A.M. Best Affirms Ratings of American National Insurance Company and Its Subsidiaries
June 16, 2014 by Best's News Service
Oldwick – A.M. Best has affirmed the financial strength rating (FSR) of A (Excellent) and the issuer credit rating (ICR) of “a+” of American National Insurance Company (ANICO) [NASDAQ:ANAT]. Additionally, A.M. Best has upgraded the ICR to “a+” from “a” and affirmed the FSR of A (Excellent) of ANICO’s subsidiary, American National Life Insurance Company of New York (ANICONY) (Glenmont, NY). A.M. Best also has affirmed the FSR of A (Excellent) and the ICRs of “a” of ANICO’s other life insurance subsidiaries: American National Life Insurance Company of Texas, Garden State Life Insurance Company (League City, TX), Standard Life and Accident Insurance Company and Farm Family Life Insurance Company (Glenmont, NY). The outlook for all ratings is stable. The ratings of ANICO have been extended to ANICONY,based on its strategic role as the New York marketing arm of its ultimate parent. All the above companies are headquartered in Galveston, TX, unless otherwise specified.
The rating affirmations for ANICO are based on its more than adequate level of consolidated risk-adjusted capitalization, continued profitable GAAP and statutory earnings and diverse product offerings. The ratings also reflect growth in ANICO’s admitted and invested assets, driven by its fixed annuity-based asset expansion and more recently by growth in its life insurance business. ANICO benefits from revenue and income from diverse sources, which include its life/health and property/casualty affiliates, as well as from its non-insurance affiliates. A.M. Best also notes that the financial leverage at ANICO remains low relative to its consolidated equity level.
Partially offsetting these positive rating factors are ANICO’s high exposure to interest-sensitive liabilities, a decrease in overall net premiums written mainly due to planned decreases in annuity sales, variability in GAAP and statutory earnings in the past as well as the challenges of optimizing its returns on a sustained basis.
The ratings of the life insurance subsidiaries of ANICO acknowledge their strong risk-adjusted capitalization and continuing contribution to ANICO’s consolidated results. Partially offsetting these positive rating factors are the life subsidiaries’ somewhat fluctuating premiums and earnings trends, limited business profiles and the challenges to grow their business lines.
Key rating factors that could result in positive rating actions for the organization include the continued management of products including more creditworthy business, an improved credit profile of operating subsidiaries and/or maintenance or improvement in risk-adjusted capitalization. Key rating factors that could result in negative rating actions include a decrease in risk-adjusted capitalization, profitability below A.M. Best’s expectations and/or further concentration in interest-sensitive products.
In addition, A.M. Best has affirmed the FSRs of A (Excellent) and the ICRs of “a” of American National Property & Casualty Company (ANPAC) (Springfield, MO) and its subsidiary, American National General Insurance Company (Springfield, MO) and its affiliate, American National County Mutual Insurance Company (Galveston, TX) as well as its separately-rated subsidiaries, American National Lloyds Insurance Company (Galveston, TX) and Pacific Property & Casualty Company (San Jose, CA). At the same time, A.M. Best has affirmed the FSR of A- (Excellent) and the ICR of “a-” of ANPAC’s separately-rated subsidiary, ANPAC Louisiana Insurance Company (Mandeville, LA). Concurrently, A.M. Best has affirmed the FSR of A (Excellent) and the ICRs of “a” of Farm Family Casualty Insurance Company (Farm Family) and United Farm Family Insurance Company. The outlook for these ratings is stable. These companies are all property/casualty subsidiaries of their ultimate parent, ANICO and are domiciled in Glenmont, NY, unless otherwise specified.
The ratings reflect the support provided by ANICO, as well as the synergies generated amongst and between the groups and their parent.
Negative rating actions for ANICO’s property/casualty subsidiaries could occur if there were a sudden unexpected and material decline in their risk-adjusted capitalization, a sustained deterioration in their operating performance and/or diminished liquidity measures.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source.
