(Mark One)
|
|
☒
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the fiscal year ended December 31, 2019
|
|
or
|
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from to
|
Iowa
|
42-1447959
|
(State or other jurisdiction of Incorporation)
|
(I.R.S. Employer Identification No.)
|
Title of each class
|
|
Trading Symbol(s)
|
|
Name of each exchange on which registered
|
Common stock, par value $1
|
|
AEL
|
|
New York Stock Exchange
|
Depositary Shares, each representing a 1/1,000th interest in a share of 5.95% Fixed-Rate Reset Non-Cumulative Preferred Stock, Series A
|
|
AELPRA
|
|
New York Stock Exchange
|
Large accelerated filer
|
☒
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
Smaller reporting company
|
☐
|
|
|
Emerging growth company
|
☐
|
|
||
|
||
|
||
|
||
|
||
Exhibit 21.2
|
Subsidiaries of American Equity Investment Life Holding Company
|
|
Exhibit 23.1
|
Consent of Independent Registered Public Accounting Firm
|
|
Exhibit 31.1
|
Certification
|
|
Exhibit 31.2
|
Certification
|
|
Exhibit 32.1
|
Certification
|
|
Exhibit 32.2
|
Certification
|
|
|
For the Year Ended December 31,
|
||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||
Total industry sales of fixed index annuities
|
$
|
68,471,294
|
|
|
$
|
53,992,850
|
|
|
$
|
58,235,265
|
|
|
$
|
53,069,850
|
|
|
$
|
46,896,350
|
|
Increase (decrease) from prior year
|
14,478,444
|
|
|
(4,242,415
|
)
|
|
5,165,415
|
|
|
6,173,500
|
|
|
8,249,486
|
|
|||||
Increase (decrease) from prior year
|
26.8
|
%
|
|
(7.3
|
)%
|
|
9.7
|
%
|
|
13.2
|
%
|
|
21.3
|
%
|
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
Product Type
|
|
Deposits
Collected
|
|
Deposits
as a % of
Total
|
|
Deposits
Collected
|
|
Deposits
as a % of
Total
|
|
Deposits
Collected
|
|
Deposits
as a % of
Total
|
|||||||||
|
|
(Dollars in thousands)
|
|||||||||||||||||||
Fixed index annuities
|
|
$
|
4,705,541
|
|
|
95
|
%
|
|
$
|
4,221,282
|
|
|
96
|
%
|
|
$
|
3,966,839
|
|
|
95
|
%
|
Annual reset fixed rate annuities
|
|
11,444
|
|
|
—
|
%
|
|
47,191
|
|
|
1
|
%
|
|
74,829
|
|
|
2
|
%
|
|||
Multi-year fixed rate annuities
|
|
234,226
|
|
|
5
|
%
|
|
112,677
|
|
|
3
|
%
|
|
110,596
|
|
|
3
|
%
|
|||
Single premium immediate annuities
|
|
12,002
|
|
|
—
|
%
|
|
23,813
|
|
|
—
|
%
|
|
24,946
|
|
|
—
|
%
|
|||
|
|
$
|
4,963,213
|
|
|
100
|
%
|
|
$
|
4,404,963
|
|
|
100
|
%
|
|
$
|
4,177,210
|
|
|
100
|
%
|
|
|
December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
Annuity Surrender Charges:
|
|
|
|
|
|
|
||||||
Average years at issue
|
|
12.7
|
|
13.2
|
|
13.4
|
||||||
Average years remaining
|
|
6.7
|
|
7.5
|
|
8.1
|
||||||
Average surrender charge percentage remaining
|
|
10.8
|
%
|
|
12.1
|
%
|
|
13.0
|
%
|
|||
Annuity Account Value (net of coinsurance)
|
|
$
|
53,233,898
|
|
|
$
|
51,053,450
|
|
|
$
|
48,400,755
|
|
|
Financial Strength Rating
|
|
Outlook Statement
|
A.M. Best Company, Inc.
|
|
|
|
January 2011 - current
|
A-
|
|
Stable
|
S&P Global
|
|
|
|
August 2015 - current
|
A-
|
|
Stable
|
June 2013 - August 2015
|
BBB+
|
|
Positive
|
October 2011 - June 2013
|
BBB+
|
|
Stable
|
Fitch Ratings Ltd.
|
|
|
|
August 2019 - current
|
A-
|
|
Stable
|
September 2018 - August 2019
|
BBB+
|
|
Positive
|
May 2013 - September 2018
|
BBB+
|
|
Stable
|
•
|
grant and revoke licenses to transact business;
|
•
|
regulate and supervise trade practices and market conduct;
|
•
|
establish guaranty associations;
|
•
|
license agents;
|
•
|
approve policy forms;
|
•
|
approve premium rates for some lines of business;
|
•
|
establish reserve requirements;
|
•
|
prescribe the form and content of required financial statements and reports;
|
•
|
determine the reasonableness and adequacy of statutory capital and surplus;
|
•
|
perform financial, market conduct and other examinations;
|
•
|
define acceptable accounting principles for statutory reporting;
|
•
|
regulate the type and amount of permitted investments; and
|
•
|
limit the amount of dividends and surplus note payments that can be paid without obtaining regulatory approval.
|
•
|
insurance company investments;
|
•
|
risk-based capital ("RBC") guidelines, which consist of regulatory targeted surplus levels based on the relationship of statutory capital and surplus, with prescribed adjustments, to the sum of stated percentages of each element of a specified list of company risk exposures;
|
•
|
suitability/best interest standard;
|
•
|
the implementation of non-statutory guidelines and the circumstances under which dividends may be paid;
|
•
|
principles-based reserving;
|
•
|
own risk solvency and enterprise risk management assessment;
|
•
|
cybersecurity assessments;
|
•
|
product approvals;
|
•
|
agent licensing; and
|
•
|
life insurance and annuity sales practices.
|
•
|
our investment portfolio could incur additional other than temporary impairments;
|
•
|
our commercial mortgage loans could experience a greater amount of loss;
|
•
|
due to potential downgrades in our investment portfolio, we could be required to raise additional capital to sustain our current business in force and new sales of our annuity products, which may be difficult in a distressed market. If capital would be available, it may be at terms that are not favorable to us;
|
•
|
we may be required to limit growth in sales of our annuity products; and/or
|
•
|
our liquidity could be negatively affected and we could be forced to limit our operations and our business could suffer, as we need liquidity to pay our policyholder benefits, operating expenses, dividends on our capital stock, and to service our debt obligations.
|
•
|
We must present the call options purchased to fund the index credits on our fixed index annuity products at fair value. The fair value of the call options is based upon the amount of cash that would be required to settle the call options obtained from the counterparties adjusted for the nonperformance risk of the counterparty. We record the change in fair value of these options as a component of our revenues. The change in fair value of derivatives includes the gains or losses recognized at expiration of the option term and changes in fair value for open positions.
|
•
|
The contractual obligations for future index credits are treated as a "series of embedded derivatives" over the expected life of the applicable contracts. Increases or decreases in the fair value of embedded derivatives generally correspond to increases or decreases in equity market performance and changes in the interest rates used to discount the excess of the projected policy contract values over the projected minimum guaranteed contract values. We record the change in fair value of these embedded derivatives as a component of our benefits and expenses in our consolidated statements of operations.
|
|
High
|
|
Low
|
2019
|
|
|
|
First Quarter
|
$33.57
|
|
$26.34
|
Second Quarter
|
$30.91
|
|
$25.84
|
Third Quarter
|
$27.80
|
|
$20.16
|
Fourth Quarter
|
$30.96
|
|
$21.75
|
2018
|
|
|
|
First Quarter
|
$35.79
|
|
$28.90
|
Second Quarter
|
$37.16
|
|
$27.06
|
Third Quarter
|
$38.57
|
|
$34.51
|
Fourth Quarter
|
$36.39
|
|
$25.27
|
Period
|
|
Total Number of
Shares Purchased (a)
|
|
Average Price
Paid Per Share
|
|||
January 1, 2019 - January 31, 2019
|
|
—
|
|
|
$
|
—
|
|
February 1, 2019 - February 28, 2019
|
|
—
|
|
|
$
|
—
|
|
March 1, 2019 - March 31, 2019
|
|
—
|
|
|
$
|
—
|
|
April 1, 2019 - April 30, 2019
|
|
—
|
|
|
$
|
—
|
|
May 1, 2019 - May 31, 2019
|
|
—
|
|
|
$
|
—
|
|
June 1, 2019 - June 30, 2019
|
|
14,538
|
|
|
$
|
28.09
|
|
July 1, 2019 - July 31, 2019
|
|
822
|
|
|
$
|
26.49
|
|
August 1, 2019 - August 31, 2019
|
|
755
|
|
|
$
|
23.97
|
|
September 1, 2019 - September 30, 2019
|
|
—
|
|
|
$
|
—
|
|
October 1, 2019 - October 31, 2019
|
|
—
|
|
|
$
|
—
|
|
November 1, 2019 - November 30, 2019
|
|
—
|
|
|
$
|
—
|
|
December 1, 2019 - December 31, 2019
|
|
—
|
|
|
$
|
—
|
|
Total
|
|
16,115
|
|
|
|
(a)
|
Includes the number of shares of common stock utilized to execute certain stock incentive awards.
|
|
Year ended December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
(Dollars in thousands, except per share data)
|
||||||||||||||||||
Consolidated Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
||||||||||
Premiums and other considerations
|
$
|
23,534
|
|
|
$
|
26,480
|
|
|
$
|
34,228
|
|
|
$
|
43,767
|
|
|
$
|
36,048
|
|
Annuity product charges
|
240,035
|
|
|
224,488
|
|
|
200,494
|
|
|
173,579
|
|
|
136,168
|
|
|||||
Net investment income
|
2,307,635
|
|
|
2,147,812
|
|
|
1,991,997
|
|
|
1,849,872
|
|
|
1,692,192
|
|
|||||
Change in fair value of derivatives
|
906,906
|
|
|
(777,848
|
)
|
|
1,677,871
|
|
|
164,219
|
|
|
(336,146
|
)
|
|||||
Net realized gains (losses) on investments, excluding other than temporary impairment ("OTTI") losses
|
6,962
|
|
|
(37,178
|
)
|
|
10,509
|
|
|
11,524
|
|
|
10,211
|
|
|||||
Net OTTI losses recognized in operations
|
(18,726
|
)
|
|
(36,656
|
)
|
|
(4,630
|
)
|
|
(22,679
|
)
|
|
(19,536
|
)
|
|||||
Total revenues
|
3,464,345
|
|
|
1,547,098
|
|
|
3,891,652
|
|
|
2,220,282
|
|
|
1,518,937
|
|
|||||
Benefits and expenses
|
|
|
|
|
|
|
|
|
|
||||||||||
Insurance policy benefits and change in future policy
benefits
|
35,418
|
|
|
39,530
|
|
|
43,219
|
|
|
52,483
|
|
|
45,458
|
|
|||||
Interest sensitive and index product benefits
|
1,287,576
|
|
|
1,610,835
|
|
|
2,023,668
|
|
|
725,472
|
|
|
968,053
|
|
|||||
Change in fair value of embedded derivatives
|
1,454,042
|
|
|
(1,389,491
|
)
|
|
919,735
|
|
|
543,465
|
|
|
(464,698
|
)
|
|||||
Amortization of deferred sales inducements and policy acquisition costs
|
176,302
|
|
|
550,192
|
|
|
432,576
|
|
|
625,178
|
|
|
495,504
|
|
|||||
Interest expense on notes and loan payable and subordinated debentures
|
41,289
|
|
|
40,989
|
|
|
44,492
|
|
|
41,206
|
|
|
41,088
|
|
|||||
Other operating costs and expenses
|
154,153
|
|
|
129,301
|
|
|
111,691
|
|
|
102,231
|
|
|
96,218
|
|
|||||
Total benefits and expenses
|
3,148,780
|
|
|
981,356
|
|
|
3,575,381
|
|
|
2,090,035
|
|
|
1,181,623
|
|
|||||
Income before income taxes
|
315,565
|
|
|
565,742
|
|
|
316,271
|
|
|
130,247
|
|
|
337,314
|
|
|||||
Income tax expense
|
69,475
|
|
|
107,726
|
|
|
141,626
|
|
|
47,004
|
|
|
117,484
|
|
|||||
Net income
|
$
|
246,090
|
|
|
$
|
458,016
|
|
|
$
|
174,645
|
|
|
$
|
83,243
|
|
|
$
|
219,830
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Per Share Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings per common share
|
$
|
2.70
|
|
|
$
|
5.07
|
|
|
$
|
1.96
|
|
|
$
|
0.98
|
|
|
$
|
2.78
|
|
Earnings per common share - assuming dilution
|
2.68
|
|
|
5.01
|
|
|
1.93
|
|
|
0.97
|
|
|
2.72
|
|
|||||
Dividends declared per common share
|
0.30
|
|
|
0.28
|
|
|
0.26
|
|
|
0.24
|
|
|
0.22
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Non-GAAP Financial Measures (a):
|
|
|
|
|
|
|
|
|
|
||||||||||
Reconciliation from net income to non-GAAP operating income:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income
|
$
|
246,090
|
|
|
$
|
458,016
|
|
|
$
|
174,645
|
|
|
$
|
83,243
|
|
|
$
|
219,830
|
|
Net realized investment gains/losses, including OTTI
|
7,361
|
|
|
45,450
|
|
|
(5,093
|
)
|
|
7,188
|
|
|
5,737
|
|
|||||
Change in fair value of derivatives and embedded derivatives - fixed index annuities
|
373,221
|
|
|
(72,181
|
)
|
|
121,846
|
|
|
56,634
|
|
|
(44,055
|
)
|
|||||
Change in fair value of derivatives - interest rate caps and swap
|
1,247
|
|
|
(1,892
|
)
|
|
(1,224
|
)
|
|
(1,265
|
)
|
|
1,296
|
|
|||||
Litigation reserve
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,957
|
)
|
|
—
|
|
|||||
Income taxes
|
(79,736
|
)
|
|
(3,653
|
)
|
|
(5,124
|
)
|
|
(21,499
|
)
|
|
13,012
|
|
|||||
Non-GAAP operating income
|
$
|
548,183
|
|
|
$
|
425,740
|
|
|
$
|
285,050
|
|
|
$
|
122,344
|
|
|
$
|
195,820
|
|
Non-GAAP operating income per common share
|
$
|
6.01
|
|
|
$
|
4.71
|
|
|
$
|
3.20
|
|
|
$
|
1.44
|
|
|
$
|
2.48
|
|
Non-GAAP operating income per common share - assuming dilution
|
5.97
|
|
|
4.66
|
|
|
3.16
|
|
|
1.43
|
|
|
2.42
|
|
|
As of and for the Year Ended December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
(Dollars in thousands, except per share data)
|
||||||||||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total investments
|
$
|
56,877,573
|
|
|
$
|
49,427,498
|
|
|
$
|
50,300,705
|
|
|
$
|
44,757,568
|
|
|
$
|
39,570,332
|
|
Total assets
|
69,696,552
|
|
|
61,625,564
|
|
|
62,030,736
|
|
|
56,053,472
|
|
|
49,029,392
|
|
|||||
Policy benefit reserves
|
61,893,945
|
|
|
57,606,009
|
|
|
56,142,673
|
|
|
51,637,026
|
|
|
45,495,431
|
|
|||||
Notes and loan payable
|
495,116
|
|
|
494,591
|
|
|
494,093
|
|
|
493,755
|
|
|
393,227
|
|
|||||
Subordinated debentures
|
157,265
|
|
|
242,982
|
|
|
242,565
|
|
|
241,853
|
|
|
241,452
|
|
|||||
Accumulated other comprehensive income (loss) ("AOCI")
|
1,497,921
|
|
|
(52,432
|
)
|
|
724,599
|
|
|
339,966
|
|
|
201,663
|
|
|||||
Total stockholders' equity
|
4,570,119
|
|
|
2,399,101
|
|
|
2,850,157
|
|
|
2,291,595
|
|
|
1,944,535
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Other Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Life subsidiaries' statutory capital and surplus and asset valuation reserve
|
3,824,457
|
|
|
3,542,339
|
|
|
3,260,328
|
|
|
2,933,193
|
|
|
2,593,472
|
|
|||||
Life subsidiaries' statutory net gain from operations before income taxes and realized capital gains (losses)
|
210,002
|
|
|
372,830
|
|
|
565,295
|
|
|
144,159
|
|
|
227,865
|
|
|||||
Life subsidiaries' statutory net income
|
162,267
|
|
|
222,734
|
|
|
386,274
|
|
|
80,699
|
|
|
132,723
|
|
|||||
Equity available to preferred stockholders (b)
|
400,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total common stockholders' equity (c)
|
4,170,119
|
|
|
2,399,101
|
|
|
2,850,157
|
|
|
2,291,595
|
|
|
1,944,535
|
|
|||||
Total common stockholder's equity excluding AOCI (c)
|
2,672,198
|
|
|
2,451,533
|
|
|
2,125,558
|
|
|
1,951,629
|
|
|
1,742,872
|
|
|||||
Book value per common share (c)
|
45.77
|
|
|
26.55
|
|
|
31.91
|
|
|
26.04
|
|
|
23.83
|
|
|||||
Book value per common share excluding AOCI (c)
|
29.33
|
|
|
27.13
|
|
|
23.79
|
|
|
22.17
|
|
|
21.36
|
|
(a)
|
In addition to net income, we have consistently utilized non-GAAP operating income and non-GAAP operating income per common share—assuming dilution, non-GAAP financial measures commonly used in the life insurance industry, as economic measures to evaluate our financial performance. Non-GAAP operating income equals net income adjusted to eliminate the impact of items that fluctuate from year to year in a manner unrelated to core operations, and we believe measures excluding their impact are useful in analyzing operating trends. The most significant adjustments to arrive at non-GAAP operating income eliminate the impact of fair value accounting for our fixed index annuity business. These adjustments are not economic in nature but rather impact the timing of reported results. In addition, 2017 includes a $35.9 million adjustment to arrive at non-GAAP operating income resulting from the Tax Cuts and Jobs Act of 2017, which was enacted on December 22, 2017 and required a revaluation of our net deferred tax assets from 35% to 21%. We believe the combined presentation and evaluation of non-GAAP operating income together with net income provides information that may enhance an investor's understanding of our underlying results and profitability. The amounts included in the reconciliation of net income to non-GAAP operating income are presented net of related adjustments to amortization of deferred sales inducements and deferred policy acquisition costs.
|
(b)
|
Equity available to preferred stockholders is equal to the redemption value of outstanding preferred stock plus share dividends declared but not yet issued.
|
(c)
|
Total common stockholders’ equity and book value per common share excluding AOCI, non-GAAP financial measures, are based on common stockholders’ equity excluding the effect of AOCI. Since AOCI fluctuates from quarter to quarter due to unrealized changes in the fair value of available for sale securities, we believe these non-GAAP financial measures provide useful supplemental information. Total common stockholders' equity and total common stockholder's equity excluding AOCI, non-GAAP financial measures, exclude equity available to preferred stockholders. Book value per common share including and excluding AOCI are calculated as total common stockholders’ equity and total common stockholders’ equity excluding AOCI divided by the total number of shares of common stock outstanding.
|
•
|
general economic conditions and other factors, including prevailing interest rate levels and stock and credit market performance which may affect (among other things) our ability to sell our products, our ability to access capital resources and the costs associated therewith, the fair value of our investments, which could result in impairments and other than temporary impairments, and certain liabilities, and the lapse rate and profitability of policies;
|
•
|
customer response to new products and marketing initiatives;
|
•
|
changes in Federal income tax laws and regulations which may affect the relative income tax advantages of our products;
|
•
|
increasing competition in the sale of fixed annuities;
|
•
|
regulatory changes or actions, including those relating to regulation of financial services affecting (among other things) bank sales and underwriting of insurance products and regulation of the sale, underwriting and pricing of products; and
|
•
|
the risk factors or uncertainties listed from time to time in our filings with the SEC.
|
•
|
the amount of assets under our management,
|
•
|
investment spreads we earn on our policyholder account balances,
|
•
|
our ability to manage our investment portfolio to maximize returns and minimize risks such as interest rate changes and defaults or impairment of investments,
|
•
|
our ability to appropriately price for lifetime income benefit riders offered on certain of our fixed rate and fixed index annuity policies,
|
•
|
our ability to manage interest rates credited to policyholders and costs of the options purchased to fund the annual index credits on our fixed index annuities,
|
•
|
our ability to manage the costs of acquiring new business (principally commissions paid to agents and distribution partners and bonuses credited to policyholders),
|
•
|
our ability to manage our operating expenses, and
|
•
|
income taxes.
