IMMEDIATE RELEASE
Contact: Tracy W. Knapp, Chief Financial Officer
(816) 753-7299 *8216
Kansas City Life Announces Second Quarter 2009 Results
Kansas City, Mo.
-- Kansas City Life Insurance Company recorded net income of $8.0 million or $0.70 per share in the second quarter of 2009, an increase of $6.4 million from net income of $1.7 million or $0.14 per share for the same quarter in the prior year. The improved earnings in the second quarter of 2009 were largely due to lower realized losses from the write-down of investments, favorable changes in policyholder benefits from reduced death benefit payments and contract reserves, and reduced amortization of deferred acquisition costs and value of business acquired.
Net income for the first six months of 2009 was $3.5 million or $0.30 per share compared with $5.3 million or $0.45 per share in the prior year. Realized investment losses decreased $2.2 million and policyholder benefits declined $6.0 million. These favorable changes were partially offset by a decline in insurance revenues and net investment income, along with increased operating expenses.
Premiums from new sales of individual life insurance increased 5% during the second quarter and 4% for the first half of 2009, and total renewal premiums increased 1% and 2% for the same respective periods. These results were driven by increases in new life insurance sales of 17% and 13% in the Old American segment during the second quarter and six months, respectively. Old American primarily sells traditional life insurance to the senior market. On a consolidated basis, total insurance revenues declined by $2.3 million for the quarter and $0.7 million for the six months, due to reduced sales of immediate annuities, new group life, and new group accident and health insurance. Also contributing to the decrease were contract charges, which declined 1% for the quarter and 2% for the six months. The reduced contract charges reflected a decline in account balances on variable contracts and the runoff of closed blocks of business.
Total deposits increased $19.2 million or 39% for the quarter and $24.5 million or 25% for the six months, due to increased sales of fixed deferred annuities. These increases were partially offset by lower sales of universal life insurance, variable life insurance, and variable annuities for both periods.
Net investment income declined versus the prior year in both the second quarter and six months, reflecting the difficult recessionary environment. Lower yields and a lower volume of investment assets for these respective periods resulted in the reduced net investment income. However, improvements in the market conditions led to reduced write-downs on investments from other-than-temporary impairments in both the quarter and six months. Realized investment losses declined $7.0 million in the quarter and $2.2 million for the six months.
Total benefits and expenses decreased $6.8 million or 7% for the second quarter and $0.9 million or less than 1% for the six months, compared with the same period a year earlier. The decline in benefits was largely the result of lower policyholder benefits from improved mortality experience and lower benefit and contract reserves in both the second quarter and six months.
The amortization of deferred policy acquisition costs (DAC) and the value of business acquired (VOBA) declined $0.9 million for the second quarter but increased $0.5 million for the six months. In 2008, the Company unlocked interest margins and mortality assumptions that reduced the amortization of DAC by $3.0 million. In 2009, the Company unlocked assumptions and reduced the amortization of VOBA in the amount of $0.2 million, along with a $2.5 million reduction in the amortization of VOBA due to a refined method of calculating VOBA amortization. The refinement to the amortization methodology is intended to provide for improved matching of the amortization to the business in-force on selected products.
Operating expenses increased $3.3 million in the second quarter and $5.1 million for the six months. The increase during the second quarter was primarily due to increased legal and pension costs. The increase for the six months primarily reflected increased severance costs associated with reductions in staff and higher pension costs.
On July 27, 2009, the Kansas City Life Board of Directors declared a quarterly dividend of $0.27 per share that will be paid on August 12, 2009 to stockholders of record as of August 6, 2009.
The financial markets and economy showed definite signs of stabilization and improvement during the first half of 2009, particularly during the second quarter. Evidence of these changes can be seen in the Company’s improved earnings for the second quarter and the net unrealized loss position on the Company’s investment securities, which improved by approximately $78.8 million or 41% before tax at June 30, 2009 relative to December 31, 2008. Further, the Company continues to maintain a high-quality investment portfolio and a strong capital position. These attributes allow the Company to actively consider opportunities for growth while remaining focused on our long-term commitment of providing Security Assured, our promise to our valued customers.
Kansas City Life Insurance Company (NASDAQ: KCLI) was established in 1895 and is based in Kansas City, Missouri. The Company’s primary business is providing financial protection through the sale of life insurance and annuities. The Company’s revenues were $374.3 million in 2008, and assets and life insurance in force were $4.0 billion and $30.3 billion, respectively, as of December 31, 2008. The Company operates in 49 states and the District of Columbia. For more information, please visit
www.kclife.com
.
View the Condensed Consolidated Income Statement
7/30/2009
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