EXHIBIT 99.2
AmerUs Group Co.
Financial Supplement
Second Quarter 2005
Second Quarter 2005
AmerUs Group Co.
Financial Highlights
($ in thousands, except for per share data)
($ in thousands, except for per share data)
For The Three Months Ended | For The Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
Earnings: | 2005 | 2004 | 2005 | 2004 | ||||||||||||
Net Income | $ | 35,567 | $ | 48,776 | $ | 97,055 | $ | 81,905 | ||||||||
Adjustments for: | ||||||||||||||||
Realized/unrealized (gains) losses on open block assets | 958 | 6,044 | 888 | 22,132 | ||||||||||||
Net amortization of DAC and VOBA due to open block gains or losses | 316 | (21 | ) | 121 | 889 | |||||||||||
Net effect of derivative related market value adjustments | 9,874 | 860 | 15,075 | (622 | ) | |||||||||||
Other (income) loss from non-insurance operations | (7 | ) | (815 | ) | 219 | (696 | ) | |||||||||
Income tax items | 244 | (13,109 | ) | (19,683 | ) | (18,291 | ) | |||||||||
Income from discontinued operations | — | — | — | (3,899 | ) | |||||||||||
Cumulative effect of change in accounting | — | — | — | 510 | ||||||||||||
Adjusted Net Operating Income (1) | $ | 46,952 | $ | 41,735 | $ | 93,675 | $ | 81,928 | ||||||||
Basic Earnings Per Share: | ||||||||||||||||
Adjusted Net Operating Income per Share (2) | $ | 1.20 | $ | 1.06 | $ | 2.38 | $ | 2.08 | ||||||||
Net Income per Share | $ | 0.91 | $ | 1.24 | $ | 2.46 | $ | 2.08 | ||||||||
Weighted Average Shares Outstanding | 39,265 | 39,327 | 39,412 | 39,342 | ||||||||||||
Diluted Earnings Per Share: | ||||||||||||||||
Adjusted Net Operating Income per Share (2) | $ | 1.10 | $ | 1.02 | $ | 2.19 | $ | 2.02 | ||||||||
Net Income per Share | $ | 0.83 | $ | 1.20 | $ | 2.27 | $ | 2.02 | ||||||||
Weighted Average Shares Outstanding | 42,752 | 40,760 | 42,845 | 40,619 |
Capitalization: | 6/30/2005 | 12/31/2004 | ||||||||||||||
Bank Borrowings | $ | 100,000 | $ | — | ||||||||||||
Senior Notes | — | 125,000 | ||||||||||||||
PRIDES | 143,750 | 143,750 | ||||||||||||||
OCEANs | 189,981 | 189,212 | ||||||||||||||
Surplus Note | 25,000 | 25,000 | ||||||||||||||
Other Borrowings | 37,151 | 37,438 | ||||||||||||||
Capital Securities — AmerUs Capital I | 50,755 | 50,755 | ||||||||||||||
Total Notes Payable | 546,637 | 571,155 | ||||||||||||||
Stockholders’ Equity (excluding AOCI) (5) | 1,589,074 | 1,508,799 | ||||||||||||||
Total Capitalization (excluding AOCI) (5) | $ | 2,135,711 | $ | 2,079,954 | ||||||||||||
AOCI — Unrealized Gains / (Losses) | 128,440 | 114,670 | ||||||||||||||
Total Capitalization (including AOCI) | $ | 2,264,151 | $ | 2,194,624 | ||||||||||||
Book Value per Share (3) (5): | ||||||||||||||||
including AOCI | $ | 43.94 | $ | 41.20 | ||||||||||||
excluding AOCI | $ | 40.65 | $ | 38.29 | ||||||||||||
Debt-to-Capital Ratio (4): | ||||||||||||||||
A. M. Best | 17.05 | % | 18.70 | % | ||||||||||||
Fitch | 19.46 | % | 21.16 | % | ||||||||||||
Moody’s | 22.23 | % | 24.00 | % | ||||||||||||
Standard & Poor’s | 10.60 | % | 12.46 | % |
(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 6/30/2005 and 12/31/2004 were 39,091,588 and 39,400,663, respectively. | |
(4) | Debt-to-Capital Ratio is defined and used by rating agencies to measure the level of debt as compared to equity for an organization. For A. M. Best, the PRIDES are treated as 60% equity and AmerUs Capital I and the OCEANs are treated as 40% equity. For Fitch, the PRIDES are treated as 70% equity, AmerUs Capital I is treated as 60% equity and the OCEANs are treated as 100% debt. For Moody’s, AmerUs Capital I and the OCEANs are treated as 100% debt and the PRIDES are treated as 50% debt and 50% equity. For Standard & Poor’s, the PRIDES, AmerUs Capital I and OCEANs 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 $64,129 and $71,724 as of June 30, 2005 and December 31, 2004, respectively. Management believes that excluding accumulated other comprehensive income (AOCI) 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. | |
(5) | Stockholders’ equity, total capitalization and book value (excluding AOCI) are non-GAAP financial measures which management uses for the reasons and purposes detailed in footnote (4) above. Stockholders’ equity including AOCI amounted to $1,717.5 million at June 30, 2005 and $1,623.5 million at December 31, 2004. |
Page 2
AmerUs Group Co.
Consolidated Income Statement
($ in thousands)
For The Three Months Ended | For The Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||
Revenues: | ||||||||||||||||
Insurance premiums | $ | 61,001 | $ | 63,791 | $ | 123,547 | $ | 134,528 | ||||||||
Product charges | 54,638 | 54,284 | 113,671 | 103,846 | ||||||||||||
Net investment income | 277,040 | 251,311 | 545,751 | 508,186 | ||||||||||||
Realized/unrealized capital gains (losses) | 6,266 | (44,550 | ) | (42,678 | ) | (44,635 | ) | |||||||||
Other income: | ||||||||||||||||
Income from Independent Marketing Organizations | 7,153 | 7,327 | 16,164 | 14,063 | ||||||||||||
Other | 4,076 | 4,877 | 7,621 | 9,843 | ||||||||||||
Total Revenue | 410,174 | 337,040 | 764,076 | 725,831 | ||||||||||||
Benefits and Expenses: | ||||||||||||||||
Policyowner benefits — traditional life | 59,268 | 69,051 | 119,200 | 131,816 | ||||||||||||
Policyowner benefits — investment and UL contracts | 184,935 | 99,299 | 294,586 | 274,963 | ||||||||||||
Operating expenses | 32,847 | 32,624 | 65,524 | 60,828 | ||||||||||||
Expenses from Independent Marketing Organizations | 5,572 | 6,219 | 13,503 | 10,715 | ||||||||||||
Amortization — DAC and VOBA | 35,058 | 58,278 | 87,801 | 106,189 | ||||||||||||
Dividends to policyowners | 31,864 | 10,936 | 51,867 | 36,420 | ||||||||||||
Total Benefits and Expenses | 349,544 | 276,407 | 632,481 | 620,931 | ||||||||||||
Interest expense: | ||||||||||||||||
Interest on bank debt | 188 | — | 188 | 123 | ||||||||||||
Interest on Senior Notes | 2,172 | 2,172 | 4,344 | 4,344 | ||||||||||||
Interest on Capital Securities (AmerUs Capital I) | 1,123 | 1,123 | 2,128 | 2,128 | ||||||||||||
Interest on PRIDES | 1,998 | 1,998 | 3,996 | 3,996 | ||||||||||||
Interest on OCEANs | 1,964 | 1,839 | 3,803 | 3,677 | ||||||||||||
Interest on Surplus Note | 542 | 541 | 1,083 | 1,083 | ||||||||||||
Interest on other borrowings | 204 | 263 | 429 | 983 | ||||||||||||
Total interest expense | 8,191 | 7,936 | 15,971 | 16,334 | ||||||||||||
Income before income tax expense | 52,439 | 52,697 | 115,624 | 88,566 | ||||||||||||
Income tax (expense) | (16,872 | ) | (3,921 | ) | (18,569 | ) | (10,050 | ) | ||||||||
Income from discontinued operations, net of tax | — | — | — | 3,899 | ||||||||||||
Cumulative effect of change in accounting, net of tax | — | — | — | (510 | ) | |||||||||||
Net income | $ | 35,567 | $ | 48,776 | $ | 97,055 | $ | 81,905 | ||||||||
Weighted Average Common Shares Outstanding: | ||||||||||||||||
Basic | 39,264,504 | 39,327,182 | 39,412,211 | 39,342,363 | ||||||||||||
Diluted | 42,751,912 | 40,760,364 | 42,845,240 | 40,619,242 |
Page 3
AmerUs Group Co.
