LINCOLN,
Neb., Aug. 15, 2022 /PRNewswire/ -- Midwest
Holding Inc. ("Midwest") (NASDAQ: MDWT), today announced financial
results for the second quarter of 2022.
Second Quarter 2022 Highlights:
- GAAP net income was $9.3 million
compared to a $(5.0) million GAAP net
loss incurred in the second quarter of 2021. GAAP earnings were
$2.47 per share (diluted) versus the
$(1.34) per-share loss in Q1
2021.
- GAAP total revenue was slightly negative at $(122,000) compared to total revenue of
$8.9 million in the second quarter of
2021. Total revenue was increased by net investment income of
$10.5 million compared to
$3.2 million in second quarter of
2021, as invested assets grew to $1.2
billion as of June 30, 2022,
compared with $834.5 million as of
June 30, 2021. This increase was
offset by a decline in the market value of derivatives.
- Annuity direct written premium under statutory accounting
principles ("SAP"), a non-GAAP measure, was $156.0 million, up 59% compared to $98.1 million in first quarter of 2022 and up
from $125.9 million in 2021's second
quarter. The mix of our new business was 45% Multi-Year Guaranteed
Annuities (MYGA) and 55% Fixed Indexed Annuities (FIA).
- Ceded premiums (SAP) were $59.9
million compared with $86.1
million in the year-earlier quarter. The cession rate, or
that portion of our written premiums that we reinsured, was 38.4%
compared with 68.4%.
- Total expenses benefited from negative interest credited due to
the fall in value of the options embedded in our liabilities and
the gain on mark-to-market value of the options allowance
classified in other operating expenses.
Georgette Nicholas, CEO of
Midwest noted, "We are seeing strong results from the actions we
took in the first quarter to position the Company for growth
relating to distribution, pricing, products, investment management,
and reinsurance. We are investing in technology and
foundational capabilities to strengthen the business. We saw
strong trends in premiums written in the second quarter. We
are benefiting from movements in interest rates, as consumers seek
stable returns, and from the performance of our investment
portfolio. Overall, the second quarter showed very positive
trends and positioned us for a strong start to the third
quarter."
Ms. Nicholas concluded: "Our opportunities are substantial to
build on the value of our platform. The focus of the team
continues to be on the key drivers of growth and profitability:
Deepening distribution relationships, state expansion to achieve
sales growth, reinsurance, investment management, and operational
readiness and efficiency. With these five keys to our strategy, we
will deliver on our commitment to shareholders to produce strong
growth paired with a high return on capital."
Q2 2022 versus Q2 2021 on a GAAP basis
Midwest reported GAAP net income of $9.3
million in the second quarter of 2022 compared to a
$(5.0) million GAAP net loss
incurred in the second quarter of 2021. On a diluted, per-share
basis, this year's quarterly net income was 2.47 cents compared with the (1.34)-cent per-share loss reported in the
second quarter of 2021.
Investment income in 2022's second quarter was $10.5 million compared with $3.2 million in the prior- year's second
quarter. Driving the change was an increase in invested
assets as well as performance on those assets, benefiting from core
capabilities developed around sourcing assets with a higher yield –
generating approximately a 5.5% return on the investment
portfolio.
Amortization of deferred gain on reinsurance reached
$1.0 million in the second quarter of
2022 compared with $588,000 in the
second quarter of 2021 primarily due to growth in the deferred gain
on co-insurance on our balance sheet, which reflects ceding
commissions received on reinsurance of business to third
parties.
Service fee revenue was $416,000
versus $672,000 in the prior year
second quarter. Service fee revenue consists of fee
revenue generated for our asset-management services provided to
third-party clients. Assets under management for third parties was
$471.1 million on June 30, 2022, compared to $455.4 million on March
31, 2022.
Other revenue finished at $514,000
compared with $358,000 in the
prior-year quarter. Other revenue consists primarily of
revenue we generate by providing ancillary services, such as policy
administration, to third parties and policy surrender
charges.
Our total expenses on a GAAP basis were a negative $(1.4) million versus $13.1 million in the prior year second
quarter. Total expenses were helped by negative
interest credited due to the decrease in value of the options
embedded in our liabilities of $2.0
million and an increase in mark-to-market value of our
options allowance of $5.3 million.
Salaries and benefits were $4.2
million in Q2 2022 compared to $4.5
million in Q2 2021 as we continue to seek operational
improvement and work on technology initiatives.
