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

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8-K - 8-K - AMERICAN EQUITY INVESTMENT LIFE HOLDING CO	a2013-09x30ael8k.htm
EX-99.1 - PRESS RELEASE - AMERICAN EQUITY INVESTMENT LIFE HOLDING CO	a2013-09x30ael8kexhibit991.htm

Exhibit 99.2

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement

September 30, 2013



A.	Financial Highlights
	Condensed Consolidated Balance Sheets	1
	Consolidated Statements of Operations	2
	Quarterly Summary - Most Recent 5 Quarters	3
	Non-GAAP Financial Measures
	Reconciliation from Net Income (Loss) to Operating Income	4
	Summary of Adjustments to Arrive at Operating Income	5
	Quarterly Summary - Reconciliation from Net Income (Loss) to Operating Income	6
	Quarterly Summary - Summary of Adjustments to Arrive at Operating Income	7
	Capitalization/Book Value per Share	8
	Spread Results	9

B.	Product Summary
	Summary of Cost of Money for Deferred Annuities	9
	Annuity Account Balance Rollforward	9
	Annuity Deposits by Product Type	10
	Surrender Charge Protection and Account Values by Product Type	10
	Annuity Liability Characteristics	11

C.	Investment Summary
	Summary of Invested Assets	14
	Credit Quality of Fixed Maturity Securities	14
	Watch List Securities	15
	Summary of Residential Mortgage Backed Securities	15
	Fixed Maturity Securities by Sector	16
	Mortgage Loans on Commercial Real Estate	17

D.	Shareholder Information	18

E.	Research Analyst Coverage	19

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-September 30, 2013

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)



	September 30, 2013			December 31, 2012
	(Unaudited)
Assets
Investments:
Fixed maturity securities:
Available for sale, at fair value	$	26,262,878		$	24,172,136
Held for investment, at amortized cost	76,212			76,088
Equity securities, available for sale, at fair value	9,708			53,422
Mortgage loans on real estate	2,593,851			2,623,940
Derivative instruments	625,236			415,258
Other investments	212,870			196,366
Total investments	29,780,755			27,537,210

Cash and cash equivalents	934,931			1,268,545
Coinsurance deposits	2,970,601			2,910,701
Accrued investment income	307,554			261,833
Deferred policy acquisition costs	2,291,996			1,709,799
Deferred sales inducements	1,763,137			1,292,341
Deferred income taxes	225,894			—
Other assets	438,279			153,049
Total assets	$	38,713,147		$	35,133,478

Liabilities and Stockholders' Equity
Liabilities:
Policy benefit reserves	$	34,652,479		$	31,773,988
Other policy funds and contract claims	431,425			455,752
Notes payable	691,452			309,869
Subordinated debentures	246,003			245,869
Amounts due under repurchase agreements	148,180			—
Deferred income taxes	—			49,303
Income taxes payable	29,878			4,756
Other liabilities	1,119,062			573,704
Total liabilities	37,318,479			33,413,241

Stockholders' equity:
Common stock	64,723			61,751
Additional paid-in capital	487,971			496,715
Unallocated common stock held by ESOP	(1,623		)	(2,583		)
Accumulated other comprehensive income	163,725			686,807
Retained earnings	679,872			477,547
Total stockholders' equity	1,394,668			1,720,237
Total liabilities and stockholders' equity	$	38,713,147		$	35,133,478

Page 1

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-September 30, 2013

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share data)

(Unaudited)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
Revenues:
Traditional life insurance premiums	$	2,493		$	3,300		$	8,104		$	9,770
Annuity product charges	26,451			23,875			71,443			65,176
Net investment income	354,147			318,594			1,019,980			965,763
Change in fair value of derivatives	193,028			161,090			631,030			269,404
Net realized gains (losses) on investments, excluding other than temporary impairment ("OTTI") losses	(2,077		)	(1,238		)	24,197			(7,925		)
OTTI losses on investments:
Total OTTI losses	—			—			(4,964		)	(2,156		)
Portion of OTTI losses recognized from other comprehensive income	(222		)	(1,686		)	(1,270		)	(3,389		)
Net OTTI losses recognized in operations	(222		)	(1,686		)	(6,234		)	(5,545		)
Loss on extinguishment of debt	(938		)	—			(1,527		)	—
Total revenues	572,882			503,935			1,746,993			1,296,643

