AmerUs Group Reports Record Third Quarter Operating Earnings of $32.3 million.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)--Nov. 6, 2001 AmerUs Group (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 ) today announced third quarter 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 of $32.3 million, or $0.77 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 $14.1 million, or $0.74 per diluted share, in the third quarter of 2000. Adjusted net operating earnings for the first nine months of 2001 were $80.8 million, or $2.26 per diluted share, compared with $40.2 million, or $2.24 per diluted share, a year ago. The operating earnings for the quarter and year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. were record highs for AmerUs Group. "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 very pleased with the operating results we've we've Contraction of we have. we've have delivered this quarter during very challenging economic conditions," 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. "Our strong sales growth continues and the consolidation efforts are on track. Looking forward, we expect to show steady and continual improvement Continual Improvement (also called incremental improvement or staircase improvement) is a process or productivity improvement tool intended to have a stable and consistent growth and improvement of all the segments of a process or processes. in our operating performance." 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 $21.1 million, or $0.50 per diluted share, compared with $10.4 million, or $0.55 per diluted share, for the third quarter of 2000. Year-to-date net income from continuing operations was $60.2 million, or $1.68 per diluted share, compared with $33.1 million, or $1.85 per diluted share, a year ago. The increase in net income was primarily due 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 Insurance Company. Partially offsetting this increase was a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta restructuring charge 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. of $6.5 million related to the consolidation of various functions in the company's 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. operations. Annuity Sales Annuity sales for the third quarter increased 12 percent to $441.4 million, compared with $393.9 million for the third quarter of 2000. The company's equity-linked annuity product sales increased by 74 percent compared to the third quarter of 2000. "The annuity segment had a very strong quarter and remains on track to reach their goal of $1.8 billion in annuity production by year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. ," said Brooks. Year-to-date, annuity sales increased $358.1 million or 34 percent to $1,400.5 million, compared to $1,042.4 million in 2000. Life Sales During the third quarter, fixed life sales increased more than 155 percent to $22.4 million, compared to $8.8 million in the third quarter of 2000. "This is the first full quarter Indianapolis Life has been a part of AmerUs Group. This increase in scale establishes AmerUs Group as a substantial player in the life insurance industry. We continue to be a market leader in the sale of equity-linked life insurance products," said Brooks. For the year, fixed life sales increased nearly 74 percent to $48.9 million, compared to $28.1 million a year ago. Net Investment Income Net investment income, boosted by the acquisition of Indianapolis Life, was $231.9 million for the third quarter of 2001 compared with $175.7 million for the same period in 2000. 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 Life and higher invested assets. Net investment income through September September: see month. 30, 2001, was $620.2 million compared to $519.4 million a year ago. The portfolio yield during the third quarter was 6.43 percent, compared with 6.83 percent in the third quarter of 2000. For the first nine months of 2001, the portfolio yield was 6.80 percent, compared with 6.82 percent for the same period a year ago. The lower yields were primarily due to the acquisition of Indianapolis Life, which holds a significant amount of convertible securities. Corporate Actions As previously reported, the company's adjustable conversion-rate equity security units (ACES Units) matured on July July: see month. 27, 2001. This resulted in the replacement of $128 million in debt with 3.8 million shares of common stock. Additionally, on July 31, 2001, AmerUs Group began distributing 9.0 million shares of common stock and $9 million in cash and policy credits to Indianapolis Life policyholders as part of AmerUs Group's acquisition of Indianapolis Life. Finally, during the third quarter, the company repurchased 1,202,847 shares of its common stock at an average price of $31.67 per share. AmerUs Group's board of directors had approved the 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. of up to three million shares of common stock, subject to prevailing market conditions. Conference Call, Audio Replay and Additional Financial Information Interested parties may listen to a conference call with AmerUs Group's management discussing third quarter 2001 results by calling 800-937-6563 (international 801-983-4013) at 10:30 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy on November November: see month. 7, 2001. An audio replay of AmerUs Group's third quarter 2001 earnings conference 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. , November 7, 2001, through November 14, 2001. The call can be accessed by dialing 800-839-0860 (international: 402-220-1189), PIN 1189. 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 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 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., Banker's 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, Financial Benefit Life Insurance Company, IL Annuity and Insurance Company, Indianapolis Life Insurance Company and Western Security Life Insurance Company. As of September 30, 2001, AmerUs Group's total assets were $18.1 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 $1,271.7 million, including accumulated other comprehensive income In 1997 the Financial Accounting Standards Board issued a Statement on Financial Accounting Standards entitled “Comprehensive Income”. This statement required all income statement items to be reported either as a regular item in the income statement and or a special item as . Certain statements made by the company which are not historical facts may be considered forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , including, without limitation, statements as to sales targets, sales and earnings trends, management's beliefs, expectations, goals and opinions, which are based upon a number of assumptions concerning future conditions that ultimately may prove to be inaccurate. Such forward-looking statements are subject to risks and uncertainties and may be affected by various factors that may cause actual results to differ materially from those in the forward-looking statements. For further information which could cause actual results to differ from the company's expectations as well as other factors which could affect the company's financial statements, please refer to the company's filings with the Securities and Exchange Commission.
