AMERICAN EQUITY INVESTMENT LIFE HOLDING CO - FORM 8-K - EX-99.2 - EXHIBIT 99.2

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8-K - AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY 8-K - AMERICAN EQUITY INVESTMENT LIFE HOLDING CO	ael8k06302011.htm
EX-99.1 - EXHIBIT 99.1 - AMERICAN EQUITY INVESTMENT LIFE HOLDING CO	ael06302011exhibit991.htm

Exhibit 99.2

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement

June 30, 2011



A.	Financial Highlights
	Condensed Consolidated Balance Sheets	1
	Consolidated Statements of Operations	2
	Operating Income
	Six Months Ended June 30, 2011	3
	Three Months Ended June 30, 2011	4
	Quarterly Summary - Most Recent 5 Quarters	5
	Capitalization/Book Value per Share	6

B.	Product Summary
	Annuity Deposits by Product Type	7
	Surrender Charge Protection and Account Values by Product Type	7
	Annuity Liability Characteristics	8
	Spread Results	10

C.	Investment Summary
	Summary of Invested Assets	10
	Credit Quality of Fixed Maturity Securities	11
	Watch List Securities	11
	Summary of Residential Mortgage Backed Securities	12
	Mortgage Loans by Region and Property Type	13

D.	Shareholder Information	14

E.	Research Analyst Coverage	15

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-June 30, 2011

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(Unaudited)



	June 30, 2011			December 31, 2010
Assets
Investments:
Fixed maturity securities:
Available for sale, at fair value	$	15,682,872		$	15,830,663
Held for investment, at amortized cost	2,135,968			822,200
Equity securities, available for sale, at fair value	66,612			65,961
Mortgage loans on real estate	2,798,233			2,598,641
Derivative instruments	537,920			479,786
Other investments	26,030			19,680
Total investments	21,247,635			19,816,931

Cash and cash equivalents	949,484			597,766
Coinsurance deposits	2,699,158			2,613,191
Accrued investment income	215,457			167,645
Deferred policy acquisition costs	1,825,392			1,747,760
Deferred sales inducements	1,326,984			1,227,328
Deferred income taxes	185,152			143,253
Income taxes recoverable	9,442			6,134
Other assets	108,067			106,755
Total assets	$	28,566,771		$	26,426,763

Liabilities and Stockholders' Equity
Liabilities:
Policy benefit reserves	$	25,940,513		$	23,655,807
Other policy funds and contract claims	318,420			222,860
Notes payable	337,239			330,835
Subordinated debentures	268,512			268,435
Other liabilities	662,555			1,010,779
Total liabilities	27,527,239			25,488,716

Stockholders' equity:
Common stock	57,832			56,968
Additional paid-in capital	463,245			454,454
Unallocated common stock held by ESOP	(4,264		)	(4,815		)
Accumulated other comprehensive income	123,482			81,820
Retained earnings	399,237			349,620
Total stockholders' equity	1,039,532			938,047
Total liabilities and stockholders' equity	$	28,566,771		$	26,426,763

Page 1

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-June 30, 2011

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share data)

(Unaudited)



	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
Revenues:
Traditional life and accident and health insurance premiums	$	3,289		$	2,643		$	6,205		$	5,930
Annuity product charges	19,892			18,617			36,854			34,135
Net investment income	296,878			254,845			589,006			497,755
Change in fair value of derivatives	(22,029		)	(208,737		)	126,624			(126,722		)
Net realized gains (losses) on investments, excluding other than temporary impairment ("OTTI") losses	(854		)	1,063			(2,047		)	10,966
OTTI losses on investments:
Total OTTI losses	(113		)	(1,603		)	(5,213		)	(14,187		)
Portion of OTTI losses recognized in (from) other comprehensive income	(2,116		)	785			(3,587		)	10,146
Net OTTI losses recognized in operations	(2,229		)	(818		)	(8,800		)	(4,041		)
Loss on extinguishment of debt	—			(292		)	—			(292		)
Total revenues	294,947			67,321			747,842			417,731

