EXHIBIT 99.2
AmerUs Group Co.
Financial Supplement
Third Quarter 2006
AmerUs Group Co.
Financial Highlights
($ in thousands, except for per share data)
Financial Highlights
($ in thousands, except for per share data)
For The Three Months Ended | For The Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Earnings: | ||||||||||||||||
Net Income available to common stockholders | $ | 5,327 | $ | 38,619 | $ | 128,777 | $ | 135,674 | ||||||||
Adjustments for: | ||||||||||||||||
Realized/unrealized losses on open block assets | 6,937 | 7,161 | 12,021 | 8,049 | ||||||||||||
Net amortization of DAC, VOBA and deferred sales inducements due to open block gains or losses | (1,222 | ) | (773 | ) | (2,001 | ) | (652 | ) | ||||||||
Net effect of derivative related market value adjustments | 24,333 | (13,895 | ) | (526 | ) | 1,180 | ||||||||||
Other (income) loss from non-insurance operations | — | (96 | ) | — | 123 | |||||||||||
Litigation following class certification, net | 1,907 | 6,428 | 1,907 | 6,428 | ||||||||||||
Merger costs | 835 | — | 835 | — | ||||||||||||
Income tax items | 2,943 | (312 | ) | 2,474 | (19,995 | ) | ||||||||||
Early extinguishment of debt | — | 11,449 | — | 11,449 | ||||||||||||
Loss on redemption of preferred stock | 11,385 | — | 11,385 | — | ||||||||||||
Adjusted Net Operating Income available to common stockholders (1) | $ | 52,445 | $ | 48,581 | $ | 154,872 | $ | 142,256 | ||||||||
Basic Earnings Per Common Share: | ||||||||||||||||
Adjusted Net Operating Income available to common stockholders per common share (2) | $ | 1.29 | $ | 1.26 | $ | 3.94 | $ | 3.64 | ||||||||
Net Income available to common stockholders per common share | $ | 0.13 | $ | 1.00 | $ | 3.28 | $ | 3.47 | ||||||||
Weighted average common shares outstanding | 40,673 | 38,488 | 39,309 | 39,102 | ||||||||||||
Diluted Earnings Per Common Share: | ||||||||||||||||
Adjusted Net Operating Income available to common stockholders per common share (2) | $ | 1.22 | $ | 1.14 | $ | 3.68 | $ | 3.33 | ||||||||
Net Income available to common stockholders per common share | $ | 0.12 | $ | 0.91 | $ | 3.06 | $ | 3.17 | ||||||||
Weighted average common shares outstanding | 42,903 | 42,526 | 42,091 | 42,743 |
(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. |
AmerUs Group Co.
Equity and Capitalization
($ in thousands, except for per share data)
($ in thousands, except for per share data)
As Of Or | As Of Or | |||||||||||||||
For The Three Months Ended | For The Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Common Stockholders’ Equity: | ||||||||||||||||
Beginning of period (including AOCI) | $ | 1,415,631 | $ | 1,717,514 | $ | 1,557,485 | $ | 1,623,469 | ||||||||
Beginning of period (excluding AOCI) (1) | 1,634,845 | 1,589,074 | 1,561,097 | 1,508,799 | ||||||||||||
End of period (including AOCI) | 1,723,626 | 1,552,589 | 1,723,626 | 1,552,589 | ||||||||||||
End of period (excluding AOCI) (1) | 1,785,877 | 1,526,960 | 1,785,877 | 1,526,960 | ||||||||||||
Average equity (including AOCI) | 1,569,628 | 1,635,052 | 1,640,556 | 1,588,029 | ||||||||||||
Average equity (excluding AOCI) (1) | 1,710,361 | 1,558,017 | 1,673,487 | 1,517,880 | ||||||||||||
Common shares outstanding, end of period | 43,059 | 38,651 | ||||||||||||||
Return on Common Stockholders’ Equity: | ||||||||||||||||
Net income available to common stockholders / Average common stockholders’ equity (including AOCI) | 1.4 | % | 9.4 | % | 10.5 | % | 11.4 | % | ||||||||
Adjusted Net Operating Income available to common stockholders / Average common stockholders’ equity (excluding AOCI) (1) (2) | 12.3 | % | 12.5 | % | 12.3 | % | 12.5 | % | ||||||||
Book Value per Common Share: | ||||||||||||||||
including AOCI | $ | 40.03 | $ | 40.17 | ||||||||||||
excluding AOCI (1) | $ | 41.48 | $ | 39.51 |
9/30/2006 | 12/31/2005 | |||||||||||
Capitalization: | ||||||||||||
Bank Borrowings | $ | 40,000 | $ | — | ||||||||
Senior Notes | 300,000 | 300,000 | ||||||||||
PRIDES | 143,750 | 143,750 | ||||||||||
Surplus Note | 25,000 | 25,000 | ||||||||||
Other Borrowings | 23,492 | 36,546 | ||||||||||
Capital Securities — AmerUs Capital I | 50,755 | 50,755 | ||||||||||
Total Notes Payable | 582,997 | 556,051 | ||||||||||
Preferred Stock | — | 144,830 | ||||||||||
Common Stockholders’ Equity | 1,785,877 | 1,561,097 | ||||||||||
Total Capitalization (excluding AOCI) (1) | $ | 2,368,874 | $ | 2,261,978 | ||||||||
AOCI — Unrealized Losses | (62,251 | ) | (3,612 | ) | ||||||||
Total Capitalization (including AOCI) | $ | 2,306,623 | $ | 2,258,366 | ||||||||
Debt-to-Capital Ratio (3): | ||||||||||||
A. M. Best | 23.75 | % | 20.51 | % | ||||||||
Fitch | 23.33 | % | 18.79 | % | ||||||||
Moody’s | 25.79 | % | 24.27 | % | ||||||||
Standard & Poor’s | 22.47 | % | 15.99 | % |
(1) | Stockholders’ equity, return on equity, book value, and total capitalization amounts excluding accumulated other comprehensive income (AOCI), are non-GAAP financial measures. Management believes that excluding 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. | |
(2) | 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. | |
(3) | 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, AmerUs Capital I is treated as 40% equity and previously, preferred stock was treated as 90% equity and PRIDES were treated as 60% equity. For Fitch, Amerus Capital I is treated as 60% equity and previously, preferred stock was treated as 100% equity and PRIDES were treated as 70% equity. For Moody’s, AmerUs Capital I is treated as 100% debt and previously, preferred stock was treated as 75% equity and PRIDES were treated as 50% equity. Debt includes $23,845 of defined benefit plan obligation and $13,792 of future lease commitments for both September 30, 2006 and December 31, 2005. For Standard & Poors, AmerUs Capital I is treated as 100% equity (and previously preferred stock and PRIDES were also 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 none and $38 as of September 30, 2006 and December 31, 2005 respectively. |
AmerUs Group Co.
