American National Announces Third Quarter 2020 Results
November 02 2020 - 2:00PM
American National Group, Inc. (NASDAQ: ANAT) (formerly American
National Insurance Company)(1) and subsidiaries (collectively, the
“Company”) announced net income for the third quarter of 2020 of
$171.1 million or $6.36 per diluted share, compared to $92.2
million or $3.43 per diluted share for the same period in 2019. The
increase in net income for the third quarter of 2020 was primarily
attributable to an increase in after-tax net gain on equity
securities due to favorable equity market conditions. This increase
was partially offset by a reduction in net realized investment
earnings due to fewer sales of real estate related assets in the
third quarter of 2020. After-tax net gains on equity securities for
the third quarter of 2020 were $120.1 million or $4.47 per diluted
share compared to $6.8 million or $0.25 per diluted share for the
same period in 2019. After-tax net realized investment earnings for
the third quarter of 2020 were $23.6 million or $0.88 per diluted
share, compared to $47.1 million or $1.75 per diluted share during
the same period in 2019.
Net income for the nine months ended September
30, 2020 was $161.2 million or $5.99 per diluted share, down from
net income of $449.2 million or $16.71 per diluted share for the
same period in 2019. Net income for the nine months ended September
30, 2020 included an after-tax net gain on equity securities of
$93.5 million or $3.48 per diluted share, down from $222.8 million
or $8.29 per diluted share for the same period in 2019. The
reduction in the net gain on equity securities was primarily driven
by the first quarter downturn in financial markets resulting from
the impacts of COVID-19. In addition, net income for the nine
months ended September 30, 2020 included after-tax net realized
investment losses of $47.8 million or $1.78 per diluted share,
compared to after-tax net realized investment earnings of $89.1
million or $3.31 per diluted share for the same period in 2019. The
after-tax net realized investment loss for the nine months ended
September 30, 2020 included an expense of $82.3 million or $3.06
per diluted share due to changes in estimated credit losses
resulting from our adoption of accounting guidance(2) which was not
applicable in 2019. Also, earnings from unconsolidated affiliates
decreased in 2020 from prior year due to reduced sales of real
estate development entities and lower valuations on certain
investment entities given current market conditions that have been
impacted by COVID-19.
After-tax adjusted net operating income for the
third quarter of 2020 was $27.4 million or $1.01 per diluted share
compared to $38.3 million or $1.43 per diluted share for the same
period in 2019. The decrease was driven by lower investment income
and a reduction in earnings from our life business due to
unfavorable mortality. This decrease was partially offset by an
improvement in our property and casualty segment operating earnings
resulting from an improvement in the combined ratio for our
personal auto and agribusiness lines.
After-tax adjusted net operating income for the
nine months ended September 30, 2020 was $115.5 million or $4.29
per diluted share compared to $137.3 million or $5.11 per diluted
share for the same period in 2019. As well as the third
quarter impacts discussed above, the decline in year-over-year
earnings was also impacted by lower earnings from our annuity
business reflecting spread compression and an unfavorable change in
mark-to-market reserves on our indexed annuity products.
For the nine months ended September 30, 2020,
total life insurance in force increased by $7.4 billion to $125.5
billion, and book value per share increased $5.86 to $228.60.
(1) |
|
Effective July 1, 2020, American National Group, Inc. was
established as the parent company of American National Insurance
Company under a previously announced holding company
reorganization. As a result of the reorganization, American
National Group, Inc. replaced American National Insurance
Company as the publicly held corporation. |
(2) |
|
Effective January 1, 2020, the Company adopted ASU 2016-13,
Financial Instruments-Credit Losses (Topic 326): Measurement of
Credit Losses on Financial Instruments. |
A reconciliation of adjusted net operating income, a non-GAAP
measure, to GAAP net income is included in the following table.
