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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 |
![](https://capedge.com/proxy/10-K/0000950123-11-021302/c13346c1334600.gif)
Texas (State or other jurisdiction of incorporation or organization) | 74-0484030 (I.R.S. Employer Identification No.) |
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 filerþ | Non-accelerated filero | Smaller reporting companyo | |||
(Do not check if a smaller reporting company) |
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Exhibit 10.5 | ||||||||
Exhibit 10.8 | ||||||||
Exhibit 10.9 | ||||||||
Exhibit 21 | ||||||||
Exhibit 23 | ||||||||
Exhibit 31.1 | ||||||||
Exhibit 31.2 | ||||||||
Exhibit 32.1 | ||||||||
Exhibit 32.2 |
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• | international economic and financial factors, including the performance and fluctuations of fixed income, equity, real estate, credit capital and other financial markets; |
• | interest rate fluctuations; |
• | estimates of our reserves for future policy benefits and claims; |
• | differences between actual experience regarding mortality, morbidity, persistency, surrender experience, interest rates or market returns, and the assumptions we use in pricing our products, establishing liabilities and reserves or for other purposes; |
• | changes in our assumptions related to deferred policy acquisition costs; |
• | changes in our claims-paying or credit ratings; |
• | investment losses and defaults; |
• | competition in our product lines and for personnel; |
• | changes in tax law; |
• | regulatory or legislative changes; |
• | adverse determinations in litigation or regulatory matters and our exposure to contingent liabilities, including and in connection with our divestiture or winding down of businesses; |
• | domestic or international military actions, natural or man-made disasters, including terrorist activities or pandemic disease, or other events resulting in catastrophic loss of life; |
• | ineffectiveness of risk management policies and procedures in identifying, monitoring and managing risks; |
• | effects of acquisitions, divestitures and restructurings, including possible difficulties in integrating and realizing the projected results of acquisitions; |
• | changes in statutory or U.S. generally accepted accounting principles (“GAAP”) practices or policies; and |
• | changes in assumptions for retirement expense. |
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ITEM 1. | BUSINESS |
• | 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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• | Fixed annuities; and |
• | Variable annuities. |
Single Premium Immediate Annuity(“SPIA”).A single premium immediate annuity is an annuity purchased by one premium payment, providing a periodic (usually monthly or annual) income payment to the owner of the annuity for a specified period, such as for the remainder of the annuitant’s life. Generally, once the payments of an immediate annuity have begun, the contract cannot be revised or cashed in, and there is no return of part or all of the original deposit. Annuity payments are usually fixed for the payment period, although it may increase at a predetermined rate, depending upon the terms of the contract. |
Deferred Annuity. A deferred annuity is an asset accumulation product. Premiums were received either as a single payment, Single Premium Deferred Annuity, or as multiple payments, Flexible Premium Deferred Annuity. The payments are credited with interest at our determined rates, subject to policy minimums. Deferred annuities usually have surrender charges that apply beginning at issue and grade off over time. Deferred annuities sometimes have Market Value Adjustments that can have a positive or negative effect on any surrender value that is paid, depending on the relationship of interest rates when the product was sold as compared to interest rates when the policy is surrendered. If not surrendered, the proceeds of the deferred annuity can be converted to an income stream similar to those available under SPIA contracts. |
Equity- Indexed Deferred Annuity.Equity-indexed deferred annuities are deferred annuities, meaning that payment of the annuity is not scheduled to commence until a future date. With an equity-indexed deferred annuity, a minimum interest rate is credited at the rates required by state insurance law. Any additional interest credited is typically tied to the performance of a particular stock market index, such as the S&P 500. Crediting of the additional interest, however, may be limited by caps or participation rates prescribed by the particular product. |
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• | Medicare Supplement; |
• | Supplemental insurance; |
• | Medical Expense; |
• | Stop-loss; and |
• | Credit disability. |
Specific Stop-Loss.Specific stop loss coverage is initiated when claims for an individual reach the threshold selected by the employer. After the threshold is reached, a stop-loss policy reimburses claims paid by the employer up to the lifetime limit per individual. |
Aggregate Stop-Loss.Aggregate stop-loss coverage is designed to reimburse the employer once the group’s total paid claims reach the stipulated threshold. |
• | Personal, including auto, homeowner and other; |
• | Commerical, including auto, agribusiness and other; and |
• | Credit property and casualty insurance. |
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• | Collateral Protection Insurance(“CPI”). Commonly referred to as creditor-placed insurance. CPI provides insurance against loss, expense to recover, or damage to personal property (typically automobiles) pledged as collateral resulting from fire, burglary, collision, or other loss occurrence that would either impair a creditor’s interest or adversely affect the value of the collateral. The coverage is purchased according to the terms of the credit obligation when the borrower fails to provide the required insurance. The cost of the insurance is charged to the borrower. |
• | Guaranteed Auto ProtectionorGuaranteed Asset Protection(“GAP”). GAP insures the excess of the outstanding indebtedness over the primary property insurance benefits that may occur in the event of a total loss to or an unrecovered theft of the collateral. GAP can be written on a variety of assets that are used as collateral to secure credit; however, it is most commonly written on automobiles. |
• | Independent Marketing Group/Direct Marketing; |
• | Career Sales and Services Division; |
• | Multiple-Line; |
• | Health/Senior Age Marketing Division; and |
• | Credit Insurance Division. |
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Primary Means of | ||||||
Segment | Marketing Channels | Companies | Distribution | |||
Life | Independent Marketing Group/Direct Marketing; Multiple-line; Career Sales and Service Division; Health/Senior Age Marketing Division; Credit Insurance Division | American National Insurance Company; Farm Family 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/Direct Marketing; Multiple-line; Career Sales and Service Division; Health/Senior Age Marketing Division | American National Insurance Company; Standard Life and Accident Insurance Company; Farm Family Life Insurance Company; American National Life Insurance Company of New York | Independent agents; Employee agents; Exclusive agents | |||
Health | Career Sales and Service Division; Health/Senior Age Marketing Division; Credit Insurance Division | American National Insurance Company; Standard Life and Accident Insurance Company; Farm Family Life Insurance Company | Employee agents; Exclusive agents; Independent agents; Managing general underwriters | |||
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 | Exclusive agents; General agents; Independent agents |
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• | A.M. Best Company: A (Excellent)(1) |
• | Standard & Poor’s: A+ (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 A is in the “strong” category and represents “Strong capacity to meet financial commitments, but somewhat susceptible to adverse economic conditions and changes in circumstances. A+ is the fifth highest of twenty active company ratings. |
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ITEM 1A. | RISK FACTORS |
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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; |
• | acquisition and disposition of assets; and |
• | any other matters submitted for stockholder approval. |
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• | reducing new sales of insurance products, and annuity 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; | ||
• | increasing our borrowing cost; | ||
• | adversely affecting our ability to obtain reinsurance at reasonable prices; 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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ITEM 1B. | UNRESOLVED STAFF COMMENTS |
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ITEM 2. | PROPERTIES |
• | We own and occupy four buildings in League City, Texas, consisting of a total of approximately 346,000 square feet. Approximately 40% 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. |
ITEM 3. | LEGAL PROCEEDINGS |
ITEM 4. | REMOVED AND RESERVED |
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ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
Dividend Paid | ||||||||||||
High | Low | Per Share | ||||||||||
(per share) | ||||||||||||
2010: | ||||||||||||
Fourth quarter | $ | 86.91 | $ | 75.55 | $ | 0.77 | ||||||
Third quarter | 85.80 | 74.14 | 0.77 | |||||||||
Second quarter | 116.40 | 80.43 | 0.77 | |||||||||
First quarter | 121.36 | 102.00 | 0.77 | |||||||||
$ | 3.08 | |||||||||||
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 | |||||||||||
Equity Compensation Plan Information | ||||||||||||
Number of securities remaining | ||||||||||||
Number of securities to be | available for future issuance under | |||||||||||
issued upon exercise of | Weighted-average exercise | equity compensation plans | ||||||||||
outstanding | price outstanding options, | (excluding | ||||||||||
options, warrants and rights | warrants and rights | securities reflected in column (a)) | ||||||||||
(a) | (b) | (c) | ||||||||||
Plan category | ||||||||||||
Equity compensation plans approved by security holders | $ | — | $ | 109.40 | 2,203,233 | |||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
Total | $ | — | $ | 109.40 | 2,203,233 | |||||||
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![](https://capedge.com/proxy/10-K/0000950123-11-021302/c13346c1334601.gif)
12/31/05 | 12/31/06 | 12/31/07 | 12/31/08 | 12/31/09 | 12/31/10 | |||||||||||||||||||
American National | $ | 100.00 | $ | 99.76 | $ | 108.16 | $ | 69.94 | $ | 111.50 | $ | 85.17 | ||||||||||||
NASDAQ Total | 100.00 | 109.85 | 119.13 | 57.40 | 82.44 | 97.87 | ||||||||||||||||||
NASDAQ Insurance | 100.00 | 113.07 | 113.30 | 104.95 | 109.61 | 123.39 |
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ITEM 6. | SELECTED FINANCIAL DATA |
(and its subsidiaries)
(dollar amounts in millions, except per | Years ended December 31, | |||||||||||||||||||
share amounts, or unless otherwise noted) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||
Revenues | $ | 3,067 | $ | 2,938 | $ | 2,503 | $ | 3,038 | $ | 3,090 | ||||||||||
Income (loss) from continuing operations attributable to American National Insurance Company and Subsidiaries | 145 | 17 | (174 | ) | 245 | 278 | ||||||||||||||
Income (loss) from discontinued operations, net of tax | (1 | ) | (1 | ) | 20 | (4 | ) | (5 | ) | |||||||||||
Net income (loss) | 143 | 15 | (154 | ) | 240 | 275 | ||||||||||||||
Net income (loss) attributable to American National Insurance Company and Subsidiaries | 144 | 16 | (154 | ) | 241 | 273 | ||||||||||||||
Per common share | ||||||||||||||||||||
Income (loss) from continuing operations: | ||||||||||||||||||||
- basic | 5.47 | 0.64 | (6.55 | ) | 9.24 | 10.50 | ||||||||||||||
- diluted | 5.45 | 0.64 | (6.55 | ) | 9.19 | 10.45 | ||||||||||||||
Income (loss) from discontinued operations: | ||||||||||||||||||||
- basic | (0.05 | ) | (0.05 | ) | 0.73 | (0.15 | ) | (0.18 | ) | |||||||||||
- diluted | (0.05 | ) | (0.05 | ) | 0.73 | (0.15 | ) | (0.18 | ) | |||||||||||
Net income (loss) attributable to American National Insurance Company and Subsidiaries: | ||||||||||||||||||||
- basic | 5.42 | 0.59 | (5.82 | ) | 9.09 | 10.32 | ||||||||||||||
- diluted | 5.40 | 0.59 | (5.82 | ) | 9.04 | 10.27 | ||||||||||||||
Cash dividends per share | 3.08 | 3.08 | 3.08 | 3.05 | 3.01 | |||||||||||||||
Dividend payout ratio(1) | 86.2 | % | 127.2 | % | 89.2 | % | 38.1 | % | 38.7 | % | ||||||||||
Years ended December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Total assets | $ | 21,413 | $ | 20,150 | $ | 18,379 | $ | 18,461 | $ | 17,932 | ||||||||||
Total American National Insurance Company and Subsidiaries stockholders’ equity | 3,633 | 3,460 | 3,134 | 3,737 | 3,576 | |||||||||||||||
Total equity | 3,636 | 3,472 | 3,142 | 3,741 | 3,582 |
(1) | Total dividends paid to stockholders divided by the sum of net income less realized gains (losses) on investments and other-than-temporary impairments, after tax. |
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ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
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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, contract holders and beneficiaries 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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• | In 2010, we established a New York life insurance subsidiary. The subsidiary started its operations in the first half of 2010. A variety of annuity products were available for sale in 2010 and will be followed in subsequent years by our life products. Initial sales are anticipated to be 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 Service Division increased in 2010. 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. |
• | Sales of Universal Life insurance products increased for our Multiple-line and Career Sales and Service Divisions in 2010. |
• | We believe there will be a continuing shift in sales emphasis to utilizing the Internet, endorsed direct mail and innovative product/distribution combinations. Our direct sales of life insurance products rebounded in 2010. Selling traditional life insurance products through our Internet and third-party marketing distribution channels will remain a focus. |
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• | Deferred policy acquisition costs; |
• | Reserves; |
• | Reinsurance; |
• | Pension and postretirement benefit plans; |
• | Other-than-temporary impairment; |
• | Litigation contingencies; and |
• | Federal income taxes. |
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Increase/(decrease) | ||||
in DAC | ||||
Increase in future investment margins of 25 basis points | $ | 29,050 | ||
Decrease in future investment margins of 25 basis points | (33,594 | ) | ||
Decrease in future life mortality by 1% | 2,462 | |||
Increase in future life mortality by 1% | (2,528 | ) |
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• | Case reserves — claims that were reported to us but not yet paid, and |
• | 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 that have been incurred but not yet reported. |
Year ended December 31, 2010 | Year ended December 31, 2009 | |||||||||||||||||||||||
Gross | Ceded | Net | Gross | Ceded | Net | |||||||||||||||||||
Case | $ | 472,794 | $ | 13,676 | $ | 459,118 | $ | 473,908 | $ | 11,639 | $ | 462,269 | ||||||||||||
IBNR | 458,509 | 30,619 | 427,890 | 443,082 | 48,693 | 394,389 | ||||||||||||||||||
Total | $ | 931,303 | $ | 44,295 | $ | 887,008 | $ | 916,990 | $ | 60,332 | $ | 856,658 | ||||||||||||
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• | Initial Expected Loss Ratio: 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 and the 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 that 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. |
Year ended December 31, 2010 | ||||||||
Cumulative Increase (Decrease) | ||||||||
5 Day Speed Up | 5 Day Slow Down | |||||||
Personal: | ||||||||
Personal Auto | $ | (1,421 | ) | $ | 1,236 | |||
Homeowner | 14 | 345 | ||||||
Commercial: | ||||||||
Agribusiness | 71 | 377 | ||||||
Commercial auto | (374 | ) | 1,409 | |||||
Other | (1,106 | ) | 3,169 |
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Used for Net | Used for Net | |||||||||||||||
Benefit Cost | Used for Benefit | Benefit Cost | Used for Benefit | |||||||||||||
for year ended | Obligations as of | for year ended | Obligations as of | |||||||||||||
December 31, 2010 | December 31, 2010 | December 31, 2009 | December 31, 2009 | |||||||||||||
Discount rate | 6.17 | % | 5.34 | % | 6.17 | % | 5.73 | % | ||||||||
Rate of compensation increase | 4.20 | 3.78 | % | 4.20 | 4.20 | |||||||||||
Long-term rate of return | 7.65 | 7.65 | % | 7.65 | 7.65 |
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Years ended December 31, | Change over prior year | |||||||||||||||||||
2010 | 2009 | 2008 | 2010 | 2009 | ||||||||||||||||
Premiums and other revenues: | ||||||||||||||||||||
Premiums | $ | 1,877,908 | $ | 1,974,024 | $ | 1,888,495 | $ | (96,116 | ) | $ | 85,529 | |||||||||
Other policy revenues | 185,805 | 179,504 | 174,899 | 6,301 | 4,605 | |||||||||||||||
Net investment income | 911,915 | 839,777 | 795,442 | 72,138 | 44,335 | |||||||||||||||
Realized investments gains (losses), net | 74,062 | (73,855 | ) | (379,034 | ) | 147,917 | 305,179 | |||||||||||||
Other income | 17,398 | 19,000 | 22,777 | (1,602 | ) | (3,777 | ) | |||||||||||||
