SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   Form 10-QSB

|X|      Quarterly report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 For the quarterly period ended March 31, 1998

                                       OR

|_|      Transition report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 For the transaction period from _________________
         to _________________

                                                     Commission File No. 1-12677

                       PREFERRED EMPLOYERS HOLDINGS, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


              Delaware                                  65-0698779
    -------------------------------         -----------------------------------
    (State or other jurisdiction of        (I.R.S. Employer Identification No.)
    incorporation or organization)


                 10800 Biscayne Boulevard, Miami, Florida 33161
               ---------------------------------------------------
                    (Address of principal executive offices)

                                 (305) 893-4040
               ---------------------------------------------------
              (Registrant's telephone number, including area code)

      Check whether the issuer (1) filed all reports required to be filed by
Section 13 of 15(d) of the Securities Exchange Act of 1934 during the past 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 |_| No |X|

    APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
       PROCEEDINGS DURING THE PRECEDING FIVE YEARS

      Check whether the Registrant filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 after
the distribution of securities under a plan confirmed by a court.

          Not Applicable  X

       APPLICABLE ONLY TO CORPORATE ISSUERS

The number of shares outstanding of each of the issuer's classes of common 
equity, as of March 31, 1998 was:
              Common Stock 4,725,000 shares
              (Par value $.01 per share)

<PAGE>

                       PREFERRED EMPLOYERS HOLDINGS, INC.

                                    FORM 10-Q

                                      INDEX


PART     I    -   FINANCIAL INFORMATION                                     PAGE
                                                                            ----

Item-1        -   Quarterly Financial Statements                               1

         Consolidated Balance Sheets                                           1

         Consolidated Statements of Operations                                 2

         Consolidated Statements of Cash Flows                                 3

         Notes to Consolidated Financial Statements                            4

Item-2        -   Management's Discussion and Analysis of Financial 
                  Condition and Results of Operations                         14

PART     II   -   OTHER INFORMATION

Item-1        -   Legal Proceedings                                           18

Item-2        -   Changes in Securities and Use of Proceeds                   18

Item-3        -   Defaults Upon Senior Securities                             18

Item-4        -   Submission of Matters to a Vote of Security Holders         18

Item-5        -   Other Information                                           18

Item-6        -   Exhibits and Reports on Form 8-K                            19

SIGNATURE                                                                     20

<PAGE>

               PREFERRED EMPLOYERS HOLDINGS, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                March 31, 1998 (unaudited) and December 31, 1997

<TABLE>
<CAPTION>
                                   Assets                                           March 31,1998          December 31, 1997
                                                                                    -------------          -----------------
<S>                                                                                    <C>                         <C>      
Investments:
   Held-to-maturity securities, at amortized cost (fair value of $7,310,231
      in 1998 and $8,237,669 in 1997)........................................          $7,144,658                  8,015,105
   Held-to-maturity securities, at amortized cost - restricted (fair value of
      $8,846,055 in 1998 and $7,947,981 in 1997).............................           8,728,146                  7,877,444
   Short-term investments....................................................           4,659,119                  7,090,550
                                                                                      -----------                -----------
      Total investments......................................................          20,531,923                 22,983,099
Cash.........................................................................           2,938,719                  4,125,147
Accrued investment and interest income.......................................             243,960                    311,934
Accounts, commissions and premiums receivable, net...........................           3,161,759                    585,072
Deferred acquisition costs...................................................           1,052,259                    903,880
Property and equipment, net..................................................             467,666                    478,826
Deferred tax assets..........................................................             604,608                    252,837
Goodwill and other intangible assets, net....................................           4,979,167                          -
Deposits.....................................................................              30,684                     24,921
Other assets.................................................................              95,427                     34,487
                                                                                      -----------                -----------
      Total assets...........................................................         $34,106,132                 29,700,203
                                                                                      ===========                 ==========

                   Liabilities and Shareholders' Equity
Liabilities:
   Unpaid losses and loss adjustment expenses................................          $7,763,582                  6,107,613
   Unearned premiums.........................................................           3,244,629                  2,671,831
   Premiums payable..........................................................           3,755,813                  3,064,103
   Commissions payable.......................................................             300,105                    330,055
   Other liabilities.........................................................           5,312,027                  4,750,082
   Accounts payable and accrued expenses.....................................           1,147,828                    508,127
   Deferred reinsurance income...............................................             279,980                    279,980
                                                                                      -----------                -----------
        Total liabilities....................................................          21,803,964                 17,711,791
                                                                                      -----------                -----------

Shareholders' equity:
   Common stock, $0.01 par value; authorized 10,000,000 shares; issued
      5,254,412 shares.......................................................              52,544                     52,544
   Additional paid-in capital................................................          10,367,074                 10,367,074
   Retained earnings.........................................................           2,388,107                  2,074,351
                                                                                      -----------                -----------
      Total shareholders' equity.............................................          12,807,725                 12,493,969
   Treasury stock, at cost, 529,412 shares...................................           (505,557)                  (505,557)
                                                                                      -----------                -----------
      Net shareholders' equity...............................................          12,302,168                 11,988,412
                                                                                      -----------                 ----------
      Total liabilities and shareholders' equity.............................         $34,106,132                 29,700,203
                                                                                      ===========                 ==========

          See accompanying notes to consolidated financial statements.

