Kansas City Life Insurance Co.
Annual Report 2014

Plain-text annual report

THE Lioness Protecting Her own ... 2 0 14 Annual Report THEProtecting Her ownMessage From The President My fellow shareholders, It is my pleasure to share with you the Company’s 2014 results. The year was marked with several notable achievements. The Company recorded solid earnings, improved an already strong financial position and completed some important steps to improve our efficiency and profitability. The Company completed the conversion of the American Family Life Insurance Company block of business to the Home Office systems and processes during the first quarter of the year. This enabled the Company to reduce costs and gain efficiency. In the second half of the year, the Company reached an agreement for the sale of certain assets associated with the Company’s broker/dealer, Sunset Financial Services. This new relationship with Securities America, Inc. provides enhanced support to our policyholders and agents, while allowing the Company to remain focused on the sale and administration of our core products. The Company completed the sale in the fourth quarter, resulting in Sunset Financial Services recognizing a gain on the transaction and being better positioned to operate more efficiently in the future. Net earnings in 2014 totaled $30.0 million, similar to last year, as reduced operating expenses and policyholder benefits were partially offset by lower net investment income and premiums. Life insurance premiums and contract charges increased in 2014, resulting from improved sales and the full-year impact of the American Family transaction. As a result, total assets increased to $4.6 billion and stockholders’ equity reached $743 million at year-end. The prolonged low-interest rate environment continues to provide many challenges to all financial institutions, as well as consumers. To meet the changing needs of policyholders, the Company continually enhances a wide spectrum of products. The Company’s suite of universal life, variable life, whole life, return of premium and term insurance products offers consumers many options for today’s environment, as well as the ability to adjust to future changes in the marketplace. The Company remains focused on what we do best, which is helping agents serve their clients by providing valuable life insurance protection solutions for families and loved ones. We have thrived by tailoring these solutions to the evolving needs of the American population, including the growing senior market, which is the focus of Old American Insurance Company. In addition, the Company features group life, group disability and group dental products for its targeted market of small employers, primarily serving companies between two and 500 employees. The year 2015 will mark our 120th year of service and commitment. Throughout our long and venerable history, we have successfully navigated through many periods of economic turbulence and change, and we believe our future is as bright as our past. Our experience allows us to remain focused to provide value for the benefit of our policyholders and shareholders both today and in the future. We remain continually aware that there are many options available to agents and policyholders, and the trust that they afford us by selecting one of our many products must be earned and continually renewed. Our faithful commitment to providing Security Assured is our promise and the cornerstone in all that we do. — R. Philip Bixby President, Chief Executive Officer and Chairman of the Board 1 T h e 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 our customers. Kansas City Life provides financial services, including life insurance and investments*, to consumers throughout 48 states and the District of Columbia. More than 2,500 general agents and agents serve individuals, families, small businesses and corporations with a diverse range of products including universal life, term life, whole life, variable life insurance,* variable annuities,* fixed deferred annuities and group products. Kansas City Life has been providing Security Assured for more than 119 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 our market and, in turn, enhance the quality of life for policyholders and their beneficiaries. Agents assist individuals ages 50 to 85 through final arrangements planning, charitable giving life insurance, Social Security and retirement income replacement insurance. In addition, Old American began targeting individuals ages 20 to 65 in 2009 with our Level Term 20 life insurance product. The subsidiary operates in 47 states and the District of Columbia. Sunset Financial Services Inc.* Sunset Financial Services Inc. is the distributing broker/dealer for Kansas City Life’s line of variable annuity and variable universal life products. Sunset Life Insurance Company of America Sunset Life Insurance Company of America (www.sunsetlife.com) was originally founded in 1937. 