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 27, 1999
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 26, 1999, Farm Family Holdings, Inc. issued a press release
announcing the results of its operations for the third quarter ended September
30, 1999.
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 27, 1999 /s/ Philip P. Weber
- ----------------- --------------------------------------------------
(Date) Philip P. Weber
President and CEO
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FOR IMMEDIATE RELEASE CONTACT: Timothy A. Walsh
Executive Vice President
Finance & Treasurer
(518) 431-5410
Farm Family Holdings Reports Increased
Operating Income for the Third Quarter Ended September 30, 1999
Glenmont, New York - October 26, 1999 - - Farm Family Holdings, Inc. (NYSE: FFH)
("the Company") today announced results of its operations for the third quarter
ended September 30, 1999, which includes the operations of Farm Family Life
Insurance Company ("Farm Family Life") and Farm Family Life's wholly-owned
subsidiary, United Farm Family Insurance Company ("United Farm Family"), since
April 6, 1999, the effective date of the acquisition of Farm Family Life by the
Company.
Consolidated operating income for the third quarter of 1999 increased to
$5,243,000 compared to $4,227,000 for the same period in 1998. On a diluted per
share basis, consolidated operating income increased to $0.85 for the third
quarter of 1999 compared to $0.80 for the same period in 1998. Consolidated
operating income for the first nine months of 1999 was $13,949,000 compared to
$9,737,000 for the same period in 1998. On a diluted per share basis,
consolidated operating income for the first nine months of 1999 was $2.38
compared to $1.84 for the same period in 1998. Operating income excludes
realized investment gains (losses), nonrecurring charges, and the related taxes
thereon.
Net income for the third quarter of 1999 was $5,068,000 compared to $8,458,000
for the third quarter of 1998. On a diluted per share basis, net income was
$0.82 for the third quarter of 1999 compared to $1.59 for the same period in
1998. Net income for the first nine months of 1999 was $13,965,000 compared to
$14,191,000 for the same period in 1998. On a diluted per share basis, net
income for the first nine months of 1999 was $2.38 compared to $2.67 for the
same period in 1998. Net income for the third quarter and first nine months of
1998 included a net gain of $4,107,000 or $0.77 per share ($6,318,000 less taxes
of $2,211,000) as a result of the reduction of a significant portion of the
Company's liability for its extended earnings program with its agents.
Philip P. Weber, President and CEO of Farm Family Holdings, said, "We are
pleased with our operating results for the third quarter. Our efforts remain
focused on supporting our distribution system and enhancing our delivery of
value-added customer service. We are committed to aligning our resources to
support these initiatives."
***More***
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Property and Casualty Insurance Business
For the third quarter of 1999, property and casualty premium revenue increased
8.2% to $49,398,000 compared to $45,660,000 for the same period in 1998. The
increase in premium revenue for the third quarter of 1999 was primarily
attributable to an increase of $1,668,000 in premium revenue derived from Farm
Family Casualty's direct writings and a decrease in premium revenue ceded to
Farm Family Casualty's reinsurers of $1,738,000.
For the first nine months of 1999, property and casualty premium revenue
increased 6.8% to $142,455,000 compared to $133,404,000 for the same period in
1998. The increase in property and casualty premium revenue for the first nine
months of 1999 was primarily attributable to the following relating to Farm
Family Casualty: an increase of $5,986,000 in premium revenue from direct
writings, an increase of $2,069,000 in voluntary assumed reinsurance business
and a decrease of $737,000 in premiums ceded to reinsurers.
For the third quarter of 1999, property and casualty net written premiums
increased 8.5% to $50,201,000 compared to $46,273,000 for the same period in
1998. For the first nine months of 1999, property and casualty net written
premiums increased 3.6% to $147,357,000 compared to $142,226,000 for the same
period in 1998. The increase in property and casualty net written premiums for
the first nine months of 1999 was primarily attributable to an increase of
$4,246,000 or 3.1% in direct writings by Farm Family Casualty (excluding
assigned risk automobile business premiums), an increase of $1,111,000 in Farm
Family Casualty's assigned risk automobile business premiums, and the inclusion
of United Farm Family's direct written premium of $927,000. These increases were
partially offset by an increase of $1,331,000 in premiums ceded by Farm Family
Casualty to its reinsurers. Excluding premiums from personal automobile business
in the state of New Jersey and premiums from assigned risk automobile business,
Farm Family Casualty's direct writings increased $2,702,000 or 7.1% for the
third quarter of 1999 compared to the same period in 1998 and $7,394,000 or 6.3%
for the first nine months of 1999 compared to the same period in 1998.
