KANSAS CITY LIFE INSURANCE COMPANY
HOME OFFICE: KANSAS CITY, MISSOURI
Decades of
Dependability
KANSAS CITY LIFE INSURANCE COMPANY
2008
Annual Report
1924
1904
Major
William Warner
1895 – 1899
J.B. Reynolds
1904 – 1937
1895
1900
1920 1940
H.S. Halbert
1899 – 1904
D.T. Torrens
1937 – 1939
1920s
STOCKHOLDER INFORMATION
CORPORATE HEADQUARTERS
Kansas City Life Insurance Company
3520 Broadway
Post Office Box 219139
Kansas City, MO 64121-9139
Telephone: 816-753-7000
Fax: 816-753-4902
Internet: http://www.kclife.com
E-mail: kclife@kclife.com
NOTICE OF ANNUAL MEETING
The annual meeting of stockholders will be held at 9 a.m. Central Time on Thursday, April 23, 2009,
at Kansas City Life's corporate headquarters.
TRANSFER AGENT
Cheryl Keefer, Assistant Secretary
Kansas City Life Insurance Company
Post Office Box 219139
Kansas City, MO 64121-9139
10-K REQUEST
Stockholders may request a free copy of Kansas City Life's Form 10-K, as filed with the Securities
and Exchange Commission, by writing to Secretary, Kansas City Life Insurance Company.
SECURITY HOLDERS
As of January 31, 2009, Kansas City Life had approximately 2,500 security holders, including
individual participants in security position listings.
1960
1980
2000
STOCK AND DIVIDEND INFORMATION
Stock Quotation Symbol
NASDAQ – KCLI
The following table presents the high and low prices for the Company’s common stock for the periods
indicated and the dividends declared per share during such periods.
High
Low
(Per share)
Dividend
Paid
2008:
First quarter
Second quarter
Third quarter
Fourth quarter
$ 49.15
52.85
57.93
53.93
$ 39.36
41.51
41.16
33.06
2007:
First quarter
Second quarter
Third quarter
Fourth quarter
$ 52.28
47.95
50.79
50.48
$ 44.35
44.61
38.18
40.00
$ 0.27
0.27
0.27
0.27
$ 1.08
$ 2.27
0.27
0.27
0.27
$ 3.08
1937
A quarterly dividend of $0.27 per share was paid February 10, 2009.
NASDAQ market quotations are compiled according to Company records and may reflect inter-dealer
prices, without markup, markdown or commission and may not necessarily represent actual transactions.
Board of Directors – Kansas City Life Insurance Company
Kevin G. Barth
President and Chief Operating Officer
Commerce Bank
Kansas City, Missouri
R. Philip Bixby
President, Chief Executive Officer and
Chairman of the Board
Kansas City Life Insurance Company
Kansas City, Missouri
Walter E. Bixby, LLIF
Vice Chairman of the Board
Kansas City Life Insurance Company
President
Old American Insurance Company
Kansas City, Missouri
William R. Blessing
Retired Senior Vice President,
Corporate Strategy and Development
Embarq
Overland Park, Kansas
Michael Braude
Retired President and Chief Executive Officer
Kansas City Board of Trade
Kansas City, Missouri
Tracy W. Knapp
Senior Vice President, Finance
Kansas City Life Insurance Company
Kansas City, Missouri
John C. Cozad
President
Cozad Company, LLC
Platte City, Missouri
Cecil R. Miller, CPA
Retired Partner
KPMG LLP
Kansas City, Missouri
Richard L. Finn
Retired Senior Vice President, Finance
Kansas City Life Insurance Company
Kansas City, Missouri
Bradford T. Nordholm
Chief Executive Officer
Starwood Energy Group Global, LLC
Greenwich, Connecticut
Nancy Bixby Hudson
Investor
Lander, Wyoming
Daryl D. Jensen, MAAA, FLMI
Vice President of Finance
Western Institutional Review Board
Olympia, Washington
Retired President and Vice Chairman of the Board
Sunset Life Insurance Company of America
Kansas City, Missouri
William A. Schalekamp, JD, CLU, FLMI
Senior Vice President, General Counsel and
Secretary
Kansas City Life Insurance Company
Kansas City, Missouri
E. Larry Winn Jr.
Retired Member of Congress
Kansas, Third Congressional District
Prairie Village, Kansas
1974
W.E. Bixby
1939 – 1964
1980
W.E. “Walt” Bixby
1990 – 1998
Senior Officers
Kansas City Life
Insurance Company
R. Philip Bixby
President, Chief Executive Officer and
Chairman of the Board
1895
1900
Richard D. Ropp, FLMI, ACS
Vice President, Customer Services
Bruce G. Olberding
Vice President, Broker Dealer
President, Sunset Financial Services
Walter E. Bixby, LLIF
Vice Chairman of the Board
Kansas City Life Insurance Company
President
Old American Insurance Company
Charles R. Duffy Jr., FLMI
Senior Vice President, Operations
Tracy W. Knapp
Senior Vice President, Finance
J. Todd Salash
Vice President, Computer
Information Services
Dan L. Schick, CPA, CLU, FLMI
Vice President and Auditor
Jeffrey M. Seeman
Vice President, Group
Donald E. Krebs, MSM, CLU, ChFC
Senior Vice President, Sales and Marketing
Philip A. Williams, CFA
Vice President, Securities
Mark A. Milton, FSA, CERA, MAAA
Senior Vice President and Actuary
William A. Schalekamp, JD, CLU, FLMI
Senior Vice President, General Counsel
and Secretary
Kathleen A. Hunzicker, M.D.
