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Q4 Earnings in Line at American Equity - Analyst Blog

By: Zacks.com
Posted: 2/14/2014 1:50:00 PM
Referenced Stocks: RBC;AEL;GNW;LNC;PL

American Equity Investment Life Holding Company ( AEL ) reported its fourth-quarter 2013 operating net income of 50 cents per share, in line with the Zacks Consensus Estimate. However, the number increased 6.4% year over year, driven by improvement in the top line.

Including net realized investment gains of 8 cents per share; changes in fair value of derivatives and embedded derivatives (index annuities) of 30 cents per share; changes in fair value of derivatives and embedded derivatives (debt) of 5 cents a share; litigation reserve of 3 cents a share and extinguishment of debt of 26 cents per share, American Equity reported net income of 64 cents per share, up 16.4% year over year.

Operational Update

During the fourth-quarter, American Equity's revenues totaled $837.3 million, skyrocketing from $304.7 million reported in the prior-year quarter. The hike was primarily fueled by higher net investment income, net realized investment gains and favorable changes in fair value derivatives.

American Equity's annuity sales amounted to $1.09 billion, up 2.2% from the prior-year quarter.

Investment spread of American Equity increased 14 basis points (bps) year over year to 2.7%.

Total benefits and expenses of the company shot up to nearly $758 million, from $251.1 million reported in the year-ago quarter. The increase was attributable to favorable change in fair value of embedded derivatives, higher amortization of deferred policy acquisition costs and also interest sensitive and index product benefits.

Full-Year Highlights

American Equity reported net operating earnings of $2.18 per share for full-year 2013, increasing almost 29% from the 2012 number. Growth was supported by increasing demand for the company's guaranteed retirement savings and income products.

American Equity reported 2013 net income of $3.38 per share surging from 89 cents a share.

Total revenue jumped 58% year over year to $2.61 billion during 2013.

Financial Update

Total invested assets of American Equity as of Dec 31, 2013 were $30.3 billion, up from $27.5 billion as of 2012-end.

As of 2013-end, estimated risk-based capital (RBC) ratio exceeded the target at 344% compared to 332% at 2012-end.

As of Dec 31, 2013, American Equity's book value per share was at $18.75, inched down 0.3% from 2012-end.

Dividend Update

During 2013, American Equity paid an annual cash dividend of 18 cents a share, up 20% from the 2012 annual dividend of 15 cents. The company has been paying annual dividend for the last 15 consecutive years. Additionally, 2013 marked the 10th consecutive annual dividend hike by the company.

Performances of Other Life Insurers

Protective Life Corp. ( PL ) reported fourth-quarter 2013 net operating earnings of $1.43 per share, 31 cents ahead of the Zacks Consensus Estimate. Earnings also surged 46% year over year.

Lincoln National Corp. ( LNC ) reported fourth-quarter 2013 operating earnings of $1.40 per share. The results noticeably outpaced the Zacks Consensus Estimate of $1.28 and breezed past the prior-year quarter figure of $1.10 per share.

Genworth Financial Inc. ( GNW ) reported fourth-quarter 2013 net operating income of 38 cents per share. The results were nearly 27% higher than the Zacks Consensus Estimate and 15% above the year-ago level.

Zacks Rank

American Equity presently carries a Zacks Rank #3 (Hold).



AMER EQUITY INV (AEL): Free Stock Analysis Report

GENWORTH FINL (GNW): Free Stock Analysis Report

LINCOLN NATL-IN (LNC): Free Stock Analysis Report

PROTECTIVE LIFE (PL): Free Stock Analysis Report

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