SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 0-5562
HOME BENEFICIAL CORPORATION
(Exact name of registrant as specified in its charter)
VIRGINIA 54-0884714
(State or other jurisdiction of (I.R.S.
Employer
incorporation or organization) Identification
No.)
3901 West Broad Street, Richmond, Virginia 23230
(Address of principal executive offices) (Zip Code)
804-358-8431
(Registrant's telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year, if changed
since last report)
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
Number of shares outstanding of each of the Registrant's
classes of Common Stock as of August 4, 1995:
Class
Class A Common Stock
$.3125 Par Value 8,476,576 Shares
Class B Common Stock
$.3125 Par Value 9,087,534 Shares
Total number of pages 11
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HOME BENEFICIAL CORPORATION
INDEX
Page
PART I - Financial Information
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Item 1. Financial Statements
Consolidated Condensed Balance Sheet at
June 30, 1995 and December 31, 1994................................. 4
Consolidated Condensed Statement of Income for the three months and
six months ended June 30, 1995 and 1994 ............................ 5
Consolidated Condensed Statement of Cash Flows
for the six months ended June 30, 1995 and 1994..................... 6
Notes to Consolidated Condensed Financial Statements ............... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ................................ 8
PART II - Other Information
Item 6. Exhibits and Reports on Form 8-K .............................. 9
SIGNATURES ............................................................. 10
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PART I. FINANCIAL INFORMATION
HOME BENEFICIAL CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEET
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<CAPTION>
<S> <C> <C>
June 30 December 31
1995 1994
ASSETS
Investments
Securities available-for-sale at fair value
Fixed maturities (Amortized value:
1995, $725,850,593; 1994, $718,305,895) $ 740,778,324 $ 691,976,855
Equities (Cost: 1995, $8,978,006;
1994, $9,728,145 26,480,195 24,229,849
Mortgage loans on real estate 332,146,312 338,458,261
Policy loans 53,806,832 53,425,676
Short-term investments 47,486,305 32,459,616
Other 6,850,525 6,167,002
Total investments 1,207,548,493 1,146,717,259
Cash and cash equivalents 2,712,586 1,726,812
Receivables 22,482,089 22,190,964
Deferred policy acquisition costs 97,576,671 96,246,153
Other assets 12,803,178 21,944,872
$ 1,343,123,017 $ 1,288,826,060
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Policy liabilities and accruals
Future policy benefits and claims $ 666,087,389 $ 660,081,842
Unearned premiums 26,230,578 25,658,167
Other policy claims and benefits payable 10,591,601 11,004,362
Total policy liabilities and accruals 702,909,568 696,744,371
Other policyholder funds 68,182,258 65,821,085
Other liabilities 65,239,063 59,490,670
Total liabilities 836,330,889 822,056,126
Stockholders' Equity
Capital stock
Class A common stock, voting, $.3125 par
value, 12,800,000 shares authorized;
8,476,576 issued at June 30, 1995
and December 31, 1994 2,648,930 2,648,930
Class B common stock, non-voting, $.3125
par value, 19,200,000 shares authorized;
9,087,534 issued at June 30, 1995 and
at December 31, 1994 2,839,854 2,839,854
Total capital stock 5,488,784 5,488,784
Unrealized gains (losses) on securities
available-for-sale less related deferred
income taxes 22,104,920 (6,652,336)
Retained earnings 479,198,424 467,933,486
Total stockholders' equity 506,792,128 466,769,934
$ 1,343,123,017 $ 1,288,826,060
</TABLE>
See accompanying notes.
