UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period ended June 30, 1995
Commission File No. 2-572299
FARM FAMILY MUTUAL INSURANCE COMPANY
A New York Corporation IRS No. 14-1415410
344 Route 9W, Glenmont, New York 12077-2910
Registrant's telephone number: (518) 436-9751
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
FARM FAMILY MUTUAL INSURANCE COMPANY & SUBSIDIARY
INDEX
Part I. Financial Information
Item 1. Financial Statements (unaudited)
Consolidated Statements of Admitted Assets, Liabilities and
Policyholders' Surplus - Statutory Basis June 30, 1995 and
December 31, 1994
Consolidated Statements of Income - Statutory Basis Six months
and three months ended June 30, 1995 and 1994
Consolidated Statements of Cash Flow - Statutory Basis Six months
ended June 30, 1995 and 1994
Item 2. Management's Discussion and Analysis of the
Consolidated Statutory Statements of Income - Statutory Basis
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
FARM FAMILY MUTUAL INSURANCE COMPANY & SUBSIDIARY
Consolidated Statements of Admitted Assets, Liabilities and
Policyholders' Surplus - Statutory Basis
(In Thousands)
(Unaudited)
ADMITTED ASSETS June 30, 1995 Dec. 31, 1994
Investments:
Fixed maturities, at NAIC value
(NAIC Market Value: $159,118
and $157,409) 162,217 160,475
Equity securities, at NAIC market
value (Cost: $8,206 and $7,503) 11,107 10,156
Mortgage loans, at cost 1,857 1,890
Short-term investments, at cost 10,974 3,013
Other invested assets 1,160 1,572
TOTAL INVESTMENTS: 187,315 177,106
Cash 4,138 4,507
Premiums receivable (Net of balance
of $270 and $237 outstanding 90
days or more) 23,516 17,616
Accrued investment income 4,001 4,047
Reinsurance recoverable on paid losses 653 1,176
Equities & deposits in pools &
associations 1,570 1,236
Other Assets 264 899
TOTAL ADMITTED ASSETS: 221,457 206,587
LIABILITIES & POLICYHOLDERS' SURPLUS
Liabilities:
Reserve for losses and loss
adjustment expenses 108,433 103,660
Unearned premiums 53,368 46,948
Reinsurance balances payable 6,380 8,286
Accrued expenses and other liabilities 7,396 4,823
TOTAL LIABILITIES: 175,577 163,717
Policyholders' Surplus:
Special contingent surplus 1,300 1,300
Net unrealized appreciation of
equity securities 2,890 2,433
Debentures issued and outstanding 1,251 1,265
Subordinated surplus certificates
issued and outstanding 1,465 1,484
Unassigned surplus 38,974 36,388
TOTAL POLICYHOLDERS' SURPLUS: 45,880 42,870
TOTAL LIABILITIES & POLICYHOLDERS'
SURPLUS: 221,457 206,587
FARM FAMILY MUTUAL INSURANCE COMPANY & SUBSIDIARY
Consolidated Statements of Income - Statutory Basis
(In Thousands)
Six Months Three Months
Ended June 30, Ended June 30,
1995 1994 1995 1994
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues:
Net Premiums earned $ 57,064 48,404 29,211 24,417
Net investment income 7,010 6,764 3,505 3,504
Realized gain on investments (108) 1,407 (169) 499
Other income, net 322 250 192 148
64,288 56,825 32,739 28,568
Operating Expenses:
Losses and loss adjustment
expenses 41,217 40,719 21,784 19,778
Underwriting expenses 18,460 14,643 9,383 7,421
Interest on debentures &
subordinated surplus certificates 220 223 220 223
Income before federal income
taxes and dividends to
policyholders 59,897 55,585 31,387 27,422
Income before Federal Income
Taxes & Dividends to
policyholders 4,391 1,240 1,352 1,146
Dividends to policyholders 0 0 0 0
Income before federal income
taxes 4,391 1,240 1,352 1,146
Federal income tax expense 2,245 604 1,039 604
Net Income statutory basis: $ 2,146 636 313 542
FARM FAMILY MUTUAL INSURANCE COMPANY & SUBSIDIARY
CONSOLIDATED STATEMENTS oF CASH FLOW - STATUTORY BASIS
Six months ended June 30, 1995 and 1994
(In Thousands)
1995 1994
Cash provided:
From operations:
Premiums collected, net $ 56,909 52,195
