☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Iowa
|
|
42-1447959
|
(State or other jurisdiction of incorporation or organization)
|
|
(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
|
Depositary Shares, each representing a 1/1,000th interest in a share of 6.625% Fixed-Rate Reset Non-Cumulative Preferred Stock, Series B
|
|
AELPRB
|
|
New York Stock Exchange
|
Large accelerated filer
|
☒
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
Smaller reporting company
|
☐
|
|
|
Emerging growth company
|
☐
|
|
Page
|
|
|
|
|
|
|
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
|
(Unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Investments:
|
|
|
|
||||
Fixed maturity securities, available for sale, at fair value (amortized cost of $46,951,043 as of 2020 and $48,238,946 as of 2019; allowance for credit losses of $50,186 as of 2020)
|
$
|
50,738,792
|
|
|
$
|
51,580,490
|
|
Mortgage loans on real estate (net of allowance for credit losses of $20,089 as of 2020 and $9,179 as of 2019)
|
3,958,233
|
|
|
3,448,793
|
|
||
Derivative instruments
|
672,958
|
|
|
1,355,989
|
|
||
Other investments
|
479,099
|
|
|
492,301
|
|
||
Total investments
|
55,849,082
|
|
|
56,877,573
|
|
||
|
|
|
|
||||
Cash and cash equivalents
|
2,408,635
|
|
|
2,293,392
|
|
||
Coinsurance deposits (net of allowance for credit losses of $3,948 as of 2020 and $0 as of 2019)
|
4,962,859
|
|
|
5,115,013
|
|
||
Accrued investment income
|
450,290
|
|
|
472,826
|
|
||
Deferred policy acquisition costs
|
2,920,793
|
|
|
2,923,454
|
|
||
Deferred sales inducements
|
1,937,083
|
|
|
1,966,723
|
|
||
Income taxes recoverable
|
35,962
|
|
|
—
|
|
||
Other assets
|
43,592
|
|
|
47,571
|
|
||
Total assets
|
$
|
68,608,296
|
|
|
$
|
69,696,552
|
|
|
|
|
|
||||
Liabilities and Stockholders' Equity
|
|
|
|
||||
Liabilities:
|
|
|
|
||||
Policy benefit reserves
|
$
|
61,669,232
|
|
|
$
|
61,893,945
|
|
Other policy funds and contract claims
|
244,186
|
|
|
256,105
|
|
||
Notes payable
|
495,388
|
|
|
495,116
|
|
||
Subordinated debentures
|
77,964
|
|
|
157,265
|
|
||
Deferred income taxes
|
229,757
|
|
|
177,897
|
|
||
Income taxes payable
|
—
|
|
|
429
|
|
||
Other liabilities
|
829,710
|
|
|
2,145,676
|
|
||
Total liabilities
|
63,546,237
|
|
|
65,126,433
|
|
||
|
|
|
|
||||
Stockholders' equity:
|
|
|
|
||||
Preferred stock, Series A; par value $1 per share; $400,000 aggregate liquidation preference; 20,000 shares authorized; issued and outstanding:
2020 - 16,000 shares;
2019 - 16,000 shares
|
16
|
|
|
16
|
|
||
Preferred stock, Series B; par value $1 per share; $300,000 aggregate liquidation preference; 12,000 shares authorized; issued and outstanding:
2020 - 12,000 shares;
2019 - no shares
|
12
|
|
|
—
|
|
||
Common stock; par value $1 per share; 200,000,000 shares authorized; issued and outstanding:
2020 - 91,595,066 shares (excluding 1,171,451 treasury shares);
2019 - 91,107,555 shares (excluding 1,344,193 treasury shares)
|
91,595
|
|
|
91,107
|
|
||
Additional paid-in capital
|
1,508,171
|
|
|
1,212,311
|
|
||
Accumulated other comprehensive income
|
1,719,839
|
|
|
1,497,921
|
|
||
Retained earnings
|
1,742,426
|
|
|
1,768,764
|
|
||
Total stockholders' equity
|
5,062,059
|
|
|
4,570,119
|
|
||
Total liabilities and stockholders' equity
|
$
|
68,608,296
|
|
|
$
|
69,696,552
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Premiums and other considerations
|
$
|
11,032
|
|
|
$
|
4,126
|
|
|
$
|
18,696
|
|
|
$
|
9,536
|
|
Annuity product charges
|
63,438
|
|
|
60,700
|
|
|
122,987
|
|
|
113,666
|
|
||||
Net investment income
|
543,704
|
|
|
570,568
|
|
|
1,117,022
|
|
|
1,129,006
|
|
||||
Change in fair value of derivatives
|
327,662
|
|
|
76,045
|
|
|
(614,212
|
)
|
|
460,514
|
|
||||
Net realized gains (losses) on investments
|
(25,888
|
)
|
|
(3,832
|
)
|
|
(46,224
|
)
|
|
(4,395
|
)
|
||||
Other than temporary impairment (OTTI) losses on investments:
|
|
|
|
|
|
|
|
||||||||
Total OTTI losses
|
—
|
|
|
(998
|
)
|
|
—
|
|
|
(998
|
)
|
||||
Portion of OTTI losses recognized from other comprehensive income
|
—
|
|
|
(215
|
)
|
|
—
|
|
|
(215
|
)
|
||||
Net OTTI losses recognized in operations
|
—
|
|
|
(1,213
|
)
|
|
—
|
|
|
(1,213
|
)
|
||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
(2,024
|
)
|
|
—
|
|
||||
Total revenues
|
919,948
|
|
|
706,394
|
|
|
596,245
|
|
|
1,707,114
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Benefits and expenses:
|
|
|
|
|
|
|
|
||||||||
Insurance policy benefits and change in future policy benefits
|
13,331
|
|
|
6,939
|
|
|
23,403
|
|
|
16,238
|
|
||||
Interest sensitive and index product benefits
|
240,992
|
|
|
251,103
|
|
|
641,211
|
|
|
387,777
|
|
||||
Amortization of deferred sales inducements
|
(75,178
|
)
|
|
19,785
|
|
|
(1,587
|
)
|
|
53,094
|
|
||||
Change in fair value of embedded derivatives
|
1,126,935
|
|
|
327,562
|
|
|
(123,126
|
)
|
|
1,093,885
|
|
||||
Interest expense on notes payable
|
6,388
|
|
|
6,380
|
|
|
12,773
|
|
|
12,759
|
|
||||
Interest expense on subordinated debentures
|
1,321
|
|
|
4,057
|
|
|
2,909
|
|
|
8,145
|
|
||||
Amortization of deferred policy acquisition costs
|
(119,889
|
)
|
|
29,946
|
|
|
813
|
|
|
75,078
|
|
||||
Other operating costs and expenses
|
41,951
|
|
|
37,426
|
|
|
85,577
|
|
|
76,405
|
|
||||
Total benefits and expenses
|
1,235,851
|
|
|
683,198
|
|
|
641,973
|
|
|
1,723,381
|
|
||||
Income (loss) before income taxes
|
(315,903
|
)
|
|
23,196
|
|
|
(45,728
|
)
|
|
(16,267
|
)
|
||||
Income tax expense (benefit)
|
(68,474
|
)
|
|
4,606
|
|
|
(41,246
|
)
|
|
(4,847
|
)
|
||||
Net income (loss)
|
(247,429
|
)
|
|
18,590
|
|
|
(4,482
|
)
|
|
(11,420
|
)
|
||||
Less: Preferred stock dividends
|
5,950
|
|
|
—
|
|
|
12,561
|
|
|
—
|
|
||||
Net income (loss) available to common stockholders
|
$
|
(253,379
|
)
|
|
$
|
18,590
|
|
|
$
|
(17,043
|
)
|
|
$
|
(11,420
|
)
|
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) per common share
|
$
|
(2.76
|
)
|
|
$
|
0.20
|
|
|
$
|
(0.19
|
)
|
|
$
|
(0.13
|
)
|
Earnings (loss) per common share - assuming dilution
|
$
|
(2.76
|
)
|
|
$
|
0.20
|
|
|
$
|
(0.19
|
)
|
|
$
|
(0.13
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding (in thousands):
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) per common share
|
91,803
|
|
|
91,103
|
|
|
91,724
|
|
|
90,994
|
|
||||
Earnings (loss) per common share - assuming dilution
|
92,027
|
|
|
91,785
|
|
|
92,024
|
|
|
91,765
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Net income (loss)
|
$
|
(247,429
|
)
|
|
$
|
18,590
|
|
|
$
|
(4,482
|
)
|
|
$
|
(11,420
|
)
|
Other comprehensive income:
|
|
|
|
|
|
|
|
||||||||
Change in net unrealized investment gains/losses (1)
|
1,898,567
|
|
|
677,320
|
|
|
273,492
|
|
|
1,394,233
|
|
||||
Noncredit component of OTTI losses (1)
|
—
|
|
|
103
|
|
|
—
|
|
|
103
|
|
||||
Reclassification of unrealized investment gains/losses to net income (loss) (1)
|
(2
|
)
|
|
1,422
|
|
|
7,418
|
|
|
1,128
|
|
||||
Other comprehensive income before income tax
|
1,898,565
|
|
|
678,845
|
|
|
280,910
|
|
|
1,395,464
|
|
||||
Income tax effect related to other comprehensive income
|
(398,700
|
)
|
|
(142,558
|
)
|
|
(58,992
|
)
|
|
(293,048
|
)
|
||||
Other comprehensive income
|
1,499,865
|
|
|
536,287
|
|
|
221,918
|
|
|
1,102,416
|
|
||||
Comprehensive income
|
$
|
1,252,436
|
|
|
$
|
554,877
|
|
|
$
|
217,436
|
|
|
$
|
1,090,996
|
|
(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 |
|
Retained
Earnings
|
|
Total
Stockholders'
Equity
|
||||||||||||
For the six months ended June 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at December 31, 2019
|
$
|
16
|
|
|
$
|
91,107
|
|
|
$
|
1,212,311
|
|
|
$
|
1,497,921
|
|
|
$
|
1,768,764
|
|
|
$
|
4,570,119
|
|
Net loss for period
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,482
|
)
|
|
(4,482
|
)
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
221,918
|
|
|
—
|
|
|
221,918
|
|
||||||
Issuance of preferred stock
|
12
|
|
|
—
|
|
|
290,248
|
|
|
—
|
|
|
—
|
|
|
290,260
|
|
||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
4,394
|
|
|
—
|
|
|
—
|
|
|
4,394
|
|
||||||
Issuance of 487,511 shares of common stock under compensation plans
|
—
|
|
|
488
|
|
|
1,218
|
|
|
—
|
|
|
—
|
|
|
1,706
|
|
||||||
Cumulative effect of change in accounting principle
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,295
|
)
|
|
(9,295
|
)
|
||||||
Dividends on preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,561
|
)
|
|
(12,561
|
)
|
||||||
Balance at June 30, 2020
|
$
|
28
|
|
|
$
|
91,595
|
|
|
$
|
1,508,171
|
|
|
$
|
1,719,839
|
|
|
$
|
1,742,426
|
|
|
$
|
5,062,059
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Preferred
Stock |
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Other
Comprehensive
Income |
|
Retained
Earnings
|
|
Total
Stockholders'
Equity
|
||||||||||||
For the three months ended June 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at March 31, 2020
|
$
|
16
|
|
|