</TABLE>


<PAGE>

               PREFERRED EMPLOYERS HOLDINGS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

         For the Three Months Ended March 31, 1998 and 1997 (unaudited)



<TABLE>
<CAPTION>
                                                                                1998          1997
                                                                                ----          ----
<S>                                                                           <C>           <C>      
Revenues:
   Premiums earned ........................................................   $3,066,609    2,044,430
   Net investment income ..................................................      385,985      213,652
   Net commission income ..................................................      543,130      634,314
   Staffing income ........................................................    1,411,030           --
   Other income ...........................................................      138,906      145,084
                                                                              ----------   ----------
        Total revenues ....................................................    5,545,660    3,037,480
                                                                              ----------   ----------

Expenses:
   Losses and loss adjustment expenses incurred ...........................    1,655,969    1,103,317
   Amortization of deferred acquisition costs .............................      981,315      737,309
   Staffing costs .........................................................    1,278,651           --
   Other expenses .........................................................    1,265,630      846,611
                                                                              ----------   ----------
        Total expenses ....................................................    5,181,565    2,687,237
                                                                              ----------   ----------

Income before income taxes ................................................      364,095      350,243
Income taxes ..............................................................       50,339      129,590
                                                                              ----------   ----------
      Net income ..........................................................   $  313,756      220,653
                                                                              ==========   ==========

Net basic income per share ................................................   $      .07   $      .06
                                                                              ==========   ==========

Net diluted income per share ..............................................   $      .07   $      .06
                                                                              ==========   ==========

Common shares and common share equivalents used in computing net income per
   share ..................................................................    4,725,000    3,867,500
                                                                              ==========   ==========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       2
<PAGE>

               PREFERRED EMPLOYERS HOLDINGS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

         For the Three Months Ended March 31, 1998 and 1997 (unaudited)

<TABLE>
<CAPTION>
                                                                                           1998            1997
                                                                                           ----            ----
<S>                                                                                    <C>                <C>    
Cash flow from operating activities:
   Net income ........................................................................ $   313,756        220,653
   Adjustments to reconcile net income to net cash provided by operating activities:
      Depreciation and amortization ..................................................      54,401         36,319
      Amortization of deferred acquisition costs .....................................     981,315        737,309
      Deferred income taxes ..........................................................     351,771             --
      Change in:
        Accrued investment and interest income .......................................      67,974             --
        Accounts, commissions and premiums receivable ................................  (2,576,687)     3,419,805
        Deferred acquistion costs ....................................................    (651,604)            --
        Unpaid losses and loss adjustment expenses ...................................   1,655,969      1,016,082
        Unearned premiums ............................................................     572,798       (603,435)
        Deferred reinsurance income ..................................................          --       (360,374)
        Premiums payable .............................................................     691,710        366,024
        Commissions payable ..........................................................     (29,950)       (27,767)
        Accounts payable and accrued expenses ........................................     639,701        587,189
        Other, net ...................................................................    (686,390)     1,678,905
                                                                                       -----------    -----------
           Net cash provided by operating activities .................................   1,384,764      7,070,710
                                                                                       -----------    -----------

Cash flow from investing activities:
   Purchase of subsidiary ............................................................  (5,000,000)            --
   Sale (purchase) of short-term investments, net ....................................   2,451,176     (7,405,936)
   Purchase of property and equipment ................................................     (22,368)       (15,741)
                                                                                       -----------    -----------
           Net cash used in investing activities .....................................  (2,571,192)    (7,421,677)
                                                                                       -----------    -----------

Cash flow from financing activities:
   Proceeds from sale of common stock ................................................          --     10,402,129
   Repayment of shareholder loan .....................................................          --        (75,000)
                                                                                       -----------    -----------
           Net cash provided by financing activities .................................          --     10,327,129
                                                                                       -----------    -----------

Net decrease in cash .................................................................  (1,186,428)       (23,838)
Cash at beginning of period ..........................................................   4,125,147      5,591,140
                                                                                       -----------    -----------
Cash at end of period ................................................................ $ 2,938,719      5,567,302
                                                                                       ===========    ===========

Supplemental disclosure of cash flow information:
   Income taxes paid ................................................................. $   280,000             --
                                                                                       ===========    ===========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       3
<PAGE>

               PREFERRED EMPLOYERS HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                March 31, 1998 (unaudited) and December 31, 1997

(1) Summary of Significant Accounting Policies

      (a) Basis of Presentation

      The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
notes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments, consisting
of normal recurring accruals, considered necessary for a fair presentation have
been included. Operating results for the three-month period ended March 31, 1998
are not necessarily indicative of the results that may be expected for the year
ending December 31, 1998. These consolidated financial statements and notes
should be read in conjunction with the financial statements and notes included
in the audited consolidated financial statements of the Company for the year
ended December 31, 1997, which were filed with the Securities and Exchange
Commission of Form 10-KSB on March 31, 1998.

      (b) Organization

      Preferred Employers Holdings, Inc. is the successor company to Preferred
Employers Group, Inc. ("PEGI"). In February 1997, the Company completed an
initial public offering of 1,725,000 shares of common stock (including the
underwriter's over-allotment option) at a price of $7.25 per share. Immediately
prior to the Company's initial public offering, the Company and the stockholders
of PEGI (the "Exchanging Stockholders") effected a recapitalization whereby the
Company exchanged 17,647.06 shares of common stock for each share of common
stock of PEGI held by the Exchanging Stockholders (the "Exchange"). As a result
of the Exchange, PEGI became a wholly owned subsidiary of the Company. Except as
otherwise specified or when the context otherwise requires, references to the
Company herein include Preferred Employers Holdings, Inc. and PEGI, through
which the Company conducts certain of its business.

      In March 1998, the Company, through a wholly owned subsidiary, consummated
the purchase of the operations of HSSI Travel Nurse Operations, Inc., a
wholly-owned subsidiary of Hospital Staffing Services, Inc. for $5.0 million in
cash. Based in Ft. Lauderdale, Florida since 1981, Travel Nurse has provided
registered nurse and other professional medical personnel, often referred to as
"travelers," primarily to client hospitals in the United States and the
Caribbean on a contractual basis for periods generally ranging from 8 to 52
weeks. During 1997, Travel Nurse placed in excess of 700 nurses. The goodwill
associated with the acquisition is amortized consistent with the expected future
revenue stream of the hospital contracts purchased, or 15 years.

