Alfa Corporation Reports Record 2005 Results.MONTGOMERY Montgomery, city, United States Montgomery, city (1990 pop. 187,106), state capital and seat of Montgomery co., E central Ala., near the head of navigation on the Alabama River just below the confluence of the Coosa and Tallapoosa rivers, and in the rich , Ala ALA aminolevulinic acid. Ala alanine. ala (a´lah) pl. a´lae [L.] a winglike process. . -- Alfa Al´fa n. 1. A plant (Macrochloa tenacissima) of North Africa; also, its fiber, used in paper making. Corporation (Nasdaq/NM:ALFA) today announced record financial results for the year ended December December: see month. 31, 2005. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for the year was a record $95,100,686, or $1.18 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared with operating income of $84,863,334, or $1.05 per diluted share for 2004, an increase of 11.8% on a per share basis. Included in 2005 results is the recognition of a deferred tax asset and subsequent charge to net income for the change in this deferred tax asset, arising from the creation of Alfa Benefits Corporation in 1999. The impact to income for this correction CORRECTION,punishment. Chastisement by one having authority of a person who has committed some offence, for the purpose of bringing him to legal subjection. 2. It is chiefly exercised in a parental manner, by parents, or those who are placed in loco parentis. is $1,595,506 or $0.02 per share. Excluding this nonrecurring Non`re`cur´ring a. 1. Nonrecurrent; as, the costs of a layoff are considered as a nonrecurring expense s>. item operating income was $96,696,192 or $1.20 per diluted share for 2005. Net income, which includes net realized investment gains, was a record $99,033,753, or $1.23 per diluted share for 2005, compared with $89,444,959, or $1.11 per diluted share in 2004, a per share increase of 10.4%. Premiums and policy charges for 2005 increased 13.7% to $633,072,049. Operating income for the fourth quarter of 2005 was $22,704,120, or $0.28 per diluted share, compared with fourth quarter 2004 operating income of $21,479,250, or $0.27 per diluted share. After net realized investment gains, net income for the fourth quarter of 2005 was $23,805,346, or $0.29 per diluted share, compared with $22,681,694, or $0.28 per diluted share, in the prior-year period. Premium revenue for the final three months of 2005 increased 15.7% to $162,908,090. Alfa's Chairman, President and Chief Executive Officer, Jerry Jer·ry n. pl. Jer·ries Chiefly British Slang A German, especially a German soldier. [Alteration of German. A. Newby, said, "In a year of significant challenges for the insurance industry, we are very pleased with our company's accomplishments in 2005. Our employees once again rose to the highest levels of performance when, for a second time in as many years, they were faced with the overwhelming task of servicing tens of thousands of Alfa customers whose lives were forever changed Forever Changed was a Christian Rock band from Tallahassee and Orlando, FL. They came together in 1999 and broke up in 2006. Dan Cole was the lead singer, a guitarist, and a pianist. Ben O'Rear was the lead guitarist, Tom Gustafson played bass, and Nathan Lee played the drums. by a single force of nature. Their efforts helped generate strong financial performance, producing another year of record earnings. Also, the addition of our two newest companies, Alfa Vision Insurance and Alfa Virginia Virginia, state, United States Virginia, state of the south-central United States. It is bordered by the Atlantic Ocean (E), North Carolina and Tennessee (S), Kentucky and West Virginia (W), and Maryland and the District of Columbia (N and NE). Mutual, to our inter-company pooling arrangement had a significant positive impact on our top line growth. We are proud of the many successes we achieved during the year, including advances in technology, new product offerings and geographical ge·o·graph·ic also ge·o·graph·i·cal adj. 1. Of or relating to geography. 2. Concerning the topography of a specific region. ge expansion. "As the new year unfolds, we are excited about what the future holds for our companies. Our emphasis in 2006 will remain on developing our people, building sound relationships, improving our service, and producing solid financial performance." Alfa Corporation will host a conference call today at 10:30 a.m. Eastern time. Investors and other interested parties may access the teleconference by calling 1-800-289-0518, or via links located on Alfa's web site: www.alfains.com. A 30-day Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the play of the call will also be available from Alfa's web site. Alfa Corporation is engaged in insurance and financial activities through its subsidiaries. The common stock of Alfa Corporation is traded on the Nasdaq Stock Market's National Market under the symbol ALFA. The associated investor supplement package for the fourth quarter ended December 31, 2005, may be found by clicking on the web cast link in the "Invest in Alfa" section of Alfa's web site and is also available at: http://www.irinfo.com/alfa/4q05fsx.pdf. Investors are cautioned that statements in this press release which relate to the future are, by their nature, uncertain and dependent upon numerous contingencies Contingencies (ISSN 1048-9851) is the bimonthly magazine of the American Academy of Actuaries, providing a large and diverse readership with general interest and technical articles on a wide range of issues related to the actuarial profession. - including political, economic, regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. , climatic, competitive, legal, and technological - any of which could cause actual results and events to differ materially from those indicated in such forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . Additional information regarding these and other risk factors and uncertainties may be found in Alfa Corporation's filings with the Securities and Exchange Commission.
