FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION
13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2000 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 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 May 12, 2000
------------- ------------------
Common Stock $1.00 Par Value 10,000
<PAGE>
See notes to consolidated financial statements
5
AMERICO LIFE, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEET
(In thousands - unaudited)
<TABLE>
March 31, December 31,
2000 1999
---- ----
<S> <C> <C>
Assets
Investments:
Fixed maturities:
Held to maturity, at amortized cost (market: $797,086 and
$821,335) $ 836,349 $ 852,908
Available for sale, at market (amortized cost: $1,054,050 and
$985,854) 1,006,691 925,997
Equity securities, at market (cost: $34,509 and $33,467) 72,609 73,448
Investment in equity subsidiaries 13,965 12,141
Mortgage loans on real estate, net 227,601 227,601
Investment real estate, net 27,513 28,516
Policy loans 208,281 209,979
Other invested assets 30,114 30,429
----------- -----------
Total investments 2,423,123 2,361,019
Cash and cash equivalents 80,186 122,788
Accrued investment income 30,445 31,764
Amounts receivable from reinsurers 1,108,063 1,140,206
Other receivables 108,179 42,596
Deferred policy acquisition costs 220,758 212,860
Cost of business acquired 208,052 219,490
Amounts due from affiliate 7,974 7,710
Other assets 47,391 49,729
----------- -----------
Total assets $ 4,234,171 $ 4,188,162
=========== ===========
Liabilities and stockholder's equity
Policyholder account balances $ 2,621,312 $ 2,599,627
Reserves for future policy benefits 819,510 822,940
Unearned policy revenues 59,104 60,279
Policy and contract claims 38,853 37,821
Other policyholder funds 121,663 119,664
Notes payable 111,241 111,165
Amounts payable to reinsurers 25,535 48,749
Deferred income taxes 41,247 40,531
Due to broker 92,348 53,810
Other liabilities 74,984 68,262
----------- -----------
Total liabilities 4,005,797 3,962,848
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
Accumulated other comprehensive income 21,256 19,159
Retained earnings 203,363 202,400
----------- -----------
Total stockholder's equity 228,374 225,314
----------- -----------
Commitments and contingencies
Total liabilities and stockholder's equity $ 4,234,171 $ 4,188,162
=========== ===========
</TABLE>
AMERICO LIFE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share amounts - unaudited)
<TABLE>
Three Months
Ended March 31,
2000 1999
---- ----
<S> <C> <C>
Income
Premiums and policy revenues $ 59,745 $ 59,101
Net investment income 59,831 58,432
Net realized investment losses (5,253) (75)
Other income 1,617 1,677
------------- -------------
Total income 115,940 119,135
Benefits and expenses
Policyholder benefits:
Death benefits 32,669 36,576
Interest credited on universal life and annuity products 29,073 26,740
Other policyholder benefits 15,082 12,796
Change in reserves for future policy benefits (4,459) (5,852)
Commissions 2,896 3,171
Amortization expense 17,652 18,858
Interest expense 2,705 2,968
Other operating expenses 18,203 23,147
------------- -------------
Total benefits and expenses 113,821 118,404
------------- -------------
Income before provision for income taxes 2,119 731
Provision for income taxes 656 (35)
------------- -------------
Net income $ 1,463 $ 766
============= =============
Net income per common share $ 146.30 $ 76.60
============= =============
</TABLE>
<PAGE>
AMERICO LIFE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands - unaudited)
<TABLE>
Three Months
Ended March 31,
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities
Net income $ 1,463 $ 766
---------- ----------
Adjustments to reconcile net income to net cash provided (used) by operating
activities:
Depreciation and amortization 18,605 23,841
Deferred policy acquisition costs (21,141) (11,685)
Undistributed earnings of equity subsidiaries (255) (894)
Amortization of unrealized gains 774 (2,591)
(Increase) decrease in assets:
Accrued investment income 1,319 (1,778)
Amounts receivable from reinsurers 27,835 18,808
Other receivables (1,054) (476)
Other assets, net of amortization expense 1,006 (3,023)
Increase (decrease) in liabilities:
Policyholder account balances (18,184) (21,214)
