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

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8-K - 8-K - AMERICAN EQUITY INVESTMENT LIFE HOLDING CO	a2014-12x31_ael8k.htm
EX-99.1 - PRESS RELEASE - AMERICAN EQUITY INVESTMENT LIFE HOLDING CO	a2014-12x31_ael8kexhibit991.htm

Exhibit 99.2

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement

December 31, 2014



A.	Financial Highlights
	Condensed Consolidated Balance Sheets	1
	Consolidated Statements of Operations	2
	Quarterly Summary - Most Recent 5 Quarters	3
	Non-GAAP Financial Measures
	Reconciliation from Net Income to Operating Income	4
	Summary of Adjustments to Arrive at Operating Income	5
	Quarterly Summary - Reconciliation from Net Income (Loss) to Operating Income	6
	Quarterly Summary - Summary of Adjustments to Arrive at Operating Income	7
	Capitalization/Book Value per Share	8
	Spread Results	9

B.	Product Summary
	Summary of Cost of Money for Deferred Annuities	9
	Annuity Account Balance Rollforward	9
	Annuity Deposits by Product Type	10
	Surrender Charge Protection and Account Values by Product Type	10
	Annuity Liability Characteristics	11

C.	Investment Summary
	Summary of Invested Assets	14
	Credit Quality of Fixed Maturity Securities	14
	Watch List Securities	14
	Fixed Maturity Securities by Sector	15
	Mortgage Loans on Commercial Real Estate	16

D.	Shareholder Information	17

E.	Research Analyst Coverage	18

Table of Contents

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - December 31, 2014

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(Unaudited)



	December 31, 2014		December 31, 2013
Assets
Investments:
Fixed maturity securities:
Available for sale, at fair value	$	32,445,202	$	26,610,447
Held for investment, at amortized cost	76,432		76,255
Equity securities, available for sale, at fair value	7,805		7,778
Mortgage loans on real estate	2,434,580		2,581,082
Derivative instruments	731,113		856,050
Other investments	286,726		215,042
Total investments	35,981,858		30,346,654

Cash and cash equivalents	701,514		897,529
Coinsurance deposits	3,044,342		2,999,618
Accrued investment income	326,559		301,641
Deferred policy acquisition costs	2,058,556		2,426,652
Deferred sales inducements	1,587,257		1,875,880
Deferred income taxes	—		301,856
Income taxes recoverable	9,252		—
Other assets	280,396		471,669
Total assets	$	43,989,734	$	39,621,499

Liabilities and Stockholders' Equity
Liabilities:
Policy benefit reserves	$	39,802,861	$	35,789,655
Other policy funds and contract claims	365,819		418,033
Notes payable	421,679		549,958
Subordinated debentures	246,243		246,050
Deferred income taxes	3,895		—
Income taxes payable	—		10,153
Other liabilities	1,009,361		1,222,963
Total liabilities	41,849,858		38,236,812

Stockholders' equity:
Common stock	76,062		70,535
Additional paid-in capital	513,218		550,400
Unallocated common stock held by ESOP	—		(631		)
Accumulated other comprehensive income	721,401		46,196
Retained earnings	829,195		718,187
Total stockholders' equity	2,139,876		1,384,687
Total liabilities and stockholders' equity	$	43,989,734	$	39,621,499

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - December 31, 2014

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,
	2014			2013			2014			2013
Revenues:
Premiums and other considerations	$	10,126		$	10,838		$	32,623		$	45,347
Annuity product charges	32,513			32,148			118,990			103,591
Net investment income	403,849			363,947			1,531,667			1,383,927
Change in fair value of derivatives	146,231			444,985			504,825			1,076,015
Net realized gains (losses) on investments, excluding other than temporary impairment ("OTTI") losses	2,131			16,364			(4,003		)	40,561
OTTI losses on investments:
Total OTTI losses	—			—			—			(4,964		)
Portion of OTTI losses recognized from other comprehensive income	(564		)	—			(2,627		)	(1,270		)
Net OTTI losses recognized in operations	(564		)	—			(2,627		)	(6,234		)
Loss on extinguishment of debt	(1,951		)	(30,988		)	(12,502		)	(32,515		)
Total revenues	592,335			837,294			2,168,973			2,610,692