Loss and loss adjustment expenses paid, net (35,921) (37,061)
Underwriting expenses paid (17,985) (14,900)
Investment income collected, net 7,078 6,240
Other income 322 250
Dividends paid to policyholders 0 0
Federal income taxes paid (1,610) (869)
Net cash provided from operations 8,793 5,855
From investments sold, matured or redeemed:
Fixed maturities 22,880 26,356
Equity securities 56 578
Mortgage loans 32 26
Other invested assets 412 450
Investment proceeds 23,380 27,410
Other sources of cash:
Decrease in receivable from affiliates 1,393 8
Sale of data processing equipment 0 0
Other sources 106 1,448
Total cash provided 33,671 34,721
Cash used:
Cash used to acquire investments:
Fixed maturities 24,167 32,121
Equity securities 629 0
Mortgage loans 0 0
24,795 32,121
Other uses of cash:
Increase in due from affiliates 8 3
Repurchase of debentures and
subordinated surplus certificates 0 0
Interest paid of debentures and
subordinated surplus certificates 220 (241)
Miscellaneous, net 1,057 223
Total cash used 26,080 32,347
Net cash provided (used) 7,591 2,374
Cash and short-term investments at beginning of year 7,520 6,738
Cash and short-term investments at end of year $ 15,111 9,112
FARM FAMILY MUTUAL INSURANCE COMPANY & SUBSIDIARY
Notes to Consolidated Statutory Financial Statements - Statutory Basis
1. The accompanying unaudited consolidated statutory financial
statements have been prepared in conformity with insurance accounting
practices prescribed or permitted by the Insurance Department of the State
of New York which vary in some respects from generally accepted
accounting principles. Significant variations include: (1)
stocks are carried at market values and no provision is made for
income tax on the unrealized appreciation of such investments;
(2) certain assets designated as "non-admitted assets"
(principally direct premiums "overdue" and balances due from
agents and employees) are excluded from the consolidated balance
sheet through charges to policyholders' surplus; (3) salvage and
subrogation recoveries are not recorded until cash is received;
(4) premiums written are taken into operations on a pro-rata
basis over the periods covered by the policies, whereas related
policy acquisition costs are charged to operations when
incurred; (5) federal income taxes are provided on the basis of
amounts currently payable or refundable. No provision is made
for deferred income taxes relating to timing differences between
financial reporting and taxable income.
2. The consolidated statutory financial statements included the
accounts of Farm Family Mutual Insurance Company (the Company) and its
wholly-owned subsidiary Rural Agency and Brokerage, Inc. (RAB) and its
subsidiaries. The subsidiaries of RAB are Rural Insurance
Agency and Brokerage of Massachusetts, Inc. (100%-owned by RAB),
R.A.A.B. of W. Va., Inc.. (100%-owned by RAB) and Rural Agency
and Brokerage of New Hampshire, Inc. (25%-owned by RAB). The
minority interest in the capital and net income of Rural Agency
and Brokerage of New Hampshire, Inc. is immaterial. All
significant intercompany accounts and transactions have been
eliminated in consolidation.
3. The management of the Company believes the accompanying
unaudited consolidated statutory financial statements contain all
adjustments necessary to present fairly the financial position as of
June 30, 1995 and the results of operations and changes in financial
portion for the period then ended.
4. The results of operations for the periods ended June 30,
1995 and 1994 are not necessarily indicative of the results to be expected
for the full year.
5. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's annual report
on Form 10-K for the year ended December 31, 1994.
