National Western Life Group, Inc. Announces 2020 Full Year and Fourth Quarter Earnings

Rhea-AI Summary

National Western Life Group reported 2020 consolidated net earnings of $92.3 million ($26.11 per diluted share), down from $131.6 million in 2019. Total revenues for 2020 were $658.9 million, a decrease from $689.7 million in the previous year, attributed to lower net investment income of $402.4 million due to declining interest rates. However, book value per share rose to $698.50. Annuity sales increased by 38%, while life insurance sales were up over 6%. The company faced minor COVID-19 related claims of $7.9 million.

Positive

• Book value per share increased to $698.50 from $582.07 year-over-year.
• Annuity sales surged by 38%, indicating strong demand.
• Life insurance sales rose over 6%, reflecting resilience in demand.
• Successfully executed a reinsurance transaction relieving $1.7 billion in policy obligations.

Negative

• Consolidated net earnings fell to $92.3 million from $131.6 million, a decrease of 30% year-over-year.
• Total revenues declined by $30.8 million compared to 2019.
• Net investment income dropped by $29.9 million due to lower interest rates.

AUSTIN, Texas, March 15, 2021 /PRNewswire/ -- Ross R. Moody, Chairman of the Board, President, and Chief Executive Officer of National Western Life Group, Inc. (Nasdaq: NWLI), announced today 2020 consolidated net earnings of $92.3 million, or $26.11 per diluted Class A common share, compared with consolidated net earnings of $131.6 million, or $37.22 per diluted Class A common share, for 2019. The Company's book value per share increased to $698.50 as of December 31, 2020 from $582.07 as of December 31, 2019. For the quarter ended December 31, 2020, the Company reported consolidated net earnings of $35.1 million, or $9.94 per diluted Class A common share, compared with $37.7 million, or $10.67 per diluted Class A common share, in the fourth quarter of 2019.

The Company reported total revenues for the year, excluding realized and unrealized gains on index options and investments, of $658.9 million in 2020 compared to $689.7 million in 2019. Mr. Moody noted that the decline was due to lower net investment income as a consequence of the substantial decrease in interest rates during 2020 caused by the COVID-19 pandemic. Net investment income for the year ended December 31, 2020 was $402.4 million compared to $432.3 million a year earlier.

Addressing the impact of lower yielding investments, Mr. Moody highlighted the execution of a reinsurance transaction the Company completed at the end of 2020. "In the past year, the life insurance industry has experienced a heightened level of merger and acquisition activity as well as consummations of reinsurance deals, particularly involving life insurers such as National Western with large legacy blocks of in force business with fixed interest rate guarantees. These types of products have come under pressure as traditional investment yields continue an unprecedented decline. As previously reported, we successfully completed a reinsurance agreement at December 31, 2020 that transferred financial responsibility for approximately $1.7 billion of these fixed interest rate policy obligations, which relieved us of the associated interest rate spread compression and allows us to redeploy our capital resources."

Mr. Moody indicated that the pandemic crisis presented challenges but did not prevent the Company from achieving successful operating results. "In terms of COVID-19 mortality experience, we were fortunate that National Western and Ozark National in the aggregate incurred only $7.9 million in net death claims, which was balanced out by favorable mortality experienced with the remainder of our business. From a new business standpoint, we had a very successful sales year as our annuity sales were up 38% and our life insurance sales increased over 6%."

National Western Life Group, Inc. is the parent organization of National Western Life Insurance Company, which is the parent organization of Ozark National Life Insurance Company, both stock life insurance companies in aggregate offering a broad portfolio of individual universal life, whole life and term insurance plans, as well as annuity products. At December 31, 2020, the Company maintained consolidated total assets of $14.6 billion, consolidated stockholders' equity of $2.5 billion, and combined life insurance in force of $22.0 billion.

Caution Regarding Forward-Looking Statements:

This press release contains statements which are or may be viewed as forward-looking within the meaning of The Private Securities Litigation Reform Act of 2005. Forward-looking statements relate to future operations, strategies, financial results or other developments, and are subject to assumptions, risks, and uncertainties. Factors that may cause actual results to differ materially from those contemplated in these forward-looking statements can be found in the Company's Form 10-K filed with the Securities and Exchange Commission. Forward-looking statements speak only as of the date the statement was made and the Company undertakes no obligation to update such forward-looking statements. There can be no assurance that other factors not currently anticipated by the Company will not materially and adversely affect our results of operations. Investors are cautioned not to place undue reliance on any forward-looking statements made by us or on our behalf.

Summary of Consolidated Financial Results (Unaudited (In thousands except per share data)
		Three Months Ended						Twelve Months Ended
		December 31,						December 31,
		2020			2019			2020			2019
Revenues:
Revenues, excluding investment and index option	$	165,507			172,808			658,917			689,740
gains
Realized and unrealized gains on index options		49,619			60,081			14,754			123,207
Realized gains on investments		8,411			2,539			21,071			6,241
Total revenues		223,537			235,428			694,742			819,188
Benefits and expenses:
Life and other policy benefits		37,331			35,578			131,337			137,342
Amortization of deferred acquisition costs and
value of business acquired		28,568			30,229			140,503			116,802
Universal life and annuity contract interest		86,625			94,830			206,250			295,330
Other operating expenses		29,854			27,363			104,584			104,558
Total benefits and expenses		182,378			188,000			582,674			654,032
Earnings before income taxes		41,159			47,428			112,068			165,156
Income tax expense		6,024			9,695			19,756			33,540
Net earnings	$	35,135			37,733			92,312			131,616
Net earnings attributable to Class A shares	$	34,142			36,666			89,701			127,894
Diluted Earnings Per Class A Share	$	9.94			10.67			26.11			37.22
Diluted Weighted Average Class A Shares		3,436			3,436			3,436			3,436
								December 31,			December 31,
								2020			2019
Book value per share							$	698.50			582.07
Less: Per share impact of accumulated other comprehensive income								108.75			16.53
Book value per share, excluding accumulated other comprehensive income *							$	589.75			565.54

 

*

Book value per share excluding accumulated other comprehensive income is a non-GAAP financial measure. Accumulated other comprehensive income totaled $395.4 million at December 31, 2020 and $60.1 million at December 31, 2019. Since accumulated other comprehensive income fluctuates from quarter to quarter due to unrealized changes in the fair value of investments caused primarily by changes in market interest rates, National Western Life Group, Inc. believes this financial measure provides useful supplemental information.

 

Investor Relations Contact:
Brian M. Pribyl - Senior Vice President, Chief Financial Officer and Treasurer
(512) 836-1010
bpribyl@nationalwesternlife.com
www.nwlgi.com

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SOURCE National Western Life Group, Inc.

FAQ

What were the 2020 earnings for National Western Life Group (NWLI)?

National Western Life Group reported 2020 consolidated net earnings of $92.3 million, or $26.11 per diluted Class A common share.

How did NWLI's revenue in 2020 compare to 2019?

NWLI's total revenues for 2020 were $658.9 million, down from $689.7 million in 2019.

What was the impact of COVID-19 on NWLI's claims?

NWLI incurred $7.9 million in net death claims related to COVID-19, which was manageable given the favorable mortality in the rest of its business.

How much did NWLI's annuity sales increase in 2020?

Annuity sales for NWLI increased by 38% in 2020.

What reinsurance transaction did NWLI complete in 2020?

NWLI executed a reinsurance transaction transferring $1.7 billion of fixed interest rate policy obligations, alleviating associated interest rate spread compression.