-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EOwGxTo3oaqtHGvFIMAbmzdcMxWBC9DCQt02ECVv+pQekVEIg9ca/hrd/TW2CfT5 fTkqVbbjbFFaOBdJfLTr5g== 0000837332-97-000005.txt : 19970815 0000837332-97-000005.hdr.sgml : 19970815 ACCESSION NUMBER: 0000837332-97-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERUS LIFE INSURANCE CO CENTRAL INDEX KEY: 0000837332 STANDARD INDUSTRIAL CLASSIFICATION: ASSET-BACKED SECURITIES [6189] IRS NUMBER: 421405698 STATE OF INCORPORATION: IA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-23590 FILM NUMBER: 97660150 BUSINESS ADDRESS: STREET 1: 611 FIFTH AVE CITY: DES MOINES STATE: IA ZIP: 50309 BUSINESS PHONE: 5152832371 MAIL ADDRESS: STREET 1: 611 FIFTH AVENUE CITY: DES MOINES STATE: IA ZIP: 50309 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN MUTUAL LIFE INSURANCE CO DATE OF NAME CHANGE: 19950227 FORMER COMPANY: FORMER CONFORMED NAME: CENTRAL LIFE ASSURANCE CO DATE OF NAME CHANGE: 19920703 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ================================ (Mark One) /x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1997 OR // TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ---------------- to ----------------- Commission file number 0-21459 AmerUs Life Holdings, Inc. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Iowa 42-1459712 - -------------------------------------------------------------------------------- (State of other jurisdiction of incorporation or organization)(IRS employer identification no.) 418 Sixth Avenue, Des Moines, Iowa 50309-2407 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code (515) 280-1331 - -------------------------------------------------------------------------------- Former name, former address and formal fiscal year, if changed since last report Indicate by check X 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 // The number of shares outstanding of each of the registrant's classes of common stock on August 13, 1997 was as follows: Class A, Common Stock 18,155,989 shares Class B, Common Stock 5,000,000 shares Exhibit index - Page 37 Page 1 of 47 INDEX Page No. Part I - Financial Information . . . . . . . . . . . . . . . . . .4 Item 1. Consolidated Financial Statements . . . . . . . . . . . .4 Consolidated Balance Sheets June 30, 1997 (Unaudited) and December 31, 1996 . . . . . . . . . . . . . . .4 Consolidated Statements of Income (Unaudited) - For the Six Months Ended June 30, 1997 and 1996 and the Three Months Ended June 30, 1997 and 1996 . . . . . . . . . . .7 Consolidated Statements of Cash Flows (Unaudited) - For the Six Months Ended June 30, 1997 and 1996 . . . . . . . .8 Notes to Consolidated Financial Statements (Unaudited). . . . . . . . . . . . . . . . . . . . . . . . . 11 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . .15 Part II - Other Information . . . . . . . . . . . . . . . . . . . 34 Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . 34 Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . . . . . .34 Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . .35 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . .36 Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . . . 37 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS AMERUS LIFE HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS (Dollars In thousands)
June 30, December 31, 1997 1996 --------- ----------- (Unaudited) Assets Investments: Securities available-for-sale at fair value: Fixed maturity securities(Cost 1997 $2,332,766; 1996 $2,335,875; $2,405,580 $2,414,807 Equity securities (Cost 1997 $59,121; 1996 $60,247) 63,008 64,033 Short-term investments (Cost 1997 $5,632; 1996 $13,288) 5,632 13,288 Investment in unconsolidated subsidiaries 23,131 20,809 Mortgage loans on real estate 230,368 225,743 Real estate 4,417 4,561 Policy loans 66,064 65,183 Other investments 78,960 93,228 ---------- ---------- Total investments 2,877,160 2,901,652 Cash 7,752 1,814 Accrued investment income 33,442 30,792 Premiums and fees receivable 3,195 1,489 Reinsurance receivables 1,964 1,329 Deferred policy acquisition costs 138,455 120,481 Deferred income taxes 6,043 - Property and equipment (less accumulated depreciation 1997 $13,095; 1996 $11,775) 3,874 4,393 Other assets 71,230 52,111 Closed block assets 1,307,386 1,270,168 ---------- ---------- Total assets $4,450,501 $4,384,229 ========== ========== Liabilities and Shareholders' Equity Liabilities Policy reserves and policyowner funds: Future life and annuity policy benefits $1,999,838 $2,053,740 Policyowner funds 66,004 55,369 ---------- ---------- Total 2,065,842 2,109,109 Accrued expenses 17,056 14,227 Dividends payable to policyowners 970 - Policy and contract claims 5,412 7,039 Income taxes payable 29,365 25,182 Deferred income taxes - 1,337 Other liabilities 65,532 64,173 Debt 81,548 188,381 Closed block liabilities 1,563,790 1,517,271 --------- --------- Total liabilities 3,829,515 3,926,719 --------- --------- Company obligated mandatorily redeemable preferred capital securities of subsidiary trust holding solely junior subordinated debentures of the Company 86,000 - Shareholders' equity Preferred stock, no par value, 20,000,000 shares authorized, none issued - - Common stock, Class A, no par value, 75,000,000 shares authorized; 18,155,989 shares issued and outstanding 1997; 14,500,000 shares issued and outstanding 1996 18,156 14,500 Common stock, Class B, no par value, 50,000,000 shares authorized; 5,000,000 shares issued and outstanding 5,000 5,000 Unrealized appreciation of available-for-sale securities 31,043 35,300 Additional paid in capital 51,371 - Retained earnings 429,416 402,710 ---------- ---------- Total shareholders' equity 534,986 457,510 ---------- ---------- Total liabilities and shareholders' equity $4,450,501 $4,384,229 ========== ==========
AMERUS LIFE HOLDINGS, INC. CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands, except share data) (unaudited)
Six Months Ended Three Months Ended June 30, June 30, ----------------- ---------------- 1997 1996 1997 1996 ---- ---- ---- ---- Revenues: Insurance premiums $20,928$123,063 $12,758 $60,834 Universal life and annuity product charges 20,287 29,272 10,252 14,371 Net investment income 96,856 143,589 48,308 70,369 Realized gains on investments 9,523 64,409 4,264 5,669 Other revenues 3,000 1,329 387 1,186 Contribution from the Closed Block 13,410 - 4,134 - ------- ------- ------ ----- 164,004 361,662 80,103 152,429 ------- ------- ------- ------- Benefits and expenses: Policyowner benefits 83,875 188,063 39,501 92,081 Underwriting, acquisition, and insurance expenses 29,029 29,115 14,826 13,884 Amortization of deferred policy acquisition costs 10,973 29,157 5,916 14,195 Dividends to policyowners 173 26,324 52 12,883 ------- ------- ------- ------- 124,050 272,659 60,295 133,043 ------- ------- ------- ------- Income before income tax expense and equity in earnings of unconsolidated subsidiary 39,954 89,003 19,808 19,386 Income tax expense 11,586 32,841 5,847 8,014 ------- ------- ------- ------ Income before equity in earnings of unconsolidated subsidiary $28,368 $56,162 $13,961 $11,372 Equity in earnings of unconsolidated subsidiary 654 299 481 299 ------- ------- ------- ------- Net income $29,022 $56,461 $14,442 $11,671 ======= ======= ======= ======= Pro forma net income per common share $1.25 $2.44 $0.62 $0.51 ===== ===== ===== ===== Weighted average Common Shares outstanding 23,155,989 23,155,989 23,155,989 23,155,989 ========== ========== ========== ==========
AMERUS LIFE HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Six Months Ended June 30, (In thousands) (unaudited)
1997 1996 ---- ---- Cash flows from operating activities: Net income $29,022 $56,462 Adjustments to reconcile net income to net cash provided by operating activities: Policyowner assessments on universal life and annuity products (20,287) (29,272) Interest credited to policyowner account balances 53,137 60,090 Realized investment (gains) losses (9,523) (64,409) Change in: Accrued investment income (2,650) 3,616 Reinsurance ceded receivables (635) 225 Deferred policy acquisition costs (12,195) 3,795 Liabilities for future policy benefits (16,381) 30,636 Policy and contract claims and other policyowner funds (1,627) (3,789) Income taxes: Current 4,183 14,865 Deferred (5,718) (5,009) Other, net 20,347 (15,015) Change in Closed Block assets and liabilities, net 68,656 - -------- -------- Net cash provided by operating activities 106,329 52,195 -------- -------- Cash flows from investing activities: Purchase of fixed maturities available for sale (620,969) (765,036) Maturities, calls, and principal reductions of fixed maturities available for sale 538,801 686,987 Purchase of equity securities (23,042) (66,921) Proceeds from sale of equity securities 26,706 84,982 Proceeds from repayment and sale of mortgage loans 26,174 62,248 Purchase of mortgage loans (30,653) - Purchase of real estate and other invested assets 14,670 7,240 Change in policy loans, net (882) (5,675) Tax on capital gains (3) 1 Other assets, net 39,271 16,145 Change in Closed Block investments, net (41,758) - Initial establishment of the Closed Block - - -------- ------- Net cash used in investing activities (71,685) 19,971 -------- ------- Cash flows from financing activities: Deposits to policyowner account balances 63,191 91,918 Withdrawals from