Julie LaFollette - Director, Investor Relations John Matovina - President and Chief Executive Officer Ted Johnson - Chief Financial Officer and Treasurer Ronald Grensteiner - President, American Equity Investment Life Insurance Company

Randy Binner - FBR Capital Markets Steven Schwartz - Raymond James & Associates Mark Hughes – SunTrust Robinson Humphrey

Good morning, and welcome to American Equity Investment Life Holding Company's conference call to discuss fourth quarter 2014 earnings. Our earnings release and financial supplement can be found on our website at www.american-equity.com.

Presenting on today's call are John Matovina, Chief Executive Officer; Ted Johnson, Chief Financial Officer; and Ron Grensteiner, President of the Life Company. Some of the comments made during this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act.

There are number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied. Factors that could cause the actual results to differ materially are discussed in detail in our most recent filings with the SEC.

An audio replay will be available on our website shortly after today's call. It is now my pleasure to introduce John Matovina.

Thank you, Julie. Good morning, everyone and welcome to our call this morning.

As Dave Noble, our Executive Chairman and Founder said in our earnings release, fourth quarter financial performance capped another year of record highs for our operating income and the related per share amount. For 2014, we delivered 12% growth in policyholder funds under management, a 14% operating return on average equity and we increased the cushion to our targeted capital management ratio.

We achieved those results while conservatively managing risk and our financial profile. When speaking with our distribution partners, we regularly highlighted our consistent presence in the fixed index annuity marketplace.

American Equity has been a top – in the top three of fixed index annuity sales in 14 of the last 15 years and that market consistency also shows up year-after-year in our financial performance. Over the past ten years, our operating income has compounded at a 16% annual rate while funds under management have grown 17% annually.

This track record makes us one of the best growth stories in the past decade, in the life insurance industry. And looking some of the specifics of the fourth quarter results, our operating earnings of $0.63 per diluted share grew 26% year-over-year and our investment spread widened to 2.92%, up ten basis points from the prior quarter.

However, similar to the third quarter, our operating earnings and investment spread benefited from bond fees and prepayment income ignoring the impact of those non-trendable items, lower rates on new invested assets, offset the benefit we received from reductions in our liability rates. Low interest rates remain a headwind to our spread management and achieving our spread targets maybe more challenging in 2015.

Yields available on new investments have moved lower in the first few weeks of the year and achieving a 4% average yield on new investments is not possible without taking on an uncomfortable level of risk. Fortunately, we continue to have flexibility in managing the liability side of the spread equation.

Renewal rate adjustments have been ongoing for sometime now and new money rates will be reduced by the end of this month. In terms of our spread management flexibility, we’ve got the capacity to reduce the cost of money by approximately 63 basis points if we were to reduce all of our fixed rates caps and participation rates to their guaranteed minimums.

Obviously in action we don’t want to take but it does demonstrate the flexibility that we have to manage the liabilities side of that spread equation. Fourth quarter sales of $1.15 billion pushed our full year sales to just under $4.2 billion, which was essentially flat with last year’s results.

However, fourth quarter sales were the highest quarterly amount in the last three years and give us excellent momentum heading into 2015. Ron’s remarks will include his usual commentary about sales, marketing in the competitive environments.

So now let me turn the call over to Ted for more detailed comments on fourth quarter financial results.

Thank you John. Our operating income of $50 7 million for the fourth quarter was 27% higher than fourth quarter 2013 operating income and our fourth quarter diluted per share amount of $0.63 was 26% higher than the $0.50 per share for fourth quarter 2013.

Normalized operating earnings for the fourth quarter was $0.58 per share removing the effects of certain non-recurring items. Investment spread for the fourth quarter was 2.92%.

The spread result was 10 basis points more than the third quarter spread of 282. Spread performance was impacted by average yield on investments, which increased 6 basis points to 4.95% from 4.89% in the third quarter.

Much of this increase was due to make-whole consent fees from several bond calls, which together with certain prepayment income added 13 basis points to the fourth quarter average yield on invested assets compared to 7 basis points for such items in the third quarter. Cash and short-term investments were at normal operating levels for much of the fourth quarter, and above normal operating levels for much of the third quarter.

The average balance for excess cash and short-term investments for the fourth quarter was $116 million compared to $656 million for the third quarter. Adjusting for the effect of these non-trendable items, the average yield on invested assets for the quarter fell by 7 basis points from the prior quarter as new premiums and portfolio cash flows were invested at rates below the portfolio rate.

