SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
| [X] | ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the Fiscal Year ended December 31, 2002 | |
| [ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from __________ to ___________ |
Commission File Number 2-40764
KANSAS CITY
LIFE INSURANCE COMPANY
(Exact Name of Registrant as Specified in its Charter)
| Missouri | 44-0308260 |
| (State or Other Jurisdiction of | (I.R.S. Employer |
| Incorporation or Organization) | Identification Number) |
| 3520 Broadway, Kansas City, Missouri | 64111-2565 |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant's Telephone Number, including Area Code: 816-753-7000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
| Name of Each Exchange on | |
| Title of Each Class | Which Registered |
| None | None |
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
(Title of Class)
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
| Yes X | No |
As of December 31, 2002, 11,996,183 shares of the Company’s capital stock par value $1.25 were outstanding, and the aggregate market value of the common stock (based upon the average bid and asked price according to Company records) of Kansas City Life Insurance Company held by non-affiliates was approximately $137,919,811.
Kansas City Life Insurance Company (KCL or the Company) was incorporated under the assessment laws of Missouri in 1895 as the Bankers Life Association. In 1900, its present corporate title was adopted and it was reorganized as a legal reserve company in 1903.
The Company primarily operates in four business segments: Kansas City Life Insurance Company, divided between its individual and group businesses, and its two insurance affiliates, Sunset Life Insurance Company of America (Sunset) and Old American Insurance Company (Old American). KCL markets its individual products, principally interest sensitive and variable products, through a career general agency sales force and these products generate 42 percent of consolidated revenues from customers. The group products, largely life, dental, disability and administrative services only, are sold through the general agency sales force and appointed group agents. Group revenues account for 23 percent of revenues from customers. Kansas City Life operates in 48 states and the District of Columbia. Sunset markets interest sensitive and traditional products to individuals through a personal producing general agency system. Sunset operates in 43 states and the District of Columbia. This segment provides 7 percent of revenues. The Old American segment markets whole life final expense products to seniors through a general agency sales force. Old American operates in 46 states and the District of Columbia and accounts for 28 percent of consolidated revenues from customers.
Old American and Sunset’s administrative and accounting operations are part of KCL’s home office. However, each entity operates a separate and independent marketing department and field force.
KCL and its subsidiaries are subject to state regulations in their states of domicile and in the states in which they do business. Although the federal government generally does not regulate the business of insurance, federal initiatives often have an impact on the business in a variety of ways including the taxation of insurance companies and the tax treatment of insurance products.
KCL and its subsidiaries have 601 full time employees located in its home office. The Company considers relations with its employees to be good.
The Company is engaged in a competitive industry, competing with 1,500 to 2,000 other life insurance companies in the United States. The industry is highly competitive with respect to pricing, selection of products and quality of service. No single competitor nor any small group of competitors dominates any of the markets in which the Company operates.
Access to Public Filings
Beginning with this filing KCL will be providing access to its annual report on Form 10-K, and will provide access as they become available during the year for all quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to these reports filed with the Securities and Exchange Commission (SEC) under the 1934 Act, free of charge. These documents may be accessed on KCL’s website at the following address: http://www.kclife.com. These documents will be provided as soon as is practicable after filing with the SEC, although not always on the same day. These documents may also be found on the SEC’s website at http://www.sec.gov.
KCL’s home office is located at 3520 Broadway in Kansas City, Missouri. The Company owns and wholly occupies two five story buildings on an eight acre site.
The Company owns various other properties held for investment.
In recent years, the life insurance industry, including the Company and its subsidiaries, have been subject to an increase in litigation pursued on behalf of purported classes of insurance purchasers, questioning the conduct of insurers in the marketing of their products. The Company believes that the actions described below are part of this trend. The Company denies all allegations of wrongdoing in these lawsuits, and has been defending them vigorously.
In the case of Charles R. Sullivan, etc., previously reported in the Company’s Form 10-Q Report for the Quarter Ended September 30, 2001, a Motion for Certification of the Class has been filed by the Plaintiff. Management believes that it is administering and has responsibility for 326 of the policies involved in the dispute.
In the previously reported case of Wilner v. Sunset Life Insurance Company, Dean Delevie, et al., Case No. SC051573, the Superior Court of the State of California, County of Los Angeles, on February 28, 2002 approved a settlement of a nationwide class action lawsuit focusing on universal life sales practices by Sunset Life. The settlement has become final. With certain limited exceptions, the class that is bound by the terms of the settlement includes persons and entities who at any time during the class period (January 1, 1982 through December 31, 2001) had an ownership interest in one or more of Sunset Life’s universal life policies during the class period. The reserve in connection with this settlement was increased to $18,000,000 in 2001. The actual cost of the settlement including claim, administration, and attorney’s fees was $15,918,000. The case has been dismissed following settlement.
In addition to the above, the Company and its subsidiaries are defendants in, or subject to other claims or legal actions. Some of these claims and legal actions are in jurisdictions where juries are given substantial latitude in assessing damages, including punitive damages. Although no assurances can be given and no determinations can be made at this time, management believes that the ultimate liability, if any with respect to these other claims and legal actions, would have no material effect on the Company’s business, results of operations or financial position.
No matters were submitted to a vote of the shareholders of the Company during the Fourth Quarter of the fiscal year ended December 31, 2002.
