EX-99.1 2 a5821394ex99_1.htm EXHIBIT 99.1 a5821394ex99_1.htm
Exhibit 99.1
 
 
 

 
American Equity Investment Life Holding Company
Financial Supplement
 
September 30, 2008
 
A. Financial Highlights  
     
 
1
 
  3
 
 Operating Income  
 
4
 
5
     
6
 
7
     
B. Product Summary  
     
 
8
 
8
 
9
 
11
     
C. Investment Summary  
     
 
12
 
13
 
13
 
14
     
D. Shareholder Information
15
     
E.  Research Analyst Coverage
16

 
American Equity Investment Life Holding Company
Financial Supplement – September 30, 2008
 
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
(Dollars in thousands)

   
September 30,
2008
    
December 31,
2007
  
   
(Unaudited)
        
Assets
            
Investments:
            
Fixed maturity securities:
            
Available for sale, at fair value
   $ 6,074,420     $ 5,008,772  
Held for investment, at amortized cost
     4,578,368       5,355,733  
Equity securities, available for sale, at fair value
     111,983       87,412  
Mortgage loans on real estate
     2,280,741       1,953,894  
Derivative instruments
     50,161       204,657  
Policy loans
     437       427  
Total investments
     13,096,110       12,610,895  
                 
Cash and cash equivalents
     17,392       18,888  
Coinsurance deposits
     1,571,980       1,698,153  
Accrued investment income
     94,072       77,348  
Deferred policy acquisition costs
     1,485,867       1,272,108  
Deferred sales inducements
     770,164       588,473  
Deferred income taxes
     64,152       75,806  
Other assets
     43,714       52,701  
Total assets
   $ 17,143,451     $ 16,394,372  
 
Page 1
American Equity Investment Life Holding Company
Financial Supplement – September 30, 2008
 
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
 (Dollars in thousands)

   
September 30,
2008
    
December 31,
2007
  
   
(Unaudited)
        
 
Liabilities and Stockholders’ Equity
            
Liabilities:
            
Policy benefit reserves
   $ 15,505,069     $ 14,711,780  
Other policy funds and contract claims
     113,890       120,186  
Notes payable
     272,629       268,339  
Subordinated debentures
     268,176       268,330  
Amounts due under repurchase agreements
     373,139       257,225  
Other liabilities
     90,010       156,877  
Total liabilities
     16,622,913       15,782,737  
                 
Stockholders’ equity:
                
Common stock
     50,742       53,556  
Additional paid-in capital
     360,020       387,302  
Unallocated common stock held by ESOP
     (6,472 )     (6,781 )
Accumulated other comprehensive loss
     (143,156 )     (38,929 )
Retained earnings
     259,404       216,487  
Total stockholders’ equity
     520,538       611,635  
Total liabilities and stockholders’ equity
   $ 17,143,451     $ 16,394,372  
 
Page 2
American Equity Investment Life Holding Company
Financial Supplement – September 30, 2008
 
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
(Dollars in thousands, except per share data)
(Unaudited)

   
Three Months Ended
September 30,
    
Nine Months Ended
September 30,
  
   
2008
    
2007
    
2008
    
2007
  
Revenues:
                        
Traditional life and accident and health insurance premiums
   $ 3,223     $ 3,344     $ 9,419     $ 9,591  
Annuity product charges
     13,328       12,576       37,271       33,023  
Net investment income
     209,978       183,732       607,546       528,809  
Realized gains (losses) on investments
     (58,974 )     325       (91,412 )     921  
Change in fair value of derivatives
     (83,753 )     (10,709 )     (314,431 )     79,755  
Total revenues
     83,802       189,268       248,393       652,099  
                                 
Benefits and expenses:
                                
