American National Group Inc 8-K, filed Aug 7, 2023
American National Group Inc. (ANG-PD)
8-K
2023-08-07
For: 2023-08-07
View Original
Added on
April 06, 2026
About this 8-K
American National Group Inc filed this 8-K on August 7, 2023.
Items reported
- Item 2.02: Financial results
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 07, 2023
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||
(Address of principal executive offices and zip code)
(515 ) 221-0002
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition
On August 7, 2023, the registrant issued a press release announcing its financial results for the quarter ended June 30, 2023, a copy of which is attached as Exhibit 99.1 and is incorporated herein by reference. The registrant's financial supplement for the quarter ended June 30, 2023, is attached as Exhibit 99.2 and is incorporated herein by reference.
The information, including exhibits attached hereto, furnished under this Item 2.02 shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, except as otherwise expressly stated in such filing.
Item 9.01. Financial Statements and Exhibits
Exhibit Number | Description | |||||||
| 99.1 | ||||||||
| 99.2 | ||||||||
| 104 | The cover page from this Current Report on Form 8-K, formatted in Inline XBRL. | |||||||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: August 7, 2023
| AMERICAN EQUITY | |||||||||||
| INVESTMENT LIFE HOLDING COMPANY | |||||||||||
| By: | /s/ Axel Andre | ||||||||||
| Axel Andre | |||||||||||
| Executive Vice President and Chief Financial Officer | |||||||||||
Exhibit 99.1
 | For more information, contact: | |||||||
| Steven D. Schwartz, Head of Investor Relations | ||||||||
| (515) 273-3763, sschwartz@american-equity.com | ||||||||
| FOR IMMEDIATE RELEASE | ||||||||
| August 7, 2023 | ||||||||
American Equity Reports Further Growth in Both Earnings and Sales Momentum as Private Asset Allocation Ramps to 25%
Company Highlights
•Second quarter 2023 net income available to common stockholders of $344.4 million, or $4.36 per diluted common share compared to net income of $752.4 million, or $8.06 per diluted common share for second quarter 2022 restated for the adoption of Accounting Standards Update 2018-12 — more commonly known as Long Duration Targeted Improvements or LDTI.
•Non-GAAP operating income available to common stockholders1 for the second quarter 2023 was $127.6 million, or $1.62 per diluted common share; Notable items2 negatively impacted results in the quarter by $8.9 million, or $0.11 per share, after-tax.
•On a trailing twelve-month basis GAAP return on equity of 26.4% and non-GAAP operating return on equity1 of 12.1%
•Total sales4 of $2.0 billion including approximately $1.9 billion of FIA sales reflecting a sequential quarterly FIA sales increase of 95%
•Private asset deployment ramp continues with over $800 million sourced in the quarter, bringing total portfolio allocation to 24.9%
•Ceded $821 million of flow reinsurance to reinsurance partners creating "fee-like" revenues and growing account value subject to recurring fees under reinsurance agreements to $10.9 billion
WEST DES MOINES, Iowa (August 7, 2023) – American Equity Investment Life Holding Company (NYSE: AEL), a leading issuer of fixed index annuities (FIAs), today reported its second quarter 2023 results. Sales momentum accelerated in both the independent agent channel and bank and broker-dealer channel while the investment portfolio allocation to private assets continued to increase.
American Equity's President and CEO, Anant Bhalla stated: "AEL 2.0 is thriving with the business firing on all cylinders or components of our flywheel. New business sales of $2 billion in the second quarter is at nearly all-time highs for AEL. Private asset investments over $12 billion – or 25% of all invested assets on the balance sheet – and nearly $11 billion of account values ceded to reinsurance partners to earn “fee-like” revenues are both significant milestones in our transformation into a capital-light and more resilient, +12% ROE earning institution for the benefit of our shareholders. This is the vision that we shared 3 years ago, and we have delivered on it, ahead of
schedule. Our Board of Directors and Management leadership are proud of the achievements of the AEL team and our network of business partners.
Bhalla continued: Looking ahead, we expect our primary focus for the remainder of 2023 to be on completing our planned merger transaction with Brookfield Reinsurance (NYSE, TSX: BNRE), which is currently expected to close by the first half of 2024, while continuing to excel as the premier provider of Financial Dignity Solutions to retail clients.”
Non-GAAP operating income available to common stockholders1 for the second quarter of 2023 was $127.6 million, or $1.62 per diluted common share, compared to non-GAAP operating income available to common stockholders1 of $124.3 million, or $1.47 per diluted common share, for the first quarter of 2023 and $151.2 million, or $1.62 per diluted common share, for the second quarter of 2022, restated for the adoption of Accounting Standards Update 2018-12 — more commonly known as Long Duration Targeted Improvements or LDTI. For the second quarter of 2023, non-GAAP operating income available to common stockholders1 was negatively affected by $8.9 million, or $0.11 per share, after taxes, from notable items2. Results in the first quarter of 2023 included negative notable items2 of $9.6 million, or $0.11 per share after taxes, while there were no notable items2 affecting results for the second quarter of 2022.
The year-over-year change in quarterly non-GAAP operating income available to common stockholders1 excluding the impact of notable items2 reflects increased recurring fee revenue related to reinsurance and higher surrender charge fee income more than offset by lower investment spread income.
Compared to the first quarter of 2023, quarterly non-GAAP operating income available to common stockholders1 excluding the impact of notable items2 increased slightly reflecting higher surrender charge fee income, a smaller increase in the Market Risk Benefit liability and lower tax rate offset by lower investment spread income. Notable items2 in the first and second quarters of 2023 reflect the special incentive compensation plan put in place in November 2022.
For the second quarter of 2023, net investment income fell to $547 million, when adjusted to reflect non-GAAP operating income available to common stockholders1, from $559 million for the first quarter of 2023. This $12 million decrease reflects a six-basis point decline in effective yield on the investment portfolio, lower invested assets, and a decrease in cash and short-term investments at the holding company level. The decline in the portfolio yield resulted from a decrease in the return from partnerships and other mark-to-market investments which more than offset higher short-term floating rates and new money investment yields.
Compared to the first quarter of 2023, second quarter surrender charge income increased $7 million to $34 million, reflecting increased lapsation associated with higher interest rates positively affecting yields on bank deposits and new money caps, participation rates and credited interest rates on annuities offered by American Equity and its competitors.
Outflows in the second quarter of 2023, including surrenders, income utilization and partial withdrawals, were nearly flat compared to the first quarter of 2023, totaling $1.3 billion.
2
As of June 30, 2023, account value of business ceded subject to fee income was $10.9 billion, up from $10.2 billion three months earlier. Flow reinsurance ceded subject to fee income in the second quarter of 2023 totaled $821 million of account value. Revenue associated with recurring fees under reinsurance agreements for the second quarter of 2023 totaled $23 million compared to $22 million for the first quarter of 2023, each as adjusted to reflect non-GAAP operating income available to common stockholders1. First quarter 2023 revenue included a positive $1 million true-up associated with the final settlement of the fourth quarter 2022 reinsurance transaction.
The cost of money for deferred annuities in the second quarter increased $4 million from the first quarter of 2023 to $217 million. Cost of money in the second quarter of 2023 benefited from approximately $4 million in hedging gains.
Compared to the first quarter of 2023, the change in the MRB liability decreased by $6 million to $41 million when adjusted to reflect non-GAAP operating income available to common stockholders1. Second quarter 2023 change in MRB liability adjusted to reflect non-GAAP operating income available to common stockholders1 was $5 million less than expected, consisting of a $7 million benefit from reserves released due to higher-than-expected surrenders, and a $4 million benefit from higher amortization of net deferred capital market impact due to favorable second quarter capital market changes, offset by $6 million of other adverse experience. The change in the modeled expectation for the MRB liability, adjusted to reflect non-GAAP operating income available to common stockholders1, for the third quarter of 2023 is $41.5 million, before the effects of potential third quarter actuarial assumption revisions, based on current in-force. Third quarter 2023 expected change in the MRB liability includes an expected benefit from the amortization of capital market impacts on the fair value of market risk benefits of $20 million.
Amortization of deferred policy acquisition and sales inducement cost was basically flat at $115 million for the second quarter of 2023. Amortization in the quarter included $1 million of expense associated with new sales. For the third quarter of 2023, the modeled expectation for deferred acquisition cost and deferred sales inducement amortization is $117 million before the effect of new sales, experience variances and potential third quarter actuarial assumption revisions.
Other operating costs and expenses for the second quarter of 2023 increased to $76 million, up $2 million from the first quarter. Notable items2 in the second and first quarters of 2023 were $11 million and $12 million, pre-tax, respectively, both reflecting quarterly expense associated with the strategic incentive compensation award made in November 2022.
The effective tax rate on pre-tax operating income available for common stockholders1 for the second quarter of 2023 was 20.8% compared to the first quarter of 2023 tax rate of 24.4%. Tax expense in the first quarter included a $6 million true-up related to 2022 which contributed approximately 300 basis points to the effective tax rate.
POINT-IN-TIME YIELD INCREASES ON STRONG ORIGINATION OF PRIVATE ASSETS
American Equity’s investment spread was 2.57% for the second quarter of 2023 compared to 2.67% for the first quarter of 2023 and 2.64% for the second quarter of 2022. Excluding non-trendable items3, adjusted investment spread decreased to 2.53% in the second quarter of 2023 from 2.67% in the first quarter of 2023.
3
Average yield on invested assets was 4.42% in the second quarter of 2023 compared to 4.48% in the first quarter of 2023. The average adjusted yield on invested assets excluding non-trendable items3 was 4.41% in the second quarter of 2023 compared to 4.48% in the first quarter of 2023.
During the second quarter of 2023, investment asset purchases totaled $2.3 billion and were made at an average rate of 6.54%, including approximately $800 million of private assets at 7.14%.
The point-in-time yield on the portfolio at June 30, 2023, was 4.77%. We continue to expect to see positive impacts from higher short term rates on $7.2 billion of floating rate securities in the investment portfolio, while we add to our existing cash and cash equivalents positions to reduce risk in the investment portfolio as we prepare for the closing of our proposed Merger with Brookfield Reinsurance. Reflecting these actions, the point-in-time yield at the end of the third quarter of 2023 is expected to be relatively flat compared to the end of the previous quarter.
The aggregate cost of money for annuity liabilities of 1.85% in the second quarter of 2023 was up four basis points compared to the first quarter of 2023. The cost of money in the second quarter of 2023 reflects a three-basis point benefit from the over-hedging of index-linked credits compared to a minimal benefit in the first quarter of 2023. The seven basis-point increase in the adjusted cost of money compared to the first quarter is in line with increased market costs.
Cost of options in the second quarter of 2023 averaged 1.93% compared to 1.79% in the first quarter of 2023, reflecting both market effects on the cost of options for renewals as well as higher option costs on new sales due to increases in caps, participation rates and credited interest rates on our annuity products over time consistent with the interest rate environment. Approximately 70% of the increase in the cost of options in the second quarter was associated with new sales.
Net account balance growth in the second quarter was a positive $111 million, or 0.2% of account values, compared to a net account balance decrease of $472 million in the first quarter. Index credits in the second quarter were generally in-line with modeled expectations while net flows improved substantially from the first quarter of the year.
FIA SALES INCREASE 95% FROM PRIOR SEQUENTIAL QUARTER
Second quarter 2023 sales were $2.0 billion, of which 93.9%, or $1.9 billion, were in fixed index annuities. Total enterprise FIA sales increased 94.7% and 142.0% compared to the first quarter of 2023 and the second quarter of 2022, respectively. Compared to the first quarter of 2023, FIA sales at American Equity Life in the Independent Marketing Organization (IMO) channel doubled, while Eagle Life FIA sales through banks and broker-dealers rose 77.7%.
Bhalla noted, "Total enterprise sales in July were approximately $680 million. As interest rates remain volatile, and possibly move higher, we may see competitors chase rates. In that scenario, we will likely continue to emphasize building cash on the balance sheet, with an eye towards even better investment opportunities in the future, while maintaining the underwriting discipline necessary to write resilient, double-digit, return on capital business. Therefore, we expect to manage sales levels through the remainder of the year to finish 2023 with total FIA sales in the $5 billion to $6 billion range across our IMO, bank and broker dealer channels. We expect the bank and broker dealer channels to contribute approximately 25% of new sales – a meaningful achievement reflecting the re-building of these channels over the past three years.
4
CREDIT AND CAPITAL METRICS LARGELY UNCHANGED
With regard to credit markets, Jim Hamalainen, Chief Investment Officer, added, "Credit metrics in the investment portfolio remain largely unchanged from the end of the first quarter, and our fixed securities portfolio remains A- rated. Total net realized losses for the quarter of approximately $25 million includes a loss of $44 million on First Republic Bank. Regional bank valuations have stabilized, and we remain comfortable with our $127 million exposure, which is heavily slanted towards the large regionals and has an overall rating in the BBB+ range. We saw very little deterioration in the commercial mortgage loan portfolio and all loans are performing. Average loan-to-value of the CML portfolio remains at 53% and over 80% of the portfolio maintains a debt service coverage ratio of 1.2x or higher. Looking specifically at our direct office mortgage loan exposure, we are considerably underweight relative to our peers at just 8% of the CML portfolio. The average debt service coverage ratio on the office mortgage loan portfolio is 1.91x with an average loan-to-value ratio of 61%. We have only $7 million of loans maturing through the end of 2024 with just $31 million set to mature in 2025."
