FORM 10-Q
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For The Quarterly Period Ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ---------- to ------------
COMMISSION FILE NUMBER 33-64820
AMERICO LIFE, INC.
(Exact name of registrant as specified in its charter)
MISSOURI
(State of other jurisdiction of incorporation or organization)
43-1627599
(I.R.S. Employer Identification No.)
1055 BROADWAY
KANSAS CITY, MISSOURI 64105
(Address of principal executive offices)
(816) 391-2000
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class and Title of Shares Outstanding
CAPITAL STOCK AS OF AUGUST 12, 1997
Common Stock,$1.00 Par Value 10,000
AMERICO LIFE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In Thousands - unaudited)
<TABLE>
JUNE 30, DECEMBER 31,
1997 1996
----------- ----------
<S> <C> <C>
ASSETS
Investments:
Fixed maturities:
Held to maturity, at amortized cost
(market: $880,556 and $847,832) $ 893,559 $ 857,451
Available for sale, at market
(amortized cost: $671,605 and $671,792) 671,752 670,274
Equity securities, at market
(cost: $50,551 and $33,341) 72,376 48,262
Investment in equity subsidiaries 20,712 18,078
Mortgage loans on real estate, net 166,529 184,326
Investment real estate, net 19,730 22,417
Policy loans 201,986 204,607
Other invested assets 15,253 13,437
----------- ---------
Total investments 2,061,897 2,018,852
Cash and cash equivalents 75,831 96,069
Accrued investment income 26,454 25,287
Amounts receivable from reinsurers 1,120,621 375,150
Other receivables 17,992 13,969
Deferred policy acquisition costs 85,876 72,438
Cost of business acquired 285,711 200,710
Other assets 36,176 28,235
----------- ----------
Total assets $ 3,710,558 $2,830,710
=========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Policyholder account balances $ 2,127,512 $1,466,959
Reserves for future policy benefits 870,458 681,545
Unearned policy revenues 36,050 32,128
Policy and contract claims 37,879 30,959
Other policyholder funds 81,579 81,442
Notes payable 133,162 133,312
Amounts payable to reinsurers 71,314 67,348
Deferred income taxes 47,126 43,195
Amounts due to affiliates 3,645 2,168
Due to brokers 22,223 50,013
Other liabilities 58,299 34,619
----------- ----------
Total liabilities 3,489,247 2,623,688
Stockholder's equity:
Common stock ($1 par value; 30,000 shares
authorized, 10,000 shares issued and outstanding) 10 10
Additional paid-in capital 3,745 3,745
Net unrealized investment gains 41,589 37,189
Retained earnings 175,967 166,078
----------- ----------
Total stockholder's equity 221,311 207,022
Commitments and contingencies
----------- ----------
Total liabilities and stockholder's equity $ 3,710,558 $2,830,710
=========== ==========
</TABLE>
See notes to consolidated financial statements
AMERICO LIFE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(In Thousands, except per share amounts - unaudited)
<TABLE>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
INCOME
Premiums and policy revenues $ 55,164 $ 39,163 $ 96,488 $ 80,355
Net investment income 59,583 42,991 109,191 86,659
Net realized investment
gains (losses) 2,958 (494) 3,452 (1,259)
Other income 1,602 304 1,711 449
-------- ------- ------- --------
Total income 119,307 81,964 210,842 166,204
BENEFITS AND EXPENSES
Policyholder benefits:
Death benefits 29,986 24,113 56,097 47,543
Interest credited on universal
life and annuity products 28,879 17,771 52,000 35,732
Other policyholder benefits 15,271 12,763 28,711 27,008
Change in reserves for
future policy benefits (3,149) (4,613) (7,584) (8,088)
Commissions 3,206 3,316 6,134 5,820
Amortization expense 11,449 6,484 18,109 13,352
Interest expense 3,026 3,014 6,033 6,048
Other operating expenses 20,360 14,518 35,647 27,989
------- ------- ------- --------
Total benefits and expenses 109,028 77,366 195,147 155,404
Income before provision for
income taxes 10,279 4,598 15,695 10,800
Provision for income taxes 3,154 1,572 4,806 3,657
------- ------ -------- --------
Net income $ 7,125 $ 3,026 $ 10,889 $ 7,143
======= ======= ======== ========
Net income per common share $712.50 $ 302.60 $1,088.90 $ 714.30
======= ======= ========= ========
</TABLE>
See notes to consolidated financial statements
<PAGE>
AMERICO LIFE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(In Thousands - unaudited)
<TABLE>
SIX MONTHS
ENDED JUNE 30,
1997 1996
-------- --------
<S> <C> <C>
Cash flows from operating activities
Net income $ 10,889 $ 7,143
-------- --------
Adjustments to reconcile net income
to net cash used by operating activities:
Depreciation and amortization 20,003 14,787
Deferred policy acquisition costs (13,994) (9,659)
Undistributed earnings of equity subsidiaries (2,636) (3,068)
Distribution of earnings from equity subsidiary - 6,000
Amortization of unrealized gains (3,445) (2,417)
(Increase) decrease in assets:
Accrued investment income 925 1,048
Amounts receivable from reinsurers (40,752) (30,307)
Other receivables (4,023) (23,830)
Other assets, net of depreciation
and amortization 3,205 394
Increase (decrease) in liabilities:
Policyholder account balances (8,270) (405)
Reserves for future policy benefits
and unearned policy revenues 11,982 (5,632)
Policy and contract claims (950) 6,698
Other policyholder funds 137 (6,924)
Amounts payable to reinsurers 3,966 (5,549)
Provision for deferred income taxes 1,560 1,860
Amounts due to affiliates 1,477 5,734
Other liabilities 5,235 2,397
Net realized losses (gains) on investments sold (3,452) 1,259
Amortization on bonds and mortgage loans 67 135
Other changes (3,308) (2,331)
-------- -------
Total adjustments (32,269) (49,810)
-------- --------
Net cash used by operating activities (21,380) (42,667)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of fixed maturity investments (170,186) (85,849)
Purchases of other investments (50,827) (9,233)
Maturities or redemptions of fixed
maturity investments 40,061 12,807
Sales of available for sale fixed
maturity investments 230,501 160,582
Sales of equity securities 147,944 15,889
Sales of other investments 14,567 413
Payment for subsidiaries acquired, net of
cash acquired (246,348) -
Mortgage loans originated (335) (337)
Repayments from mortgage loans 19,320 12,110
Change in due to brokers (27,790) (42,034)
