Exhibit 99.1
| FOR IMMEDIATE RELEASE | For more information, contact: Marty Ketelaar, Director, Investor Relations (515) 362-3693 |
AmerUs Group Reports Record 2002 Adjusted Net
Operating Income of $144.5 million; $3.58 Per Share
DES MOINES, Iowa (February 6, 2003)—AmerUs Group Co. (NYSE: AMH), a leading producer of life insurance and annuity products, today announced fourth quarter adjusted net operating income of $36.1 million, or $0.92 per diluted share, compared with $35.2 million, or $0.83 per diluted share ($0.79 per diluted share including goodwill amortization) in the fourth quarter of 2001. Adjusted net operating income for 2002 was $144.5 million, or $3.58 per diluted share, compared with $122.4 million, or $3.27 per diluted share ($3.05 per diluted share including goodwill amortization) a year ago. “I’m pleased with the operating results we’ve achieved in 2002,” said Roger K. Brooks, chairman, president and chief executive officer of AmerUs Group. “We will continue to focus on our core protection and asset accumulation businesses to build scale, achieve greater efficiencies and increase profitability during the coming year.” Adjusted net operating income excludes items such as open block realized capital gains and losses, restructuring charges and the cumulative effect of accounting changes. A reconciliation of GAAP net income to net adjusted operating earnings has been included as part of this press release. In accordance with Statement of Financial Accounting Standard
142, “Goodwill and Other Intangible Assets,” AmerUs Group stopped amortizing goodwill on January 1, 2002.
Net Income
As previously announced by the company, credit-related losses impacted net income during 2002. Net income decreased to $7.2 million for the fourth quarter of 2002, or $0.18 per diluted share compared to $21.5 million, or $0.51 per diluted share a year ago ($0.46 per diluted share including goodwill amortization). Year-to-date net income was $62.9 million, or $1.56 per diluted share, compared with $81.2 million or $2.17 per diluted share ($1.95 per diluted share including goodwill amortization) a year ago.
Record Protection Product Sales
Fourth quarter fixed life sales increased to $33.6 million, compared to $28.1 million in the fourth quarter of 2001. Year-to-date, fixed life sales were up 73 percent to $129.7 million compared to $74.7 million during the same period of 2001. The increase in year-to-date sales is primarily a result of the acquisition of Indianapolis Life Insurance Company in May 2001. Assuming Indianapolis Life was owned for all of 2001, year-to-date fixed life sales would have increased 33 percent, up from $97.3 million. “These outstanding sales results exceeded our expectations for the year and are the result of our innovative product offerings and quality distribution systems,” said Brooks.
Accumulation Product Sales
Sales of fixed annuity products for the quarter were $514 million, compared with $550 million for the fourth quarter of 2001. Year-to-date, fixed annuity sales were $1.8 billion compared to $1.9 billion a year ago. Additionally, the company issued $125 million of funding agreements during the quarter, resulting in total funding agreement issuance of
$875 million during 2002. “These are solid results and are in line with our plan given the current interest rate environment,” said Brooks.
Net Investment Income
Net investment income was $250 million in the fourth quarter of 2002 compared to $253 million for the fourth quarter of 2001. Growth in invested assets was offset by lower yields on new investments. The portfolio yield during the fourth quarter of 2002 was 6.19 percent, compared to 6.61 percent in the fourth quarter of 2001. The 2002 annual portfolio yield was 6.38 percent, compared to 6.72 percent in 2001.
Corporate Actions
During the quarter, the company paid its annual dividend of $0.40 per share on December 4, 2002, to shareholders of record on November 18, 2002. Additionally, the company will hold its annual meeting of shareholders at its corporate headquarters on May 8, 2003, at 2 p.m. CDT. Individuals interested in attending should contact the company’s corporate secretary’s office at (515) 362-3695.
Conference Call, Audio Replay and Additional Financial Information
Interested parties may listen to a conference call with AmerUs Group’s management discussing fourth quarter 2002 results by calling (toll free) 888-820-4341 (international 706-679-8569) at 10:30 a.m. EST on Friday, February 7, 2003. An audio replay of AmerUs Group’s call will be available at 1 p.m. EST, February 7, 2003, through February 14, 2003. The replay can be accessed by dialing 800-642-1687 (international: 706-645-9291), Conference ID 7477637.
Further detailed financial information, including operating segment income, investment composition, operating expenses and product distribution by channel, can be
found in AmerUs Group’s Financial Supplement, which is available by accessing the company’s web site at www.amerus.com or by contacting the company’s investor relations department.
