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): November 10, 2006
Kansas City Life Insurance Company
(Exact Name of Registrant as Specified in Charter)
|
|
Missouri |
2-40764 |
44-0308260 |
|
|
(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 |
|
|
(Address of Principal Executive Offices) |
(Zip Code) |
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 November 10, 2006. It reflects the financial condition, in a condensed format, for Kansas City Life Insurance Company as of September 30, 2006, and was previously included in the Company's third quarter Form 10-Q report filed on November 1, 2006.
Message from the President, CEO and Chairman of the Board
Net income increased 7% for the third quarter at Kansas City Life Insurance Company, rising to $9.5 million or $0.80 per share from $8.9 million or $0.75 per share a year earlier. Net income for the nine months increased 6% to $26.8 million or $2.26 per share from $25.3 million or $2.12 per share in 2005. The increase in earnings for both periods was due to increased revenues, including a 2% increase during the third quarter and a 1% increase for the nine months.
The growth in revenues was $2.3 million during the third quarter and was primarily the result of increased premiums and improvement in realized investment gains. Growth in revenues during the nine months reflected increases in net investment income, realized investment gains, and other revenues totaling $2.6 million.
Deposits from new universal life sales increased 16% for the third quarter and 7% for the nine months. New individual life insurance premiums declined for the third quarter and nine months, but new variable universal life deposits increased for both periods. New deposits from fixed deferred and variable annuities continued to decline due to competitive factors, while group accident and health sales increased for the quarter and year-to-date as a result of improved group dental sales.
Net investment income declined 1% in the third quarter but increased 1% for the nine months. Interest rates have generally increased over the prior year and the increase has helped improve investment yields. Offsetting the improved yields, the Company’s invested assets declined for both the third quarter and the nine months compared with the same periods a year ago. Increased surrenders of life insurance policies and lower sales of annuities contributed to the lower level of invested assets.
Policyholder benefits increased 4% for the third quarter, primarily due to increased death benefits, but decreased 1% for the nine months. Death benefits increased in both the third quarter and nine months compared with the prior year, while interest credited to policyholder account balances declined 1% for the third quarter and 2% for the nine months. Interest credited has declined primarily due to reduced policyholder account balances.
Today’s financial services environment is intensely competitive, but Kansas City Life believes that there are many unique opportunities for success and growth. At Kansas City Life, Security Assured is built and honored over time. The Company’s core strengths of a solid financial base, emphasis on growth, a commitment to those we serve and steady earnings, position us well to meet today’s and tomorrow’s challenges. While we acknowledge the ever-present challenges, we are pleased with the results we have attained and we look forward to continuing the Company’s achievements as we conclude 2006.
Additionally, the Kansas City Life Board of Directors approved a quarterly dividend of $0.27 per share to be paid November 14, 2006, to shareholders of record as of November 9, 2006.