The average yield on fixed income securities purchased and commercial mortgage loans funded in the fourth quarter was 4.27%, compared to 4.14%, 4.15% and 4.39% in the third, second and first quarters of 2014. The aggregate cost of money for annuity liabilities was 2.03% in the fourth quarter compared to 2.07% in the third quarter.

This decrease reflected continued reductions in new money and renewal crediting rates. The benefit from over hedging was 5 basis points in both the fourth and third quarters.

Hedging results for the past two quarters are consistent with our historical experience of managing the hedging process toward an over hedged outcome. Certain new money rates were modestly reduced in early October 2014.

Competitive conditions have eased somewhat in the first quarter of 2015 as several of our key competitors have recently reduced the terms of their new product offering. We plan to reduce our new money rates by the end of this month.

We will continue to monitor the competitive environment and make further adjustments to new money rates based upon changes in investing and market conditions. We have been implementing renewal rate adjustments to small groups of policies for some time now.

Policies issued in the fourth quarter of 2011 were adjusted in the fourth quarter of 2014 for the first time since their issue date and certain policies issued in the fourth quarter of 2010 were adjusted in the fourth quarter for the second time since their issue date. In addition, as reported in our first quarter call, during the second quarter we initiated additional renewal rate reductions for policies issued prior to July 20th of 2010.

These rate reductions will occur on policy anniversary date over a 15-month period that began on April 14, 2014, with the majority of the rate reductions completed by May 15th of 2015. Our active management of renewal rates will continue should the low interest – the low investment yields currently available to us persists.

We retired $23.1 million of our 3.5% convertible notes last October and the $32.1 million of our 5.25% convertible notes in December. The total consideration paid for these retirements included $99.4 million of cash and 1.5 million shares of our common stock.

We estimate that these convertible debt retirements reduced our book value per share excluding ALCI by $0.86 per share. A significant portion of this impact was attributable to the retirement of the 5.25% convertible notes.

Several holders of those notes opted to receive the conversion value of their notes entirely in cash and we issued approximately 1.3 million fewer shares to retire those notes than we would have issued under the original conversion terms of the 5.25% notes. While this negatively impacted book value per share, earnings per share in future periods will benefit from reduced shares outstanding.

With the fourth quarter convertible note retirements, we ended the year with just $22.4 million of 3.5% convertible notes outstanding. These notes mature in September 2015 and will be retired at maturity, if not redeemed or repurchased prior to that date.

The holding company has sufficient cash on hand and cash resources to retire the remaining 3.5% convertible note without accessing external sources of capital such as its bank line of credit or dividends from its primary insurance subsidiary. The fourth quarter convertible debt retirements have contributed to the reduction in our S&P adjusted debt-to-capital ratio to 20.2%.

We have substantially met our goal of reducing this ratio which was 31.9% at September 30, 2013 following the $400 million July, 2013 senior notes offering to our 20% target ratio. S&P’s capital model requires additional capital for companies whose adjusted debt-to-capital ratio exceeds 20%.

One element of S&P’s positive outlook on our ratings has been reducing our adjusted debt-to-capital ratio below 20%. Our RBC is 372%, up from 359% at second quarter and 344% at fourth quarter 2013.

We remain comfortably above 300% rating threshold from A. M.

Best and we have adequate regulatory capital to support much larger sales volumes than what we are currently experiencing. With that, I’ll turn the call over to Ron.

Thank you, Ted. Good morning, everyone.

Before I talk about sales and marketing, I did want to speak to the value proposition of our products which was evident again in the fourth quarter of last year. Once again, our policyholders participated in the advancement of the stock market without any risk to their premium or already credited interest.

The average index credit for policy anniversaries in the fourth quarter was 4.74% and the highest was nearly 12%. So for the year, the average index credit was 5.63% and the largest was almost 20%.

Approximately, 41% of 2014’s index credits were 6% or more and 89% or at least 3%. So when you think about our primary responsibility being to provide principal protection and income, it certainly is a pleasant side benefit to get some really nice index credits too like, 5.63% for the year.

That’s pretty amazing when you compare to other safe money alternatives available. Now on to sales and marketing, you’ve heard John talk about the numbers, the fourth quarter was $1.14 billion, which was up 7.2% from the third quarter and also was up from the fourth quarter of last year which came in at $1.09 billion.

