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

Attached files

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EX-99.1 - EXHIBIT 99.1 - AMERICAN EQUITY INVESTMENT LIFE HOLDING CO	ael8kexhibit991.htm
8-K - AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY 8-K - AMERICAN EQUITY INVESTMENT LIFE HOLDING CO	a2012-06x30xaelx8k.htm

Exhibit 99.2

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement

June 30, 2012



A.	Financial Highlights
	Consolidated Balance Sheets	1
	Consolidated Statements of Operations	2
	Operating Income
	Six Months Ended June 30, 2012	3
	Three Months Ended June 30, 2012	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

C.	Investment Summary
	Spread Results	11
	Summary of Invested Assets	11
	Credit Quality of Fixed Maturity Securities	12
	Watch List Securities	12
	Summary of Residential Mortgage Backed Securities	13
	Fixed Maturity Securities by Sector	14
	Mortgage Loans on Commercial Real Estate	15

D.	Shareholder Information	16

E.	Research Analyst Coverage	17

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-June 30, 2012

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(Unaudited)



	June 30, 2012			December 31, 2011
Assets
Investments:
Fixed maturity securities:
Available for sale, at fair value	$	20,955,231		$	18,464,109
Held for investment, at amortized cost	1,000,024			2,644,206
Equity securities, available for sale, at fair value	61,441			62,845
Mortgage loans on real estate	2,732,093			2,823,047
Derivative instruments	476,699			273,314
Other investments	201,757			115,930
Total investments	25,427,245			24,383,451

Cash and cash equivalents	1,407,830			404,952
Coinsurance deposits	2,895,212			2,818,642
Accrued investment income	244,644			228,937
Deferred policy acquisition costs	1,677,770			1,683,857
Deferred sales inducements	1,253,583			1,242,787
Deferred income taxes	—			21,981
Income taxes recoverable	11,934			8,441
Other assets	215,384			81,671
Total assets	$	33,133,602		$	30,874,719

Liabilities and Stockholders' Equity
Liabilities:
Policy benefit reserves	$	29,896,751		$	28,118,716
Other policy funds and contract claims	434,142			400,594
Notes payable	303,595			297,608
Subordinated debentures	256,122			268,593
Deferred income taxes	29,808			—
Other liabilities	635,533			380,529
Total liabilities	31,555,951			29,466,040

Stockholders' equity:
Common stock	60,209			57,837
Additional paid-in capital	482,563			468,281
Unallocated common stock held by ESOP	(3,175		)	(3,620		)
Accumulated other comprehensive income	579,872			457,229
Retained earnings	458,182			428,952
Total stockholders' equity	1,577,651			1,408,679
Total liabilities and stockholders' equity	$	33,133,602		$	30,874,719

Page 1

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-June 30, 2012

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,
	2012			2011			2012			2011
Revenues:
Traditional life and accident and health insurance premiums	$	3,248		$	3,289		$	6,470		$	6,205
Annuity product charges	21,908			19,892			41,301			36,854
Net investment income	320,259			296,878			647,169			589,006
Change in fair value of derivatives	(150,847		)	(22,029		)	108,314			126,624
Net realized losses on investments, excluding other than temporary impairment ("OTTI") losses	(611		)	(854		)	(6,687		)	(2,047		)
OTTI losses on investments:
Total OTTI losses	(375		)	(113		)	(2,156		)	(5,213		)
Portion of OTTI losses recognized from other comprehensive income	(603		)	(2,116		)	(1,703		)	(3,587		)
Net OTTI losses recognized in operations	(978		)	(2,229		)	(3,859		)	(8,800		)
Total revenues	192,979			294,947			792,708			747,842

Benefits and expenses:
Insurance policy benefits and change in future policy benefits	2,250			2,499			4,367			4,394
Interest sensitive and index product benefits (b)	142,733			238,420			281,856			398,085
Amortization of deferred sales inducements	25,940			20,265			42,650			50,957
Change in fair value of embedded derivatives	(80,989		)	(60,963		)	278,077			67,340
Interest expense on notes payable	7,072			7,832			14,067			15,739
Interest expense on subordinated debentures	3,563			3,481			7,149			6,947
Interest expense on amounts due under repurchase agreements	—			1			—			5
Amortization of deferred policy acquisition costs	44,848			38,862			79,132			94,085
Other operating costs and expenses (c)	18,902			16,634			40,615			34,108
Total benefits and expenses	164,319			267,031			747,913			671,660
Income before income taxes	28,660			27,916			44,795			76,182
Income tax expense	9,901			9,642			15,565			26,565
Net income (b)	$	18,759		$	18,274		$	29,230		$	49,617

