Rating hassles may have held down growth at American Equity Investment Life Holding Company, West Des Moines, Iowa, during the second quarter.[@@]
The company, best known for its equity index annuities, is reporting $10.4 million in net income for the second quarter on $123 million in revenue, up from $6.4 million in net income on $86 million in revenue for the second quarter of 2003.
American Equity collected $888 million in fixed and index annuity deposits during the first half, up from $787 million during the first half of 2003. Sales of multiyear fixed annuities made up less than 10% of the total, and deposits into American Equity’s Index Strategies annuities soared to $503 million, from $307 million.
The average spread, or difference, between the rate American Equity earned on its own investments and the rate it must pay customers fell to 0.81%, from 0.91%, for fixed annuities that offer multiyear rate guarantees. But the spread increased to 2.92%, from 2.54%, for annually adjusted fixed annuities and to 2.89%, from 2.78%, for index annuities.
Although profits and deposits were up, company executives said during an earnings conference that rating hassles have caused sales of equity index annuities to lag.