policyowner account balances (123,775) (167,569) Change in debt, net (106,833) (7,162) Change in checks drawn in excess of bank balance - 10,590 Dividends to American Mutual Holding Company - (4,563) Initial public offering of common stock 55,027 - Dividends to shareholders (2,316) - Issuance of company-obligated mandatory redeemable capital securities 86,000 - ------- ------- Net cash used in financing activities (28,706) (76,786) ------- ------- Net (decrease) increase in cash 5,938 (4,620) Cash at beginning of period 1,814 4,620 ------ -------- Cash at end of period $7,752 $ - ======== ======== Supplemental disclosure of cash activities: Interest paid $2,919 $929 ====== ==== Income taxes paid $26,235 $35,000 ======= ======= /TABLE AMERUS LIFE HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for annual financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All adjustments were of a normal recurring nature, unless otherwise noted in Management's Discussion and Analysis and the Notes to Financial Statements. Operating results for the six months ended June 30, 1997 are not necessarily indicative of the results that may be expected for the year ending December 31, 1997. For further information and for capitalized terms not defined in this 10-Q, refer to the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1996. Certain amounts in the 1996 financial statements have been reclassified to conform to the 1997 financial statement presentation. EARNINGS PER COMMON SHARE Earnings per share have been computed on a pro forma basis by giving retroactive effect to the issuance of 18.16 million shares of Class A common stock and 5 million shares of Class B common stock as if all such shares had been issued at the beginning of the respective periods and by giving retroactive effect to the capital contribution (by the Company) to former subsidiaries of AmerUs Life. For further discussion, refer to the consolidated financial statements of the Company for the year ended December 31, 1996. (2) CLOSED BLOCK Summarized financial information of the Closed Block balance sheet as of June 30, 1997, and statements of income for the six months and three months ended June 30, 1997 is as follows (in thousands):
Assets: Closed Block June 30, 1997 ------------- Fixed maturity securities, at fair value (amortized cost of $933,019) $950,617 Short-term investments, at fair value 14,040 Policy loans 169,029 Cash (3,115) Accrued Investment Income 10,995 Premiums and fees receivable 3,023 Deferred policy acquisition costs 161,125 Other assets 1,672 ---------- $1,307,386 ========== Liabilities: Future life and annuity policy benefits $1,407,021 Policyowner funds 7,357 Accrued expenses 2,868 Dividends payable to policyowners 133,263 Policy and contract claims 7,429 Other liabilities 5,852 ---------- $1,563,790 ==========
Six Months Ended Three Months Ended June 30, 1997 June 30, 1997 ----------- ----------- Revenues and Expenses: Insurance premiums $104,994 $ 50,058 Universal life and annuity product charges 10,007 5,129 Net investment income 54,278 27,977 Realized (losses) on investments (989) (416) Policyowner benefits (108,382) (57,504) Underwriting, acquisition, and insurance expenses (2,821) (1,330) Amortization of deferred policy acquisition costs (14,111) (7,280) Dividends to policyowners (29,566) (12,500) ------- -------- Contribution from the Closed Block before income taxes $ 13,410 $4,134 ======== ======
(3) DEBT AND CAPITAL SECURITIES Debt consists of the following (in thousands):
June 30, December 31, 1997 1996 --------- ----------- Line of credit with Federal Home Loan Bank-bearing interest at 6.90% at June 30, 1997 $19,927 $ - Federal Home Loan Bank community investment long-term advances with a weighted average interest rate of 6.35% at June 30,1997 16,621 13,381 Bank Credit Facility: Term loan bearing interest at 6.63% 45,000 100,000 at June 30, 1997 Revolving credit loan - 75,000 ------- -------- $81,548 $188,381 ======= ========
For an additional discussion of the terms of the above indebtedness, refer to the Company's consolidated financial statements as of December 31, 1996. On February 3, 1997, the Company issued $86,000,000 of 8.85% Capital Securities, Series A, through a wholly-owned subsidiary trust. The sole asset of the trust is the junior subordinated debentures of the Company in the principal amount of $88.66 million with interest at 8.85% maturing February 1, 2027. The Company has fully and unconditionally guaranteed the obligation of the trust under the Capital Securities and is obligated to mandatorily redeem the securities on February 1, 2027. The Company may prepay the securities at anytime after February 1, 2007. (4) LEGAL PROCEEDINGS As previously discussed in the Company's annual report, AmerUs Life is a defendant in a class action lawsuit, Cozad v. American Mutual Life Insurance Company, which was brought on August 31, 1995 in the District Court for Travis County, Texas. The complaint, which seeks unspecified damages, was filed by former policyowners on behalf of themselves and all similarly situated persons who purchased individual life insurance policies which were underwritten and sold by AmerUs Life within Texas and which were allegedly based upon uniform sales presentations and policy illustrations from and after 1980. AmerUs Life has denied the allegations contained in such complaint. Following a court-initiated mediation process, the Company and the plaintiffs have entered into a nationwide class settlement of certain market conduct issues for a substantial block of its policies. The court has entered an order preliminarily approving the certification of the class and the fairness of the settlement. A final hearing is scheduled for September 16, 1997, following notice to class members. There can be no assurance the agreement will be approved by the court and become effective. Should a settlement not be approved, this litigation would continue and the Company would continue to vigorously defend against claims asserted, including the existence of a legitimate class. AmerUs Life Holdings, Inc. June 30, 1997 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview The Company is engaged in the business of underwriting, marketing and distributing a broad range of individual life insurance and annuity products to individuals and businesses in 45 states and the District of Columbia. The Company's primary product offerings consist of whole life, universal life and term life insurance policies and fixed annuities. Since April 1, 1996 the Company has been a party to the Ameritas Joint Venture with Ameritas Life Insurance Corp., through which it markets fixed annuities, variable annuities and variable life insurance products. In accordance with GAAP, universal life insurance premiums and annuity deposits received are reflected as increases in liabilities for policyowner account balances and not as revenues. Revenues reported for universal life and annuity products consist of policy charges for the cost of insurance, administration charges and surrender charges assessed against policyowner account balances. Surrender benefits paid relating to universal life insurance policies and annuity products are reflected as decreases in liabilities for policyowner account balances and not as expenses. Amounts for interest credited to universal life and annuity policyowner account balances and benefit claims in excess of policyowner account balances are reported as expenses in the financial statements. The Company receives investment income earned from the funds deposited into account balances by universal life and annuity policyowners, the majority of which is passed through to such policyowners in the form of interest credited. Premium revenues reported for traditional life insurance products are recognized as revenues when due. Future policy benefits and policy acquisition costs are recognized as expenses over the life of the policy by means of a provision for future policy benefits and amortization of deferred policy acquisition costs. The costs related to acquiring new business, including certain costs of issuing policies and certain other variable selling expenses (principally commissions), defined as deferred policy acquisition costs, are capitalized and amortized as an expense in proportion to expected profits or margins. This amortization is adjusted when current or estimated future gross profits or margins on the underlying policies vary from previous estimates. For example, the amortization of deferred policy acquisition costs is accelerated when policy terminations are higher than originally estimated or when investments supporting the policies are sold at a gain prior to their anticipated maturity. Death and other policyowner benefits reflect exposure to mortality risk and fluctuate from period to period based on the level of claims incurred within insurance retention limits. The profitability of the Company is primarily affected by expense levels, interest spread results (i.e., the excess of investment earnings over the interest credited to policyowners) and fluctuations in mortality, persistency and other policyowner benefits. The Company has the ability to mitigate adverse experience through adjustments to credited interest rates, policyowner dividends or cost of insurance charges. Sales The following table sets forth information regarding the Company's sales activity by product: Sales Activity by Product
