SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the Fiscal Year ended December 31, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
For the Transition Period from to
Commission File Number 2-40764
KANSAS CITY LIFE INSURANCE COMPANY
(Exact Name of Registrant as Specified in its Charter)
Missouri 44-0308260
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
3520 Broadway, Kansas City, Missouri 64111-2565
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: 816-753-7000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of Each Exchange on
Title of Each Class Which Registered
None None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
(Title of Class)
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Indicate by check mark whether the Registrant (1) has filed all reports re-
quired 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
As of February 29, 1996, 6,184,705 shares of the Company's capital stock
par value $2.50 were outstanding, and the aggregate market value of the common
stock (based upon the average bid and asked price according to Company records)
of Kansas City Life Insurance Company held by non-affiliates was approximately
$117,477,772.
Part II
Documents Incorporated by Reference
Item 5: Market for Registrant's Common Page 33 of Annual Report to
Equity and Related Stockholder Shareholders for the year
Matters. ended December 31, 1995.
Item 6: Selected Financial Data. Page 12 of Annual Report to
Shareholders for the year
ended December 31, 1995.
Item 7: Management's Discussion Pages 11 through 13 of Annual
and Analysis of Financial Report to Shareholders for
Condition and Results of the year ended December 31,
Operations. 1995.
Item 8: Financial Statements and Pages 14 through 27 of Annual
Supplementary Data. Report to Shareholders for
the year ended December 31,
1995.
Part IV
Index to Exhibits Pages 14 and 15
PART I
Item 1. BUSINESS
Kansas City Life Insurance Company (KCL) was incorporated under the
assessment laws of Missouri in 1895 as the Bankers Life Association. In 1900,
its present corporate title was adopted and it was reorganized as a legal
reserve company in 1903. The Company operates nationwide, being licensed in 48
states and the District of Columbia.
The Company primarily operates in a single business segment: individual
life insurance and annuity products. A general agency distribution system is
employed. Nearly 85% of statutory premiums are derived from individual life
insurance and annuities on a consolidated basis. Interest sensitive products,
universal life insurance and flexible annuities, comprise the vast majority of
these premiums. Individual life insurance and annuities accounted for 92% of new
premiums in 1995. KCL introduced its first variable annuity product in late 1995
and will issue a variable universal life product in 1996.
KCL has two wholly owned life insurance subsidiaries, Sunset Life
Insurance Company of America (Sunset) and Old American Insurance Company (OAIC).
Sunset was acquired in 1974. Headquartered in Olympia, Washington, Sunset
operates in 21 states, principally west of the Mississippi. California provides
one-third of its statutory premiums. The Company offers products similar to
KCL's and sells through personal producing general agents. OAIC was acquired in
1991 and its operations, excluding marketing, have been merged into KCL's home
office and administrative and accounting systems. OAIC operates in 46 states,
primarily selling relatively small policies to the senior market to cover
funeral and other final expenses.
Kansas City Life and its subsidiaries are subject to state regulations in
their states of domicile and in the states in which they do business. Although
the federal government generally does not regulate the business of insurance,
federal initiatives often have an impact on the business in a variety of ways
including the taxation of insurance companies and the tax treatment of insurance
products.
Kansas City Life and OAIC respectively have 462 and 101 full time
employees who are located in KCL's home office. Sunset has 125 full time
employees located in Olympia, Washington.
The Company is engaged in a crowded, competitive industry, competing with
1,500 to 2,000 other life insurance companies in the United States. The
industry is highly competitive with respect to pricing, selection of products
and quality of service. No single competitor nor any small group of competitors
dominates any of the markets in which the Company operates.
Item 2. PROPERTIES
Kansas City Life's home office is located at 3520 Broadway in Kansas City,
Missouri. The Company owns and wholly occupies two five story buildings on an
eight acre site.
Sunset owns and wholly occupies a two story office business at 3200
Capitol Boulevard in Olympia, Washington. The building is situated on four
acres of land.
Kansas City Life owns various other properties held for investment.
Item 3. LEGAL PROCEEDINGS
In April, 1994, an Oklahoma jury returned a $10.7 million verdict against
the Company, consisting of actual and punitive damages. The case, Nita Charlene
Pelter Cox and Verna Leanne Pelter Graybill, Personal Representatives of the
Estate of Leora Pearl Pelter, Deceased, Plaintiffs, vs. Kansas City Life
Insurance Company and Billy D. Stearman, Defendants, arose out of certain
alleged actions by Stearman, one of the Company's agents. The Plaintiffs allege
that Stearman induced a policyowner to sign a beneficiary designation form
naming the agent's wife as beneficiary for $25,000 of a $100,000 death benefit.
The Company appealed the adverse jury verdict citing that the trial court
committed numerous errors in the conduct of the trial, in determination of
issues of evidence, in rulings on dispositive motions, and in jury instructions.
On January 16, 1996, a division of the Oklahoma Appellate Court issued an
opinion affirming a judgment of $1.3 million. While the opinion substantially
reduced the jury verdict, the Company believes this award should be further
reduced and has filed a petition for certiorari with the Oklahoma Supreme Court.
The Plaintiffs have also filed a petition for certiorari seeking reinstatement
of the jury verdict. Management believes that damages, if any, related to this
matter would not have a material adverse effect on the Company's consolidated
results of operations and financial position.
In addition to the above case, the Company and certain of its subsidiaries
are Defendants in various lawsuits involving claims and disputes with
policyowners which often include claims seeking punitive damages. Some of these
lawsuits arise in jurisdictions such as Alabama that permit punitive damages
disproportionate to the actual damages alleged. Although no assurances can be
given and no determinations can be made at this time as to the outcome of any
particular lawsuit or proceeding, the Company and its subsidiaries believe that
there are meritorious defenses for all of these claims and are defending them
vigorously. Management believes that the amounts that would ultimately be paid,
if any, would have no material adverse effect on the Company's consolidated
results of operations and financial position.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Incorporated by Reference.
Item 6. SELECTED FINANCIAL DATA
Incorporated by Reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Incorporated by Reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Incorporated by Reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Not Applicable.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following information, as of December 31, 1995, is provided with
respect to each Director:
<TABLE>
<CAPTION>
Term as
Director Served as
Expires Other Positions Director
Name of Director Age in April with the Company From
<S> <C> <C> <C> <C>
Kathryn A. Bixby-Haddad 46 1996 None 1984
(6)
Daryl D. Jensen (3)(6) 57 1996 None 1978
Ilus W. Davis (4)(5)(6) 78 1996 None 1985
Webb R. Gilmore (3)(6) 51 1996 None 1990
C. John Malacarne 54 1996 Vice President, 1991
(1)(2)(3) General Counsel
and Secretary
W. E. Bixby, III (3)(6) 37 Nominee None --
Nancy Bixby Hudson (3)(6) 44 Nominee None --
J. R. Bixby (1)(2) 70 1997 Chairman of the Board 1957
Robert Philip Bixby 42 1997 Senior Vice President, 1985
(1)(2) Operations
Larry Winn, Jr. 76 1997 None 1985
(2)(4)(5)(6)
Richard L. Finn 54 1997 Senior Vice President, 1983
(1)(2) Finance
Warren J. Hunzicker, M.D. 75 1997 None 1989
(6)
W. E. Bixby (1)(2) 64 1998 Vice Chairman of the 1966
Board and President
David D. Dysart (2)(6) 67 1998 None 1972
Francis P. Lemery 56 1998 Senior Vice President 1985
(1)(2) and Actuary
Michael J. Ross 53 1998 None 1972
(2)(4)(5)(6)
Jack D. Hayes (1) 55 1998 Senior Vice President, 1995
Marketing
</TABLE>
(1) See below with respect to the business experience of executive officers of
the Company.
(2) Member of Executive Committee.
(3) Subject to the approval of the shareholders at the annual meeting of
shareholders to be held on April 18, 1996, will be elected for three year
term ending in 1998.
(4) Member of Audit Committee.
(5) Member of Compensation Committee.
(6) Mrs. Bixby-Haddad was elected Assistant Vice President of the Company in
1980 and served as Vice President, Compensation from 1981 until 1985.
W. E. Bixby, III was elected Assistant Vice President of the Company in
1985, Vice President, Marketing in 1980, Vice President, Marketing
Operations in 1992, and President of Old American, a subsidiary, in 1996.
He also serves as a Director of Sunset Life and Old American,
subsidiaries. Mr. Davis is a partner in the law firm of Armstrong,
Teasdale, Schlafly and Davis, is a former Mayor of Kansas City, Missouri,
and also serves as a Director of Boatmen's Bancshares, Inc., St. Louis,
Missouri. Mr. Dysart served as Executive Vice President from 1980 until
he retired in January, 1987. Mr. Gilmore is a partner in the law firm of
Gilmore & Bell. Nancy Bixby Hudson has served as a Director of Sunset
Life, a subsidiary, since 1986. Dr. Hunzicker was elected by the Board of
Directors to an unexpired term in 1989. Dr. Hunzicker served as the
Company's Medical Director from 1987 to 1989; he formerly served as a
member of the Company's Board of Directors from 1977 to 1980. Mr. Jensen
has been President of Sunset Life Insurance Company of America, a
subsidiary of Registrant, since 1973. Mr. Ross has been President of
Jefferson Bank and Trust Company, St. Louis, Missouri, since 1971 and was
elected Chairman of the Board in 1983. Mr. Winn is retired as the Kansas
Third District Representative to the U.S. Congress.
Name, Age and Business Experience
Position During Past 5 Years
J. R. Bixby, 70 Chairman since 1972; President from 1964 until he
Chairman of the Board retired in April, 1990; responsible for overall
corporate policy. Director of Sunset Life, a
subsidiary.
W. E. Bixby, 64 Vice Chairman of the Board since 1974; elected
Vice Chairman of the Executive Vice President in January, 1987 and
President and CEO in April, 1990; primarily
responsible for the operation of the Company.
Chairman of the Board of Sunset Life and President
and Chairman of the Board of Old American,
subsidiaries.
Robert Philip Bixby, 42 Elected Assistant Secretary in 1979; Assistant Vice
Senior Vice President, President in 1982; Vice President in 1984 and to
Operations present position in 1990; responsible for Customer
Services, Computer Services, Claims and Premium
Collection.
Richard L. Finn, 54 Elected Vice President in 1976; Financial Vice
Senior Vice President, President in 1983 and to present position in 1984;
Operations chief financial officer and responsible for
investment of the Company's funds, accounting and
taxes. Director, Vice President and Chief
Financial Officer of Old American, a subsidiary.
Name, Age and Business Experience
Position During Past 5 Years
Jack D. Hayes, 55 Elected Senior Vice President, Marketing in
Senior Vice President, February, 1994; responsible for Marketing,
Marketing Marketing Administration, Communications and Public
Relations. Served as Executive Vice President and
Chief Marketing Officer of Fidelity Union Life,
Dallas, Texas, from June, 1981 to January, 1994.
Francis P. Lemery, 56 Elected Vice President in 1979; Vice President and
Senior Vice President Actuary in 1980, and to present position in 1984;
Actuary responsible for Group Insurance Department,
Actuarial Services, State Compliance, New Business
and Underwriting. Director of Sunset Life and Old
American, subsidiaries.
Robert C. Miller, 49 Elected Assistant Auditor in 1972; Auditor in 1973;
Senior Vice President, Vice President and Auditor in 1987; and to present
Administrative Services position in 1991. Responsible for Human Resources
and Home Office building and maintenance.
John K. Koetting, 50 Elected Assistant Controller in 1975 and to present
Vice President and position in 1980; chief accounting officer;
Controller responsible Controller for all corporate accounting
reports. Director and Vice President and
Controller of Old American, a subsidiary.
C. John Malacarne, 54 Elected Associate General Counsel in 1976; General
Vice President, General Counsel in 1980; Vice President and General Counsel
Counsel and Secretary in 1981; and to present position in 1991.
Responsible for Legal Department, Office of the
Secretary, Stock Transfer Department and Market
Compliance. Director of Sunset Life and Director
and Secretary of Old American, subsidiaries.
(d) Joseph R. Bixby, Chairman of the Board, and W. E. Bixby, Vice
Chairman of the Board and President, are brothers. Kathryn A. Bixby-
Haddad and Nancy Bixby Hudson are the daughters of Joseph R. Bixby;
Robert Philip Bixby and Walter E. Bixby, III are the sons of W. E.
Bixby.
(e) See Business Experience During Past 5 Years above.
(f) There have been no events under any bankruptcy act, no criminal pro-
ceedings and no judgments or injunctions material to the evaluation
of the ability and integrity of any Director, nominee or executive
officer during the past five years.
Item 11. EXECUTIVE COMPENSATION
(a) Compensation
The following table sets forth information concerning cash compensation
paid or accrued by the Company and its subsidiaries to the Chief Executive
Officer and the other four most highly paid executive officers as of December
31, 1995 for the fiscal years ending December 31, 1995, 1994 and 1993.
SUMMARY COMPENSATION TABLE
<TABLE>
Annual Compensation
<CAPTION>
Other All
Annual Other
Compen- Compen-
sation sation
Name and Principal Position Year Salary($) Bonus($) $ $
<S> <C> <C> <C> <C> <C>
W. E. Bixby, Vice Chairman of the 1995 396,780 143,344 7,000 52,903
Board, President and CEO, Kansas 1994 377,880 121,921 7,000 50,350
City Life; Chairman of the Board, 1993 356,460 71,692 7,000 47,360
Sunset Life, and Chairman of the
Board, Old American, subsidiaries.
R. L. Finn, Senior Vice President, 1995 193,380 52,231 5,000 21,835
Finance and Director, Kansas City 1994 184,140 43,672 5,000 20,778
Life; Director, Old American, a 1993 174,120 22,145 5,000 19,611
subsidiary.
F. P. Lemery, Senior Vice Presi- 1995 193,380 52,232 7,000 23,239
dent and Actuary and Director, 1994 184,140 40,449 7,000 22,452
Kansas City Life; Director, 1993 174,120 22,165 7,000 19,508
Sunset Life and Old American,
subsidiaries.
D. D. Jensen, Director, Kansas 1995 176,190 35,275 6,000 21,133
City Life; Vice Chairman of 1994 168,750 39,020 6,000 19,944
the Board and President, Sunset 1993 170,788 20,343 6,000 19,085
Life, a subsidiary.
J. D. Hayes, Senior Vice Presi- 1995 169,620 89,131 3,000 19,215
dent, Marketing and Director, 1994 148,060 35 3,000 55,910
Kansas City Life.
</TABLE>
ALL OTHER COMPENSATION INCLUDES THE FOLLOWING:
J. D. Hayes began employment with the Company on February 1, 1994. Per-
quisites and other personal benefits including $49,895 for moving expenses are
included in all other compensation for 1994.
The Company has a contributory Internal Revenue Code Section 401(k)
savings and investment plan. Directors and officers who are full time employees
of the Registrant or its subsidiaries participate in the plan on the same basis
as all other employees. Employees may contribute from 1% to 10% of their
monthly base salary. Highly compensated employees are limited to contributions
of 6%. The Company contributes an amount equal to the employee contributions in
the form of capital stock of the Company. The total amount contributed to the
plan for the accounts of the named individuals for fiscal years 1993, 1994 and
1995 are respectively as follows: W. E. Bixby, $8,994, $9,000, 9,000; R. L.
Finn, $8,706, $9,000, $9,000; F. P. Lemery, $8,706, $9,000, $9,000; D. D.
Jensen, $8,537, $9,000, $9,000; J. D. Hayes, $0, $0, $9,000.
The Company has adopted a nonqualified deferred compensation plan for
approximately 74 highly compensated officers and employees. It is similar to
the Company's 401(k) plan. Participants contribute amounts to this plan that
they cannot contribute to the 401(k) plan up to a total of 10% of their monthly
salary and the Company contributes an equal amount. The amount contributed to
the plan for fiscal years 1993, 1994 and 1995 respectively for the accounts of
the named individuals are as follows: W. E. Bixby, $26,652, $28,788, $30,678;
R. L. Finn, $8,706, $9,414, $10,338; F. P. Lemery, $8,706, $9,414, $10,338;
D. D. Jensen, $8,537, $7,875, $8,619; J. D. Hayes, $0, $0, $6,549.
The Company provides yearly renewable term insurance to its employees in
the amount of 2 1/2 times their annual salary. Directors and officers who are
full time employees participate in the program on the same basis as all other
employees. Premiums paid for the named individuals for fiscal years 1993, 1994
and 1995 respectively are as follows: W. E. Bixby, $11,714, $12,562, $13,225;
R. L. Finn, $2,199, $2,364, $2,497; F. P. Lemery, $2,096, $4,038, $3,901; D. D.
Jensen, $2,010, $3,069, $3,514; J. D. Hayes, $0, $2,046, $3,666.
(f) Defined Benefit or Actuarial Plan Disclosure
PENSION PLAN TABLE
The following table illustrates the possible annual pension benefits upon
completion of the indicated years of service with the five year average salary
for all officers and employees. Benefits are calculated on a straight life
annuity basis. The Social Security offset and benefit has been estimated.
<TABLE>
<CAPTION>
Compensation Years of Service SS**
10 20 30 40
<C> <C> <C> <C> <C> <C>
$ 75,000 $ 18,750 $ 37,500 $ 52,500 $ 52,715* $14,571
100,000 25,000 50,000 70,000 72.715* 14,571
125,000 31,250 62,500 87,500 92,715* 14,571
150,000 37,500 75,000 105,000 112,715* 14,571
200,000 50,000 100,000 140,000 152,715* 14,571
250,000 62,500 125,000 175,000 192,715* 14,571
300,000 75,000 150,000 210,000 232,715* 14,571
350,000 87,500 175,000 245,000 272,715* 14,571
400,000 100,000 200,000 280,000 312,715* 14,571
450,000 112,500 225,000 315,000 352,715* 14,571
500,000 125,000 250,000 350,000 392,715* 14,571
</TABLE>
*Maximum pension based on an estimate of Social Security.
**Estimated annual Social Security benefit at age 65.
The Company has a noncontributory defined benefit pension plan which
covers all full time employees age 21 and over. A participant's retirement
benefit is determined by multiplying his or her highest average annual salary
for five consecutive years, from the last ten years of his or her employment, by
a percentage determined from the participant's total years of service from that
participant's 21st birthdate. The participant's percentage is determined by
multiplying 2 1/2% for each of the participant's years of service up to the
first twenty years, 2% for each year of service for the next ten years, and 1%
for each year of the next ten. A participant's benefit may not exceed 80% of
such average salary reduced by 1/2 of his or her Social Security benefit.
Early retirement benefits are available after age 55, depending upon years of
service and age. Benefits are fully vested after five years of service
following a participant's 18th birthdate.