Hamalainen continued, "So far through the third quarter, we have built up a substantial cash position in the investment portfolio of $5.4 billion funded through sales of the core fixed income portfolio – primarily corporate bonds, municipal bonds and structured assets – and we expect our cash position to increase to between $7 billion and $10 billion over the next few quarters with cash likely at the low-end of the range by year-end. These actions will help protect the company if macro-economic trends point to stubbornly high inflation or growing risks in the economy, while providing the company with substantial dry powder to take advantage of opportunities that may emerge in the private asset sector over the coming year."
Following the announcement of the definitive agreement to merge with Brookfield Reinsurance, the company terminated its accelerated share repurchase program having repurchased the 4.8 million shares delivered to it on March 20, 2023. Given the impending merger transaction, the previously announced capital return plan for the company is currently suspended.
As of June 30, total adjusted capital at American Equity Life Insurance Co. totaled $4.1 billion with estimated excess capital of over $600 million. Additionally, cash and equivalents at the holding company level was $390 million at quarter-end and $462 million as of July 31st.
UPDATE ON DEFINITIVE AGREEMENT WITH BROOKFIELD REINSURANCE
On July 5, 2023, Brookfield Reinsurance and American Equity announced that they had entered into a definitive agreement whereby Brookfield Reinsurance will acquire all of the outstanding shares of common stock of American Equity it does not already own in a cash and stock transaction that values AEL at approximately $4.3 billion.
The merger is expected to close in the first half of 2024, subject to approval by American Equity shareholders and other closing conditions customary for a transaction of this type, including receipt of insurance regulatory approvals in relevant jurisdictions and the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
5
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
The forward-looking statements in this release such as believe, build, confident, continue, could, estimate, expect, exposure, future, grow, likely, maintain, may, might, model, opportunity, outlook, plan, potential, proposed, risk, scenario, should, trend, will, would, and their derivative forms and similar words, as well as any projections of future results, are based on assumptions and expectations that involve risks and uncertainties, including the "Risk Factors" the company describes in its U.S. Securities and Exchange Commission filings. The Company's future results could differ, and it has no obligation to correct or update any of these statements.
ABOUT AMERICAN EQUITY
At American Equity Investment Life Holding Company, our policyholders work with over 40,000 independent agents and advisors affiliated with independent market organizations (IMOs), banks and broker-dealers through our wholly-owned operating subsidiaries Advisors and agents choose one of our leading annuity products best suited for their clients' personal needs to create financial dignity in retirement. To deliver on its promises to policyholders, American Equity has re-framed its investment focus — building a stronger emphasis on insurance liability driven asset allocation and specializing in alternate, private asset management while partnering with world renowned, public fixed income asset managers. American Equity is headquartered in West Des Moines, Iowa with additional offices in Charlotte, NC, New York, NY and Miami, FL. For more information, please visit www.american-equity.com.
1 Use of non-GAAP financial measures is discussed in this release in the tables that follow the text of the release.
2 Notable items reflect the increase (decrease) to non-GAAP operating income (loss) available to common stockholders for certain matters where more detail may help investors better understand, evaluate, and forecast results. Notable items are further discussed in the tables that follow the text of the release.
3 Non-trendable items are the impact of investment yield – additional prepayment income and cost of money effect of over (under) hedging as shown in our June 30, 2023 financial supplement on page 10, “Spread Results”.
4 For the purposes of this document, all references to sales are on a gross basis. Gross sales is defined as sales before the use of reinsurance.
###
6
American Equity Investment Life Holding Company
Unaudited (Dollars in thousands, except per share data)
Consolidated Statements of Operations
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Premiums and other considerations | $ | 2,516 | $ | 3,831 | $ | 6,653 | $ | 13,909 | |||||||||||||||
| Annuity product charges | 71,642 | 55,514 | 134,233 | 107,869 | |||||||||||||||||||
| Net investment income | 542,685 | 592,308 | 1,104,008 | 1,159,731 | |||||||||||||||||||
| Change in fair value of derivatives | 242,739 | (506,181) | 288,629 | (983,700) | |||||||||||||||||||
| Net realized losses on investments | (24,679) | (33,272) | (52,466) | (46,399) | |||||||||||||||||||
| Other revenue | 16,736 | 9,408 | 33,130 | 18,225 | |||||||||||||||||||
| Total revenues | 851,639 | 121,608 | 1,514,187 | 269,635 | |||||||||||||||||||
| Benefits and expenses: | |||||||||||||||||||||||
| Insurance policy benefits and change in future policy benefits | 5,125 | 6,998 | 12,333 | 20,613 | |||||||||||||||||||
| Interest sensitive and index product benefits | 122,387 | 140,346 | 180,298 | 428,263 | |||||||||||||||||||
| Market risk benefits (gains) losses | (144,124) | (299,278) | 39,570 | (107,385) | |||||||||||||||||||
| Amortization of deferred sales inducements | 46,951 | 44,696 | 93,552 | 89,781 | |||||||||||||||||||
| Change in fair value of embedded derivatives | 213,764 | (885,984) | 618,204 | (2,279,633) | |||||||||||||||||||
| Interest expense on notes and loan payable | 11,227 | 6,461 | 22,245 | 12,886 | |||||||||||||||||||
| Interest expense on subordinated debentures | 1,338 | 1,346 | 2,674 | 2,663 | |||||||||||||||||||
| Amortization of deferred policy acquisition costs | 68,476 | 72,485 | 136,711 | 145,454 | |||||||||||||||||||
| Other operating costs and expenses | 75,697 | 59,872 | 149,701 | 117,667 | |||||||||||||||||||
| Total benefits and expenses | 400,841 | (853,058) | 1,255,288 | (1,569,691) | |||||||||||||||||||
| Income before income taxes | 450,798 | 974,666 | 258,899 | 1,839,326 | |||||||||||||||||||
| Income tax expense | 95,652 | 211,377 | 59,644 | 396,572 | |||||||||||||||||||
| Net income | 355,146 | 763,289 | 199,255 | 1,442,754 | |||||||||||||||||||
| Less: Net loss available to noncontrolling interests | (217) | (4) | (114) | (4) | |||||||||||||||||||
| Net income available to American Equity Investment Life Holding Company stockholders | 355,363 | 763,293 | 199,369 | 1,442,758 | |||||||||||||||||||
| Less: Preferred stock dividends | 10,919 | 10,919 | 21,838 | 21,838 | |||||||||||||||||||
| Net income available to American Equity Investment Life Holding Company common stockholders | $ | 344,444 | $ | 752,374 | $ | 177,531 | $ | 1,420,920 | |||||||||||||||
| Earnings per common share | $ | 4.43 | $ | 8.13 | $ | 2.20 | $ | 15.01 | |||||||||||||||
| Earnings per common share - assuming dilution | $ | 4.36 | $ | 8.06 | $ | 2.17 | $ | 14.86 | |||||||||||||||
| Weighted average common shares outstanding (in thousands): | |||||||||||||||||||||||
| Earnings per common share | 77,767 | 92,544 | 80,576 | 94,693 | |||||||||||||||||||
| Earnings per common share - assuming dilution | 78,928 | 93,375 | 81,824 | 95,652 | |||||||||||||||||||
Page 1
American Equity Investment Life Holding Company
Unaudited (Dollars in thousands, except per share data)
NON-GAAP FINANCIAL MEASURES
In addition to net income available to common stockholders, we have consistently utilized non-GAAP operating income available to common stockholders and non-GAAP operating income available to common stockholders per common share - assuming dilution, non-GAAP financial measures commonly used in the life insurance industry, as economic measures to evaluate our financial performance. Non-GAAP operating income available to common stockholders equals net income available to common stockholders adjusted to eliminate the impact of items that fluctuate from quarter to quarter in a manner unrelated to core operations, and we believe measures excluding their impact are useful in analyzing operating trends. The most significant adjustments to arrive at non-GAAP operating income available to common stockholders eliminate the impact of fair value accounting for our fixed index annuity business. These adjustments are not economic in nature but rather impact the timing of reported results. We believe the combined presentation and evaluation of non-GAAP operating income available to common stockholders together with net income available to common stockholders provides information that may enhance an investor’s understanding of our underlying results and profitability.
Reconciliation from Net Income Available to Common Stockholders to Non-GAAP Operating Income Available to Common Stockholders
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
| Net income available to American Equity Investment Life Holding Company common stockholders | $ | 344,444 | $ | 752,374 | $ | 177,531 | $ | 1,420,920 | |||||||||||||||
| Adjustments to arrive at non-GAAP operating income available to common stockholders: | |||||||||||||||||||||||
| Net realized losses on financial assets, including credit losses | 22,737 | 37,054 | 47,121 | 50,779 | |||||||||||||||||||
| Change in fair value of derivatives and embedded derivatives | (124,816) | (470,813) | 81,386 | (1,318,020) | |||||||||||||||||||
| Capital markets impact on the change in fair value of market risk benefits | (184,700) | (335,330) | (47,750) | (216,417) | |||||||||||||||||||
| Net investment income | 4,609 | — | 2,118 | — | |||||||||||||||||||
| Other revenue | 5,969 | — | 11,938 | — | |||||||||||||||||||
| Income taxes | 59,373 | 167,944 | (20,392) | 321,034 | |||||||||||||||||||
| Non-GAAP operating income available to common stockholders | $ | 127,616 | $ | 151,229 | $ | 251,952 | $ | 258,296 | |||||||||||||||
| Impact of excluding notable items (a) | $ | 8,892 | $ | — | $ | 18,458 | $ | — | |||||||||||||||
| Per common share - assuming dilution: | |||||||||||||||||||||||
| Net income available to American Equity Investment Life Holding Company common stockholders | $ | 4.36 | $ | 8.06 | $ | 2.17 | $ | 14.86 | |||||||||||||||
| Adjustments to arrive at non-GAAP operating income available to common stockholders: | |||||||||||||||||||||||
| Net realized losses on financial assets, including credit losses | 0.29 | 0.39 | 0.58 | 0.53 | |||||||||||||||||||
| Change in fair value of derivatives and embedded derivatives | (1.58) | (5.04) | 0.99 | (13.78) | |||||||||||||||||||
| Capital markets impact on the change in fair value of market risk benefits | (2.34) | (3.59) | (0.58) | (2.26) | |||||||||||||||||||
| Net investment income | 0.06 | — | 0.02 | — | |||||||||||||||||||
| Other revenue | 0.08 | — | 0.15 | — | |||||||||||||||||||
| Income taxes | 0.75 | 1.80 | (0.25) | 3.35 | |||||||||||||||||||
| Non-GAAP operating income available to common stockholders | $ | 1.62 | $ | 1.62 | $ | 3.08 | $ | 2.70 | |||||||||||||||
| Impact of excluding notable items (a) | $ | 0.11 | $ | — | $ | 0.23 | $ | — | |||||||||||||||
Notable Items
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
| Notable items impacting non-GAAP operating income available to common stockholders: | |||||||||||||||||||||||
| Expense associated with strategic incentive award | 8,892 | — | $ | 18,458 | $ | — | |||||||||||||||||
| Total notable items (a) | $ | 8,892 | $ | — | $ | 18,458 | $ | — | |||||||||||||||
(a)Notable items reflect the after-tax increase (decrease) to non-GAAP operating income (loss) available to common stockholders for certain matters where more detail may help investors better understand, evaluate, and forecast results.
For the three and six months ended June 30, 2023, non-GAAP operating income available to common stockholders would increase $8.9 million and $18.5 million, respectively, if we were to exclude the impact of notable items.
Page 2
American Equity Investment Life Holding Company
Unaudited (Dollars in thousands, except share and per share data)
Book Value per Common Share
| Q2 2023 | |||||||||||||||||||||||||||||
| Total stockholders’ equity attributable to American Equity Investment Life Holding Company | $ | 2,571,915 | |||||||||||||||||||||||||||
| Equity available to preferred stockholders (a) | (700,000) | ||||||||||||||||||||||||||||
| Total common stockholders' equity (b) | 1,871,915 | ||||||||||||||||||||||||||||
| Accumulated other comprehensive (income) loss (AOCI) | 3,425,248 | ||||||||||||||||||||||||||||
| Total common stockholders’ equity excluding AOCI (b) | 5,297,163 | ||||||||||||||||||||||||||||
| Net impact of fair value accounting for derivatives and embedded derivatives | (1,587,599) | ||||||||||||||||||||||||||||
| Net capital markets impact on the fair value of market risk benefits | (638,442) | ||||||||||||||||||||||||||||
Total common stockholders’ equity excluding AOCI and the net impact of fair value accounting for fixed index annuities (b) | $ | 3,071,122 | |||||||||||||||||||||||||||
| Common shares outstanding | 78,047,941 | ||||||||||||||||||||||||||||
| Book Value per Common Share: (c) | |||||||||||||||||||||||||||||
| Book value per common share | $ | 23.98 | |||||||||||||||||||||||||||
| Book value per common share excluding AOCI (b) | $ | 67.87 | |||||||||||||||||||||||||||
| Book value per common share excluding AOCI and the net impact of fair value accounting for fixed index annuities (b) | $ | 39.35 | |||||||||||||||||||||||||||
(a)Equity available to preferred stockholders is equal to the redemption value of outstanding preferred stock plus share dividends declared but not yet issued.
