Market Overview

AM Best Affirms Credit Ratings of American National Insurance Company and Life/Health Subsidiaries; Upgrades Issuer Credit Ratings of American National Property & Casualty Group Members

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AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of "a+" of American National Insurance Company (ANICO) (NASDAQ:ANAT), American National Life Insurance Company of Texas (ANTEX), American National Life Insurance Company of New York (ANICONY) (Glenmont, NY) and Standard Life and Accident Insurance Company (SLAICO). These companies are referred to collectively as the American National Group (ANG). Concurrently, AM Best affirmed the FSR of A (Excellent) and Long-Term ICR of "a" for Garden State Life Insurance Company (GSL). 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 AM Best categorizes as strongest, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management (ERM).

The ratings reflect ANG's high level of absolute and risk-adjusted capitalization, which supports the group's insurance and business risks. In addition, AM Best considers the quality of capital as good, with organic earnings growth, no financial leverage, an overall good credit quality of invested assets and low use of reinsurance. ANG has strong liquidity capability and good liquidity management, which is supported by strong liquidity metrics. The favorable business profile allows the group to offer a diverse array of life, annuity and accident & health products to various markets using multiple distribution platforms, which also results in good diversification of earnings. While not a market leader, ANG does hold prominent positions in its focused markets. The group's ERM program focuses on the evaluation of risks and its impact on the capital structure.

ANG's statutory earnings have somewhat declined over the past several years, mainly due to new business strain and spread compression on its interest-sensitive blocks of business caused by persistently low interest rates. Approximately 70 percent of general account liabilities are annuity liabilities, which exposes the group to spread compression if interest rates remain low. However, disintermediation risk is somewhat muted due to strong management of crediting rates on its annuity blocks of business.

In addition, AM Best has upgraded the Long-Term ICRs to "a+" from "a" and affirmed the FSR of A (Excellent) of American National Property and Casualty Company (Springfield, MO), and its subsidiaries, American National General Insurance Company (Springfield, MO); ANPAC Louisiana Insurance Company (Baton Rouge, LA); American National Lloyds Insurance Company (Galveston, TX); Pacific Property and Casualty Company (San Jose, CA) and its affiliates, American National County Mutual Insurance Company (Galveston, TX), Farm Family Casualty Insurance Company and United Farm Family Insurance Company (both domiciled in Glenmont, NY). These entities are all considered part of American National Property & Casualty Group (ANPAC Group) due to their strategic importance. 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 AM Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and appropriate ERM.

Furthermore, the ratings reflect ANPAC Group's consistent 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 companies 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 by comprehensive reinsurance protection.

This press release relates to Credit Ratings that have been published on AM 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 AM 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 AM Best press releases, please view Guide for Media - Proper Use of Best's Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data provider specializing in the insurance industry. The company does business in more than 100 countries. Headquartered in Oldwick, NJ, AM Best has offices in cities around the world, including London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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