American Equity Investment Life Holding Co Reports Record FIA Sales in 2023
Net Loss in Q4: AEL reported a net loss of $(475.9) million in Q4 2023, a stark contrast to the net income of $21.7 million in Q4 2022.
Annual Net Income: Full-year net income stood at $166.9 million in 2023, down from $1.9 billion in 2022.
Record FIA Sales: FIA sales reached over $7.0 billion in 2023, marking an all-time high for the company.
Investment Yield and Portfolio: Fourth quarter investment yield increased to 4.65%, with private assets comprising 25.8% of the investment portfolio.
Merger Plans: AEL expects to have $10 billion of liquidity available after the planned merger with Brookfield Reinsurance in the first half of 2024.
Non-GAAP Operating Income: Non-GAAP operating income for Q4 2023 was $159.6 million, or $1.99 per diluted common share.
Capital and Credit Metrics: Total adjusted capital at American Equity Life totaled $4.3 billion with an estimated risk-based capital ratio of 370% to 390%.
On February 14, 2024, American Equity Investment Life Holding Co (NYSE:AEL) released its 8-K filing, detailing its financial performance for the fourth quarter and full year of 2023. AEL, a prominent financial services company specializing in fixed-index and fixed-rate annuity products, faced a challenging fourth quarter with a net loss available to common stockholders of $(475.9) million, or $(6.04) per diluted common share. This was a significant downturn from the net income of $21.7 million, or $0.25 per diluted common share, reported in the fourth quarter of 2022. However, the full year 2023 net income available to common stockholders remained positive at $166.9 million, or $2.06 per diluted common share, although it was a decrease from the net income of $1.9 billion, or $20.50 per diluted common share, for the full year 2022.
The company's performance in 2023 was marked by record sales in fixed index annuities (FIA), totaling over $7.0 billion, a testament to the effectiveness of AEL's strategic focus on guaranteed retirement income product offerings. Despite the net loss in the fourth quarter, AEL's non-GAAP operating income available to common stockholders for the same period was $159.6 million, or $1.99 per diluted common share, indicating a strong underlying business performance.
Financial Highlights and Strategic Developments
American Equity's investment yield for the fourth quarter was 4.65%, reflecting a year-over-year increase of 35 basis points. The company also reported a significant increase in private assets, which now represent 25.8% of the investment portfolio. This strategic allocation is part of AEL's broader transformation, which includes a planned merger with Brookfield Reinsurance expected to close in the first half of 2024. The merger is anticipated to provide AEL with $10 billion of liquidity to be redeployed opportunistically.
From a capital and credit perspective, AEL remains stable with total adjusted capital at American Equity Life totaling $4.3 billion and an estimated risk-based capital ratio between 370% to 390%. The company's credit metrics within the investment portfolio continued to be stable, with a core fixed income portfolio that remains "A" rated.
"Supported by our strategy flywheel, American Equity had an outstanding 2023 capped off by our strong results in the fourth quarter," said Anant Bhalla, President and CEO of American Equity. "This strategy has created a more than three-fold increase in value for American Equity shareholders based on the average volume-weighted stock price of $17.86 in March 2020 while also returning approximately $1.1 billion to shareholders over that period."
Despite the challenges faced in the fourth quarter, AEL's strategic initiatives and record FIA sales underscore the company's resilience and commitment to growth. The company's focus on guaranteed retirement income products and private asset management has positioned it well for future success, particularly in light of its upcoming merger with Brookfield Reinsurance.
For more detailed information on American Equity Investment Life Holding Co's financial performance, including income statements and balance sheet details, investors can review the full 8-K filing.
Explore the complete 8-K earnings release (here) from American Equity Investment Life Holding Co for further details.
This article first appeared on GuruFocus.
