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: August 2, 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
<PAGE>
Item 5. Other Events
On July 28, 1999, Farm Family Holdings, Inc. issued a press release announcing
results of its operations for the second quarter ended June 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)
August 2, 1999 /s/ Philip P. Weber
- -------------------------------- -------------------------------------------
(Date) Philip P. Weber
President and CEO
<PAGE>
Exhibit 99
News Release
Contact:
IMMEDIATE RELEASE Timothy A. Walsh
Executive Vice President
Finance & Treasurer
(518) 431-5410
Farm Family Holdings Reports Increased Operating Income
for the Second Quarter Ended June 30, 1999
Glenmont, New York - July 28, 1999 - - Farm Family Holdings, Inc. (NYSE: FFH)
("the Company") today announced results of its operations for the second quarter
ended June 30, 1999, which now 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 second quarter of 1999 increased to
$5,144,000 compared to $2,571,000 for the same period in 1998. On a diluted per
share basis, consolidated operating income increased to $0.84 for the second
quarter of 1999 compared to $0.48 for the same period in 1998. Consolidated
operating income for the first six months of 1999 was $8,706,000 compared to
$5,511,000 for the same period in 1998. On a diluted per share basis,
consolidated operating income for the first six months of 1999 was $1.53
compared to $1.04 for the same period in 1998. Operating income excludes
realized investment gains (losses), nonrecurring charges, and the related taxes
thereon.
Net income for the second quarter of 1999 was $5,154,000 compared to $2,711,000
for the second quarter of 1998. On a diluted per share basis, net income was
$0.84 for the second quarter of 1999 compared to $0.51 for the same period in
1998. Net income for the first six months of 1999 was $8,897,000 compared to
$5,733,000 for the same period in 1998. On a diluted per share basis, net income
for the first six months of 1999 was $1.56 compared to $1.08 for the same period
in 1998.
Philip P. Weber, President and CEO of Farm Family Holdings, said, "Overall, we
are pleased with our operating results for the second quarter. We continue to
grow our property and casualty business in a prudent manner with an intense
focus on our combined ratio. In addition, we are emphasizing life insurance
cross-selling opportunities within our distribution system."
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<PAGE>
Property and Casualty Insurance Business
For the second quarter of 1999, property and casualty premium revenue decreased
$206,000 to $44,723,000 compared to $44,929,000 for the same period in 1998. For
the second quarter of 1999, premium revenue derived from Farm Family Casualty's
direct writings increased $1,763,000 or 3.9% to $46,695,000 and was impacted by
the recently enacted 15% rate roll back for personal automobile business in New
Jersey. Also, premium revenue from Farm Family Casualty's voluntary assumed
reinsurance business increased $1,250,000. These increases were offset by a
$3,027,000 increase in premium revenue ceded to Farm Family Casualty's
reinsurers. The increase in premium revenue ceded to reinsurers was primarily
attributable to an increase in premiums ceded pursuant to Farm Family Casualty's
aggregate stop loss reinsurance program which also reduced loss and loss
adjustment expenses for the second quarter of 1999.
For the first six months of 1999, property and casualty premium revenue
increased $5,313,000 or 6.1% to $93,057,000 compared to $87,744,000 for the same
period in 1998. The increase in property and casualty premium revenue for the
first six months of 1999 was primarily attributable to an increase of $4,318,000
in premium revenue from direct writings and an increase of $2,200,000 in
voluntary assumed reinsurance business for Farm Family Casualty. These increases
were partially offset by an increase of $1,001,000 in premiums ceded to Farm
Family Casualty's reinsurers.
