SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to _____________________
Commission file number 0-21459
AmerUs Life Holdings, Inc.
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(Exact name of registrant as specified in its charter)
Iowa 42-1459712
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(State of other jurisdiction of incorporation or organization)(IRS employer
identification no.)
418 Sixth Avenue, Des Moines, Iowa 50309-2407
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (515) 280-1331
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Former name, former address and formal fiscal year, if changed since last report
Indicate by check X whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
The number of shares outstanding of each of the registrant's classes of common
stock on May 12, 1997 was as follows:
Class A, Common Stock 18,155,989 shares
Class B, Common Stock 5,000,000 shares
Exhibit index - Page 26 Page 1 of 34
INDEX
Page No.
Part I - Financial Information . . . . . . . . . . . . . . . . . . . . . 3
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets March 31, 1997
(Unaudited) and December 31, 1996 . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Income (Unaudited) - For
the Three Months Ended March 31, 1997 and 1996. . . . . . . . . . . 5
Consolidated Statements of Cash Flows (Unaudited) - For
the Three Months Ended March 31, 1997 and 1996. . . . . . . . . . . 6
Notes to Consolidated Financial Statements (Unaudited). . . . . . . 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . . . . . 10
Part II - Other Information. . . . . . . . . . . . . . . . . . . . . . . 24
Item 6. Exhibits and Reports on Form 8-K
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Exhibit Index. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
-2-
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERUS LIFE HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
March 31, December 31,
1997 1996
---------- ----------
(Unaudited)
ASSETS
Investments:
Securities available-for-sale at fair value:
Fixed maturity securities
(Cost 1997 $2,345,660; 1996 $2,335,875) $2,376,246 $2,414,807
Equity securities
(Cost 1997 $61,309; 1996 $60,247) 64,089 64,033
Short-term investments
(Cost 1997 $14,724; 1996 $13,288) 14,724 13,288
Investment in unconsolidated subsidiaries 20,947 20,809
Mortgage loans on real estate 236,644 225,743
Real estate 4,495 4,561
Policy loans 65,802 65,183
Other investments 81,182 93,228
---------- ----------
Total investments 2,864,129 2,901,652
Cash 1,437 1,814
Accrued investment income 37,423 30,792
Premiums and fees receivable 1,221 1,489
Reinsurance receivables 1,808 1,329
Deferred policy acquisition costs 164,392 120,481
Deferred income taxes 13,862 -
Property and equipment
(less accumulated depreciation) 4,371 4,393
(1997-$12,433; 1996-$11,775)
Other assets
54,700 52,111
Closed block assets 1,268,704 1,270,168
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Total assets $4,412,047 $4,384,229
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---------- ----------
-3-
AMERUS LIFE HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
LIABILITIES AND SHAREHOLDERS' EQUITY
March 31, December 31,
1997 1996
---------- ----------
(Unaudited)
LIABILITIES
Policy reserves and policyowner funds:
Future life and annuity policy benefits $2,021,234 $2,053,740
Policyowner funds 60,078 55,369
---------- ----------
2,081,312 2,109,109
Accrued expenses 16,624 14,227
Dividends payable to policyowners 1,186 -
Policy and contract claims 6,009 7,039
Income taxes payable 33,024 25,182
Deferred income taxes - 1,337
Other liabilities 62,752 64,173
Debt 79,325 188,381
Closed block liabilities 1,542,245 1,517,271
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Total liabilities 3,822,477 3,926,719
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Company obligated mandatorily redeemable preferred
capital securities of subsidiary trust holding
solely junior subordinated debentures of the
Company 86,000 -
SHAREHOLDERS' EQUITY
Preferred stock, no par value,
20,000,000 shares authorized, none issued - -
Common stock, Class A, no par value,
75,000,000 shares authorized;
18,155,989 shares issued and outstanding 1997;
14,500,000 shares issued and outstanding 1996 18,156 14,500
Common stock, Class B, no par value,
50,000,000 shares authorized;
5,000,000 shares issued and outstanding 5,000 5,000
Unrealized appreciation of available-for-sale
securities 11,753 35,300
Additional paid in capital 51,371 -
Retained earnings 417,290 402,710
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Total shareholders' equity 503,570 457,510
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Total liabilities and
shareholders' equity $4,412,047 $4,384,229
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---------- ----------
-4-
AMERUS LIFE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
1997 1996
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Revenues:
Insurance premiums $8,170 $62,229
Universal life and annuity
product charges 10,035 14,901
Net investment income 48,548 73,220
Realized gains on investments 5,259 58,740
Other revenues 2,613 143
Contribution from the Closed Block 9,276 -
---------- ----------
83,901 209,233
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Benefits and expenses:
Policyowner benefits 44,374 95,982
Underwriting, acquisition, and
insurance expenses 14,203 15,231
Amortization of deferred policy
acquisition costs 5,057 14,962
Dividends to policyowners 121 13,441
---------- ----------
63,755 139,616
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Income before income tax expense
and equity in earnings of
unconsolidated subsidiary 20,146 69,617
Income tax expense 5,739 24,827
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Income before equity in earnings
of unconsolidated subsidiary 14,407 44,790
Equity in earnings of unconsolidated
subsidiary 173 -
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Net income $14,580 $44,790
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---------- ----------
Pro forma net income per common share $0.63 $1.93
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---------- ----------
Weighted average Common Shares outstanding 23,155,989 23,155,989
---------- ----------
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-5-
AMERUS LIFE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31,
(IN THOUSANDS)
(UNAUDITED)
1997 1996
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Cash flows from operating activities:
Net income $14,580 $44,790
Adjustments to reconcile net
income to net cash provided
by operating activities:
Policyowner assessments on
universal life and
annuity products (10,035) (14,901)
Interest credited to
policyowner account balances 26,347 29,579
Realized investment (gains)
losses (5,259) (58,740)
Change in:
Accrued investment income (6,631) (4,001)
Reinsurance ceded receivables (479) 793
Deferred policy acquisition
costs (6,830) 3,062
Liabilities for future
policy benefits (18,626) 14,053
Policy and contract claims
and other policyowner funds (1,030) (879)
Income taxes:
Current 7,842 24,762
Deferred (3,208) (5,817)
Other, net 14,212 (11,250)
Change in Closed Block assets
and liabilities, net 25,878 -
---------- ----------
Net cash provided by operating
activities 36,761 21,451
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-6-
1997 1996
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Cash flows from investing activities:
Purchase of fixed maturities
available for sale (309,000) (365,241)
Maturities, calls, and principal
reductions of fixed maturities
available for sale 233,285 278,165
Purchase of equity securities (10,799) (2,974)
Proceeds from sale of equity
securities 15,953 74,581
Proceeds from repayment and sale
of mortgage loans 18,869 11,367
Purchase of mortgage loans (29,135) (3,924)
Purchase of real estate and other
invested assets 11,140 3,034
Change in policy loans, net (618) (4,022)
Other assets, net (2,121) 19,575
Change in Closed Block
investments, net 22,721 -
---------- ----------
Net cash used in investing
activities (49,705) 10,561
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Cash flows from financing activities:
Deposits to policyowner account
balances 32,031 48,701
Withdrawals from policyowner
account balances (58,367) (81,184)
Change in debt, net (109,056) (6,559)
Initial public offering of
common stock 55,027 -
Change in checks drawn in excess
of bank balance 6,932 2,722
Dividends to American Mutual
Holding Company - (312)
Issuance of company-obligated
mandatory redeemable
capital securities 86,000 -
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Net cash used in financing
activities 12,567 (36,632)
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Net (decrease) increase in cash (377) (4,620)
Cash at beginning of period 1,814 4,620
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Cash at end of period $1,437 $ -
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Supplemental disclosure of cash
activities:
Interest paid $1,910 $478
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---------- ----------
Income taxes paid $12,800 $18,000
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-7-
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for annual
financial statements. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included. All adjustments were of a
normal recurring nature, unless otherwise noted in Management's Discussion and
Analysis and the Notes to Financial Statements. Operating results for the three
months ended March 31, 1997 are not necessarily indicative of the results that
may be expected for the year ending December 31, 1997. For further information
and for capitalized terms not defined in this 10-Q, refer to the consolidated
financial statements and notes thereto included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1996.
