AmerUs Group Reports Record First Quarter Operating Income of $36.1 Million, $0.86 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)--May 7, 2002 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 protection and 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. products, today announced record first 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 in the first quarter of 2002, or $0.86 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 $24.7 million, or $0.81 per diluted share ($0.75 per diluted share including goodwill amortization), in the first quarter of 2001. AmerUs Group stopped amortizing goodwill on January January: see month. 1, 2002 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. ". Adjusted net operating income excludes items such as net non-core 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. , extraordinary losses and the cumulative effect of accounting changes. "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 financial and operational results delivered this quarter," 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. "Throughout the remainder of 2002, our strategy will continue to focus on expanding distribution, growing assets, improving margins and reducing expenses." Net Income Net income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the was $24.5 million for the first quarter of 2002, or $0.58 per diluted share, compared with $21.4 million, or $0.70 per diluted share ($0.64 per diluted share including goodwill amortization) for the first quarter of 2001. The 2001 figures also exclude amortization of goodwill. Growth in Accumulation Products Sales of accumulation products, which include 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. sales and 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. , increased 29% for the first quarter to $672 million, compared with $521 million for the first quarter of 2001. The key driver of growth during the quarter was the sale of $275 million in funding agreements. "The funding agreements are a natural extension of our other spread management business, are capital efficient, and meet our profitability objectives." said Brooks. Strong Protection Product Sales During the first quarter, direct fixed life sales tripled to $30.9 million, compared to $10.3 million in the first quarter of 2001. "We continue to see excellent production results from all distribution sources and we hope to continue our sales momentum throughout the remainder of the year," said Brooks. Net Investment Income Net investment income was $239.8 million for the first quarter of 2002 compared with $181.1 million for the same period in 2001. The increase was primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to 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 and higher invested assets. The portfolio yield during the first quarter was 6.30 percent, compared with 7.32 percent in the first quarter of 2001. While lower reinvestment rates Reinvestment Rate The rate at which cash flows from fixed-income securities may be reinvested. Notes: Because of the additional interest income, bondholders can make larger investment returns if they reinvest received coupon payments. contributed to lower yields, the primary reason for the decline in yield was due to the acquisition of Indianapolis Life, which holds a significant amount of convertible securities. Excluding Indianapolis Life's convertible securities, the portfolio yield was 6.90 percent for the quarter. Corporate Actions On March 6, 2002, the company completed the sale of $185 million of Optionally Convertible Equity-linked Accreting Notes (OCEANs(SM)) due 2032 in a private placement. The notes are generally convertible into common stock if specified spec·i·fy tr.v. spec·i·fied, spec·i·fy·ing, spec·i·fies 1. To state explicitly or in detail: specified the amount needed. 2. To include in a specification. 3. conditions are satisfied, including if the price of common stock exceeds $47.85 per share for at least 20 trading days In Business, the trading day is the time span that a particular stock exchange is open. For example, the New York Stock Exchange is, as of 2006, open from 09:30AM to 4:00PM. Trading days never take place on weekends. in a 30-day trading period. Net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). from the $185 million offering were used to repay existing indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. under the Company's revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility and to purchase shares of AmerUs Group common stock. During the first quarter, the company purchased 1,778,900 shares of its common stock at an average price of $35.02 per share. AmerUs Group currently has board authorization The right or permission to use a system resource; the process of granting access. See access control. to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 1.2 million additional shares. Conference Call, Audio Replay and Additional Financial Information Interested parties may listen to a conference call with AmerUs Group's management discussing first quarter 2002 results by calling (toll free) 888-820-4341 (international 706-679-8569) at 10:30 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 May 8, 2002. An audio replay of AmerUs Group's call will be available at 1 p.m. EDT, May 8, 2002, through May 15, 2002. The replay can be accessed by dialing 800-642-1687 (international: 706-645-9291), Conference ID 3676850. More 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 an Iowa corporation located in Des Moines, Iowa “Des Moines” redirects here. For other uses, see Des Moines (disambiguation). Des Moines (pronounced /dɪˈmɔɪn/ in English, , 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 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 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 , Delta Life and Annuity Company, IL Annuity and Insurance Company, and Indianapolis Life Insurance Company. As of March 31, 2002, AmerUs Group's total assets were $18.8 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 $1,177.6 million, including accumulated other comprehensive income In 1997 the Financial Accounting Standards Board issued a Statement on Financial Accounting Standards entitled “Comprehensive Income”. This statement required all income statement items to be reported either as a regular item in the income statement and or a special item as . Certain statements made by the company which are not historical facts may be considered forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , including, without limitation, statements as to sales targets, sales and earnings trends, management's beliefs, expectations, goals and opinions, which are based upon a number of assumptions concerning future conditions that ultimately may prove to be inaccurate. Such forward-looking statements are subject to risks and uncertainties and may be affected by various factors that may cause actual results to differ materially from those in the forward-looking statements. For further information which could cause actual results to differ from the company's expectations as well as other factors which could affect the company's financial statements, please refer to the company's filings with the Securities and Exchange Commission.