      The Company was appointed as a general agent ("GA") by the American
International Group of Companies ("AIG"), a major group of international
insurance carriers, on January 1, 1993. In this regard, the Company is
authorized to write workers' compensation as well as other forms of "property
and casualty" business (such other forms of insurance being hereinafter referred
to as "Package") on behalf of AIG. In addition, the Company was appointed as a
GA by General Accident Insurance Company of America ("GAIC") on September 1,
1994, with the authority to write all forms of commercial property and casualty
business for family style and fast-food restaurants. On June 11, 1996, GAIC
advised the Company that it would no longer write Package insurance for
fast-food restaurants; however, on March 20, 1997, the Company was appointed as
a GA by the Kemper Group of Insurance Companies with the authority to write
workers' compensation and other forms of commercial property and casualty
business for family style and fast-food restaurants and convenience stores.


                                       4
<PAGE>

               PREFERRED EMPLOYERS HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                March 31, 1998 (unaudited) and December 31, 1997

(1) Summary of Significant Accounting Policies (Continued)

      (c) Insurance Operations

      In 1996, the Company formed a Bermuda licensed reinsurance subsidiary (the
"Reinsurer") and entered into a reinsurance agreement (the "Agreement") with AIG
during the fourth quarter of 1996. The Agreement provides that the Reinsurer
assume certain workers' compensation and employer's liability insurance policies
from AIG with policy inception dates as of January 1, 1996 and subsequent.
Although the Reinsurer will assume the risks associated with being a reinsurer,
the Agreement limits the liability of the Reinsurer for losses and certain
defined expenses to the first $300,000 per occurrence. In addition, the
Agreement limits the aggregate liability of the Reinsurer for all coverage to an
amount not to exceed 70 percent of the gross written premium for each individual
underwriting year.

      Because the Agreement is effective for all business written on or after
January 1, 1996, the policies written prior to the execution of the Agreement
and formation of the Reinsurer are accounted for as retroactive reinsurance.

      The principal difference between the accounting for retroactive and
prospective reinsurance is that revenue and costs of retroactive reinsurance are
deferred and accreted into income over the claim-settlement period, rather than
over the period for which contractual coverage is provided, as would be the case
under prospective reinsurance.

      Retroactive insurance accounting does not change the amount of income to
be recognized, but rather extends the period of recognition from one year-the
period of coverage, to six years-the period over which claims liabilities from
the business are expected to be settled. Cash flows from the reinsurance
transactions are not affected by the accounting treatment.

      The accompanying financial statements reflect a composite
retroactive/prospective accounting treatment with business written prior to
October 1, 1996, being accounted for as retroactive and business written
subsequent thereto accounted for as prospective.

      The effects of prospective and retroactive reinsurance accounting
treatment are illustrated below. The prospective method assumed that the
Agreement incepted on January 1, 1996, and provides for a loss ratio of 51.5%,
acquisition costs of 33.38%, aggregate net premiums written of approximately $15
million ($12,600,000 relating to the period January 1 through September 30,
1996) and an investment yield of 6.5% on net cash flows. The retroactive
(deposit) method uses the same assumptions except that since the Agreement was
not executed until October 1996, any investment income on net cash flows earned
for the period from January through September 1996 are deferred and recognized
as "other income" over the payment period of the remaining claim liabilities.

      Income before income taxes recognized, and estimated to be recognized in
the calendar year indicated below is as follows:

                                  Prospective               Composite
                                    Method             Retroactive/Prospective
Years                             (pro forma)                (actual)
                                  ----------           -----------------------
1996.............................  $1,658,000                  324,000
1997.............................   1,288,000                1,372,000
1998.............................     400,000                  840,000
1999.............................     332,000                  658,000
2000.............................     300,000                  563,000
2001.............................     282,000                  503,000
                                  -----------               ----------

                                   $4,260,000                4,260,000
                                  ===========               ==========


                                       5
<PAGE>

               PREFERRED EMPLOYERS HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                March 31, 1998 (unaudited) and December 31, 1997

(1) Summary of Significant Accounting Policies (Continued)

      It should be noted that the table presented above is for illustrative
purposes only to highlight that the basis of accounting used only impacts the
timing of the net revenue recognition and not the aggregate economic results.
Further, it should be noted that the above table is based on estimates as to the
amount and timing of aggregate loss and loss expense payments, available
investment yields and acquisition and other costs associated with the provision
of insurance protection. Actual results may vary, perhaps materially, from those
illustrated above. No assurance is given or may be taken that subsequent
revisions of estimates will not have a material impact on the illustration
above.

      Prospective reinsurance premiums are earned on a pro-rata basis over the
term of the related coverage. The reserve for unearned premiums represents the
portion of the net premiums written relating to the unexpired term of coverage.

      Acquisition costs are deferred and amortized over the period in which the
related prospective reinsurance premiums are earned.

      Losses and loss adjustment expenses are charged to income as incurred. The
reserve for unpaid claims represents the accumulation of estimates for reported
losses and includes provisions for losses incurred but not reported. The methods
of determining such estimates and establishing resulting reserves are
continually reviewed and updated. Adjustments, if any, resulting therefrom are
reflected in income currently. The Company does not discount its loss reserves.

      (d) Investments

      Fixed maturity securities which the Company has the positive intent and
ability to hold to maturity are classified as "held to maturity" and are
reported at amortized cost. Fixed maturity and equity securities that are bought
and held principally for the purpose of selling them in the near term are
classified as "trading" and are reported at fair value, with unrealized gains
and losses included in income. Fixed maturity and equity securities not
classified as either held to maturity or trading are classified as "available
for sale" and are reported at fair value, with unrealized gains and losses (net
of deferred taxes) charged or credited as a separate component of shareholders'
equity.

      Investment income is recorded as earned on the accrual basis and includes
amortization of premiums and accretion of discounts relating to investments
acquired at other than par value. Realized gains or losses on disposal of
investments are determined on a specific identification basis and are included
in revenues.

      The Company does not own any on-balance sheet or off-balance sheet
derivative instruments.

      (e) Property and Equipment, net

      Property and equipment is stated at cost less accumulated depreciation.
Depreciation is computed using an accelerated method of depreciation over the
estimated useful lives of the related assets, which range from five to seven
years. Leasehold improvements are carried at cost less accumulated amortization
provided on the straight-line basis over the shorter of the lease term or the
estimated useful lives of the improvements.


