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

Attached files

file	filename
EX-99.1 - PRESS RELEASE - AMERICAN EQUITY INVESTMENT LIFE HOLDING CO	a2017-03x31_ael8kexhibit991.htm
8-K - 8-K - AMERICAN EQUITY INVESTMENT LIFE HOLDING CO	a2017-03x31_ael8k.htm

Exhibit 99.2

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement

March 31, 2017



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 Non-GAAP Operating Income	4
	Summary of Adjustments to Arrive at Non-GAAP Operating Income	5
	Quarterly Summary - Reconciliation from Net Income (Loss) to Non-GAAP Operating Income (Loss)	6
	Quarterly Summary - Summary of Adjustments to Arrive at Non-GAAP Operating Income (Loss)	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	14
	Fixed Maturity Securities by Sector	15
	Mortgage Loans on Commercial Real Estate	16

D.	Shareholder Information	17

E.	Research Analyst Coverage	18

Table of Contents

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - March 31, 2017

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(Unaudited)



	March 31, 2017		December 31, 2016
Assets
Investments:
Fixed maturity securities:
Available for sale, at fair value	$	42,105,366	$	41,060,494
Held for investment, at amortized cost	76,878		76,825
Mortgage loans on real estate	2,506,991		2,480,956
Derivative instruments	1,033,552		830,519
Other investments	309,429		308,774
Total investments	46,032,216		44,757,568

Cash and cash equivalents	1,172,748		791,266
Coinsurance deposits	4,630,422		4,639,492
Accrued investment income	424,144		397,773
Deferred policy acquisition costs	2,839,557		2,905,377
Deferred sales inducements	2,146,891		2,208,218
Deferred income taxes	126,706		168,578
Income taxes recoverable	—		11,474
Other assets	175,926		173,726
Total assets	$	57,548,610	$	56,053,472

Liabilities and Stockholders' Equity
Liabilities:
Policy benefit reserves	$	52,701,412	$	51,637,026
Other policy funds and contract claims	293,094		298,347
Notes and loan payable	494,071		493,755
Subordinated debentures	241,949		241,853
Income taxes payable	19,687		—
Other liabilities	1,362,166		1,090,896
Total liabilities	55,112,379		53,761,877

Stockholders' equity:
Common stock	88,631		88,001
Additional paid-in capital	775,834		770,344
Accumulated other comprehensive income	424,543		339,966
Retained earnings	1,147,223		1,093,284
Total stockholders' equity	2,436,231		2,291,595
Total liabilities and stockholders' equity	$	57,548,610	$	56,053,472

Page 1

Table of Contents

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - March 31, 2017

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share data)

(Unaudited)



	Three Months Ended March 31,
	2017			2016
Revenues:
Premiums and other considerations	$	9,402		$	7,345
Annuity product charges	43,572			36,505
Net investment income	485,597			450,826
Change in fair value of derivatives	386,533			(74,065		)
Net realized gains on investments, excluding other than temporary impairment ("OTTI") losses	2,338			2,687
OTTI losses on investments:
Total OTTI losses	—			(6,018		)
Portion of OTTI losses recognized in (from) other comprehensive income	(141		)	324
Net OTTI losses recognized in operations	(141		)	(5,694		)
Total revenues	927,301			417,604

Benefits and expenses:
Insurance policy benefits and change in future policy benefits	11,875			9,109
Interest sensitive and index product benefits	419,139			97,671
Amortization of deferred sales inducements	62,325			27,479
Change in fair value of embedded derivatives	224,170			265,857
Interest expense on notes and loan payable	7,722			6,880
Interest expense on subordinated debentures	3,336			3,168
Amortization of deferred policy acquisition costs	89,678			49,713
Other operating costs and expenses	27,579			26,830
Total benefits and expenses	845,824			486,707
Income (loss) before income taxes	81,477			(69,103		)
Income tax expense (benefit)	27,538			(24,262		)
Net income (loss)	$	53,939		$	(44,841	)

Earnings (loss) per common share	$	0.61		$	(0.55	)
Earnings (loss) per common share - assuming dilution	$	0.60		$	(0.55	)

Weighted average common shares outstanding (in thousands):
Earnings (loss) per common share	88,647			82,129
Earnings (loss) per common share - assuming dilution	89,976			82,961