A participant's base salary not to exceed $150,000 (as adjusted for cost
of living) commencing January 1, 1994, was used to determine compensation under
the plan. For the individuals named in the Cash Compensation Table, the years
of service covered by the plan for the year ended December 31, 1995, were: W.
E. Bixby, 38 years; R. L. Finn, 21 years; F. P. Lemery, 35 years; D. D. Jensen,
29 years; J. D. Hayes, 2 years.
The Company has adopted an unfunded excess benefit plan which covers any
employee who is an active participant in the noncontributory defined benefit
pension plan and whose pension benefit under that plan would exceed the maximum
benefit limited under Internal Revenue Code Section 415. A participant under
this plan is entitled to a monthly benefit of the difference between the maxi-
mum monthly normal, early, or deferred vested retirement benefit determined
without regard to the Internal Revenue Code Section 415 limitation and the
monthly equivalent of the maximum benefit permitted by Internal Revenue Code
Section 415.
(g) Compensation of Directors
Outside Directors are paid $4,000 quarterly; $2,000 if they attend Special
Board Meetings; $1,000 if they attend Executive Committee Meetings; $500 if they
attend all other Committee Meetings. Inside Directors are paid $1,000 quarterly
and $400 if they attend Special Board Meetings. J. R. Bixby, Chairman of the
Board, is paid $30,000 quarterly. Directors of Sunset Life, a subsidiary, are
paid $500 quarterly and Directors of Old American are paid $250 quarterly.
Directors fees are included in the Compensation Table.
(h) Employment Contracts and Termination of Employment and Change in
Control Arrangements
There are no employment contracts between the Company and its executive
officers. The Company's benefit plans contain typical provisions applicable to
all employees for termination of employment.
(j) Additional Information with Respect to Compensation Committee
The members of the Compensation Committee are Ilus W. Davis, Michael J.
Ross and Larry Winn, Jr.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners
The following sets forth information as of February 29, 1996, concerning
holding of voting securities of the Company's $2.50 par value capital stock,
which is the Company's only class of voting stock.
Name and Address of Beneficial Owners:
John K. Koetting, Robert C. Miller
and Ronald E. Hiatt, Trustees of the
Kansas City Life Insurance Company
Savings and Investment Plan
3520 Broadway, Kansas City, MO 64111-2565
Amount and Nature of Ownership* Percent of Class
437,504 shares 7.0
John K. Koetting, Robert C. Miller
and Ronald E. Hiatt, Trustees of the
Kansas City Life Employee Stock Plan
3520 Broadway, Kansas City, MO 64111-2565
Amount and Nature of Ownership* Percent of Class
44,219 shares .7
*Trustees have the power to sell plan assets. Participants may instruct
the Trustees how to vote their shares.
Angeline I. Bixby
c/o William A. Hirsch, Esq.
Morrison & Hecker
2600 Grand Avenue, Kansas City, MO 64108
Amount and Nature of Ownership** Percent of Class
341,484 shares 5.5
**Includes 165,035 shares in the Walter E. Bixby Descendants Trust.
Angeline I. Bixby, Robert Philip Bixby and Walter E. Bixby, III are Co-
Trustees. The Trustees share voting and investment power. The terms of
the Trust restrict the transfer of the shares.
Angeline I. Bixby; Joseph R. Bixby; Margie Morris Bixby; Kathryn A. Bixby-
Haddad; Kathryn A. Bixby-Haddad as Custodian for Kellie S. Curtis; Sorouch
Haddad; Nancy Bixby Hudson; Robert Philip Bixby; Walter E. Bixby, III;
James R. Gammon as Trustee of the Walter E. Bixby Family Trust; Robert
Philip Bixby, Angeline I. Bixby, and Walter E. Bixby, III, as Co-Trustees
of the Walter E. Bixby Descendants Trust; W. E. Bixby; W. E. Bixby as
Trustee for Trust B created pursuant to the Will of Edwin Bixby and Trust
B created pursuant to the Will of Angeline Reynolds Bixby were members of
a group that agreed to act together for the purpose of holding Common
Stock, and the Common Stock ownership of such group was reflected in a
Schedule 13D filed with the Commission on November 23, 1988 and
subsequently amended. The agreement that documented the various rights
and obligations among all of the members of that group expired May 20,
1990.
Nonetheless, Ms. Bixby and other former members of the Bixby Group in sub-
sequent filings with the Commission have indicated that they currently share the
expectation of many members of their extended family that a majority of the
Common Stock will continue to be beneficially owned by such individuals or be
under the control of trustees under certain testamentary or inter vivos trusts
for the benefit of such individuals.
(b) Security Ownership of Management
The names of the nominees proposed by management for election to three
year terms at the annual meeting to be held April 18, 1996 are set forth as
follows:
<TABLE>
<CAPTION>
Served Shares of
as a Record and
Principal Director Beneficially
Nominee Occupation Since Owned Percent
of Class
<S> <C> <C> <C> <C>
C. John Malacarne Vice President, 1991 10
3520 Broadway General Counsel 5,459(2) *
Kansas City, MO and Secretary
Daryl D. Jensen Vice Chairman of the 1978 24
2143 Old Port Dr. Board and President, 6,968(2) *
Olympia, WA Sunset Life Insurance
Company of America,
Olympia, WA
Webb R. Gilmore Partner - 1990 220 *
Attorney at Law Gilmore & Bell
833 Westover Rd.
Kansas City, MO
</TABLE>
<TABLE>
<CAPTION>
Served Shares of
as a Record and
Principal Director Beneficially Percent
Nominee Occupation Since Owned of
Class
<S> <C> <C> <C> <C>
W. E. Bixby, III President, Old -- 176,399 5.6
3520 Broadway American Insur- 2,129(2)
Kansas City, MO ance Company, 165,035(3)
Kansas City, MO 1,886(4)
Nancy Bixby Hudson Investor -- 165,783 2.7
926 Hobson
Lander, WY
</TABLE>
The following Directors were elected April 21, 1994 for a three year term:
<TABLE>
<S> <C> <C> <C>
Joseph R. Bixby Chairman of the 1957 1,484,611(1) 24.0
3520 Broadway Board
Kansas City, MO
Richard L. Finn Senior Vice Presi- 1983 12
3520 Broadway dent, Finance 6,008(2) *
Kansas City, MO
Robert Philip Bixby Senior Vice Presi- 1985 175,989
3520 Broadway dent, Operations 5,439(2) 5.7
Kansas City, MO 165,035(3)
8,232(5)
Larry Winn, Jr. Retired Represent- 1985 166 *
8420 Roe Ave. ative, U.S. Congress
Prairie Village, KS
Warren J. Hunzicker, M.D. Director 1989 150 *
1248 Stratford Rd.
Kansas City, MO
</TABLE>
The following Directors were elected April 20, 1995 for a three year term:
<TABLE>
<S> <S> <C> <C> <C>
W. E. Bixby Vice Chairman of 1966 1,156,659 19.1
3520 Broadway the Board and 23,864(2)
Kansas City, MO President
David D. Dysart Director 1972 9,000 *
HCR 69, Box 395
Sunrise Beach, MO
Francis P. Lemery Senior Vice Presi- 1985 708 *
3520 Broadway dent and Actuary 6,968(2)
Kansas City, MO
Michael J. Ross Chairman of the 1972 300 *
12826 Dubon Lane Board and President,
St. Louis, MO Jefferson Bank and
Trust Company,
St. Louis, MO
Jack D. Hayes Senior Vice Presi- 1995 1,000 *
3520 Broadway dent, Marketing 227(2)
Kansas City, MO
</TABLE>
<TABLE>
<CAPTION>
Served Shares of as a Record and
Principal Director Beneficially Percent
Nominee Occupation Since Owned of
Class
The following Directors' terms will expire April 18, 1996:
<S> <C> <C> <C> <C>
Kathryn A. Bixby-Haddad Investor 1984 170,776(1) 3.2
2517 W. 118th St. 30,000(6)
Leawood, KS
Ilus W. Davis Partner - Armstrong, 1985 1,000 *
Attorney at Law Teasdale, et al
1001 W. 59th Terr.
Kansas City, MO
All Directors, executive officers
and their spouses (also includes all
shares held by Trustees of Company
benefit plans and shares held by the
Bixby Family and related Trusts) 4,206,132 68.0
</TABLE>
*Less than 1%.
(1) Includes shares owned by the spouses of these Directors: Mr. Joseph R.
Bixby 900; Mrs. Bixby-Haddad 2,847. Beneficial ownership of these shares
is disclaimed.
(2) Approximate vested beneficial interest in shares held by the Trustees of
Kansas City Life Insurance Company employee benefit plans. Participants
in the plans may instruct the Trustees how to vote those shares held in
their account.
(3) Shares in the Walter E. Bixby Descendants Trust. Robert Philip Bixby,
Walter E. Bixby, III and Angeline I. Bixby are Co-Trustees. The Trustees
share voting and investment power. The terms of the trust restrict
transferring shares.
(4) Shares as to which W. E. Bixby, III is Custodian for his nephew under
Missouri Uniform Gifts to Minors law.
(5) Shares as to which Robert Philip Bixby is Custodian for minor nieces and
nephews under the Missouri Uniform Gifts to Minors law.
(6) Shares as to which Mrs. Kathryn A. Bixby-Haddad is Custodian for her
niece, Kellie Curtis, and has voting and investment power. The terms of
the deed of gift restrict the transfer of these shares.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K
(a)(1) Financial Statements
The following financial statements of Kansas City Life Insurance Company
are incorporated by reference from the Company's Annual Report to Shareholders
for the year ended December 31, 1995 at the following pages:
Page
Consolidated Income Statement - Years ended
December 31, 1995, 1994 and 1993 . . . . . . . . . . . . . . . 14
Consolidated Balance Sheet -
December 31, 1995 and 1994 . . . . . . . . . . . . . . . . . . 15
Consolidated Statement of Stockholder Equity -
Years ended December 31, 1995, 1994 and 1993 . . . . . . . . . 16
Consolidated Statement of Cash Flows -
Years ended December 31, 1995, 1994 and 1993 . . . . . . . . . 17
Notes to Consolidated Financial Statements . . . . . . . . . . . 18-26
Report of Independent Auditors . . . . . . . . . . . . . . . . . 27
(a)(2) Supplementary Data and Financial Statement Schedules
Schedules are attached hereto at the following pages:
Page
I - Summary of Investments - Other than Investments
in Related Parties, December 31, 1995 . . . . . . . . . 17
II - Condensed Financial Information of Registrant,
Years ended December 31, 1995, 1994 and 1993 . . . . . . 18-20
III - Supplementary Insurance Information, Years ended
December 31, 1995, 1994 and 1993 . . . . . . . . . . . . 21
V - Valuation and Qualifying Accounts, Years ended
December 31, 1995, 1994 and 1993 . . . . . . . . . . . . 21
All other schedules are omitted as the required information is inapplicable or
the information is presented in the financial statements or related notes.
(b) Reports on Form 8-K
None.
(c) Exhibits
Exhibit
Number: Basic Documents:
3(a) 1986 Restatement of Articles of Incorporation. [Filed as
Exhibit 3(a) to the Company's 10-K Report for 1986 and
incorporated herein by reference]
3(b) Bylaws as amended October 26, 1986. [Filed as Exhibit
3(b) to the Company's 10-K Report for 1986 and
incorporated herein by reference]
3(c) Specimen copies of Capital Stock Certificates, (a) less
than 100 shares; (b) 100 shares; and (c) unlimited.
[Filed as Exhibit 3(d) to the Company's 10-K Report for
1985 and in-corporated herein by reference]
10(a) Fourth Amendment, Kansas City Life Deferred Compensation
Plan. [Filed as Exhibit 10(a) to the Company's 10-K
Report for 1993 and incorporated herein by reference]
10(b) Twenty-first Amendment, Kansas City Life Insurance Company
Savings and Investment Plan. [Filed as Exhibit 10(b) to
the Company's 10-K Report for 1994 and incorporated herein
by reference]
Exhibit
Number: Basic Documents:
10(c) Ninth Amendment, Kansas City Life Employee Stock Plan.
[Filed as Exhibit 10(c) to the Company's 10-K Report for
1994 and incorporated herein by reference]
10(d) Kansas City Life Excess Benefit Plan. [Filed as Exhibit
10(e) to the Company's 10-K Report for 1990 and
incorporated herein by reference]
11 Computation of Per Share Earnings.
13 Annual Report to Shareholders for the year ended December
31, 1995.
21 Subsidiaries.
23(a) Consent of Independent Auditors.
23(b) Consent of Independent Auditors.
27 Financial Data Schedule.
99(a) Form 11-K for the Kansas City Life Insurance Company
Savings and Investment Plan for the year 1995 and filed as
a part hereof and incorporated herein by reference.
99(b) Prospectus for Kansas City Life Insurance Company Savings
and Investment Plan.
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.
KANSAS CITY LIFE INSURANCE COMPANY
By: /s/ John K. Koetting
John K. Koetting
Vice President and Controller
(Principal Accounting Officer)
Date: March 28, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the Regis-
trant and in the capacities and on the dates indicated.
By: /s/ W. E. Bixby By: /s/ Richard L. Finn
W. E. Bixby Richard L. Finn
Director; Vice Chairman of the Director; Senior Vice
Board and President President, Finance
(Principal Executive Officer) (Principal Financial Officer)
Date: March 28, 1996 Date: March 28, 1996
By: /s/ J. R. Bixby By: /s/ Francis P. Lemery
J. R. Bixby Francis P. Lemery
Director; Chairman of Director; Senior Vice
the Board President and Actuary
Date: March 28, 1996 Date: March 28, 1996
By: /s/ Warren J. Hunzicker By: /s/ Daryl D. Jensen
Warren J. Hunzicker, M.D. Daryl D. Jensen
Director Director
Date: March 28, 1996 Date: March 28, 1996
By: /s/ C. John Malacarne By: /s/ R. Philip Bixby
C. John Malacarne R. Philip Bixby
Director; Vice President, Director; Senior Vice
General Counsel and Secretary President, Operations
Date: March 28, 1996 Date: March 28, 1996
Schedule I
<TABLE>
KANSAS CITY LIFE INSURANCE COMPANY
SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS IN RELATED PARTIES
December 31, 1995
<CAPTION>
Amount at
Which Shown
Fair in Balance
Type of Investment Cost Value Sheet
(in thousands)
<S> <C> <C> <C> <C>
Fixed maturity securities,
available-for-sale:
Bonds:
United States government and government
agencies and authorities $ 138,372 141,599 141,599
Mortgage-backed securities 242,187 251,276 251,276
States, municipalities and political
subdivisions 46,369 46,479 46,479
Public utilities 279,156 285,185 285,185
All other corporate bonds 884,821 909,783 909,783
Redeemable preferred stocks 13,510 13,352 13,352
Total 1,604,415 1,647,674 1,647,674
Equity securities, available-for-sale:
Common stocks 187 72 72
Nonredeemable preferred stocks 62,165 70,765 70,765
Total 62,352 70,837 70,837
Fixed maturity securities,
held-to-maturity:
Bonds:
United States government and government
agencies and authorities 3,742 4,075 3,742
States, municipalities and political
subdivisions 2,225 2,394 2,225
Public utilities 175,700 188,608 175,700
All other corporate bonds 138,727 144,834 138,727
Total 320,394 339,911 320,394
Mortgage loans on real estate 235,213 235,213
Real estate, net 48,542 48,542
Real estate joint ventures 36,103 36,103(1)
Policy loans 94,312 94,312
Other investments 36,898 36,898
Total investments $2,438,229 2,489,973
<FN>
(1)The carrying value of the real estate joint ventures reflects adjustments for
the Company's equity in the results of the operations of the joint ventures.
</FN>
</TABLE>
Schedule II
KANSAS CITY LIFE INSURANCE COMPANY
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
BALANCE SHEET
<TABLE>
<CAPTION>
December 31
1995 1994
(in thousands)
<S> <C> <C>
Assets
Investments:
Fixed maturity securities:
Available for sale, at fair value $1,246,684 986,011
Held to maturity, at amortized cost 218,166 276,084
Equity securities available for sale, at fair value:
Investments in affiliates 190,083 159,893
Other 56,807 65,968
Mortgage loans on real estate, net 207,465 236,391
Real estate, net 47,976 52,300
Real estate joint ventures 32,272 22,285
Policy loans 75,305 77,840
Short-term 26,966 16,534
Total investments 2,101,724 1,893,306
Deferred acquisition costs 90,296 98,431
Other assets 88,650 84,959
Separate account assets 1,264 -
Total assets $2,281,934 2,076,696
Liabilities and stockholders' equity
Future policy benefits $ 452,332 452,509
Accumulated contract values 1,206,233 1,155,796
Other liabilities 164,978 124,696
Separate account liabilities 1,264 -
Total liabilities 1,824,807 1,733,001
Stockholders' equity:
Capital stock 23,121 23,121
Paid in capital 13,039 11,847
Unrealized gains (losses) on securities
available for sale and equity securities, net 29,740 (51,345)
Retained earnings including $85,213,000 undis-
tributed earnings of affiliates ($79,495,000 - 1994) 477,826 446,149
Less treasury stock, at cost (86,599) (86,077)
Total stockholders' equity 457,127 343,695
Total liabilities and stockholders' equity $2,281,934 2,076,696
</TABLE>
The above condensed financial statement should be read in conjunction with the
consolidated financial statements and notes thereto of Kansas City Life
Insurance Company.
Schedule II (continued)
KANSAS CITY LIFE INSURANCE COMPANY
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
INCOME STATEMENT
<TABLE>
<CAPTION>
Years ended December 31
1995 1994 1993
(in thousands)
<S> <C> <C> <C>
Revenues
Insurance revenues:
Premiums:
Life insurance $ 23,927 28,187 29,575
Accident and health 22,324 22,580 20,207
Contract charges 52,932 49,600 47,782
Investment revenues:
Investment income, net 144,502 133,006 124,666
Dividends from affiliates 6,400 4,000 4,500
Realized gains, net 4,581 5,492 18,118
Other 6,906 8,892 8,576
Total revenues 261,572 251,757 253,424
Benefits and expenses
Policy benefits:
Death benefits 42,217 41,400 39,813
Surrenders of life insurance 12,491 12,965 13,427
Other benefits 44,066 44,928 42,213
Increase in benefit and contract reserves 54,348 47,506 56,563
Amortization of policy acquisition costs 13,693 15,554 9,293
Insurance operating expenses 52,328 48,457 46,030
Management fees from affiliates (5,995) (4,744) (3,173)
Total benefits and expenses 213,148 206,066 204,166
Pretax income 48,424 45,691 49,258
Federal income taxes 12,404 12,722 14,494
Income before equity in undistributed income
of affiliates and nonrecurring item 36,020 32,969 34,764
Equity in undistributed income of affiliates 5,718 5,889 7,290
Income before nonrecurring item 41,738 38,858 42,054
Postemployment benefits, net - 1,481 -
Net income $ 41,738 37,377 42,054
</TABLE>
The above condensed financial statement should be read in conjunction with the
consolidated financial statements and notes thereto of Kansas City Life
Insurance Company.
