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American Equity Investment Life Holding Company AEL reported third-quarter 2020 adjusted net earnings of 99 cents per share, which missed the Zacks Consensus Estimate by 8.3%. The bottom line decreased 39.4% on a year-over-year basis.
The quarter witnessed lower investment spread income and an increase in the liability for future policy benefits to be paid for lifetime income benefit riders, partially offset by a decline in deferred acquisition cost and deferred sales inducement amortization.
Operating total revenues were $543 million, up 0.2% year over year. The top line beat the Zacks Consensus Estimate by 0.7%.
Premiums and other considerations more than doubled. Annuity product charges decreased 2.2% while net investment income declined about 8%, all on a year-over-year basis.
Gross annuity sales of $574 million decreased 53% year over year. Sequentially, Annuity sales increased driven by increased multi-year fixed rate annuity sales at Eagle Life. Gross sales at American Equity Life decreased 8% while at Eagle Life it surged 75% year over year
Total benefits were $53 million, compared with expenses of $592.4 million in the year ago quarter.
Investment spread was 2.44%, down from 2.75% in the year-ago quarter.
Policyholder funds under management of $53 billion at quarter end were down 0.2% from second quarter end.
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
Cash and cash equivalents were $2.7 billion as on Sep 30, 2020, compared with $2.3 billion as on Dec 31, 2019. Total investments were about $57 billion, up from $56.9 billion at 2019 end.
Note payable totaled $495.4 million, slightly up from $495.1 million at 2019 end.
Book value per common share excluding AOCI was $35.97, up 31.6% from 2019 end.
Total debt/total capitalization was 12.6% at third-quarter end, improving 1080 basis points.
Operating return on equity excluding average AOCI was 4.3%.
Estimated risk-based capital ratio was 382%, excluding approximately $300 million of excess cash at the holding company.
American Equity currently 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
Of the insurance industry players that have reported third-quarter results so far, The Progressive Corporation PGR, The Travelers Companies TRV and RLI Corp. RLI beat the respective Zacks Consensus Estimate for earnings.
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