Benefits and expenses:
Insurance policy benefits and change in future policy benefits	11,624			13,279			41,815			53,071
Interest sensitive and index product benefits	359,319			390,956			1,473,700			1,272,867
Amortization of deferred sales inducements	34,743			69,121			131,419			253,113
Change in fair value of embedded derivatives	53,973			142,881			32,321			133,968
Interest expense on notes payable	8,244			11,885			36,370			38,870
Interest expense on subordinated debentures	3,046			3,027			12,122			12,088
Amortization of deferred policy acquisition costs	49,629			99,934			163,578			365,468
Other operating costs and expenses	20,996			26,886			81,584			91,915
Total benefits and expenses	541,574			757,969			1,972,909			2,221,360
Income before income taxes	50,761			79,325			196,064			389,332
Income tax expense	19,544			28,367			70,041			136,049
Net income	$	31,217		$	50,958		$	126,023		$	253,283

Earnings per common share	$	0.41		$	0.73		$	1.69		$	3.86
Earnings per common share - assuming dilution	$	0.39		$	0.64		$	1.58		$	3.38
Weighted average common shares outstanding (in thousands):
Earnings per common share	75,620			69,416			74,431			65,544
Earnings per common share - assuming dilution	80,154			79,041			79,894			75,041

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - December 31, 2014

Quarterly Summary - Most Recent 5 Quarters (Unaudited)



	Q4 2014			Q3 2014			Q2 2014			Q1 2014			Q4 2013
	(Dollars in thousands, except per share data)
Revenues:
Traditional life insurance premiums	$	2,537		$	2,615		$	2,854		$	2,804		$	2,452
Life contingent immediate annuity considerations	7,589			3,428			6,269			4,527			8,386
Surrender charges (a)	10,418			11,717			12,942			12,423			15,239
Lifetime income benefit rider fees	22,095			20,241			16,305			12,849			16,909
Net investment income	403,849			386,931			370,882			370,005			363,947
Change in fair value of derivatives	146,231			39,218			270,883			48,493			444,985
Net realized gains (losses) on investments, excluding OTTI	2,131			(3,190		)	(2,230		)	(714		)	16,364
Net OTTI losses recognized in operations	(564		)	(564		)	(594		)	(905		)	—
Loss on extinguishment of debt	(1,951		)	—			(6,574		)	(3,977		)	(30,988		)
Total revenues	592,335			460,396			670,737			445,505			837,294

Benefits and expenses:
Traditional life insurance policy benefits and change in future policy benefits	1,300			2,420			1,758			2,261			1,452
Life contingent immediate annuity benefits and change in future policy benefits	10,324			6,689			9,229			7,834			11,827
Interest sensitive and index product benefits (b)	359,319			429,415			367,774			317,192			390,956
Amortization of deferred sales inducements (c)	34,743			40,661			55,349			666			69,121
Change in fair value of embedded derivatives (d)	53,973			(195,206		)	80,935			92,619			142,881
Interest expense on notes payable	8,244			8,741			9,121			10,264			11,885
Interest expense on subordinated debentures	3,046			3,044			3,024			3,008			3,027
Amortization of deferred policy acquisition costs (c)	49,629			39,671			67,084			7,194			99,934
Other operating costs and expenses (e)(f)	20,996			20,616			20,887			19,085			26,886
Total benefits and expenses	541,574			356,051			615,161			460,123			757,969
Income (loss) before income taxes	50,761			104,345			55,576			(14,618		)	79,325
Income tax expense (benefit)	19,544			36,530			18,832			(4,865		)	28,367
Net income (loss) (a)(b)(c)(d)(e)(f)	$	31,217		$	67,815		$	36,744		$	(9,753	)	$	50,958

Earnings (loss) per common share	$	0.41		$	0.90		$	0.49		$	(0.13	)	$	0.73
Earnings (loss) per common share - assuming dilution (a)(b)(c)(d)(e)(f)	$	0.39		$	0.85		$	0.46		$	(0.13	)	$	0.64
Weighted average common shares outstanding (in thousands):
Earnings (loss) per common share	75,620			75,083			74,461			72,519			69,416
Earnings (loss) per common share - assuming dilution	80,154			79,467			79,518			79,616			79,041

(a)

Q4 2013 includes a benefit of $4.7 million from surrender charges deducted from California policyholders surrendering their policies as a condition of receiving certain benefits in a national class action lawsuit settlement, which after related adjustments to amortization of deferred sales inducements and deferred policy acquisition costs and income taxes, increased net income and earnings per common share - assuming dilution by $1.9 million and $0.02 per share, respectively.

(b)

Q3 2014 includes expense from the revision of assumptions used in determining reserves held for living income benefit riders consistent with unlocking for deferred policy acquisition costs and deferred sales inducements. The impact increased interest sensitive and index product benefits by $12.4 million and decreased net income and earnings per common share - assuming dilution by $8.0 million and $0.10 per share, respectively.


