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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[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, 1996
[ ] 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 February 28, 1997, 6,191,562 shares of the Company's capital stock
par value $2.50 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
$138,113,597.
Part II
Documents Incorporated by Reference
Item 5: Market for Registrant's Common Page 33 of Annual Report to
Equity and Related Stockholder Shareholders for the year
Matters. ended December 31, 1996.
Item 6: Selected Financial Data. Page 12 of Annual Report to
Shareholders for the year
ended December 31, 1996.
Item 7: Management's Discussion Pages 10 through 12 of
and Analysis of Financial Annual to Shareholders for
Condition and Results of the year ended December 31,
Operations. 1996.
Item 8: Financial Statements and Pages 14 through 27 of
Supplementary Data. Annual Report to
Shareholders for year ended
December 31, 1996.
Part IV
Index to Exhibits Page 14
PART I
Item 1. BUSINESS
Kansas City Life Insurance Company (KCL) 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 operates nationwide, being licensed in 48
states and the District of Columbia.
The Company primarily operates in a single business segment: individual
life insurance and annuity products. A general agency distribution system is
employed. Nearly 82% of statutory premiums are derived from individual life
insurance and annuities on a consolidated basis. Interest sensitive products,
universal life and flexible annuities, comprise the vast majority of these
premiums. Individual life insurance and annuities accounted for 81% of new
statutory premiums in 1996. KCL introduced its first variable annuity in late
1995 and its first variable universal life product in January, 1996. Together
these products totaled 13% of new statutory premiums in 1996.
KCL has two wholly owned life insurance subsidiaries, Sunset Life
Insurance Company of America (Sunset) and Old American Insurance Company
(OAIC). Sunset was acquired in 1974. Headquartered in Olympia, Washington,
Sunset operates in 21 states, principally west of the Mississippi. California
provides one-third of its statutory premiums. The Company offers products
similar to KCL's and sells through personal producing general agents. OAIC was
acquired in 1991 and its operations, excluding marketing, have been merged into
KCL's home office and administrative and accounting systems. OAIC operates in
46 states, primarily selling relatively small policies to the senior market to
cover funeral and other final expenses.
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 OAIC respectively have 467 and 89 full time employees who are
located in KCL's home office. Sunset has 113 full time employees located in
Olympia, Washington.
The Company is engaged in a crowded, 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.
Item 2. PROPERTIES
Kansas City Life'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.
Sunset owns and wholly occupies a two story office building at 3200
Capitol Boulevard in Olympia, Washington. The building is situated on four
acres of land.
Kansas City Life owns various other properties held for investment.
Item 3. LEGAL PROCEEDINGS
In January, 1996, a division of the Oklahoma Appellate Court issued an
opinion reducing a prior $10.7 million judgment against the Company to $1.3
million which the Company has accrued. The case, Nita Charlene Pelter Cox and
Verna Leanne Pelter Graybill, Personal Representatives of the Estate of Leora
Pearl Pelter, Deceased, Plaintiffs, vs. Kansas City Life Insurance Company and
Billy D. Stearman, Defendants, arose out of certain alleged actions by
Stearman, one of the Company's agents. In November, 1996, an Oklahoma District
Court judge ruled that the Company was also responsible for $2.5 million of a
judgment rendered against the agent in the same case. The Company believes
that the court's ruling violates the Company's rights and guarantees under the
Oklahoma and Federal Constitutions as well as Oklahoma common and statutory
law. The Oklahoma Supreme Court has agreed to hear the Company's appeal.
Management believes that damages, if any, related to this matter would not have
a material effect on the Company's consolidated results of operations and
financial position.
In addition to the above case, the Company and certain of its
subsidiaries are Defendants in lawsuits involving claims and disputes with
policyowners that may include claims seeking punitive damages. Some of these
lawsuits arise in jurisdictions such as Alabama where juries sometimes award
punitive damages grossly disproportionate to the actual damages. Although no
assurances can be given and no determinations can be made at this time as to
the outcome of any particular lawsuit or proceeding, the Company and its
subsidiaries believe that there are meritorious defenses for these claims and
are defending them vigorously. Management believes that the amounts that would
ultimately be paid, if any, would have no material effect on the Company's
consolidated results of operations and financial position.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Incorporated by Reference.