Consolidated Income Statement
($ in thousands)
For The Three Months Ended | For The Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Revenues: | ||||||||||||||||
Insurance premiums | $ | 51,268 | $ | 54,603 | $ | 159,611 | $ | 178,150 | ||||||||
Product charges | 70,525 | 64,939 | 207,327 | 178,610 | ||||||||||||
Net investment income | 290,651 | 278,641 | 862,941 | 824,392 | ||||||||||||
Realized/unrealized capital gains (losses) | 71,509 | 23,362 | 59,289 | (19,316 | ) | |||||||||||
Other income: | ||||||||||||||||
Income from Independent Marketing Organizations | 8,017 | 7,331 | 24,223 | 23,495 | ||||||||||||
Other | 4,429 | 4,156 | 13,108 | 11,777 | ||||||||||||
Total Revenue | 496,399 | 433,032 | 1,326,499 | 1,197,108 | ||||||||||||
�� | ||||||||||||||||
Benefits and Expenses: | ||||||||||||||||
Policyowner benefits — traditional life | 55,531 | 54,100 | 167,568 | 173,300 | ||||||||||||
Policyowner benefits — investment and UL contracts | 301,979 | 157,111 | 572,725 | 451,697 | ||||||||||||
Operating expenses | 35,552 | 34,981 | 106,365 | 100,505 | ||||||||||||
Expenses from Independent Marketing Organizations | 5,707 | 5,873 | 18,117 | 19,376 | ||||||||||||
Litigation following class certification, net | 3,179 | 9,380 | 3,179 | 9,380 | ||||||||||||
Amortization — DAC and VOBA | 37,244 | 58,714 | 152,526 | 146,515 | ||||||||||||
Dividends to policyowners | 16,369 | 18,770 | 52,785 | 70,637 | ||||||||||||
Total Benefits and Expenses | 455,561 | 338,929 | 1,073,265 | 971,410 | ||||||||||||
Interest expense: | ||||||||||||||||
Interest on bank debt | 348 | 939 | 468 | 1,127 | ||||||||||||
Interest on Senior Notes | 4,463 | 2,760 | 13,388 | 7,104 | ||||||||||||
Interest on Capital Securities (AmerUs Capital I) | 1,005 | 1,005 | 3,133 | 3,133 | ||||||||||||
Interest on PRIDES | 2,409 | 1,998 | 6,600 | 5,994 | ||||||||||||
Interest on OCEANs | — | (45 | ) | — | 3,758 | |||||||||||
Interest on Surplus Note | 541 | 541 | 1,624 | 1,624 | ||||||||||||
Interest on other borrowings | 382 | 527 | 1,365 | 956 | ||||||||||||
Total interest expense | 9,148 | 7,725 | 26,578 | 23,696 | ||||||||||||
Early extinguishment of debt | — | 19,082 | — | 19,082 | ||||||||||||
Income before income tax expense | 31,690 | 67,296 | 226,656 | 182,920 | ||||||||||||
Income tax (expense) | (12,260 | ) | (28,677 | ) | (78,338 | ) | (47,246 | ) | ||||||||
Net income | 19,430 | 38,619 | 148,318 | 135,674 | ||||||||||||
Dividends on preferred stock | (2,718 | ) | — | (8,156 | ) | — | ||||||||||
Loss on redemption of preferred stock | (11,385 | ) | — | (11,385 | ) | — | ||||||||||
Net income available to common stockholders | $ | 5,327 | $ | 38,619 | $ | 128,777 | $ | 135,674 | ||||||||
Weighted Average Common Shares Outstanding: | ||||||||||||||||
Basic | 40,672,524 | 38,488,294 | 39,309,376 | 39,102,190 | ||||||||||||
Diluted | 42,903,211 | 42,525,870 | 42,090,818 | 42,743,043 |
AmerUs Group Co.
Operating Segment Income
($ in thousands)
Protection | Accumulation | Total | ||||||||||||||
For The Three Months Ended September 30, 2006 | Products | Products | All Other | Consolidated | ||||||||||||
Revenues: | ||||||||||||||||
Insurance premiums | $ | 49,916 | $ | 1,168 | $ | 184 | $ | 51,268 | ||||||||
Product charges | 54,176 | 16,349 | — | 70,525 | ||||||||||||
Net investment income | 89,086 | 200,328 | 1,237 | 290,651 | ||||||||||||
Realized/unrealized gains on closed block investments | 122 | — | — | 122 | ||||||||||||
Other income: | ||||||||||||||||
Income from Independent Marketing Organizations | — | 8,017 | — | 8,017 | ||||||||||||
Other | 902 | 2,641 | 886 | 4,429 | ||||||||||||
194,202 | 228,503 | 2,307 | 425,012 | |||||||||||||
Benefits and expenses: | ||||||||||||||||
Policyowner benefits | 91,617 | 131,119 | 412 | 223,148 | ||||||||||||
Underwriting, acquisition, and other expenses: | ||||||||||||||||
Operating expenses | 18,773 | 9,815 | 5,574 | 34,162 | ||||||||||||
Expenses from Independent Marketing Organizations | — | 5,707 | — | 5,707 | ||||||||||||
Amortization of DAC and VOBA | 25,009 | 28,655 | — | 53,664 | ||||||||||||
Dividends to policyowners | 16,368 | 1 | — | 16,369 | ||||||||||||
151,767 | 175,297 | 5,986 | 333,050 | |||||||||||||
Segment pre-tax operating income | $ | 42,435 | $ | 53,206 | $ | (3,679 | ) | 91,962 | ||||||||
Realized/unrealized losses on open block assets | (10,999 | ) | ||||||||||||||
Unrealized gains on open block options and trading investments | 82,386 | |||||||||||||||
Change in option value of indexed products and market value adjustments on total return strategy annuities | (139,271 | ) | ||||||||||||||
Cash flow hedge amortization | 129 | |||||||||||||||
Amortization of DAC and VOBA due to open block gains and losses and market value adjustments | 16,420 | |||||||||||||||
Amortization of deferred sales inducements due to open block gains and losses and market value adjustments | 4,780 | |||||||||||||||
Litigation following class certification, net | (3,179 | ) | ||||||||||||||
Merger costs | (1,390 | ) | ||||||||||||||
Income from continuing operations | 40,838 | |||||||||||||||
Interest (expense) | (9,148 | ) | ||||||||||||||
Income tax (expense) | (12,260 | ) | ||||||||||||||
Net income | 19,430 | |||||||||||||||
Dividends on preferred stock | (2,718 | ) | ||||||||||||||
Loss on redemption of preferred stock | (11,385 | ) | ||||||||||||||
Net income available to common stockholders | $ 5,327 | |||||||||||||||
AmerUs Group Co.
Operating Segment Income
($ in thousands)
Protection | Accumulation | Total | ||||||||||||||
For The Three Months Ended September 30, 2005 | Products | Products | All Other | Consolidated | ||||||||||||
Revenues: | ||||||||||||||||
Insurance premiums | $ | 53,535 | $ | 727 | $ | 341 | $ 54,603 | |||||||||
Product charges | 51,350 | 13,589 | — | 64,939 | ||||||||||||
Net investment income | 88,930 | 189,332 | 379 | 278,641 | ||||||||||||
Realized/unrealized losses on closed block investments | (650 | ) | — | — | (650 | ) | ||||||||||
Other income: | ||||||||||||||||
Income from Independent Marketing Organizations | — | 7,331 | — | 7,331 | ||||||||||||
Other | 879 | 2,551 | 566 | 3,996 | ||||||||||||
194,044 | 213,530 | 1,286 | 408,860 | |||||||||||||
Benefits and expenses: | ||||||||||||||||
Policyowner benefits | 87,918 | 130,529 | (387 | ) | 218,060 | |||||||||||
Underwriting, acquisition, and other expenses: | ||||||||||||||||
Operating expenses | 19,473 | 7,230 | 8,278 | 34,981 | ||||||||||||
Expenses from Independent Marketing Organizations | — | 5,873 | — | 5,873 | ||||||||||||
Amortization of DAC and VOBA | 27,598 | 22,030 | — | 49,628 | ||||||||||||
Dividends to policyowners | 18,769 | 1 | — | 18,770 | ||||||||||||
153,758 | 165,663 | 7,891 | 327,312 | |||||||||||||
Segment pre-tax operating income | $ | 40,286 | $ | 47,867 | $ | (6,605 | ) | 81,548 | ||||||||
Realized/unrealized losses on open block assets | (793 | ) | ||||||||||||||
Unrealized gains on open block options and trading investments | 24,805 | |||||||||||||||
Change in option value of indexed products and market value adjustments on total return strategy annuities | 6,814 | |||||||||||||||
Cash flow hedge amortization | 35 | |||||||||||||||
Amortization of DAC and VOBA due to open block gains and losses | (9,086 | ) | ||||||||||||||
Litigation following class certification, net | (9,380 | ) | ||||||||||||||
Other income from non-insurance operations | 160 | |||||||||||||||
Income from continuing operations | 94,103 | |||||||||||||||
Interest (expense) | (7,725 | ) | ||||||||||||||
Early extinguishment of debt | (19,082 | ) | ||||||||||||||
Income tax (expense) | (28,677 | ) | ||||||||||||||
Net income | 38,619 | |||||||||||||||
Dividends on preferred stock | — | |||||||||||||||
Net income available to common stockholders | $ 38,619 | |||||||||||||||
AmerUs Group Co.
