AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY Exhibit 99.2
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement
December 31, 2020
A. | Financial Highlights | |
Condensed Consolidated Balance Sheets | ||
Consolidated Statements of Operations | ||
Quarterly Summary - Most Recent 5 Quarters | ||
Non-GAAP Financial Measures | ||
Reconciliation from Net Income (Loss) Available to Common Stockholders to Non-GAAP | 5 | |
Operating Income Available to Common Stockholders | ||
Summary of Adjustments to Arrive at Non-GAAP Operating Income Available to | 6 | |
Common Stockholders | ||
Quarterly Summary - Reconciliation from Net Income (Loss) Available to Common | 7 | |
Stockholders to Non-GAAP Operating Income (Loss) Available to Common Stockholders | ||
Quarterly Summary - Summary of Adjustments to Arrive at Non-GAAP Operating | 8 | |
Income (Loss) Available to Common Stockholders | ||
Capitalization/Book Value per Common Share | 9 | |
Spread Results | 10 | |
B. | Product Summary | |
Summary of Cost of Money for Deferred Annuities | 10 | |
Annuity Account Balance Rollforward | 10 | |
Annuity Deposits by Product Type | 11 | |
Surrender Charge Protection and Account Values by Product Type | 11 | |
Annuity Liability Characteristics | 12 | |
C. | Investment Summary | |
Summary of Invested Assets | 15 | |
Credit Quality of Fixed Maturity Securities | 15 | |
Watch List Securities | 15 | |
Fixed Maturity Securities by Sector | 16 | |
Mortgage Loans on Real Estate | 17 | |
D. | Shareholder Information | 19 |
E. | Research Analyst Coverage | 20 |
1 2 3
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, 2020
December 31, 2019
Assets
Investments:
$
47,538,893 $ 51,580,490
Fixed maturity securities, available for sale, at fair value Mortgage loans on real estate
4,165,489 3,448,793
1,310,954 1,355,989
Derivative instruments Other investments
590,078
492,301
Total investments
53,605,414 56,877,573
9,095,522 2,293,392
1,328,857 1,966,723
Cash and cash equivalents Coinsurance deposits Accrued investment income Deferred policy acquisition costs Deferred sales inducements Income taxes recoverable Other assets
4,844,927 5,115,013
398,082
472,826
2,045,812 2,923,454
862 70,198
Total assets
- 47,571
$
71,389,674
$ 69,696,552
Liabilities and Stockholders' Equity
Liabilities:
Policy benefit reserves
$
61,768,246
$ 61,893,945
240,904 256,105
Other policy funds and contract claims Notes payable
495,668 495,116
78,112 157,265
Subordinated debentures Deferred income taxes Income taxes payable Other liabilities
564,003 177,897
-
429
1,668,025 2,145,676
Total liabilities
64,814,958 65,126,433
Stockholders' equity:
1,681,127 1,212,311
Preferred stock, Series A Preferred stock, Series B Common stock Additional paid-in capital
16 12 95,721
16 - 91,107
Accumulated other comprehensive income Retained earnings
2,429,285 1,497,921
2,368,555 1,768,764
Total stockholders' equity
6,574,716 4,570,119
Total liabilities and stockholders' equity
$
71,389,674
$ 69,696,552
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
December 31,Year Ended December 31,2020
2019
2020
2019
Revenues:
65,963
62,722
251,227 240,035
Premiums and other considerations Annuity product charges
Net investment income
$
10,279 $
8,846 $
39,382 $ 23,534
521,725
588,217
2,182,078
2,307,635
Change in fair value of derivatives
443,867
466,434
34,666 906,906
Net realized gains (losses) on investments
(12,135)
7,029
(80,680) 6,962
Other than temporary impairment (OTTI) losses on investments:
Total OTTI losses
- - - - 1,029,699
(17,412)
- -
(18,511)
Portion of OTTI losses recognized from other comprehensive income
(215)
(2,024) (2,001)
Net OTTI losses recognized in operations Loss on extinguishment of debt
Total revenues
- (17,412) (2,001) 1,113,835
- (18,726)
2,424,649
3,464,345
Benefits and expenses:
Insurance policy benefits and change in future policy benefits Interest sensitive and index product benefits
Amortization of deferred sales inducements Change in fair value of embedded derivatives Interest expense on notes payable
325,912
13,066
22,768
399,514
11,553
91,260
49,742 1,543,270 438,164
35,418 1,287,576 88,585
568,836
147,879
(1,286,787) 1,454,042
6,391
6,384
25,552 25,525
Interest expense on subordinated debentures Amortization of deferred policy acquisition costs Other operating costs and expenses
1,325
3,651
5,557 15,764
26,145
133,573
649,554 87,717
55,321
Total benefits and expenses
1,019,764
833,008
39,194
183,636 1,608,688
154,153 3,148,780
Income before income taxes Income tax expense
9,935
280,827
815,961 315,565
1,193
60,677
144,501 69,475
Net income
8,742
220,150 -
671,460 246,090
Less: Preferred stock dividends
15,004
33,515
-
Net income (loss) available to common stockholders
$
(6,262)
$
220,150
$
637,945
$ 246,090
Earnings (loss) per common share