So, some nice increases quarter-over-quarter. The fourth quarter was our best quarter of the year and December was our best month of the year in 2014.

December came in at $429.7 million. So, for the year, total, total, $4.18 billion for 2014, which was basically flat compared to 2013, that came in at $4.2 billion.

We did get some very good momentum in the fourth quarter of last year and that’s continuing into the first quarter of this year. Probably the primary reason for our momentum is our competition pulling back.

We’ve seen a lot companies lowering caps, reducing their payout options on a lifetime income benefit riders reducing commissions, reducing premium bonuses, and American Equity has been pretty steady. We are fundamentally priced correctly on our basic chassis.

Our bonuses, our compensation, our lifetime income benefit riders, we haven’t – we think that’s where they need to be and that you already heard both Ted and John talk about the one lever that we are planning on pulling our new business rates that will be changing relatively soon. Our marketing department is very busy out visiting producers and going to different conferences and when they visit with producers who have moved to other companies, they are saying to them, hey, you guys are back in the game.

The fact that the matter is we never left and a lot of it is, other companies are just making their adjustments to where perhaps they should have been in the first place. And also in my personal travels, I’ve heard over and over from different marketing companies, they tell us that we are the most consistent and that we are their best relationship company and that really goes to the cornerstone of our company that if the products are similar, agents do prefer to do business with American Equity.

And, we are not going to compromise our pricing integrity to deal with unrealistic competition. Probably, some of the other reasons for some good momentum is we did have some new initiatives that we introduced in the third quarter.

If you’ll recall, we introduced a gender-based lifetime income benefit rider, we did get some nice traction with that. Our rates for the men improved pretty much across the board, the women rates also had some nice benefits.

So we did become more competitive with some of the companies that really had cornered that market if you will. Also, we introduced our volatility controlled aristocrat strategy that has been very well received as well.

In August, when we introduced that strategy, it was 1% of the premium allocated to FIAs in September, it went to 7.9% and it increased steadily throughout each month. In December, it was 13.7% of the money allocated to FIAs.

The last initiative that we did last August was commission you. The goal of commission you was to recruit some of those producers that we were losing to the competitors where they get more upfront commission but pay less total commission.

The bad news is, is our recruitment really didn’t pick up as we hoped, our fourth quarter recruiting numbers were about the same as all the other quarters in the year. The good news however is, we did win back some producers.

We won back 116 producers who had quit writing business with us when we introduced our current option A and that was just since August, 116 producers and added to the total in our production of about $13 million. So we think, we will continue to see some improvements there.

When we look at the statistics in December, 87% of the applications are sticking with our traditional option A schedule, 10% of the applications shows option U and then the remaining 3% went with the more traditional trail option. Take a look at pending.

Pending has been very strong in the fourth quarter and today as you can imagine. This is – today, it’s very good for this time of the year.

It tops out in December at about 3600 and then dropped down to around 32, 42 by the end of the year. But as always, we always have a January dip each year as the pipeline sort of empties out and then when the holidays are over the producers get back to work.

So in 2015, our January dips down to 2775 pending applications and that was in the middle of January. That compares to our 2014 dip of 2277, so there is about a 500 policies or 500 applications difference in counts.

Today, our pending is at 3147, and that compares to one year ago today, when it was at 2635. So we got another 500 applications differential there.

Turning to Gold – excuse me, want to help send the message to our producers, we want to keep all this great momentum going. So we did introduce a new sales incentive on January 1, which will run through May.

We are basically doubling the marketing money portion of our Gold Eagle program. This is our message to the producers that we want their business year round and not just in the beginning of the year or the end of the year, year round.

Speaking of Gold Eagle we did have a successful program in 2014, considering that we have a overhaul of the program for 2014. Just to refresh your memory, a Gold Eagle producer is a producer that writes at least $1 million on a calendar year for us.

Historically, we have found that our retention of our Gold Eagle producers is about 50% from year-to-year when they write between $1 million and $2 million in sales. But if we can get them to write over $2 million, our retention jumps to over 80%.

So in 2014, we raised the threshold to receive the cash and equity awards from the program. We raised that from $1 million to $2 million to reward our more consistent and the loyal producers and hopefully get some of those producers that we are in the low $1 million to push them to get to that $2 million mark.

