##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 þ
    
    Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the fiscal year ended December 31, 2010
 or
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 Commission File No. 001-34280
 
 American National Insurance Company
  Texas
(State or other jurisdiction of 
incorporation or organization)
    
    74-0484030
(I.R.S. Employer Identification No.)
 
 
  Title of each class
    
    Name of each exchange on which registeredCommon Stock, $1.00 par value
    
    NASDAQ Stock Market LLC
 
 o Yes þ No
 o Yes þ No
 þ o
 o o
 o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o Yes þ No




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##### 



AMERICAN NATIONAL INSURANCE COMPANY
 TABLE OF CONTENTS
 PART IITEM 1. BUSINESS
    
    
    3ITEM 1A. RISK FACTORS
    
    
    15ITEM 1B. UNRESOLVED STAFF COMMENTS
    
    
    28ITEM 2. PROPERTIES
    
    
    29ITEM 3. LEGAL PROCEEDINGS
    
    
    29ITEM 4. REMOVED AND RESERVED
    
    
    29PART IIITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES
    
    
    30ITEM 6. SELECTED FINANCIAL DATA
    
    
    32ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
    
    
    33ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    84ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    87ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    147ITEM 9A. CONTROLS AND PROCEDURES
    
    
    147ITEM 9B. OTHER INFORMATION
    
    
    148PART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
    
    
    149ITEM 11. EXECUTIVE COMPENSATION
    
    
    149ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    
    149ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND
DIRECTOR INDEPENDENCE
    
    
    149ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    149PART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
    
    
    150INDEX TO EXHIBITS
    
    
    150SIGNATURES
    
    
    152Exhibit 10.5Exhibit 10.8Exhibit 10.9Exhibit 21Exhibit 23Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   1




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##### Table of Contents



Forward-Looking Statements
  
    
    international economic and financial factors, including the performance and
fluctuations of fixed income, equity, real estate, credit capital and other
financial markets;
 
    
    interest rate fluctuations;
 
    
    estimates of our reserves for future policy benefits and claims;
 
    
    differences between actual experience regarding mortality, morbidity,
persistency, surrender experience, interest rates or market returns, and the
assumptions we use in pricing our products, establishing liabilities and reserves
or for other purposes;
 
    
    changes in our assumptions related to deferred policy acquisition costs;
 
    
    changes in our claims-paying or credit ratings;
 
    
    investment losses and defaults;
 
    
    competition in our product lines and for personnel;
 
    
    changes in tax law;
 
    
    regulatory or legislative changes;
 
    
    adverse determinations in litigation or regulatory matters and our exposure to
contingent liabilities, including and in connection with our divestiture or winding
down of businesses;
 
    
    domestic or international military actions, natural or man-made disasters,
including terrorist activities or pandemic disease, or other events resulting in
catastrophic loss of life;
 
    
    ineffectiveness of risk management policies and procedures in identifying,
monitoring and managing risks;
 
    
    effects of acquisitions, divestitures and restructurings, including possible
difficulties in integrating and realizing the projected results of acquisitions;
 
    
    changes in statutory or U.S. generally accepted accounting principles (GAAP)
practices or policies; and
 
    
    changes in assumptions for retirement expense.
   2




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##### Table of Contents



PART I
 
 ITEM 1.
    
    BUSINESS
 Company Overview
   Business Strategy
   Our Business Segments
  
    
    Life;
 
    
    Annuity;
 
    
    Health;
 
    
    Property and Casualty; and
 
    
    Corporate and Other.
   3




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##### Table of Contents



Life Segment
   
    
    Individual and group life insurance products, including universal life, variable
universal life, whole life, and term life; and
 
    
    Credit life insurance.
 Whole Life.
 Term Life.
 Variable Universal Life.
 Universal Life.
 Credit Life Insurance.
  4




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##### Table of Contents



Annuity Segment
   
    
    Fixed annuities; and
 
    
    Variable annuities.
 Fixed Annuities.
 Single Premium Immediate Annuity(SPIA).A single premium immediate annuity is an annuity
purchased by one premium payment, providing a periodic (usually monthly or annual) income
payment to the owner of the annuity for a specified period, such as for the remainder of the
annuitants life. Generally, once the payments of an immediate annuity have begun, the
contract cannot be revised or cashed in, and there is no return of part or all of the
original deposit. Annuity payments are usually fixed for the payment period, although it
may increase at a predetermined rate, depending upon the terms of the contract.
 Deferred Annuity. A deferred annuity is an asset accumulation product. Premiums were
received either as a single payment, Single Premium Deferred Annuity, or as multiple
payments, Flexible Premium Deferred Annuity. The payments are credited with interest at our
determined rates, subject to policy minimums. Deferred annuities usually have surrender
charges that apply beginning at issue and grade off over time. Deferred annuities sometimes
have Market Value Adjustments that can have a positive or negative effect on any surrender
value that is paid, depending on the relationship of interest rates when the product was
sold as compared to interest rates when the policy is surrendered. If not surrendered, the
proceeds of the deferred annuity can be converted to an income stream similar to those
available under SPIA contracts.
 Equity- Indexed Deferred Annuity.Equity-indexed deferred annuities are deferred annuities,
meaning that payment of the annuity is not scheduled to commence until a future date. With
an equity-indexed deferred annuity, a minimum interest rate is credited at the rates
required by state insurance law. Any additional interest credited is typically tied to the
performance of a particular stock market index, such as the S&P 500. Crediting of the
additional interest, however, may be limited by caps or participation rates prescribed by
the particular product.
 Variable
Annuities.
  5




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##### Table of Contents



Health Segment
   
    
    Medicare Supplement;
 
    
    Supplemental insurance;
 
    
    Medical Expense;
 
    
    Stop-loss; and
 
    
    Credit disability.
 Medicare Supplement.
 Supplemental Insurance.
 Medical Expense.
 Stop-Loss.
 Specific Stop-Loss.Specific stop loss coverage is initiated when claims for an individual
reach the threshold selected by the employer. After the threshold is reached, a stop-loss
policy reimburses claims paid by the employer up to the lifetime limit per individual.
 Aggregate Stop-Loss.Aggregate stop-loss coverage is designed to reimburse the employer
once the groups total paid claims reach the stipulated threshold.
 Credit Disability.
 Property and Casualty Segment
   
    
    Personal, including auto, homeowner and other;
 
    
    Commerical, including auto, agribusiness and other; and
 
    
    Credit property and casualty insurance.
 Auto Insurance.
 Homeowners Insurance.
  6




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Other Personal
 Agribusiness.
 Other Commercial.
 Credit Property and Casualty Insurance.
 
    
    Collateral Protection Insurance(CPI). Commonly referred to as creditor-placed
insurance. CPI provides insurance against loss, expense to recover, or damage to
personal property (typically automobiles) pledged as collateral resulting from fire,
burglary, collision, or other loss occurrence that would either impair a creditors
interest or adversely affect the value of the collateral. The coverage is purchased
according to the terms of the credit obligation when the borrower fails to provide the
required insurance. The cost of the insurance is charged to the borrower.
 
    
    Guaranteed Auto Protectionor Guaranteed Asset Protection(GAP). GAP insures the
excess of the outstanding indebtedness over the primary property insurance benefits
that may occur in the event of a total loss to or an unrecovered theft of the
collateral. GAP can be written on a variety of assets that are used as collateral to
secure credit; however, it is most commonly written on automobiles.
 Corporate and Other Segment
  Our Marketing Channels
  
    
    Independent Marketing Group/Direct Marketing;
 
    
    Career Sales and Services Division;
 
    
    Multiple-Line;
 
    
    Health/Senior Age Marketing Division; and
 
    
    Credit Insurance Division.
  7




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Primary Means ofSegment
    
    Marketing Channels
    
    Companies
    
    DistributionLife
    
    Independent Marketing
Group/Direct Marketing; 
Multiple-line; 
Career Sales and Service
Division; 
Health/Senior Age
Marketing Division; 
Credit Insurance Division
    
    American National Insurance
Company; 
Farm Family Life Insurance Company; 
Standard Life and Accident
Insurance Company
    
    Independent agents; 
Employee agents; 
Dedicated agents; 
Internet, mail,
print and broadcast
media; 
General agentsAnnuity
    
    Independent Marketing
Group/Direct Marketing;
Multiple-line;
Career Sales and Service
Division; 
Health/Senior Age
Marketing Division
    
    American National Insurance
Company; 
Standard Life and Accident
Insurance Company; 
Farm Family Life Insurance Company; 
American National Life Insurance
Company of New York
    
    Independent agents; 
Employee agents; 
Exclusive agentsHealth
    
    Career Sales and Service
Division; 
Health/Senior Age
Marketing Division; 
Credit Insurance Division
    
    American National Insurance
Company; 
Standard Life and Accident
Insurance Company; 
Farm Family Life Insurance Company
    
    Employee agents; 
Exclusive agents; 
Independent agents; 
Managing general
underwritersProperty and
Casualty
    
    Multiple-line;
Credit Insurance Division
    
    American National County Mutual
Insurance Company ; 
The American National Property and
Casualty Companies (ANPAC); 
ANPAC Louisiana Insurance Company; 
Pacific Property and Casualty
Company; 
American National General
Insurance Co.; 
American National Lloyds Insurance
Co.; 
Farm Family Casualty Insurance
Co.; United Farm Family Insurance
Company
    
    Exclusive agents;
General agents;
Independent agents
  Independent Marketing Group/ Direct Marketing
   8




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Career Sales and Service Division
  Multiple-line
  Health/Senior Age Marketing Division
  Credit Insurance Division
  Policyholder Liabilities
     9




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Reserves .
 Risk Management
       10




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Pricing
    Competition
   Our Ratings
   
    
    A.M. Best Company: A (Excellent)(1)
 
    
    Standard & Poors: A+ (Strong)(2)
 (1)
    
    A.M. Bests active company rating scale consists of thirteen ratings ranging from A++
(Superior) to D (poor). A is the third highest of such thirteen ratings and represents
companies excellent ability to meet their ongoing insurance obligations.(2)
    
    Standard & Poors active company rating scale ranges from AAA (Extremely Strong) to CC
(Extremely Weak). Plus (+) or Minus (-) modifiers show the relative standing within the
categories from AA to CCC. A rating of A is in the strong category and represents Strong
capacity to meet financial commitments, but somewhat susceptible to adverse economic
conditions and changes in circumstances. A+ is the fifth highest of twenty active company
ratings.  11




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Regulation
   Limitations on Dividends By Insurance Subsidiaries.
 Holding Company Regulation.
 Price Regulation.
   12




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Involuntary Markets and Guaranty Fund.
 Risk-Based Capital.
 Investment Regulation.
 Exiting Geographic Markets, Canceling and Non-Renewing Policies.
 Variable Life Insurance and Variable Annuities.
  13




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Privacy Regulation.
 Environmental Considerations.
  Employees
  Available Information
    14




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ITEM 1A.
    
    RISK FACTORS
  Difficult conditions in the economy generally may materially adversely affect our business and
results of operations, and these conditions may not improve in the near future.
    Differences between risk assumptions used to price our products and actual experience could
materially affect our profitability.
   15




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Increased claims activity resulting from catastrophic events, whether natural or man-made, may
result in significant losses.
     As an insurance company, we face a significant risk of litigation and regulatory investigations,
which may result in significant financial losses, harm our reputation, and prevent us from
implementing our business strategy.
    16




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The determination of the amount of allowances and impairments taken on our investments and the
valuation allowance on the deferred income tax asset are judgmental and could materially impact our
financial condition and results of operations.
     Our investment portfolio includes fixed maturity securities, equity securities, and commercial real
estate, and fluctuations in these markets could adversely affect the valuation of our investment
portfolio, our net investment income, and our overall profitability.
   17




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Concentration of our investment portfolios in any particular segment of the economy may have
adverse effects on our financial condition and results of operations.
  Some of our investments are relatively illiquid.
  A decline in equity markets or an increase in volatility in the equity markets may adversely affect
sales and/or yields of our investment products.
    18




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Defaults on our mortgage loans may adversely affect our profitability.
  We are controlled by a small number of stockholders.
  
    
    the composition of our Board of Directors, subject to applicable legal and regulatory
requirements, and through the Board of Directors, any determination with respect to our
business direction and policies, including the appointment and removal of officers;
 
    
    any determinations with respect to mergers or other business combinations;
 
    
    acquisition and disposition of assets; and
 
    
    any other matters submitted for stockholder approval.
   Our future results are dependent in part on our ability to successfully operate in insurance and
annuity industries that are highly competitive.
   19




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We may be unable to attract and retain sales representatives and third-party independent agents for
our products.
    Our risk management policies and procedures may leave us exposed to unidentified or unanticipated
risk, which could negatively affect our business.
  Reinsurance may not be available, affordable or adequate to protect us against losses.
   20




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Emerging claim and coverage issues could negatively impact our business.
  Our financial results may be adversely affected by the cyclical nature of the property and casualty
business in which we participate.
  Inflationary pressures on medical care costs, auto parts and repair, construction costs, and other
economic factors may increase the amount we pay for claims and negatively affect our underwriting
results.
  Interest rate fluctuations and other events may require us to accelerate the amortization of
deferred policy acquisition costs (DAC), which could adversely affect our financial condition and
results of operations.
    21




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Changes in market interest rates may lead to a significant decrease in the sales and profitability
of our spread-based products.
    i.e.,
 If the counterparties to our reinsurance arrangements or to the derivative instruments we use to
hedge our business risks default or fail to perform, we may be exposed to risks we had sought to
mitigate, which could have a material adverse effect on our financial condition and results of
operations.
   22




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A downgrade or a potential downgrade in our financial strength ratings could result in a loss of
business and could adversely affect our financial condition and results of operations.
   
    
    reducing new sales of insurance products, and annuity products;
    
    adversely affecting our relationships with our sales force and independent sales intermediaries;
    
    materially increasing the number or amount of policy surrenders and withdrawals by
policyholders and contract holders;
    
    requiring us to reduce prices for many of our products and services to remain competitive;
    
    increasing our borrowing cost;
    
    adversely affecting our ability to obtain reinsurance at reasonable prices; and
    
    adversely affecting our relationships with credit counterparties.
   The continued threat of terrorism and ongoing military actions may adversely affect the level of
our claim losses and the value of our investment portfolio.
   23