Benefits and expenses:
Insurance policy benefits and change in future policy benefits	1,647			1,865			5,488			6,232
Interest sensitive and index product benefits	327,976			246,105			889,810			527,961
Amortization of deferred sales inducements	34,625			7,709			183,992			50,359
Change in fair value of embedded derivatives	36,224			188,201			(8,913		)	466,278
Interest expense on notes payable	12,957			7,141			26,985			21,208
Interest expense on subordinated debentures	3,034			3,235			9,061			10,384
Amortization of deferred policy acquisition costs	50,034			25,954			265,534			105,086
Other operating costs and expenses	20,658			36,170			65,029			76,785
Total benefits and expenses	487,155			516,380			1,436,986			1,264,293
Income (loss) before income taxes	85,727			(12,445		)	310,007			32,350
Income tax expense (benefit)	29,546			(4,616		)	107,682			10,949
Net income (loss)	$	56,181		$	(7,829	)	$	202,325		$	21,401

Earnings (loss) per common share	$	0.86		$	(0.13	)	$	3.15		$	0.35
Earnings (loss) per common share - assuming dilution	$	0.75		$	(0.13	)	$	2.79		$	0.34
Weighted average common shares outstanding (in thousands):
Earnings (loss) per common share	65,129			62,504			64,239			60,723
Earnings (loss) per common share - assuming dilution	74,560			65,262			72,459			65,232

Page 2

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-September 30, 2013

Quarterly Summary - Most Recent 5 Quarters (Unaudited)



	Q3 2013			Q2 2013			Q1 2013			Q4 2012			Q3 2012
	(Dollars in thousands, except per share data)
Revenues:
Traditional life insurance premiums	$	2,493		$	2,913		$	2,698		$	3,107		$	3,300
Surrender charges	11,160			11,292			11,502			10,153			11,240
Lifetime income benefit rider fees	15,291			12,219			9,979			13,677			12,635
Net investment income	354,147			336,143			329,690			321,160			318,594
Change in fair value of derivatives	193,028			64,040			373,962			(48,266		)	161,090
Net realized gains (losses) on investments, excluding OTTI	(2,077		)	15,689			10,585			1,471			(1,238		)
Net OTTI losses recognized in operations	(222		)	(2,775		)	(3,237		)	(9,387		)	(1,686		)
Loss on extinguishment of debt	(938		)	(589		)	—			—			—
Total revenues	572,882			438,932			735,179			291,915			503,935

Benefits and expenses:
Insurance policy benefits and change in future policy benefits	1,647			2,106			1,735			1,843			1,865
Interest sensitive and index product benefits (a)	327,976			336,025			225,809			290,126			246,105
Amortization of deferred sales inducements (b)	34,625			120,536			28,831			36,798			7,709
Change in fair value of embedded derivatives	36,224			(408,409		)	363,272			(179,379		)	188,201
Interest expense on notes payable	12,957			6,780			7,248			7,271			7,141
Interest expense on subordinated debentures	3,034			3,018			3,009			3,074			3,235
Amortization of deferred policy acquisition costs (b)	50,034			169,270			46,230			59,833			25,954
Other operating costs and expenses (c)	20,658			24,851			19,520			18,710			36,170
Total benefits and expenses	487,155			254,177			695,654			238,276			516,380
Income (loss) before income taxes	85,727			184,755			39,525			53,639			(12,445		)
Income tax expense (benefit)	29,546			64,642			13,494			17,242			(4,616		)
Net income (loss) (a) (b) (c)	$	56,181		$	120,113		$	26,031		$	36,397		$	(7,829	)

Earnings (loss) per common share	$	0.86		$	1.87		$	0.41		$	0.58		$	(0.13	)
Earnings (loss) per common share - assuming dilution (a) (b) (c)	$	0.75		$	1.71		$	0.38		$	0.55		$	(0.13	)
Weighted average common shares outstanding (in thousands):
Earnings (loss) per common share	65,129			64,254			63,314			62,856			62,504
Earnings (loss) per common share - assuming dilution	74,560			70,382			68,706			65,897			65,262

(a)

Q3 2013 includes a benefit from the revision of assumptions used in determining reserves held for living income benefit riders consistent with unlocking for deferred policy acquisition costs and deferred sales inducements. The impact decreased interest sensitive and index product benefits by $1.8 million and increased net income and earnings per common share - assuming dilution by $1.1 million and $0.01 per share, respectively.

Q3 2012 includes a benefit from the revision of assumptions used in determining reserves held for living income benefit riders consistent with unlocking for deferred policy acquisition costs and deferred sales inducements. The impact decreased interest sensitive and index product benefits by $2.2 million and decreased net loss and loss per common share - assuming dilution by $1.4 million and $0.02 per share, respectively.


(b)	Q3 2013 includes benefit from unlocking which reduced amortization of deferred sales inducements and deferred policy acquisition costs by $11.1 million and $18.5 million, respectively, and increased net income and earnings per common share- assuming dilution by $19.1 million and $0.26 per share, respectively.