Benefits and expenses:
Insurance policy benefits and change in future policy benefits	2,499			2,169			4,394			4,501
Interest sensitive and index product benefits (b)	238,420			228,818			398,085			425,687
Amortization of deferred sales inducements	20,265			3,243			50,957			16,332
Change in fair value of embedded derivatives	(60,963		)	(190,211		)	67,340			(126,336		)
Interest expense on notes payable	7,832			4,673			15,739			9,324
Interest expense on subordinated debentures	3,481			3,716			6,947			7,401
Interest expense on amounts due under repurchase agreements	1			—			5			—
Amortization of deferred policy acquisition costs	38,862			917			94,085			28,185
Other operating costs and expenses	16,634			16,702			34,108			32,687
Total benefits and expenses	267,031			70,027			671,660			397,781
Income (loss) before income taxes	27,916			(2,706		)	76,182			19,950
Income tax expense (benefit)	9,642			(1,202		)	26,565			6,569
Net income (loss) (b)	$	18,274		$	(1,504	)	$	49,617		$	13,381

Earnings (loss) per common share (b)	$	0.31		$	(0.03	)	$	0.84		$	0.23
Earnings (loss) per common share - assuming dilution (a) (b)	$	0.28		$	(0.03	)	$	0.77		$	0.23
Weighted average common shares outstanding (in thousands):
Earnings (loss) per common share	59,504			58,427			59,344			58,326
Earnings (loss) per common share - assuming dilution	65,530			61,592			65,437			61,365


(a)	The numerator for earnings per common share - assuming dilution is equal to net income plus the after tax cost of interest on convertible subordinated debentures issued to a subsidiary trust. The after tax cost of such interest was $258 and $259 for the three months ended June 30, 2011 and 2010, respectively, and $517 and $518 for the six months ended June 30, 2011 and 2010, respectively.


(b)	Six months ended June 30, 2011 includes an adjustment recorded in the first quarter of 2011 to single premium immediate annuity reserves which reduced interest sensitive and index product benefits by $4.2 million and increased net income, earnings per common share and earnings per common share - assuming dilution by $2.7 million, $0.05 per share and $0.04 per share, respectively.

Page 2

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-June 30, 2011

Operating Income

Six months ended June 30, 2011 (Unaudited)



				Adjustments
	As Reported			Realized Losses		Derivatives and Other Index Annuity			Operating Income (a)
	(Dollars in thousands, except per share data)
Revenues:
Traditional life and accident and health insurance premiums	$	6,205		$	—	$	—		$	6,205
Annuity product charges	36,854			—		—			36,854
Net investment income	589,006			—		—			589,006
Change in fair value of derivatives	126,624			—		(42,575		)	84,049
Net realized losses on investments, excluding other than temporary impairment ("OTTI") losses	(2,047		)	2,047		—			—
Net OTTI losses recognized in operations	(8,800		)	8,800		—			—
Total revenues	747,842			10,847		(42,575		)	716,114

Benefits and expenses:
Insurance policy benefits and change in future policy benefits	4,394			—		—			4,394
Interest sensitive and index product benefits (b)	398,085			—		—			398,085
Amortization of deferred sales inducements	50,957			2,026		8,155			61,138
Change in fair value of embedded derivatives	67,340			—		(70,794		)	(3,454		)
Interest expense on notes payable	15,739			—		—			15,739
Interest expense on subordinated debentures	6,947			—		—			6,947
Interest expense on amounts due under repurchase agreements	5			—		—			5
Amortization of deferred policy acquisition costs	94,085			2,997		10,492			107,574
Other operating costs and expenses	34,108			—		—			34,108
Total benefits and expenses	671,660			5,023		(52,147		)	624,536
Income before income taxes	76,182			5,824		9,572			91,578
Income tax expense	26,565			2,074		3,352			31,991
Net income (b)	$	49,617		$	3,750	$	6,220		$	59,587

Earnings per common share (b)	$	0.84							$	1.00
Earnings per common share - assuming dilution (b)	$	0.77							$	0.92

(a)

In addition to net income, we have consistently utilized operating income, operating income per common share and operating income per common share - assuming dilution, non-GAAP financial measures commonly used in the life insurance industry, as economic measures to evaluate our financial performance. Operating income equals net income adjusted to eliminate the impact of net realized gains and losses on investments including net OTTI losses recognized in operations and fair value changes in derivatives and embedded derivatives. Because these items fluctuate from quarter to quarter in a manner unrelated to core operations, we believe measures excluding their impact are useful in analyzing operating trends. We believe the combined presentation and evaluation of operating income together with net income, provides information that may enhance an investor’s understanding of our underlying results and profitability.

