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Table of Contents
Filed Pursuant to Rule 424(b)(5)
Registration No. 333-207077
Subject to completion, dated June 13, 2017
The information in this preliminary prospectus supplement and the accompanying prospectus is not complete and may be changed. This preliminary prospectus supplement and the
accompanying prospectus are not an offer to sell these securities, nor a solicitation of an offer to buy these securities, in any jurisdiction where the offering is not permitted.
Preliminary prospectus supplement
(To prospectus dated September 22, 2015)
American Equity Investment Life Holding Company
$500,000,000
% Notes due 2027
We are offering $500,000,000 aggregate principal amount of % Notes due 2027 (the "notes"). We will pay interest on the notes
on and
of each year,
beginning , 2017. The notes will mature
on , 2027.
Prior
to , 2027 (the date that is three months prior to the maturity date of the notes), we may redeem the notes, at our
option, at any time in whole or from time to time in part at the
"make-whole" redemption price set forth in this prospectus supplement. On or after , 2027 (the date that is three
months prior to the maturity date of the notes), we may redeem the
notes in whole or from time to time in part at a redemption price
equal to 100% of the principal amount of the notes to be redeemed plus accrued and unpaid interest on the notes to be redeemed to, but not including, the date of redemption. See "Description of the
notesOptional redemption."
In
addition, we may be required to make an offer to purchase the notes upon a change of control triggering event. See "Description of the notesChange of control triggering event."
The
notes will be our senior unsecured obligations and will rank equally in right of payment to all of our existing and future senior unsecured debt and senior in right of payment to all of our
existing and future subordinated debt. The notes will be effectively subordinated to any of our existing and future secured debt to the extent of the value of the assets securing such debt. None of
our subsidiaries will guarantee the notes, and the notes will be structurally subordinated to the liabilities of our subsidiaries. The notes will be issued only in registered form in minimum
denominations of $2,000 and integral multiples of $1,000 above that amount.
The
notes will not be listed on any securities exchange. Currently, there is no public market for the notes.
Investing in the Notes involves risks. See "Risk factors" beginning on page S-16 of this prospectus supplement.
Neither the Securities and Exchange Commission ("SEC"), any state securities commission, the Iowa Commissioner of Insurance nor any other regulatory body has approved or
disapproved of these securities or passed upon the adequacy or accuracy of this prospectus supplement and the accompanying prospectus. Any representation to the contrary is a criminal
offense.
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Per note
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Total
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Public offering price(1)
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%
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$
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Underwriting discount
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%
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$
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Proceeds, before expenses, to us
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%
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$
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(1) Plus
accrued interest, if any, from , 2017.
The
notes will be ready for delivery in book-entry form only through the facilities of The Depository Trust Company for the accounts of its participants, including Euroclear Bank S.A./N.V., as
operator of the Euroclear System, and Clearstream Banking, société anonyme, on or about , 2017.
Joint book-running managers
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J.P. Morgan
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RBC Capital Markets
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SunTrust Robinson Humphrey
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Citigroup
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, 2017
Table of Contents
Table of contents
Table of Contents
About this prospectus supplement
This document is in two parts. The first part is this prospectus supplement, which contains the terms of this offering of notes. The second
part is the accompanying prospectus, dated September 22, 2015, which is part of our Registration Statement on Form S-3.
This
prospectus supplement adds to, updates and/or changes certain of the information in the accompanying prospectus and the documents incorporated by reference herein. If information in this
prospectus supplement is inconsistent with information in the accompanying prospectus or the documents incorporated by reference herein, the information in this prospectus
supplement will apply and will supersede the information in the accompanying prospectus or the documents incorporated by reference herein, as the case may be.
It
is important for you to read and consider all information contained or incorporated by reference in this prospectus supplement and the accompanying prospectus in making your investment decision
regarding the notes. You should also read and consider the information in the documents to which we have referred you in "Where you can find more information" in this prospectus supplement and the
accompanying prospectus.
No
person is authorized to give any information or to make any representations other than those contained or incorporated by reference in this prospectus supplement or the accompanying prospectus,
and, if given or made, such information or representations must not be relied upon as having been authorized. Neither the delivery of this prospectus supplement and the accompanying prospectus, nor
any sale made hereunder, shall under any circumstances create any implication that there has been no change in our affairs since the date of this prospectus supplement, or that the information
contained or incorporated by reference in this prospectus supplement or the accompanying prospectus is correct as of any time subsequent to the date of such information.
The
distribution of this prospectus supplement and the accompanying prospectus and the offering of notes in certain jurisdictions may be restricted by law. This prospectus supplement and the
accompanying prospectus do not constitute an offer, or an invitation on our behalf or the underwriters or any of them, to subscribe to or purchase any notes and may not be used for or in connection
with an offer or solicitation by anyone, in any jurisdiction in which such an offer or solicitation is not authorized or to any person to whom it is unlawful to make such an offer or solicitation. See
"Underwriting (conflicts of interest)."
Unless
otherwise stated or the context otherwise requires, as used in this prospectus supplement, all references to "American Equity," the "Company," "we," "our" and similar references are to American
Equity Investment Life Holding Company and its consolidated subsidiaries.
S-i
Table of Contents
Cautionary note regarding forward-looking statements
This prospectus supplement and the accompanying prospectus contain forward-looking statements within the meaning of the federal securities
laws and the Private Securities Litigation Reform Act of 1995. Forward-looking statements typically are identified by the use of terms such as "anticipate," "believe," "plan," "estimate," "expect,"
"project," "intend," "may," "will," "should," "goal," "target," "objective" and similar words, although some forward-looking statements are expressed differently. We caution that these statements may
and often do vary from actual results and the differences between these statements and actual results can be material. Accordingly, we cannot assure you that actual results will not differ materially
from those expressed or implied by the forward-looking statements. The "Risk Factors" section of our Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC
on February 27, 2017 (our "2016 Annual Report") (and any updates of such section in any subsequent filings with the SEC incorporated by reference herein), provides examples of risks,
uncertainties and events that could cause our actual results to differ materially from the expectations expressed in our forward-looking statements. Other important factors that could cause our actual
results to differ materially from those anticipated in our forward-looking statements include, among other things:
-
-
general economic conditions and other factors, including prevailing interest rate levels and stock and credit market performance which may
affect (among other things) our ability to sell our products, our ability to access capital resources and the costs associated therewith, the fair value of our investments, which could result in
impairments and other than temporary impairments, and certain liabilities, and the lapse rate and profitability of policies;
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customer response to new products and marketing initiatives;
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changes in federal income tax laws and regulations which may affect the relative income tax advantages of our products;
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increasing competition in the sale of annuities;
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regulatory changes or actions, including those relating to regulation of financial services affecting (among other things) bank sales and
underwriting of insurance products and regulation of the sale, underwriting and pricing of products, as well as the U.S. Department of Labor's ("DOL") fiduciary rule;
-
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the risk factors or uncertainties listed from time to time in our filings with the SEC; and
-
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the risk factors identified below under "Risk factors" beginning on page S-16.
Other
factors and assumptions not identified above are also relevant to the forward-looking statements, and it is not possible for us to predict all of them; nor can we assess the impact of each such
factor or the extent to which any factor, or combinations of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
All
written or oral forward-looking statements attributable to us are expressly qualified in their entirety by the foregoing cautionary statement. Our forward-looking statements speak only as of the
date made. Except as required under the federal securities laws and the rules and regulations of the SEC, we do not have any intention or obligation to update or to publicly
S-ii
Table of Contents
announce
the results of any revisions to any of the forward-looking statements to reflect actual results, future events or developments, changes in assumptions or changes in other factors affecting
the forward-looking statements. You are advised, however, to consult any further disclosures we make on related subjects in reports we file with the SEC.
Market share, ranking, industry data and forecasts
This prospectus supplement and the accompanying prospectus include market share, ranking, industry data and forecasts that we obtained from
industry publications and surveys, public filings and internal company sources. Industry publications, surveys and forecasts generally state that the information contained therein has been obtained
from sources believed to be reliable, but the included information may not be accurate or complete. While we are not aware of any misstatements regarding the industry data presented in this prospectus
supplement and the accompanying prospectus, we have not independently verified any of the data from third-party sources, nor have we ascertained the underlying economic assumptions relied upon by
those sources. Neither we nor the underwriters can guarantee the accuracy or completeness of such information contained in this prospectus supplement and the accompanying prospectus.
Where you can find more information
We are subject to the informational reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). You may
read and copy any document that we file at the public reference facilities of the SEC at 100 F Street, N.E., Washington, D.C. 20549. Information on the operation of the public reference
facilities may be obtained by calling the SEC at 1-800-SEC-0330. You may also inspect our annual, quarterly and current reports, any proxy statements and other information at the SEC's website at
http://www.sec.gov
.
The
SEC allows us to "incorporate by reference" information into this prospectus supplement and the accompanying prospectus. This means that we can disclose important information to you by referring
you to another document that we have filed separately with the SEC. The information incorporated by reference is considered to be part of this prospectus supplement and the accompanying prospectus.
Information that we file with the SEC after the date of this prospectus supplement will automatically modify and supersede the information included or incorporated by reference in this prospectus
supplement and the accompanying prospectus to the extent that the subsequently filed information modifies or supersedes the existing information. Nothing in this prospectus supplement or the
accompanying prospectus shall be deemed to incorporate by reference information furnished to, but not filed with, the SEC, unless specifically stated otherwise. We incorporate by reference the
following documents (each with SEC file number 001-31911):
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Our 2016 Annual Report on Form 10-K, including our Definitive Proxy Statement on Schedule 14A, filed on April 19, 2017
(our "Proxy Statement") for the 2017 Annual Meeting of Shareholders and incorporated by reference into our 2016 Annual Report;
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Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, filed on May 9, 2017 (our "First Quarter 2017
Quarterly Report");
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Our Current Report on Form 8-K, dated January 10, 2017, filed on January 11, 2017;
S-iii
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Our Current Report on Form 8-K, dated March 28, 2017, filed on March 29, 2017;
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Our Current Report on Form 8-K, dated April 17, 2017, filed on April 17, 2017;
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Our Current Report on Form 8-K, dated April 18, 2017, filed on April 19, 2017; and
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Our Current Report on Form 8-K, dated June 1, 2017, filed on June 5, 2017.
Also,
all documents we file with the SEC under File No. 001-31911 pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act (not including Current Reports or portions thereof
furnished under Item 2.02 or Item 7.01 under Form 8-K) after the date of this prospectus supplement and prior to termination of the offering to which this prospectus supplement
relates shall be deemed to be incorporated by reference herein and to be a part hereof from the date of such filing. Any statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes hereof to the extent that a statement contained herein or in any other subsequently filed document that also is, or is deemed
to be, incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a
part of this prospectus supplement.
We
will provide to each person, including any beneficial owner, to whom this prospectus supplement is delivered a copy of any or all of the information that we have incorporated by reference into this
prospectus supplement or the accompanying prospectus but not delivered with this prospectus supplement, at no cost to such person upon request. To receive a free copy of any of the documents
incorporated by reference into this prospectus supplement or the accompanying prospectus, other than exhibits, unless they are specifically incorporated by reference into those documents, call or
write:
American
Equity Investment Life Holding Company
6000 Westown Parkway
West Des Moines, IA 50266
Attention: Corporate Secretary
Tel: (515) 221-0002
S-iv
Table of Contents
Summary
This summary highlights information more fully described elsewhere in this prospectus supplement, the accompanying
prospectus and the documents incorporated by reference herein and therein. You should read carefully this entire prospectus supplement, the accompanying prospectus and the documents incorporated by
reference herein and therein, including the risks set forth under the caption "Risk factors" included in this prospectus supplement, the accompanying prospectus, our 2016 Annual Report and First
Quarter 2017 Quarterly Report, as well as the historical consolidated financial statements and the related notes thereto incorporated by reference in this prospectus supplement and the accompanying
prospectus, before deciding to invest in the notes.
The Company
We are a leader in the development and sale of fixed index and fixed rate annuity products. We were incorporated in the state of Iowa on
December 15, 1995. We issue fixed annuity and life insurance products through our wholly-owned life insurance subsidiaries, American Equity Investment Life Insurance Company ("American Equity
Life"), American Equity Investment Life Insurance Company of New York and Eagle Life Insurance Company ("Eagle Life"). We have one business segment which represents our core business comprised of the
sale of fixed index and fixed rate annuities. Our business strategy is focused on growing our policyholder funds and earning predictable returns by managing investment spreads and investment risk. We
are licensed to sell our products in 50 states and the District of Columbia.
Annuity market overview
Our target market includes the group of individuals ages 45-75 who are seeking to accumulate tax-deferred savings or create guaranteed
lifetime income. We believe that significant growth opportunities exist for annuity products because of favorable demographic and economic trends. According to the U.S. Census Bureau, there were
approximately 39 million Americans age 65 and older in 2010, representing 13% of the U.S. population and this group has grown to 44.7 million in 2013. By 2030, this sector of the
population is expected to increase to 20% of the total population. Our fixed index and fixed rate annuity products are particularly attractive to this group due to their principal protection,
competitive rates of credited interest, tax-deferred growth, guaranteed lifetime income and alternative payout options. Our competitive fixed index and fixed rate annuity products have enabled us to
enjoy favorable growth in recent years and since our formation.
According
to Wink's Sales and Market Report published by Wink, Inc., total industry sales of fixed index annuities increased 9.7% to $58.2 billion for 2016 from $53.1 billion for
2015. Total industry sales of fixed index annuities have increased 71% over the five year period from 2011 to 2016 (data provided in the following table according to Wink's Sales and Market Report
published by Wink, Inc.), which we believe is attributable to more Americans reaching
S-1
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retirement
age and seeking products that will provide principal protection and guaranteed lifetime income.
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Year ended December 31,
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(Dollars in thousands)
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2016
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2015
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2014
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2013
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2012
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Total industry sales of fixed index annuities
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$
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58,235,265
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$
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53,069,850
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$
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46,896,350
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$
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38,646,864
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$
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33,975,442
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Increase from prior year
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5,165,415
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6,173,500
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8,249,486
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4,671,422
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1,588,397
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Increase from prior year
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9.7%
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13.2%
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21.3%
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13.7%
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4.9%
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Strategy
Key elements of executing our strategy include the following:
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Expand and enhance our distribution
network.
We currently distribute through a number of distribution channels, including independent agents, broker/dealers, banks and registered
investment advisors. American Equity Life has relationships with approximately 35 national marketing organizations, through which nearly 25,000 independent agents are under contract. Our objective is
to improve the productivity and efficiency of our independent agent distribution channel by focusing our marketing and recruiting efforts on those independent agents capable of selling
$1 million or more of annuity premium annually. We will also be alert for opportunities to establish relationships with successful national marketing organizations and agents not presently
associated with us. We continue to grow distribution through broker/dealers, banks and registered investment advisors. According to Wink's Sales and Market Report published by Wink, Inc., sales
of fixed index annuities through broker/dealers and banks represented approximately 32% of industry sales in the fourth quarter of 2016. Eagle Life is focused solely on the broker/dealer, bank and
registered investment advisor channel and is developing a network of broker/dealers, banks and registered investment advisors that have the ability to distribute fixed index and fixed rate annuity
products in large volume. We also offer broker/dealer and bank friendly products for those broker/dealers and banks that choose to associate with us through American Equity Life. We continue to strive
to provide all of our distribution partners with the highest quality service possible.
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Continue to introduce innovative and competitive
products.
We intend to be at the forefront of the fixed index and fixed rate annuity industry in developing and introducing innovative and
competitive products. We were one of the first companies to offer a fixed index annuity that allows a choice among interest crediting strategies including both equity and bond indices as well as a
traditional fixed rate strategy. We were one of the first companies to include a lifetime income benefit rider with our fixed index annuities and first to have a lifetime income benefit rider with
gender-based income payments. We believe that our continued focus on anticipating and being responsive to the product needs of the ever-growing population of retirees will lead to increased customer
loyalty, revenues and profitability.
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Use our expertise to achieve targeted spreads on annuity
products.
We have had a successful track record in achieving the targeted spreads on our annuity products. This historical success has been
challenged in the current extended low interest rate environment. However, we intend to continue to leverage our experience and expertise in managing the
S-2
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investment
spread during a range of interest rate environments to achieve, or work towards achieving, our targeted spreads.
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Maintain our profitability focus and improve operating
efficiency.
We are committed to improving our profitability by advancing the scope and sophistication of our investment management and spread
capabilities and continuously seeking out efficiencies within our operations. The expanded use of technological resources will continue to allow us to improve our processes, scalability and response
times.
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Take advantage of the growing popularity of index
products.
We believe that the growing popularity of fixed index annuity products that allow equity and bond market participation without the risk
of loss of the premium deposit presents an attractive opportunity to grow our business. The popularity of fixed index annuity products has increased in recent years with the availability of lifetime
income benefit riders that provide an attractive alternative for converting accumulated retirement savings into lifetime income. We intend to capitalize on our reputation as a leading provider of
fixed index annuities in this expanding segment of the annuity market.
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Focus on high quality service to agents and
policyholders.
We have maintained high quality personal service as one of our highest priorities since the inception of our company and continue
to strive for an unprecedented level of timely and accurate service to both our agents and policyholders. Examples of our high quality service include a live person answering phone calls and issuing
policies within 24 hours of receiving the application if the paperwork is in good order. We believe high quality service is one of our strongest competitive advantages.
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Be proactive in the changing regulatory
environment.
We have been a strong and vocal defender of our products and our industry through continued regulatory challenges and have long been
an advocate for appropriate regulation. We intend to remain flexible and responsive to the ever changing regulatory environment and will continue to engage with our key regulators to ensure
policyholder protections are in place and adequate while permitting continued access to our much needed retirement products.
Products
Annuities offer our policyholders a tax-deferred means of accumulating retirement savings, as well as a reliable source of income during the
payout period. When our policyholders deposit cash to annuities, we account for these receipts as policy benefit reserves in the liability section of our consolidated balance sheet. The annuity
deposits collected, by product type, during the three most recent fiscal years and the most recent quarter are as follows:
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Year ended December 31,
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Three months ended
March 31, 2017
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2016
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2015
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2014
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Product type
(dollars in thousands)
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Deposits
collected
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Deposits as
a % of total
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Deposits
collected
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Deposits as
a % of total
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Deposits
collected
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Deposits as
a % of total
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Deposits
collected
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Deposits as
a % of total
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Fixed index annuities
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$
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1,028,839
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95%
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$
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5,724,758
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80%
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$
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6,791,689
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96%
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$
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3,999,439
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96%
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Annual reset fixed rate annuities
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14,843
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1%
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64,317
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1%
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45,182
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1%
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57,273
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1%
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Multi-year fixed rate annuities
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29,901
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3%
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1,303,273
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18%
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214,356
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3%
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103,293
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2%
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Single premium immediate annuities
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5,551
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1%
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35,851
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1%
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32,752
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%
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24,580
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1%
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$
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1,079,134
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100%
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$
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7,128,199
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100%
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$
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7,083,979
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100%
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$
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4,184,585
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100%
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S-3
Table of Contents
Fixed index annuities
Fixed index annuities allow policyholders to earn index credits based on the performance of a particular index without the risk of loss of their principal.
Most of these products allow policyholders to transfer funds once a year among several different crediting strategies, including one or more index based strategies and a traditional fixed rate
strategy. Approximately 88%, 89% and 89% of our fixed index annuity sales for the years ended December 31, 2016, 2015 and 2014, respectively, were "premium bonus" products. The initial annuity
deposit on these policies is increased at issuance by a specified premium bonus ranging from 3% to 10%. Generally, the surrender charge and bonus vesting provisions of our policies are structured such
that we have comparable protection from early termination between bonus and non-bonus products.
The
annuity contract value is equal to the sum of premiums paid, premium bonuses and interest credited ("index credits" for funds allocated to an index based strategy), which is based upon an overall
limit (or "cap") or a percentage (the "participation rate") of the annual appreciation (based in certain situations on monthly averages or monthly point-to-point calculations) in a recognized index or
benchmark. Caps and participation rates limit the amount of annual interest the policyholder may earn in any one contract year and may be adjusted by us annually subject to stated minimums. Caps
generally range from 1% to 12% and participation rates range from 10% to 100%. In addition, some products have a spread or "asset fee" generally ranging from 0.75% to 4.0%, which is deducted from
annual interest to be credited. For products with asset fees, if the annual appreciation in the index does not exceed the asset fee, the policyholder's index credit is zero. The minimum guaranteed
surrender values are equal to no less than 87.5% of the premium collected plus interest credited at an annual rate ranging from 1% to 3%.
Fixed rate annuities
Fixed rate deferred annuities include annual reset and multi-year rate guaranteed products. Our annual reset fixed rate annuities have an annual interest rate
(the "crediting rate") that is guaranteed for the first policy year. After the first policy year, we have the discretionary ability to change the crediting rate once annually to any rate at or above a
guaranteed minimum rate. Our multi-year rate guaranteed annuities are similar to our annual reset products except that the initial crediting rate is guaranteed for up to seven years before it may be
changed at our discretion. The minimum guaranteed rate on our annual reset fixed
rate deferred annuities ranges from 1% to 4% and the initial guaranteed rate on our multi-year rate guaranteed policies ranges from 1.7% to 3.75%.
The
initial crediting rate is largely a function of the interest rate we can earn on invested assets acquired with new annuity deposits and the rates offered on similar products by our competitors.
For subsequent adjustments to crediting rates, we take into account the yield on our investment portfolio, annuity surrender and withdrawal assumptions and crediting rate history for particular groups
of annuity policies with similar characteristics. As of December 31, 2016, crediting rates on our outstanding fixed rate deferred annuities generally ranged from 1.0% to 4.0%. The average
crediting rates on our outstanding annual reset and multi-year rate guaranteed fixed rate deferred annuities at December 31, 2016 were 1.99% and 2.74%, respectively.
S-4
Table of Contents
We
also sell single premium immediate annuities ("SPIAs"). Our SPIAs are designed to provide a series of periodic payments for a fixed period of time or for life, according to the policyholder's
choice at the time of issue. The amounts, frequency and length of time of the payments are fixed at the outset of the annuity contract. SPIAs are often purchased by persons at or near retirement age
who desire a steady stream of payments over a future period of years. The implicit interest rate on SPIAs is based on market conditions when the policy is issued. The implicit interest rate on our
outstanding SPIAs averaged 2.61% at December 31, 2016.
Withdrawal optionsfixed index and fixed rate annuities
Policyholders are typically permitted penalty-free withdrawals up to 10% of the contract value in each year after the first year, subject to limitations.
Withdrawals in excess of allowable penalty-free amounts are assessed a surrender charge during a penalty period which ranges from 6 to 17 years for fixed index annuities and 5 to
15 years for fixed rate annuities from the date the policy is issued. This surrender charge initially ranges from 7% to 20% for fixed index annuities and 8% to 20% for fixed rate annuities of
the contract value and generally decreases by approximately one-half to two percentage points per year during the surrender charge period. For certain policies, the premium bonus is considered in the
establishment of the surrender charge percentages. For other policies, there is a vesting schedule ranging from 10 to 14 years that applies to the premium bonus and any interest earned on that
premium bonus. Surrender charges and bonus vesting are set at levels aimed at protecting us from loss on early terminations and reducing the likelihood of policyholders terminating their policies
during periods of increasing interest rates. This practice enhances our ability to maintain profitability on such policies. Policyholders may elect to take the proceeds of the annuity either in a
single payment or in a series of payments for life, for a fixed number of years or a combination of these payment options. Information on surrender charge protection and net account values are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
(Dollars in thousands)
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annuity Surrender Charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average years at issue
|
|
|
13.5
|
|
|
13.5
|
|
|
13.7
|
|
|
13.8
|
|
Average years remaining
|
|
|
8.6
|
|
|
8.6
|
|
|
9.1
|
|
|
9.2
|
|
Average surrender charge percentage remaining
|
|
|
13.6%
|
|
|
13.8%
|
|
|
14.3%
|
|
|
14.7%
|
|
Annuity Account Value (net of coinsurance)
|
|
$
|
46,022,759
|
|
$
|
45,204,015
|
|
$
|
41,249,647
|
|
$
|
35,363,041
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
in July 2007, substantially all of our fixed index annuity policies and many of our annual reset fixed rate deferred annuities were issued with a lifetime income benefit rider. This rider
provides an additional liquidity option to policyholders. With the lifetime income benefit rider, a policyholder can elect to receive guaranteed payments for life from their contract without requiring
them to annuitize their contract value. The amount of the living income benefit available is determined by the growth in the policy's income account value as defined in the rider (3.0% to 8.0%), which
is selected by the policyholder at the time of purchase, and the policyholder's age at the time the policyholder elects to begin receiving living income benefit payments. Lifetime income benefit
payments may be stopped and restarted at the election of the policyholder. During 2013, we introduced new versions of our lifetime income benefit rider that had an optional wellbeing benefit or
optional death benefit. Policyholders have the choice of selecting a rider with a base level of benefit for no explicit fee or paying a
S-5
Table of Contents
fee
for a rider that has a higher level of benefits, and beginning in 2013 we introduced products where the addition of a rider to the policy is completely optional. Rider fees range from 0.30% to
1.00% of the policy's income account value.
Life insurance
These products include traditional ordinary and term, universal life and other interest-sensitive life insurance products. We have approximately
$2.0 billion of life insurance in force as of December 31, 2016. Premiums related to this business accounted for less than 1% of revenues for the years ended December 31, 2016,
2015 and 2014.
Investments/spread management
Investment activities are an integral part of our business, and net investment income is a significant component of our total revenues.
Profitability of our annuity products is significantly affected by spreads between interest yields on investments, the cost of options to fund the annual index credits on our fixed index annuities and
rates credited on our fixed rate annuities and the fixed rate strategy in our fixed index annuities. We manage the index-based risk component of our fixed index annuities by purchasing call options on
the applicable indices to fund the annual index credits on these annuities and by adjusting the caps, participation rates and asset fees on policy anniversary dates to reflect the change in the cost
of such options which varies based on market conditions. All options are purchased on the respective policy anniversary dates, and new options are purchased on each of the anniversary dates to fund
the next annual index credits. All credited rates on annual reset fixed rate deferred annuities and the fixed rate strategy in fixed index annuities may be changed annually, subject to minimum
guarantees. Changes in caps, participation rates and asset fees on fixed index annuities and crediting rates on fixed rate and fixed index annuities may not be sufficient to maintain targeted
investment spreads in all economic and market environments. In addition, competition and other factors, including the potential for increases in surrenders and withdrawals, may limit our ability to
adjust or to maintain caps, participation rates, asset fees and crediting rates at levels necessary to avoid narrowing of spreads under certain market conditions.
Marketing/distribution
We market our products through a variable cost distribution network, including independent agents through national marketing organizations,
broker/dealers, banks and registered investment advisors. We emphasize high quality service to our agents and policyholders along with the prompt payment of commissions to our agents. We believe this
has been significant in building excellent relationships with our distribution network.
Our
independent agents and agencies range in profile from national sales organizations to personal producing general agents. We actively recruit new agents and terminate those agents who have not
produced business for us in recent periods and are unlikely to sell our products in the future. In our recruitment efforts, we emphasize that agents have direct access to our executive officers,
giving us an edge in recruiting over larger and foreign-owned competitors. We also emphasize our products, service and our focused fixed rate and fixed index annuity
expertise. We also have favorable relationships with our national marketing organizations, which have enabled us to efficiently sell through an expanded number of independent agents.
S-6
Table of Contents
The
independent agent distribution system is comprised of insurance brokers and marketing organizations. We are pursuing a strategy to increase the efficiency of our independent agent distribution
network by strengthening our relationships with key national and regional marketing organizations and are alert for opportunities to establish relationships with organizations not presently associated
with us. These organizations typically recruit agents for us by advertising our products and our commission structure through direct mail advertising or seminars for insurance agents and brokers.
These organizations bear most of the cost incurred in marketing our products. We compensate marketing organizations by paying them a percentage of the commissions earned on new annuity policy sales
generated by the agents recruited by such organizations. We also conduct incentive programs for marketing organizations and agents from time to time. We generally do not enter into exclusive
arrangements with these marketing organizations.
Agents
contracted with us through two national marketing organizations accounted for more than 29% of the annuity deposits and insurance premiums collected during 2016 by American Equity Life, and we
expect these organizations to continue as marketers for American Equity Life with a focus on selling our products. The states with the largest share of direct premium collected during 2016 were:
Florida (9.6%), California (8.6%), Texas (7.2%), Pennsylvania (6.1%) and North Carolina (5.3%).
Eagle
Life's fixed index and fixed rate annuities are distributed pursuant to selling agreements with the applicable broker/dealers, banks and registered investment advisors. Relationships with these
firms are facilitated by wholesalers who promote Eagle Life and are compensated based upon the sales of the firms that they have contracted with Eagle Life. At December 31, 2016, Eagle Life had
53 selling agreements in place with broker/dealers. Fourteen of these
selling agreements are with broker/dealers affiliated with banks. American Equity Life also is selling through broker/dealers and we have introduced products specifically for this distribution
channel.
