American National Group Inc
For the period ended Jun 30, 2024. Filed Aug 14, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 14, 2024
ANG-PD$21.88+0.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-10.
0001039828-24-000071
Item 2. : Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-14.
0001039828-24-000074
Item 2. : Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 161 previous paragraphs and 187 current paragraphs.
22 unchanged; 7 reworded; 158 added; 131 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 24 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (158)
Current report
Overview of our Business
Current report
On May 2, 2024, the Company’s predecessor, AEL, merged with and into Arches Merger Sub Inc., an indirect, wholly-owned subsidiary of Brookfield Reinsurance with AEL surviving and becoming an indirect, wholly-owned subsidiary of Brookfield Reinsurance. On May 7, 2024, American National merged with and into AEL, with AEL surviving as an indirect, wholly-owned subsidiary of Brookfield Reinsurance. Subsequently, AEL discontinued its existence as an Iowa corporation and continued its existence as a corporation incorporated in the State of Delaware through the Reincorporation. In connection with the Reincorporation, AEL changed its name to American National Group Inc. Throughout this report, unless otherwise specified or the context otherwise requires, all references to “ANGI", the "Company", "we", "our" and similar references are to American National Group Inc. and its consolidated subsidiaries.
Current report
Through our insurance subsidiaries, our Company offers a broad range of insurance products and services, including annuities, life insurance, and personal and commercial property and casualty insurance. Our business is presently conducted through our subsidiaries under four operating segments: Life, Annuity, Property and Casualty and Corporate and Other.
Current report
Key Financial Data
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The following table presents key financial data of the Company:
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Regulation
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Our subsidiaries are subject to extensive regulation, primarily at the state level. Such regulation varies by state but generally has its source in statutes that establish requirements for the business of insurance and that grant broad regulatory authority to a state agency. Insurance regulation governs a wide variety of matters including:
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•insurance company licensing
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•agent and adjuster licensing
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•policy benefits
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•price setting
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•accounting practices
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•product suitability
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•the payment of dividends
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•the nature and amount of investments
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•underwriting practices
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•reserve requirements
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•sales and advertising practices
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•privacy practices
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•information systems security
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•policy forms
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•reinsurance reserve requirements
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•risk and solvency assessments
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•mergers and acquisitions
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•corporate governance practices
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•capital adequacy
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•transactions with affiliates
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•participation in shared markets and guaranty associations
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•claims practices
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•the remittance of unclaimed property
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•enterprise risk management requirements
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The models for state laws and regulations often emanate from the National Association of Insurance Commissioners (“NAIC”). While it is not mandatory for insurers to comply with an NAIC model law, nor for states to adopt a model law, state and federal legislators and regulators generally look to the model law for guidance in proposing new legislation and regulation.
Current report
State insurance departments monitor compliance with regulations through periodic reporting procedures and examinations. At any given time, financial, market conduct or other examinations of our U.S. subsidiaries may be occurring.
Current report
The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) expanded the U.S. federal government presence in insurance oversight. Dodd-Frank also established the Federal Insurance Office within the U.S. Department of Treasury, which is authorized to, among other things, gather data and information to monitor aspects of the insurance industry, identify certain issues in the regulation of insurers, and preempt state insurance measures under certain circumstances. Provisions of Dodd-Frank are or may become applicable to us, our competitors, or certain entities with which we do business. For example, it is possible that regulations issued by the Consumer Financial Protection Bureau may extend, or be interpreted to extend, to the sale of certain insurance products by covered financial institutions, which could adversely affect sales of such products. The Federal Insurance Office, as a result of various studies it conducts, may also recommend changes in laws or regulations that affect our business. There may be further federal involvement in the business of insurance in the future, which may add significant legal complexity and associated costs to our business.
Current report
Regulatory matters having the most significant effects on our insurance operations and related financial reporting are described further below.
Current report
Holding Company Regulation
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We are an insurance holding company system under the insurance laws of the states where we do business. Our insurance companies are organized in multiple U.S. jurisdictions. Insurance holding company system laws and regulations in such states generally require periodic reporting to state insurance regulators of various business, enterprise risk management, corporate governance, and financial matters, as well as advance notice to, and in some cases approval by, such regulators prior to certain transactions between insurers and their affiliates. These laws also generally require regulatory approval prior to the acquisition of a controlling interest in an insurance company. These requirements may deter or delay certain transactions considered desirable by management or our stockholders.
