EXHIBIT 99.3
AmerUs Group Co.
Financial Supplement
Fourth Quarter 2003
AmerUs Group Co.
Financial Highlights
($ in thousands, except for per share data)
For The Three Months Ended | For the Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
Earnings: | 2003 | 2002 | 2003 | 2002 | ||||||||||||
Net Income | $ | 40,811 | $ | 7,199 | $ | 161,147 | $ | 62,866 | ||||||||
Adjustments for: | ||||||||||||||||
Realized (gains) losses on open block investments | (1,221 | ) | 29,986 | (20,941 | ) | 66,386 | ||||||||||
Net amortization of DAC and VOBA due to open block gains or losses | (499 | ) | (3,994 | ) | 5,989 | (10,869 | ) | |||||||||
Net effect of accounting differences from SFAS 133 | (5,165 | ) | (2,769 | ) | (8,553 | ) | 14,638 | |||||||||
Demutualization costs | — | — | — | 1,186 | ||||||||||||
Restructuring costs | 3,767 | 6,581 | 14,989 | 13,225 | ||||||||||||
Other income from non-insurance operations | (312 | ) | (336 | ) | (742 | ) | (814 | ) | ||||||||
Reinsurance adjustments | — | — | (2,505 | ) | — | |||||||||||
Income from discontinued operations | (247 | ) | (617 | ) | (1,815 | ) | (2,084 | ) | ||||||||
Cumulative effect of change in accounting | 1,296 | — | 1,296 | — | ||||||||||||
Adjusted Net Operating Income (1) | $ | 38,430 | $ | 36,050 | $ | 148,865 | $ | 144,534 | ||||||||
Basic Earnings Per Share: | ||||||||||||||||
Adjusted Net Operating Income per Share (2) | $ | 0.98 | $ | 0.93 | $ | 3.80 | $ | 3.62 | ||||||||
Net Income per Share | $ | 1.04 | $ | 0.18 | $ | 4.11 | $ | 1.57 | ||||||||
Weighted Average Shares Outstanding | 39,268 | 38,919 | 39,176 | 39,972 | ||||||||||||
Diluted Earnings Per Share: | ||||||||||||||||
Adjusted Net Operating Income per Share (2) | $ | 0.96 | $ | 0.92 | $ | 3.76 | $ | 3.58 | ||||||||
Net Income per Share | $ | 1.02 | $ | 0.18 | $ | 4.07 | $ | 1.56 | ||||||||
Weighted Average Shares Outstanding | 40,133 | 39,169 | 39,618 | 40,398 |
Capitalization: | 12/31/2003 | 12/31/2002 | ||||||
Bank Borrowings | $ | 27,000 | $ | 113,000 | ||||
Senior Notes | 125,000 | 125,000 | ||||||
PRIDES | 143,750 | — | ||||||
OCEANs | 187,723 | 186,233 | ||||||
Surplus Note | 25,000 | 25,000 | ||||||
Other Borrowings | 36,873 | 13,871 | ||||||
Total Notes Payable | 545,346 | 463,104 | ||||||
Capital Securities — AmerUs Capital I | 50,755 | 48,095 | ||||||
Capital Securities — AmerUs Capital II | 0 | 154 | ||||||
Total Debt | 596,101 | 511,353 | ||||||
Stockholders’ Equity (excluding AOCI) (5) | 1,325,292 | 1,174,426 | ||||||
Total Capitalization (excluding AOCI) (5) | $ | 1,921,393 | $ | 1,685,779 | ||||
AOCI — unrealized Gains / (Losses) | 87,765 | 88,522 | ||||||
Total Capitalization (including AOCI) | $ | 2,009,158 | $ | 1,774,301 | ||||
Book Value per Share (3): | ||||||||
including AOCI | $ | 36.05 | $ | 32.37 | ||||
excluding AOCI | $ | 33.81 | $ | 30.10 | ||||
Debt-to-Capital Ratio (4): | ||||||||
Standard & Poor’s | 16.02 | % | 16.42 | % | ||||
Moody’s | 24.84 | % | 27.57 | % |
(1) | The Company views Adjusted Net Operating Income, a non-GAAP financial measure, as an important indicator of financial performance. When presented with net income, the combined presentation can enhance an investor’s understanding of AmerUs Group’s underlying profitability and normalized results from operations. Non-GAAP measures are also used for goal setting, determining employee and management compensation and evaluating our performance on a comparable basis to that used by security analysts. | |
(2) | Adjusted Net Operating Income per Share is a non-GAAP financial measure which is derived from Adjusted Net Operating Income in the same manner that Net Income per Share is derived from Net Income. Management uses this measure for the reasons and purposes detailed in footnote (1) above. | |
(3) | Common shares outstanding at 12/31/2003 and 12/31/2002 were 39,194,602 and 39,011,578, respectively. | |
(4) | Debt-to-Capital Ratio excludes AOCI. For Standard & Poor’s, the OCEANs, PRIDES, AmerUs Capital I and AmerUs Capital II are treated as 100% equity, except to the extent the sum of these securities exceeds 15% of total capitalization. The amount in excess of 15% of capitalization was $94,019 and none as of December 31, 2003 and 2002, respectively. For Moody’s, AmerUs Capital I and AmerUs Capital II are treated as 100% debt, the OCEANs are treated as 75% debt and 25% equity, and the PRIDES are treated as 50% debt and 50% equity. | |
(5) | Management believes that excluding accumulated other comprehensive income assists investors in understanding the underlying performance of the Company by eliminating the effect of unrealized gains and losses on available for sale investment securities which fluctuate with market conditions. |
Page 2
AmerUs Group Co.
Consolidated Income Statement
($ in thousands)
For The Three Months Ended | For the Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2003 | 2002 | 2003 | 2002 | |||||||||||||
Revenues: | ||||||||||||||||
Insurance premiums | $ | 71,593 | $ | 88,040 | $ | 297,188 | $ | 351,300 | ||||||||
Product charges | 45,186 | 33,383 | 181,354 | 144,494 | ||||||||||||
Net investment income | 250,816 | 252,858 | 1,001,914 | 1,001,257 | ||||||||||||
Realized/unrealized gains (losses) on investments | 55,926 | (27,345 | ) | 131,291 | (149,919 | ) | ||||||||||
Other income: | ||||||||||||||||
Income from Independent Marketing Organizations | 13,006 | 12,420 | 50,214 | 48,642 | ||||||||||||
Other | 4,832 | 4,969 | 18,084 | 19,871 | ||||||||||||
Total Revenue | 441,359 | 364,325 | 1,680,045 | 1,415,645 | ||||||||||||
Benefits and Expenses: | ||||||||||||||||
Policyowner benefits — traditional life | 83,820 | 81,724 | 297,522 | 328,936 | ||||||||||||
Policyowner benefits — SFAS 97 products | 183,191 | 146,519 | 642,636 | 542,956 | ||||||||||||
Underwriting, acquisition and other expenses: | ||||||||||||||||
Operating expenses | 30,849 | 30,430 | 115,666 | 127,722 | ||||||||||||
Expenses from Independent Marketing Organizations | 10,086 | 9,561 | 39,802 | 34,545 | ||||||||||||
Demutualization costs | — | — | — | 1,186 | ||||||||||||
Restructuring costs | 5,879 | 10,445 | 23,294 | 21,225 | ||||||||||||
Amortization — DAC/VOBA | 42,128 | 41,214 | 177,083 | 154,567 | ||||||||||||
Amortization — DAC/VOBA realized gains / (losses) | 3,457 | (5,100 | ) | 16,257 | (15,002 | ) | ||||||||||
Total underwriting, acquisition and other expenses | 92,399 | 86,550 | 372,102 | 324,243 | ||||||||||||
Interest expense: | ||||||||||||||||
Interest on bank debt | 24 | 789 | 1,586 | 2,420 | ||||||||||||
Interest on Senior Notes | 2,172 | 2,172 | 8,687 | 8,688 | ||||||||||||
Interest on Capital Securities (AmerUs Capital I) | 1,064 | 1,065 | 4,256 | 4,717 | ||||||||||||
Interest on Capital Securities (AmerUs Capital II) | — | 3 | 7 | 12 | ||||||||||||
Interest on PRIDES | 1,998 | — | 4,728 | — | ||||||||||||
Interest on OCEANs | 1,839 | 1,836 | 7,354 | 6,120 | ||||||||||||
Interest on Surplus Note | 541 | 541 | 2,165 | 2,165 | ||||||||||||
Interest on other borrowings | 279 | 303 | 1,371 | 1,365 | ||||||||||||
Total interest expense | 7,917 | 6,709 | 30,154 | 25,487 | ||||||||||||
Dividends to policyowners | 12,063 | 32,866 | 98,393 | 104,866 | ||||||||||||
Income before income tax expense | 61,969 | 9,957 | 239,238 | 89,157 | ||||||||||||
Income tax (expense) | (20,109 | ) | (3,375 | ) | (78,610 | ) | (28,375 | ) | ||||||||
Income from discontinued operations, net of tax | 247 | 617 | 1,815 | 2,084 | ||||||||||||
Cumulative effect of change in accounting, net of tax | (1,296 | ) | — | (1,296 | ) | — | ||||||||||
Net income | $ | 40,811 | $ | 7,199 | $ | 161,147 | $ | 62,866 | ||||||||
Weighted Average Common Shares Outstanding: | ||||||||||||||||
Basic | 39,268,068 | 38,919,178 | 39,175,924 | 39,972,328 | ||||||||||||
Diluted | 40,133,053 | 39,168,989 | 39,618,217 | 40,398,378 |
Page 3
AmerUs Group Co.