(b)

Six months ended June 30, 2011 includes an adjustment recorded in the first quarter of 2011 to single premium immediate annuity reserves which reduced interest sensitive and index product benefits by $4.2 million, increased net income and operating income by $2.7 million, increased earnings per common share and operating income per common share by $0.05 per share and increased earnings per common share - assuming dilution and operating income per common share - assuming dilution by $0.04 per share.



Change in fair value of derivatives:
Proceeds received at expiration	$	248,551		$	—		$	248,551
Cost of money for fixed index annuities	(159,921		)	—			(159,921		)
Change in the difference between fair value and remaining option cost at beginning and end of period	37,994			(42,575		)	(4,581		)
	$	126,624		$	(42,575	)	$	84,049

Index credits included in interest credited to account balances	244,588						244,588

Page 3

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-June 30, 2011

Operating Income

Three months ended June 30, 2011 (Unaudited)



				Adjustments
	As Reported			Realized Losses		Derivatives and Other Index Annuity		Operating Income (a)
	(Dollars in thousands, except per share data)
Revenues:
Traditional life and accident and health insurance premiums	$	3,289		$	—	$	—	$	3,289
Annuity product charges	19,892			—		—		19,892
Net investment income	296,878			—		—		296,878
Change in fair value of derivatives	(22,029		)	—		91,345		69,316
Net realized losses on investments, excluding other than temporary impairment ("OTTI") losses	(854		)	854		—		—
Net OTTI losses recognized in operations	(2,229		)	2,229		—		—
Total revenues	294,947			3,083		91,345		389,375

Benefits and expenses:
Insurance policy benefits and change in future policy benefits	2,499			—		—		2,499
Interest sensitive and index product benefits	238,420			—		—		238,420
Amortization of deferred sales inducements	20,265			390		10,211		30,866
Change in fair value of embedded derivatives	(60,963		)	—		52,240		(8,723		)
Interest expense on notes payable	7,832			—		—		7,832
Interest expense on subordinated debentures	3,481			—		—		3,481
Interest expense on amounts due under repurchase agreements	1			—		—		1
Amortization of deferred policy acquisition costs	38,862			708		14,245		53,815
Other operating costs and expenses	16,634			—		—		16,634
Total benefits and expenses	267,031			1,098		76,696		344,825
Income before income taxes	27,916			1,985		14,649		44,550
Income tax expense	9,642			707		5,188		15,537
Net income	$	18,274		$	1,278	$	9,461	$	29,013

Earnings per common share	$	0.31						$	0.48
Earnings per common share - assuming dilution	$	0.28						$	0.45

(a)



Change in fair value of derivatives:
Proceeds received at expiration	$	160,525		$	—	$	160,525
Cost of money for fixed index annuities	(81,932		)	—		(81,932		)
Change in the difference between fair value and remaining option cost at beginning and end of period	(100,622		)	91,345		(9,277		)
	$	(22,029	)	$	91,345	$	69,316

Index credits included in interest credited to account balances	157,194					157,194

Page 4

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-June 30, 2011

Operating Income/Net Income

Quarterly Summary - Most Recent 5 Quarters (Unaudited)



	Q2 2011			Q1 2011			Q4 2010			Q3 2010			Q2 2010
	(Dollars in thousands, except per share data)
Revenues:
Traditional life and accident and health insurance premiums	$	3,289		$	2,916		$	2,871		$	3,181		$	2,643
Annuity product charges	19,892			16,962			16,402			18,538			18,617
Net investment income	296,878			292,128			277,876			260,475			254,845
Change in fair value of derivatives	69,316			14,733			29,401			17,095			91,306
Total revenues	389,375			326,739			326,550			299,289			367,411

