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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
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|X| Quarterly Report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended September 30, 1995
OR
|_| Transition report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
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Commission File Number 2-13933
BANKERS FIDELITY LIFE INSURANCE
COMPANY
Incorporated pursuant to the laws of the State of Georgia
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Internal Revenue Service -- Employer Identification No.
58-0658963
Address of Principal Executive Offices:
4370 Peachtree Road, N.E., Atlanta, Georgia 30319
(404) 266-5500
Indicate by check mark whether 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 |_|
The total number of shares of the registrant's Common Stock, $1 par value,
outstanding on November 6, 1995, was 2,987,087.
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<PAGE>
BANKERS FIDELITY LIFE INSURANCE COMPANY
INDEX
Part 1. Financial Information Page No.
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Item 1. Financial Statements:
Balance Sheets -
December 31, 1994 and September 30, 1995 2
Statements of Operations -
Three months ended and nine months ended 3
September 30, 1994 and 1995
Statements of Cash Flows -
Nine months ended September 30, 1994 4
and 1995
Notes to Financial Statements 5
Item 2. Management's Discussion and Analysis of 6
Financial Condition and Results of Operations
Part II. Other Information
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Item 6. Exhibits and reports on Form 8-K 7
Signatures 8
<PAGE>
BANKERS FIDELITY LIFE INSURANCE COMPANY
BALANCE SHEETS
ASSETS
September 30, December 31,
1995 1994
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(In thousands, except share
and per share data)
Cash, including short-term investments of
$1,800 and $1,999 $ 2,253 $ 3,061
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Investments:
Bonds (cost: $21,037 and $18,333) 21,112 17,836
Common and preferred stocks (cost: $7,562
and $8,778) 12,581 10,710
Mortgage loans 2,183 2,303
Policy loans 1,060 1,079
Investment in limited partnership 297 297
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Total investments 37,233 32,225
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Receivables (net of allowance for bad debts:
$199 and $240) 2,325 2,191
Deferred acquisition costs 5,260 5,636
Other assets 651 782
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$47,722 $43,895
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LIABILITIES AND SHAREHOLDERS' EQUITY
Insurance reserves and policy funds:
Future policy benefits $17,268 $17,764
Unearned premiums 922 1,065
Losses and claims 2,353 2,474
Other policy liabilities 1,540 1,586
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Total policy liabilities 22,083 22,889
Accounts payable and accrued expenses 1,195 308
Deferred income taxes 2,701 1,548
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Total liabilities 25,979 24,745
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Commitments and contingencies
Common stock, $1 par, 10,000,000 shares
authorized, 3,010,000 shares issued 3,010 3,010
Additional paid-in capital 5,547 5,547
Retained earnings 10,035 9,797
Net unrealized investment gains 3,311 956
Cost of 22,913 treasury shares (160) (160)
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Total shareholders' equity 21,743 19,150
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$47,722 $43,895
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The accompanying notes are an integral part of these financial statements.
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<PAGE>
BANKERS FIDELITY LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS
Three Months Nine Months
Ended Ended
September 30, September 30,
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(In thousands, except per share data)
1995 1994 1995 1994
---- ---- ---- ----
Revenue:
Insurance premiums $ 2,767 $ 2,992 $ 8,193 $ 8,514
Investment income 590 551 1,775 1,609
Realized investment gains 283 17 387 206
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Total revenue 3,640 3,560 10,355 10,329
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Benefits and expenses:
Insurance benefits and losses incurred 1,415 1,784 4,351 5,606
Commissions and underwriting expenses 1,225 1,005 3,680 2,947
Underwriting expenses to parent
company 485 446 1,407 1,322
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Total benefits and expenses 3,125 3,235 9,438 9,875
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Income before income tax
benefit (provision) 515 325 917 454
Benefit (provision) for income taxes 314 (84) 217 (63)
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Net income $ 829 $ 241 $ 1,134 $ 391
======= ======= ======= =======
Net income per share $ 0.28 $ 0.08 $ 0.38 $ 0.13
======= ======= ======= =======
Shares outstanding 2,987 2,987 2,987 2,987
======= ======= ======= =======
The accompanying notes are an integral part of these financial statements.
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<PAGE>
BANKERS FIDELITY LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
Nine Months Ended
(In thousands) September 30,
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1995 1994
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $1,134 $ 391
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Amortization of deferred acquisition costs 1,583 1,005
Acquisition costs deferred (1,207) (1,186)
Realized investment gains (387) (206)
Decrease in reserves (806) (122)
Other, net 278 (978)
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Net cash provided by (used in) operating
activities 595 (1,096)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from investments sold or matured 5,085 3,264
Investments purchased (5,568) (5,378)
Additions to property and equipment (24) (565)
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Net cash used in investing activities (507) (2,679)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends to parent company (835) --
Cash dividends to minority shareholders
(61) --
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Net cash used in financing activities (896) --
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Net decrease in cash and short-term investments (808) (3,775)
Cash and short-term investments at beginning of
year 3,061 7,066
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Cash and short-term investments at end of quarter $2,253 $3,291
====== ======
Supplemental cash flow information:
Cash (received) paid (from) to parent for
income taxes $ (152) $ 291
====== ======
The accompanying notes are an integral part of these financial statements.
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<PAGE>
BANKERS FIDELITY LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
Note 1. Basis of presentation.
