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Court decision on annuities helps American Equity sales


American Equity Investment Life Holding Co. reported record sales of annuities during the third quarter of 2010, “with average monthly sales volumes exceeding $400 million.” A court’s decision on how to classify the insurance product helped the company post such strong results.

In a report to the Securities and Exchange Commission (SEC), the West Des Moines-based company said: “The increase in the pace of sales reflects continued high demand for safe money products as a result of market volatility as well as the relatively lower rates available on competing products such as bank certificates of deposit. In addition, rate reductions by competitors helped drive a higher volume of sales to American Equity. Finally, the demise of Securities and Exchange Commission Rule 151A has lifted an impediment to sales caused by the uncertainty surrounding the impact of that Rule on the index annuity market.”

Rule 151A was an SEC regulation reclassifying fixed indexed annuities as securities and placing them under the agency’s jurisdiction. The rule was challenged in court in 2009 by several companies and the National Association of Insurance Commissioners, and the U.S. Court of Appeals for the D.C. Circuit vacated it last July.

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