Guidance
We continue to see intense competition in the fixed annuity
market around pricing and new competitors. We have taken
actions to maintain a competitive position and have seen positive
results from these actions and improved sales momentum in the
second quarter. With these positive trends and the premium
written so far along with the backlog in process, we have had a
strong start to the third quarter.
State expansion efforts remain a key priority. We have active
applications in process and will provide updates as they
progress.
Given these dynamics, we are confident in anticipated premiums
written being in the range of $500
million to $600 million (SAP)
for the year. We expect the mix in product sales to be
60% towards MYGA this year, given increasing interest rates and
market volatility and 40% FIA. We would expect that to move back
towards 75% FIA and 25% MYGA in future years.
The goal is to cede, on average, approximately 70-90% of our
premium in the year to generate ceded commission fees and manage
capital, although currently we are running at approximately 40%.
Timing of closing additional reinsurance deals can be delayed due
to various factors and will vary quarter to quarter as new
agreements are reached. Demand from our existing
reinsurance partners is strong and we have capacity in place to
cover anticipated written premium through them with the potential
to grow along with additional potential reinsurance transactions in
the pipeline.
We are making progress towards bringing general and
administrative expenses on a management basis, a non-GAAP measure,
within approximately $27 to
$28 million for the full year
2022.
Q2 2022 Key Performance Indicators and Non-GAAP Financial
Measures
In addition to GAAP measures, Midwest's management utilizes a
series of key performance indicators (KPIs) and non-GAAP measures
to, among other things:
1) monitor and evaluate the
performance of our business operations and financial
performance;
2) facilitate internal comparisons of
the historical operating performance of our business
operations;
3) review and assess the operating
performance of our management team;
4) analyze and evaluate financial and
strategic planning decisions regarding future operations;
5) plan for and prepare future annual
operating budgets and determine appropriate levels of operating
investments; and
6) facilitate comparison of results
between periods and to better understand the underlying historical
trends in our business and prospects.
These non-GAAP measures are not a substitute for GAAP measures;
however, management believes that when used in conjunction with the
GAAP measures, the non-GAAP measures can contribute to investors'
understanding of our business. Non-GAAP financial measures used by
us may be calculated differently from, and therefore may not be
comparable to, similarly titled measures used by other companies.
These non-GAAP financial measures should be considered along with,
but not as alternatives to, our operating performance measures as
prescribed by GAAP.
Annuity Premiums (a KPI)
For the second quarter of 2022, annuity direct written premiums
were $156.0 million compared with
$98.1 million at first quarter of
2022 and up from $125.9 million in
the second quarter of 2021. Ceded premiums were
$59.9 million in second quarter of
2022 compared to $40.1 million in
2022's first quarter. whereas ceded premiums were $86.1 million in the second quarter of
2021. Of the second quarter 2022 sales, approximately 45% was
in the MYGA category and the remaining 55% consisted of sales of
FIAs.
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
(In
thousands)
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Annuity Premiums (SAP)
|
|
|
|
|
|
|
|
|
|
|
|
Annuity direct written
premiums
|
$
|
156,034
|
|
$
|
125,865
|
|
$
|
254,145
|
|
$
|
249,519
|
Ceded
premiums
|
|
(59,881)
|
|
|
(86,106)
|
|
|
(100,023)
|
|
|
(133,570)
|
Net premiums
retained
|
$
|
96,153
|
|
$
|
39,759
|
|
$
|
154,122
|
|
$
|
115,949
|
Fees Received for Reinsurance (a KPI)
We use this non-GAAP figure to measure our efforts to secure
third-party capital to back our reinsurance programs.
Fees Received for Reinsurance sums two components: Amortization of
deferred gain on reinsurance, which is a line item in our
Consolidated Statements of Comprehensive Income (Loss), and
deferred coinsurance ceding commission, which is a line item in our
Consolidated Statements of Cash Flows.
For the second quarter of 2022, fees received for reinsurance
totaled $3.2 million compared with
$4.9 million in the
second quarter of 2021.
|
|
Three months ended June 30,
|
|
Six months ended
June 30,
|
(In
thousands)
|
|
2021
|
|
2020
|
|
2022
|
|
2021
|
Fees received for reinsurance
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees received for
reinsurance - total
|
|
$
|
3,197
|
|
$
|
4,864
|
|
$
|
5,626
|
|
$
|
7,722
|
General and Administrative Expenses (a non-GAAP
measure)
We monitor this figure to track our overhead. It
includes salary and benefits and other operating expenses; however,
it excludes non-cash stock-based compensation and the non-cash
mark-to-market-adjustment of our option budget allowance.
