UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
================================
(Mark One)
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ---------------- to -----------------
Commission file number 0-21459
AmerUs Life Holdings, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Iowa 42-1459712
- --------------------------------------------------------------------------------
(State of other jurisdiction of incorporation or organization) (IRS employer
identification no.)
699 Walnut Street, Des Moines, Iowa 50309-3948
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (515) 362-3600
- --------------------------------------------------------------------------------
Former name, former address and formal fiscal year, if changed since last report
Indicate by check /x/ whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /x/ No //
The number of shares outstanding of each of the registrant's classes of common
stock on April 30, 1998 was as follows:
Class A, Common Stock 29,734,918 shares
Class B, Common Stock 5,000,000 shares
Exhibit index - Page 32
Page 1 of 42<PAGE>
INDEX
Page No.
Part I - Financial Information . . . . . . . . . . . . . . . . . . . . . . . . 3
Item 1. Consolidated Financial Statements . . . . . . . . . . . . . . . . . . 3
Consolidated Balance Sheets March 31, 1998
(Unaudited) and December 31, 1997 . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Income (Unaudited) - For
the Three Months Ended March 31, 1998 and 1997 . . . . . . . . .. . . . . 5
Consolidated Statement of Comprehensive Income (Unaudited) -
For the Three Months Ended March 31, 1998 and 1997. . . . . . . . . . . . 7
Consolidated Statements of Cash Flows (Unaudited) -
For the Three Months Ended March 31, 1998 and 1997 . . . . . . . . . . . 8
Notes to Consolidated Financial Statements
(Unaudited). . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . 10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . . . . . . . .14
Part II - Other Information . . . . . . . . . . . . . . . . . . .. . . . . . 29
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . . . .29
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . .32
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERUS LIFE HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars In thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
-------------- ---------------
(Unaudited)
<S> <C> <C>
Assets
Investments:
Securities available-for-sale at fair value:
Fixed maturity securities $6,832,763 $6,851,427
Equity securities 101,537 61,480
Short-term investments 29,637 12,595
Fixed maturity securities held for trading
purposes 15,056 22,955
Mortgage loans on real estate 485,243 462,473
Real estate 7,556 8,670
Policy loans 119,764 117,865
Other investments 184,146 158,073
---------- ----------
Total investments 7,775,702 7,695,538
Cash 21,927 58,081
Accrued investment income 86,874 84,713
Premiums and fees receivable 3,207 3,445
Reinsurance receivables 6,242 6,203
Deferred policy acquisition costs 141,710 118,896
Value of business acquired 258,625 266,014
Investment in unconsolidated subsidiaries 27,316 26,849
Goodwill 218,455 220,250
Property and equipment 23,117 22,863
Other assets 357,436 359,308
Closed block assets 1,434,358 1,391,848
---------- ----------
Total assets $10,354,969 $10,254,008
========== ==========
Liabilities and Shareholders' Equity
Liabilities:
Policy reserves and policyowner funds:
Future life and annuity policy
benefits $7,083,600 $7,074,444
Policyowner funds 98,648 89,641
---------- ----------
Total 7,182,248 7,164,085
Accrued expenses 34,274 39,095
Dividends payable to policyowners 1,292 1,575
Policy and contract claims 5,570 4,548
Income taxes payable 18,424 12,753
Deferred income taxes 9,808 16,914
Other liabilities 134,019 111,180
Debt 266,341 266,435
Closed block liabilities 1,672,365 1,623,432
---------- ----------
Total liabilities 9,324,341 9,240,017
---------- ----------
Company obligated mandatorily redeemable preferred
capital securities of subsidiary trust holding
solely junior subordinated debentures of the
Company 86,000 86,000
Shareholders' equity:
Preferred Stock, no par value, 20,000,000
shares authorized, none issued - -
Common Stock, Class A, no par value,
75,000,000 shares authorized;
29,734,918 shares issued and
outstanding 29,735 29,735
Common Stock, Class B, no par value,
50,000,000 shares authorized;
5,000,000 shares issued and
outstanding 5,000 5,000
Additional paid in capital 383,686 383,686
Accumulated other comprehensive income 54,099 55,747
Retained earnings 472,108 453,823
---------- ----------
Total shareholders' equity 944,628 927,991
---------- ----------
Total liabilities and shareholders' equity $10,354,969 $10,254,008
========== ==========
/TABLE
<PAGE>
AMERUS LIFE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except share data)
<TABLE>
Three Months Ended March 31
------------------------------------------
1998 1997
------ ------
(unaudited)
<S> <C> <C>
Revenues:
Insurance premiums $17,294 $8,170
Universal life and annuity
product charges 16,380 11,182
Net investment income 133,173 50,918
Realized gains on investments 6,219 5,259
Contribution from the Closed Block 8,975 9,276
---------- ----------
182,041 84,805
---------- ----------
Benefits and expenses:
Policyowner benefits 107,356 45,521
Underwriting, acquisition,
and insurance expenses 27,981 11,013
Amortization of deferred policy
acquisition costs 8,191 5,057
Dividends to policyowners 315 121
---------- ----------
143,843 61,712
---------- ----------
Income from operations 38,198 23,093
Interest expense 6,682 2,947
---------- ----------
Income before income tax expense
and equity in earnings of
unconsolidated subsidiary 31,516 20,146
Income tax expense 10,177 5,739
---------- ----------
Income before equity in earnings
of unconsolidated
subsidiary 21,339 14,407
Equity in earnings of unconsolidated
subsidiary 418 173
---------- ----------
Net income $21,757 $14,580
========== ==========
Earnings per common share:
Basic $0.63 $0.63
===== =====
Diluted $0.62 $0.63
===== =====
Weighted average Common
Shares outstanding:
Basic 34,734,918 23,155,989
========== ==========
Diluted 34,831,363 23,155,989
========== ==========
</TABLE>
<PAGE>
AMERUS LIFE HOLDINGS, INC.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Dollars in thousands)
(Unaudited)
<TABLE>
Three Months Ended March 31,
-----------------------------
1998 1997
---- ----
<S> <C> <C>
Net income $21,757 $14,580
Other comprehensive income (loss), net of tax:
Unrealized gains on securities:
Unrealized holding gains arising
during period (net of deferred tax of
$(1,179) and $(14,388) 2,190 26,720
Reclassification adjustment
for gains included in net income
(net of deferred tax of $3,756
and $2,176) (3,838) (3,173)
------- -------
Other comprehensive income (loss) (1,648) 23,547
------- -------
Comprehensive income $20,109 $38,127
======= =======
/TABLE
<PAGE>
AMERUS LIFE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
Three Months Ended March 31,
------------------------------
1998 1997
------ ------
(unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $21,757 $14,580
Adjustments to reconcile net
income to net cash provided
by operating activities:
Policyowner assessments on
universal life and annuity products (16,381) (10,035)
Interest credited to
policyowner account balances 46,819 26,347
Realized investment (gains) losses (6,220) (5,259)
Change in:
Accrued investment income (2,161) (6,631)
Reinsurance ceded receivables (39) (479)
Deferred policy acquisition costs (15,352) (6,830)
Liabilities for future policy benefits (46,669) (18,626)
Policy and contract claims
and other policyowner funds 1,022 (1,030)
Income taxes:
Current 7,243 7,842
Deferred (4,182) (3,208)
Other, net (11,512) 14,212
Change in Closed Block assets
and liabilities, net 53,003 25,878
---------- ----------
Net cash provided by operating
activities 27,328 36,761
---------- ----------
Cash flows from investing activities:
Purchase of fixed maturities
available for sale (604,573) (309,000)
Maturities, calls, and principal
reductions of fixed maturities
available for sale 577,195 233,285
Purchase of equity securities (61,798) (10,799)
Proceeds from sale of equity
securities 53,946 15,953
Proceeds from repayment and sale
of mortgage loans 20,089 18,869
Purchase of mortgage loans (43,872) (29,135)
Purchase of real estate and other
invested assets (25,971) -
Proceeds from sale of real estate
and other invested assets 2,898 11,140
Change in policy loans, net (1,899) (618)
Other assets, net 39,685 (2,121)
Change in Closed Block
investments, net (50,010) 22,721
---------- ---------
Net cash used in investing
activities (94,310) (49,705)
---------- ---------
Cash flows from financing activities:
Deposits to policyowner account
balances 191,598 32,031
Withdrawals from policyowner
account balances (157,204) (58,367)
Change in debt, net (94) (109,056)
Change in checks drawn in excess
of bank balance - 6,932
Initial public offering of
common stock - 55,027
Dividends to shareholders (3,472) -
Issuance of company-obligated
mandatory redeemable
capital securities - 86,000
--------- ---------
Net cash used in financing
activities 30,828 12,567
--------- ---------
Net (decrease) increase
in cash (36,154) (377)
Cash at beginning of period 58,081 1,814
-------- ----------
Cash at end of period $21,927 $1,437
======== =========
Supplemental disclosure of cash
activities:
Interest paid $6,419 $1,910
====== ======
Income taxes paid $2,189 $12,800
====== =======
</TABLE>
<PAGE>
AMERUS LIFE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for annual
financial statements. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included. All adjustments were of a
normal recurring nature, unless otherwise noted in Management's Discussion and
Analysis and the Notes to Financial Statements. Operating results for the three
months ended March 31, 1998 are not necessarily indicative of the results that
may be expected for the year ending December 31, 1998. For further information
and for capitalized terms not defined in this 10-Q, refer to the consolidated
financial statements and notes thereto included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1997.
SFAS 130
On January 1, 1998, the Company adopted SFAS 130, "Reporting
Comprehensive Income," and restated prior years' financial statements to conform
to the reporting standard. SFAS 130 establishes standards for reporting and
displaying comprehensive income and its components in a full set of
general-purpose financial statements. Comprehensive income includes all changes
in shareholders' equity during a period except those resulting from investments
by owners and distributions to owners. The adoption of SFAS 130 resulted in
revised and additional disclosures but had no effect on the financial position,
results of operations, or liquidity of the Company.
