AmerUs Group Reports Second Quarter Operating Income of $47.0 Million; $1.10 Per Share.DES MOINES, Iowa “Des Moines” redirects here. For other uses, see Des Moines (disambiguation). Des Moines (pronounced /dɪˈmɔɪn/ in English, -- AmerUs Group Co. (NYSE NYSE See: New York Stock Exchange :AMH AMH Abington Memorial Hospital (Abington, PA) AMH Anti-Müllerian Hormone AMH Australian Medicines Handbook AMH Automated Material Handling AMH Aviation Structural Mechanic (Hydraulics) US Navy Rating ), a leading producer of life insurance and annuity annuity: see insurance. annuity Payment made at a fixed interval. A common example is the payment received by retirees from their pension plan. There are two main classes of annuities: annuities certain and contingent annuities. products, today reported second quarter 2005 results. Highlights for the quarter include: --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 $47.0 million, or $1.10 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(1) --Net income of $35.6 million, or $0.83 per diluted share --Book value of $43.94 per share --Life insurance product sales(2) of $31 million --Fixed annuity product sales(2) of $713 million Commenting on the company's second 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, "These strong results reflect our focused strategy, strong distribution management, investment expertise and excellent product design. Our products continue to perform very well for our customers and provide profitable returns to the company." Quarterly net income was $35.6 million or $0.83 per diluted share compared to $48.8 million or $1.20 per diluted share a year ago. Quarterly adjusted net operating income increased 12.5 percent to $47.0 million or $1.10 per diluted share compared to $41.7 million or $1.02 per diluted share a year ago. On a year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. basis, AmerUs Group reported net income of $97.1 million or $2.27 per diluted share compared to $81.9 million or $2.02 per diluted share a year ago. Adjusted net operating income for the same period was $93.7 million or $2.19 per diluted share compared to $81.9 million or $2.02 per diluted share a year ago. Protection Product Sales(2) and Results Pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta operating income for the protection segment increased 18 percent to $41.4 million compared to $34.9 million in the second quarter of 2004. The increase was primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the growing block of indexed life business and increased product margins. Year-to-date, pre-tax operating income increased nearly 26 percent to $85.4 million compared to $68.0 million for the first six months of 2004. Second quarter fixed life sales were $31.0 million, compared to $33.5 million in the second quarter of 2004 and $26.1 million in the first quarter of 2005. Sales of indexed life products, AmerUs Group's most profitable products, increased to 78 percent of total fixed life sales during the second quarter of 2005, compared to 58 percent a year ago. Year-to-date, fixed life sales were $57.1 million, compared to $65.3 million in the first six months of 2004. AmerUs Group is the leading producer of indexed life insurance and has held this position for 16 consecutive quarters. For the year, AmerUs Group expects total fixed life sales of $115-$120 million. 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 Pre-tax operating income for the accumulation segment was $41.9 million during the second quarter of 2005 compared to $38.3 million a year ago. The increase was due to the continued shift in business mix from traditional fixed annuities Fixed annuities Contracts in which an insurance company or issuing financial institution pays a fixed dollar amount of money per period. to higher margin indexed annuity products and more assets under management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. . Year-to-date, pre-tax operating income was $82.6 million compared to $75.3 million for the first six months of 2004. 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 totaled a record $713 million, compared with $427 million in the second quarter of 2004. Sales of indexed annuity products, AmerUs Group's most profitable annuity product, comprised 90 percent of second quarter sales compared to 82 percent a year ago. AmerUs Group has remained one of the top five producers of indexed annuity 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 16 consecutive quarters. Year-to-date, fixed annuity sales were $1,284 million compared to $806 million during the first six months of 2004. The company plans to generate total fixed annuity sales of $2.2 billion to $2.5 billion in 2005, with equity indexed products representing 85-90 percent of those sales. Net Investment Income Net investment income was $277 million in the second quarter of 2005 compared to $251 million in the second quarter of 2004. Growth in invested assets and higher yields on investments contributed to the increase. The weighted average book yield was 5.69 percent at June June: see month. 30, 2005 compared to 5.71 percent at March 31, 2005. Earnings Guidance(3) "Our business fundamentals business fundamentals The general background within which an economy operates including earnings, sales, wage rates, taxes, and inflation. Improving business fundamentals are generally viewed as bullish for stocks, although stock prices at any given point and our growth plans for the balance of the year are on track. I am pleased to reaffirm re·af·firm tr.v. re·af·firmed, re·af·firm·ing, re·af·firms To affirm or assert again. re our 2005 adjusted net operating income guidance of $4.45 to $4.57 per share," said Brooks. Corporate Actions During the second quarter, the company repurchased 107,500 shares of common stock at an average price of $46.48 per share. The company has authorization The right or permission to use a system resource; the process of granting access. See access control. from its board of directors 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. an additional six million shares. 