$
|
91,498
|
|
|
$
|
1,215,464
|
|
|
$
|
219,974
|
|
|
$
|
1,995,805
|
|
|
$
|
3,522,757
|
|
Net loss for period
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(247,429
|
)
|
|
(247,429
|
)
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
1,499,865
|
|
|
—
|
|
|
1,499,865
|
|
||||||
Issuance of preferred stock
|
12
|
|
|
—
|
|
|
290,248
|
|
|
—
|
|
|
—
|
|
|
290,260
|
|
||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
2,105
|
|
|
—
|
|
|
—
|
|
|
2,105
|
|
||||||
Issuance of 97,225 shares of common stock under compensation plans
|
—
|
|
|
97
|
|
|
354
|
|
|
—
|
|
|
—
|
|
|
451
|
|
||||||
Dividends on preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,950
|
)
|
|
(5,950
|
)
|
||||||
Balance at June 30, 2020
|
$
|
28
|
|
|
$
|
91,595
|
|
|
$
|
1,508,171
|
|
|
$
|
1,719,839
|
|
|
$
|
1,742,426
|
|
|
$
|
5,062,059
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Preferred
Stock |
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Other
Comprehensive
Income (Loss) |
|
Retained
Earnings
|
|
Total
Stockholders'
Equity
|
||||||||||||
For the six months ended June 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at December 31, 2018
|
$
|
—
|
|
|
$
|
90,369
|
|
|
$
|
811,186
|
|
|
$
|
(52,432
|
)
|
|
$
|
1,549,978
|
|
|
$
|
2,399,101
|
|
Net loss for period
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,420
|
)
|
|
(11,420
|
)
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
1,102,416
|
|
|
—
|
|
|
1,102,416
|
|
||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
7,360
|
|
|
—
|
|
|
—
|
|
|
7,360
|
|
||||||
Issuance of 567,095 shares of common stock under compensation plans
|
—
|
|
|
567
|
|
|
(549
|
)
|
|
—
|
|
|
—
|
|
|
18
|
|
||||||
Balance at June 30, 2019
|
$
|
—
|
|
|
$
|
90,936
|
|
|
$
|
817,997
|
|
|
$
|
1,049,984
|
|
|
$
|
1,538,558
|
|
|
$
|
3,497,475
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Preferred
Stock |
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Other
Comprehensive
Income |
|
Retained
Earnings
|
|
Total
Stockholders'
Equity
|
||||||||||||
For the three months ended June 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at March 31, 2019
|
$
|
—
|
|
|
$
|
90,784
|
|
|
$
|
815,088
|
|
|
$
|
513,697
|
|
|
$
|
1,519,968
|
|
|
$
|
2,939,537
|
|
Net income for period
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,590
|
|
|
18,590
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
536,287
|
|
|
—
|
|
|
536,287
|
|
||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
3,155
|
|
|
—
|
|
|
—
|
|
|
3,155
|
|
||||||
Issuance of 152,201 shares of common stock under compensation plans
|
—
|
|
|
152
|
|
|
(246
|
)
|
|
—
|
|
|
—
|
|
|
(94
|
)
|
||||||
Balance at June 30, 2019
|
$
|
—
|
|
|
$
|
90,936
|
|
|
$
|
817,997
|
|
|
$
|
1,049,984
|
|
|
$
|
1,538,558
|
|
|
$
|
3,497,475
|
|
|
Six Months Ended
June 30, |
||||||
|
2020
|
|
2019
|
||||
Operating activities
|
|
|
|
||||
Net income (loss)
|
$
|
(4,482
|
)
|
|
$
|
(11,420
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
||||
Interest sensitive and index product benefits
|
641,211
|
|
|
387,777
|
|
||
Amortization of deferred sales inducements
|
(1,587
|
)
|
|
53,094
|
|
||
Annuity product charges
|
(122,987
|
)
|
|
(113,666
|
)
|
||
Change in fair value of embedded derivatives
|
(123,126
|
)
|
|
1,093,885
|
|
||
Change in traditional life and accident and health insurance reserves
|
3,322
|
|
|
(2,889
|
)
|
||
Policy acquisition costs deferred
|
(123,861
|
)
|
|
(236,076
|
)
|
||
Amortization of deferred policy acquisition costs
|
813
|
|
|
75,078
|
|
||
Provision for depreciation and other amortization
|
2,485
|
|
|
1,916
|
|
||
Amortization of discounts and premiums on investments
|
17,645
|
|
|
12,734
|
|
||
Realized gains/losses on investments
|
46,224
|
|
|
5,608
|
|
||
Distributions from equity method investments
|
—
|
|
|
753
|
|
||
Change in fair value of derivatives
|
614,212
|
|
|
(460,326
|
)
|
||
Deferred income taxes
|
(7,132
|
)
|
|
(11,207
|
)
|
||
Loss on extinguishment of debt
|
2,024
|
|
|
—
|
|
||
Share-based compensation
|
4,394
|
|
|
7,360
|
|
||
Change in accrued investment income
|
22,536
|
|
|
(11,935
|
)
|
||
Change in income taxes recoverable/payable
|
(36,391
|
)
|
|
(21,547
|
)
|
||
Change in other assets
|
3,055
|
|
|
(4,868
|
)
|
||
Change in other policy funds and contract claims
|
(15,222
|
)
|
|
(10,605
|
)
|
||
Change in collateral held for derivatives
|
(727,069
|
)
|
|
680,208
|
|
||
Change in collateral held for securities lending
|
(494,280
|
)
|
|
441,908
|
|
||
Change in other liabilities
|
(36,407
|
)
|
|
1,306
|
|
||
Other
|
6,727
|
|
|
(5,854
|
)
|
||
Net cash provided by (used in) operating activities
|
(327,896
|
)
|
|
1,871,234
|
|
||
|
|
|
|
||||
Investing activities
|
|
|
|
||||
Sales, maturities, or repayments of investments:
|
|
|
|
||||
Fixed maturity securities, available for sale
|
2,413,147
|
|
|
859,767
|
|
||
Mortgage loans on real estate
|
129,531
|
|
|
136,035
|
|
||
Derivative instruments
|
430,662
|
|
|
238,557
|
|
||
Other investments
|
3,013
|
|
|
3,407
|
|
||
Acquisitions of investments:
|
|
|
|
||||
Fixed maturity securities, available for sale
|
(1,137,134
|
)
|
|
(2,199,848
|
)
|
||
Mortgage loans on real estate
|
(654,936
|
)
|
|
(276,385
|
)
|
||
Derivative instruments
|
(389,877
|
)
|
|
(419,798
|
)
|
||
Other investments
|
(4,936
|
)
|
|
(291,519
|
)
|
||
Purchases of property, furniture and equipment
|
(11,624
|
)
|
|
(1,400
|
)
|
||
Net cash provided by (used in) investing activities
|
777,846
|
|
|
(1,951,184
|
)
|
|
Six Months Ended
June 30, |
||||||
|
2020
|
|
2019
|
||||
Financing activities
|
|
|
|
||||
Receipts credited to annuity policyholder account balances
|
$
|
1,248,172
|
|
|
$
|
2,732,241
|
|
Coinsurance deposits
|
204,759
|
|
|
59,190
|
|
||
Return of annuity policyholder account balances
|
(1,971,344
|
)
|
|
(1,726,013
|
)
|
||
Repayment of subordinated debentures
|
(81,450
|
)
|
|
—
|
|
||
Net proceeds from amounts due under repurchase agreements
|
—
|
|
|
(109,298
|
)
|
||
Proceeds from issuance of preferred stock, net
|
290,260
|
|
|
—
|
|
||
Proceeds from issuance of common stock, net
|
1,706
|
|
|
18
|
|
||
Change in checks in excess of cash balance
|
(14,249
|
)
|
|
(4,617
|
)
|
||
Preferred stock dividends
|
(12,561
|
)
|
|
—
|
|
||
Net cash provided by (used in) financing activities
|
(334,707
|
)
|
|
951,521
|
|
||
Increase in cash and cash equivalents
|
115,243
|
|
|
871,571
|
|
||
Cash and cash equivalents at beginning of period
|
2,293,392
|
|
|
344,396
|
|
||
Cash and cash equivalents at end of period
|
$
|
2,408,635
|
|
|
$
|
1,215,967
|
|
|
|
|
|
||||
Supplemental disclosures of cash flow information
|
|
|
|
||||
Cash paid (received) during period for:
|
|
|
|
||||
Interest expense
|
$
|
16,427
|
|
|
$
|
22,513
|
|
Income taxes
|
(161
|
)
|
|
28,193
|
|
||
Non-cash operating activity:
|
|
|
|
||||
Deferral of sales inducements
|
47,262
|
|
|
93,991
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||||||||||
|
Carrying
Amount
|
|
Fair Value
|
|
Carrying
Amount
|
|
Fair Value
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities, available for sale
|
$
|
50,738,792
|
|
|
$
|
50,738,792
|
|
|
$
|
51,580,490
|
|
|
$
|
51,580,490
|
|
Mortgage loans on real estate
|
3,958,233
|
|
|
4,044,873
|
|
|
3,448,793
|
|
|
3,536,446
|
|
||||
Derivative instruments
|
672,958
|
|
|
672,958
|
|
|
1,355,989
|
|
|
1,355,989
|
|
||||
Other investments
|
479,099
|
|
|
479,099
|
|
|
492,301
|
|
|
492,301
|
|
||||
Cash and cash equivalents
|
2,408,635
|
|
|
2,408,635
|
|
|
2,293,392
|
|
|
2,293,392
|
|
||||
Coinsurance deposits
|
4,962,859
|
|
|
4,527,374
|
|
|
5,115,013
|
|
|
4,635,926
|
|
||||
Interest rate caps
|
—
|
|
|
—
|
|
|
6
|
|
|
6
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Liabilities
|
|
|
|
|
|
|
|
||||||||
Policy benefit reserves
|
61,312,957
|
|
|
51,865,732
|
|
|
61,540,992
|
|
|
51,800,247
|
|
||||
Single premium immediate annuity (SPIA) benefit reserves
|
243,910
|
|
|
251,599
|
|
|
255,698
|
|
|
263,773
|
|
||||
Notes payable
|
495,388
|
|
|
543,520
|
|
|
495,116
|
|
|
541,520
|
|
||||
Subordinated debentures
|
77,964
|
|
|
74,084
|
|
|
157,265
|
|
|
168,357
|
|
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)
|
||||||||||||||
June 30, 2020
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
||||||||
United States Government full faith and credit
|
$
|
39,342
|
|
|
$
|
33,057
|
|
|
$
|
6,285
|
|
|
$
|
—
|
|
United States Government sponsored agencies
|
343,387
|
|
|
—
|
|
|
343,387
|
|
|
—
|
|
||||
United States municipalities, states and territories
|
3,778,710
|
|
|
—
|
|
|
3,778,710
|
|
|
—
|
|
||||
Foreign government obligations
|
207,509
|
|
|
—
|
|
|
207,509
|
|
|
—
|
|
||||
Corporate securities
|
33,330,711
|
|
|
10
|
|
|
33,330,701
|
|
|
—
|
|
||||
Residential mortgage backed securities
|
1,712,725
|
|
|
—
|
|
|
1,712,725
|
|
|
—
|
|
||||
Commercial mortgage backed securities
|
5,393,062
|
|
|
—
|
|
|
5,393,062
|