Q3 2012 includes expense from unlocking which reduced amortization of deferred sales inducements by $0.2 million, increased amortization of deferred policy acquisition costs by $3.7 million, and increased net loss and loss per common share - assuming dilution for Q3 2012 by $2.2 million and $0.03 per share, respectively.


(c)	Q2 2013 includes expense of $8.5 million related to assessments received and future estimates of assessments from state guaranty fund associations related to the insolvency of Executive Life Insurance Company of New York, which after income taxes decreased net income and earnings per common share - assuming dilution by $5.5 million and $0.08 per share, respectively.

Q2 2013 includes a benefit of $3.2 million related to the final settlement of a litigation liability established in 2010, which after related adjustments to amortization of deferred sales inducements and deferred policy acquisition costs and income taxes increased net income and earnings per common share - assuming dilution by $2.0 million and $0.03 per share, respectively.

Q3 2012 includes expense from recognizing an estimated litigation liability of $17.5 million, which, after related adjustments to amortization of deferred sales inducements and deferred policy acquisition costs and income taxes, increased net loss and loss per common share - assuming dilution by $9.6 million and $0.15 per share.

Page 3

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-September 30, 2013

NON-GAAP FINANCIAL MEASURES

In addition to net income (loss), we have consistently utilized operating income 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, fair value changes in derivatives and embedded derivatives, loss on extinguishment of debt and changes in litigation reserves. 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.

Reconciliation from Net Income (Loss) to Operating Income (Unaudited)



	Three Months Ended September 30,					Nine Months Ended September 30,
	2013		2012			2013			2012
	(Dollars in thousands, except per share data)
Net income (loss)	$	56,181	$	(7,829	)	$	202,325		$	21,401
Adjustments to arrive at operating income:
Net realized investment (gains) losses, including OTTI (a)	890		1,415			(5,488		)	5,823
Change in fair value of derivatives and embedded derivatives (a)	2,229		19,000			(72,187		)	42,478
Litigation reserve (a)	—		9,580			(1,969		)	9,580
Extinguishment of debt (a)	548		—			893			—
Operating income (a non-GAAP financial measure)	$	59,848	$	22,166		$	123,574		$	79,282

Per common share - assuming dilution:
Net income (loss)	$	0.75	$	(0.13	)	$	2.79		$	0.34
Adjustments to arrive at operating income:
Anti-dilutive effect of net loss	—		0.01			—			—
Net realized investment (gains) losses, including OTTI	0.01		0.02			(0.07		)	0.08
Changes in fair value of derivatives and embedded derivatives	0.03		0.29			(0.99		)	0.65
Litigation reserve	—		0.15			(0.03		)	0.15
Extinguishment of debt	0.01		—			0.01			—
Operating income (a non-GAAP financial measure)	$	0.80	$	0.34		$	1.71		$	1.22


(a)	Adjustments to net income (loss) to arrive at operating income are presented net of related adjustments to amortization of deferred sales inducements (DSI) and deferred policy acquisition costs (DAC) and net of income taxes.

Page 4

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-September 30, 2013

Summary of Adjustments to Arrive at Operating Income (Unaudited)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
	(Dollars in thousands)
Net realized investment gains and losses, including OTTI:
Net realized (gains) losses on investments, including OTTI	$	2,299		$	2,924		$	(17,963	)	$	13,470
Amortization of DAC and DSI	(917		)	(727		)	9,441			(4,428		)
Income taxes	(492		)	(782		)	3,034			(3,219		)
	$	890		$	1,415		$	(5,488	)	$	5,823
Change in fair value of derivatives and embedded derivatives:
Index annuities	$	(26,228	)	$	88,646		$	(300,927	)	$	173,000
2015 notes, note hedge and warrants	11,445			—			11,445			—
Interest rate caps and swap	705			1,484			(6,148		)	5,037
Amortization of DAC and DSI	17,531			(60,531		)	184,023			(111,753		)
Income taxes	(1,224		)	(10,599		)	39,420			(23,806		)
	$	2,229		$	19,000		$	(72,187	)	$	42,478
Litigation reserve:
Change in litigation reserve recorded in other operating costs	$	—		$	17,532		$	(3,212	)	$	17,532
Amortization of DAC and DSI	—			(2,656		)	156			(2,656		)
Income taxes	—			(5,296		)	1,087			(5,296		)
	$	—		$	9,580		$	(1,969	)	$	9,580
Extinguishment of debt:
Loss on extinguishment of debt	$	938		$	—		$	1,527		$	—
Income taxes	(390		)	—			(634		)	—
	$	548		$	—		$	893		$	—

