Firm Highlights
Fourth quarter 2018 web revenue of $53.eight million or $zero.59 per diluted widespread share; Full 12 months 2018 web revenue of $458.zero million or $5.01 per diluted widespread share
Fourth quarter 2018 non-GAAP working income1 of $90.three million or $zero.99 per diluted widespread share; Full 12 months 2018 non-GAAP working income1 of $425.7 million or $four.66 per diluted widespread share
Fourth quarter 2018 annuity gross sales of $1.1 billion
Policyholder funds below administration of $51.1 billion
Fourth quarter 2018 funding unfold of two.56%
Threat-based capital ratio at December 31, 2018 (after change in tax elements) of 360%
Annual money dividend of $zero.28 per share
WEST DES MOINES, Iowa--(BUSINESS WIRE)-- American Fairness Funding Life Holding Firm (NYSE: AEL), a number one issuer of mounted index annuities (FIAs), as we speak reported fourth quarter 2018 web revenue of $53.eight million, or $zero.59 per diluted widespread share, in comparison with web revenue of $36.eight million, or $zero.41 per diluted widespread share, for fourth quarter 2017.
For the 12 months ended December 31, 2018, web revenue was $458.zero million, or $5.01 per diluted widespread share, in comparison with $174.6 million, or $1.93 per diluted widespread share, for the 12 months ended December 31, 2017.
Non-GAAP working income1 for the fourth quarter of 2018 was $90.three million, or $zero.99 per diluted widespread share, in comparison with non-GAAP working income1 of $74.5 million, or $zero.82 per diluted widespread share, for fourth quarter 2017. For the 12 months ended December 31, 2018, non-GAAP working income1 was $425.7 million, or $four.66 per diluted widespread share, in comparison with $285.1 million, or $three.16 per diluted widespread share, for the 12 months ended December 31, 2017. Non-GAAP working return on common fairness excluding common AOCI1 for the 12 months was 18.6% based mostly upon reported outcomes and 15.four% excluding the affect of assumption revisions.
POLICYHOLDER FUNDS UNDER MANAGEMENT UP 1% ON $1.1 BILLION OF SALES
Policyholder funds below administration at December 31, 2018 have been $51.1 billion, a $441 million or 1% improve from September 30, 2018. Fourth quarter gross sales have been $1.1 billion earlier than coinsurance ceded and $1.zero billion after coinsurance ceded. Product sales and web gross sales for the quarter elevated 12% and 18%, respectively, from fourth quarter 2017 gross sales. On a sequential foundation, gross and web gross sales elevated eight% and 12%, respectively.
Whole gross sales by impartial brokers for American Fairness Funding Life Insurance coverage Firm (American Fairness Life) elevated 13% sequentially whereas whole gross sales by broker-dealers and banks for Eagle Life Insurance coverage Firm (Eagle Life) decreased by $23 million or 12% sequentially. Gross sales of FIAs have been up 11% sequentially to $1.1 billion pushed by a 14% improve in gross sales for American Fairness Life. FIA gross sales for Eagle Lifetime of $163 million have been down $1 million or 1% sequentially.
Commenting on gross sales, John Matovina, Chairman and Chief Government Officer, stated: "We skilled sequential and year-over-year will increase in FIA gross sales in American Fairness Life's impartial agent channel. Our increased new cash funding yields allowed us to take a number of actions late within the third quarter and early within the fourth quarter to boost our competitiveness in each the buildup and assured lifetime revenue market segments. The launch of AssetShield on October ninth was profitable; and it now joins IncomeShield as considered one of our two prime promoting merchandise. Within the fourth quarter, mixed gross sales for AssetShield and the Selection collection, our different accumulation product within the impartial agent channel, have been larger than whole gross sales of Selection within the third quarter. Selection and AssetShield accounted for 38% of gross sales within the fourth quarter in comparison with 35% of gross sales within the third quarter. Within the assured lifetime revenue house, we improved the aggressive place of the IncomeShield collection and our different assured revenue merchandise by growing payout elements in early October. The IncomeShield collection, which was the third best-selling assured lifetime revenue product within the impartial agent channel within the third quarter, accounted for 33% of our FIA gross sales within the fourth quarter."