Certain amounts in the 1996 financial statements have been reclassified to
conform to the 1997 financial statement presentation.
EARNINGS PER COMMON SHARE
Earnings per share have been computed on a pro forma basis by giving
retroactive effect to the issuance of 18.16 million shares of Class A common
stock and 5 million shares of Class B common stock as if all such shares had
been issued at the beginning of the respective periods and by giving retroactive
effect to the capital contribution (by the Company) to former subsidiaries of
AmerUs Life. For further discussion, refer to the consolidated financial
statements of the Company for the year ended December 31, 1996.
(2) CLOSED BLOCK
Summarized financial information of the Closed Block balance sheet as of
March 31, 1997, and statement of income from January 1, 1997 to March 31, 1997,
is as follows (IN THOUSANDS):
ASSETS: Closed Block:
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Fixed maturity securities, at fair value
(amortized cost of $901,568) $897,319
Short-term investments, at fair value 4,508
Policy loans 168,794
Cash 31
Accrued Investment Income 12,486
Premiums and fees receivable 4,760
Deferred policy acquisition costs 168,405
Other assets 12,401
----------
$1,268,704
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----------
-8-
LIABILITIES:
Future life and annuity policy benefits $1,389,112
Policyowner funds 7,500
Accrued expenses 1,491
Dividends payable to policyowners 134,114
Policy and contract claims 3,911
Other liabilities 6,117
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$1,542,245
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----------
REVENUES AND EXPENSES:
Insurance premiums $54,936
Universal life and annuity product charges 4,878
Net investment income 26,301
Realized (losses) on investments (573)
Policyowner benefits (50,878)
Underwriting, acquisition, and insurance expenses (1,491)
Amortization of deferred policy acquisition costs (6,831)
Dividends to policyowners (17,066)
----------
Contribution from the Closed Block before income taxes $9,276
----------
----------
(3) DEBT AND CAPITAL SECURITIES
Debt consists of the following (in thousands):
March 31, December 31,
1997 1996
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Line of credit with Federal Home Loan Bank-bearing
interest at 6.85% at March 31, 1997 $15,997 $ -
Federal Home Loan Bank community investment
long-term advances with a weighted average
interest rate of 6.26% at March 31, 1997 13,328 13,381
Bank Credit Facility:
Term loan bearing interest at 6.50%
at March 31, 1997 50,000 100,000
Revolving credit loan - 75,000
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$79,325 $188,381
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---------- ----------
For an additional discussion of the terms of the above indebtedness, refer
to the Company's consolidated financial statements as of December 31, 1996.
On February 3, 1997, the Company issued $86,000,000 of 8.85% Capital
Securities, Series A, through a subsidiary trust for which the Company is
obligated to mandatorily redeem the securities on February 1, 2027. The Company
may prepay the securities at anytime after February 1, 2007.
-9-
AMERUS LIFE HOLDINGS, INC. MARCH 31, 1997
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company is engaged in the business of underwriting, marketing and
distributing a broad range of individual life insurance and annuity products to
individuals and businesses in 45 states and the District of Columbia. The
Company's primary product offerings consist of whole life, universal life and
term life insurance policies and fixed annuities. Since April 1, 1996 the
Company has been a party to the Ameritas Joint Venture with Ameritas Life
Insurance Corp., through which it markets fixed annuities, variable annuities
and variable life insurance products.
In accordance with GAAP, universal life insurance premiums and annuity
deposits received are reflected as increases in liabilities for policyowner
account balances and not as revenues. Revenues reported for universal life and
annuity products consist of policy charges for the cost of insurance,
administration charges and surrender charges assessed against policyowner
account balances. Surrender benefits paid relating to universal life insurance
policies and annuity products are reflected as decreases in liabilities for
policyowner account balances and not as expenses. Amounts for interest credited
to universal life and annuity policyowner account balances and benefit claims in
excess of policyowner account balances are reported as expenses in the financial
statements. The Company receives investment income earned from the funds
deposited into account balances by universal life and annuity policyowners, the
majority of which is passed through to such policyowners in the form of interest
credited.
Premium revenues reported for traditional life insurance products are
recognized as revenues when due. Future policy benefits and policy acquisition
costs are recognized as expenses over the life of the policy by means of a
provision for future policy benefits and amortization of deferred policy
acquisition costs.
The costs related to acquiring new business, including certain costs of
issuing policies and certain other variable selling expenses (principally
commissions), defined as deferred policy acquisition costs, are capitalized and
amortized as an expense in proportion to expected profits or margins. This
amortization is adjusted when current or estimated future gross profits or
margins on the underlying policies vary from previous estimates. For example,
the amortization of deferred policy acquisition costs is accelerated when policy
terminations are higher than originally estimated or when investments supporting
the policies are sold at a gain prior to their anticipated maturity. Death and
other policyowner benefits reflect exposure to mortality risk and fluctuate from
period to period based on the level of claims incurred within insurance
retention limits. The profitability of the Company is primarily affected by
expense levels, interest spread results
-10-
(i.e., the excess of investment earnings over the interest credited to
policyowners) and fluctuations in mortality, persistency and other policyowner
benefits. The Company has the ability to mitigate adverse experience through
adjustments to credited interest rates, policyowner dividends or cost of
insurance charges.
SALES
The following table sets forth information regarding the Company's sales
activity by product:
SALES ACTIVITY BY PRODUCT
Three Months Ended March 31,
1997 1996
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(In thousands)
Individual life insurance:
Participating whole life $ 4,585 $ 4,282
Universal life 2,571 1,971
Term life 563 727
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Total life insurance $ 7,719 $ 6,980
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---------- ----------
Individual annuities $10,196 $27,550
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---------- ----------
Life insurance sales as measured by annualized premiums increased by $.7
million, or 10.6%. Individual annuity sales decreased by $17.4 million to
$10.2 million from $27.6 million in the same period in 1996. The decrease in
annuity sales resulted primarily from the transfer of new production to the
AMAL joint venture in May 1996. The Company's investment in AMAL is carried
on the equity method.