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We are subject to extensive regulation, and potential further restrictive regulation may increase
our operating costs and limit our growth.
  
    
    licensing companies and agents to transact business;
 
    
    calculating the value of assets to determine compliance with statutory requirements;
 
    
    restricting the size of risks that may be insured under a single contract;
 
    
    mandating certain insurance benefits;
 
    
    regulating certain premium rates;
 
    
    reviewing and approving policy forms and reports of financial condition required to
be filed;
 
    
    regulating unfair trade and claims practices, including imposing restrictions on
marketing and sales practices, distribution arrangements, and payment of inducements;
 
    
    regulating advertising;
 
    
    protecting privacy;
 
    
    establishing statutory capital and reserve requirements and solvency standards;
 
    
    determining methods of accounting;
 
    
    fixing maximum interest rates on insurance policy loans and minimum rates for
guaranteed crediting rates on life insurance policies and annuity contracts;
 
    
    approving changes in control of insurance companies;
 
    
    restricting the payment of dividends and other transactions between affiliates; and
 
    
    regulating the types, amounts and valuation of investments.
     24




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Changes in tax laws may decrease sales and profitability of certain products.
   Changes in the U.S. federal and state securities laws and regulations may affect our operations and
our profitability.
   25




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##### Table of Contents



New accounting rules or changes to existing accounting rules could negatively impact our business.
  SAP NAIC
  Prohibition on the use of customer credit information in connection with pricing and underwriting
could impact our ability to price policies and consequently our profitability.
  The occurrence of events that are unanticipated in our disaster recovery systems and business
continuity planning could impair our ability to conduct business effectively.
   26




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We may not be able to continue to be a low cost provider of property and casualty products due to
the potential effects of the use of comparative rating software.
  If we are unable to maintain the availability of our systems and safeguard the security of our
data, our ability to conduct our business may be compromised and our reputation may be harmed.
    Employee error and misconduct may be difficult to detect and prevent and may result in significant
losses.
   27




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Our business operations depend on our ability to appropriately execute and administer our policies
and claims.
  Our Medicare Supplement business could be negatively affected by alternative healthcare providers.
 -
 Our Medicare Supplement business is subject to intense competition and stringent pricing
regulation, which could negatively impact future sales and affect our ability to offer this
product.
  
 ITEM 1B.
    
    UNRESOLVED STAFF COMMENTS
   28




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##### Table of Contents



ITEM 2.
    
    PROPERTIES
  
    
    We own and occupy four buildings in League City, Texas, consisting of a total of
approximately 346,000 square feet. Approximately 40% of such space is leased to third
parties. Our use of these facilities is related primarily to our Life, Health, and
Corporate and Other segments.
 
    
    Our Property and Casualty segment conducts substantial operations through the
American National Property and Casualty group of companies in Springfield, Missouri,
and the Farm Family companies in Glenmont, New York. The Springfield facility is
approximately 232,000 square feet, of which we occupy approximately two-thirds, with
the remaining portion leased to third parties. The Glenmont facility is approximately
140,000 square feet, all of which is occupied by us.
 
    
    We own an approximately 100,000 square foot facility in San Antonio, Texas. We
occupy approximately three-fourths of this facility. We use this facility as a remote
processing center for customer support and to support other business operations in the
event the Galveston home office is evacuated due to catastrophic weather.
  
 ITEM 3.
    
    LEGAL PROCEEDINGS
  
 ITEM 4.
    
    REMOVED AND RESERVED
  29




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PART II
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
 STOCKHOLDER INFORMATION
  Dividend PaidHigh
    
    
    Low
    
    
    Per Share(per share)2010:Fourth quarter
    
    $
    86.91
    
    
    $
    75.55
    
    
    $
    0.77Third quarter
    
    
    85.80
    
    
    
    74.14
    
    
    
    0.77Second quarter
    
    
    116.40
    
    
    
    80.43
    
    
    
    0.77First quarter
    
    
    121.36
    
    
    
    102.00
    
    
    
    0.77$
    3.082009:Fourth quarter
    
    $
    120.81
    
    
    $
    81.05
    
    
    $
    0.77Third quarter
    
    
    88.68
    
    
    
    71.64
    
    
    
    0.77Second quarter
    
    
    81.65
    
    
    
    55.09
    
    
    
    0.77First quarter
    
    
    74.59
    
    
    
    33.74
    
    
    
    0.77$
    3.08
  Security Holders
  Securities Authorized for Issuance under Equity Compensation Plans
  Equity Compensation Plan InformationNumber of securities remainingNumber of securities to be
    
    
    
    
    
    
    available for future issuance underissued upon exercise of
    
    
    Weighted-average exercise
    
    
    equity compensation plansoutstanding
    
    
    price outstanding options,
    
    
    (excludingoptions, warrants and rights
    
    
    warrants and rights
    
    
    securities reflected in column (a))(a)
    
    
    (b)
    
    
    (c)Plan categoryEquity compensation
plans
approved by
security holders
    
    $
    
    
    
    $
    109.40
    
    
    
    2,203,233Equity compensation
plans
not approved by
security
holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    
    
    
    $
    109.40
    
    
    
    2,203,233
  30




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Performance Graph
  
  12/31/05
    
    
    12/31/06
    
    
    12/31/07
    
    
    12/31/08
    
    
    12/31/09
    
    
    12/31/10American National
    
    $
    100.00
    
    
    $
    99.76
    
    
    $
    108.16
    
    
    $
    69.94
    
    
    $
    111.50
    
    
    $
    85.17NASDAQ Total
    
    
    100.00
    
    
    
    109.85
    
    
    
    119.13
    
    
    
    57.40
    
    
    
    82.44
    
    
    
    97.87NASDAQ Insurance
    
    
    100.00
    
    
    
    113.07
    
    
    
    113.30
    
    
    
    104.95
    
    
    
    109.61
    
    
    
    123.39
   31




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ITEM 6.
    
    SELECTED FINANCIAL DATA
 American National Insurance Company  (and its subsidiaries)
 (dollar amounts in millions, except per
    
    Years ended December 31,share amounts, or unless otherwise noted)
    
    2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Revenues
    
    $
    3,067
    
    
    $
    2,938
    
    
    $
    2,503
    
    
    $
    3,038
    
    
    $
    3,090Income (loss) from continuing operations attributable to
American National Insurance Company and Subsidiaries
    
    
    145
    
    
    
    17
    
    
    
    (174
    )
    
    
    245
    
    
    
    278Income (loss) from discontinued operations, net of tax
    
    
    (1
    )
    
    
    (1
    )
    
    
    20
    
    
    
    (4
    )
    
    
    (5
    )Net income (loss)
    
    
    143
    
    
    
    15
    
    
    
    (154
    )
    
    
    240
    
    
    
    275Net income (loss) attributable to American National
Insurance Company and Subsidiaries
    
    
    144
    
    
    
    16
    
    
    
    (154
    )
    
    
    241
    
    
    
    273Per common shareIncome (loss) from continuing operations:- basic
    
    
    5.47
    
    
    
    0.64
    
    
    
    (6.55
    )
    
    
    9.24
    
    
    
    10.50- diluted
    
    
    5.45
    
    
    
    0.64
    
    
    
    (6.55
    )
    
    
    9.19
    
    
    
    10.45Income (loss) from discontinued operations:- basic
    
    
    (0.05
    )
    
    
    (0.05
    )
    
    
    0.73
    
    
    
    (0.15
    )
    
    
    (0.18
    )- diluted
    
    
    (0.05
    )
    
    
    (0.05
    )
    
    
    0.73
    
    
    
    (0.15
    )
    
    
    (0.18
    )Net income (loss) attributable to American National
Insurance Company and Subsidiaries:- basic
    
    
    5.42
    
    
    
    0.59
    
    
    
    (5.82
    )
    
    
    9.09
    
    
    
    10.32- diluted
    
    
    5.40
    
    
    
    0.59
    
    
    
    (5.82
    )
    
    
    9.04
    
    
    
    10.27Cash dividends per share
    
    
    3.08
    
    
    
    3.08
    
    
    
    3.08
    
    
    
    3.05
    
    
    
    3.01Dividend payout ratio (1)
    
    
    86.2
    %
    
    
    127.2
    %
    
    
    89.2
    %
    
    
    38.1
    %
    
    
    38.7
    %Years ended December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Total assets
    
    $
    21,413
    
    
    $
    20,150
    
    
    $
    18,379
    
    
    $
    18,461
    
    
    $
    17,932Total American National Insurance Company
and Subsidiaries stockholders equity
    
    
    3,633
    
    
    
    3,460
    
    
    
    3,134
    
    
    
    3,737
    
    
    
    3,576Total equity
    
    
    3,636
    
    
    
    3,472
    
    
    
    3,142
    
    
    
    3,741
    
    
    
    3,582
 (1)
    
    Total dividends paid to stockholders divided by the sum of net income less realized
gains (losses) on investments and other-than-temporary impairments, after tax.  32




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##### Table of Contents



ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  INDEX
 Segments
    
    
    34Outlook
    
    
    35Critical Accounting Estimates
    
    
    40Consolidated Results of Operations
    
    
    50Life
    
    
    51Annuity
    
    
    56Health
    
    
    62Property and Casualty
    
    
    66Corporate and Other
    
    
    75Liquidity
    
    
    76Capital Resources
    
    
    77Contractual Obligations
    
    
    78Off-Balance Sheet Arrangements
    
    
    79Related Party Transactions
    
    
    79Investments
    
    
    80
  33




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##### Table of Contents



Overview
  
 Segments
  Insurance Segments
  
    
    net premiums earned on individual term and whole life insurance, property and
casualty insurance, credit insurance, health insurance and single premium immediate
annuity products;
 
    
    net investment income; and
 
    
    insurance and investment product fees and other income, including surrender charges,
mortality and expense risk charges, primarily from variable life and annuity, deferred
annuities, and universal life insurance policies, management fees and commissions from
other investment products, and other administrative charges.
  
    
    benefits provided to policyholders, contract holders and beneficiaries and changes
in reserves held for future benefits;
 
    
    interest credited on account balances;
 
    
    acquisition and operating expenses, including commissions, marketing expenses,
policy and contract servicing costs, overhead and other general expenses that are not
capitalized (shown net of deferrals);
 
    
    amortization of deferred policy acquisition costs and other intangible assets; and
 
    
    income taxes.
   34




---



##### Table of Contents



Corporate & Other
  
 Outlook
   General Trends
 Challenging Financial and Economic Environment:
 Low Interest Rates:
  35




---



##### Table of Contents



Focus on Operating Efficiencies:
 Changing Regulatory Environment
 Life and Annuity
    Demographics
  36




---



##### Table of Contents



Competitive Pressures
   
    
    In 2010, we established a New York life insurance subsidiary. The subsidiary started
its operations in the first half of 2010. A variety of annuity products were available
for sale in 2010 and will be followed in subsequent years by our life products. Initial
sales are anticipated to be through independent and multiple-line agents. Based on
competitors market experience, we expect annuity deposits from this subsidiary to
represent five to ten percent of total deposits received once the market is
established.
 
    
    Sales of traditional life insurance products through our Career Sales and Service
Division increased in 2010. This, coupled with our focus on policy persistency and
expense management, allowed us to continue to maintain a stable and profitable block of
in force business.
 
    
    Sales of Universal Life insurance products increased for our Multiple-line and
Career Sales and Service Divisions in 2010.
 
    
    We believe there will be a continuing shift in sales emphasis to utilizing the
Internet, endorsed direct mail and innovative product/distribution combinations. Our
direct sales of life insurance products rebounded in 2010. Selling traditional life
insurance products through our Internet and third-party marketing distribution channels
will remain a focus.
  37




---



##### Table of Contents



Health
   Other income All other
 Property and Casualty
      38




---



##### Table of Contents



Competition
   39




---



##### Table of Contents



Critical Accounting Estimates
   
    
    Deferred policy acquisition costs;
 
    
    Reserves;
 
    
    Reinsurance;
 
    
    Pension and postretirement benefit plans;
 
    
    Other-than-temporary impairment;
 
    
    Litigation contingencies; and
 
    
    Federal income taxes.
   Deferred Policy Acquisition Costs
      40




---



##### Table of Contents



Increase/(decrease)in DACIncrease in future investment margins of 25 basis points
    
    $
    29,050Decrease in future investment margins of 25 basis points
    
    
    (33,594
    )Decrease in future life mortality by 1%
    
    
    2,462Increase in future life mortality by 1%
    
    
    (2,528
    )
 Reserves
 Life and Annuity Reserves:
 Liability for Future Policy Benefits and Policy Account Balances 
       41




---



##### Table of Contents



Life Reserving Methodology  Financial Services Insurance-
Claim Costs and Liabilities for Future Policy Benefits,
  .
  Annuity Reserving Methodology
   42




---



##### Table of Contents



Health Reserves:
 Overview
   Completion Factor Approach
   Tabular Reserves
  Future Policy Benefits
  43




---



##### Table of Contents



Premium Deficiency Reserves
 Property and Casualty Reserves:
 Reserves for Loss and Loss Adjustment Expense (LAE) -
 
    
    Case reserves  claims that were reported to us but not yet paid, and
 
    
    IBNR  anticipated cost of claims incurred but not reported. IBNR reserves include
a provision for potential development on case reserves, losses on claims currently
closed which may reopen in the future, and claims that have been incurred but not yet
reported.
  Year ended December 31, 2010
    
    
    Year ended December 31, 2009Gross
    
    
    Ceded
    
    
    Net
    
    
    Gross
    
    
    Ceded
    
    
    NetCase
    
    $
    472,794
    
    
    $
    13,676
    
    
    $
    459,118
    
    
    $
    473,908
    
    
    $
    11,639
    
    
    $
    462,269IBNR
    
    
    458,509
    
    
    
    30,619
    
    
    
    427,890
    
    
    
    443,082
    
    
    
    48,693
    
    
    
    394,389Total
    
    $
    931,303
    
    
    $
    44,295
    
    
    $
    887,008
    
    
    $
    916,990
    
    
    $
    60,332
    
    
    $
    856,658
 Case Reserves :
  IBNR:
   44




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##### Table of Contents



Premium Deficiency Reserve:
 Reserving Methodology
 
    
    Initial Expected Loss Ratio: This method calculates an estimate of ultimate losses
by applying an estimated loss ratio to an estimate of ultimate earned premium for each
accident year. This method is appropriate for classes of business where the actual
paid or reported loss experience is not yet mature enough to override initial
expectations of the ultimate loss ratios.
 
