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: February 9, 1995
Date of Earliest Event Reported: February 9, 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 February 9, 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 February 9, 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: February 9, 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
February 9, 1995
EQUITABLE OF IOWA COMPANIES
99 Additional Exhibits
February 9, 1995 Press Release
FOR IMMEDIATE RELEASE CONTACT: Paul E. Larson
Executive VP & CFO
TELEPHONE: (515) 241-7600
EQUITABLE OF IOWA'S OPERATING INCOME
INCREASES 28.0 PERCENT IN 1994;
FOURTH QUARTER RISES 25.6 PERCENT
DES MOINES, February 9, 1995 -- Equitable of Iowa Companies
(NYSE: EIC) reported that operating income in 1994 increased 28.0
percent to $88.2 million from $68.9 million the year before,
while earnings per share, reflecting more shares outstanding
because of a common stock offering in October 1993, rose 19.7
percent to $2.79 from $2.33.
The results represented the seventh consecutive year of record
operating earnings.
Revenues were also a record, totaling $651.7 million, up 13.7
percent over 1993's $573.0 million. Excluding realized and
prepayment gains, revenues were up 18.7 percent from the previous
year.
Net income, which included realized investment gains, reached
$98.3 million, or $3.11 per share, versus $87.2 million, or $2.95
per share in 1993.
Fourth-quarter operating income gained 25.6 percent to $23.2
million, or $0.73 per share, from $18.4 million, or $0.59 per
share. Net income in 1994 was $24.9 million, or $0.79
per share, compared with $25.8 million, or $0.84 per share, in
1993. Realized gains were lower for the fourth quarter and full
year as a result of fewer investment calls and prepayments in
1994. Revenues for the fourth quarter rose 7.7 percent to $171.4
million from $159.2 million. Net investment income increased
21.4 percent compared with fourth quarter 1993.
"During 1994, we exceeded our three financial objectives,"
pointed out Fred S. Hubbell, president and chief executive
officer. "Strong sales boosted our assets by 23.9 percent, ahead
of our 20 percent goal. Using operating earnings, return on
equity reached 15.8 percent and return on assets based on net
income was approximately 1.4 percent, compared with objectives of
15.0 percent and 1.0 percent, respectively," he reported.
"Despite the sharp rise in interest rates throughout 1994, we
are pleased to have maintained our spreads while achieving record
sales. While 1995 will be a challenging year, we are well-
positioned to sustain our positive earnings momentum and achieve
our financial goals."
Annuity sales during 1994 climbed 43.3 percent to $1.6 billion
from the previous high of $1.1 billion in 1993. Assets at
December 31, 1994, totaled $8.0 billion, versus $6.4 billion at
year-end 1993.
Total life insurance premiums, including traditional and
universal life, rose 7.8 percent during 1994. Even stronger were
first-year and single life premiums, which increased 38.9
percent.
At year-end 1994 life insurance in force was $10.1 billion,
compared with $9.6 billion the year before.
"During 1994, we made significant strides expanding our
distribution channels by 33 percent to over 44,000 insurance
brokerage and career agents," Hubbell indicated. "We introduced
a variable annuity product in October, and although sales of $2.8
million are modest compared with our other products, we view this
as an important strategic product line for our company, agents
and policyholders."
"Operating results in 1994 also benefited from the company's
ongoing emphasis on expense management," he noted. General and
administrative expenses amounted to $47.4 million in 1994,
representing only 0.66 percent of average assets, a continuation
of a steady decline since 1988 when the percentage was 1.5.
"The nominal default rate of our investment portfolio improved
even further throughout the year, and we ended 1994 with no
defaults," Hubbell pointed out. The portfolio's estimated value
was equal to 94.8 percent of its carrying value at December 31,
1994.
Equitable of Iowa Companies is the holding company for
Equitable Life Insurance Company of Iowa, USG Annuity and Life
Company, Locust Street Securities and Equitable Investment
Services.