Page 5

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-September 30, 2013

NON-GAAP FINANCIAL MEASURES

Quarterly Summary - Most Recent 5 Quarters (Unaudited)

Reconciliation from Net Income (Loss) to Operating Income



	Q3 2013		Q2 2013			Q1 2013			Q4 2012			Q3 2012
	(Dollars in thousands, except per share data)
Net income (loss)	$	56,181	$	120,113		$	26,031		$	36,397		$	(7,829	)
Adjustments to arrive at operating income:
Net realized investment (gains) losses, including OTTI (a)	890		(3,574		)	(2,804		)	2,825			1,415
Change in fair value of derivatives and embedded derivatives (a)	2,229		(84,653		)	10,237			(8,317		)	19,000
Litigation reserve (a)	—		(1,969		)	—			—			9,580
Extinguishment of debt (a)	548		345			—			—			—
Operating income (a non-GAAP financial measure) (b) (c) (d)	$	59,848	$	30,262		$	33,464		$	30,905		$	22,166

Operating income per common share - assuming dilution (b) (c) (d)	$	0.80	$	0.43		$	0.49		$	0.47		$	0.34


(a)	Adjustments to net income (loss) to arrive at operating income are presented net of related adjustments to amortization and deferred sales inducements and deferred policy acquisition costs and net of income taxes.


(b)	Q2 2013 includes expense of $8.5 million related to assessments received and future estimates of assessments from state guaranty fund associations related to the insolvency of Executive Life Insurance Company of New York, which after income taxes decreased operating income and operating income per common share - assuming dilution by $5.5 million and $0.08 per share, respectively.


(c)	Q3 2013 includes benefit from unlocking which reduced amortization of deferred sales inducements and deferred policy acquisition costs by $12.6 million and $20.4 million, respectively, and increased operating income and operating income per common share- assuming dilution by $21.3 million and $0.29 per share, respectively.

Q3 2012 includes expense from unlocking which increased amortization of deferred sales inducements and amortization of deferred policy acquisition costs by $2.4 million and $7.3 million, respectively, and decreased operating income and operating income per common share - assuming dilution by $6.3 million and $0.09 per share, respectively.

(d)

Q3 2013 includes a benefit from the revision of assumptions used in determining reserves held for living income benefit riders consistent with unlocking for deferred policy acquisition costs and deferred sales inducements. The impact decreased interest sensitive and index product benefits by $1.8 million and increased operating income and operating income per common share - assuming dilution by $1.1 million and $0.01 per share, respectively.

Q3 2012 includes a benefit from the revision of assumptions used in determining reserves held for living income benefit riders consistent with unlocking for deferred policy acquisition costs and deferred sales inducements. The impact reduced interest sensitive and index product benefits by $2.2 million and increased operating income and operating income per common share - assuming dilution by $1.4 million $0.02 per share, respectively.

Page 6

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-September 30, 2013

Summary of Adjustments to Arrive at Operating Income



	Q3 2013			Q2 2013			Q1 2013			Q4 2012			Q3 2012
	(Dollars in thousands)
Net realized (gains) losses on investments	$	2,077		$	(15,689	)	$	(10,585	)	$	(1,471	)	$	1,238
Net OTTI losses recognized in operations	222			2,775			3,237			9,387			1,686
Change in fair value of derivatives	25,448			91,374			(299,494		)	156,123			(96,232		)
Loss on extinguishment of debt	938			589			—			—			—
Increase (decrease) in total revenues	28,685			79,049			(306,842		)	164,039			(93,308		)

Amortization of deferred sales inducements	(6,765		)	(82,583		)	7,447			(3,140		)	28,278
Change in fair value of embedded derivatives	39,526			408,606			(335,174		)	182,465			(186,362		)
Amortization of deferred policy acquisition costs	(9,849		)	(111,570		)	9,700			(6,746		)	35,636
Other operating costs and expenses	—			3,212			—			—			(17,532		)
Increase (decrease) in total benefits and expenses	22,912			217,665			(318,027		)	172,579			(139,980		)
Increase (decrease) in income (loss) before income taxes	5,773			(138,616		)	11,185			(8,540		)	46,672
Increase (decrease) in income tax expense	2,106			(48,765		)	3,752			(3,048		)	16,677
Increase (decrease) in net income (loss)	$	3,667		$	(89,851	)	$	7,433		$	(5,492	)	$	29,995

