American Equity Reports Record $7+ Billion Annual FIA Sales and Strong Financial Results to Cap a Historic 2023
- Record FIA sales of $7.0 billion in 2023
- Q4 2023 net loss of $(475.9) million compared to net income of $21.7 million in Q4 2022
- Full year 2023 net income of $166.9 million, down from $1.9 billion in 2022
- Increase in private assets to 25.8% of the investment portfolio in Q4 2023
- Agreement to merge with Brookfield Reinsurance in the first half of 2024
- Net loss of $(475.9) million in Q4 2023
- Decrease in full year 2023 net income compared to 2022
- Increase in surrender charges and outflows in Q4 2023
Insights
The reported net loss of $(475.9) million in Q4 2023, compared to a net income of $21.7 million in Q4 2022, is a significant downturn for American Equity Investment Life Holding Company. This shift from profit to loss could raise concerns among investors regarding the company's financial stability and potential future profitability. A financial analyst would scrutinize the company's balance sheet and income statement to understand the drivers behind the loss, such as increased claims, changes in investment income, or operational challenges. The full-year net income of $166.9 million, while lower than the previous year's $1.9 billion, still indicates profitability on an annual basis. However, the drastic year-over-year decline warrants a detailed analysis of the company's financial strategy and operational efficiency.
The increase in investment yield and the shift in portfolio allocation towards private assets could signal a strategic move to higher-yielding, albeit potentially riskier, investments. The expectation to have $10 billion of liquidity available after the planned merger with Brookfield Reinsurance suggests strategic positioning for future investment opportunities or to buffer against potential market downturns. The record FIA sales of $7.0 billion in 2023, up from $2.3 billion in 2020, demonstrate strong product demand and effective execution of the AEL 2.0 strategy. However, the sustainability of these sales levels in a potentially changing interest rate environment will be critical for long-term growth.
From a market perspective, the significant increase in fixed index annuity (FIA) sales indicates a successful adoption of the AEL 2.0 strategy and a strong market position in retirement income products. The strategic shift to retain all FIA new business on the balance sheet ahead of the merger with Brookfield Reinsurance reflects a move to maximize shareholder value and could be seen as a positive development by the market. The company's ability to deliver a 23-basis point increase in yield compared to the full year 2022, excluding non-trendable items, showcases effective asset management capabilities. However, the decreased non-GAAP operating income in Q4 2023 compared to Q3 2023 and the impact of notable items on the per-share results may raise concerns about the consistency of earnings and the potential for future earnings volatility.
The expected lapsation of MYGA policies in the first half of 2024 could lead to increased outflows, which may impact future profitability. The market will be observing how well the company can manage potential surrender surges and whether the increased liquidity position will be sufficient to cover these outflows without affecting operational performance. The stability of credit metrics and the 'A' rating of the core fixed income portfolio suggest a strong credit risk management framework, which is essential for investor confidence, particularly in a period of market uncertainty.
The planned merger with Brookfield Reinsurance is a major corporate action that will have legal and regulatory implications. The merger's successful execution will depend on satisfying various legal conditions and obtaining regulatory approvals. The legal process involves due diligence, the drafting and negotiation of merger agreements and ensuring compliance with securities laws. The merger's impact on the company's corporate structure, tax considerations and potential changes in shareholder rights are all legal aspects that require careful examination. The company's strategic incentive compensation plan, put in place in November 2022, may also have legal implications regarding disclosure requirements and executive compensation regulations.
Furthermore, the company's increase in allocation to private assets and the associated liquidity strategy must adhere to insurance regulations and investment guidelines. Legal experts would assess the compliance of these strategic moves with applicable laws and regulations to ensure that the company's actions do not expose it to legal risks or penalties. The legal perspective is crucial for understanding the broader implications of the company's strategies on corporate governance, compliance and potential litigation risks.
