AMERICAN EQUITY INVESTMENT LIFE HOLDING CO - FORM 8-K - EX-99.2 - EXHIBIT 99.2

Attached files

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8-K - AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY 8-K - AMERICAN EQUITY INVESTMENT LIFE HOLDING CO	a20111231ael8k.htm
EX-99.1 - EXHIBIT 99.1 - AMERICAN EQUITY INVESTMENT LIFE HOLDING CO	a20111231ael8kexhibit991.htm

Exhibit 99.2

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement

December 31, 2011



A.	Financial Highlights
	Condensed Consolidated Balance Sheets	1
	Consolidated Statements of Operations	2
	Operating Income
	Year Ended December 31, 2011	3
	Three Months Ended December 31, 2011	4
	Quarterly Summary - Most Recent 5 Quarters	5
	Capitalization/Book Value per Share	6

B.	Product Summary
	Annuity Deposits by Product Type	7
	Surrender Charge Protection and Account Values by Product Type	7
	Annuity Liability Characteristics	8
	Spread Results	10

C.	Investment Summary
	Summary of Invested Assets	10
	Credit Quality of Fixed Maturity Securities	11
	Summary of Residential Mortgage Backed Securities	11
	Fixed Maturity Securities by Sector	12
	Watch List Securities	13
	Mortgage Loans on Commercial Real Estate	13

D.	Shareholder Information	14

E.	Research Analyst Coverage	15

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-December 31, 2011

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(Unaudited)



	December 31, 2011			December 31, 2010
Assets
Investments:
Fixed maturity securities:
Available for sale, at fair value	$	18,464,109		$	15,830,663
Held for investment, at amortized cost	2,644,206			822,200
Equity securities, available for sale, at fair value	62,845			65,961
Mortgage loans on real estate	2,823,047			2,598,641
Derivative instruments	273,314			479,786
Other investments	115,930			19,680
Total investments	24,383,451			19,816,931

Cash and cash equivalents	404,952			597,766
Coinsurance deposits	2,818,642			2,613,191
Accrued investment income	228,937			167,645
Deferred policy acquisition costs	1,683,857			1,747,760
Deferred sales inducements	1,242,787			1,227,328
Deferred income taxes	21,981			143,253
Income taxes recoverable	8,441			6,134
Other assets	81,671			106,755
Total assets	$	30,874,719		$	26,426,763

Liabilities and Stockholders' Equity
Liabilities:
Policy benefit reserves	$	28,118,716		$	23,655,807
Other policy funds and contract claims	400,594			222,860
Notes payable	297,608			330,835
Subordinated debentures	268,593			268,435
Other liabilities	380,529			1,010,779
Total liabilities	29,466,040			25,488,716

Stockholders' equity:
Common stock	57,837			56,968
Additional paid-in capital	468,281			454,454
Unallocated common stock held by ESOP	(3,620		)	(4,815		)
Accumulated other comprehensive income	457,229			81,820
Retained earnings	428,952			349,620
Total stockholders' equity	1,408,679			938,047
Total liabilities and stockholders' equity	$	30,874,719		$	26,426,763

Page 1

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-December 31, 2011

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share data)

(Unaudited)



	Three Months Ended December 31,						Year Ended December 31,
	2011			2010			2011			2010
Revenues:
Traditional life and accident and health insurance premiums	$	2,820		$	2,871		$	12,151		$	11,982
Annuity product charges	18,930			16,402			76,189			69,075
Net investment income	324,272			277,876			1,218,780			1,036,106
Change in fair value of derivatives	92,269			201,604			(114,728		)	168,862
Net realized gains (losses) on investments, excluding other than temporary impairment ("OTTI") losses	698			1,462			(18,641		)	23,726
OTTI losses on investments:
Total OTTI losses	(9,834		)	(3,197		)	(20,180		)	(19,544		)
Portion of OTTI losses recognized in (from) other comprehensive income	(6,451		)	(12,639		)	(13,796		)	(4,323		)
Net OTTI losses recognized in operations	(16,285		)	(15,836		)	(33,976		)	(23,867		)
Loss on extinguishment of debt	—			—			—			(292		)
Total revenues	422,704			484,379			1,139,775			1,285,592