Schedule II (continued)
KANSAS CITY LIFE INSURANCE COMPANY
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CASH FLOW STATEMENT
<TABLE>
<CAPTION>
Years ended December 31
1995 1994 1993
(in thousands)
<S> <C> <C> <C>
Net cash from operating activities $ 43,035 29,081 19,762
Investing activities
Investments called, matured or repaid 232,966 260,836 670,024
Investments sold 141,990 43,649 176,968
Investments purchased or originated (445,236) (378,958) (903,642)
Other (538) 477 (5,748)
Net cash used in investing activities (70,818) (73,996) (62,398)
Financing activities
Repayment of short-term debt - (10,555) (25,408)
Policyowner contract deposits 132,408 133,648 136,556
Withdrawals of policyowner
contract deposits (94,150) (74,650) (61,539)
Cash dividends to stockholders (10,061) (8,609) (8,358)
Other 670 816 (130)
Net cash from financing activities 28,867 40,650 41,121
Increase (decrease) in cash 1,084 (4,265) (1,515)
Cash at beginning of year 4,240 8,505 10,020
Cash at end of year $ 5,324 4,240 8,505
</TABLE>
The above condensed financial statement should be read in conjunction with the
consolidated financial statements and notes thereto of Kansas City Life
Insurance Company.
Schedule III
KANSAS CITY LIFE INSURANCE COMPANY
SUPPLEMENTARY INSURANCE INFORMATION
The Company believes it operates in a single industry segment, that of providing
life and accident and health insurance coverage. Therefore, supplementary
information for this segment is limited to the following:
December 31
1995 1994
(in thousands)
Unearned premiums (included in $ 925 1,003
other policyowners' funds in the
accompanying Consolidated Balance
Sheet)
All other information required by this Schedule is shown in the accompanying
Consolidated Income Statement and Consolidated Balance Sheet.
Schedule V
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
Years ended December 31
1995 1994 1993
(in thousands)
<S> <C> <C> <C>
Real estate valuation account
Beginning of year $ 9,942 11,113 10,743
Additions - - 448
Deductions (2,564) (1,171) (78)
End of year $ 7,378 9,942 11,113
Mortgage loan valuation account
Beginning of year $10,500 10,500 7,000
Additions - - 3,500
End of year $10,500 10,500 10,500
Allowance for uncollectible accounts
Beginning of year $ 2,732 2,642 2,572
Additions 1,258 464 613
Deductions (2,867) (374) (543)
End of year $ 1,123 2,732 2,642
</TABLE>
Exhibit 11, Form 10-K
Kansas City Life
Insurance Company
KANSAS CITY LIFE INSURANCE COMPANY
COMPUTATION OF PER SHARE EARNINGS
Years ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Shares outstanding
at the end of:
January 6,163,293 6,146,912 6,142,432
February 6,167,341 6,149,595 6,142,616
March 6,169,609 6,152,038 6,142,979
April 6,167,726 6,148,472 6,144,893
May 6,176,567 6,153,712 6,150,295
June 6,179,444 6,154,480 6,153,021
July 6,178,783 6,150,730 6,153,737
August 6,178,894 6,146,180 6,159,390
September 6,177,911 6,154,427 6,143,140
October 6,175,032 6,154,517 6,142,316
November 6,177,879 6,160,637 6,140,715
December 6,177,905 6,162,436 6,143,875
Weighted average
number of shares
outstanding for
the year 6,173,294 6,152,155 6,146,583
Income before
nonrecurring item $41,738,000 38,858,000 42,054,000
Postemployment
benefits, net - 1,481,000 -
Net income $41,738,000 37,377,000 42,054,000
Per common share:
Income before
nonrecurring item $ 6.76 6.32 6.84
Postemployment
benefits, net - .24 -
Net income $ 6.76 6.08 6.84
</TABLE>
Exhibit 13, Form 10-K
Kansas City Life
Insurance Company
Management's Discussion
and analysis of financial condition and results of operations
Operating Results
Operating earnings per share have risen steadily over the past three years,
$4.24 - 1993, $5.68 - 1994 and $6.24 - 1995, averaging 22 percent annual
growth. However 1993's earnings were somewhat below trend, thus the growth
rate over the past five years, 12 percent a year, better indicates the
Company's progress. Much of the earnings' growth over the past three years
reflects expense control and aggressive asset/liability matching which allowed
competitive yields to be paid to policyowners while earning a fair return for
the stockholders.
Net income, which includes realized gains and nonrecurring items as well as
operating earnings, equaled $6.84 a share in 1993, $6.08 a share in 1994 and
$6.76 a share in 1995. Net income was boosted considerably in 1993 by $24.6
million in realized gains, compared with gains averaging $5.5 million in each of
the other two years. Return on equity averaged 10.7 percent over the three
years.
Book value per share rose to $61.68 in 1993, declined to $55.78 in 1994, and
then rose to $73.99 in 1995. The variability in these numbers reflects changes
in the market value of the securities which were available for sale. Excluding
these changes in market value, book value rose from $59.48 a share in 1993, to
$64.11 in 1994, to $69.18 in 1995; a consistent 8 percent annual growth over
this period.
Dividends paid to stockholders rose steadily from $1.36 a share in 1993, to
$1.40 in 1994, to $1.63 in 1995. Dividends in 1995 included a special $.10 a
share dividend commemorating the Company's centennial. The regular quarterly
dividend paid in February 1996 indicated an annual rate of $1.68 a share for
1996.
Insurance revenues rose 4 percent in 1994 and 1 percent in 1995. This growth was
paced by contract charge revenues from the interest sensitive line. These
charges increased 4 percent and 7 percent in 1994 and 1995, respectively,
reflecting the increase in accumulated values. Universal life generated the vast
majority of these contract charges. Traditional life insurance premiums
fluctuated as premiums from final expense products varied year-to-year.
Accident and health premiums, principally arising from group disability products
and a home health care product that is no longer offered, decreased in 1995 due
to declines in Old American's closed block of accident and health business,
including the aforementioned home health care product.
Interest sensitive products provided half of all statutory premiums in 1995,
with universal life accounting for 60 percent of the interest sensitive
premiums and flexible annuities providing the balance. Traditional individual
insurance products accounted for one-third of the total premiums. In terms of
new statutory premiums, three-fourths arose from interest sensitive products
while traditional individual products provided 15 percent of these premiums.
Kansas City Life instituted a five-year plan in mid 1994 designed to
dramatically increase sales. As a part of this plan, the Company restructured
its sales force by removing marginal producers and recruiting new agents with
demonstrated growth potential. Although new production was down slightly in
1995, the Company believes the foundation has been laid for future growth. The
newly recruited agents have exceeded their production goals. The Asian-American
market, entered during 1994, also has exceeded expectations. The variable
insurance market, a rapidly growing segment of the life insurance market,
was entered as well with the introduction of a variable annuity product in late
1995 and the addition of a variable universal product in early 1996.
Investment income rose 6 percent in 1994 and 8 percent in 1995. Investment
spreads on the Company's interest sensitive business were managed aggressively
the past two years. Competitive crediting rates were maintained as evidenced by
the fact that surrender rates on this business were largely unchanged year-to-
year. Aided by a $4.0 million receipt of additional mortgage interest as
discussed below, Kansas City Life's net investment yield rose 32 basis points in
1995, benefiting returns on traditional lines of business. The overall
portfolio yield rose each of the past three years: 7.65 percent in 1993, 7.71
percent in 1994 and 8.03 percent in 1995.
Securities comprised 81.5 percent of total investments in terms of book value
and were 97.2 percent of new investments over the past three years. For
comparison, securities equaled 68.4 percent of investments three years ago.
These investments are principally in high quality issuers and over 95 percent of
the portfolio is rated investment grade. Of the investments rated below
investment grade, 2.3 percent of the portfolio is invested in Argentinean and
Mexican securities whose market value was $4.6 million below cost at year end
1995. However the market value of the entire securities portfolio exceeded its
amortized cost by $71.3 million.
Mortgage loans represented 9.6 percent of investments compared to 16.1 percent
three years ago. The Company's concentration was slightly below that of the
industry. Just 1.9 percent of new money over the past three years was
allocated to mortgages, and loan payoffs exceeded new mortgages made by $106.5
million. Loans which were delinquent or in the process of foreclosure equaled
2.1 percent of the portfolio, one percentage point better than the industry.
Restructured loans comprised 4.7 percent of the portfolio. The mortgage
valuation reserve equaled 4.3 percent of loans outstanding in 1995, compared
with 3.8 percent the previous year. Mortgage earnings were helped in 1995 by
the receipt of $4.0 million of additional interest related to a participating
mortgage. The interest arose due to the operating performance of the secured
properties over the past four years.
Real estate consists of investment properties, joint ventures and properties
acquired through foreclosure. These investments represented 3.5 percent of the
Company's investments, in line with industry asset allocations. At year end the
Company had 27 foreclosed properties which represented one-fourth of the real
estate investments in dollar terms. Foreclosed properties are carried at their
current fair value or their fair value when they were foreclosed (cost),
whichever is lower. The valuation reserve on these properties rose $0.4 million
in 1993 but declined $1.2 million in 1994 and $2.6 million further in 1995 as
real estate markets improved and properties were sold. During 1995, four
properties (valued at $4.3 million) were added through foreclosure, while 13
properties (with a carrying value of $10.6 million) were sold, generating a
$2.2 million gain. With respect to the joint ventures and investment
properties, their estimated fair market value was substantially above their
carrying value.
Mortality experience was less favorable in 1994 than in 1993, and overall
experience was unchanged in 1995 as improved mortality in Kansas City Life's
traditional line offset less favorable experience in the affiliates' books of
business. Fluctuations in mortality experience may be expected year-to-year.
Surrenders of traditional life insurance rose 6 percent in 1994, but declined 1
percent in 1995. Surrenders, while generally having little earnings impact in
the year in which they occur, lessen future profit streams. Other benefits
rose 7 percent in 1994 before declining 1 percent in 1995. While 1994's
increase reflected an increase in group disability claims, group disability
claim ratios improved as premium growth outpaced claims increases.
Amortization of deferred acquisition costs fluctuates as amortization schedules
for the interest sensitive business are adjusted quarterly as the timing of
gross profit streams are reassessed based upon actual experience. However,
unlocking did not occur regarding operating earnings over the three-year
period since assumed total gross margins on this business were unchanged.
Home office expenses, which comprise a good portion of the insurance operating
expenses, declined 4 percent in 1993 and 2 percent in 1994. However these
expenses increased 6 percent in 1995 due largely to several one-time costs
including developing the variable line of business and its administrative
system, and observing the Company's centennial. Staffing continued to
decline in 1995, 5 percent for the year. Significant economies of scale were
achieved over the past several years through consolidation of Old American's
operations into the home office and efficiencies generated with consultants'
assistance. Reengineering efforts continue. While costs have been incurred
in this endeavor, significant savings have yet to be realized. Future savings
also will be realized by consolidating additional affiliate functions into the
home office. But the synergy and substantial reductions in unit costs which
have been realized in past years will be difficult to sustain without
significant sales increases and the acquisition of sizable blocks of business
or a company of size.
The Company's effective tax rate was 33 percent in 1993, 32 percent in 1994 and
30 percent in 1995. The improvement in this rate was largely due to the
acquisition of investments which generate low income housing tax credits.
Accounting changes were minor in 1995 for the Company and should be again in
1996. FASB Statement No. 114, "Accounting by Creditors for Impairment of a
Loan," as amended by FASB Statement No. 118, "Accounting by Creditors for
Impairment of a Loan-Income Recognition and Disclosures," was adopted in 1995's
first quarter with no impact to the financial statements.
FASB Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed of," will be implemented in the first
quarter of 1996. This statement applies to long-lived assets such as property,
plant and equipment, identifiable intangibles and goodwill related to those
assets. It does not apply to financial instruments, deferred tax assets or
deferred acquisition costs. No impact on the financial statements is expected.
Liquidity and Capital Resources
Kansas City Life invests funds in order to provide protection and security for
its policyowners over an extended period of time. Thus the Company and the life
insurance industry in general play a vital role in the nation's economy as
providers of capital to fuel expansion. Liquidity concerns are normally
minor for life insurers.
Over the past three years, Kansas City Life invested $2.4 billion in the
economy. Forward investment commitments are minimal. Borrowing activity was
minor the last three years and 1996 activity is anticipated to be minor as
well, only to support investment strategies rather than to meet cash shortfalls.
A $60.0 million bank credit line is maintained for this purpose.
Asset/liability matching and cash flow testing are employed as added assurances
that the Company's future cash needs will be met.
Selected Financial Data
(Thousands, except per share data)
1995 1994 1993 1992 1991
Revenues:
Insurance $ 205 458 203 827 196 829 188 492 118 306
Investment income, net 188 087 173 388 163 237 171 581 170 523
Realized gains 4 950 6 060 24 648 8 273 1 006
Other 10 290 10 179 9 609 9 742 9 631
$ 408 785 393 454 394 323 378 088 299 466
Operating income $ 38 521 34 919 26 033 31 190 26 204
Realized gains, net 3 217 3 939 16 021 5 460 664
Income before
nonrecurring items 41 738 38 858 42 054 36 650 26 868
Nonrecurring expenses, net - 1 481 - 5 592 -
Net income $ 41 738 37 377 42 054 31 058 26 868
Per common share:
Operating income $ 6.24 5.68 4.24 5.09 4.28
Realized gains, net .52 .64 2.60 .89 .11
Income before
nonrecurring items 6.76 6.32 6.84 5.98 4.39
Nonrecurring
expenses, net - .24 - .91 -
Net income $ 6.76 6.08 6.84 5.07 4.39
Cash dividends $ 1.63 1.40 1.36 1.28 1.20
Stockholders'equity:
As reported 73.99 55.78 61.68 56.49 52.28
Excluding unrealized
gains and losses 69.18 64.11 59.48 54.00 50.27
Assets $ 2 903 768 2 663 753 2 651 430 2 510 662 2 331 487
Net return on
invested assets 8.03% 7.71 7.65 8.54 9.29
Life insurance
in force $21 023 702 20 023 820 19 028 772 18 862 33618 069 161
(The above is not covered by the report of independent auditors)
Consolidated Income Statement
(Thousands, except per share data)
1995 1994 1993
Revenues
Insurance revenues:
Premiums:
Life insurance $101 341 103 324 99 941
Accident and health 29 475 30 896 29 988
Contract charges 74 642 69 607 66 900
Investment revenues:
Investment income, net 188 087 173 388 163 237
Realized gains, net 4 950 6 060 24 648
Other 10 290 10 179 9 609
Total revenues 408 785 393 454 394 323
Benefits and Expenses
Policy benefits:
Death benefits 85 388 79 829 72 128
Surrenders of life insurance 16 345 16 490 15 525
Other benefits 53 441 54 146 50 680
Increase in benefit and contract reserves 89 139 83 158 96 188
Amortization of policy acquisition costs 27 992 29 370 22 350
Insurance operating expenses 76 535 73 043 73 990
Interest expense 22 444 926
Total benefits and expenses 348 862 336 480 331 787
Income before Federal income taxes 59 923 56 974 62 536
Federal income taxes:
Current 22 038 22 845 27 772
Deferred (3 853) (4 729) (7 290)
18 185 18 116 20 482
Income before nonrecurring item 41 738 38 858 42 054
Postemployment benefits, net - 1 481 -
Net income $ 41 738 37 377 42 054
Per common share:
Income before nonrecurring item $6.76 6.32 6.84
Postemployment benefits, net - .24 -
Net income $6.76 6.08 6.84
See accompanying Notes to Consolidated Financial Statements.
Consolidated Balance Sheet
1995 1994
Assets
Investments:
Fixed maturities:
Available for sale, at fair value (cost
$1,604,415,000; $1,400,616,000 -1994) $1 647 674 1 309 297
Held to maturity, at amortized cost
(fair value $339,911,000; $398,736,000 -1994) 320 394 395 886
Equity securities available for sale, at fair value
(cost $62,352,000; $77,533,000 -1994) 70 837 82 251
Mortgage loans on real estate, net 235 213 267 695
Real estate, net 48 542 54 976
Real estate joint ventures 36 103 26 120
Policy loans 94 312 95 854
Short-term 36 898 19 340
Total investments 2 489 973 2 251 419
Cash 9 612 7 250
Accrued investment income 40 923 39 480
Receivables, net 7 228 9 088
Property and equipment, net 27 866 28 805
Deferred acquisition costs 192 476 193 667
Value of purchased insurance in force 39 084 40 015
Reinsurance assets 89 983 88 887
Other 6 623 5 142
$2 903 768 2 663 753
Liabilities and Stockholders' Equity
Future policy benefits:
Life insurance $ 658 350 643 672
Accident and health 27 379 26 986
Accumulated contract values 1 518 968 1 459 045
Policy and contract claims 31 919 32 548
Other policyowners' funds:
Dividend and coupon accumulations 42 610 42 737
Other 56 206 52 228
Income taxes:
Current 2 796 538
Deferred 43 230 3 608
Other 65 183 58 696
Total liabilities 2 446 641 2 320 058
Stockholders' equity:
Common stock, par value $2.50 per share
Authorized 18,000,000 shares, issued 9,248,340 shares 23 121 23 121
Paid-in capital 13 039 11 847
Unrealized gains (losses) on securities
available for sale and equity securities, net 29 740 (51 345)
Retained earnings 477 826 446 149
Less treasury stock, at cost
(3,070,435 shares; 3,085,904 shares - 1994) (86 599) (86 077)
Total stockholders' equity 457 127 343 695
$2 903 768 2 663 753
See accompanying Notes to Consolidated Financial Statements.
Consolidated Statement of Equity
1995 1994 1993
Common stock, beginning and end of year $ 23 121 23 121 23 121
Paid-in-capital:
Beginning of year 11 847 10 597 9 342
Excess of proceeds over cost of treasury stock sold 1 192 1 250 1 255
End of year 13 039 11 847 10 597
Unrealized gains (losses) on securities:
Beginning of year (51 345) 13 501 15 298
Unrealized appreciation on cumulative effect
of accounting change, net - 14 627 -
Unrealized appreciation (depreciation) on securities
available for sale, net 81 085 (79 473) (1 797)
End of year 29 740 (51 345) 13 501
Retained earnings:
Beginning of year 446 149 417 381 383 685
Net income 41 738 37 377 42 054
Stockholder dividends of $1.63 per share
($1.40 - 1994 and $1.36 - 1993) (10 061) (8 609) (8 358)
End of year 477 826 446 149 417 381
Treasury stock, at cost:
Beginning of year (86 077) (85 643) (84 258)
Cost of 17,240 shares acquired
(17,329 shares -1994 and 31,594 shares - 1993) (829) (771) (1 661)
Cost of 32,709 shares sold (35,890
shares - 1994 and 29,301 shares - 1993) 307 337 276
End of year (86 599) (86 077) (85 643)
Total stockholders' equity $457 127 343 695 378 957
See accompanying Notes to Consolidated Financial Statements.
