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: July 26, 2000
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 25, 2000, Farm Family Holdings, Inc. issued a press release announcing
the results of its operations for the second quarter ended June 30, 2000.
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)
July 26, 2000 /s/ Philip P. Weber
-------------------------------- ---------------------------------------------
(Date) Philip P. Weber
President and CEO
<PAGE>
Farm Family Holdings Reports Increased Operating Income
for the Second Quarter Ended June 30, 2000
Glenmont, New York - July 25, 2000 - Farm Family Holdings, Inc. (NYSE: FFH)
("the Company") today announced that consolidated operating income for the
second quarter of 2000 increased to $5,268,000 compared to $5,144,000 for the
same period in 1999. On a diluted per share basis, consolidated operating income
increased to $0.86 for the second quarter of 2000 compared to $0.84 for the same
period in 1999. Consolidated operating income for the first six months of 2000
was $8,957,000 compared to $8,706,000 for the same period in 1999. On a diluted
per share basis, consolidated operating income for the first six months of 2000
was $1.46 compared to $1.53 for the same period in 1999.
Net income for the second quarter of 2000 was $5,028,000 compared to $5,154,000
for the second quarter of 1999. On a diluted per share basis, net income was
$0.82 for the second quarter of 2000 compared to $0.84 for the same period in
1999. Net income for the first six months of 2000 was $21,437,000 compared to
$8,897,000 for the same period in 1999. On a diluted per share basis, net income
for the first six months of 2000 was $3.50 compared to $1.56 for the same period
in 1999. In addition, book value on a diluted per share basis increased to
$32.24 per share as of June 30, 2000.
Philip P. Weber, President and CEO of Farm Family Holdings, said, "Overall, I am
pleased with the Company's operating results for the second quarter. We continue
to grow profitably and we are emphasizing the marketing of multiple policies
into the households and businesses in the markets we serve. Clearly, our expense
management program continues to enhance our operating results."
Property and Casualty Insurance Business
For the second quarter of 2000, property and casualty premium revenue increased
$3,721,000 to $48,444,000 compared to $44,723,000 for the same period in 1999.
The increase was primarily attributable to an increase of $2,561,000 in premium
revenue from our direct writings and a decrease of $2,198,000 in premiums ceded
to reinsurers. The decrease in premium revenue ceded to reinsurers was primarily
attributable to a decrease in premiums ceded pursuant to the Company's aggregate
stop loss reinsurance program. These increases were partially offset by a
$1,065,000 decrease in revenue from voluntary assumed reinsurance premiums.
For the first six months of 2000, property and casualty premium revenue
increased $2,909,000 to $95,966,000 compared to $93,057,000 for the same period
in 1999. The increase was primarily attributable to an increase of $4,417,000 in
premium revenue from our direct writings, due in part to the inclusion of United
Farm Family since April 6, 1999, and a decrease of $162,000 in premiums ceded to
reinsurers. These increases were partially offset by a decrease of $1,442,000 in
revenue from voluntary assumed reinsurance premiums.
For the second quarter of 2000, property and casualty net written premiums were
$63,330,000 compared to $48,413,000 for the same period in 1999. For the first
six months of 2000, property and casualty net written premiums were $120,675,000
compared to $97,156,000 for the same period in 1999, which includes the
operations of United Farm Family since April 6, 1999. The increase in property
and casualty net written premiums for the first six months of 2000 was primarily
attributable to an increase of $25,989,000 in direct written premiums (excluding
assigned risk automobile business premiums) largely as a result of the
conversion of our personal and commercial automobile policies in certain states
from six-month to twelve-month policies. Excluding the impact of converting
personal and commercial automobile policies from six-month to twelve-month
policies in certain states, we estimate that property and casualty direct
written premiums (excluding assigned risk automobile business premiums) would
have increased approximately $6,820,000 or 7.1% to $102,330,000 for the first
six months of 2000. This increase was partially offset by a decrease of
$1,828,000 in assigned risk automobile premiums and a decrease of $525,000 in
voluntary assumed reinsurance premiums.
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The GAAP combined ratio for property and casualty business was 100.1% for the
second quarter of 2000 compared to 98.5% for the same period in 1999. Excluding
United Farm Family, the GAAP combined ratio was 98.7% for the second quarter of
2000 compared to 95.9% for the same period in 1999. Losses and loss adjustment
expenses for our property and casualty business were 76.3% of premium revenue
for the second quarter of 2000 compared to 73.6% for the same period in 1999.