6.93 $ 2.70
Earnings (loss) per common share - assuming dilution
$ $
(0.07) (0.07)
$ $
2.41 2.40
$ $
6.90 $ 2.68
Weighted average common shares outstanding (in thousands):
Earnings (loss) per common share
92,055 91,139
Earnings (loss) per common share - assuming dilution
92,904 93,352
91,314 91,883
92,392 91,782
Quarterly Summary - Most Recent 5 Quarters
Q4 2020
Q3 2020
Q2 2020
Q1 2020
Q4 2019
Revenues:
Traditional life insurance premiums
$
701 $
708 $
9,578
9,699
6,841 8,084
Life contingent immediate annuity considerations Surrender charges
17,009
16,447
48,954
45,830
39,844 47,630
Lifetime income benefit rider fees Net investment income
722 $ 10,310 19,390 44,048
823 $ 762
19,705 15,092
521,725
543,331
543,704 573,318 588,217
Change in fair value of derivatives
443,867
205,011
Net realized gains (losses) on investments Net OTTI losses recognized in operations Loss on extinguishment of debt
(12,135)
(22,321)
327,662 (25,888)
(941,874) 466,434 (20,336) 7,029
- -
- -
Total revenues
1,029,699
798,705
(323,703)
1,113,835
- - 919,948
- (17,412)
(2,024) (2,001)
Benefits and expenses:
Traditional life insurance policy benefits and change in future policy benefits
Life contingent immediate annuity benefits and change in future policy benefits
Interest sensitive and index product benefits (a)
Amortization of deferred sales inducements (b)(d)
416,983
73,591 91,260
1,091 11,975 325,912 22,768
655 12,618
702 12,629
621 9,451
835 10,718
576,147 240,992
400,219 399,514
Change in fair value of embedded derivatives (c)(d)
568,836 (1,732,497)
Interest expense on notes payable
6,391
6,385 6,384
26,145
622,596 (119,889)
120,702 133,573
Interest expense on subordinated debentures Amortization of deferred policy acquisition costs (b)(d)
1,325
6,388 1,323
(75,178) 1,126,935 6,388 1,321
(1,250,061) 147,879
1,588 3,651
Other operating costs and expenses
55,321
Total benefits and expenses
1,019,764
(593,878) 833,008
1,193
27,228 60,677
Income (loss) before income taxes Income tax expense (benefit) (e)
9,935
42,738 (53,049) 851,754 184,554
41,951 1,235,851 (315,903) (68,474)
43,626 39,194
270,175 280,827
Net income (loss) (a)(b)(c)(d)(e)
8,742
667,200 (247,429)
242,947 220,150
Less: Preferred stock dividends
15,004
5,950
5,950
6,611
-
Net income (loss) available to common stockholders (a)(b)(c)(d)(e)
$
(6,262)
$
661,250
$
(253,379)
$
236,336
$ 220,150
Earnings (loss) per common share
Earnings (loss) per common share - assuming dilution (a)(b)(c)(d)(e)
2.57 $ 2.40
$ $
(0.07) (0.07)
$ $
7.20 7.17
$ $
(2.76) (2.76)
$ $
2.58 $ 2.41
Weighted average common shares outstanding (thousands):
Earnings (loss) per common share
Earnings (loss) per common share - assuming dilution
92,021 91,883
92,904 93,352
91,861 92,163
91,803 92,027
91,644 91,314
(a) Q3 2020 includes expense from the revision of assumptions used in determining reserves held for lifetime income benefit riders. The impact increased interest sensitive and index products by $285.8 million and decreased both net income and net income available to common stockholders by $224.4 million and decreased earnings per common share - assuming dilution by $2.44 per share.
(b) Q3 2020 includes expense from the revision of assumptions which increased amortization of deferred sales inducements and deferred policy acquisition costs by $391.4 million and $589.2 million, respectively, and decreased both net income and net income available to common stockholders by $769.8 million and decreased earnings per common share - assuming dilution by $8.35 per share.
(c) Q3 2020 includes a benefit from the revision 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 $2,111.1 million and increased both net income and net income available to common stockholders by $1,657.2 million and increased earnings per common share - assuming dilution by $17.98 per share.
(d) Q2 2020 includes a benefit from the revision 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 $230.1 million, increased amortization of deferred sales inducements and deferred policy acquisition costs by $36.7 million and $57.6 million, respectively, and decreased both net loss and net loss available to common stockholders by $106.5 million and reduced loss per common share - assuming dilution by $1.16 per share.
(e) Q1 2020 includes a tax benefit related to the provision of the Coronavirus Aid, Relief, and Economic Security Act, ("the CARES ACT") which was signed into legislation on March 27, 2020 and allows net operating losses for 2018 through 2020 to be carried back to previous tax years in which a 35% statutory tax rate was in effect. The impact reduced income tax expense and increased both net income and net income available to common stockholders by $30.8 million and increased earnings per common share - assuming dilution by $0.33 per share.
