SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: July 27, 1995
Date of Earliest Event Reported: July 27, 1995
Equitable of Iowa Companies
(Exact name of registrant as specified in its charter)
Iowa 0-8590 42-1083593
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
604 Locust Street, Des Moines, Iowa 50306
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (515) 245-6911
Item 5. Other Events.
See attached press release dated July 27, 1995 which by this
reference is incorporated herein.
Item 7. Financial Statements and Exhibits.
(c) The following exhibits are filed as part of this report in
accordance with the provisions of Item 601 of Regulation S-K.
99 July 27, 1995 Press Release
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
Date: July 27, 1995 EQUITABLE OF IOWA COMPANIES
By /s/ Paul E. Larson
_____________________________
Paul E. Larson
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
INDEX TO EXHIBITS
CURRENT REPORT ON FORM 8-K
July 27, 1995
EQUITABLE OF IOWA COMPANIES
99 Additional Exhibits
July 27, 1995 Press Release
FOR IMMEDIATE RELEASE CONTACT: Paul E. Larson
Executive VP & CFO
TELEPHONE: (515) 241-7600
EQUITABLE OF IOWA'S OPERATING INCOME
IN SECOND QUARTER INCREASES 12.9 PERCENT PER SHARE
DES MOINES, July 27, 1995 -- Equitable of Iowa Companies
(NYSE:EIC) reported that second quarter operating income rose to
a record $25.0 million, or $0.79 per share, from $22.4 million,
or $0.70 per share, the year before, a 12.9 percent per share
increase.
"The double-digit operating earnings gain is encouraging in
light of strong year-ago results," observed Fred S. Hubbell,
president and chief executive officer.
Revenues were up 17.6 percent, reaching a new high of $187.4
million, versus $159.3 million a year ago.
Net income was $26.6 million, or $0.84 per share, compared
with $26.0 million, or $0.82 per share, and included realized
investment gains of $1.6 million, or $0.05 per share, and $3.6
million, or $0.12 per share, respectively, in the 1995 and 1994
periods.
"We continue to target annual financial goals of 20 percent
asset growth, despite the extremely competitive sales environment,
as well as 15 percent return on equity and 1 percent return on
assets," Hubbell pointed out. "We believe we are on track for
another excellent year."
First-half operating income rose to $48.4 million, or $1.53
per share, from $42.4 million, or $1.34 per share, a year ago, a
14.2 percent per share increase. Net income, including realized
investment gains, improved to $50.4 million, or $1.59 per share,
from $48.6 million, or $1.54 per share.
Revenues totaled $366.1 million, an increase of 17.4 percent
over $311.9 million in 1994's first half.
Total annuity premiums in the second quarter were $364.5
million versus $450.1 million the year before, a 19.0 percent
decline, while total annuity premiums year-to-date increased 2.3
percent, to $771.4 million. "These sales reflect the impact of a
challenging environment. The higher short-term interest rates of
the last several months have allowed bank certificates of deposit
to be more competitive than usual, while declining long-term
rates have caused returns on annuity and life products to be
comparatively lower than usual," Hubbell explained.
"Consequently, sales growth was slower than last year's second
quarter."
"We expect sales growth will remain difficult industry-wide
as long as current interest rates persist. But, we intend to
adhere to our strategic discipline, and will not sacrifice
profitability just to achieve short-term sales gains," Hubbell
emphasized. "However, we continue to expand the number of agents
selling our products, and we are well-positioned to take
advantage of a more typical interest rate and sales environment."
Life insurance sales, as measured by first-year and single
premiums, continued to show strength, rising 51.3 percent to
$10.4 million in the second quarter, while climbing 75.4 percent
on a year-to-date basis to $20.9 million. Premiums from tax
sheltered annuities ("TSAs") were up 10.1 percent for the second
quarter and 33.3 percent for the first half of 1995. "We're very
pleased with the growth in our life insurance and TSA businesses.