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. Financial Ratings, evaluated by A.M. Best Kansas City Life Insurance Company: A (Excellent; Stable Outlook) Old American Insurance Company: A- (Excellent; Stable Outlook) Sunset Life Insurance Company: A- (Excellent; Stable Outlook) These ratings represent A.M. Best’s opinion of the financial strength and stability of Kansas City Life, Old American and Sunset Life Insurance Companies and each company’s ability to meet ongoing obligations to policyholders, as of June 2014. There are 16 financial strength ratings offered by A.M. Best, ranging from A++ (Superior) to F (In Liquidation). Please refer to the Company’s Form 10-K and Proxy Statement as filed with the Securities and Exchange Commission (SEC). *Kansas City Life’s variable product series is distributed through Sunset Financial Services Inc. Member FINRA and SIPC. 2 Honor and respect – One of a pair of lionesses gracing the front of Kansas City Life Insurance Company’s Home Office building. The north lioness was featured on the cover of The Kansas City Star January 25, 1965, when the Kansas City Life flag was at half-mast in honor of Sir Winston Churchill’s passing. 3 T h e Lionesses Two grand lionesses, carved in granite, sit on pedestals atop a flight of stone of Kansas City Life steps, one on either side, and are the outstanding feature of the approach to Kansas City Life Insurance Company’s Home Office building in Kansas City, Mo. These majestic figures guard the front steps and were chosen by the Company’s forefathers to grace the building’s entrance for their symbolic as well as decorative value. The lioness image, also represented in Kansas City Life’s logo, is symbolic of maternal strength, stability and protection – the lioness protecting her own. The two granite lioness statues help reinforce that message and serve as lasting reminders of the Company’s dependability and financial strength. 4 A Kansas City Life symbol – Kansas City Life’s logo throughout the years has featured the lioness image to promote maternal strength, stability and protection. Statues of protection Sculptor Jorgen C. Dreyer, who modeled the dignified lioness statues in the early 1920s, spent a significant amount of time observing the lionesses at the Swope Park Zoo (now the Kansas City Zoo, Kansas City, Mo.). He studied the lines of their bodies and their various postures and movements. The figure of the lioness, he pointed out, possesses a softer roundness than that of the male, and the fore part of the body is not concealed by a heavy mane. At the Swope Park Zoo Dreyer discovered an exceptionally beautiful model in the lioness Lizzie, which according to the sculptor, is one of the most perfect specimens he had found. “The caged beast,” Dreyer observed one day, “is nearly an ideal model. Always it is natural. Usually it is in movement at certain times of the day, and the best understanding of its body can be obtained when it is in action.” He worked on his model for the lionesses throughout hot weather, standing in buckets of cold water in his back yard to keep cool. First a study was modeled in wax, one-quarter size, from which a full-sized clay model was made. The clay model was used to form a plaster mound and cast, which served as the final model for the carving. When Dreyer had finished, the model was sent to a granite quarry in Cold Springs, Minn. There, stone carvers worked with two huge blocks of granite, each weighing 9 tons, to create the creatures from Dreyer’s model. He supervised the completion of this work and finished the carving. When a flaw was discovered in his cast, one of the two lionesses had to be re-cast three times. The granite lioness statues are 10 feet 6 inches long, 4 feet 10 inches high, weigh 6 tons and cost $4,000 in 1925. Carved in pink, black and white granite, they are remarkable creatures with their heavy paws, rounded faces and large Symbol of protection – The lioness image in Kansas City Life’s logo serves as a lasting reminder of the Company’s dependability and financial strength. 5 bellies. Though they are at rest, there is also a watchfulness and protectiveness about them that makes them appropriate symbols for a life insurance company. The pride of Kansas City Life The word “pride” is defined as a feeling of happiness you get when you or someone you know does something good or difficult. It also represents a company of lions that are dedicated and loyal to one another. It is no wonder that the word pride has significant meaning for Kansas City Life Insurance Company. From the moment you first come in contact with our 119-year-old Company, you will realize we highly regard the promise of life insurance and financial products. Kansas City Life remains dedicated to our shareholders, our policyholders, our field force and our associates. Kansas City Life has not altered that promise of providing Security Assured since our inception in 1895. We have assisted policyholders through world wars, the Great Depression and various periods of recession and inflation. With a complete product portfolio and financial services, each need is met. Humble beginnings – The photo above features a clay model of one of the two lionesses that furnish the detail of the approach to Kansas City Life’s Home Office building. The actual statues are hewn from granite, are 10 feet 6 inches long, 4 feet 10 inches high and weigh 6 tons each. They are placed on pedestals beside the entry steps, 25 feet from the curb and 45 feet apart. From the lionesses to the building, a broad walkway extends 150 feet. Below are two images of the artist, Jorgen C. Dreyer, with the lionesses in development through completion. 