Bankers Life Holding Corp. reports fourth quarter 1995 operating results.CHICAGO--(BUSINESS WIRE)--Feb. 12, 1996--Bankers Life Holding Corp. (NYSE NYSE See: New York Stock Exchange : BLH BLH Baldwin-Lima-Hamilton (locomotive manufacturer) BLH Bellingham, Washington (border patrol station) BLH Bidirectional Long Haul ) today reported fourth quarter 1995 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 (excluding realized investment gains, trading income and extraordinary charge) of $36.1 million, or 71 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. , compared to $36.6 million, or 69 cents per share, in the fourth quarter of 1994. For the full year 1995, Bankers reported operating earnings of $121.0 million, or $2.32 per share. This compares to operating earnings of $135.9 million, or $2.53 per share, in 1994. Results for the full year 1994 included a third quarter non-recurring gain of $8.1 million, or 15 cents per share, resulting principally from the resolution of items associated with the change in control of the company in 1992. Fourth quarter results "Long-term care long-term care (LTC), n the provision of medical, social, and personal care services on a recurring or continuing basis to persons with chronic physical or mental disorders. sales continued to be strong, increasing 57 percent for the quarter and 47 percent for the year," President Fred (Friendly Rollabout Engineered for Doctors) A mobile medical conferencing unit. See videoconferencing. 1. FRED - Robert Carr. Language used by Framework, Ashton-Tate. 2. E. Crosley The Crosley was an automobile manufactured by the Crosley Corporation and later by Crosley Motors Incorporated in the United States from 1939 to 1952. (It should not be confused with the Crossley made by Crossley Motors of Manchester, England. said. "Bankers already has one of the leading shares of the long-term care market and has been rapidly growing its long-term care business. We continue to believe that long-term care insurance represents the most significant growth opportunity in the senior market in many years. "In our Medicare Medicare, national health insurance program in the United States for persons aged 65 and over and the disabled. It was established in 1965 with passage of the Social Security Amendments and is now run by the Centers for Medicare and Medicaid Services. supplement business," Crosley said, "medical provider claims have exceeded plan since the fourth quarter of 1994, but have levelled off in the most recent quarter. Higher Medicare supplement claims reduced fourth quarter 1995 operating earnings by just $0.9 million, or 2 cents per share, compared to a negative impact of $2.8 million, or 5 cents per share, in the third quarter of 1995, and $4 million, or 8 cents per share, in both the second and first quarters of the year. In response to higher claims, we moved aggressively in 1995 to improve the profitability of our in-force Medicare supplement business. We applied for approval to raise our premium rates, and we changed our commission structure 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. criteria criteria (krītēr´ē  ),n. . Those moves will have an increasingly favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impact in 1996. "Sales of new Medicare supplement policies in the fourth quarter of 1995 continued to be affected by competitive pressures," Crosley said. "The usual intense competition from HMOs, Blue Cross/Blue Shield organizations and other traditional insurers was accentuated in 1995 as these competitors reacted more slowly than we did in obtaining rate increases, putting our policies at a decided price disadvantage In policy debate, a disadvantage (abbreviated as DA, and sometimes referred to as a Disad) is an argument that a team brings up against a policy action that is being considered. Structure A DA usually has four key elements. during the year. "We sold fewer new Medicare supplement policies than in prior quarters (14,500 in the fourth quarter of 1995, down 36 percent from the fourth quarter of 1994), but, because we took early action in 1995, we will be able to quickly re-establish re-establish Verb to create or set up (an organization, link, etc.) again re-establishment n profit margins on new sales. And, as our competitors catch up with their own rate increases in 1996, our pricing will again be competitive. In addition, we are beginning to selectively expand the distribution of Medicare supplement policies (as well as long-term care products) through brokers and financial institutions. As a result, we expect that new Medicare supplement sales in 1996 will improve over 1995." Collected premiums. Compared to the fourth quarter of 1994, Medicare supplement premiums were up 1 percent to $155.8 million, long-term care insurance premiums increased by 24 percent, to $42.0 million, 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. premiums declined 41 percent, to $53.1 million. For the full year 1995, Medicare supplement premiums rose 1 percent to $597.0 million, long-term care insurance premiums increased by 20 percent, to $158.8 million, and annuity premiums declined 10 percent, to $261.4 million. Net income. Fourth quarter 1995 net income of $35.8 million, or 70 cents per share, included: (1) trading gains of $0.1 million (nil per share); (2) net 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. of $1.2 million, or 2 cents per share; and (3) an extraordinary charge of $1.6 million, or 3 cents per share, related to early retirement of debt. This compares to fourth quarter 1994 net income of $35.6 million, or 67 cents per share, which included realized losses Realized Loss A loss recognized when assets are sold for a price lower than the original purchase price. Notes: A portion of the realized loss may be applied