|
|
—
|
|
||||
Other asset backed securities
|
5,933,346
|
|
|
—
|
|
|
5,933,346
|
|
|
—
|
|
||||
Derivative instruments
|
672,958
|
|
|
—
|
|
|
672,958
|
|
|
—
|
|
||||
Cash and cash equivalents
|
2,408,635
|
|
|
2,408,635
|
|
|
—
|
|
|
—
|
|
||||
|
$
|
53,820,385
|
|
|
$
|
2,441,702
|
|
|
$
|
51,378,683
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Fixed index annuities - embedded derivatives
|
$
|
9,418,485
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,418,485
|
|
|
|
|
|
|
|
|
|
||||||||
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
|
|
•
|
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)
|
|
June 30, 2020
|
|
December 31, 2019
|
|
June 30, 2020
|
|
December 31, 2019
|
1 - 5
|
|
0.98%
|
|
0.90%
|
|
3.38%
|
|
3.33%
|
6 - 10
|
|
1.29%
|
|
1.29%
|
|
3.87%
|
|
3.84%
|
11 - 15
|
|
3.11%
|
|
3.31%
|
|
4.12%
|
|
4.12%
|
16 - 20
|
|
7.74%
|
|
8.52%
|
|
4.21%
|
|
4.18%
|
20+
|
|
7.29%
|
|
7.10%
|
|
4.12%
|
|
4.12%
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Fixed index annuities - embedded derivatives
|
|
|
|
|
|
|
|
||||||||
Beginning balance
|
$
|
8,451,482
|
|
|
$
|
8,876,055
|
|
|
$
|
9,624,395
|
|
|
$
|
8,165,405
|
|
Premiums less benefits
|
53,019
|
|
|
200,472
|
|
|
165,177
|
|
|
258,480
|
|
||||
Change in fair value, net
|
913,984
|
|
|
204,590
|
|
|
(371,087
|
)
|
|
857,232
|
|
||||
Ending balance
|
$
|
9,418,485
|
|
|
$
|
9,281,117
|
|
|
$
|
9,418,485
|
|
|
$
|
9,281,117
|
|
|
Amortized
Cost (1)
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Allowance for Credit Losses
|
|
Fair Value
|
||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||
June 30, 2020
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
|
|
||||||||||
United States Government full faith and credit
|
$
|
36,507
|
|
|
$
|
2,835
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
39,342
|
|
United States Government sponsored agencies
|
293,731
|
|
|
49,656
|
|
|
—
|
|
|
—
|
|
|
343,387
|
|
|||||
United States municipalities, states and territories
|
3,283,321
|
|
|
497,428
|
|
|
(2,039
|
)
|
|
—
|
|
|
3,778,710
|
|
|||||
Foreign government obligations
|
187,021
|
|
|
21,616
|
|
|
(1,128
|
)
|
|
—
|
|
|
207,509
|
|
|||||
Corporate securities
|
29,734,789
|
|
|
3,889,518
|
|
|
(246,847
|
)
|
|
(46,749
|
)
|
|
33,330,711
|
|
|||||
Residential mortgage backed securities
|
1,588,760
|
|
|
129,579
|
|
|
(4,837
|
)
|
|
(777
|
)
|
|
1,712,725
|
|
|||||
Commercial mortgage backed securities
|
5,524,081
|
|
|
138,590
|
|
|
(266,949
|
)
|
|
(2,660
|
)
|
|
5,393,062
|
|
|||||
Other asset backed securities
|
6,302,833
|
|
|
96,404
|
|
|
(465,891
|
)
|
|
—
|
|
|
5,933,346
|
|
|||||
|
$
|
46,951,043
|
|
|
$
|
4,825,626
|
|
|
$
|
(987,691
|
)
|
|
$
|
(50,186
|
)
|
|
$
|
50,738,792
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
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
|
|
|
Available for sale
|
||||||
|
Amortized
Cost
|
|
Fair Value
|
||||
|
(Dollars in thousands)
|
||||||
Due in one year or less
|
$
|
425,542
|
|
|
$
|
432,132
|
|
Due after one year through five years
|
6,511,972
|
|
|
6,869,898
|
|
||
Due after five years through ten years
|
9,337,950
|
|
|
10,131,288
|
|
||
Due after ten years through twenty years
|
9,676,298
|
|
|
11,429,195
|
|
||
Due after twenty years
|
7,583,607
|
|
|
8,837,146
|
|
||
|
33,535,369
|
|
|
37,699,659
|
|
||
Residential mortgage backed securities
|
1,588,760
|
|
|
1,712,725
|
|
||
Commercial mortgage backed securities
|
5,524,081
|
|
|
5,393,062
|
|
||
Other asset backed securities
|
6,302,833
|
|
|
5,933,346
|
|
||
|
$
|
46,951,043
|
|
|
$
|
50,738,792
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
|
(Dollars in thousands)
|
||||||
Net unrealized gains on available for sale fixed maturity securities
|
$
|
3,826,652
|
|
|
$
|
3,341,544
|
|
Adjustments for assumed changes in amortization of deferred policy acquisition costs and deferred sales inducements
|
(1,678,164
|
)
|
|
(1,473,966
|
)
|
||
Deferred income tax valuation allowance reversal
|
22,534
|
|
|
22,534
|
|
||
Deferred income tax expense
|
(451,183
|
)
|
|
(392,191
|
)
|
||
Net unrealized gains reported as accumulated other comprehensive income
|
$
|
1,719,839
|
|
|
$
|
1,497,921
|
|
|
Less than 12 months
|
|
12 months or more
|
|
Total
|
||||||||||||||||||
|
Fair Value
|
|
Unrealized
Losses (1)
|
|
Fair Value
|
|
Unrealized
Losses (1)
|
|
Fair Value
|
|
Unrealized
Losses (1)
|
||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||
June 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States municipalities, states and territories
|
$
|
51,931
|
|
|
$
|
(2,039
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
51,931
|
|
|
$
|
(2,039
|
)
|
Foreign government obligations
|
23,057
|
|
|
(1,128
|
)
|
|
—
|
|
|
—
|
|
|
23,057
|
|
|
(1,128
|
)
|
||||||
Corporate securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Finance, insurance and real estate
|
626,564
|
|
|
(23,749
|
)
|
|
—
|
|
|
—
|
|
|
626,564
|
|
|
(23,749
|
)
|
||||||
Manufacturing, construction and mining
|
280,272
|
|
|
(12,977
|
)
|
|
18,451
|
|
|
(2,678
|
)
|
|
298,723
|
|
|
(15,655
|
)
|
||||||
Utilities and related sectors
|
457,237
|
|
|
(62,364
|
)
|
|
37,346
|
|
|
(9,405
|
)
|
|
494,583
|
|
|
(71,769
|
)
|
||||||
Wholesale/retail trade
|
185,882
|
|
|
(21,316
|
)
|
|
105,576
|
|
|
(27,228
|
)
|
|
291,458
|
|
|
(48,544
|
)
|
||||||
Services, media and other
|
570,547
|
|
|
(64,840
|
)
|
|
234,595
|
|
|
(69,039
|
)
|
|
805,142
|
|
|
(133,879
|
)
|
||||||
Residential mortgage backed securities
|
221,327
|
|
|
(3,882
|
)
|
|
12,675
|
|
|
(1,732
|
)
|
|
234,002
|
|
|
(5,614
|
)
|
||||||
Commercial mortgage backed securities
|
2,711,400
|
|
|
(249,494
|
)
|
|
88,303
|
|
|
(20,115
|
)
|
|
2,799,703
|
|
|
(269,609
|
)
|
||||||
Other asset backed securities
|
2,161,262
|
|
|
(125,269
|
)
|
|
2,677,210
|
|
|
(340,622
|
)
|
|
4,838,472
|
|
|
(465,891
|
)
|
||||||
|
$
|
7,289,479
|
|
|
$
|
(567,058
|
)
|
|
$
|
3,174,156
|
|
|
$
|
(470,819
|
)
|
|
$
|
10,463,635
|
|
|
$
|
(1,037,877
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
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
|
)
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Fixed maturity securities available for sale carried at fair value
|
$
|
3,347,516
|
|
|
$
|
1,383,290
|
|
|
$
|
485,108
|
|
|
$
|
2,900,810
|
|
|
|
|
|
|
|
|
|
||||||||
Adjustment for effect on other balance sheet accounts:
|
|
|
|
|
|
|
|
||||||||
Deferred policy acquisition costs and deferred sales inducements
|
(1,448,951
|
)
|
|
(704,445
|
)
|
|
(204,198
|
)
|
|
(1,505,346
|
)
|
||||
Deferred income tax asset/liability
|
(398,700
|
)
|
|
(142,558
|
)
|
|
(58,992
|
)
|
|
(293,048
|
)
|
||||
|
(1,847,651
|
)
|
|
(847,003
|
)
|
|
(263,190
|
)
|
|
(1,798,394
|
)
|
||||
Change in net unrealized gains/losses on investments carried at fair value
|
$
|
1,499,865
|
|
|
$
|
536,287
|
|
|
$
|
221,918
|
|
|
$
|
1,102,416
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Available for sale fixed maturity securities:
|
|
|
|
|
|
|
|
||||||||
Gross realized gains
|
$
|
1,215
|
|
|
$
|
5,255
|
|
|
$
|
15,453
|
|
|
$
|
6,426
|
|
Gross realized losses
|
(264
|
)
|
|
(2,287
|
)
|
|
(1,470
|
)
|
|
(4,081
|
)
|
||||
Credit losses (1)
|
(25,041
|
)
|
|
—
|
|
|
(56,412
|
)
|
|
—
|
|
||||
|
(24,090
|
)
|
|
2,968
|
|
|
(42,429
|
)
|
|
2,345
|
|
||||
Other investments:
|
|
|
|
|
|
|
|
||||||||
Gross realized gains
|
—
|
|
|
7,296
|
|
|
—
|
|
|
7,296
|
|
||||
Gross realized losses
|
—
|
|
|
(14,446
|
)
|
|
—
|
|
|
(14,446
|
)
|
||||
|
—
|
|
|
(7,150
|
)
|
|
—
|
|
|
(7,150
|
)
|
||||
Mortgage loans on real estate:
|
|
|
|
|
|
|
|
||||||||
Increase (decrease) in allowance for credit losses
|
(2,510
|
)
|
|
350
|
|
|
(4,507
|
)
|
|
410
|
|
||||
Recovery of specific allowance
|
712
|
|
|
—
|
|
|
712
|
|
|
—
|
|
||||
|
(1,798
|
)
|
|
350
|
|
|
(3,795
|
)
|
|
410
|
|
||||
|
$
|
(25,888
|
)
|
|
$
|
(3,832
|
)
|
|
$
|
(46,224
|
)
|
|
$
|
(4,395
|
)
|
•
|
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.
|
|
Three Months Ended June 30, 2020
|
||||||||||||||||||
|
Corporate Securities
|
|
Commercial Mortgage Backed Securities
|
|
Residential Mortgage Backed Securities
|
|
Other Asset Backed Securities
|
|
Total
|
||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||
Beginning balance (1)
|
$
|
28,332
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
28,332
|
|
Additions for credit losses not previously recorded
|
18,417
|
|
|
5,847
|
|
|
777
|
|
|
—
|
|
|
25,041
|
|
|||||
Reduction for securities with credit losses due to intent to sell
|
—
|
|
|
(3,187
|
)
|
|
—
|
|
|
—
|
|
|
(3,187
|
)
|
|||||
Ending balance
|
$
|
46,749
|
|
|
$
|
2,660
|
|
|
$
|
777
|
|
|
$
|
—
|
|
|
$
|
50,186
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Six Months Ended June 30, 2020
|
||||||||||||||||||
|
Corporate Securities
|
|
Commercial Mortgage Backed Securities
|
|
Residential Mortgage Backed Securities
|
|
Other Asset Backed Securities
|
|
Total
|
