2014-03-31_AEL 8K

0001039828-14-000066.txt : 20140501 0001039828-14-000066.hdr.sgml : 20140501 20140430175820 ACCESSION NUMBER: 0001039828-14-000066 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20140430 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20140501 DATE AS OF CHANGE: 20140430 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN EQUITY INVESTMENT LIFE HOLDING CO CENTRAL INDEX KEY: 0001039828 STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311] IRS NUMBER: 421447959 STATE OF INCORPORATION: IA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-31911 FILM NUMBER: 14800958 BUSINESS ADDRESS: STREET 1: 6000 WESTOWN PARKWAY CITY: WEST DEMOINES STATE: IA ZIP: 50266 BUSINESS PHONE: 5152210002 MAIL ADDRESS: STREET 1: 6000 WESTOWN PARKWAY CITY: WEST DES MOINES STATE: IA ZIP: 50266 8-K 1 a2014-03x31_ael8k.htm 8-K 2014-03-31_AEL 8K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 30, 2014

AMERICAN EQUITY

INVESTMENT LIFE HOLDING COMPANY

(Exact Name of Registrant as Specified in its Charter)



Iowa	001-31911	42-1447959
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Indentification No.)



6000 Westown Parkway, West Des Moines, Iowa	50266
(Address of Principal Executive Offices)	(Zip Code)

(515) 221-0002

(Registrant's telephone number, including area code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

On April 30, 2014, the registrant issued a press release announcing its financial results for the quarter ended March 31, 2014, a copy of which is attached as Exhibit 99.1 and is incorporated herein by reference. The registrant's financial supplement for the quarter ended March 31, 2014, is attached as Exhibit 99.2 and is incorporated herein by reference.

The information, including exhibits attached hereto, furnished under this Item 2.02 shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, except as otherwise expressly stated in such filing.

Item 9.01. Financial Statements and Exhibits



(d)		Exhibits

The following exhibits are being furnished with this Form 8-K.



Exhibit Number		Description
99.1		Press release dated April 30, 2014, announcing American Equity Investment Life Holding Company's financial results for the quarter ended March 31, 2014.
99.2		American Equity Investment Life Holding Company's Financial Supplement for the quarter ended March 31, 2014.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: April 30, 2014



	AMERICAN EQUITY
	INVESTMENT LIFE HOLDING COMPANY


	By:	/s/ John M. Matovina
		John M. Matovina
		Chief Executive Officer and President

EXHIBIT INDEX



Exhibit Number		Description
99.1		Press release dated April 30, 2014, announcing American Equity Investment Life Holding Company's financial results for the quarter ended March 31, 2014.
99.2		American Equity Investment Life Holding Company's Financial Supplement for the quarter ended March 31, 2014.

EX-99.1 2 a2014-03x31_ael8kexhibit991.htm PRESS RELEASE 2014-03-31_AEL 8K Exhibit 99.1

Exhibit 99.1



		For more information, contact:

		John M. Matovina, Chief Executive Officer
		(515) 457-1813, jmatovina@american-equity.com

		Ted M. Johnson, Chief Financial Officer
		(515) 457-1980, tjohnson@american-equity.com

FOR IMMEDIATE RELEASE		Debra J. Richardson, Chief Administrative Officer
April 30, 2014		(515) 273-3551, drichardson@american-equity.com

		Julie L. LaFollette, Director of Investor Relations
		(515) 273-3602, jlafollette@american-equity.com

American Equity Reports First Quarter 2014 Results

WEST DES MOINES, Iowa (April 30, 2014) - American Equity Investment Life Holding Company (NYSE: AEL), a leading underwriter of index and fixed rate annuities, today reported a first quarter 2014 net loss of $9.8 million, or $0.13 per diluted common share, compared to first quarter 2013 net income of $26.0 million, or $0.38 per diluted common share.

Non-GAAP operating income¹ for the first quarter of 2014 was $37.5 million, or $0.47 per diluted common share, compared to first quarter 2013 non-GAAP operating income¹ of $33.5 million, or $0.49 per diluted common share.

Highlights for the first quarter of 2014 include:


▪	Annuity sales (before coinsurance) were $921 million compared to first quarter 2013 annuity sales of $930 million.


▪	Total invested assets were $32.0 billion (amortized cost basis = $30.4 billion).


▪	Investment spread was 2.77% compared to 2.73% for the fourth quarter of 2013 and 2.68% for the first quarter of 2013.


▪	Estimated risk-based capital (RBC) ratio at March 31, 2014 remained above A. M. Best’s rating threshold at 351% compared to 344% at December 31, 2013.

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. See accompanying tables for reconciliations of net income (loss) to operating income and descriptions of reconciling items. See Company’s Quarterly Report on Form 10-Q for a more complete discussion of the reconciling items and their impact on net income (loss) for the periods presented. Because these items fluctuate from period to period 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.


▪	Book value per share (excluding accumulated other comprehensive income) was $18.15 at March 31, 2014 compared to $18.75 at December 31, 2013.

The diluted share count for first quarter 2014 was 79.6 million shares compared to 68.7 million shares for the first quarter of 2013. This increase was attributable to (i) shares issued for retirement of convertible notes and the exercise of stock options and (ii) greater dilution from convertible notes, warrants and stock options because the Company’s common stock price was substantially higher in the first quarter of 2014 compared to the first quarter of 2013.

SATISFYING START TO YEAR WITH SOLID PERFORMANCE ON KEY METRICS

Commenting on first quarter results, founder and Executive Chairman David J. Noble said: “Our year is off to a satisfying start with solid performance on the key metrics that define our business. First quarter sales of $921 million contributed to a 2.5% increase in our policyholder liabilities under management which puts us on track to achieve our goal of at least 10% growth in policyholder liabilities under management for the year. We continued to generate attractive profitability with our operating return on average equity for the trailing 12 months, excluding the third quarter 2013 unlocking benefit, at 12.13% and maintained a high quality investment portfolio with minimal credit loss in the quarter. In addition, we continued to improve our capital structure and financial profile by retiring more convertible notes and reducing our debt leverage. And finally, we achieved a modest increase in our regulatory capital ratio which remains comfortably above the threshold for our A. M. Best rating.”