Page 2

Table of Contents

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - March 31, 2017

Quarterly Summary - Most Recent 5 Quarters (Unaudited)



	Q1 2017			Q4 2016			Q3 2016			Q2 2016			Q1 2016
	(Dollars in thousands, except per share data)
Revenues:
Traditional life insurance premiums	$	2,790		$	2,767		$	2,147		$	2,398		$	2,634
Life contingent immediate annuity considerations	6,612			9,466			10,584			9,060			4,711
Surrender charges	13,634			11,196			13,819			11,997			14,565
Lifetime income benefit rider fees	29,938			37,079			33,856			29,127			21,940
Net investment income	485,597			475,633			463,583			459,830			450,826
Change in fair value of derivatives	386,533			95,391			103,794			39,099			(74,065		)
Net realized gains on investments, excluding OTTI	2,338			844			5,256			2,737			2,687
Net OTTI losses recognized in operations	(141		)	(9,560		)	(2,979		)	(4,446		)	(5,694		)
Total revenues	927,301			622,816			630,060			549,802			417,604

Benefits and expenses:
Traditional life insurance policy benefits and change in future policy benefits	2,185			2,026			1,348			2,177			1,545
Life contingent immediate annuity benefits and change in future policy benefits	9,690			12,890			13,717			11,216			7,564
Interest sensitive and index product benefits (b)	419,139			237,737			278,943			111,121			97,671
Amortization of deferred sales inducements (c)(d)	62,325			123,770			69,245			30,672			27,479
Change in fair value of embedded derivatives	224,170			(151,099		)	144,404			284,303			265,857
Interest expense on notes and loan payable	7,722			7,599			6,887			6,882			6,880
Interest expense on subordinated debentures	3,336			3,331			3,253			3,206			3,168
Amortization of deferred policy acquisition costs (c)(d)	89,678			175,526			98,108			50,665			49,713
Other operating costs and expenses (a)	27,579			23,445			25,133			26,823			26,830
Total benefits and expenses	845,824			435,225			641,038			527,065			486,707
Income (loss) before income taxes	81,477			187,591			(10,978		)	22,737			(69,103		)
Income tax expense (benefit)	27,538			66,795			(3,558		)	8,029			(24,262		)
Net income (loss) (a)(b)(c)(d)	$	53,939		$	120,796		$	(7,420	)	$	14,708		$	(44,841	)

Earnings (loss) per common share	$	0.61		$	1.37		$	(0.09	)	$	0.18		$	(0.55	)
Earnings (loss) per common share - assuming dilution (a)(b)(c)(d)	$	0.60		$	1.35		$	(0.09	)	$	0.18		$	(0.55	)

Weighted average common shares outstanding (in thousands):
Earnings (loss) per common share	88,647			88,211			86,262			82,517			82,129
Earnings (loss) per common share - assuming dilution	89,976			89,178			87,044			83,184			82,961


(a)	Q3 2016 includes a benefit of $2.8 million based upon developments in the claims process associated with a lawsuit settlement, which after related adjustments to amortization of deferred sales inducements and deferred policy acquisition costs and income taxes, decreased the net loss and loss per common share - assuming dilution by $1.1 million and $0.01 per share, respectively.


(b)	Q3 2016 includes expense from the revision of assumptions used in determining reserves held for living income benefit riders. The impact increased interest sensitive and index product benefits by $42.0 million and increased the net loss and loss per common share - assuming dilution by $27.1 million and $0.31 per share, respectively.


(c)	Q3 2016 includes expense from unlocking which increased amortization of deferred sales inducements and deferred policy acquisition costs by $17.9 million and $22.1 million, respectively, and increased the net loss and loss per common share- assuming dilution by $25.8 million and $0.30 per share, respectively.


(d)	Q1 2016 includes expense from unlocking which increased amortization of deferred sales inducements and deferred policy acquisition costs by $17.9 million and $26.1 million, respectively, and increased the net loss and loss per common share- assuming dilution by $28.4 million and $0.35 per share, respectively.