Current report
Limitations on Dividends by Subsidiaries
Current report
The ability of our U.S. subsidiaries to pay dividends is generally limited by state law and is also impacted by federal income tax considerations. This includes restrictions on certain of our subsidiaries’ ability to distribute cash to us which may limit the movement of capital to us from certain subsidiaries.
Current report
Rate Regulation
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Removed paragraphs (131)
Previous report
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Previous report
•our recently completed Merger with Brookfield Reinsurance and the Post-Effective Merger with ANAT.
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•recent changes to our jurisdiction of incorporation from Iowa to Delaware.
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•strained shareholder relationships or disadvantageous takeover proposals.
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Our Business and Profitability
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We specialize in the sale of individual annuities (primarily fixed and fixed index deferred annuities) through independent marketing organizations ("IMOs"), agents, banks and broker-dealers. Fixed and fixed index annuities are an important product for Americans looking to fund their retirement needs as annuities have the ability to provide retirees a paycheck for life. We have one business segment which represents our core business comprised of the sale of fixed index and fixed rate annuities.
Previous report
Under U.S. GAAP, premium collections for deferred annuities are reported as deposit liabilities instead of as revenues. Similarly, cash payments to policyholders are reported as decreases in the liabilities for policyholder account balances and not as expenses. Sources of revenues for products accounted for as deposit liabilities are net investment income, surrender charges assessed against policy withdrawals and fees deducted from policyholder account balances for lifetime income benefit riders, net realized gains (losses) on investments and changes in fair value of derivatives. Components of expenses for products accounted for as deposit liabilities are interest sensitive and index product benefits (primarily interest credited to account balances), changes in fair value of embedded derivatives, changes in market risk benefits, amortization of deferred sales inducements and deferred policy acquisition costs, other operating costs and expenses and income taxes.
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Our profitability depends in large part upon:
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•the amount of assets under our management,
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•investment spreads we earn on our policyholder account balances,
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•our ability to manage our investment portfolio to maximize returns and minimize risks such as interest rate changes and defaults or credit losses,
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•our ability to appropriately price for lifetime income benefit riders offered on certain of our fixed rate and fixed index annuity policies,
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•our ability to manage interest rates credited to policyholders and costs of the options purchased to fund the annual index credits on our fixed index annuities,
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•our ability to manage the costs of acquiring new business (principally commissions paid to agents and distribution partners and bonuses credited to policyholders),
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•our ability to maintain and continue to generate fee based revenue,
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•our ability to manage our operating expenses, and
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•income taxes.
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While the business looks considerably different today than it did when it was started back in 1995, the themes have been consistent. We offer our customers simple fixed and fixed index annuity products, which we primarily sell through independent insurance agents in the IMO distribution channel. We have consistently been a leader in the IMO market. Additionally, we have continued to expand our sales in the bank and broker dealer channel. We will benefit from two secular trends: the demographic trends of people retiring or getting close to retirement who want to accumulate wealth through index based investing while protecting their principal and the need of retirees and pre-retirees to have a way to deaccumulate their wealth into income for life. A traditional brokerage based equity bond portfolio can’t really meet these unique needs, but a fixed index annuity can as part of a holistic financial plan. Finally, there is a scarcity value to what we do: that is originating billions of dollars of annuity funding each year at scale from the IMO channel and bank and broker dealer channel.
Previous report
We began to implement an updated strategy, referred to as AEL 2.0, after having undertaken a thorough review of our business in 2020. AEL 2.0 is designed to capitalize on the scarcity value of our annuity origination and couple it with an “open architecture” investment management platform for investing the annuity assets. Our approach to investment management is to partner with best in class investment management firms across a wide array of asset classes and capture part of the asset management value chain economics for our shareholders. This enables us to operate at the intersection of both asset management and insurance. Our strategy focuses on four key pillars: Go-to-Market, Investment Management, Capital Structure and Foundational Capabilities.
Previous report
On July 5, 2023, Brookfield Reinsurance and American Equity Investment Life Holding Company announced that they had entered into a definitive agreement whereby Brookfield Reinsurance will acquire all of the outstanding shares of common stock of American Equity it does not already own in a cash and stock transaction that values American Equity at approximately $4.3 billion. On May 2, 2024, the Company completed the transactions contemplated by the definitive agreement. See Note 12 - Subsequent Events for more information.
Previous report
On May 7, 2024, the Company merged with American National Group, LLC. The Company discontinued its existence as an Iowa Corporation and continued its existence as a corporation incorporated in the State of Delaware. In connection with the Reincorporation, the Company changed its name from American Equity Investment Life Holding Company to American National Group Inc. See Note 12 - Subsequent Events for more information. This is considered a common control transaction. As a result, financial results of the Company will be combined with American National Group, LLC as of the date they came under common control which is the effective date of the acquisition by Brookfield Reinsurance.
