(Mark One) | |||||
☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
For the fiscal year ended December 31, 2021 | |||||
or | |||||
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
For the transition period from to |
Iowa | 42-1447959 | ||||
(State or other jurisdiction of Incorporation) | (I.R.S. Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Common stock, par value $1 | AEL | New York Stock Exchange | ||||||||||||
Depositary Shares, each representing a 1/1,000th interest in a share of 5.95% Fixed-Rate Reset Non-Cumulative Preferred Stock, Series A | AELPRA | New York Stock Exchange | ||||||||||||
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 | ☐ |
F-1 | ||||||||
Exhibit 21.2 | Subsidiaries of American Equity Investment Life Holding Company | |||||||
Exhibit 23.1 | Consent of Independent Registered Public Accounting Firm | |||||||
Exhibit 31.1 | Certification | |||||||
Exhibit 31.2 | Certification | |||||||
Exhibit 32.1 | Certification | |||||||
Exhibit 32.2 | Certification |
Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||
2021 | 2020 | 2019 | ||||||||||||||||||||||||||||||||||||
Product Type | Deposits Collected | Deposits as a % of Total | Deposits Collected | Deposits as a % of Total | Deposits Collected | Deposits as a % of Total | ||||||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||
Fixed index annuities | $ | 3,450,547 | 58 | % | $ | 2,337,578 | 64 | % | $ | 4,705,541 | 95 | % | ||||||||||||||||||||||||||
Annual reset fixed rate annuities | 6,483 | — | % | 8,225 | — | % | 11,444 | — | % | |||||||||||||||||||||||||||||
Multi-year fixed rate annuities | 2,452,994 | 41 | % | 1,303,133 | 35 | % | 234,226 | 5 | % | |||||||||||||||||||||||||||||
Single premium immediate annuities | 59,816 | 1 | % | 33,461 | 1 | % | 12,002 | — | % | |||||||||||||||||||||||||||||
$ | 5,969,840 | 100 | % | $ | 3,682,397 | 100 | % | $ | 4,963,213 | 100 | % |
Financial Strength Rating | Outlook Statement | ||||||||||
A.M. Best Company, Inc. | |||||||||||
January 2011 - current | A- | Stable | |||||||||
S&P Global | |||||||||||
August 2020 - current | A- | Stable | |||||||||
March 2020 - August 2020 | A- | Negative | |||||||||
August 2015 - March 2020 | A- | Stable | |||||||||
June 2013 - August 2015 | BBB+ | Positive | |||||||||
October 2011 - June 2013 | BBB+ | Stable | |||||||||
Fitch Ratings Ltd. | |||||||||||
April 2021 - current | A- | Stable | |||||||||
April 2020 - April 2021 | A- | Negative | |||||||||
August 2019 - April 2020 | A- | Stable | |||||||||
September 2018 - August 2019 | BBB+ | Positive | |||||||||
May 2013 - September 2018 | BBB+ | Stable |
High | Low | ||||||||||
2021 | |||||||||||
First Quarter | $32.54 | $26.21 | |||||||||
Second Quarter | $33.68 | $29.18 | |||||||||
Third Quarter | $33.79 | $27.12 | |||||||||
Fourth Quarter | $39.88 | $29.46 | |||||||||
2020 | |||||||||||
First Quarter | $34.16 | $9.07 | |||||||||
Second Quarter | $27.09 | $14.76 | |||||||||
Third Quarter | $27.32 | $19.06 | |||||||||
Fourth Quarter | $34.25 | $22.37 |
Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Program (a) | Approximate Dollar Value of Shares That May Yet Be Purchased Under Program | |||||||||||||||||||||||
Period | (shares) | (dollars) | (shares) | (dollars in thousands) | ||||||||||||||||||||||
October 1, 2021 - October 31, 2021 | — | $ | — | — | $ | 236,000 | ||||||||||||||||||||
November 1, 2021 - November 30, 2021 | — | $ | — | — | $ | 736,000 | ||||||||||||||||||||
December 1, 2021 - December 31, 2021 | — | $ | — | — | $ | 736,000 | ||||||||||||||||||||
Total | — |
12/31/2016 | 12/31/2017 | 12/31/2018 | 12/31/2019 | 12/31/2020 | 12/31/2021 | |||||||||||||||
American Equity Investment Life Holding Co. | 100.00 | 137.51 | 126.06 | 136.41 | 127.53 | 181.14 | ||||||||||||||
S&P 500 Index | 100.00 | 121.83 | 116.49 | 153.17 | 181.35 | 233.41 | ||||||||||||||
S&P 500 Financials Index | 100.00 | 122.18 | 106.26 | 140.40 | 138.02 | 186.38 |
Year Ended December 31, | |||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||
Average yield on invested assets | 3.73% | 4.12% | 4.52% | ||||||||||||||
Aggregate cost of money | 1.55% | 1.69% | 1.84% | ||||||||||||||
Aggregate investment spread | 2.18% | 2.43% | 2.68% | ||||||||||||||
Impact of: | |||||||||||||||||
Investment yield - additional prepayment income | 0.11% | 0.08% | 0.06% | ||||||||||||||
Cost of money benefit from over hedging | 0.07% | 0.02% | 0.03% |
Year Ended December 31, | ||||||||||||||||||||
Product Type | 2021 | 2020 | 2019 | |||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
American Equity Life: | ||||||||||||||||||||
Fixed index annuities | $ | 2,753,479 | $ | 1,992,059 | $ | 4,058,638 | ||||||||||||||
Annual reset fixed rate annuities | 6,133 | 8,128 | 11,245 | |||||||||||||||||
Multi-year fixed rate annuities | 855,702 | 395,982 | 1,613 | |||||||||||||||||
Single premium immediate annuities | 59,816 | 33,461 | 12,002 | |||||||||||||||||
3,675,130 | 2,429,630 | 4,083,498 | ||||||||||||||||||
Eagle Life: | ||||||||||||||||||||
Fixed index annuities | 697,068 | 345,519 | 646,903 | |||||||||||||||||
Annual reset fixed rate annuities | 350 | 97 | 199 | |||||||||||||||||
Multi-year fixed rate annuities | 1,597,292 | 907,151 | 232,613 | |||||||||||||||||
2,294,710 | 1,252,767 | 879,715 | ||||||||||||||||||
Consolidated: | ||||||||||||||||||||
Fixed index annuities | 3,450,547 | 2,337,578 | 4,705,541 | |||||||||||||||||
Annual reset fixed rate annuities | 6,483 | 8,225 | 11,444 | |||||||||||||||||
Multi-year fixed rate annuities | 2,452,994 | 1,303,133 | 234,226 | |||||||||||||||||
Single premium immediate annuities | 59,816 | 33,461 | 12,002 | |||||||||||||||||
Total before coinsurance ceded | 5,969,840 | 3,682,397 | 4,963,213 | |||||||||||||||||
Coinsurance ceded | 424,819 | 35,667 | 290,040 | |||||||||||||||||
Net after coinsurance ceded | $ | 5,545,021 | $ | 3,646,730 | $ | 4,673,173 |
Year Ended December 31, | |||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Increase (decrease) in amortization of deferred sales inducements | $ | (45,107) | $ | 428,101 | $ | (104,707) | |||||||||||
Increase (decrease) in amortization of deferred policy acquisition costs | (45,662) | 646,785 | (192,982) | ||||||||||||||
Increase in interest sensitive and index product benefits | 243,658 | 285,825 | 315,383 | ||||||||||||||
Increase (decrease) in change in fair value of embedded derivatives | (122,294) | (2,341,279) | 28,208 | ||||||||||||||
Effect on net income available to common stockholders | (24,017) | 769,611 | (35,987) |
Year Ended December 31, | |||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Reconciliation from net income available to common stockholders to non-GAAP operating income available to common stockholders: | |||||||||||||||||
Net income available to common stockholders | $ | 430,317 | $ | 637,945 | $ | 246,090 | |||||||||||
Adjustments to arrive at non-GAAP operating income available to common stockholders: | |||||||||||||||||
Net realized losses on financial assets, including credit losses | 10,299 | 59,355 | 7,361 | ||||||||||||||
Change in fair value of derivatives and embedded derivatives | (187,290) | (784,005) | 374,468 | ||||||||||||||
Income taxes | 37,184 | 155,808 | (79,736) | ||||||||||||||
Non-GAAP operating income available to common stockholders | 290,510 | 69,103 | 548,183 | ||||||||||||||
Impact of notable items | 78,036 | 310,117 | (123,739) | ||||||||||||||
Non-GAAP operating income available to common stockholders, excluding notable items | $ | 368,546 | $ | 379,220 | $ | 424,444 | |||||||||||
Per common share - assuming dilution: | |||||||||||||||||
Non-GAAP operating income available to common stockholders | $ | 3.07 | $ | 0.75 | $ | 5.97 | |||||||||||
Impact of notable items | 0.83 | 3.36 | (1.35) | ||||||||||||||
Non-GAAP operating income available to common stockholders, excluding notable items | $ | 3.90 | $ | 4.11 | $ | 4.62 | |||||||||||
Notable items impacting non-GAAP operating income available to common stockholders: | |||||||||||||||||
Impact of actuarial assumption updates | $ | 78,036 | $ | 340,895 | $ | (123,739) | |||||||||||
Tax benefit related to the CARES Act | — | (30,778) | — | ||||||||||||||
Total notable items | $ | 78,036 | $ | 310,117 | $ | (123,739) |
Year Ended December 31, | |||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Increase (decrease) in amortization of deferred sales inducements | $ | (66,066) | $ | 57,467 | $ | (184,882) | |||||||||||
Increase (decrease) in amortization of deferred policy acquisition costs | (78,183) | 90,970 | (288,332) | ||||||||||||||
Increase in interest sensitive and index product benefits | 243,658 | 285,825 | 315,383 | ||||||||||||||
Effect on non-GAAP operating income available to common stockholders | (78,036) | (340,895) | 123,739 |
Year Ended December 31, | |||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Surrender charges | $ | 67,657 | $ | 72,551 | $ | 71,565 | |||||||||||
Lifetime income benefit riders (LIBR) fees | 174,974 | 178,676 | 168,470 | ||||||||||||||
$ | 242,631 | $ | 251,227 | $ | 240,035 | ||||||||||||
Withdrawals from annuity policies subject to surrender charges | $ | 1,099,098 | $ | 776,305 | $ | 662,795 | |||||||||||
Average surrender charge collected on withdrawals subject to surrender charges | 6.2 | % | 9.3 | % | 10.8 | % | |||||||||||
Fund values on policies subject to LIBR fees | $ | 22,183,623 | $ | 22,986,903 | $ | 22,490,676 | |||||||||||
Weighted average per policy LIBR fee | 0.79 | % | 0.78 | % | 0.75 | % |
Year Ended December 31, | |||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Call options: | |||||||||||||||||
Gain (loss) on option expiration | $ | 1,368,381 | $ | 15,042 | $ | (190,376) | |||||||||||
Change in unrealized gains/losses | (20,456) | 19,562 | 1,098,932 | ||||||||||||||
Warrants | 810 | — | — | ||||||||||||||
Interest rate swap | — | — | (1,059) | ||||||||||||||
Interest rate caps | — | 62 | (591) | ||||||||||||||
$ | 1,348,735 | $ | 34,666 | $ | 906,906 |
Year Ended December 31, | |||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||
S&P 500 Index | |||||||||||||||||
Point-to-point strategy | 0.0% - 42.6% | 0.0% - 17.4% | 0.0% - 22.3% | ||||||||||||||
Monthly average strategy | 0.0% - 29.4% | 0.0% - 11.9% | 0.0% - 14.7% | ||||||||||||||
Monthly point-to-point strategy | 0.0% - 21.7% | 0.0% - 14.0% | 0.0% - 14.0% | ||||||||||||||
Volatility control index point-to-point strategy | 0.0% - 9.7% | 0.0% - 9.3% | 0.0% - 10.3% | ||||||||||||||
Fixed income (bond index) strategies | 0.0% - 10.0% | 0.0% - 13.6% | 0.0% - 10.0% |
Year Ended December 31, | |||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Index credits on index policies | $ | 1,977,888 | $ | 747,489 | $ | 587,818 | |||||||||||
Interest credited (including changes in minimum guaranteed interest for fixed index annuities) | 253,725 | 198,745 | 204,474 | ||||||||||||||
Lifetime income benefit riders | 449,793 | 597,036 | 495,284 | ||||||||||||||
$ | 2,681,406 | $ | 1,543,270 | $ | 1,287,576 |
Year Ended December 31, | |||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Amortization of deferred sales inducements before gross profit adjustments | $ | 112,790 | $ | 243,067 | $ | 78,398 | |||||||||||
Gross profit adjustments: | |||||||||||||||||
Fair value accounting for derivatives and embedded derivatives | 40,899 | 202,660 | 12,189 | ||||||||||||||
Net realized losses on investments | (997) | (7,563) | (2,002) | ||||||||||||||
Amortization of deferred sales inducements after gross profit adjustments | $ | 152,692 | $ | 438,164 | $ | 88,585 |
Year Ended December 31, | |||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Fixed index annuities - embedded derivatives | $ | (876,803) | $ | (1,922,085) | $ | 562,302 | |||||||||||
Other changes in difference between policy benefit reserves computed using derivative accounting vs. long-duration contracts accounting | 520,863 | 635,298 | 891,740 | ||||||||||||||
Reinsurance related embedded derivative | (2,362) | — | — | ||||||||||||||
$ | (358,302) | $ | (1,286,787) | $ | 1,454,042 |
Year Ended December 31, | |||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Amortization of deferred policy acquisition costs before gross profit adjustments | $ | 181,589 | $ | 368,139 | $ | 97,736 | |||||||||||
Gross profit adjustments: | |||||||||||||||||
Fair value accounting for derivatives and embedded derivatives | 88,576 | 293,827 | (7,618) | ||||||||||||||
Net realized losses on investments | (1,837) | (12,412) | (2,401) | ||||||||||||||
Amortization of deferred policy acquisition costs after gross profit adjustments | $ | 268,328 | $ | 649,554 | $ | 87,717 |
Year Ended December 31, | |||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Salary and benefits | $ | 139,155 | $ | 95,815 | $ | 82,883 | |||||||||||
Risk charges | 36,272 | 45,091 | 38,342 | ||||||||||||||
Other | 68,285 | 42,730 | 32,928 | ||||||||||||||
Total other operating costs and expenses | $ | 243,712 | $ | 183,636 | $ | 154,153 |
December 31, | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
Carrying Amount | Percent | Carrying Amount | Percent | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
Fixed maturity securities: | |||||||||||||||||||||||
United States Government full faith and credit | $ | 37,793 | 0.1 | % | $ | 39,771 | 0.1 | % | |||||||||||||||
United States Government sponsored agencies | 1,040,953 | 1.7 | % | 1,039,551 | 1.9 | % | |||||||||||||||||
United States municipalities, states and territories | 3,927,201 | 6.5 | % | 3,776,131 | 7.0 | % | |||||||||||||||||
Foreign government obligations | 402,545 | 0.7 | % | 202,706 | 0.4 | % | |||||||||||||||||
Corporate securities | 34,660,234 | 57.4 | % | 31,156,827 | 58.1 | % | |||||||||||||||||
