American National Announces Second Quarter 2020 Results
August 03 2020 - 4:04PM
American National Group, Inc. (NASDAQ: ANAT) (formerly American
National Insurance Company)(1) and subsidiaries (collectively, the
“Company”) announced net income for the second quarter of 2020 of
$210.5 million or $7.83 per diluted share, compared to $98.8
million or $3.67 per diluted share for the same period in 2019. The
increase in net income for the second quarter of 2020 was primarily
attributable to an after-tax net gain on equity securities of
$236.1 million or $8.78 per diluted share due to favorable equity
market conditions, compared to $53.0 million or $1.97 per diluted
share for the same period in 2019.
Net income for the second quarter of 2020 included after-tax net
realized investment losses of $49.0 million or $1.82 per diluted
share, compared to after-tax net realized investment earnings of
$6.4 million or $0.23 per diluted share during the same period in
2019. The after-tax net realized investment loss in the second
quarter of 2020 included an expense of $41.2 million or $1.53 per
diluted share due to changes in estimated credit losses resulting
from our adoption of new accounting guidance, which was effective
January 1, 2020 and had no impact on 2019(2). The increase in
estimated credit losses was primarily due to the economic
disruption relating to the novel coronavirus (COVID-19) and its
impact on some of our mortgage loans.
After-tax net loss for the six months ended June 30, 2020 was
$9.9 million or $0.37 per diluted share, down from net income of
$357.1 million or $13.28 per diluted share for the same period in
2019. The net loss for the six months ended June 30, 2020 included
an after-tax net loss on equity securities of $26.7 million or
$0.99 per diluted share compared to an after-tax net gain on equity
securities of $216.0 million or $8.03 per diluted share for the
same period in 2019. The year-to-date loss on equity securities in
2020 was primarily driven by the first quarter downturn in
financial markets resulting from the impacts of COVID-19.
In addition, the net loss for the six months ended June 30, 2020
included after-tax net realized investment losses of $71.5 million
or $2.66 per diluted share, compared to after-tax net realized
investment earnings of $42.0 million or $1.56 per diluted share for
the same period in 2019. The after-tax net realized investment loss
for the six months ended June 30, 2020 included an expense of $79.4
million or $2.95 per diluted share due to changes in estimated
credit losses resulting from our adoption of the aforementioned new
accounting guidance(2). In addition, earnings from unconsolidated
affiliates decreased from prior year due to reduced sales of real
estate development entities and lower valuations of alternative
investment entities given current market conditions.
After-tax adjusted net operating income for the second quarter
of 2020 was $23.4 million or $0.87 per diluted share compared to
$39.4 million or $1.47 per diluted share for the same period in
2019. The decrease in earnings was driven by higher catastrophe
losses in our property and casualty homeowners line of business and
a reduction in earnings from our life business. During the second
quarter of 2020, our life business had unfavorable mortality
experience in early duration term policies when compared to the
second quarter of 2019. This change in life mortality was not
related to COVID-19.
After-tax adjusted net operating income for the six months ended
June 30, 2020 was $88.3 million or $3.28 per diluted share compared
to $99.1 million or $3.69 per diluted share for the same period in
2019. The decrease in earnings is primarily the result of less
investment income in 2020 and an unfavorable change in
mark-to-market reserves in our indexed annuity products.
For the six months ended June 30, 2020, total life insurance in
force increased by $5.0 billion to $123.1 billion, and book value
per share declined slightly to $221.90 primarily due to a $2.66
loss per diluted share resulting from changes in estimated credit
losses(2).