Previous report
On May 7, 2024, S&P upgraded its financial strength rating on American Equity Investment Life Insurance Company from "A-" to "A", its long-term issuer credit rating on American Equity Investment Life Holding Company from "BBB-" to "BBB", and its preferred stock ratings from "BB" to "BB+".
Previous report
On July 6, 2023, Fitch affirmed its "A-" financial strength rating on American Equity Investment Life Insurance Company and its life insurance subsidiaries and its "BBB" issuer default rating on American Equity Investment Life Holding Company. On May 7, 2024, Fitch upgraded and its senior unsecured debt ratings from "BBB-" to "BBB" and its preferred stock ratings from "BB" to BB+".
Previous report
On September 9, 2022, A.M. Best affirmed its "A-" financial strength rating on American Equity Investment Life Insurance Company and its subsidiaries, American Equity Investment Life Insurance Company of New York and Eagle Life Insurance Company, its "bbb-" long-term issuer credit rating of American Equity Investment Life Holding Company, its "bbb-" senior unsecured debt ratings, and its "bb" perpetual, non-cumulative preferred stock ratings. The outlook for these credit ratings of "stable" was also affirmed by A.M. Best on September 9, 2022. Following the announcement of the merger agreement with Brookfield Reinsurance, A.M. Best placed these credit ratings on watch, noting the ratings will likely remain under review pending completion of the merger.
Previous report
Earnings from products accounted for as deposit liabilities are primarily generated from the excess of net investment income earned over the interest credited or the cost of providing index credits to the policyholder, or the "investment spread." Our investment spread is summarized as follows:
Previous report
The cost of money for fixed index annuities and average crediting rates for fixed rate annuities are computed based upon policyholder account balances and do not include the impact of amortization of deferred sales inducements. With respect to our fixed index annuities, the cost of money includes the average crediting rate on amounts allocated to the fixed rate strategy and expenses we incur to fund the annual index credits. Proceeds received upon expiration of call options purchased to fund annual index credits are recorded as part of the change in fair value of derivatives and are largely offset by an expense for interest credited to annuity policyholder account balances. See Critical Accounting Policies and Estimates - Policy Liabilities for Fixed Index Annuities and Financial Condition - Derivative Instruments included in Management's Discussion and Analysis in our Annual Report on Form 10-K for the year ended December 31, 2023.
Previous report
Average yield on invested assets decreased primarily as a result of lower returns on our private assets and partnerships and an increase in investment expenses partially offset by an increase in new money yields. See Net investment income. The aggregate cost of money decreased primarily due to an increase in the benefit from over hedging as compared to the prior period. We have the flexibility to reduce our crediting rates if necessary and could decrease our cost of money by approximately 124 basis points if we reduce current rates to guaranteed minimums.
Previous report
Annuity deposits by product type collected during the three months ended March 31, 2024 and 2023, were as follows:
Previous report
Annuity deposits before and after coinsurance ceded increased 71% and 145%, respectively, during the first quarter of 2024 compared to the same period in 2023. The increase in sales for the three months ended March 31, 2024 compared to the same period in 2023 was primarily driven by increases in fixed index annuity sales as a result of our income product sales, which benefited from a higher demand for guaranteed income solutions as a result of high volatility in the markets. In addition, annuity deposits benefited from an increase in multi-year fixed rate annuities (MYGA) which reflects pricing support from the 2023 amendment to our reinsurance agreement with AeBe ISA LTD ("AeBe") to cede new MYGA flow business.
Previous report
The decrease in coinsurance ceded annuity deposits is primarily due to the agreement with North End Re to reduce the quota share of all newly issued flow policies to zero effective October 1, 2023.
Previous report
Net income (loss) available to common stockholders increased to $332.1 million in the first quarter of 2024 compared to $(166.9) million for the same period in 2023. The increase in net income (loss) available to common stockholders for the three months ended March 31, 2024 was driven primarily by a decrease in the change in fair value of embedded derivatives, a gain from the change in market risk benefits, an increase in the change in fair value of derivatives, an increase in annuity product charges and an increase in other revenue partially offset by a decrease in net investment income, an increase in net realized losses on investments, an increase in interest sensitive and index product benefits, an increase in amortization of deferred acquisition costs and deferred sales inducements, and an increase in other operating costs and expenses.
