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American Equity (AEL) Q4 Earnings Top Estimates, Rise Y/Y

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American Equity Investment Life Holding Company reported fourth-quarter 2023 adjusted net earnings of $1.99 per share, which beat the Zacks Consensus Estimate by 15%. The bottom line increased 21.3% year over year.

The quarterly results reflected increased annuity product charges, improved investment income and other revenues, offset by lower premiums and higher expenses.

Operational Update   

Operating total revenues were $703.7 million, up 14.3% year over year due to higher annuity product charges, net investment income and other revenues.

Premiums and other considerations decreased 11% year over year to $2.6 million. The figure was higher than our estimate of $2.2 million. Annuity product charges increased 57.2% year over year to $96.9 million. The figure was higher than our estimate of $62.3 million.

Net investment income rose 8.2% on a year-over-year basis to $582 million. The figure was higher than our estimate of $570.8 million.

Total expenses more than doubled year over year to $1.6 billion. The figure was higher than our estimate of $507.8 million.

The investment spread was 2.64%, up from 2.54% in the year-ago quarter.

Financial Update

Cash and cash equivalents were $9.8 billion as of Dec 31, 2023, which surged fivefold from 2022-end. Total investments were $48.2 billion, which decreased 6% from 2022-end.

Notes and loan payable totaled $785.4 million, down 0.8% from 2022-end.
Book value per common share, excluding average accumulated other comprehensive income (AOCI), was $66.84, up 5% from 2022-end.

Total debt/total capitalization was 12.8%, deteriorating 20 basis points from 2022-end.

Non-GAAP operating return on equity, excluding average AOCI and net impact of fair value accounting for fixed index annuities, was 18.7%.

Full-Year Highlights

Total operating revenues for 2023 were $2.7 billion, which increased 2.9% year over year.

Adjusted earnings for 2023 were $7.50 per share, which surged 75.6% year over year.

Net Investment income was $2.3 billion in 2023, which decreased 1.5% year over year.

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

Lincoln National Corporation (LNC - Free Report) reported fourth-quarter 2023 adjusted earnings of $1.45 per share, which outpaced the Zacks Consensus Estimate by 9.9%. The bottom line surged 90.8% year over year. Adjusted operating revenues of $2 billion plunged 56.6% year over year in the quarter under review. The top line lagged the consensus mark by 55.7%. Fee income inched up 0.5% year over year to $1.4 billion, which almost touched the Zacks Consensus Estimate. Insurance premiums were a negative figure of $1.1 billion.

Net investment income of $1.4 billion dipped 0.1% year over year but beat the consensus mark of $1.3 billion. Meanwhile, other revenues climbed 32.1% year over year. Total expenses decreased 19% year over year to $2.3 billion in the fourth quarter. Commissions and other expenses fell 1.2% year over year, while interest and debt expenses witnessed a year-over-year increase of 5.2% during the same time frame. Lincoln National incurred a net loss of $1.2 billion against the year-ago quarter’s net income of $812 million.

Brighthouse Financial Inc. (BHF - Free Report) reported fourth-quarter 2023 adjusted net income of $2.92 per share, which missed the Zacks Consensus Estimate by 23.8%. The bottom line declined 16.8% year over year. The results reflected higher revenues, offset by higher expenses. Total operating revenues of $2.1 billion increased 5.4% year over year, driven by higher premiums, net investment income and other income. The top line beat the consensus mark by 0.2%. Premiums of $226 million increased 35.5% year over year.

Adjusted net investment income was $1.2 billion in the quarter under review, up 13.3% year over year, primarily driven by alternative investment income, asset growth and higher interest rates. The investment income yield was 4.16%. Total expenses were $2.6 million. Corporate expenses, pretax, were $224 million, a slight decrease from $243 million incurred in the year ago quarter.

Sun Life Financial Inc. (SLF - Free Report) delivered fourth-quarter 2023 underlying net income of $1.23 per share, which beat the Zacks Consensus Estimate by 5.1%. However, the bottom line decreased 1.6% year over year.  Underlying net income was $722 million (C$983 million), which increased 10% year over year. Revenues of $13.7 billion increased 51.5% on a year-over-year basis.

Wealth sales & asset management gross flows of $33.7 billion (C$45.8 billion) increased 5.7% year over year. Group - Health & Protection sales of $1.1 billion (C$1.5 billion) improved 8.5% year over year. Individual - Protection sales of $519.6 million (C$707 million) jumped 42% year over year. The new business contractual service margin was $280 million (C$381 million), up 51% year over year.


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