Executive Summary

Q2 2023 reported net earnings of $29.6M ($8.38 diluted EPS) versus $12.3M ($3.48) in Q1 2023 and $96.5M ($27.30) in Q2 2022; results were heavily affected by LDTI-related Market Risk Benefits (MRB) and a large share‑based compensation liability accrual tied to the stock’s sharp move post “strategic alternatives” announcement .
Total revenues rose to $186.2M, up sequentially from $152.6M and up year over year from $118.3M, driven by a swing in index option gains and higher core revenues; however, the quarter included a $34.6M pretax hit in Other operating expenses from share‑based equity awards as the stock closed Q2 at $415.56 (vs $242.62 at 3/31) .
Book value per share (ex‑AOCI, non‑GAAP) increased sequentially to $745.62 from $737.46; reported BVPS was $626.57 at 6/30/23 (down vs $634.27 at 3/31/23 but up vs $552.04 at 12/31/22) .
The Board’s exploration of strategic alternatives (announced 5/16) was a notable stock catalyst during Q2; management retained Goldman Sachs and formed an independent director committee to oversee the process .

What Went Well and What Went Wrong

What Went Well
- Sequential earnings inflected despite accounting noise: net earnings rose to $29.6M and EPS to $8.38 from $12.3M/$3.48 in Q1 2023, aided by higher total revenues and a small MRB benefit this quarter .
- Management expanded product distribution and emphasized expense control: “We have released competitive new products into distribution channels that we have not previously been in, and we have managed to do this while decreasing our administrative cash expenditures compared to last year” (Ross R. Moody) .
- Book value ex‑AOCI strengthened sequentially to $745.62 (from $737.46) as AOCI headwinds eased; reported BVPS also materially higher vs year‑end 2022 .
What Went Wrong
- GAAP volatility from LDTI/MRB continues to distort comparability: MRB moved from a large YoY benefit in Q2 2022 (pretax $(55.5)M) to a minimal benefit in Q2 2023 (pretax $(0.8)M), reducing YoY net income .
- Other operating expenses spiked to $62.4M (vs $30.3M YoY and $24.7M in Q1) due to share‑based equity award liabilities marked to a sharply higher quarter‑end stock price, depressing underlying earnings power optics .
- Key operating indicators softened sequentially: total assets declined to $12.5B (from $12.8B in Q1) and life insurance in force decreased to $18.9B (from $19.3B), warranting monitoring of growth trajectory and mix .

Financial Results

Metric	Q2 2022	Q4 2022	Q1 2023	Q2 2023
Total Revenues ($USD Millions)	$118.3	$163.1	$152.6	$186.2
Net Earnings ($USD Millions)	$96.5	$12.4	$12.3	$29.6
Diluted EPS ($)	$27.30	$3.52	$3.48	$8.38
Market Risk Benefit Expense (Pretax, $USD Millions)	$(55.5)	N/A	$37.0	$(0.8)
Other Operating Expenses ($USD Millions)	$30.3	$43.5	$24.7	$62.4
Net Earnings Margin (%)	81.6% (calc. from $96.5/$118.3)	7.6% (calc. from $12.4/$163.1)	8.1% (calc. from $12.3/$152.6)	15.9% (calc. from $29.6/$186.2)

Notes: Net Earnings Margin is calculated from press release total revenues and net earnings disclosed in the same source citations.

Segment breakdown: Not disclosed in the company’s Q2 press release; no segment table provided in the 8‑K .

KPIs and Capital

KPI	Q4 2022	Q1 2023	Q2 2023
Book Value Per Share ($)	$552.04	$634.27	$626.57
BVPS ex‑AOCI ($, non‑GAAP)	$666.56	$737.46	$745.62
Total Assets ($USD Billions)	$13.1	$12.8	$12.5
Stockholders’ Equity ($USD Billions)	$2.0	$2.3	$2.3
Life Insurance In Force ($USD Billions)	$19.7	$19.3	$18.9
Class A Share Price (Period End, $)	$281.00 (12/31/22)	$242.62 (3/31/23)	$415.56 (6/30/23)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Company guidance	2023/Q2	Not provided	Not provided	No formal guidance disclosed

No explicit revenue, margin, OpEx, OI&E, tax, or dividend guidance was provided in the Q2 8‑K press release .