Reserves for future policy benefits and unearned policy revenues (1,476) (2,688)
Policy and contract claims 1,032 (653)
Other policyholder funds 1,999 12,352
Amounts payable to reinsurers (23,214) 8,640
Provision for deferred income taxes (3,151) 486
Federal income tax payable 4 11
Change in affiliated balances (263) (7,593)
Other liabilities 6,723 274
Net realized losses on investments sold 5,253 75
Amortization on bonds and mortgage loans 332 2,650
Other changes (1,363) (1,112)
----------- -----------
Total adjustments (5,219) 13,430
----------- -----------
Net cash provided (used) by operating activities (3,756) 14,196
----------- -----------
</TABLE>
<PAGE>
AMERICO LIFE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
(In thousands - unaudited)
<TABLE>
Three Months
Ended March 31,
2000 1999
---- ----
<S> <C> <C>
Cash flows from investing activities
Purchases of fixed maturity investments $ (254,041) $ (49,946)
Purchases of other investments (59,542) (31,005)
Mortgage loans originated (4,383) (14,175)
Maturities or redemptions of fixed maturity investments 12,392 5,161
Sales of fixed maturity available for sale investments 189,425 53,757
Sales of other investments 57,482 7,954
Repayments from mortgage loans 4,714 7,418
Change in due to broker (30,268) 2,262
Change in policy loans 1,698 1,318
----------- -----------
Net cash used by investing activities (82,523) (17,256)
----------- ------------
Cash flows from financing activities
Receipts credited to policyholder account balances 131,196 86,234
Return of policyholder account balances (87,019) (64,049)
Repayments of notes payable - (74)
Dividends paid (500) (500)
----------- -----------
Net cash provided by financing activities 43,677 21,611
----------- -----------
Net increase (decrease) in cash and cash equivalents (42,602) 18,551
----------- -----------
Cash and cash equivalents at beginning of period 122,788 68,219
----------- -----------
Cash and cash equivalents at end of period $ 80,186 $ 86,770
=========== ===========
</TABLE>
<PAGE>
AMERICO LIFE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ended March 31, 2000 and 1999
(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, 1999 Form 10-K as filed with the Securities and Exchange
Commission.
1. ACCOUNTING POLICIES
The unaudited consolidated financial statements as of March 31, 2000 and for the
three months ended March 31, 2000 and 1999 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,
1999 consolidated financial statements. The results of operations for the three
months ended March 31, 2000 and 1999 are not necessarily indicative of the
expected results for the full year 2000, nor the results experienced for the
year 1999.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 provides guidance related to
the accounting for derivative instruments and hedging activities focusing on the
recognition and measurement of derivative instruments. This statement is
effective for all fiscal quarters of all fiscal years beginning after June 15,
2000. Adoption of this accounting standard is not expected to have a significant
impact on the Company's consolidated financial statements.
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.
2. STOCKHOLDER'S EQUITY
Comprehensive income (loss) for the three months ended March 31, 2000 and 1999
is as follows:
<TABLE>
2000 1999
---- ----
<S> <C> <C>
Net income $ 1,463 $ 766
Other comprehensive income (loss) 2,097 (14,265)
--------- ---------
Comprehensive income (loss) $ 3,560 $ (13,499)
========= =========
</TABLE>
<PAGE>
AMERICO LIFE, INC. AND SUBSIDIARIES
Following are the components of net unrealized investment gains which comprise
accumulated other comprehensive income:
<TABLE>
March 31, December 31,
2000 1999
<S> <C> <C>
Investment securities:
Fixed maturities available for sale $ (50,220) $ (62,186)
Fixed maturities reclassified from
available for sale to held to maturity 33,120 33,482
Equity securities 36,024 39,981
----------- -----------
18,924 11,277
Effect on other balance sheet accounts 12,563 16,984
Deferred income taxes (10,231) (9,102)
------------ -----------
Net unrealized investment gains $ 21,256 $ 19,159
=========== ===========
</TABLE>
During both the three months ended March 31, 2000 and 1999, the Company paid
dividends to Financial Holding Corporation (FHC) totaling $500.