FARM FAMILY MUTUAL INSURANCE COMPANY & SUBSIDIARY
Management's Discussion and Analysis of the Consolidated Statements of
Income - Statutory Basis
(In Thousands)
The following is management's discussion and analysis of certain
significant factors which have affected the Company's net income
during the periods included in the accompanying statements of
income.
A summary of the period to period changes in the principal items
included in the statutory consolidated statements of income is
shown below:
Comparison of
6 Months Ended 3 Months Ended
June 30, 1995 and 1994 June 30, 1995 and 1994
Amount Percent Amount Percent
Premiums earned $ 8,660 17.89 $ 4,795 19.64
Net investment income 246 3.64 1 0.03
Losses incurred (444) (1.25) 1,369 7.95
Loss adjustment expenses 942 17.96 667 25.97
Underwriting expenses 3,817 26.07 1,962 26.44
Net Income: $ 1,730 272.01 $ (9) (1.66)
COMPARISON OF THE SIX MONTH PERIODS ENDED JUNE 30, 1995 & JUNE 30, 1994
PREMIUMS EARNED
The increase of $8,660,000 is the net result of (1) an increase
of $4,026,000 in voluntary auto; (2) an increase of $1,089,000
in the SFP-"10" policy, which is the Company's farm property and
liability package policy; (3) an increase of $949,000 in
workers' compensation premium; (4) an increase of $1,037,000 in
assigned risk auto; (5) an increase of $1,559,000 in all other
lines.
NET INVESTMENT INCOME
Net investment income has increased due to an increase in
invested assets.
LOSSES INCURRED
The decrease of $444,000 includes an increase of $2,846,000 in
voluntary auto, an increase of $261,000 in workers'
compensation, a decrease of $4,583,000 in the SFP-"10" policy,
an increase of $1,722,000 in the assigned risk auto, and a
decrease of $690,000 in all other lines.
LOSS ADJUSTMENT EXPENSES
The increase of $942,000 is caused in part by an increase in
assumed LAE Expenses paid from the assigned risk pools.
UNDERWRITING EXPENSES
The underwriting expense increase is due in part to the increase
in commission and taxes paid due to the increase in direct
written premiums.
FEDERAL INCOME TAX EXPENSE
The Company makes provision for federal income taxes based on
pre-tax earnings for each of the periods.
COMPARISON OF THE THREE MONTH PERIODS ENDED JUNE 30, 1995 AND JUNE 30, 1994
PREMIUMS EARNED
The increase of $4,795,000 is the net result of (1) an increase
of $2,054,000 in voluntary auto; (2) an increase of $521,000 in
the SFP-"10" policy, which is the Company's farm property and
liability package policy; (3) an increase of $618,000 in
workers' compensation premium; (4) an increase of $811,000 in
assigned risk auto; (5) an increase of $791,000 in all other
lines.
NET INVESTMENT INCOME
Investment income has increased due to an increase in invested
assets.
LOSSES INCURRED
The increase of $1,369,000 includes an increase of $1,560,000 in
voluntary auto, a decrease of $81,000 in workers' compensation,
a decrease of $763,000 in the SFP-"10" policy, an increase of
$878,000 in the assigned risk auto, and a decrease of $225,000
in all other lines.
LOSS ADJUSTMENT EXPENSES
The increase of $667,000 is caused in part by an increase in
assumed LAE Expenses paid from the assigned risk pools.
UNDERWRITING EXPENSES
The underwriting expense increase is due in part to the increase
in commission and taxes paid due to the increase in direct
written premiums.
FEDERAL INCOME TAX EXPENSE
The Company makes provision for federal income taxes based on
pre-tax earnings for each of the periods.
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter for
which this report is filed.
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.
FARM FAMILY MUTUAL INSURANCE COMPANY
(Registrant)
August 2, 1995 /s/ Philip P. Weber
(Date) Philip P. Weber, Executive Vice-President & C.E.O.
(Principal Administrative Officer)
August 2, 1995 /s/ Charles E. Simon
(Date) Charles E. Simon, Senior Vice President & C.F.O.
(Principal Financial Officer)