Benefits and expenses:
Insurance policy benefits and change in future policy benefits	1,588			1,622			7,870			8,251
Interest sensitive and index product benefits (b)	154,440			148,376			775,757			733,218
Amortization of deferred sales inducements (c)	48,889			38,357			71,781			59,873
Change in fair value of embedded derivatives	33,031			142,463			(105,194		)	130,950
Interest expense on notes payable	7,910			7,861			31,633			22,125
Interest expense on subordinated debentures	3,542			3,700			13,977			14,906
Interest expense on amounts due under repurchase agreements	25			—			30			—
Amortization of deferred policy acquisition costs (c)	78,323			62,408			143,478			136,388
Other operating costs and expenses	17,518			65,715			67,529			114,615
Total benefits and expenses	345,266			470,502			1,006,861			1,220,326
Income before income taxes	77,438			13,877			132,914			65,266
Income tax expense	27,739			4,839			46,666			22,333
Net income (b) (c)	$	49,699		$	9,038		$	86,248		$	42,933

Earnings per common share (b) (c)	$	0.83		$	0.15		$	1.45		$	0.73
Earnings per common share - assuming dilution (a) (b) (c)	$	0.79		$	0.14		$	1.37		$	0.68
Weighted average common shares outstanding (in thousands):
Earnings per common share	59,641			58,757			59,482			58,507
Earnings per common share - assuming dilution	63,582			65,054			63,619			64,580


(a)	The numerator for earnings per common share - assuming dilution is equal to net income 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 December 31, 2011 and 2010, and $1,034 and $1,035 for the year ended December 31, 2011 and 2010, respectively.


(b)	The year ended December 31, 2011, includes an adjustment recorded in the first quarter of 2011 to single premium immediate annuity reserves which reduced interest sensitive and index product benefits by $4.2 million and increased net income, earnings per common share and earnings per common share - assuming dilution by $2.7 million, $0.05 per share and $0.04 per share, respectively.


(c)	The year ended December 31, 2011, includes benefit from unlocking which reduced amortization of deferred sales inducements by $5.0 million and amortization of deferred policy acquisition costs by $9.1 million and increased net income, earnings per common share and earnings per common

share - assuming dilution by $9.1 million, $0.15 per share and $0.14 per share, respectively.

Page 2

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-December 31, 2011

Operating Income

Year ended December 31, 2011 (Unaudited)



				Adjustments
	As Reported			Realized Losses		Derivatives and Other Index Annuity		Operating Income (a)
	(Dollars in thousands, except per share data)
Revenues:
Traditional life and accident and health insurance premiums	$	12,151		$	—	$	—	$	12,151
Annuity product charges	76,189			—		—		76,189
Net investment income	1,218,780			—		—		1,218,780
Change in fair value of derivatives	(114,728		)	—		209,913		95,185
Net realized losses on investments, excluding other than temporary impairment ("OTTI") losses	(18,641		)	18,641		—		—
Net OTTI losses recognized in operations	(33,976		)	33,976		—		—
Total revenues	1,139,775			52,617		209,913		1,402,305

Benefits and expenses:
Insurance policy benefits and change in future policy benefits	7,870			—		—		7,870
Interest sensitive and index product benefits (b)	775,757			—		—		775,757
Amortization of deferred sales inducements (c)	71,781			9,659		35,498		116,938
Change in fair value of embedded derivatives	(105,194		)	—		84,192		(21,002		)
Interest expense on notes payable	31,633			—		—		31,633
Interest expense on subordinated debentures	13,977			—		—		13,977
Interest expense on amounts due under repurchase agreements	30			—		—		30
Amortization of deferred policy acquisition costs (c)	143,478			14,458		45,360		203,296
Other operating costs and expenses	67,529			—		—		67,529
Total benefits and expenses	1,006,861			24,117		165,050		1,196,028
Income before income taxes	132,914			28,500		44,863		206,277
Income tax expense	46,666			10,146		15,812		72,624
Net income (b) (c)	$	86,248		$	18,354	$	29,051	$	133,653

Earnings per common share (b) (c)	$	1.45						$	2.25
Earnings per common share - assuming dilution (b) (c)	$	1.37						$	2.12

(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 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.