Item 6. SELECTED FINANCIAL DATA
Incorporated by Reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Incorporated by Reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Incorporated by Reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Not Applicable. PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following information, as of December 31, 1996, is provided with
respect to each Director:
Term as
Director Served as
Expires Other Positions Director
Director Age in April with the Company From
J. R. Bixby (1)(2)(3) 71 1997 Chairman of the Board 1957
Robert Philip Bixby 43 1997 Executive Vice President 1985
(1)(2)(3)
Richard L. Finn 55 1997 Senior Vice President, 1983
(1)(2)(3) Finance
Warren J. Hunzicker, M.D. 76 1997 None 1989
(3)(6)
Larry Winn, Jr. 77 1997 None 1985
(2)(3)(4)(5)(6)
W. E. Bixby (1)(2) 64 1998 Vice Chairman of the 1966
Board and President
Jack D. Hayes (1) 56 1998 Senior Vice President, 1995
Marketing
Francis P. Lemery 57 1998 Senior Vice President 1985
(1)(2) and Actuary
Michael J. Ross 55 1998 None 1972
(2)(4)(5)(6)
W. E. Bixby, III (6) 38 1999 None 1996
Webb R. Gilmore 52 1999 None 1990
(2)(4)(5)(6)
Nancy Bixby Hudson (6) 44 1999 None 1996
Daryl D. Jensen (6) 57 1999 None 1978
C. John Malacarne 55 1999 Vice President, 1991
(1)(2) General Counsel
and Secretary
(1) See below with respect to the business experience of executive officers
of the Company.
(2) Member of Executive Committee.
(3) Subject to the approval of the shareholders at the annual meeting of
shareholders to be held on April 24, 1997, will be elected for a three
year term ending in 2000.
(4) Member of Audit Committee.
(5) Member of Compensation Committee.
(6) W. E. Bixby, III 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 and Old American,
subsidiaries. Mr. Gilmore is a partner in 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
has been President of Sunset Life Insurance Company of America, a
subsidiary of Registrant, since 1973. Mr. Ross has been President of
Jefferson Bank and Trust Company, St. Louis, Missouri, since 1971 and was
elected Chairman of the Board in 1983. Mr. Winn is retired as the Kansas
Third District Representative to the U.S. Congress.
Name, Age and Business Experience
Position During Past 5 Years
J. R. Bixby, 71 Chairman since 1972; President from 1964 until he
Chairman of the Board retired in April, 1990. Responsible for overall
corporate policy. Director of Sunset Life, a
subsidiary.
W. E. Bixby, 64 Vice Chairman of the Board since 1974; elected
Vice Chairman of the Executive Vice President in January, 1987; and
Board, President and CEO and CEO in April, 1990. Primarily responsible for
the operation of the Company. Chairman of the
of Sunset Life and Old American, subsidiaries.
Robert Philip Bixby, 43 Elected Assistant Secretary in 1979; Assistant
Executive Vice President President in 1982; Vice President in 1984; Senior
Vice President, Operations in 1990; and to present
position in 1996.
Richard L. Finn, 55 Elected Vice President in 1976; Financial Vice
Senior Vice President, President in 1983; and to present position in
Finance 1984. Chief financial officer and responsible for
investment of the Company's funds, accounting and
taxes. Director of Sunset Life and Director, Vice
President and Chief Financial Officer of Old
American, subsidiaries.
Jack D. Hayes, 56 Elected Senior Vice President, Marketing in
Senior Vice President, February 1994. Responsible for Marketing,
Marketing Marketing Administration, Communications and
Public Relations. Served as Executive Vice
President and Chief Marketing Officer of Fidelity
Union Life, Dallas, Texas, from June, 1981 to
January, 1994.
Francis P. Lemery, 57 Elected Vice President in 1979; Vice President and
Senior Vice President Actuary in 1980; and to present position in 1984.
Actuary Responsible for Group Insurance Department,
Actuarial Services, State Compliance, New Business
and underwriting. Director of Sunset Life and Old
American, subsidiaries.
