AmerUs Group Reports Record 2002 Adjusted Net Operating Income of $144.5 million; $3.58 Per Share.Business Editors DES MOINES Des Moines, city, United States Des Moines (dĭ moin`), city (1990 pop. 193,187), state capital and seat of Polk co., S central Iowa, at the junction of the Des Moines and Raccoon rivers; inc. , Iowa--(BUSINESS WIRE)--Feb. 6, 2003 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 announced fourth quarter 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. of $36.1 million, or $0.92 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 $35.2 million, or $0.83 per diluted share ($0.79 per diluted share including goodwill amortization) in the fourth quarter of 2001. Adjusted net operating income for 2002 was $144.5 million, or $3.58 per diluted share, compared with $122.4 million, or $3.27 per diluted share ($3.05 per diluted share including goodwill amortization) a year ago. "I'm I'm Contraction of I am. Our Living Language Speakers of some scattered varieties of American English sometimes use I'm instead of I've or I have in present perfect constructions, as in pleased with the operating results we've we've Contraction of we have. we've have achieved in 2002," said 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. , chairman, president and chief executive officer of AmerUs Group. "We will continue to focus on our core protection and asset 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. businesses to build scale, achieve greater efficiencies and increase profitability during the coming year." Adjusted net operating income excludes items such as open block realized capital gains and losses, restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. and the cumulative effect of accounting changes. A reconciliation of GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net income to net adjusted 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 has been included as part of this press release. 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 Statement of Financial Accounting Standard 142, "Goodwill and Other Intangible Assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. ," AmerUs Group stopped amortizing goodwill on January January: see month. 1, 2002. Net Income As previously announced by the company, credit-related losses impacted net income during 2002. Net income decreased to $7.2 million for the fourth quarter of 2002, or $0.18 per diluted share compared to $21.5 million, or $0.51 per diluted share a year ago ($0.46 per diluted share including goodwill amortization). Year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. net income was $62.9 million, or $1.56 per diluted share, compared with $81.2 million or $2.17 per diluted share ($1.95 per diluted share including goodwill amortization) a year ago. Record Protection Product Sales Fourth quarter fixed life sales increased to $33.6 million, compared to $28.1 million in the fourth quarter of 2001. Year-to-date, fixed life sales were up 73 percent to $129.7 million compared to $74.7 million during the same period of 2001. The increase in year-to-date sales is primarily a result of the acquisition of 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 in May 2001. Assuming Indianapolis Life was owned for all of 2001, year-to-date fixed life sales would have increased 33 percent, up from $97.3 million. "These outstanding sales results exceeded our expectations for the year and are the result of our innovative product offerings and quality distribution systems," said Brooks. Accumulation Product Sales 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 were $514 million, compared with $550 million for the fourth quarter of 2001. Year-to-date, fixed annuity sales were $1.8 billion compared to $1.9 billion a year ago. Additionally, the company issued $125 million of funding agreements Funding Agreement Illiquid insurance contracts that provide guaranteed principal repayment and interest payments for a predetermined period of time. Notes: Funding agreements are marketed to mutual fund companies and municipal reinvestments. during the quarter, resulting in total funding agreement issuance of $875 million during 2002. "These are solid results and are in line with our plan given the current interest rate environment," said Brooks. Net Investment Income Net investment income was $250 million in the fourth quarter of 2002 compared to $253 million for the fourth quarter of 2001. Growth in invested assets was offset by lower yields on new investments. The portfolio yield during the fourth quarter of 2002 was 6.19 percent, compared to 6.61 percent in the fourth quarter of 2001. The 2002 annual portfolio yield was 6.38 percent, compared to 6.72 percent in 2001. Corporate Actions During the quarter, the company paid its annual dividend of $0.40 per share on December December: see month. 4, 2002, to shareholders of record on November November: see month. 18, 2002. Additionally, the company will hold its annual meeting of shareholders at its corporate headquarters on May 8, 2003, 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 . Individuals interested in attending should contact the company's corporate secretary's office at (515) 362-3695. Conference Call, Audio Replay and Additional Financial Information Interested parties may listen to a conference call with AmerUs Group's management discussing fourth quarter 2002 results by calling (toll free) 888-820-4341 (international 706-679-8569) at 10:30 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy on Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , February February: see month. 7, 2003. An audio replay of AmerUs Group's call will be available at 1 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. , February 7, 2003, through February 14, 2003. The replay can be accessed by dialing 800-642-1687 (international: 706-645-9291), Conference ID 7477637. 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. AmerUs Group Co. is located in Des Moines, Iowa “Des Moines” redirects here. For other uses, see Des Moines (disambiguation). Des Moines (pronounced /dɪˈmɔɪn/ in English, , and is engaged through its subsidiaries in the business of marketing and underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. individual life insurance and annuity products in 50 states, the District of Columbia District of Columbia, federal district (2000 pop. 572,059, a 5.7% decrease in population since the 1990 census), 69 sq mi (179 sq km), on the east bank of the Potomac River, coextensive with the city of Washington, D.C. (the capital of the United States). and the U.S. Virgin Islands. 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 , IL Annuity and Insurance Company, and Indianapolis Life Insurance Company. As of December 31, 2002, AmerUs Group's total assets were $20.3 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 $1,262.9 million, including accumulated other comprehensive income In 1997 the Financial Accounting Standards Board issued a Statement on Financial Accounting Standards entitled “Comprehensive Income”. This statement required all income statement items to be reported either as a regular item in the income statement and or a special item as .
