Related Party Transactions and Outside Related Director Information

American Equity Investment Life Holding Company (AEL)

4/27/2006 Proxy Information

General Agency Commission and Servicing Agreement. We have a General Agency Commission and Servicing Agreement with American Equity Investment Service Company, or the Service Company whereby the Service Company acts as a national supervisory agent with responsibility for paying commissions to our agents. Until September 2, 2005, the Service Company was wholly owned by Mr. Noble, our Chairman, Chief Executive Officer and President. On September 2, 2005, we acquired 100% of the common stock of the Service Company from Mr. Noble in exchange for $1. Immediately prior to the acquisition, Mr. Noble received a distribution of $2.5 million of cash held by the Service Company.

Under the terms of the Servicing Agreement, as amended, the Service Company has paid a portion (ranging from 13.5% to 100%) of the agents’ commissions for certain annuity policies issued during 1997 - 1999 and 2002 - 2004. In return, we have paid and agreed to pay quarterly renewal commissions to the Service Company ranging from .0975% to .375% based upon the account values of the applicable annuity policies issued during those years. No renewal commission is paid unless the underlying policy is in force on the date renewal commissions are calculated pursuant to the terms of the Servicing Agreement.

For all years except 2004, renewal commissions are capped and interest expense computed at a 9% imputed interest rate. The liability to the Service Company for policies issued during 2004 was created on December 31, 2004 and quarterly renewal commissions are payable for five years. The effective interest rate based upon the estimated future renewal commissions for these policies as of December 31, 2005 is 11.2%. Actual renewal commission payments may vary from expected based upon the persistency and account value growth of the covered policies.

During the years ended December 31, 2004 and 2003, the Service Company paid $20.0 million and $14.4 million, respectively, to our agents and we paid renewal commissions to the Service Company of $17.0 million, $28.1 million, and $22.1 million during the years ended December 31, 2005, 2004 and 2003, respectively.

EquiTrust Transactions. We entered into two coinsurance agreements with EquiTrust Life Insurance Company, (“EquiTrust”), an affiliate of Farm Bureau Life Insurance Company , (“Farm Bureau”) covering 70% of certain of our fixed rate and index annuities issued from August 1, 2001 through December 31, 2001, 40% of those contracts for 2002 and 2003 and 20% of those contracts issued from January 1, 2004 to July 31, 2004, when the agreement was suspended by mutual consent of the parties. As a result of the suspension, new business will no longer be ceded to EquiTrust until the parties mutually agree to resume the coinsurance of new business. The business reinsured under these agreements is not eligible for recapture before the expiration of 10 years. As of April 15, 2006, Farm Bureau beneficially owned 5.43% of our Common Stock.

Total annuity deposits ceded were $4.7 million and $202.1 million for the years ended December 31, 2005 and 2004, respectively. Expense allowances received were $2.0 million and $22.6 million for the years ended December 31, 2005 and 2004. The balance due under this agreement to EquiTrust was $27.7 million at December 31, 2005 and $32.0 million at December 31, 2004, and represents the market value of the call options related to the ceded business we hold to fund the index credits and cash due to or from EquiTrust related to the transfer of annuity deposits. We remain liable with respect to policy liabilities ceded to EquiTrust should it fail to meet the obligations assumed by it.

5% Trust Preferred Securities. In October 1999, American Equity Capital Trust II (“Trust II”) issued 97,000 shares of company obligated mandatorily redeemable preferred securities of subsidiary trust, or the 5% trust preferred securities to Iowa Farm Bureau Federation, which owns more than 50% of the voting capital stock of the parent of Farm Bureau. The 5% trust preferred securities have a liquidation value of $100 per share ($97,000,000 in the aggregate). The consideration received by Trust II in connection with the issuance of the 5% trust preferred securities consisted of fixed income trust preferred securities of equal value which were issued by the parent of Farm Bureau. We receive an annual dividend of $4,850,000 on the fixed income trust preferred securities issued by the parent of Farm Bureau, and Trust II pays an equivalent annual dividend on the 5% trust preferred securities.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act generally requires the officers and directors of a reporting company, and persons who own more than ten percent of a registered class of a reporting company’s equity securities, to file reports of beneficial ownership and changes in beneficial ownership with the Securities and Exchange Commission. Based solely on our review of the copies of such reports received by us, or upon written representations received from certain reporting persons, we believe that during 2004, our officers, directors and ten-percent stockholders complied with all Section 16(a) filing requirements applicable to them.