(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Exhibit Number | Description | |
99.1 | ||
99.2 | ||
104 | The cover page from this Current Report on Form 8-K, formatted in Inline XBRL. |
AMERICAN EQUITY | |||
INVESTMENT LIFE HOLDING COMPANY | |||
By: | /s/ Anant Bhalla | ||
Anant Bhalla | |||
Chief Executive Officer and President | |||
For more information, contact: | ||
Steven D. Schwartz, Vice President-Investor Relations | ||
(515) 273-3763, sschwartz@american-equity.com | ||
FOR IMMEDIATE RELEASE | ||
August 5, 2020 |
• | Second quarter 2020 net loss available to common stockholders of $253.4 million or $(2.76) per diluted common share driven primarily by the tightening of American Equity's own credit spread with improving market conditions; thereby reducing the discount rate used for policyholder liabilities |
• | Second quarter 2020 non-GAAP operating income1 available to common stockholders of $93.1 million or $1.01 per diluted common share |
• | Second quarter 2020 annuity sales of $559 million |
• | Policyholder funds under management of $53.1 billion |
• | Second quarter 2020 investment spread of 2.39% |
• | Estimated risk-based capital ratio of 389% excluding $290 million of cash proceeds at the holding company from the issuance of $300 million of perpetual preferred stock in June |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Revenues: | |||||||||||||||
Premiums and other considerations | $ | 11,032 | $ | 4,126 | $ | 18,696 | $ | 9,536 | |||||||
Annuity product charges | 63,438 | 60,700 | 122,987 | 113,666 | |||||||||||
Net investment income | 543,704 | 570,568 | 1,117,022 | 1,129,006 | |||||||||||
Change in fair value of derivatives | 327,662 | 76,045 | (614,212 | ) | 460,514 | ||||||||||
Net realized gains (losses) on investments | (25,888 | ) | (3,832 | ) | (46,224 | ) | (4,395 | ) | |||||||
Other than temporary impairment (OTTI) losses on investments: | |||||||||||||||
Total OTTI losses | — | (998 | ) | — | (998 | ) | |||||||||
Portion of OTTI losses recognized from other comprehensive income | — | (215 | ) | — | (215 | ) | |||||||||
Net OTTI losses recognized in operations | — | (1,213 | ) | — | (1,213 | ) | |||||||||
Loss on extinguishment of debt | — | — | (2,024 | ) | — | ||||||||||
Total revenues | 919,948 | 706,394 | 596,245 | 1,707,114 | |||||||||||
Benefits and expenses: | |||||||||||||||
Insurance policy benefits and change in future policy benefits | 13,331 | 6,939 | 23,403 | 16,238 | |||||||||||
Interest sensitive and index product benefits | 240,992 | 251,103 | 641,211 | 387,777 | |||||||||||
Amortization of deferred sales inducements | (75,178 | ) | 19,785 | (1,587 | ) | 53,094 | |||||||||
Change in fair value of embedded derivatives | 1,126,935 | 327,562 | (123,126 | ) | 1,093,885 | ||||||||||
Interest expense on notes payable | 6,388 | 6,380 | 12,773 | 12,759 | |||||||||||
Interest expense on subordinated debentures | 1,321 | 4,057 | 2,909 | 8,145 | |||||||||||
Amortization of deferred policy acquisition costs | (119,889 | ) | 29,946 | 813 | 75,078 | ||||||||||
Other operating costs and expenses | 41,951 | 37,426 | 85,577 | 76,405 | |||||||||||
Total benefits and expenses | 1,235,851 | 683,198 | 641,973 | 1,723,381 | |||||||||||
Income (loss) before income taxes | (315,903 | ) | 23,196 | (45,728 | ) | (16,267 | ) | ||||||||
Income tax expense (benefit) | (68,474 | ) | 4,606 | (41,246 | ) | (4,847 | ) | ||||||||
Net income (loss) | (247,429 | ) | 18,590 | (4,482 | ) | (11,420 | ) | ||||||||
Less: Preferred stock dividends | 5,950 | — | 12,561 | — | |||||||||||
Net income (loss) available to common stockholders | $ | (253,379 | ) | $ | 18,590 | $ | (17,043 | ) | $ | (11,420 | ) | ||||
Earnings (loss) per common share | $ | (2.76 | ) | $ | 0.20 | $ | (0.19 | ) | $ | (0.13 | ) | ||||
Earnings (loss) per common share - assuming dilution | $ | (2.76 | ) | $ | 0.20 | $ | (0.19 | ) | $ | (0.13 | ) | ||||
Weighted average common shares outstanding (in thousands): | |||||||||||||||
Earnings (loss) per common share | 91,803 | 91,103 | 91,724 | 90,994 | |||||||||||
Earnings (loss) per common share - assuming dilution | 92,027 | 91,785 | 92,024 | 91,765 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Net income (loss) available to common stockholders | $ | (253,379 | ) | $ | 18,590 | $ | (17,043 | ) | $ | (11,420 | ) | ||||
Adjustments to arrive at non-GAAP operating income available to common stockholders: (a) | |||||||||||||||
Net realized gains/losses on financial assets, including credit losses | 18,492 | 2,625 | 34,841 | 2,930 | |||||||||||
Change in fair value of derivatives and embedded derivatives - fixed index annuities | 423,590 | 99,868 | 303,136 | 250,812 | |||||||||||
Change in fair value of derivatives - interest rate caps and swap | — | 854 | (848 | ) | 1,490 | ||||||||||
Income taxes | (95,599 | ) | (22,346 | ) | (72,897 | ) | (54,819 | ) | |||||||
Non-GAAP operating income available to common stockholders | $ | 93,104 | $ | 99,591 | $ | 247,189 | $ | 188,993 | |||||||
Per common share - assuming dilution: | |||||||||||||||
Net income (loss) available to common stockholders | $ | (2.76 | ) | $ | 0.20 | $ | (0.19 | ) | $ | (0.13 | ) | ||||
Adjustments to arrive at non-GAAP operating income available to common stockholders: | |||||||||||||||
Anti-dilutive effect of net loss | 0.01 | — | — | 0.01 | |||||||||||
Net realized gains/losses on financial assets, including credit losses | 0.20 | 0.03 | 0.38 | 0.03 | |||||||||||
Change in fair value of derivatives and embedded derivatives - fixed index annuities | 4.60 | 1.09 | 3.30 | 2.73 | |||||||||||
Change in fair value of derivatives - interest rate caps and swap | — | 0.01 | (0.01 | ) | 0.02 | ||||||||||
Income taxes | (1.04 | ) | (0.24 | ) | (0.79 | ) | (0.60 | ) | |||||||
Non-GAAP operating income available to common stockholders | $ | 1.01 | $ | 1.09 | $ | 2.69 | $ | 2.06 |
(a) | Adjustments to net income (loss) available to common stockholders to arrive at non-GAAP operating income available to common stockholders are presented net of related adjustments to amortization of deferred sales inducements and deferred policy acquisition costs where applicable. |