SFAS 131
On January 1, 1998, the Company adopted SFAS 131, "Disclosures about
Segments of an Enterprise and Related Information." SFAS 131 establishes
standards for the way that public businesses report information about operating
segments in financial statements. Operating segments are components of an
enterprise about which separate financial information is available that is
evaluated regularly by the chief operating decision maker in deciding how to
allocate resources and assess performance. Generally, financial information is
required to be reported on the basis that it is used internally for evaluating
segment performance and deciding how to allocate resources to segments. The
provisions of SFAS 131 are of a reporting nature and have no impact on the
financial position or results of operations of the Company, as the life
insurance and annuity operation is the Company's only business segment.
Certain amounts in the 1997 financial statements have been reclassified
to conform to the 1998 financial statement presentation.
EARNINGS PER COMMON SHARE
The Company adopted the provisions of SFAS 128 "Earnings per Share" at
December 31, 1997, which had no effect on the Company's previously reported
earnings per share information. Basic earnings per share of common stock are
computed by dividing net income by the weighted-average number of common shares
outstanding during the period. Diluted earnings per share assumes the issuance
of common shares applicable to stock options and warrants calculated using the
treasury stock method.
(2) CLOSED BLOCK
Summarized financial information of the Closed Block balance sheet as of
March 31, 1998 and December 31, 1997 and statements of income for the three
months ended March 31, 1998 and 1997 are as follows (in thousands):
Assets:
<TABLE>
March 31, 1998 December 31, 1997
--------------- ------------------
<S> <C> <C>
Fixed maturity securities, at fair value $1,103,302 $1,053,066
Short-term investments, at fair value - 660
Policy loans 169,470 168,368
Other investments - 591
Cash (3,484) 21
Accrued investment income 14,879 12,617
Premiums and fees receivable 2,208 3,591
Deferred policy acquisition costs 135,731 143,765
Other assets 12,252 9,169
---------- ----------
$1,434,358 $1,391,848
========== ==========
Liabilities:
Future life and annuity policy benefits $1,465,657 $1,448,725
Policyowner funds 6,981 6,786
Accrued expenses 7,293 5,980
Dividends payable to policyowners 137,146 135,985
Policy and contract claims 5,667 5,966
Other liabilities 49,621 19,990
---------- ----------
$1,672,365 $1,623,432
========== ==========
Three months ended Three months ended
March 31, 1998 March 31, 1997
------------------ ------------------
Revenues and Expenses:
Insurance premiums $50,416 $54,936
Universal life and annuity
product charges 3,521 3,731
Net investment income 29,183 26,301
Realized gains on investments 869 (573)
Policyowner benefits (49,031) (49,731)
Underwriting, acquisition, and
insurance expenses (1,361) (1,491)
Amortization of deferred policy
acquisition costs (8,034) (6,831)
Dividends to policyowners (16,588) (17,066)
------ ------
Contribution from the Closed Block
before income taxes $8,975 $9,276
====== ======
</TABLE>
(3) DEBT AND CAPITAL SECURITIES
Debt consists of the following (in thousands):
<TABLE>
March 31, December 31,
1998 1997
------------ ----------------
(Unaudited)
<S> <C> <C>
Federal Home Loan Bank community
investment long-term advances
with a weighted average interest
rate of 6.35% at March 31, 1998 $16,341 $16,435
Revolving credit agreement bearing
interest at 6.3375% 250,000 250,000
------- -------
$266,341 $266,435
======= =======
</TABLE>
For an additional discussion of the terms of the above indebtedness,
refer to the Company's consolidated financial statements as of December 31,
1997.
On February 3, 1997, the Company issued $86,000,000 of 8.85% Capital
Securities, Series A, through a wholly-owned subsidiary trust. The sole asset
of the trust is the junior subordinated debentures of the Company in the
principal amount of $88.66 million with interest at 8.85% maturing February 1,
2027. The Company has fully and unconditionally guaranteed the obligation of
the trust under the Capital Securities and is obligated to mandatorily redeem
the securities on February 1, 2027. The Company may prepay the securities at
anytime after February 1, 2007.
(4) FEDERAL INCOME TAXES
The effective income tax rate for the period ending March 31, 1998 was
lower than the prevailing corporate rate primarily as a result of earned low
income housing and historic rehabilitation credits.
<PAGE>
(5) COMMITMENTS AND CONTINGENCIES
AmerUs Life Insurance Company ("AmerUs Life") and its joint venture partner
are contingently liable in the event the joint venture, Ameritas Variable Life
Insurance Company ("AVLIC"), cannot meet its policyholder obligations. At March
31, 1998, AVLIC had statutory assets of $1,600 million, liabilities of $1,554
million, and surplus of $45.6 million.
(6) RELATED PARTY TRANSACTIONS
AmerUs Life has a master agreement of purchase and sale with AmerUs Bank,
dated as of March 5, 1997, whereby AmerUs Life agrees to purchase whole loans
from AmerUs Bank from time to time. AmerUs Life also has a loan servicing
agreement with AmerUs Bank, whereby AmerUs Bank acts as servicer of the loans
and receives a servicing fee ranging from 50 to 58 basis points of the
outstanding principal balances of the loans. During the quarter ended March 31,
1998, AmerUs Life purchased loans with a total outstanding principal balance of
$65.3 million at a $14.2 million premium.
(7) ACQUISITIONS
On October 23, 1997, the Company acquired all of the outstanding capital
stock of Delta Life Corporation ("Delta") in exchange for cash of approximately
$165 million. The acquisition was accounted for using the purchase method of
accounting with goodwill of $69.4 million established which is being amortized
on a straight-line basis over 30 years.
On December 19, 1997, the Company acquired AmVestors Financial Corporation
in a stock exchange valued at approximately $350 million. The acquisition was
accounted for using the purchase method of accounting with goodwill of $152.9
million established which is being amortized on a straight-line basis over 30
years.
(8) SUBSEQUENT EVENT
On May 8, 1998, the Company's stockholders approved an amendment to the
Company's articles of incorporation to increase the number of authorized shares
of Class A common stock from 75 million to 180 million.<PAGE>
AmerUs Life Holdings, Inc. March 31, 1998
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Overview
The Company is a holding company engaged through its subsidiaries in
the business of marketing, underwriting and distributing a broad range of
individual life insurance and annuity products to individuals and businesses in
49 states, the District of Columbia and the U.S. Virgin Islands. The Company's
primary product offerings consist of whole life, universal life and term life
insurance policies and fixed annuities. Since April 1, 1996 the Company has been
a party to the Ameritas Joint Venture with Ameritas Life Insurance Corp.,
through which it markets fixed annuities and sells variable annuities and
variable life insurance products.
In accordance with GAAP, universal life insurance premiums and annuity
deposits received are reflected as increases in liabilities for policyowner
account balances and not as revenues. Revenues reported for universal life and
annuity products consist of policy charges for the cost of insurance,
administration charges and surrender charges assessed against policyowner
account balances. Surrender benefits paid relating to universal life insurance
policies and annuity products are reflected as decreases in liabilities for
policyowner account balances and not as expenses. Amounts for interest credited
to universal life and annuity policyowner account balances and benefit claims in
excess of policyowner account balances are reported as expenses in the financial
statements. The Company receives investment income earned from the funds
deposited into account balances by universal life and annuity policyowners, the
majority of which is passed through to such policyowners in the form of interest
credited.
Premium revenues reported for traditional life insurance products are
recognized as revenues when due. Future policy benefits and policy acquisition
costs are recognized as expenses over the life of the policy by means of a
provision for future policy benefits and amortization of deferred policy
acquisition costs.
The costs related to acquiring new business, including certain costs
of issuing policies and certain other variable selling expenses (principally
commissions), defined as deferred policy acquisition costs, are capitalized and
amortized as an expense primarily in proportion to expected profits or margins
from such policies. This amortization is adjusted when current or estimated
future gross profits or margins on the underlying policies vary from previous
estimates. For example, the amortization of deferred policy acquisition costs is
accelerated when policy terminations are higher than originally estimated or
when investments supporting the policies are sold at a gain prior to their
anticipated maturity. Death and other policyowner benefits reflect exposure to
mortality risk and fluctuate from period to period based on the level of claims
incurred within insurance retention limits. The profitability of the Company is
primarily affected by expense levels, interest spread results (i.e., the excess
of investment earnings over the interest credited to policyowners) and
fluctuations in mortality, persistency and other policyowner benefits. The
Company has the ability to mitigate adverse experience through adjustments to
credited interest rates, policyowner dividends or cost of insurance charges.
Sales
The following table sets forth information regarding the Company's
sales activity by product:
<TABLE>
Sales Activity by Product
For the Three Months Ended March 31,
1998 1997
---- ----
(In thousands)
<S> <C> <C>
Individual life insurance:
Participating whole life $3,570 $4,585
Universal life 2,110 2,106
Term life 1,456 563
------ ------
Total life insurance (A) $7,136 $7,254
====== ======
Annuities (B) $174,696 $12,544
======== =======
(A) Direct first year annualized premiums
(B) Direct collected premiums
</TABLE>
Life insurance sales as measured by annualized premiums decreased by
$0.1 million, or 1.6%. As a result of the introduction of new term products near
the end of the first quarter of 1997 and the introduction of three new term
plans in January, 1998, sales of term life insurance during the first quarter of
1998 increased by $0.9 million, or 159%. This increase and increased sales of
variable life products through the Ameritas Joint Venture were more than offset
by lower sales of other traditional life products by the Company. Annuity sales
through March 31, 1998 include $21.1 million and $143.0 million from Delta Life
Corporation and AmVestors Financial Corporation, respectively, companies
acquired during the fourth quarter of 1997.