Change in policy loans 2,621 2,745
-------- --------
Net cash provided (used) by
investing activities (40,472) 67,093
--------- --------
</TABLE>
(Continued)
See notes to consolidated financial statements
<PAGE>
AMERICO LIFE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
(In Thousands - unaudited)
<TABLE>
SIX MONTHS
ENDED JUNE 30,
1997 1996
-------- --------
<S> <C> <C>
Cash flows from financing activities
Receipts credited to policyholder account balances $94,512 $ 96,004
Return of policyholder account balances (51,611) (51,608)
Repayments of notes payable (287) (269)
Dividends paid (1,000) (1,000)
--------- ---------
Net cash provided by financing activities 41,614 43,127
--------- ---------
Net increase (decrease) in cash and
cash equivalents (20,238) 67,553
Cash and cash equivalents at beginning of period 96,069 58,996
--------- ---------
Cash and cash equivalents at end of period $ 75,831 $ 126,549
========= =========
Supplemental schedule of non-cash investing
and financing activities
Acquisition of subsidiaries:
Fair value of assets acquired, net of cash
acquired $ 947,498 $ -
Liabilities assumed (701,150) -
--------- ---------
Payments for subsidiaries acquired,
net of cash acquired $ 246,348 $ -
========= =========
</TABLE>
See notes to consolidated financial statements
<PAGE>
AMERICO LIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For Six Months Ended June 30, 1997 and 1996
(In Thousands, except per share amounts - unaudited)
The following notes should be read in conjunction with the notes to the
consolidated financial statements contained in the Americo Life, Inc. ("the
Company") December 31, 1996 Form 10-K as filed with the Securities and
Exchange Commission.
1. ACCOUNTING POLICIES
The unaudited consolidated financial statements as of June 30, 1997 and for
the three and six months ended June 30, 1997 reflect all adjustments,
consisting of normal recurring adjustments, which are necessary for a fair
statement of financial position and results of operations on a basis
consistent with accounting principles described fully in Note 1 of the
Company's December 31, 1996 consolidated financial statements. The results of
operations for the three and six months ended June 30, 1997 and 1996 are not
necessarily indicative of the results experienced for the full year 1996, nor
the results to be expected for the full year 1997.
In January 1997, the Company implemented Statement of Financial Accounting
Standards ("SFAS") No. 125 "Accounting for Transfers and Servicing of
Financial Assets and Extinguishment of Liabilities". SFAS No. 125 establishes
new criteria for determing whether a transfer of financial assets in exchange
for cash or other consideration should be accounted for as a sale or as a
pledge of collateral. The implementation of portions of this statement with
respect to accounting for pledged collateral, repurchase agreements and
similar transactions was deferred for one year by SFAS No. 127 "Deferral of
the Effective Date of Certain Provisions of the FASB Statement No. 125"
issued in December 1996. Implementation of these new accounting standards
did not have a material impact on the consolidated financial statements of
the Company.
In February 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 128, "Earnings per Share" and SFAS No. 129, "Disclosure of Information
about Capital Structure". SFAS No. 128 specifies the computation,
presentation and disclosure requirements for earnings per share. SFAS No.
129 does not establish new disclosure requirements, rather it codifies
certain disclosure requirements contained in other statements previously
issued. These statements are effective for financial statement periods
ending after December 15, 1997. Theimplementation of these statements is not
expected to have an impact on the consolidated financial statements of the
Company.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income"
and SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information". SFAS No. 130 establishes standards for the reporting and
display of comprehensive income and its components in general-purpose financial
statements. SFAS No. 131 establishes new guidelines for public business
enterprises to report financial and descriptive information about their
operating segments. These statements are effective for financial statement
periods beginning after December 15, 1997.
The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
<PAGE>
AMERICO LIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For Six Months Ended June 30, 1997 and 1996
(In Thousands, except per share amounts - unaudited)
2. STOCKHOLDER'S EQUITY
Following are the components of net unrealized investment gains:
<TABLE>
CHANGE IN
SIX MONTHS
ENDED
JUNE 30, DECEMBER 31, JUNE 30,
1997 1996 1997
<S> <C> <C> <C>
Investment securities:
Fixed maturities available
for sale $ (147) $ (1,518) $ 1,371
Fixed maturities reclassified
from available for sale to
held to maturity 49,982 53,426 (3,444)
Equity securities 21,825 14,922 6,903
-------- --------- ---------
71,660 66,830 4,830
Effect on other balance sheet accounts:
Net effect on other balance
sheet accounts (9,392) (11,123) 1,731
Deferred income taxes (20,679) (18,518) (2,161)
--------- --------- ---------
Net unrealized investment
gains $41,589 $ 37,189 $ 4,400
========= ========= =========
</TABLE>
During the six months ended June 30, 1997, the Company paid dividends to
Financial Holding Corporation (FHC) totalling $1,000.
3. ACQUISITION
On April 15, 1997 (the "Closing Date"), Great Southern Life Insurance Company
("Great Southern"), a wholly-owned subsidiary of the Company, acquired all of
the outstanding common stock of The Ohio State Life Insurance Company ("Ohio
State") and Investors Guaranty Life Insurance Company ("Investors") from Farmers
Group, Inc. pursuant to a stock purchase agreement dated January 21, 1997. The
purchase price was approximately $343.0 million. The acquisition of Ohio
State and Investors was accounted for using the purchase method of accounting.
The operating results of Ohio State and Investors after the date of acquisition
are included in the Company's statement of income for the three and six months
ended June 30,1997.
