UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period ended September 30, 1995
Commission File No. 2-57299
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 September 30, 1995 and December 31,
1994
Consolidated Statements of Income - Statutory Basis
Nine months and three months ended September 30, 1995 and 1994
Consolidated Statements of Cash Flow - Statutory Basis
Nine months ended September 30, 1995 and 1994
Notes to Consolidated Statutory Financial Statements
Item 2. Management's Discussion and Analysis of the
Consolidated Statutory
Statements of Income - Statutory Basis
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)
ADMITTED ASSETS (Unaudited)
September 30, 1995 Dec. 31, 1994
Investments:
Fixed maturities, at NAIC value
(NAIC Market Value: $169,61 and
$157,409) 172,917 160,475
Equity securities, at NAIC market
value (Cost: $7,853 and $7,503) 10,630 10,156
Mortgage loans, at cost 1,840 1,890
Short-term investments, at cost 5,287 3,013
Other invested assets 1,132 1,572
TOTAL INVESTMENTS: 191,806 177,106
Cash 3,383 4,507
Premiums receivable (Net of balance of
$396 and $303 outstanding 90
days or more) 24,481 17,616
Accrued investment income 3,546 4,047
Reinsurance recoverable on paid losses 357 1,176
Equities & deposits in pools & assoc. 1,930 1,236
Other Assets 0 899
TOTAL ADMITTED ASSETS: 225,503 206,587
LIABILITIES & POLICYHOLDERS' SURPLUS
Liabilities:
Reserve for losses and loss
adjustment expenses 110,531 103,660
Unearned premiums 53,485 46,948
Reinsurance balances payable 4,749 8,286
Accrued expenses and other liabilities 8,205 4,823
TOTAL LIABILITIES: 176,970 163,717
Policyholders' Surplus:
Special contingent surplus 1,300 1,300
Net unrealized appreciation of
equity securities 3,226 2,433
Debentures issued and outstanding 1,250 1,265
Subordinated surplus certificates
issued and outstanding 1,460 1,484
Unassigned surplus 41,297 36,388
TOTAL POLICYHOLDERS' SURPLUS: 48,533 42,870
TOTAL LIABILITIES &
POLICYHOLDERS' SURPLUS: 225,503 206,587
<PAGE>
FARM FAMILY MUTUAL INSURANCE COMPANY & SUBSIDIARY
Consolidated Statements of Income - Statutory Basis
(In Thousands)
Nine Months Three Months
Ended September 30, Ended September 30,
1995 1994 1995 1994
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues:
Net Premiums earned $ 87,022 74,576 29,958 26,172
Net investment income 10,702 10,525 3,692 3,761
Realized gain on investments 198 1,585 306 178
Other income, net 463 362 141 112
98,385 87,048 34,097 30,223
Operating Expenses:
Losses and loss
adjustment expenses 62,320 61,537 21,103 20,818
Underwriting expenses 27,489 22,221 9,029 7,578
Interest on debentures &
subordinated surplus
certificates 220 223 0 0
90,028 83,981 30,132 28,396
Income before federal income taxes and dividends to
policyholders Income before Federal Income Taxes & Dividends to
policyholders 8,357 3,067 3,965 1,827
Dividends to policyholders 51 122 51 122
Income before federal income taxes 8,306 2,945 3,914
1,705
Federal income tax expense 3,994 1,159 1,749 555
Net Income statutory basis: $ 4,312 1,786 2,165
1,150
<PAGE>
FARM FAMILY MUTUAL INSURANCE COMPANY & SUBSIDIARY
CONSOLIDATED STATEMENTS oF CASH FLOW - STATUTORY BASIS
Nine months ended September 30, 1995 and 1994
(In Thousands)
1995 1994
Cash provided:
From operations:
Premiums collected, net $ 84,180
76,112
Loss and loss adjustment expenses paid, net
(54,630) (56,988)
Underwriting expenses paid (26,289)
(23,303)
Investment income collected, net 11,245
10,272
Other income 463 361
Dividends paid to policyholders (51)
(122)
Federal income taxes paid (2,475)
(1,484)
Net cash provided from operations 12,443
4,848
From investments sold, matured or redeemed:
Fixed maturities 32,267 32,827
Equity securities 1,296 812
Mortgage loans 49 41
Other invested assets 440 2,988
Investment proceeds 34,052 36,668
Other sources of cash:
Decrease in receivable from affiliates
921 8
Sale of data processing equipment 0
0
Other sources 132 2,527
Total cash provided 47,548 44,051
Cash used:
Cash used to acquire investments:
Fixed maturities 43,802 44,274
Equity securities 1,028 375
Mortgage loans 0 0
44,830 44,649
Other uses of cash:
Increase in due from affiliates 4 1
Repurchase of debentures and
subordinated surplus certificates 0
0
Interest paid of debentures and 0
subordinated surplus certificates 0
0
Miscellaneous, net 1,565 223
Total cash used 46,399 44,873
Net cash provided (used) 1,149 (822)
Cash and short-term investments at beginning of year
7,521 6,738
Cash and short-term investments at end of year