Direct written premiums for personal automobile business in New Jersey decreased
$1,455,000 or 20.3% for the third quarter of 1999 compared to the same period in
1998 and decreased $3,148,000 or 15.5% for the first nine months of 1999
compared to the same period in 1998. This reduction was primarily attributable
to the New Jersey legislation mandating a rate roll back for personal automobile
business in the state. In addition, certain changes in the New Jersey Farm
Bureau's membership requirements have had a favorable impact on reducing the
growth of Farm Family Casualty's personal automobile policies in New Jersey. For
the first nine months of 1999, the number of personal automobile policies Farm
Family Casualty had in New Jersey decreased by 2.0% compared to an increase of
20.2% for the first nine months of 1998.
The statutory combined ratio for Farm Family Casualty was 97.4% for the third
quarter of 1999 compared to 97.6% for the same period in 1998. The statutory
combined ratio for the first nine months of 1999 was 98.5% compared to 99.1% for
the same period in 1998. Loss and loss adjustment expenses for Farm Family
Casualty were 73.7% of premium revenue for the first nine months of 1999
compared to 74.3% for the same period in 1998.
***More***
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Operating income for property and casualty business for the third quarter of
1999 was $4,439,000 compared to $4,389,000 for the same period in 1998 and was
$12,855,000 for the first nine months of 1999 compared to $10,143,000 for the
same period in 1998.
Life Insurance Business
For the third quarter of 1999, life insurance premium revenue was
$9,055,000, operating income was $963,000, net investment income
was $13,004,000 and total assets were $821,728,000.
The operations of the life insurance business have been included in the
Company's operating results since April 6, 1999, when the Company acquired all
of the outstanding capital stock of Farm Family Life.
Farm Family Holdings is the parent of Farm Family Casualty Insurance Company and
Farm Family Life Insurance Company. Farm Family Casualty and Farm Family Life's
subsidiary, United Farm Family are specialized, property and casualty insurers
of farms, agricultural related businesses and residents and businesses of rural
and suburban communities. Farm Family Life sells individual whole life, term and
universal life products, single and flexible premium deferred annuity products
and disability income insurance products.
- ---------------------------------
Safe Harbor Statement under The Private Securities Litigation Reform Act of
1995:
This press release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 that are based on management's
current knowledge, expectations, estimates, beliefs and assumptions. The
forward-looking statements in this press release include, but are not limited
to, statements of the plans and objectives of the Company or its management,
statements of future economic performance and assumptions underlying statements
regarding the Company or its business. Readers are hereby cautioned that certain
events or circumstances could cause actual results to differ materially from
those estimated, projected, or predicted. The forward-looking statements in this
press release are not guarantees of future performance and are subject to a
number of important risks and uncertainties, many of which are outside the
Company's control, that could cause actual results to differ materially. These
risks and uncertainties include, but are not limited to, the results of
operations of the Company, exposure to catastrophic loss, geographic
concentration of loss exposure, general economic conditions and conditions
specific to the property and casualty insurance industry, including its cyclical
nature, regulatory changes and conditions, rating agency policies and practices,
competitive factors, claims development and the impact thereof on loss reserves
and the Company's reserving policy, the adequacy of the Company's reinsurance
programs, developments in the securities markets and the impact thereof on the
Company's investment portfolio, the effect of regulatory changes governing
personal automobile insurance in New Jersey and the impact thereof on the
Company's direct written premium, losses and loss adjustment expenses, and other
risks listed from time to time in the Company's Securities and Exchange
Commission filings, including the Form 10-K filed for the fiscal year ended
December 31, 1998. Additional risks and uncertainties that may cause actual
results of operations and business of Farm Family Life Insurance Company ("the
Life Company") to differ materially from those contemplated or projected,
forecasted, estimated or budgeted in such forward
***More***
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looking statements, include, among others: (i) assumptions regarding future
morbidity, persistency, lapse rates, expenses, mortality and interest rates used
in calculating reserve and liability amounts; (ii) significant variations of
actual experience from that assumed by the Life Company as to the expected
morbidity, lapse rates and other factors in developing pricing and other terms
of its life insurance products; (iii) the ability of the Life Company to
maintain its current rating from A.M. Best Company, Inc.; (iv) changes in
interest rates causing a reduction of investment income, operating cash flow and
other sources which affect the Life Company's ability to pay policyholder
benefits; (v) policyholder lapses resulting from interest rate fluctuations;
(vi) inability of the Life Company to maintain appropriate levels of statutory
capital and surplus, particularly in light of continuing scrutiny by rating
organizations and state insurance regulatory authorities, and to maintain
acceptable financial strength and claim-paying ratings; (vii) a significant
change in or termination of the Life Company's relationship with the Farm
Bureaus(R) in the states where the Life Company's business is concentrated;
(viii) adverse state and federal legislation and regulation, including
limitations on premium levels, increases in minimum capital and reserves and
other financial viability requirements; (ix) heightened competition, including,
specifically the intensification of price competition, the entry of new or
existing competitors and the formation of new products by new and existing
competitors which may have substantially greater technical, financial and
operating resources; (x) inability to carry out marketing and sales plans; (xi)
loss of key executives; (xii) general economic and business conditions which are
less favorable than expected; (xiii) unanticipated changes in industry trends;
and (xiv) the reserving policies and the adequacy of the reinsurance and
retrocession programs of the Life Company. Accordingly, there can be no
assurance that actual results will conform to the forward-looking statements in
this press release.