Robert C. Miller, 50 Elected Assistant Auditor in 1972; Auditor in
Senior Vice President, 1973; Vice President and Auditor in 1987; and to
Administrative Services present position in 1991. Responsible for Human
Resources and Home Office building and
maintenance. Business Experience
Charles R. Duffy, Jr., 49 Elected Vice President, Computer Information
Senior Vice President, Services in 1989; Vice President, Insurance
Operations Administration in 1992; and to present position in
1996. Responsible for the Company's Computer
Operations, Customer Services, Claims, Premium
Collection and Agency Administration. Director of
Sunset Life and Old American, subsidiaries.
John K. Koetting, 51 Elected Assistant Controller in 1975; and to
Vice President and position in 1980. Chief accounting officer
Controller responsible for all corporate accounting reports.
Director of Old American, a subsidiary.
C. John Malacarne, 55 Elected Associate General Counsel in 1976; General
Vice President, General Counsel in 1980; Vice President and General
Counsel and Secretary Counsel in 1981; and to present position in 1991.
Responsible for Legal Department, Office of the
Secretary, Stock Transfer Department and Market
Compliance. Director and Secretary of Sunset Life
and Old American, subsidiaries.
(d) J. R. Bixby, Chairman of the Board, and W. E. Bixby, Vice Chairman
of the Board and President, are brothers. Nancy Bixby Hudson is the
daughter of J. R. Bixby; Robert Philip Bixby and W. E. Bixby, III
are the sons of W. E. Bixby.
(e) See Business Experience During Past 5 Years above.
(f) There have been no events under any bankruptcy act, no criminal pro-
ceedings 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.
Item 11. EXECUTIVE COMPENSATION
(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, 1996 for the fiscal years ending December 31, 1996, 1995 and 1994.
SUMMARY COMPENSATION TABLE
Annual Compensation
Other All
Annual Other
Compen- Compen-
sation sation
Name and Principal Position Year Salary($) Bonus($) $ $
W. E. Bixby, Vice Chairman of the 1996 416,640 58,042 7,000 55,586
Board, President and CEO, Kansas 1995 396,780 143,344 7,000 52,903
City Life; Chairman of the Board 1994 377,880 121,921 7,000 50,350
of Sunset Life and Old American,
subsidiaries.
R. L. Finn, Senior Vice President, 1996 202,080 28,336 5,500 24,305
Finance and Director, Kansas City 1995 193,380 52,231 5,000 21,835
Life; Director of Sunset Life and 1994 184,140 43,672 5,000 20,778
Old American, subsidiaries.
F. P. Lemery, Senior Vice Presi- 1996 202,080 28,336 7,000 24,305
dent and Actuary and Director, 1995 193,380 52,232 7,000 23,239
Kansas City Life; Director of 1994 184,140 40,449 7,000 22,452
Sunset Life and Old American,
subsidiaries.
D. D. Jensen, Director, Kansas 1996 184,000 29,515 6,000 22,090
City Life; Vice Chairman of 1995 176,190 35,275 6,000 21,133
the Board and President, Sunset 1994 168,750 39,020 6,000 19,944
Life, a subsidiary.
J. D. Hayes, Senior Vice Presi- 1996 177,240 45,713 4,000 21,442
dent, Marketing and Director, 1995 169,620 89,131 3,000 19,215
Kansas City Life. 1994 148,060 35 3,000 55,910
ALL OTHER COMPENSATION INCLUDES THE FOLLOWING:
J. D. Hayes began employment with the Company on February 1, 1994. Per-
quisites and other personal benefits including $49,895 for moving expenses are
included in all other compensation for 1994.
The Company has a contributory Internal Revenue Code Section 401(k)
savings and investment 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 from 1% to 10% of
their monthly base salary. Highly compensated employees are limited to
contributions of 6%. The Company contributes an amount equal to the employee
contributions in the form of capital stock of the Company. The Company
contributed $9,000 to the plan for the account of J. D. Hayes in 1995 and 1996,
and $9,000 for the accounts of the named individuals in 1994, 1995 and 1996.
