American National Group, Inc. (NASDAQ: ANAT) and subsidiaries
(collectively, the “Company”) announced net income for the third
quarter of 2021 of $51.0 million or $1.90 per diluted share,
compared to net income of $171.1 million or $6.36 per diluted share
for the same period in 2020.
Net income for the third quarter of 2021 was $120.1
million lower than net income for the same period in 2020 primarily
because gains on equity securities were $119.6 million less in the
third quarter of 2021. In addition, an increase in realized
investment earnings of $21.9 million during the third quarter of
2021 was offset by a reduction in after-tax adjusted net operating
income of $22.4 million.
Net gains on equity securities were $0.5 million or
$0.02 per diluted share in the third quarter of 2021, compared to
$120.1 million or $4.47 per diluted share for the same period in
2020, reflecting more favorable market conditions for the
appreciation of our investment in equities during the third quarter
of 2020.
Net realized investment earnings for the third
quarter of 2021 were $37.9 million or $1.41 per diluted share,
compared to net realized investment earnings of $16.0 million or
$0.60 per diluted share for the same period in 2020. The increase
in net realized investment earnings was primarily attributable to
an increase in earnings from investment funds as well as a
reduction in the credit loss related to our commercial mortgage
loans due to improved market conditions during the third quarter of
2021.
After-tax adjusted net operating income for the
third quarter of 2021 was $12.6 million or $0.47 per diluted share,
compared to $35.0 million or $1.29 per diluted share for the same
period in 2020. The decrease reflects lower earnings in our
property and casualty business due to the impact of Hurricane Ida
and an increase in claim frequency on our personal automobile
products as well as an operating loss in our life insurance
business from increased death claims as a result of the COVID-19
pandemic.
Net income for the nine months ended September 30,
2021 was $449.2 million or $16.71 per diluted share compared to net
income of $161.2 million or $5.99 per diluted share for the same
period in 2020.
Net income for the nine months ended September 30,
2021 was $288.0 million greater than net income for the same period
in 2020 primarily because of a $150.9 million increase in realized
investment earnings, a $117.7 million increase in gains on equity
securities and a $19.4 million increase in after-tax adjusted net
operating income.
Net gains on equity securities for the nine months
ended September 30, 2021 were $211.2 million or $7.86 per diluted
share, compared to net gains on equity securities of $93.5 million
or $3.48 per diluted share for the same period in 2020 due to
significantly more favorable market conditions in 2021 for
investments in equity securities. The after-tax net gains on equity
securities for the nine months ended September 30, 2020 were
affected by the negative impact on financial markets associated
with the COVID-19 pandemic.
Net realized investment earnings for the nine
months ended September 30, 2021 were $97.8 million or $3.64 per
diluted share, compared to net realized investment losses of $53.1
million or $1.98 per diluted share for the same period in 2020. The
increase in net realized investment earnings is primarily driven by
the aforementioned favorable change in the credit loss and earnings
from investment funds.
After-tax adjusted net operating income for the
nine months ended September 30, 2021 was $140.2 million or $5.21
per diluted share, compared to $120.8 million or $4.49 per diluted
share for the same period in 2020. The increase in adjusted net
operating income reflects improved earnings in our annuity segment
from our equity indexed annuity products and an increase in the
earnings from our corporate and other segment due to increased
investment earnings, partially offset by lower earnings in our life
segment due to adverse mortality experience.
For the nine months ended September 30, 2021, total
life insurance in force increased by $6.8 billion to $135.1 billion
and book value per share increased $10.74 to $250.94.
Update Regarding Pending Merger with
Brookfield Asset Management Reinsurance Partners Ltd.
As previously announced, on August 6, 2021, the
Company entered into a merger agreement with Brookfield Asset
Management Reinsurance Partners Ltd. (“Brookfield Reinsurance”) and
its wholly-owned merger subsidiary. Subject to the conditions set
forth in the merger agreement, at the closing of the transaction,
the Company will become a wholly owned subsidiary of Brookfield
Reinsurance and each then-outstanding share of the Company’s common
stock will be converted into the right to receive $190.00 per share
in cash, for total merger consideration of approximately $5.1
billion. As previously disclosed, the merger is expected to close
in the first half of 2022.
Shortly after the merger agreement was executed,
the Company’s two largest stockholders delivered written consents
that adopted the merger agreement. Because those two stockholders
hold approximately 59.8% of the Company’s outstanding shares of
common stock, no further stockholder approval is required in
connection with the transactions contemplated by the merger
agreement. As a result, after those stockholder consents were
delivered, the Company’s board of directors no longer had the right
to consider unsolicited competing acquisition proposals from third
parties or to exercise a “fiduciary out” and no such third-party
proposal has been received.
On September 17, 2021, the Company began mailing
the definitive information statement and appraisal rights notice to
the Company’s stockholders, and that document is available in the
EDGAR system on the SEC’s website at www.sec.gov. As disclosed in
the definitive information statement, any stockholder who wished to
demand appraisal rights for its shares was required to deliver its
demand no later than October 7, 2021, the 20th day after the
information statement was first mailed to stockholders. Prior to
that deadline, the Company received only one purported appraisal
demand, which was submitted by the owner of 2,000 shares of common
stock (less than 0.01% of the Company’s outstanding shares).