-11-
PREMIUM RECEIPTS
The following table sets forth the Company's collected premiums for the
periods indicated:
COLLECTED PREMIUMS BY PRODUCT
Three Months Ended March 31,
1997 1996
---------- ----------
(In thousands)
Direct individual life premiums collected:
Traditional life:
First year & single $18,239 $17,269
Renewal 42,682 42,591
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Total $60,921 $59,860
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---------- ----------
Universal life:
First year & single $ 3,929 $ 3,657
Renewal 18,844 19,451
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Total $22,773 $23,108
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---------- ----------
Total direct life $83,694 $82,968
Reinsurance assumed 346 420
Reinsurance ceded (2,441) (2,584)
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Total individual life,
net of reinsurance $81,599 $80,804
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Direct annuity premiums collected:
Individual (A) $12,544 $29,977
Group - 46
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Total annuities 12,544 30,023
Reinsurance ceded (180) (201)
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Total annuities, net of reinsurance $12,364 $29,822
---------- ----------
---------- ----------
Total group life, net of reinsurance (B) $ (10) $ 670
---------- ----------
---------- ----------
Total accident and health,
net of reinsurance $ 77 $ 54
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---------- ----------
Total collected premiums,
net of reinsurance $94,030 $111,350
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---------- ----------
(A) Effective May 1996, substantially all new sales of individual deferred
annuities are made through the AMAL Joint Venture.
(B) The Company sold substantially all of its group life business as of July 1,
1996 and is no longer actively marketing this line of business.
-12-
LIFE INSURANCE AND ANNUITIES IN FORCE
The following table sets forth information regarding life insurance and
annuities in force for each date presented:
LIFE INSURANCE AND ANNUITIES IN FORCE
As of March 31,
1997 1996
---- ----
(Dollars in thousands)
Individual life insurance:
Traditional
Number of policies 253,645 260,174
GAAP life reserves $1,237,797 $1,145,899
Face amounts $16,883,000 $16,573,000
Universal life
Number of policies 119,728 120,211
GAAP life reserves $826,715 $794,672
Face amounts $12,215,000 $12,324,000
Total individual life
Number of policies 373,373 380,385
GAAP life reserves $2,064,512 $1,940,571
Face amounts $29,098,000 $28,897,000
Annuities (A):
Number of policies 54,593 56,553
GAAP reserves $1,151,691 $1,276,379
Group life insurance (B):
Number of lives 30,210 33,774
Face amounts $859,000 $879,000
___________________
(A) Effective May 1996, substantially all new sales of individual deferred
annuities are made through the AMAL Joint Venture.
(B) The Company sold substantially all of its group life business as of July 1,
1996 and is no longer actively marketing this line of business.
The reductions in the number of life insurance policies and annuities
are attributable to policy surrenders, policy terminations or expirations,
and consolidations of one or more outstanding policies into new policies.
Many of the policies which have terminated were of a lower face amount than
the average for all policies in force. While the Company has experienced a
decrease in the number of policies outstanding, the size of policies
outstanding has increased and the amount of premiums collected has increased.
-13-
THE CLOSED BLOCK
In connection with the Reorganization of the Company, the Closed Block was
established as of June 30, 1996. Insurance policies which had a dividend scale
in effect at that time were included in the Closed Block. The Closed Block was
designed to provide reasonable assurance to owners of insurance policies
included therein that, after the Reorganization, assets would be available to
maintain the dividend scales and interest credits in effect for 1995 if the
experience underlying such scales and credits continues.
The contribution to the operating income of the Company from the Closed
Block is reported as a single line item in the income statement. Accordingly,
premiums, product charges, investment income, realized gains (losses) on
investments, policyowner benefits and dividends attributable to the Closed
Block, less certain minor expenses and the amortization of deferred policy
acquisition costs, are shown as a net number under the caption "Contribution
from the Closed Block." This results in material reductions in the respective
line items in the income statement while having no effect on net income. The
expenses associated with the administration of the policies included in the
Closed Block and the renewal commissions on these policies are not charged
against the Contribution from the Closed Block, but rather are grouped with
underwriting, acquisition and insurance expenses. Also, all assets allocated to
the Closed Block are grouped together and shown as a separate item entitled
"Closed Block Assets." Likewise, all liabilities attributable to the Closed
Block are combined and disclosed as the "Closed Block Liabilities."
Since the operating results from the Closed Block for the three months
ended March 31, 1997 are reported on one line of the income statement,
"Contribution from the Closed Block," the individual income statement components
for 1997 are not fully comparable with those for 1996, prior to the
establishment of the Closed Block. Management believes that the presentation of
the results of operations on a combined basis as if the Closed Block had not
been formed facilitates comparability with the results of operations for periods
prior to its formation. Accordingly, the combined presentation set forth below
includes certain revenues and expenses associated with the policies included in
the Closed Block. Such presentation does not, however, affect the Company's
reported net income.
-14-
Three Months Ended March 31, 1997
-----------------------------------
As Reported Closed Block Combined
----------- ------------ ---------
(In thousands)
Revenues
Insurance premiums $ 8,170 $54,936 $ 63,106
Product charges 10,035 4,878 14,913
Net investment income 48,548 26,301 74,849
Realized gains (losses) on
investments 5,259 (573) 4,686
Other revenue 2,613 - 2,613
Contribution from the
Closed Block 9,276 (9,276) -
---------- ---------- ----------
Total revenues 83,901 76,266 160,167
Benefits and expenses
Policyowner benefits 44,374 50,878 95,252
Underwriting, acquisition
and insurance expenses 14,203 1,491 15,694
Amortization of deferred
policy acquisition costs 5,057 6,831 11,888
Dividends to policyowners 121 17,066 17,187
---------- ---------- ----------
Total benefits and expenses 63,755 76,266 140,021
Income before income tax expense
and equity in earnings of
unconsolidated subsidiary 20,146 - 20,146
Income tax expense 5,739 - 5,739
---------- ---------- ----------
Income before equity in
earnings of unconsolidated
subsidiary 14,407 - 14,407
Equity in earnings of
unconsolidated subsidiary 173 - 173
---------- ---------- ----------
Net income $ 14,580 $ - $ 14,580
---------- ---------- ----------
---------- ---------- ----------
-15-
COMBINED RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31, 1996
A summary of the Company's combined revenues, including revenues associated with
the Closed Block, follows:
Three Months Ended
March 31,
-------------------------
1997 1996
---------- ----------
(In thousands)
Insurance premiums:
Traditional life insurance premiums $59,488 $57,224
Immediate annuity and supplementary
contract premiums 3,593 4,216
Other premiums 25 789
---------- ----------
Total insurance premiums 63,106 62,229
Universal life product charges 14,760 14,693
Annuity product charges 153 208
---------- ----------
Total product charges 14,913 14,901
Net investment income 74,849 73,220
Realized gains on investments 4,686 58,740
Other revenues 2,613 143
---------- ----------
Total revenues $160,167 $209,233
---------- ----------
---------- ----------
Individual life and annuity premiums and product charges increased $1.7
million, or 2.2%, to $78.0 million for the first quarter of 1997 from $76.3
million for the first quarter of 1996. Insurance premiums increased $0.9 million
to $63.1 million for the first quarter of 1997 compared to $62.2 million for
the first quarter of 1996. Traditional life insurance premiums increased $2.3
million as a result of higher life insurance sales and continued growth in
renewal premiums. Immediate annuity deposits and supplementary contract
premiums were $0.6 million lower in 1997 than in 1996 due to lower immediate
annuity sales. Other premiums were $0.8 million lower in 1997 than in 1996
primarily due to the sale of the Company's remaining group life operation in the
third quarter of 1996.
