UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: October 28, 1997
FARM FAMILY HOLDINGS, INC.
A Delaware Corporation Commission File No. 1-11941 IRS No. 14-1789227
344 Route 9W, Glenmont, New York 12077-2910
Registrant's telephone number: (518) 431-5000
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Item 5. Other Events
On October 28, 1997, Farm Family Holdings, Inc. issued a press release
announcing the company's operating results for the three months and the nine
months ended September 30, 1997.
Item 7. Financial Statements and Exhibits
The following exhibits are filed as part of this report:
Exhibit Index
Exhibit 99 - Press Release
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.
FARM FAMILY HOLDINGS, INC.
(Registrant)
October 28, 1997 /s/ Philip P. Weber
- ---------------- -----------------------------------------
(Date) Philip P. Weber
President and CEO
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Exhibit 99
News Release
FOR IMMEDIATE RELEASE CONTACT: Timothy A. Walsh
Executive Vice President - Finance
& Treasurer
(518) 431-5410
Farm Family Holdings Reports Continued Premium Growth and Increase in Operating
Earnings
Glenmont, New York - October 28, 1997 - - Farm Family Holdings, Inc. (NYSE: FFH)
today announced that operating earnings for the third quarter ended September
30, 1997 increased 12.1% to $3,955,000 from $3,528,000 for the same period in
1996. On a per share basis, operating earnings for the third quarter of 1997
were $0.74 compared to $0.76 for the same period in 1996. The reduction in
operating earnings on a per share basis was the result of the additional shares
outstanding from the Company's initial public offering on July 26, 1996.
Operating earnings for the nine months ended September 30, 1997 increased to
$10,681,000 from $6,834,000 for the same period in 1996. On a per share basis,
operating earnings for the nine months ended September 30, 1997 were $2.01
compared to $1.92 for the same period in 1996. Operating earnings exclude the
impact of realized investment gains (losses), extraordinary items, and the
related taxes thereon.
The increase in operating earnings for the third quarter and first nine months
of 1997 was primarily attributable to increased premium revenue and net
investment income, reductions in weather-related losses, and the results of the
Company's continued expense management program.
Philip P. Weber, President & CEO of Farm Family Holdings said, "We continue to
increase our penetration into the northeastern agribusiness and rural and
suburban markets which we serve. Our focus and commitment to this market has
enabled us to increase direct writings of all of our primary products during
1997. Additionally, our expense management initiatives have favorably impacted
our operating results. We remain focused on executing our strategy of profitable
growth and creating value for our shareholders."
Premiums
Premium revenue increased 16.5% to $38,457,000 for the third quarter of 1997
compared to $33,015,000 for the same period in 1996. For the nine months ended
September 30, 1997, premium revenue increased 12.7% to $109,191,000 compared to
$96,881,000 for the same period
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in 1996. The increase in premium revenue for the nine months ended September 30,
1997 was primarily attributable to an increase of $12,455,000 in premium revenue
from our direct writings and a $3,554,000 increase in revenue from the Company's
voluntary assumed reinsurance business. These increases were partially offset by
an increase in premiums ceded to reinsurers. From a product perspective, the
growth in premium revenue from our direct writings was derived primarily from
the Company's personal and commercial automobile, Special Farm Package,
businessowners, workers' compensation, and homeowners products. Geographically,
the increase in premium revenue from direct writings came primarily from New
Jersey, as well as, New York, Massachusetts, Connecticut, Delaware, Rhode
Island, and West Virginia.
Net written premiums increased 25.3% to $41,823,000 for the third quarter of
1997 compared to $33,383,000 for the same period in 1996. For the nine months
ended September 30, 1997, net written premiums increased 18.8% to $121,505,000
compared to $102,281,000 for the same period in 1996. The increase in net
written premiums for the nine months ended September 30, 1997 was primarily
attributable to an increase of $16,114,000 in direct writings and a $7,033,000
increase in the Company's voluntary assumed reinsurance business. These
increases were partially offset by an increase in premiums ceded to reinsurers
directly tied to the increase in the Company's writings. Direct writings for the
first nine months of 1997 increased primarily as a result of an increase in
writings of all of the Company's primary products and to a lesser extent as a
result of assigned risk automobile business in New Jersey and the Company's
re-entry into the Massachusetts workers' compensation market. Geographically,
direct writings in New Jersey accounted for $7,821,000 of the increase in direct
writings during the first three quarters of 1997.
Mr. Weber said, "Our growth in premium has come primarily from New Jersey.
However, direct writings in New York, Massachusetts, Connecticut, Delaware,
Rhode Island, and West Virginia for the first nine months of 1997 have increased
significantly compared to the same period in 1996. In addition, the expansion of
our distribution system has enabled us to increase policy count in each state
within our ten state region."
Combined Ratio
Farm Family Casualty Insurance Company's statutory combined ratio was 95.4% for
the third quarter of 1997 compared to 96.9% for the same period in 1996. The
statutory combined ratio for the nine months ended September 30, 1997 was 96.1%
compared to 101.5% for the same period in 1996. Loss and loss adjustment
expenses were 70.0% of premium revenue for the nine months ended September 30,
1997 compared to 74.2% for the same period in 1996. The reduction in the loss
and loss adjustment expense ratio was primarily attributable to fewer
weather-related losses incurred during the first quarter of 1997 as compared to
the same period in 1996.
Investment Income
Net investment income for the third quarter of 1997 was $4,603,000 compared to
$4,132,000 for the same period in 1996. For the nine months ended September 30,
1997, net investment income was $13,529,000 compared to $11,635,000 for the same
period in 1996.