Vice President and Medical Director
David A. Laird, CPA, FLMI
Vice President and Controller
Robert J. Milroy
Vice President, Underwriting and
New Business
John L. Nogalski, CPA, FLMI
Vice President, Taxes
12
Old American
Insurance Company
R. Philip Bixby
Chairman of the Board
Walter E. Bixby, LLIF
President
John C. Alderton
Vice President, Sales
Gary K. Hoffman, JD, CLU, FLMI
Vice President, Associate General
Counsel and Secretary
Tracy W. Knapp
Chief Financial Officer
Robert J. Milroy
Vice President, Underwriting
and New Business
1920
19
1960
1980
2000
Stephen E. Ropp
Vice President, Operation Services
David A. Laird, CPA, FLMI
Vice President and Controller
1950
Richard D. Ropp, FLMI, ACS
Vice President, Customer Services
Sunset Life Insurance
Company of America
R. Philip Bixby
President, Chairman of the Board
Daryl D. Jensen, MAAA, FLMI
Vice Chairman of the Board
Donald E. Krebs, MSM, CLU, ChFC
Vice President, Sales and Marketing
David A. Laird, CPA, FLMI
Vice President and Controller
Robert J. Milroy
Vice President, Insurance Services and
Assistant Secretary
Mark A. Milton, FSA, CERA, MAAA
Vice President and Actuary
Richard D. Ropp, FLMI, ACS
Vice President, Policy Administration
James F. Aldrich, JD, CLU, CPCU, FLMI, HIA
Secretary
J.R. Bixby
1964 – 1990
R. Philip Bixby
1998 – present
Today
Message from
the President
Looking back at 2008, the economic
challenges of the past year were
significant, testing the resiliency of
virtually every company across the
globe. Despite the economic situation,
Kansas City Life Insurance Company
was and remains prepared to provide
quality financial products and services
for generations to come. The Company’s
capital position continues to be strong,
and it maintains a solid, diversified
investment portfolio. In fact, 96% of
the Company’s fixed maturity security
holdings were in investment grade
securities at December 31, 2008, up from
94% in 2007, and approximately one-third
of these investments were in AAA rated
investments. Further, Kansas City Life has
no long-term debt, which contributes to the
Company’s ability to seek opportunities for
growth during these difficult times.
In spite of the long-term focus and
financial strength, Kansas City Life felt
the effect of the economic downturn, as
the Company recorded a net loss of $17.1
million or $1.47 per share for 2008. This
compares to net income of $35.7 million
or $3.01 per share for the prior year. The
decline in earnings was largely the result of
realized losses on investments. Excluding
the impact of realized gains and losses on
investments, net earnings after tax were
$16.9
million,
compared
to $32.1
million a
year ago.
The net
realized
loss was
the result
of the continued deep economic recession.
This impact has been felt across all sectors
and has affected values of virtually all
financial assets. The Company incurred net
realized investment losses after taxes of
$34.0 million, primarily during the last half
of the year due to write-downs of securities
determined to be other-than-temporarily
impaired. The economic downturn has also
affected net investment income through
reduced yields and a lower amount of
invested assets. As a result, net investment
income declined $13.0 million for the year
compared with 2007.
Total insurance revenues increased 2% for
the year, largely due to a 3% increase in
premiums. New premiums increased 20%
for the year, led by a 55% increase in the
sale of immediate annuities and a 37%
increase in group life insurance sales. New
individual life premiums increased 5%,
2
R. Philip Bixby
President, Chief
Executive Officer and
Chairman of the Board
Walter E. Bixby, LLIF
Vice Chairman of the Board,
Kansas City Life Insurance Company
President, Old American Insurance
Company
Charles R. Duffy Jr., FLMI
Senior Vice President,
Operations
Tracy W. Knapp
Senior Vice President,
Finance
Kansas City Life
Insurance Company
Old American Insurance
Company
Sunset Life Insurance
Company of America
Sunset Financial
Services Inc.
Home Office
3520 Broadway
Kansas City, MO 64111
Phone: 816-753-7000
Visit us on the Internet:
www.kclife.com
www.oaic.com
www.sunsetlife.com
www.sunsetfinancial.com
Donald E. Krebs,
MSM, CLU, ChFC
Senior Vice President,
Sales and Marketing
Mark A. Milton,
FSA, CERA, MAAA
Senior Vice President
and Actuary
Senior Officers
William A. Schalekamp,
JD, CLU, FLMI
Senior Vice President, General
Counsel and Secretary
11
Old American
Insurance
Company
Long an industry leader in the final expense market, Old American Insurance Company’s
mission to provide peace of mind to the senior market has helped enhance the quality of life
for policyholders and their beneficiaries for nearly 70 years.
In order to provide this peace of mind, Old American sells products that are designed to cover
necessary costs following a death and also to provide comfort to surviving family members
that money will be available for ongoing living expenses.
The Kansas City Life subsidiary proved once again they would remain an industry leader.
Old American exceeded its 2007 annualized sales by 5%, and unlike prior years during this
decade when sales for most of Old American’s independent general agencies were flat, 37%
of agencies exceeded their 2008 sales projections.
Additionally, the Company’s approach to lead generation is one of the most sophisticated
in the industry and will remain a driving force behind Old American sales. During 2008,
Old American also focused on redefining sales territories for its general agencies in order to
effectively meet the sales needs of the Company.
Thanks to these and other enhancements to products, compensation and distribution
expansion, Old American produced 26% of consolidated insurance revenues in 2008. New
premiums increased by 11% in 2008, following a 5% increase in 2007.
For nearly seven decades, Old American has continued to chart the course while other
competitors have come and gone. The Company’s future objective is to remain on the same
path of growth it has produced the past two years through its nationwide general agency
system with exclusive territories. Undoubtedly, Old American will continue to evaluate
additional ways to increase overall sales and customer retention in order to reach its mission
of delivering peace of mind to the senior market.
10
while group accident and health premiums
increased 9%. However, contract charges
declined 2%, primarily due to lower
balances of certain products. New deposits
declined 1% compared with an 8%
increase a year earlier. This decline largely
occurred in the variable life and annuity
products, where consumers were affected
by the negative performance in the equity
markets. New deposits for variable life
products declined 22% and new variable
annuity deposits declined 13% versus the
prior year. However, deposits related to
universal life were flat relative to 2007
and fixed deferred annuities increased
15%. Renewal premiums declined 1% and
renewal deposits declined 4% versus the
prior year.