Benefits and expenses:
Insurance policy benefits and change in future policy benefits	2,499			1,895			1,622			2,128			2,169
Interest sensitive and index product benefits (b)	238,420			159,665			148,320			155,667			224,331
Amortization of deferred sales inducements	30,866			30,272			27,719			24,942			24,503
Change in fair value of embedded derivatives	(8,723		)	5,269			28,112			1,483			—
Interest expense on notes payable	7,832			7,907			7,861			4,940			4,673
Interest expense on subordinated debentures	3,481			3,466			3,700			3,805			3,716
Interest expense on amounts due under repurchase agreements	1			4			—			—			—
Amortization of deferred policy acquisition costs	53,815			53,759			50,788			47,754			46,417
Other operating costs and expenses	16,634			17,474			17,715			16,213			16,702
Total benefits and expenses	344,825			279,711			285,837			256,932			322,511
Operating income before income taxes	44,550			47,028			40,713			42,357			44,900
Income tax expense	15,537			16,454			14,319			14,795			15,692
Operating income (a) (b)	29,013			30,574			26,394			27,562			29,208
Net realized gains (losses) and net OTTI losses on investments, net of offsets	(1,278		)	(2,472		)	(4,687		)	1,950			(11		)
Lawsuit settlement	—			—			(27,297		)	—			—
Convertible debt retirement, net of income taxes	—			—			—			—			(171		)
Net effect of derivatives and other index annuity, net of offsets	(9,461		)	3,241			14,628			(8,998		)	(30,530		)
Net income (loss) (b)	$	18,274		$	31,343		$	9,038		$	20,514		$	(1,504	)

Operating income per common share (a) (b)	$	0.48		$	0.52		$	0.45		$	0.47		$	0.50
Operating income per common share - assuming dilution (a) (b)	$	0.45		$	0.47		$	0.41		$	0.45		$	0.48
Earnings (loss) per common share (b)	$	0.31		$	0.53		$	0.15		$	0.35		$	(0.03	)
Earnings (loss) per common share - assuming dilution (b)	$	0.28		$	0.48		$	0.14		$	0.33		$	(0.03	)

Weighted average common shares outstanding (in thousands):
Earnings (loss) per common share	59,504			59,182			58,757			58,564			58,427
Earnings (loss) per common share - assuming dilution	65,530			65,711			65,054			62,498			61,592

(a)

In addition to net income (loss), we have consistently utilized operating income, operating income per common share and operating income per common share - assuming dilution, non-GAAP financial measures commonly used in the life insurance industry, as economic measures to evaluate our financial performance. Operating income equals net income (loss) adjusted to eliminate the impact of net realized gains and losses on investments including net OTTI losses recognized in operations, loss on extinguishment of debt, the settlement of a class action lawsuit and fair value changes in derivatives and embedded derivatives. Because these items fluctuate from quarter to quarter in a manner unrelated to core operations, we believe measures excluding their impact are useful in analyzing operating trends. We believe the combined presentation and evaluation of operating income together with net income (loss), provides information that may enhance an investor’s understanding of our underlying results and profitability.

(b)

Three months ended March 31, 2011 includes an adjustment to single premium immediate annuity reserves which reduced interest sensitive and index product benefits by $4.2 million, increased operating income and net income by $2.7 million, increased operating income per common share and earnings per common share by $0.05 per share and increased operating income per common share - assuming dilution and earnings per common share - assuming dilution by $0.04 per share.

Page 5

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-June 30, 2011

Capitalization/Book Value per Share



	June 30, 2011			December 31, 2010
	(Dollars in thousands, except per share data)
Capitalization:
Notes payable	$	337,239		$	330,835
Subordinated debentures payable to subsidiary trusts	268,512			268,435
Total debt	605,751			599,270
Total stockholders’ equity	1,039,532			938,047
Total capitalization	1,645,283			1,537,317
Accumulated other comprehensive income loss (AOCI)	(123,482		)	(81,820		)
Total capitalization excluding AOCI (a)	$	1,521,801		$	1,455,497

Total stockholders’ equity	$	1,039,532		$	938,047
Accumulated other comprehensive income	(123,482		)	(81,820		)
Total stockholders’ equity excluding AOCI (a)	$	916,050		$	856,227