    
    Bornhuetter Ferguson: This method uses as a starting point an assumed initial
expected loss ratio method and blends in the loss ratio implied by the claims
experience to date by using loss development patterns based on our own historical
experience. This method is generally appropriate where there are few reported claims
and a relatively less stable pattern of reported losses.
 
    
    Loss or Expense Development (Chain Ladder): This method uses actual loss or defense
and cost containment expense data and the historical development profiles on older
accident periods to project more recent, less developed periods to their ultimate
position. This method is appropriate when there is a relatively stable pattern of loss
and expense emergence and a relatively large number of reported claims.
 
    
    Ratio of Paid Defense and Cost Containment Expense to Paid Loss Development: This
method uses the ratio of paid defense and cost containment expense to paid loss data
and the historical development profiles on older accident periods to project more
recent, less developed periods to their ultimate position. In this method, an ultimate
ratio of paid defense and cost containment expense to paid loss is selected for each
accident period. The selected paid defense and cost containment expense to paid loss
ratio is then applied to the selected ultimate loss for each accident period to
estimate the ultimate defense and cost containment expense. Paid defense and cost
containment expense is then subtracted from the ultimate defense and cost containment
expense to calculate the unpaid defense and cost containment expense for that accident
period.
 
    
    Calendar Year Paid Adjusting and Other Expense to Paid Loss: This method uses the
ratio of prior calendar years paid expense to paid loss to project ultimate loss
adjustment expenses for adjusting and other expense. The key to this method is the
selection of the paid expense to paid loss ratio based on prior calendar years
activity. A percentage of the selected ratio is applied to the case reserves
(depending on the line of insurance) and 100% to the indicated
IBNR reserves. These ratios assume that a percentage of the expense is incurred when a
claim is opened and the remaining percentage is paid throughout the claims life.
  45




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##### Table of Contents



Key Assumptions:
  
    
    The selected loss ratio used in the initial expected loss ratio method and
Bornhuetter Ferguson method for each accident year;
 
    
    The expected loss development profiles;
 
    
    A consistent claims handling process;
 
    
    A consistent payout pattern;
 
    
    No unusual growth patterns;
 
    
    No major shift in liability limits distribution on liability policies; and
 
    
    No significant prospective changes in workers compensation laws that would
significantly affect future payouts.
    Year ended December 31, 2010Cumulative Increase (Decrease)5 Day Speed Up
    
    
    5 Day Slow DownPersonal:Personal Auto
    
    $
    (1,421
    )
    
    $
    1,236Homeowner
    
    
    14
    
    
    
    345Commercial:Agribusiness
    
    
    71
    
    
    
    377Commercial auto
    
    
    (374
    )
    
    
    1,409Other
    
    
    (1,106
    )
    
    
    3,169
  46




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##### Table of Contents



Reserving by class of business:
  Short-tail business 
  Long-tail business 
 Credit business
 Loss adjustment expenses
 Reinsurance
     47




---



##### Table of Contents



Pension and Postretirement Benefit Plans
     Used for Net
    
    
    
    
    
    
    Used for NetBenefit Cost
    
    
    Used for Benefit
    
    
    Benefit Cost
    
    
    Used for Benefitfor year ended
    
    
    Obligations as of
    
    
    for year ended
    
    
    Obligations as ofDecember 31, 2010
    
    
    December 31, 2010
    
    
    December 31, 2009
    
    
    December 31, 2009Discount rate
    
    
    6.17
    %
    
    
    5.34
    %
    
    
    6.17
    %
    
    
    5.73
    %Rate of compensation increase
    
    
    4.20
    
    
    
    3.78
    %
    
    
    4.20
    
    
    
    4.20Long-term rate of return
    
    
    7.65
    
    
    
    7.65
    %
    
    
    7.65
    
    
    
    7.65
 Other-Than-Temporary Impairment
   48




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##### Table of Contents



Litigation Contingencies
   Federal Income Taxes
       49




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##### Table of Contents



Consolidated Results of Operations
 Outlook Results
of Operations and Related Information by Segment
 Years ended December 31,
    
    
    Change over prior year2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009Premiums and other revenues:Premiums
    
    $
    1,877,908
    
    
    $
    1,974,024
    
    
    $
    1,888,495
    
    
    $
    (96,116
    )
    
    $
    85,529Other policy revenues
    
    
    185,805
    
    
    
    179,504
    
    
    
    174,899
    
    
    
    6,301
    
    
    
    4,605Net investment income
    
    
    911,915
    
    
    
    839,777
    
    
    
    795,442
    
    
    
    72,138
    
    
    
    44,335Realized investments gains
(losses), net
    
    
    74,062
    
    
    
    (73,855
    )
    
    
    (379,034
    )
    
    
    147,917
    
    
    
    305,179Other income
    
    
    17,398
    
    
    
    19,000
    
    
    
    22,777
    
    
    
    (1,602
    )
    
    
    (3,777
    )Total revenues
    
    
    3,067,088
    
    
    
    2,938,450
    
    
    
    2,502,579
    
    
    
    128,638
    
    
    
    435,871Benefits, losses and expenses:Policy benefits
    
    
    1,608,415
    
    
    
    1,709,899
    
    
    
    1,601,854
    
    
    
    (101,484
    )
    
    
    108,045Interest credited to policy
account balances
    
    
    393,119
    
    
    
    370,563
    
    
    
    299,833
    
    
    
    22,556
    
    
    
    70,730Commissions
    
    
    448,880
    
    
    
    459,943
    
    
    
    475,345
    
    
    
    (11,063
    )
    
    
    (15,402
    )Other operating costs and expenses
    
    
    454,146
    
    
    
    471,920
    
    
    
    493,907
    
    
    
    (17,774
    )
    
    
    (21,987
    )Change in deferred policy
acquisition costs (1)
    
    
    (40,095
    )
    
    
    (63,611
    )
    
    
    (67,439
    )
    
    
    23,516
    
    
    
    3,828Total benefits and expenses
    
    
    2,864,465
    
    
    
    2,948,714
    
    
    
    2,803,500
    
    
    
    (84,249
    )
    
    
    145,214Income (loss) before other items and federal income taxes
    
    $
    202,623
    
    
    $
    (10,264
    )
    
    $
    (300,921
    )
    
    $
    212,887
    
    
    $
    290,657
 (1)
    
    A negative amount of net change indicates more expense was deferred than amortized and
represents a decrease to expenses in the periods indicated.  
    
    an increase in our Corporate and Other segments realized investment gains and net
investment income as a result of improved market conditions,
 
    
    a decrease in policy benefits across all segments,
 
    
    a decrease in other operating costs and expenses in our Life and Health segments,
 
    
    partially offset by a decrease in Life and Health segment premiums and an increase in
Annuity segment interest credited to policy account balances.
  
    
    a decrease in our Corporate and other segments realized investment losses partially
offset by increased investment income,
 
    
    an increase in annuity premiums,
 
    
    partially offset by increased policy benefits in annuities due to strong single premium
immediate annuity sales and increased interest credited to policy account balances.
  50




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Results of Operations and Related Information by Segment
 
 Life
   Years ended December 31,
    
    
    Change over prior year2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009Revenues:Premiums
    
    $
    282,160
    
    
    $
    284,530
    
    
    $
    299,338
    
    
    $
    (2,370
    )
    
    $
    (14,808
    )Other policy revenues
    
    
    170,729
    
    
    
    164,748
    
    
    
    154,984
    
    
    
    5,981
    
    
    
    9,764Net investment income
    
    
    223,753
    
    
    
    222,611
    
    
    
    226,643
    
    
    
    1,142
    
    
    
    (4,032
    )Other income
    
    
    3,547
    
    
    
    2,720
    
    
    
    3,767
    
    
    
    827
    
    
    
    (1,047
    )Total revenues
    
    
    680,189
    
    
    
    674,609
    
    
    
    684,732
    
    
    
    5,580
    
    
    
    (10,123
    )Benefits, losses and expenses:Policy benefits
    
    
    294,177
    
    
    
    297,719
    
    
    
    296,078
    
    
    
    (3,542
    )
    
    
    1,641Interest credited to policy account balances
    
    
    59,149
    
    
    
    58,983
    
    
    
    62,221
    
    
    
    166
    
    
    
    (3,238
    )Commissions
    
    
    91,165
    
    
    
    91,968
    
    
    
    126,813
    
    
    
    (803
    )
    
    
    (34,845
    )Other operating costs and expenses
    
    
    178,619
    
    
    
    185,048
    
    
    
    222,908
    
    
    
    (6,429
    )
    
    
    (37,860
    )Change in deferred policy acquisition costs
    
    
    (1,963
    )
    
    
    1,536
    
    
    
    (42,103
    )
    
    
    (3,499
    )
    
    
    43,639Total benefits, losses and expenses
    
    
    621,147
    
    
    
    635,254
    
    
    
    665,917
    
    
    
    (14,107
    )
    
    
    (30,663
    )Income before other items
and federal income taxes
    
    $
    59,042
    
    
    $
    39,355
    
    
    $
    18,815
    
    
    $
    19,687
    
    
    $
    20,540
   Perkins
  51




---



##### Table of Contents



Premiums
   Other Policy Revenues
   Commissions
   Other Operating Costs and Expenses
 .
 .
  52




---



##### Table of Contents



Change in Deferred Policy Acquisition Costs
  Years ended December 31,
    
    
    Change over prior year2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009Acquisition cost capitalized
    
    $
    80,789
    
    
    $
    77,161
    
    
    $
    129,031
    
    
    $
    3,628
    
    
    $
    (51,870
    )Amortization of DAC
    
    
    (78,826
    )
    
    
    (78,697
    )
    
    
    (86,928
    )
    
    
    (129
    )
    
    
    8,231Change in deferred policy acquisition costs(1)
    
    $
    1,963
    
    
    $
    (1,536
    )
    
    $
    42,103
    
    
    $
    3,499
    
    
    $
    (43,639
    )
 (1)
    
    A positive amount of net change indicates more expense was deferred than amortized and
represents a decrease to expenses in the periods indicated.    Reinsurance
  Reserves
    
    
    PremiumsYears Ended December 31,
    
    
    Years Ended December 31,2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009
    
    
    2008Reinsurance assumed
    
    $
    9,827
    
    
    $
    19,514
    
    
    $
    25,553
    
    
    $
    (1,130
    )
    
    $
    4,512
    
    
    $
    8,460Reinsurance ceded
    
    
    (173,097
    )
    
    
    (160,934
    )
    
    
    (147,523
    )
    
    
    (86,241
    )
    
    
    (74,577
    )
    
    
    (80,826
    )Total
    
    $
    (163,270
    )
    
    $
    (141,420
    )
    
    $
    (121,970
    )
    
    $
    (87,371
    )
    
    $
    (70,065
    )
    
    $
    (72,366
    )
   53




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##### Table of Contents



.
   A.M. Best
    
    Ceded
    
    
    Percentage ofReinsurer
    
    Rating(1)
    
    Premium
    
    
    Gross PremiumSwiss Re Life and Health America Inc.
    
    A
    
    $
    23,332
    
    
    
    6.5
    %Munich American Reassurance Company
    
    A+
    
    
    12,065
    
    
    
    3.4
    %Transamerica Life Insurance Company
    
    A+
    
    
    9,882
    
    
    
    2.8
    %General Re Life Corporation
    
    A++
    
    
    8,410
    
    
    
    2.3
    %SCOR Global Life Re Insurance Company of Texas
    
    A-
    
    
    7,173
    
    
    
    2.0
    %Other Reinsurers with no single company
greater than 2% of the total
    
    
    
    
    3,473
    
    
    
    83.0
    %Total life reinsurance ceded
    
    
    
    $
    75,735
    
    
    
    100.0
    %
 (1)
    
    A.M. Best rating as of the most current information available  February 22, 2011. Policy in-force information
  Years Ended December 31,
    
    
    Change over prior year2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009Life insurance in-force:Traditional life
    
    $
    45,919,000
    
    
    $
    45,229,000
    
    
    $
    45,008,000
    
    
    $
    690,000
    
    
    $
    221,000Interest sensitive life
    
    
    23,879,000
    
    
    
    24,219,000
    
    
    
    24,863,000
    
    
    
    (340,000
    )
    
    
    (644,000
    )Total life insurance in-force
    
    $
    69,798,000
    
    
    $
    69,448,000
    
    
    $
    69,871,000
    
    
    $
    350,000
    
    
    $
    (423,000
    )
  Years Ended December 31,
    
    
    Change Over Prior Year2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009Number of policies:Traditional life
    
    
    2,274
    
    
    
    2,347
    
    
    
    2,452
    
    
    
    (73
    )
    
    
    (105
    )Interest sensitive life
    
    
    176
    
    
    
    175
    
    
    
    176
    
    
    
    1
    
    
    
    (1
    )Total number of policies
    
    
    2,450
    
    
    
    2,522
    
    
    
    2,628
    
    
    
    (72
    )
    
    
    (106
    )
  54




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55




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##### Table of Contents



Annuity
   Years ended December 31,
    
    
    Change over prior year2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009Revenues:Premiums
    
    $
    174,193
    
    
    $
    220,284
    
    
    $
    116,248
    
    
    $
    (46,091
    )
    
    $
    104,036Other policy revenues
    
    
    15,076
    
    
    
    14,756
    
    
    
    19,915
    
    
    
    320
    
    
    
    (5,159
    )Net investment income
    
    
    510,106
    
    
    
    449,035
    
    
    
    374,023
    
    
    
    61,071
    
    
    