|
|
Year Ended December 31,
|
||||
|
2019
|
|
2018
|
|
2017
|
Average yield on invested assets
|
4.52%
|
|
4.47%
|
|
4.46%
|
Aggregate cost of money
|
1.84%
|
|
1.87%
|
|
1.74%
|
Aggregate investment spread
|
2.68%
|
|
2.60%
|
|
2.72%
|
|
|
|
|
|
|
Impact of:
|
|
|
|
|
|
Investment yield - additional prepayment income
|
0.06%
|
|
0.08%
|
|
0.08%
|
Cost of money benefit from over hedging
|
0.03%
|
|
0.05%
|
|
0.06%
|
|
|
Year Ended December 31,
|
||||||||||
Product Type
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
American Equity Life:
|
|
|
|
|
|
|
||||||
Fixed index annuities
|
|
$
|
4,058,638
|
|
|
$
|
3,560,881
|
|
|
$
|
3,390,144
|
|
Annual reset fixed rate annuities
|
|
11,245
|
|
|
45,636
|
|
|
74,829
|
|
|||
Multi-year fixed rate annuities
|
|
1,613
|
|
|
3,581
|
|
|
23,424
|
|
|||
Single premium immediate annuities
|
|
12,002
|
|
|
23,813
|
|
|
24,946
|
|
|||
|
|
4,083,498
|
|
|
3,633,911
|
|
|
3,513,343
|
|
|||
Eagle Life:
|
|
|
|
|
|
|
||||||
Fixed index annuities
|
|
646,903
|
|
|
660,401
|
|
|
576,695
|
|
|||
Annual reset fixed rate annuities
|
|
199
|
|
|
1,555
|
|
|
—
|
|
|||
Multi-year fixed rate annuities
|
|
232,613
|
|
|
109,096
|
|
|
87,172
|
|
|||
|
|
879,715
|
|
|
771,052
|
|
|
663,867
|
|
|||
Consolidated:
|
|
|
|
|
|
|
||||||
Fixed index annuities
|
|
4,705,541
|
|
|
4,221,282
|
|
|
3,966,839
|
|
|||
Annual reset fixed rate annuities
|
|
11,444
|
|
|
47,191
|
|
|
74,829
|
|
|||
Multi-year fixed rate annuities
|
|
234,226
|
|
|
112,677
|
|
|
110,596
|
|
|||
Single premium immediate annuities
|
|
12,002
|
|
|
23,813
|
|
|
24,946
|
|
|||
Total before coinsurance ceded
|
|
4,963,213
|
|
|
4,404,963
|
|
|
4,177,210
|
|
|||
Coinsurance ceded
|
|
290,040
|
|
|
413,222
|
|
|
387,280
|
|
|||
Net after coinsurance ceded
|
|
$
|
4,673,173
|
|
|
$
|
3,991,741
|
|
|
$
|
3,789,930
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(Dollars in thousands)
|
||||||||||
Decrease in amortization of deferred sales inducements
|
$
|
(104,707
|
)
|
|
$
|
(21,465
|
)
|
|
$
|
(34,274
|
)
|
Decrease in amortization of deferred policy acquisition costs
|
(192,982
|
)
|
|
(30,572
|
)
|
|
(48,198
|
)
|
|||
Increase (decrease) in interest sensitive and index product benefits
|
315,383
|
|
|
(53,607
|
)
|
|
21,608
|
|
|||
Increase in change in fair value of embedded derivatives
|
28,208
|
|
|
8,458
|
|
|
21,007
|
|
|||
Effect on net income
|
(35,987
|
)
|
|
76,194
|
|
|
25,667
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(Dollars in thousands)
|
||||||||||
Decrease in amortization of deferred sales inducements
|
$
|
(184,882
|
)
|
|
$
|
(20,466
|
)
|
|
$
|
(31,317
|
)
|
Decrease in amortization of deferred policy acquisition costs
|
(288,332
|
)
|
|
(28,702
|
)
|
|
(43,716
|
)
|
|||
Increase (decrease) in interest sensitive and index product benefits
|
315,383
|
|
|
(53,607
|
)
|
|
21,608
|
|
|||
Effect on non-GAAP operating income
|
123,739
|
|
|
80,576
|
|
|
34,405
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(Dollars in thousands)
|
||||||||||
Surrender charges
|
$
|
71,565
|
|
|
$
|
65,644
|
|
|
$
|
54,624
|
|
Lifetime income benefit riders (LIBR) fees
|
168,470
|
|
|
158,844
|
|
|
145,870
|
|
|||
|
$
|
240,035
|
|
|
$
|
224,488
|
|
|
$
|
200,494
|
|
|
|
|
|
|
|
||||||
Withdrawals from annuity policies subject to surrender charges
|
$
|
662,795
|
|
|
$
|
572,802
|
|
|
$
|
456,084
|
|
Average surrender charge collected on withdrawals subject to surrender charges
|
10.8
|
%
|
|
11.5
|
%
|
|
12.0
|
%
|
|||
|
|
|
|
|
|
||||||
Fund values on policies subject to LIBR fees
|
$
|
22,490,676
|
|
|
$
|
21,773,577
|
|
|
$
|
20,440,431
|
|
Weighted average per policy LIBR fee
|
0.75
|
%
|
|
0.73
|
%
|
|
0.71
|
%
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(Dollars in thousands)
|
||||||||||
Call options:
|
|
|
|
|
|
||||||
Gain (loss) on option expiration
|
$
|
(190,376
|
)
|
|
$
|
656,953
|
|
|
$
|
1,062,328
|
|
Change in unrealized gains/losses
|
1,098,932
|
|
|
(1,435,852
|
)
|
|
615,955
|
|
|||
Interest rate swap
|
(1,059
|
)
|
|
869
|
|
|
255
|
|
|||
Interest rate caps
|
(591
|
)
|
|
182
|
|
|
(667
|
)
|
|||
|
$
|
906,906
|
|
|
$
|
(777,848
|
)
|
|
$
|
1,677,871
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(Dollars in thousands)
|
||||||||||
Index credits on index policies
|
$
|
587,818
|
|
|
$
|
1,285,555
|
|
|
$
|
1,594,722
|
|
Interest credited (including changes in minimum guaranteed interest for fixed index annuities)
|
204,474
|
|
|
221,554
|
|
|
257,896
|
|
|||
Lifetime income benefit riders
|
495,284
|
|
|
103,726
|
|
|
171,050
|
|
|||
|
$
|
1,287,576
|
|
|
$
|
1,610,835
|
|
|
$
|
2,023,668
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(Dollars in thousands)
|
||||||||||
Amortization of deferred sales inducements before gross profit adjustments
|
$
|
78,398
|
|
|
$
|
249,627
|
|
|
$
|
240,562
|
|
Gross profit adjustments:
|
|
|
|
|
|
||||||
Fair value accounting for derivatives and embedded derivatives
|
12,189
|
|
|
(15,283
|
)
|
|
(64,219
|
)
|
|||
Net realized gains (losses) on investments, net OTTI losses recognized in operations
|
(2,002
|
)
|
|
(12,143
|
)
|
|
269
|
|
|||
Amortization of deferred sales inducements after gross profit adjustments
|
$
|
88,585
|
|
|
$
|
222,201
|
|
|
$
|
176,612
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(Dollars in thousands)
|
||||||||||
Fixed index annuities - embedded derivatives
|
$
|
562,302
|
|
|
$
|
(2,167,628
|
)
|
|
$
|
174,154
|
|
Other changes in difference between policy benefit reserves computed using derivative accounting vs. long-duration contracts accounting
|
891,740
|
|
|
778,137
|
|
|
745,581
|
|
|||
|
$
|
1,454,042
|
|
|
$
|
(1,389,491
|
)
|
|
$
|
919,735
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(Dollars in thousands)
|
||||||||||
Amortization of deferred policy acquisition costs before gross profit adjustments
|
$
|
97,736
|
|
|
$
|
358,736
|
|
|
$
|
340,191
|
|
Gross profit adjustments:
|
|
|
|
|
|
||||||
Fair value accounting for derivatives and embedded derivatives
|
(7,618
|
)
|
|
(14,504
|
)
|
|
(84,744
|
)
|
|||
Net realized gains (losses) on investments, net OTTI losses recognized in operations
|
(2,401
|
)
|
|
(16,241
|
)
|
|
517
|
|
|||
Amortization of deferred policy acquisition costs after gross profit adjustments
|
$
|
87,717
|
|
|
$
|
327,991
|
|
|
$
|
255,964
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(Dollars in thousands)
|
||||||||||
Salary and benefits
|
$
|
82,883
|
|
|
$
|
71,914
|
|
|
$
|
58,043
|
|
Risk charges
|
38,342
|
|
|
31,297
|
|
|
29,104
|
|
|||
Other
|
32,928
|
|
|
26,090
|
|
|
24,544
|
|
|||
Total other operating costs and expenses
|
$
|
154,153
|
|
|
$
|
129,301
|
|
|
$
|
111,691
|
|
|
December 31,
|
||||||||||||
|
2019
|
|
2018
|
||||||||||
|
Carrying
Amount
|
|
Percent
|
|
Carrying
Amount
|
|
Percent
|
||||||
|
(Dollars in thousands)
|
||||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
||||||
United States Government full faith and credit
|
$
|
161,765
|
|
|
0.3
|
%
|
|
$
|
11,652
|
|
|
—
|
%
|
United States Government sponsored agencies
|
625,020
|
|
|
1.1
|
%
|
|
1,138,529
|
|
|
2.3
|
%
|
||
United States municipalities, states and territories
|
4,527,671
|
|
|
7.9
|
%
|
|
4,126,267
|
|
|
8.3
|
%
|
||
Foreign government obligations
|
205,096
|
|
|
0.3
|
%
|
|
230,274
|
|
|
0.5
|
%
|
||
Corporate securities
|
32,536,839
|
|
|
57.2
|
%
|
|
28,371,514
|
|
|
57.4
|
%
|
||
Residential mortgage backed securities
|
1,575,664
|
|
|
2.8
|
%
|
|
1,202,159
|
|
|
2.4
|
%
|
||
Commercial mortgage backed securities
|
5,786,279
|
|
|
10.2
|
%
|
|
5,379,003
|
|
|
10.9
|
%
|
||
Other asset backed securities
|
6,162,156
|
|
|
10.8
|
%
|
|
5,464,329
|
|
|
11.1
|
%
|
||
Total fixed maturity securities
|
51,580,490
|
|
|
90.6
|
%
|
|
45,923,727
|
|
|
92.9
|
%
|
||
Mortgage loans on real estate
|
3,448,793
|
|
|
6.1
|
%
|
|
2,943,091
|
|
|
6.0
|
%
|
||
Derivative instruments
|
1,355,989
|
|
|
2.4
|
%
|
|
205,149
|
|
|
0.4
|
%
|
||
Other investments
|
492,301
|
|
|
0.9
|
%
|
|
355,531
|
|
|
0.7
|
%
|
||
|
$
|
56,877,573
|
|
|
100.0
|
%
|
|
$
|
49,427,498
|
|
|
100.0
|
%
|
|
|
December 31,
|
||||||||||||
|
|
2019
|
|
2018
|
||||||||||
Rating Agency Rating
|
|
Carrying
Amount
|
|
Percent of Fixed Maturity Securities
|
|
Carrying
Amount
|
|
Percent of Fixed Maturity Securities
|
||||||
|
|
(Dollars in thousands)
|
||||||||||||
Aaa/Aa/A
|
|
$
|
30,662,644
|
|
|
59.4
|
%
|
|
$
|
27,052,481
|
|
|
58.9
|
%
|
Baa
|
|
19,833,309
|
|
|
38.4
|
%
|
|
17,265,590
|
|
|
37.6
|
%
|
||
Total investment grade
|
|
50,495,953
|
|
|
97.8
|
%
|
|
44,318,071
|
|
|
96.5
|
%
|
||
Ba
|
|
821,902
|
|
|
1.6
|
%
|
|
1,191,772
|
|
|
2.6
|
%
|
||
B
|
|
81,407
|
|
|
0.2
|
%
|
|
139,313
|
|
|
0.3
|
%
|
||
Caa
|
|
95,676
|
|
|
0.2
|
%
|
|
122,717
|
|
|
0.3
|
%
|
||
Ca and lower
|
|
85,552
|
|
|
0.2
|
%
|
|
151,854
|
|
|
0.3
|
%
|
||
Total below investment grade
|
|
1,084,537
|
|
|
2.2
|
%
|
|
1,605,656
|
|
|
3.5
|
%
|
||
|
|
$
|
51,580,490
|
|
|
100.0
|
%
|
|
$
|
45,923,727
|
|
|
100.0
|
%
|
NAIC Designation
|
|
NRSRO Equivalent Rating
|
1
|
|
Aaa/Aa/A
|
2
|
|
Baa
|
3
|
|
Ba
|
4
|
|
B
|
5
|
|
Caa
|
6
|
|
Ca and lower
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||||||||
NAIC
Designation
|
|
Amortized
Cost
|
|
Fair Value
|
|
Carrying
Amount
|
|
Percentage
of Total
Carrying
Amount
|
|
Amortized
Cost
|
|
Fair Value
|
|
Carrying
Amount
|
|
Percentage
of Total
Carrying
Amount
|
||||||||||||||
|
|
(Dollars in thousands)
|
|
|
|
(Dollars in thousands)
|
|
|
||||||||||||||||||||||
1
|
|
$
|
27,781,525
|
|
|
$
|
30,122,657
|
|
|
$
|
30,122,657
|
|
|
58.4
|
%
|
|
$
|
26,588,352
|
|
|
$
|
26,921,843
|
|
|
$
|
26,921,843
|
|
|
58.6
|
%
|
2
|
|
19,278,355
|
|
|
20,316,911
|
|
|
20,316,911
|
|
|
39.4
|
%
|
|
17,901,161
|
|
|
17,528,072
|
|
|
17,528,072
|
|
|
38.2
|
%
|
||||||
3
|
|
1,001,087
|
|
|
977,191
|
|
|
977,191
|
|
|
1.9
|
%
|
|
1,396,650
|
|
|
1,269,242
|
|
|
1,269,242
|
|
|
2.8
|
%
|
||||||
4
|
|
114,497
|
|
|
112,534
|
|
|
112,534
|
|
|
0.2
|
%
|
|
173,987
|
|
|
137,991
|
|
|
137,991
|
|
|
0.3
|
%
|
||||||
5
|
|
57,952
|
|
|
45,205
|
|
|
45,205
|
|
|
0.1
|
%
|
|
23,836
|
|
|
19,453
|
|
|
19,453
|
|
|
—
|
%
|
||||||
6
|
|
5,530
|
|
|
5,992
|
|
|
5,992
|
|
|
—
|
%
|
|
47,204
|
|
|
47,126
|
|
|
47,126
|
|
|
0.1
|
%
|
||||||
|
|
$
|
48,238,946
|
|
|
$
|
51,580,490
|
|
|
$
|
51,580,490
|
|
|
100.0
|
%
|
|
$
|
46,131,190
|
|
|
$
|
45,923,727
|
|
|
$
|
45,923,727
|
|
|
100.0
|
%
|
|
Number of
Securities
|
|
Amortized
Cost
|
|
Unrealized
Losses
|
|
Fair Value
|
|||||||
|
(Dollars in thousands)
|
|||||||||||||
December 31, 2019
|
|
|
|
|
|
|
|
|||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
|||||||
United States Government full faith and credit
|
5
|
|
|
$
|
144,678
|
|
|
$
|
(96
|
)
|
|
$
|
144,582
|
|
United States Government sponsored agencies
|
6
|
|
|
374,961
|
|
|
(4,785
|
)
|
|
370,176
|
|
|||
United States municipalities, states and territories
|
42
|
|
|
296,812
|
|
|
(8,250
|
)
|
|
288,562
|
|
|||
Foreign government obligations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Corporate securities:
|
|
|
|
|
|
|
|
|||||||
Finance, insurance and real estate
|
38
|
|
|
399,043
|
|
|
(9,529
|
)
|
|
389,514
|
|
|||
Manufacturing, construction and mining
|
20
|
|
|
216,229
|
|
|
(9,990
|
)
|
|
206,239
|
|
|||
Utilities and related sectors
|
32
|
|
|
397,116
|
|
|
(11,212
|
)
|
|
385,904
|
|
|||
Wholesale/retail trade
|
12
|
|
|
194,815
|
|
|
(11,162
|
)
|
|
183,653
|
|
|||
Services, media and other
|
65
|
|
|
631,587
|
|
|
(40,366
|
)
|
|
591,221
|
|
|||
Residential mortgage backed securities
|
34
|
|
|
227,427
|
|
|
(3,691
|
)
|
|
223,736
|
|
|||
Commercial mortgage backed securities
|
127
|
|
|
810,505
|
|
|
(13,783
|
)
|
|
796,722
|
|
|||
Other asset backed securities
|
652
|
|
|
4,306,620
|
|
|
(179,191
|
)
|
|
4,127,429
|
|
|||
|
1,033
|
|
|
$
|
7,999,793
|
|
|
$
|
(292,055
|
)
|
|
$
|
7,707,738
|
|
|
|
|
|
|
|
|
|
|||||||
December 31, 2018
|
|
|
|
|
|
|
|
|||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
|||||||
United States Government full faith and credit
|
4
|
|
|
$
|
8,650
|
|
|
$
|
(322
|
)
|
|
$
|
8,328
|
|
United States Government sponsored agencies
|
23
|
|
|
1,066,544
|
|
|
(83,034
|
)
|
|
983,510
|
|
|||
United States municipalities, states and territories
|
136
|
|
|
518,758
|
|
|
(15,658
|
)
|
|
503,100
|
|
|||
Foreign government obligations
|
6
|
|
|
114,529
|
|
|
(4,159
|
)
|
|
110,370
|
|
|||
Corporate securities:
|
|
|
|
|
|
|
|
|||||||
Finance, insurance and real estate
|
286
|
|
|
3,551,237
|
|
|
(164,727
|
)
|
|
3,386,510
|
|
|||
Manufacturing, construction and mining
|
231
|
|
|
2,515,204
|
|
|
(119,607
|
)
|
|
2,395,597
|
|
|||
Utilities and related sectors
|
273
|
|
|
3,032,710
|
|
|
(127,957
|
)
|
|
2,904,753
|
|
|||
Wholesale/retail trade
|
103
|
|
|
1,308,962
|
|
|
(77,554
|
)
|
|
1,231,408
|
|
|||
Services, media and other
|
529
|
|
|
6,040,083
|
|
|
(348,884
|
)
|
|
5,691,199
|
|
|||
Residential mortgage backed securities
|
33
|
|
|
172,427
|
|
|
(4,125
|
)
|
|
168,302
|
|
|||
Commercial mortgage backed securities
|
487
|
|
|
4,367,221
|
|
|
(134,826
|
)
|
|
4,232,395
|
|
|||
Other asset backed securities
|
604
|
|
|
4,615,477
|
|
|
(270,234
|
)
|
|
4,345,243
|
|
|||
|
2,715
|
|
|
$
|
27,311,802
|
|
|
$
|
(1,351,087
|
)
|
|
$
|
25,960,715
|
|
NAIC Designation
|
|
Carrying Value of
Securities with
Gross Unrealized
Losses
|
|
Percent of
Total
|
|
Gross
Unrealized
Losses
|
|
Percent of
Total
|
||||||
|
|
(Dollars in thousands)
|
||||||||||||
December 31, 2019
|
|
|
|
|
|
|
|
|
||||||
1
|
|
$
|
3,580,578
|
|
|
46.4
|
%
|
|
$
|
(79,638
|
)
|
|
27.3
|
%
|
2
|
|
3,412,695
|
|
|
44.3
|
%
|
|
(151,826
|
)
|
|
52.0
|
%
|
||
3
|
|
613,240
|
|
|
8.0
|
%
|
|
(38,216
|
)
|
|
13.1
|
%
|
||
4
|
|
74,027
|
|
|
1.0
|
%
|
|
(8,575
|
)
|
|
2.9
|
%
|
||
5
|
|
26,998
|
|
|
0.3
|
%
|
|
(13,437
|
)
|
|
4.6
|
%
|
||
6
|
|
200
|
|
|
—
|
%
|
|
(363
|
)
|
|
0.1
|
%
|
||
|
|
$
|
7,707,738
|
|
|
100.0
|
%
|
|
$
|
(292,055
|
)
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
||||||
1
|
|
$
|
13,302,253
|
|
|
51.2
|
%
|
|
$
|
(552,455
|
)
|
|
40.9
|
%
|
2
|
|
11,301,715
|
|
|
43.5
|
%
|
|
(622,053
|
)
|
|
46.0
|
%
|
||
3
|
|
1,170,941
|
|
|
4.5
|
%
|
|
(129,441
|
)
|
|
9.6
|
%
|
||
4
|
|
127,222
|
|
|
0.5
|
%
|
|
(40,927
|
)
|
|
3.0
|
%
|
||
5
|
|
19,453
|
|
|
0.1
|
%
|
|
(4,383
|
)
|
|
0.3
|
%
|
||
6
|
|
39,131
|
|
|
0.2
|
%
|
|
(1,828
|
)
|
|
0.2
|
%
|
||
|
|
$
|
25,960,715
|
|
|
100.0
|
%
|
|
$
|
(1,351,087
|
)
|
|
100.0
|
%
|
|
Number of
Securities
|
|
Amortized
Cost
|
|
Fair Value
|
|
Gross
Unrealized
Losses
|
|||||||
|
|
|
(Dollars in thousands)
|
|||||||||||
December 31, 2019
|
|
|
|
|
|
|
|
|||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
|||||||
Investment grade:
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
352
|
|
|
$
|
2,960,557
|
|
|
$
|
2,911,909
|
|
|
$
|
(48,648
|
)
|
Six months or more and less than twelve months
|
46
|
|
|
290,674
|
|
|
282,347
|
|
|
(8,327
|
)
|
|||
Twelve months or greater
|
513
|
|
|
4,003,478
|
|
|
3,829,474
|
|
|
(174,004
|
)
|
|||
Total investment grade
|
911
|
|
|
7,254,709
|
|
|
7,023,730
|
|
|
(230,979
|
)
|
|||
Below investment grade:
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
11
|
|
|
32,607
|
|
|
31,695
|
|
|
(912
|
)
|
|||
Six months or more and less than twelve months
|
8
|
|
|
35,080
|
|
|
33,268
|
|
|
(1,812
|
)
|
|||
Twelve months or greater
|
103
|
|
|
677,397
|
|
|
619,045
|
|
|
(58,352
|
)
|
|||
Total below investment grade
|
122
|
|
|
745,084
|
|
|
684,008
|
|
|
(61,076
|
)
|
|||
|
1,033
|
|
|
$
|
7,999,793
|
|
|
$
|
7,707,738
|
|
|
$
|
(292,055
|
)
|
December 31, 2018
|
|
|
|
|
|
|
|
|||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
|||||||
Investment grade:
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
770
|
|
|
$
|
6,986,778
|
|
|
$
|
6,777,338
|
|
|
$
|
(209,440
|
)
|
Six months or more and less than twelve months
|
1,184
|
|
|
12,208,435
|
|
|
11,692,145
|
|
|
(516,290
|
)
|
|||
Twelve months or greater
|
606
|
|
|
6,639,807
|
|
|
6,186,550
|
|
|
(453,257
|
)
|
|||
Total investment grade
|
2,560
|
|
|
25,835,020
|
|
|
24,656,033
|
|
|
(1,178,987
|
)
|
|||
Below investment grade:
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
59
|
|
|
578,858
|
|
|
533,979
|
|
|
(44,879
|
)
|
|||
Six months or more and less than twelve months
|
44
|
|
|
371,075
|
|
|
338,056
|
|
|
(33,019
|
)
|
|||
Twelve months or greater
|
52
|
|
|
526,849
|
|
|
432,647
|
|
|
(94,202
|
)
|
|||
Total below investment grade
|
155
|
|
|
1,476,782
|
|
|
1,304,682
|
|
|
(172,100
|
)
|
|||
|
2,715
|
|
|
$
|
27,311,802
|
|
|
$
|
25,960,715
|
|
|
$
|
(1,351,087
|
)
|
|
Number of
Securities
|
|
Amortized
Cost