Consolidated Statement of Cash Flows
1995 1994 1993
Operating Activities
Net income $ 41 738 37 377 42 054
Adjustments to reconcile net income to
net cash from operating activities:
Amortization of investment discount, net (5 215) (3 882) (5 590)
Depreciation 5 265 5 165 4 638
Policy acquisition costs capitalized (40 388) (43 952) (50 574)
Amortization of deferred policy
acquisition costs 27 992 29 370 22 350
Realized gains (4 950) (6 060) (24 648)
Changes in assets and liabilities:
Future policy benefits 15 071 15 747 22 793
Accumulated contract values 8 135 8 445 19 822
Accrued investment income (1 443) (2 611) (1 705)
Income taxes payable and deferred (1 595) (4 784) (12 295)
Postemployment benefits, net - 1 481 -
Other, net 9 613 5 456 6 166
Net cash from operating activities 54 223 41 752 23 011
Investing Activities
Investments called, matured or repaid:
Fixed maturities available for sale 136 574 203 640 -
Fixed maturities held to maturity 63 433 75 060 809 347
Equity securities available for sale 13 727 27 876 55 026
Mortgage loans on real estate 67 722 35 311 49 151
Decrease in policy loans, net 1 542 1 929 4 927
Other 3 342 540 2 899
Investments sold:
Fixed maturities available for sale 165 563 51 124 -
Fixed maturities held to maturity 4 207 - 206 923
Equity securities available for sale 18 984 3 488 36 236
Investments purchased or originated:
Fixed maturities available for sale (495 766) (574 667) -
Fixed maturities held to maturity - (21 533) (1 221 873)
Equity securities available for sale (12 896) (5 566) (25 425)
Real estate joint ventures (8 093) (5 707) (10 661)
Mortgage loans on real estate (31 053) (8 192) (6 468)
Decrease (increase) in short-term
investments, net (17 558) 120 142 29 425
Other (1 068) (1 789) (5 762)
Net additions to property and equipment (2 918) (1 640) (11 370)
Net cash used in investing activities (94 258) (99 984) (87 625)
Financing Activities
Proceeds from borrowings 22 730 891 2 586
Repayment of borrowings (22 730) (11 446) (27 994)
Policyowner contract deposits 179 135 179 411 167 979
Withdrawals of policyowner contract deposits (127 347) (107 354) (70 258)
Cash dividends to stockholders (10 061) (8 609) (8 358)
Disposition (acquisition)
of treasury stock, net 670 816 (130)
Net cash from financing activities 42 397 53 709 63 825
Increase (decrease) in cash 2 362 (4 523) (789)
Cash at beginning of year 7 250 11 773 12 562
Cash at end of year $ 9 612 7 250 11 773
See accompanying Notes to Consolidated Financial Statements.
Notes to Consolidated Financial Statements
(Amounts in tables are generally stated in thousands, except per share data)
Significant Accounting Policies
Organization
Kansas City Life Insurance Company is a Missouri-domiciled stock life insurance
company which, with its affiliates, is licensed to sell insurance products in 48
states and the District of Columbia. The Company offers a diversified
portfolio of individual insurance, annuity and group products distributed
through numerous general agencies. In recent years, the Company's new business
activities have been concentrated in interest sensitive products.
Basis of Presentation
The accompanying consolidated financial statements have been prepared on the
basis of generally accepted accounting principles (GAAP) and include the
accounts of Kansas City Life Insurance Company and its subsidiaries.
Significant intercompany transactions have been eliminated in consolidation.
Certain reclassifications have been made to prior year results to conform with
the current year's presentation. GAAP requires management to make certain
estimates and assumptions which effect amounts reported in the financial
statements and accompanying notes. Actual results could differ from these
estimates.
Recognition of Revenues
Traditional life insurance products include whole life insurance, term life
insurance and certain annuities. Premiums for these products are recognized as
revenues when due. Accident and health insurance premiums are recognized as
revenues over the terms of the policies. Universal life-type products include
universal life insurance and flexible annuities. Revenues for these products are
amounts assessed against contract values for cost of insurance, policy
administration and surrenders, as well as amortization of deferred front-end
contract charges.
Future Policy Benefits
For traditional life insurance products, reserves have been computed by a net
level premium method based upon estimates at the time of issue for investment
yields, mortality and withdrawals. These estimates include provisions for
experience less favorable than actually expected. Investment yield assumptions
for new issues are graded and range from 5.75 percent to 7.75 percent.
Mortality assumptions are based on standard mortality tables. The 1965-70 Select
and Ultimate Basic Table is used for business issued since 1977.
Reserves and claim liabilities for accident and health insurance include
estimated unpaid claims and claims incurred but not reported. For traditional
life and accident and health insurance, benefits and claims are charged to
expense in the period incurred.
Liabilities for universal life-type products represent accumulated contract
values, without reduction for potential surrender charges, and deferred front-
end contract charges which are amortized over the term of the policies.
Benefits and claims are charged to expense in the period incurred net of related
accumulated contract values. Interest on accumulated contract values is credited
to contracts as earned. Crediting rates for universal life insurance and
flexible annuity products ranged from 4.79 percent to 7.00 percent during 1995
(4.50 percent to 7.50 percent during 1994 and 4.50 percent to 8.00 percent
during 1993).
Withdrawal assumptions for all products are based on corporate experience.
Policy Acquisition Costs
The costs of acquiring new business, principally commissions, certain policy
issue and underwriting expenses and certain variable agency expenses, are
deferred. For traditional life products, deferred acquisition costs are
amortized in proportion to premium revenues over the premium-paying period of
related policies, using assumptions consistent with those used in computing
benefit reserves. Acquisition costs for universal life-type products are
amortized over a period not exceeding 30 years in proportion to estimated
gross profits arising from interest spreads and mortality, expense and surrender
charges expected to be realized over the term of the contracts.
Calls in the securities portfolio resulted in realized gains in 1994 and 1993
which increased gross profits above those originally estimated. Calls and
realized gains related to them were negligible in 1995. In accordance with
Financial Accounting Standards Board (FASB) Statement No. 97, these higher than
expected gross profits required the Company to recompute its amortization of
deferred acquisition costs retrospectively to the date the amortization was
originally determined. This increased the amortization of deferred acquisition
costs $804,000 in 1994 and $3,030,000 in 1993, or $.08 a share in 1994 and $.32
a share in 1993 after taxes. This increased amortization was netted against
realized investment gains in the accompanying income statement.
Value of Purchased Insurance in Force
The value of Old American's purchased insurance in force was capitalized and is
being amortized in proportion to projected future gross profits. This asset was
increased $5,157,000 ($5,310,000 - 1994 and $5,513,000 - 1993) for accrual of
interest and reduced $6,088,000 ($6,636,000 -1994 and $7,217,000 - 1993) for
amortization. A 13 percent interest rate was used. Through 1995, total
accumulated accrual of interest and amortization equal $22,553,000 and
$26,969,000, respectively. The percentage of the asset's current carrying amount
which will be amortized in each of the next five years is 2.7 percent - 1996,
7.1 percent - 1997 and 1998, 7.2 percent - 1999 and 7.4 percent - 2000.
Investments
Securities held to maturity and short-term investments are stated at cost
adjusted for amortization of premium and accrual of discount. Securities
available for sale are stated at fair value. Unrealized gains and losses on
securities available for sale are reduced by deferred income taxes and related
adjustments in deferred acquisition costs, and are included in a separate
stockholders' equity account.
Mortgage loans are stated at cost adjusted for amortization of premium and
accrual of discount less an allowance for possible losses. Foreclosed real
estate is stated at fair value at the date of foreclosure (cost) or net
realizable value, whichever is lower. Other real estate investments are carried
at depreciated cost. Real estate joint ventures are valued at cost adjusted for
the Company's equity in earnings since acquisition. Policy loans are carried at
cost less payments received. Realized gains and losses on disposals of
investments, determined by the specific identification method, are included in
investment revenues.
Federal Income Taxes
Income taxes have been provided using the liability method in accordance with
FASB Statement No. 109, "Accounting for Income Taxes." Under that method,
deferred tax assets and liabilities are determined based on the differences
between their financial reporting and their tax bases and are measured using the
enacted tax rates.
Income Per Common Share
Income per common share is based upon the weighted average number of shares
outstanding during the year, 6,173,294 shares (6,152,155 shares - 1994 and
6,146,583 shares - 1993).
Statutory Information and Stockholder Dividends Restriction
The Company's earnings, unassigned surplus (retained earnings and stockholders'
equity, on the statutory basis used to report to regulatory authorities, follow.
1995 1994 1993
Net gain from operations for the year $ 29 307 29 151 20 685
Net income for the year 29 484 28 324 24 035
Unassigned surplus at December 31 268 239 235 226 202 538
Stockholders' equity at December 31 217 801 184 117 150 613
Stockholder dividends may not exceed statutory unassigned surplus.
Additionally, under Missouri law, the Company must have the prior approval of
the Missouri Director of Insurance in order to pay a dividend exceeding the
greater of statutory net gain from operations for the preceding year or 10
percent of statutory stockholders' equity at the end of the preceding year.
The maximum payable in 1996 without prior approval is $29,307,000. The Company
believes these statutory limitations impose no practical restrictions on its
dividend payment plans.
The Company is required to deposit a defined amount of assets with state
regulatory authorities. Such assets had an aggregate carrying value of
approximately $100,000,000 in 1995 and 1994.
Investments
Accounting Change
Kansas City Life adopted FASB Statement No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," on January 1, 1994, and classified
73 percent of its securities as available for sale, with the balance
classified as held to maturity. Prior to 1994 fixed maturities were carried at
amortized cost and equity securities were carried at their market value.
Valuing securities available for sale at market increased stockholders' equity
$14,627,000 at January 1, 1994, net of related deferred acquisition costs of
$5,068,000 and taxes of $7,876,000.
Late in 1995, the FASB issued a special report, "A Guide to Implementation of
Statement 115 on Accounting for Certain Investments in Debt and Equity
Securities". This report provides companies with an opportunity for a one-time
reassessment and reclassification of securities as of a single measurement date
without tainting the held to maturity debt securities classification. On
December 31, 1995, the Company reclassified securities with an amortized cost of
$14,737,000 from held to maturity to available for sale which increased
unrealized gains on securities by approximately $185,000, net of related
deferred acquisition costs and taxes.
Currently 84 percent of the Company's securities are categorized as available
for sale and are valued at market. The resulting adjustment causes significant
volatility in these securities' carrying values which affects various
calculations that are dependent on stockholders' equity, such as return on
equity.
Kansas City Life employs no derivative financial instruments.
Investment Revenues
Major categories of investment revenues are summarized as follows.
1995 1994 1993
Investment Income:
Fixed maturities $144 242 127 806 107 880
Equity securities 6 259 7 563 11 971
Mortgage loans 31 378 29 118 33 337
Real estate 12 342 11 732 10 106
Policy loans 6 174 6 295 6 524
Short-term 2 753 4 437 8 192
Other 2 533 2 433 1 785
205 681 189 384 179 795
Less investment expenses (17 594) (15 996) (16 558)
$188 087 173 388 163 237
Realized Gains (Losses):
Fixed maturities $ (1 718) 1 995 19 087
Equity securities 4 634 4 568 11 433
Mortgage loans (108) - (3 500)
Real estate 2 172 300 875
Other (30) 1 (217)
Deferred acquisition cost
amortization for realized gains - (804) (3 030)
$ 4 950 6 060 24 648
Unrealized Gains and Losses
Unrealized gains (losses) on the Company's securities follow. Held to maturity
and available for sale securities relate to 1995 and 1994, while fixed
maturities relate only to 1993.
1995 1994 1993
Held to maturity and fixed maturities $ 19 517 2 850 68 670
Available for sale and equity securities $ 51 744 (86 601) 20 771
Deferred income taxes (16 013) 27 661 (7 270)
Effect on deferred acquisition costs (5 991) 7 595 -
$ 29 740 (51 345) 13 501
Increase (decrease) in
net unrealized gains:
Held to maturity and fixed maturities $ 16 667 (65 820) (7 478)
Available for sale fixed maturities $ 78 876 (55 150) -
Available for sale equity securities 2 209 (9 696) (1 797)
$ 81 085 (64 846) (1 797)
Securities
The amortized cost and fair value of investments in securities at December 31,
1995, follow.
Gross
Amortized Unrealized Fair
Cost Gains Losses Value
Available for sale:
U.S. government bonds $ 138 372 3 479 253 141 599
Public utility bonds 279 156 7 641 1 612 285 185
Corporate bonds 865 960 29 744 3 609 892 094
Mortgage-backed bonds 242 187 9 350 261 251 276
Other bonds 65 230 609 1 672 64 168
Redeemable preferred stocks 13 510 632 790 13 352
Total fixed maturities 1 604 415 51 455 8 197 1 647 674
Equity securities 62 352 9 345 859 70 837
1 666 767 60 800 9 056 1 718 511
Held to maturity:
Public utility bonds 175 700 13 023 114 188 608
Corporate bonds 138 727 6 969 863 144 834
Other bonds 5 967 511 9 6 469
320 394 20 503 986 339 911
$1 987 161 81 303 10 042 2 058 422
The amortized cost and fair value of investments in fixed maturity and equity
securities at December 31, 1994, follow.
Gross
Amortized Unrealized Fair
Cost Gains Losses Value
Available for sale:
U.S. government bonds $ 137 522 567 3 268 134 821
Public utility bonds 305 749 439 21 837 284 351
Corporate bonds 583 648 684 47 437 536 895
Mortgage-backed bonds 263 824 2 683 14 445 252 062
Other bonds 84 687 268 8 323 76 632
Redeemable preferred stocks 25 186 495 1 145 24 536
Total fixed maturities 1 400 616 5 136 96 455 1 309 297
Equity securities 77 533 6 846 2 128 82 251
$1 478 149 11 982 98 583 1 391 548
Held to maturity:
Public utility bonds $203 747 10 079 1 644 212 182
Corporate bonds 174 879 3 285 8 899 169 265
Other bonds 17 260 397 368 17 289
395 886 13 761 10 911 398 736
$1 874 035 25 743 109 494 1 790 284
All fixed maturity securities produced income in 1995.
The distribution of the fixed maturity securities' contractual maturities
follows. However, expected maturities may differ from these contractual
maturities since borrowers may have the right to call or prepay obligations.
Amortized Fair
Cost Value
Available for sale:
Due in one year or less $ 32 075 32 267
Due after one year through five years 329 480 334 365
Due after five years through ten years 650 309 663 764
Due after ten years 350 364 366 002
Mortgage-backed bonds 242 187 251 276
$1 604 415 1 647 674
Held to maturity:
Due in one year or less $ 48 608 49 527
Due after one year through five years 137 623 148 560
Due after five years through ten years 61 102 65 602
Due after ten years 73 061 76 222
$ 320 394 339 911
Sales of investments in securities available for sale in 1995 and 1994 and fixed
maturity securities in 1993, excluding normal maturities and calls, follow.
1995 1994 1993
Proceeds $184 547 54 612 206 923
Gross realized gains 6 416 1 065 2 480
Gross realized losses 6 527 377 241
During 1995, the Company sold a held to maturity security with an amortized cost
of $4,284,000, resulting in a realized investment loss of $77,000, due to a
perceived significant deterioration in the issuer's credit worthiness.
At December 31, 1995, the Company does not hold securities of any corporation
and its affiliates which exceeded 10 percent of stockholders' equity.
Mortgage Loans
The Company holds non-income producing mortgage loans equaling $2,862,000
($3,040,000 - 1994). Mortgage loans are carried net of a valuation reserve of
$10,500,000 in 1995 and 1994.
At December 31, 1995 and 1994, the mortgage portfolio is diversified
geographically and by property type as follows.
1995 1994
Carrying Fair Carrying Fair
Amount Value Amount Value
Geographic Region:
Mountain $ 78 843 82 753 102 673 101 589
Pacific 80 334 82 802 84 617 84 509
West South Central 35 541 37 483 38 573 38 252
West North Central 28 172 29 717 28 272 27 778
Other 22 823 24 233 24 060 23 571
Valuation reserve (10 500) (10 500) (10 500) (10 500)
$235 213 246 488 267 695 265 199
Property Type:
Industrial $104 728 109 247 111 946 111 608
Retail 57 246 60 114 64 464 63 631
Office 66 404 69 656 62 496 62 117
Other 17 335 17 971 39 289 38 343
Valuation reserve (10 500) (10 500) (10 500) (10 500)
$235 213 246 488 267 695 265 199
As of December 31, 1995, the Company has commitments which expire in 1996 to
originate mortgage loans of $2,550,000.
Mortgage loans foreclosed upon and transferred to real estate investments during
the year equaled $4,322,000 ($3,391,000 - 1994 and $4,466,000 - 1993).
Real Estate
Detail concerning the Company's real estate investments follows.
1995 1994
Penntower office building, at cost:
Land $ 1 106 1 106
Building 17 543 17 254
Less accumulated depreciation (8 721) (8 134)
Foreclosed real estate, at lower of
cost or net realizable value 22 736 28 904
Other investment properties, at cost:
Land 3 370 3 560
Buildings 24 890 23 875
Less accumulated depreciation (12 382) (11 589)
$ 48 542 54 976
Investment real estate, other than foreclosed properties, is depreciated on a
straight-line basis. Penntower office building is depreciated over 60 years and
all other properties from 10 to 35 years. Foreclosed real estate is carried net
of a valuation allowance of $7,378,000 ($9,942,000 - 1994) to reflect net
realizable value.
The Company held non-income producing real estate equaling $931,000 in 1995 and
1994.
Postretirement Benefit Plans
The Company has defined benefit postretirement plans providing medical benefits
for substantially all its employees, full-time agents, and their dependents, and
life insurance coverage for its employees. The Company and retirees share the
cost of the postretirement medical plan which incorporates cost-sharing
features such as annually adjusted contributions, deductibles and coinsurance.
The medical benefits for agents are contributory, incorporating cost-sharing
features similar to the retired employees' medical plan. The life insurance
benefit is non-contributory. The Company pays the cost of the postretirement
health care benefits as they occur. The Company makes level annual contributions
to its life insurance plan over the plan participants' expected service periods.