(b)Total common stockholders' equity, total common stockholders' equity excluding AOCI and total common stockholders' equity excluding AOCI and the net impact of fair value accounting for fixed index annuities, non-GAAP financial measures, exclude equity available to preferred stockholders. Total common stockholders’ equity and book value per common share excluding AOCI, non-GAAP financial measures, are based on common stockholders’ equity excluding the effect of AOCI. Since AOCI fluctuates from quarter to quarter due to unrealized changes in the fair value of available for sale securities, we believe these non-GAAP financial measures provide useful supplemental information. Total common stockholders' equity and book value per common share excluding AOCI and the net impact of fair value accounting for fixed index annuities, non-GAAP financial measures, are based on common stockholders' equity excluding AOCI and the net impact of fair value accounting for fixed index annuities. Since the net impact of fair value accounting for our fixed index annuity business is not economic in nature but rather impact the timing of reported results, we believe these non-GAAP financial measures provide useful supplemental information.
(c)Book value per common share including and excluding AOCI and book value per common share excluding AOCI and the net impact of fair value accounting for fixed index annuities are calculated as total common stockholders’ equity, total common stockholders’ equity excluding AOCI and total common stockholders' equity excluding AOCI and the net impact of fair value accounting for fixed index annuities divided by the total number of shares of common stock outstanding.
Page 3
American Equity Investment Life Holding Company
Unaudited (Dollars in thousands)
NON-GAAP FINANCIAL MEASURES
Average Common Stockholders' Equity and Return on Average Common Stockholders' Equity
Return on average common stockholders' equity measures how efficiently we generate profits from the resources provided by our net assets. Return on average common stockholders' equity is calculated by dividing net income available to common stockholders, for the trailing twelve months, by average equity available to common stockholders. Non-GAAP operating return on average common stockholders' equity excluding average accumulated other comprehensive income (AOCI) and average net impact of fair value accounting for fixed index annuities is calculated by dividing non-GAAP operating income available to common stockholders, for the trailing twelve months, by average common stockholders' equity excluding average AOCI and average net impact of fair value accounting for fixed index annuities. We exclude AOCI because AOCI fluctuates from quarter to quarter due to unrealized changes in the fair value of available for sale investments. We exclude the net impact of fair value accounting for fixed index annuities as the amounts are not economic in nature but rather impact the timing of reported results.
| Twelve Months Ended | |||||
| June 30, 2023 | |||||
| Average Common Stockholders' Equity Attributable to American Equity Investment Life Holding Company, Excluding Average AOCI and Average Net Impact of Fair Value Accounting for Fixed Index Annuities | |||||
| Average total stockholders’ equity | $ | 3,098,646 | |||
| Average equity available to preferred stockholders | (700,000) | ||||
| Average equity available to common stockholders | 2,398,646 | ||||
| Average AOCI | 2,828,421 | ||||
| Average common stockholders' equity excluding average AOCI | 5,227,067 | ||||
| Average net impact of fair value accounting for derivatives and embedded derivatives | (1,502,922) | ||||
| Average net capital markets impact on the fair value of market risk benefits | (550,149) | ||||
| Average common stockholders' equity excluding average AOCI and average net impact of fair value accounting for fixed index annuities | $ | 3,173,996 | |||
| Net income available to American Equity Investment Life Holding Company common stockholders | $ | 633,155 | |||
| Adjustments to arrive at non-GAAP operating income available to common stockholders: | |||||
| Net realized losses on financial assets, including credit losses | 44,606 | ||||
| Change in fair value of derivatives and embedded derivatives | (149,799) | ||||
| Capital markets impact on the change in fair value of market risk benefits | (224,950) | ||||
| Net investment income | 3,594 | ||||
| Other revenue | 17,907 | ||||
| Income taxes | 60,412 | ||||
| Non-GAAP operating income available to common stockholders | $ | 384,925 | |||
| Impact of excluding notable items (a) | $ | 200,348 | |||
| Return on Average Common Stockholders' Equity Attributable to American Equity Investment Life Holding Company | |||||
| Net income available to common stockholders | 26.4 | % | |||
| Return on Average Common Stockholders' Equity Attributable to American Equity Investment Life Holding Company, Excluding Average AOCI and Average Net Impact of Fair Value Accounting for Fixed Index Annuities | |||||
| Non-GAAP operating income available to common stockholders | 12.1 | % | |||
| Notable Items | Twelve Months Ended | ||||
| June 30, 2023 | |||||
| Notable items impacting non-GAAP operating income available to common stockholders: | |||||
| Expense associated with strategic incentive award | $ | 18,458 | |||
| Impact of actuarial assumption updates | 181,890 | ||||
| Total notable items (a) | $ | 200,348 | |||
(a)Notable items reflect the after-tax increase (decrease) to non-GAAP operating income (loss) available to common stockholders for certain matters where more detail may help investors better understand, evaluate, and forecast results.
Page 4
Exhibit 99.2
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement
June 30, 2023
| A. | Financial Highlights | |||||||
| Non-GAAP Financial Measures | ||||||||
| B. | Product Summary | |||||||
| C. | Investment Summary | |||||||
| D. | ||||||||
| E. | ||||||||
Effective January 1, 2023, American Equity Investment Life Holding Company (the “Company”) adopted Accounting Standards Update 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts (LDTI). The Company applied this guidance as of the transition date of January 1, 2021, and retrospectively adjusted prior period amounts to reflect the new guidance. The prior period numbers within this financial supplement have been recast, to the extent impacted by LDTI, from the original financial supplements published by the Company.
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - June 30, 2023
Unaudited (Dollars in thousands)
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
| June 30, 2023 | December 31, 2022 | ||||||||||
| Assets | |||||||||||
| Investments: | |||||||||||
| Fixed maturity securities, available for sale, at fair value | $ | 38,680,457 | $ | 39,804,617 | |||||||
| Mortgage loans on real estate | 7,373,609 | 6,949,027 | |||||||||
| Real estate investments | 1,270,213 | 1,056,063 | |||||||||
| Limited partnerships and limited liability companies | 1,649,959 | 1,266,779 | |||||||||
| Derivative instruments | 1,131,597 | 431,727 | |||||||||
| Other investments | 1,412,939 | 1,817,085 | |||||||||
| Total investments | 51,518,774 | 51,325,298 | |||||||||
| Cash and cash equivalents | 5,000,657 | 1,919,669 | |||||||||
| Coinsurance deposits | 14,247,284 | 13,254,956 | |||||||||
| Market risk benefits | 234,470 | 229,871 | |||||||||
| Accrued investment income | 488,396 | 497,851 | |||||||||
| Deferred policy acquisition costs | 2,842,615 | 2,773,643 | |||||||||
| Deferred sales inducements | 2,134,254 | 2,045,683 | |||||||||
| Deferred income taxes | 293,466 | 438,434 | |||||||||
| Income taxes recoverable | 55,678 | 55,498 | |||||||||
| Other assets | 829,831 | 642,696 | |||||||||
| Total assets | $ | 77,645,425 | $ | 73,183,599 | |||||||
| Liabilities and Stockholders' Equity | |||||||||||
| Liabilities: | |||||||||||
| Policy benefit reserves | $ | 59,856,677 | $ | 58,781,836 | |||||||
| Market risk benefits | 2,673,272 | 2,455,492 | |||||||||
| Other policy funds and contract claims | 202,251 | 512,790 | |||||||||
| Notes and loan payable | 788,754 | 792,073 | |||||||||
| Subordinated debentures | 78,927 | 78,753 | |||||||||
| Funds withheld for reinsurance liabilities | 7,565,295 | 6,577,426 | |||||||||
| Other liabilities | 3,885,208 | 1,614,479 | |||||||||
| Total liabilities | 75,050,384 | 70,812,849 | |||||||||
| Stockholders' equity: | |||||||||||
| Preferred stock, Series A | 16 | 16 | |||||||||
| Preferred stock, Series B | 12 | 12 | |||||||||
| Common stock | 78,048 | 84,810 | |||||||||
| Additional paid-in capital | 1,055,963 | 1,325,316 | |||||||||
| Accumulated other comprehensive loss | (3,425,248) | (3,746,230) | |||||||||
| Retained earnings | 4,863,124 | 4,685,593 | |||||||||
| Total stockholders' equity attributable to American Equity Investment Life Holding Company | 2,571,915 | 2,349,517 | |||||||||
| Noncontrolling interests | 23,126 | 21,233 | |||||||||
| Total stockholders' equity | 2,595,041 | 2,370,750 | |||||||||
| Total liabilities and stockholders' equity | $ | 77,645,425 | $ | 73,183,599 | |||||||
Page 1
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - June 30, 2023
Unaudited (Dollars in thousands, except per share data)
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Premiums and other considerations | $ | 2,516 | $ | 3,831 | $ | 6,653 | $ | 13,909 | |||||||||||||||
| Annuity product charges | 71,642 | 55,514 | 134,233 | 107,869 | |||||||||||||||||||
| Net investment income | 542,685 | 592,308 | 1,104,008 | 1,159,731 | |||||||||||||||||||
| Change in fair value of derivatives | 242,739 | (506,181) | 288,629 | (983,700) | |||||||||||||||||||
| Net realized losses on investments | (24,679) | (33,272) | (52,466) | (46,399) | |||||||||||||||||||
| Other revenue | 16,736 | 9,408 | 33,130 | 18,225 | |||||||||||||||||||
| Total revenues | 851,639 | 121,608 | 1,514,187 | 269,635 | |||||||||||||||||||
| Benefits and expenses: | |||||||||||||||||||||||
| Insurance policy benefits and change in future policy benefits | 5,125 | 6,998 | 12,333 | 20,613 | |||||||||||||||||||
| Interest sensitive and index product benefits | 122,387 | 140,346 | 180,298 | 428,263 | |||||||||||||||||||
| Market risk benefits (gains) losses | (144,124) | (299,278) | 39,570 | (107,385) | |||||||||||||||||||
| Amortization of deferred sales inducements | 46,951 | 44,696 | 93,552 | 89,781 | |||||||||||||||||||
| Change in fair value of embedded derivatives | 213,764 | (885,984) | 618,204 | (2,279,633) | |||||||||||||||||||
| Interest expense on notes and loan payable | 11,227 | 6,461 | 22,245 | 12,886 | |||||||||||||||||||
| Interest expense on subordinated debentures | 1,338 | 1,346 | 2,674 | 2,663 | |||||||||||||||||||
| Amortization of deferred policy acquisition costs | 68,476 | 72,485 | 136,711 | 145,454 | |||||||||||||||||||
| Other operating costs and expenses | 75,697 | 59,872 | 149,701 | 117,667 | |||||||||||||||||||
| Total benefits and expenses | 400,841 | (853,058) | 1,255,288 | (1,569,691) | |||||||||||||||||||
| Income before income taxes | 450,798 | 974,666 | 258,899 | 1,839,326 | |||||||||||||||||||
| Income tax expense | 95,652 | 211,377 | 59,644 | 396,572 | |||||||||||||||||||
| Net income | 355,146 | 763,289 | 199,255 | 1,442,754 | |||||||||||||||||||
| Less: Net loss available to noncontrolling interests | (217) | (4) | (114) | (4) | |||||||||||||||||||
| Net income available to American Equity Investment Life Holding Company stockholders | 355,363 | 763,293 | 199,369 | 1,442,758 | |||||||||||||||||||
| Less: Preferred stock dividends | 10,919 | 10,919 | 21,838 | 21,838 | |||||||||||||||||||
| Net income available to American Equity Investment Life Holding Company common stockholders | $ | 344,444 | $ | 752,374 | $ | 177,531 | $ | 1,420,920 | |||||||||||||||
| Earnings per common share | $ | 4.43 | $ | 8.13 | $ | 2.20 | $ | 15.01 | |||||||||||||||
| Earnings per common share - assuming dilution | $ | 4.36 | $ | 8.06 | $ | 2.17 | $ | 14.86 | |||||||||||||||
| Weighted average common shares outstanding (in thousands): | |||||||||||||||||||||||
| Earnings per common share | 77,767 | 92,544 | 80,576 | 94,693 | |||||||||||||||||||
| Earnings per common share - assuming dilution | 78,928 | 93,375 | 81,824 | 95,652 | |||||||||||||||||||
Page 2
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - June 30, 2023
Unaudited (Dollars in thousands, except per share data)
Quarterly Summary - Most Recent 5 Quarters
| Q2 2023 | Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022 | |||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||
| Traditional life insurance premiums | $ | 629 | $ | 698 | $ | 626 | $ | 634 | $ | 691 | |||||||||||||||||||
| Life contingent immediate annuity considerations | 1,887 | 3,439 | 2,365 | 2,205 | 3,140 | ||||||||||||||||||||||||
| Surrender charges | 33,777 | 26,542 | 22,030 | 19,783 | 15,345 | ||||||||||||||||||||||||
| Lifetime income benefit rider fees | 37,865 | 36,049 | 39,636 | 41,036 | 40,169 | ||||||||||||||||||||||||
| Net investment income | 542,685 | 561,323 | 537,995 | 609,737 | 592,308 | ||||||||||||||||||||||||
| Change in fair value of derivatives | 242,739 | 45,890 | 22,243 | (176,671) | (506,181) | ||||||||||||||||||||||||
| Net realized gains (losses) on investments | (24,679) | (27,787) | 14,411 | (15,860) | (33,272) | ||||||||||||||||||||||||
| Other revenue (a) | 16,736 | 16,394 | 13,032 | 10,988 | 9,408 | ||||||||||||||||||||||||
| Total revenues | 851,639 | 662,548 | 652,338 | 491,852 | 121,608 | ||||||||||||||||||||||||
| Benefits and expenses: | |||||||||||||||||||||||||||||
| Traditional life insurance policy benefits and change in future policy benefits (b) | 940 | 1,206 | 944 | 118 | 495 | ||||||||||||||||||||||||
| Life contingent immediate annuity benefits and change in future policy benefits (c) | 4,185 | 6,002 | 5,004 | 6,541 | 6,503 | ||||||||||||||||||||||||
| Interest sensitive and index product benefits | 122,387 | 57,911 | 57,626 | 68,982 | 140,346 | ||||||||||||||||||||||||
| Market risk benefits (gains) losses (d) | (144,124) | 183,694 | 33,490 | 77,579 | (299,278) | ||||||||||||||||||||||||
| Amortization of deferred sales inducements | 46,951 | 46,601 | 45,966 | 46,223 | 44,696 | ||||||||||||||||||||||||
| Change in fair value of embedded derivatives (e) | 213,764 | 404,440 | 342,409 | (415,374) | (885,984) | ||||||||||||||||||||||||
| Interest expense on notes payable | 11,227 | 11,018 | 10,228 | 8,984 | 6,461 | ||||||||||||||||||||||||
| Interest expense on subordinated debentures | 1,338 | 1,336 | 1,335 | 1,333 | 1,346 | ||||||||||||||||||||||||
| Amortization of deferred policy acquisition costs | 68,476 | 68,235 | 66,831 | 71,726 | 72,485 | ||||||||||||||||||||||||
