UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
x | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2005
OR
¨ | TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
Commission File Number 000-11773
A. | Full title of the plan and the address of the plan, if different from that of the issuer named below: |
Savings and Profit Sharing Plan and Trust Agreement
of Alfa Mutual Insurance Company
B. | Name of issuer of the securities held pursuant to the plan and the address of its principal executive officer: |
Alfa Corporation
2108 E. South Blvd
Montgomery, Al 36106
SAVINGS AND PROFIT SHARING PLAN AND TRUST AGREEMENT
OF ALFA MUTUAL INSURANCE COMPANY
Financial Statements and Supplemental Schedule
December 30, 2005 and 2004
(With Report of Independent Registered Public Accounting Firm Thereon)
SAVINGS AND PROFIT SHARING PLAN AND TRUST AGREEMENT
OF ALFA MUTUAL INSURANCE COMPANY
Table of Contents
Page | ||
Report of Independent Registered Public Accounting Firm | 1 | |
Financial Statements: | ||
Statements of Net Assets Available for Benefits as of December 30, 2005 and 2004 |
2 | |
3 | ||
4 | ||
Supplemental Schedule | ||
Schedule H, Line 4i Schedule of Assets (Held at End of Year) as of December 30, 2005 | 8 |
Report of Independent Registered Public Accounting Firm
The Plan Administrator
Savings and Profit Sharing Plan and Trust Agreement
of Alfa Mutual Insurance Company:
We have audited the accompanying statements of net assets available for benefits of Savings and Profit Sharing Plan and Trust Agreement of Alfa Mutual Insurance Company as of December 30, 2005 and 2004, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plans management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 financial statements referred to above present fairly, in all material respects, the net assets available for benefits of Savings and Profit Sharing Plan and Trust Agreement of Alfa Mutual Insurance Company as of December 30, 2005 and 2004, and the changes in net assets available for benefits for the years then ended in conformity with U.S. generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets (held at end of year) as of December 30, 2005 is presented for the purpose of additional analysis and is not a required part of the basic financial statements, but is supplementary information required by the Department of Labors Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plans management. The supplemental schedule has been subjected to the auditing procedures applied in the audit of the basic 2005 financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic 2005 financial statements taken as a whole.
/s/ KPMG
Birmingham, Alabama
June 19, 2006
1
SAVINGS AND PROFIT SHARING PLAN AND TRUST AGREEMENT
OF ALFA MUTUAL INSURANCE COMPANY
Statements of Net Assets Available for Benefits
December 30, 2005 and 2004
2005 | 2004 | ||||
Assets: |
|||||
Investments: |
|||||
At fair value: |
|||||
Alfa Corporation Common Stock Fund |
$ | 21,865,448 | 19,568,152 | ||
Loans to participants |
3,616,285 | 3,475,699 | |||
Mutual funds |
85,890,016 | 77,603,084 | |||
Common/collective trust |
19,946,534 | 19,722,983 | |||
Total investments |
131,318,283 | 120,369,918 | |||
Receivables: |
|||||
Contributions receivable employee |
222,192 | 375,492 | |||
Contributions receivable employer |
132,462 | 200,425 | |||
Total receivables |
354,654 | 575,917 | |||
Total assets |
131,672,937 | 120,945,835 | |||
Liabilities: |
|||||
Due to broker |
| 199,703 | |||
Net assets available for benefits |
$ | 131,672,937 | 120,746,132 | ||
See accompanying notes to financial statements.