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 second quarter 2005 results. The webcast may be accessed through AmerUs Group's website at www.amerus.com under the "For Investors" section of the home page. The conference call may be accessed by calling (toll free) 800-857-3793 (international 630-395-0018) at 10 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT on Wednesday Wednesday: see week. , July July: see month. 27, 2005. The pass code for the call is 'AmerUs'. An audio replay of AmerUs Group's call will be available at 12 p.m. EDT, July 27, 2005, through August 3, 2005. The replay can be accessed by dialing 888-676-2670 (international 402-220-6439). Further detailed financial information, including operating segment income, investment composition, operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. and product distribution by channel, can be found in AmerUs Group's Financial Supplement, which is available by accessing the company's web site at www.amerus.com or by contacting the company's investor relations Investor relations The process by which the corporation communicates with its investors. department. Caution Regarding Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This press release contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Forward-looking statements are not based on historical information and relate to future operations, strategies, financial results or other developments. Additionally, forward-looking statements are subject to assumptions, risks and uncertainties. Statements such as "expect," "anticipate," "believe," "goal," "objective," "target," "may," "should," "estimate," "projects," or similar words as well as specific projections of future results qualify as forward-looking statements. Factors that may cause our actual results to differ materially from those contemplated by these forward-looking statements can be found in the company's 10-K, filed with the Securities and Exchange Commission. Forward-looking statements speak only as of the date the statement was made and AmerUs Group undertakes no obligation to update such forward-looking statements. There can be no assurance that other factors not currently anticipated by the company will not materially and adversely affect our results of operations. Investors are cautioned not to place undue reliance on any forward-looking statements made by us or on our behalf. AmerUs Group Co. is located in Des Moines, Iowa, and is engaged through its subsidiaries in the business of marketing individual life insurance and annuity products in the United States. Its major subsidiaries include: AmerUs Life Insurance Company, American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Investors Life Insurance Company, Inc., Bankers Life Insurance Company of New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of and Indianapolis Indianapolis (ĭn'dēənă`pəlĭs), city (1990 pop. 731,327), state capital and seat of Marion co., central Ind., on the White River; selected 1820 as the site of the state capital (which was moved there in 1825), inc. 1847. Life Insurance Company. As of June 30, 2005, AmerUs Group's total assets were $24.2 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 $1.7 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 income, as presented in this press release, excludes items such as: open block realized gains Realized Gain A gain resulting from selling an asset at a price higher than the original purchase price. Notes: There may be tax consequences for a realized profit. and losses, deferred policy acquisition costs associated with open block realized gains and losses, non-insurance operations, the impact of 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. (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 items that management believes are not indicative indicative: see mood. of ongoing operational performance, guidance on GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net income cannot readily be estimated. Accordingly, the company is unable to provide guidance with respect to, or a reconciliation of guidance on, adjusted net operating income per share to GAAP net income per share.
AMERUS GROUP CO.
ADJUSTED NET OPERATING INCOME
($ in thousands, except share data)
Adjusted net operating income reflects net income adjusted to
eliminate certain items, such as open block realized/unrealized gains
and losses; DAC and VOBA associated with the open block
realized/unrealized gains and losses; non-insurance operations;
derivative related market value adjustments; the release of income tax
provisions; discontinued operations and the cumulative effect of
change in accounting. Adjusted net operating income shown below does
not constitute our net income computed in accordance with GAAP. The
adjustments are presented net of income taxes.
For The Three For The Six
Months Ended Months Ended
June 30, June 30,
2005 2004 2005 2004
----------------------- -----------------------
Net Income $35,567 $48,776 $97,055 $81,905
Realized/unrealized
(gains) losses on
open block assets (A) 958 6,044 888 22,132
Net amortization of
DAC and VOBA due to
open block gains or
losses (B) 316 (21) 121 889
Net effect of
derivative related
market value
adjustments (C) 9,874 860 15,075 (622)
Other (income) loss
from non-insurance
operations (D) (7) (815) 219 (696)
Income tax items (E) 244 (13,109) (19,683) (18,291)
Income from
discontinued
operations (F) - - - (3,899)
Cumulative effect of
change in accounting (G) - - - 510
----------------------- -----------------------
Adjusted Net Operating
Income $46,952 $41,735 $93,675 $81,928
======================= =======================
Adjusted Net Operating
Income per common
share:
Basic $1.20 $1.06 $2.38 $2.08
======================= =======================
Diluted $1.10 $1.02 $2.19 $2.02
======================= =======================
Weighted average
common shares
outstanding:
Basic 39,264,504 39,327,182 39,412,211 39,342,363
======================= =======================
Diluted 42,751,912 40,760,364 42,845,240 40,619,242
======================= =======================
AMERUS GROUP CO.
