EIA Sales Rise At AmerUs

By Steve Tuckey

October 25, 2005 at 08:00 PM

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A flurry of special charges hit earnings at AmerUs Group Company in the third quarter.[@@]

AmerUs, Des Moines, Iowa, is reporting $39 million in net income for the third quarter on $433 million in revenue, compared with $43 million in net income on $402 million in revenue for the third quarter of 2004.

Net results include a $19 million charge for early retirement of debt and a $6.4 million charge resulting from efforts to settle annuity sales practices litigation in California.

The net figures also include a $14 million charge resulting from an adjustment in the market value of the derivatives that AmerUs uses to back its popular equity-indexed annuity products, which offer returns that are linked to the performance of major investment indices. The value adjustment produced a $5 million gain during the third quarter of 2004.

AmerUs sales of equity indexed annuities were up 76%, Jukka Lipponen, a life insurance analyst at Keefe Bruyette Woods Inc., New York, writes in a comment on AmerUs's earnings.

Equity-indexed annuities come with a higher profit margin than variable annuities or conventional fixed annuities, and they made up 92% of AmerUs's annuity sales during the third quarter, Lipponen writes.

Lipponen notes that the $6.4 million charge AmerUs took in connection with the California litigation settlement is smaller than he had expected.

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