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SECURITIES AND EXCHANGE COMMISSION
þ | Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
o | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
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Texas | 74-0484030 | |
(State or other jurisdiction of | (I.R.S. Employer Identification No.) | |
incorporation or organization) |
Galveston, Texas 77550-7999
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code)
Title of each class | Name of each exchange on which registered | |
Common Stock, $1.00 par value | NASDAQ Stock Market LLC |
None
(Title of Class)
Large accelerated filero | Accelerated filero | Non-accelerated filerþ(Do not check if a smaller reporting company) | Smaller reporting companyo |
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Exhibit 21.1 | ||||||||
Exhibit 23.1 | ||||||||
Exhibit 31.1 | ||||||||
Exhibit 31.2 | ||||||||
Exhibit 32.1 | ||||||||
Exhibit 32.2 |
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• | Life; |
• | Annuity; |
• | Health; |
• | Property and Casualty; and |
• | Corporate and Other. |
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• | Individual and group life insurance products, including universal life, variable universal life, whole life, and term life; and |
• | Credit life insurance. |
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• | Variable annuities; and |
• | Fixed annuities. |
• | Medicare Supplement; |
• | Supplemental insurance; |
• | Hospital surgical; |
• | Stop-loss; and |
• | Credit disability. |
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• | Auto insurance; |
• | Homeowners insurance; |
• | Agribusiness and commercial insurance; and |
• | Credit property and casualty insurance. |
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• | Credit involuntary unemployment insurance, which pays a limited number of monthly payments on a loan or credit account if the borrower becomes involuntarily unemployed during the term of coverage; and |
• | Credit property insurance, which pays funds to pay off the entire debt on a piece of property serving as collateral for a loan if the property is lost or damaged. |
• | Independent Marketing Group; |
• | Career Sales & Services Division; |
• | Multiple Line; |
• | Health/Senior Age Marketing Division; |
• | Direct Marketing; and |
• | Credit Insurance Division. |
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Primary Means of | ||||||
Segment | Marketing Channels | Companies | Distribution | |||
Life | Independent Marketing Group; Multiple Line; Career Sales & Service Division; Health/Senior Age Marketing Division; Direct Marketing; Credit Insurance Division | American National Insurance Company; Farm Family Life Insurance Company; Garden State Life Insurance Company; Standard Life and Accident Insurance Company; | Independent agents; Employee agents; Dedicated agents; Internet, mail, print and broadcast media; General agents | |||
Annuity | Independent Marketing Group; Multiple Line; Career Sales & Service Division; Health/Senior Age Marketing Division | American National Insurance Company; Standard Life and Accident Insurance Company; Farm Family Life Insurance Company | Independent agents; Employee agents; Exclusive agents | |||
Property and Casualty | Multiple Line; Credit Insurance Division | American National County Mutual Insurance Company The American National Property and Casualty Companies; (ANPAC) ANPAC Louisiana Insurance Company Pacific Property and Casualty Company American National General Insurance Co. American National Lloyds Insurance Co. Farm Family Casualty Insurance Co. United Farm Family Insurance Company | Multiple Line: Exclusive agents and General agents; Credit Insurance Division: Independent agents | |||
Health | Career Sales & Service Division; Health/Senior Age Marketing Division; Credit Insurance Division | American National Insurance Company; Standard Life and Accident Insurance Company; American National Life Insurance Company of Texas; Farm Family Life Insurance Company | Employee agents; Exclusive agents; Independent agents; Managing general underwriters |
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• | A.M. Best Company: A (Excellent)(1) |
• | Standard & Poor’s: AA- (Very Strong)(2) |
(1) | A.M. Best’s active company rating scale consists of thirteen ratings ranging from A++ (Superior) to D (poor). A is the third highest of such thirteen ratings and represents companies’ “excellent ability to meet their ongoing insurance obligations.” | |
(2) | Standard & Poor’s active company rating scale ranges from AAA (Extremely Strong) to CC (Extremely Weak). Plus (+) or Minus (-) modifiers show the relative standing within the categories from AA to CCC. A rating of AA is in the “very strong” category and represents “very strong financial security characteristics, differing only slightly from those rated higher.” AA- is the fourth highest of twenty active company ratings. |
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• | The composition of our Board of Directors, subject to applicable legal and regulatory requirements, and through the Board of Directors, any determination with respect to our business direction and policies, including the appointment and removal of officers; |
• | Any determinations with respect to mergers or other business combinations; |
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• | Our acquisition and disposition of assets; and |
• | Any other matters submitted for stockholder approval. |
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• | reducing new sales of insurance products, annuities, and investment products; |
• | adversely affecting our relationships with our sales force and independent sales intermediaries; |
• | materially increasing the number or amount of policy surrenders and withdrawals by policyholders and contract holders; |
• | requiring us to reduce prices for many of our products and services to remain competitive; |
• | adversely affecting our ability to obtain reinsurance at reasonable prices or at all; and |
• | adversely affecting our relationships with credit counterparties. |
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• | licensing companies and agents to transact business; |
• | calculating the value of assets to determine compliance with statutory requirements; |
• | restricting the size of risks that may be insured under a single contract; |
• | mandating certain insurance benefits; |
• | regulating certain premium rates; |
• | reviewing and approving policy forms and reports of financial condition required to be filed; |
• | regulating unfair trade and claims practices, including imposing restrictions on marketing and sales practices, distribution arrangements, and payment of inducements; |
• | regulating advertising; |
• | protecting privacy; |
• | establishing statutory capital and reserve requirements and solvency standards; |
• | determining methods of accounting; |
• | fixing maximum interest rates on insurance policy loans and minimum rates for guaranteed crediting rates on life insurance policies and annuity contracts; |
• | approving changes in control of insurance companies; |
• | restricting the payment of dividends and other transactions between affiliates; and |
• | regulating the types, amounts and valuation of investments. |
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• | We own and occupy four buildings in League City, Texas, consisting of a total of approximately 298,000 square feet. Approximately one-third of such space is leased to third parties. Our use of these facilities is related primarily to our Life, Health, and Corporate and Other segments. |
• | Our Property and Casualty segment conducts substantial operations through the American National Property and Casualty group of companies in Springfield, Missouri, and the Farm Family companies in Glenmont, New York. The Springfield facility is approximately 232,000 square feet, of which we occupy approximately two-thirds, with the remaining portion leased to third parties. The Glenmont facility is approximately 140,000 square feet, all of which is occupied by us. |
• | We own an approximately 100,000 square foot facility in San Antonio, Texas. We occupy approximately three-fourths of this facility. We use this facility as a remote processing center for customer support and to support other business operations in the event the Galveston home office is evacuated due to catastrophic weather. |
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Dividend Paid | ||||||||||||
High | Low | Per Share | ||||||||||
(per share) | ||||||||||||
2009: | ||||||||||||
Fourth quarter | $ | 120.81 | $ | 81.05 | $ | 0.77 | ||||||
Third quarter | 88.68 | 71.64 | 0.77 | |||||||||
Second quarter | 81.65 | 55.09 | 0.77 | |||||||||
First quarter | 74.59 | 33.74 | 0.77 | |||||||||
$ | 3.08 | |||||||||||
2008: | ||||||||||||
Fourth quarter | $ | 94.40 | $ | 55.00 | $ | 0.77 | ||||||
Third quarter | 111.76 | 81.68 | 0.77 | |||||||||
Second quarter | 119.65 | 97.50 | 0.77 | |||||||||
First quarter | 133.60 | 100.00 | 0.77 | |||||||||
$ | 3.08 |
Equity Compensation Plan Information | ||||||||||||
Number of securities remaining | ||||||||||||
Number of securities to be | Weighted-average exercise | available for future issuance under | ||||||||||
issued upon exercise of outstanding | price outstanding options, | equity compensation plans (excluding | ||||||||||
Plan category | options, warrants and rights | warrants and rights | securities reflected in column (a)) | |||||||||
(a) | (b) | (c) | ||||||||||
Equity compensation plans approved by security holders | — | $ | 108.53 | 2,366,390 | ||||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
Total | — | $ | 108.53 | 2,366,390 | ||||||||
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12/31/04 | 12/31/05 | 12/31/06 | 12/31/07 | 12/31/08 | 12/31/09 | |||||||||||||||||||
ANICO | $ | 100.000 | $ | 115.083 | $ | 115.193 | $ | 125.023 | $ | 82.504 | $ | 129.613 | ||||||||||||
NASDAQ Total | $ | 100.000 | $ | 102.131 | $ | 112.196 | $ | 121.670 | $ | 58.624 | $ | 84.201 | ||||||||||||
NASDAQ Insurance | $ | 100.000 | $ | 112.076 | $ | 126.722 | $ | 126.984 | $ | 117.626 | $ | 122.845 |
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(dollar amounts in millions, except per | Years Ended December 31, | |||||||||||||||||||
share amounts, or unless otherwise noted) | 2009 | 2008 | 2007 | 2006 | 2005 | |||||||||||||||
Revenues | $ | 2,950 | $ | 2,519 | $ | 3,056 | $ | 3,105 | $ | 3,036 | ||||||||||
Income (loss) from continuing operations | 15 | (173 | ) | 245 | 280 | 245 | ||||||||||||||
Net income (loss) | 15 | (154 | ) | 240 | 275 | 238 | ||||||||||||||
Net income (loss) attributed to American National Insurance Company and Subsidiaries | 16 | (154 | ) | 241 | 273 | 236 | ||||||||||||||
Per common share | ||||||||||||||||||||
Income (loss) from continuing operations: | ||||||||||||||||||||
- basic | 0.57 | (6.52 | ) | 9.26 | 10.58 | 9.27 | ||||||||||||||
- diluted | 0.57 | (6.52 | ) | 9.21 | 10.53 | 9.23 | ||||||||||||||
Net income (loss): | ||||||||||||||||||||
- basic | 0.57 | (5.82 | ) | 9.07 | 10.37 | 8.99 | ||||||||||||||
- diluted | 0.57 | (5.82 | ) | 9.02 | 10.32 | 8.96 | ||||||||||||||
Net income (loss) attributed to American National Insurance Company and Subsidiaries: | ||||||||||||||||||||
- basic | 0.59 | (5.82 | ) | 9.09 | 10.32 | 8.91 | ||||||||||||||
- diluted | 0.59 | (5.82 | ) | 9.04 | 10.27 | 8.87 | ||||||||||||||
Cash dividends per share | 3.08 | 3.08 | 3.05 | 3.01 | 2.97 | |||||||||||||||
Selected data | ||||||||||||||||||||
Return on American National Insurance Company and Subsidiaries stockholders’ equity | 11.3 | % | (14.0 | )% | 6.9 | % | 8.2 | % | 4.7 | % | ||||||||||
Dividend payout ratio | 127.2 | % | N/A | 38.1 | % | 38.7 | % | 43.9 | % |
Balances at December 31, | ||||||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Total assets | $ | 20,150 | $ | 18,379 | $ | 18,461 | $ | 17,932 | $ | 17,493 | ||||||||||
Total American National Insurance Company and Subsidiaries stockholders’ equity | 3,460 | 3,134 | 3,737 | 3,576 | 3,378 | |||||||||||||||
Total equity | 3,472 | 3,142 | 3,741 | 3,582 | 3,380 |
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• | net premiums earned on individual term and whole life insurance, property and casualty insurance, credit insurance, health insurance and single premium immediate annuity products; |
• | net investment income; and |
• | insurance and investment product fees and other income, including surrender charges, mortality and expense risk charges, primarily from variable life and annuity, deferred annuities, and universal life insurance policies, management fees and commissions from other investment products, and other administrative charges. |
• | benefits provided to policyholders and contract holders and changes in reserves held for future benefits; |
• | interest credited on account balances; |
• | acquisition and operating expenses, including commissions, marketing expenses, policy and contract servicing costs, overhead and other general expenses that are not capitalized (shown net of deferrals); |
• | amortization of deferred policy acquisition costs and other intangible assets; and |
• | income taxes. |
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• | Established in 2009, we have a project under way to establish a New York life insurance subsidiary. We anticipate that sales will begin through this new company in the first half of 2010. A variety of annuity products will be available for sale once the subsidiary is established, followed in subsequent years by our life products. Initial sales are anticipated through independent and multiple-line agents. Based on competitors’ market experience, we expect annuity deposits from this subsidiary to represent five to ten percent of total deposits received once the market is established. |
• | Sales of traditional life insurance products through our Career Sales and Services Division increased in 2009. This coupled with our focus on policy persistency and expense management allowed us to continue to maintain a stable and profitable block of in force business. |
• | We have repositioned the competitiveness of life products sold through our Independent Marketing Group, particularly at older ages. While this repositioning resulted in a slowing of sales in the last quarter of 2008 and 2009, it has and will help improve the future profitability of these products. |
• | We believe there will be a continuing shift in sales emphasis to utilizing the Internet, endorsed direct mail and innovative product/distribution combinations. Although our direct sales of life insurance products were lower in 2009, we remain committed to traditional life insurance products (term life and whole life) through our Internet and third-party marketing distribution channels. |
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• | Deferred acquisition costs; |
• | Reserves; |
• | Reinsurance recoverable; |
• | Pension and postretirement benefit plans; |
• | Other-than-temporary impairment; |
• | Litigation contingencies; and |
• | Federal income taxes. |
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Increase/(Reduction) in DAC | ||||
Increase in future investment margins of 25 basis points | $ | 26,666 | ||
Decrease in future investment margins of 25 basis points | $ | (31,810 | ) | |
Decrease in future life mortality by 1% | $ | 1,988 | ||
Increase in future life mortality by 1% | $ | (2,045 | ) |
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• | Case reserves — cost of claims that were reported to us but not yet paid, and |
• | Reserves for IBNR — anticipated cost of claims incurred but not reported. IBNR reserves include a provision for potential development on case reserves, losses on claims currently closed which may reopen in the future and claims, which have been incurred but not yet, reported. |
December 31, 2009 | December 31, 2008 | |||||||||||||||||||||||
Gross | Ceded | Net | Gross | Ceded | Net | |||||||||||||||||||
Case | $ | 491,163 | $ | 11,639 | $ | 479,524 | $ | 475,738 | $ | 47,888 | $ | 427,850 | ||||||||||||
IBNR | $ | 425,827 | $ | 48,693 | $ | 377,134 | $ | 437,275 | $ | 17,265 | $ | 420,010 | ||||||||||||
Total | $ | 916,990 | $ | 60,332 | $ | 856,658 | $ | 913,013 | $ | 65,153 | $ | 847,860 | ||||||||||||
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• | Initial Expected Loss Ratio method: This method calculates an estimate of ultimate losses by applying an estimated loss ratio to an estimate of ultimate earned premium for each accident year. This method is appropriate for classes of business where the actual paid or reported loss experience is not yet mature enough to override initial expectations of the ultimate loss ratios. |
• | Bornhuetter Ferguson: This method uses as a starting point an assumed initial expected loss ratio method and blends in the loss ratio implied by the claims experience to date by using loss development patterns based on our own historical experience. This method is generally appropriate where there are few reported claims and a relatively less stable pattern of reported losses. |
• | Loss or Expense Development (Chain Ladder): This method uses actual loss or defense and cost containment expense data and the historical development profiles on older accident periods to project more recent, less developed periods to their ultimate position. This method is appropriate when there is a relatively stable pattern of loss and expense emergence and a relatively large number of reported claims. |
• | Ratio of Paid Defense and Cost Containment Expense to Paid Loss Development: This method uses the ratio of paid defense and cost containment expense to paid loss data historical development profiles on older accident periods to project more recent, less developed periods to their ultimate position. In this method, an ultimate ratio of paid defense and cost containment expense to paid loss is selected for each accident period. The selected paid defense and cost containment expense to paid loss ratio is then applied to the selected ultimate loss for each accident period to estimate the ultimate defense and cost containment expense. Paid defense and cost containment expense is then subtracted from the ultimate defense and cost containment expense to calculate the unpaid defense and cost containment expense for that accident period. |
• | Calendar Year Paid Adjusting and Other Expense to Paid Loss: This method uses the ratio of prior calendar years’ paid expense to paid loss to project ultimate loss adjustment expenses for adjusting and other expense. The key to this method is the selection of the paid expense to paid loss ratio based on prior calendar years’ activity. A percentage of the selected ratio is applied to the case reserves (depending on the line of insurance) and 100% to the indicated IBNR reserves. These ratios assume a percentage of the expense is incurred when a claim is opened and the remaining percentage is paid throughout the claim’s life. |
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• | The selected loss ratio used in the initial expected loss ratio method and Bornhuetter Ferguson method for each accident year; |
• | The expected loss development profiles; |
• | A consistent claims handling process; |
• | A consistent payout pattern; |
• | No unusual growth patterns; |
• | No major shift in liability limits distribution on liability policies; and |
• | No significant prospective changes in workers’ compensation laws that would significantly affect future payouts. |
Change in Reporting Pattern | ||||||||
5 Day Speed Up | 5 Day Slow Down | |||||||
Personal Auto | $ | (2,499 | ) | $ | 1,171 | |||
Homeowner | $ | (913 | ) | $ | 822 | |||
Agribusiness | $ | (616 | ) | $ | 2,749 | |||
Commercial auto | $ | (1,476 | ) | $ | 4,857 | |||
Other | $ | (2,219 | ) | $ | 5,990 |
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Years Ended December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Used for Net Benefit | Used for Benefit | Used for Net Benefit | Used for Benefit | |||||||||||||
Cost in Fiscal Year | Obligations as of | Cost in Fiscal Year | Obligations as of | |||||||||||||
1/1/2009 to 12/31/2009 | 12/31/2009 | 1/1/2008 to 12/31/2008 | 12/31/2008 | |||||||||||||
Discount rate | 6.17 | % | 5.73 | % | 6.10 | % | 6.17 | % | ||||||||
Rate of compensation increase | 4.20 | % | 4.20 | % | 4.20 | % | 4.20 | % | ||||||||
Long-term rate return | 7.65 | % | 7.65 | % | 7.65 | % | 7.65 | % |
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Years Ended December 31, | Change Over Prior Years | |||||||||||||||||||||||||||
2009 | 2008 | 2007 | 2009 | 2008 | ||||||||||||||||||||||||
amount | percentage | amount | percentage | |||||||||||||||||||||||||
Premiums and other revenues: | ||||||||||||||||||||||||||||
Premiums | $ | 1,974,024 | $ | 1,888,495 | $ | 1,999,623 | $ | 85,529 | 4.5 | $ | (111,128 | ) | (5.6 | ) | ||||||||||||||
Other policy revenues | 179,504 | 174,899 | 155,230 | 4,605 | 2.6 | 19,669 | 12.7 | |||||||||||||||||||||
Net investment income | 840,105 | 796,177 | 812,969 | 43,928 | 5.5 | (16,792 | ) | (2.1 | ) | |||||||||||||||||||
Realized investments gains (losses), net | (75,697 | ) | (379,709 | ) | 41,027 | 304,012 | (80.1 | ) | (420,736 | ) | (1,025.5 | ) | ||||||||||||||||
Other income | 31,843 | 38,779 | 47,224 | (6,936 | ) | (17.9 | ) | (8,445 | ) | (17.9 | ) | |||||||||||||||||
Total revenues | 2,949,779 | 2,518,641 | 3,056,073 | 431,138 | 17.1 | (537,432 | ) | (17.6 | ) | |||||||||||||||||||
Benefits, losses and expenses: | ||||||||||||||||||||||||||||
Policy benefits | 1,709,899 | 1,601,854 | 1,551,698 | 108,045 | 6.7 | 50,156 | 3.2 | |||||||||||||||||||||
Interest credited to policy account balances | 370,563 | 299,833 | 295,894 | 70,730 | 23.6 | 3,939 | 1.3 | |||||||||||||||||||||
Commissions | 459,943 | 475,345 | 456,537 | (15,402 | ) | (3.2 | ) | 18,808 | 4.1 | |||||||||||||||||||
Other operating costs and expenses | 485,409 | 508,800 | 465,140 | (23,391 | ) | (4.6 | ) | 43,660 | 9.4 | |||||||||||||||||||
