American Equity (AEL) Q3 Earnings Beat, Revenues Rise Y/Y
American Equity Investment Life Holding Company AEL reported third-quarter 2023 adjusted net earnings of $2.45 per share, which beat the Zacks Consensus Estimate by 45.8%. The bottom line rebounded from the year-ago loss of 10 cents per share.
The quarterly results reflected higher annuity product charges and other revenues as well as improved benefits, offset by lower premiums and investment income.
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
Operating total revenues were $694.3 million, up 1.4% year over year due to higher annuity product charges and other revenues.
Premiums and other considerations decreased 6.4% year over year to $2.6 million. The figure was lower than our estimate of $3.2 million. Annuity product charges increased 38.6% year over year to $84.3 million. The figure was higher than our estimate of $60.6 million.
Net investment income decreased 3.8% on a year-over-year basis to $586.6 million. The figure was higher than our estimate of $549.7 million.
Total benefits were $343.1 million, greater than the year-ago quarter’s benefits of $74.4 million.
The investment spread was 2.73%, which has remained unchanged from the year-ago quarter.
Financial Update
Cash and cash equivalents were $10.2 billion as of Sep 30, 2023, which surged more than fivefold from 2022-end. Total investments were $44.6 billion, which decreased 13.1% from 2022-end.
Notes and loan payable totaled $787 million, down 0.6% from 2022-end.
Book value per common share, excluding AOCI, was $73.18, up 15% from 2022-end.
Total debt/total capitalization was 11.9%, deteriorating 70 basis points from 2022-end.
Non-GAAP operating return on equity, excluding average AOCI and average net impact of fair value accounting for fixed index annuities, was 18.6%.
Zacks Rank
American Equity currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Life Insurers
Voya Financial, Inc. VOYA reported third-quarter 2023 adjusted operating earnings of $2.07 per share, which missed the Zacks Consensus Estimate by about 1%. The bottom line decreased 10% year over year, attributable to lower net underwriting results, partially offset by higher fee income.
Adjusted operating revenues amounted to $281 billion, which decreased 21.1% year over year. The top line missed the Zacks Consensus Estimate by 16.4%. Net investment income increased 4.8% year over year to $547 million. Meanwhile, fee income of $489 million increased 9.9% year over year. Premiums totaled $682 million, up 12.5% from the year-ago quarter. Total benefits and expenses were $1.7 billion, up 29.6% from the year-ago quarter. As of Sep 30, 2023, VOYA’s assets under management, assets under administration and advisement totaled $770.3 million.
Reinsurance Group of America, Incorporated RGA reported third-quarter 2023 adjusted operating earnings of $5.57 per share, which beat the Zacks Consensus Estimate by 30%. Moreover, the bottom line increased 42% from the year-ago quarter’s figure. Net foreign currency fluctuations had an adverse effect of 1 cent per share on adjusted operating income. Reinsurance Group witnessed a solid performance in the U.S. and Latin America, Canada and Asia/Pacific segments, offset by soft result in the Europe, Middle East and Africa segment. RGA's operating revenues of $5.3 billion beat the Zacks Consensus Estimate by 21%. The top line also improved 25.5% year over year due to higher net premiums.
Net premiums of $4.2 billion rose 31% year over year. Investment income increased 19.8% from the prior-year quarter to $922 million. The average investment yield increased to 4.72% in the third quarter from 4.4% in the prior-year period due to higher yields. Total benefits and expenses at Reinsurance Group increased 15.6% year over year to $4.7 billion on higher claims and other policy benefits, interest credited, policy acquisition and other insurance expenses, other operating costs and interest expense.
Lincoln National Corporation LNC reported third-quarter 2023 adjusted earnings of 23 cents per share, which missed the Zacks Consensus Estimate by 86.9%. However, the bottom line significantly improved from a loss of $11.49 a year ago.
Adjusted operating revenues grew 5.7% year over year to $4.7 billion. The top line missed the consensus mark by 1.6%. Total expenses plunged 53.4% year over year to $3.2 billion in the quarter under review and remained below our estimate of $3.6 billion due to the incidence of a significant MRB gain. Benefits of $2.2 billion, which accounted for 67.9% of the quarter’s overall costs, increased marginally and were above our estimate of $2.1 billion. Commissions and other expenses rose 4.3% year over year to $1.3 billion and were above our model estimate.
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