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: March 31, 1996
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 May 8, 1996:
Class
Class A Common Stock
$.3125 Par Value 8,317,827 Shares
Class B Common Stock
$.3125 Par Value 8,992,910 Shares
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HOME BENEFICIAL CORPORATION
INDEX
Page
PART I - Financial Information
<TABLE>
<CAPTION>
Item 1. Financial Statements
<S> <C>
Consolidated Condensed Balance Sheet at
March 31, 1996 and December 31, 1995................................ 4
Consolidated Condensed Statement of Income for the three months
ended March 31, 1996 and 1995 ...................................... 5
Consolidated Condensed Statement of Cash Flows
for the three months ended March 31, 1996 and 1995.................. 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 4. Submission of Matters to a Vote of Security Holders........... 9
Item 6. Exhibits and Reports on Form 8-K ............................. 9
SIGNATURES ............................................................ 10
</TABLE>
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PART I. FINANCIAL INFORMATION
HOME BENEFICIAL CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>
March 31 December 31
1996 1995
<S> <C> <C>
ASSETS
Investments
Securities available-for-sale at fair value
Fixed maturities (Amortized value:
1996, $746,257,616; 1995, $744,043,172) $ 772,860,426 $ 795,741,956
Equities (Cost: 1996, $8,679,670;
1995, $8,637,928) 32,926,792 29,475,901
Mortgage loans on real estate 344,888,915 339,773,729
Policy loans 54,966,039 54,480,175
Short-term investments 47,094,944 41,072,441
Other 6,184,837 6,242,886
Total investments 1,258,921,953 1,266,787,088
Cash and cash equivalents 1,070,486 3,086,602
Receivables 23,137,383 23,006,240
Deferred policy acquisition costs 8,678,423 99,246,423
Other assets 10,766,958 11,228,471
$1,392,575,203 $1,403,354,824
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Policy liabilities and accruals
Future policy benefits and claims $ 675,376,161 $ 672,301,481
Unearned premiums 26,653,339 26,248,702
Other policy claims and benefits payable 10,699,972 10,819,728
Total policy liabilities and accruals 712,729,472 709,369,911
Other policyholder funds 71,112,793 71,450,993
Other liabilities 77,960,964 80,446,342
Total liabilities 861,803,229 861,267,246
Stockholders' Equity
Capital stock
Class A common stock, voting, $.3125 par value,
12,800,000 shares authorized; 8,317,827 issued
at March 31, 1996 and 8,446,200 issued
at December 31, 1995 2,599,321 2,639,438
Class B common stock, non-voting, $.3125 par value,
19,200,000 shares authorized; 8,992,910 issued
at March 31, 1996 and at December 31, 1995 2,810,284 2,810,284
Total capital stock 5,409,605 5,449,722
Unrealized gains (losses) on securities
available-for-sale less related deferred
income taxes 34,091,670 48,161,757
Retained earnings 491,270,699 488,476,099
Total stockholders' equity 530,771,974 542,087,578
$1,392,575,203 $1,403,354,824
</TABLE>
See accompanying notes.
4
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HOME BENEFICIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF INCOME
<TABLE>
<CAPTION>
Three Months Ended
March 31
1996 1995
<S> <C> <C>
Revenues
Premiums $29,266,341 $28,806,763
Net investment income 22,171,852 21,789,471
Realized investment gains 58,956 66,921
Total revenues 51,497,149 50,663,155
Benefits, claims and expenses
Benefits and claims 24,043,098 23,803,748
Underwriting, acquisition
and insurance expenses 13,783,361 13,194,677
Total benefits, claims and expenses 37,826,459 36,998,425
Income before income taxes 13,670,690 13,664,730
Income taxes 4,200,000 4,200,000
Net income $ 9,470,690 $ 9,464,730
Net income per share of common stock
(Average shares outstanding:
1996-17,364,343; 1995-17,564,110) $ .54 $ .54
Dividends per share $ .21 $ .20
</TABLE>
See accompanying notes.
5
<PAGE>
HOME BENEFICIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
March 31
1996 1995
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 9,470,690 $ 9,464,730
Adjustments to reconcile net income to
net cash provided by operating activities 9,244,492 6,886,826
Net cash provided by operating
activities 18,715,182 16,351,556
INVESTING ACTIVITIES
Proceeds from sales or maturities of investments
Fixed maturities available-for-sale 36,512,324 31,932,746
Mortgage loans on real estate 8,568,054 7,000,199
Other 3,002,631 3,313,905
Total proceeds 48,083,009 42,246,850
Costs of investments acquired
Fixed maturities available-for-sale 38,649,706 23,394,634
Mortgage loans on real estate 13,643,119 5,192,856
Short-term investments -- net 6,022,503 24,668,120
Other 3,444,572 2,961,485
Total costs 61,759,900 56,217,095
Net cash used in investing activities (13,676,891) (13,970,245)
FINANCING ACTIVITIES
Dividends paid (3,635,255) (3,512,822)
Purchase of Class A Common Stock (3,080,952) 0
Other (338,200) 1,189,584
Net cash used in financing activities (7,054,407) (2,323,238)
Net (decrease)increase in cash and cash
equivalents (2,016,116) 58,073
Cash and cash equivalents at beginning of
year 3,086,602 1,726,812
Cash and cash equivalents at end of period $ 1,070,486 $ 1,784,885
Supplemental disclosure of cash flow information
Income tax payments $0 $0
</TABLE>
See accompanying notes.