Change in deferred policy acquisition costs | (63,611 | ) | (67,439 | ) | (60,442 | ) | 3,828 | (5.7 | ) | (6,997 | ) | 11.6 | ||||||||||||||||
Total benefits and expenses | 2,962,203 | 2,818,393 | 2,708,827 | 143,810 | 5.1 | 109,566 | 4.0 | |||||||||||||||||||||
Income (loss) before other items and federal income taxes | $ | (12,424 | ) | $ | (299,752 | ) | $ | 347,246 | $ | 287,328 | (95.9 | ) | $ | (646,998 | ) | (186.3 | ) | |||||||||||
• | Decreased realized investment losses and increased investment income; and |
• | Increase in immediate annuity premiums. |
• | Investment losses realized during 2008, including $367.0 million in other-than-temporary impairment write-downs; |
• | Lower sales of our single premium immediate annuity products, caused by the drop in interest rates, which made the product less desirable; and |
• | The declines were partially offset by other policy revenues arising primarily from mortality charges and fees on the in-force block of universal life policies 2008 witnessed a continuation of increased sales of universal life products experienced in 2007. |
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• | Increased policy benefits in annuities due to strong single premium immediate annuity sales resulting in an increase of the related reserve balance; |
• | Increased interest credited to policy account balances due to an 18.2% increase in average account balances; and |
• | These increases were partially offset by the decrease in other operating costs due to non-recurring litigation costs and costs for preparing for compliance with SEC and Sarbanes-Oxley requirements in 2008. |
• | The impact of increased catastrophe losses in our Property and Casualty business; and |
• | Additional operating expenses incurred due to non-recurring litigation costs and costs for preparing for compliance with SEC and Sarbanes-Oxley requirements. |
• | An increase in benefits paid on the growing block of annuity business. |
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Years Ended December 31, | Change Over Prior Years | |||||||||||||||||||||||||||
2009 | 2008 | 2007 | 2009 | 2008 | ||||||||||||||||||||||||
amount | percentage | amount | percentage | |||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||
Premiums | $ | 284,530 | $ | 299,338 | $ | 315,893 | $ | (14,808 | ) | (4.9 | ) | $ | (16,555 | ) | (5.2 | ) | ||||||||||||
Other policy revenues | 164,748 | 154,984 | 130,744 | 9,764 | 6.3 | 24,240 | 18.5 | |||||||||||||||||||||
Net investment income | 222,611 | 226,643 | 229,092 | (4,032 | ) | (1.8 | ) | (2,449 | ) | (1.1 | ) | |||||||||||||||||
Other income | 2,720 | 3,767 | 3,967 | (1,047 | ) | (27.8 | ) | (200 | ) | (5.0 | ) | |||||||||||||||||
Total revenues | 674,609 | 684,732 | 679,696 | (10,123 | ) | (1.5 | ) | 5,036 | 0.7 | |||||||||||||||||||
Benefits, losses and expenses: | ||||||||||||||||||||||||||||
Policy benefits | 297,719 | 296,078 | 273,750 | 1,641 | 0.6 | 22,328 | 8.2 | |||||||||||||||||||||
Interest credited to policy account balances | 58,983 | 62,221 | 63,289 | (3,238 | ) | (5.2 | ) | (1,068 | ) | (1.7 | ) | |||||||||||||||||
Commissions | 91,968 | 126,813 | 141,517 | (34,845 | ) | (27.5 | ) | (14,704 | ) | (10.4 | ) | |||||||||||||||||
Other operating costs and expenses | 185,048 | 222,908 | 200,361 | (37,860 | ) | (17.0 | ) | 22,547 | 11.3 | |||||||||||||||||||
Change in deferred policy acquisition costs | 1,536 | (42,103 | ) | (57,666 | ) | 43,639 | (103.6 | ) | 15,563 | (27.0 | ) | |||||||||||||||||
Total benefits, losses and expenses | 635,254 | 665,917 | 621,251 | (30,663 | ) | (4.6 | ) | 44,666 | 7.2 | |||||||||||||||||||
Income (loss) before other items and federal income taxes | $ | 39,355 | $ | 18,815 | $ | 58,445 | $ | 20,540 | 109.2 | $ | (39,630 | ) | (67.8 | ) | ||||||||||||||
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Years Ended December 31, | Change Over Prior Years | |||||||||||||||||||||||||||
2009 | 2008 | 2007 | 2009 | 2008 | ||||||||||||||||||||||||
amount | percentage | amount | percentage | |||||||||||||||||||||||||
Acquisition cost capitalized | $ | 77,162 | $ | 129,031 | $ | 144,936 | $ | (51,869 | ) | 40.2 | $ | (15,905 | ) | 11.0 | ||||||||||||||
Amortization of DAC | (78,698 | ) | (86,928 | ) | (87,270 | ) | 8,230 | 9.5 | 342 | 0.4 | ||||||||||||||||||
Change in deferred policy acquisition costs | $ | (1,536 | ) | $ | 42,103 | $ | 57,666 | $ | (43,639 | ) | 103.6 | $ | (15,563 | ) | 27.0 | |||||||||||||
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Reserves | Premiums | |||||||||||||||||||||||
Years Ended December 31, | Years Ended December 31, | |||||||||||||||||||||||
2009 | 2008 | 2007 | 2009 | 2008 | 2007 | |||||||||||||||||||
Reinsurance assumed | $ | 19,514 | $ | 25,553 | $ | 28,413 | $ | 4,512 | $ | 8,460 | $ | 10,355 | ||||||||||||
Reinsurance ceded | (160,934 | ) | (147,523 | ) | (124,316 | ) | (74,577 | ) | (80,826 | ) | (66,068 | ) | ||||||||||||
Total | $ | (141,420 | ) | $ | (121,970 | ) | $ | (95,903 | ) | $ | (70,065 | ) | $ | (72,366 | ) | $ | (55,713 | ) | ||||||
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Percentage of | ||||||||||
Reinsurer | A.M. Best Rating | Ceded Premiums | Total Gross Premium | |||||||
Swiss Re Life and Health of America | A | $ | 22,476 | 6.3 | % | |||||
Transamerica Life Insurance Company | A | 10,728 | 3.0 | % | ||||||
Munich | A+ | 10,782 | 3.0 | % | ||||||
General Re Life Corporation | A++ | 8,175 | 2.3 | % | ||||||
Revios/SCOR | A- | 6,560 | 1.9 | % | ||||||
Canada Life Reinsurance | A+ | 5,000 | 1.4 | % | ||||||
Other Reinsurers with no single company greater than 1% of the total | 7,323 | 2.1 | % | |||||||
Total life reinsurance ceded | $ | 71,044 | 20.0 | % | ||||||
Years Ended December 31, | Change Over Prior Years | |||||||||||||||||||||||||||
2009 | 2008 | 2007 | 2009 | 2008 | ||||||||||||||||||||||||
amount | percentage | amount | percentage | |||||||||||||||||||||||||
Life insurance in-force: | ||||||||||||||||||||||||||||
Traditional life | $ | 45,229,407 | $ | 45,007,657 | $ | 44,538,506 | $ | 221,750 | 0.5 | $ | 469,151 | 1.1 | ||||||||||||||||
Interest sensitive life | 24,218,843 | 24,863,199 | 24,144,561 | (644,356 | ) | (2.6 | ) | 718,638 | 3.0 | |||||||||||||||||||
Total life insurance in-force | $ | 69,448,250 | $ | 69,870,856 | $ | 68,683,067 | $ | (422,606 | ) | (0.6 | ) | $ | 1,187,789 | 1.7 | ||||||||||||||
Years Ended December 31, | Change Over Prior Years | |||||||||||||||||||||||||||
2009 | 2008 | 2007 | 2009 | 2008 | ||||||||||||||||||||||||
amount | percentage | amount | percentage | |||||||||||||||||||||||||
Number of policies: | ||||||||||||||||||||||||||||
Traditional life | 2,347,423 | 2,451,748 | 2,606,012 | (104,325 | ) | (4.3 | ) | (154,264 | ) | (5.9 | ) | |||||||||||||||||
Interest sensitive life | 174,738 | 175,553 | 176,628 | (815 | ) | (0.5 | ) | (1,075 | ) | (0.6 | ) | |||||||||||||||||
Total number of policies | 2,522,161 | 2,627,301 | 2,782,640 | (105,140 | ) | (4.0 | ) | (155,339 | ) | (5.6 | ) | |||||||||||||||||
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Years Ended December 31, | Change Over Prior Years | |||||||||||||||||||||||||||
2009 | 2008 | 2007 | 2009 | 2008 | ||||||||||||||||||||||||
amount | percentage | amount | percentage | |||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||
Premiums | $ | 220,284 | $ | 116,248 | $ | 222,748 | $ | 104,036 | 89.5 | $ | (106,500 | ) | (47.8 | ) | ||||||||||||||
Other policy revenues | 14,756 | 19,915 | 24,486 | (5,159 | ) | (25.9 | ) | (4,571 | ) | (18.7 | ) | |||||||||||||||||
Net investment income | 449,035 | 374,023 | 364,607 | 75,012 | 20.1 | 9,416 | 2.6 | |||||||||||||||||||||
Other income | (3,870 | ) | (5,718 | ) | 345 | 1,848 | (32.3 | ) | (6,063 | ) | (1,757.4 | ) | ||||||||||||||||
Total revenues | 680,205 | 504,468 | 612,186 | 175,737 | 34.8 | (107,718 | ) | (17.6 | ) | |||||||||||||||||||
Benefits, losses and expenses: | ||||||||||||||||||||||||||||
Policy benefits | 249,709 | 142,867 | 249,878 | 106,842 | 74.8 | (107,011 | ) | (42.8 | ) | |||||||||||||||||||
Interest credited to policy account balances | 311,580 | 237,612 | 232,605 | 73,968 | 31.1 | 5,007 | 2.2 | |||||||||||||||||||||
Commissions | 107,053 | 79,213 | 58,635 | 27,840 | 35.1 | 20,578 | 35.1 | |||||||||||||||||||||
Other operating costs and expenses | 59,254 | 45,491 | 35,030 | 13,763 | 30.3 | 10,461 | 29.9 | |||||||||||||||||||||
Change in deferred policy acquisition costs | (62,013 | ) | (20,690 | ) | (911 | ) | (41,323 | ) | 199.7 | (19,779 | ) | 2,171.1 | ||||||||||||||||
Total benefits, losses and expenses | 665,583 | 484,493 | 575,237 | 181,090 | 37.4 | (90,744 | ) | (15.8 | ) | |||||||||||||||||||
Income (loss) before other items and federal income taxes | $ | 14,622 | $ | 19,975 | $ | 36,949 | $ | (5,353 | ) | (26.8 | ) | $ | (16,974 | ) | (45.9 | ) | ||||||||||||
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Years Ended December 31, | Change Over Prior Years | |||||||||||||||||||||||||||
2009 | 2008 | 2007 | 2009 | 2008 | ||||||||||||||||||||||||
amount | percentage | amount | percentage | |||||||||||||||||||||||||
Fixed deferred annuity | $ | 1,715,871 | $ | 1,573,237 | $ | 789,012 | $ | 142,634 | 9.1 | $ | 784,225 | 99.4 | ||||||||||||||||
Equity indexed deferred annuity | 239,664 | 85,334 | 90,327 | 154,330 | 180.9 | (4,993 | ) | (5.5 | ) | |||||||||||||||||||
Single premium immediate annuity | 227,937 | 121,952 | 227,617 | 105,985 | 86.9 | (105,665 | ) | (46.4 | ) | |||||||||||||||||||
Variable deferred annuity | 99,429 | 103,233 | 119,507 | (3,804 | ) | (3.7 | ) | (16,274 | ) | (13.6 | ) | |||||||||||||||||
Total | 2,282,901 | 1,883,756 | 1,226,463 | 399,145 | 21.2 | 657,293 | 53.6 | |||||||||||||||||||||
Less: policy deposits | (2,062,617 | ) | (1,767,508 | ) | (1,003,715 | ) | (295,109 | ) | 16.7 | (763,793 | ) | 76.1 | ||||||||||||||||
Total earned premiums | $ | 220,284 | $ | 116,248 | $ | 222,748 | $ | 104,036 | 89.5 | $ | (106,500 | ) | (47.8 | ) | ||||||||||||||
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Years Ended December 31, | Change Over Prior Years | |||||||||||||||||||
2009 | 2008 | 2007 | 2009 | 2008 | ||||||||||||||||
Derivative gain/(loss) included in net investment income | $ | 5,380 | $ | (24,400 | ) | $ | (141 | ) | $ | 29,780 | $ | (24,259 | ) | |||||||
Embedded derivative gain/(loss) included in interest credited | $ | (8,138 | ) | $ | 23,184 | $ | 434 | $ | (31,322 | ) | $ | 22,750 | ||||||||
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Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Fixed deferred annuity | ||||||||||||
Interest spread (excluding first year sales inducements): | ||||||||||||
Dollar amount | $ | 113,461 | $ | 111,545 | $ | 108,668 | ||||||
Annualized rate | 1.51 | % | 1.70 | % | 1.76 | % | ||||||
Variable deferred annuity | ||||||||||||
Mortality and expense charge: | ||||||||||||
Dollar amount | $ | 4,096 | $ | 4,581 | $ | 4,498 | ||||||
Annualized rate | 1.15 | % | 1.24 | % | 1.18 | % | ||||||
Single premium immediate annuity (SPIA) | ||||||||||||
Gross interest and mortality margins: | ||||||||||||
Dollar amount | $ | 5,377 | $ | 2,981 | $ | 5,454 | ||||||
Annualized rate | 0.71 | % | 0.43 | % | 0.87 | % | ||||||
Total annuity: | ||||||||||||
Gross interest margins including SPIA mortality: | ||||||||||||
Dollar amount | $ | 122,934 | $ | 119,107 | $ | 118,620 | ||||||
Annualized rate | 1.46 | % | 1.65 | % | 1.70 | % |
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Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Fixed deferred annuity: | ||||||||||||
Account value, beginning of period | $ | 6,918,365 | $ | 6,210,456 | $ | 6,121,475 | ||||||
Net inflows/(outflows) | 930,417 | 487,410 | (123,195 | ) | ||||||||
Fees | (10,592 | ) | (15,363 | ) | (19,899 | ) | ||||||
Interest credited | 313,175 | 235,862 | 232,075 | |||||||||
Account value, end of period | $ | 8,151,365 | $ | 6,918,365 | $ | 6,210,456 | ||||||
Variable deferred annuity: | ||||||||||||
Account value, beginning of period | $ | 309,011 | $ | 429,505 | $ | 331,971 | ||||||
Net inflows | 20,452 | 24,364 | 66,571 | |||||||||
Fees | (4,096 | ) | (4,582 | ) | (4,498 | ) | ||||||
Change in market value and other | 75,257 | (140,276 | ) | 35,461 | ||||||||
Account value, end of period | $ | 400,624 | $ | 309,011 | $ | 429,505 | ||||||
Single premium immediate annuity: | ||||||||||||
Reserve, beginning of period | $ | 701,141 | $ | 693,137 | $ | 557,866 | ||||||
Net inflows/(outflows) | 84,785 | (26,330 | ) | 107,861 | ||||||||
Interest and mortality | 34,369 | 34,334 | 27,410 | |||||||||
Reserve, end of period | $ | 820,295 | $ | 701,141 | $ | 693,137 | ||||||
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Years Ended December 31, | Change Over Prior Years | |||||||||||||||||||||||||||
2009 | 2008 | 2007 | 2009 | 2008 | ||||||||||||||||||||||||
amount | percentage | amount | percentage | |||||||||||||||||||||||||
Acquisition cost capitalized | $ | 126,768 | $ | 96,544 | $ | 71,723 | $ | 30,224 | 31.3 | $ | 24,821 | 34.6 | ||||||||||||||||
Amortization of DAC | (64,755 | ) | (75,854 | ) | (70,812 | ) | 11,099 | (14.6 | ) | (5,042 | ) | 7.1 | ||||||||||||||||
Change in deferred policy acquisition costs | $ | 62,013 | $ | 20,690 | $ | 911 | $ | 41,323 | 199.7 | $ | 19,779 | 2,171.1 | ||||||||||||||||
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Years Ended December 31, | Change Over Prior Years | |||||||||||||||||||||||||||
2009 | 2008 | 2007 | 2009 | 2008 | ||||||||||||||||||||||||
amount | percentage | amount | percentage | |||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||
Premiums | $ | 309,701 | $ | 290,883 | $ | 283,765 | $ | 18,818 | 6.5 | $ | 7,118 | 2.5 | ||||||||||||||||
Net investment income | 15,992 | 16,566 | 16,710 | (574 | ) | (3.5 | ) | (144 | ) | (0.9 | ) | |||||||||||||||||
Other income | 10,382 | 13,252 | 13,048 | (2,870 | ) | (21.7 | ) | 204 | 1.6 | |||||||||||||||||||
Total premiums and other revenues | 336,075 | 320,701 | 313,523 | 15,374 | 4.8 | 7,178 | 2.3 | |||||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||||||
Policy benefits | 239,407 | 223,055 | 209,840 | 16,352 | 7.3 | 13,215 | 6.3 | |||||||||||||||||||||
Commissions | 51,717 | 43,219 | 39,342 | 8,498 | 19.7 | 3,877 | 9.9 | |||||||||||||||||||||
Other operating costs and expenses | 62,134 | 69,961 | 57,975 | (7,827 | ) | (11.2 | ) | 11,986 | 20.7 | |||||||||||||||||||
Change in deferred policy acquisition costs | 5,017 | 5,023 | 5,774 | (6 | ) | (0.1 | ) | (751 | ) | (13.0 | ) | |||||||||||||||||
Total benefits and expenses | 358,275 | 341,258 | 312,931 | 17,017 | 5.0 | 28,327 | 9.1 | |||||||||||||||||||||
Income (loss) before other items and federal income taxes | $ | (22,200 | ) | $ | (20,557 | ) | $ | 592 | $ | (1,643 | ) | 8.0 | $ | (21,149 | ) | (3,572.5 | ) | |||||||||||
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Year Ended December 31, 2009 | Year Ended December 31, 2008 | Year Ended December 31, 2007 | ||||||||||||||||||||||
Premiums | Premiums | Premiums | ||||||||||||||||||||||
dollars | percentage | dollars | percentage | dollars | percentage | |||||||||||||||||||
Medicare Supplement | $ | 123,102 | 39.7 | % | $ | 120,757 | 41.5 | % | $ | 114,283 | 40.3 | % | ||||||||||||
Managing general underwriter | 34,015 | 11.0 | % | 13,160 | 4.5 | % | 15,054 | 5.3 | % | |||||||||||||||
Group | 33,484 | 10.8 | % | 33,758 | 11.7 | % | 33,492 | 11.8 | % | |||||||||||||||
Major medical | 29,580 | 9.6 | % | 38,951 | 13.4 | % | 49,313 | 17.4 | % | |||||||||||||||
Hospital surgical | 51,136 | 16.5 | % | 39,340 | 13.5 | % | 24,228 | 8.5 | % | |||||||||||||||
Long-term care | 1,970 | 0.6 | % | 2,719 | 0.9 | % | 3,437 | 1.2 | % | |||||||||||||||
Supplemental insurance | 8,146 | 2.6 | % | 8,213 | 2.8 | % | 8,574 | 3.0 | % | |||||||||||||||
Credit accident and health | 19,627 | 6.3 | % | 24,676 | 8.5 | % | 25,471 | 9.0 | % | |||||||||||||||
All other | 8,641 | 2.9 | % | 9,309 | 3.2 | % | 9,913 | 3.5 | % | |||||||||||||||
Total | $ | 309,701 | 100.0 | % | $ | 290,883 | �� | 100.0 | % | $ | 283,765 | 100.0 | % | |||||||||||
As of December 31, 2009 | As of December 31, 2008 | As of December 31, 2007 | ||||||||||||||||||||||
Certificates/Policies | Certificates/Policies | Certificates/Policies | ||||||||||||||||||||||
number | percentage | number | percentage | number | percentage | |||||||||||||||||||
Medicare Supplement | 58,627 | 8.9 | % | 60,264 | 8.2 | % | 57,162 | 7.5 | % | |||||||||||||||
Managing general underwriter | 81,571 | 12.4 | % | 124,829 | 17.0 | % | 139,683 | 18.4 | % | |||||||||||||||
Group | 23,890 | 3.6 | % | 21,409 | 2.9 | % | 20,882 | 2.8 | % | |||||||||||||||
Major medical | 3,453 | 0.5 | % | 4,884 | 0.7 | % | 7,509 | 1.0 | % | |||||||||||||||
Hospital surgical | 14,915 | 2.3 | % | 15,468 | 2.1 | % | 10,526 | 1.4 | % | |||||||||||||||
Long-term care | 1,919 | 0.3 | % | 2,055 | 0.3 | % | 2,229 | 0.3 | % | |||||||||||||||
Supplemental insurance | 44,138 | 6.7 | % | 47,133 | 6.4 | % | 51,409 | 6.8 | % | |||||||||||||||
Credit accident and health | 309,695 | 47.2 | % | 323,158 | 44.0 | % | 319,285 | 42.2 | % | |||||||||||||||
All other | 118,061 | 18.1 | % | 135,921 | 18.4 | % | 148,780 | 19.6 | % | |||||||||||||||
Total | 656,269 | 100.0 | % | 735,121 | 100.0 | % | 757,465 | 100.0 | % | |||||||||||||||
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Years Ended December 31, | Change Over Prior Years | |||||||||||||||||||||||||||
2009 | 2008 | 2007 | 2009 | 2008 | ||||||||||||||||||||||||
amount | percentage | amount | percentage | |||||||||||||||||||||||||
Acquisition cost capitalized | $ | 16,729 | $ | 22,762 | $ | 18,735 | $ | (6,033 | ) | (26.5 | ) | $ | 4,027 | 21.5 | ||||||||||||||
Amortization of DAC | (21,746 | ) | (27,785 | ) | (24,509 | ) | 6,039 | (21.7 | ) | (3,276 | ) | 13.4 | ||||||||||||||||
Total change in DAC | $ | (5,017 | ) | $ | (5,023 | ) | $ | (5,774 | ) | $ | 6 | (0.1 | ) | $ | 751 | (13.0 | ) | |||||||||||
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A.M. Best | Ceded | Percentage of | ||||||||
Reinsurer | Rating | Premiums | Total Gross Premium | |||||||
Motors Insurance Corp. | A- | $ | 45,574 | 10.4 | % | |||||
Munich American Reinsurance Company | A+ | 15,437 | 3.5 | % | ||||||
Transatlantic Re | A | 14,458 | 3.3 | % | ||||||
United States Fire Insurance Company | A | 10,336 | 2.4 | % | ||||||
Maiden Re | A- | 6,764 | 1.6 | % | ||||||
Other reinsurers with no single company greater than 1% of the total | 34,416 | 7.9 | % | |||||||
Total health reinsurance ceded | $ | 126,985 | 29.1 | % | ||||||
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• | Loss and loss adjustment expense ratio (“loss ratio”), which is calculated by dividing policy benefits by net premiums earned; |
• | Underwriting expense ratio (“expense ratio”), which is calculated by dividing all expenses related to the issuance of new and renewal policies by net premiums earned; and |
• | Combined ratio, which is the sum of the loss ratio and the expense ratio. |
Years Ended December 31, | Change Over Prior Years | |||||||||||||||||||||||||||
2009 | 2008 | 2007 | 2009 | 2008 | ||||||||||||||||||||||||
amount | percentage | amount | percentage | |||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||
Net premiums written | $ | 1,307,762 | $ | 1,184,686 | $ | 1,191,113 | $ | 123,076 | 10.4 | $ | (6,427 | ) | (0.5 | ) | ||||||||||||||
Net premiums earned | $ | 1,159,509 | $ | 1,182,026 | $ | 1,177,217 | $ | (22,517 | ) | (1.9 | ) | $ | 4,809 | 0.4 | ||||||||||||||
Net investment income | 66,175 | 69,348 | 75,041 | (3,173 | ) | (4.6 | ) | (5,693 | ) | (7.6 | ) | |||||||||||||||||
Other income | 7,064 | 8,973 | 8,623 | (1,909 | ) | (21.3 | ) | 350 | 4.1 | |||||||||||||||||||
Total premiums and other revenues | 1,232,748 | 1,260,347 | 1,260,881 | (27,599 | ) | (2.2 | ) | (534 | ) | (0.0 | ) | |||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||||||
Policy benefits | 923,064 | 939,854 | 818,230 | (16,790 | ) | (1.8 | ) | 121,624 | 14.9 | |||||||||||||||||||
Commissions | 209,203 | 226,100 | 217,043 | (16,897 | ) | (7.5 | ) | 9,057 | 4.2 | |||||||||||||||||||
Other operating costs and expenses | 124,266 | 132,601 | 110,705 | (8,335 | ) | (6.3 | ) | 21,896 | 19.8 | |||||||||||||||||||
Change in deferred policy acquisition costs | (8,151 | ) | (9,669 | ) | (7,639 | ) | 1,518 | (15.7 | ) | (2,030 | ) | 26.6 | ||||||||||||||||
Total benefits and expenses | 1,248,382 | 1,288,886 | 1,138,339 | (40,504 | ) | (3.1 | ) | 150,547 | 13.2 | |||||||||||||||||||
Income before other items and federal income taxes | $ | (15,634 | ) | $ | (28,539 | ) | $ | 122,542 | $ | 12,905 | (45.2 | ) | $ | (151,081 | ) | (123.3 | ) | |||||||||||
Loss ratio | 79.6 | % | 79.5 | % | 69.5 | % | 0.1 | 10.0 | ||||||||||||||||||||
Underwriting expense ratio | 28.1 | % | 29.5 | % | 27.2 | % | (1.4 | ) | 2.3 | |||||||||||||||||||
Combined ratio | 107.7 | % | 109.0 | % | 96.7 | % | (1.3 | ) | 12.3 | |||||||||||||||||||
Effect of net catastrophe losses on combined ratio | 7.8 | % | 11.1 | % | 2.7 | % | (3.3 | ) | 8.4 | |||||||||||||||||||
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Years Ended December 31, | Change Over Prior Years | |||||||||||||||||||||||||||
2009 | 2008 | 2007 | 2009 | 2008 | ||||||||||||||||||||||||
amount | percentage | amount | percentage | |||||||||||||||||||||||||
Net premiums written | ||||||||||||||||||||||||||||
Auto | $ | 456,960 | $ | 462,545 | $ | 484,310 | $ | (5,585 | ) | (1.2 | ) | $ | (21,765 | ) | (4.5 | ) | ||||||||||||
Homeowner | 217,963 | 203,516 | 207,093 | 14,447 | 7.1 | (3,577 | ) | (1.7 | ) | |||||||||||||||||||
Other Personal | 38,815 | 34,610 | 30,452 | 4,205 | 12.1 | 4,158 | 13.7 | |||||||||||||||||||||
Total net premiums written | 713,738 | 700,671 | 721,855 | 13,067 | 1.9 | (21,184 | ) | (2.9 | ) | |||||||||||||||||||
Net premiums earned | ||||||||||||||||||||||||||||
Auto | 452,754 | 469,425 | 479,722 | (16,671 | ) | (3.6 | ) | (10,297 | ) | (2.1 | ) | |||||||||||||||||
Homeowner | 208,558 | 205,764 | 199,126 | 2,794 | 1.4 | 6,638 | 3.3 | |||||||||||||||||||||
Other Personal | 37,283 | 31,990 | 30,241 | 5,293 | 16.5 | 1,749 | 5.8 | |||||||||||||||||||||
Total net premiums earned | $ | 698,595 | $ | 707,179 | $ | 709,089 | $ | (8,584 | ) | (1.2 | ) | $ | (1,910 | ) | (0.3 | ) | ||||||||||||
