EX-99.2 3 a2013-03x31ael8kexhibit992.htm FINANCIAL SUPPLEMENT 2013-03-31 AEL 8K Exhibit 99.2

Exhibit 99.2



AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement

March 31, 2013


A.
Financial Highlights
 
 
 
 
 
Non-GAAP Financial Measures
 
 
 
 
 
 
 
 
 
 
B.
Product Summary
 
 
 
 
 
 
 
 
 
C.
Investment Summary
 
 
 
 
 
 
 
 
 
 
D.
 
 
 
E.





AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement-March 31, 2013

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
 
March 31, 2013
 
December 31, 2012
 
(Unaudited)
 
 
Assets
 
 
 
Investments:
 
 
 
Fixed maturity securities:
 
 
 
Available for sale, at fair value
$
25,609,218

 
$
24,172,136

Held for investment, at amortized cost
76,129

 
76,088

Equity securities, available for sale, at fair value
55,215

 
53,422

Mortgage loans on real estate
2,591,897

 
2,623,940

Derivative instruments
719,683

 
415,258

Other investments
193,714

 
196,366

Total investments
29,245,856

 
27,537,210

 
 
 
 
Cash and cash equivalents
882,097

 
1,268,545

Coinsurance deposits
2,941,816

 
2,910,701

Accrued investment income
298,341

 
261,833

Deferred policy acquisition costs
1,803,498

 
1,709,799

Deferred sales inducements
1,370,285

 
1,292,341

Other assets
311,076

 
153,049

Total assets
$
36,852,969

 
$
35,133,478

 
 
 
 
Liabilities and Stockholders' Equity
 
 
 
Liabilities:
 
 
 
Policy benefit reserves
$
32,937,308

 
$
31,773,988

Other policy funds and contract claims
447,301

 
455,752

Notes payable
313,043

 
309,869

Subordinated debentures
245,913

 
245,869

Deferred income taxes
33,313

 
49,303

Income taxes payable
10,194

 
4,756

Other liabilities
1,135,668

 
573,704

Total liabilities
35,122,740

 
33,413,241

 
 
 
 
Stockholders' equity:
 
 
 
Common stock
62,784

 
61,751

Additional paid-in capital
504,470

 
496,715

Unallocated common stock held by ESOP
(2,266
)
 
(2,583
)
Accumulated other comprehensive income
661,663

 
686,807

Retained earnings
503,578

 
477,547

Total stockholders' equity
1,730,229

 
1,720,237

Total liabilities and stockholders' equity
$
36,852,969

 
$
35,133,478




Page 1


AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement-March 31, 2013

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
(Unaudited)
 
 
Three Months Ended
March 31,
 
2013
 
2012
Revenues:
 
 
 
Traditional life insurance premiums
$
2,698

 
$
3,222

Annuity product charges
21,481

 
19,393

Net investment income
329,690

 
326,910

Change in fair value of derivatives
373,962

 
259,161

Net realized gains (losses) on investments, excluding other than temporary impairment ("OTTI") losses
10,585

 
(6,076
)
OTTI losses on investments:
 
 
 
Total OTTI losses
(2,189
)
 
(1,781
)
Portion of OTTI losses recognized from other comprehensive income
(1,048
)
 
(1,100
)
Net OTTI losses recognized in operations
(3,237
)
 
(2,881
)
Total revenues
735,179

 
599,729

 
 
 
 
Benefits and expenses:
 
 
 
Insurance policy benefits and change in future policy benefits
1,735

 
2,117

Interest sensitive and index product benefits
225,809

 
139,123

Amortization of deferred sales inducements
28,831

 
16,710

Change in fair value of embedded derivatives
363,272

 
359,066

Interest expense on notes payable
7,248

 
6,995

Interest expense on subordinated debentures
3,009

 
3,586

Amortization of deferred policy acquisition costs
46,230

 
34,284

Other operating costs and expenses
19,520

 
21,713

Total benefits and expenses
695,654

 
583,594

Income before income taxes
39,525

 
16,135

Income tax expense
13,494

 
5,664

Net income
$
26,031

 
$
10,471

 
 
 
 
Earnings per common share
$
0.41

 
$
0.18

Earnings per common share - assuming dilution
$
0.38

 
$
0.16

Weighted average common shares outstanding (in thousands):
 
 
 
Earnings per common share
63,314

 
59,701

Earnings per common share - assuming dilution
68,706

 
65,930




Page 2


AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement-March 31, 2013

Quarterly Summary - Most Recent 5 Quarters (Unaudited)
 
Q1 2013
 
Q4 2012
 
Q3 2012
 
Q2 2012
 
Q1 2012
 
(Dollars in thousands, except per share data)
Revenues:
 
 
 
 
 
 
 
 
 
Traditional life insurance premiums
$
2,698

 
$
3,107

 
$
3,300

 
$
3,248

 
$
3,222

Annuity product charges
21,481

 
23,830

 
23,875

 
21,908

 
19,393

Net investment income
329,690

 
321,160

 
318,594

 
320,259

 
326,910

Change in fair value of derivatives
373,962

 
(48,266
)
 
161,090

 
(150,847
)
 