Total revenues | 3,067,088 | 2,938,450 | 2,502,579 | 128,638 | 435,871 | |||||||||||||||
Benefits, losses and expenses: | ||||||||||||||||||||
Policy benefits | 1,608,415 | 1,709,899 | 1,601,854 | (101,484 | ) | 108,045 | ||||||||||||||
Interest credited to policy account balances | 393,119 | 370,563 | 299,833 | 22,556 | 70,730 | |||||||||||||||
Commissions | 448,880 | 459,943 | 475,345 | (11,063 | ) | (15,402 | ) | |||||||||||||
Other operating costs and expenses | 454,146 | 471,920 | 493,907 | (17,774 | ) | (21,987 | ) | |||||||||||||
Change in deferred policy acquisition costs(1) | (40,095 | ) | (63,611 | ) | (67,439 | ) | 23,516 | 3,828 | ||||||||||||
Total benefits and expenses | 2,864,465 | 2,948,714 | 2,803,500 | (84,249 | ) | 145,214 | ||||||||||||||
Income (loss) before other items and federal income taxes | $ | 202,623 | $ | (10,264 | ) | $ | (300,921 | ) | $ | 212,887 | $ | 290,657 | ||||||||
(1) | A negative amount of net change indicates more expense was deferred than amortized and represents a decrease to expenses in the periods indicated. |
• | an increase in our Corporate and Other segment’s realized investment gains and net investment income as a result of improved market conditions, |
• | a decrease in policy benefits across all segments, |
• | a decrease in other operating costs and expenses in our Life and Health segments, |
• | partially offset by a decrease in Life and Health segment premiums and an increase in Annuity segment interest credited to policy account balances. |
• | a decrease in our Corporate and other segment’s realized investment losses partially offset by increased investment income, |
• | an increase in annuity premiums, |
• | partially offset by increased policy benefits in annuities due to strong single premium immediate annuity sales and increased interest credited to policy account balances. |
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Years ended December 31, | Change over prior year | |||||||||||||||||||
2010 | 2009 | 2008 | 2010 | 2009 | ||||||||||||||||
Revenues: | ||||||||||||||||||||
Premiums | $ | 282,160 | $ | 284,530 | $ | 299,338 | $ | (2,370 | ) | $ | (14,808 | ) | ||||||||
Other policy revenues | 170,729 | 164,748 | 154,984 | 5,981 | 9,764 | |||||||||||||||
Net investment income | 223,753 | 222,611 | 226,643 | 1,142 | (4,032 | ) | ||||||||||||||
Other income | 3,547 | 2,720 | 3,767 | 827 | (1,047 | ) | ||||||||||||||
Total revenues | 680,189 | 674,609 | 684,732 | 5,580 | (10,123 | ) | ||||||||||||||
Benefits, losses and expenses: | ||||||||||||||||||||
Policy benefits | 294,177 | 297,719 | 296,078 | (3,542 | ) | 1,641 | ||||||||||||||
Interest credited to policy account balances | 59,149 | 58,983 | 62,221 | 166 | (3,238 | ) | ||||||||||||||
Commissions | 91,165 | 91,968 | 126,813 | (803 | ) | (34,845 | ) | |||||||||||||
Other operating costs and expenses | 178,619 | 185,048 | 222,908 | (6,429 | ) | (37,860 | ) | |||||||||||||
Change in deferred policy acquisition costs | (1,963 | ) | 1,536 | (42,103 | ) | (3,499 | ) | 43,639 | ||||||||||||
Total benefits, losses and expenses | 621,147 | 635,254 | 665,917 | (14,107 | ) | (30,663 | ) | |||||||||||||
Income before other items and federal income taxes | $ | 59,042 | $ | 39,355 | $ | 18,815 | $ | 19,687 | $ | 20,540 | ||||||||||
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Years ended December 31, | Change over prior year | |||||||||||||||||||
2010 | 2009 | 2008 | 2010 | 2009 | ||||||||||||||||
Acquisition cost capitalized | $ | 80,789 | $ | 77,161 | $ | 129,031 | $ | 3,628 | $ | (51,870 | ) | |||||||||
Amortization of DAC | (78,826 | ) | (78,697 | ) | (86,928 | ) | (129 | ) | 8,231 | |||||||||||
Change in deferred policy acquisition costs(1) | $ | 1,963 | $ | (1,536 | ) | $ | 42,103 | $ | 3,499 | $ | (43,639 | ) | ||||||||
(1) | A positive amount of net change indicates more expense was deferred than amortized and represents a decrease to expenses in the periods indicated. |
Reserves | Premiums | |||||||||||||||||||||||
Years Ended December 31, | Years Ended December 31, | |||||||||||||||||||||||
2010 | 2009 | 2008 | 2010 | 2009 | 2008 | |||||||||||||||||||
Reinsurance assumed | $ | 9,827 | $ | 19,514 | $ | 25,553 | $ | (1,130 | ) | $ | 4,512 | $ | 8,460 | |||||||||||
Reinsurance ceded | (173,097 | ) | (160,934 | ) | (147,523 | ) | (86,241 | ) | (74,577 | ) | (80,826 | ) | ||||||||||||
Total | $ | (163,270 | ) | $ | (141,420 | ) | $ | (121,970 | ) | $ | (87,371 | ) | $ | (70,065 | ) | $ | (72,366 | ) | ||||||
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A.M. Best | Ceded | Percentage of | ||||||||
Reinsurer | Rating(1) | Premium | Gross Premium | |||||||
Swiss Re Life and Health America Inc. | A | $ | 23,332 | 6.5 | % | |||||
Munich American Reassurance Company | A+ | 12,065 | 3.4 | % | ||||||
Transamerica Life Insurance Company | A+ | 9,882 | 2.8 | % | ||||||
General Re Life Corporation | A++ | 8,410 | 2.3 | % | ||||||
SCOR Global Life Re Insurance Company of Texas | A- | 7,173 | 2.0 | % | ||||||
Other Reinsurers with no single company greater than 2% of the total | 3,473 | 83.0 | % | |||||||
Total life reinsurance ceded | $ | 75,735 | 100.0 | % | ||||||
(1) | A.M. Best rating as of the most current information available February 22, 2011. |
Years Ended December 31, | Change over prior year | |||||||||||||||||||
2010 | 2009 | 2008 | 2010 | 2009 | ||||||||||||||||
Life insurance in-force: | ||||||||||||||||||||
Traditional life | $ | 45,919,000 | $ | 45,229,000 | $ | 45,008,000 | $ | 690,000 | $ | 221,000 | ||||||||||
Interest sensitive life | 23,879,000 | 24,219,000 | 24,863,000 | (340,000 | ) | (644,000 | ) | |||||||||||||
Total life insurance in-force | $ | 69,798,000 | $ | 69,448,000 | $ | 69,871,000 | $ | 350,000 | $ | (423,000 | ) | |||||||||
Years Ended December 31, | Change Over Prior Year | |||||||||||||||||||
2010 | 2009 | 2008 | 2010 | 2009 | ||||||||||||||||
Number of policies: | ||||||||||||||||||||
Traditional life | 2,274 | 2,347 | 2,452 | (73 | ) | (105 | ) | |||||||||||||
Interest sensitive life | 176 | 175 | 176 | 1 | (1 | ) | ||||||||||||||
Total number of policies | 2,450 | 2,522 | 2,628 | (72 | ) | (106 | ) | |||||||||||||
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Years ended December 31, | Change over prior year | |||||||||||||||||||
2010 | 2009 | 2008 | 2010 | 2009 | ||||||||||||||||
Revenues: | ||||||||||||||||||||
Premiums | $ | 174,193 | $ | 220,284 | $ | 116,248 | $ | (46,091 | ) | $ | 104,036 | |||||||||
Other policy revenues | 15,076 | 14,756 | 19,915 | 320 | (5,159 | ) | ||||||||||||||
Net investment income | 510,106 | 449,035 | 374,023 | 61,071 | 75,012 | |||||||||||||||
Other income (expense) | (7,900 | ) | (3,870 | ) | (5,718 | ) | (4,030 | ) | 1,848 | |||||||||||
Total revenues | 691,475 | 680,205 | 504,468 | 11,270 | 175,737 | |||||||||||||||
Benefits, losses and expenses: | ||||||||||||||||||||
Policy benefits | 205,948 | 249,709 | 142,867 | (43,761 | ) | 106,842 | ||||||||||||||
Interest credited to policy account balances | 333,970 | 311,580 | 237,612 | 22,390 | 73,968 | |||||||||||||||
Commissions | 95,701 | 107,053 | 79,213 | (11,352 | ) | 27,840 | ||||||||||||||
Other operating costs and expenses | 62,791 | 59,254 | 45,491 | 3,537 | 13,763 | |||||||||||||||
Change in deferred policy acquisition costs | (44,569 | ) | (62,013 | ) | (20,690 | ) | 17,444 | (41,323 | ) | |||||||||||
Total benefits, losses and expenses | 653,841 | 665,583 | 484,493 | (11,742 | ) | 181,090 | ||||||||||||||
Income before other items and federal income taxes | $ | 37,634 | $ | 14,622 | $ | 19,975 | $ | 23,012 | $ | (5,353 | ) | |||||||||
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Years ended December 31, | Change over prior year | |||||||||||||||||||
2010 | 2009 | 2008 | 2010 | 2009 | ||||||||||||||||
Fixed deferred annuity | $ | 1,045,429 | $ | 1,715,871 | $ | 1,573,237 | $ | (670,442 | ) | $ | 142,634 | |||||||||
Equity-indexed deferred annuity | 340,920 | 239,664 | 85,334 | 101,256 | 154,330 | |||||||||||||||
Single premium immediate annuity | 177,688 | 227,937 | 121,952 | (50,249 | ) | 105,985 | ||||||||||||||
Variable deferred annuity | 90,188 | 99,429 | 103,233 | (9,241 | ) | (3,804 | ) | |||||||||||||
Total | 1,654,225 | 2,282,901 | 1,883,756 | (628,676 | ) | 399,145 | ||||||||||||||
Less: policy deposits | 1,480,032 | 2,062,617 | 1,767,508 | (582,585 | ) | 295,109 | ||||||||||||||
Total earned premiums | $ | 174,193 | $ | 220,284 | $ | 116,248 | $ | (46,091 | ) | $ | 104,036 | |||||||||
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With Options | Without Options | |||||||||||||||||||||||
Years ended December 31, | Years ended December 31, | |||||||||||||||||||||||
2010 | 2009 | 2008 | 2010 | 2009 | 2008 | |||||||||||||||||||
Net investment income | $ | 510,106 | $ | 449,035 | $ | 374,023 | $ | 500,163 | $ | 443,655 | $ | 398,423 |
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Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Fixed deferred annuity: | ||||||||||||
Account value, beginning of period | $ | 8,151,365 | $ | 6,918,365 | $ | 6,210,456 | ||||||
Net inflows | 528,338 | 930,417 | 487,410 | |||||||||
Fees | (10,080 | ) | (10,592 | ) | (15,363 | ) | ||||||
Interest credited | 337,069 | 313,175 | 235,862 | |||||||||
Account value, end of period | $ | 9,006,692 | $ | 8,151,365 | $ | 6,918,365 | ||||||
Variable deferred annuity: | ||||||||||||
Account value, beginning of period | $ | 400,624 | $ | 309,011 | $ | 429,505 | ||||||
Net inflows/(outflows) | (27,792 | ) | 20,452 | 24,364 | ||||||||
Fees | (4,795 | ) | (4,096 | ) | (4,582 | ) | ||||||
Change in market value and other | 47,720 | 75,257 | (140,276 | ) | ||||||||
Account value, end of period | $ | 415,757 | $ | 400,624 | $ | 309,011 | ||||||
Single premium immediate annuity: | ||||||||||||
Reserve, beginning of period | $ | 820,295 | $ | 701,141 | $ | 693,137 | ||||||
Net inflows/(outflows) | 42,476 | 84,785 | (26,330 | ) | ||||||||
Interest and mortality | 40,355 | 34,369 | 34,334 | |||||||||
Reserve, end of period | $ | 903,126 | $ | 820,295 | $ | 701,141 | ||||||
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With Equity-Indexed Deferred Annuities | Without Equity-Indexed Deferred Annuities | |||||||||||||||||||||||
Years ended December 31, | Years ended December 31, | |||||||||||||||||||||||
2010 | 2009 | 2008 | 2010 | 2009 | 2008 | |||||||||||||||||||
Interest credited to policy account balances | $ | 333,970 | $ | 311,580 | $ | 237,612 | $ | 309,031 | $ | 293,857 | $ | 254,313 |
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Years ended December 31, | Change over prior year | |||||||||||||||||||
2010 | 2009 | 2008 | 2010 | 2009 | ||||||||||||||||
Acquisition cost capitalized | $ | 117,090 | $ | 126,769 | $ | 96,544 | $ | (9,679 | ) | $ | 30,225 | |||||||||
Amortization of DAC | (72,521 | ) | (64,756 | ) | (75,854 | ) | (7,765 | ) | 11,098 | |||||||||||
Change in deferred policy acquisition costs(1) | $ | 44,569 | $ | 62,013 | $ | 20,690 | $ | (17,444 | ) | $ | 41,323 | |||||||||
(1) | A positive amount of net change indicates more expense was deferred than amortized and is a decrease to expense in the periods indicated. |
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Years ended December 31, | Change over prior year | |||||||||||||||||||
2010 | 2009 | 2008 | 2010 | 2009 | ||||||||||||||||
Revenues: | ||||||||||||||||||||
Premiums | $ | 263,294 | $ | 309,701 | $ | 290,883 | $ | (46,407 | ) | $ | 18,818 | |||||||||
Net investment income | 14,855 | 15,992 | 16,566 | (1,137 | ) | (574 | ) | |||||||||||||
Other income | 10,384 | 10,382 | 13,252 | 2 | (2,870 | ) | ||||||||||||||
Total premiums and other revenues | 288,533 | 336,075 | 320,701 | (47,542 | ) | 15,374 | ||||||||||||||
Benefits and expenses: | ||||||||||||||||||||
Policy benefits | 184,554 | 239,407 | 223,055 | (54,853 | ) | 16,352 | ||||||||||||||
Commissions | 35,263 | 51,717 | 43,219 | (16,454 | ) | 8,498 | ||||||||||||||
Other operating costs and expenses | 49,634 | 62,134 | 69,961 | (12,500 | ) | (7,827 | ) | |||||||||||||
Change in deferred policy acquisition costs | 4,886 | 5,017 | 5,023 | (131 | ) | (6 | ) | |||||||||||||
Total benefits and expenses | 274,337 | 358,275 | 341,258 | (83,938 | ) | 17,017 | ||||||||||||||
Income (loss) before other items and federal income taxes | $ | 14,196 | $ | (22,200 | ) | $ | (20,557 | ) | $ | 36,396 | $ | (1,643 | ) | |||||||
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Years ended December 31, | ||||||||||||||||||||||||
2010 | 2009 | 2008 | ||||||||||||||||||||||
Premiums | Premiums | Premiums | ||||||||||||||||||||||
dollars | percentage | dollars | percentage | dollars | percentage | |||||||||||||||||||
Medicare Supplement | $ | 117,132 | 44.5 | % | $ | 123,102 | 39.8 | % | $ | 120,757 | 41.5 | % | ||||||||||||
Medical expense | 67,050 | 25.5 | 80,716 | 26.1 | 78,291 | 26.9 | ||||||||||||||||||
Group | 29,343 | 11.1 | 33,484 | 10.8 | 33,758 | 11.6 | ||||||||||||||||||
Credit accident and health | 21,553 | 8.2 | 19,627 | 6.3 | 24,676 | 8.5 | ||||||||||||||||||
All other | 28,216 | 10.7 | 52,772 | 17.0 | 33,401 | 11.5 | ||||||||||||||||||
Total | $ | 263,294 | 100.0 | % | $ | 309,701 | 100.0 | % | $ | 290,883 | 100.0 | % | ||||||||||||
Years ended December 31, | |||||||||||||||||||||||||
2010 | 2009 | 2008 | |||||||||||||||||||||||
number | percentage | number | percentage | number | percentage | ||||||||||||||||||||
Medicare Supplement | 48,584 | 8.0 | % | 58,627 | 8.9 | % | 60,264 | 8.2 | % | ||||||||||||||||
Medical expense | 11,057 | 1.8 | 18,368 | 2.8 | 20,352 | 2.8 | |||||||||||||||||||
Group | 17,038 | 2.8 | 23,890 | 3.7 | 21,409 | 2.9 | |||||||||||||||||||
Credit accident and health | 294,702 | 48.2 | 309,695 | 47.2 | 323,158 | 44.0 | |||||||||||||||||||
All other | 239,624 | 39.2 | 245,689 | 37.4 | 309,938 | 42.1 | |||||||||||||||||||
Total | 611,005 | 100.0 | % | 656,269 | 100.0 | % | 735,121 | 100.0 | % | ||||||||||||||||
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Years ended December 31, | Change over prior year | |||||||||||||||||||
2010 | 2009 | 2008 | 2010 | 2009 | ||||||||||||||||
Acquisition cost capitalized | $ | 18,087 | $ | 16,729 | $ | 22,762 | $ | 1,358 | $ | (6,033 | ) | |||||||||
Amortization of DAC | (22,973 | ) | (21,746 | ) | (27,785 | ) | (1,227 | ) | 6,039 | |||||||||||
Change in deferred policy acquisition costs(1) | $ | (4,886 | ) | $ | (5,017 | ) | $ | (5,023 | ) | $ | 131 | $ | 6 | |||||||
(1) | A negative amount of net change indicates less expense was deferred than amortized and represents an increase to expenses in the periods indicated. |
A.M. Best | Ceded | Percentage of | ||||||||
Reinsurer | Rating(1) | Premium | Gross Premium | |||||||
Maiden Re Insurance Company | A- | $ | 21,916 | 18.8 | % | |||||
Harbour Life and Reinsurance Co. Ltd. | NR(2) | 15,102 | 13.0 | |||||||
Munich Reinsurance America | A+ | 13,800 | 11.8 | |||||||
AmFirst Insurance Company | B+ | 11,045 | 9.5 | |||||||
United States Fire Insurance Company | A | 8,768 | 7.5 | |||||||
Madison National Life Insurance Company | A- | 7,433 | 6.4 | |||||||
Other reinsurers with no single company greater than 5% of the total | 38,593 | 33.0 | ||||||||
Total health reinsurance ceded | $ | 116,657 | 100.0 | % | ||||||
(1) | A.M. Best rating as of the most current information available February 22, 2011. | |
(2) | Not Rated. |
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Years ended December 31, | Change over prior year | |||||||||||||||||||
2010 | 2009 | 2008 | 2010 | 2009 | ||||||||||||||||
amount | amount | |||||||||||||||||||
Revenues: | ||||||||||||||||||||
Net premiums written | $ | 1,185,366 | $ | 1,164,136 | $ | 1,184,686 | $ | 21,230 | $ | (20,550 | ) | |||||||||
Net premiums earned | $ | 1,158,261 | $ | 1,159,509 | $ | 1,182,026 | $ | (1,248 | ) | $ | (22,517 | ) | ||||||||
Net investment income | 67,545 | 66,175 | 69,348 | 1,370 | (3,173 | ) | ||||||||||||||
Other income | 8,192 | 7,064 | 8,973 | 1,128 | (1,909 | ) | ||||||||||||||
Total premiums and other revenues | 1,233,998 | 1,232,748 | 1,260,347 | 1,250 | (27,599 | ) | ||||||||||||||
Benefits and expenses: | ||||||||||||||||||||
Policy benefits | 923,736 | 923,064 | 939,854 | 672 | (16,790 | ) | ||||||||||||||
Commissions | 226,748 | 209,203 | 226,100 | 17,545 | (16,897 | ) | ||||||||||||||
Other operating costs and expenses | 124,410 | 124,266 | 132,601 | 144 | (8,335 | ) | ||||||||||||||
Change in deferred policy acquisition costs | 1,551 | (8,151 | ) | (9,669 | ) | 9,702 | 1,518 | |||||||||||||
Total benefits and expenses | 1,276,445 | 1,248,382 | 1,288,886 | 28,063 | (40,504 | ) | ||||||||||||||
Income before other items and federal income taxes | $ | (42,447 | ) | $ | (15,634 | ) | $ | (28,539 | ) | $ | (26,813 | ) | $ | 12,905 | ||||||
Loss ratio | 79.8 | % | 79.6 | % | 79.5 | % | 0.2 | 0.1 | ||||||||||||
Underwriting expense ratio | 30.5 | 28.1 | 29.5 | 2.4 | (1.4 | ) | ||||||||||||||
Combined ratio | 110.3 | % | 107.7 | % | 109.0 | % | 2.6 | (1.3 | ) | |||||||||||
Effect of net catastrophe losses on combined ratio | 10.6 | % | 7.8 | % | 11.1 | % | 2.8 | (3.3 | ) | |||||||||||
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Years ended December 31, | Change over prior year | |||||||||||||||||||
2010 | 2009 | 2008 | 2010 | 2009 | ||||||||||||||||
Net premiums written | ||||||||||||||||||||
Auto | $ | 468,100 | $ | 456,960 | $ | 462,545 | $ | 11,140 | $ | (5,585 | ) | |||||||||
Homeowner | 217,785 | 217,963 | 203,516 | (178 | ) | 14,447 | ||||||||||||||
Other Personal | 38,875 | 38,815 | 34,610 | 60 | 4,205 | |||||||||||||||
Total net premiums written | 724,760 | 713,738 | 700,671 | 11,022 | 13,067 | |||||||||||||||
Net premiums earned | ||||||||||||||||||||