Loss ratio | ||||||||||||||||||||||||||||
Auto | 83.9 | % | 78.0 | % | 76.0 | % | 5.9 | 2.0 | ||||||||||||||||||||
Homeowner | 100.6 | % | 111.0 | % | 68.4 | % | (10.4 | ) | 42.6 | |||||||||||||||||||
Other Personal | 44.9 | % | 87.7 | % | 84.4 | % | (42.8 | ) | 3.3 | |||||||||||||||||||
Personal line loss ratio | 86.8 | % | 88.1 | % | 74.2 | % | (1.3 | ) | 13.9 | |||||||||||||||||||
Combined Ratio | ||||||||||||||||||||||||||||
Auto | 104.9 | % | 101.6 | % | 97.3 | % | 3.3 | 4.3 | ||||||||||||||||||||
Homeowner | 122.8 | % | 138.0 | % | 94.2 | % | (15.2 | ) | 43.8 | |||||||||||||||||||
Other Personal | 51.3 | % | 110.1 | % | 90.5 | % | (58.8 | ) | 19.6 | |||||||||||||||||||
Personal line combined ratio | 107.4 | % | 112.6 | % | 96.1 | % | (5.2 | ) | 16.5 | |||||||||||||||||||
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Years Ended December 31, | Change Over Prior Years | |||||||||||||||||||||||||||
2009 | 2008 | 2007 | 2009 | 2008 | ||||||||||||||||||||||||
amount | percentage | amount | percentage | |||||||||||||||||||||||||
Net premiums written | ||||||||||||||||||||||||||||
Agribusiness | $ | 101,074 | $ | 101,243 | $ | 93,664 | $ | (169 | ) | (0.2 | ) | $ | 7,579 | 8.1 | ||||||||||||||
Auto | 88,642 | 95,155 | 100,397 | (6,513 | ) | (6.8 | ) | (5,242 | ) | (5.2 | ) | |||||||||||||||||
Other Commercial | 127,291 | 139,266 | 144,281 | (11,975 | ) | (8.6 | ) | (5,015 | ) | (3.5 | ) | |||||||||||||||||
Total net premiums written | 317,007 | 335,664 | 338,342 | (18,657 | ) | (5.6 | ) | (2,678 | ) | (0.8 | ) | |||||||||||||||||
Net premiums earned | ||||||||||||||||||||||||||||
Agribusiness | 105,921 | 105,230 | 95,402 | 691 | 0.7 | 9,828 | 10.3 | |||||||||||||||||||||
Auto | 91,074 | 96,574 | 96,232 | (5,500 | ) | (5.7 | ) | 342 | 0.4 | |||||||||||||||||||
Other Commercial | 125,855 | 137,971 | 139,051 | (12,116 | ) | (8.8 | ) | (1,080 | ) | (0.8 | ) | |||||||||||||||||
Total net premiums earned | $ | 322,850 | $ | 339,775 | $ | 330,685 | $ | (16,925 | ) | (5.0 | ) | $ | 9,090 | 2.7 | ||||||||||||||
Loss ratio | ||||||||||||||||||||||||||||
Agribusiness | 90.1 | % | 87.5 | % | 71.9 | % | 2.6 | 15.6 | ||||||||||||||||||||
Auto | 74.3 | % | 76.3 | % | 75.6 | % | (2.0 | ) | 0.7 | |||||||||||||||||||
Other Commercial | 76.9 | % | 71.2 | % | 61.0 | % | 5.7 | 10.2 | ||||||||||||||||||||
Commercial line loss ratio | 80.5 | % | 77.7 | % | 68.4 | % | 2.8 | 9.3 | ||||||||||||||||||||
Combined ratio | ||||||||||||||||||||||||||||
Agribusiness | 126.8 | % | 117.7 | % | 105.1 | % | 9.1 | 12.6 | ||||||||||||||||||||
Auto | 96.9 | % | 99.3 | % | 99.8 | % | (2.4 | ) | (0.5 | ) | ||||||||||||||||||
Other Commercial | 106.4 | % | 95.8 | % | 86.3 | % | 10.6 | 9.5 | ||||||||||||||||||||
Commercial line combined ratio | 110.4 | % | 103.6 | % | 95.6 | % | 6.8 | 8.0 | ||||||||||||||||||||
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• | Treaty reinsurance, in which certain types of policies are automatically reinsured without the need for approval by the reinsurer of the individual risks; |
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• | Facultative reinsurance, in which individual insurance policy or a specific risk is reinsured with the prior approval of the reinsurer. Facultative reinsurance is purchased for risks which fall outside the treaty reinsurance; and |
• | Excess of loss treaty reinsurance, where the reinsurer indemnifies us against all, or a specified portion, of losses and loss adjustment expense incurred in excess of a specified retention or attachment point, and up to the contract limit. |
Percent of Risk Covered | ||||||||||
Reinsurer | AM Best Rating | Non-catastrophe | Catastrophe Coverage | |||||||
Lloyd’s Syndicates | A | 20.6 | % | 50.1 | % | |||||
Hannover Re | A | 38.5 | % | 1.6 | % | |||||
Munich Re America | A+ | 17.7 | % | 2.2 | % | |||||
Platinum Re | A | 12.1 | % | 0.2 | % | |||||
Catlin Insurance Co | A | 4.5 | % | 4.7 | % | |||||
Transatlantic QBE Reinsurance | A | 2.4 | % | 0.4 | % | |||||
Swiss Re America | A | 2.2 | % | 0.0 | % | |||||
Amlin Bermuda Ltd | A | 2.0 | % | 3.7 | % | |||||
Tokio Millenium Re Ltd | A+ | 0.0 | % | 6.2 | % | |||||
Sompco Japan Insurance, Inc | A+ | 0.0 | % | 3.7 | % | |||||
Scor Re | A- | 0.0 | % | 3.4 | % | |||||
Flagstone Reassurance Suisse SA | A- | 0.0 | % | 2.6 | % | |||||
Munchener Ruckversicherungs-Gesellschaft | A+ | 0.0 | % | 2.9 | % | |||||
Partner Re, Bermuda | A+ | 0.0 | % | 2.0 | % | |||||
Other reinsurers with no single company greater than 2% of the total | 0.0 | % | 16.3 | % | ||||||
Total reinsurance coverage | 100.0 | % | 100.0 | % | ||||||
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Property and Casualty Loss and Loss Adjustment Expense Liability Development-Net of Reinsurance
For the Years Ended December 31,
1999 | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | ||||||||||||||||||||||||||||||||||
Liability for unpaid losses and loss adjustment expenses, net of reinsurance (includes loss reserves, IBNR, allocated and unalloc expense) | 331,431 | 384,191 | 425,129 | 490,215 | 590,365 | 678,379 | 796,267 | 801,953 | 809,500 | 847,860 | 856,658 | |||||||||||||||||||||||||||||||||
Cumulative paid losses and loss expenses | ||||||||||||||||||||||||||||||||||||||||||||
One year later | 161,942 | 192,167 | 228,699 | 233,074 | 256,386 | 274,810 | 366,007 | 296,620 | 318,944 | 345,346 | ||||||||||||||||||||||||||||||||||
Two years later | 236,136 | 280,667 | 322,112 | 338,459 | 377,139 | 405,748 | 506,463 | 453,042 | 477,958 | |||||||||||||||||||||||||||||||||||
Three years later | 280,004 | 323,685 | 370,179 | 399,651 | 445,702 | 479,410 | 590,643 | 544,100 | ||||||||||||||||||||||||||||||||||||
Four years later | 297,942 | 345,507 | 396,758 | 429,408 | 479,524 | 518,972 | 640,003 | |||||||||||||||||||||||||||||||||||||
Five years later | 306,853 | 356,119 | 407,212 | 443,161 | 498,349 | 541,627 | ||||||||||||||||||||||||||||||||||||||
Six years later | 311,746 | 362,307 | 412,004 | 452,256 | 509,521 | |||||||||||||||||||||||||||||||||||||||
Seven years later | 314,097 | 365,331 | 416,207 | 457,972 | ||||||||||||||||||||||||||||||||||||||||
Eight years later | 315,750 | 367,326 | 420,045 | |||||||||||||||||||||||||||||||||||||||||
Nine years later | 317,270 | 369,963 | ||||||||||||||||||||||||||||||||||||||||||
Ten years later | 318,474 | |||||||||||||||||||||||||||||||||||||||||||
Liabilites re-estimated | ||||||||||||||||||||||||||||||||||||||||||||
One year later | 330,858 | 368,951 | 432,028 | 488,595 | 564,287 | 638,910 | 770,238 | 711,880 | 766,882 | 798,583 | ||||||||||||||||||||||||||||||||||
Two years later | 323,422 | 372,991 | 435,574 | 488,455 | 564,485 | 617,374 | 737,341 | 713,339 | 733,361 | |||||||||||||||||||||||||||||||||||
Three years later | 324,838 | 376,776 | 441,564 | 490,717 | 553,163 | 596,242 | 739,825 | 680,900 | ||||||||||||||||||||||||||||||||||||
Four years later | 323,853 | 379,498 | 441,309 | 482,799 | 538,459 | 596,754 | 714,995 | |||||||||||||||||||||||||||||||||||||
Five years later | 324,878 | 379,318 | 435,796 | 476,615 | 542,429 | 585,370 | ||||||||||||||||||||||||||||||||||||||
Six years later | 326,786 | 380,050 | 432,953 | 478,201 | 534,287 | |||||||||||||||||||||||||||||||||||||||
Seven years later | 326,798 | 379,270 | 433,990 | 472,502 | ||||||||||||||||||||||||||||||||||||||||
Eight years later | 326,345 | 380,082 | 430,722 | |||||||||||||||||||||||||||||||||||||||||
Nine years later | 327,685 | 378,611 | ||||||||||||||||||||||||||||||||||||||||||
Ten years later | 326,128 | |||||||||||||||||||||||||||||||||||||||||||
Deficiency(redundancy), net of reinsurance | (5,303 | ) | (5,580 | ) | 5,593 | (17,713 | ) | (56,078 | ) | (93,009 | ) | (81,272 | ) | (121,053 | ) | (76,139 | ) | (49,277 | ) | |||||||||||||||||||||||||
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For the Years Ended December 31,
1999 | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | ||||||||||||||||||||||||||||||||||
Net reserve, as initially estimated | 331,431 | 384,191 | 425,129 | 490,215 | 590,365 | 678,379 | 796,267 | 801,953 | 809,500 | 847,860 | 856,658 | |||||||||||||||||||||||||||||||||
Reinsurance and other recoverables as initially estimated | 35,677 | 47,162 | 65,327 | 61,077 | 61,600 | 80,526 | 86,186 | 86,898 | 79,071 | 109,518 | 70,837 | |||||||||||||||||||||||||||||||||
Gross reserve as initially estimated | 366,943 | 431,075 | 490,103 | 550,022 | 646,397 | 750,454 | 869,781 | 875,436 | 875,963 | 945,810 | 916,990 | |||||||||||||||||||||||||||||||||
Net re-estimated reserve | 326,128 | 378,611 | 430,722 | 472,502 | 534,287 | 585,370 | 714,995 | 680,900 | 733,361 | 798,583 | ||||||||||||||||||||||||||||||||||
Re-estimated and other reinsurance recoverables | 67,765 | 82,797 | 80,232 | 83,520 | 86,245 | 84,763 | 494,020 | 93,619 | 71,972 | 102,963 | ||||||||||||||||||||||||||||||||||
Gross re-estimated reserve | 393,893 | 461,408 | 510,954 | 556,022 | 620,532 | 670,133 | 1,209,015 | 774,519 | 805,333 | 901,546 | ||||||||||||||||||||||||||||||||||
Deficiency(redundancy), gross of reinsurance | 26,950 | 30,333 | 20,851 | 6,000 | (25,865 | ) | (80,321 | ) | 339,234 | (100,917 | ) | (70,630 | ) | (44,264 | ) |
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Years Ended December 31, | Change Over Prior Years | |||||||||||||||||||||||||||
2009 | 2008 | 2007 | 2009 | 2008 | ||||||||||||||||||||||||
amount | percentage | amount | percentage | |||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||
Net investment income | $ | 86,292 | $ | 109,597 | $ | 127,519 | $ | (23,305 | ) | (21.3 | ) | $ | (17,922 | ) | (14.1 | ) | ||||||||||||
Gain/(loss) from investments, net | (75,697 | ) | (379,709 | ) | 41,027 | 304,012 | (80.1 | ) | (420,736 | ) | (1,025.5 | ) | ||||||||||||||||
Other Income | 15,547 | 18,505 | 21,241 | (2,958 | ) | (16.0 | ) | (2,736 | ) | (12.9 | ) | |||||||||||||||||
Total revenues | 26,142 | (251,607 | ) | 189,787 | 277,749 | (110.4 | ) | (441,394 | ) | (232.6 | ) | |||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||||||
Other operating costs and expenses | 54,709 | 37,839 | 61,069 | 16,870 | 44.6 | (23,230 | ) | (38.0 | ) | |||||||||||||||||||
Total benefits and expenses | 54,709 | 37,839 | 61,069 | 16,870 | 44.6 | (23,230 | ) | (38.0 | ) | |||||||||||||||||||
Income (loss) before other items and federal income taxes | $ | (28,567 | ) | $ | (289,446 | ) | $ | 128,718 | $ | 260,879 | (90.1 | ) | $ | (418,164 | ) | (324.9 | ) | |||||||||||
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Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Net cash provided by (used in): | ||||||||||||
Operating activities | $ | 491,390 | $ | 171,681 | $ | 462,913 | ||||||
Investing activities | (1,352,613 | ) | (690,441 | ) | (436,670 | ) | ||||||
Financing activities | 956,610 | 450,787 | (107,051 | ) | ||||||||
Net increase (decrease) in cash | $ | 95,387 | $ | (67,973 | ) | $ | (80,808 | ) | ||||
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Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
American National stockholders’ equity, excluding accumulated other comprehensive income (loss), net of tax (“AOCI”) | $ | 3,342,805 | $ | 3,355,004 | $ | 3,590,812 | ||||||
AOCI | 117,649 | (221,148 | ) | 145,972 | ||||||||
Total American National stockholders’ equity | $ | 3,460,454 | $ | 3,133,856 | $ | 3,736,784 | ||||||
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Payments Due by Period | ||||||||||||||||||||
Less than | More than | |||||||||||||||||||
Total | 1 year | 1-3 years | 3-5 years | 5 years | ||||||||||||||||
Life insurance obligations(1) | $ | 5,527,844 | $ | 45,495 | $ | 139,286 | $ | 298,513 | $ | 5,044,550 | ||||||||||
Annuity obligations(1) | 10,969,319 | 1,341,183 | 3,945,324 | 2,528,519 | 3,154,293 | |||||||||||||||
Property and casualty insurance obligations(2) | 1,003,143 | 454,763 | 379,362 | 111,537 | 57,481 | |||||||||||||||
Accident and health insurance obligations(3) | 159,789 | 92,449 | 25,360 | 10,274 | 31,706 | |||||||||||||||
Purchase obligations: | — | |||||||||||||||||||
Commitments to purchase and fund investments(4) | 50,520 | 28,281 | 16,491 | 2,767 | 2,981 | |||||||||||||||
Mortgage loan commitments(5) | 192,294 | 192,294 | — | — | — | |||||||||||||||
Operating leases(6) | 4,124 | 562 | 1,824 | 1,360 | 378 | |||||||||||||||
Defined benefit pension plans(7) | 147,050 | 10,183 | 17,965 | 18,482 | 100,420 | |||||||||||||||
Total | $ | 18,054,083 | $ | 2,165,210 | $ | 4,525,612 | $ | 2,971,452 | $ | 8,391,809 | ||||||||||
(1) | Life and annuity obligations include estimated claim, benefit, surrender and commission obligations offset by expected future premiums and deposits on in-force insurance policies and contracts. All amounts are gross of reinsurance. Estimated claim, benefit and surrender obligations are based on mortality and lapse assumptions that are comparable with historical experience. Estimated payments on interest-sensitive life and annuity obligations include interest credited to those products. The interest crediting rates are derived by deducting current product spreads from a constant investment yield. The obligations shown in the table have not been discounted at present value. As a result, the estimated obligations for insurance liabilities included in the table exceed the liabilities recorded in reserves for future policy benefits and the liability for policy and contract claims. Due to the significance of the assumptions used, the amounts presented could materially differ from actual results. Separate account obligations have not been included since those obligations are not part of the general account obligations and will be funded by cash flows from separate account assets. The general account obligations for insurance liabilities will be funded by cash flows from general account assets and future premiums and deposits. Participating policyholder dividends payable consists of liabilities related to dividends payable in the following calendar year on participating policies. As such, the contractual obligation related to participating policyholder dividends payable is presented in the table above in the less than one-year category at the amount of the liability presented in the consolidated balance sheet. All estimated cash payments represented in the table above are undiscounted as to interest, net of estimated future premiums on policies currently in-force and gross of any reinsurance recoverable. Estimated future premiums on participating policies currently in-force are net of future policyholder dividends payable. Future policyholder dividends, the participating policyholder share obligation on the consolidated balance sheet, represents the accumulated net income from participating policies and a pro-rata portion of unrealized investment gains (losses), net of tax, reserved for payment to such policyholders as policyholder dividends. Because of the nature of the participating policyholder obligation, the exact timing and amount of the ultimate participating policyholder obligation is subject to significant uncertainty and the amount of the participating policyholder obligation is based upon a long-term projection of the performance of the participating policy block. | |
(2) | Expected future gross loss and loss adjustment expense payments from property and casualty policies. This includes case reserves for reported claims and reserves for claims IBNR. Timing of future payments is estimated based on the Company’s historical payment patterns. The timing of these payments may vary significantly from the amounts shown above. The ultimate losses may vary materially from the recorded amounts, which are our best estimates. |
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(3) | Accident and health insurance obligations reflect estimated future claim payment amounts net of reinsurance for claims incurred prior to January 1, 2009. The estimate does not include claim payments for claims incurred after December 31, 2008. Estimated claim payment amounts are based on mortality and morbidity assumptions that are consistent with historical experience and are not discounted with interest so will exceed the liabilities recorded in reserves for future claim payments. Due to the significance of the assumptions used, actual results could vary greatly from the estimates shown here. | |
(4) | Expected payments to fund investments based on capital commitments and other related contractual obligations. | |
(5) | Expected future payments to fund investments based on mortgage loan commitments and other related contractual obligations. | |
(6) | Represents estimated obligations due to contracts and agreements entered into within the ordinary course of business for items classified by ASC 840-20 (formerly “FAS 13”),Accounting for Operating Leases. The Company rents office space, which qualifies as operating leases under ASC 840-20 (formerly “FAS 13”). | |
(7) | Represents estimated payments for pension benefit obligations for the non-qualified defined benefit pension plan. As such, these payments are funded through continuing operations. A liability has been established for the full amount of benefits accrued as per ASC 715-40 (formerly ”FAS 158”),Compensation-Retirement Benefits, including a provision for the effects of future salary inflation on the accrued benefits. |
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As of: | ||||||||||||||||
December 31, 2009 | December 31, 2008 | |||||||||||||||
amount | percent | amount | percent | |||||||||||||
Bonds held-to-maturity, at amortized cost | $ | 7,461,711 | 44.9 | % | $ | 6,681,837 | 45.9 | % | ||||||||
Bonds available-for-sale, at fair value | 4,213,550 | 25.4 | % | 3,820,837 | 26.3 | % | ||||||||||
Preferred stock, at fair value | 35,717 | 0.2 | % | 48,822 | 0.3 | % | ||||||||||
Common stock, at fair value | 934,754 | 5.6 | % | 853,530 | 5.9 | % | ||||||||||
Mortgage loans at amortized cost | 2,229,659 | 13.4 | % | 1,877,053 | 13.0 | % | ||||||||||
Policy loans, at outstanding balance | 364,354 | 2.2 | % | 354,398 | 2.4 | % | ||||||||||
Investment real estate, net of depreciation | 635,110 | 3.8 | % | 528,905 | 3.6 | % | ||||||||||
Short-term investments | 636,823 | 3.9 | % | 295,170 | 2.0 | % | ||||||||||
Other invested assets | 94,442 | 0.6 | % | 85,151 | 0.6 | % | ||||||||||
Total Invested Assets | $ | 16,606,120 | 100 | % | $ | 14,545,703 | 100 | % | ||||||||
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Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Corporate bonds | $ | (10,046 | ) | $ | (165,802 | ) | $ | (1,089 | ) | |||
Equities: | ||||||||||||
Financial services | (22,295 | ) | (125,518 | ) | — | |||||||
Other | (46,762 | ) | (74,231 | ) | (6,077 | ) | ||||||
Mortgage loans | (1,647 | ) | (740 | ) | — | |||||||
Real estate | (10,550 | ) | (745 | ) | — | |||||||
Other invested assets | (7,643 | ) | — | — | ||||||||
Total other-than-temporary impairment charges | $ | (98,943 | ) | $ | (367,036 | ) | $ | (7,166 | ) | |||
1. | We determined if we intend to hold the bond until maturity. |
2. | We determined if it is more likely than not that, we will have to sell the bond before maturity. |
3. | If it was determined, that we would hold the bond and we would not have to sell it, then we would determine the present value of the future cash flows of the bond. |
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As of December 31, 2009 | ||||||||||||||||||||
Amortized | Unrealized | Unrealized | Estimated Fair | % of Fair | ||||||||||||||||
Cost | Gains | Losses | Value | Value | ||||||||||||||||
Corporate bonds | $ | 8,613,275 | $ | 403,487 | $ | (139,823 | ) | $ | 8,876,939 | 74.5 | % | |||||||||
Mortgage-backed securities | 1,094,943 | 32,991 | (54,491 | ) | 1,073,443 | 9.0 | % | |||||||||||||
States and political subdivisions | 779,425 | 27,472 | (2,188 | ) | 804,709 | 6.8 | % | |||||||||||||
Public utilities | 978,337 | 56,393 | (3,945 | ) | 1,030,785 | 8.6 | % | |||||||||||||
U.S. Treasury and government agencies | 98,326 | 2,591 | (593 | ) | 100,324 | 0.8 | % | |||||||||||||
Foreign governments | 5,498 | 559 | — | 6,057 | 0.1 | % | ||||||||||||||
Other | 27,951 | 156 | (338 | ) | 27,769 | 0.2 | % | |||||||||||||
Total Bonds | $ | 11,597,755 | $ | 523,649 | $ | (201,378 | ) | $ | 11,920,026 | 100.0 | % | |||||||||
As of December 31, 2008 | ||||||||||||||||||||
Amortized | Unrealized | Unrealized | Estimated Fair | % of Fair | ||||||||||||||||
Cost | Gains | Losses | Value | Value | ||||||||||||||||
Corporate bonds | $ | 8,197,057 | $ | 71,968 | $ | (943,424 | ) | $ | 7,325,601 | 73.5 | % | |||||||||
Mortgage-backed securities | 1,205,379 | 17,974 | (82,118 | ) | 1,141,235 | 11.5 | % | |||||||||||||
States and political subdivisions | 742,175 | 10,940 | (19,922 | ) | 733,193 | 7.4 | % | |||||||||||||
Public utilities | 587,265 | 8,440 | (35,668 | ) | 560,037 | 5.5 | % | |||||||||||||
U.S. Treasury and government agencies | 174,037 | 3,355 | (3 | ) | 177,389 | 1.8 | % | |||||||||||||
Foreign governments | 5,254 | 1,618 | (87 | ) | 6,785 | 0.1 | % | |||||||||||||
Other | 30,230 | 2 | (4,932 | ) | 25,300 | 0.2 | % | |||||||||||||
Total Bonds | $ | 10,941,397 | $ | 114,297 | $ | (1,086,154 | ) | $ | 9,969,540 | 100.0 | % | |||||||||
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As of December 31, 2009 | ||||||||||||||||
Amortized | Estimated | |||||||||||||||
Cost | Percentage | Fair Value | Percentage | |||||||||||||
Bonds held-to-maturity | ||||||||||||||||
Due in one year or less | $ | 147,317 | 1.9 | % | $ | 147,303 | 1.9 | % | ||||||||
Due after one year through five years | 3,445,659 | 46.2 | % | 3,609,070 | 46.8 | % | ||||||||||
Due after five years through ten years | 3,130,532 | 42.0 | % | 3,208,615 | 41.6 | % | ||||||||||
Due after ten years | 732,353 | 9.8 | % | 736,915 | 9.6 | % | ||||||||||
Without single maturity date | 5,850 | 0.1 | % | 4,573 | 0.1 | % | ||||||||||
Total bonds held-to-maturity | $ | 7,461,711 | 100.0 | % | $ | 7,706,476 | 100.0 | % | ||||||||
Bonds available-for-sale | ||||||||||||||||
Due in one year or less | $ | 207,074 | 5.0 | % | $ | 211,138 | 5.0 | % | ||||||||
Due after one year through five years | 1,948,476 | 47.1 | % | 1,990,220 | 47.2 | % | ||||||||||