    75,012Other income (expense)
    
    
    (7,900
    )
    
    
    (3,870
    )
    
    
    (5,718
    )
    
    
    (4,030
    )
    
    
    1,848Total revenues
    
    
    691,475
    
    
    
    680,205
    
    
    
    504,468
    
    
    
    11,270
    
    
    
    175,737Benefits, losses and expenses:Policy benefits
    
    
    205,948
    
    
    
    249,709
    
    
    
    142,867
    
    
    
    (43,761
    )
    
    
    106,842Interest credited to policy account balances
    
    
    333,970
    
    
    
    311,580
    
    
    
    237,612
    
    
    
    22,390
    
    
    
    73,968Commissions
    
    
    95,701
    
    
    
    107,053
    
    
    
    79,213
    
    
    
    (11,352
    )
    
    
    27,840Other operating costs and expenses
    
    
    62,791
    
    
    
    59,254
    
    
    
    45,491
    
    
    
    3,537
    
    
    
    13,763Change in deferred policy acquisition costs
    
    
    (44,569
    )
    
    
    (62,013
    )
    
    
    (20,690
    )
    
    
    17,444
    
    
    
    (41,323
    )Total benefits, losses and expenses
    
    
    653,841
    
    
    
    665,583
    
    
    
    484,493
    
    
    
    (11,742
    )
    
    
    181,090Income before other items and federal income taxes
    
    $
    37,634
    
    
    $
    14,622
    
    
    $
    19,975
    
    
    $
    23,012
    
    
    $
    (5,353
    )
 Interest Credited
to Policy Account Balances
    56




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##### Table of Contents



Premiums
  Years ended December 31,
    
    
    Change over prior year2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009Fixed deferred annuity
    
    $
    1,045,429
    
    
    $
    1,715,871
    
    
    $
    1,573,237
    
    
    $
    (670,442
    )
    
    $
    142,634Equity-indexed deferred annuity
    
    
    340,920
    
    
    
    239,664
    
    
    
    85,334
    
    
    
    101,256
    
    
    
    154,330Single premium immediate annuity
    
    
    177,688
    
    
    
    227,937
    
    
    
    121,952
    
    
    
    (50,249
    )
    
    
    105,985Variable deferred annuity
    
    
    90,188
    
    
    
    99,429
    
    
    
    103,233
    
    
    
    (9,241
    )
    
    
    (3,804
    )Total
    
    
    1,654,225
    
    
    
    2,282,901
    
    
    
    1,883,756
    
    
    
    (628,676
    )
    
    
    399,145Less: policy deposits
    
    
    1,480,032
    
    
    
    2,062,617
    
    
    
    1,767,508
    
    
    
    (582,585
    )
    
    
    295,109Total earned premiums
    
    $
    174,193
    
    
    $
    220,284
    
    
    $
    116,248
    
    
    $
    (46,091
    )
    
    $
    104,036
       57




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##### Table of Contents



Net Investment Income
     With Options
    
    
    Without OptionsYears ended December 31,
    
    
    Years ended December 31,2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009
    
    
    2008Net investment income
    
    $
    510,106
    
    
    $
    449,035
    
    
    $
    374,023
    
    
    $
    500,163
    
    
    $
    443,655
    
    
    $
    398,423
   58




---



##### Table of Contents



Account Values
  Years Ended December 31,2010
    
    
    2009
    
    
    2008Fixed deferred annuity:Account value, beginning of period
    
    $
    8,151,365
    
    
    $
    6,918,365
    
    
    $
    6,210,456Net inflows
    
    
    528,338
    
    
    
    930,417
    
    
    
    487,410Fees
    
    
    (10,080
    )
    
    
    (10,592
    )
    
    
    (15,363
    )Interest credited
    
    
    337,069
    
    
    
    313,175
    
    
    
    235,862Account value, end of period
    
    $
    9,006,692
    
    
    $
    8,151,365
    
    
    $
    6,918,365Variable deferred annuity:Account value, beginning of period
    
    $
    400,624
    
    
    $
    309,011
    
    
    $
    429,505Net inflows/(outflows)
    
    
    (27,792
    )
    
    
    20,452
    
    
    
    24,364Fees
    
    
    (4,795
    )
    
    
    (4,096
    )
    
    
    (4,582
    )Change in market value and other
    
    
    47,720
    
    
    
    75,257
    
    
    
    (140,276
    )Account value, end of period
    
    $
    415,757
    
    
    $
    400,624
    
    
    $
    309,011Single premium immediate annuity:Reserve, beginning of period
    
    $
    820,295
    
    
    $
    701,141
    
    
    $
    693,137Net inflows/(outflows)
    
    
    42,476
    
    
    
    84,785
    
    
    
    (26,330
    )Interest and mortality
    
    
    40,355
    
    
    
    34,369
    
    
    
    34,334Reserve, end of period
    
    $
    903,126
    
    
    $
    820,295
    
    
    $
    701,141
 Fixed Deferred Annuity
   Variable Deferred Annuity:
     59




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##### Table of Contents



SPIA: .
  Policy Benefits
  Interest Credited to Policy Account Balances
  With Equity-Indexed Deferred Annuities
    
    
    Without Equity-Indexed Deferred AnnuitiesYears ended December 31,
    
    
    Years ended December 31,2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009
    
    
    2008Interest credited to policy account balances
    
    $
    333,970
    
    
    $
    311,580
    
    
    $
    237,612
    
    
    $
    309,031
    
    
    $
    293,857
    
    
    $
    254,313
    .
  60




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##### Table of Contents



Commissions
  Other Operating Costs and Expenses
   Change in Deferred Policy Acquisition Costs
  Years ended December 31,
    
    
    Change over prior year2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009Acquisition cost capitalized
    
    $
    117,090
    
    
    $
    126,769
    
    
    $
    96,544
    
    
    $
    (9,679
    )
    
    $
    30,225Amortization of DAC
    
    
    (72,521
    )
    
    
    (64,756
    )
    
    
    (75,854
    )
    
    
    (7,765
    )
    
    
    11,098Change in deferred policy acquisition costs(1)
    
    $
    44,569
    
    
    $
    62,013
    
    
    $
    20,690
    
    
    $
    (17,444
    )
    
    $
    41,323
 (1)
    
    A positive amount of net change indicates more expense was deferred than amortized and is a
decrease to expense in the periods indicated.   Reinsurance
   61




---



##### Table of Contents



Health
   Years ended December 31,
    
    
    Change over prior year2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009Revenues:Premiums
    
    $
    263,294
    
    
    $
    309,701
    
    
    $
    290,883
    
    
    $
    (46,407
    )
    
    $
    18,818Net investment income
    
    
    14,855
    
    
    
    15,992
    
    
    
    16,566
    
    
    
    (1,137
    )
    
    
    (574
    )Other income
    
    
    10,384
    
    
    
    10,382
    
    
    
    13,252
    
    
    
    2
    
    
    
    (2,870
    )Total premiums and other
revenues
    
    
    288,533
    
    
    
    336,075
    
    
    
    320,701
    
    
    
    (47,542
    )
    
    
    15,374Benefits and expenses:Policy benefits
    
    
    184,554
    
    
    
    239,407
    
    
    
    223,055
    
    
    
    (54,853
    )
    
    
    16,352Commissions
    
    
    35,263
    
    
    
    51,717
    
    
    
    43,219
    
    
    
    (16,454
    )
    
    
    8,498Other operating costs and expenses
    
    
    49,634
    
    
    
    62,134
    
    
    
    69,961
    
    
    
    (12,500
    )
    
    
    (7,827
    )Change in deferred policy
acquisition costs
    
    
    4,886
    
    
    
    5,017
    
    
    
    5,023
    
    
    
    (131
    )
    
    
    (6
    )Total benefits and expenses
    
    
    274,337
    
    
    
    358,275
    
    
    
    341,258
    
    
    
    (83,938
    )
    
    
    17,017Income (loss) before other items
and federal income taxes
    
    $
    14,196
    
    
    $
    (22,200
    )
    
    $
    (20,557
    )
    
    $
    36,396
    
    
    $
    (1,643
    )
     62




---



##### Table of Contents



Premiums
  Years ended December 31,2010
    
    
    2009
    
    
    2008Premiums
    
    
    Premiums
    
    
    Premiumsdollars
    
    
    percentage
    
    
    dollars
    
    
    percentage
    
    
    dollars
    
    
    percentageMedicare Supplement
    
    $
    117,132
    
    
    
    44.5
    %
    
    $
    123,102
    
    
    
    39.8
    %
    
    $
    120,757
    
    
    
    41.5
    %Medical expense
    
    
    67,050
    
    
    
    25.5
    
    
    
    80,716
    
    
    
    26.1
    
    
    
    78,291
    
    
    
    26.9Group
    
    
    29,343
    
    
    
    11.1
    
    
    
    33,484
    
    
    
    10.8
    
    
    
    33,758
    
    
    
    11.6Credit accident and health
    
    
    21,553
    
    
    
    8.2
    
    
    
    19,627
    
    
    
    6.3
    
    
    
    24,676
    
    
    
    8.5All other
    
    
    28,216
    
    
    
    10.7
    
    
    
    52,772
    
    
    
    17.0
    
    
    
    33,401
    
    
    
    11.5Total
    
    $
    263,294
    
    
    
    100.0
    %
    
    $
    309,701
    
    
    
    100.0
    %
    
    $
    290,883
    
    
    
    100.0
    %
 All other
   Years ended December 31,2010
    
    
    2009
    
    
    2008number
    
    
    percentage
    
    
    number
    
    
    percentage
    
    
    number
    
    
    percentageMedicare Supplement
    
    
    48,584
    
    
    
    8.0
    %
    
    
    58,627
    
    
    
    8.9
    %
    
    
    60,264
    
    
    
    8.2
    %Medical expense
    
    
    11,057
    
    
    
    1.8
    
    
    
    18,368
    
    
    
    2.8
    
    
    
    20,352
    
    
    
    2.8Group
    
    
    17,038
    
    
    
    2.8
    
    
    
    23,890
    
    
    
    3.7
    
    
    
    21,409
    
    
    
    2.9Credit accident and health
    
    
    294,702
    
    
    
    48.2
    
    
    
    309,695
    
    
    
    47.2
    
    
    
    323,158
    
    
    
    44.0All other
    
    
    239,624
    
    
    
    39.2
    
    
    
    245,689
    
    
    
    37.4
    
    
    
    309,938
    
    
    
    42.1Total
    
    
    611,005
    
    
    
    100.0
    %
    
    
    656,269
    
    
    
    100.0
    %
    
    
    735,121
    
    
    
    100.0
    %
  Policy Benefits
  All
other
  63




---



##### Table of Contents



Commissions
   Other Operating Costs and Expenses
   Change in Deferred Policy Acquisition Costs
   64




---



##### Table of Contents



Years ended December 31,
    
    
    Change over prior year2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009Acquisition cost capitalized
    
    $
    18,087
    
    
    $
    16,729
    
    
    $
    22,762
    
    
    $
    1,358
    
    
    $
    (6,033
    )Amortization of DAC
    
    
    (22,973
    )
    
    
    (21,746
    )
    
    
    (27,785
    )
    
    
    (1,227
    )
    
    
    6,039Change in deferred
policy acquisition costs(1)
    
    $
    (4,886
    )
    
    $
    (5,017
    )
    
    $
    (5,023
    )
    
    $
    131
    
    
    $
    6
 (1)
    
    A negative amount of net change indicates less expense was deferred than amortized and
represents an increase to expenses in the periods indicated.   Reinsurance
    A.M. Best
    
    Ceded
    
    
    Percentage ofReinsurer
    
    Rating(1)
    
    Premium
    
    
    Gross PremiumMaiden Re Insurance Company
    
    A-
    
    $
    21,916
    
    
    
    18.8
    %Harbour Life and Reinsurance Co. Ltd.
    
    NR(2)
    
    
    15,102
    
    
    
    13.0Munich Reinsurance America
    
    A+
    
    
    13,800
    
    
    
    11.8AmFirst Insurance Company
    
    B+
    
    
    11,045
    
    
    
    9.5United States Fire Insurance Company
    
    A
    
    
    8,768
    
    
    
    7.5Madison National Life Insurance Company
    
    A-
    
    
    7,433
    
    
    
    6.4Other reinsurers with no single company
greater than 5% of the total
    
    
    
    
    38,593
    
    
    
    33.0Total health reinsurance ceded
    
    
    
    $
    116,657
    
    
    
    100.0
    %
 (1)
    
    A.M. Best rating as of the most current information available February 22,
2011.(2)
    
    Not Rated.  65




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##### Table of Contents



Property and Casualty
  Years ended December 31,
    
    
    Change over prior year2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009amount
    
    
    amountRevenues:Net premiums written
    
    $
    1,185,366
    
    
    $
    1,164,136
    
    
    $
    1,184,686
    
    
    $
    21,230
    
    
    $
    (20,550
    )Net premiums earned
    
    $
    1,158,261
    
    
    $
    1,159,509
    
    
    $
    1,182,026
    
    
    $
    (1,248
    )
    
    $
    (22,517
    )Net investment income
    
    
    67,545
    
    
    
    66,175
    
    
    
    69,348
    
    
    
    1,370
    
    
    
    (3,173
    )Other income
    
    
    8,192
    
    
    
    7,064
    
    
    
    8,973
    
    
    
    1,128
    
    
    
    (1,909
    )Total premiums and other revenues
    
    
    1,233,998
    
    
    
    1,232,748
    
    
    
    1,260,347
    
    
    
    1,250
    
    
    
    (27,599
    )Benefits and expenses:Policy benefits
    
    
    923,736
    
    
    
    923,064
    
    
    
    939,854
    
    
    
    672
    
    
    
    (16,790
    )Commissions
    
    
    226,748
    
    
    
    209,203
    
    
    
    226,100
    
    
    
    17,545
    
    
    
    (16,897
    )Other operating costs and expenses
    
    
    124,410
    
    
    
    124,266
    
    
    
    132,601
    
    
    
    144
    
    
    
    (8,335
    )Change in deferred policy acquisition costs
    
    
    1,551
    
    
    
