American National Group Inc.

Previous wording

Management's discussion and analysis reviews our unaudited consolidated financial position at September 30, 2024 compared with December 31, 2023, and our unaudited consolidated results of operations for the three and nine months ended September 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 nine months ended September 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.

Current wording

Management's discussion and analysis reviews our unaudited consolidated financial position at March 31, 2025 compared with December 31, 2024, and our unaudited consolidated results of operations for the three months ended March 31, 2025 and 2024, 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 as well as the December 31, 2024 audited consolidated financial statements included in the Form 10-K, filed with the SEC on March 31, 2025. Interim operating results for the three months ended March 31, 2025 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

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: Annuity, Life, Property and Casualty and Corporate and Other.

Current wording

Through our insurance subsidiaries, our Company is focused on securing the financial futures of individuals and institutions through a range of insurance and retirement services. Our business is presently conducted through our subsidiaries under three operating segments: Annuities, Property and Casualty (“P&C”) and Life Insurance.

Previous wording

Results of Operations for the Three and Nine Months Ended September 30, 2024 and 2023

Current wording

Results of Operations for the Three Months Ended March 31, 2025 and 2024

Previous wording

The results of operations discussed below comprise results for American National for all periods presented and results for American Equity for the period May 2, 2024 to September 30, 2024.

Current wording

The results of operations discussed below comprise results for American National for the periods prior to the Post-Effective Merger and the combined results of American National and AEL for periods subsequent to the Post-Effective Merger.

Previous wording

(1)Premiums differ from gross annuity sales in PRT, since premiums are recognized as revenue when due while they are included in sales upon deal close, which is confirmed by the counterparty.

Current wording

(2)Gross annuity sales differ from premiums in Pension Risk Transfer, since premiums are recognized as revenue when due while they are included in sales upon deal close, which is confirmed by the counterparty.

Previous wording

For the three months ended September 30, 2024, we reported total gross annuity sales of $4.1 billion, compared to gross annuity sales of $1.6 billion for the same period in 2023. The increase of $2.5 billion is primarily due to the addition of fixed index annuity deposits generated by American Equity subsequent to the completion of the acquisition as well as strong fixed rate annuity and PRT sales.

Current wording

For the three months ended March 31, 2025, we reported total gross annuity sales of $3.8 billion, compared to gross annuity sales of $1.5 billion in the prior year period. The increase of $2.3 billion is primarily due to the contribution of fixed index annuity deposits generated by American Equity subsequent to the completion of the acquisition coupled with our FABN issuance during the quarter.

Previous wording

The following table summarizes the financial results of our business for the three and nine months ended September 30, 2024 and 2023:

Current wording

The following table summarizes the financial results of our business for the three months ended March 31, 2025 and 2024:

Previous wording

The results of operations discussed below comprise results for American National for all periods presented and results for American Equity for the period May 2, 2024 to September 30, 2024.

Current wording

The results of operations discussed below comprise results for American National for the periods prior to the Post-Effective Merger and the combined results of American National and AEL for periods subsequent to the Post-Effective Merger.

Previous wording

For the nine months ended September 30, 2024, we reported net income of $80 million, compared to a net income of $163 million for the same period in 2023. The decrease is primarily due to an increase in the change in fair value of insurance-related derivatives and embedded derivatives and an increase in the change in fair value of market risk benefits as a result of equity market and interest rate movements. Additionally, there was an increase in policyholder benefits and claims incurred due to growth in the PRT business and an increase in interest sensitive contract benefits and operating expenses due to the inclusion of American Equity following the acquisition. This decrease was partially offset by an increase in net investment income and other policy revenue due to the inclusion of American Equity.

Current wording

For the three months ended March 31, 2025, we reported net loss of $(206) million, compared to a net income of $113 million for the same period in 2024. The decrease is primarily due to an increase in the expense associated with the change in fair value of insurance-related derivatives and embedded derivatives and an increase in the expense associated with the change in fair value of market risk benefits as a result of equity market and interest rate movements. Additionally, there was an decrease in net premiums due to lower PRT sales and an increase in interest sensitive contract benefits and operating expenses due to the inclusion of American Equity following the acquisition. This decrease was partially offset by an increase in net investment income and other policy revenue due to the inclusion of American Equity and a decrease in policyholder benefits and claims incurred due to improved results within the property casualty line of business and decreased sales activity.

