UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 07, 2022
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||
(Address of principal executive offices and zip code)
(515 ) 221-0002
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition
On November 7, 2022, the registrant issued a press release announcing its financial results for the quarter ended September 30, 2022, a copy of which is attached as Exhibit 99.1 and is incorporated herein by reference. The registrant's financial supplement for the quarter ended September 30, 2022, is attached as Exhibit 99.2 and is incorporated herein by reference.
The information, including exhibits attached hereto, furnished under this Item 2.02 shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, except as otherwise expressly stated in such filing.
Item 9.01. Financial Statements and Exhibits
Exhibit Number | Description | |||||||
| 99.1 | ||||||||
| 99.2 | ||||||||
| 104 | The cover page from this Current Report on Form 8-K, formatted in Inline XBRL. | |||||||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: November 7, 2022
| AMERICAN EQUITY | |||||||||||
| INVESTMENT LIFE HOLDING COMPANY | |||||||||||
| By: | /s/ Axel Andre | ||||||||||
| Axel Andre | |||||||||||
| Chief Financial Officer and Executive Vice President | |||||||||||
Exhibit 99.1
 | For more information, contact: | |||||||
| Steven D. Schwartz, Vice President-Investor Relations | ||||||||
| (515) 273-3763, sschwartz@american-equity.com | ||||||||
| FOR IMMEDIATE RELEASE | ||||||||
| November 7, 2022 | ||||||||
American Equity Reports Strong Earnings Driven by Continued Execution of AEL 2.0 Strategy with Private Asset Allocation Growing to 18.4%
Company Highlights
•Q3 2022 net income available to common stockholders of $301.7 million, or $3.41 per diluted common share compared to $141.9 million, or $1.53 per diluted common share for Q3 2021
•Non-GAAP operating income1 available to common stockholders excluding notable items for the third quarter 2022 was $87.4 million, or $0.99 per diluted common share
•Only notable item this quarter, the annual actuarial update, positively impacted non-GAAP operating income1 by $26.6 million, or $0.30 per common diluted share
•American Equity Life ranked #1 annuity provider for Customer Satisfaction among Annuity Providers2 in the J.D. Power 2022 U.S. Individual Annuity Study
•Repurchased $154 million or 4.2 million common shares in Q3 2022 bringing total year-to-date to $522 million or 13.6 million shares
•Private asset deployment momentum continues with approximately $1.3 billion sourced in the quarter
•Approximately $500 million increase in notional value3 of reinsurance ceded to North End Re., a subsidiary of Brookfield Reinsurance, that earns recurring "fee-like" revenues for 6-7 years, growing total balance to $4.9 billion
WEST DES MOINES, Iowa (November 7, 2022) – American Equity Investment Life Holding Company (NYSE: AEL), a leading issuer of fixed index annuities (FIAs) today reported on its third quarter 2022 results. These results include improved yields in the investment portfolio through continued ramping of our investment portfolio toward target allocation to privately sourced assets, and continued share repurchase activities in-line with our capital return goals for this year.
American Equity's President and CEO, Anant Bhalla, noted a significant business achievement during the quarter, stating: "We are extraordinarily proud that American Equity Investment Life Insurance Company has been ranked #1 for Customer Satisfaction among Annuity Providers2 in the J.D. Power 2022 U.S. Individual Annuity Study. According to the research, AEL bucked the industry trends, exhibiting the largest year-over-year increase in Customer Satisfaction J.D. Power has ever seen in the study. Our Go-to-Market strategy is differentiated through a combination of industry leading product design and outstanding policyholder and advisor service."
Non-GAAP operating income1 available to common stockholders for the third quarter of 2022 was $114.0 million, or $1.29 per diluted common share, compared to non-GAAP operating income1 available to common stockholders of $79.5 million, or $0.85 per diluted common share for the third quarter of 2021. For the third quarter of 2022, non-GAAP operating income1, excluding notable items, was $87.4 million, or $0.99 per diluted common share compared to $136.3 million, or $1.46 per diluted common share for the third quarter of 2021.
The one notable item in each quarter, actuarial assumption revisions utilized in the determination of deferred policy acquisition costs, deferred sales inducements, and the liability for future policy benefits to be paid for lifetime income benefit riders (LIBR), positively impacted non-GAAP operating income by $26.6 million, or $0.30 per diluted common share, in the third quarter of 2022 while having a negative effect of $56.8 million, or $0.61 per diluted common share, in the third quarter of 2021.
The year-over-year change in quarterly non-GAAP operating income1 available to common stockholders excluding the impact of actuarial assumption revisions reflected reduced equity index credits due to the decline in equity markets and increases in amortization of the deferred acquisition cost and deferred sales inducement assets offset partly by a substantial increase in average yield on invested assets.
For the third quarter of 2022, net investment income increased $83 million from the comparable quarter of 2021 reflecting an increase in average yield on investments resulting from strong returns from partnerships, the benefit from higher short-term interest rates on our floating rate portfolio, lower cash balances, and the increase in allocation to higher yielding privately sourced assets to 18.4% of the investment portfolio.
Compared to the third quarter of 2021, the change in the liability for future benefits to be paid for LIBR decreased by $222 million. Excluding the impact of actuarial assumption revisions, the year-over-year change in liability for future policy benefits to be paid for LIBR was $64 million. In the third quarter of 2022, the expected change in the liability for future policy benefits to be paid for LIBR increased by $8 million for the on-going change in earnings patterns resulting from the impact of actuarial assumption revisions and $37 million for actual versus modeled experience primarily reflecting $23 million of additional expense associated with near zero index credits; actual versus modeled experience reduced the reserve by $14 million in the third quarter of 2021.
Compared to the third quarter of 2021, the change in amortization of deferred policy acquisition and sales inducement costs increased by $233 million. Excluding the impact of actuarial assumption revisions, amortization of deferred policy acquisition and sales inducement costs increased by $52 million from the third quarter of 2021. The change to earnings patterns resulting from the impact of actuarial assumption revisions increased total amortization by $11 million. Actual versus modeled expectations in the third quarter of 2022, primarily reflecting the level of equity index credits, interest margin and lapsation, offset in part by lower option budget, increased amortization by $7 million primarily reflecting $9 million of additional expense associated with near zero index credits. Amortization of deferred sales inducements and policy acquisition costs was positively affected by $12 million in the third quarter of 2021 from actual versus modeled expectations.
As of September 30, 2022, notional value3 under reinsurance agreements - generating six to seven years of "fee-like" return on asset (ROA) earnings - was $4.9 billion, up nearly $500 million from three months earlier.
2
STRONG INVESTMENT MANAGEMENT RESULTS
American Equity’s investment spread was 2.73% for the third quarter of 2022 compared to 2.64% for the second quarter of 2022 and 2.40% for the third quarter of 2021. On a sequential quarterly basis, the average yield on invested assets increased by 15 basis points - driven primarily by the increase in short-term interest rates - while the cost of money increased 6 basis points. Adjusted investment spread excluding non-trendable items4 increased to 2.70% in the third quarter of 2022 from 2.57% in the second quarter of 2022.
Average yield on invested assets was 4.48% in the third quarter of 2022 compared to 4.33% in the second quarter of 2022. The average adjusted yield on invested assets excluding non-trendable items4 was 4.45% in the third quarter of 2022 compared to 4.28% in the second quarter of 2022. Relative to the prior quarter, the increase in the average adjusted yield in the third quarter of 2022 was primarily driven by a 15 basis point benefit due to higher short term rates. While the benefit from residential real estate assets was lower than in the second quarter, this was more than offset by partnership income. Partnerships and other mark-to-market assets contributed 22 basis points to average yield in the third quarter of 2022 in excess of rates of return assumed in our investment process, compared to 20 basis points in the second quarter.
During the quarter, investment asset purchases totaled $1.5 billion and were made at an average rate of 6.42%, including approximately $1.3 billion of private assets at 6.5%.
The aggregate cost of money for annuity liabilities of 1.75% in the third quarter of 2022 was up 6 basis points compared to the second quarter of 2022, in line with market costs. The cost of money in the second quarter of 2022 was positively affected by 2 basis points of over-hedging of index-linked credits compared to a very minimal benefit in the quarter just ended.
SALES FOCUS ON FIA AND PRICING DISCIPLINE5
Third quarter sales were $752 million, of which 97%, or $730 million, were in fixed index annuities. This is in line with the company's focus on disciplined liability origination through a combination of value-added services to distribution, consistency of product offerings and leading customer service over chasing market share primarily with product rates as interest rates fluctuated during the quarter. Compared to the second quarter of 2022, total enterprise FIA sales decreased 6% reflecting a 7% decline at American Equity Life in the Independent Marketing Organization (IMO) channel, while Eagle Life FIA sales through banks and broker-dealers fell 2%.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
The forward-looking statements in this release or that American Equity uses on its conference call, such as ability, aim, anticipate, assume, become, believe, can, commit, continue, could, estimate, expect, exposure, forward, future, goal, grow, guidance, intend, likely, look to, may, might, model, opportunity, outlook, over time, plan, potential, prepare, project, ramp, risk, scenario, should, signal, strategy, stress test, target, to be, toward, trends, will, would, and their derivative forms and similar words, as well as any projections of future results, are based on assumptions and expectations that involve risks and uncertainties, including the "Risk Factors" the company describes in its U.S. Securities and Exchange Commission filings. The Company's future results could differ, and it has no obligation to correct or update any of these statements.
