AEL...Market cap...430 Mil..
As far I am concerned I always try to keep Market Caps. below 100 Mil on the Ideas that I bring to this board... That does'nt mean that when I find an idea that should be bought that isn't a bank or an oil I won't bring it.. Today I bring a company that meets my criteria for investment without downside risk.. It is an Insurance company that is in whole and personal life.. I owned it several years ago when it first came public and did a freerider trade.. After revisiting it today I bought a 8968 share position at 11.15... It trades like water and is a great place to hide money in uncertain times..I think that 14.00 is a likely short term target and if some one other than me finds it the low 20's are possible.. I have bought AEL for a trade...hank
This quote is what AEL is all about..."We sell sleep insurance. Unlike many holders of variable annuities or mutual funds, not a single one of our policyholders saw his or her contract value decline when equity market indexes plummeted in 2001 and 2002."
American Equity Reports Record Sales and Earnings
WEST DES MOINES, Iowa, Aug. 3 /PRNewswire-FirstCall/ -- American Equity Investment Life Holding Company (NYSE: AEL), a leading underwriter of fixed rate and index annuities, today reported 2005 second quarter operating income(1) of a record $14.1 million, or $0.37 per common share and $0.33 per diluted common share, an increase of 29% over 2004 second quarter operating income of $10.9 million, or $0.29 per common share and $0.26 per diluted common share. Net income increased 18% to $12.2 million or $0.32 per common share and $0.29 per diluted common share.
American Equity also reported record sales of annuities during the second quarter of $762 million (before coinsurance of $1.3 million), an increase of 46% over sales of $521 million (before coinsurance of $98.8 million) for the same period in 2004. Year to date sales for 2005 were $1.4 billion (before coinsurance of $3.1 million).
INVESTMENT INCOME AND SPREAD RESULTS
Investment income, which is the largest component of American Equity's revenues, was $133.2 million for the second quarter compared with $106.2 million in the second quarter of 2004. This 25% increase is primarily attributable to the growth in the company's annuity business and corresponding increases in invested assets. The weighted average yield on invested assets, of which over 99% are investment grade, was 6.20%. 'We remain committed to a fundamental concept of investing in very high quality assets for the ultimate benefit of our policyholders and shareholders,' commented David J. Noble, Chairman, CEO and President of American Equity. 'As we gradually diversify our portfolio, we will continue to minimize our exposure to credit risk.'
At June 30, 2005, the aggregate duration of the company's invested assets was 5.99 years compared with an aggregate liability duration of 6.63 years. During the second quarter overall asset duration shortened significantly as a result of the flattening of the yield curve, the growth in the company's commercial mortgage loans and improved call protection in its U.S. agency securities.
For the first six months of 2005 American Equity earned a weighted average gross spread (aggregate yield on invested assets over the cost of money on annuities) of 2.51% on its aggregate annuity fund values, compared to 2.39% for the same period in 2004. This improvement is attributable primarily to a reduction in the company's cost of money on its annuity liabilities, including in particular the expirations of guaranteed interest rates on its 3-year rate guaranteed products sold in 2001.
INDEX ANNUITY PRODUCT DESIGN
American Equity ranks second in all-time sales of index annuities, which is the fastest growing segment of the annuity market. Recently, the growth in this segment has invited increased regulatory scrutiny. American Equity emphasizes the safety, stability and sound design of its products, including a guarantee of premium and minimum interest, tax-deferred build-up of account values, liquidity options, annuitization privileges, and payment of full contract value at death without necessity of probate. As a result of the guarantees in the products, the levels of which are based upon state law, the policyholder bears no risk of loss of contract value and is guaranteed a minimum return regardless of the performance of the company's general account invested assets. As described by Noble, 'We sell sleep insurance. Unlike many holders of variable annuities or mutual funds, not a single one of our policyholders saw his or her contract value decline when equity market indexes plummeted in 2001 and 2002.'
All of American Equity's index products are multi-strategy products offering the policyholder the ability to allocate premium among annual crediting strategies including a fixed-rate strategy, bond index strategy and two or more equity index strategies. Regardless of which strategies are selected, income is credited annually and once credited can never be removed or diminished by later market performance. Policyholders may reallocate contract values once annually on the respective anniversary dates of their contracts. Commented Noble, 'We believe our products are second to none. Sound product design has assisted our excellent agency force of approximately 49,000 independent, licensed insurance agents and over 80 national marketing organizations to be among the most effective sales forces in our industry.'
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 second quarter 2005 earnings on Thursday, August 4, 2005, at 10 a.m. CDT. 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 http://www.american-equity.com . The call may also be accessed by telephone at 888-396-2356, passcode 88718315 (international callers, please dial 617-847-8709). An audio replay will be available shortly after the call on AEL's web site. An audio replay will also be available via telephone through August 18, 2005 by calling 888-286-8010, passcode 75046098 (international callers will need to dial 617-801-6888).
ABOUT AMERICAN EQUITY
Founded in 1995, American Equity Investment Life Holding Company is a full -service underwriter of a broad line of annuity and insurance products, with a primary emphasis on the sale of fixed-rate and index annuities. The company has approximately 260 employees and approximately 49,000 agents selling its products in 49 states and District of Columbia.