Operating Segment Income
($ in thousands)
For The Three Months Ended December 31, 2003 | ||||||||||||||||
Protection | Accumulation | Total | ||||||||||||||
Products | Products | All Other | Consolidated | |||||||||||||
Revenues: | ||||||||||||||||
Insurance premiums | $ | 71,394 | $ | 391 | $ | (192 | ) | $ | 71,593 | |||||||
Product charges | 33,302 | 11,884 | — | 45,186 | ||||||||||||
Net investment income | 80,668 | 167,930 | 2,218 | 250,816 | ||||||||||||
Realized gains (losses) on closed block investments | (1,932 | ) | — | — | (1,932 | ) | ||||||||||
Other income | 1,141 | 15,887 | 288 | 17,316 | ||||||||||||
184,573 | 196,092 | 2,314 | 382,979 | |||||||||||||
Benefits and expenses: | ||||||||||||||||
Policyowner benefits | 108,157 | 114,866 | 188 | 223,211 | ||||||||||||
Underwriting, acquisition, and other expenses | 16,818 | 16,974 | 7,143 | 40,935 | ||||||||||||
Amortization of DAC and VOBA, net of open block gain/loss adjustment of $3,457 | 14,790 | 27,338 | — | 42,128 | ||||||||||||
Dividends to policyowners | 12,063 | — | — | 12,063 | ||||||||||||
151,828 | 159,178 | 7,331 | 318,337 | |||||||||||||
Segment pre-tax operating income | $ | 32,745 | $ | 36,914 | $ | (5,017 | ) | 64,642 | ||||||||
Realized gains (losses) on open block investments | 1,888 | |||||||||||||||
Unrealized gains (losses) on open block options and trading investments | 55,970 | |||||||||||||||
Change in option value of equity-indexed products and market value adjustments on total return strategy annuities | (43,214 | ) | ||||||||||||||
Cash flow hedge amortization | (586 | ) | ||||||||||||||
Amortization of DAC and VOBA due to open block gains and losses | (3,457 | ) | ||||||||||||||
Restructuring costs | (5,879 | ) | ||||||||||||||
Other income from non-insurance operations | 522 | |||||||||||||||
Income from continuing operations | 69,886 | |||||||||||||||
Interest (expense) | (7,917 | ) | ||||||||||||||
Income tax (expense) | (20,109 | ) | ||||||||||||||
Income from discontinued operations, net of tax | 247 | |||||||||||||||
Cumulative effect of change in accounting, net of tax | (1,296 | ) | ||||||||||||||
Net income | $ | 40,811 | ||||||||||||||
Page 4
AmerUs Group Co.
Operating Segment Income
($ in thousands)
For The Three Months Ended December 31, 2002 | ||||||||||||||||
Protection | Accumulation | Total | ||||||||||||||
Products | Products | All Other | Consolidated | |||||||||||||
Revenues: | ||||||||||||||||
Insurance premiums | $ | 85,172 | $ | 2,936 | �� | $ | (68 | ) | $ | 88,040 | ||||||
Product charges | 23,318 | 10,065 | — | 33,383 | ||||||||||||
Net investment income | 87,067 | 164,183 | 1,608 | 252,858 | ||||||||||||
Realized gains (losses) on closed block investments | (520 | ) | — | — | (520 | ) | ||||||||||
Other income | 1,013 | 15,458 | 350 | 16,821 | ||||||||||||
196,050 | 192,642 | 1,890 | 390,582 | |||||||||||||
Benefits and expenses: | ||||||||||||||||
Policyowner benefits | 92,382 | 120,940 | 878 | 214,200 | ||||||||||||
Underwriting, acquisition, and other expenses | 17,317 | 19,774 | 2,900 | 39,991 | ||||||||||||
Amortization of DAC and VOBA, net of open block gain/loss adjustment of ($5,100) | 19,142 | 22,072 | — | 41,214 | ||||||||||||
Dividends to policyowners | 32,866 | — | — | 32,866 | ||||||||||||
161,707 | 162,786 | 3,778 | 328,271 | |||||||||||||
Segment pre-tax operating income | $ | 34,343 | $ | 29,856 | $ | (1,888 | ) | 62,311 | ||||||||
Realized gains (losses) on open block investments | (46,171 | ) | ||||||||||||||
Unrealized gains (losses) on open block options and trading investments | 19,346 | |||||||||||||||
Change in option value of equity-indexed products and market value adjustments on total return strategy annuities | (12,351 | ) | ||||||||||||||
Cash flow hedge amortization | (1,692 | ) | ||||||||||||||
Amortization of DAC and VOBA due to open block gains and losses | 5,100 | |||||||||||||||
Restructuring costs | (10,445 | ) | ||||||||||||||
Other income from non-insurance operations | 568 | |||||||||||||||
Income from continuing operations | 16,666 | |||||||||||||||
Interest (expense) | (6,709 | ) | ||||||||||||||
Income tax (expense) | (3,375 | ) | ||||||||||||||
Income from discontinued operations, net of tax | 617 | |||||||||||||||
Net income | $ | 7,199 | ||||||||||||||
Page 5
AmerUs Group Co.