3
CONFERENCE CALL
American Equity will hold a conference call to discuss third quarter 2022 earnings on Tuesday, November 8, at 10:00 a.m. CST.
The conference call will be webcast live on the Internet. Investors and interested parties who wish to listen to the webcast may register to access it on our IR website at https://ir.american-equity.com. An audio replay will also be available via the same link on our website shortly after the completion of the call for 30 days.
The call may also be accessed by telephone. Investors and interested parties may register for the call with the form available at this link, and upon submission (and via follow-up email) will receive the dial-in number and a unique PIN to access the call. Registration is available now or any time up to and during the time of the call. Registration is also available by visiting our IR website at https://ir.american-equity.com.
ABOUT AMERICAN EQUITY
At American Equity Investment Life Holding Company, we think of ourselves as The Financial Dignity CompanyTM that offers solutions designed to create financial dignity in retirement. Our policyholders work with independent agents, banks and broker-dealers, through our wholly-owned operating subsidiaries, to choose one of our leading annuity products best suited for their personal needs. To deliver on our promises to policyholders, American Equity has reframed its investment focus, building a stronger emphasis on insurance liability driven asset allocation as well as the origination and management of private assets. Our company is headquartered in West Des Moines, Iowa with satellite offices slated to open in 2022 in Charlotte, NC and New York, NY. For more information, please visit www.american-equity.com.
1 Use of non-GAAP financial measures, including those that isolate notable items, is discussed in this release in the tables that follow the text of the release..
2 American Equity received the highest score in the J.D. Power 2022 U.S. Individual Annuity Study of customers’ satisfaction with annuity
providers. Visit jdpower.com/awards for more details.
3 Notional value represents the initial cash surrender value of business ceded subject to recurring fees under reinsurance agreements.
4 Non-trendable items are the impact of investment yield – additional prepayment income and cost of money effect of over (under) hedging as shown in our September 30, 2022 financial supplement on page 11, “Spread Results”.
5 For the purposes of this document, all references to sales are on a gross basis. Gross sales is defined as sales before the use of reinsurance.
###
4
American Equity Investment Life Holding Company
Unaudited (Dollars in thousands, except per share data)
Consolidated Statements of Operations
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Premiums and other considerations | $ | 2,839 | $ | 15,841 | $ | 16,748 | $ | 43,649 | |||||||||||||||
| Annuity product charges | 60,819 | 58,480 | 168,688 | 182,321 | |||||||||||||||||||
| Net investment income | 609,737 | 526,366 | 1,769,468 | 1,522,876 | |||||||||||||||||||
| Change in fair value of derivatives | (176,671) | (70,701) | (1,160,371) | 826,484 | |||||||||||||||||||
| Net realized gains (losses) on investments | (15,860) | 4,933 | (62,259) | (2,764) | |||||||||||||||||||
| Other revenue | 10,989 | 7,644 | 28,773 | 7,644 | |||||||||||||||||||
| Total revenues | 491,853 | 542,563 | 761,047 | 2,580,210 | |||||||||||||||||||
| Benefits and expenses: | |||||||||||||||||||||||
| Insurance policy benefits and change in future policy benefits | 5,707 | 18,756 | 25,436 | 51,008 | |||||||||||||||||||
| Interest sensitive and index product benefits | 121,890 | 817,014 | 729,407 | 2,106,590 | |||||||||||||||||||
| Amortization of deferred sales inducements | 127,784 | (17,172) | 361,775 | 93,283 | |||||||||||||||||||
| Change in fair value of embedded derivatives | (415,374) | (536,404) | (2,695,007) | (545,104) | |||||||||||||||||||
| Interest expense on notes payable | 8,984 | 6,535 | 21,870 | 19,322 | |||||||||||||||||||
| Interest expense on subordinated debentures | 1,333 | 1,342 | 3,996 | 3,994 | |||||||||||||||||||
| Amortization of deferred policy acquisition costs | 183,182 | (1,588) | 550,962 | 185,329 | |||||||||||||||||||
| Other operating costs and expenses | 59,532 | 56,518 | 177,575 | 177,433 | |||||||||||||||||||
| Total benefits and expenses | 93,038 | 345,001 | (823,986) | 2,091,855 | |||||||||||||||||||
| Income before income taxes | 398,815 | 197,562 | 1,585,033 | 488,355 | |||||||||||||||||||
| Income tax expense | 86,214 | 44,697 | 345,633 | 107,500 | |||||||||||||||||||
| Net income | 312,601 | 152,865 | 1,239,400 | 380,855 | |||||||||||||||||||
| Less: Net income (loss) available to noncontrolling interests | 1 | — | (3) | — | |||||||||||||||||||
| Net income available to American Equity Investment Life Holding Company stockholders | 312,600 | 152,865 | 1,239,403 | 380,855 | |||||||||||||||||||
| Less: Preferred stock dividends | 10,918 | 10,918 | 32,756 | 32,756 | |||||||||||||||||||
| Net income available to American Equity Investment Life Holding Company common stockholders | $ | 301,682 | $ | 141,947 | $ | 1,206,647 | $ | 348,099 | |||||||||||||||
| Earnings per common share | $ | 3.44 | $ | 1.53 | $ | 13.07 | $ | 3.69 | |||||||||||||||
| Earnings per common share - assuming dilution | $ | 3.41 | $ | 1.53 | $ | 12.94 | $ | 3.67 | |||||||||||||||
| Weighted average common shares outstanding (in thousands): | |||||||||||||||||||||||
| Earnings per common share | 87,707 | 92,478 | 92,339 | 94,326 | |||||||||||||||||||
| Earnings per common share - assuming dilution | 88,581 | 93,044 | 93,270 | 94,867 | |||||||||||||||||||
Page 1
American Equity Investment Life Holding Company
Unaudited (Dollars in thousands, except per share data)
NON-GAAP FINANCIAL MEASURES
In addition to net income available to common stockholders, we have consistently utilized non-GAAP operating income available to common stockholders and non-GAAP operating income available to common stockholders 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 available to common stockholders equals net income available to common stockholders 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 available to common stockholders eliminate the impact of fair value accounting for our fixed index annuity business. These adjustments 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 available to common stockholders together with net income available to common stockholders provides information that may enhance an investor’s understanding of our underlying results and profitability.
Reconciliation from Net Income Available to Common Stockholders to Non-GAAP Operating Income Available to Common Stockholders and Non-GAAP Operating Income Available to Common Stockholders, Excluding Notable Items
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Net income available to American Equity Investment Life Holding Company common stockholders | $ | 301,682 | $ | 141,947 | $ | 1,206,647 | $ | 348,099 | |||||||||||||||
| Adjustments to arrive at non-GAAP operating income available to common stockholders: (a) | |||||||||||||||||||||||
| Net realized (gains) losses on financial assets, including credit losses | 9,738 | (3,900) | 51,595 | 2,528 | |||||||||||||||||||
| Change in fair value of derivatives and embedded derivatives | (248,823) | (75,879) | (1,219,322) | (172,746) | |||||||||||||||||||
| Income taxes | 51,403 | 17,285 | 256,120 | 36,801 | |||||||||||||||||||
| Non-GAAP operating income available to common stockholders | 114,000 | 79,453 | 295,040 | 214,682 | |||||||||||||||||||
| Impact of excluding notable items (b) | (26,572) | 56,801 | (26,572) | 56,801 | |||||||||||||||||||
| Non-GAAP operating income available to common stockholders, excluding notable items | $ | 87,428 | $ | 136,254 | $ | 268,468 | $ | 271,483 | |||||||||||||||
| Per common share - assuming dilution: | |||||||||||||||||||||||
| Net income available to American Equity Investment Life Holding Company common stockholders | $ | 3.41 | $ | 1.53 | $ | 12.94 | $ | 3.67 | |||||||||||||||
| Adjustments to arrive at non-GAAP operating income available to common stockholders: | |||||||||||||||||||||||
| Net realized (gains) losses on financial assets, including credit losses | 0.11 | (0.04) | 0.55 | 0.02 | |||||||||||||||||||
| Change in fair value of derivatives and embedded derivatives | (2.81) | (0.82) | (13.07) | (1.82) | |||||||||||||||||||
| Income taxes | 0.58 | 0.18 | 2.75 | 0.39 | |||||||||||||||||||
| Non-GAAP operating income available to common stockholders | 1.29 | 0.85 | 3.17 | 2.26 | |||||||||||||||||||
| Impact of excluding notable items | (0.30) | 0.61 | (0.29) | 0.60 | |||||||||||||||||||
| Non-GAAP operating income available to common stockholders, excluding notable items | $ | 0.99 | $ | 1.46 | $ | 2.88 | $ | 2.86 | |||||||||||||||
Notable Items
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Notable items impacting non-GAAP operating income available to common stockholders: | |||||||||||||||||||||||
| Impact of actuarial assumption updates | $ | 26,572 | $ | (56,801) | $ | 26,572 | $ | (56,801) | |||||||||||||||
| Total notable items (b) | $ | 26,572 | $ | (56,801) | $ | 26,572 | $ | (56,801) | |||||||||||||||
(a)Adjustments to net income 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) and accretion of lifetime income benefit rider (LIBR) reserves where applicable.