Twelve Months Ended | |||
June 30, 2020 | |||
Average Common Stockholders' Equity Excluding Average AOCI | |||
Average total stockholders' equity | $ | 4,279,767 | |
Average equity available to preferred stockholders | (350,000 | ) | |
Average AOCI | (1,384,912 | ) | |
Average common stockholders' equity excluding average AOCI | $ | 2,544,855 | |
Net income available to common stockholders | $ | 240,467 | |
Non-GAAP operating income available to common stockholders | $ | 606,379 | |
Return on Average Common Stockholders' Equity Excluding Average AOCI | |||
Net income available to common stockholders | 9.45 | % | |
Non-GAAP operating income available to common stockholders | 23.83 | % |
A. | Financial Highlights | |
Non-GAAP Financial Measures | ||
B. | Product Summary | |
C. | Investment Summary | |
D. | ||
E. |
June 30, 2020 | December 31, 2019 | ||||||
Assets | |||||||
Investments: | |||||||
Fixed maturity securities, available for sale, at fair value | $ | 50,738,792 | $ | 51,580,490 | |||
Mortgage loans on real estate | 3,958,233 | 3,448,793 | |||||
Derivative instruments | 672,958 | 1,355,989 | |||||
Other investments | 479,099 | 492,301 | |||||
Total investments | 55,849,082 | 56,877,573 | |||||
Cash and cash equivalents | 2,408,635 | 2,293,392 | |||||
Coinsurance deposits | 4,962,859 | 5,115,013 | |||||
Accrued investment income | 450,290 | 472,826 | |||||
Deferred policy acquisition costs | 2,920,793 | 2,923,454 | |||||
Deferred sales inducements | 1,937,083 | 1,966,723 | |||||
Income taxes recoverable | 35,962 | — | |||||
Other assets | 43,592 | 47,571 | |||||
Total assets | $ | 68,608,296 | $ | 69,696,552 | |||
Liabilities and Stockholders' Equity | |||||||
Liabilities: | |||||||
Policy benefit reserves | $ | 61,669,232 | $ | 61,893,945 | |||
Other policy funds and contract claims | 244,186 | 256,105 | |||||
Notes payable | 495,388 | 495,116 | |||||
Subordinated debentures | 77,964 | 157,265 | |||||
Deferred income taxes | 229,757 | 177,897 | |||||
Income taxes payable | — | 429 | |||||
Other liabilities | 829,710 | 2,145,676 | |||||
Total liabilities | 63,546,237 | 65,126,433 | |||||
Stockholders' equity: | |||||||
Preferred stock, Series A | 16 | 16 | |||||
Preferred stock, Series B | 12 | — | |||||
Common stock | 91,595 | 91,107 | |||||
Additional paid-in capital | 1,508,171 | 1,212,311 | |||||
Accumulated other comprehensive income | 1,719,839 | 1,497,921 | |||||
Retained earnings | 1,742,426 | 1,768,764 | |||||
Total stockholders' equity | 5,062,059 | 4,570,119 | |||||
Total liabilities and stockholders' equity | $ | 68,608,296 | $ | 69,696,552 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Revenues: | |||||||||||||||
Premiums and other considerations | $ | 11,032 | $ | 4,126 | $ | 18,696 | $ | 9,536 | |||||||
Annuity product charges | 63,438 | 60,700 | 122,987 | 113,666 | |||||||||||
Net investment income | 543,704 | 570,568 | 1,117,022 | 1,129,006 | |||||||||||
Change in fair value of derivatives | 327,662 | 76,045 | (614,212 | ) | 460,514 | ||||||||||
Net realized gains (losses) on investments | (25,888 | ) | (3,832 | ) | (46,224 | ) | (4,395 | ) | |||||||
Other than temporary impairment (OTTI) losses on investments: | |||||||||||||||
Total OTTI losses | — | (998 | ) | — | (998 | ) | |||||||||
Portion of OTTI losses recognized from other comprehensive income | — | (215 | ) | — | (215 | ) | |||||||||
Net OTTI losses recognized in operations | — | (1,213 | ) | — | (1,213 | ) | |||||||||
Loss on extinguishment of debt | — | — | (2,024 | ) | — | ||||||||||
Total revenues | 919,948 | 706,394 | 596,245 | 1,707,114 | |||||||||||
Benefits and expenses: | |||||||||||||||
Insurance policy benefits and change in future policy benefits | 13,331 | 6,939 | 23,403 | 16,238 | |||||||||||
Interest sensitive and index product benefits | 240,992 | 251,103 | 641,211 | 387,777 | |||||||||||
Amortization of deferred sales inducements | (75,178 | ) | 19,785 | (1,587 | ) | 53,094 | |||||||||
Change in fair value of embedded derivatives | 1,126,935 | 327,562 | (123,126 | ) | 1,093,885 | ||||||||||
Interest expense on notes payable | 6,388 | 6,380 | 12,773 | 12,759 | |||||||||||
Interest expense on subordinated debentures | 1,321 | 4,057 | 2,909 | 8,145 | |||||||||||
Amortization of deferred policy acquisition costs | (119,889 | ) | 29,946 | 813 | 75,078 | ||||||||||
Other operating costs and expenses | 41,951 | 37,426 | 85,577 | 76,405 | |||||||||||
Total benefits and expenses | 1,235,851 | 683,198 | 641,973 | 1,723,381 | |||||||||||
Income (loss) before income taxes | (315,903 | ) | 23,196 | (45,728 | ) | (16,267 | ) | ||||||||
Income tax expense (benefit) | (68,474 | ) | 4,606 | (41,246 | ) | (4,847 | ) | ||||||||
Net income (loss) | (247,429 | ) | 18,590 | (4,482 | ) | (11,420 | ) | ||||||||
Less: Preferred stock dividends | 5,950 | — | 12,561 | — | |||||||||||
Net income (loss) available to common stockholders | $ | (253,379 | ) | $ | 18,590 | $ | (17,043 | ) | $ | (11,420 | ) | ||||
Earnings (loss) per common share | $ | (2.76 | ) | $ | 0.20 | $ | (0.19 | ) | $ | (0.13 | ) | ||||
Earnings (loss) per common share - assuming dilution | $ | (2.76 | ) | $ | 0.20 | $ | (0.19 | ) | $ | (0.13 | ) | ||||
Weighted average common shares outstanding (in thousands): | |||||||||||||||
Earnings (loss) per common share | 91,803 | 91,103 | 91,724 | 90,994 | |||||||||||
Earnings (loss) per common share - assuming dilution | 92,027 | 91,785 | 92,024 | 91,765 |
Q2 2020 | Q1 2020 | Q4 2019 | Q3 2019 | Q2 2019 | |||||||||||||||
Revenues: | |||||||||||||||||||
Traditional life insurance premiums | $ | 722 | $ | 823 | $ | 762 | $ | 778 | $ | 799 | |||||||||
Life contingent immediate annuity considerations | 10,310 | 6,841 | 8,084 | 4,374 | 3,327 | ||||||||||||||
Surrender charges | 19,390 | 19,705 | 15,092 | 20,537 | 19,480 | ||||||||||||||
Lifetime income benefit rider fees | 44,048 | 39,844 | 47,630 | 43,110 | 41,220 | ||||||||||||||
Net investment income | 543,704 | 573,318 | 588,217 | 590,412 | 570,568 | ||||||||||||||
