<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): February 10, 1998
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ARM FINANCIAL GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 33-67268 61--1244251
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) file number) Identification No.)
515 West Market Street
LOUISVILLE, KENTUCKY 40202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (502) 582-7900
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ITEM 5. OTHER EVENTS.
On February 11, 1998, ARM Financial Group, Inc. (the "Company") announced
that, as of February 10, 1998, Martin H. Ruby has been named Chief Executive
Officer and Chairman of the Board of Directors. Prior to that date, from the
inception of the Company, Mr. Ruby had served as Co-Chief Executive Officer
and Co-Chairman of the Board of Directors with John Franco. Mr. Franco
announced his retirement from the Company, effective February 10, 1998.
Effective February 10, 1998, Warren M. Foss resigned as a director and as a
member of the Audit Committee of the Company. Also effective February 10,
1998, Frank V. Sica resigned as a director and as a member of the
Compensation Committee. Mr. Sica's resignation was contemporaneous with his
resignation from Morgan Stanley, Dean Witter, Discover & Co. Furthermore,
James S. Cole resigned as a director of the Company. At the present time,
the Company will not fill the vacancies on the Board of Directors created by
the resignations of Mr. Franco and Mr. Foss, and effective February 20,
1998, has reduced the number of members comprising the Board of Directors to
seven (7). Effective February 20, 1998, Mr. Alan E. Goldberg, 43, was
elected to fulfill the term of Mr. Sica as a director; while Colin F.
Raymond, a current director, was elected to fulfill the term of Mr. Sica on
the Company's Compensation Committee. Furthermore, effective February 20,
1998, Robert H. Niehaus, 42, was elected to fulfill the term of Mr. Cole as a
director.
Effective February 13, 1998, Daniel R. Gattis resigned as Executive Vice
President - Institutional Business Group. Effective February 20, 1998,
Patricia L. Winter, formerly the Company's Senior Vice President -
Mergers/Acquisitions and Investment Assurance, was elected to replace Mr.
Gattis, and was given the title Executive Vice President- Investment
Assurance and Institutional Products. In conjunction with his appointment,
Madison C. McCarty was promoted to Senior Managing Director- Institutional
Business Group, reporting to Ms. Winter.
2
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ITEM 7 (c) EXHIBITS FILED.
The following exhibits are filed as part of this report on Form 8-K:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<S> <C>
99.1 Press release by the Company dated February 11, 1998.
99.2 Press release by the Company dated February 20, 1998.
</TABLE>
3
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized, on February 27, 1998.
ARM FINANCIAL GROUP, INC.
(Registrant)
By: /s/ Robert H. Scott
---------------------------------
Robert H. Scott
Executive Vice President, General
Counsel and Secretary
By: /s/ Barry G. Ward
---------------------------------
Barry G. Ward
Controller
4
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EXHIBIT 99.1
[ARM FINANCIAL GROUP, INC. LOGO]
ARM FINANCIAL GROUP REPORTS:
- - 1997 PRO FORMA OPERATING EARNINGS UP 34% OVER 1996 AND FOURTH QUARTER 1997
UP 5% OVER 1996 SAME PERIOD
- - PRODUCT ENHANCEMENTS AND NEW PRODUCTS SUPPORT STRONG SALES GROWTH
- - MARTIN H. RUBY NAMED CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
- - JOHN FRANCO, CO-CHAIRMAN AND CO-CEO, RETIRES; COMPANY PLANS RELATED
ONE-TIME CHARGE IN THE 1ST QUARTER 1998
HOLD For Release at: 2/11/98 7:50 am
Contact:
PETER RESNIK, TREASURER AND CORPORATE COMMUNICATIONS OFFICER
ARM FINANCIAL GROUP, INC.
