ANG-PD 8-K
American National Group Inc. (ANG-PD)
8-K
2023-02-16
For: 2023-02-16
View Original
Added on
April 06, 2026
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): February 16, 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 February 16, 2023, the registrant issued a press release announcing its financial results for the fourth quarter and year ended December 31, 2022, a copy of which is attached as Exhibit 99.1 and is incorporated herein by reference. The registrant's financial supplement for the fourth quarter and year ended December 31, 2022, 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: February 16, 2023
| AMERICAN EQUITY | |||||||||||
| INVESTMENT LIFE HOLDING COMPANY | |||||||||||
| By: | /s/ Axel Andre | ||||||||||
| Axel Andre | |||||||||||
| Chief Financial Officer and Executive Vice President | |||||||||||
Exhibit 99.1
 | For more information, contact: | |||||||
| Steven D. Schwartz, Vice President-Investor Relations | ||||||||
| (515) 273-3763, [email protected] | ||||||||
| FOR IMMEDIATE RELEASE | ||||||||
| February 16, 2023 | ||||||||
American Equity Ramps Private Asset Allocation to 22% and Achieves Close to $10 billion in Fee-Generating Reinsurance Balances in Fourth Quarter 2022
Company Highlights
•Q4 2022 net loss available to common stockholders of $(29.4) million, or $(0.34) per diluted common share compared to net income of $82.2 million, or $0.88 per diluted common share for Q4 2021
•Non-GAAP operating income1 available to common stockholders for the fourth quarter 2022 was $67.9 million, or $0.79 per diluted common share; No notable items impacted results in the quarter
•Private asset deployment momentum continues with approximately $1.4 billion sourced in the quarter bringing total portfolio allocation to 22%
•Sequential quarterly FIA sales increase of 7% to $783 million
•Ceded $352 million of flow reinsurance to Brookfield Re and $4.3 billion of GAAP reserves, including $3.8 billion of account value, in new strategic partnership with 26North Re increasing "fee-like" revenues and growing account value subject to recurring fees to $9.6 billion
WEST DES MOINES, Iowa (February 16, 2023) – American Equity Investment Life Holding Company (NYSE: AEL), a leading issuer of fixed index annuities (FIAs) today reported its fourth quarter 2022 results. Results in the quarter reflected a lower-than-expected return on mark-to-market assets and higher fee revenues on reinsured account values.
American Equity's President and CEO, Anant Bhalla stated: "The fourth quarter caps a year of outstanding achievements as we continue to execute on our AEL 2.0 strategy. During the year, we originated $5 billion of privately sourced assets, driving total allocation to 22% of our investment portfolio – generating value for shareholders and policyholders without taking additional risk. Aggregate adjusted investment spread for the year increased 59 basis points as we reinvested excess cash, invested in privately sourced assets, and benefited from our allocation to floating rate assets, all while proactively reducing the portfolio's credit risk exposure in anticipation of potentially amplifying macro-economic uncertainty. We also revamped our pricing procedures creating the ability to quickly re-price product as markets change, entered into an important, long-term reinsurance relationship with 26North Re helping to drive reinsurance assets subject to fees to nearly $10 billion, and made a number of
foundational operational changes to facilitate the efficient sales growth we foresee as the AEL 2.0 flywheel continues to gain speed."
Bhalla continued, “While fourth quarter results reflect lower-than-expected investment returns on mark-to-market assets, impacting overall portfolio yield by 9 basis points, our strong execution on our AEL 2.0 strategy over the last year, as well as the sales momentum we are seeing through the first six weeks of 2023, only increase our confidence in our continued delivery of superior shareholder value this year and over the long term.”
Non-GAAP operating income1 available to common stockholders for the fourth quarter of 2022 was $67.9 million, or $0.79 per diluted common share, compared to non-GAAP operating income1 available to common stockholders of $75.8 million, or $0.81 per diluted common share for the fourth quarter of 2021. For the fourth quarter of 2021, non-GAAP operating income1, excluding notable items, was $97.1 million, or $1.04 per diluted common share. There were no notable items affecting results for the fourth quarter of 2022.
Actuarial assumption revisions utilized in the determination of deferred policy acquisition costs, deferred sales inducements, and the liability for future policy benefits to be paid for guaranteed lifetime income through life-time income benefit riders (LIBR) negatively affected non-GAAP operating income1 by $21.2 million, or $0.23 per diluted common share, in the fourth quarter of 2021.
The year-over-year change in quarterly non-GAAP operating income1 available to common stockholders excluding the impact of actuarial assumption revisions primarily reflected the effect of reduced equity index credits due to the decline in equity markets on the increase in the LIBR reserve and in the amortization of the deferred acquisition cost and deferred sales inducement assets. This was offset partly by substantial increases in both investment spread and recurring fee revenue associated with reinsurance.
For the fourth quarter of 2022, net investment income increased $25 million from the comparable quarter of 2021 reflecting an increase in average yield on investments resulting from the benefit from higher short-term interest rates on our floating rate portfolio, lower cash balances, and the increase in allocation to privately sourced assets to 22.0% of the investment portfolio offsetting a decline in investment assets primarily due to our recent in-force reinsurance transaction which became effective on October 3, 2022..
Compared to the fourth quarter of 2021, the change in the liability for future benefits to be paid for LIBR increased $35 million. Excluding the impact of actuarial assumption revisions in the fourth quarter of 2021, the year-over-year change in liability for future policy benefits to be paid for LIBR was $45 million higher as lower than modeled index credits increased the LIBR reserve by $18 million in the quarter; conversely, better than expected index credits in the fourth quarter of 2021 lowered the change in the LIBR reserve by $30 million. Actual versus modeled experience resulted in an increase in the reserve for the fourth quarter of 2022 of $37 million compared to expectations reflecting $18 million of additional expense associated with near zero index credits, $8 million for lower than modeled option budget, and $8 million for other experience true-ups; actual versus modeled experience reduced the reserve by $4 million in the fourth quarter of 2021.
2
Compared to the fourth quarter of 2021, amortization of deferred policy acquisition and sales inducement cost increased $10 million. Excluding the impact of actuarial assumption revisions in the fourth quarter of 2021, amortization of deferred policy acquisition and sales inducement costs increased by $26 million year-over year. Actual versus modeled expectations in the fourth quarter of 2022, primarily reflecting the level of equity index credits, interest margin and lapsation, offset in part by lower option budget, increased amortization by $8 million. Additional expense associated with near zero index credits in the fourth quarter of 2022 was $9 million. Amortization of deferred sales inducements and policy acquisition costs was positively affected by $9 million in the fourth quarter of 2021 from actual versus modeled expectations.
As of December 31, 2022, account value of business ceded subject to fee income was $9.6 billion, up $4 billion from three months earlier, primarily reflecting $3.8 billion of in-force account value reinsured in the quarter. Flow reinsurance ceded in the fourth quarter of 2022 totaled $352 million of account value. Operating income1 for the fourth quarter of 2022 included $21 million of revenues from reinsurance account values subject to fees compared to $11 million in the third quarter, reflecting the increase in ceded account value.
The effective tax rate on pre-tax operating income1 for the fourth quarter of 2022 was 13.8%, reflecting true-ups to bring the estimated income tax rate through the first nine months of the year in line with the full year effective rate. For the full year, the effective tax rate on pre-tax operating income1 was 20.1% - at the low end of expectations.
STRONG INVESTED ASSET ORIGINATION AT ATTRACTIVE EXPECTED RATES OF RETURN
American Equity’s investment spread was 2.54% for the fourth quarter of 2022 compared to 2.73% for the third quarter of 2022 and 2.29% for the fourth quarter of 2021. On a sequential quarterly basis, the average yield on invested assets decreased by 18 basis points - driven by lower returns on partnerships and other mark-to-market assets - while the cost of money increased 1 basis point. Adjusted investment spread excluding non-trendable items2 decreased to 2.53% in the fourth quarter of 2022 from 2.70% in the third quarter of 2022.
Average yield on invested assets was 4.30% in the fourth quarter of 2022 compared to 4.48% in the third quarter of 2022. The average adjusted yield on invested assets excluding non-trendable items2 was 4.29% in the fourth quarter of 2022 compared to 4.45% in the third quarter of 2022. Returns on mark-to-market assets contributed a benefit of 22 basis points in the third quarter but reduced the portfolio yield by nine basis points in the fourth quarter. The benefit to the investment portfolio from higher short term rates on floating rate investments was 15 basis points in the fourth quarter.
During the quarter, investment asset purchases totaled $2.5 billion and were made at an average rate of 6.81%, including approximately $1.4 billion of private assets at 7.02%.
The aggregate cost of money for annuity liabilities of 1.76% in the fourth quarter of 2022 was up 1 basis point compared to the third quarter of 2022, in line with market costs. The cost of money in the both quarters reflect a small benefit from the over-hedging of index-linked credits.
FIA SALES3 INCREASE 7% FROM PRIOR SEQUENTIAL QUARTER
Fourth quarter sales were $900 million, of which 87.0%, or $783 million, were in fixed index annuities. Although total enterprise FIA sales were down on a year-over-year basis, reflecting the company's pricing discipline in the midst of historically competitive markets, total enterprise FIA sales increased 7.3% compared to third quarter as pricing changes made in the fourth quarter helped increase traction with producers. Compared to the third
3
quarter of 2022, FIA sales at American Equity Life in the Independent Marketing Organization (IMO) channel increased 1.5%, while Eagle Life FIA sales through banks and broker-dealers rose 42.4%.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
The forward-looking statements in this release or that American Equity uses on its conference call, such as ability, aim, anticipate, assume, become, believe, building, can, commit, constructive, continue, could, estimate, expect, exposure, forward, future, goal, grow, guidance, intend, likely, look to, may, might, model, opportunity, outlook, over time, plan, potential, prepare, project, ramp, risk, scenario, see, should, signal, strategy, target, to be, toward, trends, 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.
CONFERENCE CALL
American Equity will hold a conference call to discuss fourth quarter 2022 earnings on Friday, February 17, at 10:00 a.m. CT.
The conference call will be webcast live on the Internet. Investors and interested parties who wish to listen to the webcast may register to access it on our IR website at https://ir.american-equity.com. An audio replay will also be available via the same link on our website shortly after the completion of the call for 30 days.
The call may also be accessed by telephone. Investors and interested parties may register for the call with the form available at this link, and upon submission (and via follow-up email) will receive the dial-in number and a unique PIN to access the call. Registration is available now or any time up to and during the time of the call. Registration is also available by visiting our IR website at https://ir.american-equity.com.
ABOUT AMERICAN EQUITY
At American Equity Investment Life Holding Company, we think of ourselves as The Financial Dignity CompanyTM that offers solutions designed to create financial dignity in retirement. Our policyholders work with independent agents, banks and broker-dealers, through our wholly-owned operating subsidiaries, to choose one of our leading annuity products best suited for their personal needs. To deliver on our promises to policyholders, American Equity has reframed its investment focus, building a stronger emphasis on insurance liability driven asset allocation as well as the origination and management of private assets. Our company is headquartered in West Des Moines, Iowa with satellite offices in Charlotte, NC and New York, NY. For more information, please visit www.american-equity.com.