Page 3

Table of Contents

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - March 31, 2017

NON-GAAP FINANCIAL MEASURES

In addition to net income (loss), we have consistently utilized non-GAAP operating income and non-GAAP 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. Non-GAAP operating income equals net income (loss) adjusted to eliminate the impact of items that fluctuate from quarter to quarter in a manner unrelated to core operations, and we believe measures excluding their impact are useful in analyzing operating trends. The most significant adjustments to arrive at non-GAAP operating income eliminate the impact of fair value accounting for our fixed index annuity business and are not economic in nature but rather impact the timing of reported results. We believe the combined presentation and evaluation of non-GAAP 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 Non-GAAP Operating Income (Unaudited)



	Three Months Ended March 31,
	2017			2016
	(Dollars in thousands, except per share data)
Net income (loss)	$	53,939		$	(44,841	)
Adjustments to arrive at non-GAAP operating income: (a)
Net realized investment (gains) losses, including OTTI	(1,942		)	1,155
Change in fair value of derivatives and embedded derivatives - index annuities	10,977			97,549
Change in fair value of derivatives and embedded derivatives - debt	(247		)	2,764
Income taxes	(3,105		)	(35,629		)
Non-GAAP operating income	$	59,622		$	20,998

Per common share - assuming dilution:
Net income (loss)	$	0.60		$	(0.55	)
Adjustments to arrive at non-GAAP operating income:
Anti-dilutive effect of net loss	—			0.01
Net realized investment (gains) losses, including OTTI	(0.02		)	0.01
Change in fair value of derivatives and embedded derivatives - index annuities	0.12			1.18
Change in fair value of derivatives and embedded derivatives - debt	—			0.03
Income taxes	(0.04		)	(0.43		)
Non-GAAP operating income	$	0.66		$	0.25


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

Page 4

Table of Contents

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - March 31, 2017

NON-GAAP FINANCIAL MEASURES

Summary of Adjustments to Arrive at Non-GAAP Operating Income (Unaudited)



	Three Months Ended March 31,
	2017			2016
	(Dollars in thousands)
Net realized investment gains and losses, including OTTI:
Net realized (gains) losses on investments, including OTTI	$	(2,197	)	$	3,007
Amortization of DAC and DSI	255			(1,852		)
Income taxes	692			(410		)
	$	(1,250	)	$	745
Change in fair value of derivatives and embedded derivatives:
Index annuities	$	22,443		$	203,584
Interest rate caps and swap	(247		)	2,764
Amortization of DAC and DSI	(11,466		)	(106,035		)
Income taxes	(3,797		)	(35,219		)
	$	6,933		$	65,094

Page 5

Table of Contents

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - March 31, 2017

NON-GAAP FINANCIAL MEASURES

Quarterly Summary - Most Recent 5 Quarters (Unaudited)

Reconciliation from Net Income (Loss) to Non-GAAP Operating Income (Loss)



	Q1 2017			Q4 2016			Q3 2016			Q2 2016			Q1 2016
	(Dollars in thousands, except per share data)
Net income (loss)	$	53,939		$	120,796		$	(7,420	)	$	14,708		$	(44,841	)
Adjustments to arrive at non-GAAP operating income (loss): (a)
Net realized investment (gains) losses, including OTTI	(1,942		)	6,436			(1,008		)	605			1,155
Change in fair value of derivatives and embedded derivatives - index annuities	10,977			(103,444		)	9,400			53,129			97,549
Change in fair value of derivatives and embedded derivatives - debt	(247		)	(3,748		)	(1,049		)	768			2,764
Litigation reserve	—			—			(1,957		)	—			—
Income taxes	(3,105		)	35,927			(2,689		)	(19,108		)	(35,629		)
Non-GAAP operating income (loss) (b)(c)(d)	$	59,622		$	55,967		$	(4,723	)	$	50,102		$	20,998

Per common share - assuming dilution:
Net income (loss)	$	0.60		$	1.35		$	(0.09	)	$	0.18		$	(0.55	)
Adjustments to arrive at non-GAAP operating income (loss):
Anti-dilutive effect of net loss	—			—			—			—			0.01
Net realized investment (gains) losses, including OTTI	(0.02		)	0.07			(0.01		)	—			0.01
Change in fair value of derivatives and embedded derivatives - index annuities	0.12			(1.16		)	0.11			0.64			1.18
Change in fair value of derivatives and embedded derivatives - debt	—			(0.04		)	(0.01		)	0.01			0.03
Litigation reserve	—			—			(0.02		)	—			—
Income taxes	(0.04		)	0.41			(0.03		)	(0.23		)	(0.43		)
Non-GAAP operating income (loss) (b)(c)(d)	$	0.66		$	0.63		$	(0.05	)	$	0.60		$	0.25


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


(b)	Q3 2016 includes expense from unlocking which increased amortization of deferred sales inducements and deferred policy acquisition costs by $18.1 million and $21.5 million, respectively, and increased the non-GAAP operating loss and non-GAAP operating loss per common share- assuming dilution by $25.5 million and $0.29 per share, respectively.


