Kansas City Life Insurance Company posted a $0.62 per share net loss in the first quarter 2003, compared with a $0.54 per share net income last year. The net loss of $7.5 million for the quarter is primarily due to investment losses in the highly distressed airline industry, including airline equipment trust securities with aircraft leased or owned by various airline carriers and manufacturers. United Airlines, American Airlines and Delta Airlines were among the carriers whose leased or owned aircraft provide the collateral for the securities that made up the majority of the losses. Realized investment losses totaled $21.8 million in the first quarter, including 94 percent or $20.5 million in the airline sector.
In spite of the difficult financial markets, premiums and contract charges rose three percent in the first quarter versus the prior year. Premium growth was led by the sales of immediate annuities with life contingencies, which grew $6.0 million in the first quarter. These products continued their rise in sales from last year and were sustained by a general consumer preference towards purchasing fixed income products. Partially offsetting this increase was a $2.4 million decline in group-accident and health premiums.
Net investment income declined three percent from the prior year as the historically low interest rates reduced overall investment yields. The trend of reduced investment revenue continues, in spite of the Company’s strong growth in investment balances. Total investments were $3.1 billion as of the end of the first quarter, up eight percent from one year earlier. This increase in investments can largely be attributed to the growth in cash receipts, which are primarily the result of sales growth.
Policyholder benefits increased $2.4 million, reflecting additional reserve growth due to new product sales. Other benefit costs were favorable for the quarter, including mortality and accident and health results.
Book value per share was $50.92 as of March 31, 2003, a two percent increase from the prior year-end. The quarter ended with assets totaling $3.9 billion, up two percent from the beginning of the quarter. The Board of Directors declared a quarterly dividend of $0.27 per share, payable May 27, 2003 to stockholders of record on May 12, 2003.
On March 31, 2003, the Company announced that it had signed a definitive Stock Purchase Agreement to purchase all of the issued and outstanding shares of common stock of GuideOne Life Insurance Company for approximately $78 million. GuideOne Life is an Iowa-based company licensed to sell in 40 states through captive and independent multiple-line agents.
This acquisition potentially offers both Kansas City Life and GuideOne Life policyholders a stronger financial position and provides the Company with improved marketing opportunities in the future. Despite the current weakness in certain sectors of the credit markets and low interest rates, we continue to believe that our sales outlook and strong capital position provide excellent prospects for the long-term future of the Company.
Tracy W. Knapp, Senior Vice President, Finance
Phone: (816) 753-7000 ext. 8216
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