Page 7

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-September 30, 2013

Capitalization/Book Value per Share



	(a) Pro-forma September 30, 2013			September 30, 2013			December 31, 2012
				(Dollars in thousands, except per share data)
Capitalization:
Notes payable	$	597,426		$	691,452		$	309,869
Subordinated debentures payable to subsidiary trusts	246,003			246,003			245,869
Total debt	843,429			937,455			555,738
Total stockholders’ equity	1,423,351			1,394,668			1,720,237
Total capitalization	2,266,780			2,332,123			2,275,975
Accumulated other comprehensive income (AOCI)	(163,725		)	(163,725		)	(686,807		)
Total capitalization excluding AOCI (b)	$	2,103,055		$	2,168,398		$	1,589,168

Total stockholders’ equity	$	1,423,351		$	1,394,668		$	1,720,237
Accumulated other comprehensive income	(163,725		)	(163,725		)	(686,807		)
Total stockholders’ equity excluding AOCI (b)	$	1,259,626		$	1,230,943		$	1,033,430

Common shares outstanding (c)	68,547,583			65,428,803			62,653,134

Book Value per Share: (d)
Book value per share including AOCI	$	20.76		$	21.32		$	27.46
Book value per share excluding AOCI (b)	$	18.38		$	18.81		$	16.49

Debt-to-Capital Ratios: (e)
Senior debt / Total capitalization	28.4		%	31.9		%	19.5		%
Adjusted debt / Total capitalization	28.4		%	31.9		%	20.0		%


(a)	Pro-forma September 30, 2013 amounts include the impact of our exchange offers initiated on August 26, 2013 which closed on October 21, 2013. The exchange offers resulted in a net decrease in notes payable of $94,026 and a net increase in stockholders' equity of $28,683.


(b)	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.


(c)	Common shares outstanding include shares held by the NMO Deferred Compensation Trust: 2013 - 892,688 shares; 2012 - 1,142,332 shares and excludes unallocated shares held by the ESOP: 2013 - 186,485 shares; 2012 - 239,799 shares.


(d)	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.


(e)	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 excluding AOCI.

Page 8

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-September 30, 2013

Spread Results



	Three Months Ended September 30,		Nine Months Ended September 30,
	2013	2012	2013	2012
Average yield on invested assets	5.02%	5.17%	4.99%	5.36%
Aggregate cost of money	2.22%	2.55%	2.26%	2.60%
Aggregate investment spread	2.80%	2.62%	2.73%	2.76%

Impact of:
Investment yield - additional prepayment income	0.05%	0.04%	0.06%	0.04%
Cost of money effect of (under) over hedging	0.03%	0.01%	0.04%	0.01%

Weighted average investments (in thousands)	$28,370,947	$24,730,542	$27,335,838	$24,029,689

Weighted average investments include fixed maturity securities at amortized cost and equity securities at cost. 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



	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
	(Dollars in thousands)
Included in interest sensitive and index product benefits:
Index credits	$	233,316		$	152,150		$	610,458		$	253,490
Interest credited	76,158			78,431			226,426			230,172
Included in change in fair value of derivatives:
Proceeds received at option expiration	(235,445		)	(152,716		)	(615,428		)	(253,619		)
Pro rata amortization of option cost	92,718			89,697			271,115			272,456
Cost of money for deferred annuities	$	166,747		$	167,562		$	492,571		$	502,499

Weighted average liability balance outstanding (in thousands)	$	30,045,346		$	26,285,755		$	29,033,190		$	25,729,518

Annuity Account Balance Rollforward



	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
	(Dollars in thousands)
Account balances at beginning of period	$	29,537,818		$	25,859,144		$	27,669,672		$	24,483,118
Net deposits	998,002			805,109			2,944,307			2,570,567
Premium and interest bonuses	85,389			77,536			250,320			220,784
Fixed interest credited and index credits	309,474			230,581			836,884			483,662
Surrender charges	(11,160		)	(11,240		)	(33,954		)	(35,037		)
Lifetime income benefit rider fees	(15,291		)	(12,635		)	(37,489		)	(30,139		)
Surrenders, withdrawals, deaths, etc.	(351,358		)	(236,130		)	(1,076,866		)	(980,590		)
Account balances at end of period	$	30,552,874		$	26,712,365		$	30,552,874		$	26,712,365

Page 9

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-September 30, 2013

Annuity Deposits by Product Type



	Three Months Ended September 30,				Nine Months Ended September 30,				Year Ended December 31,
Product Type	2013		2012		2013		2012		2012
	(Dollars in thousands)
Fixed Index Annuities:
Index Strategies	$	722,088	$	547,230	$	2,091,166	$	1,568,989	$	2,225,902
Fixed Strategy	254,399		315,029		782,944		885,589		1,208,324
	976,487		862,259		2,874,110		2,454,578		3,434,226
Fixed Rate Annuities:
Single-Year Rate Guaranteed	16,238		22,413		56,552		78,041		98,821
Multi-Year Rate Guaranteed	47,281		45,037		142,828		205,934		249,228
Single premium immediate annuities	13,618		52,315		45,422		140,265		164,657
	77,137		119,765		244,802		424,240		512,706
Total before coinsurance ceded	1,053,624		982,024		3,118,912		2,878,818		3,946,932
Coinsurance ceded	42,004		36,539		129,183		167,986		203,734
Net after coinsurance ceded	$	1,011,620	$	945,485	$	2,989,729	$	2,710,832	$	3,743,198