| Incorporated by Reference. | Page 38 of Annual Report to shareholders for the year ended December 31, 2002. |
| Incorporated by Reference. |
Page 16 of Annual Report to shareholders for the year ended December 31, 2002. |
| Incorporated by Reference. |
Pages 14 through 21 of Annual Report to shareholders for the year ended December 31, 2002. |
| Incorporated by Reference. |
Pages 18 through 20 of Annual Report to shareholders for the year ended December 31, 2002. |
| Incorporated by Reference. |
Pages 22 through 37 of Annual Report to shareholders for the year ended December 31, 2002. |
| Not Applicable. |
(a) The following information, as of December 31, 2002, is provided with respect to each Director and Nominee:
Term as
Director Served as
Expires Other Positions Director
Name of Director Age in April with the Company From
J. R. Bixby (1)(3)(4) 77 2003 Chairman of the Board 1957
R. Philip Bixby 49 2003 President, CEO and Vice 1985
(1)(3)(4) Chairman of the Board
Warren J. Hunzicker, M.D. 82 2003 None 1989
(1)(2)
Tracy W. Knapp 40 2003 Senior Vice President, 2002
(1)(3)(4) Finance
E. Larry Winn, Jr. 83 2003 None 1985
(1)(2)(4)(5)(6)
William R. Blessing 48 2004 None 2001
(2)
Bruce W. Gordon (3) 55 2004 Senior Vice President, 2002
Marketing
Cecil R. Miller (2)(5) 70 2004 None 2001
Michael J. Ross 61 2004 None 1972
(2)(4)(5)(6)
Elizabeth T. Solberg 63 2004 None 1997
(2)
Walter E. Bixby (2) 43 2005 None 1996
Webb R. Gilmore 58 2005 None 1990
(2)(4)(6)
Nancy Bixby Hudson (2) 50 2005 None 1996
Daryl D. Jensen (2) 63 2005 None 1978
William A. Schalekamp (3)(4) 58 2005 Senior Vice President, 2002
General Counsel
and Secretary
| (1) |
Subject to the approval of the shareholders at the annual meeting of shareholders to be held on April 24, 2003, will be
elected for a three-year term ending in 2006. |
| (2) | Walter E. Bixby was elected Assistant Vice President of the Company in 1985, Vice President, Marketing in 1990, Vice President, Marketing Operations in 1992, and President of Old American, a subsidiary, in 1996. He also serves as a Director of Sunset Life, Old American, and Generations Bank, subsidiaries. Mr. Blessing is currently Vice President, Business Development and Strategy, Sprint PCS, Kansas City, Missouri, a position he has held since 1998. He has been with Sprint and related entities in various capacities since 1981. Mr. Gilmore is Chairman, CEO and Shareholder of the law firm of Gilmore & Bell. Nancy Bixby Hudson has served as a Director of Sunset Life, a subsidiary, since 1986. Dr. Hunzicker was elected by the Board of Directors to an unexpired term in 1989. Dr. Hunzicker served as the Company's Medical Director from 1987 to 1989; he formerly served as a member of the Company's Board of Directors from 1977 to 1980. Mr. Jensen served as President of Sunset Life, a subsidiary of Registrant, from 1973 until his retirement in 1999. Mr. Jensen serves as a Director of Sunset Life and Generations Bank, subsidiaries. He also serves on the Board of Directors of Heritage Financial Corporation and is Vice President, Administration of Western Institutional Review Board. Mr. Miller is a retired partner of KPMG LLP (formerly Peat, Marwick, Mitchell & Co.) Mr. Miller joined KPMG in 1957 and became an audit partner in 1967 specializing in insurance and agribusiness. He retired in 1990. Mr. Ross has been Chairman of the Board of Jefferson Bank and Trust Company, St. Louis, Missouri, since 1983. Mr. Ross also serves as a Director of Generations Bank, a subsidiary. Mrs. Solberg became a Regional President and Senior Partner of Fleishman-Hillard, Inc., in January, 1998. She had been Executive Vice President since 1984. She serves as a Director of Generations Bank, a subsidiary. She also serves as a Director of Ferrellgas, Inc. and Midwest Express Holdings, Inc. Mr. Winn is retired as the Kansas Third District Representative to the U.S. Congress. |
| (3) |
See below with respect to the business experience of executive officers of the Company. |
| (4) |
Member of Executive Committee. |
| (5) |
Member of Audit Committee. |
| (6) |
Member of Compensation Committee. |
|
(b) Executive Officers. |
| Name, Age and Position |
Business Experience During Past 5 Years |
| J. R. Bixby, 77 Chairman of the Board |
Chairman since 1972; President from 1964 until he retired in April, 1990.
Responsible for overall corporate policy. Chairman of the Board of Sunset
Life and Old American, subsidiaries.
|
| R. Philip Bixby, 49 President, CEO and Vice Chairman of the Board |
Elected Assistant Secretary in 1979; Assistant Vice President in 1982; Vice
President in 1984; Senior Vice President, Operations in 1990; Executive
Vice President in 1996; President and CEO in April, 1998; and Vice
Chairman of the Board in January, 2000. Director and President of Sunset
Life, Director of Old American, and Chairman of the Board of Generations Bank,
subsidiaries.
|
| Name, Age and Position |
Business Experience During Past 5 Years |
| Bruce W. Gordon, 55 Senior Vice President, Marketing |
Elected Senior Vice President, Marketing in July, 2001. Responsible for
Marketing, Marketing Administration, Communications and Public
Relations. Served as Vice President, Distribution Individual Insurance, Sun
Life Financial 1999-2001; President, Product Resource Group and Vice
President-ILD Marketing, Protective Life Insurance Company 1997-1999.
Elected to fill the unexpired term of Jack D. Hayes on the Company's
Board of Directors in January, 2002. Senior Vice President, Marketing and
a member of the Board of Directors of Sunset Life, a subsidiary.
|
| Tracy W. Knapp, 40 Senior Vice President, Finance |
Was elected Senior Vice President, Finance and to the unexpired term on
the Board of Directors of Richard L. Finn, who retired January 31, 2002.
Chief financial officer and responsible for the investment of the Company's
funds, accounting and taxes. Mr. Knapp joined the Company in 1998 and
was responsible for developing a banking subsidiary. He was elected
President and CEO of Generations Bank when it was chartered in
July, 2000. From 1991 to 1998,he held several positions with U.S. Credit
Union including Vice President, Finance and Controller. Director of Sunset Life, Old
American and Generations Bank, subsidiaries.
|
| Mark A. Milton, 44 Senior Vice President and Actuary |
Elected Assistant Actuary in 1984; Assistant Vice President/Associate
Actuary in 1987; Vice President/ Associate Actuary in 1989;
Vice President and Actuary in January, 2000; and to present position in
January, 2001. Responsible for Actuarial Services, State Compliance and
Group. Director, Vice President and Actuary of Sunset Life, and Director of Old American,
subsidiaries.
|
| Michael P. Horton, 60 Vice President, Group |
Elected Director, Group Life/Sales in 1977; Assistant Vice President,
Group in 1981; and to Vice President, Group in 1984. Responsible for
group sales and products. Mr. Horton retired January 31, 2003.
|
| Robert C. Miller, 56 Senior Vice President, Administrative Services |
Elected Assistant Auditor in 1972; Auditor in 1973; Vice President
and Auditor in 1987; and to present position in 1991. Responsible
for Human Resources and Administrative Functions.
|
| Charles R. Duffy, Jr., 55 Senior Vice President, Operations |
Elected Vice President, Computer Information Services in 1989; Vice
President, Insurance Administration in 1992; and to present position in
1996. Responsible for the Company's Computer Operations, Customer
Services, Claims, Agency Administration, New Business, Medical and
Underwriting. Director of Sunset Life and Old American, subsidiaries.
|
| John K. Koetting, 57 Vice President and Controller |
Elected Assistant Controller in 1975; and to Vice President and
Controller in 1980. Chief accounting officer responsible for all
corporate accounting reports. Director of Old American, a subsidiary. Mr.
Koetting retired January 31, 2003.
|
| C. John Malacarne, 61 Senior Vice President, General Counsel and Secretary |
Elected Associate General Counsel in 1976; General Counsel in 1980;
Vice President and General Counsel in 1981; and to Senior Vice
President, General Counsel and Secretary in 1991. Responsible
for Legal Department, Office of the Secretary, Stock Transfer Department
and Market Compliance. Director and Secretary of Sunset Life, Old American, and
Generations Bank, subsidiaries. Mr. Malacarne retired May 31, 2002.
|
| Name, Age and Position |
Business Experience During Past 5 Years |
| William A. Schalekamp, 58 Senior Vice President, General Counsel, and Secretary |
Joined the Company in 1971. Was elected Assistant Counsel in 1973; Associate Counsel in 1975; Assistant General Counsel in 1980; Associate General Counsel in 1984; Vice President and Chief Compliance Officer/Associate General Counsel in January, 2002, and to his present position in April, 2002. Responsible for Legal Department, Office of the Secretary, Stock Transfer Department, and Market Compliance. |
(d) Nancy Bixby Hudson is the daughter of J. R. Bixby; R. Philip Bixby and Walter E. Bixby are brothers and the nephews of J. R. Bixby.