3. COMMITMENTS AND CONTINGENCIES
On April 18, 2000, the court approved a settlement of a purported class action
against Great Southern Life Insurance Company ("Great Southern") relating to the
marketing of credit cards secured by certain policies issued by Great Southern.
Great Southern will pay class counsel's fees and expenses in the amount of
$275,000 and will provide free insurance for one year to class members who
timely submit an application for a new universal life policy and satisfy Great
Southern's underwriting requirements.
The Company and Great Southern are defendants with other parties in a class
action lawsuit brought by agents of one of Great Southern's general agents
alleging that they were defrauded into surrendering renewal commissions in
return for a promise of stock ownership in a company to be taken public at some
point in the future. Subsequent to March 31, 2000, the parties tentatively
agreed to a proposal pursuant to which Great Southern will pay $1.1 million to
settle this lawsuit. The settlement agreement will be subject to the approval of
the court.
Great Southern is a defendant in a certified class action and Great Southern and
two other subsidiaries, The College Life Insurance Company of America
("College") and Ohio State Life Insurance Company, are defendants in lawsuits
filed as purported class actions asserting claims related to sales practices and
premiums charged for certain life insurance products. The Company and certain
subsidiaries, including College, also are defendants in a purported class action
asserting claims in connection with the marketing and administration of deferred
annuity and life insurance products sold to school teachers and others. The
Company intends to defend these cases vigorously.
The Company and its subsidiaries named in the pending actions referred to above
deny any allegations of wrongdoing and intend to defend the actions vigorously.
Although plaintiffs in these actions generally are seeking indeterminate
amounts, including punitive and treble damages, such amounts could be large.
Although there can be no assurances, at the present time the Company does not
anticipate that the amounts in the settlements described above and the ultimate
liability arising from such pending litigation, after consideration of amounts
provided in the consolidated financial statements, will have a material adverse
effect on the financial condition of the Company.
<PAGE>
4. SEGMENT INFORMATION
The table below presents information about the reported revenues and income
before provision for income taxes for the Company's reportable segments as
defined in the Company's December 31, 1999 Form 10-K. Asset information by
segment is not reported, because the Company does not produce such information
internally.
<TABLE>
Life Insurance Asset Non-Life Reconciling Consolidated
Operations Accumulation Insurance Items Totals
Products Investments
Operations
Three months ended March 31,
------------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000 1999 2000 1999 2000 1999
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $99,783 $105,242 $13,507 $ 8,882 $1,533 $1,409 $1,119 $ 3,602 $115,941 $119,135
Income (loss)
before income 10,578 9,816 1,612 (77) 835 1,146 (10,906) (10,154) 2,119 731
taxes
</TABLE>
Significant reconciling items shown in the above table which are not allocated
to specific segments include interest expense and a portion of (i) net
investment income, (ii) operating expenses and (iii) net realized investment
gains (losses).
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following discussion analyzes significant items affecting the results of
operations and the financial condition of the Company. This discussion should be
read in conjunction with the accompanying consolidated financial statements and
the notes thereto.
In connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, the Company cautions readers regarding certain
forward-looking statements contained in this report and in any other statements
made by, or on behalf of, the Company, whether or not in future filings with the
Securities and Exchange Commission (the "SEC"). Forward-looking statements are
statements not based on historical information and which relate to future
operations, strategies, financial results, or other developments. Statements
using verbs such as "plan", "anticipate", "believe" or words of similar import
generally involve forward-looking statements. Without limiting the foregoing,
forward-looking statements include statements which represent the Company's
beliefs concerning future levels of sales and surrenders of the Company's
products, investment spreads and yields, or the earnings and profitability of
the Company's activities.
