================================================================================

                                  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 QUARTERLY PERIOD ENDED MARCH 31, 2004

                                        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: 1-15135

                              CHANDLER (U.S.A.), INC.
             (Exact name of registrant as specified in its charter)


               OKLAHOMA                               73-1325906
    (State or other jurisdiction of      (I.R.S. Employer Identification No.)
     incorporation or organization)

                  1010 MANVEL AVENUE, CHANDLER, OKLAHOMA 74834
              (Address of principal executive offices and zip code)

     Registrant's telephone number, including area code: (405) 258-0804

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 by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). YES      NO  X
                                                ---     ---

The number of common shares, $1.00 par value, of the registrant outstanding on
April 30, 2004 was 2,484, which are owned by Chandler Insurance Company, Ltd.

=============================================================================

<PAGE>
                                                                     PAGE i

                             CHANDLER (U.S.A.), INC.

                                      INDEX

PART I - FINANCIAL INFORMATION
------------------------------

ITEM 1.
-------
Consolidated Balance Sheets as of March 31, 2004 and December 31, 2003 ......  1

Consolidated Statements of Operations for the three months
     ended March 31, 2004 and 2003 ..........................................  2

Consolidated Statements of Comprehensive Income for the three
     months ended March 31, 2004 and 2003 ...................................  3

Consolidated Statements of Cash Flows for the three months
     ended March 31, 2004 and 2003 ..........................................  4

Notes to Interim Consolidated Financial Statements ..........................  5

ITEM 2.
-------
Management's Discussion and Analysis of Financial Condition and
     Results of Operations ..................................................  7

ITEM 4.
-------
Controls and Procedures ..................................................... 10

PART II - OTHER INFORMATION
---------------------------

Item 1.     Legal Proceedings ............................................... 11

Item 2.     Changes in Securities and Use of Proceeds ....................... 11

Item 3.     Defaults Upon Senior Securities ................................. 11

Item 4.     Submission of Matters to a Vote of Security Holders ............. 11

Item 5.     Other Information ............................................... 11

Item 6.     Exhibits and Reports on Form 8-K ................................ 11

Signatures .................................................................. 12

<PAGE>
                                                                     PAGE 1

                             CHANDLER (U.S.A.), INC.
                           CONSOLIDATED BALANCE SHEETS
                   (Amounts in thousands except share amounts)

<TABLE>
<CAPTION>
                                                                                        March 31,    December 31,
                                                                                          2004           2003
                                                                                       -----------   ------------
                                                                                       (Unaudited)
<S>                                                                                    <C>           <C>
ASSETS
Investments
  Fixed maturities available for sale, at fair value
    Restricted (amortized cost $7,596 and $7,622 in 2004 and 2003, respectively) ..... $    7,733    $     7,677
    Unrestricted (amortized cost $59,423 and $53,549 in 2004 and 2003, respectively)..     60,567         54,303
  Equity securities available for sale, at fair value ................................         92             92
                                                                                       -----------   ------------
    Total investments ................................................................     68,392         62,072
Cash and cash equivalents ($601 restricted in 2004 and 2003, respectively) ...........      9,952          7,126
Premiums receivable, less allowance for non-collection
  of $84 and $133 at 2004 and 2003, respectively .....................................     19,133         20,304
Reinsurance recoverable on paid losses, less allowance for non-collection
  of $3,034 and $2,934 at 2004 and 2003, respectively ................................      4,574          9,036
Reinsurance recoverable on paid losses from related parties ..........................          -            271
Reinsurance recoverable on unpaid losses, less allowance for non-collection
  of $347 and $380 at 2004 and 2003, respectively ....................................     50,110         48,688
Reinsurance recoverable on unpaid losses from related parties ........................      9,565          9,737
Prepaid reinsurance premiums .........................................................     15,101         15,269
Prepaid reinsurance premiums to related parties ......................................     10,255          9,521
Deferred policy acquisition costs ....................................................        315            165
Property and equipment, net ..........................................................      9,682          9,879
Amounts due from related parties .....................................................      9,809          9,642
State insurance licenses, net ........................................................      3,745          3,745
Other assets .........................................................................     12,368         12,758
                                                                                       -----------   ------------
Total assets ......................................................................... $  223,001    $   218,213
                                                                                       ===========   ============
LIABILITIES AND SHAREHOLDER'S EQUITY
Liabilities
  Unpaid losses and loss adjustment expenses ......................................... $   90,374    $    87,768
  Unearned premiums ..................................................................     49,779         47,325
  Policyholder deposits ..............................................................      4,483          4,807
  Accrued taxes and other payables ...................................................      5,412          5,617
  Premiums payable ...................................................................      1,342            983
  Premiums payable to related parties ................................................        442              -
  Senior debentures ..................................................................      6,979          7,254
  Junior subordinated debentures issued to affiliated trusts .........................     20,620         20,620
                                                                                       -----------   ------------
    Total liabilities ................................................................    179,431        174,374
                                                                                       -----------   ------------
Shareholder's equity
  Common stock, $1.00 par value, 50,000 shares authorized;
    2,484 shares issued and outstanding ..............................................          2              2
  Paid-in surplus ....................................................................     60,584         60,584
  Accumulated deficit ................................................................    (17,922)       (17,342)
  Accumulated other comprehensive income:
    Unrealized gain on investments available for sale, net of deferred income taxes ..        906            595
                                                                                       -----------   ------------
      Total shareholder's equity .....................................................     43,570         43,839
                                                                                       -----------   ------------
Total liabilities and shareholder's equity ........................................... $  223,001    $   218,213
                                                                                       ===========   ============
</TABLE>

See accompanying Notes to Interim Consolidated Financial Statements.