1 Use of non-GAAP financial measures, including those that isolate notable items, is discussed in this release in the tables that follow the text of the release.
2 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 December 31, 2022 financial supplement on page 10, “Spread Results”.
3 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.
###
4
American Equity Investment Life Holding Company
Unaudited (Dollars in thousands, except per share data)
Consolidated Statements of Operations
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Premiums and other considerations | $ | 2,991 | $ | 14,553 | $ | 19,739 | $ | 58,202 | |||||||||||||||
| Annuity product charges | 61,666 | 60,310 | 230,354 | 242,631 | |||||||||||||||||||
| Net investment income | 537,995 | 514,599 | 2,307,463 | 2,037,475 | |||||||||||||||||||
| Change in fair value of derivatives | 22,243 | 522,251 | (1,138,128) | 1,348,735 | |||||||||||||||||||
| Net realized gains (losses) on investments | 14,411 | (10,478) | (47,848) | (13,242) | |||||||||||||||||||
| Other revenue | 15,148 | 8,026 | 43,921 | 15,670 | |||||||||||||||||||
| Total revenues | 654,454 | 1,109,261 | 1,415,501 | 3,689,471 | |||||||||||||||||||
| Benefits and expenses: | |||||||||||||||||||||||
| Insurance policy benefits and change in future policy benefits | 5,663 | 16,975 | 31,099 | 67,983 | |||||||||||||||||||
| Interest sensitive and index product benefits | 160,243 | 574,816 | 889,650 | 2,681,406 | |||||||||||||||||||
| Amortization of deferred sales inducements | 46,773 | 59,409 | 408,548 | 152,692 | |||||||||||||||||||
| Change in fair value of embedded derivatives | 342,409 | 186,802 | (2,352,598) | (358,302) | |||||||||||||||||||
| Interest expense on notes and loan payable | 10,228 | 6,259 | 32,098 | 25,581 | |||||||||||||||||||
| Interest expense on subordinated debentures | 1,335 | 1,330 | 5,331 | 5,324 | |||||||||||||||||||
| Amortization of deferred policy acquisition costs | 64,338 | 82,999 | 615,300 | 268,328 | |||||||||||||||||||
| Other operating costs and expenses | 62,041 | 66,279 | 239,616 | 243,712 | |||||||||||||||||||
| Total benefits and expenses | 693,030 | 994,869 | (130,956) | 3,086,724 | |||||||||||||||||||
| Income (loss) before income taxes | (38,576) | 114,392 | 1,546,457 | 602,747 | |||||||||||||||||||
| Income tax expense (benefit) | (20,478) | 21,255 | 325,155 | 128,755 | |||||||||||||||||||
| Net income (loss) | (18,098) | 93,137 | 1,221,302 | 473,992 | |||||||||||||||||||
| Less: Net income available to noncontrolling interests | 361 | — | 358 | — | |||||||||||||||||||
| Net income (loss) available to American Equity Investment Life Holding Company stockholders | (18,459) | 93,137 | 1,220,944 | 473,992 | |||||||||||||||||||
| Less: Preferred stock dividends | 10,919 | 10,919 | 43,675 | 43,675 | |||||||||||||||||||
| Net income (loss) available to American Equity Investment Life Holding Company common stockholders | $ | (29,378) | $ | 82,218 | $ | 1,177,269 | $ | 430,317 | |||||||||||||||
| Earnings (loss) per common share | $ | (0.34) | $ | 0.89 | $ | 13.00 | $ | 4.58 | |||||||||||||||
| Earnings (loss) per common share - assuming dilution | $ | (0.34) | $ | 0.88 | $ | 12.86 | $ | 4.55 | |||||||||||||||
| Weighted average common shares outstanding (in thousands): | |||||||||||||||||||||||
| Earnings (loss) per common share | 85,274 | 92,479 | 90,558 | 93,860 | |||||||||||||||||||
| Earnings (loss) per common share - assuming dilution | 86,402 | 93,378 | 91,538 | 94,491 | |||||||||||||||||||
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American Equity Investment Life Holding Company
Unaudited (Dollars in thousands, except per share data)
NON-GAAP FINANCIAL MEASURES
In addition to net income (loss) 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 (loss) 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 (loss) available to common stockholders provides information that may enhance an investor’s understanding of our underlying results and profitability.
Reconciliation from Net Income (Loss) Available to Common Stockholders to Non-GAAP Operating Income Available to Common Stockholders and Non-GAAP Operating Income Available to Common Stockholders, Excluding Notable Items
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Net income (loss) available to American Equity Investment Life Holding Company common stockholders | $ | (29,378) | $ | 82,218 | $ | 1,177,269 | $ | 430,317 | |||||||||||||||
| Adjustments to arrive at non-GAAP operating income available to common stockholders: | |||||||||||||||||||||||
| Net realized (gains) losses on financial assets, including credit losses (a) | (15,167) | 7,771 | 36,428 | 10,299 | |||||||||||||||||||
| Change in fair value of derivatives and embedded derivatives (a) | 138,966 | (14,544) | (1,080,356) | (187,290) | |||||||||||||||||||
| Net investment income (a) | 664 | — | 664 | — | |||||||||||||||||||
| Other revenue | 5,969 | — | 5,969 | — | |||||||||||||||||||
| Income taxes | (33,154) | 383 | 222,966 | 37,184 | |||||||||||||||||||
| Non-GAAP operating income available to common stockholders | 67,900 | 75,828 | 362,940 | 290,510 | |||||||||||||||||||
| Impact of excluding notable items (b) | — | 21,235 | (26,572) | 78,036 | |||||||||||||||||||
| Non-GAAP operating income available to common stockholders, excluding notable items | $ | 67,900 | $ | 97,063 | $ | 336,368 | $ | 368,546 | |||||||||||||||
| Per common share - assuming dilution: | |||||||||||||||||||||||
| Net income (loss) available to American Equity Investment Life Holding Company common stockholders | $ | (0.34) | $ | 0.88 | $ | 12.86 | $ | 4.55 | |||||||||||||||
| Adjustments to arrive at non-GAAP operating income available to common stockholders: | |||||||||||||||||||||||
| Net realized (gains) losses on financial assets, including credit losses | (0.18) | 0.08 | 0.40 | 0.11 | |||||||||||||||||||
| Change in fair value of derivatives and embedded derivatives | 1.61 | (0.15) | (11.80) | (1.98) | |||||||||||||||||||
| Net investment income | 0.01 | — | 0.01 | — | |||||||||||||||||||
| Other revenue | 0.07 | — | 0.06 | — | |||||||||||||||||||
| Income taxes | (0.38) | — | 2.43 | 0.39 | |||||||||||||||||||
| Non-GAAP operating income available to common stockholders | 0.79 | 0.81 | 3.96 | 3.07 | |||||||||||||||||||
| Impact of excluding notable items | — | 0.23 | (0.29) | 0.83 | |||||||||||||||||||
| Non-GAAP operating income available to common stockholders, excluding notable items | $ | 0.79 | $ | 1.04 | $ | 3.67 | $ | 3.90 | |||||||||||||||
Notable Items
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Notable items impacting non-GAAP operating income available to common stockholders: | |||||||||||||||||||||||
| Impact of actuarial assumption updates | $ | — | $ | (21,235) | $ | 26,572 | $ | (78,036) | |||||||||||||||
| Total notable items (b) | $ | — | $ | (21,235) | $ | 26,572 | $ | (78,036) | |||||||||||||||
(a)Adjustments to net income (loss) available to common stockholders to arrive at non-GAAP operating income available to common stockholders are presented net of related adjustments to amortization of deferred sales inducements (DSI) and deferred policy acquisition costs (DAC) and accretion of lifetime income benefit rider (LIBR) reserves where applicable.
(b)Notable items reflect the after-tax impact to non-GAAP operating income available to common stockholders for certain items that do not reflect the company's expected ongoing operations. Notable items primarily include the impact from actuarial assumption updates. The presentation of notable items is intended to help investors better understand our results and to evaluate and forecast those results.
Page 2
American Equity Investment Life Holding Company
Unaudited (Dollars in thousands, except share and per share data)
Book Value per Common Share
| Q4 2022 | |||||
| Total stockholders’ equity attributable to American Equity Investment Life Holding Company | $ | 3,169,223 | |||
| Equity available to preferred stockholders (a) | (700,000) | ||||
| Total common stockholders' equity (b) | 2,469,223 | ||||
| Accumulated other comprehensive (income) loss (AOCI) | 2,155,055 | ||||
| Total common stockholders’ equity excluding AOCI (b) | 4,624,278 | ||||
| Net impact of fair value accounting for derivatives and embedded derivatives | (1,150,532) | ||||
Total common stockholders’ equity excluding AOCI and the net impact of fair value accounting for derivatives and embedded derivatives (b) | $ | 3,473,746 | |||
| Common shares outstanding | 84,810,255 | ||||
| Book Value per Common Share: (c) | |||||
| Book value per common share | $ | 29.11 | |||
| Book value per common share excluding AOCI (b) | $ | 54.52 | |||
| Book value per common share excluding AOCI and the net impact of fair value accounting for derivatives and embedded derivatives (b) | $ | 40.96 | |||
(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 derivatives and embedded derivatives, 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 derivatives and embedded derivatives, non-GAAP financial measures, are based on common stockholders' equity excluding AOCI and the net impact of fair value accounting for derivatives and embedded derivatives. Since the net impact of fair value accounting for our derivatives and embedded derivatives fluctuates from quarter to quarter and the most significant impacts relate to fair value accounting for our fixed index annuity business and are 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 derivatives and embedded derivatives 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 derivatives and embedded derivatives 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 derivatives and embedded derivatives 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 derivatives and embedded derivatives. 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 derivatives and embedded derivatives as the amounts are not economic in nature but rather impact the timing of reported results.
| Twelve Months Ended | |||||
| December 31, 2022 | |||||
| Average Common Stockholders' Equity Attributable to American Equity Investment Life Holding Company, Excluding Average AOCI and Average Net Impact of Fair Value Accounting for Derivatives and Embedded Derivatives | |||||
| Average total stockholders’ equity | $ | 4,746,175 | |||
| Average equity available to preferred stockholders | (700,000) | ||||
| Average equity available to common stockholders | 4,046,175 | ||||
| Average AOCI | 153,133 | ||||
| Average common stockholders' equity excluding average AOCI | 4,199,308 | ||||
| Average net impact of fair value accounting for derivatives and embedded derivatives | (712,757) | ||||
| Average common stockholders' equity excluding average AOCI and average net impact of fair value accounting for derivatives and embedded derivatives | 3,486,551 | ||||
| Impact of excluding notable items on average common stockholders' equity excluding average AOCI and average net impact of fair value accounting for derivatives and embedded derivatives | (13,286) | ||||
| Average common stockholders' equity excluding average AOCI, average net impact of fair value accounting for derivatives and embedded derivatives and notables | $ | 3,473,265 | |||
| Net income available to American Equity Investment Life Holding Company common stockholders | $ | 1,177,269 | |||
| Adjustments to arrive at non-GAAP operating income available to common stockholders: (a) | |||||
| Net realized losses on financial assets, including credit losses | 36,428 | ||||
| Change in fair value of derivatives and embedded derivatives | (1,080,356) | ||||
| Net investment income | 664 | ||||
| Other revenue | 5,969 | ||||
| Income taxes | 222,966 | ||||
| Non-GAAP operating income available to common stockholders | 362,940 | ||||
| Impact of excluding notable items (b) | (26,572) | ||||
| Non-GAAP operating income available to common stockholders, excluding notable items | $ | 336,368 | |||
| Return on Average Common Stockholders' Equity Attributable to American Equity Investment Life Holding Company | |||||
| Net income available to common stockholders | 29.1 | % | |||
| 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 Derivatives and Embedded Derivatives | |||||
| Non-GAAP operating income available to common stockholders | 10.4 | % | |||
| Non-GAAP operating income available to common stockholders, excluding notable items | 9.7 | % | |||
| Notable Items | Twelve Months Ended | ||||
| December 31, 2022 | |||||
| Notable items impacting non-GAAP operating income available to common stockholders: | |||||
| Impact of actuarial assumption updates | $ | 26,572 | |||
| Total notable items (b) | $ | 26,572 | |||
(a)Adjustments to net income available to common stockholders to arrive at non-GAAP operating income available to common stockholders are presented net of related adjustments to amortization of deferred sales inducements (DSI) and deferred policy acquisition costs (DAC) and accretion of lifetime income benefit rider (LIBR) reserves where applicable.
