Subordinated Debentures

12 Months Ended

Dec. 31, 2019

Our wholly-owned subsidiary trusts (which are not consolidated) have issued fixed rate and floating rate trust preferred securities and have used the proceeds from these offerings to purchase subordinated debentures from us. We also issued subordinated debentures to the trusts in exchange for all of the common securities of each trust. The sole assets of the trusts are the subordinated debentures and any interest accrued thereon. The interest payment dates on the subordinated debentures correspond to the distribution dates on the trust preferred securities issued by the trusts. The trust preferred securities mature simultaneously with the subordinated debentures. Our obligations under the subordinated debentures and related agreements provide a full and unconditional guarantee of payments due under the trust preferred securities. All subordinated debentures are callable by us at any time, except for the Trust II subordinated debt obligations.

Following is a summary of subordinated debt obligations to the trusts at December 31, 2019 and 2018:



	December 31,
	2019			2018			Interest Rate		Due Date
	(Dollars in thousands)
American Equity Capital Trust II	$	77,822		$	77,551		5%		June 1, 2047
American Equity Capital Trust III	27,840			27,840			*LIBOR +	3.90%	April 29, 2034
American Equity Capital Trust IV	12,372			12,372			*LIBOR +	4.00%	January 8, 2034
American Equity Capital Trust VII	—			10,830			*LIBOR +	3.75%	December 15, 2034
American Equity Capital Trust VIII	—			20,620			*LIBOR +	3.75%	December 15, 2034
American Equity Capital Trust IX	—			15,470			*LIBOR +	3.65%	June 15, 2035
American Equity Capital Trust X	—			20,620			*LIBOR +	3.65%	September 15, 2035
American Equity Capital Trust XI	—			20,620			*LIBOR +	3.65%	December 15, 2035
American Equity Capital Trust XII	41,238			41,238			*LIBOR +	3.50%	April 7, 2036
	159,272			247,161
Unamortized debt issue costs	(2,007		)	(4,179		)
	$	157,265		$	242,982

*—three month London Interbank Offered Rate

The principal amount of the subordinated debentures issued by us to American Equity Capital Trust II ("Trust II") is $100.0 million. These debentures were assigned a fair value of $74.7 million at the date of issue (based upon an effective yield-to-maturity of 6.8%). The difference between the fair value at the date of issue and the principal amount is being accreted over the life of the debentures. The trust preferred securities issued by Trust II were issued to Iowa Farm Bureau Federation, which owns more than 50% of the voting capital stock of FBL Financial Group, Inc. ("FBL"). The consideration received by Trust II in connection with the issuance of its trust preferred securities consisted of fixed income securities of equal value which were issued by FBL.

We redeemed subordinated debentures issued to the following trusts during December 2019: American Equity Capital Trust VII, American Equity Capital Trust VIII, American Equity Capital Trust IX, American Equity Capital Trust X and American Equity Capital Trust XI. In addition, we redeemed subordinated debentures issued to American Equity Capital Trust IV and American Equity Capital Trust XII during January 2020 and subordinated debentures issued to American Equity Capital Trust III during February 2020.