6 Our essential relationships with our shareholders, our policyholders, our field force and our associates build upon our solid foundation and separate us from all others in the industry. We are proud of our superior customer service, sales and marketing support and our financial strength. The pride of Kansas City Life can also be seen in the select group of agencies who have received the Company’s most prestigious agency honor – the Agency Building Award. In this instance, PRIDE stands for positive, resourcefulness, innovative, dedication and efficiency. When you look at Kansas City Life, you are truly discovering a family. And when you feel a part of a family, your efforts and hard work become an investment, as opposed to a job. Our Home Office associates are committed to putting in the extra effort. After all, our agents and their customers are the most important part of our family. And that’s who we are in business to support. Kansas City Life has held true to the tradition and promise of honesty, integrity and sound business practices upon which our Company was founded in 1895. Kansas City Life is proud of the heritage that has been passed down for four generations. South lioness; photo autographed by the sculptor Jorgen C. Dreyer. ArTisT Bio Jorgen C. Dreyer Sculptor 1878-1948 Jorgen Christian Dreyer was born in 1878 in Tromso, Norway, the son of Hans and Regina Dreyer. He studied at the Latin School in Tromso and later at the Royal School of Art and Industries in Oslo. He showed early promise as a sculptor when, as a child, he playfully modeled a life-size snow figure that clearly resembled one of his professors. When Dreyer had finished his 10th year in the art school at home and was hesitating whether or not to go to Paris to begin his career, he received a letter from his sister who had married and gone to live in Topeka, Kan. The letter told of the wealth of the country, the shortage of artists, especially sculptors, the awakening interest in art and the dire need of it. So the young sculptor decided to try this venture, rather than go to the already overcrowded city of Paris. Dreyer came to America in 1903 and made Kansas City his home for more than 40 years. From 1907 to 1909, Dreyer taught at the Fine Arts Institute, the predecessor of the Kansas City Art Institute. The years following included a number of public and private commissions that spread Dreyer’s works across the city. The ‘20s and early ‘30s seem to have been Dreyer’s best years. During those years, he completed the Kansas City Life Insurance Company lionesses in 1925 and the Scottish Rite Temple sphinxes in 1928. Dreyer died November 17, 1948 of a heart ailment, according to The Kansas City Star. 7 1924 2014 Kansas City Life Home Office building completed in 1924 – The photo above shows the Kansas City Life Home Office building right before completion. The two lionesses found their perch upon their pedestals on April 6, 1925. The sculptor, Jorgen C. Dreyer, studied lionesses at the Swope Park Zoo (now the Kansas City Zoo, Kansas City, Mo.) for inspiration to ensure he would capture their realism. Dreyer would visit the zoo often, including early in the morning and at night. 8 Corporate Highlights The promise of Security Assured has been Company’s field force a 119-year tradition at Kansas City Life The Company’s field force is represented by Insurance Company. The goal of this mission independent agencies, which are operated by is to not only safeguard individuals, families general agents and agents across the U.S. and and businesses against the unpredictability of in certain locations in Europe. Kansas City life, but it is also the foundation on which the Life provides each agency with an ever-growing Company was built. We are committed to providing financial security to policyholders for generations to come. Kansas product portfolio and marketing support necessary to succeed in servicing consumers in their local markets. City Life will always uphold our promise to The Company’s expanding product portfolio provide premium services and continue our and individual one-on-one support from the tradition of bringing value to our shareholders. Home Office are attractive recruiting resources, It is Kansas City Life’s commitment to sound business practices, integrity and financial strength that has made our 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. Kansas City Life enjoyed a solid sales year in 2014, with life insurance sales tracking setting Kansas City Life apart from many in the industry. Third-party