American National Group, Inc. (NASDAQ: ANAT) and subsidiaries
(collectively, the “Company”) announced net income for the fourth
quarter of 2021 of $250.1 million or $9.30 per diluted share,
compared to net income of $306.4 million or $11.40 per diluted
share for the same period in 2020. The reduction in net income in
the fourth quarter of 2021 was primarily due to a $67.3 million
decrease in net gains on equity securities and a reduction in
after-tax adjusted net operating income of $30.2 million, partially
offset by an increase in realized investment earnings of $44.2
million.
Net gains on equity securities were $120.7 million or $4.49 per
diluted share in the fourth quarter of 2021, compared to $188.0
million or $6.99 per diluted share for the same period in 2020. The
Company sold the majority of its equity securities portfolio in the
fourth quarter of 2021. While the sale resulted in a taxable gain,
the impact to net income was limited to the after-tax change in
fair value of the portfolio during the fourth quarter of 2021 since
equity securities have been marked to market value each reporting
period prior to the sale of the portfolio.
Net realized investment earnings for the fourth quarter of 2021
were $59.0 million or $2.19 per diluted share, compared to $14.8
million or $0.55 per diluted share for the same period in 2020. The
increase in net realized investment earnings was primarily
attributable to an increase in sales and realized gains from real
estate development properties reflecting more favorable market
conditions compared to the prior period.
After-tax adjusted net operating income for the fourth quarter
of 2021 was $73.4 million or $2.73 per diluted share, compared to
$103.6 million or $3.86 per diluted share for the same period in
2020. The decrease reflects a previously reported non-recurring
$23.0 million change in estimate that increased annuity segment
earnings in the fourth quarter of 2020 and an operating loss in our
life insurance business from increased death claims in 2021
partially as a result of the ongoing COVID-19 pandemic.
Net income for the twelve months ended December 31, 2021 was
$699.3 million or $26.01 per diluted share compared to net income
of $467.5 million or $17.39 per diluted share for the same period
in 2020. The $231.8 million increase in net income was primarily
due to a $195.0 million increase in net realized investment
earnings and a $50.6 million increase in net gains on equity
securities, partially offset by $16.9 million in expenses related
to the pending merger with Brookfield Asset Management Reinsurance
Partners Ltd.
Net gains on equity securities for the twelve months ended
December 31, 2021 were $332.1 million or $12.35 per diluted share,
compared to net gains on equity securities of $281.5 million or
$10.47 per diluted share for the same period in 2020 due to more
favorable market conditions in 2021.
Net realized investment earnings for the twelve months ended
December 31, 2021 were $156.7 million or $5.83 per diluted share,
compared to net realized investment losses of $38.3 million or
$1.42 per diluted share for the same period in 2020. The increase
in net realized investment earnings in 2021 is primarily driven by
a recovery in estimated credit loss in 2021 related to our
commercial mortgage loans reflecting improved market conditions and
increased realized gains from the sale of real estate development
properties.
After-tax adjusted net operating income for the twelve months
ended December 31, 2021 was $227.4 million or $8.46 per diluted
share, compared to $224.3 million or $8.34 per diluted share for
the same period in 2020. The increase in adjusted net operating
income reflects an increase in earnings from our corporate and
other segment driven by higher investment income and improved
earnings in our annuity segment, partially offset by lower earnings
in our life segment due to adverse mortality experience.
For the twelve months ended December 31, 2021, total life
insurance in force increased by $8.7 billion to $136.9 billion and
book value per share increased $19.96 to $260.16.
Update Regarding Pending Merger with Brookfield Asset
Management Reinsurance Partners Ltd.
As previously announced, the Company entered into a merger
agreement with Brookfield Asset Management Reinsurance Partners
Ltd. ("Brookfield Reinsurance") and its wholly-owned merger
subsidiary on August 6, 2021. 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. Those regulators are reviewing the filings and the
insurance regulatory process has been moving forward consistent
with our prior disclosures, and we continue to expect to complete
the Merger before the end of the first half of 2022. However,
because state insurance regulatory approval remains outstanding,
the Company cannot provide assurance the Merger will be completed
on the terms or timeline currently contemplated, or at all.
