<PAGE>   1

                    U.S. SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549
                                  FORM 10-QSB


              Quarterly report under Section 13 or 15(d) of the
                       Securities Exchange Act of 1934

                    For the quarter ended September 30, 1996


                    PROFESSIONAL BENEFITS INSURANCE COMPANY
           ----------------------------------------------------------
           (Exact Name of Small Business as Specified in Its Charter)

           TEXAS                                          74-2072635
------------------------------                       ----------------------
(State or Other Jurisdiction                             (IRS Employer
Incorporation or Organization)                       Identification Number)
                

                        COMMISSION FILE NUMBER: 0-22344


           10835 ROCKLEY ROAD                                       
             HOUSTON, TEXAS                                   77099
---------------------------------------                     ----------
(Address or principal executive office)                     (Zip Code)


                                 (713) 561-9919
                        -------------------------------
                        (Registrant's telephone number)


Check mark whether the Issuer (1) filed all reports required 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 number of shares of Class A common stock the Registrant, par value $1.22
per share, issued and outstanding at September 30, 1996 was 587,129.  The
number of shares of Class B common stock the Registrant, par value $1.22 per
share, issued and outstanding at September 30, 1996 was 73,524.

Transitional Small Business Disclosure Format:  Yes        No   X
                                                    -----     -----




<PAGE>   2
                    PROFESSIONAL BENEFITS INSURANCE COMPANY

                               INDEX TO FORM 10-Q




PART 1 - FINANCIAL INFORMATION

<TABLE>
<CAPTION>
                                                                                                        Page
                                                                                                        ----
<S>      <C>                                                                                            <C>
ITEM 1.  Financial Statements.
           Consolidated Balance Sheets - September 30, 1996 and December 31, 1995 ..................      3
           Consolidated Income Statements - Three Months Ended and Nine Months
             Ended September 30, 1996 and 1995 .....................................................      5
           Consolidated Statements of Cash Flows - Three Months Ended and Nine Months
             Ended September 30, 1996 and 1995......................................................      6

ITEM 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations .....      7
</TABLE>





                                       2

<PAGE>   3

Item 1.  Financial Statements.


                    PROFESSIONAL BENEFITS INSURANCE COMPANY
                          CONSOLIDATED BALANCE SHEETS
                    SEPTEMBER 30, 1996 AND DECEMBER 31, 1995

                                     ASSETS
                                     ------
<TABLE>
<CAPTION>
                                                                       SEPTEMBER 30, 1996   DECEMBER 31, 1995*
                                                                           (Unaudited)
                                                                       ------------------   ------------------
<S>                                                                         <C>                  <C>
INVESTMENTS                                                                               
     Fixed maturity securities held for investment,                                       
          at market value (amortized cost: September 30, 1996 -                           
          $1,062,960; and December 31, 1995 - $1,230,612)                   $1,043,071           $1,220,642 
     Common stock mutual funds, at market                                      703,234              856,389 
     Short-term investments, at cost                                         1,713,487            1,420,523 
                                                                            ----------           ----------
          Total Investments                                                  3,459,792            3,497,554 
                                                                            ----------           ----------
                                                                                                            
CASH                                                                           212,112               37,252 
                                                                                                            
DUE FROM REINSURERS                                                            771,662            1,006,756 
                                                                                                           
ACCRUED INVESTMENT INCOME                                                        6,475               47,643 

PREMIUMS DUE AND UNCOLLECTED                                                    86,846               28,551 
                                                                                                            
ACCOUNTS RECEIVABLE                                                            151,992               36,584 
                                                                                                            
LAND AND BUILDING, At Cost                                                                                  
     (Net of accumulated depreciation of                                                                    
          $405,456 - 1996 and $376,794 - 1995)                                 547,332              575,994 
                                                                                                            
FURNITURE AND EQUIPMENT, At Cost                                                                            
     (net of accumulated depreciation -                                                                     
          $349,066 - 1996 and $529,326 - 1995)                                 235,475              217,139 
                                                                                                            
GUARANTY FUND ASSESSMENTS                                                        5,734               10,361 
                                                                                                            
FEDERAL INCOME TAX RECEIVABLE                                                  188,000              188,000 
                                                                                                            
OTHER ASSETS, At Cost                                                           34,442               37,630 
                                                                            ----------           ----------
                                                                                                            
Total Assets                                                                $5,699,862           $5,683,464 
                                                                            ==========           ==========
</TABLE>



* The amounts for December 31, 1995 were derived from amounts included in the
  audited financial statements filed as part of the Company's 1995 Form
  10-KSB.