against a capital gain or realized profit to reduce taxes. of $0.7 million, or 1 cent per share, and trading losses The following contains a list of trading losses which eventually forced major corporations to go bankrupt or restructure parts of their organisation. This list is not exhaustive. of $0.3 million, or 1 cent per share. Full-year 1995 net income of $126.7 million, or $2.43 per share, included: (1) trading income of $1.5 million, or 3 cents per share; (2) net realized gains of $5.8 million, or 11 cents per share; and (3) an extraordinary charge of $1.6 million, or 3 cents per share, related to early retirement of debt. This compares to full-year 1994 net income of $133.6 million, or $2.49 per share, which included trading losses of $1.1 million, or 2 cents per share, and net realized losses of $1.2 million, or 2 cents per share. Trading income and realized gains often fluctuate from quarter to quarter. Assets. Total assets at Dec. 31, 1995, were $4.8 billion. Approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 5 percent of investments were high-yield bonds High-yield bond See: Junk bond high-yield bond See junk bond. , less than 1 percent were mortgages, and there were no significant nonperforming investments. 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. . Excluding the mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. adjustment, shareholders' equity at Dec. 31, 1995, was $985.4 million ($19.47 per common share), compared to 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. 1994 shareholders' equity of $598.7 million ($11.34 per share). Including the mark-to-market adjustment, shareholders' equity at Dec. 31, 1995, was $1.03 billion ($20.39 per common share), compared to year-end 1994 shareholders' equity of $478.2 million ($9.06 per share). The improvement in market values caused Bankers' mark-to-market adjustment to increase shareholders' equity by $167 million in 1995. The change in the basis of presentation discussed below increased shareholders' equity by $330.7 million, and Bankers' share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program reduced shareholders' equity by $42.1 million. Basis of presentation. As previously reported, in a series of transactions during the second quarter of 1995, Conseco Conseco (NYSE: CNO), originally Security Life of Indiana, is a financial services organization based in Carmel, Indiana. Conseco's insurance subsidiaries provide life insurance, annuity and supplemental health insurance products to more than 4 million customers in the , Inc. (NYSE: CNC (Computerized Numerical Control) See numerical control. CNC - Collaborative Networked Communication ) increased its ownership interest in Bankers to above 80 percent. Consequently, Bankers adopted a new basis for its assets and liabilities under the "push down" method of accounting to recognize the cost of the ownership interest acquired by Conseco. This accounting was reflected in the balance sheet at June June: see month. 30, 1995, and is reflected in the statement of operations See Income statement. beginning in the third quarter of 1995. "Push-down" accounting reduced Bankers' operating earnings by $4.2 million, or 8 cents per share, in the fourth quarter of 1995 and by $5.3 million, or 10 cents per share, for the full year. Share repurchases. In January January: see month. 1996 Bankers completed the share repurchase program originally announced in April 1994 and expanded in August 1995. Under the program, Bankers purchased 5.3 million of its common shares at a cost of $105.3 million, leaving approximately 49.3 million shares currently outstanding, of which 90.5 percent are owned by Conseco. As a result of the repurchases, weighted average fully 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. shares outstanding for the quarter and 1995 full-year periods decreased by 4 percent and 3 percent, respectively, from the prior year. Bankers Life Holding Corp., headquartered in Chicago Chicago, city, United States Chicago (shĭkä`gō, shĭkô`gō), city (1990 pop. 2,783,726), seat of Cook co., NE Ill., on Lake Michigan; inc. 1837. , Ill., is a specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. insurance holding company. Bankers' principal subsidiary, Bankers Life and Casualty Bankers Life and Casualty is primarily a health insurance company in the United States. It was founded in 1879 and was previously known as White Cross. It was formerly owned by millionaire investor John D. Company, serves America's seniors as a leading provider of Medicare supplement, long-term care and other individual health, life and annuity products, which it markets through career agents and other distribution channels. -0-
Bankers Life Holding Corp. (NYSE: BLH)
Financial Highlights (in millions, except per-share amounts)
Quarter Ended Dec. 31: Year Ended Dec. 31:
1995 (1) 1994 1995 (1) 1994
Revenues $384.3 $360.1 $1,527.2 $1,437.9 Earnings from insurance operations (operating earnings) 36.1 36.6 121.0 135.9 Trading income (losses), net of related costs and taxes 0.1 (0.3) 1.5 (1.1) Realized gains (losses), net of related costs, amortization and taxes 1.2 (0.7) 5.8 (1.2) Extraordinary charge, net of tax (1.6) 0.0 (1.6) 0.0 Net income $35.8 $35.6 $126.7 $133.6 Per common share--primary and fully diluted: Weighted average shares (in millions) 51.0 52.9 52.2 53.6 Earnings from insurance operations (operating earnings) $0.71 $0.69 $2.32 $2.53 Trading income (loss), net of related costs and taxes 0.00 (0.01) 0.03 (0.02) Realized gains (losses), net of related costs, amortization and taxes 0.02 (0.01) 0.11 (0.02) Extraordinary charge, net of tax (0.03) 0.00 (0.03) 0.00 Net income $0.70 $0.67 $2.43 $2.49
(1) Financial data for periods subsequent to June 30, 1995, reflect
the adoption of a new basis of accounting.