(b)Notable items reflect the after-tax impact to non-GAAP operating income available to common stockholders for certain items that do not reflect the company's expected ongoing operations. Notable items primarily include the impact from actuarial assumption updates. The presentation of notable items is intended to help investors better understand our results and to evaluate and forecast those results.
Page 2
American Equity Investment Life Holding Company
Unaudited (Dollars in thousands, except share and per share data)
Book Value per Common Share
| Q3 2022 | |||||
| Total stockholders’ equity attributable to American Equity Investment Life Holding Company | $ | 3,207,698 | |||
| Equity available to preferred stockholders (a) | (700,000) | ||||
| Total common stockholders' equity (b) | 2,507,698 | ||||
| Accumulated other comprehensive (income) loss (AOCI) | 2,214,388 | ||||
| Total common stockholders’ equity excluding AOCI (b) | 4,722,086 | ||||
| Net impact of fair value accounting for derivatives and embedded derivatives | (1,217,754) | ||||
Total common stockholders’ equity excluding AOCI and the net impact of fair value accounting for derivatives and embedded derivatives (b) | $ | 3,504,332 | |||
| Common shares outstanding | 85,966,505 | ||||
| Book Value per Common Share: (c) | |||||
| Book value per common share | $ | 29.17 | |||
| Book value per common share excluding AOCI (b) | $ | 54.93 | |||
| Book value per common share excluding AOCI and the net impact of fair value accounting for derivatives and embedded derivatives (b) | $ | 40.76 | |||
(a)Equity available to preferred stockholders is equal to the redemption value of outstanding preferred stock plus share dividends declared but not yet issued.
(b)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, 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.
(c)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.
Page 3
American Equity Investment Life Holding Company
Unaudited (Dollars in thousands)
NON-GAAP FINANCIAL MEASURES
Average Common Stockholders' Equity and Return on Average Common Stockholders' Equity
Return on average common stockholders' equity measures how efficiently we generate profits from the resources provided by our net assets. Return on average common stockholders' equity is calculated by dividing net income available to common stockholders, for the trailing twelve months, by average equity available to common stockholders. Non-GAAP operating return on average common stockholders' equity excluding average accumulated other comprehensive income (AOCI) and average net impact of fair value accounting for derivatives and embedded derivatives is calculated by dividing non-GAAP operating income available to common stockholders, for the trailing twelve months, by average common stockholders' equity excluding average AOCI and average net impact of fair value accounting for derivatives and embedded derivatives. We exclude AOCI because AOCI fluctuates from quarter to quarter due to unrealized changes in the fair value of available for sale investments. We exclude the net impact of fair value accounting for derivatives and embedded derivatives as the amounts are not economic in nature but rather impact the timing of reported results.
| Twelve Months Ended | |||||
| September 30, 2022 | |||||
| Average Common Stockholders' Equity Attributable to American Equity Investment Life Holding Company, Excluding Average AOCI and Average Net Impact of Fair Value Accounting for Derivatives and Embedded Derivatives | |||||
| Average total stockholders’ equity | $ | 4,791,453 | |||
| Average equity available to preferred stockholders | (700,000) | ||||
| Average equity available to common stockholders | 4,091,453 | ||||
| Average AOCI | 128,707 | ||||
| Average common stockholders' equity excluding average AOCI | 4,220,160 | ||||
| Average net impact of fair value accounting for derivatives and embedded derivatives | (741,386) | ||||
| Average common stockholders' equity excluding average AOCI and average net impact of fair value accounting for derivatives and embedded derivatives | 3,478,774 | ||||
| Impact of excluding notable items on average common stockholders' equity excluding average AOCI and average net impact of fair value accounting for derivatives and embedded derivatives | (2,669) | ||||
| Average common stockholders' equity excluding average AOCI, average net impact of fair value accounting for derivatives and embedded derivatives and notables | $ | 3,476,105 | |||
| Net income available to American Equity Investment Life Holding Company common stockholders | $ | 1,288,865 | |||
| Adjustments to arrive at non-GAAP operating income available to common stockholders: (a) | |||||
| Net realized losses on financial assets, including credit losses | 59,366 | ||||
| Change in fair value of derivatives and embedded derivatives | (1,233,866) | ||||
| Income taxes | 256,503 | ||||
| Non-GAAP operating income available to common stockholders | 370,868 | ||||
| Impact of excluding notable items (b) | (5,337) | ||||
| Non-GAAP operating income available to common stockholders, excluding notable items | $ | 365,531 | |||
| Return on Average Common Stockholders' Equity Attributable to American Equity Investment Life Holding Company | |||||
| Net income available to common stockholders | 31.5 | % | |||
| Return on Average Common Stockholders' Equity Attributable to American Equity Investment Life Holding Company, Excluding Average AOCI and Average Net Impact of Fair Value Accounting for Derivatives and Embedded Derivatives | |||||
| Non-GAAP operating income available to common stockholders | 10.7 | % | |||
| Non-GAAP operating income available to common stockholders, excluding notable items | 10.5 | % | |||
| Notable Items | Twelve Months Ended | ||||
| September 30, 2022 | |||||
| Notable items impacting non-GAAP operating income available to common stockholders: | |||||
| Impact of actuarial assumption updates | $ | 5,337 | |||
| Total notable items (b) | $ | 5,337 | |||
(a)Adjustments to net income 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) and accretion of lifetime income benefit rider (LIBR) reserves where applicable.
(b)Notable items reflect the after-tax impact to non-GAAP operating income available to common stockholders for certain items that do not reflect the company's expected ongoing operations. Notable items primarily include the impact from actuarial assumption updates. The presentation of notable items is intended to help investors better understand our results and to evaluate and forecast those results.
Page 4
Exhibit 99.2
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement
September 30, 2022
| A. | Financial Highlights | |||||||
| Non-GAAP Financial Measures | ||||||||
| B. | Product Summary | |||||||
| C. | Investment Summary | |||||||
| D. | ||||||||
| E. | ||||||||
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - September 30, 2022
Unaudited (Dollars in thousands)
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, 2022 | December 31, 2021 | ||||||||||
| Assets | |||||||||||
| Investments: | |||||||||||
| Fixed maturity securities, available for sale, at fair value | $ | 41,087,911 | $ | 51,305,943 | |||||||
| Mortgage loans on real estate | 6,601,445 | 5,687,998 | |||||||||
| Real estate investments | 897,673 | 337,939 | |||||||||
| Derivative instruments | 196,656 | 1,277,480 | |||||||||
| Other investments | 2,636,152 | 1,767,144 | |||||||||
| Total investments | 51,419,837 | 60,376,504 | |||||||||
| Cash and cash equivalents | 1,808,132 | 4,508,982 | |||||||||
| Coinsurance deposits | 8,848,418 | 8,850,608 | |||||||||
| Accrued investment income | 516,649 | 445,097 | |||||||||
| Deferred policy acquisition costs | 3,878,343 | 2,222,769 | |||||||||
| Deferred sales inducements | 2,649,102 | 1,546,073 | |||||||||
| Deferred income taxes | 246,492 | — | |||||||||
| Income taxes recoverable | 103,838 | 166,586 | |||||||||
| Other assets | 714,186 | 232,490 | |||||||||
| Total assets | $ | 70,184,997 | $ | 78,349,109 | |||||||
| Liabilities and Stockholders' Equity | |||||||||||
| Liabilities: | |||||||||||
| Policy benefit reserves | $ | 61,137,017 | $ | 65,477,778 | |||||||
| Other policy funds and contract claims | 266,425 | 226,844 | |||||||||
| Notes and loan payable | 794,831 | 496,250 | |||||||||
| Subordinated debentures | 78,668 | 78,421 | |||||||||
| Deferred income taxes | — | 541,972 | |||||||||
| Funds withheld for reinsurance liabilities | 3,235,894 | 3,124,740 | |||||||||
| Other liabilities | 1,461,534 | 2,079,977 | |||||||||
| Total liabilities | 66,974,369 | 72,025,982 | |||||||||