259,161

Net realized gains (losses) on investments, excluding OTTI
10,585

 
1,471

 
(1,238
)
 
(611
)
 
(6,076
)
Net OTTI losses recognized in operations
(3,237
)
 
(9,387
)
 
(1,686
)
 
(978
)
 
(2,881
)
Total revenues
735,179

 
291,915

 
503,935

 
192,979

 
599,729

 
 
 
 
 
 
 
 
 
 
Benefits and expenses:
 
 
 
 
 
 
 
 
 
Insurance policy benefits and change in future policy benefits
1,735

 
1,843

 
1,865

 
2,250

 
2,117

Interest sensitive and index product benefits (b)
225,809

 
290,126

 
246,105

 
142,733

 
139,123

Amortization of deferred sales inducements (a)
28,831

 
36,798

 
7,709

 
25,940

 
16,710

Change in fair value of embedded derivatives
363,272

 
(179,379
)
 
188,201

 
(80,989
)
 
359,066

Interest expense on notes payable
7,248

 
7,271

 
7,141

 
7,072

 
6,995

Interest expense on subordinated debentures
3,009

 
3,074

 
3,235

 
3,563

 
3,586

Amortization of deferred policy acquisition costs (a)
46,230

 
59,833

 
25,954

 
44,848

 
34,284

Other operating costs and expenses (c)
19,520

 
18,710

 
36,170

 
18,902

 
21,713

Total benefits and expenses
695,654

 
238,276

 
516,380

 
164,319

 
583,594

Income (loss) before income taxes
39,525

 
53,639

 
(12,445
)
 
28,660

 
16,135

Income tax expense (benefit)
13,494

 
17,242

 
(4,616
)
 
9,901

 
5,664

Net income (loss) (a) (b) (c)
$
26,031

 
$
36,397

 
$
(7,829
)
 
$
18,759

 
$
10,471

 
 
 
 
 
 
 
 
 
 
Earnings (loss) per common share
$
0.41

 
$
0.58

 
$
(0.13
)
 
$
0.31

 
$
0.18

Earnings (loss) per common share - assuming dilution (a) (b) (c)
$
0.38

 
$
0.55

 
$
(0.13
)
 
$
0.30

 
$
0.16

Weighted average common shares outstanding (in thousands):
 
 
 
 
 
 
 
 
 
Earnings (loss) per common share
63,314

 
62,856

 
62,504

 
59,943

 
59,701

Earnings (loss) per common share - assuming dilution
68,706

 
65,897

 
65,262

 
64,254

 
65,930

(a)
Q3 2012 includes expense from unlocking which reduced amortization of deferred sales inducements by $0.2 million, increased amortization of deferred policy acquisition costs by $3.7 million, and increased net loss and loss per common share - assuming dilution for Q3 2012 by $2.2 million and $0.03 per share, respectively.
(b)
Q3 2012 includes a benefit from the revision of assumptions used in determining reserves held for living income benefit riders consistent with unlocking for deferred policy acquisition costs and deferred sales inducements. The impact decreased interest sensitive and index product benefits by $2.2 million and decreased net loss and loss per common share - assuming dilution by $1.4 million $0.02 per share, respectively.
(c)
Q3 2012 includes expense from recognizing an estimated litigation liability of $17.5 million, which, after related adjustments to amortization of deferred sales inducements and deferred policy acquisition costs and income taxes, increased net loss and loss per common share - assuming dilution by $9.6 million and $0.15 per share.

Page 3


AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement-March 31, 2013

NON-GAAP FINANCIAL MEASURES
In addition to net income (loss), we have consistently utilized operating income and operating income per common share - assuming dilution, non-GAAP financial measures commonly used in the life insurance industry, as economic measures to evaluate our financial performance. Operating income equals net income adjusted to eliminate the impact of net realized gains and losses on investments including net OTTI losses recognized in operations and fair value changes in derivatives and embedded derivatives. Because these items fluctuate from quarter to quarter in a manner unrelated to core operations, we believe measures excluding their impact are useful in analyzing operating trends. We believe the combined presentation and evaluation of operating income together with net income provides information that may enhance an investor’s understanding of our underlying results and profitability.
Reconciliation from Net Income to Operating Income (Unaudited)
 
Three Months Ended
March 31,
 
2013
 
2012
 
(Dollars in thousands, except per share data)
Net income
$
26,031

 
$
10,471

Adjustments to arrive at operating income:
 
 
 
Net realized investment (gains) losses, including OTTI (a)
(2,804
)
 
3,547

Change in fair value of derivatives and embedded derivatives (a)
10,237

 
15,742

Operating income (a non-GAAP financial measure)
$
33,464

 
$
29,760

 
 
 
 
Per common share - assuming dilution:
 
 
 
Net income
$
0.38

 
$
0.16

Adjustments to arrive at operating income:
 
 
 
Net realized investment (gains) losses, including OTTI
(0.04
)
 
0.06

Changes in fair value of derivatives and embedded derivatives
0.15

 
0.24

Operating income (a non-GAAP financial measure)
$
0.49

 
$
0.46

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

                                                        
Summary of Adjustments to Arrive at Operating Income (Unaudited)
 