Page 2 of 7
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Consolidated |
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| ||
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Balance Sheets |
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(Thousands) |
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| ||
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September 30 |
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December 31 | ||
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2006 |
|
2005 | ||||
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(Unaudited) |
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| |
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Assets |
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Investments: |
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|
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| ||
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Fixed maturity securities available |
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|
|
|
| |
|
|
|
for sale, at fair value |
$ |
2,744,720 |
|
$ |
2,865,476 |
|
|
Equity securities available |
|
|
|
|
| |
|
|
|
for sale, at fair value |
|
58,368 |
|
|
52,775 |
|
|
Mortgage loans |
|
464,281 |
|
|
458,668 | |
|
|
Short-term investments |
|
21,417 |
|
|
46,383 | |
|
|
Other investments |
|
221,782 |
|
|
185,137 | |
|
|
|
|
|
|
|
|
|
|
|
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Total investments |
|
3,510,568 |
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|
3,608,439 |
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|
|
|
|
|
|
|
|
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Cash |
|
3,317 |
|
|
10,985 | ||
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Deferred acquisition costs |
|
221,009 |
|
|
226,963 | ||
|
Value of business acquired |
|
84,473 |
|
|
89,505 | ||
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Other assets |
|
261,024 |
|
|
254,620 | ||
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Separate account assets |
|
377,179 |
|
|
367,860 | ||
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|
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Total assets |
$ |
4,457,570 |
|
$ |
4,558,372 |
|
|
|
|
|
|
|
|
|
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Liabilities |
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|
|
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Future policy benefits |
$ |
853,199 |
|
$ |
860,284 | ||
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Policyholder account balances |
|
2,214,779 |
|
|
2,278,418 | ||
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Notes payable |
|
18,033 |
|
|
27,282 | ||
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Income taxes |
|
33,744 |
|
|
40,155 | ||
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Other liabilities |
|
278,655 |
|
|
304,154 | ||
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Separate account liabilities |
|
377,179 |
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|
367,860 | ||
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|
|
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Total liabilities |
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3,775,589 |
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3,878,153 |
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Stockholders’ equity |
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|
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| ||
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Common stock |
|
23,121 |
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|
23,121 | ||
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Additional paid in capital |
|
25,566 |
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|
25,063 | ||
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Retained earnings |
|
774,007 |
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|
756,807 | ||
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Accumulated other |
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|
|
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| ||
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comprehensive loss |
|
(21,672) |
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|
(8,406) | |
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Less treasury stock |
|
(119,041) |
|
|
(116,366) | ||
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|
|
|
|
|
|
|
|
|
|
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Total stockholders’ equity |
|
681,981 |
|
|
680,219 |
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|
|
|
|
|
|
|
|
|
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Total liabilities and equity |
$ |
4,457,570 |
|
$ |
4,558,372 |
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See accompanying Notes to Consolidated Financial Statements (Unaudited). | |||||||
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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Nine Months ended | |||||||||
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September 30 |
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September 30 | ||||||||
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2006 |
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2005 |
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2006 |
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2005 | ||
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Revenues |
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Insurance revenues: |
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Premiums |
$ |
43,321 |
|
$ |
42,275 |
|
$ |
131,602 |
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$ |
134,736 | |||
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Contract charges |
|
28,364 |
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|
28,525 |
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|
86,217 |
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|
85,422 | |||
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Reinsurance ceded |
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(13,397) |
|
|
(13,605) |
|
|
(40,622) |
|
|
(41,304) | |||
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Total insurance revenues |
|
58,288 |
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|
57,195 |
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|
177,197 |
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|
178,854 | ||
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Investment revenues: |
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| ||||
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Net investment income |
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48,995 |
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|
49,340 |
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146,731 |
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|
144,991 | |||
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Realized investment gains (losses) |
|
757 |
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(94) |
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|
2,397 |
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|
863 | |||
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Other revenues |
|
3,330 |
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|
2,617 |
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|
8,835 |
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|
7,833 | ||||
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Total revenues |
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111,370 |
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|
109,058 |
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|
335,160 |
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|
332,541 | ||
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Benefits and expenses |
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|
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| ||||
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Policyholder benefits |
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43,625 |
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|
42,120 |
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|
129,794 |
