Midwest Holding Inc.

For 2022, Midwest reported GAAP net income of $7.1 million versus a net loss of $16.6 million in 2021. Direct written premium on a statutory basis was $715.8 million for the year, and Q4 direct written premium was $206.2 million, up 97.9% from $104.2 million in Q4 2021. Investment portfolio revenue was $35.1 million in 2022 versus $15.7 million in 2021, while ceded premium was $311.3 million, or 43.5%, versus $237.4 million, or 50.3%, in 2021. Invested assets were $1.6 billion at December 31, 2022, up from $976 million a year earlier. For 2023, management expects Q1 to be consistent with Q4 2022, full-year premiums written of $800 million to $850 million, ceding of approximately 55% to 65%, and management-basis G&A of approximately $30 million to $32 million.

Georgette Nicholas framed 2022 as a year of execution across premium growth, investment performance, and foundational capability-building. She emphasized that Midwest is focused on its core model of selling annuity products, reinsuring liabilities, and using technology, products, and service to compete in a dynamic pricing environment. Her tone was upbeat but practical, noting that state expansion takes time and that the company is building toward a 48- to 49-state footprint over time.

No separate CFO spoke on the call, so the financial commentary came from management. Nicholas highlighted that ceding commissions were $14.3 million in 2022 versus $13.4 million in 2021, with $38 million on the balance sheet tied to deferred gain on coinsurance transactions. She also said the invested asset base reached $1.6 billion and that portfolio yield was approximately 8%, while expenses rose about 30% versus premium growth of over 50%, reflecting continued investment in technology, distribution, personnel, and state expansion. She added that investment income in Q4 dipped due to timing and FX/other asset marks, but the company sees the run rate as broadly consistent with the second and third quarters and expects leverage from Federal Home Loan Bank usage.

Analysts focused on the pace and impact of state expansion and on the run rate for investment income. In response, management said approvals can take up to a year and a half, that Florida and Georgia are important large annuity markets, and that other applications are concentrated in the Southeast; they expect meaningful production impact only after licensing and ramp-up time. On investment income, management said the fourth-quarter decline was timing-related rather than a sign of asset problems, and they expect investment income to be similar to the second and third quarters going forward, helped by putting cash to work and using the Federal Home Loan Bank.