The assets acquired and liabilities assumed related to the acquisition of Ohio
State and Investors were as follows (in millions):
<TABLE>
<S> <C>
Assets acquired:
Fixed maturities $ 623.8
Equity securities 123.4
Cash and cash equivalents 90.2
Cost of business acquired 140.7
Other assets 59.6
---------
$ 1,037.7
=========
Liabilities assumed:
Policyholder account balances $ 521.4
Reserves for future policy
benefits 132.3
Other liabilities 40.9
---------
$ 694.6
=========
</TABLE>
<PAGE>
AMERICO LIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For Six Months Ended June 30, 1997 and 1996
(In Thousands, except per share amounts - unaudited)
On April 16, 1997, Ohio State and Investors entered into separate coinsurance
agreements to reinsure 100% of their insurance liabilities to an unaffiliated
insurance company (the "Reinsurer") in exchange for a ceding commission of
$146,000. On the same day, the Reinsurer and Great Southern entered into a
modified coinsurance agreement under which the Reinsurer ceded certain risks
on a 70% quota share basis on the same insurance liabilities to Great Southern.
The reinsurance agreements have the net effect of transferring 30% of the
profits on the Ohio State and Investors policies to the Reinsurer. Under the
coinsurance treaty, the assets supporting the insurance liabilities are
retained by the Reinsurer in an escrow account for the benefit of Great
Southern. The Reinsurer will receive 100% of the statutory profits from the
reinsured policies until the Reinsurer has recovered the initial ceding
commission.
Ohio State and Investors transferred bonds and policy loans to the Reinsurer
equal to the statutory reserve liabilities less the ceding commission. The
policy liabilities remain the direct liabilities of Ohio State and Investors and
therefore remain on the Company's consolidated balance sheet. The assets
retained by the Reinsurer are included on the Company's consolidated balance
sheet as a receivable from the Reinsurer. The cost of business acquired asset
related to the acquired business has been reduced to reflect the net 30%
coinsurance.
The acquisition of Ohio State and Investors was funded by internal funds and
the proceeds of a $240,000 repurchase agreement. Upon receipt of the $146,000
ceding commission from the Reinsurer, Ohio State and Investors paid dividends
totalling $200,000 to Great Southern. The repurchase agreement was
substantially closed out in April 1997.
Summarized unaudited pro forma consolidated financial information of the
Company for the six months ended June 30, 1997, assuming the transactions had
occurred on January 1, 1997 is as follows:
Total revenue $ 230,768
Net income $ 10,534
Net income per common share $ 1,053.40
4. Commitments and Contingencies
In February 1997, Great Southern was named a defendant in a lawsuit filed in
the Circuit Court of Dade County, Florida related to the sale of universal life
policies and alleging that policyholders were misled regarding the premiums
payable for such policies (Irwin Ginsberg v. Jack Goldberg and Great Southern
Life Insurance Company). The plaintiff in such lawsuit seeks to represent a
class of Great Southern policyholders and claims unspecified compensatory and
punitive damages. Great Southern removed this case to the United States
District Court in and for the Southern District of Florida. The Company is
still investigating the matter. In July 1997, the plaintiff in a lawsuit
against Great Southern (James Morgan McGraw v. Great Southern Life Insurance
Co. and Ervin Jackson), filed an amended petition in the District Court of
Jasper County, Texas, purporting to represent a class of all Texas
policyowners who have or had an ownership interest in whole life insurance
policies issued by Great Southern. The plaintiff has alleged that Great
Southern's marketing practices for these policies were fraudulent and
misleading and violated the Texas Insurance Code and Deceptive Trade
Practices Act. On behalf of the putative class, the plaintiff is seeking
unspecified actual, exemplary, and treble damages. Great Southern intends to
defend these cases vigorously. The amount of any liability that may arise as
a result of these cases, if any, cannot be reasonably estimated at this time and
no provision for loss has been made in the accompanying financial statements.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company entered into two transactions in 1996 and 1997 which affect the
comparability of the Company's results of operations for the three and six
months ended June 30, 1997 and 1996.
In July 1996, in connection with administrative agreements entered into by the
Company with Fremont General Corporation and Fremont Life Insurance Company
("Fremont Life"), an unaffiliated company ("Reinsurer") reinsured certain of
the insurance liabilities of Fremont Life on a coinsurance basis. The Reinsurer
ceded certain risks on these same liabilities to Great Southern Life Insurance
Company ("Great Southern") on a modified coinsurance basis. The invested assets
related to the reinsured business are owned by the Reinsurer. The Company has
offset the receivable from the Reinsurer against its liabilities under the
modified coinsurance agreement in the Company's consolidated financial
statements at June 30, 1997. At June 30, 1997, the reinsured liabilities,
consisting primarily of annuities and universal life policies, totalled $385.1
million. The earnings from this transaction are included in the Company's
results of operations for the three and six months ended June 30, 1997.
In April 1997, Great Southern acquired all of the outstanding common stock of
The Ohio State Life Insurance Company ("Ohio State")and Investors Guaranty Life
Insurance Company ("Investors") from Farmers Group, Inc. pursuant to a stock
purchase agreement. In April 1997, Ohio State and Investors entered into
separate coinsurance agreements to reinsure 100% of their insurance
liabilities to the Reinsurer in exchange for a ceding commission of $145.7
million. On the same day, the Reinsurer and Great Southern entered into a
modified coinsurance agreement under which the Reinsurer ceded certain risks on
a 70% quota share basis on the same insurance liabilities to Great Southern.
The acquisition was accounted for using the purchase method of accounting.
At June 30, 1997, the insurance business of Ohio State and Investors,
consisting primarily of annuities and universal life policies, had aggregate
insurance liabilities of $686.1 million. The results of operations of this
acquired business from the date of the acquisition, less the net 30%
coinsurance, are included in the Company's results of operations for the three
and six months ended June 30, 1997. The Fremont Life transaction and the Ohio
State and Investors transactions will hereinafter be referred to as the
Acquisitions. The effects of the Acquisitions on the individual income
statement components are as follows (in millions):
<TABLE>
Three months Six months
ended ended
June 30, 1997 June 30, 1997
------------- -------------
<S> <C> <C>
Premiums and policy revenues $ 17.8 $ 21.0
Net investment income 15.3 22.1
Other income 1.6 1.6
Policyholder benefits 20.9 28.5
Commissions 0.5 1.1
Amortization expense 5.1 6.2
Other operating expenses 4.4 5.1
</TABLE>
The other operating expenses in the above table include only the direct
expense related to providing administration of the policies and assets of the
Acquisitions. The other operating expenses shown do not include any
allocation of indirect or overhead expenses.
SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996
Income before income taxes for the first six months of 1997 was $15.7 million
compared to $10.8 million for the same period in 1996. This increase is
primarily due to (i) income from the Acquisitions and (ii) an increase in
realized investment gains, offset by (iii) an increase in death benefits and
(iv) an increase in other operating expenses. These items and significant
changes in individual income statement components are discussed in more detail
below.
PREMIUMS AND POLICY REVENUES: Premiums and policy revenues increased to $96.5
million for the six months ended June 30, 1997 from $80.4 million for the six
months ended June 30, 1996. Excluding the Acquisitions, premiums and policy
revenues decreased $4.9 million. Traditional premiums decreased $4.2 million
from the six months ended June 30, 1996 to the six months ended June 30,
1997. The Company's traditional life premiums have decreased as the amount
of in-force traditional business has decreased. The six months ended June
30, 1996 included $2.2 million of traditional premiums on supplementary
contracts which did not recur during the six months ended June 30, 1997.
Additionally, policy revenues were $0.6 million lower in the six months
ended June 30, 1997 compared to the same period in 1996 due to lower
surrender charge income in 1997.
NET INVESTMENT INCOME: Net investment income increased $22.5 million to $109.2
million for the six months ended June 30, 1997 from $86.7 million for the six
months ended June 30, 1996. Excluding net investment income related to the
Acquisitions, net investment income increased $0.4 million from 1996 to 1997.
Investment income was comparable from 1996 to 1997 as a decrease in the
average yield on fixed maturity securities was offset by an increase in the
average invested assets of $117.4 million.
NET REALIZED INVESTMENT GAINS: The Company recorded realized investment gains
of $3.5 million for the first six months of 1997 compared to net realized
investment losses of $1.3 million for the same period in 1996. During 1997,
the Company had gains of $5.1 million from the sale of three properties
received in the disposition of GSSW, Limited Partnership in December 1996.
POLICYHOLDER BENEFITS: Policyholder benefits increased $27.0 million to $129.2
million for the six months ended June 30, 1997 from $102.2 million for the six
months ended June 30, 1996. Excluding policyholder benefits related to the
Acquisitions, policyholder benefits decreased $1.5 million. For the six
months ended June 30, 1997, lower surrender benefits on traditional products and
lower benefit reserves associated with the lower traditional premiums
referred to above were partially offset by higher death benefits. The
Company's death benefits for the six months ended June 30, 1997 were $2.0
million higher than the same period in 1996 and at a level above the
Company's assumptions used in computing the amortization of deferred policy
acquisition costs and the cost of business acquired asset. Although it is
too early to conclude that its mortality will continue at such a level, it
has been the Company's position to change cost of insurance charges on
universal life type policies when experience supports such a change in order
to offset the higher cost. Accordingly, the Company has begun to review
the source of the adverse experience to determine whether such an increase
is warranted. Death benefits for the three months ended June 30, 1997
returned to levels expected by the Company.
AMORTIZATION EXPENSE: Amortization expense increased $4.7 million from $13.4
million in 1996 to $18.1 million in 1997. Excluding amortization expense
related to the Acquisitions, amortization expense decreased $1.5 million
from 1996 to 1997. The higher amortization expense in 1996 primarily
resulted from higher policy lapses and surrenders during that period.
OTHER OPERATING EXPENSES: Other operating expenses increased $7.6 million to
$35.6 million for the six months ended June 30, 1997 from $28.0 million
in 1996. Excluding the other operating expense related to the Acquisitions,
other operating expenses increased $2.5 million. The primary reasons for
the increase in operating expenses from 1996 to 1997 are expenses associated
with a sales office opened in California in September 1996, increased
depreciation expense in 1997 resulting from purchases of computer equipment
in 1996, and development costs on marketing-related software.
INTEREST EXPENSE: Interest expense totalled $6.0 million for both the six
months ended June 30, 1997 and 1996. Average outstanding indebtness was $133.3
million with an average cost of 9.05% for the six months ended June 30, 1997
compared to an average outstanding balance of $133.4 million with an average
cost of 9.10% for the same period in 1996.
THREE MONTHS ENDED JUNE 30, 1997 COMPARED TO THREE MONTHS ENDED JUNE 30, 1996
Income before income taxes for the three months ended June 30, 1997 was $10.3
million compared to $4.6 million for the same period in 1996. This increase
is primarily due to (i) income from the Acquisitions and (ii) an increase in
realized investment gains, offset by (iii) an increase in other operating
expenses. These items and significant changes in individual income statement
components are discussed in more detail below.
PREMIUMS AND POLICY REVENUES: Premiums and policy revenues increased to $55.2
million for the three months ended June 30, 1997 from $39.2 million for the
thre emonths ended June 30, 1996. Excluding the Acquisitions, premiums and
policy revenues decreased $1.8 million primarily due to a decrease in
traditional premiums from the three months ended June 30, 1996 to the three
months ended June 30, 1997.
NET INVESTMENT INCOME: Net investment income increased $16.6 million for the
three months ended June 30, 1997 from the three months ended June 30, 1996.
Excluding the Acquisitions, net investment income increased $1.3 million from
1996 to 1997. The primary reason for the increase in net investment income
is an increase in average invested assets of $144.9 million from 1996 to 1997
which was partially offset by a decrease in the average yield on fixed maturity
securities.
POLICYHOLDER BENEFITS: Policyholder benefits increased $21.0 million to $71.0
million for the three months ended June 30, 1997 from $50.0 million for the
three months ended June 30, 1996. Excluding the Acquisitions, policyholder
benefits for the three months ended June 30, 1996 to the three months ended
June 30, 1997 remained consistent.