$ 8,670 5,916
<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) salvage and
subrogation recoveries are not recorded until cash is received;
(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 Brokerage of Massachusetts, Inc. (100%-owned by RAB),
R.A.A.B. of W. Va., 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 September 30,
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 September
30, 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 Statements of Income - Statutory Basis
(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
9 Months Ended September 30, 1995 and September 30, 1994
3 Months Ended September 30, 1995 and September 30, 1994
Amount Percent Amount Percent
Premiums earned $ 12,446 16.69 $ 3,786 14.47
Net investment income 177 1.68 (69) (1.83)
Losses incurred 56 0.11 500 2.86
Loss adjustment expenses 727 8.49 (215) (6.47)
Underwriting expenses 5,268 23.71 1,451 19.15
Net Income: $ 2,526 141.43 $ 1,016 88.35
<PAGE>
COMPARISON OF THE NINE MONTH PERIODS ENDED
SEPTEMBER 30, 1995 & SEPTEMBER 30, 1994
PREMIUMS EARNED
The increase of $12,446,000 is the net result of (1) an
increase of $6,189,000 in voluntary auto; (2) an increase of
$1,620,000 in the SFP-"10" policy, which is the Company's farm
property and liability package policy; (3) an increase of
$882,000 in workers' compensation premium; (4) an increase of
$1,403,000 in assigned risk auto; (5) an increase of $2,352,000
in all other lines.
NET INVESTMENT INCOME
Net investment income has increased due to an increase in
invested assets.
LOSSES INCURRED
The increase of $56,000 includes an increase of $2,010,000 in
voluntary auto, a decrease of $412,000 in workers' compensation,
a decrease of $4,979,000 in the SFP-"10" policy, an increase of
$1,868,000 in the assigned risk auto, and an increase of
$1,569,000 in all other lines.
LOSS ADJUSTMENT EXPENSES
The increase of $727,000 is caused in part by an increase in the
number of claims as a result of the increased amount of business
written.
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 THREE MONTH PERIODS ENDED
SEPTEMBER 30, 1995 AND SEPTEMBER 30, 1994
PREMIUMS EARNED
The increase of $3,786,000 is the net result of (1) an increase
of $2,163,000 in voluntary auto; (2) an increase of $531,000 in
the SFP-"10" policy, which is the Company's farm property and
liability package policy; (3) a decrease of $67,000 in workers'
compensation premium; (4) an increase of $366,000 in assigned
risk auto; (5) an increase of $793,000 in all other lines.
NET INVESTMENT INCOME
Investment income has decreased due to a reduction in interest
rates earned on new investments.
LOSSES INCURRED
The increase of $500,000 includes a decrease of $836,000 in
voluntary auto, a decrease of $673,000 in workers' compensation,
a decrease of $396,000 in the SFP-"10" policy, an increase of
$146,000 in the assigned risk auto, and an increase of
$2,259,000 in all other lines.
LOSS ADJUSTMENT EXPENSES
The decrease of $215,000 is caused in part by a decrease in loss
adjustment expenses paid for the residual market automobile and
workers' compensation 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)
November 8, 1995 /s/ Philip P. Weber
(Date) Philip P. Weber, Executive Vice-President & C.E.O.
(Principal Administrative Officer)
November 8, 1995 /s/ Charles E. Simon
(Date) Charles E. Simon, Senior Vice President & C.F.O.
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 7
<CIK> 0000277269
<NAME> FARM FAMILY MUTUAL INSURANCE COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<DEBT-HELD-FOR-SALE> 172,917
<DEBT-CARRYING-VALUE> 172,917
<DEBT-MARKET-VALUE> 178,600
<EQUITIES> 10,630
<MORTGAGE> 1,840
<REAL-ESTATE> 0
<TOTAL-INVEST> 191,806
<CASH> 3,383
<RECOVER-REINSURE> 357
<DEFERRED-ACQUISITION> 0
<TOTAL-ASSETS> 225,503
<POLICY-LOSSES> 110,531
<UNEARNED-PREMIUMS> 53,485
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 0
<COMMON> 0
0
0
<OTHER-SE> 3,226
<TOTAL-LIABILITY-AND-EQUITY> 225,503
87,022
<INVESTMENT-INCOME> 10,702
<INVESTMENT-GAINS> 198
<OTHER-INCOME> 463
<BENEFITS> 62,320
<UNDERWRITING-AMORTIZATION> 27,489
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> 8,357
<INCOME-TAX> 3,994
<INCOME-CONTINUING> 4,312
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,312
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<RESERVE-OPEN> 103,660
<PROVISION-CURRENT> 66,050
<PROVISION-PRIOR> (3,733)
<PAYMENTS-CURRENT> 25,162
<PAYMENTS-PRIOR> 30,286
<RESERVE-CLOSE> 110,529
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