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|||||||
|
|
|
(Dollars in thousands)
|
|||||||||||
December 31, 2019
|
|
|
|
|
|
|
|
|||||||
Investment grade:
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Six months or more and less than twelve months
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Twelve months or greater
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total investment grade
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Below investment grade:
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Six months or more and less than twelve months
|
1
|
|
|
2,640
|
|
|
1,755
|
|
|
(885
|
)
|
|||
Twelve months or greater
|
4
|
|
|
53,800
|
|
|
35,541
|
|
|
(18,259
|
)
|
|||
Total below investment grade
|
5
|
|
|
56,440
|
|
|
37,296
|
|
|
(19,144
|
)
|
|||
|
5
|
|
|
$
|
56,440
|
|
|
$
|
37,296
|
|
|
$
|
(19,144
|
)
|
December 31, 2018
|
|
|
|
|
|
|
|
|||||||
Investment grade:
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
5
|
|
|
$
|
103,637
|
|
|
$
|
78,378
|
|
|
$
|
(25,259
|
)
|
Six months or more and less than twelve months
|
1
|
|
|
20,189
|
|
|
15,225
|
|
|
(4,964
|
)
|
|||
Twelve months or greater
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total investment grade
|
6
|
|
|
123,826
|
|
|
93,603
|
|
|
(30,223
|
)
|
|||
Below investment grade:
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
13
|
|
|
146,474
|
|
|
108,465
|
|
|
(38,009
|
)
|
|||
Six months or more and less than twelve months
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Twelve months or greater
|
3
|
|
|
45,594
|
|
|
26,665
|
|
|
(18,929
|
)
|
|||
Total below investment grade
|
16
|
|
|
192,068
|
|
|
135,130
|
|
|
(56,938
|
)
|
|||
|
22
|
|
|
$
|
315,894
|
|
|
$
|
228,733
|
|
|
$
|
(87,161
|
)
|
|
Available for sale
|
||||||
|
Amortized
Cost
|
|
Fair Value
|
||||
|
(Dollars in thousands)
|
||||||
December 31, 2019
|
|
|
|
||||
Due in one year or less
|
$
|
5,073
|
|
|
$
|
5,071
|
|
Due after one year through five years
|
278,165
|
|
|
273,869
|
|
||
Due after five years through ten years
|
555,200
|
|
|
544,687
|
|
||
Due after ten years through twenty years
|
1,041,474
|
|
|
1,008,487
|
|
||
Due after twenty years
|
775,329
|
|
|
727,737
|
|
||
|
2,655,241
|
|
|
2,559,851
|
|
||
Residential mortgage backed securities
|
227,427
|
|
|
223,736
|
|
||
Commercial mortgage backed securities
|
810,505
|
|
|
796,722
|
|
||
Other asset backed securities
|
4,306,620
|
|
|
4,127,429
|
|
||
|
$
|
7,999,793
|
|
|
$
|
7,707,738
|
|
December 31, 2018
|
|
|
|
||||
Due in one year or less
|
$
|
31,590
|
|
|
$
|
30,780
|
|
Due after one year through five years
|
2,596,616
|
|
|
2,534,891
|
|
||
Due after five years through ten years
|
7,196,565
|
|
|
6,907,961
|
|
||
Due after ten years through twenty years
|
3,247,923
|
|
|
3,056,474
|
|
||
Due after twenty years
|
5,083,983
|
|
|
4,684,669
|
|
||
|
18,156,677
|
|
|
17,214,775
|
|
||
Residential mortgage backed securities
|
172,427
|
|
|
168,302
|
|
||
Commercial mortgage backed securities
|
4,367,221
|
|
|
4,232,395
|
|
||
Other asset backed securities
|
4,615,477
|
|
|
4,345,243
|
|
||
|
$
|
27,311,802
|
|
|
$
|
25,960,715
|
|
|
December 31, 2019
|
|||||||||
|
Amortized
Cost
|
|
Carrying Amount/
Fair Value
|
|
Percent
of Total Carrying Amount |
|||||
|
(Dollars in thousands)
|
|
|
|||||||
GIIPS (1)
|
$
|
251,310
|
|
|
$
|
279,592
|
|
|
0.5
|
%
|
Asia/Pacific
|
436,537
|
|
|
475,082
|
|
|
0.9
|
%
|
||
Non-GIIPS Europe
|
3,143,830
|
|
|
3,390,000
|
|
|
6.6
|
%
|
||
Latin America
|
277,489
|
|
|
302,147
|
|
|
0.6
|
%
|
||
Non-U.S. North America
|
1,378,013
|
|
|
1,503,885
|
|
|
2.9
|
%
|
||
Australia & New Zealand
|
1,075,604
|
|
|
1,126,723
|
|
|
2.2
|
%
|
||
Other
|
5,587,191
|
|
|
5,477,698
|
|
|
10.6
|
%
|
||
|
$
|
12,149,974
|
|
|
$
|
12,555,127
|
|
|
24.3
|
%
|
(1)
|
Greece, Ireland, Italy, Portugal and Spain ("GIIPS"). All of our exposure in GIIPS are corporate securities with issuers domiciled in these countries. None of our foreign government obligations were held in any of these countries.
|
|
December 31, 2019
|
||||||
|
Amortized Cost
|
|
Carrying Amount/
Fair Value
|
||||
|
(Dollars in thousands)
|
||||||
GIIPS
|
$
|
14,537
|
|
|
$
|
16,060
|
|
Asia/Pacific
|
11,000
|
|
|
10,471
|
|
||
Non-GIIPS Europe
|
77,826
|
|
|
78,275
|
|
||
Latin America
|
58,066
|
|
|
61,891
|
|
||
Non-U.S. North America
|
25,453
|
|
|
25,756
|
|
||
Other
|
439,933
|
|
|
411,234
|
|
||
|
$
|
626,815
|
|
|
$
|
603,687
|
|
General Description
|
|
Number of
Securities
|
|
Amortized
Cost
|
|
Unrealized
Gains (Losses)
|
|
Fair Value
|
|
Months in
Continuous
Unrealized
Loss Position
|
|
Months
Unrealized
Losses
Greater
Than 20%
|
||||||
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
||||||||||
Below investment grade
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Corporate securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Consumer discretionary
|
|
5
|
|
$
|
52,654
|
|
|
$
|
(3,575
|
)
|
|
$
|
49,079
|
|
|
0 - 59
|
|
0 - 22
|
Energy
|
|
4
|
|
38,386
|
|
|
(5,742
|
)
|
|
32,644
|
|
|
0 - 64
|
|
0 - 15
|
|||
Industrials
|
|
1
|
|
563
|
|
|
(363
|
)
|
|
200
|
|
|
7
|
|
3
|
|||
Materials
|
|
1
|
|
3,990
|
|
|
560
|
|
|
4,550
|
|
|
—
|
|
—
|
|||
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|||
Other asset backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Financials
|
|
1
|
|
977
|
|
|
261
|
|
|
1,238
|
|
|
—
|
|
—
|
|||
Industrials
|
|
1
|
|
8,364
|
|
|
(2,420
|
)
|
|
5,944
|
|
|
50
|
|
13
|
|||
|
|
13
|
|
$
|
104,934
|
|
|
$
|
(11,279
|
)
|
|
$
|
93,655
|
|
|
|
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||
|
Principal Outstanding
|
|
Percent of Total Principal Outstanding
|
|
Principal Outstanding
|
|
Percent of Total Principal Outstanding
|
||||||
|
(Dollars in thousands)
|
|
|
|
(Dollars in thousands)
|
|
|
||||||
Debt Service Coverage Ratio:
|
|
|
|
|
|
|
|
||||||
Greater than or equal to 1.5
|
$
|
2,518,872
|
|
|
72.8
|
%
|
|
$
|
2,121,785
|
|
|
71.9
|
%
|
Greater than or equal to 1.2 and less than 1.5
|
789,420
|
|
|
22.8
|
%
|
|
645,470
|
|
|
21.8
|
%
|
||
Greater than or equal to 1.0 and less than 1.2
|
114,862
|
|
|
3.3
|
%
|
|
127,083
|
|
|
4.3
|
%
|
||
Less than 1.0
|
35,760
|
|
|
1.1
|
%
|
|
58,126
|
|
|
2.0
|
%
|
||
|
$
|
3,458,914
|
|
|
100.0
|
%
|
|
$
|
2,952,464
|
|
|
100.0
|
%
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(Dollars in thousands)
|
||||||
Impaired mortgage loans with an allowance
|
$
|
1,229
|
|
|
$
|
1,253
|
|
Impaired mortgage loans with no related allowance
|
—
|
|
|
—
|
|
||
Allowance for probable loan losses
|
(229
|
)
|
|
(229
|
)
|
||
Net carrying value of impaired mortgage loans
|
$
|
1,000
|
|
|
$
|
1,024
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
Total
|
|
Less Than
1 year
|
|
1–3 Years
|
|
4–5 Years
|
|
After
5 Years
|
||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||
Annuity and single premium universal life products (1)
|
$
|
55,215,581
|
|
|
$
|
3,688,477
|
|
|
$
|
7,819,678
|
|
|
$
|
8,165,187
|
|
|
$
|
35,542,239
|
|
Notes and loan payable, including interest payments (2)
|
688,271
|
|
|
25,462
|
|
|
50,309
|
|
|
50,000
|
|
|
562,500
|
|
|||||
Subordinated debentures, including interest payments (3)
|
376,803
|
|
|
9,291
|
|
|
18,581
|
|
|
18,581
|
|
|
330,350
|
|
|||||
Operating leases
|
13,672
|
|
|
2,427
|
|
|
4,439
|
|
|
3,698
|
|
|
3,108
|
|
|||||
Mortgage loan funding and other investments
|
369,993
|
|
|
369,993
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
56,664,320
|
|
|
$
|
4,095,650
|
|
|
$
|
7,893,007
|
|
|
$
|
8,237,466
|
|
|
$
|
36,438,197
|
|
(1)
|
Amounts shown in this table are projected payments through the year 2039 which we are contractually obligated to pay to our annuity policyholders. The payments are derived from actuarial models which assume a level interest rate scenario and incorporate assumptions regarding mortality and persistency, when applicable. These assumptions are based on our historical experience.
|
(2)
|
Period that principal amounts are due is determined by the earliest of the call/put date or the maturity date of each note payable.
|
(3)
|
Amount shown is net of equity investments in the capital trusts due to the contractual right of offset upon repayment of the notes.
|
Level 1 —
|
Quoted prices are available in active markets for identical financial instruments as of the reporting date. We do not adjust the quoted price for these financial instruments, even in situations where we hold a large position and a sale could reasonably impact the quoted price.
|
Level 2 —
|
Quoted prices in active markets for similar financial instruments, quoted prices for identical or similar financial instruments in markets that are not active; and models and other valuation methodologies using inputs other than quoted prices that are observable.
|
Level 3 —
|
Models and other valuation methodologies using significant inputs that are unobservable for financial instruments and include situations where there is little, if any, market activity for the financial instrument. The inputs into the determination of fair value require significant management judgment or estimation. Financial instruments that are included in Level 3 are securities for which no market activity or data exists and for which we used discounted expected future cash flows with our own assumptions about what a market participant would use in determining fair value.
|
|
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
|
|
Significant
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
December 31, 2019
|
|
|
|
|
|
|
|
||||||||
Priced via third party pricing services
|
$
|
155,949
|
|
|
$
|
50,570,910
|
|
|
$
|
—
|
|
|
$
|
50,726,859
|
|
Priced via independent broker quotations
|
—
|
|
|
228,401
|
|
|
—
|
|
|
228,401
|
|
||||
Priced via other methods
|
—
|
|
|
625,230
|
|
|
—
|
|
|
625,230
|
|
||||
|
$
|
155,949
|
|
|
$
|
51,424,541
|
|
|
$
|
—
|
|
|
$
|
51,580,490
|
|
% of Total
|
0.3
|
%
|
|
99.7
|
%
|
|
—
|
%
|
|
100.0
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
December 31, 2018
|
|
|
|
|
|
|
|
||||||||
Priced via third party pricing services
|
$
|
5,907
|
|
|
$
|
45,268,935
|
|
|
$
|
—
|
|
|
$
|
45,274,842
|
|
Priced via independent broker quotations
|
—
|
|
|
20,367
|
|
|
—
|
|
|
20,367
|
|
||||
Priced via other methods
|
—
|
|
|
635,955
|
|
|
—
|
|
|
635,955
|
|
||||
|
$
|
5,907
|
|
|
$
|
45,925,257
|
|
|
$
|
—
|
|
|
$
|
45,931,164
|
|
% of Total
|
—
|
%
|
|
100.0
|
%
|
|
—
|
%
|
|
100.0
|
%
|
•
|
reported trading prices,
|
•
|
benchmark yields,
|
•
|
broker-dealer quotes,
|
•
|
benchmark securities,
|
•
|
bids and offers,
|
•
|
credit ratings,
|
•
|
relative credit information, and
|
•
|
other reference data.
|
•
|
the length of time and the extent to which the fair value has been less than amortized cost or cost;
|
•
|
whether the issuer is current on all payments and all contractual payments have been made as agreed;
|
•
|
the remaining payment terms and the financial condition and near-term prospects of the issuer;
|
•
|
the lack of ability to refinance due to liquidity problems in the credit market;
|
•
|
the fair value of any underlying collateral;
|
•
|
the existence of any credit protection available;
|
•
|
our intent to sell and whether it is more likely than not we would be required to sell prior to recovery for debt securities;
|
•
|
consideration of rating agency actions; and
|
•
|
changes in estimated cash flows of mortgage and asset backed securities.
|
•
|
future taxable income of the necessary character exclusive of reversing temporary differences and carryforwards;
|
•
|
future reversals of existing taxable temporary differences;
|
•
|
taxable capital income in prior carryback years; and
|
•
|
tax planning strategies.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(Dollars in thousands)
|
||||||||||
Proceeds received at expiration of options related to such credits
|
$
|
605,005
|
|
|
$
|
1,307,755
|
|
|
$
|
1,623,346
|
|
Annual index credits to policyholders on their anniversaries
|
587,818
|
|
|
1,285,555
|
|
|
1,594,722
|
|
(a)
|
Evaluation of Disclosure Controls and Procedures
|
(b)
|
Management's Report on Internal Control over Financial Reporting
|
(c)
|
Changes in Internal Control over Financial Reporting.
|
Exhibit No.
|
|
Description
|
3.1
|
|
|
3.2
|
|
|
3.3
|
|
|
3.4
|
|
|
3.5
|
|
|
3.6
|
|
|
3.7
|
|
|
4.1
|
|
|
4.2
|
|
|
4.3
|
|
|
4.4
|
|
|
4.5
|
|
|
4.6
|
|
|
4.7
|
|
|
4.8
|
|
|
4.9
|
|
|
4.10
|
|
|
4.11
|
|
|
4.12
|
|
|
4.13
|
|
|
4.14
|
|
Exhibit No.
|
|
Description
|
4.15
|
|
|
4.16
|
|
|
4.17
|
|
|
4.18
|
|
|
4.19
|
|
|
4.20
|
|
|
4.21
|
|
|
4.22
|
|
|
4.23
|
|
|
4.24
|
|
|
4.25
|
|
|
4.26
|
|
|
10.1 *
|
|
|
10.2 *
|
|
|
10.3 *
|
|
|
10.4 *
|
|
|
10.5 *
|
|
|
10.6
|
|
|
10.7 *
|
|
|
10.8
|
|
|
10.9 *
|
|
|
10.10
|
|
|
10.11 *
|
|
|
10.12 *
|
|
|
10.13 *
|
|
|
10.14 *
|
|
|
10.15
|
|
|
10.16
|
|
|
10.17
|
|
|
10.18 *
|
|
Exhibit No.
|
|
Description
|
10.19 *
|
|
|
10.20 *
|
|
|
10.21 *
|
|
|
10.22 *
|
|
|
10.23 *
|
|
|
10.24 *
|
|
|
10.25 *
|
|
|
10.26 *
|
|
|
10.27 *
|
|
|
10.28 *
|
|
|
10.29 *
|
|
|
10.30 *
|
|
|
10.31 *
|
|
|
10.32 *
|
|
|
10.33 *
|
|
|
21.2
|
|
|
23.1
|
|
|
31.1
|
|
|
31.2
|
|
|
32.1
|
|
|
32.2
|
|
*
|
Denotes management contract or compensatory plan.
|
|
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
|
||
|
By:
|
|
/s/ JOHN M. MATOVINA
|
|
|
|
John M. Matovina,
Chief Executive Officer
|
Signature
|
|
Title (Capacity)
|
|
Date
|
|
|
|
|
|
/s/ JOHN M. MATOVINA
|
|
Chairman of the Board and Chief Executive Officer
(Principal Executive Officer)
|
|
February 25, 2020
|
John M. Matovina
|
|
|
|
|
|
|
|
|
|
/s/ TED M. JOHNSON
|
|
Chief Financial Officer and Treasurer
(Principal Financial Officer)
|
|
February 25, 2020
|
Ted M. Johnson
|
|
|
|
|
|
|
|
|
|
/s/ SCOTT A. SAMUELSON
|
|
Vice President and Chief Accounting Officer
(Principal Accounting Officer)
|
|
February 25, 2020
|
Scott A. Samuelson
|
|
|
|
|
|
|
|
|
|
/s/ ANANT BHALLA
|
|
Director
|
|
February 25, 2020
|
Anant Bhalla
|
|
|
|
|
|
|
|
|
|
/s/ JOYCE A. CHAPMAN
|
|
Director
|
|
February 25, 2020
|
Joyce A. Chapman
|
|
|
|
|
|
|
|
|
|
/s/ BRENDA J. CUSHING
|
|
Director
|
|
February 25, 2020
|
Brenda J. Cushing
|
|
|
|
|
|
|
|
|
|
/s/ JAMES M. GERLACH
|
|
Director
|
|
February 25, 2020
|
James M. Gerlach
|
|
|
|
|
|
|
|
|
|
/s/ ROBERT L. HOWE
|
|
Director
|
|
February 25, 2020
|
Robert L. Howe
|
|
|
|
|
|
|
|
|
|
/s/ WILLIAM R. KUNKEL
|
|
Director
|
|
February 25, 2020
|
William R. Kunkel
|
|
|
|
|
|
|
|
|
|
/s/ ALAN D. MATULA
|
|
Director
|
|
February 25, 2020
|
Alan D. Matula
|
|
|
|
|
|
|
|
|
|
/s/ DAVID S. MULCAHY
|
|
Director
|
|
February 25, 2020
|
David S. Mulcahy
|
|
|
|
|
|
|
|
|
|
/s/ GERARD D. NEUGENT
|
|
Director
|
|
February 25, 2020
|
Gerard D. Neugent
|
|
|
|
|
|
|
|
|
|
/s/ DEBRA J. RICHARDSON
|
|
Director
|
|
February 25, 2020
|
Debra J. Richardson
|
|
|
|
|
|
|
|
|
|
/s/ A.J. STRICKLAND, III
|
|
Director
|
|
February 25, 2020
|
A.J. Strickland, III
|
|
|
|
|
|
|
|
|
|
Consolidated Financial Statements:
|
|
Notes to Consolidated Financial Statements
|
|
Schedules:
|
|
•
|
future yields on invested assets;
|
•
|
future cost of money, which includes the expected policy crediting rates on fixed rate annuities and for fixed index annuities 1) the expected hedging expenses incurred to fund the policies annual index credits and 2) the expected policy crediting rates on amounts allocated to the fixed rate strategy;
|
•
|
future policyholder decrements, including lapse and mortality rates; and
|
•
|
future policyholder behavior related to LIBR utilization.
|
•
|
comparing estimated gross profits and assessments for the current year developed from the application of the Company’s assumptions to actual gross profits and assessments during the current year;
|
•
|
comparing the assumptions used by the Company to actual and historical invested asset yields, cost of money, and internal and industry policyholder experience;
|
•
|
developing an independent estimate of gross profits, assessments, and excess benefits for selected policies based on the assumptions used by the Company and comparing them to the Company’s estimates; and
|
•
|
evaluating period over period trends in the valuation of DAC and DSI and the liability for LIBR in relation to the assumptions used by the Company.
|
•
|
comparing the assumptions used by the Company to actual and historical cost of annual call options and internal and industry policyholder experience; and
|
•
|
developing an independent estimate of the fair value of the embedded derivatives for selected policies based on the assumptions used by the Company and comparing the estimate to the Company’s estimate.