NOTES TO ADJUSTED NET OPERATING INCOME
(A) Represents total open block realized/unrealized gains or losses on
assets. Open block gains or losses may vary widely between
periods. Such amounts are determined by management's timing of
individual transactions or current market conditions and do not
necessarily correspond to the underlying operating trends. The six
months ended June 30, 2004, include a $7.9 million loss on the
Indianapolis Life office building, which was an asset classified
as held for sale and carried at fair value. The office building
was sold in the third quarter of 2004.
(B) Represents amortization of deferred acquisition costs (DAC) and
value of business acquired (VOBA) on the open block realized gains
and losses that are included in our product margins.
(C) Represents the net effect of derivative related market value
adjustments. The accounting entries consist of cash flow hedge
amortization; market value adjustments on trading securities,
derivatives, and indexed contracts; and the associated change in
amortization of DAC and VOBA resulting from such adjustments.
(D) Represents the net income from our property operations which is
not part of our insurance operations.
(E) Represents a reduction in the income tax accrual for the release
of provisions originally established for potential tax adjustments
which have been settled or eliminated and changes in deferred
income tax valuation allowances.
(F) Represents the net income from our discontinued operations.
(G) Represents the cumulative effect of change in accounting, net of
income taxes, as of January 1, 2004, resulting from the Company's
adoption of SOP 03-1.
AMERUS GROUP CO.
CONSOLIDATED STATEMENTS OF INCOME
($ in thousands, except share data)
For The Three Months For The Six Months
Ended June 30, Ended June 30,
2005 2004 2005 2004
---------------------- ----------------------
Revenues:
Insurance premiums $61,001 $63,791 $123,547 $134,528
Product charges 54,638 54,284 113,671 103,846
Net investment income 277,040 251,311 545,751 508,186
Realized/unrealized
capital gains (losses) 6,266 (44,550) (42,678) (44,635)
Other income 11,229 12,204 23,785 23,906
---------------------- ----------------------
410,174 337,040 764,076 725,831
---------------------- ----------------------
Benefits and expenses:
Policyowner benefits 244,203 168,350 413,786 406,779
Underwriting,
acquisition and other
expenses 38,419 38,843 79,027 71,543
Amortization of
deferred policy
acquisition costs
and value of business
acquired 35,058 58,278 87,801 106,189
Dividends to
policyowners 31,864 10,936 51,867 36,420
---------------------- ----------------------
349,544 276,407 632,481 620,931
---------------------- ----------------------
Income from continuing
operations 60,630 60,633 131,595 104,900
Interest expense 8,191 7,936 15,971 16,334
---------------------- ----------------------
Income before income tax
expense 52,439 52,697 115,624 88,566
Income tax expense 16,872 3,921 18,569 10,050
---------------------- ----------------------
Net income from
continuing operations 35,567 48,776 97,055 78,516
Income from discontinued
operations, net of tax - - - 3,899
---------------------- ----------------------
Net income before
cumulative effect of
change in accounting 35,567 48,776 97,055 82,415
Cumulative effect of
change in accounting,
net of tax - - - (510)
---------------------- ----------------------
Net income $35,567 $48,776 $97,055 $81,905
====================== ======================
Net income from
continuing operations
per common share:
Basic $0.91 $1.24 $2.46 $2.00
====================== ======================
Diluted $0.83 $1.20 $2.27 $1.93
====================== ======================
Net income per common
share:
Basic $0.91 $1.24 $2.46 $2.08
====================== ======================
Diluted $0.83 $1.20 $2.27 $2.02
====================== ======================
Weighted average common
shares outstanding:
Basic 39,264,504 39,327,182 39,412,211 39,342,363
====================== ======================
Diluted 42,751,912 40,760,364 42,845,240 40,619,242
====================== ======================
AMERUS GROUP CO.