Previous wording

Net premiums and other policy revenue were $1.1 billion for the three months ended September 30, 2024, compared to $890 million for the same period in 2023. The increase of $206 million was primarily due to an increase in other policy revenue which reflects surrender fee and rider fee income recognized on annuity policies added following the acquisition of American Equity as well as strong sales in the PRT business.

Current wording

Net premiums and other policy revenue of $1.0 billion decreased by $218 million for the three months ended March 31, 2025, compared to the same period in 2024 primarily due to lower PRT sales in the first quarter of 2025 compared to the same period of 202 partially offset by an increase in other policy revenue which reflects surrender fee and rider fee income recognized on annuity policies added following the acquisition of American Equity.

Previous wording

Net investment income increased by $1.4 billion for the nine months ended September 30, 2024, compared to the same period in 2023. The increase was primarily driven by the increase in assets under management following the acquisition of American Equity as well as the continued growth in the existing investment portfolio and the rotation into higher yielding investment strategies.

Current wording

Net investment income increased by $835 million for the three months ended March 31, 2025, compared to the same period in 2024. The increase was primarily driven by the increase in assets under management following the acquisition of American Equity as well as the continued growth in the existing investment portfolio and the rotation into higher yielding investment strategies.

Previous wording

The Company incurred investment related losses of $160 million for the nine months ended September 30, 2024, compared to $32 million for the same period in 2023. The increase in investment losses of $128 million was primarily due to realized losses on investments driven by the transfer of assets pursuant to the RGA reinsurance transaction which was effective July 1, 2024.

Current wording

The Company incurred investment related losses of $4 million for the three months ended March 31, 2025, compared to $34 million for the same period in 2024. The decrease in investment losses of $30 million was primarily due to unrealized losses on equity securities, short-term investments and other invested assets for the three months ended March 31, 2024.

Previous wording

Policyholder benefits and claims incurred increased by $556 million for the nine months ended September 30, 2024, compared to the same period in 2023. The increase is primarily due to an increase in growth of the PRT business which resulted in higher reserves. Additionally, there was an increase in catastrophe claims on the property and casualty business due to weather related incidents. These increases were partially offset by a decrease in claims incurred due to the impact of business ceded to RGA beginning in Q2 2024.

Current wording

Policyholder benefits and claims incurred decreased by $198 million for the three months ended March 31, 2025, compared to the same period in 2024. The decrease is primarily due to improved results within the property casualty line of business, decreased sales activity, and the impact of business ceded to RGA beginning in Q2 2024.

Previous wording

For the nine months ended September 30, 2024, interest sensitive contract benefits increased compared to the same period in 2023 by $730 million which was primarily driven by an increase in the in-force block of annuity business following the acquisition of American Equity.

Current wording

For the three months ended March 31, 2025, interest sensitive contract benefits increased compared to the same period in 2024 by $357 million which was primarily driven by an increase in the in-force block of annuity business following the acquisition of American Equity.

Previous wording

Amortization of deferred policy acquisition costs, deferred sales inducements and value of business acquired increased by $153 million compared to the same period in 2023, primarily due to an increase in the amortization of VOBA due to the increase in the VOBA asset following the acquisition of American Equity as well as the continued growth of the annuity business which increases the deferred acquisition cost asset.

Current wording

Amortization of deferred policy acquisition costs, deferred sales inducements and value of business acquired increased by $157 million compared to the same period in 2024, primarily due to an increase in the amortization of VOBA due to the increase in the VOBA asset following the acquisition of American Equity as well as the continued growth of the annuity business which increases the deferred acquisition cost asset.

Previous wording

Change in fair value of insurance-related derivatives and embedded derivatives increased by $290 million for the three months ended September 30, 2024 compared to the same period of 2023. The increase was primarily due to the impact of interest rates and equity market performance on the fair value of the embedded derivatives and equity-indexed options and an update to the short term option budget assumption used in the calculation of the fair value of the embedded derivatives associated with fixed index annuity products.

Current wording

Change in fair value of insurance-related derivatives and embedded derivatives increased by $218 million for the three months ended March 31, 2025 compared to the same period of 2024. The increase was primarily due to the impact of interest rates and equity market performance on the fair value of the embedded derivatives and equity-indexed options.

Previous wording

The increase in the change in fair value of market risk benefit of $313 million for the nine months ended September 30, 2024 compared to the same period of 2023 was primarily due to the impact of interest rates and equity markets on the valuation of these liabilities as well as the net impact of updates to the option budget assumption and policyholder lapse assumption used in the calculation of the fair value of market risk benefits. Additionally, the market risk benefit liabilities increased as a result of the acquisition of American Equity leading to increases in the change in the fair value of these liabilities.