Insurance policy benefits and change in future policy benefits
     2,126       2,360       7,056       6,390  
Interest credited to account balances
     50,387       165,821       154,032       449,915  
Amortization of deferred sales inducements
     6,760       565       34,193       16,528  
Change in fair value of embedded derivatives
     (37,100 )     (19,829 )     (237,969 )     (11,476 )
Interest expense on notes payable
     3,881       4,039       11,732       12,178  
Interest expense on subordinated debentures
     4,669       5,673       14,549       16,876  
Interest expense on amounts due under repurchase agreements
     2,698       4,764       7,694       11,842  
Amortization of deferred policy acquisition costs
     19,285       9,013       118,595       60,948  
Other operating costs and expenses
     13,490       11,582       38,308       37,076  
Total benefits and expenses
     66,196       183,988       148,190       600,277  
                                 
Income before income taxes
     17,606       5,280       100,203       51,822  
Income tax expense
     28,608       1,837       57,286       17,848  
Net income (loss)
   $ (11,002 )   $ 3,443     $ 42,917     $ 33,974  
                                 
Earnings (loss) per common share
   $ (0.21 )   $ 0.06     $ 0.79     $ 0.60  
Earnings (loss) per common share - assuming dilution (a)
   $ (0.19 )   $ 0.06     $ 0.77     $ 0.58  
Weighted average common shares outstanding (in thousands):
                                
Earnings (loss) per common share
     52,916       56,878       54,075       56,899  
Earnings (loss) per common share - assuming dilution
     55,835       59,774       56,953       60,081  

(a)
The numerator for earnings (loss) per common share - assuming dilution is equal to net income (loss) plus the after tax cost of interest on convertible subordinated debentures issued to a subsidiary trust.  The after tax cost of such interest was $259 for the three months ended September 30, 2008, $262 for the three months ended September 30, 2007, $783 for the nine months ended September 30, 2008 and $790 for the nine months ended September 30, 2007.
 
Page 3
American Equity Investment Life Holding Company
Financial Supplement – September 30, 2008
 

Operating Income
   
As Reported
    
Realized Loss
Adjustments
    
SFAS 133
Adjustments
    
Operating
Income (a)
  
   
(Dollars in thousands, except per share data)
  
Revenues:
                        
Traditional life and accident and health insurance premiums
   $ 9,419     $ –     $ –     $ 9,419  
Annuity and single premium universal life product charges
     37,271       –       –       37,271  
Net investment income
     607,546       –       –       607,546  
Realized losses on investments
     (91,412 )     91,412       –       –  
Change in fair value of derivatives
     (314,431 )     –       117,778       (196,653 )
Total revenues
     248,393       91,412       117,778       457,583  
                                 
Benefits and expenses:
                                
Insurance policy benefits and change in future policy benefits
     7,056       –       –       7,056  
Interest credited to account balances
     154,032       –       720       154,752  
Amortization of deferred sales inducements
     34,193       19,814       (20,125 )     33,882  
Change in fair value of embedded derivatives
     (237,969 )     –       237,969       –  
Interest expense on notes payable
     11,732       –       (807 )     10,925  
Interest expense on subordinated debentures
     14,549       –       –       14,549  
Interest expense on amounts due under repurchase agreements
     7,694       –       –       7,694  
Amortization of deferred policy acquisition costs
     118,595       30,321       (49,865 )     99,051  
Other operating costs and expenses
     38,308       –       242       38,550  
Total benefits and expenses
     148,190       50,135       168,134       366,459  
                                 
Income before income taxes
     100,203       41,277       (50,356 )     91,124  
Income tax expense
     57,286       (7,863 )     (17,825 )     31,598  
Net income
   $ 42,917     $ 49,140     $ (32,531 )   $ 59,526  
                                 
Earnings per common share
   $ 0.79                     $ 1.10  
Earnings per common share – assuming dilution
   $ 0.77                     $ 1.06  

(a)
In addition to net income, we have consistently utilized operating income, operating income per common share 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 related deferred tax valuation allowance and the impact of SFAS 133, dealing with 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.


