-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, C1yfs6spaqz29x2ihRJy5/LtiLg2AjrSreNJ2AqIHcggSrrcQVnR/LdcA2O5Gpbw fLAoZoAgpsVSpN1Vm8AEWw== 0000018508-95-000008.txt : 19951119 0000018508-95-000008.hdr.sgml : 19951119 ACCESSION NUMBER: 0000018508-95-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FOREMOST CORP OF AMERICA CENTRAL INDEX KEY: 0000018508 STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311] IRS NUMBER: 381863522 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-06478 FILM NUMBER: 95590552 BUSINESS ADDRESS: STREET 1: 5600 BEECH TREE LN CITY: GRAND RAPIDS STATE: MI ZIP: 49501 BUSINESS PHONE: 6169423000 MAIL ADDRESS: STREET 1: P O BOX 2450 CITY: GRAND RAPIDS STATE: MI ZIP: 49501 FORMER COMPANY: FORMER CONFORMED NAME: CENTENNIAL CORP DATE OF NAME CHANGE: 19790320 10-Q 1 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended September 30, 1995 Commission File Number 0-6478 FOREMOST CORPORATION OF AMERICA (Exact name of Registrant as specified in its charter) Delaware 38-1863522 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 5600 Beech Tree Lane, Caledonia, Michigan 49316 Mailing address: P.O. Box 2450, Grand Rapids, Michigan 49501 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (616) 942-3000 The registrant 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 and has been subject to such filing requirements for the past 90 days. Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the close of the period covered by this report. Class Outstanding at September 30, 1995 Common Stock, $1.00 par value 10,182,200 2 FOREMOST CORPORATION OF AMERICA INDEX Page No. Part I. Financial Information: Item 1. - Financial Statements: Consolidated Balance Sheets - September 30, 1995 and December 31, 1994 1 Consolidated Statements of Income - Nine Months Ended September 30, 1995 and 1994 2 Consolidated Condensed Statements of Cash Flows - Nine Months Ended September 30, 1995 and 1994 3 Condensed Notes to Consolidated Financial Statements 4 Item 2. - Management's Discussion and Analysis 5-6 Part II. Other Information: Item 6. - Exhibits and Reports on Form 8-K 7 Signatures 7 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS FOREMOST CORPORATION OF AMERICA CONSOLIDATED BALANCE SHEETS
Sept. 30, Dec. 31, 1995 1994 -------- -------- (In thousands) ASSETS: Investments: Fixed maturities held to maturity $ 8,040 $ 14,810 Securities available for sale: Fixed maturities 383,520 351,241 Equity securities 55,903 46,611 Mortgage loans and land contracts 12,753 14,525 Investment real estate 20,301 19,284 Short-term investments 41,072 11,798 ------- ------- Total Investments 521,589 458,269 Cash 1,601 4,195 Accrued investment income 7,821 6,567 Premiums receivable 75,551 69,806 Due from reinsurance companies 26,460 34,798 Other receivables 7,632 9,784 Prepaid policy acquisition costs 77,573 75,082 Prepaid reinsurance premiums 73 10,181 Real estate and equipment 36,753 38,377 Other assets 13,057 14,014 ------- ------- Total Assets $768,110 $721,073 ======= ======= LIABILITIES: Unearned premium $268,268 $254,653 Insurance losses & loss adjustment expenses 97,073 95,496 Accounts payable and accrued expenses 39,753 36,977 Notes and other obligations payable 97,805 107,406 Income taxes 11,267 7,114 Other liabilities 12,856 12,802 ------- ------- Total Liabilities 527,022 514,448 SHAREHOLDERS' EQUITY: Common stock $1 par value - authorized 35,000,000, issued 14,000,000 14,000 14,000 Additional paid-in capital 139,344 139,380 Unrealized appreciation of securities available for sale, net of applicable taxes 13,661 (3,365) Retained earnings 174,172 149,670 Restricted stock - deferred compensation (5) (16) ------- ------- Total 341,172 299,669 Less treasury stock at cost, 3,817,980 and 3,634,004 shares (100,084) (93,044) ------- ------- Total Shareholders' Equity 241,088 206,625 ------- ------- Total Liabilities & Shareholders' Equity $768,110 $721,073 ======= =======
See accompanying condensed notes to consolidated financial statements. -1- 4 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS (CONTINUED) FOREMOST CORPORATION OF AMERICA CONSOLIDATED STATEMENTS OF INCOME