Change in fair value of derivatives | 327,662 | (941,874 | ) | 466,434 | (20,042 | ) | 76,045 | ||||||||||||
Net realized gains (losses) on investments | (25,888 | ) | (20,336 | ) | 7,029 | 4,328 | (3,832 | ) | |||||||||||
Net OTTI losses recognized in operations | — | — | (17,412 | ) | (101 | ) | (1,213 | ) | |||||||||||
Loss on extinguishment of debt | — | (2,024 | ) | (2,001 | ) | — | — | ||||||||||||
Total revenues | 919,948 | (323,703 | ) | 1,113,835 | 643,396 | 706,394 | |||||||||||||
Benefits and expenses: | |||||||||||||||||||
Traditional life insurance policy benefits and change in future policy benefits | 702 | 621 | 835 | 758 | 576 | ||||||||||||||
Life contingent immediate annuity benefits and change in future policy benefits | 12,629 | 9,451 | 10,718 | 6,869 | 6,363 | ||||||||||||||
Interest sensitive and index product benefits (a) | 240,992 | 400,219 | 399,514 | 500,285 | 251,103 | ||||||||||||||
Amortization of deferred sales inducements (b)(c) | (75,178 | ) | 73,591 | 91,260 | (55,769 | ) | 19,785 | ||||||||||||
Change in fair value of embedded derivatives (b)(d) | 1,126,935 | (1,250,061 | ) | 147,879 | 212,278 | 327,562 | |||||||||||||
Interest expense on notes payable | 6,388 | 6,385 | 6,384 | 6,382 | 6,380 | ||||||||||||||
Interest expense on subordinated debentures | 1,321 | 1,588 | 3,651 | 3,968 | 4,057 | ||||||||||||||
Amortization of deferred policy acquisition costs (b)(c) | (119,889 | ) | 120,702 | 133,573 | (120,934 | ) | 29,946 | ||||||||||||
Other operating costs and expenses | 41,951 | 43,626 | 39,194 | 38,554 | 37,426 | ||||||||||||||
Total benefits and expenses | 1,235,851 | (593,878 | ) | 833,008 | 592,391 | 683,198 | |||||||||||||
Income (loss) before income taxes | (315,903 | ) | 270,175 | 280,827 | 51,005 | 23,196 | |||||||||||||
Income tax expense (benefit) (e) | (68,474 | ) | 27,228 | 60,677 | 13,645 | 4,606 | |||||||||||||
Net income (loss) (a)(b)(c)(d)(e) | (247,429 | ) | 242,947 | 220,150 | 37,360 | 18,590 | |||||||||||||
Less: Preferred stock dividends | 5,950 | 6,611 | — | — | — | ||||||||||||||
Net income (loss) available to common stockholders (a)(b)(c)(d)(e) | $ | (253,379 | ) | $ | 236,336 | $ | 220,150 | $ | 37,360 | $ | 18,590 | ||||||||
Earnings (loss) per common share | $ | (2.76 | ) | $ | 2.58 | $ | 2.41 | $ | 0.41 | $ | 0.20 | ||||||||
Earnings (loss) per common share - assuming dilution (a)(b)(c)(d)(e) | $ | (2.76 | ) | $ | 2.57 | $ | 2.40 | $ | 0.41 | $ | 0.20 | ||||||||
Weighted average common shares outstanding (thousands): | |||||||||||||||||||
Earnings (loss) per common share | 91,803 | 91,644 | 91,314 | 91,252 | 91,103 | ||||||||||||||
Earnings (loss) per common share - assuming dilution | 92,027 | 92,021 | 91,883 | 91,711 | 91,785 |
(a) | Q3 2019 includes expense from the revision of assumptions used in determining reserves held for lifetime income benefit riders. The impact increased interest sensitive and index product benefits by $315.4 million and decreased both net income and net income available to common stockholders by $247.3 million and decreased earnings per common share - assuming dilution by $2.70 per share. |
(b) | Q2 2020 includes a benefit from the revision of assumptions used in determining the embedded derivative component of our fixed index annuity policy benefit reserves. The impact decreased change in fair value of embedded derivatives by $230.1 million, increased amortization of deferred sales inducements and deferred policy acquisition costs by $36.7 million and $57.6 million, respectively, and decreased both net loss and net loss available to common stockholders by $106.5 million and reduced loss per common share - assuming dilution by $1.16 per share. |
(c) | Q3 2019 includes a benefit from unlocking which reduced amortization of deferred sales inducements and deferred policy acquisition costs by $104.7 million and $193.0 million, respectively, and increased both net income and net income available to common stockholders by $233.4 million and increased earnings per common share - assuming dilution by $2.54 per share. |
(d) | Q3 2019 includes expense from the revision of assumptions used in determining the embedded derivative component of our fixed index annuity policy benefit reserves. The impact increased change in fair value of embedded derivatives by $28.2 million and decreased both net income and net income available to common stockholders by $22.1 million and decreased earnings per common share - assuming dilution by $0.24 per share. |
(e) | Q1 2020 includes a tax benefit related to the provision of the Coronavirus Aid, Relief, and Economic Security Act, (“the CARES ACT”) which was signed into legislation on March 27, 2020 and allows net operating losses for 2018 through 2020 to be carried back to previous tax years in which a 35% statutory tax rate was in effect. The impact reduced income tax expense and increased both net income and net income available to common stockholders by $30.8 million and increased earnings per common share - assuming dilution by $0.33 per share. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Net income (loss) available to common stockholders | $ | (253,379 | ) | $ | 18,590 | $ | (17,043 | ) | $ | (11,420 | ) | ||||
Adjustments to arrive at non-GAAP operating income available to common stockholders: (a) | |||||||||||||||
Net realized gains/losses on financial assets, including credit losses | 18,492 | 2,625 | 34,841 | 2,930 | |||||||||||
Change in fair value of derivatives and embedded derivatives - fixed index annuities | 423,590 | 99,868 | 303,136 | 250,812 | |||||||||||
Change in fair value of derivatives - interest rate caps and swap | — | 854 | (848 | ) | 1,490 | ||||||||||
Income taxes | (95,599 | ) | (22,346 | ) | (72,897 | ) | (54,819 | ) | |||||||
Non-GAAP operating income available to common stockholders | $ | 93,104 | $ | 99,591 | $ | 247,189 | $ | 188,993 | |||||||
Per common share - assuming dilution: | |||||||||||||||
Net income (loss) available to common stockholders | $ | (2.76 | ) | $ | 0.20 | $ | (0.19 | ) | $ | (0.13 | ) | ||||
