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: November 1, 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 October 31, 2000, Farm Family Holdings, Inc. issued a press release
announcing the results of its operations for the third quarter ended
September 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)
November 1, 2000 /s/ Philip P. Weber
-------------------------------- --------------------------------------------
(Date) Philip P. Weber
President and CEO
<PAGE>
Farm Family Holdings Reports Increased Operating Income
for the Third Quarter Ended September 30, 2000
Glenmont, New York - October 31, 2000 - Farm Family Holdings, Inc. (NYSE: FFH)
("the Company") today announced that consolidated operating income for the third
quarter of 2000 increased to $5,299,000 compared to $5,243,000 for the same
period in 1999. On a diluted per share basis, consolidated operating income
increased to $0.88 for the third quarter of 2000 compared to $0.85 for the same
period in 1999. Consolidated operating income for the first nine months of 2000
was $14,256,000 compared to $13,949,000 for the same period in 1999. On a
diluted per share basis, consolidated operating income for the first nine months
of 2000 was $2.34 compared to $2.38 for the same period in 1999.
Net income for the third quarter of 2000 was $5,214,000 compared to $5,068,000
for the third quarter of 1999. On a diluted per share basis, net income was
$0.86 for the third quarter of 2000 compared to $0.82 for the same period in
1999. Net income for the first nine months of 2000 was $26,651,000 compared to
$13,965,000 for the same period in 1999. On a diluted per share basis, net
income for the first nine months of 2000 was $4.37 compared to $2.38 for the
same period in 1999. In addition, book value on a diluted per share basis
increased to $33.79 per share as of September 30, 2000.
Philip P. Weber, President and CEO of Farm Family Holdings, said, "Overall, I am
pleased with our operating results for the third quarter. The GAAP combined
ratio for our property and casualty segment was 101.9% for the third quarter of
2000, primarily as a result of the inclusion of United Farm Family. Our primary
property and casualty company, Farm Family Casualty, had a GAAP combined ratio
of 98.0% for the third quarter of 2000. In addition, our life insurance segment
posted operating income in line with our expectations. We continue to emphasize
delivery of multiple policies into the households and businesses we serve."
<PAGE>
Property and Casualty Insurance Business
For the third quarter of 2000, property and casualty net written premiums
increased 6.1% to $53,258,000 compared to $50,201,000 for the same period in
1999. For the first nine months of 2000, property and casualty net written
premiums were $173,933,000 compared to $147,357,000 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 nine months
of 2000 was primarily attributable to an increase of $30,825,000 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 $11,657,000 or 8.2% to $154,354,000 for the
first nine months of 2000. This increase was partially offset by a decrease of
$1,743,000 in assigned risk automobile premiums, an increase of $1,834,000 in
premiums ceded to our reinsurers and a decrease of $672,000 in assumed
reinsurance premiums.
Operating income for our property and casualty business for the third quarter
was $4,566,000 compared to $4,439,000 for the same period in 1999 and was
$11,666,000 for the first nine months of 2000 compared to $12,855,000 for the
same period in 1999.
Life Insurance Business
Life insurance premium revenue was $9,338,000 for the third quarter of 2000
compared to $9,055,000 for the same period in 1999. Total collected premiums
from life insurance policies increased 6.0% to $9,781,000 for the third quarter
of 2000 compared to the same period in 1999.
Life insurance operating income was $1,024,000 for the third quarter of 2000
compared to $963,000 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.
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.
<PAGE>
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's filed for
the quarters ended March 31, 2000 and June 30, 2000.
<PAGE>
<TABLE>
<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,
2000 1999 2000 1999
----------------------------------------------------
Revenues:
<S> <C> <C> <C> <C>
Premiums from property/casualty operations $51,425 $49,398 $147,391 $142,455
Premiums from life and health operations and contract charges 9,338 9,055 28,321 18,351
Net investment income 19,084 18,343 56,429 40,619
Realized investment losses, net (587) (1,216) (1,743) (1,004)
Other income 486 287 1,402 1,023
----------------------------------------------------
Total revenues 79,746 75,867 231,800 201,444
----------------------------------------------------
Losses, benefits and expenses:
Losses and loss adjustment expenses on property/casualty operations 40,481 37,378 115,969 106,787
Policyholder contract benefits 12,039 12,874 39,938 26,411
Amortization expense 10,065 9,607 28,604 27,772
Other operating costs and expenses 6,685 5,863 18,410 14,781
Participating policyholders' interest 3,287 3,101 (9,880) 5,674
----------------------------------------------------
Total losses, benefits and expenses 72,557 68,823 193,041 181,425
----------------------------------------------------
Income before federal income tax expense and preferred stock dividends 7,189 7,044 38,759 20,019
Federal income tax expense 1,886 1,872 11,840 5,865
----------------------------------------------------
Income before preferred stock dividends 5,303 5,172 26,919 14,154
Preferred stock dividends 89 104 268 189
----------------------------------------------------
Net income attributable to common stockholders $5,214 $5,068 $26,651 $13,965
====================================================
Operating Income (1) $5,299 $5,243 $14,256 $13,949
====================================================
Per Share Data
Net income per share-Diluted $0.86 $0.82 $4.37 $2.38
====================================================
Operating income per share-Diluted (1) $0.88 $0.85 $2.34 $2.38
====================================================
Weighted average shares outstanding-Diluted 6,049,310 6,192,763 6,103,580 5,863,362
====================================================
</TABLE>
(1) Operating income excludes the impact of realized investment gains
(losses), non-recurring charges, and the related taxes thereon. See
"Selected Segment Information" for a reconciliation of operating
income to net income.
