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American Equity (AEL) Q2 Earnings Beat, Revenues Fall Y/Y

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American Equity Investment Life Holding Company AEL reported second-quarter 2021 adjusted net earnings of 98 cents per share, which beat the Zacks Consensus Estimate by 84.9%. The bottom line, however, dipped 2.9% on a year-over-year basis.

Net loss came in at 69 cents per share, narrower than the year-ago quarter’s net loss of $2.76. Results reflect reductions in discount rates used in the calculation of fair value of fixed index annuity policy benefit reserves.

The company witnessed an increase in annuity sales, weak net investment income and lower expenses during the quarter.

American Equity Investment Life Holding Company Price, Consensus and EPS Surprise

American Equity Investment Life Holding Company Price, Consensus and EPS Surprise
American Equity Investment Life Holding Company Price, Consensus and EPS Surprise

American Equity Investment Life Holding Company price-consensus-eps-surprise-chart | American Equity Investment Life Holding Company Quote

Operational Update

Total revenues were $577.6 million, down 6.6% year over year.

Premiums and other considerations increased 32.3% to $14.6 million. Annuity product charges inched up 0.5% to $63.8 million while net investment income declined 8.2% to $499.3 million on a year-over-year basis.

Annuity sales of $1.2 billion doubled year over year. Sequentially, gross sales of fixed index annuities at American Equity Life and Eagle Life increased 36% and 24%, respectively.

Total benefits and expenses were $1.1 billion, down 7.3% year over year.
Investment spread was 1.95%, down from 2.39% in the year-ago quarter.
Policyholder funds under management of $56.6 billion at the second-quarter end were up 1.5% from the level at the first-quarter end.

Financial Update

Cash and cash equivalents were $11.52 billion as on Jun 30, 2021, up 26.7% from the 2020-end level. Total investments were $53.6 billion, marginally up 0.06% from the 2020-end level.

Note payable totaled $495.9 million, marginally up 0.05% from the 2020-end level.

Book value per common share excluding accumulated other comprehensive income (AOCI) was $38.59, up 7.2% from the level at 2020 end.

Total debt/total capitalization was 11.9% at the second-quarter end, improving 30 basis points from the level at 2020 end.

Operating return on equity excluding average AOCI was 9.1%.

Zacks Rank

American Equity currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

Of the insurance industry players that have reported second-quarter results so far, earnings of Voya Financial, Inc. VOYA, MGIC Investment Corporation MTG and American Financial Group AFG beat the respective Zacks Consensus Estimate.


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MGIC Investment Corporation (MTG) : Free Stock Analysis Report

American Equity Investment Life Holding Company (AEL) : Free Stock Analysis Report

American Financial Group, Inc. (AFG) : Free Stock Analysis Report

Voya Financial, Inc. (VOYA) : Free Stock Analysis Report

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