In regard to COVID-19, American National continues to be fully
operational with the majority of our employees working remotely. We
continue to monitor developments related to the COVID-19 pandemic
to assess its impact on our business; however, due to the evolving
and highly uncertain nature of this event, it currently is not
possible to estimate with reasonable confidence the ultimate direct
and indirect impact of COVID-19 on our business, results of
operations, financial condition, or liquidity. To date, COVID-19
has impacted us most notably with economic uncertainty and
volatility in the financial markets in which we invest and with the
diminished ability of certain of our clients and borrowers to make
timely payments to us. This has resulted in our taking protective
measures to mitigate the impact of COVID-19 on performance and
increase liquidity should a need arise. Additional discussion and
detail about our response to COVID-19 and its impacts on us will be
contained in our Form 10-Q for the quarterly period ended June 30,
2020, which we expect to file on a timely basis with the Securities
and Exchange Commission.
(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 June 30, |
|
Six Months Ended June 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Net income (loss) (GAAP basis) |
$ |
210.5 |
|
|
$ |
98.8 |
|
|
$ |
(9.9 |
) |
|
$ |
357.1 |
|
Adjustments to eliminate the
impact of: |
|
|
|
|
|
|
|
Unrealized gains (losses) on equity securities |
$ |
236.1 |
|
|
$ |
40.8 |
|
|
$ |
(27.5 |
) |
|
$ |
201.2 |
|
Net gains on equity securities sold |
— |
|
|
12.2 |
|
|
0.8 |
|
|
14.8 |
|
Net gains (losses) on equity securities |
$ |
236.1 |
|
|
$ |
53.0 |
|
|
$ |
(26.7 |
) |
|
$ |
216.0 |
|
|
|
|
|
|
|
|
|
Adjustments to eliminate the
impact of: |
|
|
|
|
|
|
|
Net realized investment gains (losses) |
$ |
3.1 |
|
|
$ |
(7.9 |
) |
|
$ |
6.4 |
|
|
$ |
(5.5 |
) |
Change in estimated credit loss (2) |
(41.2 |
) |
|
— |
|
|
(79.4 |
) |
|
— |
|
Equity in earnings (losses) of unconsolidated affiliates |
(10.7 |
) |
|
13.3 |
|
|
1.6 |
|
|
45.2 |
|
Net gain (loss) attributable to noncontrolling interest |
0.2 |
|
|
(1.0 |
) |
|
0.1 |
|
|
(2.3 |
) |
Net realized investment earnings (losses) |
$ |
(49.0 |
) |
|
$ |
6.4 |
|
|
$ |
(71.5 |
) |
|
$ |
42.0 |
|
|
|
|
|
|
|
|
|
Adjusted net operating
income(3) (non-GAAP basis)* |
$ |
23.4 |
|
|
$ |
39.4 |
|
|
$ |
88.3 |
|
|
$ |
99.1 |
|
|
|
|
|
|
|
|
|
Per diluted share |
|
|
|
|
|
|
|
Net income (loss) (GAAP
basis) |
$ |
7.83 |
|
|
$ |
3.67 |
|
|
$ |
(0.37 |
) |
|
$ |
13.28 |
|
Net gains (losses) on equity securities |
8.78 |
|
|
1.97 |
|
|
(0.99 |
) |
|
8.03 |
|
Net realized investment earnings (losses) |
(1.82 |
) |
|
0.23 |
|
|
(2.66 |
) |
|
1.56 |
|
Adjusted net operating
income(3) (non-GAAP basis)* |
$ |
0.87 |
|
|
$ |
1.47 |
|
|
$ |
3.28 |
|
|
$ |
3.69 |
|
|
|
|
|
|
|
|
|
Weighted average number of
diluted shares upon which computations are based |
26,887,129 |
|
|
26,888,964 |
|
|
26,889,448 |
|
|
26,889,936 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of |
|
|
|
|
|
|
June 30, 2020 |
|
December 31, 2019 |
|
|
Book value per diluted
share |
|
|
$ |
221.90 |
|
|
$ |
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 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. |
|
|
(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 six months of 2020 reduced net income by $79.4
million or $2.95 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, $29.0 billion in assets, $23.0 billion in
liabilities and $6.0 billion in stockholders’ equity. American
National Insurance Company, founded in 1905 and headquartered in
Galveston, Texas, and its 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. 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 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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