(c)	Q3 2014 includes benefit from unlocking which reduced amortization of deferred sales inducements and deferred policy acquisition costs by $12.6 million and $35.5 million, respectively, and increased net income and earnings per common share- assuming dilution by $31.0 million and $0.39 per share, respectively.


(d)	Q2 2014 includes a benefit of $62.6 million from the revision of assumptions used in determining fixed index annuity embedded derivatives, which after related adjustments to deferred sales inducements and deferred policy acquisition costs and income taxes, increased net income and earnings per common share - assuming dilution by $14.8 million and $0.19 per share, respectively.

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - December 31, 2014

(e)

Q1 2014 includes a net benefit of $2.2 million from recognizing a decrease in an estimated class action litigation reserve based upon developments in the claim process for settlement of the class action and third party costs incurred during the quarter associated with administration of the settlement, which after related adjustments to amortization of deferred sales inducements and deferred policy acquisition costs and income taxes, decreased net loss and loss per common share - assuming dilution by $0.9 million and $0.01 per share, respectively.

(f)

Q4 2013 includes expense of $4.2 million from recognizing an increase in an estimated class action litigation reserve based upon developments in the claim process for settlement of the class action litigation and third party costs incurred during the quarter associated with administration of the settlement, which after related adjustments to amortization of deferred sales inducements and deferred policy acquisition costs and income taxes, decreased net income and earnings per common share - assuming dilution by $1.9 million and $0.02 per share, respectively.

NON-GAAP FINANCIAL MEASURES

In addition to net income (loss), we have consistently utilized operating income 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, loss on extinguishment of debt and changes in litigation reserves. 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.

Reconciliation from Net Income to Operating Income (Unaudited)



	Three Months Ended December 31,						Year Ended December 31,
	2014			2013			2014			2013
	(Dollars in thousands, except per share data)
Net income	$	31,217		$	50,958		$	126,023		$	253,283
Adjustments to arrive at operating income: (a)
Net realized investment (gains) losses, including OTTI	(613		)	(6,214		)	2,863			(11,702		)
Change in fair value of derivatives and embedded derivatives - index annuities	16,463			(23,419		)	51,099			(98,704		)
Change in fair value of derivatives and embedded derivatives - debt	32			(4,290		)	61			(1,192		)
Litigation reserve	—			1,988			(916		)	19
Extinguishment of debt	3,604			20,823			11,516			21,716
Operating income (a non-GAAP financial measure)	$	50,703		$	39,846		$	190,646		$	163,420

Per common share - assuming dilution:
Net income	$	0.39		$	0.64		$	1.58		$	3.38
Adjustments to arrive at operating income:
Net realized investment (gains) losses, including OTTI	(0.01		)	(0.08		)	0.04			(0.16		)
Change in fair value of derivatives and embedded derivatives - index annuities	0.21			(0.30		)	0.64			(1.31		)
Change in fair value of derivatives and embedded derivatives - debt	—			(0.05		)	—			(0.02		)
Litigation reserve	—			0.03			(0.01		)	—
Extinguishment of debt	0.04			0.26			0.14			0.29
Operating income (a non-GAAP financial measure)	$	0.63		$	0.50		$	2.39		$	2.18


(a)	Adjustments to net income to arrive at operating income are presented net of income taxes and where applicable, are net of related adjustments to amortization of deferred sales inducements (DSI) and deferred policy acquisition costs (DAC).

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - December 31, 2014

NON-GAAP FINANCIAL MEASURES

Summary of Adjustments to Arrive at Operating Income (Unaudited)



	Three Months Ended December 31,						Year Ended December 31,
	2014			2013			2014			2013
	(Dollars in thousands)
Net realized investment gains and losses, including OTTI:
Net realized (gains) losses on investments, including OTTI	$	(1,567	)	$	(16,364	)	$	6,630		$	(34,327	)
Amortization of DAC and DSI	619			6,716			(2,201		)	16,157
Income taxes	335			3,434			(1,566		)	6,468
	$	(613	)	$	(6,214	)	$	2,863		$	(11,702	)
Change in fair value of derivatives and embedded derivatives:
Index annuities	$	61,891		$	(96,795	)	$	196,816		$	(397,722	)
2015 notes, note hedge and warrants	(2,062		)	(5,654		)	(6,293		)	5,791
Interest rate caps and swap	2,116			(1,681		)	6,397			(7,829		)
Amortization of DAC and DSI	(37,261		)	60,432			(117,764		)	244,455
Income taxes	(8,189		)	15,989			(27,996		)	55,409
	$	16,495		$	(27,709	)	$	51,160		$	(99,896	)
Litigation reserve:
Change in litigation reserve recorded in other operating costs	$	—		$	4,248		$	(2,212	)	$	1,036
Amortization of DAC and DSI	—			(1,162		)	795			(1,006		)
Income taxes	—			(1,098		)	501			(11		)
	$	—		$	1,988		$	(916	)	$	19
Extinguishment of debt:
Loss on extinguishment of debt	$	1,951		$	30,988		$	12,502		$	32,515
Income taxes	1,653			(10,165		)	(986		)	(10,799		)
	$	3,604		$	20,823		$	11,516		$	21,716

