Annuity Seller Launches IPO, Courts Agents

"In our recruitment efforts," the company says in its IPO prospectus, "we emphasize that agents have direct access to our executive officers."

Offering agents direct access to executive officers helps give American Equity an edge over bigger insurers and foreign-owned insurers, the company says.

The company also points out in the IPO prospectus that it was the first company to introduce an index annuity that let policyholders earn returns linked to the Dow Jones Index.

American Equity also introduced one of the first annuities that let policyholders choose between a traditional fixed rate of return or a rate based on a formula that included bond indices as well as stock indices, the company says.

FBL Financial Group Inc., West Des Moines, helped American Equity get into the variable annuity market by agreeing in 1997 to help American Equity develop, market and administer VA products. American Equity shares in 30% of the risks, costs and operating results for VA products sold through the FBL arrangement.

FBL Financial, the parent of Farm Bureau Life Insurance Company, started out owning a 32% stake in American Equity before the IPO took place.

FBL Financial bought 550,000 additional American Equity shares through the IPO, but it says it is letting its ownership interest shrink in percentage terms because of internal and regulatory guidelines that limit the amount of capital it can concentrate in a single investment.