Residential mortgage backed securities | 1,125,049 | 1.9 | % | 1,512,831 | 2.8 | % | |||||||||||||||||
Commercial mortgage backed securities | 4,840,311 | 8.0 | % | 4,261,227 | 8.0 | % | |||||||||||||||||
Other asset backed securities | 5,271,857 | 8.7 | % | 5,549,849 | 10.4 | % | |||||||||||||||||
Total fixed maturity securities | 51,305,943 | 85.0 | % | 47,538,893 | 88.7 | % | |||||||||||||||||
Mortgage loans on real estate | 5,687,998 | 9.4 | % | 4,165,489 | 7.8 | % | |||||||||||||||||
Real estate investments | 337,939 | 0.6 | % | — | — | % | |||||||||||||||||
Derivative instruments | 1,277,480 | 2.1 | % | 1,310,954 | 2.4 | % | |||||||||||||||||
Other investments | 1,767,144 | 2.9 | % | 590,078 | 1.1 | % | |||||||||||||||||
$ | 60,376,504 | 100.0 | % | $ | 53,605,414 | 100.0 | % |
December 31, | ||||||||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||||||||
Rating Agency Rating | Carrying Amount | Percent of Fixed Maturity Securities | Carrying Amount | Percent of Fixed Maturity Securities | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||
Aaa/Aa/A | $ | 28,275,431 | 55.2 | % | $ | 27,883,428 | 58.7 | % | ||||||||||||||||||
Baa | 21,875,939 | 42.6 | % | 18,408,954 | 38.7 | % | ||||||||||||||||||||
Total investment grade | 50,151,370 | 97.8 | % | 46,292,382 | 97.4 | % | ||||||||||||||||||||
Ba | 930,384 | 1.8 | % | 973,581 | 2.0 | % | ||||||||||||||||||||
B | 118,065 | 0.2 | % | 122,553 | 0.3 | % | ||||||||||||||||||||
Caa | 39,354 | 0.1 | % | 61,037 | 0.1 | % | ||||||||||||||||||||
Ca and lower | 66,770 | 0.1 | % | 89,340 | 0.2 | % | ||||||||||||||||||||
Total below investment grade | 1,154,573 | 2.2 | % | 1,246,511 | 2.6 | % | ||||||||||||||||||||
$ | 51,305,943 | 100.0 | % | $ | 47,538,893 | 100.0 | % |
NAIC Designation | NRSRO Equivalent Rating | |||||||
1 | Aaa/Aa/A | |||||||
2 | Baa | |||||||
3 | Ba | |||||||
4 | B | |||||||
5 | Caa | |||||||
6 | Ca and lower |
December 31, 2021 | December 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||
NAIC Designation | Amortized Cost | Fair Value | Carrying Amount | Percentage of Total Carrying Amount | Amortized Cost | Fair Value | Carrying Amount | Percentage of Total Carrying Amount | ||||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | (Dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||
1 | $ | 26,157,531 | $ | 28,785,839 | $ | 28,785,839 | 56.1 | % | $ | 23,330,149 | $ | 26,564,542 | $ | 26,564,542 | 55.9 | % | ||||||||||||||||||||||||||||||||||
2 | 19,758,594 | 21,396,020 | 21,396,020 | 41.7 | % | 17,312,485 | 19,377,013 | 19,377,013 | 40.8 | % | ||||||||||||||||||||||||||||||||||||||||
3 | 909,311 | 941,210 | 941,210 | 1.9 | % | 1,292,124 | 1,299,455 | 1,299,455 | 2.7 | % | ||||||||||||||||||||||||||||||||||||||||
4 | 133,070 | 147,160 | 147,160 | 0.3 | % | 282,049 | 256,651 | 256,651 | 0.5 | % | ||||||||||||||||||||||||||||||||||||||||
5 | 16,496 | 15,357 | 15,357 | — | % | 29,396 | 16,288 | 16,288 | — | % | ||||||||||||||||||||||||||||||||||||||||
6 | 24,181 | 20,357 | 20,357 | — | % | 58,533 | 24,944 | 24,944 | 0.1 | % | ||||||||||||||||||||||||||||||||||||||||
$ | 46,999,183 | $ | 51,305,943 | $ | 51,305,943 | 100.0 | % | $ | 42,304,736 | $ | 47,538,893 | $ | 47,538,893 | 100.0 | % |
Number of Securities | Amortized Cost | Unrealized Losses, Net of Allowance | Allowance for Credit Losses | Fair Value | |||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||||||||
Fixed maturity securities, available for sale: | |||||||||||||||||||||||||||||
United States Government full faith and credit | 2 | $ | 1,041 | $ | (34) | $ | — | $ | 1,007 | ||||||||||||||||||||
United States Government sponsored agencies | 6 | 760,060 | (90) | — | 759,970 | ||||||||||||||||||||||||
United States municipalities, states and territories | 42 | 190,471 | (3,042) | (2,776) | 184,653 | ||||||||||||||||||||||||
Foreign government obligations | 3 | 43,704 | (843) | — | 42,861 | ||||||||||||||||||||||||
Corporate securities | 600 | 2,530,864 | (38,442) | — | 2,492,422 | ||||||||||||||||||||||||
Residential mortgage backed securities | 74 | 280,044 | (2,093) | (70) | 277,881 | ||||||||||||||||||||||||
Commercial mortgage backed securities | 108 | 944,407 | (17,719) | — | 926,688 | ||||||||||||||||||||||||
Other asset backed securities | 592 | 3,172,613 | (50,107) | — | 3,122,506 | ||||||||||||||||||||||||
1,427 | $ | 7,923,204 | $ | (112,370) | $ | (2,846) | $ | 7,807,988 | |||||||||||||||||||||
December 31, 2020 | |||||||||||||||||||||||||||||
Fixed maturity securities, available for sale: | |||||||||||||||||||||||||||||
United States Government sponsored agencies | 3 | $ | 250,521 | $ | (46) | $ | — | $ | 250,475 | ||||||||||||||||||||
United States municipalities, states and territories | 14 | 36,558 | (1,044) | (2,844) | 32,670 | ||||||||||||||||||||||||
Corporate securities | 103 | 856,995 | (35,892) | (60,193) | 760,910 | ||||||||||||||||||||||||
Residential mortgage backed securities | 43 | 173,875 | (2,526) | (1,734) | 169,615 | ||||||||||||||||||||||||
Commercial mortgage backed securities | 122 | 1,034,424 | (64,678) | — | 969,746 | ||||||||||||||||||||||||
Other asset backed securities | 558 | 3,728,144 | (146,640) | — | 3,581,504 | ||||||||||||||||||||||||
843 | $ | 6,080,517 | $ | (250,826) | $ | (64,771) | $ | 5,764,920 |
NAIC Designation | Carrying Value of Securities with Gross Unrealized Losses | Percent of Total | Gross Unrealized Losses (1) | Percent of Total | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||
December 31, 2021 | ||||||||||||||||||||||||||
1 | $ | 4,174,438 | 53.5 | % | $ | (37,884) | 33.7 | % | ||||||||||||||||||
2 | 3,197,575 | 41.0 | % | (57,354) | 51.0 | % | ||||||||||||||||||||
3 | 376,996 | 4.8 | % | (13,723) | 12.2 | % | ||||||||||||||||||||
4 | 33,229 | 0.4 | % | (1,083) | 1.0 | % | ||||||||||||||||||||
5 | 9,506 | 0.1 | % | (1,140) | 1.0 | % | ||||||||||||||||||||
6 | 16,244 | 0.2 | % | (1,186) | 1.1 | % | ||||||||||||||||||||
$ | 7,807,988 | 100.0 | % | $ | (112,370) | 100.0 | % | |||||||||||||||||||
December 31, 2020 | ||||||||||||||||||||||||||
1 | $ | 2,625,341 | 45.5 | % | $ | (82,045) | 32.7 | % | ||||||||||||||||||
2 | 2,286,377 | 39.7 | % | (106,700) | 42.5 | % | ||||||||||||||||||||
3 | 650,364 | 11.3 | % | (42,040) | 16.8 | % | ||||||||||||||||||||
4 | 178,669 | 3.1 | % | (16,274) | 6.5 | % | ||||||||||||||||||||
5 | 4,991 | 0.1 | % | (1,640) | 0.7 | % | ||||||||||||||||||||
6 | 19,178 | 0.3 | % | (2,127) | 0.8 | % | ||||||||||||||||||||
$ | 5,764,920 | 100.0 | % | $ | (250,826) | 100.0 | % |
Number of Securities | Amortized Cost, Net of Allowance (1) | Fair Value | Gross Unrealized Losses, Net of Allowance (1) | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||
Fixed maturity securities, available for sale: | |||||||||||||||||||||||
Investment grade: | |||||||||||||||||||||||
Less than six months | 1,024 | $ | 5,582,431 | $ | 5,536,216 | $ | (46,215) | ||||||||||||||||
Six months or more and less than twelve months | 39 | 132,110 | 130,156 | (1,954) | |||||||||||||||||||
Twelve months or greater | 281 | 1,752,779 | 1,705,640 | (47,139) | |||||||||||||||||||
Total investment grade | 1,344 | 7,467,320 | 7,372,012 | (95,308) | |||||||||||||||||||
Below investment grade: | |||||||||||||||||||||||
Less than six months | 12 | 43,808 | 43,057 | (751) | |||||||||||||||||||
Six months or more and less than twelve months | 7 | 28,544 | 25,706 | (2,838) | |||||||||||||||||||
Twelve months or greater | 64 | 380,686 | 367,213 | (13,473) | |||||||||||||||||||
Total below investment grade | 83 | 453,038 | 435,976 | (17,062) | |||||||||||||||||||
1,427 | $ | 7,920,358 | $ | 7,807,988 | $ | (112,370) | |||||||||||||||||
December 31, 2020 | |||||||||||||||||||||||
Fixed maturity securities, available for sale: | |||||||||||||||||||||||
Investment grade: | |||||||||||||||||||||||
Less than six months | 54 | $ | 686,711 | $ | 679,337 | $ | (7,374) | ||||||||||||||||
Six months or more and less than twelve months | 310 | 2,201,769 | 2,118,844 | (82,925) | |||||||||||||||||||
Twelve months or greater | 338 | 2,400,833 | 2,288,755 | (112,078) | |||||||||||||||||||
Total investment grade | 702 | 5,289,313 | 5,086,936 | (202,377) | |||||||||||||||||||
Below investment grade: | |||||||||||||||||||||||
Less than six months | 9 | 48,355 | 47,984 | (371) | |||||||||||||||||||
Six months or more and less than twelve months | 37 | 155,451 | 146,779 | (8,672) | |||||||||||||||||||
Twelve months or greater | 95 | 522,627 | 483,221 | (39,406) | |||||||||||||||||||
Total below investment grade | 141 | 726,433 | 677,984 | (48,449) | |||||||||||||||||||
843 | $ | 6,015,746 | $ | 5,764,920 | $ | (250,826) |
Number of Securities | Amortized Cost, Net of Allowance (1) | Fair Value | Gross Unrealized Losses, Net of Allowance (1) | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||
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 | — | — | — | — | |||||||||||||||||||
Twelve months or greater | — | — | — | — | |||||||||||||||||||
Total below investment grade | — | — | — | — | |||||||||||||||||||
— | $ | — | $ | — | $ | — | |||||||||||||||||
December 31, 2020 | |||||||||||||||||||||||
Investment grade: | |||||||||||||||||||||||
Less than six months | 1 | $ | 2,453 | $ | 1,909 | $ | (544) | ||||||||||||||||
Six months or more and less than twelve months | 4 | 21,368 | 15,589 | (5,779) | |||||||||||||||||||
Twelve months or greater | — | — | — | — | |||||||||||||||||||
Total investment grade | 5 | 23,821 | 17,498 | (6,323) | |||||||||||||||||||
Below investment grade: | |||||||||||||||||||||||
Less than six months | 1 | 5,963 | 4,323 | (1,640) | |||||||||||||||||||
Six months or more and less than twelve months | 8 | 38,046 | 38,046 | — | |||||||||||||||||||
Twelve months or greater | 5 | 3,875 | 3,062 | (813) | |||||||||||||||||||
Total below investment grade | 14 | 47,884 | 45,431 | (2,453) | |||||||||||||||||||
19 | $ | 71,705 | $ | 62,929 | $ | (8,776) |
Available for sale | |||||||||||
Amortized Cost | Fair Value | ||||||||||
(Dollars in thousands) | |||||||||||
December 31, 2021 | |||||||||||
Due in one year or less | $ | 762,035 | $ | 761,590 | |||||||
Due after one year through five years | 509,458 | 505,312 | |||||||||
Due after five years through ten years | 546,453 | 535,258 | |||||||||
Due after ten years through twenty years | 638,205 | 627,275 | |||||||||
Due after twenty years | 1,069,989 | 1,051,478 | |||||||||
3,526,140 | 3,480,913 | ||||||||||
Residential mortgage backed securities | 280,044 | 277,881 | |||||||||
Commercial mortgage backed securities | 944,407 | 926,688 | |||||||||
Other asset backed securities | 3,172,613 | 3,122,506 | |||||||||
$ | 7,923,204 | $ | 7,807,988 | ||||||||
December 31, 2020 | |||||||||||
Due in one year or less | $ | 2,324 | $ | 1,864 | |||||||
Due after one year through five years | 382,843 | 360,761 | |||||||||
Due after five years through ten years | 396,842 | 355,188 | |||||||||
Due after ten years through twenty years | 216,725 | 203,282 | |||||||||
Due after twenty years | 145,340 | 122,960 | |||||||||
1,144,074 | 1,044,055 | ||||||||||
Residential mortgage backed securities | 173,875 | 169,615 | |||||||||
Commercial mortgage backed securities | 1,034,424 | 969,746 | |||||||||
Other asset backed securities | 3,728,144 | 3,581,504 | |||||||||
$ | 6,080,517 | $ | 5,764,920 |
December 31, 2021 | |||||||||||||||||
Amortized Cost | Carrying Amount/ Fair Value | Percent of Total Carrying Amount | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Europe | $ | 2,591,444 | $ | 2,852,787 | 5.6 | % | |||||||||||
Asia/Pacific | 397,281 | 440,845 | 0.9 | % | |||||||||||||
Latin America | 239,427 | 260,903 | 0.5 | % | |||||||||||||
Non-U.S. North America | 1,351,057 | 1,497,014 | 2.9 | % | |||||||||||||
Australia & New Zealand | 326,657 | 351,018 | 0.7 | % | |||||||||||||
Other | 571,475 | 619,334 | 1.2 | % | |||||||||||||
$ | 5,477,341 | $ | 6,021,901 | 11.8 | % |
December 31, 2021 | |||||||||||
Amortized Cost | Carrying Amount/ Fair Value | ||||||||||
(Dollars in thousands) | |||||||||||
Europe | $ | 38,773 | $ | 40,129 | |||||||
Asia/Pacific | 83 | 81 | |||||||||
Latin America | 50,166 | 51,817 | |||||||||
Non-U.S. North America | 44,904 | 45,789 | |||||||||
Australia & New Zealand | 497 | 482 | |||||||||
Other | 64,470 | 67,600 | |||||||||
$ | 198,893 | $ | 205,898 |
General Description | Number of Securities | Amortized Cost | Allowance for Credit Losses | Amortized Cost, Net of Allowance | Net Unrealized Gains (Losses), Net of Allowance | Fair Value | ||||||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||
Corporate securities - Public securities | 3 | $ | 6,564 | $ | — | $ | 6,564 | $ | (580) | $ | 5,984 | |||||||||||||||||||||||||||
Corporate securities - Private placement securities | 1 | 10,646 | — | 10,646 | (1,140) | 9,506 | ||||||||||||||||||||||||||||||||
Residential mortgage backed securities | 14 | 27,451 | (70) | 27,381 | 316 | 27,697 | ||||||||||||||||||||||||||||||||
Commercial mortgage backed securities | 10 | 114,815 | — | 114,815 | 291 | 115,106 | ||||||||||||||||||||||||||||||||
United States municipalities, states and territories | 5 | 19,062 | (2,776) | 16,286 | (574) | 15,712 | ||||||||||||||||||||||||||||||||
33 | $ | 178,538 | $ | (2,846) | $ | 175,692 | $ | (1,687) | $ | 174,005 |
Current | 30-59 days past due | 60-89 days past due | Over 90 days past due | Total | |||||||||||||||||||||||||
As of December 31, 2021: | (Dollars in thousands) | ||||||||||||||||||||||||||||
Commercial mortgage loans | $ | 3,628,502 | $ | — | $ | — | $ | — | $ | 3,628,502 | |||||||||||||||||||
Agricultural mortgage loans | 406,999 | — | — | — | 406,999 | ||||||||||||||||||||||||
Residential mortgage loans | 1,631,999 | 34,447 | 3,030 | 7,045 | 1,676,521 | ||||||||||||||||||||||||