Earnings Call Themes & Trends

Note: No Q2 2023 earnings call transcript was available in our document set; themes below reflect management’s press releases for Q4 2022, Q1 2023, and Q2 2023 .

Topic	Previous Mentions (Q-2: Q4 2022; Q-1: Q1 2023)	Current Period (Q2 2023)	Trend
LDTI/MRB volatility	Adoption of LDTI; fair value marks drove revenue/earnings volatility in 2022; MRB swings tied to interest rates . In Q1 2023, MRB pretax expense was $37.0M amid interest rate moves .	MRB pretax benefit of $(0.8)M; management reiterates LDTI/MRB variability as a key driver of reported earnings .	Volatility persists but smaller MRB impact in Q2 vs Q1 .
Expense management	Indicated operating expense control initiatives into 2022 year‑end .	Reported Q1 2023 expense savings vs prior year .	Emphasized in Q2 that administrative cash expenditures decreased YoY despite product launches .
Product/distribution expansion	N/A in Q4 2022 release .	N/A explicitly in Q1 press release .	“Released competitive new products into distribution channels that we have not previously been in” .
Investment returns	2022 investment revenues pressured by fair value marks; 98% of bonds investment grade .	Ex‑mark‑to‑market, net investment income modestly higher YoY ($91.5M vs $90.0M) .	Index option gains swung to +$22.0M; continued diversification into alternatives .
Strategic alternatives	Not discussed in Q4 2022 .	Announced 5/16/23 review; Goldman Sachs engaged; independent committee formed .	Stock price jump into 6/30/23 raised share‑based liabilities, pressuring OpEx .

Management Commentary

“Unfortunately, these accounting conventions masked the hard work and progress we have made so far in 2023. We have released competitive new products into distribution channels that we have not previously been in, and we have managed to do this while decreasing our administrative cash expenditures compared to last year.” — Ross R. Moody, Chairman, President & CEO .
On MRB/LDTI variability: Q2 pretax MRB was $(0.8)M vs $(55.5)M in Q2 2022; six‑month MRB expense of $36.2M vs $(116.5)M in the prior year period, highlighting interest‑rate‑driven swings .
On Q1 operating backdrop (context): “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.” .

Q&A Highlights

No Q2 2023 earnings call transcript was available; the company did not furnish a call transcript in the SEC document set we reviewed. As a result, no Q&A items or in‑call guidance clarifications are provided here .

Estimates Context

We attempted to retrieve S&P Global consensus EPS and revenue estimates for Q2 2023, but no mapping/consensus data was available for NWLI in our tool at the time of analysis; therefore, no estimate comparison or beat/miss assessment is presented (default would be to S&P Global consensus if available).

Key Takeaways for Investors

Reported results improved sequentially, but remain noisy due to LDTI/MRB and share‑based liability marks; underlying themes include cost discipline and product/distribution expansion .
The strategic alternatives process is the principal stock catalyst; Q2 quarter‑end price surged to $415.56, materially affecting GAAP OpEx via share‑based liabilities and potentially continuing to influence reported volatility .
Book value ex‑AOCI strengthened sequentially to $745.62, indicating capital resiliency despite fair‑value swings in GAAP equity .
Monitoring points: trajectory of Other operating expenses as equity‑linked accruals normalize, MRB sensitivity to rates, and life insurance in force trends (down sequentially in Q2) .
With no formal guidance and limited external estimates, positioning should focus on process milestones for strategic alternatives and on signs of sustained core earnings power excluding MRB and share‑based effects .

Appendix: Additional Data Drivers

Index option gains were $22.0M in Q2 vs $(38.4)M in Q2 2022 and $2.9M in Q1 2023, aiding revenue and EBIT optics this quarter .
Other operating expenses rose to $62.4M in Q2 (from $24.7M in Q1), primarily due to $34.6M pretax share‑based equity award expenses tied to the quarter‑end share price .

Sources: Company 8‑K press releases and exhibits for Q2 2023 (8/8/23), Q1 2023 (5/15/23), and 2022 full year/Q4 (3/10/23) ; Strategic alternatives 8‑K (5/16/23) .

National Western Life Group, Inc. (NWLI)·Q2 2023 Earnings Summary