Universal life product charges were comparable for the first quarters of
1997 and 1996 at $14.7 million, with increased cost of insurance charges in 1997
as a result of the normal aging of the block of business, offset by increased
reinsurance costs in 1997.
Net investment income increased by $1.6 million to $74.8 million for the
first quarter of 1997 as compared to $73.2 million for the first quarter of
1996. The increase in 1997 was attributable to an increase in average
invested assets. Average invested assets (excluding market value
adjustments) increased by $153.3 million from $3,733.2 million in 1996 to
$3,886.5 million in 1997. The effective yield on average invested assets
(excluding market value adjustments) decreased from 7.81% in 1996 to 7.66% in
1997. The decrease in effective yield is due to lower yields in the bond and
mortgage portfolios for the first three months of 1997 compared to the same
period in 1996.
Realized gains on investments were $4.7 million during the first quarter
of 1997 compared to gains of $58.7 million during the first quarter of 1996.
Included in the 1996 amounts were approximately $51.5 million of gains from
the sale of common stock as a result of the liquidation of the Company's
equity portfolio during the first quarter of 1996.
Other revenues increased by $2.5 million to $2.6 million for the first
quarter of 1997 as compared to $0.1 million for the first quarter of 1996.
The increased income was primarily due to the sale of certain investment
partnerships in 1997.
-16-
A summary of the Company's combined policyowner benefits, including
policyowner benefits associated with the Closed Block, follows:
Three Months Ended
March 31,
----------
1997 1996
---- ----
(In thousands)
Traditional life insurance
Death benefits $ 8,593 $ 8,008
Change in liability for future policy
benefits and other policy benefits 43,247 43,172
---------- ----------
Total traditional life
insurance benefits 51,840 51,180
Universal life insurance
Death benefits in excess
of cash value 7,664 5,341
Interest credited to policyowner
account balances 10,947 10,455
Other policy benefits 593 1,109
---------- ----------
Total universal life
insurance benefits 19,204 16,905
Annuities
Interest credited to deferred
annuity account balances 15,400 18,108
Other annuity benefits 8,398 8,823
---------- ----------
Total annuity benefits 23,798 26,931
Miscellaneous benefits 410 966
---------- ----------
Total policyowner benefits $95,252 $95,982
---------- ----------
---------- ----------
Total policyowner benefits were $95.3 million for the first quarter of 1997
compared to $96.0 million for the first quarter of 1996. Traditional life
insurance benefits increased $0.7 million in 1997 primarily due to increased
mortality costs. Universal life insurance benefits increased by $2.3 million,
also primarily as a result of increased mortality costs. For both product lines
the increased death benefits are within normal statistical deviation and are not
necessarily an indication of higher levels of death benefits than expected for
the entire year. Interest credited to universal life policyowner account
balances increased $0.5 million from 1996 to 1997.
-17-
While the weighted average crediting rate for the Company's universal life
liabilities decreased 18 basis points from 6.42% for the first quarter of
1996 to 6.24% for the first quarter of 1997, the Company's average
liabilities increased $33.9 million from the first quarter of 1996 to the
first quarter of 1997, resulting in the increased credited amounts during the
first quarter of 1997.
Annuity benefits decreased $3.1 million for the first quarter of 1997 to
$23.8 million compared to $26.9 million for the first quarter of 1996. Such
benefits decreased primarily due to reduced interest credited to policyowner
account balances. The weighted average crediting rate for the Company's
individual deferred annuity liabilities decreased 15 basis points to 5.48% for
the first quarter of 1997 compared to 5.63% for the first quarter of 1996. The
Company's average deferred annuity liabilities decreased $128.8 million from the
first quarter of 1996 to the first quarter of 1997 also contributing to the
decrease in interest credited amounts in 1997. The decrease in other annuity
benefits was primarily the result of the lower immediate annuity sales in 1997.
The decrease in miscellaneous benefits of $0.6 million from the first
quarter of 1996 to the first quarter of 1997 was primarily the result of the
sale of the Company's remaining group life operation in the third quarter of
1996.
A summary of the Company's combined expenses, including expenses associated
with the Closed Block, follows:
Three Months Ended
March 31,
-------------------
1997 1996
---- ----
(In thousands)
Commission expense, net of deferrals $ 2,113 $ 2,601
Other underwriting, acquisition and
insurance expenses, net of deferrals 13,581 12,630
Amortization of deferred policy
acquisition costs 11,888 14,962
-------- --------
Total expenses $27,582 $30,193
-------- --------
-------- --------
Commission expense, net of deferrals, decreased $0.5 million to $2.1
million for the first quarter of 1997 compared to $2.6 million for the first
quarter of 1996, primarily due to lower individual annuity renewal premium
activity and the sale of the Company's remaining group life operation in 1996.
Other underwriting, acquisition and insurance expenses, net of deferrals,
increased by $1.0 million, or 7.5%, to $13.6 million for the first quarter of
1997. The increase in expenses in 1997 was primarily due to interest expense of
$2.1 million on capital securities issued by the Company.
-18-
The amortization of deferred policy acquisition costs decreased by $3.1
million to $11.9 million in the first quarter of 1997 compared to $15.0 million
in the first quarter of 1996. Deferred policy acquisition costs are generally
amortized in proportion to gross margins, including realized capital gains.
Higher death benefits and lower realized capital gains in the first quarter of
1997 compared to the first quarter of 1996 resulted in lower gross margins in
1997 on products for which deferred costs are being amortized, causing the
reduced amortization during the first quarter of 1997.
Dividends to policyowners increased by $3.8 million to $17.2 million for
the first quarter of 1997 compared to $13.4 million for the first quarter of
1996. The increase in dividends was the result of the growth and aging of the
inforce policies and the establishment of a deferred dividend liability for the
Closed Block, as actual gross margins on such policies exceeded expected
margins for the first quarter of 1997. Traditional life reserves grew 8.0%
from March 31, 1996 to $1.24 billion at March 31, 1997. The weighted average
interest rate used in the dividend formula for these policies was 7.18% during
the first quarter of 1997 compared to 7.16% during the first quarter of 1996.
Income before income taxes decreased by $49.5 million to $20.1 million for
the first quarter of 1997 compared to $69.6 million for the first quarter of
1996 primarily due to lower realized gains on investments.