The results in 2014, we had 991 Gold Eagle members that wrote $2.64 billion or 65% of our business, that’s the highest statistic ever. And that compares to 2013, in 2013, we actually had 43 more Gold Eagle producers, but this year, our 991 producers wrote $92 million more.

So we had $92 million more in production with 43 fewer Gold Eagle producers. So we think the program was effective.

To drill down a little bit further of our 991 Gold Eagle members, 466 of them were what we call the elites that is those producers that wrote $2 million or more. Those 466 producers averaged $4.1 million in production and those same agents were responsible for 47% of our total production.

So, we then felt it was a very successful program. Okay, turning to eagle life.

Eagle life, hey, we are finally starting to enjoy some good success in Eagle life. Our fourth quarter sales were $54.6 million that drove our total sales for the year at $120.5 million.

December of 2014 was $22.9 million and December eclipsed what we did for the whole year in 2013, 2013 was $21.5 million. So we are very excited about Eagle Life’s success.

Most of the business is coming from a very significant broker dealer that we’ve been working on for years. We’re really getting some nice traction there.

We also have two significant banks that were gaining traction with, but that’s more on the multi-year guaranteed annuity side. We are confident though that we get those banks to convert to fixed index annuities over time.

And so, we feel like, we are off to a really good start The product mix I think is also important when you look at Eagle’s production, 88% of the premium is going into the FIA business and the remaining 12 is going into the MIGA business. I think another factor for our success is really attitude at our company.

We’ve been told for years and years that the broker dealer and the bank channel is different and they are a bit different in certain nuances. But while they maybe different, there are a lot more similarities than our differences to the independent agent channel.

The broker dealer and bank representatives want the exact same thing that an independent agent wants, they want to be able to offer principal protection, guaranteed income. They enjoy relationships with their carriers.

They want excellent service. So, just applying the same strategy that has been successful at American Equity Life for the 19 years and applying that to Eagle life, we feel like we got a bounce in our step and we are going to enjoy some good success at Eagle Life in 2015.

Rounding out my comments, talk a little bit about our client appreciation events. We are going to continue those events in the 2015.

So far, we’ve had a total of 91 events. We’ve entertained nearly 19,000 policy holders and nearly 1200 producers.

We are going to have our 100th event in August. And these events continue to be very beneficial for everybody involved, of course for the policyholders they have a little bit of better sense of who we are and feel comfortable with where their money is.

They are great for their producers in cementing that relationship with us. It’s of course, straight for the company.

But it’s also great for our employees. We’ve had over 100 different employees attend these events regardless of their departments.

It really does their attitude good to see our policyholders person-to-person and see our agents person-to-person. It really drives home how important our business really is.

And so, it’s good for everybody. So in conclusion, we are excited about our future in the FIA market.

Consumers are searching very much so for vehicles that can help them grow their retirement savings safely and then convert those savings into income for life. And we’ve seen growth in the market and we believe there is plenty of room for more growth.

American Equity has been a pioneer and we are still a leader in the FIA market and we expect the value proposition of FIAs to drive our growth for years to come. And with that, that concludes my report and I’ll turn it back to John.

Thank you, Ron and Ted. One addition to Ron’s comments, there he mentioned this incentive program that’s underway this year and just to point out, we have had incentive programs in each of the last two years.

We didn’t kick those things off until March though in 2013 and 2014, so we kicked it off a little bit earlier this year in a little bit different format and we are really expecting to spend the same amount of money on the program this year that we spent in the last two years. So, it’s not an incremental piece of cost.

It’s just a change in the format to actually get the incentive moving a little bit earlier in the year. To wrap up the call, we owe our success to delivering attractive products that meet the retirement savings and retirement income needs of Americans.

We safely manage the retirement savings entrusted to us by our policyholders, enabling them to sleep soundly, knowing that their savings are protected from loss and can provide them with guaranteed income when their working years have ended. Our target market continues to grow as the large baby boomer group enters its retirement years and seek for safety and security that our principal protected fixed index annuity products provide.

The nature of our product and the quality of our company give us confidence that we are well positioned to continue to capitalize on the growing demand for retirement savings and retirement income products. American Equity has always recognized that our success also depends on taking great care of our distribution partners.

Our commitment to consistency and our business practices and providing best-in-class service has created a strong foundation in the independent agent distribution channel. That foundation is the result of the extraordinary commitment that each of our 425 plus employees brings to our office each day.