2
SAVINGS AND PROFIT SHARING PLAN AND TRUST AGREEMENT
OF ALFA MUTUAL INSURANCE COMPANY
Statements of Changes in Net Assets Available for Benefits
Years ended December 30, 2005 and 2004
2005 | 2004 | ||||||
Additions to net assets attributable to: |
|||||||
Investment income: |
|||||||
Interest and dividends |
$ | 2,099,948 | 1,439,525 | ||||
Net appreciation in fair value of investments |
4,735,085 | 8,639,931 | |||||
Total investment income |
6,835,033 | 10,079,456 | |||||
Contributions: |
|||||||
Employee contributions |
7,347,005 | 6,808,100 | |||||
Employer contributions |
4,262,030 | 3,944,422 | |||||
Rollovers |
266,110 | 81,097 | |||||
Total contributions |
11,875,145 | 10,833,619 | |||||
Total additions |
18,710,178 | 20,913,075 | |||||
Deductions to net assets attributable to: |
|||||||
Distributions to participants |
(7,782,348 | ) | (4,714,347 | ) | |||
Administrative expenses |
(1,025 | ) | (17,900 | ) | |||
Total deductions |
(7,783,373 | ) | (4,732,247 | ) | |||
Net increase |
10,926,805 | 16,180,828 | |||||
Net assets available for plan benefits: |
|||||||
Beginning of year |
120,746,132 | 104,565,304 | |||||
End of year |
$ | 131,672,937 | 120,746,132 | ||||
See accompanying notes to financial statements.
3
SAVINGS AND PROFIT SHARING PLAN AND TRUST AGREEMENT
OF ALFA MUTUAL INSURANCE COMPANY
Notes to Financial Statements
December 30, 2005 and 2004
(1) | Plan Description |
The following brief description of Savings and Profit Sharing Plan and Trust Agreement of Alfa Mutual Insurance Company (the Plan) is provided for general information only. Participants should refer to the Plan agreement for a more complete description of the Plans provisions.
(a) | General |
The Plan is a defined contribution plan established by Alfa Mutual Insurance Companys (the Company) board of directors, under the provisions of Section 401(a) of the Internal Revenue Code (IRC), which includes a qualified cash or deferred arrangement as described in Section 401(k) of the IRC, for the benefit of eligible employees of the Company, Alfa Services, Inc., and Creative Consultants, Inc. The Plan is funded by voluntary employee and employer contributions.
Participation in the Plan is available to all eligible employees of the Company and its affiliates, hereinafter referred to as Employer. The Plan is subject to certain provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
(b) | Contributions |
Contributions to the Plan are made by both participants and the Employer. Participants may elect to contribute a whole percentage of their gross payroll which is not less than 1% and not greater than 50%, subject to regulatory limitations. Participants who have attained age 50 before the end of the Plan year are eligible to make catch-up contributions. The Employer makes discretionary matching contributions to the Plan based on all or a portion of the employees pretax contribution.
The employer match is the greater of: (a) 100% of the salary deferrals that do not exceed 3% of compensation plus 50% of salary deferral between 3% and 5% of compensation or (b) 100% of the first $1,000 of the salary deferral; however, in no case may the matching contribution exceed 6% of compensation.
(c) | Participant Accounts |
An account is maintained for each participant in the Plan. The participants accounts are credited with the participants contributions, their allocated portion of the Employer contributions, and investment earnings, which are allocated based on account balances. Distributions, withdrawals, investment losses, and allocated expenses are subtracted from the account balances. The benefit to which a participant is entitled is the benefit that can be provided from the participants vested account.
(d) | Vesting |
Participants who enter the Plan after January 1, 2000 are immediately vested in employer contributions. Employer contributions for participants who entered the Plan prior to January 1, 2000 are subject to a fiveyear vesting schedule (year 1 10%; year 2 20%; year 3 30%; year 4 40%; year 5 100%).
4 | (Continued) |
SAVINGS AND PROFIT SHARING PLAN AND TRUST AGREEMENT
OF ALFA MUTUAL INSURANCE COMPANY
Notes to Financial Statements
December 30, 2005 and 2004
For the years ended December 30, 2005 and 2004, forfeited nonvested accounts totaled $6,007 and $3,678, respectively. These accounts will be reallocated to participants in the same manner as employer contributions.