Six Months Ended Three Months Ended June 30, June 30, ------------------ ----------------- ($ in thousands) 1997 1996 1997 1996 ---- ---- ---- ---- Individual life insurance: Participating whole life $ 8,603 $ 8,948 $4,018 $4,666 Universal life 3,666 3,494 1,560 1,720 Term life 1,756 1,369 1,193 642 ------ ------- ------- ------- Total life insurance (A) $14,025 $13,811 $6,771 $7,028 ======= ======= ====== ====== Individual annuities (B) $21,305 $49,537 $11,109 $21,987 ======== ======= ======= ======= (A) Direct first year annualized premiums (B) Direct first year and single-collected premiums
Life insurance sales as measured by annualized premiums increased $0.2 million, or 1.5%, for the six months, and decreased $0.3 million, or 3.7%, for the three months ended June 30, 1997, from the same periods in 1996. As a result of the introduction of new term products in February 1997, sales of term insurance products increased by $0.4 million and $0.5 million for the six months and three months ended June 30, 1997, respectively. These increases were partially offset by lower sales levels of other traditional products, as our distribution system increased its sales of variable products through the Ameritas Joint Venture. Including production from the Company's distribution systems through the joint venture, life insurance sales through June 30, 1997 increased 5.7% for the six months and decreased 2.1% for the three months ended June 30, 1997, from the same periods in 1996. The decrease in annuity sales for the Company resulted from the transfer of substantially all new sales of individual deferred annuities to the Ameritas Joint Venture in May 1996. Including production from the Company's distribution systems through the joint venture, annuity sales through June 30, 1997 have increased 25.9% and 18.7% for the six months and three months ended June 30, 1997, respectively, from the comparable periods in 1996. The Company's investment in Ameritas Joint Venture is carried on the equity method. Premium Receipts The following table sets forth the Company's collected premiums for the periods indicated: Collected Premiums by Product
Six Months Ended Three Months Ended June 30, June 30, ----------------- ------------------- ($ in thousands) 1997 1996 1997 1996 ---- ---- ---- ---- Direct individual life premiums collected: Traditional life: First year & single $ 35,841 $ 34,427 $17,602 $17,158 Renewal 83,703 81,721 41,021 39,130 -------- -------- ------- ------- Total $119,544 $116,148 $58,623 $56,288 ======== ======== ======= ======= Universal life: First year & single $ 6,992 $ 7,549 $ 3,063 $ 3,892 Renewal 37,585 38,446 18,741 18,995 -------- -------- ------- ------- Total $ 44,577 $ 45,995 $21,804 $22,887 ======== ======== ======= ======= Total direct life $164,121 $162,143 $ 80,427 $ 79,175 Reinsurance assumed 814 757 468 337 Reinsurance ceded (4,926) (6,580) (2,485) (3,996) -------- -------- ------- ------- Total individual life, net of reinsurance $160,009 $156,320 $ 78,410 $ 75,516 ======== ======== ======== ======== Direct annuity premiums collected: Individual (1) $ 25,611 $ 54,568 $ 13,067 $ 24,591 Group - 50 - 4 -------- -------- -------- -------- Total annuities 25,611 54,618 13,067 24,595 Reinsurance ceded (281) (345) (101) (144) -------- -------- ------ -------- Total annuities, net of reinsurance $25,330 $54,273 $12,966 $24,451 ======== ======== ======= ======= Total group life, net of reinsurance (2) $ (10) $ 1,544 - 874 ======== ======== ======= ======= Total accident and health, net of reinsurance $ 129 $ 102 $ 52 $ 48 ======= ======== ======= ======= Total collected premiums, net of reinsurance $185,458 $212,239 $91,428 $100,889 ======= ======== ======= ======== (1) Effective May 1996, substantially all new sales of individual deferred annuities are made through the Ameritas Joint Venture. (2) The Company sold substantially all of its group life business as of July 1, 1996 and is no longer actively marketing this line of business.
Life Insurance and Annuities in Force The following table sets forth information regarding life insurance and annuities in force for each date presented: Life Insurance and Annuities in Force
As of June 30, --------------- ($ in thousands) 1997 1996 ---- ---- Individual life insurance: Traditional Number of policies 252,101 257,664 GAAP life reserves $1,254,953 $1,165,658 Face amounts $17,113,000 $16,636,000 Universal life Number of policies 118,720 120,231 GAAP life reserves $835,914 $804,044 Face amounts $12,125,000 $12,306,000 Total individual life Number of policies 370,821 377,895 GAAP life reserves $2,090,867 $1,969,702 Face amounts $29,238,000 $28,942,000 Annuities (1): Number of policies 52,654 56,646 GAAP reserves $1,118,099 $1,237,769 Group life insurance (2): Number of lives 30,235 33,119 Face amounts $870,200 $872,057 ___________________ (1) Effective May 1996, substantially all new sales of individual deferred annuities are made through the Ameritas Joint Venture. (2) The Company sold substantially all of its group life business as of July 1, 1996 and is no longer actively marketing this line of business.
The Company's traditional life insurance products include participating whole life and term life insurance products. The reduction in the number of traditional life insurance policies is attributable to policy surrenders, policy terminations or expirations, and consolidations of one or more outstanding policies into new policies. The Company has issued traditional life insurance policies since its incorporation in 1896. Many of the policies which have terminated were issued years ago at lower face amounts than the average for all traditional life policies in force. Therefore, while the Company has experienced a decrease in the number of traditional life policies, the size of the policies outstanding has increased and the amount of premiums collected has also increased. For universal life products, the Company has experienced a reduction in both the number of policies and face amounts in force during the current reporting period, and over the past several years as well. Such reductions in universal life policies in force are attributable to similar termination activities as with the traditional life products. For universal life, the Company has not experienced as dramatic a growth in average size policy in force in recent years as it has for traditional life due to its more recent introduction in the 1980's. Therefore, the reduction in number of policies has translated to a reduction in the amount of insurance in force. The reduction in the amount of annuity business in force is primarily attributable to the transfer of new annuity production to the Ameritas Joint Venture in May 1996. The Company's investment in the joint venture is carried on the equity method. The Closed Block In connection with the Reorganization of the Company, the Closed Block was established as of June 30, 1996. Insurance policies which had a dividend scale in effect at that time were included in the Closed Block. The Closed Block was designed to provide reasonable assurance to owners of insurance policies included therein that, after the Reorganization, assets would be available to maintain the dividend scales and interest credits in effect for 1995 if the experience underlying such scales and credits continues. The contribution to the operating income of the Company from the Closed Block is reported as a single line item in the income statement. Accordingly, premiums, product charges, investment income, realized gains (losses) on investments, policyowner benefits and dividends attributable to the Closed Block, less certain minor expenses and the amortization of deferred policy acquisition costs, are shown as a net number under the caption "Contribution from the Closed Block." This results in material reductions in the respective line items in the income statement while having no effect on net income. The expenses associated with the administration of the policies included in the Closed Block and the renewal commissions on these policies are not charged against the Contribution from the Closed Block, but rather are grouped with underwriting, acquisition and insurance expenses. Also, all assets allocated to the Closed Block are grouped together and shown as a separate item entitled "Closed Block Assets." Likewise, all liabilities attributable to the Closed Block are combined and disclosed as the "Closed Block Liabilities." Since the operating results from the Closed Block for the six months and the three months ended June 30, 1997 are reported on one line of the income statements, "Contribution from the Closed Block," the individual income statement components for 1997 are not fully comparable with those for 1996, prior to the establishment of the Closed Block. Management believes that the presentation of the results of operations on a combined basis as if the Closed Block had not been formed facilitates comparability with the results of operations for periods prior to its formation. Accordingly, the combined presentation set forth below includes certain revenues and expenses associated with the policies included in the Closed Block. Such presentation does not, however, affect the Company's reported net income.
