UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
Commission File Number 0-24404
ALLIED Life Financial Corporation
(Exact name of registrant as specified in its charter)
Iowa
(State or other jurisdiction of incorporation or organization)
42-1406716
(I.R.S. Employer Identification No.)
701 Fifth Avenue, Des Moines, Iowa
(Address of principal executive offices)
50391-2003
(Zip Code)
515-280-4211
(Registrant's telephone number, including area code)
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 outstanding shares of each of the issuer's classes of
common stock, as of May 1, 1996:
4,634,956 shares of Common Stock.
This document contains 18 pages.
<PAGE>
1
PART I
Item 1. Financial Statements
ALLIED Life Financial Corporation and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
<S> <C> <C>
March 31, December 31,
1996 1995
Assets
Investments
Fixed maturities
Held to maturity at amortized cost
(fair value $217,352,280 and $232,252,223) $ 210,293,784 $ 219,418,225
Available for sale at fair value
(amortized cost $425,828,107 and $401,492,967) 432,844,869 425,098,718
Equity securities at fair value
(cost $4,762,438 and $4,256,516) 4,954,344 4,332,107
Mortgage loans on real estate 1,750,250 1,829,450
Policy loans 10,049,670 9,526,033
Short-term investments, at cost 960,564 721,612
Total investments 660,853,481 660,926,145
Accrued investment income 10,180,146 8,697,634
Accounts receivable 500,845 566,853
Reinsurance ceded receivables 5,661,885 7,626,401
Current income taxes recoverable ----- 869,664
Deferred policy acquisition costs 88,356,329 79,717,529
Other assets 1,590,743 1,543,033
Total $ 767,143,429 $ 759,947,259
</TABLE>
See accompanying Notes to Interim Consolidated Financial Statements.
<PAGE>
2
ALLIED Life Financial Corporation Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
<S> <C> <C>
March 31, December 31,
1996 1995
Liabilities
Policy liabilities
Policyholder account balances
Annuity contracts $ 420,067,067 $ 412,216,412
Universal life contracts 172,219,703 168,654,188
Other 7,348,257 7,634,517
Future policy benefits 28,922,960 28,149,304
Policy and contract claims 4,304,874 4,827,540
Other policyholder funds 1,433,543 867,336
634,296,404 622,349,297
Checks drawn in excess of bank balances 1,251,057 2,037,432
Amounts payable to reinsurers 278,097 1,010,800
Current income taxes payable 199,280 -----
Deferred income taxes 10,218,407 13,452,845
Indebtedness to affiliates 142,208 139,380
Note payable (note 2) 13,325,000 16,605,000
Other liabilities 9,541,421 2,670,685
Total liabilities 669,251,874 658,265,439
Stockholders' equity
Preferred stock, no par value, issuable in series,
authorized 7,500,000 shares
6.75% Series, authorized 2,440,000 shares, issued and
outstanding of 2,038,730 in 1996 and 2,004,898 in 1995 22,120,220 21,753,143
ESOP Series, authorized 300,000 shares, issued
and outstanding 96,816 in 1996 and 82,029 in 1995 1,376,091 1,117,780
Common stock, no par value, $1 stated value,
authorized 25,000,000 shares, issued and outstanding
4,634,554 in 1996 and 4,632,559 in 1995 4,634,554 4,632,559
Additional paid-in capital 48,804,970 48,773,783
Retained earnings 18,311,801 16,237,501
Unrealized appreciation of investments, net 2,643,919 9,167,054
Total stockholders' equity 97,891,555 101,681,820
Total liabilities and stockholders' equity $ 767,143,429 $ 759,947,259
</TABLE>
See accompanying Notes to Interim Consolidated Financial Statements.