Total benefits and expenses increased 4%
in 2008 compared with 2007, primarily due
to a $4.4 million increase in death benefits,
a $1.8 million increase in the amortization
of deferred acquisition costs and value
of business acquired and a $4.5 million
increase in operating expenses. Mortality
experience deteriorated during the year but
remained within pricing expectations. The
amortization of deferred acquisition costs
increased, primarily reflecting a reduction
of variable account balances due to
policyholder withdrawals and a decline in
the market value of these account balances.
Operating expenses increased in 2008,
primarily due to increases in employee
medical plan and benefit costs combined
with a reduction in employee benefit plan
accruals in 2007.
The steep economic downturn has
dramatically changed the landscape
for many individuals and families,
demonstrating the potential impact of
unexpected and unforeseen events.
The mission of Kansas City Life is to
ensure that individuals and families are
prepared and protected against many of
the unpredictable elements of life. Life
insurance and its unique attributes offer
immediate peace of mind, and the power of
its protection has been proven repeatedly
throughout history. In these uncertain
economic times, the Company’s field
force representatives, comprised of general
agents and agents, have been challenged
to help their clients and prospective clients
fully understand just how important
Security Assured can be.
Despite the economic situation, Kansas
City Life is committed and fully prepared
to provide quality financial products and
services to prospective policyholders and
to fulfill its commitment to all of those
who already have come to entrust the
Company to provide for their future needs.
Kansas City Life’s dependability has been
documented and tested throughout the
past 113 years, and it remains committed
to provide Security Assured for future
generations.
R. Philip Bixby
President, Chief Executive Officer and
Chairman of the Board
3
The Kansas City Life Group of Companies
Kansas City Life Insurance Company
Since 1895, Kansas City Life Insurance Company (www.kclife.com) has been
dedicated to the present and future financial security of its customers. With more
than 2,000 general agents and agents serving 48 states and the District of Columbia,
Kansas City Life serves individuals, families, small businesses and corporations with
universal life, term life, whole life, variable life insurance,* variable annuities,* fixed
annuities and a diverse range of group products. The Company and its subsidiaries
provide financial services, including insurance and investments.* Kansas City Life
has been providing Security Assured for more than 113 years.
Old American Insurance Company
Since 1939, the mission of Old American Insurance Company (www.oaic.com)
has been to provide peace of mind to the senior market and, in turn,
enhance the quality of life for policyholders and their beneficiaries. Agents
assist individuals ages 50 – 85 through final arrangements planning,
charitable giving life insurance, and Social Security and retirement income
replacement insurance. The subsidiary operates in 46 states and the District
of Columbia.
Sunset Financial Services Inc.*
Sunset Financial Services (www.sunsetfinancial.com) is a full-service brokerage
firm and registered investment advisor. Sunset Financial Services' registered
representatives are primarily affiliated with Kansas City Life. Investment
options include variable products, mutual funds, stocks and bonds, money
market funds, CDs and asset management products.
Sunset Life Insurance Company of America
Originally founded in 1937 in Olympia, Wash., Sunset Life (www.sunsetlife.com)
provides a competitive portfolio of traditional and interest-sensitive products.
Kansas City Life purchased Sunset Life in 1974 and its operations were
consolidated into the Company’s Home Office in 1999. The Sunset Life
sales force was integrated into the Kansas City Life sales force in 2006.
*Securities are distributed through Sunset Financial Services Inc., 3520 Broadway,
Kansas City, MO 64111, 816-753-7000. Member FINRA and SIPC.
Financial Ratings
A.M. Best: A (Excellent)
The rating represents A.M. Best’s opinion of Kansas City Life’s financial strength and its ability to
meet ongoing obligations to policyholders.
4
Standard and Poor’s: A (Strong)
The financial strength rating represents Standard & Poor’s opinion of the financial security characteristics
of an insurance organization. This opinion is with respect to the organization’s ability to pay under its
insurance policies and contracts, in accordance with their terms.
Today, the Kansas City Life
Home Office is a Kansas City,
Mo., fixture – an enduring
symbol of the Company’s
commitment to provide
Security Assured for another
100 years and beyond.
9
1945
(1945) The
Kansas City Life
Home Office.
(1985) The Home
Office building
committee, shown
in front of the
South Building’s
construction.
1985
Two granite lionesses grace
the entrance to Kansas
City Life’s Home Office,
a lasting symbol of the
Company’s strength and
dependability throughout
more than 113 years.
consumer preferences, resulting from the volatility
in the equity markets.
Kansas City Life intends to grow the Individual
Insurance segment through recruiting quality
general agents and agent representatives, along
with the potential addition of other third-party
marketing relationships.
Group insurance
Kansas City Life Insurance Company’s Group
Insurance segment markets dental, life, short- and
long-term disability, and vision insurance products
primarily to small and mid-size organizations.
Products are primarily sold through Group
Insurance representatives who target a nationwide
network of independent general agents, group
brokers and also through the Company’s career
general agents.
By emphasizing these sales, Group Insurance’s
core distribution set an annualized premium sales
record of $11.5 million in 2008, which followed a
record of more than $10 million in 2007. This is in
addition to Group Insurance products sold through
selective third-party marketing arrangements.
The Group Insurance segment generated 21%
of the Company’s customer revenues in 2008,
an increase from 20% in 2007. Contributing to
the higher customer revenues, new group dental
premiums increased 32% in 2008. However,
policyholder benefits for Kansas City Life’s
group product line increased $2.9 million or 10%
in 2008, largely because of an increase in group
dental benefits paid.
For 2009 and beyond, the Group Insurance
operation continues to focus on three key areas
of opportunity:
1. Grow in-force premiums, both through
Kansas City Life’s group representative
sales force as well as selective third-party
marketing arrangements.