Six Months Ended June 30, 1997 ----------------------------------- ($ in thousands) As Reported Closed Block Combined ----------- ------------ ---------- Revenues Insurance premiums $20,928 $104,994 $125,922 Product changes 20,287 10,007 30,294 Net investment income 96,856 54,278 151,134 Realized gains (losses) on investments 9,523 (989) 8,534 Other revenues 3,000 - 3,000 Contribution from the Closed Block 13,410 (13,410) - ------ ------ ------- Total revenues 164,004 154,880 318,884 Benefits and expenses Policyowner benefits 83,875 108,382 192,257 Underwriting, acquisition and insurance expenses 29,029 2,821 31,850 Amortization of deferred policy acquisition costs 10,973 14,111 25,084 Dividends to policyowners 173 29,566 29,739 ------ ------ ------- Total benefits and expenses 124,050 154,880 278,930 Income before income tax expense and equity in earnings of unconsolidated subsidiary 39,954 - 39,954 Income tax expense 11,586 - 11,586 ------ -------- ------- Income before equity in earnings of unconsolidated subsidiary 28,368 - 28,368 Equity in earnings of unconsolidated subsidiary 654 - 654 ------ ------ ------ Net income $29,022 $ - $29,022 ======= ======== ========
Three Months Ended June 30, 1997 -------------------------------- ($ in thousands) As Reported Closed BlockCombined ----------- -------------------- Revenues Insurance premiums $12,758 $50,058 62,816 Product charges 10,252 5,129 15,381 Net investment income 48,308 27,977 76,285 Realized gains (losses) on investments 4,264 (416) 3,848 Other revenues 387 - 387 Contribution from the Closed Block 4,134 (4,134) - ------- ------- -------- Total revenues 80,103 78,614 158,717 Benefits and expenses Policyowner benefits 39,501 57,504 97,005 Underwriting, acquisition and insurance expenses 14,826 1,330 16,156 Amortization of deferred policy acquisition costs 5,916 7,280 13,196 Dividends to policyowners 52 12,500 12,552 ------- ------- ------- Total benefits and expenses 60,295 78,614 138,909 Income before income tax expense and equity in earnings of unconsolidated subsidiary 19,808 - 19,808 Income tax expense 5,847 - 5,847 ------- ------- ------- Income before equity in earnings of unconsolidated subsidiary 13,961 - 13,961 Equity in earnings of unconsolidated subsidiary 481 - 481 ------- ------- ------- Net income $14,442 $ - 14,442 ======= ======= =======
COMBINED RESULTS OF OPERATIONS SIX MONTHS AND THREE MONTHS ENDED JUNE 30, 1997 AND JUNE 30, 1996 A summary of the Company's combined revenues, including revenues associated with the Closed Block, follows:
Six Months Ended Three Months Ended June 30, June 30, ----------------- ------------------ ($ in thousands) 1997 1996 1997 1996 ---- ---- ---- ---- Insurance premiums: Traditional life insurance premiums $117,459 $113,347 $57,971 $56,123 Immediate annuity and supplementary contract premiums 8,395 8,097 4,802 3,881 Other premiums 68 1,619 43 830 -------- ------- ------- ------ Total insurance premiums 125,922 123,063 62,816 60,834 Universal life product charges 29,886 28,841 15,126 14,148 Annuity product charges 408 431 255 223 ------- ------- ------- ------- Total product charges 30,294 29,272 15,381 14,371 Net investment income 151,134 143,589 76,285 70,369 Realized gains on investments 8,534 64,409 3,848 5,669 Other revenues 3,000 1,329 387 1,186 ------- ------- ------- ------- Total revenues $318,884 $361,662 $158,717 $152,429 ======== ======== ======== ========
Individual life and annuity premiums and product charges increased $5.4 million, or 3.6%, for the six months and increased $3.8 million, or 5.1%, for the three months ended June 30, 1997 from the same periods in 1996. Traditional life insurance premiums increased $4.1 million for the six months and increased $1.8 million for the three months as a result of continued growth in renewal premiums. Immediate annuity deposits and supplementary contract premiums were $0.3 million higher for the six months and $0.9 million higher for the three months ended June 30, 1997 compared to the same periods in 1996. The increases were primarily the result of higher supplementary contract premiums. Other premiums were lower in 1997 for both the six month and three month periods primarily due to the sale of the Company's remaining group life operation in the third quarter of 1996. Universal life product charges increased $1.0 million for both the six months ended and the three months ended June 30, 1997 compared to the same periods in 1996. The increased product charges in 1997 are primarily due to increased cost of insurance charges as a result of the normal aging of the block of business. Net investment income increased $7.5 million for the six months and increased $5.9 million for the three months ended June 30,1997 from the same periods in 1996. Average invested assets for the first half of 1997 increased $152.3 million (excluding market value adjustments) over the same period in 1996, and the effective yield on average invested assets (excluding market value adjustments) increased from 7.74% for the first six months of 1996 to 7.89% for the same period in 1997. The increase in net investment income from the second quarter of 1996 to the second quarter of 1997 was also primarily due to increased effective yields and average invested assets. Also included in the second quarter 1997 net investment income was $2.6 million from other invested assets. Realized gains on investments decreased $55.9 million for the six months and decreased $1.8 million for the three months ended June 30, 1997 from the same periods in 1996. Included in the six month amounts for 1996 were approximately $52.4 million of gains from the sale of common stock as a result of the substantial liquidation of the Company's equity portfolio, with approximately $51.5 million of the gains occurring during the first quarter of 1996. Other revenues increased $1.7 million for the six months ended June 30, 1997 from the same period in 1996 primarily due to the sale of certain investment partnerships in the first quarter of 1997. Other revenues decreased $0.8 million for the three months ended June 30, 1997 from the same period in 1996 primarily due to proceeds from a favorable litigation settlement in the second quarter of 1996. A summary of the Company's combined policyowner benefits, including policyowner benefits associated with the Closed Block, follows:
Six Months Ended Three Months Ended June 30, June 30, ------------------------------- ($ in thousands) 1997 1996 1997 1996 ---- ---- ---- ---- Traditional life insurance Death benefits $20,973 $19,664 $12,380 $11,656 Change in liability for future policy benefits and other policy benefits 83,967 79,764 40,720 36,592 ------- ------- ------- ------- Total traditional life insurance benefits 104,940 99,428 53,100 48,248 Universal life insurance Death benefits in excess of cash value 14,886 11,705 7,222 6,364 Interest credited on policyowner account balances 22,612 21,031 11,665 10,576 Other policy benefits 1,622 1,758 1,029 649 ------- ------ ------ ------ Total universal life insurance benefits 39,120 34,494 19,916 17,589 Annuities Interest credited to deferred annuity account balances 30,525 35,712 15,125 17,604 Other annuity benefits 17,236 16,234 8,838 7,411 ------- ------- ------ ------ Total annuity benefits 47,761 51,946 23,963 25,015 Miscellaneous benefits 436 2,195 26 1,229 ------- ------ ------ ------ Total policyowner benefits $192,257 $188,063 $97,005 $92,081 ======== ======== ======= =======
Total policyowner benefits increased $4.2 million for the six months and increased $4.9 million for the three months ended June 30, 1997 from the same periods in 1996. Traditional life insurance benefits increased $5.5 million for the six month period and increased $4.8 million for the three month period primarily due to the growth and aging of the business in force and increased death benefits as a result of slightly higher mortality. Universal life insurance benefits increased $4.6 million for the six months ended June 30, 1997 from the same period in 1996 primarily as a result of increased death benefits due to higher mortality. Universal life insurance benefits increased $2.3 million for the three month period due to increased death benefits as a result of higher mortality, and increased interest credited amounts. Interest credited to universal life policyowner account balances increased $1.6 million for the six months and increased $1.1 million for the three months ended June 30, 1997 from the same periods in 1996. While the weighted average crediting rate for the Company's universal life liabilities decreased 12 basis points from 6.36% for the first six months of 1996 to 6.24% for the first six months of 1997, the Company's average liabilities increased $33.3 million over the same period, resulting in the increased credited amounts during the first six months of 1997. Increased interest credited amounts in the second quarter of 1997 as compared to the second quarter of 1996 reflect similar increases in average liabilities and reasonably consistent reductions in quarterly credited rates. Annuity benefits decreased $4.2 million for the six months and decreased $1.1 million for the three months ended June 30, 1997 from the same periods in 1996, in each case primarily due to reduced interest credited to policyowner account balances. The decrease in interest credited amounts in 1997 compared to 1996 amounted to $5.2 million and $2.5 million for the six months and three months ended June 30, respectively. The weighted average crediting rate for the Company's individual deferred annuity liabilities decreased 13 basis points to 5.38% for the first six months of 1997 compared to 5.51% for the first six months of 1996. The Company's average deferred annuity liabilities decreased $125.7 million from the first six months of 1996 to the first six months of 1997 also contributing to the decrease in interest credited amounts in 1997. Lower interest credited amounts in the second quarter of 1997 as compared to the second quarter of 1996 reflect similar decreases in average liabilities and reasonably consistent reductions in quarterly credited rates. The increase in other annuity benefits in 1997 was primarily the result of higher supplementary contract premiums. Miscellaneous benefits were lower in 1997 for both the six month and three month periods primarily due to the sale of the Company's remaining group life operation in the third quarter of 1996. A summary of the Company's combined expenses, including expenses associated with the Closed Block, follows:
Six Months Ended Three Months Ended June 30, June 30, ---------------- ------------------ ($ in thousands) 1997 1996 1997 1996 ---- ---- ---- ---- Commission expense, net of deferrals $4,081 $4,503 $1,968 $1,902 Other underwriting, acquisition and insurance expenses, net of deferrals 27,769 24,612 14,188 11,982 Amortization of deferred policy acquisition costs 25,084 29,157 13,196 14,195 ------- ------- ------- ------- Total expenses $56,934 $58,272 $29,352 $28,079 ======= ======= ======= =======