Common shares outstanding (b)	58,986,019			58,377,233

Book Value per Share: (c)
Book value per share including AOCI	$	17.62		$	16.07
Book value per share excluding AOCI (a)	$	15.53		$	14.67

Debt-to-Capital Ratios: (d)
Senior debt / Total capitalization	22.2		%	22.7		%
Adjusted debt / Total capitalization	24.8		%	26.2		%


(a)	Total capitalization, total stockholders’ equity and book value per share excluding AOCI, non-GAAP financial measures, are based on 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 investments, we believe these non-GAAP financial measures provide useful supplemental information.


(b)	Common shares outstanding include shares held by the NMO Deferred Compensation Trust: 2011 - 1,549,803 shares; 2010 - 1,855,835 shares and exclude unallocated shares held by ESOP: 2011 - 395,859 shares; 2010 - 447,048 shares.


(c)	Book value per share including and excluding AOCI is calculated as total stockholders’ equity and total stockholders’ equity excluding AOCI divided by the total number of shares of common stock outstanding.


(d)	Debt-to-capital ratios are computed using total capitalization excluding AOCI. Adjusted debt includes notes payable and the portion of the total subordinated debentures payable to subsidiary trusts outstanding (qualifying trust preferred securities) that exceeds 15% of total capitalization including AOCI.

Page 6

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-June 30, 2011

Annuity Deposits by Product Type



	Three Months Ended June 30,				Six Months Ended June 30,				Year Ended December 31,
Product Type	2011		2010		2011		2010		2010
	(Dollars in thousands)
Fixed Index Annuities:
Index Strategies	$	595,422	$	545,238	$	1,374,004	$	948,362	$	2,401,891
Fixed Strategy	312,161		366,448		669,633		704,230		1,551,007
	907,583		911,686		2,043,637		1,652,592		3,952,898
Fixed Rate Annuities:
Single-Year Rate Guaranteed	34,036		28,389		80,889		57,784		160,077
Multi-Year Rate Guaranteed	85,592		72,704		162,639		125,885		384,116
Single premium immediate annuities	81,591		34,008		163,481		57,381		171,628
	201,219		135,101		407,009		241,050		715,821
Total before coinsurance ceded	1,108,802		1,046,787		2,450,646		1,893,642		4,668,719
Coinsurance ceded	70,331		69,950		136,208		259,072		478,963
Net after coinsurance ceded	$	1,038,471	$	976,837	$	2,314,438	$	1,634,570	$	4,189,756

Surrender Charge Protection and Account Values by Product Type

Annuity Surrender Charges and Net (of coinsurance) Account Values at June 30, 2011



	Surrender Charge			Net Account Value
Product Type	Avg. Years At Issue	Avg. Years Remaining	Avg. % Remaining	Dollars in Thousands		%

Fixed Index Annuities	14.2	10.8	16.1%	$	20,435,161	91.5	%
Single-Year Fixed Rate Guaranteed Annuities	11.0	4.3	7.7%	1,373,298		6.2	%
Multi-Year Fixed Rate Guaranteed Annuities	6.5	2.1	4.8%	513,916		2.3	%
Total	13.9	10.2	15.3%	$	22,322,375	100.0	%

Page 7

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-June 30, 2011

Annuity Liability Characteristics



	Fixed Annuities Account Value		Fixed Index Annuities Account Value
	(Dollars in thousands)
SURRENDER CHARGE PERCENTAGES (1):
No surrender charge	$	401,355	$	393,850
0.0% < 2.0%	32,039		35,666
2.0% < 3.0%	142,681		118,635
3.0% < 4.0%	36,510		301,485
4.0% < 5.0%	221,662		374,132
5.0% < 6.0%	26,760		288,717
6.0% < 7.0%	60,636		216,284
7.0% < 8.0%	148,177		296,388
8.0% < 9.0%	196,547		316,466
9.0% < 10.0%	191,208		761,558
10.0% or greater	429,639		17,331,980
	$	1,887,214	$	20,435,161