Operating Segment Income
($ in thousands)
Protection | Accumulation | Total | ||||||||||||||
For The Nine Months Ended September 30, 2006 | Products | Products | All Other | Consolidated | ||||||||||||
Revenues: | ||||||||||||||||
Insurance premiums | $ | 156,844 | $ | 2,568 | $ | 199 | $ 159,611 | |||||||||
Product charges | 160,534 | 46,793 | — | 207,327 | ||||||||||||
Net investment income | 266,645 | 594,261 | 2,035 | 862,941 | ||||||||||||
Realized/unrealized losses on closed block investments | (1,996 | ) | — | — | (1,996 | ) | ||||||||||
Other income: | ||||||||||||||||
Income from Independent Marketing Organizations | — | 24,223 | — | 24,223 | ||||||||||||
Other | 2,659 | 7,924 | 2,525 | 13,108 | ||||||||||||
584,686 | 675,769 | 4,759 | 1,265,214 | |||||||||||||
Benefits and expenses: | ||||||||||||||||
Policyowner benefits | 277,081 | 384,715 | 273 | 662,069 | ||||||||||||
Underwriting, acquisition, and other expenses: | ||||||||||||||||
Operating expenses | 54,538 | 28,633 | 21,804 | 104,975 | ||||||||||||
Expenses from Independent Marketing Organizations | — | 18,117 | — | 18,117 | ||||||||||||
Amortization of DAC and VOBA | 72,917 | 81,761 | — | 154,678 | ||||||||||||
Dividends to policyowners | 52,783 | 2 | — | 52,785 | ||||||||||||
457,319 | 513,228 | 22,077 | 992,624 | |||||||||||||
Segment pre-tax operating income | $ | 127,367 | $ | 162,541 | $ | (17,318 | ) | 272,590 | ||||||||
Realized/unrealized losses on open block assets | (18,676 | ) | ||||||||||||||
Unrealized gains on open block options and trading investments | 79,961 | |||||||||||||||
Change in option value of indexed products and market value adjustments on total return strategy annuities | (76,930 | ) | ||||||||||||||
Cash flow hedge amortization | 183 | |||||||||||||||
Amortization of DAC and VOBA due to open block gains and losses and market value adjustments | 2,152 | |||||||||||||||
Amortization of deferred sales inducements due to open block gains and losses and market value adjustments | (1,477 | ) | ||||||||||||||
Litigation following class certification, net | (3,179 | ) | ||||||||||||||
Merger costs | (1,390 | ) | ||||||||||||||
Income from continuing operations | 253,234 | |||||||||||||||
Interest (expense) | (26,578 | ) | ||||||||||||||
Income tax (expense) | (78,338 | ) | ||||||||||||||
Net income | 148,318 | |||||||||||||||
Dividends on preferred stock | (8,156 | ) | ||||||||||||||
Loss on redemption of preferred stock | (11,385 | ) | ||||||||||||||
Net income available to common stockholders | $ 128,777 | |||||||||||||||
AmerUs Group Co.
Operating Segment Income
($ in thousands)
Protection | Accumulation | Total | ||||||||||||||
For The Nine Months Ended September 30, 2005 | Products | Products | All Other | Consolidated | ||||||||||||
Revenues: | ||||||||||||||||
Insurance premiums | $ | 174,587 | $ | 2,263 | $ | 1,300 | $ 178,150 | |||||||||
Product charges | 139,073 | 39,537 | — | 178,610 | ||||||||||||
Net investment income | 268,799 | 554,531 | 1,062 | 824,392 | ||||||||||||
Realized/unrealized losses on closed block investments | (560 | ) | — | — | (560 | ) | ||||||||||
Other income: | ||||||||||||||||
Income from Independent Marketing Organizations | — | 23,495 | — | 23,495 | ||||||||||||
Other | 2,597 | 7,755 | 1,630 | 11,982 | ||||||||||||
584,496 | 627,581 | 3,992 | 1,216,069 | |||||||||||||
Benefits and expenses: | ||||||||||||||||
Policyowner benefits | 256,293 | 388,152 | 67 | 644,512 | ||||||||||||
Underwriting, acquisition, and other expenses: | ||||||||||||||||
Operating expenses | 57,352 | 21,391 | 21,762 | 100,505 | ||||||||||||
Expenses from Independent Marketing Organizations | — | 19,376 | — | 19,376 | ||||||||||||
Amortization of DAC and VOBA | 74,576 | 68,236 | — | 142,812 | ||||||||||||
Dividends to policyowners | 70,633 | 4 | — | 70,637 | ||||||||||||
458,854 | 497,159 | 21,829 | 977,842 | |||||||||||||
Segment pre-tax operating income | $ | 125,642 | $ | 130,422 | $ | (17,837 | ) | 238,227 | ||||||||
Realized/unrealized losses on open block assets | (2,133 | ) | ||||||||||||||
Unrealized losses on open block options and trading investments | (16,623 | ) | ||||||||||||||
Change in option value of indexed products and market value adjustments on total return strategy annuities | 19,403 | |||||||||||||||
Cash flow hedge amortization | 112 | |||||||||||||||
Amortization of DAC and VOBA due to open block gains and losses | (3,703 | ) | ||||||||||||||
Litigation following class certification, net | (9,380 | ) | ||||||||||||||
Other income from non-insurance operations | (205 | ) | ||||||||||||||
Income from continuing operations | 225,698 | |||||||||||||||
Interest (expense) | (23,696 | ) | ||||||||||||||
Early extinguishment of debt | (19,082 | ) | ||||||||||||||
Income tax (expense) | (47,246 | ) | ||||||||||||||
Net income | 135,674 | |||||||||||||||
Dividends on preferred stock | — | |||||||||||||||
Net income available to common stockholders | $ 135,674 | |||||||||||||||
AmerUs Group Co.
Consolidated Balance Sheets
($ in thousands)
September 30, | December 31, | |||||||
2006 | 2005 | |||||||
ASSETS: | ||||||||
Investments: | ||||||||
Securities available-for-sale at fair value: | ||||||||
Fixed maturity securities | $ | 17,482,586 | $ | 16,727,933 | ||||
Equity securities | 98,169 | 75,658 | ||||||
Short-term investments | 19,877 | 9,998 | ||||||
Securities held for trading purposes: | ||||||||
Fixed maturity securities | 1,255,897 | 1,414,225 | ||||||
Equity securities | 4,058 | 2,358 | ||||||
Short-term investments | 2,480 | — | ||||||
Mortgage loans | 1,018,752 | 976,135 | ||||||
Policy loans | 502,303 | 483,441 | ||||||
Other investments | 433,898 | 347,552 | ||||||
Total investments | 20,818,020 | 20,037,300 | ||||||
Cash and cash equivalents | 549,527 | 600,160 | ||||||
Accrued investment income | 256,251 | 237,221 | ||||||
Premiums, fees and other receivables | 35,913 | 40,667 | ||||||
Income taxes receivable | 17,328 | 9,005 | ||||||
Reinsurance receivables | 743,622 | 730,532 | ||||||
Deferred policy acquisition costs | 2,073,309 | 1,755,159 | ||||||
Deferred sales inducements | 338,250 | 261,322 | ||||||
Value of business acquired | 334,513 | 356,949 | ||||||
Goodwill | 229,670 | 228,869 | ||||||
Property and equipment | 47,356 | 44,467 | ||||||
Other assets | 315,314 | 306,655 | ||||||
Separate account assets | 202,366 | 221,694 | ||||||
Total Assets | $ | 25,961,439 | $ | 24,830,000 | ||||
AmerUs Group Co.