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
Three Months Ended
December 31,Year Ended December 31,2020
2019
2020
2019
Net income (loss) available to common stockholders
$
(6,262) $
220,150 $
637,945 $ 246,090
Adjustments to arrive at non-GAAP operating income available to common stockholders: (a)
Net realized gains/losses on financial assets, including credit losses
7,606
59,355 7,361
Change in fair value of derivatives and embedded derivatives - fixed index annuities
(848) 1,247
Change in fair value of derivatives - interest rate caps and swap Income taxes
9,369 90,616 - (21,996)
(127,777)
(783,157) 373,221
(167) 26,023
155,808
(79,736)
Non-GAAP operating income available to common stockholders
$
71,727
$
125,835
$
69,103
$ 548,183
Per common share - assuming dilution:
Net income (loss) available to common stockholders
$
(0.07) $
2.40 $
6.90 $ 2.68
Adjustments to arrive at non-GAAP operating income available to common stockholders:
Net realized gains/losses on financial assets, including credit losses
0.10
0.08
0.64 0.08
Change in fair value of derivatives and embedded derivatives - fixed index annuities
(1.39)
(8.47) 4.07
(0.23)
1.69 (0.87)
Change in fair value of derivatives - interest rate caps and swap Income taxes
0.97 -
- 0.28
(0.01) 0.01
Non-GAAP operating income available to common stockholders
$
0.77
$
1.37
$
0.75
$ 5.97
(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) where applicable.
Summary of Adjustments to Arrive at Non-GAAP Operating Income Available to Common Stockholders
Three Months Ended
December 31,
2020
Year Ended December 31,2019
2020
2019
Net realized gains/losses on financial assets, including credit losses:
Net realized gains/losses on financial assets, including credit losses Amortization of DAC and DSI
$
Income taxes
11,374 (2,005) (2,024)
$
10,383 (2,777) (1,643)
$
79,330 (19,975) (12,821)
$
11,764 (4,403)
$
7,345
$
5,963
$
46,534
$
Change in fair value of derivatives and embedded derivatives:
875 8,236
Fixed index annuities
$
$
(222,927)
$
(1,279,644)
$ 368,650
496,487 4,571
Interest rate caps and swap Amortization of DAC and DSI
Income taxes
152,386 - (61,770) (19,972)
(167) 95,150 27,666
(848) 1,247
168,629
$
70,644
$
(100,278)
$
(615,376)
$
(80,611) 293,857
Quarterly Summary - Most Recent 5 Quarters
Reconciliation from Net Income (Loss) Available to Common Stockholders to Non-GAAP Operating Income (Loss) Available to Common Stockholders
Q4 2020
Q3 2020
Q2 2020
Q1 2020
Q4 2019
Net income (loss) available to common stockholders
$
(6,262) $
661,250 $
(253,379)
$
236,336 $ 220,150
Adjustments to arrive at non-GAAP operating income (loss) available to common stockholders: (a)
Net realized gains/losses on financial assets, including credit losses
9,369
15,145
16,349 7,606
Change in fair value of derivatives and embedded derivatives - fixed index annuities
90,616 (1,176,909)
Change in fair value of derivatives - interest rate caps and swap Income taxes
- (21,996)
- 250,701
18,492 423,590 - (95,599)
(120,454)
(127,777)
(848) 22,702
Non-GAAP operating income (loss) available to common stockholders
(b)(c)(d)
$
71,727
$
(249,813)
$
93,104
$
154,085
$
(167) 26,023 125,835
Per common share - assuming dilution:
Net income (loss) available to common stockholders
$
(0.07)
$
7.17
$
(2.76)
$
2.57
$
2.40
Adjustments to arrive at non-GAAP operating income (loss) available to common stockholders:
Anti-dilutive effect of net loss Anti-dilutive effect of operating loss
Net realized gains/losses on financial assets, including credit losses
Change in fair value of derivatives and embedded derivatives - fixed index annuities
(12.77)
(1.39)
(1.04)
0.25 0.28
Change in fair value of derivatives - interest rate caps and swap Income taxes
- - 0.10 0.97 - (0.23)
- 0.01 0.16
0.01 - 0.20
- - 0.17
- - 0.08
- 2.71
4.60 -
(1.31) (0.01)
-
Non-GAAP operating income (loss) available to common stockholders
(b)(c)(d)
$
0.77
$
(2.72)
$
1.01
$
1.67
$ 1.37
(a) Adjustments to net income (loss) available to common stockholders to arrive at non-GAAP operating income (loss) available to common stockholders are presented net of related adjustments to amortization of deferred sales inducements and deferred policy acquisition costs where applicable.
(b) Q3 2020 includes expense from the revision of assumptions used in determining reserves held for lifetime income benefit riders. The impact increased interest sensitive and index products by $285.8 million and increased non-GAAP operating loss available to common stockholders and non-GAAP operating loss available to common stockholders per common share - assuming dilution by $224.4 million and $2.44 per share, respectively.
(c) Q3 2020 includes expense from the revision of assumptions which increased amortization of deferred sales inducements and deferred policy acquisition costs by $57.5 million and $91.0 million, respectively, and increased non-GAAP operating loss available to common stockholders and non-GAAP operating loss available to common stockholders per common share - assuming dilution by $116.5 million and $1.26 per share, respectively.
(d) Q1 2020 includes a tax benefit related to the provision of the CARES ACT which was signed into legislation on March 27, 2020 and allows net operating losses for 2018 through 2020 to be carried back to previous tax years in which a 35% statutory tax rate was in effect. The impact reduced income tax expense and increased non-GAAP operating income available to common stockholders and non-GAAP operating income available to common stockholders per common share - assuming dilution by $30.8 million and $0.33 per share, respectively.
