TEXT-Fitch affirms American Equity ratings, outlook is stable

Mon Jun 18, 2012 1:59pm EDT

June 18 - Fitch Ratings has affirmed the Issuer Default Rating (IDR) of
American Equity Investment Life Holding Company (AEL) at 'BB+' and the
Insurer Financial Strength (IFS) ratings of its insurance operating
subsidiaries: American Equity Investment Life Insurance Company (AEILIC) and
American Equity Investment Life Insurance Company of New York, at 'BBB+'. The
Rating Outlook is Stable. A full ratings list follows the end of this release.

Fitch views AEL's chief credit strengths to be:

--A high credit quality bond portfolio;

--Good operating results;

--Adequate risk-adjusted capitalization;

--Strong competitive position in the fixed indexed annuity market.

Fitch considers AEL's bond portfolio to be of high credit quality, although 
there has been a shift to lower quality, yet still investment grade bonds in 
recent years. At March 31, 2012, U.S. Government sponsored agencies accounted 
for approximately 15% of fixed income securities and 98% of the portfolio was 
investment grade according to NAIC standards. Given the composition of the 
investment portfolio, AEL had comparably less investment related losses over the
recent period of challenging capital markets than many of its peers. As the 
composition of AEL's portfolio continues to change as certain fixed maturity 
securities are subject to call redemption, Fitch expects credit risk will rise 
to levels more consistent with historical life insurance industry averages.

AEILIC's statutory total adjusted capital increased 14% in 2011 to $1.7 billion.
Fitch views AEILIC's NAIC risk based capital (RBC) ratio as adequate for the 
rating category.Insurance Rating Methodology
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