Consolidated Balance Sheets
($ in thousands)
September 30, | December 31, | |||||||
2006 | 2005 | |||||||
LIABILITIES: | ||||||||
Policyowner reserves and policyowner funds: | ||||||||
Future life and annuity policy benefits | $ | 20,127,049 | $ | 19,486,854 | ||||
Policyowner funds | 1,996,940 | 1,483,873 | ||||||
Sub-total | 22,123,989 | 20,970,727 | ||||||
Accrued expenses and other liabilities | 449,226 | 500,858 | ||||||
Payable for collateral under securities lending and other transactions | 508,561 | 474,561 | ||||||
Dividends payable to policyowners | 234,932 | 278,839 | ||||||
Policy and contract claims | 48,017 | 66,137 | ||||||
Deferred income taxes | 87,725 | 58,818 | ||||||
Notes payable: | ||||||||
Bank debt | 40,000 | — | ||||||
Senior notes | 300,000 | 300,000 | ||||||
PRIDES | 143,750 | 143,750 | ||||||
Surplus note | 25,000 | 25,000 | ||||||
AmerUs Capital I | 50,755 | 50,755 | ||||||
Other borrowings | 23,492 | 36,546 | ||||||
Separate account liabilities | 202,366 | 221,694 | ||||||
Total Liabilities | 24,237,813 | 23,127,685 | ||||||
STOCKHOLDERS’ EQUITY: | ||||||||
Preferred Stock, no par value, 20,000,000 shares authorized, 6,000,000 shares issued and outstanding in 2006 and 2005 | — | 144,830 | ||||||
Common Stock, no par value, 230,000,000 shares authorized; 51,904,999 shares issued and 43,058,995 shares outstanding in 2006; 46,675,811 shares issued and 38,612,874 shares outstanding in 2005 | 51,905 | 46,676 | ||||||
Additional paid-in capital — common stock | 1,387,426 | 1,231,533 | ||||||
Accumulated other comprehensive loss | (62,251 | ) | (3,612 | ) | ||||
Unearned compensation | — | (3,783 | ) | |||||
Retained earnings | 733,524 | 604,747 | ||||||
Treasury stock, at cost (8,846,004 shares in 2006 and 8,062,937 shares in 2005) | (386,978 | ) | (318,076 | ) | ||||
Total Stockholders’ Equity | 1,723,626 | 1,702,315 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 25,961,439 | $ | 24,830,000 | ||||
AmerUs Group Co.
Consolidated Balance Sheet
($ in thousands)
September 30, 2006
AOCI | Without | |||||||||||
GAAP | Adjustment | AOCI Adjustments (1) | ||||||||||
ASSETS: | ||||||||||||
Investments: | ||||||||||||
Securities available-for-sale at fair value: | ||||||||||||
Fixed maturity securities | $ | 17,482,586 | $ | 101,859 | $ | 17,584,445 | ||||||
Equity securities | 98,169 | (879 | ) | 97,290 | ||||||||
Short-term investments | 19,877 | (15 | ) | 19,862 | ||||||||
Securities held for trading purposes: | ||||||||||||
Fixed maturity securities | 1,255,897 | — | 1,255,897 | |||||||||
Equity securities | 4,058 | — | 4,058 | |||||||||
Short-term investments | 2,480 | — | 2,480 | |||||||||
Mortgage loans | 1,018,752 | — | 1,018,752 | |||||||||
Policy loans | 502,303 | — | 502,303 | |||||||||
Other investments | 433,898 | 4,672 | 438,570 | |||||||||
Total invested assets | 20,818,020 | 105,637 | 20,923,657 | |||||||||
Cash and cash equivalents | 549,527 | — | 549,527 | |||||||||
Accrued investment income | 256,251 | — | 256,251 | |||||||||
Premiums, fees and other receivables | 35,913 | — | 35,913 | |||||||||
Income taxes receivable | 17,328 | — | 17,328 | |||||||||
Reinsurance receivables | 743,622 | — | 743,622 | |||||||||
Deferred policy acquisition costs | 2,073,309 | (65,755 | ) | 2,007,554 | ||||||||
Deferred sales inducements | 338,250 | (16,242 | ) | 322,008 | ||||||||
Value of business acquired | 334,513 | 21,717 | 356,230 | |||||||||
Goodwill | 229,670 | — | 229,670 | |||||||||
Property and equipment | 47,356 | — | 47,356 | |||||||||
Other assets | 315,314 | — | 315,314 | |||||||||
Separate account assets | 202,366 | — | 202,366 | |||||||||
Total Assets | $ | 25,961,439 | $ | 45,357 | $ | 26,006,796 | ||||||
(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. |
AmerUs Group Co.
Consolidated Balance Sheet
($ in thousands)
September 30, 2006
AOCI | Without | |||||||||||
GAAP | Adjustment | AOCI Adjustments (1) | ||||||||||
LIABILITIES: | ||||||||||||
Policyowner reserves and policyowner funds: | ||||||||||||
Future life and annuity policy benefits | $ | 20,127,049 | $ | — | $ | 20,127,049 | ||||||
Policyowner funds | 1,996,940 | — | 1,996,940 | |||||||||
22,123,989 | — | 22,123,989 | ||||||||||
Accrued expenses and other liabilities | 449,226 | (16,620 | ) | 432,606 | ||||||||
Payable for collateral under securities lending and other transactions | 508,561 | — | 508,561 | |||||||||
Dividends payable to policyowners | 234,932 | (35,072 | ) | 199,860 | ||||||||
Policy and contract claims | 48,017 | — | 48,017 | |||||||||
Deferred income taxes | 87,725 | 34,798 | 122,523 | |||||||||
Notes payable: | ||||||||||||
Bank debt | 40,000 | — | 40,000 | |||||||||
Senior notes | 300,000 | — | 300,000 | |||||||||
PRIDES | 143,750 | — | 143,750 | |||||||||
Surplus note | 25,000 | — | 25,000 | |||||||||
AmerUs Capital I | 50,755 | — | 50,755 | |||||||||
Other borrowings | 23,492 | — | 23,492 | |||||||||
Separate Account liabilities | 202,366 | — | 202,366 | |||||||||
Liabilities of discontinued operations | — | — | — | |||||||||
Total Liabilities | 24,237,813 | (16,894 | ) | 24,220,919 | ||||||||
STOCKHOLDERS’ EQUITY: | ||||||||||||
Common Stock, no par value, 230,000,000 shares authorized; 51,904,999 shares issued and 43,058,995 shares outstanding in 2006; | 51,905 | — | 51,905 | |||||||||
Additional paid-in capital — common stock | 1,387,426 | — | 1,387,426 | |||||||||
Accumulated other comprehensive loss | (62,251 | ) | 62,251 | — | ||||||||
Retained earnings | 733,524 | — | 733,524 | |||||||||
Treasury stock, at cost (8,846,004 shares in 2006) | (386,978 | ) | — | (386,978 | ) | |||||||
Total Stockholders’ Equity | 1,723,626 | 62,251 | 1,785,877 | |||||||||
Total Liabilities and Stockholders’ Equity | $ | 25,961,439 | $ | 45,357 | $ | 26,006,796 | ||||||
(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. |
AmerUs Group Co.
