<PAGE>
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 June 30, 1997
___ 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 August 7, 1997, 10,727,322 shares of common stock were outstanding.
<PAGE>
UNITED FIRE & CASUALTY COMPANY
AND SUBSIDIARIES
TABLE OF CONTENTS
PART I: FINANCIAL INFORMATION
Report of Independent Public Accountants . . . . . . . . . . . . . . . . 1
Consolidated Balance Sheets as of June 30, 1997 (unaudited) and
December 31, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Unaudited Consolidated Statements of Operations - Three-Month Periods
Ended June 30, 1997 and 1996 . . . . . . . . . . . . . . . . . . . . . . 3
Unaudited Consolidated Statements of Operations - Six-Month Periods
Ended June 30, 1997 and 1996 . . . . . . . . . . . . . . . . . . . . . . 4
Unaudited Consolidated Statements of Cash Flows - Six-Month Periods
Ended June 30, 1997 and 1996 . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Unaudited Consolidated Financial Statements . . . . . . . . . . 6
Management's Discussion and Analysis of Financial Condition and
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . 9
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Exhibit 11. Computation of Net Income Per Common Share . . . . . . . . . 12
<PAGE>
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 June 30, 1997,
and the related consolidated statements of operations for the three-month and
six-month periods ended June 30, 1997 and 1996, and the consolidated
statements of cash flows for the six-month periods ended June 30, 1997 and
1996. These financial statements are the responsibility of the Company's
management.
We conducted our review 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 review, we are not aware of any material modifications that
should be made to the financial statements referred to above 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, 1996, and, in our report dated February
20, 1997, 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, 1996, is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
Arthur Andersen LLP
Chicago, Illinois
August 7, 1997
1
<PAGE>
UNITED FIRE & CASUALTY COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997 AND DECEMBER 31, 1996
- ------------------------------------------------------------------------------
(Dollars in Thousands)
- ------------------------------------------------------------------------------
ASSETS 1997 1996
Unaudited Audited
- ------------------------------------------------------------------------------
INVESTMENTS
Fixed maturities
Held-to-maturity, at amortized cost (market
value $708,725 in 1997 and $668,541 in 1996) $ 691,031 $ 651,138
Available-for-sale, at market (cost $77,664
in 1997 and $69,317 in 1996) 76,156 67,902
Equity securities (cost $25,906 in 1997
and $25,898 in 1996) 106,687 91,314
Mortgage loans 2,915 2,959
Policy loans 7,978 7,591
Other long-term investments, at market
(cost $8,258 in 1997 and $8,395 in 1996) 10,290 9,970
Short-term investments 13,260 29,330
- ------------------------------------------------------------------------------
$ 908,317 $ 860,204
Cash and Cash Equivalents 6,827 14,389
Accrued Investment Income 13,150 12,195
Accounts Receivable 52,059 43,433
Deferred Policy Acquisition Costs 59,393 56,083
Property and Equipment 12,330 12,630
Reinsurance Receivables 10,964 12,490
Prepaid Reinsurance Premiums 4,263 4,229
Intangibles 1,209 1,335
Income Taxes Receivable 1,775 709
Other Assets 6,669 7,138
- ------------------------------------------------------------------------------
TOTAL ASSETS $1,076,956 $1,024,835
==============================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Future policy benefits and losses, claims and
settlement expenses
Property and casualty insurance $ 224,820 $ 221,207
Life insurance 449,003 431,582
Unearned premiums 112,585 105,008
Accrued expenses and other liabilities 16,877 19,721
Employee benefit obligations 7,723 6,764
Deferred income taxes 18,626 12,694
- ------------------------------------------------------------------------------
TOTAL LIABILITIES $ 829,634 $ 796,976
- ------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Common stock $ 35,758 $ 35,759
Additional paid-in capital 9,331 9,342
Retained earnings 149,130 139,933
Net unrealized appreciation, net of applicable
income taxes of $28,202 in 1997 and
$22,750 in 1996 53,103 42,825
- ------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY $ 247,322 $ 227,859
- ------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,076,956 $1,024,835
==============================================================================
The Notes to Unaudited Consolidated Financial Statements are an integral part
of these statements.
