UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-K


                 ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 1996
                           Commission File No. 1-11941

                           FARM FAMILY HOLDINGS, INC.
             (Exact name of registrant as specified in its charter)

                           Delaware IRS No. 14-1789227

                     344 Route 9W, Glenmont, New York 12077
                  Registrant's telephone number: (518) 431-5000

                 Securities registered pursuant to Section 12(b)
                                  of the Act:

                                                  Name of each exchange
          Title of each class                      on which registered
          -------------------                      -------------------
          Common Stock, par value $0.01           New York Stock Exchange
          per share (the "Common Stock")

        Securities registered pursuant to Section 12(g) of the Act: None

     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

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.

On  February  24,  1997,   Registrant  had  5,253,813  shares  of  Common  Stock
outstanding. Of these, 5,242,002 shares, having an aggregate market value (based
on the  closing  price of these  shares as  reported  in a summary of  composite
transactions  in the Wall Street Journal for stocks listed on the New York Stock
Exchange  February  24,  1997)  of  approximately  $117,945,000,  were  owned by
stockholders other than directors and executive officers of the Registrant.



<PAGE>


                       Documents Incorporated By Reference

     Portions of the  following  documents  are  incorporated  by  reference  as
follows:

         Documents Incorporated                                Part of Form 10K


         Farm Family Holdings, Inc.                                I and II
         Annual Report to Stockholders
         for the fiscal year ended
         December 31, 1996
         (the "Annual Report")

         Farm Family Holdings, Inc.                                  III
         Proxy Statement for the
         1997 Annual Meeting of
         Stockholders
         (the "Proxy Statement")









<PAGE>


                                     PART I


ITEM 1.  BUSINESS

Overview

     The following  discussion  includes the operations of Farm Family Holdings,
Inc.  ("Farm  Family  Holdings")  and its wholly owned  subsidiary,  Farm Family
Casualty  Insurance  Company ("Farm Family Casualty") and Farm Family Casualty's
wholly owned subsidiary, Rural Agency and Brokerage, Inc. (collectively referred
to as the  "Company").  The  operations of the Company are also closely  related
with those of its affiliates,  Farm Family Life Insurance  Company ("Farm Family
Life")and  Farm  Family  Life's  wholly  owned  subsidiary,  United  Farm Family
Insurance Company (United Farm Family).

     On July 26,  1996,  Farm Family  Mutual  Insurance  Company  ("Farm  Family
Mutual")  converted from a mutual property and casualty  insurance  company to a
stockholder  owned property and casualty  insurance  company and became a wholly
owned  subsidiary of Farm Family Holdings  pursuant to a plan of  Reorganization
and Conversion  (the "Plan").  In addition,  Farm Family Mutual was renamed Farm
Family Casualty Insurance Company. As part of the Plan, Farm Family Holdings was
formed and the Farm Family Mutual  policyholders  received  2,237,000  shares of
Farm Family Holding's common stock and $11,735,000 in cash in exchange for their
membership interest in Farm Family Mutual.

     On July 23, 1996,  Farm Family  Holdings made an initial public offering of
its common stock at a price of $16.00 per share.  Farm Family Holdings  received
net proceeds of  $41,453,000  for  2,786,000  shares sold in the initial  public
offering.  In addition,  Farm Family  Holdings  received  $3,427,000 for 217,000
shares  purchased  by  policyholders  of Farm  Family  Mutual in a  subscription
offering. In addition,  pursuant to the Plan, holders of Farm Family Mutual debt
could elect to exchange  their debt  instruments  for shares of common  stock or
cash.  As a result,  there were  17,000  common  shares and  $1,107,000  in cash
exchanged for debt with an outstanding principal amount of $1,371,000.

     Farm Family  Casualty is a  specialized  property and  casualty  insurer of
farms,  other generally  related  businesses and residents of rural and suburban
communities  principally in the Northeastern United States. Farm Family Casualty
provides property and casualty insurance  coverages to members of the state Farm
Bureau organizations in New York, New Jersey, Delaware, West Virginia and all of
the New England states.  Membership in the state Farm Bureau  organizations is a
prerequisite  for  voluntary  insurance  coverage  (except for  employees of the
Company and its affiliates).

     Farm Family Casualty  markets its insurance  products through more than 200
Farm Family agents and field  managers who are located in the rural and suburban
communities it serves.  These agents generally sell insurance  products only for
Farm  Family  Casualty  and Farm Family  Life.  The  Company  believes  that the
distinctive  focus of the  Company  and its  agents on meeting  the  specialized
insurance needs of rural communities has provided the Company with the knowledge
and experience to adapt to changes in the demographics of its markets and in the
nature of agricultural related businesses. In addition to insuring those engaged
in agricultural pursuits such as dairy, vegetable and fruit farming, the Company
insures  a wide  range of  other  businesses  related  to  agriculture,  such as
distributors of agricultural  products,  horse breeding and training facilities,
landscapers, nurseries, florists, wineries and growers of specialty products. In
recent  years,  the  Company has also  introduced  businessowners  products  for
certain retail and contractor  businesses and for owners of apartment and office
buildings, as well as a homeowners product.

     The Company's  principal  strategy is to maintain its focus on meeting many
of  the  specialized   insurance  needs  of  Northeastern   rural  and  suburban
communities.  The Company's  flagship  product,  the Special Farm Package,  is a
flexible  policy  that  can be  adapted  to  meet  the  needs  of a  variety  of
agricultural  and  agricultural   related   businesses.   As  evidenced  by  its
introduction  of  businessowners  products in 1990,  the  Company  also seeks to
leverage its local reputation,  agency force, knowledge and experience to expand
its product  offerings to a wider variety of customers in the rural and suburban
communities  in which it  currently  operates.  In  addition,  the Company  will
continue to seek to  facilitate  and  expedite  sales,  underwriting  and policy
administration  functions  through the expanded use of local service centers and
computer networking communications with the home office.



<PAGE>


Related  Party Transactions

     The  operations  of the  Company  are  closely  related  with  those of its
affiliates,  Farm Family Life and Farm Family  Life's  wholly owned  subsidiary,
United Farm Family.  The  affiliated  companies  operate  under similar Board of
Directors  and have  similar  senior  management.  In addition,  the  affiliated
companies  share home office  facilities,  data  processing  equipment,  certain
personnel and other operational expenses.

     The Company  and Farm  Family  Life are parties to an Amended and  Restated
Expense  Sharing  Agreement,  effective  as of February  14, 1996 (the  "Expense
Sharing Agreement"),  pursuant to which shared expenses for goods,  services and
facilities  are allocated  between the Company and Farm Family Life. In 1995 and
1994, the parties shared  expenses under a similar  expense  sharing  agreement.
Under the Expense Sharing  Agreement,  expenses are allocated in accordance with
applicable provisions of the New York Insurance Law and regulations  promulgated
thereunder.  Direct  expenses  are  charged as  incurred to the Company and Farm
Family Life, as  applicable,  at cost.  For each of the years ended December 31,
1996, 1995, and 1994, 65%, 61%, and 60%,  respectively,  of aggregate  operating
expenses totaling $30.7 million, $26.7 million and $23.8 million,  respectively,
were allocated to the Company, under a similar expense sharing arrangement.

     The Company and Farm  Family  Life are parties to a Lease  Agreement  dated
July 1, 1988, as amended by Amendment to Lease Agreement,  effective  January 1,
1994,  as so  amended,  (the  "Lease  Agreement")  pursuant to which the Company
leases home office  space in Glenmont,  New York from Farm Family  Life.  Annual
rent  under  the Lease  Agreement  was  approximately  $712,000,  $687,000,  and
$629,000  for each of the  years  ended  December  31,  1996,  1995,  and  1994,
respectively.

     The Company's  reinsurance  program  includes  reinsurance  agreements with
United Farm Family.  In  accordance  with the  provisions  of these  reinsurance
agreements,  premiums earned, losses and expenses ceded by the Company to United
Farm Family were as follows:

<TABLE>
<CAPTION>

         ($ in thousands)         1996             1995             1994
                                  ----             ----             ----
         <S>                    <C>              <C>              <C>
         Premiums Earned        $9,334           $9,238           $9,750
         Losses                  7,049            6,447            7,158
         Expenses                  446              199              213
                                   ---              ---              ---
         Net                    $1,839           $2,593           $2,379
                                ======           ======           ======
</TABLE>


     The Company and United Farm Family are parties to a service agreement dated
July 25, 1988 (the "Service  Agreement")  pursuant to which the Company provides
United Farm Family with certain  administrative  and special services  necessary
for  its  operations,   including,   but  not  limited  to,  claims  management,
underwriting,   accounting,   tax  and  auditing,   investment  management,  and
functional  support  services.  In addition,  the Company  provides  United Farm
Family with  certain  personnel,  property,  equipment  and  facilities  for its
operations.  For each of the years ended  December  31,  1996,  1995,  and 1994,
United Farm Family incurred  approximately $0.7 million,  $0.8 million, and $0.5
million,  respectively,  in direct and allocated expenses and overhead under the
Service Agreement.



<PAGE>


Products

     The Company  offers a variety of property and casualty  insurance  products
primarily  designed  to meet the  unique  insurance  needs  of its  agricultural
clients and the general insurance needs of the rural and suburban communities in
which it does business.  Many  policyholders  have more than one policy with the
Company,  most  commonly,  a property  policy (such as a Special Farm Package or
homeowners policy) and an automobile policy.

The  following  table sets forth by product the direct  premiums  written by the
Company for the periods indicated:

<TABLE>
<CAPTION>

                                                           Year Ended December 31,
                                                         % of                 % of                % of
                                             1996       Total     1995       Total      1994     Total
                                             -----      -----     -----      -----      ----     -----
         ($ in millions)
<S>                                          <C>        <C>       <C>        <C>       <C>       <C>
         Personal Automobile                 $50.0      34.2%     $46.5      34.2%     $40.3     33.0%
         Special Farm Package                 35.9      24.5%      34.0      25.0%      32.7     26.8%
         Commercial Automobile                24.1      16.5%      22.7      16.7%      20.2     16.6%
         Workers' Compensation                 9.7       6.5%       9.1       6.7%       8.1      6.6%
         Businessowners                        7.6       5.2%       6.6       4.9%       5.3      4.3%
         Homeowners                            6.1       4.2%       5.2       3.8%       4.1      3.4%
         Umbrella                              4.6       3.1%       4.4       3.2%       4.2      3.4%
         Commercial General Liability          3.9       2.7%       3.4       2.5%       3.0      2.5%
         Special Home Package                  2.9       2.0%       2.8       2.1%       2.8      2.3%
         Fire, Allied, Inland Marine           1.2       0.8%       1.0       0.7%       1.0      0.8%
         Products Liability                    0.3       0.2%       0.2       0.1%       0.2      0.2%
         Pollution                             0.1       0.1%       0.1       0.1%       0.1      0.1%
                                          -------------------------------------------------------------
         Total                              $146.4     100.0%    $136.0     100.0%    $122.0    100.0%
                                          -------------------------------------------------------------

</TABLE>

     Personal Automobile.  Personal automobile is the Company's largest product.
The Company's  industry standard policies are generally  marketed in conjunction
with its other products,  such as the Special Farm Package,  the  businessowners
policy or the homeowners policy.

     Special Farm  Package.  The Special Farm  Package,  developed in 1980, is a
flexible, multi-line package of insurance coverages which the Company regards as
its "flagship" product.  As a result of its flexible features,  this product can
be  adapted  to  meet  the  needs  of a  variety  of  agricultural  and  related
businesses. The Special Farm Package policy combines personal, farm and business
property and liability  insurance for the farm owner, as well as owners of other
agricultural related businesses, such as horse breeding and training facilities,
nurseries, wineries and greenhouses.

     Commercial Automobile. Commercial automobile is the Company's third largest
product.  The Company's  industry  standard  policies are generally  marketed in
conjunction with the Special Farm Package or the businessowners policy.

     Workers'  Compensation.  The Company  generally  does not seek to market or
write its  workers'  compensation  policy apart from a Special Farm Package or a
businessowners policy.

     Businessowners.  The Company introduced a businessowners  product (based on
the industry standard policy form) in 1990 to meet the needs of small businesses
within its rural and suburban markets.  This product is marketed to two distinct
groups:  (i) "mercantile  businessowners"  with property based risks,  including
apartment  and  office  building   owners  and  small  to  medium-sized   retail
businesses,  such as  florists  and farm  markets  and (ii)  small,  established
artisan contractors principally serving the agricultural community.

     Special Home Package and  Homeowners  Policy.  The Special Home Package was
developed in 1980 as a companion  product for the Special  Farm Package  policy.
The Company's  homeowners policy,  introduced in 1989, is a standard  homeowners
multi-peril  policy  for the rural and  suburban  homeowner.  Increasingly,  the
homeowners policy is being sold to provide coverage for the insured's  principal
residence,  while the  Special  Home  Package  is used by the  Company to insure
rural-based,  tenant  occupied  residences.  Like the Special Farm Package,  the
Special Home Package  combines  personal and  commercial  property and liability
coverages,  and contains  flexible features which also allow it to be adapted to
meet the needs of a variety of customers.

     Umbrella Liability.  The Company writes commercial and personal line excess
liability  policies  covering  business,  farm and personal  liabilities  of its
policyholders   in  excess  of  amounts  covered  under  Special  Farm  Package,
homeowners,  businessowners and automobile policies. Such policies are available
with limits of $1.0 million to $5.0 million. The Company does not generally seek
to market its excess  liability  policies  unless it also  writes an  underlying
liability policy.

     Commercial  General  Liability.  The Company  writes an  industry  standard
commercial  general  liability policy which is generally  marketed in connection
with the  Special  Farm  Package or, as an  accommodation  to  policyholders  in
connection  with  the  commercial  automobile  policy.  The  commercial  general
liability  policy is generally not written apart from these other policies.  The
policy is usually written by the Company for unique business situations, such as
horse breeding and training  facilities and certain  landscaper risks,  which do
not meet the criteria for liability  coverage under a businessowners  or Special
Farm Package policy. The policy insures businesses against third party liability
from accidents occurring on their premises or arising out of their operations or
products.  Most of the Company's  products  liability line is written as part of
the commercial general liability product.

     Pollution.  The  Company  writes  a small  number  of  pollution  liability
policies  covering  specified farm risks on a  "claims-made"  basis.  The policy
insures against losses  incurred from third party  liability,  including  bodily
injury and property damages, for pollution incidents,  such as those caused from
pesticides,  fertilizers,  herbicides and manure piles.  An "extended  reporting
period" option is available under certain  circumstances  which allows for claim
reporting after the policy expiration.  As of December 31, 1996, The Company had
approximately 260 pollution policies in force.


Marketing

     The following  table sets forth the Company's  direct  written  premiums by
state for the periods indicated:
<TABLE>
<CAPTION>

                                                               Year Ended December 31,
                                                               -----------------------
         ($ in millions)                                 % of                 % of               % of
                                              1996      Total      1995      Total    1994      Total
                                              -----     -----      -----     -----    -----     -----
<S>                                           <C>       <C>        <C>       <C>      <C>       <C>
         New York                             $56.5     38.6%      $53.2     39.1%    $47.0     38.5%
         New Jersey                            33.1     22.6%       28.3     20.8%     23.9     19.6%
         Massachusetts                         10.3      7.0%       10.5      7.7%     10.1      8.3%
         Connecticut                            9.8      6.7%        9.1      6.7%      8.2      6.7%
         West Virginia                          8.1      5.5%        7.8      5.7%      7.3      6.0%
         Maine                                  6.8      4.7%        6.9      5.1%      6.7      5.5%
         New Hampshire                          6.7      4.6%        6.8      5.0%      6.7      5.5%
         Vermont                                5.7      3.9%        5.3      3.9%      5.0      4.1%
         Delaware                               5.0      3.4%        4.4      3.3%      4.1      3.4%
         Rhode Island                           4.4      3.0%        3.7      2.7%      3.0      2.4%
                                           --------- --------- ---------- --------- -------- ---------
                                             $146.4    100.0%     $136.0    100.0%   $122.0    100.0%
                                           --------- --------- ---------- --------- -------- ---------

</TABLE>

     As of December  31,  1996,  the Company  marketed its property and casualty
insurance  products in its ten state region through  approximately 189 full-time
agents, 15 field managers and 10 associate field managers. Many of the Company's
agents are established  residents of the rural and suburban communities in which
they operate and often have specific prior  experience in  agricultural  related
businesses.  The Company's  agents  generally market and write the full range of
its  products.  In addition to  marketing  the  Company's  property and casualty
insurance  products,  the agency force also markets life insurance  products for
Farm Family Life. The Company's  policies are marketed  exclusively  through its
agency force. In 1996, Agent compensation was comprised entirely of commissions,
office expense allowances and incentive bonuses.

     The  Company  emphasizes  personal  contact  between  its  agents  and  the
policyholders.  The Company  believes  that its name  recognition,  policyholder
loyalty and policyholder  satisfaction  with agent and claims  relationships are
the principal  sources of new customer  referrals,  cross-selling  of additional
insurance products and policyholder retention. In addition, the Company believes
that its  relationship  with the Farm Bureaus in its target markets promotes the
Company's name recognition and new customer referrals among Farm Bureau members.
See " Relationship with Farm Bureaus."

Relationship with Farm Bureaus

     The Company was organized through the efforts of certain Farm Bureaus,  and
its relationship with the Farm Bureaus in its ten state region continues to be a
fundamental  aspect of its business.  These Farm Bureaus are affiliated with the
American Farm Bureau Federation,  the nation's largest general farm organization
with over four million members,  which has  traditionally  sought to advance the
interests of the  agricultural  community.  The Company was  established in 1955
through the efforts of certain  Farm  Bureaus to provide  property  and casualty
insurance for Farm Bureau  members in the  Northeast.  Substantially  all of the
directors of the Company are associated  with Farm Bureau  organizations  in the
Northeast.  The Company has the  exclusive  endorsement  of the Farm  Bureaus to
market property and casualty insurance in the ten states in which it operates.

     The  endorsement of the Farm Bureaus  generally means that the Farm Bureaus
provide  the  Company  with the  right to  utilize  their  membership  lists and
authorize  the use of  their  name and  service  marks  in  connection  with the
marketing of the Company's  products.  In exchange for these rights, the Company
pays to each of the Farm Bureaus an annual fee of $7.50 per Farm Bureau  member,
pursuant to  agreements  with each Farm Bureau (the  "Membership  List  Purchase
Agreements"). The current term of each Membership List Purchase Agreement is six
years,  commencing on January 1, 1996.  Pursuant to the Membership List Purchase
Agreements,  the Farm Bureaus may not endorse the products of other property and
casualty  insurers  within the Company's ten state region.  Farm Family Life has
entered into similar  membership list purchase  agreements with each of the Farm
Bureaus.

Underwriting

     The  Company  seeks to write its  commercial  and  personal  lines risks by
evaluating  loss experience and  underwriting  profitability  with  consistently
applied  standards.  The  Company  maintains  information  on all aspects of its
business which is routinely  reviewed by the Company's  staff of underwriters in
relationship to product line profitability. The Company's underwriters generally
specialize by agency territory. Specific information is monitored with regard to
individual  insureds  which is used to assist the  Company  in making  decisions
about policy renewals or modifications.

     The Company  concentrates on its established  major product lines (personal
and  commercial  auto,  Special  Farm  Package,  businessowners  and  homeowners
policies).  It generally  does not pursue the  development of products with risk
profiles with which it is not familiar, nor does it, typically,  actively market
its automobile,  workers'  compensation or general liability  policies except to
policyholders who may also purchase its Special Farm Package,  businessowners or
homeowners  products.  The Company  believes  its  extensive  knowledge of local
markets in its region is a key element in its underwriting process.

Claims

     Claims on insurance  policies written are usually  investigated and settled
by one of the Company's staff claims  adjusters,  located in nine field offices.
The Company's claims philosophy emphasizes timely investigation,  evaluation and
settlement of claims,  while maintaining adequate reserves and controlling claim
adjustment expenses.  The claims philosophy is designed to support the Company's
marketing efforts by providing agents and policyholders with prompt service.

     Claims  settlement  authority  levels are established for each adjuster and
claims manager based upon the employee's ability and level of experience. Claims
are  reported  directly to the claims  department,  located at a field office or
through the central claim reporting unit at the home office.  Specialized  units
exist at the home  office for  no-fault  automobile  and  workers'  compensation
claims, as well as subrogation and large, litigated or certain other claims. The
Company  also has on  staff a  special  investigator  to  investigate  suspected
insurance  fraud,  including  arson.  The claims  department is responsible  for
reviewing all claims,  obtaining  necessary  documentation,  estimating the loss
reserves and resolving the claims.

Reinsurance

Reinsurance Ceded

     The  Company's   reinsurance   arrangements   are  generally   placed  with
non-affiliated  reinsurers through  reinsurance  brokers.  In addition,  certain
reinsurance  coverages  are also placed  directly  with United Farm Family.  See
"Related Party  Transactions." The largest net per risk exposure retained by the
Company on any one  individual  property or casualty risk is $100,000.  Property
and casualty  risks in excess of $100,000 are covered on an excess of loss basis
up to  $300,000  per risk by United Farm  Family.  Per risk  property  losses in
excess of $300,000  but less than $4 million are  reinsured on an excess of loss
basis by unaffiliated reinsurers.  Facultative coverage is available for certain
property  risks in excess of $4 million  per risk.  Casualty  losses per risk in
excess of  $300,000  but less than $1 million  (which is  generally  the maximum
limit of liability written by the Company's casualty insurance  policies,  other
than workers'  compensation and umbrella  liability  policies) are covered on an
excess of loss basis by  unaffiliated  reinsurers.  Clash  coverage  provided by
unaffiliated reinsurers covers casualty losses, including workers' compensation,
in  excess  of $1  million  but less  than $5  million.  In  addition,  workers'
compensation claims, on a per occurrence basis with a $600,000 per person limit,
in excess of $3 million but less than $10 million are separately reinsured on an
excess of loss basis by an unaffiliated reinsurer.  The Company reinsures 95% of
its  umbrella  liability  losses  (including a 5% quota share  participation  by
United Farm Family) under $1 million per loss on a quota share basis and 100% of
umbrella  liability  losses in excess of $1 million up to $5 million per loss by
unaffiliated reinsurers.

     The Company 's property  catastrophe  reinsurance  provides for recovery of
95% of the losses over $6 million up to a maximum of $51 million per  occurrence
and  approximately  79% of the  losses  between $3  million  and $6 million  per
occurrence.  The Company  retains the first $3 million of losses per  occurrence
under its property catastrophe  program.  United Farm Family is a participant in
Farm Family's property catastrophe  reinsurance program and assumes 2% of losses
per  occurrence  between $11 million  and $51 million and  approximately  16% of
losses between $3 million and $6 million.

     The insolvency or inability of any reinsurer to meet its obligations to the
Company  could have a material  adverse  effect on the results of  operations or
financial  condition of the Company.  As of December 31, 1996,  more than 95% of
the Company's  reinsurance  program was provided by reinsurers  which were rated
"A-" (Excellent) or above by A.M. Best Company, Inc. ("A.M. Best").

     In June  1995,  the  Company  terminated  its excess  casualty  reinsurance
agreement with American Agricultural  Insurance Company to reduce administrative
and financial costs associated with the reinsurance arrangement. The reinsurance
arrangement  was  commuted for  casualty  and  workers'  compensation  risks for
accident years 1980 to 1988 and prior to 1975. As a result of the termination of
this arrangement, the Company does not have reinsurance in effect for any future
development on casualty and workers' compensation losses for accident years 1980
to 1988 and prior to 1975. The Company  received  approximately  $1.8 million in
cash  as a  result  of the  termination  of  this  arrangement  and  established
additional net loss reserves of approximately  $1.7 million for any casualty and
worker's  compensation losses for accident years 1980 to 1988 and prior to 1975.
Separate reinsurance  agreements with American  Agricultural  Insurance Company,
however,  continue to remain in effect for property and umbrella risks for those
accident years.

     Reinsurance Assumed

     The Company assumes  voluntary  reinsurance  covering  primarily  property,
property  catastrophe and casualty risks located  outside of the Northeast.  The
Company   believes  that,   among  other  benefits,   its  assumed   reinsurance
arrangements  balance to a limited  extent the geographic  concentration  of its
risks in the  Northeast.  The Company  also assumes an  insignificant  amount of
reinsurance  covering  substandard  automobile policies from United Farm Family.
For the year ended  December  31,  1996,  the  Company  earned  premiums of $1.6
million under various voluntary  proportional and  non-proportional  reinsurance
agreements.  In  1996,  the  Company  generally  retroceded  50% of all  assumed
reinsurance to United Farm Family.

Loss and Loss Adjustment Expense ("LAE") Reserves

     The  Company's  reserve for losses is an estimate of the unpaid amount , as
of December  31, of the losses  incurred in both the current  year and all prior
years. The LAE reserve is an estimate of the unpaid expenses  required to settle
losses  incurred in both the current  year and all prior  years.  The Company is
required to maintain  reserves  for payment of  estimated  loss and LAE for both
reported  claims and claims which have been incurred but not yet  reported.  The
ultimate liability incurred by the company may be different from current reserve
estimates.
     Adjustments in aggregate  reserves,  if any, are reflected in the operating
results of the period during which such  adjustments  are made.  Although claims
for which reserves are established  may not be paid for several years,  reserves
for losses and LAE are not  discounted,  except for  certain  lifetime  workers'
compensation indemnity reserves where the reserves are discounted at 3.5%.




<PAGE>


The following table provides a  reconciliation  of beginning and ending loss and
LAE  reserve  balances  of the  Company  for each of the years in the three year
period ended December 31, 1996.

                    Reconciliation of Liability for Loss
                        and Loss Adjustment Expenses
<TABLE>
<CAPTION>

         ($ in thousands)
                                                                       For the years ended December 31,

                                                                          1996       1995        1994
                                                                          ----       ----        ----
<S>                                                                    <C>        <C>         <C>
Reserves for losses and loss adjustment expenses at the
 beginning of the year                                                 $ 137,978  $ 127,954   $ 123,477
Less:     Reinsurance recoverables and receivables                        28,655     28,230      28,761
                                                                          ------     ------      ------
Net reserves for losses and loss adjustment expenses at
    beginning of year                                                    109,323     99,724      94,716
                                                                         -------     ------      ------
Provision for losses and loss adjustment expenses for claims occurring in:
Current year                                                             100,418     88,366      86,370
Prior years                                                               (5,441)    (5,182)     (3,690)
                                                                          ------     ------      ------
Total incurred losses and loss adjustment expenses                        94,977     83,184      82,680
                                                                          ------     ------      ------
Loss and loss adjustment expenses payments for claims occurring in:
Current year                                                              50,122     40,519      43,232
Prior years                                                               39,795     33,066      34,440
                                                                          ------     ------      ------
Total payments                                                            89,917     73,585      77,672
                                                                          ------     ------      ------
Net reserves for losses and loss adjustment expenses at end of year      114,383    109,323      99,724
Add:   Reinsurance recoverables and receivables                           26,837     28,655      28,230
                                                                          ------     ------      ------
Reserves for losses and loss adjustment expenses at end of year         $141,220   $137,978    $127,954
                                                                        ========   ========    ========

</TABLE>

Analysis of Loss and Loss Adjustment Expense Development

     The following  table reflects the development of losses and loss adjustment
expenses for the periods  indicated at the end of that year and each  subsequent
year. Each calendar  year-end reserve includes the estimated unpaid  liabilities
for that  accident year and for all prior  accident  years.  The data  presented
under  the  caption  "Cumulative  Amount  of  Reserves  Paid  Through"  show the
cumulative  amounts paid related to the reserve as of the end of each subsequent
year. The data presented under the caption  "Reserves,  Net,  Reestimated as of"
show the original  recorded reserve as adjusted as of the end of each subsequent
year  to  reflect  the   cumulative   amounts  paid  and  all  other  facts  and
circumstances  discovered during each such year. The line "Cumulative Redundancy
(Deficiency)"  reflects the difference  between the latest  reestimated  reserve
amount and the reserve amount as originally established.

     In evaluating the  information in the table below,  it should be noted that
each amount includes the effects of all changes in amounts of prior periods. For
example,  if a loss determined in 1993 to be $150,000 was first reserved in 1985
at $100,000,  the $50,000 deficiency (actual loss minus original estimate) would
be included in the cumulative  deficiency in each of the years 1986 through 1992
shown below. This table presents  development data by calendar year and does not
relate the data to the year in which the accident actually occurred.  Conditions
and trends that have affected the  development of these reserves in the past may
not necessarily recur in the future.



<PAGE>


         The  following  table  sets  forth  the  development  of loss  and loss
adjustment  expenses  reserves  of the  Company for the  ten-year  period  ended
December 31, 1996:

<TABLE>
<CAPTION>

Analysis of Loss and
   Loss Adjustment
 Expense Development
($ in thousands)
Year Ended December 31,   1986     1987     1988    1989     1990      1991     1992     1993     1994     1995     1996
                         ------   ------   ------  ------   ------    ------   ------   ------   ------   ------   ------
Reserves for Losses
     and Loss
<S>                     <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>
   Adjustment Expenses  $41,718  $53,126  $65,543  $78,339  $94,135  $110,135 $117,497 $123,477 $127,954 $137,978 $141,220
Reinsurance Recoverable
     on Unpaid Losses    (5,053)  (5,468)  (7,126) (11,784) (22,123)  (25,048) (24,463) (28,761) (28,230) (28,655) (26,837)
                        --------------------------------------------------------------------------------------------------
Reserves for Losses
  and Loss Adjustment
        Expenses, Net    36,665   47,658   58,417   66,555   72,012    85,087   93,034   94,716   99,724  109,323  114,383
                        --------------------------------------------------------------------------------------------------
Reserves, Net,
 Reestimated as of:
       One year later    37,961   50,145   57,932   69,036   76,786    84,514   91,561   88,296   94,542  103,882
      Two years later    38,047   50,572   63,348   72,478   76,442    84,305   89,666   82,876   87,592
    Three years later    39,057   53,540   65,399   72,926   76,832    83,960   86,876   81,556
     Four years later    39,981   55,303   65,842   73,130   77,879    82,750   85,204
     Five years later    41,097   55,445   66,289   74,599   77,375    81,690
      Six years later    41,088   56,018   68,298   74,391   76,811
    Seven years later    41,072   57,751   68,370   74,578
    Eight years later    42,622   58,323   68,678
     Nine years later    42,759   58,754
      Ten years later    44,734

Cumulative Redundancy
         (Deficiency)    (8,069) (11,096) (10,261)  (8,023)  (4,799)    3,397    7,830   13,160   12,132    5,441
                        -----------------------------------------------------------------------------------------

Cumulative Amount of
   Reserves Paid Through:
       One year later    16,621   21,931   23,852   29,587   29,446    32,708   36,692   34,439   33,066   39,796
      Two years later    26,294   33,879   40,454   46,469   47,392    53,455   57,236   49,867   53,121
    Three years later    31,636   42,838   51,147   57,838   60,737    65,951   66,127   62,138
     Four years later    35,838   48,480   57,239   65,803   67,401    70,176   73,409
     Five years later    38,588   51,216   62,168   68,950   68,634    74,752
      Six years later    39,836   54,644   64,423   68,652   71,697
    Seven years later    40,920   55,794   63,815  71,075
    Eight years later    41,693   55,313   65,940
     Nine years later    41,116   57,174
      Ten years later    41,698

</TABLE>

     Prior to 1990,  the Company  had a history of  cumulative  deficiencies  in
reserving for losses and LAE. These  deficiencies  were primarily  caused by the
underestimation  of reserves for  workers'  compensation,  automobile  and other
liability  claims.  In 1991,  the Company  reviewed  and revised its process for
estimating  reserves  for losses and LAE,  and in recent  years the  Company has
generally  experienced  overall  redundancies.  The redundancies at December 31,
1996 of $13.2 million, $12.1 million and $5.4 million for the December 31, 1993,
1994 and 1995 reserves,  respectively,  were primarily attributable to favorable
development  of IBNR and  case  reserves  for  personal  automobile,  commercial
automobile, automobile physical damage, and workers' compensation claims.


<PAGE>

<TABLE>
<CAPTION>


                                                                  Year Ended December 31,
($ in thousands)                                                1996        1995       1994
                                                              --------   --------   --------
Reserve for unpaid losses and loss adjustment expenses:
<S>                                                           <C>        <C>        <C>
Gross liability ...........................................   $141,220   $137,978   $127,954
Reinsurance recoverable ...................................     26,837     28,655     28,230
                                                                ------     ------     ------
Net liability .............................................   $114,383   $109,323   $ 99,724
                                                              ========   ========   ========
One year later:
Gross reestimated liability ...............................              $126,779   $116,672
Reestimated reinsurance recoverable .......................                22,897     22,130
                                                                           ------     ------
Net reestimated liability .................................              $103,882   $ 94,542
                                                                         ========   ========
Two years later:
Gross reestimated liability ...............................                         $105,637
Reestimated reinsurance recoverable .......................                           18,045
                                                                                      ------
Net reestimated liability .................................                         $ 87,592
                                                                                    ========
</TABLE>

     The Company  believes  that its reserves at December 31, 1996 are adequate.
Conditions and trends that have  historically  affected the Company's claims may
not necessarily occur in the future. Accordingly, it would not be appropriate to
extrapolate  future  deficiencies or redundancies based on the results set forth
above. Future adjustments to loss reserves and LAE that are unanticipated by the
Company  could have a  material  adverse  impact  upon the  Company's  financial
condition and results of operations.

Investments

     An important component of the operating results of the Company has been the
return on invested  assets.  The Company's  investment  objective is to maximize
current  yield  while  maintaining  safety of  capital  together  with  adequate
liquidity for its insurance operations.  In an effort to improve the quality and
safety  of  its  investments,  the  Company  embarked  on  a  plan  in  1995  to
significantly  reduce  its  holdings  of  non-investment  grade  fixed  maturity
securities.

     The Company manages all of its investments internally. Investment decisions
and guidelines are made and implemented by the Company's  investment  department
under the  supervision  of an investment  committee  comprised of members of the
board of directors.  In addition, the Company maintains a Credit Watch Committee
comprised of the Chief Executive  Officer,  Executive Vice President - Finance &
Treasurer,  and the Senior  Vice  President  -  Investments  in order to monitor
securities  which have  experienced  late  payments,  adverse  changes in credit
rating or financial  condition of the borrower or any modifications of terms. At
December 31, 1996, the Company had five investments totaling $4.9 million on the
Credit Watch Report, of which none were considered non-performing or in default.