<PAGE>
3
ALLIED Life Financial Corporation and Subsidiaries
Consolidated Statements of Income
<TABLE>
Three Months Ended
March 31,
<CAPTION>
<S> <C> <C>
1996 1995
Revenues
Insurance revenues
Policyholder assessments on universal life contracts $ 5,167,300 $ 4,901,177
Surrender charges 628,460 635,432
Life insurance premiums 2,832,887 3,030,792
Other insurance income 805,428 616,236
Reinsurance premiums ceded (2,063,720) (1,723,457)
Total insurance revenues 7,370,355 7,460,180
Investment income 11,749,917 10,688,042
Realized investment losses (84,184) (113,548)
Other income 287,986 138,939
19,324,074 18,173,613
Benefits and Expenses
Policyholder benefits
Interest credited to policyholder account balances
Annuity contracts 5,800,453 5,225,339
Universal life contracts 2,375,262 2,387,083
Other 84,197 74,271
Death benefits 1,503,420 1,569,459
Other policyholder benefits 1,357,260 1,933,976
Total policyholder benefits 11,120,592 11,190,128
Amortization of deferred policy acquisition costs 1,732,594 1,356,261
Commissions 669,331 677,997
Affiliated operating expenses 323,156 374,761
Other insurance operating expenses 1,434,021 1,102,017
15,279,694 14,701,164
Income before income taxes 4,044,380 3,472,449
Income taxes
Current 1,069,061 1,415,598
Deferred 278,019 (311,984)
1,347,080 1,103,614
Net Income $ 2,697,300 $ 2,368,835
Net income applicable to common stock $ 2,306,015 $ 2,003,517
Earnings per Common share $ .50 $ .44
Weighted average number of common shares outstanding 4,633,202 4,590,096
</TABLE>
See accompanying Notes to Interim Consolidated Financial Statements.
<PAGE>
4
ALLIED Life Financial Corporation and Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
Three Months Ended
March 31,
<CAPTION>
<S> <C> <C>
1996 1995
Cash flow from operating activities
Net income $ 2,697,300 $ 2,368,835
Adjustments to reconcile net income to net cash provided by
operating activities
Policyholder assessments on universal life contracts (5,167,300) (4,901,177)
Surrender charges (628,460) (635,432)
Interest credited to policyholder account balances 8,259,912 7,686,693
Realized investment losses 84,184 113,548
Change in
Accrued investment income (1,482,512) (1,248,737)
Reinsurance ceded receivables 1,964,516 (190,429)
Deferred policy acquisition costs (2,201,719) (3,588,346)
Liabilities for future policy benefits 773,656 1,570,950
Policy and contract claims and other policyholder funds 43,541 (680,088)
Income taxes
Current 1,068,944 1,410,199
Deferred 278,019 (311,984)
Other, net (673,378) (1,343,896)
Net cash provided by operating activities 5,016,703 250,136
Cash Flows from Investing Activities
Purchase of fixed maturities held to maturity (6,500,000) (15,001,732)
Maturities, calls, and principal reductions of fixed maturities
held to maturity 15,534,368 5,606,112
Purchase of fixed maturities available for sale (50,627,478) (22,397,736)
Proceeds from sale of fixed maturities available for sale 30,617,977 6,200,406
Maturities, calls, and principal reductions of fixed maturities
available for sale 2,489,422 83,742
Purchase of equity securities (505,922) -----
Proceeds from repayment of mortgage loans 78,365 109,232
Change in policy loans, net (523,637) 71,431
Net cash used in investing activities (9,436,905) (25,328,545)
Cash Flows from Financing Activities
Change in checks drawn in excess of bank balances (786,375) (307,310)
Deposits to policyholder account balances 20,238,719 39,750,524
Withdrawals from policyholder account balances (11,572,961) (12,610,829)
Change in note payable, net (3,280,000) (3,750,000)
Proceeds from issuance of stock, net 291,494 327,586
Dividends paid to stockholders (231,723) (183,790)
Net cash provided by financing activities 4,659,154 23,226,181
Net Increase (Decrease) in Cash and Short-term Investments 238,952 (1,852,228)
Cash and short-term investments at beginning of year 721,612 3,465,285
Cash and short-term investments at end of quarter $ 960,564 $ 1,613,057
</TABLE>
See accompanying Notes to Interim Consolidated Financial Statements.
<PAGE>
5
ALLIED Life Financial Corporation and Subsidiaries
Notes to Interim Consolidated Financial Statements
(1) Summary of Significant Accounting Policies
The accompanying consolidated financial statements include the accounts of
ALLIED Life Financial Corporation (the Company) and its subsidiaries on a
consolidated basis.
At March 31, 1996, ALLIED Mutual Insurance Company (ALLIED Mutual), an
affiliated property-casualty insurance company, controlled 53% of the voting
stock of the Company and the ALLIED Life Financial Corporation Employee Stock
Ownership Trust owned 1%. The remainder was owned by public stockholders.