2
<PAGE>
UNITED FIRE & CASUALTY COMPANY
AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE-MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
- ------------------------------------------------------------------------------
(Dollars in Thousands Except Per
Share Data and Number of Shares)
- ------------------------------------------------------------------------------
1997 1996
- ------------------------------------------------------------------------------
Revenues
Net premiums earned $ 60,403 $ 56,209
Investment income, net 15,137 14,078
Realized investment gains and other income 52 791
Commission and policy fee income 517 514
- ------------------------------------------------------------------------------
76,109 71,592
- ------------------------------------------------------------------------------
Benefits, Losses and Expenses
Losses and settlement expenses 40,793 39,753
Increase in liability for future policy benefits 1,339 1,541
Amortization of deferred policy acquisition costs 13,292 11,447
Other underwriting expenses 7,973 7,345
Interest on policyholders' accounts 6,154 5,054
- ------------------------------------------------------------------------------
69,551 65,140
- ------------------------------------------------------------------------------
Income before income taxes 6,558 6,452
Federal income taxes 1,440 1,291
- ------------------------------------------------------------------------------
Net income $ 5,118 $ 5,161
==============================================================================
Net Income per common share $ 0.48 $ 0.48
==============================================================================
Weighted average common shares outstanding 10,727,408 10,794,675
==============================================================================
Cash dividends declared per common share $ 0.16 $ 0.15
==============================================================================
The Notes to Unaudited Consolidated Financial Statements are an integral part
of these statements.
3
<PAGE>
UNITED FIRE & CASUALTY COMPANY
AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
SIX-MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
- ------------------------------------------------------------------------------
(Dollars in Thousands Except Per
Share Data and Number of Shares)
- ------------------------------------------------------------------------------
1997 1996
- ------------------------------------------------------------------------------
Revenues
Net premiums earned $ 119,659 $ 111,802
Investment income, net 30,174 28,098
Realized investment gains and other income 748 4,848
Commission and policy fee income 958 945
- ------------------------------------------------------------------------------
151,539 145,693
- ------------------------------------------------------------------------------
Benefits, Losses and Expenses
Losses and settlement expenses 77,758 75,490
Increase in liability for future
policy benefits 2,602 2,594
Amortization of deferred policy
acquisition costs 25,015 24,187
Other underwriting expenses 17,780 14,833
Interest on policyholders' accounts 11,653 10,169
- ------------------------------------------------------------------------------
134,808 127,273
- ------------------------------------------------------------------------------
Income before income taxes 16,731 18,420
Federal income taxes 4,210 4,504
- ------------------------------------------------------------------------------
Net Income $ 12,521 $ 13,916
==============================================================================
Net Income per common share $ 1.17 $ 1.29
==============================================================================
Weighted average common shares
outstanding 10,727,559 10,812,061
==============================================================================
Cash dividends declared per common share $ 0.31 $ 0.30
==============================================================================
The Notes to Unaudited Consolidated Financial Statements are an integral part
of these statements.
4
<PAGE>
UNITED FIRE & CASUALTY COMPANY
AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX-MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
- ------------------------------------------------------------------------------
(Dollars in Thousands)
1997 1996
- ------------------------------------------------------------------------------
Cash Flows From Operating Activities
Net income $ 12,521 $ 13,916
- ------------------------------------------------------------------------------
Adjustments to reconcile net income to net
cash provided by operating activities
Net bond discount accretion (9) (340)
Depreciation and amortization 1,425 1,143
Realized investment gains (748) (2,791)
Changes in:
Accrued investment income (955) (165)
Accounts receivable (8,626) (13,221)
Deferred policy acquisition costs (3,310) (3,952)
Reinsurance receivables 1,526 (2,173)
Prepaid reinsurance premiums (34) (186)
Income taxes receivable (1,066) 1,460
Other assets 469 (192)
Future policy benefits and losses, claims and
settlement expenses 5,701 12,757
Unearned premiums 7,577 11,059
Accrued expenses and other liabilities (1,233) 1,825
Employee benefit obligations 959 547
Deferred income taxes 480 (1,537)
- ------------------------------------------------------------------------------
Total adjustments $ 2,156 $ 4,234
- ------------------------------------------------------------------------------
Net cash provided by operating activities $ 14,677 $ 18,150
- ------------------------------------------------------------------------------
Cash Flows From Investing Activities
Proceeds from sale of available-for-sale
investments $ 617 $ 18,894
Proceeds from call and maturity of
held-to-maturity investments 27,657 34,539
Proceeds from call and maturity of
available-for-sale investments 2,196 5,431
Proceeds from sale of other investments 28,046 17,176
Purchase of investments held-to-maturity (67,380) (63,919)
Purchase of investments available-for-sale (10,578) (18,773)
Purchase of other investments (12,185) (5,610)
Proceeds from sale of property and equipment - 229
Purchase of property and equipment (999) (1,168)
- ------------------------------------------------------------------------------
Net cash used in investing activities $(32,626) $ (13,201)
- ------------------------------------------------------------------------------
Cash Flows From Financing Activities
Policyholders' account balances
Deposits to investment and universal
life type contracts $ 59,657 $ 41,238
Withdrawals from investment and
universal life type contracts (44,324) (38,297)
Purchase and retirement of common stock (12) (2,713)
Payment of cash dividends (4,934) (4,861)
- ------------------------------------------------------------------------------
Net cash provided by (used in)
financing activities $ 10,387 $ (4,633)
- ------------------------------------------------------------------------------
Increase (Decrease) in Cash and Cash Equivalents $ (7,562) $ 316
Cash and Cash Equivalents at Beginning of Year 14,389 6,998
- ------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Period $ 6,827 $ 7,314
==============================================================================
The Notes to Unaudited Consolidated Financial Statements are an integral part
of these statements.
