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 September 30, 1995 Commission File No. 2-57299 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 September 30, 1995 and December 31, 1994 Consolidated Statements of Income - Statutory Basis Nine months and three months ended September 30, 1995 and 1994	 Consolidated Statements of Cash Flow - Statutory Basis Nine months ended September 30, 1995 and 1994 Notes to Consolidated Statutory Financial Statements 					 		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) ADMITTED ASSETS 	 	 	(Unaudited) September 30, 1995 	 	 Dec. 31, 1994 Investments: 	 	 	 	 	 	Fixed maturities, at NAIC value (NAIC Market Value: $169,61 and $157,409) 	 	172,917 	 	160,475 	Equity securities, at NAIC market value (Cost: $7,853 and $7,503) 	 	10,630 	 	10,156 	Mortgage loans, at cost 	 	1,840 	 	1,890 	Short-term investments, at cost 	 	5,287 	 	3,013 	Other invested assets 	 	1,132 	 	1,572 	TOTAL INVESTMENTS: 	 	191,806 	 	177,106 	Cash 	 	3,383 	 	4,507 	Premiums receivable (Net of balance of $396 and $303 outstanding 90 days or more) 	 	24,481 	 	17,616 	Accrued investment income 	 	3,546 	 	4,047 	Reinsurance recoverable on paid losses 	 	357 	 	1,176 	Equities & deposits in pools & assoc. 	 	1,930 	 	1,236 	Other Assets 	 	0 	 	899 	TOTAL ADMITTED ASSETS: 	 	225,503 	 	206,587 LIABILITIES & POLICYHOLDERS' SURPLUS 	 	 	 	 	 Liabilities: 	 	 	 	 	 	Reserve for losses and loss adjustment expenses 	 	110,531 	103,660 	Unearned premiums 	 	53,485 	 	46,948 	Reinsurance balances payable 	 	4,749 	 	8,286 	Accrued expenses and other liabilities 	 	8,205 	 	4,823 	TOTAL LIABILITIES: 	 	176,970 	 	163,717 Policyholders' Surplus: 	 	 	 	 	 	Special contingent surplus 	 	1,300 	 	1,300 	Net unrealized appreciation of equity securities 	 	3,226 	2,433 	Debentures issued and outstanding 	 	1,250 	 	1,265 	Subordinated surplus certificates issued and outstanding 	1,460 	 	1,484 	Unassigned surplus 	 	41,297 	 	36,388 	TOTAL POLICYHOLDERS' SURPLUS: 	 	48,533 	 	42,870 	TOTAL LIABILITIES & 	 	 	 	 	POLICYHOLDERS' SURPLUS: 	 	225,503 	 	206,587 FARM FAMILY MUTUAL INSURANCE COMPANY & SUBSIDIARY Consolidated Statements of Income - Statutory Basis (In Thousands) 	 	 	 Nine Months Three Months Ended September 30, Ended September 30, 	 	 	 1995 	 	1994 	 	 1995 	 	 1994 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenues: 	 	 	 	 	 	 	 	 	 	Net Premiums earned 	$ 	87,022 	 	74,576 	 	29,958 	 	26,172 	Net investment income 	 	10,702 	 	10,525 	 	3,692 	 	3,761 	Realized gain on investments 	198 	 	1,585 	 	306 	 	178 	Other income, net 	 	463 	 	362 	 	141 	 	112 	 	 	98,385 	 	87,048 	 	34,097 	 	30,223 Operating Expenses: 	 	 	 	 	 	 	 	 	 	Losses and loss adjustment expenses 	 	62,320 	 	61,537 	21,103 	 	20,818 	Underwriting expenses 	 	27,489 	 	22,221 	 	9,029 	 	7,578 	Interest on debentures & subordinated surplus certificates 	220 	 	223 	 	0 	 	0 	 	 	90,028 	 	83,981 	 	30,132 	 	28,396 Income before federal income taxes and dividends to policyholders 	Income before Federal Income Taxes & Dividends to policyholders 	 	8,357 	 	3,067 	 	3,965 	 	1,827 Dividends to policyholders 	 	 	51 	 	122 	 	51 	 	122 Income before federal income taxes 	 	 	8,306 	 	2,945 	 	3,914 	 	1,705 Federal income tax expense 	 	 	3,994 	 	1,159 	 	1,749 	 	555 	 	 	 	 	 	 	 	 	 	Net Income statutory basis: 	$ 	4,312 	 	1,786 	 	2,165 	 	1,150 FARM FAMILY MUTUAL INSURANCE COMPANY & SUBSIDIARY CONSOLIDATED STATEMENTS oF CASH FLOW - STATUTORY BASIS Nine months ended September 30, 1995 and 1994 (In Thousands) 	 	 	 	 	 	 	 	 	 	 	1995 	 	 	1994 		 Cash provided: 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	From operations: 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Premiums collected, net 	 	 	 	 	 	 	 	 	$ 	84,180 	 	 	76,112 	 	 	Loss and loss adjustment expenses paid, net 	 	 	 	 	 	 	 	 	 	(54,630) 	 	 	(56,988) 	 	 	Underwriting expenses paid 	 	 	 	 	 	 	 	 	 	(26,289) 	 	 	(23,303) 	 	 	Investment income collected, net 	 	 	 	 	 	 	 	 	 	11,245 	 	 	10,272 	 	 	Other income 	 	 	 	 	 	 	 	 	 	463 	 	 	361 	 	 	Dividends paid to policyholders 	 	 	 	 	 	 	 	 	 	(51) 	 	 	(122) 	 	 	Federal income taxes paid 	 	 	 	 	 	 	 	 	 	(2,475) 	 	 	(1,484) 	 	 	 	 	Net cash provided from operations 	 	 	 	 	 	 	 	12,443 	 	 	4,848 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	From investments sold, matured or redeemed: 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Fixed maturities 	 	 	 	 	 	 	 	 	 	32,267 	 	 	32,827 	 	 	Equity securities 	 	 	 	 	 	 	 	 	 	1,296 	 	 	812 	 	 	Mortgage loans 	 	 	 	 	 	 	 	 	 	49 	 	 	41 	 	 	Other invested assets 	 	 	 	 	 	 	 	 	 	440 	 	 	2,988 	 	 	 	 	Investment proceeds 	 	 	 	 	 	 	 	34,052 	 	 	36,668 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Other