Additional information
Our principal executive offices are located at 6000 Westown Parkway, West Des Moines, IA 50266, and our telephone number is
(515) 221-0002. Our principal website is located at http://www.american-equity.com. The contents of our website are not a part of this prospectus supplement unless otherwise expressly
incorporated by reference.
S-7
Table of Contents
The offering
The summary below describes the principal terms of the notes. Some of the terms and conditions described below are subject to important
limitations and exceptions. See "Description of the notes" beginning on page S-28 of this prospectus supplement and "Description of Debt Securities" beginning on page 5 of the
accompanying prospectus for a more detailed description of the terms and conditions of the notes.
|
|
|
|
|
|
|
|
|
|
|
Issuer
|
|
American Equity Investment Life Holding Company.
|
Securities offered
|
|
$500,000,000 aggregate principal amount of % Notes due 2027, which we refer to herein as the "notes."
|
Maturity
|
|
The notes will mature on , 2027.
|
Interest
|
|
Interest on the notes will accrue from , 2017 at a rate
of % and will be payable semi-annually in arrears on and of each year,
commencing , 2017.
|
Interest rate adjustment
|
|
The interest rate payable on the notes will be subject to adjustment from time to time in the manner set forth below if any of Standard & Poor's Ratings Services ("S&P"), Fitch Ratings,
Inc. ("Fitch") or A.M. Best Company, Inc. ("A.M. Best") (each of S&P, Fitch and A.M. Best, a "Rating Agency") downgrades or subsequently upgrades the credit rating assigned to the notes. If the rating on the Notes from
any of S&P, Fitch or A.M. Best is a rating set forth in the table below, the interest rate payable on the notes will increase from % by the sum of the number of basis points set forth next
to such ratings.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rating agency
|
|
|
|
|
Rating levels
|
|
S&P
|
|
Fitch
|
|
A.M. Best
|
|
Percentage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
BB+
|
|
BB
|
|
bb+
|
|
25 basis points
|
|
|
2
|
|
BB
|
|
BB
|
|
bb
|
|
50 basis points
|
|
|
3
|
|
BB
|
|
B+
|
|
bb
|
|
75 basis points
|
|
|
4
|
|
B+ or below
|
|
B or below
|
|
b+ or below
|
|
100 basis points
|
|
|
|
|
|
|
|
|
|
|
|
|
|
If only two Rating Agencies provide a rating on the notes, the interest rate shall increase from % by 1.5 multiplied by the
sum of the number of basis points set forth next to each of such ratings. If only one Rating Agency provides a rating on the notes, the interest rate on the notes will be increased
from % by three times the number of basis points set forth opposite such rating. If no Rating Agency provides a rating on the notes, the per annum interest on the notes will
increase to, or remain at, as the case may be, 200 basis points above %.
|
|
|
If any Rating Agency changes its rating or initiates a rating with respect to the notes, the per annum interest rate on the notes will be increased or decreased in accordance with the foregoing
requirements.
|
|
|
Any interest rate increase or decrease described above will take effect from the first business day of the interest period during which a rating change requires an adjustment in the interest rate. If any
Rating Agency changes its rating on the notes more than once during any particular interest period, the last such change to occur will control for purposes of the rating provided by such Rating Agency for the applicable interest period.
|
S-8
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
The interest rate on the notes will permanently cease to be subject to any adjustment described above (notwithstanding any subsequent decrease in the ratings by any other Rating Agency) if the notes
become rated A, A or a or higher by any two of S&P, Fitch and A.M. Best, respectively, with a stable or positive outlook.
|
|
|
In no event shall (1) the per annum interest rate on the notes be reduced below %, and (2) the total increase in the per annum interest rate
on the notes exceed 200 basis points above %. Nothing herein shall be construed as a requirement that the Company obtain a rating on the notes from any Rating Agency or otherwise.
|
Optional redemption
|
|
Prior to , 2027 (the date that is three months prior to the maturity
date of the notes), we may redeem the notes, at our option, at any time in whole or from time to time in part at the "make-whole" redemption price described in "Description of the notesOptional redemption."
|
|
|
On or after , 2027 (the date that is three months prior to the maturity
date of the notes), we may redeem the notes in whole or from time to time in part at a redemption price equal to % of the principal amount of the notes to be redeemed plus accrued and unpaid
interest on the notes to be redeemed to, but not including, the date of redemption.
|
Change of control triggering event
|
|
Upon the occurrence of a Change of Control Triggering Event (as defined under "Description of the notesCertain definitions"), you will have the right, as holders of the notes, to cause us to
repurchase some or all of your notes at 101% of their face amount, plus accrued and unpaid interest to, but excluding, the repurchase date. See "Description of the notesChange of control triggering event."
|
No guarantees
|
|
The notes will not be guaranteed by any of our subsidiaries.
|
Ranking
|
|
The notes will be our senior unsecured obligations and will:
|
|
|
rank senior in right of
payment to all of our existing and future subordinated indebtedness;
|
|
|
rank equally in right of
payment with all of our existing and future senior indebtedness;
|
|
|
be effectively subordinated
to any of our existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness; and
|
|
|
be structurally
subordinated to all of the existing and future liabilities (including trade payables) of each of our subsidiaries.
|
|
|
For the twelve months ended March 31, 2017, our subsidiaries:
|
|
|
represented approximately
99.9% of our total revenues;
|
|
|
represented all of our
Operating Income (which is a non-U.S. generally accepted accounting principles ("GAAP") financial measure); and
|
|
|
represented all of our net
income.
|
|
|
As of March 31, 2017, our subsidiaries:
|
|
|
represented 99.9% of our
total assets; and
|
|
|
had $54.4 billion of
total liabilities, including trade payables but excluding intercompany liabilities.
|
|
|
As of March 31, 2017, after giving effect to this offering and our use of the net proceeds therefrom:
|
S-9
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
we would have had
approximately $769.6 million of total indebtedness (including the notes), none of which would have ranked equally with the notes and $269.6 million of which would have been subordinated to the notes;
|
|
|
we would have had
commitments available to be borrowed under our existing revolving credit facility of $150.0 million; and
|
|
|
our subsidiaries would have
had approximately $54.4 billion of total liabilities (including trade payables but excluding intercompany liabilities), all of which would have been structurally senior to the notes.
|
Certain covenants
|
|
The indenture that will govern the notes will contain certain covenants that limit, among other things, our ability and the ability of our subsidiaries to:
|
|
|
incur
indebtedness;
|
|
|
create liens on the stock
of certain subsidiaries;
|
|
|
issue or sell the stock of
certain subsidiaries; and
|
|
|
merge or consolidate with
other entities.
|
|
|
These covenants are subject to important exceptions and qualifications, which are described in "Description of the notesAdditional covenants."
|
Use of proceeds
|
|
We estimate that the net proceeds from this offering will be approximately $ million after deducting the underwriting
discount and our expenses related to the offering. We intend to use the net proceeds of this offering to (i) redeem all of our outstanding $400.0 million aggregate principal amount 6.625% Notes due 2021 (the "2021 Notes") and
(ii) prepay in full our $100.0 million term loan that matures on September 30, 2019 (the "Term Loan"). See "Use of proceeds."
|
|
|
The indenture governing the 2021 Notes permits us to redeem the 2021 Notes on or after July 15, 2017 at a redemption price equal to 103.313% of principal amount of the 2021 Notes to be redeemed. We
intend to deliver a notice of redemption for all 2021 Notes on or about the closing date of this offering. This prospectus supplement does not constitute a notice of redemption of the 2021 Notes.
|
|
|
The Term Loan may be prepaid prior to maturity without penalty and must be prepaid or paid down with the net cash proceeds received from the issuance of debt securities.
|
Further issuances
|
|
We may from time to time, without notice to or the consent of the holders of the notes, create and issue further notes having the same ranking and terms and conditions as the notes offered hereby, except
for the issue date, the public offering price and, in some cases, the first interest payment date, as described under "Description of the notesGeneral." Any additional notes having such similar terms, together with the notes, will constitute a
single series of securities under the indenture; provided, however, that if the additional notes are not fungible with the notes offered hereby for U.S. federal income tax purposes, the additional notes will be issued with a separate CUSIP
number.
|
S-10
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
Absence of public market for the notes
|
|
The notes are a new issue of securities and there is currently no established trading market for the notes. We do not intend to apply for a listing of the notes on any securities exchange or an automated
dealer quotation system. Accordingly, a liquid market for the notes may not develop. The underwriters have advised us that they currently intend to make a market in the notes. However, they are not obligated to do so, and any market making with
respect to the notes may be discontinued without notice.
|
Conflicts of interest
|
|
Affiliates of J.P. Morgan Securities LLC and SunTrust Robinson Humphrey, Inc. will receive at least 5% of the net proceeds of this offering in connection with the repayment of our Term Loan. See
"Use of proceeds." Accordingly, this offering is being made in compliance with the requirements of Rule 5121 of Financial Industry Regulatory Authority, Inc. ("FINRA"). Because the notes are expected to be rated investment grade by a
nationally recognized ratings agency, pursuant to Rule 5121, the appointment of a qualified independent underwriter is not necessary.
|
Denomination and form
|
|
We will issue the notes in the form of one or more fully registered global notes registered in the name of the nominee of The Depository Trust Company, or "DTC." Beneficial interests in the notes will be
represented through book-entry accounts of financial institutions acting on behalf of beneficial owners as direct and indirect participants in DTC. Clearstream Banking, société anonyme and Euroclear Bank, S.A./N.V., as operator of
the Euroclear System, will hold interests on behalf of their participants through their respective U.S. depositaries, which in turn will hold such interests in accounts as participants of DTC. Except in the limited circumstances described in this
prospectus supplement, owners of beneficial interests in the notes will not be entitled to have notes registered in their names, will not receive or be entitled to receive notes in definitive form and will not be considered holders of notes under the
indenture. The notes will be issued only in minimum denominations of $2,000 and integral multiples of $1,000 above that amount.
|
Trustee
|
|
U.S. Bank National Association.
|
Governing law
|
|
New York.
|
Risk factors
In evaluating an investment in the notes, prospective investors should carefully consider, along with the other information in this prospectus
supplement and the accompanying prospectus, the specific factors set forth under "Risk factors" for risks involved with an investment in the notes.
S-11
Table of Contents
Summary consolidated financial information
The following table sets forth our summary consolidated financial information as of and for the years ended December 31, 2016, 2015 and
2014 and as of and for the three months ended March 31, 2017 and 2016. The information as of and for the fiscal years ended December 31, 2016, 2015 and 2014 was derived from our audited
annual consolidated financial statements. The information as of and for the three months ended March 31, 2017 and 2016 was derived from our unaudited interim consolidated financial statements
and includes, in the opinion of management, all normal and recurring adjustments necessary to present fairly the information for such periods. The results of operations for the three months ended
March 31, 2017 are not necessarily indicative of the results to be expected for the full year ending December 31, 2017.
You
should read the following summary consolidated financial information together with "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" included
in our 2016 Annual Report, "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our First Quarter 2017 Quarterly Report and our audited
consolidated financial statements and unaudited
S-12
Table of Contents
consolidated
financial statements, including the related notes, in each case incorporated by reference in this prospectus.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended March 31,
|
|
Year ended December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands, except per share data)
|
|
2017
|
|
2016
|
|
2016
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Consolidated statements of operations data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums and other considerations
|
|
$
|
9,402
|
|
$
|
7,345
|
|
$
|
43,767
|
|
$
|
36,048
|
|
$
|
32,623
|
|
Annuity product charges
|
|
|
43,572
|
|
|
36,505
|
|
|
173,579
|
|
|
136,168
|
|
|
118,990
|
|
Net investment income
|
|
|
485,597
|
|
|
450,826
|
|
|
1,849,872
|
|
|
1,692,192
|
|
|
1,531,667
|
|
Change in fair value of derivatives
|
|
|
386,533
|
|
|
(74,065
|
)
|
|
164,219
|
|
|
(336,146
|
)
|
|
504,825
|
|
Net realized gains (losses) on investments, excluding other than temporary impairment ("OTTI") losses
|
|
|
2,338
|
|
|
2,687
|
|
|
11,524
|
|
|
10,211
|
|
|
(4,003
|
)
|
Net OTTI losses recognized in operations
|
|
|
(141
|
)
|
|
(5,694
|
)
|
|
(22,679
|
)
|
|
(19,536
|
)
|
|
(2,627
|
)
|
Loss on extinguishment of debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12,502
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
927,301
|
|
|
417,604
|
|
|
2,220,282
|
|
|
1,518,937
|
|
|
2,168,973
|
|
Benefits and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance policy benefits and change in future policy benefits
|
|
|
11,875
|
|
|
9,109
|
|
|
52,483
|
|
|
45,458
|
|
|
41,815
|
|
Interest sensitive and index product benefits
|
|
|
419,139
|
|
|
97,671
|
|
|
725,472
|
|
|
968,053
|
|
|
1,473,700
|
|
Change in fair value of embedded derivatives
|
|
|
224,170
|
|
|
265,857
|
|
|
543,465
|
|
|
(464,698
|
)
|
|
32,321
|
|
Amortization of deferred sales inducements and policy acquisition costs
|
|
|
152,003
|
|
|
77,192
|
|
|
625,178
|
|
|
495,504
|
|
|
294,997
|
|
Interest expense on notes and loan payable and subordinated debentures
|
|
|
11,058
|
|
|
10,048
|
|
|
41,206
|
|
|
41,088
|
|
|
48,492
|
|
Other operating costs and expenses
|
|
|
27,579
|
|
|
26,830
|
|
|
102,231
|
|
|
96,218
|
|
|
81,584
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total benefits and expenses
|
|
|
845,824
|
|
|
486,707
|
|
|
2,090,035
|
|
|
1,181,623
|
|
|
1,972,909
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
81,477
|
|
|
(69,103
|
)
|
|
130,247
|
|
|
337,314
|
|
|
196,064
|
|
Income tax expense
|
|
|
27,538
|
|
|
(24,262
|
)
|
|
47,004
|
|
|
117,484
|
|
|
70,041
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
53,939
|
|
$
|
(44,841
|
)
|
$
|
83,243
|
|
$
|
219,830
|
|
$
|
126,023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per common share
|
|
$
|
0.61
|
|
$
|
(0.55
|
)
|
$
|
0.98
|
|
$
|
2.78
|
|
$
|
1.69
|
|
Earnings (loss) per common shareassuming dilution
|
|
|
0.60
|
|
|
(0.55
|
)
|
|
0.97
|
|
|
2.72
|
|
|
1.58
|
|
Non-GAAP financial measures (a):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of net income (loss) to non-GAAP operating income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
53,939
|
|
$
|
(44,841
|
)
|
$
|
83,243
|
|
$
|
219,830
|
|
$
|
126,023
|
|
Net realized investment (gains) losses, including OTTI
|
|
|
(1,942
|
)
|
|
1,155
|
|
|
7,188
|
|
|
5,737
|
|
|
4,429
|
|
Change in fair value of derivatives and embedded derivativesindex annuities
|
|
|
10,977
|
|
|
97,549
|
|
|
56,634
|
|
|
(44,055
|
)
|
|
79,053
|
|
Change in fair value of derivatives and embedded derivativesdebt
|
|
|
(247
|
)
|
|
2,764
|
|
|
(1,265
|
)
|
|
1,296
|
|
|
104
|
|
Extinguishment of debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,503
|
|
Litigation reserve
|
|
|
|
|
|
|
|
|
(1,957
|
)
|
|
|
|
|
(1,418
|
)
|
Income taxes
|
|
|
(3,105
|
)
|
|
(35,629
|
)
|
|
(21,499
|
)
|
|
13,012
|
|
|
(30,048
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP operating income (b)
|
|
$
|
59,622
|
|
$
|
20,998
|
|
$
|
122,344
|
|
$
|
195,820
|
|
$
|
190,646
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP operating income per common share
|
|
$
|
0.67
|
|
$
|
0.26
|
|
$
|
1.44
|
|
$
|
2.48
|
|
$
|
2.56
|
|
Non-GAAP operating income per common shareassuming dilution
|
|
|
0.66
|
|
|
0.25
|
|
|
1.43
|
|
|
2.42
|
|
|
2.39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S-13
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Consolidated balance sheet data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investments
|
|
$
|
46,032,216
|
|
$
|
44,757,568
|
|
$
|
39,570,332
|
|
$
|
35,981,858
|
|
Total assets
|
|
|
57,548,610
|
|
|
56,053,472
|
|
|
49,029,392
|
|
|
43,976,689
|
|
Policy benefit reserves
|
|
|
52,701,412
|
|
|
51,637,026
|
|
|
45,495,431
|
|
|
39,802,861
|
|
Notes and loan payable (c)
|
|
|
494,071
|
|
|
493,755
|
|
|
393,227
|
|
|
413,805
|
|
Subordinated debentures
|
|
|
241,949
|
|
|
241,853
|
|
|
241,452
|
|
|
241,072
|
|
Accumulated other comprehensive income ("AOCI")
|
|
|
424,543
|
|
|
339,966
|
|
|
201,663
|
|
|
721,401
|
|
Total stockholders' equity
|
|
|
2,436,231
|
|
|
2,291,595
|
|
|
1,944,535
|
|
|
2,139,876
|
|
Statutory financial data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life subsidiaries' statutory capital and surplus and asset valuation reserve
|
|
|
3,000,569
|
|
|
2,933,193
|
|
|
2,593,472
|
|
|
2,327,335
|
|
Life subsidiaries' statutory net gain from operations before income taxes and realized capital gains (losses)
|
|
|
91,658
|
|
|
144,159
|
|
|
227,865
|
|
|
467,923
|
|
Life subsidiaries' statutory net income
|
|
|
68,453
|
|
|
80,699
|
|
|
132,723
|
|
|
344,666
|
|
Other data (unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Debt to total capitalization ratio (d)
|
|
|
18.0
|
%
|
|
18.4
|
%
|
|
16.6
|
%
|
|
20.0
|
%
|
Debt to total capitalization ratio (d)
|
|
|
27.7
|
%
|
|
28.3
|
%
|
|
27.8
|
%
|
|
32.8
|
%
|
American Equity Life's risk-based capital ("RBC") ratio (e)
|
|
|
353
|
|
|
342
|
|
|
336
|
|
|
372
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) In
addition to net income (loss), we have consistently utilized non-GAAP operating income, non-GAAP operating income per common share and non-GAAP operating income per common
shareassuming dilution, non-GAAP financial measures commonly used in the life insurance industry, as economic measures to evaluate our financial performance. Non-GAAP operating income
equals net income adjusted to eliminate the impact of items that fluctuate from year to year in a manner unrelated to core operations and we believe measures excluding their impact are useful in
analyzing operating trends. The most significant adjustments to arrive at non-GAAP operating income eliminate the impact of fair value accounting for our fixed index annuity business and are not
economic in nature bur rather impact the timing of reported results. We believe the combined presentation and evaluation of non-GAAP operating income together with net income provides information that
may enhance an investor's understanding of our underlying results and profitability. The amounts included in the reconciliation of net income to non-GAAP operating income are presented net of related
adjustments to amortization of deferred sales inducements and deferred policy acquisition costs.
Non-GAAP
operating income is not a substitute for net income determined in accordance with GAAP. The adjustments made to derive non-GAAP operating income are important to understanding our overall
results from operations, and, if evaluated without proper context, non-GAAP operating income possesses material limitations:
-
-
As an example, we could produce a low level of net income in a given period, despite strong operating
performance, if in that period we generate significant net realized losses from our investment portfolio. We could also produce a high level of net income in a given period, despite poor operating
performance, if in that period we generate significant net realized gains from our investment portfolio.
-
-
Another limitation of non-GAAP operating income is that it does not include the decrease in cash flows
expected to be collected as a result of credit loss OTTI.
Therefore, our management reviews net realized investment gains (losses) and analyses of our net investment income,
including impacts related to OTTI write-downs, in connection with their review of our investment portfolio. In addition, our management examines net income as part of their review of our overall
financial results.
(b) Non-GAAP
operating income reflects the following expenses and adjustments for the period indicated:
-
-
Unlocking:
The
three months ended March 31, 2016 includes expense from unlocking, which decreased non-GAAP operating income by $28.6 million. The year ended December 31, 2016 includes expense
from unlocking, which decreased non-GAAP operating income by $54.1 million. The year ended December 31, 2015 includes benefit from unlocking, which increased non-GAAP operating income by
$3.1 million. The year ended December 31, 2014 includes benefit from unlocking, which increased non-GAAP operating income by $28.2 million. For an explanation of the unlocking
process, see "Management's Discussion and Analysis of Financial Condition and Results of OperationsResults of Operations for the Three Years Ended December 31, 2016Net
income" and "Management's Discussion and Analysis of Financial Condition and Results of OperationsResults of Operations for the Three Years Ended December 31,
2016Operating income, a non-GAAP financial measure" in our 2016 Annual Report incorporated by reference herein.
-
-
Reserves held for living income benefit
riders:
The year ended December 31, 2016 includes an expense from the revision of
assumptions used in determining reserves held for living income benefit riders. The impact increased interest sensitive and index product benefits by $42.0 million and decreased non-GAAP
operating income by
S-14
Table of Contents
$27.1 million
for the year ended December 31, 2016. The year ended December 31, 2015 includes an expense from the revision of assumptions used in determining reserves held for
living income benefit riders. The impact increased interest sensitive and index product benefits by $18.3 million and decreased non-GAAP operating income by $11.8 million for the year
ended December 31, 2015. The year ended December 31, 2014 includes an expense from the revision of
assumptions used in determining reserves held for living income benefit riders. The impact increased interest sensitive and index product benefits by $12.4 million and decreased non-GAAP
operating income by $8.0 million for the year ended December 31, 2014.
(c) In
2015, 2014 and 2013, we retired $344 million aggregate principal amount of three convertible note issues. The total consideration paid to retire the convertible notes
included $486 million of cash and 9.45 million shares of our common stock. We have now extinguished all of our convertible notes.
(d) The
Adjusted Debt to total capitalization ratio is calculated by dividing Adjusted Debt by total capitalization excluding AOCI. Adjusted Debt is the sum of notes and loan payable and
the portion of the total principal amount of subordinated debentures payable to statutory trusts outstanding (qualifying trust preferred securities) that exceeds 15% of total capitalization excluding
AOCI. The debt to total capitalization ratio is calculated by dividing the sum of notes and loan payable and the total principal amount of subordinated debentures by total capitalization excluding
AOCI.
In
addition to total debt in accordance with GAAP, we use Adjusted Debt, a non-GAAP financial measure, as an alternate measure of our leverage. Adjusted Debt is the sum of notes and loan payable and
the portion of the total principal amount of subordinated debentures payable to statutory trusts outstanding that exceeds 15% of total capitalization excluding AOCI. Because rating agencies and
certain analysts and investors give equity credit to a portion of our subordinated debentures in analyzing our leverage and financial condition, we use Adjusted Debt as a supplemental measure in
evaluating our leverage.
Total
capitalization excluding AOCI, a non-GAAP financial measure, is the sum of total debt and total stockholders' equity minus AOCI. Since AOCI fluctuates from quarter to quarter due to unrealized
changes in the fair value of available for sale investments, we believe that total capitalization excluding AOCI provides useful supplemental information in evaluating our total capitalization.
In
addition, our existing revolving credit facility requires us to maintain a ratio of Adjusted Debt to total capitalization excluding AOCI below a specified level. We also use these measures,
therefore, in evaluating our leverage and ongoing compliance with our existing revolving credit facility.
The
table below demonstrates how we calculate Adjusted Debt and sets forth a reconciliation of our Adjusted Debt to our total debt for the periods indicated, as well as the components for the
calculation of the debt to total capitalization ratio and the Adjusted Debt to total capitalization ratio (unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes and loan payable
|
|
$
|
500,000
|
|
$
|
500,000
|
|
$
|
400,000
|
|
$
|
421,679
|
|
Portion of total subordinated debentures payable to statutory trusts outstanding that exceeds 15% of total capitalization excluding AOCI (A)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Debt
|
|
|
500,000
|
|
|
500,000
|
|
|
400,000
|
|
|
421,679
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remaining portion of total subordinated debentures (B)
|
|
|
269,610
|
|
|
269,610
|
|
|
269,610
|
|
|
269,610
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total subordinated debentures (A+B)
|
|
|
269,610
|
|
|
269,610
|
|
|
269,610
|
|
|
269,610
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt
|
|
|
769,610
|
|
|
769,610
|
|
|
669,610
|
|
|
691,289
|
|
Total stockholders' equity
|
|
|
2,436,231
|
|
|
2,291,595
|
|
|
1,944,535
|
|
|
2,139,876
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capitalization
|
|
|
3,205,841
|
|
|
3,061,205
|
|
|
2,614,145
|
|
|
2,831,165
|
|
AOCI
|
|
|
424,543
|
|
|
339,966
|
|
|
201,663
|
|
|
721,401
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capitalization excluding AOCI
|
|
|
2,781,298
|
|
|
2,721,239
|
|
|
2,412,482
|
|
|
2,109,764
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(e) The risk-based capital (RBC) ratio is calculated by dividing total adjusted statutory capital by regulatory required capital. Total adjusted
statutory capital is calculated based on a formula specified by the National Association of Insurance Commissioners ("NAIC") that includes American Equity Life's statutory capital and surplus and
asset valuation reserve and certain other adjustments. For more information about American Equity Life's statutory capital and surplus, see Note 12 to our audited consolidated financial
statements included in our 2016 Annual Report incorporated by reference herein.
The
table below sets forth the components for our calculation of the RBC ratio (unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
American Equity Life's statutory capital and surplus and asset valuation reserve
|
|
$
|
3,000,569
|
|
$
|
2,933,193
|
|
$
|
2,593,472
|
|
$
|
2,327,335
|
|
Regulatory required capital
|
|
|
850,494
|
|
|
857,261
|
|
|
771,293
|
|
|
625,373
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S-15
Table of Contents
Risk factors
Investing in the notes involves a high degree of risk. Before making an investment decision, and in consultation with your own financial and
legal advisors, you should carefully consider the following risk factors and all other information contained or incorporated by reference in this prospectus supplement or the accompanying prospectus
(including, without limitation, the risk factors contained under the heading "Risk Factors" in our 2016 Annual Report and any updates of such section in any subsequent filings with the SEC
incorporated by reference herein). The risks and uncertainties described below and incorporated by reference herein are not the only ones facing us. Additional risks and uncertainties of which we are
unaware, or that we currently deem immaterial, also may become material factors that affect us. If any of the following risks or those incorporated by
reference herein occur or intensify, our business, financial condition or results of operations could be materially and adversely affected. If this were to happen, you may lose some or all of your
investment in the notes. In connection with the forward-looking statements that appear in this prospectus supplement, you should also carefully review the cautionary statements under "Cautionary note
regarding forward-looking statements."
Risks related to the business
Changes in federal regulation may affect our annuity sales and profitability.
On April 6, 2016, the DOL released a final regulation which substantially expands the range of activities that will be considered to be fiduciary
advice under the U.S. Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and the Internal Revenue Code of 1986, as amended (the "Code"). As released, the final regulation provided
for a phased implementation beginning April 10, 2017, with full implementation by January 1, 2018. Lawsuits are pending challenging the regulation and efforts continue to overturn,
delay, repeal or revise the regulation. The success of efforts to overturn, delay, repeal or revise the regulation cannot be predicted. We believe the regulation could materially impact our business
and have a material adverse effect on sales of annuity products to individual retirement account ("IRA") holders, particularly index annuity products sold in the independent insurance agent
distribution channel. A significant portion of our annuity sales are to IRAs. The new regulation deems advisors, including independent insurance agents who sell fixed index annuities to IRAs, IRA
rollovers or 401(k) plans to be fiduciaries and prohibits them from receiving compensation unless they comply with a prohibited transaction exemption. Prohibited transaction exemptions include the new
Best Interest Contract ("BIC") exemption and the amended Prohibited Transaction Exemption 84-24 ("PTE 84-24"). The BIC exemption allows an advisor to preserve existing compensation and fee
arrangements provided: (1) an entity qualifying as a financial institution executes a best interest contract with the policyholder, acknowledges fiduciary status, and complies with requirements
related to written policies and procedures, supervision, record retention, compensation and disclosure; (2) policyholders are permitted to participate in class action litigation; and
(3) the agent follows the "Impartial Conduct Standards" in making investment recommendations, including providing recommendations in a holder's best interest, charging no more than reasonable
compensation and avoiding misleading statements. The April 2016 regulation amended PTE 84-24 to only cover sales of fixed rate annuity contracts, when it previously also covered variable annuities
and fixed indexed annuities. PTE 84-24 requires agents to: (1) follow the "Impartial Conduct Standards" as set forth above; (2) receive
S-16
Table of Contents
only
insurance commissions; (3) make certain disclosures; and (4) comply with record retention requirements.
On
February 3, 2017, a presidential memorandum directed the DOL to review the regulation to determine whether it would adversely impact retirement savers ability to access retirement
information and financial advice.
