<PAGE> 1
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 September 30, 1995
__________________
___ 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 2-39621
UNITED FIRE & CASUALTY COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Iowa 42-0644327
________________________ ___________________________________
(State of Incorporation) (IRS Employer Identification No.)
118 Second Avenue, S.E.
Cedar Rapids, Iowa 52407
_______________________________________________________________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(319) 399-5700
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
______ _____
As of November 2, 1995, 7,219,780 shares of common stock were
outstanding.
<PAGE> 2
UNITED FIRE & CASUALTY COMPANY
AND SUBSIDIARIES
TABLE OF CONTENTS
PART I: FINANCIAL INFORMATION
Report of Independent Public Accountants...... 3
Consolidated Balance Sheets for
September 30, 1995 and December 31, 1994.......... 4
Unaudited Consolidated Statements of
Operations - Three Months Ended
September 30, 1995 and 1994....................... 5
Unaudited Consolidated Statements of
Operations - Nine Months Ended
September 30, 1995 and 1994....................... 6
Unaudited Consolidated Statements of
Cash Flows - Nine Months Ended
September 30, 1995 and 1994....................... 7
Notes to Unaudited Consolidated
Financial Statements.......................... 8-11
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 12-14
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Signatures.................................... 15
Exhibit 11. Computation of Net Income Per
Common Share.................................. 16
<PAGE> 3
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
________________________________________
To the Stockholders and Board of Directors of
United Fire & Casualty Company:
We have reviewed the accompanying consolidated balance sheet of UNITED FIRE &
CASUALTY COMPANY (an Iowa corporation) AND SUBSIDIARIES as of September 30,
1995, and the related consolidated statements of operations for the three-month
and nine-month periods ended September 30, 1995 and 1994, and the consolidated
statements of cash flows for the nine-month periods ended September 30, 1995 and
1994. These financial statements are the responsibility of the Company's
management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the financial statements referred to above in order for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of United Fire & Casualty Company and
Subsidiaries as of December 31, 1994, and, in our report dated February 24,
1995, we expressed an unqualified opinion on that statement. In our opinion, the
information set forth in the accompanying consolidated balance sheet as of
December 31, 1994, is fairly stated, in all material respects, in relation to
the consolidated balance sheet from which it has been derived.
/S/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Chicago, Illinois,
November 2, 1995
<PAGE> 4
<TABLE>
<CAPTION>
UNITED FIRE & CASUALTY COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
_____________________________________________________________________________________________________
1995 1994
UNAUDITED Audited
_____________________________________________________________________________________________________
<S> <C> <C>
ASSETS
INVESTMENTS:
Fixed maturities (market value $675,557,339 in 1995
and $571,306,514 in 1994) . . . . . . . . . . . . . . . . . . . . .$655,424,754 $593,637,794
Equity securities (cost $25,039,173
in 1995 and $24,913,743 in 1994). . . . . . . . . . . . . . . . . . 71,472,530 56,196,670
Mortgage loans. . . . . . . . . . . . . . . . . . . . . . . . . . . 3,061,095 3,120,093
Policy loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,047,233 6,802,227
Other long-term investments (cost $7,313,314
in 1995 and $6,556,845 in 1994) . . . . . . . . . . . . . . . . . . 7,966,607 7,071,898
Short-term investments. . . . . . . . . . . . . . . . . . . . . . . 11,378,106 9,954,637
_____________________________________________________________________________________________________
756,350,325 676,783,319
CASH AND CASH EQUIVALENTS. . . . . . . . . . . . . . . . . . . . . . . 6,229,313 10,254,892
ACCRUED INVESTMENT INCOME . . . . . . . . . . . . . . . . . . . . . . 11,063,630 10,410,792
ACCOUNTS RECEIVABLE. . . . . . . . . . . . . . . . . . . . . . . . . . 42,217,206 33,864,498
DEFERRED POLICY ACQUISITION COSTS. . . . . . . . . . . . . . . . . . . 52,192,309 47,544,519
PROPERTY AND EQUIPMENT . . . . . . . . . . . . . . . . . . . . . . . . 12,948,788 12,737,712
REINSURANCE RECEIVABLES. . . . . . . . . . . . . . . . . . . . . . . . 16,674,160 24,222,444
PREPAID REINSURANCE PREMIUMS . . . . . . . . . . . . . . . . . . . . . 3,958,413 3,033,531
INTANGIBLES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,691,171 1,882,196
INCOME TAXES RECEIVABLE. . . . . . . . . . . . . . . . . . . . . . . . 406,751 --
OTHER ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,438,626 7,391,810