Total mortgage loans | $ | 5,667,500 | $ | 34,447 | $ | 3,030 | $ | 7,045 | $ | 5,712,022 | |||||||||||||||||||
As of December 31, 2020: | |||||||||||||||||||||||||||||
Commercial mortgage loans | $ | 3,578,888 | $ | — | $ | — | $ | — | $ | 3,578,888 | |||||||||||||||||||
Agricultural mortgage loans | 245,173 | — | — | — | 245,173 | ||||||||||||||||||||||||
Residential mortgage loans | 346,730 | 25,449 | 111 | 167 | 372,457 | ||||||||||||||||||||||||
Total mortgage loans | $ | 4,170,791 | $ | 25,449 | $ | 111 | $ | 167 | $ | 4,196,518 |
Payments Due by Period | |||||||||||||||||||||||||||||
Total | Less Than 1 year | 1–3 Years | 4–5 Years | After 5 Years | |||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||
Annuity and single premium universal life products (1) | $ | 72,960,114 | $ | 3,938,038 | $ | 15,703,072 | $ | 9,782,847 | $ | 43,536,157 | |||||||||||||||||||
Notes payable, including interest payments (2) | 637,500 | 25,000 | 50,000 | 50,000 | 512,500 | ||||||||||||||||||||||||
Subordinated debentures, including interest payments (3) | 220,675 | 4,850 | 9,700 | 9,700 | 196,425 | ||||||||||||||||||||||||
Operating leases | 12,574 | 2,509 | 4,564 | 3,934 | 1,567 | ||||||||||||||||||||||||
Mortgage loan funding and other investments | 836,400 | 836,400 | — | — | — | ||||||||||||||||||||||||
Total | $ | 74,667,263 | $ | 4,806,797 | $ | 15,767,336 | $ | 9,846,481 | $ | 44,246,649 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||
Priced via third party pricing services | $ | 32,742 | $ | 47,204,947 | $ | — | $ | 47,237,689 | |||||||||||||||
Priced via independent broker quotations | — | — | — | — | |||||||||||||||||||
Priced via other methods | 32,695 | 4,035,559 | — | 4,068,254 | |||||||||||||||||||
$ | 65,437 | $ | 51,240,506 | $ | — | $ | 51,305,943 | ||||||||||||||||
% of Total | 0.1 | % | 99.9 | % | — | % | 100.0 | % | |||||||||||||||
December 31, 2020 | |||||||||||||||||||||||
Priced via third party pricing services | $ | 33,948 | $ | 46,445,244 | $ | — | $ | 46,479,192 | |||||||||||||||
Priced via independent broker quotations | — | 296,022 | — | 296,022 | |||||||||||||||||||
Priced via other methods | — | 763,679 | — | 763,679 | |||||||||||||||||||
$ | 33,948 | $ | 47,504,945 | $ | — | $ | 47,538,893 | ||||||||||||||||
% of Total | 0.1 | % | 99.9 | % | — | % | 100.0 | % |
Year Ended December 31, | |||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Proceeds received at expiration of options related to such credits | $ | 2,019,477 | $ | 758,604 | $ | 605,005 | |||||||||||
Annual index credits to policyholders on their anniversaries | 1,977,888 | 747,489 | 587,818 |
Exhibit No. | Description | |||||||
3.1 | ||||||||
3.2 | ||||||||
3.3 | ||||||||
3.4 | ||||||||
3.5 | ||||||||
3.6 | ||||||||
3.7 | ||||||||
3.8 | ||||||||
4.1 | ||||||||
4.2 | ||||||||
4.3 | ||||||||
4.4 | ||||||||
4.5 | ||||||||
4.6 | ||||||||
4.7 | ||||||||
4.8 | ||||||||
4.9 | ||||||||
4.10 | ||||||||
4.11 | ||||||||
10.1 * |
Exhibit No. | Description | |||||||
10.2 * | ||||||||
10.3 * | ||||||||
10.4 * | ||||||||
10.5 * | ||||||||
10.6 * | ||||||||
10.7 * | ||||||||
10.8 * | ||||||||
10.9 * | ||||||||
10.10 * | ||||||||
10.11 * | ||||||||
10.12 * | ||||||||
10.13 * | ||||||||
10.14 * | ||||||||
10.15 * | ||||||||
10.16 | ||||||||
10.17 * | ||||||||
10.18 * | ||||||||
10.19 * | ||||||||
10.20 * | ||||||||
10.21 * | ||||||||
10.22 * | ||||||||
10.23 | Assignment Agreement, Consent and Waiver in Anticipation of Regulatory Form A Filing dated February 28, 2021 by and among Brookfield Asset Management, Inc., Burgundy Acquisitions I Ltd., Brookfield Asset Management Reinsurance Partners Ltd., North End Re (Cayman) SPC and American Equity Investment Life Holding Company (Incorporated by reference to Exhibit 10.37 to Form 10-K for the year ended December 31, 2020 filed on March 1, 2021) | |||||||
10.24 * | ||||||||
10.25 * | ||||||||
10.26 | ||||||||
10.27 * | ||||||||
10.28 * | ||||||||
10.29 * | ||||||||
10.30 * | ||||||||
10.31 * |
Exhibit No. | Description | |||||||
10.32 * | ||||||||
10.33 * | ||||||||
21.2 | ||||||||
23.1 | ||||||||
23.2 | ||||||||
31.1 | ||||||||
31.2 | ||||||||
32.1 | ||||||||
32.2 | ||||||||
101 | The following materials from American Equity Investment Life Holding Company's Annual Report on Form 10-K for the year ended December 31, 2021 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, (vi) the Notes to Consolidated Financial Statements, (vii) Schedule I - Summary of Investments - Other Than Investments in Related Parties, (viii) Schedule II — Condensed Financial Information of Registrant, (ix) Schedule III - Supplementary Insurance Information and (x) Schedule IV — Reinsurance. | |||||||
104 | The cover page from American Equity Investment Life Holding Company's Annual Report on Form 10-K for the year ended December 31, 2021 formatted in iXBRL and contained in Exhibit 101. |
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY | |||||||||||
By: | /s/ ANANT BHALLA | ||||||||||
Anant Bhalla, Chief Executive Officer & President |
Signature | Title (Capacity) | Date | ||||||||||||
/s/ ANANT BHALLA | Chief Executive Officer, President and Director (Principal Executive Officer) | March 1, 2022 | ||||||||||||
Anant Bhalla | ||||||||||||||
/s/ AXEL ANDRE | Executive Vice President and Chief Financial Officer (Principal Financial Officer) | March 1, 2022 | ||||||||||||
Axel Andre | ||||||||||||||
/s/ DEWAYNE LUMMUS | Senior Vice President and Chief Accounting Officer (Principal Accounting Officer) | March 1, 2022 | ||||||||||||
Dewayne Lummus | ||||||||||||||
/s/ DAVID S. MULCAHY | Non-Executive Chairman and Director | March 1, 2022 | ||||||||||||
David S. Mulcahy | ||||||||||||||
/s/ JOYCE A. CHAPMAN | Director | March 1, 2022 | ||||||||||||
Joyce A. Chapman | ||||||||||||||
/s/ BRENDA J. CUSHING | Director | March 1, 2022 | ||||||||||||
Brenda J. Cushing | ||||||||||||||
/s/ JAMES M. GERLACH | Director | March 1, 2022 | ||||||||||||
James M. Gerlach | ||||||||||||||
/s/ DOUGLAS T. HEALY | Director | March 1, 2022 | ||||||||||||
Douglas T. Healy | ||||||||||||||
/s/ ROBERT L. HOWE | Director | March 1, 2022 | ||||||||||||
Robert L. Howe | ||||||||||||||
/s/ WILLIAM R. KUNKEL | Director | March 1, 2022 | ||||||||||||
William R. Kunkel | ||||||||||||||
/s/ ALAN D. MATULA | Director | March 1, 2022 | ||||||||||||
Alan D. Matula | ||||||||||||||
/s/ GERARD D. NEUGENT | Director | March 1, 2022 | ||||||||||||
Gerard D. Neugent | ||||||||||||||
/s/ SACHIN SHAH | Director | March 1, 2022 | ||||||||||||
Sachin Shah | ||||||||||||||
/s/ A.J. STRICKLAND, III | Director | March 1, 2022 | ||||||||||||
A.J. Strickland, III |
Deferred Policy Acquisition Costs (DAC), Deferred Sales Inducements (DSI) and liability for Lifetime Income Benefit Rider (LIBR) | ||||||||
Description of the Matter | At December 31, 2021 DAC, DSI, and LIBR balances were $2.2 billion, $1.5 billion, and $2.9 billion, respectively. As discussed in Note 1 to the consolidated financial statements, DAC and DSI are amortized over the lives of the policies in relation to the emergence of actual gross profits (AGPs) and estimated gross profits (EGPs). The LIBR is based on the actual and present value of expected benefit payments to be paid in excess of projected policy values, and the excess is recognized over the expected lives of the underlying policies based on the actual and present value of expected assessments. The expected assessments are calculated using the same assumptions used to determine DAC and DSI EGPs, including investment spreads, product charges, and fees. There is significant uncertainty inherent in calculating EGPs and expected assessments, as the calculation is sensitive to management’s best estimate of assumptions such as investment earned rate, the expected cost of annual call options, lapse, mortality, LIBR reset and LIBR utilization. Management’s assumptions are adjusted, also known as unlocking, based on actual policyholder behavior and market experience and projecting for expected trends. The unlocking results in amortization being recalculated using the new assumptions for estimated gross profits, resulting either in additional or less cumulative amortization expense. Additionally, the LIBR is adjusted in a similar manner to unlocking of DAC and DSI to reflect the changes in management’s assumptions. Auditing the valuation of the Company’s DAC, DSI and LIBR was complex because of the highly judgmental nature of the methods and determination of the assumptions applied to determine the EGPs and expected assessments. The high degree of judgment was primarily due to the sensitivity of the EGPs and expected assessments to the methods and assumptions applied which have a significant effect on the valuation of DAC, DSI, and LIBR. |
How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls over management’s process for the development of the significant assumptions used in calculating the DAC and DSI EGPs, and assessments used in the valuation of LIBR. These controls included, among others, the review and approval process management has in place for the development of the significant assumptions described above. To evaluate the judgment used by management in determining the EGPs and expected assessments, among other procedures, we involved actuarial specialists and evaluated the methodology applied by management in determining the EGPs and expected assessments with those used in prior periods and the industry. To evaluate the significant assumptions used by management, we compared policyholder behavior assumptions that we identified as being higher risk to prior actual experience, observable market data or management’s estimates of prospective changes in these assumptions. We tested management’s recalculation of EGPs and performed independent recalculations of LIBR for a sample of policies, which we compared to the actuarial model used by management. | |||||||
Fixed Index Annuity Embedded Derivative Liability | ||||||||
Description of the Matter | As of December 31, 2021, the fair value of the Company’s fixed index annuity embedded derivative liability totaled $40.8 billion, net of coinsurance ceded. The Company’s fixed index annuity contracts contain crediting features, where amounts credited to the contract’s account value are linked to the performance of certain market indices. The index crediting feature is accounted for as an embedded derivative liability and reported at fair value as discussed in Notes 1 and 2 to the consolidated financial statements. Management reviews the assumptions used to determine the fair value of the embedded derivative on a quarterly basis. Auditing the valuation of the Company’s fixed index annuity embedded derivative was complex because of the highly judgmental nature of the determination of the assumptions required to determine the fair value of the embedded derivative. In particular, the fair value was sensitive to the significant assumptions used to determine future policy growth including lapse, mortality, LIBR reset, LIBR utilization, and the expected cost of annual call options. | |||||||
How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s controls over management’s process for the development of the significant assumptions used in measuring the fair value of the embedded derivative for fixed index annuities. These controls included, among others, the review and approval process management has in place for the development of the significant assumptions. To evaluate the judgment used by management in determining the assumptions used in measuring the fair value of the fixed index annuity embedded derivative, among other procedures, we involved actuarial specialists and evaluated the methodology applied by management in determining the fair value with those used in the prior period and in the industry. To evaluate the significant assumptions used by management in the methodology applied, we compared policyholder behavior assumptions to prior actual experience and management’s estimate of prospective changes in the assumptions. In addition, we compared the expected cost of annual call options to actual and historical cost of annual call options. We performed an independent recalculation of the embedded derivative for a sample of policies for comparison with the actuarial model used by management. |
December 31, | |||||||||||
2021 | 2020 | ||||||||||
Assets | |||||||||||
Investments: | |||||||||||
Fixed maturity securities, available for sale, at fair value (amortized cost of $46,999,183 as of 2021 and $42,304,736 as of 2020; allowance for credit losses of $2,846 as of 2021 and $64,771 as of 2020) | $ | 51,305,943 | $ | 47,538,893 | |||||||
Mortgage loans on real estate (net of allowance for credit losses of $24,024 as of 2021 and $31,029 as of 2020) | 5,687,998 | 4,165,489 | |||||||||
Real estate investments related to consolidated variable interest entities | 337,939 | — | |||||||||
Derivative instruments | 1,277,480 | 1,310,954 | |||||||||
Other investments (2021 includes $168,711 related to consolidated variable interest entities) | 1,767,144 | 590,078 | |||||||||
Total investments | 60,376,504 | 53,605,414 | |||||||||
Cash and cash equivalents (2021 includes $23,763 related to consolidated variable interest entities) | 4,508,982 | 9,095,522 | |||||||||
Coinsurance deposits (net of allowance for credit losses of $2,264 as of 2021 and $1,888 as of 2020) | 8,850,608 | 4,844,927 | |||||||||
Accrued investment income (2021 includes $3 related to consolidated variable interest entities) | 445,097 | 398,082 | |||||||||
Deferred policy acquisition costs | 2,222,769 | 2,225,199 | |||||||||
Deferred sales inducements | 1,546,073 | 1,448,375 | |||||||||
