American Equity Reports First Quarter 2019 Results

Company Highlights

• First quarter 2019 net loss of $30.0 million or $0.33 per diluted
  common share
• First quarter 2019 non-GAAP operating income¹ of
  $89.4 million or $0.97 per diluted common share
• First quarter 2019 annuity sales of $1.2 billion
• Policyholder funds under management of $51.6 billion
• First quarter 2019 investment spread of 2.58%
• Estimated risk-based capital ratio of 352% compared to 360% at
  December 31, 2018

WEST DES MOINES, Iowa–(BUSINESS WIRE)–American Equity Investment Life Holding Company (NYSE: AEL), a leading
issuer of fixed index annuities (FIAs), today reported a first quarter
2019 net loss of $30.0 million, or $0.33 per diluted common share,
compared to net income of $141.0 million, or $1.55 per diluted common
share, for first quarter 2018.

Non-GAAP operating income¹ for the first quarter of 2019 was
$89.4 million, or $0.97 per diluted common share, compared to non-GAAP
operating income¹ of $77.7 million, or $0.85 per diluted
common share, for first quarter 2018. On a trailing twelve-month basis,
non-GAAP operating return¹ on average equity excluding
average AOCI¹ was 19.1% based upon reported results and 15.9%
excluding the impact of assumption revisions.

POLICYHOLDER FUNDS UNDER MANAGEMENT UP 1.1% ON $1.2 BILLION OF SALES

Policyholder funds under management at March 31, 2019 were $51.6
billion, a $551 million or 1.1% increase from December 31, 2018. First
quarter sales were $1.2 billion both before and after coinsurance ceded.
Gross sales and net sales for the quarter increased 20% and 26%,
respectively, from first quarter 2018 sales. On a sequential basis,
gross and net sales increased 10% and 13%, respectively.

Total sales by independent agents for American Equity Investment Life
Insurance Company (American Equity Life) increased 8% sequentially while
total sales by broker-dealers and banks for Eagle Life Insurance Company
(Eagle Life) increased 15% sequentially. Sales of FIAs were up 9%
sequentially to $1.2 billion driven by a 9% increase in sales for
American Equity Life. FIA sales for Eagle Life were up 9% sequentially
as well.

Commenting on sales, John Matovina, Chairman and Chief Executive
Officer, said: “We delivered sequential and year-over-year increases in
FIA sales in American Equity Life’s independent agent channel. Sales
have been on an upswing for the last three quarters and the momentum has
carried over to the second quarter. The expansion of our investment
program into non-traditional asset classes has enabled us to compete
more effectively in our markets. In the first quarter, combined sales
for AssetShield and the Choice series, our accumulation products in the
independent agent channel, accounted for 41% of sales compared to 38% of
sales in the fourth quarter. In the guaranteed lifetime income space,
the IncomeShield series, which was the second best-selling guaranteed
lifetime income product in the independent agent channel in the fourth
quarter of 2018, accounted for 39% of our FIA sales in the first
quarter.”

Commenting on the market environment and the outlook for FIA sales,
Matovina added: “The market in each of our distribution channels
continues to be challenging. However, we remain pleased with our
competitive positioning for both accumulation and guaranteed lifetime
income products. Reflecting the decline in available investment yields
during the quarter, we lowered participation rates on S&P 500 annual
point-to-point strategies at both American Equity Life and Eagle Life in
mid-April. However, our business activity remains strong as a number of
major competitors have made similar reductions.”

Matovina continued: “In the bank and broker-dealer channels, the large
bank we referenced last quarter has become Eagle Life’s third largest
distribution relationship. At current run rates, we have seven accounts
capable of producing sales of $50 million or higher this year compared
to four such accounts in 2018. Year to date sales at these four accounts
are up 15%. Eagle Life’s sales are also benefiting from the expansion of
our employee wholesalers. Eagle Life now has ten employee wholesalers,
up from four at the end of the year. Our intent is to use our employee
wholesalers to target accounts that do not use third party wholesalers
and to complement our third party wholesalers when possible. Our
employee wholesalers are now working with five meaningful accounts.”

INVESTMENT SPREAD INCREASES ON LOWER COST OF MONEY

American Equity’s investment spread was 2.58% for the first quarter of
2019 compared to 2.56% for the fourth quarter of 2018 and 2.54% for the
first quarter of 2018. On a sequential basis, the average yield on
invested assets decreased by 3 basis points while the cost of money fell
5 basis points.

Average yield on invested assets was 4.48% in the first quarter of 2019
compared to 4.51% in the fourth quarter of 2018. This decrease was
attributable to a decline in the benefit from non-trendable investment
income items from 7 basis points in the fourth quarter of 2018 to 2
basis points in the first quarter of this year. The decline from
non-trendable investment income items was partially offset by a 2 basis
point increase in our average yield on invested assets from the $4.7
billion of floating rate instruments in our investment portfolio.