Three Months Ended
March 31,
 
2013
 
2012
 
(Dollars in thousands)
Net realized investment gains and losses, including OTTI:
 
 
 
Net realized (gains) losses on investments, including OTTI
$
(7,348
)
 
$
8,957

Amortization of DAC and DSI
3,093

 
(3,450
)
Income taxes
1,451

 
(1,960
)
 
$
(2,804
)
 
$
3,547

Change in fair value of derivatives and embedded derivatives:
 
 
 
Change in fair value of derivatives and embedded derivatives
$
35,680

 
$
59,050

Amortization of DAC and DSI
(20,240
)
 
(34,663
)
Income taxes
(5,203
)
 
(8,645
)
 
$
10,237

 
$
15,742



Page 4


AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement-March 31, 2013

NON-GAAP FINANCIAL MEASURES
Quarterly Summary - Most Recent 5 Quarters (Unaudited)
Reconciliation from Net Income (Loss) to Operating Income
 
Q1 2013
 
Q4 2012
 
Q3 2012
 
Q2 2012
 
Q1 2012
 
(Dollars in thousands, except per share data)
Net income (loss)
$
26,031

 
$
36,397

 
$
(7,829
)
 
$
18,759

 
$
10,471

Adjustments to arrive at operating income:
 
 
 
 
 
 
 
 
 
Net realized investment (gains) losses (a)
(2,804
)
 
2,825

 
1,415

 
861

 
3,547

Change in fair value of derivatives and embedded derivatives (a)
10,237

 
(8,317
)
 
19,000

 
7,736

 
15,742

Litigation reserve (a)
—

 
—

 
9,580

 
—

 
—

Operating income (a non-GAAP financial measure) (b) (c)
$
33,464

 
$
30,905

 
$
22,166

 
$
27,356

 
$
29,760

 
 
 
 
 
 
 
 
 
 
Operating income per common share - assuming dilution (b) (c)
$
0.49

 
$
0.47

 
$
0.34

 
$
0.43

 
$
0.46

(a)
Adjustments to net income (loss) to arrive at operating income are presented net of related adjustments to amortization and deferred sales inducements and deferred policy acquisition costs and net of income taxes.
(b)
Q3 2012 includes expense from unlocking which increased amortization of deferred sales inducements and amortization of deferred policy acquisition costs by $2.4 million and $7.3 million, respectively, and decreased operating income and operating income per common share - assuming dilution for Q3 2012 by $6.3 million and $0.09 per share, respectively.
(c)
Q3 2012 includes a benefit from the revision of assumptions used in determining reserves held for living income benefit riders consistent with unlocking for deferred policy acquisition costs and deferred sales inducements. The impact reduced interest sensitive and index product benefits by $2.2 million and increased operating income and operating income per common share - assuming dilution by $1.4 million $0.02 per share, respectively.

Summary of Adjustments to Arrive at Operating Income
 
Q1 2013
 
Q4 2012
 
Q3 2012
 
Q2 2012
 
Q1 2012
 
(Dollars in thousands)
Net realized (gains) losses on investments
$
(10,585
)
 
$
(1,471
)
 
$
1,238

 
$
611

 
$
6,076

Net OTTI losses recognized in operations
3,237

 
9,387

 
1,686

 
978

 
2,881

Change in fair value of derivatives
(299,494
)
 
156,123

 
(96,232
)
 
85,683

 
(283,265
)
Increase (decrease) in total revenues
(306,842
)
 
164,039

 
(93,308
)
 
87,272

 
(274,308
)
 
 
 
 
 
 
 
 
 
 
Amortization of deferred sales inducements
7,447

 
(3,140
)
 
28,278

 
7,201

 
16,758

Change in fair value of embedded derivatives
(335,174
)
 
182,465

 
(186,362
)
 
56,826

 
(342,315
)
Amortization of deferred policy acquisition costs
9,700

 
(6,746
)
 
35,636

 
9,609

 
21,355

Other operating costs and expenses
—

 
—

 
(17,532
)
 
—

 
—

Increase (decrease) in total benefits and expenses
(318,027
)
 
172,579

 
(139,980
)
 
73,636

 
(304,202
)
Increase (decrease) in income (loss) before income taxes
11,185

 
(8,540
)
 
46,672

 
13,636

 
29,894

Increase (decrease) in income tax expense
3,752

 
(3,048
)
 
16,677

 
5,039

 
10,605

Increase (decrease) in net income (loss)
$
7,433

 
$
(5,492
)
 
$
29,995

 
$
8,597

 
$
19,289


Page 5


AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement-March 31, 2013


Capitalization/Book Value per Share

 
March 31, 2013
 
December 31, 2012
 
(Dollars in thousands, except per share data)
Capitalization:
 
 
 
Notes payable
$
313,043

 
$
309,869

Subordinated debentures payable to subsidiary trusts
245,913

 
245,869

   Total debt
558,956

 
555,738

Total stockholders’ equity
1,730,229

 
1,720,237

Total capitalization
2,289,185

 
2,275,975

Accumulated other comprehensive income (AOCI)
(661,663
)
 