| Stockholders' equity: | |||||||||||
| Preferred stock, Series A | 16 | 16 | |||||||||
| Preferred stock, Series B | 12 | 12 | |||||||||
| Common stock | 85,967 | 92,514 | |||||||||
| Additional paid-in capital | 1,362,022 | 1,614,374 | |||||||||
| Accumulated other comprehensive income (loss) | (2,214,388) | 1,848,789 | |||||||||
| Retained earnings | 3,974,069 | 2,767,422 | |||||||||
| Total stockholders' equity attributable to American Equity Investment Life Holding Company | 3,207,698 | 6,323,127 | |||||||||
| Noncontrolling interests | 2,930 | — | |||||||||
| Total stockholders' equity | 3,210,628 | 6,323,127 | |||||||||
| Total liabilities and stockholders' equity | $ | 70,184,997 | $ | 78,349,109 | |||||||
Page 1
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - September 30, 2022
Unaudited (Dollars in thousands, except per share data)
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Premiums and other considerations | $ | 2,839 | $ | 15,841 | $ | 16,748 | $ | 43,649 | |||||||||||||||
| Annuity product charges | 60,819 | 58,480 | 168,688 | 182,321 | |||||||||||||||||||
| Net investment income | 609,737 | 526,366 | 1,769,468 | 1,522,876 | |||||||||||||||||||
| Change in fair value of derivatives | (176,671) | (70,701) | (1,160,371) | 826,484 | |||||||||||||||||||
| Net realized gains (losses) on investments | (15,860) | 4,933 | (62,259) | (2,764) | |||||||||||||||||||
| Other revenue | 10,989 | 7,644 | 28,773 | 7,644 | |||||||||||||||||||
| Total revenues | 491,853 | 542,563 | 761,047 | 2,580,210 | |||||||||||||||||||
| Benefits and expenses: | |||||||||||||||||||||||
| Insurance policy benefits and change in future policy benefits | 5,707 | 18,756 | 25,436 | 51,008 | |||||||||||||||||||
| Interest sensitive and index product benefits | 121,890 | 817,014 | 729,407 | 2,106,590 | |||||||||||||||||||
| Amortization of deferred sales inducements | 127,784 | (17,172) | 361,775 | 93,283 | |||||||||||||||||||
| Change in fair value of embedded derivatives | (415,374) | (536,404) | (2,695,007) | (545,104) | |||||||||||||||||||
| Interest expense on notes payable | 8,984 | 6,535 | 21,870 | 19,322 | |||||||||||||||||||
| Interest expense on subordinated debentures | 1,333 | 1,342 | 3,996 | 3,994 | |||||||||||||||||||
| Amortization of deferred policy acquisition costs | 183,182 | (1,588) | 550,962 | 185,329 | |||||||||||||||||||
| Other operating costs and expenses | 59,532 | 56,518 | 177,575 | 177,433 | |||||||||||||||||||
| Total benefits and expenses | 93,038 | 345,001 | (823,986) | 2,091,855 | |||||||||||||||||||
| Income before income taxes | 398,815 | 197,562 | 1,585,033 | 488,355 | |||||||||||||||||||
| Income tax expense | 86,214 | 44,697 | 345,633 | 107,500 | |||||||||||||||||||
| Net income | 312,601 | 152,865 | 1,239,400 | 380,855 | |||||||||||||||||||
| Less: Net income (loss) available to noncontrolling interests | 1 | — | (3) | — | |||||||||||||||||||
| Net income available to American Equity Investment Life Holding Company stockholders | 312,600 | 152,865 | 1,239,403 | 380,855 | |||||||||||||||||||
| Less: Preferred stock dividends | 10,918 | 10,918 | 32,756 | 32,756 | |||||||||||||||||||
| Net income available to American Equity Investment Life Holding Company common stockholders | $ | 301,682 | $ | 141,947 | $ | 1,206,647 | $ | 348,099 | |||||||||||||||
| Earnings per common share | $ | 3.44 | $ | 1.53 | $ | 13.07 | $ | 3.69 | |||||||||||||||
| Earnings per common share - assuming dilution | $ | 3.41 | $ | 1.53 | $ | 12.94 | $ | 3.67 | |||||||||||||||
| Weighted average common shares outstanding (in thousands): | |||||||||||||||||||||||
| Earnings per common share | 87,707 | 92,478 | 92,339 | 94,326 | |||||||||||||||||||
| Earnings per common share - assuming dilution | 88,581 | 93,044 | 93,270 | 94,867 | |||||||||||||||||||
Page 2
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - September 30, 2022
Unaudited (Dollars in thousands, except per share data)
Quarterly Summary - Most Recent 5 Quarters
| Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | Q3 2021 | |||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||
| Traditional life insurance premiums | $ | 634 | $ | 691 | $ | 675 | $ | 677 | $ | 697 | |||||||||||||||||||
| Life contingent immediate annuity considerations | 2,205 | 3,140 | 9,403 | 13,876 | 15,144 | ||||||||||||||||||||||||
| Surrender charges | 19,783 | 15,345 | 15,541 | 13,638 | 16,481 | ||||||||||||||||||||||||
| Lifetime income benefit rider fees | 41,036 | 40,169 | 36,814 | 46,672 | 41,999 | ||||||||||||||||||||||||
| Net investment income | 609,737 | 592,308 | 567,423 | 514,599 | 526,366 | ||||||||||||||||||||||||
| Change in fair value of derivatives | (176,671) | (506,181) | (477,519) | 522,251 | (70,701) | ||||||||||||||||||||||||
| Net realized gains (losses) on investments | (15,860) | (33,272) | (13,127) | (10,478) | 4,933 | ||||||||||||||||||||||||
| Other revenue (a) | 10,989 | 9,195 | 8,589 | 8,026 | 7,644 | ||||||||||||||||||||||||
| Total revenues | 491,853 | 121,395 | 147,799 | 1,109,261 | 542,563 | ||||||||||||||||||||||||
| Benefits and expenses: | |||||||||||||||||||||||||||||
Traditional life insurance policy benefits and change in future policy benefits | 424 | 785 | 765 | 624 | 798 | ||||||||||||||||||||||||
Life contingent immediate annuity benefits and change in future policy benefits | 5,283 | 6,306 | 11,873 | 16,351 | 17,958 | ||||||||||||||||||||||||
| Interest sensitive and index product benefits (b) | 121,890 | 234,855 | 372,662 | 574,816 | 817,014 | ||||||||||||||||||||||||
| Amortization of deferred sales inducements (c) | 127,784 | 90,446 | 143,545 | 59,409 | (17,172) | ||||||||||||||||||||||||
| Change in fair value of embedded derivatives (d) | (415,374) | (885,984) | (1,393,649) | 186,802 | (536,404) | ||||||||||||||||||||||||
| Interest expense on notes payable | 8,984 | 6,461 | 6,425 | 6,259 | 6,535 | ||||||||||||||||||||||||
| Interest expense on subordinated debentures | 1,333 | 1,346 | 1,317 | 1,330 | 1,342 | ||||||||||||||||||||||||
| Amortization of deferred policy acquisition costs (c) | 183,182 | 142,354 | 225,426 | 82,999 | (1,588) | ||||||||||||||||||||||||
| Other operating costs and expenses | 59,532 | 59,923 | 58,120 | 66,279 | 56,518 | ||||||||||||||||||||||||
| Total benefits and expenses | 93,038 | (343,508) | (573,516) | 994,869 | 345,001 | ||||||||||||||||||||||||
| Income before income taxes | 398,815 | 464,903 | 721,315 | 114,392 | 197,562 | ||||||||||||||||||||||||
| Income tax expense | 86,214 | 104,327 | 155,092 | 21,255 | 44,697 | ||||||||||||||||||||||||
| Net income (b)(c)(d) | 312,601 | 360,576 | 566,223 | 93,137 | 152,865 | ||||||||||||||||||||||||
| Less: Net income (loss) available to noncontrolling interests | 1 | (4) | — | — | — | ||||||||||||||||||||||||
| Net income available to American Equity Investment Life Holding Company stockholders (b)(c)(d) | 312,600 | 360,580 | 566,223 | 93,137 | 152,865 | ||||||||||||||||||||||||
| Less: Preferred stock dividends | 10,918 | 10,919 | 10,919 | 10,919 | 10,918 | ||||||||||||||||||||||||
| Net income available to American Equity Investment Life Holding Company common stockholders (b)(c)(d) | $ | 301,682 | $ | 349,661 | $ | 555,304 | $ | 82,218 | $ | 141,947 | |||||||||||||||||||
| Earnings per common share | $ | 3.44 | $ | 3.78 | $ | 5.73 | $ | 0.89 | $ | 1.53 | |||||||||||||||||||
| Earnings per common share - assuming dilution (b)(c)(d) | $ | 3.41 | $ | 3.74 | $ | 5.67 | $ | 0.88 | $ | 1.53 | |||||||||||||||||||
| Weighted average common shares outstanding (thousands): | |||||||||||||||||||||||||||||
| Earnings per common share | 87,707 | 92,544 | 96,866 | 92,479 | 92,478 | ||||||||||||||||||||||||
| Earnings per common share - assuming dilution | 88,581 | 93,375 | 97,953 | 93,378 | 93,044 | ||||||||||||||||||||||||
(a)Other revenue consists of $3.3 million in Q3 2022, $3.0 million in Q2 2022, $2.9 million in Q1 2022, $2.8 million in Q4 2021 and $2.7 million in Q3 2021 related to asset liability management fees and $7.7 million in Q3 2022, $6.2 million in Q2 2022, $5.7 million in Q1 2022, $5.3 million in Q4 2021 and $4.9 million in Q3 2021 related to amortization of the deferred gain associated with the cost of reinsurance. The deferred gain, which is recorded in Other liabilities on the Consolidated Balance Sheets, was $435.9 million and $321.7 million at September 30, 2022 and December 31, 2021, respectively. The deferred gain consists primarily of a difference between liabilities ceded and assets transferred and the present value of the ceding commissions offset by a reduction in deferred policy acquisition costs associated with the in-force business ceded.