(b)Notable items reflect the after-tax impact to non-GAAP operating income available to common stockholders for certain items that do not reflect the company's expected ongoing operations. Notable items primarily include the impact from actuarial assumption updates. The presentation of notable items is intended to help investors better understand our results and to evaluate and forecast those results.
Page 4
Exhibit 99.2
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement
December 31, 2022
| A. | Financial Highlights | |||||||
| Non-GAAP Financial Measures | ||||||||
| B. | Product Summary | |||||||
| C. | Investment Summary | |||||||
| D. | ||||||||
| E. | ||||||||
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - December 31, 2022
Unaudited (Dollars in thousands)
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
| December 31, 2022 | December 31, 2021 | ||||||||||
| Assets | |||||||||||
| Investments: | |||||||||||
| Fixed maturity securities, available for sale, at fair value | $ | 39,804,617 | $ | 51,305,943 | |||||||
| Mortgage loans on real estate | 6,949,027 | 5,687,998 | |||||||||
| Real estate investments | 1,056,063 | 337,939 | |||||||||
| Limited partnerships and limited liability companies | 1,266,779 | 520,120 | |||||||||
| Derivative instruments | 431,727 | 1,277,480 | |||||||||
| Other investments | 1,817,085 | 1,247,024 | |||||||||
| Total investments | 51,325,298 | 60,376,504 | |||||||||
| Cash and cash equivalents | 1,919,669 | 4,508,982 | |||||||||
| Coinsurance deposits | 13,208,399 | 8,850,608 | |||||||||
| Accrued investment income | 497,851 | 445,097 | |||||||||
| Deferred policy acquisition costs | 3,562,075 | 2,222,769 | |||||||||
| Deferred sales inducements | 2,593,350 | 1,546,073 | |||||||||
| Deferred income taxes | 220,873 | — | |||||||||
| Income taxes recoverable | 55,498 | 166,586 | |||||||||
| Other assets | 543,128 | 232,490 | |||||||||
| Total assets | $ | 73,926,141 | $ | 78,349,109 | |||||||
| Liabilities and Stockholders' Equity | |||||||||||
| Liabilities: | |||||||||||
| Policy benefit reserves | $ | 61,118,134 | $ | 65,477,778 | |||||||
| Other policy funds and contract claims | 512,790 | 226,844 | |||||||||
| Notes and loan payable | 792,073 | 496,250 | |||||||||
| Subordinated debentures | 78,753 | 78,421 | |||||||||
| Deferred income taxes | — | 541,972 | |||||||||
| Funds withheld for reinsurance liabilities | 6,577,426 | 3,124,740 | |||||||||
| Other liabilities | 1,656,509 | 2,079,977 | |||||||||
| Total liabilities | 70,735,685 | 72,025,982 | |||||||||
| Stockholders' equity: | |||||||||||
| Preferred stock, Series A | 16 | 16 | |||||||||
| Preferred stock, Series B | 12 | 12 | |||||||||
| Common stock | 84,810 | 92,514 | |||||||||
| Additional paid-in capital | 1,325,316 | 1,614,374 | |||||||||
| Accumulated other comprehensive income (loss) | (2,155,055) | 1,848,789 | |||||||||
| Retained earnings | 3,914,124 | 2,767,422 | |||||||||
| Total stockholders' equity attributable to American Equity Investment Life Holding Company | 3,169,223 | 6,323,127 | |||||||||
| Noncontrolling interests | 21,233 | — | |||||||||
| Total stockholders' equity | 3,190,456 | 6,323,127 | |||||||||
| Total liabilities and stockholders' equity | $ | 73,926,141 | $ | 78,349,109 | |||||||
Page 1
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - December 31, 2022
Unaudited (Dollars in thousands, except per share data)
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Premiums and other considerations | $ | 2,991 | $ | 14,553 | $ | 19,739 | $ | 58,202 | |||||||||||||||
| Annuity product charges | 61,666 | 60,310 | 230,354 | 242,631 | |||||||||||||||||||
| Net investment income | 537,995 | 514,599 | 2,307,463 | 2,037,475 | |||||||||||||||||||
| Change in fair value of derivatives | 22,243 | 522,251 | (1,138,128) | 1,348,735 | |||||||||||||||||||
| Net realized gains (losses) on investments | 14,411 | (10,478) | (47,848) | (13,242) | |||||||||||||||||||
| Other revenue | 15,148 | 8,026 | 43,921 | 15,670 | |||||||||||||||||||
| Total revenues | 654,454 | 1,109,261 | 1,415,501 | 3,689,471 | |||||||||||||||||||
| Benefits and expenses: | |||||||||||||||||||||||
| Insurance policy benefits and change in future policy benefits | 5,663 | 16,975 | 31,099 | 67,983 | |||||||||||||||||||
| Interest sensitive and index product benefits | 160,243 | 574,816 | 889,650 | 2,681,406 | |||||||||||||||||||
| Amortization of deferred sales inducements | 46,773 | 59,409 | 408,548 | 152,692 | |||||||||||||||||||
| Change in fair value of embedded derivatives | 342,409 | 186,802 | (2,352,598) | (358,302) | |||||||||||||||||||
| Interest expense on notes and loan payable | 10,228 | 6,259 | 32,098 | 25,581 | |||||||||||||||||||
| Interest expense on subordinated debentures | 1,335 | 1,330 | 5,331 | 5,324 | |||||||||||||||||||
| Amortization of deferred policy acquisition costs | 64,338 | 82,999 | 615,300 | 268,328 | |||||||||||||||||||
| Other operating costs and expenses | 62,041 | 66,279 | 239,616 | 243,712 | |||||||||||||||||||
| Total benefits and expenses | 693,030 | 994,869 | (130,956) | 3,086,724 | |||||||||||||||||||
| Income (loss) before income taxes | (38,576) | 114,392 | 1,546,457 | 602,747 | |||||||||||||||||||
| Income tax expense (benefit) | (20,478) | 21,255 | 325,155 | 128,755 | |||||||||||||||||||
| Net income (loss) | (18,098) | 93,137 | 1,221,302 | 473,992 | |||||||||||||||||||
| Less: Net income available to noncontrolling interests | 361 | — | 358 | — | |||||||||||||||||||
| Net income (loss) available to American Equity Investment Life Holding Company stockholders | (18,459) | 93,137 | 1,220,944 | 473,992 | |||||||||||||||||||
| Less: Preferred stock dividends | 10,919 | 10,919 | 43,675 | 43,675 | |||||||||||||||||||
| Net income (loss) available to American Equity Investment Life Holding Company common stockholders | $ | (29,378) | $ | 82,218 | $ | 1,177,269 | $ | 430,317 | |||||||||||||||
| Earnings (loss) per common share | $ | (0.34) | $ | 0.89 | $ | 13.00 | $ | 4.58 | |||||||||||||||
| Earnings (loss) per common share - assuming dilution | $ | (0.34) | $ | 0.88 | $ | 12.86 | $ | 4.55 | |||||||||||||||
| Weighted average common shares outstanding (in thousands): | |||||||||||||||||||||||
| Earnings (loss) per common share | 85,274 | 92,479 | 90,558 | 93,860 | |||||||||||||||||||
| Earnings (loss) per common share - assuming dilution | 86,402 | 93,378 | 91,538 | 94,491 | |||||||||||||||||||
Page 2
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - December 31, 2022
Unaudited (Dollars in thousands, except per share data)
Quarterly Summary - Most Recent 5 Quarters
| Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | |||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||
| Traditional life insurance premiums | $ | 626 | $ | 634 | $ | 691 | $ | 675 | $ | 677 | |||||||||||||||||||
| Life contingent immediate annuity considerations | 2,365 | 2,205 | 3,140 | 9,403 | 13,876 | ||||||||||||||||||||||||
| Surrender charges | 22,030 | 19,783 | 15,345 | 15,541 | 13,638 | ||||||||||||||||||||||||
| Lifetime income benefit rider fees | 39,636 | 41,036 | 40,169 | 36,814 | 46,672 | ||||||||||||||||||||||||
| Net investment income | 537,995 | 609,737 | 592,308 | 567,423 | 514,599 | ||||||||||||||||||||||||
| Change in fair value of derivatives | 22,243 | (176,671) | (506,181) | (477,519) | 522,251 | ||||||||||||||||||||||||
| Net realized gains (losses) on investments | 14,411 | (15,860) | (33,272) | (13,127) | (10,478) | ||||||||||||||||||||||||
| Other revenue (a) | 15,148 | 10,989 | 9,195 | 8,589 | 8,026 | ||||||||||||||||||||||||
| Total revenues | 654,454 | 491,853 | 121,395 | 147,799 | 1,109,261 | ||||||||||||||||||||||||
| Benefits and expenses: | |||||||||||||||||||||||||||||
| Traditional life insurance policy benefits and change in future policy benefits | 703 | 424 | 785 | 765 | 624 | ||||||||||||||||||||||||
| Life contingent immediate annuity benefits and change in future policy benefits | 4,960 | 5,283 | 6,306 | 11,873 | 16,351 | ||||||||||||||||||||||||
| Interest sensitive and index product benefits (b) | 160,243 | 121,890 | 234,855 | 372,662 | 574,816 | ||||||||||||||||||||||||
| Amortization of deferred sales inducements (c) | 46,773 | 127,784 | 90,446 | 143,545 | 59,409 | ||||||||||||||||||||||||
| Change in fair value of embedded derivatives (d) | 342,409 | (415,374) | (885,984) | (1,393,649) | 186,802 | ||||||||||||||||||||||||
| Interest expense on notes payable | 10,228 | 8,984 | 6,461 | 6,425 | 6,259 | ||||||||||||||||||||||||
| Interest expense on subordinated debentures | 1,335 | 1,333 | 1,346 | 1,317 | 1,330 | ||||||||||||||||||||||||
| Amortization of deferred policy acquisition costs (c) | 64,338 | 183,182 | 142,354 | 225,426 | 82,999 | ||||||||||||||||||||||||
| Other operating costs and expenses | 62,041 | 59,532 | 59,923 | 58,120 | 66,279 | ||||||||||||||||||||||||
| Total benefits and expenses | 693,030 | 93,038 | (343,508) | (573,516) | 994,869 | ||||||||||||||||||||||||
| Income (loss) before income taxes | (38,576) | 398,815 | 464,903 | 721,315 | 114,392 | ||||||||||||||||||||||||
| Income tax expense (benefit) | (20,478) | 86,214 | 104,327 | 155,092 | 21,255 | ||||||||||||||||||||||||
| Net income (loss) (b)(c)(d) | (18,098) | 312,601 | 360,576 | 566,223 | 93,137 | ||||||||||||||||||||||||
| Less: Net income (loss) available to noncontrolling interests | 361 | 1 | (4) | — | — | ||||||||||||||||||||||||
| Net income (loss) available to American Equity Investment Life Holding Company stockholders (b)(c)(d) | (18,459) | 312,600 | 360,580 | 566,223 | 93,137 | ||||||||||||||||||||||||
| Less: Preferred stock dividends | 10,919 | 10,918 | 10,919 | 10,919 | 10,919 | ||||||||||||||||||||||||
| Net income (loss) available to American Equity Investment Life Holding Company common stockholders (b)(c)(d) | $ | (29,378) | $ | 301,682 | $ | 349,661 | $ | 555,304 | $ | 82,218 | |||||||||||||||||||
| Earnings (loss) per common share | $ | (0.34) | $ | 3.44 | $ | 3.78 | $ | 5.73 | $ | 0.89 | |||||||||||||||||||
| Earnings (loss) per common share - assuming dilution (b)(c)(d) | $ | (0.34) | $ | 3.41 | $ | 3.74 | $ | 5.67 | $ | 0.88 | |||||||||||||||||||
| Weighted average common shares outstanding (thousands): | |||||||||||||||||||||||||||||
| Earnings (loss) per common share | 85,274 | 87,707 | 92,544 | 96,866 | 92,479 | ||||||||||||||||||||||||
| Earnings (loss) per common share - assuming dilution | 86,402 | 88,581 | 93,375 | 97,953 | 93,378 | ||||||||||||||||||||||||
(a)Other revenue consists of $3.5 million in Q4 2022, $3.3 million in Q3 2022, $3.0 million in Q2 2022, $2.9 million in Q1 2022 and $2.8 million in Q4 2021 related to asset liability management fees and $11.7 million in Q4 2022, $7.7 million in Q3 2022, $6.2 million in Q2 2022, $5.7 million in Q1 2022 and $5.3 million in Q4 2021 related to amortization of the deferred gain associated with the cost of reinsurance. The deferred gain, which is recorded in Other liabilities on the Consolidated Balance Sheets, was $607.5 million and $321.7 million at December 31, 2022 and 2021, respectively. The deferred gain consists primarily of a difference between liabilities ceded and assets transferred and the present value of the ceding commissions offset by a reduction in deferred policy acquisition costs associated with the in-force business ceded.