(686,807
)
Total capitalization excluding AOCI (a)
$
1,627,522

 
$
1,589,168

 
 
 
 
Total stockholders’ equity
$
1,730,229

 
$
1,720,237

Accumulated other comprehensive income
(661,663
)
 
(686,807
)
Total stockholders’ equity excluding AOCI (a)
$
1,068,566

 
$
1,033,430

 
 
 
 
Common shares outstanding (b)
63,436,860

 
62,653,134

 
 
 
 
Book Value per Share: (c)
 
 
 
Book value per share including AOCI
$
27.27

 
$
27.46

Book value per share excluding AOCI (a)
$
16.84

 
$
16.49

 
 
 
 
Debt-to-Capital Ratios: (d)
 
 
 
Senior debt / Total capitalization
19.2
%
 
19.5
%
Adjusted debt / Total capitalization
19.3
%
 
20.0
%

(a)
Total capitalization, total stockholders’ equity and book value per share excluding AOCI, non-GAAP financial measures, are based on stockholders’ equity excluding the effect of AOCI. Since AOCI fluctuates from quarter to quarter due to unrealized changes in the fair value of available for sale investments, we believe these non-GAAP financial measures provide useful supplemental information.
(b)
Common shares outstanding include shares held by the NMO Deferred Compensation Trust: 2013 - 892,688 shares; 2012 - 1,142,332 shares and exclude unallocated shares held by ESOP: 2013 - 239,799 shares; 2012 - 239,799 shares.
(c)
Book value per share including and excluding AOCI is calculated as total stockholders’ equity and total stockholders’ equity excluding AOCI divided by the total number of shares of common stock outstanding.
(d)
Debt-to-capital ratios are computed using total capitalization excluding AOCI. Adjusted debt includes notes payable and the portion of the total subordinated debentures payable to subsidiary trusts outstanding (qualifying trust preferred securities) that exceeds 15% of total capitalization excluding AOCI.


Page 6


AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement-March 31, 2013

Spread Results
 
Three Months Ended
March 31,
 
2013
 
2012
Average yield on invested assets
5.01%
 
5.61%
Aggregate cost of money
2.33%
 
2.68%
Aggregate investment spread
2.68%
 
2.93%
 
 
 
 
Impact of:
 
 
 
Investment yield - additional prepayment income
0.08%
 
0.07%
Cost of money benefit from over hedging
0.03%
 
0.01%
 
 
 
 
Weighted average investments
$
26,382,116

 
$
23,352,928

Weighted average investments include fixed maturity securities at amortized cost and equity securities at cost. The numerator for average yield on invested assets includes net investment income and the tax effect of investment income that is exempt from income taxes.
Summary of Cost of Money for Deferred Annuities
 
Three Months Ended
March 31,
 
2013
 
2012
 
(Dollars in thousands)
Included in interest sensitive and index product benefits:
 
 
 
Index credits
$
135,341

 
$
50,658

Interest credited
74,417

 
75,016

Included in change in fair value of derivatives:
 
 
 
Proceeds received at option expiration
(135,225
)
 
(50,862
)
Pro rata amortization of option cost
88,855

 
91,717

Cost of money for deferred annuities
$
163,388

 
$
166,529

 
 
 
 
Weighted average liability balance outstanding (in thousands)
$
28,060,075

 
$
24,829,275

Annuity Account Balance Rollforward
 
Three Months Ended
March 31,
 
2013
 
2012
 
(Dollars in thousands)
Account balances at beginning of period
$
27,669,669

 
$
24,483,118

Net deposits
872,329

 
834,853

Premium and interest bonuses
73,898

 
70,019

Fixed interest credited and index credits
209,758

 
125,674

Surrender charges
(11,502
)
 
(11,662
)
Lifetime income benefit charges
(9,979
)
 
(7,731
)
Surrenders, withdrawals, deaths, etc.
(353,695
)
 
(318,838
)
Account balances at end of period
$
28,450,478

 
$
25,175,433


Page 7


AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement-March 31, 2013


Annuity Deposits by Product Type
 
 
Three Months Ended
March 31,
 
Year Ended December 31,
Product Type
 
2013
 
2012
 
2012
 
 
(Dollars in thousands)
 
 
Fixed Index Annuities:
 
 
 
 
 
 
Index Strategies
 
$
604,641

 
$
488,126

 
$
2,225,902

Fixed Strategy
 
243,129

 
289,354

 
1,208,324

 
 
847,770

 
777,480

 
3,434,226

Fixed Rate Annuities:
 
 
 
 
 
 
Single-Year Rate Guaranteed
 
19,910

 
34,487

 
98,821

Multi-Year Rate Guaranteed
 
47,256

 
121,665

 
249,228

Single premium immediate annuities
 
14,980

 
45,813

 
164,657

 
 
82,146

 
201,965

 
512,706

Total before coinsurance ceded
 
929,916

 
979,445

 
3,946,932

Coinsurance ceded
 
42,607

 
98,779

 
203,734

Net after coinsurance ceded
 
$
887,309

 
$
880,666

 
3,743,198

Surrender Charge Protection and Account Values by Product Type
Annuity Surrender Charges and Net (of coinsurance) Account Values at March 31, 2013:
 