SPREAD WIDENS IN ADVANCE OF FURTHER RENEWAL RATE ADJUSTMENTS

American Equity’s investment spread of 2.77% for the first quarter of 2014 increased slightly compared to 2.73% for the fourth quarter of 2013. Spread performance was impacted by the average yield on invested assets, which declined 0.02% to 4.95% for the first quarter of 2014 from 4.97% for the fourth quarter of 2013, due to the investment of new premiums and portfolio cash flows at rates below the portfolio rate. The average yield on fixed income securities purchased and commercial mortgage loans funded in the first quarter of 2014 was 4.39%, compared to an average yield of 4.48% and 4.37% in the fourth and third quarters of 2013, respectively.

The aggregate cost of money for annuity liabilities was 2.18% in the first quarter of 2014 compared to 2.24% in the fourth quarter of 2013. This decrease reflected continued reductions in crediting rates. In addition, the Company eliminated the 0.03% under hedging cost incurred in the fourth quarter of 2013.

Commenting on investment spread, John Matovina, Chief Executive Officer and President said: “Most of the 0.04% improvement in investment spread for the quarter was due to improvement in our hedging results. But, we also saw crediting rates decrease by 0.01% more than the decrease in investment yield. Much of the decrease in crediting rates was attributable to policies issued in 2011 which were adjusted for the first time since their issue date.”

Matovina continued, “We remain committed to our objective of restoring our investment spread to the 3.00% target rate. Earlier this quarter we initiated additional renewal crediting rate reductions for policies issued prior to July 20, 2010. These rate reductions will occur on policy anniversary dates over a fifteen month period that began on April 14, 2014 with the majority of the rate reductions completed by May 15, 2015. When fully implemented, we estimate that the cost of money for approximately $15 billion of policyholder funds will be reduced by 0.20%. With our portfolio yield still under pressure from lower reinvestment rates, further adjustments to renewal crediting rates will be considered.”

LONG-TERM BENEFIT FROM RETIREMENT OF CONVERTIBLE DEBT

During the quarter, the Company continued to improve its capital structure and financial profile by reducing its debt leverage and eliminating potential additional dilution from further increases in the Company’s stock price through the retirement of additional convertible notes. After retiring $156 million of aggregate principal amount of its two outstanding convertible debt instruments in the fourth quarter of 2013, the Company retired $31 million aggregate principal amount of one of the issues in the first quarter of 2014. The total consideration paid by the Company in the first quarter included $55 million of cash and 946,793 shares of the Company’s common stock. The first quarter retirements reduced book value per share by $0.50 and the net loss for the first quarter included $0.03 from the loss on extinguishment of debt.

At March 31, 2014, the Company had approximately $151 million of net proceeds from its $400 million 6.625% Senior Notes due 2021 offering. These funds are available for future retirement of the convertible notes, and the Company intends to use these remaining net proceeds to tender for, redeem or repurchase the $129 million aggregate principal amount of convertible notes that were outstanding at March 31, 2014. The form and timing of any such activity will be dependent upon market conditions and other factors and there can be no assurance that any such transactions can be completed prior to the December 2014 call date for the 5.25% convertible notes or the September 2015 maturity date for the 3.50% convertible notes. Subsequent to the end of the first quarter, the Company retired an additional $34 million aggregate principal amount of the convertible notes in exchange for $38 million of cash and 1,225,845 shares of its common stock. The impact of these transactions on the Company’s capitalization and book value per share is disclosed in the Company’s March 31, 2014 Financial Supplement.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to future operations, strategies, financial results or other developments, and are subject to assumptions, risks and uncertainties. Statements such as “guidance”, “expect”, “anticipate”, “believe”, “goal”, “objective”, “target”, “may”, “should”, “estimate”, “projects” or similar words as well as specific projections of future results qualify as forward-looking statements. Factors that may cause our actual results to differ materially from those contemplated by these forward looking statements can be found in the company’s Form 10-K filed with the Securities and Exchange Commission. Forward-looking statements speak only as of the date the statement was made and the company undertakes no obligation to update such forward-looking statements. There can be no assurance that other factors not currently anticipated by the company will not materially and adversely affect our results of operations. Investors are cautioned not to place undue reliance on any forward-looking statements made by us or on our behalf.

CONFERENCE CALL

American Equity will hold a conference call to discuss first quarter 2014 earnings on Thursday, May 1, 2014, at 10:00 a.m. CDT. The conference call will be webcast live on the Internet. Investors and interested parties who wish to listen to the call on the Internet may do so at www.american-equity.com.

The call may also be accessed by telephone at 866-515-2909, passcode 15834723 (international callers, please dial 617-399-5123). An audio replay will be available shortly after the call on AEL’s website. An audio replay will also be available via telephone through May 22, 2014 at 1-888-286-8010, passcode 43428446 (international callers will need to dial 617-801-6888).

ABOUT AMERICAN EQUITY

American Equity Investment Life Holding Company, through its wholly-owned operating subsidiaries, is a full service underwriter of fixed annuity and life insurance products, with a primary emphasis on the sale of index and fixed rate annuities. American Equity Investment Life Holding Company, a New York Stock Exchange Listed company (NYSE: AEL), is headquartered in West Des Moines, Iowa. For more information, please visit www.american-equity.com.