Premium Receipts
The following table sets forth the Company's collected premiums,
including collected premiums associated with the Closed Block, for the periods
indicated:
<TABLE>
Collected Premiums by Product
For the Three Months Ended March 31,
1998 1997
---- ----
(In thousands)
<S> <C> <C>
Direct individual life premiums collected:
Traditional life:
First year & single $19,511 $18,239
Renewal 45,012 42,682
------- -------
Total 64,523 60,921
Universal life:
First year & single 4,078 3,929
Renewal 19,079 18,844
------- -------
Total 23,157 22,773
Total direct life 87,680 83,694
Reinsurance assumed 97 346
Reinsurance ceded (2,836) (2,441)
-------- -------
Total individual life,
net of reinsurance 84,941 81,599
-------- -------
Direct annuity premiums collected:
Individual 173,988 12,544
Group 708 -
-------- ------
Total annuities 174,696 12,544
Reinsurance ceded (967) (180)
-------- ------
Total annuities, net of
reinsurance 173,729 12,364
-------- --------
Other collected premiums, net of
reinsurance (54) 67
-------- --------
Total collected premiums, net of
reinsurance $258,616 $94,030
======== =======
</TABLE>
Annuity premiums, net of reinsurance, for the first quarter of 1998
include $20.2 million and $143.0 million for Delta Life Corporation and
AmVestors Financial Corporation, respectively.
Life Insurance and Annuities in Force
The following table sets forth information regarding the Company's
life insurance and annuities in force for each date presented:
<TABLE>
Life Insurance and Annuities in Force
As of March 31,
1998 1997
---- ----
(Dollars in thousands)
<S> <C> <C>
Individual life insurance:
Traditional life
Number of policies 256,688 253,645
GAAP life reserves $1,493,263 $1,237,797
Face amounts $18,333,000 $16,883,000
Universal life
Number of policies 117,044 119,728
GAAP life reserves $876,030 $826,715
Face amounts $12,098,000 $12,215,000
Total life insurance
Number of policies 373,732 373,373
GAAP life reserves $2,369,293 $2,064,512
Face amounts $30,431,000 $29,098,000
Annuities:
Number of policies 193,327 54,593
GAAP reserves $5,929,883 $1,322,655
Group life insurance:
Number of lives 19,400 30,210
Face amounts $559,000 $859,000
</TABLE>
Included in the March 31, 1998 annuity amounts are approximately
155,000 policies and $4.7 billion of GAAP reserves from the recent acquisitions.
The Company sold substantially all of its group life business as of July 1, 1996
and is no longer actively marketing this line of business.
Adjusted Operating Income
The following table reflects net income adjusted to eliminate certain
items (net of applicable income taxes) which management believes are not
necessarily indicative of overall operating trends. For example, net realized
capital gains or losses on investments, excluding gains or losses on convertible
debt which are considered core earnings, are eliminated. Different items are
likely to occur in each period presented and others may have different opinions
as to which items may warrant adjustment. The adjusted operating income shown
below does not constitute net income computed in accordance with GAAP.
<TABLE>
For the Three Months Ended March 31,
1998 1997
---- ----
(In thousands, except per share amounts)
<S> <C> <C>
Net income $21,757 $14,580
Net realized (gains) losses
on investments (A) (2,265) (2,981)
------- -------
Adjusted operating income $19,492 $11,599
======= =======
Adjusted operating income per
common share (B):
Basic $ 0.56 $ 0.50
Diluted $ 0.56 $ 0.50
(A) Represents non-core realized gains or losses on investments less that
portion of the amortization of deferred policy acquisition costs adjusted
for income taxes on such amounts. Realized gains 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) Basic adjusted operating income per common share for the first quarter of
1998 is calculated using 29.73 million weighted average shares of Class A
common stock and 5 million shares of Class B common stock outstanding.
Diluted adjusted operating income per common share for the first quarter of
1998 is calculated using 29.83 million weighted average shares of Class A
common stock and 5 million shares of Class B common stock outstanding. The
basic and diluted adjusted operating income per common share for the first
quarter of 1997 are calculated using 18.16 million shares of Class A common
stock and 5 million shares of Class B common stock outstanding.
</TABLE>
The Closed Block
The Closed Block was established on June 30, 1996. Insurance policies
which had a dividend scale in effect as of June 30, 1996 were included in the
Closed Block. The Closed Block was designed to provide reasonable assurance to
owners of insurance policies included therein that, after the Company's
reorganization, assets would be available to maintain the dividend scales and
interest credits in effect prior to the Company's reorganization if the
experience underlying such scales and credits continues.
The contribution to the operating income of the Company from the
Closed Block is reported as a single line item in the income statement.
Accordingly, premiums, product charges, investment income, realized gains on
investments, policyowner benefits and dividends attributable to the Closed
Block, less certain minor expenses including amortization of deferred policy
acquisition costs, are shown as a net number under the caption the "Contribution
from the Closed Block." This results in material reductions in the respective
line items in the income statement while having no effect on net income. The
expenses associated with the administration of the policies included in the
Closed Block and the renewal commissions on these policies are not charged
against the Contribution from the Closed Block, but rather are grouped with
underwriting, acquisition and insurance expenses. Also, all assets allocated to
the Closed Block are grouped together and shown as a separate item entitled
"Closed Block Assets." Likewise, all liabilities attributable to the Closed
Block are combined and disclosed as the "Closed Block Liabilities."
Results of Operations
A summary of the Company's revenues follows:
<TABLE>
Three Months Ended March 31,
------------------------------
1998 1997
---- ----
(In thousands)
<S> <C> <C>
Insurance premiums
Traditional life insurance premiums $10,141 $4,552
Immediate annuity and supplementary
contract premiums 7,077 3,593
Other premiums 76 25
-------- -------
Total insurance premiums 17,294 8,170
-------- --------
Universal life product charges 11,664 11,029
Annuity product charges 4,716 153
-------- --------
Total product charges 16,380 11,182
-------- --------
Net investment income 133,173 50,918
Realized gains on investments 6,219 5,259
Contribution from the Closed Block 8,975 9,276
-------- --------
Total revenues $182,041 $84,805
======== =======
</TABLE>
Individual life and annuity premiums and product charges increased by
$14.3 million, or 73.8%, to $33.6 million for the first quarter of 1998 from
$19.3 million for the first quarter of 1997. Included in the 1998 increase were
$6.3 million of insurance and annuity premiums and product charges from Delta
and AmVestors. Insurance premiums increased by $9.1 million to $17.3 million for
the first quarter of 1998 compared to $ 8.2 million for the first quarter of
1997. Included in the increased insurance premiums in 1998 was $2.0 million from
the acquisitions. Traditional life insurance premiums increased by $5.6 million
primarily as a result of growth in renewal premiums on traditional life
insurance policies not included in the Closed Block (as defined below).
Immediate annuity deposits and supplementary contract premiums were $3.5 million
higher in 1998 than in 1997 with $1.8 million from the recent acquisitions of
Delta and AmVestors and $1.7 million from increased immediate annuity and
supplementary contract premium sales of AmerUs Life.
Universal life product charges increased by $0.6 million for the first
quarter of 1998 primarily due to increased cost of insurance charges as a result
of the normal aging of the block of business.
Annuity product charges for first quarter 1998 increased by $4.5
million from 1997 amounts. The increase includes $4.3 million of annuity product
charges from Delta and AmVestors.
Net investment income increased by $82.2 million to $133.1 million for
first quarter 1998. Included in the 1998 increase in net investment income was
$82.6 million of net investment income from Delta and AmVestors. The remaining
$0.3 million decrease in net investment income was attributable to a decrease in
average invested assets (excluding market value adjustments, the Closed Block,
and Delta and AmVestors) partially offset by an increase in effective yields on
average invested assets. Average invested assets (excluding market value
adjustments, the Closed Block and Delta and AmVestors) in the first quarter of
1998 decreased by $56.8 million from the first quarter of 1997, primarily as a
result of the continued runoff of AmerUs Life's individual deferred annuity
business. Effective May, 1996 substantially all new sales of individual
deferred annuities by AmerUs Life's distribution network have been made through
the Ameritas Joint Venture pursuant to which AmerUs Life markets fixed annuities
issued by Ameritas Variable Life Insurance Company ("AVLIC") and sells AVLIC's
variable life insurance and variable annuity products. The effective yield on
average invested assets (excluding market value adjustments, the Closed Block
and acquisitions) increased from 7.22% for the first quarter of 1997 to 7.26%
for the first quarter of 1998.
Realized gains on investments were $6.2 million for the first quarter
of 1998 compared to gains of $5.2 million for the first quarter of 1997.
Included in the first quarter amounts were $1.9 million of net gains from Delta
and AmVestors, which incorporated $2.8 million of gains from the sale of
convertible debt securities considered to be a part of core operating earnings
by the Company.
The Contribution from the Closed Block for the first quarter of 1998
was $9.0 million compared to $9.3 million for the same period in 1997. The
following table sets forth the operating results of the Closed Block for the
periods indicated.
<TABLE>
Three Months Ended March 31,
----------------------------
1998 1997
---- ----
(In thousands)
<S> <C> <C>
Revenues
Insurance premiums $50,416 $ 54,936
Product charges 3,521 3,731
Net investment income 29,183 26,301
Realized gains (losses) on investments 869 (573)
------- --------
Total revenues 83,989 84,395
------- --------
Benefits and expenses
Policyowner benefits 49,031 49,731
Underwriting, acquisition and insurance
expenses 1,361 1,491
Amortization of deferred policy
acquisition costs 8,034 6,831
Dividends to policyowners 16,588 17,066
------- -------
Total benefits and expenses 75,014 75,119
------- -------
Contribution from the Closed Block $ 8,975 $ 9,276
======= =======
</TABLE>
Closed Block insurance premiums decreased by $4.5 million to $50.4
million for the first quarter of 1998 compared to $54.9 million for the same
period in 1997. Insurance policies which had a dividend scale in effect as of
June 30, 1996 were included in the Closed Block. The decrease in insurance
premiums reflects a reduction in the Closed Block's traditional life insurance
business in force as a result of the lapse of such business. Similarly, the
decrease in product charges on universal life policies included in the Closed
Block is primarily the result of the reduction of such business in force.