Adjustments to arrive at non-GAAP operating income available to common stockholders: | |||||||||||||||
Anti-dilutive effect of net loss | 0.01 | — | — | 0.01 | |||||||||||
Net realized gains/losses on financial assets, including credit losses | 0.20 | 0.03 | 0.38 | 0.03 | |||||||||||
Change in fair value of derivatives and embedded derivatives - fixed index annuities | 4.60 | 1.09 | 3.30 | 2.73 | |||||||||||
Change in fair value of derivatives - interest rate caps and swap | — | 0.01 | (0.01 | ) | 0.02 | ||||||||||
Income taxes | (1.04 | ) | (0.24 | ) | (0.79 | ) | (0.60 | ) | |||||||
Non-GAAP operating income available to common stockholders | $ | 1.01 | $ | 1.09 | $ | 2.69 | $ | 2.06 |
(a) | Adjustments to net income (loss) available to common stockholders to arrive at non-GAAP operating income available to common stockholders are presented net of related adjustments to amortization of deferred sales inducements (DSI) and deferred policy acquisition costs (DAC) where applicable. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Net realized gains/losses on financial assets, including credit losses: | |||||||||||||||
Net realized gains/losses on financial assets, including credit losses | $ | 25,276 | $ | 5,045 | $ | 46,933 | $ | 5,608 | |||||||
Amortization of DAC and DSI | (6,784 | ) | (2,420 | ) | (12,092 | ) | (2,678 | ) | |||||||
Income taxes | (3,995 | ) | (567 | ) | (7,526 | ) | (633 | ) | |||||||
$ | 14,497 | $ | 2,058 | $ | 27,315 | $ | 2,297 | ||||||||
Change in fair value of derivatives and embedded derivatives: | |||||||||||||||
Fixed index annuities | $ | 713,446 | $ | 218,046 | $ | 503,555 | $ | 459,166 | |||||||
Interest rate caps and swap | — | 854 | (848 | ) | 1,490 | ||||||||||
Amortization of DAC and DSI | (289,856 | ) | (118,178 | ) | (200,419 | ) | (208,354 | ) | |||||||
Income taxes | (91,604 | ) | (21,779 | ) | (65,371 | ) | (54,186 | ) | |||||||
$ | 331,986 | $ | 78,943 | $ | 236,917 | $ | 198,116 |
Q2 2020 | Q1 2020 | Q4 2019 | Q3 2019 | Q2 2019 | |||||||||||||||
Net income (loss) available to common stockholders | $ | (253,379 | ) | $ | 236,336 | $ | 220,150 | $ | 37,360 | $ | 18,590 | ||||||||
Adjustments to arrive at non-GAAP operating income available to common stockholders: (a) | |||||||||||||||||||
Net realized gains/losses on financial assets, including credit losses | 18,492 | 16,349 | 7,606 | (3,175 | ) | 2,625 | |||||||||||||
Change in fair value of derivatives and embedded derivatives - fixed index annuities | 423,590 | (120,454 | ) | (127,777 | ) | 250,186 | 99,868 | ||||||||||||
Change in fair value of derivatives - interest rate caps and swap | — | (848 | ) | (167 | ) | (76 | ) | 854 | |||||||||||
Income taxes | (95,599 | ) | 22,702 | 26,023 | (50,940 | ) | (22,346 | ) | |||||||||||
Non-GAAP operating income available to common stockholders (b)(c)(d) | $ | 93,104 | $ | 154,085 | $ | 125,835 | $ | 233,355 | $ | 99,591 | |||||||||
Per common share - assuming dilution: | |||||||||||||||||||
Net income (loss) available to common stockholders | $ | (2.76 | ) | $ | 2.57 | $ | 2.40 | $ | 0.41 | $ | 0.20 | ||||||||
Adjustments to arrive at non-GAAP operating income available to common stockholders: | |||||||||||||||||||
Anti-dilutive effect of net loss | 0.01 | — | — | — | — | ||||||||||||||
Net realized gains/losses on financial assets, including credit losses | 0.20 | 0.17 | 0.08 | (0.04 | ) | 0.03 | |||||||||||||
Change in fair value of derivatives and embedded derivatives - fixed index annuities | 4.60 | (1.31 | ) | (1.39 | ) | 2.73 | 1.09 | ||||||||||||
Change in fair value of derivatives - interest rate caps and swap | — | (0.01 | ) | — | — | 0.01 | |||||||||||||
Income taxes | (1.04 | ) | 0.25 | 0.28 | (0.56 | ) | (0.24 | ) | |||||||||||
Non-GAAP operating income available to common stockholders (b)(c)(d) | $ | 1.01 | $ | 1.67 | $ | 1.37 | $ | 2.54 | $ | 1.09 |
(a) | Adjustments to net income (loss) available to common stockholders to arrive at non-GAAP operating income available to common stockholders are presented net of related adjustments to amortization of deferred sales inducements and deferred policy acquisition costs where applicable. |
(b) | Q3 2019 includes expense from the revision of assumptions used in determining reserves held for lifetime income benefit riders. The impact increased interest sensitive and index product benefits by $315.4 million and decreased non-GAAP operating income available to common stockholders and non-GAAP operating income available to common stockholders per common share - assuming dilution by $247.3 million and $2.70 per share, respectively. |
(c) | Q3 2019 includes a benefit from unlocking which reduced amortization of deferred sales inducements and deferred policy acquisition costs by $184.9 million and $288.3 million, respectively, and increased non-GAAP operating income available to common stockholders and non-GAAP operating income available to common stockholders per common share- assuming dilution by $371.0 million and $4.05 per share, respectively. |
(d) | Q1 2020 includes a tax benefit related to the provision of the CARES ACT which was signed into legislation on March 27, 2020 and allows net operating losses for 2018 through 2020 to be carried back to previous tax years in which a 35% statutory tax rate was in effect. The impact reduced income tax expense and increased non-GAAP operating income available to common stockholders and non-GAAP operating income available to common stockholders per common share - assuming dilution by $30.8 million and $0.33 per share, respectively. |
Q2 2020 | Q1 2020 | Q4 2019 | Q3 2019 | Q2 2019 | |||||||||||||||
Net realized (gains) losses on investments | $ | 25,888 | $ | 20,336 | $ | (7,029 | ) | $ | (4,328 | ) | $ | 3,832 | |||||||
Net OTTI losses recognized in operations | — | — | 17,412 | 101 | 1,213 | ||||||||||||||
Change in fair value of derivatives | (413,489 | ) | 1,039,322 | (370,973 | ) | (79,943 | ) | (108,662 | ) | ||||||||||
Increase (decrease) in total revenues | (387,601 | ) | 1,059,658 | (360,590 | ) | (84,170 | ) | (103,617 | ) | ||||||||||