Operating Segment Income
($ in thousands)
For the Year Ended December 31, 2003 | ||||||||||||||||
Protection | Accumulation | Total | ||||||||||||||
Products | Products | All Other | Consolidated | |||||||||||||
Revenues: | ||||||||||||||||
Insurance premiums | $ | 290,707 | $ | 4,114 | $ | 787 | $ | 295,608 | ||||||||
Product charges | 138,215 | 43,139 | — | 181,354 | ||||||||||||
Net investment income | 321,532 | 672,141 | 8,241 | 1,001,914 | ||||||||||||
Realized gains (losses) on closed block investments | 9,326 | — | — | 9,326 | ||||||||||||
Other income | 4,224 | 61,849 | 988 | 67,061 | ||||||||||||
764,004 | 781,243 | 10,016 | 1,555,263 | |||||||||||||
Benefits and expenses: | ||||||||||||||||
Policyowner benefits | 387,068 | 478,256 | (626 | ) | 864,698 | |||||||||||
Underwriting, acquisition, and other expenses | 76,042 | 69,225 | 18,367 | 163,634 | ||||||||||||
Amortization of DAC and VOBA, net of open block gain/loss adjustment of $16,257 | 74,211 | 102,872 | — | 177,083 | ||||||||||||
Dividends to policyowners | 98,393 | — | — | 98,393 | ||||||||||||
635,714 | 650,353 | 17,741 | 1,303,808 | |||||||||||||
Segment pre-tax operating income | $ | 128,290 | $ | 130,890 | $ | (7,725 | ) | 251,455 | ||||||||
Realized gains (losses) on open block investments | 32,196 | |||||||||||||||
Unrealized gains (losses) on open block options and trading investments | 89,769 | |||||||||||||||
Change in option value of equity-indexed products and market value adjustments on total return strategy annuities | (65,741 | ) | ||||||||||||||
Cash flow hedge amortization | (3,827 | ) | ||||||||||||||
Amortization of DAC and VOBA due to open block gains and losses | (16,257 | ) | ||||||||||||||
Reinsurance adjustments | 3,854 | |||||||||||||||
Restructuring costs | (23,294 | ) | ||||||||||||||
Other income from non-insurance operations | 1,237 | |||||||||||||||
Income from continuing operations | 269,392 | |||||||||||||||
Interest (expense) | (30,154 | ) | ||||||||||||||
Income tax (expense) | (78,610 | ) | ||||||||||||||
Income from discontinued operations, net of tax | 1,815 | |||||||||||||||
Cumulative effect of change in accounting, net of tax | (1,296 | ) | ||||||||||||||
Net income | $ | 161,147 | ||||||||||||||
Page 6
AmerUs Group Co.
Operating Segment Income
($ in thousands)
For the Year Ended December 31, 2002 | ||||||||||||||||
Protection | Accumulation | Total | ||||||||||||||
Products | Products | All Other | Consolidated | |||||||||||||
Revenues: | ||||||||||||||||
Insurance premiums | $ | 341,602 | $ | 8,702 | $ | 996 | $ | 351,300 | ||||||||
Product charges | 103,145 | 41,349 | — | 144,494 | ||||||||||||
Net investment income | 335,111 | 660,470 | 5,676 | 1,001,257 | ||||||||||||
Realized gains (losses) on closed block investments | (2,400 | ) | — | — | (2,400 | ) | ||||||||||
Other income | 4,026 | 60,420 | 2,675 | 67,121 | ||||||||||||
781,484 | 770,941 | 9,347 | 1,561,772 | |||||||||||||
Benefits and expenses: | ||||||||||||||||
Policyowner benefits | 403,293 | 490,401 | 2,606 | 896,300 | ||||||||||||
Underwriting, acquisition, and other expenses | 80,319 | 68,585 | 13,363 | 162,267 | ||||||||||||
Amortization of DAC and VOBA, net of open block gain/loss of ($15,002) | 63,267 | 91,300 | — | 154,567 | ||||||||||||
Dividends to policyowners | 104,866 | — | — | 104,866 | ||||||||||||
651,745 | 650,286 | 15,969 | 1,318,000 | |||||||||||||
Segment pre-tax operating income | $ | 129,739 | $ | 120,655 | $ | (6,622 | ) | 243,772 | ||||||||
Realized gains (losses) on open block investments | (102,310 | ) | ||||||||||||||
Unrealized gains (losses) on open block options and trading investments | (45,209 | ) | ||||||||||||||
Change in option value of equity-indexed products and market value adjustments on total return strategy annuities | 28,759 | |||||||||||||||
Cash flow hedge amortization | (4,351 | ) | ||||||||||||||
Amortization of DAC and VOBA due to open block gains and losses | 15,002 | |||||||||||||||
Demutualization costs | (1,186 | ) | ||||||||||||||
Restructuring costs | (21,225 | ) | ||||||||||||||
Other income from non-insurance operations | 1,392 | |||||||||||||||
Income from continuing operations | 114,644 | |||||||||||||||
Interest (expense) | (25,487 | ) | ||||||||||||||
Income tax (expense) | (28,375 | ) | ||||||||||||||
Income from discontinued operations, net of tax | 2,084 | |||||||||||||||
Net income | $ | 62,866 | ||||||||||||||
Page 7
AmerUs Group Co.
Consolidated Balance Sheets
($ in thousands)
December 31, | December 31, | |||||||
ASSETS: | 2003 | 2002 | ||||||
Investments: | ||||||||
Securities available-for-sale at fair value: | ||||||||
Fixed maturity securities | $ | 13,944,961 | $ | 13,328,902 | ||||
Equity securities | 74,890 | 63,345 | ||||||
Short-term investments | 28,556 | 32,318 | ||||||
Securities held for trading purposes: | ||||||||
Fixed maturity securities | 2,089,502 | 1,843,868 | ||||||
Equity securities | 1,652 | — | ||||||
Short-term investments | 591 | — | ||||||
Mortgage loans | 968,572 | 883,034 | ||||||
Real estate | 33 | 476 | ||||||
Policy loans | 494,646 | 496,753 | ||||||
Other investments | 339,436 | 283,794 | ||||||
Total investments | 17,942,839 | 16,932,490 | ||||||
Cash and cash equivalents | 274,150 | 102,612 | ||||||
Accrued investment income | 205,492 | 185,660 | ||||||
Premiums, fees and other receivables | 42,761 | 13,082 | ||||||
Reinsurance receivables | 663,452 | 865,930 | ||||||
Deferred policy acquisition costs | 1,120,130 | 884,239 | ||||||
Value of business acquired | 419,582 | 454,159 | ||||||
Goodwill | 224,075 | 218,995 | ||||||
Property and equipment | 48,849 | 74,188 | ||||||
Other assets | 311,331 | 296,994 | ||||||
Separate account assets | 261,657 | 235,913 | ||||||
Assets of discontinued operations | 27,950 | 29,403 | ||||||
Total Assets | $ | 21,542,268 | $ | 20,293,665 | ||||
Page 8
AmerUs Group Co.
Consolidated Balance Sheets
($ in thousands)
December 31, | December 31, | |||||||
LIABILITIES: | 2003 | 2002 | ||||||
Policyowner reserves and policyowner funds: | ||||||||
Future life and annuity policy benefits | $ | 16,994,255 | $ | 16,244,016 | ||||
Policyowner funds | 1,306,160 | 1,335,144 | ||||||
Sub-total | 18,300,415 | 17,579,160 | ||||||
Accrued expenses and other liabilities | 438,622 | 261,147 | ||||||
Dividends payable to policyowners | 321,233 | 303,062 | ||||||
Policy and contract claims | 58,880 | 39,569 | ||||||
Income taxes payable | 65,202 | 61,325 | ||||||
Deferred income taxes | 67,680 | 16,499 | ||||||
Notes payable: | ||||||||
Bank debt | 27,000 | 113,000 | ||||||
Senior notes | 125,000 | 125,000 | ||||||
PRIDES | 143,750 | — | ||||||
OCEANs | 187,723 | 186,233 | ||||||
Surplus note | 25,000 | 25,000 | ||||||
AmerUs Capital I | 50,755 | 48,095 | ||||||
AmerUs Capital II | — | 154 | ||||||
Other borrowings | 36,873 | 13,871 | ||||||
Separate account liabilities | 261,657 | 235,913 | ||||||
Liabilities of discontinued operations | 19,421 | 22,689 | ||||||
Total Liabilities | 20,129,211 | 19,030,717 | ||||||
STOCKHOLDERS’ EQUITY: | ||||||||
Preferred Stock, no par value, 20,000,000 shares authorized, none issued | — | — | ||||||
Common Stock, no par value, 230,000,000 shares authorized; | 43,839 | 43,656 | ||||||
43,839,304 shares issued and 39,194,602 shares outstanding in 2003; 43,656,280 shares issued and 39,011,578 shares outstanding in 2002 Additional paid-in capital | 1,184,300 | 1,179,646 | ||||||
Accumulated other comprehensive income (loss) | 87,765 | 88,522 | ||||||
Unearned compensation | (1,361 | ) | (458 | ) | ||||
Unallocated ESOP shares | — | (1,443 | ) | |||||
Retained earnings | 255,006 | 109,517 | ||||||
Treasury stock, at cost (4,644,702 shares in 2003 and 2002) | (156,492 | ) | (156,492 | ) | ||||
Total Stockholders’ Equity | 1,413,057 | 1,262,948 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 21,542,268 | $ | 20,293,665 | ||||
Page 9
AmerUs Group Co.