Change in fair value of derivatives:
                          
Proceeds received at expiration
   $ 24,641             $ –     $ 24,641  
Cost of money for index annuities
     (220,573 )             –       (220,573 )
Change in the difference between fair value and remaining
   option cost at beginning and end of period
     (118,499 )               117,778       (721 )
    $ (314,431 )           $ 117,778     $ (196,653 )
                                 
Index credits included in interest credited to account balances
   $ 29,264                     $ 29,264  
 
Page 4
American Equity Investment Life Holding Company
Financial Supplement – September 30, 2008
 
 
Operating Income
   
As Reported
    
Realized Loss
Adjustments
    
SFAS 133
Adjustments
    
Operating
Income (a)
  
   
(Dollars in thousands, except per share data)
  
Revenues:
                        
Traditional life and accident and health insurance premiums
   $ 3,223     $ –     $ –     $ 3,223  
Annuity product charges
     13,328       –       –       13,328  
Net investment income
     209,978       –       –       209,978  
Realized losses on investments
     (58,974 )     58,974       –       –  
Change in fair value of derivatives
     (83,753 )     –       16,813       (66,940 )
Total revenues
     83,802       58,974       16,813       159,589  
                                 
Benefits and expenses:
                                
Insurance policy benefits and change in future policy benefits
     2,126       –       –       2,126  
Interest credited to account balances
     50,387       –       720       51,107  
Amortization of deferred sales inducements
     6,760       13,496       (6,859 )     13,397  
Change in fair value of embedded derivatives
     (37,100 )     –       37,100       –  
Interest expense on notes payable
     3,881       –       (243 )     3,638  
Interest expense on subordinated debentures
     4,669       –       –       4,669  
Interest expense on amounts due under repurchase agreements
     2,698       –       –       2,698  
Amortization of deferred policy acquisition costs
     19,285       19,566       (5,743 )     33,108  
Other operating costs and expenses
     13,490       –       60       13,550  
Total benefits and expenses
     66,196       33,062       25,035       124,293  
                                 
Income before income taxes
     17,606       25,912       (8,222 )     35,296  
Income tax expense
     28,608       (13,310 )     (3,117 )     12,181  
Net income (loss)
   $ (11,002 )   $ 39,222     $ (5,105 )   $ 23,115  
                                 
Earnings (loss) per common share
   $ (0.21 )                   $ 0.44  
Earnings (loss) per common share – assuming dilution
   $ (0.19 )                   $ 0.42  

(a)
In addition to net income (loss), we have consistently utilized operating income, operating income per common share 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 (loss) adjusted to eliminate the impact of net realized gains and losses on investments including related deferred tax valuation allowance and the impact of SFAS 133, dealing with 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 (loss), provides information that may enhance an investor’s understanding of our underlying results and profitability.


Change in fair value of derivatives:
                          
Proceeds received at expiration
   $ 4,611             $ –     $ 4,611  
Cost of money for index annuities
     (71,253 )             –       (71,253 )
Change in the difference between fair value and remaining
   option cost at beginning and end of period
     (17,111 )               16,813       (298 )
    $ (83,753 )           $ 16,813     $ (66,940 )
                                 
Index credits included in interest credited to account balances
   $ 5,047                     $ 5,047  
 
Page 5
American Equity Investment Life Holding Company
Financial Supplement – September 30, 2008
 
 
Operating Income/Net Income (Loss)
     
Q3 2008
      
Q2 2008
      
Q1 2008
      
Q4 2007
      
Q3 2007
  
   
(Dollars in thousands, except per share data)
  
Revenues:
                                        
Traditional life and accident and health insurance premiums
   $ 3,223     $ 2,880     $ 3,316     $ 3,032     $ 3,344  
Annuity product charges
     13,328       11,845       12,098       12,805       12,576  
Net investment income
     209,978       202,080       195,488       191,107       183,732  
Change in fair value of derivatives
     (66,940 )     (67,261 )     (62,452 )     (7,249 )     56,332  
Total revenues
     159,589       149,544       148,450       199,695       255,984  
                                         
Benefits and expenses:
                                        