6
<PAGE>
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 March
31, 1996 and December 31, 1995, and the results of operations and cash
flows for the three months ended March 31, 1996 and 1995. 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
1995 Annual Report to Stockholders.
2. During the first quarter of 1996, the Corporation purchased 128,373 shares
of its Class A Common Stock at a cost of $3.1 million.
<PAGE>
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 $1.4 billion at March 31, 1996 with investment assets
totalling $1.3 billion or 90% of total assets. 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 March 31, 1996
the fair value of these securities exceeded their cost by $51 million. At
March 31, 1996 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.
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, 1995, $145 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 three months of 1996 was $9,470,690 compared to
$9,464,730 for the same period in 1995. Realized investment gains were
insignificant for the two periods.
Individual life insurance sales for 1996 increased by 6% and amounted to
$230 million compared to $217 million for the first three months of 1995.
Net investment income, excluding realized investment gains and losses,
increased 1.8% compared to an increase of 3.8% for the 1995 period. The
improvement for both 1996 and 1995 resulted from growth in portfolio
assets.
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders
(a) During the three months ended March 31, 1996, and during the period
from that date to the date of this report, no matters other than
those considered at the Corporation's annual meeting of stockholders
held on April 2, 1996 (the "1996 Annual Meeting"), were submitted to
a vote of security holders, through the solicitation of proxies or
otherwise. At the 1996 Annual Meeting a total of 7,331,515 shares
of the Corporation's outstanding Class A Common Stock were present
in person or by proxy and entitled to vote.
(b) At the 1996 Annual Meeting Dianne N. Collins, H. D. Garnett, W. G.
Hancock, G. T. Richardson, L. W. Richardson, J. M. Wiltshire, Jr.,
R. W. Wiltshire, R. W. Wiltshire, Jr., and W. B. Wiltshire were
elected as directors to serve until the next annual meeting of
stockholders and until their successors are duly elected and
qualified.
(c) At the 1996 Annual Meeting, the following matters were voted upon
and received the vote set forth below:
(1) Election of Directors. Each nominee of the Corporation's
Board of Directors for election as a director at the 1996
Annual Meeting was elected, having received the following vote
of the holders of the Corporation's Class A Common Stock:
Nominee For Withheld
Dianne N. Collins 7,331,515 -0-
H. D. Garnett 7,331,515 -0-
W. G. Hancock 7,331,515 -0-
G. T. Richardson 7,331,515 -0-
L. W. Richardson 7,331,515 -0-
J. M. Wiltshire, Jr. 7,331,515 -0-
R. W. Wiltshire 7,331,515 -0-
R. W. Wiltshire, Jr. 7,331,515 -0-
W. B. Wiltshire 7,331,515 -0-
(2) Ratification of Designation of Auditors.
Designation by the Corporation's Board of Directors of Ernst
& Young LLP as independent public accountants to audit the
financial statements of the Corporation and its subsidiaries
for the year ending December 31, 1996 was ratified at the 1996
Annual Meeting by the following vote of the holders of the
Corporation's Class A Common Stock:
FOR: 7,331,515
AGAINST: -0-
ABSTAIN: -0-
(d) Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) EXHIBITS: Exhibit 27 - Financial Data Schedule is filed as part of
this Quarterly Report on Page 12.
(b) No reports on Form 8-K were filed during the period covered by this
report.
<PAGE>
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: May 8, 1996 R. W. Wiltshire, Jr.
President and
Chief Executive Officer
Date: May 8, 1996 Hugh D. Garnett
Vice President and Controller
<PAGE>
(Item 6(a))
Sequential
Page Number
EXHIBITS
27 - Financial Data Schedule 12
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 7
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<DEBT-HELD-FOR-SALE> 772,860,426
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 32,926,792
<MORTGAGE> 344,888,915
<REAL-ESTATE> 0
<TOTAL-INVEST> 1,258,921,953
<CASH> 1,070,486
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 98,678,423
<TOTAL-ASSETS> 1,392,575,203
<POLICY-LOSSES> 675,376,161
<UNEARNED-PREMIUMS> 26,653,339
<POLICY-OTHER> 10,699,972
<POLICY-HOLDER-FUNDS> 71,112,793
<NOTES-PAYABLE> 0
0
0
<COMMON> 5,409,605
<OTHER-SE> 525,362,369
<TOTAL-LIABILITY-AND-EQUITY> 1,392,575,203
29,266,341
<INVESTMENT-INCOME> 22,171,852
<INVESTMENT-GAINS> 58,956
<OTHER-INCOME> 0
<BENEFITS> 24,043,098
<UNDERWRITING-AMORTIZATION> 4,029,705
<UNDERWRITING-OTHER> 9,753,656
<INCOME-PRETAX> 13,670,690
<INCOME-TAX> 4,200,000
<INCOME-CONTINUING> 9,470,690
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,470,690
<EPS-PRIMARY> .54
<EPS-DILUTED> .54
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
