American Equity Investment Life Holding Company

Welcome to the American Equity Investment Lifeholding Company's second quarter 2021 conference call. At this time, for opening remarks and introductions, I would like to turn the call over to Julie LaFollette, coordinator of investor relations.

Good morning and welcome to American Equity Investment Lifeholding Company's conference call to discuss second quarter 2021 earnings. Our earnings release and financial supplement can be found on our website at www.american-equity.com. Non-GAAP financial measures discussed on today's call and reconciliations of non-GAAP financial measures to the most comparable GAAP measures can be found in those documents or elsewhere on our investor relations portion of our website. Presenting on today's call are Anat Bala, Chief Executive Officer and Interim Chief Financial Officer, and Jim Hamelainen, Chief Investment Officer. Some of our comments will contain forward-looking statements indicated by terms such as anticipate, assuming, believe, continue to, estimate, expect, forward, future, intend, likely, look to, may, need, over time, plan, potential, project, should, strategy, target, trends, will, and would, Our actual results could significantly differ due to many risks, including the risk factors in our SEC filings. An audio replay will be made available on our website shortly after today's call. It is now my pleasure to introduce Anat Bala.

Thank you, Julie. Good morning, and thank you all for your interest in American equity. Before we speak about second quarter results, I want to provide you with three strategy execution updates. First, we reached agreement with Brookfield on a reinsurance contract that covers both a portion of our in-force and new business flow. We have filed the agreement with our regulator for approval. We look forward to receiving regulatory approval and closing on the reinsurance treaty. Shortly after, we would expect the second anticipated equity investment from Brookfield to be completed. Second, we have completed our share repurchase of 9.1 million shares since starting our buyback in the fourth quarter of last year. This fully offset the impact of shares issued to Brookfield. The total buyback included repurchase of 3 million shares in the second quarter for $95.1 million. Additionally, for the first time in our company's history, in the second quarter, we started leveraging our asset management partnerships to invest in single-family rental homes and middle market loans, consistent with ramping towards the AEL 2.0 asset allocation strategy. During the quarter, we invested in 933 single-family rental homes. AEL will indirectly be the landlord to residential renters with partners who manage the property through acquisition, renovation, leasing, and sale in focused metropolitan areas, where the trends of wage growth and rental growth dynamics are robust. During the quarter, we allocated $104 million to middle market loans, We expect middle market credit to be an important piece of the AEL 2.0 investment strategy. Finally, we continued the revitalization of our go-to-market strategy pillar, which has historically been an industry-leading, at-scale annuity funding origination platform. This platform slowed down in recent years And one of the focus areas in my first year as CEO was to revise sales by refreshing our product mix and how we go to market. Go to market has been trending upwards since the fourth quarter of last year. Preliminary estimates indicate that the second quarter of 2021 will mark the third straight quarter in which the company increased its fixed index annuity, or FIA, market share. At American Equity Life, FIA sales were driven by the new competitive indices we introduced to Asset Shield back in February. At Eagle Life, the increase in FIA sales was driven by new relationships, our new income product, and an increase in our employee wholesaler force. In addition, on July 21st, we announced to our independent agent distribution the introduction of a new product, Estate Shield. Estate Shield is an expansion of our income offerings in the non-guaranteed income space. This subsegment of the market is a $4 billion per year product space historically dominated by two of our competitors. EstateShield has received strong support from key distribution partners, and we look forward to growing sales in the coming quarters. We are committed to continue to introduce new products as we move through the AEL 2.0 transformation, which will help us compete effectively and grow our share of the annuity market. Moving on to business results for the second quarter, total sales of $1.2 billion were down sequentially as expected versus the all-time record we set of $2.4 billion in the first quarter of this year. As we discussed on the last call, we are focused on our fixed index annuity products. For the second quarter, FIA sales increased 33% sequentially to $887 million. As I said earlier, we believe this will be the third quarter in a row in which FIA market share increased. Clearly, the changes that we've made in our go-to-market franchise over the last year are resonating with distribution. At American Equity Life, Fixed index annuity sales increased 36% to $703 million from $517 million sequentially as the refreshed Acid Shield series continued to see increased momentum led by a sequential 206% increase in Acid Shield deposits. In the quarter, The three proprietary indices we introduced to Asset Shield as part of our February refresh, the Credit Suisse Tech Edge Index, the Societe Generale Global Sentiment Index, and the Bank of America Destinations Index, accounted for 77% of second quarter Asset Shield deposits. FIA sales at Eagle Life of $185 million represented a 24% increase versus the first quarter of 2021 and a 155% increase compared to the year-ago quarter. Our new Eagle Select Income Focus Guaranteed Retirement Income product accounted for roughly half of the sequential quarterly increase. The Eagle Life team is increasing our presence within distribution partners by updating our FIA product shelf and increasing our Salesforce headcount while raising the quality of talent. In addition, we are leveraging relationships with advisors and our distribution partners' centers of influence uncovered through multi-year fixed-rate annuities to migrate towards fixed-index annuities. As we indicated on past calls, Our plan has been to re-engage with distribution with a simpler multi-year fixed rate annuity product during COVID-19 and then pivot to driving growth through a revamped fixed index annuity product portfolio. We are beginning to see our plan bear results. As the financial planning needs of Americans evolve, American equity is focused on providing our clients the dignity of a paycheck for life. I believe our commitment to this core mission statement will become recognized and appreciated in the market over time. This will help grow AEL in both our channels and open up other market access opportunities for us in the future. At this time, I would also like to take a moment and share with you the conclusions of a corporate governance project undertaken by our board of directors. Earlier this year, our board retained nationally recognized expertise to review its structure and operations and to advise it on governance practices. The board has completed its review and is implementing changes to refresh our corporate governance in line with best practices and to advance our strategic evolution. The board has set a new target size of seven to nine directors plus the CEO, has set a new director retirement age at 75 years, and has modified the membership and structure of its committees. Importantly on this front, our audit committee will exercise increased risk management oversight The Nominating and Corporate Governance Committee will have an expanded role in director compensation, selection, and skills training. The Compensation Committee will have a deeper role in executive talent development and succession planning. We believe these changes will make our board even more effective in driving stakeholder value realization and in playing its essential role in the successful transformation of the company. Now, I'll turn the call over to Jim Hamerleinen, our Chief Investment Officer, before I come back to cover financial results.