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	a2015-12x31_ael8k.htm
EX-99.1 - PRESS RELEASE - AMERICAN EQUITY INVESTMENT LIFE HOLDING CO	a2015-12x31_ael8kexhibit991.htm

Exhibit 99.2

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement

December 31, 2015



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 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	15
	Fixed Maturity Securities by Sector	16
	Mortgage Loans on Commercial Real Estate	18

D.	Shareholder Information	19

E.	Research Analyst Coverage	20

Table of Contents

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - December 31, 2015

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(Unaudited)



	December 31, 2015		December 31, 2014
Assets
Investments:
Fixed maturity securities:
Available for sale, at fair value	$	36,421,839	$	32,445,202
Held for investment, at amortized cost	76,622		76,432
Equity securities, available for sale, at fair value	7,828		7,805
Mortgage loans on real estate	2,435,257		2,434,580
Derivative instruments	337,256		731,113
Other investments	291,530		286,726
Total investments	39,570,332		35,981,858

Cash and cash equivalents	397,749		701,514
Coinsurance deposits	3,187,470		3,044,342
Accrued investment income	362,104		326,559
Deferred policy acquisition costs	2,905,136		2,058,556
Deferred sales inducements	2,232,148		1,587,257
Deferred income taxes	232,683		—
Income taxes recoverable	29,599		9,252
Other assets	123,942		280,396
Total assets	$	49,041,163	$	43,989,734

Liabilities and Stockholders' Equity
Liabilities:
Policy benefit reserves	$	45,495,431	$	39,802,861
Other policy funds and contract claims	324,850		365,819
Notes payable	400,000		421,679
Subordinated debentures	246,450		246,243
Deferred income taxes	—		3,895
Other liabilities	629,897		1,009,361
Total liabilities	47,096,628		41,849,858

Stockholders' equity:
Common stock	81,354		76,062
Additional paid-in capital	630,367		513,218
Accumulated other comprehensive income	201,663		721,401
Retained earnings	1,031,151		829,195
Total stockholders' equity	1,944,535		2,139,876
Total liabilities and stockholders' equity	$	49,041,163	$	43,989,734

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - December 31, 2015

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,
	2015			2014			2015			2014
Revenues:
Premiums and other considerations	$	10,679		$	10,126		$	36,048		$	32,623
Annuity product charges	37,102			32,513			136,168			118,990
Net investment income	438,262			403,849			1,692,192			1,531,667
Change in fair value of derivatives	69,338			146,231			(336,146		)	504,825
Net realized gains (losses) on investments, excluding other than temporary impairment ("OTTI") losses	(151		)	2,131			10,211			(4,003		)
OTTI losses on investments:
Total OTTI losses	(15,415		)	—			(25,547		)	—
Portion of OTTI losses recognized in (from) other comprehensive income	2,068			(564		)	6,011			(2,627		)
Net OTTI losses recognized in operations	(13,347		)	(564		)	(19,536		)	(2,627		)
Loss on extinguishment of debt	—			(1,951		)	—			(12,502		)
Total revenues	541,883			592,335			1,518,937			2,168,973

Benefits and expenses:
Insurance policy benefits and change in future policy benefits	12,829			11,624			45,458			41,815
Interest sensitive and index product benefits	165,622			359,319			968,053			1,473,700
Amortization of deferred sales inducements	57,112			34,743			209,390			131,419
Change in fair value of embedded derivatives	118,414			53,973			(464,698		)	32,321
Interest expense on notes payable	6,873			8,244			28,849			36,370
Interest expense on subordinated debentures	3,101			3,046			12,239			12,122
Amortization of deferred policy acquisition costs	99,243			49,629			286,114			163,578
Other operating costs and expenses	25,731			20,996			96,218			81,584
Total benefits and expenses	488,925			541,574			1,181,623			1,972,909
Income before income taxes	52,958			50,761			337,314			196,064
Income tax expense	19,182			19,544			117,484			70,041
Net income	$	33,776		$	31,217		$	219,830		$	126,023

Earnings per common share	$	0.41		$	0.41		$	2.78		$	1.69
Earnings per common share - assuming dilution	$	0.40		$	0.39		$	2.72		$	1.58
Weighted average common shares outstanding (in thousands):
Earnings per common share	81,733			75,620			78,937			74,431
Earnings per common share - assuming dilution	83,851			80,154			80,961			79,894