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Net Income
Net income for the third quarter of 1997 increased to $4,077,000 compared to
$3,336,000 for the same period in 1996. On a per share basis, net income for the
third quarter of 1997 was $0.77 compared to $0.72 for the same period in 1996.
Net income for the nine months ended September 30, 1997 increased to $14,353,000
compared to $5,275,000 for the same period in 1996. On a per share basis, net
income for the nine months ended September 30, 1997 was $2.70 compared to $1.48
for the same period in 1996. Net income for the nine months ended September 30,
1997 included net realized investment gains of $5,649,000 and net income for the
nine months ended September 30, 1996 included the impact of abnormally high
weather-related losses and a nonrecurring charge of $1,543,000 related to the
conversion of Farm Family Casualty from a mutual company to a stockholder owned
company.
Mr. Weber said, "We have now completed five consecutive quarters of profitable
underwriting results. Although encouraged by our operating results, we continue
to evaluate alternatives to further enhance our growth and profitability. We
will begin marketing a Country Estate policy which is a version of our Special
Farm Package designed to meet the needs of a very specific segment of the farm
market where agricultural exposures are present, but agribusiness is not the
principal income for the household. As previously reported, we have expanded our
voluntary assumed reinsurance business to further diversify our geographic reach
and risk exposure. In addition, we have initiated our Odd-Lot Shareowner Program
which provides stockholders owning fewer than 100 shares of common stock of the
Company with a convenient means of selling their shares in the open market at
reduced brokerage fees. Finally, we continue to evaluate the potential exercise
of the option to acquire our affiliate, Farm Family Life Insurance Company."
Farm Family Holdings is the parent of Farm Family Casualty Insurance Company, a
specialized, regional property and casualty insurer of farms, agricultural
related businesses, and residents and businesses of rural and suburban
communities.
- ---------------------------------
Safe Harbor Statement under The Private Securities Litigation Reform Act of
1995: Except for the historical information contained herein, the matters
discussed in this news release are forward looking statements that are based on
management's current knowledge of factors, and are subject to a number of
important risks and uncertainties, many of which are outside the Company's
control and, accordingly, actual results may differ materially. These risks and
uncertainties include, but are not limited to, the factors outlined in the
Company's SEC filings, including the 1996 Form 10-K and the Prospectus dated
July 22, 1996 and is incorporated herein by reference.
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<TABLE>
FARM FAMILY HOLDINGS, INC.
Condensed Consolidated Statements of Income
($ in thousands except per share date)
<CAPTION>
(Unaudited) (Unaudited)
Three Months Nine Months
Ended Ended
September 30, September 30,
1997 1996 1997 1996
---- ---- ---- ----
Revenues:
<S> <C> <C> <C> <C>
Premiums $38,457 $33,015 $109,191 $96,881
Net investment income 4,603 4,132 13,529 11,635
Realized investment gains (losses), net 188 (102) 5,649 (25)
Other income 234 219 719 689
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Total Revenues 43,482 37,264 129,088 109,180
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Losses and Expenses:
Losses and loss adjustment expenses 26,701 23,089 76,421 71,842
Underwriting expenses 10,605 9,120 30,803 27,087
Interest expense 25 33 77 141
Dividends to policyholders 65 43 177 156
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Total Losses and Expenses 37,396 32,285 107,478 99,226
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Income before federal income tax expense and extraordinary item
6,086 4,979 21,610 9,954
Federal income tax expense 2,009 1,517 7,257 3,136
----------------------------------------------
Income before extraordinary item 4,077 3,462 14,353 6,818
Extraordinary item - demutualization expenses - 126 - 1,543
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Net Income $4,077 $3,336 $14,353 $5,275
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Operating Income (1) $3,955 $3,528 $10,681 $6,834
----------------------------------------------
Per share data:
Net income per share $0.77 $0.72 $2.70 $1.48
----------------------------------------------
Net operating income per share (1) $0.74 $0.76 $2.01 $1.92
----------------------------------------------
Weighted average shares outstanding (2) 5,317,828 4,641,411 5,317,828 3,553,150
----------------------------------------------
</TABLE>
(1) Operating income excludes the impact of realized investment gains (losses),
extraordinary items, and the related taxes thereon.
(2) Gives effect to the allocation of 3,000,000 shares to eligible
policyholders on July 26, 1996 pursuant to Farm Family Casualty Insurance
Company's conversion from a mutual company to a stockholder owned company.
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<TABLE>
FARM FAMILY HOLDINGS, INC.
Condensed Consolidated Balance Sheets
($ in thousands)
<CAPTION>
(Unaudited)
09/30/97 12/31/96
-------- --------
Assets:
<S> <C> <C>
Investments $270,003 $244,704
Cash 3,747 4,110
Insurance receivables 43,519 33,406
Deferred acquisition costs 12,746 10,682
Accrued investment income 4,778 4,861
Other assets 24,487 21,649
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Total Assets $359,280 $319,412
--------------------------------
Liabilities:
Reserves for losses and loss adjustment expenses 150,297 141,220
Unearned premium reserve 68,529 55,945
Debt 1,277 1,304
Other liabilities 14,722 10,202
--------------------------------
Total Liabilities 234,825 208,671
--------------------------------
Stockholders' equity 124,455 110,741
--------------------------------
Total Liabilities and Stockholders' Equity $359,280 $319,412
--------------------------------
Book Value Per Share $23.69 $21.08
--------------------------------
Book Value Per Share (excluding SFAS 115 adjustment) $22.53 $19.80
--------------------------------
Shares Outstanding 5,253,813 5,253,813
--------------------------------
</TABLE>
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