The Company has adopted a nonqualified deferred compensation plan for
approximately 62 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 10% of their monthly
salary and the Company contributes an equal amount. The amount contributed to
the plan for fiscal years 1994, 1995 and 1996 respectively for the accounts of
the named individuals are as follows: W. E. Bixby, $28,788, $30,678, $32,664;
R. L. Finn, $9,414, $10,338, $11,208; F. P. Lemery, $9,414, $10,338, $11,208;
D. D. Jensen, $7,875, $8,619, $9,400; J. D. Hayes, $0, $6,549, $8,724.
The Company provides yearly renewable term insurance to its employees in
the amount of 2 1/2 times 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 fiscal years 1994, 1995
and 1996 respectively are as follows: W. E. Bixby, $12,562, $13,225, $13,922;
R. L. Finn, $2,364, $2,497, $4,097; F. P. Lemery, $4,038, $3,901, $4,097; D. D.
Jensen, $3,069, $3,514, $3,690; J. D. Hayes, $2,046, $3,666, $3,718.
(f) Defined Benefit or Actuarial Plan Disclosure
PENSION PLAN TABLE
The following table illustrates the possible annual pension benefits upon
completion of the indicated years of service with the five year average salary
for all officers and employees. Benefits are calculated on a straight life
annuity basis. The Social Security offset and benefit has been estimated.
Compensation Years of Service SS**
10 20 30 40
$ 75,000 $ 18,750 $ 37,500 $ 52,044* $ 52,044* $15,912
100,000 25,000 50,000 70,000 72,044* 15,912
125,000 31,250 62,500 87,500 92,044* 15,912
150,000 37,500 75,000 105,000 112,044* 15,912
200,000 50,000 100,000 140,000 152,044* 15,912
250,000 62,500 125,000 175,000 192,044* 15,912
300,000 75,000 150,000 210,000 232,044* 15,912
350,000 87,500 175,000 245,000 272,044* 15,912
400,000 100,000 200,000 280,000 312,044* 15,912
450,000 112,500 225,000 315,000 352,044* 15,912
500,000 125,000 250,000 350,000 392,044* 15,912
*Maximum pension based on an estimate of Social Security.
**Estimated annual Social Security benefit at age 65.
The Company has a noncontributory defined benefit pension plan which
covers all full time employees age 21 and over. A participant's retirement
benefit is determined by multiplying his or her highest average annual salary
for five consecutive years, from the last ten years of his or her employment,
by a percentage determined from the participant's total years of service from
that participant's 21st birthdate. The participant's percentage is determined
by multiplying 2 1/2% for each of the participant's years of service up to the
first twenty years, 2% for each year of service for the next ten years, and 1%
for each year of the next ten. A participant's benefit may not exceed 80% of
such average salary reduced by 1/2 of his or her Social Security benefit.
Early retirement benefits are available after age 55, depending upon years of
service and age. Benefits are fully vested after five years of service
following a participant's 18th birthdate.
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 the individuals named in the Cash Compensation Table, the years
of service covered by the plan for the year ended December 31, 1996, were: W.
E. Bixby, 39 years; R. L. Finn, 22 years; F. P. Lemery, 36 years; D. D.
Jensen, 30 years; J. D. Hayes, 3 years.
The Company has adopted an unfunded excess benefit plan which covers any
employee who is an active participant in the noncontributory 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 maxi-
mum 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.
(g) Compensation of Directors
Outside Directors are paid $4,000 quarterly; $2,000 if they attend
Special Board Meetings; $1,000 if they attend Executive Committee Meetings;
$500 if they attend all other Committee Meetings. Inside Directors are paid
$1,000 quarterly and $400 if they attend Special Board Meetings. J. R. Bixby,
Chairman of the Board, is paid $30,000 quarterly. Directors of Sunset Life, a
subsidiary, are paid $500 quarterly and Directors of Old American are paid $250
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: Ilus W. Davis (January 1,
1996 to April 22, 1996), Webb R. Gilmore (from April 22, 1996), Michael J. Ross
and Larry Winn, Jr.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners
The following sets forth information as of February 28, 1997, concerning
holding of voting securities of the Company's $2.50 par value capital stock,
which is the Company's only class of voting stock.
