8-K 1 0001.txt FARM FAMILY HOLDINGS, INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report: February 28, 2001 FARM FAMILY HOLDINGS, INC. A Delaware Corporation Commission File No. 1-11941 IRS No. 14-1789227 344 Route 9W, Glenmont, New York 12077-2910 Registrant's telephone number: (518) 431-5000 Item 5. Other Events On February 27, 2001, Farm Family Holdings, Inc. issued a press release announcing the results of its operations for the fourth quarter and year ended December 31, 2000 and stockholder approval of the merger agreement with American National Insurance Company. Item 7. Financial Statements and Exhibits The following exhibits are filed as part of this report: Exhibit Index Exhibit 99 - Press Release 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. FARM FAMILY HOLDINGS, INC. (Registrant) February 28, 2001 /s/ Philip P. Weber -------------------------------- --------------------------------------------- (Date) Philip P. Weber President and CEO Farm Family Holdings Reports Operating Results and Stockholder Approval of Merger Glenmont, New York - February 27, 2001 - Farm Family Holdings, Inc. (NYSE: FFH) ("Farm Family") today announced that consolidated operating income per share, on a diluted basis, increased to $0.85 for the fourth quarter of 2000 compared to $0.84 for the same period in 1999. Consolidated operating income for the fourth quarter of 2000 was $5,165,000 compared to $5,182,000 for the same period in 1999. Consolidated operating income for the year ended December 31, 2000 was $19,421,000 compared to $19,131,000 for the same period in 1999. On a diluted per share basis, consolidated operating income for the year ended December 31, 2000 was $3.18 compared to $3.22 for the same period in 1999. Net income for the fourth quarter of 2000 was $3,463,000 compared to $4,653,000 for the fourth quarter of 1999. On a diluted per share basis, net income was $0.57 for the fourth quarter of 2000 compared to $0.75 for the same period in 1999. The decrease in net income for the fourth quarter was primarily attributable to expenses of $1,097,000, net of tax, related to Farm Family's pending merger with American National Insurance Company (NASDAQ: ANAT) ("American National"). Net income for the year ended December 31, 2000 was $30,114,000 compared to $18,618,000 for the same period in 1999. On a diluted per share basis, net income for the year ended December 31, 2000 was $4.93 compared to $3.13 for the same period in 1999. The increase in net income for the year was primarily attributable to the effect of retroactively including Excess Interest and Spreads in the Company's calculation of its estimate of profits on participating life insurance business allocable to stockholders. In addition, book value on a diluted per share basis increased to $35.10 per share as of December 31, 2000. Property and Casualty Insurance Business For the fourth quarter of 2000, property and casualty net written premiums increased 11.1% to $49,250,000 compared to $44,345,000 for the same period in 1999. For the year ended December 31, 2000, property and casualty net written premiums were $223,183,000 compared to $191,702,000 for the same period in 1999, which includes the operations of United Farm Family since April 6, 1999. The increase in property and casualty net written premiums for the year ended December 31, 2000 was primarily attributable to an increase of $35,407,000 in direct written premiums (excluding assigned risk automobile business premiums) largely as a result of the conversion of our personal and commercial automobile policies in certain states from six-month to twelve-month policies. Excluding the impact of converting personal and commercial automobile policies from six-month to twelve-month policies in certain states, we estimate that property and casualty direct written premiums (excluding assigned risk automobile business premiums) would have increased approximately $16,227,000 or 8.6% to $204,131,000 for the year ended December 31, 2000. This increase was offset by a decrease of $1,093,000 in assigned risk automobile premiums, an increase of $1,158,000 in premiums ceded to our reinsurers and a decrease of $1,675,000 in assumed reinsurance premiums. Life Insurance Business Life insurance premium revenue was $9,773,000 for the fourth quarter of 2000 compared to $9,448,000 for the same period in 1999. For the year ended December 31, 2000, life insurance premium revenue was $38,094,000 compared to $27,799,000 for the same period in 1999. The 1999 revenue includes amounts subsequent to April 6, 1999, the effective date of Farm Family Holdings' acquisition of Farm Family Life. Total collected premiums from life insurance policies decreased 3.6% to $10,305,000 for the fourth quarter of 2000 compared to the same period in 1999. For the year ended December 31, 2000, total collected premiums from life insurance policies increased to $40,617,000 from $29,731,000 for the same period in 1999. The 1999 collected premiums include amounts subsequent to April 6, 1999, the effective date of Farm Family Holdings' acquisition of Farm Family Life. Stockholders Approve Merger Agreement with American National Insurance Company At a special meeting of stockholders held today, Farm Family's stockholders voted to adopt the previously announced merger agreement with American National. The proposal to adopt the merger agreement was approved by the holders of a majority of Farm Family's outstanding voting stock. The proposed merger remains subject to the satisfaction of certain closing conditions, including the approval of the New York State Insurance Department. Under the terms of a definitive merger agreement previously announced on October 31, 2000, American National will acquire Farm Family at a price of $44 per share for Farm Family's common stock and $35.72 per share for Farm Family's Series A Preferred Stock in cash. The consideration to be paid to the holders of the Series A Preferred Stock will also include any accrued and unpaid dividends to the closing date. The companies expect to close the merger late in the first quarter of 2001. American