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - December 31, 2014

NON-GAAP FINANCIAL MEASURES

Quarterly Summary - Most Recent 5 Quarters (Unaudited)

Reconciliation from Net Income (Loss) to Operating Income



	Q4 2014			Q3 2014			Q2 2014			Q1 2014			Q4 2013
	(Dollars in thousands, except per share data)
Net income (loss)	$	31,217		$	67,815		$	36,744		$	(9,753	)	$	50,958
Adjustments to arrive at operating income: (a)
Net realized investment (gains) losses, including OTTI	(613		)	1,551			1,361			564			(6,214		)
Change in fair value of derivatives and embedded derivatives - index annuities	16,463			(4,957		)	(4,115		)	43,708			(23,419		)
Change in fair value of derivatives and embedded derivatives - debt	32			(427		)	(1,053		)	1,509			(4,290		)
Litigation reserve	—			—			—			(916		)	1,988
Extinguishment of debt	3,604			—			5,518			2,394			20,823
Operating income (a non-GAAP financial measure) (b)(c)(d)	$	50,703		$	63,982		$	38,455		$	37,506		$	39,846

Operating income per common share - assuming dilution (b)(c)(d)	$	0.63		$	0.81		$	0.48		$	0.47		$	0.50


(a)	Adjustments to net income (loss) to arrive at operating income are presented net of income taxes and where applicable, are net of related adjustments to amortization of deferred sales inducements and deferred policy acquisition costs.


(b)	Q3 2014 includes a benefit from unlocking which reduced amortization of deferred sales inducements and deferred policy acquisition costs by $10.7 million and $33.0 million, respectively, and increased operating income and operating income per common share- assuming dilution by $28.2 million and $0.36 per share, respectively.

(c)

Q3 2014 includes expense from the revision of assumptions used in determining reserves held for living income benefit riders consistent with unlocking for deferred policy acquisition costs and deferred sales inducements. The impact increased interest sensitive and index product benefits by $12.4 million and decreased operating income and operating income per common share - assuming dilution by $8.0 million and $0.10 per share, respectively.

(d)

Q4 2013 includes a benefit of $4.7 million from surrender charges deducted from California policyholders surrendering their policies as a condition of receiving certain benefits in a national class action lawsuit settlement, which after related adjustments to amortization of deferred sales inducements and deferred policy acquisition costs and income taxes, increased operating income and operating income per common share - assuming dilution by $2.0 million and $0.02 per share, respectively.

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - December 31, 2014

NON-GAAP FINANCIAL MEASURES

Summary of Adjustments to Arrive at Operating Income (Unaudited)



	Q4 2014			Q3 2014			Q2 2014			Q1 2014			Q4 2013
	(Dollars in thousands)
Net realized (gains) losses on investments	$	(2,131	)	$	3,190		$	2,230		$	714		$	(16,364	)
Net OTTI losses recognized in operations	564			564			594			905			—
Change in fair value of derivatives	19,033			171,274			(95,852		)	57,039			(209,083		)
Loss on extinguishment of debt	1,951			—			6,574			3,977			30,988
Increase (decrease) in total revenues	19,417			175,028			(86,454		)	62,635			(194,459		)

Amortization of deferred sales inducements	14,579			(3,886		)	(10,749		)	43,435			(27,797		)
Change in fair value of embedded derivatives	(42,912		)	188,383			(77,876		)	(113,021		)	(104,953		)
Amortization of deferred policy acquisition costs	22,063			(3,349		)	(1,242		)	58,319			(38,189		)
Other operating costs and expenses	—			—			—			2,212			(4,248		)
Increase (decrease) in total benefits and expenses	(6,270		)	181,148			(89,867		)	(9,055		)	(175,187		)
Increase (decrease) in income (loss) before income taxes	25,687			(6,120		)	3,413			71,690			(19,272		)
Increase (decrease) in income tax expense	6,201			(2,287		)	1,702			24,431			(8,160		)
Increase (decrease) in net income (loss)	$	19,486		$	(3,833	)	$	1,711		$	47,259		$	(11,112	)