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HOME BENEFICIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF INCOME
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Three Months Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues
Premiums $ 28,533,352 $ 28,360,063 $57,340,115 $57,172,320
Net investment income 22,031,356 21,167,158 43,820,827 42,152,191
Realized investment
(losses)gains (16,942) (1,887) 49,979 57,346
Total revenues 50,547,766 49,525,334 101,210,921 99,381,857
Benefits, claims and expenses
Benefits and claims 23,510,018 22,718,281 47,313,766 45,897,749
Underwriting, acquisition
and insurance expenses 12,386,255 12,418,806 25,580,932 25,586,979
Total benefits, claims
and expenses 35,896,273 35,137,087 72,894,698 71,484,728
Income before income
taxes 14,651,493 14,388,247 28,316,223 27,897,129
Income taxes 5,650,000 5,750,000 9,850,000 9,950,000
Net income $ 9,001,493 $ 8,638,247 $18,466,223 $17,947,129
Net income per share of
common stock (Average shares
outstanding: 1995-17,564,110;
1994-17,920,90 $0.51 $0.48 $1.05 $1.00
Dividends per share $0.21 $0.20 $0.41 $0.395
</TABLE>
See accompanying notes.
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HOME BENEFICIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
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Six Months Ended
June 30
1995 1994
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OPERATING ACTIVITIES
Net income $ 18,466,223 $ 17,947,129
Adjustments to reconcile net income to net
cash provided by operating activities 3,161,087 6,105,379
Net cash provided by operating activities 21,627,310 24,052,508
INVESTING ACTIVITIES
Proceeds from sales or maturities of investments
Fixed maturities 58,100,590 121,411,115
Mortgage loans on real estate 15,632,800 29,831,765
Short-term investments -- net
Other 6,817,224 10,509,640
Total proceeds 80,550,614 161,752,520
Costs of investments acquired
Fixed maturities 65,418,302 135,487,016
Mortgage loans on real estate 9,866,882 33,120,028
Short-term investments -- net 15,026,689 3,100,480
Other 6,040,165 11,377,638
Total costs 96,352,038 183,085,162
Net cash used in investing activities (15,801,424) (21,332,642)
FINANCING ACTIVITIES
Dividends paid (7,201,285) (7,076,928)
Purchase of Class B Common Stock - (911,250)
Other 2,361,173 1,909,823
Net cash used in financing activities (4,840,112) (6,078,355)
Net increase(decrease) in cash and
cash equivalents 985,774 (3,358,489)
Cash and cash equivalents at beginning of year 1,726,812 6,039,294
Cash and cash equivalents at end of period $ 2,712,586 $ 2,680,805
Supplemental disclosure of cash flow information
Income tax payments $9,500,000 $9,700,000
</TABLE>
See accompanying notes.
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HOME BENEFICIAL CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. Basis of Presentation - In the opinion of management, the accompanying
unaudited interim consolidated condensed financial statements of the
Corporation contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the financial position as of June
30, 1995 and December 31, 1994, and the results of operations and cash
flows for the six months ended June 30, 1995 and 1994. The consolidated
condensed financial statements include the accounts of the Corporation,
its principal subsidiary, Home Beneficial Life Insurance Company (the Life
Company), and its other subsidiaries. All significant intercompany
accounts and transactions are eliminated.
The accompanying financial statements should be read in conjunction with
the financial statements and notes thereto included in the Corporation's
1994 Annual Report to Stockholders.
2. In May 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 114, "Accounting for Creditors
for Impairment of a Loan." SFAS No 114 requires that impaired loans be
valued at the present value of expected future cash flows discounted at
the loan's effective interest rate or, as a practical expedient, at the
loan's observable market price, or the fair market value of the
collateral, if the loan is collateral dependent. The Corporation adopted
the provisions of SFAS No. 114 as of January 1, 1995. Adoption of this
Standard does not have any significant effect on the financial condition
or results of operations of the Corporation.
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Financial Condition
The Corporation is primarily engaged in the life insurance business which
historically has provided a positive cash flow. By statute, the Life
Company is required to invest in quality securities which provide ample
protection for its policyholders. Policy liabilities of the Life Company
are predominately long term in nature and are supported primarily by long
term fixed maturity investments and mortgage loans on real estate.