     Farm Family Casualty  reduced its holdings of NAIC Class 3 through 6 bonds,
generally  considered  non-investment  grade, from $10.8 million, or 5.6% of its
fixed maturity  portfolio,  as of December 31, 1995 to $6.9 million,  or 3.2% of
its fixed maturity  portfolio,  as of December 31, 1996. Due to uncertainties in
the  economic  environment,   however,  it  is  possible  that  the  quality  of
investments  currently held in Farm Family Casualty's  investment  portfolio may
change.


<PAGE>



The following  table sets forth  certain  information  concerning  the Company's
investments:

<TABLE>
<CAPTION>

($ in thousands)
                                                               December 31, 1996       December 31, 1995
                                                            Amortized      Market   Amortized       Market
Type of Investment                                             Cost      Value(3)     Cost        Value(3)
                                                               ----      --------     ----        --------
<S>                                                          <C>         <C>         <C>          <C>
   Available For Sale Portfolio:
    Fixed Maturities(1)
        United States government and
        government agencies and authorities                  $18,401     $18,743     $22,700      $24,243
        States, municipalities and political subdivisions     42,568      43,950      21,871       23,480
        Public utilities                                      26,244      26,233      20,008       21,126
        All other corporate bonds                            109,241     111,643      99,311      104,245
        Mortgage-backed securities                             9,676      10,342       1,082        1,130
        Redeemable preferred stock                             8,096       8,277       6,722        6,965
                                                        --------------------------------------------------
          Total Fixed Maturities                            $214,226    $219,188    $171,694     $181,189

       Equity securities                                       2,546       7,908         334        4,746
                                                        --------------------------------------------------
          Total Available for Sale                          $216,772    $227,096    $172,028     $185,935
                                                        --------------------------------------------------
    Held to Maturity Portfolio:
       Fixed Maturities(2)
                                                        --------------------------------------------------
       States, municipalities and political                   $5,423      $5,482      $5,925       $6,298
              subdivisions
       All other corporate bonds                               4,359       4,491       6,461        6,802
                                                        --------------------------------------------------

          Total Held to Maturity                              $9,782      $9,973     $12,386      $13,100
                                                        --------------------------------------------------

       Mortgage loans                                         $1,745      $1,745      $1,822       $1,822
       Short-term investments                                  5,333       5,333       6,532        6,532
       Other Invested Assets                                     748         748       1,246        1,246
                                                        --------------------------------------------------

          Total Investments                                 $234,380    $244,895    $194,014     $208,635
                                                        ==================================================

(1) Fixed maturities  (bonds,  redeemable  preferred stocks and  mortgage-backed
securities)  and equity  securities  in the  Available  for Sale  Portfolio  are
carried at market value in the consolidated financial statements of the Company.
Mortgage  loans,  cash and short-term  investments and other invested assets are
carried at cost, which approximates market value.

(2) Fixed maturities in the Held to Maturity  Portfolio are carried at amortized
cost.

(3) The Company primarily  obtains market value information  through the pricing
service  offered  by  Interactive  Data  Corporation.  Market  values  are  also
obtained, to a lesser extent, from various brokers who provide price quotes.

</TABLE>


<PAGE>


The Company's investments in fixed maturity securities are composed primarily of
intermediate-term,   investment  grade  securities.  The  table  below  contains
additional  information concerning the investment ratings of the Company's fixed
maturity investments at December 31, 1996.

<TABLE>
<CAPTION>
                                                                     Amortized         Market
    Type/Ratings of Investment(1)                                       Cost            Value      Percentage(4)
                                                                                     ($ in Thousands)
<S>                                                                        <C>             <C>              <C>
    Available for Sale Portfolio:(2)
       U.S. Government and Agencies                                        $27,125         $28,103          12.8%
       AAA                                                                  20,229          21,034           9.6%
       AA                                                                   30,900          31,145          14.2%
       A                                                                    62,070          64,205          29.3%
       BBB                                                                  66,075          66,876          30.5%
                                                                  ------------------------------------------------
         Total BBB or Better                                               206,399         211,363          96.4%
       BB                                                                    5,877           5,924           2.7%
       B and Below                                                           1,950           1,901           0.9%
                                                                  ------------------------------------------------
         Total Available for Sale                                         $214,226        $219,188         100.0%
                                                                  ------------------------------------------------

    Held to Maturity Portfolio:(3)
       U.S. Government and Agencies                                         $    -          $    -           0.0%
       AAA                                                                   3,115           3,188          32.0%
       AA                                                                    1,270           1,326          13.3%
       A                                                                     4,091           4,207          42.1%
       BBB                                                                       -               -           0.0%
                                                                  ------------------------------------------------
         Total BBB or Better                                                 8,476           8,721          87.4%
       BB                                                                    1,306           1,252          12.6%
       B and Below                                                               -               -           0.0%
                                                                  ------------------------------------------------
         Total Held to Maturity                                             $9,782          $9,973         100.0%
                                                                  ------------------------------------------------
</TABLE>


(1) The  ratings  set  forth in this  table are  based on the  ratings,  if any,
assigned  by  Standard  & Poor's  Corporation  ("S&P").  If S&P's  ratings  were
unavailable,  the equivalent  ratings  supplied by Moody's  Investors  Services,
Inc., Fitch Investors Service,  Inc. or the NAIC were used where available.  The
percentage of securities  that were not assigned a rating by S&P at December 31,
1996 was 4.7%.

(2) Fixed  maturities in the Available for Sale  Portfolio are carried at market
value in the consolidated financial statements of the Company.

(3) Fixed maturities in the Held to Maturity  Portfolio are carried at amortized
cost.

(4) Represents  percent of market value for classification as a percent of total
for each portfolio.



<PAGE>


The table below sets forth the maturity  profile of the Company's fixed maturity
investments as of December 31, 1996:

<TABLE>
<CAPTION>

    Maturity                                                   Amortized Cost(1)    Market Value(2)      Percentage
    Available for Sale:                                         ($ in thousands)
<S>                                                                       <C>                <C>                <C>
       1 year or less                                                         $771               $746             0.3%
       More than 1 year through 3 years                                     15,844             15,988             7.3%
       More than 3 years through 5 years                                    12,217             12,768             5.8%
       More than 5 years through 10 years                                  100,668            102,102            46.6%
       More than 10 years through 15 years                                  44,228             44,786            20.4%
       More than 15 years through 20 years                                  14,032             14,389             6.6%
       More than 20 years                                                   16,790             18,067             8.2%
       Mortgage backed securities                                            9,676             10,342             4.7%
                                                              ---------------------------------------------------------
         Total                                                            $214,226           $219,188           100.0%
                                                              ---------------------------------------------------------

    Held to Maturity:
       1 year or less                                                         $350               $358             3.6%
       More than 1 year through 3 years                                        706                716             7.2%
       More than 3 years through 5 years                                       211                207             2.1%
       More than 5 years through 10 years                                    3,186              3,173            31.8%
       More than 10 years through 15 years                                   5,329              5,519            55.3%
       More than 15 years through 20 years                                       -                  -                -
       More than 20 years                                                        -                  -                -
                                                              ---------------------------------------------------------
         Total                                                              $9,782             $9,973           100.0%
                                                              ---------------------------------------------------------

(1) Fixed  maturities in the Available for Sale  Portfolio are carried at market
value in the consolidated  financial statements of the Company. Fixed maturities
in the Held to Maturity Portfolio are carried at amortized cost.

(2) The Company obtains market value  information  primarily through the pricing
service  offered  by  Interactive  Data  Corporation.  Market  values  are  also
obtained, to a lesser extent, from various brokers who provide price quotes

</TABLE>


     The average  duration and average  maturity of the Company's fixed maturity
investments  as of  December  31,  1996 were  approximately  6.2 and 10.1 years,
respectively.  As a result,  the market value of the Company's  investments  may
fluctuate  significantly  in response to changes in interest rates. In addition,
the Company may also be likely to experience investment losses to the extent its
liquidity  needs  require  the  disposition  of  fixed  maturity  securities  in
unfavorable interest rate environments.

     For the year ended  December 31, 1996,  compared  with the prior year,  the
amortized  cost of the Company's  cash and invested  assets  increased  13.4% to
$238.5 million, primarily as a result of the proceeds from the Company's initial
public  offering.   As  a  result  of  the  reduction  in  holdings  of  certain
non-investment grade securities,  the Company anticipates that future investment
yields may be lower than they  otherwise  would be. For the years ended December
31, 1996, 1995 and 1994, the Company's net investment  income,  average cash and
invested assets and return on average cash and invested assets were as follows:

                                   Years Ended December 31,
         ($ in millions)                      1996          1995           1994
                                              ----          ----           ----
Net investment income                        $16.0         $14.3         $ 13.2
Average cash and invested asset             $212.0        $187.8         $173.9
Return on average cash and invested assets    7.5%           7.6%           7.6%





<PAGE>


Information Services

     The Company's automated information  processing  capabilities are supported
by  centralized  computer  systems and a network of personal  computers  linking
agents,  claims offices and service  centers with the Company's home office data
center and information  services division.  This network enables field employees
and agents to work  directly  with clients in response to service  questions and
policy  transactions.  A specialized client information system containing policy
and claim information for each customer's portfolio is utilized by the Company's
agents to monitor  policy  activity.  Also,  personalized  summaries of material
events  affecting  each agent's  policies  are updated  daily on the network and
forwarded to agents.  Substantially  all of the Company's  information  services
equipment,  including the centralized  computer systems and computer network, is
owned by Farm  Family  Life.  Information  systems  expenses  are  shared by the
Company and Farm  Family  Life  pursuant to an  agreement.  (See  Related  Party
Transactions.)

A.M. Best Rating

     A.M. Best,  which rates insurance  companies based on factors of concern to
policyholders,  currently assigns an "A-" (Excellent) rating (its fourth highest
rating category) to Farm Family Casualty.  A.M. Best assigns "A" or "A-" ratings
to  companies  which,  in  its  opinion,  have  demonstrated  excellent  overall
performance when compared to the standards  established by A.M. Best.  Companies
rated  "A"  or  "A-"  have  a  strong  ability  to  meet  their  obligations  to
policyholders  over a long period of time. In  evaluating a company's  financial
and  operating  performance,  A.M.  Best  reviews the  company's  profitability,
leverage and liquidity,  as well as the company's book of business, the adequacy
and soundness of its reinsurance,  the quality and estimated market value of its
assets,  the adequacy of its loss  reserves,  the  adequacy of its surplus,  its
capital  structure,  the  experience  and  competency of its  management and its
market  presence.  No assurance  can be given that A.M. Best will not reduce the
Company's current rating in the future.

Competition

     The property  and  casualty  insurance  market is highly  competitive.  The
Company  competes  with  stock  insurance  companies,  mutual  companies,  local
cooperatives and other underwriting organizations.  Certain of these competitors
have substantially greater financial, technical and operating resources than the
Company.  The Company's ability to compete successfully in its principal markets
is  dependent  upon a number of  factors,  many of which  (including  market and
competitive  conditions) are outside the Company's control. Many of the lines of
insurance written by the Company are subject to significant  price  competition.
Some  companies  may offer  insurance at lower  premium rates through the use of
salaried  personnel  or other  methods,  rather than agents paid on a commission
basis,  as the Company does. In addition to price,  competition  in the lines of
business written by the Company is based on quality of the products, quality and
speed of  service  (including  claims  service),  financial  strength,  ratings,
distribution systems and technical expertise.

Seasonality

     Although the insurance business generally is not seasonal,  losses and loss
adjustment  expenses  tend to be higher  for  periods  of  severe  or  inclement
weather.

Employees

     The Company  shares most of its  employees  with Farm  Family  Life.  As of
December  31, 1996,  the total number of full time  employees of the Company and
Farm Family Life was 389 employees in  aggregate,  of which 286 were employed in
the home office.  Based on annual time studies,  63% of total employee expenses,
including  salary  expense,  is  currently  allocated  to the Company and 37% is
allocated to Farm Family Life and United Farm Family. See "Certain Relationships
and Related  Transactions".  None of these employees are covered by a collective
bargaining  agreement,  and the Company believes that its employee relations are
good.


Effect of Regulation

     General

     The Company is regulated by  government  agencies in the states in which it
does business. Such regulation usually includes (i) regulating premium rates and
policy  forms,  (ii) setting  minimum  capital and surplus  requirements,  (iii)
regulating  guaranty  fund  assessments  and residual  markets,  (iv)  licensing
companies, adjusters and agents, (v) approving accounting methods and methods of
setting statutory loss and expense reserves,  (vi) setting  requirements for and
limiting the types and amounts of investments,  (vii) establishing  requirements
for the  filing  of  annual  statements  and  other  financial  reports,  (viii)
conducting   periodic  statutory   examinations  of  the  affairs  of  insurance
companies,  (ix)  approving  proposed  changes in control and (x)  limiting  the
amount of dividends that may be paid without prior regulatory approval.
     Insurance  companies  are also  affected  by a variety of state and federal
legislative  and  regulatory  measures  and judicial  decisions  that define and
extend the risks and benefits for which insurance is sought and provided.  These
include  redefinitions  of risk  exposure in areas such as  products  liability,
environmental  damage  and  workers'   compensation.   Certain  state  insurance
departments  and  legislatures  may prevent  premium  rates for some  classes of
insureds  from  reflecting  the level of risk  assumed by the  insurer for those
classes.  Several  states  place  restrictions  on the  ability of  insurers  to
discontinue  or withdraw from some lines of  insurance.  Such  developments  may
adversely affect the profitability of various lines of insurance.

Risk-Based Capital

     State  insurance  departments  have adopted a methodology  developed by the
NAIC for  assessing  the adequacy of statutory  surplus of property and casualty
insurers  which includes a risk-based  capital  formula that attempts to measure
statutory  capital  and surplus  needs based on the risks in a company's  mix of
products  and  investment  portfolio.  The  formula is  designed  to allow state
insurance regulators to identify potential  inadequately  capitalized companies.
Under the formula,  a company  determines its  "risk-based  capital"  ("RBC") by
taking into account  certain risks related to the  insurer's  assets  (including
risks  related  to its  investment  portfolio  and  ceded  reinsurance)  and the
insurer's  liabilities  (including  underwriting risks related to the nature and
experience of its insurance business).  The risk-based capital rules provide for
different levels of regulatory  attention  depending on the ratio of a company's
total  adjusted  capital  to its  "authorized  control  level" of RBC.  Based on
calculations made by the Company,  the risk-based  capital level for the Company
exceeds a level that would trigger regulatory  attention.  At December 31, 1996,
the  Company's  total  adjusted  capital was $83.2  million,  and the  threshold
requiring the least regulatory attention was $26.7 million.

     NAIC-IRIS Ratios

     The NAIC's Insurance  Regulatory  Information System ("IRIS") was developed
by a committee of state insurance regulators and is primarily intended to assist
state insurance departments in executing their statutory mandates to oversee the
financial condition of insurance companies operating in their respective states.
IRIS identifies 12 ratios for the property and casualty  insurance  industry and
specifies a range of "usual  values" for each ratio.  Departure  from the "usual
value" range on four or more ratios may lead to increased  regulatory  oversight
from  individual  state  insurance  commissioners.  The Company did not have any
ratios which varied from the "usual value" range in 1996, 1995 or 1994.

Risk Factors

     In  addition  to the normal  risks of  business,  the Company is subject to
significant  risk  factors,  including  but not  limited  to:  (i) the  inherent
uncertainty  in the process of  establishing  property-liability  loss reserves,
including  reserves for the cost of pollution claims, and the fact that ultimate
losses could  materially  exceed  established  loss reserves and have a material
adverse  effect on results  of  operations  and  financial  condition;  (ii) the
potential  material  adverse  impact  on its  financial  condition,  results  of
operations  and cash  flow of  losses  arising  out of  catastrophes;  (iii) the
insolvency or inability of any reinsurer to meet its  obligations to Farm Family
Casualty  may have a material  adverse  effect on the  business  and  results of
operations  of the Company;  (iv) the need for Farm Family  Casualty to maintain
appropriate  levels of statutory  capital and surplus,  particularly in light of
continuing  scrutiny  by rating  organizations  and state  insurance  regulatory
authorities,  and to maintain  acceptable  financial  strength and claims-paying
ability ratings; (v) there can be no assurance that Farm Family Casualty will be
able to maintain its current A.M.  Best rating and that the  Company's  business
and results of  operations  could be materially  adversely  affected by a rating
downgrade;  (vi) the fact  that the  property  and  casualty  market  is  highly
competitive  and  certain  of its  competitors  may have  substantially  greater
financial,  technical  and  operating  resources  than the  Company;  (vii)  the
extensive  regulation and  supervision to which Farm Family Casualty is subject,
various regulatory  initiatives that may affect the Company,  and regulatory and
other legal actions involving the Company;  (viii) Farm Family Holdings' primary
reliance, as a holding company, on dividends and other payments from Farm Family
Casualty for funds to meet its obligations,  and regulatory restrictions on Farm
Family  Casualty to pay such  dividends;  (ix) the inherent  uncertainty  in the
economic environment may cause the quality of the investments  currently held in
the Company's investment portfolio to change; (x) the impact on the revenues and
profitability of the Company from prevailing economic,  regulatory,  demographic
and other  conditions in New York,  New Jersey and the other states in which the
company  operates;  (xi)  the  fact  that  since a  substantial  portion  of the
Company's  business is  concentrated in a relatively  small number of states,  a
significant change in or the termination of the Company's  relationship with the
Farm Bureaus in certain of these states could have a materially  adverse  effect
on the Company's  results of operations and financial  condition;  and (xii) the
Company has entered into an agreement with the  shareholders of Farm Family Life
pursuant to which the Company  has the option,  for a two year period  beginning
July 26,  1996,  to acquire  Farm  Family  Life in  exchange  for common  and/or
preferred stock of the Company, the exercise price for the shares of Farm Family
Life has not been  determined,  and there is  uncertainty  whether the option to
purchase will be exercised, the Company's common stock may be diluted, depending
on the  valuation of Farm Family Life and certain Farm Family Life  shareholders
may become  significant  shareholders of the Company if the option is exercised.
The Company has  experienced,  and can be expected in the future to  experience,
storm and weather related losses which may have a material adverse impact on the
Company's results of operations, financial condition and cash flow.

"Safe Harbor"  statement under the Private  Securities  Litigation Reform Act of
1995

With  the  exception  of  historical  information,   the  matters  discussed  or
incorporated  by  reference  in this  Report  on Form  10-K are  forward-looking
statements that involve risks and uncertainties  that could cause actual results
to  differ  materially  from  those  expected  and  projected.  Such  risks  and
uncertainties  include,  but are not  limited  to, the  following:  exposure  to
catastrophic  loss,general  economic  conditions and conditions  specific to the
property  and  casualty   insurance  industry  including  its  cyclical  nature,
regulatory  changes  and  conditions,  rating  agency  policies  and  practices,
competitive factors,  claims development and the impact thereof on loss reserves
and the Company's  reserving policy,  the adequacy of the Company's  reinsurance
programs, developments in the securities markets and the impact on the Company's
investment  portfolio and other risks  indicated in this Report on Form 10-K and
other risk  factors  listed from time to time in the  Company's  Securities  and
Exchange Commission Filings.

<TABLE>

                      Executive Officers of the Registrant
<CAPTION>
                                                                                     Date First Elected
                                                                                         Officer of
                                                                                        Registrant or
            Name             Age       Position Presently Held with Registrant           Subsidiary
---------------------------------------------------------------------------------------------------------
<S>                           <C> <C>                                                        <C>
Philip P. Weber               48  President & Chief Executive Officer                        1987
James J. Bettini              42  Executive Vice President - Operations                      1990
Victoria M. Stanton           37  Executive Vice President,                                  1991
                                  General Counsel and Secretary
Timothy A. Walsh              35  Executive Vice President - Finance and Treasurer           1996
William T. Conine             48  Senior Vice President - Information Services of            1985
                                  Farm Family Casualty Insurance Company
Stuart C. Henderson           41  Senior Vice President - Casualty Operations of             1991
                                  Farm Family Casualty Insurance Company
Raymond A. Osterhout          52  Senior Vice President - Investments of Farm                1987
                                  Family Casualty Insurance Company
Dale E. Wyman                 54  Senior Vice President - Marketing of Farm Family           1989
                                  Casualty Insurance Company

</TABLE>


There are no family  relationships  among any of such officers nor are there any
arrangements or  understandings  between any person pursuant to which he/she was
elected  as an  officer.  All  officers  serve at the  pleasure  of the Board of
Directors,  but subject to the foregoing, are elected for terms of approximately
one year until the next Annual Meeting of the Company.

All  the  Executive  Officers  of  the  Registrant  have  been  employed  by the
Registrant or its Subsidiary in various executive or  administrative  capacities
for at least five years, except for the following:

Mr. Walsh has served as Executive  Vice  President - Finance & Treasurer of Farm
Family  Holdings and Executive Vice President - Finance of Farm Family  Casualty
since December 1996, and as Treasurer of Farm Family  Holdings from October 1996
to December  1996.  Mr. Walsh was Senior Vice President - Finance of Farm Family
Casualty  from March 1996 to  December  1996,  and was  previously  Director  of
Corporate  Development  for Farm Family Casualty from August 1995 to March 1996.
Previously, Mr. Walsh was Vice President, Finance & Chief Financial Officer with
MPW Industrial  Services,  Inc.,  Columbus,  OH, from April 1994 to August 1995,
Corporate  Controller of NSC  Corporation,  Methuen,  MA from July 1992 to April
1994 and Senior Manager at KPMG Peat Marwick from July 1983 to July 1992.




<PAGE>


ITEM 2.  PROPERTIES

     The Company  currently  leases space for its home office in  Glenmont,  New
York  from Farm  Family  Life.  The Lease  Agreement  provides  for Farm  Family
Casualty to pay Farm Family Life an annual rental of approximately $712,000. The
lease expires on December 31, 1998. See "Related Party Transactions".

ITEM 3.  LEGAL PROCEEDINGS

     The  Company is subject to  litigation  in the normal  course of  business.
Based upon information  presently  available to it, the management believes that
resolution of these legal actions will not have a material adverse effect on the
Company's  consolidated  financial condition.  However,  given the uncertainties
attendant  to  litigation,   there  can  be  no  assurance  that  the  Company's
consolidated   results  of  operations  and  financial  condition  will  not  be
materially adversely affected by any threatened or pending litigation.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None


                                     PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
         STOCKHOLDER MATTERS

     The Company's common stock is traded on the New York Stock Exchange.  There
were  approximately  34,000 registered  holders of the Company's common stock at
February 24, 1997. The Company currently intends to retain any earnings in order
to develop  its  business  and support its  operations,  and, as such,  does not
anticipate  that it will pay any dividends to  stockholders  in the  foreseeable
future.  The declaration of dividends in the future are at the discretion of the
Board of Directors of the Company, are subject to certain regulatory constraints
and will depend upon, among other things,  the Company's  results of operations,
financial condition, cash requirements, future prospects and other factors.

     The high and low New York  Stock  Exchange  closing  market  price  for the
Company's  Common  Stock for each quarter  since the  Company's  initial  public
offering on July 26, 1996 were as follows:

                           For the Quarter Ended,
                           ----------------------
                   September 30, 1996   December 31, 1996
                   ------------------   -----------------
                      High      Low       High      Low
                     19.125    16.000    20.500    18.125



<PAGE>


ITEM 6.  SELECTED FINANCIAL DATA

The  following  table sets forth  certain  consolidated  financial  data for the
Company and its subsidiaries prior to and after the  reorganization  pursuant to
the Plan that took place during 1996. The consolidated  statement of income data
set forth below for the years ended December 31, 1996,  1995,  1994 and 1993 and
the  consolidated  balance sheet data as of December 31, 1996, 1995 and 1994 are
derived from the  consolidated  financial  statements  of the Company which have
been audited by Coopers & Lybrand L.L.P,  independent auditors. The consolidated
statement  of  income  data  for  the  year  ended  December  31,  1992  and the
consolidated  balance  sheet data as of  December  31, 1993 and 1992 are derived
from the unaudited consolidated financial statements of the Company. The Company
believes that such  unaudited  financial  data fairly  reflect the  consolidated
results of operations and the  consolidated  financial  condition of the Company
for  such  periods.  This  data  should  be  read  in  conjunction  with  Item 7
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations  as  well as  Item 8  Financial  Statements  and  Supplementary  Data
included elsewhere herein.

<TABLE>
<CAPTION>

         ($ in millions except per share data)                                    Year Ended December 31,
         Statement of Income Data:                                     1996      1995       1994      1993      1992
                                                                       ----      ----       ----      ----      ----
        Revenues:
<S>                                                                  <C>       <C>        <C>        <C>       <C>
           Premiums                                                  $130.8    $116.9     $101.5     $96.7     $90.0
           Net investment income                                       15.9      14.3       13.2      13.8      12.9
           Net realized investment gains (losses), net                 (0.6)      0.9        1.3     (0.2)       1.0
           Other income(1)                                              0.9       0.9        0.7       0.7      0.05
                                                                 ----------------------------------------------------
             Total revenues                                           147.0     133.0      116.7     111.0     104.4
                                                                 ----------------------------------------------------

         Losses and Expenses:
           Losses and loss adjustment expenses                         95.0      83.2       82.7      73.2      72.1
           Underwriting expenses                                       38.2      34.9       28.8      26.8      24.0
           Early retirement program expense                             1.2         -          -         -         -
           Interest and other expense                                   0.5       0.3        0.3       0.3       0.3
                                                                 ----------------------------------------------------
             Total losses and expenses                                134.9     118.4      111.8     100.3      96.4
                                                                 ----------------------------------------------------

        Income before federal income tax and extraordinary item        12.1      14.6        4.9      10.7       8.0
        Federal income tax expense                                      3.7       5.0        1.4       3.1       1.8
                                                                 ----------------------------------------------------
        Income before extraordinary item                                8.4       9.6        3.5       7.6       6.2
        Extraordinary item - Demutualization expense                    1.5         -          -         -         -
                                                                 ----------------------------------------------------
        Net Income                                                     $6.9      $9.6       $3.5      $7.6      $6.2
                                                                 ----------------------------------------------------

         Income before extraordinary item per share                   $2.13     $3.20      $1.18     $2.53     $2.07
                                                                 ----------------------------------------------------
         Net income per share                                         $1.74     $3.20      $1.18     $2.53     $2.07
                                                                 ----------------------------------------------------
         Weighted average shares outstanding(2)                   3,979,115 3,000,000  3,000,000 3,000,000 3,000,000
                                                                 ----------------------------------------------------

         Balance Sheet Data (at December 31):
           Total investments(3)                                      $244.7    $207.9     $170.6    $177.7    $160.8
           Total assets                                               319.4     278.3      243.1     244.1     221.5
           Long term debt                                               1.3       2.7        2.7       2.8       2.8
           Total liabilities                                          208.7     204.1      190.1     183.6     175.0
           Total equity(3)                                            110.7      74.2       53.0      60.5      46.5

         Book value per share                                        $21.08    $24.72     $17.66    $20.17    $15.48
                                                                 ----------------------------------------------------
         GAAP Ratios:
         Loss and loss adjustment expense ratio(4)                    72.6%     71.1%      81.5%     75.7%     80.2%
         Underwriting expense ratio(5)                                29.2%     29.8%      28.4%     27.7%     26.6%
         Combined ratio(6)                                           101.8%    100.9%     109.9%    103.4%    106.8%

         Statutory Data:
         Statutory Combined Ratio(7)                                 101.8%    101.0%     108.9%    104.2%    106.0%
         Statutory Surplus                                            $83.2     $55.9      $42.9     $39.1     $33.5
              Ratio of annual written premiums to  surplus -
                 statutory basis(8)                                   1.61x     2.16x      2.46x     2.52x     2.73x
</TABLE>


(1)  Primarily  represents  service  fee income on the  Company's  property  and
casualty insurance business.

(2) Gives effect to the allocation of 3,000,000 shares to eligible policyholders
on July 26, 1996 pursuant to aFarm Family  Casualty's  conversion  from a mutual
company to a stockholder owned company.

(3) Due to the  adoption by the  Company on  December  31, 1993 of SFAS No. 115,
"Accounting  for  Certain  Investments  in Debt and  Equity  Securities,"  total
investments and policyholders' equity were adjusted to reflect changes in market
value,  which  resulted  in an increase of $6.8  million,  a reduction  of $11.1
million and an increase of $11.7 million as of December 31, 1993, 1994 and 1995,
respectively.

(4) Calculated by dividing losses and loss adjustment expenses by
premiums.

(5) Calculated by dividing underwriting expenses by premiums.

(6) The sum of the Loss and Loss Adjustment  Expense Ratio and the Underwriting
Expense Ratio.

(7) The sum of the Loss & Loss Adjustment  Expense Ratio and the ratio of
statutory  underwriting expense divided by net written premium (8) Calculated by
dividing  statutory net written premiums for the period by statutory  surplus at
the end of the period.


<PAGE>


ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
              CONDITION AND RESULTS OF OPERATIONS


The "Management's  Discussion and Analysis of Financial Condition and Results of
Operations"  on pages 11 - 15 of the  Annual  Report is  incorporated  herein by
reference.



ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The consolidated financial statements of the Company, including the accompanying
notes  to the  consolidated  financial  statements  and  Report  of  Independent
Accountants  on pages 16 - 32 of the Annual  Report are  incorporated  herein by
reference.

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
             ACCOUNTING AND FINANCIAL DISCLOSURE

There were no disagreements with our independent auditors.


                                    PART III


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Certain information regarding directors of the Company under "Item 1-Election of
Directors"  beginning on page 2 of the Proxy Statement is incorporated herein by
reference .

Information  regarding  executive officers of the Company in Item 1 of Part 1 of
this Report under the caption  "Executive  Officers of the Registrant" hereof is
incorporated herein by reference.

Information  required  by  Item  405 of  Regulation  S-K of the  Securities  and
Exchange Act of 1934 located on page 13 of the Proxy Statement under the caption
"Section 16(a) Beneficial Ownership Reporting Compliance" is incorporated herein
by reference.


ITEM 11.   EXECUTIVE COMPENSATION

Information regarding executive compensation is incorporated by reference to the
material  under the  captions  "Item 1 Election of Directors -  Compensation  of
Directors" on page 6, "Item 3 - Approval of the Corporation's Omnibus Securities
Plan" on pages 6-10, "Executive  Compensation" on pages 14-19, and "Common Stock
Performance Graph" on page 20 of the Proxy Statement.

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
               MANAGEMENT

Information  regarding  security  ownership  of  certain  beneficial  owners and
management  located  in the  material  under the  caption  "Stock  Ownership  of
Management and Certain  Beneficial Owners" on pages 11-13 of the Proxy Statement
is incorporated herein by reference.

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information  regarding certain relationships and related transactions located in
the material under the headings "Certain Relationships and Related Transactions"
on pages 21-22 of the Proxy Statement is incorporated herein by reference.



<PAGE>


                                     PART IV


ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
               FORM 8-K




                (a) 1
                and      2 An  "Index  to  Financial  Statements  and  Financial
                         Statement  Schedules"  has been filed as a part of this
                         Report beginning on page S-1 hereof.

                (a) 3    Exhibits:

                         An  "Exhibit  Index"  has been  filed as a part of this
                         Report beginning on page E-1 hereof and is incorporated
                         herein by reference.

                (b)      Reports on Form 8-K:

                         On  October  29,  1996,  a Report on Form 8-K was filed
                         regarding  a press  release  announcing  the  Company's
                         operating  results for the three  month  period and the
                         nine month period ended September 30, 1996.

                         On  November  6,  1996,  a Report on Form 8-K was filed
                         regarding a press release announcing the resignation of
                         Charles  E.  Simon  as  Executive  Vice  President  and
                         Treasurer.

                         On December  16,  1996,  a Report on Form 8-K was filed
                         regarding a press release announcing the implementation
                         of a  voluntary  early  retirement  program  and  other
                         changes in the Company's benefit plans.



<PAGE>


                   FARM FAMILY HOLDINGS, INC. AND SUBSIDIARIES
         INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
                          Year Ended December 31, 1996

The  following  consolidated  financial  statements,  notes  thereto and related
information of Farm Family  Holdings,  Inc. and  Subsidiaries  are  incorporated
herein by reference to the Company's Annual Report.

                                                                      Page in
                                                                   Annual Report

Consolidated Statements of Income                                        16

Consolidated Balance Sheets                                              17

Consolidated Statements of Stockholders' Equity                          18

Statements of Consolidated Cash Flows                                    19

Notes to Consolidated Financial Statements                               20

Report of Independent Accountants                                        32


The following  additional  financial  statement schedules are furnished herewith
pursuant to the requirements of Form 10-K.


                                                                            Page
              Report of Independent Accountants                              S-2

Schedule I    Summary of Investments -
              Other than Investments in Related Parties                      S-3

Schedule II   Condensed Financial Information of the Registrant              S-4

Schedule IV   Reinsurance                                                    S-8

Schedule VI   Supplemental Information Concerning
              Property - Casualty Insurance Operations                       S-9





                                       S-1


<PAGE>





                        Report of Independent Accountants




To the Shareholders and Board of Directors
of Farm Family Holdings, Inc.


Our report on the  consolidated  financial  statements of Farm Family  Holdings,
Inc. and Subsidiaries has been  incorporated by reference in this Form 10-K from
page 32 of the 1996 Annual Report to Shareholders of Farm Family Holdings,  Inc.
and Subsidiaries. In connection with our audits of such financial statements, we
have also audited the related financial  statement schedules listed in the index
on page S-1 of this Form 10-K

In our  opinion,  the  financial  statement  schedules  referred to above,  when
considered  in  relation  to the basic  financial  statements  taken as a whole,
present  fairly,  in all  material  respects,  the  information  required  to be
included therein.



                                                   Coopers and Lybrand L.L.P.



