UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report April 13, 1998
(Date of earliest event reported)
ALLIED Life Financial Corporation
(Exact name of registrant as specified in its charter)
Iowa 0-22404 42-1406716
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
701 Fifth Avenue, Des Moines, Iowa 50391-2003
(Address of principal executive offices) (Zip Code)
515-280-4211
(Registrant's telephone number including area code)
The total number of pages contained herein is 2.
1
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Item 5. Other Events.
ALLIED Life Financial Corporation (NASDAQ symbol ALFC) (the "Company") announced
on January 29, 1998 that a complaint had been filed by Sharlotte G. Harbott, a
policyholder of the Company's principal subsidiary, ALLIED Life Insurance
Company ("ALLIED Life"), in Superior Court in the State of California for the
County of Los Angeles. The Complaint was cast as a class action and alleged that
ALLIED Life fraudulently increased the cost of insurance rates charged to
policyholders in breach of the terms of its universal life policies, its
fiduciary obligations, and its obligations of good faith and fair dealing toward
its policyholders and without adequate notice. The plaintiff, an insured under a
universal life policy issued by ALLIED Life, seeks actual, consequential, and
punitive damages in unspecified amounts as well as interest, attorney's fees, an
accounting for moneys allegedly improperly charged to policyholders, and
injunctive relief, on behalf of herself and all policyholders of ALLIED Life
with similar universal life policies.
While the outcome of the litigation remains uncertain, the Company currently
estimates that a reasonable range of cost with respect to this litigation,
including attorney fees, would be, on an after tax basis, $700,000 to
$1,500,000. Accordingly, the Company has decided to set up an after tax charge
in the amount of $1,320,000 in connection with the lawsuit. The litigation
charge will reduce the first quarter earnings by the amount of $.29 per share.
The Company expects operating earnings for the first quarter of 1998, before the
litigation charge, to be in line with analysts' expectations.
For the first quarter of 1998, death claims are estimated to be approximately
$2,000,000, net of reinsurance, as compared with $2,326,092 in the first quarter
of 1997. First quarter earnings are expected to be released after the close of
the market on April 23, 1998.
The Company's estimates set forth in the two immediately preceding paragraphs
are forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 ("Reform Act"). These forward-looking statements
are made pursuant to the safe harbor provisions of the Reform Act. Investors are
cautioned that there are important factors that could cause actual results to
differ materially from those in these forward-looking statements. Such factors
include, without limitation, risks and uncertainties inherent in any litigation
and specifically those uncertainties in predicting how the universal life policy
referred to above may be interpreted by the judge or the jury hearing the
lawsuit allegations and the legal standards found to be applicable.
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)
/s/ Wendell P. Crosser
Wendell P. Crosser, Vice President and Treasurer
(Principal Financial Officer and Principal Accounting Officer)
Date: April 13, 1998