Company Highlights
-
Fourth quarter 2023 net loss available to common stockholders of
$(475.9) million $(6.04) $21.7 million $0.25
-
Full year 2023 net income available to common stockholders of
$166.9 million $2.06 $1.9 billion $20.50
-
Non-GAAP operating income available to common stockholders1 for the fourth quarter and full year 2023 of
$159.6 million $607.1 million $1.99 $7.50 $0.17 $0.13
-
For full year 2023, GAAP return on equity and non-GAAP operating return on equity1 of
8.4% and18.7% , respectively
-
Total fourth quarter sales4 of
$2.0 billion $7.0 billion $2.3 billion
-
Fourth quarter investment yield of
4.65% , up 35 basis points year-over-year, while the sequential change from the third quarter reflects lower-than-expected returns on market-to-market private assets
-
Increase in private assets to
25.8% of the investment portfolio as of December 31, 2023, with an additional$7 billion 15% of the investment portfolio - at year-end; Expect to have$10 billion
American Equity's President and CEO, Anant Bhalla stated: "Supported by our strategy flywheel, American Equity had an outstanding 2023 capped off by our strong results in the fourth quarter. FIA sales for the year were a record
Non-GAAP operating income available to common stockholders1 for the fourth quarter of 2023 was
The year-over-year change in quarterly non-GAAP operating income available to common stockholders1, excluding the impact of notable items2, reflects higher net investment income and surrender charges, increased recurring fee revenue related to reinsurance, and a decrease in the quarterly change in the Market Risk Benefit liability.
Compared to the third quarter of 2023, quarterly non-GAAP operating income available to common stockholders1. excluding the impact of notable items2, decreased reflecting lower investment spread and increased other operating expenses. Notable items2 in the fourth and third quarters of 2023 reflect the special incentive compensation plan put in place in November 2022. Notable items2 in the third quarter also include the effect of actuarial assumption revisions.
For the fourth quarter of 2023, net investment income fell to
Compared to the third quarter of 2023, fourth quarter surrender charge income increased
Outflows in the fourth quarter of 2023, including surrenders, income utilization, death benefits and partial withdrawals, increased
As of December 31, 2023, account value of business ceded subject to fee income was
Interest sensitive and index product benefits, as adjusted to reflect non-GAAP operating income available to common stockholders1, for the fourth quarter of 2023 reflected an
Compared to the third quarter of 2023, the change in the MRB liability increased by
Amortization of deferred policy acquisition and sales inducement cost was
Other operating costs and expenses adjusted to reflect non-GAAP operating income available to common stockholders1 for the fourth quarter of 2023 increased to
The effective tax rate on pre-tax operating income available for common stockholders1 for the fourth quarter of 2023 was
INVESTMENT SPREAD DECREASES FROM PRIOR SEQUENTIAL QUARTER ON LOWER MARK-TO-MARKET PRIVATE ASSET RETURNS
American Equity’s investment spread was
Average yield on invested assets was
The return on mark-to-market private assets declined from the third quarter of 2023, and was
During the fourth quarter of 2023, long-term investment asset purchases totaled
The point-in-time yield on the portfolio at December 31, 2023, was
The aggregate cost of money for annuity liabilities of
Cost of options in the fourth quarter of 2023 averaged
Net account balance growth in the fourth quarter was a positive
FIA SALES REMAIN STRONG BOLSTERED BY INCREASE IN GUARANTEED RETIREMENT INCOME PRODUCT SALES
Fourth quarter 2023 sales were
Compared to the third quarter of 2023, FIA sales at American Equity Life in the Independent Marketing Organization (IMO) channel fell
Bhalla noted, "We continued to record strong FIA sales in the fourth quarter of 2023, despite lowering S&P 500 caps on our accumulation products late in the third quarter, in line with our product profitability targets in light of lower interest rates. We were particularly pleased that sales of income products, which we believe is the most attractive sector in the FIA marketplace, were up
