On Oct. 28, 2004, Standard & Poors Ratings Services affirmed its 'BB+' counterparty credit rating on American Equity Investment Holding Co. (AEI). At the same time, Standard & Poor's affirmed its 'BBB+' counterparty credit and financial strength ratings on AEI's operating subsidiary, American Equity Investment Life Insurance Co. (AEILIC). The outlook is stable. The financial strength rating reflects AEI/AEILIC's good competitive position in the annuity industry in its chosen markets, improving profitability, strong capitalization, strong liquidity, and seasoned management team. These strengths are offset by Standard & Poor's concerns about aggressive asset liability management and product concentration. Profitability could be affected in the near term if interest rates rise rapidly or if there is a flattening of the yield curve.