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Assets
|
|
|
|
||||
Investments:
|
|
|
|
||||
Fixed maturity securities, available for sale, at fair value (amortized cost: 2019 - $48,238,946; 2018 - $46,131,190)
|
$
|
51,580,490
|
|
|
$
|
45,923,727
|
|
Mortgage loans on real estate
|
3,448,793
|
|
|
2,943,091
|
|
||
Derivative instruments
|
1,355,989
|
|
|
205,149
|
|
||
Other investments
|
492,301
|
|
|
355,531
|
|
||
Total investments
|
56,877,573
|
|
|
49,427,498
|
|
||
|
|
|
|
||||
Cash and cash equivalents
|
2,293,392
|
|
|
344,396
|
|
||
Coinsurance deposits
|
5,115,013
|
|
|
4,954,068
|
|
||
Accrued investment income
|
472,826
|
|
|
468,729
|
|
||
Deferred policy acquisition costs
|
2,923,454
|
|
|
3,535,838
|
|
||
Deferred sales inducements
|
1,966,723
|
|
|
2,516,721
|
|
||
Deferred income taxes
|
—
|
|
|
291,169
|
|
||
Income taxes recoverable
|
—
|
|
|
26,537
|
|
||
Other assets
|
47,571
|
|
|
60,608
|
|
||
Total assets
|
$
|
69,696,552
|
|
|
$
|
61,625,564
|
|
|
|
|
|
||||
Liabilities and Stockholders' Equity
|
|
|
|
||||
Liabilities:
|
|
|
|
||||
Policy benefit reserves
|
$
|
61,893,945
|
|
|
$
|
57,606,009
|
|
Other policy funds and contract claims
|
256,105
|
|
|
270,858
|
|
||
Notes payable
|
495,116
|
|
|
494,591
|
|
||
Subordinated debentures
|
157,265
|
|
|
242,982
|
|
||
Amounts due under repurchase agreements
|
—
|
|
|
109,298
|
|
||
Deferred income taxes
|
177,897
|
|
|
—
|
|
||
Income taxes payable
|
429
|
|
|
—
|
|
||
Other liabilities
|
2,145,676
|
|
|
502,725
|
|
||
Total liabilities
|
65,126,433
|
|
|
59,226,463
|
|
||
|
|
|
|
||||
Stockholders' equity:
|
|
|
|
||||
Preferred stock; par value $1 per share; 2,000,000 shares authorized; issued and outstanding:
2019 - 16,000 shares ($400,000 aggregate liquidation preference); 2018 - no shares
|
16
|
|
|
—
|
|
||
Common stock; par value $1 per share; 200,000,000 shares authorized; issued and outstanding:
2019 - 91,107,555 shares (excluding 1,344,193 treasury shares);
2018 - 90,369,229 shares (excluding 1,535,960 treasury shares)
|
91,107
|
|
|
90,369
|
|
||
Additional paid-in capital
|
1,212,311
|
|
|
811,186
|
|
||
Accumulated other comprehensive income (loss)
|
1,497,921
|
|
|
(52,432
|
)
|
||
Retained earnings
|
1,768,764
|
|
|
1,549,978
|
|
||
Total stockholders' equity
|
4,570,119
|
|
|
2,399,101
|
|
||
Total liabilities and stockholders' equity
|
$
|
69,696,552
|
|
|
$
|
61,625,564
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Premiums and other considerations
|
$
|
23,534
|
|
|
$
|
26,480
|
|
|
$
|
34,228
|
|
Annuity product charges
|
240,035
|
|
|
224,488
|
|
|
200,494
|
|
|||
Net investment income
|
2,307,635
|
|
|
2,147,812
|
|
|
1,991,997
|
|
|||
Change in fair value of derivatives
|
906,906
|
|
|
(777,848
|
)
|
|
1,677,871
|
|
|||
Net realized gains (losses) on investments, excluding other than temporary impairment (OTTI) losses
|
6,962
|
|
|
(37,178
|
)
|
|
10,509
|
|
|||
OTTI losses on investments:
|
|
|
|
|
|
||||||
Total OTTI losses
|
(18,511
|
)
|
|
(35,005
|
)
|
|
(2,758
|
)
|
|||
Portion of OTTI losses recognized from other comprehensive income
|
(215
|
)
|
|
(1,651
|
)
|
|
(1,872
|
)
|
|||
Net OTTI losses recognized in operations
|
(18,726
|
)
|
|
(36,656
|
)
|
|
(4,630
|
)
|
|||
Loss on extinguishment of debt
|
(2,001
|
)
|
|
—
|
|
|
(18,817
|
)
|
|||
Total revenues
|
3,464,345
|
|
|
1,547,098
|
|
|
3,891,652
|
|
|||
|
|
|
|
|
|
||||||
Benefits and expenses:
|
|
|
|
|
|
||||||
Insurance policy benefits and change in future policy benefits
|
35,418
|
|
|
39,530
|
|
|
43,219
|
|
|||
Interest sensitive and index product benefits
|
1,287,576
|
|
|
1,610,835
|
|
|
2,023,668
|
|
|||
Amortization of deferred sales inducements
|
88,585
|
|
|
222,201
|
|
|
176,612
|
|
|||
Change in fair value of embedded derivatives
|
1,454,042
|
|
|
(1,389,491
|
)
|
|
919,735
|
|
|||
Interest expense on notes and loan payable
|
25,525
|
|
|
25,498
|
|
|
30,368
|
|
|||
Interest expense on subordinated debentures
|
15,764
|
|
|
15,491
|
|
|
14,124
|
|
|||
Amortization of deferred policy acquisition costs
|
87,717
|
|
|
327,991
|
|
|
255,964
|
|
|||
Other operating costs and expenses
|
154,153
|
|
|
129,301
|
|
|
111,691
|
|
|||
Total benefits and expenses
|
3,148,780
|
|
|
981,356
|
|
|
3,575,381
|
|
|||
Income before income taxes
|
315,565
|
|
|
565,742
|
|
|
316,271
|
|
|||
Income tax expense
|
69,475
|
|
|
107,726
|
|
|
141,626
|
|
|||
Net income
|
$
|
246,090
|
|
|
$
|
458,016
|
|
|
$
|
174,645
|
|
|
|
|
|
|
|
||||||
Earnings per common share
|
$
|
2.70
|
|
|
$
|
5.07
|
|
|
$
|
1.96
|
|
Earnings per common share - assuming dilution
|
$
|
2.68
|
|
|
$
|
5.01
|
|
|
$
|
1.93
|
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding (in thousands):
|
|
|
|
|
|
||||||
Earnings per common share
|
91,139
|
|
|
90,348
|
|
|
88,982
|
|
|||
Earnings per common share - assuming dilution
|
91,782
|
|
|
91,423
|
|
|
90,311
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net income
|
$
|
246,090
|
|
|
$
|
458,016
|
|
|
$
|
174,645
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Change in net unrealized investment gains/losses (1)
|
1,954,044
|
|
|
(1,129,213
|
)
|
|
556,384
|
|
|||
Noncredit component of OTTI losses (1)
|
103
|
|
|
775
|
|
|
915
|
|
|||
Reclassification of unrealized investment gains/losses to net income (1)
|
8,323
|
|
|
(16,606
|
)
|
|
4,496
|
|
|||
Other comprehensive income (loss) before income tax
|
1,962,470
|
|
|
(1,145,044
|
)
|
|
561,795
|
|
|||
Income tax effect related to other comprehensive income (loss)
|
(412,117
|
)
|
|
240,459
|
|
|
(177,162
|
)
|
|||
Other comprehensive income (loss)
|
1,550,353
|
|
|
(904,585
|
)
|
|
384,633
|
|
|||
Comprehensive income (loss)
|
$
|
1,796,443
|
|
|
$
|
(446,569
|
)
|
|
$
|
559,278
|
|
(1)
|
Net of related adjustments to amortization of deferred sales inducements and deferred policy acquisition costs.
|
|
Preferred
Stock
|
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Retained
Earnings
|
|
Total
Stockholders'
Equity
|
||||||||||||
Balance at December 31, 2016
|
$
|
—
|
|
|
$
|
88,001
|
|
|
$
|
770,344
|
|
|
$
|
339,966
|
|
|
$
|
1,093,284
|
|
|
$
|
2,291,595
|
|
Net income for the year
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
174,645
|
|
|
174,645
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
384,633
|
|
|
—
|
|
|
384,633
|
|
||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
6,464
|
|
|
—
|
|
|
—
|
|
|
6,464
|
|
||||||
Issuance of 1,329,957 shares of common stock under compensation plans
|
—
|
|
|
1,330
|
|
|
14,638
|
|
|
—
|
|
|
—
|
|
|
15,968
|
|
||||||
Dividends on common stock ($0.26 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(23,148
|
)
|
|
(23,148
|
)
|
||||||
Balance at December 31, 2017
|
—
|
|
|
89,331
|
|
|
791,446
|
|
|
724,599
|
|
|
1,244,781
|
|
|
2,850,157
|
|
||||||
Net income for the year
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
458,016
|
|
|
458,016
|
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(904,585
|
)
|
|
—
|
|
|
(904,585
|
)
|
||||||
Implementation of accounting standard related to the reclassification of certain tax effects
|
—
|
|
|
—
|
|
|
—
|
|
|
127,554
|
|
|
(127,554
|
)
|
|
—
|
|
||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
11,097
|
|
|
—
|
|
|
—
|
|
|
11,097
|
|
||||||
Issuance of 1,038,142 shares of common stock under compensation plans
|
—
|
|
|
1,038
|
|
|
8,643
|
|
|
—
|
|
|
—
|
|
|
9,681
|
|
||||||
Dividends on common stock ($0.28 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(25,265
|
)
|
|
(25,265
|
)
|
||||||
Balance at December 31, 2018
|
—
|
|
|
90,369
|
|
|
811,186
|
|
|
(52,432
|
)
|
|
1,549,978
|
|
|
2,399,101
|
|
||||||
Net income for the year
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
246,090
|
|
|
246,090
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
1,550,353
|
|
|
—
|
|
|
1,550,353
|
|
||||||
Issuance of preferred stock
|
16
|
|
|
—
|
|
|
388,877
|
|
|
—
|
|
|
—
|
|
|
388,893
|
|
||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
11,295
|
|
|
—
|
|
|
—
|
|
|
11,295
|
|
||||||
Issuance of 738,326 shares of common stock under compensation plans
|
—
|
|
|
738
|
|
|
953
|
|
|
—
|
|
|
—
|
|
|
1,691
|
|
||||||
Dividends on common stock ($0.30 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27,304
|
)
|
|
(27,304
|
)
|
||||||
Balance at December 31, 2019
|
$
|
16
|
|
|
$
|
91,107
|
|
|
$
|
1,212,311
|
|
|
$
|
1,497,921
|
|
|
$
|
1,768,764
|
|
|
$
|
4,570,119
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Operating activities
|
|
|
|
|
|
||||||
Net income
|
$
|
246,090
|
|
|
$
|
458,016
|
|
|
$
|
174,645
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Interest sensitive and index product benefits
|
1,287,576
|
|
|
1,610,835
|
|
|
2,023,668
|
|
|||
Amortization of deferred sales inducements
|
88,585
|
|
|
222,201
|
|
|
176,612
|
|
|||
Annuity product charges
|
(240,035
|
)
|
|
(224,488
|
)
|
|
(200,494
|
)
|
|||
Change in fair value of embedded derivatives
|
1,454,042
|
|
|
(1,389,491
|
)
|
|
919,735
|
|
|||
Change in traditional life and accident and health insurance reserves
|
(3,546
|
)
|
|
(163
|
)
|
|
(33
|
)
|
|||
Policy acquisition costs deferred
|
(422,516
|
)
|
|
(388,222
|
)
|
|
(406,641
|
)
|
|||
Amortization of deferred policy acquisition costs
|
87,717
|
|
|
327,991
|
|
|
255,964
|
|
|||
Provision for depreciation and other amortization
|
4,068
|
|
|
3,474
|
|
|
3,948
|
|
|||
Amortization of discounts and premiums on investments
|
25,846
|
|
|
19,204
|
|
|
15,431
|
|
|||
Loss on extinguishment of debt
|
2,001
|
|
|
—
|
|
|
18,817
|
|
|||
Realized gains (losses) on investments and net OTTI losses recognized in operations
|
11,764
|
|
|
73,834
|
|
|
(5,879
|
)
|
|||
Change in fair value of derivatives
|
(906,201
|
)
|
|
777,575
|
|
|
(1,678,956
|
)
|
|||
Distributions from equity method investments
|
2,753
|
|
|
1,270
|
|
|
1,454
|
|
|||
Deferred income taxes
|
56,947
|
|
|
(12,563
|
)
|
|
(46,730
|
)
|
|||
Share-based compensation
|
11,295
|
|
|
11,097
|
|
|
6,464
|
|
|||
Change in accrued investment income
|
(4,097
|
)
|
|
(39,721
|
)
|
|
(31,235
|
)
|
|||
Change in income taxes recoverable/payable
|
26,966
|
|
|
(60,822
|
)
|
|
45,759
|
|
|||
Change in other assets
|
(5,607
|
)
|
|
(844
|
)
|
|
448
|
|
|||
Change in other policy funds and contract claims
|
(21,971
|
)
|
|
(19,029
|
)
|
|
(23,101
|
)
|
|||
Change in collateral held for derivatives
|
1,190,656
|
|
|
(1,296,629
|
)
|
|
772,181
|
|
|||
Change in collateral held for securities lending
|
495,101
|
|
|
—
|
|
|
—
|
|
|||
Change in other liabilities
|
(28,607
|
)
|
|
(17,318
|
)
|
|
(84,416
|
)
|
|||
Other
|
(7,425
|
)
|
|
(13,022
|
)
|
|
(13,794
|
)
|
|||
Net cash provided by operating activities
|
3,351,402
|
|
|
43,185
|
|
|
1,923,847
|
|
|||
|
|
|
|
|
|
||||||
Investing activities
|
|
|
|
|
|
||||||
Sales, maturities, or repayments of investments:
|
|
|
|
|
|
||||||
Fixed maturity securities - available for sale
|
3,266,821
|
|
|
3,870,415
|
|
|
1,911,991
|
|
|||
Mortgage loans on real estate
|
294,356
|
|
|
298,100
|
|
|
351,255
|
|
|||
Derivative instruments
|
657,885
|
|
|
1,446,948
|
|
|
1,697,948
|
|
|||
Other investments
|
472,549
|
|
|
358,372
|
|
|
9,117
|
|
|||
Acquisitions of investments:
|
|
|
|
|
|
||||||
Fixed maturity securities - available for sale
|
(5,509,314
|
)
|
|
(6,852,481
|
)
|
|
(5,026,640
|
)
|
|||
Mortgage loans on real estate
|
(799,037
|
)
|
|
(575,367
|
)
|
|
(535,249
|
)
|
|||
Derivative instruments
|
(823,077
|
)
|
|
(864,717
|
)
|
|
(691,428
|
)
|
|||
Other investments
|
(611,047
|
)
|
|
(85,318
|
)
|
|
(305,575
|
)
|
|||
Purchases of property, furniture and equipment
|
(4,022
|
)
|
|
(4,283
|
)
|
|
(4,809
|
)
|
|||
Net cash used in investing activities
|
(3,054,886
|
)
|
|
(2,408,331
|
)
|
|
(2,593,390
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Financing activities
|
|
|
|
|
|
||||||
Receipts credited to annuity policyholder account balances
|
$
|
4,951,211
|
|
|
$
|
4,381,150
|
|
|
$
|
4,152,264
|
|
Coinsurance deposits
|
91,238
|
|
|
(23,838
|
)
|
|
(6,597
|
)
|
|||
Return of annuity policyholder account balances
|
(3,584,960
|
)
|
|
(3,159,700
|
)
|
|
(2,809,486
|
)
|
|||
Financing fees incurred and deferred
|
—
|
|
|
—
|
|
|
(5,817
|
)
|
|||
Proceeds from issuance of notes payable
|
—
|
|
|
—
|
|
|
499,650
|
|
|||
Repayment of notes payable
|
—
|
|
|
—
|
|
|
(413,252
|
)
|
|||
Repayment of loan payable
|
—
|
|
|
—
|
|
|
(100,000
|
)
|
|||
Repayment of subordinated debentures
|
(88,160
|
)
|
|
—
|
|
|
—
|
|
|||
Net proceeds from (repayments of) amounts due under repurchase agreements
|
(109,298
|
)
|
|
109,298
|
|
|
—
|
|
|||
Proceeds from issuance of common stock, net
|
1,691
|
|
|
9,681
|
|
|
14,028
|
|
|||
Proceeds from issuance of preferred stock, net
|
388,893
|
|
|
—
|
|
|
—
|
|
|||
Change in checks in excess of cash balance
|
29,169
|
|
|
(15,829
|
)
|
|
4,680
|
|
|||
Dividends paid
|
(27,304
|
)
|
|
(25,265
|
)
|
|
(23,148
|
)
|
|||
Net cash provided by financing activities
|
1,652,480
|
|
|
1,275,497
|
|
|
1,312,322
|
|
|||
Increase (decrease) in cash and cash equivalents
|
1,948,996
|
|
|
(1,089,649
|
)
|
|
642,779
|
|
|||
Cash and cash equivalents at beginning of year
|
344,396
|
|
|
1,434,045
|
|
|
791,266
|
|
|||
Cash and cash equivalents at end of year
|
$
|
2,293,392
|
|
|
$
|
344,396
|
|
|
$
|
1,434,045
|
|
|
|
|
|
|
|
||||||
Supplemental disclosures of cash flow information
|
|
|
|
|
|
||||||
Cash paid during the year for:
|
|
|
|
|
|
||||||
Interest expense
|
$
|
42,879
|
|
|
$
|
39,575
|
|
|
$
|
55,445
|
|
Income taxes
|
28,413
|
|
|
181,202
|
|
|
142,627
|
|
|||
Non-cash operating activity:
|
|
|
|
|
|
||||||
Deferral of sales inducements
|
177,941
|
|
|
179,465
|
|
|
216,172
|
|
|
|
Year Ended December 31,
|
||||||||||
Product Type
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
Fixed index annuities
|
|
$
|
4,603,490
|
|
|
$
|
3,898,366
|
|
|
$
|
3,668,121
|
|
Annual reset fixed rate annuities
|
|
10,665
|
|
|
46,744
|
|
|
74,572
|
|
|||
Multi-year fixed rate annuities
|
|
47,016
|
|
|
22,818
|
|
|
22,291
|
|
|||
Single premium immediate annuities (SPIA)
|
|
12,002
|
|
|
23,813
|
|
|
24,946
|
|
|||
|
|
$
|
4,673,173
|
|
|
$
|
3,991,741
|
|
|
$
|
3,789,930
|
|
|
December 31,
|
||||||||||||||
|
2019
|
|
2018
|
||||||||||||
|
Carrying
Amount
|
|
Fair Value
|
|
Carrying
Amount
|
|
Fair Value
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities, available for sale
|
$
|
51,580,490
|
|
|
$
|
51,580,490
|
|
|
$
|
45,923,727
|
|
|
$
|
45,923,727
|
|
Mortgage loans on real estate
|
3,448,793
|
|
|
3,536,446
|
|
|
2,943,091
|
|
|
2,920,612
|
|
||||
Derivative instruments
|
1,355,989
|
|
|
1,355,989
|
|
|
205,149
|
|
|
205,149
|
|
||||
Other investments
|
492,301
|
|
|
492,301
|
|
|
355,531
|
|
|
348,970
|
|
||||
Cash and cash equivalents
|
2,293,392
|
|
|
2,293,392
|
|
|
344,396
|
|
|
344,396
|
|
||||
Coinsurance deposits
|
5,115,013
|
|
|
4,635,926
|
|
|
4,954,068
|
|
|
4,553,790
|
|
||||
Interest rate caps
|
6
|
|
|
6
|
|
|
597
|
|
|
597
|
|
||||
Interest rate swap
|
—
|
|
|
—
|
|
|
354
|
|
|
354
|
|
||||
Counterparty collateral
|
—
|
|
|
—
|
|
|
33,101
|
|
|
33,101
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Liabilities
|
|
|
|
|
|
|
|
||||||||
Policy benefit reserves
|
61,540,992
|
|
|
51,800,247
|
|
|
57,249,510
|
|
|
49,180,143
|
|
||||
Single premium immediate annuity (SPIA) benefit reserves
|
255,698
|
|
|
263,773
|
|
|
270,406
|
|
|
279,077
|
|
||||
Notes payable
|
495,116
|
|
|
541,520
|
|
|
494,591
|
|
|
489,985
|
|
||||
Subordinated debentures
|
157,265
|
|
|
168,357
|
|
|
242,982
|
|
|
215,514
|
|
||||
Amounts due under repurchase agreements
|
—
|
|
|
—
|
|
|
109,298
|
|
|
109,298
|
|
Level 1—
|
Quoted prices are available in active markets for identical financial instruments as of the reporting date. We do not adjust the quoted price for these financial instruments, even in situations where we hold a large position and a sale could reasonably impact the quoted price.