Forward-looking statements are necessarily based on estimates and assumptions
that are inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond the Company's control
and many of which are subject to change. Whether or not actual results differ
materially from forward-looking statements may depend on numerous foreseeable
and unforeseeable developments. Some may be national in scope, such as general
economic conditions, changes in tax law and changes in interest rates. Some may
be related to the insurance industry generally, such as pricing competition,
regulatory developments and industry consolidation. Others may relate to the
Company specifically, such as credit, volatility and other risks associated with
the investment portfolio. Investors are also directed to consider other risks
and uncertainties discussed in documents filed by the Company with the SEC. The
Company disclaims any obligation to update forward-looking information.
SEGMENT RESULTS
Revenues and income before provision for income taxes for the Company's
operating segments, as defined by Statement of Financial Accounting Standard No.
131, "Financial Reporting for Segments of a Business Enterprise", is summarized
as follows (in millions):
<TABLE>
Life Insurance Asset Accumulation Non-Life
Operations Products Operations Insurance Investments
----------------------- ------------------------ ------------------------
March 31, March 31, March 31,
2000 1999 2000 1999 2000 1999
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Revenues $99.8 $105.2 $13.5 $8.9 $1.5 $1.4
Income (loss) before income taxes 10.6 9.8 1.6 (0.1) 0.8 1.1
</TABLE>
Life insurance operations. Income before income taxes for the three months ended
March 31, 2000 was $10.6 million compared to $9.8 million for the three months
ended March 31, 1999. This increase in profits is primarily due to a $2.4
million decrease in death benefits, net of reserves for future policy benefits
released on traditional life insurance death benefits. This increase is offset
by normal runoff of profits on the Company's in force life insurance business.
Asset accumulation products operations. Income before income taxes for the three
months ended March 31, 2000 was $1.6 million compared to a loss before taxes of
$0.1 million for the same period in 1999. This increase in profits is due to (i)
a $0.4 million decrease in death benefits and (ii) an increase in both revenues
and the amount of fund values in the asset accumulation operations.
Non-life insurance investments. Income before income taxes for the three month
period ended March 31, 2000 was comparable to the same period in 1999.
Reconciling items. The differences between the segment revenues and income
before income taxes shown above and the amounts reported in the consolidated
financial statements result from items not allocated to specific segments. The
significant reconciling items are interest expense and a portion of (i) net
investment income, (ii) operating expenses and (iii)net realized investment
gains (losses).
Losses before income taxes for the three month period ended March 31, 2000
increased from the same period in 1999 due to a (i) a $5.2 million increase in
net realized investment losses offset by (ii) a $1.5 million decrease in
advisory and data processing fees paid to FHC, and (iii) a general reduction in
the level of operating expenses due to cost controls implemented during 2000.
THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999
Income before income taxes for the three months ended March 31, 2000 was $2.1
million compared to $0.7 million for the three months ended March 31, 1999.
Excluding the effects of net realized investment losses, income before income
taxes increased $6.6 million for this same period from $0.8 million to $7.4
million. The primary reasons for the increase in profit from 1999 to 2000 were
(i) lower death benefits, (ii) lower operating expenses resulting from cost
controls implemented during 2000, and (iii) lower advisory and data processing
fees paid to FHC.
Premiums and policy revenues. Premiums and policy revenues totaled $59.7 million
for the three months ended March 31, 2000 compared to $59.1 million for the
three months ended March 31, 1999. Premiums from traditional life insurance
business increased $2.8 million for the three months ended March 31, 2000
compared to the three months ended March 31, 1999. First year premiums on life
insurance sold by the Americo Preneed Sales division totaled $3.6 million during
2000. As new business sales from this division began in the fourth quarter of
1999, there were no comparable premiums in the three months ended March 31,
1999. The increase in Preneed business was offset by a decrease in premiums from
the remainder of the Company's inforce traditional life insurance business.
Policy revenues from interest sensitive life and annuity products decreased $2.2
million from 1999 to 2000. This increase was primarily due to administrative
charges on the Company's universal life business decreasing $3.8 million, offset
by a $1.3 million increase in policy revenues from the Company's asset
accumulation business.