alliances Independent alliances with American Republic Insurance Company, GuideOne Mutual Insurance Company and AmeriLife Group LLC allow representatives from all three companies to distribute Kansas City Life’s products. These industry life insurance sales. With some strategic agreements provide representatives with the organizational changes during the year, our complementary products and services they need to Company is positioned to further grow our life offer complete financial security to their clients. insurance sales in 2015. Life insurance sales Individual Insurance Kansas City Life’s Individual Insurance segment Life insurance sales and new business production at Kansas City Life are measured by new provides financial security to consumers in 48 premiums recorded and new deposits received. states. Life insurance products are distributed Premiums include receipts from traditional through two channels: the Company’s field force individual life insurance and immediate annuity and through alliances with third-party marketing products. Deposits are received from universal arrangements. The Individual Insurance segment life insurance, variable universal life insurance consists of individual insurance products for and fixed deferred and variable annuity products. both Kansas City Life and Sunset Life. 9 The Individual Insurance segment generated These offerings encompass both traditional, approximately 53% of consolidated insurance employer-funded group insurance, as well as revenues for the year ended December 31, voluntary, employee-paid products. 2014, compared to 58% and 49%, respectively, for the years ended December 31, 2013 and 2012. In addition, this segment provided 92% of consolidated net income for the year ended December 31, 2014, compared to 85% and 93%, respectively, for the years ended December 31, 2013 and 2012. The Group Insurance segment markets our products primarily to small and mid-size organizations. Group products are sold through sales representatives who target a nationwide network of independent general agents and group brokers, along with the Company’s career general agents. The sales network is Total new deposits increased $1.4 million or this segment’s core distribution system. The 2% in 2014, compared to a $2.9 million or 3% Company also markets Group products through decline in 2013. The increase in 2014 resulted select third-party marketing arrangements. from a $12.8 million or 65% increase in new variable annuity deposits. Total renewal deposits decreased $2.1 million or 1% in 2014, following a $14.6 million or 10% increase in 2013. The reinsurance transaction on variable products increased renewal deposits $25.2 million in 2014 and $20.0 million in 2013, as the transaction occurred in April of 2013. The Group Insurance segment generated 20% of the Company’s consolidated insurance revenues in 2014, compared to 18% in 2013. Total Group premiums increased $3.8 million or 6% in 2014, following a $4.4 million or 7% increase in 2013. Moving forward, the Group Insurance segment continues to focus on three primary areas of emphasis to improve sales: Future growth 1. Growing in-force business through the The Individual Insurance segment is an essential Company’s sales representatives and select part of Kansas City Life’s core business, representing a majority of the Company’s revenue and net income. The Company plans to continue to grow the segment by recruiting talented general agents and agents and by adding more third-party alliances. Enhancements to the third-party marketing arrangements 2. Improving administrative efficiency through greater use of customer-facing technology, designed to reduce expenses and improve customer service vast product portfolio, increased focus on sales 3. Enhancing the segment’s product portfolio, development and superior marketing support are through delivery of new product offerings and elements that will be emphasized to attract new more flexible options to meet the dynamic field representatives. needs of the employee benefits market. Group Insurance Sunset Financial Services Inc. Kansas City Life Insurance Company offers Kansas City Life Insurance Company’s distributing several insurance products in the Group broker/dealer for its proprietary line of variable Insurance segment, including dental, life, annuity and variable universal life products. vision, and short- and long-term disability. 