AMERUS GROUP CO.
ADJUSTED NET OPERATING INCOME
($ in thousands, except share data)
(Unaudited)
Adjusted net operating income reflects net income adjusted to
eliminate certain items, such as non-core realized gains and losses,
restructuring costs and discontinued operations. Adjusted net
operating income shown below does not constitute our net income
computed in accordance with GAAP.
For The Three Months Ended
March 31,
2002 2001
--------------------------
Net Income $ 24,914 $ 11,636
Net non-core realized (gains) losses (A) 6,420 4,817
Net amortization of deferred policy
acquisition costs due to non-core
realized gains or losses (B) (1,498) (1,506)
Net effect of accounting differences
from the adoption of SFAS 133 (C) 5,322 -
Demutualization costs (D) 285 -
Restructuring costs (E) 1,116 -
Discontinued operations (F) (456) (414)
Cumulative effect of change in
accounting for derivatives (G) - 8,236
--------------------------
Adjusted Net Operating Income $ 36,103 $ 22,769
==========================
Adjusted Net Operating Income
per common share:
Basic $ 0.87 $ 0.76
==========================
Diluted $ 0.86 $ 0.75
==========================
Weighted average common shares outstanding:
Basic 41,349,785 29,973,039
==========================
Diluted 41,968,570 30,365,387
==========================
(A) Represents total realized gains or losses on investments less core
realized gains or losses (defined as gains or losses from the
closed block) adjusted for income taxes. Non-core realized gains
or losses may vary widely between periods. Such amounts are
determined by management's timing of individual transactions and
do not necessarily correspond to the underlying operating trends.
(B) Represents amortization of deferred policy acquisition costs on
the non-core realized gains or losses that are included in our
product margins, adjusted for income taxes on such amounts.
(C) Represents the net effect of Statement of Financial Accounting
Standard (SFAS) No. 133, "Accounting for Derivative Instruments
and Hedging Activities," related accounting entries, adjusted for
income taxes. The accounting entries consist of market value
adjustments on trading securities, derivatives, certain annuity
contracts, and the associated change in amortization of deferred
acquisition costs resulting from such adjustments.
(D) Represents costs directly related to ILICO's demutualization. The
costs consist primarily of legal, actuarial and consulting
expenses.
(E) Represents costs of restructuring our operations to eliminate
duplicative functions, adjusted for income taxes. The costs
consist primarily of systems conversion, relocation of employees
and severance and termination benefits.
(F) Represents the net income from our discontinued operations.
(G) Represents the cumulative effect of change in accounting for
derivatives, net of income taxes, as of January 1, 2001, resulting
from the Company's adoption of SFAS No. 133. This statement is
effective for fiscal years beginning after June 15, 2000.
AMERUS GROUP CO.
CONSOLIDATED STATEMENTS OF INCOME
($ in thousands, except share data)
For The Three Months
Ended March 31,
2002 2001
------------------------
(unaudited)
Revenues:
Insurance premiums $ 92,108 $ 57,167
Universal life and annuity product charges 42,871 24,266
Net investment income 239,770 181,128
Realized/unrealized (losses) on investments (24,712) (39,835)
Other income 12,012 10,332
------------------------
362,049 233,058
------------------------
Benefits and expenses:
Policyowner benefits 213,556 120,484
Underwriting, acquisition and other expenses 36,251 31,334
Demutualization costs 285 -
Restructuring costs 1,795 -
Amortization of deferred policy acquisition
costs and value of business acquired 39,842 25,271
Dividends to policyowners 28,403 19,158
------------------------
320,132 196,247
------------------------
Income from continuing operations 41,917 36,811
Interest expense 6,027 7,332
------------------------
Income before income tax expense 35,890 29,479
Income tax expense 11,432 10,021
------------------------
Net income from continuing operations 24,458 19,458
Discontinued operations (net of tax):
Income from discontinued operations 456 414
------------------------
Net income before cumulative effect of change
in accounting for derivatives 24,914 19,872
Cumulative effect of change in accounting for
derivatives, net of tax - (8,236)
------------------------
Net income $ 24,914 $ 11,636
========================
Net income from continuing operations per
common share:
Basic $ 0.59 $ 0.65
========================
Diluted $ 0.58 $ 0.64
========================
Net income from discontinued operations per
common share:
Basic $ 0.01 $ 0.01
========================
Diluted $ 0.01 $ 0.01
========================
Net income per common share:
Basic $ 0.60 $ 0.39
========================
Diluted $ 0.59 $ 0.38
========================
Weighted average common shares outstanding:
Basic 41,349,785 29,973,039
========================
Diluted 41,968,570 30,365,387
========================
AMERUS GROUP CO.