Insurance policy benefits and change in future policy benefits
     2,126       2,321       2,609       2,029       2,360  
Interest credited to account balances
     51,107       49,469       54,176       110,294       165,821  
Amortization of deferred sales inducements
     13,397       9,890       10,595       9,364       9,177  
Interest expense on notes payable
     3,638       3,649       3,638       3,772       3,770  
Interest expense on subordinated debentures
     4,669       4,649       5,231       5,644       5,673  
Interest expense on amounts due under repurchase agreements
     2,698       2,024       2,972       4,084       4,764  
Amortization of deferred policy acquisition costs
     33,108       36,356       29,587       27,712       27,776  
Other operating costs and expenses
     13,550       12,549       12,451       11,154       11,582  
Total benefits and expenses
     124,293       120,907       121,259       174,053       230,923  
                                         
Operating income before income taxes
     35,296       28,637       27,191       25,642       25,061  
Income tax expense
     12,181       9,960       9,457       8,622       8,639  
                                         
Operating income (a)
     23,115       18,677       17,734       17,020       16,422  
Realized gains (losses) on investments, net of offsets
     (39,222 )     (8,910 )     (1,008 )     (2,283 )     210  
Net effect of SFAS 133, net of offsets
     5,105       (5,000 )     32,426       (19,735 )     (13,189 )
                                         
Net income (loss)
   $ (11,002 )   $ 4,767     $ 49,152     $ (4,998 )   $ 3,443  
                                         
Operating income per common share (a)   $
0.44
     $
0.35
     $
0.32
     $
0.30
     $
0.29
  
Operating income per common share – assuming dilution (a)   $
0.42
     $
0.33
     $
0.31
     $
0.29
     $
0.28
  
Earnings (loss) per common share   $
(0.21
 )    $
0.09
     $
0.89
     $
(0.09
 )    $
0.06
  
Earnings (loss) per common share – assuming dilution   $
(0.19
 )    $
0.09
     $
0.85
     $
(0.08
 )    $
0.06
  
                                         
Weighted average common shares outstanding (in thousands):                                        
Earnings (loss) per common share    
52,916
       53,934      
55,431
      
56,348
      
56,878
  
Earnings (loss) per common share - assuming dilution    
55,835
       56,856      
58,221
      
59,154
      
59,774
  
 
 
(a)
In addition to net income (loss), we have consistently utilized operating income, operating income per common share 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 (loss) adjusted to eliminate the impact of net realized gains and losses on investments including related deferred tax valuation allowance and the impact of SFAS 133, dealing with 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 (loss), provides information that may enhance an investor’s understanding of our underlying results and profitability.
 
Page 6
American Equity Investment Life Holding Company
Financial Supplement – September 30, 2008
 
 
             
   
September 30,
2008
    
December 31,
2007
  
   
(Dollars in thousands, except per share data)
  
Capitalization:
            
Notes payable
   $ 272,629     $ 268,339  
Subordinated debentures payable to subsidiary trusts
      268,176       268,330  
Total debt
     540,805       536,669  
                 
Total stockholders’ equity
     520,538       611,635  
                 
Total capitalization
     1,061,343       1,148,304  
Accumulated other comprehensive loss (AOCL)
     143,156       38,929  
Total capitalization excluding AOCL (a)
   $ 1,204,499     $ 1,187,233  
                 
Total stockholders’ equity
   $ 520,538     $ 611,635  
Accumulated other comprehensive loss
     143,156       38,929  
Total stockholders’ equity excluding AOCL (a)
   $ 663,694     $ 650,564  
                 
Common shares outstanding (b)
     52,494,480       55,919,585  
                 
Book Value per Share: (c)
                
Book value per share including AOCL
   $ 9.92     $ 10.94  
Book value per share excluding AOCL (a)
   $ 12.64     $ 11.63  
Book value per share excluding AOCL and SFAS 133 (a)
   $ 12.65     $ 12.22  
                 
Debt-to-Capital Ratios: (d)
                
Senior debt / Total capitalization
     22.6 %     22.6 %
Adjusted debt / Total capitalization
     29.9 %     30.2 %

 
(a)
Total capitalization, total stockholders’ equity and book value per share excluding AOCL, non-GAAP financial measures, are based on stockholders’ equity excluding the effect of AOCL.  Since AOCL 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.  Book value per share excluding AOCL and SFAS 133 is a non-GAAP financial measure based on stockholders’ equity excluding the effect of AOCL and the cumulative impact on stockholders’ equity of SFAS 133, dealing with fair value changes in derivatives and embedded derivatives.  Because the cumulative impact of SFAS 133 fluctuates in a manner unrelated to core operations, we believe this non-GAAP financial measure provides useful supplemental information.