(b)

The year ended December 31, 2011, includes an adjustment recorded in the first quarter of 2011 to single premium immediate annuity reserves which reduced interest sensitive and index product benefits by $4.2 million, increased net income and operating income by $2.7 million, increased earnings per common share and operating income per common share by $0.05 per share and increased earnings per common share - assuming dilution and operating income per common share - assuming dilution by $0.04 per share.


(c)	See note (c) on page 2 for discussion of the impact of unlocking on "As Reported" amounts and the first sentence of note (c) on page 5 for discussion of the impact of unlocking on "Operating Income" amounts.



Change in fair value of derivatives:
Proceeds received at expiration	$	454,212		$	—	$	454,212
Cost of money for fixed index annuities	(336,162		)	—		(336,162		)
Change in the difference between fair value and remaining option cost at beginning and end of period	(232,778		)	209,913		(22,865		)
	$	(114,728	)	$	209,913	$	95,185

Index credits included in interest credited to account balances	$	448,248				$	448,248

Page 3

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-December 31, 2011

Operating Income

Three months ended December 31, 2011 (Unaudited)



				Adjustments
	As Reported			Realized Losses			Derivatives and Other Index Annuity			Operating Income (a)
	(Dollars in thousands, except per share data)
Revenues:
Traditional life and accident and health insurance premiums	$	2,820		$	—		$	—		$	2,820
Annuity product charges	18,930			—			—			18,930
Net investment income	324,272			—			—			324,272
Change in fair value of derivatives	92,269			—			(93,544		)	(1,275		)
Net realized losses on investments, excluding other than temporary impairment ("OTTI") losses	698			(698		)	—			—
Net OTTI losses recognized in operations	(16,285		)	16,285			—			—
Total revenues	422,704			15,587			(93,544		)	344,747

Benefits and expenses:
Insurance policy benefits and change in future policy benefits	1,588			—			—			1,588
Interest sensitive and index product benefits	154,440			—			—			154,440
Amortization of deferred sales inducements	48,889			2,613			(19,981		)	31,521
Change in fair value of embedded derivatives	33,031			—			(9,132		)	23,899
Interest expense on notes payable	7,910			—			—			7,910
Interest expense on subordinated debentures	3,542			—			—			3,542
Interest expense on amounts due under repurchase agreements	25			—			—			25
Amortization of deferred policy acquisition costs	78,323			4,253			(29,051		)	53,525
Other operating costs and expenses	17,518			—			—			17,518
Total benefits and expenses	345,266			6,866			(58,164		)	293,968
Income before income taxes	77,438			8,721			(35,380		)	50,779
Income tax expense	27,739			3,105			(12,667		)	18,177
Net income	$	49,699		$	5,616		$	(22,713	)	$	32,602

Earnings per common share	$	0.83								$	0.55
Earnings per common share - assuming dilution	$	0.79								$	0.52

(a)



Change in fair value of derivatives:
Proceeds received at expiration	$	65,495		$	—		$	65,495
Cost of money for fixed index annuities	(90,493		)	—			(90,493		)
Change in the difference between fair value and remaining option cost at beginning and end of period	117,267			(93,544		)	23,723
	$	92,269		$	(93,544	)	$	(1,275	)

Index credits included in interest credited to account balances	$	65,036					$	65,036

Page 4

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-December 31, 2011

Operating Income/Net Income

Quarterly Summary - Most Recent 5 Quarters (Unaudited)