Auto | 470,535 | 452,754 | 469,425 | 17,781 | (16,671 | ) | ||||||||||||||
Homeowner | 216,849 | 208,558 | 205,764 | 8,291 | 2,794 | |||||||||||||||
Other Personal | 39,298 | 37,283 | 31,990 | 2,015 | 5,293 | |||||||||||||||
Total net premiums earned | $ | 726,682 | $ | 698,595 | $ | 707,179 | $ | 28,087 | $ | (8,584 | ) | |||||||||
Loss ratio | ||||||||||||||||||||
Auto | 78.0 | % | 83.9 | % | 78.0 | % | (5.9 | ) | 5.9 | |||||||||||
Homeowner | 104.1 | 100.6 | 111.0 | 3.5 | (10.4 | ) | ||||||||||||||
Other Personal | 61.6 | 44.9 | 87.7 | 16.7 | (42.8 | ) | ||||||||||||||
Personal line loss ratio | 84.9 | % | 86.8 | % | 88.1 | % | (1.9 | ) | (1.3 | ) | ||||||||||
Combined Ratio | ||||||||||||||||||||
Auto | 102.3 | % | 104.9 | % | 101.6 | % | (2.6 | ) | 3.3 | |||||||||||
Homeowner | 129.6 | 122.8 | 138.0 | 6.8 | (15.2 | ) | ||||||||||||||
Other Personal | 68.7 | 51.3 | 110.1 | 17.4 | (58.8 | ) | ||||||||||||||
Personal line combined ratio | 108.6 | % | 107.4 | % | 112.6 | % | 1.2 | (5.2 | ) |
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Years ended December 31, | Change over prior year | |||||||||||||||||||
2010 | 2009 | 2008 | 2010 | 2009 | ||||||||||||||||
Net premiums written | ||||||||||||||||||||
Other Commercial | $ | 123,605 | $ | 127,291 | $ | 139,266 | $ | (3,686 | ) | $ | (11,975 | ) | ||||||||
Agribusiness | 103,937 | 101,074 | 101,243 | 2,863 | (169 | ) | ||||||||||||||
Auto | 80,109 | 88,642 | 95,155 | (8,533 | ) | (6,513 | ) | |||||||||||||
Total net premiums written | 307,651 | 317,007 | 335,664 | (9,356 | ) | (18,657 | ) | |||||||||||||
Net premiums earned | ||||||||||||||||||||
Other Commercial | 120,365 | 125,855 | 137,971 | (5,490 | ) | (12,116 | ) | |||||||||||||
Agribusiness | 106,678 | 105,921 | 105,230 | 757 | 691 | |||||||||||||||
Auto | 80,948 | 91,074 | 96,574 | (10,126 | ) | (5,500 | ) | |||||||||||||
Total net premiums earned | $ | 307,991 | $ | 322,850 | $ | 339,775 | $ | (14,859 | ) | $ | (16,925 | ) | ||||||||
Loss ratio | ||||||||||||||||||||
Other Commercial | 82.9 | % | 76.9 | % | 71.2 | % | 6.0 | 5.7 | ||||||||||||
Agribusiness | 108.3 | 90.1 | 87.5 | 18.2 | 2.6 | |||||||||||||||
Auto | 72.9 | 74.3 | 76.3 | (1.4 | ) | (2.0 | ) | |||||||||||||
Commercial line loss ratio | 89.1 | % | 80.5 | % | 77.7 | % | 8.6 | 2.8 | ||||||||||||
Combined ratio | ||||||||||||||||||||
Other Commercial | 112.1 | % | 106.4 | % | 95.8 | % | 5.7 | 10.6 | ||||||||||||
Agribusiness | 145.2 | 126.8 | 117.7 | 18.4 | 9.1 | |||||||||||||||
Auto | 97.2 | 96.9 | 99.3 | 0.3 | (2.4 | ) | ||||||||||||||
Commercial line combined ratio | 119.6 | % | 110.4 | % | 103.6 | % | 9.2 | 6.8 |
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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; |
• | Facultative reinsurance, in which an 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. |
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• | For Louisiana and Texas, we have coverage which lowers our retention to $10.0 million in those states. |
• | In 2010, the Louisiana and Texas covers were expanded to include additional coastal states as well as Oklahoma and Arkansas. Those covers will remain in place for 2011. |
• | Additional catastrophe coverage for the other states outside of the Northeast. The retention for this cover was $20.0 million in 2010, and will be lowered to $10.0 million for 2011. |
• | Additional catastrophe coverage for the Northeast for the last several years, and the retention for Northeast catastrophe events will be reduced from $20.0 million to $10.0 million in 2011. |
Percent of Risk Covered | ||||||||||||
AM Best | Non- | Catastrophe | ||||||||||
Reinsurer | Rating(1) | catastrophe | Coverage | |||||||||
Hannover Re (Bermuda), Ltd. | A | 39.8 | % | 2.4 | % | |||||||
Lloyd’s Syndicates | A | 26.6 | 52.3 | |||||||||
Platinum Underwriters Bermuda, Ltd | A | 12.1 | 0.2 | |||||||||
Swiss Reinsurance America Corporation | A | 8.6 | 0.9 | |||||||||
Catlin Insurance Co | A | 5.3 | 4.6 | |||||||||
Tokio Millenium Re Ltd | A+ | 0.0 | 5.8 | |||||||||
Other reinsurers with no single company greater than 5% of the total | 7.6 | 33.8 | ||||||||||
Total reinsurance coverage | 100.0 | % | 100.0 | % | ||||||||
(1) | A.M. Best rating as of the most current information available February 22, 2011. |
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Property and Casualty Loss and Loss Adjustment Expense Liability Development-Net of Reinsurance
Years Ended December 31,
2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | ||||||||||||||||||||||||||||||||||
Liability for unpaid losses and loss adjustment expenses, net of reinsurance (includes loss reserves, IBNR, allocated and unalloc expense) | $ | 384,191 | $ | 425,129 | $ | 490,215 | $ | 590,365 | $ | 678,379 | $ | 796,267 | $ | 801,953 | $ | 809,500 | $ | 847,860 | $ | 856,658 | $ | 887,008 | ||||||||||||||||||||||
Cumulative paid losses and loss expenses | ||||||||||||||||||||||||||||||||||||||||||||
One year later | 192,167 | 228,699 | 233,074 | 256,386 | 274,810 | 366,007 | 296,620 | 318,944 | 345,346 | 308,113 | ||||||||||||||||||||||||||||||||||
Two years later | 280,667 | 322,112 | 338,459 | 377,139 | 405,748 | 506,463 | 453,042 | 477,958 | 495,277 | |||||||||||||||||||||||||||||||||||
Three years later | 323,685 | 370,179 | 399,651 | 445,702 | 479,410 | 590,643 | 544,100 | 569,031 | ||||||||||||||||||||||||||||||||||||
Four years later | 345,507 | 396,758 | 429,408 | 479,524 | 518,972 | 640,003 | 593,126 | |||||||||||||||||||||||||||||||||||||
Five years later | 356,119 | 407,212 | 443,161 | 498,349 | 541,627 | 664,588 | ||||||||||||||||||||||||||||||||||||||
Six years later | 362,307 | 412,004 | 452,256 | 509,521 | 552,136 | |||||||||||||||||||||||||||||||||||||||
Seven years later | 365,331 | 416,207 | 457,972 | 513,968 | ||||||||||||||||||||||||||||||||||||||||
Eight years later | 367,326 | 420,045 | 460,785 | |||||||||||||||||||||||||||||||||||||||||
Nine years later | 369,963 | 423,256 | ||||||||||||||||||||||||||||||||||||||||||
Ten years later | 371,230 | |||||||||||||||||||||||||||||||||||||||||||
Liabilites re-estimated | ||||||||||||||||||||||||||||||||||||||||||||
One year later | 368,951 | 432,028 | 488,595 | 564,287 | 638,910 | 770,238 | 711,880 | 766,882 | 798,587 | 776,808 | ||||||||||||||||||||||||||||||||||
Two years later | 372,991 | 435,574 | 488,455 | 564,485 | 617,374 | 737,341 | 713,339 | 733,361 | 770,900 | |||||||||||||||||||||||||||||||||||
Three years later | 376,776 | 441,564 | 490,717 | 553,163 | 596,242 | 739,825 | 680,900 | 727,675 | ||||||||||||||||||||||||||||||||||||
Four years later | 379,498 | 441,309 | 482,799 | 538,459 | 596,754 | 714,995 | 682,460 | |||||||||||||||||||||||||||||||||||||
Five years later | 379,318 | 435,796 | 476,615 | 542,429 | 585,370 | 717,474 | ||||||||||||||||||||||||||||||||||||||
Six years later | 380,050 | 432,953 | 478,201 | 534,287 | 585,914 | |||||||||||||||||||||||||||||||||||||||
Seven years later | 379,270 | 433,990 | 472,502 | 534,477 | ||||||||||||||||||||||||||||||||||||||||
Eight years later | 380,082 | 430,722 | 473,754 | |||||||||||||||||||||||||||||||||||||||||
Nine years later | 378,611 | 433,070 | ||||||||||||||||||||||||||||||||||||||||||
Ten years later | 379,544 | |||||||||||||||||||||||||||||||||||||||||||
Deficiency(redundancy), net of reinsurance | $ | (4,647 | ) | $ | 7,941 | $ | (16,461 | ) | $ | (55,888 | ) | $ | (92,465 | ) | $ | (78,793 | ) | $ | (119,493 | ) | $ | (81,825 | ) | $ | (76,960 | ) | $ | (79,850 | ) | |||||||||||||||
Property and Casualty Loss and Loss Adjustment Expense Liability Development-Gross Years Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||
2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | ||||||||||||||||||||||||||||||||||
Net reserve, as initially estimated | $ | 384,191 | $ | 425,129 | $ | 490,215 | $ | 590,365 | $ | 678,379 | $ | 796,267 | $ | 801,953 | $ | 809,500 | $ | 847,860 | $ | 856,658 | $ | 887,008 | ||||||||||||||||||||||
Reinsurance and other recoverables as initially estimated | 47,162 | 65,327 | 61,077 | 61,600 | 80,526 | 86,186 | 86,898 | 79,071 | 109,518 | 62,854 | 50,972 | |||||||||||||||||||||||||||||||||
Gross reserve as initially estimated | 431,075 | 490,103 | 550,022 | 646,397 | 750,454 | 869,781 | 875,436 | 875,963 | 945,810 | 909,003 | 931,303 | |||||||||||||||||||||||||||||||||
Net re-estimated reserve | 379,544 | 433,070 | 473,754 | 534,477 | 585,914 | 717,474 | 682,460 | 727,675 | 770,900 | 776,808 | ||||||||||||||||||||||||||||||||||
Re-estimated and other reinsurance recoverables | 82,008 | 78,104 | 82,466 | 86,211 | 86,070 | 498,247 | 97,434 | 79,394 | 111,176 | 47,206 | ||||||||||||||||||||||||||||||||||
Gross re-estimated reserve | 461,552 | 511,174 | 556,220 | 620,688 | 671,984 | 1,215,721 | 779,894 | 807,069 | 882,076 | 824,014 | ||||||||||||||||||||||||||||||||||
Deficiency(redundancy), gross of reinsurance | $ | 30,477 | $ | 21,071 | $ | 6,198 | $ | (25,709 | ) | $ | (78,470 | ) | $ | 345,940 | $ | (95,542 | ) | $ | (68,894 | ) | $ | (63,734 | ) | $ | (84,989 | ) | ||||||||||||||||||
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Years ended December 31, | Change over prior year | |||||||||||||||||||
2010 | 2009 | 2008 | 2010 | 2009 | ||||||||||||||||
Revenues: | ||||||||||||||||||||
Net investment income | $ | 95,656 | $ | 85,964 | $ | 108,862 | $ | 9,692 | $ | (22,898 | ) | |||||||||
Gain (loss) from investments, net | 74,062 | (73,855 | ) | (379,034 | ) | 147,917 | 305,179 | |||||||||||||
Other Income | 3,175 | 2,704 | 2,503 | 471 | 201 | |||||||||||||||
Total revenues | 172,893 | 14,813 | (267,669 | ) | 158,080 | 282,482 | ||||||||||||||
Benefits and expenses: | ||||||||||||||||||||
Other operating costs and expenses | 38,695 | 41,220 | 22,946 | (2,525 | ) | 18,274 | ||||||||||||||
Total benefits and expenses | 38,695 | 41,220 | 22,946 | (2,525 | ) | 18,274 | ||||||||||||||
Income (loss) before other items and federal income taxes | $ | 134,198 | $ | (26,407 | ) | $ | (290,615 | ) | $ | 160,605 | $ | 264,208 | ||||||||
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Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
American National stockholders’ equity, excluding accumulated other comprehensive income (loss), net of tax (“AOCI”) | $ | 3,407,439 | $ | 3,342,805 | $ | 3,355,004 | ||||||
AOCI | 225,212 | 117,649 | (221,148 | ) | ||||||||
Total American National stockholders’ equity | $ | 3,632,651 | $ | 3,460,454 | $ | 3,133,856 | ||||||
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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) | $ | 5,441,711 | $ | 34,770 | $ | 144,175 | $ | 328,987 | $ | 4,933,779 | ||||||||||
Annuity obligations(1) | 12,070,742 | 1,635,876 | 4,337,263 | 2,415,466 | 3,682,137 | |||||||||||||||
Property and casualty insurance obligations(2) | 931,303 | 498,245 | 335,177 | 73,245 | 24,636 | |||||||||||||||
Accident and health insurance obligations(3) | 139,127 | 80,192 | 18,989 | 8,861 | 31,085 | |||||||||||||||
Purchase obligations: | ||||||||||||||||||||
Commitments to purchase and fund investments(4) | 55,385 | 48,404 | 4,310 | 1,130 | 1,541 | |||||||||||||||
Mortgage loan commitments(4) | 227,441 | 227,441 | — | — | — | |||||||||||||||
Operating leases(5) | 3,429 | 626 | 1,275 | 1,528 | — | |||||||||||||||
Defined benefit pension plans(6) | 140,503 | 9,680 | 19,138 | 21,825 | 89,860 | |||||||||||||||
Notes payable(7) | 60,140 | 47,632 | — | — | 12,508 | |||||||||||||||
Total | $ | 19,069,781 | $ | 2,582,866 | $ | 4,860,327 | $ | 2,851,042 | $ | 8,775,546 | ||||||||||
(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. 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 payments. 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 statements of financial position. All estimated cash payments 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 statements of financial position, 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 includes case reserves for reported claims and reserves for IBNR. Timing of future payments is estimated based on our historical payment patterns. The timing of these payments may vary significantly from the pattern shown in the preceding table. 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, 2010. The estimate does not include claim payments for claims incurred after December 31, 2009. 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 the amounts presented could materially differ from actual payments. | |
(4) | Expected payments to fund investments based on mortgage loans and capital commitments and other related contractual obligations. | |
(5) | Represents estimated obligations due to contracts and agreements entered into within the ordinary course of business for items classified as an operating lease by ASC 840-20Accounting for Operating Leases. | |
(6) | 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 715-40Compensation-Retirement Benefits, including a provision for the effects on the accrued benefits of assumed future salary increases. | |
(7) | Notes payable are comprised of obligations to third-party lenders, and are collateralized by real-estate owned by the respective entity. The estimated payments due by period for notes payable reflect the contractual maturities of principal and estimated future interest payments. The payment of principal and estimated future interest for the current portion of long-term notes payable are reflected in estimated payments due in less than one year. These are not corporate obligations and the Company’s liability is limited to its investment in the respective venture. See Note 12, Notes Payable, in the Notes to the Consolidated Financial Statements for further explanation. |
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Year ended December 31, 2010 | Year ended December 31, 2009 | |||||||||||||||
Amount | Percent | Amount | Percent | |||||||||||||
Bonds held-to-maturity, at amortized cost | $ | 8,513,550 | 47.5 | % | $ | 7,461,711 | 44.9 | % | ||||||||
Bonds available-for-sale, at fair value | 4,123,613 | 23.0 | 4,213,550 | 25.4 | ||||||||||||
Preferred stock, at fair value | 36,867 | 0.2 | 35,717 | 0.2 | ||||||||||||
Common stock, at fair value | 1,045,888 | 5.8 | 934,754 | 5.6 | ||||||||||||
Mortgage loans at amortized cost | 2,679,909 | 15.0 | 2,229,659 | 13.4 | ||||||||||||
Policy loans, at outstanding balance | 380,505 | 2.1 | 364,354 | 2.2 | ||||||||||||
Investment real estate, net of depreciation | 521,768 | 2.9 | 635,110 | 3.8 | ||||||||||||
Short-term investments | 486,206 | 2.8 | 636,823 | 3.9 | ||||||||||||
Other invested assets | 119,251 | 0.7 | 94,442 | 0.6 | ||||||||||||
Total Invested Assets | $ | 17,907,557 | 100.0 | % | $ | 16,606,120 | 100.0 | % | ||||||||
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December 31, 2010 | December 31, 2009 | |||||||||||||||||||||||
Amortized | Estimated | % of Fair | Amortized | Estimated | % of Fair | |||||||||||||||||||
Cost | Fair Value | Value | Cost | Fair Value | Value | |||||||||||||||||||
AAA | $ | 1,258,952 | $ | 1,311,152 | 10.0 | % | $ | 1,357,021 | $ | 1,387,783 | 11.6 | % | ||||||||||||
AA | 1,289,870 | 1,343,653 | 10.2 | 927,081 | 967,274 | 8.1 | ||||||||||||||||||
A | 4,551,294 | 4,848,986 | 37.0 | 4,080,455 | 4,251,937 | 35.7 | ||||||||||||||||||
BBB | 4,613,315 | 4,871,583 | 37.2 | 4,287,623 | 4,428,359 | 37.2 | ||||||||||||||||||
BB and below | 725,436 | 728,073 | 5.6 | 945,575 | 884,673 | 7.4 | ||||||||||||||||||
Total | $ | 12,438,867 | $ | 13,103,447 | 100.0 | % | $ | 11,597,755 | $ | 11,920,026 | 100.0 | % | ||||||||||||
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Year ended December 31, 2010 | ||||||||||||||||
Unrealized | Unrealized | |||||||||||||||
Cost | Gains | Losses | Fair Value | |||||||||||||
Common stock | $ | 690,245 | $ | 361,048 | $ | (5,405 | ) | $ | 1,045,888 | |||||||
Preferred stock | 30,420 | 6,714 | (267 | ) | 36,867 | |||||||||||
Total | $ | 720,665 | $ | 367,762 | $ | (5,672 | ) | $ | 1,082,755 | |||||||
Year ended 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 | |||||||
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ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
• | 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 | |||||||||||||
Year ended December 31, 2010 | ||||||||||||||||
Investment portfolio | $ | 529,510 | $ | 263,245 | $ | (261,875 | ) | $ | (520,447 | ) | ||||||
Year ended December 31, 2009 | ||||||||||||||||
Investment portfolio | $ | 489,843 | $ | 245,091 | $ | (245,733 | ) | $ | (489,148 | ) |
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Item 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
88 | ||||
89 | ||||
90 | ||||
91 | ||||
92 | ||||
92 | ||||
93 | ||||
94 |
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American National Insurance Company:
March 2, 2011
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American National Insurance Company:
March 2, 2011
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(in thousands, except for per share data)
Years ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
PREMIUMS AND OTHER REVENUE | ||||||||||||
Premiums | ||||||||||||
Life | $ | 282,160 | $ | 284,530 | $ | 299,338 | ||||||
Annuity | 174,193 | 220,284 | 116,248 | |||||||||
Accident and health | 263,294 | 309,701 | 290,883 | |||||||||
Property and casualty | 1,158,261 | 1,159,509 | 1,182,026 | |||||||||
Other policy revenues | 185,805 | 179,504 | 174,899 | |||||||||
Net investment income | 911,915 | 839,777 | 795,442 | |||||||||
Realized investments gains (losses) | 79,728 | 5,248 | (13,483 | ) | ||||||||
Other-than-temporary impairments | (5,666 | ) | (79,103 | ) | (365,551 | ) | ||||||
Other income | 17,398 | 19,000 | 22,777 | |||||||||
Total revenues | 3,067,088 | 2,938,450 | 2,502,579 | |||||||||