|
Level 2—
|
Quoted prices in active markets for similar financial instruments, quoted prices for identical or similar financial instruments in markets that are not active; and models and other valuation methodologies using inputs other than quoted prices that are observable.
|
Level 3—
|
Models and other valuation methodologies using significant inputs that are unobservable for financial instruments and include situations where there is little, if any, market activity for the financial instrument. The inputs into the determination of fair value require significant management judgment or estimation. Financial instruments that are included in Level 3 are securities for which no market activity or data exists and for which we used discounted expected future cash flows with our own assumptions about what a market participant would use in determining fair value.
|
|
Total
Fair Value
|
|
Quoted
Prices
in Active
Markets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
December 31, 2019
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
||||||||
United States Government full faith and credit
|
$
|
161,765
|
|
|
$
|
155,945
|
|
|
$
|
5,820
|
|
|
$
|
—
|
|
United States Government sponsored agencies
|
625,020
|
|
|
—
|
|
|
625,020
|
|
|
—
|
|
||||
United States municipalities, states and territories
|
4,527,671
|
|
|
—
|
|
|
4,527,671
|
|
|
—
|
|
||||
Foreign government obligations
|
205,096
|
|
|
—
|
|
|
205,096
|
|
|
—
|
|
||||
Corporate securities
|
32,536,839
|
|
|
4
|
|
|
32,536,835
|
|
|
—
|
|
||||
Residential mortgage backed securities
|
1,575,664
|
|
|
—
|
|
|
1,575,664
|
|
|
—
|
|
||||
Commercial mortgage backed securities
|
5,786,279
|
|
|
—
|
|
|
5,786,279
|
|
|
—
|
|
||||
Other asset backed securities
|
6,162,156
|
|
|
—
|
|
|
6,162,156
|
|
|
—
|
|
||||
Derivative instruments
|
1,355,989
|
|
|
—
|
|
|
1,355,989
|
|
|
—
|
|
||||
Cash and cash equivalents
|
2,293,392
|
|
|
2,293,392
|
|
|
—
|
|
|
—
|
|
||||
Interest rate caps
|
6
|
|
|
—
|
|
|
6
|
|
|
—
|
|
||||
|
$
|
55,229,877
|
|
|
$
|
2,449,341
|
|
|
$
|
52,780,536
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Fixed index annuities - embedded derivatives
|
$
|
9,624,395
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,624,395
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2018
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
||||||||
United States Government full faith and credit
|
$
|
11,652
|
|
|
$
|
5,900
|
|
|
$
|
5,752
|
|
|
$
|
—
|
|
United States Government sponsored agencies
|
1,138,529
|
|
|
—
|
|
|
1,138,529
|
|
|
—
|
|
||||
United States municipalities, states and territories
|
4,126,267
|
|
|
—
|
|
|
4,126,267
|
|
|
—
|
|
||||
Foreign government obligations
|
230,274
|
|
|
—
|
|
|
230,274
|
|
|
—
|
|
||||
Corporate securities
|
28,371,514
|
|
|
7
|
|
|
28,371,507
|
|
|
—
|
|
||||
Residential mortgage backed securities
|
1,202,159
|
|
|
—
|
|
|
1,202,159
|
|
|
—
|
|
||||
Commercial mortgage backed securities
|
5,379,003
|
|
|
—
|
|
|
5,379,003
|
|
|
—
|
|
||||
Other asset backed securities
|
5,464,329
|
|
|
—
|
|
|
5,464,329
|
|
|
—
|
|
||||
Derivative instruments
|
205,149
|
|
|
—
|
|
|
205,149
|
|
|
—
|
|
||||
Cash and cash equivalents
|
344,396
|
|
|
344,396
|
|
|
—
|
|
|
—
|
|
||||
Interest rate caps
|
597
|
|
|
—
|
|
|
597
|
|
|
—
|
|
||||
Interest rate swap
|
354
|
|
|
—
|
|
|
354
|
|
|
—
|
|
||||
Counterparty collateral
|
33,101
|
|
|
—
|
|
|
33,101
|
|
|
—
|
|
||||
|
$
|
46,507,324
|
|
|
$
|
350,303
|
|
|
$
|
46,157,021
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Fixed index annuities - embedded derivatives
|
$
|
8,165,405
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,165,405
|
|
•
|
reported trading prices,
|
•
|
benchmark yields,
|
•
|
broker-dealer quotes,
|
•
|
benchmark securities,
|
•
|
bids and offers,
|
•
|
credit ratings,
|
•
|
relative credit information, and
|
•
|
other reference data.
|
|
|
Average Lapse Rates
|
|
Average Partial Withdrawal Rates
|
||||
Contract Duration (Years)
|
|
December 31, 2019
|
|
December 31, 2018
|
|
December 31, 2019
|
|
December 31, 2018
|
1 - 5
|
|
0.90%
|
|
2.05%
|
|
3.33%
|
|
3.33%
|
6 - 10
|
|
1.29%
|
|
7.28%
|
|
3.84%
|
|
3.33%
|
11 - 15
|
|
3.31%
|
|
11.35%
|
|
4.12%
|
|
3.35%
|
16 - 20
|
|
8.52%
|
|
11.90%
|
|
4.18%
|
|
3.22%
|
20+
|
|
7.10%
|
|
11.57%
|
|
4.12%
|
|
3.22%
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(Dollars in thousands)
|
||||||
Fixed index annuities - embedded derivatives
|
|
|
|
||||
Beginning balance
|
$
|
8,165,405
|
|
|
$
|
8,790,427
|
|
Premiums less benefits
|
896,688
|
|
|
1,542,606
|
|
||
Change in fair value, net
|
562,302
|
|
|
(2,167,628
|
)
|
||
Ending balance
|
$
|
9,624,395
|
|
|
$
|
8,165,405
|
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
December 31, 2019
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
||||||||
United States Government full faith and credit
|
$
|
161,492
|
|
|
$
|
369
|
|
|
$
|
(96
|
)
|
|
$
|
161,765
|
|
United States Government sponsored agencies
|
601,672
|
|
|
28,133
|
|
|
(4,785
|
)
|
|
625,020
|
|
||||
United States municipalities, states and territories
|
4,147,343
|
|
|
388,578
|
|
|
(8,250
|
)
|
|
4,527,671
|
|
||||
Foreign government obligations
|
186,993
|
|
|
18,103
|
|
|
—
|
|
|
205,096
|
|
||||
Corporate securities
|
29,822,172
|
|
|
2,796,926
|
|
|
(82,259
|
)
|
|
32,536,839
|
|
||||
Residential mortgage backed securities
|
1,477,738
|
|
|
101,617
|
|
|
(3,691
|
)
|
|
1,575,664
|
|
||||
Commercial mortgage backed securities
|
5,591,167
|
|
|
208,895
|
|
|
(13,783
|
)
|
|
5,786,279
|
|
||||
Other asset backed securities
|
6,250,369
|
|
|
90,978
|
|
|
(179,191
|
)
|
|
6,162,156
|
|
||||
|
$
|
48,238,946
|
|
|
$
|
3,633,599
|
|
|
$
|
(292,055
|
)
|
|
$
|
51,580,490
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2018
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
||||||||
United States Government full faith and credit
|
$
|
11,872
|
|
|
$
|
102
|
|
|
$
|
(322
|
)
|
|
$
|
11,652
|
|
United States Government sponsored agencies
|
1,208,468
|
|
|
13,095
|
|
|
(83,034
|
)
|
|
1,138,529
|
|
||||
United States municipalities, states and territories
|
3,880,703
|
|
|
261,222
|
|
|
(15,658
|
)
|
|
4,126,267
|
|
||||
Foreign government obligations
|
226,860
|
|
|
7,573
|
|
|
(4,159
|
)
|
|
230,274
|
|
||||
Corporate securities
|
28,483,138
|
|
|
727,105
|
|
|
(838,729
|
)
|
|
28,371,514
|
|
||||
Residential mortgage backed securities
|
1,134,623
|
|
|
71,661
|
|
|
(4,125
|
)
|
|
1,202,159
|
|
||||
Commercial mortgage backed securities
|
5,492,271
|
|
|
21,558
|
|
|
(134,826
|
)
|
|
5,379,003
|
|
||||
Other asset backed securities
|
5,693,255
|
|
|
41,308
|
|
|
(270,234
|
)
|
|
5,464,329
|
|
||||
|
$
|
46,131,190
|
|
|
$
|
1,143,624
|
|
|
$
|
(1,351,087
|
)
|
|
$
|
45,923,727
|
|
|
Available for sale
|
||||||
|
Amortized
Cost
|
|
Fair Value
|
||||
|
(Dollars in thousands)
|
||||||
Due in one year or less
|
$
|
290,310
|
|
|
$
|
294,212
|
|
Due after one year through five years
|
5,831,134
|
|
|
6,061,370
|
|
||
Due after five years through ten years
|
10,199,288
|
|
|
10,829,871
|
|
||
Due after ten years through twenty years
|
10,519,078
|
|
|
11,812,300
|
|
||
Due after twenty years
|
8,079,862
|
|
|
9,058,638
|
|
||
|
34,919,672
|
|
|
38,056,391
|
|
||
Residential mortgage backed securities
|
1,477,738
|
|
|
1,575,664
|
|
||
Commercial mortgage backed securities
|
5,591,167
|
|
|
5,786,279
|
|
||
Other asset backed securities
|
6,250,369
|
|
|
6,162,156
|
|
||
|
$
|
48,238,946
|
|
|
$
|
51,580,490
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(Dollars in thousands)
|
||||||
Net unrealized gains (losses) on available for sale fixed maturity securities
|
$
|
3,341,544
|
|
|
$
|
(207,463
|
)
|
Adjustments for assumed changes in amortization of deferred policy acquisition costs and deferred sales inducements
|
(1,473,966
|
)
|
|
112,571
|
|
||
Deferred income tax valuation allowance reversal
|
22,534
|
|
|
22,534
|
|
||
Deferred income tax benefit (expense)
|
(392,191
|
)
|
|
19,926
|
|
||
Net unrealized gains (losses) reported as accumulated other comprehensive income (loss)
|
$
|
1,497,921
|
|
|
$
|
(52,432
|
)
|
|
|
December 31,
|
||||||||||||||
|
|
2019
|
|
2018
|
||||||||||||
NAIC
Designation
|
|
Amortized
Cost
|
|
Fair
Value
|
|
Amortized
Cost
|
|
Fair
Value
|
||||||||
|
|
(Dollars in thousands)
|
||||||||||||||
1
|
|
$
|
27,781,525
|
|
|
$
|
30,122,657
|
|
|
$
|
26,588,352
|
|
|
$
|
26,921,843
|
|
2
|
|
19,278,355
|
|
|
20,316,911
|
|
|
17,901,161
|
|
|
17,528,072
|
|
||||
3
|
|
1,001,087
|
|
|
977,191
|
|
|
1,396,650
|
|
|
1,269,242
|
|
||||
4
|
|
114,497
|
|
|
112,534
|
|
|
173,987
|
|
|
137,991
|
|
||||
5
|
|
57,952
|
|
|
45,205
|
|
|
23,836
|
|
|
19,453
|
|
||||
6
|
|
5,530
|
|
|
5,992
|
|
|
47,204
|
|
|
47,126
|
|
||||
|
|
$
|
48,238,946
|
|
|
$
|
51,580,490
|
|
|
$
|
46,131,190
|
|
|
$
|
45,923,727
|
|
|
Less than 12 months
|
|
12 months or more
|
|
Total
|
||||||||||||||||||
|
Fair Value
|
|
Unrealized
Losses
|
|
Fair Value
|
|
Unrealized
Losses
|
|
Fair Value
|
|
Unrealized
Losses
|
||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||
December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States Government full faith and credit
|
$
|
144,582
|
|
|
$
|
(96
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
144,582
|
|
|
$
|
(96
|
)
|
United States Government sponsored agencies
|
168,732
|
|
|
(1,229
|
)
|
|
201,444
|
|
|
(3,556
|
)
|
|
370,176
|
|
|
(4,785
|
)
|
||||||
United States municipalities, states and territories
|
285,481
|
|
|
(8,173
|
)
|
|
3,081
|
|
|
(77
|
)
|
|
288,562
|
|
|
(8,250
|
)
|
||||||
Corporate securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Finance, insurance and real estate
|
267,521
|
|
|
(4,785
|
)
|
|
121,993
|
|
|
(4,744
|
)
|
|
389,514
|
|
|
(9,529
|
)
|
||||||
Manufacturing, construction and mining
|
161,633
|
|
|
(6,039
|
)
|
|
44,606
|
|
|
(3,951
|
)
|
|
206,239
|
|
|
(9,990
|
)
|
||||||
Utilities and related sectors
|
334,635
|
|
|
(7,730
|
)
|
|
51,269
|
|
|
(3,482
|
)
|
|
385,904
|
|
|
(11,212
|
)
|
||||||
Wholesale/retail trade
|
54,289
|
|
|
(1,751
|
)
|
|
129,364
|
|
|
(9,411
|
)
|
|
183,653
|
|
|
(11,162
|
)
|
||||||
Services, media and other
|
275,135
|
|
|
(6,135
|
)
|
|
316,086
|
|
|
(34,231
|
)
|
|
591,221
|
|
|
(40,366
|
)
|
||||||
Residential mortgage backed securities
|
212,404
|
|
|
(2,686
|
)
|
|
11,332
|
|
|
(1,005
|
)
|
|
223,736
|
|
|
(3,691
|
)
|
||||||
Commercial mortgage backed securities
|
602,394
|
|
|
(9,366
|
)
|
|
194,328
|
|
|
(4,417
|
)
|
|
796,722
|
|
|
(13,783
|
)
|
||||||
Other asset backed securities
|
752,413
|
|
|
(11,709
|
)
|
|
3,375,016
|
|
|
(167,482
|
)
|
|
4,127,429
|
|
|
(179,191
|
)
|
||||||
|
$
|
3,259,219
|
|
|
$
|
(59,699
|
)
|
|
$
|
4,448,519
|
|
|
$
|
(232,356
|
)
|
|
$
|
7,707,738
|
|
|
$
|
(292,055
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States Government full faith and credit
|
$
|
543
|
|
|
$
|
(3
|
)
|
|
$
|
7,785
|
|
|
$
|
(319
|
)
|
|
$
|
8,328
|
|
|
$
|
(322
|
)
|
United States Government sponsored agencies
|
30,089
|
|
|
(949
|
)
|
|
953,421
|
|
|
(82,085
|
)
|
|
983,510
|
|
|
(83,034
|
)
|
||||||
United States municipalities, states and territories
|
340,103
|
|
|
(6,816
|
)
|
|
162,997
|
|
|
(8,842
|
)
|
|
503,100
|
|
|
(15,658
|
)
|
||||||
Foreign government obligations
|
98,511
|
|
|
(1,748
|
)
|
|
11,859
|
|
|
(2,411
|
)
|
|
110,370
|
|
|
(4,159
|
)
|
||||||
Corporate securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Finance, insurance and real estate
|
2,501,640
|
|
|
(87,220
|
)
|
|
884,870
|
|
|
(77,507
|
)
|
|
3,386,510
|
|
|
(164,727
|
)
|
||||||
Manufacturing, construction and mining
|
2,045,859
|
|
|
(84,972
|
)
|
|
349,738
|
|
|
(34,635
|
)
|
|
2,395,597
|
|
|
(119,607
|
)
|
||||||
Utilities and related sectors
|
2,313,271
|
|
|
(82,119
|
)
|
|
591,482
|
|
|
(45,838
|
)
|
|
2,904,753
|
|
|
(127,957
|
)
|
||||||
Wholesale/retail trade
|
1,032,603
|
|
|
(51,228
|
)
|
|
198,805
|
|
|
(26,326
|
)
|
|
1,231,408
|
|
|
(77,554
|
)
|
||||||
Services, media and other
|
4,618,477
|
|
|
(196,520
|
)
|
|
1,072,722
|
|
|
(152,364
|
)
|
|
5,691,199
|
|
|
(348,884
|
)
|
||||||
Residential mortgage backed securities
|
145,613
|
|
|
(2,638
|
)
|
|
22,689
|
|
|
(1,487
|
)
|
|
168,302
|
|
|
(4,125
|
)
|
||||||
Commercial mortgage backed securities
|
2,141,560
|
|
|
(37,150
|
)
|
|
2,090,835
|
|
|
(97,676
|
)
|
|
4,232,395
|
|
|
(134,826
|
)
|
||||||
Other asset backed securities
|
4,073,249
|
|
|
(252,265
|
)
|
|
271,994
|
|
|
(17,969
|
)
|
|
4,345,243
|
|
|
(270,234
|
)
|
||||||
|
$
|
19,341,518
|
|
|
$
|
(803,628
|
)
|
|
$
|
6,619,197
|
|
|
$
|
(547,459
|
)
|
|
$
|
25,960,715
|
|
|
$
|
(1,351,087
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(Dollars in thousands)
|
||||||||||
Fixed maturity securities held for investment carried at amortized cost
|
$
|
—
|
|
|
$
|
581
|
|
|
$
|
7,478
|
|
Investments carried at fair value:
|
|
|
|
|
|
||||||
Fixed maturity securities, available for sale
|
$
|
3,549,007
|
|
|
$
|
(2,463,693
|
)
|
|
$
|
1,149,691
|
|
Equity securities
|
—
|
|
|
—
|
|
|
(479
|
)
|
|||
|
3,549,007
|
|
|
(2,463,693
|
)
|
|
1,149,212
|
|
|||
Adjustment for effect on other balance sheet accounts:
|
|
|
|
|
|
||||||
Deferred policy acquisition costs and deferred sales inducements
|
(1,586,537
|
)
|
|
1,318,649
|
|
|
(587,417
|
)
|
|||
Deferred income tax asset/liability
|
(412,117
|
)
|
|
240,459
|
|
|
(177,162
|
)
|
|||
|
(1,998,654
|
)
|
|
1,559,108
|
|
|
(764,579
|
)
|
|||
Change in net unrealized gains/losses on investments carried at fair value
|
$
|
1,550,353
|
|
|
$
|
(904,585
|
)
|
|
$
|
384,633
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(Dollars in thousands)
|
||||||||||
Fixed maturity securities
|
$
|
2,171,768
|
|
|
$
|
2,027,599
|
|
|
$
|
1,876,542
|
|
Equity securities
|
4,083
|
|
|
4,735
|
|
|
764
|
|
|||
Mortgage loans on real estate
|
145,344
|
|
|
131,259
|
|
|
122,680
|
|
|||
Cash and cash equivalents
|
5,164
|
|
|
2,320
|
|
|
2,562
|
|
|||
Other
|
3,119
|
|
|
1,548
|
|
|
4,073
|
|
|||
|
2,329,478
|
|
|
2,167,461
|
|
|
2,006,621
|
|
|||
Less investment expenses
|
(21,843
|
)
|
|
(19,649
|
)
|
|
(14,624
|
)
|
|||
Net investment income
|
$
|
2,307,635
|
|
|
$
|
2,147,812
|
|
|
$
|
1,991,997
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(Dollars in thousands)
|
||||||||||
Available for sale fixed maturity securities:
|
|
|
|
|
|
||||||
Gross realized gains
|
$
|
21,449
|
|
|
$
|
12,245
|
|
|
$
|
18,254
|
|
Gross realized losses
|
(6,397
|
)
|
|
(47,974
|
)
|
|
(9,058
|
)
|
|||
|
15,052
|
|
|
(35,729
|
)
|
|
9,196
|
|
|||
Equity securities:
|
|
|
|
|
|
||||||
Gross realized gains
|
—
|
|
|
—
|
|
|
348
|
|
|||
|
|
|
|
|
|
||||||
Other investments:
|
|
|
|
|
|
||||||
Gross realized gains
|
7,296
|
|
|
—
|
|
|
—
|
|
|||
Gross realized losses
|
(14,446
|
)
|
|
—
|
|
|
—
|
|
|||
Gain on sale of real estate
|
—
|
|
|
—
|
|
|
56
|
|
|||
|
(7,150
|
)
|
|
—
|
|
|
56
|
|
|||
|
|
|
|
|
|
||||||
Mortgage loans on real estate:
|
|
|
|
|
|
||||||
Decrease (increase) in allowance for credit losses
|
(940
|
)
|
|
(3,165
|
)
|
|
278
|
|
|||
Recovery of specific allowance
|
—
|
|
|
1,592
|
|
|
631
|
|
|||
Gain on sale of mortgage loans
|
—
|
|
|
124
|
|
|
—
|
|
|||
|
(940
|
)
|
|
(1,449
|
)
|
|
909
|
|
|||
|
$
|
6,962
|
|
|
$
|
(37,178
|
)
|
|
$
|
10,509
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(Dollars in thousands)
|
||||||
Fixed maturity securities, available for sale
|
$
|
5,792
|
|
|
$
|
6,717
|
|
•
|
the length of time and the extent to which the fair value has been less than amortized cost or cost;
|
•
|
whether the issuer is current on all payments and all contractual payments have been made as agreed;
|
•
|
the remaining payment terms and the financial condition and near-term prospects of the issuer;
|
•
|
the lack of ability to refinance due to liquidity problems in the credit market;
|
•
|
the fair value of any underlying collateral;
|
•
|
the existence of any credit protection available;
|
•
|
our intent to sell and whether it is more likely than not we would be required to sell prior to recovery for debt securities;
|
•
|
consideration of rating agency actions; and
|
•
|
changes in estimated cash flows of mortgage and asset backed securities.