The increase in the loss and loss adjustment expense ratio was primarily
attributable to an increase in weather-related losses incurred by Farm Family
Casualty during the second quarter of 2000. Weather-related losses incurred by
Farm Family Casualty during the second quarter of 2000 increased to $2,631,000
compared to $1,072,000 for the same period in 1999. The underwriting expense
ratio for property and casualty business was 23.8% for the second quarter of
2000 compared to 24.9% for the same period in 1999. The decrease in the
underwriting expense ratio is primarily attributable to the continued execution
of the Company's expense management program.
Operating income for property and casualty business for the second quarter was
$4,282,000 compared to $4,783,000 for the same period in 1999 and was $7,100,000
for the first six months of 2000 compared to $8,416,000 for the same period in
1999.
Life Insurance Business
Life insurance premium revenue was $9,420,000 for the second quarter of 2000
compared to $9,296,000 for the same period in 1999. Total collected premium from
life insurance policies increased 3.7% to $10,179,000 for the second quarter of
2000 compared to the same period in 1999.
Life insurance operating income was $1,291,000 for the second quarter of 2000
compared to $635,000 for the same period in 1999. The increase in operating
income was largely due to revisions made in the first quarter of 2000 to the
Company's calculation of its estimate of profits on participating life insurance
business allocable to stockholders. In addition, the Company's expense
management program continues to improve operating results for our life insurance
business.
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.
Stock Repurchase Program
On April 25, 2000, the Company's Board of Directors adopted a stock repurchase
plan that authorizes the Company to repurchase shares of its common stock in an
aggregate amount of up to $7,500,000. During the second quarter of 2000, the
Company repurchased 110,000 shares of its common stock for $3,019,000 at an
average cost of $27.45 per share.
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. Additional information regarding the
Company is available at www.farmfamily.com.
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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, exposure to
catastrophic loss, frequency and severity of losses, geographic concentration of
loss exposure in New York, New Jersey, and the Northeastern United States
generally, conditions specific to the 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, the risks
associated with the legislative, regulatory and competitive environments in the
states in which the Company currently operates, heightened competition,
including specifically the intensification of competition, failure to obtain new
customers or to retain existing customers, the Company's primary reliance, as a
holding company, on dividends from its subsidiaries and the applicable
regulatory restrictions on the ability of the Company's subsidiaries to pay such
dividends, changes in tax laws, and other risks listed from time to time in the
Company's Securities and Exchange Commission filings, including Form 10-K filed
for the fiscal year ended December 31, 1999 and Form 10-Q filed for the quarter
ended March 31, 2000.
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<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,
2000 1999 2000 1999
------------------------------------------------
Revenues:
<S> <C> <C> <C> <C>
Premiums from property/casualty operations $48,444 $44,723 $95,966 $93,057
Premiums from life and health operations and contract charges 9,420 9,296 18,983 9,296
Net investment income 18,852 17,442 37,345 22,276
Realized investment gains (losses), net (948) (67) (1,156) 212
Other income 295 459 916 736
-------------------------------------------------
Total revenues 76,063 71,853 152,054 125,577
-------------------------------------------------
Losses, benefits and expenses:
Losses and loss adjustment expenses on property/casualty operations 36,954 32,923 75,488 69,409
Policyholder contract benefits 13,239 13,537 27,899 13,537
Amortization expense 9,788 9,169 18,539 18,165
Other operating costs and expenses 6,051 6,082 11,725 8,918
Participating policyholders' interest 2,728 2,573 (13,167) 2,573
-------------------------------------------------
Total losses, benefits and expenses 68,760 64,284 120,484 112,602
-------------------------------------------------
Income before federal income tax expense and preferred stock dividends 7,303 7,569 31,570 12,975
Federal income tax expense 2,185 2,330 9,954 3,993
-------------------------------------------------
Income before preferred stock dividends 5,118 5,239 21,616 8,982
Preferred stock dividends 90 85 179 85
-------------------------------------------------
Net income attributable to common stockholders $5,028 $5,154 $21,437 $8,897
=================================================
Operating Income (1) $5,268 $5,144 $8,957 $8,706
=================================================
Per Share Data
Net income per share-Diluted $0.82 $0.84 $3.50 $1.56
=================================================
Operating income per share-Diluted (1) $0.86 $0.84 $1.46 $1.53
=================================================
Weighted average shares outstanding-Diluted 6,094,763 6,100,551 6,131,029 5,696,139
=================================================
</TABLE>
(1) Operating income excludes the impact of realized investment gains
(losses), non-recurring charges, and the related taxes thereon. See
"Selected Segment Information " for a reconciliation of operating
income to net income.