Net investment income for the Closed Block increased by $2.9 million
to $29.2 million for the first quarter of 1998 compared to $26.3 million for the
first quarter of 1997 due primarily to higher average invested assets (excluding
market value adjustments) partially offset by lower effective yields. Average
invested assets (excluding market value adjustments) increased by $125.6 million
and average effective yields decreased by 19 basis points for the Closed Block.
Realized gains on investments of the Closed Block were $0.9 million
for the first quarter of 1998 compared to a $0.6 million realized loss for the
same period in 1997.
Closed Block policyowner benefits were $49.0 million for the first
quarter of 1998 compared to $49.7 million a year ago. The decrease in benefits
was largely the result of lower death benefits on the Closed Block policies.
Insurance expenses for the Closed Block were $1.4 million for the
first quarter of 1998 compared to $1.5 million for the first quarter of 1997.
The decrease in expenses is the result of reduced premium taxes on such business
due to the lower insurance premiums.
The amortization of deferred policy acquisition costs for the Closed
Block increased by $1.2 million to $8.0 million for the first quarter of 1998.
Deferred policy acquisition costs are generally amortized in proportion to gross
margins, including realized capital gains. Lower death benefits and increased
realized capital gains in the first quarter of 1998, compared to the same period
in 1997, contributed to higher gross margins in 1998 on those policies included
in the Closed Block for which deferred costs are amortized, resulting in the
increased amortization in 1998.
Closed Block dividends to policyowners were $16.6 million for the
first quarter of 1998 compared to $17.1 million for the same period in 1997.
A summary of the Company's policyowner benefits follows:
<TABLE>
Three Months Ended March 31,
--------------------------------
1998 1997
---- ----
(In thousands)
<S> <C> <C>
Traditional life insurance
Death benefits $ 397 $ 502
Change in liability for future policy
benefits and other policy benefits 6,285 5,211
------- -------
Total traditional life insurance
benefits 6,682 5,713
------- -------
Universal life insurance
Death benefits in excess of cash value 4,660 6,439
Interest credited to policyowner
account balances 8,179 8,568
Other policy benefits 1,468 593
------- -------
Total universal life insurance benefits 14,307 15,600
------- -------
Annuities
Interest credited to deferred annuity
account balances 75,503 15,400
Other annuity benefits 10,303 8,398
------- -------
Total annuity benefits 85,806 23,798
------- -------
Miscellaneous benefits 561 410
-------- -------
Total policyowner benefits $107,356 $45,521
======== =======
</TABLE>
Total policyowner benefits were $107.3 million for the first quarter
of 1998 compared to $45.5 million for the first quarter of 1997, an increase of
$61.8 million. Included in the first quarter 1998 amounts were $63.0 million of
benefits of acquired companies primarily consisting of interest credited to
deferred annuity account balances. Traditional life insurance benefits increased
by $1.0 million in 1998 primarily due to the growth and aging of such business
in force. Universal life insurance benefits were $1.3 million lower in 1998
primarily due to decreased death benefits as a result of lower mortality.
Annuity benefits increased by $62.0 million for the first quarter of
1998 to $85.8 million compared to $23.8 million for the first quarter of 1997.
Included in the first quarter 1998 annuity benefits were $62.0 million
attributable to the recent acquisitions of Delta and AmVestors. AmerUs Life's
annuity benefits were $23.8 million for both the first quarters of 1998 and
1997. Interest credited to AmerUs Life's policyowner account balances decreased
by $1.8 million to $13.6 million for the first quarter of 1998 compared to $15.4
million for the same period in 1997. The weighted average crediting rate for
AmerUs Life's individual deferred annuity liabilities decreased by 19 basis
points from 5.48% for the first quarter of 1997 to 5.29% for the first quarter
of 1998, and AmerUs Life's average deferred annuity liabilities decreased by
$110.4 million from the first quarter of 1997 to the same period in 1998 also
contributing to the lower credited amounts in 1998. Other annuity benefits for
AmerUs Life increased by $1.8 million to $10.2 million for the first quarter of
1998 compared to $8.4 million for the first quarter of 1997, primarily as a
result of increased immediate annuity and supplementary contract premium sales.
A summary of the Company's expenses follows:
<TABLE>
Three Months Ended March 31,
------------------------------
1998 1997
---- ----
(In thousands)
<S> <C> <C>
Commission expense, net of deferrals $3,080 $2,113
Other underwriting, acquisition and insurance
expenses, net of deferrals 24,901 8,900
Amortization of deferred policy
acquisition costs 8,191 5,057
-------- --------
Total expenses $36,172 $16,070
======== ========
</TABLE>
The Company's commission expense, net of deferrals, increased by $1.0
million to $3.1 million for the first quarter of 1998 compared to $2.1 million
for the first quarter of 1997. Included in the increase is $0.4 million of
commission expense, net of deferrals, from the recent acquisitions. Other
underwriting, acquisition and insurance expenses, net of deferrals, increased by
$16.0 million to $24.9 million for the first quarter of 1998. Included in the
1998 amounts is $15.7 million of expenses for the recently acquired companies,
including $1.8 million of goodwill amortization and $6.7 million of amortization
of value of business acquired. Excluding recently acquired companies, other
underwriting, acquisition and insurance expenses, net of deferrals, increased by
$0.3 million.
The amortization of deferred policy acquisition costs increased by
$3.1 million to $8.2 million in the first quarter of 1998 compared to $5.1
million in the first quarter of 1997. Deferred policy acquisition costs are
generally amortized in proportion to gross margins, including realized capital
gains. Lower death benefits and increased realized capital gains in the first
quarter of 1998, compared to the first quarter of 1997, contributed to increased
gross margins in 1998 on products for which deferred costs are amortized,
resulting in the higher amortization in 1998.
Income from operations increased by $15.1 million to $38.2 million for
the first quarter of 1998 compared to $23.1 million for the same period in 1997,
with the recent acquisitions of Delta and AmVestors accounting for $11.7 million
of income from operations during the first quarter of 1998. Improved product
margins, in large part the result of better mortality, contributed to the
remaining increase in income from operations in 1998.
Interest expense increased by $3.7 million in the first quarter of
1998 to $6.7 million compared to $3.0 million for the first quarter of 1997. The
increased interest expense in the first quarter of 1998 was due to increased
interest expense on the capital securities issued by the Company on February 3,
1997 and increased interest expense on the revolving line of credit as a result
of increased debt levels.
Income before income tax expense and equity in earnings of
unconsolidated subsidiary increased by $11.4 million to $31.5 million for the
first quarter of 1998 compared to $20.1 million for the first quarter of 1997,
with the recent acquisitions of Delta and AmVestors adding $11.7 million to such
income for the first quarter of 1998.
Income tax expense increased by $4.4 million to $10.1 million for the
first quarter of 1998 compared to $5.7 million for the same period of 1997. The
increase in income tax expense was primarily due to the higher pre-tax income
including income from the recent acquisitions of Delta and AmVestors. The
effective income tax rate for the first quarter of 1998 was 32.3% compared to
28.5% for the first quarter of 1997. The higher effective tax rate in 1998 was
in part attributable to the non-deductibility of the amortization of goodwill
resulting from the recent acquisitions. In addition, relatively similar amounts
of tax credits in 1998 and 1997, had a greater impact on reducing the effective
tax rate for the first quarter of 1997 due to the lower income in the first
quarter of 1997.
Net income increased by $7.2 million to $21.8 million for the first
quarter of 1998 compared to $14.6 million for the same period in 1997, with the
recent acquisitions of Delta and AmVestors adding $6.5 million of net income for
the first quarter of 1998.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
THE COMPANY
The Company's cash flows from operations consist of dividends from
subsidiaries, if declared and paid, interest income on loans and advances to its
subsidiaries (including a surplus note issued to the Company by AmerUs Life),
investment income on assets held by the Company and fees which the Company
charges its subsidiaries and certain other of its affiliates for management
services, offset by the expenses incurred for debt service, salaries and other
expenses.
The Company intends to rely primarily on dividends and interest income from
its life insurance subsidiaries in order to make dividend payments to its
shareholders. The payment of dividends by its life insurance subsidiaries is
regulated under various state laws. Under Iowa law, AmerUs Life and Delta Life
and Annuity Company ("Delta Life") may pay dividends only from the earned
surplus arising from their respective businesses and must receive the prior
approval of the Iowa Commissioner to pay any dividend that would exceed certain
statutory limitations. The current statutory limitation is the greater of (i)
10% of the respective company's policyowners' surplus as of the preceding year
end or (ii) the net gain from operations for the previous calendar year. Iowa
law gives the Iowa Commissioner broad discretion to disapprove requests for
dividends in excess of these limits. Based on this limitation and 1997 results,
AmerUs Life and Delta Life would be able to pay approximately $58 million and $8
million, respectively, in dividends in 1998 without obtaining the Iowa
Commissioner's approval. The payment of dividends by American Investors Life
Insurance Company, Inc. ("American") and Financial Benefit Life Insurance
Company ("FBL") (together "AmVestors' Subsidiaries") is regulated under Kansas
law, which has statutory limitations similar to those in place in Iowa. Based on
these limitations and 1997 results, AmVestors' Subsidiaries could pay
approximately $15 million in dividends in 1998. During the first quarter of
1998, AmerUs Life paid the Company $16.7 million in dividends. Based upon the
cumulative limitations and 1997 results, the Company's subsidiaries could pay an
estimated $63 million in additional dividends in 1998 without obtaining
regulatory approval.