(b)Q3 2022 includes a benefit from the update of assumptions used in determining reserves held for lifetime income benefit riders. The impact decreased interest sensitive and index products by $53.0 million and increased both net income and net income available to common stockholders by $41.6 million and increased earnings per common share - assuming dilution by $0.47 per share.
Page 3
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - December 31, 2022
Unaudited (Dollars in thousands, except per share data)
Q4 2021 includes expense from the update of assumptions used in determining reserves held for lifetime income benefit riders. The impact increased interest sensitive and index products by $10.5 million and decreased both net income and net income available to common stockholders by $8.2 million and decreased earnings per common share - assuming dilution by $0.09 per share.
(c)Q3 2022 includes expense from the update of assumptions which increased amortization of deferred sales inducements and deferred policy acquisition costs by $45.7 million and $56.9 million, respectively, and decreased both net income and net income available to common stockholders by $80.5 million and decreased earnings per common share - assuming dilution by $0.91 per share.
Q4 2021 includes expense from the update of assumptions which increased amortization of deferred sales inducements and deferred policy acquisition costs by $6.3 million and $6.9 million, respectively, and decreased both net income and net income available to common stockholders by $10.4 million and decreased earnings per common share - assuming dilution by $0.11 per share
(d)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.
Q4 2021 includes expense from the update of assumptions used in determining the embedded derivative component of our fixed index annuity policy benefit reserves. The impact increased change in fair value of embedded derivatives by $3.5 million and decreased both net income and net income available to common stockholders by $2.7 million and decreased earnings per common share - assuming dilution by $0.03 per share.
Page 4
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - December 31, 2022
Unaudited (Dollars in thousands, except per share data)
NON-GAAP FINANCIAL MEASURES
In addition to net income (loss) 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 (loss) 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 (loss) available to common stockholders provides information that may enhance an investor’s understanding of our underlying results and profitability.
Reconciliation from Net Income (Loss) Available to Common Stockholders to Non-GAAP Operating Income Available to Common Stockholders and Non-GAAP Operating Income Available to Common Stockholders, Excluding Notable Items
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Net income (loss) available to American Equity Investment Life Holding Company common stockholders | $ | (29,378) | $ | 82,218 | $ | 1,177,269 | $ | 430,317 | |||||||||||||||
| Adjustments to arrive at non-GAAP operating income available to common stockholders: | |||||||||||||||||||||||
| Net realized (gains) losses on financial assets, including credit losses (a) | (15,167) | 7,771 | 36,428 | 10,299 | |||||||||||||||||||
| Change in fair value of derivatives and embedded derivatives (a) | 138,966 | (14,544) | (1,080,356) | (187,290) | |||||||||||||||||||
| Net investment income (a) | 664 | — | 664 | — | |||||||||||||||||||
| Other revenue | 5,969 | — | 5,969 | — | |||||||||||||||||||
| Income taxes | (33,154) | 383 | 222,966 | 37,184 | |||||||||||||||||||
| Non-GAAP operating income available to common stockholders | 67,900 | 75,828 | 362,940 | 290,510 | |||||||||||||||||||
| Impact of excluding notable items (b) | — | 21,235 | (26,572) | 78,036 | |||||||||||||||||||
| Non-GAAP operating income available to common stockholders, excluding notable items | $ | 67,900 | $ | 97,063 | $ | 336,368 | $ | 368,546 | |||||||||||||||
| Per common share - assuming dilution: | |||||||||||||||||||||||
| Net income (loss) available to American Equity Investment Life Holding Company common stockholders | $ | (0.34) | $ | 0.88 | $ | 12.86 | $ | 4.55 | |||||||||||||||
| Adjustments to arrive at non-GAAP operating income available to common stockholders: | |||||||||||||||||||||||
| Net realized (gains) losses on financial assets, including credit losses | (0.18) | 0.08 | 0.40 | 0.11 | |||||||||||||||||||
| Change in fair value of derivatives and embedded derivatives | 1.61 | (0.15) | (11.80) | (1.98) | |||||||||||||||||||
| Net investment income | 0.01 | — | 0.01 | — | |||||||||||||||||||
| Other revenue | 0.07 | — | 0.06 | — | |||||||||||||||||||
| Income taxes | (0.38) | — | 2.43 | 0.39 | |||||||||||||||||||
| Non-GAAP operating income available to common stockholders | 0.79 | 0.81 | 3.96 | 3.07 | |||||||||||||||||||
| Impact of excluding notable items | — | 0.23 | (0.29) | 0.83 | |||||||||||||||||||
| Non-GAAP operating income available to common stockholders, excluding notable items | $ | 0.79 | $ | 1.04 | $ | 3.67 | $ | 3.90 | |||||||||||||||
Page 5
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - December 31, 2022
Unaudited (Dollars in thousands, except per share data)
Notable Items
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Notable items impacting non-GAAP operating income available to common stockholders: | |||||||||||||||||||||||
| Impact of actuarial assumption updates | $ | — | $ | (21,235) | $ | 26,572 | $ | (78,036) | |||||||||||||||
| Total notable items (b) | $ | — | $ | (21,235) | $ | 26,572 | $ | (78,036) | |||||||||||||||
(a)Adjustments to net income (loss) available to common stockholders to arrive at non-GAAP operating income available to common stockholders are presented net of related adjustments to amortization of deferred sales inducements (DSI) and deferred policy acquisition costs (DAC) and accretion of lifetime income benefit rider (LIBR) reserves where applicable.
(b)Notable items reflect the after-tax impact to non-GAAP operating income available to common stockholders for certain items that do not reflect the company's expected ongoing operations. Notable items primarily include the impact from actuarial assumption updates. The presentation of notable items is intended to help investors better understand our results and to evaluate and forecast those results.