Operating Segment Income
($ in thousands)
For The Three Months Ended June 30, 2005 | ||||||||||||||||
Protection | Accumulation | Total | ||||||||||||||
Products | Products | All Other | Consolidated | |||||||||||||
Revenues: | ||||||||||||||||
Insurance premiums | $ | 59,569 | $ | 1,056 | $ | 376 | $ | 61,001 | ||||||||
Product charges | 40,646 | 13,992 | — | 54,638 | ||||||||||||
Net investment income | 92,983 | 183,553 | 504 | 277,040 | ||||||||||||
Realized/unrealized losses on closed block investments | (40 | ) | — | — | (40 | ) | ||||||||||
Other income: | ||||||||||||||||
Income from Independent Marketing Organizations | — | 7,153 | — | 7,153 | ||||||||||||
Other | 857 | 2,663 | 544 | 4,064 | ||||||||||||
194,015 | 208,417 | 1,424 | 403,856 | |||||||||||||
Benefits and expenses: | ||||||||||||||||
Policyowner benefits | 79,174 | 132,895 | 427 | 212,496 | ||||||||||||
Underwriting, acquisition, and other expenses: | ||||||||||||||||
Operating expenses | 19,486 | 6,901 | 6,460 | 32,847 | ||||||||||||
Expenses from Independent Marketing Organizations | — | 5,572 | — | 5,572 | ||||||||||||
Amortization of DAC and VOBA, net of open block loss adjustment of $8,208 | 22,107 | 21,159 | — | 43,266 | ||||||||||||
Dividends to policyowners | 31,862 | 2 | — | 31,864 | ||||||||||||
152,629 | 166,529 | 6,887 | 326,045 | |||||||||||||
Segment pre-tax operating income | $ | 41,386 | $ | 41,888 | $ | (5,463 | ) | 77,811 | ||||||||
Realized/unrealized losses on open block assets | (1,517 | ) | ||||||||||||||
Unrealized gains on open block options and trading investments | 7,823 | |||||||||||||||
Change in option value of indexed products and market value adjustments on total return strategy annuities | (31,745 | ) | ||||||||||||||
Cash flow hedge amortization | 38 | |||||||||||||||
Amortization of DAC and VOBA due to open block gains and losses | 8,208 | |||||||||||||||
Other income from non-insurance operations | 12 | |||||||||||||||
Income from continuing operations | 60,630 | |||||||||||||||
Interest (expense) | (8,191 | ) | ||||||||||||||
Income tax (expense) | (16,872 | ) | ||||||||||||||
Net income | $ | 35,567 | ||||||||||||||
Page 4
AmerUs Group Co.
Operating Segment Income
($ in thousands)
For The Three Months Ended June 30, 2004 | ||||||||||||||||
Protection | Accumulation | Total | ||||||||||||||
Products | Products | All Other | Consolidated | |||||||||||||
Revenues: | ||||||||||||||||
Insurance premiums | $ | 62,427 | $ | 859 | $ | 505 | $ | 63,791 | ||||||||
Product charges | 41,640 | 12,644 | — | 54,284 | ||||||||||||
Net investment income | 81,186 | 168,218 | 1,907 | 251,311 | ||||||||||||
Realized/unrealized losses on closed block investments | (4,473 | ) | — | — | (4,473 | ) | ||||||||||
Other income:: | ||||||||||||||||
Income from Independent Marketing Organizations | — | 7,327 | — | 7,327 | ||||||||||||
Other | 928 | 2,626 | (37 | ) | 3,517 | |||||||||||
181,708 | 191,674 | 2,375 | 375,757 | |||||||||||||
Benefits and expenses: | ||||||||||||||||
Policyowner benefits | 91,205 | 114,261 | (179 | ) | 205,287 | |||||||||||
Underwriting, acquisition, and other expenses: | ||||||||||||||||
Operating expenses | 19,115 | 7,106 | 6,403 | 32,624 | ||||||||||||
Expenses from Independent Marketing Organizations | — | 6,219 | — | 6,219 | ||||||||||||
Amortization of DAC and VOBA, net of open block loss adjustment of $7,002 | 25,527 | 25,749 | — | 51,276 | ||||||||||||
Dividends to policyowners | 10,934 | 2 | — | 10,936 | ||||||||||||
146,781 | 153,337 | 6,224 | 306,342 | |||||||||||||
Segment pre-tax operating income | $ | 34,927 | $ | 38,337 | $ | (3,849 | ) | 69,415 | ||||||||
Realized/unrealized losses on open block assets | (8,851 | ) | ||||||||||||||
Unrealized losses on open block options and trading investments | (31,226 | ) | ||||||||||||||
Change in option value of indexed products and market value adjustments on total return strategy annuities | 37,288 | |||||||||||||||
Cash flow hedge amortization | (351 | ) | ||||||||||||||
Amortization of DAC and VOBA due to open block gains and losses | (7,002 | ) | ||||||||||||||
Other income from non-insurance operations | 1,360 | |||||||||||||||
Income from continuing operations | 60,633 | |||||||||||||||
Interest (expense) | (7,936 | ) | ||||||||||||||
Income tax (expense) | (3,921 | ) | ||||||||||||||
Net income | $ | 48,776 | ||||||||||||||
Page 5
AmerUs Group Co.