G&A expense in the second quarter of 2022 was $7.0 million, down from $8.9 million at first quarter 2022 and compared
with $5.9 million in the prior year
second quarter. We continue to build foundational
capabilities to support potential growth in the business and work
on technology initiatives.
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
G&A
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and benefits -
GAAP
|
|
$
|
4,298
|
|
$
|
4,514
|
|
$
|
8,615
|
|
$
|
7,441
|
Other operating
expenses - GAAP
|
|
|
(2,240)
|
|
|
4,174
|
|
|
(4,060)
|
|
|
2,645
|
Subtotal
|
|
|
2,058
|
|
|
8,688
|
|
|
4,555
|
|
|
10,086
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Stock-based
compensation
|
|
|
(354)
|
|
|
(1,508)
|
|
|
(386)
|
|
|
(1,770)
|
Less: Mark-to-market
option allowance
|
|
|
5,295
|
|
|
(1,287)
|
|
|
11,681
|
|
|
2,828
|
G&A
|
|
$
|
6,999
|
|
$
|
5,893
|
|
$
|
15,850
|
|
$
|
11,144
|
Management Expenses (a non-GAAP measure)
We use this metric to monitor the expenses of our business on a
cash basis. Importantly, we exclude from the
calculation of management expenses the index interest credited
related to our FIAs because this expense is hedged.
Instead, we add back to Management Expenses the period's
amortization of options previously purchased to provide this hedge.
We view this amortized cost as our true cost of funds.
Management Expenses also excludes the mark-to-market adjustment of
our option budget allowance.
Management Expenses and non-cash stock-based
compensation
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Management Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
G&A
|
|
$
|
6,999
|
|
$
|
5,893
|
|
$
|
15,850
|
|
$
|
11,144
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management interest
credited
|
|
|
2,895
|
|
|
1,740
|
|
|
5,937
|
|
|
2,882
|
Amortization of
deferred acquisition costs
|
|
|
1,052
|
|
|
524
|
|
|
1,902
|
|
|
1,027
|
Expenses related to
retained business
|
|
|
3,947
|
|
|
2,264
|
|
|
7,839
|
|
|
3,909
|
Management expenses -
total
|
|
$
|
10,946
|
|
$
|
8,157
|
|
$
|
23,689
|
|
$
|
15,053
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
|
|
|
|
|
|
|
G&A
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and benefits -
GAAP
|
|
$
|
4,298
|
|
$
|
4,514
|
|
$
|
8,615
|
|
$
|
7,441
|
Other operating
expenses - GAAP
|
|
|
(2,240)
|
|
|
4,174
|
|
|
(4,060)
|
|
|
2,645
|
Subtotal
|
|
|
2,058
|
|
|
8,688
|
|
|
4,555
|
|
|
10,086
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Stock-based
compensation
|
|
|
(354)
|
|
|
(1,508)
|
|
|
(386)
|
|
|
(1,770)
|
Less: Mark-to-market
option allowance
|
|
|
5,295
|
|
|
(1,287)
|
|
|
11,681
|
|
|
2,828
|
G&A
|
|
$
|
6,999
|
|
$
|
5,893
|
|
$
|
15,850
|
|
$
|
11,144
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Management Interest Credited
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest credited -
GAAP
|
|
$
|
(5,496)
|
|
$
|
3,931
|
|
$
|
(12,170)
|
|
$
|
1,585
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: FIA interest
credited - GAAP
|
|
|
6,401
|
|
|
(3,404)
|
|
|
14,165
|
|
|
(586)
|
Add: FIA options cost -
amortized
|
|
|
1,990
|
|
|
1,213
|
|
|
3,942
|
|
|
1,883
|
Management interest
credited
|
|
$
|
2,895
|
|
$
|
1,740
|
|
$
|
5,937
|
|
$
|
2,882
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Reconciliation - Management Expenses to GAAP
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses -
GAAP
|
|
$
|
(1,392)
|
|
$
|
13,143
|
|
$
|
(4,719)
|
|
$
|
12,698
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Less:
Benefits
|
|
|
(994)
|
|
|
—
|
|
|
(994)
|
|
|
—
|
Less: Stock-based
compensation
|
|
|
(354)
|
|
|
(1,508)
|
|
|
(386)
|
|
|
(1,770)
|
Less: Mark-to-market
option allowance
|
|
|
5,295
|
|
|
(1,287)
|
|
|
11,681
|
|
|
2,828
|
Less: FIA interest
credited - GAAP
|
|
|
6,401
|
|
|
(3,404)
|
|
|
14,165
|
|
|
(586)
|
Add: FIA options cost -
amortized
|
|
|
1,990
|
|
|
1,213
|
|
|
3,942
|
|
|
1,883
|
Management expenses -
total
|
|
$
|
10,946
|
|
$
|
8,157
|
|
$
|
23,689
|
|
$
|
15,053
|
SPECIAL CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
Certain statements contained or incorporated by reference in
this release constitute forward-looking statements. These
statements are based on management's expectations, estimates,
projections and assumptions. In some cases, you can identify
forward-looking statements by terminology including "could," "may,"