    (8,151
    )
    
    
    (9,669
    )
    
    
    9,702
    
    
    
    1,518Total benefits and expenses
    
    
    1,276,445
    
    
    
    1,248,382
    
    
    
    1,288,886
    
    
    
    28,063
    
    
    
    (40,504
    )Income before other items and federal income taxes
    
    $
    (42,447
    )
    
    $
    (15,634
    )
    
    $
    (28,539
    )
    
    $
    (26,813
    )
    
    $
    12,905Loss ratio
    
    
    79.8
    %
    
    
    79.6
    %
    
    
    79.5
    %
    
    
    0.2
    
    
    
    0.1Underwriting expense ratio
    
    
    30.5
    
    
    
    28.1
    
    
    
    29.5
    
    
    
    2.4
    
    
    
    (1.4
    )Combined ratio
    
    
    110.3
    %
    
    
    107.7
    %
    
    
    109.0
    %
    
    
    2.6
    
    
    
    (1.3
    )Effect of net catastrophe losses on combined ratio
    
    
    10.6
    %
    
    
    7.8
    %
    
    
    11.1
    %
    
    
    2.8
    
    
    
    (3.3
    )
   Net Premiums Written and Earned
     66




---



##### Table of Contents



,
Business.
 Policy Benefits
     Commissions and Change in Deferred Policy Acquisition Costs
     67




---



##### Table of Contents



Other Operating Costs and Expenses
 Farm Bureau
 Products
   Years ended December 31,
    
    
    Change over prior year2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009Net premiums writtenAuto
    
    $
    468,100
    
    
    $
    456,960
    
    
    $
    462,545
    
    
    $
    11,140
    
    
    $
    (5,585
    )Homeowner
    
    
    217,785
    
    
    
    217,963
    
    
    
    203,516
    
    
    
    (178
    )
    
    
    14,447Other Personal
    
    
    38,875
    
    
    
    38,815
    
    
    
    34,610
    
    
    
    60
    
    
    
    4,205Total net premiums written
    
    
    724,760
    
    
    
    713,738
    
    
    
    700,671
    
    
    
    11,022
    
    
    
    13,067Net premiums earnedAuto
    
    
    470,535
    
    
    
    452,754
    
    
    
    469,425
    
    
    
    17,781
    
    
    
    (16,671
    )Homeowner
    
    
    216,849
    
    
    
    208,558
    
    
    
    205,764
    
    
    
    8,291
    
    
    
    2,794Other Personal
    
    
    39,298
    
    
    
    37,283
    
    
    
    31,990
    
    
    
    2,015
    
    
    
    5,293Total net premiums earned
    
    $
    726,682
    
    
    $
    698,595
    
    
    $
    707,179
    
    
    $
    28,087
    
    
    $
    (8,584
    )Loss ratioAuto
    
    
    78.0
    %
    
    
    83.9
    %
    
    
    78.0
    %
    
    
    (5.9
    )
    
    
    5.9Homeowner
    
    
    104.1
    
    
    
    100.6
    
    
    
    111.0
    
    
    
    3.5
    
    
    
    (10.4
    )Other Personal
    
    
    61.6
    
    
    
    44.9
    
    
    
    87.7
    
    
    
    16.7
    
    
    
    (42.8
    )Personal line loss ratio
    
    
    84.9
    %
    
    
    86.8
    %
    
    
    88.1
    %
    
    
    (1.9
    )
    
    
    (1.3
    )Combined RatioAuto
    
    
    102.3
    %
    
    
    104.9
    %
    
    
    101.6
    %
    
    
    (2.6
    )
    
    
    3.3Homeowner
    
    
    129.6
    
    
    
    122.8
    
    
    
    138.0
    
    
    
    6.8
    
    
    
    (15.2
    )Other Personal
    
    
    68.7
    
    
    
    51.3
    
    
    
    110.1
    
    
    
    17.4
    
    
    
    (58.8
    )Personal line combined ratio
    
    
    108.6
    %
    
    
    107.4
    %
    
    
    112.6
    %
    
    
    1.2
    
    
    
    (5.2
    )
 Personal Automobile
   68




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##### Table of Contents



Homeowners
  Other Operating Costs and Expenses.
  Other Personal
   69




---



##### Table of Contents



Years ended December 31,
    
    
    Change over prior year2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009Net premiums writtenOther Commercial
    
    $
    123,605
    
    
    $
    127,291
    
    
    $
    139,266
    
    
    $
    (3,686
    )
    
    $
    (11,975
    )Agribusiness
    
    
    103,937
    
    
    
    101,074
    
    
    
    101,243
    
    
    
    2,863
    
    
    
    (169
    )Auto
    
    
    80,109
    
    
    
    88,642
    
    
    
    95,155
    
    
    
    (8,533
    )
    
    
    (6,513
    )Total net premiums written
    
    
    307,651
    
    
    
    317,007
    
    
    
    335,664
    
    
    
    (9,356
    )
    
    
    (18,657
    )Net premiums earnedOther Commercial
    
    
    120,365
    
    
    
    125,855
    
    
    
    137,971
    
    
    
    (5,490
    )
    
    
    (12,116
    )Agribusiness
    
    
    106,678
    
    
    
    105,921
    
    
    
    105,230
    
    
    
    757
    
    
    
    691Auto
    
    
    80,948
    
    
    
    91,074
    
    
    
    96,574
    
    
    
    (10,126
    )
    
    
    (5,500
    )Total net premiums earned
    
    $
    307,991
    
    
    $
    322,850
    
    
    $
    339,775
    
    
    $
    (14,859
    )
    
    $
    (16,925
    )Loss ratioOther Commercial
    
    
    82.9
    %
    
    
    76.9
    %
    
    
    71.2
    %
    
    
    6.0
    
    
    
    5.7Agribusiness
    
    
    108.3
    
    
    
    90.1
    
    
    
    87.5
    
    
    
    18.2
    
    
    
    2.6Auto
    
    
    72.9
    
    
    
    74.3
    
    
    
    76.3
    
    
    
    (1.4
    )
    
    
    (2.0
    )Commercial line loss ratio
    
    
    89.1
    %
    
    
    80.5
    %
    
    
    77.7
    %
    
    
    8.6
    
    
    
    2.8Combined ratioOther Commercial
    
    
    112.1
    %
    
    
    106.4
    %
    
    
    95.8
    %
    
    
    5.7
    
    
    
    10.6Agribusiness
    
    
    145.2
    
    
    
    126.8
    
    
    
    117.7
    
    
    
    18.4
    
    
    
    9.1Auto
    
    
    97.2
    
    
    
    96.9
    
    
    
    99.3
    
    
    
    0.3
    
    
    
    (2.4
    )Commercial line combined ratio
    
    
    119.6
    %
    
    
    110.4
    %
    
    
    103.6
    %
    
    
    9.2
    
    
    
    6.8
 Other Commercial
  Agribusiness Product
  Commercial Automobile:
   70




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##### Table of Contents



Product Discussion  Credit Products
      Property and Casualty Reinsurance
  
    
    Treaty reinsurance, in which certain types of policies are automatically reinsured
without the need for approval by the reinsurer of the individual risks;
 
    
    Facultative reinsurance, in which an individual insurance policy or a specific risk
is reinsured with the prior approval of the reinsurer. Facultative reinsurance is
purchased for risks which fall outside the treaty reinsurance; and
 
    
    Excess of loss treaty reinsurance, where the reinsurer indemnifies us against all,
or a specified portion, of losses and loss adjustment expense incurred in excess of a
specified retention or attachment point, and up to the contract limit.
   71




---



##### Table of Contents




    
    For Louisiana and Texas, we have coverage which lowers our retention to $10.0 million in
those states.
 
    
    In 2010, the Louisiana and Texas covers were expanded to include additional coastal
states as well as Oklahoma and Arkansas. Those covers will remain in place for 2011.
 
    
    Additional catastrophe coverage for the other states outside of the Northeast. The
retention for this cover was $20.0 million in 2010, and will be lowered to $10.0 million
for 2011.
 
    
    Additional catastrophe coverage for the Northeast for the last several years, and the
retention for Northeast catastrophe events will be reduced from $20.0 million to $10.0
million in 2011.
     Percent of Risk CoveredAM Best
    
    
    Non-
    
    
    CatastropheReinsurer
    
    Rating(1)
    
    
    catastrophe
    
    
    CoverageHannover Re (Bermuda), Ltd.
    
    
    A
    
    
    
    39.8
    %
    
    
    2.4
    %Lloyds Syndicates
    
    
    A
    
    
    
    26.6
    
    
    
    52.3Platinum Underwriters Bermuda, Ltd
    
    
    A
    
    
    
    12.1
    
    
    
    0.2Swiss Reinsurance America Corporation
    
    
    A
    
    
    
    8.6
    
    
    
    0.9Catlin Insurance Co
    
    
    A
    
    
    
    5.3
    
    
    
    4.6Tokio Millenium Re Ltd
    
    
    A+
    
    
    
    0.0
    
    
    
    5.8Other reinsurers with no single company
greater than 5% of the total
    
    
    
    
    
    
    7.6
    
    
    
    33.8Total reinsurance coverage
    
    
    
    
    
    
    100.0
    %
    
    
    100.0
    %
 (1)
    
    A.M. Best rating as of the most current information available February 22, 2011.  Prior Period Reserve Development
    72




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##### Table of Contents



Loss Development Table
Property and Casualty Loss and Loss Adjustment Expense Liability Development-Net of Reinsurance
Years Ended December 31,
 2000
    
    
    2001
    
    
    2002
    
    
    2003
    
    
    2004
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010Liability for unpaid losses and
loss adjustment expenses, net
of reinsurance (includes loss reserves, IBNR,
allocated and unalloc expense)
    
    $
    384,191
    
    
    $
    425,129
    
    
    $
    490,215
    
    
    $
    590,365
    
    
    $
    678,379
    
    
    $
    796,267
    
    
    $
    801,953
    
    
    $
    809,500
    
    
    $
    847,860
    
    
    $
    856,658
    
    
    $
    887,008Cumulative paid losses and
loss expensesOne year later
    
    
    192,167
    
    
    
    228,699
    
    
    
    233,074
    
    
    
    256,386
    
    
    
    274,810
    
    
    
    366,007
    
    
    
    296,620
    
    
    
    318,944
    
    
    
    345,346
    
    
    
    308,113Two years later
    
    
    280,667
    
    
    
    322,112
    
    
    
    338,459
    
    
    
    377,139
    
    
    
    405,748
    
    
    
    506,463
    
    
    
    453,042
    
    
    
    477,958
    
    
    
    495,277Three years later
    
    
    323,685
    
    
    
    370,179
    
    
    
    399,651
    
    
    
    445,702
    
    
    
    479,410
    
    
    
    590,643
    
    
    
    544,100
    
    
    
    569,031Four years later
    
    
    345,507
    
    
    
    396,758
    
    
    
    429,408
    
    
    
    479,524
    
    
    
    518,972
    
    
    
    640,003
    
    
    
    593,126Five years later
    
    
    356,119
    
    
    
    407,212
    
    
    
    443,161
    
    
    
    498,349
    
    
    
    541,627
    
    
    
    664,588Six years later
    
    
    362,307
    
    
    
    412,004
    
    
    
    452,256
    
    
    
    509,521
    
    
    
    552,136Seven years later
    
    
    365,331
    
    
    
    416,207
    
    
    
    457,972
    
    
    
    513,968Eight years later
    
    
    367,326
    
    
    
    420,045
    
    
    
    460,785Nine years later
    
    
    369,963
    
    
    
    423,256Ten years later
    
    
    371,230Liabilites re-estimatedOne year later
    
    
    368,951
    
    
    
    432,028
    
    
    
    488,595
    
    
    
    564,287
    
    
    
    638,910
    
    
    
    770,238
    
    
    
    711,880
    
    
    
    766,882
    
    
    
    798,587
    
    
    
    776,808Two years later
    
    
    372,991
    
    
    
    435,574
    
    
    
    488,455
    
    
    
    564,485
    
    
    
    617,374
    
    
    
    737,341
    
    
    
    713,339
    
    
    
    733,361
    
    
    
    770,900Three years later
    
    
    376,776
    
    
    
    441,564
    
    
    
    490,717
    
    
    
    553,163
    
    
    
    596,242
    
    
    
    739,825
    
    
    
    680,900
    
    
    
    727,675Four years later
    
    
    379,498
    
    
    
    441,309
    
    
    
    482,799
    
    
    
    538,459
    
    
    
    596,754
    
    
    
    714,995
    
    
    
    682,460Five years later
    
    
    379,318
    
    
    
    435,796
    
    
    
    476,615
    
    
    
    542,429
    
    
    
    585,370
    
    
    
    717,474Six years later
    
    
    380,050
    
    
    
    432,953
    
    
    
    478,201
    
    
    
    534,287
    
    
    
    585,914Seven years later
    
    
    379,270
    
    
    
    433,990
    
    
    
    472,502
    
    
    
    534,477Eight years later
    
    
    380,082
    
    
    
    430,722
    
    
    
    473,754Nine years later
    
    
    378,611
    
    
    
    433,070Ten years later
    
    
    379,544Deficiency(redundancy), net
of reinsurance
    
    $
    (4,647
    )
    
    $
    7,941
    
    
    $
    (16,461
    )
    
    $
    (55,888
    )
    
    $
    (92,465
    )
    
    $
    (78,793
    )
    
    $
    (119,493
    )
    
    $
    (81,825
    )
    
    $
    (76,960
    )
    
    $
    (79,850
    )Property and Casualty Loss and Loss Adjustment Expense Liability Development-Gross
Years Ended December 31,2000
    
    
    2001
    
    
    2002
    
    
    2003
    
    
    2004
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010Net reserve, as initially estimated
    
    $
    384,191
    
    
    $
    425,129
    
    
    $
    490,215
    
    
    $
    590,365
    
    
    $
    678,379
    
    
    $
    796,267
    
    
    $
    801,953
    
    
    $
    809,500
    
    
    $
    847,860
    
    
    $
    856,658
    
    
    $
    887,008Reinsurance and other recoverables
as initially estimated
    
    
    47,162
    
    
    