(e) | Payment of Benefits |
Participants may receive a distribution equal to the vested value of their account upon death, disability, retirement, or termination of either the participants employment or the Plan. Distributions may be made in the form of a lumpsum cash payment, partial lumpsum payment and part installment payments, or installment payments over a specified period of time.
(f) | Loans |
Participants may borrow funds from their accounts in the Plan subject to limitations set forth in the Plan agreement. A loan may not be for less than $1,000 and not more than the lesser of either onehalf of the employees vested account balance or $50,000, reduced by the highest outstanding loan balance during the oneyear period preceding the loan date. Interest rates are determined by the Plan using the prime rate plus one percentage point at the time the loan is requested. Interest rates ranged from 5.0% to 10.5% at December 30, 2005 and 2004.
(g) | Agreement with Trustee |
SEI Private Trust Company (SEI) is the Plan trustee. The Company pays most administrative expenses incurred by the Plan.
(h) | Investment Options |
Participants may direct their contributions and any related earnings or losses thereon into various investment options including mutual funds, common/collective trusts, or Company stock. The underlying assets of mutual funds and common/collective trusts are invested in publicly traded debt, equity, and other securities options.
(2) | Summary of Significant Accounting Policies |
(a) | Basis of Financial Statements |
The financial statements of the Plan have been prepared in conformity with U.S. generally accepted accounting principles using the accrual method of accounting.
(b) | Investment Valuation and Income Recognition |
Investments are stated at fair value. Investments in securities traded on a national exchange are valued at the last reported sales price on the last business day of the Plan year; securities traded in the overthecounter market and listed securities for which no sale was reported on that date are valued at the mean between the last reported bid and asked prices. Shares of mutual funds are valued at quoted market prices. Common/collective trusts are stated at fair value as determined by the trustee, which is based on the fair value of the underlying assets held by the trusts.
5 | (Continued) |
SAVINGS AND PROFIT SHARING PLAN AND TRUST AGREEMENT
OF ALFA MUTUAL INSURANCE COMPANY
Notes to Financial Statements
December 30, 2005 and 2004
Purchases and sales of securities are recorded on a tradedate basis. Gain or loss on sales of securities is based on the specific identification method. Dividends and interest are recorded on the ex-dividend date. The Plan presents in the statement of changes in net assets available for benefits the appreciation (depreciation) in the fair value of its investments, which consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments.
The Plan provides for investments in various investment securities that in general are exposed to various risks such as interest rate, credit, and overall market volatility. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the statement of net assets available for benefits.
(c) | Use of Estimates in Preparation of Financial Statements |
The preparation of financial statements in conformity with generally accepted accounting principles requires the Plan administrator to make estimates and assumptions that affect the reported amounts of net assets available for benefits and changes therein. Actual results could differ from those estimates.
(d) | Benefit Payments |
Benefits are recorded when paid.
(3) | Plan Administration Expenses |
Expenses of plan administration paid by the Plan for the years ended December 30, 2005 and 2004 were $1,025 and $17,900, respectively.