(e) See Business Experience During Past 5 Years above.
(f) There have been no events under any bankruptcy act, no criminal proceedings and no judgments or injunctions material to the evaluation of the ability and integrity of any Director, nominee or executive officer during the past five years.
(a) Compensation
The following table sets forth information concerning cash compensation paid or accrued by the Company and its subsidiaries to the Chief Executive Officer and the other four most highly paid executive officers as of December 31, 2002 for the fiscal years ending December 31, 2002, 2001 and 2000.
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term
Incentive Other All
Name and Compensation Annual Other
Principal Position Year Salary Bonus Payouts Compensation Compensation
R. P. Bixby 2002 $527,220 $101,924 $7,000 $48,774
President, CEO and Vice Chairman of the Board, 2001 483,660 21,682 7,000 45,965
Kansas City Life; Director of Sunset Life, 2000 443,700 400 7,000 42,287
Director of Old American, and Chairman
of the Board of Generations Bank, subsidiaries
---------------------------------------------------------------------
B. W. Gordon 2002 249,900 102,790 5,000 11,639
Senior Vice President, Marketing, Kansas City 2001 113,670 40,740 500 4,612
Life; Director of Sunset Life, subsidiary 2000 0 0 0 0
---------------------------------------------------------------------
C. R. Duffy, Jr. 2002 226,980 37,760 3,000 22,802
Senior Vice President, Operations, Kansas City 2001 216,180 14,513 3,000 19,959
Life; Director of Sunset Life and Old American, 2000 202,020 14,654 3,000 18,385
subsidiaries
---------------------------------------------------------------------
M. A. Milton 2002 208,500 35,999 2,750 18,339
Senior Vice President and Actuary, Kansas City 2001 184,810 15,139 2,000 16,847
Life; Director of Sunset Life and Old American, 2000 163,200 3,201 1,000 13,877
subsidiaries
---------------------------------------------------------------------
T. W. Knapp 2002 201,150 51,789 5,250 13,286
Senior Vice President, Finance, CFO, Kansas City 2001 130,000 0 0 286
Life; Director of Old American, Sunset Life, 2000 119,820 10,000 0 8,518
and Generations Bank, subsidiaries
---------------------------------------------------------------------
ALL OTHER COMPENSATION INCLUDES THE FOLLOWING:
The Company has a contributory Internal Revenue Code Section 401(k) savings and profit sharing plan. Directors and officers who are full time employees of the Registrant or its subsidiaries participate in the plan on the same basis as all other employees. Employees may contribute up to 100% of their monthly base salary. Highly compensated employees are limited to contributions of 6%. The Company contributes an amount equal to 50%, 75% or 100% of the employee contributions based on a schedule of years of employment to a maximum of 6% of an employee's compensation in the form of capital stock of the Company. The amount contributed to the plan in 2002 for the accounts of the named individuals are as follows: R. P. Bixby, $11,000; B. W. Gordon, $2,083; C. R. Duffy, Jr., $11,000; M. A. Milton, $11,000; T. W. Knapp, $5,660.
The Company has adopted a nonqualified deferred compensation plan for approximately 42 highly compensated officers and employees. It is similar to the Company's 401(k) plan. Participants contribute amounts to this plan that they cannot contribute to the 401(k) plan up to a total of 25% of their monthly salary and the Company contributes up to a maximum of 6% of their monthly salary. The amount contributed to the plan in 2002 for the accounts of the named individuals are as follows: R. P. Bixby, $20,633; B. W. Gordon, $0; C. R. Duffy, Jr., $2,619; M. A. Milton, $1,510; T. W. Knapp, $0.
The Company provides yearly renewable term insurance to its employees in the amount of 2 1/2times their annual salary. Directors and officers who are full time employees participate in the program on the same basis as all other employees. Premiums paid for the named individuals for 2002 are as follows: R. P. Bixby, $2,283; B. W. Gordon, $1,586; C. R. Duffy, Jr., $2,418; M. A. Milton, $566; T. W. Knapp, $535.
The Company has a three year long term incentive plan in place for senior management that awards participants for the increase in the price of the Company's common stock from January 25, 2000 through January 24, 2003. Participants are awarded units (phantom shares) based on their annualized salary divided by the share price of $32.25 as of January 21, 2000. At the conclusion of the plan, participants receive awards based on the increase in the per share price times their number of units. Participants are also awarded dividends on these shares commensurate with the Company's dividend policy. Payments equivalent to dividends received by the named individuals and included in All Other Compensation are as follows: R. P. Bixby, $14,859; B. W. Gordon, $7,970; C. R. Duffy, Jr., $6,765; M. A. Milton, $5,264; T. W. Knapp, $7,091.
(f) Defined Benefit or Actuarial Plan Disclosure
The Company has a noncontributory defined benefit pension plan which covers employees age 21 and over. Effective January 1, 1998, the pension plan was converted to a cash balance plan. Benefits under the plan will no longer be determined primarily by final average compensation and years of service. Each participant’s benefit accrued under the prior plan formula as of December 31, 1997 was converted to an opening account balance in the cash balance plan.
Beginning in 1998, participants accumulate annual pay credits equal to a percentage of annual compensation, ranging from 3% to 16% based on years of service of the participant. The cash balance account is further credited with interest annually which is based on the 30-year treasury bond rate in effect for November of the prior plan year. Upon termination of employment, the account balance as of such date may be distributed to the participant in lump sum or annuity form, at the election of the participant. Benefits vest according to years of service after age 18 on a graded scale, beginning with 30% vesting with 3 years, and becoming 100% vested with 7 years. Compensation for determining benefits under the plan is equal to base salary, excluding overtime and bonuses.
Participants age 55 with 15 years of service as of December 31, 1997 will receive the greater of the benefit under the cash balance plan, or the prior plan formula based on final average compensation and years of service. The following table illustrates the possible annual pension benefits under the prior plan formula based upon final average compensation and years of service, for these employees. Participants may elect a lump sum distribution.
PENSION PLAN TABLE
Compensation Years of Service SS**
10 20 30 40
$ 75,000 $ 18,750 $ 37,500 $ 50,776* $ 50,776* $18,449
100,000 25,000 50,000 70,000 70,776* 18,449
125,000 31,250 62,500 87,500 90,776* 18,449
150,000 37,500 75,000 105,000 110,776* 18,449
200,000 50,000 100,000 140,000 150,776* 18,449
250,000 62,500 125,000 175,000 190,776* 18,449
300,000 75,000 150,000 210,000 230,776* 18,449
350,000 87,500 175,000 245,000 270,776* 18,449
400,000 100,000 200,000 280,000 310,776* 18,449
450,000 112,500 225,000 315,000 350,776* 18,449
500,000 125,000 250,000 350,000 390,776* 18,449
*Maximum pension based on
an estimate of Social Security
**Estimated annual Social Security benefit at age
65
A participant's base salary not to exceed $150,000 (as adjusted for cost of living) commencing January 1, 1994, was used to determine compensation under the plan for benefits from the qualified plan. For the individuals named in the Cash Compensation Table, the years of service covered by the plan for the year ended December 31, 2002, were: R. P. Bixby, 25 years; B. W. Gordon, 2 years; C. R. Duffy, Jr., 13 years; M. A. Milton, 21 years; T. W. Knapp, 2 years.