Albany, New York
February 13, 1997







                                       S-2


<TABLE>

                   FARM FAMILY HOLDINGS, INC. AND SUBSIDIARIES
                       SCHEDULE 1 - SUMMARY OF INVESTMENTS
                    OTHER THAN INVESTMENTS IN RELATED PARTIES
                                DECEMBER 31, 1996

<CAPTION>

($ in thousands)
                                                                           Cost
                                                                        Amortized/                      Balance Sheet
Type of Investment                                                         Cost          Fair Value    Carrying Value
------------------                                                         ----          ----------    --------------
  Available for sale
    Fixed maturities:
<S>                                                                          <C>            <C>               <C>
         United States Government and government agencies                    $18,401        $18,743           $18,743
         States, municipalities and political subdivisions                    42,568         43,950            43,950
         Public utilities                                                     26,244         26,233            26,233
         Corporate                                                           109,241        111,643           111,643
         Mortgage-backed                                                       9,676         10,342            10,342
         Redeemable preferred stock                                            8,096          8,277             8,277
                                                                       -----------------------------------------------
           Total fixed maturities                                            214,226        219,188           219,188
                                                                       -----------------------------------------------

    Equity securities:
       Common stocks:
         Public utilities                                                      1,219          1,314             1,314
         Banks, trusts and insurance companies                                   244          5,490             5,490
         Industrial and miscellaneous                                          1,083          1,104             1,104
                                                                       -----------------------------------------------
           Total equity securities                                             2,546          7,908             7,908

           Total available for sale                                          224,598        234,922           234,922
                                                                       -----------------------------------------------

  Held to maturity
    States, municipalities and political subdivisions                          5,423          5,482             5,423
    Corporate                                                                  4,359          4,491             4,359
                                                                       -----------------------------------------------
           Total held to maturity                                              9,782          9,973             9,782
                                                                       -----------------------------------------------

    Mortgage loans on real estate                                              1,745          1,745             1,745
    Short-term investments                                                     5,333          5,333             5,333
    Other invested assets                                                        748            748               748
                                                                       -----------------------------------------------

           Total investments                                                $234,380       $244,895          $244,704
                                                                       -----------------------------------------------



</TABLE>



                                                            S-3


<PAGE>


                  FARM FAMILY HOLDINGS, INC. AND SUBSIDIARIES
                                   SCHEDULE II
                  CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                             STATEMENT OF OPERATIONS
                                ($ in Thousands)

                                                              For the Year Ended
                                                               December 31, 1996
                                                               -----------------
       Revenues:
          Investment Income                                               $319

       Expenses:
          General and Administrative Expenses                              580
                                                               -----------------
       Loss Before Federal Income Tax Benefit                             (261)

       Federal Income Tax Benefit                                           87
                                                               -----------------
       Net Loss from operations                                           (174)
                                                               -----------------
       Income From Investment in Subsidiary                              7,098
                                                               -----------------
       Net Income                                                       $6,924
                                                               =================








                                       S-4


<PAGE>


                  FARM FAMILY HOLDINGS, INC. AND SUBSIDIARIES
                                   SCHEDULE II
                  CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                                  BALANCE SHEET
                                ($ in Thousands)


                                                                   As of
Assets:                                                      December 31, 1996
                                                             -----------------
   Fixed Maturities Available for Sale                                 $7,438
   Investment in Subsidiaries                                         100,419
   Short-term Investments                                               3,350
   Cash                                                                     1
   Other Assets                                                           362
                                                             -----------------
     Total Assets                                                    $111,570
                                                             =================

Liabilities:
   Payable to Affiliates                                                 $356
   Other Liabilities                                                      473
                                                             -----------------
     Total Liabilities                                                    829

Commitments and Contingencies
Stockholders' Equity
   Common Stock, $.01 par value, 10,000,000 shares authorized
          and 5,253,813 shares issued and outstanding                      53
   Additional Paid in Capital                                          35,337
   Retained Earnings                                                   75,316
   Unrealized Investment Gains                                             35
                                                             -----------------
     Total Stockholders' Equity                                       110,741
                                                             -----------------
     Total Liabilities and Stockholders' Equity                      $111,570
                                                             =================





                                       S-5


<PAGE>


                  FARM FAMILY HOLDINGS, INC. AND SUBSIDIARIES
                                   SCHEDULE II
                  CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                             STATEMENT OF CASH FLOWS
                                ($ in Thousands)
                                                             For the Year Ended
CASH FLOWS FROM OPERATING ACTIVITIES:                        December 31, 1996
-------------------------------------                        -----------------
   Net Income                                                           $6,924

   Amortization of Bond Discount                                            (4)
   Changes in:
       Equity in Net Income of Subsidiary                               (7,098)
       Accrued Investment Income                                          (152)
       Federal Income Taxes Recoverable                                   (133)
       Other Assets                                                        (47)
       Payable to Affiliates                                               356
       Other Liabilities                                                   (72)
   Total Adjustments                                                    (7,150)
                                                             -----------------
   Net Cash Provided by Operating Activities                              (226)
                                                             -----------------

CASH FLOWS FROM INVESTING ACTIVITIES:
-------------------------------------
   Investment Purchases:
       Investment in Subsidiary                                        (20,001)
       Fixed Maturities Available for Sale                              (7,380)
       Change in Short-Term Investments                                 (3,350)
                                                             -----------------
   Net Cash Used in Investing Activities                               (30,731)
                                                             -----------------

CASH FLOWS FROM FINANCING ACTIVITIES:
-------------------------------------
   Proceeds from IPO & Subscription Offerings                           44,880
   Demutualization Payments to Policyholders and Noteholders           (12,842)
   IPO Expenses Paid                                                    (1,080)
                                                             -----------------
    Net Cash Provided by Financing Activities                           30,958
                                                             -----------------
    Net Change in Cash                                                       1

Cash, beginning of year                                                      -
                                                             -----------------
Cash, end of year                                                           $1
                                                             =================



                                       S-6


<PAGE>


                  FARM FAMILY HOLDINGS, INC. AND SUBSIDIARIES
                                   SCHEDULE II
                  CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                    NOTES TO CONDENSED FINANCIAL INFORMATION
                                ($ in Thousands)


Basis of Presentation

The financial  statements of the registrant  should be read in conjunction  with
the  Consolidated  Financial  Statements and notes thereto  included in the Farm
Family Holdings, Inc. 1996 Annual Report.

The accompanying  condensed financial  information includes the accounts of Farm
Family Holdings,  Inc. Farm Family  Holdings,  Inc. was incorporated on February
14, 1996.








                                       S-7


<PAGE>
<TABLE>


                  FARM FAMILY HOLDINGS, INC. AND SUBSIDIARIES
                                   SCHEDULE IV
                                   REINSURANCE
                                ($ in Thousands)

<CAPTION>
                                                             Earned Premiums
                                                             ---------------
                                                                                                 Percentage
                                                      Ceded to Other  Assumed from                of Amount
                                             Gross       Companies        Other     Net Amount   Assumed to
                                            Amount                      Companies                    Net
                                          --------------------------------------------------------------------
<S>                                          <C>              <C>            <C>       <C>               <C>
Year Ended December 31, 1996
Property/Casualty Insurance                  $142,794         $18,945        $6,931    $130,780          5.3%

Year Ended December 31, 1995
Property/Casualty Insurance                   131,717          21,333         6,552     116,936          5.6%

Year Ended December 31, 1994
Property/Casualty Insurance                   117,384          23,608         7,690     101,466          7.6%




</TABLE>












                                       S-8



                   FARM FAMILY HOLDINGS, INC. AND SUBSIDIARIES
                                   SCHEDULE VI
                SUPPLEMENTAL INFORMATION CONCERNING CONSOLIDATED
                     PROPERTY-CASUALTY INSURANCE OPERATIONS
                                ($ in Thousands)
<TABLE>
<CAPTION>


                           Reserve for                                                Adjustment
                              Unpaid                                                    Expense
                              Claims                                                   Incurred   Amortization Paid Claims
                  Deferred   & Claim    Discount                             Net      Related to   of Deferred   and Claim
                Acquisition Adjustment   if any     Unearned     Earned  Investment Current  Prior Acquisition Adjustment    Premium
                   Costs     Expenses   Deducted    Premiums    Premiums   Income    Year     Year    Costs     Expenses     Written
Affiliation with
Registrant
---------------------------
<S>                 <C>       <C>                    <C>        <C>       <C>     <C>       <C>       <C>       <C>         <C>
Year Ended
December 31, 1996
Property and

Casualty business   $ 10,682  $141,220               $55,945    $130,780  $15,952 $100,418  $(5,441)  $26,348   $89,917     $133,844

Year Ended
December 31, 1995
Property and
Casualty business     10,527   137,978                52,799     116,936   14,326   88,366   (5,182)   23,162    73,585      120,834

Year Ended
December 31, 1994
Property and
Casualty business      8,671   127,954                48,843     101,466   13,190   86,370   (3,690)   19,469    77,672      105,614





</TABLE>











                                       S-9


                                                       EXHIBIT INDEX

                                           FARM FAMILY HOLDINGS, INC. FORM 10-K
                                           FOR THE YEAR ENDED DECEMBER 31, 1996

<TABLE>

                                                                                                            Sequential
                                                                                                           Page Number
Exhibit Number       Document Description

*2.1                 Plan  of  Reorganization  and  Conversion  dated  February  14,  1996 as  amended  by
                     Amendment No. 1, dated April 23, 1996

*3.1                 Certificate of Incorporation of Farm Family Holdings, Inc.

*3.2                 Bylaws of Farm Family Holdings, Inc.

*10.1                Option Purchase Agreement,  dated February 14, 1996, among Farm Family Holdings, Inc.
                     and The Shareholders of Farm Family Life Insurance Company Listed Therein

 10.2                Amended and Restated  Expense  Sharing  Agreement,  made effective as of February 14,
                     1996, by and among Farm Family Mutual Insurance  Company,  Farm Family Life Insurance
                     Company and Farm Family Holdings, Inc.

*10.3                Indenture  of  Lease,  made  the 1st day of  January  1988,
                     between Farm Family Life Insurance  Company and Farm Family
                     Mutual  Insurance  Company as amended by the  Amendment  to
                     Lease, effective January 1, 1994

 10.4                Underlying  Multi-Line  Per Risk  Reinsurance  Contract,  effective  January 1, 1995,
                     issued to Farm  Family  Mutual  Insurance  Company by The  Subscription  Reinsurer(s)
                     Executing the Interests and Liabilities  Agreement(s) Attached Thereto, as amended by
                     Addendum No. 1, effective January 1, 1996  (Incorporated by reference to Registration
                     Statement No. 333-4446),  Addendum No. 2, effective January 1, 1996,  Addendum No. 3,
                     effective July 26, 1996

 10.5                Umbrella Quota Share Reinsurance Contract,  effective January 1, 1995, issued to Farm
                     Family Mutual Insurance Company and United Farm Family Insurance Company,  as amended
                     by  Addendum  No.  1,  effective  January  1,  1995  (Incorporated  by  reference  to
                     Registration  Statement  No.  333-4446),  and Addendum No. 2 effective  July 26, 1996

*10.6                Excess  Catastrophe  Reinsurance  Contract  effective January 1, 1996, issued to Farm
                     Family Mutual Insurance Company

*10.7                Assumption  Agreement,  commencing  January  1,  1995,  between  Farm  Family  Mutual
                     Insurance Company and United Farm Family Insurance Company

*10.8                Service  Agreement,  made  effective  as of July 25, 1988 by and between  Farm Family
                     Mutual Insurance Company and United Farm Family Insurance Company

*10.9                Form of Membership  List  Purchase  Agreement  between Farm Family  Mutual  Insurance
                     Company and each of the Farm Bureaus

*10.10               Farm Family Mutual Insurance Company 8% Subordinated Surplus Certificate,  as amended
                     by Certificate of Amendment No. 1 and Trust Indenture,  dated as of December 29, 1976
                     relating to the 8% Subordinated Surplus Certificates





                                       E-1
                                                                                                            Sequential
                                                                                                            Page Number
<S>                  <C>
Exhibit Number       Document Description

*10.11               Farm Family Mutual  Insurance  Company 5%  Debenture,  as amended by  Certificate  of
                     Amendment,  effective  January 1, 1969,  Certificate  of Amendment  No. 2,  effective
                     January 1, 1979,  Certificate of Amendment No. 3 and  Supplemental  Trust  Indenture,
                     dated as of August  25,  1955  Amending  Trust  Indenture,  dates as of May 16,  1955
                     Relating to The 5% Debentures,  as amended by  Certificate of Amendment,  dated as of
                     August 25,  1955,  Certificate  of  Amendment  No. 2,  dated as of August  25,  1955,
                     Certificate of Amendment No. 3 dated as of August 25, 1955

*10.12               Farm Family Mutual Insurance Company Officer Severance Pay Plan, adopted effective
                     August 1, 1994

*10.13               Farm Family Mutual Insurance Company  Supplemental  Employee Retirement Plan, adopted
                     as of January 1, 1994

 10.14               Farm Family Holdings,  Inc. Directors' Deferred  Compensation Plan, effective January
                     1, 1997

 10.15               Farm Family Holdings,  Inc. Officers' Deferred  Compensation Plan,  effective January
                     1, 1997

 10.16               Farm Family Holdings, Inc. Annual Incentive Plan effective January 1, 1997

 10.17               Farm Family Supplemental Savings and Profit Sharing Plan effective January 1, 1997

 10.18               Tax  Payment  Allocation  Agreement  effective  January 1, 1996 by and  between  Farm
                     Family Holdings, Inc. and Farm Family Casualty Insurance Company

 11                  Computation of Earnings per Common Share

 13                  Farm Family Holdings, Inc. 1996 Annual Report

 21                  Subsidiaries of the Registrant

*   Incorporated by reference to Registration Statement No. 333-4446


</TABLE>





                                       E-2


<PAGE>


Exhibit 10.2
                              AMENDED AND RESTATED
                            EXPENSE SHARING AGREEMENT

     This Amended and Restated Expense Sharing  Agreement,  made effective as of
February 14, 1996, by and among Farm Family Mutual Insurance Company  ("FFMIC"),
Farm Family Life Insurance  Company  ("FFLIC"),  and Farm Family Holdings,  Inc.
("FFH").

     WHEREAS,  FFMIC  and  FFLIC  entered  into an  Expense  Sharing  Agreement,
effective as of January 1, 1996 (the "Agreement"),  providing for the sharing of
certain  expenses  between the parties and  defining  the methods to be used for
allocating such expenses; and

     WHEREAS,  FFMIC and FFLIC wish to amend and restate the Agreement,  for the
purpose of making FFH a party; and WHEREAS,  FFH wishes to become a party to the
Agreement,  as amended and restated, for the purpose of sharing certain expenses
with FFMIC and FFLIC using the methodology described therein.

         NOW,  THEREFORE,  in  consideration  of the  premises and of the mutual
covenants  herein  contained,  and intending to be legally bound hereby,  FFMIC,
FFLIC  and FFH  agree  that the text of the  Agreement  is  hereby  amended  and
restated, effective February 14, 1996, to read in full as follows:

         1.  Methods  of  Allocation.  Subject  to New  York  Insurance  Law and
Regulations,  the  methods  for  allocating  expenses  shared  pursuant  to this
Agreement  shall be those used by the parties  for  internal  cost  distribution
including,  where appropriate,  time records prepared at least annually for this
purpose.
         As used in this Agreement,  the following  capitalized terms shall have
the following meanings:
(a) Weighted  Time Method.  Weighted  Time Method means the method of allocation
based on a series of ratios  derived from weighted time studies  conducted  from
time to time for the purpose of quantifying  the efforts of directors,  officers
and employees as applied to each party.
         (b) Written Premium Method.  Written Premium Method means the method of
allocation based on the ratio of (i) the annual amount of direct written premium
written by each individual party to this Agreement as reported in the statements
filed with the New York Insurance Department to (ii) the annual amount of direct
written  premium  written by all parties to this  Agreement in the  aggregate as
reported in the statements  filed with the New York Insurance  Department.  Such
direct  written  premiums for clauses (i) and (ii) shall be  calculated as gross
premiums less return premiums.

     (c)  Actual  Usage.  Actual  Usage  means the  estimated  actual  hours (or
fractions thereof) of use benefiting a party.

     2. Direct Expenses. All expenses for goods, services or facilities that are
incurred  for the sole  benefit  of any party  shall be charged to the party for
whose benefit such expenses were incurred at cost.

     3. Shared Expenses. If any party incurs an expense for goods,  services, or
facilities that benefits the other parties to this Agreement,  then that expense
shall be shared among the parties on a reasonable  and equitable  basis.  Unless
otherwise  agreed to by the parties  hereto the  following  basis of  allocation
shall be used:

     (a)  Salaries.  Salaries  and expenses  related to officers and  employees,
including  but not limited to employee  benefits  and  payroll  taxes,  shall be
allocated pro rata among the parties according to the Weighted Time Method.

     (b) Directors'  Expenses.  Directors'  expenses shall be allocated pro rata
among the parties according to the Weighted Time Method.

     (c) Office  Space.  (i) Home office costs will be shared  between FFMIC and
FFLIC pursuant to a presently existing lease between these companies, dated July
1, 1988, as amended.  FFH agrees to reimburse FFMIC for its share of Home Office
costs according to the Weighted Time Method.  (ii) The costs for all other joint
office space shall be allocated among the parties according to the Weighted Time
Method.

     (d) Fixed Assets.  Where fixed assets,  including but not limited to office
equipment,  furniture,  computer  equipment and motor vehicles,  are held in the
name of one party and used jointly by the parties,  the annual  depreciation  or
costs of such assets shall be allocated pro rata among the parties  according to
the Weighted Time Method.

     (e) General Expenses.  (i) General  expenses,  including but not limited to
postage,  telephone,  equipment  rental,  books  and  subscriptions,   shall  be
allocated pro rata among the parties according to the Weighted Time Method. (ii)
The costs  associated with  conferences and meetings shall be allocated pro rata
among the parties  according to the Written Premium  Method.  (iii) The costs of
electronic  data  processing  services  shall be  allocated  pro rata  among the
parties according to Actual Usage.

     (f) Advertising. Advertising expenses shall be allocated pro rata among the
parties according to the Written Premium Method.

     (g) Other Shared  Expenses.  All other shared  expenses,  if any,  shall be
allocated among the parties in accordance with the applicable New York Insurance
Law and Regulations, as the same may be amended from time to time.

     4. Modification of Allocations.  The methods and bases used to allocate the
expenses shared pursuant to this Agreement shall be reviewed, at least annually,
and modified and  adjusted by the mutual  agreement of the parties  hereto where
necessary or appropriate to reflect fairly and equitably the actual incidence of
cost incurred by the parties.

     To  the  extent  that  any  allocation  methodology  set  forth  herein  is
determined to be contrary to, or in violation of, an existing New York Insurance
Law or Regulation,  the parties agree that this Agreement shall be automatically
conformed to comply with said Law or Regulation.

     5.  Payment.  The amounts due  hereunder  shall be determined at the end of
each month using the same  accounting  principles  and practices used for filing
quarterly and annual  statements  with the New York  Insurance  Department.  All
charges under this  Agreement  shall be paid within  fifteen (15) days following
the end of each month.

     6. Termination and  Modification.  This Agreement or any part thereof shall
remain in effect until  terminated  in whole or in part by mutual  consent or by
any party upon giving at least 60 days advance written notice.


     This  Agreement may be amended only by mutual  consent in writing signed by
the parties.

     7.  Settlement  on  Termination.  No later than  thirty (30) days after the
effective date of termination of this Agreement, each party shall deliver to the
other  parties a detailed  written  statement  of all charges  incurred  and not
included in any statement prior to the effective date of termination. The amount
owed  hereunder  shall be due and payable  within thirty (30) days of receipt of
such  statement.

     8.  Assignment.  This Agreement and any rights pursuant hereto shall not be
assignable  by any party  hereto,  except by operation  of law.  Nothing in this
Agreement,  expressed or implied, is intended to confer on any person other than
the parties hereto, or their respective legal successors,  any rights, remedies,
obligations  or  liabilities,  or to relieve  any person  other than the parties
hereto,  or  their  respective  legal   successors,   from  any  obligations  or
liabilities that would otherwise be applicable.

     9.  Governing Law. This Agreement is made pursuant to and shall be governed
by,  interpreted  under, and the rights of the parties  determined in accordance
with the laws of the State of New York.

     10.  Notice.  All notices,  statements  or requests  provided for hereunder
shall be in writing  and shall be deemed to have been duly given when  delivered
by hand to an officer of the other party, or when deposited with the U.S. Postal
Service, as certified or registered mail, postage prepaid,  addressed:

                                    (a)     If to FFMIC to:
                                            Farm Family Mutual Insurance Company
                                            PO. Box 656 Albany,  New York 12201

                                            Attn: Corporate Secretary



                                    (b)     If to FFLIC  to:
                                            Farm Family Life Insurance Company
                                            PO. Box 656
                                            Albany, New York   12201

                                            Attn:  Corporate Secretary

                                    (c)     If to FFH to:

                                            Farm Family Holdings, Inc.
                                            P.O. Box 656
                                            Albany, New York   12201

                                            Attn:  Corporate Secretary

     or to such person or place as each party may from time to time designate by
written notice sent as aforesaid.

     11. Headings.  The headings of the various paragraphs of this Agreement are
for  convenience  only, and shall be accorded no weight in the  construction  of
this Agreement.

     12. Entire Agreement. This Agreement,  together with such Amendments as may
from time to time be executed in writing by the parties,  constitutes the entire
Agreement among the parties with respect to the subject matter hereof.


<PAGE>


     IN WITNESS  WHEREOF,  the parties have caused this Agreement to be executed
by their respective duly authorized officers as of the date and year first above
written.

                                      FARM FAMILY MUTUAL INSURANCE COMPANY

                                            BY:  /s/ Charles E. Simon
                                            --------------------------
                                            Charles E. Simon
                                            Senior Vice President
                                             and Chief Financial Officer


                                     FARM FAMILY LIFE INSURANCE COMPANY


                                            BY:  /s/ Philip P. Weber
                                            ------------------------
                                            Philip P. Weber
                                            Executive Vice President and Chief
                                             Executive Officer


                                     FARM FAMILY HOLDINGS, INC.


                                            BY:  /s/ Philip P. Weber
                                            ------------------------
                                            Philip P. Weber
                                            President and Chief Executive
                                             Officer


<PAGE>







Exhibit 10.4





                                 Addendum No. 2

                                     to the

                         Underlying Multi-Line Per Risk
                              Reinsurance Contract
                           Effective: January 1, 1995

                                    issued to

                      Farm Family Mutual Insurance Company
                               Glenmont, New York
                   (hereinafter referred to as the "Company")



It Is Hereby Agreed,  effective January 1, 1996, that paragraph A of Article X -
Reinsurance Premium (BRMA 43K) - shall be deleted and the following  substituted
therefor:

"A. As premium for the reinsurance provided hereunder, the Company shall pay the
Reinsurer 7.0% of its net earned premium (as defined in Article VII)."

The provisions of this Contract shall remain otherwise unchanged.

In Witness  Whereof,  the  Company  by its duly  authorized  representative  has
executed this Addendum as of the date undermentioned at:

Glenmont,  New York,  this  _______  day of  ___________________________________
199___.

                             _/s/ Philip P. Weber_____________________________
                             Farm Family Mutual Insurance Company









<PAGE>


                                 Addendum No. 2

                                     to the

                       Interests and Liabilities Agreement

                                       of

                      United Farm Family Insurance Company
                               Glenmont, New York
            (hereinafter referred to as the "Subscribing Reinsurer")

                               with respect to the

                         Underlying Multi-Line Per Risk
                              Reinsurance Contract
                           Effective: January 1, 1995

                                    issued to

                      Farm Family Mutual Insurance Company
                               Glenmont, New York
                   (hereinafter referred to as the "Company")



The Subscribing Reinsurer hereby accepts Addendum No. 2, as duly executed by the
Company, as part of the Contract, effective January 1, 1996.

In  Witness   Whereof,   the  Subscribing   Reinsurer  by  its  duly  authorized
representative has executed this Addendum as of the date undermentioned at:

Glenmont,  New York,  this  _______  day of  ___________________________________
199___.

                                  /s/ Charles E. Simon________________________
                                       United Farm Family Insurance Company




<PAGE>


                                 Addendum No. 3

                                     to the

                         Underlying Multi-Line Per Risk
                              Reinsurance Contract
                           Effective: January 1, 1995

                                    issued to

                      Farm Family Mutual Insurance Company
                               Glenmont, New York
                   (hereinafter referred to as the "Company")



It Is Hereby  Agreed,  effective  July 26,  1996,  that all  references  in this
Contract to "Farm  Family  Mutual  Insurance  Company"  shall be amended to read
"Farm Family Casualty Insurance Company."

The provisions of this Contract shall remain otherwise unchanged.

In Witness  Whereof,  the  Company  by its duly  authorized  representative  has
executed this Addendum as of the date undermentioned at:

Glenmont,  New York,  this  ________  day of  __________________________________
199___.

                             __/s/ Philip P. Weber_____________________________
                             Farm Family Casualty Insurance Company


<PAGE>


                                 Addendum No. 3

                                     to the

                       Interests and Liabilities Agreement

                                       of

                      United Farm Family Insurance Company
                               Glenmont, New York
            (hereinafter referred to as the "Subscribing Reinsurer")

                               with respect to the

                         Underlying Multi-Line Per Risk
                              Reinsurance Contract
                           Effective: January 1, 1995

                                    issued to

                      Farm Family Mutual Insurance Company
                               Glenmont, New York
                   (hereinafter referred to as the "Company")



The Subscribing Reinsurer hereby accepts Addendum No. 3, as duly executed by the
Company, as part of the Contract, effective July 26, 1996.

In  Witness   Whereof,   the  Subscribing   Reinsurer  by  its  duly  authorized
representative has executed this Addendum as of the date undermentioned at:

Glenmont, New York, this _______day of___________________________________199___.

                                  ___/s/ Timothy A. Walsh______________________
                                   United Farm Family Insurance Company


<PAGE>


                                 Addendum No. 2

                                     to the

                              Umbrella Quota Share
                              Reinsurance Contract
                           Effective: January 1, 1995

                                    issued to

                      Farm Family Mutual Insurance Company
                               Glenmont, New York
                   (hereinafter referred to as the "Company")



It Is Hereby  Agreed,  effective  July 26,  1996,  that all  references  in this
Contract to "Farm  Family  Mutual  Insurance  Company"  shall be amended to read
"Farm Family Casualty Insurance Company."

The provisions of this Contract shall remain otherwise unchanged.

In Witness  Whereof,  the  Company  by its duly  authorized  representative  has
executed this Addendum as of the date undermentioned at:

Glenmont, New York, this ____5____ day of __December____________________________
1996___.

                             /s/ Philip P. Weber________________________________
                             Farm Family Casualty Insurance Company


<PAGE>


                                 Addendum No. 2

                                     to the

                       Interests and Liabilities Agreement

                                       of

                          Continental Casualty Company
                                Chicago, Illinois
            (hereinafter referred to as the "Subscribing Reinsurer")

                               with respect to the

                              Umbrella Quota Share
                              Reinsurance Contract
                           Effective: January 1, 1995

                                    issued to

                      Farm Family Mutual Insurance Company
                               Glenmont, New York
                   (hereinafter referred to as the "Company")



The Subscribing Reinsurer hereby accepts Addendum No. 2, as duly executed by the
Company, as part of the Contract, effective July 26, 1996.

In  Witness   Whereof,   the  Subscribing   Reinsurer  by  its  duly  authorized
representative has executed this Addendum as of the date undermentioned at:

Chicago, Illinois, this_______day of____________________________________199___.

                             ---------------------------------------------------
                             Continental Casualty Company


<PAGE>


                                 Addendum No. 2

                                     to the

                       Interests and Liabilities Agreement

                                       of

                      United Farm Family Insurance Company
                               Glenmont, New York
            (hereinafter referred to as the "Subscribing Reinsurer")

                               with respect to the

                              Umbrella Quota Share
                              Reinsurance Contract
                           Effective: January 1, 1995

                                    issued to

                      Farm Family Mutual Insurance Company
                               Glenmont, New York
                   (hereinafter referred to as the "Company")



The Subscribing Reinsurer hereby accepts Addendum No. 2, as duly executed by the
Company, as part of the Contract, effective July 26, 1996.

In  Witness   Whereof,   the  Subscribing   Reinsurer  by  its  duly  authorized
representative has executed this Addendum as of the date undermentioned at:

Glenmont,  New York,  this  ____5____ day of  ______December____________________
1996___.

                             /s/ Timothy A. Walsh_______________________________
                             United Farm Family Insurance Company



<PAGE>


                                 Addendum No. 2

                                     to the

                       Interests and Liabilities Agreement

                                       of

                        Folksamerica Reinsurance Company
                               New York, New York
            (hereinafter referred to as the "Subscribing Reinsurer")

                               with respect to the

                              Umbrella Quota Share
                              Reinsurance Contract
                           Effective: January 1, 1995

                                    issued to

                      Farm Family Mutual Insurance Company
                               Glenmont, New York
                   (hereinafter referred to as the "Company")



The Subscribing Reinsurer hereby accepts Addendum No. 2, as duly executed by the
Company, as part of the Contract, effective July 26, 1996.

In  Witness   Whereof,   the  Subscribing   Reinsurer  by  its  duly  authorized
representative has executed this Addendum as of the date undermentioned at:

New York,  New York,  this  _______  day of  ___________________________________
199___.

                             ---------------------------------------------------
                             Folksamerica Reinsurance Company


<PAGE>


                                 Addendum No. 2

                                     to the

                       Interests and Liabilities Agreement

                                       of

                           Kemper Reinsurance Company
                              Long Grove, Illinois
            (hereinafter referred to as the "Subscribing Reinsurer")

                               with respect to the

                              Umbrella Quota Share
                              Reinsurance Contract
                           Effective: January 1, 1995

                                    issued to

                      Farm Family Mutual Insurance Company
                               Glenmont, New York
                   (hereinafter referred to as the "Company")



The Subscribing Reinsurer hereby accepts Addendum No. 2, as duly executed by the
Company, as part of the Contract, effective July 26, 1996.

In  Witness   Whereof,   the  Subscribing   Reinsurer  by  its  duly  authorized
representative has executed this Addendum as of the date undermentioned at:

Long Grove, Illinois, this _______ day of________________________________199___.

                             ---------------------------------------------------
                                    Kemper Reinsurance Company


<PAGE>


                                 Addendum No. 2

                                     to the

                       Interests and Liabilities Agreement

                                       of

                         Signet Star Reinsurance Company
                              Wilmington, Delaware
            (hereinafter referred to as the "Subscribing Reinsurer")

                               with respect to the

                              Umbrella Quota Share
                              Reinsurance Contract
                           Effective: January 1, 1995

                                    issued to

                      Farm Family Mutual Insurance Company
                               Glenmont, New York
                   (hereinafter referred to as the "Company")



The Subscribing Reinsurer hereby accepts Addendum No. 2, as duly executed by the
Company, as part of the Contract, effective July 26, 1996.

In  Witness   Whereof,   the  Subscribing   Reinsurer  by  its  duly  authorized
representative has executed this Addendum as of the date undermentioned at:

Florham Park,  New Jersey,  this _______ day of  _______________________________
199___.

                             ---------------------------------------------------
                                            Signet Star Reinsurance Company


<PAGE>


Exhibit 10.14





                           FARM FAMILY HOLDINGS, INC.

                      DIRECTORS' DEFERRED COMPENSATION PLAN





<TABLE>


                           FARM FAMILY HOLDINGS, INC.
                      DIRECTORS' DEFERRED COMPENSATION PLAN
                                TABLE OF CONTENTS


                                                                                                                   Page No.

<S>               <C>                                                                                         <C>
         ARTICLE 1  DEFINITIONS                                                                              1
                  1.01  Accrued Benefit                                                                      1
                  1.02  Agreement                                                                            1
                  1.03  Annual Deferral Amount                                                               1
                  1.04  Board of Directors                                                                   1
                  1.05  Change in Control                                                                    1
                  1.06  Code                                                                                 2
                  1.07  Company                                                                              2
                  1.08  Compensation                                                                         2
                  1.09  Committee                                                                            2
                  1.10  Deferred Amounts                                                                     2
                  1.11  Designated Beneficiary(ies)                                                          2
                  1.12  Director                                                                             2
                  1.13  Distribution Election                                                                2
                  1.14  Earnings                                                                             3
                  1.15  Effective Date                                                                       3
                  1.16  Election of Deferral                                                                 3
                  1.17  Eligible Participant                                                                 3
                  1.18  ERISA                                                                                3
                  1.19  Notice of Discontinuance                                                             3
                  1.20  Participant                                                                          3
                  1.21  Plan                                                                                 3
                  1.22  Plan Year                                                                            3
                  1.23  Retirement Book Account                                                              3
                  1.24  Secretary                                                                            3
                  1.25  Termination Date                                                                     3
                  1.26  Unforeseeable Emergency                                                              3

         ARTICLE 2  PARTICIPATION and ELIGIBILITY                                                            4
                  2.01  Commencement of Participation                                                        4
                  2.02  Cessation of Participation                                                           4
                  2.03  Eligibility                                                                          4
                  2.04  Cessation of Eligibility                                                             4




<PAGE>


         ARTICLE 3 CONTRIBUTIONS      4
                  3.01  Election to Defer Compensation                                                       4
                  3.02  Change of Election to Defer                                                          4
                  3.03  Termination of Election to Defer                                                     5
                  3.04  Deferral Amount                                                                      5

         ARTICLE 4  ACCOUNTS AND ALLOCATIONS                                                                 5
                  4.01  Deferred Amounts                                                                     5
                  4.02  Earnings Credited to Retirement Book Account                                         5
                  4.03  Vested Interest                                                                      5

         ARTICLE 5  DISTRIBUTIONS                                                                            5
                  5.01  Methods and Election of Distribution of Accrued Benefit                              5
                  5.02  Time of Distribution                                                                 6
                  5.03  Distribution Upon Change in Control                                                  6
                  5.04  Distribution in the Event of Unforeseeable Emergency                                 6

         ARTICLE 6  ADMINISTRATION                                                                           6
                  6.01  Appointment of Committee                                                             6
                  6.02  Compensation of Committee                                                            6
                  6.03  Rules of Plan                                                                        6
                  6.04  Agents and Employees                                                                 6
                  6.05  Records                                                                              6
                  6.06  Delegation of Authority                                                              7
                  6.07  Eligibility                                                                          7
                  6.08  Indemnification                                                                      7

         ARTICLE 7  MISCELLANEOUS                                                                            7
                  7.01  No Trust Created                                                                     7
                  7.02  Benefits Payable Only From General Corporate Asset -
                         Unsecured General Creditor Status of Participant                                    7
                  7.03  No Contract of Retention                                                             8
                  7.04  Benefits Not Transferable                                                            8
                  7.05  Determination of Benefits                                                            8
                  7.06  Amendment or Termination                                                             9
                  7.07  Severability of Provisions                                                          10
                  7.08  Headings                                                                            10
                  7.09  Inurement                                                                           10
                  7.10  Notice                                                                              10
                  7.11  Governing Law                                                                       10
                  7.12  Pronouns                                                                            10

</TABLE>


<PAGE>







                           FARM FAMILY HOLDINGS, INC.
                      DIRECTORS' DEFERRED COMPENSATION PLAN


Farm  Family  Holdings,   Inc.  hereby  establishes  this  Directors'   Deferred
Compensation  Plan for the members of its Board of Directors  and the members of
the Boards of  Directors of its  affiliates.  The Plan is comprised of this plan
document  and  each  valid,   executed  Directors'  Deferred  Compensation  Plan
Agreement entered into by and between the Company and a Participant.