||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||
Beginning balance (1)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Additions for credit losses not previously recorded
|
46,749
|
|
|
8,338
|
|
|
777
|
|
|
548
|
|
|
56,412
|
|
|||||
Reduction for securities with credit losses due to intent to sell
|
—
|
|
|
(5,678
|
)
|
|
—
|
|
|
(548
|
)
|
|
(6,226
|
)
|
|||||
Ending balance
|
$
|
46,749
|
|
|
$
|
2,660
|
|
|
$
|
777
|
|
|
$
|
—
|
|
|
$
|
50,186
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||
|
2019
|
|
2019
|
||||
|
(Dollars in thousands)
|
||||||
Cumulative credit loss at beginning of period
|
$
|
(175,398
|
)
|
|
$
|
(175,398
|
)
|
Additions for the amount related to credit losses for which OTTI has not previously been recognized
|
(998
|
)
|
|
(998
|
)
|
||
Additional credit losses on securities for which OTTI has previously been recognized
|
(215
|
)
|
|
(215
|
)
|
||
Accumulated losses on securities that were disposed of during the period
|
10,960
|
|
|
10,960
|
|
||
Cumulative credit loss at end of period
|
$
|
(165,651
|
)
|
|
$
|
(165,651
|
)
|
|
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
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
|
(Dollars in thousands)
|
||||||
Commercial mortgage loans:
|
|
|
|
||||
Principal outstanding
|
$
|
3,828,972
|
|
|
$
|
3,458,914
|
|
Deferred fees and costs, net
|
(1,858
|
)
|
|
(942
|
)
|
||
Amortized cost
|
3,827,114
|
|
|
3,457,972
|
|
||
Valuation allowance
|
(18,439
|
)
|
|
(9,179
|
)
|
||
Commercial mortgage loans, carrying value
|
3,808,675
|
|
|
3,448,793
|
|
||
|
|
|
|
||||
Residential mortgage loans:
|
|
|
|
||||
Principal outstanding
|
153,913
|
|
|
—
|
|
||
Deferred fees and costs, net
|
373
|
|
|
—
|
|
||
Unamortized discount
|
(3,078
|
)
|
|
—
|
|
||
Amortized cost
|
151,208
|
|
|
—
|
|
||
Valuation allowance
|
(1,650
|
)
|
|
—
|
|
||
Residential mortgage loans, carrying value
|
149,558
|
|
|
—
|
|
||
Mortgage loans, carrying value
|
$
|
3,958,233
|
|
|
$
|
3,448,793
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||||||||
|
Principal
|
|
Percent
|
|
Principal
|
|
Percent
|
||||||
|
(Dollars in thousands)
|
||||||||||||
Geographic distribution
|
|
|
|
|
|
|
|
||||||
East
|
$
|
714,198
|
|
|
18.7
|
%
|
|
$
|
645,991
|
|
|
18.7
|
%
|
Middle Atlantic
|
287,864
|
|
|
7.5
|
%
|
|
284,597
|
|
|
8.2
|
%
|
||
Mountain
|
444,495
|
|
|
11.6
|
%
|
|
389,892
|
|
|
11.3
|
%
|
||
New England
|
25,066
|
|
|
0.7
|
%
|
|
9,152
|
|
|
0.3
|
%
|
||
Pacific
|
782,240
|
|
|
20.4
|
%
|
|
655,518
|
|
|
19.0
|
%
|
||
South Atlantic
|
820,260
|
|
|
21.4
|
%
|
|
751,199
|
|
|
21.7
|
%
|
||
West North Central
|
308,874
|
|
|
8.1
|
%
|
|
302,534
|
|
|
8.7
|
%
|
||
West South Central
|
445,975
|
|
|
11.6
|
%
|
|
420,031
|
|
|
12.1
|
%
|
||
|
$
|
3,828,972
|
|
|
100.0
|
%
|
|
$
|
3,458,914
|
|
|
100.0
|
%
|
Property type distribution
|
|
|
|
|
|
|
|
||||||
Office
|
$
|
259,888
|
|
|
6.8
|
%
|
|
$
|
250,287
|
|
|
7.3
|
%
|
Medical Office
|
27,372
|
|
|
0.7
|
%
|
|
29,990
|
|
|
0.9
|
%
|
||
Retail
|
1,225,212
|
|
|
32.0
|
%
|
|
1,225,670
|
|
|
35.4
|
%
|
||
Industrial/Warehouse
|
974,579
|
|
|
25.5
|
%
|
|
896,558
|
|
|
25.9
|
%
|
||
Apartment
|
971,536
|
|
|
25.4
|
%
|
|
858,679
|
|
|
24.8
|
%
|
||
Agricultural
|
177,333
|
|
|
4.6
|
%
|
|
51,303
|
|
|
1.5
|
%
|
||
Mixed use/Other
|
193,052
|
|
|
5.0
|
%
|
|
146,427
|
|
|
4.2
|
%
|
||
|
$
|
3,828,972
|
|
|
100.0
|
%
|
|
$
|
3,458,914
|
|
|
100.0
|
%
|
|
Three Months Ended June 30, 2020
|
||||||||||
|
Commercial
|
|
Residential
|
|
Total
|
||||||
|
(Dollars in thousands)
|
||||||||||
Beginning allowance balance (1)
|
$
|
(19,776
|
)
|
|
$
|
—
|
|
|
$
|
(19,776
|
)
|
Charge-offs
|
1,485
|
|
|
—
|
|
|
1,485
|
|
|||
Recoveries
|
712
|
|
|
—
|
|
|
712
|
|
|||
Change in provision for credit losses
|
(860
|
)
|
|
(1,650
|
)
|
|
(2,510
|
)
|
|||
Ending allowance balance
|
$
|
(18,439
|
)
|
|
$
|
(1,650
|
)
|
|
$
|
(20,089
|
)
|
|
|
|
|
|
|
||||||
|
Six Months Ended June 30, 2020
|
||||||||||
|
Commercial
|
|
Residential
|
|
Total
|
||||||
|
(Dollars in thousands)
|
||||||||||
Beginning allowance balance (1)
|
$
|
(17,779
|
)
|
|
$
|
—
|
|
|
$
|
(17,779
|
)
|
Charge-offs
|
1,485
|
|
|
—
|
|
|
1,485
|
|
|||
Recoveries
|
712
|
|
|
—
|
|
|
712
|
|
|||
Change in provision for credit losses
|
(2,857
|
)
|
|
(1,650
|
)
|
|
(4,507
|
)
|
|||
Ending allowance balance
|
$
|
(18,439
|
)
|
|
$
|
(1,650
|
)
|
|
$
|
(20,089
|
)
|
|
2020
|
2019
|
2018
|
2017
|
2016
|
Prior
|
Total
|
||||||||||||||||||||||||||||
As of June 30, 2020:
|
Amortized
Cost
|
Average
LTV
|
Amortized
Cost |
Average
LTV |
Amortized
Cost |
Average
LTV |
Amortized
Cost |
Average
LTV |
Amortized
Cost |
Average
LTV |
Amortized
Cost |
Average
LTV |
Amortized
Cost |
Average
LTV |
|||||||||||||||||||||
Debt Service Coverage Ratio:
|
(Dollars in thousands)
|
||||||||||||||||||||||||||||||||||
Greater than or equal to 1.5
|
$
|
316,727
|
|
64
|
%
|
$
|
455,910
|
|
67
|
%
|
$
|
405,363
|
|
61
|
%
|
$
|
310,373
|
|
58
|
%
|
$
|
378,311
|
|
55
|
%
|
$
|
816,947
|
|
46
|
%
|
$
|
2,683,631
|
|
56
|
%
|
Greater than or equal to 1.2 and less than 1.5
|
187,242
|
|
63
|
%
|
256,913
|
|
69
|
%
|
141,693
|
|
68
|
%
|
151,241
|
|
65
|
%
|
54,324
|
|
62
|
%
|
159,528
|
|
54
|
%
|
950,941
|
|
64
|
%
|
|||||||
Greater than or equal to 1.0 and less than 1.2
|
5,966
|
|
68
|
%
|
61,471
|
|
58
|
%
|
8,931
|
|
75
|
%
|
15,548
|
|
64
|
%
|
—
|
|
—
|
%
|
22,868
|
|
63
|
%
|
114,784
|
|
62
|
%
|
|||||||
Less than 1.0
|
8,784
|
|
60
|
%
|
25,220
|
|
44
|
%
|
18,550
|
|
65
|
%
|
2,996
|
|
62
|
%
|
—
|
|
—
|
%
|
22,208
|
|
51
|
%
|
77,758
|
|
54
|
%
|
|||||||
Total
|
$
|
518,719
|
|
64
|
%
|
$
|
799,514
|
|
66
|
%
|
$
|
574,537
|
|
63
|
%
|
$
|
480,158
|
|
60
|
%
|
$
|
432,635
|
|
56
|
%
|
$
|
1,021,551
|
|
48
|
%
|
$
|
3,827,114
|
|
58
|
%
|
|
2020
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
Prior
|
|
Total
|
||||||||||||||
As of June 30, 2020:
|
(Dollars in thousands)
|
||||||||||||||||||||||||||
Commercial mortgage loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Current
|
$
|
518,719
|
|
|
$
|
799,514
|
|
|
$
|
574,537
|
|
|
$
|
480,158
|
|
|
$
|
432,635
|
|
|
$
|
1,021,551
|
|
|
$
|
3,827,114
|
|
30 - 59 days past due
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
60 - 89 days past due
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Over 90 days past due
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Total commercial mortgage loans
|
$
|
518,719
|
|
|
$
|
799,514
|
|
|
$
|
574,537
|
|
|
$
|
480,158
|
|
|
$
|
432,635
|
|
|
$
|
1,021,551
|
|
|
$
|
3,827,114
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Residential mortgage loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Current
|
138,749
|
|
|
$
|
12,459
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
151,208
|
|
|
30 - 59 days past due
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
60 - 89 days past due
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Over 90 days past due
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Total residential mortgage loans
|
$
|
138,749
|
|
|
$
|
12,459
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
151,208
|
|
•
|
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.
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
|
(Dollars in thousands)
|
||||||
Assets
|
|
|
|
||||
Derivative instruments
|
|
|
|
||||
Call options
|
$
|
672,958
|
|
|
$
|
1,355,989
|
|
Other assets
|
|
|
|
||||
Interest rate caps
|
—
|
|
|
6
|
|
||
|
$
|
672,958
|
|
|
$
|
1,355,995
|
|
Liabilities
|
|
|
|
||||
Policy benefit reserves - annuity products
|
|
|
|
||||
Fixed index annuities - embedded derivatives, net
|
$
|
9,418,485
|
|
|
$
|
9,624,395
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Change in fair value of derivatives:
|
|
|
|
|
|
|
|
||||||||
Call options
|
$
|
327,662
|
|
|
$
|
76,942
|
|
|
$
|
(614,274
|
)
|
|
$
|
462,108
|
|
Interest rate swap
|
—
|
|
|
(688
|
)
|
|
—
|
|
|
(1,056
|
)
|
||||
Interest rate caps
|
—
|
|
|
(209
|
)
|
|
62
|
|
|
(538
|
)
|
||||
|
$
|
327,662
|
|
|
$
|
76,045
|
|
|
$
|
(614,212
|
)
|
|
$
|
460,514
|
|
Change in fair value of embedded derivatives:
|
|
|
|
|
|
|
|
||||||||
Fixed index annuities - embedded derivatives
|
$
|
913,984
|
|
|
$
|
204,590
|
|
|
$
|
(371,087
|
)
|
|
$
|
857,232
|
|
Other changes in difference between policy benefit reserves computed using derivative accounting vs. long-duration contracts accounting
|
212,951
|
|
|
122,972
|
|
|
247,961
|
|
|
236,653
|
|
||||
|
$
|
1,126,935
|
|
|
$
|
327,562
|
|
|
$
|
(123,126
|
)
|
|
$
|
1,093,885
|
|
|
|
|
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||||||||||
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
|
|
$
|
2,038,746
|
|
|
$
|
36,929
|
|
|
$
|
2,680,543
|
|
|
$
|
80,692
|
|
Barclays
|
|
A
|
|
A1
|
|
6,458,090
|
|
|
191,581
|
|
|
5,753,868
|
|
|
217,536
|
|
||||
Canadian Imperial Bank of Commerce
|
|
A+
|
|
Aa2
|
|
4,080,916
|
|
|
110,616
|
|
|
4,110,525
|
|
|
154,917
|
|
||||
Citibank, N.A.