                                       3


<PAGE>   4

                    PROFESSIONAL BENEFITS INSURANCE COMPANY
                     CONSOLIDATED BALANCE SHEETS (cont'd.)

                      LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                      SEPTEMBER 30, 1996   
                                                                          (Unaudited)      DECEMBER 31, 1995*
                                                                      ------------------   ------------------
<S>                                                                       <C>                  <C>
LIABILITIES                                                                            
     Future policy benefits                                               $  972,877           $1,052,509         
     Policy claims                                                         1,506,000            1,623,000         
     Premiums received in advance                                            206,539              100,488         
     Unearned premium                                                         69,333                    0         
                                                                          ----------           ----------
                                                                           2,754,749            2,775,997         
                                                                                                                  
                                                                                                                  
     Reinsurance payable                                                      38,580               31,820         
     Federal income taxes payable                                             41,380                    0         
     Deferred Tax Liability                                                   56,100                5,000         
     Other liabilities                                                       134,643              300,951         
                                                                          ----------           ----------
          Total Liabilities                                                3,025,452            3,113,768         
                                                                          ----------           ----------
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  
STOCKHOLDERS' EQUITY                                                                                              
     Common stock                                                                                                 
          Class A voting, $1.22 par value; 1,022,668                                                              
            authorized shares; 587,129 and issued and                                                             
            outstanding in 1996 and 1995                                     716,594              716,594         
          Class B nonvoting, $1.22 par value; 136,720                                                             
            authorized shares; 73,524 issued and                                                                  
            outstanding in 1996 and 1995                                      89,699               89,699         
                                                                                                                  
     Additional paid-in capital                                              536,214              536,464         
     Unrealized gain on investments                                                                               
          (net of deferred income tax benefits (liabilities)                                                       
          of $(51,100) - 1996 and $(21,200) - 1995)                           99,285               41,959         
     Retained earnings                                                     1,232,618            1,184,980         
                                                                          ----------           ----------
          Total Stockholders' Equity                                       2,674,410            2,569,696         
                                                                          ----------           ----------
                                                                                                                  
              Total Liabilities and Stockholders' Equity                  $5,699,862           $5,683,464         
                                                                          ==========           ==========
</TABLE>





*  The amounts for December 31, 1995 were derived from amounts included in the
   audited financial statements filed as part of the Company's 1995 Form
   10-KSB.




                                       4

<PAGE>   5







                    PROFESSIONAL BENEFITS INSURANCE COMPANY
                         CONSOLIDATED INCOME STATEMENTS
           QUARTERS ENDING SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995




<TABLE>
<CAPTION>
                                                                     1996                               1995
                                                        -----------------------------      ------------------------------
                                                          3 MONTHS        9 MONTHS           3 MONTHS        9 MONTHS
                                                        ENDED 9/30/96   ENDED 9/30/96      ENDED 9/30/95    ENDED 9/30/95
                                                                  (Unaudited)                      (Unaudited)
                                                        -----------------------------------------------------------------
<S>                                                       <C>             <C>                <C>             <C>         
REVENUES                                                                                                                 
   Premiums earned                                        $2,496,869      $6,910,492         $2,226,325      $6,581,198  
   Less reinsurance ceded                                    135,572         372,015            150,650         426,459  
                                                          ----------      ----------         ----------      ----------
        Net premiums earned                                2,361,297       6,538,477          2,075,675       6,154,739  
   Net investment income                                      68,038         141,013             66,892         213,632  
   Other income                                               31,229          79,563             29,283         104,382  
                                                          ----------      ----------         ----------      ----------
        Total Revenues                                     2,460,564       6,759,053          2,171,850       6,472,753  
                                                          ----------      ----------         ----------      ----------
                                                                                                                         