***More***
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<CAPTION>
FARM FAMILY HOLDINGS, INC.
Condensed Consolidated Statements of Income
($ in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
-------------------------------------------------
Revenues:
<S> <C> <C> <C> <C>
Premiums from property/casualty operations $49,398 $45,660 $142,455 $133,404
Premiums from life and health operations and contract charges 9,055 ---- 18,351 ----
Net investment income 18,343 4,815 40,619 14,333
Realized investment gains (losses), net (1,216) 192 (1,004) 534
Other income 287 269 1,023 752
--------------------------------------------------
Total Revenues 75,867 50,936 201,444 149,023
--------------------------------------------------
Losses, benefits, expenses and other:
Losses and loss adjustment expenses on property/casualty operations 37,378 32,936 106,787 99,063
Life and health contract benefits 12,874 ---- 26,411 ----
Amortization expense 9,607 8,752 27,772 25,795
Other operating costs and expenses 5,863 2,850 14,781 9,478
Participating policyholders' interest 3,101 ---- 5,674 ----
--------------------------------------------------
Total Losses, Benefits and Expenses 68,823 44,538 181,425 134,336
Gain on partial reduction of extended earnings liability ---- (6,318) ---- (6,318)
--------------------------------------------------
Total Losses, Benefits, Expenses and Other 68,823 38,220 181,425 128,018
Income before federal income tax expense and preferred stock dividends 7,044 12,716 20,019 21,005
Federal income tax expense 1,872 4,258 5,865 6,814
--------------------------------------------------
5,172 8,458 14,154 14,191
Preferred stock dividends 104 ---- 189 ----
--------------------------------------------------
Net income attributable to common stockholders $5,068 $8,458 $13,965 $14,191
==================================================
Operating income (1) $5,243 $4,227 $13,949 $9,737
==================================================
Per Share Data
Net income per share-Diluted $0.82 $1.59 $2.38 $2.67
==================================================
Operating income per share-Diluted (1) $0.85 $0.80 $2.38 $1.84
==================================================
Weighted average shares outstanding-Diluted 6,192,764 5,303,707 5,863,363 5,306,257
==================================================
(1) Operating income excludes the impact of realized investment gains
(losses), non-recurring charges, and the related taxes thereon.
***More***
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FARM FAMILY HOLDINGS, INC.
Condensed Consolidated Balance Sheets
($ in thousands, except per share data)
September 30, 1999 December 31, 1998
------------------ -----------------
Assets:
<S> <C> <C>
Investments $1,078,241 $307,524
Cash and cash equivalents 20,018 10,677
Insurance receivables 59,251 47,466
Deferred acquisition costs 17,096 13,668
Present value of future profits 29,403 ----
Accrued investment income 17,458 5,527
Property and equipment, net 14,483 ----
Receivable from affiliates, net ---- 16,660
Other assets 5,654 4,981
===========================================
Total Assets $1,241,604 $406,503
===========================================
Liabilities:
Reserves for property/casualty insurance
losses and loss adjustment expenses $185,252 $174,435
Reserves for life policies and contract benefits 237,213 ----
Funds on deposit from policyholders 419,369 ----
Unearned premium reserve 76,728 71,209
Accrued dividends to policyholders 5,302 ----
Deferred income tax liability, net 18,750 ----
Accrued expenses and other liabilities 22,501 16,621
Participating policyholders' interest 91,399 ----
-------------------------------------------
Total liabilities 1,056,514 262,265
Mandatory redeemable preferred stock 5,830 ----
Total stockholders' equity 179,260 144,238
===========================================
Total Liabilities and Stockholders' Equity $1,241,604 $406,503
===========================================
Book Value Per Share $29.34 $27.45
===========================================
Book Value Per Share (excluding SFAS 115 adjustment) $29.31 $25.60
===========================================
Common Shares Outstanding 6,110,684 5,253,813
===========================================
***More***
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<CAPTION>
FARM FAMILY HOLDINGS, INC.
