American Equity Investment Life Holding Co.

The stable outlook indicates our expectation that AEL will sustain its market positions in its core fixed-index annuity business while maintaining capitalization at or above the 'A' level, including financial leverage below 30% and fixed-charge coverage above 4.0x. We could lower our ratings on AEL within 12-24 months if: Capital adequacy drops below the 'A' confidence level for a sustained period; Sales volume and/or operating performance significantly declines relative to its fixed-index annuity market competitors for a sustained period; and Any changes to investment strategies lack appropriate risk controls. It is unlikely we will raise the ratings in the next 12-24 months as AEL undergoes its updated strategy. Over the longer term, we could raise our ratings on AEL if

...We expect American Equity Investment Life Insurance Co. and holding company American Equity Investment Life Holding Co. (together, AEL) to maintain a strong market presence in the U.S. fixed-index annuity market. AEL remains a leading player in the U.S. fixed-index annuity market, as demonstrated by revenue from fixed annuity sales during the first quarter of 2022, according to LIMRA. S&P Global Ratings expects AEL to continue to evolve its product offerings from spread to fee income and further diversify outside of its independent marketing organizations (IMO) channel to benefit market presence. However, competition is expected to be intense as interest rates remain low, despite recent increase in key interest rates. AEL's concentration in the fixed-index and fixed annuity products and IMO channel limits the company'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...

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