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, 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 August 2, 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
June 30, 1996 and December 31, 1995................................. 4
Consolidated Condensed Statement of Income for the six months and
three months ended June 30, 1996 and 1995 .......................... 5
Consolidated Condensed Statement of Cash Flows
for the six months ended June 30, 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 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
June 30 December 31
1996 1995
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investments
Securities available-for-sale at fair value
Fixed maturities (Amortized value: 1996,
$758,180,266; 1995, $725,850,593) $ 771,949,081 $ 795,741,956
Equities (Cost: 1996, $9,520,207;
1995, $8,978,006) 33,682,456 29,475,901
Mortgage loans on real estate 357,794,347 339,773,729
Policy loans 54,835,531 54,480,175
Short-term investments 22,329,155 41,072,441
Other 6,371,326 6,242,886
Total investments 1,246,961,896 1,266,787,088
Cash and cash equivalents 1,124,614 3,086,602
Receivables 23,635,160 23,006,240
Deferred policy acquisition costs 98,566,158 99,246,423
Other assets 10,765,492 11,228,471
$1,381,053,320 $1,403,354,824
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Policy liabilities and accruals
Future policy benefits and claims $ 677,989,012 $ 672,301,481
Unearned premiums 26,715,273 26,248,702
Other policy claims and benefits
payable 10,607,935 10,819,728
Total policy liabilities and accruals 715,312,220 709,369,911
Other policyholder funds 72,312,854 71,450,993
Other liabilities 65,715,815 80,446,342
Total liabilities 853,340,889 861,267,246
Stockholders' Equity
Capital stock
Class A common stock, voting, $.3125 par
value, 12,800,000 shares authorized;
8,317,827 issued at June 30, 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 June 30, 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 25,697,805 48,161,757
Retained earnings 496,605,021 488,476,099
Total stockholders' equity 527,712,431 542,087,578
$1,381,053,320 $1,403,354,824
</TABLE>
See accompanying notes.
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HOME BENEFICIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF INCOME
Three Months Ended Six Months Ended
June 30 June 30
1996 1995 1996 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Revenues
Premiums $29,169,175 $28,533,352 $58,435,516 $57,340,115
Net investment income 22,269,410 22,031,356 44,441,262 43,820,827
Realized investment gains
(losses) 4,218 (16,942) 63,174 49,979
Total revenues 51,442,803 50,547,766 102,939,952 101,210,921
Benefits, claims and expenses
Benefits and claims 23,145,245 23,510,018 47,188,343 47,313,766
Underwriting, acquisition
and insurance expenses 14,154,874 12,386,255 27,938,235 25,580,932
Total benefits, claims
and expenses 37,300,119 35,896,273 75,126,578 72,894,698
Income before income taxes 14,142,684 14,651,493 27,813,374 28,316,223
Income taxes 5,000,000 5,650,000 9,200,000 9,850,000
Net income $ 9,142,684 $ 9,001,493 $18,613,374 $18,466,223
Net income per share of common stock
(Average shares outstanding:
1996-17,337,540; 1995-17,564,110) $ .53 $.51 $1.07 $1.05
Dividends per share $ .22 $.21 $ .43 $ .41
</TABLE>
See accompanying notes.
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HOME BENEFICIAL CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
Six Months Ended
June 30
1996 1995
<TABLE>
<CAPTION>
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 18,613,374 $ 18,466,223
Adjustments to reconcile net income to net
cash provided by operating activities 3,080,846 3,161,087
Net cash provided by operating activities 21,694,220 21,627,310
INVESTING ACTIVITIES
Proceeds from sales or maturities of investments
Fixed maturities available-for-sale 81,231,876 58,100,590
Mortgage loans on real estate 19,477,353 15,632,800
Short-term investments - net 18,743,285 -
Other 7,626,275 6,817,224
Total proceeds 127,078,789 80,550,614
Costs of investments acquired
Fixed maturities available-for-sale 95,767,092 65,418,302
Mortgage loans on real estate 37,336,720 9,866,882
Short-term investments -- net - 15,026,689
Other 7,968,477 6,040,165
Total costs 141,072,289 96,352,038
Net cash used in investing activities (13,993,500) (15,801,424)
FINANCING ACTIVITIES
Dividends paid (7,443,617) (7,201,285)
Purchase of Class A Common Stock (3,080,952) -
Other 861,861 2,361,173
Net cash used in financing activities (9,662,708) (4,840,112)
Net (decrease)increase in cash and
cash equivalents (1,961,988) 985,774
Cash and cash equivalents at beginning of year 3,086,602 1,726,812
Cash and cash equivalents at end of period $ 1,124,614 $ 2,712,586
Supplemental disclosure of cash flow information
Income tax payments $9,520,000 $9,500,000
</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, 1996 and December 31, 1995, and the results of operations and cash
flows for the three months and six months ended June 30, 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 six months of 1996, the Corporation purchased 128,373
shares of its Class A Common Stock at a cost of $3.1 million.
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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 $1.4 billion at June 30, 1996 with investment assets
totalling $1.2 billion. 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, 1996 the fair value of these
securities exceeded their cost by $38 million. At June 30, 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 six months of 1996 was $18,613,374 compared to
$18,466,223 for the same period in 1995. Realized investment gains were
insignificant for the two periods.
Individual life insurance sales for 1996 increased by 9.2% and amounted to
$492.4 million compared to $451 million for the first six months of 1995.
Net investment income, excluding realized investment gains and losses,
increased 1.4% compared to an increase of 4% for the 1995 period.
Growth in investment income continued to decline as a result of average
yields on newly acquired mortgages and fixed income securities being below
the Corporation's portfolio yield rate. First half 1996 underwriting,
acquisition and insurance expenses increased over the corresponding period
of 1995 as a result of increased individual insurance policy terminations.
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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 9, 1996 R. W. Wiltshire, Jr.
President and
Chief Executive Officer
Date: August 9, 1996 Hugh D. Garnett
Vice President and Controller
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HOME BENEFICIAL CORPORATION
Index to Exhibits
(Item 6(a))
Sequential
Page Number
EXHIBITS
27 - Financial Data Schedule 12
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<TABLE> <S> <C>
<ARTICLE> 7
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<DEBT-HELD-FOR-SALE> 771,949,081
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 33,682,456
<MORTGAGE> 357,794,347
<REAL-ESTATE> 0
<TOTAL-INVEST> 124,961,896
<CASH> 1,124,614
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 98,566,158
<TOTAL-ASSETS> 1,381,053,320
<POLICY-LOSSES> 677,989,012
<UNEARNED-PREMIUMS> 26,715,273
<POLICY-OTHER> 10,607,935
<POLICY-HOLDER-FUNDS> 72,312,854
<NOTES-PAYABLE> 0
0
0
<COMMON> 5,409,605
<OTHER-SE> 522,302,826
<TOTAL-LIABILITY-AND-EQUITY> 1,381,053,320
58,435,516
<INVESTMENT-INCOME> 44,441,262
<INVESTMENT-GAINS> 63,174
<OTHER-INCOME> 0
<BENEFITS> 47,188,343
<UNDERWRITING-AMORTIZATION> 8,526,120
<UNDERWRITING-OTHER> 19,412,115
<INCOME-PRETAX> 27,813,374
<INCOME-TAX> 9,200,000
<INCOME-CONTINUING> 18,613,374
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,613,374
<EPS-PRIMARY> 1.07
<EPS-DILUTED> 1.07
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