(b)Q3 2022 includes a benefit from the update of assumptions used in determining reserves held for lifetime income benefit riders. The impact decreased interest sensitive and index products by $53.0 million and increased both net income and net income available to common stockholders by $41.6 million and increased earnings per common share - assuming dilution by $0.47 per share.
Page 3
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - September 30, 2022
Unaudited (Dollars in thousands, except per share data)
Q4 2021 includes expense from the update of assumptions used in determining reserves held for lifetime income benefit riders. The impact increased interest sensitive and index products by $10.5 million and decreased both net income and net income available to common stockholders by $8.2 million and decreased earnings per common share - assuming dilution by $0.09 per share.
Q3 2021 includes expense from the update of assumptions used in determining reserves held for lifetime income benefit riders. The impact increased interest sensitive and index products by $233.2 million and decreased both net income and net income available to common stockholders by $183.0 million and decreased earnings per common share - assuming dilution by $1.97 per share.
(c)Q3 2022 includes expense from the update of assumptions which increased amortization of deferred sales inducements and deferred policy acquisition costs by $45.7 million and $56.9 million, respectively, and decreased both net income and net income available to common stockholders by $80.5 million and decreased earnings per common share - assuming dilution by $0.91 per share.
Q4 2021 includes expense from the update of assumptions which increased amortization of deferred sales inducements and deferred policy acquisition costs by $6.3 million and $6.9 million, respectively, and decreased both net income and net income available to common stockholders by $10.4 million and decreased earnings per common share - assuming dilution by $0.11 per share
Q3 2021 includes a benefit from the update of assumptions which decreased amortization of deferred sales inducements and deferred policy acquisition costs by $51.4 million and $52.6 million, respectively, and increased both net income and net income available to common stockholders by $81.7 million and increased earnings per common share - assuming dilution by $0.88 per share.
(d)Q3 2022 includes a benefit from the update 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 $94.8 million and increased both net income and net income available to common stockholders by $74.4 million and increased earnings per common share - assuming dilution by $0.84 per share.
Q4 2021 includes expense from the update 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 $3.5 million and decreased both net income and net income available to common stockholders by $2.7 million and decreased earnings per common share - assuming dilution by $0.03 per share.
Q3 2021 includes a benefit from the update 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 $125.8 million and increased both net income and net income available to common stockholders by $98.7 million and increased earnings per common share - assuming dilution by $1.06 per share.
Page 4
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - September 30, 2022
Unaudited (Dollars in thousands, except per share data)
NON-GAAP FINANCIAL MEASURES
In addition to net income available to common stockholders, we have consistently utilized non-GAAP operating income available to common stockholders and non-GAAP operating income available to common stockholders 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 available to common stockholders equals net income available to common stockholders 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 available to common stockholders eliminate the impact of fair value accounting for our fixed index annuity business. These adjustments 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 available to common stockholders together with net income available to common stockholders provides information that may enhance an investor’s understanding of our underlying results and profitability.
Reconciliation from Net Income Available to Common Stockholders to Non-GAAP Operating Income Available to Common Stockholders and Non-GAAP Operating Income Available to Common Stockholders, Excluding Notable Items
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Net income available to American Equity Investment Life Holding Company common stockholders | $ | 301,682 | $ | 141,947 | $ | 1,206,647 | $ | 348,099 | |||||||||||||||
| Adjustments to arrive at non-GAAP operating income available to common stockholders: (a) | |||||||||||||||||||||||
| Net realized (gains) losses on financial assets, including credit losses | 9,738 | (3,900) | 51,595 | 2,528 | |||||||||||||||||||
| Change in fair value of derivatives and embedded derivatives | (248,823) | (75,879) | (1,219,322) | (172,746) | |||||||||||||||||||
| Income taxes | 51,403 | 17,285 | 256,120 | 36,801 | |||||||||||||||||||
| Non-GAAP operating income available to common stockholders | 114,000 | 79,453 | 295,040 | 214,682 | |||||||||||||||||||
| Impact of excluding notable items (b) | (26,572) | 56,801 | (26,572) | 56,801 | |||||||||||||||||||
| Non-GAAP operating income available to common stockholders, excluding notable items | $ | 87,428 | $ | 136,254 | $ | 268,468 | $ | 271,483 | |||||||||||||||
| Per common share - assuming dilution: | |||||||||||||||||||||||
| Net income available to American Equity Investment Life Holding Company common stockholders | $ | 3.41 | $ | 1.53 | $ | 12.94 | $ | 3.67 | |||||||||||||||
| Adjustments to arrive at non-GAAP operating income available to common stockholders: | |||||||||||||||||||||||
| Net realized (gains) losses on financial assets, including credit losses | 0.11 | (0.04) | 0.55 | 0.02 | |||||||||||||||||||
| Change in fair value of derivatives and embedded derivatives | (2.81) | (0.82) | (13.07) | (1.82) | |||||||||||||||||||
| Income taxes | 0.58 | 0.18 | 2.75 | 0.39 | |||||||||||||||||||
| Non-GAAP operating income available to common stockholders | 1.29 | 0.85 | 3.17 | 2.26 | |||||||||||||||||||
| Impact of excluding notable items | (0.30) | 0.61 | (0.29) | 0.60 | |||||||||||||||||||
| Non-GAAP operating income available to common stockholders, excluding notable items | $ | 0.99 | $ | 1.46 | $ | 2.88 | $ | 2.86 | |||||||||||||||
Page 5
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - September 30, 2022
Unaudited (Dollars in thousands, except per share data)
Notable Items
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Notable items impacting non-GAAP operating income available to common stockholders: | |||||||||||||||||||||||
| Impact of actuarial assumption updates | $ | 26,572 | $ | (56,801) | $ | 26,572 | $ | (56,801) | |||||||||||||||
| Total notable items (b) | $ | 26,572 | $ | (56,801) | $ | 26,572 | $ | (56,801) | |||||||||||||||
(a)Adjustments to net income 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) and accretion of lifetime income benefit rider (LIBR) reserves where applicable.
(b)Notable items reflect the after-tax impact to non-GAAP operating income available to common stockholders for certain items that do not reflect the company's expected ongoing operations. Notable items primarily include the impact from actuarial assumption updates. The presentation of notable items is intended to help investors better understand our results and to evaluate and forecast those results.