	Q4 2011			Q3 2011			Q2 2011			Q1 2011			Q4 2010
	(Dollars in thousands, except per share data)
Revenues:
Traditional life and accident and health insurance premiums	$	2,820		$	3,126		$	3,289		$	2,916		$	2,871
Annuity product charges	18,930			20,405			19,892			16,962			16,402
Net investment income	324,272			305,502			296,878			292,128			277,876
Change in fair value of derivatives	(1,275		)	12,411			69,316			14,733			29,401
Total revenues	344,747			341,444			389,375			326,739			326,550

Benefits and expenses:
Insurance policy benefits and change in future policy benefits	1,588			1,888			2,499			1,895			1,622
Interest sensitive and index product benefits (b)	154,440			223,232			238,420			159,665			148,320
Amortization of deferred sales inducements (c)	31,521			24,279			30,866			30,272			27,719
Change in fair value of embedded derivatives	23,899			(41,447		)	(8,723		)	5,269			28,112
Interest expense on notes payable	7,910			7,984			7,832			7,907			7,861
Interest expense on subordinated debentures	3,542			3,488			3,481			3,466			3,700
Interest expense on amounts due under repurchase agreements	25			—			1			4			—
Amortization of deferred policy acquisition costs (c)	53,525			42,197			53,815			53,759			50,788
Other operating costs and expenses	17,518			15,903			16,634			17,474			17,715
Total benefits and expenses	293,968			277,524			344,825			279,711			285,837
Operating income before income taxes	50,779			63,920			44,550			47,028			40,713
Income tax expense	18,177			22,456			15,537			16,454			14,319
Operating income (a) (b) (c)	32,602			41,464			29,013			30,574			26,394
Net realized gains (losses) and net OTTI losses on investments, net of offsets	(5,616		)	(8,988		)	(1,278		)	(2,472		)	(4,687		)
Net effect of derivatives and other index annuity, net of offsets	22,713			(45,544		)	(9,461		)	3,241			14,628
Litigation settlement, net of offsets	—			—			—			—			(27,297		)
Net income (loss) (b) (c)	$	49,699		$	(13,068	)	$	18,274		$	31,343		$	9,038

Operating income per common share (a) (b) (c)	$	0.55		$	0.70		$	0.48		$	0.52		$	0.45
Operating income per common share - assuming dilution (a) (b) (c)	$	0.52		$	0.67		$	0.45		$	0.47		$	0.41
Earnings (loss) per common share (b) (c)	$	0.83		$	(0.22	)	$	0.31		$	0.53		$	0.15
Earnings (loss) per common share - assuming dilution (b) (c)	$	0.79		$	(0.22	)	$	0.28		$	0.48		$	0.14

Weighted average common shares outstanding (in thousands):
Earnings (loss) per common share	59,641			59,596			59,504			59,182			58,757
Earnings (loss) per common share - assuming dilution	63,582			62,698			65,530			65,711			65,054

(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 net OTTI losses recognized in operations, fair value changes in derivatives and embedded derivatives and the settlement of a class action lawsuit. 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.

(b)

Q1 2011 includes an adjustment to single premium immediate annuity reserves which reduced interest sensitive and index product benefits by $4.2 million, increased operating income and net income by $2.7 million, increased operating income per common share and earnings per common share by $0.05 per share and increased operating income per common share - assuming dilution and earnings per common share - assuming dilution by $0.04 per share.

(c)

Q3 2011 (and the year ended December 31, 2011 - see page 3) includes benefit from unlocking which reduced amortization of deferred sales inducements by $7.3 million and amortization of deferred policy acquisition costs by $12.1 million and increased operating income, operating income per common share and operating income per common share - assuming dilution by $12.5 million, $0.21 and $0.20, respectively. The unlocking benefit reduced the net loss, loss per common share and loss per common share - assuming dilution for Q3 2011 by $9.1 million, $0.15 and $0.15, respectively.