The accompanying interim consolidated financial statements should be read in
conjunction with the following notes and with the Notes to Consolidated
Financial Statements included in the ALLIED Life Financial Corporation 1995
Annual Report to Stockholders. The interim consolidated financial statements
have been prepared in conformity with generally accepted accounting principles
(GAAP) and include all adjustments which are in the opinion of management
necessary for fair presentation of the results for the interim periods. In the
opinion of management, all such adjustments are of a normal and recurring
nature. All significant intercompany balances and transactions have been
eliminated.
(2) Transactions with Affiliates
The Company and its affiliates pool their excess cash pursuant to the
Intercompany Cash Concentration Fund Agreement. The fund, administered by AID
Finance Services, Inc. (an affiliate of the Company), also issues short-term
loans (30 days or less) to affiliated companies in accordance with the current
intercompany borrowing policy. At March 31, 1996, the Company had a loan
outstanding of $1,024,711. Pursuant to the Agreement, AID Finance Services, Inc.
receives a management fee of 5 basis points which the fund participants pay in
the form of an additional 0.05% in the interest rate for borrowings and a 0.05%
reduction in the interest rate on invested funds.
(3) Note Payable to Nonaffiliates
ALLIED Life Insurance Company, a wholly owned subsidiary, has a line of credit
agreement with the Federal Home Loan Bank (FHLB) to make available borrowings of
$25,000,000. Interest is payable at either an adjustable interest rate with the
interest rate set and charged daily on the outstanding advance amount or at a
fixed rate with the interest rate set at issuance. As of March 31, 1996
borrowings on this line of credit agreement were $13,325,000 at an interest rate
of 5.85% per annum. All borrowings with the FHLB are secured by securities with
a carrying value of $31,672,054.
<PAGE>
6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Overview
The following analysis of the consolidated results of operations and financial
condition of the Company should be read in conjunction with the interim
consolidated financial statements and related footnotes included elsewhere
herein, and with the Company's Annual Report on Form 10-K for the year ended
December 31, 1995.
ALLIED Life Financial Corporation is an insurance holding company formed by
ALLIED Mutual Insurance Company (ALLIED Mutual) in 1993. The financial
statements include the accounts of ALLIED Life Insurance Company (ALLIED Life),
ALLIED Life Brokerage Agency, Inc. (ALBA), and ALLIED Group Merchant Banking
Corporation (AGMB). ALLIED Life accounts for substantially all of the Company's
operations and sells primarily universal life insurance, term life insurance,
and annuity products.
ALLIED Life's universal life insurance products provide life insurance coverages
with flexible premium payments determined by policyholders and accumulate cash
value over the policy term. Premiums received less policy assessments for
administration expenses and mortality costs are credited to policyholder account
balances, to which tax-deferred interest is credited at rates adjusted
periodically by ALLIED Life. Surrender charges may be deducted from the account
balances if policies are surrendered within a specified period after their
effective dates.
Term life insurance policies provide life insurance protection over a specified
number of years. Policyholders remit premiums for the insurance protection but
accumulate no cash value.
Annuity contracts are products which provide for fixed or variable periodic
benefit payments that commence according to contract terms and permit interest
income to accumulate on a tax-deferred basis. Considerations paid by
policyholders are credited to their accounts and earn interest at rates
determined by ALLIED Life. To encourage policy persistency, surrender charges
are imposed against account balances for early termination of annuity contracts.
In accordance with GAAP, universal life insurance premiums received are shown as
increases in liabilities for policyholder account balances and not as revenues.
Revenues reported for universal life products consist of fee income from
mortality charges, administration expenses, and surrender charges assessed
against the account balances. Surrender benefits paid are reflected as decreases
in liabilities for these account balances and not as expenses. Interest credited
to account balances is reported as benefit expenses in the financial statements.
<PAGE>
7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
Premium revenues reported for term life insurance products are recognized as
revenues when due. Benefits relating to these products are associated with
earned premiums. They are reported as benefit expenses by means of the change in
the liabilities for future policy benefits so as to recognize profits over the
premium-paying periods of the policies.
Annuity considerations received and surrender benefits paid are shown as
increases and decreases to liabilities for policyholder account balances and are
not shown as revenues or expenses. Revenues reported for annuity products
consist of surrender charges deducted from policyholder accounts. Expenses
consist of interest credited to account balances.