Bankers Life Holding Corp.
Consolidated Balance Sheet (in millions)
At Dec. 31, At Dec. 31,
1995 (1) 1994
Assets
Investments:
Actively managed fixed maturities at
fair value $3,252.3 $2,611.0
Mortgage loans 5.2 17.4
Credit-tenant loans 88.9 69.0
Policy loans 47.3 45.4
Short-term investments 42.8 88.7
Other invested assets 78.4 37.4
Total investments 3,514.9 2,868.9
Accrued investment income 49.5 47.4
Accounts receivable and uncollected premiums 43.9 46.2
Reinsurance receivables 29.9 30.3
Cost of policies purchased 515.6 443.3
Cost of policies produced 244.2 345.0
Goodwill, net of accumulated amortization 369.3 86.4
Other assets 17.9 61.3
Total assets 4,785.2 3,928.8
Liabilities and Shareholders' Equity Liabilities Insurance liabilities 3,265.7 3,038.3 Income tax liabilities 59.8 1.2 Investment borrowings 28.1 0.0 Notes payable 301.5 269.9 Other liabilities 98.2 141.2 Total liabilities 3,753.3 3,450.6 Shareholders' equity Common stock and additional paid-in capital 748.8 371.1 Net unrealized appreciation (depreciation) of investments 46.5 (120.5) Retained earnings 236.6 227.6 Total shareholders' equity 1,031.9 478.2 Total liabilities and shareholders' equity $4,785.2 $3,928.8
(1) As adjusted for change in basis of presentation effective
June 30, 1995.
Bankers Life Holding Corp.
Consolidated Statement of Operations (in millions)
Quarter Ended Dec. 31: Year Ended Dec. 31:
1995 (1) 1994 1995 (1) 1994
Revenues
Insurance policy income $309.9 $303.9 $1,247.2 $1,214.0
Investment activity:
Net investment income 63.8 62.0 255.1 222.1
Net trading income (loss) 0.2 (0.5) 2.4 (1.7)
Net realized gains (losses) 12.6 (3.3) 26.9 (5.1)
Other income (loss) (2.2) (2.0) (4.4) 8.6
Total revenues 384.3 360.1 1,527.2 1,437.9
Benefits and expenses
Insurance policy benefits 224.2 219.2 933.3 880.3
Amortization related
to operations 28.4 26.6 120.8 113.6
Amortization related to
realized gains and losses 10.7 (2.2) 17.8 (3.2)
Interest expense on annuities
and financial products 20.7 17.7 77.7 59.7
Interest expense on notes
payable 7.4 8.2 31.0 31.6
Interest expense on investment
borrowings 0.7 1.4 5.1 6.7
Other operating costs and
expenses 33.2 33.8 140.4 140.8
Total benefits and expenses 325.3 304.7 1,326.1 1,229.5
Income before income taxes
and extraordinary charge 59.0 55.4 201.1 208.4
Income taxes 21.6 19.8 72.8 74.8
Income before extraordinary
charge 37.4 35.6 128.3 133.6
Extraordinary charge, net
of tax 1.6 0.0 1.6 0.0
Net income $35.8 $35.6 126.7 $133.6
Per common share Weighted average shares 51.0 52.9 52.2 53.6 Earnings from insurance operations (operating earnings) $0.71 $0.69 $2.32 $2.53 Trading income (loss), net of related costs and taxes 0.00 (0.01) 0.03 (0.02) Realized gains (losses), net of related costs, amortization and taxes 0.02 (0.01) 0.11 (0.02) Extraordinary charge, net of tax (0.03) 0.00 (0.03) 0.00 Net income $0.70 $0.67 $2.43 $2.49
(1) Financial data for periods subsequent to June 30, 1995, reflect
the adoption of a new basis of accounting.
CONTACT: Bankers Life Holding Corp. Jim Rosensteele, 317/817-2893 |
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