For The 3 Months Ended For The 9 Months Ended
September 30, September 30,
2001 2000 2001 2000
---------------------- ----------------------
($ in thousands, except
per share data)
Net Income $ 21,510 $ 11,144 $ 53,373 $ 33,801
Net non-core realized
(gains) losses(A) 5,085 1,370 14,579 285
Net amortization of
deferred policy
acquisition costs due to
non-core realized gains
or losses(B) (3,101) (1,045) (5,924) (2,431)
Net effect of accounting
differences from the
adoption of SFAS 133(C) 4,754 - 7,295 -
Demutualization costs(D) 249 3,378 451 9,235
Restructuring costs(E) 4,189 - 4,189 -
Discontinued operations(F) (428) (712) (1,374) (655)
Cumulative effect of
change in accounting for
derivatives(G) - - 8,236 -
--------------------- ---------------------
Adjusted Net Operating
Income $ 32,258 $ 14,135 $ 80,825 $ 40,235
===================== =====================
Adjusted Net Operating
Income per common
share(H):
Basic $ 0.78 $ 0.75 $ 2.29 $ 2.25
===================== =====================
Diluted $ 0.77 $ 0.74 $ 2.26 $ 2.24
===================== =====================
Weighted average common
shares outstanding(H):
Basic 41,536,389 18,888,948 35,334,160 17,893,406
===================== =====================
Diluted 42,060,929 19,026,397 35,825,884 17,934,801
===================== =====================
(A) Represents total realized gains or losses on investments less core
realized gains or losses (defined as gains or losses on the
convertible preferred stock and bond portfolio) adjusted for
income taxes and minority interest on such amounts. 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 product
margins, adjusted for income taxes and minority interest on such
amounts.
(C) Represents the net effect of SFAS No. 133 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) For the 2001 periods presented, represents costs directly related
to ILICO's demutualization. For the 2000 periods presented,
represents costs directly related to the Company's demutualization
and merger with ALHI, adjusted for minority interest on such
amounts. The costs consist primarily of legal, actuarial and
consulting expenses.
(E) Represents costs of restructuring life insurance and annuity
operations to eliminate duplicative functions, adjusted for income
taxes. The costs consist primarily of severance and termination
benefits.
(F) Represents the net income from the Company's 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.
(H) The Company was formed in 1996 as a mutual holding company and
therefore, had no shares of common stock outstanding until its
demutualization on September 20, 2000. At that time, the Company
distributed 17.4 million shares of its common stock to its former
members and exchanged its common stock for the 12.9 million shares
of common stock held by the public in ALHI on a one-for-one basis.
The Company's operating income is primarily from its former
subsidiary, ALHI. The Company has owned shares of ALHI common
stock since 1996. Adjusted net operating income per share has been
calculated on the basis that the shares of stock the Company owned
of ALHI were distributed to members and outstanding from January
1, 1996 and the shares exchanged for ALHI shares were outstanding
from the date of demutualization.
AMERUS GROUP CO.