Due after five years through ten years | 1,426,738 | 34.5 | % | 1,453,903 | 34.5 | % | ||||||||||
Due after ten years | 543,479 | 13.2 | % | 549,006 | 13.1 | % | ||||||||||
Without single maturity date | 10,277 | 0.2 | % | 9,283 | 0.2 | % | ||||||||||
Total bonds available-for-sale | $ | 4,136,044 | 100.0 | % | $ | 4,213,550 | 100.0 | % | ||||||||
Total bonds | $ | 11,597,755 | $ | 11,920,026 | ||||||||||||
As of December 31, 2008 | ||||||||||||||||
Amortized | Estimated | |||||||||||||||
Cost | Percentage | Fair Value | Percentage | |||||||||||||
Bonds held-to-maturity | ||||||||||||||||
Due in one year or less | $ | 335,885 | 5.0 | % | $ | 334,044 | 5.4 | % | ||||||||
Due after one year through five years | 2,880,344 | 43.1 | % | 2,674,238 | 43.5 | % | ||||||||||
Due after five years through ten years | 2,722,138 | 40.8 | % | 2,436,099 | 39.6 | % | ||||||||||
Due after ten years | 737,619 | 11.0 | % | 700,052 | 11.4 | % | ||||||||||
Without single maturity date | 5,851 | 0.1 | % | 4,270 | 0.1 | % | ||||||||||
Total bonds held-to-maturity | $ | 6,681,837 | 100.0 | % | $ | 6,148,703 | 100.0 | % | ||||||||
Bonds available-for-sale | ||||||||||||||||
Due in one year or less | $ | 154,877 | 3.6 | % | $ | 153,727 | 4.0 | % | ||||||||
Due after one year through five years | 1,359,792 | 31.9 | % | 1,237,037 | 32.4 | % | ||||||||||
Due after five years through ten years | 2,012,462 | 47.2 | % | 1,733,270 | 45.3 | % | ||||||||||
Due after ten years | 722,153 | 17.0 | % | 689,786 | 18.1 | % | ||||||||||
Without single maturity date | 10,276 | 0.3 | % | 7,017 | 0.2 | % | ||||||||||
Total bonds available-for-sale | $ | 4,259,560 | 100.0 | % | $ | 3,820,837 | 100.0 | % | ||||||||
Total bonds | $ | 10,941,397 | $ | 9,969,540 | ||||||||||||
As of December 31, 2009 | As of December 31, 2008 | |||||||||||||||||||||||
Amortized | Estimated | % of Fair | Amortized | Estimated | % of Fair | |||||||||||||||||||
Cost | Fair Value | Value | Cost | Fair Value | Value | |||||||||||||||||||
AAA | $ | 1,357,021 | $ | 1,387,783 | 11.6 | % | $ | 1,671,644 | $ | 1,644,482 | 16.5 | % | ||||||||||||
AA | 927,081 | 967,274 | 8.1 | % | 1,044,896 | 984,250 | 9.9 | % | ||||||||||||||||
A | 4,080,455 | 4,251,937 | 35.7 | % | 4,278,795 | 3,983,117 | 40.0 | % | ||||||||||||||||
BBB | 4,287,623 | 4,428,359 | 37.2 | % | 3,266,507 | 2,801,027 | 28.1 | % | ||||||||||||||||
BB | 356,272 | 336,393 | 2.8 | % | 282,298 | 222,591 | 2.2 | % | ||||||||||||||||
Below BB | 589,303 | 548,280 | 4.6 | % | 397,257 | 334,073 | 3.3 | % | ||||||||||||||||
Total | $ | 11,597,755 | $ | 11,920,026 | 100.0 | % | $ | 10,941,397 | $ | 9,969,540 | 100.0 | % | ||||||||||||
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December 31, | ||||||||
2009 | 2008 | |||||||
West South Central | 22 | % | 22 | % | ||||
South Atlantic | 20 | % | 17 | % | ||||
East North Central | 20 | % | 22 | % | ||||
Pacific | 10 | % | 13 | % | ||||
Middle Atlantic | 8 | % | 10 | % | ||||
Mountain | 6 | % | 5 | % | ||||
East South Central | 6 | % | 4 | % | ||||
New England | 4 | % | 5 | % | ||||
West North Central | 4 | % | 2 | % | ||||
Total | 100 | % | 100 | % | ||||
December 31, | ||||||||
2009 | 2008 | |||||||
Office buildings | 31 | % | 30 | % | ||||
Industrial | 28 | % | 25 | % | ||||
Shopping centers | 19 | % | 21 | % | ||||
Hotels and motels | 15 | % | 17 | % | ||||
Other | 4 | % | 4 | % | ||||
Commercial | 3 | % | 3 | % | ||||
Total | 100 | % | 100 | % | ||||
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December 31, 2009 | ||||||||||||||||
Unrealized | Unrealized | |||||||||||||||
Cost | Gains | Losses | Fair Value | |||||||||||||
Common stock | $ | 683,794 | $ | 259,256 | $ | (8,296 | ) | $ | 934,754 | |||||||
Preferred stock | 35,359 | 5,269 | (4,911 | ) | 35,717 | |||||||||||
Total | $ | 719,153 | $ | 264,525 | $ | (13,207 | ) | $ | 970,471 | |||||||
December 31, 2008 | ||||||||||||||||
Unrealized | Unrealized | |||||||||||||||
Cost | Gains | Losses | Fair Value | |||||||||||||
Common stock | $ | 820,908 | $ | 115,692 | $ | (83,070 | ) | $ | 853,530 | |||||||
Preferred stock | 60,718 | 3,609 | (15,505 | ) | 48,822 | |||||||||||
Total | $ | 881,626 | $ | 119,301 | $ | (98,575 | ) | $ | 902,352 | |||||||
December 31, | ||||||||
2009 | 2008 | |||||||
Consumer goods | 19 | % | 20 | % | ||||
Financials | 17 | % | 16 | % | ||||
Information technology | 16 | % | 13 | % | ||||
Energy and utilities | 13 | % | 13 | % | ||||
Health care | 12 | % | 13 | % | ||||
Industrials | 9 | % | 8 | % | ||||
Mutual funds | 7 | % | 10 | % | ||||
Communication | 4 | % | 5 | % | ||||
Materials | 3 | % | 2 | % | ||||
Total | 100 | % | 100 | % | ||||
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December 31, | ||||||||
2009 | 2008 | |||||||
West South Central | 58 | % | 64 | % | ||||
South Atlantic | 13 | % | 16 | % | ||||
Middle Atlantic | 10 | % | 0 | % | ||||
East North Central | 8 | % | 6 | % | ||||
East South Central | 7 | % | 10 | % | ||||
Pacific | 2 | % | 2 | % | ||||
West North Central | 1 | % | 1 | % | ||||
Mountain | 1 | % | 1 | % | ||||
Total | 100 | % | 100 | % | ||||
December 31, | ||||||||
2009 | 2008 | |||||||
Industrial | 37 | % | 45 | % | ||||
Shopping centers | 19 | % | 23 | % | ||||
Other | 16 | % | 11 | % | ||||
Office buildings | 15 | % | 18 | % | ||||
Commercial | 11 | % | 1 | % | ||||
Hotels and motels | 2 | % | 2 | % | ||||
Total | 100 | % | 100 | % | ||||
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Net Investment Income | Gains (Losses) on Investments | |||||||||||||||||||||||
Years Ended December 31, | Years Ended December 31, | |||||||||||||||||||||||
2009 | 2008 | 2007 | 2009 | 2008 | 2007 | |||||||||||||||||||
Bonds | $ | 627,236 | $ | 623,356 | $ | 620,035 | $ | (20,000 | ) | $ | (157,272 | ) | $ | 366 | ||||||||||
Preferred stocks | 3,419 | 5,687 | 4,561 | (1,590 | ) | (49,172 | ) | — | ||||||||||||||||
Common stocks | 23,324 | 28,977 | 27,002 | (32,265 | ) | (164,407 | ) | 23,913 | ||||||||||||||||
Mortgage loans | 141,124 | 118,067 | 103,627 | (1,647 | ) | — | — | |||||||||||||||||
Real estate | 122,603 | 114,198 | 126,926 | (9,027 | ) | 1,005 | 18,563 | |||||||||||||||||
Other invested assets | 46,545 | 12,123 | 40,994 | (7,374 | ) | (5,977 | ) | (40 | ) | |||||||||||||||
964,251 | 902,408 | 923,145 | (71,903 | ) | (375,823 | ) | 42,802 | |||||||||||||||||
Investment expense | (124,146 | ) | (106,231 | ) | (110,176 | ) | — | — | — | |||||||||||||||
Increase in valuation allowances | — | — | — | (3,794 | ) | (3,886 | ) | (1,775 | ) | |||||||||||||||
Total | $ | 840,105 | $ | 796,177 | $ | 812,969 | $ | (75,697 | ) | $ | (379,709 | ) | $ | 41,027 | ||||||||||
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• | Designing an approach to identify potential risks and events that may affect the entity; |
• | Managing risks within our risk profile; and |
• | Providing reasonable assurance regarding the achievement of our strategic objectives. |
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Increase/(Decrease) in Market Value Given an Interest rate | ||||||||||||||||
Increase/(Decrease) of X Basis Points | ||||||||||||||||
(100) | (50) | 50 | 100 | |||||||||||||
As of December 31, 2009 | ||||||||||||||||
Investment portfolio | $ | 489,843 | $ | 245,091 | $ | (245,773 | ) | $ | (489,148 | ) | ||||||
As of December 31, 2008 | ||||||||||||||||
Investment portfolio | $ | 391,701 | $ | 198,650 | $ | (203,759 | ) | $ | (406,628 | ) |
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Item 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
98 | ||||
99 | ||||
100 | ||||
101 | ||||
101 | ||||
102 | ||||
103 |
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American National Insurance Company:
March 11, 2010
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American National Insurance Company:
March 11, 2010
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Twelve Months Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
PREMIUMS AND OTHER REVENUE | ||||||||||||
Premiums | ||||||||||||
Life | $ | 284,530 | $ | 299,338 | $ | 315,893 | ||||||
Annuity | 220,284 | 116,248 | 222,748 | |||||||||
Accident and health | 309,701 | 290,883 | 283,765 | |||||||||
Property and casualty | 1,159,509 | 1,182,026 | 1,177,217 | |||||||||
Other policy revenues | 179,504 | 174,899 | 155,230 | |||||||||
Net investment income | 840,105 | 796,177 | 812,969 | |||||||||
Realized investments gains (losses) | 23,246 | (12,673 | ) | 48,193 | ||||||||
Other-than-temporary impairments | (98,943 | ) | (367,036 | ) | (7,166 | ) | ||||||
Other income | 31,843 | 38,779 | 47,224 | |||||||||
Total revenues | 2,949,779 | 2,518,641 | 3,056,073 | |||||||||
BENEFITS, LOSSES AND EXPENSES | ||||||||||||
Policy Benefits | ||||||||||||
Life | 297,719 | 296,078 | 273,750 | |||||||||
Annuity | 249,709 | 142,867 | 249,878 | |||||||||
Accident and health | 239,407 | 223,055 | 209,840 | |||||||||
Property and casualty | 923,064 | 939,854 | 818,230 | |||||||||
Interest credited to policy account balances | 370,563 | 299,833 | 295,894 | |||||||||
Commissions for acquiring and servicing policies | 459,943 | 475,345 | 456,537 | |||||||||
Other operating costs and expenses | 485,409 | 508,800 | 465,140 | |||||||||
Increase in deferred policy acquisition costs | (63,611 | ) | (67,439 | ) | (60,442 | ) | ||||||
Total benefits, losses and expenses | 2,962,203 | 2,818,393 | 2,708,827 | |||||||||
Income (loss) from continuing operations before federal income tax, and equity in earnings of unconsolidated affiliates | (12,424 | ) | (299,752 | ) | 347,246 | |||||||
Provision (benefit) for federal income taxes | ||||||||||||
Current | (14,224 | ) | (34,642 | ) | 80,324 | |||||||
Deferred | (17,583 | ) | (87,388 | ) | 25,539 | |||||||
Total provision (benefit) for federal income taxes | (31,807 | ) | (122,030 | ) | 105,863 | |||||||
Equity in earnings (losses) of unconsolidated affiliates, net of tax | (4,216 | ) | 4,965 | 3,866 | ||||||||
Income (loss) from continuing operations | 15,167 | (172,757 | ) | 245,249 | ||||||||
Income (loss) from discontinued operations | — | 18,728 | (4,958 | ) | ||||||||
Net income (loss) | 15,167 | (154,029 | ) | 240,291 | ||||||||
Less:Net income (loss) attributable to noncontrolling interest | (458 | ) | (31 | ) | (482 | ) | ||||||
Net income (loss) attributable to American National Insurance Company and Subsidiaries | $ | 15,625 | $ | (153,998 | ) | $ | 240,773 | |||||
Amounts attributable to American National Insurance Company common stockholders | ||||||||||||
Earnings (loss) per share: | ||||||||||||
Basic | $ | 0.59 | $ | (5.82 | ) | $ | 9.09 | |||||
Diluted | $ | 0.59 | $ | (5.82 | ) | $ | 9.04 | |||||
Unrestricted common shares outstanding | 26,528,832 | 26,479,832 | 26,479,832 | |||||||||
Unrestricted common shares outstanding and dilutive potential common shares | 26,597,476 | 26,479,832 | 26,638,219 | |||||||||
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December 31, | ||||||||
2009 | 2008 | |||||||
ASSETS | ||||||||
Investments, other than investments in unconsolidated affiliates | ||||||||
Fixed Securities: | ||||||||
Bonds held-to-maturity | $ | 7,461,711 | $ | 6,681,837 | ||||
Bonds available-for-sale | 4,213,550 | 3,820,837 | ||||||
Equity securities: | ||||||||
Preferred stocks | 35,717 | 48,822 | ||||||
Common stocks | 934,754 | 853,530 | ||||||
Mortgage loans on real estate, net of allowance | 2,229,659 | 1,877,053 | ||||||
Policy loans | 364,354 | 354,398 | ||||||
Investment real estate, net of accumulated depreciation of $209,115 and $191,435 | 635,110 | 528,905 | ||||||
Short-term investments | 636,823 | 295,170 | ||||||
Other invested assets | 94,442 | 85,151 | ||||||
Total investments | 16,606,120 | 14,545,703 | ||||||
Cash | 161,483 | 66,096 | ||||||
Investments in unconsolidated affiliates | 156,809 | 154,309 | ||||||
Accrued investment income | 191,737 | 184,801 | ||||||
Reinsurance ceded receivables | 371,654 | 482,846 | ||||||
Prepaid reinsurance premiums | 53,545 | 61,433 | ||||||
Premiums due and other receivables | 282,865 | 325,019 | ||||||
Deferred policy acquisition costs | 1,330,981 | 1,482,664 | ||||||
Property and equipment, net | 88,705 | 92,458 | ||||||
Current federal income taxes | 29,474 | 68,327 | ||||||
Deferred federal income taxes | 5,034 | 195,508 | ||||||
Other assets | 152,722 | 159,254 | ||||||
Separate account assets | 718,378 | 561,021 | ||||||
Total assets | $ | 20,149,507 | $ | 18,379,439 | ||||
LIABILITIES | ||||||||
Policyholder funds | ||||||||
Future policy benefits: | ||||||||
Life | $ | 2,485,886 | $ | 2,436,001 | ||||
Annuity | 783,065 | 664,136 | ||||||
Accident and health | 97,407 | 96,548 | ||||||
Policy account balances | 9,567,860 | 8,295,527 | ||||||
Policy and contract claims | 1,293,791 | 1,401,960 | ||||||
Participating policyholder share | 162,794 | 149,970 | ||||||
Other policyholder funds | 919,864 | 959,134 | ||||||
Total policyholder liabilities | 15,310,667 | 14,003,276 | ||||||
Liability for retirement benefits | 180,909 | 184,124 | ||||||
Notes payable | 73,842 | 111,922 | ||||||
Other liabilities | 393,302 | 376,863 | ||||||
Separate account liabilities | 718,378 | 561,021 | ||||||
Total liabilities | 16,677,098 | 15,237,206 | ||||||
STOCKHOLDERS’ EQUITY | ||||||||
Common stock, $1.00 par value, — Authorized 50,000,000 Issued 30,832,449, Outstanding 26,820,166 shares | 30,832 | 30,832 | ||||||
Additional paid-in capital | 11,986 | 7,552 | ||||||
Accumulated other comprehensive income (loss) | 117,649 | (221,148 | ) | |||||
Retained earnings | 3,398,492 | 3,414,946 | ||||||
Treasury stock, at cost | (98,505 | ) | (98,326 | ) | ||||
Total American National stockholders’ equity | 3,460,454 | 3,133,856 | ||||||
Noncontrolling interest | 11,955 | 8,377 | ||||||
Total stockholders’ equity | 3,472,409 | 3,142,233 | ||||||
Total liabilities and stockholders’ equity | $ | 20,149,507 | $ | 18,379,439 | ||||
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Twelve Months Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Common Stock | ||||||||||||
Balance at beginning and end of the year | $ | 30,832 | $ | 30,832 | $ | 30,832 | ||||||
Additional Paid-In Capital | ||||||||||||
Balance at beginning of the year | 7,552 | 6,080 | 4,160 | |||||||||
Issuance of treasury shares as restricted stock | 179 | (1,139 | ) | (79 | ) | |||||||
Tax benefit on excess restricted stock | 439 | — | — | |||||||||
Amortization of restricted stock | 3,816 | 2,611 | 1,999 | |||||||||
Balance as of December 31, | $ | 11,986 | $ | 7,552 | $ | 6,080 | ||||||
Accumulated Other Comprehensive Income | ||||||||||||
Balance at beginning of the year | (221,148 | ) | 145,972 | 141,869 | ||||||||
Change in unrealized gains on marketable securities, net | 383,098 | (331,828 | ) | 268 | ||||||||
Cumulative adjustment for accounting change on | ||||||||||||
Other-than-temporary impairments on debt securities | (50,411 | ) | — | — | ||||||||
Foreign exchange adjustments | 664 | (247 | ) | (17 | ) | |||||||
Minimum pension liability adjustment | 5,446 | (35,045 | ) | 3,852 | ||||||||
Balance as of December 31, | $ | 117,649 | $ | (221,148 | ) | $ | 145,972 | |||||
Retained Earnings | ||||||||||||
Balance at beginning of the year | 3,414,946 | 3,653,365 | 3,498,306 | |||||||||
Net income (loss) attributable to American National Insurance Company and Subsidiaries | 15,625 | (153,998 | ) | 240,773 | ||||||||
Cash dividends to common stockholders ($3.08, $3.08 and $3.05 per share) | (82,490 | ) | (82,651 | ) | (81,531 | ) | ||||||
ASC 740 implementation | — | — | (4,183 | ) | ||||||||
Effect of ASC 715 change in measurement date | — | (1,770 | ) | — | ||||||||
Cumulative adjustment for accounting change on | ||||||||||||
Other-than-temporary impairments on debt securities | 50,411 | — | — | |||||||||
Balance as of December 31, | $ | 3,398,492 | $ | 3,414,946 | $ | 3,653,365 | ||||||
Treasury | ||||||||||||
Balance at beginning of the year | (98,326 | ) | (99,465 | ) | (99,544 | ) | ||||||
Net issuance of restricted stock | (179 | ) | 1,139 | 79 | ||||||||
Balance as of December 31, | $ | (98,505 | ) | $ | (98,326 | ) | $ | (99,465 | ) | |||
Noncontrolling Interest | ||||||||||||
Balance at beginning of the year | 8,377 | 4,539 | 1,273 | |||||||||
Contributions | 4,392 | 4,279 | 4,284 | |||||||||
Distributions | (109 | ) | (427 | ) | (5,575 | ) | ||||||
Gain (loss) attributable to noncontrolling interest | (705 | ) | (14 | ) | 4,557 | |||||||
Balance as of December 31, | $ | 11,955 | $ | 8,377 | $ | 4,539 | ||||||
Total Equity | ||||||||||||
Balance as of December 31, | $ | 3,472,409 | $ | 3,142,233 | $ | 3,741,323 | ||||||
2009 | 2008 | 2007 | ||||||||||
Net income (loss) attributable to American National Insurance Company common stockholders | $ | 15,625 | $ | (153,998 | ) | $ | 240,773 | |||||
Other comprehensive income (loss), net of tax | ||||||||||||
Change in unrealized gains on marketable securities, net | 383,098 | (331,828 | ) | 268 | ||||||||
Foreign exchange adjustments | 664 | (247 | ) | (17 | ) | |||||||
Defined benefit plans adjustment | 5,446 | (35,045 | ) | 3,852 | ||||||||
Total other comprehensive income (loss) | $ | 389,208 | $ | (367,120 | ) | $ | 4,103 | |||||
Total comprehensive income (loss) attributable to American National Insurance Company and Subsidiaries | $ | 404,833 | $ | (521,118 | ) | $ | 244,876 | |||||
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Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
OPERATING ACTIVITIES | ||||||||||||
Net income (loss) attributable to American National Insurance Company and Subsidiaries | $ | 15,625 | $ | (153,998 | ) | $ | 240,773 | |||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||
Realized (gains) losses on investments | (23,246 | ) | 12,673 | (46,499 | ) | |||||||
Other-than-temporary impairments | 98,943 | 367,036 | — | |||||||||
Amortization of discounts and premiums on bonds | 16,215 | 16,654 | 15,619 | |||||||||
Net capitalized interest on policy loans and mortgage loans | (27,881 | ) | 3,511 | — | ||||||||
Depreciation | 44,744 | 26,496 | 35,327 | |||||||||
Interest credited to policy account balances | 370,563 | 299,833 | 295,894 | |||||||||
Charges to policy account balances | (173,360 | ) | (191,238 | ) | (146,555 | ) | ||||||
Deferred federal income tax (benefit) expense | (17,583 | ) | (87,388 | ) | 25,539 | |||||||
Deferral of policy acquisition costs | (477,419 | ) | (491,342 | ) | (465,362 | ) | ||||||
Amortization of deferred policy acquisition costs | 413,808 | 424,005 | 405,024 | |||||||||
Equity in (earnings) losses of unconsolidated affiliates | 6,488 | (7,639 | ) | (5,947 | ) | |||||||
Changes in: | ||||||||||||
Policyholder funds liabilities | 32,629 | 88,908 | 72,663 | |||||||||
Reinsurance ceded receivables | 111,192 | (44,780 | ) | 30,549 | ||||||||
Premiums due and other receivables | 42,154 | (38,419 | ) | 9,552 | ||||||||
Accrued investment income | (6,936 | ) | (1,952 | ) | (8,562 | ) | ||||||
Current federal income tax liability (recoverable) | 38,853 | (65,182 | ) | — | ||||||||
Liability for retirement benefits | (3,215 | ) | 6,018 | 5,963 | ||||||||
Prepaid reinsurance premiums | 7,888 | 5,339 | 9,298 | |||||||||
Other, net | 21,928 | 3,146 | (10,363 | ) | ||||||||
Net cash provided by operating activities | 491,390 | 171,681 | 462,913 | |||||||||
INVESTING ACTIVITIES | ||||||||||||
Proceeds from sales of: | ||||||||||||
Bonds available-for-sale | 82,861 | 6,353 | 68,004 | |||||||||
Common stocks | 182,871 | 129,270 | 277,429 | |||||||||
Real estate | 4,837 | 4,500 | 84,744 | |||||||||
Mortgage loans | — | 2,294 | — | |||||||||
Other invested assets | 1,806 | 9,896 | 104,743 | |||||||||
Disposals of property and equipment | 1,608 | 1,380 | 23,021 | |||||||||
Distributions from unconsolidated affiliates | 11,310 | 12,332 | 17,414 | |||||||||
Proceeds from maturities of: | ||||||||||||
Bonds available-for-sale | 273,819 | 269,566 | 287,559 | |||||||||
Bonds held-to-maturity | 561,903 | 580,515 | 547,416 | |||||||||
Principal payments received on: | ||||||||||||
Mortgage loans | 116,365 | 144,497 | 223,956 | |||||||||
Policy loans | 45,591 | 9,459 | 5,472 | |||||||||
Purchases of investments: | ||||||||||||
Bonds available-for-sale | (166,194 | ) | (626,623 | ) | (658,731 | ) | ||||||
Bonds held-to-maturity | (1,372,246 | ) | (644,151 | ) | (483,722 | ) | ||||||
Common stocks | (53,758 | ) | (290,979 | ) | (364,352 | ) | ||||||
Real estate | (127,281 | ) | (78,119 | ) | (46,295 | ) | ||||||
Mortgage loans | (477,275 | ) | (520,426 | ) | (386,137 | ) | ||||||
Policy loans | (32,129 | ) | (20,447 | ) | (10,237 | ) | ||||||
Other invested assets | (31,572 | ) | (21,795 | ) | (50,115 | ) | ||||||
Additions to property and equipment | (13,178 | ) | (25,024 | ) | (18,076 | ) | ||||||
Contributions to unconsolidated affiliates | (20,042 | ) | (38,514 | ) | (64,592 | ) | ||||||
Net decrease (increase) in short-term investments | (341,653 | ) | 403,092 | 19,881 | ||||||||
Other, net | (256 | ) | 2,483 | (14,052 | ) | |||||||
Net cash used in investing activities | (1,352,613 | ) | (690,441 | ) | (436,670 | ) | ||||||
FINANCING ACTIVITIES | ||||||||||||
Policyholders’ deposits to policy account balances | 2,268,201 | 1,996,836 | 1,220,022 | |||||||||
Policyholders’ withdrawals from policy account balances | (1,191,021 | ) | (1,446,521 | ) | (1,250,266 | ) | ||||||
Increase (decrease) in notes payable | (38,080 | ) | (16,877 | ) | 4,724 | |||||||
Dividends to stockholders | (82,490 | ) | (82,651 | ) | (81,531 | ) | ||||||
Net cash provided by (used in) financing activities | 956,610 | 450,787 | (107,051 | ) | ||||||||
NET INCREASE (DECREASE) IN CASH | 95,387 | (67,973 | ) | (80,808 | ) | |||||||
Cash: | ||||||||||||
Beginning of the year | 66,096 | 134,069 | 214,877 | |||||||||
End of year | $ | 161,483 | $ | 66,096 | $ | 134,069 | ||||||
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(i) | the form of our ownership interest and legal structure; | ||
(ii) | our representation on the entity’s governing body; | ||
(iii) | the size of our investment (including loans); | ||
(iv) | estimates of future cash flows; | ||
(v) | our ability to participate in policy making decisions, including but not limited to, the acquisition or disposition of investment properties and the incurrence or refinancing of debt; | ||