<PAGE>
                                                                     PAGE 2
                            CHANDLER (U.S.A.), INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
                             (Amounts in thousands)

<TABLE>
<CAPTION>


                                                                    Three months ended March 31,
                                                                  --------------------------------
                                                                       2004               2003
                                                                  -------------       ------------
<S>                                                               <C>                 <C>
Premiums and other revenues
  Direct premiums written and assumed ........................... $     31,661        $    33,108
  Reinsurance premiums ceded ....................................       (9,150)           (12,434)
  Reinsurance premiums ceded to related parties .................       (6,751)            (8,306)
                                                                  -------------       ------------
    Net premiums written and assumed ............................       15,760             12,368
  Decrease (increase) in unearned premiums ......................       (1,888)             2,169
                                                                  -------------       ------------

    Net premiums earned .........................................       13,872             14,537

Interest income, net ............................................        1,135                486
Interest income, net from related parties .......................          103                110
Realized investment gains, net ..................................          463                151
Other income ....................................................          479                209
                                                                  -------------       ------------

    Total premiums and other revenues ...........................       16,052             15,493
                                                                  -------------       ------------
Operating costs and expenses
  Losses and loss adjustment expenses, net of amounts
    ceded to related parties of $2,680 and $3,170 in
    2004 and 2003, respectively .................................       10,632              8,709
  Policy acquisition costs, net of ceding commissions
    received from related parties of $2,557 and $2,747 in
    2004 and 2003, respectively .................................        2,508              2,897
  General and administrative expenses ...........................        3,313              3,640
  Interest expense ..............................................          595                558
                                                                  -------------       ------------


    Total operating costs and expenses ..........................       17,048             15,804
                                                                  -------------       ------------

Loss before income taxes ........................................         (996)              (311)
Federal income tax benefit ......................................          416                 88
                                                                  -------------       ------------

  Net loss ...................................................... $       (580)       $      (223)
                                                                  =============       ============

</TABLE>

See accompanying Notes to Interim Consolidated Financial Statements.

<PAGE>
                                                                     PAGE 3


                             CHANDLER (U.S.A.), INC.
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                    (Unaudited)
                              (Amounts in thousands)

<TABLE>
<CAPTION>
                                                                   Three months ended March 31,
                                                                  --------------------------------
                                                                       2004               2003
                                                                  -------------       ------------
<S>                                                               <C>                 <C>
Net loss ........................................................ $       (580)       $      (223)
                                                                  -------------       ------------
Other comprehensive income, before income tax:
  Unrealized gains on securities:
    Unrealized holding gains arising during period ..............          934              1,220
    Less: Reclassification adjustment for gains included in
      net loss ..................................................         (463)              (151)
                                                                  -------------       ------------
Other comprehensive income, before income tax ...................          471              1,069
Income tax benefit (provision) related to items of other
  comprehensive income ..........................................         (160)                 7
                                                                  -------------       ------------
Other comprehensive income, net of income tax ...................          311              1,076
                                                                  -------------       ------------
Comprehensive income (loss) ..................................... $       (269)       $       853
                                                                  =============       ============

</TABLE>

See accompanying Notes to Interim Consolidated Financial Statements.

<PAGE>
                                                                     PAGE 4

                             CHANDLER (U.S.A.), INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                             (Amounts in thousands)