Amortization of deferred sales inducements | 115,511 | (29,683 | ) | (37,374 | ) | (57,408 | ) | 49,101 | |||||||||||
Change in fair value of embedded derivatives | (1,126,935 | ) | 1,250,061 | (147,879 | ) | (212,278 | ) | (327,562 | ) | ||||||||||
Interest sensitive and index product benefits (a) | 612 | (1,321 | ) | — | — | — | |||||||||||||
Amortization of deferred policy acquisition costs | 181,129 | (54,446 | ) | (54,999 | ) | (61,419 | ) | 71,497 | |||||||||||
Increase (decrease) in total benefits and expenses | (829,683 | ) | 1,164,611 | (240,252 | ) | (331,105 | ) | (206,964 | ) | ||||||||||
Increase in income (loss) before income taxes | 442,082 | (104,953 | ) | (120,338 | ) | 246,935 | 103,347 | ||||||||||||
Increase (decrease) in income tax expense (benefit) | 95,599 | (22,702 | ) | (26,023 | ) | 50,940 | 22,346 | ||||||||||||
Increase (decrease) in net income (loss) available to common stockholders | $ | 346,483 | $ | (82,251 | ) | $ | (94,315 | ) | $ | 195,995 | $ | 81,001 |
(a) | Interest sensitive and index product benefits adjustment reflects the change in the allowance for credit losses on our reinsurance recoverable/coinsurance deposits under a revised impairment model for financial assets measured at amortized cost which we were required to adopt on January 1, 2020. The change in this allowance is reflected in the net realized gains/losses of financial assets, including credit losses line in the other Non-GAAP financial measures tables in this financial supplement. |
Q2 2020 | Q1 2020 | Q4 2019 | Q3 2019 | Q2 2019 | |||||||||||||||
Capitalization: | |||||||||||||||||||
Notes payable | $ | 500,000 | $ | 500,000 | $ | 500,000 | $ | 500,000 | $ | 500,000 | |||||||||
Subordinated debentures payable to subsidiary trusts | 77,964 | 77,893 | 159,272 | 247,362 | 247,294 | ||||||||||||||
Total debt | 577,964 | 577,893 | 659,272 | 747,362 | 747,294 | ||||||||||||||
Total stockholders’ equity | 5,062,059 | 3,522,757 | 4,570,119 | 4,126,716 | 3,497,475 | ||||||||||||||
Total capitalization | 5,640,023 | 4,100,650 | 5,229,391 | 4,874,078 | 4,244,769 | ||||||||||||||
Accumulated other comprehensive income (AOCI) | (1,719,839 | ) | (219,974 | ) | (1,497,921 | ) | (1,639,429 | ) | (1,049,984 | ) | |||||||||
Total capitalization excluding AOCI (a) | $ | 3,920,184 | $ | 3,880,676 | $ | 3,731,470 | $ | 3,234,649 | $ | 3,194,785 | |||||||||
Total stockholders’ equity | $ | 5,062,059 | $ | 3,522,757 | $ | 4,570,119 | $ | 4,126,716 | $ | 3,497,475 | |||||||||
Equity available to preferred stockholders (b) | (700,000 | ) | (400,000 | ) | (400,000 | ) | — | — | |||||||||||
Total common stockholders' equity (c) | 4,362,059 | 3,122,757 | 4,170,119 | 4,126,716 | 3,497,475 | ||||||||||||||
Accumulated other comprehensive income | (1,719,839 | ) | (219,974 | ) | (1,497,921 | ) | (1,639,429 | ) | (1,049,984 | ) | |||||||||
Total common stockholders’ equity excluding AOCI (c) | 2,642,220 | 2,902,783 | 2,672,198 | 2,487,287 | 2,447,491 | ||||||||||||||
Net impact of fair value accounting for derivatives and embedded derivatives | 685,839 | 353,853 | 448,924 | 549,202 | 353,180 | ||||||||||||||
Total common stockholders’ equity excluding AOCI and the net impact of fair value accounting for derivatives and embedded derivatives (c) | $ | 3,328,059 | $ | 3,256,636 | $ | 3,121,122 | $ | 3,036,489 | $ | 2,800,671 | |||||||||
Common shares outstanding | 91,595,066 | 91,497,841 | 91,107,555 | 91,006,950 | 90,936,324 | ||||||||||||||
Book Value per Common Share: (d) | |||||||||||||||||||
Book value per common share (c) | $ | 47.62 | $ | 34.13 | $ | 45.77 | $ | 45.35 | $ | 38.46 | |||||||||
Book value per common share excluding AOCI (c) | $ | 28.85 | $ | 31.73 | $ | 29.33 | $ | 27.33 | $ | 26.91 | |||||||||
Book value per common share excluding AOCI and the net impact of fair value accounting for derivatives and embedded derivatives (c) | $ | 36.33 | $ | 35.59 | $ | 34.26 | $ | 33.37 | $ | 30.80 | |||||||||
Debt-to-Capital Ratios: (e) | |||||||||||||||||||
Senior debt / Total capitalization | 12.8 | % | 12.9 | % | 13.4 | % | 15.5 | % | 15.7 | % | |||||||||
Total debt / Total capitalization | 14.7 | % | 14.9 | % | 17.7 | % | 23.1 | % | 23.4 | % |
(a) | Total capitalization excluding AOCI, a non-GAAP financial measure, is based on stockholders' equity excluding the effect of AOCI. |
(b) | Equity available to preferred stockholders is equal to the redemption value of outstanding preferred stock plus share dividends declared but not yet issued. |
(c) | Total common stockholders' equity, total common stockholder's equity excluding AOCI and total common stockholders' equity excluding AOCI and the net impact of fair value accounting for derivatives and embedded derivatives, non-GAAP financial measures, exclude equity available to preferred stockholders. Total common stockholders’ equity and book value per common share excluding AOCI, non-GAAP financial measures, are based on common stockholders’ equity excluding the effect of AOCI. Since AOCI fluctuates from quarter to quarter due to unrealized changes in the fair value of available for sale securities, we believe these non-GAAP financial measures provide useful supplemental information. Total common stockholders' equity and book value per common share excluding AOCI and the net impact of fair value accounting for derivatives and embedded derivatives, non-GAAP financial measures, are based on common stockholders' equity excluding AOCI and the net impact of fair value accounting for derivatives and embedded derivatives. Since the net impact of fair value accounting for our derivatives and embedded derivatives fluctuates from quarter to quarter and the most significant impacts relate to fair value accounting for our fixed index annuity business and are not economic in nature but rather impact the timing of reported results, we believe these non-GAAP financial measures provide useful supplemental information. |