_____________________________________________________________________________________________________
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$910,170,692 $828,125,713
=====================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
_____________________________________________________________________________________________________
LIABILITIES:
Future policy benefits and losses, claims and settlement expenses
Property and casualty insurance . . . . . . . . . . . . . . . . .$200,923,268 $203,910,747
Life insurance. . . . . . . . . . . . . . . . . . . . . . . . . . 384,433,829 344,095,937
Unearned premiums . . . . . . . . . . . . . . . . . . . . . . . . . 96,922,113 83,450,394
Accrued expenses and other liabilities. . . . . . . . . . . . . . . 21,885,733 22,323,899
Postretirement benefits other than pensions . . . . . . . . . . . . 2,770,778 2,366,492
Income taxes payable. . . . . . . . . . . . . . . . . . . . . . . . -- 826,379
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . 7,039,698 498,437
_____________________________________________________________________________________________________
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . . . . .$713,975,419 $657,472,285
_____________________________________________________________________________________________________
STOCKHOLDERS' EQUITY:
Common stock. . . . . . . . . . . . . . . . . . . . . . . . . . . .$ 24,065,947 $ 24,066,490
Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . 12,038,946 12,048,856
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . 129,336,250 113,616,829
Net unrealized appreciation, net of applicable
income taxes of $16,303,716 in 1995 and $11,009,092 in 1994 . . . . 30,754,130 20,921,253
_____________________________________________________________________________________________________
TOTAL STOCKHOLDERS' EQUITY . . . . . . . . . . . . . . . . . . . . . .$196,195,273 $170,653,428
_____________________________________________________________________________________________________
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY . . . . . . . . . . . . . .$910,170,692 $828,125,713
=====================================================================================================
The Notes to Unaudited Consolidated Financial Statements are an integral part of these statements.
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
UNITED FIRE & CASUALTY COMPANY
AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
___________________________________________________________________________________________________
1995 1994
___________________________________________________________________________________________________
<S> <C> <C>
Revenues:
Premiums earned . . . . . . . . . . . . . . . . . . . . . . . . $ 52,382,055 $ 48,156,713
Investment income, net . . . . . . . . . . . . . . . . . . . . 13,542,081 11,984,846
Realized investment gains . . . . . . . . . . . . . . . . . . . 520,837 138,020
Commission and policy fee income. . . . . . . . . . . . . . . . 456,596 489,884
___________________________________________________________________________________________________
$ 66,901,569 $ 60,769,463
___________________________________________________________________________________________________
Benefits, Losses and Expenses:
Losses and settlement expenses. . . . . . . . . . . . . . . . . $ 31,916,998 $ 35,011,072
Increase in liability for future policy benefits. . . . . . . . 2,594,558 1,231,280
Amortization of deferred policy acquisition costs . . . . . . . 10,456,515 11,586,982
Other underwriting expenses . . . . . . . . . . . . . . . . . . 7,891,779 4,420,730
Interest on policyholders' accounts . . . . . . . . . . . . . . 4,973,964 4,258,146
___________________________________________________________________________________________________
$ 57,833,814 $ 56,508,210
___________________________________________________________________________________________________
Income before income taxes. . . . . . . . . . . . . . . . . . . $ 9,067,755 $ 4,261,253
Federal income taxes . . . . . . . . . . . . . . . . . . . . . 2,506,969 778,259
___________________________________________________________________________________________________
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,560,786 $ 3,482,994
===================================================================================================
Net income per common share . . . . . . . . . . . . . . . . . . $ .91 $ .48
===================================================================================================
Weighted average common shares outstanding . . . . . . . . . . . . 7,219,842 7,219,943
===================================================================================================
Cash dividends declared per common share . . . . . . . . . . . . . $ .20 $ . 18
===================================================================================================
The Notes to Unaudited Consolidated Financial Statements are an integral part of these statements.