<TABLE>
<CAPTION>
                                                                                 Three months ended March 31,
                                                                               -------------------------------
                                                                                   2004               2003
                                                                               ------------       ------------
<S>                                                                            <C>                <C>
OPERATING ACTIVITIES
Net loss ..................................................................... $      (580)       $      (223)
  Add (deduct):
  Adjustments to reconcile net loss to cash provided by
    (applied to) operating activities:
    Realized investment gains, net ...........................................        (463)              (151)
    Gain on retirement of debentures .........................................         (36)                 -
    Net gains on sale of property and equipment ..............................        (369)              (136)
    Amortization and depreciation ............................................         354                367
    Provision for non-collection of premiums .................................         (50)                75
    Provision for non-collection of reinsurance recoverables .................         150                138
    Net change in non-cash balances relating to operating activities:
      Premiums receivable ....................................................       1,221                266
      Reinsurance recoverable on paid losses .................................       4,280                415
      Reinsurance recoverable on paid losses from related parties ............         271               (183)
      Reinsurance recoverable on unpaid losses ...............................      (1,390)             9,142
      Reinsurance recoverable on unpaid losses from related parties ..........         172                117
      Prepaid reinsurance premiums ...........................................         168               (168)
      Prepaid reinsurance premiums to related parties ........................        (734)            (1,871)
      Deferred policy acquisition costs ......................................        (150)               355
      Other assets ...........................................................         221              1,185
      Unpaid losses and loss adjustment expenses .............................       2,606            (10,939)
      Unearned premiums ......................................................       2,454               (129)
      Policyholder deposits ..................................................        (324)               168
      Accrued taxes and other payables .......................................         163               (450)
      Premiums payable .......................................................         359                (93)
      Premiums payable to related parties ....................................         442                  -
                                                                               ------------       ------------
    Cash provided by (applied to) operating activities .......................       8,765             (2,115)
                                                                               ------------       ------------
INVESTING ACTIVITIES
  Unrestricted fixed maturities available for sale:
    Purchases ................................................................     (17,929)            (5,243)
    Sales ....................................................................      12,176              8,480
    Maturities ...............................................................         248              1,604
  Cost of property and equipment purchased ...................................         (24)              (117)
  Proceeds from sale of property and equipment ...............................           1                 34
                                                                               ------------       ------------
    Cash provided by (applied to) investing activities .......................      (5,528)             4,758
                                                                               ------------       ------------
FINANCING ACTIVITIES
  Payments on retirement of debentures .......................................        (226)                 -
  Debt issue costs ...........................................................         (18)                 -
  Payments and loans from related parties ....................................         867                218
  Payments and loans to related parties ......................................      (1,034)              (172)
                                                                               ------------       ------------
    Cash provided by (applied to) financing activities .......................        (411)                46
                                                                               ------------       ------------
Increase in cash and cash equivalents during the period ......................       2,826              2,689
Cash and cash equivalents at beginning of period .............................       7,126              9,336
                                                                               ------------       ------------
Cash and cash equivalents at end of period ................................... $     9,952        $    12,025
                                                                               ============       ============
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

<PAGE>
                                                                     PAGE 5


                             CHANDLER (U.S.A.), INC.
               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                   THREE MONTHS ENDED MARCH 31, 2004 AND 2003
                                   (Unaudited)



NOTE 1.  BASIS OF PRESENTATION

     The accompanying unaudited consolidated financial statements of Chandler
(U.S.A.), Inc. ("Chandler USA") have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X.  They do not
include all information and footnotes required by generally accepted accounting
principles for complete financial statements.  However, except as disclosed
herein, there have been no material changes in the information included in
Chandler USA's Annual Report on Form 10-K for the year ended December 31, 2003.
In the opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation have been included.
The results of operations for the three-month period ended March 31, 2004 are
not necessarily indicative of the results that may be expected for the year.
Certain reclassifications of prior years have been made to conform to the 2004
presentation.

     The consolidated financial statements include the accounts of Chandler USA
and all wholly owned  subsidiaries that meet consolidation requirements
including National American Insurance Company ("NAICO").

     Chandler USA is wholly owned by Chandler Insurance Company, Ltd.
("Chandler Insurance"), a Cayman Islands company.  Prior to December 2003,
Chandler USA was a wholly owned subsidiary of Chandler Insurance (Barbados),
Ltd. ("Chandler Barbados") which, in turn, was a wholly owned subsidiary of
Chandler Insurance.  In December  2003, Chandler Barbados was dissolved
following the transfer of its assets, liabilities and business to Chandler
Insurance.  Chandler Insurance assumed the obligations of Chandler Barbados
including those under its reinsurance agreements with NAICO pursuant to a
Distribution Agreement and a General Conveyance.  The reorganization of
Chandler Barbados and Chandler Insurance was approved by the Cayman Islands
Monetary Authority, the Supervisor of Insurance in Barbados and the Oklahoma
Insurance Department.

NOTE 2.  LITIGATION

     Certain officers and directors of Chandler USA and Chandler Insurance were
named as defendants in certain litigation involving CenTra, Inc.  This
litigation was concluded in 2002.  In accordance with its Articles of
Association, Chandler Insurance and its subsidiaries have advanced the
litigation expenses of these persons in exchange for undertakings to repay such
expenses if those persons are later determined to have breached the standard of
conduct provided in the Articles of Association.   These expenses together with
certain other expenses may be recovered from Chandler Insurance's director and
officer liability insurance policy (the "D&O Insurer").  As a result of various
events in 1995, 1996 and 1997, Chandler Barbados and Chandler USA recorded
estimated recoveries of costs from its D&O Insurer totaling $3,456,000 and
$1,044,000, respectively, for reimbursable amounts previously paid that relate
to allowable defense and litigation costs for such parties.  Chandler Barbados
and Chandler USA received payment for a 1995 claim during 1996 in the amount of
$636,000 and $159,000, respectively.  The balance of $2,820,000 and $885,000 is
included in other assets in Chandler Insurance's and Chandler USA's respective
balance sheets.  Chandler Insurance assumed this receivable from Chandler
Barbados during December 2003 under the reorganization of these companies.
Chandler Insurance and its subsidiaries contend they are entitled to a total of
$5 million under the applicable insurance policy to the extent they have
advanced reimbursable expenses.  The D&O Insurer contends that certain policy
provisions exclude coverage for these claims.  On August 22, 2001, Chandler
Insurance and its subsidiaries, including Chandler USA, filed an action in the
State District Court in Oklahoma City, Oklahoma ("Oklahoma State Court")
alleging that the director and officer liability insurance policies should be
rescinded and seeking repayment of more than $5 million in premiums they
previously paid.  Chandler Insurance and its subsidiaries are currently
involved in litigation with the insurer for payment of the policy balance or
rescission and repayment of premiums previously paid.  The litigation is
pending in the Oklahoma State Court.  The case is still in the early pleading
stages and Chandler USA cannot predict the date of resolution or the outcome of
this case.  Chandler Insurance and its subsidiaries may or may not recover the
remaining policy limits or the previously paid premiums and could incur
significant costs in resolving this matter.

