REPORT ON EXAMINATION

OF

UNITED FARM FAMILY INSURANCE COMPANY

AS OF

DECEMBER 31, 2015

DATE OF REPORT MAY 23, 2017

EXAMINER LAMIN JAMMEH

TABLE OF CONTENTS

ITEM NO. PAGE NO.

1 Scope of Examination 2

2. Description of Company 4

A. Management 4

B. Territory and plan of operation 5

C. Reinsurance 7

D. Holding company system 11

E. Significant operating ratios 14

F. Accounts and records 15

3. Financial Statements 16

A. Balance sheet 16

B. Statement of income 18

C. Capital and surplus accounts 19

4. Losses and loss adjustment expenses 19

5. Compliance with prior report on examination 20

6. Summary of comments and recommendations 20

(212) 480-6400 | 1 State Street, New York, NY 10004 | WWW.DFS.NY.GOV

May 23, 2017

Honorable Maria T. Vullo

Superintendent

New York State Department of Financial Services

Albany, New York 12257

Madam:

Pursuant to the requirements of the New York Insurance Law, and in compliance with the

instructions contained in Appointment Number 31397 dated January 07, 2016, attached hereto, I have

made an examination into the condition and affairs of United Farm Family Insurance Company as of

December 31, 2015, and submit the following report thereon.

Wherever the designation the Company or UFFIC appears herein without qualification, it

should be understood to indicate United Farm Family Insurance Company.

Wherever the term Department appears herein without qualification, it should be understood

to mean the New York State Department of Financial Services.

The examination was conducted at the Companys home office located at 344 Route 9W,

Glenmont, NY 12077.

Maria T. Vullo Superintendent

Andrew M. Cuomo Governor

2

1. SCOPE OF EXAMINATION

The Department has performed a coordinated group examination of the Company, a multi-state

insurer. The previous examination was conducted as of December 31, 2011. This examination covered

the four year period from January 1, 2012 through December 31, 2015. Transactions occurring

subsequent to this period were reviewed where deemed appropriate by the examiner.

The examination was conducted in conjunction with the state of Texas, which was the

coordinating state of the American National Insurance Group. The examination was performed

concurrently with the examinations of the following insurers:

Company State of Domicile

American National Insurance Company (ANICO) Texas

American National County Mutual Insurance Company (ANCMIC) Texas

American National General Insurance Company (ANGIC) Missouri

American National Life Insurance Company of New York (ANICONY) New York

American National Life Insurance Company of Texas (ANTEX) Texas

American National Lloyds Insurance Company (ANLIC) Texas

American National Property And Casualty Company (ANPAC) Missouri

ANPAC Louisiana Insurance Company (ANPAC LA) Louisiana

Farm Family Casualty Insurance Company (FFCIC) New York

Farm Family Life Insurance Company (FFLIC) New York

Garden State Life Insurance Company (GSLIC) Texas

Pacific Property And Casualty Company (Pacific) California

Standard Life and Accident Insurance Company (SLAICO) Texas

Other states participating in this examination were California, Louisiana, and Missouri.

This examination was conducted in accordance with the National Association of Insurance

Commissioners (NAIC) Financial Condition Examiners Handbook (Handbook), which requires

that we plan and perform the examination to evaluate the financial condition and identify prospective

risks of the Company by obtaining information about the Company including corporate governance,

identifying and assessing inherent risks within the Company and evaluating system controls and

3

procedures used to mitigate those risks. This examination also includes assessing the principles used

and significant estimates made by management, as well as evaluating the overall financial statement

presentation, managements compliance with Statutory Accounting Principles and annual statement

instructions when applicable to domestic state regulations.

All financially significant accounts and activities of the Company were considered in

accordance with the risk-focused examination process. This examination also included a review and

evaluation of the Companys own control environment assessment and an evaluation based upon the

Companys Sarbanes Oxley documentation and testing. The examiners also relied upon audit work

performed by the Companys independent public accountants where deemed appropriate.