Another source of revenues for ALLIED Life is investment income earned from the
funds deposited to accounts by universal life and annuity policyholders, a
portion of which is passed through to these policyholders in the form of
interest credited.
The costs related to acquiring new business (principally commissions), certain
costs of issuing policies, and certain other variable selling expenses (defined
as deferred policy acquisition costs) are capitalized and amortized into
expenses primarily in proportion to the present value of expected gross profits.
The amortization is adjusted when ALLIED Life revises its estimate of current or
future gross profits. For example, deferred policy acquisition costs are
amortized earlier than originally estimated when policy terminations are higher
than expected and when investments are sold at a gain prior to their anticipated
maturity.
Death and other policyholder benefits reflect ALLIED Life's exposure to
mortality risk. They fluctuate from period to period based on the level of
claims incurred under its insurance retention limit.
Profitability is primarily affected by investment spread (the excess of
investment income earned over the amounts credited as interest to policyholder
accounts, mortality experience (difference between actual and expected death and
other policyholder benefits), and the ability to control policy acquisition
costs and other operating expenses. ALLIED Life's relatively small size means
that its operating results may be affected significantly by the level of death
and other policyholder benefits incurred in any one reporting period.
<PAGE>
8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
The following table reflects ALLIED Life's production information and pretax
operating results excluding realized investment losses and related amortization
of deferred policy acquisition costs for the periods indicated.
<TABLE>
Life Insurance Operations
Three Months Ended
March 31,
<CAPTION>
<S> <C> <C>
1996 1995
(Dollars in thousands)
Production information
Life insurance
Life insurance face amount in force
Directly produced by agents
Universal Life $ 4,228,392 $ 4,087,739
Term life 3,555,948 2,886,125
Whole life 49,688 47,960
7,834,028 7,021,824
Other 382,440 526,690
$ 8,216,468 $ 7,548,514
Face amount of new life insurance sold
Directly produced by agents
Universal Life $ 98,326 $ 242,142
Term life 293,833 285,603
Whole life 977 792
393,136 528,537
Other 4,347 5,957
$ 397,483 $ 534,494
Life insurance termination rate
Universal life 7.0% 7.8%
Term life 17.8% 19.5%
Annuities
Account balance $ 420,067 $ 368,641
First-year annuity premiums $ 9,268 $ 29,154
</TABLE>
<PAGE>
9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
Life Insurance Operations (Continued)
<TABLE>
Three Months Ended
March 31,
<CAPTION>
<S> <C> <C>
1996 1995
(Dollars in thousands)
Profitability
Investment income $ 11,739 $ 10,635
Interest credited on
Annuities 5,801 5,225
Universal Life 2,375 2,387
Other 84 74
Total interest expense 8,260 7,686
Investment spread 3,479 2,949
Fee income
Universal life charges 5,685 5,285
Annuity surrender charges 111 252
Total fee income 5,796 5,537
Other insurance income 1,575 1,923
Adjusted insurance revenues 10,850 10,409
Other expenses
Amortization of deferred policy acquisition costs (1) 1,762 1,406
Renewal commissions 568 595
Other operating expenses 1,597 1,421
Total acquisition and operating expenses 3,927 3,422
Death benefits, net 1,503 1,569
Other policyholder benefits 1,358 1,934
Total other expenses 6,788 6,925
Income before income taxes and realized investment
losses from insurance operations $ 4,062 $ 3,484
<FN>
(1) Excludes excess amortization of deferred policy acquisition costs
resulting from net realized investment losses.
</FN>
</TABLE>
RESULTS OF OPERATIONS
Consolidated revenues for the three months ended March 31, 1996 were $19.3
million, a 6.3% increase over the $18.2 million reported for the first quarter
of 1995. The increase was primarily attributable to higher investment income,
which rose 9.9% to $11.7 million from $10.7 million. This increase resulted from
the 14.9% growth in invested assets.
Operating income increased 15.9% to $4.1 million through March 31, 1996 from
$3.5 million through March 31, 1995. Net income totaled $2.7 million, up 13.9%
from $2.4 million through March 31, 1995. Operating earnings per common share
rose to $0.51 through March 31, 1996 from $0.45 through March 31, 1995; net
income per common was $0.50 compared with $0.44 for the same periods. Higher
investment income more than offset an increase in interest credited to
policyholders, amortization of deferred policy acquisition costs and other
expenses incurred.
