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, 2009

 

 

Kansas City Life Insurance Company

(Exact name of registrant as specified in charter)

 

 

 

Telephone Number: (816) 753-7000

Not Applicable

(Former name, former address and former fiscal year, 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))

 

Item 2.02 – Results of Operations and Financial Condition.

Included below is a release of financial information mailed to stockholders on May 19, 2009. It reflects the financial condition, in a condensed format, for Kansas City Life Insurance Company as of March 31, 2009, and was previously included in the Company’s first quarter Form 10-Q report filed on May 1, 2009.

 

Message from the President, CEO and Chairman of the Board

 

Kansas City Life Insurance Company recorded a net loss of $4.5 million or $0.40 per share in the first quarter of 2009 compared with net income of $3.6 million or $0.31 per share for the prior year. The decline in earnings in 2009 was largely due to an $8.1 million decline in investment revenues and a $3.2 million increase in policyholder benefits. Lower investment revenues resulted from the impact of the recessionary environment, including $6.1 million in net realized losses on investments from writedowns on formerly investment grade securities that had become credit impaired. The remainder of the decline in investment revenues was the result of lower yields and a lower volume of assets in the Company’s investment portfolio.

 

Premiums from new sales during the first quarter were $10.5 million, an increase of $1.2 million or 13% over the same period in 2008. Sales of immediate annuities were $4.4 million, an increase of $1.4 million or 47%. The increase in the sales of new immediate annuities largely reflects consumer preferences toward more secure products that pay a fixed rate of return. New individual life insurance premiums were $3.3 million, an increase of 4% compared with the prior year. This improvement was primarily generated by the steady growth in sales in the Old American Insurance Company segment, which focuses on the senior market. Renewal premiums increased $0.8 million or 2% versus the prior year.

 

New deposits from interest sensitive products were $20.4 million, an increase of $4.2 million or 26%. These new sales were largely driven from an increase in fixed deferred annuity sales that totaled $15.3 million, an increase of $9.8 million over the prior year. This increase also reflects the changes in consumer preferences toward the safety of fixed-rate investments.

 

Total insurance revenues increased 3% for the first quarter, largely due to the increase in immediate annuity premiums. Total individual life premiums were flat and total accident and health premiums increased 7% compared with the prior year, largely due to growth in renewals on group accident and health premiums. Contract charges declined 2%, primarily as a result of lower policyholder account balances.

 

The realized investment losses were generated by write-downs of fixed-maturity securities in four different sectors, including the financial, consumer non-cyclical, industrial, and mortgage-backed sectors. This is a reflection of the far-reaching breadth of the current economic downturn. However, despite the difficult environment, 95% of the Company’s fixed maturity securities were rated as investment grade at March 31, 2009. The Company continues to maintain a strong capital position and a well diversified, high-quality investment portfolio.

 

Total benefits and expenses increased 6% in the first quarter of 2009 compared with 2008. This change was primarily due to an increase in policyholder benefits of $3.2 million, an increase in operating expenses of $1.9 million and a $1.4 million increase in the amortization of deferred acquisition costs and the value of business acquired. The rise in policyholder benefits was primarily due to higher benefits in the group accident and health products, along with increased reserves from the growth in new premiums for the period. The increase in operating expenses was due to costs associated with reduced staffing to lower future operating costs. The increased amortization of deferred acquisition costs primarily reflected a reduction of variable account balances from a decline in the market value of policyholder accounts invested in external equity and fixed-income funds.

 

The impact of changes in Financial Accounting Standards Board (FASB) Staff Positions adopted this period was an adjustment to increase retained earnings in the amount of $8.4 million and to increase accumulated other comprehensive loss in the amount of $6.6 million. In addition, these changes had the effect of reducing net realized investment losses by $15.3 million for the period.

 

On April 27, 2009, the Kansas City Life Board of Directors declared a quarterly dividend of $0.27 per share that will be paid on May 13, 2009 to stockholders of record as of May 7, 2009.

 

The continued economic challenges are reflected in the results recorded by Kansas City Life in the first quarter of 2009. The overall conditions remain difficult for both companies and individuals alike. However, Kansas City Life

 

is positioned to successfully weather these conditions and offer policyholders, agents and stockholders the confidence of knowing the Company is committed to maintaining its focus on making decisions to achieve long-term results, just as it has during other difficult times and economic cycles in the past.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes

 

 

 

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.

 

 

 

 

 

 

May 18, 2009