<PAGE>
                                                                     PAGE 6

     Transamerica Occidental Life Insurance Company ("Transamerica") reinsured
NAICO for certain workers compensation risks during 1989, 1990 and 1991.
Beginning in 1996, Transamerica refused to pay NAICO for balances that it owed
under the reinsurance treaties.  On March 15, 2004, an arbitration panel
ordered Transamerica to pay the losses and loss adjustment expenses owed to
NAICO in the amount of $1,607,704 plus interest at 6%, or approximately
$577,000, plus $25,000 in costs.  NAICO has received payment for these amounts.

     Chandler USA and its subsidiaries are not parties to any other material
litigation other than as is routinely encountered in their respective business
activities.  While the outcome of these matters cannot be predicted with
certainty, Chandler USA does not expect these matters to have a material
adverse effect on its financial condition, results of operations or cash
flows.

NOTE 3.  SEGMENT INFORMATION

     Chandler USA has one reportable operating segment for property and
casualty insurance.  Net premiums earned and losses and loss adjustment
expenses within the property and casualty segment can be identified to Chandler
USA designated insurance programs.  Chandler USA's chief operating decision
makers review net premiums earned and losses and loss adjustment expenses in
assessing the performance of an insurance program.  In addition, Chandler USA's
chief operating decision makers consider many other factors such as the lines
of business offered within an insurance program and the states in which the
insurance programs are offered.  Certain discrete financial information is not
readily available by insurance program, including assets, interest income, and
investment gains or losses, allocated to each insurance program.  Chandler USA
does not consider its insurance programs to be reportable segments, however,
the following supplemental information pertaining to each insurance program's
net premiums earned and losses and loss adjustment expenses is presented for
the property and casualty segment.

<TABLE>
<CAPTION>
                                             THREE MONTHS ENDED MARCH 31,
                                             ----------------------------
                                                 2004            2003
                                             ------------    ------------
                                                    (In thousands)
<S>                                          <C>             <C>
INSURANCE PROGRAM
--------------------------------------------
NET PREMIUMS EARNED
Standard property and casualty ............. $    11,597     $    11,690
Political subdivisions .....................       1,686           2,349
Surety bonds ...............................         504             407
Other (1) ..................................          85              91
                                             ------------    ------------
                                             $    13,872     $    14,537
                                             ============    ============
LOSSES AND LOSS ADJUSTMENT EXPENSES
Standard property and casualty ............. $     7,499     $     6,751
Political subdivisions .....................       2,419           1,808
Surety bonds ...............................         400             (46)
Other (1) ..................................         314             196
                                             ------------    ------------
                                             $    10,632     $     8,709
                                             ============    ============
<FN>

--------------------------------------------------------

(1)  This program is comprised primarily of the run-off of other discontinued
     programs and NAICO's participation in various mandatory workers
     compensation pools and assigned risks.

</TABLE>

NOTE 4.  COMMITMENTS AND CONTINGENCIES

     During March 2001, Chandler USA entered into a $3.8 million sale and
leaseback transaction for certain owned equipment for a three year term.
During March 2004, the lease was extended for an additional three years with
monthly rental installments equal to the sum of (i) $17,512 plus (ii) interest
on the unpaid lease balance at a floating interest rate of 1% over JP Morgan
Chase Bank prime, which was 4.0% at March 31, 2004.  Chandler USA has the
option to repurchase the equipment at the end of the lease for approximately
$2.4 million (the "Balloon Payment"), or may elect to have the lessor sell the
equipment.  If the election to sell the equipment is made, Chandler USA would
retain any proceeds exceeding the Balloon Payment.  If the proceeds were less
than the Balloon Payment, Chandler USA would be required to pay the difference
between the proceeds and the Balloon Payment, not to exceed approximately $1.9
million.