Bhalla continued, "I could not be more proud of the efforts of my teammates in making 2023 a record sales year for FIAs with total deposits of just over
CREDIT AND CAPITAL METRICS REMAIN STABLE
With regard to credit markets, Jim Hamalainen, Chief Investment Officer, added, "Credit metrics in the investment portfolio continued to be stable in the fourth quarter, and our core fixed income portfolio remains 'A' rated. Net realized losses for the quarter totaled just
Hamalainen continued, "At year-end, the cash position in the investment portfolio totaled
Effective October 1, 2023, the company completed its second
As of December 31, 2023, total adjusted capital at American Equity Life totaled
PENDING MERGER WITH BROOKFIELD REINSURANCE
On July 5, 2023, Brookfield Reinsurance and American Equity announced that they had entered into a definitive agreement whereby Brookfield Reinsurance will acquire all outstanding shares of common stock of American Equity it does not already own in a cash and stock transaction that values AEL at approximately
Following approval of the transaction by shareholders at the special meeting held November 10, 2023, American Equity continues to expect the merger to close in the first half of 2024. Closing remains subject to the satisfaction of certain closing conditions customary for a transaction of this type, including receipt of insurance regulatory approvals in relevant jurisdictions.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
The forward-looking statements in this release such as believe, build, confident, continue, could, estimate, expect, exposure, future, grow, likely, maintain, may, might, model, opportunity, outlook, plan, potential, proposed, risk, scenario, should, trend, will, would, and their derivative forms and similar words, as well as any projections of future results, are based on assumptions and expectations that involve risks and uncertainties, including the "Risk Factors" the company describes in its
ABOUT AMERICAN EQUITY
At American Equity Investment Life Holding Company, our policyholders work with over 40,000 independent agents and advisors affiliated with independent market organizations (IMOs), banks and broker-dealers through our wholly-owned operating subsidiaries. Advisors and agents choose one of our leading annuity products best suited for their clients' personal needs to create financial dignity in retirement. To deliver on its promises to policyholders, American Equity has re-framed its investment focus — building a stronger emphasis on insurance liability driven asset allocation and specializing in alternate, private asset management while partnering with world renowned, public fixed income asset managers. American Equity is headquartered in
1 |
Use of non-GAAP financial measures is discussed in this release in the tables that follow the text of the release. |
2 |
Notable items reflect the increase (decrease) to non-GAAP operating income (loss) available to common stockholders for certain matters where more detail may help investors better understand, evaluate, and forecast results. Notable items are further discussed in the tables that follow the text of the release. |
3 |
Non-trendable items are the impact of investment yield – additional prepayment income and cost of money effect of over (under) hedging as shown in our December 31, 2023 financial supplement on page 10, “Spread Results”. |
4 |
For the purposes of this document, all references to sales are on a gross basis. Gross sales is defined as sales before the use of reinsurance. |
American Equity Investment Life Holding Company
Unaudited (Dollars in thousands, except per share data)
Consolidated Statements of Operations
|
Three Months Ended December 31, |
|
Year Ended December 31, |
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenues: |
|
|
|
|
|
|
|
||||||||
Premiums and other considerations |
$ |
2,657 |
|
|
$ |
2,991 |
|
|
$ |
11,967 |
|
|
$ |
19,739 |
|
Annuity product charges |
|
96,947 |
|
|
|
61,666 |
|
|
|
315,496 |
|
|
|
230,354 |
|
Net investment income |
|
582,176 |
|