10 Lioness poster from the 1980s Kansas City Life’s enhanced website The Kansas City Life Tradition Kansas City Life Tradition brochure Heritage of strength – Kansas City Life Insurance Company has held true to the tradition and promise of honesty, integrity and sound business practices upon which our Company was founded in 1895. Kansas City Life is proud of the heritage that has been passed down for four generations and features the lioness image of strength and protection in Company materials. Pride for the Kansas City Royals Personal Financial Organizer Personal Financial Organizer 11 1693 3.10SOld American Insurance Company Old American Insurance Company celebrated a significant milestone in 2014 – our 75th Diamond Anniversary. Founded in December of 1939, Old American was created based on the philosophy that nobody should be considered uninsurable simply on the basis of age. This philosophy allowed for tremendous growth during the next several decades with Old American offering peace of mind to the senior market across the country. During the 1950s, the Company established an agency force and confined the agency operation to the state of Missouri. It was also during this decade that Old American embarked on a program to become licensed in other states around the country. While obtaining the various state licenses and expanding agency operations, Old American developed a model office, which became how the Company operates agency territories with general agent managers. Old American began its current chapter on October 31, 1991, when it was purchased by Kansas City Life Insurance Company and the Bixby family. The Bixby family has remained focused on providing peace of mind to policyholders and their families. Walter E. Bixby, LLIF, a fourth generation member of the Bixby family, has served as the Company’s president since 1996. Our Company’s Peace of Mind mission is represented by a symbolic eagle. Prominently displayed in Old American’s logo, the eagle stands for reliability, protection and security. Old American carries out this mission through products that are designed to cover the necessary costs following the death of a loved one. These funds also provide comfort to surviving family 12 members to know that money will be available for ongoing expenses. For the past 75 years, Old American’s products and services have provided for financial needs following a death, but they also fulfill emotional needs as well. The need for final expense products among the senior market continues to increase as the country’s population ages. With the final expense industry’s strong demand, Old American Insurance Company had a record-breaking sales year as we carried out our mission to provide peace of mind to our market. During 2014, Old American focused on improving territory penetration, recruiting and agent productivity for our general agencies in order to effectively meet the sales objectives of our Company. Looking forward, Old American will remain committed to delivering peace of mind through our successful nationwide general agency system with exclusive territories. Old American is focused on our core foundation for even further momentum to fuel profitable growth for our field force and our Company. reliaBility, Protection and security These three words have been the cornerstone of Old American Insurance Company since its inception and represent a promise to our policyholders – a promise to provide peace of mind to the senior market. old american vs other final exPense comPanies Cost is what you pay for something. Value is what you deem to receive in return for your cost. While it is always important to be smart with your money, it is equally important to be sure that what you are getting is what you think you are buying. Sometimes, things are often not what they appear to be. This is particularly true with final expense life insurance and the companies that sell it. When evaluating a final expense company and plan to provide for funeral and other final expenses, it is important to consider: 1. How long the company has been in business? 2. How long the company has been devoted solely to the final expense market? 3. What is the company’s history of paying final expense death claims? 4. Is the agent a dedicated, full-time final expense sales professional? since 1939, old american insurance company has offered peace of mind to policyholders and their beneficiaries that only the security of life insurance can provide. We will remain focused on this mission that has guided our company for more than seven decades – delivering peace of mind to the senior market. 3520 Broadway Kansas City, MO 64111 FR:SF6372 2.14T old american insurance comPany Providing Peace of mind to the senior years market for 75 Old American consumer brochure Old American’s website Peace of Mind protection – Our Company’s Peace of Mind mission is represented by a symbolic eagle. Prominently displayed in Old American’s logo, the eagle stands for reliability, protection and security. Old American carries out this mission through products that are designed to cover the necessary costs following the death of a loved one. Old American is housed in Kansas City Life’s Home Office building and utilizes the symbolic logo in all marketing materials. PEACE MIND of Planning PEACE MIND Guide of PEACE MIND of l h a s , i n 4 7 O l d A m e r i c a n I n s u r a n c e M o . i n K a n s a s C i t y, S i n c e 1 9 3 9 , i c y h o l d e r s l o c a t e d C o m p a n y, s e r v e d n e a r l y 2 0 0 , 0 0 0 p o l i f e l i o n o f l l w i t h o v e r $ 9 0 0 m i We k n o w a n d i n s u r a n c e s t a t e s , i n f o r c e . i f e u n d e r s t a n d h o w t o s e r v e t h e i n s u