On October 23, 1997, the Company entered into a $250 million revolving
credit facility with a syndicate of lenders (the "Bank Credit Facility") to be
used to replace its then existing revolving credit facility, to finance the
acquisition of Delta, to finance permitted mergers and acquisitions and for
other general corporate purposes. The Bank Credit Facility is secured by a
pledge of approximately 49.9% of the outstanding common stock of AmerUs Life,
100% of the outstanding common stock of Delta and a $50 million 9% surplus note
payable to the Company by AmerUs Life. As of March 31, 1998, there was an
outstanding loan balance of $250 million under the facility. The Bank Credit
Facility provides for typical events of default and covenants with respect to
the conduct of the business of the Company and its subsidiaries and requires the
maintenance of various financial levels and ratios. Among other covenants, the
Company (a) cannot have a leverage ratio greater than 0.35:1.0 or an interest
coverage ratio less than 2.5:1.0, (b) is prohibited from paying cash dividends
on its common stock in excess of an amount equal to 3% of its consolidated net
worth as of the last day of the preceding fiscal year, and (c) must cause
certain of its life insurance subsidiaries to maintain certain ratings from A.M.
Best and certain levels of adjusted capital and surplus and risk-based capital.
The Company may from time to time review other potential acquisition
opportunities. The Company anticipates that funding for any such acquisition may
be provided from available cash resources, from debt or equity financing or
stock-for-stock acquisitions. In the future, the Company anticipates that its
liquidity and capital needs will be met through interest and dividends from its
life insurance subsidiaries, accessing the public equity and debt markets
depending upon market conditions, or alternatively from bank financing.
LIFE INSURANCE SUBSIDIARIES
The cash flows of the Company's life insurance subsidiaries consist
primarily of premium income, deposits to policyowner account balances, income
from investments, sales, maturities and calls of investments and repayments of
investment principal. Cash outflows are primarily related to withdrawals of
policyowner account balances, investment purchases, payment of policy
acquisition costs, payment of policyowner benefits, income taxes and current
operating expenses. Life insurance companies generally produce a positive cash
flow from operations, as measured by the amount by which cash flows are adequate
to meet benefit obligations to policyowners and normal operating expenses as
they are incurred. The remaining cash flow is generally used to increase the
asset base to provide funds to meet the need for future policy benefit payments
and for writing new business.
Management anticipates that funds to meet its short-term and long-term
capital expenditures, cash dividends to shareholders and operating cash needs
will come from existing capital and internally generated funds. Management
believes that the current level of cash and available-for-sale and short-term
securities, combined with expected net cash inflows from operations, maturities
of fixed maturity investments, principal payments on mortgage-backed securities
and its insurance products, will be adequate to meet the anticipated short-term
cash obligations of the Company's life insurance subsidiaries.
The Company and its subsidiaries generated cash flows from operating
activities of $27.3 million and $36.8 million for the three months ended March
31, 1998 and 1997, respectively. Excess operating cash flows were primarily used
to increase the Company's fixed maturity investment portfolio.
Matching the investment portfolio maturities to the cash flow demands of
the type of insurance being provided is an important consideration for each type
of life insurance product and annuity. The Company continuously monitors
benefits and surrenders to provide projections of future cash requirements. As
part of this monitoring process, the Company performs cash flow testing of its
assets and liabilities under various scenarios to evaluate the adequacy of
reserves. In developing its investment strategy, the Company establishes a level
of cash and securities which, combined with expected net cash inflows from
operations, maturities of fixed maturity investments and principal payments on
mortgage-backed securities, are believed adequate to meet anticipated short-term
and long-term benefit and expense payment obligations. There can be no assurance
that future experience regarding benefits and surrenders will be similar to
historic experience since withdrawal and surrender levels are influenced by such
factors as the interest rate environment and the claims-paying and financial
strength ratings of the Company's life insurance subsidiaries.
The Company takes into account asset-liability management considerations in
the product development and design process. Contract terms for the Company's
interest-sensitive products include surrender and withdrawal provisions which
mitigate the risk of losses due to early withdrawals. These provisions generally
do one or more of the following: limit the amount of penalty-free withdrawals,
limit the circumstances under which withdrawals are permitted, or assess a
surrender charge or market value adjustment relating to the underlying assets.
The following table summarizes statutory liabilities for interest-sensitive life
products and annuities by their contractual withdrawal provisions at March 31,
1998 (dollars in millions):
<TABLE>
<S> <C>
Not subject to discretionary withdrawal $406.8
Subject to discretionary withdrawal with adjustments:
Specified surrender charges (A) 4,107.5
Market value adjustments 1,310.5
--------
Subtotal 5,418.0
--------
Subject to discretionary withdrawal without adjustments 1,166.8
--------
Total $6,991.7
========
(A) Includes $1,426.5 million of statutory liabilities with a contractual
surrender charge of less than five percent of the account balance.
</TABLE>
Through its membership in the Federal Home Loan Bank ("FHLB") of Des
Moines, AmerUs Life is eligible to borrow on a line of credit available to
provide it additional liquidity. Interest is payable at a current rate at the
time of any advance. As of March 31, 1998, AmerUs Life had a $25.0 million open
secured line of credit against which there were no borrowings. In addition to
the line of credit, AmerUs Life has long-term advances from the FHLB outstanding
of $16.3 million at March 31, 1998.
The Company's life insurance subsidiaries may also obtain liquidity through
sales of investments or borrowings collateralized by their investment
portfolios. The Company's investment portfolio as of March 31, 1998 had a
carrying value of $9.0 billion, including Closed Block investments. As of March
31, 1998, fixed maturity securities were $7.9 billion, or 88% of invested
assets, with public and private fixed maturity securities constituting $7.6
billion, or 96.2%, and $0.3 million, or 3.8%, of total fixed maturity
securities, respectively.
At March 31, 1998, the statutory surplus of AmerUs Life, Delta Life,
American and FBL were approximately $321 million, $86 million, $115 million and
$42 million, respectively. The Company believes that these levels of statutory
capital are more than adequate as each life insurance subsidiary's risk-based
capital is significantly in excess of required levels.
In the future, in addition to their cash flows from operations and
borrowing capacity, the life insurance subsidiaries would anticipate obtaining
their required capital from the Company as the Company will have access to the
public debt and equity markets.
The Company does not believe that inflation has had a material effect on
its consolidated results of operations.
Interest rate changes may have temporary effects on the sale and
profitability of the annuities and life insurance products offered by the
Company. For example, if interest rates rise, competing investments (such as
annuities or life insurance products offered by the Company's competitors,
certificates of deposit, mutual funds, and similar instruments) may become more
attractive to potential purchasers of the Company's products until the Company
increases the interest rate credited to owners of its annuities and life
insurance products. In contrast, as interest rates fall, the Company attempts
to adjust its credited rates to compensate for the corresponding decline in
reinvestment rates. The Company monitors interest rates and sells annuities and
life insurance policies that permit flexibility to make interest rate changes as
part of its management of interest spreads. However, the profitability of the
Company's products is based upon persistency, mortality and expenses, as well as
interest rate spreads.
The Company manages its investment portfolio in part to reduce its exposure
to interest rate fluctuations. In general, the market value of its fixed
maturity portfolio increases or decreases in an inverse relationship with
fluctuations in interest rates, and net investment income increases or decreases
in a direct relationship with interest rate changes.
The Company has developed an asset/liability management approach with
separate investment portfolios for major product lines such as traditional life,
universal life and annuities. Investment policies and strategies have been
established based on the specific characteristics of each product line. The
portfolio investment policies and strategies establish asset duration, quality
and other guidelines. The Company utilizes analytical systems to establish an
optimal asset mix for each line of business. The Company seeks to manage the
asset/liability mismatch and the associated interest rate risk through active
management of the investment portfolio. Financial, actuarial, investment,
product development and product marketing professionals work together throughout
the product development, introduction and management phases to jointly develop
and implement product features, initial and renewal crediting strategies, and
investment strategies based on extensive modeling of a variety of factors under
a number of interest rate scenarios.
Inforce reserves and the assets allocated to each segment are modeled on a
regular basis to analyze projected cash flows under a variety of economic
scenarios. The result of this modeling is used to modify asset allocation,
investment portfolio duration and convexity and renewal crediting strategies.
The Company invests in CMOs as part of its basic portfolio strategy, but uses
other types of derivatives only as a hedge against the effects of interest rate
fluctuations or to synthetically alter the investment characteristics of
specific assets.
YEAR 2000 COMPLIANCE
As the year 2000 approaches, an important business issue has emerged
regarding how existing application software programs and operating systems can
accommodate the date value "2000." Many existing application software products
were designed to only accommodate a two digit date position which represents the
year (e.g., the number "95" is stored on the system and represents the year
1995). As a result, the year 1999 (i.e., "99") is the maximum date value many
systems will be able to accurately process. The Company formed a year 2000
working group to address potential problems posed by this development to assure
that the Company is prepared for the year 2000. The Company has already made
significant progress in accomplishing the necessary modifications and
conversions to deal with year 2000 issues and anticipates that the majority of
the required efforts will be completed by the end of 1998. Management does not
anticipate that the Company will incur significant operating expenses or be
required to invest heavily in computer system improvements to address year 2000
issues. Total estimated costs are in a range of $4 to $6 million with
approximately $3 million to be incurred in 1998. However, if modifications and
conversions to deal with year 2000 issues are not completed on a timely basis or
are not fully effective, such issues may have a material adverse effect on the
operations of the Company. All cost associated with year 2000 modifications and
conversions will be expensed as incurred.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
A list of exhibits included as part of this report is set forth in the
Exhibit Index which immediately precedes such exhibits and is hereby
incorporated by reference herein.
(b) The following report on Form 8-K was filed during the quarter ended
March 31, 1998:
1. Form 8-K/A dated October 23, 1997, as amended January 6, 1998,
including financial statements as follows:
(a) Delta Life Corporation (Unaudited) as of September 30, 1997
and the nine months ended September 30, 1997 and 1996;
(b) Delta Life Corporation as of December 31, 1996 and 1995 and
the years ended December 31, 1996, 1995 and 1994; and
(c) AmerUs Life Holdings, Inc. Unaudited Pro Forma Financial
Statements as of September 30, 1997 and for the nine months
ended September 30, 1997 and the year ended December, 1996.