The estimated annual annuity benefit payable starting at normal retirement age (age 65) as accrued through December 31, 2002 under the cash balance plan for each of the named individuals are as follows: R. P. Bixby, $180,824; B. W. Gordon, $1,616; C. R. Duffy, Jr., $28,966; M. A. Milton, $76,128; T. W. Knapp, $3,840.
The Company has adopted an unfunded excess benefit plan which covers any employee who is an active participant in the non-contributory defined benefit pension plan and whose pension benefit under that plan would exceed the maximum benefit limited under Internal Revenue Code Section 415. A participant under this plan is entitled to a monthly benefit of the difference between the maximum monthly normal, early, or deferred vested retirement benefit determined without regard to the Internal Revenue Code Section 415 limitation and the monthly equivalent of the maximum benefit permitted by Internal Revenue Code Section 415. Participants may elect a lump sum distribution.
(g) Compensation of Directors
Outside Directors are paid $5,000 quarterly; $2,000 if they attend Special Board Meetings; $1,000 if they attend Executive Committee Meetings; $1,000 if they attend Audit Committee Meeting; and $500 if they attend all other Committee Meetings. Inside Directors are paid $1,000 quarterly and $400 if they attend Special Board Meetings. The Chairman of the Board is paid $30,000 quarterly. Outside Directors of Sunset Life, a subsidiary, are paid $1,000 quarterly, inside Directors are paid $500 quarterly. The Chairman of the Board is paid $11,250 quarterly. Directors of Old American are paid $250 quarterly. The Chairman of the Board is paid $8,750 quarterly. Director fees are included in the Compensation Table.
(h) Employment Contracts and Termination of Employment and Change in Control Arrangements
There are no employment contracts between the Company and its executive officers. The Company’s benefit plans contain typical provisions applicable to all employees for termination of employment.
(j) Additional Information with Respect to Compensation Committee
The members of the Compensation Committee: Elizabeth T. Solberg, Michael J. Ross and E. Larry Winn, Jr.
(a) Security Ownership of Certain Beneficial Owners
The following table sets forth information as of December 31, 2002 concerning certain beneficial owners of voting securities of the Company’s $1.25 par value capital stock (“common stock”). The common stock is the Company’s only class of voting securities. As described in the notes to the table set forth below, certain named persons share the power of voting and disposition with respect to certain shares of common stock. Consequently, such shares are shown as being beneficially owned by more than one person.
Name and Address Percent of Class
Mark A. Milton, Robert C. Miller and Tracy W. Knapp,
Trustees of the Kansas City Life Insurance Company
Savings and Profit Sharing Plan and the Kansas City Life
Employee Stock Plan and the Kansas City Life Agents
Stock Bonus Plan
3520 Broadway
Kansas City, MO 64111-2565
Amount and Nature of Ownership(1)
848,656 Shares 7.1
WEB Interests, Ltd.
3520 Broadway
Kansas City, MO 64111-2565
Amount and Nature of Ownership(2)
2,358,340 Shares 19.7
Angeline I. O'Connor
12501 Granada Lane
Leawood, KS 66209
Amount and Nature of Ownership(2)(3)
3,084,343 Shares 25.7
JRB Interests, Ltd.
3520 Broadway
Kansas City, MO 64111-2565
Amount and Nature of Ownership(4)
2,966,312 Shares 24.7
Margie Morris Bixby
3530 Pennsylvania
Kansas City, MO 64111
Amount and Nature of Ownership(4)(5)
2,968,112 Shares 24.7
Lee M. Vogel
4701 NW 59th Court
Kansas City, MO 64151
Amount and Nature of Ownership(4)(6)
2,973,410 Shares 24.8
R. L. Finn
10106 N.W. 74th St.
Kansas City, MO 64152
Amount and Nature of Ownership(7)
2,903,815 Shares 24.2
| (1) |
Trustees have the power to sell plan assets. Participants may instruct the Trustees how to vote their shares.
|
| (2) |
The WEB Interests, Ltd. is a Texas limited partnership (the "WEB Partnership"). Each partner of the WEB Partnership has the
power to vote that number of shares of Common Stock owned by the WEB Partnership which equals such partner's proportionate
interest in the WEB Partnership.
|
| (3) |
Includes 2,358,340 shares for which Angeline I. O'Connor ("Ms. O'Connor") shares the power of disposition as a general
partner of the WEB Partnership. Of these shares, Ms. O'Connor: (a) as a general partner of the WEB Partnership, in her
capacity as a co-trustee of the Walter E. Bixby, Jr. Revocable Trust, shares the power to vote 2,064,540 shares; (b) as the
sole trustee of the Angeline I. O'Connor GST Trust and the Issue Trust for Angeline I. O'Connor, which trusts are limited
partners of the WEB Partnership, has the power to vote 90,643 shares; and (c) as an individual general partner of the WEB
Partnership, has the sole power to vote 209 shares. Also includes: (a) 372,315 shares for which Ms. O'Connor, as a
co-trustee (with R. Philip Bixby and Walter E. Bixby) of the Walter E. Bixby Descendants Trust, shares the power to vote and
the power of disposition; and (b) 353,688 shares which Ms. O'Connor owns directly and has the sole power to vote and the
sole power of disposition.
|
| (4) |
The JRB Interests, Ltd. is a Texas limited partnership (the "JRB Partnership"). Each partner of the JRB Partnership has
the power to vote that number of shares of Common Stock owned by the JRB Partnership which equals such partner's
proportionate interest in the JRB Partnership.
|
| (5) |
Includes 2,966,312 shares for which Margie Morris Bixby ("MM Bixby"), as the sole trustee of the Margie Morris Bixby
Revocable Trust (the "MMB Trust"), a general partner and a limited partner of the JRB Partnership, shares the power of
disposition. Of these shares, MM Bixby (a) as a general partner and a limited partner of the JRB Partnership, in her
capacity as sole trustee of MMB Trust, has the sole power to vote 25,900 shares; and (b) as a limited partner of the JRB
Partnership, in her individual capacity, has sole power to vote 324 shares. Also includes, 1,800 shares for which MM Bixby,
as a joint tenant with right of survivorship with Mr. Vogel, shares the power to vote and the power of disposition.
|
| (6) |
Includes 2,966,312 shares for which Lee M. Vogel ("Mr. Vogel"), as a general partner of the JRB Partnership, shares the
power of disposition. Of these shares, Mr. Vogel: (a) as a general partner of the JRB Partnership, in his individual
capacity, has the sole power to vote 259 shares; and (b) as a co-trustee (with Richard L. Finn and Webb R. Gilmore) of the
Issue Trust for Lee M. Vogel, a limited partner of the JRB Partnership, shares the power to vote 979,491 shares. Also
includes: (a) 1,800 shares for which Mr. Vogel, as a joint tenant with right of survivorship with MM Bixby, shares the power
to vote and the power of disposition; and (b) 5,298 shares which Mr. Vogel owns directly and has the sole power to vote and
the sole power of disposition.
|
| (7) | Richard L. Finn and Webb R. Gilmore share the power to vote (a) 1,924,300 shares with Nancy Hudson, as co-trustees of the Nancy Bixby Hudson GST Trust and the Issue Trust for Nancy Bixby Hudson, which trusts are limited partners of the JRB Partnership; (b) 979,491 shares with Lee M. Vogel, as co-trustees of the Issue Trust for Lee M. Vogel, a limited partner of the JRB Partnership, and (c) also includes 24 shares which Mr. Finn owns directly and has the sole power to vote and the sole power of disposition. |
(b) Security Ownership of Management
The following table sets forth information as of December 31, 2002 concerning officers and directors who own an interest in the Company’s $1.25 par value capital stock (“common stock”). The common stock is the Company’s only class of voting securities. As described in the notes to the table set forth below, certain named persons share the power of voting and disposition with respect to certain shares of Common Stock. Consequently, such shares are shown as being beneficially owned by more than one person.