ALFA CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
Years Ended
December 31, Statistics
--------------------------------------------
2005 2004 %Change 2005 2004
--------------------------------------------
Revenues
Premiums - Property
and Casualty Insurance 556,438,727 485,534,231 14.60
Premiums - Life
Insurance 41,134,144 37,134,465 10.77
Policy Charges - Life
Insurance 35,499,178 34,089,930 4.13
Net Investment Income 94,931,739 89,361,003 6.23
Other Income 22,849,897 8,123,307 181.29
----------------------------------------------------------------------
Total Revenues 750,853,685 654,242,936 14.77
----------------------------------------------------------------------
Benefits and Expenses
Benefits & Settlement
Expenses 432,856,310 390,061,548 10.97 57.65 59.62
Dividends to
Policyholders 4,009,119 3,873,932 3.49 0.53 0.59
Amortization of Deferred
Policy Acquisition
Costs 108,723,470 90,454,509 20.20 14.48 13.83
Other Operating Expenses 73,453,925 56,272,154 30.53 9.78 8.60
----------------------------------------------------------------------
Total Expenses 619,042,824 540,662,143 14.50 82.45 82.64
----------------------------------------------------------------------
Income Before Provision
for Income Taxes 131,810,861 113,580,793 16.05 17.55 17.36
Provision For Income
Taxes 36,710,175 28,717,459 27.83 27.85 25.28
----------------------------------------------------------------------
Operating Income 95,100,686 84,863,334 12.06
Realized Investment Gains,
Net of Tax 3,933,067 4,581,625 (14.16)
----------------------------------------------------------------------
Net Income 99,033,753 89,444,959 10.72
======================================================================
Operating Income
Per Share - Basic 1.19 1.06 11.84
======================================================================
Operating Income
Per Share - Diluted 1.18 1.05 11.75
======================================================================
Net Income Per
Share - Basic 1.24 1.12 10.50
======================================================================
Net Income Per
Share - Diluted 1.23 1.11 10.41
======================================================================
Dividends Per Share 0.3875 0.3425 13.14
======================================================================
Average Shares
Outstanding - Basic 80,141,068 79,984,651 0.20
======================================================================
Average Shares
Outstanding - Diluted 80,712,923 80,489,502 0.28
======================================================================
Three Months Ended
December 31, Statistics
--------------------------------------------
2005 2004 %Change 2005 2004
--------------------------------------------
Revenues
Premiums - Property
and Casualty Insurance 143,872,916 122,642,041 17.31
Premiums - Life
Insurance 10,260,406 9,752,897 5.20
Policy Charges - Life
Insurance 8,774,768 8,412,761 4.30
Net Investment Income 24,421,647 22,472,784 8.67
Other Income 5,642,746 1,824,564 209.27
----------------------------------------------------------------------
Total Revenues 192,972,483 165,105,047 16.88
----------------------------------------------------------------------
Benefits and Expenses
Benefits & Settlement
Expenses 109,578,448 98,830,281 10.88 56.78 59.86
Dividends to
Policyholders 1,063,724 1,018,655 4.42 0.55 0.62
Amortization of Deferred
Policy Acquisition
Costs 26,725,516 20,341,056 31.39 13.85 12.32
Other Operating Expenses 22,768,806 17,709,415 28.57 11.80 10.73
----------------------------------------------------------------------
Total Expenses 160,136,494 137,899,407 16.13 82.98 83.52
----------------------------------------------------------------------
Income Before Provision
for Income Taxes 32,835,989 27,205,640 20.70 17.02 16.48
Provision For Income
Taxes 10,131,869 5,726,390 76.93 30.86 21.05
----------------------------------------------------------------------
Operating Income 22,704,120 21,479,250 5.70
Realized Investment Gains,
Net of Tax 1,101,226 1,202,444 (8.42)
----------------------------------------------------------------------
Net Income 23,805,346 22,681,694 4.95
======================================================================
Operating Income
Per Share - Basic 0.28 0.27 5.19
======================================================================
Operating Income
Per Share - Diluted 0.28 0.27 4.99
======================================================================
Net Income Per
Share - Basic 0.30 0.28 4.45
======================================================================
Net Income Per
Share - Diluted 0.29 0.28 4.24
======================================================================
Dividends Per Share 0.1000 0.0875 14.29
======================================================================
Average Shares
Outstanding - Basic 80,215,641 79,829,520 0.48
======================================================================
Average Shares
Outstanding - Diluted 80,904,931 80,356,539 0.68
======================================================================
Management believes that operating income and operating income per
share, non-GAAP financial measures, serve as meaningful tools for
assessing the profitability of the Company's ongoing operations.
Operating income is defined by the Company as net income excluding
realized investment gains and losses, net of applicable taxes.
Operating income per share represents operating income divided by the
weighted average shares outstanding for the reporting period.