On
April 7, 2017, the DOL issued a final rule delaying the applicability date of the regulation and related exemptions. Under that rule, the new definition of fiduciary and the "Impartial
Conduct Standards" will become effective on June 9, 2017. Compliance with the remaining conditions and related exemptions would not be required until January 1, 2018. This rule also
changed some requirements of the April 2016 regulation, including permitting insurance agents to rely on PTE-84-24 until January 1, 2018 for all annuity sales, including variable and indexed
annuities, provided that the agents follow "Impartial Conduct Standards." Additional changes to the regulation's requirements are possible given the presidential directive to the DOL to review the
regulation.
On
May 22, 2017, the DOL confirmed that, while it is continuing to review the regulation, the applicability date of the regulation and related exemptions would not be extended and would be
June 9, 2017. The DOL also issued certain transition relief information and guidance for the period between June 9, 2017 through January 1, 2018 and indicated that it would not
pursue claims against fiduciaries who are "working diligently and in good faith" to comply with the new requirements during the transition period.
Although
the precise impact of the regulation is difficult to assess, compliance with the prohibited transaction exemptions will likely result in increased regulatory burdens, decreases in sales,
changes to our compensation practices and product offerings and increased litigation risk, which could negatively impact our business, results of operations or financial condition.
Risks related to the notes
Despite our current debt levels, we may still incur substantially more debt or take other actions which would
intensify the risks discussed below.
As of March 31, 2017, after giving effect to this offering and the use of proceeds therefrom, our total debt would have been approximately
$769.6 million.
We
and our subsidiaries may be able to incur substantial additional debt in the future, subject to the restrictions contained in the documents governing our outstanding debt. We will not be restricted
under the terms of the indenture that will govern the notes from incurring additional debt, recapitalizing our debt or taking a number of other actions that are not limited by the terms of the
indenture that will govern the notes that could have the effect of diminishing our ability to make payments on the notes when due. If we incur any additional indebtedness that ranks equally with the
notes, the holders of that debt will be entitled to share ratably with you in any proceeds distributed in connection with any insolvency, liquidation, reorganization, dissolution or other winding up
of our company. This may have the effect of reducing the amount of proceeds paid to you. These restrictions also will not prevent us from incurring obligations that do not constitute indebtedness.
S-17
Table of Contents
Our
ability to recapitalize, incur additional debt and take a number of other actions that are not limited by the terms of the indenture and the notes could have important consequences for you. For
example, it could:
-
-
make it difficult for us to satisfy our obligations with respect to the notes;
-
-
increase our vulnerability to general adverse economic and industry conditions;
-
-
require us to dedicate a portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of cash
flow to fund working capital, capital expenditures, acquisitions and investments and other general corporate purposes;
-
-
make it difficult for us to optimally capitalize and manage the cash flow for our businesses;
-
-
limit our flexibility in planning for, or reacting to, changes in our businesses and the markets in which we operate;
-
-
place us at a competitive disadvantage compared to our competitors that have less debt; and
-
-
limit our ability to borrow additional funds.
In
addition, it is possible that we may need to incur additional indebtedness in the future in the ordinary course of business or otherwise. Furthermore, if future debt financing is not
available to us when required or is not available on acceptable terms, we may be unable to grow our business, take advantage of business opportunities, respond to competitive pressures or refinance
maturing debt, any of which could have a material adverse effect on our operating results and financial condition.
Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our
business to pay our debt.
Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness, including the notes, depends on our future
performance, which is subject to economic, financial, competitive and other factors beyond our control. Our business may not continue to generate cash flow from operations in the future sufficient to
service our debt. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital
on terms that may be onerous. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these
activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.
The notes will be effectively subordinated to any secured indebtedness of our company to the extent of the
value of the property securing that indebtedness.
The notes will not be secured by any of our assets. As a result, the notes will be effectively subordinated to any secured indebtedness with respect to the
assets that secure that indebtedness. We have no material secured indebtedness, but we may incur secured debt in the future. The effect of this subordination is that upon a default in payment on, or
the acceleration of, any of our secured indebtedness, or in the event of bankruptcy, insolvency, liquidation, dissolution or reorganization of our company, the proceeds from the sale of assets
securing our secured indebtedness will be available to pay obligations on the notes only after
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Table of Contents
all
secured indebtedness has been paid in full. As a result, the holders of the notes may receive less, ratably, than the holders of secured debt in the event of our bankruptcy, insolvency,
liquidation, dissolution or reorganization.
The terms of our existing revolving credit facility restrict, and the terms of the indenture that will govern
the notes will restrict, our current and future operations, particularly our ability to respond to changes or to take certain actions.
Our existing revolving credit facility contains a number of restrictive covenants that impose significant operating and financial restrictions on us and may
limit our ability to engage in acts that may be in our long-term best interest. In addition, any new senior term loan or revolving credit facility that we enter into to replace our existing revolving
credit facility could have similar restrictive covenants. These covenants include limitations on our ability to:
-
-
incur additional indebtedness or issue preferred stock;
-
-
pay dividends or make other restricted payments;
-
-
create liens;
-
-
enter into transactions with affiliates;
-
-
enter into mergers, consolidations, or sales of all or substantially all of our assets; and
-
-
allow limitations on any restricted subsidiary's ability to pay dividends, make loans or sell assets to American Equity Investment Life Holding
Company or our other restricted subsidiaries.
The
indenture that will govern the notes will also contain a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to engage in
acts that may be in our long-term best interest. These covenants include limitations on our ability to:
-
-
incur additional indebtedness;
-
-
create liens on the stock of certain subsidiaries
-
-
issue or sell the stock of certain subsidiaries; and
-
-
merge or consolidate with other entities.
A
breach of the covenants or restrictions under the existing revolving credit facility, any new senior term loan or revolving credit facility and the indenture that will govern the notes could result
in an event of default under the applicable indebtedness. Such a default may allow the creditors to accelerate the related debt and may result in the acceleration of any other debt to which a
cross-acceleration or cross-default provision applies.
We conduct substantially all of our operations through our subsidiaries, which will not guarantee the notes.
American Equity Investment Life Holding Company is a holding company with no business operations of its own. We conduct our operations through our
subsidiaries, which will not guarantee the notes. Our subsidiaries will have no obligation, contingent or otherwise, to pay amounts due under the notes or to make any funds available to pay those
amounts, whether
S-19
Table of Contents
by
dividend, distribution, loan or other payment. Accordingly, repayment of our indebtedness, including the notes, is dependent on the generation of cash flow by our subsidiaries and their ability to
make such cash available to us, by dividend, debt repayment or otherwise. Our subsidiaries may not be able to, or may not be permitted to, make distributions to enable us to make payments in respect
of our indebtedness, including the notes. Each subsidiary is a distinct legal entity, and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from our
subsidiaries. In the event that we do not receive distributions from our subsidiaries, we may be unable to make required principal and interest payments on our indebtedness, including the notes.
The
notes will be structurally subordinated to all indebtedness and other obligations of our subsidiaries such that in the event of insolvency, liquidation, reorganization, dissolution or other
winding up of any subsidiary, all of that subsidiary's creditors (including trade creditors) would be entitled to payment in full out of that subsidiary's assets before we would be entitled to any
payment.
In
addition, the indenture that will govern the notes will not contain any limitation on the amount of indebtedness or other liabilities, such as trade payables, that may be incurred by our
subsidiaries.
For
the twelve months ended March 31, 2017, our subsidiaries represented 99.9% of our total revenues, all of our non-GAAP Operating Income and all of our net income. As of March 31,
2017, our subsidiaries represented 99.9% of our total assets and had $54.4 billion of total liabilities, including trade payables but excluding intercompany liabilities.
Our liquidity and ability to meet our obligations under the notes may be constrained by the ability of our
insurance subsidiaries to distribute cash to us.
We depend on our insurance subsidiaries for cash to make principal and interest payments on debt and to pay administrative expenses and income taxes. We
receive cash from our insurance subsidiaries, consisting of dividends and distributions, fees earned under investment advisory agreements, principal and interest payments on surplus debentures and
tax-sharing payments, as well as cash from our non-insurance subsidiaries consisting of dividends, distributions, loans and advances. Deterioration in the financial condition, earnings or cash flow of
these subsidiaries for any reason could hinder the ability of such subsidiaries to pay cash dividends or other disbursements to American Equity Investment Life Holding Company, which would limit our
ability to meet our debt service requirements, including our obligations under the notes, and satisfy other financial obligations. In addition, we may elect to contribute additional capital to certain
insurance subsidiaries to strengthen their surplus for covenant compliance or regulatory purposes (including, for example, maintaining adequate risk-based capital ("RBC") levels) or to provide the
capital necessary for growth, in which case it is less likely that our insurance subsidiaries would pay us dividends. Accordingly, this could limit our ability to meet debt service requirements and
satisfy other holding company financial obligations.
In
addition, the payment of dividends or surplus debenture interest by our insurance subsidiaries is restricted by the applicable laws of their respective jurisdictions requiring that our insurance
subsidiaries hold a specified amount of minimum reserves in order to meet future obligations on their outstanding policies.
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Table of Contents
The ability of our insurance subsidiaries to pay dividends is also impacted by various criteria established by rating agencies to maintain or receive higher financial strength
ratings and by the capital levels that we target for our insurance subsidiaries, as well as RBC and statutory surplus compliance requirements under our existing revolving credit facility.
There is currently no public market for the notes, and we do not know if a market will ever develop or, if a
market does develop, whether it will be sustained.
The notes are a new issue of securities, and there is no existing trading market for the notes. Although the underwriters have informed us that they intend to
make a
market in the notes, they have no obligation to do so and may discontinue making a market at any time without notice. As a result, a liquid market may not develop for the notes, and you may not be
able to sell your notes when you wish to sell them, or the prices that you receive when you sell the notes may not be favorable. We do not intend to apply for listing of the notes on any securities
exchange. If a market for the notes does not develop, you may not be able to resell your notes for an extended period of time, if at all. Moreover, if markets for the notes do develop in the future,
these markets may not continue indefinitely, and the notes may not be sold at a price equal to or greater than their initial offering price. In addition, in response to prevailing interest rates and
market conditions generally, as well as our performance, the notes could trade at a price lower than their initial offering price.
We may not be able to repurchase the notes upon a change of control triggering event.
Upon the occurrence of a change of control triggering event as defined in the indenture that will govern the notes, each holder of notes will have the right
to require us to repurchase all or any part of such holder's notes for cash at a price equal to 101% of their principal amount, plus accrued and unpaid interest, if any, to the date of such
repurchase, unless we have previously given notice of our intention to exercise our right to redeem the notes. If a change of control triggering event occurs, we may not have sufficient financial
resources available to satisfy our obligations to repurchase the notes, or the terms of other indebtedness may preclude us from doing so. Our failure to repurchase the notes as required under the
indenture that will govern the notes would result in a default under the indenture that could have material adverse consequences for us and the holders of the notes. In order to avoid the obligations
to repurchase the notes and events of default and potential breaches of our existing revolving credit facility and other indebtedness, we may have to avoid certain change of control transactions that
would otherwise be beneficial to us.
In
addition, certain important corporate events, such as leveraged recapitalizations, may not, under the indenture that will govern the notes, constitute a "change of control" that would require us to
repurchase the notes, even though those corporate events could increase the level of our indebtedness or otherwise adversely affect our capital structure, credit ratings or the value of the notes. See
"Description of the notesChange of control triggering event."
Holders of the notes may not be able to determine when a change of control triggering event giving rise to
their right to have the notes repurchased has occurred following a sale of "substantially all" of our assets.
One of the circumstances under which a change of control triggering event may occur is upon the sale or disposition of "all or substantially all" of our
assets. There is no precise established definition of the phrase "substantially all" under applicable law, and the interpretation of that
S-21
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phrase
will likely depend upon particular facts and circumstances. Accordingly, the ability of a holder of notes to require us to repurchase its notes as a result of a sale of less than all our assets
to another person may be uncertain.
Our credit ratings may not reflect all risks of your investment in the notes.
Our credit ratings are an assessment by rating agencies of our ability to pay our debts when due. There can be no assurance that our credit ratings will
remain in effect for any given period of time or that a rating will not be lowered, suspended or withdrawn entirely by the applicable agencies, if, in such agency's judgment, circumstances so warrant.
Consequently, real or anticipated changes in our credit ratings will generally affect the market value of the notes. These credit ratings may not reflect the potential impact of risks relating to the
structure or marketing of the notes. In addition, if any of our outstanding debt that is rated is downgraded, raising capital will become more difficult for us, and commitment and borrowing costs
under our credit agreement and other future borrowings may increase. Agency ratings are not a recommendation to buy, sell or hold any security and may be revised or withdrawn at any time by the
issuing organization. Each agency's rating should be evaluated independently of any other agency's rating.
S-22
Table of Contents
Use of proceeds
We estimate that the net proceeds from this offering will be approximately $ million after deducting the underwriting
discounts and our expenses related to the offering. We intend to use the net proceeds of this offering to (i) redeem all of our outstanding $400.0 million aggregate principal amount 2021
Notes and (ii) prepay in full our $100.0 million Term Loan.
The
indenture governing the 2021 Notes permits us to redeem the 2021 Notes on or after July 15, 2017 at a redemption price equal to 103.313% of principal amount of the 2021 Notes to be
redeemed. We intend to deliver a notice of redemption for all 2021 Notes on or about the closing date of this offering. This prospectus supplement does not constitute a notice of redemption of the
2021 Notes.
The
Term Loan may be prepaid prior to maturity without penalty and must be prepaid or paid down with the net cash proceeds received from the issuance of debt securities. For more information about the
interest rate and original use of proceeds of the Term Loan, see "Description of other indebtednessRevolving credit facility and term loan."
S-23
Table of Contents
Capitalization
The following table sets forth our capitalization as of March 31, 2017 and as adjusted to give effect to the application of the net
proceeds from the sale of the notes as described under "Use of proceeds." This table should be read in conjunction with our consolidated financial statements and related notes incorporated by
reference in this prospectus supplement and the accompanying prospectus.
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As of March 31, 2017
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|
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|
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(Dollars in thousands)
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Actual
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|
As adjusted
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2021 Notes
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$
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400,000
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|
$
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|
Term Loan
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|
|
100,000
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|
|
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Principal amount of subordinated debentures payable to subsidiary trusts
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|
269,610
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|
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269,610
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Notes offered hereby
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500,000
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|
|
|
|
|
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Total debt
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|
|
769,610
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|
|
769,610
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Total Stockholders' equity
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2,436,231
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2,436,231
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Total capitalization
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$
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3,205,841
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$
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3,205,841
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S-24
Table of Contents
Ratio of earnings to fixed charges
The following table sets forth our ratio of earnings to fixed charges on a historical basis for the periods indicated. The ratios are
calculated by dividing earnings by fixed charges. Earnings consist of income before income taxes and minority interests plus fixed charges. Fixed charges consist of interest expense and the portion of
operating leases that are representative of the interest factor. Interest expense includes interest sensitive and index product benefits and amortization of deferred sales inducements, interest
expense on notes and loan payable, interest expense on subordinated debentures, interest expense on amounts due under repurchase agreements and other interest expense.
We
did not have any preferred stock outstanding for the periods presented, and therefore the ratio of earnings to combined fixed charges and preferred stock dividends would be the same as the ratios
of earnings to fixed charges presented below.
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March 31,
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December 31,
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2017
|
|
2016
|
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2016
|
|
2015
|
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2014
|
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2013
|
|
2012
|
|
|
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|
|
|
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|
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|
|
|
|
|
|
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|
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Ratio of earnings to fixed charges
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|
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1.2x
|
|
|
0.5x
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1.1x
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|
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1.3x
|
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1.1x
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1.2x
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1.1x
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The
following table sets forth our ratio of earnings to fixed charges excluding interest sensitive and index product benefits and amortization of deferred sales inducements. This ratio is presented
here to reflect the effect of excluding interest sensitive and index product benefits and amortization of deferred sales inducements, which we believe are not indicative of interest expense related to
amounts borrowed. Interest sensitive and index product benefits and amortization of deferred sales inducements do not require cash outlays unless and until annuity holders elect to withdraw their
annuity account balances, subject to applicable surrender charges. Therefore, we view such expenses as operating expenses and treat them as such in our consolidated statements of operations.
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March 31,
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December 31,
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2017
|
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2016
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2016
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2015
|
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2014
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2013
|
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2012
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|
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Ratio of earnings to fixed charges, excluding interest sensitive and index product benefits and amortization of deferred sales inducements
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8.1x
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(5.7)x
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4.1x
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9.0x
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5.0x
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8.5x
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3.0x
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S-25
Table of Contents
Description of other indebtedness
Revolving credit facility and term loan
On September 30, 2016, we entered into a credit agreement with six banks, including JPMorgan Chase Bank, N.A. (as administrative agent
(the "Agent") and as a lender), Royal Bank of Canada, SunTrust Bank, and Citibank, N.A. that provided for a $150.0 million unsecured revolving line of credit (the "Revolving Facility") that
matures on September 30, 2021 and a $100.0 million Term Loan that matures on September 30, 2019 and can be prepaid prior to maturity without penalty.
We
utilized the proceeds from the Term Loan to make a contribution to the capital and surplus of our subsidiary, American Equity Life. Any proceeds from the Revolving Facility will be used to finance
our general corporate purposes. Interest is paid quarterly on the Term Loan. The interest rate for all borrowings under the credit agreement is floating at a rate based on our election that will be
equal to the alternate base rate (as defined in the credit agreement) plus the applicable margin or the adjusted LIBOR rate (as defined in the credit agreement) plus the applicable margin. We also pay
a commitment fee based on the available unused portion of the Revolving Facility. The applicable margin and commitment fee rate are based on our credit rating and can change throughout the period of
the borrowings. Based upon our current credit rating, the applicable margin is 0.75% for alternate base rate borrowings and 1.75% for adjusted LIBOR rate borrowings, and the commitment fee is 0.275%.
The interest rate in effect on the Term Loan during the three months ended March 31, 2017 was 3.125%.
Under
the credit agreement, we are required to maintain a minimum risk-based capital ratio at our subsidiary, American Equity Life, of 275%, a maximum ratio of adjusted debt to total adjusted capital
of 0.35, and a minimum level of statutory surplus at American Equity Life equal to the sum of (i) 80% of statutory surplus at June 30, 2016, (ii) 50% of the statutory net income
for each fiscal quarter ending after June 30, 2016 and (iii) 50% of all capital contributed to American Equity Life after June 30, 2016.
The
Revolving Facility contains an accordion feature that allows us, on up to three occasions and subject to credit availability, to increase the credit facility by an additional $50.0 million
in the aggregate. We also have the ability to extend the maturity date of the Revolving Facility by an additional one year past the initial maturity date of September 30, 2021 with the consent
of the extending banks. There are currently no guarantors of the Revolving Facility or the Term Loan, but certain of our subsidiaries must guarantee our obligations under the credit agreement if such
subsidiaries guarantee other material amounts of our debt.
No
amounts were outstanding under the Revolving Facility at March 31, 2017. As of March 31, 2017, $658.8 million is unrestricted and could be distributed to shareholders and still
be in compliance with all covenants under the credit agreement.
The
credit agreement contains additional negative and affirmative covenants applicable to us and our existing and future subsidiaries (subject to certain exceptions, including carve-outs and baskets),
including, without limitation, negative covenants that, subject to customary exceptions, limit the ability of our material non-guarantor subsidiaries to create, incur, assume or permit to exist
certain debt, limit our ability, and the ability of our material subsidiaries, to create or permit to exist certain liens and undergo certain fundamental changes, limit our
S-26
Table of Contents
ability
to change the nature of our business and the business conducted by our subsidiaries, limit our ability and the ability of our insurance subsidiaries to enter into certain reinsurance
agreements, limit our ability and the ability of our subsidiaries to enter into certain transactions with affiliates and limit our ability to make certain restricted payments.
The
credit agreement contains certain events of default (subject to customary grace periods, cure rights and materiality thresholds), including, among others, failure to pay principal, interest or
fees, violation of covenants, material inaccuracy of representations and warranties, cross-defaults and cross-acceleration to material indebtedness, certain bankruptcy and insolvency events, certain
material judgments, certain ERISA events, change of control and invalidity of loan documents. Upon the occurrence and during the continuance of an event of default, under the credit agreement, the
Agent may, with the consent of the lenders holding a majority of the term loans and the revolving commitments, or shall, upon the request of such lenders, terminate the commitments and declare the
principal of all loans to be due and payable together with accrued interest thereon and all fees and all our other obligations accrued thereunder.
We
will prepay our $100.0 million Term Loan in full with the proceeds of this offering.
2021 Notes
At March 31, 2017, we had outstanding $400.0 million of senior unsecured notes due 2021 which bear interest at 6.625% per year
and will mature on July 15, 2021. Interest on the 2021 Notes is payable on January 15 and July 15 of each year.
On
and after July 15, 2017, we may redeem all or, from time to time, a part of the 2021 Notes at the following redemption prices (expressed as a percentage of principal amount of the 2021 Notes
to be redeemed) plus accrued and unpaid interest, if any, to the date of redemption, if redeemed during the twelve-month period beginning on July 15 of the years indicated below:
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Year
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Percentage
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2017
|
|
|
103.313
|
%
|
2018
|
|
|
101.656
|
%
|
2019 and thereafter
|
|
|
100.000
|
%
|
|
|
|
|
|
We
intend to deliver a notice of redemption for all 2021 Notes on or about the closing date of this offering. This prospectus supplement does not constitute a notice of redemption of the 2021 Notes.
S-27
Table of Contents
Description of the notes
The Company will issue the notes offered hereby (the "
Notes
") under the base indenture, as
amended and supplemented by a supplemental indenture between itself and U.S. Bank National Association, as trustee (in such capacity, the "
Trustee
"),
dated as
of , 2017
with respect to the Notes between the Company and the Trustee (the "
Supplemental Indenture
"). For convenience, the
base indenture, as supplemented by the Supplemental Indenture, is referred to as the "
Indenture
." The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (the "
Trust Indenture Act
"), as in effect on
the date of the Indenture. The issuance of Notes in this offering will be limited to $500,000,000. Following the Issue Date, additional Notes may be issued under the Indenture from time to time in an
unlimited amount ("
Additional Notes
"), subject to compliance with the restrictions set forth in the covenant described below under the caption
"Additional covenantsLimitation on incurrence of indebtedness." Any Additional Notes will be part of the same series as the Notes offered hereby and will vote on all matters
as a single series with the Notes offered in this offering (except as otherwise provided herein). The Indenture will permit the Company to designate the maturity date, interest rate and optional
redemption provisions applicable to each series of Additional Notes, which may differ from the maturity date, interest rate and optional redemption provisions applicable to the Notes issued on the
Issue Date. Additional Notes that differ with respect to maturity date, interest rate or optional redemption provisions from the Notes issued on the Issue Date will constitute a different series of
Notes from such initial Notes. Additional Notes that have the same maturity date, interest rate and optional redemption provisions as the Notes issued on the Issue Date will be treated as the same
series as such initial Notes unless otherwise designated by the Company;
provided
,
however
, that if the
Additional Notes are not fungible with such initial Notes for U.S. federal income tax purposes, the Additional Notes will be issued with a separate CUSIP number. The Company similarly will be entitled
to vary the application of certain other provisions to any series of Additional Notes. All references to the Notes include Additional Notes (unless indicated to the contrary).
This
Description of the notes is intended to be a summary of the material provisions of the Notes and the Indenture. Since this Description of the notes is only a summary, you should refer to the
Indenture and the Notes for a complete description of the obligations of the Company and its Subsidiaries and your rights. This Description of the notes supplements the description of the senior debt
securities set forth under the caption "Description of Debt Securities" in the accompanying prospectus, and in the event that any provision described in this Description of the notes is inconsistent
with any description contained in the accompanying prospectus, this Description of the notes will apply and supersede the description in the accompanying prospectus.
You
will find the definitions of capitalized terms used in this description under the caption "Certain definitions." For purposes of this description, references to the "Company," "we,"
"our" and "us" refer only to American Equity Investment Life Holding Company and not to its Subsidiaries. Certain defined terms used in this Description of the notes but not defined herein have the
meanings assigned to them in the Indenture.
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General
The Notes will:
-
-
be senior unsecured obligations of the Company;
-
-
rank equally in right of payment to any existing and future senior Indebtedness of the Company and senior in right of payment to any existing
and future subordinated Indebtedness of the Company;
-
-
be effectively subordinated to any future secured Indebtedness of the Company, to the extent of the value of the assets securing such
Indebtedness;
-
-
be structurally subordinated to all existing and future obligations of Subsidiaries of the Company that are not Subsidiary Guarantors;
-
-
be unconditionally guaranteed by each future Subsidiary Guarantor, if any, as further described below under the caption
"Additional covenantsFuture subsidiary guarantors";
-
-
mature
on , 2027;
and
-
-
be issued in denominations of $2,000 and integral multiples of $1,000 in excess thereof.
As
of March 31, 2017, on an as adjusted basis after giving effect to this offering and the use of the net proceeds therefrom:
-
-
the Company would have had approximately $769.6 million of total Indebtedness (including the Notes), none of which would have ranked
equally with the Notes, and $269.6 million of which would have been subordinated to the Notes;
-
-
the Company would have had commitments available to be borrowed under its existing revolving credit facility of $150.0 million; and
-
-
our Subsidiaries, none of which will Guarantee the Notes as of the Issue Date, would have had approximately $54.4 billion of total
liabilities (including trade payables but excluding intercompany liabilities), all of which would have been structurally senior to the Notes.
Interest
Interest on the Notes will:
-
-
accrue at the rate of % per annum, subject to adjustment as described under "Interest rate adjustment";
-
-
accrue from the date of original issuance or, if interest has already been paid, from the most recent interest payment date;
-
-
be payable in cash semiannually in arrears
on and (each an "
Interest Payment
Date
"), commencing
on , 2017;
be payable to Holders of record at the close of business
on the and
immediately preceding the
related Interest Payment Date; and
be computed on the basis of a 360-day year comprised of twelve 30-day months.
Notwithstanding
the foregoing, if any such Interest Payment Date would otherwise be a day that is not a Business Day, then the interest payment will be postponed to the next succeeding Business Day.
If the maturity date of the Notes is a day that is not a Business Day, all payments to be made on such day will be made on the next succeeding Business Day, with the same force and effect as if made
on the maturity date. In either of such cases, no additional interest will be payable as a result of such delay in payment.
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Interest rate adjustment
The interest rate payable on the Notes will be subject to adjustment from time to time, in the manner set forth below, if any of S&P, Fitch or
A.M. Best (each as defined below) downgrades or subsequently upgrades the credit rating assigned to the Notes. If the rating on the Notes from any of S&P, Fitch or A.M. Best is a rating set forth in
the table below, the interest rate payable on the Notes shall increase from % by the sum of the number of basis points set forth next to such ratings.
|
|
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|
|
|
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|
|
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|
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|
Rating agency
|
|
|
Rating levels
|
|
S&P*
|
|
Fitch*
|
|
A.M. Best*
|
|
Percentage
|
|
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|
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|
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1
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BB+
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BB
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bb+
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25 basis points
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2
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BB
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BB
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bb
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50 basis points
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3
|
|
BB
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B+
|
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bb
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75 basis points
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4
|
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B+ or below
|
|
B or below
|
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b+ or below
|
|
100 basis points
|
|
|
|
|
|
|
|
|
|
* Including
the equivalent ratings of any substitute Rating Agency.
If
only two Rating Agencies provide a rating on the Notes, the interest rate shall increase from % by 1.5 multiplied by the sum of the number of basis points set forth next to each of
such ratings. If only one Rating Agency provides a rating on the Notes, the interest rate on the Notes will be increased from % by three times the number of basis points set forth
opposite such rating. If no Rating Agency provides a rating on the Notes, the per annum interest on the Notes will increase to, or remain at, as the case may be, 200 basis points above
%.
If
any Rating Agency changes its rating or initiates a rating with respect to the Notes, the per annum interest rate on the Notes will be increased or decreased in accordance with the foregoing
requirements.
Any
interest rate increase or decrease described above will take effect from the first Business Day of the interest period during which a rating change requires an adjustment in the interest rate. If
any Rating Agency changes its rating on the Notes more than once during any particular interest period, the last such change to occur will control for purposes of the rating provided by such Rating
Agency for the applicable interest period.
The
interest rate on the Notes will permanently cease to be subject to any adjustment described above (notwithstanding any subsequent decrease in the ratings by any other Rating Agency) if the Notes
become rated A, A or a or higher by any two of S&P, Fitch and A.M. Best, respectively, with a stable or positive outlook.
In
no event shall (1) the per annum interest rate on the Notes be reduced below %, and (2) the total increase in the per annum interest rate on the Notes exceed 200 basis
points above %. Nothing herein shall be construed as a requirement that the Company obtain a rating on the Notes from any Rating Agency or otherwise.
