AmerUs Group Reports Record First Quarter Operating Income of $40.2 Million; $0.99 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 3, 2004 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 2004 net income of $26.4 million, or $0.65 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 $35.8 million, or $0.91 per diluted share in the first quarter of 2003. 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 2004 was $40.2 million, or $0.99 per diluted share, compared with $36.1 million, or $0.92 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 11 percent increase in operating income as it reflects the results achieved from our commitment to streamline streamline, path of a fluid flowing steadily and without appreciable turbulence. A body is said to be streamlined if its shape offers the least possible resistance to a current of air, water, or other fluid. operations and offer profitable products that meet our customers' needs." The primary items causing a difference between net income and net adjusted operating income include a $7.3 million increase in policy reserve liabilities as required by SOP 03-1 and a $7.9 million loss related to the proposed sale of its office building in Indianapolis, Indiana “Indianapolis” redirects here. For other uses, see Indianapolis (disambiguation). Indianapolis (IPA: [ˌɪndiəˈnæpəlɪs]) is the capital city of the U.S. . This property was acquired as part of the 2001 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. Protection Product Sales(2) and Results First quarter fixed life sales were on plan at $31.8 million, compared to $31.4 million in the first quarter of 2003. Sales of equity indexed products, AmerUs Group's most profitable products, amounted to 54 percent of total fixed life sales during the first quarter of 2004 compared to 43 percent a year ago. AmerUs Group remains the leading writer of equity indexed life insurance products 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 year, AmerUs Group expects to grow total fixed life sales to approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $130-$135 million, an increase of 10 percent over 2003 results. 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. in the protection segment decreased to $17.0 million in the first quarter of 2004 compared to $20.4 million a year ago. The lower operating expenses were a result of the company's restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). activities in 2003. 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 also remained steady at $379 million, compared with $376 million in the first quarter of 2003. Sales of equity indexed products, AmerUs Group's most profitable annuity product, comprised 78 percent of first quarter sales compared to 62 percent a year ago. AmerUs Group continues to rank as the number two writer of equity indexed annuity products in the United States. The company plans to generate total fixed annuity sales of $1.9 billion in 2004, with equity indexed products representing 85 percent of those sales. Net Investment Income Net investment income was $257 million in the first quarter of 2004 compared to $255 million in the first quarter of 2003. Growth in invested assets was offset by lower yields on new investments. The portfolio earned rate during the first quarter of 2004 was 5.80 percent compared to 6.11 percent during the same period in 2003. The portfolio earned rate increased eight basis points, from 5.72 percent, in the fourth quarter of 2003. Earnings Guidance(3) "Our continued strong sales of profitable products and effective investment management 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 2004 adjusted net operating income guidance of $4.00 to $4.10 per share," said Brooks. Corporate Actions 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. , May 13, 2004, in Des Moines, Iowa “Des Moines” redirects here. For other uses, see Des Moines (disambiguation). Des Moines (pronounced /dɪˈmɔɪn/ in English, . 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 2004 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) 888-810-4235 (international 706-679-5686) 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 Tuesday Tuesday: see week. , May 4, 2004. An audio replay of AmerUs Group's call will be available at 1 p.m. EDT, May 4, 2004, through May 11, 2004. The replay can be accessed by dialing 800-839-0860, Conference ID 1022. Further detailed financial information, including operating segment income, investment composition, operating expenses 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 Life Insurance Company. As of March 31, 2004, AmerUs Group's total assets were $22.2 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 $1.5 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 the following items 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: 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, restructuring costs, the impact of SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 133, 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 comparable basis 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, FAS 133 adjustments as well as the unpredictable nature of certain other unusual or non-recurring 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 gains and
losses, deferred policy acquisition costs associated with the open
block realized gains and losses, non-insurance operations,
restructuring costs, the impact of SFAS 133, 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,
2004 2003
----------------------
Net Income $26,354 $35,789
Realized (gains) losses on open block assets (A) 16,088 (5,276)
Net amortization of DAC, VOBA and bonus interest
due to open block gains or losses (B) 910 4,305
Net effect of accounting differences
from SFAS 133 (C) (1,482) 17
Restructuring costs (D) - 2,023
Other income from non-insurance operations (E) 119 (238)
Income tax provision release (F) (5,182) -
Income from discontinued operations (G) (3,899) (487)
Cumulative effect of change in accounting (H) 7,285 -
----------------------
Adjusted Net Operating Income $40,193 $36,133
======================
Adjusted Net Operating Income
per common share:
Basic $1.02 $0.93
======================
Diluted $0.99 $0.92
======================
Weighted average common
shares outstanding:
Basic 39,263,367 38,984,807
======================
Diluted 40,434,902 39,217,951
======================
AMERUS GROUP CO.