AmerUs Group Co. is located in Des Moines, Iowa, and is engaged through its subsidiaries in the business of marketing and underwriting individual life insurance and annuity products in 50 states, the District of Columbia and the U.S. Virgin Islands. Its major subsidiaries include: AmerUs Life Insurance Company, American Investors Life Insurance Company, Inc., Bankers Life Insurance Company of New York, IL Annuity and Insurance Company, and Indianapolis Life Insurance Company.
As of December 31, 2002, AmerUs Group’s total assets were $20.3 billion and shareholders’ equity totaled $1,262.9 million, including accumulated other comprehensive income.
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AMERUS GROUP CO.
ADJUSTED NET OPERATING INCOME
($ in thousands, except share data)
Adjusted net operating income reflects net income adjusted to eliminate certain items, such as open block realized gains and losses, restructuring costs and non-insurance operations. Adjusted net operating income shown below does not constitute our net income computed in accordance with GAAP. The adjustments are presented net of income taxes.
| For The Three Months Ended | For The Year Ended | |||||||||||||||||
| December 31, | December 31, | |||||||||||||||||
| 2002 | 2001 | 2002 | 2001 | |||||||||||||||
| Net Income | $ | 7,199 | $ | 19,534 | $ | 62,866 | $ | 72,907 | ||||||||||
| Realized losses on open block investments (A) | 29,986 | 10,896 | 66,386 | 25,475 | ||||||||||||||
| Net amortization of deferred policy acquisition costs due to open block gains or losses (B) | (3,994 | ) | 2,311 | (10,869 | ) | (3,613 | ) | |||||||||||
| Net effect of accounting differences from the adoption of SFAS 133 (C) | (2,769 | ) | (878 | ) | 14,638 | 6,417 | ||||||||||||
| Demutualization costs (D) | — | 518 | 1,186 | 969 | ||||||||||||||
| Restructuring costs (E) | 6,581 | 1,287 | 13,225 | 5,476 | ||||||||||||||
| Other income from non-insurance operations (F) | (953 | ) | (446 | ) | (2,898 | ) | (1,820 | ) | ||||||||||
| Cumulative effect of change in accounting for derivatives (G) | — | — | — | 8,236 | ||||||||||||||
| Adjusted Net Operating Income | $ | 36,050 | $ | 33,222 | $ | 144,534 | $ | 114,047 | ||||||||||
| Adjusted Net Operating Income per common share: | ||||||||||||||||||
| Basic | $ | 0.93 | $ | 0.80 | $ | 3.62 | $ | 3.09 | ||||||||||
| Diluted | $ | 0.92 | $ | 0.79 | $ | 3.58 | $ | 3.05 | ||||||||||
| Weighted average common | ||||||||||||||||||
| shares outstanding: | ||||||||||||||||||
| Basic | 38,919,178 | 41,741,649 | 39,972,328 | 36,949,198 | ||||||||||||||
| Diluted | 39,168,989 | 42,288,468 | 40,398,378 | 37,453,428 | ||||||||||||||
AMERUS GROUP CO.
NOTES TO ADJUSTED NET OPERATING INCOME
| (A) | Represents total open block realized gains or losses on investments. Open block realized gains or losses may vary widely between periods. Such amounts are determined by management’s timing of individual transactions or current market conditions and do not necessarily correspond to the underlying operating trends. | |
| (B) | Represents amortization of DAC and VOBA on the open block realized gains or losses that are included in our product margins. | |
| (C) | Represents the net effect of SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” related accounting entries. The accounting entries consist of cash flow hedge amortization, market value adjustments on trading securities, derivatives, certain annuity contracts, and the associated change in amortization of DAC and VOBA resulting from such adjustments. | |
| (D) | Represents costs directly related to our demutualizations. The costs consist primarily of legal, actuarial and consulting expenses. | |
| (E) | Represents costs of restructuring our operations to eliminate duplicative functions. The costs consist primarily of relocation of employees, severance and termination benefits, and systems conversion. | |
| (F) | Represents the net income from our residential financing and property operations which is not part of our core insurance operations. | |
| (G) | Represents the cumulative effect of change in accounting for derivatives, as of January 1, 2001, resulting from our adoption of SFAS No. 133. |
AMERUS GROUP CO.