2. Reduce expense ratios through deployment of
new technologies that improve administrative
efficiency.
3. Enhance the product portfolio with new
product offerings and more flexible options.
Sunset Financial
Services Inc.
Kansas City Life Insurance Company’s in-house
broker dealer facilitates the purchase, sale and
management of securities such as variable universal
life and variable annuity products. Through this
effective alliance, Sunset Financial Services gives
registered representatives the flexibility to market a
full range of fixed and variable products through a
single relationship.
In the face of unprecedented 2008 market
performance both in domestic and foreign markets,
Sunset Financial Services’ gross revenue decreased
9% for the year. This compares with a 17% increase
from 2007. Looking ahead to 2009 and beyond,
Sunset Financial Services will continue working with
Kansas City Life to help recruit and retain quality
agencies and producers.
8
5
1940s
1953
Kansas City Life has evolved throughout the decades, but its promise to provide
Security Assured remains timeless. (1940s) Kansas City Life advertised on
roadside billboards during the 1940s. (1953) The Great Depression and wars of
the time period tested the Company’s resolve. Pictured are Air Force 1st Lieutenant
Walt Bixby’s cap and dog tags from 1953, and a war-service policy issued by the Company.
Corporate Highlights
SaleS and Marketing MeSSage
Throughout the course of 2008, Kansas City Life
Insurance Company stood tall in the path of one
of our nation’s most trying economic periods.
Despite the struggles endured by many, the
Company continued to provide policyholders with
the same quality and services they have come to
expect from a Company dedicated to providing
Security Assured for more than 113 years.
It is our commitment to sound business practices,
integrity and ethics that have forged this
Company into what it is today. These notions are
the cornerstone of our business philosophy as we
seek to maintain consistent, long-term profitable
growth. Leading our efforts for growth is Donald
E. Krebs, MSM, CLU, ChFC, Senior Vice
President, Sales and Marketing, who continues
to focus on building strong partnerships with
our field force, while also establishing new
partnerships through recruiting.
One of the Company’s unrelenting goals is to
continually strengthen the relationships it creates
with members of the field force, comprised
of dedicated general agents and agents who
sell Kansas City Life’s products. During 2008,
resources were redirected to provide additional
one-on-one support for the field force. A Home
Office team of specialized individuals, whose
primary responsibility is to be in the field and
in the agencies on a regular basis, was created.
While other companies continue to eliminate
such premier services, Kansas City Life believes
these are key components within its relationship-
based value proposition. It is this value
proposition that distinguishes the Company from
all others in the industry.
Recruiting talented and committed field force
members is a must in order to strengthen and grow
the Company. But Kansas City Life is not looking
for just anyone. Standards are implemented to find
professionals whose business philosophy mirrors
Kansas City Life’s – a philosophy founded on
honesty, integrity and sound business practices
that has stood the test of time.
Twenty-two new general agents from across the
nation joined our team in 2008. These newest
additions will represent Kansas City Life with
the utmost dignity, while providing solid sales
production. Looking forward, it is imperative to
recruit individuals who strongly believe in the
Company’s core values.
To help established and new field force members
remain competitive, Kansas City Life streamlined
and enhanced its product portfolio in 2008.
The modifications afford the Company with
an opportunity to provide a more competitive
product portfolio to our valued field force.
Ultimately, Kansas City Life will continue to
monitor the marketplace to ensure its products
remain competitive, innovative and profitable.
These product changes along with the redirection
of our training resources and our continued
recruiting efforts, will further strengthen our
6
continued commitment to growth. While
the Company recognizes the impact of the
economic crisis, it still believes this is an
excellent opportunity to help people discover
the unequaled power of life insurance. With the
enhancements implemented in 2008, Kansas City
Life’s general agents and agents have eagerly
accepted this challenge.
Kansas City Life is in business to ensure
individuals and families are prepared for the
unpredictable elements of life, and strongly
believes in the immediate, life-long peace of
mind life insurance can provide. The Company
is committed to providing financial security to
policyholders for generations to come. Kansas
City Life will always uphold its commitment to
provide premium services and continue its 113-
year tradition of bringing value to shareholders.
individual insurance
Kansas City Life Insurance Company remains
committed to its Individual Insurance segment with
a primary focus on the distribution of life insurance
products through the Company’s field force.
The Company’s life insurance products are
marketed through independent general agents
and agents who sell face-to-face to their
clients. The Company’s objective is to deliver
competitive products at a reasonable cost,
quality customer service, excellent financial
strength, and superior sales and marketing
support to the field force.
In addition, representatives of American
Republic Insurance Company have offered
the Company’s life insurance products to their
clients since 2006. The Company’s life insurance
products are also available through the agents
of GuideOne Insurance Company. The ability
to offer Kansas City Life products allows these
representatives to provide for the life insurance
needs of their clients, complementing the types
of insurance products provided by American
Republic and GuideOne. Representatives
from both companies are expected to continue
contributing to the Company’s growth in new
life insurance sales.
The Individual Insurance segment generated
approximately 53% of consolidated customer
revenues in 2008. Total new premiums increased
31% from $13.9 million in 2007 to $18.2 million
in 2008, and new individual life premiums
decreased 2% from 2007. New immediate
annuity premiums increased from $8.1 million
in 2007 to $12.6 million in 2008, while total
renewal premiums increased 1% in 2008.
New universal life deposits were flat in 2008
compared with 2007. New variable universal
life deposits decreased 22%, following a
5% increase in 2007. New variable annuity
deposits also declined 13%. These declines
reflect the difficult economic environment,
increased competition, and the continued impact
of alternative products in the marketplace.
However, new fixed deferred annuity deposits
increased $4.1 million or 15% in 2008. This
increase can largely be attributed to changes in
1957
(1957) The Company expands
its Home Office in 1957. (1962)
President W.E. Bixby celebrates
his birthday at the Home Office
with a large birthday cake
containing thousands of candles,
each representing an insurance
application filed the month of
his birthday.