Payments on the notes; paying agent and registrar
The Company will pay, or cause to be paid, principal of, premium, if any, and interest on the Notes, and Notes may be exchanged or
transferred, at the office or agency designated by the Company, except that the Company may, at its option, pay interest on the Notes by wire
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transfer
or by check mailed to or upon the written order of Holders of the Notes at their registered addresses as they appear in the registrar's books. The Company has initially designated the
corporate trust office of the Trustee (or an affiliate thereof) to act as its paying agent (the "
Paying Agent
") and registrar
("
Registrar
"). The Company may, however, change the Paying Agent or Registrar without prior notice to the Holders, and the Company or any of the
Subsidiaries may act as Paying Agent or Registrar.
The
Company will pay principal of, premium, if any, and interest on, Notes in global form registered in the name of or held by The Depository Trust Company
("
DTC
") or its nominee in immediately available funds to DTC or its nominee, as the case may be, as the registered Holder of such global Note.
Transfer and exchange
A Holder may transfer or exchange Notes in accordance with the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents in connection with a transfer of the Notes. No service charge will be imposed by the Company, the Trustee or the Registrar for any
registration of transfer or exchange of Notes, but the Company may require a Holder to pay a sum sufficient to cover any transfer tax or other governmental taxes and fees required by law or permitted
by the Indenture. The Company is not required to transfer or exchange any Note selected for redemption. Also, the Company is not required to transfer or exchange any Note for a period of
15 days before the mailing of a notice of redemption.
The
registered Holder of a Note will be treated as the owner of it for all purposes.
Mandatory redemption
The Company is not required to make any mandatory redemption or sinking fund payments with respect to the Notes.
Optional redemption
Prior to , 2027 (the date that is three months prior to the maturity date of the Notes), we may redeem the Notes, at our
option, at any time (the time of any redemption of the Notes, the "
Redemption Date
") in whole or from time to time in part at a redemption price
calculated by an Independent Investment Banker (as defined below) equal to the greater of:
-
-
100% of the principal amount of the Notes being redeemed, and
-
-
the sum of the present values of the remaining principal amount and scheduled payments of interest
to , 2027 (the date that is
three months prior to the maturity date of the Notes) on the Notes to be redeemed (not including any portion of such payments of interest accrued as of the Redemption Date) discounted to the
Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below),
plus basis points, as calculated by an
Independent Investment Banker;
plus,
in either of the above cases, accrued and unpaid interest on the principal amount of any Notes to be redeemed to, but not including, the Redemption Date.
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On
or after , 2027 (the date that is three months prior to the maturity date of the Notes), we may redeem the Notes, at our option, at any time in
whole or from time to time in part, at
a redemption price equal to 100% of the principal amount of the Notes to be redeemed plus accrued and unpaid interest on the principal amount of any Notes to be redeemed to, but not including, the
date of redemption.
As
used in this prospectus supplement:
"
Comparable Treasury Issue
" means the United States Treasury security selected by the Independent Investment Banker as having a maturity comparable to
the remaining term of the Notes (assuming that the Notes matured on the date that is three months prior to the maturity of the Notes) to be redeemed that would be utilized, at the time of selection
and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Notes (assuming that the Notes matured on
the date that is three months prior to the maturity of the Notes).
"
Comparable Treasury Price
" means, with respect to any Redemption Date for the Notes, the average of the Reference Treasury Dealer Quotations for such
Redemption Date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or if the Independent Investment Banker obtains fewer than five such Reference Treasury Dealer
Quotations, the average of all such quotations.
"
Independent Investment Banker
" means any of J.P. Morgan Securities LLC, RBC Capital Markets, LLC and any successor firm or, if such firm
is unwilling or unable to select the Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the Company.
"
Reference Treasury Dealer
" means each of J.P. Morgan Securities LLC, RBC Capital Markets, LLC and three other primary U.S. government
securities dealers (each a "
Primary Treasury Dealer
"), as specified by us;
provided, however
, that if
any of J.P. Morgan Securities LLC, RBC Capital Markets, LLC or any Primary Treasury Dealer as specified by us shall cease to be a Primary Treasury Dealer, we will substitute therefor
another Primary Treasury Dealer, and if we fail to
select a substitute within a reasonable period of time, then the substitute will be a Primary Treasury Dealer selected by the Trustee after consultation with us.
"
Reference Treasury Dealer Quotations
" means, with respect to the Reference Treasury Dealer and any Redemption Date, the average, as determined by the
Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed, in each case, as a percentage of its principal amount) quoted in writing to the Independent
Investment Banker by such Reference Treasury Dealer at 3:30 p.m., New York City time, on the third Business Day preceding such Redemption Date.
"
Treasury Rate
" means the rate per year equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price
for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date. The Treasury Rate shall be calculated on the
third Business Day preceding the Redemption Date.
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Redemption procedures
The Company shall provide notice of any optional redemption to the Holders, with a copy to the Trustee, at least 30 and not more than
60 days prior to the applicable Redemption Date mailed by first-class mail to each Holder's registered address or in accordance with the applicable procedures of DTC. Notwithstanding the
foregoing, redemption notices may be mailed or otherwise provided more than 60 days prior to a Redemption Date if such notice is issued in connection with the discharge of the obligations of
the Company and the Subsidiary Guarantors under the Notes pursuant to the Company's exercise of the defeasance or satisfaction and discharge provisions under the Indenture.
If
a Redemption Date is on or after an interest record date and on or before the related Interest Payment Date, the accrued and unpaid interest, if any, will be paid to the Person in whose name the
Note is registered at the close of business on such record date, and no
additional interest will be payable to Holders whose Notes will be subject to redemption by the Company.
In
the case of any partial redemption, selection of the Notes for redemption will be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on
which the Notes are listed or, if the Notes are not listed, then on as nearly a pro rata basis as possible or by lot or such other similar method in accordance with the procedures of DTC (subject to
such rounding as may be necessary so that Notes are redeemed in whole increments of $1,000 and no Note of $2,000 in original principal amount or less will be redeemed in part). If any Note is to be
redeemed in part only, the notice of redemption relating to such Note will state the portion of the principal amount thereof to be redeemed. A new Note in principal amount equal to the unredeemed
portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Note.
From
time to time, the Company, its Subsidiaries, its direct or indirect parents or its Affiliates may acquire any Notes through open market purchases, privately negotiated transactions, tender
offers, exchange offers, redemptions or otherwise, upon such terms and at such prices as the Company, its Subsidiaries, its direct or indirect parents or its Affiliates (as applicable) may determine
(or as may be provided for in the Indenture), which may be more or less than the consideration for which such Notes are being sold and may be less than the redemption price in effect and could be for
cash or other consideration, in accordance with applicable securities laws, so long as such acquisition does not otherwise violate the terms of the Indenture. There can be no assurance as to which, if
any, of these alternatives or combinations thereof the Company, its Subsidiaries, its direct or indirect parents or its Affiliates may choose to pursue in the future.
Absence of subsidiary guarantees as of the issue date
As of the Issue Date, none of the Company's Subsidiaries will Guarantee the Notes, and, except under the limited circumstances described below
under the caption "Additional covenantsFuture subsidiary guarantors," will not be required to Guarantee the Notes. The operations of the Company are conducted through its
Subsidiaries and, therefore, the Company depends on the cash flow of its Subsidiaries to meet its obligations, including its obligations under the Notes. The Notes will be effectively subordinated in
right of payment to all Indebtedness and other obligations, liabilities and commitments (including trade payables and all claims of the
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Company's
Insurance Subsidiaries' policyholders) of the Company's Subsidiaries that are not Subsidiary Guarantors. Any right of the Company to receive assets of any of its Subsidiaries upon the
Subsidiary's liquidation or reorganization (and the consequent right of the Holders of the Notes to participate in those assets) will be effectively subordinated to the claims of that Subsidiary's
creditors, except to the extent that the Company is itself recognized as a creditor of the Subsidiary, in which case the claims of the Company would still be subordinate in right of payment to any
security interest in the assets of the Subsidiary and any Indebtedness of the Subsidiary senior to that claim held by the Company.
Change of control triggering event
If a Change of Control Triggering Event occurs, unless the Company has exercised its right to redeem all of the Notes as described above under
the caption "Optional redemption," each Holder will have the right to require the Company to repurchase all or any part (in integral multiples of $1,000 except that no Note may be
tendered in part if the remaining principal amount would be less than $2,000) of such Holder's Notes at a purchase price in cash equal to 101% of the principal amount of the Notes plus accrued and
unpaid interest, if any, to, but excluding, the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant Interest Payment Date).
Within
30 days following any Change of Control Triggering Event, except to the extent the Company has exercised its right to redeem all of the Notes as described above under the caption
"Optional redemption," or, at the Company's option, prior to any Change of Control Triggering Event but after the public announcement of a transaction or transactions that constitute or
may constitute a Change of Control, the Company will be required to send, by first class mail, or otherwise deliver in accordance with the applicable procedures of DTC, a notice (the
"
Change of Control Offer
") to each Holder or otherwise give notice in accordance with the applicable procedures of DTC, with a copy to the Trustee,
stating:
-
(1)
-
that
a Change of Control Offer is being made and that all Notes properly tendered pursuant to such Change of Control Offer will be accepted for purchase by the
Company at a purchase price in cash equal to 101% of the principal amount of such Notes plus accrued and unpaid interest, if any, to, but excluding, the date of purchase (subject to the right of
Holders of record on a record date to receive interest on the relevant Interest Payment Date) (the "
Change of Control Payment
");
-
(2)
-
the
repurchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed or otherwise delivered in
accordance with the applicable procedures of DTC, other than as may be required by law) (the "
Change of Control Payment Date
");
-
(3)
-
the
procedures determined by the Company, consistent with the Indenture, that a Holder must follow in order to have its Notes repurchased;
-
(4)
-
that
any Notes not tendered will continue to accrue interest in accordance with the terms of the Indenture;
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-
(5)
-
that,
unless the Company defaults in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer will cease
to accrue interest on the Change of Control Payment Date;
-
(6)
-
that
Holders will be entitled to withdraw their election if the Paying Agent receives, not later than the close of business on the second Business Day preceding the
Change of Control Payment Date, a facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Notes delivered for purchase and a statement that such Holder is
unconditionally withdrawing its election to have such Notes purchased;
-
(7)
-
if
such notice is delivered prior to the occurrence of a Change of Control Triggering Event, stating that the Change of Control Triggering Event is conditioned on
the occurrence of such Change of Control Triggering Event; and
-
(8)
-
that
Holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered,
which unpurchased portion must be equal to $2,000 in principal amount or an integral multiple of $1,000 in excess thereof.
On the Change of Control Payment Date, the Company will, to the extent lawful:
-
(1)
-
accept
for payment all Notes or portions of Notes (in principal amounts of $2,000 or larger integral multiples of $1,000 in excess thereof) properly tendered
pursuant to the Change of Control Offer;
-
(2)
-
deposit
with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions of Notes validly tendered; and
-
(3)
-
deliver
or cause to be delivered to the Trustee for cancellation the Notes so accepted together with an Officer's Certificate stating the aggregate principal amount
of Notes or portions of Notes being purchased by the Company.
The
Paying Agent will promptly submit electronically or mail to each Holder of Notes so tendered the Change of Control Payment for such Notes, and the Trustee will promptly authenticate and mail (or
cause to be transferred by book entry) to each Holder a new Note (it being understood that, notwithstanding anything in the Indenture to the contrary, no Opinion of Counsel or Officer's Certificate
will be required for the Trustee to authenticate or deliver such new Note) equal in principal amount to any unpurchased portion of the Notes
surrendered, if any;
provided
that each such new Note will be in a minimum principal amount of $2,000 or integral multiples of $1,000 in excess thereof.
Except
as described above with respect to a Change of Control Triggering Event, the Indenture does not contain provisions that permit the Holders to require that the Company repurchase or redeem the
Notes in the event of a takeover, recapitalization or similar transaction.
The
Company will not be required to make a Change of Control Offer following a Change of Control Triggering Event if (1) a third party makes the Change of Control Offer in the manner, at the
times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by the Company and purchases all Notes validly tendered and not
withdrawn under such Change of Control Offer or (2) a notice of redemption for all of the outstanding Notes has been given pursuant to the Indenture unless and until
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there
is a default in payment of the applicable redemption price, plus accrued and unpaid interest to, but excluding, the proposed redemption date. Notwithstanding anything to the contrary herein, a
Change of Control Offer may be made in advance of a Change of Control Triggering Event, conditioned upon such Change of Control Triggering Event.
The
Company will comply, to the extent applicable, with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws or regulations thereunder in connection with the
repurchase of Notes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with provisions of the Indenture, the Company will comply
with the applicable securities laws and regulations and will not be deemed to have breached its obligations described in the Indenture by virtue of such compliance.
The
Change of Control Triggering Event provisions described above may deter certain mergers, tender offers and other takeover attempts involving the Company by increasing the capital required to
effectuate such transactions. The definition of "Change of Control Triggering Event" includes a disposition of all or substantially all of the property and assets of the Company and the Subsidiaries
taken as a whole to any Person. Although there is a limited body of case law interpreting the phrase "substantially all," there is no precise established definition of the phrase under applicable law.
Accordingly, in certain circumstances there may be a degree of uncertainty as to whether a particular transaction would involve a disposition
of "all or substantially all" of the property or assets of a Person. As a result, it may be unclear as to whether a Change of Control Triggering Event has occurred and whether a Holder of Notes may
require the Company to make an offer to repurchase the Notes as described above. Certain provisions under the Indenture relating to the Company's obligation to make an offer to repurchase the Notes as
a result of a Change of Control Triggering Event may be waived or modified with the written consent of the Holders of a majority in principal amount of the Notes.
The
Company may be unable to repurchase the Notes upon a Change of Control Triggering Event because it may not have sufficient funds available, or the Company may be prohibited from doing so by the
terms of its other Indebtedness. A transaction constituting a Change of Control Triggering Event may also constitute an Event of Default under future agreements relating to Indebtedness to which the
Company becomes a party. If a Change of Control Triggering Event were to occur, the Company may seek to obtain a waiver or refinance the Indebtedness under any such future agreement. However, no
assurance can be provided that the Company would be successful in obtaining any such waiver or refinancing, and if the Company were not successful the amounts outstanding under such agreements may be
declared immediately due and payable. See "Risk factorsRisks related to the notesWe may not be able to repurchase the notes upon a change of control triggering event."
Events of default
We refer you to the section entitled "Description of Debt SecuritiesEvents of Default, Notice and Waiver" in the accompanying
prospectus for a description of the Events of Default, which will be applicable to the Notes, with the exception of the fourth bullet point of the first
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paragraph
thereof, which is replaced with the following, and the addition of the succeeding paragraph below:
-
-
Default under any mortgage, indenture or instrument under which there is issued or by which there is secured or evidenced any Indebtedness for
money borrowed by the Company or any of its Subsidiaries (or the payment of which is Guaranteed by the Company or any of its Subsidiaries), other than Indebtedness owed to the Company or a Subsidiary,
whether such Indebtedness or Guarantee now exists, or is created after the Issue Date, which Default:
-
-
is caused by a failure to pay principal on such Indebtedness at its final Stated Maturity within the grace period provided in the
agreements or instruments governing such Indebtedness (a "
payment default
"); or
-
-
results in the acceleration of such Indebtedness prior to its final Stated Maturity (the "
cross
acceleration provision
");
and,
in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a payment default or the maturity of
which has been so accelerated, aggregates $50.0 million or more (or its foreign currency equivalent); and
In
the event of a declaration of acceleration of the Notes because an Event of Default described in the fourth bullet point of the first paragraph under "Events of Default, Notice and
Waiver" (as modified as described above) has occurred and is continuing, the declaration of acceleration of the Notes shall be automatically rescinded and annulled if the default triggering such Event
of Default pursuant to the provision described in such fourth bullet point shall be remedied or cured by the Company or a Subsidiary or waived by the holders of the relevant Indebtedness within
30 days after the declaration of acceleration with respect thereto and if (1) the annulment of the acceleration of the Notes would not conflict with any judgment or decree of a court of
competent jurisdiction and (2) all existing Events of Default, except nonpayment of principal, premium or interest on the Notes that became due solely because of the acceleration of the Notes,
have been cured or waived.
Additional covenants
We refer you to the section entitled "Description of Debt Securities" in the accompanying prospectus for a description of certain covenants
applicable to the Notes, including the covenants described in such section under "Restrictive CovenantLimitations on Dispositions of Stock of Certain Subsidiaries" and
"Consolidation, Merger, Sale of Assets and Other Transactions." In addition to the foregoing, the following covenants will apply to the Notes for the benefit of holders of the Notes.
Limitation on incurrence of indebtedness
The Indenture will provide that we will not, and will not permit any of our Subsidiaries to create, Incur, issue, assume, Guarantee or otherwise become
directly or indirectly liable for, contingently or otherwise, any Indebtedness unless (1) no Event of Default has occurred and is continuing and (2) our Leverage Ratio as of the Balance Sheet Date
immediately preceding the date on which such additional Indebtedness is Incurred would have been no greater than 0.35 to 1.00, determined on a pro forma basis (including a pro forma application of the
net
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proceeds
therefrom) as if the additional Indebtedness and all other Indebtedness Incurred since the immediately preceding Balance Sheet Date had been Incurred and the proceeds therefrom applied as of
such day.
Negative pledge
Because we are a holding company, our assets consist primarily of the securities of our Subsidiaries. The negative pledge provisions in the Notes limit our
ability to pledge some of these securities. Under the terms of the Notes, except for specifically permitted liens, we will not, and will not permit any Subsidiary to, create, assume, incur or permit
to exist any Indebtedness for borrowed money (including any guarantee of Indebtedness for borrowed money) that is secured by a Lien on:
-
-
the voting securities of any Significant Subsidiary, or
-
-
the voting securities of a Subsidiary that owns, directly or indirectly, the voting securities of any of the Significant Subsidiaries, without
providing that the issued and outstanding Notes will be secured equally and ratably with Indebtedness so secured so long as such other Indebtedness shall be secured.
As
of the date of this prospectus supplement, our Significant Subsidiaries are American Equity Investment Life Insurance Company, American Equity Investment Life Insurance Company of New York and
Eagle Life Insurance Company.
Restrictions on dispositions
The terms of the Notes also provide that we will not, and will not permit any of our Subsidiaries to, issue, sell, assign, transfer or otherwise dispose of,
directly or indirectly, any of the Common Stock of our Significant Subsidiaries (except to us or to one or more of our other Subsidiaries or for the purpose of qualifying directors),
unless:
-
-
the issuance, sale, assignment, transfer or other disposition is required to comply with the order of a court or regulatory authority of
competent jurisdiction, other than an order issued at our request or the request of one of our Subsidiaries;
-
-
the entire Capital Stock of a Significant Subsidiary then owned by us or one of our Subsidiaries is disposed of in a single transaction or in a
series of related transactions, for consideration consisting of cash or other property which is at least equal to the Fair Value of such Capital Stock; or
-
-
after giving effect to the issuance, sale, assignment, transfer or other disposition, we and our Subsidiaries would own directly or indirectly
at least 80% of the issued and outstanding Capital Stock of such Significant Subsidiary and such issuance, sale, assignment, transfer or other disposition is made for consideration consisting of cash
or other property which is at least equal to the Fair Value of such Capital Stock.
Reports
Notwithstanding that the Company may not be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company will furnish
to the Trustee and the registered Holders of the Notes, within 15 days of the applicable time periods specified in the relevant forms: (1) all quarterly and annual financial information
that would be required to be
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contained
in a filing with the SEC on Forms 10-Q and 10-K if the Company were required to file such Forms, including a "Management's discussion and analysis of financial condition and results
of operations" and, with respect to the annual information only, a report on the annual financial statements by the Company's independent registered public accounting firm; and (2) all current
reports that would be required to be filed with the SEC on Form 8-K if the Company were required to file such reports;
provided, however
, that to
the extent such reports are filed with the SEC and publicly available, such reports shall have been deemed to have been provided to the Trustee and the Holders and no additional copies need to be
provided to the Trustee and the Holders.
Unless
such reports are otherwise filed with the SEC, the Company shall maintain a website to which all of the reports and press releases required by this "Reports" covenant are posted to which access
will be given to the Trustee, and Holders, prospective purchasers of the Notes, securities analysts and market making institutions that certify their status as such to the reasonable satisfaction of
the Company.
In
addition, if at any time any direct or indirect parent company of the Company guarantees the Notes (there being no obligation of any such parent to do so), such entity holds no material assets
other than cash, cash equivalents and the Capital Stock of the Company or any other direct or indirect parent of the Company (and performs the related incidental activities associated with such
ownership) and would comply with the requirements of Rule 3-10 of Regulation S-X promulgated by the SEC (or any successor provision), the reports, information and other documents
required to be furnished to Holders pursuant to this covenant may, at the option of the Company, be furnished by and be those of such parent rather than the Company.
Any
and all Defaults or Events of Default arising from a failure to furnish or file in a timely manner a report required by this covenant shall be deemed cured (and the Company shall be deemed to be
in compliance with this covenant) upon furnishing or filing such report as contemplated by this covenant (but without regard to the date on which such report is so furnished or filed);
provided
that
such cure shall not otherwise affect the rights of the holders described in the section entitled "Description of Debt
SecuritiesEvents of Default, Notice and Waiver" in the accompanying prospectus, as modified as described under the heading "Events of default" hereunder, if the principal,
premium, if any, and accrued interest have been accelerated in accordance with the terms of the Indenture and such acceleration has not been rescinded or cancelled prior to such cure.
Future subsidiary guarantors
The Indenture will provide that any of our Subsidiaries that Guarantees Indebtedness under our Senior Credit Agreement will be required, within 15 days
after giving such Guarantee, to execute and deliver to the Trustee a supplemental indenture providing for the Guarantee of the payment of the Notes by such Subsidiary, which Guarantee will be
pari passu
with such Subsidiary's guarantee of the Indebtedness under our Senior Credit Agreement.
Notwithstanding
the preceding paragraph, any Guarantee by a Subsidiary Guarantor will provide by its terms that it will be automatically and unconditionally released and discharged under the
circumstances described in the Supplemental Indenture.
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Modification and waiver
We refer you to the section entitled "Description of Debt SecuritiesModification and Waiver" in the accompanying prospectus for a
description of the provisions governing modification of the indenture, which will be applicable to the Notes, as modified as described below.
The
fourth bullet point under the heading "With the Consent of Securityholders" is replaced with the following:
-
-
impair the right of any Holder to receive payment of principal, premium, if any, and interest on such Holder's Notes on or after the due dates
therefor or to institute suit for the enforcement of any payment on or with respect to such Holder's Notes (
provided
that the rescission of an
acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the then outstanding Notes with respect to an Event of Default other than the nonpayment of principal,
premium, if any, and interest on the Notes in accordance with the second paragraph set forth under the caption "Events of default" shall not be deemed to impair the right of any Holder to
receive payment of principal, premium, if any, or interest on such Holder's Notes);
In
addition, the following bullet points are added under the heading "With the Consent of Securityholders":
-
-
reduce the premium payable upon the redemption or repurchase of any Note or change the time at which any Note may be redeemed or repurchased as
described above under the caption "Optional redemption" or, after a Change of Control Triggering Event has occurred, as described under the caption "Change of control
triggering event," whether through an amendment or waiver of provisions in the covenants or otherwise;
-
-
make the Notes subordinated in right of payment to any other obligations.
The
following bullet points are added under the heading "Without the Consent of Securityholders":
-
-
comply with the rules of any applicable depositary;
-
-
add Guarantees with respect to the Notes or release any future Subsidiary Guarantor from its obligations under its Subsidiary Guarantee or the
Indenture in accordance with the applicable provisions of the Indenture;
-
-
comply with any requirement of the SEC in connection with the qualification or maintaining the qualification of the Indenture under the Trust
Indenture Act of 1939, as amended;
-
-
conform the text of the Indenture, the Notes to any provision of this "Description of the notes" to the extent that such provision in this
"Description of the notes" was intended to be a verbatim recitation of a provision of the Indenture, the Notes; or
-
-
provide for or confirm the issuance of Additional Notes in accordance with the terms of the consent of the Holders is not necessary under the
Indenture to approve the particular form of any proposed amendment or supplement. It is sufficient if such consent approves the substance of the proposed amendment or supplement. A consent to any
amendment, supplement or waiver under the Indenture by any Holder of Notes given in connection with a tender of such Holder's Notes will not be rendered invalid by such tender.
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Discharge, defeasance and covenant defeasance
We refer you to the section entitled "Description of Debt SecuritiesDischarge, Defeasance and Covenant Defeasance" in the
accompanying prospectus, which will apply to the Notes.
Notwithstanding
the foregoing, the Supplemental Indenture will state that Section 13.04 (Conditions to Defeasance and Covenant Defeasance) of the Indenture is modified with respect to the Notes
to replace clause (6) thereof with the following:
-
(6)
-
Such
Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under, any other indenture or other agreement or
instrument for borrowed money, pursuant to which in excess of $50,000,000 principal amount is then outstanding, to which the Company is a party or by which it is bound.
No personal liability of directors, officers, employees and stockholders
No past, present or future director, officer, employee, incorporator, member, partner or stockholder of the Company or any of the Subsidiary
Guarantor shall have any liability for any obligations of the Company or the Subsidiaries under the Notes, the Indenture, any Subsidiary Guarantee or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes
and any Subsidiary Guarantee. The waiver may not be effective to waive liabilities under the federal securities law.
Notices
Any notice or communication to a Holder will be mailed by first-class mail or by overnight air courier guaranteeing next day delivery to its
address shown on the Note register or by such other delivery system as the Holder agrees to accept. Failure to mail a notice or communication to a Holder or any defect in it will not affect its
sufficiency with respect to other Holders. Notwithstanding any other provision of the Indenture or any Note, where the Indenture or any Note provides for notice of any event (including any notice of
redemption) to any Holder of an interest in a global Note (whether by mail or otherwise), such notice shall be sufficiently given if given to DTC or any other applicable depositary for such Note (or
its designee) according to the applicable procedures of DTC or such depositary.
Concerning the trustee
U.S. Bank National Association is the Trustee under the Indenture and has been appointed by the Company as Registrar and Paying Agent with
regard to the Notes. U.S. Bank National Association, in each of its capacities, including without limitation as Trustee, Registrar and Paying Agent, assumes no responsibility for the accuracy or
completeness of the information contained in this document or the related documents or for any failure by us or any other party to disclose events that may have occurred and may affect the
significance or accuracy of such information.
Governing law
The Indenture will provide that it and the Notes and any Subsidiary Guarantees will be governed by, and construed in accordance with, the laws
of the State of New York.
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Book-entry delivery and form
The Notes will be issued as global debt securities in "book-entry" form in denominations of $2,000 and integral multiples of $1,000 in excess
thereof. DTC will be the depositary with respect to the Notes. The Notes will be issued as fully registered securities in the name of Cede & Co., DTC's nominee, and will be deposited
with DTC. See "Description of
Debt SecuritiesDenominations, Registrations and Transfer" in the accompanying prospectus.
DTC
has advised us that it is a member of the U.S. Federal Reserve System, a limited-purpose trust company under the New York banking law and a registered clearing agency with the SEC. DTC holds
securities that its participants deposit with DTC and facilitates the settlement among participants of securities transactions in deposited securities through electronic computerized book-entry
changes in participants' accounts, thereby eliminating the need for physical movement of securities certificates. Participants include securities brokers and dealers (including the underwriters),
banks, trust companies, clearing corporations and certain other organizations. DTC is a wholly-owned subsidiary of the Depository Trust & Clearing Corporation, which is owned by a number of its
participants and by The New York Stock Exchange, Inc., the American Stock Exchange LLC and the Financial Industry Regulatory Authority. Access to DTC's book-entry system is also
available to others, such as securities brokers and dealers, banks and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly. The
rules applicable to DTC and its participants are on file with the SEC.
Certain definitions
"
Adjusted Consolidated Debt
" means, at any date of determination, Consolidated Indebtedness
(of the type described in any or all of clauses (a), (b), (c), (d), (g) and (h) of the definition of "Indebtedness", but, as to clause (h), only to the extent that it is an unpaid obligation in
respect of a letter of credit or letter of guaranty that is then due and payable and not contingent) of the Company and its Subsidiaries, other than (i) Indebtedness evidenced by Trust
Preferred Securities Notes, but only to the extent that the aggregate unpaid principal balance of such Trust Preferred Securities Notes on such date does not exceed an amount equal to fifteen percent
(15%) of Total Capitalization on such date (for the sake of clarity, with any portion of Indebtedness evidenced by Trust Preferred Securities Notes that exceeds an amount equal to fifteen percent
(15%) of Total Capitalization on such date being included in Indebtedness for the purposes of this definition) and (ii) Subordinated Debt other than any Indebtedness evidenced by Trust
Preferred Securities Notes.
"
Adjusted Total Capitalization
" means, as of any date, an amount equal to Total Capitalization, plus accumulated other comprehensive loss, or minus
accumulated other comprehensive income (as those terms are used under GAAP), as applicable, to the extent, if any, reflected as a component of Consolidated Net Worth as of such date.
"
Affiliate
" of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition, "
control
" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms
"
controlling
" and "
controlled
" have meanings correlative to the foregoing.