(c)	Q3 2016 includes expense from the revision of assumptions used in determining reserves held for living income benefit riders. The impact increased interest sensitive and index product benefits by $42.0 million and increased the non-GAAP operating loss and non-GAAP operating loss per common share - assuming dilution by $27.1 million and $0.31 per share, respectively.


(d)	Q1 2016 includes expense from unlocking which increased amortization of deferred sales inducements and deferred policy acquisition costs by $18.1 million and $26.3 million, respectively, and decreased non-GAAP operating income and non-GAAP operating income per common share- assuming dilution by $28.6 million and $0.35 per share, respectively.

Page 6

Table of Contents

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - March 31, 2017

NON-GAAP FINANCIAL MEASURES

Summary of Adjustments to Arrive at Non-GAAP Operating Income (Loss) (Unaudited)



	Q1 2017			Q4 2016			Q3 2016			Q2 2016			Q1 2016
	(Dollars in thousands)
Net realized gains on investments	$	(2,338	)	$	(844	)	$	(5,256	)	$	(2,737	)	$	(2,687	)
Net OTTI losses recognized in operations	141			9,560			2,979			4,446			5,694
Change in fair value of derivatives	(201,974		)	(108,359		)	(116,308		)	(170,795		)	(59,509		)
Decrease in total revenues	(204,171		)	(99,643		)	(118,585		)	(169,086		)	(56,502		)

Amortization of deferred sales inducements	5,459			(61,820		)	8,934			28,027			48,002
Change in fair value of embedded derivatives	(224,170		)	151,099			(144,404		)	(284,303		)	(265,857		)
Amortization of deferred policy acquisition costs	5,752			(88,166		)	8,670			32,688			59,885
Other operating costs and expenses	—			—			2,829			—			—
Increase (decrease) in total benefits and expenses	(212,959		)	1,113			(123,971		)	(223,588		)	(157,970		)
Increase (decrease) in income (loss) before income taxes	8,788			(100,756		)	5,386			54,502			101,468
Increase (decrease) in income tax expense	3,105			(35,927		)	2,689			19,108			35,629
Increase (decrease) in net income (loss)	$	5,683		$	(64,829	)	$	2,697		$	35,394		$	65,839

Page 7

Table of Contents

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - March 31, 2017

Capitalization/Book Value per Share



	March 31, 2017			December 31, 2016

Capitalization:
Notes and loan payable	$	500,000		$	500,000
Subordinated debentures payable to subsidiary trusts	246,729			246,671
Total debt	746,729			746,671
Total stockholders’ equity	2,436,231			2,291,595
Total capitalization	3,182,960			3,038,266
Accumulated other comprehensive income (AOCI)	(424,543		)	(339,966		)
Total capitalization excluding AOCI (a)	$	2,758,417		$	2,698,300

Total stockholders’ equity	$	2,436,231		$	2,291,595
Accumulated other comprehensive income	(424,543		)	(339,966		)
Total stockholders’ equity excluding AOCI (a)	$	2,011,688		$	1,951,629

Common shares outstanding (b)	88,645,741			88,016,188

Book Value per Share: (c)
Book value per share including AOCI	$	27.48		$	26.04
Book value per share excluding AOCI (a)	$	22.69		$	22.17

Debt-to-Capital Ratios: (d)
Senior debt / Total capitalization	18.1		%	18.5		%
Adjusted debt / Total capitalization	18.1		%	18.5		%


(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: 2017 - 15,058 shares; 2016 - 15,058 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 excluding AOCI.