CONSOLIDATED STATEMENTS OF INCOME
($ in thousands, except share data)
(Unaudited)
For The 3 Months Ended For The 9 Months Ended
September 30, September 30,
2001 2000 2001 2000
----------------------- -----------------------
Revenues:
Insurance premiums $ 101,947 $ 65,855 $ 249,676 $ 204,118
Universal life and
annuity product
charges 47,407 26,148 106,520 74,943
Net investment income 231,943 175,670 620,164 519,424
Realized/unrealized
gains (losses) on
investments (45,649) (7,292) (97,309) (11,552)
Other income 11,460 8,794 33,744 22,672
----------------------- -----------------------
347,108 269,175 912,795 809,605
----------------------- -----------------------
Benefits and expenses:
Policyowner benefits 205,270 157,659 533,967 469,985
Underwriting,
acquisition and
other expenses 40,800 30,574 107,255 91,820
Demutualization costs 249 3,732 451 10,437
Restructuring costs 6,527 - 6,527 -
Amortization of
deferred policy
acquisition costs
and value of
business acquired 31,270 20,938 86,512 67,128
Dividends to
policyowners 26,191 18,732 68,416 56,226
----------------------- -----------------------
310,307 231,635 803,128 695,596
----------------------- -----------------------
Income from continuing
operations 36,801 37,540 109,667 114,009
Interest expense 5,974 7,603 20,716 22,430
----------------------- -----------------------
Income before income
tax expense and
minority interest 30,827 29,937 88,951 91,579
Income tax expense 9,745 13,098 28,716 36,756
Minority interest - 6,407 - 21,677
----------------------- -----------------------
Net income from
continuing operations 21,082 10,432 60,235 33,146
Discontinued operations
(net of tax):
Income (loss) from
discontinued
operations 428 712 1,374 655
----------------------- -----------------------
Net income before
cumulative effect of
change in accounting
for derivatives 21,510 11,144 61,609 33,801
Cumulative effect of
change in accounting
for derivatives, net
of tax - - (8,236) -
----------------------- -----------------------
Net income $ 21,510 $ 11,144 $ 53,373 $ 33,801
======================= =======================
Net income from
continuing operations
per common share:
Basic $ 0.51 $ 0.55 $ 1.70 $ 1.85
======================= =======================
Diluted $ 0.50 $ 0.55 $ 1.68 $ 1.85
======================= =======================
Net income from
discontinued operations
per common share:
Basic $ 0.01 $ 0.04 $ 0.04 $ 0.04
======================= =======================
Diluted $ 0.01 $ 0.04 $ 0.04 $ 0.03
======================= =======================
Net income per common
share:
Basic $ 0.52 $ 0.59 $ 1.51 $ 1.89
======================= =======================
Diluted $ 0.51 $ 0.59 $ 1.49 $ 1.88
======================= =======================
Weighted average common
shares outstanding:
Basic 41,536,389 18,888,948 35,334,160 17,893,406
======================= =======================
Diluted 42,060,929 19,026,397 35,825,884 17,934,801
======================= =======================
See accompanying notes to consolidated financial statements.
AMERUS GROUP CO.
CONSOLIDATED BALANCE SHEETS
($ in thousands)
Sept. 30, Dec. 31,
2001 2000
------------------------
(unaudited)
Assets
Investments:
Securities available-for-sale at fair value:
Fixed maturity securities $10,958,725 $ 8,261,647
Equity securities 70,045 152,903
Short-term investments 10,285 20,861
Securities held for trading purposes:
Fixed maturity securities 2,174,315 -
Equity securities 3,340 -
Short-term investments - -
Loans 931,028 534,857
Real estate 1,779 3,226
Policy loans 511,116 312,662
Other investments 253,297 320,650
------------------------
Total investments 14,913,930 9,606,806
Cash and cash equivalents 175,020 65,485
Accrued investment income 178,322 114,034
Premiums, fees and other receivables 7,329 9,652
Income taxes receivable 12,480 -
Reinsurance receivables 543,489 6,529
Deferred policy acquisition costs 501,372 437,312
Value of business acquired 574,911 468,430
Investment in unconsolidated subsidiary - -
Goodwill 227,040 183,491
Property and equipment 85,923 56,101
Deferred income taxes - -
Other assets 527,580 491,296
Separate Account assets 296,043 -
Assets of discontinued operations 29,689 32,386
------------------------
Total assets $18,073,128 $11,471,522
========================
See accompanying notes to consolidated financial statements.
AMERUS GROUP CO.
