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American Equity Investment Life pany(AEL) - 2023 Q1 - Quarterly Report
AELAmerican Equity Investment Life pany(AEL)2023-05-09 16:00

Financial Performance - Total revenues for the three months ended March 31, 2023, were 662,548thousand,asignificantincreasefrom662,548 thousand, a significant increase from 148,027 thousand in the same period of 2022[18]. - Net income (loss) available to American Equity Investment Life Holding Company common stockholders for the three months ended March 31, 2023, was (166,913)thousand,comparedto(166,913) thousand, compared to 668,546 thousand in the same period of 2022[18]. - The company reported total benefits and expenses of 854,447thousandforthethreemonthsendedMarch31,2023,comparedto854,447 thousand for the three months ended March 31, 2023, compared to (716,633) thousand in the same period of 2022[18]. - Net income for the three months ended March 31, 2023, was a loss of 155,891thousand,comparedtoanetincomeof155,891 thousand, compared to a net income of 679,465 thousand for the same period in 2022, representing a significant decline[22]. - Comprehensive income for the three months ended March 31, 2023, was 553,910thousand,comparedtoacomprehensivelossof553,910 thousand, compared to a comprehensive loss of 2,086,592 thousand for the same period in 2022[22]. - Earnings (loss) per common share for the three months ended March 31, 2023, was (2.00),comparedto(2.00), compared to 6.90 for the same period in 2022[18]. Assets and Liabilities - Total assets as of March 31, 2023, were 74,495,726thousand,upfrom74,495,726 thousand, up from 73,183,599 thousand as of December 31, 2022[14]. - Total liabilities increased to 71,866,917thousandasofMarch31,2023,comparedto71,866,917 thousand as of March 31, 2023, compared to 70,812,849 thousand as of December 31, 2022[14]. - Total stockholders' equity attributable to American Equity Investment Life Holding Company increased to 2,605,485thousandasofMarch31,2023,from2,605,485 thousand as of March 31, 2023, from 2,349,517 thousand as of December 31, 2022[14]. - Total stockholders' equity increased to 2,628,809thousandasofMarch31,2023,from2,628,809 thousand as of March 31, 2023, from 2,370,750 thousand as of December 31, 2022[26]. Investment Income and Performance - The company reported net investment income of 561,323thousandforthethreemonthsendedMarch31,2023,downfrom561,323 thousand for the three months ended March 31, 2023, down from 567,423 thousand in the same period of 2022[18]. - The change in fair value of derivatives for the three months ended March 31, 2023, was 45,890thousand,comparedto45,890 thousand, compared to (477,519) thousand in the same period of 2022[18]. - The company reported realized gains on investments of 27,787thousandforthethreemonthsendedMarch31,2023,comparedto27,787 thousand for the three months ended March 31, 2023, compared to 13,127 thousand for the same period in 2022, indicating improved investment performance[29]. - The company reported total purchases and sales, net of (26.3)millionforfixedmaturitysecuritiesduringthereportingperiod[85].−Thecompanyexpectstorecoveramortizedcostonallsecuritiesexceptthosewithrecognizedcreditlossallowances,indicatingastrongoutlookforinvestmentrecovery[107].CashFlowandLiquidity−Thecompanyreportedanetcashprovidedbyoperatingactivitiesof(26.3) million for fixed maturity securities during the reporting period[85]. - The company expects to recover amortized cost on all securities except those with recognized credit loss allowances, indicating a strong outlook for investment recovery[107]. Cash Flow and Liquidity - The company reported a net cash provided by operating activities of 865,043 thousand for the three months ended March 31, 2023, compared to 99,932thousandforthesameperiodin2022,indicatingasubstantialincrease[29].−Cashandcashequivalentsattheendoftheperiodroseto99,932 thousand for the same period in 2022, indicating a substantial increase[29]. - Cash and cash equivalents at the end of the period rose to 2,777,852, compared to 1,933,899attheendofthepreviousyear,reflectingimprovedliquidity[33].