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): August 13, 2007

 

 

 

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.)

 

 

3520 Broadway
                    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 August 13, 2007. It reflects the financial condition, in a condensed format, for Kansas City Life Insurance Company as of June 30, 2007, and was previously included in the Company’s second quarter Form 10-Q report filed on August 3, 2007.

 

Message from the President, CEO and Chairman of the Board

 

Kansas City Life Insurance Company reported a 17% increase in net income for the quarter ended June 30, 2007 relative to the prior year. The Company earned $11.8 million or $1.00 of net income per share in the second quarter compared with $10.1 million or $0.85 of net income per share in the same period of 2006. Net income for the six months increased 16% to $20.1 million or $1.70 per share, compared with $17.3 million or $1.45 per share one year earlier.

 

Improvements in the Company’s second quarter included an increase in premiums of 2% and a decline in benefits and expenses of 6%. The improvement in net income for the six-month period was primarily the result of an increase in realized investment gains of $3.5 million and a $6.1 million reduction in benefits and expenses.

 

The increase in premiums during the second quarter was primarily due to increased sales of immediate annuities. Sales of life insurance products were mixed, as new universal life deposits increased 11% and 13% for the quarter and six months, respectively, and new individual life insurance premiums declined for both periods.

 

The improved benefit and expense results were primarily due to mortality experience, interest credited to policyholder account balances and changes to amortization of deferred acquisition costs and value of business acquired. Death benefits, after consideration of reinsurance, declined for both the quarter and six months. Interest credited was reduced in both periods, as interest sensitive account balances declined. Amortization expense declined $4.5 million for the quarter and $4.7 million for the six months, as adjustments were made to the schedules for deferred costs associated with sales of policies and the value of business acquired through acquisitions. The adjustments to amortization expense were primarily due to improved mortality and interest margin experience.

 

We continue to benefit from several initiatives focusing primary growth strategies on our individual life insurance business. The Company has experienced growth in sales from new general agents and third-party marketing agreements. New product development and continued recruiting of general agents in key markets provide promise for continued organic growth.

 

Additionally, the Kansas City Life Board of Directors approved a quarterly dividend of $0.27 per share to be paid August 14, 2007, to shareholders of record as of August 9, 2007.

 

 

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Consolidated
Balance Sheets
(Thousands)
June 30
2007
(Unaudited) 		December 31
2006
Assets            
Investments:                
    Fixed maturity securities available                
        for sale, at fair value   $ 2,634,073   $ 2,719,439  
    Equity securities available                
        for sale, at fair value    51,076    52,351  
    Mortgage loans    462,414    472,019  
    Short-term investments    20,062    44,219  
    Other investments    190,828    205,743  
   
       Total investments    3,358,453    3,493,771  
 
Cash    14,559    3,908  
Deferred acquisition costs    222,249    220,595  
Value of business acquired    77,986    82,769  
Other assets    258,622    258,630  
Separate account assets    422,921    400,749  
   
       Total assets   $ 4,354,790   $ 4,460,422  
   
Liabilities                
Future policy benefits   $ 850,386   $ 854,447  
Policyholder account balances    2,132,214    2,191,105  
Notes payable    12,700    14,700  
Income taxes    24,769    35,319  
Other liabilities    258,889    279,798  
Separate account liabilities    422,921    400,749  
   
       Total liabilities    3,701,879    3,776,118  
 
Stockholders’ equity                
Common stock    23,121    23,121  
Additional paid in capital    28,060    25,852  
Retained earnings    770,979    780,892  
Accumulated other          
    comprehensive loss    (46,261 )  (25,118 )
Less treasury stock    (122,988 )  (120,443 )
   
       Total stockholders’ equity    652,911    684,304  
   
       Total liabilities and equity   $ 4,354,790   $ 4,460,422  

See accompanying Notes to Consolidated Financial Statements.