Earnings per common share (b)	$	0.31		$	0.31		$	0.49		$	0.84
Earnings per common share - assuming dilution (a) (b) (c)	$	0.30		$	0.28		$	0.46		$	0.77
Weighted average common shares outstanding:
Earnings per common share	59,943,337			59,504,119			59,821,937			59,343,959
Earnings per common share - assuming dilution	64,253,628			65,530,192			64,229,656			65,436,952


(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 $257 and $258 for the three months ended June 30, 2012 and 2011, respectively, and $515 and $517 for the six months ended June 30, 2012 and 2011, respectively.


(b)	Six months ended June 30, 2011 includes an adjustment recorded in the first quarter 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.

(c)

Other operating costs and expenses for the three and six months ended June 30, 2012 includes $2.0 million and $5.0 million, respectively, of expense related to the impact of the prospective adoption (effective January 1, 2012) of revised accounting guidance for deferred policy acquisition costs. This revised accounting guidance requires the recognition of a current expense for certain costs which previously were capitalized and amortized over the expected life of the underlying policies. This change, including the impact on related amortization expense, reduced diluted earnings per share for the three and six months ended June 30, 2012 by $0.02 and $0.05, respectively.

Page 2

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-June 30, 2012

Operating Income

Six months ended June 30, 2012 (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	$	6,470		$	—	$	—		$	6,470
Annuity product charges	41,301			—		—			41,301
Net investment income	647,169			—		—			647,169
Change in fair value of derivatives	108,314			—		(197,582		)	(89,268		)
Net realized losses on investments, excluding other than temporary impairment ("OTTI") losses	(6,687		)	6,687		—			—
Net OTTI losses recognized in operations	(3,859		)	3,859		—			—
Total revenues	792,708			10,546		(197,582		)	605,672

Benefits and expenses:
Insurance policy benefits and change in future policy benefits	4,367			—		—			4,367
Interest sensitive and index product benefits	281,856			—		—			281,856
Amortization of deferred sales inducements	42,650			1,322		22,637			66,609
Change in fair value of embedded derivatives	278,077			—		(285,489		)	(7,412		)
Interest expense on notes payable	14,067			—		—			14,067
Interest expense on subordinated debentures	7,149			—		—			7,149
Amortization of deferred policy acquisition costs	79,132			2,379		28,585			110,096
Other operating costs and expenses	40,615			—		—			40,615
Total benefits and expenses	747,913			3,701		(234,267		)	517,347
Income before income taxes	44,795			6,845		36,685			88,325
Income tax expense	15,565			2,437		13,207			31,209
Net income	$	29,230		$	4,408	$	23,478		$	57,116

Earnings per common share	$	0.49							$	0.95
Earnings per common share - assuming dilution	$	0.46							$	0.90

(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.



Change in fair value of derivatives:
Proceeds received at expiration	$	100,903		$	—		$	100,903
Cost of money for fixed index annuities	(182,759		)	—			(182,759		)
Change in the difference between fair value and remaining option cost at beginning and end of period	190,170			(197,582		)	(7,412		)
	$	108,314		$	(197,582	)	$	(89,268	)

Index credits included in interest credited to account balances	$	101,340					$	101,340

Page 3

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-June 30, 2012

Operating Income

Three months ended June 30, 2012 (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	$	3,248		$	—		$	—	$	3,248
Annuity product charges	21,908			—			—		21,908
Net investment income	320,259			—			—		320,259
Change in fair value of derivatives	(150,847		)	—			85,683		(65,164		)
Net realized losses on investments, excluding other than temporary impairment ("OTTI") losses	(611		)	611			—		—
Net OTTI losses recognized in operations	(978		)	978			—		—
Total revenues	192,979			1,589			85,683		280,251