Net investment income. Net investment income totaled $59.8 million for the three
months ended March 31, 2000 compared to $58.4 million for the three months ended
March 31, 1999. Net investment income increased due to (i) an increase in net
investment income on the Company's bond portfolio, (ii) a $0.3 million increase
in mortgage loan net investment income, and (iii) a $0.3 million increase in net
investment income related to a reduction in the unrecovered ceding commission
due to the Reinsurer, offset by (iv) a $1.2 million decrease in net investment
income on investments held by the Reinsurer.
The increased investment income related to the Company's bond portfolio is
primarily due to an increase in assets related to the asset accumulation
business from sales in the Company's Americo Retirement Services sales division.
The increase related to the Company's mortgage loan portfolio is due to an
increase in the average mortgage loan balance from $193.5 million in 1999 to
$227.6 million in 2000. This increase was offset by a decrease in the average
yield of the portfolio from 1999 to 2000.
The decrease related to investments held by the Reinsurer is due primarily to a
$1.6 million decrease in net investment income on a closed block of annuity
business. The decrease in investment income and the associated $1.0 million
decrease of interest credited on the policyholder fund values resulted from
lower fund values.
Net realized investment losses. Net realized investment losses totaled $5.3
million for the three months ended March 31, 2000 compared to net realized
investment losses of $0.1 million for the three months ended March 31, 1999.
During 2000, the Company realized losses of $6.3 million on common stocks.
Offsetting these losses were $0.6 million of gains on fixed maturity investments
and $0.4 million of gains related to real estate ventures.
Included in 2000 realized investment losses of $5.3 million was $5.2 million
of realized losses on short positions held on common stocks and bonds owned by
the Company. There was a like amount of increase in market value on the
related long positions which was included in unrealized investment gains in
stockholder's equity.
Policyholder benefits. Policyholder benefits totaled $72.4 million for the three
months ended March 31, 2000 compared to $70.3 million for the three months ended
March 31, 1999. This increase resulted from a (i) $3.9 million decrease in death
benefits, (ii) a $2.4 million increase in interest credited on universal life
and annuity fund balances, and (iii) a $2.3 million increase in other
policyholder benefits.
The decrease in death benefits was offset by a $0.6 million reduction in
reserves for future policy benefits released on traditional life insurance death
benefits. Interest credited on fund balances increased $3.3 million due to
increased assets related to the asset accumulation business. This increase was
partially offset by a $1.0 million decrease on a closed block of annuity
business resulting from lower fund values. Other policyholder benefits increased
primarily due to an increase in surrender benefits on a closed block of
traditional life business.
Amortization expense. Amortization expense totaled $17.7 million for the three
months ended March 31, 2000 compared to $18.9 million for the three months ended
March 31, 1999. Amortization expense related to the Company's universal life
insurance business decreased $2.9 million. This decrease was due primarily to
decreased administrative charges on this block of business. Offsetting this
decrease was a $0.8 million increase in amortization expense related to a closed
block of annuity business.
Other operating expenses. Other operating expenses totaled $18.2 million for the
three months ended March 31, 2000 compared to $23.1 million for the three months
ended March 31, 1999.
The Company amended its advisory agreement and its data processing agreement
with FHC in June 1999. The effect of these amendments was to lower the fees paid
to FHC, resulting in a $1.5 million decrease in other operating expenses in 2000
compared to 1999.
In addition, during 1999 the Company reviewed the levels of general expenses in
all of its operating and corporate departments. The Company identified sources
of expense savings through increased cost controls which have decreased
operating expenses by $2.3 million during 2000 compared to 1999.
FINANCIAL CONDITION AND LIQUIDITY
The changes occurring in the Company's consolidated balance sheet from December
31, 1999 to March 31, 2000 primarily reflect the normal operations of the
Company's life insurance subsidiaries.
The quality of the Company's investment in fixed maturity investments at March
31, 2000 remained consistent with December 31, 1999. Non-investment grade
securities totaled less than 2.5% of the Company's total fixed maturity
investments at March 31, 2000. The Company has not made any significant changes
to its investment philosophy during 2000.