CONSOLIDATED STATEMENTS OF INCOME
($ in thousands, except share data)
| For The Three Months Ended | For The Year Ended | ||||||||||||||||
| December 31, | December 31, | ||||||||||||||||
| 2002 | 2001 | 2002 | 2001 | ||||||||||||||
| Revenues: | |||||||||||||||||
| Insurance premiums | $ | 86,956 | $ | 90,085 | $ | 350,812 | $ | 305,905 | |||||||||
| Universal life and annuity product charges | 37,118 | 39,535 | 161,510 | 146,055 | |||||||||||||
| Net investment income | 249,953 | 253,010 | 994,007 | 873,174 | |||||||||||||
| Realized (losses) on investments | (46,691 | ) | (9,956 | ) | (104,710 | ) | (30,579 | ) | |||||||||
| Unrealized (losses) on investments | 19,346 | 16,636 | (45,209 | ) | (60,050 | ) | |||||||||||
| Other income | 18,418 | 11,906 | 71,986 | 47,024 | |||||||||||||
| 365,100 | 401,216 | 1,428,396 | 1,281,529 | ||||||||||||||
| Benefits and expenses: | |||||||||||||||||
| Policyowner benefits | 230,653 | 252,892 | 890,688 | 753,003 | |||||||||||||
| Underwriting, acquisition and other expenses | 37,328 | 33,216 | 152,749 | 140,471 | |||||||||||||
| Demutualization costs | — | 518 | 1,186 | 969 | |||||||||||||
| Restructuring costs | 10,445 | 2,039 | 21,225 | 8,566 | |||||||||||||
| Amortization of deferred policy acquisition costs and value of business acquired | 36,114 | 46,387 | 139,565 | 132,899 | |||||||||||||
| Dividends to policyowners | 32,866 | 30,529 | 104,866 | 98,945 | |||||||||||||
| 347,406 | 365,581 | 1,310,279 | 1,134,853 | ||||||||||||||
| Income from continuing operations | 17,694 | 35,635 | 118,117 | 146,676 | |||||||||||||
| Interest expense | 6,709 | 5,295 | 25,487 | 26,011 | |||||||||||||
| Income before income tax expense | 10,985 | 30,340 | 92,630 | 120,665 | |||||||||||||
| Income tax expense | 3,786 | 10,806 | 29,764 | 39,522 | |||||||||||||
| Net income from continuing operations | 7,199 | 19,534 | 62,866 | 81,143 | |||||||||||||
| Cumulative effect of change in accounting for derivatives, net of tax | — | — | — | (8,236 | ) | ||||||||||||
| Net income | $ | 7,199 | $ | 19,534 | $ | 62,866 | $ | 72,907 | |||||||||
| Net income from continuing operations per common share: | |||||||||||||||||
| Basic | $ | 0.18 | $ | 0.47 | $ | 1.57 | $ | 2.20 | |||||||||
| Diluted | $ | 0.18 | $ | 0.46 | $ | 1.56 | $ | 2.17 | |||||||||
| Net income per common share: | |||||||||||||||||
| Basic | $ | 0.18 | $ | 0.47 | $ | 1.57 | $ | 1.97 | |||||||||
| Diluted | $ | 0.18 | $ | 0.46 | $ | 1.56 | $ | 1.95 | |||||||||
| Weighted average common shares outstanding: | |||||||||||||||||
| Basic | 38,919,178 | 41,741,649 | 39,972,328 | 36,949,198 | |||||||||||||
| Diluted | 39,168,989 | 42,288,468 | 40,398,378 | 37,453,428 | |||||||||||||
AMERUS GROUP CO.
CONSOLIDATED BALANCE SHEETS
($ in thousands)
| December 31, | |||||||||||
| 2002 | 2001 | ||||||||||
| Assets | |||||||||||
| Investments: | |||||||||||
| Securities available-for-sale at fair value: | |||||||||||
| Fixed maturity securities | $ | 13,328,902 | $ | 11,037,425 | |||||||
| Equity securities | 63,345 | 11,362 | |||||||||
| Short-term investments | 32,318 | 14,881 | |||||||||
| Securities held for trading purposes: | |||||||||||
| Fixed maturity securities | 1,843,868 | 2,175,106 | |||||||||
| Equity securities | — | 12,013 | |||||||||
| Short-term investments | — | 4,212 | |||||||||
| Mortgage loans | 883,034 | 944,532 | |||||||||
| Real estate | 476 | 1,405 | |||||||||
| Policy loans | 496,753 | 506,318 | |||||||||
| Other investments | 283,794 | 345,179 | |||||||||
| Total investments | 16,932,490 | 15,052,433 | |||||||||
| Cash and cash equivalents | 102,612 | 179,376 | |||||||||
| Accrued investment income | 185,660 | 174,238 | |||||||||
| Premiums, fees and other receivables | 13,082 | 9,920 | |||||||||
| Reinsurance receivables | 865,930 | 732,030 | |||||||||
| Deferred policy acquisition costs | 884,239 | 642,680 | |||||||||
| Value of business acquired | 454,159 | 583,829 | |||||||||
| Goodwill | 218,995 | 195,484 | |||||||||
| Property and equipment | 74,188 | 83,221 | |||||||||
| Deferred income taxes | — | 12,140 | |||||||||
| Other assets | 326,397 | 305,416 | |||||||||
| Separate account assets | 235,913 | 328,385 | |||||||||
| Total assets | $ | 20,293,665 | $ | 18,299,152 | |||||||
AMERUS GROUP CO.