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"
A.M. Best
" means A.M. Best Company, Inc. and its successors.
"
Balance Sheet Date
" means the last day of any annual or quarterly period for which the Company's consolidated balance sheet is delivered to the Trustee
as required under the Indenture.
"
Beneficial Owner
" has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating
the beneficial ownership of any particular "person" (as that term is used in Section 13(d)(3) of the Exchange Act), such "person" shall be deemed to have beneficial ownership of all securities
that such "person" has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent
condition. The terms "
Beneficially Owns
" and "
Beneficially Owned
" shall have a corresponding meaning.
"
Board of Directors
" means:
-
(1)
-
with
respect to a corporation, the Board of Directors of the corporation or any committee thereof duly authorized to act on behalf of the Board of Directors with
respect to the relevant matter;
-
(2)
-
with
respect to a partnership, the Board of Directors of the general partner of the partnership; and
-
(3)
-
with
respect to any other Person, the board or committee of such Person serving a similar function.
"
Business Day
" means each day that is not a Saturday, Sunday or other day on which commercial banking institutions in New York, New York or the offices
of the Trustee are authorized or required by law, regulation or executive order to close.
"
Capital Stock
" of any Person means (1) with respect to any Person that is a corporation, any and all shares, interests, rights to purchase,
warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any Common Stock or Preferred Stock, and (2) with respect to any
Person that is not a corporation, any and all partnership, limited liability company, membership or other equity interests of such Person, but in each case excluding any debt securities convertible
into any of the foregoing.
"
Capital Lease Obligations
" of any Person means such obligations of the Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of the Person
under GAAP (excluding all obligations under operating leases required by the Financial Accounting Standards Board to be classified or accounted for as capital leases). The amount of such obligations
will be the capitalized amount thereof, determined in accordance with GAAP.
"
Ceded Reinsurance
" means risk that is ceded (whether by co-insurance, reinsurance or equivalent relationship otherwise named) by any Insurance
Subsidiary to any other Person (other than to another Insurance Subsidiary or Affiliate of the Company), other than Surplus Relief Reinsurance.
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"
Change of Control
" means the occurrence of any one of the following:
-
(1)
-
the
direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of the Company and its Subsidiaries taken as a whole to any Person (including any "person" (as that term is used in Section 13(d)(3) of
the Exchange Act)) other than to the Company or one of its Subsidiaries;
-
(2)
-
the
consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any Person (including any "person" (as
that term is used in Section 13(d)(3) of the Exchange Act)) becomes the Beneficial Owner, directly or indirectly, of more than 50% of the outstanding Voting Stock of the Company, measured by
voting power rather than number of shares;
-
(3)
-
the
Company consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into, the Company, in any such event pursuant
to a transaction in which any of the outstanding Voting Stock of the Company or such other Person is converted into or exchanged for cash, securities or other property, other than any such transaction
where the shares of the Voting Stock of the Company outstanding immediately prior to such transaction constitute, or are converted into or exchanged for, a majority of the Voting Stock of the
surviving Person immediately after giving effect to such transaction;
-
(4)
-
the
first day on which the majority of the members of the Board of Directors of the Company cease to be Continuing Directors; or
-
(5)
-
the
adoption of a plan relating to the liquidation or dissolution of the Company.
"
Change of Control Triggering Event
" means, on any date during the period (the "
Trigger Period
")
commencing upon the first public announcement by the Company of any Change of Control (or pending Change of Control) and ending 60 days following consummation of such Change of Control (which
Trigger Period will be extended following consummation of a Change of Control for so long as either S&P or Fitch has publicly announced that it is considering a possible ratings change), (i) if
the Notes were rated Investment Grade by both S&P and Fitch on the day before the commencement of the Trigger Period, the Notes cease to be rated Investment Grade by both S&P and Fitch and
(ii) if the Notes were rated Investment Grade on the day before the commencement of the Trigger Period by one of S&P and Fitch and below Investment Grade by the other Rating Agency, the Notes
cease to be rated Investment Grade by the Rating Agency that had previously provided the Investment Grade rating and are downgraded by the Rating Agency that had previously provided the below
Investment Grade rating;
provided
that if the Notes were rated below Investment Grade by both S&P and Fitch on the day before the commencement of the
Trigger Period, then a Change of Control Triggering Event shall be deemed to occur upon the consummation of a Change of Control without regard to any action by any Rating Agency. Notwithstanding the
foregoing, no Change of Control Triggering Event will be deemed to have occurred in connection with any particular Change of Control unless and until such Change of Control has actually been
consummated. References in this definition to S&P and Fitch shall be deemed to include any Rating Agency substituted for S&P or Fitch, as the case may be, in accordance with the definition of "Rating
Agency."
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"
Common Stock
" means with respect to any Person, any and all shares, interests or other participations in, and other equivalents (however designated and
whether voting or nonvoting) of such Person's common stock whether or not outstanding on the Issue Date, and includes, without limitation, all series and classes of such common stock.
"
Consolidated
" means the Company and its Subsidiaries, taken as a whole in accordance with GAAP.
"
Consolidated Assets
" means, as of the date of determination, the net book value of all assets of the Company and its Subsidiaries as of such date
classified as assets in accordance with GAAP and determined on a Consolidated basis.
"
Consolidated Liabilities
" means, as of the date of determination, all liabilities of the Company and its Subsidiaries as of such date classified as
liabilities in accordance with GAAP and determined on a Consolidated basis.
"
Consolidated Net Worth
" means, as of the date of determination, the remainder of (i) all Consolidated Assets (after deducting all applicable
reserves and excluding any re-appraisal or write-up of assets after the Issue Date) as of such date, minus (ii) all Consolidated Liabilities as of such date.
"
Continuing Director
" means as of any date of determination, any member of the Board of Directors of the Company who:
-
(1)
-
was
a member of such Board of Directors on the Issue Date; or
-
(2)
-
was
nominated for election or elected to such Board of Directors with the approval of the majority of the Continuing Directors who were members of such Board of
Directors at the time of such nomination or election.
"
Current Redeemable Equity
" means any preferred stock or other Equity Interests, which, in either case, are subject to mandatory redemption at any time
prior to the first anniversary of the final maturity date of the Notes.
"
Default
" means any event or condition that is, or after notice or passage of time or both would be, an Event of Default.
"
Effective Date Trust Preferred Securities
" means mandatorily redeemable preferred securities issued by any of the following Delaware business trusts
that are Affiliates of the Company as of the Issue Date: American Equity Capital Trust II, American Equity Capital Trust III, American Equity Capital Trust IV, American Equity Capital Trust VII,
American Equity Capital Trust VIII, American Equity Capital Trust IX, American Equity Capital Trust X, American Equity Capital Trust XI and American Equity Capital Trust XII.
"
Equity Interests
" means (a) shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests
in a trust or other equity ownership interests in a Person or (b) any Equity Rights in such Person;
provided
that any convertible securities issued by
the Company shall be deemed not to be Equity Interests prior to their conversion to shares of common stock of the Company.
"
Equity Rights
" means, with respect to any Person, any subscriptions, options, warrants, commitments, preemptive rights or agreements of any kind
(including any stockholders' or
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voting
trust agreements) for the issuance, sale, registration or voting of, or securities convertible into, any additional shares of capital stock of any class, or partnership or other ownership
interests of any type in, such Person.
"
Exchange Act
" means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.
"
Fair Value
" means, when used with respect to dispositions of Capital Stock or other assets, the fair value thereof as determined in good faith by the
Board of Directors.
"
Fitch
" means Fitch Ratings, Inc. and its successors.
"
GAAP
" means generally accepted accounting principles in the United States of America as in effect as of the Issue Date (except with respect to the
financial statements being furnished pursuant to the covenant described above under the caption "Additional
covenantsReports," as to which such principles in effect from time to time shall apply), including those set forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as approved by a
significant segment of the accounting profession. All ratios and computations based on GAAP contained in the Indenture will be computed in conformity with GAAP, except that in the event the Company is
acquired in a transaction that is accounted for using purchase accounting, the effects of the application of purchase accounting shall be disregarded in the calculation of such ratios and other
computations contained in the Indenture.
"
Guarantee
" means any obligation, contingent or otherwise, of any Person, directly or indirectly, guaranteeing any Indebtedness or other financial
obligations of any other Person and any obligation, direct or indirect, contingent or otherwise, of such Person:
(1) to
purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such other Person (whether arising by virtue of partnership arrangements, or by
agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise); or
(2) entered
into for purposes of assuring in any other manner the obligee of such Indebtedness or other financial obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part);
provided
,
however
, that the term "
Guarantee
" will not
include endorsements for collection or deposit in the ordinary course of business. The term "
Guarantee
" used as a verb has a corresponding meaning.
"
Holder
" means a Person in whose name a Note is registered on the Registrar's books.
"
Incur
" means to issue, create, assume, Guarantee, incur or otherwise become liable for;
provided
,
however
, that any
Indebtedness or Capital Stock of a Person existing at the time such Person becomes a Subsidiary (whether by merger, consolidation,
acquisition or otherwise) will be deemed to be Incurred by such Person at the time it becomes a Subsidiary; and the terms "
Incurred
" and
"
Incurrence
" have meanings correlative to the foregoing. Any Indebtedness issued at a discount (including Indebtedness on which interest is payable
through the issuance
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of
additional Indebtedness) shall be deemed incurred at the time of original issuance of the Indebtedness at the initial accreted amount thereof.
"
Indebtedness
" of any Person means, without duplication:
-
(a)
-
all
obligations of such Person for borrowed money;
-
(b)
-
all
obligations of such Person evidenced by bonds, debentures, notes (with respect to the Company, including the Trust Preferred Securities Notes) or similar
instruments;
-
(c)
-
all
obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person;
-
(d)
-
all
obligations of such Person in respect of the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course
of business);
-
(e)
-
all
Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed;
-
(f)
-
all
Guarantees by such Person of Indebtedness of others;
-
(g)
-
all
Capital Lease Obligations of such Person;
-
(h)
-
all
unpaid obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty (other than cash
collateralized letters of credit to secure the performance of workers' compensation, unemployment insurance, other social security laws or regulations, bids, trade contracts, leases, environmental and
other statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case, obtained in the ordinary course of business);
-
(i)
-
Current
Redeemable Equity; and
-
(j)
-
all
obligations, contingent or otherwise, of such Person in respect of bankers' acceptances.
The
Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent that such Person is liable
therefor pursuant to law or judicial holding as a result of such Person's ownership interest in or other relationship with such entity, except to the extent that contractual provisions binding on the
holder of such Indebtedness provide that such Person is not liable therefor;
provided
, that Indebtedness shall not include (i) obligations with
respect to insurance policies, annuities, guaranteed investment contracts and similar products underwritten by, or Reinsurance Agreements or Retrocession Agreements entered into by, an Insurance
Subsidiary in the ordinary course of its business, (ii) obligations with respect to Surplus Relief Reinsurance ceded by an Insurance Subsidiary, (iii) obligations in the ordinary course
of business of such Person to purchase securities that arise out of or in connection with the sale of the same or substantially similar securities or to return collateral consisting of securities
arising out of or in connection with the loan of the same or substantially similar securities, (iv) [reserved], (v) unspent cash deposits or securities held in
escrow by or in favor of such Person, or in a segregated deposit or securities account, as applicable, controlled by such Person, in each case in the ordinary course of business to secure the
performance obligations of, or damages owing
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from,
one or more third parties, (vi) any indebtedness under any overdraft or other cash management facilities so long as any such indebtedness is repaid in full no later than five Business
Days following the date on which it was incurred or in the case of such indebtedness in respect of credit or purchase cards, within 60 days of its incurrence, (vii) except as provided in
clause (g) above, any obligations in respect of a lease properly classified as an operating lease in accordance with GAAP, (viii) any liability for federal, state, local or other taxes
not yet delinquent or being contested in good faith and for which adequate reserves have been established to the extent required by GAAP, (ix) any customer deposits or advance payments received
in the ordinary course of business, and (x) the following obligations issued or undertaken in connection with a Statutory Reserve Financing: (A) Surplus Notes or other obligations of any
Special Purpose Subsidiary of the Company ("
Reserve Financing Notes
"), (B) any securities backed by such Reserve Financing Notes by an entity
formed in connection with a Statutory Reserve Financing, (C) letters of credit issued for the account of any Special Purpose Subsidiary of the Company, (D) reimbursement obligations of
any Special Purpose Subsidiary, (E) any guarantees by the Company of the obligations described in (A), (B), (C) or (D) above, (F) reimbursement obligations of the Company
or (G) capital maintenance or similar obligations of the Company in favor of any Special Purpose Subsidiary.
"
Insurance Regulatory Authority
" means, with respect to any Insurance Subsidiary, the governmental or regulatory authority or agency charged with
regulating the insurance business of insurance companies or insurance holding companies, in its jurisdiction of legal domicile.
"
Insurance Subsidiary
" means any Subsidiary of the Company that is required to be licensed as an insurer or reinsurer.
"
Investment Grade
" means a rating of BBB- or better by S&P (or its equivalent under any successor rating category of S&P) or a rating of BBB- or better
by Fitch (or its equivalent under any successor rating category of Fitch), as the case may be.
"
Issue Date
" means , 2017.
"
Leverage Ratio
" means, as of any determination date, the ratio of (a) the Adjusted Consolidated Debt to (b) Adjusted Total Capitalization.
"
Lien
" means, with respect to any asset, any mortgage, lien (statutory or otherwise), pledge, hypothecation, charge, security interest or encumbrance of
any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the
nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction;
provided
that in no event shall an operating lease (or any filing or agreement to give any financing statement in
connection therewith) be deemed to constitute a Lien.
"
Material Subsidiary
" means a Subsidiary that holds, directly or indirectly, more than 5% of the Consolidated assets of the Company and its Subsidiaries
at such time or that accounts for more than 5% of the Consolidated revenues of the Company and its Subsidiaries at such time, in each instance determined in accordance with GAAP.
"
Obligations
" means any principal, interest (including any interest accruing subsequent to the filing of a petition in bankruptcy, reorganization or
similar proceeding at the rate provided for
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in
the documentation with respect thereto, whether or not such interest is an allowed claim under applicable state, federal or foregoing law), penalties, fees, indemnifications, reimbursements
(including, without limitation, reimbursement obligations with respect to letters of credit and bankers' acceptances), damages and other liabilities, and guarantees of payment of such principal,
interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities, payable under the documentation governing any Indebtedness.
"
Officer
" means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Financial Officer, any
Executive Vice President, Senior Vice President or Vice President, the Treasurer or the Secretary of the Company or, in the event that a Person is a partnership or a limited liability company that has
no such officers, a person duly authorized under applicable law by the general partner, managers, members or a similar body to act on behalf of such Person. Officer of any Subsidiary Guarantor has a
correlative meaning.
"
Officer's Certificate
" means a certificate signed by two Officers or by an Officer and either an Assistant Treasurer or an Assistant Secretary of the
Company.
"
Opinion of Counsel
" means a written opinion from legal counsel who is reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or a Subsidiary.
"
Paying Agent
" means initially, the Trustee and, thereafter, a replacement agent chosen by the Company in accordance with the Indenture.
"
Person
" means any individual, corporation, limited liability company, partnership, joint venture, association, jointstock company, trust,
unincorporated organization, government or any agency or political subdivision thereof or any other entity.
"
Preferred Stock
" means, as applied to the Capital Stock of any corporation, Capital Stock of any class or classes (however designated) that is
preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of Capital Stock of any other
class of such Person.
"
Rating Agency
" means each of S&P, Fitch and A.M. Best, or if S&P, Fitch or A.M. Best shall not make a rating on the Notes publicly
available, a nationally recognized statistical rating organization or organizations, as the case may be, selected by the Company (as certified by a resolution of the Board of Directors) that shall be
substituted for S&P, Fitch or A.M. Best, as the case may be.
"
Registrar
" means initially, the Trustee and, thereafter, a replacement registrar chosen by the Company in accordance with the Indenture.
"
Reinsurance Agreements
" means any agreement, contract, treaty, certificate or other arrangement providing for Ceded Reinsurance by any Insurance
Subsidiary or any Subsidiary of any Insurance Subsidiary.
"
Retrocession Agreement
" means any agreement, contract, treaty or other arrangement whereby any Insurance Subsidiary or any Subsidiary of any Insurances
Subsidiary cedes reinsurance to other insurers (other than to another Insurance Subsidiary or a Subsidiary of another Insurance Subsidiary).
"
S&P
" means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., and any successor to its rating agency
business.
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"
SAP
" shall mean, with respect to any Insurance Subsidiary, the statutory accounting practices prescribed or permitted by the
Insurance Regulatory Authority of its jurisdiction of legal domicile, consistently applied as in effect from time to time.
"
SEC
" means the United States Securities and Exchange Commission.
"
Securities Act
" means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.
"
Senior Credit Agreement
" means the Credit Agreement, dated September 30, 2016, among the Company, JPMorgan Chase Bank, N.A., as administrative
agent, and the other lenders party
thereto from time to time, as such agreement may be amended, restated, supplemented, modified, renewed, refunded, replaced, restructured, refinanced or extended in whole or in part from time to time.
"
Significant Subsidiary
" means any Subsidiary that would be a "Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
"
Special Purpose Subsidiary
" means any Material Subsidiary formed solely to issue Surplus Notes or other obligations in connection with a Statutory
Reserve Financing or enter into Reinsurance Agreements in connection with a Statutory Reserve Financing or enter into ancillary obligations in respect of the foregoing.
"
Stated Maturity
" means, with respect to any security, the date specified in the agreement governing or certificate relating to such security as the
fixed date on which the final payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision, but shall not include any contingent obligations to
repay, redeem or repurchase any such principal prior to the date originally scheduled for the payment thereof.
"
Statutory Reserve Financing
" means a transaction or series of transactions entered into primarily for the purpose of financing a portion of the
statutory reserves required to be held by an Insurance Subsidiary, where the proceeds or funding obligations provided by the financing counterparty or counterparties in such transaction or
transactions are not expected, as of the date such transaction or transactions are entered into, to be used or applied to pay insurance or reinsurance claims reasonably projected to be payable as of
the date such transaction or transactions are entered into.
"
Subordinated Debt
" means the Indebtedness of the Company evidenced by the Trust Preferred Securities Notes and any other Indebtedness of the Company
(a) no part of the principal of which is required to be paid (whether by way of mandatory sinking fund, mandatory redemption, mandatory prepayment or otherwise) prior to the date that is twelve
months after the maturity date of the Notes and (b) that has been subordinated to our Indebtedness under the Senior Credit Agreement in accordance with the terms thereof and to the Notes in
right and time of payment.
"
Subsidiary
" of any Person means (1) any corporation, association or other business entity of which more than 50% of the total voting power of
shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly
or indirectly, by such Person or one
or more of the other Subsidiaries of that Person (or a combination thereof), or (2) any partnership (a) the sole general partner or the managing general partner of which is such
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Person
or a Subsidiary of such Person or (b) the only general partners of which are such Person or one or more Subsidiaries of such Person (or any combination thereof). Unless otherwise
specified herein, each reference to a Subsidiary will refer to a Subsidiary of the Company.
"
Subsidiary Guarantee
" means, individually, any Guarantee by a Subsidiary Guarantor pursuant to the terms of the Indenture and any supplemental
indenture thereto, and, collectively, all such Guarantees. Each such Subsidiary Guarantee will be set forth in a supplement to the Indenture.
"
Subsidiary Guarantor
" means any Subsidiary that provides a Subsidiary Guarantee in accordance with the Indenture;
provided
that upon release or discharge of such
Subsidiary from its Subsidiary Guarantee in accordance with the Indenture, such Subsidiary ceases to be
a Subsidiary Guarantor.
"
Surplus Note
" means a promissory note executed by an Insurance Subsidiary of the type generally described in the insurance industry as a "surplus
note," the principal amount of which an insurance regulator permits the issuer to record as an addition to capital and surplus rather than as a liability in accordance with SAP.
"
Surplus Relief Reinsurance
" means any transaction in which any Insurance Subsidiary or any Subsidiary of such Insurance Subsidiary cedes risk relating
to its annuity business under a reinsurance agreement that would be considered a "financing-type" reinsurance agreement as determined in accordance with GAAP.
"
Total Capitalization
" means, at any date of determination, the sum of (i) Consolidated Indebtedness of the Company, of the type described in any
or all of clauses (a), (b), (c), (d), (g) and (h) of the definition of "Indebtedness" (but with respect to clause (h), only to the extent that it is an unpaid obligation in respect of a letter of
credit or letter of guaranty that is then due and payable and not contingent on such date), and (ii) Consolidated Net Worth of the Company.
"
Trust Preferred Securities
" means mandatorily redeemable preferred securities issued by one or more Delaware business trusts that are Affiliates of the
Company (including Effective Date Trust Preferred Securities), to which trusts the Company has issued Trust Preferred Securities Notes.
"
Trust Preferred Securities Notes
" means (a) the unsecured junior subordinated deferrable interest notes issued by the Company to evidence loans
made to the Company by the issuers of the Trust Preferred Securities from the proceeds of the sale of such Trust Preferred Securities under and pursuant to any of the Effective Date Trust Preferred
Securities and (b) any subsequent unsecured junior subordinated deferrable interest notes issued by the Company to evidence loans made to the Company by the issuers of the Trust Preferred
Securities from the proceeds of the sale of such Trust Preferred Securities, which notes are governed by indentures in all material respects equivalent (other than the face amount of such debentures)
to that certain Junior Subordinated Indenture dated June 15, 2005 between the Company and JPMorgan Chase Bank, N.A., as trustee.
"
Trustee
" means the party named as such in the Indenture until a successor replaces it and, thereafter, means such successor.
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"
Uniform Commercial Code
" means the New York Uniform Commercial Code as in effect from time to time.
"
Voting Stock
" of a Person means all classes of Capital Stock of such Person then outstanding and normally entitled to vote in the election of
directors, managers or trustees, as applicable, of such Person.
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Certain ERISA considerations
The following is a summary of certain considerations associated with the purchase of the notes by employee benefit plans that are subject to
Title I of ERISA, plans, individual retirement accounts and other arrangements that are subject to Section 4975 of the Code, or provisions under any other federal, state, local, non-U.S. or
other laws or regulations that are similar to such provisions of the Code or ERISA (collectively, "Similar Laws"), government plans, church plans, non-U.S. plans subject to Similar Laws and entities
whose underlying assets are considered to include "plan assets" of any such plan, account or arrangement (each, a "Plan").
General fiduciary matters
ERISA and the Code impose certain duties on persons who are fiduciaries of a Plan subject to Title I of ERISA or Section 4975 of the
Code (an "ERISA Plan") and prohibit certain transactions involving the assets of an ERISA Plan and its fiduciaries or other interested parties. Under ERISA and the Code, any person who exercises any
discretionary authority or control over the administration of such an ERISA Plan or the management or disposition of the assets of such an ERISA Plan, or who renders investment advice for a fee or
other compensation to such an ERISA Plan, is generally considered to be a fiduciary of the ERISA Plan.
In
considering an investment in the notes of a portion of the assets of any Plan, a fiduciary should determine whether the investment is in accordance with the documents and instruments governing the
Plan and the applicable provisions of ERISA, the Code or any Similar Laws relating to a fiduciary's duties to the Plan including, without limitation with respect to ERISA Plans, the applicable
prudence, diversification, delegation of control and prohibited transaction provisions of ERISA and the Code.
Prohibited transaction issues
Section 406 of ERISA and Section 4975 of the Code prohibit ERISA Plans from engaging in specified transactions involving plan
assets with persons or entities who are "parties in interest," within the meaning of ERISA, or "disqualified persons," within the meaning of Section 4975 of the Code, unless an exemption is
available. A party in interest or disqualified person who engaged in a non-exempt prohibited transaction may be subject to excise taxes and other penalties and liabilities under ERISA and the Code. In
addition, the fiduciary of the ERISA Plan that engaged in such a non-exempt prohibited transaction may be subject to penalties and liabilities under ERISA and the Code. The acquisition of notes by an
ERISA Plan with respect to which the Company or an underwriter is considered a party in interest or a disqualified person may constitute or result in a direct or indirect prohibited transaction under
Section 406 of ERISA and/or Section 4975 of the Code, unless the investment is acquired in accordance with an applicable statutory, class or individual prohibited transaction exemption.
In this regard, the U.S. Department of Labor has issued prohibited transaction class exemptions ("PTCEs") that may apply to the acquisition of notes. These class exemptions include, without
limitation, PTCE 84-14 respecting transactions determined by independent qualified professional asset managers, PTCE 90-1 respecting insurance company pooled separate accounts, PTCE 91-38 respecting
bank collective investment funds, PTCE 95-60 respecting life insurance company general accounts and PTCE 96-23 respecting transactions determined by in-house asset managers. In addition,
Section 408(b)(17) of ERISA and Section 4975(d)(20) of the
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Code
provide relief from the prohibited transaction provisions of ERISA and Section 4975 of the Code for certain transactions between an ERISA Plan and a person that is a party in interest or
disqualified person with respect to the ERISA Plan solely by reason of providing services to the ERISA Plan or a relationship with such a service provider, provided that neither the person transacting
with the ERISA Plan nor any of its affiliates has or exercises any discretionary authority or control or renders any investment advice with respect to the assets of the ERISA Plan involved in the
transaction and provided further that the ERISA Plan pays no more and receives no less than adequate consideration in connection with the transaction. There can be no assurance that any of the
foregoing exemptions or any other exemption will be available with respect to the acquisition of notes or that all of the conditions of any such exemptions will be satisfied.
Because
of the foregoing, the notes may not be purchased by any person investing "plan assets" of any Plan, unless such purchase will not constitute or result in a non-exempt prohibited transaction
under ERISA and the Code or a similar violation of any applicable Similar Laws.
Representation
By acceptance of a note, each purchaser and subsequent transferee of a note will be deemed to have represented and warranted that either
(i) no portion of the assets used by such purchaser or transferee to acquire notes constitutes assets of any Plan or (ii) the acquisition, holding or disposition of notes by such
purchaser or transferee will not constitute or result in a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or a similar violation under any
applicable Similar Laws.
The
foregoing discussion is general in nature and is not intended to be all inclusive. Due to the complexity of these rules and the penalties that may be imposed upon persons involved in non-exempt
prohibited transactions, it is particularly important that fiduciaries, or other persons considering purchasing the notes on behalf of, or with the assets of, any Plan, consult with their counsel
regarding the potential applicability of ERISA, Section 4975 of the Code and any Similar Laws to such investment and whether an exemption would be applicable to the purchase of the notes.
The
provision of this prospectus supplement and the accompanying prospectus and the sale of notes to a Plan is in no respect a recommendation or representation by the Company, the underwriters or any
other person that such an investment meets all relevant legal requirements with respect to investments by Plans generally or any particular Plan or that such an investment is appropriate for Plans
generally or any particular Plan.
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U.S. federal income tax consequences
General
The following is a discussion of U.S. federal income tax consequences generally applicable to the ownership and disposition of the notes,
principally, by Non-U.S. Holders (as defined below) that purchase the notes for cash pursuant to this offering at the initial sale price and hold the notes as capital assets for U.S. federal income
tax purposes (generally, property held for investment). This discussion is based on the Internal Revenue Code of 1986, as amended (the "Code"), U.S. Treasury regulations promulgated thereunder
("Regulations"), judicial decisions, published positions of the Internal Revenue Service (the "IRS") and other applicable authorities, all as in effect as of the date hereof and all of which are
subject to change or differing interpretations (possibly with retroactive effect). This discussion does not address all aspects of U.S. federal income taxation that may be relevant to particular
holders subject to special treatment under U.S. federal income tax laws (such as broker dealers, traders in securities that elect to use a mark-to-market method of accounting, financial institutions,
tax-exempt organizations, insurance companies, persons who hold notes as part of a hedging, integrated, straddle, conversion or constructive sale transaction for U.S. federal income tax purposes,
persons subject to the alternative minimum tax or Medicare tax on certain investment income, U.S. expatriates, controlled foreign corporations, passive foreign investment companies, or persons that
are, or hold their notes through, partnerships or other pass-through entities), all of whom may be subject to tax rules that differ from those discussed below. Moreover, this discussion does not
address any foreign, state or local tax consequences, or any U.S. federal estate or gift tax consequences. No assurance can be given that the IRS would not assert, or that a court would not sustain, a
position contrary to any of those set forth below.
EACH
PROSPECTIVE PURCHASER OF THE NOTES SHOULD CONSULT ITS TAX ADVISOR CONCERNING THE U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF AN INVESTMENT IN SUCH NOTES.
A
"U.S. Holder" means a beneficial owner of a note (as determined for U.S. federal income tax purposes) that, for U.S. federal income tax purposes, is:
-
-
an individual who is a citizen or resident of the United States;
-
-
a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the
United States, any state thereof or the District of Columbia;
-
-
an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or
-
-
a trust (i) the administration of which is subject to the primary supervision of a court within the United States and for which one or
more U.S. persons have the authority to control all substantial decisions, or (ii) that has otherwise elected to be treated as a U.S. person under the applicable Regulations.
