A.M. Best Upgrades Credit Ratings of Certain American National Group Members; Affirms Credit Ratings of American National Insurance Company and Other Subsidiaries

OLDWICK, N.J.–(BUSINESS WIRE)–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
.

A.M. Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit
www.ambest.com
for more information
.

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.

Contacts

A.M. Best
Frank Walko CPA
Financial
Analyst—L/H

+1 908 439 2200, ext. 5072
frank.walko@ambest.com
or
Michael
T. Venezia

Senior Financial Analyst—P/C
+1 908
439 2200, ext. 5034

michael.venezia@ambest.com
or
Christopher
Sharkey

Manager, Public Relations
+1 908 439
2200, ext. 5159

christopher.sharkey@ambest.com
or
Jim
Peavy

Director, Public Relations
+1 908 439
2200, ext. 5644

james.peavy@ambest.com

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