Income tax expense decreased by $19.1 million for the first quarter of 1997
to $5.7 million compared to $24.8 million for the first quarter of 1996. The
decreased 1997 income taxes were primarily the result of the lower pre-tax
income due largely to the lower realized gains on investments. The effective
income tax rate for first quarter 1997 was 28.2% compared to 35.7% for first
quarter 1996. The higher effective tax rate in 1996 was primarily attributable
to the equity add-on tax which is applicable only to mutual life insurance
companies. The Company was subject to this tax prior to the conversion to a
stock company on June 30, 1996. The favorable effective tax rate for the first
quarter of 1997 was primarily attributable to affordable housing income tax
credits of $1.4 million.
Net income decreased by $30.2 million for the first quarter of 1997 to
$14.6 million compared to $44.8 million for the first quarter of 1996. The
reduced net income resulted primarily from lower realized gains on investments.
-19-
LIQUIDITY AND CAPITAL RESOURCES
THE COMPANY
The Company's cash flows from operations consists of dividends from
subsidiaries, if declared and paid, interest income on loans and advances to its
subsidiaries (including a surplus note issued to the Company by AmerUs Life),
investment income on assets held by the Company and fees which the Company will
charge AmerUs Group, AmerUs Life and certain other of its affiliates for
management services, offset by the expenses incurred for debt service, salaries
and other expenses.
The Company intends to rely primarily on dividends and interest income from
AmerUs Life to make any dividend payments to its shareholders. The payment of
dividends by AmerUs Life to the Company is regulated under Iowa law. Under Iowa
law, AmerUs Life may pay dividends only from the earned surplus arising from its
business and must receive the prior approval of the Iowa Commissioner to pay a
dividend, if such dividend would exceed certain statutory limitations. The
current statutory limitation is the greater of (i) 10% of AmerUs Life's capital
and surplus as of the preceding year end or (ii) the net gain from operations
for the previous calendar year. Iowa law gives the Iowa Commissioner broad
discretion to disapprove requests for dividends in excess of these limits.
During 1997, the maximum amount that would have been legally available for
distribution to the Company, absent the dividends paid as a part of the
reorganization of the Company, without further regulatory approval would have
been approximately $34 million. However, as a result of the Distribution, AmerUs
Life will not be able to pay dividends to the Company in 1997 without the prior
consent of the Iowa Commissioner. It is the Company's intention to seek
regulatory approval to pay dividends from AmerUs Life during 1997. However, at
March 31, 1997, the Company also had the ability to borrow up to approximately
$119.0 million from AmerUs Life without prior regulatory approval. The Company
would utilize this borrowing capacity, if necessary, to meet its liquidity needs
including the payment of dividends to its shareholders. Any such borrowings from
AmerUs Life would be repaid from future available dividends from AmerUs Life.
Management believes that the Company's access to capital through borrowings from
AmerUs Life, public equity and debt markets and its $75 million revolving credit
facility provide the Company with sufficient liquidity and capital resources
during 1997, irrespective of whether regulatory approval for the payment of
dividends by AmerUs Life is obtained.
In December, 1996, the Company entered into a bank credit agreement, which
was comprised of $100 million in term debt and $75 million under a revolving
line of credit ("Bank Credit Facility"). Immediately after establishing the Bank
Credit Facility the Company borrowed $100 million under the term debt component
of the facility and $75 million under the revolving line of credit. The Company
contributed $125 million of the borrowings under the Bank Credit Facility to
AmerUs Life and used $50 million to purchase a 9% surplus note, due December 1,
2006, from AmerUs Life. Proceeds from the Company's common stock and capital
note offerings were used to repay $50 million of borrowings outstanding under
the term facility and $75 million of
-20-
borrowing outstanding under the revolving line of credit. The Company has $75
million of unused borrowing capacity under its revolving line of credit.
On February 3, 1997, the Company issued $86,000,000 of 8.85% Capital
Securities, Series A, through a subsidiary trust for which the Company is
obligated to mandatorily redeem the securities on February 1, 2027. The Company
may prepay the securities at anytime after February 1, 2007.
In connection with the Bank Credit Facility, the Company pledged
approximately 49.9% of the common stock of AmerUs Life owned by the Company and
a $50 million 9% surplus note payable to the Company by AmerUs Life.
The Company may from time to time review potential acquisition
opportunities. The Company anticipates that funding for any such acquisition may
be provided from available cash resources or from debt or equity financing. As
of March 31, 1997 the Company had no material commitments for capital
expenditures. In the future the Company anticipates that its liquidity and
capital needs will be met through interest and dividends from AmerUs Life,
accessing the public equity and debt markets depending upon market conditions,
or alternatively from bank financing.
At March 31, 1997, AmerUs Life had substantial excess statutory capital as
its adjusted statutory capital was $365.1 million resulting in an RBC ratio in
excess of 750% of the authorized control level RBC.
AMERUS LIFE
AmerUs Life's cash inflows consist primarily of premium income, deposits to
policyowner account balances, income from investments, sales, maturities and
calls of investments and repayments of investment principal. Cash outflows are
primarily related to withdrawals of policyowner account balances, investment
purchases, payment of policy acquisition costs, payment of policyowner benefits,
income taxes and current operating expenses. Life insurance companies generally
produce a positive cash flow from operations, as measured by the amount by which
cash inflows are adequate to meet benefit obligations to policyowners and
normal operating expenses as they are incurred. The remaining cash flow is
generally used to increase the asset base to provide funds to meet the need for
future policy benefit payments and for writing new business.
Management anticipates that funds to meet its short-term and long-term
capital expenditures, cash dividends to shareholders and operating cash needs
will come from existing capital and internally generated funds. Management
believes that the current level of cash and available-for-sale and short-term
securities, combined with expected net cash inflows from operations, maturities
of fixed maturity investments, principal payments on mortgage-backed securities
and its insurance products, will be adequate to meet AmerUs Life's anticipated
short-term cash obligations.
-21-
AmerUs Life generated cash flows from operating activities of $36.8 million
and $21.5 million, for the three months ended March 31, 1997 and 1996,
respectively. Excess operating cash flows were primarily used to increase AmerUs
Life's fixed maturity investment portfolio.
Matching the investment portfolio maturities to the cash flow demands of
the type of insurance being provided is an important consideration for each type
of life insurance product and annuity. AmerUs Life continuously monitors
benefits and surrenders to provide projections of future cash requirements. As
part of this monitoring process, AmerUs Life performs cash flow testing of its
assets and liabilities under various scenarios to evaluate the adequacy of
reserves. In developing its investment strategy, AmerUs Life establishes a
level of cash and securities which, combined with expected net cash inflows from
operations, maturities of fixed maturity investments and principal payments on
mortgage-backed securities, are believed adequate to meet anticipated short-term
and long-term benefit and expense payment obligations. There can be no assurance
that future experience regarding benefits and surrenders will be similar to
historic experience since withdrawal and surrender levels are influenced by such
factors as the interest rate environment and AmerUs Life's claims-paying and
financial strength ratings.
AmerUs Life takes into account asset-liability management considerations.