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
UNITED FIRE & CASUALTY COMPANY
AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
___________________________________________________________________________________________________
1995 1994
___________________________________________________________________________________________________
<S> <C> <C>
Revenues:
Premiums earned . . . . . . . . . . . . . . . . . . . . . . . . $153,661,885 $135,203,041
Investment income, net . . . . . . . . . . . . . . . . . . . . 39,366,001 33,630,455
Realized investment gains . . . . . . . . . . . . . . . . . . . 1,433,264 636,920
Commission and policy fee income. . . . . . . . . . . . . . . . 1,395,476 1,457,948
___________________________________________________________________________________________________
$195,856,626 $170,928,364
___________________________________________________________________________________________________
Benefits, Losses and Expenses:
Losses and settlement expenses. . . . . . . . . . . . . . . . . $ 92,830,561 $ 91,833,818
Increase in liability for future policy benefits. . . . . . . . 7,304,352 3,988,127
Amortization of deferred policy acquisition costs . . . . . . . 30,321,087 26,443,612
Other underwriting expenses . . . . . . . . . . . . . . . . . . 24,054,911 20,516,531
Interest on policyholders' accounts . . . . . . . . . . . . . . 14,880,012 12,420,926
___________________________________________________________________________________________________
$169,390,923 $155,203,014
___________________________________________________________________________________________________
Income before income taxes. . . . . . . . . . . . . . . . . . . $ 26,465,703 $ 15,725,350
Federal income taxes . . . . . . . . . . . . . . . . . . . . . 6,413,612 2,784,838
___________________________________________________________________________________________________
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 20,052,091 $ 12,940,512
===================================================================================================
Net income per common share . . . . . . . . . . . . . . . . . . $ 2.78 $ 1.79
===================================================================================================
Weighted average common shares outstanding . . . . . . . . . . . . 7,219,909 7,219,943
===================================================================================================
Cash dividends declared per common share . . . . . . . . . . . . . $ .60 $ . 54
===================================================================================================
The Notes to Unaudited Consolidated Financial Statements are an integral part of these statements.
</TABLE>
<PAGE> 7
<TABLE>
<CAPTION>
UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
_____________________________________________________________________________________________________
1995 1994
_____________________________________________________________________________________________________
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 20,052,091 $ 12,940,512
_____________________________________________________________________________________________________
Adjustments to reconcile net income to net cash provided by
operating activities:
Net bond discount accretion . . . . . . . . . . . . . . . . . . . . (685,484) (247,453)
Depreciation and amortization . . . . . . . . . . . . . . . . . . . 1,043,787 1,846,273
Realized gains on sales and calls of investments. . . . . . . . . . (1,433,264) (636,920)
Changes in:
Accrued investment income . . . . . . . . . . . . . . . . . . . . (652,838) 408,391
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . (8,352,708) (6,248,685)
Deferred policy acquisition costs . . . . . . . . . . . . . . . . (4,647,790) (3,571,170)
Reinsurance receivables . . . . . . . . . . . . . . . . . . . . . 7,548,284 (4,626,338)
Prepaid reinsurance premiums. . . . . . . . . . . . . . . . . . . (924,882) (99,069)
Income taxes receivable . . . . . . . . . . . . . . . . . . . . . (406,751) (853,156)
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . 953,184 378,611
Future policy benefits and losses, claims and
settlement expenses . . . . . . . . . . . . . . . . . . . . . . . 6,567,299 21,318,774
Unearned premiums . . . . . . . . . . . . . . . . . . . . . . . . 13,471,719 10,264,538
Accrued expenses and other liabilities. . . . . . . . . . . . . . 1,005,823 (787,685)
Postretirement benefits other than pensions . . . . . . . . . . . 404,286 423,195
Income taxes payable. . . . . . . . . . . . . . . . . . . . . . . (826,379) --
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . 1,246,637 (1,473,833)
_____________________________________________________________________________________________________
Total adjustments . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,310,923 $ 16,095,473
_____________________________________________________________________________________________________
Net cash provided by operating activities . . . . . . . . . . . . . $ 34,363,014 $ 29,035,985
_____________________________________________________________________________________________________
Cash Flows From Investing Activities:
Proceeds from sale of available-for-sale investments. . . . . . . . $ 1,344,627 $ 196,217
Proceeds from call and maturity of held-to-maturity investments . . 19,186,787 45,582,994
Proceeds from call and maturity of available-for-sale investments . 3,205,191 1,595,230
Proceeds from sale of other investments . . . . . . . . . . . . . . 7,276,603 16,396,576
Purchase of investments held-to-maturity. . . . . . . . . . . . . . (80,472,978) (90,709,090)