American National Consolidated Financial
Highlights |
(Preliminary & Unaudited in millions, except per share
data) |
|
|
|
|
|
|
|
|
|
Quarters Ended September 30, |
|
Nine Months Ended September 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Net income (GAAP
basis) |
$ |
171.1 |
|
|
$ |
92.2 |
|
|
$ |
161.2 |
|
|
$ |
449.2 |
|
Adjustments to eliminate the
impact of: |
|
|
|
|
|
|
|
Unrealized gains on equity securities |
$ |
121.7 |
|
|
$ |
2.9 |
|
|
$ |
94.2 |
|
|
$ |
204.0 |
|
Net gains (losses) on equity securities sold |
(1.6 |
) |
|
3.9 |
|
|
(0.7 |
) |
|
18.8 |
|
Net gains on equity securities |
$ |
120.1 |
|
|
$ |
6.8 |
|
|
$ |
93.5 |
|
|
$ |
222.8 |
|
|
|
|
|
|
|
|
|
Adjustments to eliminate the
impact of: |
|
|
|
|
|
|
|
Net realized investment gains |
$ |
13.7 |
|
|
$ |
25.3 |
|
|
$ |
20.1 |
|
|
$ |
19.7 |
|
Change in estimated credit loss (2) |
(2.8 |
) |
|
— |
|
|
(82.3 |
) |
|
— |
|
Equity in earnings of unconsolidated affiliates |
13.4 |
|
|
35.6 |
|
|
15.1 |
|
|
80.8 |
|
Net gain attributable to noncontrolling interest |
0.7 |
|
|
13.8 |
|
|
0.7 |
|
|
11.4 |
|
Net realized investment earnings (losses) |
$ |
23.6 |
|
|
$ |
47.1 |
|
|
$ |
(47.8 |
) |
|
$ |
89.1 |
|
|
|
|
|
|
|
|
|
Adjusted net
operating
income(3)
(non-GAAP basis)* |
$ |
27.4 |
|
|
$ |
38.3 |
|
|
$ |
115.5 |
|
|
$ |
137.3 |
|
|
|
|
|
|
|
|
|
Per diluted share |
|
|
|
|
|
|
|
Net income (GAAP basis) |
$ |
6.36 |
|
|
$ |
3.43 |
|
|
$ |
5.99 |
|
|
$ |
16.71 |
|
Net gains on equity securities |
4.47 |
|
|
0.25 |
|
|
3.48 |
|
|
8.29 |
|
Net realized investment earnings (losses) |
0.88 |
|
|
1.75 |
|
|
(1.78 |
) |
|
3.31 |
|
Adjusted net
operating
income(3)
(non-GAAP basis)* |
$ |
1.01 |
|
|
$ |
1.43 |
|
|
$ |
4.29 |
|
|
$ |
5.11 |
|
|
|
|
|
|
|
|
|
Weighted average number of diluted shares upon which computations
are based |
26,884,758 |
|
|
26,888,172 |
|
|
26,887,874 |
|
|
26,889,338 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of |
|
|
|
|
|
September 30, 2020 |
|
|
December 31, 2019 |
|
|
|
Book value per diluted
share |
|
|
$ |
228.60 |
|
|
$ |
222.74 |
|
|
|
* |
|
This
measure is non-GAAP because it is not based on accounting
principles generally accepted in the United States. This non-GAAP
measure is used by the Company to enhance comparability between
periods and to eliminate the impact of certain items listed in
footnote 3, which can fluctuate in a manner unrelated to core
operations due to factors such as market volatility, interest rate
changes and credit risk. In the opinion of the Company’s
management, inclusion of this non-GAAP measure is meaningful to
provide an understanding of the significant factors that comprise
the Company’s periodic results of operations and financial
condition. |
(2) |
|
Effective
January 1, 2020, the Company adopted a new accounting standard that
significantly changes how it estimates credit losses for most of
our investments, reinsurance recoverables and certain other assets.
Upon adoption, a cumulative effect adjustment was made reducing
stockholders' equity by $33.5 million or $1.25 per diluted share.
Beginning in the first quarter of 2020, changes in the estimate of
these expected credit losses are recognized through income. The
total change in credit loss for the first nine months of 2020
reduced net income by $82.3 million or $3.06 per diluted share. The
new guidance was effective January 1, 2020 and had no impact on
2019. |
(3) |
|
Adjusted
net operating income excludes the after-tax impact of net gains
(losses), both realized and unrealized, on equity securities and
net realized investment earnings. Realized investment earnings
(losses) are comprised of realized investment gains on assets
excluding equity securities, changes in estimated credit loss, and
earnings (losses) from our equity in unconsolidated affiliates and
non-controlling interests. |
American National is a family of companies that
has, on a consolidated GAAP basis, $29.4 billion in assets, $23.3
billion in liabilities and $6.1 billion in stockholders’ equity.
American National Insurance Company, founded in 1905 and
headquartered in Galveston, Texas, and other American National
subsidiaries offer a broad portfolio of products and services,
which include life insurance, annuities, property and casualty
insurance, health insurance, credit insurance, and pension
products. The American National companies operate in all 50 states.
In addition to American National Insurance Company, major
subsidiaries include American National Life Insurance Company of
Texas, American National Life Insurance Company of New York,
American National Property and Casualty Company, Garden State Life
Insurance Company, Standard Life and Accident Insurance Company,
Farm Family Casualty Insurance Company and United Farm Family
Insurance Company.
American National Insurance Company has been assigned an ‘A’
rating by A.M. Best Company and an ‘A’ rating by Standard &
Poor’s, both of which are nationally recognized rating agencies,
and is licensed to conduct the business of insurance in all states
except New York.
For more information, including company news and investor
relations information, visit the company’s web site at
www.AmericanNational.com.
Contact: Timothy A. Walsh (409) 766-6553
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