(vi) | the rights of other investors to participate in the decision making process; and | ||
(vii) | the ability for other partners or owners to replace us as manager and/or liquidate the venture, if applicable. |
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• | Other-than-temporary impairment (“OTTI”); | ||
• | Deferred acquisition costs; | ||
• | Reserves; | ||
• | Reinsurance recoverable; | ||
• | Pension and postretirement benefit plans; | ||
• | Litigation contingencies; and | ||
• | Federal income taxes. |
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Gross Unrealized | Gross Unrealized | Estimated Fair | ||||||||||||||
December 31, 2009 | Amortized Cost | Gains | Losses | Value | ||||||||||||
Debt securities | ||||||||||||||||
Bonds held-to-maturity: | ||||||||||||||||
U.S. treasury and other U.S. government corporations and agencies | $ | 21,222 | $ | 183 | $ | (58 | ) | $ | 21,347 | |||||||
States of the U.S. and political subdivisions of the states | 240,403 | 8,619 | (1,144 | ) | 247,878 | |||||||||||
Foreign governments | 28,997 | 3,606 | — | 32,603 | ||||||||||||
Corporate debt securities | 6,390,377 | 327,535 | (73,856 | ) | 6,644,056 | |||||||||||
Residential mortgage backed securities | 693,178 | 24,650 | (21,856 | ) | 695,972 | |||||||||||
Commercial mortgage backed securities | 33,128 | — | (23,941 | ) | 9,187 | |||||||||||
Collateralized debt securities | 9,627 | 85 | (1,036 | ) | 8,676 | |||||||||||
Other debt securities | 44,779 | 2,009 | (31 | ) | 46,757 | |||||||||||
Total bonds held-to-maturity | $ | 7,461,711 | $ | 366,687 | $ | (121,922 | ) | $ | 7,706,476 | |||||||
Bonds available-for-sale: | ||||||||||||||||
U.S. treasury and other U.S. government corporations and agencies | 3,438 | 448 | — | 3,886 | ||||||||||||
States of the U.S. and political subdivisions of the states | 540,210 | 18,869 | (1,044 | ) | 558,035 | |||||||||||
Foreign governments | 5,000 | 1,188 | — | 6,188 | ||||||||||||
Corporate debt securities | 3,196,202 | 126,742 | (69,932 | ) | 3,253,012 | |||||||||||
Residential mortgage backed securities | 353,729 | 8,507 | (6,671 | ) | 355,565 | |||||||||||
Collateralized debt securities | 23,064 | 983 | (1,553 | ) | 22,494 | |||||||||||
Other debt securities | 14,401 | 225 | (256 | ) | 14,370 | |||||||||||
Total bonds available-for-sale | $ | 4,136,044 | $ | 156,962 | $ | (79,456 | ) | $ | 4,213,550 | |||||||
Total debt securities | $ | 11,597,755 | $ | 523,649 | $ | (201,378 | ) | $ | 11,920,026 | |||||||
Marketable equity securities | ||||||||||||||||
Common stock: | ||||||||||||||||
Consumer goods | 129,363 | 47,093 | (2,336 | ) | 174,120 | |||||||||||
Energy and utilities | 83,284 | 42,939 | (1,453 | ) | 124,770 | |||||||||||
Finance | 118,622 | 40,296 | (2,174 | ) | 156,744 | |||||||||||
Healthcare | 81,454 | 29,767 | (1,100 | ) | 110,121 | |||||||||||
Industrials | 58,900 | 28,887 | (357 | ) | 87,430 | |||||||||||
Information technology | 102,171 | 48,413 | (422 | ) | 150,162 | |||||||||||
Materials | 17,875 | 7,317 | (22 | ) | 25,170 | |||||||||||
Telecommunication services | 32,272 | 8,118 | (355 | ) | 40,035 | |||||||||||
Mutual funds | 59,853 | 6,426 | (77 | ) | 66,202 | |||||||||||
Total common stock | $ | 683,794 | $ | 259,256 | $ | (8,296 | ) | $ | 934,754 | |||||||
Preferred stock | 35,359 | 5,269 | (4,911 | ) | 35,717 | |||||||||||
Total marketable equity securities | $ | 719,153 | $ | 264,525 | $ | (13,207 | ) | $ | 970,471 | |||||||
Total investments in securities | $ | 12,316,908 | $ | 788,174 | $ | (214,585 | ) | $ | 12,890,497 | |||||||
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Gross Unrealized | Gross Unrealized | Estimated Fair | ||||||||||||||
December 31, 2008 | Amortized Cost | Gains | Losses | Value | ||||||||||||
Debt securities | ||||||||||||||||
Bonds held-to-maturity: | ||||||||||||||||
U.S. treasury and other U.S. government corporations and agencies | $ | 11,484 | $ | 346 | $ | — | $ | 11,830 | ||||||||
States of the U.S. and political subdivisions of the states | 155,420 | 4,485 | (1,611 | ) | 158,294 | |||||||||||
Foreign governments | 28,975 | 3,481 | — | 32,456 | ||||||||||||
Corporate debt securities | 5,602,250 | 48,963 | (532,544 | ) | 5,118,669 | |||||||||||
Residential mortgage backed securities | 735,025 | 13,557 | (39,288 | ) | 709,294 | |||||||||||
Commercial mortgage backed securities | 32,110 | — | (24,368 | ) | 7,742 | |||||||||||
Collateralized debt securities | 39,768 | 330 | (5,274 | ) | 34,824 | |||||||||||
Other debt securities | 76,805 | 81 | (1,292 | ) | 75,594 | |||||||||||
Total bonds held-to-maturity | $ | 6,681,837 | $ | 71,243 | $ | (604,377 | ) | $ | 6,148,703 | |||||||
Bonds available-for-sale: | ||||||||||||||||
U.S. treasury and other U.S. government corporations and agencies | 3,462 | 900 | — | 4,362 | ||||||||||||
States of the U.S. and political subdivisions of the states | 591,405 | 6,281 | (19,477 | ) | 578,209 | |||||||||||
Foreign governments | 5,000 | 2,332 | — | 7,332 | ||||||||||||
Corporate debt securities | 3,195,355 | 29,053 | (441,400 | ) | 2,783,008 | |||||||||||
Residential mortgage backed securities | 427,460 | 4,355 | (14,618 | ) | 417,197 | |||||||||||
Collateralized debt securities | 25,649 | 133 | (4,710 | ) | 21,072 | |||||||||||
Other debt securities | 11,229 | — | (1,572 | ) | 9,657 | |||||||||||
Total bonds available-for-sale | $ | 4,259,560 | $ | 43,054 | $ | (481,777 | ) | $ | 3,820,837 | |||||||
Total debt securities | $ | 10,941,397 | $ | 114,297 | $ | (1,086,154 | ) | $ | 9,969,540 | |||||||
Marketable equity securities | ||||||||||||||||
Common stock: | ||||||||||||||||
Consumer goods | 159,068 | 23,558 | (15,093 | ) | 167,533 | |||||||||||
Energy and utilities | 97,103 | 25,105 | (8,889 | ) | 113,319 | |||||||||||
Finance | 128,866 | 17,824 | (13,048 | ) | 133,642 | |||||||||||
Healthcare | 94,807 | 21,076 | (6,380 | ) | 109,503 | |||||||||||
Industrials | 72,360 | 10,786 | (9,618 | ) | 73,528 | |||||||||||
Information technology | 111,976 | 7,910 | (15,207 | ) | 104,679 | |||||||||||
Materials | 30,725 | 1,685 | (6,886 | ) | 25,524 | |||||||||||
Telecommunication services | 39,171 | 5,359 | (3,840 | ) | 40,690 | |||||||||||
Mutual funds | 86,832 | 2,389 | (4,109 | ) | 85,112 | |||||||||||
Total common stock | $ | 820,908 | $ | 115,692 | $ | (83,070 | ) | $ | 853,530 | |||||||
Preferred stock | 60,718 | 3,609 | (15,505 | ) | 48,822 | |||||||||||
Total marketable equity securities | $ | 881,626 | $ | 119,301 | $ | (98,575 | ) | $ | 902,352 | |||||||
Total investments in securities | $ | 11,823,023 | $ | 233,598 | $ | (1,184,729 | ) | $ | 10,871,892 | |||||||
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Bonds Held-to-Maturity | Bonds Available-for-Sale | |||||||||||||||
Amortized | Estimated | Amortized | Estimated | |||||||||||||
Cost | Fair Value | Cost | Fair Value | |||||||||||||
Due in one year or less | $ | 147,317 | $ | 147,303 | $ | 207,074 | $ | 211,138 | ||||||||
Due after one year through five years | 3,445,659 | 3,609,070 | 1,948,476 | 1,990,220 | ||||||||||||
Due after five years through ten years | 3,130,532 | 3,208,615 | 1,426,738 | 1,453,903 | ||||||||||||
Due after ten years | 732,353 | 736,915 | 543,479 | 549,006 | ||||||||||||
$ | 7,455,861 | $ | 7,701,903 | $ | 4,125,767 | $ | 4,204,267 | |||||||||
Without single maturity date | 5,850 | 4,573 | 10,277 | 9,283 | ||||||||||||
Total | $ | 7,461,711 | $ | 7,706,476 | $ | 4,136,044 | $ | 4,213,550 | ||||||||
2009 | 2008 | 2007 | ||||||||||
Proceeds from sales of available-for-sale securities | $ | 265,732 | $ | 135,623 | $ | 166,493 | ||||||
Gross realized gains | 42,101 | 22,496 | 34,033 | |||||||||
Gross realized losses | (11,351 | ) | (31,304 | ) | (2,069 | ) |
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Location of Asset (Liability) | Estimated Fair Value | |||||||||
Derivatives Not Designated as | Reported in the Statements of | For the Years Ended December 31, | ||||||||
Hedging Instruments | Financial Position | 2009 | 2008 | |||||||
Equity indexed options | Other invested assets | $ | 32,801 | $ | 6,157 | |||||
Equity indexed annuity embedded derivative | Future policy benefits — Annuity | $ | (22,487 | ) | $ | (6,208 | ) |
Location of Gain (Loss) | Amount of Gain (Loss) Recognized in Income on Derivatives | |||||||||||||
Derivatives Not Designated as | Recognized in | For the Years Ended December 31, | ||||||||||||
Hedging Instruments | the Statements of Operations | 2009 | 2008 | 2007 | ||||||||||
Equity indexed options | Investment income | $ | 5,380 | $ | (24,400 | ) | $ | (141 | ) | |||||
Equity indexed annuity embedded derivative | Policy benefits — Annuity | $ | (8,138 | ) | $ | 23,184 | $ | 434 |
2009 | 2008 | 2007 | ||||||||||
Bonds available-for-sale | $ | 516,229 | $ | (393,429 | ) | $ | (4,443 | ) | ||||
Preferred stocks | 12,254 | (3,359 | ) | (9,544 | ) | |||||||
Common stocks | 218,338 | (295,988 | ) | 11,161 | ||||||||
Amortization of deferred policy acquisition costs | (215,294 | ) | 164,937 | 3,080 | ||||||||
531,527 | (527,839 | ) | 254 | |||||||||
Provision (benefit) for federal income taxes | 185,700 | (185,273 | ) | 130 | ||||||||
$ | 345,827 | $ | (342,566 | ) | $ | 124 | ||||||
Change in unrealized gains (losses) of investments attributable to participating policyholders’ interest | (13,140 | ) | 10,738 | 144 | ||||||||
Impact of adoption of “Recognition and Presentation of Other- | ||||||||||||
Than-Temporary Impairments,” FASB ASC Topic 320 | 50,411 | |||||||||||
Total | $ | 383,098 | $ | (331,828 | ) | $ | 268 | |||||
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Less than 12 months | 12 Months or more | Total | ||||||||||||||||||||||
Unrealized | Fair | Unrealized | Fair | Unrealized | Fair | |||||||||||||||||||
December 31, 2009 | Losses | Value | Losses | Value | Losses | Value | ||||||||||||||||||
Debt securities | ||||||||||||||||||||||||
Bonds held-to-maturity: | ||||||||||||||||||||||||
U.S. Treasury and other U.S. government corporations and agencies | $ | 58 | $ | 6,387 | $ | — | $ | — | $ | 58 | $ | 6,387 | ||||||||||||
States of the U.S. and political subdivisions of the states | 666 | 24,819 | 478 | 5,849 | 1,144 | 30,668 | ||||||||||||||||||
Corporate debt securities | 12,602 | 543,459 | 61,254 | 700,718 | 73,856 | 1,244,177 | ||||||||||||||||||
Residential mortgage backed securities | 445 | 23,750 | 21,411 | 182,315 | 21,856 | 206,065 | ||||||||||||||||||
Commercial mortgage backed securities | — | — | 23,941 | 9,187 | 23,941 | 9,187 | ||||||||||||||||||
Collateralized debt securities | 53 | 2,844 | 983 | 2,310 | 1,036 | 5,154 | ||||||||||||||||||
Other debt securities | 31 | 3,428 | — | — | 31 | 3,428 | ||||||||||||||||||
Total bonds held-to-maturity | $ | 13,855 | $ | 604,687 | $ | 108,067 | $ | 900,379 | $ | 121,922 | $ | 1,505,066 | ||||||||||||
Bonds available-for-sale: | ||||||||||||||||||||||||
States of the U.S. and political subdivisions of the states | 520 | 58,622 | 524 | 18,941 | 1,044 | 77,563 | ||||||||||||||||||
Corporate debt securities | 13,340 | 318,569 | 56,592 | 506,881 | 69,932 | 825,450 | ||||||||||||||||||
Residential mortgage backed securities | 2,273 | 49,066 | 4,398 | 36,649 | 6,671 | 85,715 | ||||||||||||||||||
Collateralized debt securities | 269 | 1,313 | 1,284 | 9,077 | 1,553 | 10,390 | ||||||||||||||||||
Other debt securities | 256 | 9,947 | — | — | 256 | 9,947 | ||||||||||||||||||
Total bonds available-for-sale | $ | 16,658 | $ | 437,517 | $ | 62,798 | $ | 571,548 | $ | 79,456 | $ | 1,009,065 | ||||||||||||
Total debt securities | $ | 30,513 | $ | 1,042,204 | $ | 170,865 | $ | 1,471,927 | $ | 201,378 | $ | 2,514,131 | ||||||||||||
Marketable equity securities | ||||||||||||||||||||||||
Common stock: | ||||||||||||||||||||||||
Consumer goods | 837 | 5,838 | 1,499 | 14,900 | 2,336 | 20,738 | ||||||||||||||||||
Energy and utilities | 296 | 7,949 | 1,157 | 7,006 | 1,453 | 14,955 | ||||||||||||||||||
Finance | 1,712 | 29,515 | 462 | 3,881 | 2,174 | 33,396 | ||||||||||||||||||
Healthcare | 464 | 6,124 | 636 | 5,316 | 1,100 | 11,440 | ||||||||||||||||||
Industrials | 163 | 2,567 | 194 | 1,678 | 357 | 4,245 | ||||||||||||||||||
Information technology | 358 | 2,583 | 64 | 533 | 422 | 3,116 | ||||||||||||||||||
Materials | 19 | 453 | 3 | 45 | 22 | 498 | ||||||||||||||||||
Telecommunications services | 232 | 3,188 | 123 | 2,542 | 355 | 5,730 | ||||||||||||||||||
Mutual funds | 77 | 4,372 | — | — | 77 | 4,372 | ||||||||||||||||||
Total common stock | $ | 4,158 | $ | 62,589 | $ | 4,138 | $ | 35,901 | $ | 8,296 | $ | 98,490 | ||||||||||||
Preferred stock | 21 | 4,169 | 4,890 | 15,210 | 4,911 | 19,379 | ||||||||||||||||||
Total marketable equity securities | $ | 4,179 | $ | 66,758 | $ | 9,028 | $ | 51,111 | $ | 13,207 | $ | 117,869 | ||||||||||||
Total investments in securities | $ | 34,692 | $ | 1,108,962 | $ | 179,893 | $ | 1,523,038 | $ | 214,585 | $ | 2,632,000 | ||||||||||||
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Less than 12 months | 12 Months or more | Total | ||||||||||||||||||||||
Unrealized | Fair | Unrealized | Fair | Unrealized | Fair | |||||||||||||||||||
December 31, 2008 | Losses | Value | Losses | Value | Losses | Value | ||||||||||||||||||
Debt securities | ||||||||||||||||||||||||
Bonds held-to-maturity: | ||||||||||||||||||||||||
States of the U.S. and political subdivisions of the states | $ | 1,571 | $ | 21,104 | $ | 40 | $ | 383 | $ | 1,611 | $ | 21,487 | ||||||||||||
Corporate debt securities | 280,110 | 2,685,787 | 252,434 | 928,186 | 532,544 | 3,613,973 | ||||||||||||||||||
Residential mortgage backed securities | 31,471 | 186,404 | 7,817 | 50,425 | 39,288 | 236,829 | ||||||||||||||||||
Commercial mortgage backed securities | 24,368 | 7,742 | — | — | 24,368 | 7,742 | ||||||||||||||||||
Collateralized debt securities | 613 | 4,785 | 4,661 | 23,844 | 5,274 | 28,629 | ||||||||||||||||||
Other debt securities | 1,292 | 9,566 | — | — | 1,292 | 9,566 | ||||||||||||||||||
Total bonds held-to-maturity | $ | 339,425 | $ | 2,915,388 | $ | 264,952 | $ | 1,002,838 | $ | 604,377 | $ | 3,918,226 | ||||||||||||
Bonds available-for-sale: | ||||||||||||||||||||||||
States of the U.S. and political subdivisions of the states | 15,383 | 274,191 | 4,094 | 35,295 | 19,477 | 309,486 | ||||||||||||||||||
Corporate debt securities | 247,590 | 1,683,287 | 193,810 | 643,327 | 441,400 | 2,326,614 | ||||||||||||||||||
Residential mortgage backed securities | 8,067 | 102,382 | 6,551 | 51,327 | 14,618 | 153,709 | ||||||||||||||||||
Collateralized debt securities | 1,822 | 10,295 | 2,888 | 8,529 | 4,710 | 18,824 | ||||||||||||||||||
Other debt securities | 1,572 | 9,657 | — | — | 1,572 | 9,657 | ||||||||||||||||||
Total bonds available-for-sale | $ | 274,434 | $ | 2,079,812 | $ | 207,343 | $ | 738,478 | $ | 481,777 | $ | 2,818,290 | ||||||||||||
Total debt securities | $ | 613,859 | $ | 4,995,200 | $ | 472,295 | $ | 1,741,316 | $ | 1,086,154 | $ | 6,736,516 | ||||||||||||
Marketable equity securities | ||||||||||||||||||||||||
Common stock: | ||||||||||||||||||||||||
Consumer goods | 13,717 | 66,398 | 1,376 | 5,014 | 15,093 | 71,412 | ||||||||||||||||||
Energy and utilities | 8,203 | 24,909 | 686 | 2,818 | 8,889 | 27,727 | ||||||||||||||||||
Finance | 12,729 | 49,150 | 319 | 1,190 | 13,048 | 50,340 | ||||||||||||||||||
Healthcare | 5,177 | 29,429 | 1,203 | 5,826 | 6,380 | 35,255 | ||||||||||||||||||
Industrials | 9,496 | 23,880 | 122 | 593 | 9,618 | 24,473 | ||||||||||||||||||
Information technology | 13,859 | 57,237 | 1,348 | 2,583 | 15,207 | 59,820 | ||||||||||||||||||
Materials | 6,665 | 15,164 | 221 | 456 | 6,886 | 15,620 | ||||||||||||||||||
Telecommunications services | 3,838 | 16,570 | 2 | 7 | 3,840 | 16,577 | ||||||||||||||||||
Mutual funds | 4,107 | 16,775 | 2 | 6 | 4,109 | 16,781 | ||||||||||||||||||
Total common stock | $ | 77,791 | $ | 299,512 | $ | 5,279 | $ | 18,493 | $ | 83,070 | $ | 318,005 | ||||||||||||
Preferred stock | 1,238 | 7,853 | 14,267 | 31,835 | 15,505 | 39,688 | ||||||||||||||||||
Total marketable equity securities | $ | 79,029 | $ | 307,365 | $ | 19,546 | $ | 50,328 | $ | 98,575 | $ | 357,693 | ||||||||||||
Total investments in securities | $ | 692,888 | $ | 5,302,565 | $ | 491,841 | $ | 1,791,644 | $ | 1,184,729 | $ | 7,094,209 | ||||||||||||
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Net Investment Income | Realized Investments Gains/(Losses) | |||||||||||||||||||||||
2009 | 2008 | 2007 | 2009 | 2008 | 2007 | |||||||||||||||||||
Bonds | $ | 627,236 | $ | 623,356 | $ | 620,035 | $ | (9,954 | ) | $ | 8,531 | $ | 1,455 | |||||||||||
Preferred stocks | 3,419 | 5,687 | 4,561 | (1,590 | ) | (5,307 | ) | — | ||||||||||||||||
Common stocks | 23,324 | 28,977 | 27,002 | 36,792 | (8,524 | ) | 29,990 | |||||||||||||||||
Mortgage loans | 141,124 | 118,067 | 103,627 | — | — | — | ||||||||||||||||||
Real estate | 122,603 | 114,198 | 126,926 | 1,523 | 1,750 | 18,563 | ||||||||||||||||||
Options | 5,380 | — | — | — | — | — | ||||||||||||||||||
Other invested assets | 41,165 | 12,123 | 40,994 | 269 | (5,977 | ) | (40 | ) | ||||||||||||||||
964,251 | 902,408 | 923,145 | 27,040 | (9,527 | ) | 49,968 | ||||||||||||||||||
Investment expenses | (124,146 | ) | (106,231 | ) | (110,176 | ) | — | — | — | |||||||||||||||
Increase in valuation allowances | — | — | — | (3,794 | ) | (3,146 | ) | (1,775 | ) | |||||||||||||||
Total | $ | 840,105 | $ | 796,177 | $ | 812,969 | $ | 23,246 | $ | (12,673 | ) | $ | 48,193 | |||||||||||
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Year Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Bonds | $ | (10,046 | ) | $ | (165,803 | ) | $ | (1,089 | ) | |||
Stocks | (69,057 | ) | (199,748 | ) | (6,077 | ) | ||||||
Mortgage loans | (1,647 | ) | (740 | ) | — | |||||||
Real estate | (10,550 | ) | (745 | ) | — | |||||||
Other invested assets | (7,643 | ) | — | — | ||||||||
Total | $ | (98,943 | ) | $ | (367,036 | ) | $ | (7,166 | ) | |||
2009 | 2008 | |||||||
AAA | 12 | % | 17 | % | ||||
AA+ | 2 | % | 1 | % | ||||
AA | 2 | % | 6 | % | ||||
AA- | 5 | % | 4 | % | ||||
A+ | 8 | % | 11 | % | ||||
A | 14 | % | 16 | % | ||||
A- | 14 | % | 13 | % | ||||
BBB+ | 13 | % | 11 | % | ||||
BBB | 16 | % | 12 | % | ||||
BBB- | 8 | % | 4 | % | ||||
BB+ and below | 6 | % | 5 | % | ||||
Total | 100 | % | 100 | % | ||||
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2009 | 2008 | |||||||
Consumer goods | 19 | % | 20 | % | ||||
Financials | 17 | % | 16 | % | ||||
Information technology | 16 | % | 13 | % | ||||
Energy and utilities | 13 | % | 13 | % | ||||
Healthcare | 12 | % | 13 | % | ||||
Industrials | 9 | % | 8 | % | ||||
Mutual funds | 7 | % | 10 | % | ||||
Communications | 4 | % | 5 | % | ||||
Materials | 3 | % | 2 | % | ||||
Total | 100 | % | 100 | % | ||||
Mortgage Loans | Investment Real Estate | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Office buildings | 31 | % | 30 | % | 15 | % | 18 | % | ||||||||
Industrial | 28 | % | 25 | % | 37 | % | 45 | % | ||||||||
Shopping centers | 19 | % | 21 | % | 19 | % | 23 | % | ||||||||
Hotels and motels | 15 | % | 17 | % | 2 | % | 2 | % | ||||||||
Other | 4 | % | 4 | % | 16 | % | 11 | % | ||||||||
Commercial | 3 | % | 3 | % | 11 | % | 1 | % | ||||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||
Mortgage Loans | Investment Real Estate | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
West South Central | 22 | % | 22 | % | 58 | % | 64 | % | ||||||||
East North Central | 20 | % | 22 | % | 8 | % | 6 | % | ||||||||
South Atlantic | 20 | % | 17 | % | 13 | % | 16 | % | ||||||||
Pacific | 10 | % | 13 | % | 2 | % | 2 | % | ||||||||
Middle Atlantic | 8 | % | 10 | % | 10 | % | 0 | % | ||||||||
Mountain | 6 | % | 5 | % | 1 | % | 1 | % | ||||||||
East South Central | 6 | % | 4 | % | 7 | % | 10 | % | ||||||||
New England | 4 | % | 5 | % | 0 | % | 0 | % | ||||||||
West North Central | 4 | % | 2 | % | 1 | % | 1 | % | ||||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||
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December 31, 2009 | December 31, 2008 | |||||||||||||||
Carrying | Estimated | Carrying | Estimated | |||||||||||||
Amount | Fair Value | Amount | Fair Value | |||||||||||||
Financial assets: | ||||||||||||||||
Fixed maturities | ||||||||||||||||
Held-to-maturity: | ||||||||||||||||
U.S. treasury and other U.S. government corporations and agencies | $ | 21,222 | $ | 21,347 | $ | 11,484 | $ | 11,830 | ||||||||
States of the U.S. and political subdivisions of the states | 240,403 | 247,878 | 155,420 | 158,294 | ||||||||||||
Foreign governments | 28,997 | 32,603 | 28,975 | 32,456 | ||||||||||||
Corporate debt securities | 6,390,377 | 6,644,056 | 5,602,250 | 5,118,669 | ||||||||||||
Residential mortgage backed securities | 693,178 | 695,972 | 735,025 | 709,294 | ||||||||||||
Commercial mortgage backed securities | 33,128 | 9,187 | 32,110 | 7,742 | ||||||||||||
Collateralized debt securities | 9,627 | 8,676 | 39,768 | 34,824 | ||||||||||||
Other debt securities | 44,779 | 46,757 | 76,805 | 75,594 | ||||||||||||
Total fixed maturities, held-to-maturity | $ | 7,461,711 | $ | 7,706,476 | $ | 6,681,837 | $ | 6,148,703 | ||||||||
Available-for-sale: | ||||||||||||||||
U.S. treasury and other U.S. government corporations and agencies | 3,886 | 3,886 | 4,362 | 4,362 | ||||||||||||
States of the U.S. and political subdivisions of the states | 558,035 | 558,035 | 578,209 | 578,209 | ||||||||||||
Foreign governments | 6,188 | 6,188 | 7,332 | 7,332 | ||||||||||||
Corporate debt securities | 3,253,012 | 3,253,012 | 2,783,008 | 2,783,008 | ||||||||||||
Residential mortgage backed securities | 355,565 | 355,565 | 417,197 | 417,197 | ||||||||||||
Collateralized debt securities | 22,494 | 22,494 | 21,072 | 21,072 | ||||||||||||
Other debt securities | 14,370 | 14,370 | 9,657 | 9,657 | ||||||||||||
Total fixed maturities, available-for-sale | $ | 4,213,550 | $ | 4,213,550 | $ | 3,820,837 | $ | 3,820,837 | ||||||||
Total fixed maturities | $ | 11,675,261 | $ | 11,920,026 | $ | 10,502,674 | $ | 9,969,540 | ||||||||
Marketable equity securities | ||||||||||||||||
Common stock: | ||||||||||||||||
Consumer goods | 174,120 | 174,120 | 167,533 | 167,533 | ||||||||||||
Energy and utilities | 124,770 | 124,770 | 113,319 | 113,319 | ||||||||||||