 
Surrender Charge
 
Net Account Value
Product Type
 
Avg.
Years
At Issue
 
Avg.
Years
Remaining
 
Avg.
%
Remaining
 
Dollars in Thousands
 
%
 
 
 
 
 
 
 
 
 
 
 
Fixed Index Annuities
 
14.2
 
10.3
 
16.0%
 
$
26,434,249

 
92.9
%
Single-Year Fixed Rate Guaranteed Annuities
 
11.2
 
4.7
 
8.0%
 
1,441,686

 
5.1
%
Multi-Year Fixed Rate Guaranteed Annuities (a)
 
6.1
 
1.7
 
4.4%
 
574,543

 
2.0
%
Total
 
13.9
 
9.8
 
15.3%
 
$
28,450,478

 
100.0
%
(a) 57% of Net Account Value is no longer in multi-year guarantee period and can be adjusted annually.


Page 8


AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement-March 31, 2013


Annuity Liability Characteristics
 
 
Fixed
Annuities
Account Value
 
Fixed Index
Annuities
Account Value
 
 
(Dollars in thousands)
SURRENDER CHARGE PERCENTAGES:
 
 
 
 
No surrender charge
 
$
610,936

 
$
623,208

0.0% < 2.0%
 
40,092

 
278,495

2.0% < 3.0%
 
88,709

 
189,831

3.0% < 4.0%
 
24,190

 
299,890

4.0% < 5.0%
 
49,313

 
215,568

5.0% < 6.0%
 
78,985

 
265,458

6.0% < 7.0%
 
174,895

 
217,070

7.0% < 8.0%
 
197,497

 
682,312

8.0% < 9.0%
 
172,552

 
486,775

9.0% < 10.0%
 
58,608

 
433,318

10.0% or greater
 
520,452

 
22,742,324

 
 
$
2,016,229

 
$
26,434,249

 
 
Fixed and
Fixed Index
Annuities
Account Value
 
Weighted
Average
Surrender
Charge
 
 
(Dollars in thousands)
 
 
SURRENDER CHARGE EXPIRATION BY YEAR:
 
 
 
 
Out of Surrender Charge
 
$
1,234,144

 
0.00
%
2013
 
363,127

 
1.86
%
2014
 
520,581

 
2.95
%
2015
 
563,972

 
4.75
%
2016
 
817,451

 
6.33
%
2017
 
977,275

 
7.48
%
2018
 
835,561

 
9.67
%
2019
 
587,453

 
10.46
%
2020
 
922,707

 
11.86
%
2021
 
1,225,065

 
13.56
%
2022
 
2,052,386

 
15.60
%
2023
 
4,037,764

 
17.84
%
2024
 
4,119,108

 
18.81
%
2025
 
3,187,938

 
18.83
%
2026
 
2,710,522

 
18.90
%
2027
 
2,163,248

 
19.34
%
2028
 
1,705,743

 
19.87
%
2029
 
415,650

 
19.99
%
2030
 
10,783

 
20.00
%
 
 
$
28,450,478

 
15.33
%

Page 9


AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement-March 31, 2013

Annuity Liability Characteristics
 
 
Fixed
Annuities
Account Value
 
Fixed Index
Annuities
Account Value
 
 
(Dollars in thousands)
CREDITED RATE (INCLUDING BONUS INTEREST) VS. ULTIMATE MINIMUM GUARANTEED RATE DIFFERENTIAL:
 
 
 
 
No differential
 
$
764,715

 
$
794,499

› 0.0% - 0.25%
 
302,957

 
543,743

› 0.25% - 0.5%
 
121,435

 
38,583

› 0.5% - 1.0% (a)
 
327,190

 
1,091,187

› 1.0% - 1.5% (a)
 
108,052

 
24,142

› 1.5% - 2.0%
 
121,459

 
2,348

› 2.0% - 2.5%
 
2,367

 
—

› 2.5% - 3.0%
 
41,809

 
—

1.00% ultimate guarantee - 2.34% wtd avg interest rate (b)
 
33,516

 
—

1.50% ultimate guarantee - 1.74% wtd avg interest rate (b)
 
85,724

 
2,318,536

2.00% ultimate guarantee - 2.66% wtd avg interest rate (b)
 
107,005

 
—

2.25% ultimate guarantee - 2.72% wtd avg interest rate (b)
 
—

 
1,559,112

3.00% ultimate guarantee - 2.92% wtd avg interest rate (b)
 
—

 
3,076,290

Allocated to index strategies (see tables that follow)
 
—

 
16,985,809

 
 
$
2,016,229

 
$
26,434,249

(a)
$137,972 of Fixed Annuities Account Value have a guarantee of 2.25% for the first 10 years and 3.00% thereafter. They begin increasing in 2014. $625,886 of Index Annuities Account Value is in fixed rate strategies that have a guarantee of 2.25% for the first 10 years and 3.00% thereafter. They begin increasing in 2014.    
(b)
The minimum guaranteed interest rate for the fixed rate or the fixed rate strategy is 1.00%. The ultimate guaranteed rate is applied on less than 100% of the premium.
If all crediting rates were reduced to minimum guaranteed rates (subject to limitations imposed by ultimate minimum guaranteed rates where applicable) the weighted average crediting rate as of March 31, 2013 for fixed annuities and funds allocated to the fixed rate strategy for fixed index annuities would decrease by 0.60%.