<PAGE>
                                                                     PAGE 7

NOTE 5.  NEW ACCOUNTING STANDARD

     In December 2003, the Financial Accounting Standards Board issued Revised
Interpretation No. 46 ("FIN 46R"), CONSOLIDATION OF VARIABLE INTEREST
ENTITIES.  FIN 46R provides guidance on the identification of, and financial
reporting for, entities over which control is achieved through means other than
voting rights.  FIN 46R is used to determine whether consolidation is required
or, alternatively, whether the variable-interest model under FIN 46R should be
used to account for existing and new entities.  Chandler USA adopted FIN 46R
effective January 1, 2004.  The result of adoption was the deconsolidation of
the two capital trusts that were created during 2003 in connection with the
issuance of trust preferred securities.  Chandler USA now reports the $20.6
million of junior subordinated debentures that were issued to the capital
trusts on its consolidated balance sheet, and the December 31, 2003 balances
were restated accordingly.  The adoption of FIN 46R had no effect on net
earnings.

ITEM 2.              MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

     Some of the statements made in this Form 10-Q report, as well as
statements made by Chandler (U.S.A.), Inc. ("Chandler USA") in periodic press
releases and oral statements made by Chandler USA's officials constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995.  Such forward-looking statements involve known
and unknown risks, uncertainties and other factors that may cause the actual
results, performance or achievements of Chandler USA to be materially different
from any future results, performance or achievements expressed or implied by
the forward-looking statements.  Such factors include, among other things, (i)
general economic and business conditions; (ii) interest rate changes; (iii)
competition and regulatory environment in which Chandler USA and its
subsidiaries operate, including the ability to implement price increases;
(iv) claims frequency; (v) claims severity; (vi) catastrophic events of
unanticipated frequency or severity; (vii) the number of new and renewal policy
applications submitted to National American Insurance Company ("NAICO") by its
agents; (viii) the ability of NAICO to obtain adequate reinsurance in amounts
and at rates that will not adversely affect its competitive position; (ix) the
ability of NAICO to collect reinsurance recoverables; (x) the ability of NAICO
to maintain favorable insurance company ratings; and (xi) various other factors.

RESULTS OF OPERATIONS

PREMIUMS EARNED

     The following table sets forth premiums earned on a gross basis (before
reductions for premiums ceded to reinsurers) and on a net basis (after such
reductions) for each insurance program for the three month periods ended March
31, 2004 and 2003:

<TABLE>
<CAPTION>
                                         GROSS PREMIUMS EARNED          NET PREMIUMS EARNED
                                      ---------------------------   ---------------------------
   THREE MONTHS ENDED MARCH 31,           2004           2003           2004           2003
   ---------------------------------- ------------   ------------   ------------   ------------
                                                            (In thousands)
   <S>                                <C>            <C>            <C>            <C>
   Standard property and casualty ... $    22,676    $    24,091    $    11,597    $    11,690
   Political subdivisions ...........       5,760          8,179          1,686          2,349
   Surety bonds .....................         686            875            504            407
   Other ............................          85             92             85             91
                                      ------------   ------------   ------------   ------------
   TOTAL ............................ $    29,207    $    33,237    $    13,872    $    14,537
                                      ============   ============   ============   ============
</TABLE>

     Gross premiums earned decreased $4.0 million or 12% in the first quarter
of 2004 compared to the first quarter of 2003.  Gross premiums earned in
Oklahoma and Texas decreased $2.1 million and $1.5 million, respectively, from
the first quarter of 2003.  These decreases were primarily the result of
NAICO's continued  efforts to improve underwriting profitability.  Net premiums
earned decreased $665,000 or 5% in the first quarter of 2004 compared to the
first quarter of 2003.

<PAGE>
                                                                     PAGE 8

     Gross premiums earned in the standard property and casualty program
decreased $1.4 million or 6% in the first quarter of 2004 compared to the first
quarter of 2003.  Approximately $1.3 million of the total decrease was in the
workers compensation line of business.  Gross premiums earned in Oklahoma
increased by $244,000 in the first quarter of 2004 compared to the first
quarter of 2003 while gross premiums earned in Texas decreased by $1.4
million.   Net premiums earned decreased $93,000 or 1% in the first quarter of
2004 versus the first quarter of 2003.

     Gross premiums earned in the political subdivisions program decreased
$2.4 million or 30% in the first quarter of 2004 compared to the first quarter
of 2003.  The decrease was primarily in the school districts portion of the
program in Oklahoma.  Net premiums earned in the political subdivisions program
decreased $663,000 or 28% in the first quarter of 2004 versus the first quarter
of 2003.

      Gross premiums earned in the surety bond program decreased $189,000 or
22% in the first quarter of 2004 compared to the first quarter of 2003.  The
decrease was primarily due to stricter underwriting policies as NAICO continues
to focus on improving underwriting profitability in this program.  Net premiums
earned in the surety bond program increased $97,000 or 24% in the first quarter
of 2004 versus the first quarter of 2003.  Even though gross premiums earned
decreased from the prior quarter, net premiums earned increased due to NAICO's
election to not renew its surety bond excess of loss reinsurance program
effective April 1, 2003.