r a n c e n e e d s o f t h e s e n i o r m a r k e t . t h e p e r s o n a l A s o u r C o m p a n y h a s g r o w n , r e l a t i o n s h i p b e t w e e n a g e n t a n d c u s t o m e r l a r o f o u r b u s i n e s s . T h a t r e l a t i o n s h i p h a s m a d e t h i s a s t r o n g c o n t i n u e s t o b e t h e p i a n d h i g h l y r e s p e c t e d C o m p a n y. i s a s u b s i d i a r y O l d A m e r i c a n o f K a n s a s C i t y L i f e I n s u r a n c e C o m p a n y. I n a d d i t i o n , K a n s a s C i t y L i f e h a s i n 1 8 9 5 , m o r e t h a n 1 1 5 y e a r s o f e x p e r i e n c e F o u n d e d i n s u r a n c e n e e d s o f p r o v i d i n g f o r t h e i c y h o l d e r s . p o l i f e i n l l Peace of Mind Planning Guide PEACE of MIND Since 1939, Old American Insurance Company, located in Kansas City, Mo., has served nearly 200,000 policyholders in 47 states, with over $900 million of life insurance in force. We know and understand how to serve the life insurance needs of the senior market. As our Company has grown, the personal relationship between agent and customer continues to be the pillar of our business. That relationship has made this a strong and highly respected Company. In addition, Old American is a subsidiary of Kansas City Life Insurance Company. Founded in 1895, Kansas City Life has more than 115 years of experience in providing for the life insurance needs of its policyholders. C h i l d r e n ’s Te r m R i d e r PEACE of MIND Budget Master Insured Policy Accidental Death Benefit C o v e r a g e f o r y o u r m o s t i m p o r t a n t a s s e t s . Ensure against an unexpected shortfall in your family’s financial life. Protection against life’s uncertainties Since 1939, Old American Insurance Company, located in Kansas City, Mo., has served nearly 200,000 policyholders in 46 states, with nearly $900 million of life insurance in force. We know and understand how to serve the life insurance needs of the senior market. As our Company has grown, the personal relationship between agent and customer continues to be the pillar of our business. That relationship has made this a strong and highly respected Company. In addition, Old American is a subsidiary of Kansas City Life Insurance Company. Founded in 1895, Kansas City Life has more than 115 years of experience in providing for the life insurance needs of its policyholders. i t s The coverage described in this brochure is for the Budget Master Insured Policy of Old American Insurance Company (Home Office: Kansas City, Mo.). Policy form is P5106. Accidental Death Benefit rider form is R8156. Coverage may not be available in all states. 3520 Broadway Kansas City, MO 64111 816-753-4900 www.oaic.com FRSF6195 FR:SF6138 2.11L 4 . 1 2 m 3 5 2 0 B r o a d w a y K a n s a s C i t y, M O 6 4 1 1 1 8 1 6 - 7 5 3 - 4 9 0 0 w w w. o a i c . c o m F R S F 6 1 9 3 3520 Broadway Kansas City, MO 64111 816-753-4900 www.oaic.com 4.12m Policy informational brochures From the President’s desk … The desire to know our customers and serve their individual needs is the foundation of Old American Insurance Company. Today’s retirees can look forward to a life much longer than was expected at the time they left the workforce, and the options for filling those years range from exploring new hobbies to spending time with family and friends. Walter E. Bixby President, Old American Insurance Company However, living well for that long takes more money than most retirees anticipate. A major question is, “Will I outlive my pension?” With the growing concern about Social Security solvency, this question takes on even greater importance. Self-respecting people who love their families want to be sure they have adequate finances to live on – as well as enough money to pay their final expenses. These are the people Old American serves. As a family-oriented company, we are proud to help other families provide for future expenses. Recognizing their concern, we have focused on filling their needs. For 75 years, we have helped make this period of life one of enjoyment and relaxation for our policyholders and their families. Our final expense and pension supplement plans help alleviate worry and frustration. From agents in the field to associates in the Home Office, our goal is the same – to serve you well. Providing peace of mind for 75 years 3520 Broadway Kansas City, MO 64111 816-753-4900 www.oaic.com X:SF198 10.13S “A policy of life insurance is the cheapest and safest mode of making a certain provision for one’s family.” — Benjamin Franklin Benjamin Franklin knew it in 1791, and Old American Insurance Company knows it’s still true today! Company informational brochure 13 SeniorOfficers Kansas City Life Insurance Company R. Philip Bixby President, Chief Executive Officer and Chairman of the Board David A. Laird, CPA, FLMI® Vice President and Controller John L. Nogalski, CPA, FLMI® Vice President, Taxes Walter E. Bixby, LLIF Executive Vice President and Vice Chairman of the Board Tracy W. Knapp Senior Vice President, Finance Donald