|
|
537,995 |
|
|
|
2,272,798 |
|
|
|
2,307,463 |
|
Change in fair value of derivatives |
|
353,443 |
|
|
|
22,243 |
|
|
|
259,046 |
|
|
|
(1,138,128 |
) |
Net realized gains (losses) on investments |
|
(2,065 |
) |
|
|
14,411 |
|
|
|
(99,203 |
) |
|
|
(47,848 |
) |
Other revenue |
|
21,973 |
|
|
|
13,032 |
|
|
|
75,866 |
|
|
|
42,245 |
|
Total revenues |
|
1,055,131 |
|
|
|
652,338 |
|
|
|
2,835,970 |
|
|
|
1,413,825 |
|
|
|
|
|
|
|
|
|
||||||||
Benefits and expenses: |
|
|
|
|
|
|
|
||||||||
Insurance policy benefits and change in future policy benefits |
|
3,161 |
|
|
|
5,948 |
|
|
|
17,687 |
|
|
|
33,220 |
|
Interest sensitive and index product benefits |
|
193,439 |
|
|
|
57,626 |
|
|
|
567,423 |
|
|
|
554,871 |
|
Market risk benefits (gains) losses |
|
241,998 |
|
|
|
33,490 |
|
|
|
(14,546 |
) |
|
|
3,684 |
|
Amortization of deferred sales inducements |
|
50,346 |
|
|
|
45,966 |
|
|
|
192,252 |
|
|
|
181,970 |
|
Change in fair value of embedded derivatives |
|
977,178 |
|
|
|
342,409 |
|
|
|
1,143,576 |
|
|
|
(2,352,598 |
) |
Interest expense on notes and loan payable |
|
11,642 |
|
|
|
10,228 |
|
|
|
45,890 |
|
|
|
32,098 |
|
Interest expense on subordinated debentures |
|
1,341 |
|
|
|
1,335 |
|
|
|
5,355 |
|
|
|
5,331 |
|
Amortization of deferred policy acquisition costs |
|
72,428 |
|
|
|
66,831 |
|
|
|
279,700 |
|
|
|
284,011 |
|
Other operating costs and expenses |
|
75,250 |
|
|
|
62,389 |
|
|
|
301,581 |
|
|
|
239,526 |
|
Total benefits and expenses |
|
1,626,783 |
|
|
|
626,222 |
|
|
|
2,538,918 |
|
|
|
(1,017,887 |
) |
Income (loss) before income taxes |
|
(571,652 |
) |
|
|
26,116 |
|
|
|
297,052 |
|
|
|
2,431,712 |
|
Income tax expense (benefit) |
|
(108,202 |
) |
|
|
(6,817 |
) |
|
|
85,133 |
|
|
|
511,135 |
|
Net income (loss) |
|
(463,450 |
) |
|
|
32,933 |
|
|
|
211,919 |
|
|
|
1,920,577 |
|
Less: Net income available to noncontrolling interests |
|
1,545 |
|
|
|
361 |
|
|
|
1,389 |
|
|
|
358 |
|
Net income (loss) available to American Equity Investment Life Holding Company stockholders |
|
(464,995 |
) |
|
|
32,572 |
|
|
|
210,530 |
|
|
|
1,920,219 |
|
Less: Preferred stock dividends |
|
10,919 |
|
|
|
10,919 |
|
|
|
43,675 |
|
|
|
43,675 |
|
Net income (loss) available to American Equity Investment Life Holding Company common stockholders |
$ |
(475,914 |
) |
|
$ |
21,653 |
|
|
$ |
166,855 |
|
|
$ |
1,876,544 |
|
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) per common share |
$ |
(6.04 |
) |
|
$ |
0.25 |
|
|
$ |
2.10 |
|
|
$ |
20.72 |
|
Earnings (loss) per common share - assuming dilution |
$ |
(6.04 |
) |
|
$ |
0.25 |
|
|
$ |
2.06 |
|
|
$ |
20.50 |
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding (in thousands): |
|
|
|
|
|
|
|
||||||||
Earnings (loss) per common share |
|
78,754 |
|
|
|
85,274 |
|
|
|
79,476 |
|
|
|
90,558 |
|
Earnings (loss) per common share - assuming dilution |
|
78,754 |
|
|
|
86,402 |
|
|
|
80,952 |
|
|
|
91,538 |
|
American Equity Investment Life Holding Company
Unaudited (Dollars in thousands, except per share data)
NON-GAAP FINANCIAL MEASURES
In addition to net income (loss) available to common stockholders, we have consistently utilized non-GAAP operating income available to common stockholders and non-GAAP operating income available to common stockholders per common share - assuming dilution, non-GAAP financial measures commonly used in the life insurance industry, as economic measures to evaluate our financial performance. Non-GAAP operating income available to common stockholders equals net income (loss) available to common stockholders 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. The most significant adjustments to arrive at non-GAAP operating income available to common stockholders eliminate the impact of fair value accounting for our fixed index annuity business. These adjustments are not economic in nature but rather impact the timing of reported results. We believe the combined presentation and evaluation of non-GAAP operating income available to common stockholders together with net income (loss) available to common stockholders provides information that may enhance an investor’s understanding of our underlying results and profitability.