We are building on that foundation by expanding our distribution into broker dealers and banks and while we believe independent agents will continue to be a significant source of our future fixed index annuity sales, we anticipate meaningful sales in 2015 from new distribution sources. So that ends our prepared remarks and we’ll open the call up to questions.

Hey good morning. Thanks.

I wanted to ask a couple or two or three products-related questions. And I guess, the first one is, just to kind of try and parse out a little bit better for myself and maybe some other observers of where you can grow in the banks and the BDEs and how that happens from both, kind of a registered product and non-registered product perspective.

I think, Eagle Life – if, unless I’m wrong, is more of a registered product initiative I think. And so, there is a $120 million, you said in the year, kind of interested in the outlook for that and what that could do in 2014?

And then in relation to the new products you just offer to the new product set, I think that’s non-registered but also focused on banks and broker dealers. So maybe you can help us kind of understand how you are hitting that new area, banks broker dealers with both non-registered and registered products?

Okay, thanks Randy it’s Ron. Just a point of clarification though, the Eagle Life products are not registered products.

They are insurance products, FIA products, just like the same product line that we have at American Equity Life. So, as we look at Eagle life, really one of the primary differences between Eagle Life and American Equity is Eagle Life is doing business with banks and broker dealers that do their own suitability.

So, those banks and broker dealers will do the suitability as the applications come through Eagle life, the process theoretically is supposed to flow a lot smoother and we’ll do checks on the suitability procedures of those broker dealers over time, but they do the suitability. We think our growth in Eagle Life is just making a name for ourselves.

You’ve been aware an insurance company that focuses exclusively on banks and broker dealers, we don’t do anything else at Eagle life, that’s it. Broker dealers and banks and we are going to provide excellent service and we want to build relationships with them.

The same principles that we’ve used at American Equity for years. So turning to American Equity for a minute, we think we can grow on the bank and the broker dealer channel there as well, before now, we really haven’t had the products to penetrate the broker dealer market at American Equity and that is because our products have been longer-terms, they have had higher surrender charges, they’ve had premium bonuses and those types of things.

So they haven’t really gravitated towards American Equity. So we introduced our choice series here just in the last couple of weeks that will be more appealing to the banks and broker dealers.

There are fewer choices, for example, on the bonus Gold, our top selling product, it has – I think nine or ten different strategies as they can choose from. On the choice series, we’ve neared it down to four, five.

So they don’t like a lot of choices, they like the products to be simpler. There is no premium bonuses, the surrender charges are shorter in duration and because of all those things, we are able to have a little bit higher caps and participation rates.

So, we think, it’s just sticking to our principles of relationships and excellent service and having a product line at American Equity that will fit and then really using our brand at Eagle Life to focus exclusively on banks and broker dealers. Does that make sense, Randy?

That’s very helpful. And so, do you – so you did a 120-ish in full year 2014, any kind of rough indication of what you can do in 2015 in that new area considering, it seems like you had a ton of momentum.

You made up almost all that number in the last month and a half of the year, it seems like?

This is John, Randy. So we are always hesitant about making predictions.

I know that last year, I said, well, if we did $200 million in Eagle, that would probably consider that a good year and $500 million would be an outstanding year and I guess, the best measure – the best thing in sales while we didn’t do the $200 million, but the last quarter of the year was on that $200 million run rate at least. So, we are not going to throw out a number but, certainly, we don’t see us going back and if a couple of these other relationships kick in, easily several hundred million and I think that $500 million perhaps gets inside although that might be a stretch too depending upon how fast the two other relationships we’ve been working on can come online.

Okay, yes, I was hoping to corner you into a number but, I – that’s…

No, no, no. I tried to do as my best dance.

One addition to Ron’s comments, I think, one of the things we’ve cornered is that some of our existing NMOs would – might have the opportunity to have a relationship with the broker dealer and they want to bring them up to their existing channel. So that’s where you are going to find some potential broker dealer sales coming to American Equity as some of our larger NMOs are bringing those opportunities to us.

But, they couldn’t do that to this - up until this point, because American Equity didn’t have a product that that distribution would find suitable.

One other add-on to John’s – some broker dealers don’t want to do suitability for their fixed index premium in which case, Eagle Life was not a good match, but, American Equity does suitability for every obligation that comes to the door. So, those broker dealers that didn’t want to do suitability.

Now, they have a company and a product at American Equity that fits the bill.