E. Krebs, MSM, CLU®, ChFC®, LLIF Senior Vice President, Sales and Marketing A. Craig Mason, Jr. Senior Vice President, General Counsel and Secretary Mark A. Milton, FSA, CERA, MAAA Senior Vice President and Actuary Stephen E. Ropp Senior Vice President, Operations Ryan C. Beasley, MSFS, CFP®, CLU®, ChFC®, LLIF Vice President, Agencies Aaron L. Bush Vice President, Corporate Actuary Robert M. Fisher, CPA, CITP Vice President, Information Technology Timothy W. Knott Vice President, Group Richard D. Ropp, FLMI®, ACS® Vice President, Customer Services and Claims J. Todd Salash* Vice President, Information Technology Dan L. Schick, CPA, CLU®, FLMI® Vice President and Auditor Philip A. Williams, CFA Vice President, Securities Old American Insurance Company R. Philip Bixby Chairman of the Board Walter E. Bixby, LLIF President Robert M. Fisher, CPA, CITP Vice President, Information Technology Gary K. Hoffman, JD, CLU®, FLMI®** Vice President, Associate General Counsel and Secretary Tracy W. Knapp Chief Financial Officer David A. Laird, CPA, FLMI® Vice President and Controller Timothy J. Langland, JD, CLU®, FLMI® Vice President, Associate General Counsel and Secretary Richard D. Ropp, FLMI®, ACS® Vice President, Customer Services and Claims Stephen E. Ropp Vice President, Operations Benton T. Summers, CLU®, ChFC® Vice President, Sales Sunset Life Insurance Company of America R. Philip Bixby President and Chairman of the Board Walter E. Bixby, LLIF Vice Chairman of the Board Donald E. Krebs, MSM, CLU®, ChFC®, LLIF Vice President, Sales and Marketing David A. Laird, CPA, FLMI® Vice President and Controller Mark A. Milton, FSA, CERA, MAAA Vice President and Actuary Richard D. Ropp, FLMI®, ACS® Vice President, Policy Administration Matthew R. O’Connor, JD Secretary *J. Todd Salash retired from the Company in October 2014. **Gary K. Hoffman retired from the Company in April 2014. Kansas City Life Insurance Company Old American Insurance Company Sunset Financial Services Inc. Sunset Life Insurance Company of America 14 Home Office 3520 Broadway Kansas City, MO 64111 816-753-7000 Visit us on the Internet: www.kclife.com www.oaic.com www.sunsetlife.com Board o f Directors Kansas City Life Insurance Company Kevin G. Barth President and Chief Operating Officer Commerce Bank Kansas City, Mo. R. Philip Bixby President, Chief Executive Officer and Chairman of the Board Kansas City Life Insurance Company Kansas City, Mo. Walter E. Bixby, LLIF Executive Vice President and Vice Chairman of the Board Kansas City Life Insurance Company President Old American Insurance Company Kansas City, Mo. William R. Blessing Retired Senior Vice President, Corporate Strategy and Development Embarq Overland Park, Kan. Michael Braude Retired President and Chief Executive Officer Kansas City Board of Trade Kansas City, Mo. James T. Carr President and Chief Executive Officer National Association of Intercollegiate Athletics Kansas City, Mo. John C. Cozad President Cozad Company, LLC Platte City, Mo. Richard L. Finn Retired Senior Vice President, Finance Kansas City Life Insurance Company Kansas City, Mo. Nancy Bixby Hudson Investor Lander, Wyo. David S. Kimmel Chief Executive Officer CyberRiskPartners, LLC Rye, N.Y. Tracy W. Knapp Senior Vice President, Finance Kansas City Life Insurance Company Kansas City, Mo. Cecil R. Miller, CPA Retired Partner KPMG, LLP Kansas City, Mo. Mark Milton, FSA, CERA, MAAA Senior Vice President and Actuary Kansas City Life Insurance Company Kansas City, Mo. William A. Schalekamp, JD, CLU®, FLMI® Retired Senior Vice President, General Counsel and Secretary Kansas City Life Insurance Company Kansas City, Mo. 15 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 Email: kclife@kclife.com NOTICE OF ANNUAL MEETING The annual meeting of stockholders will be held at 9 a.m. on Thursday, April 23, 2015, at Kansas City Life Insurance Company’s corporate headquarters. TRANSFER AGENT Janice Poe, Stock Agent and 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, 2015, Kansas City Life had approximately 3,023 security holders, including individual participants in security position listings. Please refer to the Company’s Form 10-K and Proxy Statement as filed with the Securities and Exchange Commission (SEC). Stock & Dividend Information 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 and paid during such periods. The Company’s common stock is traded on the NASDAQ Capital Market under the symbol “KCLI.” 2014: First quarter Second quarter Third quarter Fourth quarter 2013: First quarter Second quarter Third quarter Fourth quarter High Low $ 50.62 48.68 46.99 49.82 $ 43.60 40.62 43.29 43.90 $ 39.93 39.06 45.31 49.95 $ 36.35 34.01 38.10 43.15 Dividend Paid $ 0.27 0.27 0.27 0.27 $ 1.08 $ 0.27 0.27 0.27 0.27 $ 1.08 A quarterly dividend of $0.27 per share was paid February 11, 2015. 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. 16 Kansas City Life Insurance Company Home Office: Kansas City, MO 3520 Broadway Kansas City, MO 64111 816-753-7000 www.kclife.com 11907 

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