Income taxes recoverable | 166,586 | 862 | |||||||||
Other assets (2021 includes $1,524 related to consolidated variable interest entities) | 232,490 | 70,198 | |||||||||
Total assets | $ | 78,349,109 | $ | 71,688,579 | |||||||
Liabilities and Stockholders' Equity | |||||||||||
Liabilities: | |||||||||||
Policy benefit reserves | $ | 65,477,778 | $ | 62,352,882 | |||||||
Other policy funds and contract claims | 226,844 | 240,904 | |||||||||
Notes payable | 496,250 | 495,668 | |||||||||
Subordinated debentures | 78,421 | 78,112 | |||||||||
Deferred income taxes | 541,972 | 504,000 | |||||||||
Funds withheld for reinsurance liabilities | 3,124,740 | — | |||||||||
Other liabilities (2021 includes $20,168 related to consolidated variable interest entities) | 2,079,977 | 1,668,025 | |||||||||
Total liabilities | 72,025,982 | 65,339,591 | |||||||||
Stockholders' equity: | |||||||||||
Preferred stock, Series A; par value $1 per share; $400,000 aggregate liquidation preference; 20,000 shares authorized; issued and outstanding: 2021 - 16,000 shares; 2020 - 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: 2021 - 12,000 shares; 2020 - 12,000 shares | 12 | 12 | |||||||||
Common stock; par value $1 per share; 200,000,000 shares authorized; issued and outstanding: 2021 - 92,513,517 shares (excluding 9,936,715 treasury shares); 2020 - 95,720,622 shares (excluding 6,516,525 treasury shares) | 92,514 | 95,721 | |||||||||
Additional paid-in capital | 1,614,374 | 1,681,127 | |||||||||
Accumulated other comprehensive income | 1,848,789 | 2,203,557 | |||||||||
Retained earnings | 2,767,422 | 2,368,555 | |||||||||
Total stockholders' equity | 6,323,127 | 6,348,988 | |||||||||
Total liabilities and stockholders' equity | $ | 78,349,109 | $ | 71,688,579 |
Year Ended December 31, | |||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||
Revenues: | |||||||||||||||||
Premiums and other considerations | $ | 58,202 | $ | 39,382 | $ | 23,534 | |||||||||||
Annuity product charges | 242,631 | 251,227 | 240,035 | ||||||||||||||
Net investment income | 2,037,475 | 2,182,078 | 2,307,635 | ||||||||||||||
Change in fair value of derivatives | 1,348,735 | 34,666 | 906,906 | ||||||||||||||
Net realized gains (losses) on investments | (13,242) | (80,680) | 6,962 | ||||||||||||||
Other than temporary impairment (OTTI) losses on investments: | |||||||||||||||||
Total OTTI losses | — | — | (18,511) | ||||||||||||||
Portion of OTTI losses recognized from other comprehensive income | — | — | (215) | ||||||||||||||
Net OTTI losses recognized in operations | — | — | (18,726) | ||||||||||||||
Other revenue | 15,670 | — | — | ||||||||||||||
Loss on extinguishment of debt | — | (2,024) | (2,001) | ||||||||||||||
Total revenues | 3,689,471 | 2,424,649 | 3,464,345 | ||||||||||||||
Benefits and expenses: | |||||||||||||||||
Insurance policy benefits and change in future policy benefits | 67,983 | 49,742 | 35,418 | ||||||||||||||
Interest sensitive and index product benefits | 2,681,406 | 1,543,270 | 1,287,576 | ||||||||||||||
Amortization of deferred sales inducements | 152,692 | 438,164 | 88,585 | ||||||||||||||
Change in fair value of embedded derivatives | (358,302) | (1,286,787) | 1,454,042 | ||||||||||||||
Interest expense on notes payable | 25,581 | 25,552 | 25,525 | ||||||||||||||
Interest expense on subordinated debentures | 5,324 | 5,557 | 15,764 | ||||||||||||||
Amortization of deferred policy acquisition costs | 268,328 | 649,554 | 87,717 | ||||||||||||||
Other operating costs and expenses | 243,712 | 183,636 | 154,153 | ||||||||||||||
Total benefits and expenses | 3,086,724 | 1,608,688 | 3,148,780 | ||||||||||||||
Income before income taxes | 602,747 | 815,961 | 315,565 | ||||||||||||||
Income tax expense | 128,755 | 144,501 | 69,475 | ||||||||||||||
Net income | 473,992 | 671,460 | 246,090 | ||||||||||||||
Less: Preferred stock dividends | 43,675 | 33,515 | — | ||||||||||||||
Net income available to common stockholders | $ | 430,317 | $ | 637,945 | $ | 246,090 | |||||||||||
Earnings per common share | $ | 4.58 | $ | 6.93 | $ | 2.70 | |||||||||||
Earnings per common share - assuming dilution | $ | 4.55 | $ | 6.90 | $ | 2.68 | |||||||||||
Weighted average common shares outstanding (in thousands): | |||||||||||||||||
Earnings per common share | 93,860 | 92,055 | 91,139 | ||||||||||||||
Earnings per common share - assuming dilution | 94,491 | 92,392 | 91,782 |
Year Ended December 31, | |||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||
Net income | $ | 473,992 | $ | 671,460 | $ | 246,090 | |||||||||||
Other comprehensive income (loss): | |||||||||||||||||
Change in net unrealized investment gains/losses (1) | (441,008) | 1,058,289 | 1,765,107 | ||||||||||||||
Noncredit component of OTTI losses (1) | — | — | 103 | ||||||||||||||
Reclassification of unrealized investment gains/losses to net income (1) | (4,044) | 16,690 | 8,323 | ||||||||||||||
Other comprehensive income (loss) before income tax | (445,052) | 1,074,979 | 1,773,533 | ||||||||||||||
Income tax effect related to other comprehensive income (loss) | 90,284 | (225,746) | (372,472) | ||||||||||||||
Other comprehensive income (loss) | (354,768) | 849,233 | 1,401,061 | ||||||||||||||
Comprehensive income | $ | 119,224 | $ | 1,520,693 | $ | 1,647,151 |
Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Total Stockholders' Equity | ||||||||||||||||||||||||||||||
Balance at December 31, 2018 | $ | — | $ | 90,369 | $ | 811,186 | $ | (46,737) | $ | 1,549,978 | $ | 2,404,796 | |||||||||||||||||||||||
Net income for the year | — | — | — | — | 246,090 | 246,090 | |||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | 1,401,061 | — | 1,401,061 | |||||||||||||||||||||||||||||
Issuance of preferred stock | 16 | — | 388,877 | — | — | 388,893 | |||||||||||||||||||||||||||||
Share-based compensation | — | — | 11,295 | — | — | 11,295 | |||||||||||||||||||||||||||||
Issuance of common stock | — | 738 | 953 | — | — | 1,691 | |||||||||||||||||||||||||||||
Dividends on common stock ($0.30 per share) | — | — | — | — | (27,304) | (27,304) | |||||||||||||||||||||||||||||
Balance at December 31, 2019 | 16 | 91,107 | 1,212,311 | 1,354,324 | 1,768,764 | 4,426,522 | |||||||||||||||||||||||||||||
Net income for the year | — | — | — | — | 671,460 | 671,460 | |||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | 849,233 | — | 849,233 | |||||||||||||||||||||||||||||
Issuance of preferred stock | 12 | — | 290,248 | — | — | 290,260 | |||||||||||||||||||||||||||||
Share-based compensation | — | — | 10,215 | — | — | 10,215 | |||||||||||||||||||||||||||||
Issuance of common stock | — | 10,053 | 328,008 | — | — | 338,061 | |||||||||||||||||||||||||||||
Treasury stock acquired, common | — | (5,439) | (159,655) | — | — | (165,094) | |||||||||||||||||||||||||||||
Cumulative effect of change in accounting principle | — | — | — | — | (9,295) | (9,295) | |||||||||||||||||||||||||||||
Dividends on preferred stock | — | — | — | — | (33,515) | (33,515) | |||||||||||||||||||||||||||||
Dividends on common stock ($0.32 per share) | — | — | — | — | (28,859) | (28,859) | |||||||||||||||||||||||||||||
Balance at December 31, 2020 | 28 | 95,721 | 1,681,127 | 2,203,557 | 2,368,555 | 6,348,988 | |||||||||||||||||||||||||||||
Net income for the year | — | — | — | — | 473,992 | 473,992 | |||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | (354,768) | — | (354,768) | |||||||||||||||||||||||||||||
Share-based compensation | — | — | 24,601 | — | — | 24,601 | |||||||||||||||||||||||||||||
Issuance of common stock | — | 460 | 4,394 | — | — | 4,854 | |||||||||||||||||||||||||||||
Treasury stock acquired, common | — | (3,667) | (95,748) | — | — | (99,415) | |||||||||||||||||||||||||||||
Dividends on preferred stock | — | — | — | — | (43,675) | (43,675) | |||||||||||||||||||||||||||||
Dividends on common stock ($0.34 per share) | — | — | — | — | (31,450) | (31,450) | |||||||||||||||||||||||||||||
Balance at December 31, 2021 | $ | 28 | $ | 92,514 | $ | 1,614,374 | $ | 1,848,789 | $ | 2,767,422 | $ | 6,323,127 |
Year Ended December 31, | |||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||
Operating activities | |||||||||||||||||
Net income | $ | 473,992 | $ | 671,460 | $ | 246,090 | |||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||
Interest sensitive and index product benefits | 2,681,406 | 1,543,270 | 1,287,576 | ||||||||||||||
Amortization of deferred sales inducements | 152,692 | 438,164 | 88,585 | ||||||||||||||
Annuity product charges | (242,631) | (251,227) | (240,035) | ||||||||||||||
Change in fair value of embedded derivatives | (358,302) | (1,286,787) | 1,454,042 | ||||||||||||||
Change in traditional life and accident and health insurance reserves | 40,090 | 8,694 | (3,546) | ||||||||||||||
Policy acquisition costs deferred | (307,857) | (255,154) | (422,516) | ||||||||||||||
Amortization of deferred policy acquisition costs | 268,328 | 649,554 | 87,717 | ||||||||||||||
Provision for depreciation and other amortization | 5,527 | 5,199 | 4,068 | ||||||||||||||
Amortization of discounts and premiums on investments | 19,861 | 57,437 | 25,846 | ||||||||||||||
Loss on extinguishment of debt | — | 2,024 | 2,001 | ||||||||||||||
Realized gains/losses on investments | 13,242 | 80,680 | 11,764 | ||||||||||||||
Change in fair value of derivatives | (1,348,704) | (34,668) | (906,201) | ||||||||||||||
Distributions from equity method investments | 12,409 | 1,968 | 2,753 | ||||||||||||||
Deferred income taxes | 128,423 | 141,071 | 56,947 | ||||||||||||||
Share-based compensation | 24,601 | 10,215 | 11,295 | ||||||||||||||
Change in accrued investment income | (47,015) | 74,744 | (4,097) | ||||||||||||||
Change in income taxes recoverable/payable | (165,724) | (1,291) | 26,966 | ||||||||||||||
Change in other assets | (4,464) | (849) | (5,607) | ||||||||||||||
Change in other policy funds and contract claims | (19,809) | (21,865) | (21,971) | ||||||||||||||
Change in collateral held for derivatives | 17,423 | (72,413) | 1,190,656 | ||||||||||||||
Change in collateral held for securities lending | — | (495,039) | 495,101 | ||||||||||||||
Change in funds withheld from reinsurers | 3,124,740 | — | — | ||||||||||||||
Change in other liabilities | (221,726) | 38,995 | (28,607) | ||||||||||||||
Other | (13,338) | 804 | (7,425) | ||||||||||||||
Net cash provided by operating activities | 4,233,164 | 1,304,986 | 3,351,402 | ||||||||||||||
Investing activities | |||||||||||||||||
Sales, maturities, or repayments of investments: | |||||||||||||||||
Fixed maturity securities - available for sale | 4,490,736 | 8,291,316 | 3,266,821 | ||||||||||||||
Mortgage loans on real estate | 862,666 | 378,812 | 294,356 | ||||||||||||||
Derivative instruments | 2,260,959 | 860,520 | 657,885 | ||||||||||||||
Other investments | 368,837 | 4,324 | 472,549 | ||||||||||||||
Acquisitions of investments: | |||||||||||||||||
Fixed maturity securities - available for sale | (9,206,733) | (2,429,114) | (5,509,314) | ||||||||||||||
Mortgage loans on real estate | (2,386,712) | (1,121,756) | (799,037) | ||||||||||||||
Real estate investments acquired | (335,767) | — | — | ||||||||||||||
Derivative instruments | (748,061) | (730,333) | (823,077) | ||||||||||||||
Other investments | (1,512,123) | (105,925) | (611,047) | ||||||||||||||
Purchases of property, furniture and equipment | (18,109) | (13,240) | (4,022) | ||||||||||||||
Net cash provided by (used in) investing activities | (6,224,307) | 5,134,604 | (3,054,886) |
Year Ended December 31, | |||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||
Financing activities | |||||||||||||||||
Receipts credited to annuity policyholder account balances | $ | 5,910,024 | $ | 3,648,936 | $ | 4,951,211 | |||||||||||
Coinsurance deposits | (3,187,332) | 430,644 | 91,238 | ||||||||||||||
Return of annuity policyholder account balances | (5,145,193) | (4,040,054) | (3,584,960) | ||||||||||||||
Repayment of subordinated debentures | — | (81,450) | (88,160) | ||||||||||||||
Net proceeds from (repayments of) amounts due under repurchase agreements | — | — | (109,298) | ||||||||||||||
Proceeds from issuance of common stock, net | 4,854 | 338,061 | 1,691 | ||||||||||||||
Acquisition of treasury stock | (99,415) | (165,094) | — | ||||||||||||||
Proceeds from issuance of preferred stock, net | — | 290,260 | 388,893 | ||||||||||||||
Change in checks in excess of cash balance | (3,210) | 3,611 | 29,169 | ||||||||||||||
Dividends paid on common stock | (31,450) | (28,859) | (27,304) | ||||||||||||||
Dividends paid on preferred stock | (43,675) | (33,515) | — | ||||||||||||||
Net cash provided by (used in) financing activities | (2,595,397) | 362,540 | 1,652,480 | ||||||||||||||
Increase (decrease) in cash and cash equivalents | (4,586,540) | 6,802,130 | 1,948,996 | ||||||||||||||
Cash and cash equivalents at beginning of year | 9,095,522 | 2,293,392 | 344,396 | ||||||||||||||
Cash and cash equivalents at end of year | $ | 4,508,982 | $ | 9,095,522 | $ | 2,293,392 | |||||||||||
Supplemental disclosures of cash flow information | |||||||||||||||||
Cash paid during the year for: | |||||||||||||||||
Interest expense | $ | 30,000 | $ | 31,427 | $ | 42,879 | |||||||||||
Income taxes | 165,537 | 4,842 | 28,413 | ||||||||||||||
Non-cash operating activity: | |||||||||||||||||
Deferral of sales inducements | 95,160 | 93,610 | 177,941 | ||||||||||||||
Year Ended December 31, | ||||||||||||||||||||
Product Type | 2021 | 2020 | 2019 | |||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Fixed index annuities | $ | 3,026,211 | $ | 2,309,580 | $ | 4,603,490 | ||||||||||||||
Annual reset fixed rate annuities | 6,000 | 7,846 | 10,665 | |||||||||||||||||
Multi-year fixed rate annuities | 2,452,994 | 1,295,843 | 47,016 | |||||||||||||||||