The Plan is not intended to be a qualified  plan pursuant to the Code;  the Plan
is intended to be unfunded  and  maintained  to qualify for purposes of Sections
201(2), 301(a)(3), 401(a)(1) and 402(b)(6) of ERISA.

                                    ARTICLE 1
                                   DEFINITIONS

     1.01  Accrued  Benefit:  The sum of all  Deferred  Amounts  credited to the
Participant's  Retirement  Book Account and due and owing to the  Participant or
Designated  Beneficiary  pursuant  to the  Plan  and the  applicable  Agreement,
together with Earnings thereon, less any distributions made hereunder.

     1.02 Agreement: The Directors' Deferred Compensation Plan Agreement entered
into by and  between the Company  and an  Eligible  Participant.  The  Agreement
includes  an  Eligible  Participant's  Election(s)  of  Deferral,   Distribution
Election and Notice of Discontinuance.

     1.03  Annual  Deferral  Amount:  The amount  selected  for  deferral  by an
Eligible Participant pursuant to Article 3.

     1.04 Board of Directors: The Board of Directors of the Company.

     1.05 Change in Control: A change in control of the Company of a nature that
would be required  to be  reported  in response to Item 6(e) of Schedule  14A of
Regulation  14A under the  Securities  Exchange  Act of 1934,  as  amended  (the
"Exchange  Act"),  whether or not the Company is subject to the  Exchange Act at
such time;  provided,  however,  that  without  limiting the  generality  of the
foregoing, a Change in Control will in any event be deemed to occur if and when:

                  (a) any person (as such term is used in  paragraphs  13(d) and
         14(d)(2)  of  the  Exchange  Act,   hereinafter  in  this   definition,
         "Person"),  other than the Company or a subsidiary or employee  benefit
         plan of the Company or  subsidiary,  becomes the  beneficial  owner (as
         defined in Rule 13d-3 under the Exchange Act),  directly or indirectly,
         of securities of the Company representing more than twenty-five percent
         (25%) of the combined  voting power of the Company's  then  outstanding
         securities;

                  (b)  stockholders  approve  a merger,  consolidation  or other
         business  combination (a "Business  Combination") other than a Business
         Combination in which holders of common stock of the Company immediately
         prior  to  the  Business   Combination  have   substantially  the  same
         proportionate  ownership of common stock of the  surviving  corporation
         immediately after the Business Combination as immediately before;

                  (c) stockholders  approve either (i) an agreement for the sale
         or disposition of all or  substantially  all of the Company's assets to
         any entity that is not a subsidiary  of the Company,  or (ii) a plan of
         complete liquidation; or

                  (d) the  persons  who were  members of the Board of  Directors
         immediately  before a tender offer by any Person other than the Company
         or a  subsidiary,  or  before  a  merger,  consolidation  or  contested
         election,  or before any  combination  of such  transactions,  cease to
         constitute  a majority  of the Board of  Directors  as a result of such
         transaction or transactions.

     1.06 Code: The Internal Revenue Code of 1986, as amended.

     1.07 Company: Farm Family Holdings,  Inc., a Delaware Corporation,  and any
successor thereto.

     1.08  Compensation:  The annual  retainer and meeting fees, as  applicable,
payable to an Eligible  Participant  by the Company or an  affiliate  thereof on
account of the Eligible Participant's services therefor as a Director.

     1.09  Committee:  The  committee  comprised of three (3) or more  Directors
selected by the Board of Directors to --------- administer the Plan.

     1.10 Deferred Amounts:  Amounts of Compensation deferred under the Plan and
credited to a Retirement Book Account.

     1.11  Designated  Beneficiary(ies):  A person or persons  designated by the
Participant to receive the  Participant's  Accrued Benefit in this Plan upon the
death  of the  Participant.  If no such  designation  has been  received  by the
Committee prior to the Participant's death, the Participant's then living spouse
shall be  treated  as the  Designated  Beneficiary.  If the  Participant  is not
survived by a spouse, the then living children of the Participant, if any, shall
be treated as the Designated Beneficiary.  If the Participant is not survived by
any children,  the estate of the Participant  shall be treated as the Designated
Beneficiary.

     1.12 Director: A member of the Board of Directors of the Company and/or the
Board of Directors of one or more affiliates of the Company.

     1.13 Distribution  Election: A written election filed by the Participant as
part of the Agreement with the Committee  specifying the method of  distribution
of the Participant's Accrued Benefit.

     1.14  Earnings:  Interest  credited to the  Participant's  Retirement  Book
Account for each month,  at the rate equal to the "Prime  Rate" as  published in
the "Money Rates" section of the Wall Street Journal,  on the first business day
of the calendar quarter containing such month.

     1.15 Effective Date: January 1, 1997.

     1.16  Election  of  Deferral:   A  written  notice  filed  by  an  Eligible
Participant with the Committee pursuant to which the Participant elects to defer
receipt of Compensation  under the Plan. The Election of Deferral is part of the
Agreement.

     1.17 Eligible Participant: An individual who is a Director.

     1.18  ERISA:  The  Employee  Retirement  Income  Security  Act of 1974,  as
amended.

     1.19  Notice of  Discontinuance:  A written  notice  filed by the  Eligible
Participant with the Committee requesting the withdrawal and cancellation,  on a
prospective  basis,  of the  Eligible  Participant's  most  recent  Election  of
Deferral. The Notice is part of the Agreement.

     1.20  Participant:  An Eligible  Participant  and/or an individual  with an
Accrued Benefit credited to a Retirement Book Account.

     1.21  Plan:  This  Plan  document,   together  with  each  executed,  valid
Agreement.

     1.22 Plan Year:  The calendar  year.  The first Plan Year begins January 1,
1997.

     1.23  Retirement Book Account:  An account  maintained for a Participant on
the Company's  accounting system reflecting such Participant's  Deferred Amounts
and Earnings thereon; provided, however, that the existence of such book entries
and a Retirement Book Account shall not create and shall not be deemed to create
a trust of any kind, or a fiduciary relationship between the Company and (a) the
Participant, (b) a Designated Beneficiary, or (c) other beneficiaries, under the
Agreement.

     1.24 Secretary: The Corporate Secretary of the Company.

     1.25  Termination  Date:  The effective date of a  Participant's  permanent
resignation or removal as a Director.

     1.26 Unforeseeable  Emergency:  An unanticipated emergency resulting from a
sudden  and   unexpected   illness  or  accident  of  the   Participant  or  the
Participant's  dependents  or  the  Designated  Beneficiary  or  the  Designated
Beneficiary's   dependents,   loss  of  the   Participant's  or  the  Designated
Beneficiary's  property  due to casualty,  or other  similar  extraordinary  and
unforeseeable  circumstance(s)  arising as a result of events beyond the control
of the  Participant  or the Designated  Beneficiary  that would result in severe
financial  hardship  to the  Participant  or  Designated  Beneficiary  if  early
distribution of the Participant's Accrued Benefit were not permitted.

                                    ARTICLE 2
                          PARTICIPATION and ELIGIBILITY

     2.01 Commencement of Participation:  An Eligible Participant shall become a
Participant  when such Eligible  Participant has fully and accurately  completed
and  executed  an  Agreement.  Each  Eligible  Participant  who is not already a
Participant in the Plan will be provided a copy of the Plan and an Agreement.

     2.02  Cessation  of  Participation:   An  Eligible   Participant  or  other
individual  will  cease  to be a  Participant  in this  Plan on the day when all
amounts to the credit of the Eligible Participant's or other individual's entire
Retirement Book Account have been distributed to such Eligible Participant or to
such Eligible Participant's Designated Beneficiary.

     2.03 Eligibility:  Each Eligible  Participant shall be permitted to make an
Election  of  Deferral  for each  respective  Plan Year for which such  Eligible
Participant is an Eligible Participant.

     2.04 Cessation of Eligibility:  An individual shall cease to be eligible to
make an Election of Deferral upon ceasing to be an Eligible Participant.

                                    ARTICLE 3
                                  CONTRIBUTIONS

     3.01 Election to Defer Compensation:  An Eligible  Participant may elect an
Annual  Deferral  Amount  hereunder  by filing an Election of Deferral  with the
Secretary.  An Election of Deferral  must be filed with the  Secretary  any time
prior to the end of the month  preceding the beginning of the Plan Year to which
it will first pertain.  The Election of Deferral shall be effective on the first
day of the Plan Year  following  the filing  thereof,  and may relate  solely to
Compensation  for  services not yet  performed  as of the date of the  election.
However,  in the first Plan Year in which an  individual  is determined to be an
Eligible Participant, such Eligible Participant may make an Election of Deferral
with  respect  to  Compensation  for  services  as a  Director  to be  performed
subsequent  to the  election,  within  thirty  (30)  days  after  the date  such
individual is determined to be an Eligible Participant.

     3.02  Change of  Election  to Defer:  The  Eligible  Participant's  initial
Election  of  Deferral  shall  continue  in effect  pursuant to the terms of the
Election of Deferral,  unless and until the Eligible  Participant files with the
Secretary  a  subsequent  Election  of  Deferral  specifying  that the  Eligible
Participant  no longer wishes to have  Compensation  deferred.  Each Election of
Deferral filed  subsequent to the initial Election of a Deferral shall similarly
continue  in effect  until the  Eligible  Participant  files a new  Election  of
Deferral.  Any new Election of Deferral,  to be effective,  must be filed at any
time prior to the end of the month  preceding  the beginning of the Plan Year to
which it will pertain.  Such new Election of Deferral  shall be effective on the
first day of the Plan Year following the filing thereof,  and may relate only to
Compensation for services not yet performed as of the date of the election.

     3.03  Termination  of Election to Defer:  The Eligible  Participant's  most
recent  Election of Deferral shall continue in effect,  pursuant to the terms of
such  Election  of  Deferral,  until the  Eligible  Participant  files  with the
Secretary a Notice of  Discontinuance  or until the  individual  ceases to be an
Eligible Participant.  A Notice of Discontinuance shall be effective if filed at
any time prior to the end of the month  preceding the beginning of the Plan Year
to which it will pertain.  Such Notice of  Discontinuance  shall be effective on
the first day of the Plan Year following the filing thereof, and may relate only
to  Compensation  for services not yet performed as of the effective date of the
Notice of  Discontinuance.  Within  the sole  discretion  of the  Committee,  an
Eligible  Participant's  Election  of  Deferral  may  be  discontinued  for  the
remainder of a Plan Year if, during a Plan Year, the Participant receives a Plan
distribution in the event of an Unforeseeable Emergency.

     3.04 Deferral  Amount:  Commencing on the Effective  Date,  and  continuing
through the Eligible Participant's  Termination Date or the date as of which the
individual  ceases  to be  an  Eligible  Participant,  whichever  occurs  first,
the Eligible Participant may elect to defer Compensation under the Plan.

                                    ARTICLE 4
                            ACCOUNTS AND ALLOCATIONS

     4.01 Deferred Amounts: Each Eligible  Participant's  Deferred Amounts shall
be  credited  to  a  Retirement  Book  Account  established  for  such  Eligible
Participant as soon as administratively  practicable after such Deferred Amounts
are earned.

     4.02 Earnings  Credited to  Retirement  Book  Account:  Each  Participant's
Retirement   Book   Account   will  be  credited   with   Earnings  as  soon  as
administratively  practicable  after  the  last  day of each  calendar  quarter.
Earnings shall be based on each respective Participant's Retirement Book Account
balance  at the  beginning  of each  month,  less any  distributions  from  such
Retirement Book Account made during such month.

     4.03 Vested Interest: Each Participant shall always be fully vested in such
Participant's entire Accrued Benefit.

                                    ARTICLE 5
                                  DISTRIBUTIONS

     5.01 Methods and Election of Distribution of Accrued Benefit: A Participant
may elect to receive the Accrued Benefit thereof in a single lump sum or in five
(5), ten (10) or fifteen (15) equal annual  installments.  Distributions will be
made to the Participant or, if the Participant is deceased, to the Participant's
Designated  Beneficiary.  The method of  distribution  must be elected  when the
Participant's initial Election of Deferral is executed thereby. The Distribution
Election must be made on a Distribution Election Form. The Distribution Election
is irrevocable by the  Participant;  provided,  however,  that the  Distribution
Election  may be  changed by the  Committee  in its sole  discretion  to another
acceptable  method under the Plan. If no method is selected by the  Participant,
the distribution of the Participant's  Accrued Benefit shall be made in a single
sum.

     5.02 Time of  Distribution:  Except as provided in Sections  5.03 and 5.04,
upon a Participant's Termination Date, the Company shall commence payment of the
Participant's  entire Accrued  Benefit as soon as  administratively  practicable
following  the end of the month  coincident  with or in which the  Participant's
Termination Date occurs,  in accordance with the distribution  method elected by
the Participant.

     5.03  Distribution  Upon Change in Control:  If a Change in Control occurs,
each Participant, or if a Participant is deceased, such Participant's Designated
Beneficiary,  shall receive the Participant's entire Accrued Benefit in a single
sum as soon as administratively  practicable following the date of the Change in
Control.

     5.04  Distribution  in the  Event  of  Unforeseeable  Emergency:  An  early
distribution  may be approved by the Committee in the event of an  Unforeseeable
Emergency; provided, however, that such a distribution shall be permitted solely
to the extent  reasonably  necessary to meet the Participant's or the Designated
Beneficiary's financial needs with respect to the Unforeseeable Emergency.

                                    ARTICLE 6
                                 ADMINISTRATION

     6.01 Appointment of Committee:  The general  administration of the Plan and
the  responsibility  for  carrying out its  provisions  shall be placed with the
Committee which shall be appointed from time to time by the Board of Directors.

     6.02  Compensation  of Committee:  The members of the  Committee  shall not
receive  compensation  for their  services as such,  other than regular  meeting
fees, and, except as required by law, no bond or other security need be required
of them in such capacity in any jurisdiction.

     6.03 Rules of Plan:  Subject to the  limitations of the Plan, the Committee
may, from time to time,  establish  policies for the  administration of the Plan
and the transaction of its business.  The Committee may correct errors,  however
arising, and, as far as possible,  adjust any benefit payments accordingly.  The
determination of the Committee as to the interpretation of the provisions of the
Plan or any disputed  question with respect to the Plan shall be conclusive upon
all interested parties.

     6.04 Agents and  Employees:  The Committee may authorize one or more agents
to execute or deliver any  instrument.  The Committee may appoint or employ such
agents,  counsel,  auditors,  physicians,  clerical help and actuaries as in the
Committee's   judgment   shall  be   reasonable  or  necessary  for  the  proper
administration of the Plan.

     6.05  Records:   The  Committee   shall  maintain   accounts   showing  the
transactions of the Plan. The Committee shall prepare and submit annually to the
Board of Directors a report setting forth the amounts credited to the Retirement
Book  Accounts and the related  corporate  liability  equal to the total Accrued
Benefit of all  Participants.  The report to the Board of  Directors  shall also
include a brief account of the operation of the Plan for the Plan Year.

     6.06  Delegation of Authority:  With the consent of the Board of Directors,
the Committee may, by  resolution,  delegate to any person or persons any or all
of its rights  and  duties  hereunder.  Any such  delegation  shall be valid and
binding on all persons, and the person or persons to whom any such authority has
been delegated shall, upon written acceptance of such authority, have full power
to act in all matters so delegated  until the authority  expires by its terms or
is revoked by the Committee.

     6.07 Eligibility:  The members of the Committee shall not be precluded from
becoming Participants or Eligible  Participants in the Plan; provided,  however,
that no member of the Committee who is a Participant or an Eligible  Participant
shall have any authority with respect to his own participation in the Plan.

     6.08  Indemnification:  The  Company  shall  indemnify  each  member of the
Committee  for all expenses and  liabilities  (including  reasonable  attorneys'
fees) arising out of the  administration of the Plan, other than any expenses or
liabilities  resulting  from the  Committee's  own gross  negligence  or willful
misconduct.  The foregoing right of indemnification  shall be in addition to any
other rights to which the members of the Committee shall be entitled as a matter
of law.

                                    ARTICLE 7
                                  MISCELLANEOUS

     7.01 No Trust Created:  Nothing  contained in the Plan, and no action taken
pursuant  to the Plan by the  Company or any  Participant  shall  create,  or be
construed to create,  a trust of any kind, or a fiduciary  relationship  between
the Company and the  Participant,  the spouse of any  Participant,  a Designated
Beneficiary or any other person. Any trust created by the Company and any assets
held by any such trust to assist the  Company in meeting its  obligations  under
the Plan shall  conform to the terms of the model  trust  described  in Internal
Revenue Procedure 92-64 and as subsequently modified.

     7.02  Benefits  Payable  Only From  General  Corporate  Assets -  Unsecured
General  Creditor Status of  Participant:  Payments to any  Participant,  to any
Participant's spouse or to any Designated  Beneficiary shall be made from assets
which  shall  continue,  for  all  purposes,  to  be  a  part  of  the  general,
unrestricted  assets of the Company.  Title to and  beneficial  ownership of any
assets, whether cash or investments which the Company may earmark to pay Accrued
Benefits hereunder,  shall at all times remain in the Company and no Participant
or Designated  Beneficiary  shall have any property  interest  whatsoever in any
specific  asset of the  Company.  No person  shall have any interest in any such
assets  by virtue of the  provisions  of this  Plan.  The  Company's  obligation
hereunder  shall be  unfunded,  for tax  purposes and for purposes of Title I of
ERISA, and an unsecured  promise to pay money in the future.  To the extent that
any person acquires a right to receive payments from the Company under the Plan,
such right shall be no greater than the right of any unsecured  general creditor
of the Company, and no such person shall have nor acquire any legal or equitable
right, interest or claim in or to any property or asset of the Company.

In the event that, in its discretion,  the Company purchases an insurance policy
or policies  insuring the life of a Participant  or any other  property to allow
the  Company to recover  the cost of  providing  benefits,  in whole or in part,
hereunder, neither the Participant, the Participant's Designated Beneficiary nor
any other person shall have any rights whatsoever to the proceeds therefrom. The
Company shall be the sole owner and beneficiary of any such insurance policy and
shall  possess and may exercise all  incidents  of  ownership  therein.  No such
policy,  policies  or  other  property  shall  be  held  in any  trust  for  the
Participant or any other person nor as collateral security for any obligation of
the Company hereunder.

There is no  obligation  on the part of the  Company  to fund for any  liability
which accrues as a result of the Plan.

     7.03 No Contract of Retention:  Nothing contained herein shall be construed
to be a  contract  of  retention  as a  Director  for any term of years,  nor as
conferring  upon any  Participant  the right to  continue  to be  retained  as a
Director  in the  Participant's  present  capacity,  or in any  capacity.  It is
expressly  understood  that the Plan relates merely to the promise of payment of
deferred  compensation  for the  Participant's  services as a Director,  payable
after the Participant's Termination Date.

     7.04  Benefits  Not  Transferable:  Neither the  Participant,  a Designated
Beneficiary  nor any other  beneficiary  under the Plan  shall have any power or
right to transfer,  assign,  anticipate,  hypothecate or otherwise  encumber any
part or all of the amounts  payable  hereunder.  A  Participant's  or Designated
Beneficiary's  rights to benefit  payments under the Plan are not subject in any
manner  to  anticipation,   alienation,  sale,  transfer,   assignment,  pledge,
encumbrance, attachment or garnishment by creditors of the Participant or of the
Designated  Beneficiary,  and no such amounts shall be subject to seizure by any
creditor of any Participant or Designated Beneficiary, by a proceeding at law or
in equity,  nor shall such  amounts be  transferable  by operation of law in the
event  of  bankruptcy,  insolvency  or death of the  Participant  or  Designated
Beneficiary,  or any other beneficiary hereunder.  Any such attempted assignment
or transfer shall be void.

     7.05  Determination  of Benefits:  A  Participant  who  believes  that such
Participant is being denied a benefit to which the Participant is entitled under
the Plan  (hereinafter  referred to as a "Claimant")  may file a written request
for such benefit with the Committee,  setting forth the Participant's claim. The
request must be addressed to the Secretary at the principal place of business of
the Company.

Upon receipt of a claim,  the  Secretary  shall advise the Claimant that a reply
will be  forthcoming  within ninety (90) days and shall,  in fact,  deliver such
reply within such period.  The Committee may,  however,  extend the reply period
for an additional ninety (90) days for reasonable cause.

If the claim is denied in whole or in part, the Committee shall render a written
opinion,  using  language  calculated to be understood by the Claimant,  setting
forth:

         (a)      The specific reason or reasons for such denial;

         (b)      The specific reference to pertinent provisions of the Plan
                  upon which such denial is based;

         (c)      A description of any additional  material or information
                  necessary for the Claimant to perfect his claim and an
                  explanation why such material or such information is
                  necessary; and

         (d)      Appropriate information as to the steps to be taken if the
                  Claimant wishes to submit the claim for review and the time
                  period  within which such review must be requested.

Within sixty (60) days after the receipt by the Claimant of the written  opinion
described above, the Claimant may request in writing that the Board of Directors
review the determination of the Committee. Such request must be addressed to the
Board of  Directors  at the  principal  place of  business of the  Company.  The
Claimant or the Claimant's  duly  authorized  representative  may, but need not,
review the  pertinent  documents  and submit  issues and comments in writing for
consideration  by the Board of  Directors.  If the  Claimant  does not request a
review of the Committee's  determination  by the Board of Directors  within such
sixty  (60)  day  period,  the  Claimant  shall  be  barred  and  estopped  from
challenging the Committee's determination.

Within  sixty (60) days after the Board of  Directors'  receipt of a request for
review from a Claimant,  the Board of  Directors  shall  review the  Committee's
determination.  If the  Claimant  is a member  of the  Board of  Directors,  the
Claimant shall be precluded from participating in the Board of Directors' review
of the  Claimant's  claim.  After  considering  all  material  presented  by the
Claimant,  the Board of Directors shall render a written  opinion,  written in a
manner  calculated to be understood by the Claimant,  setting forth the specific
reasons for the decision and  containing  specific  references  to the pertinent
provisions   of  the  Plan  upon  which  the  decision  is  based.   If  special
circumstances require that the sixty (60) day time period be extended, the Board
of  Directors  shall so notify the Claimant and will render the decision as soon
as possible,  but not later than one hundred  twenty (120) days after receipt of
the request for review from the Claimant.

     7.06 Amendment or Termination:  The Board of Directors, without the consent
of any Participant or Designated Beneficiary, may amend or terminate the Plan at
any  time;  provided,  however,  that  no  amendment  shall  be  made  or act of
termination taken which divests any Participant or Designated Beneficiary of the
unsecured  right to  receive  payments  under the Plan with  respect  to amounts
theretofore credited to the applicable Participant's Retirement Book Account.

     7.07  Severability  of  Provisions:  If any  provision  of the Plan is held
invalid or unenforceable,  such invalidity or unenforceability  shall not affect
any other provision of the Plan, and the Plan shall be construed and enforced as
if such invalid or unenforceable provision had not been included in the Plan.

     7.08 Headings:  Headings used throughout the Plan are for convenience  only
and shall not be given legal significance.

     7.09  Inurement:  The Plan  shall be  binding  upon and shall  inure to the
benefit of, the Company and its successors and assigns, and the Participants and
their   Designated   Beneficiaries   and  the  successors,   heirs,   executors,
administrators and beneficiaries thereof.

     7.10  Notice:  Any notice,  consent or demand  required or  permitted to be
given under the Plan shall be in writing and shall be signed by the party giving
or  making  the same.  If such  notice,  consent  or demand is mailed to a party
hereto, it shall be sent by United States certified mail,  postage prepaid,  and
addressed  to such  party's  last known  address as shown on the  records of the
Company. The date of such mailing shall be deemed the date of notice, consent or
demand. Any party hereto may change the address to which notice is to be sent by
giving notice of the change of address in the manner aforesaid.

     7.11 Governing Law: The Plan and the rights of the parties  hereunder shall
be governed by and be construed in accordance  with the laws of the State of New
York.

     7.12  Pronouns:  Any  masculine  term used in the Plan  shall  include  the
feminine  and any  singular  term  shall  include  the  plural,  unless the text
indicates otherwise.

     IN WITNESS  WHEREOF,  the Company has hereby  executed this Plan, as of the
date written below.


                           FARM FAMILY HOLDINGS, INC.


                           By:                      /s/Philip P. Weber
                           ---                      ------------------
                           Title:            President & Chief Executive Officer

                           Date:             November 1, 1996


<PAGE>




Exhibit 10.15


















                           FARM FAMILY HOLDINGS, INC.

                      OFFICERS' DEFERRED COMPENSATION PLAN








<TABLE>



                           FARM FAMILY HOLDINGS, INC.
                      OFFICERS' DEFERRED COMPENSATION PLAN
                                TABLE OF CONTENTS



                                                                                                                   Page No.


<S>               <C>                                                                                        <C>
         ARTICLE 1 DEFINITIONS                                                                               1
                  1.01  Accrued Benefit                                                                      1
                  1.02  Agreement                                                                            1
                  1.03  Annual Deferral Amount                                                               1
                  1.04  Board of Directors                                                                   1
                  1.05  Change in Control                                                                    1
                  1.06  Code                                                                                 2
                  1.07  Company                                                                              2
                  1.08  Compensation                                                                         2
                  1.09  Committee                                                                            2
                  1.10  Deferred Amounts                                                                     2
                  1.11  Designated Beneficiary(ies)                                                          2
                  1.12  Distribution Election                                                                2
                  1.13  Earnings                                                                             2
                  1.14  Effective Date                                                                       3
                  1.15  Election of Deferral                                                                 3
                  1.16  Eligible Participant                                                                 3
                  1.17  Employee                                                                             3
                  1.18  ERISA                                                                                3
                  1.19  Notice of Discontinuance                                                             3
                  1.20  Participant                                                                          3
                  1.21  Plan                                                                                 3
                  1.22  Plan Year                                                                            3
                  1.23  Retirement Book Account                                                              3
                  1.24  Secretary                                                                            3
                  1.25  Termination Date                                                                     3
                  1.26  Unforeseeable Emergency                                                              3

         ARTICLE 2 PARTICIPATION and ELIGIBILITY                                                             4
                  2.01  Commencement of Participation                                                        4
                  2.02  Cessation of Participation                                                           4
                  2.03  Eligibility                                                                          4
                  2.04  Cessation of Eligibility                                                             4




<PAGE>


ARTICLE 3 CONTRIBUTIONS             4
                  3.01  Election to Defer Compensation                                                       4
                  3.02  Change of Election to Defer                                                          4
                  3.03  Termination of Election to Defer                                                     5
                  3.04  Deferral Amount                                                                      5

         ARTICLE 4 ACCOUNTS AND ALLOCATIONS                                                                  5
                  4.01  Deferred Amounts                                                                     5
                  4.02  Earnings Credited to Retirement Book Account                                         5
                  4.03  Vested Interest                                                                      5

         ARTICLE 5 DISTRIBUTIONS                                                                             5
                  5.01  Methods and Election of Distribution of Accrued Benefit                              5
                  5.02  Time of Distribution                                                                 6
                  5.03  Distribution Upon Change in Control                                                  6
                  5.04  Distribution in the Event of Unforeseeable Emergency                                 6

         ARTICLE 6 ADMINISTRATION                                                                            6
                  6.01  Appointment of Committee                                                             6
                  6.02  Compensation of Committee                                                            6
                  6.03  Rules of Plan                                                                        6
                  6.04  Agents and Employees                                                                 6
                  6.05  Records                                                                              6
                  6.06  Delegation of Authority                                                              7
                  6.07  Eligibility                                                                          7
                  6.08  Indemnification                                                                      7

         ARTICLE 7 MISCELLANEOUS                                                                             7
                  7.01  No Trust Created                                                                     7
                  7.02  Benefits Payable Only From General Corporate Assets - Unsecured
                         General Creditor Status of Participant                                              7
                  7.03  No Contract of Retention                                                             9
                  7.04  Benefits Not Transferable                                                            9
                  7.05  Determination of Benefits                                                            9
                  7.06  Amendment or Termination                                                            10
                  7.07  Severability of Provisions                                                          10
                  7.08  Headings                                                                            10
                  7.09  Inurement                                                                           10
                  7.10  Notice                                                                              10
                  7.11  Governing Law                                                                       11
                  7.12  Pronouns                                                                            11

</TABLE>

<PAGE>


                           FARM FAMILY HOLDINGS, INC.
                      OFFICERS' DEFERRED COMPENSATION PLAN

Farm  Family  Holdings,   Inc.  hereby   establishes  this  Officers'   Deferred
Compensation  Plan (the "Plan") for certain key employees of the Company and its
affiliates who are selected for participation in the Plan. The Plan is comprised
of this Plan document and each valid,  executed Officers' Deferred  Compensation
Plan Agreement entered into by and between the Company and a Participant.

The Plan is not intended to be a qualified  plan pursuant to the Code;  the Plan
is intended to be unfunded  and  maintained  to qualify for purposes of Sections
201(2), 301(a)(3), 401(a)(1) and 402(b)(6) of ERISA.

                                    ARTICLE 1
                                   DEFINITIONS

     1.01  Accrued  Benefit:  The sum of all  Deferred  Amounts  credited to the
Participant's  Retirement  Book Account and due and owing to the  Participant or
Designated  Beneficiary  pursuant  to the  Plan  and the  applicable  Agreement,
together with Earnings thereon, less any distributions made hereunder.

     1.02 Agreement:  The Officers' Deferred Compensation Plan Agreement entered
into by and  between the Company  and an  Eligible  Participant.  The  Agreement
includes  an  Eligible  Participant's  Election(s)  of  Deferral,   Distribution
Election and Notice of Discontinuance.

     1.03  Annual  Deferral  Amount:  The amount  selected  for  deferral  by an
Eligible Participant pursuant to Article 3.

     1.04 Board of Directors: The Board of Directors of the Company.

     1.05 Change in Control: A change in control of the Company of a nature that
would be required  to be  reported  in response to Item 6(e) of Schedule  14A of
Regulation  14A under the  Securities  Exchange  Act of 1934,  as  amended  (the
"Exchange  Act"),  whether or not the Company is subject to the  Exchange Act at
such time;  provided,  however,  that  without  limiting the  generality  of the
foregoing, a Change in Control will in any event be deemed to occur if and when:

                  (a) any person (as such term is used in  paragraphs  13(d) and
         14(d)(2)  of  the  Exchange  Act,   hereinafter  in  this   definition,
         "Person"),  other than the Company or a subsidiary or employee  benefit
         plan of the Company or  subsidiary,  becomes the  beneficial  owner (as
         defined in Rule 13d-3 under the Exchange Act),  directly or indirectly,
         of securities of the Company representing more than twenty-five percent
         (25%) of the combined  voting power of the Company's  then  outstanding
         securities;

                  (b)  stockholders  approve  a merger,  consolidation  or other
         business  combination (a "Business  Combination") other than a Business
         Combination in which holders of common stock of the Company immediately
         prior  to  the  Business   Combination  have   substantially  the  same
         proportionate  ownership of common stock of the  surviving  corporation
         immediately after the Business Combination as immediately before;

                  (c) stockholders  approve either (i) an agreement for the sale
         or disposition of all or  substantially  all of the Company's assets to
         any entity that is not a subsidiary  of the Company,  or (ii) a plan of
         complete liquidation; or

                  (d) the  persons  who were  members of the Board of  Directors
         immediately  before a tender offer by any Person other than the Company
         or a  subsidiary,  or  before  a  merger,  consolidation  or  contested
         election,  or before any  combination  of such  transactions,  cease to
         constitute  a majority  of the Board of  Directors  as a result of such
         transaction or transactions.

     1.06 Code: The Internal Revenue Code of 1986, as amended.

     1.07 Company: Farm Family Holdings,  Inc., a Delaware corporation,  and any
successor thereto.

     1.08 Compensation:  The base salary and/or bonus, as applicable, payable to
an Eligible Participant by the Company or an affiliate thereof on account of the
Eligible Participant's services therefor as an Employee.

     1.09  Committee:  The  committee  comprised of three (3) or more  Directors
selected by the Board of Directors to administer the Plan.

     1.10 Deferred Amounts:  Amounts of Compensation deferred under the Plan and
credited to a Retirement Book Account.

     1.11  Designated  Beneficiary(ies):  A person or persons  designated by the
Participant to receive the  Participant's  Accrued Benefit in this Plan upon the
death  of the  Participant.  If no such  designation  has been  received  by the
Committee prior to the Participant's death, the Participant's then living spouse
shall be  treated  as the  Designated  Beneficiary.  If the  Participant  is not
survived by a spouse, the then living children of the Participant, if any, shall
be treated as the Designated Beneficiary.  If the Participant is not survived by
any children,  the estate of the Participant  shall be treated as the Designated
Beneficiary.

     1.12 Distribution  Election: A written election filed by the Participant as
part of the Agreement with the Committee  specifying the method of  distribution
of the Participant's Accrued Benefit.

     1.13  Earnings:  Interest  credited to the  Participant's  Retirement  Book
Account for each month,  at the rate equal to the "Prime  Rate" as  published in
the "Money Rates" section of the Wall Street Journal,  on the first business day
of the calendar quarter containing such month.

     1.14 Effective Date: January 1, 1997.

     1.15  Election  of  Deferral:   A  written  notice  filed  by  an  Eligible
Participant with the Committee pursuant to which the Participant elects to defer
receipt of Compensation  under the Plan. The Election of Deferral is part of the
Agreement.

     1.16  Eligible  Participant:  An  Employee  who is selected by the Board of
Directors as eligible to participate in the Plan.

     1.17 Employee: An individual who is employed by the Company or an affiliate
thereof.

     1.18  ERISA:  The  Employee  Retirement  Income  Security  Act of 1974,  as
amended.

     1.19  Notice of  Discontinuance:  A written  notice  filed by the  Eligible
Participant with the Committee requesting the withdrawal and cancellation,  on a
prospective  basis,  of the  Eligible  Participant's  most  recent  Election  of
Deferral. The Notice is part of the Agreement.