| Other operating costs and expenses | 75,697 | 74,004 | 62,389 | 59,470 | 59,872 | ||||||||||||||||||||||||
| Total benefits and expenses | 400,841 | 854,447 | 626,222 | (74,418) | (853,058) | ||||||||||||||||||||||||
| Income (loss) before income taxes | 450,798 | (191,899) | 26,116 | 566,270 | 974,666 | ||||||||||||||||||||||||
| Income tax expense (benefit) | 95,652 | (36,008) | (6,817) | 121,380 | 211,377 | ||||||||||||||||||||||||
| Net income (loss) (b)(c)(d)(e) | 355,146 | (155,891) | 32,933 | 444,890 | 763,289 | ||||||||||||||||||||||||
| Less: Net income (loss) available to noncontrolling interests | (217) | 103 | 361 | 1 | (4) | ||||||||||||||||||||||||
| Net income (loss) available to American Equity Investment Life Holding Company stockholders (b)(c)(d)(e) | 355,363 | (155,994) | 32,572 | 444,889 | 763,293 | ||||||||||||||||||||||||
| Less: Preferred stock dividends | 10,919 | 10,919 | 10,919 | 10,918 | 10,919 | ||||||||||||||||||||||||
| Net income (loss) available to American Equity Investment Life Holding Company common stockholders (b)(c)(d)(e) | $ | 344,444 | $ | (166,913) | $ | 21,653 | $ | 433,971 | $ | 752,374 | |||||||||||||||||||
| Earnings (loss) per common share | $ | 4.43 | $ | (2.00) | $ | 0.25 | $ | 4.95 | $ | 8.13 | |||||||||||||||||||
| Earnings (loss) per common share - assuming dilution (b)(c)(d)(e) | $ | 4.36 | $ | (2.00) | $ | 0.25 | $ | 4.90 | $ | 8.06 | |||||||||||||||||||
| Weighted average common shares outstanding (thousands): | |||||||||||||||||||||||||||||
| Earnings (loss) per common share | 77,767 | 83,417 | 85,274 | 87,707 | 92,544 | ||||||||||||||||||||||||
| Earnings (loss) per common share - assuming dilution | 78,928 | 83,417 | 86,402 | 88,581 | 93,375 | ||||||||||||||||||||||||
(a)Other revenue consists of reinsurance related fee revenue including asset liability management fees and amortization of the deferred gain associated with the cost of reinsurance.
(b)Q3 2022 includes benefit from the update of assumptions used in determining the deferred profit liability. The impact decreased traditional life insurance policy benefits and change in future policy benefits by $0.5 million and increased both net income and net income available to common stockholders by $0.4 million and did not impact earnings per common share - assuming dilution.
(c)Q3 2022 includes expense from the update of assumptions used in determining the liability for future policyholder benefits. The impact increased life contingent immediate annuity benefits and change in future policy benefits by $1.3 million and decreased both net income and net income available to common stockholders by $1.0 million and decreased earnings per common share - assuming dilution by $0.01 per share.
Page 3
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - June 30, 2023
Unaudited (Dollars in thousands, except per share data)
(d)Q3 2022 includes expense from the update of assumptions used in determining the reserves held for market risk benefits. The impact increased market risk benefits (gains) losses by $229.4 million and decreased both net income and net income available to common stockholders by $181.3 million and decreased earnings per common share - assuming dilution by $2.05 per share.
(e)Q3 2022 includes a benefit from the update of assumptions used in determining the embedded derivative component of our fixed index annuity policy benefit reserves. The impact decreased change in fair value of embedded derivatives by $94.8 million and increased both net income and net income available to common stockholders by $74.4 million and increased earnings per common share - assuming dilution by $0.84 per share.
Page 4
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - June 30, 2023
Unaudited (Dollars in thousands, except per share data)
NON-GAAP FINANCIAL MEASURES
In addition to net income available to common stockholders, we have consistently utilized non-GAAP operating income available to common stockholders and non-GAAP operating income available to common stockholders per common share - assuming dilution, non-GAAP financial measures commonly used in the life insurance industry, as economic measures to evaluate our financial performance. Non-GAAP operating income available to common stockholders equals net income available to common stockholders adjusted to eliminate the impact of items that fluctuate from quarter to quarter in a manner unrelated to core operations, and we believe measures excluding their impact are useful in analyzing operating trends. The most significant adjustments to arrive at non-GAAP operating income available to common stockholders eliminate the impact of fair value accounting for our fixed index annuity business. These adjustments are not economic in nature but rather impact the timing of reported results. We believe the combined presentation and evaluation of non-GAAP operating income available to common stockholders together with net income available to common stockholders provides information that may enhance an investor’s understanding of our underlying results and profitability.
Reconciliation from Net Income Available to Common Stockholders to Non-GAAP Operating Income Available to Common Stockholders
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
| Net income available to American Equity Investment Life Holding Company common stockholders | $ | 344,444 | $ | 752,374 | $ | 177,531 | $ | 1,420,920 | |||||||||||||||
| Adjustments to arrive at non-GAAP operating income available to common stockholders: | |||||||||||||||||||||||
| Net realized losses on financial assets, including credit losses | 22,737 | 37,054 | 47,121 | 50,779 | |||||||||||||||||||
| Change in fair value of derivatives and embedded derivatives | (124,816) | (470,813) | 81,386 | (1,318,020) | |||||||||||||||||||
| Capital markets impact on the change in fair value of market risk benefits | (184,700) | (335,330) | (47,750) | (216,417) | |||||||||||||||||||
| Net investment income | 4,609 | — | 2,118 | — | |||||||||||||||||||
| Other revenue | 5,969 | — | 11,938 | — | |||||||||||||||||||
| Income taxes | 59,373 | 167,944 | (20,392) | 321,034 | |||||||||||||||||||
| Non-GAAP operating income available to common stockholders | $ | 127,616 | $ | 151,229 | $ | 251,952 | $ | 258,296 | |||||||||||||||
| Impact of excluding notable items (a) | $ | 8,892 | $ | — | $ | 18,458 | $ | — | |||||||||||||||
| Per common share - assuming dilution: | |||||||||||||||||||||||
| Net income available to American Equity Investment Life Holding Company common stockholders | $ | 4.36 | $ | 8.06 | $ | 2.17 | $ | 14.86 | |||||||||||||||
| Adjustments to arrive at non-GAAP operating income available to common stockholders: | |||||||||||||||||||||||
| Net realized losses on financial assets, including credit losses | 0.29 | 0.39 | 0.58 | 0.53 | |||||||||||||||||||
| Change in fair value of derivatives and embedded derivatives | (1.58) | (5.04) | 0.99 | (13.78) | |||||||||||||||||||
| Capital markets impact on the change in fair value of market risk benefits | (2.34) | (3.59) | (0.58) | (2.26) | |||||||||||||||||||
| Net investment income | 0.06 | — | 0.02 | — | |||||||||||||||||||
| Other revenue | 0.08 | — | 0.15 | — | |||||||||||||||||||
| Income taxes | 0.75 | 1.80 | (0.25) | 3.35 | |||||||||||||||||||
| Non-GAAP operating income available to common stockholders | $ | 1.62 | $ | 1.62 | $ | 3.08 | $ | 2.70 | |||||||||||||||
| Impact of excluding notable items (a) | $ | 0.11 | $ | — | $ | 0.23 | $ | — | |||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
| Notable items impacting non-GAAP operating income available to common stockholders: | |||||||||||||||||||||||
| Expense associated with strategic incentive award | $ | 8,892 | $ | — | $ | 18,458 | $ | — | |||||||||||||||
| Total notable items (a) | $ | 8,892 | $ | — | $ | 18,458 | $ | — | |||||||||||||||
(a)Notable items reflect the after-tax increase (decrease) to non-GAAP operating income (loss) available to common stockholders for certain matters where more detail may help investors better understand, evaluate, and forecast results.
For the three and six months ended June 30, 2023, non-GAAP operating income available to common stockholders would increase $8.9 million and $18.5 million, respectively, if we were to exclude the impact of notable items.
Page 5
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - June 30, 2023
Unaudited (Dollars in thousands)
NON-GAAP FINANCIAL MEASURES
Summary of Adjustments to Arrive at Non-GAAP Operating Income Available to Common Stockholders
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
| Net realized losses on financial assets, including credit losses: | |||||||||||||||||||||||
| Net realized losses on financial assets, including credit losses | $ | 22,737 | $ | 37,054 | $ | 47,121 | $ | 50,779 | |||||||||||||||
| Income taxes | (4,888) | (7,966) | (10,131) | (10,917) | |||||||||||||||||||
| $ | 17,849 | $ | 29,088 | $ | 36,990 | $ | 39,862 | ||||||||||||||||
| Change in fair value of derivatives and embedded derivatives: | |||||||||||||||||||||||
| Fixed index annuities | $ | (97,095) | $ | (275,057) | $ | 45,852 | $ | (919,820) | |||||||||||||||
| Reinsurance contracts | (19,750) | (199,422) | 44,630 | (401,866) | |||||||||||||||||||
| Interest rate swaps | (7,971) | 3,666 | (9,096) | 3,666 | |||||||||||||||||||
| Income taxes | 26,825 | 103,814 | (17,505) | 285,421 | |||||||||||||||||||
| $ | (97,991) | $ | (366,999) | $ | 63,881 | $ | (1,032,599) | ||||||||||||||||
| Capital market impact on the fair value of market risk benefits: | |||||||||||||||||||||||
| Capital markets impact on the change in fair value of market risk benefits | $ | (204,779) | $ | (348,676) | $ | (83,437) | $ | (235,674) | |||||||||||||||
| Amortization of capital markets impact on the fair value of market risk benefits | 20,079 | 13,346 | 35,687 | 19,257 | |||||||||||||||||||
| Income taxes | 39,710 | 72,096 | 10,266 | 46,530 | |||||||||||||||||||
| $ | (144,990) | $ | (263,234) | $ | (37,484) | $ | (169,887) | ||||||||||||||||
| Net investment income: | |||||||||||||||||||||||
| Income associated with assets transferred under reinsurance treaty | $ | 4,609 | $ | — | $ | 2,118 | $ | — | |||||||||||||||
| Income taxes | (990) | — | (455) | — | |||||||||||||||||||
| $ | 3,619 | $ | — | $ | 1,663 | $ | — | ||||||||||||||||
| Other revenue: | |||||||||||||||||||||||
| Amortization of deferred fees associated with reinsurance treaties | $ | 5,969 | $ | — | $ | 11,938 | $ | — | |||||||||||||||
| Income taxes | (1,284) | — | (2,567) | — | |||||||||||||||||||
| $ | 4,685 | $ | — | $ | 9,371 | $ | — | ||||||||||||||||
Page 6
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - June 30, 2023
Unaudited (Dollars in thousands, except per share data)
NON-GAAP FINANCIAL MEASURES
Quarterly Summary - Most Recent 5 Quarters
Reconciliation from Net Income (Loss) Available to Common Stockholders to Non-GAAP Operating Income (Loss) Available to Common Stockholders
| Q2 2023 | Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022 | |||||||||||||||||||||||||
| Net income (loss) available to American Equity Investment Life Holding Company common stockholders | $ | 344,444 | $ | (166,913) | $ | 21,653 | $ | 433,971 | $ | 752,374 | |||||||||||||||||||
| Adjustments to arrive at non-GAAP operating income (loss) available to common stockholders: | |||||||||||||||||||||||||||||
| Net realized (gains) losses on financial assets, including credit losses | 22,737 | 24,384 | (19,460) | 16,945 | 37,054 | ||||||||||||||||||||||||
| Change in fair value of derivatives and embedded derivatives | (124,816) | 206,202 | 169,767 | (400,952) | (470,813) | ||||||||||||||||||||||||
| Capital markets impact on the change in fair value of market risk benefits | (184,700) | 136,950 | 2,309 | (179,509) | (335,330) | ||||||||||||||||||||||||
| Net investment income | 4,609 | (2,491) | 1,476 | — | — | ||||||||||||||||||||||||
| Other revenue | 5,969 | 5,969 | 5,969 | — | — | ||||||||||||||||||||||||
| Income taxes | 59,373 | (79,765) | (39,998) | 120,802 | 167,944 | ||||||||||||||||||||||||
| Non-GAAP operating income (loss) available to common stockholders | $ | 127,616 | $ | 124,336 | $ | 141,716 | $ | (8,743) | $ | 151,229 | |||||||||||||||||||
| Impact of excluding notable items (a) | $ | 8,892 | $ | 9,566 | $ | — | $ | 181,890 | $ | — | |||||||||||||||||||
| Per common share - assuming dilution: | |||||||||||||||||||||||||||||
| Net income (loss) available to American Equity Investment Life Holding Company common stockholders | $ | 4.36 | $ | (2.00) | $ | 0.25 | $ | 4.90 | $ | 8.06 | |||||||||||||||||||
| Adjustments to arrive at non-GAAP operating income (loss) available to common stockholders: | |||||||||||||||||||||||||||||
| Anti-dilutive impact for losses (b) | — | 0.03 | — | — | — | ||||||||||||||||||||||||
| Net realized (gains) losses on financial assets, including credit losses | 0.29 | 0.29 | (0.23) | 0.19 | 0.39 | ||||||||||||||||||||||||
| Change in fair value of derivatives and embedded derivatives | (1.58) | 2.43 | 1.96 | (4.52) | (5.04) | ||||||||||||||||||||||||
| Capital markets impact on the change in fair value of market risk benefits | (2.34) | 1.62 | 0.03 | (2.03) | (3.59) | ||||||||||||||||||||||||
| Net investment income | 0.06 | (0.03) | 0.02 | — | — | ||||||||||||||||||||||||
| Other revenue | 0.08 | 0.07 | 0.07 | — | — | ||||||||||||||||||||||||
| Income taxes | 0.75 | (0.94) | (0.46) | 1.36 | 1.80 | ||||||||||||||||||||||||
| Non-GAAP operating income (loss) available to common stockholders | $ | 1.62 | $ | 1.47 | $ | 1.64 | $ | (0.10) | $ | 1.62 | |||||||||||||||||||
| Impact of excluding notable items (a) | $ | 0.11 | $ | 0.11 | $ | — | $ | 2.05 | $ | — | |||||||||||||||||||
Notable Items
| Q2 2023 | Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022 | |||||||||||||||||||||||||
| Notable items impacting non-GAAP operating income (loss) available to common stockholders: | |||||||||||||||||||||||||||||
| Expense associated with strategic incentive award | $ | 8,892 | $ | 9,566 | $ | — | $ | — | $ | — | |||||||||||||||||||
| Impact of actuarial assumption updates | — | — | — | 181,890 | — | ||||||||||||||||||||||||
| Total notable items (a) | $ | 8,892 | $ | 9,566 | $ | — | $ | 181,890 | $ | — | |||||||||||||||||||
(a)Notable items reflect the after-tax increase (decrease) to non-GAAP operating income (loss) available to common stockholders for certain matters where more detail may help investors better understand, evaluate, and forecast results. For the three months ended June 30, 2023, March 31, 2023 and September 30, 2022, non-GAAP operating income available to common stockholders would increase $8.9 million, $9.6 million and $181.9 million, respectively, if we were to exclude the impact of notable items.
