AmerUs Group Reports 86% Increase in First Quarter Results; Net Income $61.5 Million; $1.43 Per Share.DES MOINES, Iowa “Des Moines” redirects here. For other uses, see Des Moines (disambiguation). Des Moines (pronounced /dɪˈmɔɪn/ in English, -- AmerUs Group Co. (NYSE NYSE See: New York Stock Exchange :AMH AMH Abington Memorial Hospital (Abington, PA) AMH Anti-Müllerian Hormone AMH Australian Medicines Handbook AMH Automated Material Handling AMH Aviation Structural Mechanic (Hydraulics) US Navy Rating ), a leading producer of life insurance and annuity annuity: see insurance. annuity Payment made at a fixed interval. A common example is the payment received by retirees from their pension plan. There are two main classes of annuities: annuities certain and contingent annuities. products, today reported first quarter 2005 net income of $61.5 million, or $1.43 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 $33.1 million, or $0.82 per diluted share in the first quarter of 2004. Adjusted net 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 first quarter of 2005 was $46.7 million, or $1.09 per diluted share, compared with $40.2 million, or $0.99 per diluted share a year ago.(1) Commenting on the company's first quarter results, chairman and chief executive officer Roger K. Brooks Brooks , Gwendolyn Elizabeth 1917-2000. American poet known for her verse detailing the dreams and struggles of African Americans. An early volume of poems, Annie Allen (1949), was awarded a Pulitzer Prize. Noun 1. said, "We are very pleased with the 86 percent increase in net income and the 16 percent increase in operating income as they reflect the strong results achieved from our focus on competitive, profitable products that meet our customers' needs." The primary item causing the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. difference between net income and adjusted net operating income was the release of a $19.9 million tax provision originally established for potential tax adjustments that have been settled or eliminated. Accumulation Accumulation 1) In the context of individual investing, it is the process of contributing cash to invest in securities over a period of time in order to build a portfolio of desired value. Dividends and capital gains are also reinvested during this process. Product Sales(2) and Results Sales of fixed annuity Fixed Annuity An insurance contract in which the insurance company makes fixed dollar payments to the annuitant for the term of the contract, usually until the annuitant dies. The insurance company guarantees both earnings and principal. products for the quarter increased 51 percent to $572 million compared to $379 million in the first quarter of 2004. Sales of indexed annuities, AmerUs Group's most profitable annuity product, comprised 88 percent of first quarter sales compared to 78 percent a year ago. AmerUs Group continued its leadership position in the indexed annuity market, remaining among the top five writers of indexed annuities in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. for the 15th consecutive quarter. The company plans to generate total fixed annuity sales in excess of $2.2 billion in 2005, with indexed annuity products representing 85 percent of those sales. Pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta segment earnings grew to $40.7 million for the first quarter of 2005, a 10 percent increase over first quarter 2004 results. Protection Product Sales(2) and Results First quarter fixed life sales were $26.1 million, compared to $31.8 million in the first quarter of 2004. Sales of indexed products, AmerUs Group's most profitable products, amounted to 69 percent of total fixed life sales during the first quarter of 2005 compared to 54 percent a year ago. AmerUs Group remains the number one writer of indexed life insurance products in the United States for the 15th consecutive quarter. Life insurance margins continue to expand as the company's business mix continues to shift to higher margin products. Pre-tax segment earnings increased nearly 33 percent to $44 million compared to $33.1 million in the first quarter of 2004. Net Investment Income Net investment income was $269 million in the first quarter of 2005 compared to $257 million in the first quarter of 2004. Growth in invested assets and higher yields on new investments contributed to the increase in net investment income. The average rate on new investments in the first quarter was 5.53 percent, 21 basis points higher than a year ago. The portfolio earned rate for the first quarter was 5.68 percent. Earnings Guidance(3) "Our strong business fundamentals business fundamentals The general background within which an economy operates including earnings, sales, wage rates, taxes, and inflation. Improving business fundamentals are generally viewed as bullish for stocks, although stock prices at any given point , competitive, profitable products and investment management results are key contributors to our excellent first quarter results, and I am pleased to reaffirm re·af·firm tr.v. re·af·firmed, re·af·firm·ing, re·af·firms To affirm or assert again. re our 2005 adjusted net operating income guidance of $4.45 to $4.57 per diluted share," said Brooks. Corporate Actions At the end of the first quarter of 2005, the company repurchased 414,000 shares of its common stock. The company will hold its annual meeting of shareholders at 2 p.m. (CDT CDT abbr. Central Daylight Time CDT Central Daylight Time CDT n abbr (US) (= Central Daylight Time) → hora de verano del centro; (BRIT ) on Thursday Thursday: see week. , April 28, 2005, in Des Moines, Iowa. Shareholders of record who wish to attend the annual meeting should contact the company's corporate secretary at (515) 362-3695 for more information. Webcast, Conference Call, Audio Replay and Additional Financial Information Interested parties may listen to a webcast or conference call with AmerUs Group's management discussing first quarter 2005 results. The webcast may be accessed through AmerUs Group's website at www.amerus.com under the "For Investors" section of the home page. The conference call may be accessed by calling (toll free) 888-809-8965 (international 712-257-2022) at 10 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT on Wednesday Wednesday: see week. , April 27, 2005. An audio replay of AmerUs Group's call will be available at 12 p.m. EDT, April 27, 2005, through May 6, 2005. The replay can be accessed by dialing 800-756-0409 (international 402-998-0763). Further detailed financial information, including operating segment income, investment composition, operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. and product distribution by channel, can be found in AmerUs Group's Financial Supplement, which is available by accessing the company's web site at www.amerus.com or by contacting the company's investor relations Investor relations The process by which the corporation communicates with its investors. department. Caution Regarding 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. This press release contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Forward-looking statements are not based on historical information and relate to future operations, strategies, financial results or other developments. Additionally, forward-looking statements are subject to assumptions, risks and uncertainties. Statements such as "expect," "anticipate," "believe," "goal," "objective," "target," "may," "should," "estimate," "projects," or similar words as well as specific projections of future results qualify as forward-looking statements. Factors that may cause our actual results to differ materially from those contemplated by these forward-looking statements can be found in the company's 10-K, filed with the Securities and Exchange Commission. Forward-looking statements speak only as of the date the statement was made and AmerUs Group undertakes no obligation to update such forward-looking statements. There can be no assurance that other factors not currently anticipated by the company will not materially and adversely affect our results of operations. Investors are cautioned not to place undue reliance on any forward-looking statements made by us or on our behalf. AmerUs Group Co. is located in Des Moines, Iowa, and is engaged through its subsidiaries in the business of marketing individual life insurance and annuity products in the United States. Its major subsidiaries include: AmerUs Life Insurance Company, American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Investors Life Insurance Company, Inc., Bankers Life Insurance Company of New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of and Indianapolis Indianapolis (ĭn'dēənă`pəlĭs), city (1990 pop. 731,327), state capital and seat of Marion co., central Ind., on the White River; selected 1820 as the site of the state capital (which was moved there in 1825), inc. 1847. Life Insurance Company. As of March 31, 2005, AmerUs Group's total assets were $23.5 billion and shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. totaled $1.6 billion, including accumulated other comprehensive income In 1997 the Financial Accounting Standards Board issued a Statement on Financial Accounting Standards entitled “Comprehensive Income”. This statement required all income statement items to be reported either as a regular item in the income statement and or a special item as . (1) The company views adjusted net operating income, a non-GAAP financial measure, as an important indicator Indicator Anything used to predict future financial or economic trends. Notes: In the context of technical analysis, an indicator is a mathematical calculation based on a securities price and/or volume. The result is used to predict future prices. of financial performance. When presented with net income, the combined presentation can enhance an investor's understanding of AmerUs Group's underlying profitability and normalized results from operations. The definition of adjusted net operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before , as presented in this press release, excludes, on an after-tax basis After-tax basis The comparison basis used to analyze the net after-tax returns on a corporate taxable bond and a municipal tax-free bond. , from net income items such as open block realized gains Realized Gain A gain resulting from selling an asset at a price higher than the original purchase price. Notes: There may be tax consequences for a realized profit. and losses, deferred policy acquisition costs associated with open block realized gains and losses, non-insurance operations, the impact of derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. related market value adjustments, the release of income tax provisions, discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. and the cumulative effect of change in accounting. Non-GAAP measures are also used for goal setting, determining employee and management compensation and evaluating our performance on a basis comparable to that used by security analysts. A reconciliation of net income to adjusted net operating income has been included as part of this press release. (2) Sales for an insurance company are a performance measure. Sales are presented in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with industry practice and represent the amount of new business sold during the period. We believe sales are a measure of the productivity of our distribution networks. Sales are also a leading indicator Leading Indicator A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators are used to predict changes in the economy, but are not always accurate. of future revenue trends. However, revenues are driven by prior period sales as well as current period sales. (3) Adjusted net operating income per share is a non-GAAP financial measure. Due to the unpredictability of the timing and recognition of gains and losses, especially items such as credit impairments, trading gains and losses, derivative related market value adjustments as well as the unpredictable nature of certain other items that management believes are not indicative indicative: see mood. of ongoing operational performance, guidance on GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net income cannot readily be estimated. Accordingly, the company is unable to provide guidance with respect to, or a reconciliation of guidance on, adjusted net operating income per share to GAAP net income per share.
AMERUS GROUP CO.