     1.20  Participant:  An Eligible  Participant  and/or an individual  with an
Accrued Benefit credited to a Retirement Book Account.

     1.21  Plan:  This  Plan  document,   together  with  each  executed,  valid
Agreement.

     1.22 Plan Year:  The calendar  year.  The first Plan Year begins January 1,
1997.

     1.23  Retirement Book Account:  An account  maintained for a Participant on
the Company's  accounting system reflecting such Participant's  Deferred Amounts
and Earnings thereon; provided, however, that the existence of such book entries
and a Retirement Book Account shall not create and shall not be deemed to create
a trust of any kind, or a fiduciary relationship between the Company and (a) the
Participant, (b) a Designated Beneficiary or (c) other beneficiaries,  under the
Agreement.

     1.24 Secretary: The Corporate Secretary of the Company.

     1.25 Termination Date: The effective date of a Participant's  retirement or
other  termination  of service  with the  Company or an  affiliate  thereof,  as
applicable.

     1.26 Unforeseeable  Emergency:  An unanticipated emergency resulting from a
sudden  and   unexpected   illness  or  accident  of  the   Participant  or  the
Participant's  dependents  or  the  Designated  Beneficiary  or  the  Designated
Beneficiary's   dependents,   loss  of  the   Participant's  or  the  Designated
Beneficiary's  property  due to casualty,  or other  similar  extraordinary  and
unforeseeable  circumstance(s)  arising as a result of events beyond the control
of the  Participant  or the Designated  Beneficiary  that would result in severe
financial  hardship  to the  Participant  or  Designated  Beneficiary  if  early
distribution of the Participant's Accrued Benefit were not permitted.

                                    ARTICLE 2
                          PARTICIPATION and ELIGIBILITY

     2.01 Commencement of Participation:  An Eligible Participant shall become a
Participant  when such Eligible  Participant has fully and accurately  completed
and  executed  an  Agreement.  Each  Eligible  Participant  who is not already a
Participant in the Plan will be provided a copy of the Plan and an Agreement.

     2.02  Cessation  of  Participation:   An  Eligible   Participant  or  other
individual  will  cease  to be a  Participant  in this  Plan on the day when all
amounts to the credit of the Eligible Participant's or other individual's entire
Retirement Book Account have been distributed to such Eligible Participant or to
such Eligible Participant's Designated Beneficiary.

     2.03 Eligibility:  Each Eligible  Participant shall be permitted to make an
Election  of  Deferral  for each  respective  Plan Year for which such  Eligible
Participant is an Eligible Participant.

     2.04 Cessation of Eligibility:  An individual shall cease to be eligible to
make an Election of Deferral upon ceasing to be an Eligible Participant.

                                    ARTICLE 3
                                  CONTRIBUTIONS

         3.01 Election to Defer Compensation:  An Eligible Participant may elect
an Annual Deferral  Amount  hereunder by filing an Election of Deferral with the
Secretary.  An Election of Deferral  must be filed with the  Secretary  any time
prior to the end of the month  preceding the beginning of the Plan Year to which
it will first pertain.  The Election of Deferral shall be effective on the first
day of the Plan Year  following  the filing  thereof,  and may relate  solely to
Compensation  for  services not yet  performed  as of the date of the  election.
However,  in the first Plan Year in which an  individual  is determined to be an
Eligible Participant, such Eligible Participant may make an Election of Deferral
with  respect to  Compensation  for  services  as an  Employee  to be  performed
subsequent  to the  election,  within  thirty  (30)  days  after  the date  such
individual is determined to be an Eligible Participant.

         3.02 Change of Election to Defer:  The Eligible  Participant's  initial
Election  of  Deferral  shall  continue  in effect  pursuant to the terms of the
Election of Deferral,  unless and until the Eligible  Participant files with the
Secretary  a  subsequent  Election  of  Deferral  specifying  that the  Eligible
Participant  no longer wishes to have  Compensation  deferred.  Each Election of
Deferral filed  subsequent to the initial Election of a Deferral shall similarly
continue  in effect  until the  Eligible  Participant  files a new  Election  of
Deferral.  Any new Election of Deferral,  to be effective,  must be filed at any
time prior to the end of the month  preceding  the beginning of the Plan Year to
which it will pertain.  Such new Election of Deferral  shall be effective on the
first day of the Plan Year following the filing thereof,  and may relate only to
Compensation for services not yet performed as of the date of the election.

         3.03 Termination of Election to Defer: The Eligible  Participant's most
recent  Election of Deferral shall continue in effect,  pursuant to the terms of
such  Election  of  Deferral,  until the  Eligible  Participant  files  with the
Secretary a Notice of  Discontinuance  or until the  individual  ceases to be an
Eligible Participant.  A Notice of Discontinuance shall be effective if filed at
any time prior to the end of the month  preceding the beginning of the Plan Year
to which it will pertain.  Such Notice of  Discontinuance  shall be effective on
the first day of the Plan Year following the filing thereof, and may relate only
to  Compensation  for services not yet performed as of the effective date of the
Notice of  Discontinuance.  Within  the sole  discretion  of the  Committee,  an
Eligible  Participant's  Election  of  Deferral  may  be  discontinued  for  the
remainder of a Plan Year if, during a Plan Year, the Participant receives a Plan
distribution in the event of an Unforeseeable Emergency.

         3.04 Deferral Amount:  Commencing on the Effective Date, and continuing
through the Eligible Participant's  Termination Date or the date as of which the
individual  ceases to be an Eligible  Participant,  whichever  occurs first, the
Eligible Participant may elect to defer Compensation under the Plan.

                                    ARTICLE 4
                            ACCOUNTS AND ALLOCATIONS

     4.01 Deferred Amounts: Each Eligible  Participant's  Deferred Amounts shall
be  credited  to  a  Retirement  Book  Account  established  for  such  Eligible
Participant as soon as administratively  practicable after such Deferred Amounts
are earned.

     4.02 Earnings  Credited to  Retirement  Book  Account:  Each  Participant's
Retirement   Book   Account   will  be  credited   with   Earnings  as  soon  as
administratively  practicable  after  the  last  day of each  calendar  quarter.
Earnings shall be based on each respective Participant's Retirement Book Account
balance  at the  beginning  of each  month,  less any  distributions  from  such
Retirement Book Account made during such month.

     4.03 Vested Interest: Each Participant shall always be fully vested in such
Participant's entire Accrued Benefit.

                                    ARTICLE 5
                                  DISTRIBUTIONS

         5.01  Methods  and  Election  of  Distribution  of Accrued  Benefit:  A
Participant  may elect to receive the Accrued  Benefit  thereof in a single lump
sum or in five  (5),  ten  (10)  or  fifteen  (15)  equal  annual  installments.
Distributions  will  be  made  to the  Participant  or,  if the  Participant  is
deceased,   to  the  Participant's   Designated   Beneficiary.   The  method  of
distribution must be elected when the Participant's initial Election of Deferral
is executed  thereby.  The Distribution  Election must be made on a Distribution
Election Form.  The  Distribution  Election is  irrevocable by the  Participant;
provided,  however,  that  the  Distribution  Election  may  be  changed  by the
Committee in its sole discretion to another acceptable method under the Plan. If
no method is selected by the Participant,  the distribution of the Participant's
Accrued Benefit shall be made in a single sum.

         5.02 Time of  Distribution:  Except as provided  in  Sections  5.03 and
5.04, upon a Participant's  Termination Date, the Company shall commence payment
of  the  Participant's  entire  Accrued  Benefit  as  soon  as  administratively
practicable  following  the end of the  month  coincident  with or in which  the
Participant's  Termination  Date occurs,  in  accordance  with the  distribution
method elected by the Participant.

         5.03  Distribution  Upon  Change in  Control:  If a Change  in  Control
occurs,  each Participant,  or if a Participant is deceased,  such Participant's
Designated  Beneficiary,  shall receive the Participant's entire Accrued Benefit
in a single sum as soon as  administratively  practicable  following the date of
the Change in Control.

         5.04  Distribution in the Event of  Unforeseeable  Emergency:  An early
distribution  may be approved by the Committee in the event of an  Unforeseeable
Emergency; provided, however, that such a distribution shall be permitted solely
to the extent  reasonably  necessary to meet the Participant's or the Designated
Beneficiary's financial needs with respect to the Unforeseeable Emergency.

                                    ARTICLE 6
                                 ADMINISTRATION

         6.01 Appointment of Committee:  The general  administration of the Plan
and the  responsibility for carrying out its provisions shall be placed with the
Committee which shall be appointed from time to time by the Board of Directors.

         6.02 Compensation of Committee:  The members of the Committee shall not
receive  compensation  for their  services as such,  other than regular  meeting
fees, and, except as required by law, no bond or other security need be required
of them in such capacity in any jurisdiction.

         6.03  Rules  of Plan:  Subject  to the  limitations  of the  Plan,  the
Committee may, from time to time,  establish  policies for the administration of
the Plan and the transaction of its business.  The Committee may correct errors,
however  arising,  and,  as  far  as  possible,   adjust  any  benefit  payments
accordingly.  The determination of the Committee as to the interpretation of the
provisions  of the Plan or any disputed  question with respect to the Plan shall
be conclusive upon all interested parties.

         6.04 Agents and  Employees:  The  Committee  may  authorize one or more
agents to execute or deliver any instrument. The Committee may appoint or employ
such agents, counsel,  auditors,  physicians,  clerical help and actuaries as in
the  Committee's  judgment  shall be  reasonable  or  necessary  for the  proper
administration of the Plan.

         6.05  Records:  The  Committee  shall  maintain  accounts  showing  the
transactions of the Plan. The Committee shall prepare and submit annually to the
Board of Directors a report setting forth the amounts credited to the Retirement
Book  Accounts and the related  corporate  liability  equal to the total Accrued
Benefit of all  Participants.  The report to the Board of  Directors  shall also
include a brief account of the operation of the Plan for the Plan Year.

         6.06  Delegation  of  Authority:  With  the  consent  of the  Board  of
Directors,  the Committee may, by resolution,  delegate to any person or persons
any or all of its rights  and duties  hereunder.  Any such  delegation  shall be
valid and  binding  on all  persons,  and the person or persons to whom any such
authority has been delegated shall,  upon written  acceptance of such authority,
have full power to act in all matters so delegated  until the authority  expires
by its terms or is revoked by the Committee.

         6.07  Eligibility:  The members of the Committee shall not be precluded
from  becoming  Participants  or Eligible  Participants  in the Plan;  provided,
however,  that no member of the Committee  who is a  Participant  or an Eligible
Participant  shall have any authority with respect to his own  participation  in
the Plan.

         6.08  Indemnification:  The Company shall  indemnify each member of the
Committee  for all expenses and  liabilities  (including  reasonable  attorneys'
fees) arising out of the  administration of the Plan, other than any expenses or
liabilities  resulting  from the  Committee's  own gross  negligence  or willful
misconduct.  The foregoing right of indemnification  shall be in addition to any
other rights to which the members of the Committee shall be entitled as a matter
of law.

                                    ARTICLE 7
                                  MISCELLANEOUS

         7.01 No Trust  Created:  Nothing  contained in the Plan,  and no action
taken pursuant to the Plan by the Company or any Participant shall create, or be
construed to create,  a trust of any kind, or a fiduciary  relationship  between
the Company and the  Participant,  the spouse of any  Participant,  a Designated
Beneficiary or any other person. Any trust created by the Company and any assets
held by any such trust to assist the  Company in meeting its  obligations  under
the Plan shall  conform to the terms of the model  trust  described  in Internal
Revenue Procedure 92-64 and as subsequently modified.

         7.02 Benefits  Payable Only From General  Corporate  Assets - Unsecured
General  Creditor Status of  Participant:  Payments to any  Participant,  to any
Participant's spouse or to any Designated  Beneficiary shall be made from assets
which  shall  continue,  for  all  purposes,  to  be  a  part  of  the  general,
unrestricted  assets of the Company.  Title to and  beneficial  ownership of any
assets, whether cash or investments which the Company may earmark to pay Accrued
Benefits hereunder,  shall at all times remain in the Company and no Participant
or Designated  Beneficiary  shall have any property  interest  whatsoever in any
specific  asset of the  Company.  No person  shall have any interest in any such
assets  by virtue of the  provisions  of this  Plan.  The  Company's  obligation
hereunder  shall be  unfunded,  for tax  purposes and for purposes of Title I of
ERISA, and an unsecured  promise to pay money in the future.  To the extent that
any person acquires a right to receive payments from the Company under the Plan,
such right shall be no greater than the right of any unsecured  general creditor
of the Company, and no such person shall have nor acquire any legal or equitable
right, interest or claim in or to any property or asset of the Company.

In the event that, in its discretion,  the Company purchases an insurance policy
or policies  insuring the life of a Participant  or any other  property to allow
the  Company to recover  the cost of  providing  benefits,  in whole or in part,
hereunder, neither the Participant, the Participant's Designated Beneficiary nor
any other person shall have any rights whatsoever to the proceeds therefrom. The
Company shall be the sole owner and beneficiary of any such insurance policy and
shall  possess and may exercise all  incidents  of  ownership  therein.  No such
policy,  policies  or  other  property  shall  be  held  in any  trust  for  the
Participant or any other person nor as collateral security for any obligation of
the Company hereunder.

There is no  obligation  on the part of the  Company  to fund for any  liability
which accrues as a result of the Plan.




<PAGE>


         7.03 No  Contract  of  Retention:  Nothing  contained  herein  shall be
construed to be a contract of  employment  as an Employee for any term of years,
nor as conferring  upon any  Participant the right to continue to be employed as
an Employee in the  Participant's  present capacity,  or in any capacity.  It is
expressly  understood  that the Plan relates merely to the promise of payment of
deferred  compensation for the  Participant's  services as an Employee,  payable
after the Participant's Termination Date.

         7.04 Benefits Not Transferable:  Neither the Participant,  a Designated
Beneficiary  nor any other  beneficiary  under the Plan  shall have any power or
right to transfer,  assign,  anticipate,  hypothecate or otherwise  encumber any
part or all of the amounts  payable  hereunder.  A  Participant's  or Designated
Beneficiary's  rights to benefit  payments under the Plan are not subject in any
manner  to  anticipation,   alienation,  sale,  transfer,   assignment,  pledge,
encumbrance, attachment or garnishment by creditors of the Participant or of the
Designated  Beneficiary,  and no such amounts shall be subject to seizure by any
creditor of any Participant or Designated Beneficiary, by a proceeding at law or
in equity,  nor shall such  amounts be  transferable  by operation of law in the
event  of  bankruptcy,  insolvency  or death of the  Participant  or  Designated
Beneficiary,  or any other beneficiary hereunder.  Any such attempted assignment
or transfer shall be void.

         7.05  Determination  of Benefits:  A Participant who believes that such
Participant is being denied a benefit to which the Participant is entitled under
the Plan  (hereinafter  referred to as a "Claimant")  may file a written request
for such benefit with the Committee,  setting forth the Participant's claim. The
request must be addressed to the Secretary at the principal place of business of
the Company.

Upon receipt of a claim,  the  Secretary  shall advise the Claimant that a reply
will be  forthcoming  within ninety (90) days and shall,  in fact,  deliver such
reply within such period.  The Committee may,  however,  extend the reply period
for an additional ninety (90) days for reasonable cause.

If the claim is denied in whole or in part, the Committee shall render a written
opinion,  using  language  calculated to be understood by the Claimant,  setting
forth:

         (a)  The specific reason or reasons for such denial;

         (b)  The specific reference to pertinent provisions of the Plan upon
which such denial is based;

         (c) A description of any additional  material or information  necessary
for the Claimant to perfect his claim and an  explanation  why such  material or
such information is necessary; and

         (d) Appropriate information as to the steps to be taken if the Claimant
wishes to submit  the claim for  review and the time  period  within  which such
review must be requested.


Within sixty (60) days after the receipt by the Claimant of the written  opinion
described above, the Claimant may request in writing that the Board of Directors
review the determination of the Committee. Such request must be addressed to the
Board of  Directors  at the  principal  place of  business of the  Company.  The
Claimant or the Claimant's  duly  authorized  representative  may, but need not,
review the  pertinent  documents  and submit  issues and comments in writing for
consideration  by the Board of  Directors.  If the  Claimant  does not request a
review of the Committee's  determination  by the Board of Directors  within such
sixty  (60)  day  period,  the  Claimant  shall  be  barred  and  estopped  from
challenging the Committee's determination.

Within  sixty (60) days after the Board of  Directors'  receipt of a request for
review from a Claimant,  the Board of  Directors  shall  review the  Committee's
determination.  If the  Claimant  is a member  of the  Board of  Directors,  the
Claimant shall be precluded from participating in the Board of Directors' review
of the  Claimant's  claim.  After  considering  all  material  presented  by the
Claimant,  the Board of Directors shall render a written  opinion,  written in a
manner  calculated to be understood by the Claimant,  setting forth the specific
reasons for the decision and  containing  specific  references  to the pertinent
provisions   of  the  Plan  upon  which  the  decision  is  based.   If  special
circumstances require that the sixty (60) day time period be extended, the Board
of  Directors  shall so notify the Claimant and will render the decision as soon
as possible,  but not later than one hundred  twenty (120) days after receipt of
the request for review from the Claimant.

         7.06  Amendment or  Termination:  The Board of  Directors,  without the
consent of any Participant or Designated Beneficiary, may amend or terminate the
Plan at any time; provided,  however,  that no amendment shall be made or act of
termination taken which divests any Participant or Designated Beneficiary of the
unsecured  right to  receive  payments  under the Plan with  respect  to amounts
theretofore credited to the applicable Participant's Retirement Book Account.

         7.07  Severability of Provisions:  If any provision of the Plan is held
invalid or unenforceable,  such invalidity or unenforceability  shall not affect
any other provision of the Plan, and the Plan shall be construed and enforced as
if such invalid or unenforceable provision had not been included in the Plan.

         7.08  Headings: Headings used throughout  the Plan  are for convenience
only and  shall  not be given  legal significance.

         7.09  Inurement:  The Plan shall be binding upon and shall inure to the
benefit of, the Company and its successors and assigns, and the Participants and
their   Designated   Beneficiaries   and  the  successors,   heirs,   executors,
administrators and beneficiaries thereof.

         7.10 Notice: Any notice,  consent or demand required or permitted to be
given under the Plan shall be in writing and shall be signed by the party giving
or  making  the same.  If such  notice,  consent  or demand is mailed to a party
hereto, it shall be sent by United States certified mail,  postage prepaid,  and
addressed  to such  party's  last known  address as shown on the  records of the
Company. The date of such mailing shall be deemed the date of notice, consent or
demand. Any party hereto may change the address to which notice is to be sent by
giving notice of the change of address in the manner aforesaid.

         7.11  Governing  Law:  The Plan and the rights of the parties hereunder
shall be governed by and be construed in accordance with the laws of the State
of New York.

         7.12  Pronouns:  Any masculine  term used in the Plan shall include the
feminine  and any  singular  term  shall  include  the  plural,  unless the text
indicates otherwise.

         IN WITNESS  WHEREOF,  the Company has hereby  executed this Plan, as of
the date written below.


                                       FARM FAMILY HOLDINGS, INC.

                                       By:        /s/Philip P. Weber
                                       ---       ------------------------------
                                       Title:    President & Chief Exec. Officer
                                       Date:      November 1, 1996

<PAGE>






Exhibit 10.16
                           FARM FAMILY HOLDINGS, INC.

                              ANNUAL INCENTIVE PLAN



Farm Family  Holdings,  Inc. hereby  establishes this Annual Incentive Plan (the
"Plan") for  certain key  employees  of the Company and its  affiliates  who are
selected  for  participation  in the Plan.  The Plan is  comprised  of this Plan
document  and  each  valid,   executed  Annual   Incentive  Plan  Notice  for  a
Participant.



                                    ARTICLE 1
                                   DEFINITIONS

 1.01   Board of Directors:  The Board of Directors of the Company.

 1.02  Cause:  A  felony  conviction  of  a  participant  or  the  failure  of a
participant to contest  prosecution  for a felony,  or a  participant's  willful
miscount or dishonesty,  any of which is directly and materially  harmful to the
business or reputation of the Company or any Subsidiary or Affiliate.

        (a)   theft,  participation  by Employee in any fraudulent  conduct,  or
              other acts involving  misappropriation  of property;

        (b)   habitual drunkenness or habitual drug abuse;

        (c)   breach by Employee of this duty of trust to the Company, unethical
              business  conduct,  or  material  and  willful  disclosure  of any
              confidential information in violation of this Agreement;

        (d)   conviction of a felony or a job-related crime;

        (e)   unlawful discrimination and/or unlawful sexual harassment by
              Employee;

        (f)   insubordination or other serious breach of the Company's policies;
              or

        (g)   continuing  inattention to,  continuing  neglect of, or continuing
              inadequate  performance of the duties to be performed by Employee,
              which  inattention,  neglect  or  inadequacy  is not the result of
              illness or accident.



<PAGE>


 1.03  Change in  Control:  A change in control of the  Company of a nature that
would be required  to be  reported  in response to Item 6(e) of Schedule  14A of
Regulation  14A under the  Securities  Exchange  Act of 1934,  as  amended  (the
"Exchange  Act"),  whether or not the Company is subject to the  Exchange Act at
such time;  provided,  however,  that  without  limiting the  generality  of the
foregoing, a Change in Control will in any event be deemed to occur if and when:

        (a)   any person (as such term is used in paragraphs  13(d) and 14(d)(2)
              of the Exchange Act,  hereinafter in this  definition,  "Person"),
              other than the Company or a subsidiary or employee benefit plan of
              the  Company  or  subsidiary,  becomes  the  beneficial  owner (as
              defined  in Rule  13d-3  under  the  Exchange  Act),  directly  or
              indirectly  of securities  of the Company  representing  more than
              twenty-five  percent  (25%) of the  combined  voting  power of the
              Company's then outstanding securities;

        (b)   stockholders  approve a merger,  consolidation  or other  business
              combination  (a  "Business  Combination")  other  than a  Business
              Combination  in which  holders  of  common  stock  of the  Company
              immediately prior to the Business  Combination have  substantially
              the same proportionate  ownership of common stock of the surviving
              corporation   immediately   after  the  Business   Combination  as
              immediately before;

        (c)   stockholders  approve  either  (i) an  agreement  for the  sale or
              disposition of all or substantially all of the Company's assets to
              any entity that is not a subsidiary of the Company, or (ii) a plan
              of complete liquidation; or

        (d)   the persons who were members of the Board of Directors immediately
              before a tender  offer by any Person  other than the  Company or a
              subsidiary,  or  before  a  merger,   consolidation  or  contested
              election, or before any combination of such transactions, cease to
              constitute  a majority  of the Board of  Directors  as a result of
              such transaction or transactions.

 1.04   Company:  Farm Family Holdings, Inc., a Delaware  corporation,  and  any
successor thereto.

 1.05  Committee:  The  Compensation  Committee of the Board of Directors of the
Company or such other committee  appointed by the Board. If at any time there is
no Committee, then the functions of the Committee specified in the Plan shall be
exercised by the Board.

 1.06   Disability:  The total and permanent disability as determined under  the
Company's long term disability program.

 1.07   Earned  Award: The amount of incentive award to be paid to a Participant
calculated  pursuant to Section  6.01 hereof.

 1.08   Effective Date:  January 1, 1997.

 1.09   Employee:  An individual who is employed by the Company or an  affiliate
thereof.

 110    ERISA:  The Employee Retirement Income Security Act of 1974, as amended.

 1.11   Notice: The Annual Incentive Plan Notice  for a  Participant for a  Plan
 Year.

 1.12   Participant:  An employee who is selected by the Committee as eligible
to participate in the Plan for a Plan Year.

 1.13   Plan:  This Plan document, together with each executed, valid Notice.

 1.14   Plan Year: The calendar year. The first Plan Year begins January 1,
1997.

 1.15   Retirement:  The Normal or Early  Retirement  as those terms are defined
in the Farm Family  Employee  Savings Plus (401(k)) Plan.

 1.16   Secretary:  The Corporate Secretary of the Company.



                                    ARTICLE 2
                                   OBJECTIVES

 2.01   Objectives:  The objectives of the Annual Incentive Plan are to:

     (a)  provide  incentives  and  financial  rewards to the  employees  of the
Company and its affiliates for their contribution to improving the profitability
of the Company and its affiliates;

     (b) enable the Company to pay a  fully-competitive  total cash compensation
package; and

     (c) facilitate the attraction and retention of executives.



                                    ARTICLE 3
                                   ELIGIBILITY

 3.01  Eligibility:  Officers  and  other  key  employees  of the  Company,  its
subsidiaries and its affiliates (but excluding  members of the Committee and any
person who serves only as a director) who are  responsible  for or contribute to
the management,  growth and/or  profitability of the business of the Company, or
its subsidiaries, may be designated as Participants.



<PAGE>


 3.02  Part-year  Participants:  An employee who is employed after January 1 but
prior to September 1 may be designated a Participant  for the Plan Year in which
he commenced employment. An employee who is employed on or after September 1 may
not be  designated  a  Participant  for the  Plan  Year in  which  he  commenced
employment.

 3.03 Cessation of  Eligibility:  An individual  shall cease to be a Participant
for any Plan Year in which the  individual's  employment with the Company or its
affiliates is terminated  voluntarily  by the  individual or  involuntarily  for
Cause.



                                    ARTICLE 4
                   AWARD OPPORTUNITIES AND PERFORMANCE FACTORS

4.01  Levels of Award  Opportunities:  Award  Opportunities  have the  following
levels:

(a) Threshold Award Opportunity: 50% of the amount which will be paid for Target
Performance.

(b)   Target Award Opportunity:  The amount paid for Target Performance.

(c)  Outstanding  Award  Opportunity:   150%  of  the  amount  paid  for  Target
Performance.

4.02  Performance  Factors:  Each level of performance  shall have the following
Performance Factors:

(a)   Below Threshold Performance:  will have a Performance Factor of 0.

(b)   Threshold Performance:  will have a Performance Factor of 0.5.

(c)   Target Performance:  will have a Performance Factor of 1.0.

(d)   Outstanding Performance:  will have a Performance Factor of 1.5.

(e)   Above Outstanding Performance:  will have a Performance Factor of 1.5.

4.03  Interpolation  of  Performance   Factors:   The  Performance  Factors  for
performance  between  Threshold  and  Outstanding  Performance  levels  will  be
interpolated.

4.04  Limitations  on  Award  Opportunities:  No award  will be paid  for  below
Threshold  Performance.  No award will exceed the amount payable for Outstanding
Performance.






<PAGE>


                                    ARTICLE 5
                             PERFORMANCE MEASUREMENT

 5.01 Performance Measures: The performance of each Participant will be assessed
according to the achievement of predefined  goals derived from the Company's and
its  affiliates'  strategic  plans and budgets.  These goals will be chosen each
year  and  identified  as  Performance  Measures  on the  Participant's  Notice,
weighted according to the Participant's relative responsibilities to the Company
and its affiliates and according to their relative importance.

5.02 Levels of Performance:  Performance Measures will be stated in terms of the
following levels of performance: ---------------------

(a) Threshold Performance: which will be defined to be 90% achievement of budget
or a similar level of any performance measure which is not budget-related;

(b) Target  Performance:  which will generally be defined to be 100% achievement
of  budget  or  a  similar  level  of  any  performance  measure  which  is  not
budget-related; or

(c)  Outstanding  Performance:  which  will  generally  be  defined  to be  110%
achievement of budget or a similar level of any performance measure which is not
budget-related.

5.03  Performance  Measurement:  The  Performance  Measures and weights for each
Participant will be set forth in a Notice for each Plan Year.



                                    ARTICLE 6
                                PAYMENT OF AWARDS

6.01  Calculation of Earned Awards:  The Earned Award for each Participant for a
Plan Year shall be calculated as follows:

(a) The Performance Factor will be calculated for each Performance Measure based
on the Participant's actual performance

(b) The  Adjusted  Performance  Factor  for  each  Performance  Measure  will be
calculated  by  multiplying  the  weight  for each  Performance  Measure  by the
Performance Factor.

(c) The  Total  Adjusted  Performance  Factor  will  be the sum of all  Adjusted
Performance Factors for the Participant.

(d) The Earned Award will be equal to the Target Award Opportunity multiplied by
the Total Adjusted Performance Factor.

An example of the Earned  Award  calculation  is set forth in Exhibit A attached
hereto.


<PAGE>


 6.02  Determination of Awards: The Earned Award for each Participant for a Plan
Year will be based solely on the  Company's  and its  affiliates'  records.  The
Earned Award for each  Participant  for a Plan Year will be determined  within a
reasonable time period after the end of the Plan Year.

 6.03  Payment  of  Awards:  Payment  of  Earned  Awards  will be made  within a
reasonable time period after the end of the Plan Year but in no event later than
90 days after close of the Company's books for the Plan Year.  Participants  may
elect  to defer  receipt  of  their  Earned  Awards  pursuant  to the  Company's
Officers' Deferred  Compensation Plan. The Company will deduct from all payments
due a  Participant,  taxes  required by law to be withheld  with respect to such
payments.

 6.04 Change of Control:  In the event of a Change of Control,  each Participant
will  receive  payment of the greater of his actual  Earned  Award or his Target
Award  Opportunity  for the Plan Year in which  the  Change  of  Control  occurs
regardless of achievement of Target Performance.

 6.05 Change in  Employment  Status:  The  effect of a change in the  employment
status of an Participant during a Plan Year shall be determined as follows:

        (a)   New Hire or Promotion  During the Plan Year: The Participant  will
              be paid the Earned  Award  prorated  for the number of days of the
              Plan  Year  that the  Participant  was  employed  in the  eligible
              position.

        (b)   Death,   Retirement  or  Disability  During  the  Plan  Year:  The
              Participant  will be paid the Earned Award prorated for the number
              of days of the Plan Year that the  Participant was employed in the
              eligible position.

        (c)   Voluntary  Termination: The Participant will  forfeit  any  Earned
              Award  for the  Plan  Year in which he voluntarily terminates
              employment with the Company or its affiliates.

        (d)   Involuntary Termination other than for Cause: The Participant will
              be paid the Earned  Award  prorated  for the number of days of the
              Plan Year that the  Participant was employed by the Company or its
              affiliates.

        (e)   Involuntary  Termination for Cause:  The Participant  will forfeit
              any Award for the Plan Year in which he is terminated for Cause.

 6.06.  Amendment  or  Termination  of Plan:  In the  event of an  amendment  or
termination of the Plan, each Participant will receive payment for the Plan Year
in which the amendment or  termination is effective of the greater of his actual
Earned  Award  calculated  under the  Plan,  as  amended,  or his  Target  Award
Opportunity  for the Plan Year  without  giving any effect to such  amendment or
termination.





<PAGE>


                                    ARTICLE 7
                                 ADMINISTRATION

 7.01 Appointment of Committee:  The general  administration of the Plan and the
responsibility  for  carrying  out its  provisions  shall  be  placed  with  the
Committee which shall be appointed from time to time by the Board of Directors.

 7.02 Compensation of Committee:  The members of the Committee shall not receive
compensation  for their services as such,  other than regular meeting fees, and,
except as required by law, no bond or other security need be required of them in
such capacity in any jurisdiction.

 7.03 Rules of Plan:  Subject to the limitations of the Plan, the Committee may,
from time to time, establish policies for the administration of the Plan and the
transaction of its business.  The Committee may correct errors, however arising,
and,  as  far  as  possible,   adjust  any  award  payments   accordingly.   The
determination of the Committee as to the interpretation of the provisions of the
Plan or any disputed  question with respect to the Plan shall be conclusive upon
all interested parties.

 7.04 Agents and  Employees:  The  Committee may authorize one or more agents to
execute or deliver  any  instrument.  The  Committee  may appoint or employ such
agents,  counsel,  auditors,  physicians,  clerical help and actuaries as in the
Committee's   judgment   shall  be   reasonable  or  necessary  for  the  proper
administration of the Plan.

 7.05 Records: The Committee shall maintain accounts showing the transactions of
the Plan.  The  Committee  shall  prepare  and submit  annually  to the Board of
Directors a report setting forth the amounts paid to  Participants  for the Plan
Year. The report to the Board of Directors shall also include a brief account of
the operation of the Plan for the Plan Year.

 7.06 Delegation of Authority:  With the consent of the Board of Directors,  the
Committee  may, by  resolution,  delegate to any person or persons any or all of
its rights and duties hereunder.  Any such delegation shall be valid and binding
on all persons,  and the person or persons to whom any such  authority  has been
delegated shall, upon written  acceptance of such authority,  have full power to
act in all matters so delegated  until the authority  expires by its terms or is
revoked by the Committee.

 7.07 Indemnification:  The Company shall indemnify each member of the Committee
for all expenses and liabilities  (including reasonable attorneys' fees) arising
out of the  administration  of the Plan,  other than any expenses or liabilities
resulting from the Committee's own gross negligence or willful  misconduct.  The
foregoing right of  indemnification  shall be in addition to any other rights to
which the members of the Committee shall be entitled as a matter of law.





<PAGE>


                                    ARTICLE 8
                                  MISCELLANEOUS

8.01 No Trust  Created:  Nothing  contained  in the Plan,  and no  action  taken
pursuant  to the Plan by the  Company or any  Participant  shall  create,  or be
construed to create,  a trust of any kind, or a fiduciary  relationship  between
the Company and the Participant, or any other person

 8.02 Benefits Payable Only From General  Corporate  Assets - Unsecured  General
Creditor Status of Participant:  Payments to any Participant  shall be made from
assets  which shall  continue,  for all  purposes,  to be a part of the general,
unrestricted  assets of the Company.  Title to and  beneficial  ownership of any
assets,  whether cash or investments which the Company may earmark to pay Awards
hereunder,  shall at all times  remain in the Company and no  Participant  shall
have any property interest  whatsoever in any specific asset of the Company.  No
person shall have any interest in any such assets by virtue of the provisions of
this  Plan.  The  Company's  obligation  hereunder  shall be  unfunded,  for tax
purposes and for purposes of Title I of ERISA,  and an unsecured  promise to pay
money in the future.  To the extent that any person  acquires a right to receive
payments  from the Company  under the Plan,  such right shall be no greater than
the right of any unsecured  general creditor of the Company,  and no such person
shall have nor acquire any legal or equitable right,  interest or claim in or to
any property or asset of the Company.