Page 8

Table of Contents

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - March 31, 2017

Spread Results



	Three Months Ended March 31,
	2017	2016
Average yield on invested assets	4.48%	4.58%
Aggregate cost of money	1.77%	1.93%
Aggregate investment spread	2.71%	2.65%

Impact of:
Investment yield - additional prepayment income	0.07%	0.08%
Cost of money effect of over hedging	0.05%	—%

Weighted average investments (in thousands)	$43,552,928	$39,465,521

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 March 31,
	2017			2016
	(Dollars in thousands)
Included in interest sensitive and index product benefits:
Index credits	$	321,880		$	6,531
Interest credited	65,178			62,702
Included in change in fair value of derivatives:
Proceeds received at option expiration	(326,552		)	(6,742		)
Pro rata amortization of option cost	141,543			139,766
Cost of money for deferred annuities	$	202,049		$	202,257

Weighted average liability balance outstanding (in thousands)	$	45,613,388		$	41,884,781

Annuity Account Balance Rollforward



	Three Months Ended March 31,
	2017			2016
	(Dollars in thousands)
Account balances at beginning of period	$	45,204,015		$	41,249,647
Net deposits	1,002,509			1,628,753
Premium bonuses	65,244			107,674
Fixed interest credited and index credits	387,058			69,233
Surrender charges	(13,634		)	(14,565		)
Lifetime income benefit rider fees	(29,938		)	(21,940		)
Surrenders, withdrawals, deaths, etc.	(592,495		)	(498,887		)
Account balances at end of period	$	46,022,759		$	42,519,915

Page 9

Table of Contents

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - March 31, 2017

Annuity Deposits by Product Type



	Three Months Ended March 31,				Year Ended December 31,
Product Type	2017		2016		2016
	(Dollars in thousands)
American Equity:
Fixed index annuities	$	941,167	$	1,500,721	$	5,114,178
Annual reset fixed rate annuities	14,843		16,705		64,317
Multi-year fixed rate annuities	6,393		156,510		450,474
Single premium immediate annuities	5,551		5,314		35,851
	967,954		1,679,250		5,664,820
Eagle Life:
Fixed index annuities	87,672		187,281		610,580
Multi-year fixed rate annuities	23,508		228,522		852,799
	111,180		415,803		1,463,379
Consolidated:
Fixed index annuities	1,028,839		1,688,002		5,724,758
Annual reset fixed rate annuities	14,843		16,705		64,317
Multi-year fixed rate annuities	29,901		385,032		1,303,273
Single premium immediate annuities	5,551		5,314		35,851
Total before coinsurance ceded	1,079,134		2,095,053		7,128,199
Coinsurance ceded	71,074		460,986		1,736,054
Net after coinsurance ceded	$	1,008,060	$	1,634,067	$	5,392,145

Surrender Charge Protection and Account Values by Product Type

Annuity Surrender Charges and Net (of Coinsurance) Account Values at March 31, 2017:



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

Fixed Index Annuities	13.7	8.8	13.9%	$	43,948,848	95.5	%
Annual Reset Fixed Rate Annuities	10.8	4.5	7.5%	1,411,866		3.1	%
Multi-Year Fixed Rate Annuities	6.6	2.9	5.7%	662,045		1.4	%
Total	13.5	8.6	13.6%	$	46,022,759	100.0	%

Page 10

Table of Contents

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - March 31, 2017

Annuity Liability Characteristics



	Fixed Annuities Account Value		Fixed Index Annuities Account Value
	(Dollars in thousands)
SURRENDER CHARGE PERCENTAGES:
No surrender charge	$	780,610	$	1,858,815
0.0% < 2.0%	13,498		522,642
2.0% < 3.0%	27,677		101,428
3.0% < 4.0%	54,177		307,223
4.0% < 5.0%	23,281		245,440
5.0% < 6.0%	40,692		551,150
6.0% < 7.0%	79,731		424,512
7.0% < 8.0%	55,382		563,442
8.0% < 9.0%	201,804		1,853,543
9.0% < 10.0%	215,007		1,898,489
10.0% or greater	582,052		35,622,164
	$	2,073,911	$	43,948,848



	Fixed and Fixed Index Annuities Account Value		Weighted Average Surrender Charge
	(Dollars in thousands)
SURRENDER CHARGE EXPIRATION BY YEAR:
Out of Surrender Charge	$	2,639,425	0.00	%
2017	552,376		1.55	%
2018	697,134		3.58	%
2019	524,823		5.16	%
2020	879,207		7.11	%
2021	1,379,309		8.51	%
2022	2,003,147		10.11	%
2023	4,739,739		12.03	%
2024	5,287,839		13.18	%
2025	5,894,199		13.50	%
2026	4,917,402		14.60	%
2027	3,110,809		16.58	%
2028	2,389,031		17.97	%
2029	2,997,326		18.44	%
2030	2,739,480		18.87	%
2031	2,980,089		19.38	%
2032	1,923,157		19.83	%
2033	353,150		19.98	%
2034	15,117		20.00	%
	$	46,022,759	13.63	%