On August 27, 2021, the Company and Brookfield
Reinsurance filed the required notifications for antitrust
clearance under the Hart-Scott-Rodino Antitrust Improvements Act of
1976 (“HSR Act”). The waiting period under the HSR Act expired on
September 27, 2021.
Because (i) the required stockholder approval for
the merger has been obtained, (ii) the information statement and
appraisal rights notice has been sent to stockholders and (iii) the
HSR Act waiting period has expired, the only remaining significant
closing condition is the receipt of the required regulatory
approval from the insurance authorities in Texas, Missouri, New
York, Louisiana, and California. On September 3, 2021, Brookfield
Reinsurance made the required Form A filings with each of these
state insurance regulators, and those regulators are reviewing the
filings.
GAAP Reconciliation of Non-GAAP
Measures
A reconciliation of GAAP net income to adjusted net
operating income, a non-GAAP measure, is shown in the table
below:
|
American National Consolidated Financial
Highlights |
(Preliminary & Unaudited in millions, except per share
data) |
|
|
|
|
|
|
|
|
|
Quarters Ended September 30, |
|
Nine Months Ended September 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Net income (GAAP basis) |
$ |
51.0 |
|
$ |
171.1 |
|
|
$ |
449.2 |
|
|
$ |
161.2 |
|
Adjustments to eliminate the
impact of: |
|
|
|
|
|
|
|
Unrealized gains on equity securities |
$ |
0.3 |
|
$ |
121.7 |
|
|
$ |
212.9 |
|
|
$ |
94.2 |
|
Net gains (losses) on equity securities sold |
0.2 |
|
(1.6 |
) |
|
(1.7 |
) |
|
(0.7 |
) |
Net gains on equity securities |
$ |
0.5 |
|
$ |
120.1 |
|
|
$ |
211.2 |
|
|
$ |
93.5 |
|
|
|
|
|
|
|
|
|
Adjustments to eliminate the
impact of: |
|
|
|
|
|
|
|
Net realized investment gains |
$ |
15.9 |
|
$ |
13.7 |
|
|
$ |
39.5 |
|
|
$ |
20.1 |
|
(Increase) decrease in credit loss |
5.3 |
|
(2.8 |
) |
|
17.6 |
|
|
(82.3 |
) |
Equity in earnings of unconsolidated real estate joint ventures and
other investments |
16.9 |
|
5.8 |
|
|
41.0 |
|
|
9.8 |
|
Net income attributable to noncontrolling interest |
0.2 |
|
0.7 |
|
|
0.3 |
|
|
0.7 |
|
Net realized investment earnings (losses) |
$ |
37.9 |
|
$ |
16.0 |
|
|
$ |
97.8 |
|
|
$ |
(53.1 |
) |
|
|
|
|
|
|
|
|
Adjusted net operating
income(1) (non-GAAP
basis)* |
$ |
12.6 |
|
$ |
35.0 |
|
|
$ |
140.2 |
|
|
$ |
120.8 |
|
|
|
|
|
|
|
|
|
Per diluted share |
|
|
|
|
|
|
|
Net income (GAAP basis) |
$ |
1.90 |
|
$ |
6.36 |
|
|
$ |
16.71 |
|
|
$ |
5.99 |
|
Net gains on equity securities |
0.02 |
|
4.47 |
|
|
7.86 |
|
|
3.48 |
|
Net realized investment earnings (losses) |
1.41 |
|
0.60 |
|
|
3.64 |
|
|
(1.98 |
) |
Adjusted net operating
income(1) (non-GAAP
basis)* |
$ |
0.47 |
|
$ |
1.29 |
|
|
$ |
5.21 |
|
|
$ |
4.49 |
|
|
|
|
|
|
|
|
|
Weighted average number of diluted shares upon which computations
are based |
26,884,582 |
|
26,884,758 |
|
|
26,884,700 |
|
|
26,887,874 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of |
|
|
|
|
|
September 30, 2021 |
|
December 31, 2020 |
|
|
|
|
Book value per diluted
share |
$ |
250.94 |
|
$ |
240.20 |
|
|
|
|
|
|
|
* |
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 1 below, 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. |
|
|
(1) |
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 (losses). Net realized investment earnings (losses) are
comprised of realized investment gains on assets (excluding equity
securities), (increase) decrease in credit loss, and earnings from
our equity in earnings of unconsolidated real estate joint ventures
and other investments and non-controlling interests. |
American National Group, Inc. is a family of
companies that has, on a consolidated GAAP basis, $30.7 billion in
assets, $24.0 billion in liabilities and $6.7 billion in
stockholders’ equity as of September 30, 2021. 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 u’ rating by A.M. Best Company and an ‘A’ rating by
S&P Global Ratings(1), 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.
(1) A.M. Best has placed American National’s issuer
credit and financial strength ratings under review with developing
implications and S&P Global Ratings has placed the ratings on
CreditWatch with negative implications due to the pending merger
with Brookfield Reinsurance.
Contact: Brody J. Merrill (409) 766-6826
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