There is no  obligation  on the part of the  Company  to fund for any  liability
which accrues as a result of the Plan.

 8.03 No Contract of Retention:  Nothing  contained herein shall be construed to
be a  contract  of  employment  as an  Employee  for any term of  years,  nor as
conferring  upon any  Participant  the right to  continue  to be  employed as an
Employee  in the  Participant's  present  capacity,  or in any  capacity.  It is
expressly  understood  that the Plan relates merely to the promise of payment of
annual incentive compensation for the Participant's services as an Employee.

 8.04 Benefits Not  Transferable:  The  Participant  shall not have any power or
right to transfer,  assign,  anticipate,  hypothecate or otherwise  encumber any
part or all of the amounts payable hereunder. A Participant's rights to payments
under the Plan are not subject in any manner to anticipation,  alienation, sale,
transfer,  assignment,   pledge,  encumbrance,   attachment  or  garnishment  by
creditors of the Participant, and no such amounts shall be subject to seizure by
any creditor of any Participant,  by a proceeding at law or in equity, nor shall
such amounts be  transferable  by  operation of law in the event of  bankruptcy,
insolvency  or  death  of the  Participant.  Any such  attempted  assignment  or
transfer shall be void.






<PAGE>


 8.05   Determination  of  Benefits:   A  Participant  who  believes  that  such
Participant is being denied a benefit to which the Participant is entitled under
the Plan  (hereinafter  referred to as a "Claimant")  may file a written request
for such benefit with the Committee,  setting forth the Participant's claim. The
request must be addressed to the Secretary at the principal place of business of
the Company.

Upon receipt of a claim,  the  Secretary  shall advise the Claimant that a reply
will be  forthcoming  within ninety (90) days and shall,  in fact,  deliver such
reply within such period.  The Committee may,  however,  extend the reply period
for an additional ninety (90) days for reasonable cause.

If the claim is denied in whole or in part, the Committee shall render a written
opinion,  using  language  calculated to be understood by the Claimant,  setting
forth:

        (a)  The specific reason or reasons for such denial;

        (b)  The specific reference to pertinent provisions of the Plan upon
             which such denial is based;

        (c)  A description of any additional material or information  necessary
             for the Claimant to perfect his claim and an explanation  why such
             material or such information is necessary; and

        (d)  Appropriate  information  as to  the  steps  to be  taken  if  the
             Claimant wishes to submit the claim for review and the time period
             within which such review must be requested.

Within sixty (60) days after the receipt by the Claimant of the written  opinion
described above, the Claimant may request in writing that the Board of Directors
review the determination of the Committee. Such request must be addressed to the
Board of  Directors  at the  principal  place of  business of the  Company.  The
Claimant or the Claimant's  duly  authorized  representative  may, but need not,
review the  pertinent  documents  and submit  issues and comments in writing for
consideration  by the Board of  Directors.  If the  Claimant  does not request a
review of the Committee's  determination  by the Board of Directors  within such
sixty  (60)  day  period,  the  Claimant  shall  be  barred  and  estopped  from
challenging the Committee's determination.

Within  sixty (60) days after the Board of  Directors'  receipt of a request for
review from a Claimant,  the Board of  Directors  shall  review the  Committee's
determination.  If the  Claimant  is a member  of the  Board of  Directors,  the
Claimant shall be precluded from participating in the Board of Directors' review
of the  Claimant's  claim.  After  considering  all  material  presented  by the
Claimant,  the Board of Directors shall render a written  opinion,  written in a
manner  calculated to be understood by the Claimant,  setting forth the specific
reasons for the decision and  containing  specific  references  to the pertinent
provisions   of  the  Plan  upon  which  the  decision  is  based.   If  special
circumstances require that the sixty (60) day time period be extended, the Board
of


<PAGE>


Directors  shall so notify the  Claimant and will render the decision as soon as
possible,  but not later than one hundred twenty (120) days after receipt of the
request for review from the Claimant.

 8.06 Amendment or Termination:  The Board of Directors,  without the consent of
any Participant,  may amend or terminate the Plan at any time provided, however,
that the Participants shall be entitled to the payment set forth in Section 6.06
hereof for the Plan Year in which the amendment or termination is effective.

 8.07  Severability of Provisions:  If any provision of the Plan is held invalid
or unenforceable, such invalidity or unenforceability shall not affect any other
provision of the Plan,  and the Plan shall be construed  and enforced as if such
invalid or unenforceable provision had not been included in the Plan.

 8.08  Headings: Headings used throughout the Plan are for convenience  only and
shall not be given legal significance.


 8.09  Inurement:  The Plan shall be binding upon and shall inure to the benefit
of, the Company and its successors and assigns,  and the  Participants and their
Designated  Beneficiaries and the successors,  heirs, executors,  administrators
and beneficiaries thereof.

 8.10 Notice:  Any notice,  consent or demand  required or permitted to be given
under the Plan  shall be in writing  and shall be signed by the party  giving or
making the same. If such notice,  consent or demand is mailed to a party hereto,
it shall be sent by United States certified mail, postage prepaid, and addressed
to such party's last known  address as shown on the records of the Company.  The
date of such mailing shall be deemed the date of notice,  consent or demand. Any
party  hereto  may change  the  address to which  notice is to be sent by giving
notice of the change of address in the manner aforesaid.

8.11  Governing Law: The Plan and the rights of the parties  hereunder  shall be
governed by and be  construed  in  accordance  with the laws of the State of New
York.

8.12  Pronouns:  Any masculine  term used in the Plan shall include the feminine
and any  singular  term shall  include  the  plural,  unless the text  indicates
otherwise.

IN WITNESS  WHEREOF,  the Company has hereby  executed this Plan, as of the date
written below.

                                                    FARM FAMILY HOLDINGS, INC.


                                         By:    /s/Philip P. Weber
                                         --------------------------
                                                Philip P. Weber

                                         Title: President & Chief Exec. Officer
                                         Date:  December 31, 1996


<PAGE>














Exibit 10.17


                                   FARM FAMILY

                  SUPPLEMENTAL SAVINGS AND PROFIT SHARING PLAN



         Section 1.  Establishment  of Plan. Farm Family Life Insurance  Company
and Farm Family Casualty  Insurance Company (the "Principal  Employers")  hereby
establish  this Farm Family  Supplemental  Savings and Profit  Sharing Plan (the
"Plan"),  effective as of January 1, 1997 (the "Effective  Date"),  to cover the
eligible employees of the Principal  Employers as well as the eligible employees
of  Farm  Family  Holdings,  Inc.  and  United  Farm  Family  Insurance  Company
(collectively with the Principal Employers, the "Employers").

         Section  2.  Definitions.  Except as  otherwise  specifically  provided
herein, each capitalized term used herein which is defined in the Qualified Plan
shall,  for purposes of the Plan, have the same meaning assigned to such term in
the Farm Family Savings and Profit Sharing Plan (the "Qualified Plan").

         Section 3. Eligible  Employees.  Each  employee of the Employers  whose
Compensation from the Employers (but without reduction for deferred compensation
which would  otherwise be excluded from the definition of  "Compensation"  under
the  Qualified  Plan)  earned for any Plan Year on or after the  Effective  Date
exceeds the  compensation  limit of Section  401(a)(17) of the Internal  Revenue
Code of 1986,  as  amended  (the  "Code")  or any  successor  provisions,  shall
automatically become a participant in the Plan (each, a "Participant").

         Section 4.  Purpose of Plan.  The  purpose of the Plan is to provide an
additional   retirement   benefit  to  each   Participant   to  the  extent  the
Participant's  Accrued Benefit under the Qualified Plan has been limited for any
Plan Year of the Qualified  Plan  occurring on or after the  Effective  Date, by
application of (a) the requirements of Sections 401(a)(17) , 401(k)(3),  401(m),
402(g) and/or 415 of the Code or any successor provisions, and (b) the exclusion
of  deferred  compensation  from the  definition  of  "Compensation"  under  the
Qualified Plan pursuant to Sections 1.08 and 7.03(a)  thereof (the  requirements
and exclusion referred to in clauses (a) and (b) of this sentence  collectively,
the "Qualified Limitations"). For purposes of Sections 201(2),


<PAGE>






301(a)(3),  401(a)(1) and 4021(b)(6) of the Employee  Retirement Income Security
Act of 1974,  as amended or any successor  provisions,  the Plan is intended and
shall at all times be  administered  and  interpreted  in such a manner so as to
constitute a plan  maintained  primarily  for the purpose of providing  deferred
compensation for a select group of management or highly compensated employees.


         Section 5. Plan Benefit.  Within thirty (30) days after the end of each
Plan Year,  the Employers  shall credit to bookkeeping  accounts  maintained for
each  Participant  (each, a "Plan  Account"),  an amount ("Plan  Contributions")
equal to the difference between clauses (a) and (b) below:

          (a)  the sum of -

               (i)   the Company Matching  Contributions  that would be required
                     to be made by the  Employers to the  Participant's  Company
                     Regular   Account   under  the   Qualified   Plan  for  the
                     immediately   preceding   Plan  Year  without   taking  the
                     Qualified  Limitations  into account and assuming  that the
                     Participant made the maximum Savings/Deferral  Contribution
                     permissible  under the Plan  without  taking the  Qualified
                     Limitations into account,

               (ii)  the Company Regular Contributions that would be required to
                     be  made  by the  Employers  to the  Participant's  Company
                     Regular   Account   under  the   Qualified   Plan  for  the
                     immediately   preceding   Plan  Year  without   taking  the
                     Qualified Limitations into account, and

               (iii)any other contributions that would be required to be made by
                     the  Employers  to the  Qualified  Plan  on  behalf  of the
                     Participant for the immediately preceding Plan Year without
                     taking the Qualified Limitations into account; and

         (b)  the sum of -

               (i)   the  Company   Matching   Contributions   credited  to  the
                     Participant's  Company Matching Account under the Qualified
                     Plan for the immediately preceding Plan Year,

               (ii)  the   Company   Regular   Contributions   credited  to  the
                     Participant's  Company  Regular Account under the Qualified
                     Plan for the immediately preceding Plan Year, and

               (iii)any  other  contributions  made  by  the  Employers  to  the
                     Qualified  Plan  on  behalf  of  the  Participant  for  the
                     immediately preceding Plan Year.

         The Employers shall also credit interest ("Plan Earnings") to each Plan
Account  for each  calendar  quarter at the rate  equal to the  "Prime  Rate" as
published in the "Money Rates" section of the Wall Street Journal,  on the first
business  day  of  each  such  calendar   quarter.   The  balance  of  all  Plan
Contributions  plus Plan  Earnings  allocated  to a  Participant's  Plan Account
shall, as of any particular  date,  constitute such  Participant's  then benefit
under the Plan (the "Plan Benefit").

         Section 6. Vesting of Plan  Benefit.  Each  Participant's  Plan Benefit
shall be vested to the  identical  extent as that of the  Participant's  benefit
under the Qualified Plan.

         Section 7.   Payment of Plan Benefit.

         Section 7.1 Timing,  Amounts,  Recipients  and Form of  Payments.  Each
Participant's  Plan Benefit shall be paid at the same times, in the same manner,
to the same person(s) (including  beneficiaries) and in the same payment form as
the Participant's benefit shall be paid under the Qualified Plan.

         Section 7.2  Withholding.  The  Employers  shall  withhold all required
amounts for tax withholding purposes as shall be required by applicable federal,
state and local income tax laws.

         Section 7.3 Source of Payments. Except to the extent otherwise provided
in Section 13, all payments made pursuant to the Plan shall be paid in cash from
the general assets of the Employers.

         Section 8. Administration. The Compensation Committee (the "Committee")
of the  Board of  Directors  of Farm  Family  Casualty  Insurance  Company  (the
"Board")  shall  have  full  and  final  power  and  authority,  subject  to the
provisions of the Plan,  to interpret  the  provisions of the Plan, to supervise
the  administration  of the Plan and to take all actions in  connection  with or
relating to the Plan as it deems necessary.  Any  determination or action of the
Committee  shall be final,  conclusive and binding upon the  Participant and the
Participant's beneficiaries, if applicable.

         Section 9. Claims  Procedure.  A  Participant  who  believes  that such
Participant is being denied a benefit to which the Participant is entitled under
the Plan  (hereinafter  referred to as a "Claimant")  may file a written request
for such benefit with the Committee,  setting forth the Participant's claim. The
request  must be addressed to the  Secretary of Farm Family  Casualty  Insurance
Company  (the  "Secretary")  at the  principal  place of business of Farm Family
Casualty Insurance Company.

         Upon receipt of a claim, the Secretary shall advise the Claimant that a
reply will be forthcoming  within ninety (90) days and shall,  in fact,  deliver
such reply within such period.  The  Committee  may,  however,  extend the reply
period for an additional ninety (90) days for reasonable cause.

         If the claim is denied, in whole or in part, the Committee shall render
a written opinion,  using language  calculated to be understood by the Claimant,
setting forth:

         (a)   The specific reason or reasons for such denial;

         (b)   The specific reference to pertinent provisions of the Plan upon
               which such denial is based;

         (c)   A description of any additional material or information necessary
               for the  Claimant to perfect his or her claim and an  explanation
               why such material or such information is necessary; and

         (d)   Appropriate  information  as to  the  steps  to be  taken  if the
               Claimant wishes to submit the claim for review of the Committee's
               decision  by the  Board and the time  period  within  which  such
               review must be requested.

         Within sixty (60) days after the receipt by the Claimant of the written
opinion  described  above,  the  Claimant  may request in writing that the Board
review the determination of the Committee. Such request must be addressed to the
Board at the  principal  place of  business of Farm  Family  Casualty  Insurance
Company. The Claimant or the Claimant's duly authorized  representative may, but
need not,  review the  pertinent  documents  and submit  issues and  comments in
writing  for  consideration  by the Board.  If the  Claimant  does not request a
review of the Committee's  determination by the Board within such sixty (60) day
period,  the  Claimant  shall  be  barred  and  estopped  from  challenging  the
Committee's determination.

         Within  sixty (60) days  after the  Board's  receipt  of a request  for
review from a Claimant, the Board shall review the Committee's determination. If
the  Claimant is a member of the Board,  the Claimant  shall be  precluded  from
participating in the Board's review of the Claimant's  claim.  After considering
all  material  presented  by the  Claimant,  the  Board  shall  render a written
opinion,  written  in a manner  calculated  to be  understood  by the  Claimant,
setting  forth the specific  reasons for its decision  and  containing  specific
references  to the  pertinent  provisions of the Plan upon which its decision is
based. If special  circumstances  require that the sixty (60) day time period be
extended, the Board shall so notify the Claimant and will render the decision as
soon as possible, but not later than one hundred twenty (120) days after receipt
of the request for review from the Claimant.

         Section 10. Amendment of Plan. The Principal  Employers,  in their sole
discretion  and at any time,  may  together  adopt such  written  amendments  or
modifications of the Plan as they may deem advisable; provided, however, that no
such  amendment or  modification  shall deprive any  Participant of any right or
benefit to which such Participant had previously become entitled under the Plan.

         Section 11. Termination of Plan. The Principal Employers, in their sole
discretion and at any time, may together terminate the Plan; provided,  however,
that no such  termination  shall deprive any Participant of any right or benefit
to which such  Participant  had  previously  become  entitled under the Plan. In
addition,   notwithstanding  the  provisions  of  Section  6,  upon  the  Plan's
termination, all Plan Benefits shall become fully vested and nonforfeitable.

         Section 12. No Rights  Created.  Nothing herein is intended or shall be
interpreted to give any Participant  the right to be employed,  reemployed or to
continue to be employed by any  Employer,  and nothing  herein  shall confer any
right or benefit or any entitlement to any benefit to any Participant unless and
until an  amount  is  actually  paid over to such  Participant  pursuant  to the
foregoing provisions of the Plan.

         Section 13. No Trust  Required.  Neither the provisions of the Plan nor
any action taken by any Employer or the Board  pursuant to the provisions of the
Plan shall be deemed to create any trust,  express or implied,  or any fiduciary
relationship between and among the Employers, the Board, any member of the Board
or any Participant.

         Section 14.  Non-Alienation of Benefits.  No right or benefit under the
Plan shall be subject  to  anticipation,  transfer,  sale,  assignment,  pledge,
encumbrance, charge, levy, attachment or execution of a judgment of any kind. No
right or benefit  under the Plan shall in any manner be liable for or subject to
the debts, contract liabilities or torts of any Participant.

         Section  15.  Receipt  and  Release.  Before  making  any  payment to a
Participant,  former  Participant or Beneficiary,  the Employers may require the
payee to execute a receipt and release for such payment,  in a form satisfactory
to the Employers.

         Section 16.  Governing  Law. The Plan shall be construed,  administered
and enforced according to the laws of the State of New York.

         Section 17. Captions.  The captions to the Sections of the Plan are for
convenience  only and shall not control or affect the meaning or construction of
any of the Plan's provisions.

         IN WITNESS WHEREOF,  Farm Family Life Insurance Company and Farm Family
Casualty Insurance Company have caused this Farm Family Supplemental Savings and
Profit Sharing Plan to be adopted pursuant to execution by their duly authorized
officers this 31st day of December, 1996.

ATTEST:                                     FARM FAMILY LIFE INSURANCE COMPANY


By: /s/Victoria M. Stanton            By:  /s/Philip P. Weber
--------------------------            -----------------------
        Secretary                     Philip P. Weber
                                      Title: President & Chief Executive Officer

ATTEST:                               FARM FAMILY CASUALTY INSURANCE  COMPANY


By: /s/Victoria M. Stanton            By:  /s/Philip P. Weber
--------------------------            -----------------------
        Secretary                     Philip P. Weber
                                      Title: President & Chief Executive Officer



<PAGE>


         The following  employers hereby agree to become Employers (as such term
is defined in the Farm Family  Supplemental  Savings and Profit  Sharing  Plan),
effective January 1, 1997, under the Farm Family Supplemental Savings and Profit
Sharing Plan,  pursuant to execution by their duly authorized  officers this day
of December, 1996.



ATTEST:                             FARM FAMILY HOLDINGS, INC.

By: /s/Victoria M. Stanton          By:  /s/Philip P. Weber
--------------------------          -----------------------
       Secretary                    Philip P. Weber
                                    Title: President & Chief Executive Officer



ATTEST:                             UNITED FARM FAMILY INSURANCE COMPANY

By: /s/Victoria M. Stanton          By:  /s/Philip P. Weber
--------------------------          -----------------------
       Secretary                    Philip P. Weber
                                    Title: President & Chief Executive Officer


<PAGE>


Exhibit 10.18
                        TAX PAYMENT ALLOCATION AGREEMENT
                     FARM FAMILY HOLDINGS, INC. & SUBSIDIARY
                     Taxable Years Beginning January 1, 1996

         THIS AGREEMENT is made with reference to the following facts:

     A.  Farm  Family  Holdings,  Inc.  ("Parent"),  and  Farm  Family  Casualty
Insurance  Company  ("Subsidiary"),  are members of an affiliated  group as that
term is defined in Section 1504 of the Internal Revenue Code of 1954.

     B. The  affiliated  group has  exercised  the  privilege  granted  to it by
Section 1501 of the Internal  Revenue Code to file  consolidated  Federal income
tax returns.

    C. Parent and Subsidiary each desire that there be fair  compensation to the
member responsible for any reduction in income taxes for any taxable year (after
1995)  realized by the  affiliated  group  through the filing of a  consolidated
return.

         NOW,  THEREFORE,  in  consideration  of the  premises and of the mutual
agreements  and  convenants  herein  contained,  Parent and Subsidiary do hereby
enter into this Agreement and do hereby agree as follows:

         1.Preparation  of  Consolidated  Return - Parent  agrees to  prepare or
cause to be prepared and to file  annually on behalf of the  affiliated  group a
consolidated  return for all taxable years of the affiliated  group ending after
December 31, 1995,  until such time as it may determine  that the best interests
of the affiliated  group are no longer served thereby,  subject to receiving the
required consent of the  Commissioner of Internal Revenue to discontinue  filing
consolidated  returns,  and  Subsidiary  agrees to cooperate  with Parent in the
preparation and filing of each such consolidated return.

         2.  Allocation  of  Consolidated  Tax Liability - The tax charge or tax
refund to Subsidiary  shall be the amount that the Subsidiary would have paid or
received if it had filed on a separate  return basis with the  Internal  Revenue
Service.

              For purposes of  determining  the tax on a separate  return basis,
Subsidiary's  separate  company  taxable income shall include net capital gains,
charitable contributions,  net capital losses, dividends received from companies
included  in the  consolidated  return  and any  dividends  received  deduction.
Carryovers or carrybacks attributable to net operating losses, capital losses or
charitable contributions shall be taken into account.

              To help assure  Subsidiary's  enforceable  right to recoup federal
income taxes in the event of future net losses an escrow  account  consisting of
assets  eligible  as an  investment  for  Subsidiary  shall be  established  and
maintained  by Parent in an amount  equal to the  excess of the  amount  paid by
Subsidiary to the Parent for federal  income taxes over the actual  payment made
by Parent to the Internal Revenue Service.

              Escrow assets may be released to Parent from the escrow account at
such time as the permissible period for loss carrybacks has elapsed.

         3. All settlements under this Agreement shall be made within 30 days of
the filing of the applicable  estimated or actual consolidated federal corporate
income tax return with the Internal  Revenue  Service,  except where a refund is
due Parent,  in which case, it may defer payment to Subsidiary to within 30 days
of  receipt  of such  refund.  All  settlements  shall be in cash or  securities
eligible as investments for Subsidiary, at market value.
         4. If taxable  income,  special  deductions  or credits  reported  in a
consolidated  federal  income  tax return are  revised by the  Internal  Revenue
Service or other appropriate authority, a recalculation of the tax liability for
all parties to this Agreement shall be made.

         5.   Termination -

              The Agreement may be terminated if:

              a) The parties agree in writing to such termination;
              b) Membership in the affiliated group ceases or is terminated for
                 any reason whatsoever;
              c) The affiliated group fails to file a consolidated return for
                 any taxable year.

              PROVIDED,  HOWEVER,  that  notwithstanding the termination of this
Agreement,  the  obligations of Parent and Subsidiary  hereunder shall remain in
effect  with  respect  to any  period  of  time  during  the tax  year in  which
termination  occurs  for  which  the  income of the  terminating  party  must be
included in the consolidated return.

         6.  Assignment or Transfer - This Agreement  shall not be assignable or
transferable  by either party hereto  without the prior  written  consent of the
other.

         7.  Arbitration  of  Disputes - Should any  dispute  arise  between the
parties to this Agreement concerning any of the rights or obligations  hereunder
of either of the parties  hereto,  such dispute  shall be referred to a Board of
Arbitrators  to consist of three  members  to be chosen as  follows:  Each party
shall select one  Arbitrator  and the two  Arbitrators  so chosen shall select a
third.  If either party shall fail to appoint its Arbitrator  within twenty (20)
days after the party desiring arbitration has appointed its Arbitrator and given
notice in writing to the other of such appointment and the matter proposed to be
arbitrated,  or if the two  Arbitrators  chosen  shall be unable to agree upon a
third  Arbitrator  within twenty (20) days after the  appointment  of the second
Arbitrator,  then such  Arbitrator(s)  shall be appointed in accordance with the
provisions of the Civil Practice Laws and Rules. Any Arbitrator  appointed under
this  provision  shall be  knowledgeable  in the federal  taxation of  insurance
companies.  Said Board so appointed  shall hear and decide the matter or matters
in  dispute.  The  decision of said  Arbitrators  or a majority of them shall be
final and  conclusive  upon the  parties  hereto  with  respect  to all  matters
referred to the Arbitrators for decision.

         8.  Notwithstanding  the  termination of this  Agreement,  all material
including,  but not  limited  to,  returns,  supporting  schedules,  workpapers,
correspondence and other documents relating to the consolidated returns shall be
made available to any party to this Agreement during regular business hours.

                               PARENT:
                               FARM FAMILY HOLDINGS, INC.

   Date: December 20, 1996                         By:  /s/Timothy A. Walsh
         ------------------------                       -------------------
                                                         Timothy A. Walsh
                                                            Treasurer

                               SUBSIDIARY:
                               FARM FAMILY CASUALTY INSURANCE COMPANY

   Date: December 24, 1996                         By:  /s/Philip P. Weber
         ----------------------                         ------------------
                                                           Philip P. Weber
                                                        President and C.E.O.

<TABLE>

                  FARM FAMILY HOLDINGS, INC. AND SUBSIDIARIES
                                   EXHIBIT 11
                        COMPUTATION OF EARNINGS PER SHARE
<CAPTION>


                                                              Twelve months
         ($ in thousands except per share data)                   ended
                                                               December 31,
                                                                   1996                1995               1994
                                                             -------------------------------------------------------
<S>                                                                    <C>                   <C>             <C>
         Net income available to common shareholders                   $6,294                $9,606          $3,526

         Weighted average shares outstanding (1)                        3,979                 3,000           3,000
                                                             -------------------------------------------------------

         Net income per share                                           $1.74                 $3.20           $1.18
                                                             -------------------------------------------------------


         Net income before extraordinary item available to
             common shareholders                                       $8,467                $9,606          $3,526

         Weighted average shares outstanding(1)                         3,979                 3,000           3,000
                                                             -------------------------------------------------------

         Net income before extraordinary item per share                 $2.13                 $3.20           $1.18
                                                             -------------------------------------------------------

       (1) Gives  effect  to the  allocation  of  3,000,000  shares to  eligible
policyholders  on July 26, 1996  pursuant to Farm Family  Casualty's  conversion
from a mutual company to a stockholder owned company.

</TABLE>

<PAGE>


Exhibit 13

Management's Discussion and Analysis of Financial Condition and Results of
Operations

GENERAL

Corporate Profile
The  following  discussion  and analysis of financial  condition  and results of
operations  includes the operations of Farm Family Holdings,  Inc. ("Farm Family
Holdings")  and its wholly  owned  subsidiary,  Farm Family  Casualty  Insurance
Company  ("Farm  Family  Casualty")  and Farm  Family  Casualty's  wholly  owned
subsidiary,  Rural Agency and Brokerage,  Inc.  (collectively referred to as the
"Company"). The operations of the Company are also closely related with those of
its  affiliates,  Farm  Family  Life  Insurance  Company  and Farm  Family  Life
Insurance  Company's  wholly  owned  subsidiary,  United Farm  Family  Insurance
Company.

Conversion and Initial Public Offering
On July 26, 1996,  Farm Family Mutual  Insurance  Company ("Farm Family Mutual")
converted from a mutual property and casualty insurance company to a stockholder
owned  property  and  casualty  insurance  company  and  became a  wholly  owned
subsidiary  of Farm Family  Holdings  pursuant to a Plan of  Reorganization  and
Conversion  (the "Plan of  Conversion").  In  addition,  Farm Family  Mutual was
renamed  Farm  Family  Casualty  Insurance  Company.  As  part  of the  Plan  of
Conversion,  Farm  Family  Holdings  was  formed  and  the  Farm  Family  Mutual
policyholders  received  2,237,000  shares of Farm Family Holding's common stock
and $11,735,000 in cash in exchange for their membership interest in Farm Family
Mutual.

On July 23, 1996,  Farm Family  Holdings made an initial public  offering of its
common  stock at a price of $16 per share.  Farm Family  Holdings  received  net
proceeds  of  $41,453,000  for  2,786,000  shares  sold  in the  initial  public
offering.  In addition,  Farm Family  Holdings  received  $3,427,000 for 214,000
shares  purchased  by  policyholders  of Farm  Family  Mutual in a  subscription
offering.  In  addition,  pursuant  to the Plan of  Conversion,  holders of Farm
Family Mutual debt could elect to exchange their debt  instruments for shares of
common  stock  or cash.  As a  result,  there  were  17,000  common  shares  and
$1,107,000 in cash  exchanged for debt with an outstanding  principal  amount of
$1,371,000.

Farm Family
Farm Family  Casualty is a specialized  property and casualty  insurer of farms,
other  generally  related   businesses  and  residents  of  rural  and  suburban
communities  principally in the Northeastern United States. Farm Family Casualty
provides property and casualty insurance  coverages to members of the state Farm
Bureau(R) organizations in New York, New Jersey, Delaware, West Virginia and all
of the New England states.  Membership in a state Farm Bureau  organization is a
prerequisite  for  voluntary  insurance  coverage  (except for  employees of the
Company and its  affiliates).  Associate Farm Bureau  memberships  are generally
available to persons not engaged in agricultural businesses.

Operating Environment
The  operating  results of companies  in the  property  and  casualty  insurance
industry have  historically  been subject to  fluctuations  due to  competition,
economic  conditions,  weather and various other factors.  Factors affecting the
results of  operations  of the  property  and casualty  industry  include  price
competition and aggressive  marketing which historically have resulted in higher
combined loss and expense ratios. The Company's premium revenue is a function of
changes in average premiums per policy and the growth in the number of policies.
Premium rates are regulated by the state insurance  departments in the states in
which the Company  operates.  Because of the nature of the property and casualty
insurance  industry,  it is difficult to predict future trends in the industry's
overall combined losses and profitability.

The Company's  operating  results are subject to significant  fluctuations  from
period to period depending upon, among other factors, the frequency and severity
of losses from  weather  related and other  catastrophic  events,  the effect of
competition  and  regulation  on the  pricing of  products,  changes in interest
rates, general economic conditions, tax laws and the regulatory environment.  As
a condition  of its license to do  business  in various  states,  the Company is
required to participate  in a variety of mandatory  residual  market  mechanisms
(including  mandatory  pools) which  provide  certain  insurance  (most  notably
automobile  insurance)  to  consumers  who are  otherwise  unable to obtain such
coverages from private  insurers.  Residual  market premium rates for automobile
insurance  have  generally  been  inadequate.  The  amount of  future  losses or
assessments from residual market  mechanisms can not be predicted with certainty
and could have a material adverse effect on the Company's results of operations.

For the years ended December 31, 1996, 1995, and 1994,  38.6%,  39.1% and 38.5%,
respectively,  of the  Company's  direct  written  premiums  were  derived  from
policies  written in New York and 22.6%,  20.8%, and 19.6%,  respectively,  were
derived from policies written in New Jersey.  For these periods,  no other state
accounted for more than 10.0% of the Company's  direct  written  premiums.  As a
result of the concentration of the Company's  business in the states of New York
and New  Jersey  and more  generally  in the  Northeastern  United  States,  the
Company's  results  of  operations  may be  significantly  affected  by  weather
conditions,  catastrophic events and regulatory developments in these two states
and in the Northeastern United States.

Products
The  Special  Farm  Package  is a  flexible,  multi-line  package  of  insurance
coverages  which the Company  regards as its  "flagship"  product.  For the year
ended December 31, 1996,  24.5% of the Company's  total direct written  premiums
were derived from the Special Farm Package product.

The  Company  concentrates  on its primary  products:  personal  and  commercial
automobile, the Special Farm Package,  businessowners,  and homeowners policies.
The Company  underwrites  its  commercial and personal lines risks by evaluating
historical loss experience,  current prevailing market  conditions,  and product
profitability with consistently applied standards. The adequacy of premium rates
is affected  mainly by the severity  and  frequency of claims and changes in the
competitive, legal and regulatory environment in which the Company operates.

Expense Management
During the fourth quarter of 1996, the Company announced the implementation of a
voluntary early  retirement  program and other changes to the Company's  benefit
plans as part of its continuous expense management program. The Company recorded
a nonrecurring  charge, net of an income tax benefit of $412,000,of $765,000 for
the Company's  share of the costs of this voluntary  early  retirement  program.
Eligibility for the program was based on age and years of service.  In addition,
effective  January 1, 1997,  the Company froze  benefits  available  through its
defined  benefit plan and enhanced its defined  contribution  plan. As a result,
the  Company's  contributions  to the defined  contribution  plan will vary to a
greater  extent based upon the Company's  profitability  than the  contributions
previously  required to fund its defined  benefit  plan.  The Board of Directors
also  approved a stock  option plan,  subject to  shareholder  approval,  and an
annual incentive plan for officers.

RESULTS OF OPERATIONS

The Year Ended December 31, 1996 Compared to the Year Ended December 31, 1995

Premiums
Premium revenue increased $13.9 million or 11.8%, during the year ended December
31, 1996 to $130.8  million from $116.9 million in 1995. The increase in premium
revenue in 1996 resulted from an increase of $11.1 million in earned premiums on
additional business directly written by the Company (principally in New York and
New Jersey) and an increase of $2.4 million in earned  premiums  retained by the
Company and not ceded to reinsurers,  in addition to an increase of $0.4 million
in earned  premiums  assumed.  The $11.1 million  increase in earned premiums on
additional  business directly written by the Company was primarily  attributable
to an increase of $9.9 million,  or 9.2%, in earned  premiums from the Company's
primary  products  (personal  and  commercial  automobile  policies  other  than
assigned  risk  business,  the Special Farm  Package,  businessowners  policies,
homeowners  policies,  and  Special  Home  Package)  and to an  increase of $0.7
million in earned  premiums on  workers'  compensation  business.  The number of
policies in force related to the Company's primary products increased by 8.6% to
approximately 114,000 in 1996 from approximately 105,000 in 1995 and the average
premium earned for each such policy  increased by 0.6% in 1996. The $2.4 million
increase in earned premiums  retained by the Company was primarily the result of
a change  in the  terms  of  certain  of the  Company's  reinsurance  agreements
pursuant to which the earned premiums ceded by the Company were reduced.

Net Investment Income
Net investment  income  increased $1.6 million or 11.3% to $15.9 million for the
year ended  December  31, 1996 from $14.3  million in 1995.  The increase in net
investment  income was  primarily the result of an increase in cash and invested
assets  (at  amortized  cost) of  approximately  $34.7  million,  or 17.7%.  The
increase in average cash and invested  assets was primarily  attributable to the
net proceeds of $31.0 million from the initial public offering and  subscription
offering  received in July 1996.  The return  realized on the Company's cash and
invested assets was 7.5% in 1996 and 7.6% in 1995.

Net Realized Investment Gains (Losses)
Net realized investment losses were $0.6 million for the year ended December 31,
1996 compared to a gain of $0.9 million in 1995.

Losses and Loss Adjustment Expenses
Losses and loss adjustment  expenses increased $11.8 million, or 14.2%, to $95.0
million for the year ended  December  31, 1996 from $83.2  million in 1995.  The
increase in losses and loss  adjustment  expenses was primarily  attributable to
the  overall  growth in the  Company's  business,  as well as the  frequency  of
weather related losses in the Northeastern United States during the three months
ended March 31, 1996.  Loss and loss  adjustment  expenses were 72.6% of premium
revenue in 1996 compared to 71.1% of premium revenue in 1995. Losses believed to
be weather related  aggregated $10.6 million in 1996 compared to $5.2 million in
1995.