NON-GAAP FINANCIAL MEASURES
Summary of Adjustments to Arrive at Non-GAAP Operating Income Available to Common Stockholders
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Net realized (gains) losses on financial assets, including credit losses: | |||||||||||||||||||||||
| Net realized (gains) losses on financial assets, including credit losses | $ | (19,460) | $ | 10,045 | $ | 48,264 | $ | 13,618 | |||||||||||||||
| Amortization of DAC and DSI and accretion of LIBR reserves | 4,293 | (2,274) | (11,836) | (3,319) | |||||||||||||||||||
| Income taxes | 3,261 | (1,670) | (7,832) | (2,214) | |||||||||||||||||||
| $ | (11,906) | $ | 6,101 | $ | 28,596 | $ | 8,085 | ||||||||||||||||
| Change in fair value of derivatives and embedded derivatives: | |||||||||||||||||||||||
| Fixed index annuities | $ | 89,662 | $ | (26,797) | $ | (1,129,326) | $ | (314,403) | |||||||||||||||
| Reinsurance contracts | 78,594 | (2,362) | (439,502) | (2,362) | |||||||||||||||||||
| Interest rate swaps | 1,511 | — | 19,623 | — | |||||||||||||||||||
| Amortization of DAC and DSI | (30,801) | 14,615 | 468,849 | 129,475 | |||||||||||||||||||
| Income taxes | (34,989) | 2,053 | 232,224 | 39,398 | |||||||||||||||||||
| $ | 103,977 | $ | (12,491) | $ | (848,132) | $ | (147,892) | ||||||||||||||||
| Net investment income: | |||||||||||||||||||||||
| Income associated with assets transferred under reinsurance treaty | $ | 1,476 | $ | — | $ | 1,476 | $ | — | |||||||||||||||
| Amortization of DAC and DSI | (812) | — | (812) | — | |||||||||||||||||||
| Income taxes | (143) | — | (143) | — | |||||||||||||||||||
| $ | 521 | $ | — | $ | 521 | $ | — | ||||||||||||||||
| Other revenue: | |||||||||||||||||||||||
| Amortization of deferred fees associated with reinsurance treaties | $ | 5,969 | $ | — | $ | 5,969 | $ | — | |||||||||||||||
| Income taxes | (1,283) | — | (1,283) | — | |||||||||||||||||||
| $ | 4,686 | $ | — | $ | 4,686 | $ | — | ||||||||||||||||
Page 6
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - December 31, 2022
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 Available to Common Stockholders and Non-GAAP Operating Income Available to Common Stockholders, Excluding Notable Items
| Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | |||||||||||||||||||||||||
| Net income (loss) available to American Equity Investment Life Holding Company common stockholders | $ | (29,378) | $ | 301,682 | $ | 349,661 | $ | 555,304 | $ | 82,218 | |||||||||||||||||||
| Adjustments to arrive at non-GAAP operating income available to common stockholders: | |||||||||||||||||||||||||||||
| Net realized (gains) losses on financial assets, including credit losses (a) | (15,167) | 9,738 | 31,572 | 10,285 | 7,771 | ||||||||||||||||||||||||
| Change in fair value of derivatives and embedded derivatives (a) | 138,966 | (248,823) | (367,145) | (603,354) | (14,544) | ||||||||||||||||||||||||
| Net investment income (a) | 664 | — | — | — | — | ||||||||||||||||||||||||
| Other revenue | 5,969 | — | — | — | — | ||||||||||||||||||||||||
| Income taxes | (33,154) | 51,403 | 77,056 | 127,661 | 383 | ||||||||||||||||||||||||
| Non-GAAP operating income available to common stockholders (b)(c) | 67,900 | 114,000 | 91,144 | 89,896 | 75,828 | ||||||||||||||||||||||||
| Impact of excluding notable items (d) | — | (26,572) | — | — | 21,235 | ||||||||||||||||||||||||
| Non-GAAP operating income available to common stockholders, excluding notable items | $ | 67,900 | $ | 87,428 | $ | 91,144 | $ | 89,896 | $ | 97,063 | |||||||||||||||||||
| Per common share - assuming dilution: | |||||||||||||||||||||||||||||
| Net income (loss) available to American Equity Investment Life Holding Company common stockholders | $ | (0.34) | $ | 3.41 | $ | 3.74 | $ | 5.67 | $ | 0.88 | |||||||||||||||||||
| Adjustments to arrive at non-GAAP operating income available to common stockholders: | |||||||||||||||||||||||||||||
| Net realized (gains) losses on financial assets, including credit losses | (0.18) | 0.11 | 0.34 | 0.11 | 0.08 | ||||||||||||||||||||||||
| Change in fair value of derivatives and embedded derivatives | 1.61 | (2.81) | (3.93) | (6.16) | (0.15) | ||||||||||||||||||||||||
| Net investment income | 0.01 | — | — | — | — | ||||||||||||||||||||||||
| Other revenue | 0.07 | — | — | — | — | ||||||||||||||||||||||||
| Income taxes | (0.38) | 0.58 | 0.83 | 1.30 | — | ||||||||||||||||||||||||
| Non-GAAP operating income available to common stockholders (b)(c) | 0.79 | 1.29 | 0.98 | 0.92 | 0.81 | ||||||||||||||||||||||||
| Impact of excluding notable items (d) | — | (0.30) | — | — | 0.23 | ||||||||||||||||||||||||
| Non-GAAP operating income available to common stockholders, excluding notable items | $ | 0.79 | $ | 0.99 | $ | 0.98 | $ | 0.92 | $ | 1.04 | |||||||||||||||||||
Notable Items
| Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | |||||||||||||||||||||||||
| Notable items impacting non-GAAP operating income available to common stockholders: | |||||||||||||||||||||||||||||
| Impact of actuarial assumption updates (b)(c) | $ | — | $ | 26,572 | $ | — | $ | — | $ | (21,235) | |||||||||||||||||||
| Total notable items (d) | $ | — | $ | 26,572 | $ | — | $ | — | $ | (21,235) | |||||||||||||||||||
(a)Adjustments to net income (loss) available to common stockholders to arrive at non-GAAP operating income available to common stockholders are presented net of related adjustments to amortization of deferred sales inducements (DSI) and deferred policy acquisition costs (DAC) and accretion of lifetime income benefit rider (LIBR) reserves where applicable.
(b)Q3 2022 includes a benefit from the update of assumptions used in determining reserves held for lifetime income benefit riders. The impact decreased interest sensitive and index products by $53.0 million and increased both non-GAAP operating income available to common stockholders and non-GAAP operating income available to common stockholders per share - assuming dilution by $41.6 million and $0.47 per share, respectively.
Q4 2021 includes expense from the update of assumptions used in determining reserves held for lifetime income benefit riders. The impact increased interest sensitive and index products by $10.5 million and decreased both non-GAAP operating income available to common stockholders and non-GAAP operating income available to common stockholders per share - assuming dilution by $8.2 million and $0.09 per share, respectively.
(c)Q3 2022 includes expense from the update of assumptions which increased amortization of deferred sales inducements and deferred policy acquisition costs by $8.7 million and $10.5 million, respectively, and decreased non-GAAP operating income available to common stockholders and non-GAAP operating income available to common stockholders per common share - assuming dilution by $15.1 million and $0.17 per share, respectively.
Q4 2021 includes expense from the update of assumptions which increased amortization of deferred sales inducements and deferred policy acquisition costs by $7.7 million and $8.8 million, respectively, and decreased non-GAAP operating income available to common stockholders and non-GAAP operating income available to common stockholders per common share - assuming dilution by $13.0 million and $0.14 per share, respectively.
Page 7
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - December 31, 2022
Unaudited (Dollars in thousands, except per share data)
(d)Notable items reflect the after-tax impact to non-GAAP operating income available to common stockholders for certain items that do not reflect the company's expected ongoing operations. Notable items primarily include the impact from actuarial assumption updates. The presentation of notable items is intended to help investors better understand our results and to evaluate and forecast those results.
NON-GAAP FINANCIAL MEASURES
Summary of Adjustments to Arrive at Non-GAAP Operating Income Available to Common Stockholders
| Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | |||||||||||||||||||||||||
| Net realized (gains) losses on investments | $ | (14,411) | $ | 15,860 | $ | 33,272 | $ | 13,127 | $ | 10,478 | |||||||||||||||||||
| Net investment income | 1,476 | — | — | — | — | ||||||||||||||||||||||||
| Other revenue | 5,969 | — | — | — | — | ||||||||||||||||||||||||
| Change in fair value of derivatives | (172,643) | 14,423 | 415,171 | 546,442 | (215,961) | ||||||||||||||||||||||||
| Increase (decrease) in total revenues | (179,609) | 30,283 | 448,443 | 559,569 | (205,483) | ||||||||||||||||||||||||
| Amortization of deferred sales inducements | 13,417 | (59,647) | (37,179) | (90,361) | (4,506) | ||||||||||||||||||||||||
| Change in fair value of embedded derivatives | (342,409) | 415,374 | 885,984 | 1,393,649 | (186,802) | ||||||||||||||||||||||||
| Interest sensitive and index product benefits (a) | 4,087 | 502 | (2,569) | 143 | 971 | ||||||||||||||||||||||||
| Amortization of deferred policy acquisition costs | 14,864 | (86,861) | (62,220) | (150,793) | (8,373) | ||||||||||||||||||||||||
| Increase (decrease) in total benefits and expenses | (310,041) | 269,368 | 784,016 | 1,152,638 | (198,710) | ||||||||||||||||||||||||
| Increase (decrease) in income (loss) before income taxes | 130,432 | (239,085) | (335,573) | (593,069) | (6,773) | ||||||||||||||||||||||||
| Increase (decrease) in income tax expense benefit | 33,154 | (51,403) | (77,056) | (127,661) | (383) | ||||||||||||||||||||||||
| Increase (decrease) in net income (loss) available to common stockholders | $ | 97,278 | $ | (187,682) | $ | (258,517) | $ | (465,408) | $ | (6,390) | |||||||||||||||||||
(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 - December 31, 2022
Unaudited (Dollars in thousands, except share and per share data)
Capitalization/Book Value per Common Share
| Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | |||||||||||||||||||||||||
| Capitalization: | |||||||||||||||||||||||||||||
| Notes and loan payable | $ | 800,000 | $ | 800,000 | $ | 500,000 | $ | 500,000 | $ | 500,000 | |||||||||||||||||||