"will," "should," "expect," "plan," "anticipate," "believe,"
"estimate," "predict," "potential," "intend," or "continue," the
negative of these terms, or other comparable terminology used in
connection with any discussion of future operating results or
financial performance. These statements are only predictions and
reflect our management's good faith present expectation of future
events and are subject to a number of important factors and
uncertainties that could cause actual results to differ materially
from those described in the forward-looking statements.
Factors that may cause our actual results to differ materially
from those contemplated or projected, forecast, estimated or
budgeted in such forward-looking statements include among others,
the following possibilities:
- intense competition, including pricing, competitive pressures
from established insurers with greater financial resources, the
entry of new competitors, and the introduction of new products by
new and existing competitors;
- our business plan, particularly including our reinsurance
strategy, may not prove to be successful;
- our reliance on third-party insurance marketing organizations
to market and sell our annuity insurance products through a network
of independent agents;
- adverse changes in our ratings obtained from independent rating
agencies;
- failure to maintain adequate reinsurance;
- our inability to expand our insurance operations outside the 22
states and District of Columbia in
which we are currently licensed;
- our annuity insurance products may not achieve significant
market acceptance;
- we may continue to experience operating losses in the
foreseeable future;
- the possible loss or retirement of one or more of our key
executive personnel;
- adverse state and federal legislation or regulation, including
decreases in rates, limitations on premium levels, increases in
minimum capital and reserve requirements, benefit mandates and tax
treatment of insurance products;
- fluctuations in interest rates causing a reduction of
investment income or increase in interest expense and in the market
value of interest-rate sensitive investment;
- failure to obtain new customers, retain existing customers, or
reductions in policies in force by existing customers;
- higher service, administrative, or general expense due to the
need for additional advertising, marketing, administrative or
management information systems expenditures;
- changes in our liquidity due to changes in asset and liability
matching;
- possible claims relating to sales practices for insurance
products; and
- lawsuits in the ordinary course of business.
Earnings Teleconference information and Details
Midwest Holding has announced plans to host a conference call to
discuss financial and operating results for the second quarter of
2022 on August 16, 2022, at
8:30 a.m. Eastern Time. The Company
also posted those results on the investor relations section of its
website at https://ir.midwestholding.com after the close
of the financial markets on August
15, 2022.
To register for this conference call, please use the
following link:
https://ige.netroadshow.com/registration/q4inc/11308/midwest-holding-inc-reports-second-quarter-2022-results/.
Registrants will receive a confirmation email with dial-in
details.
The call may also be accessed via webcast at this link:
https://events.q4inc.com/attendee/619100939
A replay of the webcast will be made available after the call on
the Investor Relations page of the Company's website
at https://ir.midwestholding.com
About Midwest Holding Inc.
Midwest Holding Inc. is a growing, technology-enabled,
services-oriented annuity platform. Midwest designs and develops
annuity products that are distributed through independent
distribution channels, to a large and growing demographic of U.S.
retirees. Midwest originates, manages and typically transfers these
annuities through reinsurance arrangements to asset managers and
other third-party investors. Midwest also provides the operational
and regulatory infrastructure and expertise to enable asset
managers and third-party investors to form and manage their own
reinsurance capital vehicles.
For more information, please
visit www.midwestholding.com
Investor contact: ir@midwestholding.com
Media inquiries: press@midwestholding.com
MIDWEST
HOLDING INC.