Current wording

The increase in the change in fair value of market risk benefit of $342 million for the three months ended March 31, 2025 compared to the same period of 2024 was primarily due to the impact of interest rates and equity markets on the valuation of these liabilities. Additionally, the market risk benefit liabilities increased as a result of the acquisition of American Equity leading to increases in the change in the fair value of these liabilities.

Previous wording

Operating expenses increased by $216 million for the nine months ended September 30, 2024 compared to the same period in 2023, primarily driven by transaction expenses incurred related to the acquisition of American Equity as well as an increase associated with five months of operating expenses from American Equity subsequent to the acquisition.

Current wording

Operating expenses increased by $172 million for the three months ended March 31, 2025 compared to the same period in 2024, primarily driven by the contribution of expenses from American Equity subsequent to the acquisition as well as additional costs incurred to support the continued growth of our business.

Previous wording

Interest expense on borrowings increased by $41 million for the nine months ended September 30, 2024 compared to the same period in 2023 primarily as a result of increased borrowings with the new term loan entered into in May 2024 as well as the acquisition of American Equity which included legacy senior notes and subordinated debt.

Current wording

Interest expense on borrowings increased by $22 million for the three months ended March 31, 2025 compared to the same period in 2024 primarily as a result of increased borrowings with the new term loan entered into in May 2024 as well as the acquisition of American Equity which included legacy senior notes and subordinated debt.

Previous wording

We measure operating performance primarily using Distributable Operating Earnings (“DOE”) which measures our ability to acquire net insurance assets at a positive margin, and invest these assets at a return that is greater than the cost of policyholder liabilities.

Current wording

We measure operating performance primarily using Distributable Operating Earnings (“DOE”) which is a Non-GAAP metric which measures our ability to acquire net insurance assets at a positive margin, and invest these assets at a return that is greater than the cost of policyholder liabilities. See “Performance Measures Used by Management” for the reconciliation of GAAP consolidated net income to DOE.

Previous wording

The following table presents DOE of each of our reporting segments for the three and nine months ended September 30, 2024 and 2023:

Current wording

The following table presents DOE of each of our reporting segments for the three months ended March 31, 2025 and 2024:

Previous wording

Annuity – DOE within our annuity business represents contribution from both our retail and institutional platforms. DOE increased by $247 million for the three months ended September 30, 2024 compared to the same period in 2023. The increase is primarily attributable to earnings contributed from AEL as well as increased investment income from our continued deployment into higher yielding investment strategies.

Current wording

Annuities – DOE increased by $302 million for the three months ended March 31, 2025 compared to the same period in 2024. The increase is primarily attributable to earnings contributed from AEL, coupled with new business wins and higher spread earnings.

Previous wording

Life – DOE decreased by $(22) million for the three months ended September 30, 2024 compared to the same period in 2023. The decrease is primarily driven by the impact of the RGA reinsurance treaty executed during the quarter.

Current wording

Life Insurance – DOE decreased by $25 million for the three months ended March 31, 2025 compared to the same period in 2024. The decrease was driven by higher policyholder benefits, lower investment income due to an increase in cash and cash equivalents held during the period, and the impact of the RGA reinsurance treaty executed during the third quarter of 2024.

Previous wording

Property and Casualty – DOE increased by $49 million for the nine months ended September 30, 2024 compared to the same period in 2023. The increase was driven by improvements in loss experience arising from underwriting actions implemented since the prior year period.

Current wording

Property and Casualty – DOE increased by $15 million for the three months ended March 31, 2025 compared to the same period in 2024. The increase was driven by improvements in loss experience arising from underwriting actions implemented since the prior year period.

Previous wording

Deferred policy acquisition costs (“DAC”), deferred sales inducements (“DSI”) and value of business acquired (“VOBA”) are capitalized costs directly related to writing new policyholder contracts and include the VOBA intangible assets. During the year, the balance increased by $7.4 billion primarily driven by the addition of $7.2 billion of VOBA related to the acquisition of American Equity. Additionally, deferrals associated with writing new business contributed to an increase of $1.1 billion of DAC and DSI assets, partially offset by $650 million of amortization of DAC, DSI and VOBA recorded during the year.