| Subordinated debentures payable to subsidiary trusts | 78,753 | 78,668 | 78,584 | 78,502 | 78,421 | ||||||||||||||||||||||||
Total debt | 878,753 | 878,668 | 578,584 | 578,502 | 578,421 | ||||||||||||||||||||||||
| Total stockholders’ equity attributable to American Equity Investment Life Holding Company | 3,169,223 | 3,207,698 | 3,882,217 | 5,171,086 | 6,323,127 | ||||||||||||||||||||||||
| Total capitalization | 4,047,976 | 4,086,366 | 4,460,801 | 5,749,588 | 6,901,548 | ||||||||||||||||||||||||
| Accumulated other comprehensive (income) loss (AOCI) | 2,155,055 | 2,214,388 | 1,387,968 | (63,706) | (1,848,789) | ||||||||||||||||||||||||
Total capitalization excluding AOCI (a) | $ | 6,203,031 | $ | 6,300,754 | $ | 5,848,769 | $ | 5,685,882 | $ | 5,052,759 | |||||||||||||||||||
| Total stockholders’ equity attributable to American Equity Investment Life Holding Company | $ | 3,169,223 | $ | 3,207,698 | $ | 3,882,217 | $ | 5,171,086 | $ | 6,323,127 | |||||||||||||||||||
| Equity available to preferred stockholders (b) | (700,000) | (700,000) | (700,000) | (700,000) | (700,000) | ||||||||||||||||||||||||
Total common stockholders' equity (c) | 2,469,223 | 2,507,698 | 3,182,217 | 4,471,086 | 5,623,127 | ||||||||||||||||||||||||
| Accumulated other comprehensive (income) loss | 2,155,055 | 2,214,388 | 1,387,968 | (63,706) | (1,848,789) | ||||||||||||||||||||||||
Total common stockholders’ equity excluding AOCI (c) | 4,624,278 | 4,722,086 | 4,570,185 | 4,407,380 | 3,774,338 | ||||||||||||||||||||||||
| Net impact of fair value accounting for derivatives and embedded derivatives | (1,150,532) | (1,217,754) | (1,031,257) | (750,229) | (274,981) | ||||||||||||||||||||||||
Total common stockholders’ equity excluding AOCI and the net impact of fair value accounting for derivatives and embedded derivatives (c) | $ | 3,473,746 | $ | 3,504,332 | $ | 3,538,928 | $ | 3,657,151 | $ | 3,499,357 | |||||||||||||||||||
| Common shares outstanding | 84,810,255 | 85,966,505 | 90,168,512 | 95,019,904 | 92,513,517 | ||||||||||||||||||||||||
Book Value per Common Share: (d) | |||||||||||||||||||||||||||||
| Book value per common share | $ | 29.11 | $ | 29.17 | $ | 35.29 | $ | 47.05 | $ | 60.78 | |||||||||||||||||||
| Book value per common share excluding AOCI (c) | $ | 54.52 | $ | 54.93 | $ | 50.68 | $ | 46.38 | $ | 40.80 | |||||||||||||||||||
| Book value per common share excluding AOCI and the net impact of fair value accounting for derivatives and embedded derivatives (c) | $ | 40.96 | $ | 40.76 | $ | 39.25 | $ | 38.49 | $ | 37.83 | |||||||||||||||||||
Debt-to-Capital Ratios: (e) | |||||||||||||||||||||||||||||
| Senior debt / Total capitalization | 12.9 | % | 12.7 | % | 8.5 | % | 8.8 | % | 9.9 | % | |||||||||||||||||||
| Total debt / Total capitalization | 14.2 | % | 13.9 | % | 9.9 | % | 10.2 | % | 11.4 | % | |||||||||||||||||||
(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 derivatives and embedded derivatives, 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 derivatives and embedded derivatives, non-GAAP financial measures, are based on common stockholders' equity excluding AOCI and the net impact of fair value accounting for derivatives and embedded derivatives. Since the net impact of fair value accounting for our derivatives and embedded derivatives fluctuates from quarter to quarter and the most significant impacts relate to fair value accounting for our fixed index annuity business and are 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 derivatives and embedded derivatives 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 derivatives and embedded derivatives 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 - December 31, 2022
Unaudited (Dollars in thousands)
Spread Results
| Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | ||||||||||||||||||||||||||||||||
| 4.34% | 3.73% | Average yield on invested assets | 4.30% | 4.48% | 4.33% | 4.15% | 3.80% | |||||||||||||||||||||||||||||||
| 1.71% | 1.55% | Aggregate cost of money | 1.76% | 1.75% | 1.69% | 1.64% | 1.51% | |||||||||||||||||||||||||||||||
| 2.63% | 2.18% | Aggregate investment spread | 2.54% | 2.73% | 2.64% | 2.51% | 2.29% | |||||||||||||||||||||||||||||||
| Impact of: | ||||||||||||||||||||||||||||||||||||||
| 0.03% | 0.11% | Investment yield - additional prepayment income | 0.01% | 0.03% | 0.05% | 0.03% | 0.12% | |||||||||||||||||||||||||||||||
| 0.01% | 0.07% | Cost of money effect of over hedging | —% | —% | 0.02% | 0.03% | 0.14% | |||||||||||||||||||||||||||||||
| $ | 53,225,871 | $ | 54,750,862 | Weighted average investments | $ | 50,040,228 | $ | 54,378,154 | $ | 54,768,966 | $ | 54,728,239 | $ | 54,407,554 | ||||||||||||||||||||||||
| 49,811,623 | 54,617,968 | Ending investments | 49,811,623 | 54,056,886 | 54,699,422 | 54,838,509 | 54,617,968 | |||||||||||||||||||||||||||||||
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
| Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | ||||||||||||||||||||||||||||||||
| Investment income: | ||||||||||||||||||||||||||||||||||||||
| $ | 2,108,088 | $ | 1,967,496 | Fixed income (a) | $ | 511,077 | $ | 547,326 | $ | 539,382 | $ | 510,303 | $ | 500,577 | ||||||||||||||||||||||||
| 200,349 | 73,990 | Mark-to-market private asset income (a) | 26,816 | 61,671 | 53,816 | 58,046 | 16,596 | |||||||||||||||||||||||||||||||
| $ | 2,308,437 | $ | 2,041,486 | Total non-GAAP investment income (b) | $ | 537,893 | $ | 608,997 | $ | 593,198 | $ | 568,349 | $ | 517,173 | ||||||||||||||||||||||||
| Investment yield: | ||||||||||||||||||||||||||||||||||||||
| 4.08% | 3.62% | Fixed income investment yield | 4.26% | 4.16% | 4.04% | 3.80% | 3.73% | |||||||||||||||||||||||||||||||
| 12.95% | 16.53% | Mark-to-market private asset yield | 5.29% | 13.89% | 15.15% | 22.36% | 9.60% | |||||||||||||||||||||||||||||||
| 4.34% | 3.73% | Total investment yield | 4.30% | 4.48% | 4.33% | 4.15% | 3.80% | |||||||||||||||||||||||||||||||
| Weighted average investments: | ||||||||||||||||||||||||||||||||||||||
| $ | 51,678,469 | $ | 54,303,353 | Fixed income investments | $ | 48,012,311 | $ | 52,602,319 | $ | 53,347,874 | $ | 53,689,782 | $ | 53,716,356 | ||||||||||||||||||||||||
| 1,547,402 | 447,509 | Mark-to-market private assets | 2,027,917 | 1,775,835 | 1,421,092 | 1,038,457 | 691,199 | |||||||||||||||||||||||||||||||
| $ | 53,225,871 | $ | 54,750,862 | Total weighted average investments | $ | 50,040,228 | $ | 54,378,154 | $ | 54,768,966 | $ | 54,728,239 | $ | 54,407,555 | ||||||||||||||||||||||||
(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 Parent Company and tax exempt investment income was $1,578 thousand in Q4 2022, $740 thousand in Q3 2022, $890 thousand in Q2 2022, $926 thousand in Q1 2022, and $2,574 thousand in Q4 2021.
Page 10
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - December 31, 2022
Unaudited (Dollars in thousands, except per share data)
Summary of Cost of Money for Deferred Annuities
| Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | ||||||||||||||||||||||||||||||||
Included in interest sensitive and index product benefits: | ||||||||||||||||||||||||||||||||||||||
| $ | 305,292 | $ | 1,977,888 | Index credits | $ | 3,861 | $ | 4,648 | $ | 72,398 | $ | 224,385 | $ | 442,568 | ||||||||||||||||||||||||
| 240,889 | 245,892 | Interest credited | 56,402 | 62,383 | 60,770 | 61,334 | 63,974 | |||||||||||||||||||||||||||||||
Included in change in fair value of derivatives: | ||||||||||||||||||||||||||||||||||||||
| (312,133) | (2,019,477) | Proceeds received at option expiration | (4,061) | (4,865) | (75,115) | (228,092) | (459,982) | |||||||||||||||||||||||||||||||
| 647,132 | 630,015 | Pro rata amortization of option cost | 154,463 | 167,197 | 165,375 | 160,097 | 153,399 | |||||||||||||||||||||||||||||||
| $ | 881,180 | $ | 834,318 | Cost of money for deferred annuities | $ | 210,665 | $ | 229,363 | $ | 223,428 | $ | 217,724 | $ | 199,959 | ||||||||||||||||||||||||
| $ | 51,558,865 | $ | 53,681,684 | Weighted average liability balance outstanding | $ | 47,802,219 | $ | 52,337,208 | $ | 52,940,739 | $ | 53,155,293 | $ | 53,064,893 | ||||||||||||||||||||||||
Annuity Account Balance Rollforward
| Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | ||||||||||||||||||||||||||||||||
| $ | 53,191,277 | $ | 54,056,725 | Account balances at beginning of period | $ | 51,913,689 | $ | 52,762,558 | $ | 53,119,291 | $ | 53,191,277 | $ | 52,938,493 | ||||||||||||||||||||||||
| (4,068,761) | (4,279,394) | Reserves ceded - in-force | (3,810,982) | (257,779) | — | — | — | |||||||||||||||||||||||||||||||
| 49,122,516 | 49,777,331 | Account balance at beginning of period, net of reinsurance ceded | 48,102,707 | 52,504,779 | 53,119,291 | 53,191,277 | 52,938,493 | |||||||||||||||||||||||||||||||
| 2,347,315 | 5,485,205 | Net deposits | 613,084 | 496,940 | 562,366 | 674,925 | 815,890 | |||||||||||||||||||||||||||||||
| 107,691 | 95,160 | Premium bonuses | 33,617 | 27,385 | 23,547 | 23,142 | 23,476 | |||||||||||||||||||||||||||||||
| 546,181 | 2,223,780 | Fixed interest credited and index credits | 60,263 | 67,031 | 133,168 | 285,719 | 506,542 | |||||||||||||||||||||||||||||||
| (72,699) | (67,657) | Surrender charges | (22,030) | (19,783) | (15,345) | (15,541) | (13,638) | |||||||||||||||||||||||||||||||
| (157,655) | (174,974) | Lifetime income benefit rider fees | (39,636) | (41,036) | (40,169) | (36,814) | (46,672) | |||||||||||||||||||||||||||||||
| (4,388,734) | (4,147,568) | Surrenders, withdrawals, deaths, etc. | (1,243,390) | (1,121,627) | (1,020,300) | (1,003,417) | (1,032,814) | |||||||||||||||||||||||||||||||
| $ | 47,504,615 | $ | 53,191,277 | Account balances at end of period | $ | 47,504,615 | $ | 51,913,689 | $ | 52,762,558 | $ | 53,119,291 | $ | 53,191,277 | ||||||||||||||||||||||||
| $ | 2,243,215 | $ | 2,311,842 | Lifetime income benefit rider reserves, excluding unrealized gain/loss adjustment | $ | 2,243,215 | $ | 2,542,651 | $ | 2,491,096 | $ | 2,396,587 | $ | 2,311,842 | ||||||||||||||||||||||||
Page 11
