Fitch Assigns 'BBB+' IFS Rating to Eagle Life Insurance Company

The following is from Fitch Ratings on July 24:

Fitch Ratings has assigned an Insurer Financial Strength (IFS) of 'BBB+' to Eagle Life Insurance Company (Eagle Life), whose ultimate parent company is American Equity Investment Life Holding Company (AEL).

The Rating Outlook is Stable.

KEY RATING DRIVERS

Fitch considers Eagle Life to be 'core' under the agency's group rating methodology. As such, Eagle Life has been assigned the group rating. Fitch affirmed the ratings of AEL and its insurance operating subsidiaries on July 7.

Eagle Life was formed in 2008 and supports AEL's strategy of expanding distribution of core annuity products into broker-dealers and banks. The company reinsures most of its new business to AEL's lead insurance company, American Equity Investment Life Insurance Company. Eagle Life has no distinct operating profile as it is fully integrated into AEL's infrastructure.

RATING SENSITIVITIES (for AEL organization)

The ability of AEL to achieve a higher IFS rating is somewhat constrained by the company's limited diversity of earnings and cash flow given its heavy focus on fixed indexed annuities. This constraint could be overcome by the following:

--Enhanced capitalization with RBC above 350 percent on a sustained basis;

--Financial leverage below 25 percent;

--Continued stable or improved operating results and investment quality.

The key rating triggers that could result in a downgrade include:

--A reduction in capitalization with RBC below 300 percent;

--Sustained deterioration in operating results such that interest coverage is below 3x;

--Significant increase in lapse/surrender rates;

--Financial leverage above 50 percent.

The key rating triggers that could result in a narrowing of notching between the IDR of AEL and the IFS of AEILIC include:

--A sustainable decline in financial leverage below 30 percent;

--Sustained GAAP EBIT-based interest coverage above 8x.

FULL LIST OF RATING ACTIONS

Fitch has assigned the following rating with a Stable Rating Outlook:

Eagle Life Insurance Company

--IFS 'BBB+'.

Additional information is available on fitchratings.com

Applicable Criteria

Insurance Rating Methodology (pub. 14 Jul 2015)

https://fitchratings.com/creditdesk/reports/ report_frame.cfm?rpt_id=868367

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://fitchratings.com/creditdesk/press_releases/content/ ridf_frame.cfm?pr_id=988473

Solicitation Status

https://fitchratings.com/gws/en/disclosure/ solicitation?pr_id=988473

Endorsement Policy

https://fitchratings.com/jsp/creditdesk/ PolicyRegulation.faces?context=2&detail=31

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