Okay, that’s great. And then I want to just try one more on the products, it goes towards something that Ted said in the opening remarks was that, your find in the market should be accomodative for either reprice your liabilities somewhat.

And so, I’m trying – I might take a little more call on that, when you talk about – that to me, I mean, as people are kind of pulling back or maybe really pulling back. Are these major competitors?

Are these the household names or are these some of the kind of newcomers to the market? Any color you can give on that would be helpful, what’s going out there and what their competition was?

Well, Ron made some comments there a little more detailed and Ted, this is John, but, it’s the Allianz in the security benefits that have a cutback on product terms. If I would understand security benefits lifetime income rider is no longer anywhere near – it’s not as attractive as it was at the end of last year, I am not aware so much of other, of rates and commission adjustments that they may have made.

Allianz though has reduced rates, they have reduced commissions and they have reduced premium bonuses. And Ron’s comments, there we don’t see the need to change our bonus structure or terms of our lifetime income rider, but it is time for us to reduce our rates and that will be happening within the next couple of weeks.

All right. Great, thanks so much.

Hey guys, good morning. I find it humorous Ron that the choice series has less choice.

Good point, Steve, and maybe…

That’s, that’s..

We may need to change that.

That’s marketing for you right there. Ted, were you saying, I was trying to track, were you saying that there is, at the end of the year, there was another block of existing business that was going to retched down on renewal?

I think what we said is that there were some blocks of business that we had adjusted for the first time or for the second time in the fourth quarter, some smaller blocks.

Right.

As we’ve been going through typically, three years or after the – we usually – usually after a product has been issued, it’s been – our kind of practice, historical practice of leaving that original crediting rate in place for approximately three years before we adjusted it. So, that’s where you saw one of those blocks being adjusted for the first time and then there was another block that was being adjusted for the second time.

But those are just smaller blocks. And as I said, depending on what market conditions having for investment and yields, we’ll have to be looking back and considering whether or not we need to make further rate adjustments to the existing enforced blocks to be able to manage our cost of money.

Sure, yes. For the current block as it exists with what you already announced for repricing going through their anniversary days and I think you said, everything is done by May 2015.

I think the existing block is – the existing cost of money is around 208, 209, where can that go to by the end of the second quarter? How much further we get down as our prices?

This is John, Steven. The business – as we tabulate cost of money each week when we buy the options, the total block has been coming through, lets say right at 2%.

Okay.

With new money coming through into the 150 to 155 range, that’s looking like, we got a report yesterday that showed all the business with anniversaries or new business that was for the preceding Tuesday through the Wednesday of the week before.

Okay.

So that weeks were the business came in at – right at 2 and 152 or something like that. So, there is some other rate at new money will continue to drive that 2% a little bit lower, but not a lot and there are some renewal rate adjustments still kicking through that are going to edge it down a little bit, but, that’s the next consideration on renewal rates that large block of business that kicked in on April 15 of last year as to whether we have to reduce those further.

There is also - there were some policies, we go back maybe now, that will be hitting their third year or in their third year this year, that we had previously said, we were unlikely to – sort of we said to ourselves, we are unlikely to adjust rates on those policies because they work quite low relative to new money rates. But, with new money rates coming down, again, that probably opens those policies up to a reconsideration of whether those rates should be adjusted as well.

But there again, you are talking about one year’s worth of business, $4 billion worth of premium or account value on $35 billion of total. So, moving those rates somewhat is going to have a modest effect on the overall rate.

Sure, and, John, you announced that new money rates are going to come down, you just said they were coming in at 150, 155. What are you going to be looking at?

Well, that conversation is going to happen with my partners a little bit later this morning, but it’s probably in the 20 to 25 basis point range.

Ron, could you remind us on the marketing front on American Eagle, those are different people, right? And the people reach out to the brokers, can you remind what that looks like?

How many people are there, things like that?

Well, today, we have, Jeff Arisco, who is helping me lead the marketing efforts at Eagle life. He has been with us with, gosh, two or three, maybe four years by now already knows the system well.

And then we had one of our field training specialists that was at American Equity, Tom Hamilton. He has moved over to Eagle Life as well.

Plus, we do want to hire at least two more marketing people at Eagle life. We feel like we’ve got a lot of fertile ground that we want to go out and a lot of marketing companies and broker dealers that are opening up to us and we need to get the word out at Eagle life.