Contract terms for AmerUs Life's interest-sensitive products include surrender
and withdrawal provisions which mitigate the risk of losses due to early
withdrawals. These provisions generally do one or more of the following: limit
the amount of penalty-free withdrawals, limit the circumstances under which
withdrawals are permitted, or assess a surrender charge or market value
adjustment relating to the underlying assets. The following table summarizes
statutory liabilities for interest-sensitive life products and annuities by
their contractual withdrawal provisions at March 31, 1997 (in millions):
Not subject to discretionary withdrawal $210
Subject to discretionary withdrawal with adjustments:
Specified surrender charges (A) $865
Market value adjustments 389
----
Subtotal 1,254
Subject to discretionary withdrawal without adjustments 570
-------
Total $2,034
-------
-------
(A) Includes $304 million of statutory liabilities with a contractual surrender
charge of less than five percent of the account balance.
Through its membership in the Federal Home Loan Bank of Des Moines, AmerUs
Life is eligible to borrow on a line of credit available to provide it
additional liquidity. The line of credit, the amount of which is re-set
annually, is based on the amount of capital stock of the Federal Home Loan
-22-
Bank of Des Moines owned by AmerUs Life, which supported a borrowing capacity of
$36.7 million as of March 31, 1997. Interest is payable at a current rate at the
time of any advance. As of March 31, 1997, AmerUs Life had a $25 million open
secured line of credit with $16.0 million outstanding.
In the future, in addition to cash flows from operations and AmerUs Life's
borrowing capacity, AmerUs Life would anticipate obtaining its required capital
from the Company as the Company has access to the public markets.
-23-
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
A list of exhibits included as part of this report is set forth in the
Exhibit Index which immediately precedes such exhibits and is hereby
incorporated by reference herein.
(b) The following report on Form 8-K was filed during the quarter ended
March 31, 1997:
(i) None.
-24-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
DATED: May 13, 1997 AMERUS LIFE HOLDINGS, INC.
By/s/ Michael E. Sproule
--------------------------------------
Executive Vice President and CFO
(Chief Financial Officer)
By/s/ Michael G. Fraizer
--------------------------------------
Senior Vice President -
Controller and Treasurer
(Principal Accounting Officer)
-25-
AMERUS LIFE HOLDINGS, INC. AND SUBSIDIARIES
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
2.1* Plan of Reorganization dated October 27, 1995
3.1 Amended and Restated Articles of Incorporation of the Company
filed as Exhibit 3.5 to the registration statement of the Company
on Form S-1, Registration Number 333-12234, is hereby
incorporated by reference.
3.2* Bylaws of the Company
4.1 Amended and Restated Trust Agreement dated as of February 3, 1997
among the Company, Wilmington Trust Company, as property trustee,
and the administrative trustees named therein (AmerUs Capital I
business trust), filed as exhibit 3.6 to the registration
statement of the Company and AmerUs Capital I on Form S-1,
Registration Number 333-13713, is hereby incorporated by
reference.
4.2 Indenture dated as of February 3, 1997 between the Company and
Wilmington Trust Company relating to the Company's 8.85% Junior
Subordinated Debentures, Series A, filed as exhibit 4.1 to the
registration statement of the Company and AmerUs Capital I on
Form S-1, Registration Number, 333-13713, is hereby incorporated
by reference.
4.3 Guaranty Agreement dated as of February 3, 1997 between the
Company, as guarantor and Wilmington Trust Company, as trustee,
relating to the 8.85% Capital Securities, Series A, issued by
AmerUs Capital I, filed as exhibit 4.4 on Form S-1, Registration
Number, 333-13713, is hereby incorporated by reference.
10.1 Amended and Restated Intercompany Agreement dated as of December
1, 1996, among American Mutual Holding Company, AmerUs Group Co.
and the Company. Filed as Exhibit 10.81 to the company's
registration statement on Form S-1, Registration Number 333-
12237, is hereby incorporated by reference
10.2* Joint Venture Agreement, dated as of March 8, 1996, between
American Mutual Insurance Company and Ameritas Life Insurance
Corp., and First Amendment thereto dated as of April 1, 1996
between American Mutual Life Insurance Company and Ameritas Life
Insurance Corp.
10.3* Management and Administrative Service Agreement, dated as of
April 1, 1996, among American Mutual Life Insurance Company,
Ameritas Variable Life Insurance Company and Ameritas Life
Insurance Corp.
10.4* Agreement and Plan of Merger, dated as of August 24, 1994,
between Central Life Assurance Company and American Mutual Life
Insurance Company
10.5* Line of Credit Application and Approval, dated February 28, 1996
and April 22, 1996, respectively, between American Mutual Life
Insurance Company and Federal Home Loan Bank of Des Moines
-26-
10.6* All*AmerUs Supplemental Executive Retirement Plan, effective
January 1, 1996
10.7* American Mutual Life Insurance Company Supplemental Pension Plan
(which was curtailed as of December 31, 1995)
10.8* Central Life Assurance Company Supplemental Pension Plan (which
was curtailed as of December 31, 1995)
10.9* Management Incentive Plan
10.10* AmerUs Life Insurance Company Performance Share Plan
10.11* AmerUs Life Stock Incentive Plan
10.12* Employment Agreement, dated February 1, 1995, between American
Mutual Life Insurance Company and Sam C. Kalainov
10.13* AmerUs Life Non-Employee Director Stock Plan
10.14* Modification of Real Estate Contract, dated as of July 1, 1996,
between AmerUs Life Insurance Company and AmerUs Properties, Inc.
10.15* Asset Management and Disposition Agreement, dated January 3,
1995, between American Mutual Life Insurance Company and Central
Properties, Inc. (now AmerUs Properties, Inc.)
10.16* Management Contract, dated January 1, 1993, between Central Life
Assurance Company and Central Properties, Inc. (now AmerUs
Properties, Inc.)
10.17* Management Contract, dated November 1, 1994, between American
Mutual Life Insurance Company and CPI Resource Group (now AmerUs
Group Co.)
10.18* Management Contract, dated January 1, 1993, between Central Life
Assurance Company and Central Properties, Inc. (now AmerUs
Properties, Inc.)
10.19* Management Contract, dated January 1, 1995, between American
Mutual Life Insurance Company and Central Properties, Inc. (now
AmerUs Properties, Inc.)
10.20* Management Contract, dated July 1, 1994, between Central Life
Assurance Company and CPI Resource Group (now AmerUs Group Co.)
10.21* Management Contract, dated February 1, 1994, between Central Life
Assurance Company and Central Properties, Inc. (now AmerUs
Properties, Inc.)
10.22* Management Contract, dated May 1, 1994, between Central Life
Assurance Company and Central Properties, Inc. (now AmerUs
Properties, Inc.)
10.23* Management Contract, dated February 1, 1994, between Central Life
Assurance Company and Central Properties, Inc. (now AmerUs
Properties, Inc.)
10.24* Management Contract, dated January 4, 1994, between Central Life
Assurance Company and CPI Resource Group (now AmerUs Group Co.)