Benefits and expenses:
Insurance policy benefits and change in future policy benefits	2,250			—			—		2,250
Interest sensitive and index product benefits	142,733			—			—		142,733
Amortization of deferred sales inducements	25,940			(16		)	7,217		33,141
Change in fair value of embedded derivatives	(80,989		)	—			56,826		(24,163		)
Interest expense on notes payable	7,072			—			—		7,072
Interest expense on subordinated debentures	3,563			—			—		3,563
Amortization of deferred policy acquisition costs	44,848			267			9,342		54,457
Other operating costs and expenses	18,902			—			—		18,902
Total benefits and expenses	164,319			251			73,385		237,955
Income before income taxes	28,660			1,338			12,298		42,296
Income tax expense	9,901			477			4,562		14,940
Net income	$	18,759		$	861		$	7,736	$	27,356

Earnings per common share	$	0.31							$	0.46
Earnings per common share - assuming dilution	$	0.30							$	0.43

(a)



Change in fair value of derivatives:
Proceeds received at expiration	$	50,041		$	—	$	50,041
Cost of money for fixed index annuities	(91,042		)	—		(91,042		)
Change in the difference between fair value and remaining option cost at beginning and end of period	(109,846		)	85,683		(24,163		)
	$	(150,847	)	$	85,683	$	(65,164	)

Index credits included in interest credited to account balances	$	50,682				$	50,682

Page 4

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-June 30, 2012

Operating Income/Net Income

Quarterly Summary - Most Recent 5 Quarters (Unaudited)



	Q2 2012			Q1 2012			Q4 2011			Q3 2011			Q2 2011
	(Dollars in thousands, except per share data)
Revenues:
Traditional life and accident and health insurance premiums	$	3,248		$	3,222		$	2,820		$	3,126		$	3,289
Annuity product charges	21,908			19,393			18,930			20,405			19,892
Net investment income	320,259			326,910			324,272			305,502			296,878
Change in fair value of derivatives	(65,164		)	(24,104		)	(1,275		)	12,411			69,316
Total revenues	280,251			325,421			344,747			341,444			389,375

Benefits and expenses:
Insurance policy benefits and change in future policy benefits	2,250			2,117			1,588			1,888			2,499
Interest sensitive and index product benefits	142,733			139,123			154,440			223,232			238,420
Amortization of deferred sales inducements	33,141			33,468			31,521			24,279			30,866
Change in fair value of embedded derivatives	(24,163		)	16,751			23,899			(41,447		)	(8,723		)
Interest expense on notes payable	7,072			6,995			7,910			7,984			7,832
Interest expense on subordinated debentures	3,563			3,586			3,542			3,488			3,481
Interest expense on amounts due under repurchase agreements	—			—			25			—			1
Amortization of deferred policy acquisition costs	54,457			55,639			53,525			42,197			53,815
Other operating costs and expenses (b)	18,902			21,713			17,518			15,903			16,634
Total benefits and expenses	237,955			279,392			293,968			277,524			344,825
Operating income before income taxes	42,296			46,029			50,779			63,920			44,550
Income tax expense	14,940			16,269			18,177			22,456			15,537
Operating income (a)	27,356			29,760			32,602			41,464			29,013
Net realized gains (losses) and net OTTI losses on investments, net of offsets	(861		)	(3,547		)	(5,616		)	(8,988		)	(1,278		)
Net effect of derivatives and other index annuity, net of offsets	(7,736		)	(15,742		)	22,713			(45,544		)	(9,461		)
Net income (loss)	$	18,759		$	10,471		$	49,699		$	(13,068	)	$	18,274

Operating income per common share (a)	$	0.46		$	0.50		$	0.55		$	0.70		$	0.48
Operating income per common share - assuming dilution (a)	$	0.43		$	0.46		$	0.52		$	0.67		$	0.45
Earnings (loss) per common share	$	0.31		$	0.18		$	0.83		$	(0.22	)	$	0.31
Earnings (loss) per common share - assuming dilution (b)	$	0.30		$	0.16		$	0.79		$	(0.22	)	$	0.28

Weighted average common shares outstanding (in thousands):
Earnings (loss) per common share	59,943			59,701			59,641			59,596			59,504
Earnings (loss) per common share - assuming dilution	64,254			65,930			63,582			62,698			65,530

(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 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)

Other operating costs and expenses for the second and first quarters of 2012 include $2.0 million and $3.0 million, respectively, of expense related to the impact of the prospective adoption (effective January 1, 2012) of revised accounting guidance for deferred policy acquisition costs. This revised accounting guidance requires the recognition of a current expense for certain costs which previously were capitalized and amortized over the expected life of the underlying policies. This change, including the impact on related amortization expense, reduced diluted earnings per share for the second and first quarters of 2012 by $0.02 and $0.03, respectively.

