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 (Date of earliest event reported): May 19, 2005
Kansas City Life Insurance Company
(Exact Name of Registrant as Specified in Charter)
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Missouri |
2-40764 |
44-0308260 |
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(State of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) | ||||
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3520 Broadway |
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Kansas City, Missouri |
64111-2565 | ||||
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(Address of Principal Executive Offices) |
(Zip Code) |
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Telephone Number: (816) 753-7000
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Page 1 of 7
Item 2.02 – Results of Operations and Financial Condition.
Included below is a release of financial information mailed to stockholders on May 19, 2005. It reflects the financial condition, in a condensed format, for Kansas City Life Insurance Company as of March 31, 2005.
Message from the President and CEO
Kansas City Life opened the year with a solid first quarter, recording net income of $8.0 million or $0.67 per share. These results represent a 42% improvement over last year’s $5.6 million or $0.47 per share. The increase was primarily the result of reduced policyholder benefits, interest credited to account balances and operating expenses. These improvements were partially offset by lower net investment income and insurance revenues.
Insurance revenues were 3% lower in the first quarter, due to lower premiums and an increase in reinsurance premiums ceded. However, production from new sales in the first quarter offered mixed results. New premiums for life insurance and annuities increased 30% and accident and health decreased 45%, resulting in total new premiums having decreased by 2%. New deposits declined 25%, primarily due to a 37% decrease in sales of fixed deferred annuities and a 3% decline in new universal life deposits.
Net investment income declined 4% due to reduced investment yields. The yields earned on the Company's investments continue to be negatively affected by the low interest rate environment. However, the Company recorded realized investment gains of $1.3 million, an increase of $0.5 million over the prior year period.
Policyholder benefits declined 9% due to favorable mortality experience. Interest credited to policyholder account balances declined 5% due to lower crediting rates, which were primarily the result of reduced investment yields. The Company realized an operating expense reduction of $2.0 million or 8%. Approximately half of these savings were generated by the integration of the GuideOne operating activities into the home office. It is anticipated that expense savings from the GuideOne consolidation will continue to emerge over the year.
On May 9, 2005, the Board of Directors declared a quarterly dividend of $0.27 per share, unchanged from the prior year, that will be paid May 24, 2005 to stockholders of record as of May 19, 2005.
The Company is focused on increasing revenues by expanding its traditional distribution network of independent agents and improving the support provided by our home office in servicing agents and policyholders. Further, our efforts continue to be concentrated on increasing life insurance sales, which we believe meets the needs of an underserved market and provides for quality long-term growth.
Page 2 of 7
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Consolidated |
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Balance Sheets (Unaudited) |
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(Thousands) |
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March 31 |
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December 31 |
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2005 |
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2004 | ||
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Assets |
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Investments: |
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Fixed maturity securities available |
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| |
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for sale, at fair value |
$ |
2,949,303 |
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$ |
2,962,114 |
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Equity securities available |
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|
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| |
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for sale, at fair value |
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59,259 |
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63,099 |
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Mortgage loans |
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445,479 |
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430,632 | |
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Short-term investments |
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19,257 |
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67,980 | |
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Other investments |
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197,124 |
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202,146 | |
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Total investments |
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3,670,422 |
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3,725,971 |
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Cash |
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7,739 |
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4,147 | ||
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Deferred acquisition costs |
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229,619 |
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229,712 | ||
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Value of business acquired |
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94,679 |
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|
96,853 | ||
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Other assets |
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266,599 |
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255,480 | ||
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Separate account assets |
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346,857 |
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353,983 | ||
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Total assets |
$ |
4,615,915 |
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$ |
4,666,146 |
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Liabilities |
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Future policy benefits |
$ |
860,034 |
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$ |
859,890 | ||
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Policyholder account balances |
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2,297,039 |
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2,299,647 | ||
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Notes payable |
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72,279 |
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92,220 | ||
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Income taxes |
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38,382 |
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53,703 | ||
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Other liabilities |
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327,349 |
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313,807 | ||
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Separate account liabilities |
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346,857 |
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353,983 | ||
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Total liabilities |
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3,941,940 |
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3,973,250 |
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Stockholders’ equity |
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Common stock |
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23,121 |
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23,121 | ||
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Additional paid in capital |
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24,486 |
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24,279 | ||
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Retained earnings |
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738,238 |
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733,499 | ||
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Accumulated other |
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comprehensive income |
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3,768 |
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26,231 | |
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Less treasury stock |
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(115,638) |
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(114,234) | ||
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Total stockholders’ equity |
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673,975 |
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692,896 |
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Total liabilities and equity |
$ |
4,615,915 |
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$ |
4,666,146 |
See accompanying Notes to Consolidated Financial Statements.
