American Equity Investment Life Holding Co.

The stable outlook reflects our expectation that AEL will continue to operate in its core FIA market and keep its satisfactory business risk profile. We expect AEL to maintain capital redundancy at the 'A' level, financial leverage below 30%, and fixed-charge coverage above 4x. We could lower our ratings in the next 12-24 months if AEL's capital adequacy drops below the 'A' confidence level for a sustained period. We may also lower the ratings if sales decline compared with top FIA players for a prolonged period and operating performance declines relative to peers. Also, we will be closely monitoring the company's new strategic partnerships and allocation to private investments, and may lower our ratings if we view the investment strategy

...S&P Global Ratings expects American Equity Investment Life Insurance Co. and holding company American Equity Life Holding Co. (together, AEL) to maintain a strong market presence in the U.S. fixed-index annuity (FIA) market. AEL remains a leading player in the FIA market, as demonstrated by its top 10 sales position across U.S. fixed annuities as of first-quarter 2021, according to LIMRA. We expect sales to rebound in 2021 after a steep decline in 2020 amid product refreshes, diversification in distribution channels, and the ongoing economic recovery, yet we believe pressure remains due to intense competition and low interest rates. Business diversity continues to limit AEL's competitive position. AEL's business model primarily focuses on growing the presence of its core fixed-index and fixed annuity products. AEL primarily relies on independent agents via national marketing organizations and is increasingly tapping banks and broker-dealers to further diversify its current distribution...

Full Report