Consolidated Balance Sheet
($ in thousands)
December 31, 2003
AOCI | Without | |||||||||||
ASSETS: | GAAP | Adjustment | AOCI Adjustments (1) | |||||||||
Investments: | ||||||||||||
Securities available-for-sale at fair value: | ||||||||||||
Fixed maturity securities | $ | 13,944,961 | $ | (470,059 | ) | $ | 13,474,902 | |||||
Equity securities | 74,890 | (2,094 | ) | 72,796 | ||||||||
Short-term investments | 28,556 | (674 | ) | 27,882 | ||||||||
Securities held for trading purposes: | ||||||||||||
Fixed maturity securities | 2,089,502 | — | 2,089,502 | |||||||||
Equity securities | 1,652 | — | 1,652 | |||||||||
Short-term investments | 591 | — | 591 | |||||||||
Mortgage loans | 968,572 | — | 968,572 | |||||||||
Real estate | 33 | — | 33 | |||||||||
Policy loans | 494,646 | — | 494,646 | |||||||||
Other investments | 339,436 | (497 | ) | 338,939 | ||||||||
Total invested assets | 17,942,839 | (473,324 | ) | 17,469,515 | ||||||||
Cash and cash equivalents | 274,150 | — | 274,150 | |||||||||
Accrued investment income | 205,492 | — | 205,492 | |||||||||
Premiums, fees and other receivables | 42,761 | — | 42,761 | |||||||||
Reinsurance receivables | 663,452 | — | 663,452 | |||||||||
Deferred policy acquisition costs | 1,120,130 | 135,858 | 1,255,988 | |||||||||
Value of business acquired | 419,582 | 87,263 | 506,845 | |||||||||
Goodwill | 224,075 | — | 224,075 | |||||||||
Property and equipment | 48,849 | — | 48,849 | |||||||||
Other assets | 311,331 | — | 311,331 | |||||||||
Separate account assets | 261,657 | — | 261,657 | |||||||||
Assets of discontinued operations | 27,950 | — | 27,950 | |||||||||
Total Assets | $ | 21,542,268 | $ | (250,203 | ) | $ | 21,292,065 | |||||
(1) | This column represents the Company’s assets exclusive of accumulated other comprehensive income (AOCI) adjustments and is a non-GAAP financial measure. The comparable GAAP numbers are presented in the first column. The non-GAAP presentation is used to assist investors and analysts in identifying market value related adjustments related to AOCI. |
Page 10
AmerUs Group Co.
Consolidated Balance Sheet
($ in thousands)
December 31, 2003
AOCI | Without | |||||||||||
LIABILITIES: | GAAP | Adjustment | AOCI Adjustment (1) | |||||||||
Policyowner reserves and policyowner funds: | ||||||||||||
Future life and annuity policy benefits | $ | 16,994,255 | $ | — | $ | 16,994,255 | ||||||
Policyowner funds | 1,306,160 | (1,109 | ) | 1,305,051 | ||||||||
18,300,415 | (1,109 | ) | 18,299,306 | |||||||||
Accrued expenses and other liabilities | 438,622 | (5,475 | ) | 433,147 | ||||||||
Dividends payable to policyowners | 321,233 | (108,860 | ) | 212,373 | ||||||||
Policy and contract claims | 58,880 | — | 58,880 | |||||||||
Income taxes payable | 65,202 | — | 65,202 | |||||||||
Deferred income taxes | 67,680 | (46,994 | ) | 20,686 | ||||||||
Debt: | ||||||||||||
Bank debt | 27,000 | — | 27,000 | |||||||||
Senior notes | 125,000 | — | 125,000 | |||||||||
PRIDES | 143,750 | — | 143,750 | |||||||||
OCEANs | 187,723 | — | 187,723 | |||||||||
Surplus note | 25,000 | — | 25,000 | |||||||||
AmerUs Capital I | 50,755 | — | 50,755 | |||||||||
Other borrowings | 36,873 | — | 36,873 | |||||||||
Separate Account liabilities | 261,657 | — | 261,657 | |||||||||
Liabilities of discontinued operations | 19,421 | — | 19,421 | |||||||||
Total Liabilities | 20,129,211 | (162,438 | ) | 19,966,773 | ||||||||
STOCKHOLDERS’ EQUITY: | ||||||||||||
Preferred Stock, no par value, 20,000,000 shares authorized, none issued | — | — | — | |||||||||
Common Stock, no par value, 230,000,000 shares | 43,839 | — | 43,839 | |||||||||
authorized; 43,839,304 shares issued and 39,194,602 shares outstanding in 2003; 43,656,280 shares issued and 39,011,578 shares outstanding in 2002 | ||||||||||||
Additional paid-in capital | 1,184,300 | — | 1,184,300 | |||||||||
Accumulated other comprehensive income (loss) | 87,765 | (87,765 | ) | — | ||||||||
Unearned compensation | (1,361 | ) | — | (1,361 | ) | |||||||
Unallocated ESOP shares | — | — | — | |||||||||
Retained earnings | 255,006 | — | 255,006 | |||||||||
Treasury stock, at cost (4,644,702 shares in 2003 | (156,492 | ) | — | (156,492 | ) | |||||||
and 2002) | ||||||||||||
Total Stockholders’ Equity | 1,413,057 | (87,765 | ) | 1,325,292 | ||||||||
Total Liabilities and Stockholders’ Equity | $ | 21,542,268 | $ | (250,203 | ) | $ | 21,292,065 | |||||
(1) | This column represents the Company’s assets exclusive of accumulated other comprehensive income (AOCI) adjustments and is a non-GAAP financial measure. The comparable GAAP numbers are presented in the first column. The non-GAAP presentation is used to assist investors and analysts in identifying market value related adjustments related to AOCI. |
Page 11
AmerUs Group Co.