ADJUSTED NET OPERATING INCOME
($ in thousands, except share data)
Adjusted net operating income reflects net income adjusted to
eliminate certain items, such as open block realized/unrealized gains
and losses; DAC and VOBA associated with the open block
realized/unrealized gains and losses; non-insurance operations;
derivative related market value adjustments; the release of income tax
provisions; discontinued operations and the cumulative effect of
change in accounting. Adjusted net operating income shown below does
not constitute our net income computed in accordance with GAAP. The
adjustments are presented net of income taxes.
For The Three Months Ended
March 31,
2005 2004
--------------------------
Net Income $61,488 $33,129
Realized/unrealized (gains) losses on open
block assets (A) (70) 16,088
Net amortization of DAC and VOBA due to open
block gains or losses (B) (195) 910
Net effect of derivative related market value
adjustments (C) 5,201 (1,482)
Other (income) loss from non-insurance
operations (D) 226 119
Income tax items (E) (19,927) (5,182)
Income from discontinued operations (F) - (3,899)
Cumulative effect of change in accounting (G) - 510
-------------------------
Adjusted Net Operating Income $46,723 $40,193
=========================
Adjusted Net Operating Income per common
share:
Basic $1.18 $1.02
=========================
Diluted $1.09 $0.99
=========================
Weighted average common shares outstanding:
Basic 39,575,696 39,263,367
=========================
Diluted 42,930,905 40,434,902
=========================
AMERUS GROUP CO.
NOTES TO ADJUSTED NET OPERATING INCOME
(A) Represents total open block realized/unrealized gains or losses on
assets. Open block gains or losses may vary widely between
periods. Such amounts are determined by management's timing of
individual transactions or current market conditions and do not
necessarily correspond to the underlying operating trends. The
first quarter of 2004 includes a $7.9 million loss on the
Indianapolis Life office building, which was an asset classified
as held for sale and carried at fair value. The office building
was sold in the third quarter of 2004.
(B) Represents amortization of deferred acquisition costs (DAC) and
value of business acquired (VOBA) on the open block realized gains
and losses that are included in our product margins.
(C) Represents the net effect of derivative related market value
adjustments. The accounting entries consist of cash flow hedge
amortization; market value adjustments on trading securities,
derivatives, and indexed contracts; and the associated change in
amortization of DAC and VOBA resulting from such adjustments.
(D) Represents the net income from our property operations which is
not part of our insurance operations.
(E) Represents a reduction in the income tax accrual for the release
of provisions originally established for potential tax adjustments
which have been settled or eliminated.
(F) Represents the net income from our discontinued operations.
(G) Represents the cumulative effect of change in accounting, net of
income taxes, as of January 1, 2004, resulting from the Company's
adoption of SOP 03-1.
AMERUS GROUP CO.
CONSOLIDATED STATEMENTS OF INCOME
($ in thousands, except share data)
For The Three Months
Ended March 31,
2005 2004
-----------------------
Revenues:
Insurance premiums $62,546 $70,737
Product charges 59,033 49,562
Net investment income 268,711 256,875
Realized/unrealized capital losses (48,944) (85)
Other income 12,556 11,702
-----------------------
353,902 388,791
-----------------------
Benefits and expenses:
Policyowner benefits 169,583 238,429
Underwriting, acquisition and other expenses 40,608 32,700
Amortization of deferred policy acquisition
costs and value of business acquired 52,743 47,911
Dividends to policyowners 20,003 25,484
-----------------------
282,937 344,524
-----------------------
Income from continuing operations 70,965 44,267
Interest expense 7,780 8,398
-----------------------
Income before income tax expense 63,185 35,869
Income tax expense 1,697 6,129
-----------------------
Net income from continuing operations 61,488 29,740
Income from discontinued operations, net of tax - 3,899
-----------------------
Net income before cumulative effect of change
in accounting 61,488 33,639
Cumulative effect of change in accounting, net
of tax - (510)
-----------------------
Net income $61,488 $33,129
=======================
Net income from continuing operations per
common share:
Basic $1.55 $0.76
=======================
Diluted $1.43 $0.74
=======================
Net income per common share:
Basic $1.55 $0.84
=======================
Diluted $1.43 $0.82
=======================
Weighted average common shares outstanding:
Basic 39,575,696 39,263,367
=======================
Diluted 42,930,905 40,434,902
=======================
AMERUS GROUP CO.
