Kansas City Life Insurance Company Reports Operating Results (10-Q)
Kansas City Life Insurance Company has a market cap of $342.8 million; its shares were traded at around $29.89 with a P/E ratio of 13.1 and P/S ratio of 0.8. The dividend yield of Kansas City Life Insurance Company stocks is 3.6%.
Highlight of Business Operations: Net cash used for investing activities for the six months ended June 30, 2011 was $20.9 million, down from net cash used of $27.0 million for the same period in 2010. The Companys new investments in fixed maturity and equity securities were $104.0 million for the six months, a 51% decrease from $210.3 million in the prior year. New investments in mortgage loans were $105.2 million, compared with $25.9 million last year. Purchases of real estate totaled $4.5 million, down from $7.1 million in 2010. Sales and maturities of fixed maturity and equity securities totaled $172.6 million for the first six months of 2011, a 24% increase versus $139.7 million a year ago. Mortgage loan maturities and principal paydowns totaled $39.1 million, compared to $19.5 million last year.
Net cash provided by financing activities was $17.4 million for the first six months of 2011, compared with net cash provided of $10.3 million a year ago. This change was primarily the result of three items. First, deposits net of related withdrawals from policyholder account balances, provided $21.3 million in 2011, compared with $9.1 million during the same period in 2010. Second, change in other deposits provided $0.2 million compared to $8.2 million in the prior year. Third, the Companys net acquisition of treasury stock was less than $0.1 million compared to net acquisitions of $3.1 million through the first six months of 2010.
Kansas City Life Insurance Company recorded net income of $11.2 million or $0.97 per share in the second quarter of 2011, an increase of $1.1 million or $0.09 per share from the same quarter in the prior year. The increase in earnings was primarily due to a $3.2 million increase in investment revenues, a $4.5 million decrease in total benefits, and a $1.5 million decrease in the deferred acquisition costs (DAC). Partially offsetting these improvements was a $6.3 million decrease in insurance revenues and a $1.0 million increase in the amortization of the value of business acquired (VOBA).
Net income for the six months of 2011 was $16.0 million or $1.39 per share, an increase of $4.9 million or $0.43 per share compared with the same period in the prior year. This increase was driven from an improvement in investment revenues of $6.3 million and a $7.8 million decrease in total benefits. Partially offsetting these favorable factors was a decrease in insurance revenues of $8.1 million and an increase of $1.0 million in the amortization of VOBA.
Total investment revenues increased $3.2 million or 7% for the second quarter versus one year earlier and net investment revenues increased $6.3 million for the six months versus one year ago. Net investment revenues are comprised of two components, net investment income and realized investment gains or losses. Gross investment income increased $1.6 million in the second quarter and $4.0 million for the six months versus the prior year. The increase in both periods was primarily the result of an increased allocation to commercial mortgage investments and improved returns from an alternative investment. Income from fixed maturity securities decreased slightly, as portfolio yields declined. The Company recorded net realized investment gains of $1.7 million in the second quarter of 2011, an improvement of $1.5 million compared with the prior year. In addition, the Company recorded net realized investment gains of $2.5 million for the six months, compared with a $0.1 million loss in the first six months of last year.
Policyholder benefits and interest credited to policyholder account balances decreased $4.5 million or 7% in the second quarter compared to the same period one year earlier. These same benefits decreased $7.8 million or 6% in the six months versus one year ago. These decreases were primarily the result of a decline in benefit and contract reserves, including declines of $5.7 million for the second quarter and $11.8 million for the six months. Reduced benefit and contract reserves resulted from a decline in immediate annuity premiums of $3.5 million and $5.9 million for the second quarter and six months, respectively, as well as the result of greater reserves released from higher net death benefits. Net death benefits increased $2.2 million in the second quarter and $5.7 million in the six months, due to unfavorable changes in mortality relative to the prior year. In addition, interest credited to policyholder account balances decreased $0.8 million in the second quarter and $1.5 million for the six months versus the prior year.
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