Finance | 156,744 | 156,744 | 133,642 | 133,642 | ||||||||||||
Healthcare | 110,121 | 110,121 | 109,503 | 109,503 | ||||||||||||
Industrials | 87,430 | 87,430 | 73,528 | 73,528 | ||||||||||||
Information technology | 150,162 | 150,162 | 104,679 | 104,679 | ||||||||||||
Materials | 25,170 | 25,170 | 25,524 | 25,524 | ||||||||||||
Mutual funds | 66,202 | 66,202 | 85,112 | 85,112 | ||||||||||||
Telecommunication services | 40,035 | 40,035 | 40,690 | 40,690 | ||||||||||||
Preferred stock | 35,717 | 35,717 | 48,822 | 48,822 | ||||||||||||
Total marketable equity securities | $ | 970,471 | $ | 970,471 | $ | 902,352 | $ | 902,352 | ||||||||
Options | 32,801 | 32,801 | 6,157 | 6,157 | ||||||||||||
Mortgage loans on real estate, net of allowance | 2,229,659 | 2,267,157 | 1,877,053 | 1,891,895 | ||||||||||||
Policy loans | 364,354 | 364,354 | 354,398 | 354,398 | ||||||||||||
Short-term investments | 636,823 | 636,823 | 295,170 | 295,170 | ||||||||||||
Total financial assets | $ | 15,909,369 | $ | 16,191,632 | $ | 13,937,804 | $ | 13,419,512 | ||||||||
Financial liabilities: | ||||||||||||||||
Investment contracts | 7,828,243 | 7,828,243 | 6,626,561 | 6,626,561 | ||||||||||||
Liability for embedded derivatives of equity indexed annuities | 22,487 | 22,487 | 6,208 | 6,208 | ||||||||||||
Notes payable | 73,842 | 73,842 | 111,922 | 111,922 | ||||||||||||
Total financial liabilities | $ | 7,924,572 | $ | 7,924,572 | $ | 6,744,691 | $ | 6,744,691 | ||||||||
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Level 1 | Unadjusted quoted prices in active markets for identical assets or liabilities. American National defines active markets based on average trading volume for equity securities. The size of the bid/ask spread is used as an indicator of market activity for fixed maturity securities. |
Level 2 | Quoted prices in markets that are not active or inputs that are observable directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities other than quoted prices in Level 1; quoted prices in markets that are not active; or other inputs that are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. |
Level 3 | Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Unobservable inputs reflect American National’s own assumptions about the assumptions that market participants would use in pricing the asset or liability. Level 3 assets and liabilities include financial instruments whose values are determined using pricing models and third-party evaluation, as well as instruments for which the determination of fair value requires significant management judgment or estimation. |
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Fair Value Measurement at December 31, 2009 Using: | ||||||||||||||||
Quoted | ||||||||||||||||
Prices in | ||||||||||||||||
Active | Significant | |||||||||||||||
Markets for | Other | Significant | ||||||||||||||
Fair Value at | Identical | Observable | Unobservable | |||||||||||||
December 31, | Assets | Inputs | Inputs | |||||||||||||
2009 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
Financial assets: | ||||||||||||||||
Fixed maturities | ||||||||||||||||
Held-to-maturity: | ||||||||||||||||
U.S. treasury and other U.S. government corporations and agencies | $ | 21,347 | $ | — | $ | 21,347 | $ | — | ||||||||
States of the U.S. and political subdivisions of the states | 247,878 | — | 247,878 | — | ||||||||||||
Foreign governments | 32,603 | — | 32,603 | — | ||||||||||||
Corporate debt securities | 6,644,056 | — | 6,635,387 | 8,669 | ||||||||||||
Residential mortgage backed securities | 695,972 | — | 692,702 | 3,270 | ||||||||||||
Commercial mortgage backed securities | 9,187 | — | 9,187 | — | ||||||||||||
Collateralized debt securities | 8,676 | — | 624 | 8,052 | ||||||||||||
Other debt securities | 46,757 | — | 46,757 | — | ||||||||||||
Total fixed maturities, held-to-maturity | $ | 7,706,476 | $ | — | $ | 7,686,485 | $ | 19,991 | ||||||||
Available-for-sale: | ||||||||||||||||
U.S. treasury and other U.S. government corporations and agencies | 3,886 | — | 3,886 | — | ||||||||||||
States of the U.S. and political subdivisions of the states | 558,035 | — | 558,035 | — | ||||||||||||
Foreign governments | 6,188 | — | 6,188 | — | ||||||||||||
Corporate debt securities | 3,253,012 | — | 3,238,004 | 15,008 | ||||||||||||
Residential mortgage backed securities | 355,565 | — | 355,548 | 17 | ||||||||||||
Collateralized debt securities | 22,494 | — | 21,138 | 1,356 | ||||||||||||
Other debt securities | 14,370 | — | 14,370 | — | ||||||||||||
Total fixed maturities, available-for-sale | $ | 4,213,550 | $ | — | $ | 4,197,169 | $ | 16,381 | ||||||||
Total fixed maturities | $ | 11,920,026 | $ | — | $ | 11,883,654 | $ | 36,372 | ||||||||
Marketable equity securities | ||||||||||||||||
Common stock: | ||||||||||||||||
Consumer goods | 174,120 | 174,120 | — | — | ||||||||||||
Energy and utilities | 124,770 | 124,770 | — | — | ||||||||||||
Finance | 156,744 | 156,744 | — | — | ||||||||||||
Healthcare | 110,121 | 110,121 | — | — | ||||||||||||
Industrials | 87,430 | 87,430 | — | — | ||||||||||||
Information technology | 150,162 | 150,162 | — | — | ||||||||||||
Materials | 25,170 | 25,170 | — | — | ||||||||||||
Mutual funds | 66,202 | 66,202 | — | — | ||||||||||||
Telecommunication services | 40,035 | 40,035 | — | — | ||||||||||||
Preferred stock | 35,717 | 35,123 | — | 594 | ||||||||||||
Total marketable equity securities | $ | 970,471 | $ | 969,877 | $ | — | $ | 594 | ||||||||
Options | 32,801 | — | — | 32,801 | ||||||||||||
Mortgage loans on real estate, net of allowance | 2,267,157 | — | 2,267,157 | — | ||||||||||||
Short-term investments | 636,823 | — | 636,823 | — | ||||||||||||
Total financial assets | $ | 15,827,278 | $ | 969,877 | $ | 14,787,634 | $ | 69,767 | ||||||||
Financial liabilities: | ||||||||||||||||
Liability for embedded derivatives of equity indexed annuities | 22,487 | — | — | 22,487 | ||||||||||||
Total financial liabilities | $ | 22,487 | $ | — | $ | — | $ | 22,487 | ||||||||
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Fair Value Measurement at December 31, 2008 Using: | ||||||||||||||||
Quoted | ||||||||||||||||
Prices in | ||||||||||||||||
Active | Significant | |||||||||||||||
Markets for | Other | Significant | ||||||||||||||
Fair Value at | Identical | Observable | Unobservable | |||||||||||||
December 31, | Assets | Inputs | Inputs | |||||||||||||
2008 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
Financial assets: | ||||||||||||||||
Fixed maturities | ||||||||||||||||
Held-to-maturity: | ||||||||||||||||
U.S. treasury and other U.S. government corporations and agencies | $ | 11,830 | $ | — | $ | 11,830 | $ | — | ||||||||
States of the U.S. and political subdivisions of the states | 158,294 | — | 158,294 | — | ||||||||||||
Foreign governments | 32,456 | — | 32,456 | — | ||||||||||||
Corporate debt securities | 5,118,669 | — | 5,111,068 | 7,601 | ||||||||||||
Residential mortgage backed securities | 709,294 | — | 705,491 | 3,803 | ||||||||||||
Commercial mortgage backed securities | 7,742 | — | 7,742 | — | ||||||||||||
Collateralized debt securities | 34,824 | — | 26,117 | 8,707 | ||||||||||||
Other debt securities | 75,594 | — | 75,584 | 10 | ||||||||||||
Total fixed maturities, held-to-maturity | $ | 6,148,703 | $ | — | $ | 6,128,582 | $ | 20,121 | ||||||||
Available-for-sale: | ||||||||||||||||
U.S. treasury and other U.S. government corporations and agencies | 4,362 | — | 4,362 | — | ||||||||||||
States of the U.S. and political subdivisions of the states | 578,209 | — | 578,209 | — | ||||||||||||
Foreign governments | 7,332 | — | 7,332 | — | ||||||||||||
Corporate debt securities | 2,783,008 | — | 2,752,640 | 30,368 | ||||||||||||
Residential mortgage backed securities | 417,197 | — | 407,753 | 9,444 | ||||||||||||
Commercial mortgage backed securities | — | — | — | — | ||||||||||||
Collateralized debt securities | 21,072 | — | 18,062 | 3,010 | ||||||||||||
Other debt securities | 9,657 | — | 9,657 | — | ||||||||||||
Total fixed maturities, available-for-sale | $ | 3,820,837 | $ | — | $ | 3,778,015 | $ | 42,822 | ||||||||
Total fixed maturities | $ | 9,969,540 | $ | — | $ | 9,906,597 | $ | 62,943 | ||||||||
Marketable equity securities | ||||||||||||||||
Common stock: | ||||||||||||||||
Consumer goods | 167,533 | 167,533 | — | — | ||||||||||||
Energy and utilities | 113,319 | 113,319 | — | — | ||||||||||||
Finance | 133,642 | 133,642 | — | — | ||||||||||||
Healthcare | 109,503 | 109,503 | — | — | ||||||||||||
Industrials | 73,528 | 73,528 | — | — | ||||||||||||
Information technology | 104,679 | 104,679 | — | — | ||||||||||||
Materials | 25,524 | 25,524 | — | — | ||||||||||||
Mutual funds | 85,112 | 85,112 | — | — | ||||||||||||
Telecommunication services | 40,690 | 40,690 | — | — | ||||||||||||
Preferred stock | 48,822 | 27,566 | — | 21,256 | ||||||||||||
Total marketable equity securities | $ | 902,352 | $ | 881,096 | $ | — | $ | 21,256 | ||||||||
Options | 6,157 | — | — | 6,157 | ||||||||||||
Mortgage loans on real estate, net of allowance | 1,891,895 | — | 1,891,895 | — | ||||||||||||
Short-term investments | 295,170 | — | 295,170 | — | ||||||||||||
Total financial assets | $ | 13,065,114 | $ | 881,096 | $ | 12,093,662 | $ | 90,356 | ||||||||
Financial liabilities: | ||||||||||||||||
Liability for embedded derivatives of equity indexed annuities | 6,208 | — | — | 6,208 | ||||||||||||
Total financial liabilities | $ | 6,208 | $ | — | $ | — | $ | 6,208 | ||||||||
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Fair Value Measurements Using | ||||
Significant Unobservable Inputs | ||||
Level 3 Totals | ||||
Beginning balance — January 1, 2009 | $ | 84,148 | ||
Net gains included in other comprehensive income | 9,022 | |||
Net gain (loss) for derivatives included in net investment income | (18,267 | ) | ||
Purchases, sales, and settlements of derivatives (net) | 21,413 | |||
Transfers into Level 3 | 175 | |||
Transfers out of Level 3 | (49,211 | ) | ||
Ending balance — December 31, 2009 | $ | 47,280 | ||
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Life | Accident | Property | ||||||||||||||
& Annuity | & Health | & Casualty | Total | |||||||||||||
Balance at December 31, 2006 | $ | 981,035 | $ | 85,666 | $ | 121,178 | $ | 1,187,879 | ||||||||
Additions | 216,660 | 18,735 | 232,138 | 467,533 | ||||||||||||
Amortization | (156,017 | ) | (24,508 | ) | (224,499 | ) | (405,024 | ) | ||||||||
Effect of change in unrealized gains on available-for-sale securities | 3,080 | — | — | 3,080 | ||||||||||||
Net changes | 63,723 | (5,773 | ) | 7,639 | 65,589 | |||||||||||
Acquisitions | (2,170 | ) | — | (2,170 | ) | |||||||||||
Foreign exchange effect | (13 | ) | — | (13 | ) | |||||||||||
Balance at December 31, 2007 | $ | 1,042,575 | $ | 79,893 | $ | 128,817 | $ | 1,251,285 | ||||||||
Additions | 225,575 | 22,762 | 243,005 | 491,342 | ||||||||||||
Amortization | (162,884 | ) | (27,785 | ) | (233,336 | ) | (424,005 | ) | ||||||||
Effect of change in unrealized gains on available-for-sale securities | 164,937 | — | — | 164,937 | ||||||||||||
Net changes | 227,628 | (5,023 | ) | 9,669 | 232,274 | |||||||||||
Acquisitions | (729 | ) | — | — | (729 | ) | ||||||||||
Foreign exchange effect | (166 | ) | — | — | (166 | ) | ||||||||||
Balance at December 31, 2008 | $ | 1,269,308 | $ | 74,870 | $ | 138,486 | $ | 1,482,664 | ||||||||
Additions | 203,930 | 16,729 | 256,758 | 477,417 | ||||||||||||
Amortization | (143,453 | ) | (21,746 | ) | (248,607 | ) | (413,806 | ) | ||||||||
Effect of change in unrealized losses on available-for-sale securities | (215,294 | ) | — | — | (215,294 | ) | ||||||||||
Net changes | (154,817 | ) | (5,017 | ) | 8,151 | (151,683 | ) | |||||||||
Balance at December 31, 2009 | $ | 1,114,491 | $ | 69,853 | $ | 146,637 | $ | 1,330,981 | ||||||||
2009 Premiums | $ | 504,814 | $ | 309,701 | $ | 1,159,509 | $ | 1,974,024 | ||||||||
2008 Premiums | $ | 415,586 | $ | 290,883 | $ | 1,182,026 | $ | 1,888,495 | ||||||||
2007 Premiums | $ | 538,641 | $ | 283,765 | $ | 1,177,217 | $ | 1,999,623 | ||||||||
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2009 | 2008 | 2007 | ||||||||||
Balance at January 1 | $ | 1,310,272 | $ | 1,256,698 | $ | 1,308,603 | ||||||
Less reinsurance recoverables | 377,692 | 363,140 | 421,737 | |||||||||
Net beginning balance | 932,580 | 893,558 | 886,866 | |||||||||
Incurred related to: | ||||||||||||
Current | 1,139,481 | 1,158,452 | 1,073,249 | |||||||||
Prior years | (30,623 | ) | (43,045 | ) | (93,524 | ) | ||||||
Total incurred | 1,108,858 | 1,115,407 | 979,725 | |||||||||
Paid related to: | ||||||||||||
Current | 690,085 | 709,705 | 636,234 | |||||||||
Prior years | 407,129 | 366,680 | 336,799 | |||||||||
Total paid | 1,097,214 | 1,076,385 | 973,033 | |||||||||
Net balance at December 31 | 944,224 | 932,580 | 893,558 | |||||||||
Plus reinsurance recoverables | 279,987 | 377,692 | 363,140 | |||||||||
Balance at December 31 | $ | 1,224,211 | $ | 1,310,272 | $ | 1,256,698 | ||||||
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2009 | 2008 | 2007 | ||||||||||
Direct premiums | $ | 2,113,109 | $ | 2,117,400 | $ | 2,134,669 | ||||||
Reinsurance premiums assumed from other companies | 182,848 | 215,189 | 176,357 | |||||||||
Reinsurance premiums ceded to other companies | (321,933 | ) | (444,094 | ) | (302,650 | ) | ||||||
Net premiums | $ | 1,974,024 | $ | 1,888,495 | $ | 2,008,376 | ||||||
Reinsurance recoveries | $ | 193,529 | $ | 301,397 | $ | 198,553 | ||||||
2009 | 2008 | 2007 | ||||||||||
Direct life insurance in-force | $ | 68,584,383 | $ | 68,820,212 | $ | 67,604,695 | ||||||
Reinsurance risks assumed from other companies | 863,867 | 1,050,645 | 1,078,371 | |||||||||
Total life insurance in-force | 69,448,250 | 69,870,857 | 68,683,066 | |||||||||
Reinsurance risks ceded to other companies | (31,347,876 | ) | (31,241,255 | ) | (29,635,648 | ) | ||||||
Net life insurance in-force | $ | 38,100,374 | $ | 38,629,602 | $ | 39,047,418 | ||||||
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For the Years Ended December 31, | ||||||||||||||||||||||||
2009 | 2008 | 2007 | ||||||||||||||||||||||
Amount | Rate | Amount | Rate | Amount | Rate | |||||||||||||||||||
Income tax (benefit) on pre-tax income | $ | (4,348 | ) | 35.0 | % | $ | (105,021 | ) | 35.0 | % | $ | 121,536 | 35.0 | % | ||||||||||
Tax-exempt investment income | (9,351 | ) | 75.3 | (8,791 | ) | 2.9 | (6,360 | ) | (1.8 | ) | ||||||||||||||
Dividend exclusion | (8,432 | ) | 67.9 | (12,028 | ) | 4.0 | (6,589 | ) | (1.9 | ) | ||||||||||||||
Miscellaneous tax credits, net | (6,963 | ) | 56.0 | (5,835 | ) | 1.9 | (3,862 | ) | (1.1 | ) | ||||||||||||||
Foreign operations | — | — | — | — | 1,735 | 0.5 | ||||||||||||||||||
Other items, net | (2,713 | ) | 21.8 | 9,645 | (3.1 | ) | (597 | ) | (0.2 | ) | ||||||||||||||
Total | $ | (31,807 | ) | 256.0 | % | $ | (122,030 | ) | 40.7 | % | $ | 105,863 | 30.5 | % | ||||||||||
For the Years Ended December 31, | ||||||||
2009 | 2008 | |||||||
DEFERRED TAX ASSETS: | ||||||||
Marketable securities, principally due to impairment losses | $ | 109,650 | $ | 138,487 | ||||
Marketable securities, principally due to net unrealized losses | — | 146,191 | ||||||
Investment in real estate and other invested assets principally due to investment valuation allowances | 18,315 | 1,279 | ||||||
Policyholder funds, principally due to policy reserve discount | 211,547 | 187,277 | ||||||
Policyholder funds, principally due to unearned premium reserve | 31,312 | 30,716 | ||||||
Non-qualified pension | 29,109 | 27,630 | ||||||
Participating policyholders’ surplus | 28,505 | 28,615 | ||||||
Pension | 35,228 | 36,968 | ||||||
Commissions and other expenses | 16,209 | 24,395 | ||||||
Tax carryforwards | 8,666 | 623 | ||||||
Other assets | 5,952 | 8,895 | ||||||
Gross deferred tax assets | 494,493 | 631,076 | ||||||
Valuation allowance | (400 | ) | (1,000 | ) | ||||
Net deferred tax assets | $ | 494,093 | $ | 630,076 | ||||
DEFERRED TAX LIABILITIES: | ||||||||
Marketable securities, principally due to net unrealized gains | (114,861 | ) | — | |||||
Investment in bonds, principally due to accrual of discount on bonds | (13,426 | ) | (18,221 | ) | ||||
Deferred policy acquisition costs, due to difference between GAAP and tax amortization methods | (356,014 | ) | (410,970 | ) | ||||
Property, plant and equipment, principally due to difference between GAAP and tax depreciation methods | (4,758 | ) | (5,377 | ) | ||||
Gross deferred tax liabilities | (489,059 | ) | (434,568 | ) | ||||
Total net deferred tax — asset | $ | 5,034 | $ | 195,508 | ||||
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2009 | 2008 | 2007 | ||||||||||
Unrecognized tax positions | ||||||||||||
Balance at beginning of year | $ | 1,054 | $ | 4,618 | $ | 5,832 | ||||||
Tax positions related to prior years | — | — | — | |||||||||
Current year tax positions | — | — | — | |||||||||
Settlements during the year | (1,054 | ) | (3,564 | ) | (1,214 | ) | ||||||
Lapse in statute of limitations | — | — | — | |||||||||
Balance at end of year | $ | — | $ | 1,054 | $ | 4,618 | ||||||
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Before | Federal | |||||||||||
Federal | Income Tax | Net of Federal | ||||||||||
Income Tax | Expense | Income Tax | ||||||||||
December 31, 2009 | ||||||||||||
Unrealized gains | $ | 746,821 | $ | 332,846 | $ | 413,975 | ||||||
Less: reclassification adjustment for net losses realized in net loss | (47,503 | ) | (16,626 | ) | (30,877 | ) | ||||||
Net unrealized gain component of comprehensive income | $ | 699,318 | $ | 316,220 | $ | 383,098 | ||||||
December 31, 2008 | ||||||||||||
Unrealized losses | $ | (138,311 | ) | $ | (48,409 | ) | $ | (89,902 | ) | |||
Less: reclassification adjustment for net losses realized in net loss | (372,194 | ) | (130,268 | ) | (241,926 | ) | ||||||
Net unrealized loss component of comprehensive loss | $ | (510,505 | ) | $ | (178,677 | ) | $ | (331,828 | ) | |||
December 31, 2007 | ||||||||||||
Unrealized losses | $ | (20,082 | ) | $ | (7,029 | ) | $ | (13,053 | ) | |||
Less: reclassification adjustment for net gains realized in net income | 20,494 | 7,173 | 13,321 | |||||||||
Net unrealized gain component of comprehensive income | $ | 412 | $ | 144 | $ | 268 | ||||||
2009 | 2008 | 2007 | ||||||||||
Common stock | ||||||||||||
Shares issued | 30,832,449 | 30,832,449 | 30,832,449 | |||||||||
Treasury shares | 4,012,283 | 4,013,616 | 4,099,617 | |||||||||
Restricted shares | 261,334 | 339,001 | 253,000 | |||||||||
Unrestricted outstanding shares | 26,558,832 | 26,479,832 | 26,479,832 | |||||||||
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SAR Weighted- | RS Weighted- | |||||||||||||||
Average Price | Average Price | |||||||||||||||
SAR Shares | per Share | RS Shares | per Share | |||||||||||||
Outstanding at December 31, 2006 | 132,699 | $ | 95.05 | 247,000 | $ | 4.51 | ||||||||||
Granted | 4,500 | 130.52 | 6,000 | — | ||||||||||||
Exercised | (34,795 | ) | 91.36 | — | — | |||||||||||
Forfeited | (5,680 | ) | 98.20 | — | ||||||||||||
Outstanding at December 31, 2007 | 96,724 | $ | 97.84 | 253,000 | $ | 4.40 | ||||||||||
Granted | 96,917 | 115.92 | 86,001 | — | ||||||||||||
Exercised | (4,109 | ) | 81.30 | — | — | |||||||||||
Forfeited | — | — | — | |||||||||||||
Outstanding at December 31, 2008 | 189,532 | $ | 107.44 | 339,001 | $ | 3.28 | ||||||||||
Granted | 2,999 | 66.76 | 1,333 | — | ||||||||||||
Exercised | (18,184 | ) | 92.50 | (79,000 | ) | — | ||||||||||
Forfeited | (12,898 | ) | 105.46 | — | ||||||||||||
Outstanding at December 31, 2009 | 161,449 | $ | 108.53 | 261,334 | $ | — | ||||||||||
2009 | 2008 | 2007 | ||||||||||
Weighted average shares outstanding | 26,528,832 | 26,479,832 | 26,479,832 | |||||||||
Incremental shares from restricted stock | 68,644 | — | 158,387 | |||||||||
Total shares for diluted calculations | 26,597,476 | 26,479,832 | 26,638,219 | |||||||||
Net income (loss) attributable to American National Insurance Company and Subsidiaries | 15,625,000 | (153,998,000 | ) | 240,773,000 | ||||||||
Diluted earnings (losses) per share | $ | 0.59 | $ | (5.82 | ) | $ | 9.04 | |||||
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• | The Life segment markets whole, term, universal and variable life insurance on a national basis primarily through employee and multiple line agents, direct marketing channels and independent third-party marketing organizations. | ||
• | The Annuity segment develops sells and supports fixed, equity-indexed, and variable annuity products. These products are primarily sold through independent agents and brokers, but are also sold through financial institutions, multiple line agents and employee agents. | ||
• | The Health segment’s primary lines of business are Medicare Supplement, medical expense, employer medical stop loss, true group, other supplemental health products and credit disability insurance. Health products are typically distributed through independent agents and Managing General Underwriters. | ||
• | The Property and Casualty segment writes auto, homeowners, agribusiness and credit related property insurance. These products are primarily sold through multiple line agents and independent agents. | ||
• | The Corporate and Other business segment consists of net investment income on the capital not allocated to the insurance lines and the operations of non-insurance lines of business. |
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• | Net investment income from fixed income assets (bonds and mortgage loans) is allocated based on the funds generated by each line of business at the average yield available from these fixed income assets at the time such funds become available. |
• | Net investment income from all other assets is allocated to the operating segments in accordance with the amount of equity invested in each segment, with the remainder going to Corporate and Other. |
• | Expenses are allocated to the lines based upon various factors, including premium and commission ratios within the respective operating segments. |
• | Realized gains or losses on investments are allocated to Corporate and Other. |
• | Equity in earnings of unconsolidated affiliates are allocated to Corporate and Other. |