The plans' funded status, reconciled with the amounts recognized in the
Company's balance sheet, follows.
1995 1994
Life Life
Medical Insurance MedicaI Insurance
Plans Plan Plans Plan
Accumulated postretirement
benefit obligation:
Retirees $ 5 170 2 063 4 172 1 923
Fully eligible active
plan participants 1 358 422 796 306
Other active plan participants 5 058 786 3 105 537
11 586 3 271 8 073 2 766
Unrecognized net gain (loss) (679) (43) 2 298 306
$10 907 3 228 10 371 3 072
The net periodic postretirement benefit cost included the following components
by plan.
1995 1994 1993
Medical plans:
Service cost $ 274 305 434
Interest cost 669 535 658
Net amortization of experience gains (93) (87) -
$ 850 753 1 092
Life insurance plan:
Service cost $ 40 74 81
Interest cost - - -
$ 40 74 81
The weighted average annual assumed rate of increase in the per capita cost of
covered benefits for the medical plans is 12 percent for 1996, the same as for
1995, and is assumed to decrease gradually to 6 percent in 2004. Increasing the
assumed health care cost growth rates by one percentage point increases the
accrued postretirement benefit costs $1,931,000 and $1,119,000 as of December
31, 1995 and 1994, respectively. The aggregate service and interest cost
components of the net periodic postretirement benefit cost for 1995 would
increase $268,000. The weighted average discount rate used in determining
the accumulated postretirement benefit obligation was 7.0 percent and 8.5
percent at December 31, 1995 and 1994, respectively.
Employee Benefit Plans
The Company has a defined benefit pension plan covering substantially all its
employees. The benefits are based on years of service and the employee's
compensation during the last five years of employment. The Company annually
funds an amount greater than the minimum required by ERISA but no more than the
maximum deductible for Federal income tax purposes. Contributions provide not
only for benefits attributed to service to date, but also for those expected to
be earned in the future. The table below states the plan's funded status and
those amounts recognized in the Company's financial statements.
1995 1994
Actuarial present value of
accumulated benefit obligation, including vested
benefits of $80,212,000 ($63,829,000 - 1994) $81 769 64 979
Projected benefit obligation for service
rendered to date $96 771 74 093
Plan assets at fair value, primarily
listed corporate and U.S. bonds 85 710 74 098
Plan assets in excess of (less than)
projected benefit obligation (11 061) 5
Items not yet recognized in earnings:
Net loss from past experience 13 885 3 733
Prior service costs 16 18
Net asset at January 1, 1987,
being recognized over 16 years (1 442) (1 648)
Net prepaid pension costs $ 1 398 2 108
1995 1994 1993
Net pension cost includes:
Service costs - benefits earned during the period $ 2 403 3 178 3 156
Interest cost on projected benefit obligation 6 156 5 835 5 367
Actual return on plan assets (14 139) 1 907 (7 631)
Net amortization and deferral 7 412 (8 923) 1 047
Net periodic pension cost $ 1 832 1 997 1 939
Assumptions were as follows:
Weighted average discount rate 7.0% 8.5 7.0
Weighted average compensation increase 5.5 5.5 5.5
Weighted average expected
long-term return on plan assets 9.0 9.0 9.0
The Company made no pension contributions in 1993 and 1994. Contributions for
1995 were $992,000.
Non-contributory defined contribution retirement plans are offered for general
agents and eligible sales agents which provide supplemental payments based upon
earned agency first-year individual life and annuity commissions. Contributions
to these plans were $287,000 ($111,000 - 1994 and $114,000 - 1993). The Company
also sponsors a non-contributory deferred compensation plan for eligible
agents based upon earned first-year commissions. Contributions to this plan were
$405,000 ($377,000 - 1994 and $370,000 - 1993).
Savings plans for eligible employees and agents are sponsored in which the
Company matches employee contributions up to 10 percent of salary and agent
contributions up to 2.5 percent of prior year paid commissions. Contributions to
the plans were $1,826,000 ($1,898,000 - 1994 and $1,839,000 - 1993).
The Company also has a non-contributory trusteed employee stock ownership plan
covering substantially all salaried employees. The Company made no contributions
to this plan between 1993 and 1995.
Kansas City Life adopted FASB Statement No. 112, "Employers'Accounting for
Postemployment Benefits," on January 1, 1994. This statement generally requires
the accrual of liabilities for providing benefits, such as severance and
disability, to former or inactive employees whose employment ended before
becoming eligible for retirement. This accounting change resulted in the
immediate recognition of a $1,481,000 transition liability, net of applicable
income taxes, reported as a 1994 nonrecurring expense. Statement No. 112 did not
materially effect 1995 and 1994 operating expenses.
Property and Equipment
1995 1994
Land $ 1 029 1 029
Home office buildings 23 122 23 262
Furniture and equipment 26 382 23 552
50 533 47 843
Less accumulated depreciation (22 667) (19 038)
$27 866 28 805
Property and equipment are stated at cost. Depreciation is provided using the
straight-line method. Home office buildings are depreciated over 25 to 50 years
and furniture and equipment over 3 to 10 years, their estimated useful lives.
Federal Income Taxes
A reconciliation of the Federal income tax rate and the actual tax rate
experienced is shown below.
1995 1994 1993
Federal income tax rate 35 % 35 35
Special tax credits (4) (2) (1)
Other permanent differences (1) (1) (1)
Actual income tax rate 30 % 32 33
Due to a Federal income tax rate change from 34 percent to 35 percent during
1993, the Company had a charge of $900,000 to 1993 earnings. There were no such
tax rate changes in 1994 and 1995.
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities are presented below.
1995 1994
Deferred tax assets:
Future policy benefits $ 43 906 41 118
Basis differences between tax and
GAAP accounting for investments - 9 580
Employee retirement benefits 11 598 10 753
Other 3 073 3 286
Gross deferred tax assets 58 577 64 737
Deferred tax liabilities:
Capitalization of policy acquisition
costs, net of amortization 47 321 51 151
Basis differences between tax and
GAAP accounting for investments 38 933 -
Property and equipment, net 2 073 2 167
Value of insurance in force 12 116 12 405
Other 1 364 2 622
Gross deferred tax liabilities 101 807 68 345
Net deferred tax liability $ 43 230 3 608
Federal income taxes paid for the year were $19,981,000 ($22,684,000 - 1994 and
$33,191,000 - 1993).
Policyowners' surplus, which is frozen under the Deficit Reduction Act of 1984,
is $40,500,000 for Kansas City Life, $2,800,000 for Sunset Life and $13,700,000
for Old American. The Companies do not plan to distribute their policyowners'
surplus. Consequently, the possibility of such surplus becoming subject to tax
is remote, and no provision has been made in the financial statements for taxes
thereon. Should the balance in policyowners' surplus become taxable, the tax
computed at current rates would approximate $19,950,000.
Income taxed on a current basis is accumulated in "shareholders' surplus" and
can be distributed to stockholders without tax to the Company. At year-end 1995
this shareholders' surplus was $304,545,000 for Kansas City Life, $59,474,000
for Sunset Life and $31,218,000 for Old American.
Separate Accounts
These accounts arise from the variable line of business. Their assets are
legally segregated and are not subject to the claims which may arise from any
other business of the Company. These assets are reported at fair value since the
underlying investment risks are assumed by the policyowners. Therefore the
related liabilities are recorded at amounts equal to the underlying assets.
Investment income and gains or losses arising from separate accounts accrue
directly to the policyowners and are, therefore, not included in investment
earnings in the accompanying income statement. Revenues to the Company from
separate accounts consist principally of contract maintenance charges,
administrative fees and mortality and risk charges. Separate account assets and
liabilities each equaled $1,264,000
(none - 1994).
Reinsurance
1995 1994 1993
Life Insurance in Force (in millions):
Direct $20 991 19 988 18 990
Ceded (2 442) (2 073) (1 616)
Assumed 33 36 39
Net $18 582 17 951 17 413
Premiums:
Life insurance:
Direct $124 504 126 652 121 577
Ceded (23 292) (23 538) (21 829)
Assumed 129 210 193
Net $101 341 103 324 99 941
Accident and health:
Direct $ 42 971 42 709 41 529
Ceded (13 496) (11 956) (11 788)
Assumed - 143 247
Net $ 29 475 30 896 29 988
Contract charges arise generally from directly issued business. Ceded benefit
recoveries were $27,613,000 ($27,365,000 - 1994 and $30,487,000 - 1993).
Old American has a coinsurance agreement with Employers Reassurance Corporation
which reinsures certain whole life policies issued by Old American prior to
December 1, 1986. As of December 31, 1995, these policies had a face value of
$161,855,000. The reserve for future policy benefits ceded under this agreement
was $53,649,000 ($54,686,000 - 1994).
The maximum retention on any one life is $350,000. A contingent liability exists
with respect to reinsurance, which may become a liability of the Company in the
unlikely event that the reinsurers should be unable to meet obligations assumed
under reinsurance contracts.
Fair Value of Financial Instruments
The carrying amounts for cash, short-term investments and policy loans as
reported in the accompanying balance sheet approximate their fair values. The
fair values for securities held to maturity are based on quoted market prices,
where available. For those securities not actively traded, fair values are
estimated using values obtained from independent pricing services or, in
the case of private placements, are estimated by discounting expected future
cash flows using a current market rate applicable to the yield, credit quality
and maturity of the investments. The fair values for securities available for
sale are based on quoted market prices. Fair values for mortgage loans are based
upon discounted cash flow analyses using an interest rate assumption of 2
percent above the comparable U.S. Treasury rate.
Fair values for the Company's liabilities under investment-type insurance
contracts, included with accumulated contract values for flexible annuities and
with other policyholder funds for supplementary contracts without life
contingencies, are estimated to be their cash surrender values.
Fair values for the Company's insurance contracts other than investment
contracts are not required to be disclosed. However, the fair values of
liabilities under all insurance contracts are taken into consideration in the
Company's overall management of interest rate risk, which minimizes exposure to
changing interest rates through the matching of investment maturities with
amounts due under insurance contracts.
The carrying amounts and fair values of the financial instruments follow.
1995 1994
Carrying Fair Carrying Fair
Amount Value Amount Value
Investments:
Securities available for sale $1 718 511 1 718 511 1 391 548 1 391 548
Securities held to maturity 320 394 339 911 395 886 398 736
Mortgage loans 235 213 246 488 267 695 265 199
Liabilities:
Individual and group annuities 871 340 842 809 851 847 822 946
Supplementary contracts without
life contingencies 23 343 23 343 22 403 22 403
The Investments Note provides further details regarding the investments above.
Quarterly Consolidated
Financial Data (unaudited)
First Second Third Fourth
1995:
Total revenues $98 733 100 356 103 041 106 655
Operating income $10 960 9 255 8 166 10 140
Realized gains, net 68 27 2 278 844
Net income $11 028 9 282 10 444 10 984
Per common share:
Operating income $ 1.78 1.50 1.32 1.64
Realized gains, net .01 - .37 .14
Net income $ 1.79 1.50 1.69 1.78
1994:
Total revenues $98 478 98 688 98 174 98 114
Operating income $ 8 978 9 381 9 855 6 705
Realized gains, net 1 020 1 504 1 383 32
Income before nonrecurring item 9 998 10 885 11 238 6 737
Postemployment benefits, net 1 481 - - -
Net income $ 8 517 10 885 11 238 6 737
Per common share:
Operating income $ 1.46 1.53 1.60 1.09
Realized gains, net .17 .23 .23 .01
Income before
nonrecurring item 1.63 1.76 1.83 1.10
Postemployment benefits, net .24 - - -
Net income $ 1.39 1.76 1.83 1.10
Contingent Liability
In April 1994, an Oklahoma jury returned a $10.7 million verdict against the
Company, consisting of actual and punitive damages. The case arose out of
certain alleged actions by one of the Company's agents. The Company appealed the
adverse jury verdict citing that the trial court committed numerous errors in
the conduct of the trial, determination of issues of evidence, rulings on
dispositive motions, and in jury instructions. On January 16, 1996, a division
of the Oklahoma Appellate Court issued an opinion affirming a judgment of $1.3
million. While the opinion substantially reduced the jury verdict, the Company
believes this award should be further reduced and has filed a petition for
certiorari with the Oklahoma Supreme Court. It is anticipated that the
plaintiffs will also petition for certiorari to seek reinstatement of the
original verdict. Management believes that damages, if any, related to this
matter would not have a material effect on the Company's consolidated results of
operations and financial position.
In addition to the above case, the Company and certain of its subsidiaries are
defendants in various lawsuits involving claims and disputes with policyowners
that often include claims seeking punitive damages. Some of these lawsuits arise
in jurisdictions such as Alabama where juries sometimes award punitive damages
grossly disproportionate to the actual damages alleged. Although no assurances
can be given and no determinations can be made at this time as to the outcome of
any particular lawsuit or proceeding, the Company and its subsidiaries believe
that there are meritorious defenses for all of these claims and are
defending them vigorously. Management believes that the amounts that would
ultimately be paid, if any, would have no material effect on the Company's
consolidated results of operations and financial position.
Stockholder Information
Corporate Headquarters
Kansas City Life Insurance Company
3520 Broadway
Post Office Box 419139
Kansas City, Missouri 64141-6139
Telephone: (816) 753-7000
Fax: (816) 753-4902
Internet: http://www.kclife.com
E-Mail: Kclife @ Kclife.com
Notice of Annual Meeting
The annual meeting of stockholders will be held at
9 a.m. Thursday, April 18, 1996, at Kansas City
Life's corporate headquarters.
Transfer Agent
Sherri Morehead, Assistant Secretary
Kansas City Life Insurance Company
Post Office Box 419139
Kansas City, Missouri 64141-6139
10-K Request
Stockholders may request a free copy of Kansas City Life's
Form 10-K, as filed with the Securities and Exchange Commission,
by writing to Secretary, Kansas City Life Insurance Company.
Security Holders
As of February 6, 1996, Kansas City Life had
approximately 885 security holders, including individual
participants in security position listings.
Stock Quotation Symbol Over-the-Counter-KCLI
Quarterly Stock and Dividend Information
Dividend
Bid Paid
High Low (per share)
1995:
First Quarter $44.50 42.00 $ .36
Second Quarter 48.00 41.00 .49
Third Quarter 50.50 48.00 .39
Fourth Quarter 52.00 51.00 .39
$1.63
1994:
First Quarter $49.00 46.00 $ .34
Second Quarter 49.25 42.00 .34
Third Quarter 43.00 39.50 .36
Fourth Quarter 43.00 40.00 .36
$1.40
The above includes a special $.10 per share dividend in the
second quarter of 1995 commemorating the Company's Centennial.
A quarterly dividend of $.42 per share was paid February 20, 1996.
Over-the-counter market quotations are compiled according to
Company records and may reflect inter-dealer prices, without
mark-up, mark-down or commission and may not necessarily
represent actual transactions.
Dividend Restrictions
Refer to the Significant Accounting Policies Note to the Consolidated Financial
Statements.
To the Board of Directors and Stockholders
of Kansas City Life Insurance Company
We have audited the accompanying consolidated balance sheets of Kansas City Life
Insurance Company (the Company) as of December 31, 1995 and 1994 and the related
consolidated statements of income, stockholders' equity and cash flows for each
of the three years in the period ended December 31, 1995. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion. In our opinion, the consolidated financial statements referred to above
present fairly, in all material aspects, the consolidated financial position of
Kansas City Life Insurance Company at December 31, 1995 and 1994 and the
consolidated results of its operations and its cash flows for each of the three
years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles. As discussed in the Notes to the financial
statements, the Company changed its method of accounting for investments and
postemployment benefits in 1994.
/s/ Ernst & Young LLP
Kansas City, Missouri
January 22, 1996
Exhibit 21, Form 10-K
Kansas City Life
Insurance Company
SUBSIDIARIES
Kansas City Life Insurance Company's significant insurance
subsidiaries are:
1. Sunset Life Insurance Company of America, a corporation
organized under the laws of the State of Washington.
2. Old American Insurance Company, a corporation organized
under the laws of the State of Missouri.
The Company's non-insurance subsidiaries are not significant
individually or in the aggregate.
Exhibit 23(a), Form 10-K
Kansas City Life Insurance Company
Consent of Independent Auditors
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Kansas City Life Insurance Company (the Company) of our report dated
January 22, 1996, included in the 1995 Annual Report to Shareholders of Kansas
City Life Insurance Company.
Our audits also included the financial statement schedules of Kansas City Life
Insurance Company listed in Item 14(a). These schedules are the responsibility
of the Company's management. Our responsibility is to express an opinion based
on our audits. In our opinion, with respect to which the date is January 22,
1996, the financial statement schedules referred to above, when considered in
relation to the basic financial statements taken as a whole, present fairly in
all material respects the information set forth therein.
We also consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 2-97351) pertaining to the Savings and Investment Plan of Kansas
City Life Insurance Company of our report dated January 22, 1996, with respect
to the consolidated financial statements incorporated herein by reference, and
our report included in the preceding paragraph with respect to the financial
statement schedules included in this Annual Report (Form 10-K) of Kansas City
Life Insurance Company.
/s/ Ernst & Young LLP
Kansas City, Missouri
March 22, 1996
Exhibit 23(b), Form 10-K
Kansas City Life Insurance Company
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 2-97351) pertaining to the Savings and Investment Plan of Kansas City
Life Insurance Company of our report dated February 23, 1996, with respect to
the financial statements and schedules of the Kansas City Life Insurance Company
Savings and Investment Plan included in this Annual Report (Form 11-K) for the
year ended December 31, 1995.
/s/ Ernst & Young LLP
Kansas City, Missouri
March 22, 1996
<TABLE> <S> <C>
<ARTICLE> 7
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<DEBT-HELD-FOR-SALE> 1,647,674<F1>
<DEBT-CARRYING-VALUE> 320,394<F2>
<DEBT-MARKET-VALUE> 339,911<F2>
<EQUITIES> 70,837<F3>
<MORTGAGE> 235,213
<REAL-ESTATE> 84,645<F4>
<TOTAL-INVEST> 2,453,075
<CASH> 46,510
<RECOVER-REINSURE> 89,983
<DEFERRED-ACQUISITION> 192,476
<TOTAL-ASSETS> 2,903,768
<POLICY-LOSSES> 685,729
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 31,919
<POLICY-HOLDER-FUNDS> 1,617,784<F5>
<NOTES-PAYABLE> 0
<COMMON> 23,121
0
0
<OTHER-SE> 434,006
<TOTAL-LIABILITY-AND-EQUITY> 2,903,768
130,816
<INVESTMENT-INCOME> 188,087
<INVESTMENT-GAINS> 4,950
<OTHER-INCOME> 84,932
<BENEFITS> 244,313
<UNDERWRITING-AMORTIZATION> 27,992
<UNDERWRITING-OTHER> 931<F6>
<INCOME-PRETAX> 59,923
<INCOME-TAX> 18,185
<INCOME-CONTINUING> 41,738
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 41,738
<EPS-PRIMARY> 6.76
<EPS-DILUTED> 6.76
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
<FN>
<F1>Debt securities held for sale represent FASB 115 available for sale fixed
maturity securities reported on a current value basis, and do not include
trading securities or securities held to maturity.
