Like most life insurers, National Life primarily makes money in two ways – from the fees we charge our customers who buy our products; and from the income we generate when we invest the money our customers give us.
Our incredible sales growth of the past dozen years – together with strong investment performance and diligent expense management – has nearly tripled our core earnings.
In 2009 our core earnings were $107 million. In 2016 we passed the $200 million mark, ending the year at $209 million. And now in 2021 we are on target to hit $300 million.
Vision 2023 sets a core earnings goal of $375 million, a goal that is ambitious and attainable.
To reach $375 million we need to grow core earnings at a 9% CAGR (see chart above). That’s the same growth rate we have experienced in the past few years.
Our growing book of business is the primary driver behind the planned earnings growth. In addition, our Vision 2023 calls for expanding our business in innovative and complementary ways while broadening our investment options.
Another key to our earnings growth will be the investments we have made and are making in updated platforms for New Business and Underwriting, facilitating customer self-service through our customer and agent portals, and by using data and analytics to focus our resources.
Over the next three years we will still need to add resources in areas like new business, claims and the contact center but should be able to do so at a lesser rate because of our technology initiatives. Other areas of the company – like Finance, People Center and Law – will not need to add resources as sales continue to increase, allowing us to hold down expenses in those departments.
Growing our core earnings provides the capital we need to finance the growth of our business. Capital is one of the most important financial figures in any business. A business that generates its own working capital is better off than a company that needs to borrow money to maintain or grow its business.
And in the end, generating our own working capital through strong growth in earnings is what will keep us independent, thriving and able to Do Good and deliver on our promises.
Definition
CORE EARNINGS is a measure of our profitability that focuses on the drivers we can manage and filters out the accounting noise that is temporary and/or out of our control.