National, which was founded in 1905, is headquartered in Galveston, Texas. American National has over $9.2 billion in assets and had total revenues for the year ended December 31, 2000 of approximately $1.8 billion. The American National family of companies offers a broad line of products and services, which include individual and group life and health insurance, and annuities; personal lines property and casualty insurance; credit insurance and mutual funds. The life insurance business conducted by the American National family of companies is conducted in all states, as well as in Mexico, Puerto Rico, Guam and American Samoa. American National is also authorized to sell its products to American military personnel in Western Europe. American National's property and casualty subsidiary, American National Property And Casualty Company ("ANPAC"), is based in Springfield, Missouri and currently operates in 37 states. American National and ANPAC have been assigned a Best's rating of A+ (Superior) by A.M. Best Company, Inc. and are rated AA+ (Very Strong) by Standard and Poor's. In addition, the Ward Financial Group named ANPAC as a 1999 Ward's 50 Benchmark Company. Additional information regarding American National is available at www.anico.com. Farm Family is the parent of Farm Family Casualty Insurance Company and Farm Family Life Insurance Company. Farm Family Casualty and Farm Family Life's subsidiary, United Farm Family, are specialized property and casualty insurers of farms, agricultural related businesses and residents and businesses of rural and suburban communities. Farm Family Life sells individual whole life, term and universal life products, single and flexible premium deferred annuity products and disability income insurance products. Additional information regarding Farm Family is available at www.farmfamily.com. Safe Harbor Statement under The Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on management's current knowledge, expectations, estimates, beliefs and assumptions. The forward-looking statements in this press release include, but are not limited to, statements of the plans and objectives of Farm Family or its management, statements of future economic performance and assumptions underlying statements regarding Farm Family or its business. Readers are hereby cautioned that certain events or circumstances could cause actual results to differ materially from those estimated, projected, or predicted. The forward-looking statements in this press release are not guarantees of future performance and are subject to a number of important risks and uncertainties, many of which are outside Farm Family's control, that could cause actual results to differ materially. These risks and uncertainties include, but are not limited to, the satisfaction of the closing conditions set forth in the merger agreement (which conditions include but not limited to the approval of the New York State Insurance Department and other government approvals), the risk of a significant delay in the expected completion of the merger, and other risks listed from time to time in the Company's Securities and Exchange Commission filings, including Form 10-K filed for the fiscal year ended December 31, 1999 and Forms 10-Q filed for the quarters ended March 31, 2000, June 30, 2000 and September 30, 2000.
FARM FAMILY HOLDINGS, INC. Condensed Consolidated Statements of Income ($ in thousands, except per share data) Three Months Ended Year Ended December 31, December 31, 2000 1999 2000 1999 -------------------------------------------------- Revenues: Premiums from property/casualty insurance $53,756 $46,466 $201,147 $188,921 Premiums from life and health operations and contract charges 9,773 9,448 38,094 27,799 Net investment income 19,269 17,939 75,698 58,558 Realized investment losses, net (2,165) (980) (3,908) (1,984) Other income 494 546 1,896 1,569 -------------------------------------------------- Total revenues 81,127 73,419 312,927 274,863 -------------------------------------------------- Losses, benefits and expenses: Losses and loss adjustment expenses on property/casualty insurance 41,869 34,722 157,838 141,509 Policyholder contract benefits 13,667 12,299 53,605 38,710 Amortization expense 10,957 10,410 39,561 38,182 Other operating costs and expenses 8,306 5,653 26,716 20,434 Participating policyholders' interest 1,416 4,018 (8,464) 9,692 -------------------------------------------------- Total losses, benefits and expenses 76,215 67,102 269,256 248,527 -------------------------------------------------- Income before federal income tax expense and preferred stock dividends 4,912 6,317 43,671 26,336 Federal income tax expense 1,360 1,575 13,200 7,440 -------------------------------------------------- Income before preferred stock dividends 3,552 4,742 30,471 18,896 Preferred stock dividends 89 89 357 278 -------------------------------------------------- Net income attributable to common stockholders $3,463 $4,653 $30,114 $18,618 ================================================== Operating Income (1) $5,165 $5,182 $19,421 $19,131 ================================================== Per Share Data Net income per share-Diluted $0.57 $0.75 $4.93 $3.13 ================================================== Operating income per share-Diluted (1) $0.85 $0.84 $3.18 $3.22 ================================================== Weighted average shares outstanding-Diluted 6,099,441 6,200,265 6,102,468 5,948,213 ================================================== (1) Operating income excludes the impact of realized investment gains (losses), non-recurring charges, and the related taxes thereon. See "Selected Segment Information" for a reconciliation of operating income to net income. Other non-recurring items in 2000 consist of $1,097,000, net of tax, relating to the previously announced merger agreement with American National Insurance Company. Other non-recurring items in 1999 consist of $76,000, net of tax, relating to employee severance costs and $171,000, net of tax, relating to the Company's evaluation of potential business transactions that were not pursued.