Summary of Adjustments to Arrive at Non-GAAP Operating Income (Loss) Available to Common Stockholders
Q4 2020
Q3 2020
Q2 2020
Q1 2020
Q4 2019
1,039,322 (370,973)Net realized (gains) losses on investments Net OTTI losses recognized in operations Change in fair value of derivatives Increase (decrease) in total revenues
$
12,135 - (416,450) (404,315)
$
22,321 - (203,088)
$
25,888 - (413,489)
$
20,336 -
$
(7,029) 17,412
(180,767) (387,601)
1,059,658 (360,590)
(568,836)
1,732,497
(1,126,935)
1,250,061 (147,879)
Amortization of deferred sales inducements Change in fair value of embedded derivatives Interest sensitive and index product benefits (a)
22,785
(303,710)
115,511
(29,683) (37,374)
761
1,298
612
(1,321)
-
40,990
(449,088)
181,129
99,985 (1,161,764)
Amortization of deferred policy acquisition costs Increase (decrease) in total benefits and expenses Increase in income (loss) before income taxes Increase (decrease) in income tax expense (benefit)
(504,300)
980,997
(829,683)
21,996
(250,701)
442,082 95,599
(54,446) (54,999) 1,164,611 (240,252) (104,953) (120,338) (22,702) (26,023)
Increase (decrease) in net income (loss) available to common stockholders
$
77,989
$
(911,063)
$
346,483
$
(82,251)
$ (94,315)
(a) Interest sensitive and index product benefits adjustment reflects the change in the allowance for credit losses on our reinsurance recoverable/coinsurance deposits under a revised impairment model for financial assets measured at amortized cost which we were required to adopt on January 1, 2020. 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.
Unaudited (Dollars in thousands, except share and per share data)
Capitalization/Book Value per Common Share
Q4 2020
Q3 2020
Q2 2020
Q1 2020
Q4 2019
Capitalization: Notes payable
$
500,000 $
500,000 $
500,000 $
500,000 $ 500,000
Subordinated debentures payable to subsidiary trusts
78,112
78,037
77,964
77,893 159,272
Total debt
578,112
578,037
577,964
6,574,716
6,118,734
5,062,059
Total stockholders' equity Total capitalization
7,152,828
6,696,771
5,640,023
Accumulated other comprehensive income (AOCI)
(2,429,285)
(2,112,111)
(1,719,839)
577,893 3,522,757 4,100,650 (219,974)
659,272 4,570,119 5,229,391 (1,497,921)
Total capitalization excluding AOCI (a)
$ 4,723,543
$ 4,584,660
$ 3,920,184
$ 3,880,676
$ 3,731,470
Total stockholders' equity
$ 6,574,716
$ 6,118,734
$ 5,062,059
$ 3,522,757
$ 4,570,119
(700,000)
(700,000)
(700,000)
(400,000)
(400,000)
(2,429,285)
(2,112,111)
(1,719,839)
(219,974)
(1,497,921)
Equity available to preferred stockholders (b) Total common stockholders' equity (c) Accumulated other comprehensive income
5,874,716
5,418,734
4,362,059
3,122,757
4,170,119
Total common stockholders' equity excluding AOCI (c)
3,445,431
3,306,623
2,642,220
2,902,783
2,672,198
Net impact of fair value accounting for derivatives and embedded derivatives
(166,453)
(237,099)
685,839
353,853
448,924
Total common stockholders' equity excluding AOCI and the net impact of fair value accounting for derivatives and embedded derivatives (c)
$ 3,278,978
$ 3,069,524
$ 3,328,059
$ 3,256,636
$ 3,121,122
Common shares outstanding
95,720,622
91,931,837
91,595,066
91,497,841
91,107,555
Book Value per Common Share: (d) Book value per common share
Book value per common share excluding AOCI (c)
Book value per common share excluding AOCI and the net impact of fair value accounting for derivatives and embedded derivatives (c)
Debt-to-Capital Ratios: (e)
Senior debt / Total capitalization Total debt / Total capitalization
$ | 61.37 | $ | 58.94 | $ | 47.62 | $ | 34.13 | $ | 45.77 |
$ | 35.99 | $ | 35.97 | $ | 28.85 | $ | 31.73 | $ | 29.33 |
$ | 34.26 | $ | 33.39 | $ | 36.33 | $ | 35.59 | $ | 34.26 |
10.6 % | 10.9 % | 12.8 % | 12.9 % | 13.4 % | |||||
12.2 % | 12.6 % | 14.7 % | 14.9 % | 17.7 % |
(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.
Spread Results
Year Ended December 31,
2020 | 2019 | Q4 2020 | Q3 2020 | Q2 2020 | Q1 2020 | Q4 2019 | |
4.12% | 4.52% | Average yield on invested assets | 3.88% | 4.10% | 4.12% | 4.36% | 4.52% |
1.69% | 1.84% | Aggregate cost of money | 1.63% | 1.66% | 1.73% | 1.72% | 1.75% |
2.43% | 2.68% | Aggregate investment spread | 2.25% | 2.44% | 2.39% | 2.64% | 2.77% |
Impact of: | |||||||
0.08% | 0.06% | Investment yield - additional prepayment income | 0.11% | 0.10% | 0.03% | 0.06% | 0.12% |
0.02% | 0.03% | Cost of money effect of over (under) hedging | 0.01% | 0.03% | (0.01)% | 0.05% | 0.05% |
$53,096,408 | $51,072,498 | Weighted average investments | $53,836,378 | $53,024,798 | $52,901,215 | $52,623,239 | $52,141,459 |
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.
