A.M. Best Affirms Credit Ratings of American Equity Investment Life Insurance Company and Its Subsidiaries
June 29 2017 - 3:11PM
Business Wire
A.M. Best has affirmed the Financial Strength Rating
(FSR) of A- (Excellent) and the Long-Term Issuer Credit Rating
(Long-Term ICR) of “a-” of American Equity Investment Life
Insurance Company (AEILIC) and its subsidiaries, American
Equity Investment Life Insurance Company of New York (Lake
Success, NY) and Eagle Life Insurance Company, collectively
referred to as AEL. Concurrently A.M. Best has affirmed the Long
Term ICR of “bbb-” of American Equity Investment Life Holding
Company [NYSE: AEL] and its existing Long Term Issue Credit
Ratings (Long-Terms IRs). The outlook for all of these Credit
Ratings (ratings) is stable. All companies are domiciled in West
Des Moines, IA, unless otherwise specified. (Please see below for
detailed listing of the Long-Term IRs).
The rating affirmations reflect AEL’s position as a leading
provider of fixed-indexed annuities (FIA), consistently ranking in
the top three by market share. Additionally, the expanded
utilization of Eagle Life Insurance Company to offer FIAs through
broker-dealers provides some diversification to AEL’s distribution
channels. GAAP and statutory earnings have benefited from strong
sales growth, relatively stable investment margins and overall
growth in assets under management. Risk-adjusted capitalization
remains adequate for its investment, insurance and business risks.
Finally, financial leverage and interest coverage ratios are within
AM. Best’s expectations for the current ratings.
Partially offsetting these positive factors are AEL’s
concentration in FIAs, which have a high percentage of living
benefit guarantees, some distributor concentration and the
potential for margin compression in the low interest rate
environment. Additionally, there is the potential for some
dis-intermediation risk should interest rates rise, although this
risk is partially mitigated by strong surrender charge protection.
The high percentage of liabilities with living benefit guarantees
offset some of the disintermediation risk. Despite continued strong
sales, AEL faces increased competition within the FIA market, which
could pressure growth and strain future operating performance.
Additionally, the recent adoption of the U.S. Department of Labor
rule requiring higher fiduciary standards for tax qualified fixed
annuity writers may also impact top line revenue growth. A.M. Best
also notes an elevated investment risk relative to benchmarks as
measured by higher risk assets to capital.
The following Long-Term IRs have been affirmed:
American Equity Investment Life Holding Company
— “bbb-” USD 400 million 6.625% senior unsecured notes due 2021—
“bbb-” USD 500 million 5% senior unsecured notes due 2027
The following indicative Long-Term IRs under the shelf
registration have been affirmed:
American Equity Investment Life Holding Company
— “bbb-” on senior unsecured debt— “bb+” on subordinated debt—
“bb” on preferred stock
American Equity Capital Trust V and VI
— “bb” on trust preferred securities
This press release relates to Credit Ratings that have been
published on A.M. Best’s website. For all rating information
relating to the release and pertinent disclosures, including
details of the office responsible for issuing each of the
individual ratings referenced in this release, please see A.M.
Best’s Recent Rating Activity web page. For
additional information regarding the use and limitations of Credit
Rating opinions, please view Understanding Best’s Credit
Ratings. For information on the proper media use of Best’s
Credit Ratings and A.M. Best press releases, please view
Guide for Media - Proper Use of Best’s Credit Ratings and A.M.
Best Rating Action Press Releases.
A.M. Best is the world’s oldest and most authoritative
insurance rating and information source. For more information,
visit www.ambest.com.
Copyright © 2017 by A.M. Best Rating
Services, Inc. and/or its subsidiaries. ALL RIGHTS
RESERVED.
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version on businesswire.com: http://www.businesswire.com/news/home/20170629006181/en/
A.M. BestSteve Vincent, +1-908-439-2200, ext.
5802Senior Financial
Analyststeve.vincent@ambest.comorRosemarie
Mirabella, +1-908-439-2200, ext.
5892Directorrosemarie.mirabella@ambest.comorChristopher
Sharkey, +1-908-439-2200, ext. 5159Manager, Public
Relationschristopher.sharkey@ambest.comorJim
Peavy, +1-908-439-2200, ext. 5644Director, Public
Relationsjames.peavy@ambest.com
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