National Western Life Group Inc Reports Full Year and Q4 Earnings for 2023
Consolidated Net Earnings: $94.4 million for 2023, down from $246.5 million in 2022.
Earnings Per Share: $26.71 per diluted share of Class A Common Stock, a decrease from $69.71 in the previous year.
Book Value Per Share: Increased to $670.99 as of December 31, 2023, from $602.56 at the end of 2022.
Total Assets: Consolidated total assets stood at $12.3 billion.
Life Insurance in Force: Combined life insurance in force reached $18.0 billion.
Operating Expenses: Operating expenses were reduced, excluding the increase in equity award expense accruals.
On February 29, 2024, National Western Life Group Inc (NASDAQ:NWLI) released its 8-K filing, announcing its financial results for the full year and fourth quarter of 2023. The global insurance company, which provides a broad range of insurance products for savings, protection, and retirement needs, reported a significant decrease in consolidated net earnings compared to the previous year. Despite this, the company's book value per share saw an increase, and total assets remained robust at $12.3 billion.
National Western Life Group Inc operates through four business segments: Domestic life insurance, International life insurance, Annuities, and Acquired businesses. The annuities segment is a major revenue contributor, and the company primarily operates within the United States. The company's performance in 2023 was influenced by the implementation of the new liability accounting methodology under the Accounting for Long-Duration Contracts (LDTI) accounting standard, which resulted in a notable impact on its financial statements.
Financial Performance and Challenges
Chairman, President, and CEO Ross R. Moody highlighted the challenges faced due to the new accounting standard, which caused a swing in pretax earnings of over $200 million. Despite these challenges, the company achieved significant gains in investment returns and improved mortality experience. The operating expenses were substantially pared back, excluding the increase in equity award expense accruals due to a rise in the company's stock price. These financial achievements are critical for National Western Life Group Inc as they demonstrate the company's ability to manage costs effectively and capitalize on favorable investment and mortality trends, which are essential for long-term profitability in the insurance industry.
The company's pretax earnings for 2023 included an expense of $68.1 million for changes in the Market Risk Benefits liability, a new category created under LDTI. This contrasts with a benefit of $(135.7) million in the previous year. The fair value measurement of contracts subject to Market Risk Benefits is largely determined by interest rate levels, which can significantly affect the company's financial results.
Key Financial Metrics
Important metrics from the financial statements include:
"We experienced significant gains in our investment returns, enjoyed improved mortality experience on our blocks of business, and, excluding the increase in our equity award expense accruals caused by the sizable increase in our stock price, we pared back our operating expenses substantially."
This commentary by Mr. Moody underscores the company's resilience in navigating the financial year's complexities. The reduction in net earnings can be attributed to the accounting changes under LDTI, which introduced volatility in the company's earnings due to the fair value measurement of Market Risk Benefits.
The company's balance sheet remains strong, with a book value per share of $670.99, up from $602.56 at the end of 2022. The book value per share, excluding accumulated other comprehensive income (loss), is a non-GAAP financial measure that provides additional insight into the company's financial health, standing at $759.71 after adjusting for comprehensive income (loss).
Looking Ahead
As National Western Life Group Inc looks to the future, the company has reached a merger agreement with Prosperity Life Group, which is expected to close in the first half of 2024. This strategic move is anticipated to strengthen the company's market position and create additional value for shareholders. The successful completion of this merger is subject to approval by various insurance regulators, among other conditions.
For more detailed information on National Western Life Group Inc's financial results, interested parties can access the full earnings report through the provided 8-K filing. Investors and stakeholders can look forward to the company's continued efforts to navigate the evolving financial landscape and deliver value in the competitive insurance industry.
Contact information for investor relations is available for those seeking further engagement with the company's financial team. Brian M. Pribyl, the Senior Vice President, Chief Financial Officer, and Treasurer, can be reached for inquiries.
Explore the complete 8-K earnings release (here) from National Western Life Group Inc for further details.
This article first appeared on GuruFocus.