NON-GAAP FINANCIAL MEASURES
Summary of Adjustments to Arrive at Non-GAAP Operating Income Available to Common Stockholders
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Net realized (gains) losses on financial assets, including credit losses: | |||||||||||||||||||||||
| Net realized (gains) losses on financial assets, including credit losses | $ | 16,945 | $ | (4,016) | $ | 67,724 | $ | 3,573 | |||||||||||||||
| Amortization of DAC and DSI and accretion of LIBR reserves | (7,207) | 116 | (16,129) | (1,045) | |||||||||||||||||||
| Income taxes | (2,094) | 838 | (11,093) | (544) | |||||||||||||||||||
| $ | 7,644 | $ | (3,062) | $ | 40,502 | $ | 1,984 | ||||||||||||||||
| Change in fair value of derivatives and embedded derivatives: | |||||||||||||||||||||||
| Fixed index annuities | $ | (299,168) | $ | (125,075) | $ | (1,218,988) | $ | (287,606) | |||||||||||||||
| Reinsurance contracts | (116,230) | — | (518,096) | — | |||||||||||||||||||
| Interest rate swaps | 14,446 | — | 18,112 | — | |||||||||||||||||||
| Amortization of DAC and DSI | 152,129 | 49,196 | 499,650 | 114,860 | |||||||||||||||||||
| Income taxes | 53,497 | 16,447 | 267,213 | 37,345 | |||||||||||||||||||
| $ | (195,326) | $ | (59,432) | $ | (952,109) | $ | (135,401) | ||||||||||||||||
Page 6
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - September 30, 2022
Unaudited (Dollars in thousands, except per share data)
NON-GAAP FINANCIAL MEASURES
Quarterly Summary - Most Recent 5 Quarters
Reconciliation from Net Income Available to Common Stockholders to Non-GAAP Operating Income Available to Common Stockholders and Non-GAAP Operating Income Available to Common Stockholders, Excluding Notable Items
| Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | Q3 2021 | |||||||||||||||||||||||||
| Net income available to American Equity Investment Life Holding Company common stockholders | $ | 301,682 | $ | 349,661 | $ | 555,304 | $ | 82,218 | $ | 141,947 | |||||||||||||||||||
| Adjustments to arrive at non-GAAP operating income available to common stockholders: (a) | |||||||||||||||||||||||||||||
| Net realized (gains) losses on financial assets, including credit losses | 9,738 | 31,572 | 10,285 | 7,771 | (3,900) | ||||||||||||||||||||||||
| Change in fair value of derivatives and embedded derivatives | (248,823) | (367,145) | (603,354) | (14,544) | (75,879) | ||||||||||||||||||||||||
| Income taxes | 51,403 | 77,056 | 127,661 | 383 | 17,285 | ||||||||||||||||||||||||
| Non-GAAP operating income available to common stockholders (b)(c) | 114,000 | 91,144 | 89,896 | 75,828 | 79,453 | ||||||||||||||||||||||||
| Impact of excluding notable items (d) | (26,572) | — | — | 21,235 | 56,801 | ||||||||||||||||||||||||
| Non-GAAP operating income available to common stockholders, excluding notable items | $ | 87,428 | $ | 91,144 | $ | 89,896 | $ | 97,063 | $ | 136,254 | |||||||||||||||||||
| Per common share - assuming dilution: | |||||||||||||||||||||||||||||
| Net income available to American Equity Investment Life Holding Company common stockholders | $ | 3.41 | $ | 3.74 | $ | 5.67 | $ | 0.88 | $ | 1.53 | |||||||||||||||||||
| Adjustments to arrive at non-GAAP operating income available to common stockholders: | |||||||||||||||||||||||||||||
| Net realized (gains) losses on financial assets, including credit losses | 0.11 | 0.34 | 0.11 | 0.08 | (0.04) | ||||||||||||||||||||||||
| Change in fair value of derivatives and embedded derivatives | (2.81) | (3.93) | (6.16) | (0.15) | (0.82) | ||||||||||||||||||||||||
| Income taxes | 0.58 | 0.83 | 1.30 | — | 0.18 | ||||||||||||||||||||||||
| Non-GAAP operating income available to common stockholders (b)(c) | 1.29 | 0.98 | 0.92 | 0.81 | 0.85 | ||||||||||||||||||||||||
| Impact of excluding notable items (d) | (0.30) | — | — | 0.23 | 0.61 | ||||||||||||||||||||||||
| Non-GAAP operating income available to common stockholders, excluding notable items | $ | 0.99 | $ | 0.98 | $ | 0.92 | $ | 1.04 | $ | 1.46 | |||||||||||||||||||
Notable Items
| Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | Q3 2021 | |||||||||||||||||||||||||
| Notable items impacting non-GAAP operating income available to common stockholders: | |||||||||||||||||||||||||||||
| Impact of actuarial assumption updates (b)(c) | $ | 26,572 | $ | — | $ | — | $ | (21,235) | $ | (56,801) | |||||||||||||||||||
| Total notable items (d) | $ | 26,572 | $ | — | $ | — | $ | (21,235) | $ | (56,801) | |||||||||||||||||||
(a)Adjustments to net income 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) and accretion of lifetime income benefit rider (LIBR) reserves where applicable.
(b)Q3 2022 includes a benefit from the update of assumptions used in determining reserves held for lifetime income benefit riders. The impact decreased interest sensitive and index products by $53.0 million and increased both non-GAAP operating income available to common stockholders and non-GAAP operating income available to common stockholders per share - assuming dilution by $41.6 million and $0.47 per share, respectively.
Q4 2021 includes expense from the update of assumptions used in determining reserves held for lifetime income benefit riders. The impact increased interest sensitive and index products by $10.5 million and decreased both non-GAAP operating income available to common stockholders and non-GAAP operating income available to common stockholders per share - assuming dilution by $8.2 million and $0.09 per share, respectively.
Q3 2021 includes expense from the update of assumptions used in determining reserves held for lifetime income benefit riders. The impact increased interest sensitive and index products by $233.2 million and decreased both non-GAAP operating income available to common stockholders and non-GAAP operating income available to common stockholders per share - assuming dilution by $183.0 million and $1.97 per share, respectively.
(c)Q3 2022 includes expense from the update of assumptions which increased amortization of deferred sales inducements and deferred policy acquisition costs by $8.7 million and $10.5 million, respectively, 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 $15.1 million and $0.17 per share, respectively.
Q4 2021 includes expense from the update of assumptions which increased amortization of deferred sales inducements and deferred policy acquisition costs by $7.7 million and $8.8 million, respectively, 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 $13.0 million and $0.14 per share, respectively.
Page 7
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - September 30, 2022
Unaudited (Dollars in thousands, except per share data)
Q3 2021 includes a benefit from the update of assumptions which decreased amortization of deferred sales inducements and deferred policy acquisition costs by $73.8 million and $87.0 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 $126.2 million and $1.36 per share, respectively.
(d)Notable items reflect the after-tax impact to non-GAAP operating income available to common stockholders for certain items that do not reflect the company's expected ongoing operations. Notable items primarily include the impact from actuarial assumption updates. The presentation of notable items is intended to help investors better understand our results and to evaluate and forecast those results.
Page 8
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - September 30, 2022
Unaudited (Dollars in thousands)
NON-GAAP FINANCIAL MEASURES
Summary of Adjustments to Arrive at Non-GAAP Operating Income Available to Common Stockholders
| Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | Q3 2021 | |||||||||||||||||||||||||
| Net realized (gains) losses on investments | $ | 15,860 | $ | 33,272 | $ | 13,127 | $ | 10,478 | $ | (4,933) | |||||||||||||||||||
| Change in fair value of derivatives | 14,423 | 415,171 | 546,442 | (215,961) | 411,330 | ||||||||||||||||||||||||
| Increase (decrease) in total revenues | 30,283 | 448,443 | 559,569 | (205,483) | 406,397 | ||||||||||||||||||||||||
| Amortization of deferred sales inducements | (59,647) | (37,179) | (90,361) | (4,506) | (17,682) | ||||||||||||||||||||||||
| Change in fair value of embedded derivatives | 415,374 | 885,984 | 1,393,649 | (186,802) | 536,404 | ||||||||||||||||||||||||
| Interest sensitive and index product benefits (a) | 502 | (2,569) | 143 | 971 | (944) | ||||||||||||||||||||||||
| Amortization of deferred policy acquisition costs | (86,861) | (62,220) | (150,793) | (8,373) | (31,602) | ||||||||||||||||||||||||
| Increase (decrease) in total benefits and expenses | 269,368 | 784,016 | 1,152,638 | (198,710) | 486,176 | ||||||||||||||||||||||||
| Decrease in income before income taxes | (239,085) | (335,573) | (593,069) | (6,773) | (79,779) | ||||||||||||||||||||||||
| Decrease in income tax expense | (51,403) | (77,056) | (127,661) | (383) | (17,285) | ||||||||||||||||||||||||
| Decrease in net income available to common stockholders | $ | (187,682) | $ | (258,517) | $ | (465,408) | $ | (6,390) | $ | (62,494) | |||||||||||||||||||
(a)Interest sensitive and index product benefits adjustment reflects the change in the allowance for credit losses on our reinsurance recoverable/coinsurance deposits. 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.
Page 9
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - September 30, 2022
Unaudited (Dollars in thousands, except share and per share data)
Capitalization/Book Value per Common Share
| Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | Q3 2021 | |||||||||||||||||||||||||
| Capitalization: | |||||||||||||||||||||||||||||
| Notes and loan payable | $ | 800,000 | $ | 500,000 | $ | 500,000 | $ | 500,000 | $ | 500,000 | |||||||||||||||||||
| Subordinated debentures payable to subsidiary trusts | 78,668 | 78,584 | 78,502 | 78,421 | 78,342 | ||||||||||||||||||||||||
Total debt | 878,668 | 578,584 | 578,502 | 578,421 | 578,342 | ||||||||||||||||||||||||
| Total stockholders’ equity attributable to American Equity Investment Life Holding Company | 3,207,698 | 3,882,217 | 5,171,086 | 6,323,127 | 6,375,208 | ||||||||||||||||||||||||
| Total capitalization | 4,086,366 | 4,460,801 | 5,749,588 | 6,901,548 | 6,953,550 | ||||||||||||||||||||||||
| Accumulated other comprehensive (income) loss (AOCI) | 2,214,388 | 1,387,968 | (63,706) | (1,848,789) | (1,956,974) | ||||||||||||||||||||||||
Total capitalization excluding AOCI (a) | $ | 6,300,754 | $ | 5,848,769 | $ | 5,685,882 | $ | 5,052,759 | $ | 4,996,576 | |||||||||||||||||||
| Total stockholders’ equity attributable to American Equity Investment Life Holding Company | $ | 3,207,698 | $ | 3,882,217 | $ | 5,171,086 | $ | 6,323,127 | $ | 6,375,208 | |||||||||||||||||||
| Equity available to preferred stockholders (b) | (700,000) | (700,000) | (700,000) | (700,000) | (700,000) | ||||||||||||||||||||||||
Total common stockholders' equity (c) | 2,507,698 | 3,182,217 | 4,471,086 | 5,623,127 | 5,675,208 | ||||||||||||||||||||||||
| Accumulated other comprehensive income | 2,214,388 | 1,387,968 | (63,706) | (1,848,789) | (1,956,974) | ||||||||||||||||||||||||
Total common stockholders’ equity excluding AOCI (c) | 4,722,086 | 4,570,185 | 4,407,380 | 3,774,338 | 3,718,234 | ||||||||||||||||||||||||
| Net impact of fair value accounting for derivatives and embedded derivatives | (1,217,754) | (1,031,257) | (750,229) | (274,981) | (265,018) | ||||||||||||||||||||||||
Total common stockholders’ equity excluding AOCI and the net impact of fair value accounting for derivatives and embedded derivatives (c) | $ | 3,504,332 | $ | 3,538,928 | $ | 3,657,151 | $ | 3,499,357 | $ | 3,453,216 | |||||||||||||||||||
| Common shares outstanding | 85,966,505 | 90,168,512 | 95,019,904 | 92,513,517 | 92,513,517 | ||||||||||||||||||||||||
Book Value per Common Share: (d) | |||||||||||||||||||||||||||||
| Book value per common share | $ | 29.17 | $ | 35.29 | $ | 47.05 | $ | 60.78 | $ | 61.34 | |||||||||||||||||||
| Book value per common share excluding AOCI (c) | $ | 54.93 | $ | 50.68 | $ | 46.38 | $ | 40.80 | $ | 40.19 | |||||||||||||||||||
| Book value per common share excluding AOCI and the net impact of fair value accounting for derivatives and embedded derivatives (c) | $ | 40.76 | $ | 39.25 | $ | 38.49 | $ | 37.83 | $ | 37.33 | |||||||||||||||||||
Debt-to-Capital Ratios: (e) | |||||||||||||||||||||||||||||
| Senior debt / Total capitalization | 12.7 | % | 8.5 | % | 8.8 | % | 9.9 | % | 10.0 | % | |||||||||||||||||||
| Total debt / Total capitalization | 13.9 | % | 9.9 | % | 10.2 | % | 11.4 | % | 11.6 | % | |||||||||||||||||||
(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 stockholders' 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.
