaudited consolidated financial
statements should be read in conjunction with the consolidated
financial statements and related notes to financial statements as
contained in the Company's 1996 Annual Report on Form 10-K. The
results of operations for the period presented are not necessarily
indicative of the results to be expected for the entire year.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
General
The Company is a holding company that, through its
subsidiaries, underwrites specialty property and casualty
insurance in sectors of the insurance industry that are generally
considered difficult to insure. Many of the coverages written by
the Company can be categorized as excess and surplus lines, which
generally means that the risks are nonstandard or that the
policies in respect of the risks are written with unusual limits
or at deviated rates. The property and casualty insurance
industry is highly cyclical. The excess and surplus lines sectors
of the property and casualty insurance industry are often subject
to greater cyclicality and volatility than the industry in
general. During soft markets, large standard lines insurers often
utilize excess capacity to assume risks in excess and surplus and
specialty lines. During hard markets, such insurers tend to
abandon the excess and surplus and specialty lines to the carriers
that concentrate in these sectors. Thus, capacity in these lines
will fluctuate substantially, often with fluctuations in revenues
or profits, or both.
Results of Operations
Third quarter of 1997 Compared with the Third quarter of 1996
Gross Premiums Written. Gross premiums written were $37.3
million for the third quarter of 1997, compared with $44.8 million
for the third quarter of 1996. In 1997, the Company's gross
premiums written decreased due to business lost as a result of
premium rate competition, which has affected the following lines
of business: a $2.6 million decrease in other property, primarily
in the Company's national accounts business; a $2.4 million
decrease in casualty premiums; a $2.1 million decrease in
Difference in Conditions (DIC) premiums; and a $0.5 million
decrease in commercial automobile premiums.
Net Premiums. Net premiums written were $28.2 million for
the third quarter of 1997 compared with $28.2 million for the
third quarter of 1996. Net premiums written were favorably
affected in 1997 as a result of a new reinsurance program, which
reduced reinsurance premiums ceded by increasing net retentions to
$500,000 per risk in most lines of business. Net premiums in the
third quarter of 1997 were also increased by a premium adjustment
on a reinsurance contract. The benefit of the reduced reinsurance
premiums ceded was offset by the effect of a decrease in gross
written premiums, which was caused by the competitive premium
rate conditions in the property and casualty marketplace.
Net premiums earned increased 25% to $27.8 million for the
third quarter of 1997 from $22.3 million for the third quarter of
1996, as a result of increased net retentions, a reinsurance
premium adjustment and reduced reinsurance premiums ceded from
the Company's new reinsurance program, effective in the fourth
quarter of 1996.
Net Investment Income. Net investment income increased 7% to
$4.3 million for the third quarter of 1997 from $4.1 million for
the third quarter of 1996. In 1997, net investment income was
affected by additional funds available for investment, but also by
lower average interest rates compared with the third quarter of
1996.
Net Realized Gains on Investments. In the third quarter of
1997, the Company realized a net gain of $2.6 million, compared to
a net gain of four thousand dollars in the third quarter of 1996.
Portfolio sales were effected in the third quarter of 1997 to
optimize the mix of taxable and tax-exempt investments.
Other Income. For the third quarter of 1997, the Company's
other income was $0.3 million, compared with $0.4 million for the
third quarter of 1996. The Company receives underwriting
management fees for DIC business underwritten on behalf of a
companion carrier. This income decreased in the third quarter of
1997 due to competitive market conditions.
Losses and Loss Adjustment Expenses. Losses and loss
adjustment expenses increased 28% to $17.9 million for the third
quarter of 1997 from $14.0 million for the third quarter of 1996,
due to increased earned premium exposures and reserve increases of
$1.4 million for prior period development in the casualty,
commercial automobile and other property lines of business. In
1996, the Company strengthened reserves by $1.8 million with
respect to a truck leasing program and a used car dealers program,
each discontinued during 1995. Losses and loss adjustment
expenses were 64.4% of net premiums earned in the third quarter of
1997, compared with 62.6% in the third quarter of 1996.
Underwriting, Acquisition, and Insurance Expenses.