Name and Address of Beneficial Owners:
John K. Koetting, Robert C. Miller
and Ronald E. Hiatt, Trustees of the
Kansas City Life Insurance Company
Savings and Investment Plan
3520 Broadway, Kansas City, MO 64111-2565
Amount and Nature of Ownership* Percent of Class
443,991 shares 7.2
John K. Koetting, Robert C. Miller
and Ronald E. Hiatt, Trustees of the
Kansas City Life Employee Stock Plan
3520 Broadway, Kansas City, MO 64111-2565
Amount and Nature of Ownership* Percent of Class
41,748 shares .7
*Trustees have the power to sell plan assets. Participants may instruct
the Trustees how to vote their shares.
Angeline I. O'Connor
c/o William A. Hirsch, Esq.
Morrison & Hecker
2600 Grand Avenue, Kansas City, MO 64108
Amount and Nature of Ownership** Percent of Class
347,649 shares 5.6
**Includes 171,035 shares in the Walter E. Bixby Descendants Trust.
Angeline I. O'Connor, Robert Philip Bixby and W. E. Bixby, III are Co-
Trustees. The Trustees share voting and investment power. The terms of
the Trust restrict the transfer of the shares.
Angeline I. O'Connor (then known as Angeline I. Oxler); J. R. Bixby;
Margie Morris Bixby; Kathryn A. Bixby-Haddad; Kathryn A. Bixby-Haddad as
Custodian for Kellie S. Curtis; Sorouch Haddad; Nancy Bixby Hudson;
Robert Philip Bixby; W. E. Bixby, III; James R. Gammon as Trustee of
the Walter E. Bixby Family Trust;
Robert Philip Bixby, Angeline I. O'Connor and W. E. Bixby, III as Co-
Trustees of the Walter E. Bixby Descendants Trust; W. E. Bixby; W. E.
Bixby as Trustee for Trust B created pursuant to the Will of Edwin Bixby
and Trust B created pursuant to the Will of Angeline Reynolds Bixby were
members of a group that agreed to act together for the purpose of holding
common stock, and the common stock ownership of such group was reflected
in a Schedule 13D filed with the Commission on November 23, 1988 and
subsequently amended. The agreement that documented the various rights
and obligations among all of the members of that group expired
May 20, 1990.
Nonetheless, Mrs. O'Connor and other former members of the Bixby Group in
subsequent filings with the Commission have indicated that they currently
share the expectation of many members of their extended family that a
majority of the common stock will continue to be beneficially owned by
such individuals or be under the control of Trustees under certain
testamentary or inter vivos Trusts for the benefit of such individuals.
(b) Security Ownership of Management
The names of the nominees proposed by management for election to three
year terms at the annual meeting to be held April 24, 1997 are set forth
as follows:
Served Shares of
as a Record and
Principal Director Beneficially Percent
Nominee Occupation Since Owned of Class
J. R. Bixby Chairman of the 1957 1,484,281(1) 24.0
3520 Broadway Board
Kansas City, MO
Robert Philip Bixby Executive Vice 1985 175,164
3520 Broadway President 5,964(2) 5.7
Kansas City, MO 171,035(3)
9,222(5)
Richard L. Finn Senior Vice Presi- 1983 12
3520 Broadway dent, Finance 6,357(2) *
Kansas City, MO
Warren J. Hunzicker, M.D. Director 1989 150 *
1248 Stratford Rd.
Kansas City, MO
Larry Winn, Jr. Retired Represent- 1985 166 *
8420 Roe Ave. ative, U.S. Congress
Prairie Village, KS
The following Directors were elected April 20, 1995 for a three year
term:
W. E. Bixby Chairman of 1,155,009 19.0
3520 Broadway the Board and 25,398(2)
Kansas City, MO President
Jack D. Hayes Senior Vice Presi- 1995 1,000 *
3520 Broadway dent, Marketing 397(2)
Kansas City, MO
Francis P. Lemery Senior Vice Presi- 1985 708 *
3520 Broadway dent and Actuary 7,346(2)
Kansas City, MO
Michael J. Ross Chairman of the 1972 300 *
12826 Dubon Lane Board and President,
St. Louis, MO Jefferson Bank and
Trust Company,
St. Louis, MO
The following Directors were elected April 18, 1996 for a three year
term:
W. E. Bixby, III President, Old 1996 176,234 5.7
3520 Broadway American Insur- 1,963(2)
Kansas City, MO ance Company, 171,035(3)
Kansas City, MO 3,371(4)
