American Equity Investment (AEL) Tops Q4 EPS by 9c

American Equity Investment (NYSE: AEL) reported Q4 EPS of $0.99, $0.09 better than the analyst estimate of $0.90.

• Fourth quarter 2018 net income of $53.8 million or $0.59 per diluted common share; Full year 2018 net income of $458.0 million or $5.01 per diluted common share
• Fourth quarter 2018 non-GAAP operating income1 of $90.3 million or $0.99 per diluted common share; Full year 2018 non-GAAP operating income1 of $425.7 million or $4.66 per diluted common share
• Fourth quarter 2018 annuity sales of $1.1 billion
• Policyholder funds under management of $51.1 billion
• Fourth quarter 2018 investment spread of 2.56%
• Risk-based capital ratio at December 31, 2018 (after change in tax factors) of 360%
• Annual cash dividend of $0.28 per share

Commenting on sales, John Matovina, Chairman and Chief Executive Officer, said: "We experienced sequential and year-over-year increases in FIA sales in American Equity Life\'s independent agent channel. Our higher new money investment yields allowed us to take several actions late in the third quarter and early in the fourth quarter to enhance our competitiveness in both the accumulation and guaranteed lifetime income market segments. The launch of AssetShield on October 9th was successful; and it now joins IncomeShield as one of our two top selling products. In the fourth quarter, combined sales for AssetShield and the Choice series, our other accumulation product in the independent agent channel, were greater than total sales of Choice in the third quarter. Choice and AssetShield accounted for 38% of sales in the fourth quarter compared to 35% of sales in the third quarter. In the guaranteed lifetime income space, we improved the competitive position of the IncomeShield series and our other guaranteed income products by increasing payout factors in early October. The IncomeShield series, which was the third best-selling guaranteed lifetime income product in the independent agent channel in the third quarter, accounted for 33% of our FIA sales in the fourth quarter."

Commenting on the market environment and the outlook for FIA sales, Matovina added: "The market in each of our distribution channels continues to be challenging. However, we are pleased with our competitive positioning for both accumulation and guaranteed lifetime income products. Business activity in January 2019 was appreciably ahead of January 2018 and we are optimistic that the sales momentum we developed in the fourth quarter will continue in 2019."

Matovina continued: "In the bank channel, we are seeing meaningful sales from the large bank we referenced in our prior release and continue to expect this relationship to be a key account for Eagle Life. We are also continuing to build out our employee wholesaling model which will be a key initiative for Eagle Life in 2019. Our intent is to use our employee wholesalers to target accounts that do not use third party wholesalers and to complement our third party wholesalers when possible. When accomplished, we will be able to serve banks and broker-dealers in the manner in which they desire while lowering our distribution costs."

For earnings history and earnings-related data on American Equity Investment (AEL) click here.

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