###

American Equity Investment Life Holding Company

Consolidated Statements of Operations (Unaudited)



	Three Months Ended March 31,
	2014			2013
	(Dollars in thousands, except per share data)
Revenues:
Premiums and other considerations (a)	$	7,331		$	13,084
Annuity product charges	25,272			21,481
Net investment income	370,005			329,690
Change in fair value of derivatives	48,493			373,962
Net realized gains (losses) on investments, excluding other than temporary impairment ("OTTI") losses	(714		)	10,585
OTTI losses on investments:
Total OTTI losses	—			(2,189		)
Portion of OTTI losses recognized from other comprehensive income	(905		)	(1,048		)
Net OTTI losses recognized in operations	(905		)	(3,237		)
Loss on extinguishment of debt	(3,977		)	—
Total revenues	445,505			745,565

Benefits and expenses:
Insurance policy benefits and change in future policy benefits (a)	10,095			14,760
Interest sensitive and index product benefits (a)	317,192			223,170
Amortization of deferred sales inducements	666			28,831
Change in fair value of embedded derivatives	92,619			363,272
Interest expense on notes payable	10,264			7,248
Interest expense on subordinated debentures	3,008			3,009
Amortization of deferred policy acquisition costs	7,194			46,230
Other operating costs and expenses	19,085			19,520
Total benefits and expenses	460,123			706,040
Income (loss) before income taxes	(14,618		)	39,525
Income tax expense (benefit)	(4,865		)	13,494
Net income (loss)	$	(9,753	)	$	26,031

Earnings (loss) per common share	$	(0.13	)	$	0.41
Earnings (loss) per common share - assuming dilution	$	(0.13	)	$	0.38

Weighted average common shares outstanding (in thousands):
Earnings (loss) per common share	72,519			63,314
Earnings (loss) per common share - assuming dilution	79,616			68,706

(a)

The Company made an immaterial correction in the presentation of premiums, insurance policy benefits and change in future policy benefits and interest sensitive and index product benefits related to life contingent immediate annuities. We have revised the 2013 consolidated statement of operations above to be consistent with the 2014 presentation. These changes had no impact on the Company's consolidated balance sheets, net income (loss) or stockholders' equity.

Page 1

American Equity Investment Life Holding Company

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 (Loss) to Operating Income (Unaudited)



	Three Months Ended March 31,
	2014			2013
	(Dollars in thousands, except per share data)
Net income (loss)	$	(9,753	)	$	26,031
Adjustments to arrive at operating income:
Net realized investment (gains) losses, including OTTI (a)	564			(2,804		)
Change in fair value of derivatives and embedded derivatives - index annuities (a)	43,708			10,973
Change in fair value of derivatives and embedded derivatives - debt (a)	1,509			(736		)
Litigation reserve (a)	(916		)	—
Extinguishment of debt (a)	2,394			—
Operating income (a non-GAAP financial measure)	$	37,506		$	33,464
Per common share - assuming dilution:
Net income (loss)	$	(0.13	)	$	0.38
Adjustments to arrive at operating income:
Anti-dilutive effect of net loss	0.01			—
Net realized investment (gains) losses, including OTTI	—			(0.04		)
Change in fair value of derivatives and embedded derivatives - index annuities	0.55			0.16
Change in fair value of derivatives and embedded derivatives - debt	0.02			(0.01		)
Litigation reserve	(0.01		)	—
Extinguishment of debt	0.03			—
Operating income (a non-GAAP financial measure)	$	0.47		$	0.49


(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 (DSI) and deferred policy acquisition costs (DAC).

Page 2

American Equity Investment Life Holding Company

NON-GAAP FINANCIAL MEASURES

Average Stockholders' Equity and Return on Average Equity

Return on equity measures how efficiently we generate profits from the resources provided by our net assets. Return on equity is calculated by dividing net income and operating income for the trailing twelve months by average equity excluding average accumulated other comprehensive income ("AOCI").



	Twelve Months Ended
	March 31, 2014
	(Dollars in thousands)
Average Stockholders' Equity ¹
Average equity including average AOCI	$	1,692,589
Average AOCI	(497,049		)
Average equity excluding average AOCI	$	1,195,540

Net income	$	217,499
Operating income	167,462

Return on Average Equity Excluding Average AOCI
Net income	18.19		%
Operating income	14.01		%

1 - simple average based on stockholders' equity at beginning and end of the twelve month period.

Page 3

EX-99.2 3 a2014-03x31_ael8kexhibit992.htm FINANCIAL SUPPLEMENT 2014-03-31_AEL 8K Exhibit 99.2

Exhibit 99.2

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement

March 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 (Loss) 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	15
	Summary of Residential Mortgage Backed Securities	15
	Fixed Maturity Securities by Sector	16
	Mortgage Loans on Commercial Real Estate	17

D.	Shareholder Information	18

E.	Research Analyst Coverage	19

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - March 31, 2014

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)



	March 31, 2014			December 31, 2013
	(Unaudited)
Assets
Investments:
Fixed maturity securities:
Available for sale, at fair value	$	28,315,473		$	26,610,447
Held for investment, at amortized cost	76,298			76,255
Equity securities, available for sale, at fair value	7,767			7,778
Mortgage loans on real estate	2,584,583			2,581,082
Derivative instruments	790,396			856,050
Other investments	213,706			215,042
Total investments	31,988,223			30,346,654

Cash and cash equivalents	679,172			897,529
Coinsurance deposits	3,028,367			2,999,618
Accrued investment income	322,818			301,641
Deferred policy acquisition costs	2,210,694			2,426,652
Deferred sales inducements	1,713,246			1,875,880
Deferred income taxes	189,956			301,856
Other assets	412,020			471,669
Total assets	$	40,544,496		$	39,621,499

Liabilities and Stockholders' Equity
Liabilities:
Policy benefit reserves	$	36,731,438		$	35,789,655
Other policy funds and contract claims	402,895			418,033
Notes payable	521,758			549,958
Subordinated debentures	246,097			246,050
Income taxes payable	18,062			10,153
Other liabilities	969,297			1,222,963
Total liabilities	38,889,547			38,236,812

