2009-12-24 16:25:56 -

A.M. Best Co. has assigned a debt rating of “bbb-” to $115.8 million 5.25% senior unsecured convertible notes due in 2029 of American Equity Investment Life Holding Company (AEL) (Des Moines, IA) [NYSE.
AEL] which comprises a new convertible debt issue of $52.2 million and an exchange of existing convertible debt of $63.6 million. The assigned outlook is negative. The existing financial strength ratings, issuer credit ratings (ICR) and debt ratings of AEL and its subsidiaries were affirmed on December 18, 2009. (See press release.)

The securities transactions will allow AEL to ladder maturities, potentially buy back company debt at favorable market rates and allow additional financial flexibility.

The affirmation of the existing financial strength ratings, ICR and debt ratings of AEL

was based upon factors including AEL’s prominent position in the indexed annuity market, consistently positive operating results on both a Statutory and GAAP basis, favorable surrender protection for its annuity products and leverage ratios commensurate with their ratings.

The negative outlook highlights the downward credit migration in its investment portfolio, exposure to commercial mortgages given the weak economic environment and challenges related to managing high rates of growth, which is partially mitigated by the use of reinsurance.

For Best’s Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings : .

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology : .



Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com : .



A.M. Best Co.AnalystsFrank Walko,

908-439-2200, ext. 5072 frank.walko@ambest.com : mailto:frank.walko@ambest.com orRaj
Shah, 908-439-2200, ext. 5409 raj.shah@ambest.com : mailto:raj.shah@ambest.com orPublic
RelationsJim Peavy, 908-439-2200, ext. 5644 james.peavy@ambest.com : mailto:james.peavy@ambest.com orRachelle
Morrow, 908-439-2200, ext. 5378 rachelle.morrow@ambest.com : mailto:rachelle.morrow@ambest.com