	Fixed and Fixed Index Annuities Account Value		Weighted Average Surrender Charge
	(Dollars in thousands)
SURRENDER CHARGE EXPIRATION BY YEAR:
Out of Surrender Charge	$	795,205	0.00	%
2011	118,278		2.41	%
2012	390,967		2.92	%
2013	556,540		3.96	%
2014	592,867		5.23	%
2015	623,960		7.10	%
2016	838,099		8.36	%
2017	956,909		9.48	%
2018	892,729		11.65	%
2019	629,485		12.15	%
2020	967,834		13.60	%
2021	1,015,361		14.22	%
2022	1,085,635		16.89	%
2023	3,957,954		19.34	%
2024	4,227,152		19.49	%
2025	2,100,429		19.50	%
2026	1,728,541		19.77	%
2027	835,788		19.98	%
2028	8,642		20.00	%
	$	22,322,375	15.33	%

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-June 30, 2011

Annuity Liability Characteristics



	Fixed Annuities Account Value		Fixed Index Annuities Account Value
	(Dollars in thousands)
APPLICABLE GUARANTEE PERIOD:
Annual reset (2)	$	1,656,296	$	20,422,465
Multi-year (3 - 7 years)	230,918		12,696
	$	1,887,214	$	20,435,161

ULTIMATE MINIMUM GUARANTEE RATE:
1.50%	$	42,419	$	1,488,361
2.00%	383,387		1,198
2.20%	4,377		73,869
2.25%	9,575		5,404,254
2.25% (3)	182,981		942,183
3.00% (4)	1,204,814		1,299,925
3.00% (5)	—		11,107,705
3.50% (6)	—		117,666
4.00%	59,661		—
	$	1,887,214	$	20,435,161

CREDITED RATE (INCLUDING BONUS INTEREST) VS. ULTIMATE MINIMUM GUARANTEED RATE DIFFERENTIAL (7):
No differential	$	89,166	$	10,300
› 0.0% - 0.25%	865,664		1,005,027
› 0.25% - 0.5%	128,910		358,613
› 0.5% - 1.0% (8)	316,438		1,104,043
› 1.0% - 1.5% (8)	129,253		65,500
› 1.5% - 2.0%	144,269		2,785
› 2.0% - 2.5%	8,191		—
› 2.5% - 3.0%	74,104		—
1.50% ultimate guarantee - 2.15% wtd avg interest rate (9)	22,730		387,187
2.00% ultimate guarantee - 2.82% wtd avg interest rate (9)	108,489		—
2.25% ultimate guarantee - 2.88% wtd avg interest rate (9)	—		1,542,830
3.00% ultimate guarantee - 3.13% wtd avg interest rate (9)	—		3,097,971
Cumulative floor	—		12,860,905
	$	1,887,214	$	20,435,161

(1) In addition, $938,020 (49.7%) of the Fixed Annuities Account Value have market value adjustment protection.

(2) The contract features for substantially all of the Fixed Index Annuities Account Value provide for the annual reset of contractual features that effect the cost of money. The contract features for less than 0.5% of the Fixed Index Annuities Account Value are reset every two years.

(3) Products have a guarantee of 2.25% for the first 10 years, and 3.00% thereafter.

(4) Products have a guarantee of 3.00% on 100% of the premium.

(5) Products have a guarantee of 3.00% on less than 100% of the premium.

(6) Rates applicable to the minimum guaranteed surrender value are 3.50% for the first 5 years, and 3.00% thereafter (applied to less than 100% of the annuity deposits received). Minimum guaranteed rates for amounts allocated to the fixed rate strategy are 2.25% for the first 10 years, and 3.00% thereafter.

(7) Recent issues may contain bonus interest rates ranging from 1.0% to 3.0%.

(8) $182,981 of Fixed Annuities Account Value have a guarantee of 2.25% for the first 10 years and 3.00% thereafter. They begin increasing in 2014. $647,405 of Index Annuities Account Value is in fixed rate strategies that have a guarantee of 2.25% for the first 10 years and 3.00% thereafter. They begin increasing in 2014.

(9) The minimum guaranteed interest rate for the fixed rate or the fixed rate strategy is 1.00%. The ultimate guaranteed rate is applied on less than 100% of the premium.

