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American Equity (AEL) Q4 Earnings, Revenues Miss, Down Y/Y
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American Equity Investment Life Holding Company (AEL - Free Report) reported fourth-quarter 2020 adjusted net earnings of 77 cents per share, which missed the Zacks Consensus Estimate by 21.4%. The bottom line decreased 43.8% on a year-over-year basis.
The quarter witnessed lower investment spread income, an increase in other operating costs and expenses as well as increase in the liability for future policy benefits to be paid for lifetime income benefit riders. However, decline in deferred acquisition cost and deferred sales inducement amortization were partial offsets.
Operational Update
Operating total revenues were $521.3 million, down 11.3% year over year. The top line missed the Zacks Consensus Estimate by 2.4%.
Premiums and other considerations increased 16.2% year over year. Annuity product charges increased 4.2% while net investment income declined 11.3%, all on a year-over-year basis.
Gross annuity sales of $1.8 billion doubled year over year. Sequentially, annuity sales were driven by increased gross annuity sales at Eagle Life (up 630%) and American Equity Life (up 103%).
Total benefits were $1 billion, up 22.4% year over year.
Investment spread was 2.25%, down from 2.77% in the year-ago quarter.
Policyholder funds under management of $54.1 billion at quarter end were up 2% from third- quarter end.
American Equity Investment Life Holding Company Price, Consensus and EPS Surprise
Adjusted net earnings of 75 cents per share missed the Zacks Consensus Estimate of 97 cents. The bottom line dropped from the year-ago earnings of $5.97 per share.
Operating total revenues were $2.5 billion, down 3.8% year over year. The top line beat the Zacks Consensus Estimate of $2.2 billion.
Financial Update
Cash and cash equivalents were $9.1 billion as on Dec 31, 2020, compared with $2.3 billion as on Dec 31, 2019. Total investments were about $53.6 billion, down from $56.9 billion at 2019 end.
Note payable totaled $495.7 million, slightly up from $495.1 million at 2019 end.
Book value per common share excluding AOCI was $35.99, up 22.7% from 2019 end.
Total debt/total capitalization was 12.2% at 2020 end, improving 550 basis points.
Operating return on equity excluding average AOCI was 2.3%.
Estimated risk-based capital ratio was 372%, excluding approximately $300 million of excess cash at the holding company.
Zacks Rank
American Equity currently carries a Zacks Rank #4 (Sell).
Fourth-quarter earnings of Reinsurance Group of America (RGA - Free Report) beat the Zacks Consensus Estimate while that of Lincoln Financial (LNC - Free Report) and Primerica (PRI - Free Report) missed the same.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
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American Equity (AEL) Q4 Earnings, Revenues Miss, Down Y/Y
American Equity Investment Life Holding Company (AEL - Free Report) reported fourth-quarter 2020 adjusted net earnings of 77 cents per share, which missed the Zacks Consensus Estimate by 21.4%. The bottom line decreased 43.8% on a year-over-year basis.
The quarter witnessed lower investment spread income, an increase in other operating costs and expenses as well as increase in the liability for future policy benefits to be paid for lifetime income benefit riders. However, decline in deferred acquisition cost and deferred sales inducement amortization were partial offsets.
Operational Update
Operating total revenues were $521.3 million, down 11.3% year over year. The top line missed the Zacks Consensus Estimate by 2.4%.
Premiums and other considerations increased 16.2% year over year. Annuity product charges increased 4.2% while net investment income declined 11.3%, all on a year-over-year basis.
Gross annuity sales of $1.8 billion doubled year over year. Sequentially, annuity sales were driven by increased gross annuity sales at Eagle Life (up 630%) and American Equity Life (up 103%).
Total benefits were $1 billion, up 22.4% year over year.
Investment spread was 2.25%, down from 2.77% in the year-ago quarter.
Policyholder funds under management of $54.1 billion at quarter end were up 2% from third- 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
Full-Year Highlights
Adjusted net earnings of 75 cents per share missed the Zacks Consensus Estimate of 97 cents. The bottom line dropped from the year-ago earnings of $5.97 per share.
Operating total revenues were $2.5 billion, down 3.8% year over year. The top line beat the Zacks Consensus Estimate of $2.2 billion.
Financial Update
Cash and cash equivalents were $9.1 billion as on Dec 31, 2020, compared with $2.3 billion as on Dec 31, 2019. Total investments were about $53.6 billion, down from $56.9 billion at 2019 end.
Note payable totaled $495.7 million, slightly up from $495.1 million at 2019 end.
Book value per common share excluding AOCI was $35.99, up 22.7% from 2019 end.
Total debt/total capitalization was 12.2% at 2020 end, improving 550 basis points.
Operating return on equity excluding average AOCI was 2.3%.
Estimated risk-based capital ratio was 372%, excluding approximately $300 million of excess cash at the holding company.
Zacks Rank
American Equity currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Life Insurers
Fourth-quarter earnings of Reinsurance Group of America (RGA - Free Report) beat the Zacks Consensus Estimate while that of Lincoln Financial (LNC - Free Report) and Primerica (PRI - Free Report) missed the same.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
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