For the second quarter of 1999, property and casualty net written premiums
decreased $185,000 to $48,413,000 compared to $48,598,000 for the same period in
1998. For the first six months of 1999, property and casualty net written
premiums increased 1.6% to $97,475,000 compared to $95,954,000 for the same
period in 1998. The increase in property and casualty net written premiums for
the first six months of 1999 was primarily attributable to an increase of
$2,997,000 or 3.3% in direct writings by Farm Family Casualty (excluding
assigned risk automobile business premiums), an increase of $977,000 in direct
writings by Farm Family Casualty in assigned risk automobile business premiums,
and to a lesser extent, an increase of $511,000 in Farm Family Casualty's
written voluntary assumed reinsurance business. These increases were partially
offset by an increase of $3,185,000 in premiums ceded by Farm Family Casualty to
its reinsurers. Excluding personal automobile business in the state of New
Jersey and assigned risk automobile business premiums, Farm Family Casualty's
direct writings increased $2,826,000 or 6.9% for the second quarter of 1999
compared to the same period in 1998 and $4,692,000 or 6.0% for the first six
months of 1999 compared to the same period in 1998. Direct written premiums for
personal automobile business in New Jersey decreased $1,587,000 or 23.9% for the
second quarter of 1999 compared to the same period in 1998 and decreased
$1,693,000 or 12.8% for the first six 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.
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 six months of 1998, the number
of personal automobile policies Farm Family Casualty had in New Jersey increased
by 13.4% compared to a decrease of 1.8% for the first six months of 1999.
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The statutory combined ratio for Farm Family Casualty was 97.8% for the second
quarter of 1999 compared to 99.0% for the same period in 1998. The statutory
combined ratio for the first six months of 1999 was 99.0% compared to 99.8% for
the same period in 1998. Loss and loss adjustment expenses for Farm Family
Casualty were 73.5% of premium revenue for the first six months of 1999 compared
to 75.4% for the same period in 1998. The decrease in Farm Family Casualty's
loss and loss adjustment expense ratio was primarily attributable to a decrease
in weather-related losses incurred during the first six months of 1999 compared
to the same period in 1998.
Operating income for property and casualty business for the second quarter was
$4,783,000 compared to $2,707,000 for the same period in 1998 and was $8,416,000
for the first six months of 1999 compared to $5,755,000 for the same period in
1998. The increases in operating income were primarily attributable to a
reduction in weather related losses and an increase in premium revenue for the
first six months of 1999.
Life Insurance Business
For the second quarter, life insurance premium revenue was $9,296,000 and
operating income was $635,000.
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. The acquisition of Farm
Family Life was accounted for using the purchase method of accounting.
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,
***More***
<PAGE>
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 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 form 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***
<PAGE>
<TABLE>
<CAPTION>
FARM FAMILY HOLDINGS, INC.
Condensed Consolidated Statements of Income
($ in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
------------------------------------------------
Revenues:
<S> <C> <C> <C> <C>
Premiums from property/casualty operations $44,723 $44,929 $93,057 $87,744
Premiums from life and health operations and contract charges 9,296 ---- 9,296 ----
Net investment income 17,442 4,751 22,276 9,518
Realized investment gains (losses), net (67) 216 212 342
Other income 459 264 736 483
-------------------------------------------------
Total Revenues 71,853 50,160 125,577 98,087
-------------------------------------------------
Losses, benefits and expenses:
Losses and loss adjustment expenses on property/casualty operations 32,923 33,988 69,409 66,127
Life and health contract benefits 7,736 ---- 7,736 ----
Other operating costs and expenses 15,251 12,122 27,083 23,671
Interest credited to policyholders 5,801 ---- 5,801 ----
Participating policyholders' interest 2,573 ---- 2,573 ----
-------------------------------------------------
Total Losses, Benefits and Expenses 64,284 46,110 112,602 89,798
-------------------------------------------------
Income before federal income tax expense and preferred stock dividends 7,569 4,050 12,975 8,289
Federal income tax expense 2,330 1,339 3,993 2,556
-------------------------------------------------
5,239 2,711 8,982 5,733
Preferred stock dividends 85 ---- 85 ----
-------------------------------------------------
Net income attributable to common stockholders $5,154 $2,711 $8,897 $5,733
=================================================
Operating Income (1) $5,144 $2,571 $8,706 $5,511
=================================================
Per Share Data
Net income per share-Diluted $0.84 $0.51 $1.56 $1.08
=================================================
Operating income per share-Diluted (1) $0.84 $0.48 $1.53 $1.04
=================================================
Weighted average shares outstanding-Diluted 6,100,551 5,313,386 5,696,139 5,307,442
=================================================
</TABLE>
(1) Operating income excludes the impact of realized investment gains
(losses), non-recurring charges, and the related taxes thereon.