Page 5

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-December 31, 2011

Capitalization/Book Value per Share



	December 31, 2011			December 31, 2010
	(Dollars in thousands, except per share data)
Capitalization:
Notes payable	$	297,608		$	330,835
Subordinated debentures payable to subsidiary trusts	268,593			268,435
Total debt	566,201			599,270
Total stockholders’ equity	1,408,679			938,047
Total capitalization	1,974,880			1,537,317
Accumulated other comprehensive income (AOCI)	(457,229		)	(81,820		)
Total capitalization excluding AOCI (a)	$	1,517,651		$	1,455,497

Total stockholders’ equity	$	1,408,679		$	938,047
Accumulated other comprehensive income	(457,229		)	(81,820		)
Total stockholders’ equity excluding AOCI (a)	$	951,450		$	856,227

Common shares outstanding (b)	59,131,995			58,377,233

Book Value per Share: (c)
Book value per share including AOCI	$	23.82		$	16.07
Book value per share excluding AOCI (a)	$	16.09		$	14.67

Debt-to-Capital Ratios: (d)
Senior debt / Total capitalization	19.6		%	22.7		%
Adjusted debt / Total capitalization	22.3		%	26.2		%


(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: 2011 - 1,631,548 shares; 2010 - 1,855,835 shares and exclude unallocated shares held by ESOP: 2011 - 336,093 shares; 2010 - 447,048 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 including AOCI.

Page 6

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-December 31, 2011

Annuity Deposits by Product Type



	Three Months Ended December 31,				Year Ended December 31,
Product Type	2011		2010		2011		2010
	(Dollars in thousands)
Fixed Index Annuities:
Index Strategies	$	763,495	$	871,622	$	2,839,295	$	2,401,891
Fixed Strategy	391,263		459,711		1,377,987		1,551,007
	1,154,758		1,331,333		4,217,282		3,952,898
Fixed Rate Annuities:
Single-Year Rate Guaranteed	51,220		66,800		169,304		160,077
Multi-Year Rate Guaranteed	118,518		88,590		397,925		384,116
Single premium immediate annuities	47,608		67,761		305,603		171,628
	217,346		223,151		872,832		715,821
Total before coinsurance ceded	1,372,104		1,554,484		5,090,114		4,668,719
Coinsurance ceded	95,911		76,666		326,531		478,963
Net after coinsurance ceded	$	1,276,193	$	1,477,818	$	4,763,583	$	4,189,756

Surrender Charge Protection and Account Values by Product Type

Annuity Surrender Charges and Net (of coinsurance) Account Values at December 31, 2011:



	Surrender Charge			Net Account Value
Product Type	Avg. Years At Issue	Avg. Years Remaining	Avg. % Remaining	Dollars in Thousands		%

Fixed Index Annuities	14.3	10.8	16.2%	$	22,516,854	92.0	%
Single-Year Fixed Rate Guaranteed Annuities	11.1	4.7	7.9%	1,417,971		5.8	%
Multi-Year Fixed Rate Guaranteed Annuities	6.4	2.1	4.8%	548,293		2.2	%
Total	13.9	10.2	15.5%	$	24,483,118	100.0	%

Page 7

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-December 31, 2011

Annuity Liability Characteristics



	Fixed Annuities Account Value		Fixed Index Annuities Account Value
	(Dollars in thousands)
SURRENDER CHARGE PERCENTAGES (1):
No surrender charge	$	428,120	$	438,696
0.0% < 2.0%	37,924		67,501
2.0% < 3.0%	195,095		135,369
3.0% < 4.0%	40,700		400,992
4.0% < 5.0%	131,034		295,405
5.0% < 6.0%	22,339		271,729
6.0% < 7.0%	72,145		206,658
7.0% < 8.0%	200,553		338,594
8.0% < 9.0%	199,439		529,599
9.0% < 10.0%	184,907		692,204
10.0% or greater	454,008		19,140,107
	$	1,966,264	$	22,516,854