Operating Segment Income
($ in thousands)
For The Six Months Ended June 30, 2005 | ||||||||||||||||
Protection | Accumulation | Total | ||||||||||||||
Products | Products | All Other | Consolidated | |||||||||||||
Revenues: | ||||||||||||||||
Insurance premiums | $ | 121,052 | $ | 1,536 | $ | 959 | $ | 123,547 | ||||||||
Product charges | 87,723 | 25,948 | — | 113,671 | ||||||||||||
Net investment income | 179,869 | 365,199 | 683 | 545,751 | ||||||||||||
Realized/unrealized gains on closed block investments | 90 | — | — | 90 | ||||||||||||
Other income: | ||||||||||||||||
Income from Independent Marketing Organizations | — | 16,164 | — | 16,164 | ||||||||||||
Other | 1,718 | 5,204 | 1,064 | 7,986 | ||||||||||||
390,452 | 414,051 | 2,706 | 807,209 | |||||||||||||
Benefits and expenses: | ||||||||||||||||
Policyowner benefits | 168,375 | 257,623 | 454 | 426,452 | ||||||||||||
Underwriting, acquisition, and other expenses: | ||||||||||||||||
Operating expenses | 37,879 | 14,161 | 13,484 | 65,524 | ||||||||||||
Expenses from Independent Marketing Organizations | — | 13,503 | — | 13,503 | ||||||||||||
Amortization of DAC and VOBA, net of open block loss adjustment of $5,383 | 46,978 | 46,206 | — | 93,184 | ||||||||||||
Dividends to policyowners | 51,864 | 3 | — | 51,867 | ||||||||||||
305,096 | 331,496 | 13,938 | 650,530 | |||||||||||||
Segment pre-tax operating income | $ | 85,356 | $ | 82,555 | $ | (11,232 | ) | 156,679 | ||||||||
Realized/unrealized losses on open block assets | (1,340 | ) | ||||||||||||||
Unrealized losses on open block options and trading investments | (41,428 | ) | ||||||||||||||
Change in option value of indexed products and market value adjustments on total return strategy annuities | 12,589 | |||||||||||||||
Cash flow hedge amortization | 77 | |||||||||||||||
Amortization of DAC and VOBA due to open block gains and losses | 5,383 | |||||||||||||||
Other income from non-insurance operations | (365 | ) | ||||||||||||||
Income from continuing operations | 131,595 | |||||||||||||||
Interest (expense) | (15,971 | ) | ||||||||||||||
Income tax (expense) | (18,569 | ) | ||||||||||||||
Net income | $ | 97,055 | ||||||||||||||
Page 6
AmerUs Group Co.
Operating Segment Income
($ in thousands)
For The Six Months Ended June 30, 2004 | ||||||||||||||||
Protection | Accumulation | Total | ||||||||||||||
Products | Products | All Other | Consolidated | |||||||||||||
Revenues: | ||||||||||||||||
Insurance premiums | $ | 132,143 | $ | 1,582 | $ | 803 | $ | 134,528 | ||||||||
Product charges | 77,099 | 26,747 | — | 103,846 | ||||||||||||
Net investment income | 162,444 | 342,481 | 3,261 | 508,186 | ||||||||||||
Realized/unrealized losses on closed block investments | (3,643 | ) | — | — | (3,643 | ) | ||||||||||
Other income: | ||||||||||||||||
Income from Independent Marketing Organizations | — | 14,063 | — | 14,063 | ||||||||||||
Other | 1,834 | 5,377 | 1,471 | 8,682 | ||||||||||||
369,877 | 390,250 | 5,535 | 765,662 | |||||||||||||
Benefits and expenses: | ||||||||||||||||
Policyowner benefits | 184,600 | 235,079 | (158 | ) | 419,521 | |||||||||||
Underwriting, acquisition, and other expenses: | ||||||||||||||||
Operating expenses | 36,073 | 13,438 | 11,317 | 60,828 | ||||||||||||
Expenses from Independent Marketing Organizations | — | 10,715 | — | 10,715 | ||||||||||||
Amortization of DAC and VOBA, net of open block loss adjustment of $5,742 | 44,768 | 55,679 | — | 100,447 | ||||||||||||
Dividends to policyowners | 36,418 | 2 | — | 36,420 | ||||||||||||
301,859 | 314,913 | 11,159 | 627,931 | |||||||||||||
Segment pre-tax operating income | $ | 68,018 | $ | 75,337 | $ | (5,624 | ) | 137,731 | ||||||||
Realized/unrealized losses on open block assets | (33,581 | ) | ||||||||||||||
Unrealized losses on open block options and trading investments | (7,411 | ) | ||||||||||||||
Change in option value of indexed products and market value adjustments on total return strategy annuities | 13,555 | |||||||||||||||
Cash flow hedge amortization | (813 | ) | ||||||||||||||
Amortization of DAC and VOBA due to open block gains and losses | (5,742 | ) | ||||||||||||||
Other income from non-insurance operations | 1,161 | |||||||||||||||
Income from continuing operations | 104,900 | |||||||||||||||
Interest (expense) | (16,334 | ) | ||||||||||||||
Income tax (expense) | (10,050 | ) | ||||||||||||||
Income from discontinued operations, net of tax | 3,899 | |||||||||||||||
Cumulative effect of change in accounting, net of tax | (510 | ) | ||||||||||||||
Net income | $ | 81,905 | ||||||||||||||
Page 7
AmerUs Group Co.
Consolidated Balance Sheets
($ in thousands)
June 30, | December 31, | |||||||
2005 | 2004 | |||||||
ASSETS: | ||||||||
Investments: | ||||||||
Securities available-for-sale at fair value: | ||||||||
Fixed maturity securities | $ | 16,481,895 | $ | 15,646,653 | ||||
Equity securities | 76,006 | 77,024 | ||||||
Short-term investments | 11,954 | 2,979 | ||||||
Securities held for trading purposes: | ||||||||
Fixed maturity securities | 1,559,922 | 1,718,125 | ||||||
Equity securities | 33 | 15,468 | ||||||
Mortgage loans | 931,066 | 865,733 | ||||||
Policy loans | 485,371 | 486,071 | ||||||
Other investments | 346,616 | 374,240 | ||||||
Total investments | 19,892,863 | 19,186,293 | ||||||
Cash and cash equivalents | 650,045 | 478,441 | ||||||
Accrued investment income | 225,608 | 222,294 | ||||||
Premiums, fees and other receivables | 41,413 | 39,688 | ||||||
Income taxes receivable | 30,296 | — | ||||||
Reinsurance receivables | 684,299 | 666,493 | ||||||
Deferred policy acquisition costs | 1,392,276 | 1,248,009 | ||||||
Deferred sales inducements | 177,622 | 137,538 | ||||||
Value of business acquired | 354,861 | 374,792 | ||||||
Goodwill | 228,869 | 226,291 | ||||||
Property and equipment | 45,393 | 46,114 | ||||||
Other assets | 300,533 | 296,409 | ||||||
Separate account assets | 224,294 | 248,507 | ||||||
Total Assets | $ | 24,248,372 | $ | 23,170,869 | ||||
Page 8
AmerUs Group Co.
Consolidated Balance Sheets
($ in thousands)
June 30, | December 31, | |||||||
2005 | 2004 | |||||||
LIABILITIES: | ||||||||
Policyowner reserves and policyowner funds: | ||||||||
Future life and annuity policy benefits | $ | 18,711,861 | $ | 17,923,329 | ||||
Policyowner funds | 1,471,974 | 1,419,762 | ||||||
Sub-total | 20,183,835 | 19,343,091 | ||||||
Accrued expenses and other liabilities | 1,008,665 | 837,514 | ||||||
Dividends payable to policyowners | 364,695 | 322,037 | ||||||
Policy and contract claims | 68,453 | 70,465 | ||||||
Income taxes payable | — | 9,299 | ||||||
Deferred income taxes | 134,279 | 145,332 | ||||||
Notes payable: | ||||||||
Bank debt | 100,000 | — | ||||||
Senior notes | — | 125,000 | ||||||
PRIDES | 143,750 | 143,750 | ||||||
OCEANs | 189,981 | 189,212 | ||||||
Surplus note | 25,000 | 25,000 | ||||||
AmerUs Capital I | 50,755 | 50,755 | ||||||
Other borrowings | 37,151 | 37,438 | ||||||
Separate account liabilities | 224,294 | 248,507 | ||||||
Total Liabilities | 22,530,858 | 21,547,400 | ||||||
STOCKHOLDERS’ EQUITY: | ||||||||
Preferred Stock, no par value, 20,000,000 shares authorized, none issued | — | — | ||||||
Common Stock, no par value, 230,000,000 shares authorized; 44,569,825 shares issued and 39,091,588 shares outstanding in 2005; 44,225,902 shares issued and 39,400,663 shares outstanding in 2004 | 44,570 | 44,226 | ||||||
Additional paid-in capital | 1,206,088 | 1,198,379 | ||||||
Accumulated other comprehensive income | 128,440 | 114,670 | ||||||
Unearned compensation | (2,389 | ) | (1,238 | ) | ||||
Retained earnings | 528,966 | 431,911 | ||||||
Treasury stock, at cost (5,478,237 shares in 2005 and 4,825,239 shares in 2004) | (188,161 | ) | (164,479 | ) | ||||
Total Stockholders’ Equity | 1,717,514 | 1,623,469 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 24,248,372 | $ | 23,170,869 | ||||
Page 9
AmerUs Group Co.