The Company's net unrealized investment gains increased $2.1 million during the
first three months of 2000. The gross unrealized investment gains on the
Company's fixed maturity investment securities increased $11.6 million due to a
market value increase and the gross unrealized investment gains on equity
securities decreased $4.0 million. The components of the change during the three
months ended March 31, 2000 were (in millions):
<TABLE>
<S> <C>
Gross unrealized investment gains $ 7.6
Effect on insurance assets and liabilities (4.4)
Deferred income tax effect (1.1)
---------
$ 2.1
</TABLE>
During the three months ended March 31, 2000, changes in the interest rate
environment did not adversely affect the Company's economic position. These rate
changes did not materially affect disclosures included in the Company's December
31, 1999 Form 10-K regarding the Company's exposure to market risk.
<PAGE>
EFFECT OF ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 provides guidance related to
the accounting for derivative instruments and hedging activities focusing on the
recognition and measurement of derivative instruments. This statement is
effective for all fiscal quarters of all fiscal years beginning after June 15,
2000. Adoption of this accounting standard is not expected to have a significant
impact on the Company's consolidated financial statements.
<PAGE>
PART II - OTHER INFORMATION
ITEM 2. LEGAL PROCEEDINGS
Reference is made to the Company's Annual Report on Form 10-K for the year ended
December 31, 1999 regarding certain legal proceedings to which the Company
and/or certain of its subsidiaries are parties.
Included among those matters reported in the 10-K was McCulley v. Great Southern
Life Insurance Company, et. al., U.S. District Court of the Northern District of
Texas. The Court has approved the settlement previously described pursuant to
which Great Southern will pay class counsel's fees and expenses in the amount of
$275,000 and will provide free insurance for one year to class members who
timely submit an application for a new universal life policy and satisfy Great
Southern's underwriting requirements. The Company does not believe the costs of
implementing the settlement, after consideration of amounts provided in the
consolidated financial statements, will have a material adverse effect on the
financial condition of the Company.
Also included among the matters reported in the 10-K was Thibodeau et al. v.
Great American Life Underwriters, et al., District Court, Dallas County, Texas.
Subsequent to March 31, 2000, the parties tentatively agreed to a proposal
pursuant to which Great Southern will pay $1.1 million to settle this lawsuit.
When prepared in final form, the settlement agreement will be subject to the
approval of the court. The Company does not believe the costs of implementing
the settlement, after consideration of amounts provided in the consolidated
financial statements, will have a material adverse effect on the financial
condition of the Company.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The quantitative and qualitative disclosures about market risk are contained in
the "Financial Condition and Liquidity" section of Management's Discussion and
Analysis of Financial Condition and Results of Operations.
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
3.1 Restated Articles of Incorporation, as amended,
of the Registrant (incorporated by reference from
Exhibit 3.1 to Registrant's Form S-4 [File No.
33-64820] filed June 22, 1993).
3.2 Bylaws, as amended, of the Registrant
(incorporated by reference from Exhibit 3.2 to
Registrant's Form S-4 [File No. 33-64820] filed
June 22, 1993).
10.2(b)* Amendment, effective as of December 31, 1999,
to Tax Sharing Agreement, adding Americo
Retirement Services, Inc., CAPCO Holdings, L.C.,
GSSW LM, Inc., GSSW WR, Inc. and GSSW WWA, Inc.
as parties.
27 Financial Data Schedule.
- ------------ ----------------- ------------------------------------------------
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed for the three months ended March 31,
2000.
<PAGE>
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: May 12, 2000
AMENDMENT TO
TAX SHARING AGREEMENT
Life-Nonlife
This Amendment to Tax Sharing Agreement--Life-Nonlife (the "Amendment")
is made as of December 31, 1999.
