Name: National Western Life Group, Inc. Q1 2024 Earnings Call
Start: 2024-05-09T12:02:58.000Z

Executive Summary

Q1 2024 delivered a sharp rebound: net earnings of $73.6M and $20.82 diluted EPS versus $12.3M and $3.48 a year ago, driven by equity market-linked index option gains and a decrease in Market Risk Benefits (MRB) liability; revenues rose 29% to $197.6M .
QoQ, EPS swung from a Q4 2023 loss of $(3.46) to $20.82, with pretax earnings flipping from $(21.4)M to $93.3M as MRB moved from a heavy expense in Q4 to a benefit in Q1 .
Management highlighted supportive markets (equities and higher rates), stronger life sales (+24% face amount YoY), and continued progress toward required approvals for the Prosperity Life merger; no formal operating guidance was issued .
Catalyst narrative: non-operational accounting drivers (MRB fair-value swings under LDTI) and derivative gains tied to equity markets and interest rates were the primary EPS drivers; merger approval progress remains a headline risk/driver for the stock .

What Went Well and What Went Wrong

Equity markets and higher rates boosted realized/unrealized gains on index options ($38.4M vs $2.9M YoY) and improved investment returns; net investment income (ex index option derivative gains) rose to $96.0M from $87.0M .
MRB liability expense decreased $16.4M versus a $37.0M increase last year, materially lifting pretax earnings under LDTI fair-value accounting .
Life sales momentum: “more sales activity on the life insurance side… 24% increase in the face amount of life insurance sold” (Ross Moody) .

Operating cost intensity remained notable versus last year: other operating expenses increased to $33.1M from $24.7M YoY; universal life and annuity contract interest rose to $41.6M from $30.2M YoY .
Revenues were lower sequentially (Q1: $197.6M vs Q4: $207.9M) as Q4 benefited from elevated revenue components; Q4’s realized investment gains/losses and operating expenses were unusually volatile, underscoring quarter-to-quarter swings .
Merger execution risk persists: timing remains uncertain, regulatory approvals may impose conditions or delay/terminate the transaction (Company’s cautionary statements) .

Metric	Q1 2023	Q4 2023	Q1 2024
Total Revenues ($USD Millions)	152.6	207.9	197.6
Earnings Before Income Taxes ($USD Millions)	15.3	(21.4)	93.3
Net Earnings ($USD Millions)	12.3	(12.2)	73.6
Diluted EPS ($USD)	3.48	(3.46)	20.82
Net Income Margin (%)	8.1%	(5.9)%	37.3%

Component ($USD Millions)	Q1 2023	Q4 2023	Q1 2024
Revenues excl. investment & index option gains/losses	149.6	172.6	159.2
Realized & Unrealized Gains on Index Options	2.9	35.4	38.4
Realized Gains (Losses) on Investments	0.1	(0.1)	(0.0)
Total Revenues	152.6	207.9	197.6
Net Investment Income (ex index option derivative gains)	87.0	—	96.0

Line Item ($USD Millions)	Q1 2023	Q4 2023	Q1 2024
Life and Other Policy Benefits	24.2	34.2	25.5
Market Risk Benefits (Gains)/Losses	37.0	61.4	(16.4)
Amortization of Deferred Transaction Costs	21.3	19.7	20.4
Universal Life & Annuity Contract Interest	30.2	52.3	41.6
Other Operating Expenses	24.7	61.6	33.1
Total Benefits & Expenses	137.3	229.2	104.3

KPI	Q4 2023	Q1 2024
Book Value Per Share ($)	670.99	686.73
BVPS ex AOCI ($)	759.71	779.95
Total Assets ($USD Billions)	12.3	12.1
Stockholders’ Equity ($USD Billions)	2.4	2.5
Life Insurance In Force ($USD Billions)	18.0	17.7
Face Amount of Life Insurance Sold YoY Change (%)	—	+24%

Metric	Period	Previous Guidance	Current Guidance	Change
Operating Guidance (Revenue, Margins, OpEx, Tax)	Q2–FY 2024	Not provided	Not provided	Maintained (no formal guidance)
Merger Close Timing (Prosperity Life)	1H 2024	“Expect to close the deal in the first half of 2024.” (Feb 29)	“Working toward obtaining the necessary approvals… timing uncertain.” (May 9; cautionary statements)	Maintained/Uncertain (subject to regulatory approvals)

Note: No public Q1 2024 earnings call transcript was available in our document set. Themes are synthesized from management’s press releases.

Topic	Previous Mentions (Q3 2023, Q4 2023)	Current Period (Q1 2024)	Trend
Interest Rates & MRB (LDTI)	Q3: MRB decrease benefited pretax; Q4: MRB expense weighed heavily on pretax	MRB expense decreased by $16.4M, materially lifting pretax	Volatile, rate-driven swings continue; supportive in Q1
Equity Markets & Index Option Gains	Q3: negative index option gains; Q4: strong gains	Gains of $38.4M as equity markets rallied	Positive tailwind in Q1
Investment Yields	Q4: improved returns highlighted	Higher bond purchase yields improved portfolio returns	Incremental improvement
Life Sales Momentum	Q3/Q4: ongoing business execution amid merger	Face amount of life insurance sold +24% YoY	Strengthening
Operating Expenses	Q4: elevated OpEx ($61.6M)	Other OpEx $33.1M (above prior year)	Elevated vs YoY; improved vs Q4
Merger & Regulatory Approvals	Q3/Q4: announced/approved by shareholders; aiming 1H 2024 close	Working toward approvals; timing uncertain per cautionary	Ongoing, regulatory-dependent

“For the most part, the economic environment coupled with financial market performance was very conducive for us… The Company benefited from equity markets gains and rising interest rate levels.” — Ross R. Moody .
“We experienced more sales activity on the life insurance side… 24% increase in the face amount of life insurance sold in the 2024 first quarter compared to last year.” — Ross R. Moody .
“We continued working toward obtaining the necessary approvals that are a condition for closing our previously announced merger agreement with Prosperity Life Group.” — Ross R. Moody .
Prior context: management emphasized LDTI-driven swings overshadowing operational gains and targeted merger close in 1H 2024 .

No Q1 2024 earnings call transcript was available; therefore, no Q&A commentary or guidance clarifications could be assessed from a call in this period [ListDocuments: 0 transcripts].

Wall Street consensus (S&P Global) for Q1 2024 EPS/Revenue was unavailable due to missing CIQ mapping for NWLI in our SPGI dataset (tool error indicates no mapping). As a result, estimate comparisons and beats/misses vs consensus cannot be determined at this time [SpgiEstimatesError in GetEstimates].

Q1’s EPS surge was largely driven by LDTI fair-value mechanics (MRB liability decrease) and equity market-linked derivative gains; these are non-operational and can reverse with market/interest-rate moves .
Underlying investment engine remains constructive: higher bond purchase yields and stronger net investment income support earnings power beyond accounting volatility .
Life sales momentum (+24% YoY face amount) suggests distribution traction and potential for sustained premium growth in core franchises .
Expense discipline improved versus Q4 but remains higher than last year on select lines (other OpEx, credited interest), warranting monitoring for run-rate normalization .
Book value per share and BVPS ex-AOCI both increased sequentially, indicative of capital strength despite AOCI volatility from rates .
Merger with Prosperity Life is the key strategic overhang/catalyst; timing and regulatory outcomes are uncertain and could materially influence the equity narrative .
Absence of consensus estimates and a public call limits near-term “beat/miss” framing; focus on trajectory of MRB, index option gains, and life sales to gauge sustainable earnings capacity .