NOTES TO ADJUSTED NET OPERATING INCOME
(A) Represents total open block realized gains or losses on assets.
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. The
first quarter of 2004 includes a $7.9 million unrealized loss on
the Indianapolis Life office building which is an asset classified
as held for sale and carried at fair value.
(B) Represents amortization of deferred acquisition costs (DAC), value
of business acquired (VOBA) and capitalized bonus interest on the
open block realized gains and losses that are included in our
product margins.
(C) Represents the net effect of SFAS 133, "Accounting for Derivative
Instruments and Hedging Activities," related accounting entries.
The accounting entries consist of cash flow hedge amortization,
market value adjustments on trading securities, derivatives,
equity-indexed contracts, and the associated change in
amortization of DAC, VOBA and capitalized bonus interest resulting
from such adjustments.
(D) Represents costs of restructuring our operations to eliminate
duplicative functions and to merge IL Annuity into ILIC. The costs
consist primarily of relocation of employees, severance and
termination benefits, systems coversion, and merger related
expenses.
(E) Represents the net income from our property operations which is
not part of our insurance operations.
(F) Represents a reduction in the income tax accrual for the release
of provisions originally established for potential tax adjustments
which have been settled or eliminated.
(G) Represents the net income from our discontinued operations.
(H) Represents the cumulative effect of change in accounting, net of
income taxes, as of January, 2004, resulting from the Company's
adoption of SOP 03-1.
AMERUS GROUP CO.
CONSOLIDATED STATEMENTS OF INCOME
($ in thousands, except share data)
For The Three Months
Ended March 31,
2004 2003
----------------------
Revenues:
Insurance premiums $70,737 $81,605
Product charges 49,562 46,831
Net investment income 256,875 255,113
Realized/unrealized capital gains
(losses) (85) 7,855
Other income 19,603 16,356
----------------------
396,692 407,760
----------------------
Benefits and expenses:
Policyowner benefits 238,429 223,361
Underwriting, acquisition and other
expenses 40,601 40,356
Restructuring costs - 3,193
Amortization of deferred policy
acquisition costs and value
of business acquired 47,911 47,074
Dividends to policyowners 25,484 34,574
----------------------
352,425 348,558
----------------------
Income from continuing operations 44,267 59,202
Interest expense 8,398 6,799
----------------------
Income before income tax expense 35,869 52,403
Income tax expense 6,129 17,101
----------------------
Net income from continuing operations 29,740 35,302
Income from discontinued operations, net of
tax 3,899 487
----------------------
Net income before cumulative effect of
change in accounting 33,639 35,789
Cumulative effect of change in accounting,
net of tax (7,285) -
----------------------
Net income $26,354 $35,789
======================
Net income from continuing operations per
common share:
Basic $0.76 $0.91
======================
Diluted $0.74 $0.90
======================
Net income per common share:
Basic $0.67 $0.92
======================
Diluted $0.65 $0.91
======================
Weighted average common shares outstanding:
Basic 39,263,367 38,984,807
======================
Diluted 40,434,902 39,217,951
======================
AMERUS GROUP CO.
CONSOLIDATED BALANCE SHEETS
($ in thousands)
March 31, December 31,
2004 2003
------------------------
Assets
Investments:
Securities available-for-sale at fair
value:
Fixed maturity securities $14,642,276 $13,944,961
Equity securities 76,201 74,890
Short-term investments 25,207 28,556
Securities held for trading purposes:
Fixed maturity securities 2,022,366 2,089,502
Equity securities 5,722 1,652
Short-term investments 586 591
Mortgage loans 849,776 968,572
Real estate 33 33
Policy loans 490,245 494,646
Other investments 460,897 339,436
------------------------
Total investments 18,573,309 17,942,839
Cash and cash equivalents 409,529 274,150
Accrued investment income 215,058 205,492
Premiums, fees and other receivables 44,066 42,761
Reinsurance receivables 681,822 663,452
Deferred policy acquisition costs 960,935 1,005,934
Capitalized bonus interest 120,844 114,196
Value of business acquired 391,139 419,582
Goodwill 226,291 224,075
Property and equipment 49,237 48,849
Other assets 298,015 311,305
Separate account assets 262,031 261,657
Assets of discontinued operations - 27,950
------------------------
Total assets $22,232,276 $21,542,242
========================
AMERUS GROUP CO.