Single premium immediate annuities (SPIA) | 59,816 | 33,461 | 12,002 | |||||||||||||||||
$ | 5,545,021 | $ | 3,646,730 | $ | 4,673,173 |
Revised Consolidated Balance Sheet | Year Ended December 31, 2020 | ||||||||||||||||
As Reported | Adjustment | As Revised | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Assets | |||||||||||||||||
Deferred policy acquisition costs | $ | 2,045,812 | $ | 179,387 | $ | 2,225,199 | |||||||||||
Deferred sales inducements | 1,328,857 | 119,518 | 1,448,375 | ||||||||||||||
Total assets | 71,389,674 | 298,905 | 71,688,579 | ||||||||||||||
Liabilities and Stockholders' Equity | |||||||||||||||||
Liabilities: | |||||||||||||||||
Policy benefit reserves | 61,768,246 | 584,636 | 62,352,882 | ||||||||||||||
Deferred income taxes | 564,003 | (60,003) | 504,000 | ||||||||||||||
Total liabilities | 64,814,958 | 524,633 | 65,339,591 | ||||||||||||||
Stockholders' equity: | |||||||||||||||||
Accumulated other comprehensive income | 2,429,285 | (225,728) | 2,203,557 | ||||||||||||||
Total stockholders' equity | 6,574,716 | (225,728) | 6,348,988 | ||||||||||||||
Total liabilities and stockholders' equity | 71,389,674 | 298,905 | 71,688,579 |
Revised Consolidated Statement of Comprehensive Income | Year Ended December 31, 2020 | ||||||||||||||||
As Reported | Adjustment | As Revised | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Other comprehensive income: | |||||||||||||||||
Change in net unrealized investment gains/losses (1) | $ | 1,162,252 | $ | (103,963) | $ | 1,058,289 | |||||||||||
Other comprehensive income before income tax | 1,178,942 | (103,963) | 1,074,979 | ||||||||||||||
Income tax effect related to other comprehensive income | (247,578) | 21,832 | (225,746) | ||||||||||||||
Other comprehensive income | 931,364 | (82,131) | 849,233 | ||||||||||||||
Comprehensive income | 1,602,824 | (82,131) | 1,520,693 | ||||||||||||||
Year Ended December 31, 2019 | |||||||||||||||||
As Reported | Adjustment | As Revised | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Other comprehensive income: | |||||||||||||||||
Change in net unrealized investment gains/losses (1) | $ | 1,954,044 | $ | (188,937) | $ | 1,765,107 | |||||||||||
Other comprehensive income before income tax | 1,962,470 | (188,937) | 1,773,533 | ||||||||||||||
Income tax effect related to other comprehensive income | (412,117) | 39,645 | (372,472) | ||||||||||||||
Other comprehensive income | 1,550,353 | (149,292) | 1,401,061 | ||||||||||||||
Comprehensive income | 1,796,443 | (149,292) | 1,647,151 |
December 31, | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
Assets | |||||||||||||||||||||||
Fixed maturity securities, available for sale | $ | 51,305,943 | $ | 51,305,943 | $ | 47,538,893 | $ | 47,538,893 | |||||||||||||||
Mortgage loans on real estate | 5,687,998 | 5,867,227 | 4,165,489 | 4,327,885 | |||||||||||||||||||
Real estate investments | 337,939 | 337,939 | — | — | |||||||||||||||||||
Derivative instruments | 1,277,480 | 1,277,480 | 1,310,954 | 1,310,954 | |||||||||||||||||||
Other investments | 1,767,144 | 1,767,144 | 590,078 | 590,078 | |||||||||||||||||||
Cash and cash equivalents | 4,508,982 | 4,508,982 | 9,095,522 | 9,095,522 | |||||||||||||||||||
Coinsurance deposits | 8,850,608 | 7,938,292 | 4,844,927 | 4,411,051 | |||||||||||||||||||
Liabilities | |||||||||||||||||||||||
Policy benefit reserves | 65,076,041 | 56,375,076 | 61,406,599 | 52,928,174 | |||||||||||||||||||
Single premium immediate annuity (SPIA) benefit reserves | 226,207 | 235,891 | 240,226 | 247,679 | |||||||||||||||||||
Notes payable | 496,250 | 569,485 | 495,668 | 567,345 | |||||||||||||||||||
Subordinated debentures | 78,421 | 93,721 | 78,112 | 87,951 | |||||||||||||||||||
Total Fair Value | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||
Assets | |||||||||||||||||||||||
Fixed maturity securities, available for sale: | |||||||||||||||||||||||
United States Government full faith and credit | $ | 37,793 | $ | 32,737 | $ | 5,056 | $ | — | |||||||||||||||
United States Government sponsored agencies | 1,040,953 | — | 1,040,953 | — | |||||||||||||||||||
United States municipalities, states and territories | 3,927,201 | — | 3,927,201 | — | |||||||||||||||||||
Foreign government obligations | 402,545 | — | 402,545 | — | |||||||||||||||||||
Corporate securities | 34,660,234 | 32,700 | 34,627,534 | — | |||||||||||||||||||
Residential mortgage backed securities | 1,125,049 | — | 1,125,049 | — | |||||||||||||||||||
Commercial mortgage backed securities | 4,840,311 | — | 4,840,311 | — | |||||||||||||||||||
Other asset backed securities | 5,271,857 | — | 5,271,857 | — | |||||||||||||||||||
Other investments: equity securities | 12,226 | — | 5,877 | 6,349 | |||||||||||||||||||
Real estate investments | 337,939 | — | — | 337,939 | |||||||||||||||||||
Derivative instruments | 1,277,480 | — | 1,277,480 | — | |||||||||||||||||||
Cash and cash equivalents | 4,508,982 | 4,508,982 | — | — | |||||||||||||||||||
$ | 57,442,570 | $ | 4,574,419 | $ | 52,523,863 | $ | 344,288 | ||||||||||||||||
Liabilities | |||||||||||||||||||||||
Fixed index annuities - embedded derivatives | $ | 7,964,961 | $ | — | $ | — | $ | 7,964,961 | |||||||||||||||
December 31, 2020 | |||||||||||||||||||||||
Assets | |||||||||||||||||||||||
Fixed maturity securities, available for sale: | |||||||||||||||||||||||
United States Government full faith and credit | $ | 39,771 | $ | 33,940 | $ | 5,831 | $ | — | |||||||||||||||
United States Government sponsored agencies | 1,039,551 | — | 1,039,551 | — | |||||||||||||||||||
United States municipalities, states and territories | 3,776,131 | — | 3,776,131 | — | |||||||||||||||||||
Foreign government obligations | 202,706 | — | 202,706 | — | |||||||||||||||||||
Corporate securities | 31,156,827 | 8 | 31,156,819 | — | |||||||||||||||||||
Residential mortgage backed securities | 1,512,831 | — | 1,512,831 | — | |||||||||||||||||||
Commercial mortgage backed securities | 4,261,227 | — | 4,261,227 | — | |||||||||||||||||||
Other asset backed securities | 5,549,849 | — | 5,549,849 | — | |||||||||||||||||||
Derivative instruments | 1,310,954 | — | 1,310,954 | — | |||||||||||||||||||
Cash and cash equivalents | 9,095,522 | 9,095,522 | — | — | |||||||||||||||||||
$ | 57,945,369 | $ | 9,129,470 | $ | 48,815,899 | $ | — | ||||||||||||||||
Liabilities | |||||||||||||||||||||||
Fixed index annuities - embedded derivatives | $ | 7,938,281 | $ | — | $ | — | $ | 7,938,281 | |||||||||||||||
Average Lapse Rates | Average Partial Withdrawal Rates | |||||||||||||||||||||||||
Contract Duration (Years) | December 31, 2021 | December 31, 2020 | December 31, 2021 | December 31, 2020 | ||||||||||||||||||||||
1 - 5 | 3.04% | 1.22% | 2.19% | 2.63% | ||||||||||||||||||||||
6 - 10 | 2.84% | 1.50% | 2.26% | 3.14% | ||||||||||||||||||||||
11 - 15 | 4.47% | 5.66% | 2.14% | 3.58% | ||||||||||||||||||||||
16 - 20 | 8.93% | 7.08% | 1.33% | 3.79% | ||||||||||||||||||||||
20+ | 4.93% | 7.36% | —% | 3.63% |
Year Ended December 31, | |||||||||||
2021 | 2020 | ||||||||||
(Dollars in thousands) | |||||||||||
Other investments: equity securities | |||||||||||
Beginning balance | $ | — | $ | — | |||||||
Transfers in | 6,349 | — | |||||||||
Ending balance | $ | 6,349 | $ | — | |||||||
Real estate investments | |||||||||||
Beginning balance | $ | — | $ | — | |||||||
Purchases and sales, net | 335,767 | — | |||||||||
Change in fair value | 2,172 | — | |||||||||
Ending balance | $ | 337,939 | $ | — | |||||||
Fixed index annuities - embedded derivatives | |||||||||||
Beginning balance | $ | 7,938,281 | $ | 9,624,395 | |||||||
Premiums less benefits | 1,424,372 | 235,971 | |||||||||
Change in fair value, net | (876,803) | (1,922,085) | |||||||||
Reserve release related to in-force ceded reinsurance | (520,889) | — | |||||||||
Ending balance | $ | 7,964,961 | $ | 7,938,281 |
Amortized Cost (1) | Gross Unrealized Gains | Gross Unrealized Losses (2) | Allowance for Credit Losses | Fair Value | |||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||||||||
Fixed maturity securities, available for sale: | |||||||||||||||||||||||||||||
United States Government full faith and credit | $ | 37,109 | $ | 718 | $ | (34) | $ | — | $ | 37,793 | |||||||||||||||||||
United States Government sponsored agencies | 1,008,920 | 32,123 | (90) | — | 1,040,953 | ||||||||||||||||||||||||
United States municipalities, states and territories | 3,495,563 | 437,456 | (3,042) | (2,776) | 3,927,201 | ||||||||||||||||||||||||
Foreign government obligations | 380,646 | 22,742 | (843) | — | 402,545 | ||||||||||||||||||||||||
Corporate securities | 31,084,629 | 3,614,047 | (38,442) | — | 34,660,234 | ||||||||||||||||||||||||
Residential mortgage backed securities | 1,056,778 | 70,434 | (2,093) | (70) | 1,125,049 | ||||||||||||||||||||||||
Commercial mortgage backed securities | 4,708,878 | 149,152 | (17,719) | — | 4,840,311 | ||||||||||||||||||||||||
Other asset backed securities | 5,226,660 | 95,304 | (50,107) | — | 5,271,857 | ||||||||||||||||||||||||
$ | 46,999,183 | $ | 4,421,976 | $ | (112,370) | $ | (2,846) | $ | 51,305,943 | ||||||||||||||||||||
December 31, 2020 | |||||||||||||||||||||||||||||
Fixed maturity securities, available for sale: | |||||||||||||||||||||||||||||
United States Government full faith and credit | $ | 37,471 | $ | 2,300 | $ | — | $ | — | $ | 39,771 | |||||||||||||||||||
United States Government sponsored agencies | 995,465 | 44,132 | (46) | — | 1,039,551 | ||||||||||||||||||||||||
United States municipalities, states and territories | 3,236,767 | 543,252 | (1,044) | (2,844) | 3,776,131 | ||||||||||||||||||||||||
Foreign government obligations | 177,062 | 25,644 | — | — | 202,706 | ||||||||||||||||||||||||
Corporate securities | 26,745,196 | 4,507,716 | (35,892) | (60,193) | 31,156,827 | ||||||||||||||||||||||||
Residential mortgage backed securities | 1,399,956 | 117,135 | (2,526) | (1,734) | 1,512,831 | ||||||||||||||||||||||||
Commercial mortgage backed securities | 4,119,650 | 206,255 | (64,678) | — | 4,261,227 | ||||||||||||||||||||||||
Other asset backed securities | 5,593,169 | 103,320 | (146,640) | — | 5,549,849 | ||||||||||||||||||||||||
$ | 42,304,736 | $ | 5,549,754 | $ | (250,826) | $ | (64,771) | $ | 47,538,893 |
Available for sale | |||||||||||
Amortized Cost | Fair Value | ||||||||||
(Dollars in thousands) | |||||||||||
Due in one year or less | $ | 1,950,504 | $ | 1,968,323 | |||||||
Due after one year through five years | 7,573,038 | 7,962,521 | |||||||||
Due after five years through ten years | 7,230,026 | 7,860,389 | |||||||||
Due after ten years through twenty years | 10,119,850 | 12,053,093 | |||||||||
Due after twenty years | 9,133,449 | 10,224,400 | |||||||||
36,006,867 | 40,068,726 | ||||||||||
Residential mortgage backed securities | 1,056,778 | 1,125,049 | |||||||||
Commercial mortgage backed securities | 4,708,878 | 4,840,311 | |||||||||
Other asset backed securities | 5,226,660 | 5,271,857 | |||||||||
$ | 46,999,183 | $ | 51,305,943 |
December 31, | |||||||||||
2021 | 2020 | ||||||||||
(Dollars in thousands) | |||||||||||
Net unrealized gains on available for sale fixed maturity securities | $ | 4,309,606 | $ | 5,297,040 | |||||||
Adjustments for assumed changes in amortization of deferred policy acquisition costs, deferred sales inducements and policy benefit reserves | (1,993,869) | (2,536,251) | |||||||||
Deferred income tax valuation allowance reversal | 22,534 | 22,534 | |||||||||
Deferred income tax expense | (489,482) | (579,766) | |||||||||
Net unrealized gains reported as accumulated other comprehensive income | $ | 1,848,789 | $ | 2,203,557 |
December 31, | ||||||||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||||||||
NAIC Designation | Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||
1 | $ | 26,157,531 | $ | 28,785,839 | $ | 23,330,149 | $ | 26,564,542 | ||||||||||||||||||
2 | 19,758,594 | 21,396,020 | 17,312,485 | 19,377,013 | ||||||||||||||||||||||
3 | 909,311 | 941,210 | 1,292,124 | 1,299,455 | ||||||||||||||||||||||
4 | 133,070 | 147,160 | 282,049 | 256,651 | ||||||||||||||||||||||
5 | 16,496 | 15,357 | 29,396 | 16,288 | ||||||||||||||||||||||
6 | 24,181 | 20,357 | 58,533 | 24,944 | ||||||||||||||||||||||
$ | 46,999,183 | $ | 51,305,943 | $ | 42,304,736 | $ | 47,538,893 |
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) | |||||||||||||||||||||||||||||||||||
December 31, 2021 | |||||||||||||||||||||||||||||||||||
Fixed maturity securities, available for sale: | |||||||||||||||||||||||||||||||||||
United States Government full faith and credit | $ | 1,007 | $ | (34) | $ | — | $ | — | $ | 1,007 | $ | (34) | |||||||||||||||||||||||
United States Government sponsored agencies | 759,970 | (90) | — | — | 759,970 | (90) | |||||||||||||||||||||||||||||
United States municipalities, states and territories | 168,942 | (2,468) | 15,711 | (3,350) | 184,653 | (5,818) | |||||||||||||||||||||||||||||
Foreign government obligations | 42,861 | (843) | — | — | 42,861 | (843) | |||||||||||||||||||||||||||||
Corporate securities | 2,375,603 | (30,070) | 116,819 | (8,372) | 2,492,422 | (38,442) | |||||||||||||||||||||||||||||
Residential mortgage backed securities | 250,964 | (1,408) | 26,917 | (755) | 277,881 | (2,163) | |||||||||||||||||||||||||||||
Commercial mortgage backed securities | 784,464 | (5,500) | 142,224 | (12,219) | 926,688 | (17,719) | |||||||||||||||||||||||||||||
Other asset backed securities | 1,351,324 | (11,345) | 1,771,182 | (38,762) | 3,122,506 | (50,107) | |||||||||||||||||||||||||||||
$ | 5,735,135 | $ | (51,758) | $ | 2,072,853 | $ | (63,458) | $ | 7,807,988 | $ | (115,216) | ||||||||||||||||||||||||
December 31, 2020 | |||||||||||||||||||||||||||||||||||