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|
131,555 | ||||
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Interest credited to policyholder account balances |
22,295 |
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|
22,624 |
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|
67,356 |
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|
68,532 | |||||
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Amortization of deferred acquisition costs |
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| ||||
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and value of business acquired |
|
10,623 |
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|
10,751 |
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|
32,939 |
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|
31,519 | |||
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Operating expenses |
|
21,535 |
|
|
21,397 |
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|
67,616 |
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|
66,220 | ||||
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Total benefits and expenses |
|
98,078 |
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|
96,892 |
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|
297,705 |
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|
297,826 | ||
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Income before income tax expense |
|
13,292 |
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|
12,166 |
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37,455 |
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|
34,715 | ||||
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Income tax expense |
|
3,766 |
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|
3,264 |
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10,631 |
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9,428 | ||||
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Net income |
$ |
9,526 |
|
$ |
8,902 |
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$ |
26,824 |
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$ |
25,287 | ||||
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Per common share: |
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Net income, basic and diluted |
$ |
0.80 |
|
$ |
0.75 |
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$ |
2.26 |
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$ |
2.12 | |||
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Cash dividends |
$ |
0.27 |
|
$ |
0.27 |
|
$ |
0.81 |
|
$ |
0.81 | |||
|
See accompanying Notes to Consolidated Financial Statements (Unaudited). |
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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Nine Months ended | ||||||
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September 30 | ||||||
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2006 |
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2005 | |
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|
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Operating activities |
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| ||
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Net cash provided (used) |
$ |
(6,194) |
|
$ |
29,828 | |
|
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|
|
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Investing activities |
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|
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Purchases of investments: |
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|
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| ||
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Fixed maturity securities |
|
(193,177) |
|
|
(434,355) | |
|
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Equity securities |
|
(9,737) |
|
|
(4,123) | |
|
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Mortgage loans |
|
(45,787) |
|
|
(76,158) | |
|
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Other investment assets |
|
(44,401) |
|
|
(11,244) | |
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Sales of investments: |
|
|
|
|
| ||
|
|
Fixed maturity securities |
|
83,029 |
|
|
127,320 | |
|
|
Equity securities |
|
1,123 |
|
|
4,738 | |
|
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Other investment assets |
|
32,206 |
|
|
51,736 | |
|
Maturities and principal paydowns |
|
|
|
|
| ||
|
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of other investments |
|
241,362 |
|
|
373,795 | |
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Net additions to property and |
|
|
|
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| ||
|
|
equipment |
|
(1,097) |
|
|
(633) | |
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Net cash provided |
|
63,521 |
|
|
31,076 | |
|
|
|
|
|
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|
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Financing activities |
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|
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| ||
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Proceeds from borrowings |
|
55,796 |
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|
26,064 | ||
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Repayment of borrowings |
|
(65,045) |
|
|
(84,602) | ||
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Deposits on policyholder account |
|
|
|
|
| ||
|
|
balances |
|
153,437 |
|
|
188,149 | |
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Withdrawals from policyholder |
|
|
|
|
| ||
|
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account balances |
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(202,000) |
|
|
(181,386) | |
|
Net transfers from separate accounts |
|
13,186 |
|
|
1,468 | ||
|
Change in other deposits |
|
(8,573) |
|
|
(1,299) | ||
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Cash dividends to stockholders |
|
(9,624) |
|
|
(9,658) | ||
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Net acquisition of treasury stock |
|
(2,172) |
|
|
(1,032) | ||
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Net cash used |
|
(64,995) |
|
|
(62,296) | |
|
|
|
|
|
|
|
|
|
|
Decrease in cash |
|
(7,668) |
|
|
(1,392) | ||
|
Cash at beginning of year |
|
10,985 |
|
|
4,147 | ||
|
|
|
|
|
|
|
|
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Cash at end of period |
$ |
3,317 |
|
$ |
2,755 | |
|
|
|
|
|
|
|
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|
See accompanying Notes to Consolidated Financial Statements (Unaudited). | |||||||
Page 5 of 7
Notes
|
• |
Comprehensive income (loss) was $46.5 million and ($22.7) million for the |
|
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third quarter of 2006 and 2005; and $13.5 million and $4.7 million for the nine |
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|
months ended September 30, 2006 and 2005, respectively. This varies from |
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net income largely due to unrealized gains or losses on investments. |
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• |
Income per common share is based upon the weighted average |
|
|
number of shares outstanding for the nine months, 11,888,046 |
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shares (11,925,389 shares - 2005). |
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• |
These interim financial statements are unaudited but, in management's |
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opinion, include all adjustments necessary for a fair presentation of the |
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results and are included in the Company's Form 10-Q as filed with the |
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Securities and Exchange Commission. |
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Please refer to the Company's Form 10-Q and the Company's Annual Report |
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on Form 10-K at www.kclife.com. |
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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:William A. Schalekamp |
William A. Schalekamp,
Senior Vice President,
General Counsel & Secretary
November 10, 2006
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(Date) |
Page 7 of 7