CONSOLIDATED BALANCE
SHEETS
|
|
|
|
|
|
|
|
|
|
June 30, 2022
|
|
December 31, 2021
|
(In thousands, except
share information)
|
|
|
(Unaudited)
|
|
|
|
Assets
|
|
|
|
|
|
|
Fixed maturities,
available for sale, at fair value
(amortized cost: $923,063 and $679,921, respectively)
|
|
$
|
894,471
|
|
$
|
683,296
|
Mortgage loans on real
estate, held for investment
|
|
|
193,902
|
|
|
183,203
|
Derivative
instruments
|
|
|
7,190
|
|
|
23,022
|
Equity securities, at
fair value (cost: $12,762 in 2022 and $22,158 in 2021)
|
|
|
11,925
|
|
|
21,869
|
Other invested
assets
|
|
|
71,170
|
|
|
35,293
|
Investment
escrow
|
|
|
1,491
|
|
|
3,611
|
Federal Home Loan Bank
(FHLB) stock
|
|
|
500
|
|
|
500
|
Preferred
stock
|
|
|
22,072
|
|
|
18,686
|
Notes
receivable
|
|
|
6,111
|
|
|
5,960
|
Policy loans
|
|
|
22
|
|
|
87
|
Total
investments
|
|
|
1,208,854
|
|
|
975,527
|
Cash and cash
equivalents
|
|
|
128,964
|
|
|
142,013
|
Deferred acquisition
costs, net
|
|
|
33,164
|
|
|
24,530
|
Premiums
receivable
|
|
|
359
|
|
|
354
|
Accrued investment
income
|
|
|
18,297
|
|
|
13,623
|
Reinsurance
recoverables
|
|
|
24,121
|
|
|
38,579
|
Intangible
assets
|
|
|
700
|
|
|
700
|
Property and equipment,
net
|
|
|
1,823
|
|
|
386
|
Operating lease right
of use assets
|
|
|
2,239
|
|
|
2,360
|
Receivable for
securities sold
|
|
|
0
|
|
|
19,732
|
Other assets
|
|
|
17,454
|
|
|
2,113
|
Total
assets
|
|
$
|
1,435,975
|
|
$
|
1,219,917
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
Benefit
reserves
|
|
$
|
12,879
|
|
$
|
12,941
|
Policy
claims
|
|
|
3,232
|
|
|
237
|
Deposit-type
contracts
|
|
|
1,283,660
|
|
|
1,075,439
|
Advance
premiums
|
|
|
1
|
|
|
1
|
Deferred gain on
coinsurance transactions
|
|
|
32,203
|
|
|
28,589
|
Lease
liabilities:
|
|
|
|
|
|
|
Operating
lease
|
|
|
2,249
|
|
|
2,364
|
Payable for securities
purchased
|
|
|
2,770
|
|
|
5,546
|
Other
liabilities
|
|
|
34,485
|
|
|
9,044
|
Total
liabilities
|
|
|
1,371,479
|
|
|
1,134,161
|
Stockholders'
Equity:
|
|
|
|
|
|
|
Preferred stock, $0.001
par value; authorized 2,000,000 shares; no shares issued and
outstanding as of June 30, 2022 or
December 31, 2021
|
|
|
—
|
|
|
—
|
Voting common stock,
$0.001 par value; authorized 20,000,000 shares; 3,737,564
shares
issued and outstanding as of June 30, 2022 and December 31, 2021,
respectively; non-voting
common stock, $0.001 par value, 2,000,000 shares authorized; no
shares issued and
outstanding June 30, 2022 and December 31, 2021,
respectively
|
|
|
4
|
|
|
4
|
Additional paid-in
capital
|
|
|
138,838
|
|
|
138,452
|
Treasury
stock
|
|
|
(175)
|
|
|
(175)
|
Retained
earnings
|
|
|
(60,707)
|
|
|
(70,159)
|
Accumulated other
comprehensive income (loss)
|
|
|
(25,877)
|
|
|
2,634
|
Total Midwest
Holding Inc.'s stockholders' equity
|
|
|
52,083
|
|
|
70,756
|
Noncontrolling
interests
|
|
|
12,413
|
|
|
15,000
|
Total stockholders'
equity
|
|
|
64,496
|
|
|
85,756
|
Total liabilities
and stockholders' equity
|
|
$
|
1,435,975
|
|
$
|
1,219,917
|
MIDWEST
HOLDING INC.