Reconciliation from Net Income (Loss) Available to Common Stockholders to Non-GAAP Operating Income Available to Common Stockholders
|
Three Months Ended December 31, |
|
Year Ended December 31, |
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net income (loss) available to American Equity Investment Life Holding Company common stockholders |
$ |
(475,914 |
) |
|
$ |
21,653 |
|
|
$ |
166,855 |
|
|
$ |
1,876,544 |
|
Adjustments to arrive at non-GAAP operating income available to common stockholders: |
|
|
|
|
|
|
|
||||||||
Net realized gains (losses) on financial assets, including credit losses |
|
(2,277 |
) |
|
|
(19,460 |
) |
|
|
91,615 |
|
|
|
48,264 |
|
Change in fair value of derivatives and embedded derivatives |
|
583,961 |
|
|
|
169,767 |
|
|
|
549,600 |
|
|
|
(1,549,205 |
) |
Capital markets impact on the change in fair value of market risk benefits |
|
216,214 |
|
|
|
2,309 |
|
|
|
(122,094 |
) |
|
|
(393,617 |
) |
Net investment income |
|
(1,509 |
) |
|
|
1,476 |
|
|
|
(1,137 |
) |
|
|
1,476 |
|
Other revenue |
|
5,969 |
|
|
|
5,969 |
|
|
|
23,876 |
|
|
|
5,969 |
|
Expenses incurred related to acquisition |
|
3,750 |
|
|
|
— |
|
|
|
13,464 |
|
|
|
— |
|
Income taxes |
|
(170,603 |
) |
|
|
(39,998 |
) |
|
|
(115,116 |
) |
|
|
401,838 |
|
Non-GAAP operating income available to common stockholders |
$ |
159,591 |
|
|
$ |
141,716 |
|
|
$ |
607,063 |
|
|
$ |
391,269 |
|
Impact of excluding notable items (a) |
$ |
13,255 |
|
|
$ |
— |
|
|
$ |
10,755 |
|
|
$ |
181,890 |
|
|
|
|
|
|
|
|
|
||||||||
Per common share - assuming dilution: |
|
|
|
|
|
|
|
||||||||
Net income (loss) available to American Equity Investment Life Holding Company common stockholders |
$ |
(6.04 |
) |
|
$ |
0.25 |
|
|
$ |
2.06 |
|
|
$ |
20.50 |
|
Adjustments to arrive at non-GAAP operating income available to common stockholders: |
|
|
|
|
|
|
|
||||||||
Anti-dilutive impact for losses (b) |
|
0.11 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Net realized gains (losses) on financial assets, including credit losses |
|
(0.03 |
) |
|
|
(0.23 |
) |
|
|
1.13 |
|
|
|
0.53 |
|
Change in fair value of derivatives and embedded derivatives |
|
7.28 |
|
|
|
1.96 |
|
|
|
6.79 |
|
|
|
(16.92 |
) |
Capital markets impact on the change in fair value of market risk benefits |
|
2.70 |
|
|
|
0.03 |
|
|
|
(1.51 |
) |
|
|
(4.30 |
) |
Net investment income |
|
(0.02 |
) |
|
|
0.02 |
|
|
|
(0.01 |
) |
|
|
— |
|
Other revenue |
|
0.07 |
|
|
|
0.07 |
|
|
|
0.29 |
|
|
|
0.01 |
|
Expenses incurred related to acquisition |
|
0.05 |
|
|
|
— |
|
|
|
0.17 |
|
|
|
0.06 |
|
Income taxes |
|
(2.13 |
) |
|
|
(0.46 |
) |
|
|
(1.42 |
) |
|
|
4.39 |
|
Non-GAAP operating income available to common stockholders |
$ |
1.99 |
|
|
$ |
1.64 |
|
|
$ |
7.50 |
|
|
$ |
4.27 |
|
Impact of excluding notable items (a) |
$ |
0.17 |
|
|
$ |
— |
|
|
$ |
0.13 |
|
|
$ |
1.99 |
|
American Equity Investment Life Holding Company
Unaudited (Dollars in thousands, except per share data)
Notable Items
|
Three Months Ended December 31, |
|
Year Ended December 31, |
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Notable items impacting non-GAAP operating income available to common stockholders: |
|
|
|
|
|
|
|
||||||||
Expense associated with strategic incentive award |
$ |
13,255 |
|
|
$ |
— |
|
|
$ |
38,323 |
|
|
$ |
— |
|
Impact of actuarial assumption updates |
|
— |
|
|
|
— |
|
|
|
(27,568 |
) |
|
|
181,890 |
|
Total notable items (a) |
$ |
13,255 |
|
$ |
— |
|
$ |
10,755 |
|
|
$ |
181,890 |
|||
(a) |
Notable items reflect the after-tax increase (decrease) to non-GAAP operating income available to common stockholders for certain matters where more detail may help investors better understand, evaluate, and forecast results. |
|
For the three months ended December 31, 2023 and 2022, non-GAAP operating income (loss) available to common stockholders would increase |
| For the year ended December 31, 2023 and 2022, non-GAAP operating income (loss) available to common stockholders would increase |
|
| (b) | For periods with a loss, dilutive shares were not included in the calculation as inclusion of such shares would have an anti-dilutive effect. |
American Equity Investment Life Holding Company