Fixed maturity securities, available for sale: | |||||||||||||||||||||||||||||||||||
United States Government sponsored agencies | $ | 250,475 | $ | (46) | $ | — | $ | — | $ | 250,475 | $ | (46) | |||||||||||||||||||||||
United States municipalities, states and territories | 31,802 | (3,887) | 868 | (1) | 32,670 | (3,888) | |||||||||||||||||||||||||||||
Corporate securities | 606,277 | (45,150) | 154,633 | (50,935) | 760,910 | (96,085) | |||||||||||||||||||||||||||||
Residential mortgage backed securities | 156,016 | (2,384) | 13,599 | (1,876) | 169,615 | (4,260) | |||||||||||||||||||||||||||||
Commercial mortgage backed securities | 934,593 | (54,834) | 35,153 | (9,844) | 969,746 | (64,678) | |||||||||||||||||||||||||||||
Other asset backed securities | 1,013,781 | (16,607) | 2,567,723 | (130,033) | 3,581,504 | (146,640) | |||||||||||||||||||||||||||||
$ | 2,992,944 | $ | (122,908) | $ | 2,771,976 | $ | (192,689) | $ | 5,764,920 | $ | (315,597) |
Year Ended December 31, | |||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Fixed maturity securities available for sale carried at fair value | $ | (987,434) | $ | 1,955,496 | $ | 3,549,007 | |||||||||||
Adjustment for effect on other balance sheet accounts: | |||||||||||||||||
Deferred policy acquisition costs, deferred sales inducements and policy benefit reserves | 542,382 | (880,517) | (1,775,474) | ||||||||||||||
Deferred income tax asset/liability | 90,284 | (225,746) | (372,472) | ||||||||||||||
632,666 | (1,106,263) | (2,147,946) | |||||||||||||||
Change in net unrealized gains/losses on investments carried at fair value | $ | (354,768) | $ | 849,233 | $ | 1,401,061 |
Year Ended December 31, | |||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Fixed maturity securities | $ | 1,772,675 | $ | 2,035,762 | $ | 2,171,768 | |||||||||||
Real estate investments | 14,138 | — | — | ||||||||||||||
Mortgage loans on real estate | 215,138 | 170,749 | 145,344 | ||||||||||||||
Cash and cash equivalents | 3,385 | 4,871 | 5,164 | ||||||||||||||
Other investments | 96,556 | 3,168 | 7,202 | ||||||||||||||
2,101,892 | 2,214,550 | 2,329,478 | |||||||||||||||
Less investment expenses | (64,417) | (32,472) | (21,843) | ||||||||||||||
Net investment income | $ | 2,037,475 | $ | 2,182,078 | $ | 2,307,635 |
Year Ended December 31, | |||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Available for sale fixed maturity securities: | |||||||||||||||||
Gross realized gains | $ | 10,167 | $ | 305,170 | $ | 21,449 | |||||||||||
Gross realized losses | (19,140) | (276,847) | (6,397) | ||||||||||||||
Net credit loss (provision) release (1) | (6,241) | (94,560) | — | ||||||||||||||
(15,214) | (66,237) | 15,052 | |||||||||||||||
Other investments: | |||||||||||||||||
Gross realized gains | — | — | 7,296 | ||||||||||||||
Gross realized losses | — | — | (14,446) | ||||||||||||||
— | — | (7,150) | |||||||||||||||
Mortgage loans on real estate: | |||||||||||||||||
Decrease (increase) in allowance for credit losses | 7,005 | (15,447) | (940) | ||||||||||||||
Recovery of specific allowance | — | 712 | — | ||||||||||||||
Gain (loss) on sale of mortgage loans | (5,033) | 292 | — | ||||||||||||||
1,972 | (14,443) | (940) | |||||||||||||||
Total net realized (losses) gains | $ | (13,242) | $ | (80,680) | $ | 6,962 |
December 31, | |||||||||||
2021 | 2020 | ||||||||||
(Dollars in thousands) | |||||||||||
Fixed maturity securities, available for sale | $ | 4,118 | $ | 5,766 | |||||||
Year Ended December 31, 2021 | |||||||||||||||||||||||||||||||||||
United States Municipalities, States and Territories | Corporate Securities | Commercial Mortgage Backed Securities | Residential Mortgage Backed Securities | Other Asset Backed Securities | Total | ||||||||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||||||||
Beginning balance | $ | 2,844 | $ | 60,193 | $ | — | $ | 1,734 | $ | — | $ | 64,771 | |||||||||||||||||||||||
Additions for credit losses not previously recorded | — | 705 | — | 407 | — | 1,112 | |||||||||||||||||||||||||||||
Change in allowance on securities with previous allowance | (68) | 443 | — | (857) | — | (482) | |||||||||||||||||||||||||||||
Reduction for securities with credit losses due to intent to sell | — | (209) | — | — | — | (209) | |||||||||||||||||||||||||||||
Reduction for securities sold during the period | — | (50,758) | — | — | — | (50,758) | |||||||||||||||||||||||||||||
Write-offs charged against the allowance | — | (10,032) | — | — | — | (10,032) | |||||||||||||||||||||||||||||
Recoveries of amounts previously written off | — | (342) | — | (1,214) | — | (1,556) | |||||||||||||||||||||||||||||
Ending balance | $ | 2,776 | $ | — | $ | — | $ | 70 | $ | — | $ | 2,846 | |||||||||||||||||||||||
Year Ended December 31, 2020 | |||||||||||||||||||||||||||||||||||
United States Municipalities, States and Territories | 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 | 2,844 | 60,193 | 29,241 | 1,734 | 548 | 94,560 | |||||||||||||||||||||||||||||
Reduction for securities with credit losses due to intent to sell | — | — | (21,888) | — | (548) | (22,436) | |||||||||||||||||||||||||||||
Reduction for securities sold during the period | — | — | (7,353) | — | — | (7,353) | |||||||||||||||||||||||||||||
Ending balance | $ | 2,844 | $ | 60,193 | $ | — | $ | 1,734 | $ | — | $ | 64,771 |
December 31, | |||||||||||
2021 | 2020 | ||||||||||
(Dollars in thousands) | |||||||||||
Commercial mortgage loans: | |||||||||||
Principal outstanding | $ | 3,633,131 | $ | 3,580,154 | |||||||
Deferred fees and costs, net | (4,629) | (1,266) | |||||||||
Amortized cost | 3,628,502 | 3,578,888 | |||||||||
Valuation allowance | (17,926) | (25,529) | |||||||||
Commercial mortgage loans, carrying value | 3,610,576 | 3,553,359 | |||||||||
Agricultural mortgage loans: | |||||||||||
Principal outstanding | 408,135 | 245,807 | |||||||||
Deferred fees and costs, net | (1,136) | (634) | |||||||||
Amortized cost | 406,999 | 245,173 | |||||||||
Valuation allowance | (519) | (2,130) | |||||||||
Agricultural mortgage loans, carrying value | 406,480 | 243,043 | |||||||||
Residential mortgage loans: | |||||||||||
Principal outstanding | 1,652,910 | 366,320 | |||||||||
Deferred fees and costs, net | 1,468 | 925 | |||||||||
Unamortized discounts and premiums, net | 22,143 | 5,212 | |||||||||
Amortized cost | 1,676,521 | 372,457 | |||||||||
Valuation allowance | (5,579) | (3,370) | |||||||||
Residential mortgage loans, carrying value | 1,670,942 | 369,087 | |||||||||
Mortgage loans, carrying value | $ | 5,687,998 | $ | 4,165,489 |
December 31, | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
Principal | Percent | Principal | Percent | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
Geographic distribution | |||||||||||||||||||||||
East | $ | 614,406 | 16.9 | % | $ | 699,741 | 19.5 | % | |||||||||||||||
Middle Atlantic | 293,494 | 8.1 | % | 281,971 | 7.9 | % | |||||||||||||||||
Mountain | 452,818 | 12.5 | % | 391,025 | 10.9 | % | |||||||||||||||||
New England | 60,172 | 1.6 | % | 24,774 | 0.7 | % | |||||||||||||||||
Pacific | 863,879 | 23.8 | % | 659,743 | 18.4 | % | |||||||||||||||||
South Atlantic | 785,679 | 21.6 | % | 832,739 | 23.3 | % | |||||||||||||||||
West North Central | 235,864 | 6.5 | % | 266,050 | 7.4 | % | |||||||||||||||||
West South Central | 326,819 | 9.0 | % | 424,111 | 11.9 | % | |||||||||||||||||
$ | 3,633,131 | 100.0 | % | $ | 3,580,154 | 100.0 | % | ||||||||||||||||
Property type distribution | |||||||||||||||||||||||
Office | $ | 315,374 | 8.7 | % | $ | 297,065 | 8.3 | % | |||||||||||||||
Medical Office | 10,827 | 0.3 | % | 20,584 | 0.6 | % | |||||||||||||||||
Retail | 1,016,101 | 28.0 | % | 1,187,484 | 33.2 | % | |||||||||||||||||
Industrial/Warehouse | 924,779 | 25.4 | % | 929,325 | 25.9 | % | |||||||||||||||||
Apartment | 864,580 | 23.8 | % | 939,084 | 26.2 | % | |||||||||||||||||
Hotel | 283,500 | 7.8 | % | — | — | % | |||||||||||||||||
Mixed Use/Other | 217,970 | 6.0 | % | 206,612 | 5.8 | % | |||||||||||||||||
$ | 3,633,131 | 100.0 | % | $ | 3,580,154 | 100.0 | % |
Year Ended December 31, 2021 | |||||||||||||||||||||||
Commercial | Agricultural | Residential | Total | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
Beginning allowance balance | $ | (25,529) | $ | (2,130) | $ | (3,370) | $ | (31,029) | |||||||||||||||
Charge-offs | — | — | — | — | |||||||||||||||||||
Recoveries | — | — | — | — | |||||||||||||||||||
Change in provision for credit losses | 7,603 | 1,611 | (2,209) | 7,005 | |||||||||||||||||||
Ending allowance balance | $ | (17,926) | $ | (519) | $ | (5,579) | $ | (24,024) | |||||||||||||||
Year Ended December 31, 2020 | |||||||||||||||||||||||
Commercial | Agricultural | Residential | Total | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
Beginning allowance balance (1) | $ | (17,579) | $ | (200) | $ | — | $ | (17,779) | |||||||||||||||
Charge-offs | 1,485 | — | — | 1,485 | |||||||||||||||||||
Recoveries | 712 | — | — | 712 | |||||||||||||||||||
Change in provision for credit losses | (10,147) | (1,930) | (3,370) | (15,447) | |||||||||||||||||||
Ending allowance balance | $ | (25,529) | $ | (2,130) | $ | (3,370) | $ | (31,029) |
2021 | 2020 | 2019 | 2018 | 2017 | Prior | Total | ||||||||||||||||||||||||||||||||||||||
As of December 31, 2021: | 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 | $ | 260,623 | 64 | % | $ | 454,828 | 60 | % | $ | 464,059 | 61 | % | $ | 344,170 | 58 | % | $ | 246,854 | 52 | % | $ | 758,494 | 45 | % | $ | 2,529,028 | 55 | % | ||||||||||||||||
Greater than or equal to 1.2 and less than 1.5 | 12,836 | 67 | % | 58,960 | 66 | % | 128,301 | 70 | % | 89,293 | 66 | % | 135,818 | 66 | % | 129,833 | 57 | % | 555,041 | 65 | % | |||||||||||||||||||||||
Greater than or equal to 1.0 and less than 1.2 | 318,636 | 45 | % | 17,762 | 82 | % | 69,684 | 72 | % | 11,937 | 75 | % | 6,343 | 60 | % | 42,125 | 58 | % | 466,487 | 53 | % | |||||||||||||||||||||||
Less than 1.0 | — | — | % | 3,289 | 61 | % | 26,147 | 63 | % | 14,051 | 76 | % | 13,385 | 73 | % | 21,074 | 54 | % | 77,946 | 65 | % | |||||||||||||||||||||||
Total | $ | 592,095 | 54 | % | $ | 534,839 | 61 | % | $ | 688,191 | 64 | % | $ | 459,451 | 60 | % | $ | 402,400 | 58 | % | $ | 951,526 | 47 | % | $ | 3,628,502 | 56 | % | ||||||||||||||||
2020 | 2019 | 2018 | 2017 | 2016 | Prior | Total | ||||||||||||||||||||||||||||||||||||||
As of December 31, 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 | $ | 364,574 | 63 | % | $ | 442,370 | 66 | % | $ | 399,193 | 62 | % | $ | 316,738 | 57 | % | $ | 359,321 | 54 | % | $ | 715,706 | 47 | % | $ | 2,597,902 | 57 | % | ||||||||||||||||
Greater than or equal to 1.2 and less than 1.5 | 161,779 | 66 | % | 226,166 | 70 | % | 124,267 | 72 | % | 124,564 | 67 | % | 52,513 | 62 | % | 111,690 | 55 | % | 800,979 | 66 | % | |||||||||||||||||||||||
Greater than or equal to 1.0 and less than 1.2 | 17,638 | 82 | % | 22,917 | 67 | % | 2,769 | 71 | % | 7,597 | 66 | % | — | — | % | 32,327 | 65 | % | 83,248 | 69 | % | |||||||||||||||||||||||
Less than 1.0 | — | — | % | 64,131 | 58 | % | 1,441 | 89 | % | 10,156 | 80 | % | — | — | % | 21,031 | 60 | % | 96,759 | 61 | % | |||||||||||||||||||||||
Total | $ | 543,991 | 65 | % | $ | 755,584 | 67 | % | $ | 527,670 | 64 | % | $ | 459,055 | 60 | % | $ | 411,834 | 55 | % | $ | 880,754 | 49 | % | $ | 3,578,888 | 59 | % |
2021 | 2020 | 2019 | 2018 | 2017 | Prior | Total | |||||||||||||||||||||||||||||||||||
As of December 31, 2021: | (Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||
Commercial mortgage loans | |||||||||||||||||||||||||||||||||||||||||
Current | $ | 592,095 | $ | 534,839 | $ | 688,191 | $ | 459,451 | $ | 402,400 | $ | 951,526 | $ | 3,628,502 | |||||||||||||||||||||||||||
30 - 59 days past due | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
60 - 89 days past due | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Over 90 days past due | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Total commercial mortgage loans | $ | 592,095 | $ | 534,839 | $ | 688,191 | $ | 459,451 | $ | 402,400 | $ | 951,526 | $ | 3,628,502 | |||||||||||||||||||||||||||
Agricultural mortgage loans | |||||||||||||||||||||||||||||||||||||||||
Current | $ | 165,764 | $ | 196,521 | $ | 19,714 | $ | 25,000 | $ | — | $ | — | $ | 406,999 | |||||||||||||||||||||||||||
30 - 59 days past due | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
60 - 89 days past due | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Over 90 days past due | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Total agricultural mortgage loans | $ | 165,764 | $ | 196,521 | $ | 19,714 | $ | 25,000 | $ | — | $ | — | $ | 406,999 | |||||||||||||||||||||||||||
Residential mortgage loans | |||||||||||||||||||||||||||||||||||||||||
Current | $ | 1,092,438 | $ | 454,532 | $ | 67,380 | $ | 16,898 | $ | 751 | $ | — | $ | 1,631,999 | |||||||||||||||||||||||||||
30 - 59 days past due | 10,284 | 12,363 | 11,373 | 427 | — | — | 34,447 | ||||||||||||||||||||||||||||||||||
60 - 89 days past due | 1,838 | 1,090 | 102 | — | — | — | 3,030 | ||||||||||||||||||||||||||||||||||
Over 90 days past due | 679 | 5,459 | 907 | — | — | — | 7,045 | ||||||||||||||||||||||||||||||||||
Total residential mortgage loans | $ | 1,105,239 | $ | 473,444 | $ | 79,762 | $ | 17,325 | $ | 751 | $ | — | $ | 1,676,521 | |||||||||||||||||||||||||||
2020 | 2019 | 2018 | 2017 | 2016 | Prior | Total | |||||||||||||||||||||||||||||||||||
As of December 31, 2020: | (Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||
Commercial mortgage loans | |||||||||||||||||||||||||||||||||||||||||
Current | $ | 543,991 | $ | 755,584 | $ | 527,670 | $ | 459,055 | $ | 411,834 | $ | 880,754 | $ | 3,578,888 | |||||||||||||||||||||||||||
30 - 59 days past due | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