Purchase of investments available-for-sale. . . . . . . . . . . . . (3,218,442) (854,401)
Purchase of other investments . . . . . . . . . . . . . . . . . . . (9,642,545) (26,418,438)
Proceeds from sale of property and equipment. . . . . . . . . . . . 889,126 32,070
Purchase of property and equipment. . . . . . . . . . . . . . . . . (1,952,964) (1,075,603)
_____________________________________________________________________________________________________
Net cash used in investing activities . . . . . . . . . . . . . . . $(63,384,595) $(55,254,445)
_____________________________________________________________________________________________________
Cash Flows From Financing Activities:
Policyholders' account balances
Deposits to investment and universal life type contracts. . . . . $ 65,985,538 $ 45,266,189
Withdrawals from investment and universal life type contracts . . (35,202,424) (20,657,830)
Purchase and retirement of common stock . . . . . . . . . . . . . . (10,453) --
Payment of cash dividends . . . . . . . . . . . . . . . . . . . . . (5,776,659) (5,198,517)
_____________________________________________________________________________________________________
Net cash provided by financing activities . . . . . . . . . . . . . $ 24,996,002 $ 19,409,842
_____________________________________________________________________________________________________
Decrease in Cash and Cash Equivalents . . . . . . . . . . . . . . . $ (4,025,579) $ (6,808,618)
Cash and Cash Equivalents at Beginning of Year. . . . . . . . . . . 10,254,892 13,704,164
_____________________________________________________________________________________________________
Cash and Cash Equivalents at End of Period . . . . . . . . . . . . . . $ 6,229,313 $ 6,895,546
=====================================================================================================
The Notes to Unaudited Consolidated Financial Statements are an integral part of these statements.
</TABLE>
<PAGE> 8
UNITED FIRE & CASUALTY COMPANY
AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1.
In the opinion of the management of United Fire & Casualty Company and
Subsidiaries (the "Company"), the accompanying unaudited consolidated financial
statements contain all adjustments (consisting of normal recurring adjustments)
necessary to present fairly the financial position, the results of operations,
and cash flows for the periods presented. The results for the interim periods
are not necessarily indicative of the results of operations that may be expected
for the year. The financial statements contained herein should be read in
conjunction with the Company's annual report on Form 10-K for the year ended
December 31, 1994. The review report of Arthur Andersen LLP accompanies the
unaudited consolidated financial statements included in Item 1 of Part I.
NOTE 2.
The Company maintains its records in conformity with the accounting practices
prescribed or permitted by the Insurance Department of the State of Iowa. To the
extent that certain of these practices differ from generally accepted accounting
principles, adjustments have been made in order to present the accompanying
financial statements on the basis of generally accepted accounting principles.
Certain amounts included in the financial statements for the previous year
have been reclassified to conform with the financial statement presentation at
September 30, 1995.
NOTE 3.
For purposes of reporting cash flows, cash and cash equivalents include cash
and non-negotiable certificates of deposit with original maturities of three
months or less. Income taxes paid, net of refunds for the nine months ended
September 30, 1995 and 1994 were $6,400,000, and $4,650,000, respectively. There
were no significant payments of interest through September 30, 1995 and 1994,
other than interest credited to policyholders' accounts.
<PAGE> 9
UNITED FIRE & CASUALTY COMPANY
AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4.
Effective December 31, 1994, the Company adopted Statement of Financial
Accounting Standards No. 119, "Disclosure about Derivative Financial Instruments
and Fair Value of Financial Instruments" ("SFAS No. 119"). SFAS No. 119 expands
disclosure requirements concerning derivative investments, including whether
investments are held for trading or other purposes, such as hedging. The Company
does not own any derivative investments as defined by SFAS No. 119, and
therefore is not subject to the expanded disclosure requirements.
Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" ("SFAS No. 115"). SFAS No. 115 addresses the accounting and
reporting for investments in equity securities that have readily determinable
fair values and for all investments in debt securities. The statement requires
that those investments be classified into the following three categories: 1)
debt securities that the enterprise has the positive intent and ability to hold
to maturity are classified as held-to-maturity securities and reported at
amortized cost; 2) debt and equity securities that are bought and held
principally for the purpose of selling them in the near term are classified as
trading securities and reported at fair value, with unrealized gains and losses
included in net income; and 3) debt securities and marketable equity securities
not classified as either held-to-maturity securities or trading securities are
classified as available-for-sale securities and reported at fair value, with
unrealized gains and losses excluded from net income and reported as a separate
component of stockholders' equity. The Company classifies a majority of its
investments in fixed income securities as held-to-maturity.