Page 5

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-June 30, 2012

Capitalization/Book Value per Share



	June 30, 2012			December 31, 2011
	(Dollars in thousands, except per share data)
Capitalization:
Notes payable	$	303,595		$	297,608
Subordinated debentures payable to subsidiary trusts	256,122			268,593
Total debt	559,717			566,201
Total stockholders’ equity	1,577,651			1,408,679
Total capitalization	2,137,368			1,974,880
Accumulated other comprehensive income (AOCI)	(579,872		)	(457,229		)
Total capitalization excluding AOCI (a)	$	1,557,496		$	1,517,651

Total stockholders’ equity	$	1,577,651		$	1,408,679
Accumulated other comprehensive income	(579,872		)	(457,229		)
Total stockholders’ equity excluding AOCI (a)	$	997,779		$	951,450

Common shares outstanding (b)	61,053,686			59,131,995

Book Value per Share: (c)
Book value per share including AOCI	$	25.84		$	23.82
Book value per share excluding AOCI (a)	$	16.34		$	16.09

Debt-to-Capital Ratios: (d)
Senior debt / Total capitalization	19.5		%	19.6		%
Adjusted debt / Total capitalization	20.9		%	22.3		%


(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: 2012 - 1,139,702 shares; 2011 - 1,631,548 shares and exclude unallocated shares held by ESOP: 2012 - 294,770 shares; 2011 - 336,093 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, 2012

Annuity Deposits by Product Type



	Three Months Ended June 30,				Six Months Ended June 30,				Year Ended December 31,
Product Type	2012		2011		2012		2011		2011
	(Dollars in thousands)
Fixed Index Annuities:
Index Strategies	$	533,633	$	595,422	$	1,021,760	$	1,374,004	$	2,839,295
Fixed Strategy	281,206		312,161		570,560		669,633		1,377,987
	814,839		907,583		1,592,320		2,043,637		4,217,282
Fixed Rate Annuities:
Single-Year Rate Guaranteed	21,141		34,036		55,628		80,889		169,304
Multi-Year Rate Guaranteed	39,232		85,592		160,897		162,639		397,925
Single premium immediate annuities	42,137		81,591		87,949		163,481		305,603
	102,510		201,219		304,474		407,009		872,832
Total before coinsurance ceded	917,349		1,108,802		1,896,794		2,450,646		5,090,114
Coinsurance ceded	32,668		70,331		131,447		136,208		326,531
Net after coinsurance ceded	$	884,681	$	1,038,471	$	1,765,347	$	2,314,438	$	4,763,583

Surrender Charge Protection and Account Values by Product Type

Annuity Surrender Charges and Net (of coinsurance) Account Values at June 30, 2012:



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

Fixed Index Annuities	14.2	10.6	16.1%	$	23,854,255	92.2	%
Single-Year Fixed Rate Guaranteed Annuities	11.2	4.3	8.0%	1,437,315		5.6	%
Multi-Year Fixed Rate Guaranteed Annuities (a)	6.3	1.9	4.7%	567,573		2.2	%
Total	13.9	10.0	15.4%	$	25,859,143	100.0	%

(a) 53% of Net Account Value is no longer in multi-year rate guarantee period and can be adjusted annually.

Page 7

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-June 30, 2012

Annuity Liability Characteristics



	Fixed Annuities Account Value		Fixed Index Annuities Account Value
	(Dollars in thousands)
SURRENDER CHARGE PERCENTAGES:
No surrender charge	$	499,250	$	496,379
0.0% < 2.0%	44,128		148,334
2.0% < 3.0%	184,841		173,419
3.0% < 4.0%	30,506		386,918
4.0% < 5.0%	65,340		249,169
5.0% < 6.0%	22,618		232,277
6.0% < 7.0%	132,121		200,692
7.0% < 8.0%	195,905		416,899
8.0% < 9.0%	190,939		651,210
9.0% < 10.0%	147,289		566,822
10.0% or greater	491,951		20,332,136
	$	2,004,888	$	23,854,255