Underwriting, acquisition, and insurance expenses increased 16% to
$11.7 million for the third quarter of 1997 from $10.1 million for
the third quarter of 1996, largely due to increased acquisition
costs, primarily net commission expenses.
Interest Expense. For the third quarter of 1997, interest
expense was $0.4 million compared with $0.4 million for the third
quarter of 1996. Interest expense resulted from a term loan used
to purchase 1.5 million shares of the Company's common stock in
1995.
Income Taxes. The Company recorded a tax expense of $1.3
million in the third quarter of 1997, compared with $0.3 million
for the third quarter of 1996.
Net Income. Net income was $3.7 million for the third
quarter of 1997, compared with $2.0 million for the third quarter
of 1996.
Nine months Ended September 30, 1997 Compared with the Nine months
Ended September 30, 1996
Gross Premiums Written. Gross premiums written were $113.7
million for the nine months ended September 30, 1997, compared
with $118.7 million for the nine months ended September 30, 1996.
In 1997, the Company's gross premiums written decreased due to
business lost as a result of premium rate competition, which has
affected the following lines of business: a $5.7 million decrease
in other property, primarily in the Company's national accounts
business; a $0.8 million decrease in casualty premiums; a $0.5
million decrease in Difference in Conditions (DIC) premiums; and a
$0.4 million decrease in commercial automobile premiums. Such
decreases were partially offset by a $1.3 million increase in
Architects' and Engineers' coverages, due to expanded marketing
and enhanced coverages offered, and a $0.9 million increase in
specialty programs.
Net Premiums. Net premiums written increased 11% to $79.9
million for the nine months ended September 30, 1997 from $72.0
million for the nine months ended September 30, 1996. Net
premiums written increased as a result of a new reinsurance
program, effective in the fourth quarter of 1996, which reduced
reinsurance premiums ceded by increasing net retentions to
$500,000 per risk in most lines of business. The increase was
offset by the affect of the decrease in gross written premiums,
which was caused by the competitive rate conditions in the
property and casualty marketplace.
Net premiums earned increased 17% to $76.8 million for the
nine months ended September 30, 1997 from $65.4 million for the
nine months ended September 30, 1996, as a result of increased net
retentions and reduced reinsurance premiums ceded from the
Company's new reinsurance program, effective in the fourth quarter
of 1996.
Net Investment Income. Net investment income increased 6% to
$12.8 million for the nine months ended September 30, 1997 from
$12.1 million for the nine months ended September 30, 1996. In
1997, net investment income was affected by additional funds
available for investment, but also by lower average interest rates
compared with the nine months ended September 30, 1996.
Net Realized Gains on Investments. In the nine months ended
September 30, 1997, the Company realized a net gain of $2.6
million, compared to a net gain of $0.6 million in 1996.
Portfolio sales were effected in each period to optimize the mix
of taxable and tax-exempt investments.
Other Income. For the nine months ended September 30, 1997,
the Company's other income was $0.8 million, compared with $0.9
million for 1996. The Company receives underwriting management
fees for DIC business underwritten on behalf of a companion
carrier. This income decreased in 1997 due to competitive market
conditions.
Losses and Loss Adjustment Expenses. Losses and loss
adjustment expenses increased 14% to $47.9 million for the nine
months ended September 30, 1997 from $41.9 million for the nine
months ended September 30, 1996, primarily due to increased earned
premium exposures and reserve increases for prior period
development in the casualty, commercial automobile and other
property lines of business. In 1996, the Company strengthened
reserves by $4.4 million with respect to a truck leasing program
and a used car dealers program, each discontinued during 1995.
Losses and loss adjustment expenses were 62.3% of net premiums
earned in the nine months ended September 30, 1997, compared with
64.1% in the nine months ended September 30, 1996.
Underwriting, Acquisition, and Insurance Expenses.
Underwriting, acquisition, and insurance expenses increased 15% to
$33.7 million for the nine months ended September 30, 1997 from
$29.3 million for the nine months ended September 30, 1996,
largely due to increased acquisition costs, primarily net
commission expenses.