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - December 31, 2015

Quarterly Summary - Most Recent 5 Quarters (Unaudited)



	Q4 2015			Q3 2015			Q2 2015			Q1 2015			Q4 2014
	(Dollars in thousands, except per share data)
Revenues:
Traditional life insurance premiums	$	2,891		$	2,664		$	2,659		$	2,703		$	2,537
Life contingent immediate annuity considerations	7,788			5,671			7,378			4,294			7,589
Surrender charges	10,543			13,104			11,413			11,554			10,418
Lifetime income benefit rider fees	26,559			24,871			20,996			17,128			22,095
Net investment income	438,262			436,085			418,176			399,669			403,849
Change in fair value of derivatives	69,338			(351,360		)	(23,024		)	(31,100		)	146,231
Net realized gains (losses) on investments, excluding OTTI	(151		)	1,159			4,324			4,879			2,131
Net OTTI losses recognized in operations	(13,347		)	(5,229		)	(828		)	(132		)	(564		)
Loss on extinguishment of debt	—			—			—			—			(1,951		)
Total revenues	541,883			126,965			441,094			408,995			592,335

Benefits and expenses:
Traditional life insurance policy benefits and change in future policy benefits	2,044			1,730			1,971			1,931			1,300
Life contingent immediate annuity benefits and change in future policy benefits	10,785			9,229			10,479			7,289			10,324
Interest sensitive and index product benefits (a)(b)	165,622			213,465			306,141			282,825			359,319
Amortization of deferred sales inducements (c)	57,112			65,807			75,518			10,953			34,743
Change in fair value of embedded derivatives	118,414			(414,724		)	(219,601		)	51,213			53,973
Interest expense on notes payable	6,873			7,283			7,354			7,339			8,244
Interest expense on subordinated debentures	3,101			3,075			3,047			3,016			3,046
Amortization of deferred policy acquisition costs (c)	99,243			67,885			104,700			14,286			49,629
Other operating costs and expenses	25,731			24,497			24,868			21,122			20,996
Total benefits and expenses	488,925			(21,753		)	314,477			399,974			541,574
Income before income taxes	52,958			148,718			126,617			9,021			50,761
Income tax expense	19,182			51,412			43,772			3,118			19,544
Net income (a)(b)(c)	$	33,776		$	97,306		$	82,845		$	5,903		$	31,217

Earnings per common share	$	0.41		$	1.22		$	1.07		$	0.08		$	0.41
Earnings per common share - assuming dilution (a)(b)(c)	$	0.40		$	1.19		$	1.05		$	0.07		$	0.39
Weighted average common shares outstanding (in thousands):
Earnings per common share	81,733			79,676			77,237			77,042			75,620
Earnings per common share - assuming dilution	83,851			81,559			79,227			79,118			80,154

(a)

Q4 2015 includes an adjustment to reserves for living income benefit riders which reduced interest sensitive and index product benefits by $1.9 million, 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 $0.7 million and $0.01 per share, respectively.


(b)	Q3 2015 includes expense from the revision of assumptions used in determining reserves held for living income benefit riders. The impact increased interest sensitive and index product benefits by $18.3 million and decreased net income and earnings per common share - assuming dilution by $11.8 million and $0.14 per share, respectively.


(c)	Q3 2015 includes benefit from unlocking which reduced amortization of deferred sales inducements and deferred policy acquisition costs by $5.6 million and $11.0 million, respectively, and increased net income and earnings per common share- assuming dilution by $10.7 million and $0.13 per share, respectively.

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - December 31, 2015

NON-GAAP FINANCIAL MEASURES

In addition to net income, 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 adjusted to eliminate the impact of items that fluctuate from quarter to quarter in a manner unrelated to core operations, and 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.

