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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 12b-25
NOTIFICATION OF LATE FILING
/X/ FORM 10-Q
For the quarterly period ended: June 30, 1999
Commission file number: 001-12294
Part I. - Registrant Information
ARM FINANCIAL GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 61-1244251
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
515 WEST MARKET STREET
LOUISVILLE, KENTUCKY 40202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (502) 582-7900
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Part II-Rules 12b-25 (b) and (c)
If the subject report could not be filed without unreasonable effort or
expense and the registrant seeks relief pursuant to Rule 12b-25(b), the
following should be completed. (Check box if appropriate)
(a) The reasons described in reasonable detail in Part III of this form
could not be eliminated without unreasonable effort or expense; /x/
(b) The subject annual report, semi-annual report, transaction report on
Form 10-K, Form 20-F, 11-K or Form N-SAR, or portion thereof, will be
filed on or before the fifteenth calendar day following the prescribed
due date; or the subject quarterly report or transition report on Form
10-Q, or portion thereof, will be filed on or before the fifth
calendar day following the prescribed due date; and /x/
(c) The accountant's statement or other exhibit required by Rule 12b-25
(c) has been attached if applicable. / /
Part III--Narrative
State below in reasonable detail the reasons why Form 10-K and Form 10-KSB,
20-F, 11-K, 10-Q and Form 10-QSB, N-SAR, or the transition report or portion
thereof, could not be filed within the prescribed period.
ARM Financial Group, Inc. (the "Company") has devoted substantial resources
towards significant transactions which include restructuring its institutional
business and positioning its retail business and technology operations for the
sale of the Company. Under normal circumstances, many of these same resources
would be devoted to preparation of the Company's Form 10-Q. The Company would
not be able to devote sufficient resources towards progress on the significant
transactions and file the Company's Form 10-Q by the date required without
unreasonable effort or expense.
Part IV--Other Information
(1) Name and telephone number of person to contact in regard to this
notification.
Barry G. Ward, Controller
(502) 582-7934
(2) Have all other periodic reports required under section 13 or 15 (d) of
the Securities Exchange Act of 1934 or section 30 of the Investment
Company Act of 1940 during the preceding 12 months or for such shorter
period that the registrant was required to file such report(s) been
filed? If the answer is no, identify report(s).
/x/ Yes / / No
(3) Is it anticipated that any significant change in results of operations
from the corresponding period for the last fiscal year will be
reflected by the earnings statements to be included in the subject
report or portion thereof?
/x/ Yes / / No
If so: attach an explanation of the anticipated change, both narratively
and quantitatively, and, if appropriate, state the reasons why a reasonable
estimate of the results cannot be made.
When filed, the Company's Form 10-Q for the quarterly period ended June 30,
1999 will report a net loss of $172.9 million during the second quarter of 1999
compared to net income of $11.9 million for the second quarter of 1998. For the
six months ended June 30, the net loss was $159.5 million in 1999, compared with
net income of $22.9 million in 1998. The net loss for the second quarter and
first six months of 1999 is primarily attributable to $180.8 million of realized
investment losses incurred during the second quarter of 1999. Such realized
investment losses include a $90.0 million charge related to the termination of a
reinsurance agreement with General American Life Insurance Company ("General
American") and a $73.9 million charge as a result of writing down the book value
of the Company's remaining investment securities related to its institutional
business.
On July 29, 1999, the Company announced that it is restructuring its
institutional business and positioning its retail business and technology
operations for the sale of the Company. There can be no assurance that a
transaction for the sale of the Company will be developed or consummated or as
to the price or value that might be obtained.
As part of the institutional restructuring, on August 3, 1999, the
Company and General American completed a transaction whereby General American
recaptured approximately $3.4 billion of assets and related liabilities
previously ceded through a reinsurance agreement to one of the Company's
insurance subsidiaries, Integrity Life Insurance Company ("Integrity") (the
"Transaction"). The Transaction, which terminated the reinsurance and related
agreements, including a marketing partnership agreement, was effective as of
July 26, 1999. These assets and related liabilities were part of a joint
product development, marketing and reinsurance relationship with General
American involving funding agreements and guaranteed investment contracts. As
a result of the Transaction, the Company recorded a charge of $90 million
during the second quarter of 1999 primarily due to interest rate related
decreases in the fair value of investment securities recaptured by General
American. The Company does not intend to pursue additional institutional
spread or institutional fee business.
Following the reinsurance recapture by General American, the Company had
approximately $1.8 billion of institutional customer deposits remaining related
to institutional funding agreements and investment certificates. In anticipation
of further actions to reduce the risk profile of this remaining institutional
business, the Company recorded a second quarter charge of $73.9 million. This
charge is a result of writing down the book value of the Company's remaining
institutional invested assets, due to
interest rate related other-than-temporary declines in asset fair values.
During July 1999, the Company implemented a hedging strategy designed to
minimize interest rate sensitivity in the remaining institutional investment
portfolio.
Operating earnings (net income or loss applicable to common shareholders
excluding realized investment gains and losses, net of tax, and a tax charge
related to prior year unrealized losses for 1999 and non-recurring charges for
1998) were $16.0 million and $10.7 million for the second quarters of 1999 and
1998, respectively. For the six months ended June 30, operating earnings were
$28.6 million in 1999, compared with $20.7 million in 1998. The increase in
operating earnings is primarily attributable to an increase in net investment
spread and variable annuity fees due to the growth of assets under management
which increased from $8.4 billion at June 30, 1998 to $10.4 billion at June 30,
1999, including $3.4 billion of assets under management which were recaptured by
General American in the third quarter of 1999.
ARM Financial Group, Inc.
Has caused this notification to be signed on its behalf by the undersigned
thereunto duly authorized, on August 16, 1999.
ARM FINANCIAL GROUP, INC.
By: /s/ EDWARD L. ZEMAN
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Edward L. Zeman
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
By: /s/ BARRY G. WARD
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Barry G. Ward
Controller
(Principal Accounting Officer)