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News Breaks
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February 22, 2012
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| 16:04 EDT |  | AEL |
| theflyonthewall.com: | American Equity sees capacity to further reduce policyholder rates if necessary | | As previously announced American Equity reduced policyholder crediting rates on sales of new annuities as well as renewal rates on existing annuities. These rate cuts were implemented in Q4. While new money rate cuts take effect immediately upon implementation, renewal rate adjustments take effect on policyholder anniversary dates over the twelve months following the implementation date. Thus, the expected benefit from the renewal rate cuts, which is an estimated improvement of 15-25 basis points in the cost of money on policyholder liabilities, is reflected only to an immaterial extent in Q4 spread results. 2012 spread results are expected to reflect this benefit to an increasing degree; however, such improvements in the cost of money may be offset by continued lower yields available on new investments including reinvestment of proceeds from calls for redemption of the company’s callable U.S. agency bonds. Management believes there is sufficient capacity to further reduce policyholder rates if necessary to enable the company to continue to meet spread targets in 2012. :theflyonthewall.com |
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