Product Mix
($ in thousands)
For The Three Months Ended | For The Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Protection Products Repetitive Premiums (1): | ||||||||||||||||
Interest-sensitive whole life | 61 | 159 | 223 | 392 | ||||||||||||
Term and other life | 1,501 | 2,835 | 4,633 | 9,241 | ||||||||||||
Universal life | ||||||||||||||||
Flexible premium without no lapse guarantee | 733 | 2,651 | 2,110 | 10,913 | ||||||||||||
Single premium | 23 | — | 68 | — | ||||||||||||
Indexed life: | ||||||||||||||||
Flexible premium without no lapse guarantee | 23,816 | 17,694 | 68,826 | 48,703 | ||||||||||||
Flexible premium with no lapse guarantee | 6,335 | 3,386 | 16,406 | 9,955 | ||||||||||||
Fixed premium excess interest whole life | 397 | 2,843 | 2,286 | 7,473 | ||||||||||||
Single premium | 658 | — | 2,075 | — | ||||||||||||
Total Repetitive Premiums | $ | 33,524 | $ | 29,568 | $ | 96,627 | $ | 86,677 | ||||||||
Accumulation Deposits (1): | ||||||||||||||||
Annuity premiums: | ||||||||||||||||
Deferred fixed annuity: | ||||||||||||||||
Traditional annuity | $ | 49,988 | $ | 52,917 | $ | 132,791 | $ | 191,277 | ||||||||
Indexed annuity | 637,017 | 632,875 | 1,699,182 | 1,778,971 | ||||||||||||
Sub-total | 687,005 | 685,792 | 1,831,973 | 1,970,248 | ||||||||||||
Variable annuity | 397 | 864 | 1,481 | 2,002 | ||||||||||||
Funding agreements | 436,000 | — | 610,666 | 26,200 | ||||||||||||
Total Accumulation Deposits | $ | 1,123,402 | $ | 686,656 | $ | 2,444,120 | $ | 1,998,450 | ||||||||
(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. |
AmerUs Group Co.
Sources of Business
($ in thousands)
Sources of Business
($ in thousands)
For The Three Months Ended | For The Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Protection Products Repetitive Premiums (1): | ||||||||||||||||
Career marketing organizations (CMOs) | $ | 8,783 | $ | 8,127 | $ | 25,423 | $ | 23,377 | ||||||||
Personal producing general agent (PPGA) | 4,374 | 5,937 | 15,412 | 19,215 | ||||||||||||
New York distribution | 3,015 | 4,535 | 9,495 | 13,121 | ||||||||||||
Independent agent force (2) | 17,352 | 10,969 | 46,297 | 30,964 | ||||||||||||
Total Repetitive Premiums | $ | 33,524 | $ | 29,568 | $ | 96,627 | $ | 86,677 | ||||||||
Accumulation Deposits (1): | ||||||||||||||||
Preferred producer (Career) | $ | 50,333 | $ | 38,464 | $ | 143,503 | $ | 123,132 | ||||||||
Personal producing general agent (PPGA) | 10,600 | 8,380 | 21,732 | 23,910 | ||||||||||||
Independent agent force (2) | 626,469 | 639,812 | 1,668,219 | 1,825,208 | ||||||||||||
Funding agreements | 436,000 | — | 610,666 | 26,200 | ||||||||||||
Total Accumulation Deposits | $ | 1,123,402 | $ | 686,656 | $ | 2,444,120 | $ | 1,998,450 | ||||||||
(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. |
AmerUs Group Co.
Investment Summary
(Including Closed Block)
($ in thousands)
Investment Summary
(Including Closed Block)
($ in thousands)
September 30, 2006 | ||||||||||||||||
Amortized Cost | Unrealized Gain | Unrealized Loss | Carrying Value | |||||||||||||
Portfolio Composition: | ||||||||||||||||
Cash and cash equivalents | $ | 549,527 | $ | — | $ | — | $ | 549,527 | ||||||||
Securities available-for-sale: | ||||||||||||||||
Investment grade bonds | 16,267,424 | 228,511 | (327,665 | ) | 16,168,270 | |||||||||||
Non-investment grade bonds | 1,317,021 | 26,611 | (29,316 | ) | 1,314,316 | |||||||||||
Equity securities | 97,290 | 879 | — | 98,169 | ||||||||||||
Short-term investments | 19,862 | 15 | — | 19,877 | ||||||||||||
Securities for trading: | ||||||||||||||||
Investment grade bonds | 1,119,789 | — | — | 1,119,789 | ||||||||||||
Non-investment grade bonds | 136,108 | — | — | 136,108 | ||||||||||||
Equity securities | 4,058 | — | — | 4,058 | ||||||||||||
Short-term investments | 2,480 | — | — | 2,480 | ||||||||||||
Mortgage loans | 1,018,752 | — | — | 1,018,752 | ||||||||||||
Policy loans | 502,303 | — | — | 502,303 | ||||||||||||
Other invested assets | 433,898 | — | — | 433,898 | ||||||||||||
Total | $ | 21,468,512 | $ | 256,016 | $ | (356,981 | ) | $ | 21,367,547 | |||||||
December 31, 2005 | ||||||||||||||||
Amortized Cost | Unrealized Gain | Unrealized Loss | Carrying Value | |||||||||||||
Portfolio Composition: | ||||||||||||||||
Cash and cash equivalents | $ | 600,160 | $ | — | $ | — | $ | 600,160 | ||||||||
Securities available-for-sale: | ||||||||||||||||
Investment grade bonds | 15,371,845 | 297,149 | (204,917 | ) | 15,464,077 | |||||||||||
Non-investment grade bonds | 1,249,886 | 35,812 | (21,842 | ) | 1,263,856 | |||||||||||
Equity securities | 74,951 | 707 | — | 75,658 | ||||||||||||
Short-term investments | 9,990 | 8 | — | 9,998 | ||||||||||||
Securities for trading: | ||||||||||||||||
Investment grade bonds | 1,286,830 | — | — | 1,286,830 | ||||||||||||
Non-investment grade bonds | 127,395 | — | — | 127,395 | ||||||||||||
Equity securities | 2,358 | — | — | 2,358 | ||||||||||||
Mortgage loans | 976,135 | — | — | 976,135 | ||||||||||||
Policy loans | 483,441 | — | — | 483,441 | ||||||||||||
Other invested assets | 347,552 | — | — | 347,552 | ||||||||||||
Total | $ | 20,530,543 | $ | 333,676 | $ | (226,759 | ) | $ | 20,637,460 | |||||||
September 30, 2006 | December 31, 2005 | |||||||
Investment Portfolio Data (1): | ||||||||
Average NAIC Rating | 1.48 | 1.49 | ||||||
Average Life | 10.37 | 9.82 | ||||||
Effective Duration | 6.22 | 6.21 | ||||||
Weighted Average Book Yield | 5.80 | 5.69 | ||||||
Quarterly New Money Rate | 6.41 | 5.77 |
September 30, 2006 | December 31, 2005 | |||||||||||||||||||||||
Amortized Cost | % of FMS | % of TIA (2) | Amortized Cost | % of FMS | % of TIA (2) | |||||||||||||||||||
High Yield Securities: | ||||||||||||||||||||||||
NAIC 3 | $ | 862,926 | 4.58 | % | 4.02 | % | $ | 806,270 | 4.47 | % | 3.93 | % | ||||||||||||
NAIC 4 | 529,666 | 2.81 | % | 2.47 | % | 533,201 | 2.96 | % | 2.60 | % | ||||||||||||||
NAIC 5 | 60,002 | 0.32 | % | 0.28 | % | 34,908 | 0.19 | % | 0.17 | % | ||||||||||||||
NAIC 6 | 535 | — | — | 2,902 | 0.02 | % | 0.01 | % | ||||||||||||||||
Total | $ | 1,453,129 | 7.71 | % | 6.77 | % | $ | 1,377,281 | 7.64 | % | 6.71 | % | ||||||||||||
(1) | Investment portfolio data reflects fixed maturity securities (FMS) managed by AmerUs Capital Management. | |
(2) | TIA — Total Invested Assets |
AmerUs Group Co.