Consolidated Balance Sheet
($ in thousands)
June 30, 2005
AOCI | Without | |||||||||||
GAAP | Adjustment | AOCI Adjustments (1) | ||||||||||
ASSETS: | ||||||||||||
Investments: | ||||||||||||
Securities available-for-sale at fair value: | ||||||||||||
Fixed maturity securities | $ | 16,481,895 | $ | (629,815 | ) | $ | 15,852,080 | |||||
Equity securities | 76,006 | (1,355 | ) | 74,651 | ||||||||
Short-term investments | 11,954 | (65 | ) | 11,889 | ||||||||
Securities held for trading purposes: | ||||||||||||
Fixed maturity securities | 1,559,922 | — | 1,559,922 | |||||||||
Equity securities | 33 | — | 33 | |||||||||
Mortgage loans | 931,066 | — | 931,066 | |||||||||
Policy loans | 485,371 | — | 485,371 | |||||||||
Other investments | 346,616 | (1,730 | ) | 344,886 | ||||||||
Total invested assets | 19,892,863 | (632,965 | ) | 19,259,898 | ||||||||
Cash and cash equivalents | 650,045 | — | 650,045 | |||||||||
Accrued investment income | 225,608 | — | 225,608 | |||||||||
Premiums, fees and other receivables | 41,413 | — | 41,413 | |||||||||
Income taxes receivable | 30,296 | — | 30,296 | |||||||||
Reinsurance receivables | 684,299 | — | 684,299 | |||||||||
Deferred policy acquisition costs | 1,392,276 | 180,745 | 1,573,021 | |||||||||
Deferred sales inducements | 177,622 | 24,709 | 202,331 | |||||||||
Value of business acquired | 354,861 | 61,744 | 416,605 | |||||||||
Goodwill | 228,869 | — | 228,869 | |||||||||
Property and equipment | 45,393 | — | 45,393 | |||||||||
Other assets | 300,533 | — | 300,533 | |||||||||
Separate account assets | 224,294 | — | 224,294 | |||||||||
Total Assets | $ | 24,248,372 | $ | (365,767 | ) | $ | 23,882,605 | |||||
(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)
June 30, 2005
AOCI | Without | |||||||||||
GAAP | Adjustment | AOCI Adjustments (1) | ||||||||||
LIABILITIES: | ||||||||||||
Policyowner reserves and policyowner funds: | ||||||||||||
Future life and annuity policy benefits | $ | 18,711,861 | $ | — | $ | 18,711,861 | ||||||
Policyowner funds | 1,471,974 | 1,824 | 1,473,798 | |||||||||
20,183,835 | 1,824 | 20,185,659 | ||||||||||
Accrued expenses and other liabilities | 1,008,665 | (16,973 | ) | 991,692 | ||||||||
Dividends payable to policyowners | 364,695 | (156,061 | ) | 208,634 | ||||||||
Policy and contract claims | 68,453 | — | 68,453 | |||||||||
Deferred income taxes | 134,279 | (66,117 | ) | 68,162 | ||||||||
Notes payable: | ||||||||||||
Bank debt | 100,000 | — | 100,000 | |||||||||
PRIDES | 143,750 | — | 143,750 | |||||||||
OCEANs | 189,981 | — | 189,981 | |||||||||
Surplus note | 25,000 | — | 25,000 | |||||||||
AmerUs Capital I | 50,755 | — | 50,755 | |||||||||
Other borrowings | 37,151 | — | 37,151 | |||||||||
Separate Account liabilities | 224,294 | — | 224,294 | |||||||||
Total Liabilities | 22,530,858 | (237,327 | ) | 22,293,531 | ||||||||
STOCKHOLDERS’ EQUITY: | ||||||||||||
Preferred Stock, no par value, 20,000,000 shares authorized, none issued | — | — | — | |||||||||
Common Stock, no par value, 230,000,000 shares authorized; 44,569,825 shares issued and 39,091,588 shares outstanding in 2005; | 44,570 | — | 44,570 | |||||||||
Additional paid-in capital | 1,206,088 | — | 1,206,088 | |||||||||
Accumulated other comprehensive income | 128,440 | (128,440 | ) | — | ||||||||
Unearned compensation | (2,389 | ) | — | (2,389 | ) | |||||||
Retained earnings | 528,966 | — | 528,966 | |||||||||
Treasury stock, at cost (5,478,237 shares in 2005) | (188,161 | ) | — | (188,161 | ) | |||||||
Total Stockholders’ Equity | 1,717,514 | (128,440 | ) | 1,589,074 | ||||||||
Total Liabilities and Stockholders’ Equity | $ | 24,248,372 | $ | (365,767 | ) | $ | 23,882,605 | |||||
(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 Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||
Protection Products Repetitive Premiums (1): | ||||||||||||||||
Interest-Sensitive Whole Life | 127 | 1,411 | 233 | 4,829 | ||||||||||||
Term and Other Life | 3,348 | 3,580 | 6,405 | 7,155 | ||||||||||||
Universal Life | 3,390 | 9,235 | 8,261 | 16,769 | ||||||||||||
Indexed Life | 24,184 | 19,291 | 42,210 | 36,594 | ||||||||||||
Total Repetitive Premiums | $ | 31,049 | $ | 33,517 | $ | 57,109 | $ | 65,347 | ||||||||
Accumulation Deposits (1): | ||||||||||||||||
Annuity Premiums: | ||||||||||||||||
Deferred Fixed Annuity: | ||||||||||||||||
Traditional Annuity | $ | 69,478 | $ | 78,577 | $ | 138,360 | $ | 160,747 | ||||||||
Indexed Annuity | 643,026 | 348,482 | 1,146,096 | 645,357 | ||||||||||||
Sub-total | 712,504 | 427,059 | 1,284,456 | 806,104 | ||||||||||||
Variable Annuity | 593 | 806 | 1,138 | 1,658 | ||||||||||||
Funding Agreements | 26,200 | 85,000 | 26,200 | 85,000 | ||||||||||||
Total Accumulation Deposits | $ | 739,297 | $ | 512,865 | $ | 1,311,794 | $ | 892,762 | ||||||||
(1) | Repetitive premiums (which we refer to herein as “sales”) exclude renewal and single or dump-in premiums. Sales and deposits for an insurance company are performance measures which are presented in accordance with industry practice and represent the amount of new business sold during the period. We believe sales and deposits are a measure of the productivity of our distribution network and are also a leading indicator of future revenue trends. However, revenues are driven by prior period sales and deposits as well as current period sales and deposits. |
Page 12
AmerUs Group Co.