BENEFITS, LOSSES AND EXPENSES | ||||||||||||
Policy Benefits | ||||||||||||
Life | 294,177 | 297,719 | 296,078 | |||||||||
Annuity | 205,948 | 249,709 | 142,867 | |||||||||
Accident and health | 184,554 | 239,407 | 223,055 | |||||||||
Property and casualty | 923,736 | 923,064 | 939,854 | |||||||||
Interest credited to policy account balances | 393,119 | 370,563 | 299,833 | |||||||||
Commissions for acquiring and servicing policies | 448,880 | 459,943 | 475,345 | |||||||||
Other operating costs and expenses | 454,146 | 471,920 | 493,907 | |||||||||
Change in deferred policy acquisition costs | (40,095 | ) | (63,611 | ) | (67,439 | ) | ||||||
Total benefits, losses and expenses | 2,864,465 | 2,948,714 | 2,803,500 | |||||||||
Income (loss) from continuing operations before federal income tax, and equity in earnings of unconsolidated affiliates | 202,623 | (10,264 | ) | (300,921 | ) | |||||||
Provision (benefit) for federal income taxes | ||||||||||||
Current | 58,946 | (14,203 | ) | (35,016 | ) | |||||||
Deferred | (3,738 | ) | (16,825 | ) | (87,378 | ) | ||||||
Total provision (benefit) for federal income taxes | 55,208 | (31,028 | ) | (122,394 | ) | |||||||
Equity in earnings (losses) of unconsolidated affiliates, net of tax | (3,169 | ) | (4,216 | ) | 4,965 | |||||||
Income (loss) from continuing operations | 144,246 | 16,548 | (173,562 | ) | ||||||||
Income (loss) from discontinued operations, net of tax (See Note 19) | (1,275 | ) | (1,381 | ) | 19,533 | |||||||
Net income (loss) | 142,971 | 15,167 | (154,029 | ) | ||||||||
Less:Net loss attributable to noncontrolling interest | (1,055 | ) | (458 | ) | (31 | ) | ||||||
Net income (loss) attributable to American National Insurance Company and Subsidiaries | $ | 144,026 | $ | 15,625 | $ | (153,998 | ) | |||||
Amounts available to American National Insurance Company common stockholders | ||||||||||||
Earnings (loss) per share: | ||||||||||||
Basic | $ | 5.42 | $ | 0.59 | $ | (5.82 | ) | |||||
Diluted | 5.40 | 0.59 | (5.82 | ) | ||||||||
Weighted average common shares outstanding | 26,559,035 | 26,528,832 | 26,479,832 | |||||||||
Weighted average common shares outstanding and dilutive potential common shares | 26,687,158 | 26,597,476 | 26,479,832 |
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(In thousands, except for share and per share data)
December 31, | ||||||||
2010 | 2009 | |||||||
ASSETS | ||||||||
Investments, other than investments in unconsolidated affiliates | ||||||||
Fixed maturity securities: | ||||||||
Bonds held-to-maturity | $ | 8,513,550 | $ | 7,461,711 | ||||
Bonds available-for-sale | 4,123,613 | 4,213,550 | ||||||
Equity securities: | ||||||||
Preferred stocks | 36,867 | 35,717 | ||||||
Common stocks | 1,045,888 | 934,754 | ||||||
Mortgage loans on real estate, net of allowance | 2,679,909 | 2,229,659 | ||||||
Policy loans | 380,505 | 364,354 | ||||||
Investment real estate, net of accumulated depreciation of $202,111 and $209,115 | 521,768 | 635,110 | ||||||
Short-term investments | 486,206 | 636,823 | ||||||
Other invested assets | 119,251 | 94,442 | ||||||
Total investments | 17,907,557 | 16,606,120 | ||||||
Cash and cash equivalents | 101,449 | 161,483 | ||||||
Investments in unconsolidated affiliates | 195,472 | 156,809 | ||||||
Accrued investment income | 201,286 | 191,737 | ||||||
Reinsurance ceded receivables | 355,188 | 371,654 | ||||||
Prepaid reinsurance premiums | 41,198 | 53,545 | ||||||
Premiums due and other receivables | 287,184 | 282,865 | ||||||
Deferred policy acquisition costs | 1,318,426 | 1,330,981 | ||||||
Property and equipment, net | 77,974 | 88,705 | ||||||
Current federal income taxes | 7,764 | 29,474 | ||||||
Deferred federal income taxes | — | 5,034 | ||||||
Other assets | 138,978 | 152,722 | ||||||
Separate account assets | 780,563 | 718,378 | ||||||
Total assets | $ | 21,413,039 | $ | 20,149,507 | ||||
LIABILITIES | ||||||||
Policyholder funds | ||||||||
Future policy benefits: | ||||||||
Life | $ | 2,539,334 | $ | 2,485,886 | ||||
Annuity | 865,480 | 783,065 | ||||||
Accident and health | 81,266 | 88,545 | ||||||
Policy account balances | 10,475,159 | 9,567,860 | ||||||
Policy and contract claims | 1,298,457 | 1,302,653 | ||||||
Participating policyholder share | 177,794 | 162,794 | ||||||
Other policyholder funds | 889,446 | 919,864 | ||||||
Total policyholder liabilities | 16,326,936 | 15,310,667 | ||||||
Liability for retirement benefits | 187,453 | 180,909 | ||||||
Current portion of long-term notes payable | 47,632 | 34,297 | ||||||
Long-term notes payable | 12,508 | 39,545 | ||||||
Deferred federal income taxes | 53,737 | — | ||||||
Other liabilities | 368,332 | 393,302 | ||||||
Separate account liabilities | 780,563 | 718,378 | ||||||
Total liabilities | 17,777,161 | 16,677,098 | ||||||
STOCKHOLDERS’ EQUITY | ||||||||
Common stock, $1.00 par value, — Authorized 50,000,000 Issued 30,832,449, Outstanding 26,820,977 shares | 30,832 | 30,832 | ||||||
Additional paid-in capital | 15,190 | 11,986 | ||||||
Accumulated other comprehensive income | 225,212 | 117,649 | ||||||
Retained earnings | 3,459,911 | 3,398,492 | ||||||
Treasury stock, at cost | (98,494 | ) | (98,505 | ) | ||||
Total American National stockholders’ equity | 3,632,651 | 3,460,454 | ||||||
Noncontrolling interest | 3,227 | 11,955 | ||||||
Total stockholders’ equity | 3,635,878 | 3,472,409 | ||||||
Total liabilities and stockholders’ equity | $ | 21,413,039 | $ | 20,149,507 | ||||
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(In thousands, except for per share data)
Years ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Common Stock | ||||||||||||
Balance at beginning and end of the year | $ | 30,832 | $ | 30,832 | $ | 30,832 | ||||||
Additional Paid-In Capital | ||||||||||||
Balance as of January 1, | 11,986 | 7,552 | 6,080 | |||||||||
Issuance of treasury shares as restricted stock | (11 | ) | 179 | (1,139 | ) | |||||||
Tax benefit on excess restricted stock | — | 439 | — | |||||||||
Amortization of restricted stock | 3,215 | 3,816 | 2,611 | |||||||||
Balance as of December 31, | 15,190 | 11,986 | 7,552 | |||||||||
Accumulated Other Comprehensive Income | ||||||||||||
Balance as of January 1, | 117,649 | (221,148 | ) | 145,972 | ||||||||
Change in unrealized gain (loss) on available-for-sale securities, net | 109,006 | 383,098 | (331,828 | ) | ||||||||
Cumulative adjustment for accounting change on other-than-temporary impairments on debt securities | — | (50,411 | ) | — | ||||||||
Foreign exchange adjustments | 276 | 664 | (247 | ) | ||||||||
Defined benefit plans adjustment | (1,719 | ) | 5,446 | (35,045 | ) | |||||||
Balance as of December 31, | 225,212 | 117,649 | (221,148 | ) | ||||||||
Retained Earnings | ||||||||||||
Balance as of January 1, | 3,398,492 | 3,414,946 | 3,653,365 | |||||||||
Net income (loss) attributable to American National Insurance Company and Subsidiaries | 144,026 | 15,625 | (153,998 | ) | ||||||||
Cash dividends to common stockholders ($3.08 per share) | (82,607 | ) | (82,490 | ) | (82,651 | ) | ||||||
Effect of ASC 715 change in measurement date | — | — | (1,770 | ) | ||||||||
Cumulative adjustment for accounting change on other-than-temporary impairments on fixed maturity securities | — | 50,411 | — | |||||||||
Balance as of December 31, | 3,459,911 | 3,398,492 | 3,414,946 | |||||||||
Treasury Stock | ||||||||||||
Balance as of January 1, | (98,505 | ) | (98,326 | ) | (99,465 | ) | ||||||
Net issuance of restricted stock | 11 | (179 | ) | 1,139 | ||||||||
Balance as of December 31, | (98,494 | ) | (98,505 | ) | (98,326 | ) | ||||||
Noncontrolling Interest | ||||||||||||
Balance as of January 1, | 11,955 | 8,377 | 4,539 | |||||||||
Contributions | 466 | 4,392 | 4,279 | |||||||||
Distributions | (278 | ) | (109 | ) | (427 | ) | ||||||
Loss attributable to noncontrolling interest | (1,623 | ) | (705 | ) | (14 | ) | ||||||
Effect of ASU 2009-17 implementation | (7,293 | ) | — | — | ||||||||
Balance as of December 31, | 3,227 | 11,955 | 8,377 | |||||||||
Total Equity | ||||||||||||
Balance as of December 31, | $ | 3,635,878 | $ | 3,472,409 | $ | 3,142,233 | ||||||
(In thousands)
Years ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Net income (loss) attributable to American National Insurance Company and Subsidiaries | $ | 144,026 | $ | 15,625 | $ | (153,998 | ) | |||||
Other comprehensive income (loss), net of tax | ||||||||||||
Change in unrealized gain (loss) on available-for-sale securities, net | 109,006 | 383,098 | (331,828 | ) | ||||||||
Foreign exchange adjustments | 276 | 664 | (247 | ) | ||||||||
Defined benefit plans adjustment | (1,719 | ) | 5,446 | (35,045 | ) | |||||||
Total other comprehensive income (loss) | 107,563 | 389,208 | (367,120 | ) | ||||||||
Total comprehensive income (loss) attributable to American National Insurance Company and Subsidiaries | $ | 251,589 | $ | 404,833 | $ | (521,118 | ) | |||||
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(in thousands)
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
OPERATING ACTIVITIES | ||||||||||||
Net income (loss) attributable to American National Insurance Company and Subsidiaries | $ | 144,026 | $ | 15,625 | $ | (153,998 | ) | |||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||
Realized (gains) losses on investments | (79,575 | ) | (3,406 | ) | 14,158 | |||||||
Other-than-temporary impairments | 5,666 | 79,103 | 365,551 | |||||||||
Amortization of discounts and premiums on bonds | 19,463 | 16,215 | 16,654 | |||||||||
Net capitalized interest on policy loans and mortgage loans | (30,310 | ) | (27,881 | ) | 3,511 | |||||||
Depreciation | 40,017 | 44,744 | 26,496 | |||||||||
Interest credited to policy account balances | 393,119 | 370,563 | 299,833 | |||||||||
Charges to policy account balances | (185,805 | ) | (173,360 | ) | (191,238 | ) | ||||||
Deferred federal income tax benefit | (3,738 | ) | (16,825 | ) | (87,378 | ) | ||||||
Deferral of policy acquisition costs | (481,600 | ) | (477,417 | ) | (491,342 | ) | ||||||
Amortization of deferred policy acquisition costs | 441,505 | 413,806 | 424,005 | |||||||||
Equity in (earnings) losses of unconsolidated affiliates | 4,875 | 6,488 | (7,639 | ) | ||||||||
Changes in: | ||||||||||||
Policyholder funds liabilities | 101,615 | 32,629 | 88,908 | |||||||||
Reinsurance ceded receivables | 16,466 | 111,192 | (44,780 | ) | ||||||||
Premiums due and other receivables | (4,319 | ) | 42,154 | (38,419 | ) | |||||||
Accrued investment income | (9,549 | ) | (6,936 | ) | (1,952 | ) | ||||||
Current federal income tax liability/recoverable | 21,710 | 38,853 | (65,182 | ) | ||||||||
Liability for retirement benefits | 6,544 | (3,215 | ) | 6,018 | ||||||||
Prepaid reinsurance premiums | 12,347 | 7,888 | 5,339 | |||||||||
Other, net | (11,486 | ) | 21,170 | 3,136 | ||||||||
Net cash provided by operating activities | 400,971 | 491,390 | 171,681 | |||||||||
INVESTING ACTIVITIES | ||||||||||||
Proceeds from sales of: | ||||||||||||
Bonds | 283,124 | 82,861 | 6,353 | |||||||||
Equity securities | 166,923 | 182,871 | 129,270 | |||||||||
Real estate | 30,412 | 4,837 | 4,500 | |||||||||
Mortgage loans | — | — | 2,294 | |||||||||
Other invested assets | 22,550 | 1,806 | 9,896 | |||||||||
Disposals of property and equipment | 1,602 | 1,608 | 1,380 | |||||||||
Distributions from unconsolidated affiliates | 10,920 | 11,310 | 12,332 | |||||||||
Proceeds from maturities/redemption of: | ||||||||||||
Bonds | 1,051,197 | 835,722 | 850,081 | |||||||||
Equity securities | 1,556 | — | — | |||||||||
Principal payments received on: | ||||||||||||
Mortgage loans | 151,828 | 116,365 | 144,497 | |||||||||
Policy loans | 49,599 | 45,591 | 9,459 | |||||||||
Purchases of investments: | ||||||||||||
Bonds | (2,160,997 | ) | (1,538,440 | ) | (1,270,774 | ) | ||||||
Equity securities | (146,488 | ) | (53,758 | ) | (290,979 | ) | ||||||
Real estate | (26,842 | ) | (127,281 | ) | (78,119 | ) | ||||||
Mortgage loans | (536,830 | ) | (477,275 | ) | (520,426 | ) | ||||||
Policy loans | (41,749 | ) | (32,129 | ) | (20,447 | ) | ||||||
Other invested assets | (44,867 | ) | (31,572 | ) | (21,795 | ) | ||||||
Additions to property and equipment | (9,359 | ) | (13,178 | ) | (25,024 | ) | ||||||
Contributions to unconsolidated affiliates | (36,083 | ) | (20,042 | ) | (38,514 | ) | ||||||
Change in short-term investments | 150,617 | (341,653 | ) | 403,092 | ||||||||
Other, net | 2,075 | (256 | ) | 2,483 | ||||||||
Net cash used in investing activities | (1,080,812 | ) | (1,352,613 | ) | (690,441 | ) | ||||||
FINANCING ACTIVITIES | ||||||||||||
Policyholders’ deposits to policy account balances | 1,722,505 | 2,268,201 | 1,996,836 | |||||||||
Policyholders’ withdrawals from policy account balances | (1,022,520 | ) | (1,191,021 | ) | (1,446,521 | ) | ||||||
Change in notes payable | 2,429 | (38,080 | ) | (16,877 | ) | |||||||
Dividends to stockholders | (82,607 | ) | (82,490 | ) | (82,651 | ) | ||||||
Net cash provided by financing activities | 619,807 | 956,610 | 450,787 | |||||||||
NET INCREASE (DECREASE) IN CASH | (60,034 | ) | 95,387 | (67,973 | ) | |||||||
Cash: | ||||||||||||
Beginning of the year | 161,483 | 66,096 | 134,069 | |||||||||
End of year | $ | 101,449 | $ | 161,483 | $ | 66,096 | ||||||
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• | Other-than-temporary impairment (“OTTI”); |
• | Deferred policy acquisition costs; |
• | Reserves; |
• | Reinsurance; |
• | Pension and postretirement benefit plans; |
• | Litigation contingencies; and |
• | Federal income taxes. |
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Year ended December 31, 2010 | ||||||||||||||||
Gross | Gross | |||||||||||||||
Cost or | Unrealized | Unrealized | Estimated Fair | |||||||||||||
Amortized Cost | Gains | Losses | Value | |||||||||||||
Fixed maturity securities | ||||||||||||||||
Bonds held-to-maturity | ||||||||||||||||
U.S. treasury and other U.S. government corporations and agencies | $ | 23,117 | $ | 288 | $ | — | $ | 23,405 | ||||||||
States of the U.S. and political subdivisions of the states | 422,249 | 7,117 | (6,920 | ) | 422,446 | |||||||||||
Foreign governments | 29,020 | 4,910 | — | 33,930 | ||||||||||||
Corporate debt securities | 7,293,501 | 478,353 | (33,077 | ) | 7,738,777 | |||||||||||
Residential mortgage-backed securities | 661,516 | 33,702 | (3,398 | ) | 691,820 | |||||||||||
Commercial mortgage-backed securities | 31,340 | — | (17,758 | ) | 13,582 | |||||||||||
Collateralized debt securities | 8,562 | 80 | (327 | ) | 8,315 | |||||||||||
Other debt securities | 44,245 | 3,314 | — | 47,559 | ||||||||||||
Total bonds held-to-maturity | 8,513,550 | 527,764 | (61,480 | ) | 8,979,834 | |||||||||||
Bonds available-for-sale | ||||||||||||||||
U.S. treasury and other U.S. government corporations and agencies | 13,268 | 643 | (4 | ) | 13,907 | |||||||||||
States of the U.S. and political subdivisions of the states | 583,163 | 15,142 | (4,193 | ) | 594,112 | |||||||||||
Foreign governments | 5,000 | 1,967 | — | 6,967 | ||||||||||||
Corporate debt securities | 3,030,671 | 197,485 | (26,587 | ) | 3,201,569 | |||||||||||
Residential mortgage-backed securities | 259,560 | 13,250 | (1,417 | ) | 271,393 | |||||||||||
Collateralized debt securities | 19,468 | 1,459 | (218 | ) | 20,709 | |||||||||||
Other debt securities | 14,187 | 769 | — | 14,956 | ||||||||||||
Total bonds available-for-sale | 3,925,317 | 230,715 | (32,419 | ) | 4,123,613 | |||||||||||
Total fixed maturity securities | 12,438,867 | 758,479 | (93,899 | ) | 13,103,447 | |||||||||||
Equity securities | ||||||||||||||||
Common stock | ||||||||||||||||
Consumer goods | 154,106 | 63,538 | (1,052 | ) | 216,592 | |||||||||||
Energy and utilities | 121,727 | 72,471 | (933 | ) | 193,265 | |||||||||||
Finance | 119,975 | 55,175 | (1,571 | ) | 173,579 | |||||||||||
Healthcare | 78,256 | 31,907 | (1,654 | ) | 108,509 | |||||||||||
Industrials | 59,856 | 47,649 | — | 107,505 | ||||||||||||
Information technology | 108,178 | 62,284 | (161 | ) | 170,301 | |||||||||||
Materials | 16,469 | 15,540 | — | 32,009 | ||||||||||||
Telecommunication services | 31,678 | 12,484 | (34 | ) | 44,128 | |||||||||||
Total common stock | 690,245 | 361,048 | (5,405 | ) | 1,045,888 | |||||||||||
Preferred stock | 30,420 | 6,714 | (267 | ) | 36,867 | |||||||||||
Total equity securities | 720,665 | 367,762 | (5,672 | ) | 1,082,755 | |||||||||||
Total investments in securities | $ | 13,159,532 | $ | 1,126,241 | $ | (99,571 | ) | $ | 14,186,202 | |||||||
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Year ended December 31, 2009 | ||||||||||||||||
Gross | Gross | |||||||||||||||
Cost or | Unrealized | Unrealized | Estimated Fair | |||||||||||||
Amortized Cost | Gains | Losses | Value | |||||||||||||
Fixed maturity 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 fixed maturity securities | 11,597,755 | 523,649 | (201,378 | ) | 11,920,026 | |||||||||||
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 | |||||||||||
Mutual funds | 59,853 | 6,426 | (77 | ) | 66,202 | |||||||||||
Telecommunication services | 32,272 | 8,118 | (355 | ) | 40,035 | |||||||||||
Total common stock | 683,794 | 259,256 | (8,296 | ) | 934,754 | |||||||||||
Preferred stock | 35,359 | 5,269 | (4,911 | ) | 35,717 | |||||||||||
Total 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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December 31, 2010 | ||||||||||||||||
Bonds Held-to-Maturity | Bonds Available-for-Sale | |||||||||||||||
Amortized | Estimated Fair | Amortized | Estimated Fair | |||||||||||||
Cost | Value | Cost | Value | |||||||||||||
Due in one year or less | $ | 444,961 | $ | 455,798 | $ | 226,340 | $ | 229,529 | ||||||||
Due after one year through five years | 3,995,818 | 4,273,860 | 1,873,992 | 1,990,183 | ||||||||||||