(4) | Investments |
The fair value of individual investments that represent 5% or more of the Plans net assets available benefits as of December 30, 2005 and 2004 are as follows:
2005 | 2004 | |||||||||
Number of units |
Amount | Number of units |
Amount | |||||||
Investments at fair value as determined by quoted market price: |
||||||||||
Alfa Corporation Common Stock Fund |
858,529 | $ | 21,865,448 | 815,217 | $ | 19,568,152 | ||||
SEI Stable Asset Fund |
18,822,813 | 19,946,534 | 19,408,564 | 19,722,983 | ||||||
SEI Diversified Conservative Fund |
862,543 | 9,315,468 | 775,851 | 8,332,636 | ||||||
SEI Diversified Global Stock Fund |
621,764 | 7,653,915 | 615,296 | 7,082,052 | ||||||
SEI Large Cap Growth Fund |
1,412,647 | 27,956,281 | 1,592,245 | 29,567,990 | ||||||
SEI Small Cap Growth Fund |
649,743 | 11,779,849 | 768,574 | 13,480,792 |
6 | (Continued) |
SAVINGS AND PROFIT SHARING PLAN AND TRUST AGREEMENT
OF ALFA MUTUAL INSURANCE COMPANY
Notes to Financial Statements
December 30, 2005 and 2004
During 2005 and 2004, the Plans investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value as follows:
2005 | 2004 | ||||
Collective/common trust |
$ | 813,945 | 312,993 | ||
Mutual funds |
2,692,016 | 5,445,152 | |||
Alfa Corporation Common Stock |
1,229,124 | 2,855,854 | |||
Alfa Unitized Stock |
| 25,932 | |||
$ | 4,735,085 | 8,639,931 | |||
(5) | Related Party Transactions |
Certain Plan investments were invested in shares of mutual funds managed by SEI (trustee). Such investments involving the trustee qualify as partyininterest transactions. There were no fees paid by the Plan to the trustee for investment management services during 2005 and 2004. Additionally, at December 30, 2005 and 2004, the Plan owned $21,865,448 (858,529 shares) and $19,568,152 (815,217 shares), respectively, in Company stock.
(6) | Plan Termination |
Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become 100% vested in their account balances.
(7) | Tax Status |
The Internal Revenue Service has determined and informed the Company by a letter dated August 30, 2001, that the Plan and related trust are designed in accordance with applicable sections of the IRC. The Plan has been amended since receiving the determination letter. However, the Plan administrator believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the IRC as of the financial statement dates.
(8) | Plan Amendment |
Effective January 1, 2006 the Plan year will commence on January 1 and end the following December 31. Effective January 1, 2004, the Plan was amended in order to comply with the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA).
7
SAVINGS AND PROFIT SHARING PLAN AND TRUST AGREEMENT
OF ALFA MUTUAL INSURANCE COMPANY
Schedule H, Line 4i Schedule of Assets (Held at End of Year)
December 30, 2005
Identity of issue, borrower lessor, or similar party |
Description of investment of interest, collateral, par, or maturity value |
Current value | |||
Common/collective trust: |
|||||
* SEI Stable Asset Fund |
18,822,813 shares | $ | 19,946,534 | ||
Mutual funds: |
|||||
* SEI Diversified Conservative Fund |
862,543 shares | 9,315,468 | |||
* SEI Diversified Global Stock Fund |
621,764 shares | 7,653,915 | |||
* SEI International Equity |
182,319 shares | 2,249,814 | |||
* SEI Large Cap Growth Fund |
1,412,647 shares | 27,956,281 | |||
* SEI Large Cap Value Fund |
296,214 shares | 6,273,809 | |||
* SEI S&P 500 Index Fund |
136,260 shares | 5,040,258 | |||
* SEI Small Cap Growth Fund |
649,743 shares | 11,779,849 | |||
* SEI Small Cap Value Fund |
236,588 shares | 4,594,545 | |||
* SEI Core Fixed Income Fund |
396,214 shares | 4,382,130 | |||
* SEI Diversified Conservative Income Fund |
58,897 shares | 660,821 | |||
* SEI Diversified Global Moderate Growth Fund |
340,803 shares | 3,939,683 | |||
* SEI Diversified Global Growth Fund |
157,673 shares | 2,043,443 | |||
Stocks: |
|||||
* Alfa Corporation Common Stock |
858,529 shares | 21,865,448 | |||
* Loans to participants |
Interest rates range from 5.0% to 10.5% with various maturities through 2035 |
3,616,285 | |||
$ | 131,318,283 | ||||
* | Indicates partyininterest to the Plan. |
See accompanying report of independent registered public accounting firm.
8
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on their behalf by the undersigned duly authorized.
SAVINGS AND PROFIT SHARING PLAN AND TRUST AGREEMENT OF ALFA MUTUAL INSURANCE COMPANY | ||
By: | /s/ Stephen G. Rutledge | |
Stephen G. Rutledge | ||
Senior Vice President and CFO |
Date: June 28, 2006