Unaudited (Dollars in thousands, except share and per share data)
Book Value per Common Share
|
Q4 2023 |
||
Total stockholders’ equity attributable to American Equity Investment Life Holding Company |
$ |
3,023,260 |
|
Equity available to preferred stockholders (a) |
|
(700,000 |
) |
Total common stockholders' equity (b) |
|
2,323,260 |
|
Accumulated other comprehensive (income) loss (AOCI) |
|
2,979,657 |
|
Total common stockholders’ equity excluding AOCI (b) |
|
5,302,917 |
|
Net impact of fair value accounting for derivatives and embedded derivatives |
|
(1,240,397 |
) |
Net capital markets impact on the fair value of market risk benefits |
|
(698,808 |
) |
Total common stockholders’ equity excluding AOCI and the net impact of fair value accounting for fixed index annuities (b) |
$ |
3,363,712 |
|
|
|
||
Common shares outstanding |
|
79,337,818 |
|
|
|
||
Book Value per Common Share: (c) |
|
||
Book value per common share |
$ |
29.28 |
|
Book value per common share excluding AOCI (b) |
$ |
66.84 |
|
Book value per common share excluding AOCI and the net impact of fair value accounting for fixed index annuities (b) |
$ |
42.40 |
|
(a) |
Equity available to preferred stockholders is equal to the redemption value of outstanding preferred stock plus share dividends declared but not yet issued. |
(b) |
Total common stockholders' equity, total common stockholders' equity excluding AOCI and total common stockholders' equity excluding AOCI and the net impact of fair value accounting for fixed index annuities, non-GAAP financial measures, exclude equity available to preferred stockholders. Total common stockholders’ equity and book value per common share excluding AOCI, non-GAAP financial measures, are based on common 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 securities, we believe these non-GAAP financial measures provide useful supplemental information. Total common stockholders' equity and book value per common share excluding AOCI and the net impact of fair value accounting for fixed index annuities, non-GAAP financial measures, are based on common stockholders' equity excluding AOCI and the net impact of fair value accounting for fixed index annuities. Since the net impact of fair value accounting for our fixed index annuity business is not economic in nature but rather impact the timing of reported results, we believe these non-GAAP financial measures provide useful supplemental information. |
(c) |
Book value per common share including and excluding AOCI and book value per common share excluding AOCI and the net impact of fair value accounting for fixed index annuities are calculated as total common stockholders’ equity, total common stockholders’ equity excluding AOCI and total common stockholders' equity excluding AOCI and the net impact of fair value accounting for fixed index annuities divided by the total number of shares of common stock outstanding. |
American Equity Investment Life Holding Company
Unaudited (Dollars in thousands)
NON-GAAP FINANCIAL MEASURES
Average Common Stockholders' Equity and Return on Average Common Stockholders' Equity
Return on average common stockholders' equity measures how efficiently we generate profits from the resources provided by our net assets. Return on average common stockholders' equity is calculated by dividing net income available to common stockholders, for the trailing twelve months, by average equity available to common stockholders. Non-GAAP operating return on average common stockholders' equity excluding average accumulated other comprehensive income (AOCI) and average net impact of fair value accounting for fixed index annuities is calculated by dividing non-GAAP operating income available to common stockholders, for the trailing twelve months, by average common stockholders' equity excluding average AOCI and average net impact of fair value accounting for fixed index annuities. We exclude AOCI because AOCI fluctuates from quarter to quarter due to unrealized changes in the fair value of available for sale investments. We exclude the net impact of fair value accounting for fixed index annuities as the amounts are not economic in nature but rather impact the timing of reported results.
