IMMEDIATE RELEASE
Contact: Tracy W. Knapp, Chief Financial Officer
(816) 753-7299 *8216
Kansas City Life Announces Fourth Quarter 2009 Results
Kansas City, MO.
-- Kansas City Life Insurance Company recorded net income of $2.1 million or $0.18 per share in the fourth quarter of 2009 compared with a net loss of $7.2 million or $0.62 per share for the same quarter in the prior year. The increase in earnings in the fourth quarter of 2009 was primarily due to an $11.9 million decrease in realized investment losses and a $4.2 million improvement in net investment income. Partially offsetting these improvements was a $2.4 million increase in operating expenses and a $5.4 million increase in income tax expense.
Net income for 2009 was $10.7 million or $0.93 per share compared with a net loss of $17.1 million or $1.47 per share in the prior year. This significant improvement was primarily due to decreased realized investment losses, which declined $42.2 million, along with an increase in insurance revenues of $5.5 million. Insurance revenues improved primarily due to sales of new individual life products at Old American Insurance Company (OAIC) and increased sales of immediate annuity products. Partially offsetting these improvements were an increase in operating expenses of $5.0 million, an increase in reserves associated with the sale of immediate annuities and an increase in income tax expense.
The financial markets improved significantly during 2009. This enabled improved strengthening of consumer demand for insurance products and the Company’s investment performance. Premiums from new sales during the fourth quarter were $12.7 million, an increase of $2.8 million or 28% versus the prior year. Sales growth in the fourth quarter resulted from increased sales of new life insurance in the OAIC segment, which improved $0.6 million or 32% compared to one year ago. In addition, sales of immediate annuities increased $1.7 million or 47% and new group accident and health premiums increased $0.4 million or 17%. Renewal premiums for the fourth quarter declined $1.1 million or 3%, primarily from decreases in individual life and group accident and health products. New premiums for 2009 increased $10.0 million or 26% compared to 2008. This growth reflected strong immediate annuity sales, which grew $9.5 million or 75%, and a $1.5 million or 20% increase in life insurance sales from OAIC. Partially offsetting these increases were declines in new group life and group accident and health products.
New universal life sales increased 11% for the comparative fourth quarters. In addition, these fourth quarter sales were the strongest period of production during both 2008 and 2009. Total new deposits for the year increased $34.8 million or 51%, primarily from a $46.2 million increase in fixed deferred annuity sales.
The Company’s investment performance improved through increased net investment income, reduced realized investment losses and increased values on securities owned. Net investment income increased $4.2 million in the fourth quarter compared with a year ago and was flat for the year versus the prior year. In the fourth quarter, the Company experienced an improvement in rates earned, primarily from yields on an alternative investment fund. Realized investment losses totaled $2.8 million for the fourth quarter, which was an $11.9 million improvement compared with the prior year’s fourth quarter. Likewise, realized investment losses were $10.1 million for the year compared with realized investment losses of $52.3 million one year earlier. A significant factor in the reduced realized investment losses was improved market values on a broad range of asset classes and sectors. During 2009, the Company’s investment securities improved $192.3 million, ending the year in an unrealized gain position of $0.2 million.
Total benefits and expenses decreased less than 1% for the fourth quarter but increased 1% for the year. Most significantly, death benefits improved in the fourth quarter and for the year compared with the prior year and quarter. Interest credited to policyholder account balances increased $0.2 million or less than 1% in the fourth quarter, reflecting a slight increase in crediting rates on selected products. Interest credited on policyholder account balances for the year was down $0.2 million or less than 1%.
Operating expenses increased $2.4 million or 11% during the fourth quarter, primarily reflecting an increase in pension expense. Operating expenses increased $5.0 million or 5% for the year, reflecting increases in pension expense, separation costs related to a reduction in staff and increased legal fees.
On January 25, 2010, the Kansas City Life Board of Directors declared a quarterly dividend of $0.27 per share that was paid on February 10, 2010 to stockholders of record on February 4, 2010.
After beginning the year in a period of deep recession, the economy began to stabilize during 2009. Accordingly, Kansas City Life experienced improved sales and investment performance. The Company’s strong capital and liquidity position offered it the ability to withstand the difficult economic pressures. The Company’s securities portfolio maintained a position of high quality with 94% of these investments rated as investment grade at December 31, 2009. Stockholders’ equity improved $101.3 million, primarily reflecting the change to a net unrealized gain position on security investments. Further, the Company’s relative competitive position and financial strength improved during this economic downturn. These improvements included increased agency recruiting and production, new investments, a reduced operating expense structure, and positioning of the Company for both organic growth and opportunistic investments. The Company has not wavered from its commitment to the protection of its policyholders, to return value to its investors and to be a strong and viable business partner to its agents and general agents. The Company continues to offer value and opportunity to its customers while also offering the desired strength and stability of the past. Security Assured is the Company’s goal of today and the promise of tomorrow.
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 $419.6 million in 2009, and assets and life insurance in force were $4.2 billion and $30.7 billion, respectively, as of December 31, 2009. 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
2/26/2010
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