(d) | Book value per common share including and excluding AOCI and book value per common share excluding AOCI and the net impact of fair value accounting for derivatives and embedded derivatives are calculated as total common stockholders’ equity, total common stockholders’ equity excluding AOCI and total common stockholders' equity excluding AOCI and the net impact of fair value accounting for derivatives and embedded derivatives divided by the total number of shares of common stock outstanding. |
(e) | Debt-to-capital ratios are computed using total capitalization excluding AOCI. |
Six Months Ended June 30, | ||||||||||||
2020 | 2019 | Q2 2020 | Q1 2020 | Q4 2019 | Q3 2019 | Q2 2019 | ||||||
4.24% | 4.49% | Average yield on invested assets | 4.12% | 4.36% | 4.52% | 4.59% | 4.51% | |||||
1.73% | 1.89% | Aggregate cost of money | 1.73% | 1.72% | 1.75% | 1.84% | 1.88% | |||||
2.51% | 2.60% | Aggregate investment spread | 2.39% | 2.64% | 2.77% | 2.75% | 2.63% | |||||
Impact of: | ||||||||||||
0.04% | 0.03% | Investment yield - additional prepayment income | 0.03% | 0.06% | 0.12% | 0.11% | 0.04% | |||||
0.02% | 0.03% | Cost of money effect of over (under) hedging | (0.01)% | 0.05% | 0.05% | 0.02% | 0.04% | |||||
$52,762,227 | $50,309,342 | Weighted average investments | $52,901,215 | $52,623,239 | $52,141,459 | $51,529,850 | $50,709,966 |
Six Months Ended June 30, | ||||||||||||||||||||||||||
2020 | 2019 | Q2 2020 | Q1 2020 | Q4 2019 | Q3 2019 | Q2 2019 | ||||||||||||||||||||
Included in interest sensitive and index product benefits: | ||||||||||||||||||||||||||
$ | 376,815 | $ | 217,677 | Index credits | $ | 97,875 | $ | 278,940 | $ | 277,798 | $ | 92,343 | $ | 161,752 | ||||||||||||
95,541 | 97,914 | Interest credited | 46,594 | 48,947 | 49,482 | 49,511 | 50,478 | |||||||||||||||||||
Included in change in fair value of derivatives: | ||||||||||||||||||||||||||
(382,278 | ) | (224,890 | ) | Proceeds received at option expiration | (97,015 | ) | (285,263 | ) | (284,624 | ) | (95,491 | ) | (166,430 | ) | ||||||||||||
369,871 | 397,503 | Pro rata amortization of option cost | 182,841 | 187,030 | 188,984 | 195,354 | 199,006 | |||||||||||||||||||
$ | 459,949 | $ | 488,204 | Cost of money for deferred annuities | $ | 230,295 | $ | 229,654 | $ | 231,640 | $ | 241,717 | $ | 244,806 | ||||||||||||
$ | 53,244,580 | $ | 51,669,061 | Weighted average liability balance outstanding | $ | 53,214,255 | $ | 53,274,905 | $ | 53,092,419 | $ | 52,682,886 | $ | 52,009,407 |
Six Months Ended June 30, | ||||||||||||||||||||||||||
2020 | 2019 | Q2 2020 | Q1 2020 | Q4 2019 | Q3 2019 | Q2 2019 | ||||||||||||||||||||
$ | 53,233,898 | $ | 51,053,450 | Account balances at beginning of period | $ | 53,315,909 | $ | 53,233,898 | $ | 52,950,937 | $ | 52,414,835 | $ | 51,603,979 | ||||||||||||
1,224,778 | 2,605,690 | Net deposits | 543,026 | 681,752 | 838,761 | 1,216,720 | 1,425,325 | |||||||||||||||||||
47,262 | 93,991 | Premium bonuses | 22,710 | 24,552 | 36,983 | 46,968 | 48,370 | |||||||||||||||||||
472,356 | 315,591 | Fixed interest credited and index credits | 144,469 | 327,887 | 327,280 | 141,854 | 212,230 | |||||||||||||||||||
(39,095 | ) | (35,936 | ) | Surrender charges | (19,390 | ) | (19,705 | ) | (15,092 | ) | (20,537 | ) | (19,480 | ) | ||||||||||||
(83,892 | ) | (77,730 | ) | Lifetime income benefit rider fees | (44,048 | ) | (39,844 | ) | (47,630 | ) | (43,110 | ) | (41,220 | ) | ||||||||||||
(1,742,707 | ) | (1,540,221 | ) | Surrenders, withdrawals, deaths, etc. | (850,076 | ) | (892,631 | ) | (857,341 | ) | (805,793 | ) | (814,369 | ) | ||||||||||||
$ | 53,112,600 | $ | 52,414,835 | Account balances at end of period | $ | 53,112,600 | $ | 53,315,909 | $ | 53,233,898 | $ | 52,950,937 | $ | 52,414,835 |
Six Months Ended June 30, | ||||||||||||||||||||||||||
2020 | 2019 | Q2 2020 | Q1 2020 | Q4 2019 | Q3 2019 | Q2 2019 | ||||||||||||||||||||
American Equity Life: | ||||||||||||||||||||||||||
$ | 1,058,962 | $ | 2,238,662 | Fixed index annuities | $ | 472,899 | $ | 586,063 | $ | 765,180 | $ | 1,054,796 | $ | 1,211,004 | ||||||||||||
4,647 | 7,062 | Annual reset fixed rate annuities | 2,316 | 2,331 | 1,843 | 2,340 | 3,614 | |||||||||||||||||||
452 | 714 | Multi-year fixed rate annuities | 83 | 369 | 306 | 593 | 566 | |||||||||||||||||||
15,482 | 3,815 | Single premium immediate annuities | 10,084 | 5,398 | 4,873 | 3,314 | 1,747 | |||||||||||||||||||
1,079,543 | 2,250,253 | 485,382 | 594,161 | 772,202 | 1,061,043 | 1,216,931 | ||||||||||||||||||||
Eagle Life: | ||||||||||||||||||||||||||
178,873 | 413,038 | Fixed index annuities | 72,371 | 106,502 | 67,784 | 166,081 | 235,558 | |||||||||||||||||||
58 | 193 | Annual reset fixed rate annuities | 17 | 41 | 6 | — | 66 | |||||||||||||||||||
5,180 | 72,572 | Multi-year fixed rate annuities | 1,031 | 4,149 | 81,041 | 79,000 | 47,004 | |||||||||||||||||||
184,111 | 485,803 | 73,419 | 110,692 | 148,831 | 245,081 | 282,628 | ||||||||||||||||||||
Consolidated: | ||||||||||||||||||||||||||
1,237,835 | 2,651,700 | Fixed index annuities | 545,270 | 692,565 | 832,964 | 1,220,877 | 1,446,562 | |||||||||||||||||||
4,705 | 7,255 | Annual reset fixed rate annuities | 2,333 | 2,372 | 1,849 | 2,340 | 3,680 | |||||||||||||||||||
5,632 | 73,286 | Multi-year fixed rate annuities | 1,114 | 4,518 | 81,347 | 79,593 | 47,570 | |||||||||||||||||||
15,482 | 3,815 | Single premium immediate annuities | 10,084 | 5,398 | 4,873 | 3,314 | 1,747 | |||||||||||||||||||
1,263,654 | 2,736,056 | Total before coinsurance ceded | 558,801 | 704,853 | 921,033 | 1,306,124 | 1,499,559 | |||||||||||||||||||
23,394 | 126,551 | Coinsurance ceded | 5,691 | 17,703 | 77,399 | 86,090 | 72,487 | |||||||||||||||||||
$ | 1,240,260 | $ | 2,609,505 | Net after coinsurance ceded | $ | 553,110 | $ | 687,150 | $ | 843,634 | $ | 1,220,034 | $ | 1,427,072 |
Surrender Charge | Net Account Value | ||||||||||||
Product Type | Avg. Years At Issue | Avg. Years Remaining | Avg. % Remaining | Dollars in Thousands | % | ||||||||
Fixed Index Annuities | 12.9 | 6.6 | 10.7% | $ | 51,122,612 | 96.3 | % | ||||||
Annual Reset Fixed Rate Annuities | 9.4 | 3.2 | 6.1% | 1,403,321 | 2.6 | % | |||||||
Multi-Year Fixed Rate Annuities | 5.9 | 1.6 | 4.6% | 586,667 | 1.1 | % | |||||||
Total | 12.7 | 6.5 | 10.5% | $ | 53,112,600 | 100.0 | % |