Assets totaled $1.3 billion at June 30, 1995 with investment assets
totalling $1.2 billion or 90% of total assets. Both total assets and
invested assets increased over year-end 1994 results. The Corporation's
fixed maturity and equity securities portfolio is classified in the
balance sheet as available-for-sale and carried at fair value. At June
30, 1995 the fair value of these securities exceeded their cost by $32
million. At June 30, 1995 there were no principal and interest payments
past due on fixed maturities, and over 99% of the mortgage loans on real
estate were current for both principal and interest.
In May 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 114, "Accounting for Creditors
for Impairment of a Loan." SFAS No. 114 requires that impaired loans be
valued at the present value of expected future cash flows discounted at
the loan's effective interest rate or, as a practical expedient, at the
loan's observable market price, or the fair market value of the
collateral, if the loan is collateral dependent. The Corporation adopted
the provisions of SFAS 114 as of January 1, 1995. Adoption of this
Standard does not have any significant effect on the financial condition
or results of operations of the Corporation.
The Life Company continually matches the investment portfolio to the cash
flow demands of the types of insurance being written and maintains
adequate cash and short term investments to meet cash requirements for
policy loans and voluntary policy terminations, as well as investment
commitments. Policy loans account for less than 5% of total cash and
invested assets.
As disclosed in the Notes to Consolidated Financial Statements as of
December 31, 1994, $140 million of consolidated stockholders' equity
represents net assets of the Life Company that cannot be transferred in
the form of dividends, loans or advances to the Corporation. However,
this poses no liquidity concerns to the Corporation as it has sufficient
cash flow to meet its operational requirements.
Results of Operations
Net income for the first six months of 1995 was $18,466,223 compared to
$17,947,129 for the same period in 1994. Realized investment gains and
losses were insignificant for the two periods.
Individual life insurance sales for 1995 increased by 15% and amounted to
$451 million compared to $389 million for the first half of 1994.
Premiums increased in both the first and second quarter of 1995.
Net investment income, excluding realized investment gains and losses,
increased 4% compared to a decrease of 3.5% for the 1994 period. The
improvement for 1995 results from growth in portfolio assets. The
decrease for 1994 was attributable to the downward trend experienced in
portfolio interest rates during 1993 and 1992, and the use of $14 million
of internally generated funds to repurchase approximately 600,000 shares
of common stock in the second quarter of 1993.
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Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) EXHIBITS: Exhibit 27 - Financial Data Schedule is filed as a part
of this Quarterly Report on Page 11
(b) No reports on Form 8-K were filed during the period covered by this
report.
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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.
Home Beneficial Corporation
(Registrant)
Date: August 4, 1995 R. W. Wiltshire, Jr.
President and
Chief Executive Officer
Date: August 4, 1995 Hugh D. Garnett
Vice President and Controller
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<ARTICLE> 7
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<DEBT-HELD-FOR-SALE> 740,778,324
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 26,480,195
<MORTGAGE> 332,146,312
<REAL-ESTATE> 0
<TOTAL-INVEST> 1,207,548,493
<CASH> 2,712,580
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 97,576,671
<TOTAL-ASSETS> 1,343,123,017
<POLICY-LOSSES> 666,087,389
<UNEARNED-PREMIUMS> 26,230,578
<POLICY-OTHER> 10,591,601
<POLICY-HOLDER-FUNDS> 68,182,258
<NOTES-PAYABLE> 0
<COMMON> 5,488,784
0
0
<OTHER-SE> 479,198,424
<TOTAL-LIABILITY-AND-EQUITY> 1,343,123,017
57,340,115
<INVESTMENT-INCOME> 43,820,827
<INVESTMENT-GAINS> 49,979
<OTHER-INCOME> 0
<BENEFITS> 47,313,766
<UNDERWRITING-AMORTIZATION> 5,893,697
<UNDERWRITING-OTHER> 19,687,235
<INCOME-PRETAX> 28,316,223
<INCOME-TAX> 9,850,000
<INCOME-CONTINUING> 18,466,223
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,466,223
<EPS-PRIMARY> 1.05
<EPS-DILUTED> 1.05
<RESERVE-OPEN> 0
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