Stockholders' equity:
Common stock	72,390			70,535
Additional paid-in capital	542,003			550,400
Unallocated common stock held by ESOP	(313		)	(631		)
Accumulated other comprehensive income	332,435			46,196
Retained earnings	708,434			718,187
Total stockholders' equity	1,654,949			1,384,687
Total liabilities and stockholders' equity	$	40,544,496		$	39,621,499

Page 1

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - March 31, 2014

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share data)

(Unaudited)



	Three Months Ended March 31,
	2014			2013
Revenues:
Premiums and other considerations (a)	$	7,331		$	13,084
Annuity product charges	25,272			21,481
Net investment income	370,005			329,690
Change in fair value of derivatives	48,493			373,962
Net realized gains (losses) on investments, excluding other than temporary impairment ("OTTI") losses	(714		)	10,585
OTTI losses on investments:
Total OTTI losses	—			(2,189		)
Portion of OTTI losses recognized from other comprehensive income	(905		)	(1,048		)
Net OTTI losses recognized in operations	(905		)	(3,237		)
Loss on extinguishment of debt	(3,977		)	—
Total revenues	445,505			745,565

Benefits and expenses:
Insurance policy benefits and change in future policy benefits (a)	10,095			14,760
Interest sensitive and index product benefits (a)	317,192			223,170
Amortization of deferred sales inducements	666			28,831
Change in fair value of embedded derivatives	92,619			363,272
Interest expense on notes payable	10,264			7,248
Interest expense on subordinated debentures	3,008			3,009
Amortization of deferred policy acquisition costs	7,194			46,230
Other operating costs and expenses	19,085			19,520
Total benefits and expenses	460,123			706,040
Income (loss) before income taxes	(14,618		)	39,525
Income tax expense (benefit)	(4,865		)	13,494
Net income (loss)	$	(9,753	)	$	26,031

Earnings (loss) per common share	$	(0.13	)	$	0.41
Earnings (loss) per common share - assuming dilution	$	(0.13	)	$	0.38
Weighted average common shares outstanding (in thousands):
Earnings (loss) per common share	72,519			63,314
Earnings (loss) per common share - assuming dilution	79,616			68,706

(a)

We made an immaterial correction in the presentation of premiums, insurance policy benefits and change in future policy benefits and interest sensitive and index product benefits related to life contingent immediate annuities. We have revised the 2013 consolidated statement of operations above to be consistent with the 2014 presentation. These changes had no impact on our consolidated balance sheets, net income (loss) or stockholders' equity.

Page 2

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - March 31, 2014

Quarterly Summary - Most Recent 5 Quarters (Unaudited)



	Q1 2014			Q4 2013			Q3 2013			Q2 2013			Q1 2013
	(Dollars in thousands, except per share data)
Revenues:
Traditional life insurance premiums	$	2,804		$	2,452		$	2,493		$	2,913		$	2,698
Life contingent immediate annuity considerations	4,527			8,386			7,381			8,638			10,386
Surrender charges (a)	12,423			15,239			11,160			11,292			11,502
Lifetime income benefit rider fees	12,849			16,909			15,291			12,219			9,979
Net investment income	370,005			363,947			354,147			336,143			329,690
Change in fair value of derivatives	48,493			444,985			193,028			64,040			373,962
Net realized gains (losses) on investments, excluding OTTI	(714		)	16,364			(2,077		)	15,689			10,585
Net OTTI losses recognized in operations	(905		)	—			(222		)	(2,775		)	(3,237		)
Loss on extinguishment of debt	(3,977		)	(30,988		)	(938		)	(589		)	—
Total revenues	445,505			837,294			580,263			447,570			745,565

Benefits and expenses:
Traditional life insurance policy benefits and change in future policy benefits	2,261			1,452			1,647			2,106			1,735
Life contingent immediate annuity benefits and change in future policy benefits	7,834			11,827			9,617			11,662			13,025
Interest sensitive and index product benefits (b)	317,192			390,956			325,740			333,001			223,170
Amortization of deferred sales inducements (c)	666			69,121			34,625			120,536			28,831
Change in fair value of embedded derivatives	92,619			142,881			36,224			(408,409		)	363,272
Interest expense on notes payable	10,264			11,885			12,957			6,780			7,248
Interest expense on subordinated debentures	3,008			3,027			3,034			3,018			3,009
Amortization of deferred policy acquisition costs (c)	7,194			99,934			50,034			169,270			46,230
Other operating costs and expenses (d)(e)(f)	19,085			26,886			20,658			24,851			19,520
Total benefits and expenses	460,123			757,969			494,536			262,815			706,040
Income (loss) before income taxes	(14,618		)	79,325			85,727			184,755			39,525
Income tax expense (benefit)	(4,865		)	28,367			29,546			64,642			13,494
Net income (loss) (a)(b)(c)(d)(e)(f)	$	(9,753	)	$	50,958		$	56,181		$	120,113		$	26,031

Earnings (loss) per common share	$	(0.13	)	$	0.73		$	0.86		$	1.87		$	0.41
Earnings (loss) per common share - assuming dilution (a)(b)(c)(d)(e)(f)	$	(0.13	)	$	0.64		$	0.75		$	1.71		$	0.38
Weighted average common shares outstanding (in thousands):
Earnings (loss) per common share	72,519			69,416			65,129			64,254			63,314
Earnings (loss) per common share - assuming dilution	79,616			79,041			74,560			70,382			68,706

(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 2013 includes a benefit 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 decreased interest sensitive and index product benefits by $1.8 million and increased net income and earnings per common share - assuming dilution by $1.1 million and $0.01 per share, respectively.


(c)	Q3 2013 includes benefit from unlocking which reduced amortization of deferred sales inducements and deferred policy acquisition costs by $11.1 million and $18.5 million, respectively, and increased net income and earnings per common share- assuming dilution by $19.1 million and $0.26 per share, respectively.