Page 11

Table of Contents

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - March 31, 2017

Annuity Liability Characteristics



	Fixed Annuities Account Value		Fixed Index Annuities Account Value
	(Dollars in thousands)
CREDITED RATE VS. ULTIMATE MINIMUM GUARANTEED RATE DIFFERENTIAL:
No differential	$	949,669	$	1,668,764
› 0.0% - 0.25%	128,953		180,948
› 0.25% - 0.5%	238,557		70,092
› 0.5% - 1.0%	89,152		152,470
› 1.0% - 1.5%	12,368		1,940
› 1.5% - 2.0%	1,163		—
1.00% ultimate guarantee - 2.68% wtd avg interest rate (a)	403,347		141,541
1.50% ultimate guarantee - 1.27% wtd avg interest rate (a)	156,065		5,100,267
2.00% ultimate guarantee - 2.1% wtd avg interest rate (a)	94,637		—
2.25% ultimate guarantee - 2.18% wtd avg interest rate (a)	—		1,242,263
3.00% ultimate guarantee - 2.34% wtd avg interest rate (a)	—		2,370,108
Allocated to index strategies (see tables that follow)	—		33,020,455
	$	2,073,911	$	43,948,848


(a)	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 March 31, 2017 for fixed annuities and funds allocated to the fixed rate strategy for fixed index annuities would decrease by 0.25%.

Page 12

Table of Contents

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - March 31, 2017

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	$	2,017	$	78,254	$	2,391,773	$	63,929	$	214,545
1.75% - 3%	5,787,449		—		—		—		—
3% - 4%	1,995,034		40,454		—		—		—
4% - 5%	280,564		191,475		3,785,279		—		—
5% - 6%	386,153		143,697		1,060,954		—		—
6% - 7%	—		—		—		—		—
>= 7%	—		14,561		747		40,809		9,428



Annual Monthly Average and Point-to-Point with Participation Rates
	Minimum Guaranteed Participation Rate
	10%		20% - 25%		35%		50% +
Current Participation Rate	(Dollars in thousands)
At minimum	$	495	$	421,863	$	128,976	$	148,350
< 20%	473,869		—		—		—
20% - 40%	842,132		195,942		—		—
40% - 60%	596,082		118,172		86,204		—
>= 60%	6,830		—		—		—



S&P 500 Monthly Point-to-Point - Minimum Guaranteed Monthly Cap = 1.0%
(Dollars in thousands)
Current Cap
At minimum	$	15,919
1.20% - 1.40%	5,117,008
1.45% - 1.70%	2,431,846
1.80% - 2.00%	2,544,826
>= 2.10%	657,822



Volatility Control Index
(Dollars in thousands)
Current Asset Fee
At Maximum	$	—
0.75% - 1.75%	176,572
2.25% - 2.75%	1,071,914
3.00% - 4.00%	1,228,697

If all caps and participation rates were reduced to minimum caps and participation rates and current asset fees were increased to their maximums, the cost of options would decrease by 0.58% based upon prices of options for the week ended April 11, 2017.

Page 13

Table of Contents

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - March 31, 2017

Summary of Invested Assets



	March 31, 2017				December 31, 2016
	Carrying Amount		Percent		Carrying Amount		Percent
	(Dollars in thousands)
Fixed maturity securities:
United States Government full faith and credit	$	11,672	—	%	$	11,805	—	%
United States Government sponsored agencies	1,340,788		2.9	%	1,344,787		3.0	%
United States municipalities, states and territories	3,989,302		8.7	%	3,926,950		8.8	%
Foreign government obligations	238,398		0.5	%	236,341		0.5	%
Corporate securities	28,237,498		61.3	%	27,191,243		60.8	%
Residential mortgage backed securities	1,200,040		2.6	%	1,254,835		2.8	%
Commercial mortgage backed securities	5,383,942		11.7	%	5,365,235		12.0	%
Other asset backed securities	1,780,604		3.9	%	1,806,123		4.0	%
Total fixed maturity securities	42,182,244		91.6	%	41,137,319		91.9	%
Mortgage loans on real estate	2,506,991		5.5	%	2,480,956		5.5	%
Derivative instruments	1,033,552		2.2	%	830,519		1.9	%
Other investments	309,429		0.7	%	308,774		0.7	%
	$	46,032,216	100.0	%	$	44,757,568	100.0	%