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
(In thousands, except
per share data)
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment income, net
of expenses
|
|
$
|
10,541
|
|
|
3,220
|
|
$
|
16,783
|
|
|
6,107
|
|
Net realized gain
(loss) on investments
|
|
|
(12,636)
|
|
|
4,060
|
|
|
(18,810)
|
|
|
(589)
|
|
Amortization of
deferred gain on reinsurance transactions
|
|
|
1,043
|
|
|
588
|
|
|
2,012
|
|
|
1,048
|
|
Service fee revenue,
net of expenses
|
|
|
416
|
|
|
672
|
|
|
1,514
|
|
|
1,110
|
|
Other
revenue
|
|
|
514
|
|
|
358
|
|
|
962
|
|
|
607
|
|
Total
revenue
|
|
|
(122)
|
|
|
8,898
|
|
|
2,461
|
|
|
8,283
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
credited
|
|
|
(5,496)
|
|
|
3,931
|
|
|
(12,170)
|
|
|
1,585
|
|
Benefits
|
|
|
994
|
|
|
—
|
|
|
994
|
|
|
—
|
|
Amortization of
deferred acquisition costs
|
|
|
1,052
|
|
|
524
|
|
|
1,902
|
|
|
1,027
|
|
Salaries and
benefits
|
|
|
4,298
|
|
|
4,514
|
|
|
8,615
|
|
|
7,441
|
|
Other operating
expenses
|
|
|
(2,240)
|
|
|
4,174
|
|
|
(4,060)
|
|
|
2,645
|
|
Total
expenses
|
|
|
(1,392)
|
|
|
13,143
|
|
|
(4,719)
|
|
|
12,698
|
|
Net income (loss)
before income tax expense
|
|
|
1,270
|
|
|
(4,245)
|
|
|
7,180
|
|
|
(4,415)
|
|
Income tax benefit
(expense)
|
|
|
2,125
|
|
|
(747)
|
|
|
(2,597)
|
|
|
(2,179)
|
|
Net income (loss)
after income tax benefit (expense)
|
|
|
3,395
|
|
|
(4,992)
|
|
|
4,583
|
|
|
(6,594)
|
|
Less: Income
attributable to noncontrolling interest
|
|
|
(5,871)
|
|
|
—
|
|
|
(4,869)
|
|
|
—
|
|
Net income (loss)
attributable to Midwest Holding Inc.
|
|
|
9,266
|
|
|
(4,992)
|
|
|
9,452
|
|
|
(6,594)
|
|
Comprehensive income
(loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains
(losses) on investments arising during the three months ended
June 2022 and 2021, net of offsets, net of tax ($2.0 million and
$120,000, respectively);
unrealized gains (losses) on investments arising during the six
months ended June 2022
and 2021, net of offsets, net of tax ($4.7 million and $61,000,
respectively)
|
|
|
(19,666)
|
|
|
373
|
|
|
(29,369)
|
|
|
1,336
|
|
Less:
Reclassification adjustment for net realized losses on investments,
net of offsets
during the three months ended June 2022 and 2021 (net of tax ($2.4
million) and $209,000,
respectively); reclassification adjustment for net realized
losses on investments, net of
offsets during the six months ended June 2022 and 2021 (net of tax
($5.0 million) and
$294,000, respectively)
|
|
|
1,369
|
|
|
(785)
|
|
|
858
|
|
|
(1,106)
|
|
Other comprehensive
income (loss)
|
|
|
(18,296)
|
|
|
(412)
|
|
|
(28,511)
|
|
|
230
|
|
Comprehensive
loss
|
|
$
|
(9,030)
|
|
$
|
(5,404)
|
|
$
|
(19,059)
|
|
$
|
(6,364)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
other-than-temporary impairment
|
|
|
534
|
|
|
—
|
|
|
534
|
|
|
—
|
|
Net
other-than-temporary impairment loss recognized in net
income
|
|
$
|
534
|
|
|
—
|
|
|
534
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) per
common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
2.48
|
|
$
|
(1.34)
|
|
$
|
2.53
|
|
$
|
(1.76)
|
|
Diluted
|
|
$
|
2.47
|
|
$
|
(1.34)
|
|
$
|
2.52
|
|
$
|
(1.76)
|
|
MIDWEST
HOLDING INC.
