American Equity Investment Life pany(AEL) - 2023 Q2 - Quarterly Report

Financial Performance - Total revenues for the three months ended June 30, 2023, were $851,639 thousand, a decrease from $1,514,187 thousand for the same period in 2022, reflecting a decline of about 43.7%[17] - Net income available to common stockholders for the three months ended June 30, 2023, was $344,444 thousand, down from $752,374 thousand in the same period of 2022, indicating a decrease of approximately 54.2%[17] - Earnings per common share for the three months ended June 30, 2023, were $4.43, compared to $8.13 for the same period in 2022, a decline of about 45.8%[17] - Net income for the three months ended June 30, 2023, was $355,146, compared to $763,289 for the same period in 2022, representing a decrease of approximately 53.5%[20] - For the six months ended June 30, 2023, net income was $199,255, down from $1,442,754 in the same period of 2022, indicating a decline of approximately 86.2%[20] - Net income available to common stockholders for the six months ended June 30, 2023, was $177.53 million, with earnings per common share of $2.20[159] - Net investment income of $542,685 thousand for the three months ended June 30, 2023, down from $592,308 thousand in the same period of 2022, a decrease of approximately 8.4%[17] - The company reported net realized losses on investments of $52,466 for the six months ended June 30, 2023, compared to $46,399 for the same period in 2022[93] Assets and Liabilities - Total assets increased to $77,645,425 thousand as of June 30, 2023, compared to $73,183,599 thousand as of December 31, 2022, representing a growth of approximately 6.7%[11] - Total liabilities increased to $75,050,384 thousand as of June 30, 2023, from $70,812,849 thousand as of December 31, 2022, reflecting an increase of about 5.2%[13] - Cash and cash equivalents rose significantly to $5,000,657 thousand as of June 30, 2023, compared to $1,919,669 thousand as of December 31, 2022, representing an increase of about 160.5%[11] - The balance of stockholders' equity as of June 30, 2023, was $2,595,041, a decrease from $3,627,547 as of June 30, 2022[24] Investment Performance - The company reported a change in net unrealized investment losses of $(421,329) for the three months ended June 30, 2023, compared to $(3,419,845) for the same period in 2022[20] - The company experienced a change in fair value of embedded derivatives amounting to $618,204 for the six months ended June 30, 2023, compared to a loss of $(2,279,633) in 2022[31] - The fair value of fixed index annuities embedded derivatives was $5,014,697 thousand as of June 30, 2023, compared to $5,836,312 thousand as of December 31, 2022, indicating a decline of about 14%[86] - The total fair value of fixed maturity securities available for sale was $32,323,907 as of June 30, 2023, with unrealized losses of $4,812,561[89] Policy Benefits and Reserves - Policy benefit reserves increased to $59,856,677 thousand as of June 30, 2023, from $58,781,836 thousand as of December 31, 2022, marking an increase of approximately 1.8%[13] - The liability for future policy benefits decreased to $309,234 thousand as of June 30, 2023, down from $318,677 thousand at the end of 2022, with a net liability after reinsurance recoverable of $327,521 thousand[140] - The expected future benefit payments for SPIA with life contingency are projected at $453,722 thousand as of June 30, 2023, compared to $467,627 thousand at the end of 2022[141] Shareholder Activities - The Company approved a share repurchase program totaling $900 million, with $500 million authorized on November 19, 2021, and an additional $400 million on November 11, 2022, to offset dilution from share issuance[164] - As of June 30, 2023, the Company repurchased approximately 31.2 million shares at an average price of $34.76 per share, with $276 million remaining under the share repurchase program[166] - Brookfield Asset Management acquired a 19.9% ownership interest in the Company, with an initial purchase of 9.9% at $37.00 per share and a subsequent purchase of 6,775,000 shares at $37.33 per share, resulting in total ownership of approximately 16%[163] Market Conditions and Risks - S&P placed all ratings for the Company on negative watch due to the merger announcement, while Fitch affirmed its "A-" financial strength rating and revised its outlook to "stable"[180][181] - The company has a diversified counterparty risk management strategy, purchasing derivatives from multiple counterparties with a minimum credit rating of A-[134] - The maximum credit exposure to any single counterparty is subject to concentration limits, with a total derivative collateral of $1.1 billion as of June 30, 2023, limiting potential economic loss to $68.5 million[135] Annuity and Investment Products - Total sales increased to $3.4 billion in the first half of 2023, with fixed index annuities representing $2.8 billion, and second-quarter sales of $2.0 billion, a 95% increase in fixed index annuity sales compared to the first quarter[179] - Annuity deposits for fixed index annuities reached $1.87 billion in Q2 2023, a 141% increase from $776 million in Q2 2022[186] - Withdrawals from annuity policies subject to surrender charges increased significantly to $600.1 million in Q2 2023 and $1,060.9 million for the six months ended June 30, 2023 compared to $190.1 million and $457.5 million for the same periods in 2022[196]