AM Best Affirms Credit Ratings of American Equity Investment Life Insurance Company and Its Subsidiaries
OLDWICK, NJ, September 09, 2022–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a-” (Excellent) 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-“(Good) of American Equity Investment Life Holding Company [NYSE: AEL] and its Long Term Issue Credit Ratings (Long-Terms IRs). The outlook 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 assesses as adequate, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
AEL has continued to improve their risk-based capital to a very strong level from strong the prior year, as measured by Best’s Capital Adequacy Ratio (BCAR), mainly on higher utilization of affiliated and unaffiliated reinsurance. The company’s risk-based capital has benefited from a significant planned change in investment strategy toward private debt, real estate and infrastructure assets, as part of a new business strategy known as AEL 2.0. The group is still transitioning from a pure return-on-equity model to a multi-year recurring return-on-assets model, whereby other parties provide the required equity. The new strategy, if successful, should result in more diversified sources of earnings beyond spread-based earnings to include asset management fee income and longer-term potential reinsurance income. Operating performance in 2021 continued with record sales of approximately $6 billion, led by new partnerships as well as some new product launches, but it remains to be