IMMEDIATE RELEASE
Contact: Tracy W. Knapp, Chief Financial Officer
(816) 753-7299 *8216
Kansas City Life Announces Third Quarter 2009 Results
Kansas City, MO.
-- Kansas City Life Insurance Company recorded net income of $5.2 million or $0.45 per share in the third quarter of 2009, improving from a net loss of $15.2 million or $1.30 per share for the same quarter in the prior year. The increase in earnings in the third quarter of 2009 was primarily due to a $28.2 million decrease in realized investment losses. Net income for the nine months was $8.7 million or $0.75 per share compared with a net loss of $9.9 million or a loss of $0.85 per share in the prior year. This significant improvement was primarily due to reduced realized investment losses, which decreased $30.3 million between the two periods.
The Company benefited from the significant improvement in the financial markets in recent months, including reduced write-downs on investments, along with increased investment values and net investment income from investments. Realized investment losses, primarily from write-downs on securities, totaled $1.1 million for the third quarter. This represented a $28.2 million improvement compared with the prior year. Similarly, realized investment losses were $7.3 million for the nine months of 2009 compared with realized investment losses of $37.6 million one year earlier. Further, the Company’s net unrealized loss on securities in the investment portfolio has improved by more than $91.2 million, net of tax, during the past two quarters. This change moved the unrealized loss of $88.4 million at March 31, 2009 to an unrealized gain of $2.7 million at September 30, 2009. Net investment income also increased $0.2 million in the third quarter, primarily due to improved yields on alternative investments. Net investment income declined 3% in the nine months, resulting from lower yields and a lower volume of investment assets.
Premiums from new sales during the third quarter were $17.6 million, an increase of $8.6 million versus the prior year. Virtually all of the increase resulted from an $8.4 million increase in immediate annuities during the period. Premiums from new individual life insurance sales increased $0.3 million or 8% during the quarter but new group sales decreased 4%. New premiums for the nine months increased 25%, largely from the increase in immediate annuities. In addition, new individual life insurance sales increased 6%, while new group life insurance declined 29%.
New deposits of universal life and deposit-type products increased 60% during the third quarter, primarily driven by new sales of fixed deferred annuities. However, new deposits in the third quarter from universal life sales declined 23% and new variable life and annuity sales declined 43%. New deposits for the nine months increased 73%, also reflecting the improved sales of fixed deferred annuities. New universal life sales declined 19% for the nine months, and new variable annuity sales declined 47%. The continued uncertainty in the financial markets has hampered products such as universal life and variable life and annuity products.
Total insurance revenues increased 11% for the third quarter and 3% for the nine months, largely due to the increase in immediate annuity premiums. Contract charges declined 3% in the third quarter and 2% for the nine months. The declines can be attributed to lower account balances on variable contracts which have been significantly reduced by the impacts from the financial markets and the runoff of closed blocks of business.
Total benefits and expenses increased $3.6 million for the third quarter and $2.7 million for the nine months compared with the same period a year earlier. The increase in both periods was primarily the result of increased immediate annuity sales, which require significant additions to future policy benefits. In addition, operating expenses decreased for the quarter, due to lower compensation and staffing. Operating expenses increased for the nine months, due to severance, pension and legal costs.
On October 26, 2009, the Kansas City Life Board of Directors declared a quarterly dividend of $0.27 per share that will be paid on November 11, 2009 to stockholders of record as of November 5, 2009.
During the third quarter, the Company continued to experience a welcomed increase in the market values of its securities and improvement in the financial markets. While the Company is pleased and cautiously optimistic about the resulting near-term effects, it is also continuing its long-held position of providing safety and protection. At September 30, 2009, the Company maintained 93% of its securities rated investment grade and had a net unrealized gain on the value of its securities portfolio. Further, the Company continues to offer a broad product portfolio to meet the needs of agents and consumers in all market environments. Since 1895 the Company has consistently weathered the highs and lows of the financial marketplace and remains dedicated to fulfilling the commitment of providing Security Assured.
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
10/30/2009
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