American National Announces First Quarter 2020 Results
May 05 2020 - 3:30PM
American National Insurance Company (NASDAQ: ANAT) announced a net
loss for the first quarter of 2020 of $220.4 million or $8.20 per
diluted share, compared to net income of $258.2 million or $9.60
per diluted share for the same period in 2019. The decrease in net
income for the first quarter of 2020 was primarily driven by an
after-tax net loss on equity securities of $262.7 million or $9.77
per diluted share due to the negative impact of changes in the fair
value of equity securities associated in part with the novel
coronavirus (COVID-19) and its related economic impacts beginning
in March of 2020. In comparison, favorable equity market returns
during the first quarter of 2019 produced an after-tax net gain of
$163.0 million or $6.06 per diluted share in that period.
In addition, the net loss for the first quarter of 2020 also
included an after-tax net realized investment loss of $22.4 million
or $0.83 per diluted share compared to after-tax net realized
investment earnings of $35.7 million or $1.33 per diluted share for
the same period in 2019. The after-tax net realized investment loss
in 2020 included an expense of $38.2 million or $1.42 per diluted
share due to changes in credit losses resulting from our adoption
of new accounting guidance(1) which was not effective and had no
impact on the first quarter of 2019. We also had less gains
on sales of real estate investments in joint ventures in 2020
compared to the same period in 2019 when real estate market
conditions were more favorable.
After-tax adjusted net operating income for the first quarter of
2020 increased to $64.7 million or $2.40 per diluted share compared
to $59.5 million or $2.21 per diluted share for the same period in
2019. Stronger earnings in our life and property and casualty
segments were partially offset by the negative impact of changes in
mark-to-market reserves in our annuity segment in the first quarter
of 2020 compared to 2019. In the opinion of the company's
management, after-tax adjusted net operating income, which is a
non-GAAP measure, is meaningful to provide an understanding of the
significant factors management uses to evaluate the periodic
results of operations and financial condition of the Company’s core
operations.
In regard to COVID-19, American National is
currently fully operational with 98% of our back-office employees
working remotely using access technologies and data security
measures that were already in place prior to the start of COVID-19
pandemic. We continue to assess the impact of COVID-19 on the
entirety of our business; however, there are still many
uncertainties. Specific to the three months ended March 31, 2020,
the most significant impact was the extreme market volatility and
economic disruption related to COVID-19 leading to the
aforementioned net losses on equity securities. The full financial
impact cannot be accurately assessed given the high uncertainty
related to the wide-ranging social, economic and financial
consequences and the possible effects of ongoing and future
governmental actions. American National may see an increased level
of claims, a reduction in sales, an increased level of asset
impairments, and reduced investment income during 2020 related to
the impacts of COVID-19. Additional discussion about our response
to COVID-19 and its possible impacts on us will be contained in our
Form 10-Q for the quarterly period ended March 31, 2020, which we
expect to file on a timely basis with the Securities and Exchange
Commission.
(1) Effective January 1, 2020, the Company adopted ASU 2016-13,
Financial Instruments-Credit Losses (Topic 326): Measurement of
Credit Losses on Financial Instruments.
Additional Highlights Summary:
- Total life insurance in force increased by $1.9 billion to
$120.0 billion since December 31, 2019
- Book value per diluted share as of March 31, 2020 was $208.28,
compared to book value per share of $222.74 on December 31, 2019.
The decrease in book value is primarily the result of a $9.77 per
diluted share net loss on equity securities.
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 March 31, |
|
|
2020 |
|
2019 |
Net income (loss) (GAAP basis) |
|
$ |
(220.4 |
) |
|
$ |
258.2 |
|
Adjustments to eliminate the
impact of: |
|
|
|
|
Unrealized gains (losses) on equity securities |
|
$ |
(263.5 |
) |
|
$ |
160.3 |
|
Net gains on equity securities sold |
|
0.8 |
|
|
2.7 |
|
Net gains (losses) on equity securities |
|
$ |
(262.7 |
) |
|
$ |
163.0 |
|
|
|
|
|
|
Adjustments to eliminate the
impact of: |
|
|
|
|
Net realized investment gains |
|
$ |
3.2 |
|
|
$ |
2.3 |
|
Change in credit loss (1) |
|
(38.2 |
) |
|
— |
|
Equity in earnings of unconsolidated affiliates |
|
12.4 |
|
|
32.0 |
|
Net loss attributable to noncontrolling interest |
|
(0.2 |
) |
|
(1.4 |
) |
Net realized investment earnings (losses) |
|
$ |
(22.4 |
) |
|
$ |
35.7 |
|
|
|
|
|
|
Adjusted net operating
income(2) (non-GAAP basis)* |
|
$ |
64.7 |
|
|
$ |
59.5 |
|
|
|
|
|
|
Per diluted share |
|
|
|
|
Net income (loss) (GAAP
basis) |
|
$ |
(8.20 |
) |
|
$ |
9.60 |
|
Net gains (losses) on equity securities |
|
(9.77 |
) |
|
6.06 |
|
Net realized investment earnings (losses) |
|
(0.83 |
) |
|
1.33 |
|
Adjusted net operating
income(2) (non-GAAP basis)* |
|
$ |
2.40 |
|
|
$ |
2.21 |
|
|
|
|
|
|
Weighted average number of
diluted shares upon which computations are based |
|
26,891,675 |
|
|
26,891,904 |
|
|
|
|
|
|
|
|
As of |
|
|
March 31, 2020 |
|
December 31, 2019 |
Book value per diluted
share |
|
$ |
208.28 |
|
|
$ |
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 the
footnote 2, 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. |
|
|
(1) |
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 equity by $34.7 million or $1.29 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 three months of 2020
reduced net income by $38.2 million or $1.42 per diluted share. The
new guidance was not effective and had no impact on 2019. |
|
|
(2) |
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 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, $27.8 billion in assets, $22.2 billion in
liabilities and $5.6 billion in stockholders’ equity. American
National, founded in 1905 and headquartered in Galveston, Texas,
and its 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.
Major insurance 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, the parent 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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