A
"Non-U.S. Holder" means any beneficial owner of a note (as determined for U.S. federal income tax purposes) that is not a U.S. Holder or a partnership (or other pass-through entity) for U.S. federal
income tax purposes. If a partnership holds a note, the U.S. federal income tax
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treatment
of a partner will generally depend upon the status of the partner and the activities of the partnership. Partnerships holding a note and their partners should consult their tax advisors
concerning the U.S. federal income and other tax consequences of making an investment in the notes.
Possible effect of the interest rate adjustment for all holders
We are required to pay additional interest on the notes in certain circumstances if the credit rating of the notes is downgraded, as discussed
under "Description of the notesInterest rate adjustment." We intend to take the position that the possibility of such additional interest does not result in the notes being treated as
contingent payment debt instruments under the applicable Regulations. Our position is binding on a holder unless such holder discloses that it is taking a contrary position in the manner required by
applicable Regulations. Our position is not, however, binding on the IRS. Holders should consult their tax advisors regarding the tax consequences if the notes were treated as contingent payment debt
instruments. The remainder of this discussion assumes that the notes will not be considered contingent payment debt instruments.
Tax consequences to Non-U.S. Holders
Interest
A Non-U.S. Holder will generally not be subject to U.S. federal income or withholding tax on interest paid or accrued on the notes, provided that the Non-U.S.
Holder:
-
-
does not actually or constructively own 10% or more of our voting stock;
-
-
is not a controlled foreign corporation related to us (directly or indirectly) through stock ownership; and
-
-
(i) provides its name, address, and certain other information on an IRS Form W-8BEN or W-8BEN-E (or other applicable form), and
certifies, under penalties of perjury, that it is not a U.S. person (and, in the case of an IRS Form W-8BEN-E, as to its FATCA status, as defined and discussed below) or (ii) holds the
notes through certain foreign intermediaries and satisfies the certification requirements of the applicable Regulations.
Alternatively,
a Non-U.S. Holder that cannot satisfy the above requirements will generally be exempt from U.S. federal withholding tax with respect to interest on the notes if such holder establishes
that such interest is not subject to withholding tax because it is effectively connected with such holder's conduct of a trade or business in the United States (and, in the case of certain applicable
tax treaties, is attributable to a permanent establishment or fixed base within the United States), generally, by providing an IRS Form W-8ECI. To the extent that such interest is effectively
connected with the Non-U.S. Holder's conduct of a trade or business (and, in the case of certain applicable tax treaties, is attributable to a permanent establishment or fixed base within the United
States), such holder will be subject to U.S. federal income tax on such interest on a net basis and, if it is a foreign corporation, may be subject to a 30% U.S. branch profits tax (or lower
applicable treaty rate).
If
a Non-U.S. Holder does not qualify for any of the exemptions described above, such holder will generally be subject to U.S. federal withholding tax on payments of stated interest, currently imposed
at 30%. Under certain applicable income tax treaties, the U.S. federal
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withholding
rate on payments of interest may be reduced or eliminated, provided the Non-U.S. Holder complies with the applicable certification requirements (generally, by providing a properly
completed IRS Form W-8BEN or W-BEN-E).
Sale, exchange, retirement or other disposition of a note
A Non-U.S. Holder will generally not be subject to U.S. federal income or withholding tax on any gain recognized on the sale, exchange, retirement or other
taxable disposition (each, a "disposition") of a note, unless (i) such gain is effectively connected with such holder's conduct of a trade or business within the United States (and, in the case
of certain applicable tax treaties, is attributable to a permanent establishment or fixed base within the United States); or (ii) such holder is an individual who is present in the United
States for 183 days or more in the taxable year of the disposition and certain other conditions are met.
If
the first exception applies, the Non-U.S. Holder will generally be subject to U.S. federal income tax on such gain on a net basis and, if it is a foreign corporation, may be subject to a 30% U.S.
branch profits tax (or lower applicable treaty rate). If the second exception applies, the Non-U.S. Holder will generally be subject to U.S. federal income tax at a rate of 30% (or lower applicable
treaty rate) on the amount by which capital gains allocable to U.S. sources (including gains from a disposition of the notes) exceed capital losses allocable to U.S. sources. Non-U.S. Holders should
consult their tax advisors respect to the U.S. federal income tax consequences of the disposition of our notes.
Backup withholding and information reporting
Payments of interest made by us or our paying agent on the notes will generally be subject to information reporting. In addition, such payments will generally
be subject to U.S. federal backup withholding if a Non-U.S. Holder receiving such payment fails to comply with applicable U.S. information reporting and certification requirements. Such requirements
are generally satisfied by providing a properly executed IRS Form W-8BEN or W-8BEN-E (or other applicable form) as described above. The proceeds from a disposition of the notes within the
United States or conducted through certain United States-related financial intermediaries will generally be subject to information reporting and backup withholding if a Non-U.S. Holder fails to comply
with the requirements described above. Backup withholding is not an additional tax and any amount withheld under the backup withholding rules is generally allowable as a refund or a credit against a
Non-U.S. Holder's U.S. federal income tax liability, provided that the required information is timely furnished to the IRS.
Foreign Account Tax Compliance Act
Sections 1471 through 1474 of the Code (such provisions commonly known as "FATCA") impose a reporting regime and potentially a
withholding tax at a rate of 30% in certain circumstances on interest payable on, and, after December 31, 2018, gross proceeds from the disposition of, the notes held by or through certain
foreign financial institutions (including investment funds), unless such institution (i) enters into, and complies with, an agreement with the IRS to report, on an annual basis, information
with respect to interests in, and accounts maintained by, the institution that are owned by certain U.S. persons and by certain non-U.S. entities that are wholly or partially owned by U.S. persons and
to withhold on certain payments, (ii) if required under an intergovernmental agreement between the United States and an applicable foreign country, reports such information to its local tax
authority, which will exchange such
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information
with the U.S. authorities, or (iii) otherwise qualifies for an exemption. Accordingly, the entity through which the notes are held will affect the determination of whether such
withholding is required. Similarly, in certain circumstances, interest payable on, and, after December 31, 2018, gross proceeds from the disposition of, the notes held by an investor that is a
non-financial foreign entity that does not qualify under certain exemptions will generally be subject to withholding at a rate of 30%, unless such entity either (i) certifies that it does not
have any "substantial United States owners" or (ii) provides certain information regarding the entity's "substantial United States owners," which we or the withholding agent will in turn be
required to provide to the IRS. An intergovernmental agreement between the United States and an applicable foreign country, or other guidance, may modify these requirements. We will not pay any
additional amounts to Non-U.S. Holders in respect of any amounts withheld. Prospective investors should consult their tax advisors regarding the possible implications of these rules on an investment
in the notes.
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Underwriting (conflicts of interest)
Subject to the terms and conditions in the underwriting agreement among us and the underwriters, we have agreed to sell to each underwriter,
and each underwriter has agreed to purchase from us, the principal amount of notes that appears opposite its name in the table below:
|
|
|
|
|
|
|
|
|
|
Underwriter
|
|
Principal amount
|
|
|
|
|
|
|
J.P. Morgan Securities LLC
|
|
$
|
|
|
RBC Capital Markets, LLC
|
|
|
|
|
SunTrust Robinson Humphrey, Inc.
|
|
|
|
|
Citigroup Global Markets Inc.
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
500,000,000
|
|
|
|
|
|
|
The
obligations of the underwriters under the underwriting agreement, including their agreement to purchase notes from us, are several and not joint. The underwriting agreement provides that the
underwriters will purchase all the notes if any of them are purchased.
The
underwriters initially propose to offer the notes to the public at the public offering price that appears on the cover page of this prospectus supplement. The underwriters may offer the notes to
selected dealers at the public offering price minus a concession of up to % of the principal amount. In addition, the underwriters may allow, and those selected dealers may
reallow, a
concession of up to % of the principal amount to certain other dealers. After the initial offering, the underwriters may change the public offering price and any other
selling terms.
The underwriters may offer and sell notes through certain of their affiliates.
The
following table shows the underwriting discounts and commissions to be paid to the underwriters in connection with this offering (expressed as a percentage of the principal amount of the notes and
in total).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage
|
|
Total
|
|
|
|
|
|
|
|
|
|
Per note
|
|
|
%
|
|
$
|
|
|
|
|
|
|
|
|
|
|
In
the underwriting agreement, we have agreed that:
-
-
We will not offer or sell any of our long-term debt securities (other than the notes) from the date of this prospectus supplement through and
including the settlement date for the notes without the prior consent of J.P. Morgan Securities LLC and RBC Capital Markets, LLC.
-
-
We estimate that the total expenses of this offering, excluding underwriting discounts and commissions, will be approximately
$ .
-
-
We will indemnify the underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended or
contribute to payments that the underwriters may be required to make in respect of those liabilities.
-
-
The obligations of the underwriters under the underwriting agreement may be terminated at the discretion of J.P. Morgan Securities LLC
and RBC Capital Markets, LLC upon the occurrence of certain stated events. We will not be obligated to deliver any of the notes except upon payment for all the notes to be purchased as provided
herein.
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The
notes are a new issue of securities, and there is currently no established trading market for the notes. We do not intend to apply for the notes to be listed on any securities exchange or to
arrange for the notes to be quoted on any quotation system. The underwriters have advised us that they intend to make a market in the notes, but they are not obligated to do so. The underwriters may
discontinue any market making in the notes at any time at their sole discretion. Accordingly, we cannot assure you that a liquid trading market will develop for the notes, that you will be able to
sell your notes at a particular time or that the prices that you receive when you sell will be favorable.
In
connection with this offering of the notes, the underwriters may engage in overallotments, stabilizing transactions and syndicate covering transactions in accordance with Regulation M under
the Exchange Act. Overallotment involves sales in excess of the offering size, which creates a short position for the underwriters. Stabilizing transactions involve bids to purchase the notes in the
open market for the purpose of pegging, fixing or maintaining the price of the notes, as applicable. Syndicate covering transactions involve purchases of the notes in the open market after the
distribution has been completed in order to cover short positions. Stabilizing transactions and syndicate covering transactions may cause the price of the notes to be higher than it would otherwise be
in the absence of those transactions. If the underwriters engage in stabilizing or syndicate covering transactions, they may discontinue them at any time.
Relationships with underwriters
The underwriters and/or their respective affiliates are full service financial institutions engaged in various activities, which may include
securities trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, financing and brokerage activities.
The
underwriters and/or their respective affiliates have in the past performed commercial banking, investment banking and advisory services for us and our affiliates from time to time for which they
have received customary fees and reimbursement of expenses and may, from time to time, engage in transactions with and perform services for us and our affiliates in the ordinary course of their
business for which they may receive customary fees and reimbursement of expenses. An affiliate of J.P. Morgan Securities LLC, one of the underwriters, acts as administrative agent and a lender
under our existing revolving credit facility, and affiliates of RBC Capital Markets, LLC, SunTrust Robinson Humphrey, Inc. and Citigroup Global Markets Inc., also underwriters,
also act as lenders under our existing revolving credit facility. One or more underwriters or their respective affiliates may hold, from time to time, our 2021 Notes for their own accounts or for the
accounts of their customers. An affiliate of J.P. Morgan Securities LLC also acts as trustee under certain of our subordinated debentures.
In
addition, certain of the underwriters and their affiliates, from time to time in the ordinary course of their business, may provide letters of credit to us and our subsidiaries, hold long or short
positions in our debt or equity securities and act as our and our subsidiaries' counterparties to various swaps, hedges and other derivative transactions.
In
the ordinary course of their various business activities, the underwriters and/or their respective affiliates may make or hold a broad array of investments and actively trade debt and equity
securities (or related derivative securities) and financial instruments for their own
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account
and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve our
securities and instruments. The underwriters and their respective affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities
or instruments and may at any time recommend to clients that they acquire, long and/or short positions in such securities and instruments.
Conflicts of interest
Affiliates of J.P. Morgan Securities LLC and SunTrust Robinson Humphrey, Inc. will receive at least 5% of the net proceeds of this
offering in connection with the repayment of our Term Loan. See "Use of proceeds." Accordingly, this offering is being made in compliance with the requirements of FINRA Rule 5121.
Because the notes are expected to be rated investment grade by a nationally recognized rating agency, pursuant to Rule 5121, the appointment of a qualified independent underwriter is not
necessary. J.P. Morgan Securities LLC and SunTrust Robinson Humphrey, Inc. will not confirm sales of the notes to any account over which they exercise discretionary authority without the prior
written approval of the customer.
Selling restrictions
No action has been taken in any jurisdiction (except in the United States) that would permit a public offering of the shares, or the
possession, circulation or distribution of this prospectus supplement, the accompanying prospectus or any other material relating to us or the shares where action for that purpose is required.
Accordingly, the shares may not be
offered or sold, directly or indirectly, and neither this prospectus supplement, the accompanying prospectus nor any other offering material or advertisements in connection with the shares may be
distributed or published, in or from any country or jurisdiction except in compliance with any applicable rules and regulations of any such country or jurisdiction.
The
underwriters may arrange to sell the shares offered hereby in certain jurisdictions outside the United States, either directly or through affiliates, where it is permitted to do so.
Notice to prospective investors in the European Economic Area
Neither this prospectus supplement nor the accompanying prospectus is a prospectus for the purposes of the Prospectus Directive (as defined herein). This
prospectus supplement and accompanying prospectus have been prepared on the basis that any offer of notes in any Relevant Member State (as defined herein) will be made pursuant to an exemption under
the Prospectus Directive from the requirement to publish a prospectus for offers of notes. Accordingly, any person making or intending to make an offer in that Relevant Member State of notes that are
the subject of the offering contemplated in this prospectus supplement and the accompanying prospectus may only do so in circumstances in which no obligation arises for the Company or the underwriter
to publish a prospectus pursuant to Article 3 of the Prospectus Directive in relation to such offer. Neither the Company nor the underwriter have authorized, nor do they authorize, the making
of any offer of notes in circumstances in which an obligation arises for the Company or the underwriter to publish a prospectus for such offer.
In
relation to each Member State of the European Economic Area that has implemented the Prospectus Directive (each, a "Relevant Member State"), with effect from and including the date on which the
Prospectus Directive is implemented in that Relevant Member State, no offer
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of
notes that are the subject of the offering contemplated by this prospectus supplement and the accompanying prospectus may be made to the public in that Relevant Member State other
than:
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to any legal entity that is a qualified investor as defined in the Prospectus Directive;
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to fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive), subject to obtaining the
prior consent of the representative for any such offer; or
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in any other circumstances falling within Article 3(2) of the Prospectus Directive,
provided
that no such offer of notes shall require the Company or the underwriter to publish a prospectus pursuant to Article 3 of the Prospectus Directive.
For
the purposes of this provision, the expression an "offer of notes to the public" in relation to any notes in any Relevant Member State means the communication in any form and by any means of
sufficient information on the terms of the offer and the notes to be offered so as to enable an investor to decide to purchase or subscribe for the notes, as the same may be varied in that Member
State by any measure implementing the Prospectus Directive in that Member State.
The
expression "Prospectus Directive" means Directive 2003/71/EC (as amended, including by Directive 2010/73/EU), and includes any relevant implementing measure in the Relevant Member State.
Notice to prospective investors in the United Kingdom
The communication of this prospectus supplement, the accompanying prospectus and any other document or materials relating to the issue of the notes offered
hereby is not being made, and such documents and/or materials have not been approved, by an authorized person for the purposes of section 21 of the United Kingdom's Financial Services and
Markets Act 2000, as amended (the "FSMA"). Accordingly, such documents and/or materials are not being distributed to, and must not be passed on to, the general public in the United Kingdom. The
communication of such documents and/or materials as a financial promotion is only being made to those persons in the United Kingdom (1) who are investment professionals falling within
Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order"), or (2) falling within Article 49(2)(a) to (d) of
the Order or (3) who are any other persons to whom it may otherwise lawfully be made under the Order (each such person being referred to as a "relevant person"). The notes are only available
to, and any investment or investment activity to which this prospectus supplement and accompanying prospectus relate will be engaged in only with, relevant persons. Any person who is not a relevant
person should not act or rely on this prospectus supplement or the accompanying prospectus or any of their contents.
Any
invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) in connection with the issue or sale of the notes may only be communicated or caused
to be communicated in circumstances in which Section 21(1) of the FSMA does not apply to the Company.
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All
applicable provisions of the FSMA must be complied with in respect to anything done by any person in relation to the notes in, from or otherwise involving the United Kingdom.
Notice to prospective investors in Hong Kong
The notes may not be offered or sold by means of any document other than (i) in circumstances which do not constitute an offer to the public within the
meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), or (ii) to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of
Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a "prospectus" within the meaning of the Companies Ordinance (Cap. 32,
Laws of Hong Kong), and no advertisement, invitation or document relating to the notes may be issued or may be in the possession of any person for the purpose of issue (in each case whether in
Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of
Hong Kong) other than with respect to notes which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" within the meaning of the
Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.
Notice to prospective investors in Japan
The notes have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (the Financial Instruments and Exchange Law) and
the underwriter has agreed that it will not offer or sell any notes, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person
resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan,
except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Law and any other applicable laws, regulations and
ministerial guidelines of Japan.
Notice to prospective investors in Singapore
This prospectus supplement and the accompanying prospectus have not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly,
this
prospectus supplement and the accompanying prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the notes may not be
circulated or distributed, nor may the notes be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other
than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the "SFA"), (ii) to a relevant person, or any person
pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of,
any other applicable provision of the SFA.
Where
the notes are subscribed or purchased under Section 275 by a relevant person which is: (a) a corporation (which is not an accredited investor) the sole business of which is to hold
investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor)
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whose
sole purpose is to hold investments and each beneficiary is an accredited investor, notes, debentures and units of notes and debentures of that corporation or the beneficiaries' rights and
interest in that trust shall not be transferable for six months after that corporation or that trust has acquired the notes under Section 275 except: (1) to an institutional investor
under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA;
(2) where no consideration is given for the transfer; or (3) by operation of law.
Notice to prospective investors in Canada
The notes may be sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National
Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration
Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the notes must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements
of applicable securities laws.
Securities
legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus supplement (including any amendment thereto)
contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser's
province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser's province or territory for particulars of these rights or consult with a
legal advisor.
Pursuant
to section 3A.3 (or, in the case of securities issued or guaranteed by the government of a non-Canadian jurisdiction, section 3A.4) of National Instrument 33-105
Underwriting Conflicts (NI 33-105), the underwriter is not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with
this offering.
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Legal matters
Certain legal matters in connection with the offering of the notes will be passed upon for us by Skadden, Arps, Slate, Meagher &
Flom LLP, Chicago, Illinois. Certain legal matters with respect to the validity of the notes being offered hereby will be passed upon for us by Renee D. Montz, Executive Vice President,
General Counsel and Corporate Secretary of American Equity Investment Life Holding Company. Ms. Montz is a full-time employee of our company. Ms. Montz owns shares of our common stock,
beneficially and as a participant in various employee benefit plans, and holds shares of restricted stock and restricted stock units. Certain legal matters will be passed upon for the underwriters by
Simpson Thacher & Bartlett LLP, New York, New York.
Experts
The consolidated financial statements (and schedules) of American Equity Investment Life Holding Company and subsidiaries as of
December 31, 2016 and 2015, and for each of the years in the three-year period ended December 31, 2016, and management's assessment of the effectiveness of internal control over
financial reporting as of December 31, 2016 have been incorporated by reference herein in reliance upon the report of KPMG LLP, independent registered public accounting firm,
incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing.
S-65
PROSPECTUS
American Equity
Investment Life Holding Company
Debt Securities
Preferred Stock
Common Stock
Depositary Shares
Warrants
Stock Purchase Contracts
Stock Purchase Units
We may offer, issue and sell, together or separately, from time to time:
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debt securities, which may be senior debt securities or subordinated debt securities;
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shares of our preferred stock;
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shares of our common stock;
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depositary shares representing an interest in our preferred stock;
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warrants to purchase our debt securities, shares of our common stock, shares of our preferred stock, depositary shares or securities of third
parties or other rights;
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stock purchase contracts to purchase our debt securities, shares of our common stock, shares of our preferred stock, depositary shares,
warrants, other property of American Equity Investment Life Holding Company or securities of an entity unaffiliated with American Equity Investment Life Holding Company, a basket of such securities or
any combination of the above; and
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stock purchase units, each representing ownership of a stock purchase contract and debt securities, or our debt obligations of third-parties,
including U.S. treasury securities or any combination of the foregoing, securing the holder's obligation to purchase our common stock or other securities under the stock purchase contracts.
We
will provide the specific terms of any offering and the offered securities in one or more supplements to this prospectus at the time of offering. Any prospectus supplement may also
add, update or change
information contained in this prospectus. You should read this prospectus and any applicable prospectus supplement, as well as the documents incorporated by reference in such documents carefully
before you make your investment decision.
We
may offer securities through underwriting syndicates managed or co-managed by one or more underwriters, or directly to purchasers. The prospectus supplement for each offering of
securities will describe in detail the plan of distribution for that offering. For general information about the distribution of securities offered, please see "Plan of Distribution" on page 28 of
this prospectus.
Our
common stock is listed on the New York Stock Exchange under the trading symbol "AEL." Each prospectus supplement will indicate if the securities offered thereby will be listed on any
securities exchange.
This
prospectus may not be used to sell securities unless accompanied by a prospectus supplement or a free writing prospectus.
Investing in our securities involves risks. You should carefully read and consider the risk factors included in our periodic reports, in any
prospectus supplements relating to specific offerings of securities and in other documents that we file with the Securities and Exchange Commission. See "Risk Factors" on
page 2.
None of the Securities and Exchange Commission, any state securities commission, the Iowa Commissioner of Insurance or any
other regulatory body has approved or disapproved of any of these securities or determined if this prospectus or any accompanying prospectus supplement is truthful or complete. Any representation to
the contrary is a criminal offense.
The date of this prospectus is September 22, 2015
TABLE OF CONTENTS
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Page
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ABOUT THIS PROSPECTUS
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i
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FORWARD-LOOKING STATEMENTS
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ii
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AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
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1
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RISK FACTORS
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2
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USE OF PROCEEDS
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3
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RATIO OF EARNINGS TO FIXED CHARGES
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4
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DESCRIPTION OF SECURITIES
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5
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DESCRIPTION OF DEBT SECURITIES
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5
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DESCRIPTION OF CAPITAL STOCK
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16
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DESCRIPTION OF DEPOSITARY SHARES
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20
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DESCRIPTION OF WARRANTS
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23
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DESCRIPTION OF STOCK PURCHASE CONTRACTS
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26
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DESCRIPTION OF STOCK PURCHASE UNITS
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27
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PLAN OF DISTRIBUTION
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28
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LEGAL MATTERS
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29
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EXPERTS
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29
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WHERE YOU CAN FIND MORE INFORMATION
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30
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ABOUT THIS PROSPECTUS
This prospectus is part of an "automatic shelf" registration statement that we filed with the Securities and Exchange Commission, or the SEC, as
a "well-known seasoned issuer" as defined in Rule 405 under the Securities Act of 1933, as amended, or the Securities Act. Under this shelf registration process, we may sell, from time to time,
an indeterminate amount of any combination of the securities described in this prospectus in one or more offerings. This prospectus provides you with a general description of the securities we may
offer, which is not meant to be a complete description of each security. Each time that we sell securities, a prospectus supplement containing specific information about the terms of that offering
will be provided, including the specific amounts, prices and terms of the securities offered and the manner in which they will be offered. The prospectus supplement and any other offering material may
also add to, update or change information contained in this prospectus or in documents we have incorporated by reference into this prospectus. If there is any inconsistency between the information in
this prospectus and any applicable prospectus supplement, you should rely on the information in the applicable prospectus supplement. We urge you to read both this prospectus and any applicable
prospectus supplement and any other applicable offering material (including any free writing prospectus) prepared by or on behalf of us for a specific offering of securities, together with the
additional information described under the heading "Where You Can Find More Information" on page 30 of this prospectus.
You
should rely only on the information contained or incorporated by reference in this prospectus and any applicable prospectus supplement. We have not authorized anyone to provide you
with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making an offer to sell or soliciting an offer to purchase these
securities in any jurisdiction where the offer or sale is not permitted.
You
should not assume that the information contained in this prospectus or any prospectus supplement is accurate on any date other than the date on the front cover of such documents or
that any information we have incorporated by reference is correct on any date subsequent to the date of the document incorporated by reference, even though this prospectus or any prospectus supplement
is delivered or securities are sold on a later date. Neither the delivery of this prospectus or any applicable prospectus supplement nor any distribution of securities pursuant to such documents
shall, under any circumstances, create any implication that there has been no change in the information set forth in this prospectus or any applicable prospectus supplement or in our affairs since the
date of this prospectus or any applicable prospectus supplement. Our business, financial condition, results of operations and prospects may have changed since those dates.
All
references to "we," "us," "our," the "company" or "American Equity" in this prospectus are to American Equity Investment Life Holding Company and its consolidated subsidiaries,
unless the context requires otherwise.
i
FORWARD-LOOKING STATEMENTS
This prospectus (including the information incorporated by reference) contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements,
trend analyses and other information contained in this prospectus and elsewhere (such as in filings by us with the SEC, press releases, presentations by us or our management or oral statements)
relative to markets for our products and trends in our operations or financial results, as well as other statements including words such as "anticipate," "believe," "plan," "estimate," "expect,"
"intend" and other similar expressions, constitute forward-looking statements. We caution that these statements may and often do vary from actual results and the differences between these statements
and actual results can be material. Accordingly, we cannot assure you that actual results will not differ materially from those expressed or implied by the forward-looking statements.
Factors
that could contribute to these differences include, among other things:
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general economic conditions and other factors, including prevailing interest rate levels and stock and credit market performance which may
affect (among other things) our ability to sell our products, our ability to access capital resources and the costs associated therewith, the fair value of our investments, which could result in
impairments and other than temporary impairments, and certain liabilities, and the lapse rate and profitability of policies;
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customer response to new products and marketing initiatives;
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changes in the Federal income tax laws and regulations which may affect the relative income tax advantages of our products;
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increasing competition in the sale of annuities;
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regulatory changes or actions, including those relating to regulation of financial services affecting (among other things) bank sales and
underwriting of insurance products and regulation of the sale, underwriting and pricing of products; and
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the risk factors or uncertainties listed from time to time in our filings with the SEC that are incorporated by reference in this prospectus.
You
should not place undue reliance on any forward-looking statements. Forward-looking information is intended to reflect opinions as of the date of this prospectus. Except as otherwise
required by applicable laws, we undertake no obligation to publicly update or revise any forward-looking statements described in this prospectus, whether as a result of new information, future events,
changed circumstances or any other reason after the date of this prospectus.
ii
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
We are a leader in the development and sale of fixed index and fixed rate annuity products. We issue fixed annuity and life insurance products
through our wholly-owned life insurance subsidiaries, American Equity Investment Life Insurance Company, American Equity Investment Life Insurance Company of New York and Eagle Life Insurance Company.
Our business consists primarily of the sale of fixed index and fixed rate annuities and, accordingly, we have only one business segment. Our business strategy is to focus on growing our annuity
business and earn predictable returns by managing investment spreads and investment risk. We are licensed to sell our products in 50 states and the District of Columbia.
Our
executive offices are located at 6000 Westown Parkway, West Des Moines, IA 50266, and our telephone number is (515) 221-0002. Our website address is
www.american-equity.com
. Information contained
on our website is not incorporated by reference in and does not constitute a part of this prospectus.
1
RISK FACTORS
Investing in our securities involves risk. Before you decide whether to purchase any of our securities, in addition to the other information,
documents or reports included or incorporated by reference into this prospectus and any applicable prospectus supplement or other applicable offering materials, you should carefully consider the risk
factors described in the section entitled "Risk Factors" in (i) any prospectus supplement; (ii) our most recent Annual Report on Form 10-K; and (iii) any Quarterly Reports
on Form 10-Q and those portions of the Current Reports on Form 8-K filed by us subsequently to such Annual Report on Form 10-K, each of which is incorporated by reference into
this prospectus and any prospectus supplement in its entirety (other than documents or information deemed furnished and not filed in accordance with the SEC rules, including pursuant to
Item 2.02 or Item 7.01 on Form 8-K), and as the same may be amended, supplemented or superseded from time to time by our filings under the Exchange Act. For more information, see
the section entitled "Where You Can Find More Information" on page 30 of this prospectus. These risks could materially and adversely affect our business, results of operations and financial condition
and could result in a partial or complete loss of your investment.
2
USE OF PROCEEDS
Unless otherwise indicated in an applicable prospectus supplement, we intend to use the net proceeds from the sale of the offered securities for
general corporate purposes. We may provide additional information on the use of the net proceeds from the sale of the offered securities in an applicable prospectus supplement or other offering
materials relating to the offered securities.