Surrender Charge Protection and Account Values by Product Type

Annuity Surrender Charges and Net (of coinsurance) Account Values at September 30, 2013:



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

Fixed Index Annuities	14.2	10.1	15.8%	$	28,530,195	93.4	%
Single-Year Fixed Rate Guaranteed Annuities	11.1	4.4	8.0%	1,444,654		4.7	%
Multi-Year Fixed Rate Guaranteed Annuities (a)	6.1	1.5	4.3%	578,025		1.9	%
Total	13.9	9.7	15.2%	$	30,552,874	100.0	%


(a)	60% of Net Account Value is no longer in multi-year guarantee period and can be adjusted annually.

Page 10

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-September 30, 2013

Annuity Liability Characteristics



	Fixed Annuities Account Value		Fixed Index Annuities Account Value
	(Dollars in thousands)
SURRENDER CHARGE PERCENTAGES:
No surrender charge	$	658,984	$	767,441
0.0% < 2.0%	34,387		332,513
2.0% < 3.0%	45,263		133,472
3.0% < 4.0%	24,629		301,388
4.0% < 5.0%	88,549		227,187
5.0% < 6.0%	87,267		331,282
6.0% < 7.0%	192,635		222,192
7.0% < 8.0%	170,659		764,070
8.0% < 9.0%	122,587		416,302
9.0% < 10.0%	59,247		456,875
10.0% or greater	538,472		24,577,473
	$	2,022,679	$	28,530,195



	Fixed and Fixed Index Annuities Account Value		Weighted Average Surrender Charge
	(Dollars in thousands)
SURRENDER CHARGE EXPIRATION BY YEAR:
Out of Surrender Charge	$	1,426,425	0.00	%
2013	115,481		2.07	%
2014	501,992		2.26	%
2015	548,504		3.90	%
2016	800,440		5.57	%
2017	960,769		6.90	%
2018	838,032		8.89	%
2019	586,584		9.73	%
2020	919,488		11.33	%
2021	1,218,458		13.09	%
2022	2,063,599		15.13	%
2023	4,719,753		16.90	%
2024	4,118,781		18.27	%
2025	3,186,057		18.71	%
2026	2,747,649		18.65	%
2027	2,620,202		19.10	%
2028	1,746,895		19.63	%
2029	1,402,278		19.99	%
2030	31,487		20.00	%
	$	30,552,874	15.19	%

Page 11

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-September 30, 2013

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	$	758,759	$	805,768
› 0.0% - 0.25%	299,833		529,648
› 0.25% - 0.5%	129,792		36,840
› 0.5% - 1.0% (a)	318,969		1,038,552
› 1.0% - 1.5% (a)	95,999		23,426
› 1.5% - 2.0%	118,661		1,973
› 2.0% - 2.5%	2,384		—
› 2.5% - 3.0%	41,950		—
1.00% ultimate guarantee - 2.38% wtd avg interest rate (b)	53,003		—
1.50% ultimate guarantee - 1.67% wtd avg interest rate (b)	97,565		2,697,622
2.00% ultimate guarantee - 2.62% wtd avg interest rate (b)	105,764		—
2.25% ultimate guarantee - 2.67% wtd avg interest rate (b)	—		1,487,091
3.00% ultimate guarantee - 2.89% wtd avg interest rate (b)	—		2,946,806
Allocated to index strategies (see tables that follow)	—		18,962,469
	$	2,022,679	$	28,530,195


(a)	$86,884 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. $596,931 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.

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 September 30, 2013 for fixed annuities and funds allocated to the fixed rate strategy for fixed index annuities would decrease by 0.58%.