These sales provide opportunities over time for renewal
premiums," Hubbell said.
Assets increased 22.2 percent to $8.9 billion from $7.3
billion a year ago.
The investment portfolio's default rate remained nominal at
0.05 percent, versus 0.02 percent a year ago, and 0.01 percent at
March 31, 1995. The portfolio's estimated market value was equal
to 102.8 percent of its carrying value at June 30, 1995, versus
97.6 percent the year before and 98.2 percent at the end of
1995's first quarter.
Equitable of Iowa Companies is the holding company for
Equitable Life Insurance Company of Iowa, USG Annuity & Life
Company, Locust Street Securities and Equitable Investment
Services.
- - tables attached -
Equitable of Iowa Companies
CONSOLIDATED SUMMARY OF OPERATIONS
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
06/30/95 06/30/94 06/30/95 06/30/94
--------- --------- --------- ---------
(Thousands except per share data)
UNAUDITED
<S> <C> <C> <C> <C>
REVENUES
Traditional life insurance premiums $10,923 $11,403 $22,218 $23,213
Universal life and investment
product charges 12,110 10,607 24,620 21,111
Net investment income 158,520 125,398 306,766 245,299
Realized gains 1,790 7,705 1,903 13,714
Other income 4,048 4,177 10,582 8,572
--------- --------- --------- ---------
Total Revenues 187,391 159,290 366,089 311,909
EXPENSES
Insurance benefits
Interest credited to account
balances 96,960 77,040 190,126 149,877
Mortality and other 23,361 22,085 49,394 45,271
--------- --------- --------- ---------
120,321 99,125 239,520 195,148
Underwriting, acquisition and insurance
expense
Commissions 37,862 43,037 79,661 73,605
General expense 9,731 10,313 20,802 19,619
Insurance taxes 2,255 2,388 5,054 4,633
Policy acquisition costs deferred (46,117) (52,221) (97,572) (88,650)
Amortization of deferred acquisition
costs 16,795 12,308 31,266 23,328
--------- --------- --------- ---------
20,526 15,825 39,211 32,535
Interest expense 3,752 1,995 5,773 4,185
Other expenses 1,780 2,295 3,899 5,125
--------- --------- --------- ---------
Total Expenses 146,379 119,240 288,403 236,993
--------- --------- --------- ---------
41,012 40,050 77,686 74,916
Income taxes 14,410 14,220 27,285 26,372
Equity income 18 183 13 71
--------- --------- --------- ---------
Net income 26,620 26,013 50,414 48,615
========= ========= ========= =========
Average shares outstanding 31,678 31,611 31,671 31,570
</TABLE>
Equitable of Iowa Companies
CONSOLIDATED SUMMARY OF OPERATIONS (continued)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
06/30/95 06/30/94 06/30/95 06/30/94
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
PER SHARE DATA
Earnings per common share
--operating income 0.79 0.70 1.53 1.34
--realized gains (net of tax) 0.05 0.12 0.06 0.20
--------- --------- --------- ---------
--net income 0.84 0.82 1.59 1.54
========= ========= ========= =========
Dividends paid per common share 0.135 0.12 0.255 0.225
</TABLE>
Equitable of Iowa Companies
BUSINESS SUMMARY
<TABLE>
<CAPTION>
1995 1994
Per Per
$ Share $ Share
----------- ------ ----------- ------
(Thousands except per share data)
UNAUDITED
<S> <C> <C> <C> <C>
INCOME ANALYSIS
Quarter Ended - June 30
Operating income (1) $24,985 $0.79 $22,355 $0.70
Realized and prepayment gains 1,635 0.05 3,658 0.12
----------- ------ ----------- ------
NET INCOME 26,620 0.84 26,013 0.82
=========== ====== =========== ======
Six Months Ended - June 30
Operating income (1) $48,372 $1.53 $42,401 $1.34
Realized and prepayment gains 2,042 0.06 6,214 0.20
----------- ------ ----------- ------
NET INCOME 50,414 1.59 48,615 1.54
=========== ====== =========== ======
REALIZED GAINS ANALYSIS
Quarter Ended - June 30
Realized gains $1,790 $7,705
Prepayment gains in investment
income 2,061 --
Related amort of DPAC (1,336) (2,077)
----------- -----------
2,515 5,628
Income taxes 880 1,970
----------- -----------
Total 1,635 $0.05 3,658 $0.12
Six Months Ended - June 30
Realized gains $1,903 $13,714
Prepayment gains in investment
income 2,574 --
Related amort of DPAC (1,336) (4,303)
----------- -----------
3,141 9,411
Income taxes 1,099 3,197
----------- -----------
Total 2,042 $0.06 6,214 $0.20
<FN>
1) Operating income equals net income excluding, net of tax, prepayment gains
on mortgages and mortgage-backed securities, realized gains/losses and
related amortization of deferred acquisition costs.