Sources of Business
($ in thousands)
For The Three Months Ended | For The Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||
Protection Products Repetitive Premiums (1): | ||||||||||||||||
Career Marketing Organizations (CMOs) | $ | 8,916 | $ | 8,691 | $ | 15,250 | $ | 14,972 | ||||||||
Personal producing general agent (PPGA) | 11,088 | 14,310 | 21,814 | 29,751 | ||||||||||||
Independent Agent Force (2) | 11,045 | 10,516 | 20,045 | 20,624 | ||||||||||||
Total Repetitive Premiums | $ | 31,049 | $ | 33,517 | $ | 57,109 | $ | 65,347 | ||||||||
Accumulation Deposits (1): | ||||||||||||||||
Preferred Producer (Career) | $ | 39,753 | $ | 32,666 | $ | 84,668 | $ | 65,196 | ||||||||
Personal Producing General Agent (PPGA) | 9,279 | 6,046 | 15,530 | 13,861 | ||||||||||||
Independent Agent Force (2) | 664,065 | 389,153 | 1,185,396 | 728,705 | ||||||||||||
Funding Agreements | 26,200 | 85,000 | 26,200 | 85,000 | ||||||||||||
Total Accumulation Deposits | $ | 739,297 | $ | 512,865 | $ | 1,311,794 | $ | 892,762 | ||||||||
(1) | Repetitive premiums (which we refer to herein as “sales”) exclude renewal and single or dump-in premiums. Sales and deposits for an insurance company are performance measures which are presented in accordance with industry practice and represent the amount of new business sold during the period. We believe sales and deposits are a measure of the productivity of our distribution network and are also a leading indicator of future revenue trends. However, revenues are driven by prior period sales and deposits as well as current period sales and deposits. | |
(2) | Independent agent premiums through brokerages are included with all other independent agent premiums. |
Page 13
AmerUs Group Co.
Investment Summary
(Including Closed Block)
($ in thousands)
June 30, 2005 | ||||||||||||||||
Amortized Cost | Unrealized Gain | Unrealized Loss | Carrying Value | |||||||||||||
Portfolio Composition: | ||||||||||||||||
Cash and cash equivalents | $ | 650,045 | $ | — | $ | — | $ | 650,045 | ||||||||
Securities available-for-sale: | ||||||||||||||||
Investment grade bonds | 14,638,757 | 622,591 | (33,872 | ) | 15,227,476 | |||||||||||
Non-investment grade bonds | 1,213,323 | 51,646 | (10,550 | ) | 1,254,419 | |||||||||||
Equity securities | 74,651 | 1,357 | (2 | ) | 76,006 | |||||||||||
Short-term investments | 11,889 | 66 | (1 | ) | 11,954 | |||||||||||
Securities for trading: | ||||||||||||||||
Investment grade bonds | 1,426,929 | — | — | 1,426,929 | ||||||||||||
Non-investment grade bonds | 132,993 | — | — | 132,993 | ||||||||||||
Equity securities | 33 | — | — | 33 | ||||||||||||
Mortgage loans | 931,066 | — | — | 931,066 | ||||||||||||
Policy loans | 485,371 | — | — | 485,371 | ||||||||||||
Other invested assets | 346,592 | 24 | — | 346,616 | ||||||||||||
Total | $ | 19,911,649 | $ | 675,684 | $ | (44,425 | ) | $ | 20,542,908 | |||||||
December 31, 2004 | ||||||||||||||||
Amortized Cost | Unrealized Gain | Unrealized Loss | Carrying Value | |||||||||||||
Portfolio Composition: | ||||||||||||||||
Cash and cash equivalents | $ | 478,441 | $ | — | $ | — | $ | 478,441 | ||||||||
Securities available-for-sale: | ||||||||||||||||
Investment grade bonds | 13,948,355 | 524,527 | (44,938 | ) | 14,427,944 | |||||||||||
Non-investment grade bonds | 1,153,368 | 69,890 | (4,549 | ) | 1,218,709 | |||||||||||
Equity securities | 74,770 | 2,468 | (214 | ) | 77,024 | |||||||||||
Short-term investments | 2,952 | 51 | (24 | ) | 2,979 | |||||||||||
Securities for trading: | ||||||||||||||||
Investment grade bonds | 1,592,208 | — | — | 1,592,208 | ||||||||||||
Non-investment grade bonds | 125,917 | — | — | 125,917 | ||||||||||||
Equity securities | 15,468 | — | — | 15,468 | ||||||||||||
Mortgage loans | 865,733 | — | — | 865,733 | ||||||||||||
Policy loans | 486,071 | — | — | 486,071 | ||||||||||||
Other invested assets | 373,820 | 420 | — | 374,240 | ||||||||||||
Total | $ | 19,117,103 | $ | 597,356 | $ | (49,725 | ) | $ | 19,664,734 | |||||||
June 30, 2005 | December 31, 2004 | |||||||
Investment Portfolio Data (1): | ||||||||
Average NAIC Rating | 1.48 | 1.48 | ||||||
Average Life | 9.44 | 8.58 | ||||||
Effective Duration | 6.08 | 5.73 | ||||||
Weighted Average Book Yield | 5.69 | 5.71 |
June 30, 2005 | December 31, 2004 | |||||||||||||||||||||||
Amortized Cost | % of FMS | % of TIA (2) | Amortized Cost | % of FMS | % of TIA (2) | |||||||||||||||||||
High Yield Securities: | ||||||||||||||||||||||||
NAIC 3 | $ | 821,748 | 4.72 | % | 4.13 | % | $ | 809,718 | 4.81 | % | 4.24 | % | ||||||||||||
NAIC 4 | 492,596 | 2.83 | % | 2.47 | % | 440,487 | 2.62 | % | 2.30 | % | ||||||||||||||
NAIC 5 | 29,814 | 0.17 | % | 0.15 | % | 27,196 | 0.16 | % | 0.14 | % | ||||||||||||||
NAIC 6 | 2,158 | 0.01 | % | 0.01 | % | 1,884 | 0.01 | % | 0.01 | % | ||||||||||||||
Total | $ | 1,346,316 | 7.73 | % | 6.76 | % | $ | 1,279,285 | 7.60 | % | 6.69 | % | ||||||||||||
(1) | Investment portfolio data reflects fixed maturity securities (FMS) managed by AmerUs Capital Management. | |
(2) | TIA — Total Invested Assets |
Page 14
AmerUs Group Co.