J. R. Bixby, R. Philip Bixby, Warren J. Hunzicker, M.D., Tracy W. Knapp, and E. Larry Winn, Jr. are currently Directors whose terms expire on April 28, 2003. They are nominees of management for election to three-year terms at the annual meeting to be held April 24, 2003:
Served Shares of
as a Record and
Name and Principal Director Beneficially Percent
Address Occupation Since Owned of Class
------- ---------- -------- ------------ --------
Walter E. Bixby President, Old 1996 7,955(1) 25.9
3520 Broadway American Insur- 2,358,340(2)(3)
Kansas City, MO ance Company, 367,476(4)
Kansas City, MO 372,315(5)
Webb R. Gilmore Chairman, CEO 1990 2,904,291(11) 24.2
833 Westover Rd. and Shareholder,
Kansas City, MO Gilmore & Bell,
Kansas City, MO
Nancy Bixby Hudson Investor 1996 2,966,312(6) 27.0
425 Baldwin Creek Rd. 331,566(7)
Lander, WY
Daryl D. Jensen Vice Chairman of 1978 939 *
2143 Old Port Dr. the Board, Sunset
Olympia, WA Life Insurance
Company of America,
Kansas City, MO
William A. Schalekamp Senior Vice Presi- 2002 6 *
3520 Broadway dent, General Counsel 18,089(1)
Kansas City, MO and Secretary
The following Directors, except Mr. Knapp who replaced Richard L. Finn, were elected April 20, 2000 for a three year term:
J. R. Bixby Chairman of the 1957 2,966,312(8) 24.7
3520 Broadway Board
Kansas City, MO
R. Philip Bixby President, CEO 1985 2,358,340(2)(9) 25.9
3520 Broadway and Vice Chairman 17,570(1)
Kansas City, MO of the Board 372,315(5)
360,402(10)
Warren J. Hunzicker, M.D. Director 1989 300 *
1248 Stratford Rd.
Kansas City, MO
E. Larry Winn, Jr. Retired Represent- 1985 332 *
8420 Roe Ave. ative, U.S. Congress
Prairie Village, KS
Tracy W. Knapp Senior Vice Presi- 2002 554(1) *
3520 Broadway dent, Finance
Kansas City, MO
The following Directors, except Mr. Gordon who replaced Jack D. Hayes, were elected April 19, 2001 for a three-year term:
Served Shares of
as a Record and
Name and Principal Director Beneficially Percent
Address Occupation Since Owned of Class
------- ---------- -------- ------------ --------
William R. Blessing Vice President 2001 100 *
11708 Manor Sprint PCS
Overland Park, KS Kansas City, MO
Bruce W. Gordon Senior Vice Presi- 2002 100 *
3520 Broadway dent, Marketing 279(1)
Kansas City, MO
Cecil R. Miller Retired 2001 100 *
12215 Ash
Overland Park, KS
Michael J. Ross Chairman of the 1972 600 *
12826 Dubon Lane Board, Jefferson
St. Louis, MO Bank and Trust
Company,
St. Louis, MO
Elizabeth T. Solberg Regional President 1997 200 *
850 W. 52nd St. and Senior Partner,
Kansas City, MO Fleishman-Hillard, Inc.,
St. Louis, MO
All Directors, executive officers and their spouses
(also includes all shares held by trustees of Company
benefit plans and shares held by the Bixby Family and
related Partnerships and Trusts) 8,336,138 69.5
*Less than 1%.
| (1) |
Approximate beneficial interest in shares held by the Trustees of Kansas City Life Insurance Company employee benefit
plans. Participants have the power to vote the shares held in their account.
|
| (2) |
As general partners of the WEB Interests, Ltd., a Texas limited partnership (the "WEB Partnership"), Walter E. Bixby, R.
Philip Bixby and Angeline I. O'Connor, share the power to dispose of these shares, which are owned by the WEB Partnership.
As general partners, in their capacity as co-trustees of the WEB Trust, Walter E. Bixby, R. Philip Bixby and Ms. O'Connor
share the power to vote 2,358,340 of these shares.
|
| (3) |
Includes (a) 209 shares for which Walter E. Bixby, as an individual general partner of the WEB Partnership, has the sole
power to vote; and (b) 90,643 shares for which Walter E. Bixby, as the sole trustee of the Walter E. Bixby, III GST Trust
and the Issue Trust for Walter E. Bixby, III, which trusts are limited partners of the WEB Partnership, has the power to
vote.
|
| (4) |
Includes (a) 349,730 shares which Walter E. Bixby owns directly and has the sole power to vote and the sole power of
disposition; and (b) 17,746 shares for which Walter E. Bixby, as custodian for certain of his minor nieces and nephews, has
the sole power to vote and the sole power of disposition.
|
| (5) |
These shares are held in the Walter E. Bixby Descendants Trust. R. Philip Bixby, Walter E. Bixby and Ms. O'Connor are the
co-trustees of this trust and share the power to vote and the power to dispose of these shares. The terms of the trust
restrict the transfer of these shares.
|
| (6) |
Ms. Hudson, as a general partner of JRB Interests, Ltd., a Texas limited partnership (the "JRB Partnership"), shares with
the managing general partner and the other general partners of the JRB Partnership, the power of disposition of these
shares, which are owned by the JRB Partnership. Ms. Hudson (a) as a general partner of the JRB Partnership, has sole power
to vote 259 of these shares; and (b) as a co-trustee (with Richard L. Finn and Webb R. Gilmore) of the Nancy Bixby Hudson
GST Trust and the Issue Trust for Nancy Bixby Hudson, which trusts are limited partners of the JRB Partnership, shares the
power to vote 1,924,300 of these shares.
|
| (7) |
Ms. Hudson, as sole trustee of the Nancy Bixby Hudson Trust dated December 11, 1997, has the sole power to vote and the sole
power to dispose of these shares.
|
| (8) |
J. R. Bixby, as sole managing general partner of the JRB Partnership, shares with the other general partners of the JRB
Partnership the power of disposition of these shares, which are owned by the JRB Partnership. Of these shares, he has the
sole power to vote (a) 324 of these shares as an individual limited partner of the JRB Partnership, and (b) 25,900 shares as
a general partner of the JRB Partnership, in his capacity as sole trustee of the Joseph R. Bixby Revocable Trust.