	Fixed and Fixed Index Annuities Account Value		Weighted Average Surrender Charge
	(Dollars in thousands)
SURRENDER CHARGE EXPIRATION BY YEAR:
Out of Surrender Charge	$	995,629	—	%
2012	184,214		1.94	%
2013	502,638		2.54	%
2014	550,237		3.91	%
2015	587,903		5.74	%
2016	840,927		7.24	%
2017	990,706		8.30	%
2018	854,810		10.56	%
2019	600,849		11.16	%
2020	942,256		12.62	%
2021	1,244,520		14.33	%
2022	1,485,184		16.06	%
2023	3,833,205		18.71	%
2024	4,154,497		19.12	%
2025	3,170,014		19.09	%
2026	2,210,593		19.22	%
2027	1,926,587		19.76	%
2028	772,796		19.99	%
2029	11,578		20.00	%
	$	25,859,143	15.42	%

Page 8

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-June 30, 2012

Annuity Liability Characteristics



	Fixed Annuities Account Value		Fixed Index Annuities Account Value
	(Dollars in thousands)
CREDITED RATE (INCLUDING BONUS INTEREST) VS. ULTIMATE MINIMUM GUARANTEED RATE DIFFERENTIAL:
No differential	$	426,953	$	555,439
› 0.0% - 0.25%	561,675		635,528
› 0.25% - 0.5%	152,778		200,484
› 0.5% - 1.0% (a)	336,063		1,140,674
› 1.0% - 1.5% (a)	131,747		38,812
› 1.5% - 2.0%	168,776		2,014
› 2.0% - 2.5%	4,724		—
› 2.5% - 3.0%	41,363		—
1.00% ultimate guarantee - 2.33% wtd avg interest rate (b)	6,058		—
1.50% ultimate guarantee - 1.86% wtd avg interest rate (b)	65,420		1,568,870
2.00% ultimate guarantee - 2.74% wtd avg interest rate (b)	109,331		—
2.25% ultimate guarantee - 2.79% wtd avg interest rate (b)	—		1,576,408
3.00% ultimate guarantee - 3.00% wtd avg interest rate (b)	—		3,167,172
Allocated to index strategies (see table that follows)	—		14,968,854
	$	2,004,888	$	23,854,255


(a)	$170,871 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. $655,309 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.


(b)	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, 2012

Annuity Liability Characteristics

FIXED INDEX ANNUITIES ACCOUNT VALUE - INDEX STRATEGIES



Annual Monthly Average and Point-to-Point with Caps
	Minimum Guaranteed Cap
	1%		3%		4%		7%		8% +
Current Cap	(Dollars in thousands)
At minimum	$	—	$	1,835	$	616,355	$	54,213	$	276,499
3% - 3.25%	801,573		—		—		—		—
4% - 5%	4,293		118,664		1,331,540		—		—
5% - 6%	—		6,360		1,975,726		—		—
6% - 7%	—		—		3,064,784		—		—
>= 7%	—		13,070		573,601		138,781		109,401



Annual Monthly Average and Point-to-Point with Participation Rates
	Minimum Guaranteed Participation Rate
	10%		25%		35%		50% +
Current Participation Rate	(Dollars in thousands)
At minimum	$	19	$	333,220	$	172,779	$	181,434
< 20%	71,254		—		—		—
20% - 40%	57,349		476,472		—		—
40% - 60%	—		165,530		111,252		619
>= 60%	—		77,250		55,608		43,890



S&P 500 Monthly Point-to-Point - Minimum Guaranteed Monthly Cap = 1% (Dollars in thousands)
Current Cap
At minimum	$	7,611
1.6% - 1.8%	1,039,472
2.0% - 2.4%	1,698,248
>= 2.4%	1,379,645

If all caps and participation rates were reduced to minimum caps and participation rates, the cost of options would decrease by 0.67% based upon prices of options for the week ended July 18, 2012.

Page 10

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-June 30, 2012

Spread Results



	Three Months Ended June 30,		Six Months Ended June 30,		Year Ended December 31,
	2012	2011	2012	2011	2011
Reported Amounts
Average yield on invested assets	5.34%	5.78%	5.47%	5.87%	5.80%
Aggregate cost of money	2.64%	2.73%	2.66%	2.77%	2.77%
Aggregate investment spread	2.70%	3.05%	2.81%	3.10%	3.03%

Adjustments
Investment yield - temporary cash investments	0.27%	0.11%	0.21%	0.08%	0.07%
Investment yield - additional prepayment income	(0.03)%	—%	(0.05)%	—%	—%
Cost of money effect of (under) over hedging	(0.01)%	0.10%	—%	0.08%	0.06%