Webb R. Gilmore Partner - 1990 500 *
Attorney at Law Gilmore & Bell
833 Westover Rd.
Nancy Bixby Hudson Investor 1996 165,783 2.7
425 Baldwin Creek Rd.
Lander, WY
Daryl D. Jensen Vice Chairman of the 1978 24
2143 Old Port Dr. Board and President, 7,035(2) *
Olympia, WA Sunset Life Insurance
Company of America,
Olympia, WA
C. John Malacarne Vice President, 1991 10
3520 Broadway General Counsel 5,791(2) *
Kansas City, MO and Secretary
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 Trusts) 4,204,316 68.0
*Less than 1%.
(1) Includes 900 shares owned by the spouse of J. R. Bixby. Beneficial
ownership of these shares is disclaimed.
(2) Approximate vested beneficial interest in shares held by the Trustees of
Kansas City Life Insurance Company employee benefit plans. Participants
in the plans may instruct the Trustees how to vote those shares held in
their account.
(3) Shares in the Walter E. Bixby Descendants Trust. Robert Philip Bixby, W.
E. Bixby, III and Angeline I. O'Connor are Co-Trustees. The Trustees
share voting and investment power. The terms of the Trust restrict
transferring shares.
(4) Shares as to which W. E. Bixby, III is Custodian for his minor niece and
nephews under the Missouri Uniform Gifts to Minors law.
(5) Shares as to which Robert Philip Bixby is Custodian for his minor niece
and nephews under the Missouri Uniform Gifts to Minors law.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K
(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, 1996 at the following pages:
Page
Consolidated Income Statement - Years ended
December 31, 1996, 1995 and 1994 . . . . . . . . . . . . . . . 14
Consolidated Balance Sheet -
December 31, 1996 and 1995 . . . . . . . . . . . . . . . . . . 15
Consolidated Statement of Stockholder Equity -
Years ended December 31, 1996, 1995 and 1994 . . . . . . . . . 16
Consolidated Statement of Cash Flows -
Years ended December 31, 1996, 1995 and 1994 . . . . . . . . . 17
Notes to Consolidated Financial Statements . . . . . . . . . . . 18-26
Report of Independent Auditors . . . . . . . . . . . . . . . . . 27
(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, 1996 . . . . . . . . . 16
II - Condensed Financial Information of Registrant,
Years ended December 31, 1996, 1995 and 1994 . . . . . . 17-19
III - Supplementary Insurance Information, Years ended
December 31, 1996, 1995 and 1994 . . . . . . . . . . . . 20
V - Valuation and Qualifying Accounts, Years ended
December 31, 1996, 1995 and 1994 . . . . . . . . . . . . 20 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) 1986 Restatement of Articles of Incorporation. [Filed as
Exhibit 3(a) to the Company's 10-K Report for 1986 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]
3(c) Specimen copies of Capital Stock Certificates, (a) less
than 100 shares; (b) 100 shares; and (c) unlimited.
[Filed as Exhibit 3(d) to the Company's 10-K Report for
1985 and incorporated herein by reference]
10(a) Fourth Amendment, Kansas City Life Deferred Compensation
Plan. [Filed as Exhibit 10(a) to the Company's 10-K
Report for 1993 and incorporated herein by reference]
10(b) Twenty-first Amendment, Kansas City Life Insurance
Company Savings and Investment Plan. [Filed as Exhibit
10(b) to the Company's 10-K Report for 1994 and
incorporated herein by reference]
10(c) Ninth Amendment, Kansas City Life Employee Stock Plan.