Three Nine Months Ended Months Ended Sept. 30, Sept. 30, 1995 1994 1995 1994 -------- -------- -------- -------- (In thousands except per share data) INCOME: Earned premium: Property and casualty $108,136 $103,058 $320,058 $305,992 Life 5,326 5,367 16,579 16,332 Net investment income 7,543 6,606 22,142 20,052 Realized gains (losses) 9 (293) (105) 444 Other 749 1,598 2,172 4,348 ------- ------- ------- ------- Total income 121,763 116,336 360,846 347,168 ------- ------- ------- ------- EXPENSES: Insurance losses, death and other benefits 61,931 65,354 195,134 203,079 Amortization of prepaid policy acquisition costs 32,508 31,525 97,804 97,023 Operating and other 6,714 8,082 21,789 23,336 ------- ------- ------- ------- Total expenses 101,153 104,961 314,727 323,438 ------- ------- ------- ------- Income before taxes 20,610 11,375 46,119 23,730 Income tax provision (6,421) (2,568) (13,288) (4,971) ------- ------- ------- ------- Net income $ 14,189 $ 8,807 $ 32,831 $ 18,759 ======= ======= ======= ======= PER SHARE OF COMMON STOCK: Net income $ 1.39 $ 0.83 $ 3.20 $ 1.76 ======= ======= ======= ======= Average shares outstanding 10,204 10,604 10,268 10,666 ======= ======= ======= ======= Cash dividends per share $ 0.27 $ 0.27 $ 0.81 $ 0.81 ======= ======= ======= =======
See accompanying condensed notes to consolidated financial statements. -2- 5 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS (CONTINUED) FOREMOST CORPORATION OF AMERICA CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Nine Months Ended Sept. 30, 1995 1994 --------- --------- (In thousands) Net cash from operating activities $ 64,812 $ 7,190 -------- -------- Investing Activities: Purchases of securities and loans made (147,348) (66,092) Purchases of real estate and equipment (169) (202) Sales of securities 104,058 34,858 Maturities of securities and receipts from repayments of loans 29,743 47,822 Increase in short-term investments (29,274) (2,738) Sales of real estate and equipment 994 - -------- -------- Net cash from (for) investing activities (41,996) 13,648 -------- -------- Financing Activities: Net change in short-term debt (2,000) 5,000 Repayments of long-term debt (7,601) (7,451) Dividends paid (8,330) (8,642) Purchase of treasury stock (7,547) (8,713) Exercise of stock options 68 - -------- -------- Net cash for financing activities (25,410) (19,806) -------- -------- Cash increase (decrease) (2,594) 1,032 Cash at beginning of year 4,195 5,220 -------- -------- Cash at end of period $ 1,601 $ 6,252 ======== ========
See accompanying condensed notes to consolidated financial statements. -3- 7 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS (CONTINUED) FOREMOST CORPORATION OF AMERICA CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. The notes to the consolidated financial statements are condensed and do not contain all information required by generally accepted accounting principles to be included in a full set of financial statements. 2. All information is unaudited; however, in the opinion of management, all adjustments (consisting only of normal recurring accruals) have been made which are necessary to present fairly the results shown. All significant intercompany balances and transactions have been eliminated in consolidation. Intrim results are not necessarily indicative of the results to be expected in any other period. -4- 8 PART I. FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS FOREMOST CORPORATION OF AMERICA OPERATING RESULTS AND FINANCIAL POSITION Operating Results The third quarter results produced a record operating income per share for Foremost Corporation of America. Net income for the third quarter of 1995 was $1.39 per share, with no realized gains or losses per share, compared to $.83 per share in 1994, including $.02 per share in realized losses. Net income per share for the first nine months of 1995 was $3.20 compared to $1.76 per share in 1994. Realized losses of $.01 per share for 1995 and realized gains of $.03 per share for 1994 are included in the nine months net income figures. The third quarter results reflect the Company's success in reducing its cost to produce business, obtaining rate adequacy and practicing disciplined underwriting. The third quarter combined loss and expense ratio for the property and casualty group was 87.2% compared with 94.5% for the third quarter last year. The nine month combined ratio was 91.4% compared to 98.2% in the prior year. Lower catastrophe losses and reduced underwriting expenses attributed to the improvement in the combined ratio. Catastrophe losses were 6.4 points lower in the third quarter of 1995 compared to last year and 3.8 points lower for the nine months of 1995 compared to 1994. Mobile home written premium was up 1% for the third quarter and 4.7% for the nine months over last year's results. The growth in written premium continues to be negatively impacted by the Company's catastrophe exposure management. Written premium by product line is as follows:
% % 3rd Quarter Inc Nine Months Inc 1995 1994 (Dec) 1995 1994 (Dec) -------- -------- ----- -------- -------- ----- (In thousands) (In thousands) Mobile Home. $ 93,483 $ 92,600 1.0 $275,132 $262,658 4.7 RV.......... 11,798 11,980 (1.5) 41,348 41,645 (0.7) ------- ------- ---- ------- ------- ---- Subtotal.. 105,281 104,580 0.7 316,480 304,303 4.0 Automobile.. 2,930 2,935 (0.2) 9,064 10,922 (17.0) Homeowners.. 1,765 1,370 28.8 5,453 4,430 23.1 Other....... 2,110 1,784 18.3 4,840 4,231 14.4 ------- ------- ---- ------- ------- ---- Total $112,086 $110,669 1.3 $335,837 $323,886 3.7 ======= ======= ==== ======= ======= ====
-5- 9 The combined loss and expense ratio for the Company's life insurance operation was 94.2% for the third quarter of 1995 compared to 93.8% for the third quarter last year. For the nine months of 1995, the combined ratio was 94.5% compared to 94.1% last year. Net written premium was $5.2 million for the third quarter and $16.6 million for the nine months of 1995 compared to $5.4 million and $16.3 million for 1994, respectively. After-tax investment income for the third quarter of 1995 increased 8.7% from the third quarter last year and increased 7.8% for the first nine months of 1995 compared to the same period in 1994. In early October, Hurricane Opal struck the Florida Panhandle and swept through Alabama, Georgia and Tennessee. The Company anticipates approximately $9 million in losses from this hurricane, or $5.9 million after tax, and will impact fourth quarter results by approximately $.57 per share. Actual fourth quarter results will change should further catastrophes strike during the remainder of the period. In the fourth quarter of 1994, total catastrophe losses were $13.7 million, or $8.9 million after tax, resulting in an impact of $.85 per share. Financial Position The principal sources of cash for the first nine months of 1995 were $105.1 million from the sales of securities and real estate, $64.8 million provided from operations, and $29.7 million from maturities of securities and loan repayments. During the first nine months of 1995 the Company used $176.8 million for the purchase of securities and real estate, repaid $9.6 million of debt, paid $8.3 million in dividends to shareholders, and purchased $7.5 million of treasury stock. The Company had $42.7 million in cash and other liquid assets at September 30, 1995. Total invested assets valued on a cost basis increased 9%, or $41.7 million during the first nine months of 1995 compared to year end 1994. Market values of securities available for sale increased $14.1 million net of tax in the first nine months of 1995. Total bank borrowings were $94.9 million at September 30, 1995 of which $2 million was current. Interest paid by the Company was $6.6 million for the the first nine months of 1995 compared to $6.3 million for the same period last year. Since the February 1994 announcement of the Company's plan to buy back a portion of its outstanding common stock, 552,367 shares have been purchased at an average price of $34.17 per share. During the third quarter of 1995, 32,028 of these shares were purchased at an average price of $39.50 per share. -6- 10 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8K (b) Reports on 8-K - There were no reports filed on Form 8-K for the quarter ended September 30, 1995. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. FOREMOST CORPORATION OF AMERICA (Registrant) Date: November 3, 1995 Paul D. Yared ------------------------------ Paul D. Yared Its: Senior Vice President, Secretary and General Counsel Date: November 3, 1995 Kenneth C. Haines ------------------------------ Kenneth C. Haines Its: Controller -7- EX-27 2
7 0000018508 FOREMOST CORPORATION 1,000 9-MOS DEC-31-1995 JAN-01-1995 SEP-30-1995 383,520 8,040 8,137 55,903 12,753 20,301 521,589 1,601 26,460 77,573 768,110 97,073 268,268 0 0 97,805 14,000 0 0 227,088 768,110 336,637 22,142 (105) 2,172 195,134 97,804 0 46,119 13,288 32,831 0 0 0 32,831 3.20 3.20 95,496 182,740 (74) 132,851 46,838 97,073 0
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