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<TABLE>
<CAPTION>
FARM FAMILY HOLDINGS, INC.
Condensed Consolidated Balance Sheets
($ in thousands, except per share data)
June 30, 1999 December 31, 1998
------------- -----------------
Assets:
<S> <C> <C>
Investments $1,070,081 $307,524
Cash and cash equivalents 29,005 10,677
Insurance receivables 56,843 47,466
Deferred acquisition costs 16,651 13,668
Present value of future profits 29,279 ----
Accrued investment income 18,630 5,527
Property and equipment, net 14,178 ----
Receivable from affiliates, net ---- 16,660
Other assets 4,092 4,981
=============================================
Total Assets $1,238,759 $406,503
=============================================
Liabilities:
Reserves for property/casualty insurance
losses and loss adjustment expenses $179,738 $174,435
Reserves for life policies and contract benefits 233,446 ----
Funds on deposit from policyholders 420,563 ----
Unearned premium reserve 76,187 71,209
Accrued dividends to life insurance policyholders 5,410 ----
Deferred income tax liability, net 21,370 ----
Accrued expenses and other liabilities 23,892 16,621
Participating policyholders' interest 96,584 ----
---------------------------------------------
Total liabilities 1,057,190 262,265
Mandatory redeemable preferred stock 5,830 ----
Total stockholders' equity 175,739 144,238
=============================================
Total Liabilities and Stockholders' Equity $1,238,759 $406,503
=============================================
Book Value Per Share $28.76 $27.45
=============================================
Book Value Per Share (excluding SFAS 115 adjustment) $28.48 $25.60
=============================================
Common Shares Outstanding 6,110,684 5,253,813
=============================================
</TABLE>
***More***
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<TABLE>
<CAPTION>
FARM FAMILY HOLDINGS, INC.
Segment Information
($ in thousands)
Three months ended Six months ended
June 30, June 30,
-------- --------
1999 1998 1999 1998
Premium Revenues:
<S> <C> <C> <C> <C>
Property and casualty insurance $44,723 $44,929 $93,057 $87,744
Life insurance 9,296 ---- 9,296 ----
-----------------------------------------------------
Total premium revenues $54,019 $44,929 $102,353 $87,744
=====================================================
Operating Income:
Property and casualty insurance $4,783 $2,707 $8,416 $5,755
Life insurance 635 ---- 635 ----
Corporate and other (274) (136) (345) (244)
-----------------------------------------------------
Total operating income 5,144 2,571 8,706 5,511
Realized investment gains, net of tax 10 140 191 222
=====================================================
Net income $5,154 $2,711 $8,897 $5,733
=====================================================
</TABLE>
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
---- ----
Identifiable Assets:
<S> <C> <C>
Property and casualty $437,462 $397,038
Life insurance 829,254 ----
Corporate and other 71,093 35,417
Intersegment eliminations (99,050) (25,952)
---------------------------
Total identifiable assets $1,238,759 $406,503
===========================
</TABLE>
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Selected Unaudited Pro Forma Consolidated Financial Data
($ 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.
<TABLE>
<CAPTION>
For the Six Months Ended:
June 30, 1999 June 30, 1998
------------- -------------
Statement of Income Data:
<S> <C> <C>
Total revenues $148.3 $143.5
Total losses, benefits and expenses 133.9 132.6
------------------------ ---------------------
Income before federal income tax expense 14.4 10.9
Federal income tax expense 4.4 3.4
------------------------ ---------------------
Income before preferred stock dividends 10.0 7.5
Preferred stock dividends 0.2 0.2
------------------------ ---------------------
Income attributable to common shareholders $9.8 $7.3
======================== =====================
Operating income(1) $9.6 $7.0
======================== =====================
Per Share Data:
Net income per common share - Diluted $1.59 $1.18
======================== =====================
Operating income per common share - Diluted (1) $1.56 $1.13
======================== =====================
Weighted average shares - Diluted 6,155,346 6,164,313
======================== =====================
</TABLE>
(1) Operating income excludes the impact of realized investment gains (losses),
nonrecurring charges, and the related taxes thereon.
***End***