Surrender Charge Percentages: | Fixed Annuities Account Value | Fixed Index Annuities Account Value | |||||
No surrender charge | $ | 811,287 | $ | 2,740,676 | |||
0.0% < 2.0% | 16,674 | 272,742 | |||||
2.0% < 3.0% | 18,180 | 1,059,162 | |||||
3.0% < 4.0% | 62,253 | 1,813,373 | |||||
4.0% < 5.0% | 66,625 | 1,629,546 | |||||
5.0% < 6.0% | 243,420 | 3,045,822 | |||||
6.0% < 7.0% | 94,673 | 1,169,623 | |||||
7.0% < 8.0% | 82,992 | 5,209,088 | |||||
8.0% < 9.0% | 44,361 | 4,048,053 | |||||
9.0% < 10.0% | 79,797 | 3,937,052 | |||||
10.0% or greater | 469,726 | 26,197,475 | |||||
$ | 1,989,988 | $ | 51,122,612 |
Surrender Charge Expiration By Year: | Fixed and Fixed Index Annuities Account Value | Weighted Average Surrender Charge | ||||
Out of Surrender Charge | $ | 3,551,963 | 0.00 | % | ||
2020 | 466,472 | 2.62 | % | |||
2021 | 1,205,030 | 3.67 | % | |||
2022 | 1,718,514 | 4.67 | % | |||
2023 | 4,127,620 | 5.36 | % | |||
2024 | 5,140,087 | 7.22 | % | |||
2025 | 6,002,725 | 8.49 | % | |||
2026 | 5,229,759 | 10.10 | % | |||
2027 | 4,456,516 | 11.67 | % | |||
2028 | 4,726,844 | 12.59 | % | |||
2029 | 5,980,906 | 13.84 | % | |||
2030 | 3,228,720 | 15.92 | % | |||
2031 | 2,984,563 | 17.74 | % | |||
2032 | 2,030,436 | 18.26 | % | |||
2033 | 1,169,013 | 18.68 | % | |||
2034 | 698,437 | 19.17 | % | |||
2035 | 318,637 | 19.70 | % | |||
2036 | 76,358 | 20.00 | % | |||
$ | 53,112,600 | 10.47 | % |
Credited Rate vs. Ultimate Minimum Guaranteed Rate Differential: | Fixed Annuities Account Value | Fixed Index Annuities Account Value | |||||
No differential | $ | 944,032 | $ | 1,275,851 | |||
› 0.0% - 0.25% | 49,125 | 153,052 | |||||
› 0.25% - 0.5% | 237,473 | 5,638 | |||||
› 0.5% - 1.0% | 34,082 | 10,596 | |||||
› 1.0% - 1.5% | 11,491 | — | |||||
› 2.0% - 2.5% | 238 | — | |||||
Greater than 3.0% | 2,757 | — | |||||
1.00% ultimate guarantee - 2.36% wtd avg interest rate (a) | 441,111 | 812,678 | |||||
1.50% ultimate guarantee - 1.14% wtd avg interest rate (a) | 142,690 | 3,300,429 | |||||
1.75% ultimate guarantee - 1.96% wtd avg interest rate (a) | 49,338 | 517,285 | |||||
2.00% ultimate guarantee - 1.85% wtd avg interest rate (a) | 77,651 | — | |||||
2.25% ultimate guarantee - 1.75% wtd avg interest rate (a) | — | 758,107 | |||||
2.25% ultimate guarantee - 2.00% wtd avg interest rate (a) | — | 1,471,865 | |||||
Allocated to index strategies (see tables that follow) | — | 42,817,111 | |||||
$ | 1,989,988 | $ | 51,122,612 |
(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. |
Annual Monthly Average and Point-to-Point with Caps | |||||||||||||||||||
Minimum Guaranteed Cap | |||||||||||||||||||
1% | 3% | 4% | 7% | 8% + | |||||||||||||||
Current Cap | |||||||||||||||||||
At minimum | $ | 1,418 | $ | 100,762 | $ | 4,915,126 | $ | 61,573 | $ | 83,976 | |||||||||
1.75% - 3% | 8,452,761 | — | — | — | — | ||||||||||||||
3% - 4% | 269,501 | 3,651 | — | — | — | ||||||||||||||
4% - 5% | 890,045 | 218,620 | 1,394,195 | — | — | ||||||||||||||
5% - 6% | 528,022 | 186,089 | 30,599 | — | — | ||||||||||||||
6% - 7% | — | — | 444 | — | — | ||||||||||||||
>= 7% | 10,694 | 6,334 | 716 | 5,510 | — |
Annual Monthly Average and Point-to-Point with Participation Rates | |||||||||||||||
Minimum Guaranteed Participation Rate | |||||||||||||||
10% | 20% - 25% | 35% | 50% + | ||||||||||||
Current Participation Rate | |||||||||||||||
At minimum | $ | 52,121 | $ | 392,105 | $ | 94,250 | $ | 98,941 | |||||||
< 20% | 867,652 | — | — | — | |||||||||||
20% - 40% | 1,286,560 | 171,053 | — | — | |||||||||||
40% - 60% | 3,196,216 | 96,904 | 57,801 | — | |||||||||||
60% - 100% | 573,225 | — | — | — | |||||||||||
> 100% | 473,490 | — | — | — |
S&P 500 Monthly Point-to-Point - Minimum Guaranteed Monthly Cap = 1.0% | |||
Current Cap | |||
At minimum | $ | 2,050,638 | |
1.10% - 1.30% | 7,045,435 | ||
1.40% - 1.60% | 2,017,351 | ||
1.70% - 2.00% | 312,013 | ||
>= 2.10% | 1,332 |
Volatility Control Index | |||
Current Asset Fee | |||
At Maximum | $ | — | |
0.75% - 1.75% | 373,003 | ||
2.25% - 2.75% | 211,814 | ||
3.00% - 3.50% | 2,305,934 | ||
3.75% - 5.00% | 2,524,462 |
June 30, 2020 | December 31, 2019 | ||||||||||||
Carrying Amount | Percent | Carrying Amount | Percent | ||||||||||
Fixed maturity securities: | |||||||||||||
United States Government full faith and credit | $ | 39,342 | 0.1 | % | $ | 161,765 | 0.3 | % | |||||
United States Government sponsored agencies | 343,387 | 0.6 | % | 625,020 | 1.1 | % | |||||||
United States municipalities, states and territories | 3,778,710 | 6.8 | % | 4,527,671 | 7.9 | % | |||||||
Foreign government obligations | 207,509 | 0.4 | % | 205,096 | 0.3 | % | |||||||
Corporate securities | 33,330,711 | 59.7 | % | 32,536,839 | 57.2 | % | |||||||
Residential mortgage backed securities | 1,712,725 | 3.1 | % | 1,575,664 | 2.8 | % | |||||||
Commercial mortgage backed securities | 5,393,062 | 9.6 | % | 5,786,279 | 10.2 | % | |||||||
Other asset backed securities | 5,933,346 | 10.6 | % | 6,162,156 | 10.8 | % | |||||||
Total fixed maturity securities | 50,738,792 | 90.9 | % | 51,580,490 | 90.6 | % | |||||||
Mortgage loans on real estate | 3,958,233 | 7.1 | % | 3,448,793 | 6.1 | % | |||||||
Derivative instruments | 672,958 | 1.2 | % | 1,355,989 | 2.4 | % | |||||||
Other investments | 479,099 | 0.8 | % | 492,301 | 0.9 | % | |||||||
$ | 55,849,082 | 100.0 | % | $ | 56,877,573 | 100.0 | % |
NAIC Designation | Carrying Amount | Percent | Rating Agency Rating | Carrying Amount | Percent | |||||||||||
1 | $ | 28,327,288 | 55.8 | % | Aaa/Aa/A | $ | 29,240,135 | 57.6 | % | |||||||
2 | 20,765,334 | 40.9 | % | Baa | 19,857,663 | 39.1 | % | |||||||||
3 | 1,430,998 | 2.8 | % | Ba | 1,347,637 | 2.7 | % | |||||||||
4 | 156,234 | 0.3 | % | B | 126,141 | 0.3 | % | |||||||||
5 | 31,644 | 0.1 | % | Caa | 68,192 | 0.1 | % | |||||||||
6 | 27,294 | 0.1 | % | Ca and lower | 99,024 | 0.2 | % | |||||||||
$ | 50,738,792 | 100.0 | % | $ | 50,738,792 | 100.0 | % |
General Description (a) | Amortized Cost | Allowance for Credit Losses | Amortized Cost, Net of Allowance | Net Unrealized Losses, Net of Allowance | Fair Value | |||||||||||||||