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 $USD millions, except per
share data) |
|
|
|
|
|
|
|
|
|
|
|
Quarters Ended December, |
|
Years Ended December 31, |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
Net income (GAAP
basis) |
|
$ |
250.1 |
|
|
$ |
306.4 |
|
|
$ |
699.3 |
|
|
$ |
467.5 |
|
Adjustments to eliminate the
impact of: |
|
|
|
|
|
|
|
|
Net gains on equity
securities(1) |
|
$ |
120.7 |
|
|
$ |
188.0 |
|
|
$ |
332.1 |
|
|
$ |
281.5 |
|
|
|
|
|
|
|
|
|
|
Adjustments to eliminate the
impact of: |
|
|
|
|
|
|
|
|
Net realized investment gains |
|
$ |
11.5 |
|
|
$ |
8.1 |
|
|
$ |
51.0 |
|
|
$ |
28.2 |
|
(Increase) decrease in credit loss |
|
|
2.6 |
|
|
|
(0.6 |
) |
|
|
20.1 |
|
|
|
(82.8 |
) |
Equity in earnings of unconsolidated real estate joint ventures and
other investments |
|
|
45.2 |
|
|
|
7.6 |
|
|
|
86.3 |
|
|
|
17.3 |
|
Net income attributable to noncontrolling interest |
|
|
0.3 |
|
|
|
0.3 |
|
|
|
0.7 |
|
|
|
1.0 |
|
Net realized investment earnings (losses) |
|
$ |
59.0 |
|
|
$ |
14.8 |
|
|
$ |
156.7 |
|
|
$ |
(38.3 |
) |
|
|
|
|
|
|
|
|
|
Adjustments to eliminate the
impact of: |
|
|
|
|
|
|
|
|
Nonrecurring Merger expenses |
|
$ |
(3.0 |
) |
|
$ |
— |
|
|
$ |
(16.9 |
) |
|
$ |
— |
|
Net nonrecurring expenses |
|
$ |
(3.0 |
) |
|
$ |
— |
|
|
$ |
(16.9 |
) |
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
Adjusted net operating
income(2) (non-GAAP
basis)* |
|
$ |
73.4 |
|
|
$ |
103.6 |
|
|
$ |
227.4 |
|
|
$ |
224.3 |
|
|
|
|
|
|
|
|
|
|
Per diluted share |
|
|
|
|
|
|
|
|
Net income (GAAP basis) |
|
$ |
9.30 |
|
|
$ |
11.40 |
|
|
$ |
26.01 |
|
|
$ |
17.39 |
|
Net gains on equity securities |
|
|
4.49 |
|
|
|
6.99 |
|
|
|
12.35 |
|
|
|
10.47 |
|
Net realized investment earnings (losses) |
|
|
2.19 |
|
|
|
0.55 |
|
|
|
5.83 |
|
|
|
(1.42 |
) |
Net nonrecurring expenses |
|
|
(0.11 |
) |
|
|
— |
|
|
|
(0.63 |
) |
|
|
— |
|
Adjusted net operating
income(2) (non-GAAP
basis)* |
|
$ |
2.73 |
|
|
$ |
3.86 |
|
|
$ |
8.46 |
|
|
$ |
8.34 |
|
|
|
|
|
|
|
|
|
|
Weighted average number of diluted shares upon which computations
are based |
|
|
26,884,635 |
|
|
|
26,884,903 |
|
|
|
26,884,679 |
|
|
|
26,887,125 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of |
|
|
|
|
|
|
December 31, 2021 |
|
December 31, 2020 |
|
|
|
|
Book value per diluted
share |
|
$ |
260.16 |
|
|
$ |
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 2 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) During the fourth quarter of 2021, we sold the majority of
our equity securities portfolio.
(2) Adjusted net operating income excludes the after-tax impact
of net gains (losses) on equity securities, net realized investment
earnings (losses) and nonrecurring expenses. Net realized
investment earnings (losses) are comprised of realized investment
gains on assets (excluding equity securities), (increase) decrease
in credit loss, and earnings from unconsolidated real estate joint
ventures and other investments and non-controlling interests that
do not back insurance products. Nonrecurring expenses are related
to the pending merger with Brookfield Reinsurance.
American National Group, Inc. is a family of companies that has,
on a consolidated GAAP basis, $31.3 billion in assets, $24.3
billion in liabilities and $7.0 billion in stockholders’ equity as
of December 31, 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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