<PAGE>
10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
Life Insurance Operations
Total life insurance in force grew 8.8% to $8.2 billion at March 31, 1996
from $7.5 billion at March 31, 1995. The increase was due to policy retention
and insurance sales.
The face amount of new life insurance sold directly by agents through March 31,
1996 decreased 25.6% to $393.1 million from $528.5 million through March 31,
1995. The primary factor was a 59.4% decrease in the face amount of new
universal life insurance sold to $98.3 million from $242.1 million. Lower market
interest rate levels during the quarter have reduced the attractiveness of the
savings element of universal life products, affecting sales. Policyholder
account balances, however, were up 8.1%, and fee income increased 7.6% to $5.7
million from $5.3 million.
The face amount of new term life insurance sold directly by agents increased
2.9% to $293.8 million through March 31, 1996 from $285.6 million through March
31, 1995. Sales of ALLIED Life's ten-year term product have remained strong and
the twenty-year term product introduced in the fourth quarter, 1995 also
contributed to the increased sales.
First-year annuity premiums decreased 68.2% to $9.3 million through March 31,
1996 from $29.2 million through March 31, 1995. The decrease was due to the flat
interest yield curve during the quarter, which allowed banks and other financial
institutions to offer short-term certificates of deposit at more competitive
interest rates. To combat the flat yield curve, ALLIED Life introduced an
indexed deferred annuity product March 29, 1996. While guaranteeing the return
of principle to the customer, their annuity return is based on a percentage of
the gain of the S&P 500 index. This new product is expected to begin to
contribute to sales in the second quarter of 1996. The total annuity account
balance increased 14% to $420.1 million at March 31, 1996 from $368.6 million at
March 31, 1995.
Adjusted insurance revenues increased 4.2% to $10.8 million for the first three
months of 1996 from $10.4 million for the first three months of 1995. The
increase was primarily attributable to increased investment spread and greater
fee income. The growth in life insurance in force and policyholder account
balances permitted invested assets to increase 15.4% to $660 million at March
31, 1996 from $571.8 million at March 31, 1995, allowing investment income to
increase by 10.4%. ALLIED Life's return on invested assets through March 31,
1996 decreased to 7.28% from 7.55% through March 31, 1995. The decrease was due
to the fact that ALLIED Life was reinvesting maturing investments at lower
interest rates.
Investment spread through the first quarter of 1996 and 1995 grew to $3.5
million from $2.9 million. Annual average interest-credited rates on universal
life contracts decreased to 5.6% from 6.1% and on annuities decreased to 5.6%
from 5.9%. The ratio of investment spread to investment income increased to
29.6% from 27.7% despite the volatile interest rate environment. This increase
is evidence of ALLIED Life's ability to adjust interest credited to policyholder
accounts to reflect trends in investment earnings.
Amortization of deferred policy acquisition costs through the first quarter of
1996 and 1995 increased 25.3% to $1.8 million from $1.4 million because of
ALLIED Life's increase in profitability. Other insurance operating expenses
increased 12.4% to $1.6 million from $1.4 million, a result of product
development costs and overall growth.
<PAGE>
11
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
Death benefits net of reinsurance through the first quarter of 1996 and 1995
decreased 4.2% to $1.5 million from $1.6 million. Other policyholder benefits
decreased 29.8% to $1.4 million from $1.9 million as a result of decreased
reserves on supplemental contracts.
ALLIED Life's operating income before taxes through March 31, 1996 and 1995 was
up 16.6% to $4.1 million from $3.5 million. The increase occurred because the
improved investment spread and lower death and other policyholder benefits more
than offset the higher deferred policy acquisition costs and other operating
expenses.
LIQUIDITY AND CAPITAL RESOURCES
Consolidated
Life insurance companies generally produce a positive cash flow from operations.
Its adequacy is measured by the companies' liquidity. There should be sufficient
cash to meet benefit obligations to policyholders and normal operating expenses
as they are incurred and sufficient excess to help meet future policy benefit
payments and to write new business. ALLIED Life's liquidity position continued
to be favorable for the first quarter 1996. Cash inflows were at levels
sufficient to provide the grounds necessary to meet its obligations.
