Kansas City Life Sees Net Income Rise in Q1 2025 Despite Revenue Declines

Kansas City, MO — Kansas City Life Insurance Company reported a modest rise in earnings for the first quarter of 2025, buoyed by reduced expenses and a one-time tax benefit, despite ongoing challenges with revenue declines and legal headwinds.

The company posted net income of $1.9 million, or $0.19 per share, for the quarter ended March 31, 2025. This represents an improvement over the $1.6 million, or $0.16 per share, recorded during the same period in 2024.

Key Drivers Behind the Earnings Uptick

The increase in quarterly profit was primarily attributed to a $4.2 million reduction in policyholder benefits, net of reinsurance, and a $900,000 drop in operating expenses. These cost reductions helped offset declines in the company’s top line.

Additionally, Kansas City Life benefited from a $4.2 million income tax benefit, a sharp contrast to the $400,000 tax expense incurred in the first quarter of the previous year. The tax gain was linked to a one-time item, which the company did not specify in detail.

Revenue Declines Continue

Despite the uptick in earnings, both major revenue streams saw year-over-year declines:

• Insurance revenues fell by $3.1 million, or 4%.

• Investment revenues dropped by $5.3 million, or 13%, largely due to fluctuations in the fair value of certain investment holdings.

The decline underscores ongoing pressures facing life insurance providers amid volatile market conditions and regulatory challenges.

Legal Issues Cast a Shadow

The positive first-quarter results follow a turbulent fourth quarter in 2024, during which Kansas City Life reported a net loss of $12.6 million, or $1.30 per share, compared to a net profit of $49.1 million in Q4 2023. The loss was attributed to a combination of lower revenues, reduced net investment gains, and a $21.1 million legal reserve tied to class action lawsuits.

In January 2025, the U.S. Court of Appeals for the Eighth Circuit ruled that Kansas City Life had violated contract terms by improperly calculating cost-of-insurance (COI) charges on its life policies. The court found that the company included its own profits and expenses in COI rates, a practice that contravened contract terms, which stipulated that charges should only be based on actuarial factors such as age, sex, risk class, and mortality expectations.

The ruling may have long-term implications for how Kansas City Life and other insurers structure future COI adjustments.

Looking Ahead

Founded in 1895 and headquartered in Kansas City, Missouri, Kansas City Life sells life insurance and annuity products in 49 states and the District of Columbia. The company emphasized that it remains focused on controlling operating costs and addressing legal risks as it navigates a challenging market environment.

While its improved bottom line in Q1 2025 reflects some success in cost management, Kansas City Life faces a delicate balance between cutting expenses, rebuilding revenue streams, and resolving lingering legal disputes.