(d)

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.

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - March 31, 2014

(e)

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.


(f)	Q2 2013 includes expense of $8.5 million related to assessments received and future estimates of assessments from state guaranty fund associations related to the insolvency of Executive Life Insurance Company of New York, which after income taxes decreased net income and earnings per common share - assuming dilution by $5.5 million and $0.08 per share, respectively.

Q2 2013 includes a benefit of $3.2 million related to the final settlement of a litigation liability established in 2010, 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 $2.0 million and $0.03 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 (Loss) to Operating Income (Unaudited)



	Three Months Ended March 31,
	2014			2013
	(Dollars in thousands, except per share data)
Net income (loss)	$	(9,753	)	$	26,031
Adjustments to arrive at operating income:
Net realized investment (gains) losses, including OTTI (a)	564			(2,804		)
Change in fair value of derivatives and embedded derivatives - index annuities (a)	43,708			10,973
Change in fair value of derivatives and embedded derivatives - debt (a)	1,509			(736		)
Litigation reserve (a)	(916		)	—
Extinguishment of debt (a)	2,394			—
Operating income (a non-GAAP financial measure)	$	37,506		$	33,464

Per common share - assuming dilution:
Net income (loss)	$	(0.13	)	$	0.38
Adjustments to arrive at operating income:
Anti-dilutive effect of net loss	0.01			—
Net realized investment (gains) losses, including OTTI	—			(0.04		)
Change in fair value of derivatives and embedded derivatives - index annuities	0.55			0.16
Change in fair value of derivatives and embedded derivatives - debt	0.02			(0.01		)
Litigation reserve	(0.01		)	—
Extinguishment of debt	0.03			—
Operating income (a non-GAAP financial measure)	$	0.47		$	0.49


(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 (DSI) and deferred policy acquisition costs (DAC).

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - March 31, 2014

NON-GAAP FINANCIAL MEASURES

Summary of Adjustments to Arrive at Operating Income (Unaudited)



	Three Months Ended March 31,
	2014			2013
	(Dollars in thousands)
Net realized investment gains and losses, including OTTI:
Net realized (gains) losses on investments, including OTTI	$	1,619		$	(7,348	)
Amortization of DAC and DSI	(746		)	3,093
Income taxes	(309		)	1,451
	$	564		$	(2,804	)
Change in fair value of derivatives and embedded derivatives:
Index annuities	$	167,481		$	36,890
Interest rate caps and swap	2,579			(1,210		)
Amortization of DAC and DSI	(101,803		)	(20,240		)
Income taxes	(23,040		)	(5,203		)
	$	45,217		$	10,237
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	$	3,977		$	—
Income taxes	(1,583		)	—
	$	2,394		$	—

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - March 31, 2014

NON-GAAP FINANCIAL MEASURES

Quarterly Summary - Most Recent 5 Quarters (Unaudited)

Reconciliation from Net Income (Loss) to Operating Income



	Q1 2014			Q4 2013			Q3 2013			Q2 2013			Q1 2013
	(Dollars in thousands, except per share data)
Net income (loss)	$	(9,753	)	$	50,958		$	56,181		$	120,113		$	26,031
Adjustments to arrive at operating income:
Net realized investment (gains) losses, including OTTI (a)	564			(6,214		)	890			(3,574		)	(2,804		)
Change in fair value of derivatives and embedded derivatives - index annuities (a)	43,708			(23,419		)	(4,907		)	(81,351		)	10,973
Change in fair value of derivatives and embedded derivatives - debt (a)	1,509			(4,290		)	7,136			(3,302		)	(736		)
Litigation reserve (a)	(916		)	1,988			—			(1,969		)	—
Extinguishment of debt (a)	2,394			20,823			548			345			—
Operating income (a non-GAAP financial measure) (b)(c)(d)(e)	$	37,506		$	39,846		$	59,848		$	30,262		$	33,464

Operating income per common share - assuming dilution (b)(c)(d)(e)	$	0.47		$	0.50		$	0.80		$	0.43		$	0.49


(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)

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.


(c)	Q3 2013 includes a benefit from unlocking which reduced amortization of deferred sales inducements and deferred policy acquisition costs by $12.6 million and $20.4 million, respectively, and increased operating income and operating income per common share- assuming dilution by $21.3 million and $0.29 per share, respectively.

(d)

Q3 2013 includes a benefit 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 decreased interest sensitive and index product benefits by $1.8 million and increased operating income and operating income per common share - assuming dilution by $1.1 million and $0.01 per share, respectively.


(e)	Q2 2013 includes expense of $8.5 million related to assessments received and future estimates of assessments from state guaranty fund associations related to the insolvency of Executive Life Insurance Company of New York, which after income taxes decreased operating income and operating income per common share - assuming dilution by $5.5 million and $0.08 per share, respectively.

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - March 31, 2014

NON-GAAP FINANCIAL MEASURES

Summary of Adjustments to Arrive at Operating Income (Unaudited)



	Q1 2014			Q4 2013			Q3 2013			Q2 2013			Q1 2013
	(Dollars in thousands)
Net realized (gains) losses on investments	$	714		$	(16,364	)	$	2,077		$	(15,689	)	$	(10,585	)
Net OTTI losses recognized in operations	905			—			222			2,775			3,237
Change in fair value of derivatives	57,039			(209,083		)	25,448			91,374			(299,494		)
Loss on extinguishment of debt	3,977			30,988			938			589			—
Increase (decrease) in total revenues	62,635			(194,459		)	28,685			79,049			(306,842		)