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - December 31, 2014

Capitalization/Book Value per Share



	December 31, 2014			December 31, 2013
	(Dollars in thousands, except per share data)
Capitalization:
Notes payable:
September 2015 Notes	$	21,679		$	85,328
December 2029 Notes	—			64,630
July 2021 Notes	400,000			400,000
Subordinated debentures payable to subsidiary trusts	246,243			246,050
Total debt	667,922			796,008
Total stockholders’ equity	2,139,876			1,384,687
Total capitalization	2,807,798			2,180,695
Accumulated other comprehensive income (AOCI)	(721,401		)	(46,196		)
Total capitalization excluding AOCI (a)	$	2,086,397		$	2,134,499

Total stockholders’ equity	$	2,139,876		$	1,384,687
Accumulated other comprehensive income	(721,401		)	(46,196		)
Total stockholders’ equity excluding AOCI (a)	$	1,418,475		$	1,338,491

Common shares outstanding (b)	76,605,527			71,369,474

Book Value per Share: (c)
Book value per share including AOCI	$	27.93		$	19.40
Book value per share excluding AOCI (a)	$	18.52		$	18.75

Debt-to-Capital Ratios: (d)
Senior debt / Total capitalization	20.2		%	25.8		%
Adjusted debt / Total capitalization	20.2		%	25.8		%


(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: 2014 - 543,120 shares; 2013 - 892,688 shares and excludes unallocated shares held by the ESOP: 2014 - 0 shares; 2013 - 58,618 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 excluding AOCI.

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - December 31, 2014

Spread Results



	Three Months Ended December 31,		Year Ended December 31,
	2014	2013	2014	2013
Average yield on invested assets	4.95%	4.97%	4.90%	4.98%
Aggregate cost of money	2.03%	2.24%	2.10%	2.26%
Aggregate investment spread	2.92%	2.73%	2.80%	2.72%

Impact of:
Investment yield - additional prepayment income	0.13%	0.05%	0.07%	0.06%
Cost of money effect of over hedging	0.05%	(0.03)%	0.03%	0.02%

Weighted average investments (in thousands)	$32,770,087	$29,296,113	$31,316,916	$27,825,907

Weighted average investments include fixed maturity securities at amortized cost and equity securities at cost. The numerator for average yield on invested assets includes net investment income and the tax effect of investment income that is exempt from income taxes.

Summary of Cost of Money for Deferred Annuities



	Three Months Ended December 31,						Year Ended December 31,
	2014			2013			2014			2013
	(Dollars in thousands)
Included in interest sensitive and index product benefits:
Index credits	$	264,980		$	298,259		$	1,096,504		$	908,717
Interest credited	67,146			73,613			275,671			300,039
Included in change in fair value of derivatives:
Proceeds received at option expiration	(269,208		)	(294,985		)	(1,103,710		)	(910,413		)
Pro rata amortization of option cost	114,387			97,011			432,494			368,126
Cost of money for deferred annuities	$	177,305		$	173,898		$	700,959		$	666,469

Weighted average liability balance outstanding (in thousands)	$	34,870,894		$	31,045,862		$	33,363,490		$	29,537,682

Annuity Account Balance Rollforward



	Three Months Ended December 31,						Year Ended December 31,
	2014			2013			2014			2013
	(Dollars in thousands)
Account balances at beginning of period	$	34,378,748		$	30,552,874		$	31,535,846		$	27,669,672
Net deposits	1,090,724			1,033,423			3,988,881			3,977,730
Premium bonuses	88,803			87,467			330,080			337,787
Fixed interest credited and index credits	332,126			371,872			1,372,175			1,208,756
Surrender charges	(10,418		)	(15,239		)	(47,500		)	(49,193		)
Lifetime income benefit rider fees	(22,095		)	(16,909		)	(71,490		)	(54,398		)
Surrenders, withdrawals, deaths, etc.	(494,847		)	(477,642		)	(1,744,951		)	(1,554,508		)
Account balances at end of period	$	35,363,041		$	31,535,846		$	35,363,041		$	31,535,846

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - December 31, 2014

Annuity Deposits by Product Type



	Three Months Ended December 31,				Year Ended December 31,
Product Type	2014		2013		2014		2013
	(Dollars in thousands)
Fixed index annuities	$	1,116,333	$	1,008,314	$	3,999,439	$	3,882,424
Annual reset fixed rate annuities	13,914		15,392		57,273		71,944
Multi-year fixed rate annuities	12,902		63,150		103,293		205,978
Single premium immediate annuities	6,521		6,720		24,580		52,142
Total before coinsurance ceded	1,149,670		1,093,576		4,184,585		4,212,488
Coinsurance ceded	52,425		53,433		171,124		182,616
Net after coinsurance ceded	$	1,097,245	$	1,040,143	$	4,013,461	$	4,029,872