AMORTIZATION EXPENSE: Amortization expense increased $5.0 million to $11.4
million for the three months ended June 30, 1997 from the three months ended
June 30, 1996. Excluding the Acquisitions, amortization expense for the three
months ended June 30, 1996 to the three months ended June 30, 1997 remained
consistent.
OTHER OPERATING EXPENSES: Other operating expenses increased $5.9 million to
$20.4 million for the three months ended June 30, 1997 from $14.5 million for
the same period in 1996. Excluding the other operating expenses related to the
Acquisitions, other operating expenses increased $1.5 million due to costs
associated with a sales office opened in California in September 1996,
increased depreciation expense in 1997 resulting from purchases of computer
equipment in 1996, and development costs on marketing-related software.
INTEREST EXPENSE: Interest expense totalled $3.0 million for both the three
months ended June 30, 1997 and 1996. Average outstanding indebtness was
$133.3 million with an average cost of 9.05% for the three months ended June
30, 1997 compared to an average outstanding balance of $133.4 million with
an average cost of 9.04% for the same period in 1996.
FINANCIAL RESOURCES AND LIQUIDITY:
The changes occurring in the Company's consolidated balance sheet from
December 31, 1996 to June 30, 1997 primarily reflect the normal operations
of the Company's life insurance subsidiaries, the acquisition of Ohio State
and Investors, and the related reinsurance transaction discussed in Results of
Operations.
On April 15, 1997, the Company acquired all of the outstanding common stock of
Ohio State and Investors. See Note 3 to the consolidated financial statements
included elsewhere in this Form 10-Q for a discussion of this acquisition and
the effects of the acquisition and operations of the acquired companies on the
Company's financial resources and liquidity.
The quality of the Company's investment in fixed maturity investments at June
30, 1997 remained consistent with December 31, 1996. Non-investment grade
securities totalled less than 0.7% of the Company's total fixed maturity
investments at June 30, 1997. The Company has not made any significant
changes to its investment philosophy during 1997. Cash and cash equivalents
decreased from $96.1 million at December 31, 1996 to $75.8 million at June
30, 1997, partially resulting from the acquisition of Ohio State and Investors.
The Company's net unrealized investment gains increased $4.4 million during
the first six months of 1997. The net unrealized investment gains of $6.9
million on equity securities was partially offset by net unrealized
investment losses during this period resulting from increasing interest
rates which decreased the market values of fixed maturity investment
securities. The components of the change during the six months ended June
30, 1997 are (in millions):
<TABLE>
<S> <C>
Gross unrealized investment gains $ 4.8
Effect on insurance assets and liabilities 1.7
Deferred income tax effect (2.1)
---------
$ 4.4
=========
</TABLE>
<PAGE>
PART II. - OTHER INFORMATION
ITEM 1. Legal Proceedings
As previously disclosed in the Company's December 31, 1996 Form 10-K, Great
Southern was named as defendant in a purported class action lawsuit brought by
two policyholders, Sharon K. Self and Johnnie W. Self, claiming damages
unspecified in amount, in connection with the sales of certain life insurance
policies. The class was never certified and an agreement has been reached
between Great Southern and the plaintiffs which will result in a settlement
of the claim and dismissal of the lawsuit.
As previously disclosed in the Company's December 31, 1996 Form 10-K, in
February 1997, Great Southern was named defendant in a lawsuit filed in the
Circuit Court of Dade County, Florida related to the sale of universal life
policies and alleging that policyholders were misled regarding the premiums
payable for such policies (Irwin Ginsberg v. Jack Goldberg and Great Southern
Life Insurance Company). The plaintiff in such lawsuit seeks to represent a
class of Great Southern policyholders and claims unspecified compensatory
and punitive damages. Great Southern removed this case to the United States
District Court in and for the Southern District of Florida. Great Southern
intends to defend this case vigorously.
On July 1, 1997, the plaintiff in a lawsuit against Great Southern, (James
Morgan McGraw v. Great Southern Life Insurance Co. and Ervin Jackson), filed an
amended petition in the District Court of Jasper County, Texas purporting to
represent a class of all Texas policyowners who have or had an ownership
interest in whole insurance policies issued by Great Southern. The plaintiff
has alleged that Great Southern's marketing practices for these policies
were fraudulent and misleading, and violated the Texas Insurance Code and Texas
Deceptive Trade Practices Act. On behalf of the putative class, the
plaintiff is seeking actual, exemplary and treble damages. Great Southern
intends to defend this case vigorously.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Incorporated by
reference from:
2.1(a) (2) Stock Purchase Agreement dated January 21, 1997 between
Great Southern Life Insurance Company and Farmers Group,
Inc.
2.1(b) (3) Amendment No. 1 to the Stock Purchase Agreement dated
April 15, 1997 by and between Farmers Group, Inc. and
Great Southern Life Insurance Company.
2.1(c) (2) Form of Automatic Coinsurance Reinsurance Agreement
entered into between The Ohio State Life Insurance
Company and Employers Reassurance Corporation.
2.1(d) (2) Form of Automatic Coinsurance Reinsurance Agreement
entered into between Investors Guaranty Life Insurance
Company and Employers Reassurance Corporation.
2.1(e) (2) Modified Coinsurance Retrocession Agreement (Ohio State
Life Business) between Great Southern Life Insurance
Company and Employers Reassurance Corporation.
Item 6.(a) Continued
2.1(f) (2) Modified Coinsurance Retrocession Agreement (Investors
Guaranty Life Business) between Great Southern Life
Insurance Company and Employers Reassurance Corporation.
2.1(g) Escrow Agreement (Ohio State Life/Investors Guaranty
Life Business) between Great Southern Life Insurance
Company, Employers Reassurance Corporation and Bankers
Trust Company.
2.1(h) (2) Investment Management Agreement (Ohio State Life
Business) between the Registrant and Employers
Reassurance Corporation.
2.1(i) (2) Investment Management Agreement (Investors Guaranty Life
Business) between the Registrant and Employers
Reassurance Corporation.
3.1 (1) Restated Articles of Incorporation, as amended, of the
Registrant.
3.2 (1) Bylaws, as amended, of the Registrant.