    65,327
    
    
    
    61,077
    
    
    
    61,600
    
    
    
    80,526
    
    
    
    86,186
    
    
    
    86,898
    
    
    
    79,071
    
    
    
    109,518
    
    
    
    62,854
    
    
    
    50,972Gross reserve as initially estimated
    
    
    431,075
    
    
    
    490,103
    
    
    
    550,022
    
    
    
    646,397
    
    
    
    750,454
    
    
    
    869,781
    
    
    
    875,436
    
    
    
    875,963
    
    
    
    945,810
    
    
    
    909,003
    
    
    
    931,303Net re-estimated reserve
    
    
    379,544
    
    
    
    433,070
    
    
    
    473,754
    
    
    
    534,477
    
    
    
    585,914
    
    
    
    717,474
    
    
    
    682,460
    
    
    
    727,675
    
    
    
    770,900
    
    
    
    776,808Re-estimated and other reinsurance
recoverables
    
    
    82,008
    
    
    
    78,104
    
    
    
    82,466
    
    
    
    86,211
    
    
    
    86,070
    
    
    
    498,247
    
    
    
    97,434
    
    
    
    79,394
    
    
    
    111,176
    
    
    
    47,206Gross re-estimated reserve
    
    
    461,552
    
    
    
    511,174
    
    
    
    556,220
    
    
    
    620,688
    
    
    
    671,984
    
    
    
    1,215,721
    
    
    
    779,894
    
    
    
    807,069
    
    
    
    882,076
    
    
    
    824,014Deficiency(redundancy), gross
of reinsurance
    
    $
    30,477
    
    
    $
    21,071
    
    
    $
    6,198
    
    
    $
    (25,709
    )
    
    $
    (78,470
    )
    
    $
    345,940
    
    
    $
    (95,542
    )
    
    $
    (68,894
    )
    
    $
    (63,734
    )
    
    $
    (84,989
    )
    73




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##### Table of Contents



74




---



##### Table of Contents



Corporate and Other
 Investment
  Years ended December 31,
    
    
    Change over prior year2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009Revenues:Net investment income
    
    $
    95,656
    
    
    $
    85,964
    
    
    $
    108,862
    
    
    $
    9,692
    
    
    $
    (22,898
    )Gain (loss) from investments, net
    
    
    74,062
    
    
    
    (73,855
    )
    
    
    (379,034
    )
    
    
    147,917
    
    
    
    305,179Other Income
    
    
    3,175
    
    
    
    2,704
    
    
    
    2,503
    
    
    
    471
    
    
    
    201Total revenues
    
    
    172,893
    
    
    
    14,813
    
    
    
    (267,669
    )
    
    
    158,080
    
    
    
    282,482Benefits and expenses:Other operating costs and expenses
    
    
    38,695
    
    
    
    41,220
    
    
    
    22,946
    
    
    
    (2,525
    )
    
    
    18,274Total benefits and expenses
    
    
    38,695
    
    
    
    41,220
    
    
    
    22,946
    
    
    
    (2,525
    )
    
    
    18,274Income (loss) before other items
and federal income taxes
    
    $
    134,198
    
    
    $
    (26,407
    )
    
    $
    (290,615
    )
    
    $
    160,605
    
    
    $
    264,208
    Discontinued Operations
   75




---



##### Table of Contents



Liquidity
        76




---



##### Table of Contents



Capital Resources
  Years Ended December 31,2010
    
    
    2009
    
    
    2008American National stockholders equity, excluding accumulated
other comprehensive income (loss), net of tax (AOCI)
    
    $
    3,407,439
    
    
    $
    3,342,805
    
    
    $
    3,355,004AOCI
    
    
    225,212
    
    
    
    117,649
    
    
    
    (221,148
    )Total American National stockholders equity
    
    $
    3,632,651
    
    
    $
    3,460,454
    
    
    $
    3,133,856
    Statutory Surplus and Risk-based Capital
     77




---



##### Table of Contents



Contractual Obligations
  Payments Due by PeriodLess than
    
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    
    1 year
    
    
    1-3 years
    
    
    3-5 years
    
    
    5 yearsLife insurance obligations(1)
    
    $
    5,441,711
    
    
    $
    34,770
    
    
    $
    144,175
    
    
    $
    328,987
    
    
    $
    4,933,779Annuity obligations(1)
    
    
    12,070,742
    
    
    
    1,635,876
    
    
    
    4,337,263
    
    
    
    2,415,466
    
    
    
    3,682,137Property and casualty insurance obligations(2)
    
    
    931,303
    
    
    
    498,245
    
    
    
    335,177
    
    
    
    73,245
    
    
    
    24,636Accident and health insurance obligations(3)
    
    
    139,127
    
    
    
    80,192
    
    
    
    18,989
    
    
    
    8,861
    
    
    
    31,085Purchase obligations:Commitments to purchase and fund investments(4)
    
    
    55,385
    
    
    
    48,404
    
    
    
    4,310
    
    
    
    1,130
    
    
    
    1,541Mortgage loan commitments(4)
    
    
    227,441
    
    
    
    227,441
    
    
    
    
    
    
    
    
    
    
    
    Operating leases(5)
    
    
    3,429
    
    
    
    626
    
    
    
    1,275
    
    
    
    1,528
    
    
    
    Defined benefit pension plans(6)
    
    
    140,503
    
    
    
    9,680
    
    
    
    19,138
    
    
    
    21,825
    
    
    
    89,860Notes payable(7)
    
    
    60,140
    
    
    
    47,632
    
    
    
    
    
    
    
    
    
    
    
    12,508Total
    
    $
    19,069,781
    
    
    $
    2,582,866
    
    
    $
    4,860,327
    
    
    $
    2,851,042
    
    
    $
    8,775,546
 (1)
    
    Life and annuity obligations include estimated claim, benefit, surrender and commission
obligations offset by expected future premiums and deposits on in-force insurance policies and
contracts. All amounts are gross of reinsurance. Estimated claim, benefit and surrender
obligations are based on mortality and lapse assumptions that are comparable with historical
experience. Estimated payments on interest-sensitive life and annuity obligations include
interest credited to those products. The interest crediting rates are derived by deducting
current product spreads from a constant investment yield. The obligations shown in the table
have not been discounted. As a result, the estimated obligations for insurance liabilities
included in the table exceed the liabilities recorded in reserves for future policy benefits
and the liability for policy and contract claims. Due to the significance of the assumptions
used, the amounts presented could materially differ from actual payments. Separate account
obligations have not been included since those obligations are not part of the general account
obligations and will be funded by cash flows from separate account assets. The general
account obligations for insurance liabilities will be funded by cash flows from general
account assets and future premiums and deposits. Participating policyholder dividends payable
consists of liabilities related to dividends payable in the following calendar year on
participating policies. As such, the contractual obligation related to participating
policyholder dividends payable is presented in the table above in the less than one-year
category at the amount of the liability presented in the consolidated statements of financial
position. All estimated cash payments in the table above are undiscounted as to interest, net
of estimated future premiums on policies currently in-force and gross of any reinsurance
recoverable. Estimated future premiums on participating policies currently in-force are net
of future policyholder dividends payable. Future policyholder dividends, the participating
policyholder share obligation on the consolidated statements of financial position, represents
the accumulated net income from participating policies and a pro-rata portion of unrealized
investment gains (losses), net of tax, reserved for payment to such policyholders as
policyholder dividends. Because of the nature of the participating policyholder obligation,
the exact timing and amount of the ultimate participating policyholder obligation is subject
to significant uncertainty and the amount of the participating policyholder obligation is
based upon a long-term projection of the performance of the participating policy block.(2)
    
    Expected future gross loss and loss adjustment expense payments from property and casualty
policies includes case reserves for reported claims and reserves for IBNR. Timing of future
payments is estimated based on our historical payment patterns. The timing of these payments
may vary
significantly from the pattern shown in the preceding table. The ultimate losses may vary
materially from the recorded amounts, which are our best estimates.  78




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##### Table of Contents



(3)
    
    Accident and health insurance obligations reflect estimated future claim payment amounts net
of reinsurance for claims incurred prior to January 1, 2010. The estimate does not include
claim payments for claims incurred after December 31, 2009. Estimated claim payment amounts
are based on mortality and morbidity assumptions that are consistent with historical
experience and are not discounted with interest so will exceed the liabilities recorded in
reserves for future claim payments. Due to the significance of the assumptions used the
amounts presented could materially differ from actual payments.(4)
    
    Expected payments to fund investments based on mortgage loans and capital commitments and
other related contractual obligations.(5)
    
    Represents estimated obligations due to contracts and agreements entered into within the
ordinary course of business for items classified as an operating lease by ASC 840-20
Accounting for Operating Leases.(6)
    
    Represents estimated payments for pension benefit obligations for the non-qualified defined
benefit pension plan. As such, these payments are funded through continuing operations. A
liability has been established for the full amount of benefits accrued as per ASC 715-40
Compensation-Retirement Benefits, including a provision for the effects on the accrued
benefits of assumed future salary increases.(7)
    
    Notes payable are comprised of obligations to third-party lenders, and are collateralized by
real-estate owned by the respective entity. The estimated payments due by period for notes
payable reflect the contractual maturities of principal and estimated future interest
payments. The payment of principal and estimated future interest for the current portion of
long-term notes payable are reflected in estimated payments due in less than one year. These
are not corporate obligations and the Companys liability is limited to its investment in the
respective venture. See Note 12, Notes Payable, in the Notes to the Consolidated Financial
Statements for further explanation. 
 Off-Balance Sheet Arrangements
  
 Related-Party Transactions
   79




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##### Table of Contents



Investments
      Composition of Invested Assets
  Year ended December 31, 2010
    
    
    Year ended December 31, 2009Amount
    
    
    Percent
    
    
    Amount
    
    
    PercentBonds held-to-maturity, at amortized cost
    
    $
    8,513,550
    
    
    
    47.5
    %
    
    $
    7,461,711
    
    
    
    44.9
    %Bonds available-for-sale, at fair value
    
    
    4,123,613
    
    
    
    23.0
    
    
    
    4,213,550
    
    
    
    25.4Preferred stock, at fair value
    
    
    36,867
    
    
    
    0.2
    
    
    
    35,717
    
    
    
    0.2Common stock, at fair value
    
    
    1,045,888
    
    
    
    5.8
    
    
    
    934,754
    
    
    
    5.6Mortgage loans at amortized cost
    
    
    2,679,909
    
    
    
    15.0
    
    
    
    2,229,659
    
    
    
    13.4Policy loans, at outstanding balance
    
    
    380,505
    
    
    
    2.1
    
    
    
    364,354
    
    
    
    2.2Investment real estate, net of depreciation
    
    
    521,768
    
    
    
    2.9
    
    
    
    635,110
    
    
    
    3.8Short-term investments
    
    
    486,206
    
    
    
    2.8
    
    
    
    636,823
    
    
    
    3.9Other invested assets
    
    
    119,251
    
    
    
    0.7
    
    
    
    94,442
    
    
    
    0.6Total Invested Assets
    
    $
    17,907,557
    
    
    
    100.0
    %
    
    $
    16,606,120
    
    
    
    100.0
    %
   80




---



##### Table of Contents



Investments to Support Our Insurance Business
 Bonds-
    December 31, 2010
    
    
    December 31, 2009Amortized
    
    
    Estimated
    
    
    % of Fair
    
    
    Amortized
    
    
    Estimated
    
    
    % of FairCost
    
    
    Fair Value
    
    
    Value
    
    
    Cost
    
    
    Fair Value
    
    
    ValueAAA
    
    $
    1,258,952
    
    
    $
    1,311,152
    
    
    
    10.0
    %
    
    $
    1,357,021
    
    
    $
    1,387,783
    
    
    
    11.6
    %AA
    
    
    1,289,870
    
    
    
    1,343,653
    
    
    
    10.2
    
    
    
    927,081
    
    
    
    967,274
    
    
    
    8.1A
    
    
    4,551,294
    
    
    
    4,848,986
    
    
    
    37.0
    
    
    
    4,080,455
    
    
    
    4,251,937
    
    
    
    35.7BBB
    
    
    4,613,315
    
    
    
    4,871,583
    
    
    
    37.2
    
    
    
    4,287,623
    
    
    
    4,428,359
    
    
    
    37.2BB and below
    
    
    725,436
    
    
    
    728,073
    
    
    
    5.6
    
    
    
    945,575
    
    
    
    884,673
    
    
    
    7.4Total
    
    $
    12,438,867
    
    
    $
    13,103,447
    
    
    
    100.0
    %
    
    $
    11,597,755
    
    
    $
    11,920,026
    
    
    
    100.0
    %
  Mortgage Loans-
    81




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##### Table of Contents



Equity Securities -
  Year ended December 31, 2010Unrealized
    
    
    UnrealizedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueCommon stock
    
    $
    690,245
    
    
    $
    361,048
    
    
    $
    (5,405
    )
    
    $
    1,045,888Preferred stock
    
    
    30,420
    
    
    
    6,714
    
    
    
    (267
    )
    
    
    36,867Total
    
    $
    720,665
    
    
    $
    367,762
    
    
    $
    (5,672
    )
    
    $
    1,082,755
 Year ended December 31, 2009Unrealized
    
    
    UnrealizedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueCommon stock
    
    $
    683,794
    
    
    $
    259,256
    
    
    $
    (8,296
    )
    
    $
    934,754Preferred stock
    
    
    35,359
    
    
    
    5,269
    
    
    
    (4,911
    )
    
    
    35,717Total
    
    $
    719,153
    
    
    $
    264,525
    
    
    $
    (13,207
    )
    
    $
    970,471
  Investment in Real Estate-
 Short-Term Investments-
 Policy Loans-
  Net Investment Income and Realized Gains (Losses)
   82




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Unrealized Gains and Losses :
  Fair Value Disclosures
        83




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##### Table of Contents



ITEM 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
     
    
    Designing an approach to identify potential risks and events that may affect the
entity;
 
    
    Managing risks within our risk profile; and
 
    
    Providing reasonable assurance regarding the achievement of our strategic
objectives.
  Interest Rate Risk
   84