Adjusted Amounts
Average yield on invested assets	5.58%	5.89%	5.63%	5.95%	5.87%
Aggregate cost of money	2.63%	2.83%	2.66%	2.85%	2.83%
Aggregate investment spread	2.95%	3.06%	2.97%	3.10%	3.04%

Summary of Invested Assets



	June 30, 2012				December 31, 2011
	Carrying Amount		Percent		Carrying Amount		Percent
	(Dollars in thousands)
Fixed maturity securities:
United States Government full faith and credit	$	5,214	—	%	$	4,678	—	%
United States Government sponsored agencies	2,628,531		10.3	%	4,368,053		17.9	%
United States municipalities, states and territories	3,495,557		13.8	%	3,333,383		13.7	%
Foreign government obligations	46,186		0.2	%	43,228		0.2	%
Corporate securities	12,494,144		49.1	%	10,192,293		41.8	%
Residential mortgage backed securities	2,524,030		9.9	%	2,703,290		11.1	%
Other asset backed securities	761,593		3.0	%	463,390		1.9	%
Total fixed maturity securities	21,955,255		86.3	%	21,108,315		86.6	%
Equity securities	61,441		0.2	%	62,845		0.2	%
Mortgage loans on real estate	2,732,093		10.8	%	2,823,047		11.6	%
Derivative instruments	476,699		1.9	%	273,314		1.1	%
Other investments	201,757		0.8	%	115,930		0.5	%
	$	25,427,245	100.0	%	$	24,383,451	100.0	%

Page 11

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-June 30, 2012

Credit Quality of Fixed Maturity Securities - June 30, 2012



NAIC Designation	Carrying Amount		Percent		Rating Agency Rating	Carrying Amount		Percent
	(Dollars in thousands)					(Dollars in thousands)
1	$	14,797,333	67.4	%	Aaa/Aa/A	$	14,049,730	64.0	%
2	6,758,202		30.9	%	Baa	6,479,458		29.5	%
3	359,550		1.6	%	Ba	263,616		1.2	%
4	30,224		0.1	%	B	226,137		1.0	%
5	5,783		—	%	Caa and lower	829,464		3.8	%
6	4,163		—	%	In or near default	106,850		0.5	%
	$	21,955,255	100.0	%		$	21,955,255	100.0	%

Watch List Securities - June 30, 2012



General Description	Amortized Cost		Unrealized Losses			Fair Value		Months Below Amortized Cost
	(Dollars in thousands)
Corporate bonds:
Finance	$	68,951	$	(17,153	)	$	51,798	3 - 19
Industrial	38,887		(7,947		)	30,940		11 - 22
	$	107,838	$	(25,100	)	$	82,738

Page 12

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-June 30, 2012

Summary of Residential Mortgage Backed Securities



Collateral Type	Principal Amount		Amortized Cost		Fair Value
	(Dollars in thousands)
OTTI has not been recognized
Government agency	$	491,262	$	439,046	$	544,008
Prime	1,033,851		985,064		1,034,048
Alt-A	43,998		44,614		45,732
	$	1,569,111	$	1,468,724	$	1,623,788
OTTI has been recognized
Prime	$	654,317	$	578,529	$	559,482
Alt-A	448,967		360,365		340,760
	$	1,103,284	$	938,894	$	900,242
Total by collateral type
Government agency	$	491,262	$	439,046	$	544,008
Prime	1,688,168		1,563,593		1,593,530
Alt-A	492,965		404,979		386,492
	$	2,672,395	$	2,407,618	$	2,524,030
Total by NAIC designation
1	$	2,272,920	$	2,055,472	$	2,193,086
2	329,707		290,504		273,991
3	65,544		58,905		54,948
6	4,224		2,737		2,005
	$	2,672,395	$	2,407,618	$	2,524,030