Underwriting Expenses
Underwriting  expenses increased $3.3 million, or 9.3%, to $38.2 million for the
year ended December 31, 1996 from $34.9 million for the same period in 1995. For
the year ended  December 31, 1996,  underwriting  expenses were 29.2% of premium
revenue  compared to 29.8% in 1995. The reduction in the Company's  underwriting
expense  ratio was  primarily  attributable  to a smaller  relative  increase in
overhead expenses than in premium revenue for the period.

Federal Income Tax Expense
Federal  income tax expense  decreased $1.3 million to $3.7 million in 1996 from
$5.0  million in 1995.  Federal  income tax expense  was 30.3% of income  before
federal  income  taxes in 1996  compared to 34.2% in 1995.  The  decrease in the
Company's  effective  federal income tax rate was primarily  attributable  to an
increase in tax exempt interest income in 1996.

Net Income
Net income  decreased  $2.7 million to $6.9 million in 1996 from $9.6 million in
1995  primarily  as a result of the  foregoing  factors  and the  impact of $1.5
million of  expenses  related to the Plan of  Conversion  which the  Company has
identified  as an  extraordinary  item. In addition,  the Company  implemented a
voluntary  early  retirement  program  which  resulted  in a one time  charge to
earnings,  net of an income tax benefit of $0.4 million,  of $0.8 million in the
last quarter of 1996.

The Year Ended December 31, 1995 Compared to the Year Ended December 31, 1994

Premiums
Premium revenue increased $15.5 million or 15.2%, during the year ended December
31, 1995 to $116.9  million from $101.5 million in 1994. The increase in premium
revenue in 1995 resulted from an increase of $14.3 million in earned premiums on
additional business directly written by the Company (principally in New York and
New Jersey) and an increase of $2.3 million in earned  premiums  retained by the
Company and not ceded to reinsurers,  which were partially  offset by a decrease
of $1.1 million in earned premiums assumed. The $14.3 million increase in earned
premiums on additional  business  directly  written by the Company was primarily
attributable to an increase of $10.8 million,  or 11.1%, in earned premiums from
the Company's  primary  products  (personal and commercial  automobile  policies
other than assigned  risk  business,  the Special Farm  Package,  businessowners
policies,  homeowners policies,  and Special Home Package) and to an increase of
$1.8  million  in earned  premiums  on  assigned  risk  business.  The number of
policies in force related to the Company's primary products increased by 8.4% to
approximately  105,000 in 1995 from approximately 97,000 in 1994 and the average
premium earned for each such policy  increased by 2.5% in 1995. The $2.3 million
increase in earned premiums  retained by the Company was primarily the result of
a change  in the  terms  of  certain  of the  Company's  reinsurance  agreements
pursuant  to which both the amount of earned  premiums  ceded by the Company and
the ceding  commissions  received by the Company were reduced.  The $1.1 million
decrease in earned premiums  assumed was attributable to a reduction in premiums
assumed from mandatory pools as a result of the depopulation of such pools.

Net Investment Income
Net  investment  income  increased $1.1 million or 8.6% to $14.3 million for the
year ended  December  31, 1995 from $13.2  million in 1994.  The increase in net
investment  income was  primarily the result of an increase in cash and invested
assets (at amortized cost) of approximately  $17.2 million,  or 9.6%. The return
realized on the Company's cash and invested assets was 7.6% in 1995 and 1994.

Net Realized Investment Gains
Net realized  investment gains were $0.9 million for the year ended December 31,
1995 compared to $1.3 million in 1994.

Losses and Loss Adjustment Expenses
Losses and loss adjustment  expenses  increased $0.5 million,  or 0.6%, to $83.2
million for the year ended  December  31, 1995 from $82.7  million in 1994.  The
increase in losses and loss  adjustment  expenses was primarily  attributable to
the overall growth in the Company's  business and was significantly  offset by a
reduction  in the  loss  and  loss  adjustment  expense  ratio.  Loss  and  loss
adjustment  expenses were 71.1% of premium  revenue in 1995 compared to 81.5% of
premium  revenue in 1994. The decrease in the loss and loss  adjustment  expense
ratio was  primarily  attributable  to  improved  loss  ratios on the  Company's
personal and commercial  automobile  lines and to a decline in the frequency and
severity  of weather  related  property  losses in 1995 as  compared  with 1994.
Losses believed to be weather  related  aggregated $5.2 million in 1995 compared
to $7.9 million in 1994. To a much lesser  extent,  the decrease in the loss and
loss adjustment  expense ratio on assumed  reinsurance  also  contributed to the
decrease in the Company's overall loss and loss adjustment  expense ratio during
1995.

Underwriting Expenses
Underwriting  expenses increased $6.1 million,  or 21%, to $34.9 million for the
year ended December 31, 1995 from $28.8 million for the same period in 1994. For
the year ended  December 31, 1995,  underwriting  expenses were 29.8% of premium
revenue  compared  to 28.4% in 1994.  A  reduction  in 1994 of $2.2  million  in
amounts  accrued for the Company's share of the deficit of the New Jersey Market
Transition Facility had a favorable impact on the Company's underwriting expense
ratio in that year.  Without  taking into account the effect of this  reduction,
underwriting expenses in 1994 would have been 30.5% of premium revenue

Federal Income Tax Expense
Federal income tax expense increased $3.6 million to $5.0 million in 1995 from $
1.4  million in 1994.  Federal  income tax  expense  was 34.2% of income  before
federal  income tax expense in 1995  compared to 29.1% in 1994.  The increase in
the Company's  effective  federal income tax rate was primarily  attributable to
the  increase in income  before  federal  income tax expense,  certain  expenses
related to the Plan of Conversion , and reductions in tax exempt interest income
in 1995.


Net Income
Net income  increased  $6.1 million to $9.6 million in 1995 from $3.5 million in
1994 primarily as a result of the foregoing factors.

LIQUIDITY AND CAPITAL RESOURCES

Historically,  the  principal  sources  of the  Company's  cash  flow  have been
premiums,  investment income,  maturing investments,  and proceeds from sales of
invested  assets.  In  addition  to the  need for  cash  flow to meet  operating
expenses,  the liquidity  requirements  of the Company  relate  primarily to the
payment of losses and loss adjustment  expenses.  The liquidity  requirements of
the Company vary because of the uncertainties regarding the settlement dates for
liabilities  for unpaid  claims and because of the  potential  for large losses,
either individually or in the aggregate.

During 1996,  the Company  continued  to reduce its  holdings of  non-investment
grade  fixed  maturities  to  improve  the  overall  quality  of its  investment
portfolio.  The aggregate  carrying value of fixed maturity  securities rated as
non-investment  grade by the NAIC was  reduced to $6.9  million,  or 3.2% of its
fixed maturity  portfolio,  at December 31, 1996 from $10.8 million,  or 5.6% of
its fixed maturity  portfolio,  at December 31, 1995. High yield corporate bonds
constituted most of the  non-investment  grade securities held by the Company as
of  December  31,  1996.  As a result of the  reduction  in  holdings of certain
non-investment grade securities,  the Company anticipates that future investment
yields  may be lower  than  they  otherwise  would be.  Approximately  4% of the
Company's  investment  portfolio  consists  of  investments  in  mortgage-backed
securities.  The  mortgage-backed  securities held by the Company as of December
31, 1996 were  primarily  GNMA,  FNMA,  and  Federal  Home Loan  Mortgage  Corp.
pass-through  securities.  The  Company  currently  has no  investments  in such
derivative financial instruments as futures, forward, swap, or option contracts,
or other financial instruments with similar characteristics. The market value of
the Company's  fixed maturity  investments is subject to  fluctuations  directly
attributable  to prevailing  rates of interest as well as other  factors.  As of
December 31, 1996,  the aggregate  market value of the Company's  fixed maturity
investments  exceeded the aggregate  amortized cost of such  investments by $5.1
million.  As of December 31, 1995,  the aggregate  market value of the Company's
fixed  maturity  investments  exceeded  the  aggregate  amortized  cost  of such
investments  by $10.2  million  The Company  has in place an  unsecured  line of
credit  with Key Bank,  NA under  which it may  borrow up to $2.0  million  and,
effective  January  1997,  a $7.0  million  unsecured  line of credit with Fleet
National Bank. At December 31, 1996, no amounts were  outstanding on either line
of credit,  each of which has an annual interest rate equal to such bank's prime
rate. In addition,  the Company had notes payable outstanding consisting of $0.3
million of  debentures  and $1.0 million of  subordinated  surplus  certificates
(collectively "the Surplus Notes").  The Surplus Notes bear interest at the rate
of 8% per annum, have no maturity date, and principal and interest are repayable
only with the approval of the Insurance Department of the State of New York.

Net cash provided by operating activities was $11.8 million,  $16.4 million, and
$8.6  million  during  the  years  ended  December  31,  1996,  1995,  and 1994,
respectively.  The decrease in cash provided by operating activities in 1996 was
primarily  attributable  to the decrease in net income which included the impact
of $1.5 million of expenses  related to the Plan of Conversion which the Company
has  identified  as an  extraordinary  item  during 1996  compared to 1995.  The
increase in net cash  provided by  operating  activities  in 1995 was  primarily
attributable to the increase in net income and a decrease in payments for losses
and loss adjustment expenses during 1995 compared to 1994.

Net cash used in investing activities was $41.1 million, $18.5 million, and $7.7
million during the years ended December 31, 1996, 1995, and 1994,  respectively.
The increase in net cash used in investing activities in 1996 resulted primarily
from a reduction in proceeds on the maturities and sales of fixed maturities and
the investment of the net proceeds from the Company's  initial public  offering.
The increase in net cash used in investing  activities in 1995 resulted from the
net increase in cash available from the Company's  operations  during 1995 and a
corresponding  increase  in  investments  in  short-term  investments  and fixed
maturities.

Net cash provided by financing  activities  for the year ended December 31, 1996
of $30.9 million was the result of the Company's  initial public offering of its
common  stock on July 23,  1996.  The  Company  received  net  proceeds of $41.5
million for 2,786,000 shares sold in the initial public offering as well as $3.4
million for 214,000 shares sold in a subscription offering to policyholders. The
Company made  payments of $11.7 million to  policyholders  in exchange for their
membership  interest in Farm Family  Mutual and $1.1  million to holders of Farm
Family  Mutual debt  pursuant to the Plan of  Conversion.  In addition,  the net
proceeds  were  utilized to pay  certain  expenses  associated  with the initial
public offering of $1.1 million. Subsequent to the initial public offering, Farm
Family  Holdings  made an $18.0  million  capital  contribution  to Farm  Family
Casualty.

The Company  purchases  reinsurance  in part to mitigate  the impact of large or
unusual  losses and loss  expenses on its  liquidity.  As a condition of writing
business in certain  states,  the Company  participates in a number of mandatory
pools and the  Company may be  required  to pay  assessments  to the extent such
pools require the funding of deficits in the future.

The principal  source of liquidity for Farm Family Holdings will be derived from
dividend payments received from the Farm Family Casualty. The New York Insurance
Law regulates the  distribution  of dividends and other  payments to Farm Family
Holdings by Farm Family Casualty.  Such restrictions or any subsequently imposed
restrictions may in the future affect Farm Family Holdings' liquidity.


<PAGE>
<TABLE>


FARM FAMILY HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Income
 ($ in thousands)

<CAPTION>

--------------------------------------------------------------------------------------------------------------------

For the Years Ended December 31,                                               1996          1995          1994
                                                                               ----          ----          ----
--------------------------------------------------------------------------------------------------------------------

Revenues:
<S>                                                                             <C>           <C>          <C>
         Premiums                                                               $130,780      $116,936     $101,466
         Net investment income                                                    15,952        14,326       13,190
         Realized investment gains (losses), net                                   (640)           912        1,340
         Other income                                                                905           840          696
                                                                          ------------------------------------------
             Total revenues                                                      146,997       133,014      116,692
                                                                          ------------------------------------------

Losses and Expenses:
         Losses and loss adjustment expenses                                      94,977        83,184       82,680
         Underwriting expenses                                                    38,160        34,902       28,768
         Early retirement program expense                                          1,177             -            -
         Interest expense                                                            167           216          220
         Dividends to policyholders                                                  373           122           51
                                                                          ------------------------------------------
            Total losses and expenses                                            134,854       118,424      111,719
                                                                          ------------------------------------------

Income before federal income tax expense and extraordinary item                   12,143        14,590        4,973

Federal income tax expense                                                         3,676         4,984        1,447
                                                                          ------------------------------------------

Income before extraordinary item                                                   8,467         9,606        3,526

Extraordinary item - demutualization expenses                                      1,543             -            -
                                                                          ------------------------------------------

Net income                                                                        $6,924        $9,606       $3,526
                                                                          ------------------------------------------

Per Common Share:
    Income before extraordinary item                                               $2.13         $3.20        $1.18
                                                                          ------------------------------------------

    Net income                                                                     $1.74         $3.20        $1.18
                                                                          ------------------------------------------

See accompanying notes to Consolidated Financial Statements.

</TABLE>


<PAGE>
<TABLE>


FARM FAMILY HOLDINGS, INC. AND SUBSIDIARIES
THE COMPANY MUTUAL INSURANCE COMPANY
Consolidated Balance Sheets
 ($ in thousands)

<CAPTION>

As of December 31,                                                                                             1995
                                                                                             1996
ASSETS

Investments:
   Fixed Maturities
<S>                                                                                            <C>          <C>
     Available for sale, at fair value
        (Amortized cost: $214,226 in 1996 and $171,694 in 1995 )                               $219,188     $181,189
     Held to maturity, at amortized cost
        (Fair value: $9,973 in 1996 and $13,100 in 1995)                                          9,782       12,386
     Equity securities
        Available for sale, at fair value (Cost: $2,546 in 1996 and $334 in 1995)                 7,908        4,746
   Mortgage loans                                                                                 1,745        1,822
   Other invested assets                                                                            748        1,246
   Short-term investments                                                                         5,333        6,532
                                                                                       ------------------------------
             Total investments                                                                  244,704      207,921
                                                                                       ------------------------------

Cash                                                                                              4,110        2,410
Insurance receivables:
   Reinsurance receivables                                                                       10,743       13,773
   Premiums receivable                                                                           22,663       21,791
Deferred acquisition costs                                                                       10,682       10,527
Accrued investment income                                                                         4,861        4,260
Deferred income tax asset, net                                                                    1,520            -
Prepaid reinsurance premiums                                                                      1,944        1,864
Receivable from affiliates, net                                                                  16,133       13,860
Other assets                                                                                      2,052        1,434
                                                                                       ------------------------------
             Total Assets                                                                      $319,412     $278,288
                                                                                       ------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
Reserves for losses and loss adjustment expenses                                               $141,220     $137,978
Unearned premium reserve                                                                         55,945       52,799
Reinsurance premiums payable                                                                        641        2,635
Accrued expenses and other liabilities                                                            9,561        7,788
Debt                                                                                              1,304        2,707
Deferred income tax liability, net                                                                    -          217
                                                                                       ------------------------------
             Total liabilities                                                                  208,671      204,124
                                                                                       ------------------------------

Stockholders' equity:
Common Stock $1.60 par value 1,000,000 shares authorized
         and no shares issued and outstanding                                                         -            -

Common Stock $1.60 par value 3,200,000 shares authorized
         and 5,253,813 shares issued and outstanding                                                 53            -

Additional paid in capital                                                                       98,140            -
Retained earnings                                                                                 5,838       65,284
Net unrealized investment gains                                                                   6,710        8,998
Minimum pension liability adjustment                                                                  -        (118)
                                                                                       ------------------------------
             Total stockholders' equity                                                         100,741       74,164
                                                                                       ------------------------------
             Total Liabilities and Stockholders' Equity                                        $319,412     $278,288
                                                                                       ------------------------------

See accompanying notes to Consolidated Financial Statements.


</TABLE>
<PAGE>

<TABLE>


FARM FAMILY HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
 ($ in thousands)
<CAPTION>

------------------------------------------------------------------------------------------------------------

Year Ended December 31                                                      1996        1995        1994
------------------------------------------------------------------------------------------------------------

Common stock
<S>                                                                         <C>          <C>        <C>
         Balance, beginning of year                                             $  -         $ -        $ -
         Common stock issued                                                      53           -          -
                                                                        ------------------------------------
         Balance, end of year                                                     53           -          -
                                                                        ------------------------------------

Additional paid in capital
         Balance, beginning of year                                                -           -          -
         Initial public offering and subscription offering, net               43,715           -          -
         Payments to policyholders                                          (12,210)           -          -
         Conversion of debt to common stock                                      265           -          -
         Demutualization of Farm Family Mutual                                66,370           -          -
                                                                        ------------------------------------
         Balance, end of year                                                 98,140           -          -
                                                                        ------------------------------------

Retained earnings
         Balance, beginning of year                                           65,284      55,678     52,152
         Net income                                                            6,924       9,606      3,526
         Demutualization of Farm Family Mutual                              (66,370)           -          -
                                                                        ------------------------------------
         Balance, end of year                                                  5,838      65,284     55,678
                                                                        ------------------------------------


Net unrealized appreciation (depreciation) of investments
         Balance, beginning of year                                            8,998     (2,701)      8,360
         Change in unrealized appreciation (depreciation), net               (2,288)      11,699   (11,061)
                                                                        ------------------------------------
         Balance, end of year                                                  6,710       8,998    (2,701)
                                                                        ------------------------------------

Minimum pension liability adjustment
         Balance, beginning of year                                            (118)           -          -
         Minimum pension liability adjustment                                    118       (118)          -
                                                                        ------------------------------------
         Balance, end of year                                                      -       (118)          -
                                                                        ------------------------------------
Total Stockholders' Equity                                                  $100,741     $74,164    $52,977
                                                                        ------------------------------------


See accompanying notes to Consolidated Financial Statements.

</TABLE>


<PAGE>
<TABLE>


FARM FAMILY HOLDINGS, INC. AND SUBSIDIARIES
Statements of Consolidated Cash Flows
 ($ in thousands)
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------
Year ended December 31                                                               1996         1995         1994
                                                                                     ----         ----         ----
-----------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                  <C>          <C>         <C>
Net income                                                                             $6,924       $9,606      $3,526
                                                                                 --------------------------------------

Adjustments  to  reconcile   net  income  to  net  cash  provided  by  operating
   activities:
     Realized investment (gains) losses                                                   640        (912)     (1,340)
     Amortization of bond discount                                                        130           62          77
     Deferred income taxes                                                              (505)          581         596
     Extraordinary item - demutualization expense                                       1,543            -           -
     Changes in:
         Reinsurance receivables                                                        3,030        1,254       1,910
         Premiums receivable                                                            (872)      (3,062)     (2,732)
         Deferred acquisition costs                                                     (155)      (1,856)        (39)
         Accrued investment income                                                      (601)        (213)       (426)
         Prepaid reinsurance premiums                                                    (80)         (58)       (367)
         Receivable from affiliates                                                   (2,273)      (3,293)       1,699
         Other assets                                                                   (283)          742       (803)
         Reserves for losses and loss adjustment expenses                               3,242       10,024       4,477
         Unearned premium reserve                                                       3,146        3,956       4,541
         Reinsurance premiums payable                                                 (1,994)      (1,394)           4
         Accrued expenses and other liabilities                                         1,497        1,001     (2,030)
         Income taxes payable                                                               -            -       (459)
                                                                                 --------------------------------------
         Total adjustments                                                              6,465        6,832       5,108
                                                                                 --------------------------------------
         Net cash provided by operating activities before extraordinary item           13,389       16,438       8,634
         Extraordinary item - demutualization expense                                 (1,543)            -           -
                                                                                 --------------------------------------
         Net cash provided by operating activities                                     11,846       16,438       8,634
                                                                                 --------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from sales:
    Fixed maturities available for sale                                                 5,670       28,466      26,102
    Other invested assets                                                                 144            -         732
Investment collections:
    Fixed maturities available for sale                                                 9,405       15,435      16,025
    Fixed maturities held to maturity                                                   2,561          514         418
    Mortgage loans                                                                         77           68          58
Investment purchases:
    Fixed maturities available for sale                                              (58,430)     (58,339)    (54,010)
    Fixed maturities held to maturity                                                       -      (1,598)     (1,040)
    Equity securities                                                                 (2,042)            -           -
Change in short-term investments, net                                                   1,199      (3,519)          90
Change in other invested assets                                                           344          480       3,186
Proceeds from sale of property and equipment                                                -            -         711
                                                                                 --------------------------------------
         Net cash used in investing activities                                       (41,072)     (18,493)     (7,728)
                                                                                 --------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from IPO and Subscription Offering                                            44,880            -           -
subscription
Demutualization payments to Policyholders and Noteholders                            (12,842)            -           -
IPO Expenses paid                                                                     (1,080)            -           -
Principal payments on debt                                                               (32)         (42)        (34)
                                                                                 --------------------------------------
         Net cash provided by (used in) financing activities                           30,926         (42)        (34)
                                                                                 --------------------------------------
         Net increase (decrease) in cash                                                1,700      (2,097)         872
Cash, beginning of year                                                                 2,410        4,507       3,635
                                                                                 --------------------------------------
Cash, end of year                                                                      $4,110       $2,410      $4,507
                                                                                 --------------------------------------

See accompanying notes to Consolidated Financial Statements.

</TABLE>




<PAGE>


         1.       Summary of Significant Accounting Policies

        Basis of Presentation:

         The accompanying  consolidated  financial statements have been prepared
         in conformity with generally accepted accounting principles and include
         the accounts of Farm Family Holdings, Inc. ("Farm Family Holdings") and
         its wholly owned  subsidiary,  Farm Family Casualty  Insurance  Company
         ("Farm Family Casualty") and its wholly owned subsidiary,  Rural Agency
         and  Brokerage,   Inc.,  ("RAB")  (collectively   referred  to  as  the
         "Company"). All significant intercompany balances and transactions have
         been eliminated.  The preparation of financial statements in accordance
         with generally accepted  accounting  principles  requires management to
         make  estimates  and  assumptions  that affect the reported  amounts of
         assets  and  liabilities  and  disclosures  of  contingent  assets  and
         liabilities  at the date of the financial  statements  and the reported
         amounts of revenues and expenses  during the reporting  period.  Actual
         results could differ from those estimates.

         The Company  provides  property  and  casualty  insurance  coverages to
         members of the state Farm Bureau organizations in New York, New Jersey,
         Delaware,  West Virginia and all of the New England states.  Membership
         in the state Farm Bureau  organizations is a prerequisite for voluntary
         insurance  coverage,  except  for  employees  of the  Company  and  its
         affiliates.

         The  operations  of the Company are closely  related  with those of its
         affiliates, Farm Family Life Insurance Company ("Farm Family Life") and
         Farm  Family  Life's  wholly  owned  subsidiary,   United  Farm  Family
         Insurance  Company  ("United Farm Family").  (see Note 10.) Farm Family
         Life is a stock life  insurance  company owned by the state Farm Bureau
         organizations  of the ten  states in which the  Company  operates.  The
         Company  and Farm  Family  Life are  affiliated  by common  management,
         shared agents and employees and similar Boards of Directors.

        Investments:

         Fixed  maturities  include  bonds,   redeemable  preferred  stocks  and
         mortgage-backed  securities.  Investments in fixed maturities which the
         Company has both the ability  and  positive  intent to hold to maturity
         are classified as held to maturity and carried at amortized cost. Fixed
         maturities  which may be sold prior to their  contractual  maturity are
         classified  as  available  for sale and are carried at fair value.  The
         difference  between  amortized cost and fair value of fixed  maturities
         classified as available  for sale,  net of deferred  income  taxes,  is
         reflected as a component of stockholders' equity.

         Equity securities  include common and  non-redeemable  preferred stocks
         which are carried at fair value.  The difference  between cost and fair
         value of equity securities, less deferred income taxes, is reflected as
         a component of stockholders' equity.

         Mortgage loans are carried at their outstanding principal balance.

         The  carrying  values of all  investments  are  reviewed  on an ongoing
         basis.  If this review  indicates a decline in fair value below cost is
         other than temporary, the Company's carrying value in the investment is
         reduced to its estimated  realizable value and a specific write-down is
         taken.  Such write-downs are included in realized  investment gains and
         losses.

         Short-term  investments  are  carried at cost which  approximates  fair
         value.

         Investment  income  consists   primarily  of  interest  and  dividends.
         Interest is  recognized  on an accrual basis and dividends are recorded
         on the ex-dividend date. Interest income on mortgage-backed  securities
         is  determined  on  the  effective  yield  method  based  on  estimated
         principal   repayments.   Realized  investment  gains  and  losses  are
         determined on a specific identification basis.

        Income Taxes:

         The income tax  provision is  calculated  under the  liability  method.
         Deferred  income tax assets and  liabilities  are recorded based on the
         difference between the financial  statement and tax bases of assets and
         liabilities  and the  enacted  tax  rates.  The  principal  assets  and
         liabilities giving rise to such differences are reserves for losses and
         loss adjustment expenses,  unearned premiums,  and deferred acquisition
         costs.  Deferred  income  taxes also arise from  unrealized  investment
         gains or losses on equity securities and fixed maturities classified as
         available for sale.

        Property-Liability Insurance Accounting:

         Premiums  are deferred and earned on a pro rata basis over the terms of
         the respective  policies.  Amounts paid for ceded reinsurance  premiums
         are reported as prepaid  reinsurance  premiums and  amortized  over the
         remaining contract period in proportion to premium. Premiums receivable
         are recorded at cost less an allowance for doubtful accounts.

         Policy  acquisition  costs that vary with and are primarily  related to
         the  production of business have been  deferred.  Deferred  acquisition
         costs primarily  consist of agents'  compensation,  premium taxes,  and
         certain other underwriting  expenses.  Such deferred  acquisition costs
         are amortized as premium  revenue is recognized.  Deferred  acquisition
         costs are  limited to their  estimated  realizable  value,  which gives
         effect to the  premium to be earned,  related  investment  income,  and
         losses and loss  adjustment  expenses  expected  to be  incurred as the
         premium is earned.

         Reserves for losses and loss adjustment expenses represent estimates of
         the  ultimate  amounts  necessary  to  settle  reported  losses  and  a
         provision for incurred but not reported claims of insured  losses.  The
         reserve estimates are based on known facts and circumstances, including
         the  Company's  experience  with similar  cases and  historical  trends
         involving reserving patterns,  loss payments,  pending levels of unpaid
         claims  and  product  mix,  as well as other  factors  including  court
         decisions,  economic conditions and public attitudes.  The reserves for
         losses and loss  adjustment  expenses  include case basis  estimates of
         reported  losses,  estimates of incurred but not reported  losses based
         upon prior  experience  adjusted for current  trends,  and estimates of
         losses  to be  paid  under  assumed  reinsurance  contracts.  Estimated
         amounts of recoverable  salvage and  subrogation  are deducted from the
         reserves for losses and loss adjustment expenses.  The establishment of
         appropriate  reserves,  as well as related  amounts  recoverable  under
         reinsurance  contracts  is an  inherently  uncertain  process.  Reserve
         estimates  are regularly  reviewed and updated,  using the most current
         information  available.   Any  resulting  adjustments,   which  may  be
         material, are reflected in current operations (see Note 7).

         Net Income Per Share:
         The weighted  average shares of common stock used in the computation of
         net income per share and income  per share  before  extraordinary  item
         were  3,979,115 in 1996 and  3,000,000  in 1995 and 1994.  The weighted
         average  shares  of  common  stock in all  periods  give  effect to the
         allocation   of   3,000,000   shares  of  common   stock  to   eligible
         policyholders  on July 26,  1996  pursuant  to Farm  Family  Casualty's
         conversion from a mutual company to a stockholder owned company.



<PAGE>


    2.  Plan of Reorganization and Conversion

         On July 26, 1996,  Farm Family Mutual  Insurance  Company ("Farm Family
         Mutual")  converted  from a  mutual  property  and  casualty  insurance
         company to a stockholder owned property and casualty  insurance company
         and changed its name to Farm Family  Casualty  Insurance  Company.  The
         conversion was made pursuant to a Plan of Reorganization and Conversion
         ("the Plan").  As part of the Plan, Farm Family Holdings was formed and
         the  policyholders  received  2,237,000  shares of Farm Family Holdings
         common stock and  $11,735,000 in cash in exchange for their  membership
         interest in Farm Family Mutual.

         On July 23, 1996 Farm Family  Holdings made an initial public  offering
         of its common stock at a price of $16 per share.  Farm Family  Holdings
         received net proceeds of $41,453,000  for 2,786,000  shares sold in the
         initial public  offering.  In addition,  Farm Family Holdings  received
         $3,427,000 for 214,000 shares purchased by policyholders of Farm Family
         Mutual in a subscription offering.

         As part of the Plan,  holders of Farm  Family  Mutual debt (see Note 8)
         could elect to exchange their debt  instruments  for shares of stock or
         cash.  As a result,  there were 17,000  shares and  $1,107,000  in cash
         exchanged for debt with an outstanding  principal  amount of $1,371,000
         plus accrued interest thereon.

         Farm Family  Holdings  has entered into an Option  Purchase  Agreement,
         dated  February 14, 1996 (the "Option  Purchase  Agreement"),  with the
         shareholders of Farm Family Life pursuant to which Farm Family Holdings
         has, for a two year period  commencing on July 26, 1996,  the option to
         acquire Farm Family Life subject to certain  conditions,  which include
         the  approval  of Farm Family  Holdings'  shareholders  and  applicable
         regulatory authorities. Although Farm Family Holdings believes that the
         acquisition of Farm Family Life would be desirable  under  apppropriate
         circumstances,  Farm Family  Holdings is not in a position at this time
         to predict with any certainty whether the option to acquire Farm Family
         Life will in fact be  exercised.  Farm  Family  Holdings'  decision  to
         exercise the option will depend,  among other  things,  on the exercise
         price  for the  shares  of  Farm  Family  Life,  an  evaluation  of the
         financial  statements  prepared in accordance  with generally  accepted
         accounting principles and prospects of Farm Family Life, the outcome of
         a vote by the Farm Family  Holdings'  shareholders,  and the receipt of
         applicable   regulatory   approvals.   Farm  Family  Life's   financial
         statements are prepared on the basis of statutory  accounting practices
         prescribed or permitted by insurance regulatory authorities.  Financial
         statements  for Farm Family Life prepared in accordance  with generally
         accepted accounting principles do not currently exist.



<PAGE>


    3.  Investments

        The amortized cost, fair value and gross  unrealized gains and losses of
        available  for  sale  securities  and  held to  maturity  securities  at
        December 31, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>

             ($ in thousands)
         1996
         ----                                                                        Gross
         Available for Sale                                      Amortized         Unrealized           Fair
                                                                    Cost        Gains      Losses       Value
         Fixed maturities:
<S>                                                                <C>           <C>          <C>     <C>
          U.S. Government & Agencies                               $18,401       $421         $79     $18,743
          States, Municipalities & Political Subdivisions           42,568      1,500         118      43,950
          Corporate                                                135,485      3,918       1,527     137,876
          Mortgage-backed Securities                                 9,676        666        ----      10,342
          Redeemable Preferred Stock                                 8,096        276          95       8,277
                                                              ------------------------------------------------
               Total fixed maturities                              214,226      6,781       1,819     219,188
         Equity securities                                           2,546      5,431          69       7,908
                                                              ------------------------------------------------
              Total Available for Sale                            $216,772    $12,212      $1,888    $227,096
                                                              ------------------------------------------------
         Held to Maturity
         Fixed maturities:
          States, Municipalities & Political Subdivisions           $5,423        $93         $34      $5,482
          Corporate                                                  4,359        186          54       4,491
                                                              ------------------------------------------------
              Total Held to Maturity                                $9,782       $279         $88      $9,973
                                                              ------------------------------------------------
          1995
         Available for Sale
         Fixed maturities:
          U.S. Government & Agencies                               $12,797       $596     $  ----     $13,393
          States, Municipalities & Political Subdivisions           21,871      1,675          66      23,480
          Corporate                                                119,319      7,040         987     125,372
          Mortgage-backed Securities                                10,985        995        ----      11,980
          Redeemable Preferred Stock                                 6,722        322          80       6,964
                                                              ------------------------------------------------
              Total fixed maturities                               171,694     10,628       1,133     181,189
         Equity securities                                             334      4,440          28       4,746
                                                              ------------------------------------------------
              Total Available for Sale                            $172,028    $15,068      $1,161    $185,935
                                                              ------------------------------------------------
         Held to Maturity
         Fixed maturities:
          States, Municipalities & Political Subdivisions           $5,925       $373     $  ----      $6,298
          Corporate                                                  6,461        354          13       6,802
                                                              ------------------------------------------------
              Total Held to Maturity                               $12,386       $727         $13     $13,100
                                                              ------------------------------------------------

</TABLE>


<PAGE>


     The  table  below  presents  the  amortized  cost and  fair  value of fixed
maturities at December 31, 1996, by contractual maturity.  Actual maturities may
differ from contractual maturities as a result of prepayments.
<TABLE>

($ in thousands)
<CAPTION>
                                                          Available for Sale           Held to Maturity
                                                          ------------------           ----------------
                                                        Amortized         Fair     Amortized        Fair
                                                             Cost        Value          Cost       Value
<S>                                                      <C>          <C>           <C>         <C>
         Due in one year or less                             $771         $746          $350        $358
         Due after one year through five years             28,061       28,756           917         923
         Due after five years through ten years           100,668      102,102         3,186       3,173
         Due after ten years                               75,050       77,242         5,329       5,519
                                                     -------------------------- -------------------------
                                                          204,550      208,846         9,782       9,973
         Mortgage-backed securities                         9,676       10,342          ----        ----
                                                     -------------------------- -------------------------
            Total                                        $214,226     $219,188        $9,782      $9,973
                                                     -------------------------- -------------------------
</TABLE>

     Unrealized  investment gains and losses on fixed  maturities  classified as
available for sale and equity  securities  included in  stockholders'  equity at
December 31, 1996 are as follows:


<TABLE>
<CAPTION>

             ($ in thousands)                        Cost/                                            Net
                                                   Amortized     Fair         Gross Unrealized    Unrealized
                                                     Cost        Value       Gains      Losses       Gains
                                                     ----        -----       -----      ------       -----
<S>                                                <C>         <C>           <C>         <C>          <C>
         Fixed maturities available for sale       $214,226    $219,188      $6,781      $1,819       $4,962
         Equity securities                            2,546       7,908       5,431          69        5,362
                                                -------------------------------------------------------------
         Total                                     $216,772    $227,096     $12,212      $1,888       10,324
                                                ------------------------------------------------
         Deferred income taxes                                                                         3,614
                                                                                                -------------
             Total                                                                                    $6,710
                                                                                                -------------
</TABLE>

         The change in unrealized  appreciation  (depreciation)  of  investments
         included in stockholders' equity for the years ended December 31, 1996,
         1995 and 1994 was as follows:
<TABLE>
<CAPTION>

               ($ in thousands)                                                1996        1995          1994
                                                                               ----        ----          ----
<S>                                                                          <C>         <C>         <C>
         Fixed maturities available for sale                                 $(4,532)    $17,197     $(17,236)
         Equity securities                                                       950         802          477
         Other invested assets                                                    63         (63)        ----
                                                                       ----------------------------------------
                                                                              (3,519)    17,936       (16,759)
         Deferred income taxes                                                 1,231     (6,237)        5,698
                                                                       ----------------------------------------
         Total                                                               $(2,288)   $11,699      $(11,061)
                                                                       ----------------------------------------

</TABLE>


<PAGE>


The components of net investment income are as follows:
<TABLE>
<CAPTION>

              ($ in thousands)
                                                                                   1996       1995        1994
                                                                                   ----       ----        ----
<S>                                                                             <C>        <C>         <C>
         Interest on fixed maturities                                           $15,612    $14,561     $13,546
         Dividends from equity securities                                            53         19          23
         Interest on mortgage loans                                                 169        180         182
         Interest on short-term investments                                         585        315         145
         Other, net                                                                ----      (406)       (381)
                                                                            -----------------------------------
            Gross investment income                                              16,419     14,669      13,515
         Investment expense                                                       (467)      (343)       (325)
                                                                            -----------------------------------
            Net investment income                                               $15,952    $14,326     $13,190
                                                                            -----------------------------------
</TABLE>


A summary of realized investment gains (losses), net, as follows:

<TABLE>
<CAPTION>
              ($ in thousands)
                                                                                   1996       1995        1994
                                                                                   ----       ----        ----
<S>                                                                              <C>          <C>       <C>
         Fixed maturities                                                        $(567)       $912      $1,241
         Equity securities                                                         ----       ----          99
         Other invested assets                                                     (73)       ----        ----
                                                                            -----------------------------------
         Total                                                                   $(640)       $912      $1,340
                                                                            -----------------------------------
</TABLE>

    4.  Fair Value of Financial Instruments

         The estimated fair value of financial  instruments  has been determined
         using available market information and appropriate value methodologies.
         The estimated fair value of financial  instruments  are not necessarily
         indicative  of the amounts  the Company  might pay or receive in actual
         market  transactions.  Potential taxes and other transaction costs have
         not been  considered  in  estimating  fair  value.  As a number  of the
         Company's significant assets (including deferred acquisition costs, and
         deferred income taxes) and liabilities  (including  reserves for losses
         and loss adjustment expenses) are not considered financial instruments,
         the  disclosures  that  follow  do not  reflect  the fair  value of the
         Company as a whole.