Due after five years through ten years | 2,992,353 | 3,155,544 | 1,248,564 | 1,309,798 | ||||||||||||
Due after ten years | 1,074,567 | 1,089,707 | 571,421 | 589,491 | ||||||||||||
8,507,699 | 8,974,909 | 3,920,317 | 4,119,001 | |||||||||||||
Without single maturity date | 5,851 | 4,925 | 5,000 | 4,612 | ||||||||||||
Total | $ | 8,513,550 | $ | 8,979,834 | $ | 3,925,317 | $ | 4,123,613 | ||||||||
Years ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Proceeds from sales of available-for-sale securities | $ | 435,293 | $ | 265,732 | $ | 135,623 | ||||||
Gross realized gains | 51,248 | 42,101 | 22,496 | |||||||||
Gross realized losses | (3,590 | ) | (11,351 | ) | (31,304 | ) |
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Location of Asset (Liability) | Estimated Fair Value | |||||||||
Derivatives Not Designated | Reported in the Consolidated | December 31, | ||||||||
as Hedging Instruments | Statements of Financial Position | 2010 | 2009 | |||||||
Equity-indexed options | Other invested assets | $ | 66,716 | $ | 32,801 | |||||
Equity-indexed annuity embedded derivative | Future policy benefits — Annuity | (59,644 | ) | (22,487 | ) |
Gains (Losses) | ||||||||||||||
Location of Gains (Losses) | Recognized in Income on Derivatives | |||||||||||||
Derivatives Not Designated | Recognized in the | Years Ended December 31, | ||||||||||||
as Hedging Instruments | Consolidated Statements of Operations | 2010 | 2009 | 2008 | ||||||||||
Equity-indexed options | Net investment income | $ | 9,942 | $ | 5,381 | $ | (24,400 | ) | ||||||
Equity-indexed annuity embedded derivative | Interest credited to policy account balances | (6,604 | ) | (8,138 | ) | 23,184 |
Years ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Bonds available-for-sale | $ | 120,790 | $ | 516,229 | $ | (393,429 | ) | |||||
Preferred stocks | 6,089 | 12,254 | (3,359 | ) | ||||||||
Common stocks | 104,683 | 218,338 | (295,988 | ) | ||||||||
Adjustment to deferred policy acquisition costs | (52,650 | ) | (215,294 | ) | 164,937 | |||||||
178,912 | 531,527 | (527,839 | ) | |||||||||
Less: Provision (benefit) for federal income taxes | 62,551 | 185,700 | (185,273 | ) | ||||||||
116,361 | 345,827 | (342,566 | ) | |||||||||
Change in unrealized (gains) losses of investments attributable to participating policyholders’ interest | (7,355 | ) | (13,140 | ) | 10,738 | |||||||
Cumulative adjustment for accounting change on OTTI on fixed maturity securities | — | 50,411 | — | |||||||||
Total | $ | 109,006 | $ | 383,098 | $ | (331,828 | ) | |||||
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Year ended December 31, 2010 | ||||||||||||||||||||||||
Less than 12 months | 12 Months or more | Total | ||||||||||||||||||||||
Unrealized | Fair | Unrealized | Fair | Unrealized | Fair | |||||||||||||||||||
Losses | Value | Losses | Value | Losses | Value | |||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||||||
Bonds held-to-maturity | ||||||||||||||||||||||||
States of the U.S. and political subdivisions of the states | $ | 6,898 | $ | 195,634 | $ | 22 | $ | 878 | $ | 6,920 | $ | 196,512 | ||||||||||||
Corporate debt securities | 22,493 | 912,554 | 10,584 | 128,721 | 33,077 | 1,041,275 | ||||||||||||||||||
Residential mortgage-backed securities | 579 | 57,160 | 2,819 | 64,798 | 3,398 | 121,958 | ||||||||||||||||||
Commercial mortgage-backed securities | — | — | 17,758 | 13,583 | 17,758 | 13,583 | ||||||||||||||||||
Collateralized debt securities | — | — | 327 | 5,465 | 327 | 5,465 | ||||||||||||||||||
Total bonds held-to-maturity | 29,970 | 1,165,348 | 31,510 | 213,445 | 61,480 | 1,378,793 | ||||||||||||||||||
Bonds available-for-sale | ||||||||||||||||||||||||
U.S. treasury and other U.S. government corporations and agencies | 4 | 7,040 | — | — | 4 | 7,040 | ||||||||||||||||||
States of the U.S. and political subdivisions of the states | 4,193 | 151,860 | — | — | 4,193 | 151,860 | ||||||||||||||||||
Corporate debt securities | 8,378 | 249,240 | 18,209 | 159,227 | 26,587 | 408,467 | ||||||||||||||||||
Residential mortgage-backed securities | 81 | 26,909 | 1,336 | 29,393 | 1,417 | 56,302 | ||||||||||||||||||
Collateralized debt securities | — | — | 218 | 4,664 | 218 | 4,664 | ||||||||||||||||||
Total bonds available-for-sale | 12,656 | 435,049 | 19,763 | 193,284 | 32,419 | 628,333 | ||||||||||||||||||
Total fixed maturity securities | 42,626 | 1,600,397 | 51,273 | 406,729 | 93,899 | 2,007,126 | ||||||||||||||||||
Equity securities | ||||||||||||||||||||||||
Common stock | ||||||||||||||||||||||||
Consumer goods | 440 | 25,333 | 612 | 19,419 | 1,052 | 44,752 | ||||||||||||||||||
Energy and utilities | 642 | 7,093 | 291 | 1,289 | 933 | 8,382 | ||||||||||||||||||
Finance | 1,217 | 7,954 | 354 | 11,204 | 1,571 | 19,158 | ||||||||||||||||||
Healthcare | 813 | 14,927 | 841 | 5,523 | 1,654 | 20,450 | ||||||||||||||||||
Industrials | — | 7 | — | — | — | 7 | ||||||||||||||||||
Information technology | 156 | 2,013 | 5 | 44 | 161 | 2,057 | ||||||||||||||||||
Materials | — | 61 | — | — | — | 61 | ||||||||||||||||||
Telecommunications services | 34 | 393 | — | — | 34 | 393 | ||||||||||||||||||
Total common stock | 3,302 | 57,781 | 2,103 | 37,479 | 5,405 | 95,260 | ||||||||||||||||||
Preferred stock | 231 | 6,133 | 36 | 4,464 | 267 | 10,597 | ||||||||||||||||||
Total Equity securities | 3,533 | 63,914 | 2,139 | 41,943 | 5,672 | 105,857 | ||||||||||||||||||
Total investments in securities | $ | 46,159 | $ | 1,664,311 | $ | 53,412 | $ | 448,672 | $ | 99,571 | $ | 2,112,983 | ||||||||||||
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Year ended December 31, 2009 | ||||||||||||||||||||||||
Less than 12 months | 12 Months or more | Total | ||||||||||||||||||||||
Unrealized | Fair | Unrealized | Fair | Unrealized | Fair | |||||||||||||||||||
Losses | Value | Losses | Value | Losses | Value | |||||||||||||||||||
Fixed maturity 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 fixed maturity securities | 30,513 | 1,042,204 | 170,865 | 1,471,927 | 201,378 | 2,514,131 | ||||||||||||||||||
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 | ||||||||||||||||||
Mutual funds | 77 | 4,372 | — | — | 77 | 4,372 | ||||||||||||||||||
Telecommunications services | 232 | 3,188 | 123 | 2,542 | 355 | 5,730 | ||||||||||||||||||
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 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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Net Investment Income | Realized Investments Gains (Losses) | |||||||||||||||||||||||
Years ended December 31, | Years ended December 31, | |||||||||||||||||||||||
2010 | 2009 | 2008 | 2010 | 2009 | 2008 | |||||||||||||||||||
Bonds | $ | 652,564 | $ | 627,236 | $ | 623,356 | $ | 34,330 | $ | (9,954 | ) | $ | 8,531 | |||||||||||
Preferred stocks | 2,750 | 3,419 | 5,687 | (2,262 | ) | (1,590 | ) | (5,307 | ) | |||||||||||||||
Common stocks | 22,561 | 22,996 | 28,242 | 29,865 | 38,634 | (7,849 | ) | |||||||||||||||||
Mortgage loans | 179,332 | 141,124 | 118,067 | — | — | — | ||||||||||||||||||
Real estate | 107,929 | 122,603 | 114,198 | 10,101 | 1,523 | 1,750 | ||||||||||||||||||
Options | 11,933 | 5,380 | — | — | — | — | ||||||||||||||||||
Other invested assets | 41,333 | 41,165 | 12,123 | (99 | ) | 269 | (5,977 | ) | ||||||||||||||||
1,018,402 | 963,923 | 901,673 | 71,935 | 28,882 | (8,852 | ) | ||||||||||||||||||
Investment expenses | (106,487 | ) | (124,146 | ) | (106,231 | ) | — | — | — | |||||||||||||||
Decrease (increase) in valuation allowances | — | — | — | 7,793 | (23,634 | ) | (4,631 | ) | ||||||||||||||||
Total | $ | 911,915 | $ | 839,777 | $ | 795,442 | $ | 79,728 | $ | 5,248 | $ | (13,483 | ) | |||||||||||
Years ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Bonds | $ | — | $ | (10,046 | ) | $ | (165,803 | ) | ||||
Stocks | (5,666 | ) | (69,057 | ) | (199,748 | ) | ||||||
Total | $ | (5,666 | ) | $ | (79,103 | ) | $ | (365,551 | ) | |||
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December 31, | ||||||||
2010 | 2009 | |||||||
Investment real estate | $ | 156,441 | $ | 146,329 | ||||
Short-term investments | 1,991 | 3,034 | ||||||
Cash and cash equivalents | 1,164 | 3,875 | ||||||
Accrued investment income | 2,035 | 2,533 | ||||||
Other receivables | 16,524 | 487 | ||||||
Other assets | 3,884 | 5,675 | ||||||
Total assets of consolidated VIEs | 182,039 | 161,933 | ||||||
Notes payable | 161,126 | 157,875 | ||||||
Other liabilities | 3,499 | 6,681 | ||||||
Total liabilities of consolidated VIEs | 164,625 | 164,556 | ||||||
December 31, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Maximum | Maximum | |||||||||||||||
Carrying | Exposure | Carrying | Exposure | |||||||||||||
Amount | to Loss | Amount | to Loss | |||||||||||||
Investment in unconsolidated affiliates | $ | 36,226 | $ | 36,226 | $ | 6,813 | $ | 6,813 |
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Changes to selected financial statement line items | Assets | Liabilities and Equity | ||||||
Investment real estate, net of accumulated depreciation | $ | (127,155 | ) | $ | — | |||
Investments in unconsolidated affiliates | 18,227 | — | ||||||
Mortgage loans on real estate, net of allowance | 73,519 | — | ||||||
Current and Long-term portions of notes payable | — | (16,139 | ) | |||||
Other assets and liabilities, net | 9,652 | (7,156 | ) | |||||
Noncontrolling interest | — | (2,462 | ) | |||||
Total impact on financial position | $ | (25,757 | ) | $ | (25,757 | ) | ||
December 31, 2010 | ||||
Commercial mortgages | ||||
Retail | $ | 3,685 | ||
Total | $ | 3,685 | ||
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December 31, 2010 | ||||||||||||||||||||||||
30-59 Days | 60-89 Days | Greater Than | Total Past | Total | ||||||||||||||||||||
Past Due | Past Due | 90 Days | Due | Current | Mortgage Loans | |||||||||||||||||||
Commerical Mortgages | ||||||||||||||||||||||||
Office | $ | — | $ | — | $ | — | $ | — | $ | 798,651 | $ | 798,651 | ||||||||||||
Industrial | — | — | — | — | 935,540 | 935,540 | ||||||||||||||||||
Retail | 8,579 | — | 3,685 | 12,264 | 530,267 | 542,531 | ||||||||||||||||||
Other | — | — | — | — | 607,693 | 607,693 | ||||||||||||||||||
Total | $ | 8,579 | $ | — | $ | 3,685 | $ | 12,264 | $ | 2,872,151 | $ | 2,884,415 | ||||||||||||
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Year Ended | ||||
December 31, 2010 | ||||
Commercial | ||||
Mortgage Loans | ||||
Allowance for credit losses: | ||||
Ending balance | $ | 13,788 | ||
Ending balance: individually evaluated for impairment | $ | 2,393 | ||
Ending balance: collectively evaluated for impairment | $ | 11,395 | ||
Mortgage Loans: | ||||
Ending balance | $ | 2,884,415 | ||
Ending balance: individually evaluated for impairment | $ | 341,024 | ||
Ending balance: collectively evaluated for impairment | $ | 2,543,391 | ||
Year Ended December 31, 2010 | ||||||||||||||||||||
Unpaid | Average | Interest | ||||||||||||||||||
Recorded | Principal | Related | Recorded | Income | ||||||||||||||||
Investment | Balance | Allowance | Investment | Recognized | ||||||||||||||||
With an allowance recorded: | ||||||||||||||||||||
Office | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Industrial | — | — | — | — | — | |||||||||||||||
Retail | 6,679 | 9,072 | 2,393 | 7,573 | 406 | |||||||||||||||
Other | — | — | — | — | — | |||||||||||||||
Total | $ | 6,679 | $ | 9,072 | $ | 2,393 | $ | 7,573 | $ | 406 | ||||||||||
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December 31, | ||||||||
2010 | 2009 | |||||||
AAA | 10.0 | % | 11.6 | % | ||||
AA | 10.2 | 8.1 | ||||||
A | 37.0 | 35.7 | ||||||
BBB | 37.2 | 37.2 | ||||||
BB and below | 5.6 | 7.4 | ||||||
Total | 100.0 | % | 100.0 | % | ||||
December 31, | ||||||||
2010 | 2009 | |||||||
Consumer goods | 20.7 | % | 18.6 | % | ||||
Energy and utilities | 18.5 | 13.3 | ||||||
Financials | 16.6 | 16.8 | ||||||
Information technology | 16.3 | 16.1 | ||||||
Healthcare | 10.4 | 11.8 | ||||||
Industrials | 10.3 | 9.3 | ||||||
Communications | 4.2 | 4.3 | ||||||
Materials | 3.0 | 2.7 | ||||||
Mutual funds | 0.0 | 7.1 | ||||||
Total | 100.0 | % | 100.0 | % | ||||
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Mortgage Loans | Investment Real Estate | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Industrial | 31.5 | % | 28.1 | % | 24.1 | % | 36.8 | % | ||||||||
Office buildings | 29.3 | 31.3 | 20.8 | 15.1 | ||||||||||||
Shopping centers | 17.3 | 18.6 | 35.6 | 18.7 | ||||||||||||
Hotels and motels | 12.5 | 15.0 | 2.0 | 1.8 | ||||||||||||
Other | 9.4 | 7.0 | 17.5 | 27.6 | ||||||||||||
Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Mortgage Loans | Investment Real Estate | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
West South Central | 23.0 | % | 22.4 | % | 61.2 | % | 58.4 | % | ||||||||
East North Central | 20.4 | 19.8 | 5.6 | 7.8 | ||||||||||||
South Atlantic | 19.3 | 20.3 | 18.4 | 12.5 | ||||||||||||
Pacific | 9.4 | 9.9 | 2.2 | 2.2 | ||||||||||||
Mountain | 7.4 | 6.3 | 1.3 | 0.6 | ||||||||||||
East South Central | 6.5 | 5.9 | 10.1 | 7.4 | ||||||||||||
Middle Atlantic | 6.2 | 7.8 | 0.0 | 10.2 | ||||||||||||
New England | 3.1 | 3.8 | 0.0 | 0.0 | ||||||||||||
West North Central | 4.1 | 3.8 | 1.2 | 0.9 | ||||||||||||
Other | 0.6 | — | — | — | ||||||||||||
Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
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December 31, 2010 | December 31, 2009 | |||||||||||||||
Carrying | Estimated | Carrying | Estimated | |||||||||||||
Amount | Fair Value | Amount | Fair Value | |||||||||||||
Financial assets: | ||||||||||||||||
Fixed maturity securities | ||||||||||||||||
Bonds held-to-maturity | ||||||||||||||||
U.S. treasury and other U.S. government corporations and agencies | $ | 23,117 | $ | 23,405 | $ | 21,222 | $ | 21,347 | ||||||||
States of the U.S. and political subdivisions of the states | 422,249 | 422,446 | 240,403 | 247,878 | ||||||||||||
Foreign governments | 29,020 | 33,930 | 28,997 | 32,603 | ||||||||||||
Corporate debt securities | 7,293,501 | 7,738,777 | 6,390,377 | 6,644,056 | ||||||||||||
Residential mortgage-backed securities | 661,516 | 691,820 | 693,178 | 695,972 | ||||||||||||
Commercial mortgage-backed securities | 31,340 | 13,582 | 33,128 | 9,187 | ||||||||||||
Collateralized debt securities | 8,562 | 8,315 | 9,627 | 8,676 | ||||||||||||
Other debt securities | 44,245 | 47,559 | 44,779 | 46,757 | ||||||||||||
Total bonds held-to-maturity | 8,513,550 | 8,979,834 | 7,461,711 | 7,706,476 | ||||||||||||
Bonds available-for-sale | ||||||||||||||||
U.S. treasury and other U.S. government corporations and agencies | 13,907 | 13,907 | 3,886 | 3,886 | ||||||||||||
States of the U.S. and political subdivisions of the states | 594,112 | 594,112 | 558,035 | 558,035 | ||||||||||||
Foreign governments | 6,967 | 6,967 | 6,188 | 6,188 | ||||||||||||
Corporate debt securities | 3,201,569 | 3,201,569 | 3,253,012 | 3,253,012 | ||||||||||||
Residential mortgage-backed securities | 271,393 | 271,393 | 355,565 | 355,565 | ||||||||||||
Collateralized debt securities | 20,709 | 20,709 | 22,494 | 22,494 | ||||||||||||
Other debt securities | 14,956 | 14,956 | 14,370 | 14,370 | ||||||||||||
Total bonds available-for-sale | 4,123,613 | 4,123,613 | 4,213,550 | 4,213,550 | ||||||||||||
Total fixed maturity securities | 12,637,163 | 13,103,447 | 11,675,261 | 11,920,026 | ||||||||||||
Equity securities | ||||||||||||||||
Common stock: | ||||||||||||||||
Consumer goods | 216,592 | 216,592 | 174,120 | 174,120 | ||||||||||||
Energy and utilities | 193,265 | 193,265 | 124,770 | 124,770 | ||||||||||||
Finance | 173,579 | 173,579 | 156,744 | 156,744 | ||||||||||||
Healthcare | 108,509 | 108,509 | 110,121 | 110,121 | ||||||||||||
Industrials | 107,505 | 107,505 | 87,430 | 87,430 | ||||||||||||
Information technology | 170,301 | 170,301 | 150,162 | 150,162 | ||||||||||||
Materials | 32,009 | 32,009 | 25,170 | 25,170 | ||||||||||||
Mutual funds | — | — | 66,202 | 66,202 | ||||||||||||
Telecommunication services | 44,128 | 44,128 | 40,035 | 40,035 | ||||||||||||
Preferred stock | 36,867 | 36,867 | 35,717 | 35,717 | ||||||||||||
Total equity securities | 1,082,755 | 1,082,755 | 970,471 | 970,471 | ||||||||||||
Options | 66,716 | 66,716 | 32,801 | 32,801 | ||||||||||||
Mortgage loans on real estate, net of allowance | 2,679,909 | 2,865,187 | 2,229,659 | 2,267,157 | ||||||||||||
Policy loans | 380,505 | 380,505 | 364,354 | 364,354 | ||||||||||||
Short-term investments | 486,206 | 486,206 | 636,823 | 636,823 | ||||||||||||
Total financial assets | $ | 17,333,254 | $ | 17,984,816 | $ | 15,909,369 | $ | 16,191,632 | ||||||||
Financial liabilities: | ||||||||||||||||
Investment contracts | $ | 8,586,041 | $ | 8,586,041 | $ | 7,828,243 | $ | 7,828,243 | ||||||||
Liability for embedded derivatives of equity-indexed annuities | 59,644 | 59,644 | 22,487 | 22,487 | ||||||||||||
Notes payable | 60,140 | 60,140 | 73,842 | 73,842 | ||||||||||||
Total financial liabilities | $ | 8,705,825 | $ | 8,705,825 | $ | 7,924,572 | $ | 7,924,572 | ||||||||
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. |
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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 as of December 31, 2010 Using: | ||||||||||||||||
Estimated Fair | Quoted Prices in | Significant | ||||||||||||||
Value at | Active Markets for | Significant Other | Unobservable | |||||||||||||
December 31, | Identical Assets | Observable Inputs | Inputs | |||||||||||||
2010 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
Financial assets: | ||||||||||||||||
Fixed maturity securities | ||||||||||||||||
Bonds held-to-maturity | ||||||||||||||||
U.S. treasury and other U.S. government corporations and agencies | $ | 23,405 | $ | — | $ | 23,405 | $ | — | ||||||||
States of the U.S. and political subdivisions of the states | 422,446 | — | 422,308 | 138 | ||||||||||||