2. Form 8-K/A dated December 19, 1997, as amended March 3, 1998,
including financial statements as follows:
(a) AmVestors Financial Corporation (Unaudited) as of September
30, 1997 and the nine months ended September 30, 1997 and
1996;
(b) AmVestors Financial Corporation as of December 31, 1996 and
1995 and the years ended December 31, 1996, 1995 and 1994;
and
(c) AmerUs Life Holdings, Inc. Unaudited Pro Forma Financial
Statements as of September 30, 1997 and for the nine months
ended September 30, 1997 and the year ended December, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
DATED: May 14, 1998 AMERUS LIFE HOLDINGS, INC.
By/s/ Michael E. Sproule
-------------------------------------
Executive Vice President and CFO
(Chief Financial Officer)
By/s/ Michael G. Fraizer
-------------------------------------
Senior Vice President -
Controller and Treasurer
(Principal Accounting Officer)
<PAGE>
INDEX TO EXHIBITS
AMERUS LIFE HOLDINGS, INC. AND SUBSIDIARIES
INDEX TO EXHIBITS
Exhibit No. Description
- ----------- -----------
2.1 Plan of Reorganization dated October 27, 1995, filed as Exhibit 2.1 to
the registration statement of the Registrant on Form S-1, Registration
Number 333-12239, is hereby incorporated by reference.
2.2 Amended and Restated Agreement and Plan of Merger, dated as of
September 19, 1997 and as amended and restated as of October 8, 1997,
by and among the Registrant, AFC Corp. and AmVestors Financial
Corporation ("AmVestors"), filed as Exhibit 2.2 to the Registration
Statement of the Registrant on Form S-4, Registration Number 333-40065
is hereby incorporated by reference.
2.3 Agreement and Plan of Merger, dated as of August 13, 1997 and as
amended as of September 5, 1997, among the Registrant, a wholly owned
subsidiary of the Registrant and Delta Life Corporation, filed as
Exhibit 2.2 to Form 8-K of the Registrant dated October 8, 1997, is
hereby incorporated by reference.
3.1 Amended and Restated Articles of Incorporation of the Registrant filed
as Exhibit 3.5 to the registration statement of the Registrant on Form
S-1, Registration Number 333-12239, are hereby incorporated by
reference.
3.2 Bylaws of the Registrant, filed as Exhibit 3.2 to the registration
statement of the Registrant on Form S-1, Registration Number 333-12239,
are hereby incorporated by reference.
4.1 Amended and Restated Trust Agreement dated as of February 3, 1997
among the Registrant, Wilmington Trust Company, as property trustee,
and the administrative trustees named therein (AmerUs Capital I
business trust), filed as Exhibit 3.6 to the registration statement of
the Registrant and AmerUs Capital I on Form S-1, Registration Number
333-13713, is hereby incorporated by reference.
4.2 Indenture dated as of February 3, 1997 between the Registrant and
Wilmington Trust Company relating to the Company's 8.85% Junior
Subordinated Debentures, Series A, filed as Exhibit 4.1 to the
registration statement of the Registrant and AmerUs Capital I on Form
S-1, Registration Number, 333-13713, is hereby incorporated by
reference.
4.3 Guaranty Agreement dated as of February 3, 1997 between the
Registrant, as guarantor, and Wilmington Trust Company, as trustee,
relating to the 8.85% Capital Securities, Series A, issued by AmerUs
Capital I, filed as Exhibit 4.4 to the registration statement of the
Registrant and AmerUs Capital I on Form S-1, Registration Number,
333-13713, is hereby incorporated by reference.
4.4 Common Stock Purchase Warrant, filed as Exhibit (10)(v) to Form 10-Q
of AmVestors Financial Corporation dated May 13, 1992, is hereby
incorporated by reference.
4.5 Certificate of Trust of AmerUs Capital II, filed as Exhibit 4.4 to the
registration statement of the Registrant, AmerUs Capital I and AmerUs
Capital II on Form S-3, Registration Number 333-50249, is hereby
incorporated by reference.
4.6 Trust Agreement of AmerUs Capital II, filed as Exhibit 4.5 to the
registration statement of the Registrant, AmerUs Capital I and AmerUs
Capital II on Form S-3, Registration Number 333-50249, is hereby
incorporated by reference.
4.7 Certificate of Trust of AmerUs Capital III, filed as Exhibit 4.7 to
the registration statement of the Registrant, AmerUs Capital I and
AmerUs Capital II on Form S-3, Registration Number 333-50249, is
hereby incorporated by reference.
4.8 Trust Agreement of AmerUs Capital III, filed as Exhibit 4.8 to the
registration statement of the Registrant, AmerUs Capital I and AmerUs
Capital II on Form S-3, Registration Number 333-50249, is hereby
incorporated by reference.
10.1 Amended and Restated Intercompany Agreement dated as of December 1,
1996, among American Mutual Holding Company, AmerUs Group Co. and the
Company. Filed as Exhibit 10.81 to the Registrant's registration
statement on Form S-1, Registration Number 333-12239, is hereby
incorporated by reference
10.2 Joint Venture Agreement, dated as of June 30, 1996, between American
Mutual Insurance Company and Ameritas Life Insurance Corp.
10.3 Management and Administration Service Agreement, dated as of April 1,
1996, among American Mutual Life Insurance Company, Ameritas Variable
Life Insurance Company and Ameritas Life Insurance Corp., filed as
Exhibit 10.3 to the registration statement of the Registrant on Form
S-1, Registration Number 333-12239, is hereby incorporated by
reference.
10.4 Agreement and Plan of Merger, dated as of August 24, 1994, among
Central Life Assurance Company and American Mutual Life Insurance
Company, filed as Exhibit 10.4 to the registration statement of the
Registrant on Form S-1, Registration Number 333-12239, is hereby
incorporated by reference.
10.5 All*AmerUs Supplemental Executive Retirement Plan, effective January
1, 1996, filed as Exhibit 10.6 to the registration statement of the
Registrant on Form S-1, Registration Number 333-12239, is hereby
incorporated by reference.
10.6 American Mutual Life Insurance Company Supplemental Pension Plan
(which was curtailed as of December 31, 1995), filed as Exhibit 10.7
to the registration statement of the Registrant on Form S-1,
Registration Number 333-12239, is hereby incorporated by reference.
10.7 Central Life Assurance Company Supplemental Pension Plan (which was
curtailed as of December 31, 1995), filed as Exhibit 10.8 to the
registration statement of the Registrant on Form S-1, Registration
Number 333-12239, is hereby incorporated by reference.
10.8 Management Incentive Plan, filed as Exhibit 10.9 to the registration
statement of the Registrant on Form S-1, Registration Number 333-12239,
is hereby incorporated by reference.
10.9 AmerUs Life Insurance Company Performance Share Plan, filed as Exhibit
10.10 to the registration statement of the Registrant on Form S-1,
Registration Number 333-12239, is hereby incorporated by reference.
10.10 AmerUs Life Stock Incentive Plan, filed as Exhibit 10.11 to the
registration statement of the Registrant on Form S-1, Registration
Number 333-12239, is hereby incorporated by reference.
10.11 AmerUs Life Non-Employee Director Stock Plan, filed as Exhibit 10.13
to the registration statement of the Registrant on Form S-1,
Registration Number 333-12239, is hereby incorporated by reference.
10.12 Modification of Real Estate Contract, dated as of July 1, 1996,
between AmerUs Life Insurance Company and AmerUs Properties, Inc.,
filed as Exhibit 10.14 to the registration statement of the Registrant
on Form S-1, Registration Number 333-12239, is hereby incorporated by
reference.
10.13 Asset Management and Disposition Agreement, dated January 3, 1995,
between American Mutual Life Insurance Company and Central Properties,
Inc. (now AmerUs Properties, Inc.), filed as Exhibit 10.15 to the
registration statement of the Registrant on Form S-1, Registration
Number 333-12239, is hereby incorporated by reference.
10.14 Form of Indemnification Agreement executed with directors and certain
officers, filed as Exhibit 10.33 to the registration statement of the
Registrant on Form S-1, Registration Number 333-12239, is hereby
incorporated by reference.
10.15 Amended and Restated Agreement and Certificate of Limited Partnership
of CPI Housing Partners I, L.P., dated as of September 1, 1995, among
AmerUs Properties, Inc., American Mutual Life Insurance Company and
American Mutual Affordable Housing Partners, L.P., filed as Exhibit
10.34 to the registration statement of the Registrant on Form S-1,
Registration Number 333-12239, is hereby incorporated by reference.
10.16 Amended and Restated Agreement of Limited Partnership of American
Mutual Affordable Housing Partners, L.P., dated as of September 1,
1995, among GrA Partners Joint Venture, AmerUs Properties, Inc.,
American Mutual Life Insurance Company, NCC Polar Company and NCC
Orion Company, filed as Exhibit 10.35 to the registration statement of
the Registrant on Form S-1, Registration Number 333-12239, is hereby
incorporated by reference.
10.17 Amended and Restated Agreement and Certificate of Limited Partnership
of 65th & Vista, L.P., dated as of September 1, 1995, among AmerUs
Properties, Inc., American Mutual Life Insurance Company and American
Mutual Affordable Housing Partners, L.P., filed as Exhibit 10.36 to
the registration statement of the Registrant on Form S-1, Registration
Number 333-12239, is hereby incorporated by reference.
10.18 Amended and Restated Agreement and Certificate of Limited Partnership
of 60th & Vista, L.P., dated as of September 1, 1995, among I.R.F.B.
Joint Venture, American Mutual Life Insurance Company and American
Mutual Affordable Housing Partners, L.P., filed as Exhibit 10.37 to
the registration statement of the Registrant on Form S-1, Registration
Number 333-12239, is hereby incorporated by reference.
10.19 Certificate of Limited Partnership and Limited Partnership Agreement
of CPI Housing Partners II, L.P., dated March 27, 1995, between
Central Properties, Inc. (now AmerUs Properties, Inc.) and American
Mutual Life Insurance Company, filed as Exhibit 10.38 to the
registration statement of the Registrant on Form S-1, Registration
Number 333-12239, is hereby incorporated by reference.
