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.