(b)For periods with a loss, dilutive shares were not included in the calculation as inclusion of such shares would have an anti-dilutive effect.
Page 7
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - June 30, 2023
Unaudited (Dollars in thousands)
NON-GAAP FINANCIAL MEASURES
Summary of Adjustments to Arrive at Non-GAAP Operating Income (Loss) Available to Common Stockholders
| Q2 2023 | Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022 | |||||||||||||||||||||||||
| Net realized (gains) losses on investments | $ | 24,679 | $ | 27,787 | $ | (14,411) | $ | 15,860 | $ | 33,272 | |||||||||||||||||||
| Net investment income | 4,609 | (2,491) | 1,476 | — | — | ||||||||||||||||||||||||
| Other revenue | 5,969 | 5,969 | 5,969 | — | — | ||||||||||||||||||||||||
| Change in fair value of derivatives | (338,579) | (198,239) | (172,643) | 14,423 | 415,171 | ||||||||||||||||||||||||
| Increase (decrease) in total revenues | (303,322) | (166,974) | (179,609) | 30,283 | 448,443 | ||||||||||||||||||||||||
| Change in fair value of embedded derivatives | (213,764) | (404,440) | (342,409) | 415,374 | 885,984 | ||||||||||||||||||||||||
| Market risk benefits (gains) losses | 184,700 | (136,950) | (2,309) | 179,509 | 335,330 | ||||||||||||||||||||||||
| Interest sensitive and index product benefits (a) | 1,943 | 3,402 | 5,048 | (1,084) | (3,782) | ||||||||||||||||||||||||
| Increase (decrease) in total benefits and expenses | (27,121) | (537,988) | (339,670) | 593,799 | 1,217,532 | ||||||||||||||||||||||||
| Increase (decrease) in income (loss) before income taxes | (276,201) | 371,014 | 160,061 | (563,516) | (769,089) | ||||||||||||||||||||||||
| Increase (decrease) in income tax expense benefit | (59,373) | 79,765 | 39,998 | (120,802) | (167,944) | ||||||||||||||||||||||||
| Increase (decrease) in net income (loss) available to common stockholders | $ | (216,828) | $ | 291,249 | $ | 120,063 | $ | (442,714) | $ | (601,145) | |||||||||||||||||||
(a)Interest sensitive and index product benefits adjustment reflects the change in the allowance for credit losses on our reinsurance recoverable/coinsurance deposits. The change in this allowance is reflected in the net realized (gains) losses of financial assets, including credit losses line in the other Non-GAAP financial measures tables in this financial supplement.
Page 8
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - June 30, 2023
Unaudited (Dollars in thousands, except share and per share data)
Capitalization/Book Value per Common Share
| Q2 2023 | Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022 | |||||||||||||||||||||||||
| Capitalization: | |||||||||||||||||||||||||||||
| Notes and loan payable | $ | 800,000 | $ | 800,000 | $ | 800,000 | $ | 800,000 | $ | 500,000 | |||||||||||||||||||
| Subordinated debentures payable to subsidiary trusts | 78,927 | 78,839 | 78,753 | 78,668 | 78,584 | ||||||||||||||||||||||||
Total debt | 878,927 | 878,839 | 878,753 | 878,668 | 578,584 | ||||||||||||||||||||||||
| Total stockholders’ equity attributable to American Equity Investment Life Holding Company | 2,571,915 | 2,605,485 | 2,349,517 | 2,157,667 | 3,625,377 | ||||||||||||||||||||||||
| Total capitalization | 3,450,842 | 3,484,324 | 3,228,270 | 3,036,335 | 4,203,961 | ||||||||||||||||||||||||
| Accumulated other comprehensive loss (AOCI) | 3,425,248 | 3,036,429 | 3,746,230 | 3,984,496 | 2,231,594 | ||||||||||||||||||||||||
Total capitalization excluding AOCI (a) | $ | 6,876,090 | $ | 6,520,753 | $ | 6,974,500 | $ | 7,020,831 | $ | 6,435,555 | |||||||||||||||||||
| Total stockholders’ equity attributable to American Equity Investment Life Holding Company | $ | 2,571,915 | $ | 2,605,485 | $ | 2,349,517 | $ | 2,157,667 | $ | 3,625,377 | |||||||||||||||||||
| Equity available to preferred stockholders (b) | (700,000) | (700,000) | (700,000) | (700,000) | (700,000) | ||||||||||||||||||||||||
Total common stockholders' equity (c) | 1,871,915 | 1,905,485 | 1,649,517 | 1,457,667 | 2,925,377 | ||||||||||||||||||||||||
| Accumulated other comprehensive loss | 3,425,248 | 3,036,429 | 3,746,230 | 3,984,496 | 2,231,594 | ||||||||||||||||||||||||
Total common stockholders’ equity excluding AOCI (c) | 5,297,163 | 4,941,914 | 5,395,747 | 5,442,163 | 5,156,971 | ||||||||||||||||||||||||
| Net impact of fair value accounting for derivatives and embedded derivatives | (1,587,599) | (1,490,297) | (1,652,169) | (1,721,324) | (1,418,244) | ||||||||||||||||||||||||
| Net capital markets impact on the fair value of market risk benefits | (638,442) | (493,452) | (600,958) | (602,772) | (461,856) | ||||||||||||||||||||||||
Total common stockholders’ equity excluding AOCI and the net impact of fair value accounting for fixed index annuities (c) | $ | 3,071,122 | $ | 2,958,165 | $ | 3,142,620 | $ | 3,118,067 | $ | 3,276,871 | |||||||||||||||||||
| Common shares outstanding | 78,047,941 | 77,753,194 | 84,810,255 | 85,966,505 | 90,168,512 | ||||||||||||||||||||||||
Book Value per Common Share: (d) | |||||||||||||||||||||||||||||
| Book value per common share | $ | 23.98 | $ | 24.51 | $ | 19.45 | $ | 16.96 | $ | 32.44 | |||||||||||||||||||
| Book value per common share excluding AOCI (c) | $ | 67.87 | $ | 63.56 | $ | 63.62 | $ | 63.31 | $ | 57.19 | |||||||||||||||||||
| Book value per common share excluding AOCI and the net impact of fair value accounting for fixed index annuities (c) | $ | 39.35 | $ | 38.05 | $ | 37.05 | $ | 36.27 | $ | 36.34 | |||||||||||||||||||
Debt-to-Capital Ratios: (e) | |||||||||||||||||||||||||||||
| Senior debt / Total capitalization | 11.6 | % | 12.3 | % | 11.5 | % | 11.4 | % | 7.8 | % | |||||||||||||||||||
| Total debt / Total capitalization | 12.8 | % | 13.5 | % | 12.6 | % | 12.5 | % | 9.0 | % | |||||||||||||||||||
(a)Total capitalization excluding AOCI, a non-GAAP financial measure, is based on stockholders' equity excluding the effect of AOCI.
(b)Equity available to preferred stockholders is equal to the redemption value of outstanding preferred stock plus share dividends declared but not yet issued.
(c)Total common stockholders' equity, total common stockholders' equity excluding AOCI and total common stockholders' equity excluding AOCI and the net impact of fair value accounting for fixed index annuities, non-GAAP financial measures, exclude equity available to preferred stockholders. Total common stockholders’ equity and book value per common share excluding AOCI, non-GAAP financial measures, are based on common stockholders’ equity excluding the effect of AOCI. Since AOCI fluctuates from quarter to quarter due to unrealized changes in the fair value of available for sale securities, we believe these non-GAAP financial measures provide useful supplemental information. Total common stockholders' equity and book value per common share excluding AOCI and the net impact of fair value accounting for fixed index annuities, non-GAAP financial measures, are based on common stockholders' equity excluding AOCI and the net impact of fair value accounting for fixed index annuities. Since the net impact of fair value accounting for our fixed index annuity business is not economic in nature but rather impact the timing of reported results, we believe these non-GAAP financial measures provide useful supplemental information.
(d)Book value per common share including and excluding AOCI and book value per common share excluding AOCI and the net impact of fair value accounting for fixed index annuities are calculated as total common stockholders’ equity, total common stockholders’ equity excluding AOCI and total common stockholders' equity excluding AOCI and the net impact of fair value accounting for fixed index annuities divided by the total number of shares of common stock outstanding.
(e)Debt-to-capital ratios are computed using total capitalization excluding AOCI.
Page 9
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - June 30, 2023
Unaudited (Dollars in thousands)
Spread Results
| Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||
| 2023 | 2022 | Q2 2023 | Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022 | ||||||||||||||||||||||||||||||||
| 4.44% | 4.24% | Average yield on invested assets | 4.42% | 4.48% | 4.30% | 4.48% | 4.33% | |||||||||||||||||||||||||||||||
| 1.82% | 1.66% | Aggregate cost of money | 1.85% | 1.81% | 1.76% | 1.75% | 1.69% | |||||||||||||||||||||||||||||||
| 2.62% | 2.58% | Aggregate investment spread | 2.57% | 2.67% | 2.54% | 2.73% | 2.64% | |||||||||||||||||||||||||||||||
| Impact of: | ||||||||||||||||||||||||||||||||||||||
| 0.01% | 0.04% | Investment yield - additional prepayment income | 0.01% | —% | 0.01% | 0.03% | 0.05% | |||||||||||||||||||||||||||||||
| 0.02% | 0.02% | Cost of money effect of over hedging | 0.03% | —% | —% | —% | 0.02% | |||||||||||||||||||||||||||||||
| $ | 49,354,006 | $ | 54,748,602 | Weighted average investments | $ | 49,125,197 | $ | 49,304,219 | $ | 50,040,228 | $ | 54,378,154 | $ | 54,768,966 | ||||||||||||||||||||||||
| 49,398,076 | 54,699,422 | Ending investments | 49,398,076 | 48,852,319 | 49,811,623 | 54,056,886 | 54,699,422 | |||||||||||||||||||||||||||||||
Weighted average investments include fixed maturity securities at amortized cost and mortgage loans on real estate and other investments at carrying values as reflected in the consolidated balance sheets. The numerator for average yield on invested assets includes net investment income and the tax effect of investment income that is exempt from income taxes.
