SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 0-5562
HOME BENEFICIAL CORPORATION
(Exact name of registrant as specified in its charter)
VIRGINIA 54-0884714
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3901 West Broad Street, Richmond, Virginia 23230
(Address of principal executive offices) (Zip Code)
804-358-8431
(Registrant's telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Number of shares outstanding of each of the Registrant's
classes of Common Stock as of May 11, 1995:
Class
Class A Common Stock
$.3125 Par Value 8,476,576 Shares
Class B Common Stock
$.3125 Par Value 9,087,534 Shares
Total number of pages 12
1
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HOME BENEFICIAL CORPORATION
INDEX
Page
PART I - Financial Information
Item 1. Financial Statements
Consolidated Condensed Balance Sheet at
March 31, 1995 and December 31, 1994................................ 4
Consolidated Condensed Statement of Income for the three months
ended March 31, 1995 and 1994 ...................................... 5
Consolidated Condensed Statement of Cash Flows
for the three months ended March 31, 1995 and 1994.................. 6
Notes to Consolidated Condensed Financial Statements ............... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ................................ 8
PART II - Other Information
Item 4. Submission of Matters to a Vote of Security Holders............ 9
Item 5. Other Information ............................................. 9
Item 6. Exhibits and Reports on Form 8-K .............................. 10
SIGNATURES ............................................................. 11
3
PART I. FINANCIAL INFORMATION
HOME BENEFICIAL CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEET
March 31 December 31
1995 1994
ASSETS
Investments
Securities available-for-sale at fair value (Note 3)
Fixed maturities (Amortized value:
1995, $709,877,482; 1994, $718,305,895) $ 697,391,759 $ 691,976,855
Equities (Cost:1995, $9,743,970;
1994, $9,728,145) 25,854,894 24,229,849
Mortgage loans on real estate 336,679,654 338,458,261
Policy loans 53,680,485 53,425,676
Short-term investments 57,127,736 32,459,616
Other 6,120,229 6,167,002
Total investments 1,176,854,757 1,146,717,259
Cash and cash equivalents 1,784,884 1,726,812
Receivables 22,319,557 22,190,964
Deferred policy acquisition costs 96,516,819 96,246,153
Other assets 15,326,449 21,944,872
$1,312,802,466 $1,288,826,060
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Policy liabilities and accruals
Future policy benefits and claims $ 663,109,359 $ 660,081,842
Unearned premiums 26,105,030 25,658,167
Other policy claims and benefits payable 10,907,775 11,004,362
Total policy liabilities and accruals 700,122,164 696,744,371
Other policyholder funds 67,010,669 65,821,085
Other liabilities 63,920,254 59,490,670
Total liabilities 831,053,087 822,056,126
Stockholders' Equity
Capital stock
Class A common stock, voting, $.3125 par
value, 12,800,000 shares authorized;
8,476,576 issued at March 31, 1995 and
December 31, 1994 2,648,930 2,648,930
Class B common stock, non-voting, $.3125
par value, 19,200,000 shares authorized;
9,087,534 issued at March 31, 1995 and
at December 31, 1994 2,839,854 2,839,854
Total capital stock 5,488,784 5,488,784
Unrealized gains (losses) on securities
held-for-sale less related deferred
income taxes 2,375,201 (6,652,336)
Retained earnings 473,885,394 467,933,486
Total stockholders' equity 481,749,379 466,769,934
$1,312,802,466 $1,288,826,060
See accompanying notes.
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HOME BENEFICIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF INCOME
Three Months Ended
March 31
1995 1994
Revenues
Premiums $ 28,806,763 $ 28,812,257
Net investment income 21,856,392 21,044,266
Realized investment (losses)gains
Total revenues 50,663,155 49,856,523
Benefits, claims and expenses
Benefits and claims 23,803,748 23,179,468
Underwriting, acquisition and insurance 13,194,677 13,168,173
Total benefits, claims and expenses 36,998,425 36,347,641
Income before income taxes 13,664,730 13,508,882
Income taxes 4,200,000 4,200,000
Net income $ 9,464,730 $ 9,308,882
Net income per share of common stock
(Average shares outstanding:
1995-17,564,110; 1994-17,939,058) $ .54 $ .52
Dividends per share $ .20 $ .195
See accompanying notes.