Current wording

Deferred policy acquisition costs (“DAC”), deferred sales inducements (“DSI”) and value of business acquired (“VOBA”) are capitalized costs directly related to writing new policyholder contracts and include the VOBA intangible assets. During the year, the balance increased by $152 million primarily driven by deferrals associated with writing new business during the quarter.

Previous wording

Reinsurance recoverables and deposit assets are estimated amounts due to the Company from reinsurers and include reinsurance receivables and recoverables from reinsurers and deposit assets associated with reinsurance agreements. The amount increased by $17.6 billion in the year primarily due to the acquisition of American Equity, which contributed $15.0 billion of reinsurance recoverables and deposit assets, and the RGA reinsurance transaction executed in Q3 2024, which contributed approximately $3.0 billion of reinsurance recoverables. These increases were slightly offset by a decrease in reinsurance recoverable due to an increase in benefits and surrenders ceded for existing American Equity reinsurance agreements.

Current wording

Reinsurance recoverables and deposit assets are estimated amounts due to the Company from reinsurers and include reinsurance receivables and recoverables from reinsurers and deposit assets associated with reinsurance agreements. The amount decreased by $112 million in the year due to a decrease in reinsurance recoverable due to an increase in benefits and surrenders ceded for existing American Equity reinsurance agreements as flow business is not being ceded to external reinsurers.

Previous wording

Other assets increased by $1.3 billion during the year to $1.9 billion. The balance includes current tax asset, market risk benefit asset, prepaid pension assets, as well as other miscellaneous receivables, and includes an increase of $670 million as a result of the acquisition of American Equity.

Current wording

Other assets increased by $113 million during the year to $2.9 billion. The balance includes current tax asset, market risk benefit asset, prepaid pension assets, as well as other miscellaneous receivables, and is attributable to an increase in the market risk benefit asset due movements within the equity market and interests.

Previous wording

Market risk benefits increased by $3.7 billion during 2024 primarily due to the acquisition of American Equity which contributed to an increase of $3.0 billion. Additionally, the market risk benefits increased subsequent to the acquisition due to the impact of changes in interest rates and equity markets and as a result of the net impact of updates to the option budget assumption and policyholder lapse assumption used in the calculation of the fair value of market risk benefits.

Current wording

Market risk benefits increased by $411 million during 2025 primarily due to the impact of changes in interest rates and equity markets on the valuation market risk benefits.

Previous wording

Goodwill increased $633 million during 2024 as a result of the acquisition of American Equity.

Current wording

Funds withheld for reinsurance liabilities decreased by $124 million during 2025 as a result of decrements on the existing ceded liabilities and the corresponding funds withheld payable as flow business is not being ceded to external reinsurers.

Previous wording

Other liabilities increased by $3.2 billion during 2024. The balance includes the reinsured market risk benefits liability, accrued interest on debt and other miscellaneous payables. The increase during 2024 is primarily due to the acquisition of American Equity which contributed an increase of $2.1 billion and the $1.5 billion deferred gain associated with the RGA reinsurance transaction executed in Q3 2024.

Current wording

Other liabilities increased by $25 million during 2025. The balance includes the reinsured market risk benefits liability, accrued interest on debt and other miscellaneous payables. The increase during 2025 is primarily due to the change in deferred and current tax liabilities.

Previous wording

Today, we have significant liquidity within our insurance portfolios, giving us flexibility to secure attractive investment opportunities. In addition to a portfolio of highly liquid financial assets, our operating companies have additional access to liquidity from sources such as the Federal Home Loan Bank (“FHLB”). As of September 30, 2024, the Company had no drawings and a total of $1.6 billion undrawn commitment available related to this program.

Current wording

Today, we have significant liquidity within our insurance portfolios, giving us flexibility to secure attractive investment opportunities. In addition to a portfolio of highly liquid financial assets, our operating companies have additional access to liquidity from sources such as the Federal Home Loan Bank (“FHLB”) and access to a sub-allocation under the Brookfield Wealth Solutions revolving credit facility. As of March 31, 2025, the Company had no drawings and a total of $1.1 billion undrawn commitment available related to this program, and access to $300 million of capacity under the revolving credit facility.

Previous wording

Liquidity within our insurance subsidiaries may be restricted from time to time due to regulatory constraints. As of September 30, 2024, the Company’s total liquidity was $42.3 billion, which included $42 million of unrestricted cash and cash equivalents.

Current wording

Liquidity within our insurance subsidiaries may be restricted from time to time due to regulatory constraints. As of March 31, 2025, the Company’s total liquidity was $41.2 billion, which included $342 million of unrestricted cash and cash equivalents held outside of the regulated insurance companies.