Page 10


AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement-March 31, 2013

Annuity Liability Characteristics

FIXED INDEX ANNUITIES ACCOUNT VALUE - INDEX STRATEGIES
    
Annual Monthly Average and Point-to-Point with Caps
 
Minimum Guaranteed Cap
 
1%
 
3%
 
4%
 
7%
 
8% +
Current Cap
(Dollars in thousands)
At minimum
$
445

 
$
11,342

 
$
855,480

 
$
49,280

 
$
285,448

2.5% - 3%
406,145

 
—

 
—

 
—

 
—

3% - 4%
1,563,687

 
—

 
—

 
—

 
—

4% - 5%
18,682

 
113,573

 
1,264,778

 
—

 
—

5% - 6%
—

 
8,215

 
2,685,390

 
—

 
—

6% - 7%
—

 
—

 
3,012,812

 
—

 
—

>= 7%
—

 
12,345

 
33,238

 
128,794

 
73,769


    
Annual Monthly Average and Point-to-Point with Participation Rates
 
Minimum Guaranteed Participation Rate
 
10%
 
25%
 
35%
 
50% +
Current Participation Rate
(Dollars in thousands)
At minimum
$
97

 
$
333,213

 
$
171,517

 
$
209,713

< 20%
163,959

 
—

 
—

 
—

20% - 40%
130,450

 
484,591

 
—

 
—

40% - 60%
—

 
176,945

 
150,656

 
1,449

>= 60%
—

 
—

 
—

 
—


S&P 500 Monthly Point-to-Point - Minimum Guaranteed Monthly Cap = 1% (Dollars in thousands)

Current Cap
 
At minimum
$
12,341

1.45% - 1.8%
1,747,867

2.0% - 2.3%
1,540,038

>= 2.3%
1,330,495

If all caps and participation rates were reduced to minimum caps and participation rates, the cost of options would decrease by 0.60% based upon prices of options for the week ended April 16, 2013.


Page 11


AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement-March 31, 2013

Summary of Invested Assets
 
March 31, 2013
 
December 31, 2012
 
Carrying
Amount
 
Percent
 
Carrying
Amount
 
Percent
 
(Dollars in thousands)
Fixed maturity securities:
 
 
 
 
 
 
 
United States Government full faith and credit
$
4,616

 
—
%
 
$
5,154

 
—
%
United States Government sponsored agencies
1,857,377

 
6.4
%
 
1,772,025

 
6.5
%
United States municipalities, states and territories
3,657,164

 
12.5
%
 
3,578,323

 
13.0
%
Foreign government obligations
100,460

 
0.3
%
 
105,259

 
0.4
%
Corporate securities
15,627,095

 
53.4
%
 
14,542,860

 
52.8
%
Residential mortgage backed securities
2,668,454

 
9.1
%
 
2,888,113

 
10.5
%
Commercial mortgage backed securities
748,601

 
2.6
%
 
357,982

 
1.3
%
Other asset backed securities
1,021,580

 
3.5
%
 
998,508

 
3.6
%
Total fixed maturity securities
25,685,347

 
87.8
%
 
24,248,224

 
88.1
%
Equity securities
55,215

 
0.2
%
 
53,422

 
0.2
%
Mortgage loans on real estate
2,591,897

 
8.9
%
 
2,623,940

 
9.5
%
Derivative instruments
719,683

 
2.4
%
 
415,258

 
1.5
%
Other investments
193,714

 
0.7
%
 
196,366

 
0.7
%
 
$
29,245,856

 
100.0
%
 
$
27,537,210

 
100.0
%
Credit Quality of Fixed Maturity Securities - March 31, 2013
NAIC Designation
 
Carrying
Amount
 
Percent
 
Rating Agency Rating
 
Carrying
Amount
 
Percent
 
 
(Dollars in thousands)
 
 
 
 
 
(Dollars in thousands)
 
 
1
 
$
16,121,041

 
62.8
%
 
Aaa/Aa/A
 
$
15,468,699

 
60.2
%
2
 
9,087,432

 
35.4
%
 
Baa
 
8,713,460

 
33.9
%
3
 
422,134

 
1.6
%
 
Ba
 
430,094

 
1.7
%
4
 
53,006

 
0.2
%
 
B
 
104,973

 
0.4
%
5
 
—

 
—
%
 
Caa and lower
 
803,058

 
3.1
%
6
 
1,734

 
—
%
 
In or near default
 
165,063

 
0.7
%
 
 
$
25,685,347

 
100.0
%
 
 
 
$
25,685,347

 
100.0
%

Page 12


AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement-March 31, 2013

Watch List Securities - March 31, 2013
General Description
 
Amortized
Cost
 
Unrealized
Gains (Losses)
 
Fair Value
 
Months Below Amortized Cost
 
 
(Dollars in thousands)
 
 
Corporate bonds:
 
 
 
 
 
 
 