Commission expense, net of deferrals was $4.1 million for the six months ended June 30, 1997, decreasing $0.4 million from the same period a year ago primarily due to lower sales of products for which commissions are not capitalized. Other underwriting, acquisition and insurance expenses, net of deferrals, increased $3.2 million for the six months and increased $2.2 million for the three months ended June 30, 1997, from the same periods in 1996. The increase in expenses in 1997 for both the six month and three month periods is primarily due to interest expense on capital securities issued by the Company in February 1997 and interest expense on the revolving line of credit. This added expense was largely offset by investment of the borrowed funds which contributed to the growth in invested assets and the higher investment earnings. The amortization of deferred policy acquisition costs decreased $4.1 million for the six months and decreased $1.0 million for the three months ended June 30, 1997, from the same periods in 1996. Deferred policy acquisition costs are generally amortized in proportion to gross margins, including realized capital gains. Higher death benefits and lower realized capital gains in the first six months of 1997, compared to the first six months of 1996, contributed to lower gross margins in 1997 on products for which deferred costs are amortized, resulting in the lower amortization during the first six months of 1997. Higher death benefits, partially offset by higher realized capital gains, in the second quarter of 1997, compared to the second quarter of 1996, contributed to lower gross margins on these same products, resulting in the lower amortization during the second quarter of 1997. Dividends to policyowners increased $3.4 million for the six months and decreased $0.3 million for the three months ended June 30, 1997, from the same periods in 1996. The increase in the dividends for the six month period was the result of the growth and aging of the in force policies and the establishment of a deferred dividend liability for the Closed Block, as actual gross profits on such policies through June 30, 1997, exceeded expected profits. The decrease in dividends for the three month period was the result of the growth and aging of the in force policies being more than offset by the release of deferred dividend liability for the Closed Block during the second quarter of 1997 primarily as a result of elevated death claims on the Closed Block policies. Traditional life reserves grew 7.8% from June 30, 1996, to $1.25 billion at June 30, 1997. The weighted average interest rate used in the dividend formula for these policies was 7.18% during the first six months of 1997 compared to 7.17% during the same period of 1996. Income before income taxes decreased $48.7 million for the six months ended June 30, 1997 to $40.6 million compared to $89.3 million for the same period in 1996, due to lower realized gains on investments in 1997. Income before income taxes for the three months ended June 30, 1997 increased $0.6 million to $20.3 million compared to $19.7 million for the second quarter of 1996, with increased pre-tax operating earnings nearly offset by lower realized gains on investments. Income tax expense decreased $21.3 million for the six months primarily as a result of the lower pre-tax income due to the lower realized gains on investments. Income tax expense decreased $2.2 million for the three months ended June 30, 1997, from the same period in 1996 primarily due to the elimination of the mutual insurance company equity add-on tax, which the Company believes will not be applicable to the Company after June 30, 1996 due to the conversion to a stock company. Net income decreased $27.5 million for the six months and increased $2.8 million for the three months ended June 30, 1997 from the same periods in 1996. The reduced net income for the six month period resulted primarily from lower realized gains on investments. The increased net income for the three month period resulted primarily from increased operating earnings due primarily to higher net investment income. LIQUIDITY AND CAPITAL RESOURCES THE COMPANY The Company's cash flows from operations consists of dividends from subsidiaries, if declared and paid, interest income on loans and advances to its subsidiaries (including a surplus note issued to the Company by AmerUs Life), investment income on assets held by the Company and fees which the Company will charge AmerUs Group, AmerUs Life and certain other of its affiliates for management services, offset by the expenses incurred for debt service, salaries and other expenses. The Company intends to rely primarily on dividends and interest income from AmerUs Life to make any dividend payments to its shareholders. The payment of dividends by AmerUs Life to the Company is regulated under Iowa law. Under Iowa law, AmerUs Life may pay dividends only from the earned surplus arising from its business and must receive the prior approval of the Iowa Commissioner to pay a dividend, if such dividend would exceed certain statutory limitations. The current statutory limitation is the greater of (i) 10% of AmerUs Life's capital and surplus as of the preceding year end or (ii) the net gain from operations for the previous calendar year. Iowa law gives the Iowa Commissioner broad discretion to disapprove requests for dividends in excess of these limits. During 1997, the maximum amount that would have been legally available for distribution to the Company, absent the dividends paid as a part of the reorganization of the Company, without further regulatory approval would have been approximately $34 million. However, as a result of the distribution made as a part of the reorganization, AmerUs Life will not be able to pay dividends to the Company in 1997 without the prior consent of the Iowa Commissioner. It is the Company's intention to seek regulatory approval to pay dividends from AmerUs Life during 1997 and through June 30, 1996 the Company has requested and received approval for the payment of a $5 million dividend from AmerUs Life. At June 30, 1997, the Company also had the ability to borrow up to approximately $119.0 million from AmerUs Life without prior regulatory approval. The Company would utilize this borrowing capacity, if necessary, to meet its liquidity needs including the payment of dividends to its shareholders. Any such borrowings from AmerUs Life would be repaid from future available dividends from AmerUs Life. Management believes that the Company's access to capital through borrowings from AmerUs Life, public equity and debt markets and its $75 million revolving credit facility provide the Company with sufficient liquidity and capital resources during 1997, irrespective of whether regulatory approval for the payment of dividends by AmerUs Life is obtained. In December, 1996, the Company entered into a bank credit agreement, which was comprised of $100 million in term debt and $75 million under a revolving line of credit ("Bank Credit Facility"). Immediately after establishing the Bank Credit Facility the Company borrowed $100 million under the term debt component of the facility and $75 million under the revolving line of credit. The Company contributed $125 million of the borrowings under the Bank Credit Facility to AmerUs Life and used $50 million to purchase a 9% surplus note, due December 1, 2006, from AmerUs Life. Proceeds from the Company's common stock and capital note offerings were used to repay $50 million of borrowings outstanding under the term facility and $75 million of borrowing outstanding under the revolving line of credit. The Company has $75 million of unused borrowing capacity under its revolving line of credit. On February 3, 1997, the Company issued $86,000,000 of 8.85% Capital Securities, Series A, through a wholly-owned subsidiary trust for which the Company is obligated to mandatorily redeem the securities on February 1, 2027. The Company may prepay the securities at anytime after February 1, 2007. In connection with the Bank Credit Facility, the Company pledged approximately 49.9% of the common stock of AmerUs Life owned by the Company and a $50 million 9% surplus note payable to the Company by AmerUs Life. As of June 30, 1997 the Company had no material commitments for capital expenditures. In the future the Company anticipates that its liquidity and capital needs will be met through interest and dividends from AmerUs Life, accessing the public equity and debt markets depending upon market conditions, or alternatively from bank financing. At June 30, 1997, AmerUs Life had substantial excess statutory capital as its adjusted statutory capital was $379.4 million resulting in an RBC ratio in excess of 800% of the authorized control level RBC. AMERUS LIFE AmerUs Life's cash inflows consist primarily of premium income, deposits to policyowner account balances, income from investments, sales, maturities and calls of investments and repayments of investment principal. Cash outflows are primarily related to withdrawals of policyowner account balances, investment purchases, payment of policy acquisition costs, payment of policyowner benefits, income taxes and current operating expenses. Life insurance companies generally produce a positive cash flow from operations, as measured by the amount by which cash inflows are adequate to meet benefit obligations to policyowners and normal operating expenses as they are incurred. The remaining cash flow is generally used to increase the asset base to provide funds to meet the need for future policy benefit payments and for writing new business. Management anticipates that funds to meet its short-term and long-term capital expenditures, cash dividends to shareholders and operating cash needs will come from existing capital and internally generated funds. Management believes that the current level of cash and available-for-sale and short-term securities, combined with expected net cash inflows from operations, maturities of fixed maturity investments, principal payments on mortgage-backed securities and its insurance products, will be adequate to meet AmerUs Life's anticipated short-term cash obligations. AmerUs Life generated cash flows from operating activities of $106.3 million and $52.2 million, for the six months ended June 30, 1997 and 1996, respectively. Excess operating cash flows were primarily used to increase AmerUs Life's fixed maturity investment portfolio. Matching the investment portfolio maturities to the cash flow demands of the type of insurance being provided is an important consideration for each type of life insurance product and annuity. AmerUs Life continuously monitors benefits and surrenders to provide projections of future cash requirements. As part of this monitoring process, AmerUs Life performs cash flow testing of its assets and liabilities under various scenarios to evaluate the adequacy of reserves. In developing its investment strategy, AmerUs Life establishes a level of cash and securities which, combined with expected net cash inflows from operations, maturities of fixed maturity investments and principal payments on mortgage-backed securities, are believed adequate to meet anticipated short-term and long-term benefit and expense payment obligations. There can be no assurance that future experience regarding benefits and surrenders will be similar to historic experience since withdrawal and surrender levels are influenced by such factors as the interest rate environment and AmerUs Life's claims-paying and financial strength ratings. AmerUs Life takes into account asset-liability management considerations. Contract terms for AmerUs Life's interest-sensitive products include surrender and withdrawal provisions which mitigate the risk of losses due to early withdrawals. These provisions generally do one or more of the following: limit the amount of penalty-free withdrawals, limit the circumstances under which withdrawals are permitted, or assess a surrender charge or market value adjustment relating to the underlying assets. The following table summarizes statutory liabilities for interest-sensitive life products and annuities by their contractual withdrawal provisions at June 30, 1997 (in millions):
Not subject to discretionary withdrawal $ 209 Subject to discretionary withdrawal with adjustments: Specified surrender charges (1) $901 Market value adjustments 386 ---- Subtotal 1,287 Subject to discretionary withdrawal without adjustments 586 ------ Total $2,082 ====== (1) Includes $318 million of statutory liabilities with a contractual surrender charge of less than five percent of the account balance.