BENEFITS, CLAIMS AND EXPENSES                                                                                            
   Benefits and claims                                     1,825,815       4,949,668          1,617,181       5,152,571  
   Less reinsurance recoverable                               12,160         162,899             52,872         406,991  
                                                          ----------      ----------         ----------      ----------
        Net benefits and claims                            1,813,655       4,786,769          1,564,309       4,745,580  
   Commissions                                               189,102         409,214             70,187         208,254  
   Underwriting, acquisition, insurance, and                                                                             
        administrative expenses                              403,681       1,239,173            526,198       1,468,464  
   Taxes, licenses, and fees                                  27,235         186,841             73,466         186,785  
                                                          ----------      ----------         ----------      ----------
        Total Benefits, Claims and Expenses                2,433,673       6,621,997          2,234,160       6,609,083  
                                                          ----------      ----------         ----------      ----------
                                                                                                                         
INCOME BEFORE INCOME TAXES                                    26,891         137,056            (62,310)       (136,330) 
                                                                                                                         
INCOME TAX PROVISION                                          18,644          56,100                  0               0  
                                                          ----------      ----------         ----------      ----------
                                                                                                                         
NET INCOME (LOSS)                                         $    8,247      $   80,956         $  (62,310)      $(136,330) 
                                                          ==========      ==========         ==========       =========
NET INCOME (LOSS) PER SHARE                                                                                              
   (Based on Weighted Average Shares of                                                                                  
        Common Stock Outstanding during the                                                                              
        year of 660,653 - 1996; 660,853 - 1995)                $0.01           $0.12             $(0.09)         $(0.21) 
</TABLE>



                                       5


<PAGE>   6



                    PROFESSIONAL BENEFITS INSURANCE COMPANY
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
           QUARTERS ENDING SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995


<TABLE>
<CAPTION>
                                                                              1996                               1995
                                                                -----------------------------      -----------------------------
                                                                   3 MONTHS        9 MONTHS           3 MONTHS        9 MONTHS
                                                                ENDED 9/30/96   ENDED 9/30/96      ENDED 9/30/95   ENDED 9/30/95
                                                                (Unaudited)     (Unaudited)        (Unaudited)     (Unaudited)
                                                                -----------------------------      -----------------------------
<S>                                                                <C>             <C>                <C>             <C>          
CASH FLOW FROM OPERATING ACTIVITIES                                                                                                
     Premiums                                                     $ 2,304,587     $ 6,774,845        $ 2,234,320     $ 6,666,239   
     Net investment income                                              6,934          39,576            112,873         208,966   
     Other income                                                      36,748          97,828             24,861         104,382   
     Benefits and claims                                           (1,724,559)     (5,029,230)        (2,138,515)     (5,676,190)  
     Commissions                                                     (157,895)       (413,996)           (67,933)       (214,530)  
     Underwriting, acquisition, insurance, and                                                                                     
        administrative expenses                                      (349,128)     (1,410,883)          (386,575)     (1,483,261)  
                                                                  -----------     -----------        -----------     -----------
           Net cash provided by (used in) operating activities        116,687          58,140           (220,969)       (394,394)  
                                                                  -----------     -----------        -----------     -----------
CASH FLOW FROM INVESTING ACTIVITIES                                                                                                
     Proceeds from the sale or maturing of investments                      0         200,000            197,098         580,571   
     Purchase of investments                                          (15,000)        (15,000)           (90,000)       (240,000)  
     Purchase of furniture and equipment                              (15,743)        (58,108)           (28,320)       (193,659)  
                                                                  -----------     -----------        -----------     -----------
           Net cash provided by (used in) investing activities        (30,743)        126,892             78,778         146,912   
                                                                  -----------     -----------        -----------     -----------
CASH FLOW FROM FINANCING ACTIVITIES                                                                                                
     Principal payments on capital lease payable                       (2,749)        (10,172)                 0               0   
                                                                  -----------     -----------        -----------     -----------
           Net cash provided by (used in) investing activities         (2,749)        (10,172)                 0               0   
                                                                  -----------     -----------        -----------     -----------
INCREASE(DECREASE) IN CASH                                             83,195         174,860           (142,191)       (247,482)  
                                                                                                                                   
CASH, BEGINNING OF PERIOD                                             128,917          37,252            291,653         396,944   
                                                                  -----------     -----------        -----------     -----------
                                                                                                                                   
CASH, END OF PERIOD                                               $   212,112     $   212,112        $   149,462     $   149,462   
                                                                  ===========     ===========        ===========     ===========
</TABLE>


                                       6

<PAGE>   7

                    PROFESSIONAL BENEFITS INSURANCE COMPANY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)




NOTE 1:  BASIS OF PRESENTATION

In the opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments necessary to present fairly the Company's
consolidated financial position as of September 30, 1996 and December 31, 1995,
the consolidated results of operations and its cash flow for the periods ended
September 30, 1996 and September 30, 1995, and are of a normal recurring
nature.