This examination report includes a summary of significant findings for the following items as

called for in the Handbook:

Company history

Management and control

Territory and plan of operation

Holding company description

Reinsurance

Loss review and analysis

Financial statement presentation

Significant subsequent events

Summary of recommendations

A review was also made to ascertain what action was taken by the Company with regard to

comments and recommendations contained in the prior report on examination.

This report on examination is confined to financial statements and comments on those matters

that involve departures from laws, regulations or rules, or that are deemed to require explanation or

description.

4

2. DESCRIPTION OF COMPANY

The Company was incorporated under the laws of the State of New York on February 25, 1988,

became licensed and commenced business on January 1, 1989.

Prior to December 2004, Farm Family Life Insurance Company (FFLIC) owned 100% of the

outstanding shares of stock of the Company. On December 1, 2004, FFLIC transferred all of its

outstanding shares of UFFIC to Farm Family Holdings, Inc. (FFH).

On August 23, 2007, American National Property and Casualty Holding Company LLC merged

into Farm Family Holdings, Inc., with Farm Family Holdings, Inc. being the surviving entity. At the

same time Farm Family Holdings, Inc. changed its name to American National Property & Casualty

Holdings, Inc. (ANPAC Holdings).

Capital paid in is $3,500,000 consisting of 10,000 shares of $350 par value per share common

stock. Gross paid in and contributed surplus is $4,700,000. Gross paid in and contributed surplus and

capital paid in did not change during the examination period.

A. Management

Pursuant to the Companys charter and by-laws, management of the Company is vested in a

board of directors consisting of not less than seven or more than fifteen members. The board met at

least four times during each calendar year for the period under examination. At December 31, 2015,

the board of directors was comprised of the following eleven members:

Name and Residence

Principal Business Affiliation

John J. Dunn, Jr.

League City, TX

Executive Vice President, Chief Financial Officer and

Treasurer,

ANICO

Irwin M. Herz, Jr.

Galveston, TX

Partner/Attorney,

Greer, Herz & Adams, LLP

A. Ingrid Moody

Kemah, TX

Volunteer worker and former farmer

Edward J. Muhl

Malvern, PA

Retired Partner,

PricewaterhouseCoopers, LLP

5

Name and Residence

Principal Business Affiliation

Gregory V. Ostergren

Springfield, MO

Chairman, President and Chief Executive Officer,

ANPAC

Elvin J. Pederson

Galveston, TX

Managing Director,

CitareTx Management, LLC

James E. Pozzi

Galveston, TX

President and Chief Executive Officer,

ANICO

Victoria M. Stanton

Glenmont, NY

Executive Vice President, General Counsel and

Secretary,

Farm Family Companies

Timothy A. Walsh

Friendswood, TX

President and Chief Executive Officer,

Farm Family Companies

Ronald J. Welch

League City, TX

Retired Senior Executive Vice President, Corporate

Risk Officer and Chief Actuary,

ANICO

James D. Yarbrough

Galveston, TX

Mayor

Galveston, TX

A review of the minutes of the board of directors meetings held during the examination period

indicated that the meetings were generally well attended and each board member had an acceptable

record of attendance.

As of December 31, 2015, the principal officers of the Company were as follows:

Name Title

Timothy A. Walsh President and Chief Executive Officer

Victoria M. Stanton Executive Vice President, General Counsel and

Secretary

Michele M. Bartkowski Senior Vice President, Chief Financial Officer and

Treasurer

B. Territory and Plan of Operation

As of December 31, 2015, the Company was licensed to write business in seven states:

Delaware, Maryland, New Jersey, New York, Pennsylvania, Vermont and West Virginia.

6

As of the examination date, the Company was authorized to transact the kinds of insurance as

defined in the following numbered paragraphs of Section 1113(a) of the New York Insurance Law:

Paragraph Line of Business

4 Fire

5