Page 12

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-September 30, 2013

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	$	575	$	11,287	$	767,352	$	43,776	$	276,041
2.5% - 3%	991,092		—		—		—		—
3% - 4%	1,821,895		—		—		—		—
4% - 5%	22,471		115,306		1,449,107		—		—
5% - 6%	—		8,198		2,940,058		—		—
6% - 7%	—		—		2,736,249		—		—
>= 7%	—		11,407		41,299		122,671		71,022



Annual Monthly Average and Point-to-Point with Participation Rates
	Minimum Guaranteed Participation Rate
	10%		15%		25%		35%		50% +
Current Participation Rate	(Dollars in thousands)
At minimum	$	166	$	2,265	$	332,398	$	173,292	$	205,335
< 20%	213,301		—		—		—		—
20% - 40%	210,594		—		470,138		—		—
40% - 60%	221		—		166,270		133,898		1,395
>= 60%	—		—		—		—		—



S&P 500 Monthly Point-to-Point - Minimum Guaranteed Monthly Cap = 1% (Dollars in thousands)
Current Cap
At minimum	$	14,257
1.45% - 1.8%	2,525,173
2.0% - 2.3%	1,836,708
>= 2.3%	1,235,212

If all caps and participation rates were reduced to minimum caps and participation rates, the cost of options would decrease by 0.64% based upon prices of options for the week ended October 15, 2013.

Page 13

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-September 30, 2013

Summary of Invested Assets



	September 30, 2013				December 31, 2012
	Carrying Amount		Percent		Carrying Amount		Percent
	(Dollars in thousands)
Fixed maturity securities:
United States Government full faith and credit	$	4,907	—	%	$	5,154	—	%
United States Government sponsored agencies	1,239,603		4.2	%	1,772,025		6.5	%
United States municipalities, states and territories	3,461,131		11.6	%	3,578,323		13.0	%
Foreign government obligations	92,682		0.3	%	105,259		0.4	%
Corporate securities	16,817,793		56.5	%	14,542,860		52.8	%
Residential mortgage backed securities	2,118,827		7.1	%	2,888,113		10.5	%
Commercial mortgage backed securities	1,590,310		5.4	%	357,982		1.3	%
Other asset backed securities	1,013,837		3.4	%	998,508		3.6	%
Total fixed maturity securities	26,339,090		88.5	%	24,248,224		88.1	%
Equity securities	9,708		—	%	53,422		0.2	%
Mortgage loans on real estate	2,593,851		8.7	%	2,623,940		9.5	%
Derivative instruments	625,236		2.1	%	415,258		1.5	%
Other investments	212,870		0.7	%	196,366		0.7	%
	$	29,780,755	100.0	%	$	27,537,210	100.0	%

Credit Quality of Fixed Maturity Securities - September 30, 2013



NAIC Designation	Carrying Amount		Percent		Rating Agency Rating	Carrying Amount		Percent
	(Dollars in thousands)					(Dollars in thousands)
1	$	16,367,238	62.1	%	Aaa/Aa/A	$	15,889,898	60.3	%
2	9,352,577		35.5	%	Baa	8,990,901		34.2	%
3	524,802		2.0	%	Ba	494,981		1.9	%
4	93,126		0.4	%	B	99,908		0.4	%
5	—		—	%	Caa and lower	695,562		2.6	%
6	1,347		—	%	In or near default	167,840		0.6	%
	$	26,339,090	100.0	%		$	26,339,090	100.0	%

Page 14

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-September 30, 2013

Watch List Securities - September 30, 2013



General Description	Amortized Cost		Unrealized Gains (Losses)			Fair Value		Months Below Amortized Cost
	(Dollars in thousands)
Corporate bonds:
Finance	$	40,000	$	(6,036	)	$	33,964	25 - 34
Industrial	49,474		(8,540		)	40,934		11 - 37
Industrial	9,357		75			9,432
	$	98,831	$	(14,501	)	$	84,330

Summary of Residential Mortgage Backed Securities



Collateral Type	Principal Amount		Amortized Cost		Fair Value
	(Dollars in thousands)
OTTI has not been recognized
Government agency	$	736,217	$	674,219	$	707,533
Prime	606,642		575,629		615,401
Alt-A	33,094		33,482		33,413
	$	1,375,953	$	1,283,330	$	1,356,347
OTTI has been recognized
Prime	$	493,889	$	425,986	$	455,228
Alt-A	368,256		289,885		307,252
	$	862,145	$	715,871	$	762,480
Total by collateral type
Government agency	$	736,217	$	674,219	$	707,533
Prime	1,100,531		1,001,615		1,070,629
Alt-A	401,350		323,367		340,665
	$	2,238,098	$	1,999,201	$	2,118,827
Total by NAIC designation
1	$	1,950,683	$	1,739,173	$	1,850,871
2	192,269		175,920		180,714
3	65,094		58,300		61,671
4	27,272		23,924		24,257
6	2,780		1,884		1,314
	$	2,238,098	$	1,999,201	$	2,118,827