 
Finance
 
$
49,505

 
$
(5,924
)
 
$
43,581

 
19 - 28
Industrial
 
49,488

 
(6,993
)
 
42,495

 
5 - 31
Industrial
 
9,372

 
101

 
9,473

 
 
 
 
108,365

 
(12,816
)
 
95,549

 
 
Summary of Residential Mortgage Backed Securities
Collateral Type
 
Principal
Amount

 
Amortized
Cost
 
Fair Value
 
 
(Dollars in thousands)
OTTI has not been recognized
 
 
 
 
 
 
Government agency
 
$
932,891

 
$
902,583

 
$
986,934

Prime
 
771,283

 
733,472

 
785,450

Alt-A
 
39,149

 
39,645

 
40,070

 
 
$
1,743,323

 
$
1,675,700

 
$
1,812,454

OTTI has been recognized
 
 
 
 
 
 
Prime
 
$
569,382

 
$
494,102

 
$
517,473

Alt-A
 
403,365

 
318,633

 
338,527

 
 
$
972,747

 
$
812,735

 
$
856,000

Total by collateral type
 
 
 
 
 
 
Government agency
 
$
932,891

 
$
902,583

 
$
986,934

Prime
 
1,340,665

 
1,227,574

 
1,302,923

Alt-A
 
442,514

 
358,278

 
378,597

 
 
$
2,716,070

 
$
2,488,435

 
$
2,668,454

Total by NAIC designation
 
 
 
 
 
 
1
 
$
2,304,669

 
$
2,119,514

 
$
2,287,198

2
 
333,818

 
301,506

 
312,413

3
 
43,642

 
38,352

 
39,077

4
 
30,454

 
26,825

 
28,042

6
 
3,487

 
2,238

 
1,724

 
 
$
2,716,070

 
$
2,488,435

 
$
2,668,454


Page 13


AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement-March 31, 2013

Fixed Maturity Securities by Sector
 
March 31, 2013
 
December 31, 2012
 
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
 
(Dollars in thousands)
Available for sale:
 
 
 
 
 
 
 
United States Government full faith and credit and sponsored agencies
$
1,857,709

 
$
1,861,993

 
$
1,768,379

 
$
1,777,179

United States municipalities, states and territories
3,191,793

 
3,657,164

 
3,116,678

 
3,578,323

Foreign government obligations
86,102

 
100,460

 
86,099

 
105,259

Corporate securities:
 
 
 
 
 
 
 
Consumer discretionary
1,414,122

 
1,522,755

 
1,237,208

 
1,366,504

Consumer staples
951,002

 
1,058,668

 
876,654

 
1,003,651

Energy
1,541,871

 
1,707,486

 
1,463,923

 
1,655,363

Financials
2,787,037

 
3,034,881

 
2,476,780

 
2,713,351

Health care
1,098,677

 
1,213,674

 
926,136

 
1,064,097

Industrials
1,613,794

 
1,772,367

 
1,497,435

 
1,672,681

Information technology
924,668

 
982,347

 
854,347

 
923,263

Materials
1,146,380

 
1,243,393

 
1,076,133

 
1,189,410

Telecommunications
449,179

 
480,254

 
356,486

 
400,995

Utilities
2,218,211

 
2,511,289

 
2,143,026

 
2,453,736

Residential mortgage backed securities:
 
 
 
 
 
 
 
Government agency
902,583

 
986,934

 
1,024,731

 
1,119,249

Prime
1,227,574

 
1,302,923

 
1,344,775

 
1,392,741

Alt-A
358,278

 
378,597

 
374,031

 
376,123

Commercial mortgage backed securities:
 
 
 
 
 
 
 
Government agency
136,367

 
136,465

 
35,697

 
37,976

Other
606,598

 
612,136

 
319,173

 
320,006

Other asset backed securities:
 
 
 
 
 
 
 
Consumer discretionary
86,037

 
89,870

 
77,464

 
81,772

Energy
8,295

 
9,535

 
8,304

 
9,152

Financials
711,666

 
728,864

 
659,058

 
677,948

Industrials
151,623

 
166,602

 
154,358

 
166,567

Materials
—

 
—

 
28,813

 
29,150

Telecommunications
14,835

 
17,453

 
14,835

 
17,421

Utilities
6,670

 
9,256

 
14,459

 
16,498

Redeemable preferred stock - financials
22,108

 
23,852

 
22,045

 
23,721

 
$
23,513,179

 
$
25,609,218

 
$
21,957,027

 
$
24,172,136

Held for investment:
 
 
 
 
 
 
 
Corporate security - financials
$
76,129

 
$
62,173

 
$
76,088

 
$
61,521



Page 14


AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement-March 31, 2013


Mortgage Loans on Commercial Real Estate
 
March 31, 2013
 
December 31, 2012
 
Principal
 
Percent
 
Principal
 
Percent
 
(Dollars in thousands)
Geographic distribution
 
 
 
 
 
 
 
