Efforts to hedge investment risk contributed to higher earnings at American Equity Investment Life Holding company during the fourth quarter of 2006.

American Equity, West Des Moines, Iowa, is reporting $19 million in net income for the latest quarter on $312 million in revenue, up from $11 million in net income on $166 million in revenue for the fourth quarter of 2005.

American Equity is a major seller of equity-indexed annuity and life insurance products.

Although a slowdown in the indexed products market led to a drop in annuity sales at American Equity in 2006, operating revenue was up.

The gap between the yield American Equity paid annuity holders and the yield it earned on its own investments increased to 2.73% for 2006, from 2.48% for 2005, due in part to the expiration of annuities with 5-year minimum rate guarantees that were sold in 2001, back when rates were substantially higher than they are today.

American Equity also benefited from a substantial increase in the fair value of its derivatives holdings, to $124 million, from $3.9 million.