	Fixed and Fixed Index Annuities Account Value		Weighted Average Surrender Charge
	(Dollars in thousands)
SURRENDER CHARGE EXPIRATION BY YEAR:
Out of Surrender Charge	$	866,816	0.00	%
2012	369,176		2.01	%
2013	531,096		3.32	%
2014	572,283		4.60	%
2015	605,900		6.31	%
2016	864,733		7.73	%
2017	988,753		8.91	%
2018	874,429		11.21	%
2019	591,871		11.70	%
2020	929,352		12.99	%
2021	1,252,410		14.75	%
2022	1,096,906		16.42	%
2023	3,926,486		19.19	%
2024	4,247,497		19.24	%
2025	3,126,985		19.33	%
2026	1,763,006		19.50	%
2027	1,851,076		19.99	%
2028	24,343		20.00	%
	$	24,483,118	15.49	%

Page 8

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-December 31, 2011

Annuity Liability Characteristics



	Fixed Annuities Account Value		Fixed Index Annuities Account Value
	(Dollars in thousands)
APPLICABLE GUARANTEE PERIOD:
Annual reset (2)	$	1,691,483	$	22,506,345
Multi-year (3 - 7 years)	274,781		10,509
	$	1,966,264	$	22,516,854

ULTIMATE MINIMUM GUARANTEE RATE:
1.50%	$	92,367	$	3,671,106
2.00%	438,966		1,189
2.20%	4,381		72,380
2.25%	11,870		5,410,153
2.25% (3)	177,050		917,337
3.00% (4)	1,183,618		1,235,294
3.00% (5)	—		11,152,072
3.50% (6)	—		57,323
4.00%	58,012		—
	$	1,966,264	$	22,516,854

CREDITED RATE (INCLUDING BONUS INTEREST) VS. ULTIMATE MINIMUM GUARANTEED RATE DIFFERENTIAL (7):
No differential	$	139,668	$	74,776
› 0.0% - 0.25%	826,809		985,571
› 0.25% - 0.5%	136,630		288,291
› 0.5% - 1.0% (8)	345,999		1,113,289
› 1.0% - 1.5% (8)	141,959		25,452
› 1.5% - 2.0%	170,025		35,276
› 2.0% - 2.5%	6,265		—
› 2.5% - 3.0%	40,975		—
1.50% ultimate guarantee - 2.04% wtd avg interest rate (9)	48,665		1,011,100
2.00% ultimate guarantee - 2.81% wtd avg interest rate (9)	109,269		—
2.25% ultimate guarantee - 2.85% wtd avg interest rate (9)	—		1,520,458
3.00% ultimate guarantee - 3.09% wtd avg interest rate (9)	—		3,062,720
Cumulative floor	—		14,399,921
	$	1,966,264	$	22,516,854


(1)	In addition, $917,825 (46.7%) of the Fixed Annuities Account Value have market value adjustment protection.


(2)	The contract features for substantially all of the Fixed Index Annuities Account Value provide for the annual reset of contractual features that effect the cost of money. The contract features for less than 0.5% of the Fixed 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)	Products have a guarantee of 3.00% on 100% of the premium.


(5)	Products have a guarantee of 3.00% on less than 100% of the premium.


(6)	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.


(7)	Recent issues may contain bonus interest rates ranging from 1.0% to 3.0%.


(8)	$177,050 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. $644,070 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.


(9)	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.

Page 9

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-December 31, 2011

Spread Results



	Three Months Ended December 31,		Year Ended December 31,
	2011	2010	2011	2010
Reported Amounts
Average yield on invested assets	5.76%	6.02%	5.80%	6.06%
Aggregate cost of money	2.79%	2.88%	2.77%	2.91%
Aggregate investment spread	2.97%	3.14%	3.03%	3.15%

Adjustments
Investment yield - temporary cash investments	0.03%	0.16%	0.07%	0.17%
Investment yield - additional prepayment income	—%	(0.10)%	—%	(0.04)%
Cost of money benefit from over hedging	0.02%	0.06%	0.06%	0.10%

Adjusted Amounts
Average yield on invested assets	5.79%	6.08%	5.87%	6.19%
Aggregate cost of money	2.81%	2.94%	2.83%	3.01%
Aggregate investment spread	2.98%	3.14%	3.04%	3.18%