10.20 Amended and Restated Agreement and Certificate of Limited Partnership
of API Housing Partners III, L.P., dated as of March 1, 1996, among
AmerUs Properties, Inc., American Mutual Life Insurance Company,
American Mutual Affordable Housing Partners II, L.P. and AmerUs
Management, Inc., filed as Exhibit 10.39 to the registration statement
of the Registrant on Form S-1, Registration Number 333-12239, is
hereby incorporated by reference.
10.21 Certificate of Limited Partnership and Limited Partnership Agreement
of API Housing Partners IV, L.P., dated as of June 1995, between
AmerUs Properties, Inc. and American Mutual Life Insurance Company,
filed as Exhibit 10.40 to the registration statement of the Registrant
on Form S-1, Registration Number 333-12239, is hereby incorporated by
reference.
10.22 Amended and Restated Agreement and Certificate of Limited Partnership
of API Housing Partners V, L.P., dated as of March 1, 1996, among
AmerUs Properties, Inc., American Mutual Life Insurance Company,
American Mutual Affordable Housing Partners II, L.P. and AmerUs
Management, Inc., filed as Exhibit 10.41 to the registration statement
of the Registrant on Form S-1, Registration Number 333-12239, is
hereby incorporated by reference.
10.23 Amended and Restated Agreement and Certificate of Limited Partnership
of API-Chimney Ridge Partners, L.P., dated as of March 1, 1996, among
AmerUs Properties, Inc., American Mutual Life Insurance Company,
American Mutual Affordable Housing Partners II, L.P. and AmerUs
Management, Inc., filed as Exhibit 10.42 to the registration statement
of the Registrant on Form S-1, Registration Number 333-12239, is
hereby incorporated by reference.
10.24 Certificate of Limited Partnership and Limited Partnership Agreement
of API Housing Partners VI, L.P., dated as of October 10, 1995,
between AmerUs Properties, Inc. and American Mutual Life Insurance
Company, filed as Exhibit 10.43 to the registration statement of the
Registrant on Form S-1, Registration Number 333-12239, is hereby
incorporated by reference.
10.25 Certificate of Limited Partnership and Limited Partnership Agreement
of 86th & Meredith Associates, L.P., dated as of February 14, 1995,
between Central Properties, Inc. (now AmerUs Properties, Inc.) and
American Mutual Life Insurance Company, filed as Exhibit 10.44 to the
registration statement of the Registrant on Form S-1, Registration
Number 333-12239, is hereby incorporated by reference.
10.26 Certificate of Limited Partnership and Limited Partnership Agreement
of Altoona Meadows Investors, L.P., dated as of February 22, 1995,
between KPI Investments, Inc. and Dennis Galeazzi, filed as Exhibit
10.45 to the registration statement of the Registrant on Form S-1,
Registration Number 333-12239, is hereby incorporated by reference.
10.27 First Amendment to the Certificate of Limited Partnership and Limited
Partnership Agreement of Altoona Meadows Investors, L.P., dated as of
September 28, 1995, between KPI Investments, Inc. and American Mutual
Life Insurance Company, filed as Exhibit 10.46 to the registration
statement of the Registrant on Form S-1, Registration Number
333-12239, is hereby incorporated by reference.
10.28 Loan Servicing Agreement, dated August 1, 1990, between Central Life
Assurance Company and Midland Financial Mortgages, Inc. (now AmerUs
Mortgage), filed as Exhibit 10.47 to the registration statement of the
Registrant on Form S-1, Registration Number 333-12239, is hereby
incorporated by reference.
10.29 Construction Loan Servicing Agreement, dated November 20, 1995,
between American Mutual Life Insurance Company and AmerUs Properties,
Inc., filed as Exhibit 10.48 to the registration statement of the
Registrant on Form S-1, Registration Number 333-12239, is hereby
incorporated by reference.
10.30 Loan Servicing Agreement, dated September 1, 1994, between Central
Life Assurance Company and Midland Savings Bank, FSB (now AmerUs
Bank), filed as Exhibit 10.50 to the registration statement of the
Registrant on Form S-1, Registration Number 333-12239, is hereby
incorporated by reference.
10.31 Amendment to Service Agreement, dated as of May 1, 1996, between
American Mutual Life Insurance Company and AmerUs Bank, filed as
Exhibit 10.52 to the registration statement of the Registrant on Form
S-1, Registration Number 333-12239, is hereby incorporated by
reference.
10.32 Data Processing Service Agreement, dated November 1, 1989, between
Central Life Assurance Company and Midland Financial Savings and Loan
Association (now AmerUs Bank), filed as Exhibit 10.29 to Central
Resource Group, Inc.'s registration statement on Form S-1,
Registration No. 33-48359, filed on June 4, 1992), filed as Exhibit
10.53 to the registration statement of the Registrant on Form S-1,
Registration Number 333-12239, is hereby incorporated by reference.
10.33 First Amendment to Data Processing Service Agreement, dated as of
September 30, 1990, between Central Life Assurance Company and Midland
Savings Bank FSB (now AmerUs Bank), filed as Exhibit 10.54 to the
registration statement of the Registrant on Form S-1, Registration
Number 333-12239, is hereby incorporated by reference.
10.34 Second Amendment to Data Processing Service Agreement, dated as of May
1, 1991, between Central Life Assurance Company and Midland Savings
Bank FSB (now AmerUs Bank), filed as Exhibit 10.55 to the registration
statement of the Registrant on Form S-1, Registration Number
333-12239, is hereby incorporated by reference.
10.35 Third Amendment to Data Processing Service Agreement, dated as of
October 1, 1991, between Central Life Assurance Company and Midland
Savings Bank, FSB (now AmerUs Bank), filed as Exhibit 10.56 to the
registration statement of the Registrant on Form S-1, Registration
Number 333-12239, is hereby incorporated by reference.
10.36 Fourth Amendment to Data Processing Service Agreement, dated as of
January 2, 1992, between Central Life Assurance Company and Midland
Savings Bank, (now AmerUs Bank), filed as Exhibit 10.57 to the
registration statement of the Registrant on Form S-1, Registration
Number 333-12239, is hereby incorporated by reference.
10.37 Fifth Amendment to Data Processing Service Agreement, dated as of June
1, 1993, between Central Life Assurance Company and Midland Savings
Bank FSB (now AmerUs Bank), filed as Exhibit 10.58 to the registration
statement of the Registrant on Form S-1, Registration Number
333-12239, is hereby incorporated by reference.
10.38 Sixth Amendment to Data Processing Service Agreement, dated as of
September 1, 1995, between American Mutual Life Company and AmerUs
Bank, filed as Exhibit 10.59 to the registration statement of the
Registrant on Form S-1, Registration Number 333-12239, is hereby
incorporated by reference.
10.39 Seventh Amendment to Data Processing Service Agreement, dated as of
January 1, 1996, between American Mutual Life Insurance Company and
AmerUs Bank, filed as Exhibit 10.60 to the registration statement of
the Registrant on Form S-1, Registration Number 333-12239, is hereby
incorporated by reference.
10.40 Data Processing Support Services Agreement, dated as of July 1, 1993,
between Central Life Assurance Company and Midland Savings Bank, FSB
(now AmerUs Bank), filed as Exhibit 10.61 to the registration
statement of the Registrant on Form S-1, Registration Number
333-12239, is hereby incorporated by reference.
10.41 Investment Management Agreement, dated as of August 15, 1992, between
Central Life Assurance Company and Midland Savings Bank FSB (now
AmerUs Bank), filed as Exhibit 10.63 to the registration statement of
the Registrant on Form S-1, Registration Number 333-12239, is hereby
incorporated by reference.
10.42 Purchase Agreement, dated as of June 28, 1996, between AmerUs Life
Insurance Company and AmerUs Bank, filed as Exhibit 10.65 to the
registration statement of the Registrant on Form S-1, Registration
Number 333-12239, is hereby incorporated by reference.
10.43 Brokerage Contract dated January 1, 1995, among American Mutual Life
Insurance Company and Midland Investment Services, Inc. (now AmerUs
Investments, Inc.), filed as Exhibit 10.66 to the registration
statement of the Registrant on Form S-1, Registration Number 333-12239,
is hereby incorporated by reference.
10.44 Servicing Agreement, dated March 1, 1992, between Central Life
Assurance Company and Midland Investment Services, Inc. (now AmerUs
Investments, Inc.), filed as Exhibit 10.67 to the registration
statement of the Registrant on Form S-1, Registration Number 333-12239,
is hereby incorporated by reference.
10.45 Tax Allocation Agreement dated as of November 4, 1996, filed as
Exhibit 10.68 to the registration statement of the Registrant on Form
S-1, Registration Number 333-12239, is hereby incorporated by
reference.
10.46 Limited Partnership Agreement of Theater Project Limited Partnership
dated March 15, 1985, among Tapp Management, Inc., Tapp Management
Co., Ltd., Michael Longley, Michael A. Hammond and Gary L. Wood along
with an Amendment to Certificate of Limited Partnership, dated August
22, 1986, and an Assignment of Limited Partnership Interest, dated
November 15, 1992, between F. Barry Tapp and Tapp Development Co.,
Ltd., and an Amended Certificate of Limited Partnership dated December
24, 1992, filed as Exhibit 10.73 to the registration statement of the
Registrant on Form S-1, Registration Number 333-12239, is hereby
incorporated by reference.
10.47 Assignment of Limited Partnership Interest of Theater Project Limited
Partnership, dated December 30, 1995, between American Mutual Life
Insurance Company and AmerUs Properties, Inc., filed as Exhibit 10.74
to the registration statement of the Registrant on Form S-1,
Registration Number 333-12239, is hereby incorporated by reference.