Investment Summary
(Including Closed Block)
($ in thousands)
June 30, 2005 | December 31, 2004 | |||||||||||||||||||||||
Market Value | % of FMS | % of TIA | Market Value | % of FMS | % of TIA | |||||||||||||||||||
Fixed Maturity Securities by Category: | ||||||||||||||||||||||||
Government | $ | 500,083 | 2.8 | % | 2.4 | % | $ | 548,387 | 3.2 | % | 2.8 | % | ||||||||||||
Public Credit | 10,119,427 | 56.1 | % | 49.3 | % | 9,662,584 | 55.8 | % | 49.1 | % | ||||||||||||||
Private Credit | 2,302,222 | 12.8 | % | 11.2 | % | 2,102,978 | 12.1 | % | 10.7 | % | ||||||||||||||
Below Investment Grade | 1,387,412 | 7.7 | % | 6.7 | % | 1,344,626 | 7.7 | % | 6.8 | % | ||||||||||||||
Mortgage-Backed (MBS) | 2,118,921 | 11.7 | % | 10.3 | % | 2,020,643 | 11.6 | % | 10.3 | % | ||||||||||||||
Commercial Mortgage-Backed (CMBS) | 1,225,149 | 6.8 | % | 6.0 | % | 1,119,225 | 6.4 | % | 5.7 | % | ||||||||||||||
Asset-Backed (ABS) | 371,093 | 2.0 | % | 1.8 | % | 528,075 | 3.0 | % | 2.7 | % | ||||||||||||||
Redeemable Preferred Stock | 17,510 | 0.1 | % | 0.1 | % | 38,260 | 0.2 | % | 0.2 | % | ||||||||||||||
Total | $ | 18,041,817 | 100.0 | % | 87.8 | % | $ | 17,364,778 | 100.0 | % | 88.3 | % | ||||||||||||
June 30, 2005 | December 31, 2004 | |||||||||||||||||||||||||||
Market Value | % of FMS | % of TIA | Market Value | % of FMS | % of TIA | |||||||||||||||||||||||
Fixed Maturity Securities by Quality: | ||||||||||||||||||||||||||||
NAIC Rating | S&P Equivalent | |||||||||||||||||||||||||||
1 | A- or higher | $ | 11,350,580 | 62.9 | % | 55.3 | % | $ | 10,777,378 | 62.1 | % | 54.8 | % | |||||||||||||||
2 | BBB- to BBB+ | 5,303,825 | 29.4 | % | 25.8 | % | 5,242,775 | 30.2 | % | 26.7 | % | |||||||||||||||||
Investment Grade | 16,654,405 | 92.3 | % | 81.1 | % | 16,020,153 | 92.3 | % | 81.5 | % | ||||||||||||||||||
3 | BB- to BB+ | 850,830 | 4.7 | % | 4.1 | % | 851,831 | 4.9 | % | 4.3 | % | |||||||||||||||||
4 | B- to B+ | 502,085 | 2.8 | % | 2.4 | % | 460,745 | 2.7 | % | 2.3 | % | |||||||||||||||||
5 & 6 | CCC+ or lower | 34,497 | 0.2 | % | 0.2 | % | 32,049 | 0.1 | % | 0.2 | % | |||||||||||||||||
1,387,412 | 7.7 | % | 6.7 | % | 1,344,625 | 7.7 | % | 6.8 | % | |||||||||||||||||||
Total | $ | 18,041,817 | 100.0 | % | 87.8 | % | $ | 17,364,778 | 100.0 | % | 88.3 | % | ||||||||||||||||
June 30, 2005 | December 31, 2004 | |||||||||||||||||||||||
Market Value | % of FMS | % of TIA | Market Value | % of FMS | % of TIA | |||||||||||||||||||
Fixed Maturity Securities by Industry Sector: | ||||||||||||||||||||||||
Basic Industry | $ | 866,064 | 4.8 | % | 4.2 | % | $ | 916,856 | 5.3 | % | 4.7 | % | ||||||||||||
Capital Goods | 917,928 | 5.1 | % | 4.5 | % | 902,254 | 5.2 | % | 4.6 | % | ||||||||||||||
Communications | 1,323,669 | 7.3 | % | 6.4 | % | 1,304,250 | 7.5 | % | 6.6 | % | ||||||||||||||
Consumer Cyclical | 1,124,035 | 6.2 | % | 5.5 | % | 1,247,607 | 7.2 | % | 6.3 | % | ||||||||||||||
Consumer Non Cyclical | 1,718,849 | 9.5 | % | 8.4 | % | 1,691,226 | 9.7 | % | 8.6 | % | ||||||||||||||
Energy | 1,177,949 | 6.5 | % | 5.7 | % | 1,059,864 | 6.1 | % | 5.4 | % | ||||||||||||||
Technology | 257,868 | 1.4 | % | 1.3 | % | 228,994 | 1.3 | % | 1.2 | % | ||||||||||||||
Transportation | 577,305 | 3.2 | % | 2.8 | % | 539,749 | 3.1 | % | 2.7 | % | ||||||||||||||
Industrial Other | 230,012 | 1.3 | % | 1.1 | % | 146,919 | 0.8 | % | 0.7 | % | ||||||||||||||
Utilities | 2,011,142 | 11.2 | % | 9.8 | % | 1,794,985 | 10.3 | % | 9.1 | % | ||||||||||||||
Financial Institutions | 3,001,255 | 16.7 | % | 14.6 | % | 2,704,498 | 15.6 | % | 13.9 | % | ||||||||||||||
Sub-total | 13,206,076 | 73.2 | % | 64.3 | % | 12,537,202 | 72.2 | % | 63.8 | % | ||||||||||||||
Other (1) | 4,835,741 | 26.8 | % | 23.5 | % | 4,827,576 | 27.8 | % | 24.5 | % | ||||||||||||||
Total | $ | 18,041,817 | 100.0 | % | 87.8 | % | $ | 17,364,778 | 100.0 | % | 88.3 | % | ||||||||||||
(1) | Includes foreign and domestic government, asset-backed securities, mortgage-backed securities, and collateralized mortgage-backed securities |
June 30, 2005 | December 31, 2004 | |||||||||||||||||||||||
Market Value | % of MBS | % of TIA | Market Value | % of MBS | % of TIA | |||||||||||||||||||
Mortgage Backed Securities: | ||||||||||||||||||||||||
Pass-thru | $ | 1,224,696 | 57.8 | % | 6.0 | % | $ | 1,296,699 | 64.2 | % | 6.6 | % | ||||||||||||
Planned Amortization Class (PACs) | 442,809 | 20.9 | % | 2.1 | % | 419,911 | 20.7 | % | 2.1 | % | ||||||||||||||
Sequential Pay | 436,506 | 20.6 | % | 2.1 | % | 286,388 | 14.2 | % | 1.5 | % | ||||||||||||||
Adjustable Rate Mortgages (ARMs) | 14,910 | 0.7 | % | 0.1 | % | 17,645 | 0.9 | % | 0.1 | % | ||||||||||||||
Total | $ | 2,118,921 | 100.0 | % | 10.3 | % | $ | 2,020,643 | 100.0 | % | 10.3 | % | ||||||||||||
Page 15
AmerUs Group Co.