                                       6
<PAGE>

               PREFERRED EMPLOYERS HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                March 31, 1998 (unaudited) and December 31, 1997

(1) Summary of Significant Accounting Policies (Continued)

      (f) Premiums Payable

      Premiums which are collected from insureds are reported as assets of the
Company and as corresponding liabilities to the insurance carriers. Premiums
received from insureds but not yet remitted to the carriers are held as invested
cash in a fiduciary capacity.

      (g) Commission Income

      Commission income is recognized when premiums are received. Any subsequent
commission adjustments, including policy cancellations, are recognized upon
notification from the insurance carrier or broker.

      (h) Income Taxes

      Prior to the formation of the Company, PEGI had elected to be taxed as an
S corporation under the provisions of the Internal Revenue Code. PEGI's
stockholders included in their tax returns the Company's income or loss.
However, subsequent to the formation of the Company, PEGI is taxed as a C
corporation under the provisions of the Internal Revenue Code. As such, deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.

      (i) Net Income Per Share

      Net income per common share is based upon the weighted average number of
common shares outstanding during each year. In February 1997, SFAS No. 128,
"Earnings per Share" was issued. This statement requires specific computations,
presentations and disclosures for earnings per share (EPS) amounts in order to
make EPS amounts more compatible with international accounting standards. The
Company adopted SFAS No.128 for the period ended December 31, 1997. This
statement requires that any prior period EPS amounts be restated. Stock options
outstanding at March 31, 1998 and 1997 of 616,500 and 250,000, respectively, had
no effect on diluted earnings per share amounts.


                                       7
<PAGE>

               PREFERRED EMPLOYERS HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                March 31, 1998 (unaudited) and December 31, 1997

(1) Summary of Significant Accounting Policies (Continued)

      (j) Reclassifications

      Certain items in the 1997 financial statements have been reclassified to
conform with the 1998 presentation.

(2) Investments

      At March 31, 1998 and December 31, 1997, the Company did not hold
fixed-maturity securities which individually exceeded 10% of shareholders'
equity except U.S. government and government agency securities.

      Bonds with an amortized cost of $8,728,146 and $7,877,444 were held in a
restricted account for the benefit of the ceding company (AIG) as unauthorized
reinsurance at March 31, 1998 and December 31, 1997, respectively, in accordance
with statutory requirements.

         The amortized cost and estimated fair values of investments at March
31, 1998 and December 31, 1997 are as follows:

<TABLE>
<CAPTION>
                                                                Gross        Gross        Estimated       Amount at Which
                                             Amortized        Unrealized   Unrealized       Fair          Shown in the
                                                Cost            Gains        Losses         Value         Balance Sheet
                                            -----------       -----------   ---------    -----------      ---------------
<S>                                         <C>                   <C>         <C>             <C>               <C>      
Securities held to maturity:
March 31, 1998:
   Fixed maturities:
      Obligations of states and political
        subdivisions .....................  $ 7,144,658           165,573          --      7,310,231         7,144,658
      Obligations of states and political                                                                  
        subdivisions -restricted .........    8,728,146           117,909          --      8,846,055         8,728,146
                                            -----------       -----------   ---------    -----------       -----------
Total fixed maturities ...................  $15,872,804           283,482          --     16,156,286        15,872,804
                                            ===========       ===========   =========    ===========       ===========
</TABLE>

<TABLE>
<CAPTION>
                                                                Gross        Gross        Estimated       Amount at Which
                                             Amortized        Unrealized   Unrealized       Fair           Shown in the
                                                Cost            Gains        Losses         Value          Balance Sheet
                                            -----------       -----------   ---------    -----------      ---------------
<S>                                         <C>                   <C>         <C>           <C>               <C>      

December 31, 1997:
   Fixed maturities:
      Obligations of states and political
        subdivisions .....................  $ 8,015,105         222,564            --     8,237,669         8,015,105
Obligations of states and political                                                                      
      subdivisions -restricted ...........    7,877,444          70,537            --     7,947,981         7,877,744
                                            -----------     -----------     ---------   -----------       -----------
  Total fixed maturities .................  $15,892,549         293,101            --    16,185,650        15,892,549
                                            ===========     ===========     =========   ===========       ===========
</TABLE>


                                       8
<PAGE>

               PREFERRED EMPLOYERS HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                March 31, 1998 (unaudited) and December 31, 1997

(2) Investments (Continued)

      The amortized cost and fair value of securities at March 31, 1998 and
December 31, 1997, by contractual maturity date, are presented below:

<TABLE>
<CAPTION>
                                                       March 31, 1998            December 31, 1997
                                                       ----------------         ------------------
                                                    Amortized        Fair        Amortized       Fair
                                                      Cost           Value         Cost          Value
                                                   -----------   -----------   -----------   -----------
<S>                                                <C>             <C>           <C>           <C>      
Fixed maturities held-to-maturity:
Due in one year or less .........................           --            --            --            --
Due after one year through five years ...........  $ 6,074,128     2,216,641     6,941,072     7,139,209
Due after one year through five years-restricted     7,657,616     7,752,465     6,803,411     6,849,521
Due after five years through ten years ..........           --            --            --            --
Due after ten years .............................    1,070,530     1,093,590     1,074,033     1,098,460
Due after ten years-restricted ..................    1,070,530     1,093,590     1,074,033     1,098,460
                                                   -----------   -----------   -----------   -----------
                                                    15,872,804    16,156,286    15,892,549    16,185,650
Short-term investments ..........................    4,659,119     4,659,119     7,090,550     7,090,550
                                                   -----------   -----------   -----------   -----------
      Total .....................................  $20,531,923    20,815,403    22,983,099    23,276,200
                                                   ===========   ===========   ===========   ===========
</TABLE>

(3) Financial Instruments

      The carrying amounts for short-term investments, cash, accounts,
commissions and premiums receivable, accrued investment and interest income,
premiums payable, commissions payable and accounts payable and accrued expenses
approximate their fair values due to the short-term nature of these instruments.