Americo International Corporation, a Missouri corporation Americo Life,
Inc., a Missouri corporation Americo Services, Inc., a Missouri
corporation Assured Leasing Corporation, a Missouri corporation College
Insurance Group, Inc., a Missouri corporation Financial Holding
Corporation, a Missouri corporation First Consulting and
Administration, Inc., a Missouri corporation
Great Southern Life Insurance Company, a Texas corporation ("Great
Southern") Hanover Financial Corporation, a Missouri corporation
Landmark Mortgage Company, a Missouri corporation Lufkin REO, Inc., a
Texas corporation NAP Partners, Inc., a Texas Corporation National
Farmers Union Life Insurance Company, a Texas corporation Pension
Consultants and Administrators, Inc., PFS Financing Corporation, a
Missouri corporation PFS Holding Company, a Missouri corporation
Premium Financing Specialists, Inc., a Missouri corporation Premium
Financing Specialists of California, Inc., a California corporation
Premium Financing Specialists of Iowa, Inc., an Iowa corporation TADIC,
Inc., a Delaware corporation The College Life Insurance Company of
America, a Texas corporation ("College Life") United Fidelity Life
Insurance Company, a Texas corporation collectively, the foregoing are
referred to herein as the "Existing Parties"), and
WHEREAS, the Existing Parties entered into that certain Tax Sharing
Agreement --Life-Nonlife dated as of December 29, 1995, as amended
(the"Agreement"); and
WHEREAS, the parties wish to amend the Agreement so that Americo
Retirement Services, Inc., a Missouri corporation wholly owned by College
Insurance Group, Inc. ("ARS"), CAPCO Holdings, L.C., a Missouri limited
liability company wholly owned by Financial Holding Corporation ("CAPCO"), GSSW
LM, Inc., a Missouri corporation wholly owned by Great Southern ("GSSW LM"),
GSSW WR, Inc., a Missouri Corporation wholly owned by Great Southern ("GSSW
LR"), and GSSW WWA, Inc., a Missouri corporation wholly owned by Great Southern
"(GSSW WWA"), will become parties;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, effective as of the date hereof:
(a) the Existing Parties agree that the Agreement is hereby amended
to apply to ARS, CAPCO, GSSW LM, GSSW WR, and GSSW WWA, and
that each of ARS, GSSW LM, GSSW WR, and GSSW WWA, shall
henceforth enjoy all rights of a "Subsidiary" under the
Agreement; and
(b) by their respective execution and delivery of this Amendment,
each of ARS, CAPCO, GSSW LM, GSSW WR, and GSSW WWA, agrees to
be bound by the terms of the Agreement as a "Subsidiary"; and
WHEREAS, Pension Consultants & Administrators, Inc. (merged into
Annuity Service Corporation - now known as Pension Consultants and
Administrators, Inc.), Cidat Aviation, Inc., Lufkin REO, Inc., and The Victory
Life Insurance Company have all ceased to exist due to their merger into other
subsidiaries party hereto or by virtue of their liquidation and dissolution
during 1998 and 1999 and therefore such entities will cease to be parties hereto
after the tax year 1999, and therefore, effective with the filing of the 2000
tax returns and any amendments thereto, the aforementioned companies shall cease
to be considered as parties, and
Except as herein amended, the Agreement shall remain in full force and
effect without change.
IN WITNESS WHEREOF, the Existing Parties and ARS, GSSW LM, GSSW WR and
GSSW WWA have executed this Amendment as of the date first above written.
AMERICO INTERNATIONAL AMERICO LIFE, INC.
CORPORATION
By__________________________ By__________________________
Name: Gary E. Jenkins Name: Gary E. Jenkins
Title Sr. VP and CFO Title Sr. VP and CFO
AMERICO RETIREMENT AMERICO SERVICES, INC.
SERVICES, INC.
By__________________________
By__________________________ Name: Gary E. Jenkins
Name: Gary E. Jenkins Title VP, Treasurer and CFO
Title Sr. VP and CFO
ASSURED LEASING CORPORATION COLLEGE INSURANCE GROUP, INC.