Reconciliation from Net Income to Operating Income (Unaudited)



	Three Months Ended December 31,						Year Ended December 31,
	2015			2014			2015			2014
	(Dollars in thousands, except per share data)
Net income	$	33,776		$	31,217		$	219,830		$	126,023
Adjustments to arrive at operating income: (a)
Net realized investment (gains) losses, including OTTI	5,538			(613		)	3,709			2,863
Change in fair value of derivatives and embedded derivatives - index annuities	11,675			16,463			(28,477		)	51,099
Change in fair value of derivatives and embedded derivatives - debt	(848		)	32			758			61
Litigation reserve	—			—			—			(916		)
Extinguishment of debt	—			3,604			—			11,516
Operating income (a non-GAAP financial measure)	$	50,141		$	50,703		$	195,820		$	190,646

Per common share - assuming dilution:
Net income	$	0.40		$	0.39		$	2.72		$	1.58
Adjustments to arrive at operating income:
Net realized investment (gains) losses, including OTTI	0.07			(0.01		)	0.04			0.04
Change in fair value of derivatives and embedded derivatives - index annuities	0.14			0.21			(0.35		)	0.64
Change in fair value of derivatives and embedded derivatives - debt	(0.01		)	—			0.01			—
Litigation reserve	—			—			—			(0.01		)
Extinguishment of debt	—			0.04			—			0.14
Operating income (a non-GAAP financial measure)	$	0.60		$	0.63		$	2.42		$	2.39


(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, 2015

NON-GAAP FINANCIAL MEASURES

Summary of Adjustments to Arrive at Operating Income (Unaudited)



	Three Months Ended December 31,						Year Ended December 31,
	2015			2014			2015			2014
	(Dollars in thousands)
Net realized investment gains and losses, including OTTI:
Net realized (gains) losses on investments, including OTTI	$	13,498		$	(1,567	)	$	9,325		$	6,630
Amortization of DAC and DSI	(4,926		)	619			(3,588		)	(2,201		)
Income taxes	(3,034		)	335			(2,028		)	(1,566		)
	$	5,538		$	(613	)	$	3,709		$	2,863
Change in fair value of derivatives and embedded derivatives:
Index annuities	$	(12,954	)	$	61,891		$	(40,420	)	$	196,816
2015 notes, note hedge and warrants	—			(2,062		)	—			(6,293		)
Interest rate caps and swap	(1,450		)	2,116			1,296			6,397
Amortization of DAC and DSI	30,176			(37,261		)	(3,635		)	(117,764		)
Income taxes	(4,945		)	(8,189		)	15,040			(27,996		)
	$	10,827		$	16,495		$	(27,719	)	$	51,160
Litigation reserve:
Change in litigation reserve recorded in other operating costs	$	—		$	—		$	—		$	(2,212	)
Amortization of DAC and DSI	—			—			—			795
Income taxes	—			—			—			501
	$	—		$	—		$	—		$	(916	)
Extinguishment of debt:
Loss on extinguishment of debt	$	—		$	1,951		$	—		$	12,502
Income taxes	—			1,653			—			(986		)
	$	—		$	3,604		$	—		$	11,516

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - December 31, 2015

NON-GAAP FINANCIAL MEASURES

Quarterly Summary - Most Recent 5 Quarters (Unaudited)

Reconciliation from Net Income to Operating Income



	Q4 2015			Q3 2015			Q2 2015			Q1 2015			Q4 2014
	(Dollars in thousands, except per share data)
Net income	$	33,776		$	97,306		$	82,845		$	5,903		$	31,217
Adjustments to arrive at operating income: (a)
Net realized investment (gains) losses, including OTTI	5,538			1,639			(1,649		)	(1,819		)	(613		)
Change in fair value of derivatives and embedded derivatives - index annuities	11,675			(54,535		)	(29,274		)	43,657			16,463
Change in fair value of derivatives and embedded derivatives - debt	(848		)	1,506			(977		)	1,077			32
Extinguishment of debt	—			—			—			—			3,604
Operating income (a non-GAAP financial measure) (b)(c)(d)	$	50,141		$	45,916		$	50,945		$	48,818		$	50,703

Operating income per common share - assuming dilution (b)(c)(d)	$	0.60		$	0.56		$	0.64		$	0.62		$	0.63


(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 and deferred policy acquisition costs.

(b)

Q4 2015 includes an adjustment to reserves for living income benefit riders which reduced interest sensitive and index product benefits by $1.9 million, 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 $0.5 million and $0.01 per share, respectively.


(c)	Q3 2015 includes a benefit from unlocking which reduced amortization of deferred sales inducements and deferred policy acquisition costs by $0.5 million and $4.3 million, respectively, and increased operating income and operating income per common share- assuming dilution by $3.1 million and $0.04 per share, respectively.