 
(b)
Common shares outstanding include shares held by the NMO Deferred Compensation Trust: 2008 - 2,353,053 shares; 2007 - 2,993,148 shares and exclude unallocated shares held by ESOP: 2008 - 600,228 shares; 2007 - 629,565 shares.
 
 
(c)
Book value per share including and excluding AOCL is calculated as total stockholders’ equity and total stockholders’ equity  excluding AOCL divided by the total number of shares of common stock outstanding.  Book value excluding AOCL and the impact of SFAS 133 is calculated as total stockholders’ equity excluding AOCL adjusted to eliminate the cumulative impact on stockholders’ equity of SFAS 133 divided by the total number of shares of common stock outstanding.
 
 
(d)
Debt-to-capital ratios are computed using total capitalization excluding AOCL.  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 including AOCL.
 
Page 7
American Equity Investment Life Holding Company
Financial Supplement – September 30, 2008
 
   
Nine Months Ended
September 30,
    
Year Ended
December 31,
  
Product Type  
2008
    
2007
    
2007
  
   
(Dollars in thousands)
  
Index Annuities:
                  
Index Strategies
   $ 1,040,534     $ 1,176,547     $ 1,578,347  
Fixed Strategy
     669,052       392,182       515,229  
      1,709,586       1,568,729       2,093,576  
Fixed Rate Annuities:
                        
Single-Year Rate Guaranteed
     21,350       37,840       45,948  
Multi-Year Rate Guaranteed
     4,065       4,211       5,158  
      25,415       42,051       51,106  
Total before coinsurance ceded
     1,735,001       1,610,780       2,144,682  
Coinsurance ceded
     1,149       1,461       1,779  
Net after coinsurance ceded
   $ 1,733,852     $ 1,609,319     $ 2,142,903  



 
 
 
Annuity Surrender Charges and Net (of coinsurance) Account Values at September 30, 2008
   
Surrender Charge
    
Net Account Value
  
Product Type
  
Avg. Years
 At Issue
    
Avg.
Years
Remaining
    
Avg.
%
Remaining
    
Dollars in Thousands
    
%
  
                               
Index Annuities
     14.2       11.1       15.0 %   $ 12,065,061       86.9 %
Single-Year Fixed Rate Guaranteed Annuities
     10.6        4.7       7.5 %     1,377,535       9.9 %
Multi-Year Fixed Rate Guaranteed Annuities
      7.1        2.6       5.6 %     446,214       3.2 %
                                         
Total
     13.6       10.2       14.0 %   $ 13,888,810       100.0 %
 
Page 8
American Equity Investment Life Holding Company
Financial Supplement – September 30, 2008
 
 
   
Fixed
Annuities
Account Value
    
Index
Annuities
Account Value
  
   
(Dollars in thousands)
  
SURRENDER CHARGE PERCENTAGES (1):
            
No surrender charge
   $ 194,680     $ 107,641  
0.0% <   2.0%
     14,613       7,967  
2.0% <   3.0%
     96,522       21,396  
3.0% <   4.0%
     48,905       94,065  
4.0% <   5.0%
     112,220       162,730  
5.0% <   6.0%
     60,685       155,921  
6.0% <   7.0%
     231,607       464,202  
7.0% <   8.0%
     290,060       339,939  
8.0% <   9.0%
     231,156       381,936  
9.0% < 10.0%
     61,557       385,778  
10.0% or greater
     481,744       9,943,486  
    $ 1,823,749     $ 12,065,061  
             