|
|
A+
|
|
Aa3
|
|
3,917,488
|
|
|
41,372
|
|
|
4,075,544
|
|
|
109,046
|
|
||||
Credit Suisse
|
|
A+
|
|
A1
|
|
4,442,148
|
|
|
21,101
|
|
|
4,526,414
|
|
|
116,659
|
|
||||
J.P. Morgan
|
|
A+
|
|
Aa2
|
|
4,962,629
|
|
|
20,842
|
|
|
4,703,234
|
|
|
151,651
|
|
||||
Morgan Stanley
|
|
A+
|
|
A1
|
|
2,535,021
|
|
|
25,478
|
|
|
1,886,995
|
|
|
41,253
|
|
||||
Royal Bank of Canada
|
|
AA-
|
|
A2
|
|
1,776,753
|
|
|
35,503
|
|
|
2,565,202
|
|
|
101,511
|
|
||||
Societe Generale
|
|
A
|
|
A1
|
|
1,731,241
|
|
|
21,407
|
|
|
3,280,286
|
|
|
139,101
|
|
||||
SunTrust
|
|
A
|
|
A2
|
|
2,175,542
|
|
|
53,077
|
|
|
2,051,229
|
|
|
74,910
|
|
||||
Wells Fargo
|
|
A+
|
|
Aa2
|
|
5,106,215
|
|
|
113,688
|
|
|
4,221,408
|
|
|
163,520
|
|
||||
Exchange traded
|
|
|
|
|
|
166,248
|
|
|
1,364
|
|
|
191,948
|
|
|
5,193
|
|
||||
|
|
|
|
|
|
$
|
39,391,037
|
|
|
$
|
672,958
|
|
|
$
|
40,047,196
|
|
|
$
|
1,355,989
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||
|
(Dollars in thousands)
|
||||||
Senior notes due 2027
|
|
|
|
||||
Principal
|
$
|
500,000
|
|
|
$
|
500,000
|
|
Unamortized debt issue costs
|
(4,350
|
)
|
|
(4,607
|
)
|
||
Unamortized discount
|
(262
|
)
|
|
(277
|
)
|
||
|
$
|
495,388
|
|
|
$
|
495,116
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(Dollars in thousands, except per share data)
|
||||||||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income (loss) available to common stockholders - numerator for earnings (loss) per common share
|
$
|
(253,379
|
)
|
|
$
|
18,590
|
|
|
$
|
(17,043
|
)
|
|
$
|
(11,420
|
)
|
|
|
|
|
|
|
|
|
||||||||
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding
|
91,803,312
|
|
|
91,103,151
|
|
|
91,723,814
|
|
|
90,993,810
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||||
Stock options and deferred compensation agreements
|
63,265
|
|
|
333,780
|
|
|
100,277
|
|
|
394,390
|
|
||||
Restricted stock and restricted stock units
|
160,276
|
|
|
348,292
|
|
|
199,875
|
|
|
376,898
|
|
||||
Denominator for earnings (loss) per common share - assuming dilution
|
92,026,853
|
|
|
91,785,223
|
|
|
92,023,966
|
|
|
91,765,098
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) per common share
|
$
|
(2.76
|
)
|
|
$
|
0.20
|
|
|
$
|
(0.19
|
)
|
|
$
|
(0.13
|
)
|
Earnings (loss) per common share - assuming dilution
|
$
|
(2.76
|
)
|
|
$
|
0.20
|
|
|
$
|
(0.19
|
)
|
|
$
|
(0.13
|
)
|
•
|
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 credit losses, and certain liabilities, and the lapse rate and profitability of policies;
|
•
|
major public health issues, and specifically the COVID-19 pandemic and the resulting impacts on economic conditions and financial markets;
|
•
|
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 credit losses,
|
•
|
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.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Average yield on invested assets
|
4.12%
|
|
4.51%
|
|
4.24%
|
|
4.49%
|
Aggregate cost of money
|
1.73%
|
|
1.88%
|
|
1.73%
|
|
1.89%
|
Aggregate investment spread
|
2.39%
|
|
2.63%
|
|
2.51%
|
|
2.60%
|
|
|
|
|
|
|
|
|
Impact of:
|
|
|
|
|
|
|
|
Investment yield - additional prepayment income
|
0.03%
|
|
0.04%
|
|
0.04%
|
|
0.03%
|
Cost of money benefit from over (under) hedging
|
(0.01)%
|
|
0.04%
|
|
0.02%
|
|
0.03%
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
American Equity Investment Life Insurance Company:
|
|
|
|
|
|
|
|
||||||||
Fixed index annuities
|
$
|
472,899
|
|
|
$
|
1,211,004
|
|
|
$
|
1,058,962
|
|
|
$
|
2,238,662
|
|
Annual reset fixed rate annuities
|
2,316
|
|
|
3,614
|
|
|
4,647
|
|
|
7,062
|
|
||||
Multi-year fixed rate annuities
|
83
|
|
|
566
|
|
|
452
|
|
|
714
|
|
||||
Single premium immediate annuities
|
10,084
|
|
|
1,747
|
|
|
15,482
|
|
|
3,815
|
|
||||
|
485,382
|
|
|
1,216,931
|
|
|
1,079,543
|
|
|
2,250,253
|
|
||||
Eagle Life Insurance Company:
|
|
|
|
|
|
|
|
||||||||
Fixed index annuities
|
72,371
|
|
|
235,558
|
|
|
178,873
|
|
|
413,038
|
|
||||
Annual reset fixed rate annuities
|
17
|
|
|
66
|
|
|
58
|
|
|
193
|
|
||||
Multi-year fixed rate annuities
|
1,031
|
|
|
47,004
|
|
|
5,180
|
|
|
72,572
|
|
||||
|
73,419
|
|
|
282,628
|
|
|
184,111
|
|
|
485,803
|
|
||||
Consolidated:
|
|
|
|
|
|
|
|
||||||||
Fixed index annuities
|
545,270
|
|
|
1,446,562
|
|
|
1,237,835
|
|
|
2,651,700
|
|
||||
Annual reset fixed rate annuities
|
2,333
|
|
|
3,680
|
|
|
4,705
|
|
|
7,255
|
|
||||
Multi-year fixed rate annuities
|
1,114
|
|
|
47,570
|
|
|
5,632
|
|
|
73,286
|
|
||||
Single premium immediate annuities
|
10,084
|
|
|
1,747
|
|
|
15,482
|
|
|
3,815
|
|
||||
Total before coinsurance ceded
|
558,801
|
|
|
1,499,559
|
|
|
1,263,654
|
|
|
2,736,056
|
|
||||
Coinsurance ceded
|
5,691
|
|
|
72,487
|
|
|
23,394
|
|
|
126,551
|
|
||||
Net after coinsurance ceded
|
$
|
553,110
|
|
|
$
|
1,427,072
|
|
|
$
|
1,240,260
|
|
|
$
|
2,609,505
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Reconciliation from net income (loss) available to common stockholders to non-GAAP operating income available to common stockholders:
|
|
|
|
|
|
|
|
||||||||
Net income (loss) available to common stockholders
|
$
|
(253,379
|
)
|
|
$
|
18,590
|
|
|
$
|
(17,043
|
)
|
|
$
|
(11,420
|
)
|
Adjustments to arrive at non-GAAP operating income available to common stockholders:
|
|
|
|
|
|
|
|
||||||||
Net realized gains/losses on financial assets, including credit losses
|
18,492
|
|
|
2,625
|
|
|
34,841
|
|
|
2,930
|
|
||||
Change in fair value of derivatives and embedded derivatives - fixed index annuities
|
423,590
|
|
|
99,868
|
|
|
303,136
|
|
|
250,812
|
|
||||
Change in fair value of derivatives - interest rate caps and swap
|
—
|
|
|
854
|
|
|
(848
|
)
|
|
1,490
|
|
||||
Income taxes
|
(95,599
|
)
|
|
(22,346
|
)
|
|
(72,897
|
)
|
|
(54,819
|
)
|
||||
Non-GAAP operating income available to common stockholders
|
$
|
93,104
|
|
|
$
|
99,591
|
|
|
$
|
247,189
|
|
|
$
|
188,993
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(Dollars in thousands)
|
|
(Dollars in thousands)
|
||||||||||||
Surrender charges
|
$
|
19,390
|
|
|
$
|
19,480
|
|
|
$
|
39,095
|
|
|
$
|
35,936
|
|
Lifetime income benefit riders (LIBR) fees
|
44,048
|
|
|
41,220
|
|
|
83,892
|
|
|
77,730
|
|
||||
|
$
|
63,438
|
|
|
$
|
60,700
|
|
|
$
|
122,987
|
|
|
$
|
113,666
|
|
|
|
|
|
|
|
|
|
||||||||
Withdrawals from annuity policies subject to surrender charges
|
$
|
202,187
|
|
|
$
|
167,744
|
|
|
$
|
396,977
|
|
|
$
|
309,844
|
|
Average surrender charge collected on withdrawals subject to surrender charges
|
9.6
|
%
|
|
11.6
|
%
|
|
9.8
|
%
|
|
11.6
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
Fund values on policies subject to LIBR fees
|
$
|
5,837,051
|
|
|
$
|
5,720,854
|
|
|
$
|
11,032,388
|
|
|
$
|
10,690,568
|
|
Weighted average per policy LIBR fee
|
0.75
|
%
|
|
0.72
|
%
|
|
0.76
|
%
|
|
0.73
|
%
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Call options:
|
|
|
|
|
|
|
|
||||||||
Gain (loss) on option expiration
|
$
|
(109,367
|
)
|
|
$
|
(42,483
|
)
|
|
$
|
736
|
|
|
$
|
(166,163
|
)
|
Change in unrealized gains/losses
|
437,029
|
|
|
119,425
|
|
|
(615,010
|
)
|
|
628,271
|
|
||||
Interest rate swap
|
—
|
|
|
(688
|
)
|
|
—
|
|
|
(1,056
|
)
|
||||
Interest rate caps
|
—
|
|
|
(209
|
)
|
|
62
|
|
|
(538
|
)
|
||||
|
$
|
327,662
|
|
|
$
|
76,045
|
|
|
$
|
(614,212
|
)
|
|
$
|
460,514
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Index credits on index policies
|
$
|
97,875
|
|
|
$
|
161,752
|
|
|
$
|
376,815
|
|
|
$
|
217,677
|
|
Interest credited (including changes in minimum guaranteed interest for fixed index annuities)
|
48,025
|
|
|
52,186
|
|
|
100,036
|
|
|
101,404
|
|
||||
Lifetime income benefit riders
|
95,092
|
|
|
37,165
|
|
|
164,360
|
|
|
68,696
|
|
||||
|
$
|
240,992
|
|
|
$
|
251,103
|
|
|
$
|
641,211
|
|
|
$
|
387,777
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Amortization of deferred sales inducements before gross profit adjustments
|
$
|
40,333
|
|
|
$
|
68,886
|
|
|
$
|
84,241
|
|
|
$
|
137,689
|
|
Gross profit adjustments:
|
|
|
|
|
|
|
|
||||||||
Fair value accounting for derivatives and embedded derivatives
|
(112,842
|
)
|
|
(48,034
|
)
|
|
(81,043
|
)
|
|
(83,421
|
)
|
||||
Net realized gains (losses) on investments
|
(2,669
|
)
|
|
(1,067
|
)
|
|
(4,785
|
)
|
|
(1,174
|
)
|
||||
Amortization of deferred sales inducements after gross profit adjustments
|
$
|
(75,178
|
)
|
|
$
|
19,785
|
|
|
$
|
(1,587
|
)
|
|
$
|
53,094
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Fixed index annuities - embedded derivatives
|
$
|
913,984
|
|
|
$
|
204,590
|
|
|
$
|
(371,087
|
)
|
|
$
|
857,232
|
|
Other changes in difference between policy benefit reserves computed using derivative accounting vs. long-duration contracts accounting
|
212,951
|
|
|
122,972
|
|
|
247,961
|
|
|
236,653
|
|
||||
|
$
|
1,126,935
|
|
|
$
|
327,562
|
|
|
$
|
(123,126
|
)
|
|
$
|
1,093,885
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Amortization of deferred policy acquisition costs before gross profit adjustments
|
$
|
61,240
|
|
|
$
|
101,444
|
|
|
$
|
127,496
|
|
|
$
|
201,515
|
|
Gross profit adjustments:
|
|
|
|
|
|
|
|
||||||||
Fair value accounting for derivatives and embedded derivatives
|
(177,014
|
)
|
|
(70,144
|
)
|
|
(119,375
|
)
|
|
(124,933
|
)
|
||||
Net realized gains (losses) on investments
|
(4,115
|
)
|
|
(1,354
|
)
|
|
(7,308
|
)
|
|
(1,504
|
)
|
||||
Amortization of deferred policy acquisition costs after gross profit adjustments
|
$
|
(119,889
|
)
|
|
$
|
29,946
|
|
|
$
|
813
|
|
|
$
|
75,078
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Salary and benefits
|
$
|
21,832
|
|
|
$
|
20,874
|
|
|
$
|
43,987
|
|
|
$
|
41,093
|
|
Risk charges
|
11,107
|
|
|
9,322
|
|
|
21,947
|
|
|
18,031
|
|
||||
Other
|
9,012
|
|
|
7,230
|
|
|
19,643
|
|
|
17,281
|
|
||||
Total other operating costs and expenses
|
$
|
41,951
|
|
|
$
|
37,426
|
|
|
$
|
85,577
|
|
|
$
|
76,405
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||||||||
|
Carrying
Amount
|
|
Percent
|
|