Policyowner Liability Characteristics — Annuities
($ in thousands)
June 30, 2005
Indexed | ||||||||||||||||
Fixed | Indexed | Derivatives | Indexed | |||||||||||||
Annuities | Annuities | Market Value | Annuities | |||||||||||||
Account Value | Account Value (4) | Adjustment | GAAP Reserves | |||||||||||||
FIXED DEFERRED ANNUITY SURRENDER CHARGE %: | ||||||||||||||||
Accrual Adjustment | $ | — | $ | 23,563 | $ | 118 | $ | 23,681 | ||||||||
No surrender charge | 1,722,626 | 45,400 | 902 | 46,302 | ||||||||||||
1 percent | 65,248 | 7,734 | (103 | ) | 7,631 | |||||||||||
2 percent | 119,549 | 53,999 | 3,784 | 57,783 | ||||||||||||
3 percent | 150,964 | 193,519 | 24,243 | 217,762 | ||||||||||||
4 percent | 1,054,434 | 454,508 | 56,261 | 510,769 | ||||||||||||
5 percent | 421,268 | 199,468 | 22,792 | 222,260 | ||||||||||||
6 percent | 434,835 | 121,380 | 7,229 | 128,609 | ||||||||||||
7 percent | 399,945 | 110,944 | 1,535 | 112,479 | ||||||||||||
8 percent | 401,781 | 252,375 | 4,868 | 257,243 | ||||||||||||
9 percent | 448,497 | 431,816 | 5,293 | 437,109 | ||||||||||||
10 percent or greater | 1,000,489 | 4,413,914 | 45,107 | 4,459,021 | ||||||||||||
Total | $ | 6,219,636 | $ | 6,308,620 | $ | 172,029 | $ | 6,480,649 | ||||||||
MARKET VALUE ADJUSTMENT PROTECTION: | ||||||||||||||||
MVA provision on contract | $ | 394,876 | $ | 2,959,546 | $ | 29,272 | $ | 2,988,818 | ||||||||
Total return strategy | — | 1,263,563 | (150 | ) | 1,263,413 | |||||||||||
Non-MVA | 5,824,760 | 2,085,511 | 142,907 | 2,228,418 | ||||||||||||
Total | $ | 6,219,636 | $ | 6,308,620 | $ | 172,029 | $ | 6,480,649 | ||||||||
FIXED ANNUITY-INTEREST GUARANTEE PERIOD: | ||||||||||||||||
Monthly guarantee | $ | 249,360 | $ | — | $ | — | $ | — | ||||||||
1 Year | 4,920,184 | — | — | — | ||||||||||||
Multi-year | 1,050,092 | — | — | — | ||||||||||||
Cumulative floor (1) | — | 6,308,620 | 172,029 | 6,480,649 | ||||||||||||
Total | $ | 6,219,636 | $ | 6,308,620 | $ | 172,029 | $ | 6,480,649 | ||||||||
FIXED ANNUITY-ULTIMATE MINIMUM GUARANTEE RATE: | ||||||||||||||||
2 percent | $ | 383,336 | $ | — | $ | — | $ | — | ||||||||
3 percent | 2,825,625 | — | — | — | ||||||||||||
3.25 percent | 461,069 | — | — | — | ||||||||||||
3.50 percent | 624,057 | — | — | — | ||||||||||||
4 percent | 1,872,493 | — | — | — | ||||||||||||
4.5 percent | 53,056 | — | — | — | ||||||||||||
Cumulative floor (1) | — | 6,308,620 | 172,029 | 6,480,649 | ||||||||||||
Total | $ | 6,219,636 | $ | 6,308,620 | $ | 172,029 | $ | 6,480,649 | ||||||||
CREDITED RATE VS. MINIMUM | ||||||||||||||||
GUARANTEED RATE DIFFERENTIAL (2) (3): | ||||||||||||||||
No Differential | $ | 4,646,353 | $ | — | $ | — | $ | — | ||||||||
0.0% - 0.5% | 138,638 | — | — | — | ||||||||||||
0.5% - 1.0% | 250,680 | — | — | — | ||||||||||||
1.0% - 1.5% | 35,024 | — | — | — | ||||||||||||
1.5% - 2.0% | 50,537 | — | — | — | ||||||||||||
2.0% - 2.5% | 113,199 | — | — | — | ||||||||||||
2.5% - 3.0% | 75,701 | — | — | — | ||||||||||||
Greater Than 3.0% | 909,504 | — | — | — | ||||||||||||
Cumulative floor (1) | — | 6,308,620 | 172,029 | 6,480,649 | ||||||||||||
Total | $ | 6,219,636 | $ | 6,308,620 | $ | 172,029 | $ | 6,480,649 | ||||||||
(1) | Indexed products provide guarantees based on a cumulative floor over the term of the product. | |
(2) | Recent issues may contain deferred sales inducements rates ranging from 1.5% to 3.0%. | |
(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 indexed products. For GAAP, indexed product liabilities are to be stated at fair value in accordance with accounting for derivatives. The comparable GAAP measure is presented in the last column and the difference is the derivative market adjustment in the third column. The non-GAAP measure presentation is used by management to analyze potential future surrender charge income. |
Page 16
AmerUs Group Co.
Annuity Segment Spread
($ in thousands)
Rolling 12 Months Ended | ||||||||
June 30, | ||||||||
2005 | 2004 | |||||||
ANNUITY SEGMENT SPREADS LTM: | ||||||||
Asset earned rate | 5.76 | % | 5.74 | % | ||||
Liability credited rate (1) | 3.46 | % | 3.57 | % | ||||
Product spread | 2.30 | % | 2.17 | % | ||||
Rolling 12 Months Ended | ||||||||||||
June 30, 2005 | ||||||||||||
GAAP | Adjustment (1) | Non-GAAP | ||||||||||
COMPONENTS OF ANNUITY SEGMENT SPREAD CALCULATION (2): | ||||||||||||
Investment income (3) | $ | 627,451 | $ | 627,451 | ||||||||
Average invested assets | $ | 10,885,721 | $ | 10,885,721 | ||||||||
Asset earned rate | 5.76 | % | 5.76 | % | ||||||||
Annuity segment benefit expense (1) | $ | 404,734 | $ | (19,134 | ) | $ | 385,600 | |||||
Average annuity segment liabilities (1) | $ | 11,279,296 | $ | (140,593 | ) | $ | 11,138,703 | |||||
Liability credited rate | 3.58 | % | 3.46 | % | ||||||||
Product spread | 2.18 | % | 2.30 | % | ||||||||
Rolling 12 Months Ended | ||||||||||||
June 30, 2004 | ||||||||||||
GAAP | Adjustment (1) | Non-GAAP | ||||||||||
Investment income (3) | $ | 576,721 | $ | 576,721 | ||||||||
Average invested assets | $ | 10,045,222 | $ | 10,045,222 | ||||||||
Asset earned rate | 5.74 | % | 5.74 | % | ||||||||
Annuity segment benefit expense (1) | $ | 377,944 | $ | (15,374 | ) | $ | 362,570 | |||||
Average annuity segment liabilities (1) | $ | 10,286,221 | $ | (146,362 | ) | $ | 10,139,859 | |||||
Liability credited rate | 3.67 | % | 3.57 | % | ||||||||
Product spread | 2.07 | % | 2.17 | % | ||||||||
(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 indexed annuity products. For GAAP, indexed product liabilities are to be stated at fair value following derivative accounting. In addition, the liability credited rate excludes deferred sales inducements amortization from total benefit expense. For GAAP, effective January 1, 2004, deferred sales inducements amortization is included in benefit expense instead of DAC amortization. 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 and exclusive of the deferred sales inducements amortization that historically has not been a part of this measure. | |
(2) | The annuity segment spread calculation includes fixed annuity and 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. |
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AmerUs Group Co.
Closed Block
($ in thousands)
June 30, | December 31, | |||||||
2005 | 2004 | |||||||
LIABILITIES: | ||||||||
Future life and annuity policy benefits | $ | 2,779,280 | $ | 2,804,222 | ||||
Policyowner funds | 7,780 | 8,096 | ||||||
Accrued expenses and other liabilities | 10,361 | 32,140 | ||||||
Dividends payable to policyowners | 157,777 | 161,475 | ||||||
Policy and contract claims | 12,044 | 14,705 | ||||||
Policyowner dividend obligation | 199,417 | 152,975 | ||||||
Total Liabilities | 3,166,659 | 3,173,613 | ||||||
ASSETS: | ||||||||
Securities available-for-sale at fair value: | ||||||||
Fixed maturity securities | 2,009,461 | 2,028,790 | ||||||
Mortgage loans | 66,190 | 70,686 | ||||||
Policy loans | 330,758 | 335,573 | ||||||
Other investments | — | 34 | ||||||
Cash and cash equivalents | 49,921 | 8,473 | ||||||
Accrued investment income | 32,747 | 32,637 | ||||||
Premiums, fees and other receivables | 53,091 | 59,369 | ||||||
Other assets | — | 17 | ||||||
Total Assets | 2,542,168 | 2,535,579 | ||||||
Maximum future earnings to be recognized from assets and liabilities of the Closed Blocks | $ | 624,491 | $ | 638,034 | ||||
For The Three Months Ended | For The Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||
REVENUES AND EXPENSES: | ||||||||||||||||
Insurance premiums | $ | 42,998 | $ | 44,684 | $ | 84,885 | $ | 97,280 | ||||||||
Product charges | 1,445 | 1,311 | 3,146 | 1,401 | ||||||||||||
Net investment income | 40,361 | 36,235 | 74,780 | 71,969 | ||||||||||||
Realized/unrealized gains (losses) on investments | (40 | ) | (4,473 | ) | 90 | (3,643 | ) | |||||||||
Policyowner benefits | (45,282 | ) | (58,495 | ) | (95,403 | ) | (113,665 | ) | ||||||||
Underwriting, acquisition and other expenses | (631 | ) | (918 | ) | (1,188 | ) | (2,007 | ) | ||||||||
Dividends to policyowners | (29,823 | ) | (9,019 | ) | (47,991 | ) | (32,418 | ) | ||||||||
Contribution from the Closed Block before income taxes | $ | 9,028 | $ | 9,325 | $ | 18,319 | $ | 18,917 | ||||||||
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AmerUs Group Co.