60 - 89 days past due | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Over 90 days past due | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Total commercial mortgage loans | $ | 543,991 | $ | 755,584 | $ | 527,670 | $ | 459,055 | $ | 411,834 | $ | 880,754 | $ | 3,578,888 | |||||||||||||||||||||||||||
Agricultural mortgage loans | |||||||||||||||||||||||||||||||||||||||||
Current | $ | 196,190 | $ | 23,983 | $ | 25,000 | $ | — | $ | — | $ | — | $ | 245,173 | |||||||||||||||||||||||||||
30 - 59 days past due | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
60 - 89 days past due | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Over 90 days past due | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Total agricultural mortgage loans | $ | 196,190 | $ | 23,983 | $ | 25,000 | $ | — | $ | — | $ | — | $ | 245,173 | |||||||||||||||||||||||||||
Residential mortgage loans | |||||||||||||||||||||||||||||||||||||||||
Current | $ | 321,779 | $ | 24,951 | $ | — | $ | — | $ | — | $ | — | $ | 346,730 | |||||||||||||||||||||||||||
30 - 59 days past due | 25,150 | 299 | — | — | — | — | 25,449 | ||||||||||||||||||||||||||||||||||
60 - 89 days past due | 111 | — | — | — | — | — | 111 | ||||||||||||||||||||||||||||||||||
Over 90 days past due | 167 | — | — | — | — | — | 167 | ||||||||||||||||||||||||||||||||||
Total residential mortgage loans | $ | 347,207 | $ | 25,250 | $ | — | $ | — | $ | — | $ | — | $ | 372,457 |
December 31, | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
Total Assets | Total Liabilities | Total Assets | Total Liabilities | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
Real estate investments | $ | 363,229 | $ | 20,168 | $ | — | $ | — | |||||||||||||||
Infrastructure credit fund | 168,711 | — | — | — | |||||||||||||||||||
$ | 531,940 | $ | 20,168 | $ | — | $ | — |
December 31, | |||||||||||||||||||||||
2021 | 2020 | ||||||||||||||||||||||
Asset Carrying Value | Maximum Exposure to Loss | Asset Carrying Value | Maximum Exposure to Loss | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
Fixed maturity securities, available for sale | $ | 459,681 | $ | 459,681 | $ | — | $ | — | |||||||||||||||
Other investments | 345,000 | 345,000 | — | — |
December 31, | |||||||||||
2021 | 2020 | ||||||||||
(Dollars in thousands) | |||||||||||
Assets | |||||||||||
Derivative instruments | |||||||||||
Call options | $ | 1,276,574 | $ | 1,310,954 | |||||||
Warrants | 906 | — | |||||||||
$ | 1,277,480 | $ | 1,310,954 | ||||||||
Liabilities | |||||||||||
Policy benefit reserves - annuity products | |||||||||||
Fixed index annuities - embedded derivatives, net | $ | 7,964,961 | $ | 7,938,281 | |||||||
Funds withheld for reinsurance liabilities | |||||||||||
Reinsurance related embedded derivative | (2,362) | — | |||||||||
$ | 7,962,599 | $ | 7,938,281 |
Year Ended December 31, | |||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Change in fair value of derivatives: | |||||||||||||||||
Call options | $ | 1,347,925 | $ | 34,604 | $ | 908,556 | |||||||||||
Warrants | 810 | — | — | ||||||||||||||
Interest rate swap | — | — | (1,059) | ||||||||||||||
Interest rate caps | — | 62 | (591) | ||||||||||||||
$ | 1,348,735 | $ | 34,666 | $ | 906,906 | ||||||||||||
Change in fair value of embedded derivatives: | |||||||||||||||||
Fixed index annuities - embedded derivatives | $ | (876,803) | $ | (1,922,085) | $ | 562,302 | |||||||||||
Other changes in difference between policy benefit reserves computed using derivative accounting vs. long-duration contracts accounting | 520,863 | 635,298 | 891,740 | ||||||||||||||
Reinsurance related embedded derivative | (2,362) | — | — | ||||||||||||||
$ | (358,302) | $ | (1,286,787) | $ | 1,454,042 |
December 31, | ||||||||||||||||||||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||||||||||||||||||||
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 | $ | 3,556,256 | $ | 99,229 | $ | 2,835,420 | $ | 95,378 | ||||||||||||||||||||||||||||
Barclays | A | A1 | 4,213,658 | 157,865 | 5,710,978 | 277,692 | ||||||||||||||||||||||||||||||||
Canadian Imperial Bank of Commerce | A+ | Aa2 | 3,956,329 | 141,540 | 6,593,815 | 279,053 | ||||||||||||||||||||||||||||||||
Citibank, N.A. | A+ | Aa3 | 3,190,833 | 115,860 | 3,118,979 | 96,757 | ||||||||||||||||||||||||||||||||
Credit Suisse | A+ | A1 | 3,716,868 | 113,295 | 4,422,798 | 78,823 | ||||||||||||||||||||||||||||||||
J.P. Morgan | A+ | Aa2 | 4,482,832 | 105,899 | 3,600,636 | 54,762 | ||||||||||||||||||||||||||||||||
Morgan Stanley | A+ | Aa3 | 2,223,743 | 47,950 | 2,856,466 | 62,969 | ||||||||||||||||||||||||||||||||
Royal Bank of Canada | AA- | A2 | 3,567,972 | 100,472 | 1,289,699 | 32,753 | ||||||||||||||||||||||||||||||||
Societe Generale | A | A1 | 2,548,072 | 86,494 | 1,494,904 | 34,394 | ||||||||||||||||||||||||||||||||
Truist | A | A2 | 2,547,808 | 94,924 | 2,375,124 | 96,573 | ||||||||||||||||||||||||||||||||
Wells Fargo | A+ | Aa2 | 5,820,381 | 206,403 | 4,848,541 | 196,801 | ||||||||||||||||||||||||||||||||
Exchange traded | 266,601 | 6,643 | 214,819 | 4,999 | ||||||||||||||||||||||||||||||||||
$ | 40,091,353 | $ | 1,276,574 | $ | 39,362,179 | $ | 1,310,954 |
December 31, | |||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Balance at beginning of year | $ | 2,225,199 | $ | 3,033,649 | $ | 3,529,855 | |||||||||||
Costs deferred during the year: | |||||||||||||||||
Commissions | 303,192 | 251,428 | 419,166 | ||||||||||||||
Policy issue costs | 4,665 | 3,725 | 3,351 | ||||||||||||||
Amortization: | |||||||||||||||||
Amortization | (313,990) | (2,769) | (280,699) | ||||||||||||||
Impact of unlocking | 45,662 | (646,785) | 192,982 | ||||||||||||||
Effect of net unrealized gains/losses | 299,478 | (414,049) | (831,006) | ||||||||||||||
Write-off related to in-force ceded reinsurance | (341,437) | — | — | ||||||||||||||
Balance at end of year | $ | 2,222,769 | $ | 2,225,199 | $ | 3,033,649 |
December 31, | |||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Balance at beginning of year | $ | 1,448,375 | $ | 2,042,060 | $ | 2,512,590 | |||||||||||
Costs deferred during the year | 95,160 | 93,610 | 177,941 | ||||||||||||||
Amortization: | |||||||||||||||||
Amortization | (197,799) | (10,063) | (193,292) | ||||||||||||||
Impact of unlocking | 45,107 | (428,101) | 104,707 | ||||||||||||||
Effect of net unrealized gains/losses | 155,230 | (249,131) | (559,886) | ||||||||||||||
Balance at end of year | $ | 1,546,073 | $ | 1,448,375 | $ | 2,042,060 |
December 31, | |||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Balance at beginning of year | $ | 2,485,123 | $ | 1,670,750 | $ | 790,884 | |||||||||||
Benefit expense accrual | 206,180 | 311,211 | 179,901 | ||||||||||||||
Impact of unlocking | 243,658 | 285,825 | 315,383 | ||||||||||||||
Effect of net unrealized gains/losses | (101,848) | 217,337 | 384,582 | ||||||||||||||
Reduction related to in-force ceded reinsurance | (38,484) | — | — | ||||||||||||||
Claim payments | — | — | — | ||||||||||||||
Balance at end of year | $ | 2,794,629 | $ | 2,485,123 | $ | 1,670,750 |
Year Ended December 31, | |||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Consolidated Statements of Operations | |||||||||||||||||
Annuity product charges | $ | 20,351 | $ | 7,021 | $ | 7,792 | |||||||||||
Change in fair value of derivatives | 140,641 | 43,080 | 97,195 | ||||||||||||||
$ | 160,992 | $ | 50,101 | $ | 104,987 | ||||||||||||
Interest sensitive and index product benefits | $ | 303,035 | $ | 152,485 | $ | 132,127 | |||||||||||
Change in fair value of embedded derivatives | (76,915) | 4,352 | 109,002 | ||||||||||||||
Other operating costs and expenses | 16,440 | 17,663 | 18,778 | ||||||||||||||
$ | 242,560 | $ | 174,500 | $ | 259,907 | ||||||||||||
Consolidated Statements of Cash Flows | |||||||||||||||||
Annuity deposits | $ | (424,819) | $ | (35,667) | $ | (290,040) | |||||||||||
Cash payments to policyholders | 984,260 | 466,311 | 381,276 | ||||||||||||||
$ | 559,441 | $ | 430,644 | $ | 91,236 |
Year Ended December 31, | |||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Consolidated statements of operations: | |||||||||||||||||
Current income taxes | $ | 332 | $ | 3,430 | $ | 12,528 | |||||||||||
Deferred income taxes | 128,423 | 141,071 | 56,947 | ||||||||||||||
Total income tax expense included in consolidated statements of operations | 128,755 | 144,501 | 69,475 | ||||||||||||||
Stockholders' equity: | |||||||||||||||||
Expense (benefit) relating to: | |||||||||||||||||
Adoption of expected credit loss model | — | (2,543) | — | ||||||||||||||
Change in net unrealized investment losses | (90,284) | 225,746 | 372,472 | ||||||||||||||
Total income tax expense included in consolidated financial statements | $ | 38,471 | $ | 367,704 | $ | 441,947 |
Year Ended December 31, | |||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Income before income taxes | $ | 602,747 | $ | 815,961 | $ | 315,565 | |||||||||||
Income tax expense on income before income taxes | $ | 126,577 | $ | 171,352 | $ | 66,269 | |||||||||||
Tax effect of: | |||||||||||||||||
State income taxes | 5,239 | 5,749 | 5,111 | ||||||||||||||
Tax exempt net investment income | (4,715) | (4,602) | (4,385) | ||||||||||||||
Tax rate differential on net operating loss carryback | — | (30,041) | — | ||||||||||||||
Other | 1,654 | 2,043 | 2,480 | ||||||||||||||
Income tax expense | $ | 128,755 | $ | 144,501 | $ | 69,475 | |||||||||||
Effective tax rate | 21.4 | % | 17.7 | % | 22.0 | % |
December 31, | |||||||||||
2021 | 2020 | ||||||||||
(Dollars in thousands) | |||||||||||
Deferred income tax assets: | |||||||||||
Policy benefit reserves | $ | 1,373,485 | $ | 1,586,000 | |||||||
Credit losses/Impairments | 15,275 | 28,519 | |||||||||
Other policyholder funds | 3,332 | 3,789 | |||||||||
Deferred compensation | 3,434 | 2,161 | |||||||||
Share-based compensation | 5,171 | 2,189 | |||||||||
Net operating loss carryforwards | 87,314 | — | |||||||||
Other | 1,140 | 3,569 | |||||||||
Gross deferred tax assets | 1,489,151 | 1,626,227 | |||||||||
Deferred income tax liabilities: | |||||||||||
Deferred policy acquisition costs and deferred sales inducements | (1,170,859) | (1,268,790) | |||||||||
Net unrealized gains on available for sale fixed maturity securities | (489,290) | (579,766) | |||||||||
Derivative instruments | (107,717) | (119,444) | |||||||||
Policy benefit reserves | (98,616) | (123,270) | |||||||||
Investment income items | (56,285) | (28,719) | |||||||||
Amounts due reinsurer | (103,234) | (5,636) | |||||||||
Other | (5,122) | (4,602) | |||||||||
Gross deferred tax liabilities | (2,031,123) | (2,130,227) | |||||||||
Net deferred income tax liability | $ | (541,972) | $ | (504,000) |
December 31, | |||||||||||
2021 | 2020 | ||||||||||
(Dollars in thousands) | |||||||||||
Senior notes due 2027 | |||||||||||
Principal | $ | 500,000 | $ | 500,000 | |||||||
Unamortized debt issue costs | (3,537) | (4,086) | |||||||||
Unamortized discount | (213) | (246) | |||||||||
$ | 496,250 | $ | 495,668 |
December 31, | ||||||||||||||||||||||||||
2021 | 2020 | Interest Rate | Due Date | |||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||
American Equity Capital Trust II | $ | 78,421 | $ | 78,112 | 5% | June 1, 2047 | ||||||||||||||||||||
Year Ended December 31, | |||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||
ESOP | $ | 3,377 | $ | 2,908 | $ | 2,547 | |||||||||||
Employee Incentive Plans | 22,886 | 7,855 | 6,559 | ||||||||||||||
Director Equity Plans | 1,262 | 1,056 | 922 | ||||||||||||||
$ | 27,525 | $ | 11,819 | $ | 10,028 |
Number of Shares | Weighted-Average Exercise Price per Share | Total Exercise Price | |||||||||||||||
(Dollars in thousands, except per share data) | |||||||||||||||||
Outstanding at January 1, 2019 | 1,221,865 | $ | 17.41 | $ | 21,273 | ||||||||||||
Granted | — | — | — | ||||||||||||||
Canceled | (22,600) | 18.14 | (410) | ||||||||||||||
Exercised | (370,352) | 11.76 | (4,357) | ||||||||||||||
Outstanding at December 31, 2019 | 828,913 | 19.91 | 16,506 | ||||||||||||||
Granted | 815,767 | 26.70 | 21,778 | ||||||||||||||
Canceled | (31,200) | 21.50 | (670) | ||||||||||||||
Exercised | (355,563) | 16.98 | (6,038) | ||||||||||||||
Outstanding at December 31, 2020 | 1,257,917 | 25.10 | 31,576 | ||||||||||||||
Granted | 1,246,605 | 29.15 | 36,336 | ||||||||||||||
Canceled | (146,803) | 25.44 | (3,735) | ||||||||||||||
Exercised | (295,000) | 22.88 | (6,749) | ||||||||||||||
Outstanding at December 31, 2021 | 2,062,719 | 27.84 | $ | 57,428 |
Stock Options Outstanding | Stock Options Vested | ||||||||||||||||||||||||||||||||||
Range of Exercise Prices | Number of Awards | Remaining Life (yrs) | Weighted-Average Exercise Price Per Share | Number of Awards | Remaining Life (yrs) | Weighted-Average Exercise Price Per Share | |||||||||||||||||||||||||||||
$10.52 | 42,000 | 0.43 | $ | 10.52 | 42,000 | 0.43 | $ | 10.52 | |||||||||||||||||||||||||||
$21.89 - $26.72 | 398,320 | 8.84 | 26.11 | — | 0.00 | — | |||||||||||||||||||||||||||||
$27.05 - $32.58 | 1,622,399 | 9.10 | 28.71 | — | 0.00 | — | |||||||||||||||||||||||||||||
$10.52 - $32.58 | 2,062,719 | 8.87 | 27.84 | 42,000 | 0.43 | 10.52 |
Year Ended December 31, | |||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||
American Equity Life | $ | (863,818) | $ | (34,467) | $ | 143,309 |
December 31, | |||||||||||
2021 | 2020 | ||||||||||
(Dollars in thousands) | |||||||||||
American Equity Life | $ | 4,078,532 | $ | 3,728,732 |
December 31, | |||||||||||
2021 | 2020 | ||||||||||
(Dollars in thousands) | |||||||||||
Total adjusted capital | $ | 4,437,574 | $ | 3,978,901 | |||||||
Company Action Level RBC | 1,108,796 | 1,069,434 | |||||||||
Ratio of adjusted capital to Company Action Level RBC | 400 | % | 372 | % |