NET INTEREST INCOME AND NET REALIZED INVESTMENT GAINS

     At March 31, 2004, Chandler USA's investment portfolio consisted primarily
of fixed income U.S. Government and high-quality corporate bonds, with
approximately 13% invested in cash and money market instruments.  Income
generated from this portfolio is largely dependent upon prevailing levels of
interest rates.  Chandler USA's portfolio contains no non-investment grade
bonds or real estate investments.  Chandler USA also receives interest income
from related parties on intercompany loans.

     Net interest income, excluding interest income from related parties,
increased $649,000 or 134% in the first quarter of 2004 versus the first
quarter of 2003 due primarily to an arbitration award in favor of NAICO that
included approximately $577,000 in interest.  Excluding the arbitration award,
net interest income increased $72,000 or 15% in the first quarter of 2004.
Cash and invested assets were $78.3 million at March 31, 2004 compared to
$67.2 million at March 31, 2003.  Net interest income from related parties was
$103,000 in the first quarter of 2004 compared to $110,000 in the first quarter
of 2003.

     Net realized investment gains were $463,000 for the first quarter of 2004
compared to $151,000 during the first quarter of 2003.

OTHER INCOME

     Chandler USA's other income included $368,000 and $142,000 during the
first quarter of 2004 and 2003, respectively, for the amortization of a
deferred gain related to a sale and leaseback transaction.

LOSSES AND LOSS ADJUSTMENT EXPENSES

     Chandler USA estimates losses and loss adjustment expenses based on
historical experience and payment and reporting patterns for the type of risk
involved.  These estimates are based on data available at the time of the
estimate and are periodically reviewed by independent professional actuaries.
Although such estimates are management's best estimates of the expected values,
the ultimate liability for unpaid claims may vary from these values.

     The percentage of losses and loss adjustment expenses to net premiums
earned ("loss ratio") was 76.6% for the first quarter of 2004 versus 59.9% in
the first quarter of 2003.  The increase in the 2004 loss ratio was due to an
increase in losses related to prior accident years.  The increase was primarily
in the workers compensation portion of the standard property and casualty
program, and in the municipalities portion of the political subdivisions
program.  Weather-related losses from wind and hail totaled $142,000 in the
first quarter of 2004 and increased the loss ratio by 1.0 percentage point.
Weather-related losses totaled $89,000 in the first quarter of 2003, and
increased the 2003 loss ratio by 0.6 percentage points.

<PAGE>
                                                                     PAGE 9

POLICY ACQUISITION COSTS

     Policy acquisition costs consist of costs associated with the acquisition
of new and renewal business and generally include direct costs such as premium
taxes, commissions to agents and ceding companies and premium-related
assessments and indirect costs such as salaries and expenses of personnel who
perform and support underwriting activities.  NAICO also receives ceding
commissions from the reinsurers who assume premiums from NAICO under certain
reinsurance contracts and the ceding commissions are accounted for as a
reduction of policy acquisition costs.  Direct policy acquisition costs and
ceding commissions are deferred and amortized over the terms of the policies.
When the sum of the anticipated losses, loss adjustment expenses and
unamortized policy acquisition costs exceeds the related unearned premiums,
including anticipated investment income, a provision for the indicated
deficiency is recorded.

     The following table sets forth Chandler USA's policy acquisition costs for
each of the three month periods ended March 31, 2004 and 2003:

<TABLE>
<CAPTION>

                                                  THREE MONTHS ENDED MARCH 31,
                                                  ----------------------------
                                                      2004            2003
                                                  ------------    ------------
                                                         (In thousands)
      <S>                                          <C>             <C>
      Commissions expense ....................... $     4,300     $     4,954
      Other premium related assessments .........         296             350
      Premium taxes .............................         734             761
      Excise taxes ..............................          68              83
      Dividends to policyholders ................           -               5
      Other expense .............................          64             145
                                                  ------------    ------------
      Total direct expenses .....................       5,462           6,298

      Indirect underwriting expenses ............       1,878           2,040
      Commissions received from reinsurers ......      (4,682)         (5,860)
      Adjustment for deferred acquisition costs..        (150)            419
                                                  ------------    ------------
      Net policy acquisition costs .............. $     2,508     $     2,897
                                                  ============    ============

</TABLE>

     Total gross direct and indirect expenses as a percentage of direct written
and assumed premiums were 23.2% for the first quarter of 2004 versus 25.2% for
the first quarter of 2003.  Commission expense as a percentage of gross written
and assumed premiums was 13.6% for the first quarter of 2004 versus 15.0% for
the 2003 quarter.

     Indirect underwriting expenses were 5.9% and 6.2% of total direct written
and assumed premiums in the three month periods ended March 31, 2004 and 2003,
respectively.   Indirect expenses include general overhead and administrative
costs associated with the acquisition of new and renewal business, some of
which is relatively fixed in nature, thus, the percentage of such expenses to
direct written and assumed premiums will vary depending on Chandler USA's
overall premium volume.

GENERAL AND ADMINISTRATIVE EXPENSES

     General and administrative expenses were 11.3% and 11.0% of gross premiums
earned in the first quarter of 2004 and 2003, respectively.  General and
administrative expenses have historically not varied in direct proportion to
the Company's revenues.  A portion of such expenses is allocated to policy
acquisition costs (indirect underwriting expenses) and loss adjustment expenses
based on various factors including employee counts, salaries, occupancy and
specific identification.  Because certain types of expenses are fixed in
nature, the percentage of such expenses to revenues will vary depending on
Chandler USA's overall premium volume.