Previous report
Net income, in general, is impacted by the volume of business in force and the investment spread earned on this business. The average amount of annuity account balances outstanding (net of annuity liabilities ceded under coinsurance agreements) increased 0.3% to $47.4 billion for the first quarter of 2024 compared to$47.3 billion for the same period in 2023. Our investment spread measured in dollars was $320.9 million for the first quarter of 2024 compared to $340.5 million for the same period in 2023. Investment income for the first quarter of 2024 was negatively impacted by lower returns on private assets and partnerships and an increase in investment expenses. (see Net investment income).
Previous report
Net income was also impacted by the change in fair value of derivatives and embedded derivatives, which fluctuates from period to period based upon changes in fair values of call options purchased to fund the annual index credits for fixed index annuities and changes in interest rates used to discount the embedded derivative liability. Net income (loss) for the three months ended March 31, 2024 was positively impacted by an decrease in the change in fair value of embedded derivatives and positively impacted by an increase in the change in fair value of derivatives. See Change in fair value of derivativesand Change in fair value of embedded derivatives.
Previous report
In addition, net income (loss) is impacted by the change in the market risk benefits (gains) losses which fluctuates from period to period primarily based on changes in interest rates, equity market movement, equity index volatility and policyholder behavior. Net income for the three months ended March 31, 2024 was positively impacted by decreases in the expense associated with the change in the market risk benefits. See Market risk benefit (gains) losses.
Previous report
Non-GAAP operating income available to common stockholders, a non-GAAP financial measure, increased to $143.6 million in the first quarter of 2024 compared to $124.3 million for the same period in 2023.
Previous report
In addition to net income (loss) available to common stockholders, we have consistently utilized non-GAAP operating income available to common stockholders, a non-GAAP financial measure commonly used in the life insurance industry, as an economic measure to evaluate our financial performance. Non-GAAP operating income available to common stockholders equals net income (loss) available to common stockholders adjusted to eliminate the impact of items that fluctuate from quarter to quarter in a manner unrelated to core operations, and we believe measures excluding their impact are useful in analyzing operating trends. The most significant adjustments to arrive at non-GAAP operating income available to common stockholders eliminate the impact of fair value accounting for our fixed index annuity business and are not economic in nature but rather impact the timing of reported results. We believe the combined presentation and evaluation of non-GAAP operating income available to common stockholders together with net income (loss) available to common stockholders provides information that may enhance an investor's understanding of our underlying results and profitability.
Previous report
Non-GAAP operating income available to common stockholders is not a substitute for net income (loss) available to common stockholders determined in accordance with GAAP. The adjustments made to derive non-GAAP operating income available to common stockholders are important to understand our overall results from operations and, if evaluated without proper context, non-GAAP operating income available to common stockholders possesses material limitations. As an example, we could produce a low level of net income available to common stockholders or a net loss available to common stockholders in a given period, despite strong operating performance, if in that period we experience significant net realized losses from our investment portfolio. We could also produce a high level of net income available to common stockholders in a given period, despite poor operating performance, if in that period we generate significant net realized gains from our investment portfolio. As an example of another limitation of non-GAAP operating income available to common stockholders, it does not include the decrease in cash flows expected to be collected as a result of credit losses on financial assets. Therefore, our management reviews net realized investment gains (losses) and analyses of our net investment income, including impacts related to credit losses, in connection with their review of our investment portfolio. In addition, our management examines net income (loss) available to common stockholders as part of their review of our overall financial results.
Previous report
The adjustments made to net income (loss) available to common stockholders to arrive at non-GAAP operating income available to common stockholders for the three months ended March 31, 2024 and 2023 are set forth in the table that follows:
Previous report
The increase in non-GAAP operating income available to common stockholders for the three months ended March 31, 2024 compared to the same period in 2023 was primarily due to the favorable impact of increases in annuity product charges and increases in other revenue partially offset by decreases in net investment income, increases in the cost of money and increases in other operating expenses.
Previous report
Annuity product charges(surrender charges assessed against policy withdrawals and fees deducted from policyholder account balances for lifetime income benefit riders) increased 53% to $95.6 million in the first quarter of 2024 compared to $62.6 million for the same period in 2023. The components of annuity product charges are set forth in the table that follows:
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Previous wording
Management's discussion and analysis reviews our unaudited consolidated financial position at March 31, 2024, and the unaudited consolidated results of operations for the three month periods ended March 31, 2024 and 2023, and where appropriate, factors that may affect future financial performance. This analysis should be read in conjunction with our unaudited consolidated financial statements and notes thereto appearing elsewhere in this Form 10-Q, and the audited consolidated financial statements, notes thereto and selected consolidated financial data appearing in our Annual Report on Form 10-K for the year ended December 31, 2023. Interim operating results for the three months ended March 31, 2024 are not necessarily indicative of the results expected for the entire year. Preparation of financial statements requires use of management estimates and assumptions.