(502) 582-7946
E-MAIL: [email protected]
Louisville, KY, February 11, 1998--ARM Financial Group, Inc. (the "Company")
(AMEX: ARM) (http://www.armfinancial.com) announced today that pro forma
operating earnings for the fourth quarter of 1997 increased to $10.7 million,
or 44 cents per share, from $9.9 million, or 42 cents per share, for the same
period in 1996, an increase of 5% per share. For the full year of 1997, pro
forma operating eazrnings increased to $36.3 million, or $1.51 per share,
from $26.8 million, or $1.13 cents per share, in the same period in 1996, an
increase of 34% per share.
The higher operating earnings in 1997 were parimarily attributable to an
increase in both deposit growth from sales of retail and institutional
products and ongoing asset/liability management for spread-based products.
During the second quarter of 1997, ARM Financial Group completed an initial
public offering of its common stock. The Company raised approximately $79
million which is being used to strengthen the Company's existing capital
base, to enhance the Company's retail market presence, to consolidate
operating locations and for other corporate purposes, which may include
acquisitions. For comparative purposes, ARM is reporting pro forma results
to adjust for the impact of the initial public offering of common stock as if
it had occurred at the beginning of each period presented.
Net income applicable to common shareholders was $9.6 million for the
quarter, or 39 cents per share, compared with fourth quarter 1996 of $7.4
million, or 42 cents per share. For the full year of 1997, the
<PAGE>
net income applicable to common shareholders was $22.8 million, or $1.07 per
share, which compares with 1996 full year of $18.6 million, or $1.06 per
share. The full year of 1997 includes a one-time, non-cash stock-based
compensation charge of $8.1 million as a result of the IPO and non-recurring
charges of $6.7 million ($1.6 million in the 1997 fourth quarter), mainly
relating to the previously announced relocation and consolidation of the
Company's operating facilities from Columbus, Ohio to Louisville, Kentucky.
Total sales rose to $2,297.5 million, an increase of 111%, for the full year
of 1997 from $1,088.2 million for the same period in 1996. Total sales
reflect retail sales of $588.8 million, representing a 78% increase over the
previous year's same period and institutional sales of $1,708.7 million,
representing a 126% increase over the previous year's same period.
"Strong sales and earnings growth resulted from continued diversification and
expansion in our retail and institutional business lines," said Martin H.
Ruby, Chief Executive Officer of ARM.
He added that "the changing economic environment in 1997 emphasized the
importance of the Company offering a well-balanced portfolio of products. In
the fourth quarter, retail customers had greater interest in our variable
annuity products, compared with the first half of the year when higher
interest rates resulted in preferred interest in our guaranteed rate
products."
Product innovation played a key factor for sales during the fourth quarter.
In the retail market, ARM introduced enhancements to its multi-manager
variable annuity product, PINNACLE, which offers indexed funds, along with a
diverse selection of asset classes and managers and guaranteed rate options
- -- all in one product. ARM also broadened its institutional product lines and
distribution channels in launching a new product in partnership with
Bayerische Landesbank Girozentrale, one of the safest rated banks in the
world. The product, which is initially for five years and renewable annually
thereafter, received deposits of $500 million. The primary purchasers for
this product are institutional money managers and money market funds.
For the fourth quarter of 1997, net investment spread increased to
$22.6 million from $18.0 million in the previous year's fourth quarter. Net
investment spread represents interest income earned on invested assets less
interest credited on customer deposits. For the same periods, fee income
increased to $7.1 million from $4.5 million, respectively. In addition, net
income for the fourth quarter of 1997 includes net realized investment gains
of $0.2 million compared to $3.2 million of net realized investment gains for
the comparable period of 1996.
MARTIN H. RUBY NAMED CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
The Company also announced today that Martin H. Ruby fully assumes the role
of Chairman of the Board and Chief Executive Officer, effective immediately.
Since the Company was founded in 1993, Mr. Ruby has served with John Franco
as Co-Chairman of the Board and Co-Chief Executive Officer.
Ruby indicated that the Company intends to remain focused on its key
strategies of product innovation, delivering superior service, expanding
sales and distribution channels and a disciplined approach to asset/liability
and investment management.