4.1 (2) Form of Amendment No. 1 to the Amended and Restated
Credit Agreement dated as of February 27, 1997, between
the Registrant and The Chase Manhattan Bank as
administrative agent.
27 Financial Data Schedule.
(1) Registrant's Form S-4 (file No. 33-64820) filed June 22,
1993.
(2) Registrant's December 31, 1996 Form 10-K.
(3) Registrant's Form 8-K dated as of April 15, 1997.
(b) Reports on Form 8-K:
During the three months ended June 30, 1997, the Company filed a Current
Report on Form 8-K and a Current Report - Amendment No. 1 on Form 8-K/A dated
as of April 15, 1997, with respect to the acquisition of the outstanding
common stock of The Ohio State Life Insurance Company and Investors
Guaranty Life Insurance Company from Farmers Group, Inc.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AMERICO LIFE, INC.
BY:/s/ Gary E. Jenkins
------------------------
Name: Gary E. Jenkins
Title: Senior Vice President,
Chief Financial Officer and
Treasurer
(Principal Financial Officer and
Principal Accounting Officer)
Date: August 14, 1997
<TABLE> <S> <C>
<ARTICLE> 7
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<DEBT-HELD-FOR-SALE> 671,752
<DEBT-CARRYING-VALUE> 893,559
<DEBT-MARKET-VALUE> 880,556
<EQUITIES> 72,376
<MORTGAGE> 166,529
<REAL-ESTATE> 19,730
<TOTAL-INVEST> 2,061,897
<CASH> 75,831
<RECOVER-REINSURE> 2,843
<DEFERRED-ACQUISITION> 85,876
<TOTAL-ASSETS> 3,710,558
<POLICY-LOSSES> 2,997,970
<UNEARNED-PREMIUMS> 36,050
<POLICY-OTHER> 37,879
<POLICY-HOLDER-FUNDS> 81,579
<NOTES-PAYABLE> 133,162
0
0
<COMMON> 10
<OTHER-SE> 221,301
<TOTAL-LIABILITY-AND-EQUITY> 3,710,558
96,488
<INVESTMENT-INCOME> 109,191
<INVESTMENT-GAINS> 3,452
<OTHER-INCOME> 1,711
<BENEFITS> 129,224
<UNDERWRITING-AMORTIZATION> 11,449
<UNDERWRITING-OTHER> 20,360
<INCOME-PRETAX> 10,279
<INCOME-TAX> 3,155
<INCOME-CONTINUING> 7,125
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,125
<EPS-PRIMARY> 712.50
<EPS-DILUTED> 712.50
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
Exhibit 2.1(g)
ESCROW AGREEMENT [Ohio State & Investors Guaranty Business], dated as of
May 21, 1997, (the "Agreement") by and among Employers Reassurance
Corporation, a Kansas corporation (the "Corporation"), Great Southern Life
Insurance Company a Texas corporation ("the Company") and Bankers Trust
Company, a New York banking corporation (as escrow agent hereunder, the
"Escrow Agent").
The Corporation, the Company and the Escrow Agent acknowledge the
following:
(a)The Company reinsures the Corporation in accordance with the agreements
named below:
(i)Modified Coinsurance Retrocession Agreement (Ohio State Plans)
(ii)Modified Coinsurance Retrocession Agreement (Investors Guaranty Plans)
(b)The Corporation reinsures the original ceding insurer in accordance with
the agreements named below:
(i)Automatic Coinsurance Reinsurance Agreement with The Ohio State Life
Insurance Company
(ii)Automatic Coinsurance Reinsurance Agreement with Investors Guaranty
Life Insurance Company
(c)The Corporation and the Company desire to segregate the funds pertaining
to the reinsurance agreements identified in this section (the "Treaties").
(d)The Corporation will cause to be deposited into the escrow account for
this Agreement the funds pertaining to the Treaties.
(e)The Escrow Agent is willing to act as escrow agent with respect to the
Escrow Fund (as hereinafter defined) upon the terms and conditions of this
Agreement.
(f)The funds deposited pertaining to the Treaties shall be held by the
Escrow Agent and distributed by the Escrow Agent in accordance with the
terms and conditions of this Agreement.
1. Appointment of Escrow Agent. The Corporation and the Company hereby
appoint Bankers Trust Company as escrow agent in accordance with the terms
and conditions set forth herein, and the Escrow Agent hereby accepts such
appointment.
2. Deposit into, and withdrawals from, the Escrow Fund. As soon as
practicable after the execution of this Agreement, the Corporation shall
cause to be deposited with the Escrow Agent the net initial consideration
applicable to the Treaties. As soon as practicable after the end of each
premium reporting period required by the Treaties, the Corporation shall
cause to be deposited with the Escrow Fund the net reinsurance premium if
positive, and withdrawn from the Escrow Fund the net reinsurance premium if
negative, in each case for the period applicable to the Treaties. Deposits
described in this section, net of any such withdrawals, are referred to as
the "Escrowed Proceeds", the receipt of which will be acknowledged by the
Escrow Agent substantially in the form of Exhibit B attached hereto. The
Escrowed Proceeds shall be held by the Escrow Agent upon the terms and
conditions hereinafter set forth. The Escrow Fund shall remain the
property of the Corporation until released to the Company in accordance
with Sections 4 and 5.
3. Investment of the Escrow Fund. (a) During the term of this Agreement,
the Escrow Agent shall invest and reinvest the Escrowed Proceeds and any
interest or income earned thereon (collectively, the "Escrow Fund") in
accordance with Schedule A attached hereto. Notwithstanding the foregoing,
the Escrow Agent shall have the power to sell or liquidate the foregoing
investments whenever the Escrow Agent shall be required to release all or
any portion of the Escrow Fund pursuant to Section 4 hereof.
(b) The Escrow Agent shall not have any liability for any loss sustained as
a result of any investment made as provided above, any liquidation of any
such investment prior to its maturity, or any failure to give the Escrow
Agent any written instruction to invest or reinvest the Escrowed Funds or
any earnings thereon.
