UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period ended March 31, 1995
Commission File No. 2-572299
FARM FAMILY MUTUAL INSURANCE COMPANY
A New York Corporation IRS No. 14-1415410
344 Route 9W, Glenmont, New York 12077-2910
Registrant's telephone number: (518) 436-9751
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
<PAGE>
FARM FAMILY MUTUAL INSURANCE COMPANY & SUBSIDIARY
INDEX
Part I. Financial Information
Item 1. Financial Statements (unaudited)
Consolidated Statements of Admitted Assets, Liabilities and
Policyholders'
Surplus - Statutory Basis March 31, 1995 and December 31, 1994
Consolidated Statements of Income - Statutory Basis
Three months ended March 31, 1995 and 1994
Consolidated Statutory Statements of Changes in Financial
Position
Three months ended March 31, 1995 and 1994
Item 2. Management's Discussion and Analysis of the
Consolidated Statutory
Statements of Income
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
<PAGE)
FARM FAMILY MUTUAL INSURANCE COMPANY & SUBSIDIARY
Consolidated Statements of Admitted Assets, Liabilities and
Policyholders' Surplus - Statutory Basis
(In Thousands)
(UNAUDITED)
ADMITTED ASSETS March 31, 1995 Dec. 31, 1994
Investments:
Fixed maturities, principally at amortized
cost (Market Value: $162,649 and $157,409) 165,817 160,475
Equity securities, at market value
(Cost: $7,985 and $7,503) 10,809 10,156
Mortgage loans, at cost 1,874 1,890
Short-term investments, at cost 3,058 3,013
Other invested assets 1,380 1,572
TOTAL INVESTMENTS: 182,938 177,106
Cash 3,996 4,507
Premiums receivable (Net of balance of
$270 and $237 outstanding 90 day or more) 20,940 17,616
Accrued investment income 3,543 4,047
Reinsurance recoverable on paid losses 803 1,176
Equities & deposits in pools & associations 69 1,236
Other Assets 0 899
TOTAL ADMITTED ASSETS: 212,289 206,587
LIABILITIES & POLICYHOLDERS' SURPLUS
Liabilities:
Reserve for losses and loss adjustment expenses 104,076 103,660
Unearned premiums 48,823 46,948
Reinsurance balances payable 6,829 8,286
Excess statutory reserves 0 0
Accrued expenses and other liabilities 7,399 4,823
Income taxes payable 0 0
TOTAL LIABILITIES: 167,127 163,717
Policyholders' Surplus:
Special contingent surplus 1,300 1,300
Net unrealized appreciation of equity securities 2,964 2,433
Debentures issued and outstanding 1,254 1,265
Subordinated surplus certificates outstanding 1,480 1,484
Unassigned surplus 38,164 36,388
TOTAL POLICYHOLDERS' SURPLUS: 45,162 42,870
TOTAL LIABILITIES & POLICYHOLDERS' SURPLUS: 212,289 206,587
<PAGE>
FARM FAMILY MUTUAL INSURANCE COMPANY & SUBSIDIARY
Consolidated Statements of Income - Statutory Basis
(In Thousands)
Three Months Ended March 31,
1995 (Unaudited) 1994 (Unaudited)
Revenues:
Premiums earned $ 27,853 23,987
Net investment earned 3,505 3,260
Realized gain on investments 61 908
Other income, net 130 102
31,549 28,257
Operating Expenses:
Loss adjustment expenses 19,433 20,941
Underwriting expenses 9,077 7,222
Interest on debentures &
subordinated surplus certificates 0 0
28,510 28,163
Income before Federal Income Taxes
& Dividends to policyholders 3,039 94
Dividends to policyholders 0 0
Income before Federal Income Taxes 3,039 94
Federal Income Tax expense 1,206 0
Net Income statutory basis: $ 1,833 94
<PAGE>
FARM FAMILY MUTUAL INSURANCE COMPANY & SUBSIDIARY
CONSOLIDATED STATEMENTS oF CASH FLOW - STATUTORY BASIS
Three months ended March 31, 1995 and 1994
(In Thousands)
1995 1994
Cash provided:
From operations:
Premiums collected, net $ 26,239 24,747
Loss and loss adjustment exp pd, net (18,644) (19,043)
Underwriting expenses paid (8,018) (7,752)
Investment income collected, net 4,026 3,754
Other income 130 102
