American Equity Investment Life Holding Company

For first quarter 2023, the company reported non-GAAP operating income of $124.3 million, or $1.47 per diluted common share, versus $107.1 million, or $1.09 per diluted common share, in first quarter 2022. The quarter included one notable item of $9.6 million, or $0.11 per share after tax. Total sales were $1.4 billion, with FIA sales of $964 million and total income product sales of $528 million. Investment spread was 2.67%, up 12 basis points from 2.54% in the fourth quarter. Average yield on invested assets was 4.48% versus 4.30% in Q4, and cost of money was 1.81% versus 1.76%. For Q2, management expects about 6 basis points of additional yield benefit from the $6.2 billion floating-rate portfolio and about $114 million of combined DAC/DSI amortization before new sales and experience variances. Full-year, management said it expects to meet or exceed its $4 billion FIA sales goal and continue writing a meaningful amount of fixed-rate annuities.

Anant Bhalla framed the quarter as evidence that American Equity’s go-to-market changes are working, saying the company is seeing positive traction in FIA and reinsurance. He emphasized that sustained market uncertainty makes lifetime income and principal-protected accumulation products more attractive, and he tied that to stronger sales momentum and the reinsurance strategy. His tone was confident and opportunistic, with repeated emphasis on capital discipline, share repurchases, and being able to operate well in a prolonged period of higher rates and recession risk.

Axel Andre highlighted better operating earnings, a 24.4% effective tax rate including a $6 million true-up, and improving spread metrics. He said the point-in-time portfolio yield rose to 4.68% from 4.44% at year-end, and the company expects another roughly 6 basis points of yield benefit in Q2 from floating-rate assets. He also noted cash and equivalents of $437 million at the holding company, $690 million at the operating companies, no FHLB borrowings outstanding today, and more than $650 million of rating-agency excess capital, with financial leverage at 13.5%.

Analysts focused on recession sensitivity, cost of money, investment spread, private-asset allocation, reinsurance usage, and the new sidecar. Management said a moderate recession scenario still implies about $350 million of capital impact, mostly from downgrades and required capital, and that a GFC-like scenario would be about twice that amount. On spreads and margins, management said the environment could leave upside versus prior expectations, and on the sidecar it reiterated a likely third-quarter execution with interest from counterparties. Questions on FIA competition drew a response that some rivals have eased rates, while management claimed strong distribution momentum and said the AssetShield bonus product has performed well.