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American Equity (AEL) Q2 Earnings Beat, Revenues Rise Y/Y
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American Equity Investment Life Holding Company reported second-quarter 2022 adjusted net earnings of 98 cents per share, which beat the Zacks Consensus Estimate by 24%. The bottom line remained unchanged year over year.
The quarterly results reflected higher net investment income, offset by lower premiums and annuity product charges.
American Equity Investment Life Holding Company Price, Consensus and EPS Surprise
Operating total revenues were $660.8 million, up 14.4% year over year on the back of higher net investment income and other revenues.
Premiums and other considerations decreased 73.7% year over year to $3.8 million. Annuity product charges decreased 12.9% year over year to $55.5 million.
Net investment income increased 18.6% on a year-over-year basis to $592.3 million. The upside was due to a higher average yield on investments resulting from strong returns from partnerships and other mark-to-market assets, lower cash balances, and the increase in allocation to higher-yielding privately sourced assets to 16.6% of the investment portfolio.
Total benefits were $0.3 billion versus expenses of $1.1 billion in the year-ago quarter due to lower insurance policy benefits and changes in future policy benefits, interest-sensitive and index product benefits and other operating costs and expenses.
The investment spread was 2.64%, up from 1.95% in the year-ago quarter.
Financial Update
Cash and cash equivalents were $1.3 billion as of Jun 30, 2022, down 71.4% from 2021-end. Total investments were about $54.5 billion, which decreased 9.7% from 2021-end.
Notes payable totaled $ 496.5 million, marginally up 0.06% from 2021-end. Book value per common share excluding AOCI was $50.68, up 24.2% from 2021-end.
Total debt/total capitalization was 9.9%, improving 150 basis points from 2021-end. Operating return on equity excluding average AOCI was 11.9%.
Of the life insurance industry players that have reported second-quarter results so far, Brighthouse Financial Inc. (BHF - Free Report) , Reinsurance Group of America, Incorporated (RGA - Free Report) and Voya Financial, Inc. (VOYA - Free Report) beat the respective Zacks Consensus Estimate for earnings.
Brighthouse Financial's second-quarter 2022 adjusted net income of $3.29 per share surpassed the Zacks Consensus Estimate by 16.3%. The bottom line decreased 38.2% year over year. Total operating revenues of $2.1 billion decreased 8.7% year over year due to lower universal life and investment-type product policy fees and net investment income. The top line, however, beat the consensus mark by about 1%.
Premiums of $167 million increased 3.1% year over year. Adjusted net investment income was $1.1 billion in the quarter under review, down 12.1% year over year, due to lower alternative investment income, partially offset by asset growth. The investment income yield was 3.92%.
Reinsurance Group of America reported second-quarter 2022 adjusted operating earnings of $5.78 per share, which beat the Zacks Consensus Estimate by 112.5%. Moreover, the bottom line increased 44.5% from the year-ago quarter’s figure. Net foreign currency fluctuations had an adverse effect of 16 cents per share on adjusted operating income. Reinsurance Group's operating revenues of $4.1 billion beat the Zacks Consensus Estimate by 3.3%. The top line also improved 2.9% year over year on higher net premiums.
Net premiums of $3.2 billion rose 4.3% year over year. Investment income increased 3.6% from the prior-year quarter to $397 million, reflecting a higher average asset balance. The average investment yield remained flat year over year at 4.63%.
Voya Financial reported second-quarter 2022 adjusted operating earnings of $1.67 per share, which surpassed the Zacks Consensus Estimate by 20.1%. The bottom line decreased 24.1% year over year. Total revenues amounted to $1.5 billion, which decreased 39.3% year over year.
Net investment income declined 11.4% year over year to $581 million. Meanwhile, fee income of $411 million decreased 5.7% year over year. Premiums totaled $595 million, up 15.3% from the year-ago quarter. Total expenses were $1.4 billion, down 7.4% from the year-ago quarter.