Dividends paid to policyholders 0 0
Federal income taxes paid 0 (634)
Net cash provided from operations 3,733 1,174
From investments sold, matured or redeemed:
Fixed maturities 5,622 15,789
Equity securities 56 80
Mortgage loans 16 11
Other invested assets 0 203
Investment proceeds 5,694 16,083
Other sources of cash:
Decrease in receivable from affiliates 1,033 8
Sale of data processing equipment 0 0
Other sources 235 1,334
Total cash provided 10,695 18,599
Cash used:
Cash used to acquire investments:
Fixed maturities 10,856 18,585
Equity securities 254 0
Mortgage loans 0 0
11,109 18,585
Other uses of cash:
Increase in due from affiliates 7 6
Repurchase of debentures and
subordinated surplus certificates 0 0
Interest paid of debentures and
subordinated surplus certificates 15 0
Miscellaneous, net 32 0
Total cash used 11,163 18,597
Net cash provided (used) (467) 2
Cash and short-term investments at beg of year 7,520 6,738
Cash and short-term investments at end of year $ 7,053 6,740
<PAGE>
FARM FAMILY MUTUAL INSURANCE COMPANY & SUBSIDIARY
Notes to Consolidated Statutory Financial Statements - Statutory
Basis
1. The accompanying unaudited consolidated statutory financial
statements have been
prepared in conformity with insurance accounting practices
prescribed or permitted by the Insurance Department of the State
of New York which vary in some respects from generally accepted
accounting principles. Significant variations include: (1)
stocks are carried at market values and no provision is made for
income tax on the unrealized appreciation of such investments;
(2) certain assets designated as "non-admitted assets"
(principally direct premiums "overdue" and balances due from
agents and employees) are excluded from the consolidated balance
sheet through charges to policyholders' surplus; (3) on certain
lines of insurance reserves in excess of the amounts considered
adequate by the Company have been provided in accordance with
statutory requirements; (4) premiums written are taken into
operations on a pro-rata basis over the periods covered by the
policies, whereas related policy acquisition costs are charged
to operations when incurred; (5) federal income taxes are
provided on the basis of amounts currently payable or
refundable. No provision is made for deferred income taxes
relating to timing differences between financial reporting and
taxable income.
2. The consolidated statutory financial statements included the
accounts of Farm Family
Mutual Insurance Company (the Company) and its wholly-owned
subsidiary Rural Agency and Brokerage, Inc. (RAB) and its
subsidiaries. The subsidiaries of RAB are Rural Insurance
Agency and Brokers of Massachusetts, Inc. (100%-owned by RAB),
R.A.A.B. of West Virginia, Inc.. (100%-owned by RAB) and Rural
Agency and Brokerage of New Hampshire, Inc. (25%-owned by RAB).
The minority interest in the capital and net income of Rural
Agency and Brokerage of New Hampshire, Inc. is immaterial. All
significant intercompany accounts and transactions have been
eliminated in consolidation.
3. The management of the Company believes the accompanying
unaudited consolidated
statutory financial statements contain all adjustments necessary
to present fairly the financial position as of March 31, 1995
and the results of operations and changes in financial portion
for the period then ended.
4. The results of operations for the periods ended March 31,
1995 and 1994 are not
necessarily indicative of the results to be expected for the
full year.
5. For further information, refer to the consolidated financial
statements and footnotes
thereto included in the Company's annual report on Form 10-K for
the year ended December 31, 1994.