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Consolidated
Statements of Income (Unaudited)
(Thousands, except share data)
Quarter ended
June 30 		Six Months ended
June 30
2007 2006 2007 2006
Revenues                    
Insurance revenues:  
   Premiums   $ 45,242   $ 44,374   $ 87,890   $ 87,994  
   Contract charges    26,477    28,520    55,180    57,853  
   Reinsurance ceded    (14,300 )  (14,080 )  (27,244 )  (27,225 )
     Total insurance revenues    57,419    58,814    115,826    118,622  
Investment revenues:                  
   Net investment income    48,671    48,823    95,755    97,736  
   Realized investment gains    38    1,905    5,162    1,640  
Other revenues    3,757    2,977    6,174    5,505  
     Total revenues    109,885    112,519    222,917    223,503  
   
Benefits and expenses   
Policyholder benefits    40,994    41,532    84,991    84,016  
Interest credited to policyholder account balances    22,732    23,656    45,505    47,214  
Amortization of deferred acquisition costs                            
   and value of business acquired    6,407    10,867    17,598    22,316  
Operating expenses    22,416    22,250    45,126    45,794  
     Total benefits and expenses    92,549    98,305    193,220    199,340  
   
Income before income tax expense    17,336    14,214    29,697    24,163  
   
Income tax expense    5,524    4,105    9,579    6,865  
   
Net income    $ 11,812   $ 10,109   $ 20,118   $ 17,298  
   
Per common share:                            
   Net income, basic and diluted   $ 1.00   $ 0.85   $ 1.70   $ 1.45  
   
   Cash dividends   $ 0.27   $ 0.27   $ 2.54   $ 0.54  

See accompanying Notes to Consolidated Financial Statements.


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Consolidated
Statements of Cash Flows (Unaudited)
(Thousands)
Six Months ended
June 30
2007 2006
Operating activities            
       Net cash provided   $ 15,106   $ 6,901  
   
Investing activities           
Purchases of investments:          
       Fixed maturity securities    (159,075 )  (145,778 )
       Equity securities    (1,854 )  (9,335 )
       Mortgage loans    (35,023 )  (33,740 )
       Real estate    (846 )  (43,374 )
       Other investment assets    —    391  
Sales of investments:          
       Fixed maturity securities    13,964    75,493  
       Equity securities    3,092    965  
       Other investment assets    39,796    15,013  
Maturities and principal paydowns          
       of other investments    188,382    172,305  
Net additions to property and          
       equipment    (581 )  (402 )
Proceeds from sale of          
       non insurance affiliate    10,104    —  
       Net cash provided    57,959    31,538  
   
Financing activities           
Proceeds from borrowings    23,927    12,680  
Repayment of borrowings    (25,927 )  (22,176 )
Deposits on policyholder account          
       balances    103,230    103,308  
Withdrawals from policyholder          
       account balances    (155,268 )  (137,932 )
Net transfers from          
       separate accounts    8,811    11,833  
Change in other deposits    13,224    (7,564 )
Cash dividends to stockholders    (30,074 )  (6,418 )
Net disposition of          
       treasury stock    (337 )  (2,145 )
       Net cash used    (62,414 )  (48,414 )
   
Increase (decrease) in cash    10,651    (9,975 )
Cash at beginning of year    3,908    12,099  
       Cash at end of period   $ 14,559   $ 2,124  

See accompanying Notes to Consolidated Financial Statements.


Page 5 of 7

 


Notes

• Comprehensive loss was $17.0 million and $11.6 million for the second quarters and $1.0 million and $33.0 million for the six months ended June 30, 2007 and 2006, respectively. This varies from net income largely due to unrealized gains or losses on investments.

• Income per common share was based upon the weighted average number of shares outstanding of 11,858,378 and 11,877,907 for the second quarters and 11,856,947 and 11,893,746 for the six months ended June 30, 2007 and 2006, respectively.

• These interim financial statements are unaudited but, in management’s opinion, include all adjustments necessary for a fair presentation of the results and are included in the Company’s Form 10-Q as filed with the Securities and Exchange Commission. Please refer to the Company’s Form 10-Q and the Company’s Annual Report on Form 10-K at www.kclife.com.

• Certain amounts in prior years have been reclassified to conform with 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.

 

 

KANSAS CITY LIFE INSURANCE COMPANY

(Registrant)

 

By:   /s/ William A. Schalekamp                              

William A. Schalekamp,

Senior Vice President,

General Counsel & Secretary

August 13, 2007

(Date)

 

 

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