4. Distribution of Escrow Fund. The Agent shall hold the Escrow Fund in
its possession until instructed hereunder to deliver the Escrow Fund or any
specified portion thereof as follows:
(a) For the purpose of administering the business covered by the Treaties,
the Company is entitled (without any specific consent from the Corporation)
to withdraw (and transfer to its administrator) not more than $1,000,000
per calendar quarter as a dual advance against the net balance due the
original ceding insurer for the same quarter under the reinsurance
agreements shown before Section 1 of this Agreement and the balance due the
Corporation for the same quarter under the retrocession agreements shown
before Section 1 of this Agreement. To effect such withdrawal, the Company
shall deliver a written release notice to the Escrow Agent, signed by an
authorized person of the Company, as set forth on Exhibit A attached
hereto, and the Escrow Agent shall make the release within five Business
Days.
(b) The Corporation has the right to withdraw not more than 30% of the
statutory profits, including interest thereon, derived from the Treaties.
The Corporation is not required to apply the withdrawals permitted by this
subparagraph (b) to the Treaties. To effect such withdrawal, the
Corporation shall deliver a written release notice to the Escrow Agent,
signed by an authorized person of the Corporation, as set forth on Exhibit
A attached hereto, and the Escrow Agent shall make the release within five
Business Days.
5. Final Distribution of Escrow Fund. The Escrow Agent shall distribute the
remaining balance, if any, of the Escrow Fund as follows: If the
Corporation delivers a written release notice to the Escrow Agent, signed
by an authorized person of the Corporation and by an authorized person of
the Company, as set forth on Exhibit A attached hereto, the Escrow Agent
shall release the Escrow Fund to the parties referenced in such notice
within five Business Days.
6. Resignation of Escrow Agent. The Escrow Agent may resign and be
discharged from its duties hereunder at any time by giving written notice
of such resignation to the Corporation and the Company specifying a date
when such resignation shall take effect and upon delivery of the Escrow
Fund to the successor escrow agent designated by all parties hereto (other
than the Escrow Agent) in writing. Upon such notice, a successor Escrow
Agent shall be appointed with the mutual consent of the Corporation and the
Company. Such successor Escrow Agent shall become the Escrow Agent
hereunder upon the resignation date specified in such notice. If the
Corporation and the Company are unable to agree upon a successor Escrow
Agent within thirty (30) days after such notice, the Escrow Agent shall be
entitled to apply to a court of competent jurisdiction for the appointment
of a successor. The Escrow Agent shall continue to serve until its
successor accepts the escrow and receives the Escrow Fund. The Corporation
and the Company shall have the right at any time upon their mutual consent
to substitute a new Escrow Agent by giving notice thereof to the Escrow
Agent then acting. Upon its resignation and delivery of the Escrow Fund as
set forth in this Section 6, the Escrow Agent shall be discharged of and
from any and all further obligations arising in connection with the escrow
contemplated by this Agreement.
7. Indemnification of Escrow Agent. (a) The Escrow Agent shall have no
duties or responsibilities whatsoever with respect to the Escrow Fund
except as are specifically set forth herein. The Escrow Agent shall
neither be responsible for or under, nor chargeable with knowledge of the
terms and conditions of, any other agreement, instrument or document in
connection herewith. The Escrow Agent may conclusively rely upon, and
shall be fully protected from all liability, loss, cost, damage or expense
in acting or omitting to act pursuant to any written notice, instrument,
request, consent, certificate, document, letter, telegram, opinion, order,
resolution or other writing hereunder without being required to
determine the authenticity of such document, the correctness of any fact
stated therein, the propriety of the service thereof or the capacity,
identity or authority of any party purporting to sign or deliver such
document. The Escrow Agent shall have no responsibility for the contents
of any such writing contemplated herein and may rely without any liability
upon the contents thereof.
(b) The Escrow Agent shall not be liable for any action taken or omitted by
it in good faith and reasonably believed by it to be authorized hereby or
with the rights or powers conferred upon it hereunder, nor for action taken
or omitted by it in good faith, and in accordance with advice of counsel
(which counsel may be of the Escrow Agent s own choosing), and shall not be
liable for any mistake of fact or error of judgment or for any acts or
omissions of any kind except for its own negligence, willful misconduct or
gross negligence.
(c) Each of the Corporation and the Company agrees to jointly and severally
indemnify the Escrow Agent and its employees, directors, officers and
agents and hold each harmless against any and all liabilities incurred by
it hereunder as a consequence of such party s action, and the parties agree
jointly and severally to indemnify the Escrow Agent and hold it harmless
against any claims, costs, payments, and expenses (including the fees and
expenses of counsel) and all liabilities incurred by it in connection with
the performance of its duties hereunder and them hereunder, except in
either case for claims, costs, payments, and expenses (including the fees
and expenses of counsel) and liabilities incurred by the Escrow Agent
resulting from its own negligence, willful misconduct or gross negligence.
The Corporation, and the Company agree to reimburse each other for one-half
of any payments made by them pursuant to this Section 7(c) with respect to
liabilities for which the parties are jointly liable pursuant to this
Section 7(c).
8. Compensation of Escrow Agent. The Corporation will pay 30% and the
Company will pay 70% of the customary fees and expenses for all services
rendered by the Escrow Agent hereunder in accordance with Schedule B
attached hereto (as such schedule may be amended from time to time). The
Escrow Agent shall also be entitled to reimbursement on demand for all
loss, liability, damage or expenses paid or incurred by it in the
administration of its duties hereunder, including, but not limited to, all
reasonable and appropriate counsel, advisors and agents fees and
disbursements and all taxes or other governmental charges. At all times,
the Escrow Agent will have a first lien on funds in the Escrow Fund for
payment of customary fees and expenses and all such reasonable loss,
liability, damage or expenses. Such compensation and expenses shall be
paid from the Escrow Fund.
9. Further Assurances. From time to time on and after the date hereof, the
other parties hereto shall deliver or cause to be delivered to the Escrow
Agent such further documents and instruments and shall do and cause to be
done such further acts as the Escrow Agent shall reasonably request (it
being understood that the Escrow Agent shall have no obligation to make any
such request) to carry out more effectively the provisions and purposes of
this Agreement, to evidence compliance herewith or to assure itself that it
is protected in acting hereunder.
