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National Western Life Insurance Company Message Board

  • bbarberayr bbarberayr Mar 18, 2014 8:36 AM Flag

    Annual Report - Yield on new Investments

    From the Annual Report:

    "The yield on debt security purchases to fund insurance operations rebounded somewhat to 3.53% in 2013 from 3.37% in 2012 but was still below the 4.18% yield attained in 2011."

    So, investment yields improved, but are still down. Their unrealized gains in securities dropped from $541 million to $146 because of this, so this part of the "hidden value" in the shares went down.

    But if rates can get back up to that 4.18%, a quick calc says that would cause annual earnings on their $9 billion investment portfolio to increase $58 million. If 2/3's of this is creditted to annuity holders, it leaves $19.5 million before tax for shareholders. 32% tax from 2013 gives after tax earnings increase of $13 million or $3.57 increase in earnings per share.

    If we could get yields back up to 5.5% like they were a few years ago, using the same calc would give an incerase in EPS of $9.38, or a 1/3 increase in earnings.

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