      Estimated fair values for fixed maturities were provided by outside
consultants using market quotations, prices provided by market makers or
estimates of fair values obtained from yield data relating to investment
securities with similar characteristics.

(4) Stockholder Loan

      In May 1995, the Company entered into a repurchase agreement with
stockholders (the "Agreement") whereby the Company agreed to repurchase from
them an aggregate of 30 shares of common stock (529,412 shares as adjusted) (the
"Shares") of the Company. The aggregate purchase price for the Shares was
$600,000 (including


                                       9
<PAGE>

               PREFERRED EMPLOYERS HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                March 31, 1998 (unaudited) and December 31, 1997

(4) Stockholder Loan (Continued)

interest) to be paid in 24 installments of $25,000. The closing of the Agreement
was subject to the Company's completion of a $600,000 distribution to the
stockholders of the Company, pro rata based on the number of shares of common
stock of the Company outstanding and paid to the stockholders of record on the
Agreement date, without giving effect to the repurchase. The $600,000
distribution was made by the Company on May 26, 1995.

      Pursuant to a subsequent agreement made with the stockholders, the
outstanding loan balance at December 31, 1995 was to be repaid in 23 monthly
installments of $25,000 (including interest) commencing in February 1996. The
outstanding balance of the above-referenced stockholder loan was paid in full
during 1997.

(5) Income Taxes

      U.S. Federal and state income tax expense consists of the following
components:

                                            Current      Deferred        Total
                                            -------      --------        -----

March 31, 1998 ....................         $402,110     (351,771)        50,339
March 31, 1997 ....................         $129,590         --          129,590

      Income tax expense for the quarters ended March 31, 1998 and 1997 differed
from the amount computed by applying the U.S. Federal income tax rate of 34% to
income before Federal income taxes as a result of the following:

                                                       1998               1997
                                                      ------             -----

Expected income tax expense ................        $ 123,792           119,082
State income tax, net ......................           13,217            14,709
Tax-exempt interest ........................          (65,904)          (19,061)
S Corporation income .......................               --                --
Other, net .................................          (20,766)          (14,860)
                                                    ---------         ---------
      Total income tax expense .............        $  50,339           129,590
                                                    =========         =========


                                       10
<PAGE>

               PREFERRED EMPLOYERS HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                March 31, 1998 (unaudited) and December 31, 1997

(5) Income Tax (Continued)

      Deferred income taxes are based upon temporary differences between the
financial statement and tax bases of assets and liabilities. The following
deferred taxes are recorded for March 31, 1998 and December 31, 1997:

                                                      1998               1997
                                                    ---------         ---------
Deferred tax assets:
   Commission payable ......................        $ 112,930                --
   Unearned premiums .......................          112,441                --
   Reserve for unpaid claims ...............          584,287           427,414
   Other, net ..............................           44,348            44,348
                                                    ---------         ---------
      Gross deferred tax assets ............        $ 854,006           471,762
                                                    ---------         ---------

Deferred tax liabilities:
   Commissions receivable ..................         (249,398)         (151,454)
   Commissions payable .....................               --           (67,471)
                                                    ---------         ---------
      Gross deferred tax liabilities .......         (249,398)         (218,925)
                                                    ---------         ---------
        Net deferred tax asset .............        $ 604,608           252,837
                                                    =========         =========

      A valuation allowance has not been established as the Company believes it
is more likely than not that the deferred tax asset will be realized.

      As a Bermuda domiciled corporation, the Reinsurance Subsidiary does not
file United States tax returns. The Company currently expects to operate in such
a manner that it is not directly subject to U.S. tax (other than U.S. excise tax
on reinsurance premiums where the risks covered thereby are reinsured with
another foreign insurer which is neither a resident of Bermuda nor a resident of
a third country with a United States tax treaty which entitles the foreign
insurer to exemption from excise tax, and withholding tax on certain investment
income from U.S. sources) because it does not engage in business or have a
permanent establishment in the United States.

      The Reinsurance Subsidiary does, however, constitute a "controlled foreign
corporation" ("CFC") for United States federal income tax purposes. As a result,
the Company includes in its gross income for United States federal income tax
purposes its pro-rata share of the CFC's "subpart F income," even if such
subpart F income is not distributed. Substantially all of the Reinsurance
Subsidiary's income is subpart F income.

      The Company is considering an election under section 953(d) of the
Internal Revenue Code to tax the Reinsurance Subsidiary as a domestic
corporation for U.S. Income Tax purposes. The Company believes this election, if
made, will not have a material effect on its income tax expense.

(6) Annual Statutory Solvency Requirements

      The Bermuda Insurance Act of 1978 and related regulations (the "Act")
requires the Company to meet a minimum solvency margin. Statutory capital and
surplus as of December 31, 1997 was $7,309,143 and the amounts required to be
maintained by the company was $3,300,000. In addition, a minimum liquidity ratio
must be maintained whereby relevant assets, as defined by the Act, must exceed
75% of relevant liabilities. Once these requirements have been met, there is no
restriction on the retained earnings available for distribution. At December 31,
1997, the Company was in compliance with this requirement.


                                       11
<PAGE>

               PREFERRED EMPLOYERS HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                March 31, 1998 (unaudited) and December 31, 1997

(7) Liability for Unpaid Losses and Loss Adjustment Expenses

      Activity in the liability for unpaid losses and loss adjustment expenses
is summarized as follows for the quarters ended March 31, 1998 and 1997:

                                                           1998          1997
                                                        ----------    ----------
Unpaid losses and loss adjustment expenses
   at beginning of period ..........................    $6,107,613       199,390
                                                        ----------    ----------
Incurred related to:
   Current year ....................................       657,159       792,547
   Prior year ......................................       998,810       310,770
                                                        ----------    ----------
      Total incurred ...............................     1,655,969     1,103,317
                                                        ----------    ----------
Paid related to:
   Current year ....................................            --            --
   Prior year ......................................            --        87,235
                                                        ----------    ----------
      Total paid ...................................            --        87,235
                                                        ----------    ----------
Unpaid losses and loss adjustment expenses
   at end of period ................................    $7,763,582     1,215,472
                                                        ==========    ==========


                                       12
<PAGE>


               PREFERRED EMPLOYERS HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                March 31, 1998 (unaudited) and December 31, 1997

(8) Litigation

      The Company is a defendant in various litigation matters considered to be
in the normal course of business. While the outcome of these matters cannot be
estimated with certainty, it is the opinion of management (after consultation
with legal counsel) that the resolution of such litigation will not have a
material adverse effect on the Company's financial statements.