Product Mix
($ in thousands)
For The Three Months Ended | For the Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
Protection Products Repetitive Premiums (1): | 2003 | 2002 | 2003 | 2002 | ||||||||||||
Whole Life | $ | 8 | $ | 508 | $ | 236 | $ | 4,236 | ||||||||
Interest-Sensitive Whole Life | 2,733 | 5,709 | 19,691 | 30,622 | ||||||||||||
Term Life | 3,827 | 3,629 | 14,588 | 16,390 | ||||||||||||
Universal Life | 8,545 | 7,931 | 32,476 | 32,570 | ||||||||||||
Equity-Indexed Life | 14,968 | 15,806 | 51,644 | 45,843 | ||||||||||||
Sub-total | 30,081 | 33,583 | 118,635 | 129,661 | ||||||||||||
Term Life from Private Label Sales (2) | 25 | 2,255 | 4,206 | 8,970 | ||||||||||||
Total Repetitive Premiums | $ | 30,106 | $ | 35,838 | $ | 122,841 | $ | 138,631 | ||||||||
Accumulation Deposits (1): | ||||||||||||||||
Annuity Premiums: | ||||||||||||||||
Deferred Fixed Annuity: | ||||||||||||||||
Traditional Annuity | $ | 95,392 | $ | 317,624 | $ | 443,220 | $ | 1,099,872 | ||||||||
Equity-Indexed Annuity | 318,334 | 195,991 | 1,311,409 | 683,819 | ||||||||||||
Variable Annuity | 684 | 188 | 3,254 | 6,230 | ||||||||||||
Funding Agreements | — | 125,000 | — | 875,000 | ||||||||||||
Total Accumulation Deposits | $ | 414,410 | $ | 638,803 | $ | 1,757,883 | $ | 2,664,921 | ||||||||
(1) | Sales and deposits for an insurance company are a non-GAAP financial measure. We do not believe there is a comparable GAAP financial measure and as a result, have not provided a reconciliation. Sales and deposits are presented in accordance with industry practice and represent the amount of new business sold during the period. We believe sales are a measure of the productivity of our distribution networks. Sales and deposits are also a leading indicator of future revenue trends. However, revenues are driven by prior period sales as well as current period sales and therefore, a reconciliation of sales and deposits to revenues would not be meaningful or determinable. | |
(2) | Represents the Company’s share of private label sales. |
Page 12
AmerUs Group Co.
Sources of Business
($ in thousands)
For The Three Months Ended | For the Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
Protection Products Repetitive Premiums (1): | 2003 | 2002 | 2003 | 2002 | ||||||||||||
Preferred Producer (Career) | $ | 7,948 | $ | 6,290 | $ | 26,691 | $ | 24,098 | ||||||||
Personal producing general agent (PPGA) | 14,376 | 14,758 | 57,774 | 61,416 | ||||||||||||
Bank Distribution | 18 | 45 | 100 | 510 | ||||||||||||
Independent Agent Force (2) | 7,739 | 12,490 | 34,070 | 43,637 | ||||||||||||
Total Repetitive Premium | 30,081 | 33,583 | 118,635 | 129,661 | ||||||||||||
Private Label Distribution (3) | 25 | 2,255 | 4,206 | 8,970 | ||||||||||||
Total Repetitive Premiums | $ | 30,106 | $ | 35,838 | $ | 122,841 | $ | 138,631 | ||||||||
Accumulation Deposits (1): | ||||||||||||||||
Preferred Producer (Career) | $ | 31,479 | $ | 31,687 | $ | 157,233 | $ | 124,560 | ||||||||
Personal Producing General Agent (PPGA) | 6,997 | 7,734 | 34,618 | 28,402 | ||||||||||||
Bank Distribution | 4,724 | 18,621 | 28,959 | 69,321 | ||||||||||||
Independent Agent Force (2) | 371,210 | 455,761 | 1,537,073 | 1,567,638 | ||||||||||||
Funding Agreements | — | 125,000 | — | 875,000 | ||||||||||||
Total Accumulation Deposits | $ | 414,410 | $ | 638,803 | $ | 1,757,883 | $ | 2,664,921 | ||||||||
(1) | Sales and deposits for an insurance company are a non-GAAP financial measure. We do not believe there is a comparable GAAP financial measure and as a result, have not provided a reconciliation. Sales and deposits are presented in accordance with industry practice and represent the amount of new business sold during the period. We believe sales are a measure of the productivity of our distribution networks. Sales and deposits are also a leading indicator of future revenue trends. However, revenues are driven by prior period sales as well as current period sales and therefore, a reconciliation of sales and deposits to revenues would not be meaningful or determinable. | |
(2) | Independent agent premiums through brokerages are included with all other independent agent premiums. | |
(3) | Represents the Company’s share of private label sales. |
Page 13
AmerUs Group Co.
Policyowner Liability Characteristics
($ in thousands)
December 31, 2003
Fixed | Equity-Indexed | Equity-Indexed | Equity-Indexed | |||||||||||||
Annuities | Annuities | FAS 133 | Annuities | |||||||||||||
Account Value | Account Value(4) | Adjustment | GAAP Reserves | |||||||||||||
FIXED DEFERRED ANNUITY SURRENDER CHARGE %s: | ||||||||||||||||
Accrual Adjustment | $ | — | $ | 86,695 | $ | (1,058 | ) | $ | 85,637 | |||||||
Market Value Adjustment | 220,983 | 535,987 | (545 | ) | 535,442 | |||||||||||
No surrender charge | 1,538,306 | 46,121 | 2,122 | 48,243 | ||||||||||||
1 percent | 97,905 | 11,195 | (37 | ) | 11,158 | |||||||||||
2 percent | 178,102 | 40,500 | 3,319 | 43,819 | ||||||||||||
3 percent | 148,662 | 49,691 | 3,088 | 52,779 | ||||||||||||
4 percent | 255,681 | 132,055 | 9,686 | 141,741 | ||||||||||||
5 percent | 724,119 | 478,295 | 36,933 | 515,228 | ||||||||||||
6 percent | 859,207 | 563,256 | 42,657 | 605,913 | ||||||||||||
7 percent | 478,764 | 139,919 | 8,310 | 148,229 | ||||||||||||
8 percent | 484,605 | 230,061 | 10,217 | 240,278 | ||||||||||||
9 percent | 543,958 | 246,574 | 6,184 | 252,758 | ||||||||||||
10 percent or greater | 1,454,688 | 1,712,474 | 46,137 | 1,758,611 | ||||||||||||
�� | ||||||||||||||||
Total | $ | 6,984,980 | $ | 4,272,823 | $ | 167,013 | $ | 4,439,836 | ||||||||
FIXED ANNUITY-INTEREST GUARANTEE PERIOD: | ||||||||||||||||
Monthly guarantee | $ | 254,970 | $ | — | $ | — | $ | — | ||||||||
Quarterly | — | — | — | — | ||||||||||||
1 Year | 5,434,622 | — | — | — | ||||||||||||
Multi-year | 1,249,451 | — | — | — | ||||||||||||
Bailout | 45,937 | — | — | — | ||||||||||||
Cumulative floor (1) | — | 4,272,823 | 167,013 | 4,439,836 | ||||||||||||
Total | $ | 6,984,980 | $ | 4,272,823 | $ | 167,013 | $ | 4,439,836 | ||||||||
FIXED ANNUITY-ULTIMATE MINIMUM GUARANTEE RATE: | ||||||||||||||||
2 percent | $ | 133,270 | $ | — | $ | — | $ | — | ||||||||
3 percent | 3,219,373 | — | — | — | ||||||||||||
3.25 percent | 570,556 | — | — | — | ||||||||||||
3.50 percent | 762,527 | — | — | — | ||||||||||||
4 percent | 2,241,236 | — | — | — | ||||||||||||
4.5 percent | 29,966 | — | — | — | ||||||||||||
5 percent | 27,449 | — | — | — | ||||||||||||
Greater than 5 percent | 603 | — | — | — | ||||||||||||
Cumulative floor (1) | — | 4,272,823 | 167,013 | 4,439,836 | ||||||||||||
Total | $ | 6,984,980 | $ | 4,272,823 | $ | 167,103 | $ | 4,439,836 | ||||||||
CREDITED RATE VS. MINIMUM GUARANTEED RATE DIFFERENTIAL (2) (3): | ||||||||||||||||
No Differential | $ | 4,984,109 | $ | — | $ | — | $ | — | ||||||||
0.0% - 0.5% | 272,144 | — | — | — | ||||||||||||
0.5% - 1.0% | 127,972 | — | — | — | ||||||||||||
1.0% - 1.5% | 227,678 | — | — | — | ||||||||||||
1.5% - 2.0% | 159,979 | — | — | — | ||||||||||||
2.0% - 2.5% | 214,091 | — | — | — | ||||||||||||
2.5% - 3.0% | 71,160 | — | — | — | ||||||||||||
Greater Than 3.0% | 927,847 | — | — | — | ||||||||||||
Cumulative floor (1) | — | 4,272,823 | 167,013 | 4,439,836 | ||||||||||||
Total | $ | 6,984,980 | $ | 4,272,823 | $ | 167,013 | $ | 4,439,836 | ||||||||
(1) | Equity-indexed products provide guarantees based on a cumulative floor over the term of the product. | |
(2) | Recent issues may contain bonus interest rates ranging from 0.5% to 2.5%. | |
(3) | Includes products with multi-year interest rate guarantees for which the credited rate cannot be decreased until the end of the multi-year period. At the end of the multi-year guarantee period, we will have the ability to lower the crediting rate to the minimum guaranteed rate by an average decrease of approximately 275 basis points. | |
(4) | Account value is a non-GAAP financial measure for equity-indexed products. For GAAP, equity-indexed product liabilities are to be stated at fair value in accordance with FAS 133. The comparable GAAP measure is presented in the last column and the difference is the FAS 133 adjustment in the third column. The non-GAAP measure presentation is used by management to analyze potential future surrender charge income. |
Page 14
AmerUs Group Co.