|
| (9) |
Includes (a) 209 shares for which R. Philip Bixby as an individual general partner of the WEB Partnership, has the sole
power to vote; and (b) 90,643 shares for which R. Philip Bixby, as sole trustee of the R. Philip Bixby GST Trust and the
Issue Trust for R. Philip Bixby, which trusts are limited partners of the WEB Partnership, has the power to vote.
|
| (10) |
Includes: (a) 341,164 shares which R. Philip Bixby owns directly and has the sole power to vote and the sole power of
disposition; and (b) 19,238 shares for which R. Philip Bixby, as custodian for certain of his minor nieces and nephews, has
the sole power to vote and the sole power of disposition.
|
| (11) | Webb R. Gilmore and Richard L. Finn share the power to vote (a) 1,924,300 shares with Nancy Hudson, as co-trustees of the Nancy Bixby Hudson GST Trust and the Issue Trust for Nancy Bixby Hudson, which trusts are limited partners of the JRB Partnership; (b) 979,491 shares with Lee M. Vogel, as co-trustees of the Issue Trust for Lee M. Vogel, a limited partner of the JRB Partnership, and (c) also includes 500 shares which Mr. Gilmore owns directly and has the sole power to vote and the sole power of disposition. |
None.
Based on their evaluation, as of a date within 90 days of the filing of this Form 10-K, the Company's Chief Executive Officer and Chief Financial Officer have concluded the Company's disclosure controls and procedures (as defined in Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934) are effective. There have been no significant changes in internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
PART IV
(a) (1) Financial Statements
The following financial statements of Kansas City Life Insurance Company are incorporated by reference from the Company's Annual Report to shareholders for the year ended December 31, 2002 at the following pages:
Page
Consolidated Income Statement - Years ended December 31, 2002, 2001 and 2000.......................... 22
Consolidated Balance Sheet - December 31, 2002 and 2001............................................... 23
Consolidated Statement of Stockholders' Equity - Years ended December 31, 2002, 2001 and 2000......... 24
Consolidated Statement of Cash Flows - Years ended December 31, 2002, 2001 and 2000................... 25
Notes to Consolidated Financial Statements............................................................ 26-36
Independent Auditors' Report.......................................................................... 37
(a) (2) Supplementary Data and Financial Statement Schedules
Schedules are attached hereto at the following pages:
Page
I - Summary of Investments - Other than Investments in Related Parties, December 31, 2002.......... 23
II - Condensed Financial Information of Registrant, Years ended December 31, 2002, 2001 and 2000..... 24-26
III - Supplementary Insurance Information, Years ended December 31, 2002, 2001 and 2000............... 27
IV - Reinsurance Information, Years ended December 31, 2002, 2001 and 2000........................... 28
V - Valuation and Qualifying Accounts, Years ended December 31, 2002, 2001 and 2000................. 29
All other schedules are omitted as the required information is inapplicable or the information is presented in the financial statements or related notes.
(b) Reports on Form 8-K
None.
(c) Exhibits
| Exhibit | ||
| Number: | Basic Documents: | |
| 3(a) |
Articles of Incorporation (as Restated in 1986 and Amended in 1999). [Filed as
Exhibit 3(a) to the Company's 10-Q Report for the quarter ended September 30, 1999
and incorporated herein by reference]
| |
| 3(b) |
Bylaws as Amended October 26, 1986. [Filed as Exhibit 3(b) to the Company's 10-K
Report for 1986 and incorporated herein by reference]
| |
| 4(a) |
Specimen copy of Stock Certificate. [Filed as Exhibit 4(a) to the Company's 10-Q Report for the
quarter ended September 30, 1999 and incorporated herein by reference]
| |
| 10(a) |
Tenth Amendment, Kansas City Life Deferred Compensation Plan. [Filed as Exhibit 10(a) to the Company's
10-K Report for 2001 and incorporated herein by reference]
| |
| 10(b) |
Twenty-seventh Amendment, Kansas City Life Insurance Company Savings and Profit
Sharing Plan. [Filed as Exhibit 10(b) to the Company's 10-K Report for 2001 and incorporated herein by
reference]
| |
| 10(c) |
Thirteenth Amendment, Kansas City Life Employee Stock Plan. [Filed as Exhibit 10(c) to the Company's
10-K Report for 2001 and incorporated herein by reference]
| |
| 10(d) |
Second Amendment, Kansas City Life Excess Benefit Plan. [Filed as Exhibit 10(d) to the
Company's 10-K Report for 2001 and incorporated herein by reference]
| |
| 13 |
Annual Report to Shareholders for the year ended December 31, 2002.
| |
| 21 |
Subsidiaries.
| |
| 23(a) |
Independent Auditors' Consent.
| |
| 23(b) |
Independent Auditors' Consent.
| |
| 99(a) |
Form 11-K for the Kansas City Life Insurance Company Savings and Profit Sharing Plan
for the year 2002 and filed as a part hereof and incorporated herein by reference.
| |
| 99(b) | Prospectus for Kansas City Life Insurance Company Savings and Investment Plan. [Filed as Exhibit 99(b) to the Company's 10-K Report for 2000 and incorporated herein by reference] |
Pursuant to the requirements of Section 13 or 15(d) 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.
By:/s/Tracy W. Knapp
Tracy W. Knapp
Senior Vice President, Finance
(Principal Accounting Officer)
Date: March 24, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By:/s/R. Philip Bixby By:/s/Joseph R. Bixby
R. Philip Bixby Joseph R. Bixby
Director; President, Chief Director; Chairman of
Executive Officer and Vice the Board
Chairman of the Board Date: March 25, 2003
(Principal Executive Officer)
Date: March 26, 2003
By:/s/E. Larry Winn, Jr. By:/s/William A. Schalekamp
E. Larry Winn, Jr. William A. Schalekamp
Director Director; Senior Vice President,
Date: March 24, 2003 General Counsel and
Secretary
Date: March 24, 2003
By:/s/Walter E. Bixby By:/s/Cecil R. Miller
Walter E. Bixby Cecil R. Miller
Director Director
Date: March 24, 2003 Date: March 24, 2003
By:/s/Warren J. Hunzicker, M.D. By:/s/Elizabeth T. Solberg
Warren J. Hunzicker, M.D. Elizabeth T. Solberg
Director Director
Date: March 24, 2003 Date: March 24, 2003
KANSAS CITY
LIFE INSURANCE COMPANY
SECTION 906 CERTIFICATION
Year Ended 2002
The undersigned certify that the registrant’s Form 10-K report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d) and that information contained in the report fairly represents, in all material respects, the financial condition and results of operations of the registrant.
