-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, mHvqX86NvDAwskZ6h28eAJcVDBXg8ARYNbYcGydWhUu9e4I14dUvuf09DRX5X47O hf060CJdp0naMvRDAfL0SQ== 0000909654-95-000051.txt : 19950614 0000909654-95-000051.hdr.sgml : 19950614 ACCESSION NUMBER: 0000909654-95-000051 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED FIRE & CASUALTY CO CENTRAL INDEX KEY: 0000101199 STANDARD INDUSTRIAL CLASSIFICATION: 6331 IRS NUMBER: 420644327 STATE OF INCORPORATION: IA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 002-39621 FILM NUMBER: 95539261 BUSINESS ADDRESS: STREET 1: 118 SECOND AVE SE CITY: CEDAR RAPIDS STATE: IA ZIP: 52407 BUSINESS PHONE: 3193995700 MAIL ADDRESS: STREET 1: P O BOX 73909 CITY: CEDAR RAPIDS STATE: IA ZIP: 52407 10-Q 1 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, 1995 ______________ ___ 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 2-39621 UNITED FIRE & CASUALTY COMPANY (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Iowa 42-0644327 ________________________ ________________________________________________ (State of Incorporation) (IRS Employer Identification No.) 118 Second Avenue, S.E. Cedar Rapids, Iowa 52407 ____________________________________________________________________________ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (319) 399-5700 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 ______ ______ As of May 8, 1995; 7,219,943 shares of common stock were outstanding. UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES TABLE OF CONTENTS PART I: FINANCIAL INFORMATION Report of Independent Public Accountants...................... 1 Consolidated Balance Sheets for March 31, 1995 and December 31, 1994.......................... 2 Unaudited Consolidated Statements of Operations - Three Months Ended March 31, 1995 and 1994....................................... 3 Unaudited Consolidated Statements of Cash Flows - Three Months Ended March 31, 1995 and 1994....................................... 4 Notes to Unaudited Consolidated Financial Statements.......................................... 5-8 Management's Discussion and Analysis of Financial Condition and Results of Operations.................................................... 9-11 PART II: OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K Signatures.................................................... 12 Exhibit 11. Computation of Earnings Per Common Share.................................................. 13 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ________________________________________ To the Stockholders and Board of Directors of United Fire & Casualty Company: We have reviewed the accompanying consolidated balance sheet of UNITED FIRE & CASUALTY COMPANY (an Iowa corporation) AND SUBSIDIARIES as of March 31, 1995 and the related consolidated statements of operations and cash flows for the three-month periods ended March 31, 1995 and 1994. These financial statements are the responsibility of the company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the financial statements referred to above in order for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of United Fire & Casualty Company and Subsidiaries as of December 31, 1994, and, in our report dated February 24, 1995, we expressed an unqualified opinion on that statement. In our opinion, thek information set forth in the accompanying consolidated balance sheet as of December 31, 1994, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. Arthur Andersen LLP Chicago, Illinois May 8, 1995 UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS MARCH 31, 1995 AND DECEMBER 31, 1994
___________________________________________________________________________________________________ 1995 1994 UNAUDITED Audited ___________________________________________________________________________________________________ ASSETS INVESTMENTS: Fixed maturities (market value $595,693,018 in 1995 and $571,306,514 in 1994) . . . . . . . . . . . . . . . . . . . . .$603,427,450 $593,637,794 Equity securities (cost $24,808,211 in 1995 and $24,913,743 in 1994). . . . . . . . . . . . . . . . . . 61,039,287 56,196,670 Mortgage loans. . . . . . . . . . . . . . . . . . . . . . . . . . . 3,099,327 3,120,093 Policy loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,912,285 6,802,227 Other long-term investments (cost $6,512,319 in 1995 and $6,556,845 in 1994) . . . . . . . . . . . . . . . . . . 6,722,917 7,071,898 Short-term investments. . . . . . . . . . . . . . . . . . . . . . . 10,114,847 9,954,637 ___________________________________________________________________________________________________ 691,316,113 676,783,319 CASH AND CASH EQUIVALENTS. . . . . . . . . . . . . . . . . . . . . . . 8,951,013 10,254,892 ACCRUED INVESTMENT INCOME . . . . . . . . . . . . . . . . . . . . . . 9,845,410 10,410,792 ACCOUNTS RECEIVABLE. . . . . . . . . . . . . . . . . . . . . . . . . . 38,733,598 33,864,498 DEFERRED POLICY ACQUISITION COSTS. . . . . . . . . . . . . . . . . . . 48,298,926 47,544,519 PROPERTY AND EQUIPMENT . . . . . . . . . . . . . . . . . . . . . . . . 12,526,158 12,737,712 REINSURANCE RECEIVABLES. . . . . . . . . . . . . . . . . . . . . . . . 