Through its membership in the Federal Home Loan Bank of Des Moines, AmerUs Life is eligible to borrow on a line of credit available to provide it additional liquidity. The line of credit, the amount of which is re-set annually, is based on the amount of capital stock of the Federal Home Loan Bank of Des Moines owned by AmerUs Life, which supported a borrowing capacity of $33.4 million as of June 30, 1997. Interest is payable at a current rate at the time of any advance. As of June 30, 1997, AmerUs Life had a $25 million open secured line of credit with $19.9 million outstanding. In the future, in addition to cash flows from operations and AmerUs Life's borrowing capacity, AmerUs Life would anticipate obtaining its required capital from the Company as the Company has access to the public markets. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS As previously discussed in the Company's annual report, AmerUs Life is a defendant in a class action lawsuit, Cozad v. American Mutual Life Ins. Co., which was brought on August 31, 1995 in the District Court for Travis County, Texas. The complaint, which seeks unspecified damages, was filed by former policyowners on behalf of themselves and all similarly situated persons who purchased individual life insurance policies which were underwritten and sold by AmerUs Life within Texas and which were allegedly based upon uniform sales presentations and policy illustrations from and after 1980. AmerUs Life has denied the allegations contained in such complaint. Following a court-initiated mediation process, the Company and the plaintiffs have entered into a nationwide class settlement of certain market conduct issues for a substantial block of its policies. The court has entered an order preliminarily approving the certification of the class and the fairness of the settlement. A final hearing is scheduled for September 16, 1997, following notice to class members. There can be no assurance the agreement will be approved by the court and become effective. Should a settlement not be approved, this litigation would continue and the company would continue to vigorously defend against claims asserted, including the existence of a legitimate class. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company held its annual meeting of its shareholders on May 2, 1997. There were two matters voted upon at the meeting. The first was the election of directors. The nominees, Messrs. Malcolm Candlish, Sam C. Kalainov and John W. Norris, Jr., were elected to three-year terms. Other directors continuing to serve are John R. Albers, Roger K. Brooks, Thomas F. Gaffney, Maureen M. Culhane, Ilene B. Jacobs, Jack C. Pester and John A. Wing. The second matter voted upon resulted in the ratification of the appointment of KPMG Peat Marwick LLP as independent auditors for the Company. The results of the balloting were as follows: AGAINST OR FOR WITHHELD ABSTENTIONS --- ---------- ----------- Election of Directors: Malcolm Candlish 21,810,569 10,194 Sam C. Kalainov 21,811,469 9,294 John W. Norris, Jr. 21,810,569 10,194 Ratification of KPMG Peat Marwick LLP 21,798,197 6,615 15,951 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits A list of exhibits included as part of this report is set forth in the Exhibit Index which immediately precedes such exhibits and is hereby incorporated by reference herein. (b) The following report on Form 8-K was filed during the quarter ended June 30, 1997: (i) None. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DATED: August 13, 1997 AMERUS LIFE HOLDINGS, INC. By/s/Michael E. Sproule ------------------------------------- Executive Vice President and CFO (Chief Financial Officer) By/s/Michael G. Fraizer ------------------------------------- Senior Vice President - Controller and Treasurer (Principal Accounting Officer) AMERUS LIFE HOLDINGS, INC. AND SUBSIDIARIES INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION 2.1* Plan of Reorganization dated October 27, 1995 3.1 Amended and Restated Articles of Incorporation of the Company filed as Exhibit 3.5 to the registration statement of the Company on Form S-1, Registration Number 333-12234, is hereby incorporated by reference. 3.2* Bylaws of the Company 4.1 Amended and Restated Trust Agreement dated as of February 3, 1997 among the Company, Wilmington Trust Company, as property trustee, and the administrative trustees named therein (AmerUs Capital I business trust), filed as exhibit 3.6 to the registration statement of the Company and AmerUs Capital I on Form S-1, Registration Number 333-13713, is hereby incorporated by reference. 4.2 Indenture dated as of February 3, 1997 between the Company and Wilmington Trust Company relating to the Company's 8.85% Junior Subordinated Debentures, Series A, filed as exhibit 4.1 to the registration statement of the Company and AmerUs Capital I on Form S-1, Registration Number, 333-13713, is hereby incorporated by reference. 4.3 Guaranty Agreement dated as of February 3, 1997 between the Company, as guarantor and Wilmington Trust Company, as trustee, relating to the 8.85% Capital Securities, Series A, issued by AmerUs Capital I, filed as exhibit 4.4 on Form S-1, Registration Number, 333-13713, is hereby incorporated by reference. 10.1 Amended and Restated Intercompany Agreement dated as of December 1, 1996, among American Mutual Holding Company, AmerUs Group Co. and the Company. Filed as Exhibit 10.81 to the company's registration statement on Form S-1, Registration Number 333-12237, is hereby incorporated by reference 10.2* Joint Venture Agreement, dated as of March 8, 1996, between American Mutual Insurance Company and Ameritas Life Insurance Corp., and First Amendment thereto dated as of April 1, 1996 between American Mutual Life Insurance Company and Ameritas Life Insurance Corp. 10.3* Management and Administrative Service Agreement, dated as of April 1, 1996, among American Mutual Life Insurance Company, Ameritas Variable Life Insurance Company and Ameritas Life Insurance Corp. 10.4* Agreement and Plan of Merger, dated as of August 24, 1994, between Central Life Assurance Company and American Mutual Life Insurance Company 10.5* Line of Credit Application and Approval, dated February 28, 1996 and April 22, 1996, respectively, between American Mutual Life Insurance Company and Federal Home Loan Bank of Des Moines 10.6* All*AmerUs Supplemental Executive Retirement Plan, effective January 1, 1996 10.7* American Mutual Life Insurance Company Supplemental Pension Plan (which was curtailed as of December 31, 1995) 10.8* Central Life Assurance Company Supplemental Pension Plan (which was curtailed as of December 31, 1995) 10.9* Management Incentive Plan 10.10* AmerUs Life Insurance Company Performance Share Plan 10.11* AmerUs Life Stock Incentive Plan 10.12* Employment Agreement, dated February 1, 1995, between American Mutual Life Insurance Company and Sam C. Kalainov 10.13* AmerUs Life Non-Employee Director Stock Plan 10.14* Modification of Real Estate Contract, dated as of July 1, 1996, between AmerUs Life Insurance Company and AmerUs Properties, Inc. 10.15* Asset Management and Disposition Agreement, dated January 3, 1995, between American Mutual Life Insurance Company and Central Properties, Inc. (now AmerUs Properties, Inc.) 10.16* Management Contract, dated January 1, 1993, between Central Life Assurance Company and Central Properties, Inc. (now AmerUs Properties, Inc.) 10.17* Management Contract, dated November 1, 1994, between American Mutual Life Insurance Company and CPI Resource Group (now AmerUs Group Co.) 10.18* Management Contract, dated January 1, 1993, between Central Life Assurance Company and Central Properties, Inc. (now AmerUs Properties, Inc.) 10.19* Management Contract, dated January 1, 1995, between American Mutual Life Insurance Company and Central Properties, Inc. (now