Credit Quality of Fixed Maturity Securities - March 31, 2017



NAIC Designation	Carrying Amount		Percent		Rating Agency Rating	Carrying Amount		Percent
	(Dollars in thousands)					(Dollars in thousands)
1	$	26,875,133	63.7	%	Aaa/Aa/A	$	26,298,668	62.3	%
2	14,013,896		33.2	%	Baa	14,233,527		33.7	%
3	1,157,737		2.7	%	Ba	1,086,329		2.6	%
4	104,462		0.3	%	B	104,291		0.3	%
5	21,840		0.1	%	Caa	68,265		0.2	%
6	9,176		—	%	Ca and lower	391,164		0.9	%
	$	42,182,244	100.0	%		$	42,182,244	100.0	%

Watch List Securities - March 31, 2017



General Description	Amortized Cost		Unrealized Gains (Losses)			Fair Value		Months Below Amortized Cost
	(Dollars in thousands)
Below investment grade
Corporate securities:
Energy	$	53,592	$	(6,260	)	$	47,332	0 - 47
Industrials	4,983		(3,058		)	1,925		29
Materials	3,990		542			4,532		0
Telecommunications	2,100		(180		)	1,920		33
Other asset backed securities:
Financials	6,755		(4,043		)	2,712		46 - 72
	$	71,420	$	(12,999	)	$	58,421

Page 14

Table of Contents

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - March 31, 2017

Fixed Maturity Securities by Sector



	March 31, 2017				December 31, 2016
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)
Available for sale:
United States Government full faith and credit and sponsored agencies	$	1,380,060	$	1,352,460	$	1,380,204	$	1,356,592
United States municipalities, states and territories	3,673,722		3,989,302		3,626,395		3,926,950
Foreign government obligations	228,998		238,398		229,589		236,341
Corporate securities:
Capital goods	2,373,822		2,474,552		2,248,219		2,332,625
Consumer discretionary	5,608,313		5,795,907		5,485,150		5,643,308
Energy	2,454,320		2,490,929		2,439,809		2,453,649
Financials	5,634,340		5,870,067		5,377,810		5,552,349
Industrials	226,458		230,460		186,684		187,191
Information technology	1,795,716		1,856,890		1,718,190		1,759,229
Materials	1,817,421		1,877,581		1,767,460		1,797,013
Other	1,013,998		1,051,931		1,009,390		1,037,307
Telecommunications	1,484,676		1,532,518		1,472,094		1,507,943
Transportation	1,131,565		1,165,703		1,105,324		1,133,087
Utilities	3,609,068		3,814,070		3,523,083		3,710,711
Residential mortgage backed securities:
Government agency	642,352		689,917		648,752		693,805
Prime	295,580		303,816		323,878		338,761
Alt-A	157,580		181,267		166,557		193,018
Re-Remic	23,806		25,040		27,757		29,251
Commercial mortgage backed securities:
Government agency	560,402		563,928		559,850		560,726
Other	4,846,073		4,820,014		4,862,405		4,804,509
Other asset backed securities:
Auto	270,335		271,016		240,297		237,678
Financials	822,896		827,676		865,235		866,203
Industrials	203,511		207,766		216,712		219,917
Military housing	338,084		352,314		339,186		351,903
Other	124,637		121,832		132,095		128,592
Utilities	—		—		1,830		1,830
Redeemable preferred stock - financials	—		12		—		6
	$	40,717,733	$	42,105,366	$	39,953,955	$	41,060,494
Held for investment:
Corporate security - financials	$	76,878	$	70,795	$	76,825	$	68,766

Page 15

Table of Contents

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - March 31, 2017

Mortgage Loans on Commercial Real Estate



	March 31, 2017						December 31, 2016
	Principal			Percent			Principal		Percent
	(Dollars in thousands)
Geographic distribution
East	$	622,220		24.7		%	$	635,434	25.5	%
Middle Atlantic	154,097			6.1		%	151,640		6.1	%
Mountain	241,197			9.6		%	235,932		9.5	%
New England	12,610			0.5		%	12,724		0.5	%
Pacific	403,297			16.0		%	385,683		15.5	%
South Atlantic	546,519			21.7		%	519,065		20.8	%
West North Central	313,751			12.5		%	325,447		13.1	%
West South Central	222,679			8.9		%	224,694		9.0	%
	$	2,516,370		100.0		%	$	2,490,619	100.0	%