[Filed as Exhibit 10(c) to the Company's 10-K Report for
1994 and incorporated herein by reference]
10(d) Kansas City Life Excess Benefit Plan. [Filed as Exhibit
10(e) to the Company's 10-K Report for 1990 and
incorporated herein by reference]
11 Computation of Per Share Earnings.
13 Annual Report to Shareholders for the year ended December
31, 1996.
21 Subsidiaries.
23(a) Consent of Independent Auditors.
23(b) Consent of Independent Auditors.
27 Financial Data Schedule.
99(a) Form 11-K for the Kansas City Life Insurance Company
Savings and Investment Plan for the year 1996 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 1995 and incorporated herein by
reference]
SIGNATURES
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.
KANSAS CITY LIFE INSURANCE COMPANY
By: /s/ John K. Koetting
John K. Koetting
Vice President and Controller
(Principal Accounting Officer)
Date: March 26, 1997
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 Regis-
trant and in the capacities and on the dates indicated.
By: /s/ W. E. Bixby By: /s/ Richard L. Finn
W. E. Bixby Richard L. Finn
Director; Vice Chairman of the Director; Senior Vice
Board and President President, Finance
(Principal Executive Officer) (Principal Financial Officer)
Date: March 26, 1997 Date: March 26, 1997
By: /s/ J. R. Bixby By: /s/ Francis P. Lemery
J. R. Bixby Francis P. Lemery
Director; Chairman of Director; Senior Vice
the Board President and Actuary
Date: March 26, 1997 Date: March 26, 1997
By: /s/ R. Philip Bixby By: /s/ C. John Malacarne
R. Philip Bixby C. John Malacarne
Director; Executive Director; Vice President,
Vice President General Counsel and Secretary
Date: March 26, 1997 Date: March 26, 1997
By: /s/ Warren J. Hunzicker By: /s/ Daryl D. Jensen
Warren J. Hunzicker, M.D. Daryl D.Jensen
Director Director
Date: March 26, 1997 Date: March 26, 1997
Schedule I
KANSAS CITY LIFE INSURANCE COMPANY
SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS IN RELATED PARTIES
December 31, 1996
Amount at
Which Shown
Fair in Balance
Type of Investment Cost Value Sheet
(in thousands)
Fixed maturity securities,
available-for-sale:
Bonds:
United States government and government
agencies and authorities $ 144,299 145,414 145,414
Mortgage-backed securities 253,810 258,751 258,751
States, municipalities and political
subdivisions 101,456 97,513 97,513
Public utilities 254,875 253,999 253,999
All other bonds 994,240 989,756 989,756
Redeemable preferred stocks 13,411 13,720 13,720
Total 1,762,091 1,759,153 1,759,153
Equity securities, available-for-sale:
Common stocks 187 78 78
Perpetual preferred stocks 71,335 78,940 78,940
Total 71,522 79,018 79,018
Fixed maturity securities,
held-to-maturity:
Bonds:
States, municipalities and political
subdivisions 3,527 3,701 3,527
Public utilities 138,592 143,905 138,592
All other bonds 106,314 108,436 106,314
Total 248,433 256,042 248,433
Mortgage loans on real estate, net 246,493 246,493
Real estate, net 43,750 43,750
Real estate joint ventures 28,356 28,356
Policy loans 94,412 94,412
Short-term 19,642 19,642
Total investments $2,514,699 2,519,257
Schedule II
KANSAS CITY LIFE INSURANCE COMPANY
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
BALANCE SHEET
December 31
1996 1995
(in thousands)
Assets
Investments:
Fixed maturity securities:
Available for sale, at fair value $1,322,965 1,246,684
Held to maturity, at amortized cost 162,502 218,166
Equity securities available for sale, at fair value:
Investments in affiliates 197,424 190,083
Other 61,783 56,807
Mortgage loans on real estate, net 222,548 207,465
Real estate, net 42,658 47,976
Real estate joint ventures 24,025 32,272
Policy loans 74,070 75,305
Short-term 10,912 26,966
Total investments 2,118,887 2,101,724
Deferred acquisition costs 94,095 90,296
Other assets 85,385 88,650
Separate account assets 13,916 1,264
Total assets $2,312,283 2,281,934
Liabilities and stockholders' equity
Future policy benefits $ 452,126 452,332