5
<PAGE>
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, 1996. 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 ("GAAP"), adjustments have been made in order
to present the accompanying financial statements on the basis of GAAP.
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates.
Certain amounts included in the financial statements for the previous
year have been reclassified to conform with the financial statement
presentation at June 30, 1997.
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 six month
periods ended June 30, 1997 and 1996 were $4,794,000 and $(263,000),
respectively. There were no significant payments of interest through June 30,
1997 and 1996, other than interest credited to policyholders' accounts.
NOTE 4.
Included in realized gains and other income for the six-month period
ended June 30, 1996, is $2,057,000 of interest in connection with the
settlement of a Federal income tax Revenue Agent Review for previous tax
years.
6
<PAGE>
UNITED FIRE & CASUALTY COMPANY
AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5.
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 June 30, 1997 is as follows.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
JUNE 30, 1997 Gross Gross
Amortized Unrealized Unrealized Fair
TYPE OF INVESTMENT Cost Appreciation Depreciation Value
- ---------------------------------------------------------------------------------------------------------------------------------
HELD-TO-MATURITY
Fixed Maturities
Bonds
United States Government,
government agencies and authorities
Collateralized mortgage obligations $ 27,327 $ 336 $ 650 $ 27,013
Mortgage-backed securities 20,963 1,802 2 22,763
All others 3,366 273 29 3,610
States, municipalities and political subdivisions 226,611 9,256 681 235,186
Foreign 6,835 194 23 7,006
Public utilities 90,126 422 892 89,656
Corporate bonds
Collateralized mortgage obligations 96,543 2,876 721 98,698
All other corporate bonds 219,260 6,613 1,080 224,793
- ---------------------------------------------------------------------------------------------------------------------------------
Total held-to-maturity $691,031 $21,772 $ 4,078 $708,725
=================================================================================================================================
AVAILABLE-FOR-SALE
Fixed Maturities
Bonds
United States Government,
government agencies and authorities
Collateralized mortgage obligations $ 53,290 $ 616 $ 1,324 $ 52,582
Mortgage-backed securities 59 4 - 63
All others 9,633 26 14 9,645
Public utilities 206 - 1 205
Corporate bonds
Collateralized mortgage obligations 13,956 80 902 13,134
All other corporate bonds 520 11 4 527
- ---------------------------------------------------------------------------------------------------------------------------------
Total available-for-sale fixed maturities $ 77,664 $ 737 $ 2,245 $ 76,156
- ---------------------------------------------------------------------------------------------------------------------------------
Equity securities
Common stocks
Public utilities $ 3,525 $ 5,313 $ - $ 8,838
Banks, trust and insurance companies 11,903 53,022 - 64,925
All other common stocks 9,628 22,546 187 31,987
Nonredeemable preferred stocks 850 91 4 937
- ---------------------------------------------------------------------------------------------------------------------------------
Total equity securities $ 25,906 $80,972 $ 191 $106,687
- ---------------------------------------------------------------------------------------------------------------------------------
Total available-for-sale $103,570 $81,709 $ 2,436 $182,843
=================================================================================================================================
Other long-term investments $ 8,258 $ 2,042 $ 10 $ 10,290
=================================================================================================================================
</TABLE>
7
<PAGE>
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 June 30, 1997 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.
- ------------------------------------------------------------------------------
(Dollars in Thousands)
- ------------------------------------------------------------------------------
JUNE 30, 1997 Held-to-maturity Available-for-sale
- ------------------------------------------------------------------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
- ------------------------------------------------------------------------------
Due in one year or less $ 8,973 $ 9,126 $ 80 $ 80
Due after one year through
five years 106,090 110,381 631 639
Due after five years through
ten years 189,634 194,454 6,314 6,298
Due after ten years 241,501 246,290 3,334 3,360
Mortgage-backed securities 20,963 22,763 59 63
Collateralized mortgage
obligations 123,870 125,711 67,246 65,716
- ------------------------------------------------------------------------------
$691,031 $708,725 $ 77,664 $ 76,156
==============================================================================
NOTE 6.