<PAGE>
JOHN FRANCO RETIREMENT ANNOUNCED
In addition, the Company announced that John Franco has retired as
Co-Chairman of the Board and Co-Chief Executive Officer and as a member of
the Board of Directors, effective immediately.
John Franco said, "ARM has grown rapidly and profitably since the Company's
founding in 1993 and is well-positioned for future growth. I believe that ARM
has successfully met the challenges of a start-up company and has a strong
management team capable of building on the sound platform we have
established. Now that ARM has matured to its current size, I believe this is
the right time for me to step down."
According to Martin Ruby, "John and I co-founded this Company because we
believe there are tremendous opportunities for growth in the long term
savings and retirement industry. Since then, ARM has been successfully
transformed from a start-up company to a full-fledged, publicly traded
company with $6.9 billion in assets under management, over 300 employees and
a market capitalization of over $500 million dollars. With our strategies in
place, I feel that ARM is positioned to capitalize further on this success."
Ruby added "John's leadership played a critical role in developing ARM's key
business strategies and a strong management team to direct the Company's
future. I know that I speak for all when I extend a special thanks to John
for his exceptional leadership, dedication, and commitment. He has earned the
respect of everyone who has worked with him. We wish John and his family all
the best in the years to come."
The Company also indicated that, as part of a retirement package for Mr.
Franco, the Company in the first quarter of 1998 will take a one-time charge
of approximately $3.8 million consisting of a $2.3 million non-cash item for
vesting the unvested portion of stock options and a $1.5 million item for
fulfilling remaining compensation agreements under his employment agreement.
ARM Financial Group, Inc. specializes in the asset accumulation business,
providing retail and institutional customers with products designed to serve
the growing long-term retirement savings marketplace. At December 31, 1997,
the Company had $6.9 billion in assets under management. It provides
annuities and guaranteed investment contracts through its insurance
subsidiaries, Integrity Life Insurance Company and National Integrity Life
Insurance Company; face-amount certificates through SBM Certificate
Company; and brokers support and products through its broker-dealer, ARM
Securities Corporation.
The above statements include forward-looking statements. ARM cautions
investors that any forward-looking statements are inherently uncertain and
investors must recognize that actual results may differ from ARM's
expectations. Numerous factors exist which in the future could cause results
to differ materially from these expectations. These statements involve risks
and uncertainties as detailed from time to time in ARM's filings with the
Securities and Exchange Commission.
<PAGE>
ARM FINANCIAL GROUP,INC.
SUMMARY FINANCIAL INFORMATION - 1997 AND 1996
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<TABLE>
<CAPTION>
Three Months Ended December 31, Year Ended December 31,
------------------------------- -----------------------
1997 1996 1997 1996
------------------------------- -----------------------
<S> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND WHERE NOTED)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Net investment spread $ 22,622 $ 18,016 $ 82,561 $ 67,870
Fee income 7,083 4,506 24,611 17,833
Other income and expenses
(excluding non-recurring charges) (13,156) (11,779) (53,803) (53,061)
Non-recurring charges:
Stock-based compensation expense charge - - (8,145) -
Other (1,556) (3,968) (6,678) (5,004)
Realized investment gains 165 3,239 3,192 907
-------- -------- -------- --------
Income before federal income taxes 15,158 10,014 41,738 28,545
Federal income tax expense (4,405) (1,448) (14,139) (5,167)
-------- -------- -------- --------
Net income 10,753 8,566 27,599 23,378
Dividends on preferred stock (1,187) (1,187) (4,750) (4,750)
-------- -------- -------- --------
Net income applicable to common shareholders $ 9,566 $ 7,379 $ 22,849 $ 18,628
-------- -------- -------- --------
-------- -------- -------- --------
Pro forma operating earnings (1) $ 10,745 $ 9,926 $ 36,343 $ 26,789
-------- -------- -------- --------
-------- -------- -------- --------
Per common and common equivalent share:
Net income $ 0.39 $ 0.42 $ 1.07 $ 1.06
-------- -------- -------- --------
-------- -------- -------- --------
Pro forma operating earnings $ 0.44 $ 0.42 $ 1.51 $ 1.13
-------- -------- -------- --------
-------- -------- -------- --------
SELECTED DATA
Sales (in millions):
Retail $ 100.6 $ 113.6 $ 588.8 $ 330.7
Institutional 781.8 132.8 1,708.7 757.5
-------- -------- -------- --------
Total $ 882.4 $ 246.4 $2,297.5 $ 1,088.2
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
<TABLE>
<CAPTION>
December 31, December 31,
1997 1996
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<S> <C> <C>
Total assets under management (in billions) (2) $ 6.9 $ 4.8
------ ------
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</TABLE>
(1) Pro forma operating earnings is defined as net income applicable to
common shareholders, excluding, net of tax, realized investment gains and
losses, non-recurring charges and income from defined benefit pension
plan asset management operations which were sold and includes the net pro
forma effect on earnings assuming the Company's initial public offering
of common stock has occurred at the beginning of each period presented.
