Profile: American Equity Investment Life Holding Co (AEL.N)
27 Oct 2016
American Equity Investment Life Holding Company, incorporated on December 18, 1997, is engaged in the development and sale of fixed index and fixed rate annuity products. The Company issues fixed annuity and life insurance products through its life insurance subsidiaries, American Equity Investment Life Insurance Company (American Equity Life), American Equity Investment Life Insurance Company of New York and Eagle Life Insurance Company (Eagle Life). The Company operates through the sale of fixed index and fixed rate annuities segment. The Company's products include Fixed Index Annuities, Fixed Rate Annuities, Withdrawal Options-Fixed Index and Fixed Rate Annuities and Life Insurance.
Fixed Index Annuities
Fixed index annuities allow policyholders to earn index credits based on the performance of a particular index without the risk of loss of their principal. These products allow policyholders to transfer funds once a year among various crediting strategies, including one or more index based strategies and a traditional fixed rate strategy. The annuity contract value is equal to the sum of premiums paid, premium bonuses and interest credited, which is based upon an overall limit (or cap) or a percentage (the participation rate) of the annual appreciation (based in certain situations on monthly averages or monthly point-to-point calculations) in a recognized index. Caps and participation rates limit the amount of annual interest the policyholder may earn in any one contract year and may be adjusted by it annually subject to stated minimums. Caps range from 1% to 12% and participation rates range from 10% to 100%. For products with asset fees, if the annual appreciation in the index does not exceed the asset fee, the policyholder's index credit is zero.
Fixed Rate Annuities
Fixed rate deferred annuities include annual reset and multi-year rate guaranteed products. Its annual reset fixed rate annuities have an annual interest rate (the crediting rate) that is guaranteed for the first policy year. After the first policy year, it has the discretionary ability to change the crediting rate once annually to any rate at or above a guaranteed minimum rate. Its multi-year rate guaranteed annuities are similar to its annual reset products except that the initial crediting rate is guaranteed for approximately seven years before it may be changed at its discretion. The minimum guaranteed rate on its annual reset fixed rate deferred annuities ranges from 1% to 4% and the initial guaranteed rate on its multi-year rate guaranteed policies ranges from 1.75% to 4.1%.
The Company also sells single premium immediate annuities (SPIAs). Its SPIAs are designed to provide a series of periodic payments for a fixed period of time or for life, according to the policyholder's choice at the time of issue. The amounts, frequency and length of time of the payments are fixed at the outset of the annuity contract. SPIAs are often purchased by persons at or near retirement age desiring a stream of payments over a future period of years. The implicit interest rate on SPIAs is based on market conditions when the policy is issued.
Withdrawal Options-Fixed Index and Fixed Rate Annuities
Policyholders are permitted penalty-free withdrawals up to 10% of the contract value in each year after the first year. Withdrawals in excess of allowable penalty-free amounts are assessed a surrender charge during a penalty period which ranges from 6 to 17 years for fixed index annuities and 5 to 15 years for fixed rate annuities from the date the policy is issued. This surrender charge ranges from 4.7% to 20% for fixed index annuities and 8% to 20% for fixed rate annuities of the contract value. For few policies, the premium bonus is considered in the establishment of the surrender charge percentages. For other policies, there is a vesting schedule ranging from 10 to 14 years that applies to the premium bonus and any interest earned on that premium bonus. Surrender charges and bonus vesting are set at levels aimed at protecting it from loss on early terminations and reducing the likelihood of policyholders terminating their policies during periods of increasing interest rates.
The Life Insurance products include traditional ordinary and term, universal life and other interest-sensitive life insurance products. The Company has $2.1 billion of life insurance in force.
The Company competes with Allianz Life Insurance Company of North America, Security Benefit Life, Great American Life Insurance Company, AIG Companies, Athene USA Corp and Midland National Life Insurance Company.
American Equity Investment Life Holding Co
6000 Westown Pkwy
WEST DES MOINES IA 50266-7711