<F2>Debt securities represent FASB 115 held to maturity fixed maturity
securities, and do not include trading securities or securities available
for sale.
<F3>Equity securities include equity securities that are available for sale,
under FASB 115.
<F4>Real estate includes real estate joint ventures.
<F5>Policyholder funds include accumulated contract values as defined by FASB
97, dividend and coupon accumulations and other policyowner funds.
<F6>Underwriting expenses represent amortization of the value of purchased
insurance in force.
</FN>
</TABLE>
Exhibit 99(a), Form 10-K
Kansas City Life
Insurance Company
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 11-K
[ ] ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from __________ to ___________
Commission File Number 2-40764
A. Kansas City Life Insurance Company Savings and Investment Plan
3520 Broadway
Kansas City, Missouri 64111-2565
B. Kansas City Life Insurance Company
3520 Broadway
Kansas City, Missouri 64111-2565
Kansas City Life
Insurance Company
Savings and Investment Plan
Financial Statements
1995
Statement of Net Assets
Available for Plan Benefits .............. 1-2
Statement of Changes in Net Assets
Available for Plan Benefits ............ 3-4
Notes to Financial Statements ............ 5-8
Supplemental Schedules
Assets Held for Investment .................. 9
Transactions in Excess of Five
Percent of the Current Value
of the Plan Assets ............................. 10
Report of Independent Auditors
Kansas City Life Insurance Company
Savings and Investment Plan
Statement of Net Assets Available for Plan Benefits
December 31, 1995
<TABLE>
<CAPTION>
(in thousands)
Fund Fund Fund Fund Fund Fund Fund Fund Fund Loan
I II III IV V VI VII VIII IX Fund Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Investments, at fair value:
Twentieth Century Growth 2330 - - - - - - - - - 2330
Kansas City Life common stock - 3917 18864 - - - - - - - 22781
Met Life Guar. Interest Contract - - - 3896 - - - - - - 3896
Vanguard Bond Index Fund - - - - 645 - - - - - 645
Templeton Foreign Fund - - - - - 1919 - - - - 1919
Vanguard Balanced Index Fund - - - - - 424 - - - 424
Fidelity Value Fund - - - - - - 2324 - - 2324
Vanguard Extended Market Fund - - - - - - - 511 - 511
Loans to participants - - - - - - - - 872 872
Total investments 2330 3917 18864 3896 645 1919 424 2324 511 872 35702
Restricted cash and investments - - 2 - - - - - - - 2
Cash (25) 18 128 3 5 44 (1) 16 21 - 243
Interest receivable - - - 19 - - - - - - 19
Other receivable - - 14 - - - - - - - 14
2305 3935 19008 3952 650 1963 423 2340 532 872 35980
Liabilities
Forfeitures escrowed - - 2 - - - - - - - 2
Net assets available
for plan benefits 2305 3935 19006 3952 650 1963 423 2340 532 872 35978
</TABLE>
See accompanying Notes to Financial Statements.
- -1-
Kansas City Life Insurance Company
Savings and Investment Plan
Statement of Net Assets Available for Plan Benefits
December 31, 1994
<TABLE>
<CAPTION>
(in thousands)
Fund Fund Fund Fund Fund Fund Fund Fund Fund Loan
I II III IV V VI VII VIII IX Fund Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Investments, at fair value:
Twentieth Century Growth 1876 - - - - - - - - - 1876
Kansas City Life common stock - 3230 14265 - - - - - - - 17495
Met Life Guar. Interest Contract - - - 4272 - - - - - - 4272
Vanguard Bond Index Fund - - - - 433 - - - - - 433
Templeton Foreign Fund - - - - - 1573 - - - - 1573
Vanguard Balanced Index Fund - - - - - - 238 - - - 238
Fidelity Value Fund - - - - - - - 1481 - - 1481
Vanguard Extended Market Fund - - - - - - - - 227 - 227
Loans to participants - - - - - - - - - 751 751
Total investments 1876 3230 14265 4272 433 1573 238 1481 227 751 28346
Restricted cash and investments - - 3 - - - - - - - 3
Cash (4) 3 39 (174) 58 17 9 28 22 - (2)
Interest receivable - - - 17 - - - - - - 17
Contributions receivable 4 3 17 4 1 3 1 3 1 - 37
1876 3236 14324 4119 492 1593 248 1512 250 751 28401
Liabilities
Forfeitures escrowed - - 3 - - - - - - - 3
Net assets available
for plan benefits 1876 3236 14321 4119 492 1593 248 1512 250 751 28398
</TABLE>
See accompanying Notes to Financial Statements.
- -2-
Kansas City Life Insurance Company
Savings and Investment Plan
Statement of Changes in Net Assets Available for Plan Benefits
Year ended December 31, 1995
<TABLE>
<CAPTION>
(in thousands)
Fund Fund Fund Fund Fund Fund Fund Fund Fund Loan
I II III IV V VI VII VIII IX Fund Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Contributions:
Employer - - 1637 - - - - - - - 1637
Employee 272 239 - 310 76 294 58 310 78 - 1637
272 239 1637 310 76 294 58 310 78 - 3274
Investment income, net:
Interest - - 3 216 - - - - - - 219
Interest on participant loans 12 7 - 12 2 8 2 11 2 - 56
Dividends 7 126 580 - 36 49 13 21 6 - 838
Net appreciation on
investments 380 819 3764 - 54 140 66 427 90 - 5740
Net investment income 399 952 4347 228 92 197 81 459 98 - 6853
Employee withdrawals (116) (169) (1251) (638) (71) (148) (3) (98) (5) - (2499)
Forfeitures - - (48) - - - - - - - (48)
Participant loans: Made (106) (49) - (181) (13) (62) (6) (79) (12) 508 -
Repaid 79 66 - 83 16 52 14 63 14 (387) -
Transfer from (to) other funds (99) (340) - 31 58 37 31 173 109 - -
Net assets available for
plan benefits:
Net increase (decrease) 429 699 4685 (167) 158 370 175 828 282 121 7580
Beginning of year 1876 3236 14321 4119 492 1593 248 1512 250 751 28398
End of year 2305 3935 19006 3952 650 1963 423 2340 532 872 35978
</TABLE>
See accompanying Notes to Financial Statements.
- -3-
Kansas City Life Insurance Company
Savings and Investment Plan
Statement of Changes in Net Assets Available for Plan Benefits
Year ended December 31, 1994
<TABLE>
<CAPTION>
(in thousands)
Fund Fund Fund Fund Fund Fund Fund Fund Fund Loan
I II III IV V VI VII VIII IX Fund Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Contributions:
Employer - - 1621 - - - - - - - 1621
Employee 271 287 - 323 79 280 55 269 57 - 1621
271 287 1621 323 79 280 55 269 57 - 3242
Investment income, net:
Interest - - 1 197 - - - - - - 198
Interest on participant loans 8 7 - 9 2 6 1 7 1 - 41
Dividends 4 107 468 - 27 25 9 6 4 - 650
Net appreciation (depreciation)
on investments (29) (614) (2695) - (38) (36) (12) 86 (8) - (3346)
Net investment income (17) (500) (2226) 206 (9) (5) (2) 99 (3) - (2457)
Employee withdrawals (113) (257) (1381) (552) (39) (58) (11) (197) (16) - (2624)
Forfeitures - - (65) - - - - - - - (65)
Participant loans: Made (128) (103) - (118) (8) (38) (5) (33) (2) 435 -
Repaid 53 50 - 67 13 36 7 46 6 (278) -
Transfer from (to) other funds (94) 4 - (329) 67 167 (17) 162 40 - -
Net assets available for
plan benefits:
Net increase (decrease) (28) (519) (2051) (403) 103 382 27 346 82 157 (1904)
Beginning of year 1904 3755 16372 4522 389 1211 221 1166 168 594 30302
End of year 1876 3236 14321 4119 492 1593 248 1512 250 751 28398
</TABLE>
See accompanying Notes to Financial Statements.
- -4-
Kansas City Life Insurance Company
Savings and Investment Plan
Notes To Financial Statements
ORGANIZATION
The Kansas City Life Insurance Company Savings and Investment Plan (the Plan)
is a defined contribution benefit plan sponsored by Kansas City Life Insurance
Company (the Company) and is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA). The Plan is administered by a
committee appointed by the Executive Committee of the Company. On January 1,
1988, the original plan was revised to incorporate the provisions of Section
401(k) of the Internal Revenue Code. The cash and investments of the Plan are
in the custody of three trustees who are also officers of the Company. The
Plan consists of nine funds. Fund I invests in a growth stock fund. Funds II
and III invest in the Company's common stock. All Company contributions and
earnings thereon are included in Fund III. Fund IV invests in a Guaranteed
Interest Contract (GIC). Fund V invests in an investment grade bond fund.
Fund VI invests in a managed global common stock fund. Fund VII invests in a
balanced index fund. Fund VIII invests in a capital appreciation stock fund.
Fund IX invests in a small capitalization stock index fund.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements of the Plan have been prepared on the
basis of generally accepted accounting principles.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
Valuation of Investments
The investments of the Plan in Funds I and V through IX are reported at fair
value based upon quoted market prices. The investments in Funds II and III are
reported at fair value based upon December's average bid price. Investments in
Fund IV are reported at the contract value as stated in the guaranteed interest
contract, which approximates fair value. The cost of investments sold is
determined on the specific identification basis.
Expenses
With the exception of mutual fund administrative fees, costs associated with
the administration of the Plan are borne by the Company.
- -5-
NOTES TO FINANCIAL STATEMENTS (continued)
ELIGIBILITY
Each employee, who is at least 21 years of age and has completed one year of
employment, with a minimum of 1,000 hours of employment from date of hire is
qualified to participate in the Plan.
CONTRIBUTIONS
The participant may elect to enter into a compensation reduction agreement with
the Company by which a contribution will be made in an amount equal to one to
ten percent of his or her unreduced monthly base salary. The maximum
participant contribution for 1995 could not exceed $9,240, with cost of living
increases in future years. Effective January 1, 1994, the maximum contribution
made for any participant who is classified as highly compensated was changed
from five to six percent. The contribution rate can be changed only once in
any six month period.
The Company, with respect to each participant, contributes to the Plan as soon
as practicable after the end of each month, out of its current or accumulated
earnings and profits, an amount equal to 100 percent of such participant's
contribution to the Plan. The Company's contributions are made in common stock
of the Company, which may be either treasury or authorized and unissued stock.
Treasury Stock or shares of authorized but unissued stock are valued at the
average of its bid price on the over-the-counter market for all business days
following the previous monthly valuation date.
WITHDRAWALS AND LOANS
The Plan allows a participant to withdraw all or a part of the value of his or
her account which was contributed prior to January 1, 1988. The value of a
participant account attributable to contributions after that date may not be
withdrawn except in cases of extreme financial hardship. Hardship withdrawals
are subject to the approval of the Administrative Committee, and any such
withdrawal will be limited to the amount of actual contributions made to the
Plan. Gains associated with the contributions or any of the matching Fund III
amounts may not be withdrawn for any reason.
A participant may request a loan from the 401(k) portion of their elective
accounts under the terms and conditions established by the Administrative
Committee. The amount that may be borrowed is limited in accordance with the
Internal Revenue Code Section 72(p). Loans will be made for a period no longer
than five years, except for a loan used to acquire a primary residence, which
may be for up to ten years.
- -6-
NOTES TO FINANCIAL STATEMENTS (continued)
VESTING
Company contributions vest to the participant 30 percent after three years of
employment,40 percent after four years and an additional 20 percent each year
thereafter until the participant is fully vested in Company contributions after
seven years.
TAX STATUS
The Internal Revenue Service has issued a determination letter dated October 3,
1995 that, in form, the Plan and Trust forming a part thereof, meet the
requirements of the Internal Revenue Code Section 401(a) as a qualified plan
and trust. If the Plan qualifies in operation, the Trust's earnings will be
exempt from taxation, the Company's contributions will be deductible, and each
participant will incur no current tax liability on either the Company's
contributions or any earnings of the trust credited to the participant's
account prior to the time that such contributions or earnings are withdrawn or
made available to the participant. At the time a distribution occurs, whether
because of retirement, termination, death, disability or voluntary withdrawal
of funds, any amounts distributed comprised of Company contributions, employee
pretax contributions, and earnings on contributions of the Company or the
participant shall be taxed to the participant at the tax rate then in effect.
The Plan administrator is not aware of any series of events or course of
actions that could adversely affect the Plan's qualified status.
RESTRICTED CASH AND INVESTMENTS
Participants under the original provision of the savings and investment plan,
who are less than 50 percent vested in Fund III and who elect to withdraw
proceeds from their accounts will forfeit an amount equal to 50 percent of the
withdrawal, but the dollar amount forfeited cannot exceed their non-vested
funds.
Such forfeitures are to be held in escrow for a period not to exceed five
years. If the full amount withdrawn by the employee is repaid to the Plan,
amounts held in escrow will be restored for the benefit of the participant.
Amounts which are not repaid within five years are used to reduce future
employer contributions.
All forfeitures resulting from a termination of employment will be immediately
reallocated to reduce future employer contributions.
- -7-
NOTES TO FINANCIAL STATEMENTS (continued)
INVESTMENTS
The guaranteed interest contracts held by the Plan provided an average yield of
5.4% and 4.6% during 1995 and 1994, respectively. Also, crediting rates for
contracts held were 5.8% and 4.75% at December 31, 1995 and 1994, respectively.
These crediting rates are reset every three months by Met Life.
The fair value of individual investments that represent 5 percent or more of
the Plan's participating employees' net assets available for plan benefits
follows.
1995 1994
(in thousands)
Twentieth Century Growth Stock Fund,
120,169 shares - 1995, and 100,099 shares - 1994. $ 2,330 1,876
Kansas City Life Insurance Company common stock,
439,019 shares - 1995, and 422,900 shares - 1994. 22,781 17,495
Met Life Managed Guaranteed Interest Contract 3,896 4,272
Templeton Foreign Fund
209,088 shares - 1995, and 178,290 shares - 1994. 1,919 1,573
Fidelity Value Fund
46,820 shares - 1995, and 36,292 shares -1994. 2,324 1,481
The fair value of the Plan's investments has changed as follows.
1995 1994
(in thousands)
Net
Net Appreciation
Appreciation Depreciation)
Fair Value In Fair Value Fair Value In Fair Value
Fund I $ 2,330 380 $ 1,876 (29)
II 3,917 819 3,230 (614)
III 18,864 3,764 14,265 (2,695)
IV 3,896 - 4,272 -
V 645 54 433 (38)
VI 1,919 140 1,573 (36)
VII 424 66 238 (12)
VIII 2,324 427 1,481 86
IX 511 90 227 (8)
Total $34,830 5,740 27,595 (3,346)
-8-
Kansas City Life Insurance Company
Savings and Investment Plan
Assets Held for Investment
December 31, 1995
<TABLE>
<CAPTION>
(in thousands, except shares)
Number of
Shares or
Description of Investments Par Value Cost Fair Value
<S> <C> <C> <C>
Common stock:
Kansas City Life Insurance Company 439,019 shares 14191 22781
Mutual funds:
Twentieth Century Growth Stock Fund 120,169 shares 1482 2330
Met Life Managed Guar. Interest Contract $3,895,511 3895 3896
Vanguard Bond Index Fund 63,672 shares 628 645
Templeton Foreign Fund 209,088 shares 1732 1919
Vanguard Balanced Index Fund 33,250 shares 372 424
Fidelity Value Fund 46,820 shares 1782 2324
Vanguard Index Trust-Extended Market Fund 21,227 shares 428 511
Total mutual funds 10319 12049
Loans:
Loans to participants (interest rates range from
6.5% to 10.0%) - 872 872
25382 35702
</TABLE>
- -9-
Kansas City Life Insurance Company
Savings and Investment Plan
Transactions in Excess of
Five Percent of the Current Value of the Plan Assets
Year ended December 31, 1995
Party Involved and
Description of Asset Transactions Shares Cost Consideration Net Gain
Category (iii)--series of transactions in excess of 5 percent of plan assets:
Kansas City Life
common stock 14 buys 30,429 $1,393 - -
Kansas City Life
common stock 8 sells 14,310 453 691 238
There were no category (i), (ii), or (iv) reportable transactions during 1995.
-10-
Report of Independent Auditors
The Board of Trustees
Kansas City Life Insurance Company
Savings and Investment Plan
We have audited the accompanying statements of net assets
available for plan benefits of the Kansas City Life Insurance
Company Savings and Investment Plan (the Plan) as of December 31,
1995 and 1994, and the related statements of changes in net
assets available for plan benefits for the years then ended.
These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of the Plan at December 31, 1995 and 1994, and the changes in its
financial position for the years then ended in conformity with
generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The accompanying
supplemental schedules of assets held for investment as of
December 31, 1995 and transactions in excess of 5% of the current
value of plan assets for the year then ended are presented for
purposes of complying with the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The Fund Information in
the statement of net assets available for plan benefits and the
statement of changes in net assets available for plan benefits is
presented for additional analysis rather than to present the net
assets available for plan benefits and changes in net assets
available for plan benefits of each fund. The supplemental
schedules and Fund Information have been subjected to the
auditing procedures applied in our audits of the basic financial
statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a
whole.
/s/ Ernst & Young LLP
Kansas City, Missouri
February 23, 1996
Exhibit 99(b), Form 10-K
Kansas City Life
Insurance Company
RETAIN THIS
DOCUMENT
It Is a
PROSPECTUS
and
Summary Plan Description
of the
Kansas City Life Insurance Company
Savings and Investment Plan (401-k)
This Prospectus relates to the offering by Kansas City
Life Insurance Company to its employees and to the employees
of its subsidiaries, Sunset Life Insurance Company of
America and Old American Insurance Company, who are eligible
to participate in the Kansas City Life Insurance Company
Savings and Investment Plan (the "Plan") of (i) interests
of participation in the Plan and (ii) shares of the
Company's $2.50 par value Capital Stock ("Capital Stock")
which may be acquired by the Trustees under the Plan.
The Employer Identification Number (EIN) of Kansas City
Life Insurance Company is 44-0308260. The Plan Number (PN)
is 003.