Additional Information
($ in thousands)
June 30, | December 31, | |||||||
2005 | 2004 | |||||||
LIFE INSURANCE IN FORCE (FACE AMOUNT) (1): | ||||||||
Traditional Life | $ | 68,066,000 | $ | 67,769,000 | ||||
Universal Life | 19,667,000 | 19,848,000 | ||||||
Indexed Life | 12,120,000 | 9,918,000 | ||||||
Total Life Insurance In Force | $ | 99,853,000 | $ | 97,535,000 | ||||
RESERVES (GAAP) (including Closed Block): | ||||||||
Traditional Life | $ | 3,584,008 | $ | 3,551,648 | ||||
Universal Life | 1,606,169 | 1,587,787 | ||||||
Indexed Life | 464,342 | 364,282 | ||||||
Total Life Insurance Reserves | 5,654,519 | 5,503,717 | ||||||
Deferred Fixed Annuity | 6,485,532 | 6,780,234 | ||||||
Indexed Annuity | 6,480,693 | 5,551,184 | ||||||
Total Annuity Reserves | 12,966,225 | 12,331,418 | ||||||
Total Reserves | $ | 18,620,744 | $ | 17,835,135 | ||||
NUMBER OF PRODUCERS: | ||||||||
Protection Products Segment: | ||||||||
Career Marketing Organizations | 1,329 | 1,212 | ||||||
Personal Producing General Agents and sub-agents | 5,284 | 5,158 | ||||||
Independent Agents — other than New York | 13,155 | 11,885 | ||||||
Independent Agents — New York | 6,091 | 5,658 | ||||||
Retail Broker / Dealers | 712 | 712 | ||||||
Registered Representatives | 17,781 | 17,811 | ||||||
Protection Products Segment — Total Agents | 44,352 | 42,436 | ||||||
Accumulation Products Segment — Independent Agents | 16,614 | 14,572 | ||||||
June 30, | June 30, | |||||||
2005 | 2004 | |||||||
LIFE INSURANCE LAPSE RATE — LTM | 6.2 | % | 6.3 | % | ||||
ANNUITY WITHDRAWAL RATES — LTM | ||||||||
With Internal Replacements | 9.4 | % | 9.8 | % | ||||
Without Internal Replacements | 7.8 | % | 9.0 | % |
(1) | Life insurance in force is a performance measure utilized by investors, analysts and the Company to assess the Company’s position in the industry. |
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AmerUs Group Co.
Additional Information
($ in thousands)
Protection Products | Accumulation Products | AOCI | ||||||||||||||
Segment | Segment | Adjustment | Total | |||||||||||||
DAC ROLLFORWARD: | ||||||||||||||||
Beginning Balance — December 31, 2004 | $ | 628,355 | $ | 766,129 | $ | (146,475 | ) | $ | 1,248,009 | |||||||
Capitalization | 88,824 | 153,672 | — | 242,496 | ||||||||||||
Amortization | (36,494 | ) | (27,465 | ) | — | (63,959 | ) | |||||||||
FAS 115 Adjustment | — | — | (34,270 | ) | (34,270 | ) | ||||||||||
Ending Balance — June 30, 2005 | $ | 680,685 | $ | 892,336 | $ | (180,745 | ) | $ | 1,392,276 | |||||||
Deferred | ||||||||
Sales Inducements | VOBA | |||||||
OTHER ROLLFORWARDS: | ||||||||
Beginning Balance — December 31, 2004 | $ | 137,538 | $ | 374,792 | ||||
Capitalization | 54,618 | — | ||||||
Amortization | (10,902 | ) | (23,842 | ) | ||||
FAS 115 Adjustment | (3,632 | ) | 3,911 | |||||
Ending Balance — June 30, 2005 | $ | 177,622 | $ | 354,861 | ||||
2005 | 2006 | |||||||
CONTRIBUTION FROM THE CLOSED BLOCK: | ||||||||
First Quarter | $ | 9,291 | $ | 9,103 | ||||
Second Quarter | 9,028 | 8,843 | ||||||
Third Quarter | 8,772 | 8,588 | ||||||
Fourth Quarter | 8,522 | 8,338 | ||||||
Total | $ | 35,613 | $ | 34,872 | ||||
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.
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AmerUs Group Co.
Income Tax Rate Reconciliation
For The Six Months Ended | ||||||||
June 30, | ||||||||
2005 | 2004 | |||||||
Corporate federal income tax rate | 35.00 | % | 35.00 | % | ||||
Net benefit of tax credits | (0.05 | %) | (0.10 | %) | ||||
Dividend received deduction | (0.99 | %) | (0.88 | %) | ||||
Non-deductible expenses | 0.81 | % | 0.23 | % | ||||
Tax exempt income | (1.86 | %) | (2.67 | %) | ||||
State taxes on non-life operations | 0.15 | % | 0.21 | % | ||||
Provision releases and deferred income tax valuation allowance change | (17.02 | %) | (20.65 | %) | ||||
Other items, net | 0.02 | % | 0.21 | % | ||||
Effective tax rate | 16.06 | % | 11.35 | % | ||||
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 $24.2 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.
that markets and underwrites a complete line of life insurance and annuity products to
individuals and small businesses. With $24.2 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
Fax: (515) 362-3648
699 Walnut Street — 20th Floor
Des Moines, IA 50309
Phone: (515) 362-3600
Fax: (515) 362-3648
Common Stock and Dividend Information
Dividend | ||||||||||||
High | Low | Declared | ||||||||||
2005 | ||||||||||||
First Quarter | $ | 49.08 | $ | 43.36 | $ | 0.00 | ||||||
Second Quarter | $ | 48.50 | $ | 45.06 | $ | 0.00 | ||||||
2004 | ||||||||||||
First Quarter | $ | 41.00 | $ | 34.73 | $ | 0.00 | ||||||
Second Quarter | $ | 41.70 | $ | 36.73 | $ | 0.00 | ||||||
Third Quarter | $ | 41.51 | $ | 37.31 | $ | 0.00 | ||||||
Fourth Quarter | $ | 45.68 | $ | 38.60 | $ | 0.40 |
Investor Relations | Transfer Agent and Registrar | |
Marty Ketelaar | Mellon Investor Service, LLC | |
Vice President — 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, 2004 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, 2004, 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.
Page 22