The Company's cash inflows consist primarily of deposits to policyholder account
balances, income from sales, maturities and calls of investments, and repayments
of investment principal. The Company's cash outflows primarily are related to
policyholder account withdrawals, investment purchases, policy acquisition
costs, policyholder benefits, and current operating expenses. These outflows
typically are met from normal annual premium and net investment cash inflows.
In the first quarter of 1996, the Company operations provided cash inflows of $5
million and financing activities provided cash inflows of $4.7 million. In the
first quarter of 1995 it was $250,000 and $23.2 million, respectively. These
inflows were used primarily to increase the Company's fixed maturity investment
portfolio.
Matching the investment portfolio maturities to the cash flow demands of the
insurance coverages being provided is an important consideration. The Company
continually monitors benefit and claims statistics to project future cash
requirements. As part of this monitoring process, the Company performs cash-flow
testing of its assets and liabilities under various scenarios to evaluate the
adequacy of reserves. In developing its investment strategy, the Company
establishes a level of cash and securities that when combined with expected net
cash inflows from operations, maturities of fixed-maturity investments,
principal payments on mortgage-backed securities, and its insurance products is
believed to be adequate to meet anticipated short-term and long-term benefit and
expense payment obligations.
A source of cash flows for the holding company is dividend payments from ALLIED
Life. During the first quarter of 1996, the Company paid cash dividends on
common stock of $232,000. ALLIED Life paid to the Company dividends of $237,500
to fund the Company's dividend requirements.
The Company has a line of credit agreement that provides additional liquidity.
The agreement makes $25 million available through March 1, 1997. Interest is
payable at a current rate upon issuance. From time to time, the Company has also
borrowed funds from its affiliates on an arms-length basis. At March 31, 1996,
the
<PAGE>
12
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations (Continued)
Company had outstanding borrowings of $13.3 million under the line of
credit agreements and borrowings of $1 million from affiliates.
Management anticipates that funds to meet the Company's short-term and long-term
capital expenditures, cash dividends, and operating cash needs will come from
existing capital and internally generated funds and believes the total is
adequate to meet expected cash obligations. As of March 31, 1996, the Company
had no material commitments for capital expenditures. As additional capital
needs arise, the Company will consider taking an additional debt or issuing
equity. Specific methods for meeting such needs will depend upon financial
market conditions at the time.
<PAGE>
13
PART II
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 10.12 - Federal Home Loan Bank Open Line of Credit
Application and Terms Agreement dated March 13, 1996 with ALLIED Life
Insurance
Company.
Exhibit 11 - Statement re Computation of Per Share Earnings.
Exhibit 27 - Financial Data Schedule
(b) There were no reports filed on Form 8-K during the first quarter of 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ALLIED Life Financial Corporation
(Registrant)
Date: May 10, 1996 By: /s/ Wendell P. Crosser
----------------------------------------
Wendell P. Crosser, Vice President and Treasurer
(Principal Financial Officer and Principal
Accounting Officer)
OPEN LINE OF CREDIT APPLICATION AND TERMS AGREEMENT
APPLICATION
ALLIED Life Insurance Company ("Member") hereby applies to the Federal Home Loan
Bank of Des Moines ("Bank") for an Open Line of Credit commitment beginning on
the date of approval and ending one year from the date of approval, ("Ending
Date") in the amount of $ 25,000,000.00
TERMS
1. Member, through its authorized representative may request funds by
telephone advice up to the approved Open Line of Credit limit. Funds will
be available upon advice.
2. Member may choose either an adjustable interest rate advance or a
fixed-rate, fixed-term, non-prepayable advance as follows:
a) For an adjustable interest rate advance, the interest rate will be
set and charged daily on the outstanding advance amount. The interest
amount will be deducted daily by the Bank from the member's demand
account.
b) For a fixed-rate, fixed-term, non-prepayable advance, the interest
rate will be set at issuance. The interest amount will be charged to
the member's demand account at maturity.
3. Each adjustable interest rate advance funded under the Open Line of
Credit will be available after the approval date and will mature on the
Ending Date. Each fixed-rate, fixed-term, nonprepayable advance will be
available after approval and will mature at the maturity date of the
advance.
4. Member represents and warrants that the Open Line of Credit amount
requested does not exceed 15% of assets.
5.The Bank shall have no obligation to make any advance under the Open
Line of Credit unless the Bank is satisfied as to Member's continued
creditworthiness and compliance with the terms of the Agreement for
Advances, Pledge and Security Agreement ("AAPSA"). If adverse facts
develop which make the member ineligible for Bank advances, the member
must provide the Bank with immediate written notification of its
ineligibility and the Bank may cancel this commitment.