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING
SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933.THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
No person has been authorized to give any
information or to make any representations, other
than those contained in this Prospectus in connection with
the offering contained herein, and, if given or made, such
information or representations must not be relied upon as
having been authorized by the Company. This Prospectus does
not constitute an offer to sell or a solicitation of an
offer to buy any securities other than those offered hereby
or any of the securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make
such offer of solicitation in such jurisdiction.
The date of this Prospectus is November 1, 1995.
TABLE OF CONTENTS
Description of Plan 3-13
Description of Capital Stock of the Company 13
Incorporation of Certain Documents by Reference 14
Additional Information 14-16
DEFINITIONS
Company. The term "Company" means Kansas City Life
Insurance Company, a Missouri Corporation with its
principal office at Kansas City, Missouri; Sunset Life
Insurance Company of America, a Washington Corporation with
its principal office at Olympia, Washington, one hundred
percent (100%) of the capital stock of which is owned by
Kansas City Life Insurance Company; and Old American
Insurance Company, a Missouri Corporation with its
principal office at Kansas City, Missouri, one hundred
percent (100%) of the capital stock of which is owned by
Kansas City Life Insurance Company.
Employee. The term "employee" shall mean any person
employed by Kansas City Life Insurance Company, Sunset
Life Insurance Company, or Old American Insurance
Company, under the rules of common law, and shall not
include agents, general agents, consultants or other
independent contractors, or leased employees as defined in
Section 414(n) of the Internal Revenue Code.
Company Stock. The term "Company stock" shall mean
shares of the capital stock of Kansas City Life Insurance
Company.
Executive Committee. Wherever in the Plan and Trust
the term "Executive Committee" is used, it shall be taken to
mean the Executive Committee of the Board of Directors of
Kansas City Life Insurance Company.
Board of Directors. Wherever in the Plan and Trust the
term "Board of Directors" is used, it shall be taken to mean
only the Board of Directors of Kansas City Life Insurance
Company.
Plan Year. The records of the Plan are maintained on
an annual basis. December 31st of each year is the end of
the Plan year and all records will reflect that fact.
DESCRIPTION OF PLAN
General Information Regarding the Plan
The title of the Plan is the "Kansas City Life
Insurance Company Savings and Investment Plan"
(hereinafter sometimes referred to as the "Plan"), the
address for which is 3520 Broadway, Kansas City, Missouri
64111-2565, and which is the issuer of the Interests of
Participation under the Plan. Kansas City Life Insurance
Company, a Missouri life insurance corporation organized in
1895 (hereinafter sometimes referred to as the "Company"),
the address for which is 3520 Broadway, Kansas City,
Missouri 64111-2565, telephone number 816-753-7000, is the
issuer of its Capital Stock to be purchased under the Plan
and the participating employer under this Plan. The
employees of Sunset Life Insurance Company of America and
Old American Insurance Company, subsidiaries of Kansas
City Life Insurance Company, may also be participants.
Upon proper authorization by the respective companies,
employees of other subsidiaries of Kansas City Life may be
permitted to participate in the Plan.
Purpose
It is the purpose of this Plan to recognize the
contributions of those eligible persons to the
successful operation of the companies and to reward such
contributions by providing certain savings and
investment retirement benefits for those who become
participants under the Plan.
Plan History
The basic form of the Plan was adopted by the Board of
Directors of the Company on January 27, 1972 and was
approved by the shareholders of the Company at their
annual meeting held on April 20, 1972. The Plan became
effective on September 1, 1972. The parties to the
Agreement dated June 1, 1972 (the "Agreement") pursuant to
which the Plan and the Trust were created, were the Company
and Harry W. Kenney, D. W. Gilmore and Donald L. Thompson,
the Trustees. The Plan has been amended from time to time,
the most recent amendment becoming effective on January 1,
1994. The Trustees are Robert C. Miller, John K. Koetting
and Ronald E. Hiatt.
Termination and Amendment of Plan
The Plan and Trust are purely voluntary on the part of
the Company and it reserves the right to terminate the Plan
and Trust by adoption of a written resolution by the
Board of Directors or the Executive Committee. Upon
termination, the participants' accounts in all Funds
shall become fully vested and nonforfeitable and
distribution shall be made as promptly as possible. The
Company currently intends to continue the Plan for an
indefinite period of time.
The Company also reserves the right at any time to
modify or amend in whole or in part, any or all of the
provisions of the Plan and Trust by adoption of a written
resolution by the Board of Directors or the Executive
Committee. However, no amendment by the Company may be
used for the purpose of diverting contributions and benefits
from the participants, retired participants, or their
beneficiaries, except as may be required to conform with
governmental regulations.
Federal Income Taxes
On October 3, 1995 the Internal Revenue Service issued
its most recent letter stating that a favorable
determination was made. The letter further stated that
continued qualification of the Plan will depend on its
effect in operation under its present form. The status of
the Plan in operation will be reviewed periodically. The
plan is qualified under Section 401(a) of the Internal
Revenue Code, and incorporates the benefits provided by
Section 401(k).
The Company believes the Plan qualifies and the Trust continues
to be exempt under applicable provisions of the Internal Revenue Code.
So long as the Plan and Trust continue to qualify in operation, the
Trust's earnings will be exempt from taxation, and the
Company's contributions, whether to Fund III or for the
benefit of the employees' elective accounts, will be
deductible for income tax purposes.
Commencing January 1, 1988, Company contributions made
to a participant's elective account do not incur current
tax liability, nor is there taxation of any earnings of
the Trust credited to his account until such
contributions or earnings are withdrawn.
If the total amount of a participant's funds are
distributed to him within one of his taxable years because
of his retirement or death, then he is taxable on the entire
amount of the distribution in excess of non-taxable amounts
he contributed prior to January 1, 1988, less any assets
distributed to the participant in a prior tax year.
Unless a participant was age 50 before January 1, 1986,
amounts distributed to him prior to age
59 1/2 (or to his beneficiary if death occurs before the
participant reaches age 59 1/2) are taxable at regular
income tax rates to the extent the distribution exceeds the
amount of his non-taxable contributions prior to January
1, 1988 less any assets distributed to the participant in a
prior tax year. Distributions prior to age 59 1/2 may result
in a penalty of 10% of the taxable amount.
For participants who were age 50 prior to January 1,
1986, the amount of the taxable distribution due to
separation from service or death may be prorated between an
"ordinary income portion" subject to ordinary income tax
treatment (but eligible for certain special "averaging"
provisions) and a "capital gain portion" subject to capital
gains treatment. The "ordinary income portion" is
determined by multiplying the amount of the taxable
distribution by the ratio of the length of time an
individual has been a participant in the Plan subsequent to
December 31, 1973 to the total length of time such
individual has been a participant in the Plan. The portion
of the taxable distribution which is not the "ordinary
income portion" will be the "capital gain portion" subject
to capital gains tax treatment. These participants may be
eligible for "5 year averaging" or "10 year averaging"
provisions of the Internal Revenue Code for lump sum
distributions as well as capital gains. "10 year averaging"
uses the single individual Tax Rate for 1986 that applied in
1986.
A participant who was not age 50 before January 1, 1986
is not eligible for capital gains, but may be eligible to
have the lump sum distribution taxed as ordinary income
subject to the "5 year averaging" provisions if he is 59 1/2
or older when the distribution is made.
When a distribution is made and such distribution is
not eligible for either the long term capital gain or
special averaging treatment as described above, the
recipient is generally taxed at ordinary income rates on the
amount, if any, by which the market value of Company stock
plus any cash or other assets distributed exceed the
participant's contributions not previously withdrawn,
less any unrealized appreciation in the value of Company
stock taken as part of the distribution which was purchased
with the participant's own contributions. When a
participant receives a partial distribution from his
account from assets accumulated prior to January 1, 1987, no
amount will be taxable to him until he has received back all
of his contributions. When he receives a partial
distribution from his account from funds accumulated between
December 31, 1986 and January 1, 1988, there may be a pro
rata amount of the distribution taxable to him. If a
participant receives a partial distribution from his
"elective account" on or after January 1, 1988 pursuant to
the hardship rules, the full amount of the distribution will
be taxable to him.
Any distribution of all or a portion of the balance to
the credit of the participant excluding his own
contributions prior to January 1, 1988 is an "eligible
rollover distribution". A participant may elect to have any
portion of the eligible rollover distribution paid directly
to an "eligible retirement plan" in a direct rollover. An
eligible retirement plan is either an IRA or another
qualified plan. The amount transferred to an eligible
retirement plan will not be currently taxable to the
participant. Any amounts received in cash and not rolled
over directly to an eligible retirement plan are currently
taxable and will be subject to mandatory federal income tax
withholding at the rate of 20%.
Any employee who is eligible to participate in the
Plan may become a participant by submitting a "request
for participation". As of the 31st day of October, 1995,
there were approximately 651 employees who were eligible to
participate in the Plan, of whom 598 have elected to
participate.
The Plan is subject to the protective provisions of the
Employee Retirement Income Security Act of 1974, except
that it is exempt from the provisions of Title IV of the
Act, relating to the Pension Benefit Guaranty Corporation
because it is defined as an individual account plan or
defined contribution plan.
Eligibility
Each present and future employee who shall have
completed one (1) year of continuous employment with the
Company or companies, and who shall have completed one
thousand (1,000) hours of work in such period and who shall
be at least twenty-one (21) years of age, shall be qualified
as a participant in the Plan.
A participant's contributions to the Plan shall
cease when the participant becomes disabled and is eligible
to receive disability benefits from the Company's
disability plan. Such participant may resume making
contributions when he or she returns to work on a full
time basis. Vesting shall continue while the participant is
covered by the Company's disability plan.
Employees are eligible to commence participating in the
Plan on the first business day of the month coinciding with
or next following their becoming qualified, whichever
first occurs.
The Company may purchase stock in the open market or
use treasury stock in making its required contributions
of its Capital Stock to the Plan and for selling shares of
Capital Stock to the Trustees of the Plan pursuant to their
investment decisions. The Company has registered 300,000
shares of its Capital Stock under the rules of the
Securities and Exchange Commission. The shares held under
Fund II are included in this registration statement. As of
October 31, 1995, 77,526 shares of the Company's Capital
Stock were held under Fund II . Also as of October 31, 1995,
the Plan held a total of 436,577 shares of the Company's
Capital Stock in Funds II and III.
Contributions
Commencing January 1, 1988 the Plan has been governed
by the provisions of Section 401(k) of the Internal
Revenue Code. Each participant may elect to enter into a
compensation reduction agreement with the Company by which a
contribution will be made for the participant's account in
an amount equivalent to one percent (1%), two percent
(2%), three percent (3%), four percent (4%), five percent
(5%), six percent (6%), seven percent (7%), eight percent
(8%), nine percent (9%) or ten percent (10%) of his
unreduced monthly salary. No contribution in excess of six
percent (6%) of unreduced monthly salary shall be made for
any participating employee who shall be classified as a
highly compensated person.
A participant may elect to change the percentage rate
of his salary reduction agreement as of the first day of any
month, but not more often than once in any six (6) month
period. The participant shall give written notice of such
change as shall be prescribed by the Administrative
Committee. No contribution for any participant shall
exceed nine thousand two hundred forty dollars ($9,240) in
any calendar year, although this amount may be subject to
annual adjustments pursuant to Internal Revenue Code
Sections 415(d), and 402(g), and regulations. The
contributions and any salary reduction agreement may
sometimes be referred to as a participant's "elective
account." Hereafter, participant contributions shall be
authorized only as a result of the compensation
reduction agreements with the Company.
The term "salary" includes only the fixed amounts,
weekly, semi-monthly or monthly, due and payable to the
participant by the Company, and does not include any
bonuses, overtime pay, or other extraordinary payments by
the Company.
The Company, with respect to each participant,
contributes to the Plan as soon as practicable after the
end of each month, out of its current or accumulated
earnings and profits, an amount equal to 100% of such
participant's contribution to the Plan. The Company's
contributions are made in Capital Stock of the Company,
which may be either treasury or authorized and unissued
stock, except that Sunset Life's cash contributions are
forwarded to the Trustees, who shall purchase said shares
from Kansas City Life Insurance Company. Old American's
contributions are made by the Company and recovered from Old
American. Treasury Stock or shares of authorized but
unissued are valued at the average of its bid price on the
over-the-counter market for all business days following the
previous monthly valuation date. In the event the
Company is precluded from delivering its Capital
Stock to the Plan by law or because of the
unavailability of such shares, it is required to
contribute cash which is invested until such time as shares
of the Capital Stock become available for purchase by the
Trustees from the Company or on the open market. Commencing
January 1, 1988, matching Company contributions become
fully vested in the participant to the extent shown below,
upon the valuation date of the month in which the
participant completes one thousand (1000) hours of service
for the number of years of employment with the Company as
follows:
Years of Employment 1 2 3 4 5 6 7
Percentage Vested 0% 0% 30% 40% 60% 80% 100%
A participant may suspend his compensation
reduction agreement as of the last day of any month by
giving such notice as shall be prescribed by the
Administrative Committee. The participant may resume his
compensation reduction agreement by giving such notice
as shall be prescribed by the Administrative Committee
on the first day of any month following the expiration of
six (6) months from the date contributions for him were
suspended, provided he shall then be eligible to
participate.
Each participant, not less often than annually, shall
receive a statement of account indicating total
contributions from his compensation reduction agreement,
the total contributions made on his behalf by the
Company, and reflecting the increase or decrease in the
value of his accounts.
The Plan includes provisions required by federal law
which will result in a more rapid vesting if the Plan
becomes "top heavy" as defined by the Internal Revenue
Code. It is not anticipated that this will occur.
Distribution Under and Withdrawal From the Plan - Defaults
The full value of a participant's account in the Funds
shall fully vest and shall be paid to him or his beneficiary
in the event he retires or dies. In the event of termination
of employment other than by retirement or death, the
participant's accounts in Fund I, Fund II, Fund IV, Fund
V, Fund VI, Fund VII, Fund VIII and Fund IX shall be fully
vested. He shall be entitled to receive the full value of
those accounts. The participant shall forfeit all of his
rights with respect to the value of his account in Fund III
to the extent his account therein is not vested. Except,
however, if a participant returns to work with the Company
or any of its affiliated corporations, and is qualified
to participate, his nonvested portion of Fund III shall be
reinstated if he repays the full amount of the
distribution from Fund III before the earlier of five (5)
years after the first date on which he is re-employed or the
close of the first period of five (5) consecutive one (1)
year breaks in service commencing after the withdrawal. Upon
an employee's termination on or after January 1, 1976, any
twelve (12) month employment period during which the
employee completes less than five hundred one (501) hours
of employment or work due to a termination shall
constitute a break in service.
Commencing January 1, 1988, the normal retirement
date for all employees participating in this Plan shall be
the earlier of the first day of the month following
attainment of sixty (60) years of age, or the first day of
the month following attainment of fifty-five (55) years of
age and completion of five (5) years of service. To
determine this five (5) years of service for an employee of
Old American Insurance Company, years of service before
November 1, 1991 will not be counted.
All distributions because of termination of employment
shall be in the form of a lump sum payment, either in cash
or in capital stock of Kansas City Life Insurance
Company, unless the participant elects otherwise. A
nontransferable joint and survivor annuity, providing
equal monthly installments for a period not exceeding one
hundred twenty (120) months certain and for the remainder
of his lifetime may also be elected. If the participant
dies, the distribution shall automatically be made to
the spouse, if any, or in accordance with a beneficiary
designation properly filed, or in accordance with the terms
of the Plan. Federal law now requires that if a married
participant wishes a distribution to someone other than a
spouse, both the participant and the spouse must consent in
writing. If a participant elects to take all or a portion of
his settlement in the form of Kansas City Life Insurance
Company stock there will be no restriction on the resale
of that stock unless, however, the participant is an
affiliate under Rule 405 of the Securities Act of 1933,
e.g., a controlling person, executive officer or director,
or owns more than 5% of the outstanding capital stock of
the Company at that time. The procedures that are available
to affiliates for resale are an effective registration
statement or sales made pursuant to Rule 144 of the
Securities Act of 1933. Any participant who would like
to have clarification may feel free to contact the
Company's General Counsel at 816-753-7000. No other form
of distribution will be restricted in any manner.
Commencing January 1, 1988, a participant may elect at
any time to withdraw all or any part of the value of his
accounts in Fund I, Fund II, Fund IV, Fund V, Fund VI, Fund
VII, Fund VIII and Fund IX which were contributed prior to
January 1, 1988. However, an "alternate payee" under a
Qualified Domestic Relations Order may not make such a
withdrawal. The value of "elective account" contributions,
those made on or after January 1, 1988, may not be withdrawn
by the participant except for financial hardship
resulting from accident to, or sickness of, a participant or
his dependents, or financial hardship resulting from the
establishing or preserving the home in which the participant
resides, if funds are not reasonably available from other
financial resources to the participant. Such withdrawal
shall be subject to the approval of the Administrative
Committee, and any such withdrawal will be limited to the
amount of actual contributions made to the participant's
elective account. No gain on the value of such elective
account contributions may be withdrawn. Any such
withdrawal for hardship shall result in the
participant's ineligibility to participate in the Plan
for twelve (12) months. However, an "alternate payee" under
a Qualified Domestic Relations Order may not make such a
withdrawal.
Commencing January 1, 1988, no withdrawal of the
vested portion of a participant's Fund III account shall
be permitted except upon retirement, termination or death.
Any withdrawal of a participant's pre-1988 funds shall
result in the participant's ineligibility to participate
in the Plan for six (6) months. If a participant is more
than fifty percent (50%) vested, none of the Company
contributions for his account in Fund III shall be
forfeited. If a participant who makes a withdrawal is less
than fifty percent (50%) vested, he will forfeit fifty
percent (50%) of the amount withdrawn, but the dollar amount
forfeited cannot exceed his non-vested funds.
When a participant makes a withdrawal resulting in a
forfeiture, the amount subject to forfeiture shall be set
aside in a cash account. If the participant returns the
full amount of his withdrawal within five (5) years of the
date of withdrawal, the full value of the amounts set aside
in the cash account shall be restored to him. If the
participant does not replace the full amount withdrawn from
his account within the five (5) year period, the amount in
the cash account subject to forfeiture shall be applied to
reduce the amount of the Company contribution required by
the Plan.
Commencing January 1, 1988, a participant may request
a loan to be made from his elective account under such
conditions and terms established by the Administrative
Committee. Any such loan shall be made for a period not to
exceed five (5) years, and shall provide for repayment to
the Plan with equal payments to be made by monthly payroll
deduction. Loans used to acquire a primary residence of the
participant may provide for periodic payments over a
reasonable period of time that may exceed five (5) years.
