American Equity (AEL) Q4 Earnings Miss, Revenues Up Y/Y
American Equity Investment Life Holding CompanyAEL reported fourth-quarter 2022 adjusted net earnings of 79 cents per share, which missed the Zacks Consensus Estimate by 17.7%. The bottom line decreased 24% year over year.
The quarterly results reflected an effect of reduced equity index credits on higher amortization of deferred acquisition costs, partially offset by increased investment spread and recurring reinsurance fee revenue.
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 $617.8 million, up 3.4% year over year on the back of higher annuity product charges, net investment income and other revenues.
Premiums and other considerations decreased 80% year over year to about $3 million. Annuity product charges increased 2.3% year over year to $61.6 million.
Net investment income increased 4.5% on a year-over-year basis to $538 million. The upside was due to an increase in the average yield on investments resulting from strong returns from partnerships, the benefit from higher short-term interest rates on a floating rate portfolio, lower cash balances and an increase in allocation to higher yielding privately sourced assets to 22% of the investment portfolio.
Total benefits and expenses were $693 million, which decreased 30.3% from the year-ago quarter due to lower insurance policy benefits and change in future policy benefits, interest-sensitive and index product benefits and amortization of deferred policy acquisition costs.
The investment spread was 2.54%, up from 2.29% in the year-ago quarter.
Full Year Highlights
Total operating revenues for 2022 were $2.6 billion compared with $2.4 billion at 2021-end.
Adjusted earnings for 2022 were $3.67 per share compared with $3.90 per share at 2021-end.
Net Investment income was $2.3 billion in 2022 compared with $2 billion at 2021-end.
The investment spread in 2022 was 2.63% compared with 2.18% in 2021.
Financial Update
Cash and cash equivalents were $1,919.6 million as of Dec 31, 2022, down 57.4% from 2021-end. Total investments were about $51,325.3 million, which decreased 15% from 2021-end.
Notes payable totaled $792.1 million, up 59.6% from 2021-end.
Book value per common share, excluding AOCI, was $54.52, up 33.6% from 2021-end.
Total debt/total capitalization was 14.2%, deteriorating 280 basis points from 2021-end.
Operating return on equity, excluding average AOCI, was 9.7%.
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 Some Other Life Insurers
Some of the insurance industry players, like Reinsurance Group RGA, Voya Financial VOYA and Sun Life Financial SLF, have also reported fourth-quarter results so far. Let’s see how they have performed.
Reinsurance Group reported fourth-quarter 2022 adjusted operating income of $2.99 per share, which missed the Zacks Consensus Estimate by 14.8%. RGA had reported an operating loss of 56 cents per share in the prior-year quarter.
Voya Financial reported fourth-quarter 2022 adjusted operating income of $2.18 per share, beating the Zacks Consensus Estimate by 42.5%. VOYA’s bottom line increased 14.7% year over year. Adjusted operating revenues amounted to $1.5 billion.
Sun Life Financial reported fourth-quarter 2022 adjusted operating income of $1.25 per share, beating the Zacks Consensus Estimate by 7.8%. The bottom line increased 3.3% year over year. The underlying net income of $729 million (C$990 million) was up 10% year over year, which was driven by earnings growth in the United States and Canada.
Insurance sales increased 14.8% year over year to $1.3 billion (C$1.8 billion), driven by increased sales in Canada, Asia and the United States. Wealth sales were $33.6 billion (C$45.6 billion), down 17% year over year. The value of the new business decreased 5.3% to $345 million (C$468 million).
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American Equity Investment Life Holding Company (AEL) : Free Stock Analysis Report
Reinsurance Group of America, Incorporated (RGA) : Free Stock Analysis Report
Sun Life Financial Inc. (SLF) : Free Stock Analysis Report
Voya Financial, Inc. (VOYA) : Free Stock Analysis Report