Selected Segment Information
($ in thousands)
Three months ended Nine months ended
September 30, September 30,
------------- -------------
1999 1998 1999 1998
---- ---- ---- ----
Premium Revenues
<S> <C> <C> <C> <C>
Property and casualty insurance $49,398 $45,660 $142,455 $133,404
Life insurance 9,055 ---- 18,351 ----
-----------------------------------------------------
Total $58,453 $45,660 $160,806 $133,404
=====================================================
Net Investment Income
Property and casualty insurance $5,220 $4,688 $15,069 $13,935
Life insurance 13,004 ---- 25,209 ----
Corporate and other 94 127 304 398
Intersegment eliminations 25 ---- 37 ----
=====================================================
Total $18,343 $4,815 $40,619 $14,333
=====================================================
Other Operating Costs & Expenses and Amortization
Property and casualty insurance
Underwriting and amortization expenses $11,944 $11,162 $34,580 $34,130
Dividends to policyholders 51 64 159 119
Life insurance 3,324 ---- 7,356 ----
Corporate and other 376 376 908 1,024
Intersegment eliminations (225) ---- (450) ----
=====================================================
Total $15,470 $11,602 $42,553 $35,273
=====================================================
Net Income
Operating Income
Property and casualty insurance $4,439 $4,389 $12,855 $10,143
Life insurance 963 ---- 1,598 ----
Corporate and other (159) (162) (504) (406)
-----------------------------------------------------
Total operating income 5,243 4,227 13,949 9,737
Realized investment gains (losses), net of tax (175) 124 16 347
Gain on partial reduction of extended earnings liability,
net of tax ---- 4,107 ---- 4,107
-----------------------------------------------------
Net income $5,068 $8,458 $13,965 $14,191
=====================================================
September 30, December 31,
1999 1998
---- ----
Identifiable Assets
Property and casualty $445,041 $397,038
Life insurance 821,728 ----
Corporate and other 71,593 35,417
Intersegment eliminations (96,758) (25,952)
-----------------------------
Total $1,241,604 $406,503
=============================
***More***
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<CAPTION>
FARM FAMILY HOLDINGS, INC.
Selected Unaudited Pro Forma Consolidated Financial Data
($ in millions, except per share data)
The following table presents selected unaudited pro forma financial data for the
Company. The selected unaudited pro forma consolidated financial information
gives effect to the acquisition of Farm Family Life using the purchase method of
accounting. The selected unaudited pro forma consolidated Statement of Income
data gives effect to the acquisition of Farm Family Life as if it occurred at
the beginning of the periods presented. The pro forma information is provided
for informational purposes only and is not indicative of the actual results that
would have been achieved had the acquisition of Farm Family Life been
consummated at the beginning of the periods presented, or of future results.
For the Nine Months Ended:
--------------------------
September 30, 1999 September 30, 1998
------------------ ------------------
Statement of Income Data:
<S> <C> <C>
Total revenues $224.2 $217.9
Total losses, benefits and expenses (202.7) (199.5)
Gain on partial reduction of extended earnings liability ---- 6.3
------------------------ -----------------------
Income before federal income tax expense 21.5 24.7
Federal income tax expense (6.4) (8.0)
------------------------ -----------------------
Income before preferred stock dividends 15.1 16.7
Preferred stock dividends (0.3) (0.3)
------------------------ -----------------------
Income attributable to common shareholders $14.8 $16.4
======================== =======================
Operating income(1) $14.8 $11.7
======================== =======================
Per Share Data:
Net income per common share - Diluted $2.40 $2.66
======================== =======================
Operating income per common share - Diluted (1) $2.40 $1.90
======================== =======================
Weighted average shares - Diluted 6,167,819 6,163,128
======================== =======================
(1) Operating income excludes the impact of realized investment gains (losses),
nonrecurring charges, and the related taxes thereon.
***End***
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