1962
7
1940s
1953
Kansas City Life has evolved throughout the decades, but its promise to provide
Security Assured remains timeless. (1940s) Kansas City Life advertised on
roadside billboards during the 1940s. (1953) The Great Depression and wars of
the time period tested the Company’s resolve. Pictured are Air Force 1st Lieutenant
Walt Bixby’s cap and dog tags from 1953, and a war-service policy issued by the Company.
Corporate Highlights
SaleS and Marketing MeSSage
Throughout the course of 2008, Kansas City Life
Insurance Company stood tall in the path of one
of our nation’s most trying economic periods.
Despite the struggles endured by many, the
Company continued to provide policyholders with
the same quality and services they have come to
expect from a Company dedicated to providing
Security Assured for more than 113 years.
It is our commitment to sound business practices,
integrity and ethics that have forged this
Company into what it is today. These notions are
the cornerstone of our business philosophy as we
seek to maintain consistent, long-term profitable
growth. Leading our efforts for growth is Donald
E. Krebs, MSM, CLU, ChFC, Senior Vice
President, Sales and Marketing, who continues
to focus on building strong partnerships with
our field force, while also establishing new
partnerships through recruiting.
One of the Company’s unrelenting goals is to
continually strengthen the relationships it creates
with members of the field force, comprised
of dedicated general agents and agents who
sell Kansas City Life’s products. During 2008,
resources were redirected to provide additional
one-on-one support for the field force. A Home
Office team of specialized individuals, whose
primary responsibility is to be in the field and
in the agencies on a regular basis, was created.
While other companies continue to eliminate
such premier services, Kansas City Life believes
these are key components within its relationship-
based value proposition. It is this value
proposition that distinguishes the Company from
all others in the industry.
Recruiting talented and committed field force
members is a must in order to strengthen and grow
the Company. But Kansas City Life is not looking
for just anyone. Standards are implemented to find
professionals whose business philosophy mirrors
Kansas City Life’s – a philosophy founded on
honesty, integrity and sound business practices
that has stood the test of time.
Twenty-two new general agents from across the
nation joined our team in 2008. These newest
additions will represent Kansas City Life with
the utmost dignity, while providing solid sales
production. Looking forward, it is imperative to
recruit individuals who strongly believe in the
Company’s core values.
To help established and new field force members
remain competitive, Kansas City Life streamlined
and enhanced its product portfolio in 2008.
The modifications afford the Company with
an opportunity to provide a more competitive
product portfolio to our valued field force.
Ultimately, Kansas City Life will continue to
monitor the marketplace to ensure its products
remain competitive, innovative and profitable.
These product changes along with the redirection
of our training resources and our continued
recruiting efforts, will further strengthen our
6
continued commitment to growth. While
the Company recognizes the impact of the
economic crisis, it still believes this is an
excellent opportunity to help people discover
the unequaled power of life insurance. With the
enhancements implemented in 2008, Kansas City
Life’s general agents and agents have eagerly
accepted this challenge.
Kansas City Life is in business to ensure
individuals and families are prepared for the
unpredictable elements of life, and strongly
believes in the immediate, life-long peace of
mind life insurance can provide. The Company
is committed to providing financial security to
policyholders for generations to come. Kansas
City Life will always uphold its commitment to
provide premium services and continue its 113-
year tradition of bringing value to shareholders.
individual insurance
Kansas City Life Insurance Company remains
committed to its Individual Insurance segment with
a primary focus on the distribution of life insurance
products through the Company’s field force.
The Company’s life insurance products are
marketed through independent general agents
and agents who sell face-to-face to their
clients. The Company’s objective is to deliver
competitive products at a reasonable cost,
quality customer service, excellent financial
strength, and superior sales and marketing
support to the field force.
In addition, representatives of American
Republic Insurance Company have offered
the Company’s life insurance products to their
clients since 2006. The Company’s life insurance
products are also available through the agents
of GuideOne Insurance Company. The ability
to offer Kansas City Life products allows these
representatives to provide for the life insurance
needs of their clients, complementing the types
of insurance products provided by American
Republic and GuideOne. Representatives
from both companies are expected to continue
contributing to the Company’s growth in new
life insurance sales.
The Individual Insurance segment generated
approximately 53% of consolidated customer
revenues in 2008. Total new premiums increased
31% from $13.9 million in 2007 to $18.2 million
in 2008, and new individual life premiums
decreased 2% from 2007. New immediate
annuity premiums increased from $8.1 million
in 2007 to $12.6 million in 2008, while total
renewal premiums increased 1% in 2008.
New universal life deposits were flat in 2008
compared with 2007. New variable universal
life deposits decreased 22%, following a
5% increase in 2007. New variable annuity
deposits also declined 13%. These declines
reflect the difficult economic environment,
increased competition, and the continued impact
of alternative products in the marketplace.
However, new fixed deferred annuity deposits
increased $4.1 million or 15% in 2008. This
increase can largely be attributed to changes in
1957
(1957) The Company expands
its Home Office in 1957. (1962)
President W.E. Bixby celebrates
his birthday at the Home Office
with a large birthday cake
containing thousands of candles,
each representing an insurance
application filed the month of
his birthday.
1962
7
1945
(1945) The
Kansas City Life
Home Office.
(1985) The Home
Office building
committee, shown
in front of the
South Building’s
construction.
1985
Two granite lionesses grace
the entrance to Kansas
City Life’s Home Office,
a lasting symbol of the
Company’s strength and
dependability throughout
more than 113 years.
consumer preferences, resulting from the volatility
in the equity markets.
Kansas City Life intends to grow the Individual
Insurance segment through recruiting quality
general agents and agent representatives, along
with the potential addition of other third-party
marketing relationships.
Group insurance
Kansas City Life Insurance Company’s Group
Insurance segment markets dental, life, short- and
long-term disability, and vision insurance products
primarily to small and mid-size organizations.
Products are primarily sold through Group
Insurance representatives who target a nationwide
network of independent general agents, group
brokers and also through the Company’s career
general agents.