Summary of Cost of Money for Deferred Annuities
Year Ended December 31,2020
2019
Q4 2020
Q3 2020
Q2 2020
Q1 2020
Q4 2019
Included in interest sensitive and index product benefits:
$
747,489 $ 192,468
587,818 Index credits
$
195,927 $ 49,551
174,747 $ 47,376
97,875 $ 46,594
278,940 $ 277,798
196,907 Interest credited
48,947 49,482
Included in change in fair value of derivatives:
(758,604) 716,857
(605,005) 781,841
Proceeds received at option expiration Pro rata amortization of option cost
(197,921) 170,505
(178,405) 176,481
(97,015) 182,841
(285,263)
(284,624)
187,030 188,984
$ 898,210
$
961,561 Cost of money for deferred annuities
$
218,062
$
220,199
$
230,295
$
229,654
$ 231,640
$ 53,269,994
$ 52,278,357 Weighted average liability balance outstanding
$ 53,531,441
$ 53,059,376
Annuity Account Balance Rollforward
$ 53,214,255 | $ 53,274,905 | $ 53,092,419 | |||||
2020 | 2019 | Q2 2020 | Q1 2020 | Q4 2019 | |||
$ 53,233,898 | $ 51,053,450 | Account balances at beginning of period | $ 53,006,150 | $ 53,112,600 | $ 53,315,909 | $ 53,233,898 | $ 52,950,937 |
3,613,269 | 4,661,171 | Net deposits | 1,830,816 | 557,675 | 543,026 | 681,752 | 838,761 |
93,610 | 177,942 | Premium bonuses | 25,143 | 21,205 | 22,710 | 24,552 | 36,983 |
939,957 | 784,725 | Fixed interest credited and index credits | 245,478 | 222,123 | 144,469 | 327,887 | 327,280 |
(72,551) | (71,565) | Surrender charges | (17,009) | (16,447) | (19,390) | (19,705) | (15,092) |
(178,676) | (168,470) | Lifetime income benefit rider fees | (48,954) | (45,830) | (44,048) | (39,844) | (47,630) |
(3,572,782) | (3,203,355) | Surrenders, withdrawals, deaths, etc. | (984,899) | (845,176) | (850,076) | (892,631) | (857,341) |
$ 54,056,725 | $ 53,233,898 | Account balances at end of period | $ 54,056,725 | $ 53,006,150 | $ 53,112,600 | $ 53,315,909 | $ 53,233,898 |
Page 10 |
Year Ended December 31,Q4 2020
Q3 2020
Annuity Deposits by Product Type
Year Ended December 31,2020
2019
American Equity Life:
$ 1,992,059
$
4,058,638 Fixed index annuities
Q4 2020
Q3 2020
Q2 2020
Q1 2020
Q4 2019
$
500,495 $
432,602 $
472,899 $
586,063 $ 765,180
8,128
11,245 Annual reset fixed rate annuities
1,664
1,817
2,316
2,331 1,843
395,982
1,613 Multi-year fixed rate annuities
394,999
531
83
369 306
33,461
12,002 Single premium immediate annuities
7,774
10,205
10,084
5,398 4,873
2,429,630
345,519 97 907,151 1,252,767
4,083,498
646,903 199 232,613 879,715
Eagle Life:
Fixed index annuities
Annual reset fixed rate annuities Multi-year fixed rate annuities
904,932
106,170 - 833,765 939,935
445,155
60,476 39 68,206 128,721
485,382
72,371 17 1,031 73,419
594,161 772,202
106,502 67,784
41
4,149 81,041 110,692 148,831
6
Consolidated:
2,337,578
Fixed index annuities
606,665
493,078
545,270
692,565 832,964
8,225
4,705,541 11,444
Annual reset fixed rate annuities
1,664
1,856
2,333
2,372 1,849
1,303,133
234,226 Multi-year fixed rate annuities
1,228,764
68,737
1,114
4,518 81,347
33,461
12,002 Single premium immediate annuities
7,774
10,205
10,084
5,398 4,873
3,682,397
4,963,213 Total before coinsurance ceded
1,844,867
573,876
558,801
704,853 921,033
35,667
290,040 Coinsurance ceded
6,277
5,996
5,691
17,703 77,399
$ 3,646,730
$
4,673,173 Net after coinsurance ceded
$
1,838,590
$
567,880
$
553,110
$
687,150
$ 843,634
Surrender Charge Protection and Account Values by Product Type
Annuity Surrender Charges and Net (of Coinsurance) Account Values at December 31, 2020:
Surrender Charge
Net Account Value
Avg. | Avg. | |||||
Years | Years | |||||
Product Type | At Issue | Remaining | Remaining | Thousands | ||
Fixed Index Annuities | 12.8 | 6.3 | 10.1% | $ | 50,805,202 | 94.0 % |
Annual Reset Fixed Rate Annuities | 9.2 | 2.8 | 5.3% | 1,392,825 | 2.6 % | |