AmerUs Properties, Inc.) 10.20* Management Contract, dated July 1, 1994, between Central Life Assurance Company and CPI Resource Group (now AmerUs Group Co.) 10.21* Management Contract, dated February 1, 1994, between Central Life Assurance Company and Central Properties, Inc. (now AmerUs Properties, Inc.) 10.22* Management Contract, dated May 1, 1994, between Central Life Assurance Company and Central Properties, Inc. (now AmerUs Properties, Inc.) 10.23* Management Contract, dated February 1, 1994, between Central Life Assurance Company and Central Properties, Inc. (now AmerUs Properties, Inc.) 10.24* Management Contract, dated January 4, 1994, between Central Life Assurance Company and CPI Resource Group (now AmerUs Group Co.) 10.25* Management Contract, dated November 1, 1994, between American Mutual Life Insurance Company and CPI Resource Group (now AmerUs Group Co.) 10.26* Lease - Business Property, dated December 1, 1995, between American Mutual Life Insurance Company and AmerUs Leasing 10.27* Lease - Business Property, dated January 1, 1996, between American Mutual Life Insurance Company and AmerUs Bank 10.28* Lease - Business Property, dated January 1, 1996, between American Mutual Life Insurance Company and AmerUs Bank 10.29* Lease - Business Property, dated January 1, 1996, between American Mutual Life Insurance Company and AmerUs Bank 10.30* Lease - Business Property, dated January 1, 1996, between American Mutual Life Insurance Company and AmerUs Group 10.31* Lease - Business Property, dated January 1, 1996, between American Mutual Life Insurance Company and AmerUs Group 10.32* Assumption and Amendment of Lease Agreement, dated as of November 27, 1993 among Central Life Assurance Company, Midland Savings Bank FSB (now AmerUs Bank) and Midland Financial Mortgages, Inc. (now AmerUs Mortgage, Inc.) 10.33* Form of Indemnification Agreement executed with directors and certain officers 10.34* Amended and Restated Agreement and Certificate of Limited Partnership of CPI Housing Partners I, L.P., dated as of September 1, 1995, among AmerUs Properties, Inc., American Mutual Life Insurance Company and American Mutual Affordable Housing Partners, L.P. 10.35* Amended and Restated Agreement of Limited Partnership of American Mutual Affordable Housing Partners, L.P., dated as of September 1, 1995, among GrA Partners Joint Venture, AmerUs Properties, Inc., American Mutual Life Insurance Company, NCC Polar Company and NCC Orion Company 10.36* Amended and Restated Agreement and Certificate of Limited Partnership of 65th & Vista, L.P., dated as of September 1, 1995, among AmerUs Properties, Inc., American Mutual Life Insurance Company and American Mutual Affordable Housing Partners, L.P. 10.37* Amended and Restated Agreement and Certificate of Limited Partnership of 60th & Vista, L.P., dated as of September 1, 1995, among I.R.F.B. Joint Venture, American Mutual Life Insurance Company and American Mutual Affordable Housing Partners, L.P. 10.38* Certificate of Limited Partnership and Limited Partnership Agreement of CPI Housing Partners II, L.P., dated March 27, 1995, between Central Properties, Inc. (now AmerUs Properties, Inc.) and American Mutual Life Insurance Company 10.39* Amended and Restated Agreement and Certificate of Limited Partnership of API Housing Partners III, L.P., dated as of March 1, 1996, among AmerUs Properties, Inc., American Mutual Life Insurance Company, American Mutual Affordable Housing Partners II, L.P. and AmerUs Management, Inc. 10.40* Certificate of Limited Partnership and Limited Partnership Agreement of API Housing Partners IV, L.P., dated as of June 1995, between AmerUs Properties, Inc. and American Mutual Life Insurance Company 10.41* Amended and Restated Agreement and Certificate of Limited Partnership of API Housing Partners V, L.P., dated as of March 1, 1996, among AmerUs Properties, Inc., American Mutual Life Insurance Company, American Mutual Affordable Housing Partners II, L.P. and AmerUs Management, Inc. 10.42* Amended and Restated Agreement and Certificate of Limited Partnership of API-Chimney Ridge Partners, L.P., dated as of March 1, 1996, among AmerUs Properties, Inc., American Mutual Life Insurance Company, American Mutual Affordable Housing Partners II, L.P. and AmerUs Management, Inc. 10.43* Certificate of Limited Partnership and Limited Partnership Agreement of API Housing Partners VI, L.P., dated as of October 10, 1995, between AmerUs Properties, Inc. and American Mutual Life Insurance Company 10.44* Certificate of Limited Partnership and Limited Partnership Agreement of 86th & Meredith Associates, L.P., dated as of February 14, 1995, between Central Properties, Inc. (now AmerUs Properties, Inc.) and American Mutual Life Insurance Company 10.45* Certificate of Limited Partnership and Limited Partnership Agreement of Altoona Meadows Investors, L.P., dated as of February 22, 1995, between KPI Investments, Inc. and Dennis Galeazzi 10.46* First Amendment to the Certificate of Limited Partnership and Limited Partnership Agreement of Altoona Meadows Investors, L.P., dated as of September 28, 1995, between KPI Investments, Inc. and American Mutual Life Insurance Company 10.47* Loan Servicing Agreement, dated August 1, 1990, between Central Life Assurance Company and Midland Financial Mortgages, Inc. (now AmerUs Mortgage), filed as Exhibit 10.30 to Central Resource Group, Inc.'s Registration Statement on Form S-1, Registration No. 33-48359, filed on June 4, 1992 10.48* Construction Loan Servicing Agreement, dated November 20, 1995, between American Mutual Life Insurance Company and AmerUs Properties, Inc. 10.49* Servicing Agreement, dated March 1996, between American Mutual Life Insurance Company and AmerUs Properties, Inc. 10.50* Loan Servicing Agreement, dated September 1, 1994, between Central Life Assurance Company and Midland Savings Bank, FSB (now AmerUs Bank) 10.51* Miscellaneous Services Agreement, dated as of January 1, 1996, among American Mutual Life Insurance Company, AmerUs Group Co., AmerUs Bank, AmerUs Mortgage, Inc., Iowa Realty Co., Inc., Midland Homes, Inc., Iowa Title Company, AmerUs Insurance, Inc., and AmerUs Finance Inc. 10.52* Amendment to Service Agreement, dated as of May 1, 1996, between American Mutual Life Insurance Company and AmerUs Bank 10.53* Data Processing Service Agreement, dated November 1, 1989, between Central Life Assurance Company and Midland Financial Savings and Loan Association (now AmerUs Bank), filed as Exhibit 10.29 to Central Resource Group, Inc.'s Registration Statement on Form S-1, Registration No. 33-48359, filed on June 4, 1992 10.54* First Amendment to Data Processing Service Agreement, dated as of September 30, 1990, between Central Life Assurance Company and Midland Savings Bank FSB (now AmerUs Bank) 10.55* Second Amendment to Data Processing Service Agreement, dated as of May 1, 1991, between Central Life Assurance Company and Midland Savings Bank FSB (now AmerUs Bank) 10.56* Third Amendment to Data Processing Service Agreement, dated as of October 1, 1991, between Central Life Assurance Company and Midland Savings Bank, FSB (now AmerUs Bank) 10.57* Fourth Amendment to Data Processing Service Agreement, dated as of January 2, 1992, between Central Life Assurance Company and Midland Savings Bank, (now AmerUs Bank) 10.58* Fifth Amendment to Data Processing Service Agreement, dated as of June 1, 1993, between Central Life Assurance Company and Midland Savings Bank FSB (now AmerUs Bank) 10.59* Sixth Amendment to Data Processing Service Agreement, dated as of September 1, 1995, between American Mutual Life Company and AmerUs Bank 10.60* Seventh Amendment to Data Processing Service Agreement, dated as of January 1, 1996, between American Mutual Life Insurance Company and AmerUs Bank 10.61* Data Processing Support Services Agreement, dated