−Netcashusedinfinancingactivitieswas1,933,899 at the end of the previous year, reflecting improved liquidity[33]. - Net cash used in financing activities was (811,361), compared to (228,777)intheprioryear,indicatingincreasedcashoutflows[33].PolicyReservesandBenefits−Policybenefitreservesamountedto(228,777) in the prior year, indicating increased cash outflows[33]. Policy Reserves and Benefits - Policy benefit reserves amounted to 59,019,189 thousand as of March 31, 2023, compared to 58,781,836thousandasofDecember31,2022[14].−Theliabilityforfuturepolicybenefitswasadjustedto58,781,836 thousand as of December 31, 2022[14]. - The liability for future policy benefits was adjusted to 408,750 as of January 1, 2021, reflecting changes in accounting standards[40]. - The market risk benefits (MRBs) liability decreased to 2,225,484post−adoptionofnewaccountingstandards,downfrom2,225,484 post-adoption of new accounting standards, down from 2,547,231[42]. - Deferred policy acquisition costs increased to 3,408,505post−adoption,upfrom3,408,505 post-adoption, up from 2,225,199, indicating higher costs associated with policy acquisition[43]. Derivatives and Fair Value Measurements - The company categorizes its financial instruments into three levels of fair value hierarchy, with Level 1 representing quoted prices in active markets for identical assets[53]. - The fair value of corporate securities as of March 31, 2023, is 23,401,001thousand,adecreasefrom23,401,001 thousand, a decrease from 24,161,921 thousand as of December 31, 2022[57]. - The total fair value of assets measured at fair value on a recurring basis as of March 31, 2023, is 46,041,671thousand,comparedto46,041,671 thousand, compared to 45,024,575 thousand as of December 31, 2022[57]. - The fair value of fixed index annuities' embedded derivatives is estimated using projected policy contract values and minimum guaranteed contract values, with an expected cost of annual call options at 2.40% as of both March 31, 2023, and December 31, 2022[80]. Mortgage Loans and Credit Losses - The commercial mortgage loans outstanding principal was 3,570,314,000,showinganincreasefrom3,570,314,000, showing an increase from 3,560,903,000 as of December 31, 2022[125]. - The agricultural mortgage loans outstanding principal increased to 609,026,000from609,026,000 from 567,630,000 as of December 31, 2022[128]. - The residential mortgage loans outstanding principal rose to 3,011,666,000from3,011,666,000 from 2,807,652,000 as of December 31, 2022[128]. - The ending allowance balance for credit losses increased to 45,626thousandasofMarch31,2023,comparedto45,626 thousand as of March 31, 2023, compared to 29,269 thousand as of March 31, 2022, reflecting a change in provision for credit losses of 8,654thousand[133].VariableInterestEntities(VIEs)−ConsolidatedVariableInterestEntities(VIEs)includerealestateinvestmentstotaling8,654 thousand[133]. Variable Interest Entities (VIEs) - Consolidated Variable Interest Entities (VIEs) include real estate investments totaling 2,289,365 thousand as of March 31, 2023, with total liabilities of 127,519thousand[153].−ThetotalcarryingamountsofconsolidatedVIEassetsincreasedfrom127,519 thousand[153]. - The total carrying amounts of consolidated VIE assets increased from 1,782,266 thousand in December 31, 2022, to 2,289,365thousandinMarch31,2023[153].−ThecompanyhasdetermineditistheprimarybeneficiaryofvariousVIEsduetosignificantownershipandcontrolovertheentities[150].MarketRiskBenefitsandAssumptions−Thefairvalueofmarketriskbenefitsisreportedat2,289,365 thousand in March 31, 2023[153]. - The company has determined it is the primary beneficiary of various VIEs due to significant ownership and control over the entities[150]. Market Risk Benefits and Assumptions - The fair value of market risk benefits is reported at 2,225,621 thousand[201]. - The utilization assumption for policyholders is in the range of 0.04% - 78.75%, with a weighted average of 4.24%[201]. - The option budget assumption is projected between 1.65% - 2.50%, with a weighted average of 2.31%[201]. - Changes in significant inputs and assumptions during 2022 impacted the fair value measurement of market risk benefits[204].