Investment Summary
(Including Closed Block)
($ in thousands)
Investment Summary
(Including Closed Block)
($ in thousands)
September 30, 2006 | December 31, 2005 | |||||||||||||||||||||||
Market Value | % of FMS | % of TIA | Market Value | % of FMS | % of TIA | |||||||||||||||||||
Fixed Maturity Securities by Category: | ||||||||||||||||||||||||
Government | $ | 419,370 | 2.2 | % | 2.0 | % | $ | 487,223 | 2.7 | % | 2.4 | % | ||||||||||||
Public Credit | 10,252,522 | 54.7 | % | 48.0 | % | 10,111,795 | 55.7 | % | 49.0 | % | ||||||||||||||
Private Credit | 2,699,206 | 14.4 | % | 12.6 | % | 2,482,831 | 13.7 | % | 12.0 | % | ||||||||||||||
Below Investment Grade | 1,450,424 | 7.8 | % | 6.8 | % | 1,391,251 | 7.7 | % | 6.7 | % | ||||||||||||||
Mortgage-Backed (MBS) | 2,172,976 | 11.6 | % | 10.2 | % | 2,121,298 | 11.7 | % | 10.3 | % | ||||||||||||||
Commercial Mortgage-Backed (CMBS) | 1,176,039 | 6.3 | % | 5.5 | % | 1,204,944 | 6.6 | % | 5.8 | % | ||||||||||||||
Asset-Backed (ABS) | 567,946 | 3.0 | % | 2.7 | % | 327,435 | 1.8 | % | 1.6 | % | ||||||||||||||
Redeemable Preferred Stock | — | — | — | 15,381 | 0.1 | % | 0.1 | % | ||||||||||||||||
Total | $ | 18,738,483 | 100.0 | % | 87.8 | % | $ | 18,142,158 | 100.0 | % | 87.9 | % | ||||||||||||
September 30, 2006 | December 31, 2005 | |||||||||||||||||||||||||||
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 | $ | 11,876,124 | 63.4 | % | 55.6 | % | $ | 11,337,428 | 62.5 | % | 54.9 | % | |||||||||||||||
2 | BBB- to BBB+ | 5,411,935 | 28.9 | % | 25.3 | % | 5,413,479 | 29.9 | % | 26.2 | % | |||||||||||||||||
Investment Grade | 17,288,059 | 92.3 | % | 80.9 | % | 16,750,907 | 92.4 | % | 81.1 | % | ||||||||||||||||||
3 | BB- to BB+ | 863,707 | 4.6 | % | 4.0 | % | 817,530 | 4.5 | % | 4.0 | % | |||||||||||||||||
4 | B- to B+ | 526,414 | 2.8 | % | 2.5 | % | 534,480 | 2.9 | % | 2.6 | % | |||||||||||||||||
5 & 6 | CCC+ or lower | 60,303 | 0.3 | % | 0.3 | % | 39,241 | 0.2 | % | 0.2 | % | |||||||||||||||||
Below Investment Grade | 1,450,424 | 7.7 | % | 6.8 | % | 1,391,251 | 7.6 | % | 6.8 | % | ||||||||||||||||||
Total | $ | 18,738,483 | 100.0 | % | 87.7 | % | $ | 18,142,158 | 100.0 | % | 87.9 | % | ||||||||||||||||
September 30, 2006 | December 31, 2005 | |||||||||||||||||||||||
Market Value | % of FMS | % of TIA | Market Value | % of FMS | % of TIA | |||||||||||||||||||
Fixed Maturity Securities by Industries Sector: | ||||||||||||||||||||||||
Basic Industry | $ | 877,472 | 4.7 | % | 4.1 | % | $ | 905,312 | 5.0 | % | 4.4 | % | ||||||||||||
Capital Goods | 1,065,230 | 5.7 | % | 5.0 | % | 974,375 | 5.4 | % | 4.7 | % | ||||||||||||||
Communications | 1,188,692 | 6.3 | % | 5.6 | % | 1,372,702 | 7.6 | % | 6.6 | % | ||||||||||||||
Consumer Cyclical | 1,255,851 | 6.7 | % | 5.9 | % | 1,106,303 | 6.1 | % | 5.4 | % | ||||||||||||||
Consumer Non Cyclical | 1,647,414 | 8.8 | % | 7.7 | % | 1,577,229 | 8.7 | % | 7.6 | % | ||||||||||||||
Energy | 1,136,769 | 6.1 | % | 5.3 | % | 1,139,151 | 6.3 | % | 5.5 | % | ||||||||||||||
Technology | 373,708 | 2.0 | % | 1.7 | % | 261,740 | 1.4 | % | 1.3 | % | ||||||||||||||
Transportation | 640,911 | 3.4 | % | 3.0 | % | 598,977 | 3.3 | % | 2.9 | % | ||||||||||||||
Industrial Other | 259,710 | 1.4 | % | 1.2 | % | 221,532 | 1.2 | % | 1.1 | % | ||||||||||||||
Utilities | 2,269,988 | 12.1 | % | 10.6 | % | 2,193,589 | 12.1 | % | 10.6 | % | ||||||||||||||
Financial Institutions | 3,097,448 | 16.5 | % | 14.5 | % | 3,045,535 | 16.8 | % | 14.8 | % | ||||||||||||||
Sub-total | 13,813,193 | 73.7 | % | 64.6 | % | 13,396,445 | 73.9 | % | 64.9 | % | ||||||||||||||
Other (1) | 4,925,290 | 26.3 | % | 23.1 | % | 4,745,713 | 26.1 | % | 23.0 | % | ||||||||||||||
Total | $ | 18,738,483 | 100.0 | % | 87.7 | % | $ | 18,142,158 | 100.0 | % | 87.9 | % | ||||||||||||
(1) | Includes foreign and domestic government, asset-backed securities, mortgage-backed securities, and collateralized mortgage-backed securities |
September 30, 2006 | December 31, 2005 | |||||||||||||||||||||||
Market Value | % of MBS | % of TIA | Market Value | % of MBS | % of TIA | |||||||||||||||||||
Mortgage Backed Securities: | ||||||||||||||||||||||||
Pass-thru | $ | 1,133,921 | 52.2 | % | 5.3 | % | $ | 1,179,424 | 55.6 | % | 5.7 | % | ||||||||||||
Planned Amortization Class (PACs) | 460,117 | 21.2 | % | 2.2 | % | 452,120 | 21.3 | % | 2.2 | % | ||||||||||||||
Sequential Pay | 508,828 | 23.4 | % | 2.4 | % | 447,593 | 21.1 | % | 2.2 | % | ||||||||||||||
Adjustable Rate Mortgages (ARMs) | 70,110 | 3.2 | % | 0.3 | % | 42,161 | 2.0 | % | 0.2 | % | ||||||||||||||
Total | $ | 2,172,976 | 100.0 | % | 10.2 | % | $ | 2,121,298 | 100.0 | % | 10.3 | % | ||||||||||||
AmerUs Group Co.