as of July 1, 1993, between Central Life Assurance Company and Midland Savings Bank, FSB (now AmerUs Bank) 10.62* Miscellaneous Services Agreement, dated as of February 5, 1992, between Central Life Assurance Company and Midland Savings Bank FSB (now AmerUs Bank) 10.63* Investment Management Agreement, dated as of August 15, 1992, between Central Life Assurance Company and Midland Savings Bank FSB (now AmerUs Bank) 10.64* Disbursement Services Agreement, dated as of April 15, 1995, between American Mutual Life Insurance Company and Midland Savings Bank FSB (now AmerUs Bank) 10.65* Purchase Agreement, dated as of June 28, 1996, between AmerUs Life Insurance Company and AmerUs Bank 10.66* Brokerage Contract dated January 1, 1995, between American Mutual Life Insurance Company and Midland Investment Services, Inc. (now AmerUs Investments, Inc.) 10.67* Servicing Agreement, dated March 1, 1992, between Central Life Assurance Company and Midland Investment Services, Inc. (now AmerUs Investments, Inc.) 10.68* Tax Allocation Agreement dated as of November 4, 1996 10.69* Amended and Restated Articles of Limited Partnership of T.L.B. Limited Partnership, undated, among F. Barry Tapp, Lartnec Investment Co., Michael H. Taylor, Michael Longley and Michael A. Hammond, along with a Memorandum of Understanding Regarding Assignments of Partnership Interests dated December 21, 1988 and three corresponding Assignments of Partnership Interest dated December 6, 1988 wherein Central Life Assurance Company is Assignee, and an Assignment of Partnership Interest of T.L.B. Limited Partnership dated December 29, 1995, between Lartnec Investment Co. and AmerUs Properties, Inc. 10.70* Assignment of Partnership Interest of T.L.B. Limited Partnership, dated December 28, 1994, between Lartnec Investment Co. and Central Properties, Inc. (now AmerUs Properties, Inc.) and Assignment of Limited Partnership Interest of T.L.B. Limited Partnership, dated December 30, 1995, between American Mutual Life Insurance Company and AmerUs Properties, Inc. 10.71* Limited Partnership Agreement of South 19th Limited Partnership, dated December 30, 1985, among Lartnec Investment Co., F. Barry Tapp and Michael H. Taylor, along with a Memorandum of Understanding Regarding Assignments of Partnership Interests dated December 21, 1988 and three corresponding Assignments of Partnership Interest dated December 6, 1988 wherein Central Life Assurance Company is Assignee, and an Assignment of Partnership Interest of South 19th Limited Partnership dated December 29, 1995, between Lartnec Investment Co. and AmerUs Properties, Inc. 10.72* Assignment of Partnership Interest of South 19th Limited Partnership, dated December 28, 1994, between Lartnec Investment Co. and Central Properties, Inc. (now AmerUs Properties, Inc.) and Assignment of Partnership Interest of South 19th Limited Partnership, dated December 30, 1995, between American Mutual Life Insurance Company and AmerUs Properties, Inc. 10.73* Limited Partnership Agreement of Theater Project Limited Partnership dated March 15, 1985, among Tapp Management, Inc., Tapp Management Co., Ltd., Michael Longley, Michael A. Hammond and Gary L. Wood along with an Amendment to Certificate of Limited Partnership, dated August 22, 1986, and an Assignment of Limited Partnership Interest, dated November 15, 1992, between F. Barry Tapp and Tapp Development Co., Ltd., and an Amended Certificate of Limited Partnership dated December 24, 1992 10.74* Assignment of Limited Partnership Interest of Theater Project Limited Partnership, dated December 30, 1995, between American Mutual Life Insurance Company and AmerUs Properties, Inc. 10.75* Certificate of Limited Partnership and Limited Partnership Agreement of Lagos Vista Limited Partnership, dated August 10, 1994, between Central Properties, Inc. (now AmerUs Properties, Inc.) and Central Life Assurance Company 10.76* Joint Venture Agreement, dated July 30, 1980, between F. Barry Tapp and Lartnec Investment Co., along with an Assignment by F. Barry Tapp of Interest in Tapp & LICO Properties, dated December 24, 1981, between F. Barry Tapp and Tapp Development Co., Ltd., an Assignment of Partnership Interest, dated December 6, 1988, between Tapp Development Co., Ltd. and Central Life Assurance Company and an Assignment of Joint Venture Interest of Tapp and LICO Properties, dated December 29, 1995, between Lartnec Investment Co. and AmerUs Properties, Inc. 10.77* Assignment of Joint Venture Interest of Tapp and LICO Properties, dated December 28, 1994, between Lartnec Investment Co. and Central Properties, Inc. (now AmerUs Properties, Inc.) and Assignment of Joint Venture Interest of Tapp and LICO Properties, dated December 30, 1995, between American Mutual Life Insurance Company and AmerUs Properties, Inc. 10.78* Joint Venture Agreement, dated December 30, 1980, between MBT, Ltd. and Lartnec Investment Co., along with an Assignment by F. Barry Tapp of Interest in MBT, Ltd., dated December 24, 1981, between F. Barry Tapp and Tapp Development Co., Ltd., an Assignment by Michael H. Taylor of Interest in MBT, Ltd., dated December 23, 1981, between Michael H. Taylor and Tapp Development Co., Ltd., an Assignment of Limited Partnership interest, dated December 6, 1988, between Tapp Development Co., Ltd. and Central Life Assurance Company, and an Assignment of Joint Venture Interest of Round Rock Outlet, Ltd., dated December 29, 1995, between Lartnec Investment Co. and AmerUs Properties, Inc. 10.79* Assignment of Joint Venture Interest of Round Rock Outlet, Ltd., dated December 28, 1994, between Lartnec Investment Co. and Central Properties, Inc. (now AmerUs Properties, Inc.) and Assignment of Joint Venture Interest of Round Rock Outlet, Ltd., dated December 30, 1995, between American Mutual Life Insurance Company and AmerUs Properties, Inc. 10.80* Revolving Credit and Term Loan Agreement, dated as of December 1996, among the Company, certain Signatory Banks thereto and The Chase Manhattan Bank, Note issued by the Company and Borrower Pledge Agreement 11 Statement Regarding Computation of Per Share Earnings 21* List of Subsidiaries of the Registrant 27 Financial Data Schedule
All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted. _____________________________ * Previously filed and identified with the same exhibit number in the Company's Registration Statement on Form S-1, Registration Number 333-12239, and is hereby incorporated by reference. EX-11 2 EXHIBIT 11 AMERUS LIFE HOLDINGS, INC. EXHIBIT 11 - STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE Pro Forma Weighted Average Number of Shares* (in thousands)
Class A Common Stock owned by AmerUs Group 11,707 Class A Common Stock owned by the public 6,449 Class B Common Stock owned by AmerUs Group 5,000 ------ 23,156 ====== * The issuance of Class A and Class B Common Stock is considered to have occurred as of January 1, 1996 for pro forma purposes; therefore, the weighted average number of shares outstanding is 23,156,000. The Company has no dilution of shares.
Primary Pro Forma Earnings Per Common Share
Six Months Ended Three Months Ended June 30, June 30, ------------------- ------------------ 1997 1996 1997 1996 ---- ---- ---- ---- Primary Pro Forma Earnings Per Common Share $1.25 $2.44 $0.62 $0.51 ===== ===== ===== ===== /TABLE EX-27 3
7 This schedule contains summary financial information extracted from AmerUs Life Holdings, Inc. and is qualified in its entirety by reference to such financial statements. 6-MOS Dec-31-1997 Jan-01-1997 JUN-30-1997 2,405,580 0 0 63,008 230,368 4,417 2,877,160 7,752 1,964 138,455 4,450,501 1,999,838 0 5,412 66,004 81,548 86,000 0 23,156 511,830 4,450,501 41,215 96,856 9,523 3,000 83,875 10,973 29,029 39,954 11,586 29,022 0 0 0 29,022 1.25 0 0 0 0 0 0 0 0
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