Surrender Charge Protection and Account Values by Product Type

Annuity Surrender Charges and Net (of coinsurance) Account Values at December 31, 2014:



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

Fixed Index Annuities	14.1	9.6	15.2%	$	33,417,791	94.5	%
Annual Reset Fixed Rate Annuities	11.0	4.1	7.9%	1,430,228		4.0	%
Multi-Year Fixed Rate Annuities (a)	6.3	1.4	4.1%	515,022		1.5	%
Total	13.8	9.2	14.7%	$	35,363,041	100.0	%


(a)	35% of Net Account Value is no longer in multi-year guarantee period and can be adjusted annually.

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - December 31, 2014

Annuity Liability Characteristics



	Fixed Annuities Account Value		Fixed Index Annuities Account Value
	(Dollars in thousands)
SURRENDER CHARGE PERCENTAGES:
No surrender charge	$	669,933	$	1,114,397
0.0% < 2.0%	34,881		298,260
2.0% < 3.0%	80,495		81,801
3.0% < 4.0%	21,710		568,513
4.0% < 5.0%	91,270		195,511
5.0% < 6.0%	93,436		572,856
6.0% < 7.0%	178,904		166,240
7.0% < 8.0%	66,497		610,033
8.0% < 9.0%	65,510		554,945
9.0% < 10.0%	63,639		559,223
10.0% or greater	578,975		28,696,012
	$	1,945,250	$	33,417,791



	Fixed and Fixed Index Annuities Account Value		Weighted Average Surrender Charge
	(Dollars in thousands)
SURRENDER CHARGE EXPIRATION BY YEAR:
Out of Surrender Charge	$	1,784,330	0.00	%
2015	505,641		2.01	%
2016	749,505		3.36	%
2017	908,875		4.97	%
2018	816,950		7.26	%
2019	597,967		8.29	%
2020	921,630		9.75	%
2021	1,192,928		11.51	%
2022	2,029,331		13.51	%
2023	5,053,431		15.33	%
2024	5,530,144		16.23	%
2025	3,169,903		17.48	%
2026	2,746,263		18.18	%
2027	2,875,189		18.50	%
2028	2,517,188		18.99	%
2029	1,985,343		19.49	%
2030	1,950,573		19.98	%
2031	27,850		20.00	%
	$	35,363,041	14.73	%

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - December 31, 2014

Annuity Liability Characteristics



	Fixed Annuities Account Value		Fixed Index Annuities Account Value
	(Dollars in thousands)
CREDITED RATE VS. ULTIMATE MINIMUM GUARANTEED RATE DIFFERENTIAL:
No differential	$	860,835	$	1,051,430
› 0.0% - 0.25%	262,086		150,870
› 0.25% - 0.5%	173,120		277,520
› 0.5% - 1.0%	210,136		631,959
› 1.0% - 1.5%	75,747		12,474
› 1.5% - 2.0%	58,617		1,139
› 2.0% - 2.5%	75		—
1.00% ultimate guarantee - 2.48% wtd avg interest rate (a)	88,202		—
1.50% ultimate guarantee - 1.57% wtd avg interest rate (a)	113,729		3,125,307
2.00% ultimate guarantee - 2.44% wtd avg interest rate (a)	102,703		—
2.25% ultimate guarantee - 2.46% wtd avg interest rate (a)	—		1,270,891
3.00% ultimate guarantee - 2.69% wtd avg interest rate (a)	—		2,521,336
Allocated to index strategies (see tables that follow)	—		24,374,865
	$	1,945,250	$	33,417,791


(a)	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.

If all crediting rates were reduced to minimum guaranteed rates (subject to limitations imposed by ultimate minimum guaranteed rates where applicable) the weighted average crediting rate as of December 31, 2014 for fixed annuities and funds allocated to the fixed rate strategy for fixed index annuities would decrease by 0.46%.

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - December 31, 2014

Annuity Liability Characteristics

FIXED INDEX ANNUITIES ACCOUNT VALUE - INDEX STRATEGIES



Annual Monthly Average and Point-to-Point with Caps
	Minimum Guaranteed Cap
	1%		3%		4%		7%		8% +
Current Cap	(Dollars in thousands)
At minimum	$	1,041	$	10,759	$	1,009,737	$	48,719	$	271,554
2.25% - 3%	1,119,254		—		—		—		—
3% - 4%	3,161,434		71,742		—		—		—
4% - 5%	19,539		63,666		1,545,605		—		—
5% - 6%	90,747		15,962		4,726,805		—		—
6% - 7%	—		—		582,721		—		—
>= 7%	—		13,322		1,415		95,059		32,648



