EXHIBIT 99.1
[ARM FINANCIAL GROUP, INC. LOGO]
ARM FINANCIAL GROUP REPORTS:
- - 1997 PRO FORMA OPERATING EARNINGS UP 34% OVER 1996 AND FOURTH QUARTER 1997
UP 5% OVER 1996 SAME PERIOD
- - PRODUCT ENHANCEMENTS AND NEW PRODUCTS SUPPORT STRONG SALES GROWTH
- - MARTIN H. RUBY NAMED CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
- - JOHN FRANCO, CO-CHAIRMAN AND CO-CEO, RETIRES; COMPANY PLANS RELATED
ONE-TIME CHARGE IN THE 1ST QUARTER 1998
HOLD For Release at: 2/11/98 7:50 am
Contact:
PETER RESNIK, TREASURER AND CORPORATE COMMUNICATIONS OFFICER
ARM FINANCIAL GROUP, INC.
(502) 582-7946
E-MAIL: CORPINFO@ARMFINANCIAL.COM
Louisville, KY, February 11, 1998--ARM Financial Group, Inc. (the "Company")
(AMEX: ARM) (http://www.armfinancial.com) announced today that pro forma
operating earnings for the fourth quarter of 1997 increased to $10.7 million,
or 44 cents per share, from $9.9 million, or 42 cents per share, for the same
period in 1996, an increase of 5% per share. For the full year of 1997, pro
forma operating eazrnings increased to $36.3 million, or $1.51 per share,
from $26.8 million, or $1.13 cents per share, in the same period in 1996, an
increase of 34% per share.
The higher operating earnings in 1997 were parimarily attributable to an
increase in both deposit growth from sales of retail and institutional
products and ongoing asset/liability management for spread-based products.
During the second quarter of 1997, ARM Financial Group completed an initial
public offering of its common stock. The Company raised approximately $79
million which is being used to strengthen the Company's existing capital
base, to enhance the Company's retail market presence, to consolidate
operating locations and for other corporate purposes, which may include
acquisitions. For comparative purposes, ARM is reporting pro forma results
to adjust for the impact of the initial public offering of common stock as if
it had occurred at the beginning of each period presented.
Net income applicable to common shareholders was $9.6 million for the
quarter, or 39 cents per share, compared with fourth quarter 1996 of $7.4
million, or 42 cents per share. For the full year of 1997, the
net income applicable to common shareholders was $22.8 million, or $1.07 per
share, which compares with 1996 full year of $18.6 million, or $1.06 per
share. The full year of 1997 includes a one-time, non-cash stock-based
compensation charge of $8.1 million as a result of the IPO and non-recurring
charges of $6.7 million ($1.6 million in the 1997 fourth quarter), mainly
relating to the previously announced relocation and consolidation of the
Company's operating facilities from Columbus, Ohio to Louisville, Kentucky.
Total sales rose to $2,297.5 million, an increase of 111%, for the full year
of 1997 from $1,088.2 million for the same period in 1996. Total sales
reflect retail sales of $588.8 million, representing a 78% increase over the
previous year's same period and institutional sales of $1,708.7 million,
representing a 126% increase over the previous year's same period.
"Strong sales and earnings growth resulted from continued diversification and
expansion in our retail and institutional business lines," said Martin H.
Ruby, Chief Executive Officer of ARM.
He added that "the changing economic environment in 1997 emphasized the
importance of the Company offering a well-balanced portfolio of products. In
the fourth quarter, retail customers had greater interest in our variable
annuity products, compared with the first half of the year when higher
interest rates resulted in preferred interest in our guaranteed rate
products."
Product innovation played a key factor for sales during the fourth quarter.
In the retail market, ARM introduced enhancements to its multi-manager
variable annuity product, PINNACLE, which offers indexed funds, along with a
diverse selection of asset classes and managers and guaranteed rate options
- -- all in one product. ARM also broadened its institutional product lines and
distribution channels in launching a new product in partnership with
Bayerische Landesbank Girozentrale, one of the safest rated banks in the
world. The product, which is initially for five years and renewable annually
thereafter, received deposits of $500 million. The primary purchasers for
this product are institutional money managers and money market funds.
For the fourth quarter of 1997, net investment spread increased to
$22.6 million from $18.0 million in the previous year's fourth quarter. Net
investment spread represents interest income earned on invested assets less
interest credited on customer deposits. For the same periods, fee income
increased to $7.1 million from $4.5 million, respectively. In addition, net
income for the fourth quarter of 1997 includes net realized investment gains
of $0.2 million compared to $3.2 million of net realized investment gains for
the comparable period of 1996.
MARTIN H. RUBY NAMED CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
The Company also announced today that Martin H. Ruby fully assumes the role
of Chairman of the Board and Chief Executive Officer, effective immediately.
Since the Company was founded in 1993, Mr. Ruby has served with John Franco
as Co-Chairman of the Board and Co-Chief Executive Officer.