Year Ended December 31, | |||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||
(Dollars in thousands, except per share data) | |||||||||||||||||
Numerator: | |||||||||||||||||
Net income available to common stockholders - numerator for earnings per common share | $ | 430,317 | $ | 637,945 | $ | 246,090 | |||||||||||
Denominator: | |||||||||||||||||
Weighted average common shares outstanding | 93,860,378 | 92,055,035 | 91,139,453 | ||||||||||||||
Effect of dilutive securities: | |||||||||||||||||
Stock options and deferred compensation agreements | 271,422 | 93,014 | 304,196 | ||||||||||||||
Restricted stock and restricted stock units | 359,359 | 244,447 | 338,593 | ||||||||||||||
Denominator for earnings per common share - assuming dilution | 94,491,159 | 92,392,496 | 91,782,242 | ||||||||||||||
Earnings per common share | $ | 4.58 | $ | 6.93 | $ | 2.70 | |||||||||||
Earnings per common share - assuming dilution | $ | 4.55 | $ | 6.90 | $ | 2.68 |
Column A | Column B | Column C | Column D | |||||||||||||||||
Type of Investment | Amortized Cost (1) | Fair Value | Amount at which shown in the balance sheet | |||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||
Available for sale: | ||||||||||||||||||||
United States Government full faith and credit | $ | 37,109 | $ | 37,793 | $ | 37,793 | ||||||||||||||
United States Government sponsored agencies | 1,008,920 | 1,040,953 | 1,040,953 | |||||||||||||||||
United States municipalities, states and territories | 3,495,563 | 3,927,201 | 3,927,201 | |||||||||||||||||
Foreign government obligations | 380,646 | 402,545 | 402,545 | |||||||||||||||||
Corporate securities | 31,084,629 | 34,660,234 | 34,660,234 | |||||||||||||||||
Residential mortgage backed securities | 1,056,778 | 1,125,049 | 1,125,049 | |||||||||||||||||
Commercial mortgage backed securities | 4,708,878 | 4,840,311 | 4,840,311 | |||||||||||||||||
Other asset backed securities | 5,226,660 | 5,271,857 | 5,271,857 | |||||||||||||||||
Total fixed maturity securities | 46,999,183 | 51,305,943 | 51,305,943 | |||||||||||||||||
Mortgage loans on real estate | 5,687,998 | 5,867,227 | 5,687,998 | |||||||||||||||||
Real estate investments | 335,767 | 337,939 | 337,939 | |||||||||||||||||
Derivative instruments | 402,877 | 1,277,480 | 1,277,480 | |||||||||||||||||
Other investments | 1,764,016 | 1,767,144 | ||||||||||||||||||
Total investments | $ | 55,189,841 | $ | 60,376,504 |
December 31, | |||||||||||
2021 | 2020 | ||||||||||
Assets | |||||||||||
Cash and cash equivalents | $ | 362,245 | $ | 486,670 | |||||||
Equity securities of subsidiary trusts | 2,353 | 2,343 | |||||||||
Receivable from subsidiaries | 2,783 | 2,418 | |||||||||
Notes receivable from subsidiaries | 165,000 | — | |||||||||
Federal income tax recoverable, including amount from subsidiaries | 217,174 | — | |||||||||
Other assets | 20,134 | 3,078 | |||||||||
769,689 | 494,509 | ||||||||||
Investment in and advances to subsidiaries | 6,387,912 | 6,448,924 | |||||||||
Total assets | $ | 7,157,601 | $ | 6,943,433 | |||||||
Liabilities and Stockholders' Equity | |||||||||||
Liabilities: | |||||||||||
Notes payable | $ | 496,250 | $ | 495,668 | |||||||
Subordinated debentures payable to subsidiary trusts | 78,421 | 78,112 | |||||||||
Deferred income taxes | 223,304 | 590 | |||||||||
Federal income tax payable | — | 5,395 | |||||||||
Other liabilities | 36,499 | 14,680 | |||||||||
Total liabilities | 834,474 | 594,445 | |||||||||
Stockholders' equity: | |||||||||||
Preferred stock, Series A | 16 | 16 | |||||||||
Preferred stock, Series B | 12 | 12 | |||||||||
Common stock | 92,514 | 95,721 | |||||||||
Additional paid-in capital | 1,614,374 | 1,681,127 | |||||||||
Accumulated other comprehensive income | 1,848,789 | 2,203,557 | |||||||||
Retained earnings | 2,767,422 | 2,368,555 | |||||||||
Total stockholders' equity | 6,323,127 | 6,348,988 | |||||||||
Total liabilities and stockholders' equity | $ | 7,157,601 | $ | 6,943,433 |
Year Ended December 31, | |||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||
Revenues: | |||||||||||||||||
Net investment income | $ | 114 | $ | 1,115 | $ | 1,755 | |||||||||||
Dividends from subsidiary trusts | 159 | 167 | 469 | ||||||||||||||
Dividends from subsidiaries | 250,000 | — | — | ||||||||||||||
Investment advisory fees | 126,643 | 114,228 | 107,945 | ||||||||||||||
Surplus note interest from subsidiary | 4,080 | 4,080 | 4,080 | ||||||||||||||
Change in fair value of derivatives | — | 62 | (1,650) | ||||||||||||||
Loss on extinguishment of debt | — | (2,024) | (2,001) | ||||||||||||||
Other revenue | 8,511 | 346 | — | ||||||||||||||
Total revenues | 389,507 | 117,974 | 110,598 | ||||||||||||||
Expenses: | |||||||||||||||||
Interest expense on notes payable | 25,581 | 25,552 | 25,525 | ||||||||||||||
Interest expense on subordinated debentures issued to subsidiary trusts | 5,324 | 5,557 | 15,764 | ||||||||||||||
Other operating costs and expenses | 72,435 | 46,686 | 28,357 | ||||||||||||||
Total expenses | 103,340 | 77,795 | 69,646 | ||||||||||||||
Income before income taxes and equity in undistributed income of subsidiaries | 286,167 | 40,179 | 40,952 | ||||||||||||||
Income tax expense | 11,565 | 13,142 | 11,586 | ||||||||||||||
Income before equity in undistributed income of subsidiaries | 274,602 | 27,037 | 29,366 | ||||||||||||||
Equity in undistributed income of subsidiaries | 199,390 | 644,423 | 216,724 | ||||||||||||||
Net income | 473,992 | 671,460 | 246,090 | ||||||||||||||
Less: Preferred stock dividends | 43,675 | 33,515 | — | ||||||||||||||
Net income available to common stockholders | $ | 430,317 | $ | 637,945 | $ | 246,090 |
Year Ended December 31, | |||||||||||||||||
2021 | 2020 | 2019 | |||||||||||||||
Operating activities | |||||||||||||||||
Net income | $ | 473,992 | $ | 671,460 | $ | 246,090 | |||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||
Provision for depreciation and amortization | 1,232 | 1,138 | 1,136 | ||||||||||||||
Accrual of discount on equity security | (10) | (3) | (8) | ||||||||||||||
Equity in undistributed income of subsidiaries | (199,390) | (644,423) | (216,724) | ||||||||||||||
Non cash dividend from subsidiaries | (80,000) | — | — | ||||||||||||||
Change in fair value of derivatives | — | (62) | 945 | ||||||||||||||
Loss on extinguishment of debt | — | 2,024 | 2,001 | ||||||||||||||
Accrual of discount on debenture issued to subsidiary trust | 309 | 289 | 270 | ||||||||||||||
Share-based compensation | 10,235 | 3,303 | 2,923 | ||||||||||||||
Deferred income taxes | 222,714 | 6,408 | 2,087 | ||||||||||||||
Changes in operating assets and liabilities: | |||||||||||||||||
Receivable from subsidiaries | (365) | (1,208) | (40) | ||||||||||||||
Federal income tax recoverable/payable | (222,569) | (3,879) | 382 | ||||||||||||||
Other assets | (5,054) | (320) | (1,229) | ||||||||||||||
Other liabilities | 21,819 | 7,617 | (1,846) | ||||||||||||||
Net cash provided by operating activities | 222,913 | 42,344 | 35,987 | ||||||||||||||
Investing activities | |||||||||||||||||
Notes receivable from subsidiaries | $ | (165,000) | $ | — | $ | — | |||||||||||
Repayment of equity securities | — | 2,445 | 2,660 | ||||||||||||||
Contribution to subsidiaries | — | (210,000) | (50,000) | ||||||||||||||
Purchases of property, plant and equipment | (12,642) | (48) | (117) | ||||||||||||||
Net cash used in investing activities | (177,642) | (207,603) | (47,457) | ||||||||||||||
Financing activities | |||||||||||||||||
Repayment of subordinated debentures | $ | — | $ | (81,450) | $ | (88,160) | |||||||||||
Proceeds from issuance of common stock | 4,844 | 338,061 | 1,691 | ||||||||||||||
Acquisition of treasury stock | (99,415) | (165,094) | — | ||||||||||||||
Proceeds from issuance of preferred stock, net | — | 290,260 | 388,893 | ||||||||||||||
Dividends paid on common stock | (31,450) | (28,859) | (27,304) | ||||||||||||||
Dividends paid on preferred stock | (43,675) | (33,515) | — | ||||||||||||||
Net cash provided by (used in) financing activities | (169,696) | 319,403 | 275,120 | ||||||||||||||
Increase (decrease) in cash and cash equivalents | (124,425) | 154,144 | 263,650 | ||||||||||||||
Cash and cash equivalents at beginning of year | 486,670 | 332,526 | 68,876 | ||||||||||||||
Cash and cash equivalents at end of year | $ | 362,245 | $ | 486,670 | $ | 332,526 | |||||||||||
Supplemental disclosures of cash flow information | |||||||||||||||||
Cash paid during the year for: | |||||||||||||||||
Interest on notes payable | $ | 25,000 | $ | 25,000 | $ | 25,000 | |||||||||||
Interest on subordinated debentures | 5,000 | 6,181 | 16,891 | ||||||||||||||
Column A | Column B | Column C | Column D | Column E | ||||||||||||||||||||||
Deferred policy acquisition costs | Future policy benefits, losses, claims and loss expenses | Unearned premiums | Other policy claims and benefits payable | |||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||
As of December 31, 2021: Life insurance | $ | 2,222,769 | $ | 65,477,778 | $ | — | $ | 226,844 | ||||||||||||||||||
As of December 31, 2020: Life insurance | $ | 2,225,199 | $ | 62,352,882 | $ | — | $ | 240,904 | ||||||||||||||||||
As of December 31, 2019: Life insurance | $ | 3,033,649 | $ | 62,261,244 | $ | — | $ | 256,105 |
Column A | Column F | Column G | Column H | Column I | Column J | |||||||||||||||||||||||||||
Premium revenue | Net investment income | Benefits, claims, losses and settlement expenses | Amortization of deferred policy acquisition costs | Other operating expenses | ||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||
For the year ended December 31, 2021: Life insurance | $ | 300,833 | $ | 2,037,475 | $ | 2,543,779 | $ | 268,328 | $ | 274,617 | ||||||||||||||||||||||
For the year ended December 31, 2020: Life insurance | $ | 290,609 | $ | 2,182,078 | $ | 744,389 | $ | 649,554 | $ | 214,745 | ||||||||||||||||||||||
For the year ended December 31, 2019: Life insurance | $ | 263,569 | $ | 2,307,635 | $ | 2,865,621 | $ | 87,717 | $ | 195,442 |
Column A | Column B | Column C | Column D | Column E | Column F | |||||||||||||||||||||||||||
Gross amount | Ceded to other companies | Assumed from other companies | Net amount | Percent of amount assumed to net | ||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||
Year ended December 31, 2021 | ||||||||||||||||||||||||||||||||
Life insurance in force, at end of year | $ | 48,943 | $ | 5,131 | $ | 46,119 | $ | 89,931 | 51.28 | % | ||||||||||||||||||||||
Insurance premiums and other considerations: | ||||||||||||||||||||||||||||||||
Annuity product charges | $ | 262,982 | $ | 20,351 | $ | — | $ | 242,631 | — | |||||||||||||||||||||||
Traditional life, accident and health insurance, and life contingent immediate annuity premiums | 58,150 | 117 | 169 | 58,202 | 0.29 | % | ||||||||||||||||||||||||||
$ | 321,132 | $ | 20,468 | $ | 169 | $ | 300,833 | 0.06 | % | |||||||||||||||||||||||
Year ended December 31, 2020 | ||||||||||||||||||||||||||||||||
Life insurance in force, at end of year | $ | 52,234 | $ | 5,925 | $ | 49,577 | $ | 95,886 | 51.70 | % | ||||||||||||||||||||||
Insurance premiums and other considerations: | ||||||||||||||||||||||||||||||||
Annuity product charges | $ | 258,248 | $ | 7,021 | $ | — | $ | 251,227 | — | |||||||||||||||||||||||
Traditional life, accident and health insurance, and life contingent immediate annuity premiums | 39,323 | 139 | 198 | 39,382 | 0.50 | % | ||||||||||||||||||||||||||
$ | 297,571 | $ | 7,160 | $ | 198 | $ | 290,609 | 0.07 | % | |||||||||||||||||||||||
Year ended December 31, 2019 | ||||||||||||||||||||||||||||||||
Life insurance in force, at end of year | $ | 56,451 | $ | 6,722 | $ | 52,653 | $ | 102,382 | 51.43 | % | ||||||||||||||||||||||
Insurance premiums and other considerations: | ||||||||||||||||||||||||||||||||
Annuity product charges | $ | 247,827 | $ | 7,792 | $ | — | $ | 240,035 | — | |||||||||||||||||||||||
Traditional life, accident and health insurance, and life contingent immediate annuity premiums | 23,395 | 145 | 284 | 23,534 | 1.21 | % | ||||||||||||||||||||||||||
$ | 271,222 | $ | 7,937 | $ | 284 | $ | 263,569 | 0.11 | % |
State of Organization | |||||
Insurance Subsidiaries: | |||||
American Equity Investment Life Insurance Company | Iowa | ||||
American Equity Investment Life Insurance Company of New York | New York | ||||
Eagle Life Insurance Company | Iowa | ||||
AEL Re Vermont Inc. | Vermont | ||||
AEL Re Bermuda Ltd. | Bermuda | ||||
Noninsurance Subsidiaries: | |||||
AE Capital, LLC | Iowa | ||||
American Equity Investment Properties, L.C. | Iowa | ||||
American Equity Capital Trust II | Delaware | ||||
AERL, L.C. | Iowa | ||||
High Trestle Investment Management, LLC | Iowa | ||||
NC Securities Holdco, LLC | North Carolina | ||||
Residential Investment Trust | Delaware | ||||
Residential Investment Trust II | Delaware | ||||
Residential Investment Trust III | Delaware | ||||
Residential Investment Trust IV | Delaware | ||||
Residential Investment Trust V | Delaware |
Date: | March 1, 2022 | By: | /s/ Anant Bhalla | |||||||||||
Anant Bhalla | ||||||||||||||
Chief Executive Officer and President | ||||||||||||||
(Principal Executive Officer) |
Date: | March 1, 2022 | By: | /s/ Axel Andre | |||||||||||
Axel Andre | ||||||||||||||
Chief Financial Officer and Executive Vice President | ||||||||||||||
(Principal Financial Officer) |
Date: | March 1, 2022 | By: | /s/ Anant Bhalla | |||||||||||
Anant Bhalla | ||||||||||||||
Chief Executive Officer and President | ||||||||||||||
(Principal Executive Officer) |
Date: | March 1, 2022 | By: | /s/ Axel Andre | |||||||||||
Axel Andre | ||||||||||||||
Chief Financial Officer and Executive Vice President | ||||||||||||||
(Principal Financial Officer) |