Investment Summary
(Including Closed Block)
($ in thousands)
December 31, 2003 | December 31, 2002 | |||||||||||||||
Portfolio Composition: | Amortized Cost | Market Value | Amortized Cost | Market Value | ||||||||||||
Cash and cash equivalents | $ | 274,150 | $ | 274,150 | $ | 102,612 | $ | 102,612 | ||||||||
Securities available-for-sale: | ||||||||||||||||
Investment grade bonds | 12,440,984 | 12,860,809 | 11,723,143 | 12,281,186 | ||||||||||||
Non-investment grade bonds | 1,033,917 | 1,084,152 | 1,144,569 | 1,047,716 | ||||||||||||
Equity securities | 72,796 | 74,890 | 62,602 | 63,345 | ||||||||||||
Short-term investments | 27,882 | 28,556 | 32,050 | 32,318 | ||||||||||||
Securities held for trading: | ||||||||||||||||
Investment grade bonds | 1,929,802 | 1,929,802 | 1,737,315 | 1,737,315 | ||||||||||||
Non-investment grade bonds | 159,700 | 159,700 | 106,553 | 106,553 | ||||||||||||
Equity securities | 1,652 | 1,652 | — | — | ||||||||||||
Short-term investments | 591 | 591 | — | — | ||||||||||||
Loans | 968,572 | 968,572 | 883,034 | 883,034 | ||||||||||||
Real estate | 33 | 33 | 476 | 476 | ||||||||||||
Policy loans | 494,646 | 494,646 | 496,753 | 496,753 | ||||||||||||
Other invested assets | 338,902 | 339,436 | 283,485 | 283,794 | ||||||||||||
Total | $ | 17,743,627 | $ | 18,216,989 | $ | 16,572,592 | $ | 17,035,102 | ||||||||
Investment Portfolio Data (1): | December 31, 2003 | December 31, 2002 | ||||||
Average NAIC Rating | 1.48 | 1.49 | ||||||
Average Maturity | 7.63 | 6.86 | ||||||
Effective Duration | 5.42 | 4.56 | ||||||
GAAP Effective Book Yield — Fixed Income | 5.61 | 6.04 |
Mortgage Loans: | December 31, 2003 | December 31, 2002 | ||||||
Carrying Value | 968,572 | 883,034 | ||||||
Percent of Total Invested Assets (Market) | 5.32 | % | 5.18 | % | ||||
Problem Loans | 6,704 | 5,184 | ||||||
Percent of Mortgage Loans (Market) | 0.69 | % | 0.59 | % | ||||
Restructured Loans | 1,186 | 3,481 | ||||||
Percentage of Mortgage Loans (Market) | 0.12 | % | 0.39 | % |
December 31, 2003 | December 31, 2002 | |||||||||||||||
High Yield Securities (at Market Value): | % of Asset Class | % of Bond Portfolio | % of Asset Class | % of Bond Portfolio | ||||||||||||
NAIC 3 | 64.41 | % | 5.00 | % | 62.51 | % | 4.76 | % | ||||||||
NAIC 4 | 30.80 | % | 2.39 | % | 26.45 | % | 2.01 | % | ||||||||
NAIC 5 | 3.73 | % | 0.29 | % | 6.08 | % | 0.46 | % | ||||||||
NAIC 6 | 1.06 | % | 0.08 | % | 4.96 | % | 0.38 | % | ||||||||
Total | 100.00 | % | 7.76 | % | 100.00 | % | 7.61 | % | ||||||||
(1) | Investment portfolio data reflects fixed maturity securities managed by AmerUs Capital Management. |
Page 15
AmerUs Group Co.
Investment Summary
(Including Closed Block)
($ in thousands)
December 31, 2003 | December 31, 2002 | |||||||||||||||
Fixed Maturity Securities by Category: | Market Value | % of Total | Market Value | % of Total | ||||||||||||
Government | $ | 742,209 | 4.6 | % | $ | 1,269,921 | 8.4 | % | ||||||||
Corporate | 11,721,822 | 73.1 | % | 9,920,468 | 65.4 | % | ||||||||||
Mortgage-Backed (MBS) | 2,014,701 | 12.6 | % | 2,391,252 | 15.7 | % | ||||||||||
Commercial Mortgage-Backed (CMBS) | 977,126 | 6.1 | % | 682,263 | 4.5 | % | ||||||||||
Asset-Backed (ABS) | 462,259 | 2.9 | % | 777,622 | 5.1 | % | ||||||||||
Redeemable Preferred Stock | 116,346 | 0.7 | % | 131,244 | 0.9 | % | ||||||||||
$ | 16,034,463 | 100.0 | % | $ | 15,172,770 | 100.0 | % | |||||||||
Private Placements (included above) | 1,940,299 | 12.1 | % | 1,599,168 | 10.5 | % |
December 31, 2003 | December 31, 2002 | |||||||||||||||
Fixed Maturity Securities by Quality: | Market Value | % of Rated | Market Value | % of Rated | ||||||||||||
AAA | 4,454,444 | 27.8 | % | 5,251,700 | 34.6 | % | ||||||||||
AA | 947,702 | 5.9 | % | 1,016,919 | 6.7 | % | ||||||||||
A | 4,531,333 | 28.3 | % | 3,712,968 | 24.5 | % | ||||||||||
BBB | 4,225,844 | 26.3 | % | 3,516,283 | 23.2 | % | ||||||||||
BB | 684,444 | 4.3 | % | 643,572 | 4.2 | % | ||||||||||
B and below | 345,715 | 2.1 | % | 340,639 | 2.2 | % | ||||||||||
Sub-total | 15,189,482 | 94.7 | % | 14,482,081 | 95.4 | % | ||||||||||
Not Rated by S&P (average “A” by others) | 844,981 | 5.3 | % | 690,689 | 4.6 | % | ||||||||||
Total | $ | 16,034,463 | 100.0 | % | $ | 15,172,770 | 100.0 | % | ||||||||
December 31, 2003 | December 31, 2002 | |||||||||||||||
Fixed Maturity Securities by Industry Sector: | Market Value | % of Total | Market Value | % of Total | ||||||||||||
Basic Industry | 755,957 | 4.7 | % | 533,269 | 3.5 | % | ||||||||||
Capital Goods | 864,989 | 5.4 | % | 671,862 | 4.4 | % | ||||||||||
Communications | 1,124,744 | 7.0 | % | 878,403 | 5.8 | % | ||||||||||
Consumer Cyclical | 981,486 | 6.1 | % | 845,072 | 5.6 | % | ||||||||||
Consumer Non Cyclical | 1,701,752 | 10.6 | % | 1,562,632 | 10.3 | % | ||||||||||
Energy | 965,482 | 6.0 | % | 957,863 | 6.3 | % | ||||||||||
Technology | 245,727 | 1.5 | % | 267,780 | 1.8 | % | ||||||||||
Transportation | 462,694 | 2.9 | % | 469,124 | 3.1 | % | ||||||||||
Industrial Other | 154,507 | 1.0 | % | 92,824 | 0.6 | % | ||||||||||
Utilities | 1,547,975 | 9.7 | % | 1,235,189 | 8.1 | % | ||||||||||
Financial Institutions | 2,427,920 | 15.2 | % | 1,864,481 | 12.3 | % | ||||||||||
Sub-total | 11,233,233 | 70.1 | % | 9,378,499 | 61.8 | % | ||||||||||
Other (1) | 4,801,230 | 29.9 | % | 5,794,271 | 38.2 | % | ||||||||||
Total | $ | 16,034,463 | 100.0 | % | $ | 15,172,770 | 100.0 | % | ||||||||
