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Investing.com -- Fitch Ratings has upgraded American Equity Investment Life (NYSE:AEL) Insurance Company and its subsidiaries to ’A’ from ’A-’ while affirming American National Insurance Company’s ’A’ rating, the agency announced Friday.
The rating agency maintained a stable outlook for all ratings and also affirmed American National Group Inc.’s long-term issuer default rating at ’BBB+’.
American Equity’s upgrade reflects its increased strategic importance to American National Group following Brookfield Wealth Solutions’ acquisition of American Equity in the second quarter of 2024. Fitch now considers American Equity "very important" to the consolidated group, providing a one-notch rating uplift.
American National is shifting its business focus toward predictable liabilities with known cost of funds, including fixed annuities, pension risk transfer, and structured settlements. The company has discontinued selling its own life insurance policies and executed a $3.5 billion coinsurance transaction effective July 2024.
The company is also de-risking by non-renewing homeowners’ policies across its property/casualty business. Fitch ranks both American National’s and American Equity’s company profiles as "moderate."
Investment risk for American National remains in line with peers despite increased exposure to Schedule BA assets and below-investment-grade bonds. The company maintains significant real estate and commercial mortgage loan holdings. American Equity’s investment risk profile is more conservative than peers, though higher-risk asset allocations have increased in recent years.
Capitalization remains strong for both companies. American National scored in the "Extremely Strong" category of Fitch’s Prism capital model based on year-end 2024 data, while American Equity’s risk-adjusted capitalization was "Very Strong" at year-end 2024.
American National reported a financial leverage ratio of 23% at year-end 2024, which increased to 24% through the first quarter of 2025. In June 2025, the company issued $700 million of senior unsecured notes to pay down a portion of outstanding term loans.
Negative rating factors could include financial leverage sustained above 25%, GAAP return on equity below 6%, or a decline in capital strength. Positive rating actions could result from financial leverage below 20%, sustained GAAP return on equity above 10%, or improved capital metrics.
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