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - December 31, 2022
Unaudited (Dollars in thousands, except per share data)
Account Values Subject to Recurring Fees Under Reinsurance Agreements
| Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | ||||||||||||||||||||||||||||||||
| $ | 4,660,690 | $ | — | Account value of business ceded subject to fee income at beginning of period | $ | 5,612,098 | $ | 5,065,538 | $ | 4,859,360 | $ | 4,660,690 | $ | 4,459,858 | ||||||||||||||||||||||||
| 4,068,761 | 4,279,394 | In-force account value ceded subject to fee income | 3,810,982 | 257,779 | — | — | — | |||||||||||||||||||||||||||||||
| 1,045,600 | 381,296 | Premiums on business ceded subject to fee income | 351,971 | 288,781 | 206,178 | 198,670 | 200,832 | |||||||||||||||||||||||||||||||
| (132,715) | — | Disbursements on business ceded subject to fee income | (132,715) | — | — | — | — | |||||||||||||||||||||||||||||||
| $ | 9,642,336 | $ | 4,660,690 | Account value of business ceded subject to fee income at end of period | $ | 9,642,336 | $ | 5,612,098 | $ | 5,065,538 | $ | 4,859,360 | $ | 4,660,690 | ||||||||||||||||||||||||
| $ | 50,488 | $ | 15,670 | Non-GAAP operating revenue associated with recurring fees (a) | $ | 21,117 | $ | 10,988 | $ | 9,196 | $ | 8,589 | $ | 8,026 | ||||||||||||||||||||||||
(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 5 for the reconciliation of Net Income to Non-GAAP Operating Income and page 6 for the summary of adjustments to arrive at Non-GAAP Operating Income
Annuity Deposits by Product Type
| Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | ||||||||||||||||||||||||||||||||
| American Equity Life: | ||||||||||||||||||||||||||||||||||||||
| $ | 2,692,141 | $ | 2,753,479 | Fixed index annuities | $ | 637,021 | $ | 627,444 | $ | 671,696 | $ | 755,980 | $ | 806,238 | ||||||||||||||||||||||||
| 5,329 | 6,133 | Annual reset fixed rate annuities | 1,856 | 1,271 | 1,140 | 1,062 | 848 | |||||||||||||||||||||||||||||||
| 56,511 | 855,702 | Multi-year fixed rate annuities | 49,216 | 4,465 | 485 | 2,345 | 6,640 | |||||||||||||||||||||||||||||||
| 18,935 | 59,816 | Single premium immediate annuities | 494 | 1,915 | 3,073 | 13,453 | 14,145 | |||||||||||||||||||||||||||||||
| 2,772,916 | 3,675,130 | 688,587 | 635,095 | 676,394 | 772,840 | 827,871 | ||||||||||||||||||||||||||||||||
| Eagle Life: | ||||||||||||||||||||||||||||||||||||||
| 479,279 | 697,068 | Fixed index annuities | 145,772 | 102,379 | 104,374 | 126,754 | 176,101 | |||||||||||||||||||||||||||||||
| 380 | 350 | Annual reset fixed rate annuities | 230 | 143 | — | 7 | 13 | |||||||||||||||||||||||||||||||
| 82,581 | 1,597,292 | Multi-year fixed rate annuities | 65,434 | 14,684 | 123 | 2,340 | 40,901 | |||||||||||||||||||||||||||||||
| 562,240 | 2,294,710 | 211,436 | 117,206 | 104,497 | 129,101 | 217,015 | ||||||||||||||||||||||||||||||||
| Consolidated: | ||||||||||||||||||||||||||||||||||||||
| 3,171,420 | 3,450,547 | Fixed index annuities | 782,793 | 729,823 | 776,070 | 882,734 | 982,339 | |||||||||||||||||||||||||||||||
| 5,709 | 6,483 | Annual reset fixed rate annuities | 2,086 | 1,414 | 1,140 | 1,069 | 861 | |||||||||||||||||||||||||||||||
| 139,092 | 2,452,994 | Multi-year fixed rate annuities | 114,650 | 19,149 | 608 | 4,685 | 47,541 | |||||||||||||||||||||||||||||||
| 18,935 | 59,816 | Single premium immediate annuities | 494 | 1,915 | 3,073 | 13,453 | 14,145 | |||||||||||||||||||||||||||||||
| 3,335,156 | 5,969,840 | Total before coinsurance ceded | 900,023 | 752,301 | 780,891 | 901,941 | 1,044,886 | |||||||||||||||||||||||||||||||
| 968,906 | 424,819 | Coinsurance ceded | 286,445 | 253,446 | 215,452 | 213,563 | 214,851 | |||||||||||||||||||||||||||||||
| $ | 2,366,250 | $ | 5,545,021 | Net after coinsurance ceded | $ | 613,578 | $ | 498,855 | $ | 565,439 | $ | 688,378 | $ | 830,035 | ||||||||||||||||||||||||
Page 12
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - December 31, 2022
Unaudited (Dollars in thousands, except per share data)
Surrender Charge Protection and Account Values by Product Type
Annuity Surrender Charges and Net (of Coinsurance) Account Values at December 31, 2022:
| Surrender Charge | Net Account Value | |||||||||||||||||||||||||||||||
| Product Type | Avg. Years At Issue | Avg. Years Remaining | Avg. % Remaining | Dollars in Thousands | % | |||||||||||||||||||||||||||
| Fixed Index Annuities | 12.5 | 5.0 | 8.1% | $ | 41,992,352 | 88.4 | % | |||||||||||||||||||||||||
| Annual Reset Fixed Rate Annuities | 7.4 | 1.7 | 3.4% | 1,247,151 | 2.6 | % | ||||||||||||||||||||||||||
| Multi-Year Fixed Rate Annuities | 3.9 | 1.7 | 7.4% | 4,265,112 | 9.0 | % | ||||||||||||||||||||||||||
| Total | 11.6 | 4.6 | 7.9% | $ | 47,504,615 | 100.0 | % | |||||||||||||||||||||||||
Annuity Liability Characteristics
| Surrender Charge Percentages: | Fixed Annuities Account Value | Fixed Index Annuities Account Value | |||||||||
| No surrender charge | $ | 898,320 | $ | 3,616,403 | |||||||
| 0.0% < 2.0% | 41,672 | 2,062,990 | |||||||||
| 2.0% < 3.0% | 65,004 | 4,321,344 | |||||||||
| 3.0% < 4.0% | 68,626 | 982,289 | |||||||||
| 4.0% < 5.0% | 6,436 | 2,772,450 | |||||||||
| 5.0% < 6.0% | 36,179 | 2,608,334 | |||||||||
| 6.0% < 7.0% | 71,838 | 2,548,367 | |||||||||
| 7.0% < 8.0% | 1,420,984 | 2,812,800 | |||||||||
| 8.0% < 9.0% | 2,547,819 | 2,219,917 | |||||||||
| 9.0% < 10.0% | 112,829 | 3,337,952 | |||||||||
| 10.0% or greater | 242,556 | 14,709,506 | |||||||||
| $ | 5,512,263 | $ | 41,992,352 | ||||||||
Page 13
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - December 31, 2022
Unaudited (Dollars in thousands)
| Surrender Charge Expiration By Year: | Fixed and Fixed Index Annuities Account Value | Weighted Average Surrender Charge | |||||||||
| Out of Surrender Charge | $ | 4,514,723 | 0.00 | % | |||||||
| 2023 | 4,336,011 | 3.03 | % | ||||||||
| 2024 | 3,919,595 | 5.38 | % | ||||||||
| 2025 | 5,453,784 | 4.44 | % | ||||||||
| 2026 | 4,892,384 | 5.96 | % | ||||||||
| 2027 | 4,283,172 | 7.81 | % | ||||||||
| 2028 | 3,714,323 | 9.00 | % | ||||||||
| 2029 | 4,143,581 | 10.42 | % | ||||||||
| 2030 | 2,775,742 | 12.89 | % | ||||||||
| 2031 | 3,900,824 | 13.80 | % | ||||||||
| 2032 | 3,060,964 | 14.38 | % | ||||||||
| 2033 | 1,068,172 | 17.39 | % | ||||||||
| 2034 | 676,085 | 18.03 | % | ||||||||
| 2035 | 350,543 | 18.50 | % | ||||||||
| 2036 | 196,242 | 18.99 | % | ||||||||
| 2037 | 113,435 | 19.50 | % | ||||||||
| 2038 | 105,035 | 20.00 | % | ||||||||
| $ | 47,504,615 | 7.92 | % | ||||||||
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 December 31, 2022 for the $11.9 billion of account value of fixed annuities and funds allocated to the fixed rate strategy for fixed index annuities would decrease by 0.21%.
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 $35.6 billion of account value allocated to index strategies, the cost of options would decrease by 1.03% based upon prices of options for the week ended January 1, 2023.
Page 14
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - December 31, 2022
Unaudited (Dollars in thousands)
Summary of Invested Assets
| December 31, 2022 | December 31, 2021 | ||||||||||||||||||||||
| Carrying Amount | Percent | Carrying Amount | Percent | ||||||||||||||||||||
| Fixed maturity securities: | |||||||||||||||||||||||
| U.S. Government and agencies | $ | 169,071 | 0.4 | % | $ | 1,078,746 | 1.9 | % | |||||||||||||||
| States, municipalities and territories | 3,822,943 | 8.5 | % | 3,758,761 | 6.5 | % | |||||||||||||||||
| Foreign corporate securities and foreign governments | 616,938 | 1.4 | % | 375,097 | 0.6 | % | |||||||||||||||||
| Corporate securities | 20,201,774 | 44.8 | % | 32,631,189 | 57.0 | % | |||||||||||||||||
| Residential mortgage backed securities | 1,366,927 | 3.0 | % | 1,125,049 | 2.0 | % | |||||||||||||||||
| Commercial mortgage backed securities | 3,447,075 | 7.6 | % | 4,682,900 | 8.2 | % | |||||||||||||||||
| Other asset backed securities | 5,155,254 | 11.4 | % | 5,146,567 | 9.0 | % | |||||||||||||||||
| Total fixed maturity securities | 34,779,982 | 77.1 | % | 48,798,309 | 85.2 | % | |||||||||||||||||
| Mortgage loans on real estate | 6,778,977 | 15.0 | % | 5,650,480 | 9.9 | % | |||||||||||||||||
| Real estate investments | 1,056,063 | 2.3 | % | 337,939 | 0.6 | % | |||||||||||||||||
| Limited partnerships and limited liability companies | 1,266,779 | 2.8 | % | 520,120 | 0.9 | % | |||||||||||||||||
| Derivative instruments | 431,727 | 1.0 | % | 1,277,480 | 2.2 | % | |||||||||||||||||
| Other investments | 829,900 | 1.8 | % | 690,344 | 1.2 | % | |||||||||||||||||
| Total investments, net of modified coinsurance investments | 45,143,428 | 100.0 | % | 57,274,672 | 100.0 | % | |||||||||||||||||
| Coinsurance investments (a) | 6,181,870 | 3,101,832 | |||||||||||||||||||||
| Total investments | $ | 51,325,298 | $ | 60,376,504 | |||||||||||||||||||
(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 - December 31, 2022
| NAIC Designation | Amortized Cost | Carrying Amount | Percent | Rating Agency Rating | Amortized Cost | Carrying Amount | Percent | |||||||||||||||||||||||||||||||
| 1 | $ | 24,466,961 | $ | 21,752,775 | 62.5 | % | Aaa/Aa/A | $ | 24,462,459 | $ | 21,723,282 | 62.5 | % | |||||||||||||||||||||||||
| 2 | 14,185,506 | 12,398,001 | 35.7 | % | Baa | 14,228,490 | 12,434,302 | 35.7 | % | |||||||||||||||||||||||||||||
| 3 | 562,190 | 490,198 | 1.4 | % | Ba | 554,605 | 485,166 | 1.4 | % | |||||||||||||||||||||||||||||
| 4 | 109,409 | 91,495 | 0.3 | % | B | 94,185 | 79,058 | 0.2 | % | |||||||||||||||||||||||||||||
| 5 | 61,721 | 36,738 | 0.1 | % | Caa | 20,020 | 18,540 | 0.1 | % | |||||||||||||||||||||||||||||
| 6 | 14,636 | 10,775 | — | % | Ca and lower | 40,664 | 39,634 | 0.1 | % | |||||||||||||||||||||||||||||
| 39,400,423 | 34,779,982 | 100.0 | % | 39,400,423 | 34,779,982 | 100.0 | % | |||||||||||||||||||||||||||||||
| Coinsurance investments (a) | 5,465,596 | 5,024,635 | Coinsurance investments (a) | 5,465,596 | 5,024,635 | |||||||||||||||||||||||||||||||||