Multi-Year Fixed Rate Annuities | 4.4 | 2.8 | 7.6% | 1,858,698 | 3.4 % | |
Total | 12.4 | 6.1 | 9.9% | $ | 54,056,725 | 100.0 % |
Page 11 |
Avg. %
Dollars in
%
Surrender Charge Percentages: No surrender charge
Fixed
Annuities Account Value
Fixed Index
Annuities Account Value
0.0% < 2.0%
$
821,579 $ 16,419
3,002,716 262,384
2.0% < 3.0%
37,922 1,951,839
3.0% < 4.0%
87,012 2,409,112
4.0% < 5.0%
46,626 1,931,519
5.0% < 6.0%
267,881 2,978,897
6.0% < 7.0%
37,229 1,993,112
7.0% < 8.0%
79,400 4,564,942
8.0% < 9.0%
63,272 3,637,588
9.0% < 10.0%
1,343,422 3,585,668
10.0% or greater
450,761 24,487,425
$
3,251,523
$ 50,805,202
Surrender Charge Expiration By Year: Out of Surrender Charge
Fixed and Fixed Index Annuities Account Value
$
3,824,295
2021
1,167,342
2022
1,646,140
2023
4,955,486
2024
4,920,382
2025
6,321,794
2026
5,118,551
2027
4,406,156
2028
4,639,590
2029
5,939,907
2030
3,891,867
2031
2,903,255
2032
1,986,854
2033
1,146,341
2034
722,614
2035
316,128
2036
150,023
$
54,056,725
Weighted Average Surrender
Charge
0.00 %
2.86 %
3.66 %
5.46 %
5.78 %
7.71 %
9.36 %
11.06 %
11.92 %
13.38 %
15.18 %
17.41 %
18.06 %
18.48 %
18.96 %
19.50 %
20.00 %
9.89
%
$
951,418 $
1,242,188
Credited Rate vs. Ultimate Minimum Guaranteed Rate Differential: No differential
Fixed
Annuities Account Value
Fixed Index
Annuities Account Value
› 0.0% - 0.25%
47,881 143,281
› 0.25% - 0.5%
233,363 9,812
› 0.5% - 1.0%
› 1.0% - 1.5% 1.00% ultimate guarantee - 2.11% wtd avg interest rate (a) 1.50% ultimate guarantee - 1.08% wtd avg interest rate (a) 1.75% ultimate guarantee - 1.71% wtd avg interest rate (a) 2.00% ultimate guarantee - 1.85% wtd avg interest rate (a) 2.25% ultimate guarantee - 1.65% wtd avg interest rate (a)
18,125 3,101
11,319
-
1,728,028
964,626
139,686
3,207,602
49,070
72,633 -
529,851 -
697,144
3.00% ultimate guarantee - 1.95% wtd avg interest rate (a) - 1,395,218
Allocated to index strategies (see tables that follow) - 42,612,379
$
3,251,523
$ 50,805,202
(a)The minimum guaranteed interest rate for the fixed rate or the fixed rate strategy ranges from 0.5% - 1.75%. The ultimate guaranteed rate is applied on less than 100% of the premium.
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, 2020 for fixed annuities and funds allocated to the fixed rate strategy for fixed index annuities would decrease by 0.11%.
FIXED INDEX ANNUITIES ACCOUNT VALUE - INDEX STRATEGIES
Annual Monthly Average and Point-to-Point with Caps
Minimum Guaranteed Cap
1%Current Cap
At minimum
$
1,315
1.75% - 3%
8,908,370
3% - 4%
302,595
4% - 5%
1,375,290
5% - 6%
587,639
6% - 7%
51
>= 7%
10,024
Annual Monthly Average and Point-to-Point with Participation RatesCurrent Participation Rate
At minimum
3%
$
10%
$
< 20%
1,110,572
20% - 40%
2,581,224
40% - 60%
2,730,773
60% - 100%
> 100%
S&P 500 Monthly Point-to-Point - Minimum Guaranteed Monthly Cap = 1.0% Current Cap
103,707 -
2,276
210,414
178,878 -
7,089
Minimum Guaranteed Participation Rate
139,182
750,082
565,364
At minimum | $ | 1,996,943 |
1.10% - 1.30% | 6,442,128 | |
1.40% - 1.60% | 1,875,157 | |
1.70% - 2.00% | 273,379 | |
>= 2.10% | 7,930 | |
Volatility Control Index | ||
Current Asset Fee | ||
At Maximum | $ | - |
0.75% - 1.75% | 362,570 | |
2.25% - 2.75% | 194,300 | |
3.00% - 3.50% | 1,172,780 | |
3.75% - 5.25% | 3,341,369 |
4%
7%
8% +
$
5,129,029 - -
1,051,623
27,849
444
889
$
61,044 - - - - - 5,042
$
137,218 - - - - - -
20% - 25%
35%
50% +
$
399,855 - 193,097 67,801 - -
$
84,457 - 2,266 50,850 - -
$
93,141 - - - - -
If all caps and participation rates were reduced to minimum caps and participation rates and current asset fees were increased to their maximums, the cost of options would decrease by 0.76% based upon prices of options for the week ended January 1, 2021.