10.25* Management Contract, dated November 1, 1994, between American
Mutual Life Insurance Company and CPI Resource Group (now AmerUs
Group Co.)
10.26* Lease - Business Property, dated December 1, 1995, between
American Mutual Life Insurance Company and AmerUs Leasing
10.27* Lease - Business Property, dated January 1, 1996, between
American Mutual Life Insurance Company and AmerUs Bank
-27-
10.28* Lease - Business Property, dated January 1, 1996, between
American Mutual Life Insurance Company and AmerUs Bank
10.29* Lease - Business Property, dated January 1, 1996, between
American Mutual Life Insurance Company and AmerUs Bank
10.30* Lease - Business Property, dated January 1, 1996, between
American Mutual Life Insurance Company and AmerUs Group
10.31* Lease - Business Property, dated January 1, 1996, between
American Mutual Life Insurance Company and AmerUs Group
10.32* Assumption and Amendment of Lease Agreement, dated as of November
27, 1993 among Central Life Assurance Company, Midland Savings
Bank FSB (now AmerUs Bank) and Midland Financial Mortgages, Inc.
(now AmerUs Mortgage, Inc.)
10.33* Form of Indemnification Agreement executed with directors and
certain officers
10.34* Amended and Restated Agreement and Certificate of Limited
Partnership of CPI Housing Partners I, L.P., dated as of
September 1, 1995, among AmerUs Properties, Inc., American Mutual
Life Insurance Company and American Mutual Affordable Housing
Partners, L.P.
10.35* Amended and Restated Agreement of Limited Partnership of American
Mutual Affordable Housing Partners, L.P., dated as of September
1, 1995, among GrA Partners Joint Venture, AmerUs Properties,
Inc., American Mutual Life Insurance Company, NCC Polar Company
and NCC Orion Company
10.36* Amended and Restated Agreement and Certificate of Limited
Partnership of 65th & Vista, L.P., dated as of September 1, 1995,
among AmerUs Properties, Inc., American Mutual Life Insurance
Company and American Mutual Affordable Housing Partners, L.P.
10.37* Amended and Restated Agreement and Certificate of Limited
Partnership of 60th & Vista, L.P., dated as of September 1, 1995,
among I.R.F.B. Joint Venture, American Mutual Life Insurance
Company and American Mutual Affordable Housing Partners, L.P.
10.38* Certificate of Limited Partnership and Limited Partnership
Agreement of CPI Housing Partners II, L.P., dated March 27, 1995,
between Central Properties, Inc. (now AmerUs Properties, Inc.)
and American Mutual Life Insurance Company
10.39* Amended and Restated Agreement and Certificate of Limited
Partnership of API Housing Partners III, L.P., dated as of March
1, 1996, among AmerUs Properties, Inc., American Mutual Life
Insurance Company, American Mutual Affordable Housing Partners
II, L.P. and AmerUs Management, Inc.
10.40* Certificate of Limited Partnership and Limited Partnership
Agreement of API Housing Partners IV, L.P., dated as of June
1995, between AmerUs Properties, Inc. and American Mutual Life
Insurance Company
-28-
10.41* Amended and Restated Agreement and Certificate of Limited
Partnership of API Housing Partners V, L.P., dated as of March 1,
1996, among AmerUs Properties, Inc., American Mutual Life
Insurance Company, American Mutual Affordable Housing Partners
II, L.P. and AmerUs Management, Inc.
10.42* Amended and Restated Agreement and Certificate of Limited
Partnership of API-Chimney Ridge Partners, L.P., dated as of
March 1, 1996, among AmerUs Properties, Inc., American Mutual
Life Insurance Company, American Mutual Affordable Housing
Partners II, L.P. and AmerUs Management, Inc.
10.43* Certificate of Limited Partnership and Limited Partnership
Agreement of API Housing Partners VI, L.P., dated as of October
10, 1995, between AmerUs Properties, Inc. and American Mutual
Life Insurance Company
10.44* Certificate of Limited Partnership and Limited Partnership
Agreement of 86th & Meredith Associates, L.P., dated as of
February 14, 1995, between Central Properties, Inc. (now AmerUs
Properties, Inc.) and American Mutual Life Insurance Company
10.45* Certificate of Limited Partnership and Limited Partnership
Agreement of Altoona Meadows Investors, L.P., dated as of
February 22, 1995, between KPI Investments, Inc. and Dennis
Galeazzi
10.46* First Amendment to the Certificate of Limited Partnership and
Limited Partnership Agreement of Altoona Meadows Investors, L.P.,
dated as of September 28, 1995, between KPI Investments, Inc. and
American Mutual Life Insurance Company
10.47* Loan Servicing Agreement, dated August 1, 1990, between Central
Life Assurance Company and Midland Financial Mortgages, Inc. (now
AmerUs Mortgage), filed as Exhibit 10.30 to Central Resource
Group, Inc.'s Registration Statement on Form S-1, Registration
No. 33-48359, filed on June 4, 1992
10.48* Construction Loan Servicing Agreement, dated November 20, 1995,
between American Mutual Life Insurance Company and AmerUs
Properties, Inc.
10.49* Servicing Agreement, dated March 1996, between American Mutual
Life Insurance Company and AmerUs Properties, Inc.
10.50* Loan Servicing Agreement, dated September 1, 1994, between
Central Life Assurance Company and Midland Savings Bank, FSB (now
AmerUs Bank)
10.51* Miscellaneous Services Agreement, dated as of January 1, 1996,
among American Mutual Life Insurance Company, AmerUs Group Co.,
AmerUs Bank, AmerUs Mortgage, Inc., Iowa Realty Co., Inc.,
Midland Homes, Inc., Iowa Title Company, AmerUs Insurance, Inc.,
and AmerUs Finance Inc.
10.52* Amendment to Service Agreement, dated as of May 1, 1996, between
American Mutual Life Insurance Company and AmerUs Bank
-29-
10.53* Data Processing Service Agreement, dated November 1, 1989,
between Central Life Assurance Company and Midland Financial
Savings and Loan Association (now AmerUs Bank), filed as Exhibit
10.29 to Central Resource Group, Inc.'s Registration Statement on
Form S-1, Registration No. 33-48359, filed on June 4, 1992
10.54* First Amendment to Data Processing Service Agreement, dated as of
September 30, 1990, between Central Life Assurance Company and
Midland Savings Bank FSB (now AmerUs Bank)
10.55* Second Amendment to Data Processing Service Agreement, dated as
of May 1, 1991, between Central Life Assurance Company and
Midland Savings Bank FSB (now AmerUs Bank)
10.56* Third Amendment to Data Processing Service Agreement, dated as of
October 1, 1991, between Central Life Assurance Company and
Midland Savings Bank, FSB (now AmerUs Bank)
10.57* Fourth Amendment to Data Processing Service Agreement, dated as
of January 2, 1992, between Central Life Assurance Company and
Midland Savings Bank, (now AmerUs Bank)
10.58* Fifth Amendment to Data Processing Service Agreement, dated as of
June 1, 1993, between Central Life Assurance Company and Midland
Savings Bank FSB (now AmerUs Bank)
10.59* Sixth Amendment to Data Processing Service Agreement, dated as of
September 1, 1995, between American Mutual Life Company and
AmerUs Bank
10.60* Seventh Amendment to Data Processing Service Agreement, dated as
of January 1, 1996, between American Mutual Life Insurance
Company and AmerUs Bank
10.61* Data Processing Support Services Agreement, dated as of July 1,
1993, between Central Life Assurance Company and Midland Savings
Bank, FSB (now AmerUs Bank)
10.62* Miscellaneous Services Agreement, dated as of February 5, 1992,
between Central Life Assurance Company and Midland Savings Bank
FSB (now AmerUs Bank)
10.63* Investment Management Agreement, dated as of August 15, 1992,
between Central Life Assurance Company and Midland Savings Bank
FSB (now AmerUs Bank)
10.64* Disbursement Services Agreement, dated as of April 15, 1995,
between American Mutual Life Insurance Company and Midland
Savings Bank FSB (now AmerUs Bank)
10.65* Purchase Agreement, dated as of June 28, 1996, between AmerUs
Life Insurance Company and AmerUs Bank
10.66* Brokerage Contract dated January 1, 1995, between American Mutual
Life Insurance Company and Midland Investment Services, Inc. (now
AmerUs Investments, Inc.)