6.The fee for this Open Line of Credit commitment equals .05% times the
amount of the commitment. This fee will be charged to the member's demand
account on the date this application is approved by the Bank.
<PAGE>
15
7. This Application and Terms Agreement, if approved by the Bank,
will constitute the Agreement between Member and Bank as to the Open Line
of Credit and will be wholly incorporated into and become a part of the
AAPSA
By signing this agreement, member hereby accepts the terms hereof.
ALLIED Life Insurance Company Date February 20, 1996
Member
By: Wendell P. Crosser By: Timothy J. Callahan
Typed Name of Signer Typed Name of Signer
Vice President & Treasurer Investment Accounting Supervisor
Title Title
FOR FHLB USE
Date Approved:
3-13-96 FEDERAL HOME LOAN BANK OF DES MOINES
Expiration Date:
3-13-97 By:George A. Kattermann
Amount Approved
$25,000,000 By: David J Waldrin
Commitment Number:
11099703
Commitment Fee:
$12,500
<PAGE>
16
CERTIFICATION
I, Sally J. Malloy, Assistant Secretary of ALLIED Life Insurance Company,
701 Fifth Avenue, Des Moines, Iowa certify the attached to be a true and correct
copy of the resolution adopted by the Executive Committee of the Board of
Directors on September 18, 1995.
Sally Malloy
Assistant Secretary
2/20/96
Exhibit 11
ALLIED Life Financial Corporation and Subsidiaries
Computation of Per Share Earnings
For the three months ended March 31, 1996 and 1995
<TABLE>
<CAPTION>
<S> <C> <C>
1996 1995
Primary
Net income $ 2,697,300 $ 2,368,835
Preferred stock dividends (367,085) (343,318)
Adjusted net income 2,330,215 2,025,517
Earnings per share $ .49 $ .43
Weighted average number of common shares outstanding 4,633,202 4,590,096
Effect of conversion of ESOP Series preferred stock* 96,491 86,855
Dilutive effect of unexercised stock options** 54,327 45,119
Total 4,784,020 4,722,070
Fully Diluted
Net income $ 2,697,300 $ 2,368,835
Preferred stock dividends (367,085) (343,318)
Adjusted net income $ 2,330,215 $ 2,025,517
Earnings per share $ .49 $ .43
Weighted average number of common shares outstanding 4,633,202 4,590,096
Effect of conversion of ESOP Series preferred stock* 96,491 86,855
Dilutive effect of unexercised stock options** 53,698 46,021
Total 4,783,391 4,722,972
<FN>
* For purposes of computing primary and fully diluted earnings per share the Company's ESOP convertible preferred stock
(which is convertible to common stock) is considered a common stock equivalent.
** Note: Primary - Based on average market price.
Fully Diluted - Based on the higher of the average market price or the market price at the end of each period
presented.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<DEBT-HELD-FOR-SALE> 432,845
<DEBT-CARRYING-VALUE> 643,139
<DEBT-MARKET-VALUE> 650,197
<EQUITIES> 4,954
<MORTGAGE> 1,750
<REAL-ESTATE> 0
<TOTAL-INVEST> 660,853
<CASH> 0
<RECOVER-REINSURE> 5,662
<DEFERRED-ACQUISITION> 88,356
<TOTAL-ASSETS> 767,143
<POLICY-LOSSES> 33,228
<UNEARNED-PREMIUMS> 71
<POLICY-OTHER> 1,363
<POLICY-HOLDER-FUNDS> 599,635
<NOTES-PAYABLE> 13,325
0
23,496
<COMMON> 4,635
<OTHER-SE> 69,761
<TOTAL-LIABILITY-AND-EQUITY> 767,143
1,215
<INVESTMENT-INCOME> 11,750
<INVESTMENT-GAINS> (84)
<OTHER-INCOME> 6,444
<BENEFITS> 11,121
<UNDERWRITING-AMORTIZATION> 1,733
<UNDERWRITING-OTHER> 2,427
<INCOME-PRETAX> 4,044
<INCOME-TAX> 1,347
<INCOME-CONTINUING> 2,697
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0.49
<EPS-DILUTED> 0.49
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