Summary of Invested Assets
December 31, 2020 | December 31, 2019 |
Carrying | Carrying |
Amount Percent | Amount Percent |
Fixed maturity securities:United States Government full faith and credit United States Government sponsored agencies United States municipalities, states and territories Foreign government obligations
$
39,771
0.1 % $
161,765
0.3 %
1,039,551
1.9 %
625,020
1.1 %
3,776,131
7.0 %
4,527,671
7.9 %
202,706
0.4 %
205,096
0.3 %
Corporate securities
31,156,827
58.1 %
32,536,839
57.2 %
1,512,831
2.8 %
1,575,664
2.8 %
5,549,849
10.4 %
6,162,156
10.8 %
Residential mortgage backed securities Commercial mortgage backed securities Other asset backed securities
4,165,489
7.8 %
3,448,793
4,261,227
Total fixed maturity securities Mortgage loans on real estate Derivative instruments Other investments
$
Credit Quality of Fixed Maturity Securities - December 31, 2020
Carrying
NAIC Designation
Amount Percent
8.0 %
47,538,893
88.7 %
1,310,954
2.4 %
590,078
1.1 %
53,605,414
100.0 % $
Rating Agency Rating
5,786,279
51,580,490
1,355,989
492,301
56,877,573
Carrying Amount
10.2 %
100.0
90.6 6.1 2.4 0.9
% % % % %
Percent
1
$
26,564,542
55.9 %
$
27,883,428
58.7
3
1,299,455
2.7 %
973,581
2.0
2
$
47,538,893
100.0 %
$
47,538,893
100.0
19,377,013
4
256,651
5
16,288
6
24,944
Watch List Securities - December 31, 2020
General Description (a)
40.8 %
0.5 % - %
0.1 %
Amortized
Cost
Aaa/Aa/A Baa
Ba B Caa
18,408,954
122,553
61,037
Ca and lower
Allowance for Credit LossesAmortized Cost, Net of Allowance
89,340
Net Unrealized Gains (Losses), Net of Allowance
38.7
0.3
0.1
0.2
% % % % % % %
Fair Value
Corporate securities - Public securities
$
149,419 $
(48,197) $
101,222 $
(3,416) $ 97,806
Corporate securities - Private placement securities Residential mortgage backed securities Commercial mortgage backed securities Other asset backed securities
336,910
(11,996)
324,914
1,565 326,479
31,127
(1,734)
29,393
(348) 29,045
78,269
- -
78,269
(11,254) 67,015
69,650
69,650
(2,826) 66,824
United States municipalities, states and territories
19,427
(2,844)
16,583
(951) 15,632
$
684,802
$
(64,771)
$
620,031
$
(17,230)
$ 602,801
(a)The watch list consists of all fixed maturity securities we have determined contain elevated credit risk, including those we have taken credit losses on.
Fixed Maturity Securities by Sector
Available for sale:
United States Government full faith and credit and sponsored agencies United States municipalities, states and territories
Foreign government obligations
Corporate securities:
5,674,845
6,734,249
6,082,974 6,658,120
December 31, 2020
Amortized
CostDecember 31, 2019
Fair Value
Amortized
CostFair Value
$
1,032,936 $ 3,236,767 177,062
1,079,322 $ 3,776,131 202,706
763,164 4,147,343 186,993
$
786,785 4,527,671 205,096
Capital goods Consumer discretionary Energy
2,295,927
2,721,465
2,550,750 2,794,986
2,140,768
2,359,893
2,499,030 2,677,646
Financials
5,971,097
6,877,472
6,737,325 7,323,150
Government non-guaranteed Industrials
539,148
632,178
539,639 606,308
276,352
319,823
311,269 336,537
Information technology Materials
1,556,654
1,840,942
1,868,131 2,051,175
1,543,032
1,803,501
1,818,048 1,961,033
Other Telecommunications Transportation Utilities
315,628
370,204
439,171
469,344
1,340,484
1,582,329
1,510,836 1,664,350
1,362,858
1,511,499
1,486,540 1,603,997
3,728,403
4,403,272
3,978,459 4,390,193
Residential mortgage backed securities:
Government agency
591,100 646,787
Prime
Alt-A
93,281 112,961
Commercial mortgage backed securities:
549,677 771,031 79,248
627,201 788,933 96,697
793,357 815,916
Government agency
414,626 437,420
Non-agency
398,141 3,721,509
447,726 3,813,501
5,176,541
5,348,859
Other asset backed securities:
Auto
258,286
266,065
403,860 411,371
7,301
8,946
7,495 8,603
60,894
61,147
167,466 171,273
Energy Financials Industrials
4,441
3,911
4,967 5,493
Collateralized loan obligations Military housing
4,255,839
4,112,318
4,787,402
4,612,694
464,684
538,356
471,621 539,029
Other
541,724
559,106
407,558 413,693
$
42,304,736
$
47,538,893
$
48,238,946
$
51,580,490
Mortgage Loans on Real Estate
December 31, 2020
December 31, 2019
Principal | Percent | Principal | Percent | |||||
Geographic distribution: commercial mortgage loans | ||||||||
East | $ | 699,741 | 19.5 | % | $ | 645,991 | 19.0 | % |
Middle Atlantic | 281,971 | 7.9 | % | 284,597 | 8.4 | % | ||
