Ulysses Benjamin Dover

American Equity Investment: Sound Financial Standing, Tremendous Growth

Wow. "AEL also prides itself on adhering to an ethical market code that includes competitiveness and clear and honest explanations of the services that the company provides." American Equity can have as much pride as it wants, but it is hardly adhering to any high ethical standard. AEL is not unlike the old LifeUSA in that it's core equity indexed annuity products are mediocre at best products, unclear to most consumers and sold based on the dial-a-commision concept; that is, the agent sells the highest commission product they can get away with in most cases.

Under new NASD rules, particularly notice 05-50, and an alert:

www.nasd.com/InvestorI...

AELs core products are likely to see a slow down in sales. Further, if the products do in fact need to become SEC/NASD registered products, which is increasingly likely, these products lose much of their profitability due to the fact that they would have to become at least as competitive as variable annuities with living benefits, which currently, equity indexed annuities don't come close to as of yet for performance potential or guarantee return features.

Further, the likelihood of lawsuits against the company grows everyday as consumers realize that they are not making returns exceeding the 10 year treasury with most AEL products, and in many cases are tied into the product via surrender penalties exceeding a decade and annuitization provisions that prohibit movement to a better product in a timely fashion.

Sorry, AEL is a high risk, low return proposition going forward.

Ulysses Benjamin Dover
RealWisconsinNews.com