Foreign governments | 33,930 | — | 33,930 | — | ||||||||||||
Corporate debt securities | 7,738,777 | — | 7,680,834 | 57,943 | ||||||||||||
Residential mortgage-backed securities | 691,820 | — | 689,487 | 2,333 | ||||||||||||
Commercial mortgage-backed securities | 13,582 | — | 13,582 | — | ||||||||||||
Collateralized debt securities | 8,315 | — | — | 8,315 | ||||||||||||
Other debt securities | 47,559 | — | 47,559 | — | ||||||||||||
Total bonds held-to-maturity | 8,979,834 | — | 8,911,105 | 68,729 | ||||||||||||
Bonds available-for-sale | ||||||||||||||||
U.S. treasury and other U.S. government corporations and agencies | 13,907 | — | 13,907 | — | ||||||||||||
States of the U.S. and political subdivisions of the states | 594,112 | — | 591,587 | 2,525 | ||||||||||||
Foreign governments | 6,967 | — | 6,967 | — | ||||||||||||
Corporate debt securities | 3,201,569 | — | 3,182,625 | 18,944 | ||||||||||||
Residential mortgage-backed securities | 271,393 | — | 271,376 | 17 | ||||||||||||
Collateralized debt securities | 20,709 | — | 20,447 | 262 | ||||||||||||
Other debt securities | 14,956 | — | 14,956 | — | ||||||||||||
Total bonds available-for-sale | 4,123,613 | — | 4,101,865 | 21,748 | ||||||||||||
Total fixed maturity securities | 13,103,447 | — | 13,012,970 | 90,477 | ||||||||||||
Equity securities | ||||||||||||||||
Common stock | ||||||||||||||||
Consumer goods | 216,592 | 216,592 | — | — | ||||||||||||
Energy and utilities | 193,265 | 193,265 | — | — | ||||||||||||
Finance | 173,579 | 173,579 | — | — | ||||||||||||
Healthcare | 108,509 | 108,509 | — | — | ||||||||||||
Industrials | 107,505 | 107,505 | — | — | ||||||||||||
Information technology | 170,301 | 170,301 | — | — | ||||||||||||
Materials | 32,009 | 32,009 | — | — | ||||||||||||
Telecommunication services | 44,128 | 44,128 | — | — | ||||||||||||
Preferred stock | 36,867 | 36,867 | — | |||||||||||||
Total equity securities | 1,082,755 | 1,082,755 | — | — | ||||||||||||
Options | 66,716 | — | — | 66,716 | ||||||||||||
Mortgage loans on real estate | 2,865,187 | — | 2,865,187 | — | ||||||||||||
Short-term investments | 486,206 | — | 486,206 | — | ||||||||||||
Total financial assets | $ | 17,604,311 | $ | 1,082,755 | $ | 16,364,363 | $ | 157,193 | ||||||||
Financial liabilities: | ||||||||||||||||
Liability for embedded derivatives of equity-indexed annuities | $ | 59,644 | $ | — | $ | — | $ | 59,644 | ||||||||
Total financial liabilities | $ | 59,644 | $ | — | $ | — | $ | 59,644 | ||||||||
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Fair Value Measurement as of December 31, 2009 Using: | ||||||||||||||||
Estimated Fair | Quoted Prices in | Significant | ||||||||||||||
Value at | Active Markets for | Significant Other | Unobservable | |||||||||||||
December 31, | Identical Assets | Observable Inputs | Inputs | |||||||||||||
2009 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
Financial assets: | ||||||||||||||||
Fixed Maturity securities | ||||||||||||||||
Bonds 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 bonds held-to-maturity | 7,706,476 | — | 7,686,485 | 19,991 | ||||||||||||
Bonds 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 bonds available-for-sale | 4,213,550 | — | 4,197,169 | 16,381 | ||||||||||||
Total fixed maturity securities | 11,920,026 | — | 11,883,654 | 36,372 | ||||||||||||
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 equity securities | 970,471 | 969,877 | — | 594 | ||||||||||||
Options | 32,801 | — | — | 32,801 | ||||||||||||
Mortgage loans on real estate | 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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Liability for | ||||||||||||||||
Investment | Embedded | |||||||||||||||
Securities | Options | Derivatives | Total | |||||||||||||
Balance at December 31, 2008 | $ | 84,199 | $ | 6,157 | $ | (6,208 | ) | $ | 84,148 | |||||||
Total realized and unrealized investment gains (losses) | ||||||||||||||||
Included in other comprehensive income | 1,237 | — | — | 1,237 | ||||||||||||
Net fair value change included in realized gains (losses) | 416 | — | — | 416 | ||||||||||||
Net gain for derivatives included in net investment income | — | 5,381 | — | 5,381 | ||||||||||||
Net fair value change included in interest credited | — | — | (16,279 | ) | (16,279 | ) | ||||||||||
Purchases and settlements/maturities | ||||||||||||||||
Purchases | 1,435 | 21,263 | — | 22,698 | ||||||||||||
Sales | (559 | ) | — | — | (559 | ) | ||||||||||
Settlements/maturities | (727 | ) | — | — | (727 | ) | ||||||||||
Gross transfers into Level 3 | — | — | — | — | ||||||||||||
Gross transfers out of Level 3 | (49,035 | ) | — | — | (49,035 | ) | ||||||||||
Balance at December 31, 2009 | $ | 36,966 | $ | 32,801 | $ | (22,487 | ) | $ | 47,280 | |||||||
Total realized and unrealized investment gains (losses) | ||||||||||||||||
Included in other comprehensive income | 1,461 | — | — | 1,466 | ||||||||||||
Net fair value change included in realized losses | (289 | ) | — | — | (283 | ) | ||||||||||
Net gain for derivatives included in net investment income | — | 9,942 | — | 9,942 | ||||||||||||
Net fair value change included in interest credited | — | — | (37,157 | ) | (37,157 | ) | ||||||||||
Purchases and settlements/maturities | ||||||||||||||||
Purchases | 65,033 | 34,709 | — | 99,749 | ||||||||||||
Sales | (10,000 | ) | — | — | (10,000 | ) | ||||||||||
Settlements/maturities | (2,362 | ) | (10,736 | ) | — | (13,098 | ) | |||||||||
Gross transfers into Level 3 | 5,913 | — | — | 5,913 | ||||||||||||
Gross transfers out of Level 3 | (6,245 | ) | — | — | (6,263 | ) | ||||||||||
Balance at December 31, 2010 | $ | 90,477 | $ | 66,716 | $ | (59,644 | ) | $ | 97,549 | |||||||
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Accident | Property & | |||||||||||||||||||
Life | Annuity | & Health | Casualty | Total | ||||||||||||||||
Balance at January 1, 2008 | $ | 641,902 | $ | 400,673 | $ | 79,893 | $ | 128,817 | $ | 1,251,285 | ||||||||||
Additions | 129,031 | 96,544 | 22,762 | 243,005 | 491,342 | |||||||||||||||
Amortization | (87,030 | ) | (75,854 | ) | (27,785 | ) | (233,336 | ) | (424,005 | ) | ||||||||||
Effect of change in unrealized gains on available-for-sale securities | 29,242 | 135,695 | — | — | 164,937 | |||||||||||||||
Net change | 71,243 | 156,385 | (5,023 | ) | 9,669 | 232,274 | ||||||||||||||
Acquisitions | (729 | ) | — | — | — | (729 | ) | |||||||||||||
Foreign exchange effect | (166 | ) | — | — | — | (166 | ) | |||||||||||||
Balance at December 31, 2008 | $ | 712,250 | $ | 557,058 | $ | 74,870 | $ | 138,486 | $ | 1,482,664 | ||||||||||
Additions | 77,161 | 126,769 | 16,729 | 256,758 | 477,417 | |||||||||||||||
Amortization | (78,697 | ) | (64,756 | ) | (21,746 | ) | (248,607 | ) | (413,806 | ) | ||||||||||
Effect of change in unrealized gains on available-for-sale securities | (38,651 | ) | (176,643 | ) | — | — | (215,294 | ) | ||||||||||||
Net change | (40,187 | ) | (114,630 | ) | (5,017 | ) | 8,151 | (151,683 | ) | |||||||||||
Balance at December 31, 2009 | $ | 672,063 | $ | 442,428 | $ | 69,853 | $ | 146,637 | $ | 1,330,981 | ||||||||||
Additions | 80,789 | 117,090 | 18,087 | 265,634 | 481,600 | |||||||||||||||
Amortization | (78,826 | ) | (72,521 | ) | (22,973 | ) | (267,185 | ) | (441,505 | ) | ||||||||||
Effect of change in unrealized gains on available-for-sale securities | (12,649 | ) | (40,001 | ) | — | — | (52,650 | ) | ||||||||||||
Net change | (10,686 | ) | 4,568 | (4,886 | ) | (1,551 | ) | (12,555 | ) | |||||||||||
Balance at December 31, 2010 | $ | 661,377 | $ | 446,996 | $ | 64,967 | $ | 145,086 | $ | 1,318,426 | ||||||||||
Premiums | ||||||||||||||||||||
December 31, 2010 | $ | 282,160 | $ | 174,193 | $ | 263,294 | $ | 1,158,261 | $ | 1,877,908 | ||||||||||
December 31, 2009 | $ | 284,530 | $ | 220,284 | $ | 309,701 | $ | 1,159,509 | $ | 1,974,024 | ||||||||||
December 31, 2008 | $ | 299,338 | $ | 116,248 | $ | 290,883 | $ | 1,182,026 | $ | 1,888,495 | ||||||||||
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2010 | 2009 | 2008 | ||||||||||
Balance at January 1 | $ | 1,219,233 | $ | 1,320,272 | $ | 1,265,500 | ||||||
Less reinsurance recoverables | 266,530 | 380,520 | 364,715 | |||||||||
Net beginning balance | 952,703 | 939,752 | 900,785 | |||||||||
Incurred related to: | ||||||||||||
Current | 1,188,052 | 1,149,248 | 1,166,787 | |||||||||
Prior years | (100,726 | ) | (29,811 | ) | (43,258 | ) | ||||||
Total incurred | 1,087,326 | 1,119,437 | 1,123,529 | |||||||||
Paid related to: | ||||||||||||
Current | 715,422 | 697,773 | 716,528 | |||||||||
Prior years | 346,040 | 408,713 | 368,034 | |||||||||
Total paid | 1,061,462 | 1,106,486 | 1,084,562 | |||||||||
Net balance | 978,567 | 952,703 | 939,752 | |||||||||
Plus reinsurance recoverables | 235,855 | 266,530 | 380,520 | |||||||||
Balance at December 31 | $ | 1,214,422 | $ | 1,219,233 | $ | 1,320,272 | ||||||
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Years ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Direct premiums | $ | 2,049,426 | $ | 2,113,109 | $ | 2,117,400 | ||||||
Reinsurance premiums assumed from other companies | 101,357 | 182,848 | 215,189 | |||||||||
Reinsurance premiums ceded to other companies | (272,875 | ) | (321,933 | ) | (444,094 | ) | ||||||
Net premiums | $ | 1,877,908 | $ | 1,974,024 | $ | 1,888,495 | ||||||
December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Direct life insurance in-force | $ | 69,288,973 | $ | 68,584,383 | $ | 68,820,212 | ||||||
Reinsurance risks assumed from other companies | 479,528 | 863,867 | 1,050,645 | |||||||||
Total life insurance in-force | 69,768,501 | 69,448,250 | 69,870,857 | |||||||||
Reinsurance risks ceded to other companies | (31,616,049 | ) | (31,347,876 | ) | (31,241,255 | ) | ||||||
Net life insurance in-force | $ | 38,152,452 | $ | 38,100,374 | $ | 38,629,602 | ||||||
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Years ended December 31, | ||||||||||||||||||||||||
2010 | 2009 | 2008 | ||||||||||||||||||||||
Amount | Rate | Amount | Rate | Amount | Rate | |||||||||||||||||||
Income tax expense (benefit) on pre-tax income | $ | 70,918 | 35.0 | % | $ | (3,592 | ) | 35.0 | % | $ | (105,322 | ) | 35.0 | % | ||||||||||
Tax-exempt investment income | (8,852 | ) | (4.4 | ) | (9,336 | ) | 91.0 | (8,770 | ) | 2.9 | ||||||||||||||
Dividend exclusion | (5,173 | ) | (2.6 | ) | (8,422 | ) | 82.0 | (12,002 | ) | 4.0 | ||||||||||||||
Miscellaneous tax credits, net | (7,715 | ) | (3.8 | ) | (6,963 | ) | 67.8 | (5,835 | ) | 1.9 | ||||||||||||||
Other items, net | 6,030 | 3.0 | (2,715 | ) | 26.5 | 9,535 | (3.1 | ) | ||||||||||||||||
Total | $ | 55,208 | 27.2 | % | $ | (31,028 | ) | 302.3 | % | $ | (122,394 | ) | 40.7 | % | ||||||||||
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December 31, | ||||||||
2010 | 2009 | |||||||
DEFERRED TAX ASSETS: | ||||||||
Investments, principally due to impairment losses | $ | 106,445 | $ | 115,012 | ||||
Investment in real estate and other invested assets principally due to investment valuation allowances | 9,237 | 15,236 | ||||||
Policyholder funds, principally due to policy reserve discount | 230,496 | 211,547 | ||||||
Policyholder funds, principally due to unearned premium reserve | 31,840 | 31,312 | ||||||
Non-qualified pension | 29,345 | 29,109 | ||||||
Participating policyholders’ surplus | 31,180 | 28,505 | ||||||
Pension | 37,759 | 35,765 | ||||||
Commissions and other expenses | 13,870 | 20,978 | ||||||
Tax carryforwards | 26,599 | 8,666 | ||||||
Other assets | — | 181 | ||||||
Gross deferred tax assets | 516,771 | 496,311 | ||||||
Valuation allowance | — | (400 | ) | |||||
Net deferred tax assets | 516,771 | 495,911 | ||||||
DEFERRED TAX LIABILITIES: | ||||||||
Available-for-sale securities, principally due to net unrealized gains | (195,840 | ) | (114,861 | ) | ||||
Investment in bonds, principally due to accrual of discount on bonds | (16,639 | ) | (13,426 | ) | ||||
Deferred policy acquisition costs, due to difference between GAAP and tax amortization methods | (350,981 | ) | (356,014 | ) | ||||
Property, plant and equipment, principally due to difference between GAAP and tax depreciation methods | (5,668 | ) | (6,576 | ) | ||||
Other liabilities | (1,380 | ) | — | |||||
Gross deferred tax liabilities | (570,508 | ) | (490,877 | ) | ||||
Total net deferred tax asset (liability) | $ | (53,737 | ) | $ | 5,034 | |||
Years ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Uncertain tax positions | ||||||||||||
Balance at beginning of year | $ | — | $ | 1,054 | $ | 4,618 | ||||||
Settlements during the year | — | (1,054 | ) | (3,564 | ) | |||||||
Balance at end of year | $ | — | $ | — | $ | 1,054 | ||||||
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Before Federal | Federal Income | Net of Federal | ||||||||||
Income Tax | Tax Expense | Income Tax | ||||||||||
December 31, 2010 | ||||||||||||
Total holding gain during the period | $ | 279,566 | $ | 97,815 | $ | 181,751 | ||||||
Reclassification adjustment for net gain realized in net income (loss) | (48,004 | ) | (16,836 | ) | (31,168 | ) | ||||||
Unrealized gains on securities | 231,562 | 80,979 | 150,583 | |||||||||
Adjustment to deferred policy acquisition costs | (52,650 | ) | (18,428 | ) | (34,222 | ) | ||||||
Unrealized gain on investments attributable to participating policyholders’ interest | (11,315 | ) | (3,960 | ) | (7,355 | ) | ||||||
Net unrealized gain component of comprehensive income | $ | 167,597 | $ | 58,591 | $ | 109,006 | ||||||
December 31, 2009 | ||||||||||||
Total holding gain during the period | $ | 699,318 | $ | 244,558 | $ | 454,760 | ||||||
Reclassification adjustment for net loss realized in net income (loss) | 47,503 | 16,494 | 31,009 | |||||||||
Unrealized gains on securities | 746,821 | 261,052 | 485,769 | |||||||||
Adjustment to deferred policy acquisition costs | (215,294 | ) | (75,352 | ) | (139,942 | ) | ||||||
Unrealized gain on investments attributable to participating policyholders’ interest | (20,215 | ) | (7,075 | ) | (13,140 | ) | ||||||
Cumulative effect of change in accounting | 77,555 | 27,144 | 50,411 | |||||||||
Net unrealized gain component of comprehensive income | $ | 588,867 | $ | 205,769 | $ | 383,098 | ||||||
December 31, 2008 | ||||||||||||
Total holding loss during the period | $ | (1,064,970 | ) | $ | (372,840 | ) | $ | (692,130 | ) | |||
Reclassification adjustment for net loss realized in net income (loss) | 372,194 | 130,208 | 241,986 | |||||||||
Unrealized loss on securities | (692,776 | ) | (242,632 | ) | (450,144 | ) | ||||||
Adjustment to deferred policy acquisition costs | 164,937 | 57,359 | 107,578 | |||||||||
Unrealized losses on investments attributable to participating policyholders’ interest | 16,520 | 5,782 | 10,738 | |||||||||
Net unrealized gain component of comprehensive income | $ | (511,319 | ) | $ | (179,491 | ) | $ | (331,828 | ) | |||
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December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Common stock | ||||||||||||
Shares issued | 30,832,449 | 30,832,449 | 30,832,449 | |||||||||
Treasury shares | 4,011,472 | 4,012,283 | 4,013,616 | |||||||||
Restricted shares | 261,334 | 261,334 | 339,001 | |||||||||
Unrestricted outstanding shares | 26,559,643 | 26,558,832 | 26,479,832 | |||||||||
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RS Weighted- | RSU Weighted- | |||||||||||||||||||||||
SAR Weighted- | Average Grant | Average Grant | ||||||||||||||||||||||
Average Grant | Date Fair | Date Fair | ||||||||||||||||||||||
SAR Shares | Date Fair Value | RS Shares | Value | RS Units | Value | |||||||||||||||||||
Outstanding at January 1, 2008 | 96,724 | $ | 97.84 | 253,000 | $ | 84.48 | — | $ | — | |||||||||||||||
Granted | 96,917 | 115.92 | 86,001 | 116.48 | — | — | ||||||||||||||||||
Exercised | (4,109 | ) | 81.30 | — | — | — | — | |||||||||||||||||
Outstanding at December 31, 2008 | 189,532 | 107.44 | 339,001 | 92.60 | — | — | ||||||||||||||||||
Granted | 2,999 | 66.76 | 1,333 | 40.85 | — | — | ||||||||||||||||||
Exercised | (18,184 | ) | 92.50 | (79,000 | ) | 57.39 | — | — | ||||||||||||||||
Forfeited | (12,898 | ) | 105.46 | — | — | — | ||||||||||||||||||
Outstanding at December 31, 2009 | 161,449 | 108.53 | 261,334 | 102.98 | — | — | ||||||||||||||||||
Granted | 2,411 | 109.62 | — | — | 10,230 | 109.29 | ||||||||||||||||||
Exercised | (9,533 | ) | 95.08 | — | — | (811 | ) | 109.29 | ||||||||||||||||
Forfeited | (7,100 | ) | 113.55 | — | — | — | — | |||||||||||||||||
Expired | (2,500 | ) | 90.86 | — | — | — | — | |||||||||||||||||
Outstanding at December 31, 2010 | 144,727 | 109.40 | 261,334 | 102.98 | 9,419 | 109.29 | ||||||||||||||||||
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Years ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
�� | ||||||||||||
Weighted average shares outstanding | 26,559,035 | 26,528,832 | 26,479,832 | |||||||||
Incremental shares from restricted stock | 128,123 | 68,644 | — | |||||||||
Total shares for diluted calculations | 26,687,158 | 26,597,476 | 26,479,832 | |||||||||
Net income (loss) from continuing operations attributable to American National Insurance Company and Subsidiaries | $ | 145,301,000 | $ | 17,006,000 | $ | (173,531,000 | ) | |||||
Net income (loss) from discontinued operations | (1,275,000 | ) | (1,381,000 | ) | 19,533,000 | |||||||
Net income (loss) attributable to American National Insurance Company and Subsidiaries | $ | 144,026,000 | $ | 15,625,000 | $ | (153,998,000 | ) | |||||
Basic earnings (loss) per share from continued operations | $ | 5.47 | $ | 0.64 | $ | (6.55 | ) | |||||
Basic earnings (loss) per share from discontinued operations | (0.05 | ) | (0.05 | ) | 0.73 | |||||||