(9) Year 2000

      Year 2000 issues are the result of computer programs being written using
two digits rather than four to define the applicable year. The Company developed
a plan to address Year 2000 issues and has recently completed the conversion of
its computer systems to be, it believes, Year 2000 compliant. The cost
associated with the project was immaterial.

(10) Subsequent Events

      In May 1998, the Company obtained a $3 million unsecured revolving line of
credit from a bank. The terms of the loan provide for monthly interest payments 
at the prime lending rate (currently 8 1/2% per annum). The loan is renewable on
an annual basis.

      In May 1998, the Company concluded a private placement of $10,580,000 of
7% convertible subordinated notes (the "Notes") due May 2003. The principal
amount of the Notes is convertible at any time upon the earlier of the maturity
date (May 12, 2003) or 10 business days after receipt of a termination notice at
the option of the holders into shares of the Company's common stock at a
conversion price of $9.00 (the "Conversion Price").

      In the event (i) the closing bid price of the Company's common stock
equals or exceeds $13.50 per share for twenty consecutive trading days during
any period commencing upon satisfaction of one of the conditions contained in
(ii) hereof and (ii) either a registration statement covering the shares of
common stock issuable upon conversion of the Notes has been declared effective
by the Securities and Exchange Commission and remains effective or at least two
years has elapsed since the issuance date of the Notes and the shares of common
stock issuable upon conversion of the notes are saleable, without restriction,
under Rule 144(k) promulgated under the Securities Act of 1933, as amended, then
the holder's right to convert the outstanding principal amount of the Notes
shall be terminated by the Company by delivering to the holder a notice of
termination (the "Termination Notice"), in which event (a) the holder will have
the right at any time during 10 business days after receipt of the Termination
Notice, in its sole discretion, to convert the outstanding principal amount of
the Notes into shares of common stock of the Company at the Conversion Price,
and (b) thereafter, the holder's option to convert shall terminate and the Notes
may be prepaid by the Company, at any time prior to the Maturity Date, in whole
or in part for the face amount thereof, together with all accrued and unpaid
interest through the date of prepayment.


                                       13
<PAGE>

Item 6. Management's Discussion and Analysis

      The following discussion and analysis should be read in conjunction with
the consolidated financial statements and notes related thereto contained
elsewhere in this Form 10-QSB.

General

      The Company is primarily engaged in the property and casualty insurance
business as a general agent ("GA") on behalf of the American International Group
of Companies ("AIG"), General Accident Insurance Company ("GAIC") and the Kemper
Insurance Companies ("Kemper") and as a reinsurer for certain workers'
compensation insurance policies written by the Company on behalf of AIG.
Pursuant to general agency agreements with these carriers, the Company is
authorized to solicit and bind insurance contracts on behalf of the insurers,
collect and account for premiums on business it writes, and request cancellation
or nonrenewal of any policy placed by the Company. The Company receives, as
compensation pursuant to the terms of these general agency agreements, gross
commissions on its business at rates which range from 5% to 20%. The Company has
written workers' compensation insurance since its inception in 1988 and in late
1995 began writing other forms of property and casualty insurance (such other
forms of insurance being hereinafter referred to as "Package") for family style
and fast food restaurants as a GA for GAIC. In June 1996, GAIC advised the
Company that it would no longer accept Package insurance risks for fast food
restaurants, but would continue to do so for family style restaurants. As a
result, the Company became a GA for Kemper during March 1997, through which it
writes package as well as other forms of property and casualty insurance and
workers' compensation insurance.

      In December 1996, the Company formed a reinsurance subsidiary (Preferred
Insurance) under the laws of Bermuda and entered into a reinsurance agreement
with AIG pursuant to which Preferred Insurance acts as the reinsurer with
respect to certain workers' compensation and employer's liability insurance
policies in force with policy inception dates as of January 1, 1996 and
subsequent which are written by the Company on behalf of AIG. Preferred
Insurance receives as compensation pursuant to the terms of the reinsurance
agreement the related net written premiums less certain program expenses and
commissions and the losses paid associated with the business. Although Preferred
Insurance assumes the risks associated with being a reinsurer, the reinsurance
agreement limits the liability of Preferred Insurance for losses and certain
defined expenses to the first $300,000 per occurrence. In addition, the
reinsurance agreement limits the aggregate liability of Preferred Insurance for
all coverage to an amount not to exceed 70% of the gross written premium for
each individual underwriting year. Because the reinsurance agreement is
effective for all business written on or after January 1, 1996, the policies
written prior to the execution of the contract and formation of Preferred
Insurance are accounted for as retroactive reinsurance. Refer to Note 1(c) to
the Company's consolidated financial statements for a more detailed explanation
of the accounting related thereto. The reinsurance agreement with Preferred
Insurance is terminable by either party upon the occurrence of certain events.

      The Company collects workers' compensation premiums from the insureds and
remits the ceding commission (net of the Company's commission) and reinsurance
charge to AIG and remits the net premium to Preferred Insurance. Commission
income on workers' compensation business is recognized as income when premiums
are collected. Package insurance premiums are principally collected by the
insurance carrier. The Package insurance carrier remits commissions on Package
premiums it collects to the Company monthly. Commission income on Package
business is recognized as income when premiums are due. Reinsurance premiums
received by Preferred Insurance are earned on a pro-rata basis over the term of
the related coverage.