Amortization of deferred sales inducements	43,435			(27,797		)	(6,765		)	(82,583		)	7,447
Change in fair value of embedded derivatives	(113,021		)	(104,953		)	39,526			408,606			(335,174		)
Amortization of deferred policy acquisition costs	58,319			(38,189		)	(9,849		)	(111,570		)	9,700
Other operating costs and expenses	2,212			(4,248		)	—			3,212			—
Increase (decrease) in total benefits and expenses	(9,055		)	(175,187		)	22,912			217,665			(318,027		)
Increase (decrease) in income (loss) before income taxes	71,690			(19,272		)	5,773			(138,616		)	11,185
Increase (decrease) in income tax expense	24,431			(8,160		)	2,106			(48,765		)	3,752
Increase (decrease) in net income (loss)	$	47,259		$	(11,112	)	$	3,667		$	(89,851	)	$	7,433

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - March 31, 2014

Capitalization/Book Value per Share



	(a) Pro-forma March 31, 2014			March 31, 2014			December 31, 2013
	(Dollars in thousands, except per share data)
Capitalization:
Notes payable:
September 2015 Notes	$	55,757		$	86,239		$	85,328
December 2029 Notes	33,706			35,519			64,630
July 2021 Notes	400,000			400,000			400,000
Subordinated debentures payable to subsidiary trusts	246,097			246,097			246,050
Total debt	735,560			767,855			796,008
Total stockholders’ equity	1,657,654			1,654,949			1,384,687
Total capitalization	2,393,214			2,422,804			2,180,695
Accumulated other comprehensive income (AOCI)	(332,435		)	(332,435		)	(46,196		)
Total capitalization excluding AOCI (b)	$	2,060,779		$	2,090,369		$	2,134,499

Total stockholders’ equity	$	1,657,654		$	1,654,949		$	1,384,687
Accumulated other comprehensive income	(332,435		)	(332,435		)	(46,196		)
Total stockholders’ equity excluding AOCI (b)	$	1,325,219		$	1,322,514		$	1,338,491

Common shares outstanding (c)	74,100,576			72,874,731			71,369,474

Book Value per Share: (d)
Book value per share including AOCI	$	22.37		$	22.71		$	19.40
Book value per share excluding AOCI (b)	$	17.88		$	18.15		$	18.75

Debt-to-Capital Ratios: (e)
Senior debt / Total capitalization	23.8		%	25.0		%	25.8		%
Adjusted debt / Total capitalization	23.8		%	25.0		%	25.8		%


(a)	Pro-forma March 31, 2014 amounts include the impact of convertible debt retirements completed in April 2014. The convertible debt retirements resulted in a net decrease in notes payable of $32,295 and a net increase in stockholders' equity of $2,705.


(b)	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.


(c)	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 - 58,618 shares; 2013 - 58,618 shares.


(d)	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.


(e)	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 - March 31, 2014

Spread Results



	Three Months Ended March 31,
	2014	2013
Average yield on invested assets	4.95%	5.01%
Aggregate cost of money	2.18%	2.33%
Aggregate investment spread	2.77%	2.68%

Impact of:
Investment yield - additional prepayment income	0.05%	0.08%
Cost of money effect of (under) over hedging	—%	0.03%

Weighted average investments (in thousands)	$30,002,658	$26,382,116

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 March 31,
	2014			2013
	(Dollars in thousands)
Included in interest sensitive and index product benefits:
Index credits	$	230,378		$	135,341
Interest credited	69,827			74,417
Included in change in fair value of derivatives:
Proceeds received at option expiration	(227,958		)	(135,225		)
Pro rata amortization of option cost	102,024			88,855
Cost of money for deferred annuities	$	174,271		$	163,388

Weighted average liability balance outstanding (in thousands)	$	31,928,538		$	28,060,075

Annuity Account Balance Rollforward



	Three Months Ended March 31,
	2014			2013
	(Dollars in thousands)
Account balances at beginning of period	$	31,535,846		$	27,669,669
Net deposits	865,405			872,329
Premium and interest bonuses	72,687			73,898
Fixed interest credited and index credits	300,205			209,758
Surrender charges	(12,423		)	(11,502		)
Lifetime income benefit rider fees	(12,849		)	(9,979		)
Surrenders, withdrawals, deaths, etc.	(427,639		)	(353,695		)
Account balances at end of period	$	32,321,232		$	28,450,478

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - March 31, 2014

Annuity Deposits by Product Type



	Three Months Ended March 31,				Year Ended December 31,
Product Type	2014		2013		2013
	(Dollars in thousands)
Fixed Index Annuities:
Index Strategies	$	642,266	$	604,641	$	2,861,977
Fixed Strategy	203,538		243,129		1,020,447
	845,804		847,770		3,882,424
Fixed Rate Annuities:
Single-Year Rate Guaranteed	15,240		19,910		71,944
Multi-Year Rate Guaranteed	54,587		47,256		205,978
Single premium immediate annuities	5,286		14,980		52,142
	75,113		82,146		330,064
Total before coinsurance ceded	920,917		929,916		4,212,488
Coinsurance ceded	50,226		42,607		182,616
Net after coinsurance ceded	$	870,691	$	887,309	$	4,029,872

Surrender Charge Protection and Account Values by Product Type

Annuity Surrender Charges and Net (of coinsurance) Account Values at March 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	9.9	15.6%	$	30,342,038	93.9	%
Single-Year Fixed Rate Guaranteed Annuities	11.1	4.3	8.0%	1,431,842		4.4	%
Multi-Year Fixed Rate Guaranteed Annuities (a)	6.3	1.7	4.4%	547,352		1.7	%
Total	13.9	9.5	15.1%	$	32,321,232	100.0	%


(a)	40% 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 - March 31, 2014

Annuity Liability Characteristics



	Fixed Annuities Account Value		Fixed Index Annuities Account Value
	(Dollars in thousands)
SURRENDER CHARGE PERCENTAGES:
No surrender charge	$	661,371	$	901,447
0.0% < 2.0%	28,358		321,533
2.0% < 3.0%	32,859		87,365
3.0% < 4.0%	28,091		345,218
4.0% < 5.0%	116,931		257,746
5.0% < 6.0%	59,308		492,375
6.0% < 7.0%	181,175		215,568
7.0% < 8.0%	169,938		638,822
8.0% < 9.0%	61,738		438,489
9.0% < 10.0%	80,283		508,580
10.0% or greater	559,142		26,134,895
	$	1,979,194	$	30,342,038