Basic earnings (loss) per share | $ | 5.42 | $ | 0.59 | $ | (5.82 | ) | |||||
Diluted earnings (loss) per share from continued operations | $ | 5.45 | $ | 0.64 | $ | (6.55 | ) | |||||
Diluted earnings (loss) per share from discontinued operations | (0.05 | ) | (0.05 | ) | 0.73 | |||||||
Diluted earnings (loss) per share | $ | 5.40 | $ | 0.59 | $ | (5.82 | ) | |||||
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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, 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 personal, commercial 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. |
• | Net investment income from fixed maturity 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 maturity 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 and 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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Year ended December 31, 2010 | ||||||||||||||||||||||||
Property & | Corporate & | |||||||||||||||||||||||
Life | Annuity | Health | Casualty | Other | TOTAL | |||||||||||||||||||
Premiums and Other Revenues: | ||||||||||||||||||||||||
Premiums | $ | 282,160 | $ | 174,193 | $ | 263,294 | $ | 1,158,261 | $ | — | $ | 1,877,908 | ||||||||||||
Other policy revenues | 170,729 | 15,076 | — | — | — | 185,805 | ||||||||||||||||||
Net investment income | 223,753 | 510,106 | 14,855 | 67,545 | 95,656 | 911,915 | ||||||||||||||||||
Other income (expenses) | 3,547 | (7,900 | ) | 10,384 | 8,192 | 3,175 | 17,398 | |||||||||||||||||
Total operating revenues | 680,189 | 691,475 | 288,533 | 1,233,998 | 98,831 | 2,993,026 | ||||||||||||||||||
Realized gains (losses) on investments | — | — | — | — | 74,062 | 74,062 | ||||||||||||||||||
Total revenues | 680,189 | 691,475 | 288,533 | 1,233,998 | 172,893 | 3,067,088 | ||||||||||||||||||
Benefits, Losses and Expenses: | ||||||||||||||||||||||||
Policy benefits | 294,177 | 205,948 | 184,554 | 923,736 | — | 1,608,415 | ||||||||||||||||||
Interest credited to policy account balances | 59,149 | 333,970 | — | — | — | 393,119 | ||||||||||||||||||
Commissions for acquiring and servicing policies | 91,165 | 95,701 | 35,263 | 226,748 | 3 | 448,880 | ||||||||||||||||||
Other operating costs and expenses | 178,619 | 62,791 | 49,634 | 124,410 | 38,692 | 454,146 | ||||||||||||||||||
Change in deferred policy acquisition costs | (1,963 | ) | (44,569 | ) | 4,886 | 1,551 | — | (40,095 | ) | |||||||||||||||
Total benefits, losses and expenses | 621,147 | 653,841 | 274,337 | 1,276,445 | 38,695 | 2,864,465 | ||||||||||||||||||
Income (loss) from continuing operations before federal income taxes, and equity in losses of unconsolidated affiliates | 59,042 | 37,634 | 14,196 | (42,447 | ) | 134,198 | 202,623 | |||||||||||||||||
Provision (benefit) for federal income taxes | 19,484 | 12,419 | 4,685 | (14,008 | ) | 32,628 | 55,208 | |||||||||||||||||
Equity in losses of unconsolidated affiliates | — | — | — | — | (3,169 | ) | (3,169 | ) | ||||||||||||||||
Net loss attributable to noncontrolling interests | — | — | — | — | (1,055 | ) | (1,055 | ) | ||||||||||||||||
Income (loss) from continuing operations attributable to American National Insurance Company and Subsidiaries | 39,558 | 25,215 | 9,511 | (28,439 | ) | 99,456 | 145,301 | |||||||||||||||||
Income (loss) from discontinued operations, net of income tax expense (benefit) | — | — | — | — | (1,275 | ) | (1,275 | ) | ||||||||||||||||
Net Income (loss) attributable to American National Insurance Company and Subsidiaries | $ | 39,558 | $ | 25,215 | $ | 9,511 | $ | (28,439 | ) | $ | 98,181 | $ | 144,026 | |||||||||||
Selected Data: | ||||||||||||||||||||||||
Total Assets | $ | 4,968,385 | $ | 10,672,524 | $ | 558,970 | $ | 2,404,190 | $ | 2,808,969 | $ | 21,413,039 |
Year ended December 31, 2009 | ||||||||||||||||||||||||
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 | 85,964 | 839,777 | ||||||||||||||||||
Other income (expenses) | 2,720 | (3,870 | ) | 10,382 | 7,064 | 2,704 | 19,000 | |||||||||||||||||
Total operating revenues | 674,609 | 680,205 | 336,075 | 1,232,748 | 88,668 | 3,012,305 | ||||||||||||||||||
Realized gains (losses) on investments | — | — | — | — | (73,855 | ) | (73,855 | ) | ||||||||||||||||
Total revenues | 674,609 | 680,205 | 336,075 | 1,232,748 | 14,813 | 2,938,450 | ||||||||||||||||||
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 | 41,218 | 471,920 | ||||||||||||||||||
Change 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 | 41,220 | 2,948,714 | ||||||||||||||||||
Income (loss) from continuing operations before federal income taxes, and equity in losses of unconsolidated affiliates | 39,355 | 14,622 | (22,200 | ) | (15,634 | ) | (26,407 | ) | (10,264 | ) | ||||||||||||||
Provision (benefit) for federal income taxes | 12,987 | 4,825 | (7,326 | ) | (5,159 | ) | (36,355 | ) | (31,028 | ) | ||||||||||||||
Equity in losses of unconsolidated affiliates | — | — | — | — | (4,216 | ) | (4,216 | ) | ||||||||||||||||
Net loss attributable to noncontrolling interests | — | — | — | — | (458 | ) | (458 | ) | ||||||||||||||||
Income (loss) from continuing operations attributable to American National Insurance Company and Subsidiaries | 26,368 | 9,797 | (14,874 | ) | (10,475 | ) | 6,190 | 17,006 | ||||||||||||||||
Income (loss) from discontinued operations, net of income tax expense (benefit) | — | — | — | — | (1,381 | ) | (1,381 | ) | ||||||||||||||||
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 |
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Year ended December 31, 2008 | ||||||||||||||||||||||||
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 | 108,862 | 795,442 | ||||||||||||||||||
Other income (expenses) | 3,767 | (5,718 | ) | 13,252 | 8,973 | 2,503 | 22,777 | |||||||||||||||||
Total operating revenues | 684,732 | 504,468 | 320,701 | 1,260,347 | 111,365 | 2,881,613 | ||||||||||||||||||
Realized gains (losses) on investments | — | — | — | — | (379,034 | ) | (379,034 | ) | ||||||||||||||||
Total revenues | 684,732 | 504,468 | 320,701 | 1,260,347 | (267,669 | ) | 2,502,579 | |||||||||||||||||
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 | 22,946 | 493,907 | ||||||||||||||||||
Change 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 | 22,946 | 2,803,500 | ||||||||||||||||||
Income (loss) from continuing operations before federal income taxes, and equity in losses of unconsolidated affiliates | 18,815 | 19,975 | (20,557 | ) | (28,539 | ) | (290,615 | ) | (300,921 | ) | ||||||||||||||
Provision (benefit) for federal income taxes | 6,209 | 6,592 | (6,784 | ) | (9,418 | ) | (118,993 | ) | (122,394 | ) | ||||||||||||||
Equity in losses of unconsolidated affiliates | — | — | — | — | 4,965 | 4,965 | ||||||||||||||||||
Net loss attributable to noncontrolling interests | — | — | — | — | (31 | ) | (31 | ) | ||||||||||||||||
Income (loss) from continuing operations attributable to American National Insurance Company and Subsidiaries | 12,606 | 13,383 | (13,773 | ) | (19,121 | ) | (166,626 | ) | (173,531 | ) | ||||||||||||||
Income (loss) from discontinued operations, net of income tax expense (benefit) | 18,728 | — | — | — | 805 | 19,533 | ||||||||||||||||||
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 |
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2010 | 2009 | |||||||
Reconciliation of benefit obligation: | ||||||||
Obligation at January 1, | $ | 360,374 | $ | 328,783 | ||||
Service cost benefits earned during period | 12,937 | 11,163 | ||||||
Interest cost on projected benefit obligation | 20,884 | 20,319 | ||||||
Actuarial gain | 17,652 | 19,141 | ||||||
Benefits paid | (16,674 | ) | (19,032 | ) | ||||
Obligation at December 31, | 395,173 | 360,374 | ||||||
Reconciliation of fair value of plan assets: | ||||||||
Fair value of plan assets at January 1, | 184,500 | 149,874 | ||||||
Actual return on plan assets | 20,559 | 28,729 | ||||||
Employer contributions | 24,422 | 24,929 | ||||||
Benefits paid | (16,674 | ) | (19,032 | ) | ||||
Fair value of plan assets at December 31, | 212,807 | 184,500 | ||||||
Funded status at December 31, | $ | (182,366 | ) | $ | (175,874 | ) | ||
Years ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Service cost | $ | 12,937 | $ | 11,163 | $ | 9,974 | ||||||
Interest cost | 20,884 | 20,319 | 19,003 | |||||||||
Expected return on plan assets | (15,637 | ) | (13,736 | ) | (13,571 | ) | ||||||
Amortization of prior service cost | 2,324 | 3,469 | 3,469 | |||||||||
Amortization of net gain | 7,713 | 9,134 | 4,412 | |||||||||
Net periodic benefit cost | $ | 28,221 | $ | 30,349 | $ | 23,287 | ||||||
Years ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Prior service cost | $ | 2,324 | $ | 3,469 | $ | 3,469 | ||||||
Net actuarial gain (loss) | (4,969 | ) | 4,909 | (57,385 | ) | |||||||
Deferred tax benefit (expense) | 926 | (2,932 | ) | 18,871 | ||||||||
Other comprehensive income (loss), net of tax | $ | (1,719 | ) | $ | 5,446 | $ | (35,045 | ) | ||||
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Years ended December 31, | ||||||||
2010 | 2009 | |||||||
Prior service cost | $ | — | $ | (2,324 | ) | |||
Net actuarial loss | (100,820 | ) | (95,851 | ) | ||||
Deferred tax benefit | 35,287 | 34,361 | ||||||
Amounts included in accumulated other comprehensive income (loss) | $ | (65,533 | ) | $ | (63,814 | ) | ||
Used for Net | Used for Benefit | |||||||
Benefit Cost in Fiscal Year | Obligations | |||||||
1/1/2010 to 12/31/2010 | as of 12/31/2010 | |||||||
Discount rate | 6.17 | % | 5.34 | % | ||||
Rate of compensation increase | 4.20 | % | 3.78 | % | ||||
Long-term rate of return | 7.65 | % | 7.65 | % |
Pension Benefit Payments | ||||
2011 | $ | 23,246 | ||
2012 | 21,313 | |||
2013 | 20,771 | |||
2014 | 25,135 | |||
2015 | 27,798 | |||
2016-2020 | 147,677 |
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December 31, 2010 | ||||||||||||
Quoted Prices in | Significant | |||||||||||
Active Markets for | Observable | |||||||||||
Identical Assets | Inputs | |||||||||||
Total | (Level 1) | (Level 2) | ||||||||||
Asset Category | ||||||||||||
Corporate debt securities | $ | 72,003 | $ | — | $ | 72,003 | ||||||
Residential mortgage-backed securities | 320 | — | 320 | |||||||||
Equity securities by sector: | ||||||||||||
Consumer goods | 25,992 | 25,992 | — | |||||||||
Energy | 14,143 | 14,143 | — | |||||||||
Finance | 17,254 | 17,254 | — | |||||||||
Healthcare | 11,459 | 11,459 | — | |||||||||
Industrials | 10,146 | 10,146 | — | |||||||||
Information technology | 17,500 | 17,500 | — | |||||||||
Materials | 2,411 | 2,411 | — | |||||||||
Telecom services | 4,432 | 4,432 | — | |||||||||
Utilities | 3,150 | 3,150 | — | |||||||||
Commercial paper | 30,801 | — | 30,801 | |||||||||
Money market | 14 | 14 | — | |||||||||
Unallocated group annuity contract | 2,811 | — | 2,811 | |||||||||
Contribution receivable | 276 | 276 | — | |||||||||
Other | 95 | 95 | — | |||||||||
Total | $ | 212,807 | $ | 106,872 | $ | 105,935 | ||||||
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Years ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Revenues: | ||||||||||||
Net investment income | $ | 145 | $ | 328 | $ | 735 | ||||||
Realized investments gains (losses) | 847 | (1,842 | ) | (675 | ) | |||||||
Other Income | 9,919 | 12,843 | 16,002 | |||||||||
Total revenues | 10,911 | 11,329 | 16,062 | |||||||||
Expenses | ||||||||||||
Other operating costs | 11,842 | 13,430 | 14,797 | |||||||||
Taxes, licenses and fees | 69 | 59 | 96 | |||||||||
Total expenses | 11,911 | 13,489 | 14,893 | |||||||||
Income (loss) from discontinued operations | (1,000 | ) | (2,160 | ) | 1,169 | |||||||
Loss on sale | (1,000 | ) | — | — | ||||||||
Income (loss) from discontinued operations before income tax expense (benefit) | (2,000 | ) | (2,160 | ) | 1,169 | |||||||
Income tax expense (benefit) | (725 | ) | (779 | ) | 364 | |||||||
Income (loss) from discontinued operations, net of tax | $ | (1,275 | ) | $ | (1,381 | ) | $ | 805 | ||||
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Dollar Amount of Transactions | Amount due to | |||||||||||||||||
Years ended December 31, | Years ended December 31, | |||||||||||||||||
Related Party | Financial Statement Line Impacted | 2010 | 2009 | 2010 | 2009 | |||||||||||||
Gal-Tex Hotel Corporation | Mortgage loans on real estate | $ | 924 | $ | 860 | $ | 10,951 | $ | 11,875 | |||||||||
Gal-Tex Hotel Corporation | Net investment income | 831 | 895 | 66 | 72 | |||||||||||||
Gal-Tex Hotel Corporation | Other operating costs and expenses | 254 | 280 | 21 | 20 | |||||||||||||
Gal-Tex Hotel Corporation | Accident and health premiums | 56 | 56 | 56 | — | |||||||||||||
Moody Insurance Group, Inc. | Commissions for acquiring and servicing policies | 3,124 | 2,813 | 717 | 388 | |||||||||||||
Moody Insurance Group, Inc. | Other operating costs and expenses | 135 | 171 | — | — | |||||||||||||
National Western Life Ins. | Accident and health premiums | 135 | 226 | 14 | — | |||||||||||||
National Western Life Ins. | Other operating costs and expenses | 1,328 | 1,300 | 71 | — | |||||||||||||
Moody Foundation | Accident and health premiums | 263 | 276 | 7 | — | |||||||||||||
Greer, Herz and Adams, LLP | Other operating costs and expenses | 10,785 | 9,300 | 251 | 370 |
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Three Months Ended | ||||||||||||||||||||||||||||||||
March 31, | June 30, | September 30, | December 31, | |||||||||||||||||||||||||||||
2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | |||||||||||||||||||||||||
Total revenues | $ | 748,733 | $ | 650,650 | $ | 744,540 | $ | 724,301 | $ | 790,456 | $ | 776,868 | $ | 783,359 | $ | 786,631 | ||||||||||||||||
Total benefits, losses and expenses | 706,364 | 725,517 | 716,730 | 736,648 | 710,822 | 741,974 | 730,549 | 744,575 | ||||||||||||||||||||||||
Income (loss) from continuing operations before federal income tax and equity in earnings of unconsolidated affiliates | 42,369 | (74,867 | ) | 27,810 | (12,347 | ) | 79,634 | 34,894 | 52,810 | 42,056 | ||||||||||||||||||||||
Provision (benefit) for federal income taxes | 10,016 | (30,343 | ) | 3,307 | (10,707 | ) | 31,257 | 3,178 | 10,628 | 6,844 | ||||||||||||||||||||||
Equity in earnings (losses) of unconsolidated affiliates, net of tax | 7 | (1,937 | ) | 62 | (3,180 | ) | (144 | ) | 2,110 | (3,094 | ) | (1,209 | ) | |||||||||||||||||||
Income (loss) from continuing operations | 32,360 | (46,461 | ) | 24,565 | (4,820 | ) | 48,233 | 33,826 | 39,088 | 34,003 | ||||||||||||||||||||||
Income (loss) from discontinued operations, net of income tax expense (benefit) | 223 | (1,233 | ) | 1,778 | (103 | ) | (513 | ) | 122 | (2,763 | ) | (167 | ) | |||||||||||||||||||
Net income (loss) | 32,583 | (47,694 | ) | 26,343 | (4,923 | ) | 47,720 | 33,948 | 36,325 | 33,836 | ||||||||||||||||||||||
Net income (loss) attributable to noncontrolling interest | (2,195 | ) | (1 | ) | (279 | ) | (568 | ) | 664 | 1,248 | 755 | (1,137 | ) | |||||||||||||||||||
Net income (loss) attributable to American National Insurance Company and subsidiaries | 34,778 | (47,693 | ) | 26,622 | (4,355 | ) | 47,056 | 32,700 | 35,570 | 34,973 | ||||||||||||||||||||||
Earnings (loss) per share attributable to American National Insurance Company and subsidiaries: | ||||||||||||||||||||||||||||||||
Basic | 1.31 | (1.80 | ) | 1.00 | (0.16 | ) | 1.77 | 1.23 | 1.34 | 1.32 | ||||||||||||||||||||||
Diluted | 1.30 | (1.80 | ) | 1.00 | (0.16 | ) | 1.76 | 1.23 | 1.33 | 1.32 |
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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 consolidated 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 consolidated financial statements. |
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ITEM 9B. | OTHER INFORMATION |
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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 ACCOUNTANT FEES AND SERVICES |
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ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
Page | ||||
87 | ||||
(a)(2) Supplementary Data and Financial Statement Schedules |
Page | ||||
153 | ||||
154 | ||||
157 | ||||
158 | ||||
159 |
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 10-12B filed April 10, 2009) | |||
3.2 | Bylaws (incorporated by reference to Exhibit No. 3.2 to the registrant’s Current Report on Form 8-K filed May 5, 2010) | |||
4.1 | Specimen copy of Stock Certificate (incorporated by reference to Exhibit No. 4.1 to the registrant’s Registration Statement on Form 10-12B filed April 10, 2009) | |||
10.1 | Administrative Services Agreement dated October 17, 2007 by and between the registrant and Transaction Applications Group, Inc. (incorporated by reference to Exhibit No. 10.1 to the registrant’s Registration Statement on Form 10-12B filed April 10, 2009) | |||
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 10-12B filed April 10, 2009) | ||
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 10-12B filed April 10, 2009) | ||
10.4 | * | Form of Restricted Stock Agreement for Employees (incorporated by reference to Exhibit No. 10.4 to the registrant’s Registration Statement on Form 10-12B filed April 10, 2009) | ||
10.5 | * | Form of Stock Appreciation Rights Agreement under the Stock and Incentive Plan | ||
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 10-12B filed April 10, 2009) | ||
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 10-12B filed April 10,2009) |
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Exhibit | ||||
Number: | Basic Documents: | |||
10.8 | * | Amendment No. 4 to the American National Insurance Company Nonqualified Retirement Plan | ||
10.9 | * | Form of Restricted Stock Unit Agreement under the Stock and Incentive Plan | ||
21 | Subsidiaries | |||
23 | Consent of KPMG LLP | |||