The accompanying unaudited condensed financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Certain prior year amounts have been reclassified to conform to
the 1995 presentation. Operating results for the nine month period ended
September 30, 1995, are not necessarily indicative of the results that may be
expected for the year ending December 31, 1995. For further information, refer
to the financial statements and footnotes thereto included in the Company's
annual report on Form 10-K for the year ended December 31, 1994.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
REVENUE
Total revenue remained approximately the same at $3.6 million in the third
quarter of 1995 compared to $3.6 million in 1994, while total revenue in the
first nine months of 1995 increased to $10.4 million from $10.3 million in 1994.
While total revenue did not change in the third quarter, compared to the
previous year, the composition of revenue changed. This change in the third
quarter revenue was made up of a $225,000 decrease in premiums, a $39,000
increase in investment income and a $266,000 increase in realized investment
gains. The increase in revenue for the first nine months of 1995 was comprised
of a $321,000 decrease in premiums, a $166,000 increase in investment income,
and a $181,000 increase in realized gains.
Investment income increased due to interest rates rising approximately 1%
over last year. The carrying value of funds available for investment on
September 30, 1995 (which include cash and short-term investments, bonds and
common and preferred stocks) increased approximately $4.3 million from the
balance at the end of 1994 mainly due to the increase in the market value of the
bond and stock portfolio.
The decrease in insurance premiums in the third quarter of 1995 was due to a
decrease in accident and health premiums of $339,000 offset by an increase in
life premiums of $114,000. In the first nine months of 1995, the decrease in
insurance premiums was due to a decrease in accident and health premiums of
$612,000 offset by an increase of $291,000 in life premiums. Overall, the
Company has experienced a decline in accident and health premiums as a result of
management's decision to diversify the Company's premium base. The increases in
life premiums in 1995 reflect the movement to a more diversified product mix
with emphasis on life insurance combined with other supplemental health
products.
BENEFITS AND EXPENSES
Insurance benefits and losses incurred have decreased in the third quarter of
1995 to $1.4 million from $1.8 million in 1994, and they have decreased
year-to-date to $4.3 million from $5.6 million, respectively. As a percentage of
premium revenue, insurance benefits and losses incurred have decreased to 51.1%
in 1995 from 60.0% in 1994 quarter-to-date, and they have decreased to 53.1%
from 65.8%, respectively, year-to-date. The decrease in insurance benefits and
losses is due to a decrease in reserves of which $348,000 was associated with
the elimination of a block funeral home business.
Commission and underwriting expenses in the first nine months of 1995
increased to $5.1 million in 1995 from $4.3 million in 1994. The reasons for
this were a decrease in commissions of $21,000, an increase of $283,000 of
underwriting expenses and an increase of $556,000 of amortization of deferred
acquisition costs. The amortization of $556,000 of deferred acquisition costs
includes $372,000 of deferred acquisition costs associated with the elimination
of a block funeral home business.
LIQUIDITY AND CAPITAL RESOURCES
The Company reported statutory income of $677,000 in the third quarter and
$868,000 in the first nine months of 1995 compared to income of $84,000 and a
loss of $78,000, respectively, in 1994. Increased 1995 statutory results are
mainly due to lower insurance benefits and losses and a year-to-date tax benefit
of $217,000 compared to last year's provision of $63,000.
The Company believes that premium collections, investment earnings and
proceeds from investments will continue to provide sufficient sources of funds
to meet its liquidity requirements for the foreseeable future. Approximately 91%
of the investment assets of the Company are in marketable securities that can be
converted into cash, if required; however, use of such assets by the Company is
limited by state insurance regulations. Dividend payments by the Company are
limited to accumulated statutory earnings. Accumulated statutory earnings were
$6.0 million at September 30, 1995. The Company paid a $.30 per share dividend
on May 22, 1995. The total dividend paid totals $896,000 of which the Company's
parent received approximately $835,000.
Net cash provided by operating activities totaled $595,000 in 1995 compared
to net cash used in operations of $1.1 million in 1994. The increase in cash
from operations is due mainly to lower paid claims and the Company's receipt of
$152,000 for income taxes in accordance with its Tax Sharing Agreement with its
parent company, while in the previous year the Company paid its parent $291,000.
Cash and short-term investments decreased from $3.1 million at December 31, 1994
to $2.3 million at September 30, 1995 due to the cash dividend paid. Total
investments (excluding short-term investments) increased to $37.2 million at
September 30, 1995 compared to $32.2 million at December 31, 1994 due to the
increase in the market value of the stock and bond portfolio.
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<PAGE>
BANKERS FIDELITY LIFE INSURANCE COMPANY
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits.
None.
(b) Reports on Form 8-K.
None.
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<PAGE>
SIGNATURES
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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.
BANKERS FIDELITY LIFE INSURANCE COMPANY
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(Registrant)
Date: November 10, 1995 By: /s/
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John W. Hancock
Senior Vice President-Treasurer
(Principal Financial Officer)
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<FISCAL-YEAR-END> DEC-31-1995
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<DEBT-HELD-FOR-SALE> 0
<DEBT-CARRYING-VALUE> 21,112
<DEBT-MARKET-VALUE> 21,112
<EQUITIES> 12,581
<MORTGAGE> 2,183
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0
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8,193
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