Commenting available on the market atmosphere and the outlook for FIA gross sales, Matovina added: "The market in every of our distribution channels continues to be difficult. Nevertheless, we're happy with our aggressive positioning for each accumulation and assured lifetime revenue merchandise. Enterprise exercise in January 2019 was appreciably forward of January 2018 and we're optimistic that the gross sales momentum we developed within the fourth quarter will proceed in 2019."
Matovina continued: "Within the financial institution channel, we're seeing significant gross sales from the massive financial institution we referenced in our prior launch and proceed to count on this relationship to be a key account for Eagle Life. We're additionally persevering with to construct out our worker wholesaling mannequin which will likely be a key initiative for Eagle Life in 2019. Our intent is to make use of our worker wholesalers to focus on accounts that don't use third social gathering wholesalers and to enhance our third social gathering wholesalers when potential. When achieved, we will serve banks and broker-dealers within the method wherein they need whereas decreasing our distribution prices."
INVESTMENT SPREAD DECLINES ON NON-TRENDABLE ITEMS AND HIGHER COST OF MONEY
American Fairness’s funding unfold was 2.56% for the fourth quarter of 2018 in comparison with 2.67% for the third quarter of 2018 and a couple of.75% for the fourth quarter of 2017. On a sequential foundation, the common yield on invested property decreased by three foundation factors whereas the price of cash rose eight foundation factors.
Common yield on invested property was four.51% within the fourth quarter of 2018 in comparison with four.54% within the third quarter of 2018. This lower was primarily attributable to a decline within the profit from non-trendable funding revenue objects from 11 foundation factors within the third quarter to 7 foundation factors within the fourth quarter. The common yield on mounted revenue securities bought and industrial mortgage loans funded within the fourth quarter of 2018 was 5.02% in comparison with four.97% within the third quarter of 2018 and four.61% for the primary six months of 2018.
The mixture price of cash for annuity liabilities of 1.95% within the fourth quarter of 2018 was up eight foundation factors from 1.87% within the third quarter of 2018. The profit from over hedging index linked curiosity obligations was three foundation factors within the fourth quarter of 2018 in comparison with 7 foundation factors within the third quarter of 2018.
Commenting on funding unfold, Matovina stated: “The sequential lower in funding unfold within the third quarter primarily mirrored an eight foundation level lower within the profit from non-trendable funding revenue objects and over-hedging. Our funding unfold remained below strain within the fourth quarter of 2018 because of the escalation of choice prices for sure index methods within the final a number of quarters that's acknowledged in the price of cash ratably over the twelve month choice interval. To counteract this affect, we initiated renewal fee changes on sure in-force insurance policies in October along with the renewal fee actions we undertook in March. We have now flexibility to scale back our crediting charges and will lower our price of cash by roughly zero.63% via additional reductions in renewal charges to assured minimums ought to the price of cash not return to acceptable ranges."
Matovina went on to say: "Our funding unfold ought to profit from the upper yields we've got been acquiring on funding securities purchases and industrial mortgage mortgage fundings, anticipated will increase in yields on our floating fee investments and decrease choice prices. Whereas too late to have an effect on the price of cash for the fourth quarter, we did see choice prices come down considerably in December and so they have remained decrease in January. For all of 2018, we offered $2.1 billion of e-book worth of decrease yielding securities, and we anticipate pursuing extra portfolio realignment alternatives in 2019. We proceed to count on our portfolio yield, excluding non-trendable objects, to extend in future quarters."
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This press launch incorporates forward-looking statements inside the that means of The Personal Securities Litigation Reform Act of 1995. Ahead-looking statements relate to future operations, methods, monetary outcomes or different developments, and are topic to assumptions, dangers and uncertainties. Statements comparable to “steering”, “count on”, “anticipate”, “imagine”, “objective”, “goal”, “goal”, “could”, “ought to”, “estimate”, “initiatives” or related phrases in addition to particular projections of future outcomes qualify as forward-looking statements. Components which will trigger our precise outcomes to vary materially from these contemplated by these ahead trying statements will be discovered within the firm’s Kind 10-Okay filed with the Securities and Alternate Fee. Ahead-looking statements communicate solely as of the date the assertion was made and the corporate undertakes no obligation to replace such forward-looking statements. There will be no assurance that different elements not presently anticipated by the corporate won't materially and adversely have an effect on our outcomes of operations. Traders are cautioned to not place undue reliance on any forward-looking statements made by us or on our behalf.