Mountain | 391,025 | 10.9 | % | 389,892 | 11.4 | % | ||
New England | 24,774 | 0.7 | % | 9,152 | 0.3 | % | ||
Pacific | 659,743 | 18.4 | % | 618,336 | 18.1 | % | ||
South Atlantic | 832,739 | 23.3 | % | 751,199 | 22.0 | % | ||
West North Central | 266,050 | 7.4 | % | 288,413 | 8.5 | % | ||
West South Central | 424,111 | 11.9 | % | 420,031 | 12.3 | % | ||
$ | 3,580,154 | 100.0 | % | $ | 3,407,611 | 100.0 | % | |
Property type distribution: commercial mortgage loans | ||||||||
Office | $ | 297,065 | 8.3 | % | $ | 250,287 | 7.3 | % |
Medical Office | 20,584 | 0.6 | % | 29,990 | 0.9 | % | ||
Retail | 1,187,484 | 33.2 | % | 1,225,670 | 36.0 | % | ||
Industrial/Warehouse | 929,325 | 25.9 | % | 896,558 | 26.3 | % | ||
Apartment | 939,084 | 26.2 | % | 858,679 | 25.2 | % | ||
Mixed use/Other | 206,612 | 5.8 | % | 146,427 | 4.3 | % | ||
$ | 3,580,154 | 100.0 | % | $ | 3,407,611 | 100.0 | % |
Credit exposure - by payment activity
Performing
In workout Delinquent Collateral dependent
Principal outstanding
CommercialDecember 31, 2020
Agricultural
$
Residential
3,580,154 - - - 3,580,154
$
Total
245,807 - - - 245,807
$
366,047 - 273 - 366,320
$
4,192,008 - 273 - 4,192,281
Unamortized discounts and premiums, net Deferred fees and costs, net
- (1,266)
- (634)
5,212 925 372,457
5,212
Amortized cost
3,578,888
245,173
(975) 4,196,518
Valuation allowance
(25,529)
(2,130)
(3,370)
Carrying value
$
3,553,359
$
243,043
$
369,087
$
(31,029) 4,165,489
December 31, 2019
Commercial
Agricultural
TotalCredit exposure - by payment activity
Performing
In workout Delinquent Collateral dependent
Principal outstanding
$
3,407,611 - - - 3,407,611
$
51,303 - - - 51,303
$
3,458,914 - - - 3,458,914
Unamortized discounts and premiums, net Deferred fees and costs, net
- (899)
- (43)
- (942)
Amortized cost
3,406,712
51,260
3,457,972
Valuation allowance
Carrying value
$
3,397,733
$
51,060
$
(8,979)
(200)
(9,179) 3,448,793
Shareholder Information
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,sschwartz@american-equity.com
Common Stock and Dividend Information: New York Stock Exchange symbol: "AEL"
Dividend | ||||
High | Low | Close | Declared | |
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 |
2019 | ||||
First Quarter | $33.57 | $26.34 | $27.02 | $0.00 |
Second Quarter | $30.91 | $25.84 | $27.16 | $0.00 |
Third Quarter | $27.80 | $20.16 | $24.20 | $0.00 |
Fourth Quarter | $30.96 | $21.75 | $29.93 | $0.30 |
2018 | ||||
First Quarter | $35.79 | $28.90 | $29.36 | $0.00 |
Second Quarter | $37.16 | $27.06 | $36.00 | $0.00 |
Third Quarter | $38.57 | $34.51 | $35.36 | $0.00 |
Fourth Quarter | $36.39 | $25.27 | $27.94 | $0.28 |
Transfer Agent: |
Computershare Trust Company, N.A.
P.O. Box 43010
Providence, RI 02940-0310
Phone: (877) 282-1169
Fax: (781) 575-2723www.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 atwww.american-equity.com.
Table of Contents | |
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY | |
Financial Supplement - December 31, 2020 | |
Research Analyst Coverage | |
Erik Bass | Ryan Krueger |
Autonomous Research US LP | Keefe, Bruyette & Woods |
(646) 561-6248 | (860) 722-5930 |
ebass@autonomous.com | rkrueger@kbw.com |
Randy Binner | Bob Huang |
B. Riley FBR, Inc. | Morgan Stanley Research |
(703) 312-1890 | (212) 761-6136 |
rbinner@fbr.com | Bob.Huang@morganstanley.com |
Daniel Bergman | John Barnidge |
Citi Research | Piper Sandler & Co. |
(212) 816-2132 | (312) 281-3412 |
daniel.bergman@citi.com | John.Barnidge@psc.com |
Wilma Burdis | C. Gregory Peters |
Credit Suisse Securities | Raymond James & Associates, Inc. |
Equity Research | Life Insurance | (727) 567-1534 |
(919) 306-1023 | greg.peters@raymondjames.com |
wilma.burdis@credit-suisse.com | |
Mark A. Dwelle | |
Thomas Gallagher | RBC Capital Markets, LLC |
Evercore ISI | (804) 782-4008 |
(212) 446-9439 | mark.dwelle@rbccm.com |
thomas.gallagher@evercoreisi.com | |
Mark Hughes | |
Pablo Singzon II | Truist Securities |
JP Morgan | (615) 748-4422 |
(212) 622-2295 | mark.hughes@research.truist.com |
pablo.s.singzon@jpmorgan.com |
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Disclaimer
American Equity Investment Life Holding Company published this content on 17 February 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 February 2021 21:27:11 UTC.