By__________________________ By__________________________
Name: Major W. Park, Jr. Name: Gary E. Jenkins
Title Secretary Title Sr. VP and CFO
FINANCIAL HOLDING CORPORATION FIRST CONSULTING AND ADMINISTRATION,
INC.
By__________________________
Name: Gary E. Jenkins By__________________________
Title VP, CFO and Treasurer Name: Francine D. Fetyko
Title Director, President and CEO
GREAT SOUTHERN LIFE GSSW LM, INC.
INSURANCE COMPANY
By__________________________
By__________________________ Name: Gary E. Jenkins
Name: Gary E. Jenkins Title VP, Treasurer and CFO
Title Sr. VP and CFO
GSSW WR, INC. GSSW WWA, INC.
By__________________________ By__________________________
Name: Gary E. Jenkins Name: Gary E. Jenkins
Title VP, Treasurer and CFO Title VP, Treasurer and CFO
HANOVER FINANCIAL LANDMARK MORTGAGE COMPANY
CORPORATION
By__________________________ By__________________________
Name: Francine D. Fetyko Name: Robert J. Graham
Title Director, President and Treasurer Title Director and President
NAP PARTNERS, INC. NATIONAL FARMERS UNION
LIFE INSURANCE COMPANY
By__________________________ By__________________________
Name: James L. Anderson Name: Gary E. Jenkins
Title President, Secretary, Treasurer Title Sr. VP and CFO
PFS FINANCING
CORPORATION PFS HOLDING COMPANY
By__________________________ By__________________________
Name: Thomas J. Charbonneau Name: Thomas J. Charbonneau
Title Director, President Title Director and Vice President
PREMIUM FINANCING PREMIUM FINANCING
SPECIALISTS OF CALIFORNIA, INC. SPECIALISTS, INC.
By__________________________ By__________________________
Name: Thomas J. Charbonneau Name: Bryan J. Andres
Title Director Title Vice President and Comptroller
PREMIUM FINANCING PENSION CONSULTANTS AND
SPECIALISTS OF IOWA, INC. ADMINISTRATORS INC.
By__________________________ By___________________________
Name: Thomas J. Charbonneau Name: Gary E. Jenkins
Title Director, President Title Sr VP, CFO and Treasurer
TADIC, INC. THE COLLEGE LIFE
INSURANCE COMPANY
OF AMERICA
By__________________________
Name: Major W. Park, Jr. By__________________________
Title Secretary Name: Gary E. Jenkins
Title Sr VP, CFO and Treasurer
UNITED FIDELITY LIFE CAPCO HOLDINGS, LC
INSURANCE COMPANY
By__________________________ By________________________
Name: Gary E. Jenkins Name: Gary E. Jenkins
Title Sr VP, CFO and Treasurer Title: Chief Officer and Manager
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0000908139
<NAME> Americo Life, Inc.
<MULTIPLIER> 1000
<CURRENCY> U.S. dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1000
<DEBT-HELD-FOR-SALE> 1,006,691
<DEBT-CARRYING-VALUE> 836,349
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<EQUITIES> 72,609
<MORTGAGE> 227,601
<REAL-ESTATE> 27,513
<TOTAL-INVEST> 2,423,123
<CASH> 80,186
<RECOVER-REINSURE> 1,108,063
<DEFERRED-ACQUISITION> 220,758
<TOTAL-ASSETS> 4,234,171
<POLICY-LOSSES> 3,440,822
<UNEARNED-PREMIUMS> 59,104
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<POLICY-HOLDER-FUNDS> 121,663
<NOTES-PAYABLE> 111,241
0
0
<COMMON> 10
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59,745
<INVESTMENT-INCOME> 59,831
<INVESTMENT-GAINS> (5,253)
<OTHER-INCOME> 1,617
<BENEFITS> 72,365
<UNDERWRITING-AMORTIZATION> 17,652
<UNDERWRITING-OTHER> 18,203
<INCOME-PRETAX> 2,119
<INCOME-TAX> 656
<INCOME-CONTINUING> 1,463
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,463
<EPS-BASIC> 146.30
<EPS-DILUTED> 146.30
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
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