(d)	Q3 2015 includes expense from the revision of assumptions used in determining reserves held for living income benefit riders. The impact increased interest sensitive and index product benefits by $18.3 million and decreased operating income and operating income per common share - assuming dilution by $11.8 million and $0.14 per share, respectively.

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - December 31, 2015

NON-GAAP FINANCIAL MEASURES

Summary of Adjustments to Arrive at Operating Income (Unaudited)



	Q4 2015			Q3 2015			Q2 2015			Q1 2015			Q4 2014
	(Dollars in thousands)
Net realized (gains) losses on investments	$	151		$	(1,159	)	$	(4,324	)	$	(4,879	)	$	(2,131	)
Net OTTI losses recognized in operations	13,347			5,229			828			132			564
Change in fair value of derivatives	(132,818		)	322,406			116,627			114,843			19,033
Loss on extinguishment of debt	—			—			—			—			1,951
Increase in total revenues	(119,320		)	326,476			113,131			110,096			19,417

Amortization of deferred sales inducements	(3,075		)	(12,644		)	(23,306		)	38,686			14,579
Change in fair value of embedded derivatives	(118,414		)	413,583			215,659			(50,646		)	(42,912		)
Amortization of deferred policy acquisition costs	(22,175		)	3,830			(30,593		)	56,500			22,063
Increase (decrease) in total benefits and expenses	(143,664		)	404,769			161,760			44,540			(6,270		)
Increase (decrease) in income before income taxes	24,344			(78,293		)	(48,629		)	65,556			25,687
Increase (decrease) in income tax expense	7,979			(26,903		)	(16,729		)	22,641			6,201
Increase (decrease) in net income	$	16,365		$	(51,390	)	$	(31,900	)	$	42,915		$	19,486

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - December 31, 2015

Capitalization/Book Value per Share



	December 31, 2015			December 31, 2014
	(Dollars in thousands, except per share data)
Capitalization:
Notes payable:
September 2015 Notes	$	—		$	21,679
July 2021 Notes	400,000			400,000
Subordinated debentures payable to subsidiary trusts	246,450			246,243
Total debt	646,450			667,922
Total stockholders’ equity	1,944,535			2,139,876
Total capitalization	2,590,985			2,807,798
Accumulated other comprehensive income (AOCI)	(201,663		)	(721,401		)
Total capitalization excluding AOCI (a)	$	2,389,322		$	2,086,397

Total stockholders’ equity	$	1,944,535		$	2,139,876
Accumulated other comprehensive income	(201,663		)	(721,401		)
Total stockholders’ equity excluding AOCI (a)	$	1,742,872		$	1,418,475

Common shares outstanding (b)	81,584,091			76,605,527

Book Value per Share: (c)
Book value per share including AOCI	$	23.83		$	27.93
Book value per share excluding AOCI (a)	$	21.36		$	18.52

Debt-to-Capital Ratios: (d)
Senior debt / Total capitalization	16.7		%	20.2		%
Adjusted debt / Total capitalization	16.7		%	20.2		%


(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: 2015 - 230,012 shares; 2014 - 543,120 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, 2015

Spread Results



	Three Months Ended December 31,		Year Ended December 31,
	2015	2014	2015	2014
Average yield on invested assets	4.62%	4.95%	4.73%	4.90%
Aggregate cost of money	1.95%	2.03%	1.96%	2.10%
Aggregate investment spread	2.67%	2.92%	2.77%	2.80%

Impact of:
Investment yield - additional prepayment income	0.07%	0.13%	0.08%	0.07%
Cost of money effect of over hedging	0.01%	0.05%	0.04%	0.03%

Weighted average investments (in thousands)	$38,054,743	$32,770,087	$35,857,262	$31,316,916

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,
	2015			2014			2015			2014
	(Dollars in thousands)
Included in interest sensitive and index product benefits:
Index credits	$	72,030		$	264,980		$	587,705		$	1,096,504
Interest credited	62,425			67,146			250,371			275,671
Included in change in fair value of derivatives:
Proceeds received at option expiration	(73,240		)	(269,208		)	(602,436		)	(1,103,710		)
Pro rata amortization of option cost	136,129			114,387			510,595			432,494
Cost of money for deferred annuities	$	197,344		$	177,305		$	746,235		$	700,959

Weighted average liability balance outstanding (in thousands)	$	40,429,839		$	34,870,894		$	38,126,188		$	33,363,490