Policyowner Liability Characteristics — Annuities
Policyowner Liability Characteristics — Annuities
($ in thousands)
September 30, 2006
Fixed | ||||||||||||||||
Fixed | Fixed | Indexed | Fixed | |||||||||||||
Traditional | Indexed | Derivatives | Indexed | |||||||||||||
Annuities | Annuities | Market Value | Annuities | |||||||||||||
Account Value | Account Value (4) | Adjustment | GAAP Reserves | |||||||||||||
FIXED DEFERRED ANNUITY SURRENDER CHARGE %: | ||||||||||||||||
Accrual adjustment | $ | — | $ | 11,527 | $ | 1,035 | $ | 12,562 | ||||||||
No surrender charge | 1,703,142 | 41,058 | 2,851 | 43,909 | ||||||||||||
1 percent | 44,811 | 68,088 | 7,578 | 75,666 | ||||||||||||
2 percent | 129,159 | 230,729 | 37,669 | 268,398 | ||||||||||||
3 percent | 263,197 | 315,441 | 54,644 | 370,085 | ||||||||||||
4 percent | 314,048 | 141,026 | 18,661 | 159,687 | ||||||||||||
5 percent | 343,233 | 65,049 | 3,874 | 68,923 | ||||||||||||
6 percent | 330,310 | 101,484 | 3,759 | 105,243 | ||||||||||||
7 percent | 318,881 | 202,273 | 5,505 | 207,778 | ||||||||||||
8 percent | 337,979 | 344,859 | 7,375 | 352,234 | ||||||||||||
9 percent | 456,476 | 425,465 | 11,133 | 436,598 | ||||||||||||
10 percent or greater | 464,531 | 6,629,550 | 149,392 | 6,778,942 | ||||||||||||
Total | $ | 4,705,767 | $ | 8,576,549 | $ | 303,476 | $ | 8,880,025 | ||||||||
MARKET VALUE ADJUSTMENT PROTECTION: | ||||||||||||||||
MVA provision on contract | $ | 400,971 | $ | 5,586,731 | $ | 120,420 | $ | 5,707,151 | ||||||||
Total return strategy | — | 955,094 | 135,799 | 1,090,893 | ||||||||||||
Non-MVA | 4,304,796 | 2,034,724 | 47,257 | 2,081,981 | ||||||||||||
Total | $ | 4,705,767 | $ | 8,576,549 | $ | 303,476 | $ | 8,880,025 | ||||||||
FIXED ANNUITY-INTEREST GUARANTEE PERIOD: | ||||||||||||||||
Monthly guarantee | $ | 217,401 | $ | — | $ | — | $ | — | ||||||||
1 Year | 4,212,816 | — | — | — | ||||||||||||
Multi-year | 275,550 | — | — | — | ||||||||||||
Cumulative floor (1) | — | 8,576,549 | 303,476 | 8,880,025 | ||||||||||||
Total | $ | 4,705,767 | $ | 8,576,549 | $ | 303,476 | $ | 8,880,025 | ||||||||
FIXED ANNUITY-ULTIMATE MINIMUM GUARANTEE RATE: | ||||||||||||||||
2 percent | $ | 389,666 | $ | — | $ | — | $ | — | ||||||||
3 percent | 2,018,460 | — | — | — | ||||||||||||
3.25 percent | 367,225 | — | — | — | ||||||||||||
3.50 percent | 493,999 | — | — | — | ||||||||||||
4 percent | 1,387,046 | — | — | — | ||||||||||||
4.5 percent | 49,371 | — | — | — | ||||||||||||
Cumulative floor (1) | — | 8,576,549 | 303,476 | 8,880,025 | ||||||||||||
Total | $ | 4,705,767 | $ | 8,576,549 | $ | 303,476 | $ | 8,880,025 | ||||||||
CREDITED RATE VS. MINIMUM GUARANTEED RATE DIFFERENTIAL (2) (3): | ||||||||||||||||
No differential | $ | 3,855,501 | $ | — | $ | — | $ | — | ||||||||
0.0% - 0.5% | 169,921 | — | — | — | ||||||||||||
0.5% - 1.0% | 361,245 | — | — | — | ||||||||||||
1.0% - 1.5% | 18,839 | — | — | — | ||||||||||||
1.5% - 2.0% | 93,800 | — | — | — | ||||||||||||
2.0% - 2.5% | 90,307 | — | — | — | ||||||||||||
2.5% - 3.0% | 13,394 | — | — | — | ||||||||||||
Greater than 3.0% | 102,760 | — | — | — | ||||||||||||
Cumulative floor (1) | — | 8,576,549 | 303,476 | 8,880,025 | ||||||||||||
Total | $ | 4,705,767 | $ | 8,576,549 | $ | 303,476 | $ | 8,880,025 | ||||||||
(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 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 160 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. |
AmerUs Group Co.
Annuity Segment Spread
($ in thousands)
Rolling 12 Months Ended | ||||||||
September 30, | ||||||||
ANNUITY SEGMENT SPREADS LTM: | 2006 | 2005 | ||||||
Asset earned rate | 5.70 | % | 5.73 | % | ||||
Liability credited rate (1) | 3.26 | % | 3.43 | % | ||||
Product spread | 2.44 | % | 2.30 | % | ||||
Rolling 12 Months Ended | ||||||||||||
September 30, 2006 | ||||||||||||
COMPONENTS OF ANNUITY SEGMENT SPREAD ALCULATION (2): | GAAP | Adjustment (1) | Non-GAAP | |||||||||
Investment income (3) | $ | 704,186 | $ | 704,186 | ||||||||
Average invested assets | $ | 12,362,313 | $ | 12,362,313 | ||||||||
Asset earned rate | 5.70 | % | 5.70 | % | ||||||||
Annuity segment benefit expense (1) | $ | 433,486 | $ | (22,240 | ) | $ | 411,246 | |||||
Average annuity segment liabilities (1) | $ | 12,802,869 | $ | (187,987 | ) | $ | 12,614,882 | |||||
Liability credited rate | 3.39 | % | 3.26 | % | ||||||||
Product spread | 2.31 | % | 2.44 | % | ||||||||
Rolling 12 Months Ended | ||||||||||||
September 30, 2005 | ||||||||||||
GAAP | Adjustment (1) | Non-GAAP | ||||||||||
Investment income (3) | $ | 644,082 | $ | 644,082 | ||||||||
Average invested assets | $ | 11,247,233 | $ | 11,247,233 | ||||||||
Asset earned rate | 5.73 | % | 5.73 | % | ||||||||
Annuity segment benefit expense (1) | $ | 416,741 | $ | (22,195 | ) | $ | 394,546 | |||||
Average annuity segment liabilities (1) | $ | 11,643,917 | $ | (123,239 | ) | $ | 11,520,678 | |||||
Liability credited rate | 3.58 | % | 3.43 | % | ||||||||
Product spread | 2.15 | % | 2.30 | % | ||||||||
(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. 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. |
AmerUs Group Co.
Closed Block
($ in thousands)
September 30, | December 31, | |||||||
2006 | 2005 | |||||||
LIABILITIES: | ||||||||
Future life and annuity policy benefits | $ | 2,731,718 | $ | 2,765,095 | ||||
Policyowner funds | 7,013 | 7,835 | ||||||
Accrued expenses and other liabilities | 11,439 | 6,420 | ||||||
Dividends payable to policyowners | 150,848 | 154,793 | ||||||
Policy and contract claims | 12,698 | 17,986 | ||||||
Policyowner dividend obligation | 76,498 | 116,684 | ||||||
Total Liabilities | 2,990,214 | 3,068,813 | ||||||
ASSETS: | ||||||||
Securities available-for-sale at fair value: | ||||||||
Fixed maturity securities | 1,932,794 | 1,916,052 | ||||||
Mortgage loans | 50,629 | 60,541 | ||||||
Policy loans | 334,294 | 331,561 | ||||||
Cash and cash equivalents | 2,201 | 63,506 | ||||||
Accrued investment income | 31,965 | 32,972 | ||||||
Premiums, fees and other receivables | 53,981 | 58,778 | ||||||
Total Assets | 2,405,864 | 2,463,410 | ||||||
Maximum future earnings to be recognized from assets and liabilities of the Closed Blocks | $ | 584,350 | $ | 605,403 | ||||
For The Three Months Ended | For The Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
REVENUES AND EXPENSES: | ||||||||||||||||
Insurance premiums | $ | 35,972 | $ | 37,582 | $ | 111,344 | $ | 122,467 | ||||||||
Product charges | 1,409 | 1,472 | 4,527 | 4,618 | ||||||||||||
Net investment income | 35,513 | 35,393 | 107,114 | 110,173 | ||||||||||||
Realized/unrealized gains (losses) on investments | 121 | (650 | ) | (1,997 | ) | (560 | ) | |||||||||
Policyowner benefits | (49,071 | ) | (47,174 | ) | (143,722 | ) | (142,577 | ) | ||||||||
Underwriting, acquisition and other expenses | (842 | ) | (785 | ) | (3,881 | ) | (1,973 | ) | ||||||||
Dividends to policyowners | (14,514 | ) | (17,066 | ) | (46,851 | ) | (65,057 | ) | ||||||||
Contribution from the Closed Block before income taxes | $ | 8,588 | $ | 8,772 | $ | 26,534 | $ | 27,091 | ||||||||
AmerUs Group Co.