AMERUS GROUP CO.
ADJUSTED NET OPERATING INCOME
($ in thousands, except share data)
Adjusted net operating income reflects net income adjusted to
eliminate certain items, such as open block realized gains and losses,
restructuring costs and non-insurance operations. 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 For The Year Ended
December 31, December 31,
2002 2001 2002 2001
-------------------------- ----------------------
Net Income $7,199 $19,534 $62,866 $72,907
Realized losses on
open block
investments (A) 29,986 10,896 66,386 25,475
Net amortization of
deferred policy
acquisition costs
due to open block
gains or losses (B) (3,994) 2,311 (10,869) (3,613)
Net effect of
accounting
differences from
the adoption of
SFAS 133 (C) (2,769) (878) 14,638 6,417
Demutualization
costs (D) - 518 1,186 969
Restructuring costs
(E) 6,581 1,287 13,225 5,476
Other income from
non-insurance
operations (F) (953) (446) (2,898) (1,820)
Cumulative effect of
change in
accounting for
derivatives (G) - - - 8,236
-------------------------- ----------------------
Adjusted Net
Operating Income $36,050 $33,222 $144,534 $114,047
========================== ======================
Adjusted Net
Operating Income
per common share:
Basic $0.93 $0.80 $3.62 $3.09
========================== ======================
Diluted $0.92 $0.79 $3.58 $3.05
========================== ======================
Weighted average
common
shares outstanding:
Basic 38,919,178 41,741,649 39,972,328 36,949,198
========================== ======================
Diluted 39,168,989 42,288,468 40,398,378 37,453,428
========================== ======================
AMERUS GROUP CO.
NOTES TO ADJUSTED NET OPERATING INCOME
(A) Represents total open block realized gains or losses on
investments. Open block realized gains or losses may vary widely
between periods. Such amounts are determined by management's
timing of individual transactions or current market conditions and
do not necessarily correspond to the underlying operating trends.
(B) Represents amortization of DAC and VOBA on the open block realized
gains or losses that are included in our product margins.
(C) Represents the net effect of SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," related accounting
entries. The accounting entries consist of cash flow hedge
amortization, market value adjustments on trading securities,
derivatives, certain annuity contracts, and the associated change
in amortization of DAC and VOBA resulting from such adjustments.
(D) Represents costs directly related to our demutualizations. The
costs consist primarily of legal, actuarial and consulting
expenses.
(E) Represents costs of restructuring our operations to eliminate
duplicative functions. The costs consist primarily of relocation
of employees, severance and termination benefits, and systems
conversion.
(F) Represents the net income from our residential financing and
property operations which is not part of our core insurance
operations.
(G) Represents the cumulative effect of change in accounting for
derivatives, as of January 1, 2001, resulting from our adoption of
SFAS No. 133.
AMERUS GROUP CO.
