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: February 13, 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
<PAGE>
Item 5. Other Events
On February 13, 1997, Farm Family Holdings, Inc. issued a press release
announcing the company's operating results for the quarter ended and the year
ended December 31, 1996.
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)
/s/ Philip P. Weber
February 13, 1997
(Date) Philip P. Weber
President and CEO
<PAGE>
For Release: Immediate
Contact: Timothy A. Walsh
Executive Vice President - Finance & Treasurer
(518) 431 - 5410
Farm Family Holdings Reports Increase in Operating Earnings for Fourth Quarter
and Year Ended December 31, 1996
- --------------------------------------------------------------------------------
Glenmont, New York - February 13, 1997 - - Farm Family Holdings, Inc. (NYSE:
FFH) today announced that operating earnings for the fourth quarter ended
December 31, 1996 increased to $2,813,000 from $934,000 for the same period in
1995. On a per share basis, operating earnings for the fourth quarter of 1996
were $0.54 per share compared to $0.31 for the same period in 1995.
Operating earnings for the year ended December 31, 1996 increased 7.2% to
$9,648,000 compared to $9,004,000 for the year ended 1995. On a per share basis,
operating earnings for the year ended December 31, 1996 were $2.42 compared to
$3.00 for the same period in 1995. The decrease in operating earnings on a per
share basis was primarily the result of the additional shares outstanding from
the Company's initial public offering on July 26, 1996. Operating earnings
exclude the impact of realized investment gains (losses), extraordinary items,
the nonrecurring charge attributable to the Company's voluntary early retirement
program, and the related taxes thereon.
Philip P. Weber, President & CEO of Farm Family Holdings, Inc. said, "The
Company's operating performance improved throughout the last three quarters of
the year despite the abnormally high weather related losses incurred in the
first quarter of 1996. Increases in both net written premiums and operating
earnings for the year show the strength of Farm Family. The voluntary early
retirement program, which resulted in a one time charge of $765,000, net of tax,
was part of our ongoing expense management initiative and should produce annual
savings of approximately $225,000."
Premiums
Premium revenue increased 13.3% to $33,899,000 for the fourth quarter of 1996
compared to $29,915,000 for the same period in 1995. For the year ended December
31, 1996, premium revenue increased 11.8% to $130,780,000 compared to
$116,936,000 for the same period in 1995.
Net written premiums increased 15.7% to $31,563,000 for the fourth quarter of
1996 compared to $27,276,000 for the same period in 1995. Net written premiums
for the year ended December 31, 1996 increased 10.8% to $133,844,000 compared to
$120,834,000 for the same period in 1995.
***More***
<PAGE>
"Our premium growth is a result of our continued penetration into the
Northeastern agribusiness, rural, and suburban markets, as well as changes in
the Company's reinsurance arrangements," said Mr. Weber. "During 1996, we have
increased writings of all of our primary products: personal and commercial
automobile, the Special Farm Package, businessowners, and homeowners products.
The increase in our direct writings came particularly in New Jersey, New York,
Connecticut, Rhode Island, Delaware, Vermont, and West Virginia."
Combined Ratio
Farm Family Casualty Insurance Company's statutory combined ratio, excluding the
expenses related to the Company's conversion from a mutual company to a
stockholder owned company, was 98.7% for the fourth quarter of 1996 compared to
100.0% for the same period in 1995. The statutory combined ratio, excluding the
expenses related to the Company's conversion from a mutual company to a
stockholder owned company, remained the same at 100.7% for the years ended
December 31, 1996 and 1995.
Loss and loss adjustment expenses were 68.2% of premium revenue for the fourth
quarter of 1996 compared to 72.5% for the same period in 1995. Loss and loss
adjustment expenses were 72.6% of premium revenue for the year ended December
31, 1996 compared to 71.1% for the same period in 1995. The higher loss and loss
adjustment expense ratios were primarily attributable to the
previously-mentioned abnormally high weather-related losses incurred during the
first quarter of 1996.
Net Income
Net income for the fourth quarter of 1996 increased 17.4% to $1,649,000 compared
to $1,405,000 for the same period in 1995. This increase in net income was
achieved despite a nonrecurring charge of $765,000, net of tax, related to the
Company's voluntary early retirement program. On a per share basis, net income
for the fourth quarter of 1996 was $0.31 compared to $0.47 for the same period
in 1995. The decrease in net income on a per share basis was primarily the
result of the additional shares outstanding from the Company's initial public
offering on July 26, 1996 as well as the one time charge to earnings related to
the voluntary early retirement program previously mentioned. Excluding the
nonrecurring charge, net income for the fourth quarter increased 71.8% to
$2,414,000 compared to $1,405,000 for the same period in 1995.
Net income for the year ended December 31, 1996 was $6,924,000 compared to
$9,606,000 for the same period in 1995. The results for the year ended December
31, 1996 included abnormally high weather related losses incurred in the first
quarter of 1996, nonrecurring charges of $765,000, net of tax, related to the
Company's voluntary early retirement program, and $1,543,000 related to the
conversion of Farm Family Casualty from a mutual company to a stockholder owned
company. Losses believed to be weather related were approximately $10,606,000
for the year ended December 31, 1996 compared to $5,247,000 for the same period
in 1995.
***More***
<PAGE>
Investment Income
Net investment income for the fourth quarter of 1996 was $4,317,000 compared to
$3,625,000 for the same period in 1995. Net investment income for the year ended
December 31, 1996 was $15,952,000 compared to $14,326,000 for the same period in
1995.