In February, 1997, the Financial Accounting Standards Board ("FASB")
issued two Statement of Financial Accounting Standards ("SFAS") No. 128,
"Earnings Per Share" and No. 129, "Disclosure of Information about Capital
Structure." These statements are effective for both interim and annual
periods ending after December 15, 1997. In management's opinion, the adoption
of these statements will not have a material impact on the Consolidated
Financial Statements.
In June, 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income" governing the reporting and display of comprehensive income and its
components which includes items previously recorded directly in equity, such
as unrealized gains or losses on securities available-for-sale and SFAS No.
131, "Disclosures about Segments of an Enterprise and Related Information"
requiring that public businesses report financial and descriptive information
about its reportable operating segments. Both Statements are effective for
interim and annual periods beginning after December 15, 1997. The impact of
adopting these Statements is not expected to be material to the Consolidated
Financial Statements or Notes to Consolidated Financial Statements.
8
<PAGE>
UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
ASSETS
Favorable market conditions resulted in a 24% increase in net unrealized
appreciation to $53,103,000, on the Company's available-for-sale securities
and other long-term investments. Available-for-sale holdings include 10% of
the fixed maturity portfolio, and 100% of the common and preferred stocks. A
majority of fixed maturities are classified as held-to-maturity, and the
Company has not classified any investments as trading securities.
Collateralized mortgage obligations account for approximately 25% of the
current fixed maturities compared to 26% at December 31, 1996. 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's strategy has been to purchase issues with expected maturity in
the seven-to-twelve-year range.
Equity securities consist of readily marketable common and preferred
stocks, all of which are classified as available-for-sale. Other long-term
investments are primarily holdings in limited partnership funds investing in
banks.
The Company's short-term investments, comprised of money market accounts,
overnight repurchase agreements and fixed maturities are utilized to meet
anticipated short-term cash requirements. In addition, the Company also
maintains a $6 million line of credit with a local bank, which was not
utilized through June 30, 1997, or during 1996. Short-term investments
decreased $16,070,000 between December 31, 1996 and June 30, 1997, due to
purchases of fixed maturity securities.
Accounts receivable are balances due from property and casualty insurance
agents and brokers for premiums written less commissions, and losses
receivable. In 1997, this asset grew by $8,626,000 or 20%. Premium growth
and use of a deferred payment plan have contributed to this increase. In
addition, the Company pays a deposit premium to one of its reinsurers in June
of each year, which has the effect of increasing accounts receivable.
The Company's deferred policy acquisition costs ("DAC") are expenses such
as commissions, premium taxes and other costs associated with procuring
insurance policies. The asset is established at the beginning of the policy
period and is then amortized over the lives of the respective policy terms to
achieve a matching of expenses to revenue. Premium growth has created a
corresponding increase in deferred policy acquisition costs.
Reinsurance receivables are losses, expenses and reserves that are due
the Company from reinsurers. This asset will fluctuate due to the timing of
payments between the Company and the reinsurers. Management does not
anticipate collection problems with regard to any of its reinsurance
receivables.
LIABILITIES
The property and casualty segment's gross liability before reinsurance for
losses and settlement expenses increased $3,613,000 or 2% between 1997 and 1996.
Gross reserves remaining on the 1994 Northridge earthquake were $3,348,000 as of
June 30, 1997, compared to $4,599,000 at December 31, 1996.
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 riders or endorsements to limit exposure.
9
<PAGE>
UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The liability for future policy benefits and interest on policyholders'
accounts saw an increase of $17,421,000 or 4% for 1997 due to the addition of
new premiums and growth in existing account balances.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
PROPERTY AND CASUALTY OPERATIONS
The property and casualty segment had a statutory combined ratio (i.e.,
losses incurred to premiums earned, plus expenses incurred to premiums
written) of 100% compared to 102% through the first half of 1996. For the
three months ended June 30, 1997, the combined ratio was 101% compared to
106% for the second quarter of 1996. The improved underwriting experience is
the result of an increase in premiums, coupled with a small increase in the
Company's property and casualty losses and expenses incurred. The Addison
Insurance Company, under new management since September, 1996, has made a
considerable improvement in its results, reporting a 96% combined ratio at
June, 30, 1997, compared to 146% at June, 30, 1996.