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##### Table of Contents



Interest Rate sensitivity analysis:
 Increase/(Decrease) in Market Value Given an Interest rateIncrease/(Decrease) of X Basis Points(100)
    
    
    (50)
    
    
    50
    
    
    100Year ended December 31, 2010Investment portfolio
    
    $
    529,510
    
    
    $
    263,245
    
    
    $
    (261,875
    )
    
    $
    (520,447
    )Year ended December 31, 2009Investment portfolio
    
    $
    489,843
    
    
    $
    245,091
    
    
    $
    (245,733
    )
    
    $
    (489,148
    )
      85




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##### Table of Contents



Credit Risk
    Equity Risk
  Changes in Accounting Principles
   86




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##### Table of Contents



Item 8.
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 Index to Annual Consolidated Financial Statements
 Report of Independent Registered Public Accounting Firm
    
    
    88Report of Independent Registered Public Accounting Firm on Internal Control
    
    
    89Consolidated Statements of Operations for the years ended December 31, 2010,
2009, and 2008
    
    
    90Consolidated Statements of Financial Position as of December 31, 2010 and 2009
    
    
    91Consolidated Statements of Changes in Equity for the years ended December 31,
2010, 2009, and 2008
    
    
    92Consolidated Statements of Comprehensive Income (Loss) for the years ended
December 31, 2010, 2009, and 2008
    
    
    92Consolidated Statements of Cash Flows for the years ended December 31, 2010,
2009, and 2008
    
    
    93Notes to the Consolidated Financial Statements
    
    
    94
  87




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
     Internal Control  Integrated
Framework
  
  88




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
 Internal Control  Integrated
Framework
    Internal Control  Integrated Framework
   
  89




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##### Table of Contents



AMERICAN NATIONAL INSURANCE COMPANY
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 Years ended December 31,2010
    
    
    2009
    
    
    2008PREMIUMS AND OTHER REVENUEPremiumsLife
    
    $
    282,160
    
    
    $
    284,530
    
    
    $
    299,338Annuity
    
    
    174,193
    
    
    
    220,284
    
    
    
    116,248Accident and health
    
    
    263,294
    
    
    
    309,701
    
    
    
    290,883Property and casualty
    
    
    1,158,261
    
    
    
    1,159,509
    
    
    
    1,182,026Other policy revenues
    
    
    185,805
    
    
    
    179,504
    
    
    
    174,899Net investment income
    
    
    911,915
    
    
    
    839,777
    
    
    
    795,442Realized investments gains (losses)
    
    
    79,728
    
    
    
    5,248
    
    
    
    (13,483
    )Other-than-temporary impairments
    
    
    (5,666
    )
    
    
    (79,103
    )
    
    
    (365,551
    )Other income
    
    
    17,398
    
    
    
    19,000
    
    
    
    22,777Total revenues
    
    
    3,067,088
    
    
    
    2,938,450
    
    
    
    2,502,579BENEFITS, LOSSES AND EXPENSESPolicy BenefitsLife
    
    
    294,177
    
    
    
    297,719
    
    
    
    296,078Annuity
    
    
    205,948
    
    
    
    249,709
    
    
    
    142,867Accident and health
    
    
    184,554
    
    
    
    239,407
    
    
    
    223,055Property and casualty
    
    
    923,736
    
    
    
    923,064
    
    
    
    939,854Interest credited to policy account balances
    
    
    393,119
    
    
    
    370,563
    
    
    
    299,833Commissions for acquiring and servicing policies
    
    
    448,880
    
    
    
    459,943
    
    
    
    475,345Other operating costs and expenses
    
    
    454,146
    
    
    
    471,920
    
    
    
    493,907Change in deferred policy acquisition costs
    
    
    (40,095
    )
    
    
    (63,611
    )
    
    
    (67,439
    )Total benefits, losses and expenses
    
    
    2,864,465
    
    
    
    2,948,714
    
    
    
    2,803,500Income (loss) from continuing operations before federal income tax,
and equity in earnings of unconsolidated affiliates
    
    
    202,623
    
    
    
    (10,264
    )
    
    
    (300,921
    )Provision (benefit) for federal income taxesCurrent
    
    
    58,946
    
    
    
    (14,203
    )
    
    
    (35,016
    )Deferred
    
    
    (3,738
    )
    
    
    (16,825
    )
    
    
    (87,378
    )Total provision (benefit) for federal income taxes
    
    
    55,208
    
    
    
    (31,028
    )
    
    
    (122,394
    )Equity in earnings (losses) of unconsolidated affiliates, net of tax
    
    
    (3,169
    )
    
    
    (4,216
    )
    
    
    4,965Income (loss) from continuing operations
    
    
    144,246
    
    
    
    16,548
    
    
    
    (173,562
    )Income (loss) from discontinued operations, net of tax (See Note 19)
    
    
    (1,275
    )
    
    
    (1,381
    )
    
    
    19,533Net income (loss)
    
    
    142,971
    
    
    
    15,167
    
    
    
    (154,029
    )Less:Net loss attributable to noncontrolling interest
    
    
    (1,055
    )
    
    
    (458
    )
    
    
    (31
    )Net income (loss) attributable to
American National Insurance Company and Subsidiaries
    
    $
    144,026
    
    
    $
    15,625
    
    
    $
    (153,998
    )Amounts available to American National Insurance Company
common stockholdersEarnings (loss) per share:Basic
    
    $
    5.42
    
    
    $
    0.59
    
    
    $
    (5.82
    )Diluted
    
    
    5.40
    
    
    
    0.59
    
    
    
    (5.82
    )Weighted average common shares outstanding
    
    
    26,559,035
    
    
    
    26,528,832
    
    
    
    26,479,832Weighted average common shares outstanding and
dilutive potential common shares
    
    
    26,687,158
    
    
    
    26,597,476
    
    
    
    26,479,832
 See accompanying notes to the consolidated financial statements.
  90




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AMERICAN NATIONAL INSURANCE COMPANY
 
 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
 December 31,2010
    
    
    2009ASSETSInvestments, other than investments in unconsolidated affiliatesFixed maturity securities:Bonds held-to-maturity
    
    $
    8,513,550
    
    
    $
    7,461,711Bonds available-for-sale
    
    
    4,123,613
    
    
    
    4,213,550Equity securities:Preferred stocks
    
    
    36,867
    
    
    
    35,717Common stocks
    
    
    1,045,888
    
    
    
    934,754Mortgage loans on real estate, net of allowance
    
    
    2,679,909
    
    
    
    2,229,659Policy loans
    
    
    380,505
    
    
    
    364,354Investment real estate, net of
accumulated depreciation of $202,111 and $209,115
    
    
    521,768
    
    
    
    635,110Short-term investments
    
    
    486,206
    
    
    
    636,823Other invested assets
    
    
    119,251
    
    
    
    94,442Total investments
    
    
    17,907,557
    
    
    
    16,606,120Cash and cash equivalents
    
    
    101,449
    
    
    
    161,483Investments in unconsolidated affiliates
    
    
    195,472
    
    
    
    156,809Accrued investment income
    
    
    201,286
    
    
    
    191,737Reinsurance ceded receivables
    
    
    355,188
    
    
    
    371,654Prepaid reinsurance premiums
    
    
    41,198
    
    
    
    53,545Premiums due and other receivables
    
    
    287,184
    
    
    
    282,865Deferred policy acquisition costs
    
    
    1,318,426
    
    
    
    1,330,981Property and equipment, net
    
    
    77,974
    
    
    
    88,705Current federal income taxes
    
    
    7,764
    
    
    
    29,474Deferred federal income taxes
    
    
    
    
    
    
    5,034Other assets
    
    
    138,978
    
    
    
    152,722Separate account assets
    
    
    780,563
    
    
    
    718,378Total assets
    
    $
    21,413,039
    
    
    $
    20,149,507LIABILITIESPolicyholder fundsFuture policy benefits:Life
    
    $
    2,539,334
    
    
    $
    2,485,886Annuity
    
    
    865,480
    
    
    
    783,065Accident and health
    
    
    81,266
    
    
    
    88,545Policy account balances
    
    
    10,475,159
    
    
    
    9,567,860Policy and contract claims
    
    
    1,298,457
    
    
    
    1,302,653Participating policyholder share
    
    
    177,794
    
    
    
    162,794Other policyholder funds
    
    
    889,446
    
    
    
    919,864Total policyholder liabilities
    
    
    16,326,936
    
    
    
    15,310,667Liability for retirement benefits
    
    
    187,453
    
    
    
    180,909Current portion of long-term notes payable
    
    
    47,632
    
    
    
    34,297Long-term notes payable
    
    
    12,508
    
    
    
    39,545Deferred federal income taxes
    
    
    53,737
    
    
    
    Other liabilities
    
    
    368,332
    
    
    
    393,302Separate account liabilities
    
    
    780,563
    
    
    
    718,378Total liabilities
    
    
    17,777,161
    
    
    
    16,677,098STOCKHOLDERS EQUITYCommon stock, $1.00 par value,  Authorized 50,000,000
Issued 30,832,449, Outstanding 26,820,977 shares
    
    
    30,832
    
    
    
    30,832Additional paid-in capital
    
    
    15,190
    
    
    
    11,986Accumulated other comprehensive income
    
    
    225,212
    
    
    
    117,649Retained earnings
    
    
    3,459,911
    
    
    
    3,398,492Treasury stock, at cost
    
    
    (98,494
    )
    
    
    (98,505
    )Total American National stockholders equity
    
    
    3,632,651
    
    
    
    3,460,454Noncontrolling interest
    
    
    3,227
    
    
    
    11,955Total stockholders equity
    
    
    3,635,878
    
    
    
    3,472,409Total liabilities and stockholders equity
    
    $
    21,413,039
    
    
    $
    20,149,507
 See accompanying notes to the consolidated financial statements.
  91




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AMERICAN NATIONAL INSURANCE COMPANY
 
 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
 Years ended December 31,2010
    
    
    2009
    
    
    2008Common StockBalance at beginning and end of the year
    
    $
    30,832
    
    
    $
    30,832
    
    
    $
    30,832Additional Paid-In CapitalBalance as of January 1,
    
    
    11,986
    
    
    
    7,552
    
    
    
    6,080Issuance of treasury shares as restricted stock
    
    
    (11
    )
    
    
    179
    
    
    
    (1,139
    )Tax benefit on excess restricted stock
    
    
    
    
    
    
    439
    
    
    
    Amortization of restricted stock
    
    
    3,215
    
    
    
    3,816
    
    
    
    2,611Balance as of December 31,
    
    
    15,190
    
    
    
    11,986
    
    
    
    7,552Accumulated Other Comprehensive IncomeBalance as of January 1,
    
    
    117,649
    
    
    
    (221,148
    )
    
    
    145,972Change in unrealized gain (loss) on available-for-sale securities, net
    
    
    109,006
    
    
    
    383,098
    
    
    
    (331,828
    )Cumulative adjustment for accounting change on
other-than-temporary impairments on debt securities
    
    
    
    
    
    
    (50,411
    )
    
    
    Foreign exchange adjustments
    
    
    276
    
    
    
    664
    
    
    
    (247
    )Defined benefit plans adjustment
    
    
    (1,719
    )
    
    
    5,446
    
    
    
    (35,045
    )Balance as of December 31,
    
    
    225,212
    
    
    
    117,649
    
    
    
    (221,148
    )Retained EarningsBalance as of January 1,
    
    
    3,398,492
    
    
    
    3,414,946
    
    
    
    3,653,365Net income (loss) attributable to American National
Insurance Company and Subsidiaries
    
    
    144,026
    
    
    
    15,625
    
    
    
    (153,998
    )Cash dividends to common stockholders
($3.08 per share)
    
    
    (82,607
    )
    
    
    (82,490
    )
    
    
    (82,651
    )Effect of ASC 715 change in measurement date
    
    
    
    
    
    
    
    
    
    
    (1,770
    )Cumulative adjustment for accounting change on other-than-temporary impairments on fixed maturity securities
    
    
    
    
    
    
    50,411
    
    
    
    Balance as of December 31,
    
    
    3,459,911
    
    
    
    3,398,492
    
    
    
    3,414,946Treasury StockBalance as of January 1,
    
    
    (98,505
    )
    
    
    (98,326
    )
    
    
    (99,465
    )Net issuance of restricted stock
    
    
    11
    
    
    
    (179
    )
    
    
    1,139Balance as of December 31,
    
    
    (98,494
    )
    
    
    (98,505
    )
    
    
    (98,326
    )Noncontrolling InterestBalance as of January 1,
    
    
    11,955
    
    
    
    8,377
    
    
    
    4,539Contributions
    
    
    466
    
    
    
    4,392
    
    
    
    4,279Distributions
    
    
    (278
    )
    
    
    (109
    )
    
    
    (427
    )Loss attributable to noncontrolling interest
    
    
    (1,623
    )
    
    
    (705
    )
    
    
    (14
    )Effect of ASU 2009-17 implementation
    
    
    (7,293
    )
    
    
    
    
    
    
    Balance as of December 31,
    
    
    3,227
    
    
    
    11,955
    
    
    
    8,377Total EquityBalance as of December 31,
    
    $
    3,635,878
    
    
    $
    3,472,409
    
    
    $
    3,142,233
 
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 Years ended December 31,2010
    
    
    2009
    
    
    2008Net income (loss) attributable to American National
Insurance Company and Subsidiaries
    
    $
    144,026
    
    
    $
    15,625
    
    
    $
    (153,998
    )Other comprehensive income (loss), net of taxChange in unrealized gain (loss) on available-for-sale securities, net
    
    
    109,006
    
    
    
    383,098
    
    
    
    (331,828
    )Foreign exchange adjustments
    
    
    276
    
    
    
    664
    
    
    
    (247
    )Defined benefit plans adjustment
    
    
    (1,719
    )
    
    
    5,446
    
    
    
    (35,045
    )Total other comprehensive income (loss)
    
    
    107,563
    
    
    
    389,208
    
    
    
    (367,120
    )Total comprehensive income (loss) attributable to American
National Insurance Company and Subsidiaries
    