Annuity Account Balance Rollforward



	Three Months Ended December 31,						Year Ended December 31,
	2015			2014			2015			2014
	(Dollars in thousands)
Account balances at beginning of period	$	39,610,034		$	34,378,748		$	35,363,041		$	31,535,846
Net deposits	1,938,759			1,090,724			6,579,405			3,988,881
Premium bonuses	140,514			88,803			486,924			330,080
Fixed interest credited and index credits	134,455			332,126			838,076			1,372,175
Surrender charges	(10,543		)	(10,418		)	(46,614		)	(47,500		)
Lifetime income benefit rider fees	(26,559		)	(22,095		)	(89,554		)	(71,490		)
Surrenders, withdrawals, deaths, etc.	(537,013		)	(494,847		)	(1,881,631		)	(1,744,951		)
Account balances at end of period	$	41,249,647		$	35,363,041		$	41,249,647		$	35,363,041

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - December 31, 2015

Annuity Deposits by Product Type



	Three Months Ended December 31,				Year Ended December 31,
Product Type	2015		2014		2015		2014
	(Dollars in thousands)
Fixed index annuities	$	2,043,077	$	1,116,333	$	6,791,689	$	3,999,439
Annual reset fixed rate annuities	12,570		13,914		45,182		57,273
Multi-year fixed rate annuities	82,107		12,902		214,356		103,293
Single premium immediate annuities	5,667		6,521		32,752		24,580
Total before coinsurance ceded	2,143,421		1,149,670		7,083,979		4,184,585
Coinsurance ceded	198,995		52,425		471,822		171,124
Net after coinsurance ceded	$	1,944,426	$	1,097,245	$	6,612,157	$	4,013,461

Surrender Charge Protection and Account Values by Product Type

Annuity Surrender Charges and Net (of coinsurance) Account Values at December 31, 2015:



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

Fixed Index Annuities	13.9	9.3	14.7%	$	39,345,831	95.4	%
Annual Reset Fixed Rate Annuities	10.9	3.7	7.6%	1,415,241		3.4	%
Multi-Year Fixed Rate Annuities (a)	6.7	1.7	4.2%	488,575		1.2	%
Total	13.7	9.1	14.3%	$	41,249,647	100.0	%


(a)	28% of Net Account Value is no longer in multi-year guarantee period and can be adjusted annually.

Page 10

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - December 31, 2015

Annuity Liability Characteristics



	Fixed Annuities Account Value		Fixed Index Annuities Account Value
	(Dollars in thousands)
SURRENDER CHARGE PERCENTAGES:
No surrender charge	$	733,746	$	1,359,766
0.0% < 2.0%	24,895		523,955
2.0% < 3.0%	74,317		60,535
3.0% < 4.0%	14,665		686,509
4.0% < 5.0%	98,494		50,038
5.0% < 6.0%	91,282		530,269
6.0% < 7.0%	66,803		286,649
7.0% < 8.0%	61,828		467,806
8.0% < 9.0%	64,826		714,329
9.0% < 10.0%	120,222		1,297,708
10.0% or greater	552,738		33,368,267
	$	1,903,816	$	39,345,831



	Fixed and Fixed Index Annuities Account Value		Weighted Average Surrender Charge
	(Dollars in thousands)
SURRENDER CHARGE EXPIRATION BY YEAR:
Out of Surrender Charge	$	2,093,512	0.00	%
2016	696,872		1.70	%
2017	844,602		3.27	%
2018	767,234		5.63	%
2019	567,606		7.06	%
2020	934,114		8.58	%
2021	1,272,703		10.09	%
2022	1,963,992		12.04	%
2023	4,915,395		13.86	%
2024	5,455,168		14.93	%
2025	5,927,795		15.11	%
2026	2,672,439		17.31	%
2027	2,801,075		18.16	%
2028	2,489,984		18.50	%
2029	3,054,441		18.99	%
2030	2,009,197		19.49	%
2031	2,769,455		19.99	%
2032	14,063		20.00	%
	$	41,249,647	14.35	%

