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American Equity (AEL) Q3 Earnings Beat Estimates, Surge Y/Y

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American Equity (AEL) Q3 Earnings Beat Estimates, Surge Y/Y

Higher revenues, better investment results and an increased sales volume find reflections in American Equity's (AEL) Q3 performance.

American Equity Investment Life Holding Company’s AEL third-quarter 2018 net operating income of $1.87 per share beat the Zacks Consensus Estimate of 87 cents per share. The bottom line also soared nearly 94.8% year over year.

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 Quote

Including one-time items, net income increased a whopping 193.6% year over year to $1.85 per share.

Behind the Third-Quarter Headlines

The company’s total revenues of $614.9 million grew 9.7% from the year-ago quarter owing to higher premiums and other considerations, annuity product charges as well as net investment income.

Net investment income improved 9.8% year over year to $549.4 million.

Total benefits and expenses increased 20.4% year over year to $986.1 million due to increase in amortization of deferred sales inducements, change in fair value of embedded derivatives, interest expense on subordinated debentures, amortization of deferred policy acquisition costs as well as other operating costs and expenses.

Estimated risk-based capital ratio of 386% expanded 1100 basis points (bps) from the year-ago quarter.

Investment spread in the third quarter stood at 2.67% down 3 bps from the prior-year quarter.

In the reported quarter, annuity sales of $1 billion increased 11.1% from the year-earlier period.

Policyholder funds under management as of Sep 30, 2018 came in at $50.6 billion, up 6.3% from the year-ago period.

Financial Update

As of Sep 30, 2018, total assets were $63.4 billion, up 2.3% from the level at year-end 2017.

Cash and cash equivalents at the reviewed quarter-end declined 21.3% from the 2017-end level to $1.1 billion.

Shareholders’ equity as of Sep 30, 2018 decreased 12.7% year over year to $2.5 billion.

American Equity reported book value per share (excluding AOCI) of $26.80, up 13.4% year over year.

Zacks Rank

American Equity carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

Among other players from the insurance industry having reported third-quarter earnings so far, the bottom line of The Progressive Corporation PGR and MGIC Investment Corporation MTG outpaced the respective Zacks Consensus Estimate while that of RLI Corp. RLI fell shy of the same.

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