	Fixed and Fixed Index Annuities Account Value		Weighted Average Surrender Charge
	(Dollars in thousands)
SURRENDER CHARGE EXPIRATION BY YEAR:
Out of Surrender Charge	$	1,562,818	0.00	%
2014	336,812		1.73	%
2015	530,464		3.25	%
2016	778,827		4.74	%
2017	938,531		6.20	%
2018	838,778		8.29	%
2019	602,401		9.22	%
2020	917,481		10.79	%
2021	1,205,534		12.45	%
2022	2,054,001		14.59	%
2023	5,044,448		16.43	%
2024	4,402,810		17.52	%
2025	3,188,735		18.29	%
2026	2,749,481		18.45	%
2027	2,863,871		18.87	%
2028	1,922,243		19.34	%
2029	1,932,360		19.88	%
2030	444,809		19.98	%
2031	6,828		20.00	%
	$	32,321,232	15.07	%

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - March 31, 2014

Annuity Liability Characteristics



	Fixed Annuities Account Value		Fixed Index Annuities Account Value
	(Dollars in thousands)
CREDITED RATE (INCLUDING BONUS INTEREST) VS. ULTIMATE MINIMUM GUARANTEED RATE DIFFERENTIAL:
No differential	$	758,786	$	771,761
› 0.0% - 0.25%	293,015		523,321
› 0.25% - 0.5%	165,955		33,657
› 0.5% - 1.0% (a)	286,201		971,422
› 1.0% - 1.5% (a)	92,721		21,590
› 1.5% - 2.0%	94,769		1,981
› 2.0% - 2.5%	73		—
› 2.5% - 3.0%	1,329		—
1.00% ultimate guarantee - 2.49% wtd avg interest rate (b)	76,857		—
1.50% ultimate guarantee - 1.63% wtd avg interest rate (b)	104,587		2,911,985
2.00% ultimate guarantee - 2.58% wtd avg interest rate (b)	104,901		—
2.25% ultimate guarantee - 2.65% wtd avg interest rate (b)	—		1,397,438
3.00% ultimate guarantee - 2.87% wtd avg interest rate (b)	—		2,780,802
Allocated to index strategies (see tables that follow)	—		20,928,081
	$	1,979,194	$	30,342,038


(a)	$42,484 of Fixed Annuities Account Value have a guarantee of 2.25% for the first 10 years and 3.00% thereafter. They began increasing in 2014. $530,157 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 began increasing in 2014.


(b)	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 March 31, 2014 for fixed annuities and funds allocated to the fixed rate strategy for fixed index annuities would decrease by 0.56%.

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - March 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	$	851	$	11,563	$	740,134	$	36,191	$	262,305
2.5% - 3%	1,061,268		—		—		—		—
3% - 4%	2,370,344		18,544		—		—		—
4% - 5%	20,008		103,496		1,660,988		—		—
5% - 6%	21,239		4,055		2,638,988		—		—
6% - 7%	—		—		2,783,224		—		—
>= 7%	—		11,182		39,819		117,584		68,365



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	$	231	$	337,202	$	174,591	$	203,723
< 20%	248,285		—		—		—
20% - 40%	312,823		461,954		—		—
40% - 60%	221		164,894		124,768		1,317
>= 60%	1,018		—		—		—



S&P 500 Monthly Point-to-Point - Minimum Guaranteed Monthly Cap = 1% (Dollars in thousands)
Current Cap
At minimum	$	15,297
1.45% - 1.8%	3,537,742
2.0% - 2.3%	2,588,433
>= 2.3%	775,663

If all caps and participation rates were reduced to minimum caps and participation rates, the cost of options would decrease by 0.64% based upon prices of options for the week ended April 15, 2014.

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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - March 31, 2014

Summary of Invested Assets



	March 31, 2014				December 31, 2013
	Carrying Amount		Percent		Carrying Amount		Percent
	(Dollars in thousands)
Fixed maturity securities:
United States Government full faith and credit	$	43,300	0.1	%	$	42,925	0.2	%
United States Government sponsored agencies	1,299,454		4.1	%	1,194,289		3.9	%
United States municipalities, states and territories	3,437,313		10.7	%	3,306,743		10.9	%
Foreign government obligations	144,023		0.4	%	91,557		0.3	%
Corporate securities	18,517,485		57.9	%	17,309,292		57.1	%
Residential mortgage backed securities	1,928,555		6.0	%	1,971,960		6.5	%
Commercial mortgage backed securities	1,976,589		6.2	%	1,735,460		5.7	%
Other asset backed securities	1,045,052		3.3	%	1,034,476		3.4	%
Total fixed maturity securities	28,391,771		88.7	%	26,686,702		88.0	%
Equity securities	7,767		—	%	7,778		—	%
Mortgage loans on real estate	2,584,583		8.1	%	2,581,082		8.5	%
Derivative instruments	790,396		2.5	%	856,050		2.8	%
Other investments	213,706		0.7	%	215,042		0.7	%
	$	31,988,223	100.0	%	$	30,346,654	100.0	%

Credit Quality of Fixed Maturity Securities - March 31, 2014



NAIC Designation	Carrying Amount		Percent		Rating Agency Rating	Carrying Amount		Percent
	(Dollars in thousands)					(Dollars in thousands)
1	$	17,755,174	62.6	%	Aaa/Aa/A	$	17,363,658	61.2	%
2	10,059,679		35.4	%	Baa	9,632,099		33.9	%
3	516,812		1.8	%	Ba	493,445		1.7	%
4	58,988		0.2	%	B	130,440		0.5	%
5	—		—	%	Caa and lower	580,719		2.0	%
6	1,118		—	%	In or near default	191,410		0.7	%
	$	28,391,771	100.0	%		$	28,391,771	100.0	%