Carrying
Amount
|
|
Percent
|
||||||
|
(Dollars in thousands)
|
||||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
||||||
United States Government full faith and credit
|
$
|
39,342
|
|
|
0.1
|
%
|
|
$
|
161,765
|
|
|
0.3
|
%
|
United States Government sponsored agencies
|
343,387
|
|
|
0.6
|
%
|
|
625,020
|
|
|
1.1
|
%
|
||
United States municipalities, states and territories
|
3,778,710
|
|
|
6.8
|
%
|
|
4,527,671
|
|
|
7.9
|
%
|
||
Foreign government obligations
|
207,509
|
|
|
0.4
|
%
|
|
205,096
|
|
|
0.3
|
%
|
||
Corporate securities
|
33,330,711
|
|
|
59.7
|
%
|
|
32,536,839
|
|
|
57.2
|
%
|
||
Residential mortgage backed securities
|
1,712,725
|
|
|
3.1
|
%
|
|
1,575,664
|
|
|
2.8
|
%
|
||
Commercial mortgage backed securities
|
5,393,062
|
|
|
9.6
|
%
|
|
5,786,279
|
|
|
10.2
|
%
|
||
Other asset backed securities
|
5,933,346
|
|
|
10.6
|
%
|
|
6,162,156
|
|
|
10.8
|
%
|
||
Total fixed maturity securities
|
50,738,792
|
|
|
90.9
|
%
|
|
51,580,490
|
|
|
90.6
|
%
|
||
Mortgage loans on real estate
|
3,958,233
|
|
|
7.1
|
%
|
|
3,448,793
|
|
|
6.1
|
%
|
||
Derivative instruments
|
672,958
|
|
|
1.2
|
%
|
|
1,355,989
|
|
|
2.4
|
%
|
||
Other investments
|
479,099
|
|
|
0.8
|
%
|
|
492,301
|
|
|
0.9
|
%
|
||
|
$
|
55,849,082
|
|
|
100.0
|
%
|
|
$
|
56,877,573
|
|
|
100.0
|
%
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||||||||
Rating Agency Rating
|
|
Carrying
Amount
|
|
Percent of Fixed
Maturity Securities |
|
Carrying
Amount
|
|
Percent of Fixed
Maturity Securities
|
||||||
|
|
(Dollars in thousands)
|
||||||||||||
Aaa/Aa/A
|
|
$
|
29,240,135
|
|
|
57.6
|
%
|
|
$
|
30,662,644
|
|
|
59.4
|
%
|
Baa
|
|
19,857,663
|
|
|
39.1
|
%
|
|
19,833,309
|
|
|
38.4
|
%
|
||
Total investment grade
|
|
49,097,798
|
|
|
96.7
|
%
|
|
50,495,953
|
|
|
97.8
|
%
|
||
Ba
|
|
1,347,637
|
|
|
2.7
|
%
|
|
821,902
|
|
|
1.6
|
%
|
||
B
|
|
126,141
|
|
|
0.3
|
%
|
|
81,407
|
|
|
0.2
|
%
|
||
Caa
|
|
68,192
|
|
|
0.1
|
%
|
|
95,676
|
|
|
0.2
|
%
|
||
Ca and lower
|
|
99,024
|
|
|
0.2
|
%
|
|
85,552
|
|
|
0.2
|
%
|
||
Total below investment grade
|
|
1,640,994
|
|
|
3.3
|
%
|
|
1,084,537
|
|
|
2.2
|
%
|
||
|
|
$
|
50,738,792
|
|
|
100.0
|
%
|
|
$
|
51,580,490
|
|
|
100.0
|
%
|
NAIC Designation
|
|
NRSRO Equivalent Rating
|
1
|
|
Aaa/Aa/A
|
2
|
|
Baa
|
3
|
|
Ba
|
4
|
|
B
|
5
|
|
Caa
|
6
|
|
Ca and lower
|
|
|
June 30, 2020
|
|
December 31, 2019
|
||||||||||||||||||||||||||
NAIC Designation
|
|
Amortized
Cost
|
|
Fair Value
|
|
Carrying
Amount
|
|
Percent
of Total
Carrying
Amount
|
|
Amortized
Cost
|
|
Fair Value
|
|
Carrying
Amount
|
|
Percent
of Total
Carrying
Amount
|
||||||||||||||
|
|
(Dollars in thousands)
|
|
|
|
(Dollars in thousands)
|
|
|
||||||||||||||||||||||
1
|
|
$
|
25,587,355
|
|
|
$
|
28,327,288
|
|
|
$
|
28,327,288
|
|
|
55.8
|
%
|
|
$
|
27,781,525
|
|
|
$
|
30,122,657
|
|
|
$
|
30,122,657
|
|
|
58.4
|
%
|
2
|
|
19,487,757
|
|
|
20,765,334
|
|
|
20,765,334
|
|
|
40.9
|
%
|
|
19,278,355
|
|
|
20,316,911
|
|
|
20,316,911
|
|
|
39.4
|
%
|
||||||
3
|
|
1,577,056
|
|
|
1,430,998
|
|
|
1,430,998
|
|
|
2.8
|
%
|
|
1,001,087
|
|
|
977,191
|
|
|
977,191
|
|
|
1.9
|
%
|
||||||
4
|
|
185,879
|
|
|
156,234
|
|
|
156,234
|
|
|
0.3
|
%
|
|
114,497
|
|
|
112,534
|
|
|
112,534
|
|
|
0.2
|
%
|
||||||
5
|
|
51,893
|
|
|
31,644
|
|
|
31,644
|
|
|
0.1
|
%
|
|
57,952
|
|
|
45,205
|
|
|
45,205
|
|
|
0.1
|
%
|
||||||
6
|
|
61,103
|
|
|
27,294
|
|
|
27,294
|
|
|
0.1
|
%
|
|
5,530
|
|
|
5,992
|
|
|
5,992
|
|
|
—
|
%
|
||||||
|
|
$
|
46,951,043
|
|
|
$
|
50,738,792
|
|
|
$
|
50,738,792
|
|
|
100.0
|
%
|
|
$
|
48,238,946
|
|
|
$
|
51,580,490
|
|
|
$
|
51,580,490
|
|
|
100.0
|
%
|
|
Number of
Securities
|
|
Amortized
Cost
|
|
Unrealized
Losses, Net of Allowance
|
|
Allowance for Credit Losses
|
|
Fair Value
|
|||||||||
|
|
|
(Dollars in thousands)
|
|||||||||||||||
June 30, 2020
|
|
|
|
|
|
|
|
|
|
|||||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
|
|
|||||||||
United States municipalities, states and territories
|
12
|
|
|
$
|
53,970
|
|
|
$
|
(2,039
|
)
|
|
$
|
—
|
|
|
$
|
51,931
|
|
Foreign government obligations
|
2
|
|
|
24,185
|
|
|
(1,128
|
)
|
|
—
|
|
|
23,057
|
|
||||
Corporate securities:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Finance, insurance and real estate
|
46
|
|
|
650,313
|
|
|
(23,749
|
)
|
|
—
|
|
|
626,564
|
|
||||
Manufacturing, construction and mining
|
38
|
|
|
314,378
|
|
|
(15,655
|
)
|
|
—
|
|
|
298,723
|
|
||||
Utilities and related sectors
|
68
|
|
|
566,352
|
|
|
(71,642
|
)
|
|
(127
|
)
|
|
494,583
|
|
||||
Wholesale/retail trade
|
33
|
|
|
340,002
|
|
|
(48,544
|
)
|
|
—
|
|
|
291,458
|
|
||||
Services, media and other
|
105
|
|
|
939,021
|
|
|
(87,257
|
)
|
|
(46,622
|
)
|
|
805,142
|
|
||||
Residential mortgage backed securities
|
53
|
|
|
239,616
|
|
|
(4,837
|
)
|
|
(777
|
)
|
|
234,002
|
|
||||
Commercial mortgage backed securities
|
432
|
|
|
3,069,312
|
|
|
(266,949
|
)
|
|
(2,660
|
)
|
|
2,799,703
|
|
||||
Other asset backed securities
|
824
|
|
|
5,304,363
|
|
|
(465,891
|
)
|
|
—
|
|
|
4,838,472
|
|
||||
|
1,613
|
|
|
$
|
11,501,512
|
|
|
$
|
(987,691
|
)
|
|
$
|
(50,186
|
)
|
|
$
|
10,463,635
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
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
|
|
||||
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
|
|
NAIC Designation
|
|
Carrying Value of
Securities with
Gross Unrealized
Losses
|
|
Percent of
Total
|
|
Gross
Unrealized Losses (1) |
|
Percent of
Total
|
||||||
|
|
(Dollars in thousands)
|
||||||||||||
June 30, 2020
|
|
|
|
|
|
|
|
|
||||||
1
|
|
$
|
5,001,440
|
|
|
47.8
|
%
|
|
$
|
(343,963
|
)
|
|
34.8
|
%
|
2
|
|
4,136,595
|
|
|
39.5
|
%
|
|
(441,530
|
)
|
|
44.7
|
%
|
||
3
|
|
1,124,164
|
|
|
10.7
|
%
|
|
(161,065
|
)
|
|
16.3
|
%
|
||
4
|
|
143,697
|
|
|
1.4
|
%
|
|
(32,929
|
)
|
|
3.3
|
%
|
||
5
|
|
31,644
|
|
|
0.3
|
%
|
|
(4,329
|
)
|
|
0.5
|
%
|
||
6
|
|
26,095
|
|
|
0.3
|
%
|
|
(3,875
|
)
|
|
0.4
|
%
|
||
|
|
$
|
10,463,635
|
|
|
100.0
|
%
|
|
$
|
(987,691
|
)
|
|
100.0
|
%
|
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
|
%
|
|
Number of
Securities
|
|
Amortized
Cost, Net of Allowance (1)
|
|
Fair Value
|
|
Gross
Unrealized
Losses, Net of Allowance (1)
|
|||||||
|
|
|
(Dollars in thousands)
|
|||||||||||
June 30, 2020
|
|
|
|
|
|
|
|
|||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
|||||||
Investment grade:
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
962
|
|
|
$
|
6,829,739
|
|
|
$
|
6,391,626
|
|
|
$
|
(438,113
|
)
|
Six months or more and less than twelve months
|
29
|
|
|
240,206
|
|
|
219,279
|
|
|
(20,927
|
)
|
|||
Twelve months or greater
|
388
|
|
|
2,875,775
|
|
|
2,561,199
|
|
|
(314,576
|
)
|
|||
Total investment grade
|
1,379
|
|
|
9,945,720
|
|
|
9,172,104
|
|
|
(773,616
|
)
|
|||
Below investment grade:
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
109
|
|
|
751,445
|
|
|
659,535
|
|
|
(91,910
|
)
|
|||
Six months or more and less than twelve months
|
10
|
|
|
22,034
|
|
|
19,039
|
|
|
(2,995
|
)
|
|||
Twelve months or greater
|
115
|
|
|
732,127
|
|
|
612,957
|
|
|
(119,170
|
)
|
|||
Total below investment grade
|
234
|
|
|
1,505,606
|
|
|
1,291,531
|
|
|
(214,075
|
)
|
|||
|
1,613
|
|
|
$
|
11,451,326
|
|
|
$
|
10,463,635
|
|
|
$
|
(987,691
|
)
|
|
|
|
|
|
|
|
|
|||||||
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
|
)
|
|
Number of
Securities
|
|
Amortized
Cost, Net of Allowance (1)
|
|
Fair
Value
|
|
Gross
Unrealized
Losses, Net of Allowance (1)
|
|||||||
|
|
|
(Dollars in thousands)
|
|||||||||||
June 30, 2020
|
|
|
|
|
|
|
|
|||||||
Investment grade:
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
57
|
|
|
$
|
400,583
|
|
|
$
|
282,437
|
|
|
$
|
(118,146
|
)
|
Six months or more and less than twelve months
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Twelve months or greater
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total investment grade
|
57
|
|
|
400,583
|
|
|
282,437
|
|
|
(118,146
|
)
|
|||
Below investment grade:
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
38
|
|
|
262,422
|
|
|
186,330
|
|
|
(76,092
|
)
|
|||
Six months or more and less than twelve months
|
3
|
|
|
1,603
|
|
|
794
|
|
|
(809
|
)
|
|||
Twelve months or greater
|
4
|
|
|
15,684
|
|
|
12,356
|
|
|
(3,328
|
)
|
|||
Total below investment grade
|
45
|
|
|
279,709
|
|
|
199,480
|
|
|
(80,229
|
)
|
|||
|
102
|
|
|
$
|
680,292
|
|
|
$
|
481,917
|
|
|
$
|
(198,375
|
)
|
|
|
|
|
|
|
|
|
|||||||
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
|
)
|
|
Available for sale
|
||||||
|
Amortized
Cost
|
|
Fair Value
|
||||
|
(Dollars in thousands)
|
||||||
June 30, 2020
|
|
|
|
||||
Due in one year or less
|
$
|
5,177
|
|
|
$
|
5,058
|
|
Due after one year through five years
|
508,870
|
|
|
469,413
|
|
||
Due after five years through ten years
|
1,084,846
|
|
|
980,602
|
|
||
Due after ten years through twenty years
|
569,854
|
|
|
506,516
|
|
||
Due after twenty years
|
719,474
|
|
|
629,869
|
|
||
|
2,888,221
|
|
|
2,591,458
|
|
||
Residential mortgage backed securities
|
239,616
|
|
|
234,002
|
|
||
Commercial mortgage backed securities
|
3,069,312
|
|
|
2,799,703
|
|
||
Other asset backed securities
|
5,304,363
|
|
|
4,838,472
|
|
||
|
$
|
11,501,512
|
|
|
$
|
10,463,635
|
|
|
|
|
|
||||
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
|
|
|
June 30, 2020
|
|||||||||
|
Amortized
Cost
|
|
Carrying Amount/
Fair Value
|
|
Percent
of Total
Carrying
Amount
|
|||||
|
(Dollars in thousands)
|
|
|
|||||||
GIIPS (1)
|
$
|
251,477
|
|
|
$
|
273,003
|
|
|
0.5
|
%
|
Asia/Pacific
|
436,587
|
|
|
495,818
|
|
|
1.0
|
%
|
||
Non-GIIPS Europe
|
3,043,061
|
|
|
3,337,126
|
|
|
6.6
|
%
|
||
Latin America
|
268,867
|
|
|
291,746
|
|
|
0.6
|
%
|
||
Non-U.S. North America
|
1,415,331
|
|
|
1,546,324
|
|
|
3.1
|
%
|
||
Australia & New Zealand
|
1,114,659
|
|
|
1,182,517
|
|
|
2.3
|
%
|
||
Other
|
5,629,293
|
|
|
5,296,541
|
|
|
10.4
|
%
|
||
|
$
|
12,159,275
|
|
|
$
|
12,423,075
|
|
|
24.5
|
%
|
(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.