      In March 1998, a wholly-owned subsidiary of the Company consummated the
purchase of substantially all of the assets of HSSI Travel Nurse Operations,
Inc. ("Travel Nurse"), a wholly-owned subsidiary and Hospital Staffing Services,
Inc. for $5.0 million in cash. Preferred Healthcare Staffing, Inc. ("Preferred
Healthcare") provides registered nurses and other professional medical personnel
to client hospitals in the United States and the Caribbean on a contractual
basis for periods ranging from 8 to 52 weeks.


                                       14
<PAGE>

      Preferred Healthcare negotiates billing rates with the client hospitals to
provide for the recovery of its cost of payroll, housing, utilities, travel and
insurance for its professional medical personnel, plus a profit margin and bills
its client hospitals its negotiated rate. Preferred Healthcare records amounts
billed its client hospitals as revenue on each payday.

Results of Operations

For the Three Months ended March 31, 1998 and 1997

      Total Revenues. Total revenues for the three months ended March 31, 1998
was $5,546,000 compared to $3,037,000 for the 1997 comparable period,
representing a net increase of $2,509,000, or 82.6%. The following table
provides a comparison of revenues for the three months ended March 31, 1998 and
1997 by category:

<TABLE>
<CAPTION>
                                                                           Percentage
                                        1998          1997      Net Change   Change
                                        ----          ----      ----------   -------
<S>                                 <C>              <C>           <C>          <C> 
Net commission income:
   Workers' compensation ........   $  416,000       432,000       (16,000)     -3.7%
   Package ......................       89,000       102,000       (13,000)  f  -12.7%
   Other, net ...................       38,000       100,000       (62,000)    -62.0%
                                    ----------    ----------    ----------    ------
      Total net commission income      543,000       634,000       (91,000)    -14.4%
Premiums earned .................    3,067,000     2,044,000     1,023,000      50.0%
Net investment income ...........      386,000       214,000       172,000      80.4%
Staffing income .................    1,411,000            --     1,411,000       0.0%
Other income ....................      139,000       145,000        (6,000)     -4.1%
                                    ----------    ----------    ----------    ------
      Total revenues ............   $5,546,000     3,037,000     2,509,000      82.6%
                                    ==========    ==========    ==========    ======

Workers' compensation:
   Premiums collected ...........   $4,732,000     4,219,000       513,000
                                    ==========    ==========    ==========
   Ratio of net commission
      income/premiums collected .          8.8%         10.2%         -3.1%
                                           ===          ====           === 
</TABLE>

      Workers' compensation commission income decreased $16,000, or 3.7%, for
the quarter ended March 31, 1998 as compared to the prior year as a result of an
increase in commission expense related to the mix of business produced by
brokers as depicted in the above table. Package commission income decreased
$13,000 or 12.7% for the quarter ended March 31, 1998 as compared to the prior
year as a result of the lack of product availability as described previously.
Other net commission income decreased $62,000, or 62%, for the quarter ended
March 31, 1998 as compared to the prior year as a result of the reduction in
volume of audit and small business plan premiums collected. Premiums earned
increased $1,023,000, or 50%, for the quarter ended March 31, 1998 as compared
to the prior year as a result of new business and renewals of prior year
business. Net investment income increased $172,000, or 80.4%, for the quarter
ended March 31, 1998 as compared to the prior year as a result of premiums
received and invested by Preferred Insurance. Staffing income increased
$1,411,000 for the quarter ended March 31, 1998 as a result of the acquisition
of Preferred Healthcare. Other income decreased $6,000, or 4.1% for the quarter
ended March 31, 1998 as a result of the effects of the retroactive insurance
accounting treatment of Preferred Insurance as discussed more fully in Note 1(c)
to the Company's consolidated financial statements.

      Total Expenses. Total expenses for the quarter ended March 31, 1998 were
$5,182,000 compared to $2,687,000 for the 1997 comparable period, representing
an increase of $2,495,000, or 92.9%. The following table provides a comparison
of total expenses for the quarters ended March 31, 1998 and 1997 by category:


                                       15
<PAGE>

<TABLE>
                                                                            Percentage
                                          1998         1997      Net Change  Change
                                          ----         ----      ----------  -------

<S>                                    <C>           <C>            <C>       <C>  
Losses and loss adjustment expenses
   incurred ........................   $1,656,000    1,103,000      553,000   50.1%
Amortization of deferred acquisition
   costs ...........................      981,000      737,000      244,000   33.1%
Staffing costs .....................    1,279,000           --    1,279,000     --
Other expenses .....................    1,266,000      847,000      419,000   49.5%
                                       ----------   ----------   ----------   ----
   Total expenses ..................   $5,182,000    2,687,000    2,495,000   92.9%
                                       ==========    =========    =========   ==== 
</TABLE>

      Losses and loss adjustment expenses increased $553,000, or 50.1%, for the
quarter ended March 31, 1998 as compared to the previous year. This increase is
consistent with the increase in premiums earned in 1998 as discussed above. For
the quarter ended March 31, 1998, the Company's ratio of losses incurred to
premiums earned was approximately 54%. Amortization of deferred acquisition
costs increased $244,000, or 33.1%, for the quarter ended March 31, 1998 as
compared to the previous year. This increase is consistent with the increase in
premiums earned in 1998 as discussed above. For the quarter ended March 31,
1998, the Company's ratio of amortization of deferred acquisition costs to
premiums earned was approximately 32%. Staffing costs increased $1,279,000 for
the quarter ended March 31, 1998 consistent with the staffing income as
discussed above. Other expenses increased $419,000 or 49.5% for the quarter
ended March 31, 1998 as compared to the previous year. The following table
provides a comparison of other expenses for quarters ended March 31, 1998 and
1997 by category:

                                                                 Percentage
                              1998         1997      Net Change   Change
                              ----         ----      ----------   -------

Personnel expenses .....   $  779,000      560,000      219,000    39.1%
Occupancy expenses .....       66,000       78,000      (12,000)  (15.4%)
Professional fees ......      116,000       10,000      106,000       *
Interest expense .......           --        7,000       (7,000)     --
Amortization of goodwill       21,000           --       21,000      --
Other operating expenses      284,000      192,000       92,000    47.9%
                           ----------   ----------   ----------    ----
   Total other expense .   $1,266,000      847,000      419,000    49.5%
                           ==========   ==========   ==========    ====

----------
*     The percentage change is insignificant or not meaningful for comparative
      purposes.