sources of cash: 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Decrease in receivable from affiliates 	 	 	 	 	 	 	 	 	 	921 	 	 	8 	 	 	Sale of data processing equipment 	 	 	 	 	 	 	 	 	 	0 	 	 	0 	 	 	Other sources 	 	 	 	 	 	 	 	 	 	132 	 	 	2,527 	 	 	 	 	Total cash provided 	 	 	 	 	 	 	 	47,548 	 	 	44,051 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 Cash used: 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Cash used to acquire investments: 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Fixed maturities 	 	 	 	 	 	 	 	 	 	43,802 	 	 	44,274 	 	 	Equity securities 	 	 	 	 	 	 	 	 	 	1,028 	 	 	375 	 	 	Mortgage loans 	 	 	 	 	 	 	 	 	 	0 	 	 	0 	 	 	 	 	 	 	 	 	 	 	 	 	44,830 	 	 	44,649 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Other uses of cash: 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Increase in due from affiliates 	 	 	 	 	 	 	 	 	 	4 	 	 	1 	 	 	Repurchase of debentures and 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	subordinated surplus certificates 	 	 	 	 	 	 	 	 	0 	 	 	0 	 	 	Interest paid of debentures and 	 	 	 	 	 	 	 	 	 	 	 	 	0 	 	 	 	subordinated surplus certificates 	 	 	 	 	 	 	 	 	0 	 	 	0 	 	 	Miscellaneous, net 	 	 	 	 	 	 	 	 	 	1,565 	 	 	223 	 	 	 	 	Total cash used 	 	 	 	 	 	 	 	46,399 	 	 	44,873 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Net cash provided (used) 	 	 	 	 	 	 	 	1,149 	 	 	(822) 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 Cash and short-term investments at beginning of year 	 	 	 	 	 	 	 	 	 	 	 	7,521 	 	 	6,738 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 Cash and short-term investments at end of year 	 	 	 	 	 	 	 	 	 	 	$ 	8,670 	 	 	5,916 	 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 September 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 September 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 	 	 	 	 	 	9 Months Ended September 30, 1995 and September 30, 1994 	 	 	 	3 Months Ended September 30, 1995 and September 30, 1994 	 	 	Amount 	Percent 	 	 	Amount 	Percent Premiums earned 	$ 	12,446 	16.69 	 	$ 	3,786 	14.47 Net investment income 	 	177 	1.68 	 	 	(69) 	(1.83) Losses incurred 	 	56 	0.11 	 	 	500 	2.86 Loss adjustment expenses 	 	727 	8.49 	 	 	(215) 	(6.47) Underwriting expenses 	 	5,268 	23.71 	 	 	1,451 	19.15 	 	 	 	 	 	 	 Net Income: 	$ 	2,526 	141.43 	 	$ 	1,016 	88.35 COMPARISON OF THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1995 & SEPTEMBER 30, 1994 PREMIUMS EARNED The increase of $12,446,000 is the net result of (1) an increase of $6,189,000 in voluntary auto; (2) an increase of $1,620,000 in the SFP-"10" policy, which is the Company's farm property and liability package policy; (3) an increase of $882,000 in workers' compensation premium; (4) an increase of $1,403,000 in assigned risk auto; (5) an increase of $2,352,000 in all other lines. NET INVESTMENT INCOME Net investment income has increased due to an increase in invested assets. LOSSES INCURRED The increase of $56,000 includes an increase of $2,010,000 in voluntary auto, a decrease of $412,000 in workers' compensation, a decrease of $4,979,000 in the SFP-"10" policy, an increase of $1,868,000 in the assigned risk auto, and an increase of $1,569,000 in all other lines. LOSS ADJUSTMENT EXPENSES The increase of $727,000 is caused in part by an increase in the number of claims as a result of the increased amount of business written. 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 SEPTEMBER 30, 1995 AND SEPTEMBER 30, 1994 PREMIUMS EARNED The increase of $3,786,000 is the net result of (1) an increase of $2,163,000 in voluntary auto; (2) an increase of $531,000 in the SFP-"10" policy, which is the Company's farm property and liability package policy; (3) a decrease of $67,000 in workers' compensation premium; (4) an increase of $366,000 in assigned risk auto; (5) an increase of $793,000 in all other lines. NET INVESTMENT INCOME Investment income has decreased due to a reduction in interest rates earned on new investments. LOSSES INCURRED The increase of $500,000 includes a decrease of $836,000 in voluntary auto, a decrease of $673,000 in workers' compensation, a decrease of $396,000 in the SFP-"10" policy, an increase of $146,000 in the assigned risk auto, and an increase of $2,259,000 in all other lines. LOSS ADJUSTMENT EXPENSES The decrease of $215,000 is caused in part by a decrease in loss adjustment expenses paid for the residual market automobile and workers' compensation 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) November 8, 1995 	 	 /s/ Philip P. Weber (Date) 	 	Philip P. Weber, Executive Vice-President & C.E.O. (Principal Administrative Officer) November 8, 1995 	 	 /s/ Charles E. Simon (Date) 	 	Charles E. Simon, Senior Vice President & C.F.O. (Principal Financial Officer)