Schedule II - Condensed Financial Information of Registrant

12 Months Ended

Dec. 31, 2018

Condensed Financial Information Disclosure [Abstract]

Schedule II - Condensed Financial Information of Registrant



	December 31,
	2018			2017
Assets
Cash and cash equivalents	$	68,876		$	22,486
Equity securities of subsidiary trusts	7,437			7,429
Receivable from subsidiaries	1,170			166
Deferred income taxes	7,905			7,945
Federal income tax recoverable, including amount from subsidiaries	—			1,059
Other assets	2,751			1,566
	88,139			40,651
Investment in and advances to subsidiaries	3,066,039			3,550,405
Total assets	$	3,154,178		$	3,591,056

Liabilities and Stockholders' Equity
Liabilities:
Notes and loan payable	$	494,591		$	494,093
Subordinated debentures payable to subsidiary trusts	242,982			242,565
Federal income tax payable	8,892			—
Other liabilities	8,612			4,241
Total liabilities	755,077			740,899
Stockholders' equity:
Common stock	90,369			89,331
Additional paid-in capital	811,186			791,446
Accumulated other comprehensive income (loss)	(52,432		)	724,599
Retained earnings	1,549,978			1,244,781
Total stockholders' equity	2,399,101			2,850,157
Total liabilities and stockholders' equity	$	3,154,178		$	3,591,056

See accompanying note to condensed financial statements.

See accompanying Report of Independent Registered Public Accounting Firm.



	Year Ended December 31,
	2018		2017			2016
Revenues:
Net investment income	$	773	$	492		$	78
Dividends from subsidiary trusts	461		410			384
Dividends from dissolved subsidiaries	10,393		—			—
Investment advisory fees	92,335		83,941			75,706
Surplus note interest from subsidiary	4,080		4,080			4,080
Change in fair value of derivatives	1,051		(412		)	(810		)
Loss on extinguishment of debt	—		(18,817		)	—
Total revenues	109,093		69,694			79,438

Expenses:
Interest expense on notes and loan payable	25,498		30,368			28,248
Interest expense on subordinated debentures issued to subsidiary trusts	15,491		14,124			12,958
Other operating costs and expenses	18,579		9,234			8,551
Total expenses	59,568		53,726			49,757
Income before income taxes and equity in undistributed income of subsidiaries	49,525		15,968			29,681
Income tax expense	2,603		6,895			12,073
Income before equity in undistributed income of subsidiaries	46,922		9,073			17,608
Equity in undistributed income of subsidiaries	411,094		165,572			65,635
Net income	$	458,016	$	174,645		$	83,243

See accompanying note to condensed financial statements.

See accompanying Report of Independent Registered Public Accounting Firm.



	Year Ended December 31,
	2018			2017			2016
Operating activities
Net income	$	458,016		$	174,645		$	83,243
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for depreciation and amortization	916			1,610			1,946
Accrual of discount on equity security	(8		)	(7		)	(7		)
Equity in undistributed income of subsidiaries	(411,094		)	(165,572		)	(65,635		)
Change in fair value of derivatives	(1,325		)	(657		)	(698		)
Loss on extinguishment of debt	—			18,817			—
Accrual of discount on debenture issued to subsidiary trust	254			236			221
Share-based compensation	1,626			951			818
Deferred income taxes	40			1,583			2,117
Changes in operating assets and liabilities:
Receivable from subsidiaries	(1,004		)	16			(125		)
Federal income tax recoverable/payable	9,951			(4,673		)	11,361
Other assets	(229		)	158			(326		)
Other liabilities	4,860			(12,427		)	2,546
Net cash provided by operating activities	62,003			14,680			35,461

Investing activities
Capital contributions to subsidiaries	$	—		$	—		$	(255,000	)
Purchases of property, plant and equipment	(29		)	(45		)	(54		)
Net cash used in investing activities	(29		)	(45		)	(255,054		)

Financing activities
Financing fees incurred and deferred	$	—		$	(5,817	)	$	(1,456	)
Repayment of notes payable	—			(413,252		)	—
Repayment of loan payable	—			(100,000		)	—
Proceeds from issuance of notes payable	—			499,650			—
Proceeds from issuance of loan payable	—			—			100,000
Proceeds from issuance of common stock	9,681			14,028			139,654
Dividends paid	(25,265		)	(23,152		)	(21,114		)
Net cash provided by (used in) financing activities	(15,584		)	(28,543		)	217,084
Increase (decrease) in cash and cash equivalents	46,390			(13,908		)	(2,509		)
Cash and cash equivalents at beginning of year	22,486			36,394			38,903
Cash and cash equivalents at end of year	$	68,876		$	22,486		$	36,394

Supplemental disclosures of cash flow information
Cash paid during the year for:
Interest on notes and loan payable	$	25,000		$	40,537		$	27,164
Interest on subordinated debentures	13,593			14,573			12,454
Non-cash financing activity:
Common stock issued to settle warrants that have expired	—			—			93

See accompanying note to condensed financial statements.

See accompanying Report of Independent Registered Public Accounting Firm.

1. Basis of Presentation

The accompanying condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto of American Equity Investment Life Holding Company (Parent Company).

In the Parent Company financial statements, its investment in and advances to subsidiaries are stated at cost plus equity in undistributed income (losses) of subsidiaries since the date of acquisition and net unrealized gains/losses on the subsidiaries' fixed maturity securities classified as "available for sale" and equity securities.

See Notes 9 and 10 to our audited consolidated financial statements in this Form 10-K for a description of the Parent Company's notes payable and subordinated debentures payable to subsidiary trusts.