Page 10
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - September 30, 2022
Unaudited (Dollars in thousands)
Spread Results
| Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | Q3 2021 | ||||||||||||||||||||||||||||||||
| 4.33% | 3.71% | Average yield on invested assets | 4.48% | 4.33% | 4.15% | 3.80% | 3.91% | |||||||||||||||||||||||||||||||
| 1.69% | 1.55% | Aggregate cost of money | 1.75% | 1.69% | 1.64% | 1.51% | 1.51% | |||||||||||||||||||||||||||||||
| 2.64% | 2.16% | Aggregate investment spread | 2.73% | 2.64% | 2.51% | 2.29% | 2.40% | |||||||||||||||||||||||||||||||
| Impact of: | ||||||||||||||||||||||||||||||||||||||
| 0.04% | 0.11% | Investment yield - additional prepayment income | 0.03% | 0.05% | 0.03% | 0.12% | 0.12% | |||||||||||||||||||||||||||||||
| 0.02% | 0.05% | Cost of money effect of over hedging | —% | 0.02% | 0.03% | 0.14% | 0.08% | |||||||||||||||||||||||||||||||
| $54,553,196 | $54,865,298 | Weighted average investments | $54,378,154 | $54,768,966 | $54,728,239 | $54,407,554 | $53,781,352 | |||||||||||||||||||||||||||||||
| 54,056,886 | 54,197,140 | Ending investments | 54,056,886 | 54,699,422 | 54,838,509 | 54,617,968 | 54,197,140 | |||||||||||||||||||||||||||||||
Weighted average investments include fixed maturity securities at amortized cost and mortgage loans on real estate and other investments at carrying values as reflected in the consolidated balance sheets. 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
| Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | Q3 2021 | ||||||||||||||||||||||||||||||||
Included in interest sensitive and index product benefits: | ||||||||||||||||||||||||||||||||||||||
| $ | 301,431 | $ | 1,535,320 | Index credits | $ | 4,648 | $ | 72,398 | $ | 224,385 | $ | 442,568 | $ | 475,292 | ||||||||||||||||||||||||
| 184,487 | 181,918 | Interest credited | 62,383 | 60,770 | 61,334 | 63,974 | 62,804 | |||||||||||||||||||||||||||||||
Included in change in fair value of derivatives: | ||||||||||||||||||||||||||||||||||||||
| (308,072) | (1,559,495) | Proceeds received at option expiration | (4,865) | (75,115) | (228,092) | (459,982) | (489,902) | |||||||||||||||||||||||||||||||
| 492,669 | 476,616 | Pro rata amortization of option cost | 167,197 | 165,375 | 160,097 | 153,399 | 150,262 | |||||||||||||||||||||||||||||||
| $ | 670,515 | $ | 634,359 | Cost of money for deferred annuities | $ | 229,363 | $ | 223,428 | $ | 217,724 | $ | 199,959 | $ | 198,456 | ||||||||||||||||||||||||
| $ | 52,811,080 | $ | 54,600,512 | Weighted average liability balance outstanding | $ | 52,337,208 | $ | 52,940,739 | $ | 53,155,293 | $ | 53,064,893 | $ | 52,644,622 | ||||||||||||||||||||||||
Page 11
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - September 30, 2022
Unaudited (Dollars in thousands, except per share data)
Annuity Account Balance Rollforward
| Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | Q3 2021 | ||||||||||||||||||||||||||||||||
| $ | 53,191,277 | $ | 54,056,725 | Account balances at beginning of period | $ | 52,762,558 | $ | 53,119,291 | $ | 53,191,277 | $ | 52,938,493 | $ | 56,630,138 | ||||||||||||||||||||||||
| (257,779) | (4,279,394) | Reserves ceded - in-force | (257,779) | — | — | — | (4,279,394) | |||||||||||||||||||||||||||||||
| 52,933,498 | 49,777,331 | Account balance at beginning of period, net of reinsurance ceded | 52,504,779 | 53,119,291 | 53,191,277 | 52,938,493 | 52,350,744 | |||||||||||||||||||||||||||||||
| 1,734,231 | 4,669,315 | Net deposits | 496,940 | 562,366 | 674,925 | 815,890 | 1,090,461 | |||||||||||||||||||||||||||||||
| 74,074 | 71,684 | Premium bonuses | 27,385 | 23,547 | 23,142 | 23,476 | 22,021 | |||||||||||||||||||||||||||||||
| 485,918 | 1,717,238 | Fixed interest credited and index credits | 67,031 | 133,168 | 285,719 | 506,542 | 538,096 | |||||||||||||||||||||||||||||||
| (50,669) | (54,019) | Surrender charges | (19,783) | (15,345) | (15,541) | (13,638) | (16,481) | |||||||||||||||||||||||||||||||
| (118,019) | (128,302) | Lifetime income benefit rider fees | (41,036) | (40,169) | (36,814) | (46,672) | (41,999) | |||||||||||||||||||||||||||||||
| (3,145,344) | (3,114,754) | Surrenders, withdrawals, deaths, etc. | (1,121,627) | (1,020,300) | (1,003,417) | (1,032,814) | (1,004,349) | |||||||||||||||||||||||||||||||
| $ | 51,913,689 | $ | 52,938,493 | Account balances at end of period | $ | 51,913,689 | $ | 52,762,558 | $ | 53,119,291 | $ | 53,191,277 | $ | 52,938,493 | ||||||||||||||||||||||||
| $ | 2,542,651 | $ | 2,245,040 | Lifetime income benefit rider reserves, excluding unrealized gain/loss adjustment | $ | 2,542,651 | $ | 2,491,096 | $ | 2,396,587 | $ | 2,311,842 | $ | 2,245,040 | ||||||||||||||||||||||||
Notional Values Subject to Recurring Fees Under Reinsurance Agreements
| Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | Q3 2021 | ||||||||||||||||||||||||||||||||
| $ | 4,083,301 | $ | 3,736,355 | Cash surrender value of business ceded at beginning of period subject to recurring fees | $ | 4,457,735 | $ | 4,264,133 | $ | 4,083,301 | $ | 3,900,540 | $ | 3,736,355 | ||||||||||||||||||||||||
| 866,240 | 164,185 | Cash surrender value of business ceded during the period subject to recurring fees | 491,806 | 193,602 | 180,832 | 182,761 | 164,185 | |||||||||||||||||||||||||||||||
| $ | 4,949,541 | $ | 3,900,540 | Cash surrender value of business ceded at end of period subject to recurring fees (a) | $ | 4,949,541 | $ | 4,457,735 | $ | 4,264,133 | $ | 4,083,301 | $ | 3,900,540 | ||||||||||||||||||||||||
| 0.30% | 0.30% | Asset liability management fee | 0.30% | 0.30% | 0.30% | 0.30% | 0.30% | |||||||||||||||||||||||||||||||
| 0.71% | 0.53% | Weighted average ceding commission fee | 0.71% | 0.64% | 0.60% | 0.57% | 0.53% | |||||||||||||||||||||||||||||||
(a)The business ceded to Brookfield Asset Management Re receives an annual ceding commission equal to 49 basis points for business written before July 1, 2021 and 140 basis points for business written after July 1, 2021 and an annual asset liability management fee of 30 basis points calculated based on initial cash surrender value of liabilities ceded. These annual fees are fixed and contractually guaranteed for six years with the additional and final seventh year payment being contingent on certain performance obligations for both parties.