/s/R. Philip Bixby
R. Philip Bixby
President, Chief Executive Officer,
and Vice Chairman of the Board
/s/Tracy W. Knapp
Tracy W. Knapp
Senior Vice President, Finance
Date: March 26, 2003
KANSAS CITY
LIFE INSURANCE COMPANY
SECTION 302 CERTIFICATION
Year Ended 2002
I, R. Philip Bixby, President, Chief Executive Officer, and Vice Chairman of the Board of Kansas City Life Insurance Company, certify that:
| 1. |
I have reviewed this annual report on Form 10-K of Kansas City Life Insurance Company;
|
| 2. |
Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this annual report;
|
| 3. |
Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this annual report;
|
| 4. |
The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
|
| a) |
designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this
annual report is being prepared;
| |
| b) |
evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the "Evaluation Date"); and
| |
| c) |
presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
|
| 5. |
The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
|
| a) |
all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material
weaknesses in internal controls; and
| |
| b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's
internal controls; and
|
| 6. |
The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant
changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our
most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|
Date: March 26, 2003
/s/R. Philip Bixby
R. Philip Bixby
President, Chief Executive Officer,
and Vice Chairman of the Board
KANSAS CITY LIFE
INSURANCE COMPANY
SECTION 302 CERTIFICATION
Year Ended 2002
I, Tracy W. Knapp, Senior Vice President, Finance of Kansas City Life Insurance Company, certify that:
| 1. |
I have reviewed this annual report on Form 10-K of Kansas City Life Insurance Company;
|
| 2. |
Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this annual report;
|
| 3. |
Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this annual report;
|
| 4. |
The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
|
| a) |
designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this
annual report is being prepared;
| |
| b) |
evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the "Evaluation Date"); and
| |
| c) |
presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
|
| 5. |
The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
|
| a) |
all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material
weaknesses in internal controls; and
| |
| b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's
internal controls; and
|
| 6. |
The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant
changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our
most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|
Date: March 26, 2003
/s/Tracy W. Knapp
Tracy W. Knapp
Senior Vice President, Finance
Schedule I
KANSAS CITY LIFE INSURANCE COMPANY AND SUBSIDIARIES
SUMMARY OF INVESTMENTS - OTHER THAN
INVESTMENTS IN RELATED PARTIES
December 31, 2002
Amount at
Which Shown
in Balance
Type of Investment Cost Fair Value Sheet
------------------ ---- ---------- --------------
(In thousands)
Fixed maturities, available-for-sale:
Bonds:
United States government and
government agencies and authorities $ 53,838 58,594 58,594
Mortgage-backed securities 704,359 723,297 723,297
Public utilities 250,330 241,335 241,335
Corporates 1,099,806 1,087,774 1,087,774
All other bonds 29,224 30,332 30,332
Redeemable preferred stocks 110 107 107
----------- ----------- --------------
Total 2,137,667 2,141,439 2,141,439
----------- =========== --------------
Equity securities, available-for-sale:
Common stocks 34,714 34,600 34,600
Perpetual preferred stocks 24,014 22,987 22,987
----------- ----------- --------------
Total 58,728 57,587 57,587
----------- =========== --------------
Mortgage loans, net 463,150 463,150
Real estate, net 66,751 66,751
Real estate joint ventures 26,257 26,257
Policy loans 108,551 108,551
Short-term investments 186,770 186,770
Other investments 4,484 4,484
----------- --------------
Total investments $3,052,358 3,054,989
=========== ==============
Schedule II
KANSAS CITY LIFE INSURANCE COMPANY
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
BALANCE SHEET
December 31
2002 2001
---- ----
(in thousands)
Assets
Investments:
Available for
sale:
Fixed maturities, at fair value $ 1,585,124 1,487,800
Equity securities, at fair value:
Investments in affiliates 267,896 255,478
Other 42,350 50,442
Mortgage loans, net 338,111 322,590
Real estate, net 64,562 59,543
Real estate joint ventures 19,974 26,724
Policy loans 86,647 91,777
Short-term investments 91,572 76,187
----------- ----------
Total investments 2,496,236 2,370,541
Cash 8,712 9,815
Deferred acquisition costs 120,110 120,175
Value of purchased insurance in force 51,188 55,020
Deferred income taxes 3,956 16,695
Other assets 131,118 115,714
Separate account assets 244,862 305,283
----------- -----------
Total assets $ 3,056,182 2,993,243
=========== ===========
Liabilities and stockholders' equity
Liabilities:
Future policy benefits $ 519,786 519,566
Accumulated contract values 1,405,186 1,308,678
Other liabilities 288,851 294,032
Separate account liabilities 244,862 305,283
----------- -----------
Total liabilities 2,458,685 2,427,559
----------- -----------
Stockholders' equity:
Common stock 23,121 23,121
Paid in capital 22,605 21,744
Accumulated other comprehensive loss,
net of tax (25,654) (35,833)
Retained earnings including $177,386,000
undistributed earnings of affiliates
($159,756,000 - 2001) 688,064 665,282
Less treasury stock, at cost (110,639) (108,630)
---------- ------------
Total stockholders' equity 597,497 565,684
---------- ------------
Total liabilities and
stockholders' equity $ 3,056,182 2,993,243
=========== ============
The above condensed financial statement should be read in conjunction with the consolidated financial statements and notes thereto of Kansas City Life Insurance Company.
Schedule II
(continued)
KANSAS CITY LIFE INSURANCE COMPANY
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
INCOME STATEMENT
Years ended December 31
2002 2001 2000
---- ---- ----
(in thousands)
Revenues
Insurance revenues:
Premiums and contract charges $ 181,737 175,028 175,621
Reinsurance ceded (22,251) (21,170) (23,732)
------------ ------------- -------------
Net insurance revenues 159,486 153,858 151,889
Investment revenues:
Investment income, net 143,431 151,547 155,859
Realized investment losses, net (13,555) (14,147) (304)
Other 11,140 10,447 11,042
------------ ------------- -------------
Total revenues 300,502 301,705 318,486
------------ ------------- -------------
Benefits and expenses
Policyholder benefits, net of
reinsurance ceded 201,030 191,825 191,772
Amortization of deferred acquisition
costs 11,100 17,034 11,437
Insurance operating expenses,
net of commissions ceded 83,839 78,568 80,234
Management fees from affiliates (10,957) (11,837) (12,234)
------------ -------------- ------------
Total benefits and expenses 285,012 275,590 271,209
------------ -------------- ------------
Income before federal income taxes
and equity in undistributed net
income of affiliates 15,490 26,115 47,277
Federal income taxes 1,571 3,247 12,773
------------- ------------- -------------
Income before equity in undistributed
net income of affiliates 13,919 22,868 34,504
Equity in undistributed net income of
affiliates 17,630 7,054 14,579
------------- ------------- ------------
Net income $ 31,549 29,922 49,083
============= ============= ============
The above condensed financial statement should be read in conjunction with the consolidated financial statements and notes thereto of Kansas City Life Insurance Company.
