AUSTIN, Texas, May 15, 2023 /PRNewswire/ -- Ross R. Moody, Chairman of the Board, President, and Chief Executive Officer of National Western Life Group, Inc. (NASDAQ:NWLI), announced today first quarter 2023 consolidated net earnings of $12.3 million, or $3.48 per diluted share of Class A Common Stock, compared with restated consolidated net earnings of $97.6 million, or $27.59 per diluted share of Class A Common Stock, for the quarter ended March 31, 2022. The Company's book value per share as of March 31, 2023 increased to $634.27.
Publicly traded life insurance companies were required to adopt a new accounting standard effective January 1, 2023, requiring retroactive restatement of previously reported financial statement results. The transition date for the adoption of the new accounting guidance, "Targeted Improvements to the Accounting for Long-Duration Contracts" (LDTI), was January 1, 2021.
LDTI requires a separate liability to be established for Market Risk Benefits and to report changes in the liability balance through net earnings. Market risk benefits include certain contract features on the Company's annuity products that provide minimum guarantees to policyholders, such as guaranteed minimum withdrawal benefits. For the quarters ended March 31, 2023 and 2022, pretax earnings expense/(benefit) pertaining to Market Risk Benefits was $37.0 million and $(61.0) million, respectively. Commenting on the effect of this accounting treatment, Mr. Moody noted, "The Market Risk Benefits reporting requirement introduces a new degree of volatility to Company earnings caused by this liability being reported on a fair value basis. As fair value is predominantly dictated by interest rate levels in effect at each reporting date, an increase in interest rates creates a benefit as was the case for the first quarter of 2022, while a decrease in interest rate levels causes a charge against earnings as was the situation in the first quarter of 2023."
The Company reported a 10% increase in total revenues in the first quarter of 2023 over the prior year first quarter. Excluding market value fluctuations associated with the Company's derivative instruments, index options and funds withheld reinsurance, net investment income increased from $90.0 million in the quarter ended March 31, 2022 to $91.5 million in the first quarter of 2023. Mr. Moody stated, "Despite a slightly lower investment asset base, we saw increased returns both in new bond purchase yields and in our continued diversification into alternative investment vehicles, without any slippage in credit quality."
Improvements in policy benefit and other operating expenses positively contributed to the first quarter 2023 results. "We had a very good quarter in terms of mortality experience, and we achieved expense savings in several areas compared to the first quarter of 2022," Mr. Moody indicated.
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 March 31, 2023, the Company maintained consolidated total assets of $12.8 billion, consolidated stockholders' equity of $2.3 billion, and combined life insurance in force of $19.3 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 | ||||
March 31, | ||||
2023 | 2022 | |||
Revenues: | ||||
Revenues, excluding investment and index option gains (losses) | $ | 149,614 | 172,657 | |
Realized and unrealized gains (losses) on index options | 2,933 | (38,198) | ||
Realized gains on investments | 67 | 3,794 | ||
Total revenues | 152,614 | 138,253 | ||
Benefits and expenses: | ||||
Life and other policy benefits | 24,190 | 33,512 | ||
Market risk benefit expense | 36,960 | (61,006) | ||
Amortization of deferred transaction costs | 21,274 | 23,436 | ||
Universal life and annuity contract interest | 30,212 | (13,571) | ||
Other operating expenses | 24,683 | 32,581 | ||
Total benefits and expenses | 137,319 | 14,952 | ||
Earnings before income taxes | 15,295 | 123,301 | ||
Income tax expense | 2,991 | 25,739 | ||
Net earnings | $ | 12,304 | 97,562 | |
Net earnings attributable to Class A shares | $ | 11,956 | 91,388 | |
Diluted Earnings Per Class A Share | $ | 3.48 | 27.59 | |
Diluted Weighted Average Class A Shares | 3,436 | 3,436 | ||
March 31, | December 31, | |||
2023 | 2022 | |||
Book value per share | 634.27 | 602.56 | ||
Less: Per share impact of accumulated other comprehensive income (loss) | (100.62) | (128.86) | ||
Book value per share, excluding accumulated other comprehensive income (loss) * | 734.89 | 731.42 | ||
* | Book value per share excluding accumulated other comprehensive income (loss) is a non-GAAP financial measure. Accumulated other |
Investor Relations Contact:
Brian M. Pribyl - Senior Vice President, Chief Financial Officer and Treasurer
(512) 836-1010
[email protected]
www.nwlgi.com
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SOURCE National Western Life Group, Inc.