Back to top

Image: Bigstock

American Equity (AEL) Q2 Earnings Beat, Revenues Rise Y/Y

Read MoreHide Full Article

American Equity Investment Life Holding Company (AEL - Free Report) 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.

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.