31.1 | Certification of the principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||
31.2 | Certification of the principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||
32.1 | Certification of the principal executive officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||
32.2 | Certification of the principal financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
* | Management contract or compensatory plan of arrangement. |
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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 2, 2011 | ||
/s/ John J. Dunn, Jr. | Executive Vice President, Corporate Chief Financial Officer (principal financial officer) | March 2, 2011 | ||
/s/ Arthur O. Dummer | Director | March 2, 2011 | ||
/s/ Dr. Shelby M. Elliott | Director | March 2, 2011 | ||
/s/ G. Richard Ferdinandtsen | Director | March 2, 2011 | ||
/s/ Frances Anne Moody-Dahlberg | Director | March 2, 2011 | ||
/s/ Russell S. Moody | Director | March 2, 2011 | ||
/s/ Frank P. Williamson | Director | March 2, 2011 | ||
/s/ James D. Yarbrough | Director | March 2, 2011 |
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SCHEDULE I — SUMMARY OF INVESTMENTS — OTHER THAN INVESTMENTS IN RELATED PARTIES
(in thousands)
December 31, 2010 | ||||||||||||
Amount at Which | ||||||||||||
Shown in the | ||||||||||||
Consolidated | ||||||||||||
Statements | ||||||||||||
Cost or | Estimated | of Financial | ||||||||||
Type of Investment | Amortized Cost(1) | Fair Value | Position | |||||||||
Fixed maturities: | ||||||||||||
Bonds held-to-maturity: | ||||||||||||
U.S.treasury and other U.S. government corporations and agencies | $ | 23,117 | $ | 23,405 | $ | 23,117 | ||||||
States of the U.S. and political subdivisions of the states | 422,249 | 422,446 | 422,249 | |||||||||
Foreign governments | 29,020 | 33,930 | 29,020 | |||||||||
Corporate debt securities | 7,293,501 | 7,738,777 | 7,293,501 | |||||||||
Residential mortgage-backed securities | 661,516 | 691,820 | 661,516 | |||||||||
Commercial mortgage-backed securities | 31,340 | 13,582 | 31,340 | |||||||||
Collateralized debt securities | 8,562 | 8,315 | 8,562 | |||||||||
Other debt securities | 44,245 | 47,559 | 44,245 | |||||||||
Bonds available-for-sale: | ||||||||||||
U.S.treasury and other U.S. government corporations and agencies | 13,268 | 13,907 | 13,907 | |||||||||
States of the U.S. and political subdivisions of the states | 583,163 | 594,112 | 594,112 | |||||||||
Foreign governments | 5,000 | 6,967 | 6,967 | |||||||||
Corporate debt securities | 3,030,671 | 3,201,569 | 3,201,569 | |||||||||
Residential mortgage-backed securities | 259,560 | 271,393 | 271,393 | |||||||||
Collateralized debt securities | 19,468 | 20,709 | 20,709 | |||||||||
Other debt securities | 14,187 | 14,956 | 14,956 | |||||||||
Total fixed maturity securities | 12,438,867 | 13,103,447 | 12,637,163 | |||||||||
Equity securities: | ||||||||||||
Common stocks: | ||||||||||||
Consumer goods | 154,106 | 216,592 | 216,592 | |||||||||
Energy and utilities | 121,727 | 193,265 | 193,265 | |||||||||
Finance | 119,975 | 173,579 | 173,579 | |||||||||
Healthcare | 78,256 | 108,509 | 108,509 | |||||||||
Industrials | 59,856 | 107,505 | 107,505 | |||||||||
Information technology | 108,178 | 170,301 | 170,301 | |||||||||
Materials | 16,469 | 32,009 | 32,009 | |||||||||
Telecommunication services | 31,678 | 44,128 | 44,128 | |||||||||
Preferred stock | 30,420 | 36,867 | 36,867 | |||||||||
Total equity securities | 720,665 | 1,082,755 | 1,082,755 | |||||||||
Other Investments | ||||||||||||
Mortgage loans on real estate, net of allowance | 2,679,909 | 2,865,187 | 2,679,909 | |||||||||
Investment real estate, net of accumulated depreciation | 506,772 | 506,772 | ||||||||||
Real estate acquired in satisfaction of debt | 14,996 | 14,996 | ||||||||||
Policy loans | 380,505 | 380,505 | 380,505 | |||||||||
Options | 66,716 | 66,716 | 66,716 | |||||||||
Other long-term investments | 52,535 | 52,535 | ||||||||||
Short-term investments | 486,206 | 486,206 | 486,206 | |||||||||
Total other investments | 4,187,639 | 3,798,614 | 4,187,639 | |||||||||
Total investments | $ | 17,347,171 | $ | 17,984,816 | $ | 17,907,557 | ||||||
(1) | Original cost of equity securities and, as to fixed maturity securities, 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 | 2010 | 2009 | 2008 | |||||||||
Revenues | ||||||||||||
Premium and policy revenue | $ | 735,727 | $ | 812,007 | $ | 691,885 | ||||||
Net investment income | 760,630 | 692,993 | 643,855 | |||||||||
Realized gain (loss) on investments | 46,561 | (9,047 | ) | 9,601 | ||||||||
Other-than-temporary impairments | (43 | ) | (21,113 | ) | (152,840 | ) | ||||||
Other income | 2,114 | 5,346 | 6,576 | |||||||||
Total revenues | 1,544,989 | 1,480,186 | 1,199,077 | |||||||||
Expenses | ||||||||||||
Policy benefits | 505,916 | 596,729 | 471,590 | |||||||||
Other operating costs and expenses | 820,240 | 804,583 | 771,899 | |||||||||
Total expenses | 1,326,156 | 1,401,312 | 1,243,489 | |||||||||
Income (loss) from continuing operations before federal income tax, and equity in earnings of unconsolidated affiliates and subsidiaries | 218,833 | 78,874 | (44,412 | ) | ||||||||
Provision (benefit) for federal income taxes | 78,823 | 26,698 | (15,844 | ) | ||||||||
Equity in earnings (losses) of unconsolidated affiliates and subsidiaries, net of tax | 4,016 | (36,551 | ) | (125,430 | ) | |||||||
Net income (loss) | $ | 144,026 | $ | 15,625 | $ | (153,998 | ) | |||||
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SCHEDULE II — CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(In thousands)
December 31, | ||||||||
Condensed Statements of Financial Position | 2010 | 2009 | ||||||
Assets | ||||||||
Fixed maturity securities | $ | 9,545,996 | $ | 8,584,578 | ||||
Equity securities | 43,072 | 68,295 | ||||||
Mortgage loans on real estate, net of allowance | 2,708,023 | 2,342,630 | ||||||
Other invested assets | 1,739,574 | 1,872,011 | ||||||
Investment in subsidiaries | 1,704,346 | 1,669,054 | ||||||
Deferred policy acquisition costs | 1,040,332 | 1,034,550 | ||||||
Separate account assets | 780,563 | 718,378 | ||||||
Other assets | 607,342 | 651,047 | ||||||
Total assets | 18,169,248 | 16,940,543 | ||||||
Liabilities | ||||||||
Policyholder funds | 2,860,340 | 2,737,141 | ||||||
Policy account balances | 9,810,671 | 8,937,965 | ||||||
Separate account liabilities | 780,563 | 718,378 | ||||||
Other liabilities | 1,085,023 | 1,086,605 | ||||||
Total liabilities | 14,536,597 | 13,480,089 | ||||||
Shareholders’ equity | ||||||||
Common stock | 30,832 | 30,832 | ||||||
Additional paid-in capital | 15,190 | 11,986 | ||||||
Accumulated other comprehensive income | 225,212 | 117,649 | ||||||
Retained earnings | 3,459,911 | 3,398,492 | ||||||
Treasury stock at cost | (98,494 | ) | (98,505 | ) | ||||
Total stockholders’ equity | 3,632,651 | 3,460,454 | ||||||
Total liabilities and stockholders’ equity | $ | 18,169,248 | $ | 16,940,543 | ||||
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SCHEDULE II — CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(In thousands)
Years Ended December 31, | ||||||||||||
Condensed Statements of Cash Flows | 2010 | 2009 | 2008 | |||||||||
Operating activities | ||||||||||||
Net income (loss) | $ | 144,026 | $ | 15,625 | $ | (153,998 | ) | |||||
Adjustments to reconcile net income to net cash provided operating activities: | ||||||||||||
Realized (gain) loss on investments | (46,561 | ) | 9,047 | (9,601 | ) | |||||||
Other-than-temporary impairment | 43 | 21,113 | 152,840 | |||||||||
Amortization of discounts and premiums on bonds | 10,979 | 8,256 | 10,345 | |||||||||
Net capitalized interest on policy loans and mortgage loans | (26,533 | ) | (24,331 | ) | 5,896 | |||||||
Depreciation | 21,511 | 23,679 | 9,121 | |||||||||
Interest credited to policy account balances | 364,107 | 341,184 | 272,700 | |||||||||
Charges to policy account balances | (175,846 | ) | (170,071 | ) | (165,354 | ) | ||||||
Deferred federal income tax (benefit) expense | 15,006 | (17,579 | ) | (87,389 | ) | |||||||
Deferral of policy acquisition costs | (262,291 | ) | (259,565 | ) | (437,287 | ) | ||||||
Amortization of deferred policy acquisition costs | 211,423 | 202,354 | 221,432 | |||||||||
Equity in earnings of unconsolidated affiliates | (6,027 | ) | (3,175 | ) | (378 | ) | ||||||
Net (income) loss of subsidiaries | 2,011 | 34,726 | 125,808 | |||||||||
Dividends from subsidiaries | — | 5,000 | — | |||||||||
Changes in: | ||||||||||||
Policyholder fund liabilities | 74,647 | 38,149 | 49,821 | |||||||||
Reinsurance ceded receivable | 20,260 | 92,058 | (26,654 | ) | ||||||||
Premiums due and other receivables | (1,725 | ) | 15,443 | 20,454 | ||||||||
Accrued investment income | (8,040 | ) | (11,365 | ) | (878 | ) | ||||||
Current federal income tax asset/liability | 2,077 | 42,013 | (94,955 | ) | ||||||||
Liability for retirement benefits | 4,222 | 1,933 | 52,263 | |||||||||
Prepaid reinsurance premiums | 8,086 | 9,572 | 6,682 | |||||||||
Other, net | 15,733 | 7,833 | (12,299 | ) | ||||||||
Net cash provided by (used in) operating activities | 367,108 | 381,899 | (61,431 | ) | ||||||||
Investing activities | ||||||||||||
Proceeds from sales of: | ||||||||||||
Fixed maturity securities | 194,764 | 31,761 | 5,103 | |||||||||
Equity securities | 32,390 | 28,883 | 55,084 | |||||||||
Real estate | 29,732 | 4,837 | — | |||||||||
Other invested assets | 19,407 | 140,667 | 188,493 | |||||||||
Disposals of property and equipment | 454 | 1,553 | 1,202 | |||||||||
Distributions of unconsolidated affiliates | 8,495 | 10,698 | 6,191 | |||||||||
Changes in intercompany loans | (5,212 | ) | — | — | ||||||||
Return of capital from sale of subsidiary | 13,482 | — | — | |||||||||
Proceeds from maturity of fixed maturity securities | 845,302 | 564,997 | 624,288 | |||||||||
Principal payments received on: | ||||||||||||
Mortgage loans | 154,514 | 114,207 | 138,925 | |||||||||
Policy loans | 39,774 | 43,386 | 9,203 | |||||||||
Purchases of: | ||||||||||||
Fixed maturity securities | (1,882,092 | ) | (1,279,627 | ) | (1,087,593 | ) | ||||||
Equity securities | (963 | ) | (1,042 | ) | (47,002 | ) | ||||||
Real estate | (13,628 | ) | (12,971 | ) | (15,657 | ) | ||||||
Mortgage loans | (526,672 | ) | (548,748 | ) | (493,412 | ) | ||||||
Policy loans | (33,466 | ) | (30,881 | ) | (18,165 | ) | ||||||
Other invested assets | (42,254 | ) | (30,746 | ) | (216,468 | ) | ||||||
Additions to property and equipment | (5,374 | ) | (7,356 | ) | (11,475 | ) | ||||||
Contributions to unconsolidated affiliates | (6,254 | ) | (4,905 | ) | (7,162 | ) | ||||||
Changes in short term investments, net | 192,084 | (299,941 | ) | 294,048 | ||||||||
Changes in investment in subsidiaries | (10,010 | ) | (53,039 | ) | 157,089 | |||||||
Other, net | 19,088 | (268 | ) | (581 | ) | |||||||
Net cash used in investing activities | (976,439 | ) | (1,328,535 | ) | (417,889 | ) | ||||||
Financing activities | ||||||||||||
Policyholders’ deposits to policy account balances | 1,641,541 | 2,201,309 | 1,931,709 | |||||||||
Policyholders’ withdrawals from policy account balances | (957,096 | ) | (1,125,610 | ) | (1,385,625 | ) | ||||||
Dividends to stockholders | (82,607 | ) | (82,490 | ) | (82,651 | ) | ||||||
Net cash provided by financing activities | 601,838 | 993,209 | 463,433 | |||||||||
Net increase (decrease) in cash and cash equivalents | (7,493 | ) | 46,573 | (15,887 | ) | |||||||
Cash: | ||||||||||||
Beginning of the year | 38,594 | (7,979 | ) | 7,908 | ||||||||
End of the year | $ | 31,101 | $ | 38,594 | $ | (7,979 | ) | |||||
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SCHEDULE III — SUPPLEMENTARY INSURANCE INFORMATION
(in thousands)
Future Policy | Benefits, | Amortization | ||||||||||||||||||||||||||||||||||
Deferred | Benefits, Policy and | Claims, Losses | of Deferred | |||||||||||||||||||||||||||||||||
Policy | Contract Claims | Net | and | Policy | Other | |||||||||||||||||||||||||||||||
Acquisition | and Participating | Unearned | Premium | Investment | Settlement | Acquisition | Operating | Premiums | ||||||||||||||||||||||||||||
Segment | Cost | Policyholder Share | Premiums | Revenue | Income(1) | Expenses | Costs | Expenses(2) | Written | |||||||||||||||||||||||||||
2010 | ||||||||||||||||||||||||||||||||||||
Corportate & Other | $ | — | $ | — | $ | — | $ | — | $ | 95,656 | $ | — | $ | — | $ | 38,692 | $ | — | ||||||||||||||||||
Life | 661,377 | 4,195,783 | 92,364 | 282,160 | 223,753 | 294,177 | 78,826 | 178,619 | — | |||||||||||||||||||||||||||
Annuities | 446,996 | 9,986,992 | 4 | 174,193 | 510,106 | 205,948 | 72,521 | 62,791 | — | |||||||||||||||||||||||||||
Health | 64,967 | 382,810 | 66,516 | 263,294 | 14,855 | 184,554 | 22,973 | 49,634 | — | |||||||||||||||||||||||||||
Property & Casualty | 145,086 | 927,637 | 674,830 | 1,158,261 | 67,545 | 923,736 | 267,185 | 124,410 | 1,185,366 | |||||||||||||||||||||||||||
Total | $ | 1,318,426 | $ | 15,493,222 | $ | 833,714 | $ | 1,877,908 | $ | 911,915 | $ | 1,608,415 | $ | 441,505 | $ | 454,146 | $ | 1,185,366 | ||||||||||||||||||
2009 | ||||||||||||||||||||||||||||||||||||
Corportate & Other | $ | — | $ | — | $ | — | $ | — | $ | 85,964 | $ | — | $ | — | $ | 41,218 | $ | — | ||||||||||||||||||
Life | 672,063 | 4,080,827 | 100,204 | 284,530 | 222,611 | 297,719 | 78,697 | 185,048 | — | |||||||||||||||||||||||||||
Annuities | 442,428 | 9,050,838 | 4 | 220,284 | 449,035 | 249,709 | 64,756 | 59,254 | — | |||||||||||||||||||||||||||
Health | 69,853 | 419,467 | 78,525 | 309,701 | 15,992 | 239,407 | 21,746 | 62,134 | — | |||||||||||||||||||||||||||
Property & Casualty | 146,637 | 897,871 | 682,931 | 1,159,509 | 66,175 | 923,064 | 248,607 | 124,266 | 1,164,136 | |||||||||||||||||||||||||||
Total | $ | 1,330,981 | $ | 14,449,003 | $ | 861,664 | $ | 1,974,024 | $ | 839,777 | $ | 1,709,899 | $ | 413,806 | $ | 471,920 | $ | 1,164,136 | ||||||||||||||||||
2008 | ||||||||||||||||||||||||||||||||||||
Corportate & Other | $ | — | $ | — | $ | — | $ | — | $ | 108,862 | $ | — | $ | — | $ | 22,946 | $ | — | ||||||||||||||||||
Life | 712,250 | 3,992,085 | 111,846 | 299,338 | 226,643 | 296,078 | 86,928 | 222,908 | — | |||||||||||||||||||||||||||
Annuities | 557,058 | 7,691,848 | 13 | 116,248 | 374,023 | 142,867 | 75,854 | 45,491 | — | |||||||||||||||||||||||||||
Health | 74,870 | 521,415 | 93,956 | 290,883 | 16,566 | 223,055 | 27,785 | 69,961 | — | |||||||||||||||||||||||||||
Property & Casualty | 138,486 | 904,193 | 687,920 | 1,182,026 | 69,348 | 939,854 | 233,336 | 132,601 | 1,184,686 | |||||||||||||||||||||||||||
Total | $ | 1,482,664 | $ | 13,109,541 | $ | 893,735 | $ | 1,888,495 | $ | 795,442 | $ | 1,601,854 | $ | 423,903 | $ | 493,907 | $ | 1,184,686 | ||||||||||||||||||
(1) | 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 income 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 & surplus. | |
(2) | Identifiable expenses are charged directly to the appropriate line of business. The remaining expenses are allocated to the lines based upon various factors including premium ratio within the respective lines. |
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Ceded to | Assumed | Percentage of | ||||||||||||||||||
Direct | Other | from Other | Net | Amount | ||||||||||||||||
Amount | Companies | Companies | Amount | Assumed to Net | ||||||||||||||||
Year Ended December 31, 2010 | ||||||||||||||||||||
Life insurance in-force | $ | 69,288,973 | $ | 31,616,049 | $ | 479,528 | $ | 38,152,452 | 1.3 | % | ||||||||||
Premiums earned: | ||||||||||||||||||||
Life and Annuity | $ | 543,724 | $ | 86,241 | $ | (1,130 | ) | $ | 456,353 | (0.2 | ) | |||||||||
Accident and health | 247,301 | 82,762 | 98,755 | 263,294 | 37.5 | |||||||||||||||
Property and casualty | 1,258,401 | 103,872 | 3,732 | 1,158,261 | 0.3 | |||||||||||||||
Total premiums | $ | 2,049,426 | $ | 272,875 | $ | 101,357 | $ | 1,877,908 | 5.4 | |||||||||||
Year Ended December 31, 2009 | ||||||||||||||||||||
Life insurance in-force | $ | 68,584,383 | $ | 31,347,876 | $ | 863,867 | $ | 38,100,374 | 2.3 | |||||||||||
Premiums earned: | ||||||||||||||||||||
Life and Annuity | $ | 581,422 | $ | 81,120 | $ | 4,512 | $ | 504,814 | 0.9 | |||||||||||
Accident and health | 287,977 | 151,138 | 172,862 | 309,701 | 55.8 | |||||||||||||||
Property and casualty | 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 | |||||||||||
Year Ended December 31, 2008 | ||||||||||||||||||||
Life insurance in-force | $ | 68,820,212 | $ | 31,241,255 | $ | 1,050,645 | $ | 38,629,602 | 2.7 | |||||||||||
Premiums earned: | ||||||||||||||||||||
Life and Annuity | $ | 492,068 | $ | 84,942 | $ | 8,460 | $ | 415,586 | 2.0 | |||||||||||
Accident and health | 278,907 | 134,904 | 146,880 | 290,883 | 50.5 | |||||||||||||||
Property and casualty | 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 | |||||||||||
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SCHEDULE V — VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
Balance at | Deductions | Balance at | ||||||||||||||||||
Beginning of | Charged to | Change in | End of | |||||||||||||||||
Period | Expense | Written off | Estimate (1) | Period | ||||||||||||||||
2010 | ||||||||||||||||||||
Investment valuation allowances: | ||||||||||||||||||||
Mortgage loans on real estate | $ | 23,290 | $ | (394 | ) | $ | (1,676 | ) | $ | (7,432 | ) | $ | 13,788 | |||||||
Total | $ | 23,290 | $ | (394 | ) | $ | (1,676 | ) | $ | (7,432 | ) | $ | 13,788 | |||||||
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 | ||||||||||
(1) | Decrease in the required valuation allowance for mortgage loans as a result of changes to the estimate in calculating the mortgage loan allowance based on enhanced methodology. |
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