Page 13

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-June 30, 2012

Fixed Maturity Securities by Sector



	June 30, 2012				December 31, 2011
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)
Available for sale:
United States Government full faith and credit and sponsored agencies	$	1,683,354	$	1,709,730	$	1,784,485	$	1,804,457
United States municipalities, states and territories	3,052,875		3,495,557		2,981,699		3,333,383
Foreign Government obligations	36,402		46,186		36,373		43,228
Corporate securities:
Consumer discretionary	1,121,361		1,253,702		885,834		992,042
Consumer staples	705,856		802,757		614,531		701,192
Energy	1,324,745		1,460,249		1,042,956		1,166,284
Financials	2,130,000		2,278,898		1,802,745		1,862,573
Health care	703,251		825,471		667,014		765,274
Industrials	1,262,058		1,417,701		1,029,933		1,151,961
Information technology	736,306		805,744		486,545		547,195
Materials	841,793		923,462		562,272		627,405
Military housing	5,328		5,471		5,331		5,482
Telecommunications	334,333		359,324		251,202		268,924
Utilities	1,974,719		2,256,774		1,727,993		1,988,764
Residential mortgage backed securities:
Government agency	439,046		544,008		449,720		547,987
Prime	1,563,593		1,593,530		1,738,702		1,761,890
Alt-A	404,979		386,492		429,518		393,413
Other asset backed securities:
Consumer discretionary	28,221		28,636		18,061		18,512
Consumer staples	34,887		36,508		5,000		5,038
Energy	8,322		8,282		8,338		8,680
Financials	393,679		396,862		160,994		162,892
Industrials	71,744		76,978		57,547		61,285
Military housing	150,759		160,090		142,903		152,549
Telecommunications	26,744		28,859		7,334		8,435
Utilities	7,334		8,791		14,762		17,221
Other	14,411		16,587		27,570		28,778
Redeemable preferred stock - financials	26,927		28,582		40,817		39,265
	$	19,083,027	$	20,955,231	$	16,980,179	$	18,464,109
Held for investment:
United States Government sponsored agencies	$	924,015	$	926,522	$	2,568,274	$	2,585,080
Corporate security - financials	76,009		61,839		75,932		59,342
	$	1,000,024	$	988,361	$	2,644,206	$	2,644,422

Page 14

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-June 30, 2012

Mortgage Loans on Commercial Real Estate



	June 30, 2012						December 31, 2011
	Principal			Percent			Principal		Percent
	(Dollars in thousands)
Geographic distribution
East	$	700,554		25.3		%	$	719,231	25.2	%
Middle Atlantic	161,976			5.9		%	169,240		5.9	%
Mountain	406,787			14.6		%	411,054		14.4	%
New England	32,463			1.2		%	36,815		1.3	%
Pacific	321,860			11.6		%	309,693		10.8	%
South Atlantic	500,536			18.1		%	493,764		17.3	%
West North Central	423,036			15.3		%	487,693		17.1	%
West South Central	221,526			8.0		%	228,521		8.0	%
	$	2,768,738		100.0		%	$	2,856,011	100.0	%

Property type distribution
Office	$	703,802		25.4		%	$	777,343	27.2	%
Medical Office	153,021			5.5		%	175,580		6.1	%
Retail	657,615			23.7		%	635,916		22.3	%
Industrial/Warehouse	718,964			26.0		%	710,426		24.9	%
Hotel	112,906			4.1		%	139,193		4.9	%
Apartment	190,348			6.9		%	187,548		6.6	%
Mixed use/other	232,082			8.4		%	230,005		8.0	%
	$	2,768,738		100.0		%	$	2,856,011	100.0	%

	June 30, 2012			December 31, 2011
	(Dollars in thousands)
Credit Exposure - By Payment Activity
Performing	$	2,662,205		$	2,743,068
In workout	71,008			67,425
Delinquent	7,244			6,595
Collateral dependent	28,281			38,923
	2,768,738			2,856,011
Specific loan loss allowance	(25,445		)	(23,664		)
General loan loss allowance	(11,200		)	(9,300		)
	$	2,732,093		$	2,823,047

Page 15

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-June 30, 2012

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, Chief Executive Officer and President

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

Ted M. Johnson, Chief Financial Officer and Treasurer

(515) 457-1980, tjohnson@american-equity.com

Common Stock and Dividend Information:

New York Stock Exchange symbol: “AEL”



	High	Low	Close	Dividend Declared
2012
First Quarter	$13.09	$10.13	$12.77	$0.00
Second Quarter	$12.95	$10.00	$11.01	$0.00

2011
First Quarter	$13.93	$11.27	$13.12	$0.00
Second Quarter	$13.53	$11.91	$12.71	$0.00
Third Quarter	$13.22	$8.01	$8.75	$0.00
Fourth Quarter	$11.82	$8.05	$10.40	$0.12

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

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 16

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-June 30, 2012

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

Daniel Furtado

Jefferies & Company, Inc.

(415) 229-1569

dfurtado@jefferies.com

Erik Bass

J.P. Morgan

(212) 622-2295

erik.bass@jpmorgan.com

Page 17

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