CONFERENCE CALL
American Fairness will maintain a convention name to debate fourth quarter 2018 earnings on Thursday, February 7, 2019 at eight:00 a.m. CT. The convention name will likely be webcast stay on the Web. Traders and events who want to take heed to the decision on the Web could achieve this at www.american-equity.com.
The decision might also be accessed by phone at 855-865-0606, passcode 9464918 (worldwide callers, please dial 704-859-4382). An audio replay will likely be out there shortly after the decision on AEL’s web site. An audio replay will even be out there by way of phone via February 14, 2019 at 855-859-2056, passcode 9464918 (worldwide callers might want to dial 404-537-3406).
ABOUT AMERICAN EQUITY
American Fairness Funding Life Holding Firm, via its wholly-owned working subsidiaries, points mounted annuity and life insurance coverage merchandise, with a main emphasis on the sale of mounted index and glued fee annuities. American Fairness Funding Life Holding Firm, a New York Inventory Alternate Listed firm (NYSE: AEL), is headquartered in West Des Moines, Iowa. For extra data, please go to www.american-equity.com.
1
Use of non-GAAP monetary measures is mentioned on this launch within the tables that comply with the textual content of the discharge.
American Fairness Funding Life Holding Firm
Unaudited ( in hundreds, besides per share information)
Consolidated Statements of Operations
Three Months Ended
12 months Ended
December 31,
December 31,
2018
2017
2018
2017
Revenues:
Premiums and different issues
$
four,430
$
eight,537
$
26,480
$
34,228
Annuity product expenses
60,394
56,388
224,488
200,494
Internet funding revenue
554,355
512,709
2,147,812
1,991,997
Change in truthful worth of derivatives
(1,054,281
)
661,993
(777,848
)
1,677,871
Internet realized positive factors (losses) on investments, excluding apart from non permanent impairment ("OTTI") losses
three,097
2,719
(37,178
)
10,509
OTTI losses on investments:
Whole OTTI losses
(18,980
)
(2,485
)
(35,zero05
)
(2,758
)
Portion of OTTI losses acknowledged in (from) different complete revenue
—
(591
)
(1,651
)
(1,872
)
Internet OTTI losses acknowledged in operations
(18,980
)
(three,076
)
(36,656
)
(four,630
)
Loss on extinguishment of debt
—
—
—
(18,817
)
Whole revenues
(450,985
)
1,239,270
1,547,098
three,891,652
Advantages and bills:
Insurance coverage coverage advantages and alter in future coverage advantages
7,439
10,535
39,530
43,219
Curiosity delicate and index product advantages
255,700
630,905
1,610,835
2,023,668
Amortization of deferred gross sales inducements
(11,578
)
65,885
222,201
176,612
Change in truthful worth of embedded derivatives
(804,026
)
290,890
(1,389,491
)
919,735
Curiosity expense on notes and mortgage payable
6,376
6,371
25,498
30,368
Curiosity expense on subordinated debentures
four,041
three,864
15,491
14,124
Amortization of deferred coverage acquisition prices
(eight,750
)
93,716
327,991
255,964
Different working prices and bills
33,597
29,366
129,301
111,691
Whole advantages and bills
(517,201
)
1,131,532
981,356
three,575,381
Earnings earlier than revenue taxes
66,216
107,738
565,742
316,271
Earnings tax expense
12,393
70,935
107,726
141,626
Internet revenue
$
53,823
$
36,803
$
458,016
$
174,645
Earnings per widespread share
$
zero.59
$
zero.41
$
5.07
$
1.96
Earnings per widespread share - assuming dilution
$
zero.59
$
zero.41
$
5.01
$
1.93
Weighted common widespread shares excellent (in hundreds):
Earnings per widespread share
90,555
89,308
90,348
88,982
Earnings per widespread share - assuming dilution
91,622
90,727
91,423
90,311
American Fairness Funding Life Holding Firm
Unaudited ( in hundreds, besides per share information)
NON-GAAP FINANCIAL MEASURES
Along with web revenue, the Firm has constantly utilized non-GAAP working revenue and non-GAAP working revenue per widespread share - assuming dilution, non-GAAP monetary measures generally used within the life insurance coverage trade, as financial measures to guage its monetary efficiency. Non-GAAP working revenue equals web revenue adjusted to remove the affect of things that fluctuate from quarter to quarter in a way unrelated to core operations, and the Firm believes measures excluding their affect are helpful in analyzing working traits. Essentially the most vital changes to reach at non-GAAP working revenue remove the affect of truthful worth accounting for the Firm's mounted index annuity enterprise. These changes are not financial in nature however quite affect the timing of reported outcomes. The Firm believes the mixed presentation and analysis of non-GAAP working revenue along with web revenue offers data which will improve an investor’s understanding of its underlying outcomes and profitability.