|
|
Number
of Securities
|
|
Total
OTTI Losses
|
|
Portion of OTTI
Losses
Recognized from Other
Comprehensive
Income
|
|
Net OTTI
Losses
Recognized
in Operations
|
|||||||
|
|
|
(Dollars in thousands)
|
|||||||||||
Year ended December 31, 2019
|
|
|
|
|
|
|
|
|||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
|||||||
Corporate securities:
|
|
|
|
|
|
|
|
|
||||||
Energy
|
3
|
|
|
$
|
(17,273
|
)
|
|
$
|
—
|
|
|
$
|
(17,273
|
)
|
Residential mortgage backed securities
|
3
|
|
|
(101
|
)
|
|
(215
|
)
|
|
(316
|
)
|
|||
Commercial mortgage backed securities
|
2
|
|
|
(488
|
)
|
|
—
|
|
|
(488
|
)
|
|||
Other asset backed securities
|
1
|
|
|
(649
|
)
|
|
—
|
|
|
(649
|
)
|
|||
|
9
|
|
|
$
|
(18,511
|
)
|
|
$
|
(215
|
)
|
|
$
|
(18,726
|
)
|
|
|
|
|
|
|
|
|
|||||||
Year ended December 31, 2018
|
|
|
|
|
|
|
|
|||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
|||||||
Corporate securities:
|
|
|
|
|
|
|
|
|||||||
Capital goods
|
1
|
|
|
$
|
(719
|
)
|
|
$
|
—
|
|
|
$
|
(719
|
)
|
Consumer discretionary
|
8
|
|
|
(9,533
|
)
|
|
—
|
|
|
(9,533
|
)
|
|||
Energy
|
4
|
|
|
(4,793
|
)
|
|
—
|
|
|
(4,793
|
)
|
|||
Financials
|
5
|
|
|
(3,495
|
)
|
|
—
|
|
|
(3,495
|
)
|
|||
Information technology
|
1
|
|
|
(550
|
)
|
|
—
|
|
|
(550
|
)
|
|||
Industrials
|
1
|
|
|
(2,299
|
)
|
|
—
|
|
|
(2,299
|
)
|
|||
Telecommunications
|
2
|
|
|
(249
|
)
|
|
—
|
|
|
(249
|
)
|
|||
Transportation
|
1
|
|
|
(178
|
)
|
|
—
|
|
|
(178
|
)
|
|||
Utilities
|
2
|
|
|
(5,518
|
)
|
|
—
|
|
|
(5,518
|
)
|
|||
Residential mortgage backed securities
|
3
|
|
|
(63
|
)
|
|
(295
|
)
|
|
(358
|
)
|
|||
Commercial mortgage backed securities
|
5
|
|
|
(4,859
|
)
|
|
—
|
|
|
(4,859
|
)
|
|||
Other asset backed securities
|
2
|
|
|
(2,749
|
)
|
|
(1,356
|
)
|
|
(4,105
|
)
|
|||
|
35
|
|
|
$
|
(35,005
|
)
|
|
$
|
(1,651
|
)
|
|
$
|
(36,656
|
)
|
|
|
|
|
|
|
|
|
|||||||
Year ended December 31, 2017
|
|
|
|
|
|
|
|
|||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
|||||||
Corporate securities:
|
|
|
|
|
|
|
|
|||||||
Industrials
|
1
|
|
|
$
|
(2,485
|
)
|
|
$
|
—
|
|
|
$
|
(2,485
|
)
|
Residential mortgage backed securities
|
8
|
|
|
(273
|
)
|
|
(1,585
|
)
|
|
(1,858
|
)
|
|||
Other asset backed securities
|
1
|
|
|
—
|
|
|
(287
|
)
|
|
(287
|
)
|
|||
|
10
|
|
|
$
|
(2,758
|
)
|
|
$
|
(1,872
|
)
|
|
$
|
(4,630
|
)
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(Dollars in thousands)
|
||||||
Cumulative credit loss at beginning of year
|
$
|
(175,398
|
)
|
|
$
|
(157,066
|
)
|
Additions for the amount related to credit losses for which OTTI has not previously been recognized
|
(18,271
|
)
|
|
(35,005
|
)
|
||
Additional credit losses on securities for which OTTI has previously been recognized
|
(455
|
)
|
|
(1,651
|
)
|
||
Accumulated losses on securities that were disposed of during the period
|
24,422
|
|
|
18,324
|
|
||
Cumulative credit loss at end of year
|
$
|
(169,702
|
)
|
|
$
|
(175,398
|
)
|
|
Amortized Cost
|
|
OTTI Recognized in Other Comprehensive Income (Loss)
|
|
Change in Fair Value Since OTTI was Recognized
|
|
Fair Value
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
December 31, 2019
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
||||||||
Corporate securities
|
$
|
50,755
|
|
|
$
|
(3,700
|
)
|
|
$
|
9,268
|
|
|
$
|
56,323
|
|
Residential mortgage backed securities
|
183,948
|
|
|
(145,446
|
)
|
|
172,577
|
|
|
211,079
|
|
||||
Commercial mortgage backed securities
|
12,776
|
|
|
—
|
|
|
(401
|
)
|
|
12,375
|
|
||||
Other asset backed securities
|
977
|
|
|
—
|
|
|
261
|
|
|
1,238
|
|
||||
|
$
|
248,456
|
|
|
$
|
(149,146
|
)
|
|
$
|
181,705
|
|
|
$
|
281,015
|
|
December 31, 2018
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
||||||||
Corporate securities
|
$
|
69,580
|
|
|
$
|
(3,700
|
)
|
|
$
|
6,195
|
|
|
$
|
72,075
|
|
Residential mortgage backed securities
|
245,691
|
|
|
(167,846
|
)
|
|
199,191
|
|
|
277,036
|
|
||||
Commercial mortgage backed securities
|
35,244
|
|
|
—
|
|
|
—
|
|
|
35,244
|
|
||||
Other asset backed securities
|
1,692
|
|
|
—
|
|
|
326
|
|
|
2,018
|
|
||||
|
$
|
352,207
|
|
|
$
|
(171,546
|
)
|
|
$
|
205,712
|
|
|
$
|
386,373
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(Dollars in thousands)
|
||||||
Principal outstanding
|
$
|
3,458,914
|
|
|
$
|
2,952,464
|
|
Loan loss allowance
|
(9,179
|
)
|
|
(8,239
|
)
|
||
Deferred prepayment fees
|
(942
|
)
|
|
(1,134
|
)
|
||
Carrying value
|
$
|
3,448,793
|
|
|
$
|
2,943,091
|
|
|
December 31,
|
||||||||||||
|
2019
|
|
2018
|
||||||||||
|
Principal
|
|
Percent
|
|
Principal
|
|
Percent
|
||||||
|
(Dollars in thousands)
|
||||||||||||
Geographic distribution
|
|
|
|
|
|
|
|
||||||
East
|
$
|
645,991
|
|
|
18.7
|
%
|
|
$
|
586,773
|
|
|
19.9
|
%
|
Middle Atlantic
|
284,597
|
|
|
8.2
|
%
|
|
168,969
|
|
|
5.7
|
%
|
||
Mountain
|
389,892
|
|
|
11.3
|
%
|
|
357,642
|
|
|
12.1
|
%
|
||
New England
|
9,152
|
|
|
0.3
|
%
|
|
9,418
|
|
|
0.3
|
%
|
||
Pacific
|
655,518
|
|
|
19.0
|
%
|
|
521,363
|
|
|
17.7
|
%
|
||
South Atlantic
|
751,199
|
|
|
21.7
|
%
|
|
694,599
|
|
|
23.5
|
%
|
||
West North Central
|
302,534
|
|
|
8.7
|
%
|
|
291,890
|
|
|
9.9
|
%
|
||
West South Central
|
420,031
|
|
|
12.1
|
%
|
|
321,810
|
|
|
10.9
|
%
|
||
|
$
|
3,458,914
|
|
|
100.0
|
%
|
|
$
|
2,952,464
|
|
|
100.0
|
%
|
Property type distribution
|
|
|
|
|
|
|
|
||||||
Office
|
$
|
250,287
|
|
|
7.3
|
%
|
|
$
|
268,932
|
|
|
9.1
|
%
|
Medical Office
|
29,990
|
|
|
0.9
|
%
|
|
33,467
|
|
|
1.1
|
%
|
||
Retail
|
1,225,670
|
|
|
35.4
|
%
|
|
1,091,627
|
|
|
37.0
|
%
|
||
Industrial/Warehouse
|
896,558
|
|
|
25.9
|
%
|
|
762,887
|
|
|
25.8
|
%
|
||
Apartment
|
858,679
|
|
|
24.8
|
%
|
|
600,638
|
|
|
20.3
|
%
|
||
Agricultural
|
51,303
|
|
|
1.5
|
%
|
|
25,000
|
|
|
0.9
|
%
|
||
Mixed use/Other
|
146,427
|
|
|
4.2
|
%
|
|
169,913
|
|
|
5.8
|
%
|
||
|
$
|
3,458,914
|
|
|
100.0
|
%
|
|
$
|
2,952,464
|
|
|
100.0
|
%
|
|
Year Ended December 31,
|
||||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||||||||||||||
|
Specific
Allowance
|
|
General
Allowance
|
|
Specific
Allowance
|
|
General
Allowance
|
|
Specific
Allowance
|
|
General
Allowance
|
||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||
Beginning allowance balance
|
$
|
(229
|
)
|
|
$
|
(8,010
|
)
|
|
$
|
(1,418
|
)
|
|
$
|
(6,100
|
)
|
|
$
|
(1,327
|
)
|
|
$
|
(7,100
|
)
|
Charge-offs
|
—
|
|
|
—
|
|
|
852
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Recoveries
|
—
|
|
|
—
|
|
|
1,592
|
|
|
—
|
|
|
631
|
|
|
—
|
|
||||||
Change in provision for credit losses
|
—
|
|
|
(940
|
)
|
|
(1,255
|
)
|
|
(1,910
|
)
|
|
(722
|
)
|
|
1,000
|
|
||||||
Ending allowance balance
|
$
|
(229
|
)
|
|
$
|
(8,950
|
)
|
|
$
|
(229
|
)
|
|
$
|
(8,010
|
)
|
|
$
|
(1,418
|
)
|
|
$
|
(6,100
|
)
|
|
December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(Dollars in thousands)
|
||||||||||
Individually evaluated for impairment
|
$
|
1,229
|
|
|
$
|
1,253
|
|
|
$
|
5,445
|
|
Collectively evaluated for impairment
|
3,457,685
|
|
|
2,951,211
|
|
|
2,668,870
|
|
|||
Total loans evaluated for impairment
|
$
|
3,458,914
|
|
|
$
|
2,952,464
|
|
|
$
|
2,674,315
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(Dollars in thousands)
|
||||||
Credit Exposure - By Payment Activity
|
|
|
|
||||
Performing
|
$
|
3,458,914
|
|
|
$
|
2,952,464
|
|
In workout
|
—
|
|
|
—
|
|
||
Collateral dependent
|
—
|
|
|
—
|
|
||
|
$
|
3,458,914
|
|
|
$
|
2,952,464
|
|
|
30 - 59 Days
|
|
60 - 89 Days
|
|
90 Days
and Over
|
|
Total
Past Due
|
|
Current
|
|
Collateral
Dependent
Receivables
|
|
Total
Financing
Receivables
|
||||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||||||
Commercial Mortgage Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
December 31, 2019
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,458,914
|
|
|
$
|
—
|
|
|
$
|
3,458,914
|
|
December 31, 2018
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,952,464
|
|
|
$
|
—
|
|
|
$
|
2,952,464
|
|
|
Recorded Investment
|
|
Unpaid Principal Balance
|
|
Related
Allowance
|
||||||
|
(Dollars in thousands)
|
||||||||||
December 31, 2019
|
|
|
|
|
|
||||||
Mortgage loans with an allowance
|
$
|
1,000
|
|
|
$
|
1,229
|
|
|
$
|
(229
|
)
|
Mortgage loans with no related allowance
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
$
|
1,000
|
|
|
$
|
1,229
|
|
|
$
|
(229
|
)
|
December 31, 2018
|
|
|
|
|
|
||||||
Mortgage loans with an allowance
|
$
|
1,024
|
|
|
$
|
1,253
|
|
|
$
|
(229
|
)
|
Mortgage loans with no related allowance
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
$
|
1,024
|
|
|
$
|
1,253
|
|
|
$
|
(229
|
)
|
|
Average Recorded Investment
|
|
Interest Income Recognized
|
||||
|
(Dollars in thousands)
|
||||||
December 31, 2019
|
|
|
|
||||
Mortgage loans with an allowance
|
$
|
1,012
|
|
|
$
|
69
|
|
Mortgage loans with no related allowance
|
—
|
|
|
—
|
|
||
|
$
|
1,012
|
|
|
$
|
69
|
|
December 31, 2018
|
|
|
|
||||
Mortgage loans with an allowance
|
$
|
1,042
|
|
|
$
|
74
|
|
Mortgage loans with no related allowance
|
—
|
|
|
—
|
|
||
|
$
|
1,042
|
|
|
$
|
74
|
|
December 31, 2017
|
|
|
|
||||
Mortgage loans with an allowance
|
$
|
4,464
|
|
|
$
|
221
|
|
Mortgage loans with no related allowance
|
1,513
|
|
|
91
|
|
||
|
$
|
5,977
|
|
|
$
|
312
|
|
•
|
borrower is in default,
|
•
|
borrower has declared bankruptcy,
|
•
|
there is growing concern about the borrower's ability to continue as a going concern,
|
•
|
borrower has insufficient cash flows to service debt,
|
•
|
borrower's inability to obtain funds from other sources, and
|
•
|
there is a breach of financial covenants by the borrower.
|
•
|
assets used to satisfy debt are less than our recorded investment,
|
•
|
interest rate is modified,
|
•
|
maturity date extension at an interest rate less than market rate,
|
•
|
capitalization of interest,
|
•
|
delaying principal and/or interest for a period of three months or more, and
|
•
|
partial forgiveness of the balance or charge-off.
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(Dollars in thousands)
|
||||||
Assets
|
|
|
|
||||
Derivative instruments
|
|
|
|
||||
Call options
|
$
|
1,355,989
|
|
|
$
|
205,149
|
|
Other assets
|
|
|
|
||||
Interest rate caps
|
6
|
|
|
597
|
|
||
Interest rate swap
|
—
|
|
|
354
|
|
||
|
$
|
1,355,995
|
|
|
$
|
206,100
|
|
Liabilities
|
|
|
|
||||
Policy benefit reserves - annuity products
|
|
|
|
||||
Fixed index annuities - embedded derivatives, net
|
$
|
9,624,395
|
|
|
$
|
8,165,405
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(Dollars in thousands)
|
||||||||||
Change in fair value of derivatives:
|
|
|
|
|
|
||||||
Call options
|
$
|
908,556
|
|
|
$
|
(778,899
|
)
|
|
$
|
1,678,283
|
|
Interest rate swap
|
(1,059
|
)
|
|
869
|
|
|
255
|
|
|||
Interest rate caps
|
(591
|
)
|
|
182
|
|
|
(667
|
)
|
|||
|
$
|
906,906
|
|
|
$
|
(777,848
|
)
|
|
$
|
1,677,871
|
|
Change in fair value of embedded derivatives:
|
|
|
|
|
|
||||||
Fixed index annuities - embedded derivatives
|
$
|
562,302
|
|
|
$
|
(2,167,628
|
)
|
|
$
|
174,154
|
|
Other changes in difference between policy benefit reserves computed using derivative accounting vs. long-duration contracts accounting
|
891,740
|
|
|
778,137
|
|
|
745,581
|
|
|||
|
$
|
1,454,042
|
|
|
$
|
(1,389,491
|
)
|
|
$
|
919,735
|
|
|
|
|
|
|
|
December 31,
|
||||||||||||||
|
|
|
|
|
|
2019
|
|
2018
|
||||||||||||
Counterparty
|
|
Credit Rating (S&P)
|
|
Credit Rating (Moody's)
|
|
Notional
Amount
|
|
Fair Value
|
|
Notional
Amount
|
|
Fair Value
|
||||||||
|
|
|
|
|
|
(Dollars in thousands)
|
||||||||||||||
Bank of America
|
|
A+
|
|
Aa2
|
|
$
|
2,680,543
|
|
|
$
|
80,692
|
|
|
$
|
6,518,808
|
|
|
$
|
6,704
|
|
Barclays
|
|
A
|
|
A2
|
|
5,753,868
|
|
|
217,536
|
|
|
2,301,414
|
|
|
27,032
|
|
||||
Canadian Imperial Bank of Commerce
|
|
A+
|
|
Aa2
|
|
4,110,525
|
|
|
154,917
|
|
|
4,856,150
|
|
|
29,313
|
|
||||
Citibank, N.A.