Annual Monthly Average and Point-to-Point with Participation Rates
	Minimum Guaranteed Participation Rate
	10%		25%		35%		50% +
Current Participation Rate	(Dollars in thousands)
At minimum	$	413	$	323,274	$	170,404	$	200,062
< 20%	280,531		—		—		—
20% - 40%	435,155		439,289		—		—
40% - 60%	233		154,290		113,831		1,257
>= 60%	3,887		—		—		—



S&P 500 Monthly Point-to-Point - Minimum Guaranteed Monthly Cap = 1%
(Dollars in thousands)
Current Cap
At minimum	$	17,779
1.4% - 1.9%	5,887,150
2.0% - 2.3%	2,998,268
>= 2.4%	261,498



Volatility Control Index
(Dollars in thousands)
Current Asset Fee
At Maximum	$	—
1.00%	4,209
2.25%	67,176
2.50%	105,334

If all caps and participation rates were reduced to minimum caps and participation rates and current asset fees were increased to their maximums, the cost of options would decrease by 0.64% based upon prices of options for the week ended January 21, 2015.

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - December 31, 2014

Summary of Invested Assets



	December 31, 2014				December 31, 2013
	Carrying Amount		Percent		Carrying Amount		Percent
	(Dollars in thousands)
Fixed maturity securities:
United States Government full faith and credit	$	138,460	0.4	%	$	42,925	0.2	%
United States Government sponsored agencies	1,393,890		3.9	%	1,194,289		3.9	%
United States municipalities, states and territories	3,723,309		10.4	%	3,306,743		10.9	%
Foreign government obligations	193,803		0.5	%	91,557		0.3	%
Corporate securities	21,566,724		59.9	%	17,309,292		57.1	%
Residential mortgage backed securities	1,751,345		4.9	%	1,971,960		6.5	%
Commercial mortgage backed securities	2,807,620		7.8	%	1,735,460		5.7	%
Other asset backed securities	946,483		2.6	%	1,034,476		3.4	%
Total fixed maturity securities	32,521,634		90.4	%	26,686,702		88.0	%
Equity securities	7,805		—	%	7,778		—	%
Mortgage loans on real estate	2,434,580		6.8	%	2,581,082		8.5	%
Derivative instruments	731,113		2.0	%	856,050		2.8	%
Other investments	286,726		0.8	%	215,042		0.7	%
	$	35,981,858	100.0	%	$	30,346,654	100.0	%

Credit Quality of Fixed Maturity Securities - December 31, 2014



NAIC Designation	Carrying Amount		Percent		Rating Agency Rating	Carrying Amount		Percent
	(Dollars in thousands)					(Dollars in thousands)
1	$	20,941,634	64.4	%	Aaa/Aa/A	$	20,672,331	63.6	%
2	10,981,618		33.8	%	Baa	10,516,834		32.3	%
3	583,907		1.8	%	Ba	548,681		1.7	%
4	14,089		—	%	B	87,272		0.3	%
5	—		—	%	Caa and lower	497,477		1.5	%
6	386		—	%	In or near default	199,039		0.6	%
	$	32,521,634	100.0	%		$	32,521,634	100.0	%

Watch List Securities - December 31, 2014



General Description	Amortized Cost		Unrealized Gains (Losses)			Fair Value		Months Below Amortized Cost
	(Dollars in thousands)
Corporate bonds:
Finance	$	20,000	$	(3,843	)	$	16,157	40
Industrial	64,015		(16,453		)	47,562		4 - 22
	84,015		(20,296		)	63,719
Other asset backed securities	4,846		(969		)	3,877		45
	$	88,861	$	(21,265	)	$	67,596