Reconciliation from Internet Earnings to Non-GAAP Working Earnings
Three Months Ended
12 months Ended
December 31,
December 31,
2018
2017
2018
2017
Internet revenue (b)
$
53,823
$
36,803
$
458,016
$
174,645
Changes to reach at non-GAAP working revenue: (a)
Internet realized funding (positive factors) losses, together with OTTI
9,525
(676
)
45,450
(5,zero93
)
Change in truthful worth of derivatives and embedded derivatives - mounted index annuities
36,186
5,463
(72,181
)
121,846
Change in truthful worth of derivatives - debt
1,276
(1,085
)
(1,892
)
(1,224
)
Earnings taxes (b)
(10,475
)
34,003
(three,653
)
(5,124
)
Non-GAAP working revenue
$
90,335
$
74,508
$
425,740
$
285,zero50
Per widespread share - assuming dilution:
Internet revenue
$
zero.59
$
zero.41
$
5.01
$
1.93
Changes to reach at non-GAAP working revenue:
Internet realized funding (positive factors) losses, together with OTTI
zero.10
(zero.01
)
zero.50
(zero.05
)
Change in truthful worth of derivatives and embedded derivatives - mounted index annuities
zero.40
zero.06
(zero.79
)
1.35
Change in truthful worth of derivatives - debt
zero.01
(zero.01
)
(zero.02
)
(zero.01
)
Earnings taxes
(zero.11
)
zero.37
(zero.04
)
(zero.06
)
Non-GAAP working revenue
$
zero.99
$
zero.82
$
four.66
$
three.16
(a)
Changes to web revenue to reach at non-GAAP working revenue are offered web of associated changes to amortization of deferred gross sales inducements (DSI) and deferred coverage acquisition prices (DAC) the place relevant.
(b)
Internet revenue for the three months and 12 months ended December 31, 2017 contains revenue tax expense associated to the revaluation of our deferred tax property and liabilities utilizing the brand new enacted federal tax fee ensuing from the Tax Cuts and Jobs Act of 2017 ("Tax Reform"). The change within the federal revenue tax fee decreased web revenue and earnings per widespread share-assuming dilution by $35.9 million and $zero.40 per share, respectively. The affect of Tax Reform has been excluded from non-GAAP working revenue.
American Fairness Funding Life Holding Firm
Unaudited ( in hundreds)
NON-GAAP FINANCIAL MEASURES
Common Stockholders' Fairness and Return on Common Fairness
Return on common fairness measures how effectively the Firm generates earnings from the sources supplied by its web property. Return on common fairness is calculated by dividing web revenue and non-GAAP working revenue for the trailing twelve months by common fairness excluding common amassed different complete revenue (loss) ("AOCI"). The Firm excludes AOCI as a result of AOCI fluctuates from quarter to quarter as a result of unrealized modifications within the truthful worth of obtainable on the market investments.
Twelve Months Ended
December 31, 2018
Common Stockholders' Fairness
Common fairness together with common AOCI
$
2,624,629
Common AOCI
(336,zero84
)
Common fairness excluding common AOCI
$
2,288,545
Internet revenue
$
458,016
Non-GAAP working revenue
425,740
Return on Common Fairness Excluding Common AOCI
Internet revenue
20.01
%
Non-GAAP working revenue
18.60
%
View supply model on businesswire.com: https://www.businesswire.com/information/residence/20190206005637/en/
Steven D. Schwartz, Vice President-Investor Relations
(515) 273-3763, [email protected]
Supply: American Fairness Funding Life Holding Firm
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