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American Equity (AEL) Q3 Earnings Top Estimates, Decrease Y/Y
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American Equity Investment Life Holding Company (AEL - Free Report) reported third-quarter 2022 adjusted net earnings of 99 cents per share, which beat the Zacks Consensus Estimate by 17.8%. The bottom line decreased 32.2% year over year.
The quarterly results reflected higher annuity product charges, net investment income and lower expenses, offset by lower premiums and other considerations.
American Equity Investment Life Holding Company Price, Consensus and EPS Surprise
Operating total revenues were $684.4 million, up 12.5% year over year on the back of higher annuity product charges, net investment income and other revenues.
Premiums and other considerations decreased 82.1% year over year to $2.8 million. Annuity product charges increased 4% year over year to $60.8 million.
Net investment income increased 15.8% on a year-over-year basis to $609.7 million. The upside was due to an increase in the average yield on investments resulting from strong returns from partnerships, the benefit from higher short-term interest rates on a floating rate portfolio, lower cash balances and an increase in allocation to higher yielding privately sourced assets to 18.4% of the investment portfolio.
Total benefits and expenses were $93 million, which decreased 73.1% from the year-ago quarter due to lower insurance policy benefits and change in future policy benefits, interest-sensitive and index product benefits and interest expense on subordinated debentures.
The investment spread was 2.73%, up from 2.40% in the year-ago quarter.
Financial Update
Cash and cash equivalents were $1.8 billion as of Sep 30, 2022, down 60% from 2021-end. Total investments were about $51.4 billion, which decreased 14.8% from 2021-end.
Notes payable totaled $794.8 million, up 60.2% from 2021-end.
Book value per common share, excluding AOCI, was $54.93, up 34.6% from 2021-end.
Total debt/total capitalization was 13.9%, deteriorating 250 basis points from 2021-end.
Operating return on equity, excluding average AOCI, was 10.5%.
Of the life insurance industry players that have reported third-quarter results so far, Voya Financial, Inc. (VOYA - Free Report) and Reinsurance Group of America, Incorporated (RGA - Free Report) beat the respective Zacks Consensus Estimate for earnings, while Lincoln National Corporation (LNC - Free Report) missed the mark.
Voya Financial reported third-quarter 2022 adjusted operating earnings of $2.30 per share, which surpassed the Zacks Consensus Estimate by 84%. The bottom line, however, decreased 10.5% year over year. Total revenues amounted to $1.3 billion, which decreased 33.4% year over year.
Net investment income declined 22.4% year over year to $522 million. Fee income of $435 million decreased 10.7% year over year. Premiums totaled $607 million, up 11.6% from the year-ago quarter. Total expenses were $1.2 billion, down 10% from the year-ago quarter.
Reinsurance Group of America reported third-quarter 2022 adjusted operating earnings of $5.20 per share, which beat the Zacks Consensus Estimate by 76.8%. Moreover, the bottom line rebounded from the year-ago loss of $1.11. Net foreign currency fluctuations had an adverse effect of 15 cents per share on adjusted operating income.
Reinsurance Group's operating revenues of $4.2 billion beat the Zacks Consensus Estimate by 5%. The top line also improved 5.4% year over year on higher net premiums and other revenues. Net premiums of $3.2 billion rose 4.9% year over year. Investment income decreased 7.6% from the prior-year quarter to $374 million, reflecting lower variable investment income.
Lincoln National incurred third-quarter 2022 adjusted loss of $10.23 per share. The Zacks Consensus Estimate was of earnings of $1.93 per share. Earnings of $1.62 per share were reported in the prior-year quarter.
Adjusted operating revenues amounted to $4,630 million, which dropped 11% year over year. However, the top line beat the consensus mark by 5.9% and came above our estimate of $4,387.1 million. Lincoln National’s expenses of $7,935 million increased 62.8% year over year in the quarter under review.
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American Equity (AEL) Q3 Earnings Top Estimates, Decrease Y/Y
American Equity Investment Life Holding Company (AEL - Free Report) reported third-quarter 2022 adjusted net earnings of 99 cents per share, which beat the Zacks Consensus Estimate by 17.8%. The bottom line decreased 32.2% year over year.
The quarterly results reflected higher annuity product charges, net investment income and lower expenses, offset by lower premiums and other considerations.
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 $684.4 million, up 12.5% year over year on the back of higher annuity product charges, net investment income and other revenues.
Premiums and other considerations decreased 82.1% year over year to $2.8 million. Annuity product charges increased 4% year over year to $60.8 million.
Net investment income increased 15.8% on a year-over-year basis to $609.7 million. The upside was due to an increase in the average yield on investments resulting from strong returns from partnerships, the benefit from higher short-term interest rates on a floating rate portfolio, lower cash balances and an increase in allocation to higher yielding privately sourced assets to 18.4% of the investment portfolio.
Total benefits and expenses were $93 million, which decreased 73.1% from the year-ago quarter due to lower insurance policy benefits and change in future policy benefits, interest-sensitive and index product benefits and interest expense on subordinated debentures.
The investment spread was 2.73%, up from 2.40% in the year-ago quarter.
Financial Update
Cash and cash equivalents were $1.8 billion as of Sep 30, 2022, down 60% from 2021-end. Total investments were about $51.4 billion, which decreased 14.8% from 2021-end.
Notes payable totaled $794.8 million, up 60.2% from 2021-end.
Book value per common share, excluding AOCI, was $54.93, up 34.6% from 2021-end.
Total debt/total capitalization was 13.9%, deteriorating 250 basis points from 2021-end.
Operating return on equity, excluding average AOCI, was 10.5%.
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 third-quarter results so far, Voya Financial, Inc. (VOYA - Free Report) and Reinsurance Group of America, Incorporated (RGA - Free Report) beat the respective Zacks Consensus Estimate for earnings, while Lincoln National Corporation (LNC - Free Report) missed the mark.
Voya Financial reported third-quarter 2022 adjusted operating earnings of $2.30 per share, which surpassed the Zacks Consensus Estimate by 84%. The bottom line, however, decreased 10.5% year over year. Total revenues amounted to $1.3 billion, which decreased 33.4% year over year.
Net investment income declined 22.4% year over year to $522 million. Fee income of $435 million decreased 10.7% year over year. Premiums totaled $607 million, up 11.6% from the year-ago quarter. Total expenses were $1.2 billion, down 10% from the year-ago quarter.
Reinsurance Group of America reported third-quarter 2022 adjusted operating earnings of $5.20 per share, which beat the Zacks Consensus Estimate by 76.8%. Moreover, the bottom line rebounded from the year-ago loss of $1.11. Net foreign currency fluctuations had an adverse effect of 15 cents per share on adjusted operating income.
Reinsurance Group's operating revenues of $4.2 billion beat the Zacks Consensus Estimate by 5%. The top line also improved 5.4% year over year on higher net premiums and other revenues. Net premiums of $3.2 billion rose 4.9% year over year. Investment income decreased 7.6% from the prior-year quarter to $374 million, reflecting lower variable investment income.
Lincoln National incurred third-quarter 2022 adjusted loss of $10.23 per share. The Zacks Consensus Estimate was of earnings of $1.93 per share. Earnings of $1.62 per share were reported in the prior-year quarter.
Adjusted operating revenues amounted to $4,630 million, which dropped 11% year over year. However, the top line beat the consensus mark by 5.9% and came above our estimate of $4,387.1 million. Lincoln National’s expenses of $7,935 million increased 62.8% year over year in the quarter under review.