CONSOLIDATED STATEMENTS OF INCOME
($ in thousands, except share data)
For The Three Months For The Year
Ended December 31, Ended December 31,
2002 2001 2002 2001
---------------------- ----------------------
Revenues:
Insurance premiums $86,956 $90,085 $350,812 $305,905
Universal life and
annuity product
charges 37,118 39,535 161,510 146,055
Net investment income 249,953 253,010 994,007 873,174
Realized (losses) on
investments (46,691) (9,956) (104,710) (30,579)
Unrealized (losses) on
investments 19,346 16,636 (45,209) (60,050)
Other income 18,418 11,906 71,986 47,024
---------------------- ----------------------
365,100 401,216 1,428,396 1,281,529
---------------------- ----------------------
Benefits and expenses:
Policyowner benefits 230,653 252,892 890,688 753,003
Underwriting,
acquisition and other
expenses 37,328 33,216 152,749 140,471
Demutualization costs - 518 1,186 969
Restructuring costs 10,445 2,039 21,225 8,566
Amortization of deferred
policy acquisition
costs and value of
business acquired 36,114 46,387 139,565 132,899
Dividends to
policyowners 32,866 30,529 104,866 98,945
---------------------- ----------------------
347,406 365,581 1,310,279 1,134,853
---------------------- ----------------------
Income from continuing
operations 17,694 35,635 118,117 146,676
Interest expense 6,709 5,295 25,487 26,011
---------------------- ----------------------
Income before income tax
expense 10,985 30,340 92,630 120,665
Income tax expense 3,786 10,806 29,764 39,522
---------------------- ----------------------
Net income from
continuing operations 7,199 19,534 62,866 81,143
Cumulative effect of
change in accounting
for derivatives, net
of tax - - - (8,236)
---------------------- ----------------------
Net income $7,199 $19,534 $62,866 $72,907
====================== ======================
Net income from
continuing operations
per common share:
Basic $0.18 $0.47 $1.57 $2.20
====================== ======================
Diluted $0.18 $0.46 $1.56 $2.17
====================== ======================
Net income per common
share:
Basic $0.18 $0.47 $1.57 $1.97
====================== ======================
Diluted $0.18 $0.46 $1.56 $1.95
====================== ======================
Weighted average common
shares outstanding:
Basic 38,919,178 41,741,649 39,972,328 36,949,198
====================== ======================
Diluted 39,168,989 42,288,468 40,398,378 37,453,428
====================== ======================
AMERUS GROUP CO.
CONSOLIDATED BALANCE SHEETS
($ in thousands)
December 31,
2002 2001
-------------------------
Assets
Investments:
Securities available-for-sale at fair
value:
Fixed maturity securities $13,328,902 $11,037,425
Equity securities 63,345 11,362
Short-term investments 32,318 14,881
Securities held for trading purposes:
Fixed maturity securities 1,843,868 2,175,106
Equity securities - 12,013
Short-term investments - 4,212
Mortgage loans 883,034 944,532
Real estate 476 1,405
Policy loans 496,753 506,318
Other investments 283,794 345,179
-------------------------
Total investments 16,932,490 15,052,433
Cash and cash equivalents 102,612 179,376
Accrued investment income 185,660 174,238
Premiums, fees and other receivables 13,082 9,920
Reinsurance receivables 865,930 732,030
Deferred policy acquisition costs 884,239 642,680
Value of business acquired 454,159 583,829
Goodwill 218,995 195,484
Property and equipment 74,188 83,221
Deferred income
taxes - 12,140
Other assets 326,397 305,416
Separate account assets 235,913 328,385
-------------------------
Total assets $20,293,665 $18,299,152
=========================
AMERUS GROUP CO.
CONSOLIDATED BALANCE SHEETS
($ in thousands)
December 31,
2002 2001
-------------------------
Liabilities and Stockholders' Equity
Liabilities:
Policy reserves and policyowner funds:
Future life and annuity policy benefits $16,244,016 $15,102,001
Policyowner funds 1,335,144 432,941
-------------------------
17,579,160 15,534,942
Accrued expenses and other liabilities 283,836 512,500
Dividends payable to policyowners 303,062 221,224
Policy and contract claims 39,569 33,147
Income taxes payable 57,753 45,809
Deferred income taxes 20,071 -
Notes payable 511,353 384,628
Separate account liabilities 235,913 328,385
-------------------------
Total liabilities 19,030,717 17,060,635
Stockholders' equity:
Preferred Stock, no par value, 20,000,000
shares authorized, none issued - -
Common Stock, no par value, 230,000,000
shares authorized; 43,656,280 shares
issued and 39,011,578 shares outstanding
in 2002; 43,505,998 shares issued and
41,759,450 shares outstanding in 2001 43,656 43,506
Additional paid-in capital 1,179,646 1,177,688
Accumulated other comprehensive income 88,522 12,669
Unearned compensation (458) (727)
Unallocated ESOP shares (1,443) (224)
Retained earnings 109,517 62,187
Treasury stock, at cost (4,644,702 shares
in 2002 and 1,746,548 shares in 2001) (156,492) (56,582)
-------------------------
Total stockholders'
equity 1,262,948 1,238,517
-------------------------
Total liabilities and