Page 3 of 7
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Consolidated |
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Statements of Income (Unaudited) |
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(Thousands, except share data) |
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Quarter ended | ||||||
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March 31 | ||||||
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2005 |
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2004 | |
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Revenues |
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Insurance revenues: |
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Premiums |
$ |
46,425 |
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$ |
47,051 | |
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Contract charges |
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28,762 |
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29,149 | |
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Reinsurance ceded |
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(13,609) |
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(12,518) | |
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Total insurance revenues |
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61,578 |
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63,682 |
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Investment revenues: |
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Net investment income |
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48,790 |
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50,727 | |
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Realized investment gains |
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1,335 |
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803 | |
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Other revenues |
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2,567 |
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2,534 | ||
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Total revenues |
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114,270 |
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117,746 |
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Benefits and expenses |
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Policyholder benefits |
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45,721 |
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50,468 | ||
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Interest credited to policyholder account balances |
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23,213 |
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24,309 | ||
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Amortization of deferred acquisition costs |
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and value of business acquired |
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10,665 |
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9,848 | |
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Operating expenses |
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23,778 |
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25,739 | ||
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Total benefits and expenses |
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103,377 |
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110,364 |
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Income before income tax expense |
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10,893 |
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7,382 | ||
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Income tax expense |
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2,933 |
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1,787 | ||
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Net income |
$ |
7,960 |
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$ |
5,595 | ||
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Per common share: |
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Net income, basic and diluted |
$ |
0.67 |
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$ |
0.47 | |
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Cash dividends |
$ |
0.27 |
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$ |
0.27 | |
See accompanying Notes to Consolidated Financial Statements.
Page 4 of 7
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Consolidated |
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Statements of Cash Flows (Unaudited) | |||||
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(Thousands) |
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Quarter ended | ||||||
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March 31 | ||||||
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2005 |
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2004 | |
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Operating activities |
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Net cash provided |
$ |
9,397 |
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$ |
19,801 | |
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Investing activities |
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Purchases of investments: |
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Fixed maturity securities |
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(164,111) |
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(214,806) | |
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Equity securities |
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(690) |
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(1,304) | |
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Mortgage loans |
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(37,467) |
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(9,982) | |
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Other investment assets |
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(201,184) |
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(220,241) | |
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Sales of investments: |
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Fixed maturity securities |
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38,656 |
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25,055 | |
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Equity securities |
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3,978 |
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1,030 | |
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Other investment assets |
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254,527 |
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239,704 | |
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Maturities and principal paydowns |
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of other investments |
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116,557 |
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136,003 | |
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Net additions to property and |
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equipment |
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(303) |
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(428) | |
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Net cash provided (used) |
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9,963 |
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(44,969) | |
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Financing activities |
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Proceeds from borrowings |
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22,263 |
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|
915 | ||
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Repayment of borrowings |
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(42,204) |
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(3,689) | ||
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Deposits on policyholder account |
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balances |
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63,815 |
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|
68,343 | |
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Withdrawals from policyholder |
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account balances |
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(55,667) |
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(49,420) | |
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Net transfers to separate accounts |
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(1,362) |
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(3,213) | ||
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Change in other deposits |
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1,805 |
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3,504 | ||
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Cash dividends to stockholders |
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(3,221) |
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(3,325) | ||
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Net disposition (acquisition) of |
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treasury stock |
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(1,197) |
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|
114 | |
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Net cash provided (used) |
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(15,768) |
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|
13,229 | |
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Increase (decrease) in cash |
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3,592 |
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(11,939) | ||
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Cash at beginning of year |
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4,147 |
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20,029 | ||
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Cash at end of period |
$ |
7,739 |
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$ |
8,090 | |
See accompanying Notes to Consolidated Financial Statements.
Page 5 of 7
Notes
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• |
Comprehensive income (loss) was ($14,503) and $31,498 for 2005 and 2004, |
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respectively. This varies from net income due to unrealized gains or losses |
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on investments. |
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• |
Income per common share is based upon the weighted average |
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number of shares outstanding during the quarter, 11,928,929 |
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shares (11,925,257 shares - 2004). |
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• |
These financial statements are unaudited but, in management’s opinion, |
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include all adjustments necessary for a fair presentation of the results. |
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• |
Certain amounts in prior years have been reclassified to conform with |
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the current year presentation. |
Page 6 of 7
SIGNATURE
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.
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KANSAS CITY LIFE INSURANCE COMPANY | ||
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(Registrant) |
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By:/s/William A. Schalekamp |
William A. Schalekamp,
Senior Vice President,
General Counsel & Secretary
May 19, 2005
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(Date) |
Page 7 of 7