                                      7
<PAGE>   8
Part I, Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS

RESULTS OF OPERATIONS

Change in PBIC revenues for the 3rd Quarter, 1996 and 3rd Quarter, 1995 are
shown below:

<TABLE>
<CAPTION>
 -----------------------------------------------------------------------------------------------------
                                  3 Mths Ended      9 Mths Ended      3 Mths Ended        9 Mths Ended
                                       9/30/96           9/30/96           9/30/95             9/30/95
 -----------------------------------------------------------------------------------------------------
  <S>                               <C>               <C>               <C>                 <C>
  Total Revenues                    $2,428,747        $6,828,386        $2,171,850          $6,472,753
 -----------------------------------------------------------------------------------------------------
  Increase/(Decrease) in
  Revenues Compared to
  Preceding Period                    $256,897          $355,633           $27,669           $(46,425)
 -----------------------------------------------------------------------------------------------------
  Percentage of Change
  Compared to Preceding
  Period                                 11.8%              5.5%              1.3%              (0.7%)
 -----------------------------------------------------------------------------------------------------
</TABLE>

The primary components of PBIC's revenue are premiums, management fees and net
investment income.  The increase in revenue from 1995 is primarily due to
increases in premium income which is the result of new association business and
increased sales of dental insurance.

Changes in premium revenue for the 3rd Quarter, 1996 and 3rd Quarter, 1995 are
shown below:


<TABLE>
<CAPTION>
 -----------------------------------------------------------------------------------------------------
                                 3 Mths Ended     9 Mths Ended      3 Mths Ended       9 Mths Ended
                                      9/30/96          9/30/96           9/30/95            9/30/95
 -----------------------------------------------------------------------------------------------------
 <S>                                <C>              <C>              <C>                <C>
 Net Earned Premiums               $2,329,480       $6,607,810        $2,075,675         $6,154,739
 -----------------------------------------------------------------------------------------------------
 Increase/(Decrease) in
 Premiums Compared to
 Preceding Period                  $  253,805       $  453,071        $  (35,566)        $ (239,696)
 -----------------------------------------------------------------------------------------------------
 Percentage of Change
 Compared to Preceding
 Period                                 12.2%             7.4%             (1.7%)             (3.7%)
 -----------------------------------------------------------------------------------------------------
</TABLE>

In the 3rd Quarter, 1996 premiums increased by $253,805 from the 3rd Quarter,
1995.  This increase in premiums is due to increasing sales of dental insurance
and the addition of new associations and groups which the Company contracted
with to provide major medical insurance.


                                      8
<PAGE>   9
Part I, Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)

The changes in net investment income for the 3rd Quarters, 1996 and 1995 are
show below:

<TABLE>
<CAPTION>
 --------------------------------------------------------------------------------------------------
                                3 Mths Ended      9 Mths Ended      3 Mths Ended       9 Mths Ended
                                     9/30/96           9/30/96           9/30/95            9/30/95
 --------------------------------------------------------------------------------------------------
 <S>                                 <C>           <C>                   <C>               <C>
 Total Net Investment
 Income                              $68,038         $ 141,013           $66,892           $213,632
 --------------------------------------------------------------------------------------------------
 Increase/(Decrease) in
 Net Investment Income
 Compared to Preceding
 Period                              $ 1,146         $(72,619)           $51,061           $151,460
 --------------------------------------------------------------------------------------------------
 Percent Change in Net
 Investment Income                      1.7%           (34.0%)            322.5%             243.6%
 --------------------------------------------------------------------------------------------------
</TABLE>

In the nine months ending September 30, 1996 investments experienced a 34.0%
decrease in total net investment income due to maturing bonds which have not
yet been reinvested.  The proceeds are currently held as money market funds.
This has resulted in a decrease in the interest income on the portfolio.