CONSOLIDATED BALANCE SHEETS
($ in thousands)
| December 31, | ||||||||||||
| 2002 | 2001 | |||||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||
| Liabilities: | ||||||||||||
| Policy reserves and policyowner funds: | ||||||||||||
| Future life and annuity policy benefits | $ | 16,244,016 | $ | 15,102,001 | ||||||||
| Policyowner funds | 1,335,144 | 432,941 | ||||||||||
| 17,579,160 | 15,534,942 | |||||||||||
| Accrued expenses and other liabilities | 283,836 | 512,500 | ||||||||||
| Dividends payable to policyowners | 303,062 | 221,224 | ||||||||||
| Policy and contract claims | 39,569 | 33,147 | ||||||||||
| Income taxes payable | 57,753 | 45,809 | ||||||||||
| Deferred income taxes | 20,071 | — | ||||||||||
| Notes payable | 511,353 | 384,628 | ||||||||||
| Separate account liabilities | 235,913 | 328,385 | ||||||||||
| Total liabilities | 19,030,717 | 17,060,635 | ||||||||||
| Stockholders’ equity: | ||||||||||||
| Preferred Stock, no par value, 20,000,000 shares authorized, none issued | — | — | ||||||||||
| Common Stock, no par value, 230,000,000 shares authorized; 43,656,280 shares issued and 39,011,578 shares outstanding in 2002; 43,505,998 shares issued and 41,759,450 shares outstanding in 2001 | 43,656 | 43,506 | ||||||||||
| Additional paid-in capital | 1,179,646 | 1,177,688 | ||||||||||
| Accumulated other comprehensive income | 88,522 | 12,669 | ||||||||||
| Unearned compensation | (458 | ) | (727 | ) | ||||||||
| Unallocated ESOP shares | (1,443 | ) | (224 | ) | ||||||||
| Retained earnings | 109,517 | 62,187 | ||||||||||
| Treasury stock, at cost (4,644,702 shares in 2002 and 1,746,548 shares in 2001) | (156,492 | ) | (56,582 | ) | ||||||||
| Total stockholders’ equity | 1,262,948 | 1,238,517 | ||||||||||
| Total liabilities and stockholders’ equity | $ | 20,293,665 | $ | 18,299,152 | ||||||||
AMERUS GROUP CO.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
($ in thousands)
| Accumulated | |||||||||||||||||||||||||||||||||||||
| Additional | Other | Unallocated | Total | ||||||||||||||||||||||||||||||||||
| Paid-In | Comprehensive | Unearned | ESOP | Unassigned | Retained | Treasury | Stockholders' | ||||||||||||||||||||||||||||||
| Common Stock | Capital | Income (Loss) | Compensation | Shares | Surplus | Earnings | Stock | Equity | |||||||||||||||||||||||||||||
| Balance at December 31, 1999 | $ | — | $ | — | $ | (67,948 | ) | $ | (187 | ) | $ | (797 | ) | $ | 840,962 | $ | — | $ | — | $ | 772,030 | ||||||||||||||||
| 2000: | |||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | 33,801 | 18,039 | — | 51,840 | ||||||||||||||||||||||||||||
| Net unrealized gain (loss) on securities | — | — | 50,937 | — | — | — | — | — | 50,937 | ||||||||||||||||||||||||||||
| Stock issued under various incentive plans, net of forfeitures | 6 | 169 | — | 105 | — | 273 | — | — | 553 | ||||||||||||||||||||||||||||
| Dividends declared on common stock | — | — | — | — | — | — | (11,972 | ) | — | (11,972 | ) | ||||||||||||||||||||||||||
| Allocation of shares in leveraged ESOP | — | 600 | — | — | 695 | — | — | — | 1,295 | ||||||||||||||||||||||||||||
| Minority interest ownership changes | — | — | (177 | ) | — | (2 | ) | 94 | — | — | (85 | ) | |||||||||||||||||||||||||
| Acquisition of minority interest | 12,615 | 285,405 | — | — | — | — | — | — | 298,020 | ||||||||||||||||||||||||||||
| Demutualization of AmerUs Group | 17,390 | 518,535 | — | (64 | ) | (579 | ) | (875,130 | ) | — | — | (339,848 | ) | ||||||||||||||||||||||||