stockholders' equity $20,293,665 $18,299,152
=========================
AMERUS GROUP CO.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
December 31, 2002
($ in thousands)
Accumulated
Other
Compre- Unallo-
Additional hensive Unearned cated
Common Paid-In Income Compen- ESOP
Stock Capital (Loss) sation Shares
---------- ----------- ----------- --------- --------
Balance at
December 31,
1999 $- $- $(67,948) $(187) $(797)
2000:
Net income - - - - -
Net unrealized
gain (loss) on
securities - - 50,937 - -
Stock issued
under various
incentive
plans, net of
forfeitures 6 169 - 105 -
Dividends
declared on
common stock - - - - -
Allocation of
shares in
leveraged ESOP - 600 - - 695
Minority
interest
ownership
changes - - (177) - (2)
Acquisition of
minority
interest 12,615 285,405 - - -
Demutualization
of AmerUs
Group 17,390 518,535 - (64) (579)
Other - 5,185 - - -
---------- ----------- ----------- --------- --------
Balance at
December 31,
2000 30,011 809,894 (17,188) (146) (683)
2001:
Net income - - - - -
Change in
accounting for
derivatives - - 2,661 - -
Transfer related
to unrealized
gain on
available-for-
sale securities
reclassified to
trading - - (430) - -
Net unrealized
gain (loss) on
securities - - 35,891 - -
Net unrealized
gain (loss) on
derivatives
designated as
cash flow
hedges - - (5,933) - -
Stock issued
under various
incentive
plans, net of
forfeitures 206 5,861 - (581) -
Stock issued
under exercise
of warrants - (1,383) - - -
Dividends
declared on
common stock - - - - -
Purchase of
treasury stock - - - - -
Acquisition of
IL Holdings 9,047 223,358 - - -
Conversion of
company-
obligated
mandatorily
redeemable
preferred
capital
securities 4,242 139,478 - - -
Allocation of
shares in
leveraged
ESOP - 480 - - 459
Minimum pension
liability
adjustment - - (2,332) - -
---------- ----------- ----------- --------- --------
Balance at
December 31,
2001 43,506 1,177,688 12,669 (727) (224)
2002:
Net income - - - - -
Net unrealized
gain on
securities - - 73,646 - -
Net unrealized
gain on
derivatives
designated as
cash flow
hedges - - 3,434 - -
Stock issued
under various
incentive
plans, net of
forfeitures 150 5,730 - 269 -
Stock issued
under exercise
of warrants - (3,802) - - -
Purchase of
treasury stock
and ESOP
shares - - - - (2,522)
Dividends
declared on
common stock - - - - -
Allocation of
shares in
leveraged ESOP - 30 - - 1,303
Minimum pension
liability
adjustment - - (1,227) - -
---------- ----------- ----------- --------- --------
Balance at
December 31,
2002 $43,656 $1,179,646 $88,522 $(458) $(1,443)
========== =========== =========== ========= ========
Total
Unassigned Retained Treasury Stockholders'
Surplus Earnings Stock Equity
-------------- ----------- ----------- --------------
Balance at
December 31,
1999 $840,962 $- $- $772,030
2000:
Net income 33,801 18,039 - 51,840
Net unrealized
gain (loss) on
securities - - - 50,937
Stock issued
under various
incentive
plans, net of
forfeitures 273 - - 553
Dividends
declared on
common stock - (11,972) - (11,972)
Allocation of
shares in
leveraged ESOP - - - 1,295
Minority
interest
ownership
changes 94 - - (85)
Acquisition of
minority
interest - - - 298,020
Demutualization
of AmerUs
Group (875,130) - - (339,848)
Other - - - 5,185
-------------- ----------- ----------- --------------
Balance at
December 31,
2000 - 6,067 - 827,955
2001:
Net income - 72,907 - 72,907
Change in
accounting for
derivatives - - - 2,661
Transfer related
to unrealized
gain on
available-for-
sale securities
reclassified to
trading - - - (430)
Net unrealized
gain (loss) on
securities - - - 35,891
Net unrealized
gain (loss) on
derivatives
designated as
cash flow
hedges - - - (5,933)
Stock issued
under various
incentive
plans, net of
forfeitures - - 108 5,594
Stock issued
under exercise
of warrants - - 4,468 3,085
Dividends
declared on
common stock - (16,787) - (16,787)
Purchase of
treasury stock - - (44,985) (44,985)
Acquisition of
IL Holdings - - - 232,405
Conversion of
company-
obligated
mandatorily
redeemable
preferred
capital
securities - - (16,173) 127,547
Allocation of
shares in
leveraged
ESOP - - - 939
Minimum pension
liability
adjustment - - - (2,332)
-------------- ----------- ----------- --------------
Balance at
December 31,
2001 - 62,187 (56,582) 1,238,517
2002:
Net income - 62,866 - 62,866
Net unrealized
gain on
securities - - - 73,646
Net unrealized
gain on
derivatives
designated as
cash flow
hedges - - - 3,434
Stock issued
under various
incentive
plans, net of
forfeitures - - 1 6,150
Stock issued
under exercise
of warrants - - 12,205 8,403
Purchase of
treasury stock
and ESOP
shares - - (112,116) (114,638)
Dividends
declared on
common stock - (15,536) - (15,536)
Allocation of
shares in
leveraged ESOP - - - 1,333
Minimum pension
liability
adjustment - - - (1,227)
-------------- ----------- ----------- --------------
Balance at
December 31,
2002 $- $109,517 $(156,492) $1,262,948
============== =========== =========== ==============
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