Interest Expense. For the nine months ended September 30,
1997, interest expense was $1.2 million compared with $1.3 million
for the nine months of 1996. Interest expense resulted from a
term loan used to purchase 1.5 million shares of the Company's
common stock in 1995.
Income Taxes. Income taxes were $2.2 million for the nine
months ended September 30, 1997, compared with income taxes of
$0.8 million for the nine months ended September 30, 1996.
Net Income. Net income was $8.0 million for the nine months
ended September 30, 1997, compared with $5.8 million for the nine
months ended September 30, of 1996.
Liquidity and Capital Resources
The Company receives cash from premiums and, to a lesser
extent, investment income. The principal cash outflows are for
the payment of claims, reinsurance premiums, policy acquisition
costs, and general and administrative expenses.
At September 30, 1997, the Company maintained cash and cash
equivalents of $29.6 million to meet current payment obligations.
In addition, the Company's investment portfolio could be
substantially liquidated without any material financial impact.
Substantially all of the cash and investments of the Company at
September 30, 1997 were held by its subsidiaries.
Reinsurance recoverables on unpaid losses increased from
$137.9 million at December 31, 1996 to $162.6 million at September
30, 1997. Because of the high limits on the Company's issued
policies relative to net retentions, reinsurance recoverable on
unpaid losses can fluctuate significantly depending upon the
emergence and severity of reported and unreported losses.
Net cash provided by operating activities declined to $1.5
million for the first nine months of 1997 from $16.4 million for
the first nine months of 1996, primarily due to an increase in
gross claims payments during the period. Such payments will be
recoverable from reinsurers in subsequent periods.
In September 1995, the Company purchased 1.5 million shares
of its common stock from Willis Corroon for a total purchase price
of $25.5 million, including related expenses. The Company
financed its purchase of such shares through the proceeds of
borrowing from commercial lending institutions.
As a holding company, the Company depends principally on
dividends from its insurance company subsidiaries to pay corporate
overhead expenses, including principal and interest on its
borrowings. These subsidiaries are subject to state insurance
laws that restrict their ability to pay dividends. Under the
insurance code of Pennsylvania, dividends from Calvert are limited
to the greater of 10% of surplus as regards policyholders as of
the preceding year end or the net income for the previous year,
without prior approval from the Pennsylvania Department of
Insurance. Under the insurance code of California, dividends from
Associated are limited to the greater of 10% of policyholders'
statutory surplus as of the preceding year end or the Company's
statutory net income for the previous year, without prior approval
from the California Department of Insurance.
The National Association of Insurance Commissioners adopted a
risk-based capital system for assessing the adequacy of statutory
capital and surplus for all property and casualty insurers. Based
on the guidelines and computations made by the Company in
conformity with such guidelines, Associated and Calvert have
exceeded the required levels of capital. There can be no
assurance that capital requirements applicable to the Company's
business will not increase in the future.
The Company regularly evaluates opportunities for the
acquisitions of books of business,of specialty insurance companies
or companies in related businesses and for business combinations or
joint ventures with other specialty insurance companies. There can
be no assurance, however, that any suitable business opportunities
will arise. In the event that such opportunities do arise, the
Company may incur indebtedness for borrowed money in connection
with the consummation of any such transaction. Such indebtedness,
under certain circumstances could adversely affect the Company's
liquidity and capital resources.
The Company has no off-balance-sheet obligations that are not
disclosed in its financial statements. The Company believes that
retained earnings will be sufficient to satisfy its long-term
capital requirements to fund growth.
Effects of Inflation
There was no significant impact on the Company's operations
as a result of inflation during the third quarter of 1997.
However, there can be no assurance that inflation will not have a
material impact on the Company's operations in the future.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
Exhibit No. Description Page No.
27 Financial Data Schedule 14
b) No reports on Form 8-K were filed during the third quarter of
1997.
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.
Gryphon Holdings Inc.
(Registrant)
Date: November 10, 1997 /s/ Stephen A. Crane
Stephen A. Crane
President & Chief Executive Officer
Date: November 10, 1997 /s/ Robert P. Cuthbert
Robert P. Cuthbert
Senior Vice President &
Chief Financial Officer
(Principal Financial and
Accounting Officer)