Property type distribution
Office	$	297,522		11.8		%	$	308,578	12.4	%
Medical office	38,637			1.6		%	50,780		2.1	%
Retail	910,986			36.2		%	886,942		35.6	%
Industrial/Warehouse	709,366			28.2		%	700,644		28.1	%
Apartment	380,630			15.1		%	375,837		15.1	%
Mixed use/other	179,229			7.1		%	167,838		6.7	%
	$	2,516,370		100.0		%	$	2,490,619	100.0	%

	March 31, 2017			December 31, 2016
Credit exposure - by payment activity
Performing	$	2,514,816		$	2,489,028
In workout	1,554			1,591
Delinquent	—			—
Collateral dependent	—			—
	2,516,370			2,490,619
Specific loan loss allowance	(1,327		)	(1,327		)
General loan loss allowance	(6,800		)	(7,100		)
Deferred prepayment fees	(1,252		)	(1,236		)
	$	2,506,991		$	2,480,956

Page 16

Table of Contents

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - March 31, 2017

Shareholder Information

Corporate Offices:

American Equity Investment Life Holding Company

6000 Westown Parkway

West Des Moines, IA 50266

Inquiries:

Steven Schwartz, Vice President-Investor Relations

(515) 273-3673, sschwartz@american-equity.com

Common Stock and Dividend Information:

New York Stock Exchange symbol: “AEL”



	High	Low	Close	Dividend Declared
2017
First Quarter	$28.00	$21.66	$23.63	$0.00

2016
First Quarter	$23.65	$12.65	$16.80	$0.00
Second Quarter	$16.96	$12.77	$14.25	$0.00
Third Quarter	$18.32	$13.07	$17.73	$0.00
Fourth Quarter	$23.41	$15.39	$22.54	$0.24

2015
First Quarter	$29.62	$25.46	$29.13	$0.00
Second Quarter	$29.90	$25.06	$26.98	$0.00
Third Quarter	$30.02	$22.36	$23.31	$0.00
Fourth Quarter	$28.30	$22.55	$24.03	$0.22

Transfer Agent:

Computershare Trust Company, N.A.

P.O. Box 43010

Providence, RI 02940-0310

Phone: (877) 282-1169

Fax: (781) 575-2723

www.computershare.com

Annual Report and Other Information:

Shareholders may receive when available, without charge, a copy of American Equity’s Annual Report, SEC filings and/or press releases by calling Steven Schwartz, Vice President-Investor Relations, at (515) 273-3763 or by visiting our web site at www.american-equity.com.

Page 17

Table of Contents

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - March 31, 2017

Research Analyst Coverage

Erik Bass

Autonomous Research US LP

(646) 561-6248

ebass@autonomous.com

Suneet Kamath

Citi

(212) 816-3457

suneet.kamath@citi.com

John Nadel

Credit Suisse

(212) 325-4016

john.nadel@credit-suisse.com

Thomas Gallagher

Evercore ISI

(212) 446-9439

thomas.gallagher@evercoreisi.com

Randy Binner

Friedman, Billings, Ramsey & Co., Inc.

(703) 312-1890

rbinner@fbr.com

Pablo Singzon II

JP Morgan

(212) 622-2295

pablo.s.singzon@jpmorgan.com

Ryan Krueger

Keefe, Bruyette & Woods

(860) 722-5930

rkrueger@kbw.com

C. Gregory Peters

Raymond James & Associates, Inc.

(727) 567-1534

greg.peters@raymondjames.com

Kenneth S. Lee

RBC Capital Markets, LLC

(212) 905-5995

kenneth.s.lee@rbccm.com

John Barnidge

Sandler O'Neill & Partners, L.P.

(312) 281-3412

jbarnidge@sandleroneill.com

Mark Hughes

SunTrust Robinson Humphrey

(404) 926-5072

mark.hughes@suntrust.com

Page 18

Attached files

Stock widget

Investing forum

AMERICAN EQUITY INVESTMENT LIFE HOLDING CO Reports