18,508,075 24,222,444 PREPAID REINSURANCE PREMIUMS . . . . . . . . . . . . . . . . . . . . . 3,697,383 3,033,531 INTANGIBLES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,777,571 1,882,196 OTHER ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,977,504 7,391,810 ___________________________________________________________________________________________________ TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$841,631,751 $828,125,713 =================================================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY ___________________________________________________________________________________________________ LIABILITIES: Future policy benefits and losses, claims and settlement expenses Property and casualty insurance . . . . . . . . . . . . . . . . .$200,154,518 $203,910,747 Life insurance. . . . . . . . . . . . . . . . . . . . . . . . . . 347,029,403 344,095,937 Unearned premiums . . . . . . . . . . . . . . . . . . . . . . . . . 87,185,885 83,450,394 Accrued expenses and other liabilities. . . . . . . . . . . . . . . 22,432,285 22,323,899 Postretirement benefits other than pensions . . . . . . . . . . . . 2,501,993 2,366,492 Income taxes payable. . . . . . . . . . . . . . . . . . . . . . . . 1,831,100 826,379 Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . 2,232,989 498,437 ___________________________________________________________________________________________________ TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . . . . .$663,368,173 $657,472,285 ___________________________________________________________________________________________________ STOCKHOLDERS' EQUITY: Common stock. . . . . . . . . . . . . . . . . . . . . . . . . . . .$ 24,066,490 $ 24,066,490 Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . 12,048,856 12,048,856 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . 118,414,783 113,616,829 Net unrealized appreciation, net of applicable income taxes of $12,780,105 in 1995 and $11,009,092 in 1994 . . . . 23,733,449 20,921,253 ___________________________________________________________________________________________________ TOTAL STOCKHOLDERS' EQUITY . . . . . . . . . . . . . . . . . . . . . .$178,263,578 $170,653,428 ___________________________________________________________________________________________________ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY . . . . . . . . . . . . . .$841,631,751 $828,125,713 =================================================================================================== The Notes to Unaudited Consolidated Financial Statements are an integral part of these statements.
UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 1995 AND 1994
___________________________________________________________________________________________________ 1995 1994 ___________________________________________________________________________________________________ Revenues: Premiums earned . . . . . . . . . . . . . . . . . . . . . . . . $ 51,446,687 $ 42,608,024 Investment income, net . . . . . . . . . . . . . . . . . . . . 12,311,342 10,761,573 Realized investment gains . . . . . . . . . . . . . . . . . . . 373,227 252,422 Commission and policy fee income. . . . . . . . . . . . . . . . 461,685 454,126 ___________________________________________________________________________________________________ $ 64,592,941 $ 54,076,145 ___________________________________________________________________________________________________ Benefits, Losses and Expenses: Losses and settlement expenses. . . . . . . . . . . . . . . . . $ 31,047,115 $ 29,230,326 Increase in liability for future policy benefits. . . . . . . . 2,926,636 929,368 Amortization of deferred policy acquisition costs . . . . . . . 11,523,674 7,642,300 Other underwriting expenses . . . . . . . . . . . . . . . . . . 6,626,028 7,779,136 Interest on policyholders' accounts . . . . . . . . . . . . . . 4,828,044 3,687,891 ___________________________________________________________________________________________________ $ 56,951,497 $ 49,269,021 ___________________________________________________________________________________________________ Income before income taxes. . . . . . . . . . . . . . . . . . . $ 7,641,444 $ 4,807,124 Federal income taxes . . . . . . . . . . . . . . . . . . . . . 1,393,285 688,217 ___________________________________________________________________________________________________ Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,248,159 $ 4,118,907 =================================================================================================== Net income per common share . . . . . . . . . . . . . . . . . . $ .87 $ .57 =================================================================================================== Weighted average common shares outstanding . . . . . . . . . . . . 7,219,943 7,219,943 =================================================================================================== Cash dividends declared per common share . . . . . . . . . . . . . $ .20 $ . 18 =================================================================================================== The Notes to Unaudited Consolidated Financial Statements are an integral part of these statements.
UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 1995 AND 1994
___________________________________________________________________________________________________ 1995 1994 ___________________________________________________________________________________________________ Cash Flows From Operating Activities: Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,248,159 $ 4,118,907 ___________________________________________________________________________________________________ Adjustments to reconcile net income to net cash provided by operating activities Net bond discount accretion . . . . . . . . . . . . . . . . . . . . (528,668) (104,677) Depreciation and amortization . . . . . . . . . . . . . . . . . . . 653,836 645,496 Realized gains on sales and calls of investments. . . . . . . . . . (373,227) (252,422) Changes in: Accrued investment income . . . . . . . . . . . . . . . . . . . . 565,382 570,904 Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . (4,869,100) (2,479,274) Deferred policy acquisition costs . . . . . . . . . . . . . . . . (754,407) 427,352 Reinsurance receivables . . . . . . . . . . . . . . . . . . . . . 5,714,369 (3,585,372) Prepaid reinsurance premiums. . . . . . . . . . . . . . . . . . . (663,852) 214,876 Income taxes receivable . . . . . . . . . . . . . . . . . . . . . -- 221,077 Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . (585,694) 475,043 Future policy benefits and losses, claims and settlement expenses . . . . . . . . . . . . . . . . . . . . . . . (213,951) 6,491,411 Unearned premiums . . . . . . . . . . . . . . . . . . . . . . . . 3,735,491 766,581 Accrued expenses and other liabilities. . . . . . . . . . . . . . 1,408,019 (5,637,456) Postretirement benefits other than pensions . . . . . . . . . . . 135,501 153,233 Income taxes payable. . . . . . . . . . . . . . . . . . . . . . . 1,004,721 945,324 Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . (36,461) (692,611) ___________________________________________________________________________________________________ Total adjustments . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,191,959 $ (1,840,515) ___________________________________________________________________________________________________ Net cash provided by operating activities . . . . . . . . . . . . . $ 11,440,118 $ 2,278,392 ___________________________________________________________________________________________________ Cash Flows From Investing Activities: Proceeds from sale of available-for-sale investments. . . . . . . . 85,149 144,920 Proceeds from call and maturity of held-to-maturity investments . . 7,585,267 21,622,579 Proceeds from call and maturity of available-for-sale investments . 513,880 147,857 Proceeds from sale of other investments . . . . . . . . . . . . . . 4,641,235 5,039,479 Purchase of investments held-to-maturity. . . . . . . . . . . . . . (17,132,545) (33,464,950) Purchase of investments available-for-sale. . . . . . . . . . . . . -- (481,341) Purchase of other investments . . . . . . . . . . . . . . . . . . . (4,740,676) (6,317,629) Proceeds from sale of property and equipment. . . . . . . . . . . . 15,242 19,684 Purchase of property and equipment. . . . . . . . . . . . . . . . . (352,899) (396,823) ___________________________________________________________________________________________________ Net cash used in investing activities . . . . . . . . . . . . . . . $ (9,385,347) $(13,686,224) ___________________________________________________________________________________________________ Cash Flows From Financing Activities: Policyholders' account balances Deposits to investment and universal life type contracts. . . . . $ 19,004,683 $ 12,488,606 Withdrawals from investment and universal life type contracts . . (19,613,495) (6,907,384) Purchase and retirement of common stock . . . . . . . . . . . . . . (6,219) (6,935) Payment of cash dividends . . . . . . . . . . . . . . . . . . . . . (2,743,619) (2,599,260) ___________________________________________________________________________________________________ Net cash provided by financing activities . . . . . . . . . . . . . $ (3,358,650) $ 2,975,027 ___________________________________________________________________________________________________ Decrease in Cash and Cash Equivalents . . . . . . . . . . . . . . . $ (1,303,879) $ (8,432,805) Cash and Cash Equivalents at Beginning of Year. . . . . . . . . . . 10,254,892 13,704,164 ___________________________________________________________________________________________________ Cash and Cash Equivalents at End of Period . . . . . . . . . . . . . . $ 8,951,013 $ 5,271,359 =================================================================================================== The Notes to Unaudited Consolidated Financial Statements are an integral part of these statements.
UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. _______ In the opinion of the management of United Fire & Casualty Company and Subsidiaries (the "Company"), the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position, the results of operations, and cash flows for the periods presented. The results for the interim periods are not necessarily indicative of the results of operations that may be expected for the year. The financial statements contained herein should be read in conjunction with the Company's annual report on Form 10-K for the year ended December 31, 1994. The review report of Arthur Andersen LLP accompanies the unaudited consolidated financial statements included in Item 1 of Part I. NOTE 2. _______ The Company maintains its records in conformity with the accounting practices prescribed or permitted by the Insurance Department of the State of Iowa. To the extent that certain of these practices differ from generally accepted accounting principles, adjustments have been made in order to present the accompanying financial statements on the basis of generally accepted accounting principles. Certain amounts included in the financial statements for the previous year have been reclassified to conform with the financial statement presentation at March 31, 1995. NOTE 3. _______ For purposes of reporting cash flows, cash and cash equivalents include cash and non-negotiable certificates of deposit with original maturities of three months or less. Income taxes paid, net of refunds for the three months ended March 31, 1995 and 1994 were $400,000, and $131,000, respectively. There were no significant payments of interest through March 31, 1995 and 1994, other than interest credited to policyholders' accounts. UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS NOTE 4. _______ Effective December 31, 1994, the Company adopted Statement of Financial Accounting Standards No. 119, "Disclosure about Derivative Financial Instruments and Fair Value of Financial Instruments" ("SFAS No. 119") SFAS No. 119 expands disclosure requirements concerning derivative investments, including whether investments are held for trading or other purposes, such as hedging. The Company does not own any derivative investments as defined by SFAS No. 119, and therefore is not subject to the expanded disclosure requirements. Effective January 1, 1994, the Company adopted Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" ("SFAS No. 115"). SFAS No. 115 addresses the accounting and reporting for investments in equity securities that have readily determinable fair values and for all investments in debt securities. The statement requires that those investments be classified into the following three categories: 1) debt securities that the enterprise has the positive intent and ability to hold to maturity are classified as held-to- maturity securities and reported at amortized cost; 2) debt and equity securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities and reported at fair value, with unrealized gains and losses included in net income; and 3) debt securities and marketable equity securities not classified as either held-to- maturity securities or trading securities are classified as available-for-sale securities and reported at fair value, with unrealized gains and losses excluded from net income and reported as a separate component of stockholders' equity. The Company classifies a majority of its investments in fixed income securities as held-to-maturity. A reconciliation of the amortized cost to fair values of investments in held-to-maturity and available-for-sale fixed maturities, marketable equity securities and other long-term investments as of March 31, 1995 is reported on the next page. UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
_______________________________________________________________________________________________________ March 31, 1995 Gross Gross Amortized Unrealized Unrealized Fair Type of Investment Cost Appreciation Depreciation Value _______________________________________________________________________________________________________ HELD-TO-MATURITY Fixed Maturities Bonds U.S. Government, government agencies and authorities Collateralized mortgage obligations $ 81,936,947 $ 1,340,915 $ 8,712,856 $ 74,565,006 Mortgage-backed securities 32,227,695 1,520,715 32,946 33,715,464 All others 3,679,833 236,539 142,681 3,773,691 States, municipalities and political subdivisions 171,046,045 8,043,784 1,215,499 177,874,330 Foreign 4,525,427 45,498 99,375 4,471,550 Public utilities 38,607,377 113,490 3,118,099 35,602,768 Corporate bonds Collateralized mortgage obligations 97,910,716 505,139 5,135,616 93,280,239 All other corporate bonds 172,172,431 3,495,042 4,578,482 171,088,991 _______________________________________________________________________________________________________ Total held-to-maturity $602,106,471 $ 15,301,122 $ 23,035,554 $594,372,039 _______________________________________________________________________________________________________ AVAILABLE-FOR-SALE Fixed Maturities Bonds U.S. Government, government agencies and authorities Mortgage-backed securities $ 107,548 $ 4,092 $ -- $ 111,640 All others 316,909 345 25,221 292,033 Public utilities 206,000 -- 38,000 168,000 Corporate bonds 618,643 161,954 31,291 749,306 ______________________________________________________________________________________________________ Total fixed maturities $ 1,249,100 $ 166,391 $ 94,512 $ 1,320,979 ______________________________________________________________________________________________________ Equity Securities Common stocks Public Utilities $ 3,561,403 $ 3,376,738 $ -- $ 6,938,141 Banks, trust and insurance companies 11,052,759 20,478,242 -- 31,531,001 All other common stocks 9,039,715 12,467,067 312,013 21,194,769 Nonredeemable preferred stocks 1,154,334 268,809 47,767 1,375,376 _______________________________________________________________________________________________________ Total equity securities $ 24,808,211 $ 36,590,856 $ 359,780 $ 61,039,287 _______________________________________________________________________________________________________ Total available-for-sale $ 26,057,351 $ 36,757,207 $ 454,292 $ 62,360,266 ======================================================================================================= Other long-term investments $ 6,512,319 $ 489,987 $ 279,388 $ 6,722,917 =======================================================================================================
UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS The amortized cost and fair value of held-to-maturity and available-for-sale fixed maturities at March 31, 1995 by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
_______________________________________________________________________________________________________ Held-to-maturity Available-for-sale _______________________________________________________________________________________________________ Amortized Cost Fair Value Amortized Cost Fair Value _______________________________________________________________________________________________________ Due in one year or less $ 7,263,466 $ 7,351,772 $ 123,301 $ 281,532 Due after one year through five years 49,918,353 51,556,917 233,234 221,006 Due after five years through ten years 171,046,852 171,802,261 785,017 706,801 Due after ten years 161,802,440 162,100,378 -- -- Mortgage-backed securities 32,227,695 33,715,464 107,548 111,640 Collateralized mortgage obligations 179,847,665 167,845,247 -- -- _______________________________________________________________________________________________________ $ 602,106,471 $ 594,372,039 $ 1,249,100 $ 1,320,979 =======================================================================================================
UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION AND LIQUIDITY ASSETS The Company's total fixed maturity portfolio grew by 1.7% or $9,790,000 during the first three months of 1995. Approximately 30% of these securities are collateralized mortgage obligations ("CMOs"), compared to approximately 28% at December 31, 1994. Continuing review of the fixed income market has shown that CMOs are an attractive investment alternative. The Company minimizes its prepayment risk by buying most issues priced at a slight discount. While buying at a discount does not prevent prepayment, the yield is not penalized as is the case when a premium is paid. In addition, although the stated maturity is longer than the average life of the issues, the Company is concentrating on buying issues with expected maturity in the seven to twelve year range. The Company's equity securities consists of readily marketable common and preferred stocks, all of which are classified as available-for-sale. Growth in this asset is primarily the result of unrealized appreciation in market value. Other long-term investments are primarily holdings in limited partnership funds investing in banks. The Company's accounts receivable are amounts due from property and casualty insurance agents and brokers for premiums written net of commissions. Losses payable to reinsurance brokers on assumed business are also netted against accounts receivable. The growth in this asset of $4,869,000 or 14.4% is largely the result of two factors. Utilization of the Company's deferred billing plans has increased, which has the effect of increasing the direct agents accounts receivable. The other factor relates to reinsurance. The Company deposits funds with one reinsurer in January and July, and records the deposits as accounts receivable. This asset is reduced as premiums are ceded to the reinsurer. The Company pays deposits to other reinsurers on a quarterly basis, although the aggregate amount of these deposits is smaller than the semi-annual payments. UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION AND LIQUIDITY (continued) Reinsurance receivables are ceded losses, expenses and reserves that are due the Company from reinsurers. The balance in this asset decreased $5,714,000 or 23.6% due primarily to the settlement of two large claims during the first quarter of 1995, one of which relates to the Northridge earthquake. The Company does not anticipate collection problems with regard to reinsurance receivables. LIABILITIES Gross reserves for property and casualty losses and settlement expenses decreased $3,756,000 or 1.8% between March 31, 1995 and December 31, 1994. Gross reserves relating to the Northridge earthquake were $4,711,000 through March 31, 1995. The Company has made one small payment on the Kobe earthquake, and has received very limited information on further exposure. The Company is not aware of any significant contingent liabilities as far as environmental issues are concerned. Because of the type of business the Company writes, i.e. property coverage, there exists the potential for exposure for environmental pollution and asbestos claims. The Company's underwriters are aware of these exposures and use limited riders or endorsements to limit exposure. Accrued expenses and other liabilities increased less than 1%. It is typical to report a decrease for the first quarter, because many of the Company's expenses that were accrued at December 31, of the prior year, such as contingent commissions and state premium taxes, are substantially paid by the end of the first quarter. At March 31, 1995, the Company had payables to investment brokers offsetting the usual reduction in accrued expenses. Income taxes payable increased $1,005,000 over December 31, 1994, because there have been no prepayments made in 1995. The major contributing factor to the growth of $1,735,000 in deferred taxes payable is the increase in unrealized appreciation. UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS MATERIAL CHANGES IN RESULTS OF OPERATIONS: The Company's first quarter net premiums earned increased $8,839,000 or 20.7% over the same period in 1994, with the life segment contributing $2,659,000 of the increase. The property and casualty segment has experienced growth in its direct and assumed business, and has had to pay less for its ceded protection due to a decrease in ceded premium rates. Investment income rose 14.4% over the first three months of 1995, which is attributable to a larger fixed maturity portfolio. Losses and settlement expenses increased 6.2% between years. Gross losses related to the Northridge earthquake were $526,000 for the first three months of 1995, with ceded incurred of $154,000. Amortization of deferred acquisition costs increased by $3,881,000 or 50.8% over March 31, 1994 due to an increase in premiums earned. This premium growth, coupled with increasing interest rates, contributed to the increase in the life segment's interest on policyholders' accounts. UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (A) Exhibits-Exhibit 11 - Computation of Earnings Per Common Share (Page 13). 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. UNITED FIRE & CASUALTY COMPANY __________________________________________ (Registrant) May 8, 1995 ___________________________________________ (Date) /s/ Scott McIntyre, Jr. ____________________________________________ Scott McIntyre, Jr. Chairman and Chief Executive Officer /s/ K.G. Baker ____________________________________________ K.G. Baker, Vice President Chief Financial Officer and Principal Accounting Officer UNITED FIRE & CASUALTY COMPANY AND SUBSIDIARIES PART II - OTHER INFORMATION Exhibit 11. Computation of Earnings Per Common Share
______________________________________________________________________________________________ Weighted Average Net Earnings per Number of Shares Income Common Share Outstanding ______________________________________________________________________________________________ Three months ended March 31: 1995 . . . . . . . . . . 7,219,943 $ 6,248,159 $ .87 1994 . . . . . . . . . . 7,219,943 4,118,907 .57
Computation of weighted average number of common and common equivalent shares: ____________________________ Three Months Ended March 31, 1995 1994 ____________________________ Common shares outstanding throughout the period 7,219,943 7,219,943 ========= =========
EX-27 2
7 This schedule contains summary information extracted from the Form 10-Q and is qualified in its entirety by reference to such financial statements. 0000101199 UNITED FIRE AND CASUALTY COMPANY 3-MOS DEC-31-1994 MAR-31-1995 1,320,979 602,106,471 594,372,039 61,039,287 3,099,327 12,526,158 691,316,113 8,951,013 18,508,075 48,298,926 841,631,751 547,183,921 87,185,885 0 0 0 24,066,490 0 0 130,463,639 841,631,751 51,446,687 12,311,342 373,227 461,685 33,973,751 11,523,674 11,454,072 7,641,444 1,393,285 6,248,159 0 0 0 6,248,159 .87 .87 0 0 0 0 0 0 0
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