Midwest Holding Inc. Reports Fourth Quarter and Full-Year 2022 Results.

LINCOLN: Midwest Holding Inc. ("Midwest") (NASDAQ: MDWT), today announced financial results for the fourth quarter and full year ended December 31, 2022.

Fourth Quarter and Full Year 2022 Highlights:

GAAP net income for the year was $7.1 million compared with a $(16.6) million net loss recorded in 2021. GAAP earnings were $1.88 per share (diluted) versus a ($4.45) per share (diluted) loss in the prior year. For the fourth quarter 2022, a GAAP net loss of $(9.7) million was incurred compared to a loss of $(7.0) million in the prior year fourth quarter driven by lower investment income from other invested assets and an increase in other expenses related to legal and other fees paid related to the establishment of the line of credit and reinsurance in the quarter.

GAAP total revenue for the year was $30.0 million compared with revenue of $30.1 million in 2021, driven by an increase in investment income from growth in invested assets retained, higher policy administration fees and growing amortization of deferred ceding commissions, offset by unrealized losses on derivatives compared to gains in the prior year.

Annuity direct written premium under statutory accounting principles ("SAP"), a non-GAAP measure, was up 51.8% to $715.8 million for 2022 from $471.6 million in 2021 reflecting strong growth throughout 2022, from a focus on distribution and pricing. The mix of new business was 56% Multi-Year Guaranteed Annuities (MYGA) and 45% Fixed Indexed Annuities (FIA).

Authority to write business was obtained in Florida and Georgia along with product approvals in Florida, North and South Dakota.

Ceded premiums (SAP), a non-GAAP measure, were $311.3 million for 2022 compared to $237.4 million in the prior year. The rate for the year, or that portion of our written premium that we reinsured, was 43.5% compared to 50.3% in the prior year.

Total expenses for 2022 decreased to $21.7 million from $41.9 million in the prior year benefiting from negative interest credited due to the value of the options embedded in our liabilities and from a gain on the mark to market value of the options allowance included in other operating expenses. On a non-GAAP basis, total expenses have increased from variable costs associated with increased premiums written related to technology, distribution, product fees and premium taxes along with expenses related to state expansion and capital initiatives. Salaries and benefits increased with the addition, repositioning and retention of personnel to support growth and manage a tighter labor market.

Invested assets grew to $1,615.0 million at year-end 2022 compared with $975.5 million at year- end 2021. The retained portfolio was $812 million at the end of December 31, 2022 compared to $414 million at the end of prior year. Third-party assets under management were $502 million at year-end compared to $405.0 million in prior year.

Effective February 28, 2023, reinsurer American Republic Insurance Company ("AEG") elected not to extend its commitment period for reinsuring liabilities under its Modified Coinsurance Agreement (the "AEG Agreement"). AEG had previously been taking a 20% quota share of certain liabilities with respect to Midwest's MYGA-5 business as well as a 20% quota share of certain liabilities with respect to our FIA products and, as a result of the election, its quota share with respect to both MYGA and FIA policies is 0% going forward. The AEG Agreement remains in place, and AEG remains responsible for previously ceded liabilities.

Georgette Nicholas, CEO of Midwest noted, "We are excited about the execution and progress we have made in 2022. The results reflect the actions we took to position the Company for growth. We have been focusing on distribution, pricing, products, investment management, and reinsurance. We are investing in technology and foundational capabilities to...