3
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our ratio of earnings to fixed charges on a historical basis for the periods indicated. The ratios are calculated
by dividing earnings by fixed charges. Earnings consist of income before income taxes and minority interests plus fixed charges. Fixed charges consist of interest expense and the portion of operating
leases that are representative of the interest factor. Interest expense includes interest sensitive and index product benefits and amortization of deferred sales inducements, interest expense on notes
payable, interest expense on subordinated debentures, interest expense on amounts due under repurchase agreements and other interest expense.
We
did not have any preferred stock outstanding for the periods presented, and therefore the ratio of earnings to combined fixed charges and preferred stock dividends would be the same
as the ratios of earnings to fixed charges presented below.
Ratio of Earnings to Fixed ChargesIncluding Interest Sensitive and Index Product Benefits
and Amortization of Deferred Sales Inducements
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Six Months
Ended
June 30,
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Year Ended December 31,
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2015
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2014
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2013
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2012
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2011
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2010
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Ratio of earnings to fixed charges
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1.2x
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1.1x
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1.2x
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1.1x
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1.1x
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1.1x
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Ratio of Earnings to Fixed ChargesExcluding Interest Sensitive and Index Product Benefits
and Amortization of Deferred Sales Inducements
The following table sets forth our ratio of earnings to fixed charges excluding interest sensitive and index product benefits and amortization
of deferred sales inducements. This ratio is presented here to reflect the effect of excluding interest sensitive and index product benefits and amortization of deferred sales inducements, which we
believe are not indicative of interest expense related to amounts borrowed. Interest sensitive and index product benefits and amortization of deferred sales inducements do not require cash outlays
unless and until annuity holders elect to withdraw their annuity account balances, subject to applicable surrender charges. Therefore, we view such expenses as operating expenses and treat them as
such in our consolidated statements of operations.
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Six Months
Ended
June 30,
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Year Ended December 31,
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2015
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2014
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2013
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2012
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2011
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2010
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Ratio of earnings to fixed charges
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7.4x
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5.0x
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8.5x
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3.0x
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3.9x
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2.7x
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4
DESCRIPTION OF SECURITIES
This prospectus contains summary descriptions of the debt securities, preferred stock, common stock, depositary shares, warrants, stock purchase
contracts and stock purchase units that we may sell from time to time. These summary descriptions are not meant to be complete descriptions of each security. However, at the time of an offering and
sale, this prospectus, together
with the applicable prospectus supplements, will contain the material terms of the securities being offered.
DESCRIPTION OF DEBT SECURITIES
As used in this prospectus, debt securities means the debentures, notes, bonds and other evidences of indebtedness that we may issue from time
to time in one or more series. The debt securities will either be senior debt securities or subordinated debt securities. Senior debt securities will be issued under a "senior indenture" and
subordinated debt securities will be issued under a "subordinated indenture." This prospectus sometimes refers to the senior indenture and the subordinated indenture collectively as the "indentures."
Unless the applicable prospectus supplement states otherwise, the trustee under the indentures will be U.S. Bank National Association. The trustee will be a financial institution that is not
affiliated with us.
The
indentures are filed as exhibits to the registration statement of which this prospectus forms a part. The statements and descriptions in this prospectus or in any prospectus
supplement regarding provisions of the indentures and debt securities are summaries thereof, do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all
of the provisions of the indentures and the debt securities, including the definitions therein of certain terms. Accordingly, we strongly encourage you to refer to the indentures and the debt
securities for a complete understanding of the terms and conditions applicable to the indentures and the debt securities. You should read this description of the debt securities and the indentures and
the prospectus supplement relating to the applicable series of debt securities before you buy any debt securities.
General
The debt securities will be our unsecured senior or subordinated obligations. The term "senior" is generally used to describe debt obligations
which entitle the holder to receive payment of principal and interest upon the happening of certain events prior to the holders of "subordinated" debt. Events which can trigger the right of holders of
senior indebtedness to receive payment of principal and interest prior to payments to the holders of subordinated indebtedness include insolvency, bankruptcy, liquidation, dissolution, receivership,
reorganization or an event of default under the senior indebtedness.
We
may issue the senior debt securities, pursuant to the senior indenture, in one or more series. All series of senior debt securities issued under the senior indenture will be equal in
ranking. The senior debt securities also will rank equally with all our other unsecured indebtedness, other than unsecured
indebtedness expressly designated by the holders thereof to be subordinate to our senior debt securities.
The
senior indebtedness issued pursuant to the senior indenture will rank junior and be subordinate to any of our secured indebtedness. In the event of a bankruptcy or other liquidation
event involving a distribution of assets to satisfy our outstanding indebtedness or an event of default under a loan agreement relating to the secured indebtedness, the holders of our secured
indebtedness would be entitled to receive payment of principal and interest prior to payments on the senior indebtedness issued under the senior indenture.
Additionally,
the senior indebtedness issued pursuant to the senior indenture will rank junior and be subordinate to any indebtedness of our subsidiaries. In the event of a bankruptcy,
receivership,
5
liquidation
or similar event involving a subsidiary, the assets of that subsidiary would be used to satisfy claims of creditors of the subsidiary, including liabilities under contracts of insurance
and annuities written by our insurance subsidiaries, rather than our creditors. As a result of the application of the subsidiary's assets to satisfy claims of policyholders and creditors, the value of
the stock of the subsidiary would be diminished and perhaps rendered worthless. Any such diminution in the value of the shares of our subsidiaries would adversely impact our financial condition and
possibly impair our ability to meet our obligations on the debt securities. In addition, any liquidation of the assets of a subsidiary to satisfy claims of the subsidiary's creditors might make it
impossible for such subsidiary to pay dividends to us. This inability to pay dividends would further impair our ability to satisfy our obligations under the debt securities.
The
debt securities issued under the subordinated indenture will be subordinate in right of payment in respect of principal of (and premium, if any) and interest owing under the
subordinated debt securities to all our senior indebtedness in the manner described below under the caption "Subordination."
The
indentures do not limit the aggregate principal amount of debt securities that we may issue and provide that we may issue debt securities from time to time in one or more series, in
each case with the same or various maturities, at par or at a discount. We may issue additional debt securities of a particular series without the consent of the holders of the debt securities of such
series outstanding at the time of the issuance. Any such additional debt securities, together with all other outstanding debt securities of that series, will constitute a single series of debt
securities under the applicable indenture. The indentures also do not limit our ability to incur other debt.
We
will provide a prospectus supplement to accompany this prospectus for each series of debt securities we offer. Each prospectus supplement will describe the terms relating to the
specific series of debt securities being offered. These terms will include some or all of the following:
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the title of debt securities and whether they are subordinated debt securities or senior debt securities;
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any limit on the aggregate principal amount of the debt securities;
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the price or prices at which we will sell the debt securities;
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the maturity date or dates of the debt securities;
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the rate or rates of interest, if any, which may be fixed or variable, per annum at which the debt securities will bear interest, or the method
of determining such rate or rates, if any;
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the date or dates from which any interest will accrue or the method by which such date or dates will be determined;
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the dates on which we will pay interest on the debt securities and the regular record date for determining who is entitled to the interest
payable on any interest payment date;
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the right, if any, to extend the interest payment periods and the duration of any such deferral period, including the maximum consecutive
period during which interest payment periods may be extended;
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whether the amount of payments of principal of (and premium, if any) or interest on the debt securities may be determined with reference to any
index, formula or other method, such as one or more currencies, commodities, equity indices or other indices, and the manner of determining the amount of such payments;
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the place or places where the principal of (and premium, if any) and interest on the debt securities will be payable;
6
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if we possess the option to do so, the periods within which and the prices at which we may redeem the debt securities, in whole or in part,
pursuant to optional redemption provisions, and the other terms and conditions of any such provisions;
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our obligation, if any, to redeem, repay or purchase debt securities pursuant to any sinking fund or through an analogous provision or at the
option of holders of the debt securities, and the period or periods within which and the price or prices at which we will redeem, repay or purchase the debt securities, in whole or in part, pursuant
to such obligation, and the other terms and conditions of such obligation;
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the denominations in which the debt securities will be issued, if other than denominations of $1,000 and integral multiples of $1,000;
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the currency, currencies or currency unit in which we will pay the principal of (and premium, if any) or interest on the debt securities, if
not United States dollars;
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provisions, if any, granting special rights to holders of the debt securities upon the occurrence of specified events;
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any additions to the events of default or our covenants with respect to the applicable series of debt securities;
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the manner in which we may evidence any election to defease the debt securities, if other than by resolution of our board of directors;
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whether the debt securities will be convertible into other securities or property and, if so, the terms and conditions upon which the holders
may convert or exchange such debt securities into other securities or property;
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whether any of the debt securities will be issued in global form and, if so, the terms and conditions upon which global debt securities may be
exchanged for certificated debt securities;
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the depositary for global or certificated debt securities;
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any special tax implications of the debt securities;
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any trustees, authenticating or paying agents, transfer agents or registrars or other agents with respect to the debt securities; and
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any other terms of the debt securities not inconsistent with the provisions of the indentures, as amended or supplemented, and any other terms
which may be required by or advisable under applicable laws or regulations.
Unless
otherwise specified in the applicable prospectus supplement, the debt securities will not be listed on any securities exchange.
Unless
otherwise specified in the applicable prospectus supplement, debt securities will be issued in fully-registered form without coupons.
Debt
securities may be sold at a substantial discount below their stated principal amount, bearing no interest or interest at a rate which at the time of issuance is below market rates.
The applicable prospectus supplement will describe the federal income tax consequences and special considerations applicable to any such debt securities. The debt securities may also be issued as
indexed securities or securities denominated in foreign currencies or currency units, as described in more detail in the prospectus supplement relating to any of the particular debt securities. The
prospectus supplement relating to specific debt securities will also describe any special considerations and certain additional tax considerations applicable to such debt securities.
7
Subordination
Subordinated debt securities will be subordinate and junior in right of payment to all of our senior indebtedness.
Under
the subordinated indenture, "senior indebtedness" means all amounts due on obligations in connection with any of the following, whether outstanding at the date of execution of the
subordinated indenture or thereafter incurred or created:
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-
the principal of (and premium, if any) and interest in respect of our indebtedness for borrowed money and indebtedness evidenced by securities,
debentures, bonds or other similar instruments issued by us;
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all our capital lease obligations;
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all our obligations issued or assumed as the deferred purchase price of property, all our conditional sale obligations and all our obligations
under any title retention agreement (but excluding trade accounts payable in the ordinary course of business);
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-
all our obligations for the reimbursement on any letter of credit, banker's acceptance, security purchase facility or similar credit
transaction;
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all our obligations in respect of interest rate swap, cap or other agreements, interest rate future or options contracts, currency swap
agreements, currency future or option contracts and other similar agreements;
-
-
all obligations of the types referred to above of other persons for the payment of which we are responsible or liable as obligor, guarantor or
otherwise; and
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-
all obligations of the types referred to above of other persons secured by any lien on any property or asset of ours whether or not such
obligation is assumed by us.
Senior
indebtedness does not include:
-
-
indebtedness or monetary obligations to trade creditors created or assumed by us or any of our subsidiaries in the ordinary course of business
in connection with the obtaining of materials or services;
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-
indebtedness that is by its terms subordinated to or ranks equal with the subordinated debt securities; and
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any indebtedness of us to our affiliates (including all debt securities and guarantees in respect of those debt securities issued to any trust,
partnership or other entity affiliated with us that is a financing vehicle of us in connection with the issuance by such financing entity of preferred securities or other securities guaranteed by us)
unless otherwise expressly provided in the terms of any such indebtedness.
Senior
indebtedness shall continue to be senior indebtedness and be entitled to the benefits of the subordination provisions irrespective of any amendment, modification or waiver of any
term of such senior indebtedness.
In
the event of, and during the continuation of, any default by us in the payment of principal, premium, if any, interest or any other payment due on any of our senior indebtedness, or
in the event that the maturity of any of our senior indebtedness has been accelerated because of a default, then no payment will be made by us with respect to the principal (including redemption and
sinking fund payments) of (or premium, if any) or interest on the subordinated debt securities.
In
the event of the acceleration of the maturity of any subordinated debt securities, the holders of all senior indebtedness outstanding at the time of such acceleration will first be
entitled to receive
8
payment
in full of all amounts due on the senior indebtedness before the holders of the subordinated debt securities will be entitled to receive any payment of principal of (and premium, if any) or
interest on the subordinated debt securities.
In
addition, if any of the following events occurs, we will pay in full all senior indebtedness before we make any payment on account of the principal of (and premium, if any) or
interest on the subordinated debt securities to any holder of subordinated debt securities:
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any dissolution or winding-up or liquidation or reorganization of us, whether voluntary or involuntary or in bankruptcy, insolvency or
receivership;
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-
any general assignment by us for the benefit of creditors; or
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any other marshaling of our assets or liabilities.
In
such event, any payment or distribution under the subordinated debt securities, whether in cash, securities or other property, which would otherwise (but for the subordination
provisions) be payable or deliverable in respect of the subordinated debt securities, will be paid or delivered directly to the holders of senior indebtedness in accordance with the priorities then
existing among such holders until all senior indebtedness has been paid in full. If any payment or distribution under the subordinated debt securities is received by the trustee of any subordinated
debt securities in contravention of any of the terms of the subordinated indenture and before all the senior indebtedness has been paid in full, such payment or distribution or security will be
received in trust for the benefit of, and paid over or delivered and transferred to, the holders of the senior indebtedness at the time outstanding in accordance with the priorities then existing
among such holders for application to the payment of all senior indebtedness remaining unpaid to the extent necessary to pay all such senior indebtedness in full.
The
subordinated indenture does not limit the amount of senior indebtedness that we can incur.
Restrictive Covenant
The following restrictive covenant shall apply to each series of senior debt securities:
Limitations on Dispositions of Stock of Certain Subsidiaries.
So long as any senior debt securities are outstanding and subject to the
provisions of
the senior indenture regarding mergers, consolidations and
sales of assets, neither we nor any of our subsidiaries will sell or otherwise dispose of any shares of capital stock (other than preferred stock having no voting rights of any kind)
of:
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American Equity Investment Life Insurance Company;
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American Equity Investment Life Insurance Company of New York;
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any successor to substantially all of the business of American Equity Investment Life Insurance Company or American Equity Investment Life
Insurance Company of New York which is also a subsidiary of us; or
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any corporation (other than us) having direct or indirect control of American Equity Investment Life Insurance Company, American Equity
Investment Life Insurance Company of New York or any such successor.
Except
for, in each case:
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a sale or other disposition of any of such stock to a direct or indirect wholly-owned subsidiary of us;
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a sale or other disposition of shares which are "directors' qualifying shares;"
9
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a sale or other disposition of such stock for at least fair value (as determined by our board of directors acting in good faith); or
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a sale or other disposition required to comply with an order of a court or regulatory authority of competent jurisdiction, other than an order
issued at our request or the request of any of our subsidiaries.
Consolidation, Merger, Sale of Assets and Other Transactions
We may not (i) merge with or into or consolidate with any corporation or sell, assign, transfer, lease or convey all or substantially all
of our properties and assets to any corporation other than a direct or indirect wholly-owned subsidiary of us, and (ii) no corporation may merge with or into or consolidate with us or, except
for any direct or indirect wholly-owned subsidiary of us, sell, assign, transfer, lease or convey all or substantially all of its properties and assets to us, unless:
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we are the surviving corporation or the corporation formed by or surviving such merger or consolidation or to which such sale, assignment,
transfer, lease or conveyance has been made, if other than us, has expressly assumed by supplemental indenture all the obligations of us under the debt securities and the indentures;
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immediately after giving effect to such transaction, no default or event of default has occurred and is continuing; and
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we deliver to the trustee an officer's certificate and an opinion of counsel, each stating that the supplemental indenture complies with the
applicable indenture.
Events of Default, Notice and Waiver
The following shall constitute "events of default" under the indentures with respect to each series of debt
securities:
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our failure to pay any interest on any debt security of such series when due and payable, continuing for 30 days;
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our failure to pay the principal of (or premium, if any) on any debt security of such series when due, regardless of whether such payment
became due because of maturity, redemption, acceleration or otherwise, or any payment required by any sinking fund established with respect to such series;
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our failure to observe or perform any other of our covenants or agreements with respect to such debt securities for 90 days after we
receive notice of such failure;
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the occurrence of certain defaults with respect to our debt (other than the debt securities or non-recourse debt) that results in acceleration
of the maturity of a principal amount in excess of $50,000,000, and the acceleration of the maturity of such debt is not rescinded or annulled or such debt is not discharged within 15 days
after we receive notice of such event of default; and
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certain events of bankruptcy, insolvency or reorganization of us.
If
an event of default with respect to any debt securities of any series outstanding under either of the indentures occurs and is continuing, the trustee under such indenture or the
holders of at least 25% in aggregate principal amount of the debt securities of that series outstanding may declare, by notice as provided in the applicable indenture, the principal amount (or such
lesser amount as may be provided for in the debt securities of that series) of all the debt securities of that series outstanding to be due and payable immediately; provided that, in the case of an
event of default involving certain events in bankruptcy, insolvency or reorganization, acceleration is automatic; and, provided further, that after such acceleration, but before a judgment or decree
based on acceleration, the holders of a
10
majority
in aggregate principal amount of the outstanding debt securities of that series may, under certain circumstances, rescind and annul such acceleration if all events of default, other than the
nonpayment of accelerated principal, have been cured or waived. Upon the acceleration of the maturity of original issue discount securities, an amount less than the principal amount thereof will
become due and payable. Reference is made to the prospectus supplement relating to any original issue discount securities for the particular provisions relating to acceleration of maturity thereof.
Any
past default under either indenture with respect to debt securities of any series, and any event of default arising therefrom, may be waived by the holders of a majority in aggregate
principal amount of all debt securities of such series outstanding under such indenture, except in the case of (i) default in the payment of the principal of (or premium, if any) or interest on
any debt securities of such series or (ii) default in respect of a covenant or provision which may not be amended or modified without the consent of the holder of each outstanding debt security
of such series affected.
The
trustee is required, within 90 days after the occurrence of a default (which is known to the trustee and is continuing), with respect to the debt securities of any series
(without regard to any grace period or notice requirements), to give to the holders of the debt securities of such series notice of such default; provided, however, that, except in the case of a
default in the payment of the principal of (and premium, if any) or interest, or in the payment of any sinking fund installment, on any debt securities of such series, the trustee shall be protected
in withholding such notice if it in good faith determines that the withholding of such notice is in the interests of the holders of the debt securities of such series.
The
trustee, subject to its duties during default to act with the required standard of care, may require indemnification by the holders of the debt securities of any series with respect
to which a default has occurred before proceeding to exercise any right or power under the indentures at the request of the holders of the debt securities of such series. Subject to such right of
indemnification and to certain other limitations, the holders of a majority in principal amount of the outstanding debt securities of any series under either indenture may direct the time, method and
place of conducting any proceeding for any remedy available to the trustee, or exercising any trust or power conferred on the trustee with respect to the debt securities of such series.
No
holder of a debt security of any series may institute any action against us under either of the indentures (except actions for payment of overdue principal of (and premium, if any) or
interest on such debt security) unless (i) the holder has given to the trustee written notice of an event of default and of the continuance thereof with respect to the debt securities of such
series specifying an event of default, as required under the applicable indenture, (ii) the holders of at least 25% in aggregate principal amount of the debt securities of that series then
outstanding under such indenture shall have requested the trustee to institute such action, (iii) the holder or holders have offered the trustee reasonable indemnity for its costs, expenses and
liabilities, (iv) the trustee shall not have instituted such action within 60 days of such request and (v) the holders of a majority in principal amount of the outstanding debt
securities of each affected series did not direct the trustee to refrain from instituting the action.
We
are required to furnish annually to the trustee statements either stating that no default exists or specifying any default that does exist.
Discharge, Defeasance and Covenant Defeasance
We may discharge or defease our obligations under each indenture as set forth below. For purposes of the indentures, obligations with respect to
debt securities are discharged and defeased when, through the fulfillment of the conditions summarized below, we are released and discharged from performing any further obligations under the relevant
indenture with respect to the debt
11
securities.
Covenant defeasance occurs when we are released from performing any further obligations under specific covenants in the indenture relating to the debt securities.
We
may discharge certain obligations to holders of any series of debt securities issued under either the senior indenture or the subordinated indenture which have not already been
delivered to the trustee for cancellation and which have either become due and payable or are by their terms due and payable within one year (or scheduled for redemption within one year) by
irrevocably depositing with the trustee cash or U.S. government obligations (as defined in either indenture), as trust funds in an amount certified to be sufficient to pay when due, whether at
maturity or upon redemption, the principal of (and premium, if any) and interest on such debt securities.
We
may elect either (i) to defease and be discharged from any and all obligations with respect to the debt securities of or within any series (except as otherwise provided in the
relevant indenture) ("defeasance") or (ii) to be released from our obligations with respect to certain covenants applicable to the debt securities of or within any series ("covenant
defeasance"), upon the irrevocable deposit with the relevant indenture trustee, in trust for such purpose, of money and/or U.S. government obligations which through the payment of principal and
interest in accordance with their terms will provide money in an amount sufficient to pay the principal of (and premium, if any) and interest on such debt securities to maturity or redemption, as the
case may be, and any mandatory sinking fund or analogous payments thereon. As a condition to defeasance or covenant defeasance, we must deliver to the trustee an opinion of counsel to the effect that
the holders of such debt securities will not recognize income, gain or loss for federal income tax purposes as a result of such defeasance or covenant defeasance and will be subject to federal income
tax on the same amounts and in the same manner and at the same times as would have been the case if such defeasance or covenant defeasance had not occurred. Such opinion of counsel, in the case of
defeasance under clause (i) above, must refer to and be based upon a ruling of the Internal Revenue Service or a change in applicable federal income tax law occurring after the date of the
relevant indenture. In addition, in the case of either defeasance or covenant defeasance, we shall have delivered to the trustee (i) an officers' certificate to the effect that the relevant
securities exchange(s) have informed us that neither such debt securities nor any other debt securities of the same series, if then listed on any securities exchange, will be delisted as a result of
such deposit and (ii) an officers' certificate and an opinion of counsel, each stating that all conditions precedent with respect to such defeasance or covenant defeasance have been complied
with.
We
may exercise our defeasance option with respect to such debt securities notwithstanding our prior exercise of our covenant defeasance option.
Modification and Waiver
We are restricted in our ability to modify the indentures. However, we may in certain circumstances modify the indentures either before or after
the debt securities are issued. The following is a summary of the applicable provisions under the indentures.
With the Consent of Securityholders.
We and the applicable trustee may modify the indentures or any supplemental indenture in a manner
that affects
the interests or rights of the holders of debt securities with the consent of the holders of a least a majority in aggregate principal amount of the outstanding debt securities of each affected series
issued under the indenture.
However,
the indentures require the consent of each holder of debt securities that would be affected by any modification which would:
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extend the fixed maturity of any debt securities of any series, or reduce the principal amount thereof, or reduce the rate or extend the time
of payment of interest thereon, or reduce any premium payable upon the redemption thereof;
12
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reduce the amount of principal of an original issue discount debt security or any other debt security payable upon acceleration of the maturity
thereof;
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change the currency in which any debt security or any premium or interest is payable;
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impair the right to enforce any payment on or with respect to any debt security;
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adversely change the right to convert or exchange, including decreasing the conversion rate or increasing the conversion price of, any debt
security (if applicable);
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reduce the percentage in principal amount of outstanding debt securities of any series, the consent of the holders of which is required for
modification or amendment of the indentures or for waiver of compliance with certain provisions of the indentures or for waiver of certain defaults;
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reduce the requirements contained in the indentures for quorum or voting; or
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-
modify any of the above provisions.
The
indentures permit the holders of at least a majority in aggregate principal amount of the outstanding debt securities of any series issued under the indenture which is affected by
the modification or amendment to waive our compliance with certain covenants contained in the indentures.
Without the Consent of Securityholders.
In addition, we and the applicable trustee may supplement the indentures for certain purposes
which would not
materially adversely affect the interests or rights of the holders of debt securities of a series without the consent of those holders for one or more of the following
purposes:
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to cure any ambiguity, defect, or inconsistency in the indentures, in any supplemental indenture or in the debt securities issued under the
indentures;
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-
to provide for uncertificated debt securities in addition to or in place of certificated debt securities;
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to add to the covenants of us for the benefit of the holders of all or any series of debt securities or to surrender any right or power
conferred upon us under the indentures;
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to add to, delete from or revise the conditions, limitations and restrictions on the authorized amount, terms or purposes of issue,
authentication and delivery of debt securities, as set forth in the indentures;
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-
to make any change that does not adversely affect the rights of any securityholder in any material respect;
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to provide for the issuance of and establish the form and terms and conditions of the debt securities of any series, to establish the form of
any certifications required to be furnished pursuant to the terms of the indentures or any series of debt securities or to add to the rights of the holders of any series of debt securities;
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-
to add any additional events of default for the benefit of the holders of all or any series of debt securities;
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to secure the debt securities;
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to evidence and provide for the acceptance of appointment under the indentures by a successor trustee with respect to the debt securities of
one or more series and to add to or change any of the provisions of the indentures as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one
trustee; or
13
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to evidence the succession of another corporation to us, or successive successions, and the assumption by the successor corporation of the
covenants, agreements and obligation of us under the indentures.
Payment and Paying Agents
Payment of interest on a debt security on any interest payment date will be made to the person in whose name a debt security is registered at
the close of business on the record date for the interest.
Principal
of (and premium, if any) and interest on the debt securities of a particular series will be payable at the office of such paying agent or paying agents as we may designate for
such purpose from time to time. Notwithstanding the foregoing, at our option, payment of any interest may be made by check mailed to the address of the person entitled thereto as such address appears
in the security register.
We
may act as our own paying agent or appoint one or more paying agents for payments with respect to debt securities of each series. All paying agents initially designated by us for the
debt securities of a particular series will be named in the applicable prospectus supplement. We may at any time designate additional paying agents or rescind the designation of any paying agent or
approve a change in the office through which any paying agent acts, except that we will be required to maintain a paying agent in each place of payment for the debt securities of a particular series.
All
moneys paid by us to a paying agent for the payment of the principal, interest or premium, if any, on any debt security which remain unclaimed at the end of two years after such
principal, interest or premium, if any, has become due and payable will be repaid to us upon request, and the holder of such debt security thereafter may look only to us for payment thereof.
Denominations, Registrations and Transfer
Unless an accompanying prospectus supplement states otherwise, debt securities will be represented by one or more global certificates registered
in the name of a nominee for The Depository Trust Company, or DTC. In such case, each holder's beneficial interest in the global securities will be shown on the records of DTC and transfers of
beneficial interests will only be effected through DTC's records. We will describe the specific terms of the depositary arrangement with respect to any series of debt securities represented by a
registered global security in the prospectus supplement relating to that series.
A
holder of debt securities may only exchange a beneficial interest in a global security for certificated securities registered in the holder's name
if:
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-
DTC notifies us that it is unwilling or unable to continue serving as the depositary for the relevant global securities or DTC ceases to
maintain certain qualifications under the Exchange Act and no successor depositary has been appointed for 90 days; or
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-
we determine, in our sole discretion, that the global security shall be exchangeable.
If
debt securities are issued in certificated form, they will only be issued in the minimum denomination specified in the accompanying prospectus supplement and integral multiples of
such denomination. Transfers and exchanges of such debt securities will only be permitted in such minimum denomination. Transfers of debt securities in certificated form may be registered at the
offices of an agent appointed by us under the indentures. Exchanges of debt securities for an equal aggregate principal amount of debt securities in different denominations may also be made at such
locations.
14
Governing Law
The indentures and debt securities will be governed by, and construed in accordance with, the internal laws of the State of New York, without
regard to its principles of conflicts of laws, except to the extent that the Trust Indenture Act is applicable, in which case the Trust Indenture Act will govern.
Relationship With the Trustees
The trustee under the indentures is U.S. Bank National Association. We and our subsidiaries maintain ordinary banking and trust relationships
with a number of banks and trust companies, including the trustee under the indentures.
Conversion or Exchange Rights
The prospectus supplement will describe the terms, if any, on which a series of debt securities may be convertible into or exchangeable for
other debt securities. These terms will include provisions as to whether conversion or exchange is mandatory, at the option of the holder or at our option. These provisions may allow or require the
number of other securities to be received by the holders of such series of debt securities to be adjusted.
15
DESCRIPTION OF CAPITAL STOCK
The following description briefly summarizes certain information regarding our capital stock. This information does not
purport to be complete and is subject in all respects to the applicable provisions of the Iowa Business Corporation Act (the "IBCA"), our articles of incorporation, as amended (our "amended articles
of incorporation"), and our amended and restated bylaws (our "bylaws")
.
Our
authorized capital stock consists of 202,000,000 shares, of which 200,000,000 shares are common stock, par value $1 per share, and 2,000,000 shares are preferred stock, par value $1
per share. As of August 31, 2015, we had issued and outstanding 81,504,899 shares of common stock, no shares of preferred stock, options to purchase 3,585,916 shares of common stock at a
weighted average exercise price of $14.98 per share and 412,094 restricted stock units. As of August 31, 2015, up to 3,234,400 shares of common stock was available for future grants of equity
awards.