Page 14

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - March 31, 2014

Watch List Securities - March 31, 2014



General Description	Amortized Cost		Unrealized Gains (Losses)			Fair Value		Months Below Amortized Cost
	(Dollars in thousands)
Corporate bonds:
Finance	$	20,000	$	(4,945	)	$	15,055	31
Industrial	49,459		(6,399		)	43,060		17 - 43
Industrial	9,341		501			9,842
	$	78,800	$	(10,843	)	$	67,957

Summary of Residential Mortgage Backed Securities



Collateral Type	Principal Amount		Amortized Cost		Fair Value
	(Dollars in thousands)
OTTI has not been recognized
Government agency	$	740,739	$	680,210	$	712,171
Prime	493,044		466,940		496,855
Alt-A	30,286		30,612		30,757
	$	1,264,069	$	1,177,762	$	1,239,783
OTTI has been recognized
Prime	$	443,620	$	382,950	$	395,341
Alt-A	344,556		270,449		293,431
	$	788,176	$	653,399	$	688,772
Total by collateral type
Government agency	$	740,739	$	680,210	$	712,171
Prime	936,664		849,890		892,196
Alt-A	374,842		301,061		324,188
	$	2,052,245	$	1,831,161	$	1,928,555
Total by NAIC designation
1	$	1,926,031	$	1,715,122	$	1,810,443
2	81,762		76,931		78,690
3	42,101		37,448		38,342
4	—		—		—
6	2,351		1,660		1,080
	$	2,052,245	$	1,831,161	$	1,928,555

Page 15

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - March 31, 2014

Fixed Maturity Securities by Sector



	March 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	$	1,402,611	$	1,342,754	$	1,358,628	$	1,237,214
United States municipalities, states and territories	3,186,473		3,437,313		3,181,032		3,306,743
Foreign government obligations	136,116		144,023		86,112		91,557
Corporate securities:
Consumer discretionary	1,551,557		1,611,005		1,533,993		1,532,694
Consumer staples	1,278,575		1,331,868		1,246,744		1,250,351
Energy	2,062,551		2,148,352		1,992,411		2,011,334
Financials	3,260,833		3,414,019		3,179,964		3,233,930
Health care	1,533,623		1,594,986		1,458,757		1,458,946
Industrials	2,183,057		2,282,092		2,045,490		2,039,544
Information technology	1,163,672		1,190,898		1,163,159		1,145,674
Materials	1,450,553		1,483,804		1,405,603		1,381,880
Telecommunications	510,463		527,096		472,250		473,517
Utilities	2,667,922		2,857,029		2,643,747		2,705,147
Residential mortgage backed securities:
Government agency	680,210		712,171		677,394		679,518
Prime	849,890		892,196		907,881		964,443
Alt-A	301,061		324,188		310,638		327,999
Commercial mortgage backed securities:
Government agency	301,383		297,821		302,063		288,495
Other	1,702,042		1,678,768		1,519,925		1,446,965
Other asset backed securities:
Consumer discretionary	73,223		75,327		86,788		86,633
Energy	8,258		9,149		8,268		8,922
Financials	715,037		706,289		709,900		688,737
Industrials	215,374		228,912		215,873		225,212
Telecommunications	14,836		16,880		14,835		16,714
Utilities	6,305		8,495		6,275		8,258
Redeemable preferred stock - financials	—		38		1		20
	$	27,255,625	$	28,315,473	$	26,527,731	$	26,610,447
Held for investment:
Corporate security - financials	$	76,298	$	64,920	$	76,255	$	60,840

Page 16

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - March 31, 2014

Mortgage Loans on Commercial Real Estate



	March 31, 2014						December 31, 2013
	Principal			Percent			Principal		Percent
	(Dollars in thousands)
Geographic distribution
East	$	793,717		30.4		%	$	765,717	29.4	%
Middle Atlantic	152,712			5.9		%	156,489		6.0	%
Mountain	343,166			13.1		%	356,246		13.7	%
New England	20,977			0.8		%	21,324		0.8	%
Pacific	313,896			12.0		%	317,431		12.2	%
South Atlantic	488,622			18.7		%	483,852		18.5	%
West North Central	343,660			13.2		%	351,794		13.5	%
West South Central	153,630			5.9		%	154,845		5.9	%
	$	2,610,380		100.0		%	$	2,607,698	100.0	%

Property type distribution
Office	$	557,029		21.3		%	$	590,414	22.6	%
Medical Office	122,807			4.7		%	125,703		4.8	%
Retail	729,056			27.9		%	711,364		27.3	%
Industrial/Warehouse	690,442			26.5		%	673,449		25.8	%
Hotel	47,138			1.8		%	61,574		2.4	%
Apartment	313,330			12.0		%	291,823		11.2	%
Mixed use/other	150,578			5.8		%	153,371		5.9	%
	$	2,610,380		100.0		%	$	2,607,698	100.0	%

	March 31, 2014			December 31, 2013
Credit Exposure - By Payment Activity
Performing	$	2,591,196		$	2,593,276
In workout	7,956			6,248
Delinquent	—			—
Collateral dependent	11,228			8,174
	2,610,380			2,607,698
Specific Loan Loss Allowance	(16,462		)	(16,847		)
General Loan Loss Allowance	(8,800		)	(9,200		)
Deferred prepayment fees	(535		)	(569		)
	$	2,584,583		$	2,581,082

Page 17

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - March 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

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 18

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

Financial Supplement - March 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

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

Mark Finkelstein

Evercore Partners

(312) 445-6440

mark.finkelstein@evercore.com

Page 19

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