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - December 31, 2015

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	$	926,689	$	1,117,176
› 0.0% - 0.25%	202,037		43,578
› 0.25% - 0.5%	203,290		170,024
› 0.5% - 1.0%	154,992		694,946
› 1.0% - 1.5%	56,464		1,643
› 1.5% - 2.0%	1,357		—
› 2.0% - 2.5%	72		—
1.00% ultimate guarantee - 2.51% wtd avg interest rate (a)	131,870		33,050
1.50% ultimate guarantee - 1.41% wtd avg interest rate (a)	127,040		3,761,414
2.00% ultimate guarantee - 2.27% wtd avg interest rate (a)	100,005		—
2.25% ultimate guarantee - 2.31% wtd avg interest rate (a)	—		1,201,045
3.00% ultimate guarantee - 2.54% wtd avg interest rate (a)	—		2,380,932
Allocated to index strategies (see tables that follow)	—		29,942,023
	$	1,903,816	$	39,345,831


(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, 2015 for fixed annuities and funds allocated to the fixed rate strategy for fixed index annuities would decrease by 0.36%.

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - December 31, 2015

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	$	1,722	$	10,389	$	1,619,706	$	52,310	$	256,499
1.75% - 3%	3,078,904		—		—		—		—
3% - 4%	3,007,206		101,861		—		—		—
4% - 5%	116,507		117,351		3,187,006		—		—
5% - 6%	244,323		88,618		3,005,850		—		—
6% - 7%	—		—		54		—		—
>= 7%	—		15,886		1,485		75,307		17,075



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	$	636	$	416,553	$	151,229	$	178,236
< 20%	329,218		—		—		—
20% - 40%	652,948		261,715		—		—
40% - 60%	218,129		135,412		102,142		621
>= 60%	5,219		—		—		—



S&P 500 Monthly Point-to-Point - Minimum Guaranteed Monthly Cap = 1.0%
(Dollars in thousands)
Current Cap
At minimum	$	16,745
1.2% - 1.9%	8,743,890
2.0% - 2.3%	1,613,689
>= 2.4%	68,202



Volatility Control Index
(Dollars in thousands)
Current Asset Fee
At Maximum	$	—
0.75% - 1.75%	110,836
2.25% - 2.75%	1,223,843
3.00%	611,721

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 0.53% based upon prices of options for the week ended January 26, 2016.

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - December 31, 2015

Summary of Invested Assets



	December 31, 2015				December 31, 2014
	Carrying Amount		Percent		Carrying Amount		Percent
	(Dollars in thousands)
Fixed maturity securities:
United States Government full faith and credit	$	471,256	1.3	%	$	138,460	0.4	%
United States Government sponsored agencies	1,398,611		3.5	%	1,393,890		3.9	%
United States municipalities, states and territories	3,755,367		9.5	%	3,723,309		10.4	%
Foreign government obligations	212,565		0.5	%	193,803		0.5	%
Corporate securities	23,879,016		60.3	%	21,566,724		59.9	%
Residential mortgage backed securities	1,462,072		3.7	%	1,751,345		4.9	%
Commercial mortgage backed securities	4,174,396		10.5	%	2,807,620		7.8	%
Other asset backed securities	1,145,178		2.9	%	946,483		2.6	%
Total fixed maturity securities	36,498,461		92.2	%	32,521,634		90.4	%
Equity securities	7,828		—	%	7,805		—	%
Mortgage loans on real estate	2,435,257		6.2	%	2,434,580		6.8	%
Derivative instruments	337,256		0.9	%	731,113		2.0	%
Other investments	291,530		0.7	%	286,726		0.8	%
	$	39,570,332	100.0	%	$	35,981,858	100.0	%

Credit Quality of Fixed Maturity Securities - December 31, 2015



NAIC Designation	Carrying Amount		Percent		Rating Agency Rating	Carrying Amount		Percent
	(Dollars in thousands)					(Dollars in thousands)
1	$	24,207,801	66.3	%	Aaa/Aa/A	$	23,724,648	65.0	%
2	11,589,325		31.8	%	Baa	11,491,609		31.5	%
3	654,538		1.8	%	Ba	657,760		1.8	%
4	44,312		0.1	%	B	68,712		0.2	%
5	—		—	%	Caa and lower	388,908		1.1	%
6	2,485		—	%	In or near default	166,824		0.4	%
	$	36,498,461	100.0	%		$	36,498,461	100.0	%

