Statutory Financial Information and Dividend Restrictions

Statutory accounting practices prescribed or permitted by regulatory authorities for our life insurance subsidiaries differ from GAAP. Net income for our primary life insurance subsidiary as determined in accordance with statutory accounting practices was as follows:



	Year Ended December 31,
	2017		2016		2015
	(Dollars in thousands)
American Equity Life	$	375,900	$	75,035	$	131,452

Statutory capital and surplus for our primary life insurance subsidiary was as follows:



	December 31,
	2017		2016
	(Dollars in thousands)
American Equity Life	$	3,005,654	$	2,726,664

American Equity Life is domiciled in the state of Iowa and is regulated by the Iowa Insurance Division. Life insurance companies are subject to the National Association of Insurance Commissioners ("NAIC") risk-based capital (RBC) requirements which are intended to be used by insurance regulators as an early warning tool to identify deteriorating or weakly capitalized insurance companies for the purpose of initiating regulatory action. Calculations using the NAIC formula indicated that American Equity Life's ratio of total adjusted capital to the highest level of required capital at which regulatory action might be initiated (Company Action Level) is as follows:



	December 31,
	2017			2016
	(Dollars in thousands)
Total adjusted capital	$	3,260,328		$	2,933,193
Company Action Level RBC	861,419			857,321
Ratio of adjusted capital to Company Action Level RBC	378		%	342		%

Prior approval of regulatory authorities is required for the payment of dividends to the parent company by American Equity Life which exceed an annual limitation. American Equity Life may pay dividends without prior approval, unless such payments, together with all other such payments within the preceding twelve months, exceed the greater of (1) net gain from operations before net realized capital gains/losses for the preceding calendar year or, (2) 10% of the American Equity Life's surplus at the preceding year-end. The amount of dividends permitted to be paid by American Equity Life to its parent company without prior approval of regulatory authorities is $377.1 million as of December 31, 2017. No dividends were paid by any of our insurance subsidiaries for any of the years presented in these financial statements.

The Parent Company relies on its subsidiaries for cash flow, which has primarily been in the form of investment management fees. Retained earnings in our consolidated financial statements primarily represent undistributed earnings of American Equity Life. As such, our ability to pay dividends is limited by the regulatory restriction placed upon insurance companies as described above. In addition, American Equity Life retains funds to allow for sufficient capital for growth.