Best’s News & Research Service - June 26, 2020 01:42 PM (EDT)
AM Best Affirms Credit Ratings of American Equity Investment Life Insurance Company and Its Subsidiaries
- June 26, 2020 01:42 PM (EDT)
Oldwick //BestWire// - AM Best has affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a-” of American Equity Investment Life Insurance Company (AEILIC) and its subsidiaries, American Equity Investment Life Insurance Company of New York (Lake Success, NY) and Eagle Life Insurance Company, collectively referred to as AEL. Concurrently AM Best has affirmed the Long Term ICR of “bbb-” of American Equity Investment Life Holding Company [NYSE: AEL] and its existing Long Term Issue Credit Ratings (Long-Terms IRs). The outlook for all of these Credit Ratings (ratings) is stable. All companies are domiciled in West Des Moines, IA, unless otherwise specified. (Please see below for detailed listing of the Long-Term IRs).
The ratings reflect AEL’s balance sheet strength, which AM Best categorizes as adequate, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
AEL maintains adequate risk-based capital and continuing to maintain a high quality of capital with minimal use of surplus notes, captives and reinsurance. AEL has a strong track record of profitable premium growth, which has lately outpaced the industry average by maintaining spreads that are relatively steady. AEL has investment risk primarily within its collateralized loan obligations, commercial mortgage-backed securities and commercial mortgage loan portfolios, which could result in asset impairments due to current COVID-19 economic conditions; AM Best will continue to monitor these investments. Presently, these concerns are offset by strong holding company liquidity and defensive posturing of liquidity resources within the investment portfolio.
The group continues to maintain a strong market position in the increasingly competitive fixed-index annuity segment nationally, being among one of the top market leaders in the independent marketing organization channel. While AEL’s business profile is neutral, it remains concentrated given its focus on fixed-index annuity products and a declining overall market share position related to growth in the overall market from the bank and broker/dealer channel, which has historically been an underweight channel for AEL.
Holding company liquidity is viewed favorably with financial leverage and interest coverage ratios within AM Best’s expectations.
The following Long-Term IRs have been affirmed with a stable outlook:
American Equity Investment Life Holding Company
— “bbb-” on $500 million 5% senior unsecured notes due 2027
— “bb” on $300 million 6.625% perpetual, non-cumulative preferred stock
— “bb” on $400 million 5.95% perpetual, non-cumulative preferred stock
The following indicative Long-Term IRs under the shelf registration have been affirmed with a stable outlook:
American Equity Investment Life Holding Company
— “bbb-” on senior unsecured debt
— “bb+” on subordinated debt
— “bb” on preferred stock
American Equity Capital Trust V and VI
— “bb” on trust preferred securities
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.