   
Fixed and
    
Weighted
  
   
Index
    
Average
  
   
Annuities
    
Surrender
  
   
Account Value
    
Charge
  
   
(Dollars in thousands)
          
SURRENDER CHARGE EXPIRATION BY YEAR
                
Out of Surrender Charge
   $ 302,321       0.00 %
2008
     30,807       5.63 %
2009
     343,559       6.20 %
2010
     385,232       4.95 %
2011
     359,599       5.68 %
2012
     531,827       6.66 %
2013
     685,258       7.10 %
2014
     648,576       8.20 %
2015
     599,663       10.34 %
2016
     812,191       11.43 %
2017
     1,015,148       12.39 %
2018
     897,586       14.28 %
2019
     503,089       13.71 %
2020
     640,488       14.86 %
2021
     634,146       16.57 %
2022
     1,245,671       18.42 %
2023
     2,542,268       19.40 %
2024
     1,682,987       19.91 %
2025
     28,394       20.00 %
    $ 13,888,810       13.98 %
 
Page 9
American Equity Investment Life Holding Company
Financial Supplement – September 30, 2008
 

Annuity Liability Characteristics
   
Fixed
 Annuities
Account Value
    
Index
Annuities
Account Value
  
   
(Dollars in thousands)
  
APPLICABLE GUARANTEE PERIOD:
            
Annual reset (2)
   $ 1,630,210     $ 11,937,832  
Multi-year (3 - 5 years)
     193,539       127,229  
    $ 1,823,749     $ 12,065,061  
                 
ULTIMATE MINIMUM GUARANTEE RATE (3):                
2.00%   $
–
     $
1,396
  
2.20%    
4,785
      
88,279
  
2.25%    
–
      
1,415,869
  
2.25% (3)    
228,192
      
1,134,540
  
3.00%    
1,508,544
      
7,910,970
  
3.50% (4)    
–
      
1,514,007
  
4.00%    
82,228
      
–
  
    $ 
1,823,749
     $
12,065,061
  
                 
CREDITED RATE (INCLUDING BONUS INTEREST) VS.
ULTIMATE MINIMUM GUARANTEED RATE DIFFERENTIAL
(5) (6):
                
No differential   $
76,491
     $
–
  
› 0.0% - 0.5%    
1,241,851
      
2,313,071
  
› 0.5% - 1.0%    
318,314
      
886,287
  
› 1.0% - 1.5%    
130,426
      
119,558
  
› 1.5% - 2.0%    
32,271
      
90
  
› 2.0% - 2.5%    
11,607
      
–
  
› 2.5% - 3.0%    
11,385
      
–
  
Greater than 3.0%    
1,404
      
–
  
Index strategies    
–
      
8,746,055
  
    $
1,823,749
     $ 
12,065,061
  
 
(1)
In addition, $1,115,189 (61%) of the Fixed Annuities Account Value have market value adjustment protection.
(2)
The contract features for substantially all of the Index Annuities Account Value provide for the annual reset of contractual features that effect the cost of money.  The contract features for less than .5% of the Index Annuities Account Value are reset every two years.
(3)
Products have a guarantee of 2.25% for the first 10 years, and 3.00% thereafter.
(4)
Rates applicable to the minimum guaranteed surrender value are 3.50% for the first 5 years, and 3.00% thereafter (applied to less than 100% of the annuity deposits received).  Minimum guaranteed rates for amounts allocated to the fixed rate strategy are 2.25% for the first 10 years, and 3.00% thereafter.
(5)
Recent issues may contain bonus interest rates ranging from 1.0% to 3.0%.
(6)
Includes products with multi-year guarantees for which the credited rate cannot be decreased to the ultimate minimum guaranteed rate until the end of the multi-year period.  The weighted average differential between the current credited rate and the ultimate minimum guaranteed rate on the multi-year guarantee fixed annuity account values was approximately 130 basis points.
 