- -tables attached-
Equitable of Iowa Companies
CONSOLIDATED SUMMARY OF OPERATIONS
<TABLE>
<CAPTION>
Quarter Ended Twelve Months Ended
12/31/94 12/31/93 12/31/94 12/31/93
--------- --------- --------- ---------
(Thousands except per share data)
UNAUDITED
<S> <C> <C> <C> <C>
REVENUES
Traditional life insurance premiums $11,098 $11,418 $46,265 $46,870
Universal life and investment
product charges 11,505 9,535 43,767 34,281
Net investment income 141,849 116,871 524,411 434,069
Realized gains 2,640 17,279 19,697 41,985
Other income 4,278 4,057 17,520 15,763
--------- --------- --------- ---------
Total Revenues 171,370 159,160 651,660 572,968
EXPENSES
Insurance benefits 111,190 94,195 414,450 358,172
Underwiting, acquisition and
insurance expense 17,643 21,291 68,049 62,263
Interest expense 1,886 2,037 7,882 9,522
Other expenses 2,433 1,688 10,035 8,016
--------- --------- --------- ---------
Total Expenses 133,152 119,211 500,416 437,973
--------- --------- --------- ---------
38,218 39,949 151,244 134,995
Income taxes 13,312 14,185 52,921 47,965
Equity income (loss) 42 27 (39) 126
--------- --------- --------- ---------
Net income 24,948 25,791 98,284 87,156
========= ========= ========= =========
Average shares outstanding 31,664 30,952 31,613 29,540
PER SHARE DATA
Earnings per common share
--operating income 0.73 0.59 2.79 2.33
--realized gains (net of tax) 0.06 0.25 0.32 0.62
--------- --------- --------- ---------
--net income 0.79 0.84 3.11 2.95
========= ========= ========= =========
Dividends paid per common share 0.12 0.105 0.465 0.405
</TABLE>
Equitable of Iowa Companies
BUSINESS SUMMARY
<TABLE>
<CAPTION>
1994 1993
Per Per
$ Share $ Share
----------- ------ ----------- ------
(Thousands except per share data)
UNAUDITED
<S> <C> <C> <C> <C>
INCOME ANALYSIS
Quarter Ended - December 31
Operating income (1) $23,173 $0.73 $18,444 $0.59
Realized and prepayment gains 1,775 0.06 7,347 0.25
----------- ------ ----------- ------
NET INCOME 24,948 0.79 25,791 0.84
=========== ====== =========== ======
Twelve Months Ended - December 31
Operating income (1) $88,212 $2.79 $68,911 $2.33
Realized and prepayment gains 10,072 0.32 18,245 0.62
----------- ------ ----------- ------
NET INCOME 98,284 3.11 87,156 2.95
=========== ====== =========== ======
REALIZED & PREPAYMENT GAINS ANALYSIS
Quarter Ended - December 31
Realized gains $2,640 $17,279
Prepayment gains in investment
income 745 --
Related amort of DPAC (654) (5,975)
----------- -----------
2,731 11,304
Income taxes 956 3,957
----------- -----------
Total 1,775 $0.06 7,347 $0.25
Twelve Months Ended - December 31
Realized gains $19,697 $41,985
Prepayment gains in investment
income 1,778 --
Related amort of DPAC (6,210) (13,916)
----------- -----------
15,265 28,069
Income taxes 5,193 9,824
----------- -----------
Total 10,072 $0.32 18,245 $0.62
</TABLE>
Equitable of Iowa Companies
BUSINESS SUMMARY (continued)
<TABLE>
<CAPTION>
1994 1993
Per Per
$ Share $ Share
----------- ------ ----------- ------
(Thousands except per share data)
UNAUDITED
<S> <C> <C>
PRODUCT SUMMARY
Twelve Months Ended - December 31
Average yield on assets (2) 8.6% 9.1%
Average interest credited rate (2) 5.8% 6.6%
Total premium
Traditional life $46,265 $46,870
Universal life and current
interest 68,463 59,605
Fixed annuities 1,615,768 1,117,255
Variable annuities 2,808 --
----------- -----------
1,733,304 1,223,730
New life insurance written
(at face amount) 1,417,382 1,416,576
Life insurance in force
(at face amount) 10,146,940 9,617,881
<FN>
1) Operating income equals income from continuing operations before
cumulative effect of change in accounting principle, excluding,
net of tax, prepayment gains on mortgage-backed securities, realized
gains/losses and related amortization of deferred acquisition costs.
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>
December 31 December 31
1994 1993
------------ ------------
(Thousands except per share data)
UNAUDITED
<S> <C> <C>
ASSETS
Cash and Investments - Available
for sale $865,114 $72,892
Investments - Held to maturity 6,199,121 5,622,677
Accrued investment income 105,959 92,473
Deferred policy acquisition costs 607,626 451,180
Property and equipment 7,843 7,431
Other assets 94,967 90,754
Separate account assets 84,963 94,028
------------ ------------
Total Assets 7,965,593 6,431,435
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Policyholder liabilities $7,062,084 $5,624,206
Long-term debt -- 50,214
Commercial paper notes 90,450 34,000
Other liabilities 140,766 101,025
Separate account liabilities 84,963 94,028
------------ ------------
Total Liabilities 7,378,263 5,903,473
Stockholders' equity 587,330 527,962
------------ ------------
Total Liabilities and
Stockholders' Equity 7,965,593 6,431,435
============ ============
Number of shares outstanding 31,678 31,505
Book value per share at December 31st $18.54 $16.76
</TABLE>
Investments - Insurance Operations December 31, 1994
<TABLE>
<S> <C>
Investment portfolio
Cash & short-term inv. 0.5%
Governments and Agency MBS 5.3
Investment grade bonds 47.3
Investment grade MBS 31.5
Below investment grade securities 5.9
Mortgages 9.0
-----
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 0.0% of Bonds 0.0% of Portfolio
Mortgages 0.0% of Mortgages 0.0% of Portfolio
____
Total defaults 0.0% of Portfolio
</TABLE>