      Personnel expenses increased $219,000 or 39.1% for the quarter ended March
31, 1998 as compared to the previous year as a result of the hiring of two
marketing employees and one marketing executive with aggregate annual
compensation of $400,000 together with the increased staff related to the
acquisition of Preferred Healthcare. Occupancy expenses decreased $12,000 or
15.4%, for the quarter ended March 31, 1998, principally as a result of
decreased telephone charges. Professional fees increased $106,000 for the
quarter ended March 31, 1998, principally as a result of increased legal fees
associated with various corporate and acquisition matters. Interest expense
decreased $7,000 as a result of the payoff in 1997 of a loan from a shareholder.
Amortization of goodwill increased $21,000 for the quarter ended March 31, 1998
consistent with acquisition as discussed above. Other operating expenses
increased $92,000, or 47.9% for the quarter ended March 31, 1998 as compared to
the previous year, primarily related to the following: (i) increased insurance
expense of $43,000, (ii) increased corporate fees and services of $42,000, and
(iii) increased taxes other than income taxes of $14,000. Insurance expense
increased as a result of the purchase of additional coverages (i.e., directors
and officers liability insurance) and increased premiums due to increased
limits. Corporate fees and services and taxes other than income taxes increased
as a result of the expansion of the business.


                                       16
<PAGE>

Liquidity and Capital Resources

      Historically, the Company's principal source of cash has been from the
collection of workers' compensation insurance premiums from its insureds. In
February 1997, the Company consummated an initial public offering of 1,725,000
shares of Common Stock (including the underwriters' over-allotment option) and
received gross cash proceeds of approximately $12,506,000.

      At March 31, 1998, net cash and investments were $19,715,000 (net of
premiums payable of $3,756,000). Net cash provided by operating activities
decreased to $1,385,000 in 1998 from $7,071,000 in the first quarter of 1997, a
decrease of $5,686,000. This decrease resulted primarily from a decrease in
reinsurance premiums collected of $4,679,000, and an increase in accounts
receivable of $2,577,000. The decrease in reinsurance premiums collected is a
result of the collection by Preferred Insurance during the first quarter of 1997
of the net proceeds related to the 1996 underwriting year reinsurance balances.
The increase in accounts receivable is associated with the acquisition of assets
of Travel Norse and receivables generated by Preferred Healthcare during the
first quarter of 1998.

      Cash flows used in investing activities decreased to $2,571,000 for the
quarter ended March 31, 1998 from $7,422,000 for the quarter ended March 31,
1997, a decrease of $4,851,000. This decrease resulted primarily from the
acquisition of Preferred Healthcare as discussed in the note 1(b) to the
consolidated financial statements included herein.

      Cash flows from financing activities in 1997 reflect the net proceeds
received by the Company of its initial public offering as discussed above.

      The Company believes that its existing cash balances and cash flows from
activities will be adequate to meet its current operations, including expected
capital expenditures, for at least the next twelve months.

      In May 1998, the Company concluded a private placement of $10,580,000 of
7% converted subordinated notes due May 2003 (the "Notes"). The principal amount
of the Notes is convertible at any time upon the earlier of May 12, 2003 (the
"Maturity Date") or ten business days after the receipt of Termination Notice as
defined below at the option of the holders into shares of the Company's common
stock at a conversion price of $9.00 per share (the "Conversion Price").

      In the event (i) the closing bid price of the Company's common stock
equals or exceeds $13.50 per share for twenty consecutive trading days during
any period commencing upon satisfaction of one of the conditions contained in
(ii) hereof and (ii) either a registration statement covering the shares of
common stock issuable upon conversion of the Notes has been declared effective
by the Securities and Exchange Commission and remains effective or at least two
years has elapsed since the issuance date of the Notes and the shares of common
stock issuable upon conversion of the notes are saleable, without restriction,
under Rule 144(k) promulgated under the Securites Act of 1933, as amended, then
the holder's right to convert the outstanding prinicipal amount of the Notes
shall be terminated by the Company by delivering to the holder a notice of
termination (the "Termination Notice"), in which event (a) the holder will have
the right at any time during 10 business days after receipt of the Termination
Notice, in its sole discretion, to convert the outstanding principal amount of
the Notes into shares of common stock of the Company at the Conversion Price,
and (b) thereafter, the holder's option to convert shall terminate and the Notes
may be prepaid by the Company, at any time prior to the Maturity Date, in whole
or in part for the face amount thereof, together with all accrued and unpaid
interest through the date of prepayment.

      In connection with the Company's current business strategy, it may seek
additional funds through equity and/or debt financings. There can be no
assurance that any such additional debt or equity will be available to the
Company, or if available, will be on terms acceptable to the Company. 


                                       17
<PAGE>

Item 1.           Legal Proceedings.

                  Not Applicable


Item 2.           Changes in Securities.

                  Not Applicable


Item 3.           Defaults Upon Senior Securities.

                  Not Applicable


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

                  Not Applicable

Item 5.           Other Information.

                  Not Applicable


                                       18
<PAGE>

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

      (a)   The following exhibits are included unless otherwise indicated:

      27.1  Financial Data Schedule

      (b)   Reports on Form 8-K. The Company's Current Report on Form 8-K, dated
            March 6, 1998 (filed on March 16, 1998).


                                       19
<PAGE>

                                    SIGNATURE
                                   ----------

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.


                                         Preferred Employers Holdings, Inc.
                                         ----------------------------------
                                                    (Registrant)

Date:     May 15, 1998                       /s/ William R. Dresback
          --------------                 ----------------------------------
                                     By: William R. Dresback
                                         Senior Vice President, Chief Financial
                                         Officer and Secretary (and duly
                                         authorized to sign on behalf of the
                                         Registrant)


                                       20