10. Termination of Agreement. This Agreement shall terminate on the final
disposition of the Escrow Fund provided that the rights of the Escrow Agent
and the obligations of the other parties hereto under Sections 7 and 8
shall survive the termination hereof and the resignation or removal of the
Escrow Agent.
11. Consents to Service Process. Each of the parties hereto hereby
irrevocably consents to the jurisdiction of the courts of the State of New
York and the State of Missouri and of any Federal Court located in such
States in connection with any action, suit or other proceeding arising out
of or relating to this Agreement or any action taken or omitted hereunder,
and waives any claim of forum non conveniens and any objections as to
laying of venue.
12. Reports; Inspection. The Escrow Agent shall furnish to the Corporation,
the Company and to Americo Life, Inc. (1055 Broadway, Kansas City, Missouri
64105) monthly reports of the assets held by the Escrow Agent in the Escrow
Fund. Each report shall show all deposits, withdrawals, substitutions and
a listing of assets as of the end of the month. The Corporation and the
Company shall each have the right to inspect the assets held by the Escrow
Agent in the Escrow Fund during the normal business hours of the Escrow
Agent upon at least three business days advance written notice.
13. Miscellaneous. (a)This Agreement embodies the entire agreement and
understanding among the parties relating to the subject matter hereof and
may not be changed orally, but only by instrument in writing signed by the
parties hereto.
(b) All notices and other communications under this Agreement shall be in
writing and shall be deemed given when delivered personally, on the next
Business Day after delivery to a recognized overnight courier or mailed
first class (postage prepaid) or when sent by facsimile to the parties
(which facsimile copy shall be followed, in the case of notices or other
communications sent to the Escrow Agent, by delivery of the original) at
the following addresses (or to such other address as a party may have
specified by notice given to the other parties pursuant to this provision):
If to the Corporation:
Employers Reassurance Corporation
5200 Metcalf P.O. Box 2981
Overland Park, Kansas 66201-1381
Attention: James D. Maughn
Facsimile 913 676-5221
If to the Company:
Great Southern Life Insurance Company
300 West 11th Street
Kansas City, Missouri
Attention: Gary Jenkins
Facsimile: 816 391-2083
With a copy to:
Thomas M. Higgins, III
Lathrop & Gage L.C.
2345 Grand Boulevard, Suite 2500
Kansas City, MO 64108
Facsimile: (816) 292-2001
If to the Bank:
Bankers Trust Company
Corporate Trust and Agency Group
Four Albany Street
New York, New York 10006
Attention: Insurance Trust Services
Facsimile 212 250-6725
(c) The headings of the Sections of this Agreement have been inserted for
convenience and shall not modify, define, limit or expand the express
provisions of this Agreement.
(d) This Agreement and the rights and obligations hereunder of parties
hereto may not be assigned except with the prior written consent of the
other parties hereto. This Agreement shall be binding upon and inure to
the benefit of each party s respective successors and permitted assigns.
Except as expressly provided herein, no other person shall acquire or have
any rights under or by virtue of this Agreement. This Agreement is
intended to be for the sole benefit of the parties hereto, and (subject to
the provisions of this Section 12(d) their respective successors and
assigns, and none of the provisions of this Agreement are intended to be,
nor shall they be construed to be, for the benefit of any third person.
(e) This Agreement may not be amended, supplemented or otherwise modified
without the prior written consent of the parties hereto.
(f) The Escrow Agent makes no representation as to the validity, value,
genuineness or the collectability of any security or other document or
instrument held by or delivered to it.
(g) The Escrow Agent shall not be called upon to advise any party as to the
wisdom in selling or retaining or taking or refraining from any action with
respect to any securities or other property deposited hereunder.
(h) Any payments of income from the Escrow Fund shall be subject to
withholding regulations then in force with respect to United States taxes.
Each of the Corporation and the Company will provide the Escrow Agent with
its Employer Identification Number for use by the Escrow Agent if
necessary. It is understood that the Escrow Agent shall be responsible for
income reporting only with respect to income earned on the escrow Fund and
will not be responsible for any other reporting.
(i) This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without reference to the principles of
conflict of laws.
(j) This Agreement may be executed in two or more counterparts, each of
which shall be an original, but all of which together shall constitute one
and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
EMPLOYERS REASSURANCE CORPORATION GREAT SOUTHERN LIFE INSURANCE
as Corporation COMPANY, as Company
By: /s/ James B. Maughn By: /s/ Gary E. Jenkins
Name:James B. Maughn Name: Gary E. Jenkins
Title: Executive Vice President Actuary Title: Senior Vice President
BANKERS TRUST COMPANY,
as Escrow Agent
By: /s/ Paul Dispenza
Name: Paul Dispenza
Title: Assistant Vice President
Schedule A
Permitted Investments
The Escrow Agent shall accept instructions from Americo Life, Inc., 1055
Broadway, Kansas City, Missouri 64105 ("Americo") regarding investment of
the Escrow Fund.
Exhibit A
Authorized Person(s)
For the Corporation: James D. Maughn
For the Company:
Michael A. Merriman
Gary L. Muller
Gary E. Jenkins
Donna H. Kinnaird
Mark K. Fallon
For Americo:
Michael A. Merriman
Gary L. Muller
Gary E. Jenkins
Donna H. Kinnaird
Mark K. Fallon
<PAGE>
Exhibit B
RECEIPT
This receipt is given pursuant to the Escrow Agreement (the "Agreement")
dated a of (the"Agreement") by and among.
and collectively with
and Bankers Trust Company, a New York banking corporation (as
escrow agent hereunder, the "Escrow Agent").
Bankers Trust Company, as Escrow Agent, hereby acknowledges receipt of $
constituting Escrowed Proceeds to be held in escrow pursuant to the terms
of the Escrow Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Receipt on:
BANKERS TRUST COMPANY,
As Escrow Agent
By:
<PAGE>
ESCROW AGREEMENT
[Ohio State & Investors Guaranty Business]
GREAT SOUTHERN LIFE INSURANCE COMPANY a Texas corporation