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American Equity (AEL) Q2 Earnings Beat, Revenues Rise Y/Y
American Equity Investment Life Holding Company reported second-quarter 2022 adjusted net earnings of 98 cents per share, which beat the Zacks Consensus Estimate by 24%. The bottom line remained unchanged year over year.
The quarterly results reflected higher net investment income, offset by lower premiums and annuity product charges.
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 $660.8 million, up 14.4% year over year on the back of higher net investment income and other revenues.
Premiums and other considerations decreased 73.7% year over year to $3.8 million. Annuity product charges decreased 12.9% year over year to $55.5 million.
Net investment income increased 18.6% on a year-over-year basis to $592.3 million. The upside was due to a higher average yield on investments resulting from strong returns from partnerships and other mark-to-market assets, lower cash balances, and the increase in allocation to higher-yielding privately sourced assets to 16.6% of the investment portfolio.
Total benefits were $0.3 billion versus expenses of $1.1 billion in the year-ago quarter due to lower insurance policy benefits and changes in future policy benefits, interest-sensitive and index product benefits and other operating costs and expenses.
The investment spread was 2.64%, up from 1.95% in the year-ago quarter.
Financial Update
Cash and cash equivalents were $1.3 billion as of Jun 30, 2022, down 71.4% from 2021-end. Total investments were about $54.5 billion, which decreased 9.7% from 2021-end.
Notes payable totaled $ 496.5 million, marginally up 0.06% from 2021-end.
Book value per common share excluding AOCI was $50.68, up 24.2% from 2021-end.
Total debt/total capitalization was 9.9%, improving 150 basis points from 2021-end.
Operating return on equity excluding average AOCI was 11.9%.
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 Other Life Insurers
Of the life insurance industry players that have reported second-quarter results so far, Brighthouse Financial Inc. (BHF - Free Report) , Reinsurance Group of America, Incorporated (RGA - Free Report) and Voya Financial, Inc. (VOYA - Free Report) beat the respective Zacks Consensus Estimate for earnings.
Brighthouse Financial's second-quarter 2022 adjusted net income of $3.29 per share surpassed the Zacks Consensus Estimate by 16.3%. The bottom line decreased 38.2% year over year. Total operating revenues of $2.1 billion decreased 8.7% year over year due to lower universal life and investment-type product policy fees and net investment income. The top line, however, beat the consensus mark by about 1%.
Premiums of $167 million increased 3.1% year over year. Adjusted net investment income was $1.1 billion in the quarter under review, down 12.1% year over year, due to lower alternative investment income, partially offset by asset growth. The investment income yield was 3.92%.
Reinsurance Group of America reported second-quarter 2022 adjusted operating earnings of $5.78 per share, which beat the Zacks Consensus Estimate by 112.5%. Moreover, the bottom line increased 44.5% from the year-ago quarter’s figure. Net foreign currency fluctuations had an adverse effect of 16 cents per share on adjusted operating income. Reinsurance Group's operating revenues of $4.1 billion beat the Zacks Consensus Estimate by 3.3%. The top line also improved 2.9% year over year on higher net premiums.
Net premiums of $3.2 billion rose 4.3% year over year. Investment income increased 3.6% from the prior-year quarter to $397 million, reflecting a higher average asset balance. The average investment yield remained flat year over year at 4.63%.
Voya Financial reported second-quarter 2022 adjusted operating earnings of $1.67 per share, which surpassed the Zacks Consensus Estimate by 20.1%. The bottom line decreased 24.1% year over year. Total revenues amounted to $1.5 billion, which decreased 39.3% year over year.
Net investment income declined 11.4% year over year to $581 million. Meanwhile, fee income of $411 million decreased 5.7% year over year. Premiums totaled $595 million, up 15.3% from the year-ago quarter. Total expenses were $1.4 billion, down 7.4% from the year-ago quarter.