| $ | 44,866,019 | $ | 39,804,617 | $ | 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 15
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - December 31, 2022
Unaudited (Dollars in thousands)
Watch List Securities - December 31, 2022
| General Description (a) | Amortized Cost | Allowance for Credit Losses | Amortized Cost, Net of Allowance | Net Unrealized Losses, Net of Allowance | Fair Value | |||||||||||||||||||||||||||
| States, municipalities and territories | $ | 20,657 | $ | — | $ | 20,657 | $ | (3,344) | $ | 17,313 | ||||||||||||||||||||||
| Corporate securities - Public securities | 20,860 | — | 20,860 | (1,050) | 19,810 | |||||||||||||||||||||||||||
| Corporate securities - Private placement securities | 10,646 | (3,214) | 7,432 | — | 7,432 | |||||||||||||||||||||||||||
| Residential mortgage backed securities | 25,095 | (133) | 24,962 | (2,954) | 22,008 | |||||||||||||||||||||||||||
| Commercial mortgage backed securities | 41,899 | — | 41,899 | (2,752) | 39,147 | |||||||||||||||||||||||||||
| Other asset backed securities | 2,314 | — | 2,314 | — | 2,314 | |||||||||||||||||||||||||||
| Collateralized loan obligations | 103,907 | — | 103,907 | (21,239) | 82,668 | |||||||||||||||||||||||||||
| $ | 225,378 | $ | (3,347) | $ | 222,031 | $ | (31,339) | $ | 190,692 | |||||||||||||||||||||||
(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 16
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - December 31, 2022
Unaudited (Dollars in thousands)
Fixed Maturity Securities by Sector
| December 31, 2022 | December 31, 2021 | ||||||||||||||||||||||
| Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||||||||||
| Available for sale: | |||||||||||||||||||||||
| U.S. Government and agencies | $ | 173,638 | $ | 169,071 | $ | 1,046,029 | $ | 1,078,746 | |||||||||||||||
| States, municipalities and territories | 4,356,191 | 3,822,943 | 3,325,468 | 3,758,761 | |||||||||||||||||||
| Foreign corporate securities and foreign governments | 680,263 | 616,938 | 353,198 | 375,097 | |||||||||||||||||||
| Corporate securities: | |||||||||||||||||||||||
| Capital goods | 1,601,113 | 1,395,595 | 2,329,169 | 2,666,627 | |||||||||||||||||||
| Consumer discretionary | 5,086,479 | 4,320,219 | 6,132,199 | 6,946,585 | |||||||||||||||||||
| Energy | 1,219,370 | 1,111,891 | 1,968,576 | 2,214,513 | |||||||||||||||||||
| Financials | 6,467,052 | 5,634,229 | 6,998,286 | 7,714,869 | |||||||||||||||||||
| Government non-guaranteed | 202,740 | 179,440 | 471,015 | 541,233 | |||||||||||||||||||
| Industrials | 166,061 | 138,999 | 377,631 | 425,201 | |||||||||||||||||||
| Information technology | 1,344,461 | 1,160,067 | 1,718,596 | 1,918,197 | |||||||||||||||||||
| Materials | 1,169,188 | 1,021,288 | 1,672,144 | 1,875,276 | |||||||||||||||||||
| Telecommunications | 1,306,495 | 1,090,868 | 1,569,176 | 1,756,741 | |||||||||||||||||||
| Transportation | 1,100,681 | 975,393 | 1,312,909 | 1,454,391 | |||||||||||||||||||
| Utilities | 3,620,946 | 3,115,520 | 4,156,578 | 4,716,397 | |||||||||||||||||||
| Other | 58,184 | 58,265 | 350,592 | 401,159 | |||||||||||||||||||
| Residential mortgage backed securities: | |||||||||||||||||||||||
| Government agency | 806,999 | 754,349 | 455,136 | 500,698 | |||||||||||||||||||
| Prime | 387,838 | 334,613 | 537,559 | 544,084 | |||||||||||||||||||
| Alt-A | 54,910 | 58,091 | 59,129 | 75,361 | |||||||||||||||||||
| Non-qualified mortgage | 169,847 | 157,960 | — | — | |||||||||||||||||||
| Other | 62,235 | 61,914 | 4,954 | 4,906 | |||||||||||||||||||
| Commercial mortgage backed securities: | |||||||||||||||||||||||
| Government agency | 170,307 | 157,903 | 380,339 | 415,026 | |||||||||||||||||||
| Non-agency | 3,668,300 | 3,289,172 | 4,169,970 | 4,267,874 | |||||||||||||||||||
| Other asset backed securities: | |||||||||||||||||||||||
| Auto | 44,450 | 41,896 | 218,106 | 222,364 | |||||||||||||||||||
| Consumer discretionary | 122,068 | 118,843 | — | — | |||||||||||||||||||
| Financials | 283,238 | 252,493 | 4,441 | 4,887 | |||||||||||||||||||
| Collateralized loan obligations | 4,071,929 | 3,775,347 | 3,789,984 | 3,745,452 | |||||||||||||||||||
| Other | 1,005,440 | 966,675 | 1,088,751 | 1,173,864 | |||||||||||||||||||
| 39,400,423 | 34,779,982 | 44,489,935 | 48,798,309 | ||||||||||||||||||||
| Coinsurance investments (a) | 5,465,596 | 5,024,635 | 2,509,248 | 2,507,634 | |||||||||||||||||||
| $ | 44,866,019 | $ | 39,804,617 | $ | 46,999,183 | $ | 51,305,943 | ||||||||||||||||
(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 17
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - December 31, 2022
Unaudited (Dollars in thousands)
Mortgage Loans on Real Estate
| December 31, 2022 | December 31, 2021 | ||||||||||||||||||||||
| Principal | Percent | Principal | Percent | ||||||||||||||||||||
| Property type distribution | |||||||||||||||||||||||
| Commercial mortgage loans: | |||||||||||||||||||||||
| Office | $ | 267,502 | 4.0 | % | $ | 287,557 | 5.1 | % | |||||||||||||||
| Medical Office | 10,265 | 0.1 | % | 10,827 | 0.2 | % | |||||||||||||||||
| Retail | 878,352 | 13.0 | % | 1,016,101 | 18.0 | % | |||||||||||||||||
| Industrial/Warehouse | 853,215 | 12.6 | % | 924,779 | 16.3 | % | |||||||||||||||||
| Apartment | 893,910 | 13.2 | % | 854,580 | 15.1 | % | |||||||||||||||||
| Hotel | 285,271 | 4.2 | % | 283,500 | 5.0 | % | |||||||||||||||||
| Mixed Use/Other | 200,756 | 3.0 | % | 217,970 | 3.9 | % | |||||||||||||||||
| Agricultural mortgage loans | 567,630 | 8.4 | % | 408,135 | 7.2 | % | |||||||||||||||||
| Residential mortgage loans | 2,807,652 | 41.5 | % | 1,652,910 | 29.2 | % | |||||||||||||||||
| 6,764,553 | 100.0 | % | 5,656,359 | 100.0 | % | ||||||||||||||||||
| Coinsurance investments (a) | 171,633 | 37,817 | |||||||||||||||||||||
| $ | 6,936,186 | $ | 5,694,176 | ||||||||||||||||||||
| Commercial | Agricultural | ||||||||||||||||||||||
| Amortized Cost | Average LTV | Amortized Cost | Average LTV | ||||||||||||||||||||
| 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% | ||||||||||||||||||
| As of December 31, 2021: | |||||||||||||||||||||||
| Debt Service Coverage Ratio: | |||||||||||||||||||||||
| Greater than or equal to 1.5 | $ | 2,491,464 | 55% | $ | 180,113 | 49% | |||||||||||||||||
| Greater than or equal to 1.2 and less than 1.5 | 555,055 | 65% | 202,031 | 48% | |||||||||||||||||||
| Greater than or equal to 1.0 and less than 1.2 | 466,517 | 53% | 16,304 | 44% | |||||||||||||||||||
| Less than 1.0 | 77,948 | 65% | 8,551 | 59% | |||||||||||||||||||
| 3,590,984 | 56% | 406,999 | 48% | ||||||||||||||||||||
| Coinsurance investments (a) | 37,518 | 51% | — | —% | |||||||||||||||||||
| $ | 3,628,502 | 56% | $ | 406,999 | 48% | ||||||||||||||||||
(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 - December 31, 2022
Unaudited (Dollars in thousands)
| 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 | ||||||||||||||||
| December 31, 2021 | |||||||||||||||||||||||
| Commercial | Agricultural | Residential | Total | ||||||||||||||||||||
| Credit exposure - by payment activity | |||||||||||||||||||||||
| Performing | $ | 3,595,314 | $ | 408,135 | $ | 1,645,905 | $ | 5,649,354 | |||||||||||||||
| In workout | — | — | — | — | |||||||||||||||||||
| Delinquent | — | — | 7,005 | 7,005 | |||||||||||||||||||
| Principal outstanding | 3,595,314 | 408,135 | 1,652,910 | 5,656,359 | |||||||||||||||||||
| Unamortized discounts and premiums, net | — | — | 22,143 | 22,143 | |||||||||||||||||||
| Deferred fees and costs, net | (4,330) | (1,136) | 1,468 | (3,998) | |||||||||||||||||||
| Amortized cost | 3,590,984 | 406,999 | 1,676,521 | 5,674,504 | |||||||||||||||||||
| Valuation allowance | (17,926) | (519) | (5,579) | (24,024) | |||||||||||||||||||
| Carrying value | 3,573,058 | 406,480 | 1,670,942 | 5,650,480 | |||||||||||||||||||
| Coinsurance investments (a) | 37,518 | — | — | 37,518 | |||||||||||||||||||
| $ | 3,610,576 | $ | 406,480 | $ | 1,670,942 | $ | 5,687,998 | ||||||||||||||||
(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 - December 31, 2022
Shareholder Information
| A.M. Best | S&P | Fitch | |||||||||||||||
| Financial Strength Ratings | |||||||||||||||||
| American Equity Investment Life Insurance Company | A- (stable) | A- (stable) | A- (stable) | ||||||||||||||
| American Equity Investment Life Insurance Company of New York | A- (stable) | A- (stable) | A- (stable) | ||||||||||||||
| Eagle Life Insurance Company | A- (stable) | A- (stable) | A- (stable) | ||||||||||||||
| Credit Ratings | |||||||||||||||||
| American Equity Investment Life Holding Company | bbb- (stable) | BBB- | 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, Vice President-Investor Relations
(515) 273-3763, [email protected]
Common Stock and Dividend Information:
New York Stock Exchange symbol: “AEL”
| High | Low | Close | Dividend Declared | ||||||||||||||||||||
| 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 | |||||||||||||||||||
| 2020 | |||||||||||||||||||||||
| First Quarter | $34.16 | $9.07 | $18.80 | $0.00 | |||||||||||||||||||
| Second Quarter | $27.09 | $14.76 | $24.71 | $0.00 | |||||||||||||||||||
| Third Quarter | $27.32 | $19.06 | $21.99 | $0.00 | |||||||||||||||||||
| Fourth Quarter | $34.25 | $22.37 | $27.66 | $0.32 | |||||||||||||||||||
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, Vice President-Investor Relations, at (515) 273-3763 or by visiting our website at www.american-equity.com.
Page 20
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - December 31, 2022
Research Analyst Coverage
Erik Bass
Autonomous Research US LP
(646) 561-6248
Andrew Kligerman
Credit Suisse Securities
(919) 593-7737
Thomas Gallagher
Evercore ISI
(212) 446-9439
Daniel Bergman
Jefferies
(617) 345-8688
Pablo Singzon II
JP Morgan
(212) 622-2295
Ryan Krueger
Keefe, Bruyette & Woods
(860) 722-5930
Nigel Dally
Morgan Stanley Research
(212) 761-4132
John Barnidge
Piper Sandler & Co.
(312) 281-3412
Wilma Burdis
Raymond James & Associates, Inc.
(727) 567-9371
Mark A. Dwelle
RBC Capital Markets, LLC
(804) 782-4008
Mark Hughes
Truist Securities
(615) 748-4422
Page 21