| Other | — | 5,185 | — | — | — | — | — | — | 5,185 | ||||||||||||||||||||||||||||
| Balance at December 31, 2000 | 30,011 | 809,894 | (17,188 | ) | (146 | ) | (683 | ) | — | 6,067 | — | 827,955 | |||||||||||||||||||||||||
| 2001: | |||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | 72,907 | — | 72,907 | ||||||||||||||||||||||||||||
| Change in accounting for derivatives | — | — | 2,661 | — | — | — | — | — | 2,661 | ||||||||||||||||||||||||||||
| Transfer related to unrealized gain on available-for-sale securities reclassified to trading | — | — | (430 | ) | — | — | — | — | — | (430 | ) | ||||||||||||||||||||||||||
| Net unrealized gain (loss) on securities | — | — | 35,891 | — | — | — | — | — | 35,891 | ||||||||||||||||||||||||||||
| Net unrealized gain (loss) on derivatives designated as cash flow hedges | — | — | (5,933 | ) | — | — | — | — | — | (5,933 | ) | ||||||||||||||||||||||||||
| Stock issued under various incentive plans, net of forfeitures | 206 | 5,861 | — | (581 | ) | — | — | — | 108 | 5,594 | |||||||||||||||||||||||||||
| Stock issued under exercise of warrants | — | (1,383 | ) | — | — | — | — | — | 4,468 | 3,085 | |||||||||||||||||||||||||||
| Dividends declared on common stock | — | — | — | — | — | — | (16,787 | ) | — | (16,787 | ) | ||||||||||||||||||||||||||
| Purchase of treasury stock | — | — | — | — | — | — | — | (44,985 | ) | (44,985 | ) | ||||||||||||||||||||||||||
| Acquisition of IL Holdings | 9,047 | 223,358 | — | — | — | — | — | — | 232,405 | ||||||||||||||||||||||||||||
| Conversion of company-obligated mandatorily redeemable preferred capital securities | 4,242 | 139,478 | — | — | — | — | — | (16,173 | ) | 127,547 | |||||||||||||||||||||||||||
| Allocation of shares in leveraged ESOP | — | 480 | — | — | 459 | — | — | — | 939 | ||||||||||||||||||||||||||||
| Minimum pension liability adjustment | — | — | (2,332 | ) | — | — | — | — | — | (2,332 | ) | ||||||||||||||||||||||||||
| Balance at December 31, 2001 | 43,506 | 1,177,688 | 12,669 | (727 | ) | (224 | ) | — | 62,187 | (56,582 | ) | 1,238,517 | |||||||||||||||||||||||||
| 2002: | |||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | 62,866 | — | 62,866 | ||||||||||||||||||||||||||||
| Net unrealized gain on securities | — | — | 73,646 | — | — | — | — | — | 73,646 | ||||||||||||||||||||||||||||
| Net unrealized gain on derivatives designated as cash flow hedges | — | — | 3,434 | — | — | — | — | — | 3,434 | ||||||||||||||||||||||||||||
| Stock issued under various incentive plans, net of forfeitures | 150 | 5,730 | — | 269 | — | — | — | 1 | 6,150 | ||||||||||||||||||||||||||||
| Stock issued under exercise of warrants | — | (3,802 | ) | — | — | — | — | — | 12,205 | 8,403 | |||||||||||||||||||||||||||
| Purchase of treasury stock and ESOP shares | — | — | — | — | (2,522 | ) | — | — | (112,116 | ) | (114,638 | ) | |||||||||||||||||||||||||
| Dividends declared on common stock | — | — | — | — | — | — | (15,536 | ) | — | (15,536 | ) | ||||||||||||||||||||||||||
| Allocation of shares in leveraged ESOP | — | 30 | — | — | 1,303 | — | — | — | 1,333 | ||||||||||||||||||||||||||||
| Minimum pension liability adjustment | — | — | (1,227 | ) | — | — | — | — | — | (1,227 | ) | ||||||||||||||||||||||||||
| Balance at December 31, 2002 | $ | 43,656 | $ | 1,179,646 | $ | 88,522 | $ | (458 | ) | $ | (1,443 | ) | $ | — | $ | 109,517 | $ | (156,492 | ) | $ | 1,262,948 | ||||||||||||||||