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - December 31, 2015

Watch List Securities - December 31, 2015



General Description	Amortized Cost		Unrealized Gains (Losses)			Fair Value		Months Below Amortized Cost
	(Dollars in thousands)
Investment grade
Corporate securities:
Financials	$	20,000	$	(3,888	)	$	16,112	52
Industrials	4,980		(1,817		)	3,163		14
Other asset backed securities:
Financials	2,855		(856		)	1,999		57
	$	27,835	$	(6,561	)	$	21,274
Below investment grade
Corporate securities:
Energy	$	45,090	$	(18,900	)	$	26,190	16 - 32
Materials	39,209		(18,923		)	20,286		6 - 35
Telecommunications	6,000		(3,240		)	2,760		18
Other asset backed securities:
Financials	8,332		(5,856		)	2,476		31
	$	98,631	$	(46,919	)	$	51,712
	$	126,466	$	(53,480	)	$	72,986

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - December 31, 2015

Fixed Maturity Securities by Sector



	December 31, 2015				December 31, 2014
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)
Available for sale:
United States Government full faith and credit and sponsored agencies	$	1,856,786	$	1,869,867	$	1,502,134	$	1,532,350
United States municipalities, states and territories	3,422,667		3,755,367		3,293,551		3,723,309
Foreign government obligations	210,953		212,565		181,128		193,803
Corporate securities:
Consumer discretionary	1,983,595		2,012,874		1,677,362		1,800,455
Consumer staples	1,612,382		1,649,408		1,376,634		1,489,951
Energy	2,622,284		2,410,184		2,307,432		2,378,038
Financials	4,955,851		5,134,209		3,928,295		4,246,882
Health care	1,944,109		2,007,107		1,742,218		1,884,132
Industrials	3,236,836		3,295,598		2,537,927		2,746,752
Information technology	1,689,259		1,694,466		1,324,095		1,388,990
Materials	1,732,123		1,624,073		1,589,219		1,654,125
Telecommunications	543,689		547,424		509,913		542,055
Utilities	3,277,402		3,427,041		2,991,652		3,358,901
Residential mortgage backed securities:
Government agency	687,515		741,431		689,378		759,902
Prime	474,756		493,096		683,206		721,454
Alt-A	204,714		227,545		244,262		269,989
Commercial mortgage backed securities:
Government agency	359,273		370,966		299,288		320,343
Other	3,878,992		3,803,430		2,421,006		2,487,277
Other asset backed securities:
Consumer discretionary	62,852		61,759		71,081		73,298
Energy	8,143		9,097		8,230		9,459
Financials	816,906		821,343		628,464		649,388
Industrials	223,414		231,678		177,864		190,217
Telecommunications	13,789		14,575		14,837		16,139
Utilities	5,420		6,726		5,870		7,982
Redeemable preferred stock - financials	—		10		—		11
	$	35,823,710	$	36,421,839	$	30,205,046	$	32,445,202
Held for investment:
Corporate security - financials	$	76,622	$	65,377	$	76,432	$	75,838

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - December 31, 2015

Fixed Maturity Securities by Sector

Energy and Metals & Mining

In the table on the previous page, oil and metals and mining exposure is reflected within the foreign government, energy, material, utilities, energy and industrial sectors. Our privately placed available for sale fixed maturity securities at December 31, 2015 total $167.3 million fair value ($189.6 million amortized cost) in Energy and $39.2 million fair value ($47.5 million amortized cost) in Metals & Mining and are not included in the following tables.



	December 31, 2015
Sector and Subsector	Amortized Cost		Fair Value		Unrealized Gain (Loss)			Average Credit Rating
	(Dollars in thousands)
Energy
Independent	$	494,440	$	435,476	$	(58,964	)	Baa
Integrated	451,848		438,884		(12,964		)	A
Oil field services	399,077		348,558		(50,519		)	Baa
Refining	101,055		97,379		(3,676		)	Baa
Midstream	738,396		663,068		(75,328		)	Baa
Government owned no guarantee	283,504		283,522		18			A
Metals & Mining	$	546,906	$	442,943	$	(103,963	)	Baa
Total Energy and Metals & Mining	$	3,015,226	$	2,709,830	$	(305,396	)	Baa