<PAGE>
FARM FAMILY MUTUAL INSURANCE COMPANY & SUBSIDIARY
Management's Discussion and Analysis of the
Consolidated Statutory Statements of Income
(In Thousands)
The following is management's discussion and analysis of certain
significant factors which have affected the Company's net income
during the periods included in the accompanying statements of
income.
A summary of the period to period changes in the principal items
included in the statutory consolidated statements of income is
shown below:
Comparison of
3 Months Ended 3 Months Ended
3/31/1995 & 1994 3/31/1995 & 12/31/1994
Amount Percent Amount Percent
Premiums earned $ 3,865 16.11 $ 962 3.58
Net investment income 245 7.52 840 31.52
Losses incurred (1,783) (9.76) (3,218) (16.34)
Loss adjustment expenses 275 10.28 1,059 55.97
Underwriting expenses 1,855 25.69 2,762 43.74
Net Income: $ 1,739 1850.00 $ 639 53.52
<PAGE>
COMPARISON OF THE THREE MONTH PERIODS ENDED
MARCH 31, 1995 & MARCH 31, 1994
PREMIUMS EARNED
The increase of $3,865,000 is the net result of (1) an increase
of $1,972,000 in voluntary auto; (2) an increase of $568,000 in
the SFP-"10" policy, which is the Company's farm property and
liability package policy; (3) an increase of $331,000 in
workers' compensation premium; (4) an increase of $226,000 in
assigned risk auto; (5) an increase of $768,000 in all other
lines.
NET INVESTMENT INCOME
Net investment income has increased due to an increase in
invested assets.
LOSSES INCURRED
The decrease of $1,783,000 includes an increase of $1,316,000 in
voluntary auto, an increase of $342,000 in workers'
compensation, a decrease of $3,820,000 in the SFP-"10" policy,
an increase of $844,000 in the assigned risk auto, and a
decrease of $465,000 in all other lines.
LOSS ADJUSTMENT EXPENSES
The increase of $275,000 is caused in part by an increase in
assumed LAE Expenses paid from the assigned risk pools.
UNDERWRITING EXPENSES
The underwriting expense increase is due in part to the increase
in commission and taxes paid due to the increase in direct
written premiums.
FEDERAL INCOME TAX EXPENSE
The Company makes provision for federal income taxes based on
pre-tax earnings for each of the periods.
<PAGE>
COMPARISON OF THE NINE MONTH PERIODS ENDED
MARCH 31, 1995 & DECEMBER 31, 1994
PREMIUMS EARNED
The increase of $962,000 is the net result of (1) an increase of
$519,000 in voluntary auto; (2) an increase of $586,000 in the
SFP-"10" policy, which is the Company's farm property and
liability package policy; (3) a decrease of $105,000 in workers'
compensation premium; (4) a decrease of $132,000 in assigned
risk auto; (5) an increase of $94,000 in all other lines.
NET INVESTMENT INCOME
Investment income has increased due to an increase in invested
assets.
LOSSES INCURRED
The decrease of $3,218,000 includes an increase of $1,903,000 in
voluntary auto, a decrease of $2,336,000 in workers'
compensation, a decrease of $1,348,000 in the SFP-"10" policy,
an increase of $184,000 in the assigned risk auto, and a
decrease of $1,621,000 in all other lines.
LOSS ADJUSTMENT EXPENSES
The increase of $1,059,000 is caused in part by an increase in
assumed LAE Expenses paid from the assigned risk pools.
UNDERWRITING EXPENSES
The underwriting expense increase is due in part to the increase
in commission and taxes paid due to the increase in direct
written premiums.
FEDERAL INCOME TAX EXPENSE
The Company makes provision for federal income taxes based on
pre-tax earnings for each of the periods.
<PAGE>
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter for
which this
report is filed.
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 MUTUAL INSURANCE COMPANY (Registrant)
May 11, 1995 /S/
(Date) Philip P. Weber, Executive Vice-President & C.E.O.
(Principal Administrative Officer)
May 11, 1995 /S/
(Date) Charles E. Simon, Senior Vice President & C.F.O.
(Principal Financial Officer)
<PAGE>