CONSOLIDATED BALANCE SHEETS
($ in thousands)
March 31, December, 31
2002 2001
---------------------------
(unaudited)
Assets
Investments:
Securities available-for-sale at fair
value:
Fixed maturity securities $ 11,448,608 $ 11,037,425
Equity securities 18,057 11,362
Short-term investments 17,332 14,881
Securities held for trading purposes:
Fixed maturity securities 2,066,719 2,175,106
Equity securities 17,073 12,013
Short-term investments 4,200 4,212
Mortgage loans 927,930 944,532
Real estate 1,287 1,405
Policy loans 501,037 506,318
Other investments 311,052 345,179
---------------------------
Total investments 15,313,295 15,052,433
Cash and cash equivalents 109,214 179,376
Accrued investment income 184,337 174,238
Premiums, fees and other receivables 7,733 9,920
Reinsurance receivables 760,591 732,030
Deferred policy acquisition costs 740,110 642,680
Value of business acquired 597,190 583,829
Goodwill 204,014 195,484
Property and equipment 82,267 83,221
Deferred income taxes 12,000 12,140
Other assets 430,029 270,888
Separate account assets 325,380 328,385
Assets of discontinued operations 31,401 34,528
---------------------------
Total assets $ 18,797,561 $ 18,299,152
===========================
AMERUS GROUP CO.
CONSOLIDATED BALANCE SHEETS
($ in thousands)
March 31, December, 31
2002 2001
-------------------------
(unaudited)
Liabilities and Stockholders' Equity
Liabilities:
Policy reserves and policyowner funds:
Future life and annuity policy
benefits $15,404,118 $15,102,001
Policyowner funds 722,014 432,941
-------------------------
16,126,132 15,534,942
Accrued expenses and other liabilities 476,431 488,949
Dividends payable to policyowners 187,021 221,224
Policy and contract claims 39,773 33,147
Income taxes payable 17,444 45,809
Notes and contracts payable 380,576 315,574
Separate account liabilities 325,380 328,385
Liabilities of discontinued operations 18,974 23,551
-------------------------
Total liabilities 17,571,731 16,991,581
Company-obligated mandatorily redeemable
preferred capital securities of
subsidiary trusts holding solely junior
subordinated debentures of the Company 48,249 69,054
Stockholders' equity:
Preferred Stock, no par value,
20,000,000 shares authorized, none
issued - -
Common Stock, no par value, 230,000,000
shares authorized; 40,407,968
shares issued and outstanding in
2002 (net of 3,213,542 treasury
shares) and 41,759,450 shares
issued and outstanding in 2001
(net of 1,746,548 treasury shares) 40,408 41,759
Paid-in capital 1,074,600 1,122,853
Accumulated other comprehensive income
(loss) (23,614) 12,669
Unearned compensation (690) (727)
Unallocated ESOP shares (224) (224)
Retained earnings 87,101 62,187
-------------------------
Total stockholders' equity 1,177,581 1,238,517
-------------------------
Total liabilities and
stockholders' equity $18,797,561 $18,299,152
=========================
AMERUS GROUP CO.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
March 31, 2002
($ in thousands)
Accumulated
Additional Other
Common Paid-In Comprehensive Unearned
Stock Capital Income (Loss) Compensation
-------- ----------- ------------- ------------
Balance at December 31,
2000 30,011 809,894 (17,188) (146)
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 338 8,921 - (581)
Dividends declared on
common stock - - - -
Purchase of treasury
stock (1,406) (43,579) - -
Acquisition of IL
Holdings 9,047 223,358 - -
Conversion of company-
obligated mandatorily
redeemable preferred
capital securities 3,769 123,779 - -
Allocation of shares
in leveraged ESOP - 480 - -
Minimum pension
liability adjustment - - (2,332) -
-------- ----------- ------------- ------------
Balance at December 31,
2001 $41,759 $1,122,853 $12,669 $(727)
2002 (unaudited):
Net income - - - -
Net unrealized gain
(loss) on securities - - (37,896) -
Net unrealized gain
(loss) on derivatives
designated as cash
flow hedges - - 1,613 -
Stock issued under
various incentive
plans, net of
forfeitures 350 9,372 - 37
Purchase of treasury
stock (1,701) (57,625) - -
-------- ----------- ------------- ------------
Balance at March 31,
2002 $40,408 $1,074,600 $(23,614) $(690)
======== =========== ============= ============
Unallocated Total
ESOP Retained Stockholders'
Shares Earnings Equity
----------- -------- ------------
Balance at December 31,
2000 (683) 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 - - 8,678
Dividends declared on
common stock - (16,787) (16,787)
Purchase of treasury
stock - - (44,985)
Acquisition of IL
Holdings - - 232,405
Conversion of company-
obligated mandatorily
redeemable preferred
capital securities - - 127,548
Allocation of shares
in leveraged ESOP 459 - 939
Minimum pension
liability adjustment - - (2,332)
----------- -------- ------------
Balance at December 31,
2001 $(224) $62,187 $1,238,517
2002 (unaudited):
Net income - 24,914 24,914
Net unrealized gain
(loss) on securities - - (37,896)
Net unrealized gain
(loss) on derivatives
designated as cash
flow hedges - - 1,613
Stock issued under
various incentive
plans, net of
forfeitures - - 9,759
Purchase of treasury
stock - - (59,326)
----------- -------- ------------
Balance at March 31,
2002 $(224) $87,101 $1,177,581
=========== ======== ============
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