Page 12
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - September 30, 2022
Unaudited (Dollars in thousands)
Annuity Deposits by Product Type
| Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | Q3 2021 | ||||||||||||||||||||||||||||||||
| American Equity Life: | ||||||||||||||||||||||||||||||||||||||
| $ | 2,055,120 | $ | 1,947,241 | Fixed index annuities | $ | 627,444 | $ | 671,696 | $ | 755,980 | $ | 806,238 | $ | 727,641 | ||||||||||||||||||||||||
| 3,473 | 5,285 | Annual reset fixed rate annuities | 1,271 | 1,140 | 1,062 | 848 | 1,462 | |||||||||||||||||||||||||||||||
| 7,295 | 849,062 | Multi-year fixed rate annuities | 4,465 | 485 | 2,345 | 6,640 | 14,196 | |||||||||||||||||||||||||||||||
| 18,441 | 45,671 | Single premium immediate annuities | 1,915 | 3,073 | 13,453 | 14,145 | 16,282 | |||||||||||||||||||||||||||||||
| 2,084,329 | 2,847,259 | 635,095 | 676,394 | 772,840 | 827,871 | 759,581 | ||||||||||||||||||||||||||||||||
| Eagle Life: | ||||||||||||||||||||||||||||||||||||||
| 333,507 | 520,967 | Fixed index annuities | 102,379 | 104,374 | 126,754 | 176,101 | 187,611 | |||||||||||||||||||||||||||||||
| 150 | 337 | Annual reset fixed rate annuities | 143 | — | 7 | 13 | — | |||||||||||||||||||||||||||||||
| 17,147 | 1,556,391 | Multi-year fixed rate annuities | 14,684 | 123 | 2,340 | 40,901 | 362,769 | |||||||||||||||||||||||||||||||
| 350,804 | 2,077,695 | 117,206 | 104,497 | 129,101 | 217,015 | 550,380 | ||||||||||||||||||||||||||||||||
| Consolidated: | ||||||||||||||||||||||||||||||||||||||
| 2,388,627 | 2,468,208 | Fixed index annuities | 729,823 | 776,070 | 882,734 | 982,339 | 915,252 | |||||||||||||||||||||||||||||||
| 3,623 | 5,622 | Annual reset fixed rate annuities | 1,414 | 1,140 | 1,069 | 861 | 1,462 | |||||||||||||||||||||||||||||||
| 24,442 | 2,405,453 | Multi-year fixed rate annuities | 19,149 | 608 | 4,685 | 47,541 | 376,965 | |||||||||||||||||||||||||||||||
| 18,441 | 45,671 | Single premium immediate annuities | 1,915 | 3,073 | 13,453 | 14,145 | 16,282 | |||||||||||||||||||||||||||||||
| 2,435,133 | 4,924,954 | Total before coinsurance ceded | 752,301 | 780,891 | 901,941 | 1,044,886 | 1,309,961 | |||||||||||||||||||||||||||||||
| 682,461 | 209,968 | Coinsurance ceded | 253,446 | 215,452 | 213,563 | 214,851 | 203,218 | |||||||||||||||||||||||||||||||
| $ | 1,752,672 | $ | 4,714,986 | Net after coinsurance ceded | $ | 498,855 | $ | 565,439 | $ | 688,378 | $ | 830,035 | $ | 1,106,743 | ||||||||||||||||||||||||
Surrender Charge Protection and Account Values by Product Type
Annuity Surrender Charges and Net (of Coinsurance) Account Values at September 30, 2022:
| Surrender Charge | Net Account Value | |||||||||||||||||||||||||||||||
| Product Type | Avg. Years At Issue | Avg. Years Remaining | Avg. % Remaining | Dollars in Thousands | % | |||||||||||||||||||||||||||
| Fixed Index Annuities | 12.6 | 4.9 | 8.0% | $ | 46,352,864 | 89.3 | % | |||||||||||||||||||||||||
| Annual Reset Fixed Rate Annuities | 8.1 | 1.8 | 3.7% | 1,373,539 | 2.6 | % | ||||||||||||||||||||||||||
| Multi-Year Fixed Rate Annuities | 3.9 | 1.9 | 7.6% | 4,187,286 | 8.1 | % | ||||||||||||||||||||||||||
| Total | 11.8 | 4.6 | 7.8% | $ | 51,913,689 | 100.0 | % | |||||||||||||||||||||||||
Page 13
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - September 30, 2022
Unaudited (Dollars in thousands)
Annuity Liability Characteristics
| Surrender Charge Percentages: | Fixed Annuities Account Value | Fixed Index Annuities Account Value | |||||||||
| No surrender charge | $ | 900,020 | $ | 4,130,378 | |||||||
| 0.0% < 2.0% | 74,031 | 2,581,530 | |||||||||
| 2.0% < 3.0% | 81,350 | 4,540,041 | |||||||||
| 3.0% < 4.0% | 70,035 | 1,274,657 | |||||||||
| 4.0% < 5.0% | 11,501 | 3,196,346 | |||||||||
| 5.0% < 6.0% | 50,574 | 2,887,625 | |||||||||
| 6.0% < 7.0% | 61,002 | 2,756,994 | |||||||||
| 7.0% < 8.0% | 176,106 | 2,877,601 | |||||||||
| 8.0% < 9.0% | 3,767,463 | 3,103,889 | |||||||||
| 9.0% < 10.0% | 95,017 | 3,484,053 | |||||||||
| 10.0% or greater | 273,726 | 15,519,750 | |||||||||
| $ | 5,560,825 | $ | 46,352,864 | ||||||||
| Surrender Charge Expiration By Year: | Fixed and Fixed Index Annuities Account Value | Weighted Average Surrender Charge | |||||||||
| Out of Surrender Charge | $ | 5,030,398 | 0.00 | % | |||||||
| 2022 | 442,192 | 2.16 | % | ||||||||
| 2023 | 4,477,908 | 3.47 | % | ||||||||
| 2024 | 5,983,423 | 4.70 | % | ||||||||
| 2025 | 5,639,283 | 4.82 | % | ||||||||
| 2026 | 6,028,979 | 6.67 | % | ||||||||
| 2027 | 4,275,258 | 8.20 | % | ||||||||
| 2028 | 3,796,062 | 9.37 | % | ||||||||
| 2029 | 4,125,905 | 10.72 | % | ||||||||
| 2030 | 2,826,420 | 13.19 | % | ||||||||
| 2031 | 3,947,254 | 14.07 | % | ||||||||
| 2032 | 2,828,819 | 14.77 | % | ||||||||
| 2033 | 1,085,614 | 17.53 | % | ||||||||
| 2034 | 686,554 | 18.11 | % | ||||||||
| 2035 | 356,217 | 18.59 | % | ||||||||
| 2036 | 187,964 | 19.08 | % | ||||||||
| 2037 | 113,192 | 19.63 | % | ||||||||
| 2038 | 82,247 | 20.00 | % | ||||||||
| $ | 51,913,689 | 7.84 | % | ||||||||
Page 14
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - September 30, 2022
Unaudited (Dollars in thousands)
Annuity Liability Characteristics
| Credited Rate vs. Ultimate Minimum Guaranteed Rate Differential: | Fixed Annuities Account Value | Fixed Index Annuities Account Value | |||||||||
| No differential | $ | 990,150 | $ | 1,033,902 | |||||||
| › 0.00% - 0.25% | 28,522 | 108,079 | |||||||||
| › 0.25% - 0.50% | 206,872 | 6,020 | |||||||||
| › 0.50% - 1.00% | 5,388 | 143 | |||||||||
| › 1.00% - 1.50% | 4,652 | — | |||||||||
| 1.00% ultimate guarantee - 2.12% wtd avg interest rate (a) | 4,088,793 | 1,147,535 | |||||||||
| 1.50% ultimate guarantee - 1.06% wtd avg interest rate (a) | 125,570 | 2,795,498 | |||||||||
| 1.75% ultimate guarantee - 1.84% wtd avg interest rate (a) | 47,791 | 321,304 | |||||||||
| 2.00% ultimate guarantee - 1.73% wtd avg interest rate (a) | 63,087 | — | |||||||||
| 2.25% ultimate guarantee - 1.57% wtd avg interest rate (a) | — | 560,389 | |||||||||
| 3.00% ultimate guarantee - 1.86% wtd avg interest rate (a) | — | 1,142,066 | |||||||||
| Allocated to index strategies (see tables that follow) | — | 39,237,928 | |||||||||
| $ | 5,560,825 | $ | 46,352,864 | ||||||||
(a)The minimum guaranteed interest rate for the fixed rate or the fixed rate strategy ranges from 0.5% - 1.75%. 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, 2022 for fixed annuities and funds allocated to the fixed rate strategy for fixed index annuities would decrease by 0.14%.
Page 15
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement - September 30, 2022
Unaudited (Dollars in thousands)
Annuity Liability Characteristics
FIXED INDEX ANNUITIES ACCOUNT VALUE - INDEX STRA