A.M. Best Upgrades Credit Ratings of Certain American National Group Members; Affirms Credit Ratings of American National Insurance Company and Other Subsidiaries6 Views
A.M. Best has upgraded the Financial Strength Rating (FSR) to A (Excellent) from A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “a+” from “a-” of American National Life Insurance Company of Texas. A.M. Best also has upgraded the Long-Term ICRs to “a+” from “a” and affirmed the FSR of A (Excellent) of American National Life Insurance Company of New York (Glenmont, NY) and Standard Life and Accident Insurance Company. In addition, A.M. Best has affirmed the FSR of A (Excellent) and the Long-Term ICR of “a+” of American National Insurance Company (ANICO) [NASDAQ: ANAT]. These companies are collectively referred to as American National Group (ANG). A.M. Best also has affirmed the FSR of A (Excellent) and the Long-Term ICR of “a” of Garden State Life Insurance Company (League City, TX). The outlook of these Credit Ratings (ratings) is stable. All the above companies are headquartered in Galveston, TX unless otherwise noted.
The ratings reflect ANG’s balance sheet strength, which A.M. Best categorizes as strongest, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management (ERM).
The ratings also reflect ANG’s high absolute and risk-adjusted capitalization, which is the result of organic earnings growth, overall good credit quality of invested assets, low use of reinsurance and modest financial leverage. ANG markets life, annuity, disability and accident and health products through multiple distribution channels, each tailored to a particular target market. In addition, ANG’s ERM program is based on the evaluation of risks and its overall financial impact of the group, with risk identification and reporting embedded in its corporate structure.
However, ANG’s statutory earnings have been positive but lower over the past several years primarily due to new business strain and lower interest rates, which has impacted individual annuity spreads. Annuity reserves account for nearly 70 percent of its general account reserves, which may lead to spread compression risk if interest rates remain low and disintermediation risk if interest rates rise. Partially mitigating this factor is the group’s sound liquidity management and strong liquidity metrics. Lastly, the group has increased allocations to more volatile and/or less liquid asset types in recent years to gain yield, such as mortgages and other invested assets.
On Jan. 1, 2018, Farm Family Life Insurance Company merged with American National Life Insurance Company of New York, which was then a wholly owned subsidiary of ANICO, with the surviving entity being rebranded as American National Life Insurance Company of New York.
In addition, A.M. Best has affirmed the FSR of A (Excellent) and the Long-Term ICRs of “a” of American National Property and Casualty Company (Springfield, MO), its subsidiaries, American National General Insurance Company (Springfield, MO), ANPAC Louisiana Insurance Company (Mandeville, LA), American National Lloyds Insurance Company (Galveston, TX), Pacific Property and Casualty Company (San Jose, CA) and its affiliate, American National County Mutual Insurance Company (Galveston, TX). These entities are all considered part of American National Property and Casualty Group (ANPAC Group) due to their strategic importance. At the same time, A.M. Best has affirmed the FSR of A (Excellent) and the Long-Term ICRs of “a” of Farm Family Casualty Insurance Company and United Farm Family Insurance Company (Farm Family) (both domiciled in Glenmont, NY). The outlook of these ratings is stable. These companies are property/casualty subsidiaries of their ultimate parent, ANICO.
The ratings reflect ANPAC Group’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its marginal operating performance, neutral business profile and appropriate ERM.
The ratings reflect Farm Family’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate ERM.
Furthermore, the ratings reflect these groups’ generally favorable operating earnings and extensive market knowledge as a national writer. The ratings also reflect the continued support provided by the ultimate parent, ANICO, and the synergies generated amongst these groups and their parent. Partially offsetting these rating factors are the competitive market conditions and the potential impact on capitalization from significant catastrophe losses, which is mitigated somewhat by comprehensive reinsurance protection.
This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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Frank Walko CPA
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Michael T. Venezia
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