Page 9

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-June 30, 2011

Spread Results



	Three Months Ended June 30,		Six Months Ended June 30,		Year Ended December 31,
	2011	2010	2011	2010	2010
Average yield on invested assets	5.78%	6.14%	5.87%	6.14%	6.06%

Cost of money:
Aggregate	2.73%	2.91%	2.77%	2.93%	2.91%
Cost of money for fixed index annuities	2.68%	2.85%	2.72%	2.87%	2.86%
Average crediting rate for fixed rate annuities:
Annually adjustable	3.17%	3.26%	3.18%	3.26%	3.26%
Multi-year rate guaranteed	3.66%	3.74%	3.67%	3.76%	3.74%

Investment spread:
Aggregate	3.05%	3.23%	3.10%	3.21%	3.15%
Fixed index annuities	3.10%	3.29%	3.15%	3.27%	3.20%
Fixed rate annuities:
Annually adjustable	2.61%	2.88%	2.69%	2.88%	2.80%
Multi-year rate guaranteed	2.12%	2.40%	2.20%	2.38%	2.32%

Summary of Invested Assets



	June 30, 2011				December 31, 2010
	Carrying Amount		Percent		Carrying Amount		Percent
	(Dollars in thousands)
Fixed maturity securities:
United States Government full faith and credit	$	4,419	—	%	$	4,388	—	%
United States Government sponsored agencies	3,212,410		15.1	%	3,750,065		18.9	%
United States municipalities, states and territories	2,763,142		13.0	%	2,367,003		12.0	%
Corporate securities	8,732,941		41.1	%	7,448,323		37.6	%
Residential mortgage backed securities	2,827,512		13.3	%	2,878,557		14.5	%
Other asset backed securities	278,416		1.3	%	204,527		1.0	%
Total fixed maturity securities	17,818,840		83.8	%	16,652,863		84.0	%
Equity securities	66,612		0.4	%	65,961		0.4	%
Mortgage loans on real estate	2,798,233		13.2	%	2,598,641		13.1	%
Derivative instruments	537,920		2.5	%	479,786		2.4	%
Other investments	26,030		0.1	%	19,680		0.1	%
	$	21,247,635	100.0	%	$	19,816,931	100.0	%

Page 10

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-June 30, 2011

Credit Quality of Fixed Maturity Securities - June 30, 2011



NAIC Designation	Carrying Amount		Percent		Rating Agency Rating	Carrying Amount		Percent
	(Dollars in thousands)					(Dollars in thousands)
1	$	13,124,815	73.7	%	Aaa/Aa/A	$	12,343,168	69.3	%
2	4,427,188		24.9	%	Baa	4,219,868		23.7	%
3	238,894		1.3	%	Ba	268,566		1.5	%
4	17,125		0.1	%	B	59,684		0.3	%
5	5,868		—	%	Caa and lower	845,297		4.7	%
6	4,950		—	%	In or near default	82,257		0.5	%
	$	17,818,840	100.0	%		$	17,818,840	100.0	%

Watch List Securities - June 30, 2011



General Description	Amortized Cost		Unrealized Losses			Fair Value		Months Below Amortized Cost
	(Dollars in thousands)
Corporate bonds:
Finance company	$	4,090	$	—		$	4,090	—
U.S. retail company	10,474		(1,324		)	9,150		73
	$	14,564	$	(1,324	)	$	13,240

Page 11

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-June 30, 2011

Summary of Residential Mortgage Backed Securities



Collateral Type	Principal Amount		Amortized Cost		Fair Value
	(Dollars in thousands)
OTTI has not been recognized
Government agency	$	517,340	$	457,636	$	485,703
Prime	1,447,864		1,374,183		1,420,913
Alt-A	50,910		51,379		52,530
	$	2,016,114	$	1,883,198	$	1,959,146
OTTI has been recognized
Prime	$	586,137	$	534,606	$	496,048
Alt-A	486,128		402,703		372,318
	$	1,072,265	$	937,309	$	868,366
Total by collateral type
Government agency	$	517,340	$	457,636	$	485,703
Prime	2,034,001		1,908,789		1,916,961
Alt-A	537,038		454,082		424,848
	$	3,088,379	$	2,820,507	$	2,827,512
Total by NAIC designation
1	$	2,618,412	$	2,391,196	$	2,441,122
2	401,185		364,330		327,796
3	64,339		61,709		56,401
6	4,443		3,272		2,193
	$	3,088,379	$	2,820,507	$	2,827,512