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - December 31, 2014

Fixed Maturity Securities by Sector



	December 31, 2014				December 31, 2013
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)
Available for sale:
United States Government full faith and credit and sponsored agencies	$	1,502,134	$	1,532,350	$	1,358,628	$	1,237,214
United States municipalities, states and territories	3,293,551		3,723,309		3,181,032		3,306,743
Foreign government obligations	181,128		193,803		86,112		91,557
Corporate securities:
Consumer discretionary	1,677,362		1,800,455		1,533,993		1,532,694
Consumer staples	1,376,634		1,489,951		1,246,744		1,250,351
Energy	2,307,432		2,378,038		1,992,411		2,011,334
Financials	3,928,295		4,246,882		3,179,964		3,233,930
Health care	1,742,218		1,884,132		1,458,757		1,458,946
Industrials	2,537,927		2,746,752		2,045,490		2,039,544
Information technology	1,324,095		1,388,990		1,163,159		1,145,674
Materials	1,589,219		1,654,125		1,405,603		1,381,880
Telecommunications	509,913		542,055		472,250		473,517
Utilities	2,991,652		3,358,901		2,643,747		2,705,147
Residential mortgage backed securities:
Government agency	689,378		759,902		677,394		679,518
Prime	683,206		721,454		907,881		964,443
Alt-A	244,262		269,989		310,638		327,999
Commercial mortgage backed securities:
Government agency	299,288		320,343		302,063		288,495
Other	2,421,006		2,487,277		1,519,925		1,446,965
Other asset backed securities:
Consumer discretionary	71,081		73,298		86,788		86,633
Energy	8,230		9,459		8,268		8,922
Financials	628,464		649,388		709,900		688,737
Industrials	177,864		190,217		215,873		225,212
Telecommunications	14,837		16,139		14,835		16,714
Utilities	5,870		7,982		6,275		8,258
Redeemable preferred stock - financials	—		11		1		20
	$	30,205,046	$	32,445,202	$	26,527,731	$	26,610,447
Held for investment:
Corporate security - financials	$	76,432	$	75,838	$	76,255	$	60,840

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - December 31, 2014

Mortgage Loans on Commercial Real Estate



	December 31, 2014						December 31, 2013
	Principal			Percent			Principal		Percent
	(Dollars in thousands)
Geographic distribution
East	$	701,638		28.5		%	$	765,717	29.4	%
Middle Atlantic	166,249			6.8		%	156,489		6.0	%
Mountain	279,075			11.4		%	356,246		13.7	%
New England	12,280			0.5		%	21,324		0.8	%
Pacific	302,307			12.3		%	317,431		12.2	%
South Atlantic	471,849			19.2		%	483,852		18.5	%
West North Central	349,028			14.2		%	351,794		13.5	%
West South Central	175,295			7.1		%	154,845		5.9	%
	$	2,457,721		100.0		%	$	2,607,698	100.0	%

Property type distribution
Office	$	484,585		19.7		%	$	590,414	22.6	%
Medical office	88,275			3.6		%	125,703		4.8	%
Retail	711,775			29.0		%	711,364		27.3	%
Industrial/Warehouse	649,425			26.4		%	673,449		25.8	%
Hotel	30,640			1.3		%	61,574		2.4	%
Apartment	335,087			13.6		%	291,823		11.2	%
Mixed use/other	157,934			6.4		%	153,371		5.9	%
	$	2,457,721		100.0		%	$	2,607,698	100.0	%

	December 31, 2014			December 31, 2013
Credit Exposure - By Payment Activity
Performing	$	2,451,760		$	2,593,276
In workout	—			6,248
Delinquent	—			—
Collateral dependent	5,961			8,174
	2,457,721			2,607,698
Specific loan loss allowance	(12,333		)	(16,847		)
General loan loss allowance	(10,300		)	(9,200		)
Deferred prepayment fees	(508		)	(569		)
	$	2,434,580		$	2,581,082

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - December 31, 2014

Shareholder Information

Corporate Offices:

American Equity Investment Life Holding Company

6000 Westown Parkway

West Des Moines, IA 50266

Inquiries:

John M. Matovina, Chief Executive Officer and President

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

Ted M. Johnson, Chief Financial Officer and Treasurer

(515) 457-1980, tjohnson@american-equity.com

Debra J. Richardson, Executive Vice President and Secretary

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

Common Stock and Dividend Information:

New York Stock Exchange symbol: “AEL”



	High	Low	Close	Dividend Declared
2014
First Quarter	$26.42	$18.84	$23.62	$0.00
Second Quarter	$25.15	$20.97	$24.60	$0.00
Third Quarter	$25.25	$21.69	$22.88	$0.00
Fourth Quarter	$29.75	$21.36	$29.19	$0.20

2013
First Quarter	$15.03	$12.33	$14.89	$0.00
Second Quarter	$16.60	$14.03	$15.70	$0.00
Third Quarter	$21.42	$15.64	$21.22	$0.00
Fourth Quarter	$26.46	$20.01	$26.38	$0.18

2012
First Quarter	$13.09	$10.13	$12.77	$0.00
Second Quarter	$12.95	$10.00	$11.01	$0.00
Third Quarter	$12.41	$10.62	$11.63	$0.00
Fourth Quarter	$12.40	$10.56	$12.21	$0.15

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 17

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - December 31, 2014

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

Mark Hughes

SunTrust Robinson Humphrey

(615) 748-5680

mark_hughes@rhco.com

Colin Devine

Jefferies LLC

(212) 707-6327

cdevine@jefferies.com

Page 18

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