Mr. Weber said, "Farm Family was successful in 1996 and we look forward to 1997.
The voluntary early retirement program was part of our ongoing expense
management initiative and should produce annual savings of approximately
$225,000. (1) Our goal is to reduce the underwriting expense ratio to 25% by the
end of 1998. In addition, we plan to continue our premium growth, some of which
will come from an increase in our voluntary assumed reinsurance business during
1997."
Farm Family has an option to acquire its affiliate, Farm Family Life Insurance
Company which will be considered during 1997. Farm Family Life's shareholders
today approved the reallocation of approximately $21 million of statutory
surplus to statutory shareholders' surplus. The reallocation of surplus to
shareholders' surplus will increase stockholders' equity under generally
accepted accounting principles and may increase the valuation of Farm Family
Life.
Farm Family Casualty Insurance Company is a specialized, regional property and
casualty insurer of farms, agricultural related businesses and residents of
rural and suburban communities.
- -----------------------------------
(1) Final savings will depend upon the number and costs of replacement
personnel.
Safe Harbor Statement under The Private Securities Litigation Reform Act of
1995: All forward looking information or statements contained in this press
release are based on management's current knowledge of factors, all with
inherent risks and uncertainties, affecting Farm Family Holdings, Inc.'s
business. Actual results, including without limitation the actual savings from
the Company's voluntary early retirement program, the reduction in the
underwriting expense ratio, continued premium growth, and the increase in
assumed reinsurance, may differ materially if these assumptions prove invalid.
Significant risk factors, include but are not limited to: the ultimate number
and costs of replacement personnel as well as risk factors outlined in the
Company's SEC filings, including the Prospectus dated July 22, 1996, pp. 10-15.
***More***
<PAGE>
<TABLE>
FARM FAMILY HOLDINGS, INC.
Condensed Consolidated Statements of Income
($ in thousands)
<CAPTION>
Three
Months Ended Year Ended
December 31, December 31,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Premiums ......................................... $ 33,899 $ 29,915 $ 130,780 $ 116,936
Net investment income ............................ 4,317 3,625 15,952 14,326
Realized investment gains, net ................... (615) 714 (640) 912
Other income ..................................... 216 260 905 840
--- --- --- ---
Total Revenues 37,817 34,514 146,997 133,014
------ ------ ------- -------
Losses and Expenses:
Losses and loss adjustment expenses .............. 23,135 21,693 94,977 83,184
Underwriting expenses ............................ 11,073 9,718 38,160 34,902
Early retirement program expense ................. 1,177 -- 1,177 --
Interest expense ................................. 26 54 167 216
Dividends to policyholders ....................... 217 (12) 373 122
--- --- --- ---
Total Losses and Expenses 35,628 31,453 134,854 118,424
------ ------ ------- -------
Income before federal income tax expense and
extraordinary item ......................... 2,189 3,061 12,143 14,590
----- ----- ------ ------
Federal income tax expense .......................... 540 1,656 3,676 4,984
--- ----- ----- -----
Income before extraordinary item .................... 1,649 1,405 8,467 9,606
----- ----- ----- -----
Extraordinary item - demutualization expenses ....... -- -- 1,543 --
----- ----- ----- -----
Net Income .......................................... $ 1,649 $ 1,405 $ 6,924 $ 9,606
=========== =========== =========== ===========
Net operating income per share (1) .................. $ 0.54 $ 0.31 $ 2.42 $ 3.00
=========== =========== =========== ===========
Income before extraordinary item per share .......... $ 0.31 $ 0.47 $ 2.13 $ 3.20
=========== =========== =========== ===========
Net income per share ................................ $ 0.31 $ 0.47 $ 1.74 $ 3.20
=========== =========== =========== ===========
Weighted average shares outstanding (2) ............. 5,253,813 3,000,000 3,979,115 3,000,000
=========== =========== =========== ==========
(1) Operating income excludes the impact of realized investment gains (losses),
extraordinary items, the nonrecurring charge attributable to the Company's
voluntary early retirement program, 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.
***More***
</TABLE>
<PAGE>
<TABLE>
FARM FAMILY HOLDINGS, INC.
Condensed Consolidated Balance Sheets
($ in thousands)
<CAPTION>
12/31/96 12/31/95
-------- --------
<S> <C> <C>
Assets:
Investments .............................................. $ 244,704 $ 207,921
Cash ..................................................... 4,110 2,410
Insurance receivables .................................... 33,406 35,564
Deferred acquisition costs ............................... 10,682 10,527
Accrued investment income ................................ 4,861 4,260
Other assets ............................................. 21,649 17,606
------ ------
Total Assets $ 319,412 $ 278,288
========== ==========
Liabilities:
Reserves for losses and loss adjustment expenses ......... 141,220 137,978
Unearned premium reserve ................................. 55,945 52,799
Debt ..................................................... 1,304 2,707
Other liabilities ........................................ 10,202 10,640
------ ------
Total Liabilities ................................... 204,124 208,671
------- -------
Stockholders' equity ................................ 74,164 110,741
------ -------
Total Liabilities and Stockholders' Equity $ 319,412 $ 278,288
========== ==========
Book Value Per Share ................................ $ 21.08 $ 24.72
========== ==========
Book Value Per Share (excluding SFAS 115 adjustment) $ 19.80 $ 21.72
========== ==========
Shares Outstanding (1) 5,253,813 3,000,000
========== ==========
(1) 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.
***End***
</TABLE>