A reconciliation of the amortized cost to fair values of investments in
held-to-maturity and available-for-sale fixed maturities, marketable equity
securities and other long-term investments as of September 30, 1995 is reported
on the next page.
<PAGE> 10
<TABLE>
<CAPTION>
UNITED FIRE & CASUALTY COMPANY
AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
_____________________________________________________________________________________________________
SEPTEMBER 30, 1995 Gross Gross
Amortized Unrealized Unrealized Fair
TYPE OF INVESTMENT Cost Appreciation Depreciation Value
_____________________________________________________________________________________________________
<S> <C> <C> <C> <C>
HELD-TO-MATURITY
Fixed Maturities
Bonds
U.S. Government,
government agencies and authorities
Collateralized mortgage obligations $ 94,327,085 $ 2,259,364 $ 1,453,781 $ 95,132,668
Mortgage-backed securities 29,696,145 2,172,349 2,729 31,865,765
All others 2,236,689 349,119 6,912 2,578,896
States, municipalities and
political subdivisions 183,447,383 9,815,157 665,063 192,597,477
Foreign 6,859,461 296,960 -- 7,156,421
Public utilities 47,159,267 386,840 698,488 46,847,619
Corporate bonds
Collateralized mortgage obligations 103,602,758 2,497,993 2,153,644 103,947,107
All other corporate bonds 186,765,724 7,918,952 583,532 194,101,144
_____________________________________________________________________________________________________
Total held-to-maturity $654,094,512 $ 25,696,734 $ 5,564,149 $674,227,097
_____________________________________________________________________________________________________
AVAILABLE-FOR-SALE
Fixed Maturities
Bonds
U.S. Government,
government agencies and authorities
Mortgage-backed securities $ 77,577 $ 5,058 $ -- $ 82,635
All others 326,274 957 7,228 320,003
Public utilities 206,000 -- 28,000 178,000
Corporate bonds 749,195 15,714 15,305 749,604
_____________________________________________________________________________________________________
Total fixed maturities $ 1,359,046 $ 21,729 $ 50,533 $ 1,330,242
_____________________________________________________________________________________________________
Equity Securities
Common stocks
Public Utilities $ 3,561,403 $ 4,305,442 $ -- $ 7,866,845
Banks, trust and insurance companies 11,964,375 26,838,411 102,081 38,700,705
All other common stocks 8,609,780 15,643,237 313,628 23,939,389
Nonredeemable preferred stocks 903,615 76,976 15,000 965,591
_____________________________________________________________________________________________________
Total equity securities $ 25,039,173 $ 46,864,066 $ 430,709 $ 71,472,530
_____________________________________________________________________________________________________
Total available-for-sale $ 26,398,219 $ 46,885,795 $ 481,242 $ 72,802,772
=====================================================================================================
Other long-term investments $ 7,313,314 $ 804,527 $ 151,234 $ 7,966,607
=====================================================================================================
</TABLE>
<PAGE> 11
UNITED FIRE & CASUALTY COMPANY
AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
The amortized cost and fair value of held-to-maturity and available-for-sale
fixed maturities at September 30, 1995 by contractual maturity are shown below.
Expected maturities will differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without call or
prepayment penalties.
<TABLE>
<CAPTION>
____________________________________________________________________________________________________
Held-to-maturity Available-for-sale
____________________________________________________________________________________________________
Amortized Cost Fair Value Amortized Cost Fair Value
____________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Due in one year or less $ 6,537,247 $ 6,622,063 $ 100,413 $ 101,052
Due after one year through five years 63,922,507 66,936,601 530,261 525,325
Due after five years through ten years 169,065,860 177,173,448 650,795 621,230
Due after ten years 186,942,910 192,549,445 -- --
Mortgage-backed securities 29,696,145 31,865,765 77,577 82,635
Collateralized mortgage obligations 197,929,843 199,079,775 -- --
____________________________________________________________________________________________________
$ 654,094,512 $ 674,227,097 $ 1,359,046 $ 1,330,242
====================================================================================================
</TABLE>
<PAGE> 12
UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION AND LIQUIDITY
ASSETS
The Company's investments in fixed maturities increased by 10.4% or
$61,787,000 through September 30, 1995. Approximately 30% of these securities
are collateralized mortgage obligations ("CMOs"), compared to approximately 28%
at December 31, 1994. Continuing review of the fixed income market has shown
that CMOs are an attractive investment alternative. The Company minimizes its
prepayment risk by buying most issues priced at a slight discount. While buying
at a discount does not prevent prepayment, the yield is not penalized as is the
case when a premium is paid. In addition, although the stated maturity is longer
than the average life of the issues, the Company is concentrating on buying
issues with expected maturity in the seven to twelve year range.