Corporate securities - Public securities | $ | 59,078 | $ | (46,622 | ) | $ | 12,456 | $ | (1,718 | ) | $ | 10,738 | ||||||||
Corporate securities - Private placement securities | 359,141 | (127 | ) | 359,014 | (25,933 | ) | 333,081 | |||||||||||||
Residential mortgage backed securities | 35,860 | (777 | ) | 35,083 | (458 | ) | 34,625 | |||||||||||||
Commercial mortgage backed securities | 137,801 | (2,660 | ) | 135,141 | (19,966 | ) | 115,175 | |||||||||||||
Other asset backed securities | 83,892 | — | 83,892 | (12,200 | ) | 71,692 | ||||||||||||||
$ | 675,772 | $ | (50,186 | ) | $ | 625,586 | $ | (60,275 | ) | $ | 565,311 |
(a) | The watch list consists of all fixed maturity securities we have determined contain elevated credit risk, including those we have taken credit losses on. |
June 30, 2020 | December 31, 2019 | ||||||||||||||
Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||
Available for sale: | |||||||||||||||
United States Government full faith and credit and sponsored agencies | $ | 330,238 | $ | 382,729 | $ | 763,164 | $ | 786,785 | |||||||
United States municipalities, states and territories | 3,283,321 | 3,778,710 | 4,147,343 | 4,527,671 | |||||||||||
Foreign government obligations | 187,021 | 207,509 | 186,993 | 205,096 | |||||||||||
Corporate securities: | |||||||||||||||
Capital goods | 2,489,801 | 2,824,749 | 2,550,750 | 2,794,986 | |||||||||||
Consumer discretionary | 6,128,110 | 7,003,608 | 6,082,974 | 6,658,120 | |||||||||||
Energy | 2,661,723 | 2,738,944 | 2,499,030 | 2,677,646 | |||||||||||
Financials | 6,690,075 | 7,439,505 | 6,737,325 | 7,323,150 | |||||||||||
Government non-guaranteed | 539,396 | 616,763 | 539,639 | 606,308 | |||||||||||
Industrials | 276,430 | 316,225 | 311,269 | 336,537 | |||||||||||
Information technology | 1,823,511 | 2,104,744 | 1,868,131 | 2,051,175 | |||||||||||
Materials | 1,774,801 | 1,972,694 | 1,818,048 | 1,961,033 | |||||||||||
Other | 438,725 | 498,284 | 439,171 | 469,344 | |||||||||||
Telecommunications | 1,476,151 | 1,703,362 | 1,510,836 | 1,664,350 | |||||||||||
Transportation | 1,567,784 | 1,647,677 | 1,486,540 | 1,603,997 | |||||||||||
Utilities | 3,868,282 | 4,464,156 | 3,978,459 | 4,390,193 | |||||||||||
Residential mortgage backed securities: | |||||||||||||||
Government agency | 592,348 | 684,049 | 591,100 | 646,787 | |||||||||||
Prime | 907,897 | 925,834 | 793,357 | 815,916 | |||||||||||
Alt-A | 88,515 | 102,842 | 93,281 | 112,961 | |||||||||||
Commercial mortgage backed securities: | |||||||||||||||
Government agency | 402,537 | 458,597 | 414,626 | 437,420 | |||||||||||
Non-agency | 5,121,544 | 4,934,465 | 5,176,541 | 5,348,859 | |||||||||||
Other asset backed securities: | |||||||||||||||
Auto | 381,835 | 382,965 | 403,860 | 411,371 | |||||||||||
Energy | 7,400 | 9,228 | 7,495 | 8,603 | |||||||||||
Financials | 4,441 | 4,149 | 4,967 | 5,493 | |||||||||||
Industrials | 143,874 | 140,426 | 167,466 | 171,273 | |||||||||||
Collateralized loan obligations | 4,798,760 | 4,369,527 | 4,787,402 | 4,612,694 | |||||||||||
Military housing | 468,201 | 549,773 | 471,621 | 539,029 | |||||||||||
Other | 498,322 | 477,278 | 407,558 | 413,693 | |||||||||||
$ | 46,951,043 | $ | 50,738,792 | $ | 48,238,946 | $ | 51,580,490 |
June 30, 2020 | December 31, 2019 | ||||||||||||||
Principal | Percent | Principal | Percent | ||||||||||||
Geographic distribution: commercial mortgage loans | |||||||||||||||
East | $ | 714,198 | 18.7 | % | $ | 645,991 | 18.7 | % | |||||||
Middle Atlantic | 287,864 | 7.5 | % | 284,597 | 8.2 | % | |||||||||
Mountain | 444,495 | 11.6 | % | 389,892 | 11.3 | % | |||||||||
New England | 25,066 | 0.7 | % | 9,152 | 0.3 | % | |||||||||
Pacific | 782,240 | 20.4 | % | 655,518 | 19.0 | % | |||||||||
South Atlantic | 820,260 | 21.4 | % | 751,199 | 21.7 | % | |||||||||
West North Central | 308,874 | 8.1 | % | 302,534 | 8.7 | % | |||||||||
West South Central | 445,975 | 11.6 | % | 420,031 | 12.1 | % | |||||||||
$ | 3,828,972 | 100.0 | % | $ | 3,458,914 | 100.0 | % | ||||||||
Property type distribution: commercial mortgage loans | |||||||||||||||
Office | $ | 259,888 | 6.8 | % | $ | 250,287 | 7.3 | % | |||||||
Medical Office | 27,372 | 0.7 | % | 29,990 | 0.9 | % | |||||||||
Retail | 1,225,212 | 32.0 | % | 1,225,670 | 35.4 | % | |||||||||
Industrial/Warehouse | 974,579 | 25.5 | % | 896,558 | 25.9 | % | |||||||||
Apartment | 971,536 | 25.4 | % | 858,679 | 24.8 | % | |||||||||
Agricultural | 177,333 | 4.6 | % | 51,303 | 1.5 | % | |||||||||
Mixed use/Other | 193,052 | 5.0 | % | 146,427 | 4.2 | % | |||||||||
$ | 3,828,972 | 100.0 | % | $ | 3,458,914 | 100.0 | % | ||||||||
June 30, 2020 | December 31, 2019 | ||||||||||||||
Commercial | Residential | Total | Total | ||||||||||||
Credit exposure - by payment activity | |||||||||||||||
Performing | $ | 3,828,972 | $ | 153,913 | $ | 3,982,885 | $ | 3,458,914 | |||||||
In workout | — | — | — | — | |||||||||||
Delinquent | — | — | — | — | |||||||||||
Collateral dependent | — | — | — | — | |||||||||||
Principal outstanding | 3,828,972 | 153,913 | 3,982,885 | 3,458,914 | |||||||||||
Unamortized discount | — | (3,078 | ) | (3,078 | ) | ||||||||||
Deferred fees and costs, net | (1,858 | ) | 373 | (1,485 | ) | (942 | ) | ||||||||
Amortized cost | 3,827,114 | 151,208 | 3,978,322 | 3,457,972 | |||||||||||
Valuation allowance | (18,439 | ) | (1,650 | ) | (20,089 | ) | (9,179 | ) | |||||||
Carrying value | $ | 3,808,675 | $ | 149,558 | $ | 3,958,233 | $ | 3,448,793 |
High | Low | Close | Dividend Declared | ||||
2020 | |||||||
First Quarter | $34.16 | $9.07 | $18.80 | $0.00 | |||
Second Quarter | $27.09 | $14.76 | $24.71 | $0.00 | |||
2019 | |||||||
First Quarter | $33.57 | $26.34 | $27.02 | $0.00 | |||
Second Quarter | $30.91 | $25.84 | $27.16 | $0.00 | |||
Third Quarter | $27.80 | $20.16 | $24.20 | $0.00 | |||
Fourth Quarter | $30.96 | $21.75 | $29.93 | $0.30 | |||
2018 | |||||||
First Quarter | $35.79 | $28.90 | $29.36 | $0.00 | |||
Second Quarter | $37.16 | $27.06 | $36.00 | $0.00 | |||
Third Quarter | $38.57 | $34.51 | $35.36 | $0.00 | |||
Fourth Quarter | $36.39 | $25.27 | $27.94 | $0.28 |