Page 10
American Equity Investment Life Holding Company
Financial Supplement – September 30, 2008
 
 
   
Nine Months Ended
September 30,
    
Year Ended
December 31,
  
   
2008
    
2007
    
2007
  
Average yield on invested assets
    
6.18%
      
6.09%
      
6.11%
  
Cost of money:
                        
Aggregate
    
3.45%
      
3.44%
      
3.50%
  
Cost of money for index annuities
    
3.46%
      
3.42%
      
3.51%
  
Average crediting rate for fixed rate annuities:
                        
Annually adjustable
    
3.26%
      
3.28%
      
3.28%
  
Multi-year rate guaranteed
    
3.90%
      
4.18%
      
4.14%
  
Investment spread:
                        
Aggregate
    
2.73%
      
2.65%
      
2.61%
  
Index annuities
    
2.72%
      
2.67%
      
2.60%
  
Fixed rate annuities:
                        
Annually adjustable
    
2.92%
      
2.81%
      
2.83%
  
Multi-year rate guaranteed
    
2.28%
      
1.91%
      
1.97%
  
 
Page 11
American Equity Investment Life Holding Company
Financial Supplement – September 30, 2008

 
   
September 30, 2008
    
December 31, 2007
  
   
Carrying
Amount
    
 
Percent
    
Carrying
Amount
    
 
Percent
  
   
(Dollars in thousands)
  
                         
Fixed maturity securities:
                        
United States Government full faith
and credit
   $ 20,742       0.2 %   $ 19,882       0.2 %
United States Government sponsored
agencies
       7,558,024       57.7 %       8,208,909       65.1 %
Corporate securities, including redeemable
preferred stocks
       1,471,718       11.2 %       1,419,129       11.2 %
Mortgage and asset-backed securities
     1,602,304       12.2 %     716,585       5.7 %
Total fixed maturity securities
     10,652,788       81.3 %     10,364,505       82.2 %
Equity securities
     111,983       0.9 %     87,412       0.7 %
Mortgage loans on real estate
     2,280,741       17.4 %     1,953,894       15.5 %
Derivative instruments
     50,161       0.4 %     204,657       1.6 %
Policy loans
     437       –       427       –  
    $ 13,096,110       100.0 %   $ 12,610,895       100.0 %
 
Page 12
American Equity Investment Life Holding Company
Financial Supplement – September 30, 2008
 
 
           
September 30, 2008
    
December 31, 2007
  
NAIC
Designation
    
Rating Agency
Equivalent
    
Carrying
Amount
    
 
Percent
    
Carrying
Amount
    
 
Percent
  
           
(Dollars in thousands)
  
                                 
 1
    
Aaa/Aa/A
     $ 9,561,681       89.8 %   $ 9,361,755       90.3 %
 2
    
Baa
       942,494       8.9 %     915,259       8.8 %
 3
    
Ba
       95,113       0.9 %     53,784       0.5 %
 4
     B       14,523       0.1 %     20,310       0.3 %
 5
    
Caa and lower
       14,801       0.1 %     13,397       0.1 %
 6
    
In or near default
       24,176       0.2 %     –       –  
            $ 10,652,788       100.0 %   $ 10,364,505       100.0 %




 
General Description
  
Amortized
Cost
    
Unrealized
Losses
    
Estimated
Fair Value
    
Months Unrealized
Losses Greater
Than 20%
  
             
 
Corporate bonds:
                        
Finance, insurance and real estate companies
   $ 57,140     $ (21,898 )   $ 35,242      
0 - 8
  
U.S. retail company
     10,499       (2,905 )     7,594      
8
  
Consumer staple company
     9,557       (2,256 )     7,301      
1
  
Home builder
     9,916       (3,002 )     6,914      
1
  
Natural resources company
     4,400       (1,067 )     3,333      
1
  
Preferred stocks:
                                
Finance, insurance and real estate companies
     181,730       (71,882 )     109,848      
0 - 8
  
Telecommunication and media companies
     9,433       (3,096 )     6,337      
4 - 5
  
    $ 282,675     $ (106,106 )   $ 176,569          
 
Page 13
American Equity Investment Life Holding Company
Financial Supplement – September 30, 2008
 