Schedule II
(continued)
KANSAS CITY LIFE INSURANCE COMPANY
CONDENSED FINANCIAL STATEMENT OF REGISTRANT
CASH FLOW STATEMENT
Year ended December 31
2002 2001 2000
---- ---- ----
(in thousands)
Net cash provided from operating activities $ 54,127 47,632 38,001
Investing Activities
Purchases of security investments
available for sale:
Fixed maturities (607,280) (602,440) (273,929)
Equity securities (4,004) (3,927) (10,200)
Sales of security investments
available for sale 285,022 498,268 274,036
Maturities and principal paydowns
of security investments:
Fixed maturities available for sale 244,763 128,216 84,291
Fixed maturities held to maturity -- -- 15,414
Equity securities available for sale 5,619 13,561 13,724
Purchases of other investments (108,891) (147,068) (77,150)
Sales, maturities and paydowns
of other investments 69,502 42,911 48,231
Disposition of group insurance blocks -
net cash paid -- (4,000) --
---------- ---------- ----------
Net cash provided (used) (115,269) (74,479) 74,417
---------- ---------- ----------
Financing Activities
Proceeds from borrowings 5,705 45,530 34,700
Repayment of borrowings (5,227) (4,800) (68,700)
Policyholder contract deposits 162,590 110,611 97,345
Withdrawals of policyholder
contract deposits (82,228) (106,387) (159,237)
Change in other deposits (6,696) (12,673) (3,268)
Cash dividends to stockholders (12,957) (12,991) (12,037)
Disposition (acquisition) of treasury
stock, net (1,148) 25 (2,411)
---------- ---------- ----------
Net cash provided (used) 60,039 19,315 (113,608)
---------- ---------- ----------
Decrease in cash (1,103) (7,532) (1,190)
Cash at beginning of year 9,815 17,347 18,537
---------- ---------- ----------
Cash at end of year 8,712 9,815 17,347
========== ========== ==========
The above condensed financial statement should be read in conjunction with the consolidated financial statements and notes thereto of Kansas City Life Insurance Company.
Schedule III
KANSAS CITY LIFE INSURANCE COMPANY
SUPPLEMENTARY INSURANCE INFORMATION
Future Policy
Benefits,
Contract
Deferred Values and Other
Acquisition Claim Unearned Policyholders'
Costs Liabilities Premiums Funds
------------- ---------------- ------------- --------------
(in thousands)
December 31, 2002:
KCL - Individual $ 120,110 1,935,628 384 107,653
KCL - Group - 6,533 329 -
Sunset 50,775 403,521 70 8,912
Old American 75,401 260,681 338 4,056
------------- ---------------- ------------- --------------
Total $ 246,286 2,606,363 1,121 120,621
============= ================ ============= ==============
December 31, 2001:
KCL - Individual $ 120,175 1,844,473 405 114,451
KCL - Group - 6,980 103 -
Sunset 50,895 379,685 77 9,422
Old American 72,536 259,862 355 5,075
------------- ---------------- ------------- --------------
Total $ 243,606 2,491,000 940 128,948
============= ================ ============= ==============
December 31, 2000:
KCL - Individual $ 125,259 1,833,620 319 131,958
KCL - Group - 10,935 25 -
Sunset 48,040 373,006 99 9,508
Old American 71,661 257,696 367 7,273
------------- ---------------- ------------- --------------
Total $ 244,960 2,475,257 810 148,739
============= ================ ============= ==============
Accident and
Insurance Health
Policy Operating Written
Benefits Expenses* Premiums
------------ ------------- -------------
(in thousands) *Allocations
2002: Insurance Operating
KCL - Individual $ 160,114 54,154 284 Expenses are
KCL - Group 40,916 23,176 48,945 based on a number
Sunset 25,674 6,571 19 of assumptions
Old American 51,367 16,625 1,500 and estimates,
------------ ------------- ------------- and the results
Total $ 278,071 100,526 50,748 would change if
============ ============= ============= different methods
were applied.
2001:
KCL - Individual $ 154,175 49,703 298
KCL - Group 37,649 21,377 43,791
Sunset 32,172 28,900 21
Old American 51,649 16,759 1,725
------------ ------------- -------------
Total $ 275,645 116,739 45,835
============ ============= =============
2000:
KCL - Individual $ 156,768 52,567 335
KCL - Group 35,004 20,950 42,232
Sunset 32,387 10,167 26
Old American 52,682 17,051 2,029
------------ ------------- -------------
Total $ 276,841 100,735 44,622
============ ============= =============
All other information required by this Schedule is shown in the accompanying Segment Information Note to the Consolidated Financial Statements.
Schedule IV
KANSAS CITY LIFE INSURANCE COMPANY
REINSURANCE INFORMATION
Life Insurance Premiums Accident and Health Premiums
----------------------- ----------------------------
2002 2001 2000 2002 2001 2000
---- ---- ---- ---- ---- ----
(in thousands)
Direct
KCL - Individual $ 32,864 35,862 24,951 318 344 379
KCL - Group 10,706 5,242 11,439 51,571 46,129 48,906
Sunset 6,321 6,282 6,304 21 23 28
Old American 74,034 76,508 78,912 4,093 4,742 5,456
--------------------------------- ---------------------------------
Total 123,925 123,894 121,606 56,003 51,238 54,769
--------------------------------- ---------------------------------
Ceded
KCL - Individual (17,005) (16,363) (14,737) (34) (46) (44)
KCL - Group (2,370) (2,386) (2,277) (2,841) (2,375) (6,674)
Sunset (13,602) (6,653) (5,221) (1) (2) (2)
Old American (4,796) (5,467) (6,281) (2,574) (3,004) (3,408)
--------------------------------- ---------------------------------
Total (37,773) (30,869) (28,516) (5,450) (5,427) (10,128)
--------------------------------- ---------------------------------
Assumed
KCL - Individual 5,018 4,934 6,105 - - -
KCL - Group - - - 1 - -
Sunset - - - - - -
Old American - - - - - -
--------------------------------- ---------------------------------
Total 5,018 4,934 6,105 1 - -
--------------------------------- ---------------------------------
Net $ 91,170 97,959 99,195 50,554 45,811 44,641
================================= =================================
% of Assumed to Net 6 5 6 - - -
Life Insurance In Force
-----------------------
2002 2001 2000
---- ---- ----
(in millions)
Direct
KCL - Individual $ 14,193 14,068 14,003
KCL - Group 3,513 3,292 3,440
Sunset 5,429 5,639 5,629
Old American 998 1,020 1,048
-----------------------------------
Total 24,133 24,019 24,120
-----------------------------------
Ceded
KCL - Individual (5,488) (5,158) (4,749)
KCL - Group (338) (329) (267)
Sunset (4,311) (1,562) (1,393)
Old American (87) (95) (105)
-----------------------------------
Total (10,224) (7,144) (6,514)
-----------------------------------
Assumed
KCL - Individual 2,458 2,626 2,818
KCL - Group - - -
Sunset - - -
Old American - - -
-----------------------------------
Total 2,458 2,626 2,818
-----------------------------------
Net $ 16,367 19,501 20,424
===================================
% of Assumed to Net 15 13 14
All other information required by this Schedule is shown in the accompanying Reinsurance Note to the Consolidated Financial Statements.
Schedule V
KANSAS CITY LIFE INSURANCE COMPANY
VALUATION AND QUALIFYING ACCOUNTS
Years ended December 31
2002 2001 2000
---- ---- ----
(in thousands)
Real estate valuation account
Beginning of year $ 0 625 1,519
Deductions 0 (625) (894)
------------------------------------
End of year $ 0 0 625
====================================
Mortgage loan valuation account
Beginning of year $ 4,030 4,030 7,000
Additions 570 0 0
Deductions 0 0 (2,970)
------------------------------------
End of year $ 4,600 4,030 4,030
====================================
Allowance for uncollectible accounts
Beginning of year $ 1,583 1,583 1,555
Additions 31 492 218
Deductions (37) (492) (190)
------------------------------------
End of year $ 1,577 1,583 1,583
====================================