Previous wording

Comparison of the Nine Months Ended September 30, 2024 and 2023

Current wording

Comparison of the Three Months Ended March 31, 2025 and 2024

Previous wording

The following table presents a summary of our cash flows and ending cash balances for the nine months ended September 30, 2024 and 2023:

Current wording

The following table presents a summary of our cash flows and ending cash balances for the three months ended March 31, 2025 and 2024:

Previous wording

For the nine months ended September 30, 2024, we generated $2.1 billion of cash from operating activities compared to $676 million during 2023, primarily due to higher investment income from the growth in the investment portfolio, coupled with the addition of American Equity’s investments.

Current wording

For the three months ended March 31, 2025, we generated $671 million of cash from operating activities compared to $262 million during 2024, primarily due to higher investment income from the growth in the investment portfolio, coupled with the addition of American Equity’s investments.

Previous wording

For the nine months ended September 30, 2024, we continued to rotate our investment portfolio into higher yielding investment strategies and acquired $10.8 billion of cash and cash equivalents from the acquisition of American Equity, net of cash proceeds paid. This resulted in net inflow of $6.6 billion of cash from investing activities, compared to net deployment of $1.7 billion in the prior year.

Current wording

For the three months ended March 31, 2025, cash outflows arose as we deployed cash and cash equivalents held as of December 31, 2024 to short-term investments and continued to rotate our investment portfolio into higher yielding investment strategies. This resulted in net deployment of $5.7 billion of cash from investing activities, compared to net deployment of $1.5 billion in the prior year.

Previous wording

For the nine months ended September 30, 2024, we recorded a net cash inflow of $2.0 billion from our financing activities, compared to $1.9 billion recorded in 2023. The proceeds in the current year period were mainly as a result of $1.7 billion net payments received on policyholders’ account deposits, as well as debt raised through the acquisition of American Equity.

Current wording

For the three months ended March 31, 2025, we recorded a net cash inflow of $1.3 billion from our financing activities, compared to $328 million recorded in 2024. The proceeds in the current year period were mainly as a result of $1.2 billion net payments received on policyholders’ account deposits partially offset by withdrawals on such accounts.

Previous wording

As of September 30, 2024, subsidiaries of the Company had outstanding investment commitments of $3.3 billion. The funded commitments are primarily recognized as mortgage loans, private loans, investment funds, real estate and other invested assets. For additional information, see Note 28 - Financial Commitments and Contingencies of the financial statements.

Current wording

As of March 31, 2025, the Company and its subsidiaries, in aggregate, had total unfunded investment commitments of $4.3 billion. The funded commitments are primarily recognized as mortgage loans, private loans, investment funds, investment real estate and other invested assets. For additional information, see Note 27 - Financial Commitments and Contingencies of the financial statements.

Previous wording

The Company and its subsidiaries take an integrated approach to risk management that involves the Company’s risk appetite and capital requirements. The enterprise risk management framework includes a capital management policy that describes the key processes related to capital management, which is reviewed at least annually and approved by the Board of Directors. The operating capital levels are determined by the Company’s risk appetite and Own Risk and Solvency Assessment (“ORSA”). Furthermore, additional stress techniques are used to evaluate the Company’s capital adequacy under sustained adverse scenarios.

Current wording

The Company and its subsidiaries take an integrated approach to risk management that involves the Company’s risk appetite and capital requirements. The operating capital levels are determined by the Company’s risk appetite and Own Risk and Solvency Assessment (“ORSA”). Furthermore, additional stress techniques are used to evaluate the Company’s capital adequacy under sustained adverse scenarios.

Previous wording

To measure performance, we focus on net income and total assets, as well as certain non-GAAP measures, including DOE and Total Liquidity, which we believe are useful to investors to provide additional insights into assets within the business available for redeployment. Refer to the “Results of Operations”, “Financial Condition,” and “Liquidity and Capital Resources” sections of this MD&A for further discussion on our performance and Non-GAAP measures for the three and nine months ended September 30, 2024 and 2023.

Current wording

To measure performance, we focus on net income and total assets, as well as certain Non-GAAP measures, including DOE and Total Liquidity, which we believe are useful to investors to provide additional insights into assets within the business available for redeployment. Refer to the “Results of Operations”, “Financial Condition,” and “Liquidity and Capital Resources” sections of this MD&A for further discussion on our performance and Non-GAAP measures for the three months ended March 31, 2025 and 2024.