General and Administrative expenses for the 3rd Quarters, 1996 and 1995 are
show below:


<TABLE>
<CAPTION>
 --------------------------------------------------------------------------------------------------
                                3 Mths Ended     9 Mths Ended      3 Mths Ended       9 Mths Ended
                                     9/30/96          9/30/96           9/30/95            9/30/95
 --------------------------------------------------------------------------------------------------
<S>                               <C>              <C>                 <C>              <C>
 General & Admin.
 Expenses                          $ 403,681       $1,239,173          $526,198         $1,468,464
 --------------------------------------------------------------------------------------------------
 Increase/(Decrease) in
 General & Admin.
 Expenses Compared to
 Preceding Period                  $(122,517)      $ (229,291)         $117,214         $  (10,307)
 --------------------------------------------------------------------------------------------------
 Percentage of Change
 Compared to Preceding
 Period                               (23.3%)          (15.6%)            28.7%              (0.7%)
 --------------------------------------------------------------------------------------------------
</TABLE>

General and administrative expenses have decreased by $229,291 from the nine
months ended September 30, 1995 as compared to the nine months ended September
30, 1996 due to several factors.  Due to increased efficiencies and the monthly
timing of recording accruals accounting fees have decreased by $79,000.  The
Company has purchased a client server system which has resulted in a decrease
in computer equipment rental expense of $30,000.  Also, due to favorable
experience, Texas Guaranty Fund assessments have resulted in a decrease in
expenses of $46,700.




                                      9
<PAGE>   10
Part I Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)

Commission expenses for 3rd Quarters of 1996 and 1995 are show below:

<TABLE>
<CAPTION>
 --------------------------------------------------------------------------------------------------
                                 3 Mths Ended     9 Mths Ended      3 Mths Ended       9 Mths Ended
                                      9/30/96          9/30/96           9/30/95            9/30/95
 --------------------------------------------------------------------------------------------------
 <S>                                 <C>              <C>               <C>              <C>
 Total Commission
 Expenses                            $189,102         $409,214          $ 70,187          $208,254
 --------------------------------------------------------------------------------------------------
 Increase/(Decrease) in
 Commission Expenses
 Compared to Preceding
 Period                              $118,915         $200,960          $(2,382)          $(18,123)
 --------------------------------------------------------------------------------------------------
 Percentage of Change
 Compared to Preceding
 Period                                169.4%            96.5%            (3.3%)             (8.0%)
 --------------------------------------------------------------------------------------------------
</TABLE>

The increase in commission expenses is due to an increase in gross written
premiums for the nine months ending September 30, 1996.  This increase is due
to increased sales of dental and major medical insurance.  Major medical
insurance has higher first year commissions and dental insurance has a higher
commission structure than other lines of business which the Company markets.


LIQUIDITY

All funds in excess of immediate cash needs are invested in short-term money
market funds, Federal Loan Mortgage bonds, stock mutual funds, and certificates
of deposits. The current allocation of funds is government bonds 35.2%, cash
7.0%, common stock mutual funds 23.7%, short-term money market funds 34.1%.

The nine months ending September 30, 1996 cash flow increased by $174,860.
This increase is due to increasing premium revenues and a decrease in claims as
a percentage of premium.

The Company does not expect to declare any dividends on its stock in the
foreseeable future.  No dividends have been declared or paid in the prior three
years.


CAPITAL RESOURCES

PBIC currently does not have any outstanding debts.  PBIC does not anticipate
the need for any substantial new capital or debt in the foreseeable future.




                                     10
<PAGE>   11
                          PART II.  OTHER INFORMATION



ITEM 1.  LEGAL PROCEEDINGS

         None

ITEM 2.  CHANGES IN SECURITIES

         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

         None




                                     11
<PAGE>   12
                                   SIGNATURES


In accordance with the requirements of the Exchange Act, the registrant has
duly caused this report to be signed on it's behalf by the undersigned
thereunto duly authorized.


                                        PROFESSIONAL BENEFITS INSURANCE COMPANY



Date     11/13/96                       /s/    JERRY O. RAY
         --------                       ----------------------------------
                                               Signature
                                               Jerry  O. Ray - President



Date     11/13/96                       /s/     STEVEN TAYLOR
         --------                       ----------------------------------
                                                Signature
                                                Steven Taylor - Controller




<PAGE>   13

                              INDEX TO EXHIBITS



<TABLE>
<CAPTION>

EXHIBIT
NUMBER                        DESCRIPTION
-------                       -----------
<S>                   <C>
  27                  -- Financial Data Schedule

</TABLE>