|
|
June 30, 2020
|
||||||
|
Amortized Cost
|
|
Carrying Amount/
Fair Value
|
||||
|
(Dollars in thousands)
|
||||||
GIIPS
|
$
|
14,544
|
|
|
$
|
16,271
|
|
Asia/Pacific
|
11,000
|
|
|
10,860
|
|
||
Non-GIIPS Europe
|
145,635
|
|
|
128,521
|
|
||
Latin America
|
81,913
|
|
|
81,634
|
|
||
Non-U.S. North America
|
84,630
|
|
|
77,096
|
|
||
Other
|
524,486
|
|
|
443,300
|
|
||
|
$
|
862,208
|
|
|
$
|
757,682
|
|
General Description
|
|
Number of
Securities
|
|
Amortized
Cost
|
|
Allowance for Credit Losses
|
|
Amortized Cost, Net of Allowance
|
|
Net Unrealized
Losses,
Net of Allowance
|
|
Fair Value
|
||||||||||
|
|
|
|
(Dollars in thousands)
|
||||||||||||||||||
Corporate securities - Public securities
|
|
6
|
|
$
|
59,078
|
|
|
$
|
(46,622
|
)
|
|
$
|
12,456
|
|
|
$
|
(1,718
|
)
|
|
$
|
10,738
|
|
Corporate securities - Private placement securities
|
|
34
|
|
359,141
|
|
|
(127
|
)
|
|
359,014
|
|
|
(25,933
|
)
|
|
333,081
|
|
|||||
Residential mortgage backed securities
|
|
16
|
|
35,860
|
|
|
(777
|
)
|
|
35,083
|
|
|
(458
|
)
|
|
34,625
|
|
|||||
Commercial mortgage backed securities
|
|
16
|
|
137,801
|
|
|
(2,660
|
)
|
|
135,141
|
|
|
(19,966
|
)
|
|
115,175
|
|
|||||
Other asset backed securities
|
|
5
|
|
83,892
|
|
|
—
|
|
|
83,892
|
|
|
(12,200
|
)
|
|
71,692
|
|
|||||
|
|
77
|
|
$
|
675,772
|
|
|
$
|
(50,186
|
)
|
|
$
|
625,586
|
|
|
$
|
(60,275
|
)
|
|
$
|
565,311
|
|
|
Current
|
|
30-59 days past due
|
|
60-89 days past due
|
|
Over 90 days past due
|
|
Total
|
||||||||||
As of June 30, 2020:
|
(Dollars in thousands)
|
||||||||||||||||||
Commercial mortgage loans
|
$
|
3,827,114
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,827,114
|
|
Residential mortgage loans
|
151,208
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
151,208
|
|
|||||
Total mortgage loans
|
$
|
3,978,322
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,978,322
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Proceeds received at expiration of options related to such credits
|
$
|
97,015
|
|
|
$
|
166,430
|
|
|
$
|
382,278
|
|
|
$
|
224,890
|
|
Annual index credits to policyholders on their anniversaries
|
97,875
|
|
|
161,752
|
|
|
376,815
|
|
|
217,677
|
|
Period
|
|
Total Number of
Shares Purchased (a)
|
|
Average Price
Paid Per Share
|
|||
January 1, 2020 - January 31, 2020
|
|
357
|
|
|
$
|
29.89
|
|
February 1, 2020 - February 29, 2020
|
|
—
|
|
|
$
|
—
|
|
March 1, 2020 - March 31, 2020
|
|
10,169
|
|
|
$
|
18.70
|
|
April 1, 2020 - April 30, 2020
|
|
—
|
|
|
$
|
—
|
|
May 1, 2020 - May 31, 2020
|
|
—
|
|
|
$
|
—
|
|
June 1, 2020 - June 30, 2020
|
|
234
|
|
|
$
|
24.68
|
|
Total
|
|
10,760
|
|
|
|
(a)
|
Includes the number of shares of common stock utilized to execute certain stock incentive awards.
|
Exhibit Number
|
|
Description
|
10.1
|
|
|
10.2
|
|
|
10.3
|
|
|
10.4
|
|
|
31.1
|
|
|
31.2
|
|
|
32.1
|
|
|
32.2
|
|
|
101
|
|
The following materials from American Equity Investment Life Holding Company's Quarterly Report on Form 10-Q for the period ended June 30, 2020 formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Stockholders' Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to Unaudited Consolidated Financial Statements.
|
104
|
|
The cover page from American Equity Investment Life Holding Company's Quarterly Report on Form 10-Q for the period ended June 30, 2020 formatted in iXBRL and contained in Exhibit 101.
|
Date:
|
August 10, 2020
|
|
AMERICAN EQUITY INVESTMENT LIFE
|
|
|
|
|
|
HOLDING COMPANY
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Ted M. Johnson
|
|
|
|
|
|
Ted M. Johnson, Chief Financial Officer and Treasurer
|
|
|
|
|
|
(Principal Financial Officer and Duly Authorized Officer)
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Scott A. Samuelson
|
|
|
|
|
|
Scott A. Samuelson, Vice President and Chief Accounting Officer
|
|
|
|
|
|
(Principal Accounting Officer)
|
|
1.
|
Grant of Restricted Stock Unit Award. The Company hereby grants to the Participant __________ RSUs (such number, the “Target Number” of RSUs) on the terms and conditions set forth in this Agreement and as otherwise provided in the Plan (the “Award”).
|
2.
|
Restrictions. The RSUs may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of or encumbered and shall be subject to a risk of forfeiture as described in Section 3 until such restrictions have lapsed in accordance with Section 3 hereof. Upon any attempt by the Participant to transfer any of the RSUs or any rights in respect of the RSUs before the lapse of such restrictions, such RSUs and all of the rights related thereto, shall be immediately forfeited by the Participant without payment of any consideration. The restrictions applicable to the RSUs shall lapse only in accordance with Section 3 hereof.
|
3.
|
Vesting/Forfeiture
|
a.
|
General. Subject to Sections 3(b)-(e) below, the restrictions applicable to the RSUs, as described in Section 2 hereof, shall lapse with respect to one-hundred percent (100%) of the RSUs on the _______ anniversary of the Date of Grant.
|
b.
|
Death/Disability/Retirement. Notwithstanding any other provisions in this Agreement to the contrary, in the event of a termination of the Participant’s employment with the Company due to the Participant’s death or Disability, or due to the Participant’s Retirement, the restrictions applicable to the RSUs, as described in Section 2 hereof, shall lapse with respect to one-hundred percent (100%) of the RSUs.
|
c.
|
Termination other than Death/Disability/Retirement/For Cause. Notwithstanding any other provisions in this Agreement to the contrary, in the event of a termination of the Participant’s employment with the Company for any reason other than the Participant’s death or Disability, Retirement, or termination by the Company or the relevant Affiliate For Cause, the RSUs shall be forfeited at the close of business on the effective date of such termination.
|
d.
|
Change in Control. Notwithstanding any other provisions in this Agreement to the contrary, in the event of a Change in Control, the RSUs shall be treated in accordance with Section 10.1 and Section 10.2 of the Plan.
|
e.
|
Other Termination of Service. Notwithstanding any other provisions in this Agreement to the contrary if, prior to the date on which the restrictions described in Section 2 hereof have lapsed in accordance with Section 3(a), (b), (c) or (d) above, the Participant’s employment with the Company shall terminate for any reason other than as described in Section 3(b) or Section 3(c) herein, the RSUs shall immediately be forfeited without consideration.
|
4.
|
Shareholder Rights. The RSUs are bookkeeping entries only. The Participant shall not have any privileges of a shareholder of the Company with respect to the RSUs awarded hereunder, including without limitation any right to vote shares of Common Stock underlying the RSUs or to receive dividends or other distributions in respect thereof (provided that any dividends or dividend equivalents on the RSUs shall only become payable on the same date on which the RSU from which the dividend equivalent right is derived is paid, subject to the terms hereof). All such dividend equivalent rights shall be subject to the same vesting requirements that apply to RSUs from which the dividend equivalent rights are derived.
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5.
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Legend on Certificates. Certificates evidencing the RSUs awarded to the Participant hereunder shall bear such legends as the Company may determine in its sole discretion.
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6.
|
Securities Laws Requirements. The Company shall not be obligated to issue Common Stock to the Participant free of any restrictive legend described in Section 5 hereof or of any other restrictive legend, if such transfer, in the opinion of counsel for the Company, would violate the Securities Act of 1933, as amended (the “Securities Act”) (or any other federal or state statutes having similar requirements as may be in effect at that time).
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7.
|
No Obligation to Register. The Company shall be under no obligation to register the RSUs pursuant to the Securities Act or any other federal or state securities laws.
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8.
|
Timing and Manner of Payment of RSUs. As soon as practicable after (and in no case more than seventy-four days after) the end of the vesting period (the “Payment Date”), such RSUs shall be paid by the Company delivering to the Participant a number of Shares equal to the number of RSUs that are non-forfeitable on that Payment Date (rounded down to the nearest whole share). The Company shall issue the Shares either (i) in certificate form or (ii) in book entry form, registered in the name of the Participant. Delivery of any certificates will be made to the Participant’s last address reflected on the books of the Company and its Affiliates unless the Company is otherwise instructed in writing. The Participant shall not be required to pay any cash consideration for the RSUs or for any Shares received pursuant to the Award. Neither the Participant nor any of the Participant’s successors, heirs, assigns or personal representatives shall have any further rights or interests in any RSUs that are so paid. Notwithstanding anything herein to the contrary, the Company shall have no obligation to issue Shares in payment of the RSUs unless such issuance and such payment shall comply with all relevant provisions of law and the requirements of any stock exchange on which the Shares are listed.
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9.
|
Payments to “Specified Employees” Under Certain Circumstances. Notwithstanding the provisions of Section 3 and Section 4 hereof, if the Grantee is deemed a “specified employee” (as such term is described in Section 409A of the Code and the treasury regulations thereunder (the “Code”)) at a time when such Grantee becomes eligible for payment upon a “separation from service” with the Company or any of its Affiliates, to the extent required to avoid taxation under Section 409A of the Code, such payments shall be made to the Grantee on the date that is six (6) months following such “separation from service,” or upon the Grantee’s death, if earlier.
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10.
|
Taxes. The Participant understands that he or she (and not the Company) shall be responsible for any tax liability that may arise with respect to the RSUs granted under this Agreement. The Participant shall pay to the Company, or make provision satisfactory to the Company for payment of, any taxes or social insurance contributions required by law to be withheld with respect to the RSUs no later than the date of the event creating such tax liability. The Participant may satisfy the foregoing requirement by making a payment to the Company in cash or, in the Committee’s discretion, such amount may be paid in whole or in part by electing to have the Company retain the Participant’s Shares, with the retained Shares having a value equal to the amount of tax to be so withheld. Such Shares shall be valued at their Fair Market Value on the date of retention or delivery. If a Participant makes an election under Section 83(b) of the Code to be taxed with respect to the RSUs as of the date of transfer of the RSUs rather than as of the date or dates upon which the Participant would otherwise be taxable under Section 83(a) of the Code, the Participant shall be required to deliver a copy of such election to the Company promptly after filing such election with the Internal Revenue Service.