Investment Yields
| Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||
| 2023 | 2022 | Q2 2023 | Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022 | ||||||||||||||||||||||||||||||||
| Investment income: | ||||||||||||||||||||||||||||||||||||||
| $ | 1,067,052 | $ | 1,049,685 | Fixed income (a) | $ | 533,930 | $ | 533,122 | $ | 511,077 | $ | 547,326 | $ | 539,382 | ||||||||||||||||||||||||
| 28,662 | 111,862 | Mark-to-market private asset income (a) | 9,035 | 19,627 | 26,816 | 61,671 | 53,816 | |||||||||||||||||||||||||||||||
| $ | 1,095,714 | $ | 1,161,547 | Total non-GAAP investment income (b) | $ | 542,965 | $ | 552,749 | $ | 537,893 | $ | 608,997 | $ | 593,198 | ||||||||||||||||||||||||
| Investment yield: | ||||||||||||||||||||||||||||||||||||||
| 4.54% | 3.92% | Fixed income investment yield | 4.57% | 4.52% | 4.26% | 4.16% | 4.04% | |||||||||||||||||||||||||||||||
| 2.43% | 18.23% | Mark-to-market private asset yield | 1.48% | 3.61% | 5.29% | 13.89% | 15.15% | |||||||||||||||||||||||||||||||
| 4.44% | 4.24% | Total investment yield | 4.42% | 4.48% | 4.30% | 4.48% | 4.33% | |||||||||||||||||||||||||||||||
| Weighted average investments: | ||||||||||||||||||||||||||||||||||||||
| $ | 46,990,472 | $ | 53,521,544 | Fixed income investments | $ | 46,684,803 | $ | 47,129,120 | $ | 48,012,311 | $ | 52,602,319 | $ | 53,347,874 | ||||||||||||||||||||||||
| 2,363,534 | 1,227,058 | Mark-to-market private assets | 2,440,394 | 2,175,099 | 2,027,917 | 1,775,835 | 1,421,092 | |||||||||||||||||||||||||||||||
| $ | 49,354,006 | $ | 54,748,602 | Total weighted average investments | $ | 49,125,197 | $ | 49,304,219 | $ | 50,040,228 | $ | 54,378,154 | $ | 54,768,966 | ||||||||||||||||||||||||
(a)Net of investment expenses
(b)Non-GAAP investment income is comprised of GAAP Net investment income adjusted to remove income associated with cash held by the Parent Company for corporate activities and to gross up income related to the tax benefit of tax exempt investment income, in addition to the adjustments shown in the reconciliation of Net income to Non-GAAP Operating income on page 5. The net impact of the adjustments for income associated with cash held by the Holding Company and tax exempt investment income was $4,329 thousand in Q2 2023, $6,083 thousand in Q1 2023, $1,578 thousand in Q4 2022, $740 thousand in Q3 2022, and $890 thousand in Q2 2022, respectively.
Page 10
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - June 30, 2023
Unaudited (Dollars in thousands, except per share data)
Summary of Cost of Money for Deferred Annuities
| Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||
| 2023 | 2022 | Q2 2023 | Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022 | ||||||||||||||||||||||||||||||||
Included in interest sensitive and index product benefits: | ||||||||||||||||||||||||||||||||||||||
| $ | 69,040 | $ | 296,783 | Index credits | $ | 65,507 | $ | 3,533 | $ | 3,861 | $ | 4,648 | $ | 72,398 | ||||||||||||||||||||||||
| 113,551 | 122,104 | Interest credited | 57,235 | 56,316 | 56,402 | 62,383 | 60,770 | |||||||||||||||||||||||||||||||
Included in change in fair value of derivatives: | ||||||||||||||||||||||||||||||||||||||
| (73,050) | (303,207) | Proceeds received at option expiration | (69,449) | (3,601) | (4,061) | (4,865) | (75,115) | |||||||||||||||||||||||||||||||
| 321,263 | 325,472 | Pro rata amortization of option cost | 163,992 | 157,271 | 154,463 | 167,197 | 165,375 | |||||||||||||||||||||||||||||||
| $ | 430,804 | $ | 441,152 | Cost of money for deferred annuities | $ | 217,285 | $ | 213,519 | $ | 210,665 | $ | 229,363 | $ | 223,428 | ||||||||||||||||||||||||
| $ | 47,225,241 | $ | 53,048,016 | Weighted average liability balance outstanding | $ | 47,086,271 | $ | 47,266,672 | $ | 47,802,219 | $ | 52,337,208 | $ | 52,940,739 | ||||||||||||||||||||||||
Annuity Account Balance Rollforward
| Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||
| 2023 | 2022 | Q2 2023 | Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022 | ||||||||||||||||||||||||||||||||
| $ | 47,504,615 | $ | 53,191,277 | Account balances at beginning of period | $ | 47,031,605 | $ | 47,504,615 | $ | 51,913,689 | $ | 52,762,558 | $ | 53,119,291 | ||||||||||||||||||||||||
| — | — | Reserves ceded - in-force | — | — | (3,810,982) | (257,779) | — | |||||||||||||||||||||||||||||||
| 47,504,615 | 53,191,277 | Account balance at beginning of period, net of reinsurance ceded | 47,031,605 | 47,504,615 | 48,102,707 | 52,504,779 | 53,119,291 | |||||||||||||||||||||||||||||||
| 1,907,617 | 1,237,291 | Net deposits | 1,174,953 | 732,664 | 613,084 | 496,940 | 562,366 | |||||||||||||||||||||||||||||||
| 182,123 | 46,689 | Premium bonuses | 136,856 | 45,267 | 33,617 | 27,385 | 23,547 | |||||||||||||||||||||||||||||||
| 182,591 | 418,887 | Fixed interest credited and index credits | 122,742 | 59,849 | 60,263 | 67,031 | 133,168 | |||||||||||||||||||||||||||||||
| (60,319) | (30,886) | Surrender charges | (33,777) | (26,542) | (22,030) | (19,783) | (15,345) | |||||||||||||||||||||||||||||||
| (73,914) | (76,983) | Lifetime income benefit rider fees | (37,865) | (36,049) | (39,636) | (41,036) | (40,169) | |||||||||||||||||||||||||||||||
| (2,499,131) | (2,023,717) | Surrenders, withdrawals, deaths, etc. | (1,250,932) | (1,248,199) | (1,243,390) | (1,121,627) | (1,020,300) | |||||||||||||||||||||||||||||||
| $ | 47,143,582 | $ | 52,762,558 | Account balances at end of period | $ | 47,143,582 | $ | 47,031,605 | $ | 47,504,615 | $ | 51,913,689 | $ | 52,762,558 | ||||||||||||||||||||||||
Page 11
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - June 30, 2023
Unaudited (Dollars in thousands, except per share data)
MRB Liability
| Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||
| 2023 | 2022 | Q2 2023 | Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022 | ||||||||||||||||||||||||||||||||
| $ | 1,521,954 | $ | 2,362,947 | MRB balance at beginning of period | $ | 1,632,918 | $ | 1,521,954 | $ | 1,762,629 | $ | 1,721,376 | $ | 2,075,033 | ||||||||||||||||||||||||
| — | — | Reserves ceded - in-force | — | — | (331,020) | 4,496 | — | |||||||||||||||||||||||||||||||
| 850 | 4,833 | Issuances | (2,071) | 2,921 | 1,230 | 1,366 | 913 | |||||||||||||||||||||||||||||||
| 62,933 | 21,662 | Interest accrual | 33,374 | 29,559 | 23,910 | 20,626 | 12,424 | |||||||||||||||||||||||||||||||
| 56,444 | 58,891 | Attributed fees collected | 28,247 | 28,197 | 29,585 | 29,010 | 29,378 | |||||||||||||||||||||||||||||||
| — | — | Benefits payments | — | — | — | — | — | |||||||||||||||||||||||||||||||
| (84,287) | (235,673) | Effect of changes in interest rates and equity markets | (202,709) | 118,422 | (16,236) | (197,978) | (348,675) | |||||||||||||||||||||||||||||||
| 896 | 44,331 | Effect of changes in assumptions and policyholder behavior | (974) | 1,870 | (5,023) | 224,522 | 7,220 | |||||||||||||||||||||||||||||||
| 28,904 | (535,615) | Effect of changes in instrument specific credit risk | 98,909 | (70,005) | 56,879 | (40,789) | (54,917) | |||||||||||||||||||||||||||||||
| 1,587,694 | 1,721,376 | MRB balance at end of period, net (a) | 1,587,694 | 1,632,918 | 1,521,954 | 1,762,629 | 1,721,376 | |||||||||||||||||||||||||||||||
| 813,302 | 588,352 | MRB net deferred capital markets impact, end of period | 813,302 | 628,602 | 765,552 | 767,862 | 588,352 | |||||||||||||||||||||||||||||||
| $ | 2,400,996 | $ | 2,309,728 | Non-GAAP MRB balance, end of period (b) | $ | 2,400,996 | $ | 2,261,520 | $ | 2,287,506 | $ | 2,530,491 | $ | 2,309,728 | ||||||||||||||||||||||||
(a)The MRB balance is the MRB liability net of the MRB asset and reinsurance recoverable asset associated with the ceded MRB. The reinsurance recoverable asset associated with the ceded MRB is included in coinsurance deposits on the Consolidated Balance Sheet.
(b)Non-GAAP MRB balance is comprised of the GAAP MRB balance adjusted for the pre-tax cumulative effect of the deferral of capital markets impact on the fair value of MRB. See page 9 for the non-GAAP definition and reconciliation of total common stockholders' equity to total common stockholders' equity excluding AOCI and the net impact of fair value accounting for fixed index annuities which includes the adjustment for the after-tax cumulative effect of the deferral of capital markets impact on the fair value of MRB.
Account Values Subject to Recurring Fees Under Reinsurance Agreements
| Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||
| 2023 | 2022 | Q2 2023 | Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022 | ||||||||||||||||||||||||||||||||
| $ | 9,642,336 | $ | 4,660,690 | Account value of business ceded subject to fee income at beginning of period | $ | 10,155,767 | $ | 9,642,336 | $ | 5,612,098 | $ | 5,065,538 | $ | 4,859,360 | ||||||||||||||||||||||||
| — | — | In-force account value ceded subject to fee income | — | — | 3,810,982 | 257,779 | — | |||||||||||||||||||||||||||||||
| 1,455,573 | 404,848 | Premiums on business ceded subject to fee income | 821,413 | 634,160 | 351,971 | 288,781 | 206,178 | |||||||||||||||||||||||||||||||
| (234,171) | — | Disbursements on business ceded subject to fee income | (113,442) | (120,729) | (132,715) | — | — | |||||||||||||||||||||||||||||||
| $ | 10,863,738 | $ | 5,065,538 | Account value of business ceded subject to fee income at end of period | $ | 10,863,738 | $ | 10,155,767 | $ | 9,642,336 | $ | 5,612,098 | $ | 5,065,538 | ||||||||||||||||||||||||
| $ | 45,068 | $ | 18,225 | Non-GAAP operating revenue associated with recurring fees (a) | $ | 22,705 | $ | 22,363 | $ | 19,001 | $ | 10,988 | $ | 9,408 | ||||||||||||||||||||||||
(a)Non-GAAP operating revenue associated with recurring fees is comprised of GAAP Other Revenue adjusted for the amortization of gains on assets transferred under a reinsurance transaction. See page 7 for the reconciliation of Net Income to Non-GAAP Operating Income and page 8 for the summary of adjustments to arrive at Non-GAAP Operating Income.