Summary of Invested Assets



	December 31, 2011				December 31, 2010
	Carrying Amount		Percent		Carrying Amount		Percent
	(Dollars in thousands)
Fixed maturity securities:
United States Government full faith and credit	$	4,678	—	%	$	4,388	—	%
United States Government sponsored agencies	4,338,895		17.8	%	3,750,065		18.9	%
United States municipalities, states and territories	3,405,769		14.0	%	2,382,150		12.1	%
Corporate securities	10,192,293		41.8	%	7,433,176		37.5	%
Residential mortgage backed securities	2,703,290		11.1	%	2,878,557		14.5	%
Other asset backed securities	463,390		1.9	%	204,527		1.0	%
Total fixed maturity securities	21,108,315		86.6	%	16,652,863		84.0	%
Equity securities	62,845		0.2	%	65,961		0.4	%
Mortgage loans on real estate	2,823,047		11.6	%	2,598,641		13.1	%
Derivative instruments	273,314		1.1	%	479,786		2.4	%
Other investments	115,930		0.5	%	19,680		0.1	%
	$	24,383,451	100.0	%	$	19,816,931	100.0	%

Page 10

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-December 31, 2011

Credit Quality of Fixed Maturity Securities - December 31, 2011



NAIC Designation	Carrying Amount		Percent		Rating Agency Rating	Carrying Amount		Percent
	(Dollars in thousands)					(Dollars in thousands)
1	$	15,469,765	73.3	%	Aaa/Aa/A	$	14,777,524	70.0	%
2	5,272,759		25.0	%	Baa	4,945,809		23.4	%
3	331,996		1.6	%	Ba	257,585		1.2	%
4	23,989		0.1	%	B	169,112		0.8	%
5	5,756		—	%	Caa and lower	858,694		4.1	%
6	4,050		—	%	In or near default	99,591		0.5	%
	$	21,108,315	100.0	%		$	21,108,315	100.0	%

Summary of Residential Mortgage Backed Securities



Collateral Type	Principal Amount		Amortized Cost		Fair Value
	(Dollars in thousands)
OTTI has not been recognized
Government agency	$	505,584	$	449,720	$	547,987
Prime	1,177,635		1,122,149		1,171,413
Alt-A	46,456		47,148		46,490
	$	1,729,675	$	1,619,017	$	1,765,890
OTTI has been recognized
Prime	$	693,276	$	616,653	$	590,477
Alt-A	471,586		382,370		346,923
	$	1,164,862	$	999,023	$	937,400
Total by collateral type
Government agency	$	505,584	$	449,720	$	547,987
Prime	1,870,911		1,738,802		1,761,890
Alt-A	518,042		429,518		393,413
	$	2,894,537	$	2,618,040	$	2,703,290
Total by NAIC designation
1	$	2,335,290	$	2,133,582	$	2,245,314
2	422,929		366,717		340,837
3	132,002		114,728		115,041
6	4,316		3,013		2,098
	$	2,894,537	$	2,618,040	$	2,703,290

Page 11

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-December 31, 2011

Fixed Maturity Securities by Sector



	December 31, 2011
	Amortized Cost	Fair Value
	(Dollars in thousands)
Available for sale:
United States Government full faith and credit and sponsored agencies	1,755,642	1,775,299
United States municipalities, states and territories	2,981,699	3,333,383
Foreign Government obligations	65,216	72,386
Corporate securities:
Consumer discretionary	885,834	992,042
Consumer staples	614,531	701,192
Energy	1,042,956	1,166,284
Financials	1,802,745	1,862,573
Health care	667,014	765,274
Industrials	1,029,933	1,151,961
Information technology	486,545	547,195
Materials	562,272	627,405
Military housing	5,331	5,482
Telecommunications	251,202	268,924
Utilities	1,727,993	1,988,764
Residential mortgage backed securities:
Government agency	449,720	547,987
Prime	1,738,702	1,761,890
Alt-A	429,518	393,413
Other asset backed securities:
Consumer discretionary	18,061	18,512
Consumer staples	5,000	5,038
Energy	8,338	8,680
Financials	160,994	162,892
Industrials	57,547	61,285
Military housing	142,903	152,549
Telecommunications	7,334	8,435
Utilities	14,762	17,221
Other	27,570	28,778
Redeemable preferred stock - financials	40,817	39,265
	16,980,179	18,464,109
Held for investment:
United States Government sponsored agencies	2,568,274	2,585,080
Corporate security - financials	75,932	59,342
	2,644,206	2,644,422