(1) | Includes government, asset-backed securities, mortgage-backed securities, and collateralized mortgage-backed securities |
December 31, 2003 | December 31, 2002 | |||||||||||||||
Mortgage Backed Securities: | Amortized Cost | Market Value | Amortized Cost | Market Value | ||||||||||||
Planned Amortization Class (PACs) | 479,145 | 485,320 | 545,657 | 568,685 | ||||||||||||
Targeted Amortization Class (TACs) | — | — | 1,160 | 1,177 | ||||||||||||
Sequential Pay | 94,875 | 95,655 | 213,306 | 217,197 | ||||||||||||
Subordinated | 1,326 | 1,333 | 14,180 | 14,566 | ||||||||||||
Adjustable Rate Mortgages (ARMs) | 23,144 | 23,505 | 13,303 | 13,419 | ||||||||||||
Pass-thru | 1,396,026 | 1,408,836 | 1,510,603 | 1,557,267 | ||||||||||||
Z bonds | 53 | 52 | 18,933 | 18,941 | ||||||||||||
Total | $ | 1,994,569 | $ | 2,014,701 | $ | 2,317,142 | $ | 2,391,252 | ||||||||
Page 16
AmerUs Group Co.
Closed Block
($ in thousands)
December 31, | December 31, | |||||||
2003 | 2002 | |||||||
LIABILITIES: | ||||||||
Future life and annuity policy benefits | $ | 2,845,365 | $ | 2,840,041 | ||||
Policyowner funds | 9,232 | 4,400 | ||||||
Accrued expenses and other liabilities | 44,473 | 44,295 | ||||||
Dividends payable to policyowners | 173,703 | 147,177 | ||||||
Policy and contract claims | 22,694 | 10,390 | ||||||
Policyowner dividend obligation | 134,386 | 118,623 | ||||||
Total Liabilities | 3,229,853 | 3,164,926 | ||||||
ASSETS: | ||||||||
Securities available-for-sale at fair value: | ||||||||
Fixed maturity securities | 2,027,177 | 1,970,659 | ||||||
Mortgage loans | 80,170 | 90,872 | ||||||
Policy loans | 346,823 | 354,784 | ||||||
Other investments | — | 1,047 | ||||||
Cash and cash equivalents | 3,492 | 6,178 | ||||||
Accrued investment income | 32,629 | 30,726 | ||||||
Premiums, fees and other receivables | 55,134 | 16,999 | ||||||
Other assets | 17 | 23,917 | ||||||
Total Assets | 2,545,442 | 2,495,182 | ||||||
Maximum future earnings to be recognized from assets and liabilities of the Closed Blocks | $ | 684,411 | $ | 669,744 | ||||
For The Three Months Ended | For the Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2003 | 2002 | 2003 | 2002 | |||||||||||||
REVENUES AND EXPENSES: | ||||||||||||||||
Insurance premiums | $ | 51,114 | $ | 69,929 | $ | 211,966 | $ | 265,586 | ||||||||
Product charges | 2,006 | 1,809 | 9,789 | 8,750 | ||||||||||||
Net investment income | 37,103 | 40,636 | 151,769 | 157,928 | ||||||||||||
Realized/unrealized gains (losses) on investments | (1,933 | ) | (520 | ) | 9,326 | (2,400 | ) | |||||||||
Policyowner benefits | (67,926 | ) | (69,971 | ) | (251,872 | ) | (284,821 | ) | ||||||||
Underwriting, acquisition and other expenses | (1,125 | ) | (1,139 | ) | (4,114 | ) | (4,843 | ) | ||||||||
Dividends to policyowners | (9,777 | ) | (30,006 | ) | (87,388 | ) | (95,443 | ) | ||||||||
Contribution from the Closed Block before income taxes | $ | 9,462 | $ | 10,738 | $ | 39,476 | $ | 44,757 | ||||||||
Page 17
AmerUs Group Co.
Annuity Segment Spread
($ in thousands)
ANNUITY SEGMENT SPREADS LTM:
December 31, | December 31, | |||||||||
2003 | 2002 | |||||||||
Asset earned rate | 5.91 | % | 6.58 | % | ||||||
Liability credited rate (1) | 3.82 | % | 4.46 | % | ||||||
Product spread | 2.09 | % | 2.12 | % | ||||||
COMPONENTS OF ANNUITY SEGMENT SPREAD CALCULATION (2):
December 31, 2003 | |||||||||||||
FAS 133 | |||||||||||||
GAAP | Adjustment (1) | Non-GAAP | |||||||||||
Investment income (3) | $ | 561,804 | $ | 561,804 | |||||||||
Average invested assets | $ | 9,501,750 | $ | 9,501,750 | |||||||||
Asset earned rate | 5.91 | % | 5.91 | % | |||||||||
Annuity segment benefit expense | $ | 369,209 | $ | 369,209 | |||||||||
Average annuity segment liabilities (1) | $ | 9,742,841 | $ | (88,958 | ) | $ | 9,653,883 | ||||||
Liability credited rate | 3.79 | % | 3.82 | % | |||||||||
Product spread | 2.12 | % | 2.09 | % | |||||||||
December 31, 2002 | ||||||||||||||
FAS 133 | ||||||||||||||
GAAP | Adjustment (1) | Non-GAAP | ||||||||||||
Investment income (3) | $ | 552,871 | $ | 552,871 | ||||||||||
Average invested assets | $ | 8,404,894 | $ | 8,404,894 | ||||||||||
Asset earned rate | 6.58 | % | 6.58 | % | ||||||||||
Annuity segment benefit expense | $ | 381,089 | $ | 381,089 | ||||||||||
Average annuity segment liabilities (1) | $ | 8,612,909 | $ | (58,718 | ) | $ | 8,554,191 | |||||||
Liability credited rate | 4.43 | % | 4.46 | % | ||||||||||
Product spread | 2.15 | % | 2.12 | % | ||||||||||
(1) | The liability credited rate is calculated using the annuity liability account value as the denominator for all annuity product types. The annuity liability account value is a non-GAAP financial measure for equity-indexed annuity products. For GAAP, equity-indexed product liabilities are to be stated at fair value in accordance with FAS 133. The comparable GAAP measure is presented in the “Components of Annuity Segment Spread Calculation” section on this page. The non-GAAP measure presentation is used by management to measure the liability credited rate exclusive of the fair value adjustments that will fluctuate from period to period depending on the prevailing interest rate and economic environment. | |
(2) | The annuity segment spread calculation includes fixed annuity and equity-indexed annuity products only. IL Annuity products, which we are no longer selling, and funding agreements are excluded from the calculation. | |
(3) | Excludes surrender charge income. |
Page 18
AmerUs Group Co.