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
|
|
|
Treasury
|
|
Common
|
|
Paid-In
|
|
Retained
|
|
|
|
|
Noncontrolling
|
|
Total
|
(In
thousands)
|
|
Stock
|
|
Stock
|
|
Capital
|
|
Earnings
|
|
AOCI*
|
|
Interest
|
|
Equity
|
Balance at March 31,
2022
|
|
$
|
(175)
|
|
$
|
4
|
|
$
|
138,483
|
|
$
|
(69,973)
|
|
$
|
(7,581)
|
|
$
|
18,432
|
|
$
|
79,190
|
Net income
(loss)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,266
|
|
|
—
|
|
|
—
|
|
|
9,266
|
Employee stock
options
|
|
|
—
|
|
|
—
|
|
|
355
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
355
|
Unrealized gains on
investments, net of taxes
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,296)
|
|
|
—
|
|
|
(18,296)
|
Noncontrolling
interest
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,019)
|
|
|
(6,019)
|
Balance,
June 30, 2022
|
|
$
|
(175)
|
|
$
|
4
|
|
$
|
138,838
|
|
$
|
(60,707)
|
|
$
|
(25,877)
|
|
$
|
12,413
|
|
$
|
64,496
|
Balance at March 31,
2021
|
|
$
|
(175)
|
|
$
|
4
|
|
$
|
133,854
|
|
$
|
(55,124)
|
|
$
|
7,073
|
|
$
|
—
|
|
$
|
85,632
|
Net income
(loss)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,992)
|
|
|
—
|
|
|
—
|
|
|
(4,992)
|
Additional capital
raise related expenses
|
|
|
—
|
|
|
—
|
|
|
(129)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(129)
|
Employee stock
options
|
|
|
—
|
|
|
—
|
|
|
1,507
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,507
|
Unrealized gains on
investments, net of taxes
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(412)
|
|
|
—
|
|
|
(412)
|
Balance,
June 30, 2021
|
|
$
|
(175)
|
|
$
|
4
|
|
$
|
135,232
|
|
$
|
(60,116)
|
|
$
|
6,661
|
|
$
|
—
|
|
$
|
81,606
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
June 30,
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Treasury
|
|
Common
|
|
Paid-In
|
|
Retained
|
|
|
|
Noncontrolling
|
|
Total
|
(In
thousands)
|
|
Stock
|
|
Stock
|
|
Capital
|
|
Earnings
|
|
AOCI*
|
|
Interest
|
|
Equity
|
Balance,
December 31, 2021
|
|
$
|
(175)
|
|
$
|
4
|
|
$
|
138,452
|
|
$
|
(70,159)
|
|
$
|
2,634
|
|
$
|
15,000
|
|
$
|
85,756
|
Net income
(loss)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,452
|
|
|
—
|
|
|
—
|
|
|
9,452
|
Employee stock
options
|
|
|
—
|
|
|
—
|
|
|
386
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
386
|
Unrealized gains on
investments, net of taxes
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(28,511)
|
|
|
—
|
|
|
(28,511)
|
Noncontrolling
interest
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,587)
|
|
|
(2,587)
|
Balance, June 30,
2022
|
|
$
|
(175)
|
|
$
|
4
|
|
$
|
138,838
|
|
$
|
(60,707)
|
|
$
|
(25,877)
|
|
$
|
12,413
|
|
$
|
64,496
|
Balance at December
31, 2020
|
|
$
|
(175)
|
|
$
|
4
|
|
$
|
133,591
|
|
$
|
(53,522)
|
|
$
|
6,431
|
|
$
|
—
|
|
$
|
86,329
|
Net income
(loss)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,594)
|
|
|
—
|
|
|
—
|
|
|
(6,594)
|
Additional capital
raise related expenses
|
|
|
—
|
|
|
—
|
|
|
(129)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(129)
|
Employee stock
options
|
|
|
—
|
|
|
—
|
|
|
1,770
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,770
|
Unrealized losses on
investments, net of taxes
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
230
|
|
|
—
|
|
|
230
|
Balance,
June 30, 2021
|
|
$
|
(175)
|
|
$
|
4
|
|
$
|
135,232
|
|
$
|
(60,116)
|
|
$
|
6,661
|
|
$
|
—
|
|
$
|
81,606
|
MIDWEST
HOLDING INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Six months ended
June 30,
|
(In
thousands)
|
|
2022
|
|
2021
|
Cash Flows from
Operating Activities:
|
|
|
|
|
|
|
Income (loss)
attributable to Midwest Holding, Inc.