Ruby indicated that the Company intends to remain focused on its key
strategies of product innovation, delivering superior service, expanding
sales and distribution channels and a disciplined approach to asset/liability
and investment management.
JOHN FRANCO RETIREMENT ANNOUNCED
In addition, the Company announced that John Franco has retired as
Co-Chairman of the Board and Co-Chief Executive Officer and as a member of
the Board of Directors, effective immediately.
John Franco said, "ARM has grown rapidly and profitably since the Company's
founding in 1993 and is well-positioned for future growth. I believe that ARM
has successfully met the challenges of a start-up company and has a strong
management team capable of building on the sound platform we have
established. Now that ARM has matured to its current size, I believe this is
the right time for me to step down."
According to Martin Ruby, "John and I co-founded this Company because we
believe there are tremendous opportunities for growth in the long term
savings and retirement industry. Since then, ARM has been successfully
transformed from a start-up company to a full-fledged, publicly traded
company with $6.9 billion in assets under management, over 300 employees and
a market capitalization of over $500 million dollars. With our strategies in
place, I feel that ARM is positioned to capitalize further on this success."
Ruby added "John's leadership played a critical role in developing ARM's key
business strategies and a strong management team to direct the Company's
future. I know that I speak for all when I extend a special thanks to John
for his exceptional leadership, dedication, and commitment. He has earned the
respect of everyone who has worked with him. We wish John and his family all
the best in the years to come."
The Company also indicated that, as part of a retirement package for Mr.
Franco, the Company in the first quarter of 1998 will take a one-time charge
of approximately $3.8 million consisting of a $2.3 million non-cash item for
vesting the unvested portion of stock options and a $1.5 million item for
fulfilling remaining compensation agreements under his employment agreement.
ARM Financial Group, Inc. specializes in the asset accumulation business,
providing retail and institutional customers with products designed to serve
the growing long-term retirement savings marketplace. At December 31, 1997,
the Company had $6.9 billion in assets under management. It provides
annuities and guaranteed investment contracts through its insurance
subsidiaries, Integrity Life Insurance Company and National Integrity Life
Insurance Company; face-amount certificates through SBM Certificate
Company; and brokers support and products through its broker-dealer, ARM
Securities Corporation.
The above statements include forward-looking statements. ARM cautions
investors that any forward-looking statements are inherently uncertain and
investors must recognize that actual results may differ from ARM's
expectations. Numerous factors exist which in the future could cause results
to differ materially from these expectations. These statements involve risks
and uncertainties as detailed from time to time in ARM's filings with the
Securities and Exchange Commission.
ARM FINANCIAL GROUP,INC.
SUMMARY FINANCIAL INFORMATION - 1997 AND 1996
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Three Months Ended December 31, Year Ended December 31,
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1997 1996 1997 1996
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(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND WHERE NOTED)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Net investment spread $ 22,622 $ 18,016 $ 82,561 $ 67,870
Fee income 7,083 4,506 24,611 17,833
Other income and expenses
(excluding non-recurring charges) (13,156) (11,779) (53,803) (53,061)
Non-recurring charges:
Stock-based compensation expense charge - - (8,145) -
Other (1,556) (3,968) (6,678) (5,004)
Realized investment gains 165 3,239 3,192 907
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Income before federal income taxes 15,158 10,014 41,738 28,545
Federal income tax expense (4,405) (1,448) (14,139) (5,167)
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Net income 10,753 8,566 27,599 23,378
Dividends on preferred stock (1,187) (1,187) (4,750) (4,750)
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Net income applicable to common shareholders $ 9,566 $ 7,379 $ 22,849 $ 18,628
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Pro forma operating earnings (1) $ 10,745 $ 9,926 $ 36,343 $ 26,789
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Per common and common equivalent share:
Net income $ 0.39 $ 0.42 $ 1.07 $ 1.06
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Pro forma operating earnings $ 0.44 $ 0.42 $ 1.51 $ 1.13
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SELECTED DATA
Sales (in millions):
Retail $ 100.6 $ 113.6 $ 588.8 $ 330.7
Institutional 781.8 132.8 1,708.7 757.5
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Total $ 882.4 $ 246.4 $2,297.5 $ 1,088.2
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December 31, December 31,
1997 1996
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Total assets under management (in billions) (2) $ 6.9 $ 4.8
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(1) Pro forma operating earnings is defined as net income applicable to
common shareholders, excluding, net of tax, realized investment gains and
losses, non-recurring charges and income from defined benefit pension
plan asset management operations which were sold and includes the net pro
forma effect on earnings assuming the Company's initial public offering
of common stock has occurred at the beginning of each period presented.
(2) Assets under management accepted both on and off the Company's balance
sheet.
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Additional statistical information is available on the Company's web page
(http://www.armfinancial.com) or directly from the Company at (502) 582-7993
Contact: Peter Resnik
Treasurer and Corporate
Communications Officer
(502) 582-7946
e-mail: corpinfo@armfinancial.com