Additional Information
($ in thousands)
December 31, | December 31, | |||||||
LIFE INSURANCE IN FORCE (FACE AMOUNT) (1): | 2003 | 2002 | ||||||
Traditional Life | $ | 57,474,000 | $ | 56,883,000 | ||||
Universal Life | 20,529,000 | 19,095,000 | ||||||
Equity-Indexed Life | 6,878,000 | 4,574,000 | ||||||
Total Life Insurance In Force | $ | 84,881,000 | $ | 80,552,000 | ||||
RESERVES (GAAP) (including Closed Block): | ||||||||
Traditional Life | $ | 3,465,853 | $ | 3,236,223 | ||||
Universal Life | 1,517,227 | 1,425,746 | ||||||
Equity-Indexed Life | 224,874 | 126,821 | ||||||
Total Life Insurance Reserves | 5,207,954 | 4,788,790 | ||||||
Deferred Fixed Annuity | 7,257,387 | 7,579,869 | ||||||
Equity-Indexed Annuity | 4,439,836 | 3,724,598 | ||||||
Total Annuity Reserves | 11,697,223 | 11,304,467 | ||||||
Total Reserves | $ | 16,905,177 | $ | 16,093,257 | ||||
NUMBER OF PRODUCERS: | ||||||||
Career Agents (including managing general agents) | 1,225 | 1,247 | ||||||
Personal Producing General Agents | 4,762 | 4,796 | ||||||
Independent Agents (2) | 23,356 | 33,961 | ||||||
Wholesale Broker / Dealer — AMAL Corp. Joint Venture & IL Annuity | 707 | 919 | ||||||
Registered Representatives — AMAL Corp. Joint Venture & IL Annuity | 17,581 | 19,247 | ||||||
Total Producers | 47,631 | 60,170 | ||||||
December 31, | December 31, | |||||||
2003 | 2002 | |||||||
LIFE INSURANCE LAPSE RATE — LTM | 6.5 | % | 7.3 | % | ||||
ANNUITY WITHDRAWAL RATES — LTM | ||||||||
With Internal Replacements | 10.0 | % | 11.0 | % | ||||
Without Internal Replacements | 9.5 | % | 10.6 | % |
(1) | Life insurance in force is a Non-GAAP financial measure utilized by investors, analysts and the Company to assess the Company’s position in the industry. We do not believe there is a comparable GAAP financial measure and as a result, have not provided a reconciliation. | |
(2) | The decrease in the number of independent agents reflects the discontinuance of new sales at IL Annuity. |
Page 19
AmerUs Group Co.
Additional Information
($ in thousands)
DAC / VOBA ROLLFORWARD: | DAC | VOBA | ||||||
Beginning Balance — December 31, 2002 | $ | 884,239 | $ | 454,159 | ||||
Capitalization | 391,583 | 9,218 | ||||||
Amortization | (119,040 | ) | (74,300 | ) | ||||
FAS 115 Adjustment | (36,652 | ) | 30,505 | |||||
Ending Balance — December 31, 2003 | $ | 1,120,130 | $ | 419,582 | ||||
CONTRIBUTION FROM THE CLOSED BLOCK | 2003 | 2004 | ||||||
First Quarter | $ | 10,282 | $ | 9,592 | ||||
Second Quarter | 10,003 | 9,325 | ||||||
Third Quarter | 9,729 | 9,066 | ||||||
Fourth Quarter | 9,462 | 8,812 | ||||||
Total | $ | 39,476 | $ | 36,795 | ||||
NOTE: The above table sets forth the actuarial calculation of the expected contribution from the Closed Block. The actual contribution from the Closed Block may vary from the amounts illustrated here due to differences between actual mortality results, investment results and other factors as compared to the expected results for these items used in the actuarial calculation.
Page 20
AmerUs Group Co.
Income Tax Rate Reconciliation
For the Year Ended | ||||||||
December 31, | ||||||||
2003 | 2002 | |||||||
Corporate federal income tax rate | 35.00 | % | 35.00 | % | ||||
Net benefit of tax credits | — | (0.20 | )% | |||||
Demutualization costs | — | 0.55 | % | |||||
Dividend received deduction | (0.80 | )% | (0.43 | )% | ||||
Non-deductible meals, entertainment & dues | 0.45 | % | 1.34 | % | ||||
Tax exempt income | (2.14 | )% | (5.58 | )% | ||||
State taxes on non-life operations | 0.40 | % | 1.34 | % | ||||
Other items, net | (0.05 | )% | (0.19 | )% | ||||
Effective tax rate | 32.86 | % | 31.83 | % | ||||
Page 21
Corporate Profile
AmerUs Group Co. is an Iowa corporation headquartered in Des Moines, Iowa that
markets and underwrites a complete line of life insurance and annuity products
to individuals and small businesses. With $21.5 billion in assets, AmerUs sells
products in 50 states, the District of Columbia and the Virgin Islands through
its operating subsidiaries: AmerUs Life Insurance Company; American Investors
Life Insurance Company, Inc.; Financial Benefit Life Insurance Company;
Indianapolis Life Insurance Company; Bankers Life Insurance Company of New York;
and IL Securities, Inc.
AmerUs Group’s common stock is traded on the New York Stock Exchange
(NYSE) under the trading symbol “AMH”.
Corporate Headquarters
AmerUs Group Co.
699 Walnut Street — 20th Floor
Des Moines, IA 50309
Phone: (515) 362-3600
Common Stock and Dividend Information
Dividend | ||||||||||||||||
2003 | High | Low | Declared | |||||||||||||
First Quarter | $ | 30.70 | $ | 22.94 | $ | 0.00 | ||||||||||
Second Quarter | $ | 28.41 | $ | 24.44 | $ | 0.00 | ||||||||||
Third Quarter | $ | 35.89 | $ | 27.70 | $ | 0.00 | ||||||||||
Fourth Quarter | $ | 38.00 | $ | 34.48 | $ | 0.40 | ||||||||||
2002 | ||||||||||||||||
First Quarter | $ | 39.50 | $ | 34.00 | $ | 0.00 | ||||||||||
Second Quarter | $ | 39.90 | $ | 34.45 | $ | 0.00 | ||||||||||
Third Quarter | $ | 37.21 | $ | 28.21 | $ | 0.00 | ||||||||||
Fourth Quarter | $ | 32.26 | $ | 25.87 | $ | 0.40 |
Investor Relations | Transfer Agent and Registrar | |
Marty Ketelaar | Mellon Investor Service, LLC | |
Director — Investor Relations | P.O. Box 3315 | |
Phone — (515) 362-3693 | South Hackensack, NJ 07606-1915 | |
Fax — (515) 362-3648 | (800) 304-9709 | |
e-mail: marty.ketelaar@amerus.com | www.melloninvestor.com |
Annual Report and Other Information
Shareholders may receive, without charge, a copy of AmerUs Group Co.’s Annual Report for the year ended December 31, 2002 by contacting the Company at (515) 362-3695 or by visiting our web site at www.amerus.com.
AmerUs Group Co.’s Form 10-K (without exhibits) filed with the Securities and Exchange Commission for the year ended December 31, 2002, Forms 10-Q and press releases are also available at no charge by calling (515) 362-3695 or by visiting the Company’s web site at www.amerus.com.