Management uses operating income and operating income per share as
measures of the Company's ongoing profitability since they eliminate
the effect of securities market volatility from earnings.
ALFA CORPORATION
CONSOLIDATED BALANCE SHEETS
December 31,
-------------------------------
2005 2004 %Change
--------------- --------------- ---------
Assets
Investments:
Fixed Maturities Held for
Investment, at amortized
cost (fair value $93,578
in 2005 and $123,935 in
2004) $88,330 $114,708 -23.00%
Fixed Maturities Available
for Sale, at fair value
(amortized cost
$1,394,823,078 in 2005
and $1,305,288,027 in
2004) 1,419,708,095 1,354,507,490 4.81%
Equity Securities Available
for Sale, at fair value
(cost $96,668,040 in
2005 and $83,445,562
in 2004) 107,020,104 99,701,250 7.34%
Policy Loans 62,101,204 58,476,569 6.20%
Collateral Loans 124,667,449 110,792,974 12.52%
Commercial Leases 2,515,084 4,831,363 -47.94%
Other Long-Term Investments 61,961,072 66,855,805 -7.32%
Other Long-Term Investments
in Affiliates 138,457,224 77,942,989 77.64%
Short-Term Investments 84,861,880 80,988,969 4.78%
--------------- --------------- ---------
Total Investments 2,001,380,442 1,854,212,117 7.94%
Cash 37,228,639 20,052,493 85.66%
Accrued Investment Income 16,912,488 16,726,050 1.11%
Accounts Receivable 72,622,465 50,447,800 43.96%
Reinsurance Balances
Receivable 6,648,204 5,279,560 25.92%
Deferred Policy Acquisition
Costs 204,253,919 183,258,224 11.46%
Assets Classified as Held
for Sale - 77,450,278 -100.00%
Goodwill 13,924,306 - 100.00%
Other Intangible Assets (net
of accumulated amortization
of $683,400 in 2005) 8,424,600 - 100.00%
Other Assets 20,478,836 15,237,024 34.40%
--------------- --------------- ---------
Total Assets $2,381,873,899 $2,222,663,546 7.16%
=============== =============== =========
Liabilities and
Stockholders' Equity
Policy Liabilities and
Accruals - Property and
Casualty Insurance $159,639,886 $154,107,730 3.59%
Policy Liabilities and
Accruals - Life Insurance
Interest-Sensitive Products 600,994,074 555,733,736 8.14%
Policy Liabilities and
Accruals - Life Insurance
Other Products 197,140,294 180,410,535 9.27%
Unearned Premiums 220,456,047 185,856,467 18.62%
Dividends to Policyholders 11,662,085 11,262,132 3.55%
Premium Deposit and
Retirement Deposit Funds 5,741,071 6,369,125 -9.86%
Deferred Income Taxes 29,118,958 43,070,818 -32.39%
Liabilities Associated with
Assets Classified as Held
for Sale - 340,876 -100.00%
Other Liabilities 74,201,255 73,872,992 0.44%
Due to Affiliates 22,249,975 29,995,986 -25.82%
Commercial Paper 213,790,443 204,303,206 4.64%
Notes Payable 70,000,000 70,000,000 0.00%
Notes Payable to Affiliates 20,887,635 15,887,635 31.47%
--------------- --------------- ---------
Total Liabilities 1,625,881,723 1,531,211,238 6.18%
--------------- --------------- ---------
Commitments and
Contingencies
Stockholders' Equity:
Preferred Stock, $1 par value - - 0.00%
Shares authorized:
1,000,000
Issued: None
Common Stock, $1 par value 83,783,024 83,783,024 0.00%
Shares authorized:
110,000,000
Issued: 83,783,024
Outstanding: 80,284,018
in 2005 and 79,833,467
in 2004
Capital in Excess of Par
Value 21,171,462 10,961,782 93.14%
Accumulated Other
Comprehensive Income
(unrealized gains on
securities available for
sale, net of tax of
$22,105,684 in 2005 and
$39,450,553 in 2004;
unrealized (losses) on
interest rate swap contract,
net of tax of ($11,265) in
2005 and ($1,406,747) in
2004; unrealized gains
(losses) on other long-term
investments, net of tax of
($394,560) in 2005 and
$16,565 in 2004) 21,699,859 38,060,371 -42.99%
Retained Earnings 667,535,056 599,609,509 11.33%
Treasury Stock, at cost
(shares, 3,499,006 in
2005 and 3,949,557 in
2004) (38,197,225) (40,962,378) -6.75%
--------------- --------------- ---------
Total Stockholders'
Equity 755,992,176 691,452,308 9.33%
--------------- --------------- ---------
Total Liabilities and
Stockholders' Equity $2,381,873,899 $2,222,663,546 7.16%
=============== =============== =========
Book Value per share $9.42 $8.66
=============== ===============
Book Value per share
(excluding FAS 115) $9.30 $8.37
=============== ===============
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