Page 12

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-December 31, 2011

Watch List Securities - December 31, 2011



General Description	Number of Securities	Amortized Cost		Unrealized Losses			Fair Value		Months Below Amortized Cost
		(Dollars in thousands)
Corporate bonds:
Finance	5	$	68,354	$	(22,202	)	$	46,152	0 - 13
Industrial	3	18,286		(4,151		)	14,135		5 - 16
	8	86,640		(26,353		)	60,287

Mortgage Loans on Commercial Real Estate



	December 31, 2011						December 31, 2010
	Principal			Percent			Principal		Percent
	(Dollars in thousands)
Geographic distribution
East	$	719,231		25.2		%	$	618,250	23.6	%
Middle Atlantic	169,240			5.9		%	172,443		6.6	%
Mountain	411,054			14.4		%	402,965		15.4	%
New England	36,815			1.3		%	42,695		1.6	%
Pacific	309,693			10.8		%	247,254		9.5	%
South Atlantic	493,764			17.3		%	496,606		19.0	%
West North Central	487,693			17.1		%	419,002		16.0	%
West South Central	228,521			8.0		%	215,650		8.3	%
	$	2,856,011		100.0		%	$	2,614,865	100.0	%

Property type distribution
Office	$	777,343		27.2		%	$	683,404	26.2	%
Medical Office	175,580			6.1		%	166,930		6.4	%
Retail	635,916			22.3		%	589,369		22.5	%
Industrial/Warehouse	710,426			24.9		%	666,908		25.5	%
Hotel	139,193			4.9		%	151,516		5.8	%
Apartment	187,548			6.6		%	131,682		5.0	%
Mixed use/other	230,005			8.0		%	225,056		8.6	%
	$	2,856,011		100.0		%	$	2,614,865	100.0	%

	December 31,
	2011			2010
Credit Exposure - By Payment Activity
Performing	$	2,743,068		$	2,501,843
In workout	67,425			68,477
Delinquent	6,595			20,482
Collateral dependent	38,923			24,063
	2,856,011			2,614,865
Specific Loan Loss Allowance	(23,664		)	(13,224		)
General Loan Loss Allowance	(9,300		)	(3,000		)
	$	2,823,047		$	2,598,641

Page 13

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-December 31, 2011

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

Debra J. Richardson, Executive Vice President and Secretary

(515) 273-3551, drichardson@american-equity.com

John M. Matovina, Vice Chairman, Chief Financial Officer and Treasurer

(515) 457-1813, jmatovina@american-equity.com

Wendy C. Waugaman, President and Chief Executive Officer

(515) 457-1824, wcwaugaman@american-equity.com

Common Stock and Dividend Information:

New York Stock Exchange symbol: “AEL”



	High	Low	Close	Dividend Declared
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

2010
First Quarter	$10.99	$6.65	$10.65	$0.00
Second Quarter	$11.64	$8.53	$10.32	$0.00
Third Quarter	$11.19	$9.19	$10.24	$0.00
Fourth Quarter	$13.01	$10.11	$12.55	$0.10

2009
First Quarter	$7.40	$2.96	$4.16	$0.00
Second Quarter	$8.86	$4.01	$5.58	$0.00
Third Quarter	$8.65	$5.24	$7.02	$0.00
Fourth Quarter	$8.40	$6.10	$7.44	$0.08

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 14

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement-December 31, 2011

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

Erik Bass

J.P. Morgan

(212) 622-2295

erik.bass@jpmorgan.com

Page 15

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