Page 12

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-June 30, 2011

Mortgage Loans by Region and Property Type



	June 30, 2011					December 31, 2010
	Carrying Amount			Percent		Carrying Amount			Percent
	(Dollars in thousands)
Geographic distribution
East	$	687,783		24.4	%	$	618,250		23.6	%
Middle Atlantic	185,222			6.6	%	172,443			6.6	%
Mountain	410,749			14.6	%	402,965			15.4	%
New England	40,430			1.4	%	42,695			1.6	%
Pacific	296,833			10.5	%	247,254			9.5	%
South Atlantic	502,278			17.9	%	496,606			19.0	%
West North Central	454,799			16.1	%	419,002			16.0	%
West South Central	239,366			8.5	%	215,650			8.3	%
	2,817,460			100.0	%	2,614,865			100.0	%
Loan loss allowance	(19,227		)			(16,224		)
	$	2,798,233				$	2,598,641

Property type distribution
Office	$	759,290		26.9	%	$	683,404		26.1	%
Medical Office	165,825			5.9	%	166,930			6.4	%
Retail	627,048			22.3	%	589,369			22.5	%
Industrial/Warehouse	711,972			25.3	%	666,908			25.6	%
Hotel	141,611			5.0	%	151,516			5.8	%
Apartment	167,210			5.9	%	131,682			5.0	%
Mixed use/other	244,504			8.7	%	225,056			8.6	%
	2,817,460			100.0	%	2,614,865			100.0	%
Loan loss allowance	(19,227		)			(16,224		)
	$	2,798,233				$	2,598,641

Page 13

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-June 30, 2011

Shareholder Information

Corporate Offices:

American Equity Investment Life Holding Company

6000 Westown Parkway

West Des Moines, IA 50266

Inquiries:

D. J. Noble, Executive Chairman

(515) 457-1703, dnoble@american-equity.com

Debra J. Richardson, Executive Vice President and Secretary

(515) 273-3551, drichardson@american-equity.com

John M. Matovina, Vice Chairman, Chief Financial Officer and Treasurer

(515) 457-1813, jmatovina@american-equity.com

Wendy C. Waugaman, President and Chief Executive Officer

(515) 457-1824, wcwaugaman@american-equity.com

Common Stock and Dividend Information:

New York Stock Exchange symbol: “AEL”



	High	Low	Close	Dividend Declared
2011
First Quarter	$13.93	$11.27	$13.12	$0.00
Second Quarter	$13.53	$11.91	$12.71	$0.00

2010
First Quarter	$10.99	$6.65	$10.65	$0.00
Second Quarter	$11.64	$8.53	$10.32	$0.00
Third Quarter	$11.19	$9.19	$10.24	$0.00
Fourth Quarter	$13.01	$10.11	$12.55	$0.10

2009
First Quarter	$7.40	$2.96	$4.16	$0.00
Second Quarter	$8.86	$4.01	$5.58	$0.00
Third Quarter	$8.65	$5.24	$7.02	$0.00
Fourth Quarter	$8.40	$6.10	$7.44	$0.08

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 Julie L. LaFollette, Investor Relations, at (515) 273-3602 or by visiting our web site at www.american-equity.com.

Page 14

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-June 30, 2011

Research Analyst Coverage

Steven Schwartz

Raymond James & Associates, Inc.

(312) 612-7686

steven.schwartz@raymondjames.com

Randy Binner

Friedman, Billings, Ramsey & Co., Inc.

(703) 312-1890

rbinner@fbr.com

Edward Shields

Sandler O’Neill & Partners

(312) 281-3487

eshields@sandleroneill.com

Mark Hughes

SunTrust Robinson Humphrey

(615) 748-5680

mark_hughes@rhco.com

Page 15

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