Page 12
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - June 30, 2023
Unaudited (Dollars in thousands)
Annuity Deposits by Product Type
| Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||
| 2023 | 2022 | Q2 2023 | Q1 2023 | Q4 2022 | Q3 2022 | Q2 2022 | ||||||||||||||||||||||||||||||||
| American Equity Life: | ||||||||||||||||||||||||||||||||||||||
| $ | 2,207,477 | $ | 1,427,676 | Fixed index annuities | $ | 1,471,638 | $ | 735,839 | $ | 637,021 | $ | 627,444 | $ | 671,696 | ||||||||||||||||||||||||
| 1,527 | 2,202 | Annual reset fixed rate annuities | 834 | 693 | 1,856 | 1,271 | 1,140 | |||||||||||||||||||||||||||||||
| 193,066 | 2,830 | Multi-year fixed rate annuities | 37,032 | 156,034 | 49,216 | 4,465 | 485 | |||||||||||||||||||||||||||||||
| 705 | 16,526 | Single premium immediate annuities | 278 | 427 | 494 | 1,915 | 3,073 | |||||||||||||||||||||||||||||||
| 2,402,775 | 1,449,234 | 1,509,782 | 892,993 | 688,587 | 635,095 | 676,394 | ||||||||||||||||||||||||||||||||
| Eagle Life: | ||||||||||||||||||||||||||||||||||||||
| 634,872 | 231,128 | Fixed index annuities | 406,273 | 228,599 | 145,772 | 102,379 | 104,374 | |||||||||||||||||||||||||||||||
| 3,039 | 7 | Annual reset fixed rate annuities | 1,770 | 1,269 | 230 | 143 | — | |||||||||||||||||||||||||||||||
| 331,161 | 2,463 | Multi-year fixed rate annuities | 82,932 | 248,229 | 65,434 | 14,684 | 123 | |||||||||||||||||||||||||||||||
| 969,072 | 233,598 | 490,975 | 478,097 | 211,436 | 117,206 | 104,497 | ||||||||||||||||||||||||||||||||
| Consolidated: | ||||||||||||||||||||||||||||||||||||||
| 2,842,349 | 1,658,804 | Fixed index annuities | 1,877,911 | 964,438 | 782,793 | 729,823 | 776,070 | |||||||||||||||||||||||||||||||
| 4,566 | 2,209 | Annual reset fixed rate annuities | 2,604 | 1,962 | 2,086 | 1,414 | 1,140 | |||||||||||||||||||||||||||||||
| 524,227 | 5,293 | Multi-year fixed rate annuities | 119,964 | 404,263 | 114,650 | 19,149 | 608 | |||||||||||||||||||||||||||||||
| 705 | 16,526 | Single premium immediate annuities | 278 | 427 | 494 | 1,915 | 3,073 | |||||||||||||||||||||||||||||||
| 3,371,847 | 1,682,832 | Total before coinsurance ceded | 2,000,757 | 1,371,090 | 900,023 | 752,301 | 780,891 | |||||||||||||||||||||||||||||||
| 1,463,525 | 429,015 | Coinsurance ceded | 825,526 | 637,999 | 286,445 | 253,446 | 215,452 | |||||||||||||||||||||||||||||||
| $ | 1,908,322 | $ | 1,253,817 | Net after coinsurance ceded | $ | 1,175,231 | $ | 733,091 | $ | 613,578 | $ | 498,855 | $ | 565,439 | ||||||||||||||||||||||||
Surrender Charge Protection and Account Values by Product Type
Annuity Surrender Charges and Net (of Coinsurance) Account Values at June 30, 2023:
| Surrender Charge | Net Account Value | |||||||||||||||||||||||||||||||
| Product Type | Avg. Years At Issue | Avg. Years Remaining | Avg. % Remaining | Dollars in Thousands | % | |||||||||||||||||||||||||||
| Fixed Index Annuities | 12.3 | 4.8 | 7.9% | $ | 41,563,203 | 88.2 | % | |||||||||||||||||||||||||
| Annual Reset Fixed Rate Annuities | 7.2 | 1.6 | 3.1% | 1,198,840 | 2.5 | % | ||||||||||||||||||||||||||
| Multi-Year Fixed Rate Annuities | 3.9 | 1.4 | 7.0% | 4,381,539 | 9.3 | % | ||||||||||||||||||||||||||
| Total | 11.4 | 4.4 | 7.7% | $ | 47,143,582 | 100.0 | % | |||||||||||||||||||||||||
Page 13
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - June 30, 2023
Unaudited (Dollars in thousands)
Annuity Liability Characteristics
| Surrender Charge Percentages: | Fixed Annuities Account Value | Fixed Index Annuities Account Value | |||||||||
| No surrender charge | $ | 874,352 | $ | 4,436,953 | |||||||
| 0.0% < 2.0% | 62,859 | 2,608,474 | |||||||||
| 2.0% < 3.0% | 31,276 | 3,753,293 | |||||||||
| 3.0% < 4.0% | 19,087 | 697,116 | |||||||||
| 4.0% < 5.0% | 5,288 | 2,958,714 | |||||||||
| 5.0% < 6.0% | 38,260 | 2,260,177 | |||||||||
| 6.0% < 7.0% | 62,414 | 2,425,430 | |||||||||
| 7.0% < 8.0% | 3,465,637 | 2,317,794 | |||||||||
| 8.0% < 9.0% | 669,109 | 2,716,586 | |||||||||
| 9.0% < 10.0% | 156,084 | 3,385,827 | |||||||||
| 10.0% or greater | 196,013 | 14,002,839 | |||||||||
| $ | 5,580,379 | $ | 41,563,203 | ||||||||
Page 14
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - June 30, 2023
Unaudited (Dollars in thousands)
| Surrender Charge Expiration By Year: | Fixed and Fixed Index Annuities Account Value | Weighted Average Surrender Charge | |||||||||
| Out of Surrender Charge | $ | 5,311,305 | 0.00 | % | |||||||
| 2023 | 2,737,572 | 3.75 | % | ||||||||
| 2024 | 3,742,107 | 4.64 | % | ||||||||
| 2025 | 5,092,048 | 3.88 | % | ||||||||
| 2026 | 4,606,380 | 5.33 | % | ||||||||
| 2027 | 4,011,274 | 6.91 | % | ||||||||
| 2028 | 3,936,639 | 8.26 | % | ||||||||
| 2029 | 3,992,571 | 9.71 | % | ||||||||
| 2030 | 3,148,257 | 11.68 | % | ||||||||
| 2031 | 3,759,590 | 13.32 | % | ||||||||
| 2032 | 3,093,978 | 13.89 | % | ||||||||
| 2033 | 2,294,465 | 15.81 | % | ||||||||
| 2034 | 652,734 | 17.67 | % | ||||||||
| 2035 | 338,352 | 18.25 | % | ||||||||
| 2036 | 193,131 | 18.74 | % | ||||||||
| 2037 | 119,473 | 19.22 | % | ||||||||
| 2038 | 101,458 | 19.70 | % | ||||||||
| 2039 | 12,248 | 20.00 | % | ||||||||
| $ | 47,143,582 | 7.69 | % | ||||||||
If all crediting rates were reduced to minimum guaranteed rates (subject to limitations imposed by ultimate minimum guaranteed rates where applicable) the weighted average crediting rate as of June 30, 2023 for the $12.4 billion of account value of fixed annuities and funds allocated to the fixed rate strategy for fixed index annuities would decrease by 0.25%.
If all caps and participation rates were reduced to minimum caps and participation rates and current asset fees were increased to their maximums on the $34.7 billion of account value allocated to index strategies, the cost of options would decrease by 1.11% based upon prices of options for the week ended June 30, 2023.
Page 15
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - June 30, 2023
Unaudited (Dollars in thousands)
Summary of Invested Assets
| June 30, 2023 | December 31, 2022 | ||||||||||||||||||||||
| Carrying Amount | Percent | Carrying Amount | Percent | ||||||||||||||||||||
| Fixed maturity securities: | |||||||||||||||||||||||
| U.S. Government and agencies | $ | 175,462 | 0.4 | % | $ | 169,071 | 0.4 | % | |||||||||||||||
| States, municipalities and territories | 3,261,318 | 7.2 | % | 3,822,943 | 8.5 | % | |||||||||||||||||
| Foreign corporate securities and foreign governments | 519,466 | 1.1 | % | 616,938 | 1.4 | % | |||||||||||||||||
| Corporate securities | 18,254,340 | 40.0 | % | 20,201,774 | 44.8 | % | |||||||||||||||||
| Residential mortgage backed securities | 1,316,563 | 2.9 | % | 1,366,927 | 3.0 | % | |||||||||||||||||
| Commercial mortgage backed securities | 3,260,792 | 7.1 | % | 3,447,075 | 7.6 | % | |||||||||||||||||
| Other asset backed securities | 6,725,121 | 14.7 | % | 5,155,254 | 11.4 | % | |||||||||||||||||
| Total fixed maturity securities | 33,513,062 | 73.4 | % | 34,779,982 | 77.1 | % | |||||||||||||||||
| Mortgage loans on real estate | 7,150,041 | 15.7 | % | 6,778,977 | 15.0 | % | |||||||||||||||||
| Real estate investments | 1,270,213 | 2.8 | % | 1,056,063 | 2.3 | % | |||||||||||||||||
| Limited partnerships and limited liability companies | 1,649,959 | 3.6 | % | 1,266,779 | 2.8 | % | |||||||||||||||||
| Derivative instruments | 1,131,597 | 2.5 | % | 431,727 | 1.0 | % | |||||||||||||||||
| Other investments | 909,289 | 2.0 | % | 829,900 | 1.8 | % | |||||||||||||||||
| Total investments, net of modified coinsurance investments | 45,624,161 | 100.0 | % | 45,143,428 | 100.0 | % | |||||||||||||||||
| Coinsurance investments (a) | 5,894,613 | 6,181,870 | |||||||||||||||||||||
| Total investments | $ | 51,518,774 | $ | 51,325,298 | |||||||||||||||||||
(a)Investments held by American Equity Life in a segregated account to support liabilities reinsured under both coinsurance with funds withheld and modified coinsurance reinsurance agreements.
Credit Quality of Fixed Maturity Securities - June 30, 2023
| NAIC Designation | Amortized Cost | Carrying Amount | Percent | Rating Agency Rating | Amortized Cost | Carrying Amount | Percent | |||||||||||||||||||||||||||||||
| 1 | $ | 24,100,091 | $ | 21,497,873 | 64.1 | % | Aaa/Aa/A | $ | 23,940,750 | $ | 21,363,629 | 63.7 | % | |||||||||||||||||||||||||
| 2 | 12,987,640 | 11,438,235 | 34.1 | % | Baa | 13,112,008 | 11,537,084 | 34.4 | % | |||||||||||||||||||||||||||||
| 3 | 548,122 | 470,165 | 1.4 | % | Ba | 529,257 | 454,719 | 1.4 | % | |||||||||||||||||||||||||||||
| 4 | 102,614 | 92,058 | 0.4 | % | B | 119,610 | 107,675 | 0.3 | % | |||||||||||||||||||||||||||||
| 5 | 6,765 | 6,917 | — | % | Caa | 18,915 | 17,502 | 0.1 | % | |||||||||||||||||||||||||||||
| 6 | 11,648 | 7,814 | — | % | Ca and lower | 36,340 | 32,453 | 0.1 | % | |||||||||||||||||||||||||||||
| 37,756,880 | 33,513,062 | 100.0 | % | 37,756,880 | 33,513,062 | 100.0 | % | |||||||||||||||||||||||||||||||
| Coinsurance investments (a) | 5,566,135 | 5,167,395 | Coinsurance investments (a) | 5,566,135 | 5,167,395 | |||||||||||||||||||||||||||||||||
| $ | 43,323,015 | $ | 38,680,457 | $ | 43,323,015 | $ | 38,680,457 | |||||||||||||||||||||||||||||||
(a)Investments held by American Equity Life in a segregated account to support liabilities reinsured under both coinsurance with funds withheld and modified coinsurance reinsurance agreements.
Page 16
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - June 30, 2023
Unaudited (Dollars in thousands)
Watch List Securities - June 30, 2023
| General Description (a) | Amortized Cost | Allowance for Credit Losses | Amortized Cost, Net of Allowance | Net Unrealized Gains (Losses), Net of Allowance | Fair Value | |||||||||||||||||||||||||||
| States, municipalities and territories | $ | 20,657 | $ | — | $ | 20,657 | $ | (3,339) | $ | 17,318 | ||||||||||||||||||||||
| Corporate securities - Public securities | 3,990 | — | 3,990 | (140) | 3,850 | |||||||||||||||||||||||||||
| Corporate securities - Private placement securities | 7,658 | (3,132) | 4,526 | (1,463) | 3,063 | |||||||||||||||||||||||||||
| Residential mortgage backed securities | 14,016 | (67) | 13,949 | (1,647) | 12,302 | |||||||||||||||||||||||||||
| Commercial mortgage backed securities | 101,927 | — | 101,927 | (17,126) | 84,801 | |||||||||||||||||||||||||||
| Other asset backed securities | 1,879 | — | 1,879 | 19 | 1,898 | |||||||||||||||||||||||||||
| Collateralized loan obligations | 160,319 | (947) | 159,372 | (30,283) | 129,089 | |||||||||||||||||||||||||||
| $ | 310,446 | $ | (4,146) | $ | 306,300 | $ | (53,979) | $ | 252,321 | |||||||||||||||||||||||
(a)The watch list consists of all fixed maturity securities we have determined contain elevated credit risk, including those on which we have taken credit losses.