So, for the time being, that are – that’s the people on the ground but what we’ve also done is, we’ve kind of, what we not kind of, we have assimilated the administrative aspects of Eagle Life into American Equity. So, for example, we - prior to now, we had a new business department for Eagle and we had a new business department for American Equity.

And, just recently, we combined those departments to try and be more efficient with our personnel and their workflow and we can still have dedicated people in that department to Eagle and dedicated people to American Equity, but then have the flexibility for them to go from one company to the other, when there is a surge in applications for example. So, we are going to absorb most of the administrative functions of Eagle into American Equity, because, we got the same type of products and the same procedures.

On the marketing front, we are starting to beat that up a little bit to get more boots on the ground, but we are going to rely more on independent wholesalers out in the field that can help us get into those broker dealers and banks. We are telling about the wholesalers.

Yes.

He wants to know about the – how many wholesalers we have in that?

Right.

Okay, well, we have – thanks John.

I think that’s what he wants to know.

Yes, that’s exactly what I wanted to know.

Well, sorry for the longwinded non-response.

It’s all right.

We have about three wholesalers that really focus on the bank channel and we have one wholesaler that really focuses on the broker dealer channel. And, we are probably going to expand that even further.

Some of our independent marketing companies on the American Equity side are really trying to develop the broker dealer and bank community as well and we will extend that opportunity to those organizations that are committed to us.

The independent wholesalers, are they – I mean, they are independent, so to say that there is exclusive to you, it doesn’t make sense, are they exclusive to you?

No.

No, okay. So, you’ve got to offer a product through their networks.

Okay, and then one last one. The two new distributions that you referenced, the two new distribution possibilities, this was a reference to the banks that are doing MIGA?

Correct.

Okay, got it.

We know both of those – we know both of those banks do a substantial amount of FIA premium, so the first thing that we need to do is show them that we know how to service their MIGA business and build that relationship and then once we can get that accomplished, then that will open up the doors for FIAs as well.

Okay, great. Thank you guys.

Yes, thank you. I wonder, you’ve given some very good guidance on what’s going on with spreads and yields.

In times past, you’ve spoken about the time period it might take to get back to your 300 basis point target. I wonder as we think about what’s happening here with 2015, kind of, how much progress do you think you can make and off of what base this 292 in the quarter, you’ve obviously got some one-time help.

How should we think about, kind of, how the full year is going to shape up?

Well, I think – Mark, this is John. We started tempering our comments by getting back to the 3% couple quarters ago as the investment environment in 2014 started to go south in terms of yields.

So, and make comments with that type of investment yields available to us getting back to 3% really wasn’t realistic and that holding our own in the 280 to 285 range was a more realistic goal. And that really hasn’t changed and perhaps it’s even a little tougher, given the fact that yields are even lower these days although in the last few days it come back up.

But the, low yield environment certainly presents a challenge to getting back to the 3% and while we still feel good about the 280-ish range, it’s - that’s not going to happen as long as without further rate adjustments as long as yields stay where they are at these days.

Okay, that is helpful. On the Eagle life, the banks and broker dealers, is the margin dynamic the same for those products?

The margin dynamic in terms of a spread number is lower because those products do not have premium bonuses or the commission or compensation to distribution is in its high. So the spread target to produce a comparable rate of return that American Equity gets in its products is less, and over time, yes, we would be talking about the 300 basis points ratcheting down a little bit because of the mix of American Equity business with the mix of Eagle business.

But, the profit objective in terms of returns is comparable at American Equity.

And then, Ron, how sensitive do you think distribution will be to lower crediting rates as you are considering these adjustments to these blocks. I know the marketers pay attention to those things.

You’ve got a lot of momentum here early in the year. If you do make those adjustments, how much could that impact sales momentum?

Well, the banks in particularly are very sensitive to rate adjustments on that MIGA. They will experience our service and they may take – they may sell Eagle at a lower rate than they can with another company.

But that margin isn’t very big. Our excellent reputation in service only gets us so far and then they will switch.

So we are going to have to be – we have to be prudent and when we set these rates knowing that, if we go too far, we will lose some of that MIGA momentum. But…

How about with your independent distributors?

Pardon me?

How about with your independent distributors?

Not so much. I think our independent agents are not so sensitive to rates and again, the independent guys are selling the FIAs which is not as rate-sensitive as the MIGA is.

So, I’d say the room for having some rate disparity is larger there than it is on the MIGA channel and the banks.

Great, thank you.

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