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11.
|
Failure to Enforce Not a Waiver. The failure of the Company to enforce at any time any provision of this Agreement shall in no way be construed to be a waiver of such provision or of any other provision hereof.
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12.
|
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Iowa.
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13.
|
Incorporation of Plan. The Plan is hereby incorporated by reference and made a part hereof, and the RSUs and this Agreement shall be subject to all terms and conditions of the Plan and this Agreement.
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14.
|
Agreement Binding on Successors. The terms of this Agreement shall be binding upon the Participant and upon the Participant’s heirs, executors, administrators, personal representatives, transferees, assignees and successors in interest, and upon the Company and its successors and assignees.
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15.
|
No Assignment. Notwithstanding anything to the contrary in this Agreement, neither this Agreement nor any rights granted herein shall be assignable by the Participant.
|
16.
|
Necessary Acts. The Participant hereby agrees to perform all acts, and to execute and deliver any documents that may be reasonably necessary to carry out the provisions of this Agreement, including but not limited to all acts and documents related to compliance with federal and/or state securities and/or tax laws.
|
17.
|
Entire Agreement. This Agreement contains the entire agreement and understanding among the parties as to the subject matter hereof.
|
18.
|
Headings. Headings are used solely for the convenience of the parties and shall not be deemed to be a limitation upon or descriptive of the contents of any such Section.
|
19.
|
Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument.
|
20.
|
Amendment. The Committee may amend the terms of this Agreement prospectively or retroactively at any time, but no such amendment shall impair the rights of the Participant hereunder without his or her consent.
|
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
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PARTICIPANT
|
|
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1.
|
Grant of Restricted Stock Unit Award. The Company hereby grants to the Participant __________ RSUs (such number, the “Target Number” of RSUs) on the terms and conditions set forth in this Agreement and as otherwise provided in the Plan (the “Award”).
|
2.
|
Restrictions. The RSUs may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of or encumbered and shall be subject to a risk of forfeiture as described in Section 3 until such restrictions have lapsed in accordance with Section 3 hereof. Upon any attempt by the Participant to transfer any of the RSUs or any rights in respect of the RSUs before the lapse of such restrictions, such RSUs and all of the rights related thereto, shall be immediately forfeited by the Participant without payment of any consideration. The restrictions applicable to the RSUs shall lapse only in accordance with Section 3 hereof.
|
3.
|
Vesting/Forfeiture
|
a.
|
General. Subject to Sections 3(b)-(e) below, the restrictions applicable to the RSUs, as described in Section 2 hereof, shall lapse with respect to one-hundred percent (100%) of the RSUs at the end of the Performance Period (as defined herein).
|
b.
|
Death/Disability/Retirement. Notwithstanding any other provisions in this Agreement to the contrary, in the event of a termination of the Participant’s employment with the Company due to the Participant’s death or Disability, or due to the Participant’s Retirement, the restrictions applicable to the RSUs, as described in Section 2 hereof, shall lapse with respect to one-hundred percent (100%) of the RSUs.
|
c.
|
Termination other than Death/Disability/Retirement/For Cause. Notwithstanding any other provisions in this Agreement to the contrary, in the event of a termination of the Participant’s employment with the Company for any reason other than the Participant’s death or Disability, Retirement, or termination by the Company or the relevant Affiliate For Cause, the RSUs shall be forfeited at the close of business on the effective date of such termination.
|
d.
|
Change in Control. Notwithstanding any other provisions in this Agreement to the contrary, in the event of a Change in Control, the RSUs shall be treated in accordance with Section 10.1 and Section 10.2 of the Plan.
|
e.
|
Other Termination of Service. Notwithstanding any other provisions in this Agreement to the contrary if, prior to the date on which the restrictions described in Section 2 hereof have lapsed in accordance with Section 3(a), (b), (c) or (d) above, the Participant’s employment with the Company shall terminate for any reason other than as described in Section 3(b) or Section 3(c) herein, the RSUs shall immediately be forfeited without consideration.
|
4.
|
Shareholder Rights. The RSUs are bookkeeping entries only. The Participant shall not have any privileges of a shareholder of the Company with respect to the RSUs awarded hereunder, including without limitation any right to vote shares of Common Stock underlying the RSUs or to receive dividends or other distributions in respect thereof (provided that any dividends or dividend equivalents on the RSUs shall only become payable on the same date on which the RSU from which the dividend equivalent right is derived is paid, subject to the terms hereof). All such dividend equivalent rights shall be subject to the same vesting requirements that apply to RSUs from which the dividend equivalent rights are derived.
|
5.
|
Legend on Certificates. Certificates evidencing the RSUs awarded to the Participant hereunder shall bear such legends as the Company may determine in its sole discretion.
|
6.
|
Securities Laws Requirements. The Company shall not be obligated to issue Common Stock to the Participant free of any restrictive legend described in Section 5 hereof or of any other restrictive legend, if such transfer, in the opinion of counsel for the Company, would violate the Securities Act of 1933, as amended (the “Securities Act”) (or any other federal or state statutes having similar requirements as may be in effect at that time).
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7.
|
No Obligation to Register. The Company shall be under no obligation to register the RSUs pursuant to the Securities Act or any other federal or state securities laws.
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8.
|
Performance-Based Requirements. For the [•] year period ended [•] (the “Performance Period”), the Participant shall be credited with a number of RSUs equal to the Target Number of RSUs multiplied by a percentage that (1) will be determined by the Committee after the Performance Period based on the Company’s achievement of financial performance objectives established for the Performance Period and (2) will be between 0% and 150%. The performance objectives and the methodology for establishing the number of RSUs to be credited are set forth in Exhibit A hereto. The Committee shall, following the end of the Performance Period, determine whether and the extent to which the performance objectives for the Performance Period have been satisfied and the number of RSUs to be credited to the Participant. Such determinations by the Committee shall be final and binding. Any RSUs that are not credited to the Participant in accordance with the foregoing provisions of this Section 8 shall terminate upon the date of such determinations by the Committee.
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9.
|
Timing and Manner of Payment of RSUs. As soon as practicable after (and in no case more than seventy-four days after) the end of the Performance Period (the “Payment Date”), such RSUs shall be paid by the Company delivering to the Participant a number of Shares equal to the number of RSUs that are non-forfeitable on that Payment Date (rounded down to the nearest whole share). The Company shall issue the Shares either (i) in certificate form or (ii) in book entry form, registered in the name of the Participant. Delivery of any certificates will be made to the Participant’s last address reflected on the books of the Company and its Affiliates unless the Company is otherwise instructed in writing. The Participant shall not be required to pay any cash consideration for the RSUs or for any Shares received pursuant to the Award. Neither the Participant nor any of the Participant’s successors, heirs, assigns or personal representatives shall have any further rights or interests in any RSUs that are so paid. Notwithstanding anything herein to the contrary, the Company shall have no obligation to issue Shares in payment of the RSUs unless such issuance and such payment shall comply with all relevant provisions of law and the requirements of any stock exchange on which the Shares are listed.
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10.
|
Payments to “Specified Employees” Under Certain Circumstances. Notwithstanding the provisions of Section 3 and Section 4 hereof, if the Grantee is deemed a “specified employee” (as such term is described in Section 409A of the Code and the treasury regulations thereunder (the “Code”)) at a time when such Grantee becomes eligible for payment upon a “separation from service” with the Company or any of its Affiliates, to the extent required to avoid taxation under Section 409A of the Code, such payments shall be made to the Grantee on the date that is six (6) months following such “separation from service,” or upon the Grantee’s death, if earlier.
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11.
|
Taxes. The Participant understands that he or she (and not the Company) shall be responsible for any tax liability that may arise with respect to the RSUs granted under this Agreement. The Participant shall pay to the Company, or make provision satisfactory to the Company for payment of, any taxes or social insurance contributions required by law to be withheld with respect to the RSUs no later than the date of the event creating such tax liability. The Participant may satisfy the foregoing requirement by making a payment to the Company in cash or, in the Committee’s discretion, such amount may be paid in whole or in part by electing to have the Company retain the Participant’s Shares, with the retained Shares having a value equal to the amount of tax to be so withheld. Such Shares shall be valued at their Fair Market Value on the date of retention or delivery. If a Participant makes an election under Section 83(b) of the Code to be taxed with respect to the RSUs as of the date of transfer of the RSUs rather than as of the date or dates upon which the Participant would otherwise be taxable under Section 83(a) of the Code, the Participant shall be required to deliver a copy of such election to the Company promptly after filing such election with the Internal Revenue Service.
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12.
|
Failure to Enforce Not a Waiver. The failure of the Company to enforce at any time any provision of this Agreement shall in no way be construed to be a waiver of such provision or of any other provision hereof.
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13.
|
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Iowa.
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14.
|
Incorporation of Plan. The Plan is hereby incorporated by reference and made a part hereof, and the RSUs and this Agreement shall be subject to all terms and conditions of the Plan and this Agreement.
|
15.
|
Agreement Binding on Successors. The terms of this Agreement shall be binding upon the Participant and upon the Participant’s heirs, executors, administrators, personal representatives, transferees, assignees and successors in interest, and upon the Company and its successors and assignees.
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16.
|
No Assignment. Notwithstanding anything to the contrary in this Agreement, neither this Agreement nor any rights granted herein shall be assignable by the Participant.
|
17.
|
Necessary Acts. The Participant hereby agrees to perform all acts, and to execute and deliver any documents that may be reasonably necessary to carry out the provisions of this Agreement, including but not limited to all acts and documents related to compliance with federal and/or state securities and/or tax laws.
|
18.
|
Entire Agreement. This Agreement contains the entire agreement and understanding among the parties as to the subject matter hereof.
|
19.
|
Headings. Headings are used solely for the convenience of the parties and shall not be deemed to be a limitation upon or descriptive of the contents of any such Section.
|
20.
|
Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument.
|
21.
|
Amendment. The Committee may amend the terms of this Agreement prospectively or retroactively at any time, but no such amendment shall impair the rights of the Participant hereunder without his or her consent.
|
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
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PARTICIPANT
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% of Performance
Award Earned
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Threshold 50%
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Target 100%
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Maximum 150%
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[INSERT
PERFORMANCE
OBJECTIVES]
|
[INSERT LEVELS]
|
[INSERT LEVELS]
|
[INSERT LEVELS]
|
[INSERT
PERFORMANCE
OBJECTIVES]
|
[INSERT LEVELS]
|
[INSERT LEVELS]
|
[INSERT LEVELS]
|
[INSERT
PERFORMANCE
OBJECTIVES]
|
[INSERT LEVELS]
|
[INSERT LEVELS]
|
[INSERT LEVELS]
|
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 the [•] anniversary of the Date of Grant of this Option. Should the Optionee be terminated (except for death or disability), 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 and social security number (or if more than one, the names, addresses and social security numbers of such persons);
|
(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.
|
(a)
|
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 one of the following manners:
|
(i)
|
Cash, certified or bank cashier check, or wire transfer, delivered with the notice of exercise as soon as practicable thereafter;
|
(ii)
|
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
|
(iii)
|
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.
|
7.
|
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.
|
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
|
|
|
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By:
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|
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|
|
OPTIONEE:
|
|
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|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of American Equity Investment Life Holding Company;
|
2.
|
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;
|
3.
|
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;
|
4.
|
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:
|
(a)
|
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;
|
(b)
|
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;
|
(c)
|
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
|
(d)
|
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
|
5.
|
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):
|
(a)
|
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
|
(b)
|
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.
|
Date:
|
August 10, 2020
|
By:
|
|
/s/ ANANT BHALLA
|
|
|
|
|
Anant Bhalla, Chief Executive Officer and President
(Principal Executive Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of American Equity Investment Life Holding Company;
|
2.
|
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;
|
3.
|
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;
|
4.
|
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:
|
(a)
|
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;
|
(b)
|
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;
|
(c)
|
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
|
(d)
|
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
|
5.
|
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):
|
(a)
|
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
|
(b)
|
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.
|
Date:
|
August 10, 2020
|
By:
|
|
/s/ TED M. JOHNSON
|
|
|
|
|
Ted M. Johnson, Chief Financial Officer and Treasurer
(Principal Financial Officer)
|
1.
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934;
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
August 10, 2020
|
By:
|
|
/s/ ANANT BHALLA
|
|
|
|
|
Anant Bhalla, Chief Executive Officer and President
(Principal Executive Officer)
|
1.
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934;
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
August 10, 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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