	Amortized Cost at December 31, 2015
	Energy
NRSRO Rating	Independent		Integrated		Oil field services		Refining		Midstream		Government Owned No Guarantee		Metals & Mining		Total
	(Dollars in thousands)
Aaa	$	—	$	23,914	$	—	$	—	$	—	$	—	$	—	$	23,914
Aa	—		166,662		28,277		—		—		147,763		—		342,702
A	130,615		150,400		117,993		11,617		90,185		85,846		74,670		661,326
Baa	363,825		110,872		223,741		89,438		614,167		25,259		382,121		1,809,423
Ba	—		—		29,066		—		34,044		24,636		60,093		147,839
B	—		—		—		—		—		—		23,897		23,897
Below B	—		—		—		—		—		—		6,125		6,125
	$	494,440	$	451,848	$	399,077	$	101,055	$	738,396	$	283,504	$	546,906	$	3,015,226



	Fair Value at December 31, 2015
	Energy
NRSRO Rating	Independent		Integrated		Oil field services		Refining		Midstream		Government Owned No Guarantee		Metals & Mining		Total
	(Dollars in thousands)
Aaa	$	—	$	24,734	$	—	$	—	$	—	$	—	$	—	$	24,734
Aa	—		166,245		27,997		—		—		152,334		—		346,576
A	127,940		144,831		112,187		10,928		90,335		91,499		67,332		645,052
Baa	307,536		103,074		191,603		86,451		550,056		24,227		321,617		1,584,564
Ba	—		—		16,771		—		22,677		15,462		37,226		92,136
B	—		—		—		—		—		—		13,618		13,618
Below B	—		—		—		—		—		—		3,150		3,150
	$	435,476	$	438,884	$	348,558	$	97,379	$	663,068	$	283,522	$	442,943	$	2,709,830

Page 17

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - December 31, 2015

Mortgage Loans on Commercial Real Estate



	December 31, 2015						December 31, 2014
	Principal			Percent			Principal		Percent
	(Dollars in thousands)
Geographic distribution
East	$	698,113		28.5		%	$	701,638	28.5	%
Middle Atlantic	160,261			6.6		%	166,249		6.8	%
Mountain	252,442			10.3		%	279,075		11.4	%
New England	13,161			0.5		%	12,280		0.5	%
Pacific	355,268			14.5		%	302,307		12.3	%
South Atlantic	456,227			18.6		%	471,849		19.2	%
West North Central	313,120			12.8		%	349,028		14.2	%
West South Central	201,317			8.2		%	175,295		7.1	%
	$	2,449,909		100.0		%	$	2,457,721	100.0	%

Property type distribution
Office	$	396,154		16.2		%	$	484,585	19.7	%
Medical office	77,438			3.2		%	88,275		3.6	%
Retail	790,158			32.2		%	711,775		29.0	%
Industrial/Warehouse	686,400			28.0		%	649,425		26.4	%
Hotel	3,361			0.1		%	30,640		1.3	%
Apartment	352,971			14.4		%	335,087		13.6	%
Mixed use/other	143,427			5.9		%	157,934		6.4	%
	$	2,449,909		100.0		%	$	2,457,721	100.0	%

	December 31, 2015			December 31, 2014
Credit Exposure - By Payment Activity
Performing	$	2,438,341		$	2,451,760
In workout	11,568			—
Delinquent	—			—
Collateral dependent	—			5,961
	2,449,909			2,457,721
Specific loan loss allowance	(7,842		)	(12,333		)
General loan loss allowance	(6,300		)	(10,300		)
Deferred prepayment fees	(510		)	(508		)
	$	2,435,257		$	2,434,580

Page 18

Table of Contents

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - December 31, 2015

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
2015
First Quarter	$29.62	$25.46	$29.13	$0.00
Second Quarter	$29.90	$25.06	$26.98	$0.00
Third Quarter	$30.02	$22.36	$23.31	$0.00
Fourth Quarter	$28.30	$22.55	$24.03	$0.22

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

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 19

Table of Contents

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - December 31, 2015

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

John Barnidge

Sandler O'Neill & Partners, L.P.

(312) 281-3412

jbarnidge@sandleroneill.com

Erik J. Bass

Citigroup Global Markets, Inc.

(212) 816-5257

erik.bass@citi.com

Pablo Singzon II

JP Morgan

(212) 622-2295

pablo.s.singzon@jpmorgan.com

Kenneth S. Lee

RBC Capital Markets, LLC

(212) 905-5995

kenneth.s.lee@rbccm.com

Page 20

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