|
|
$
|
9,452
|
|
$
|
(6,594)
|
Adjustments to arrive
at cash provided by operating activities:
|
|
|
|
|
|
|
Net premium and
discount on investments
|
|
|
(3,834)
|
|
|
(438)
|
Depreciation and
amortization
|
|
|
143
|
|
|
25
|
Stock
options
|
|
|
386
|
|
|
1,770
|
Amortization of
deferred acquisition costs
|
|
|
1,902
|
|
|
1,027
|
Deferred acquisition
costs capitalized
|
|
|
(10,635)
|
|
|
(9,041)
|
Net realized loss on
investments
|
|
|
18,810
|
|
|
589
|
Deferred gain on
coinsurance transactions
|
|
|
3,614
|
|
|
6,674
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
Reinsurance
recoverable
|
|
|
18,383
|
|
|
(13,530)
|
Interest and dividends
due and accrued
|
|
|
(4,674)
|
|
|
(3,642)
|
Premiums
receivable
|
|
|
(6)
|
|
|
(20)
|
Deposit-type
liabilities
|
|
|
(27,795)
|
|
|
(4,317)
|
Policy
liabilities
|
|
|
2,933
|
|
|
11,651
|
Receivable and payable
for securities
|
|
|
16,955
|
|
|
—
|
Other assets and
liabilities
|
|
|
9,893
|
|
|
7,121
|
Net cash provided by
(used in) operating activities
|
|
|
35,527
|
|
|
(8,725)
|
Cash Flows from
Investing Activities:
|
|
|
|
|
|
|
Fixed maturities
available for sale:
|
|
|
|
|
|
|
Purchases
|
|
|
(418,011)
|
|
|
(342,717)
|
Proceeds from sale or
maturity
|
|
|
187,670
|
|
|
132,752
|
Mortgage loans on real
estate, held for investment
|
|
|
|
|
|
|
Purchases
|
|
|
(55,431)
|
|
|
(51,979)
|
Proceeds from
sale
|
|
|
46,853
|
|
|
16,597
|
Derivatives
|
|
|
|
|
|
|
Purchases
|
|
|
(11,421)
|
|
|
(9,850)
|
Proceeds from
sale
|
|
|
3,232
|
|
|
3,063
|
Equity
securities
|
|
|
|
|
|
|
Purchases
|
|
|
—
|
|
|
(46,924)
|
Proceeds from
sale
|
|
|
11,009
|
|
|
—
|
Other invested
assets
|
|
|
|
|
|
|
Purchases
|
|
|
(44,257)
|
|
|
(32,292)
|
Proceeds from
sale
|
|
|
3,334
|
|
|
16,915
|
Purchase of restricted
common stock in FHLB
|
|
|
—
|
|
|
(500)
|
Preferred
stock
|
|
|
(3,474)
|
|
|
(779)
|
Net change in policy
loans
|
|
|
65
|
|
|
(6)
|
Net purchases of
property and equipment
|
|
|
(1,573)
|
|
|
(35)
|
Net cash provided by
(used in) investing activities
|
|
|
(282,004)
|
|
|
(315,755)
|
Cash Flows from
Financing Activities:
|
|
|
|
|
|
|
Net transfer to
noncontrolling interest
|
|
|
(2,587)
|
|
|
—
|
Capital
contribution
|
|
|
—
|
|
|
(129)
|
Receipts on
deposit-type contracts
|
|
|
254,145
|
|
|
249,519
|
Withdrawals on
deposit-type contracts
|
|
|
(18,130)
|
|
|
(6,310)
|
Net cash provided by
(used in) financing activities
|
|
|
233,428
|
|
|
243,080
|
Net increase
(decrease) in cash and cash equivalents
|
|
|
(13,049)
|
|
|
(81,400)
|
Cash and cash
equivalents:
|
|
|
|
|
|
|
Beginning
|
|
|
142,013
|
|
|
151,679
|
Ending
|
|
$
|
128,964
|
|
$
|
70,279
|
|
|
|
|
|
|
|
Supplementary
information
|
|
|
|
|
|
|
Cash paid for
taxes
|
|
$
|
2,870
|
|
$
|
1,500
|
View original
content:https://www.prnewswire.com/news-releases/midwest-holding-inc-reports-second-quarter-2022-results-301605906.html
SOURCE Midwest Holding Inc.