The Company's equity securities consists of readily marketable common and
preferred stocks, all of which are classified as available-for-sale. Growth in
this asset is primarily the result of $46,433,000 of unrealized appreciation in
market value. Other long-term investments are primarily holdings in limited
partnership funds investing in banks.
The Company's accounts receivable are amounts due from property and casualty
insurance agents and brokers for premiums written net of commissions. Losses
payable to reinsurance brokers on assumed business are also netted against
accounts receivable. The growth in this asset of $8,353,000 or 24.7% is largely
the result of three factors. The property and casualty segment has experienced
growth in its direct and assumed premium writings. In addition, many insureds
opt to utilize the Company's deferred billing plan, which has the effect of
increasing the agents accounts receivable. The third factor relates to
reinsurance. The Company deposits funds with one reinsurer in January and June,
and records the deposits as accounts receivable. This asset is reduced as
premiums are ceded to the reinsurer. By December 31 of each year, these premiums
are earned, so the deposit in accounts receivable is eliminated.
<PAGE> 13
UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION AND LIQUIDITY (CONTINUED)
The Company pays deposits to other reinsurers on a quarterly basis,
although the aggregate amount of these deposits is smaller than the semi-annual
payments.
Reinsurance receivables are ceded losses, expenses and reserves that are
due the Company from reinsurers. The balance in this asset decreased $7,548,000
or 31.2% due primarily to the settlement of a large claim during the first
quarter of 1995, and losses paid in connection with the 1994 Northridge
earthquake. The Company does not anticipate collection problems with regard to
reinsurance receivables.
LIABILITIES
Gross reserves for property and casualty losses and settlement expenses
decreased $2,987,000 or 1.5% between September 30, 1995 and December 31, 1994.
Gross reserves relating to the Northridge earthquake were $3,935,000 through
September 30, 1995, compared to $6,144,000 at September 30, 1994. Net reserves
related to the hurricanes of 1995 total less than $65,000.
The Company is not aware of any significant contingent liabilities as far as
environmental issues are concerned. Because of the type of business the Company
writes, i.e. property coverage, there exists the potential for exposure for
environmental pollution and asbestos claims. The Company's underwriters are
aware of these exposures and use limited riders or endorsements to limit
exposure.
Accrued expenses and other liabilities decreased $438,000 or 2.0%. The
Company establishes accruals for expenses such as contingent commissions and
state premium taxes and it is typical for these accruals to be greater at the
end of the year than at any other time of the year.
The major contributing factor to the growth of $6,541,000 in deferred taxes
payable is the increase in unrealized appreciation of investments
available-for-sale.
<PAGE> 14
UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
MATERIAL CHANGES IN RESULTS OF OPERATIONS
The Company's net premiums earned increased $18,459,000 or 13.7% over the
same nine month period in 1994. The property and casualty segment has
experienced growth in its direct and assumed business, with much of the direct
increase coming from five midwestern states. The line of business showing the
greatest direct premium increase is workers compensation. In addition to direct
and assumed growth, the Company has had to pay less for its ceded protection due
to a decrease in ceded premium rates.
Investment income increased 17.1% over September 30, 1994, which is
attributable to a larger fixed maturity portfolio. Investment yields for
September 30, 1995 and 1994 were 7.3% and 7.2%, respectively. Realized gains
increased $796,000, most of which was due to the sale of an available-for-sale
preferred stock holding.
Losses and settlement expenses increased 1.1% or $997,000 between years. An
absence of significant exposure to catastrophes and a reduction in loss expenses
have contributed to the Company's favorable results. Gross losses incurred
related to the Northridge earthquake were $3,477,000 for the first nine months
of 1995, compared to $7,259,000 at September 30, 1994. Ceded losses incurred
related to the Northridge earthquake were $2,068,000 for the first nine months
of 1995, compared to $2,512,000 at September 30, 1994. The Company has incurred
just $44,000 on a net basis in connection with the Kobe earthquake, and
anticipates minimal additional exposure. The active hurricane season of the past
few months has resulted in net losses incurred by the Company of $156,000.