FARM FAMILY HOLDINGS, INC. Condensed Consolidated Balance Sheets ($ in thousands, except per share data) December 31, 2000 December 31, 1999 ---------------------------------------------------------------------------------------------------------------------- Assets: Investments $1,118,876 $1,071,681 Cash and cash equivalents 34,746 19,190 Insurance receivables 88,437 55,223 Deferred acquisition costs 24,435 17,630 Present value of future profits 26,588 28,571 Accrued investment income 18,719 18,875 Property and equipment, net 14,167 14,520 Deferred income tax asset, net 21,441 29,605 Other assets 3,136 3,929 ---------------------------------------- Total assets $1,350,545 $1,259,224 ======================================== Liabilities: Reserves for losses and loss adjustment expenses for property/casualty insurance $213,675 $186,130 Reserves for policyholder contract benefits 252,356 238,272 Funds on deposit from policyholders 412,733 416,971 Unearned premium reserve 96,557 74,364 Accrued dividends to policyholders 5,515 5,263 Accrued expenses and other liabilities 23,408 22,684 Participating policyholders' interest 126,266 128,516 ---------------------------------------- Total liabilities 1,130,510 1,072,200 Mandatory redeemable preferred stock 5,830 5,830 Total stockholders' equity 214,205 181,194 ---------------------------------------- Total liabilities and stockholders' equity $1,350,545 $1,259,224 ======================================== Book Value Per Share Outstanding $35.68 $29.65 ======================================== Book Value Per Share Outstanding (excluding SFAS 115 adjustment) $35.10 $30.07 ======================================== Book Value Per Share-Diluted $35.10 $30.46 ======================================== Book Value Per Share-Diluted (excluding SFAS 115 adjustment) $34.53 $30.89 ======================================== Common Shares Outstanding 6,003,983 6,110,683 ========================================
FARM FAMILY HOLDINGS, INC. Selected Segment Information ($ in thousands) Three months ended Year ended December 31, December 31, 2000 1999 2000 1999 ---- ---- ---- ---- Premium revenues Property and casualty insurance $53,756 $46,466 $201,147 $188,921 Life insurance 9,773 9,448 38,094 27,799 ---------------------------------------------------- Total $63,529 $55,914 $239,241 $216,720 ==================================================== Net investment income Property and casualty insurance $6,175 $5,380 $23,289 $20,449 Life insurance 13,065 12,464 52,164 37,673 Corporate and other 17 84 203 388 Intersegment eliminations 12 11 42 48 ---------------------------------------------------- Total $19,269 $17,939 $75,698 $58,558 ==================================================== Other operating costs & expenses and amortization expense Property and casualty insurance Underwriting and amortization expenses $13,180 $11,891 $47,827 $46,471 Dividends to policyholders 175 ---- 319 159 Life insurance 4,352 3,741 16,007 11,097 Corporate and other 1,786 656 3,044 1,564 Intersegment eliminations (230) (225) (920) (675) ---------------------------------------------------- Total $19,263 $16,063 $66,277 $58,616 ==================================================== Operating income Property and casualty insurance $4,161 $4,285 $15,827 $17,140 Life insurance 1,314 1,281 4,811 2,879 Corporate and other (310) (384) (1,217) (888) ---------------------------------------------------- Total operating income 5,165 5,182 19,421 19,131 Effect of retroactively including Excess Interest and Spreads, net of tax ---- ---- 12,746 ---- Realized investment losses, net of tax (605) (282) (956) (266) Other non-recurring items, net of tax (1,097) (247) (1,097) (247) ---------------------------------------------------- Net income $3,463 $4,653 $30,114 $18,618 ==================================================== GAAP combined ratio Property and casualty insurance Loss and loss adjustment expense ratio 77.9% 74.7% 78.5% 74.9% Underwriting expense ratio 24.5% 25.5% 23.8% 24.6% ---------------------------------------------------- GAAP combined ratio 102.4% 100.2% 102.3% 99.5% ====================================================
December 31, December 31, 2000 1999 ---- ---- Identifiable Assets Property and casualty $514,320 $445,223 Life insurance 839,003 811,030 Corporate and other 67,330 71,014 Intersegment eliminations (70,108) (68,043) --------------------------- Total $1,350,545 $1,259,224 ===========================