The aggregate cost of money for annuity liabilities of 1.90% in the
first quarter of 2019 was down 5 basis points from 1.95% in the fourth
quarter of 2018. The cost of money benefited by 4 basis points from over
hedging index-linked interest obligations and other non-trendable items,
compared to 1 basis point in the fourth quarter of 2018.

Commenting on investment spread, Matovina said: “The sequential increase
in investment spread in the first quarter came despite a 2 basis point
decrease in the benefit from non-trendable investment spread items.
Excluding such items, both average yield on invested assets and the cost
of money for annuity liabilities improved for the quarter. The cost of
money, in particular, benefited from lower option costs in both the
fourth quarter of last year and the first quarter of this year.

Matovina went on to say: “Given the current market environment, we would
expect further improvement in investment spread for the remainder of the
year driven by a decrease in the cost of money. While our option costs
have begun to rise as equity market volatility has abated, the cost of
options remains below the weighted average levels of 2018. Should the
cost of money rise appreciably, we have flexibility to reduce our
crediting rates and could decrease our cost of money by approximately
0.61% through further reductions in renewal rates to guaranteed
minimums.”

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements within the
meaning of The Private Securities Litigation Reform Act of 1995.
Forward-looking statements relate to future operations, strategies,
financial results or other developments, and are subject to assumptions,
risks and uncertainties. Statements such as “guidance”, “expect”,
“anticipate”, “believe”, “goal”, “objective”, “target”, “may”, “should”,
“estimate”, “projects” or similar words as well as specific projections
of future results qualify as forward-looking statements. Factors that
may cause our actual results to differ materially from those
contemplated by these forward looking statements can be found in the
company’s Form 10-K filed with the Securities and Exchange Commission.
Forward-looking statements speak only as of the date the statement was
made and the company undertakes no obligation to update such
forward-looking statements. There can be no assurance that other factors
not currently anticipated by the company will not materially and
adversely affect our results of operations. Investors are cautioned not
to place undue reliance on any forward-looking statements made by us or
on our behalf.

CONFERENCE CALL

American Equity will hold a conference call to discuss first quarter
2019 earnings on Thursday, May 2, 2019 at 8:00 a.m. CT. The conference
call will be webcast live on the Internet. Investors and interested
parties who wish to listen to the call on the Internet may do so at www.american-equity.com.

The call may also be accessed by telephone at 855-865-0606, passcode
6087088 (international callers, please dial 704-859-4382). An audio
replay will be available shortly after the call on AEL’s website. An
audio replay will also be available via telephone through May 9, 2019 at
855-859-2056, passcode 6087088 (international callers will need to dial
404-537-3406).

ABOUT AMERICAN EQUITY

American Equity Investment Life Holding Company, through its
wholly-owned operating subsidiaries, issues fixed annuity and life
insurance products, with a primary emphasis on the sale of fixed index
and fixed rate annuities. American Equity Investment Life Holding
Company, a New York Stock Exchange Listed company (NYSE: AEL), is
headquartered in West Des Moines, Iowa. For more information, please
visit www.american-equity.com.

1 Use of non-GAAP financial measures is discussed in this release in the
tables that follow the text of the release.

American Equity Investment Life Holding Company
Unaudited (Dollars
in thousands, except per share data)

NON-GAAP FINANCIAL MEASURES

In addition to net income (loss), the Company has consistently utilized
non-GAAP operating income and non-GAAP operating income per common share
– assuming dilution, non-GAAP financial measures commonly used in the
life insurance industry, as economic measures to evaluate its financial
performance. Non-GAAP operating income equals net income (loss) adjusted
to eliminate the impact of items that fluctuate from quarter to quarter
in a manner unrelated to core operations, and the Company believes
measures excluding their impact are useful in analyzing operating
trends. The most significant adjustments to arrive at non-GAAP operating
income eliminate the impact of fair value accounting for the Company’s
fixed index annuity business. These adjustments are not economic in
nature but rather impact the timing of reported results. The Company
believes the combined presentation and evaluation of non-GAAP operating
income together with net income (loss) provides information that may
enhance an investor’s understanding of its underlying results and
profitability.

American Equity Investment Life Holding Company
Unaudited (Dollars
in thousands, except per share data)

NON-GAAP FINANCIAL MEASURES

Average Stockholders’ Equity and Return on
Average Equity

Return on average equity measures how efficiently the Company generates
profits from the resources provided by its net assets. Return on average
equity and non-GAAP operating return on average equity are calculated by
dividing net income and non-GAAP operating income, respectively, for the
trailing twelve months by average equity excluding average accumulated
other comprehensive income (“AOCI”). The Company excludes AOCI because
AOCI fluctuates from quarter to quarter due to unrealized changes in the
fair value of available for sale investments.

Contacts

Steven D. Schwartz, Vice President – Investor Relations
(515)
273-3763, [email protected]