Page 17
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - June 30, 2023
Unaudited (Dollars in thousands)
Fixed Maturity Securities by Sector
| June 30, 2023 | December 31, 2022 | ||||||||||||||||||||||
| Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||||||||||
| Available for sale: | |||||||||||||||||||||||
| U.S. Government and agencies | $ | 179,087 | $ | 175,462 | $ | 173,638 | $ | 169,071 | |||||||||||||||
| States, municipalities and territories | 3,706,777 | 3,261,318 | 4,356,191 | 3,822,943 | |||||||||||||||||||
| Foreign corporate securities and foreign governments | 585,449 | 519,466 | 680,263 | 616,938 | |||||||||||||||||||
| Corporate securities: | |||||||||||||||||||||||
| Capital goods | 1,380,044 | 1,203,058 | 1,601,113 | 1,395,595 | |||||||||||||||||||
| Consumer discretionary | 4,541,717 | 3,856,042 | 5,086,479 | 4,320,219 | |||||||||||||||||||
| Energy | 1,017,803 | 923,675 | 1,219,370 | 1,111,891 | |||||||||||||||||||
| Financials | 6,246,840 | 5,488,098 | 6,467,052 | 5,634,229 | |||||||||||||||||||
| Government non-guaranteed | 189,320 | 165,056 | 202,740 | 179,440 | |||||||||||||||||||
| Industrials | 134,368 | 108,483 | 166,061 | 138,999 | |||||||||||||||||||
| Information technology | 1,199,832 | 1,039,804 | 1,344,461 | 1,160,067 | |||||||||||||||||||
| Materials | 1,026,548 | 886,721 | 1,169,188 | 1,021,288 | |||||||||||||||||||
| Telecommunications | 1,187,414 | 988,322 | 1,306,495 | 1,090,868 | |||||||||||||||||||
| Transportation | 984,676 | 873,587 | 1,100,681 | 975,393 | |||||||||||||||||||
| Utilities | 3,111,757 | 2,648,176 | 3,620,946 | 3,115,520 | |||||||||||||||||||
| Other | 74,251 | 73,318 | 58,184 | 58,265 | |||||||||||||||||||
| Residential mortgage backed securities: | |||||||||||||||||||||||
| Government agency | 755,168 | 705,470 | 806,999 | 754,349 | |||||||||||||||||||
| Prime | 373,194 | 316,580 | 387,838 | 334,613 | |||||||||||||||||||
| Alt-A | 55,115 | 56,348 | 54,910 | 58,091 | |||||||||||||||||||
| Non-qualified mortgage | 196,504 | 182,325 | 169,847 | 157,960 | |||||||||||||||||||
| Other | 56,191 | 55,840 | 62,235 | 61,914 | |||||||||||||||||||
| Commercial mortgage backed securities: | |||||||||||||||||||||||
| Government agency | 164,999 | 153,259 | 170,307 | 157,903 | |||||||||||||||||||
| Non-agency | 3,558,841 | 3,107,533 | 3,668,300 | 3,289,172 | |||||||||||||||||||
| Other asset backed securities: | |||||||||||||||||||||||
| Auto | 372,904 | 369,260 | 44,450 | 41,896 | |||||||||||||||||||
| Consumer discretionary | 602,942 | 570,056 | 122,068 | 118,843 | |||||||||||||||||||
| Financials | 345,273 | 317,615 | 283,238 | 252,493 | |||||||||||||||||||
| Collateralized loan obligations | 4,974,918 | 4,765,571 | 4,071,929 | 3,775,347 | |||||||||||||||||||
| Other | 734,948 | 702,619 | 1,005,440 | 966,675 | |||||||||||||||||||
| 37,756,880 | 33,513,062 | 39,400,423 | 34,779,982 | ||||||||||||||||||||
| Coinsurance investments (a) | 5,566,135 | 5,167,395 | 5,465,596 | 5,024,635 | |||||||||||||||||||
| $ | 43,323,015 | $ | 38,680,457 | $ | 44,866,019 | $ | 39,804,617 | ||||||||||||||||
(a)Investments held by American Equity Life in a segregated account to support liabilities reinsured under both coinsurance with funds withheld and modified coinsurance reinsurance agreements.
Page 18
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - June 30, 2023
Unaudited (Dollars in thousands)
Mortgage Loans on Real Estate
| June 30, 2023 | December 31, 2022 | ||||||||||||||||||||||
| Principal | Percent | Principal | Percent | ||||||||||||||||||||
| Property type distribution | |||||||||||||||||||||||
| Commercial mortgage loans: | |||||||||||||||||||||||
| Office | $ | 252,168 | 3.5 | % | $ | 277,767 | 4.1 | % | |||||||||||||||
| Retail | 827,217 | 11.6 | % | 878,352 | 13.0 | % | |||||||||||||||||
| Industrial/Warehouse | 871,596 | 12.2 | % | 853,215 | 12.6 | % | |||||||||||||||||
| Apartment | 995,879 | 14.0 | % | 893,910 | 13.2 | % | |||||||||||||||||
| Hotel | 285,271 | 4.0 | % | 285,271 | 4.2 | % | |||||||||||||||||
| Mixed Use/Other | 78,243 | 1.1 | % | 200,756 | 3.0 | % | |||||||||||||||||
| Agricultural mortgage loans | 582,660 | 8.2 | % | 567,630 | 8.4 | % | |||||||||||||||||
| Residential mortgage loans | 3,236,400 | 45.4 | % | 2,807,652 | 41.5 | % | |||||||||||||||||
| 7,129,434 | 100.0 | % | 6,764,553 | 100.0 | % | ||||||||||||||||||
| Coinsurance investments (a) | 225,133 | 171,633 | |||||||||||||||||||||
| $ | 7,354,567 | $ | 6,936,186 | ||||||||||||||||||||
| Commercial | Agricultural | ||||||||||||||||||||||
| Amortized Cost | Average LTV | Amortized Cost | Average LTV | ||||||||||||||||||||
| As of June 30, 2023: | |||||||||||||||||||||||
| Debt Service Coverage Ratio: | |||||||||||||||||||||||
| Greater than or equal to 1.5 | $ | 2,323,916 | 53% | $ | 284,227 | 49% | |||||||||||||||||
| Greater than or equal to 1.2 and less than 1.5 | 337,210 | 62% | 240,675 | 52% | |||||||||||||||||||
| Greater than or equal to 1.0 and less than 1.2 | 558,172 | 47% | 11,788 | 44% | |||||||||||||||||||
| Less than 1.0 | 86,502 | 56% | 44,251 | 41% | |||||||||||||||||||
| 3,305,800 | 53% | 580,941 | 50% | ||||||||||||||||||||
| Coinsurance investments (a) | 223,568 | 51% | — | —% | |||||||||||||||||||
| $ | 3,529,368 | 53% | $ | 580,941 | 50% | ||||||||||||||||||
| As of December 31, 2022: | |||||||||||||||||||||||
| Debt Service Coverage Ratio: | |||||||||||||||||||||||
| Greater than or equal to 1.5 | $ | 2,358,793 | 53% | $ | 266,695 | 45% | |||||||||||||||||
| Greater than or equal to 1.2 and less than 1.5 | 505,644 | 61% | 236,589 | 48% | |||||||||||||||||||
| Greater than or equal to 1.0 and less than 1.2 | 475,315 | 50% | 15,075 | 39% | |||||||||||||||||||
| Less than 1.0 | 44,756 | 66% | 47,604 | 33% | |||||||||||||||||||
| 3,384,508 | 54% | 565,963 | 45% | ||||||||||||||||||||
| Coinsurance investments (a) | 170,050 | 61% | — | —% | |||||||||||||||||||
| $ | 3,554,558 | 54% | $ | 565,963 | 45% | ||||||||||||||||||
(a)Investments held by American Equity Life in a segregated account to support liabilities reinsured under both coinsurance with funds withheld and modified coinsurance reinsurance agreements.
Page 19
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - June 30, 2023
Unaudited (Dollars in thousands)
| June 30, 2023 | |||||||||||||||||||||||
| Commercial | Agricultural | Residential | Total | ||||||||||||||||||||
| Credit exposure - by payment activity | |||||||||||||||||||||||
| Performing | $ | 3,310,374 | $ | 582,660 | $ | 3,181,610 | $ | 7,074,644 | |||||||||||||||
| In workout | — | — | — | — | |||||||||||||||||||
| Delinquent | — | — | 54,790 | 54,790 | |||||||||||||||||||
| Principal outstanding | 3,310,374 | 582,660 | 3,236,400 | 7,129,434 | |||||||||||||||||||
| Unamortized discounts and premiums, net | (998) | — | 66,226 | 65,228 | |||||||||||||||||||
| Deferred fees and costs, net | (3,575) | (1,719) | 1,068 | (4,226) | |||||||||||||||||||
| Amortized cost | 3,305,801 | 580,941 | 3,303,694 | 7,190,436 | |||||||||||||||||||
| Valuation allowance | (21,330) | (895) | (18,170) | (40,395) | |||||||||||||||||||
| Carrying value | 3,284,471 | 580,046 | 3,285,524 | 7,150,041 | |||||||||||||||||||
| Coinsurance investments (a) | 223,568 | — | — | 223,568 | |||||||||||||||||||
| $ | 3,508,039 | $ | 580,046 | $ | 3,285,524 | $ | 7,373,609 | ||||||||||||||||
| December 31, 2022 | |||||||||||||||||||||||
| Commercial | Agricultural | Residential | Total | ||||||||||||||||||||
| Credit exposure - by payment activity | |||||||||||||||||||||||
| Performing | $ | 3,389,271 | $ | 564,495 | $ | 2,773,251 | $ | 6,727,017 | |||||||||||||||
| In workout | — | — | — | — | |||||||||||||||||||
| Delinquent | — | 3,135 | 34,401 | 37,536 | |||||||||||||||||||
| Principal outstanding | 3,389,271 | 567,630 | 2,807,652 | 6,764,553 | |||||||||||||||||||
| Unamortized discounts and premiums, net | — | — | 55,917 | 55,917 | |||||||||||||||||||
| Deferred fees and costs, net | (4,763) | (1,667) | 1,909 | (4,521) | |||||||||||||||||||
| Amortized cost | 3,384,508 | 565,963 | 2,865,478 | 6,815,949 | |||||||||||||||||||
| Valuation allowance | (22,428) | (1,021) | (13,523) | (36,972) | |||||||||||||||||||
| Carrying value | 3,362,080 | 564,942 | 2,851,955 | 6,778,977 | |||||||||||||||||||
| Coinsurance investments (a) | 170,050 | — | — | 170,050 | |||||||||||||||||||
| $ | 3,532,130 | $ | 564,942 | $ | 2,851,955 | $ | 6,949,027 | ||||||||||||||||
(a)Investments held by American Equity Life in a segregated account to support liabilities reinsured under both coinsurance with funds withheld and modified coinsurance reinsurance agreements.
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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - June 30, 2023
Shareholder Information
| A.M. Best | S&P | Fitch | |||||||||||||||
| Financial Strength Ratings | |||||||||||||||||
| American Equity Investment Life Insurance Company | A- (stable) | A- (negative) | A- (stable) | ||||||||||||||
| American Equity Investment Life Insurance Company of New York | A- (stable) | A- (negative) | A- (stable) | ||||||||||||||
| Eagle Life Insurance Company | A- (stable) | A- (negative) | A- (stable) | ||||||||||||||
| Credit Ratings | |||||||||||||||||
| American Equity Investment Life Holding Company | bbb- (stable) | BBB- (negative) | BBB | ||||||||||||||
| Senior unsecured debt | bbb- (stable) | BBB- | BBB- | ||||||||||||||
| Perpetual, non-cumulative preferred stock | bb (stable) | BB | BB | ||||||||||||||
Corporate Offices:
American Equity Investment Life Holding Company
6000 Westown Parkway
West Des Moines, IA 50266
Inquiries:
Steven Schwartz, Head of Investor Relations
(515) 273-3763, sschwartz@american-equity.com
Common Stock and Dividend Information:
New York Stock Exchange symbol: “AEL”
| High | Low | Close | Dividend Declared | ||||||||||||||||||||
| 2023 | |||||||||||||||||||||||
| First Quarter | $48.37 | $31.57 | $36.49 | $0.00 | |||||||||||||||||||
| Second Quarter | $53.68 | $35.22 | $52.11 | $0.00 | |||||||||||||||||||
| 2022 | |||||||||||||||||||||||
| First Quarter | $44.49 | $35.05 | $39.91 | $0.00 | |||||||||||||||||||
| Second Quarter | $42.18 | $32.65 | $36.57 | $0.00 | |||||||||||||||||||
| Third Quarter | $43.55 | $33.22 | $37.29 | $0.00 | |||||||||||||||||||
| Fourth Quarter | $46.76 | $28.05 | $45.62 | $0.36 | |||||||||||||||||||
| 2021 | |||||||||||||||||||||||
| First Quarter | $32.54 | $26.21 | $31.53 | $0.00 | |||||||||||||||||||
| Second Quarter | $33.68 | $29.18 | $32.32 | $0.00 | |||||||||||||||||||
| Third Quarter | $33.79 | $27.12 | $29.57 | $0.00 | |||||||||||||||||||
| Fourth Quarter | $39.88 | $29.46 | $38.92 | $0.34 | |||||||||||||||||||
Transfer Agent:
Computershare Trust Company, N.A.
P.O. Box 43010
Providence, RI 02940-0310
Phone: (877) 282-1169
Fax: (781) 575-2723
www.computershare.com
Annual Report and Other Information:
Shareholders may receive when available, without charge, a copy of American Equity’s Annual Report, SEC filings and/or press releases by calling Steven Schwartz, Head of Investor Relations, at (515) 273-3763 or by visiting our website at www.american-equity.com.
Page 21
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - June 30, 2023
Research Analyst Coverage
Erik Bass
Autonomous Research US LP
(646) 561-6248
ebass@autonomous.com
Thomas Gallagher
Evercore ISI
(212) 446-9439
thomas.gallagher@evercoreisi.com
Daniel Bergman
Jefferies
(617) 345-8688
dbergman@jefferies.com
Ryan Krueger
Keefe, Bruyette & Woods
(860) 722-5930
rkrueger@kbw.com
John Barnidge
Piper Sandler & Co.
(312) 281-3412
John.Barnidge@psc.com
Wilma Burdis
Raymond James & Associates, Inc.
(727) 567-9371
wilma.burdis@raymondjames.com
Scott Heleniak
RBC Capital Markets, LLC
(804) 782-4006
scott.heleniak@rbccm.com
Mark Hughes
Truist Securities
(615) 748-4422
mark.hughes@research.truist.com
Page 22