|
|
A+
|
|
Aa3
|
|
4,075,544
|
|
|
109,046
|
|
|
4,792,208
|
|
|
27,239
|
|
||||
Credit Suisse
|
|
A+
|
|
A1
|
|
4,526,414
|
|
|
116,659
|
|
|
2,877,916
|
|
|
12,887
|
|
||||
J.P. Morgan
|
|
A+
|
|
Aa2
|
|
4,703,234
|
|
|
151,651
|
|
|
3,701,964
|
|
|
17,564
|
|
||||
Morgan Stanley
|
|
A+
|
|
A1
|
|
1,886,995
|
|
|
41,253
|
|
|
3,560,044
|
|
|
1,561
|
|
||||
Royal Bank of Canada
|
|
AA-
|
|
A2
|
|
2,565,202
|
|
|
101,511
|
|
|
1,871,305
|
|
|
14,011
|
|
||||
Societe Generale
|
|
A
|
|
A1
|
|
3,280,286
|
|
|
139,101
|
|
|
2,343,165
|
|
|
21,681
|
|
||||
SunTrust
|
|
A
|
|
A2
|
|
2,051,229
|
|
|
74,910
|
|
|
1,755,030
|
|
|
12,047
|
|
||||
Wells Fargo
|
|
A+
|
|
Aa2
|
|
4,221,408
|
|
|
163,520
|
|
|
4,618,569
|
|
|
33,398
|
|
||||
Exchange traded
|
|
|
|
|
|
191,948
|
|
|
5,193
|
|
|
224,204
|
|
|
1,712
|
|
||||
|
|
|
|
|
|
$
|
40,047,196
|
|
|
$
|
1,355,989
|
|
|
$
|
39,420,777
|
|
|
$
|
205,149
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
||||||||
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
||||||
Maturity Date
|
|
Notional
Amount
|
|
Receive Rate
|
|
Pay Rate
|
|
Counterparty
|
|
Fair Value
|
|
Fair Value
|
||||||
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
||||||||
March 15, 2021
|
|
$
|
85,500
|
|
|
LIBOR
|
|
2.415%
|
|
SunTrust
|
|
$
|
—
|
|
|
$
|
354
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
||||||||
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
||||||
Maturity Date
|
|
Notional Amount
|
|
Floating Rate
|
|
Cap Rate
|
|
Counterparty
|
|
Fair Value
|
|
Fair Value
|
||||||
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
||||||||
July 7, 2021
|
|
$
|
40,000
|
|
|
LIBOR
|
|
2.50%
|
|
SunTrust
|
|
$
|
3
|
|
|
$
|
302
|
|
July 8, 2021
|
|
12,000
|
|
|
LIBOR
|
|
2.50%
|
|
SunTrust
|
|
1
|
|
|
91
|
|
|||
July 29, 2021
|
|
27,000
|
|
|
LIBOR
|
|
2.50%
|
|
SunTrust
|
|
2
|
|
|
204
|
|
|||
|
|
$
|
79,000
|
|
|
|
|
|
|
|
|
$
|
6
|
|
|
$
|
597
|
|
|
December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(Dollars in thousands)
|
||||||||||
Balance at beginning of year
|
$
|
3,535,838
|
|
|
$
|
2,714,523
|
|
|
$
|
2,905,377
|
|
Costs deferred during the year:
|
|
|
|
|
|
||||||
Commissions
|
419,165
|
|
|
384,432
|
|
|
401,124
|
|
|||
Policy issue costs
|
3,351
|
|
|
3,790
|
|
|
5,517
|
|
|||
Amortization:
|
|
|
|
|
|
||||||
Amortization
|
(280,699
|
)
|
|
(358,563
|
)
|
|
(304,162
|
)
|
|||
Impact of unlocking
|
192,982
|
|
|
30,572
|
|
|
48,198
|
|
|||
Effect of net unrealized gains/losses
|
(947,183
|
)
|
|
761,084
|
|
|
(341,531
|
)
|
|||
Balance at end of year
|
$
|
2,923,454
|
|
|
$
|
3,535,838
|
|
|
$
|
2,714,523
|
|
|
December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(Dollars in thousands)
|
||||||||||
Balance at beginning of year
|
$
|
2,516,721
|
|
|
$
|
2,001,892
|
|
|
$
|
2,208,218
|
|
Costs deferred during the year
|
177,941
|
|
|
179,465
|
|
|
216,172
|
|
|||
Amortization:
|
|
|
|
|
|
||||||
Amortization
|
(193,292
|
)
|
|
(243,666
|
)
|
|
(210,886
|
)
|
|||
Impact of unlocking
|
104,707
|
|
|
21,465
|
|
|
34,274
|
|
|||
Effect of net unrealized gains/losses
|
(639,354
|
)
|
|
557,565
|
|
|
(245,886
|
)
|
|||
Balance at end of year
|
$
|
1,966,723
|
|
|
$
|
2,516,721
|
|
|
$
|
2,001,892
|
|
|
December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(Dollars in thousands)
|
||||||||||
Balance at beginning of year
|
$
|
808,167
|
|
|
$
|
704,441
|
|
|
$
|
533,391
|
|
Benefit expense accrual
|
179,901
|
|
|
157,333
|
|
|
149,442
|
|
|||
Impact of unlocking
|
315,383
|
|
|
(53,607
|
)
|
|
21,608
|
|
|||
Claim payments
|
—
|
|
|
—
|
|
|
—
|
|
|||
Balance at end of year
|
$
|
1,303,451
|
|
|
$
|
808,167
|
|
|
$
|
704,441
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(Dollars in thousands)
|
||||||||||
Consolidated Statements of Operations
|
|
|
|
|
|
||||||
Annuity product charges
|
$
|
7,792
|
|
|
$
|
7,074
|
|
|
$
|
6,458
|
|
Change in fair value of derivatives
|
97,195
|
|
|
(41,487
|
)
|
|
94,382
|
|
|||
|
$
|
104,987
|
|
|
$
|
(34,413
|
)
|
|
$
|
100,840
|
|
|
|
|
|
|
|
||||||
Interest sensitive and index product benefits
|
$
|
132,127
|
|
|
$
|
165,485
|
|
|
$
|
177,332
|
|
Change in fair value of embedded derivatives
|
109,002
|
|
|
(92,649
|
)
|
|
35,561
|
|
|||
Other operating costs and expenses
|
18,778
|
|
|
20,415
|
|
|
19,877
|
|
|||
|
$
|
259,907
|
|
|
$
|
93,251
|
|
|
$
|
232,770
|
|
Consolidated Statements of Cash Flows
|
|
|
|
|
|
||||||
Annuity deposits
|
$
|
(290,040
|
)
|
|
$
|
(413,222
|
)
|
|
$
|
(387,280
|
)
|
Cash payments to policyholders
|
381,276
|
|
|
389,384
|
|
|
380,683
|
|
|||
|
$
|
91,236
|
|
|
$
|
(23,838
|
)
|
|
$
|
(6,597
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(Dollars in thousands)
|
||||||||||
Consolidated statements of operations:
|
|
|
|
|
|
||||||
Current income taxes
|
$
|
12,528
|
|
|
$
|
120,289
|
|
|
$
|
188,356
|
|
Deferred income taxes (benefits)
|
56,947
|
|
|
(12,563
|
)
|
|
(46,730
|
)
|
|||
Total income tax expense included in consolidated statements of operations
|
69,475
|
|
|
107,726
|
|
|
141,626
|
|
|||
Stockholders' equity:
|
|
|
|
|
|
||||||
Expense (benefit) relating to:
|
|
|
|
|
|
||||||
Change in net unrealized investment losses
|
412,117
|
|
|
(240,459
|
)
|
|
177,162
|
|
|||
Total income tax expense (benefit) included in consolidated financial statements
|
$
|
481,592
|
|
|
$
|
(132,733
|
)
|
|
$
|
318,788
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(Dollars in thousands)
|
||||||||||
Income before income taxes
|
$
|
315,565
|
|
|
$
|
565,742
|
|
|
$
|
316,271
|
|
|
|
|
|
|
|
||||||
Income tax expense on income before income taxes
|
$
|
66,269
|
|
|
$
|
118,806
|
|
|
$
|
110,695
|
|
Tax effect of:
|
|
|
|
|
|
||||||
State income taxes
|
5,111
|
|
|
5,777
|
|
|
1,961
|
|
|||
Tax exempt net investment income
|
(4,385
|
)
|
|
(4,223
|
)
|
|
(4,288
|
)
|
|||
Impact of Tax Reform
|
—
|
|
|
—
|
|
|
35,932
|
|
|||
Worthless stock deduction
|
—
|
|
|
(7,448
|
)
|
|
—
|
|
|||
Other
|
2,480
|
|
|
(5,186
|
)
|
|
(2,674
|
)
|
|||
Income tax expense
|
$
|
69,475
|
|
|
$
|
107,726
|
|
|
$
|
141,626
|
|
Effective tax rate
|
22.0
|
%
|
|
19.0
|
%
|
|
44.8
|
%
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(Dollars in thousands)
|
||||||
Deferred income tax assets:
|
|
|
|
||||
Policy benefit reserves
|
$
|
1,733,672
|
|
|
$
|
1,538,371
|
|
Other than temporary impairments
|
15,166
|
|
|
9,804
|
|
||
Net unrealized losses on available for sale fixed maturity securities
|
—
|
|
|
19,928
|
|
||
Derivative instruments
|
—
|
|
|
141,075
|
|
||
Amounts due reinsurer
|
8,784
|
|
|
—
|
|
||
Other policyholder funds
|
4,359
|
|
|
3,368
|
|
||
Deferred compensation
|
3,705
|
|
|
3,334
|
|
||
Share-based compensation
|
2,775
|
|
|
3,169
|
|
||
Net operating loss carryforwards
|
37,509
|
|
|
2,286
|
|
||
Other
|
14,677
|
|
|
9,439
|
|
||
Gross deferred tax assets
|
1,820,647
|
|
|
1,730,774
|
|
||
Deferred income tax liabilities:
|
|
|
|
||||
Deferred policy acquisition costs and deferred sales inducements
|
(1,303,385
|
)
|
|
(1,214,998
|
)
|
||
Net unrealized gains on available for sale fixed maturity securities
|
(392,189
|
)
|
|
—
|
|
||
Derivative instruments
|
(109,287
|
)
|
|
—
|
|
||
Policy benefit reserves
|
(147,924
|
)
|
|
(172,578
|
)
|
||
Investment income items
|
(42,105
|
)
|
|
(37,795
|
)
|
||
Amounts due reinsurer
|
—
|
|
|
(12,620
|
)
|
||
Other
|
(3,654
|
)
|
|
(1,614
|
)
|
||
Gross deferred tax liabilities
|
(1,998,544
|
)
|
|
(1,439,605
|
)
|
||
Net deferred income tax asset (liability)
|
$
|
(177,897
|
)
|
|
$
|
291,169
|
|
|
|
|
|
||||
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(Dollars in thousands)
|
||||||
Senior notes due 2027
|
|
|
|
||||
Principal
|
$
|
500,000
|
|
|
$
|
500,000
|
|
Unamortized debt issue costs
|
(4,607
|
)
|
|
(5,102
|
)
|
||
Unamortized discount
|
(277
|
)
|
|
(307
|
)
|
||
|
$
|
495,116
|
|
|
$
|
494,591
|
|
|
December 31,
|
|
|
|
|
|
||||||
|
2019
|
|
2018
|
|
Interest Rate
|
|
Due Date
|
|||||
|
(Dollars in thousands)
|
|
|
|
|
|
||||||
American Equity Capital Trust II
|
$
|
77,822
|
|
|
$
|
77,551
|
|
|
5%
|
|
June 1, 2047
|
|
American Equity Capital Trust III
|
27,840
|
|
|
27,840
|
|
|
*LIBOR +
|
3.90%
|
|
April 29, 2034
|
||
American Equity Capital Trust IV
|
12,372
|
|
|
12,372
|
|
|
*LIBOR +
|
4.00%
|
|
January 8, 2034
|
||
American Equity Capital Trust VII
|
—
|
|
|
10,830
|
|
|
*LIBOR +
|
3.75%
|
|
December 15, 2034
|
||
American Equity Capital Trust VIII
|
—
|
|
|
20,620
|
|
|
*LIBOR +
|
3.75%
|
|
December 15, 2034
|
||
American Equity Capital Trust IX
|
—
|
|
|
15,470
|
|
|
*LIBOR +
|
3.65%
|
|
June 15, 2035
|
||
American Equity Capital Trust X
|
—
|
|
|
20,620
|
|
|
*LIBOR +
|
3.65%
|
|
September 15, 2035
|
||
American Equity Capital Trust XI
|
—
|
|
|
20,620
|
|
|
*LIBOR +
|
3.65%
|
|
December 15, 2035
|
||
American Equity Capital Trust XII
|
41,238
|
|
|
41,238
|
|
|
*LIBOR +
|
3.50%
|
|
April 7, 2036
|
||
|
159,272
|
|
|
247,161
|
|
|
|
|
|
|
||
Unamortized debt issue costs
|
(2,007
|
)
|
|
(4,179
|
)
|
|
|
|
|
|
||
|
$
|
157,265
|
|
|
$
|
242,982
|
|
|
|
|
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(Dollars in thousands)
|
||||||||||
ESOP
|
$
|
2,547
|
|
|
$
|
2,194
|
|
|
$
|
1,474
|
|
Employee Incentive Plans
|
6,559
|
|
|
5,434
|
|
|
2,155
|
|
|||
Director Equity Plans
|
922
|
|
|
966
|
|
|
812
|
|
|||
|
$
|
10,028
|
|
|
$
|
8,594
|
|
|
$
|
4,441
|
|
|
Number of
Shares
|
|
Weighted-Average
Exercise Price
per Share
|
|
Total
Exercise
Price
|
|||||
|
(Dollars in thousands, except per share data)
|
|||||||||
Outstanding at January 1, 2017
|
2,918,946
|
|
|
$
|
16.06
|
|
|
$
|
46,885
|
|
Granted
|
—
|
|
|
—
|
|
|
—
|
|
||
Canceled
|
(57,200
|
)
|
|
13.66
|
|
|
(781
|
)
|
||
Exercised
|
(881,481
|
)
|
|
15.90
|
|
|
(14,020
|
)
|
||
Outstanding at December 31, 2017
|
1,980,265
|
|
|
16.20
|
|
|
32,084
|
|
||
Granted
|
—
|
|
|
—
|
|
|
—
|
|
||
Canceled
|
(40,850
|
)
|
|
18.87
|
|
|
(771
|
)
|
||
Exercised
|
(717,550
|
)
|
|
13.99
|
|
|
(10,040
|
)
|
||
Outstanding at December 31, 2018
|
1,221,865
|
|
|
17.41
|
|
|
21,273
|
|
||
Granted
|
—
|
|
|
—
|
|
|
—
|
|
||
Canceled
|
(22,600
|
)
|
|
18.14
|
|
|
(410
|
)
|
||
Exercised
|
(370,352
|
)
|
|
11.76
|
|
|
(4,357
|
)
|
||
Outstanding at December 31, 2019
|
828,913
|
|
|
19.91
|
|
|
$
|
16,506
|
|
|
Stock Options Outstanding and Vested
|
|||||||
Range of Exercise Prices
|
Number of
Awards
|
|
Remaining
Life (yrs)
|
|
Weighted-Average
Exercise Price
Per Share
|
|||
$9.27 - $11.35
|
147,500
|
|
|
1.19
|
|
$
|
9.74
|
|
$12.04 - $24.79
|
681,413
|
|
|
0.94
|
|
22.12
|
|
|
$9.27 - $24.79
|
828,913
|
|
|
0.98
|
|
19.91
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(Dollars in thousands)
|
||||||||||
American Equity Life
|
$
|
143,309
|
|
|
$
|
210,049
|
|
|
$
|
375,900
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(Dollars in thousands)
|
||||||
American Equity Life
|
$
|
3,490,196
|
|
|
$
|
3,251,881
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(Dollars in thousands)
|
||||||
Total adjusted capital
|
$
|
3,824,457
|
|
|
$
|
3,542,339
|
|
Company Action Level RBC
|
1,028,662
|
|
|
983,169
|
|
||
Ratio of adjusted capital to Company Action Level RBC
|
372
|
%
|
|
360
|
%
|
Year Ending December 31:
|
|
||
2020
|
$
|
2,427
|
|
2021
|
2,354
|
|
|
2022
|
2,085
|
|
|
2023
|
1,866
|
|
|
2024
|
1,832
|
|
|
2025 and thereafter
|
3,108
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(Dollars in thousands, except per share data)
|
||||||||||
Numerator:
|
|
|
|
|
|
||||||
Net income - numerator for earnings per common share
|
$
|
246,090
|
|
|
$
|
458,016
|
|
|
$
|
174,645
|
|
|
|
|
|
|
|
||||||
Denominator:
|
|
|
|
|
|
||||||
Weighted average common shares outstanding
|
91,139,453
|
|
|
90,347,915
|
|
|
88,982,442
|
|
|||
Effect of dilutive securities:
|
|
|
|
|
|
||||||
Stock options and deferred compensation agreements
|
304,196
|
|
|
709,433
|
|
|
945,612
|
|
|||
Restricted stock and restricted stock units
|
338,593
|
|
|
365,237
|
|
|
382,954
|
|
|||
Denominator for earnings per common share - assuming dilution
|
91,782,242
|
|
|
91,422,585
|
|
|
90,311,008
|
|
|||
|
|
|
|
|
|
||||||
Earnings per common share
|
$
|
2.70
|
|
|
$
|
5.07
|
|
|
$
|
1.96
|
|
Earnings per common share - assuming dilution
|
$
|
2.68
|
|
|
$
|
5.01
|
|
|
$
|
1.93
|
|
|
Quarter Ended
|
||||||||||||||
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
||||||||
|
(Dollars in thousands, except per share data)
|
||||||||||||||
2019
|
|
|
|
|
|
|
|
||||||||
Premiums and product charges
|
$
|
58,376
|
|
|
$
|
64,826
|
|
|
$
|
68,799
|
|
|
$
|
71,568
|
|
Net investment income
|
558,438
|
|
|
570,568
|
|
|
590,412
|
|
|
588,217
|
|
||||
Change in fair value of derivatives
|
384,469
|
|
|
76,045
|
|
|
(20,042
|
)
|
|
466,434
|
|
||||
Net realized gains (losses) on investments, excluding OTTI losses
|
(563
|
)
|
|
(3,832
|
)
|
|
4,328
|
|
|
7,029
|
|
||||
Net OTTI losses recognized in operations
|
—
|
|
|
(1,213
|
)
|
|
(101
|
)
|
|
(17,412
|
)
|
||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,001
|
)
|
||||
Total revenues
|
1,000,720
|
|
|
706,394
|
|
|
643,396
|
|
|
1,113,835
|
|
||||
Net income (loss)
|
(30,010
|
)
|
|
18,590
|
|
|
37,360
|
|
|
220,150
|
|
||||
Earnings (loss) per common share
|
(0.33
|
)
|
|
0.20
|
|
|
0.41
|
|
|
2.41
|
|
||||
Earnings (loss) per common share - assuming dilution
|
(0.33
|
)
|
|
0.20
|
|
|
0.41
|
|
|
2.40
|
|
||||
|
|
|
|
|
|
|
|
||||||||
2018
|
|
|
|
|
|
|
|
||||||||
Premiums and product charges
|
$
|
59,776
|
|
|
$
|
60,763
|
|
|
$
|
65,605
|
|
|
$
|
64,824
|
|
Net investment income
|
510,784
|
|
|
533,282
|
|
|
549,391
|
|
|
554,355
|
|
||||
Change in fair value of derivatives
|
(451,083
|
)
|
|
132,205
|
|
|
595,311
|
|
|
(1,054,281
|
)
|
||||
Net realized gains (losses) on investments, excluding OTTI losses
|
302
|
|
|
(38,381
|
)
|
|
(2,196
|
)
|
|
3,097
|
|
||||
Net OTTI losses recognized in operations
|
(907
|
)
|
|
(2,396
|
)
|
|
(14,373
|
)
|
|
(18,980
|
)
|
||||
Total revenues
|
118,872
|
|
|
685,473
|
|
|
1,193,738
|
|
|
(450,985
|
)
|
||||
Net income
|
140,962
|
|
|
93,903
|
|
|
169,328
|
|
|
53,823
|
|
||||
Earnings per common share
|
1.57
|
|
|
1.04
|
|
|
1.87
|
|
|
0.59
|
|
||||
Earnings per common share - assuming dilution
|
1.55
|
|
|
1.03
|
|
|
1.85
|
|
|
0.59
|
|
|
Quarter Ended
|
||||||||||||||
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
2019
|
$
|
118,491
|
|
|
$
|
78,397
|
|
|
$
|
196,396
|
|
|
$
|
(100,305
|
)
|
2018
|
(61,794
|
)
|
|
(23,593
|
)
|
|
427
|
|
|
28,298
|
|
Column A
|
|
Column B
|
|
Column C
|
|
Column D
|
||||||
Type of Investment
|
|
Amortized
Cost (1)
|
|
Fair
Value
|
|
Amount at
which shown
in the balance
sheet
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
||||||
Available for sale:
|
|
|
|
|
|
|
||||||
United States Government full faith and credit
|
|
$
|
161,492
|
|
|
$
|
161,765
|
|
|
$
|
161,765
|
|
United States Government sponsored agencies
|
|
601,672
|
|
|
625,020
|
|
|
625,020
|
|
|||
United States municipalities, states and territories
|
|
4,147,343
|
|
|
4,527,671
|
|
|
4,527,671
|
|
|||
Foreign government obligations
|
|
186,993
|
|
|
205,096
|
|
|
205,096
|
|
|||
Corporate securities
|
|
29,822,172
|
|
|
32,536,839
|
|
|
32,536,839
|
|
|||
Residential mortgage backed securities
|
|
1,477,738
|
|
|
1,575,664
|
|
|
1,575,664
|
|
|||
Commercial mortgage backed securities
|
|
5,591,167
|
|
|
5,786,279
|
|
|
5,786,279
|
|
|||
Other asset backed securities
|
|
6,250,369
|
|
|
6,162,156
|
|
|
6,162,156
|
|
|||
Total fixed maturity securities
|
|
48,238,946
|
|
|
51,580,490
|
|
|
51,580,490
|
|
|||
Mortgage loans on real estate
|
|
3,448,793
|
|
|
3,536,446
|
|
|
3,448,793
|
|
|||
Derivative instruments
|
|
412,163
|
|
|
1,355,989
|
|
|
1,355,989
|
|
|||
Other investments
|
|
492,301
|
|
|
|
|
492,301
|
|
||||
Total investments
|
|
$
|
52,592,203
|
|
|
|
|
$
|
56,877,573
|
|
(1)
|
On the basis of cost adjusted for other than temporary impairments, repayments and amortization of premiums and accrual of discounts for fixed maturity securities and short-term investments, original cost for derivative instruments and unpaid principal balance less allowance for credit losses for mortgage loans.