By emphasizing these sales, Group Insurance’s
core distribution set an annualized premium sales
record of $11.5 million in 2008, which followed a
record of more than $10 million in 2007. This is in
addition to Group Insurance products sold through
selective third-party marketing arrangements.
The Group Insurance segment generated 21%
of the Company’s customer revenues in 2008,
an increase from 20% in 2007. Contributing to
the higher customer revenues, new group dental
premiums increased 32% in 2008. However,
policyholder benefits for Kansas City Life’s
group product line increased $2.9 million or 10%
in 2008, largely because of an increase in group
dental benefits paid.
For 2009 and beyond, the Group Insurance
operation continues to focus on three key areas
of opportunity:
1. Grow in-force premiums, both through
Kansas City Life’s group representative
sales force as well as selective third-party
marketing arrangements.
2. Reduce expense ratios through deployment of
new technologies that improve administrative
efficiency.
3. Enhance the product portfolio with new
product offerings and more flexible options.
Sunset Financial
Services Inc.
Kansas City Life Insurance Company’s in-house
broker dealer facilitates the purchase, sale and
management of securities such as variable universal
life and variable annuity products. Through this
effective alliance, Sunset Financial Services gives
registered representatives the flexibility to market a
full range of fixed and variable products through a
single relationship.
In the face of unprecedented 2008 market
performance both in domestic and foreign markets,
Sunset Financial Services’ gross revenue decreased
9% for the year. This compares with a 17% increase
from 2007. Looking ahead to 2009 and beyond,
Sunset Financial Services will continue working with
Kansas City Life to help recruit and retain quality
agencies and producers.
8
5
The Kansas City Life Group of Companies
Kansas City Life Insurance Company
Since 1895, Kansas City Life Insurance Company (www.kclife.com) has been
dedicated to the present and future financial security of its customers. With more
than 2,000 general agents and agents serving 48 states and the District of Columbia,
Kansas City Life serves individuals, families, small businesses and corporations with
universal life, term life, whole life, variable life insurance,* variable annuities,* fixed
annuities and a diverse range of group products. The Company and its subsidiaries
provide financial services, including insurance and investments.* Kansas City Life
has been providing Security Assured for more than 113 years.
Old American Insurance Company
Since 1939, the mission of Old American Insurance Company (www.oaic.com)
has been to provide peace of mind to the senior market and, in turn,
enhance the quality of life for policyholders and their beneficiaries. Agents
assist individuals ages 50 – 85 through final arrangements planning,
charitable giving life insurance, and Social Security and retirement income
replacement insurance. The subsidiary operates in 46 states and the District
of Columbia.
Sunset Financial Services Inc.*
Sunset Financial Services (www.sunsetfinancial.com) is a full-service brokerage
firm and registered investment advisor. Sunset Financial Services' registered
representatives are primarily affiliated with Kansas City Life. Investment
options include variable products, mutual funds, stocks and bonds, money
market funds, CDs and asset management products.
Sunset Life Insurance Company of America
Originally founded in 1973 in Olympia, Wash., Sunset Life (www.sunsetlife.com)
provides a competitive portfolio of traditional and interest-sensitive products.
Kansas City Life purchased Sunset Life in 1974 and its operations were
consolidated into the Company’s Home Office in 1999. The Sunset Life
sales force was integrated into the Kansas City Life sales force in 2006.
*Securities are distributed through Sunset Financial Services Inc., 3520 Broadway,
Kansas City, MO 64111, 816-753-7000. Member FINRA and SIPC.
Financial Ratings
A.M. Best: A (Excellent)
The rating represents A.M. Best’s opinion of Kansas City Life’s financial strength and its ability to
meet ongoing obligations to policyholders.
4
Standard and Poor’s: A (Strong)
The financial strength rating represents Standard & Poor’s opinion of the financial security characteristics
of an insurance organization. This opinion is with respect to the organization’s ability to pay under its
insurance policies and contracts, in accordance with their terms.
Today, the Kansas City Life
Home Office is a Kansas City,
Mo., fixture – an enduring
symbol of the Company’s
commitment to provide
Security Assured for another
100 years and beyond.
9
Old American
Insurance
Company
Long an industry leader in the final expense market, Old American Insurance Company’s
mission to provide peace of mind to the senior market has helped enhance the quality of life
for policyholders and their beneficiaries for nearly 70 years.
In order to provide this peace of mind, Old American sells products that are designed to cover
necessary costs following a death and also to provide comfort to surviving family members
that money will be available for ongoing living expenses.
The Kansas City Life subsidiary proved once again they would remain an industry leader.
Old American exceeded its 2007 annualized sales by 5%, and unlike prior years during this
decade when sales for most of Old American’s independent general agencies were flat, 37%
of agencies exceeded their 2008 sales projections.
Additionally, the Company’s approach to lead generation is one of the most sophisticated
in the industry and will remain a driving force behind Old American sales. During 2008,
Old American also focused on redefining sales territories for its general agencies in order to
effectively meet the sales needs of the Company.
Thanks to these and other enhancements to products, compensation and distribution
expansion, Old American produced 26% of consolidated insurance revenues in 2008. New
premiums increased by 11% in 2008, following a 5% increase in 2007.
For nearly seven decades, Old American has continued to chart the course while other
competitors have come and gone. The Company’s future objective is to remain on the same
path of growth it has produced the past two years through its nationwide general agency
system with exclusive territories. Undoubtedly, Old American will continue to evaluate
additional ways to increase overall sales and customer retention in order to reach its mission
of delivering peace of mind to the senior market.
10
while group accident and health premiums
increased 9%. However, contract charges
declined 2%, primarily due to lower
balances of certain products. New deposits
declined 1% compared with an 8%
increase a year earlier. This decline largely
occurred in the variable life and annuity
products, where consumers were affected
by the negative performance in the equity
markets. New deposits for variable life
products declined 22% and new variable
annuity deposits declined 13% versus the
prior year. However, deposits related to
universal life were flat relative to 2007
and fixed deferred annuities increased
15%. Renewal premiums declined 1% and
renewal deposits declined 4% versus the
prior year.