Premium growth of 8% or $8,247,000 was primarily due to an increase in
the Company's direct business for the six months ended June 30, 1997 compared
to June 30, 1996. Much of the increase originated in Louisiana, Mississippi
and in several midwestern states.
Loss and settlement expenses incurred by the property and casualty segment
through June, 1997 increased 4% or $3,133,000 over 1996. Although overall claim
counts have remained relatively stable for the year, the second quarter saw
several storms pass through the midwest resulting in an estimated $4,000,000 in
flood, wind and hail losses. In addition, the workers' compensation, commercial
auto and personal auto lines saw an increase in claims severity. As an offset to
these loss increases, Addison Insurance Company has shown greatly improved
results, with a decrease in losses and settlement expenses incurred of over
$4,000,000 or 52%.
An increase of $2,386,000 in property and casualty amortization of deferred
acquisition costs and underwriting and acquisition expenses was primarily due to
an increase in commissions, premium taxes and other policy issue expenses,
associated with growth in premiums.
LIFE OPERATIONS
Premiums earned decreased $387,000, or 4% for the six months ended June
30, 1997 compared to June 30, 1996. A 54% increase of $500,000 in accident
and health business was offset by a $546,000 increase in unearned premiums
and a decrease of $342,000 in life premiums.
The increase of $1,365,000 in amortization of deferred acquisition costs
and other underwriting expenses is due primarily to an increase in commission
expense.
INVESTMENT RESULTS
Growth in the Company's fixed maturity portfolio contributed to the 7%
increase in investment income. Two factors contributed to the decrease of
$4,100,000 in realized investment gains and other income. During the first
half of 1996, the Company took advantage of market conditions and sold a few
of its available-for-sale fixed income securities. In addition, in 1996, the
settlement of a Federal income tax Revenue Agent Review for previous tax
years resulted in the receipt of $2,057,000 in interest, which was included
in realized investment gains and other income.
10
<PAGE>
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
12).
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)
AUGUST 7, 1997
______________________________
(DATE)
______________________________
JOHN A. RIFE
PRESIDENT
______________________________
K.G. BAKER
VICE PRESIDENT , CHIEF FINANCIAL OFFICER AND PRINCIPAL ACCOUNTING OFFICER
11
<PAGE>
UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES
PART II - OTHER INFORMATION
Exhibit 11. Computation of Net Income Per Common Share
- ------------------------------------------------------------------------------
(Dollars in Thousands Except Per Share Data)
- ------------------------------------------------------------------------------
Weighted Average
Three-Month Periods Ended Number of Shares Net Earnings Per
June 30, Outstanding Income Common Share
- ------------------------------------------------------------------------------
1997 10,727,408 $ 5,118 $ 0.48
1996 10,794,675 5,161 0.48
- ------------------------------------------------------------------------------
(Dollars in Thousands Except Per Share Data)
- ------------------------------------------------------------------------------
Weighted Average
Six-Month Periods Ended Number of Shares Net Earnings Per
June 30, Outstanding Income Common Share
- ------------------------------------------------------------------------------
1997 10,727,559 $ 12,521 $ 1.17
1996 10,812,061 13,916 1.29
- ------------------------------------------------------------------------------
Computation of weighted average number of common
and common equivalent shares:
- ------------------------------------------------------------------------------
Three-Month Periods Ended June 30, 1997 1996
- ------------------------------------------------------------------------------
Common shares outstanding
beginning of the period 10,727,712 10,829,399
Weighted average of the common
shares purchased and retired or reissued (304) (34,724)
- ------------------------------------------------------------------------------
Weighted average number of common shares 10,727,408 10,794,675
==============================================================================
- ------------------------------------------------------------------------------
Six-Month Periods Ended June 30, 1997 1996
- ------------------------------------------------------------------------------
Common shares outstanding
beginning of the period 10,727,712 10,829,461
Weighted average of the common
shares purchased and retired or reissued (153) (17,400)
- ------------------------------------------------------------------------------
Weighted average number of common shares 10,727,559 10,812,061
==============================================================================
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<DEBT-HELD-FOR-SALE> 76,156
<DEBT-CARRYING-VALUE> 691,031
<DEBT-MARKET-VALUE> 708,725
<EQUITIES> 106,687
<MORTGAGE> 2,915
<REAL-ESTATE> 0
<TOTAL-INVEST> 908,317
<CASH> 6,827
<RECOVER-REINSURE> 10,964
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0
0
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119,659
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