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
332,526
|
|
|
$
|
68,876
|
|
Equity securities of subsidiary trusts
|
4,785
|
|
|
7,437
|
|
||
Receivable from subsidiaries
|
1,210
|
|
|
1,170
|
|
||
Deferred income taxes
|
5,818
|
|
|
7,905
|
|
||
Other assets
|
3,067
|
|
|
2,751
|
|
||
|
347,406
|
|
|
88,139
|
|
||
Investment in and advances to subsidiaries
|
4,891,431
|
|
|
3,066,039
|
|
||
Total assets
|
$
|
5,238,837
|
|
|
$
|
3,154,178
|
|
|
|
|
|
||||
Liabilities and Stockholders' Equity
|
|
|
|
||||
Liabilities:
|
|
|
|
||||
Notes payable
|
$
|
495,116
|
|
|
$
|
494,591
|
|
Subordinated debentures payable to subsidiary trusts
|
157,265
|
|
|
242,982
|
|
||
Federal income tax payable
|
9,274
|
|
|
8,892
|
|
||
Other liabilities
|
7,063
|
|
|
8,612
|
|
||
Total liabilities
|
668,718
|
|
|
755,077
|
|
||
Stockholders' equity:
|
|
|
|
||||
Preferred stock
|
16
|
|
|
—
|
|
||
Common stock
|
91,107
|
|
|
90,369
|
|
||
Additional paid-in capital
|
1,212,311
|
|
|
811,186
|
|
||
Accumulated other comprehensive income (loss)
|
1,497,921
|
|
|
(52,432
|
)
|
||
Retained earnings
|
1,768,764
|
|
|
1,549,978
|
|
||
Total stockholders' equity
|
4,570,119
|
|
|
2,399,101
|
|
||
Total liabilities and stockholders' equity
|
$
|
5,238,837
|
|
|
$
|
3,154,178
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Net investment income
|
$
|
1,755
|
|
|
$
|
773
|
|
|
$
|
492
|
|
Dividends from subsidiary trusts
|
469
|
|
|
461
|
|
|
410
|
|
|||
Dividends from dissolved subsidiaries
|
—
|
|
|
10,393
|
|
|
—
|
|
|||
Investment advisory fees
|
107,945
|
|
|
92,335
|
|
|
83,941
|
|
|||
Surplus note interest from subsidiary
|
4,080
|
|
|
4,080
|
|
|
4,080
|
|
|||
Change in fair value of derivatives
|
(1,650
|
)
|
|
1,051
|
|
|
(412
|
)
|
|||
Loss on extinguishment of debt
|
(2,001
|
)
|
|
—
|
|
|
(18,817
|
)
|
|||
Total revenues
|
110,598
|
|
|
109,093
|
|
|
69,694
|
|
|||
|
|
|
|
|
|
||||||
Expenses:
|
|
|
|
|
|
||||||
Interest expense on notes and loan payable
|
25,525
|
|
|
25,498
|
|
|
30,368
|
|
|||
Interest expense on subordinated debentures issued to subsidiary trusts
|
15,764
|
|
|
15,491
|
|
|
14,124
|
|
|||
Other operating costs and expenses
|
28,357
|
|
|
18,579
|
|
|
9,234
|
|
|||
Total expenses
|
69,646
|
|
|
59,568
|
|
|
53,726
|
|
|||
Income before income taxes and equity in undistributed income of subsidiaries
|
40,952
|
|
|
49,525
|
|
|
15,968
|
|
|||
Income tax expense
|
11,586
|
|
|
2,603
|
|
|
6,895
|
|
|||
Income before equity in undistributed income of subsidiaries
|
29,366
|
|
|
46,922
|
|
|
9,073
|
|
|||
Equity in undistributed income of subsidiaries
|
216,724
|
|
|
411,094
|
|
|
165,572
|
|
|||
Net income
|
$
|
246,090
|
|
|
$
|
458,016
|
|
|
$
|
174,645
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Operating activities
|
|
|
|
|
|
||||||
Net income
|
$
|
246,090
|
|
|
$
|
458,016
|
|
|
$
|
174,645
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Provision for depreciation and amortization
|
1,136
|
|
|
916
|
|
|
1,610
|
|
|||
Accrual of discount on equity security
|
(8
|
)
|
|
(8
|
)
|
|
(7
|
)
|
|||
Equity in undistributed income of subsidiaries
|
(216,724
|
)
|
|
(411,094
|
)
|
|
(165,572
|
)
|
|||
Change in fair value of derivatives
|
945
|
|
|
(1,325
|
)
|
|
(657
|
)
|
|||
Loss on extinguishment of debt
|
2,001
|
|
|
—
|
|
|
18,817
|
|
|||
Accrual of discount on debenture issued to subsidiary trust
|
270
|
|
|
254
|
|
|
236
|
|
|||
Share-based compensation
|
2,923
|
|
|
1,626
|
|
|
951
|
|
|||
Deferred income taxes
|
2,087
|
|
|
40
|
|
|
1,583
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Receivable from subsidiaries
|
(40
|
)
|
|
(1,004
|
)
|
|
16
|
|
|||
Federal income tax recoverable/payable
|
382
|
|
|
9,951
|
|
|
(4,673
|
)
|
|||
Other assets
|
(1,229
|
)
|
|
(229
|
)
|
|
158
|
|
|||
Other liabilities
|
(1,846
|
)
|
|
4,860
|
|
|
(12,427
|
)
|
|||
Net cash provided by operating activities
|
35,987
|
|
|
62,003
|
|
|
14,680
|
|
|||
|
|
|
|
|
|
||||||
Investing activities
|
|
|
|
|
|
||||||
Repayment of equity securities
|
$
|
2,660
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Contribution to subsidiary
|
(50,000
|
)
|
|
—
|
|
|
—
|
|
|||
Purchases of property, plant and equipment
|
(117
|
)
|
|
(29
|
)
|
|
(45
|
)
|
|||
Net cash used in investing activities
|
(47,457
|
)
|
|
(29
|
)
|
|
(45
|
)
|
|||
|
|
|
|
|
|
||||||
Financing activities
|
|
|
|
|
|
||||||
Financing fees incurred and deferred
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(5,817
|
)
|
Repayment of notes payable
|
—
|
|
|
—
|
|
|
(413,252
|
)
|
|||
Repayment of loan payable
|
—
|
|
|
—
|
|
|
(100,000
|
)
|
|||
Proceeds from issuance of notes payable
|
—
|
|
|
—
|
|
|
499,650
|
|
|||
Repayment of subordinated debentures
|
(88,160
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from issuance of common stock, net
|
1,691
|
|
|
9,681
|
|
|
14,028
|
|
|||
Proceeds from issuance of preferred stock, net
|
388,893
|
|
|
—
|
|
|
—
|
|
|||
Dividends paid
|
(27,304
|
)
|
|
(25,265
|
)
|
|
(23,152
|
)
|
|||
Net cash provided by (used in) financing activities
|
275,120
|
|
|
(15,584
|
)
|
|
(28,543
|
)
|
|||
Increase (decrease) in cash and cash equivalents
|
263,650
|
|
|
46,390
|
|
|
(13,908
|
)
|
|||
Cash and cash equivalents at beginning of year
|
68,876
|
|
|
22,486
|
|
|
36,394
|
|
|||
Cash and cash equivalents at end of year
|
$
|
332,526
|
|
|
$
|
68,876
|
|
|
$
|
22,486
|
|
|
|
|
|
|
|
||||||
Supplemental disclosures of cash flow information
|
|
|
|
|
|
||||||
Cash paid during the year for:
|
|
|
|
|
|
||||||
Interest on notes and loan payable
|
$
|
25,000
|
|
|
$
|
25,000
|
|
|
$
|
40,537
|
|
Interest on subordinated debentures
|
16,891
|
|
|
13,593
|
|
|
14,573
|
|
Column A
|
|
Column B
|
|
Column C
|
|
Column D
|
|
Column E
|
||||||||
|
|
Deferred policy
acquisition
costs
|
|
Future policy
benefits,
losses, claims
and loss
expenses
|
|
Unearned
premiums
|
|
Other policy
claims and
benefits
payable
|
||||||||
|
|
(Dollars in thousands)
|
||||||||||||||
As of December 31, 2019:
Life insurance
|
|
$
|
2,923,454
|
|
|
$
|
61,893,945
|
|
|
$
|
—
|
|
|
$
|
256,105
|
|
As of December 31, 2018:
Life insurance |
|
$
|
3,535,838
|
|
|
$
|
57,606,009
|
|
|
$
|
—
|
|
|
$
|
270,858
|
|
As of December 31, 2017:
Life insurance |
|
$
|
2,714,523
|
|
|
$
|
56,142,673
|
|
|
$
|
—
|
|
|
$
|
282,884
|
|
Column A
|
|
Column F
|
|
Column G
|
|
Column H
|
|
Column I
|
|
Column J
|
||||||||||
|
|
Premium
revenue
|
|
Net
investment
income
|
|
Benefits,
claims,
losses and
settlement
expenses
|
|
Amortization
of deferred
policy
acquisition
costs
|
|
Other
operating
expenses
|
||||||||||
|
|
(Dollars in thousands)
|
||||||||||||||||||
For the year ended December 31, 2019:
Life insurance
|
|
$
|
263,569
|
|
|
$
|
2,307,635
|
|
|
$
|
2,865,621
|
|
|
$
|
87,717
|
|
|
$
|
195,442
|
|
For the year ended December 31, 2018:
Life insurance |
|
$
|
250,968
|
|
|
$
|
2,147,812
|
|
|
$
|
483,075
|
|
|
$
|
327,991
|
|
|
$
|
170,290
|
|
For the year ended December 31, 2017:
Life insurance |
|
$
|
234,722
|
|
|
$
|
1,991,997
|
|
|
$
|
3,163,234
|
|
|
$
|
255,964
|
|
|
$
|
156,183
|
|
Column A
|
|
Column B
|
|
Column C
|
|
Column D
|
|
Column E
|
|
Column F
|
|||||||||
|
|
Gross amount
|
|
Ceded to
other
companies
|
|
Assumed
from
other
companies
|
|
Net amount
|
|
Percent of
amount
assumed
to net
|
|||||||||
|
|
(Dollars in thousands)
|
|||||||||||||||||
Year ended December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Life insurance in force, at end of year
|
|
$
|
56,451
|
|
|
$
|
6,722
|
|
|
$
|
52,653
|
|
|
$
|
102,382
|
|
|
51.43
|
%
|
Insurance premiums and other considerations:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Annuity product charges
|
|
$
|
247,827
|
|
|
$
|
7,792
|
|
|
$
|
—
|
|
|
$
|
240,035
|
|
|
—
|
|
Traditional life, accident and health insurance, and life contingent immediate annuity premiums
|
|
23,395
|
|
|
145
|
|
|
284
|
|
|
23,534
|
|
|
1.21
|
%
|
||||
|
|
$
|
271,222
|
|
|
$
|
7,937
|
|
|
$
|
284
|
|
|
$
|
263,569
|
|
|
0.11
|
%
|
Year ended December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Life insurance in force, at end of year
|
|
$
|
64,544
|
|
|
$
|
7,832
|
|
|
$
|
53,658
|
|
|
$
|
110,370
|
|
|
48.62
|
%
|
Insurance premiums and other considerations:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Annuity product charges
|
|
$
|
231,562
|
|
|
$
|
7,074
|
|
|
$
|
—
|
|
|
$
|
224,488
|
|
|
—
|
|
Traditional life, accident and health insurance, and life contingent immediate annuity premiums
|
|
26,319
|
|
|
189
|
|
|
350
|
|
|
26,480
|
|
|
1.32
|
%
|
||||
|
|
$
|
257,881
|
|
|
$
|
7,263
|
|
|
$
|
350
|
|
|
$
|
250,968
|
|
|
0.14
|
%
|
Year ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Life insurance in force, at end of year
|
|
$
|
1,942,129
|
|
|
$
|
9,378
|
|
|
$
|
57,965
|
|
|
$
|
1,990,716
|
|
|
2.91
|
%
|
Insurance premiums and other considerations:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Annuity product charges
|
|
$
|
206,952
|
|
|
$
|
6,458
|
|
|
$
|
—
|
|
|
$
|
200,494
|
|
|
—
|
|
Traditional life, accident and health insurance, and life contingent immediate annuity premiums
|
|
33,938
|
|
|
215
|
|
|
505
|
|
|
34,228
|
|
|
1.48
|
%
|
||||
|
|
$
|
240,890
|
|
|
$
|
6,673
|
|
|
$
|
505
|
|
|
$
|
234,722
|
|
|
0.22
|
%
|
|
Balance
January 1,
|
|
Charged to Costs
and Expenses
|
|
Translation
Adjustment
|
|
Write-offs/
Payments/Other
|
|
Balance
December 31,
|
||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||
Year ended December 31, 2019
|
|
|
|
|
|
|
|
|
|
||||||||||
Valuation allowance on mortgage loans
|
$
|
(8,239
|
)
|
|
$
|
(940
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(9,179
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Year ended December 31, 2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Valuation allowance on mortgage loans
|
$
|
(7,518
|
)
|
|
$
|
(3,165
|
)
|
|
$
|
—
|
|
|
$
|
2,444
|
|
|
$
|
(8,239
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Year ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Valuation allowance on mortgage loans
|
$
|
(8,427
|
)
|
|
$
|
278
|
|
|
$
|
—
|
|
|
$
|
631
|
|
|
$
|
(7,518
|
)
|
1.
|
Option Price. The option price is [$____] for each share, the price being at least 100% of the fair market value of a share of the Stock on the date of the grant of this Option.
|
2.
|
Exercise of Option and Vesting Schedule. This Option is granted for a ten (10) year term and, therefore, may not be exercised after the expiration of ten (10) years from the date that it is granted. This Option shall become exercisable at any time subject to the terms of this Agreement and applicable law.
|
(a)
|
Vesting Schedule. This option will vest on [____________]. Should the Optionee be terminated (except for death or disability) prior to the date of vesting, then Optionee will forfeit all rights under this Agreement.
|
(b)
|
Right to Exercise. This Option shall be exercisable during the term of the Option, by the Optionee:
|
(i)
|
While the Optionee is an employee of the Company, or within sixty (60) days of the termination of Optionee as an employee; provided that in the event Optionee’s employment by the Company is terminated because of disability, as that term is defined in Section 105(d)(4) of the Internal Revenue Code, as amended (the “Code”), the Option privileges, with respect to the shares purchasable by the Optionee as of the date that the Optionee terminated, may be exercised by the Optionee within one (1) year after the date of termination of the Optionee’s employment by the Company. However, nothing contained within this statement shall be construed to extend the ultimate term of this Option beyond the period of time set out above in paragraph 2.
|
(ii)
|
If the Optionee should die during the option period while employed by the Company, the option privileges may be exercised in full by the legal representative of the Optionee’s estate, or by the person or persons to whom the Optionee’s rights under the Option shall have passed by will or the laws of descent and distribution within one (1) year after the Optionee’s date of death. However, nothing contained within this statement shall be construed to extend the ultimate term of this Option beyond the period of time set out above in paragraph 2.
|
(c)
|
Restrictions on Exercise. The minimum number of shares for which this Option may be exercised is 100 shares. In addition, as a condition to the Optionee’s exercise of this option, the Company may require the person exercising this Option to execute any buy-sell agreement in effect between the Company and its shareholders and to make such representations or warranties to the Company as may be required by applicable law or regulation.
|
(d)
|
Method of Exercise. This Option shall be exercisable by a written notice which shall:
|
(i)
|
State the election to exercise the Option, the number of shares in respect of which it is being exercised (which may be no less than 100 shares), the person in whose name the stock certificate for such shares of Stock is to be registered, the person’s address
|
(ii)
|
Contain such representations and agreements as to the holder’s investment intent with respect to such shares of Stock as may be satisfactory to the Company’s counsel; and
|
(iii)
|
Be signed by the person or persons entitled to exercise the Option and, if the Option is being exercised by any persons other than the Optionee, be accompanied by proof satisfactory to counsel for the Company, of the right of such person or persons to exercise the Option.
|
(e)
|
Payment of Option Price. Payment of the aggregate Option Price for the shares of Stock with respect to which an Option is being exercised shall be made by the Optionee in cash or in one of the following manners:
|
(i)
|
By delivery (including constructive delivery) to the Company of shares of Stock having an aggregate Fair Market Value on Date of Exercise equal to the aggregate Option Price; or
|
(ii)
|
By delivery on a form prescribed by the Committee of a properly executed exercise notice and irrevocable instructions to a registered securities broker approved by the Committee to sell shares of Stock and promptly deliver cash to the Company.
|
3.
|
No transferability of Option. This Option may not be transferred in any manner otherwise than by will or the laws of descent and distribution and may be exercised during the lifetime of the Optionee only by the Optionee and after Optionee’s death by the legal representative of the Optionee’s estate or by the person or persons to whom the Optionee’s rights under the Option passed by will or the laws of descent and distribution. This Option shall not be pledged or hypothecated in any way and shall not be subject to executive, attachment of similar process except with the express consent of the Committee.
|
4.
|
Adjustments:
|
(a)
|
Whenever a stock split, stock dividend or other relevant change in capitalization of the Company occurs, (1) the number of shares that can thereafter be purchased and the option price per share under each Option that has been granted and not exercised, and (2) the number of shares used in determining whether a particular Option is grantable thereafter shall be appropriately adjusted.
|
(b)
|
In the event of the dissolution or liquidation of the Company, any Option granted under the Plan shall terminate as of a date to be fixed by the Committee, provided that not less than 30 days’ written notice of the date so fixed shall be given to each Optionee and each such Optionee shall have the right during such period to exercise Optionee’s Option as to all or any part of the shares covered thereby, including shares as to which such Option would not otherwise be exercisable by reason of an insufficient lapse of time.
|
(c)
|
Adjustments and determinations under this paragraph 4 shall be made by the Company’s Board of Directors, whose decisions as to what adjustments or determinations shall be made, and the extent thereof, shall be final, binding and conclusive.
|
5.
|
Notices. Each notice relating to this Agreement shall be in writing and delivered in person or by certified mail to the proper address, and shall be deemed to have been given on the date it is received. Each notice to the Company shall be addressed to it at its principal office, attention of the Secretary. Each notice to the Optionee or other person or person then entitled to exercise the Option shall be addressed to the Optionee or such other person or persons at the Optionee’s address set forth in the heading of this Agreement. Anyone to whom a notice may be given under this Agreement may designate a new address by written notice to that effect.
|
6.
|
Benefits of Agreement. This Agreement shall inure to the benefit of and be binding upon each successor of the Company. All obligations imposed upon the Optionee and all rights granted to the Company under this Agreement shall be binding upon the Optionee’s heir, legal representatives and successors. This Agreement shall be the sole and exclusive source of any and all rights which the Optionee, the Optionee’s heirs, legal representatives, or successors may have in respect to the Plan or any options or Stock granted or issued thereunder whether to the Optionee or to any other person.
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7.
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Resolution of Disputes. Any dispute or disagreement which should arise under, or as a result of, or in any way relate to, the interpretation, construction or applicability of this Agreement will be determined by the Board of Directors of the Company. Any determination made hereunder shall be final, binding, and conclusive for all purposes.
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AMERICAN EQUITY INVESTMENT LIFE
HOLDING COMPANY |
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By:
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[Name and Title]
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OPTIONEE:
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By:
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State of Incorporation
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Insurance Subsidiaries:
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American Equity Investment Life Insurance Company
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Iowa
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American Equity Investment Life Insurance Company of New York
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New York
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Eagle Life Insurance Company
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Iowa
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Noninsurance Subsidiaries:
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American Equity Properties, L.C.
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Iowa
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American Equity Capital Trust II
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Delaware
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American Equity Capital Trust III
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Delaware
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American Equity Capital Trust IV
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Delaware
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American Equity Capital Trust VII
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Delaware
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American Equity Capital Trust VIII
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Delaware
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American Equity Capital Trust IX
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Delaware
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American Equity Capital Trust X
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Delaware
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American Equity Capital Trust XI
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Delaware
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American Equity Capital Trust XII
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Delaware
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AERL, L.C.
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Iowa
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1.
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I have reviewed this annual report on Form 10-K of American Equity Investment Life Holding Company;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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Date:
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February 25, 2020
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By:
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/s/ JOHN M. MATOVINA
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John M. Matovina, Chief Executive Officer
(Principal Executive Officer)
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1.
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I have reviewed this annual report on Form 10-K of American Equity Investment Life Holding Company;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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Date:
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February 25, 2020
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By:
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/s/ TED M. JOHNSON
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Ted M. Johnson, Chief Financial Officer and Treasurer
(Principal Financial Officer)
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1.
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The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934;
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2.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date:
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February 25, 2020
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By:
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/s/ JOHN M. MATOVINA
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John M. Matovina, Chief Executive Officer
(Principal Executive Officer)
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1.
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The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934;
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2.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date:
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February 25, 2020
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By:
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/s/ TED M. JOHNSON
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Ted M. Johnson, Chief Financial Officer and Treasurer
(Principal Financial Officer)
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