CONSOLIDATED BALANCE SHEETS
($ in thousands)
June 30, December 31,
2005 2004
--------------------------
Assets
Investments:
Securities available-for-sale at fair
value:
Fixed maturity securities $16,481,895 $15,646,653
Equity securities 76,006 77,024
Short-term investments 11,954 2,979
Securities held for trading purposes:
Fixed maturity securities 1,559,922 1,718,125
Equity securities 33 15,468
Mortgage loans 931,066 865,733
Policy loans 485,371 486,071
Other investments 346,616 374,240
--------------------------
Total investments 19,892,863 19,186,293
Cash and cash equivalents 650,045 478,441
Accrued investment income 225,608 222,294
Premiums, fees and other receivables 41,413 39,688
Income taxes receivable 30,296 -
Reinsurance receivables 684,299 666,493
Deferred policy acquisition costs 1,392,276 1,248,009
Deferred sales inducements 177,622 137,538
Value of business acquired 354,861 374,792
Goodwill 228,869 226,291
Property and equipment 45,393 46,114
Other assets 300,533 296,409
Separate account assets 224,294 248,507
--------------------------
Total assets $24,248,372 $23,170,869
==========================
AMERUS GROUP CO.
CONSOLIDATED BALANCE SHEETS
($ in thousands)
June 30, December 31,
2005 2004
--------------------------
Liabilities and Stockholders' Equity
Liabilities:
Policy reserves and policyowner funds:
Future life and annuity policy benefits $18,711,861 $17,923,329
Policyowner funds 1,471,974 1,419,762
--------------------------
20,183,835 19,343,091
Accrued expenses and other liabilities 1,008,665 837,514
Dividends payable to policyowners 364,695 322,037
Policy and contract claims 68,453 70,465
Income taxes payable - 9,299
Deferred income taxes 134,279 145,332
Notes payable 546,637 571,155
Separate account liabilities 224,294 248,507
--------------------------
Total liabilities 22,530,858 21,547,400
Stockholders' equity:
Preferred Stock, no par value, 20,000,000
shares authorized, none issued - -
Common Stock, no par value, 230,000,000
shares authorized; 44,569,825 shares
issued and 39,091,588 shares outstanding
in 2005; 44,225,902 shares issued and
39,400,663 shares outstanding in 2004 44,570 44,226
Additional paid-in capital 1,206,088 1,198,379
Accumulated other comprehensive income 128,440 114,670
Unearned compensation (2,389) (1,238)
Retained earnings 528,966 431,911
Treasury stock, at cost (5,478,237 shares
in 2005 and 4,825,239 shares in 2004) (188,161) (164,479)
--------------------------
Total stockholders' equity 1,717,514 1,623,469
--------------------------
Total liabilities and
stockholders' equity $24,248,372 $23,170,869
==========================
AMERUS GROUP CO.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the Six Months Ended June 30, 2005
and the Year Ended December 31, 2004
($ in thousands)
Accumulated
Additional Other
Paid-In Comprehensive
Common Stock Capital Income
------------- ----------- --------------
Balance at December 31, 2003 $43,836 $1,184,237 $84,519
2004:
Net income - - -
Net unrealized gain on
securities - - 33,959
Net unrealized gain on
derivatives designated as
cash flow hedges - - 420
Stock issued under various
incentive plans, net of
forfeitures 390 14,142 -
Purchase of treasury stock - - -
Dividends declared on common
stock - - -
Minimum pension liability
adjustment - - (4,228)
------------- ----------- --------------
Balance at December 31, 2004 44,226 1,198,379 114,670
2005:
Net income - - -
Net unrealized gain on
securities - - 13,896
Net unrealized loss on
derivatives designated as
cash flow hedges - - (126)
Stock issued under various
incentive plans, net of
forfeitures 344 7,709 -
Purchase of treasury stock - - -
------------- ----------- --------------
Balance at June 30, 2005 $44,570 $1,206,088 $128,440
============= =========== ==============
Total
Unearned Retained Treasury Stockholders'
Compensation Earnings Stock Equity
------------ --------- ---------- --------------
Balance at December
31, 2003 $(1,361) $255,006 $(156,426) $1,409,811
2004:
Net income - 192,642 - 192,642
Net unrealized gain
on securities - - - 33,959
Net unrealized gain
on derivatives
designated as cash
flow hedges - - - 420
Stock issued under
various incentive
plans, net of
forfeitures 123 - 1,100 15,755
Purchase of treasury
stock - - (9,153) (9,153)
Dividends declared
on common stock - (15,737) - (15,737)
Minimum pension
liability
adjustment - - - (4,228)
------------ --------- ---------- --------------
Balance at December
31, 2004 (1,238) 431,911 (164,479) 1,623,469
2005:
Net income - 97,055 - 97,055
Net unrealized gain
on securities - - - 13,896
Net unrealized loss
on derivatives
designated as cash
flow hedges - - - (126)
Stock issued under
various incentive
plans, net of
forfeitures (1,151) - 902 7,804
Purchase of treasury
stock - - (24,584) (24,584)
------------ --------- ---------- --------------
Balance at June 30,
2005 $(2,389) $528,966 $(188,161) $1,717,514
============ ========= ========== ==============
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