</TABLE>
Equitable of Iowa Companies
BUSINESS SUMMARY (continued)
<TABLE>
<CAPTION>
1995 1994
Per Per
$ Share $ Share
----------- ------ ----------- ------
(Thousands except per share data)
UNAUDITED
<S> <C> <C>
PRODUCT SUMMARY
Six Months Ended - June 30
Average yield on assets (2) 8.6% 8.6%
Average interest credited rate (2) 5.8% 5.9%
Total premium
Traditional life $22,218 $23,213
Universal life and current
interest 43,960 32,816
Fixed annuities 749,725 754,381
Variable annuities 21,708 --
----------- -----------
837,611 810,410
New life insurance written
(at face amount) 892,994 708,890
Life insurance in force
(at face amount) 10,527,610 9,884,777
<FN>
2) Interest credited rate represents the average annualized interest rate
credited to policy accounts for interest sensitive products, including
annuities, universal life-type policies and participating life policies.
Asset yield is the average annualized yield on assets supporting those
products.
</TABLE>
Equitable of Iowa Companies
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
June 30 June 30
1995 1994
------------ ------------
(Thousands except per share data)
UNAUDITED
<S> <C> <C>
ASSETS
Cash and Investments - Available
for sale $1,558,473 $804,973
Investments - Held to maturity 6,306,946 5,641,938
Accrued investment income 117,630 100,743
Deferred policy acquisition costs 640,700 522,431
Property and equipment 7,985 7,412
Other assets 113,269 90,866
Separate account assets 120,007 86,367
------------ ------------
Total Assets 8,865,010 7,254,730
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Policyholder liabilities $7,703,777 $6,321,386
Long-term debt 100,000 --
Commercial paper notes 109,635 139,000
Other liabilities 132,464 143,737
Separate account liabilities 120,007 86,367
------------ ------------
Total Liabilities 8,165,883 6,690,490
Stockholders' equity 699,127 564,240
------------ ------------
Total Liabilities and
Stockholders' Equity 8,865,010 7,254,730
============ ============
Number of shares outstanding 31,717 31,640
Book value per share at June 30th $22.04 $17.83
</TABLE>
Investments - Insurance Operations June 30, 1995
<TABLE>
<S> <C>
Investment portfolio
Cash & short-term inv. 0.6%
Governments and Agency MBS 5.0
Investment grade bonds 47.2
Investment grade MBS 29.4
Below investment grade securities 6.6
Mortgages 10.7
-------
Total cash and fixed income 99.5
Common stock 0.3
Real estate 0.2
-------
100.0%
=======
</TABLE>
<TABLE>
<S> <C> <C>
Average quality - fixed income A+
Portfolio yield 8.4%
Default rates
Bonds 0.05% of Bonds 0.04% of Portfolio
Mortgages 0.11% of Mortgages 0.01% of Portfolio
_____
Total defaults 0.05% of Portfolio
</TABLE>