Additional Information
($ in thousands)
September 30, | December 31, | |||||||||||
2006 | 2005 | |||||||||||
LIFE INSURANCE IN FORCE (FACE AMOUNT) (1): | ||||||||||||
Traditional life | $ | 66,556,000 | $ | 68,386,000 | ||||||||
Universal life | 18,454,000 | 19,271,000 | ||||||||||
Indexed life | 19,652,000 | 14,797,000 | ||||||||||
Total Life Insurance In Force | $ | 104,662,000 | $ | 102,454,000 | ||||||||
RESERVES (GAAP) (including Closed Block): | ||||||||||||
Traditional life | $ | 3,659,032 | $ | 3,636,832 | ||||||||
Universal life | 1,639,650 | 1,618,755 | ||||||||||
Indexed life | 896,754 | 595,087 | ||||||||||
Total life insurance reserves | 6,195,436 | 5,850,674 | ||||||||||
Deferred fixed annuity | 4,963,139 | 6,019,545 | ||||||||||
Indexed annuity | 8,880,025 | 7,526,798 | ||||||||||
Total annuity reserves | 13,843,164 | 13,546,343 | ||||||||||
Total Reserves | $ | 20,038,600 | $ | 19,397,017 | ||||||||
NUMBER OF PRODUCERS: | ||||||||||||
Protection Products Segment: | ||||||||||||
Career marketing organizations | 1,343 | 1,139 | ||||||||||
Personal producing general agents and sub-agents | 4,721 | 5,092 | ||||||||||
Independent agents — other than New York | 19,657 | 15,972 | ||||||||||
Independent agents — New York | 7,098 | 6,475 | ||||||||||
Protection Products Segment — Total Agents | 32,819 | 28,678 | ||||||||||
Accumulation Products Segment — Independent Agents | 19,119 | 17,728 | ||||||||||
September 30, | September 30, | |||||||
2006 | 2005 | |||||||
LIFE INSURANCE LAPSE RATE — LTM | 6.1 | % | 6.6 | % | ||||
ANNUITY WITHDRAWAL RATES — LTM | ||||||||
With internal replacements | 13.4 | % | 9.4 | % | ||||
Without internal replacements | 11.6 | % | 7.6 | % |
(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. |
AmerUs Group Co.
Additional Information
($ in thousands)
Protection Products | Accumulation Products | AOCI | ||||||||||||||
DAC ROLLFORWARD: | Segment | Segment | Adjustment | Total | ||||||||||||
Beginning Balance — December 31, 2005 | $ | 748,510 | $ | 999,671 | $ | 6,978 | $ | 1,755,159 | ||||||||
Capitalization | 162,124 | 214,312 | — | 376,436 | ||||||||||||
Amortization | (47,173 | ) | (69,890 | ) | — | (117,063 | ) | |||||||||
FAS 115 adjustment | — | — | 58,777 | 58,777 | ||||||||||||
Ending Balance - September 30, 2006 | $ | 863,461 | $ | 1,144,093 | $ | 65,755 | $ | 2,073,309 | ||||||||
Deferred | ||||||||
OTHER ROLLFORWARDS: | Sales Inducements | VOBA | ||||||
Beginning Balance — December 31, 2005 | $ | 261,322 | $ | 356,949 | ||||
Capitalization | 84,364 | — | ||||||
Amortization | (18,682 | ) | (35,463 | ) | ||||
FAS 115 adjustment | 11,246 | 13,027 | ||||||
Ending Balance — September 30, 2006 | $ | 338,250 | $ | 334,513 | ||||
CONTRIBUTION FROM | ||||||||
THE CLOSED BLOCK: | 2006 | 2007 | ||||||
First quarter | $ | 9,103 | $ | 8,927 | ||||
Second quarter | 8,843 | 8,667 | ||||||
Third quarter | 8,588 | 8,414 | ||||||
Fourth quarter | 8,338 | 8,166 | ||||||
Total | $ | 34,872 | $ | 34,174 | ||||
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.
AmerUs Group Co.
Income Tax Rate Reconciliation
For The Nine Months Ended | ||||||||
September 30, | ||||||||
2006 | 2005 | |||||||
Corporate federal income tax rate | 35.0 | % | 35.0 | % | ||||
Net benefit of tax credits | — | (.1 | %) | |||||
Dividend received deduction | (0.2 | %) | (.6 | %) | ||||
Non-deductible expenses | 0.5 | % | 1.2 | % | ||||
Tax exempt income | (1.5 | %) | (1.8 | %) | ||||
State taxes (benefit) on non-life operations | (0.1 | %) | (.6 | %) | ||||
Prior year overpayments | (0.2 | %) | — | |||||
Provision increases (releases) | 1.1 | % | (10.9 | %) | ||||
Additional tax incurred on joint venture investment sale (1) | — | 3.6 | % | |||||
Effective tax rate | 34.6 | % | 25.8 | % | ||||
(1) | During the third quarter of 2005, the Company sold its 34% joint venture interest in AMAL Corporation and incurred additional income tax related to the reversal of taxable temporary differences without the benefit of previously anticipated dividends received deductions. |
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 $26.0 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.
underwrites a complete line of life insurance and annuity products to individuals and small
businesses. With $26.0 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”, PRIDES under the trading symbol “AMH A”, and preferred stock under the trading symbol “AMH Pr”.
“AMH”, PRIDES under the trading symbol “AMH A”, and preferred stock under the trading symbol “AMH Pr”.
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 | ||||||||||
2006 | ||||||||||||
First Quarter | $ | 62.37 | $ | 56.61 | $ | 0.00 | ||||||
Second Quarter | $ | 61.32 | $ | 52.57 | $ | 0.00 | ||||||
Third Quarter | $ | 68.01 | $ | 58.79 | $ | 0.00 | ||||||
2005 | ||||||||||||
First Quarter | $ | 49.08 | $ | 43.36 | $ | 0.00 | ||||||
Second Quarter | $ | 48.50 | $ | 45.06 | $ | 0.00 | ||||||
Third Quarter | $ | 57.57 | $ | 48.91 | $ | 0.00 | ||||||
Fourth Quarter | $ | 60.14 | $ | 54.83 | $ | 0.40 |
Investor Relations | Transfer Agent and Registrar | |
Marty Ketelaar | Mellon Investor Service, LLC | |
Vice President — Investor Relations | 480 Washington Blvd. | |
Phone — (515) 362-3693 | Jersey City, NJ 07310 | |
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, 2005 by contacting the Company at (515) 362-3694 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, 2005, Forms 10-Q and press releases are also available at no charge by calling (515) 362-3694 or by visiting the Company’s web site at www.amerus.com.