<PAGE>
<TABLE>
<CAPTION>
FARM FAMILY HOLDINGS, INC.
Condensed Consolidated Balance Sheets
($ in thousands, except per share data)
September 30, 2000 December 31, 1999
----------------------------------------------------------------------------------------------------------------------------
Assets:
<S> <C> <C>
Investments $1,098,107 $1,071,681
Cash and cash equivalents 20,747 19,190
Insurance receivables 86,983 55,223
Deferred acquisition costs 24,117 17,630
Present value of future profits 27,440 28,571
Accrued investment income 17,738 18,875
Property and equipment, net 14,501 14,520
Deferred income tax asset, net 26,977 29,605
Other assets 6,648 4,884
--------------------------------------------
Total assets $1,323,258 $1,260,179
============================================
Liabilities:
Reserves for losses and loss adjustment expenses
for property/casualty insurance $203,614 $186,130
Reserves for policyholder contract benefits 248,978 238,272
Funds on deposit from policyholders 409,614 416,971
Unearned premium reserve 101,336 74,364
Accrued dividends to policyholders 5,334 5,263
Accrued expenses and other liabilities 24,487 23,639
Participating policyholders' interest 117,834 128,516
--------------------------------------------
Total liabilities 1,111,197 1,073,155
Mandatory redeemable preferred stock 5,830 5,830
Total stockholders' equity 206,231 181,194
--------------------------------------------
Total liabilities and stockholders' equity $1,323,258 $1,260,179
============================================
Book Value Per Share Outstanding $34.35 $29.65
============================================
Book Value Per Share Outstanding (excluding SFAS 115 adjustment) $34.55 $30.07
============================================
Book Value Per Share-Diluted $33.79 $30.46
============================================
Book Value Per Share-Diluted (excluding SFAS 115 adjustment) $33.99 $30.89
============================================
Common Shares Outstanding 6,003,983 6,110,683
============================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FARM FAMILY HOLDINGS, INC.
Selected Segment Information
($ in thousands)
Three months ended Nine months ended
September 30, September 30,
2000 1999 2000 1999
---- ---- ---- ----
Premium revenues
<S> <C> <C> <C> <C>
Property and casualty insurance $51,425 $49,398 $147,391 $142,455
Life insurance 9,338 9,055 28,321 18,351
----------------------------------------------------
Total $60,763 $58,453 $175,712 $160,806
====================================================
Net investment income
Property and casualty insurance $5,843 $5,220 $17,114 $15,069
Life insurance 13,195 13,004 39,099 25,209
Corporate and other 37 94 186 304
Intersegment eliminations 9 25 30 37
----------------------------------------------------
Total $19,084 $18,343 $56,429 $40,619
====================================================
Other operating costs & expenses and amortization expense
Property and casualty insurance
Underwriting and amortization expenses $11,931 $11,944 $34,647 $34,580
Dividends to policyholders 56 51 144 159
Life insurance 4,620 3,324 11,655 7,356
Corporate and other 373 376 1,258 908
Intersegment eliminations (230) (225) (690) (450)
----------------------------------------------------
Total $16,750 $15,470 $47,014 $42,553
====================================================
Operating income
Property and casualty insurance $4,566 $4,439 $11,666 $12,855
Life insurance 1,024 963 3,497 1,598
Corporate and other (291) (159) (907) (504)
----------------------------------------------------
Total operating income 5,299 5,243 14,256 13,949
Effect of retroactively including Excess Interest
and Spreads, net of tax ---- ---- 12,746 ----
Realized investment gains (losses), net of tax (85) (175) (351) 16
----------------------------------------------------
Net income $5,214 $5,068 $26,651 $13,965
====================================================
GAAP combined ratio
Property and casualty insurance
Loss and loss adjustment expense ratio 78.7% 75.6% 78.7% 74.9%
Underwriting expense ratio 23.2% 24.2% 23.5% 24.3%
----------------------------------------------------
GAAP combined ratio 101.9% 99.8% 102.2% 99.2%
====================================================
</TABLE>
<TABLE>
September 30, December 31,
2000 1999
---- ----
Identifiable Assets
<S> <C> <C>
Property and casualty $501,409 $446,721
Life insurance 818,834 810,487
Corporate and other 68,387 71,014
Intersegment eliminations (65,372) (68,043)
---------------------------
Total $1,323,258 $1,260,179
===========================
</TABLE>