Page 15

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-September 30, 2013

Fixed Maturity Securities by Sector



	September 30, 2013				December 31, 2012
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)
Available for sale:
United States Government full faith and credit and sponsored agencies	$	1,319,058	$	1,244,510	$	1,768,379	$	1,777,179
United States municipalities, states and territories	3,278,749		3,461,131		3,116,678		3,578,323
Foreign government obligations	86,109		92,682		86,099		105,259
Corporate securities:
Consumer discretionary	1,496,813		1,510,224		1,237,208		1,366,504
Consumer staples	1,169,374		1,195,963		876,654		1,003,651
Energy	1,914,100		1,951,664		1,463,923		1,655,363
Financials	2,930,410		3,022,047		2,476,780		2,713,351
Health care	1,430,258		1,451,657		926,136		1,064,097
Industrials	1,948,177		1,977,952		1,497,435		1,672,681
Information technology	1,103,550		1,099,876		854,347		923,263
Materials	1,335,191		1,327,193		1,076,133		1,189,410
Telecommunications	473,200		474,929		356,486		400,995
Utilities	2,612,796		2,723,164		2,143,026		2,453,736
Residential mortgage backed securities:
Government agency	674,219		707,533		1,024,731		1,119,249
Prime	1,001,615		1,070,629		1,344,775		1,392,741
Alt-A	323,367		340,665		374,031		376,123
Commercial mortgage backed securities:
Government agency	245,427		237,380		35,697		37,976
Other	1,419,114		1,352,930		319,173		320,006
Other asset backed securities:
Consumer discretionary	87,611		87,458		77,464		81,772
Energy	8,277		9,036		8,304		9,152
Financials	711,926		697,731		659,058		677,948
Industrials	185,697		194,534		154,358		166,567
Materials	—		—		28,813		29,150
Telecommunications	14,835		16,805		14,835		17,421
Utilities	6,244		8,273		14,459		16,498
Redeemable preferred stock - financials	7,000		6,912		22,045		23,721
	$	25,783,117	$	26,262,878	$	21,957,027	$	24,172,136
Held for investment:
Corporate security - financials	$	76,212	$	60,843	$	76,088	$	61,521

Page 16

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-September 30, 2013

Mortgage Loans on Commercial Real Estate



	September 30, 2013						December 31, 2012
	Principal			Percent			Principal		Percent
	(Dollars in thousands)
Geographic distribution
East	$	772,366		29.4		%	$	732,762	27.5	%
Middle Atlantic	149,951			5.7		%	155,094		5.8	%
Mountain	353,820			13.5		%	387,599		14.6	%
New England	22,790			0.9		%	26,385		1.0	%
Pacific	316,822			12.1		%	320,982		12.1	%
South Atlantic	491,221			18.7		%	458,802		17.3	%
West North Central	358,115			13.6		%	370,168		13.9	%
West South Central	160,478			6.1		%	207,091		7.8	%
	$	2,625,563		100.0		%	$	2,658,883	100.0	%

Property type distribution
Office	$	613,050		23.4		%	$	666,467	25.1	%
Medical Office	131,304			5.0		%	136,764		5.1	%
Retail	698,189			26.6		%	677,951		25.5	%
Industrial/Warehouse	664,703			25.3		%	692,637		26.1	%
Hotel	79,385			3.0		%	94,045		3.5	%
Apartment	269,817			10.3		%	219,335		8.2	%
Mixed use/other	169,115			6.4		%	171,684		6.5	%
	$	2,625,563		100.0		%	$	2,658,883	100.0	%

	September 30, 2013			December 31, 2012
Credit Exposure - By Payment Activity
Performing	$	2,588,791		$	2,597,440
In workout	30,724			26,723
Delinquent	—			—
Collateral dependent	6,048			34,720
	2,625,563			2,658,883
Specific Loan Loss Allowance	(20,118		)	(23,134		)
General Loan Loss Allowance	(11,000		)	(11,100		)
Deferred prepayment fees	(594		)	(709		)
	$	2,593,851		$	2,623,940

Page 17

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-September 30, 2013

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

John M. Matovina, Chief Executive Officer and President

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

Debra J. Richardson, Executive Vice President and Secretary

(515) 273-3551, drichardson@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
2013
First Quarter	$15.03	$12.33	$14.89	$0.00
Second Quarter	$16.60	$14.03	$15.70	$0.00
Third Quarter	$21.42	$15.64	$21.22	$0.00

2012
First Quarter	$13.09	$10.13	$12.77	$0.00
Second Quarter	$12.95	$10.00	$11.01	$0.00
Third Quarter	$12.41	$10.62	$11.63	$0.00
Fourth Quarter	$12.40	$10.56	$12.21	$0.15

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

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 18

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-September 30, 2013

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

Mark Finkelstein

Evercore Partners

(312) 445-6440

mark.finkelstein@evercore.com

Page 19

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