Common Stock
Each outstanding share of our common stock is entitled to one vote per share on each matter submitted to the vote of shareholders. Cumulative
voting for the election of directors is
not permitted, and the holders of a majority of shares voting for the election of directors can elect all members of the board of directors. Subject to the rights of holders of preferred stock,
holders of our common stock have equal ratable rights to dividends from funds legally available therefor, when, as and if declared by the board of directors. Holders of our common stock are entitled
to share ratably in all of our assets available for distribution upon our liquidation, dissolution or winding up. Holders of our common stock have no preemptive, conversion, redemption or subscription
rights.
In
2014 and 2013, we paid an annual cash dividend of $0.20 and $0.18, respectively, per share on our common stock. We intend to continue to pay an annual cash dividend on such shares so
long as we have sufficient capital and/or future earnings to do so. However, we anticipate retaining most of our future earnings, if any, for use in our operations and the expansion of our business.
Any further determination as to dividend policy will be made by our board of directors and will depend on a number of factors, including our future earnings, capital requirements, financial condition
and future prospects and such other factors as our board of directors may deem relevant.
Since
we are a holding company, our ability to pay cash dividends depends in large measure on our subsidiaries' ability to make distributions of cash or property to us. Financial
covenants under our existing or future loan agreements and reinsurance agreements, or provisions of the laws of the states where we or our subsidiaries are organized, may limit our subsidiaries'
ability to make sufficient distributions to us to permit us to pay cash dividends on our common stock.
As
of September 4, 2015, there were approximately 17,300 holders of our common stock.
Preferred Stock
We are authorized to issue up to 2,000,000 shares of preferred stock. Our amended articles of incorporation authorize our board, without any
further shareholder action or approval, to issue these shares from time to time in one or more series with such rights and preferences as may be determined by our board of directors. Our board may
authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of our common stock.
Indemnification of Directors and Executive Officers and Limitation of Liability
Section 490.202 of the IBCA permits a corporation to include a provision in its articles of incorporation permitting or making obligatory
the indemnification of a director for liability to any person for any action taken, or any failure to take any action, as a director, except liability for (i) the
16
receipt
of a financial benefit to which the person is not entitled, (ii) an intentional infliction of harm on the corporation or its shareholders, (iii) unlawful distributions to
shareholders, or (iv) an intentional violation of criminal law.
Our
amended articles of incorporation provide that our directors will not be liable to us or our shareholders for money damages for any action taken, or any failure to take any action,
as a director, except liability for (1) the amount of a financial benefit received by a director to which the director is not entitled; (2) intentional infliction of harm on us or our
shareholders; (3) a violation of Section 490.833 of the IBCA, which relates to liability for unlawful distributions; and (4) an intentional violation of criminal law.
Our
amended articles of incorporation also provide that each individual who was or is a director of the company who was or is made a party to, or is involved in any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was a director of the company, or is or was serving at
the request of the company as a director, officer, partner, trustee, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall be
indemnified and held harmless by the company to the fullest extent permitted by applicable law, except liability for:
-
-
the amount of a financial benefit received by a director to which the director is not entitled;
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-
an intentional infliction of harm on the company or its shareholders;
-
-
an unlawful distribution to shareholders; and
-
-
an intentional violation of criminal law.
Our
bylaws also provide that each person who was or is a party or is threatened to be made a party to any threatened, pending or completed civil or criminal action or proceeding by
reason of the fact that such person is or was a director of the company or is or was serving at our request as a director, officer, partner, trustee, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise, shall be indemnified and held harmless by us to the fullest extent permitted by Iowa law. This right to indemnification
shall also include the right to be paid by us the expenses incurred in connection with any such proceeding in advance of its final disposition to the fullest extent authorized by Iowa law. This right
to indemnification shall be a contract right. We may, by action of our board of directors, provide indemnification to our officers, employees and agents to the extent and to the effect as the board of
directors determines to be appropriate and authorized by Iowa law.
Section 490.857
of the IBCA provides that a corporation may purchase and maintain insurance on behalf of a person who is a director or officer of a corporation, or who, while a
director or officer of a corporation, serves at the corporation's request as a director, officer, partner, trustee, employee or agent of another corporation, partnership, joint venture, trust,
employee benefit plan, or other entity, against liability asserted against or incurred by that person in that capacity or arising from that person's status as a director or officer, whether or not the
corporation would have the power to indemnify or advance expenses to that person against the same liability under the IBCA. As permitted by and in accordance with Section 490.857 of the IBCA,
we maintain insurance coverage for our officers and directors as well as insurance coverage to reimburse us for potential costs for indemnification of directors and officers.
Selected Amended Articles of Incorporation and Bylaws Provisions
Our amended articles of incorporation and bylaws include provisions that may have the effect of discouraging, delaying or preventing
(a) a change in control of us or (b) an unsolicited acquisition proposal that a shareholder might consider favorable, including a proposal that might result in the
17
payment
of a premium over the market price for the shares held by shareholders. These provisions are summarized in the following paragraphs.
Classified Board of Directors.
Our amended articles of incorporation provide for our board of directors to be divided into three
classes of directors
serving staggered, three year terms. The classification of the board of directors has the effect of requiring at least two annual shareholder meetings to replace a majority of the members of the board
of directors.
Notice Procedures.
Our bylaws establish advance notice procedures with regard to all shareholder proposals to be brought before
meetings of our
shareholders, including proposals relating to the nomination of candidates for election as directors, the removal of directors and amendments to our amended articles of incorporation and bylaws.
Shareholder Meetings.
Our bylaws provide that special meetings may be called only by the board of directors or shareholders
owning at least 50% of
all the votes entitled to be cast on any issue proposed at the special meeting.
Authorized but Unissued or Undesignated Capital Stock.
Our amended articles of incorporation grant the
board of directors broad power to establish the rights and preferences of authorized and unissued preferred stock. The issuance of shares of preferred stock pursuant to the board of directors'
authority could (a) decrease the amount of earnings and assets available for distribution to holders of common stock, (b) adversely affect the rights and powers, including voting rights,
of such holders and (c) have the of effect delaying, deferring or preventing a change in control of us. The board of directors does not currently intend to seek shareholder approval prior to
any issuance of preferred stock, unless otherwise required by law or the rules of any exchange on which the securities are then traded.
Iowa Takeover Statute
We are subject to Section 490.1110 of the IBCA which prohibits certain "business combination" transactions between an Iowa corporation
and any "interested shareholder" for a period of three years after the date on which such shareholder became an interested shareholder, unless:
-
-
the board of directors approves, prior to such date, either the proposed business combination or the proposed acquisition of stock which
resulted in the shareholder becoming an interested shareholder;
-
-
upon consummation of the transaction in which the shareholder becomes an interested shareholder, the interested shareholder acquires at least
85% of those shares of the voting stock of the corporation which are not held by the directors, officers or certain employee stock plans; or
-
-
on or subsequent to the consummation date, the business combination with the interested shareholder is approved by the board of directors and
also approved at a shareholders' meeting by the affirmative vote of the holders of at least two-thirds of the outstanding shares of the corporation's voting stock other than shares held by the
interested shareholder.
Section 490.1110
defines "business combination" to include:
-
-
a merger or consolidation involving the corporation and any interested shareholder;
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-
any sale, lease, exchange, mortgage, pledge, transfer, or other disposition of 10% or more of the assets of the corporation involving the
interested shareholder;
-
-
any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested shareholder;
18
-
-
any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the
corporation beneficially owned by the interested shareholder; or
-
-
any other transaction resulting in a financial benefit to the interested shareholder under Iowa law.
In
general, an "interested shareholder" is any person beneficially owning 10% or more of the outstanding voting stock of the corporation and any person affiliated with or controlled by
such person. "Person" means any individual, corporation, partnership, unincorporated association or other entity.
State Statutory Provisions
Section 490.1108A of the IBCA provides that in considering acquisition proposals, our directors may consider, in addition to the
consideration of the effects of any action on shareholders, the effects on our employees, suppliers, creditors, customers and the communities in which we operate, as well as our long-term and
short-term interests. Consideration of any or all community interest factors is not a violation of the business judgment rule, even if our directors reasonably determine that effects on a community or
other factors outweigh the financial or other benefits to us or a shareholder or group of shareholders. Section 490.624A of the IBCA also includes authorization of "poison pills" which include,
without limitation, terms and conditions of stock rights or options issued by a corporation that preclude or limit the exercise, transfer or receipt of stock rights by persons owning or offering to
acquire a specified number or percentage of a corporation's outstanding shares.
The
provisions of state law that we describe above could have the effect of delaying, deferring or preventing a change in control of the company if our board of directors determines that
a change of control is not in our best interests, those of our shareholders and other constituencies. In addition, the regulatory restrictions on the acquisition of our securities may also deter
attempts to effect, or prevent the consummation of, a change in control of the company.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is Computershare Trust Company, N.A.
19
DESCRIPTION OF DEPOSITARY SHARES
General Terms
We may elect to offer depositary shares representing receipts for fractional interests in preferred stock. In this case, we will issue receipts
for depositary shares, each of which will represent a fraction of a share of a particular series of preferred stock.
We
will deposit the shares of any series of preferred stock represented by depositary shares under a deposit agreement between us and a depositary which we will name in the applicable
prospectus supplement. Subject to the terms of the deposit agreement, an owner of a depositary share will be entitled, in proportion to the applicable fraction of a share of preferred stock
represented by the depositary share, to all the rights and preferences of the preferred stock represented by the depositary share, including, as the case may be, interest, dividend, voting,
conversion, redemption, sinking fund, repayment at maturity, subscription and liquidation rights.
The
following description of the terms of the deposit agreement is a summary. It summarizes only those terms of the deposit agreement that we believe will be most important to a decision
to invest in our depositary shares. You should keep in mind, however, that it is the deposit agreement, and not this summary, which defines the rights of a holder of depositary shares. There may be
other provisions in the deposit agreement that are also important to you. You should read the deposit agreement for a full description of the terms of the depositary shares. We will file a copy
of the deposit agreement with the SEC at or before the time of the offering of the applicable series of depositary shares. This summary is subject to and qualified by reference to the description of
the particular terms of your series of depositary shares described in the applicable prospectus supplement.
Interest, Dividends and Other Distributions
The depositary will distribute all payments of interest, cash dividends or other cash distributions received on the preferred stock to record
holders of depositary shares relating to the preferred stock in proportion to the number of depositary shares that they own.
In
the event of a distribution other than in cash, the depositary will distribute property received by it to the appropriate record holders of depositary shares in an equitable manner,
unless the depositary determines that it is not feasible to make a distribution. In that case the depositary may sell the property and distribute the net proceeds from the sale to such record holders.
Redemption of Depositary Shares
If we redeem a series of preferred stock represented by depositary shares, the depositary will redeem the depositary shares from the proceeds
received by the depositary resulting from the redemption. The redemption price per depositary share will be equal to the applicable fraction of the redemption price per share of preferred stock
payable in relation to the redeemed series of preferred stock. Whenever we redeem shares of preferred stock held by the depositary, the depositary will redeem as of the same redemption date the number
of depositary shares representing the shares of preferred stock redeemed. If fewer than all the depositary shares are to be redeemed, the depositary shares to be redeemed will be selected by lot,
proportionately or by any other equitable method as the depositary may determine.
Voting the Preferred Stock
Upon receipt of notice of any meeting at which the holders of any series of deposited preference shares are entitled to vote, the depositary
will mail the information contained in the notice of meeting to the record holders of the depositary shares relating to such preferred stock. Each record holder of the depositary shares on the record
date will be entitled to instruct the depositary how to vote the
20
amount
of the preferred stock represented by that holder's depositary shares. The record date for the depositary shares will be the same date as the record date for preferred stock. The depositary
will endeavor, to the extent practicable, to vote the amount of the preferred stock represented by the depositary shares in accordance with those instructions. We will agree to take all reasonable
action which the depositary may deem necessary to enable the depositary to do so. The depositary will abstain from giving instructions or directions with respect to the voting shares of the preferred
stock if it does not receive specific instructions from the holder of depositary shares representing the preferred stock.
Amendment and Termination of the Deposit Agreement
We and the depositary may amend the form of depositary receipt evidencing the depositary shares and any provision of the deposit agreement at
any time. However, any amendment which materially and adversely alters the rights of the holders of the depositary shares will not be effective unless the amendment has been approved by the holders of
at least a majority of the depositary shares then outstanding. Every holder of an outstanding depositary receipt at the time any amendment becomes effective, or any transferee of the holder, will be
deemed, by continuing to hold the depositary receipt, or by reason of the acquisition thereof, to consent and agree to the amendment and to be bound by the deposit agreement as amended thereby.
The
deposit agreement will automatically terminate if:
-
-
all outstanding depositary shares have been redeemed,
-
-
each share of preferred stock has been converted into other preference shares or has been exchanged for debt securities, or
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-
there has been a final distribution in respect of the preferred stock, including in connection with our liquidation, dissolution or winding-up,
and the repayment, redemption or distribution proceeds, as the case may be, have been distributed.
Resignation and Removal of Depositary
The depositary may resign at any time by delivering to us notice of its election to do so. We also may, at any time, remove the depositary. Any
resignation or removal will take effect upon the appointment of a successor depositary and its acceptance of such appointment. We must appoint the successor depositary within 60 days after
delivery of the notice of resignation or removal. The successor depositary must be a bank or trust company having its principal office in the United States and having a combined capital and surplus of
at least $50,000,000.
Charges of Depositary
We will pay all transfer and other taxes and governmental charges arising solely from the existence of the depositary arrangements. We will pay
all charges of the depositary in connection with the initial deposit of the preferred stock and issuance of depositary receipts, all withdrawals of shares of preferred stock by holders of depositary
shares and any redemption of the preferred stock. Holders of depositary shares will pay other transfer and other taxes and governmental charges, as well as the other charges that are expressly
provided in the deposit agreement to be for their account.
Miscellaneous
The depositary will forward all reports and communications from us which are delivered to the depositary and which we are required or otherwise
determine to furnish to holders of preferred stock.
Neither
we nor the depositary will be liable if we are or it is prevented or delayed by law or any circumstances beyond our or its control in performing any obligations under the deposit
agreement.
21
Our
and its obligations under the deposit agreement will be limited to performance in good faith of our and its duties under the deposit agreement and neither we nor it will be obligated to prosecute
or defend any legal proceeding in respect of any depositary shares, depositary receipts or preference shares unless satisfactory indemnity is furnished. We and the depositary may rely upon written
advice of counsel or accountants, or upon information provided by holders of depositary receipts or other persons believed to be competent and on documents believed to be genuine.
22
DESCRIPTION OF WARRANTS
We may issue warrants for the purchase of our debt securities, common stock, preferred stock, depositary shares or securities of third parties
or other rights, including rights to receive payment in cash or securities based on the value, rate or price of one or more specified commodities, currencies, securities or indices, or any combination
of the foregoing. We may issue warrants independently or together with other securities, and they may be attached to or separate from the other securities. Each series of warrants will be issued under
a separate warrant agreement that we will enter into with a bank or trust company, as warrant agent, as detailed in the applicable prospectus supplement. The warrant agent will act solely as our agent
in connection with the warrants and will not assume any obligation, or agency or trust relationship, with the holders of the warrants. We will file a copy of the warrant and warrant agreement
with the SEC each time we issue a series of warrants, and these warrants and warrant agreements will be incorporated by reference into the registration statement of which this prospectus is a part. A
holder of our warrants should refer to the provisions of the applicable warrant agreement and prospectus supplement for more specific information.
The
following description of the terms of the warrants is a summary. It summarizes only those terms of the warrants and the warrant agreement which we believe will be most important to
your decision to invest in our warrants. You should keep in mind, however, that it is the warrant agreement and the warrant certificate relating to the warrants, and not this summary, which defines
the rights of a warrantholder. There may be other provisions in the warrant agreement and the warrant certificate relating to the warrants which are also important to you. You should read these
documents for a full description of the terms of the warrants. This summary is subject to and qualified by reference to the description of the particular terms of your series of warrants described in
the applicable prospectus supplement.
Debt Warrants
We will describe in the applicable prospectus supplement the terms of warrants to purchase debt securities that we may offer, the warrant
agreement relating to the debt warrants and the warrant certificates representing the debt warrants. These terms will include the following:
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-
the title of the debt warrants,
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-
the debt securities for which the debt warrants are exercisable,
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-
the aggregate number of the debt warrants,
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-
the principal amount of debt securities that may be purchased upon exercise of each debt warrant, and the price or prices at which we will
issue the debt warrants,
-
-
the procedures and conditions relating to the exercise of the debt warrants,
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-
the designation and terms of any related debt securities issued with the debt warrants, and the number of debt warrants issued with each debt
security,
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-
the date, if any, on and after which the debt warrants and the related securities will be separately transferable,
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-
the date on which the right to exercise the debt warrants commences, and the date on which the right will expire,
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-
the maximum or minimum number of the debt warrants that may be exercised at any time,
-
-
whether the debt warrants are issued in registered or bearer form,
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-
information with respect to book entry procedures, if any,
23
-
-
if applicable, a discussion of material United States federal income tax considerations,
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-
any other terms of the debt warrants and terms, procedures and limitations relating to the exercise of the debt warrants, and
-
-
the terms of the securities that may be purchased upon exercise of the debt warrants.
We
will also describe in the applicable prospectus supplement any provisions for a change in the exercise price or expiration date of the warrants and the kind, frequency and timing of
any notice to be given. Certificates representing debt warrants will be exchangeable for new debt warrant certificates of different denominations, and debt warrants may be exercised at the corporate
trust office of the warrant agent or any other office that we indicate in the applicable prospectus supplement. Prior to exercise, holders of debt warrants will not have any of the rights of holders
of the debt securities purchasable upon that exercise and will not be entitled to payments of principal, premium, if any, or interest on the debt securities purchasable upon the exercise.
Other Warrants
We may issue other warrants. We will describe in the applicable prospectus supplement the following terms of those
warrants:
-
-
the title of the warrants,
-
-
the securities, which may include preferred stock or common stock, for which the warrants may be exercised,
-
-
the aggregate number of the warrants,
-
-
the number of securities that may be purchased upon exercise of each warrant, and the price or prices at which we will issue the warrants,
-
-
the procedures and conditions relating to the exercise of the warrants,
-
-
the designation and terms of any related securities issued with the warrants, and the number of warrants issued with each security,
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-
the date, if any, on and after which the warrants and the related securities will be separately transferable,
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-
the date on which the right to exercise the warrants commences and the date on which the right will expire,
-
-
the maximum or minimum number of warrants that may be exercised at any time,
-
-
if applicable, a discussion of material United States federal income tax considerations, and
-
-
any other terms of the warrants, including terms, procedures and limitations relating to the exchange and exercise of the warrants.
We
will also describe in the applicable prospectus supplement any provisions for a change in the exercise price or the expiration date of the warrants and the kind, frequency and timing
of any notice to be given. Certificates representing warrants will be exchangeable for new warrant certificates of different denominations, and warrants may be exercised at the corporate trust office
of the warrant agent or any other office that we indicate in the applicable prospectus supplement. Prior to the exercise, the holder of warrants will not have any of the rights of holders of the
preferred stock, common stock or other securities purchasable upon that exercise and will not be entitled to dividend payments, if any, or voting rights of the preferred stock, common stock or other
securities purchasable upon the exercise.
24
Exercise of Warrants
We will describe in the prospectus supplement relating to the warrants the principal amount or the number of our securities that may be
purchased for cash upon exercise of a warrant, and the exercise price. Warrants may be exercised as described in the prospectus supplement relating to the warrants at any time up to the close of
business on the expiration date stated in the prospectus supplement. Unexercised warrants will become void after the close of business on the expiration date.
We
will forward the securities purchasable upon the exercise as soon as practicable after receipt of payment and the properly completed and executed warrant certificate at the corporate
trust office of the warrant agent or other office stated in the applicable prospectus supplement. If less than all of the warrants represented by the warrant certificate are exercised, we will issue a
new warrant certificate for the remaining warrants.
Enforcement
The holders of warrants, without the consent of the warrant agent, may, on their own behalf and for their own benefit enforce, and may
substitute and maintain any suit, action, or proceeding against us to enforce these rights to exercise and receive the securities purchasable upon exchange of the warrants.
25
DESCRIPTION OF STOCK PURCHASE CONTRACTS
We may issue stock purchase contracts, including contracts obligating holders to purchase from us, and for us to sell to holders, a specific or
varying number of debt securities, shares of our common stock or preferred stock, depositary shares, warrants or other property or securities of an entity unaffiliated with us, a basket of such or any
combination of the above, at a future date or dates. Alternatively, the stock purchase contracts may obligate us to purchase from holders, and obligate holders to sell to us, a specific or varying
number of shares of debt securities, shares of our common stock or preferred stock, depositary shares, warrants or other property. The price per share of preferred stock or common stock or price of
other securities may be fixed at the time the stock purchase contracts are issued or may be determined by reference to a specific formula described in the stock purchase contracts. We may issue stock
purchase contracts separately or as a part of stock purchase units each consisting of a purchase contract and debt securities, undivided beneficial ownership interests in debt securities, depositary
shares representing fractional interests in debt securities or shares of preferred stock, or debt obligations of third parties, including U.S. Treasury securities, securing the holder's obligations
under the purchase contract. The stock purchase contracts may require us to make periodic payments to holders or vice versa and the payments may be unsecured or pre-funded on some basis. The stock
purchase contracts may require holders to secure the holder's obligations in a specified manner that we will file with the SEC in connection with a public offering relating to the stock purchase
contracts.
The
applicable prospectus supplement will describe the terms of any stock purchase contracts. The description in the prospectus supplement will not necessarily be complete, and we will
refer you to the stock purchase contracts and, if applicable, collateral arrangements and depositary arrangements relating to the stock purchase contracts or stock purchase units.
The
applicable prospectus supplement may contain, where applicable, the following information about the stock purchase contracts issued under
it:
-
-
whether the stock purchase contracts obligate the holder or us to purchase or sell, or both purchase and sell, our common stock, preferred
stock or depositary shares, as applicable, and the nature and amount of each of those securities, or the method of determining those amounts;
-
-
whether the stock purchase contracts are to be prepaid or not;
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-
whether the stock purchase contracts are to be settled by delivery, or by reference or linkage to the value, performance or level of our common
stock or preferred stock;
-
-
any acceleration, cancellation, termination or other provisions relating to the settlement of the stock purchase contracts;
-
-
whether the stock purchase contracts will be issued in fully registered or global form; and
-
-
any other terms of the stock purchase contracts.
26
DESCRIPTION OF STOCK PURCHASE UNITS
We may issue stock purchase units comprised of one or more of the other securities described in this prospectus in any combination. Each unit
may also include debt obligations of third parties, such as U.S. Treasury securities. Each unit will be issued so that the holder of the unit is also the holder of each security included in the unit.
Thus, the holder of a unit will have the rights and obligations of a holder of each included security. The unit agreement under which a unit is issued may provide that the securities included in the
unit may not be held or transferred separately, at any time or at any time before a specified date.
The
applicable prospectus supplement will describe the terms of any stock purchase units. The preceding description and any description of stock purchase units in the applicable
prospectus supplement does not purport to be complete and is subject to and is qualified in its entirety by reference to the unit agreement and, if applicable, collateral arrangements and depositary
arrangements relating to such stock purchase units that we will file with the SEC in connection with a public offering of stock purchase units.
The
applicable prospectus supplement may describe:
-
-
the designation and terms of the stock purchase units and of the securities comprising the stock purchase units, including whether and under
what circumstances those securities may be held or transferred separately;
-
-
any provisions for the issuance, payment, settlement, transfer or exchange of the stock purchase units or of the securities comprising the
stock purchase units; and
-
-
whether the stock purchase units will be issued in fully registered or global form.
27
PLAN OF DISTRIBUTION
We may sell the securities being offered hereby in one or more of the following ways from time to
time:
-
-
to underwriters for resale to purchasers;
-
-
directly to purchasers; or
-
-
through agents or dealers to purchasers.
In
addition, we may enter into derivative or hedging transactions with third parties, or sell securities not covered by this prospectus to third parties in privately negotiated
transactions. In connection with such a transaction, the third parties may sell securities covered by and pursuant to this prospectus and an applicable prospectus supplement. If so, the third parties
may use securities borrowed from us or others to settle such sales and may use securities received from us to close out any related short positions. We may also loan or pledge securities covered by
this prospectus and an applicable prospectus supplement to third parties, who may sell the loaned securities or, in an event of default in the case of a pledge, sell the pledged securities pursuant to
this prospectus and the applicable prospectus supplement.
We
will identify the specific plan of distribution, including any underwriters, dealers, agents or direct purchasers and their compensation, in a prospectus supplement.
28
LEGAL MATTERS
Unless otherwise specified in a prospectus supplement accompanying this prospectus, Skadden, Arps, Slate, Meagher & Flom LLP,
Chicago, Illinois, and William R. Kunkel, Executive Vice President and General Counsel of American Equity Investment Life Holding Company, will provide opinions regarding the validity of the
securities. Mr. Kunkel is a full-time employee of our company. Mr. Kunkel owns shares of our common stock, beneficially and as a participant in various employee benefit plans, and owns
options to purchase shares of our common stock. Additional legal matters may be passed upon for us, or any underwriters, dealers or agents, by counsel which we will name in the applicable prospectus
supplement.
EXPERTS
The consolidated financial statements and financial statement schedules of American Equity Investment Life Holding Company and subsidiaries as
of December 31, 2014 and 2013, and for each of the years in the three-year period ended December 31, 2014, and management's assessment of the effectiveness of internal control over
financial reporting as of December 31, 2014 have been incorporated by reference herein in reliance upon the report of KPMG LLP, independent registered public accounting firm,
incorporated by reference herein and upon the authority of said firm as experts in accounting and auditing.
29
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-3 under the Securities Act relating to the securities covered by this
prospectus. This prospectus does not contain all of the information set forth in the registration statement and the exhibits filed as part of the registration statement. For further information with
respect to us and the securities being offered, we refer you to the registration statement and the exhibits filed as a part of the registration statement. Statements contained in the prospectus
concerning the contents of any contract or any other document are not necessarily complete. If a contract or document has been filed as an exhibit to the registration statement or otherwise filed with
the SEC, we refer you to the copy of the contract or document that has been filed. Each statement in this prospectus relating to a contract or document is qualified in all respects by reference to the
contract or document to which it refers. In addition, we file annual, quarterly and periodic reports, proxy statements and other information with the SEC. The public may read and copy any materials we
file with the SEC at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. The SEC maintains an Internet site at http://www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file
electronically with the SEC. Our SEC filings are accessible through the Internet at that website. These reports, proxy statements and other information may also be inspected at the New York Stock
Exchange, 20 Broad Street, New York, New York 10005.
The
SEC allows us to "incorporate by reference" the information we file with them, which means that (i) we can disclose important information to you by referring you to such
information in documents we have filed with the SEC and (ii) such information is considered part of this prospectus. The following documents are incorporated by reference into this prospectus
(other than, in each case, documents or information deemed furnished and not filed in accordance with the SEC rules, including pursuant to Item 2.02 or Item 7.01 on Form 8-K, and
no such information shall be deemed specifically incorporated by reference herein or in any accompanying prospectus supplement):
-
-
Our Annual Report on Form 10-K for the year ended December 31, 2014, filed on February 27, 2015;
-
-
The information specifically incorporated by reference into our Annual Report on Form 10-K for the year ended December 31, 2014
from our definitive Proxy Statement for the 2015 Annual Meeting of Shareholders;
-
-
Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, filed on May 7, 2015;
-
-
Our Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, filed on August 10, 2015;
-
-
Our Current Report on Form 8-K, dated February 24, 2015, filed on February 25, 2015;
-
-
Our Current Report on Form 8-K, dated June 4, 2015, filed on June 16, 2015;
-
-
Our Current Report on Form 8-K, dated August 6, 2015, filed on August 12, 2015; and
-
-
The description of the common stock which is contained in a registration statement on Form 8-A filed on November 26, 2003 (File
No. 001-31911) under the Exchange Act, including any amendment or report filed for the purpose of updating such description.
In
addition, all documents subsequently filed by us pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this prospectus and prior to the
termination of the offering (other than documents or information deemed to have been furnished and not filed in accordance with SEC rules) shall be deemed to be incorporated by reference into this
prospectus. The most recent
30
information
that we file with the SEC automatically updates and supersedes older information. The information contained in any such filing will be deemed to be a part of this prospectus, commencing on
the date on which the document is filed. Nothing in this prospectus shall be deemed to incorporate by reference information furnished to, but not filed with, the SEC.
We
will provide to each person, including any beneficial owner, to whom this prospectus is delivered a copy of any or all of the information that we have incorporated by reference into
this prospectus but not delivered with this prospectus, at no cost to the requestor. To receive a free copy of any of the documents incorporated by reference into this prospectus, other than exhibits,
unless they are specifically incorporated by reference into those documents, call or write:
American
Equity Investment Life Holding Company
6000 Westown Parkway
West Des Moines, IA 50266
Attention: Shareholder Relations
Tel: (515) 221-0002
31
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