INTEREST EXPENSE

     Interest expense was $595,000 in the first quarter of 2004 compared to
$558,000 in the year-ago quarter.  Substantially all of Chandler USA's interest
expense is related to its outstanding senior debentures and junior subordinated
debentures.

<PAGE>
                                                                     PAGE 10
LIQUIDITY AND CAPITAL RESOURCES

     In the first quarter of 2004, Chandler USA provided $8.8 million in cash
from operations which included $4.6 million from reinsurance recoverable on
paid losses.  In the first quarter of 2003, Chandler USA used $2.1 million in
cash from operations.

     At March 31, 2004, Chandler Insurance owed approximately $9.8 million to
Chandler USA versus $9.6 million at December 31, 2003 under an Intercompany
Credit Agreement (the "Credit Agreement") covering intercompany loans between
the parties.  The Credit Agreement requires interest to be paid at the prime
interest rate published in The Wall Street Journal each month, and balances
owed by either party are payable at any time upon demand.

     During March 2001, Chandler USA entered into a $3.8 million sale and
leaseback transaction for certain owned equipment for a three year term.
During March 2004, the lease was extended for an additional three years with
monthly rental installments equal to the sum of (i) $17,512 plus (ii) interest
on the unpaid lease balance at a floating interest rate of 1% over JP Morgan
Chase Bank prime, which was 4.0% at March 31, 2004.  Chandler USA has the
option to repurchase the equipment at the end of the lease for approximately
$2.4 million (the "Balloon Payment"), or may elect to have the lessor sell the
equipment.  If the election to sell the equipment is made, Chandler USA would
retain any proceeds exceeding the Balloon Payment.  If the proceeds were less
than the Balloon Payment, Chandler USA would be required to pay the difference
between the proceeds and the Balloon Payment, not to exceed approximately
$1.9 million.

ITEM 4.  CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

     As of the end of the period covered by this report and pursuant to Rule
13a-15 of the Securities Exchange Act of 1934 (the "Exchange Act"), Chandler
USA's management, including the Chief Executive Officer and Chief Financial
Officer, conducted an evaluation of the effectiveness and design of Chandler
USA's disclosure controls and procedures (as that term is defined in Rules
13a-15(e) and 15d-15(e) of the Exchange Act).  Based upon that evaluation,
Chandler USA's Chief Executive Officer and Chief Financial Officer concluded,
as of the end of the period covered by this report, that Chandler USA's
disclosure controls and procedures were effective in recording, processing,
summarizing and reporting information required to be disclosed by Chandler USA,
within the time periods specified in the Securities and Exchange Commission's
rules and forms.

CHANGES IN INTERNAL CONTROLS

     In addition and as of the end of the period covered by this report, there
have been no changes in internal control over financial reporting (as defined
in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the quarter to
which this report relates that have materially affected or is reasonably likely
to materially affect, the internal control over financial reporting.

<PAGE>
                                                                     PAGE 11

PART II.                        OTHER INFORMATION
                                -----------------

Item 1.  LEGAL PROCEEDINGS
         -----------------
         In response to this item, the Company incorporates by reference to
         Note 2.  Litigation to its Interim Consolidated Financial Statements
         contained elsewhere in this report.

Item 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS
         -----------------------------------------
         None.

Item 3.  DEFAULTS UPON SENIOR SECURITIES
         -------------------------------
         None.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
         ---------------------------------------------------
         None.

Item 5.  OTHER INFORMATION
         -----------------
         None.

Item 6.  EXHIBITS AND REPORTS ON FORM 8-K
         --------------------------------
         INDEX OF EXHIBITS
         -----------------

         31.1 Rule 13a-14(a)/15d-14(a) Certifications.
         32.1 Section 1350 Certifications.

         REPORTS ON FORM 8-K
         -------------------
         None.

<PAGE>
                                                                     PAGE 12

                                   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.

Date:  May 11, 2004                     CHANDLER (U.S.A.), INC.


                                        By: /s/ W. Brent LaGere
                                            --------------------------------
                                            W. Brent LaGere
                                            Chairman of the Board and
                                            Chief Executive Officer
                                            (Principal Executive Officer)


                                        By: /s/ Mark C. Hart
                                            --------------------------------
                                            Mark C. Hart
                                            Vice President - Finance, Chief
                                            Financial Officer and Treasurer
                                            (Principal Accounting Officer)

<PAGE>

                                                                  EXHIBIT 31.1

                                 Certifications

I, W. Brent LaGere, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of Chandler (U.S.A.),
    Inc.;

2.  Based on my knowledge, this report does not contain any untrue statement of
    a material fact or omit to state a material fact necessary to make the
    statements made, in light of the circumstances under which such statements
    were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial
    information included in this report, fairly present in all material
    respects the financial condition, results of operations and cash flows of
    the registrant as of, and for, the periods presented in this report;