Current wording
Management's discussion and analysis reviews our unaudited consolidated financial position at June 30, 2024 compared with December 31, 2023, and our unaudited consolidated results of operations for the three and six months ended June 30, 2024 and 2023, and where appropriate, factors that may affect future financial performance. This analysis should be read in conjunction with our unaudited consolidated financial statements, notes thereto and selected consolidated financial data appearing elsewhere in this Form 10-Q. Interim operating results for the three and six months ended June 30, 2024 are not necessarily indicative of the results expected for the entire year. Preparation of financial statements requires use of management estimates and assumptions.
Previous wording
All statements, trend analysis and other information contained in this report and elsewhere (such as in filings by us with the SEC, press releases, presentations by us or management or oral statements) may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended. Forward-looking statements give expectations or forecasts of future events and do not relate strictly to historical or current facts. They may relate to markets for our products, trends in our operations or financial results, strategic alternatives, future operations, strategies, plans, partnerships, investments, share buybacks and other financial developments. They use words and terms such as anticipate, assume, believe, can, continue, could, enable, estimate, expect, foreseeable, goal, improve, intend, likely, may, model, objective, opportunity, outlook, plan, potential, project, remain, risk seek, should, strategy, target, will, would, and other words and terms of similar meaning or that are otherwise tied to future periods or future performance, in each case in all forms of speech and derivative forms, or similar words, as well as any projections of future events or results. Forward-looking statements, by their nature, are subject to a variety of assumptions, risks, and uncertainties that could cause actual results to differ materially from the results projected. Many of these risks and uncertainties cannot be controlled by the Company. Factors that may cause our actual decisions or results to differ materially from those contemplated by these forward-looking statements include, among other things:
Current wording
All statements, trend analysis and other information contained in this report and elsewhere (such as in filings by us with the SEC, press releases, presentations by us or management or oral statements) may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, the Securities Act or the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements give expectations or forecasts of future events and do not relate strictly to historical or current facts. They may relate to markets for our products, trends in our operations or financial results, strategic alternatives, future operations, strategies, plans, partnerships, investments, share buybacks and other financial developments. They use words and terms such as anticipate, assume, believe, can, continue, could, enable, estimate, expect, foreseeable, goal, improve, intend, likely, may, model, objective, opportunity, outlook, plan, potential, project, remain, risk seek, should, strategy, target, will, would, and other words and terms of similar meaning or that are otherwise tied to future periods or future performance, in each case in all forms of speech and derivative forms, or similar words, as well as any projections of future events or results. Forward-looking statements, by their nature, are subject to a variety of assumptions, risks, and uncertainties that could cause actual results to differ materially from the results projected. Many of these risks and uncertainties cannot be controlled by the Company. Factors that may cause our actual decisions or results to differ materially from those contemplated by these forward-looking statements include, among other things:
Previous wording
• investment losses or failures to grow as quickly as expected due to market, credit, liquidity, concentration, default, and other risks.
Current wording
•investments losses or failures to grow as quickly as expected due to market, credit, liquidity, concentration, default, and other risks.
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• U.S. and global capital market and economic deterioration due to major public health issues, including the COVID-19 pandemic, political or social developments, or otherwise.
Current wording
•U.S. and global capital market and economic deterioration due to major public health issues, including political or social developments, or otherwise.
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• effects of climate changes, or responses to it.
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•effects of climate change, or responses to it.
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For a detailed discussion of these and other factors that might affect our performance, see Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023. Forward-looking statements speak only as of the date the statement was made and the Company undertakes no obligation to update such forward-looking statements. There can be no assurance that other factors not currently disclosed or anticipated by the Company will not materially adversely affect our results of operations or plans. Investors are cautioned not to place undue reliance on any forward-looking statements made by us or on our behalf.
Current wording
For a detailed discussion of these and other factors that might affect our performance, see Item 1A of this report.
Previous wording
See Note 1 - Significant Accounting Policies to our unaudited consolidated financial statements in this Form 10-Q, which is incorporated by reference in this Item 2.
Current wording
See Note 2 - Summary of Significant Accounting Policies to our unaudited consolidated financial statements in this Form 10-Q, which is incorporated by reference in this Item 2.
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Previous report — wording carried elsewhere
Results of Operations for the Three Months Ended March 31, 2024 and 2023