Amortization of deferred acquisition costs increased by $3,877,000 or 14.7%
over September 30, 1994 due to growth in premium writings. This premium growth,
coupled with increasing interest rates, contributed to the increase in the life
segment's interest on policyholders' accounts.
<PAGE> 15
UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits-Exhibit 11 - Computation of Net Income Per Common
Share (Page 16).
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.
UNITED FIRE & CASUALTY COMPANY
_____________________________________
(REGISTRANT)
NOVEMBER 2, 1995
_____________________________________
(DATE)
/S/ SCOTT MCINTYRE, JR.
_____________________________________
SCOTT MCINTYRE, JR.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
/S/ K.G. BAKER
_____________________________________
K.G. BAKER, VICE PRESIDENT
CHIEF FINANCIAL OFFICER AND PRINCIPAL
ACCOUNTING OFFICER
<PAGE> 16
UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES
PART II - OTHER INFORMATION
Exhibit 11. Computation of Net Income Per Common Share
<TABLE>
<CAPTION>
_________________________________________________________________________________________________
Weighted Average Net Net Income per
Number of Shares Income Common Share
Outstanding
_________________________________________________________________________________________________
Three months ended September 30:
<S> <C> <C> <C>
1995 . . . . . . . . . . 7,219,842 $ 6,560,786 $ .91
1994 . . . . . . . . . . 7,219,943 3,482,994 .48
Nine months ended September 30:
1995 . . . . . . . . . . 7,219,909 $20,052,091 $ 2.78
1994 . . . . . . . . . . 7,219,943 12,940,512 1.79
</TABLE>
Computation of weighted average number of common
and common equivalent shares:
<TABLE>
<CAPTION>
____________________________________________________________________
Three Months Ended September 30, Nine Months Ended September 30,
1995 1994 1995 1994
____________________________________________________________________
<S> <C> <C> <C> <C>
Common shares outstanding
beginning of the period . . . . . . . . 7,219,943 7,219,943 7,219,943 7,219,943
Weighted average of treasury
shares purchased and retired. . . . . . (101) -- (34) --
__________ __________ __________ __________
Weighted average number of
common shares . . . . . . . . . . . . . 7,219,842 7,219,943 7,219,909 7,219,943
========== ========== ========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
This legend contains summary information extracted from the Form 10-Q and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000101199
<NAME> UNITED FIRE & CASUALTY COMPANY
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<DEBT-HELD-FOR-SALE> 1,330,242
<DEBT-CARRYING-VALUE> 654,094,512
<DEBT-MARKET-VALUE> 674,227,097
<EQUITIES> 71,472,530
<MORTGAGE> 3,061,095
<REAL-ESTATE> 0
<TOTAL-INVEST> 756,350,325
<CASH> 6,229,313
<RECOVER-REINSURE> 16,674,160
<DEFERRED-ACQUISITION> 52,192,309
<TOTAL-ASSETS> 910,170,692
<POLICY-LOSSES> 585,357,097
<UNEARNED-PREMIUMS> 96,922,113
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 0
<COMMON> 24,065,947
0
0
<OTHER-SE> 172,129,326
<TOTAL-LIABILITY-AND-EQUITY> 910,170,692
153,661,885
<INVESTMENT-INCOME> 39,366,001
<INVESTMENT-GAINS> 1,433,264
<OTHER-INCOME> 1,395,476
<BENEFITS> 100,134,913
<UNDERWRITING-AMORTIZATION> 30,321,087
<UNDERWRITING-OTHER> 38,934,923
<INCOME-PRETAX> 26,465,703
<INCOME-TAX> 6,413,612
<INCOME-CONTINUING> 20,052,091
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,052,091
<EPS-PRIMARY> 2.78
<EPS-DILUTED> 2.78
<RESERVE-OPEN> 0<F1>
<PROVISION-CURRENT> 0<F1>
<PROVISION-PRIOR> 0<F1>
<PAYMENTS-CURRENT> 0<F1>
<PAYMENTS-PRIOR> 0<F1>
<RESERVE-CLOSE> 0<F1>
<CUMULATIVE-DEFICIENCY> 0<F1>
<FN>
<F1> Not contained in this document
</FN>
</TABLE>