CONSOLIDATED BALANCE SHEETS
($ in thousands)
March 31, December 31,
2004 2003
------------------------
Liabilities and Stockholders' Equity
Liabilities:
Policy reserves and policyowner funds:
Future life and annuity policy
benefits $17,162,955 $16,994,255
Policyowner funds 1,337,180 1,306,160
------------------------
18,500,135 18,300,415
Accrued expenses and other liabilities 809,242 443,589
Dividends payable to policyowners 365,655 321,233
Policy and contract claims 66,827 58,880
Income taxes payable 73,907 50,274
Deferred income taxes 100,433 80,861
Notes payable 545,601 596,101
Separate account liabilities 262,031 261,657
Liabilities of discontinued operations - 19,421
------------------------
Total liabilities 20,723,831 20,132,431
Stockholders'
equity:
Preferred Stock, no par value, 20,000,000
shares authorized, none issued - -
Common Stock, no par value, 230,000,000
shares authorized; 43,909,617 shares
issued and 39,318,135 shares outstanding in
2004;
43,836,608 shares issued and
39,194,602 shares outstanding in 2003 43,910 43,836
Additional paid-in capital 1,186,917 1,184,237
Accumulated other comprehensive income 153,635 84,519
Unearned compensation (1,697) (1,361)
Retained earnings 281,360 255,006
Treasury stock, at cost (4,591,482 shares
in 2004 and 4,642,006 shares in 2003) (155,680) (156,426)
------------------------
Total stockholders'
equity 1,508,445 1,409,811
------------------------
Total liabilities and
stockholders' equity $22,232,276 $21,542,242
========================
AMERUS GROUP CO.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the Three Months Ended March 31, 2004
and the Year Ended December 31, 2003
($ in thousands)
Accumulated
Additional Other
Common Paid-In Comprehensive Unearned
Stock Capital Income (Loss) Compensation
-------------------- ---------------------------
Balance at December
31, 2002 $43,656 $1,179,646 $88,522 $(458)
2003:
Net income - - - -
Net unrealized gain
(loss) on
securities - - 1,971 -
Net unrealized gain
(loss) on derivatives
designated as cash
flow hedges - - 2,476 -
Change in accounting
transfer of
unrealized gain
on available-for-
sale securites to
trading - - (5,204) -
Stock issued under
various incentive
plans, net of
forfeitures 180 11,717 - (903)
PRIDES purchase
contract
adjustments
and allocated fees
and expenses - (7,280) - -
Dividends declared
on common stock - - - -
Allocation of shares
in leveraged ESOP - 154 - -
Minimum pension
liability
adjustment - - (3,246) -
-------- ----------- ------------- -------------
Balance at December
31, 2003 43,836 1,184,237 84,519 (1,361)
2004 (unaudited):
Net income - - - -
Net unrealized gain
(loss) on securities - - 68,970 -
Net unrealized gain
(loss) on derivatives
designated as cash
flow hedges - - 146 -
Stock issued under
various incentive
plans, net of
forfeitures 74 2,680 - (336)
-------- ----------- ------------- -------------
Balance at March 31,
2004 $43,910 $1,186,917 $153,635 $(1,697)
======== =========== ============= =============
Unallocated Total
ESOP Retained Treasury Stockholders'
Shares Earnings Stock Equity
---------------------------------------------
Balance at December 31,
2002 $(1,443) $109,517 $(156,492) $1,262,948
2003:
Net income - 161,147 - 161,147
Net unrealized gain
(loss) on securities - - - 1,971
Net unrealized gain
(loss) on derivatives
designated as cash
flow hedges - - - 2,476
Change in accounting
transfer of unrealized
gain on
available-for-sale
securites to trading - - - (5,204)
Stock issued under
various incentive
plans, net of
forfeitures - - 66 11,060
PRIDES purchase
contract adjustments
and allocated fees
and expenses - - - (7,280)
Dividends declared on
common stock - (15,658) - (15,658)
Allocation of shares
in leveraged ESOP 1,443 - - 1,597
Minimum pension
liability adjustment - - - (3,246)
---------------------------------------------
Balance at December 31,
2003 - 255,006 (156,426) 1,409,811
2004 (unaudited):
Net income - 26,354 - 26,354
Net unrealized gain
(loss) on securities - - - 68,970
Net unrealized gain
(loss) on derivatives
designated as cash flow
hedges - - - 146
Stock issued under
various incentive
plans, net of
forfeitures - - 746 3,164
Balance at March 31,
2004 $- $281,360 $(155,680) $1,508,445
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