10.67* Servicing Agreement, dated March 1, 1992, between Central Life
Assurance Company and Midland Investment Services, Inc. (now
AmerUs Investments, Inc.)
10.68* Tax Allocation Agreement dated as of November 4, 1996
-30-
10.69* Amended and Restated Articles of Limited Partnership of T.L.B.
Limited Partnership, undated, among F. Barry Tapp, Lartnec
Investment Co., Michael H. Taylor, Michael Longley and Michael A.
Hammond, along with a Memorandum of Understanding Regarding
Assignments of Partnership Interests dated December 21, 1988 and
three corresponding Assignments of Partnership Interest dated
December 6, 1988 wherein Central Life Assurance Company is
Assignee, and an Assignment of Partnership Interest of T.L.B.
Limited Partnership dated December 29, 1995, between Lartnec
Investment Co. and AmerUs Properties, Inc.
10.70* Assignment of Partnership Interest of T.L.B. Limited Partnership,
dated December 28, 1994, between Lartnec Investment Co. and
Central Properties, Inc. (now AmerUs Properties, Inc.) and
Assignment of Limited Partnership Interest of T.L.B. Limited
Partnership, dated December 30, 1995, between American Mutual
Life Insurance Company and AmerUs Properties, Inc.
10.71* Limited Partnership Agreement of South 19th Limited Partnership,
dated December 30, 1985, among Lartnec Investment Co., F. Barry
Tapp and Michael H. Taylor, along with a Memorandum of
Understanding Regarding Assignments of Partnership Interests
dated December 21, 1988 and three corresponding Assignments of
Partnership Interest dated December 6, 1988 wherein Central Life
Assurance Company is Assignee, and an Assignment of Partnership
Interest of South 19th Limited Partnership dated December 29,
1995, between Lartnec Investment Co. and AmerUs Properties, Inc.
10.72* Assignment of Partnership Interest of South 19th Limited
Partnership, dated December 28, 1994, between Lartnec Investment
Co. and Central Properties, Inc. (now AmerUs Properties, Inc.)
and Assignment of Partnership Interest of South 19th Limited
Partnership, dated December 30, 1995, between American Mutual
Life Insurance Company and AmerUs Properties, Inc.
10.73* Limited Partnership Agreement of Theater Project Limited
Partnership dated March 15, 1985, among Tapp Management, Inc.,
Tapp Management Co., Ltd., Michael Longley, Michael A. Hammond
and Gary L. Wood along with an Amendment to Certificate of
Limited Partnership, dated August 22, 1986, and an Assignment of
Limited Partnership Interest, dated November 15, 1992, between F.
Barry Tapp and Tapp Development Co., Ltd., and an Amended
Certificate of Limited Partnership dated December 24, 1992
10.74* Assignment of Limited Partnership Interest of Theater Project
Limited Partnership, dated December 30, 1995, between American
Mutual Life Insurance Company and AmerUs Properties, Inc.
10.75* Certificate of Limited Partnership and Limited Partnership
Agreement of Lagos Vista Limited Partnership, dated August 10,
1994, between Central Properties, Inc. (now AmerUs Properties,
Inc.) and Central Life Assurance Company
-31-
10.76* Joint Venture Agreement, dated July 30, 1980, between F. Barry
Tapp and Lartnec Investment Co., along with an Assignment by F.
Barry Tapp of Interest in Tapp & LICO Properties, dated December
24, 1981, between F. Barry Tapp and Tapp Development Co., Ltd.,
an Assignment of Partnership Interest, dated December 6, 1988,
between Tapp Development Co., Ltd. and Central Life Assurance
Company and an Assignment of Joint Venture Interest of Tapp and
LICO Properties, dated December 29, 1995, between Lartnec
Investment Co. and AmerUs Properties, Inc.
10.77* Assignment of Joint Venture Interest of Tapp and LICO Properties,
dated December 28, 1994, between Lartnec Investment Co. and
Central Properties, Inc. (now AmerUs Properties, Inc.) and
Assignment of Joint Venture Interest of Tapp and LICO Properties,
dated December 30, 1995, between American Mutual Life Insurance
Company and AmerUs Properties, Inc.
10.78* Joint Venture Agreement, dated December 30, 1980, between MBT,
Ltd. and Lartnec Investment Co., along with an Assignment by F.
Barry Tapp of Interest in MBT, Ltd., dated December 24, 1981,
between F. Barry Tapp and Tapp Development Co., Ltd., an
Assignment by Michael H. Taylor of Interest in MBT, Ltd., dated
December 23, 1981, between Michael H. Taylor and Tapp Development
Co., Ltd., an Assignment of Limited Partnership interest, dated
December 6, 1988, between Tapp Development Co., Ltd. and Central
Life Assurance Company, and an Assignment of Joint Venture
Interest of Round Rock Outlet, Ltd., dated December 29, 1995,
between Lartnec Investment Co. and AmerUs Properties, Inc.
10.79* Assignment of Joint Venture Interest of Round Rock Outlet, Ltd.,
dated December 28, 1994, between Lartnec Investment Co. and
Central Properties, Inc. (now AmerUs Properties, Inc.) and
Assignment of Joint Venture Interest of Round Rock Outlet, Ltd.,
dated December 30, 1995, between American Mutual Life Insurance
Company and AmerUs Properties, Inc.
10.80* Revolving Credit and Term Loan Agreement, dated as of December
1996, among the Company, certain Signatory Banks thereto and The
Chase Manhattan Bank, Note issued by the Company and Borrower
Pledge Agreement
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11 Statement Regarding Computation of Per Share Earnings
21* List of Subsidiaries of the Registrant
27 Financial Data Schedule
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.
_____________________________
* Previously filed and identified with the same exhibit number in the Company's
Registration Statement on Form S-1, Registration Number 333-12239, and is
hereby incorporated by reference.
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