<PAGE>


         The following  table  presents the carrying value and fair value of the
         Company's financial instruments at December 31, 1996 and 1995.

<TABLE>
<CAPTION>
                                                                    December                  December
                                                                    31, 1996                  31, 1995
                                                                  -------------             ------------
                                                              Carrying        Fair     Carrying         Fair
               ($ in thousands)                                  Value       Value        Value        Value
               ----------------                                  -----       -----        -----        -----
         Assets
<S>                                                          <C>         <C>           <C>          <C>
         Fixed maturities                                    $228,970    $229,161      $193,575     $194,289
         Equity securities                                       7,908       7,908        4,746        4,746
         Mortgage loans                                          1,745       1,745        1,822        1,822
         Cash and short-term investments                         9,443       9,443        8,942        8,942
         Premiums receivable, net                               22,663      22,663       21,791       21,791
         Receivable from affiliates, net                        16,133      16,133       13,860       13,860
         Accrued investment income and other assets              7,137       7,137        6,940        6,940
         Liabilities
         Accrued expenses and other liabilities                  9,561       9,561        7,788        7,788
         Debt                                                    1,304       1,304        2,707        2,707

</TABLE>

The following  methods and  assumptions  were used in estimating  the fair value
disclosures for the financial instruments:

Fixed  maturities  and equity  securities -- The fair value is based upon quoted
market prices where available or from independent pricing services.

Mortgage  loans -- The  fair  value is based  on  discounted  cash  flows  using
discount  rates at which similar  loans would be made to borrowers  with similar
characteristics.

Cash and  Short-term  Investments  -- Due to  their  short-term,  highly  liquid
nature, their carrying value approximates fair value.

Premiums Receivable, net; Accrued Investment Income and Other Assets; Receivable
from Affiliates, net; and Accrued Expenses and Other Liabilities -- Due to their
short-term nature, their carrying value approximates fair value.

Debt -- The fair value is based on discounted cash flows using current borrowing
rates for similar debt arrangements.

    5.  Reinsurance

         The  Company   assumes  and  cedes  insurance  to  participate  in  the
         reinsurance market, limit maximum losses and minimize exposure on large
         risks.  Reinsurance  contracts  do not  relieve  the  Company  from its
         obligations  to  policyholders  as the  primary  insurer.  The  Company
         evaluates  the  financial  condition  of its  reinsurers  and  monitors
         concentrations of credit risk arising from similar geographic  regions,
         activities and economic  characteristics  of the reinsurers to minimize
         its exposure to significant losses from reinsurer insolvencies. Amounts
         recoverable are regularly evaluated by the Company and an allowance for
         uncollectible  reinsurance is provided when  collection is in doubt. At
         December 31, 1996 and 1995, the Company determined it was not necessary
         to provide an allowance for uncollectible reinsurance.

         The Company's reinsurance program also includes reinsurance  agreements
         with United Farm Family.  (see Note 10.) The effects of  reinsurance on
         premiums  written and earned,  and losses and loss adjustment  expenses
         incurred, for the years indicated were as follows:


<TABLE>
<CAPTION>
                                                                           Year Ended December 31,
              ($ in thousands)                                                  1996          1995        1994
                                                                                ----          ----        ----
         Premiums written
<S>                                                                         <C>           <C>         <C>
         Direct                                                             $146,408      $135,963    $122,039
         Assumed                                                               6,462         6,261       7,577
         Ceded to United Farm Family                                         (9,336)       (9,237)     (9,776)
         Ceded to non-affiliates                                             (9,690)      (12,153)    (14,226)
                                                                        ---------------------------------------
             Premiums written, net of reinsurance                           $133,844      $120,834    $105,614
                                                                        ---------------------------------------

         Premiums earned
         Direct                                                             $142,794      $131,717    $117,384
         Assumed                                                               6,931         6,552       7,690
         Ceded to United Farm Family                                         (9,334)       (9,238)     (9,750)
         Ceded to non-affiliates                                             (9,611)      (12,095)    (13,858)
                                                                        ---------------------------------------
             Premiums earned, net of reinsurance                            $130,780      $116,936    $101,466
                                                                        ---------------------------------------

         Losses and loss adjustment expenses incurred
         Direct                                                              $99,954       $91,176     $91,467
         Assumed                                                               4,630         4,658       4,513
         Ceded to United Farm Family                                         (7,277)       (6,604)     (7,378)
         Ceded to non-affiliates                                             (2,330)       (6,046)     (5,922)
                                                                        ---------------------------------------
             Losses and loss adjustment expenses incurred,
                 net of reinsurance                                          $94,977       $83,184     $82,680
                                                                        ---------------------------------------
</TABLE>

6.      Income Taxes

         The  components of the deferred  income tax assets and  liabilities  at
December 31, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>

               ($ in thousands)

         Deferred Income Tax Assets                                                      1996             1995
         --------------------------                                                      ----             ----
<S>                                                                                      <C>             <C>
         Reserves for losses and loss adjustment expenses                                $4,423          $4,444
         Unearned premium reserve                                                         3,774           3,559
         Accrued expenses and other liabilities                                             797             474
         Investments                                                                        148              68
                                                                               ---------------------------------
                 Total deferred income tax assets                                         9,142           8,545
                                                                               ---------------------------------
         Deferred Income Tax Liabilities
         Deferred acquisition costs                                                       3,739           3,685
         Unrealized investment gains, net                                                 3,614           4,846
         Other assets                                                                       269             231
                                                                               ---------------------------------
                 Total deferred income tax liabilities                                    7,622           8,762
                                                                               ---------------------------------
                      Net deferred income tax asset (liability)                          $1,520          $(217)
                                                                               ---------------------------------
</TABLE>


         There was no valuation  allowance for deferred  income tax assets as of
         December 31, 1996 or 1995. In assessing the realization of deferred tax
         assets,  management  considers  whether it is more likely than not that
         the  deferred  tax  assets  will  be  realized.   Management  primarily
         considered the existence of taxable  income in the carryback  period in
         making this  assessment  and believes  the  benefits of the  deductible
         differences recognized as of December 31, 1996 and 1995 will ultimately
         be realized.

         The components of income tax expense (benefit) are as follows:

<TABLE>
<CAPTION>

              ($ in thousands)                                       Year Ended December 31,
              ----------------                                       -----------------------
                                                                   1996         1995        1994
                                                                   ----         ----        ----
<S>                                                              <C>          <C>           <C>
         Current                                                 $4,181       $4,403        $851
         Deferred                                                 (505)          581         596
                                                          ---------------------------------------
         Total income tax expense                                $3,676       $4,984      $1,447
                                                          ---------------------------------------
</TABLE>

         The Company paid income taxes of $4,592,000,  $3,952,000 and $2,209,000
         in 1996, 1995 and 1994 respectively.

         A  reconciliation  of the differences  between the Company's  effective
         rates of tax and the United States federal income tax rates follows:
<TABLE>
<CAPTION>

                                                                    Year Ended December 31,
                                                                    -----------------------
         ($ in thousands)                                 % of                % of                 % of
                                                          Pretax              Pretax               Pretax
                                                     1996   Income       1995   Income        1994   Income
                                                     ----   ------       ----   ------        ----   ------
<S>                                                <C>      <C>        <C>      <C>         <C>      <C>
         Income tax provision at prevailing        $4,147   34.18%     $5,006   34.31%      $1,691   34.00%
         rates
         Tax effect of:
         Tax exempt interest income                 (107)    (.88)       (11)    (.08)        (67)   (1.35)
         Dividends received deduction               (156)   (1.29)      (148)   (1.01)       (140)   (2.81)
         Other, net                                 (208)   (1.71)        137      .94        (37)    (.74)
                                                 -----------------------------------------------------------
         Federal income tax expense                $3,676   30.30%     $4,984   34.16%      $1,447   29.10%
                                                 -----------------------------------------------------------
</TABLE>

7.      Reserves for Losses and Loss Adjustment Expenses

         As described in Note 1, the Company establishes reserves for losses and
         loss  adjustment  expenses on reported  and  incurred  but not reported
         claims of insured losses. The establishment of appropriate reserves for
         losses and loss adjustment expenses is an inherently  uncertain process
         and the ultimate cost may vary  materially  from the recorded  amounts.
         Reserve  estimates are regularly  reviewed and updated,  using the most
         current information. Any resulting adjustments,  which may be material,
         are reflected in current operations.



<PAGE>


         The following table provides a  reconciliation  of beginning and ending
         liability balances for reserves for losses and loss adjustment expenses
         for the years ended December 31, 1996, 1995 and 1994.

<TABLE>
<CAPTION>

                                                                                   Year Ended December 31,
                                                                                   -----------------------
                                                                                 1996        1995         1994
                                                                                 ----        ----         ----
         ($ in thousands)
<S>                                                                          <C>         <C>          <C>
         Reserves for losses and loss adjustment
               expenses at beginning of year                                 $137,978    $127,954     $123,477
         Less reinsurance recoverables and receivables                         28,655      28,230       28,761
                                                                          -------------------------------------
         Net reserves for losses and loss adjustment
               expenses at beginning of year                                  109,323      99,724       94,716
                                                                          -------------------------------------
         Incurred losses and loss adjustment expenses:
         Provision for insured events of current year                         100,418      88,366       86,370
         Decrease in provision for
                insured events of prior years                                  (5,441)     (5,182)      (3,690)
                                                                          -------------------------------------
                  Total incurred losses and loss adjustment expenses           94,977      83,184       82,680
                                                                          -------------------------------------
         Payments:
         Losses and loss adjustment expenses
             attributable to insured events of current year                    50,122      40,519       43,232
         Losses and loss adjustment expenses
             attributable to insured events of prior years                     39,795      33,066       34,440
                                                                          -------------------------------------
             Total Payments:                                                   89,917      73,585       77,672
                                                                          -------------------------------------
         Net reserves for losses and loss
              adjustment expenses at end of year                              114,383     109,323       99,724
         Plus reinsurance recoverables and receivables                         26,837      28,655       28,230
                                                                          -------------------------------------
         Reserves for losses and loss adjustment
             expenses at end of year                                         $141,220    $137,978     $127,954
                                                                          -------------------------------------
</TABLE>

        The Company  does not discount  reserves for losses and loss  adjustment
        expenses except for certain  lifetime  workers'  compensation  indemnity
        reserves it assumes from mandatory  pools. The amount of such discounted
        reserves was $4,184,000  (net of a discount of  $1,185,000),  $4,754,000
        (net of a discount of $1,192,000),  and $4,876,000 (net of a discount of
        $1,217,000) for December 31, 1996, 1995 and 1994, respectively.

        8. Debt

         At December  31,  1996,  debt  consists of $301,000 of  debentures  and
         $1,003,000 of  subordinated  surplus  certificates.  The debentures and
         subordinated  surplus  certificates bear interest at the rate of 8% per
         annum,  have no maturity date, and principal and interest are repayable
         only with the approval of the Insurance  Department of the State of New
         York. No single holder holds more than 5% of the outstanding debentures
         or  subordinated  surplus  certificates.  The Company paid  interest of
         $279,000,  $217,000 and $220,000 for the years ended December 31, 1996,
         1995 and 1994, respectively.

         At December 31, 1996,  the Company had an available line of credit with
         a bank for $2,000,000.  There were no amounts  outstanding on this line
         of credit at December 31, 1996.



<PAGE>


    9.     Benefits Plans

        Pension Plan:
         The Company and Farm  Family  Life  sponsor a qualified  multi-employer
         noncontributory defined benefit pension plan covering substantially all
         of the Company's and Farm Family  Life's  full-time  employees who meet
         the  eligibility  requirements.  Benefits  under the  pension  plan are
         primarily  based  upon  the  employee's   length  of  service  and  the
         employee's  average  compensation  for certain  periods during the last
         years of  employment.  The  Company's  funding  policy for its  defined
         benefit pension plan is to make annual contributions in accordance with
         accepted   actuarial  cost  methods   subject  to  regulatory   funding
         limitations.  Effective  January 1, 1997,  the  Company and Farm Family
         Life froze  benefits  available  through the defined  benefit  plan. In
         addition,  the Company implemented a voluntary early retirement program
         in the fourth quarter of 1996. (See note 14).

         The net pension expense for the plan is as follows:

<TABLE>
<CAPTION>

                                                                                   Year Ended December 31,
         ($ in thousands)                                                       1996          1995        1994
                                                                                ----          ----        ----
<S>                                                                             <C>           <C>         <C>
         Service cost                                                           $869          $708        $777
         Interest cost on projected benefit obligation                         1,411         1,384       1,225
         Actual return on plan assets                                          (854)       (1,844)       (401)
         Net amortization (deferral)                                           (447)           632       (756)
         Voluntary early retirement program                                    2,069          ----        ----
                                                                        ---------------------------------------
             Total pension expense                                            $3,048          $880        $845
                                                                        ---------------------------------------
</TABLE>

         The Company's  portion of net periodic pension  expense,  excluding the
         expense of the voluntary early retirement program,  for the years ended
         December 31, 1996,  1995 and 1994 was $617,000,  $537,000 and $516,000,
         respectively. In addition, the Company's portion of the expense related
         to the voluntary early retirement program was $1,155,000 for 1996.

         Assumptions used in the determination of pension obligations and assets
         were:
<TABLE>
<CAPTION>

                                                                                    Year Ended December 31,
                                                                                1996          1995        1994
                                                                                ----          ----        ----

<S>                                                                            <C>           <C>         <C>
         Weighted-average discount rate                                        7.00%         6.40%       7.90%
         Rate of increase in compensation levels                               4.00%         3.40%       4.90%
         Expected long-term rate of return on plan assets                      8.00%         8.00%       8.00%

</TABLE>


<PAGE>


         The following table summarizes the funded status of the pension plan:

<TABLE>
<CAPTION>

                                                                                        Year Ended December 31,
                                                                                            1996           1995
                                                                                            ----           ----
               ($ in thousands)
         Actuarial present value of benefit obligations:
<S>                                                                                      <C>            <C>
              Vested                                                                     $21,075        $17,901
              Nonvested                                                                      ---            338
                                                                                --------------------------------
         Accumulated benefit obligation                                                   21,075         18,239
         Effect of projected future salary increases on past service                         ---          3,204
                                                                                --------------------------------
         Projected benefit obligation                                                     21,075         21,443
         Plan assets at fair value                                                        18,881         17,112
                                                                                --------------------------------
         Projected benefit obligation in excess of plan assets                          $(2,194)       $(4,331)
                                                                                --------------------------------

</TABLE>


         The accrued pension liability of the plan was as follows:
<TABLE>
<CAPTION>

                                                                                        Year Ended December 31,
                                                                                           1996            1995
                                                                                           ----            ----
                ($ in thousands)
<S>                                                                                    <C>             <C>
          Projected benefit obligation in excess of plan assets                        $(2,194)        $(4,331)
          Unrecognized prior service asset                                                  ---             114
          Unrecognized net gain from past
                experience different from that assumed                                      ---           3,880
          Unrecognized net asset at transition                                              ---           (558)
          Minimum liability adjustment                                                      ---           (232)
                                                                                 -------------------------------
          Accrued pension liability                                                    $(2,194)        $(1,127)
                                                                                 -------------------------------

</TABLE>


         Incentive Savings Plan:

         The Company and Farm Family Life sponsor an employee  incentive savings
         plan which is qualified  under Section  401(k) of the Internal  Revenue
         Code. Under the provisions of this plan, employees may contribute 1% to
         16% of their  eligible  compensation,  with up to 6% being eligible for
         matching  contributions  from the  Company.  In  addition,  the Company
         contributed 1% of eligible  compensation up to $240 to the plan for all
         eligible employees in 1996, 1995, and 1994.  Effective January 1, 1997,
         the Company will contribute to the plan a regular contribution of 3% of
         eligible  compensation and a matching  contribution of 25% of the first
         6% of eligible compensation  deferred by each eligible employee.  Also,
         Company may elect to make additional discretionary contributions to the
         plan.  The  Company's  expense  associated  with the plan was $182,000,
         $138,000 and $155,000 in 1996, 1995 and 1994, respectively.

        Postretirement Benefits Other Than Pensions:

         The Company and Farm Family Life  provide life  insurance  benefits for
         retired   employees   meeting   certain   age  and  length  of  service
         requirements.  The Company's  postretirement  benefit plan is currently
         unfunded and noncontributory. Benefits under the postretirement benefit
         plan are provided by a group term life insurance policy.

         Effective   January  1,  1995,  the  Company   adopted  SFAS  No.  106,
         "Employers'   Accounting   for   Postretirement   Benefits  Other  than
         Pensions",   which   changed   the   accounting   for   the   Company's
         postretirement  benefit plan from a cash basis by requiring  accrual of
         the expected cost of providing benefits under the plan during the years
         that the employee renders the necessary service to the Company.

         Net periodic  postretirement  benefit expense for the plan included the
         following:
<TABLE>
<CAPTION>

                                                                                      Year Ended December 31,
                                                                                      -----------------------
         ($ in thousands)                                                                    1996          1995
         ----------------                                                                    ----          ----
<S>                                                                                           <C>           <C>
         Service cost                                                                         $27           $37
         Interest cost                                                                         63            73
         Return on assets                                                                     ---           ---
         Amortization of transition obligation                                                 47            47
          Voluntary early retirement program                                                   41           ---
                                                                                    ----------------------------
                    Total                                                                    $178          $157
                                                                                    ----------------------------

</TABLE>

         The Company incurred  postretirement benefit expense on a cash basis of
         $6,000 for the year ended December 31, 1994.  The Company's  portion of
         net periodic  postretirement  benefit  expense,  excluding  the expense
         related to the  voluntary  early  retirement  program,  for each of the
         years ended  December 31, 1996 and 1995 was $66,000.  In addition,  the
         Company's  portion  of  the  expense  related  to the  voluntary  early
         retirement program was $22,000 for 1996.

         The plan's postretirement benefit obligation reconciled with the plan's
         funded status and the amount  recognized in the Company's  consolidated
         balance sheets was as follows:
<TABLE>
<CAPTION>

                                                                                       Year Ended December 31,
          ($ in thousands)                                                                 1996           1995
         Accumulated postretirement benefit obligation:
<S>                                                                                      <C>            <C>
              Retirees                                                                   $(487)         $(534)
              Other fully eligible plan participants                                      (182)          (260)
              Other active plan participants                                              (293)          (452)
                                                                                  -----------------------------
              Obligation at year-end                                                      (962)        (1,246)
         Plan assets                                                                        ---            ---
                                                                                  -----------------------------
         Funded status                                                                    (962)        (1,246)
         Unrecognized transition obligation                                                 805            893
         Unrecognized net loss                                                             (95)            238
                                                                                  -----------------------------
                Accrued postretirement benefit liability at year-end                     $(252)         $(115)
                                                                                  -----------------------------

</TABLE>

         The discount  rate used to  determine  the  accumulated  postretirement
         benefit  obligation  was 7.0% at December 31, 1996 and 6.4% at December
         31, 1995.



<PAGE>


   10.  Related Party Transactions

         The  operations  of the Company are closely  related with those of Farm
         Family Life and Farm Family Life's wholly owned subsidiary, United Farm
         Family.  The  affiliated  Companies  operate  under  similar  Boards of
         Directors and have similar senior management.  The affiliated Companies
         share home office premises,  branch office facilities,  data processing
         equipment,  certain personnel and other operational expenses.  Expenses
         are shared based on each Company's  estimated level of usage. The gross
         shared  expenses and the Company's share of such expenses is summarized
         below:

         ($ in thousands)                             Company's Share
                                                      ---------------
                                     Gross Shared
                                       Expenses         Amount     Percentage
         Year Ended December 31,
          1996                          $30,689        $19,912            65%
          1995                           26,650         16,182             61
          1994                           23,833         14,402             60

         Farm Family Life held $813,000 of the Company's  debentures in 1994 and
         1995. In July 1996 the Company repurchased the debentures owned by Farm
         Family Life for the principal  amount of $813,000 plus accrued interest
         of $37,000.  The Company  incurred  interest expense of $37,000 in 1996
         and  $65,000  in 1995 and 1994 on the  debentures  held by Farm  Family
         Life.  During 1994, the Company sold its data  processing  equipment to
         Farm Family Life at net book value.

         The Company's reinsurance program includes reinsurance  agreements with
         United  Farm  Family.  In  accordance  with  the  provisions  of  these
         reinsurance  agreements,   the  Company  recognized  commission  income
         (expenses) of approximately $191,000,  $2,000, and ($39,000) during the
         years ended December 31, 1996, 1995 and 1994,  respectively.  A summary
         of the effect of the reinsurance  agreements with United Farm Family on
         premiums written and earned is described in Note 5.

         Receivable  from  affiliates  represents  amounts  due from United Farm
         Family  pursuant to a  reinsurance  agreement and amounts due from Farm
         Family Life and United Farm Family for shared expenses.

         Currently,  Farm Family Life and its wholly  owned  subsidiary,  United
         Farm Family,  prepare their  financial  statements  in accordance  with
         statutory accounting practices.  Such practices vary significantly from
         generally  accepted  accounting  practices.   The  following  financial
         information was derived from the statutory  basis financial  statements
         for Farm  Family  Life and  United  Farm  Family as of and for the year
         ended December 31, 1996:

         ($ in thousands)                  Total   Statutory        Net
                                          Assets    Surplus       Income
         Farm Family Life                $721,129     $74,081     $8,111
         United Farm Family                31,378      13,571      2,134



<PAGE>


11.     Dividends From Subsidiaries and Statutory Financial Information

        Farm Family Casualty is restricted by law as to the amount of dividends
        it can pay without the approval of regulatory authorities.

        Net income  and  Surplus  of Farm  Family  Casualty,  as  determined  in
        accordance with statutory accounting practices are as follows:

         ($ in thousands)                 1996             1995           1994
                                          ----             ----           ----
         Net income                     $7,221           $6,735         $3,196
         Surplus                        83,194           55,916         42,870

        rance  Commissioners  ("NAIC")  has adopted risk based  capital  ("RBC")
        requirements  that require  insurance  companies to calculate and report
        information under a risk-based  formula which measures statutory capital
        and  surplus  needs  based  on a  regulatory  definition  of  risk  in a
        company's mix of products and its balance sheet. The  implementation  of
        RBC is not  expected to affect the  operations  of Farm Family  Casualty
        since  its  Total  Adjusted  Capital  exceeds  the  threshold  level  of
        regulatory action, as defined by the NAIC.

   12.  Commitments, Contingencies and Uncertainties

         The Company is party to numerous  legal  actions  arising in the normal
         course of business.  Management believes that resolution of these legal
         actions  will not have a material  adverse  effect on its  consolidated
         financial condition.
                  Catastrophes are an inherent risk in the property and casualty
         insurance industry and could produce significant  adverse  fluctuations
         in the Company's results of operations and financial  condition.  Since
         the Company  operates  primarily  within the  Northeastern  U.S., it is
         subject to a concentration of risk within this geographic  region.  For
         the years ended December 31, 1996,  1995 and 1994,  approximately  61%,
         60% and 58%,  respectively,  of the Company's  direct written  premiums
         were  derived from  policies  written in the states of New York and New
         Jersey. The Company uses its reinsurance program to mitigate the impact
         on net income of large or unusual  losses and loss  adjustment  expense
         activity.  However,  the Company is required by law to participate in a
         number of involuntary reinsurance pools and such pools may from time to
         time experience deficits which could result in losses to the Company.

         The Company is a party to Membership List Purchase Agreements with each
         of the  state  Farm  Bureaus  in the ten  states  in which it  conducts
         business.  The  Membership  List Purchase  Agreements are for six years
         commencing  on January 1, 1996.  For the year ended  December 31, 1996,
         the Company  paid a total of $571,000 to the Farm  Bureaus  pursuant to
         the Membership List Purchase  Agreements.  For the years ended December
         31,  1995  and  1994,   the  Company  paid   $547,000   and   $516,000,
         respectively,   to  the  Farm  Bureaus  under   substantially   similar
         Membership List Purchase Agreements in effect for such periods.

         Pursuant to an agreement  between the Company and its agents and agency
         managers, subject to certain conditions including length of service and
         profitability,  certain  agents and agency  managers  are  eligible  to
         receive monthly extended  earnings payments for a period of up to eight
         years  subsequent  to the  termination  of their  association  with the
         Company. Historically,  such payments have been funded from commissions
         earned on the agent's or agency  manager's book of business  subsequent
         to the  termination  of the  agent's  association  with the  Company in
         accordance with the Company's  agreement with the successor  agents and
         agency managers. In the event that such commissions are insufficient to
         fund the extended earnings  payments,  the Company would be responsible
         for such  payments.  The aggregate  outstanding  amount of the extended
         earnings  payments which former agents and agency managers are entitled
         to receive for a period of up to eight years subsequent to December 31,
         1996 is $3,341,000.

   13.  Unaudited Interim Financial Information
<TABLE>
<CAPTION>

                                                                           Quarter Ended
         ($ in thousands except per share data)        March 31    June 30       September 30      December 31
                                                       --------    -------       ------------      -----------
         1996
<S>                                                       <C>       <C>               <C>             <C>
        Revenues                                          $35,810   $36,106           $37,264         $37,817
        Net income before extraordinary item                  823     2,533             3,462           1,649
        Net income                                            302     1,637             3,336           1,649
        Per share:
          Net income before extraordinary item              $0.27     $0.84             $0.75           $0.31
          Net income                                                   0.55              0.72            0.31
                                                             0.10

         1995
        Revenues                                          $31,585   $32,770           $34,145         $34,514
        Net income before extraordinary item                2,922     2,106             3,173           1,405
        Net income                                          2,922     2,106             3,173           1,405
        Per share:
          Net income before extraordinary item              $0.97     $0.70             $1.06           $0.47
          Net income                                         0.97      0.70              1.06            0.47

</TABLE>

14.     Extraordinary Item and Non-Recurring Expenses

         During 1996, the Company incurred expenses of $1,543,000 related to the
         demutualization  of Farm Family Mutual which the Company has identified
         as  an  extraordinary  item.  These  expenses  consisted  primarily  of
         printing, postage, and legal costs.

         Pursuant to the  Statement of Financial  Accounting  Standards  No. 87,
         "Employers'   Accounting   for  Pensions",   the  Company   recorded  a
         non-recurring  expense,  net of an income tax benefit of  $412,000,  of
         $765,000,  for the  Company's  share of the costs of a voluntary  early
         retirement  program  offered to  certain  eligible  employees  in 1996.
         Eligibility for the program was based on age and years of service.


<PAGE>



                        REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders and Board of Directors of
Farm Family Holdings, Inc.


     We have audited the accompanying consolidated balance sheets of Farm Family
Holdings,  Inc.  and  Subsidiaries  as of December  31,  1996 and 1995,  and the
related consolidated  statements of income,  stockholders' equity and cash flows
for each of the  three  years in the  period  ended  December  31,  1996.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.

     We conducted  our audits in accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

     In our opinion,  the consolidated  financial  statements  referred to above
present fairly, in all material respects,  the financial position of Farm Family
Holdings,  Inc.  and  Subsidiaries  as of December  31,  1996 and 1995,  and the
results of their  operations and their cash flows for each of the three years in
the period  ended  December  31,  1996 in  conformity  with  generally  accepted
accounting principles.


                            COOPERS & LYBRAND L.L.P.


Albany, New York
February 13, 1997


<PAGE>


                           FARM FAMILY HOLDINGS, INC.
                                   EXHIBIT 21
                         SUBSIDIARIES OF THE REGISTRANT

Subsidiaries                                                          State
------------                                                          -----

Farm Family Casualty Insurance Company ("FFCIC")is a wholly
 owned subsidiary of Farm Family Holdings, Inc.                         NY

Rural Agency and Brokerage, Inc. ("RAB") is a wholly owned
 subsidiary of FFCIC.                                                   NY

Rural Insurance Agency and Brokerage of Massachusetts, Inc.
is a wholly owned subsidiary of RAB.                                    MA

R.A.A.B of W. Va., Inc. is a wholly owned subsidiary of RAB.            WV











































<PAGE>


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.


                                             FARM FAMILY HOLDINGS, INC.


                                     By:     /s/  Philip P. Weber
                                     -----------------------------
                                     Philip P. Weber, President
                                     March 21, 1997



<PAGE>


                                                        SIGNATURES


Pursuant to the requirements of Securities Exchange Act of 1934, this report has
been signed below by the following  persons on behalf of the  Registrant  and in
the capacities and on the dates indicated.

<TABLE>

<S>                               <C>                                      <C>                         <C>
                                  President  and CEO
/s/ Philip P. Weber               (Principal Executive Officer)             /s/ Daniel R. LaPointe     Director
----------------------------------                                          ---------------------------
Philip P. Weber                   March 6, 1997                             Daniel R. LaPointe         March 6, 1997

                                  Executive Vice President - Finance &
                                  Treasurer
/s/ Timothy A. Walsh              (Principal Financial & Accounting         /s/ John W. Lincoln        Director
                                  Officer)
----------------------------------                                          ---------------------------
Timothy A. Walsh                  March 6, 1997                             John W. Lincoln            March 6, 1997


/s/ Robert L. Baker               Director                                  /s/ Wayne A. Mann          Director
----------------------------------                                          ---------------------------
Robert L. Baker                   March 6, 1997                             Wayne A. Mann              March 6, 1997


/s/ Randolph C. Blackmer, Jr.     Director                                                             Director
----------------------------------                                          ---------------------------
Randolph C. Blackmer, Jr.         March 6, 1997                             John P. Moskos             March 6, 1997


/s/ Fred G. Butler, Sr.           Director                                  /s/ Norma R. O'Leary       Director
----------------------------------                                          ---------------------------
Fred G. Butler, Sr.               March 6, 1997                             Norma R. O'Leary           March 6, 1997


/s/ Joseph E. Calhoun             Director                                                             Director
----------------------------------                                          ---------------------------
Joseph E. Calhoun                 March 6, 1997                             John I. Rigolizzo, Jr.     March 6, 1997


/s/ James V. Crane                Director                                  /s/ Harvey T. Smith        Director
----------------------------------                                          ---------------------------
James V. Crane                    March 6, 1997                             Harvey T. Smith            March 6, 1997


/s/ Stephen J. George             Director                                                             Director
----------------------------------                                          ---------------------------
Stephen J. George                 March 6, 1997                             Howard T. Sprow            March 6, 1997


                                  Director                                  /s/ William M. Stamp, Jr.  Director
----------------------------------                                          ---------------------------
Gordon H. Gowen                   March 6, 1997                             William M. Stamp, Jr.      March 6, 1997


/s/ Jon R. Greenwood              Director                                  /s/ Richard D. Tryon       Director
----------------------------------                                          ---------------------------
Jon R. Greenwood                  March 6, 1997                             Richard D. Tryon           March 6, 1997


/s/ Clark W. Hinsdale III         Director                                  /s/ Charles A. Wilfong     Director
----------------------------------                                          ---------------------------
Clark W. Hinsdale III             March 6, 1997                             Charles A. Wilfong         March 6, 1997


/s/ Richard A. Jerome             Director                                  /s/ Tyler P. Young         Director
----------------------------------                                          ---------------------------
Richard A. Jerome                 March 6, 1997                             Tyler P. Young             March 6, 1997


/s/ Arthur D. Keown, Jr.          Director
----------------------------------
Arthur D. Keown, Jr.              March 6, 1997

</TABLE>