4.  The registrant's other certifying officer(s) and I are responsible for
    establishing and maintaining disclosure controls and procedures (as defined
    in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

         a)  Designed such disclosure controls and procedures, or caused such
         disclosure controls and procedures to be designed under our
         supervision, to ensure that material information relating to the
         registrant, including its consolidated subsidiaries, is made known to
         us by others within those entities, particularly during the period in
         which this report is being prepared;

         b)  Evaluated the effectiveness of the registrant's disclosure
         controls and procedures and presented in this report our conclusions
         about the effectiveness of the disclosure controls and procedures, as
         of the end of the period covered by this report based on such
         evaluation; and

         c)  Disclosed in this report any change in the registrant's internal
         control over financial reporting that occurred during the registrant's
         most recent fiscal quarter that has materially affected, or is
         reasonably likely to materially affect, the registrant's internal
         control over financial reporting; and

5.  The registrant's other certifying officer(s) and I have disclosed, based on
    our most recent evaluation of internal control over financial reporting, to
    the registrant's auditors and the audit committee of registrant's board of
    directors (or persons performing the equivalent functions):

         a)  All significant deficiencies and material weaknesses in the design
         or operation of internal control over financial reporting which are
         reasonably likely to adversely affect the registrant's ability to
         record, process, summarize and report financial information; and

         b)  Any fraud, whether or not material, that involves management or
         other employees who have a significant role in the registrant's
         internal control over financial reporting.

Date: May 11, 2004
                                             /s/ W. Brent LaGere
                                             ---------------------------------
                                             W. Brent LaGere
                                             Chairman of the Board and
                                             Chief Executive Officer


<PAGE>

                                                                  EXHIBIT 31.1
                                                                   (continued)

                                 Certifications

I, Mark C. Hart, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of Chandler (U.S.A.),
    Inc.;

2.  Based on my knowledge, this report does not contain any untrue statement of
    a material fact or omit to state a material fact necessary to make the
    statements made, in light of the circumstances under which such statements
    were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial
    information included in this report, fairly present in all material
    respects the financial condition, results of operations and cash flows of
    the registrant as of, and for, the periods presented in this report;

4.  The registrant's other certifying officer(s) and I are responsible for
    establishing and maintaining disclosure controls and procedures (as defined
    in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

         a)  Designed such disclosure controls and procedures, or caused such
         disclosure controls and procedures to be designed under our
         supervision, to ensure that material information relating to the
         registrant, including its consolidated subsidiaries, is made known to
         us by others within those entities, particularly during the period in
         which this report is being prepared;

         b)  Evaluated the effectiveness of the registrant's disclosure
         controls and procedures and presented in this report our conclusions
         about the effectiveness of the disclosure controls and procedures, as
         of the end of the period covered by this report based on such
         evaluation; and

         c)  Disclosed in this report any change in the registrant's internal
         control over financial reporting that occurred during the registrant's
         most recent fiscal quarter that has materially affected, or is
         reasonably likely to materially affect, the registrant's internal
         control over financial reporting; and

5.  The registrant's other certifying officer(s) and I have disclosed, based on
    our most recent evaluation of internal control over financial reporting, to
    the registrant's auditors and the audit committee of registrant's board of
    directors (or persons performing the equivalent functions):

         a)  All significant deficiencies and material weaknesses in the design
         or operation of internal control over financial reporting which are
         reasonably likely to adversely affect the registrant's ability to
         record, process, summarize and report financial information; and

         b)  Any fraud, whether or not material, that involves management or
         other employees who have a significant role in the registrant's
         internal control over financial reporting.


Date: May 11, 2004
                                             /s/ Mark C. Hart
                                             ---------------------------------
                                             Mark C. Hart
                                             Vice President - Finance,
                                             Chief Financial Officer
                                             and Treasurer

<PAGE>

                                                                  EXHIBIT 32.1


                           SECTION 1350 CERTIFICATIONS


In connection with the Quarterly Report of Chandler (U.S.A.), Inc. (the
"Company") on Form 10-Q for the period ending March 31, 2004 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), W. Brent
LaGere, as Chief Executive Officer of the Company, and Mark C. Hart, as Chief
Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of
2002, to the best of his knowledge, that:

(1)  The Report fully complies with the requirements of Section 13(a) or 15(d)
     of the Securities Exchange Act of 1934; and

(2)  The information contained in the Report fairly presents, in all material
     respects, the financial condition and results of operations of the Company.



                                                   /s/ W. Brent LaGere
                                                   -----------------------------
                                                   W. Brent LaGere
                                                   Chief Executive Officer
                                                   May 11, 2004


                                                   /s/ Mark C. Hart
                                                   -----------------------------
                                                   Mark C. Hart
                                                   Chief Financial Officer
                                                   May 11, 2004

A signed original of this written statement required by Section 906 has been
provided to Chandler (U.S.A.), Inc. and will be retained by Chandler (U.S.A.),
Inc. and furnished to the Securities and Exchange Commission or its staff upon
request.