No loan shall be granted to any participant or his
beneficiaries that will provide for a repayment period
extending beyond the participant's normal retirement date. A
reasonable rate of interest may be charged, as established
by the Administrative Committee from time to time, and
such interest payments shall be treated as earnings of the
borrower's account. Minimum loan repayments shall be made
by payroll deduction. The Administrative Committee shall
have the right to deny a participant's request for a loan.
An "alternate payee" under a Qualified Domestic Relations
Order may not request a loan.
Any loan made to a participant shall result in the
withdrawal of the loan amount (which would otherwise share
in the investment activity of the Funds) from the
participant's elective accounts. Any loan made, when added
to the outstanding balance of all other loans made to the
participant, shall be limited to the lesser of:
(a) Fifty thousand dollars ($50,000.00) reduced by the
excess of the highest outstanding balance of loans to the
participant during the twelve (12) month period
ending on the day before the date on which such
loan is made, over the outstanding balance of loans to the
participant on the date on which such loan is made, or
(b) The greater of ten thousand dollars
($10,000.00) or one-half (1/2) of the value of the
participant's elective account as of the valuation date
coincident with or next preceding the date as of
which the loan is calculated. No loan may exceed the value
of a participant's elective accounts.
(c) A third limitation may further reduce a second or
subsequent loan by the amount of an existing
loan balance.
Upon termination of employment, retirement or death, a
participant (or his beneficiary if death has occurred)
may irrevocably elect during the election period to receive
a lump sum payment as of January 31st of the next calendar
year. If this election is made, his account will be valued
on the regular valuation date in January. The election
period begins on the date of terminations of employment,
retirement or death, and ends on the last day of the
following calendar month. If the participant (or
beneficiary) decides to receive a distribution immediately
instead of the following January, his account will be valued
on the last day of the month in which the election is made.
The participant's account will be subject to any gains or
losses until a valuation is made. If no election is received
within the election period, a distribution will be made
within 60 days following the valuation date that coincides
with or next follows the participant's date of
termination of employment, retirement or death. Any
distribution shall occur in accordance with the Plan's
regular procedures.
Any request for withdrawal must be delivered to and
be in the possession of the Human Resources department of
Kansas City Life no later than 2 p.m., on the last market
business day of the month on which the requested withdrawal
is to occur.
Assignment
The interest hereunder of any participant, retired
participant or beneficiary, except as may be required by
a Qualified Domestic Relations Order defined in Section
414(p) of the Internal Revenue Code, is not transferable,
either by assignment or by any other method, and to the
maximum extent permissible by law is not subject to being
taken by any process whatever by the creditors of such
participant, retired participant or beneficiary.
Liens on Funds or Property
There is no provision under the Plan or any contract in
connection therewith giving any person the right to
create a lien on any funds, securities or other property
held under the Plan.
Administration of the Plan
The Plan Administrator is Kansas City Life Insurance
Company, 3520 Broadway, Kansas City, Missouri 64111-2565,
Telephone number 816-753-7000, and the Company has the right
to delegate responsibility for administration of the Plan to
appropriate personnel from time to time. At the present
time, the Administrative Committee has this primary
responsibility as authorized by the Plan.
The Administrative Committee (the "Committee")
consists of not less than three nor more than five persons
designated by the Executive Committee of the Company. The
members of the Committee receive no compensation for
their service. The members of the Committee serve one year
terms or until their successors are designated by the
Executive Committee of the Company. Any member of the
Committee may resign by giving notice to the Company at
least 15 days before his resignation. Committee members
shall resign upon the request of the Executive Committee of
the Company. The Executive Committee of the Company shall
fill all vacancies on the Committee as soon as reasonably
possible after a resignation takes place.
The names and addresses of the present members of the
Committee, together with their positions with the Company
are as follows:
Position with the
Name Address Company
Robert C. Miller 3520 Broadway Senior Vice President -
Kansas City, Missouri Administrative Services
Robert E. Janes 3520 Broadway Assistant Vice President and
Kansas City, Missouri Assistant Controller
John A. Showalter 3520 Broadway Associate General Counsel
Kansas City, Missouri
James P. Walsh 3520 Broadway Assistant Vice President,
Kansas City, Missouri Associate Actuary
Ronald E. Hiatt 3520 Broadway Treasurer
Kansas City, Missouri
The Committee members, if otherwise eligible, are free
to participate in the Plan.
The Committee has the power to (i) adopt rules and
regulations for the administration of the Plan and to
enforce the Plan in accordance with the provisions of the
Plan and such rules and regulations, (ii) interpret the Plan
and decide any and all matters arising thereunder, except
such matters which the Executive Committee of the Company
from time to time may reserve for itself, and, (iii) make
all determinations as to the rights of any person to a
benefit and provide a reasonable opportunity for an
aggrieved person to have a review of their decision. The
Committee has the duty, when requested, to report to the
Executive Committee of the Company giving account of the
operation of the Plan and the performance of the various
funds established pursuant to the Plan.
The Company pays all expenses incurred in administering
the Plan and managing the Trust assets. The Company does
not, however, pay any brokerage fees, commissions, stock
transfer taxes or other charges and expenses in connection
with the purchase and sale of securities under the Plan.
Investment of Funds
The following officers of the Company are the Trustees
of the Plan:
Position with the
Name Address Company
Robert C. Miller 3520 Broadway Senior Vice President -
Kansas City, Missouri Administrative Services
John K. Koetting 3520 Broadway Vice President and
Kansas City, Missouri Controller
Ronald E. Hiatt 3520 Broadway Treasurer
Kansas City, Missouri
The Trustees, if otherwise eligible, are free to
participate in the plan.
The Trustees hold all sums received from the Company
and have the duty to hold, invest, reinvest, and manage and
administer the funds for the exclusive benefit of the
employees participating in the Plan. The Trustees have
the power to purchase securities, common and preferred
stocks, real estate mortgages, debentures, bonds, promissory
notes, real estate, real estate improvements, leaseholds or
any other income producing properties or securities, real
or personal, within or without the State of Missouri. The
Trustees are specifically empowered to invest in the
Capital Stock of Kansas City Life Insurance Company.
Although investment discretion rests with the
Trustees, all shares of the Company's capital stock
allocated to participants' accounts and held in trust,
whether or not fully vested, are voted in accordance with
the instructions from the participants. The
participants also have the right to direct the Trustees to
respond to an offer for the tender of the Company's stock,
in accordance with rules of procedure provided by the
Trustees at the time of any such tender offer.
The Trustees, before making any new investment or
reinvestment of any Trust funds, must submit to the
Executive Committee of the Company, or its designated
subcommittee, a list of such securities in which they
propose to invest such funds and the amount proposed to be
invested in such securities. The Trustees are required to
purchase, or refrain from purchasing, the securities
proposed in accordance with the acceptance or rejection,
in whole or in part, of such proposals by such committee.
Participant's Accounts
Prior to January 1, 1988, all participant's
contributions and any earnings thereon were accounted for in
Fund I, Fund II and Fund IV. All Company contributions and
any earnings thereon were accounted for in Fund III,
invested in the Company's capital stock.
Commencing January 1, 1988, contributions to each
participant's "elective account" continued to be invested
in Fund I, Fund II or Fund IV as directed by the
participant, but were accounted for separately from
amounts accumulated prior to January 1, 1988. The elective
accounts are established as a result of a participant's
agreement to receive reduced compensation. The elective
accounts are permissible under the provisions of Internal
Revenue Code Section 401(k).
Beginning September 1, 1993, Funds V, VI, VII, VIII and
IX were established. Contributions to each participant's
elective account in these funds continues to be accounted
for separately from amounts accumulated prior to January 1,
1988.
Although there will be a separate accounting for a
participant's elective accounts, the accumulation of
funds in those elective accounts will continue to be
invested by the Trustees in accordance with the rules of the
Plan.
The Trustees have stated that it is their present
intention that the contributions to Fund I be invested in
Twentieth Century Growth Fund (a mutual fund), Fund II in
Kansas City Life Insurance Company common stock, Fund III in
Kansas City Life Insurance Company common stock, Fund IV
in MetLife Managed Guaranteed Investment Contract (GIC),
Fund V in Vanguard Bond Index (a mutual fund), Fund VI in
Templeton Foreign Fund (a mutual fund), Fund VII in
Vanguard Balanced Index Fund (a mutual fund), Fund VIII in
Fidelity Value Fund (a mutual fund), and Fund IX in
Vanguard Index Trust (a mutual fund). Neither the
principal amount nor the rate of return on these funds is
guaranteed by the Plan or the Company.
Each participant may elect to have all or a portion of
his "elective account" contributions invested in any one
or more of Funds I, II, IV, V, VI, VII, VIII or IX so long
as the investment percentage is a whole percentage. No
fractional percentages are permitted.
Each participant may, not more often than once a month,
transfer the value of his account in any fund or funds to
another fund or funds. However, transfers to or from Fund II
may occur only once in a six (6) month period. Further, if a
participant is investing all or a portion of his monthly
contribution in Fund II and transfers all or a portion of
his Fund II account value to another fund, monthly
contributions to Fund II must stop for at least six (6)
months after the date of the last transfer form Fund II.
Transfers to or from Fund III are not permitted. Any request
for a transfer must be delivered to and be in the possession
of the Human Resources Department no later than 2:00 p.m. on
the last business day of the month on which the requested
transfer is to occur.
Each participant has an account with respect to such of
Fund I, Fund II, Fund IV, Fund V, Fund VI, Fund VII, Fund
VIII and Fund IX as he shall have selected from time to
time, as well as an account with respect to Fund III. Fund
accounts are valued monthly. The value of the assets of
each Fund is determined on the basis of market values on the
last market business day each month, except that the value
of Fund II and Fund III, comprised of Company stock, is
determined on the last business day of each month by using
an average of the bid price on the over-the-counter market
for all business days of that month.
Past Performance of Each Fund
The following chart shows the approximate percentage
increase or (decrease) in the value of each of the funds
in each of the last 5 years as compared to the preceding
year:
PERIOD ENDING
12/31/90 12/31/91 12/31/92 12/31/93 12/31/94
Fund I (4.7%) 69.9% (4.3%) 4.4% (1.4%)
Fund II (12.0%) 16.4% 46.1% 3.7% (13.6%)
Fund III (12.0%) 16.6% 46.1% 3.7% (13.6%)
Fund IV 9.3% 15.1% 6.5% 1.7% 4.6%
Fund V N/A N/A N/A 0.1% (2.5%)
Fund VI N/A N/A N/A 11.1% (0.7%)
Fund VII N/A N/A N/A 1.3% (1.6%)
Fund VIII N/A N/A N/A 4.4% 7.2%
Fund IX N/A N/A N/A 3.7% (2.2%)
The above is the average rate of return for the funds
for an entire year except as described below. No single
participant's performance necessarily reflected this
performance. The above is no indication of future
performance of any of these funds.
On September 1, 1993, the number of funds was
increased from four to nine. The investment of Funds I, II
and III remained the same, and the rates of return for them
shown above are for the full year 1993. The investment of
Fund IV changed, and Funds V, VI, VII, VIII and IX are new.
The rates of return shown above for them for 1993 reflect
only the four month period they existed that year in the
Plan. The rates of return shown above for 1994 reflect a
full year for all funds.
Other Charges and
Deductions
There are no charges and deductions which may be made
from participant's contributions and elective accounts or
their contributions made by the Company under the Plan,
other than brokerage fees, commissions, stock transfer taxes
and other charges and expenses in connection with the
purchase and sale of securities under the Plan.
DESCRIPTION OF CAPITAL STOCK OF THE COMPANY
The only class of stock which the Company is authorized
to issue is its Capital Stock, with par value of $2.50 per
share. The following statements relative to the Capital
Stock are summaries of certain provisions of the Company's
charter and bylaws and of the applicable statutes. These
statements do not purport to be complete or to give full
effect to statutory or common law, and are subject in all
respects to the applicable provisions of the charter and
bylaws of the Company, and to the applicable laws of the
State of Missouri.
Each holder of Capital Stock is entitled to one vote
per share on all matters submitted to the vote of the
stockholders, except that in the election of directors he
may vote cumulatively. In the event of the liquidation of
the Company, the holders of the Capital Stock will be
entitled to receive ratably all assets of the Company which
are available for distribution to its stockholders. No
holder of Capital Stock has any pre-emptive or other right
to subscribe for or purchase any shares of stock or other
securities of the Company at any time issued.
There are no conversion rights or redemption or
sinking fund provisions applicable to the Capital Stock.
The outstanding shares of Capital Stock are fully paid and
nonassessable. The holders of Capital Stock are entitled to
receive dividends thereon when, as and if declared by the
Board of Directors of the Company out of the funds of the
Company legally available therefor.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Incorporated by reference herein are the following
documents:
(a) The Annual Report of Kansas City Life
Insurance Company filed on Form 10-K for the year
ended December 31, 1994, and the Plan, filed pursuant to
Section 15(d) of the Securities Exchange Act of
1934.
(b) All other reports filed by either the Company or
the Plan pursuant to Section 15(d) of the Securities
Exchange Act of 1934, since the end of the fiscal year
1994 covered by the Annual Report.
Copies of these documents are available without charge
to a participant upon oral or written request by
contacting the Director, Human Resources, Kansas City Life
Insurance Company, 3520 Broadway, Kansas City, Missouri
64111-2565, Telephone number 816-753-7000.
ADDITIONAL INFORMATION
There have been no material changes in the affairs of
Kansas City Life Insurance Company which have occurred since
the end of fiscal year 1994, for which certain financial
statements were included in the Annual Report.
Reports and other information filed by Kansas City
Life with the Securities and Exchange Commission can be
inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D. C. 20549, and at the following regional
offices of the Commission; New York Regional Office, 26
Federal Plaza, New York, New York 10278; Los Angeles
Regional Office, 5757 Wilshire Blvd., Los Angeles,
California 90036; and the Chicago Regional Office, 219 S.
Dearborn Street, Chicago, Illinois 60604, and copies of such
material can be obtained from the public reference rooms of
the Commission, in these offices at prescribed rates.
Indemnification of Directors
and Officers
Each person who is or was a Director, Officer or
employee of the Company, or is or was serving at the request
of the Company as a Director, Officer or employee of another
corporation, partnership, joint venture, trust or other
enterprise shall be indemnified by the Company in the manner
and to the full extent that the Company has power to
indemnify such person under Section 351.355 of the General
and Business Corporation Law of Missouri as now in effect or
hereafter amended.
Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against
public policy as expressed in the Act and will be governed
by the final adjudication of such issue.
Information, Claims and Appeals Procedure
If you have any questions regarding the Plan, or if you
have any claim regarding the payment of benefits, you should
immediately contact the Administrative Committee, or any
member of it, and preferably state your claim in writing.
The Administrative Committee will consider the matter
promptly and will provide you with a written statement in
the event any benefits should be denied. Furthermore, the
Committee shall provide you or any beneficiary whose claim
for benefits has been denied a reasonable opportunity for a
review of the decision denying the claim. Any such appeal or
request for review should be submitted in writing within 30
days after receiving written notice from the Committee that
a benefit has been denied. Such statement should include:
(1) A request for review by the Administrative
Committee;
(2) The basis of review and the facts in support
thereof; and
(3) Any issues and comments which you deem pertinent.
The Administrative Committee may require additional
documents as its deems necessary or desirable in making such
a review. A determination shall be made and you shall be
informed in writing within 60 days of receipt of the request
for a review, or in no event more than 120 days if it is
determined that a full hearing must be held.
Procedure to Request Additional Information
If you would like any additional information or a copy
of any document related to the Plan, please write to the
Director, Human Resources, Kansas City Life Insurance
Company, 3520 Broadway, Kansas City, Missouri 64111-2565,
Telephone number 816-753-7000. In the event you request a
copy of any document not listed earlier as being available
without charge, it will be furnished at a nominal cost.
Statement of ERISA Rights
As a participant in the Savings and Investment Plan,
you are entitled to certain rights and protections under the
Employee Retirement Income Security Act of 1974 (ERISA).
ERISA provides that all Plan participants shall be entitled
to:
Examine, without charge, at the Plan
Administrator's Office and at other specified
locations, such as worksites and union halls, all Plan
documents, including insurance contracts, collective
bargaining agreements and copies of all documents filed
by the Plan with the U.S. Department of Labor, such as
detailed annual reports and Plan descriptions.
Obtain copies of all Plan documents and other Plan
information upon written request to the Plan Administrator.
The Administrator may make a reasonable charge for the
copies.
Receive a summary of the Plan's annual financial report. The
Plan Administrator is required by law to furnish each
participant with a copy of this Summary Annual Report.
Obtain a statement telling you whether you have a right to
receive a pension at normal retirement age, and if so, what
your benefits would be at normal retirement age if you stop
working under the Plan now. If you do not have a right to a
pension, the statement must be requested in writing and is
not required to be given more than once a year. The Plan
must provide the statement free of charge.
In addition to creating rights for Plan participants,
ERISA imposed duties upon the people who are responsible for
the operation of the employee benefit plan.
These people who operate your Plan, called
"fiduciaries" of the Plan, have a duty to do so prudently
and in the interest of you and other Plan participants and
beneficiaries. No one, including your employer, your union
or any other person, may fire you or otherwise discriminate
against you in any way to prevent you from obtaining a
pension benefit or exercising your rights under ERISA.
If your claim for a pension benefit is denied in whole
or part, you must receive written explanation of the reason
for the denial. You have the right to have the Plan review
and reconsider your claim.
Under ERISA, there are steps you can take to enforce
the above rights. For instance, if you request materials
from the Plan and do not receive them within 30 days, you
may file suit in a federal court. In such a case, the court
may require the Plan Administrator to provide the materials
and pay you up to $100.00 a day until you receive the
materials, unless the materials were not sent because of
reasons beyond the control of the Administrator. If you have
a claim for benefits which is denied or ignored, in whole or
in part, you may file suit in a state or federal court.
If it should happen that Plan fiduciaries misuse the
Plan's money, or if you are discriminated against for
asserting your rights, you may seek assistance from the U.S.
Department of Labor, or you may file suit in a federal
court. The court will decide who should pay court costs and
legal fees. If you are successful, the court may order the
person you have sued to pay these costs and fees. If you
lose, the court may order you to pay these costs and fees,
for example, if it finds your claim is frivolous.
If you have any questions about your Plan, you should
contact the Plan Administrator. If you have any
questions about this statement or about your rights under
ERISA, you should contact the nearest Area Office of the
U.S. Labor-Management Services Administration,
Department of Labor.
Agent for Service of Legal Process
Service of legal process may be made upon Kansas City
Life Insurance Company as the Administrator of the Plan,
or such service of process may be made upon any member of
the Administrative Committee or any one of the Trustees. Such
service of legal process should be directed to those parties
at the address of the Company, 3520 Broadway, Kansas City,
Missouri 64111-2565.