5
HOME BENEFICIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
Three Months Ended
March 31
1995 1994
OPERATING ACTIVITIES
Net income $ 9,464,730 $ 9,308,882
Adjustments to reconcile net income to
net cash provided by operating activities 6,886,826 7,945,393
Net cash provided by operating activities 16,351,556 17,254,275
INVESTING ACTIVITIES
Proceeds from sales or maturities
of investments
Fixed maturities 31,932,746 41,263,909
Mortgage loans on real estate 7,000,199 17,700,077
Short-term investments -- net - 2,791,462
Other 3,313,905 4,305,686
Total proceeds 42,246,850 66,061,134
Costs of investments acquired
Fixed maturities 23,394,634 56,610,111
Mortgage loans on real estate 5,192,856 19,742,509
Short-term investments -- net 24,668,120 -
Other 2,961,485 6,032,547
Total costs 56,217,095 82,385,167
Net cash used in investing activities (13,970,245) (16,324,033)
FINANCING ACTIVITIES
Dividends paid (3,512,822) (3,498,116)
Purchase of Class B Common Stock
Other 1,189,584 746,110
Net cash used in financing activities (2,323,238) (2,752,006)
Net increase(decrease) in cash and cash equ 58,073 (1,821,764)
Cash and cash equivalents at beginning of year 1,726,812 6,039,294
Cash and cash equivalents at end of period $ 1,784,885 $ 4,217,530
Supplemental disclosure of cash flow information
Income tax payments $0 $650,000
See accompanying notes.
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HOME BENEFICIAL CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. Basis of Presentation - In the opinion of management, the accompanying
unaudited interim consolidated condensed financial statements of the
Corporation contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the financial position as of March
31, 1995 and December 31, 1994, and the results of operations and cash
flows for the three months ended March 31, 1995 and 1994. The
consolidated condensed financial statements include the accounts of the
Corporation, its principal subsidiary, Home Beneficial Life Insurance
Company (the Life Company), and its other subsidiaries. All significant
intercompany accounts and transactions are eliminated.
The accompanying financial statements should be read in conjunction with
the financial statements and notes thereto included in the Corporation's
1994 Annual Report to Stockholders.
2. In May 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 114, "Accounting for Creditors
for Impairment of a Loan." SFAS No 114 requires that impaired loans be
valued at the present value of expected future cash flows discounted at
the loan's effective interest rate or, as a practical expedient, at the
loan's observable market price, or the fair market value of the
collateral, if the loan is collateral dependent. The Corporation adopted
the provisions of SFAS No. 114 as of January 1, 1995. Adoption of this
Standard does not have any significant effect on the financial condition
or results of operations of the Corporation.
7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Financial Condition
The Corporation is primarily engaged in the life insurance business which
historically has provided a positive cash flow. By statute, the Life
Company is required to invest in quality securities which provide ample
protection for its policyholders. Policy liabilities of the Life Company
are predominately long term in nature and are supported primarily by long
term fixed maturity investments and mortgage loans on real estate.
Assets totaled $1.3 billion at March 31, 1995 with investment assets
totalling $1.2 billion or 90% of total assets. Both total assets and
invested assets increased over year-end 1994 results. The Corporation's
fixed maturity and equity securities portfolio is classified in the
balance sheet as available-for-sale and carried at fair value. At March
31, 1995 the fair value of these securities exceeded their cost by $3.6
million. At March 31, 1995 there were no principal and interest payments
past due on fixed maturities, and over 99% of the mortgage loans on real
estate were current for both principal and interest.
In May 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 114, "Accounting for Creditors
for Impairment of a Loan." SFAS No. 114 requires that impaired loans be
valued at the present value of expected future cash flows discounted at
the loan's effective interest rate or, as a practical expedient, at the
loan's observable market price, or the fair market value of the
collateral, if the loan is collateral dependent. The Corporation adopted
the provisions of SFAS 114 as of January 1, 1995. Adoption of this
Standard does not have any significant effect on the financial condition
or results of operations of the Corporation.
Cash and invested assets at March 31, 1995 exceeded total liabilities by
40%. The Life Company continually matches the investment portfolio to the
cash flow demands of the types of insurance being written and maintains
adequate cash and short term investments to meet cash requirements for
policy loans and voluntary policy terminations, as well as investment
commitments. Policy loans account for less than 5% of total cash and
invested assets.