(2) Assets under management accepted both on and off the Company's balance
sheet.
- ------------------------------------------------------------------------------
Additional statistical information is available on the Company's web page
(http://www.armfinancial.com) or directly from the Company at (502) 582-7993
Contact: Peter Resnik
Treasurer and Corporate
Communications Officer
(502) 582-7946
e-mail: [email protected]
<PAGE>
EXHIBIT 99.2
[ARM FINANCIAL GROUP, INC. LOGO]
PRESS RELEASE
Contact:
PETER RESNIK, TREASURER AND CORPORATE COMMUNICATIONS OFFICER
ARM FINANCIAL GROUP, INC.
(502) 582-7946
E-MAIL: [email protected]
ARM FINANCIAL GROUP NAMES PATRICIA L. WINTER
EXECUTIVE VICE PRESIDENT -
INVESTMENT ASSURANCE AND INSTITUTIONAL PRODUCTS
RELEASED: PRNEWSWIRE
2-20-98/2:15 P.M.
Louisville, KY - February 20, 1998 - ARM Financial Group, Inc. (AMEX: ARM)
(http://www.armfinancial.com) announced today that Patricia L. Winter has been
named Executive Vice President - Investment Assurance and Institutional Products
effective immediately. Ms. Winter joined ARM Financial Group in April of 1992
and has served as Senior Vice President of Mergers/Acquisitions and Investment
Assurance since March of 1997. She has played an integral role in developing
the Company's asset/liability strategies, worked closely with outside investment
advisors, and evaluated a variety of strategic opportunities for the Company.
Martin H. Ruby, Chairman and Chief Executive Officer of ARM Financial Group,
Inc. said, "I am extremely pleased with this new appointment. Patty has served
ARM Financial Group for several years and for the last year has been intimately
involved in developing and implementing the Institutional Business Group's
asset/liability strategies. Her skills and Investment Assurance experience are
well suited to our goal of further expanding and diversifying our institutional
products and distribution channels."
In conjunction with this appointment, Madison C. McCarty has been promoted to
Senior Managing Director - Institutional Business Group, reporting to Ms.
Winter. Mr. McCarty joined ARM Financial Group as a Marketing Associate in the
Institutional Group in August of 1992. He brings extensive investment sales,
marketing, and product development experience to his new position. He has
played a leading role in building our Institutional business since its
inception. Mr. McCarty has also contributed significantly to establishing and
managing the Company's strategic partnership agreements.
These two appointments follow the resignation of Daniel R. Gattis as Executive
Vice President - Institutional Business Group. Mr. Gattis joined ARM Financial
Group in January 1996.
<PAGE>
ARM Financial Group specializes in the asset accumulation business, providing
retail and institutional customers with products designed to serve the growing
long-term retirement savings marketplace. At December 31, 1997, the Company had
$6.9 billion in assets under management. It provides annuities and guaranteed
investment contracts through its insurance subsidiaries, Integrity Life
Insurance Company and National Integrity Life Insurance Company; face-amount
certificates through SBM Certificate Company; and broker support and products
through its broker-dealer, ARM Securities Corporation.
###