East
$
744,863

 
28.4
%
 
$
732,762

 
27.5
%
Middle Atlantic
163,497

 
6.2
%
 
155,094

 
5.8
%
Mountain
371,550

 
14.2
%
 
387,599

 
14.6
%
New England
24,675

 
0.9
%
 
26,385

 
1.0
%
Pacific
317,017

 
12.1
%
 
320,982

 
12.1
%
South Atlantic
459,579

 
17.5
%
 
458,802

 
17.3
%
West North Central
354,299

 
13.5
%
 
370,168

 
13.9
%
West South Central
190,257

 
7.2
%
 
207,091

 
7.8
%
 
$
2,625,737

 
100.0
%
 
$
2,658,883

 
100.0
%
 
 
 
 
 
 
 
 
Property type distribution
 
 
 
 
 
 
 
Office
$
684,553

 
26.1
%
 
$
666,467

 
25.1
%
Medical Office
130,874

 
5.0
%
 
136,764

 
5.1
%
Retail
656,187

 
25.0
%
 
677,951

 
25.5
%
Industrial/Warehouse
672,522

 
25.6
%
 
692,637

 
26.1
%
Hotel
89,376

 
3.4
%
 
94,045

 
3.5
%
Apartment
220,698

 
8.4
%
 
219,335

 
8.2
%
Mixed use/other
171,527

 
6.5
%
 
171,684

 
6.5
%
 
$
2,625,737

 
100.0
%
 
$
2,658,883

 
100.0
%
 
 
 
 
 
 
 
 
 
March 31,
2013
 
December 31, 2012
 
 
 
 
Credit Exposure - By Payment Activity
 
 
 
 
 
 
 
Performing
$
2,578,031

 
$
2,597,440

 
 
 
 
In workout
28,326

 
26,723

 
 
 
 
Delinquent
—

 
—

 
 
 
 
Collateral dependent
19,380

 
34,720

 
 
 
 
 
2,625,737

 
2,658,883

 
 
 
 
Specific Loan Loss Allowance
(22,631
)
 
(23,134
)
 
 
 
 
General Loan Loss Allowance
(10,400
)
 
(11,100
)
 
 
 
 
Deferred prepayment fees
(809
)
 
(709
)
 
 
 
 
 
$
2,591,897

 
$
2,623,940

 
 
 
 


Page 15


AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement-March 31, 2013

Shareholder Information
Corporate Offices:
American Equity Investment Life Holding Company
6000 Westown Parkway
West Des Moines, IA 50266
Inquiries:
D. J. Noble, Executive Chairman    
(515) 457-1703, dnoble@american-equity.com
John M. Matovina, Chief Executive Officer and President
(515) 457-1813, jmatovina@american-equity.com
Debra J. Richardson, Executive Vice President and Secretary
(515) 273-3551, drichardson@american-equity.com        
Ted M. Johnson, Chief Financial Officer and Treasurer
(515) 457-1980, tjohnson@american-equity.com
Common Stock and Dividend Information:
New York Stock Exchange symbol: “AEL”
 
High
 
Low
 
Close
 
Dividend Declared
2013
 
 
 
 
 
 
 
First Quarter
$15.03
 
$12.33
 
$14.89
 
$0.00
 
 
 
 
 
 
 
 
2012
 
 
 
 
 
 
 
First Quarter
$13.09
 
$10.13
 
$12.77
 
$0.00
Second Quarter
$12.95
 
$10.00
 
$11.01
 
$0.00
Third Quarter
$12.41
 
$10.62
 
$11.63
 
$0.00
Fourth Quarter
$12.40
 
$10.56
 
$12.21
 
$0.15
 
 
 
 
 
 
 
 
2011
 
 
 
 
 
 
 
First Quarter
$13.93
 
$11.27
 
$13.12
 
$0.00
Second Quarter
$13.53
 
$11.91
 
$12.71
 
$0.00
Third Quarter
$13.22
 
$8.01
 
$8.75
 
$0.00
Fourth Quarter
$11.82
 
$8.05
 
$10.40
 
$0.12
Transfer Agent:
Computershare Trust Company, N.A.
P.O. Box 43010
Providence, RI 02940-0310
Phone: (877) 282-1169    
Fax: (781) 575-2723
www.computershare.com
Annual Report and Other Information:
Shareholders may receive when available, without charge, a copy of American Equity’s Annual Report, SEC filings and/or press releases by calling Julie L. LaFollette, Investor Relations, at (515) 273-3602 or by visiting our web site at www.american-equity.com.



Page 16


AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
Financial Supplement-March 31, 2013

Research Analyst Coverage

Steven Schwartz
Raymond James & Associates, Inc.
(312) 612-7686
steven.schwartz@raymondjames.com

Randy Binner
Friedman, Billings, Ramsey & Co., Inc.
(703) 312-1890
rbinner@fbr.com

Edward Shields
Sandler O’Neill & Partners
(312) 281-3487
eshields@sandleroneill.com

Mark Hughes
SunTrust Robinson Humphrey
(615) 748-5680
mark_hughes@rhco.com

Daniel Furtado
Jefferies & Company, Inc.
(415) 229-1569
dfurtado@jefferies.com

Paul Sarran, Mark Finkelstein
Evercore Partners
(312) 445-6441 paul.sarran@evercore.com
(312) 445-6440 mark.finkelstein@evercore.com



Page 17