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<TABLE>
<CAPTION>
FARM FAMILY HOLDINGS, INC.
Condensed Consolidated Balance Sheets
($ in thousands, except per share data)
June 30, December 31, 1999
------------------------------------------------------------------------------------------------------------------
2000
Assets:
<S> <C> <C>
Investments $1,062,724 $1,071,681
Cash and cash equivalents 27,442 19,190
Insurance receivables 82,782 55,223
Deferred acquisition costs 22,902 17,630
Present value of future profits 28,083 28,571
Accrued investment income 19,234 18,875
Property and equipment, net 14,689 14,520
Deferred income tax asset, net 31,049 29,605
Other assets 6,323 4,884
-----------------------------------------
Total assets $1,295,228 $1,260,179
=========================================
Liabilities:
Reserves for losses and loss adjustment expenses
for property/casualty insurance $194,529 $186,130
Reserves for policyholder contract benefits 246,338 238,272
Funds on deposit from policyholders 411,044 416,971
Unearned premium reserve 99,147 74,364
Accrued dividends to policyholders 5,446 5,263
Accrued expenses and other liabilities 25,068 23,639
Participating policyholders' interest 110,171 128,516
-----------------------------------------
Total liabilities 1,091,743 1,073,155
Mandatory redeemable preferred stock 5,830 5,830
Total stockholders' equity 197,655 181,194
-----------------------------------------
Total liabilities and stockholders' equity $1,295,228 $1,260,179
=========================================
Book Value Per Share Outstanding $32.92 $29.65
=========================================
Book Value Per Share Outstanding (excluding SFAS 115 adjustment) $33.68 $30.07
=========================================
Book Value Per Share-Diluted $32.24 $30.46
=========================================
Book Value Per Share-Diluted (excluding SFAS 115 adjustment) $32.99 $30.89
=========================================
Common Shares Outstanding 6,003,984 6,110,684
=========================================
</TABLE>
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<TABLE>
<CAPTION>
FARM FAMILY HOLDINGS, INC.
Selected Segment Information
($ in thousands)
Three months ended Six months ended
June 30, June 30,
2000 1999 2000 1999
---- ---- ---- ----
Premium Revenues
<S> <C> <C> <C> <C>
Property and casualty insurance $48,444 $44,723 $95,966 $93,057
Life insurance 9,420 9,296 18,983 9,296
-----------------------------------------------------
Total $57,864 $54,019 $114,949 $102,353
=====================================================
Net investment income
Property and casualty insurance $5,715 $5,122 $11,271 $9,849
Life insurance 13,045 12,205 25,904 12,205
Corporate and other 71 103 149 210
Intersegment eliminations 21 12 21 12
-----------------------------------------------------
Total $18,852 $17,442 $37,345 $22,276
=====================================================
Other operating costs & expenses and amortization expense
Property and casualty insurance
Underwriting and amortization expenses $11,558 $11,116 $22,716 $22,636
Dividends to policyholders 88 38 88 108
Life insurance 3,985 4,032 7,035 4,032
Corporate and other 438 290 885 532
Intersegment eliminations (230) (225) (460) (225)
-----------------------------------------------------
Total $15,839 $15,251 $30,264 $27,083
=====================================================
Operating Income
Property and casualty insurance $4,282 $4,783 $7,100 $8,416
Life insurance 1,291 635 2,473 635
Corporate and other (305) (274) (616) (345)
-----------------------------------------------------
Total operating income 5,268 5,144 8,957 8,706
Effect of retroactively including Excess Interest
and Spreads, net of tax ---- ---- 12,746 ----
Realized investment gains (losses), net of tax (240) 10 (266) 191
-----------------------------------------------------
Net income $5,028 $5,154 $21,437 $8,897
=====================================================
</TABLE>
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
---- ----
Identifiable Assets
<S> <C> <C>
Property and casualty $483,609 $446,721
Life insurance 806,109 810,487
Corporate and other 68,900 71,014
Intersegment eliminations (63,390) (68,043)
---------------------------
Total $1,295,228 $1,260,179
===========================
***End***
</TABLE>