10.48 Certificate of Limited Partnership and Limited Partnership Agreement
of Lagos Vista Limited Partnership, dated August 10, 1994, between
Central Properties, Inc. (now AmerUs Properties, Inc.) and Central
Life Assurance Company, filed as Exhibit 10.75 to the registration
statement of the Registrant on Form S-1, Registration Number 333-12239,
is hereby incorporated by reference.
10.49 Revolving Credit and Term Loan Agreement, dated as of December 1996,
among the Registrant, certain Signatory Banks thereto and The Chase
Manhattan Bank, Note issued by the Registrant and Borrower Pledge
Agreement, filed as Exhibit 10.80 to the registration statement of the
Registrant on Form S-1, Registration Number 333-12239, is hereby
incorporated by reference.
10.50 Agreement and Plan of Merger, dated as of August 13, 1997 and as
amended as of September 5, 1997, among the Registrant, a wholly-owned
subsidiary of the Registrant and Delta Life Corporation, filed as
Exhibit 2.2 to the Registrant's current report on Form 8-K on October
8, 1997, is hereby incorporated by reference.
10.51 Purchase Agreement between AmerUs Life and AmerUs Bank dated March 5,
1997 relating to the sale of certain loans , filed as Exhibit 10.82 to
the registration statement of the Registrant on Form S-4, Registration
Number 333-40065, is incorporated by reference.
10.52 Letter Agreement dated as of March 1, 1997 between AmerUs Life and
AmerUs Mortgage relating to the purchase of residential mortgage
loans, together with an amendment thereto dated March 11, 1997 , filed
as Exhibit 10.83 to the registration statement of the Registrant on
Form S-4, Registration Number 333-40065, is incorporated by reference.
10.53 Credit Agreement, dated as of October 23, 1997, among the Registrant,
Various Lender Institutions, the Co-Arrangers and The Chase Manhattan
Bank, as Administrative Agent , filed as Exhibit 10.84 to the
registration statement of the Registrant on Form S-4, Registration
Number 333-40065, is incorporated by reference.
10.54 Coinsurance Agreement, effective February 1, 1996, between Delta Life
and Annuity Company and London Life Reinsurance Company , filed as
Exhibit 10.85 to the registration statement of the Registrant on Form
S-4, Registration Number 333-40065, is incorporated by reference.
10.55 AmVestors Financial Corporation 1996 Incentive Stock Option Plan,
filed as Exhibit (4)(a) to Registration Statement of AmVestors
Financial Corporation on Form S-8, Registration Number 333-14571 dated
October 21, 1996.
10.56 1989 Non-Qualified Stock Option Plan adopted March 17, 1989, filed as
Exhibit (10)(q) to Form 10-K of AmVestors Financial Corporation, dated
April 12, 1989, is hereby incorporated by reference.
10.57 Amended and Restated Miscellaneous Service Agreement, dated as of July
21, 1997, among American Mutual Holding Company, Registrant, AmerUs
Life Insurance Company, AmerUs Group Co., AmerUs Bank, AmerUs
Mortgage, Inc., Iowa Realty Co., Inc., Iowa Title Company, AmerUs
Insurance, Inc., AmerUs Properties, Inc., AmerUs Direct, Inc. filed as
Exhibit 10.57 to the Registrant's current report on Form 10-K dated
March 25, 1998, is hereby incorporated by reference.
10.58 Lease - Business Property, dated December 1, 1996, between AmerUs
Properties, Inc. and AmerUs Life Insurance Company, property 611 Fifth
Avenue, Des Moines, Iowa filed as Exhibit 10.58 to the Registrant's
current report on Form 10-K dated March 25, 1998, is hereby
incorporated by reference.
10.59 First Amendment dated February 1, 1998 to Lease Agreement dated
December 1, 1996 between AmerUs Properties, Inc. and AmerUs Life
Insurance Company, property 611 Fifth Avenue, Des Moines, Iowa filed
as Exhibit 10.59 to the Registrant's current report on Form 10-K dated
March 25, 1998, is hereby incorporated by reference.
10.60 Lease - Business Property, dated December 1, 1996, between AmerUs
Properties, Inc. and AmerUs Life Insurance Company, 1213 Cherry
Street, Des Moines, Iowa filed as Exhibit 10.60 to the Registrant's
current report on Form 10-K dated March 25, 1998, is hereby
incorporated by reference.
10.61 Lease - Business Property, dated December 1, 1996, between AmerUs
Properties, Inc. and the Registrant, property 418 Sixth Avenue Moines,
Iowa filed as Exhibit 10.61 to the Registrant's current report on Form
10-K dated March 25, 1998, is hereby incorporated by reference.
10.62 Lease - Business Property, dated December 31, 1997, between AmerUs
Properties, Inc. and the Registrant property, 699 Walnut Street, Des
Moines, Iowa filed as Exhibit 10.62 to the Registrant's current report
on Form 10-K dated March 25, 1998, is hereby incorporated by
reference.
10.63 First Amendment dated February 1, 1998 to lease dated December 31,
1997 between AmerUs Properties and the Registrant filed as Exhibit
10.63 to the Registrant's current report on Form 10-K dated March 25,
1998, is hereby incorporated by reference.
10.64 Servicing Agreement, dated March 5, 1997, between AmerUs Life
Insurance Company and AmerUs Properties, Inc. filed as Exhibit 10.64
to the Registrant's current report on Form 10-K dated March 25, 1998,
is hereby incorporated by reference.
10.65 First Amended and Restated Articles of Limited Partnership of Cotton
Mill Limited Partnership, dated as of September 30, 1996, among
API-Cotton Mill Partners, L.P., Historic Restoration Incorporated and
AmerUs Management, Inc. filed as Exhibit 10.65 to the Registrant's
current report on Form 10-K dated March 25, 1998, is hereby
incorporated by reference.
10.66 Articles of Organization of AmerUs-Blackstone, L.L.C. dated July 8,
1997 filed as Exhibit 10.66 to the Registrant's current report on Form
10-K dated March 25, 1998, is hereby incorporated by reference.
10.67 First Amended and Restated Articles of Limited Partnership of
Blackstone Hotel Partners L.P. dated as of July 23, 1997 filed as
Exhibit 10.67 to the Registrant's current report on Form 10-K dated
March 25, 1998, is hereby incorporated by reference.
10.68 First Amended and Restated Limited Partnership Agreement of Briggs
Renewal Limited Partnership dated as of November 18, 1997 filed as
Exhibit 10.68 to the Registrant's current report on Form 10-K dated
March 25, 1998, is hereby incorporated by reference.
10.69 Declaration of Operating Agreement of AmerUs-Blackstone, L.L.C., dated
as of July 23, 1997 filed as Exhibit 10.69 to the Registrant's current
report on Form 10-K dated March 25, 1998, is hereby incorporated by
reference.
10.70 Open Line of Credit Application and Terms Agreement, dated March 3,
1997, between Federal Home Loan Bank of Des Moines and AmerUs Life
Insurance Company filed as Exhibit 10.70 to the Registrant's current
report on Form 10-K dated March 25, 1998, is hereby incorporated by
reference.
10.71 Certificate of Limited Partnership Agreement of API Cottonmill
Partner, L.P., dated as of June 21, 1996, among AmerUs Management,
Inc. and AmerUs Properties, Inc. filed as Exhibit 10. to the
Registrant's current report on Form 10-K dated March 25, 1998, is
hereby incorporated by reference.
11* Statement Re: Computation of Per Share Earnings
27 Financial Data Schedule
99.3 Employment Agreement, dated as of September 19, 1997, among Mark V.
Heitz, AmVestors Financial Corporation, American Investors Life
Insurance Company, Inc., AmVestors Investment Group, Inc. and American
Investors Sales Group, Inc., filed as Exhibit 99.3 to the registration
statement of the Registrant on Form S-4, Registration Number 333-40065,
is incorporated by reference.
99.4 Agreement of Sale, dated as of October 22, 1997, by and between R. Rex
Lee and AmerUs Group, Co., filed as Exhibit 99.4 to the registration
statement of the Registrant on Form S-4, Registration Number 333-40065,
is incorporated by reference.
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not required
under the related instructions or are inapplicable, and therefore have been
omitted.
- --------------------------
* Included herein
AMERUS LIFE HOLDINGS, INC.
Exhibit 11 - Statement Re: Computation of Per Share Earnings
<TABLE>
1998 1997
------------------------ -----------------------
Number Per Number Per
Net of Share Net of Share
Income Shares Amount Income Shares Amount
------ ------- ------ ------- ------- --------
(in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C>
Basic EPS
Net Income $21,757 34,735 $0.63 $14,580 23,156 $0.63
Effect of Dilutive securities
Options - 65 - - - -
Warrants - 31 - - - -
------- ------ ----- ------- ------ -----
Diluted EPS $21,757 34,831 $0.62 $14,580 23,156 $0.63
======= ====== ===== ======= ====== =====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<DEBT-HELD-FOR-SALE> 6,832,763
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 101,537
<MORTGAGE> 485,243
<REAL-ESTATE> 7,556
<TOTAL-INVEST> 7,775,702
<CASH> 21,927
<RECOVER-REINSURE> 6,242
<DEFERRED-ACQUISITION> 141,710
<TOTAL-ASSETS> 10,354,969
<POLICY-LOSSES> 7,083,600
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 5,570
<POLICY-HOLDER-FUNDS> 98,648
<NOTES-PAYABLE> 266,341
86,000
0
<COMMON> 34,735
<OTHER-SE> 909,893
<TOTAL-LIABILITY-AND-EQUITY> 10,354,969
33,674
<INVESTMENT-INCOME> 133,173
<INVESTMENT-GAINS> 6,219
<OTHER-INCOME> 0
<BENEFITS> 107,356
<UNDERWRITING-AMORTIZATION> 8,191
<UNDERWRITING-OTHER> 27,981
<INCOME-PRETAX> 31,516
<INCOME-TAX> 10,177
<INCOME-CONTINUING> 21,757
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,757
<EPS-PRIMARY> 0.63
<EPS-DILUTED> 0.62
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