 
   
September 30, 2008
    
December 31, 2007
  
   
Carrying
Amount
    
Percent
    
Carrying
Amount
    
Percent
  
   
(Dollars in thousands)
  
Geographic distribution
                        
East
   $ 521,503       22.9 %   $ 458,418       23.5 %
Middle Atlantic
     162,566       7.1 %     133,662       6.8 %
Mountain
     373,268       16.3 %     310,244       15.9 %
New England
     44,922       2.0 %     45,618       2.3 %
Pacific
     188,905       8.3 %     141,264       7.2 %
South Atlantic
     410,356       18.0 %     344,800       17.7 %
West North Central
     396,410       17.4 %     356,334       18.2 %
West South Central
     182,811       8.0 %     163,554       8.4 %
    $ 2,280,741       100.0 %   $ 1,953,894       100.0 %
                                 
                                 
Property type distribution                                
Office   $ 641,109       28.1 %    $ 586,109       30.0 % 
Medical Office     137,947       6.0 %      108,667       5.6 % 
Retail     532,731       23.4 %      438,214       22.4 % 
Industrial/Warehouse     543,079       23.8 %      453,654       23.2 % 
Hotel     154,725       6.8 %      115,758       5.9 % 
Apartments     110,368       4.8 %      105,431       5.4 % 
Mixed use/other     160,782       7.1 %      146,061       7.5 % 
    $ 2,280,741       100.0 %   $ 1,953,894       100.0 % 
 
Page 14
American Equity Investment Life Holding Company
Financial Supplement – September 30, 2008

 

Corporate Offices:

American Equity Investment Life Holding Company
5000 Westown Parkway Suite 440
West Des Moines, IA 50266

Inquiries:

D.J. Noble, Chairman
(515) 457-1703, dnoble@american-equity.com
 
Debra J. Richardson, Senior Vice President
(515) 273-3551, drichardson@american-equity.com
 
John M. Matovina, Vice Chairman
(515) 457-1813, jmatovina@american-equity.com

Common Stock and Dividend Information:

New York Stock Exchange symbol: “AEL”
 
 
                     
Dividend
  
   
High
    
Low
    
Close
    
Declared
  
2008
                        
First Quarter
   $ 10.21     $ 6.82     $ 9.28     $ 0.00  
Second Quarter
   $ 11.63     $ 7.61     $ 8.15     $ 0.00  
Third Quarter
   $ 10.75     $ 7.27     $ 7.50     $ 0.00  
                                 
2007
                                
First Quarter
   $ 14.07     $ 12.17     $ 13.13     $ 0.00  
Second Quarter
   $ 13.97     $ 11.37     $ 12.08     $ 0.00  
Third Quarter
   $ 12.55     $ 9.51     $ 10.65     $ 0.00  
Fourth Quarter
   $ 11.25     $ 8.09     $ 8.29     $ 0.06  
                                 
2006
                                
First Quarter
   $ 14.34     $ 12.76     $ 14.34     $ 0.00  
Second Quarter
   $ 14.60     $ 10.66     $ 10.66     $ 0.00  
Third Quarter
   $ 12.55     $ 10.07     $ 12.27     $ 0.00  
Fourth Quarter
   $ 13.44     $ 11.90     $ 13.03     $ 0.05  
 

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 15
American Equity Investment Life Holding Company
Financial Supplement – September 30, 2008
 
 

Steven Schwartz
Raymond James & Associates, Inc.
(312) 612-7686
steven.schwartz@raymondjames.com
 
Mark Finkelstein
Fox-Pitt Kelton
Cochran Caronia Waller
(312) 425-4079
mfinkelstein@ccwco.com

Elizabeth C. Malone
KeyBanc Capital Markets
(917) 368-2230
bmalone@keybanccm.com

Keith F. Walsh
Citigroup Investment Research
(212) 816-5452
keith.f.walsh@citigroup.com

Randy Binner
Friedman, Billings, Ramsey & Co., Inc.
(703) 312-1890
rbinner@fbr.com
 
 
Page 16