American Equity Investment Life pany(AEL)2023-02-27 16:00Distribution Network - In 2022, agents contracted through four national marketing organizations accounted for approximately 58% of the annuity deposits and insurance premiums collected[41]. - American Equity Life has relationships with 50 national marketing organizations, through which nearly 28,638 independent agents are under contract[40]. - The company is pursuing a strategy to increase the efficiency of its independent agent distribution network by strengthening relationships with key IMOs[40]. - Eagle Life has 102 broker-dealer/firm selling agreements, with nearly 12,050 representatives appointed to distribute fixed index and fixed rate annuities[42]. - The company emphasizes high-quality service and prompt commission payments to agents, which is crucial for building strong distribution relationships[38]. Reinsurance Agreements - The company ceded 70 million upon the execution of the reinsurance agreement with AeBe[57]. - The reinsurance agreement with AeBe includes a 75% funds withheld coinsurance and 25% coinsurance structure[57]. - American Equity Life entered into a reinsurance agreement with North End Re, ceding 70% of certain fixed indexed annuity product liabilities[54]. - The North End Re reinsurance treaty includes an annual ceding commission of 49 basis points and a management fee of 30 basis points[54]. - American Equity Life has three coinsurance agreements with Athene Life Re, covering various percentages of fixed index and multi-year rate guaranteed annuities[52]. - The company remains liable to policyholders for ceded liabilities should reinsurers fail to meet their obligations[58]. Financial Strength and Capital Management - A.M. Best, S&P, and Fitch have assigned American Equity Life a financial strength rating of A- with a stable outlook[45]. - American Equity Life has a statutory earned surplus of 369.3 million without prior regulatory approval in 2023[64]. - The ratio of total adjusted capital to the highest level at which regulatory action might be initiated was 415% as of December 31, 2022, indicating strong capital adequacy[69]. - American Equity Life's financial strength ratings are subject to periodic reviews and may change based on market conditions[49]. - The company can distribute up to $369.3 million as dividends without prior approval from the Iowa Insurance Commissioner in 2023[64]. Regulatory Environment - The company is subject to various state regulations regarding the payment of dividends and distributions, which are limited to statutory net gain from operations or a percentage of statutory surplus[64]. - The Financial Accounting Standards Board's revised guidance on long-duration insurance contracts will be effective for the company on January 1, 2023, impacting cash flow assumptions and liability calculations[75]. - The Iowa Insurance Division completed financial examinations of American Equity Life and Eagle Life for the five-year period ending December 31, 2018, with no adjustments made to their statutory financial statements[63]. - The company is subject to regulatory developments regarding insurer solvency and market conduct, which may affect its operations and financial stability[84]. - The NAIC's risk-based capital requirements serve as an early warning tool for regulators to identify weakly capitalized insurance companies[68]. Employee and Workforce Management - The company employs approximately 840 full-time team members as of December 31, 2022, with no employees covered by a collective bargaining agreement[89]. - Over 85% of employees chose coverage through the company's medical plan in 2022, with the company paying an average of 84% of participating employees' monthly medical premiums[91]. - The company matches 100% of team member contributions to the 401(k) plan up to 3% of eligible compensation and 50% up to the next 2%[92]. - Employees participated in thousands of hours of training through the Academy for Excellence and LinkedIn Learning in 2022[93]. Market and Economic Risks - The outbreak of COVID-19 has significantly disrupted distribution channels and may continue to affect economic activity and demand for the company's products[81]. - Rising interest rates may lead to increased policy surrenders, affecting net cash outflows and requiring asset sales at potentially disadvantaged prices[102]. - The company may face risks related to interest rate changes, which could impact investment spreads and policyholder behavior[101]. - Economic and capital markets may face downturns due to inflation, recession, and geopolitical conflicts, potentially impacting investment portfolio performance[120]. Competition and Market Position - The company faces significant competition from larger firms with greater financial resources and diversified product lines, which may impact customer choices[113]. - The company operates in a highly competitive industry, with its products competing against various alternatives offered by other financial institutions[43]. Compliance and Legal Risks - Increased litigation and regulatory scrutiny may arise, impacting compliance with insurance and securities laws[127]. - The SEC has proposed new climate-related disclosure rules that may significantly impact the company, requiring disclosures on governance of climate-related risks and greenhouse gas emissions[87]. - Changes in laws, regulations, and accounting standards may affect the company's operations and financial reporting[128]. - Climate change and related regulations may impact investment values and increase regulatory focus on climate-related risks[132].