Accumulated contract values 1,224,377 1,206,233
Other liabilities 159,000 164,978
Separate account liabilities 13,916 1,264
Total liabilities 1,849,419 1,824,807
Stockholders' equity:
Common stock 23,121 23,121
Paid in capital 14,761 13,039
Unrealized gains (losses) on securities
available for sale and equity securities, net 2,963 29,740
Retained earnings including $95,307,000 undis-
tributed earnings of affiliates ($85,213,000 - 1995) 509,748 477,826
Less treasury stock, at cost (87,729) (86,599)
Total stockholders' equity 462,864 457,127
Total liabilities and stockholders' equity $2,312,283 2,281,934
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
1996 1995 1994
(in thousands)
Revenues
Insurance revenues:
Premiums:
Life insurance $ 26,186 23,927 28,187
Accident and health 31,264 22,324 22,580
Contract charges 55,123 52,932 49,600
Investment revenues:
Investment income, net 142,119 144,502 133,006
Dividends from affiliates 5,000 6,400 4,000
Realized gains, net 3,089 4,581 5,492
Other 7,877 6,906 8,892
Total revenues 270,658 261,572 251,757
Benefits and expenses
Policy benefits:
Death benefits 46,033 42,217 41,400
Surrenders of life insurance 11,737 12,491 12,965
Other benefits 56,239 44,066 44,928
Increase in benefit and contract reserves 52,348 54,348 47,506
Amortization of policy acquisition costs 14,619 13,693 15,554
Insurance operating expenses 53,338 52,328 48,457
Management fees from affiliates (5,721) (5,995) (4,744)
Total benefits and expenses 228,593 213,148 206,066
Income before federal income taxes 42,065 48,424 45,691
Federal income taxes 9,844 12,404 12,722
Income before equity in undistributed net
income of affiliates and nonrecurring item 32,221 36,020 32,969
Equity in undistributed net income
of affiliates 10,094 5,718 5,889
Income before nonrecurring item 42,315 41,738 38,858
Postemployment benefits, net - - 1,481
Net income $ 42,315 41,738 37,377
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
CASH FLOW STATEMENT
Years ended December 31
1996 1995 1994
(in thousands)
Net cash from operating activities $ 54,073 43,035 29,081
Investing activities
Investments called, matured or repaid 225,957 232,966 260,836
Investments sold 102,733 141,990 43,649
Investments purchased or originated (387,849) (445,236) (378,958)
Other 1,056 (538) 477
Net cash used in investing activities (58,103) (70,818) (73,996)
Financing activities
Repayment of short-term debt - - (10,555)
Policyowner contract deposits 115,493 132,408 133,648
Withdrawals of policyowner
contract deposits (107,073) (94,150) (74,650)
Cash dividends to stockholders (10,393) (10,061) (8,609)
Other 592 670 816
Net cash from financing activities (1,381) 28,867 40,650
Increase (decrease) in cash (5,411) 1,084 (4,265)
Cash at beginning of year 5,324 4,240 8,505
Cash (overdraft) at end of year $ (87) 5,324 4,240
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
The Company believes it operates in a single industry segment, that of
providing life and accident and health insurance coverage. Therefore,
supplementary information for this segment is limited to the following:
December 31
1996 1995
(in thousands)
Unearned premiums (included in $909 925
other policyowners' funds in the
accompanying Consolidated Balance
Sheet)
All other information required by this Schedule is shown in the accompanying
Consolidated Income Statement and Consolidated Balance Sheet.
Schedule V
VALUATION AND QUALIFYING ACCOUNTS
Years ended December 31
1996 1995 1994
(in thousands)
Real estate valuation account
Beginning of year $ 7,378 9,942 11,113
Deductions (2,151) (2,564) (1,171)
End of year $ 5,227 7,378 9,942
Mortgage loan valuation account
Beginning of year $10,500 10,500 10,500
Deductions (2,000) - -
End of year $ 8,500 10,500 10,500
Allowance for uncollectible accounts
Beginning of year $ 1,123 2,732 2,642
Additions 845 1,258 464
Deductions (808) (2,867) (374)
End of year $ 1,160 1,123 2,732