As disclosed in the Notes to Consolidated Financial Statements as of
December 31, 1994, $140 million of consolidated stockholders' equity
represents net assets of the Life Company that cannot be transferred in
the form of dividends, loans or advances to the Corporation. However,
this poses no liquidity concerns to the Corporation as it has sufficient
cash flow to meet its operational requirements.
Results of Operations
Net income for the first quarter of 1995 was $9,464,730 compared to
$9,308,882 for the first quarter of 1994.
Premium income amounted to $28.8 million in the first quarter of both 1995
and 1994. Individual life insurance sales for the first quarter 1995
increased by 8% and amounted to $217 million compared to $200 million in
sales for the first quarter of 1994.
Net investment income, excluding realized investment gains and losses,
increased 3.8% compared to a decrease of 5% for the first quarter 1994.
The improvement for 1995 results primarily from higher yield on assets.
The decrease for 1994 was attributable to the downward trend experienced
in portfolio interest rates during 1993 and 1992, and the use of $14
million of internally generated funds to repurchase approximately 600,000
shares of common stock in the second quarter of 1993. Realized investment
gains were insignificant for both quarters.
8
Part II - Other Information
Item 4. Submission of Matters to a Vote of Security Holders
(a) During the three months ended March 31, 1995, and during the period
from that date to the date of this report, no matters other than those
considered at the Corporation's annual meeting of stockholders held on
April 4, 1995 (the "1995 Annual Meeting"), were submitted to a vote of
security holders, through the solicitation of proxies or otherwise. At
the 1995 Annual Meeting a total of 7,847,150 shares of the
Corporation's outstanding Class A Common Stock were present in person
or by proxy and entitled to vote.
(b) At the 1995 Annual Meeting Dianne N. Collins, H. D. Garnett, C. M.
Glenn, Jr., W. G. Hancock, G. T. Richardson, L. W. Richardson, J. M.
Wiltshire, Jr., R. W. Wiltshire, R. W. Wiltshire, Jr., and W. B.
Wiltshire were elected as directors to serve until the next annual
meeting of stockholders and until their successors are duly elected and
qualified.
(c) At the 1995 Annual Meeting, the following matters were voted upon
and received the vote set forth below:
(1) Election of Directors. Each nominee of the Corporation's
Board of Directors for election as a director at the 1995 Annual
Meeting was elected, having received the following vote of the holders
of the Corporation's Class A Common Stock:
Nominee For Withheld
Dianne N. Collins 7,847,150 -0-
H. D. Garnett 7,847,150 -0-
C. M. Glenn, Jr. 7,847,150 -0-
W. G. Hancock 7,847,150 -0-
G. T. Richardson 7,847,150 -0-
L. W. Richardson 7,847,150 -0-
J. M. Wiltshire, Jr. 7,847,150 -0-
R. W. Wiltshire 7,847,150 -0-
R. W. Wiltshire, Jr. 7,847,150 -0-
W. B. Wiltshire 7,847,150 -0-
(2) Ratification of Designation of Auditors.
Designation by the Corporation's Board of Directors or Ernst & Young
LLP as independent public accountants to audit the books of the
Corporation and its subsidiaries for the year ending December 31,
1995 was ratified at the 1995 Annual Meeting by the following
vote of the holders of the Corporation's Class A Common Stock:
FOR: 7,847,150
AGAINST: -0-
ABSTAIN: -0-
(d) Not applicable.
Item 5. Other Information
C. M. Glenn, Jr., who was elected as a director of the Corporation at the
1995 Annual Meeting, died on April 9, 1995. The vacancy on the Board of
Directors created by his death has not been filled.
9
Item 6. Exhibits and Reports on Form 8-K
(a) EXHIBITS: Exhibit 27 - Financial Data Schedule is filed as a part
of this Quarterly Report on Page 12
(b) No reports on Form 8-K were filed during the period covered by this
report.
10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Home Beneficial Corporation
(Registrant)
Date: May 11, 1995 R. W. Wiltshire, Jr.
President and
Chief Executive Officer
Date: May 11, 1995 Hugh D. Garnett
Vice President and Controller