CONSOLIDATED BALANCE SHEETS
($ in thousands)
March 31, December 31,
2005 2004
-------------------------
Assets
Investments:
Securities available-for-sale at fair
value:
Fixed maturity securities $15,740,652 $15,646,653
Equity securities 76,438 77,024
Short-term investments 2,927 2,979
Securities held for trading purposes:
Fixed maturity securities 1,602,262 1,718,125
Equity securities 534 15,468
Mortgage loans 874,650 865,733
Policy loans 487,915 486,071
Other investments 367,231 374,240
-------------------------
Total investments 19,152,609 19,186,293
Cash and cash equivalents 572,185 478,441
Accrued investment income 227,182 222,294
Premiums, fees and other receivables 38,363 39,688
Income taxes receivable 3,473 -
Reinsurance receivables 680,488 666,493
Deferred policy acquisition costs 1,446,716 1,248,009
Deferred sales inducements 168,630 137,538
Value of business acquired 369,232 374,792
Goodwill 228,869 226,291
Property and equipment 45,777 46,114
Other assets 302,819 296,409
Separate account assets 233,533 248,507
-------------------------
Total assets $23,469,876 $23,170,869
=========================
AMERUS GROUP CO.
CONSOLIDATED BALANCE SHEETS
($ in thousands)
March 31, December 31,
2005 2004
--------------------------
Liabilities and Stockholders' Equity
Liabilities:
Policy reserves and policyowner funds:
Future life and annuity policy benefits $18,239,450 $17,923,329
Policyowner funds 1,443,814 1,419,762
--------------------------
19,683,264 19,343,091
Accrued expenses and other liabilities 965,390 837,514
Dividends payable to policyowners 287,415 322,037
Policy and contract claims 69,149 70,465
Income taxes payable - 9,299
Deferred income taxes 68,666 145,332
Notes payable 571,385 571,155
Separate account liabilities 233,533 248,507
--------------------------
Total liabilities 21,878,802 21,547,400
Stockholders' equity:
Preferred Stock, no par value, 20,000,000
shares authorized, none issued - -
Common Stock, no par value, 230,000,000
shares authorized; 44,529,858 shares
issued and 39,162,518 shares outstanding
in 2005; 44,225,902 shares issued and
39,400,663 shares outstanding in 2004 44,530 44,226
Additional paid-in capital 1,204,360 1,198,379
Accumulated other comprehensive income 34,546 114,670
Unearned compensation (2,700) (1,238)
Retained earnings 493,399 431,911
Treasury stock, at cost (5,367,340 shares
in 2005 and 4,825,239 shares in 2004) (183,061) (164,479)
--------------------------
Total stockholders' equity 1,591,074 1,623,469
--------------------------
Total liabilities and stockholders'
equity $23,469,876 $23,170,869
==========================
AMERUS GROUP CO.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the Three Months Ended March 31, 2005 and the Year Ended December
31, 2004
($ in thousands)
Accumulated
Additional Other
Common Paid-In Comprehensive Unearned
Stock Capital Income (Loss) Compensation
-------- ----------- ------------- ------------
Balance at December 31,
2003 $43,836 $1,184,237 $84,519 $(1,361)
2004:
Net income - - - -
Net unrealized gain
on securities - - 33,959 -
Net unrealized gain
on derivatives
designated as cash
flow hedges - - 420 -
Stock issued under
various incentive
plans, net of
forfeitures 390 14,142 - 123
Purchase of treasury
stock - - - -
Dividends declared on
common stock - - - -
Minimum pension
liability adjustment - - (4,228) -
-------- ----------- ------------- ------------
Balance at December 31,
2004 44,226 1,198,379 114,670 (1,238)
2005:
Net income - - - -
Net unrealized loss
on securities - - (80,018) -
Net unrealized loss
on derivatives
designated as cash
flow hedges - - (106) -
Stock issued under
various incentive
plans, net of
forfeitures 304 5,981 - (1,462)
Purchase of treasury
stock - - - -
-------- ----------- ------------- ------------
Balance at March 31,
2005 $44,530 $1,204,360 $34,546 $(2,700)
======== =========== ============= ============
Total
Retained Treasury Stockholders'
Earnings Stock Equity
--------- ---------- --------------
Balance at December 31,
2003 $255,006 $(156,426) $1,409,811
2004:
Net income 192,642 - 192,642
Net unrealized gain
on securities - - 33,959
Net unrealized gain
on derivatives
designated as cash
flow hedges - - 420
Stock issued under
various incentive
plans, net of
forfeitures - 1,100 15,755
Purchase of treasury
stock - (9,153) (9,153)
Dividends declared on
common stock (15,737) - (15,737)
Minimum pension
liability adjustment - - (4,228)
--------- ---------- --------------
Balance at December 31,
2004 431,911 (164,479) 1,623,469
2005:
Net income 61,488 - 61,488
Net unrealized loss
on securities - - (80,018)
Net unrealized loss
on derivatives
designated as cash
flow hedges - - (106)
Stock issued under
various incentive
plans, net of
forfeitures - 996 5,819
Purchase of treasury
stock - (19,578) (19,578)
--------- ---------- --------------
Balance at March 31,
2005 $493,399 $(183,061) $1,591,074
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