(1) In addition to net income, American Equity has consistently utilized operating income, a non-GAAP financial measure commonly used in the life insurance industry, as an economic measure to evaluate its financial performance. Operating income equals net income adjusted to eliminate the impact of (i) net realized gains and losses on investments; (ii) the impact of FAS 133, dealing with market value changes in derivatives; and (iii) the impact of the consolidation of American Equity Investment Service Company under FIN 46. Because these items fluctuate from quarter to quarter in a manner unrelated to core operations, American Equity believes a measure excluding their impact is useful in analyzing operating trends. American Equity believes the combined presentation and evaluation of operating income together with net income, provides information that may enhance an investor's understanding of American Equity's underlying results and profitability. A reconciliation of net income to operating income is provided in the accompanying tables.
American Equity Investment Life Holding Company
Net Income/Operating Income
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
Revenues: (Restated) (Restated)
Traditional life and accident and
health insurance premiums $3,264 $3,713 $7,020 $8,099
Annuity and single premium
universal life product charges 7,023 5,345 13,285 10,316
Net investment income 133,227 106,197 258,061 204,786
Realized gains on investments 220 10 452 389
Change in fair value of derivatives (1,972) (4,934) (37,962) 881
Total revenues 141,762 110,331 240,856 224,471
Benefits and expenses:
Insurance policy benefits and
change in future policy benefits 3,326 3,750 6,958 7,631
Interest credited to account
balances 69,448 75,322 130,930 159,597
Change in fair value of embedded
derivatives 15,226 (10,955) (3,365) (27,331)
Interest expense on notes payable 4,050 350 8,189 855
Interest expense on subordinated
debentures 3,142 2,275 6,188 4,393
Interest expense on amounts due
under repurchase agreements 2,235 798 3,663 1,113
Amortization of deferred policy
acquisition costs 15,994 14,925 32,660 29,891
Other operating costs and expenses 9,733 7,784 17,878 16,354
Total benefits and expenses 123,154 94,249 203,101 192,503
Income before income taxes and
minority interest 18,608 16,082 37,755 31,968
Income tax expense 6,376 5,695 12,995 27,621
Income before minority interest 12,232 10,387 24,760 4,347
Minority Interest - - - (326)
Net income 12,232 10,387 24,760 4,673
Realized gains on investments, net of
offsets (143) (7) (294) (253)
Net effect of FIN 46 77 (9) (43) 16,142
Net effect of FAS 133 1,944 572 2,963 (289)
Operating income (a) $14,110 $10,943 $27,386 $20,273
Earnings per common share $0.32 $0.27 $0.65 $0.12
Earnings per common share - assuming
dilution $0.29 $0.25 $0.58 $0.12
Operating income per common share (a) $0.37 $0.29 $0.71 $0.53
Operating income per common share -
assuming dilution (a) $0.33 $0.26 $0.64 $0.48
Weighted average common shares
outstanding (in thousands):
Earnings per common share 38,379 38,178 38,376 38,045
Earnings per common share -
assuming dilution 43,749 43,212 43,707 43,219
American Equity Investment Life Holding Company
Operating Income
Three months ended June 30, 2005
Adjustments
Realized
Gains
As and Operating
Reported FIN 46 FAS 133 Income (a)
(Dollars in thousands, except per share data)
Reserves:
Traditional life and accident and
health insurance premiums $3,264 $- $- $3,264
Annuity and single premium
universal life product charges 7,023 - - 7,023
Net investment income 133,227 138 - 133,365
Realized gains on investments 220 (220) - -
Change in fair value of
derivatives (1,972) - (6,983) (8,955)
Total revenues 141,762 (82) (6,983) 134,697
Benefits and expenses:
Insurance policy benefits and
change in future policy benefits 3,326 - - 3,326
Interest credited to account
balances 69,448 - 1,291 70,739
Change in fair value of embedded
derivatives 15,226 - (15,226) -
Interest expense on General Agency
Commission
and Servicing Agreement - 874 - 874
Interest expense on notes payable 4,050 (604) - 3,446
Interest expense on subordinated
debentures 3,142 - - 3,142
Interest expense on amounts due
under repurchase agreements 2,235 - - 2,235
Amortization of deferred policy
acquisition costs 15,994 - 3,961 19,955
Other operating costs and expenses 9,733 (259) - 9,474
Total benefits and expenses 123,154 11 (9,974) 113,191
Income before income taxes 18,608 (93) 2,991 21,506
Income tax expense 6,376 (27) 1,047 7,396
Net income $12,232 $(66) $1,944 $14,110
Earnings per common share $0.32 $0.37
Earnings per common share - assuming
dilution $0.29 $0.33
(a) In addition to net income, we have consistently utilized operating
income, operating income per common share and operating income per
common share - assuming dilution, non-GAAP financial measures
commonly used in the life insurance industry, as economic measures
to evaluate our financial performance. Operating income equals net
income adjusted to eliminate the impact of net realized gains and
losses on investments, the impact of FIN 46, dealing with the
consolidation of variable interest entities, and the impact of FAS
133, dealing with market value changes in derivatives. Because these
items fluctuate from quarter to quarter in a manner unrelated
to core operations, we believe measures excluding their impact are
useful in analyzing operating trends. We believe the combined
presentation and evaluation of operating income together with net
income, provides information that may enhance an investor's
understanding of our underlying results and profitability.
SOURCE American Equity Investment Life Holding Company
News 
Market Data 
Discover 
AI