• | Federal income taxes have been applied to the net earnings of each segment based on a fixed tax rate. Any difference between the amount allocated to the segments and the total federal income tax amount is allocated to Corporate and Other. |
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Property & | Corporate & | |||||||||||||||||||||||
Life | Annuity | Health | Casualty | Other | TOTAL | |||||||||||||||||||
Premiums and Other Revenues: | ||||||||||||||||||||||||
Premiums | $ | 284,530 | $ | 220,284 | $ | 309,701 | $ | 1,159,509 | $ | — | $ | 1,974,024 | ||||||||||||
Other policy revenues | 164,748 | 14,756 | — | — | — | 179,504 | ||||||||||||||||||
Net investment income | 222,611 | 449,035 | 15,992 | 66,175 | 86,292 | 840,105 | ||||||||||||||||||
Other income | 2,720 | (3,870 | ) | 10,382 | 7,064 | 15,547 | 31,843 | |||||||||||||||||
Total operating revenues | 674,609 | 680,205 | 336,075 | 1,232,748 | 101,839 | 3,025,476 | ||||||||||||||||||
Realized gains/(losses) on investments | — | — | — | — | (75,697 | ) | (75,697 | ) | ||||||||||||||||
Total revenues | 674,609 | 680,205 | 336,075 | 1,232,748 | 26,142 | 2,949,779 | ||||||||||||||||||
Benefits, Losses and Expenses: | ||||||||||||||||||||||||
Policy benefits | 297,719 | 249,709 | 239,407 | 923,064 | — | 1,709,899 | ||||||||||||||||||
Interest credited to policy account balances | 58,983 | 311,580 | — | — | — | 370,563 | ||||||||||||||||||
Commissions for acquiring and servicing policies | 91,968 | 107,053 | 51,717 | 209,203 | 2 | 459,943 | ||||||||||||||||||
Other operating costs and expenses | 185,048 | 59,254 | 62,134 | 124,266 | 54,707 | 485,409 | ||||||||||||||||||
Decrease (increase) in deferred policy acquisition costs | 1,536 | (62,013 | ) | 5,017 | (8,151 | ) | — | (63,611 | ) | |||||||||||||||
Total benefits, losses and expenses | 635,254 | 665,583 | 358,275 | 1,248,382 | 54,709 | 2,962,203 | ||||||||||||||||||
Income (loss) from continuing operations before federal income taxes, and equity in losses of unconsolidated affiliates | 39,355 | 14,622 | (22,200 | ) | (15,634 | ) | (28,567 | ) | (12,424 | ) | ||||||||||||||
Provision (benefit) for federal income taxes | (12,987 | ) | (4,825 | ) | 7,326 | 5,159 | 37,134 | 31,807 | ||||||||||||||||
Net loss attributable to noncontrolling interests | (458 | ) | (458 | ) | ||||||||||||||||||||
Equity in losses of unconsolidated affiliates | — | — | — | — | (4,216 | ) | (4,216 | ) | ||||||||||||||||
Net Income (loss) attributable to American National Insurance Company and Subsidiaries | $ | 26,368 | $ | 9,797 | $ | (14,874 | ) | $ | (10,475 | ) | $ | 4,809 | $ | 15,625 | ||||||||||
Selected Data: | ||||||||||||||||||||||||
Total Assets | $ | 4,875,165 | $ | 9,683,972 | $ | 613,539 | $ | 2,066,477 | $ | 2,910,354 | $ | 20,149,507 | ||||||||||||
Return on Equity | 3.59 | % | 1.68 | % | (10.35 | )% | (2.15 | )% | 29.37 | % | 11.31 | % |
Property & | Corporate & | |||||||||||||||||||||||
Life | Annuity | Health | Casualty | Other | TOTAL | |||||||||||||||||||
Premiums and Other Revenues: | ||||||||||||||||||||||||
Premiums | $ | 299,338 | $ | 116,248 | $ | 290,883 | $ | 1,182,026 | $ | — | $ | 1,888,495 | ||||||||||||
Other policy revenues | 154,984 | 19,915 | — | — | — | 174,899 | ||||||||||||||||||
Net investment income | 226,643 | 374,023 | 16,566 | 69,348 | 109,597 | 796,177 | ||||||||||||||||||
Other income | 3,767 | (5,718 | ) | 13,252 | 8,973 | 18,505 | 38,779 | |||||||||||||||||
Total operating revenues | 684,732 | 504,468 | 320,701 | 1,260,347 | 128,102 | 2,898,350 | ||||||||||||||||||
Realized gains/(losses) on investments | — | — | — | — | (379,709 | ) | (379,709 | ) | ||||||||||||||||
Total revenues | 684,732 | 504,468 | 320,701 | 1,260,347 | (251,607 | ) | 2,518,641 | |||||||||||||||||
Benefits, Losses and Expenses: | ||||||||||||||||||||||||
Policy benefits | 296,078 | 142,867 | 223,055 | 939,854 | — | 1,601,854 | ||||||||||||||||||
Interest credited to policy account balances | 62,221 | 237,612 | — | — | — | 299,833 | ||||||||||||||||||
Commissions for acquiring and servicing policies | 126,813 | 79,213 | 43,219 | 226,100 | — | 475,345 | ||||||||||||||||||
Other operating costs and expenses | 222,908 | 45,491 | 69,961 | 132,601 | 37,839 | 508,800 | ||||||||||||||||||
Decrease (increase) in deferred policy acquisition costs | (42,103 | ) | (20,690 | ) | 5,023 | (9,669 | ) | — | (67,439 | ) | ||||||||||||||
Total benefits, losses and expenses | 665,917 | 484,493 | 341,258 | 1,288,886 | 37,839 | 2,818,393 | ||||||||||||||||||
Income (loss) from continuing operations before federal income taxes, and equity in losses of unconsolidated affiliates | 18,815 | 19,975 | (20,557 | ) | (28,539 | ) | (289,446 | ) | (299,752 | ) | ||||||||||||||
Provision (benefit) for federal income taxes | (6,209 | ) | (6,592 | ) | 6,784 | 9,418 | 118,629 | 122,030 | ||||||||||||||||
Net loss attributable to noncontrolling interests | (31 | ) | (31 | ) | ||||||||||||||||||||
Equity in losses of unconsolidated affiliates | — | — | — | — | 4,965 | 4,965 | ||||||||||||||||||
Income (loss) from continuing operations | 12,606 | 13,383 | (13,773 | ) | (19,121 | ) | (165,821 | ) | (172,726 | ) | ||||||||||||||
Income (loss) from discontinued operations | 18,728 | — | — | — | — | 18,728 | ||||||||||||||||||
Net Income (loss) attributable to American National Insurance Company and Subsidiaries | $ | 31,334 | $ | 13,383 | $ | (13,773 | ) | $ | (19,121 | ) | $ | (165,821 | ) | $ | (153,998 | ) | ||||||||
Selected Data: | ||||||||||||||||||||||||
Total Assets | $ | 4,823,465 | $ | 8,265,270 | $ | 759,089 | $ | 2,248,514 | $ | 2,283,101 | $ | 18,379,439 | ||||||||||||
Return on Equity | 4.36 | % | 2.67 | % | (9.67 | %) | (3.95 | %) | (28.17 | %) | (13.99 | %) |
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Property & | Corporate & | |||||||||||||||||||||||
Life | Annuity | Health | Casualty | Other | TOTAL | |||||||||||||||||||
Premiums and Other Revenues: | ||||||||||||||||||||||||
Premiums | $ | 315,893 | $ | 222,748 | $ | 283,765 | $ | 1,177,217 | $ | — | $ | 1,999,623 | ||||||||||||
Other policy revenues | 130,744 | 24,486 | — | — | — | 155,230 | ||||||||||||||||||
Net investment income | 229,092 | 364,607 | 16,710 | 75,041 | 127,519 | 812,969 | ||||||||||||||||||
Other income | 3,967 | 345 | 13,048 | 8,623 | 21,241 | 47,224 | ||||||||||||||||||
Total operating revenues | 679,696 | 612,186 | 313,523 | 1,260,881 | 148,760 | 3,015,046 | ||||||||||||||||||
Realized gains/(losses) on investments | — | — | — | — | 41,027 | 41,027 | ||||||||||||||||||
Total revenues | 679,696 | 612,186 | 313,523 | 1,260,881 | 189,787 | 3,056,073 | ||||||||||||||||||
Benefits, Losses and Expenses: | ||||||||||||||||||||||||
Policy benefits | 273,750 | 249,878 | 209,840 | 818,230 | — | 1,551,698 | ||||||||||||||||||
Interest credited to policy account balances | 63,289 | 232,605 | — | — | — | 295,894 | ||||||||||||||||||
Commissions for acquiring and servicing policies | 141,517 | 58,635 | 39,342 | 217,043 | — | 456,537 | ||||||||||||||||||
Other operating costs and expenses | 200,361 | 35,030 | 57,975 | 110,705 | 61,069 | 465,140 | ||||||||||||||||||
Decrease (increase) in deferred policy acquisition costs | (57,666 | ) | (911 | ) | 5,774 | (7,639 | ) | — | (60,442 | ) | ||||||||||||||
Total benefits, losses and expenses | 621,251 | 575,237 | 312,931 | 1,138,339 | 61,069 | 2,708,827 | ||||||||||||||||||
Income (loss) from continuing operations before federal income taxes, and equity in losses of unconsolidated affiliates | 58,445 | 36,949 | 592 | 122,542 | 128,718 | 347,246 | ||||||||||||||||||
Provision (benefit) for federal income taxes | (19,287 | ) | (12,193 | ) | (195 | ) | (40,439 | ) | (33,749 | ) | (105,863 | ) | ||||||||||||
Net loss attributable to noncontrolling interests | — | — | — | (482 | ) | (482 | ) | |||||||||||||||||
Equity in losses of unconsolidated affiliates | — | — | — | — | 3,866 | 3,866 | ||||||||||||||||||
Income (loss) from continuing operations | 39,158 | 24,756 | 397 | 82,103 | 99,317 | 245,731 | ||||||||||||||||||
Income (loss) from discontinued operations | (4,958 | ) | — | — | — | — | (4,958 | ) | ||||||||||||||||
Net Income (loss) attributable to American National Insurance Company and Subsidiaries | $ | 34,200 | $ | 24,756 | $ | 397 | $ | 82,103 | $ | 99,317 | $ | 240,773 | ||||||||||||
Selected Data: | ||||||||||||||||||||||||
Total Assets | $ | 4,836,221 | $ | 7,464,512 | $ | 752,863 | $ | 2,036,372 | $ | 3,370,920 | $ | 18,460,888 | ||||||||||||
Return on Equity | 6.44 | % | 5.29 | % | 0.28 | % | 16.40 | % | 5.81 | % | 6.85 | % |
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2009 | 2008 | 2007 | ||||||||||
Reconciliation of benefit obligation: | ||||||||||||
Obligation at beginning of year | $ | 328,783 | $ | 302,657 | $ | 283,344 | ||||||
Service cost benefits earned during period | 11,163 | 12,319 | 9,326 | |||||||||
Interest cost on projected benefit obligation | 20,319 | 22,077 | 16,483 | |||||||||
Participant contributions | — | 746 | 730 | |||||||||
Actuarial gain | 19,141 | 6,015 | 8,461 | |||||||||
Benefits paid | (19,032 | ) | (15,031 | ) | (15,687 | ) | ||||||
Obligation at end of year | 360,374 | 328,783 | 302,657 | |||||||||
Reconciliation of fair value of plan assets: | ||||||||||||
Fair value of plan assets at beginning of year | 149,874 | 183,018 | 167,478 | |||||||||
Actual return on plan assets | 28,729 | (38,552 | ) | 15,979 | ||||||||
Employer contributions | 24,929 | 19,689 | 14,580 | |||||||||
Participant contributions | — | 746 | 731 | |||||||||
Benefits paid | (19,032 | ) | (15,027 | ) | (15,750 | ) | ||||||
Fair value of plan assets at end of year | 184,500 | 149,874 | 183,018 | |||||||||
Funded status at end of year | $ | (175,874 | ) | $ | (178,909 | ) | $ | (119,639 | ) | |||
2009 | 2008 | 2007 | ||||||||||
Service cost | $ | 11,163 | $ | 9,974 | $ | 9,366 | ||||||
Interest cost | 20,319 | 19,003 | 16,483 | |||||||||
Expected return on plan assets | (13,736 | ) | (13,571 | ) | (12,375 | ) | ||||||
Amortization of prior service cost | 3,469 | 3,469 | 3,666 | |||||||||
Amortization of transition obligation | — | — | 117 | |||||||||
Amortization of net gain | 9,134 | 4,412 | 6,197 | |||||||||
Net periodic benefit cost | $ | 30,349 | $ | 23,287 | $ | 23,454 | ||||||
2009 | 2008 | 2007 | ||||||||||
Prior service cost | $ | 3,469 | $ | 3,469 | $ | 3,711 | ||||||
Net actuarial gain (loss) | 4,909 | (57,385 | ) | 2,215 | ||||||||
Deferred tax benefit (expense) | (2,932 | ) | 18,871 | (2,074 | ) | |||||||
Other comprehensive income (loss), net of tax | $ | 5,446 | $ | (35,045 | ) | $ | 3,852 | |||||
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2009 | 2008 | |||||||
Prior service cost | $ | (2,324 | ) | $ | (5,793 | ) | ||
Net actuarial loss | (95,851 | ) | (100,759 | ) | ||||
Deferred tax benefit | 34,361 | 37,293 | ||||||
Amounts included in accumulated other comprehensive income (loss) | $ | (63,814 | ) | $ | (69,259 | ) | ||
Used for Net | Used for Benefit | |||||||
Benefit Cost in Fiscal Year | Obligations | |||||||
1/1/2009 to 12/31/2009 | as of 12/31/2009 | |||||||
Discount rate | 6.17 | % | 5.73 | % | ||||
Rate of compensation increase | 4.20 | % | 4.20 | % | ||||
Long-term rate of return | 7.65 | % | 7.65 | % |
Pension Benefit Payments | ||||
2010 | $ | 21,611 | ||
2011 | 18,828 | |||
2012 | 20,890 | |||
2013 | 21,001 | |||
2014 | 25,191 | |||
2015-2019 | 145,070 |
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Quoted Prices in | Significant | |||||||||||
Active Markets for | Observable | |||||||||||
Identical Assets | Inputs | |||||||||||
Total | (Level 1) | (Level 2) | ||||||||||
Asset Category | ||||||||||||
Corporate Debt Securities | $ | 64,998 | $ | — | $ | 64,998 | ||||||
Residential Mortgage Backed Securities | 473 | — | 473 | |||||||||
Marketable Equity Securities by Sector: | ||||||||||||
Consumer Directory | 9,759 | 9,759 | — | |||||||||
Consumer Staples | 10,377 | 10,377 | — | |||||||||
Energy | 8,202 | 8,202 | — | |||||||||
Finance | 14,583 | 14,583 | — | |||||||||
Healthcare | 11,042 | 11,042 | — | |||||||||
Industrials | 8,272 | 8,272 | — | |||||||||
Information Technology | 14,432 | 14,432 | — | |||||||||
Materials | 1,894 | 1,894 | — | |||||||||
Telecom services | 4,075 | 4,075 | — | |||||||||
Utilities | 2,839 | 2,839 | — | |||||||||
Other types of investments: | ||||||||||||
Commercial Paper | 26,418 | — | 26,418 | |||||||||
Money Market | 16 | 16 | — | |||||||||
Unallocated Group Annuity Contract | 6,643 | — | 6,643 | |||||||||
Contribution receivable | 134 | 134 | — | |||||||||
Other | 343 | 343 | — | |||||||||
Total | $ | 184,500 | $ | 85,968 | $ | 98,532 | ||||||
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Related Party | Financial Statement Line Impacted | December 31, 2009 | ||||
Gal-Tex Hotel Corporation | Mortgage loans on real estate | $ | 11,875 | |||
Gal-Tex Hotel Corporation | Investment income | 895 | ||||
Gal-Tex Hotel Corporation | Other operating costs and expenses | 314 | ||||
Gal-Tex Hotel Corporation | Accident and health premiums | 56 | ||||
Moody Insurance Group, Inc. | Commissions | 2,813 | ||||
Moody Insurance Group, Inc. | Other operating costs and expenses | 216 | ||||
National Western Life Ins. Co. | Accident and health premiums | 226 | ||||
National Western Life Ins. Co. | Other operating costs and expenses | 1,300 | ||||
Moody Foundation | Accident and health premiums | 124 | ||||
Greer, Herz and Adams, LLP | Other operating costs and expenses | 10,967 |
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Quarters Ended | ||||||||||||||||||||
2009 | ||||||||||||||||||||
March 31, | June 30, | September 30, | December 31, | Total | ||||||||||||||||
Total revenues | $ | 651,997 | $ | 727,790 | $ | 780,347 | $ | 789,645 | $ | 2,949,779 | ||||||||||
Total benefits, losses and expenses | 728,777 | 740,309 | 745,280 | 747,837 | 2,962,203 | |||||||||||||||
Income (loss) from continuing operations before federal income tax and equity in earnings of unconsolidated affiliates | (76,780 | ) | (12,519 | ) | 35,067 | 41,808 | (12,424 | ) | ||||||||||||
Provision (benefit) for federal income taxes | (31,023 | ) | (10,776 | ) | 3,229 | 6,763 | (31,807 | ) | ||||||||||||
Equity in earnings (losses) of unconsolidated affiliates, net of tax | (1,937 | ) | (3,180 | ) | 2,110 | (1,209 | ) | (4,216 | ) | |||||||||||
Income (loss) from continuing operations | (47,694 | ) | (4,923 | ) | 33,948 | 33,836 | 15,167 | |||||||||||||
Net income (loss) | (47,694 | ) | (4,923 | ) | 33,948 | 33,836 | 15,167 | |||||||||||||
Net income (loss) attributable to noncontrolling interest | (1 | ) | (568 | ) | 1,248 | (1,137 | ) | (458 | ) | |||||||||||
Net income (loss) attributable to American National Insurance Company and subsidiaries | (47,693 | ) | (4,355 | ) | 32,700 | 34,973 | 15,625 | |||||||||||||
Net income/(loss) per share attributable to American National Insurance Company and subsidiaries: | ||||||||||||||||||||
Basic | (1.80 | ) | (0.16 | ) | 1.23 | 1.32 | 0.59 | |||||||||||||
Diluted | (1.80 | ) | (0.16 | ) | 1.23 | 1.32 | 0.59 |
Quarters Ended | ||||||||||||||||||||
2008 | ||||||||||||||||||||
March 31, | June 30, | September 30, | December 31, | Total | ||||||||||||||||
Total revenues | $ | 724,080 | $ | 731,188 | $ | 522,493 | $ | 540,880 | $ | 2,518,641 | ||||||||||
Total benefits, losses and expenses | 681,137 | 744,873 | 707,635 | 684,748 | 2,818,393 | |||||||||||||||
Income (loss) from continuing operations before federal income tax and equity in earnings of unconsolidated affiliates | 42,943 | (13,685 | ) | (185,142 | ) | (143,868 | ) | (299,752 | ) | |||||||||||
Provision (benefit) for federal income taxes | 10,220 | (11,237 | ) | (62,526 | ) | (58,487 | ) | (122,030 | ) | |||||||||||
Equity in earnings (losses) of unconsolidated affiliates, net of tax | 7,648 | 613 | (1,795 | ) | (1,501 | ) | 4,965 | |||||||||||||
Income (loss) from continuing operations(a) | 40,371 | (1,709 | ) | (123,092 | ) | (88,327 | ) | (172,757 | ) | |||||||||||
Income (loss) from discontinued operations | (1,346 | ) | (1,100 | ) | (622 | ) | 21,796 | 18,728 | ||||||||||||
Net income (loss) | 39,025 | (2,809 | ) | (123,714 | ) | (66,531 | ) | (154,029 | ) | |||||||||||
Net income (loss) attributable to noncontrolling interest | — | 126 | 1,319 | (1,476 | ) | (31 | ) | |||||||||||||
Net income (loss) attributable to American National Insurance Company and subsidiaries | 39,025 | (2,935 | ) | (125,033 | ) | (65,055 | ) | (153,998 | ) | |||||||||||
Net income/(loss) per share attributable to American National Insurance Company and subsidiaries: | ||||||||||||||||||||
Basic | 1.47 | (0.11 | ) | (4.72 | ) | (2.46 | ) | (5.82 | ) | |||||||||||
Diluted | 1.47 | (0.11 | ) | (4.72 | ) | (2.46 | ) | (5.82 | ) |
(a) | Effect of accounting change ASC 810 Consolidation-Noncontrolling Interest. Refer to Note 2. |
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12/31/2008 | 12/31/2008 | 12/31/2007 | 12/31/2007 | |||||||||||||||||||||
INVESTING ACTIVITIES | (As filed) | (Reclassified) | Change | (As filed) | (Reclassified) | Change | ||||||||||||||||||
Proceeds from sales of: | ||||||||||||||||||||||||
Bonds — available for sale | 104,093 | 6,353 | 97,740 | 68,004 | 68,004 | — | ||||||||||||||||||
Stocks | 129,270 | 129,270 | — | 277,429 | 277,429 | — | ||||||||||||||||||
Real estate | — | 4,500 | (4,500 | ) | 84,744 | 84,744 | — | |||||||||||||||||
Mortgage loans | 6,794 | 2,294 | 4,500 | — | — | — | ||||||||||||||||||
Other invested assets | 9,896 | 9,896 | — | 104,743 | 104,743 | — | ||||||||||||||||||
Disposals of property and equipment | — | 1,380 | (1,380 | ) | — | 23,021 | (23,021 | ) | ||||||||||||||||
Distributions from unconsolidated affiliates | — | 12,332 | (12,332 | ) | — | 17,414 | (17,414 | ) | ||||||||||||||||
Proceeds from maturity of: | ||||||||||||||||||||||||
Bonds — available for sale | 249,769 | 269,566 | (19,797 | ) | 287,559 | 287,559 | — | |||||||||||||||||
Bonds — held to maturity | 528,781 | 580,515 | (51,734 | ) | 547,416 | 547,416 | — | |||||||||||||||||
Principal payments received on: | ||||||||||||||||||||||||
Mortgage loans | 138,035 | 144,497 | (6,462 | ) | 223,956 | 223,956 | — | |||||||||||||||||
Policy loans | 9,459 | 9,459 | — | 5,472 | 5,472 | — | ||||||||||||||||||
Purchases of investments: | ||||||||||||||||||||||||
Bonds — available for sale | (640,403 | ) | (626,623 | ) | (13,780 | ) | (658,731 | ) | (658,731 | ) | — | |||||||||||||
Bonds — held to maturity | (656,580 | ) | (644,151 | ) | (12,429 | ) | (483,722 | ) | (483,722 | ) | — | |||||||||||||
Stocks | (290,979 | ) | (290,979 | ) | — | (364,352 | ) | (364,352 | ) | — | ||||||||||||||
Real estate | (78,119 | ) | (78,119 | ) | — | (46,295 | ) | (46,295 | ) | — | ||||||||||||||
Mortgage loans | (513,964 | ) | (520,426 | ) | 6,462 | (386,137 | ) | (386,137 | ) | — | ||||||||||||||
Policy loans | (20,447 | ) | (20,447 | ) | — | (10,237 | ) | (10,237 | ) | — | ||||||||||||||
Other invested assets | (21,795 | ) | (21,795 | ) | — | (50,115 | ) | (50,115 | ) | — | ||||||||||||||
Decrease (increase) in short-term investments, net | 403,092 | 403,092 | — | 19,881 | 19,881 | — | ||||||||||||||||||
Decrease (increase) in investment in unconsolidated affiliates, net | (34,453 | ) | — | (34,453 | ) | (44,826 | ) | — | (44,826 | ) | ||||||||||||||
Contributions to unconsolidated affiliates | — | (38,514 | ) | 38,514 | — | (64,592 | ) | 64,592 | ||||||||||||||||
Increase in property and equipment, net | (12,890 | ) | — | (12,890 | ) | (11,459 | ) | — | (11,459 | ) | ||||||||||||||
Additions to property and equipment | — | (25,024 | ) | 25,024 | — | (18,076 | ) | 18,076 | ||||||||||||||||
Other, net | — | 2,483 | (2,483 | ) | — | (14,052 | ) | 14,052 | ||||||||||||||||
Net cash used in investing activities | (690,441 | ) | (690,441 | ) | — | (436,670 | ) | (436,670 | ) | — | ||||||||||||||
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ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
ITEM 9A. | CONTROLS AND PROCEDURES |
• | pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; |
• | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and |
• | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements. |
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ITEM 9B. | OTHER INFORMATION |
ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
ITEM 11. | EXECUTIVE COMPENSATION |
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE |
ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES |
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ITEM 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES |
Page | ||||
(a)(1) Financial Statements (See Item 8: Financial Statements and Supplementary Data) | 97 | |||
(a)(2) Supplementary Data and Financial Statement Schedules | ||||
Schedules are attached hereto at the following pages: | ||||
Page | ||||
Independent Auditors Report | 155 | |||
I — Summary of Investments — Other than Investments in Related Parties, December 31, 2009 | 156 | |||
II — Condensed Financial Information of Registrant, Years ended December 31, 2009 and 2008 | 157 | |||
III — Supplementary Insurance Information, Years ended December 31, 2009, 2008 and 2007 | 160 | |||
IV — Reinsurance Information, Years ended December 31, 2009, 2008 and 2007 | 161 | |||
V — Valuation and Qualifying Accounts, Years ended December 31, 2009, 2008 and 2007 | 162 |
Exhibit | ||||
Number: | Basic Documents: | |||
3.1 | Articles of Incorporation (incorporated by reference to Exhibit No. 3.1 to the registrant’s Registration Statement on Form 10 filed with the Securities and Exchange Commission, Registration No. 001-34280) | |||
3.2 | Bylaws (incorporated by reference to Exhibit No. 3.2 to the registrant’s Registration Statement on Form 10 filed with the Securities and Exchange Commission, Registration No. 001-34280) | |||
4.1 | Specimen copy of Stock Certificate (incorporated by reference to Exhibit No. 4.1 to the registrant’s Registration Statement on Form 10 filed with the Securities and Exchange Commission, Registration No. 001-34280) | |||
10.1 | Administrative Services Agreement dated October 17, 2007 by and between American National Insurance Company and Transaction Applications Group, Inc. (incorporated by reference to Exhibit No. 10.1 to the registrant’s Registration Statement on Form 10 filed with the Securities and Exchange Commission, Registration No. 001-34280) | |||