CONSOLIDATED BALANCE SHEETS
($ in thousands)
Sept. 30, Dec. 31,
2001 2000
--------------------------
(unaudited)
Liabilities and Stockholders' Equity
Policy reserves and policyowner funds:
Future life and annuity policy benefits $14,790,662 $ 9,482,625
Policyowner funds 491,301 325,251
--------------------------
15,281,963 9,807,876
Accrued expenses and other liabilities 546,052 216,451
Dividends payable to policyowners 228,545 158,473
Policy and contract claims 36,491 11,890
Income taxes payable - 8,825
Deferred income taxes 66,231 5,904
Notes and contracts payable 260,488 215,627
Separate Account liabilities 296,043 -
Liabilities of discontinued operations 16,566 14,806
--------------------------
Total liabilities 16,732,379 10,439,852
Minority interest - -
Company-obligated mandatorily redeemable
preferred capital securities of subsidiary
trusts holding solely junior subordinated
debentures of the Company 69,054 197,691
Stockholders' equity:
Preferred Stock, no par value, 20,000,000
shares authorized, none issued - -
Common Stock, no par value, 230,000,000
shares authorized; 41,832,634 shares
issued and outstanding in 2001 (net of
1,648,100 treasury shares) and 30,011,034
shares issued and outstanding in 2000 41,833 30,011
Paid-in capital 1,125,618 809,894
Accumulated other comprehensive income
(loss) 46,317 (11,164)
Unearned compensation (830) (146)
Unallocated ESOP shares (683) (683)
Retained earnings 59,440 6,067
--------------------------
Total stockholders' equity 1,271,695 833,979
--------------------------
Total liabilities and stockholders'
equity $18,073,128 $11,471,522
==========================
See accompanying notes to consolidated financial statements.
AMERUS GROUP CO.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
September 30, 2001
($ in thousands)
Accumulated
Additional Other
Common Paid-In Comprehensive Unearned
Stock Capital Income (Loss) Compensation
-------- ----------- ------------- ------------
Balance at December 31,
1999 $ - $ - $ (78,628) $ (187)
2000:
Net income - - - -
Net unrealized gain
(loss) on securities - - 67,641 -
Stock issued under
various incentive plans,
net of forfeitures 6 169 - 105
Dividends declared on
common stock - - - -
Allocation of shares
in leveraged ESOP - 600 - -
Minority interest
ownership changes - - (177) -
Acquisition of
minority interest 12,615 285,405 - -
Demutualization of
AmerUs Group 17,390 518,535 - (64)
Other - 5,185 - -
-------- ----------- ------------- ------------
Balance at December 31,
2000 $30,011 $ 809,894 $ (11,164) $ (146)
======== =========== ============= ============
2001 (unaudited):
Net income - - - -
Change in accounting
for derivatives - - 2,661 -
Transfer related to
unrealized gain on
available-for-sale
securities reclass-
ified to trading - - (430) -
Net unrealized gain
(loss) on securities - - 62,633 -
Net unrealized gain
(loss) on derivatives
designated as cash
flow hedges - - (7,383) -
Stock issued under
various incentive plans,
net of forfeitures 235 6,317 - (684)
Purchase of treasury
stock (1,229) (37,716) - -
Acquisition of IL
Holdings 9,047 223,344 - -
Conversion of company-
obligated mandatorily
redeemable preferred
capital securities 3,769 123,779 - -
-------- ----------- ------------- ------------
Balance at September
30, 2001 $41,833 $1,125,618 $ 46,317 $ (830)
======== =========== ============= ============
Unallocated Total
ESOP Unassigned Retained Stockholders'
Shares Surplus Earnings Equity
----------- ---------- -------- -------------
Balance at December 31,
1999 $ (797) $ 840,962 $ - $ 761,350
2000:
Net income - 33,801 18,039 51,840
Net unrealized gain
(loss) on securities - - - 67,641
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 695 - - 1,295
Minority interest
ownership changes (2) 94 - (85)
Acquisition of minority
interest - - - 298,020
Demutualization of
AmerUs Group (579) (875,130) - (339,848)
Other - - - 5,185
----------- ---------- -------- -------------
Balance at December 31,
2000 $ (683) $ - $ 6,067 $ 833,979
=========== ========== ======== =============
2001 (unaudited):
Net income - - 61,609 61,609
Change in accounting
for derivatives - - (8,236) (5,575)
Transfer related to
unrealized gain on
available-for-sale
securities reclass-
ified to trading - - - (430)
Net unrealized gain
(loss) on securities - - - 62,633
Net unrealized gain (loss)
on derivatives designated
as cash flow hedges - - - (7,383)
Stock issued under
various incentive plans,
net of forfeitures - - - 5,868
Purchase of treasury stock - - - (38,945)
Acquisition of IL Holdings - - - 232,391
Conversion of company-
obligated mandatorily
redeemable preferred
capital securities - - - 127,548
----------- ---------- -------- -------------
Balance at September 30,
2001 $ (683) $ - $59,440 $ 1,271,695
=========== ========== ======== =============
See accompanying notes to consolidated financial statements.
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