National Western Life Group, Inc. - Condensed Consolidated Financial Statements for the Quarter Ended March 31, 2024
National Western Life Group, Inc. reported a net income of $1.2 million for the quarter ended March 31, 2024, with total assets of $1.4 billion and total liabilities of $1.3 billion. The company’s Class A common stock and Class B common stock had outstanding shares of 3,436,020 and 200,000, respectively.
Overview of Company’s Financial Performance
The company reported total revenues of $197.6 million for the first quarter of 2024, an increase from $152.6 million in the first quarter of 2023. Key drivers were:
- Higher investment income, up 50% from the prior year quarter to $134.4 million due to market gains on derivatives and increased yields on debt securities
- Growth in life insurance premiums, up 6% over the prior year quarter
- An increase in net gains on index options supporting fixed-index products, up to $38.4 million from $2.9 million
Net income for the quarter was $73.6 million, significantly higher than $12.3 million in the first quarter of 2023. This substantial increase was largely attributed to market gains on derivatives and changes in the fair value of embedded derivative liabilities.
Revenue and Profit Trends
| Financial Metric | Q1 2024 | Q1 2023 | Change |
|---|---|---|---|
| Total Revenues | $197.6 million | $152.6 million | +30% |
| Net Investment Income | $134.4 million | $89.9 million | +50% |
| Net Income | $73.6 million | $12.3 million | +498% |
- Life insurance premium revenues increased 6%, driven by growth in single premium life products
- Annuity sales decreased 31% due to shift in consumer preference to guaranteed rate products
- Expenses were up 39%, largely due to market gains/losses on derivatives and embedded derivative liabilities
- Significant fluctuation in earnings continues to be driven by non-cash fair value changes on derivatives
Strengths and Weaknesses
Strengths
- Strong capital position substantially above regulatory requirements
- High quality investment portfolio minimizing risk of defaults
- Addition of alternative investments increased investment income
- Growth in single premium life insurance products
Weaknesses
- Annuity sales decreased due to competitive pressures
- Persistency of policies and contracts under pressure from higher interest rates
- Earnings subject to volatility from fair value changes on derivatives
Future Outlook
The company expects the life insurance market to face headwinds such as slowing sales of single premium products and increased pressure on persistency in the rising rate environment. However, higher interest rates could improve spreads on newly invested assets. The company plans to continue focusing on capital preservation, steady investment growth, and disciplined business management. Operational strategies center on maintaining strong capital levels and rebuilding annuity sales momentum with enhanced product offerings.