10.2 | American National Insurance Company Amended and Restated 1999 Stock and Incentive Plan (the “Stock and Incentive Plan”) (incorporated by reference to Exhibit No. 10.2 to the registrant’s Registration Statement on Form 10 filed with the Securities and Exchange Commission, Registration No. 001-34280) | |||
10.3 | Form of Restricted Stock Agreement for Directors under the Stock and Incentive Plan (incorporated by reference to Exhibit No. 10.3 to the registrant’s Registration Statement on Form 10 filed with the Securities and Exchange Commission, Registration No. 001-34280) | |||
10.4 | Form of Restricted Stock Agreement for Employees under the Stock and Incentive Plan (incorporated by reference to Exhibit No. 10.4 to the registrant’s Registration Statement on Form 10 filed with the Securities and Exchange Commission, Registration No. 001-34280) |
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Exhibit | ||||
Number: | Basic Documents: | |||
10.5 | Form of Stock Appreciation Rights Agreement under the Stock and Incentive Plan (incorporated by reference to Exhibit No. 10.5 to the registrant’s Registration Statement on Form 10 filed with the Securities and Exchange Commission, Registration No. 001-34280) | |||
10.6 | American National Insurance Company Nonqualified Retirement Plan for Certain Salaried Employees (incorporated by reference to Exhibit No. 10.6 to the registrant’s Registration Statement on Form 10 filed with the Securities and Exchange Commission, Registration No. 001-34280) | |||
10.7 | American National Insurance Company Nonqualified Retirement Plan (incorporated by reference to Exhibit No. 10.7 to the registrant’s Registration Statement on Form 10 filed with the Securities and Exchange Commission, Registration No. 001-34280) | |||
21.1 | Subsidiaries | |||
23.1 | Consent of KPMG LLP | |||
31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||
31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||
32.1 | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||
32.2 | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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AMERICAN NATIONAL INSURANCE COMPANY | ||||
By: | /s/ Robert L. Moody | |||
Name: | Robert L. Moody | |||
Title: | Chairman of the Board & Chief Executive Officer |
Signature | Title | Date | ||
/s/ Robert L. Moody | Chairman of the Board & Chief Executive Officer (principal executive officer) | March 11, 2010 | ||
/s/ Stephen E. Pavlicek | Senior Vice President & Chief Financial Officer (principal financial officer and principal accounting officer) | March 11, 2010 | ||
/s/ Arthur O. Dummer | Director | March 11, 2010 | ||
/s/ Dr. Shelby M. Elliott | Director | March 11, 2010 | ||
/s/ G. Richard Ferdinandtsen | Director | March 11, 2010 | ||
/s/ Frances Anne Moody-Dahlberg | Director | March 11, 2010 | ||
/s/ Russell S. Moody | Director | March 11, 2010 | ||
/s/ Frank P. Williamson | Director | March 11, 2010 | ||
/s/ James D. Yarbrough | Director | March 11, 2010 |
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American National Insurance Company:
March 11, 2010
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SCHEDULE I — SUMMARY OF INVESTMENTS — OTHER THAN INVESTMENTS IN RELATED PARTIES
(in thousands)
As of December 31, 2009 | ||||||||||||
Amount at which | ||||||||||||
Market | shown on the | |||||||||||
Type of Investment | Cost (a) | Value | Balance Sheet | |||||||||
Fixed Maturities: | ||||||||||||
Bonds held-to-maturity: | ||||||||||||
U.S. treasury and other U.S. government corporations and agencies | $ | 21,222 | $ | 21,347 | $ | 21,222 | ||||||
States of the U.S. and political subdivisions of the states | 240,403 | 247,878 | 240,403 | |||||||||
Foreign governments | 28,997 | 32,603 | 28,997 | |||||||||
Corporate debt securities | 6,390,377 | 6,644,056 | 6,390,377 | |||||||||
Residential mortgage backed securities | 693,178 | 695,972 | 693,178 | |||||||||
Commercial mortgage backed securities | 33,128 | 9,187 | 33,128 | |||||||||
Collateralized debt securities | 9,627 | 8,676 | 9,627 | |||||||||
Other debt securities | 44,779 | 46,757 | 44,779 | |||||||||
Bonds available-for-sale: | ||||||||||||
U.S. treasury and other U.S. government corporations and agencies | 3,438 | 3,886 | 3,886 | |||||||||
States of the U.S. and political subdivisions of the states | 540,210 | 558,035 | 558,035 | |||||||||
Foreign governments | 5,000 | 6,188 | 6,188 | |||||||||
Corporate debt securities | 3,196,202 | 3,253,012 | 3,253,012 | |||||||||
Residential mortgage backed securities | 353,729 | 355,565 | 355,565 | |||||||||
Commercial mortgage backed securities | — | — | — | |||||||||
Collateralized debt securities | 23,064 | 22,494 | 22,494 | |||||||||
Other debt securities | 14,401 | 14,370 | 14,370 | |||||||||
Redeemable preferred stock | 35,359 | 35,717 | 35,717 | |||||||||
Total fixed maturities | $ | 11,633,114 | $ | 11,955,743 | $ | 11,710,978 | ||||||
Equity Securities: | ||||||||||||
Common stock: | ||||||||||||
Consumer goods | $ | 129,363 | $ | 174,120 | $ | 174,120 | ||||||
Energy and utilities | 83,284 | 124,770 | 124,770 | |||||||||
Finance | 118,622 | 156,744 | 156,744 | |||||||||
Healthcare | 81,454 | 110,121 | 110,121 | |||||||||
Industrials | 58,900 | 87,430 | 87,430 | |||||||||
Information technology | 102,171 | 150,162 | 150,162 | |||||||||
Materials | 17,875 | 25,170 | 25,170 | |||||||||
Telecommunication services | 32,272 | 40,035 | 40,035 | |||||||||
Mutual funds | 59,853 | 66,202 | 66,202 | |||||||||
Total equity securities | $ | 683,794 | $ | 934,754 | $ | 934,754 | ||||||
Other Investments: | ||||||||||||
Mortgage loans, net of allowance | $ | 2,229,659 | $ | — | $ | 2,229,659 | ||||||
Investment real estate, net of accumulated depreciation | 600,857 | — | 600,857 | |||||||||
Real estate acquired in satisfaction of debt | 34,253 | — | 34,253 | |||||||||
Policy loans | 364,354 | — | 364,354 | |||||||||
Other long-term investments | 61,641 | 32,801 | 94,442 | |||||||||
Short-term investments | 636,823 | — | 636,823 | |||||||||
Total other investments | $ | 3,927,587 | $ | 32,801 | $ | 3,960,388 | ||||||
Total investments | $ | 16,244,495 | $ | 12,923,298 | $ | 16,606,120 | ||||||
(a) | Original cost of equity securities and, as to fixed maturities, original cost reduced by repayments and valuation write-downs and adjusted for amortization of premiums or accrual of discounts. |
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SCHEDULE II — CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(In thousands)
Years Ended December 31, | ||||||||||||
Condensed Statements of Operations | 2009 | 2008 | 2007 | |||||||||
Revenues: | ||||||||||||
Premium and policy revenue | $ | 812,007 | $ | 691,885 | $ | 790,666 | ||||||
Net investment income | 692,993 | 643,855 | 641,951 | |||||||||
Realized gain (loss) on investments | (9,047 | ) | 9,601 | 4,656 | ||||||||
Other-than-temporary impairments | (21,113 | ) | (152,840 | ) | (3,180 | ) | ||||||
Other revenues | 5,346 | 6,576 | 11,840 | |||||||||
Total revenues | $ | 1,480,186 | $ | 1,199,077 | $ | 1,445,933 | ||||||
Expenses: | ||||||||||||
Benefits | $ | 596,729 | $ | 471,590 | $ | 556,543 | ||||||
Other operating costs and expenses | 804,583 | 771,899 | 704,339 | |||||||||
Total expenses | $ | 1,401,312 | $ | 1,243,489 | $ | 1,260,882 | ||||||
Income (loss) from continuing operations before federal income tax, and equity in earnings of unconsolidated affiliates & subsidiaries | $ | 78,874 | $ | (44,412 | ) | $ | 185,051 | |||||
Income taxes expense (benefit) | $ | 26,698 | $ | (15,844 | ) | $ | 68,612 | |||||
Equity in net income (loss) of unconsolidated affiliates & subsidiaries | (36,551 | ) | (144,158 | ) | 129,292 | |||||||
Income (loss) from continuing operations | $ | 15,625 | $ | (172,726 | ) | $ | 245,731 | |||||
Income (loss) from discontinued operations | $ | — | $ | 18,728 | $ | (4,958 | ) | |||||
Net income (loss) attributable to American National Insurance companies and subsidiaries | $ | 15,625 | $ | (153,998 | ) | $ | 240,773 | |||||
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SCHEDULE II — CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(In thousands)
As of December 31, | ||||||||
Condensed Statements of Financial Position | 2009 | 2008 | ||||||
Assets: | ||||||||
Fixed maturities | $ | 8,584,578 | $ | 7,449,385 | ||||
Equity securities | 68,295 | 71,925 | ||||||
Mortgage loans on real estate | 2,342,630 | 1,915,801 | ||||||
Other invested assets | 1,872,011 | 1,681,122 | ||||||
Investment in subsidiaries | 1,669,054 | 1,470,589 | ||||||
Deferred policy acquisition costs | 1,034,550 | 1,175,427 | ||||||
Separate account assets | 718,378 | 561,021 | ||||||
Other assets | 651,047 | 705,705 | ||||||
Total assets | $ | 16,940,543 | $ | 15,030,975 | ||||
Liabilities: | ||||||||
Policyowner funds | $ | 2,737,141 | $ | 2,577,472 | ||||
Policy account balances | 8,937,965 | 7,690,775 | ||||||
Separate account liabilities | 718,378 | 561,021 | ||||||
Other liabilities | 1,086,605 | 1,067,851 | ||||||
Total liabilities | $ | 13,480,089 | $ | 11,897,119 | ||||
Shareholders’ equity: | ||||||||
Capital stock | $ | 30,832 | $ | 30,832 | ||||
Additional paid-in capital | 11,986 | 7,552 | ||||||
Other accumulated comprehensive income | 117,649 | (253,409 | ) | |||||
Retained earnings | 3,398,492 | 3,447,207 | ||||||
Less: Treasury stock at cost | (98,505 | ) | (98,326 | ) | ||||
Total stockholders’ equity | $ | 3,460,454 | $ | 3,133,856 | ||||
Total liabilities and stockholders’ equity | $ | 16,940,543 | $ | 15,030,975 | ||||
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SCHEDULE II — CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(In thousands)
Years Ended December 31, | ||||||||||||
Condensed Statements of Cash Flows | 2009 | 2008 | 2007 | |||||||||
Operating Activities: | ||||||||||||
Net income (loss) attributable to American National Insurance companies and subsidiaries | $ | 15,625 | $ | (153,998 | ) | $ | 240,773 | |||||
Adjustments to reconcile net income (loss) to net cash provided operating activities: | ||||||||||||
Realized (gain) loss on investments | 9,047 | (9,601 | ) | (4,656 | ) | |||||||
Other-than-temporary impairment | 21,113 | 152,840 | 3,180 | |||||||||
Amortization of discounts and premiums on bonds | 8,256 | 10,345 | 11,153 | |||||||||
Net capitalized interest on policy loans and mortgage loans | (24,331 | ) | 5,896 | 190 | ||||||||
Depreciation | 23,679 | 9,121 | (12,563 | ) | ||||||||
Interest credited to policy account balances | 341,184 | 272,700 | 267,228 | |||||||||
Charges to policy account balances | (170,071 | ) | (165,354 | ) | (145,386 | ) | ||||||
Deferred federal income tax (benefit) expense | (17,579 | ) | (87,389 | ) | 25,539 | |||||||
Deferral of policy acquisition costs | (259,565 | ) | (437,287 | ) | (270,904 | ) | ||||||
Amortization of deferred policy acquisition costs | 202,354 | 221,432 | 209,934 | |||||||||
Equity in earnings of unconsolidated affiliates | (3,175 | ) | (378 | ) | (6,084 | ) | ||||||
Net (income) loss of subsidiaries | 34,726 | 125,808 | (118,250 | ) | ||||||||
Dividends from subsidiaries | 5,000 | — | — | |||||||||
Changes in: | ||||||||||||
Policyholder fund liabilities | 38,149 | 49,821 | 121,284 | |||||||||
Reinsurance ceded receivable | 92,058 | (26,654 | ) | 6,270 | ||||||||
Premiums due and other receivables | 15,443 | 20,454 | (21,522 | ) | ||||||||
Accrued investment income | (11,365 | ) | (878 | ) | (6,969 | ) | ||||||
Current federal income tax (asset) liability | 42,013 | (94,955 | ) | 1,340 | ||||||||
Liability for retirement benefits | 1,933 | 52,263 | 900 | |||||||||
Prepaid reinsurance premiums | 9,572 | 6,682 | 6,203 | |||||||||
Other, net | 7,833 | (12,299 | ) | 76,483 | ||||||||
Net cash provided by (used in) operating activities | 381,899 | (61,431 | ) | 384,143 | ||||||||
Investing Activities: | ||||||||||||
Proceeds from sales of: | ||||||||||||
Bonds | 31,761 | 5,103 | 283,085 | |||||||||
Stocks | 28,883 | 55,084 | 4,934 | |||||||||
Real estate | 4,837 | — | 31,810 | |||||||||
Mortgage loans | — | — | — | |||||||||
Other invested assets | 140,667 | 188,493 | 80,213 | |||||||||
Disposals of property and equipment | 1,553 | 1,202 | 22,915 | |||||||||
Distributions of unconsolidated affiliates | 10,698 | 6,191 | 9,289 | |||||||||
Proceeds from maturity of: | ||||||||||||
Bonds | 564,997 | 624,288 | 453,765 | |||||||||
Principal payments received on: | ||||||||||||
Mortgage loans | 114,207 | 138,925 | 234,165 | |||||||||
Policy loans | 43,386 | 9,203 | 9,217 | |||||||||
Purchases of: | ||||||||||||
Bonds | (1,279,627 | ) | (1,087,593 | ) | (908,103 | ) | ||||||
Stocks | (1,042 | ) | (47,002 | ) | (13,736 | ) | ||||||
Real estate | (12,971 | ) | (15,657 | ) | (22,686 | ) | ||||||
Mortgage loans | (548,748 | ) | (493,412 | ) | (368,223 | ) | ||||||
Policy loans | (30,881 | ) | (18,165 | ) | (16,363 | ) | ||||||
Other invested assets | (30,746 | ) | (216,468 | ) | (118,365 | ) | ||||||
Additions to property and equipment | (7,356 | ) | (11,475 | ) | (3,391 | ) | ||||||
Contributions to unconsolidated affiliates | (4,905 | ) | (7,162 | ) | (8,338 | ) | ||||||
Decrease (increase) in short term investments, net | (299,941 | ) | 294,048 | (17,032 | ) | |||||||
Decrease (increase) in investment in subsidiaries | (53,039 | ) | 157,089 | 14,315 | ||||||||
Other, net | (268 | ) | (581 | ) | (117 | ) | ||||||
Net cash provided by (used in) investing activities | (1,328,535 | ) | (417,889 | ) | (332,646 | ) | ||||||
Financing activities: | ||||||||||||
Policyholders’ deposits to policy account balances | 2,201,309 | 1,931,709 | 1,164,863 | |||||||||
Policyholders’ withdrawals from policy account balances | (1,125,610 | ) | (1,385,625 | ) | (1,163,120 | ) | ||||||
Dividends to stockholders | (82,490 | ) | (82,651 | ) | (81,531 | ) | ||||||
Net cash provided by (used in) financing activities | 993,209 | 463,433 | (79,788 | ) | ||||||||
Net increase (decrease) in cash and cash equivalents | 46,573 | (15,887 | ) | (28,291 | ) | |||||||
Cash: | ||||||||||||
Beginning of the year | (7,979 | ) | 7,908 | 36,199 | ||||||||
End of the year | $ | 38,594 | $ | (7,979 | ) | $ | 7,908 | |||||
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SCHEDULE III — SUPPLEMENTARY INSURANCE INFORMATION
(in thousands)
Future Policy | Benefits, | Amortization | ||||||||||||||||||||||||||||||||||||||
Deferred | Benefits, | Other Policy | Losses, Claims | of Deferred | ||||||||||||||||||||||||||||||||||||
Policy | Losses, Claims | Claims and | Net | and | Policy | Other | ||||||||||||||||||||||||||||||||||
Acquisition | and Loss | Unearned | Benefits | Premium | Investment | Settlement | Acquisition | Operating | Premiums | |||||||||||||||||||||||||||||||
Segment | Cost | Expenses | Premiums | Payable | Revenue | Income (a) | Expenses | Costs | Expenses (b) | Written | ||||||||||||||||||||||||||||||
As of December 31, 2009 | ||||||||||||||||||||||||||||||||||||||||
Corporate and other | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 86,292 | $ | — | $ | — | $ | 54,709 | $ | — | ||||||||||||||||||||
Life | 672,016 | 3,845,264 | 100,204 | 225,733 | 284,530 | 222,611 | 257,422 | 78,668 | 199,884 | — | ||||||||||||||||||||||||||||||
Annuities | 442,430 | 8,991,547 | 4 | 49,092 | 220,284 | 449,035 | 143,362 | 64,785 | 39,509 | — | ||||||||||||||||||||||||||||||
Health | 69,871 | 97,407 | 78,525 | 341,085 | 309,701 | 15,992 | 239,045 | 21,749 | 97,119 | — | ||||||||||||||||||||||||||||||
Property and casualty | 146,664 | — | 798,232 | 783,574 | 1,159,509 | 66,175 | 923,064 | 248,607 | 76,711 | 1,307,762 | ||||||||||||||||||||||||||||||
Total | $ | 1,330,981 | $ | 12,934,218 | $ | 976,965 | $ | 1,399,484 | $ | 1,974,024 | $ | 840,105 | $ | 1,562,893 | $ | 413,809 | $ | 467,932 | $ | 1,307,762 | ||||||||||||||||||||
As of December 31, 2008 | ||||||||||||||||||||||||||||||||||||||||
Corporate and other | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 109,597 | $ | — | $ | — | $ | 37,839 | $ | — | ||||||||||||||||||||
Life | 712,234 | 3,763,207 | 111,846 | 220,691 | 299,338 | 226,643 | 251,992 | 86,956 | 220,662 | — | ||||||||||||||||||||||||||||||
Annuities | 557,061 | 7,631,985 | 13 | 52,126 | 116,248 | 374,023 | 157,102 | 75,826 | 28,188 | — | ||||||||||||||||||||||||||||||
Health | 74,887 | 97,020 | 93,956 | 439,621 | 290,883 | 16,566 | 220,848 | 27,785 | 90,418 | — | ||||||||||||||||||||||||||||||
Property and casualty | 138,482 | — | 816,249 | 776,562 | 1,182,026 | 69,348 | 939,854 | 233,336 | 115,696 | 1,184,686 | ||||||||||||||||||||||||||||||
Total | $ | 1,482,664 | $ | 11,492,212 | $ | 1,022,064 | $ | 1,489,000 | $ | 1,888,495 | $ | 796,177 | $ | 1,569,796 | $ | 423,903 | $ | 492,803 | $ | 1,184,686 | ||||||||||||||||||||
As of December 31, 2007 | ||||||||||||||||||||||||||||||||||||||||
Corporate and other | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 127,519 | $ | — | $ | 198 | $ | 60,871 | $ | — | ||||||||||||||||||||
Life | 641,780 | 3,762,745 | 122,052 | 233,691 | 315,893 | 229,092 | 239,598 | 1,040,208 | (755,996 | ) | — | |||||||||||||||||||||||||||||
Annuities | 400,678 | 6,913,285 | 13 | 51,332 | 222,748 | 364,607 | 150,318 | 70,740 | 22,014 | — | ||||||||||||||||||||||||||||||
Health | 80,012 | 94,072 | 104,005 | 422,948 | 283,765 | 16,710 | 212,692 | 24,508 | 78,583 | — | ||||||||||||||||||||||||||||||
Property and casualty | 128,815 | — | 698,860 | 852,455 | 1,177,217 | 75,041 | 818,230 | 224,499 | 95,610 | 1,191,113 | ||||||||||||||||||||||||||||||
Total | $ | 1,251,285 | $ | 10,770,102 | $ | 924,930 | $ | 1,560,426 | $ | 1,999,623 | $ | 812,969 | $ | 1,420,838 | $ | 1,360,153 | $ | (498,918 | ) | $ | 1,191,113 | |||||||||||||||||||
(a) | Net investment income from fixed income assets (bonds and mortgage loans on real estate) is allocated to insurance lines based on the funds generated by each line at the average yield available from these fixed income assets at the time such funds become available. Net investment income from policy loans is allocated to the insurance lines according to the amount of loans made by each line. Net investment from all other assets is allocated to the insurance lines as necessary to support the equity assigned to that line with the remainder allocated to capital and surplus. | |
(b) | Identifiable commissions and expenses are charged directly to the appropriate line of business. The remaining expenses are allocated to the lines based upon various factors including premium and commission ratios within the respective lines. |
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SCHEDULE IV — REINSURANCE
(in thousands)
Ceded to | Assumed | Percentage of | ||||||||||||||||||
Gross | Other | from Other | Net | Amount | ||||||||||||||||
Amount | Companies | Companies | Amount | Assumed to Net | ||||||||||||||||
For the Year Ended December 31, 2009 | ||||||||||||||||||||
Life insurance in-force | $ | 68,584,383 | $ | 31,347,876 | $ | 863,867 | $ | 38,100,374 | 2.3 | % | ||||||||||
Premiums: | ||||||||||||||||||||
Life insurance | 581,422 | 81,120 | 4,512 | 504,814 | 0.9 | % | ||||||||||||||
Accident and health insurance | 287,977 | 151,138 | 172,862 | 309,701 | 55.8 | % | ||||||||||||||
Property and liability insurance | 1,243,710 | 89,675 | 5,474 | 1,159,509 | 0.5 | % | ||||||||||||||
Total premiums | $ | 2,113,109 | $ | 321,933 | $ | 182,848 | $ | 1,974,024 | 9.3 | % | ||||||||||
For the Year Ended December 31, 2008 | ||||||||||||||||||||
Life insurance in-force | $ | 68,820,212 | $ | 31,241,255 | $ | 1,050,645 | $ | 38,629,602 | 2.7 | % | ||||||||||
Premiums: | ||||||||||||||||||||
Life insurance | 492,068 | 84,942 | 8,460 | 415,586 | 2.0 | % | ||||||||||||||
Accident and health insurance | 278,907 | 134,904 | 146,880 | 290,883 | 50.5 | % | ||||||||||||||
Property and liability insurance | 1,346,425 | 224,248 | 59,849 | 1,182,026 | 5.1 | % | ||||||||||||||
Total premiums | $ | 2,117,400 | $ | 444,094 | $ | 215,189 | $ | 1,888,495 | 11.4 | % | ||||||||||
For the Year Ended December 31, 2007 | ||||||||||||||||||||
Life insurance in-force | $ | 67,604,695 | $ | 29,635,648 | $ | 1,078,371 | $ | 39,047,418 | 2.8 | % | ||||||||||
Premiums: | ||||||||||||||||||||
Life insurance | 609,643 | 72,604 | 10,355 | 547,394 | 1.9 | % | ||||||||||||||
Accident and health insurance | 255,948 | 126,417 | 154,234 | 283,765 | 54.4 | % | ||||||||||||||
Property and liability insurance | 1,269,078 | 103,629 | 11,768 | 1,177,217 | 1.0 | % | ||||||||||||||
Total premiums | $ | 2,134,669 | $ | 302,650 | $ | 176,357 | $ | 2,008,376 | 8.8 | % | ||||||||||
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Table of Contents
SCHEDULE V — VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
Deductions — Describe | ||||||||||||||||||||
Balance at | Additions | Amounts | Balance at | |||||||||||||||||
Beginning of | Charged to | Written off Due | Amounts | End of | ||||||||||||||||
Period | Expense | to Disposal (a) | Commuted (b) | Period | ||||||||||||||||
2009 | ||||||||||||||||||||
Investment valuation allowances: | ||||||||||||||||||||
Mortgage loans on real estate | $ | 19,496 | $ | 3,794 | $ | — | $ | — | $ | 23,290 | ||||||||||
Total | $ | 19,496 | $ | 3,794 | $ | — | $ | — | $ | 23,290 | ||||||||||
2008 | ||||||||||||||||||||
Investment valuation allowances: | ||||||||||||||||||||
Mortgage loans on real estate | $ | 15,610 | $ | 3,886 | $ | — | $ | — | $ | 19,496 | ||||||||||
Total | $ | 15,610 | $ | 3,886 | $ | — | $ | — | $ | 19,496 | ||||||||||
2007 | ||||||||||||||||||||
Investment valuation allowances: | ||||||||||||||||||||
Mortgage loans on real estate | $ | 13,835 | $ | 1,775 | $ | — | $ | — | $ | 15,610 | ||||||||||
Total | $ | 13,835 | $ | 1,775 | $ | — | $ | — | $ | 15,610 | ||||||||||
(a) | Amounts written off due to disposal represent reductions or (additions) in the balance due to sales, transfers or other disposals of the asset with which the allowance is associated. | |
(b) | Amounts commuted represent reductions in the allowance balance due to changes in requirements or investments conditions. |
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