Total benefits and expenses increased 4%
in 2008 compared with 2007, primarily due
to a $4.4 million increase in death benefits,
a $1.8 million increase in the amortization
of deferred acquisition costs and value
of business acquired and a $4.5 million
increase in operating expenses. Mortality
experience deteriorated during the year but
remained within pricing expectations. The
amortization of deferred acquisition costs
increased, primarily reflecting a reduction
of variable account balances due to
policyholder withdrawals and a decline in
the market value of these account balances.
Operating expenses increased in 2008,
primarily due to increases in employee
medical plan and benefit costs combined
with a reduction in employee benefit plan
accruals in 2007.
The steep economic downturn has
dramatically changed the landscape
for many individuals and families,
demonstrating the potential impact of
unexpected and unforeseen events.
The mission of Kansas City Life is to
ensure that individuals and families are
prepared and protected against many of
the unpredictable elements of life. Life
insurance and its unique attributes offer
immediate peace of mind, and the power of
its protection has been proven repeatedly
throughout history. In these uncertain
economic times, the Company’s field
force representatives, comprised of general
agents and agents, have been challenged
to help their clients and prospective clients
fully understand just how important
Security Assured can be.
Despite the economic situation, Kansas
City Life is committed and fully prepared
to provide quality financial products and
services to prospective policyholders and
to fulfill its commitment to all of those
who already have come to entrust the
Company to provide for their future needs.
Kansas City Life’s dependability has been
documented and tested throughout the
past 113 years, and it remains committed
to provide Security Assured for future
generations.
R. Philip Bixby
President, Chief Executive Officer and
Chairman of the Board
3
Message from
the President
Looking back at 2008, the economic
challenges of the past year were
significant, testing the resiliency of
virtually every company across the
globe. Despite the economic situation,
Kansas City Life Insurance Company
was and remains prepared to provide
quality financial products and services
for generations to come. The Company’s
capital position continues to be strong,
and it maintains a solid, diversified
investment portfolio. In fact, 96% of
the Company’s fixed maturity security
holdings were in investment grade
securities at December 31, 2008, up from
94% in 2007, and approximately one-third
of these investments were in AAA rated
investments. Further, Kansas City Life has
no long-term debt, which contributes to the
Company’s ability to seek opportunities for
growth during these difficult times.
In spite of the long-term focus and
financial strength, Kansas City Life felt
the effect of the economic downturn, as
the Company recorded a net loss of $17.1
million or $1.47 per share for 2008. This
compares to net income of $35.7 million
or $3.01 per share for the prior year. The
decline in earnings was largely the result of
realized losses on investments. Excluding
the impact of realized gains and losses on
investments, net earnings after tax were
$16.9
million,
compared
to $32.1
million a
year ago.
The net
realized
loss was
the result
of the continued deep economic recession.
This impact has been felt across all sectors
and has affected values of virtually all
financial assets. The Company incurred net
realized investment losses after taxes of
$34.0 million, primarily during the last half
of the year due to write-downs of securities
determined to be other-than-temporarily
impaired. The economic downturn has also
affected net investment income through
reduced yields and a lower amount of
invested assets. As a result, net investment
income declined $13.0 million for the year
compared with 2007.
Total insurance revenues increased 2% for
the year, largely due to a 3% increase in
premiums. New premiums increased 20%
for the year, led by a 55% increase in the
sale of immediate annuities and a 37%
increase in group life insurance sales. New
individual life premiums increased 5%,
2
R. Philip Bixby
President, Chief
Executive Officer and
Chairman of the Board
Walter E. Bixby, LLIF
Vice Chairman of the Board,
Kansas City Life Insurance Company
President, Old American Insurance
Company
Charles R. Duffy Jr., FLMI
Senior Vice President,
Operations
Tracy W. Knapp
Senior Vice President,
Finance
Kansas City Life
Insurance Company
Old American Insurance
Company
Sunset Life Insurance
Company of America
Sunset Financial
Services Inc.
Home Office
3520 Broadway
Kansas City, MO 64111
Phone: 816-753-7000
Visit us on the Internet:
www.kclife.com
www.oaic.com
www.sunsetlife.com
www.sunsetfinancial.com
Donald E. Krebs,
MSM, CLU, ChFC
Senior Vice President,
Sales and Marketing
Mark A. Milton,
FSA, CERA, MAAA
Senior Vice President
and Actuary
Senior Officers
William A. Schalekamp,
JD, CLU, FLMI
Senior Vice President, General
Counsel and Secretary
11
Board of Directors – Kansas City Life Insurance Company
Kevin G. Barth
President and Chief Operating Officer
Commerce Bank
Kansas City, Missouri
R. Philip Bixby
President, Chief Executive Officer and
Chairman of the Board
Kansas City Life Insurance Company
Kansas City, Missouri
Walter E. Bixby, LLIF
Vice Chairman of the Board
Kansas City Life Insurance Company
President
Old American Insurance Company
Kansas City, Missouri
William R. Blessing
Retired Senior Vice President,
Corporate Strategy and Development
Embarq
Overland Park, Kansas
Michael Braude
Retired President and Chief Executive Officer
Kansas City Board of Trade
Kansas City, Missouri
Tracy W. Knapp
Senior Vice President, Finance
Kansas City Life Insurance Company
Kansas City, Missouri
John C. Cozad
President
Cozad Company, LLC
Platte City, Missouri
Cecil R. Miller, CPA
Retired Partner
KPMG LLP
Kansas City, Missouri
Richard L. Finn
Retired Senior Vice President, Finance
Kansas City Life Insurance Company
Kansas City, Missouri
Bradford T. Nordholm
Chief Executive Officer
Starwood Energy Group Global, LLC
Greenwich, Connecticut
Nancy Bixby Hudson
Investor
Lander, Wyoming
Daryl D. Jensen, MAAA, FLMI
Vice President of Finance
Western Institutional Review Board
Olympia, Washington
Retired President and Vice Chairman of the Board
Sunset Life Insurance Company of America
Kansas City, Missouri
William A. Schalekamp, JD, CLU, FLMI
Senior Vice President, General Counsel and
Secretary
Kansas City Life Insurance Company
Kansas City, Missouri
E. Larry Winn Jr.
Retired Member of Congress
Kansas, Third Congressional District
Prairie Village, Kansas
1974
W.E. Bixby
1939 – 1964
1980
W.E. “Walt” Bixby
1990 – 1998
Senior Officers
Kansas City Life
Insurance Company
R. Philip Bixby
President, Chief Executive Officer and
Chairman of the Board
1895
1900
Richard D. Ropp, FLMI, ACS
Vice President, Customer Services
Bruce G. Olberding
Vice President, Broker Dealer
President, Sunset Financial Services
Walter E. Bixby, LLIF
Vice Chairman of the Board
Kansas City Life Insurance Company
President
Old American Insurance Company
Charles R. Duffy Jr., FLMI
Senior Vice President, Operations
Tracy W. Knapp
Senior Vice President, Finance
J. Todd Salash
Vice President, Computer
Information Services
Dan L. Schick, CPA, CLU, FLMI
Vice President and Auditor
Jeffrey M. Seeman
Vice President, Group
Donald E. Krebs, MSM, CLU, ChFC
Senior Vice President, Sales and Marketing
Philip A. Williams, CFA
Vice President, Securities
Mark A. Milton, FSA, CERA, MAAA
Senior Vice President and Actuary
William A. Schalekamp, JD, CLU, FLMI
Senior Vice President, General Counsel
and Secretary
Kathleen A. Hunzicker, M.D.
Vice President and Medical Director
David A. Laird, CPA, FLMI
Vice President and Controller
Robert J. Milroy
Vice President, Underwriting and
New Business
John L. Nogalski, CPA, FLMI
Vice President, Taxes
12
Old American
Insurance Company
R. Philip Bixby
Chairman of the Board
Walter E. Bixby, LLIF
President
John C. Alderton
Vice President, Sales
Gary K. Hoffman, JD, CLU, FLMI
Vice President, Associate General
Counsel and Secretary
Tracy W. Knapp
Chief Financial Officer
Robert J. Milroy
Vice President, Underwriting
and New Business
1920
19
1960
1980
2000
Stephen E. Ropp
Vice President, Operation Services
David A. Laird, CPA, FLMI
Vice President and Controller
1950
Richard D. Ropp, FLMI, ACS
Vice President, Customer Services
Sunset Life Insurance
Company of America
R. Philip Bixby
President, Chairman of the Board
Daryl D. Jensen, MAAA, FLMI
Vice Chairman of the Board
Donald E. Krebs, MSM, CLU, ChFC
Vice President, Sales and Marketing
David A. Laird, CPA, FLMI
Vice President and Controller
Robert J. Milroy
Vice President, Insurance Services and
Assistant Secretary
Mark A. Milton, FSA, CERA, MAAA
Vice President and Actuary
Richard D. Ropp, FLMI, ACS
Vice President, Policy Administration
James F. Aldrich, JD, CLU, CPCU, FLMI, HIA
Secretary
J.R. Bixby
1964 – 1990
R. Philip Bixby
1998 – present
Today
1924
1904
Major
William Warner
1895 – 1899
J.B. Reynolds
1904 – 1937
1895
1900
1920 1940
H.S. Halbert
1899 – 1904
D.T. Torrens
1937 – 1939
1920s
STOCKHOLDER INFORMATION
CORPORATE HEADQUARTERS
Kansas City Life Insurance Company
3520 Broadway
Post Office Box 219139
Kansas City, MO 64121-9139
Telephone: 816-753-7000
Fax: 816-753-4902
Internet: http://www.kclife.com
E-mail: kclife@kclife.com
NOTICE OF ANNUAL MEETING
The annual meeting of stockholders will be held at 9 a.m. Central Time on Thursday, April 23, 2009,
at Kansas City Life's corporate headquarters.
TRANSFER AGENT
Cheryl Keefer, Assistant Secretary
Kansas City Life Insurance Company
Post Office Box 219139
Kansas City, MO 64121-9139
10-K REQUEST
Stockholders may request a free copy of Kansas City Life's Form 10-K, as filed with the Securities
and Exchange Commission, by writing to Secretary, Kansas City Life Insurance Company.
SECURITY HOLDERS
As of January 31, 2009, Kansas City Life had approximately 2,500 security holders, including
individual participants in security position listings.
1960
1980
2000
STOCK AND DIVIDEND INFORMATION
Stock Quotation Symbol
NASDAQ – KCLI
The following table presents the high and low prices for the Company’s common stock for the periods
indicated and the dividends declared per share during such periods.
High
Low
(Per share)
Dividend
Paid
2008:
First quarter
Second quarter
Third quarter
Fourth quarter
$ 49.15
52.85
57.93
53.93
$ 39.36
41.51
41.16
33.06
2007:
First quarter
Second quarter
Third quarter
Fourth quarter
$ 52.28
47.95
50.79
50.48
$ 44.35
44.61
38.18
40.00
$ 0.27
0.27
0.27
0.27
$ 1.08
$ 2.27
0.27
0.27
0.27
$ 3.08
1937
A quarterly dividend of $0.27 per share was paid February 10, 2009.
NASDAQ market quotations are compiled according to Company records and may reflect inter-dealer
prices, without markup, markdown or commission and may not necessarily represent actual transactions.
KANSAS CITY LIFE INSURANCE COMPANY
HOME OFFICE: KANSAS CITY, MISSOURI
Decades of
Dependability
KANSAS CITY LIFE INSURANCE COMPANY
2008
Annual Report