American Equity Investment Life pany(AEL) - 2023 Q4 - Annual Report

Distribution and Marketing - Independent agents contracted through four national marketing organizations accounted for approximately 52% of the annuity deposits and insurance premiums collected during 2023[41] - American Equity Life has relationships with 47 national marketing organizations, through which nearly 34,277 independent agents are under contract[40] - Eagle Life has 107 broker-dealer/firm selling agreements, through which nearly 13,992 representatives are appointed[42] - The states with the largest share of direct premium collected during 2023 were Florida (10.0%), Texas (9.3%), California (7.2%), Pennsylvania (4.9%), and Ohio (4.4%)[41] Financial Strength and Ratings - A.M. Best and S&P currently assign American Equity Life a financial strength rating of A- with a "Watch" outlook as of August 2023 and July 2023 respectively[46] - Fitch revised its rating outlook on the North American life insurance sector from 'neutral' to 'improving', reflecting expectations of benefits from a higher interest rate environment in 2024[48] - The financial strength ratings from A.M. Best, S&P, and Fitch indicate strong financial security characteristics for American Equity Life, with potential impacts on sales and financing costs if ratings are negatively adjusted[50] Reinsurance Agreements - American Equity Life has three coinsurance agreements with Athene Life Re Ltd., ceding 20% to 80% of certain annuity liabilities[52] - The North End Re reinsurance treaty includes ceding 75% of certain fixed index annuities issued after the effective date of the agreement[55] - Effective October 1, 2023, North End Re and American Equity Life agreed to reduce the quota share of all newly issued flow policies to zero[56] - American Equity Life has a coinsurance agreement with AeBe ISA LTD, ceding 75% of certain in-force fixed indexed and fixed rate annuity product liabilities[57] - The company will receive an annual ceding commission of up to 0.50% of the premium received for flow business ceded to AeBe[58] - American Equity Life entered into a coinsurance agreement with AEL Re Vermont Inc. to cede a portion of lifetime income benefit rider payments on a funds withheld basis[59] Capital and Surplus - American Equity Life can distribute up to $373.1 million as dividends in 2024 without prior approval from the Iowa Insurance Commissioner[66] - As of December 31, 2023, American Equity Life had a statutory earned surplus of$2.1 billion[66] - The RBC ratio for American Equity Life was in excess of all action levels as of December 31, 2023[71] - The NAIC adopted a new principles-based statutory accounting definition of a "bond," effective January 1, 2025, which may impact the RBC[70] Regulatory Changes and Taxation - The Iowa statute governing permitted investments was amended effective July 1, 2023, providing greater flexibility for the investment portfolio[73] - The Inflation Reduction Act imposes a 15% corporate alternative minimum tax starting in tax year 2023, but the company was not subject to it for the year ended December 31, 2023[89] - Bermuda enacted a 15% corporate income tax based on book income effective for tax years beginning on January 1, 2025, which is not expected to have a material impact on the company[91] - The SEC has proposed new climate-related disclosure rules that could have significant cost impacts on the company[90] Employee Engagement and Benefits - As of December 31, 2023, American Equity employed approximately 995 full-time team members, with no employees covered by a collective bargaining agreement[93] - Over 85% of employees chose coverage through the company's medical plan in 2023, with the company paying an average of 84% of participating employees' monthly medical premiums[95] - 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%[96] - In early 2024, the company converted its retirement programs into a KSOP, continuing semi-annual contributions and 401(k) matching[96] - The company engaged employees in thousands of hours of training focused on business acumen and leadership development in 2023[97] Community Commitment - The company made a significant commitment to community initiatives, including support for Greater Des Moines Habitat for Humanity[98] Corporate Culture - The company emphasizes a culture of growth, innovation, and teamwork to enhance customer service and employee engagement[94]