|
Twelve Months Ended |
||
|
December 31, 2023 |
||
Average Common Stockholders' Equity Attributable to American Equity Investment Life Holding Company, Excluding Average AOCI and Average Net Impact of Fair Value Accounting for Fixed Index Annuities |
|
||
Average total stockholders’ equity |
$ |
2,686,389 |
|
Average equity available to preferred stockholders |
|
(700,000 |
) |
Average equity available to common stockholders |
|
1,986,389 |
|
Average AOCI |
|
3,362,944 |
|
Average common stockholders' equity excluding average AOCI |
|
5,349,333 |
|
Average net impact of fair value accounting for derivatives and embedded derivatives |
|
(1,446,283 |
) |
Average net capital markets impact on the fair value of market risk benefits |
|
(649,833 |
) |
Average common stockholders' equity excluding average AOCI and average net impact of fair value accounting for fixed index annuities |
$ |
3,253,217 |
|
|
|
||
Net income available to American Equity Investment Life Holding Company common stockholders |
$ |
166,855 |
|
Adjustments to arrive at non-GAAP operating income available to common stockholders: |
|
||
Net realized losses on financial assets, including credit losses |
|
91,615 |
|
Change in fair value of derivatives and embedded derivatives |
|
549,600 |
|
Capital markets impact on the change in fair value of market risk benefits |
|
(122,094 |
) |
Net investment income |
|
(1,137 |
) |
Other revenue |
|
23,876 |
|
Expenses incurred related to acquisition |
|
13,464 |
|
Income taxes |
|
(115,116 |
) |
Non-GAAP operating income available to common stockholders |
$ |
607,063 |
|
Impact of excluding notable items (a) |
$ |
10,755 |
|
|
|
||
Return on Average Common Stockholders' Equity Attributable to American Equity Investment Life Holding Company |
|
||
Net income available to common stockholders |
|
8.4 |
% |
|
|
||
Return on Average Common Stockholders' Equity Attributable to American Equity Investment Life Holding Company, Excluding Average AOCI and Average Net Impact of Fair Value Accounting for Fixed Index Annuities |
|
||
Non-GAAP operating income available to common stockholders |
|
18.7 |
% |
Notable Items |
Twelve Months Ended |
||
|
December 31, 2023 |
||
Notable items impacting non-GAAP operating income available to common stockholders: |
|
||
Expense associated with strategic incentive award |
$ |
38,323 |
|
Impact of actuarial assumption updates |
|
(27,568 |
) |
Total notable items (a) |
$ |
10,755 |
|
(a) |
Notable items reflect the after-tax increase (decrease) to non-GAAP operating income available to common stockholders for certain matters where more detail may help investors better understand, evaluate, and forecast results. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240214542354/en/
Steven D. Schwartz, Head of Investor Relations
(515) 273-3763, sschwartz@american-equity.com
Source: American Equity Investment Life Holding Company
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