    $
    251,589
    
    
    $
    404,833
    
    
    $
    (521,118
    )
 See accompanying notes to the consolidated financial statements.
  92




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AMERICAN NATIONAL INSURANCE COMPANY
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 Years Ended December 31,2010
    
    
    2009
    
    
    2008OPERATING ACTIVITIESNet income (loss) attributable to American National Insurance Company and Subsidiaries
    
    $
    144,026
    
    
    $
    15,625
    
    
    $
    (153,998
    )Adjustments to reconcile net income (loss) to net cash provided by operating activities:Realized (gains) losses on investments
    
    
    (79,575
    )
    
    
    (3,406
    )
    
    
    14,158Other-than-temporary impairments
    
    
    5,666
    
    
    
    79,103
    
    
    
    365,551Amortization of discounts and premiums on bonds
    
    
    19,463
    
    
    
    16,215
    
    
    
    16,654Net capitalized interest on policy loans and mortgage loans
    
    
    (30,310
    )
    
    
    (27,881
    )
    
    
    3,511Depreciation
    
    
    40,017
    
    
    
    44,744
    
    
    
    26,496Interest credited to policy account balances
    
    
    393,119
    
    
    
    370,563
    
    
    
    299,833Charges to policy account balances
    
    
    (185,805
    )
    
    
    (173,360
    )
    
    
    (191,238
    )Deferred federal income tax benefit
    
    
    (3,738
    )
    
    
    (16,825
    )
    
    
    (87,378
    )Deferral of policy acquisition costs
    
    
    (481,600
    )
    
    
    (477,417
    )
    
    
    (491,342
    )Amortization of deferred policy acquisition costs
    
    
    441,505
    
    
    
    413,806
    
    
    
    424,005Equity in (earnings) losses of unconsolidated affiliates
    
    
    4,875
    
    
    
    6,488
    
    
    
    (7,639
    )Changes in:Policyholder funds liabilities
    
    
    101,615
    
    
    
    32,629
    
    
    
    88,908Reinsurance ceded receivables
    
    
    16,466
    
    
    
    111,192
    
    
    
    (44,780
    )Premiums due and other receivables
    
    
    (4,319
    )
    
    
    42,154
    
    
    
    (38,419
    )Accrued investment income
    
    
    (9,549
    )
    
    
    (6,936
    )
    
    
    (1,952
    )Current federal income tax liability/recoverable
    
    
    21,710
    
    
    
    38,853
    
    
    
    (65,182
    )Liability for retirement benefits
    
    
    6,544
    
    
    
    (3,215
    )
    
    
    6,018Prepaid reinsurance premiums
    
    
    12,347
    
    
    
    7,888
    
    
    
    5,339Other, net
    
    
    (11,486
    )
    
    
    21,170
    
    
    
    3,136Net cash provided by operating activities
    
    
    400,971
    
    
    
    491,390
    
    
    
    171,681INVESTING ACTIVITIESProceeds from sales of:Bonds
    
    
    283,124
    
    
    
    82,861
    
    
    
    6,353Equity securities
    
    
    166,923
    
    
    
    182,871
    
    
    
    129,270Real estate
    
    
    30,412
    
    
    
    4,837
    
    
    
    4,500Mortgage loans
    
    
    
    
    
    
    
    
    
    
    2,294Other invested assets
    
    
    22,550
    
    
    
    1,806
    
    
    
    9,896Disposals of property and equipment
    
    
    1,602
    
    
    
    1,608
    
    
    
    1,380Distributions from unconsolidated affiliates
    
    
    10,920
    
    
    
    11,310
    
    
    
    12,332Proceeds from maturities/redemption of:Bonds
    
    
    1,051,197
    
    
    
    835,722
    
    
    
    850,081Equity securities
    
    
    1,556
    
    
    
    
    
    
    
    Principal payments received on:Mortgage loans
    
    
    151,828
    
    
    
    116,365
    
    
    
    144,497Policy loans
    
    
    49,599
    
    
    
    45,591
    
    
    
    9,459Purchases of investments:Bonds
    
    
    (2,160,997
    )
    
    
    (1,538,440
    )
    
    
    (1,270,774
    )Equity securities
    
    
    (146,488
    )
    
    
    (53,758
    )
    
    
    (290,979
    )Real estate
    
    
    (26,842
    )
    
    
    (127,281
    )
    
    
    (78,119
    )Mortgage loans
    
    
    (536,830
    )
    
    
    (477,275
    )
    
    
    (520,426
    )Policy loans
    
    
    (41,749
    )
    
    
    (32,129
    )
    
    
    (20,447
    )Other invested assets
    
    
    (44,867
    )
    
    
    (31,572
    )
    
    
    (21,795
    )Additions to property and equipment
    
    
    (9,359
    )
    
    
    (13,178
    )
    
    
    (25,024
    )Contributions to unconsolidated affiliates
    
    
    (36,083
    )
    
    
    (20,042
    )
    
    
    (38,514
    )Change in short-term investments
    
    
    150,617
    
    
    
    (341,653
    )
    
    
    403,092Other, net
    
    
    2,075
    
    
    
    (256
    )
    
    
    2,483Net cash used in investing activities
    
    
    (1,080,812
    )
    
    
    (1,352,613
    )
    
    
    (690,441
    )FINANCING ACTIVITIESPolicyholders deposits to policy account balances
    
    
    1,722,505
    
    
    
    2,268,201
    
    
    
    1,996,836Policyholders withdrawals from policy account balances
    
    
    (1,022,520
    )
    
    
    (1,191,021
    )
    
    
    (1,446,521
    )Change in notes payable
    
    
    2,429
    
    
    
    (38,080
    )
    
    
    (16,877
    )Dividends to stockholders
    
    
    (82,607
    )
    
    
    (82,490
    )
    
    
    (82,651
    )Net cash provided by financing activities
    
    
    619,807
    
    
    
    956,610
    
    
    
    450,787NET INCREASE (DECREASE) IN CASH
    
    
    (60,034
    )
    
    
    95,387
    
    
    
    (67,973
    )Cash:Beginning of the year
    
    
    161,483
    
    
    
    66,096
    
    
    
    134,069End of year
    
    $
    101,449
    
    
    $
    161,483
    
    
    $
    66,096
 See accompanying notes to the consolidated financial statements.
  93




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##### Table of Contents



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 1. NATURE OF OPERATIONS
  2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES
  BASIS OF PRESENTATION
    USE OF ESTIMATES
  
    
    Other-than-temporary impairment (OTTI);
 
    
    Deferred policy acquisition costs;
 
    
    Reserves;
 
    
    Reinsurance;
 
    
    Pension and postretirement benefit plans;
 
    
    Litigation contingencies; and
 
    
    Federal income taxes.
   94




---



##### Table of Contents



INVESTMENTS
 Fixed maturity securities
  Equity Securities
  Unrealized gains and losses
  Mortgage loans
  Policy loans
  Investment real estate
   95




---



##### Table of Contents



Real Estate Joint Ventures and Other Limited Partnership Interests
  Short-term investments
  Other invested assets
  Impairments
    96




---



##### Table of Contents



Derivative instruments and hedging activities
   Investments in unconsolidated affiliates
  CASH AND CASH EQUIVALENTS
  PROPERTY AND EQUIPMENT
   97




---



##### Table of Contents



FOREIGN CURRENCIES
  INSURANCE SPECIFIC ASSETS AND LIABILITIES
 Deferred policy acquisition costs
      Future policy benefits
    98




---



##### Table of Contents



Reinsurance
   Reserves for losses and loss expenses
  PREMIUM REVENUE AND POLICY BENEFITS
 Traditional ordinary life and health
  Annuities
  Universal life and single premium whole life
  Property and casualty
   99




---



##### Table of Contents



PARTICIPATING INSURANCE POLICIES
   FEDERAL INCOME TAXES
     PENSION AND POSTRETIREMENT BENEFIT PLANS
    100




---



##### Table of Contents



STOCK-BASED COMPENSATION
 Stock Appreciation Rights
   Restricted Stock Units
   Restricted Stock Awards
    101




---



##### Table of Contents



SEPARATE ACCOUNT ASSETS AND LIABILITIES
  LITIGATION CONTINGENCIES
  ADOPTION OF NEW ACCOUNTING STANDARDS
      102




---



##### Table of Contents



103




---



##### Table of Contents



FUTURE ADOPTION OF NEW ACCOUNTING STANDARDS
        104




---



##### Table of Contents



3. INVESTMENTS
  Year ended December 31, 2010Gross
    
    
    GrossCost or
    
    
    Unrealized
    
    
    Unrealized
    
    
    Estimated FairAmortized Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueFixed maturity securitiesBonds held-to-maturityU.S. treasury and other U.S. government
corporations and agencies
    
    $
    23,117
    
    
    $
    288
    
    
    $
    
    
    
    $
    23,405States of the U.S. and political subdivisions
of the states
    
    
    422,249
    
    
    
    7,117
    
    
    
    (6,920
    )
    
    
    422,446Foreign governments
    
    
    29,020
    
    
    
    4,910
    
    
    
    
    
    
    
    33,930Corporate debt securities
    
    
    7,293,501
    
    
    
    478,353
    
    
    
    (33,077
    )
    
    
    7,738,777Residential mortgage-backed securities
    
    
    661,516
    
    
    
    33,702
    
    
    
    (3,398
    )
    
    
    691,820Commercial mortgage-backed securities
    
    
    31,340
    
    
    
    
    
    
    
    (17,758
    )
    
    
    13,582Collateralized debt securities
    
    
    8,562
    
    
    
    80
    
    
    
    (327
    )
    
    
    8,315Other debt securities
    
    
    44,245
    
    
    
    3,314
    
    
    
    
    
    
    
    47,559Total bonds held-to-maturity
    
    
    8,513,550
    
    
    
    527,764
    
    
    
    (61,480
    )
    
    
    8,979,834Bonds available-for-saleU.S. treasury and other U.S. government
corporations and agencies
    
    
    13,268
    
    
    
    643
    
    
    
    (4
    )
    
    
    13,907States of the U.S. and political subdivisions
of the states
    
    
    583,163
    
    
    
    15,142
    
    
    
    (4,193
    )
    
    
    594,112Foreign governments
    
    
    5,000
    
    
    
    1,967
    
    
    
    
    
    
    
    6,967Corporate debt securities
    
    
    3,030,671
    
    
    
    197,485
    
    
    
    (26,587
    )
    
    
    3,201,569Residential mortgage-backed securities
    
    
    259,560
    
    
    
    13,250
    
    
    
    (1,417
    )
    
    
    271,393Collateralized debt securities
    
    
    19,468
    
    
    
    1,459
    
    
    
    (218
    )
    
    
    20,709Other debt securities
    
    
    14,187
    
    
    
    769
    
    
    
    
    
    
    
    14,956Total bonds available-for-sale
    
    
    3,925,317
    
    
    
    230,715
    
    
    
    (32,419
    )
    
    
    4,123,613Total fixed maturity securities
    
    
    12,438,867
    
    
    
    758,479
    
    
    
    (93,899
    )
    
    
    13,103,447Equity securitiesCommon stockConsumer goods
    
    
    154,106
    
    
    
    63,538
    
    
    
    (1,052
    )
    
    
    216,592Energy and utilities
    
    
    121,727
    
    
    
    72,471
    
    
    
    (933
    )
    
    
    193,265Finance
    
    
    119,975
    
    
    
    55,175
    
    
    
    (1,571
    )
    
    
    173,579Healthcare
    
    
    78,256
    
    
    
    31,907
    
    
    
    (1,654
    )
    
    
    108,509Industrials
    
    
    59,856
    
    
    
    47,649
    
    
    
    
    
    
    
    107,505Information technology
    
    
    108,178
    
    
    
    62,284
    
    
    
    (161
    )
    
    
    170,301Materials
    
    
    16,469
    
    
    
    15,540
    
    
    
    
    
    
    
    32,009Telecommunication services
    
    
    31,678
    
    
    
    12,484
    
    
    
    (34
    )
    
    
    44,128Total common stock
    
    
    690,245
    
    
    
    361,048
    
    
    
    (5,405
    )
    
    
    1,045,888Preferred stock
    
    
    30,420
    
    
    
    6,714
    
    
    
    (267
    )
    
    
    36,867Total equity securities
    
    
    720,665
    
    
    
    367,762
    
    
    
    (5,672
    )
    
    
    1,082,755Total investments in securities
    
    $
    13,159,532
    
    
    $
    1,126,241
    
    
    $
    (99,571
    )
    
    $
    14,186,202
  105




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##### Table of Contents



Year ended December 31, 2009Gross
    
    
    GrossCost or
    
    
    Unrealized
    
    
    Unrealized
    
    
    Estimated FairAmortized Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueFixed maturity securitiesBonds held-to-maturityU.S. treasury and other U.S. government
corporations and agencies
    
    $
    21,222
    
    
    $
    183
    
    
    $
    (58
    )
    
    $
    21,347States of the U.S. and political subdivisions
of the states
    
    
    240,403
    
    
    
    8,619
    
    
    
    (1,144
    )
    
    
    247,878Foreign governments
    
    
    28,997
    
    
    
    3,606
    
    
    
    
    
    
    
    32,603Corporate debt securities
    
    
    6,390,377
    
    
    
    327,535
    
    
    
    (73,856
    )
    
    
    6,644,056Residential mortgage-backed securities
    
    
    693,178
    
    
    
    24,650
    
    
    
    (21,856
    )
    
    
    695,972Commercial mortgage-backed securities
    
    
    33,128
    
    
    
    
    
    
    
    (23,941
    )
    
    
    9,187Collateralized debt securities
    
    
    9,627
    
    
    
    85
    
    
    
    (1,036
    )
    
    
    8,676Other debt securities
    
    
    44,779
    
    
    
    2,009
    
    
    
    (31
    )
    
    
    46,757Total bonds held-to-maturity
    
    
    7,461,711
    
    
    
    366,687
    
    
    
    (121,922
    )
    
    
    7,706,476Bonds available-for-saleU.S. treasury and other U.S. government
corporations and agencies
    
    
    3,438
    
    
    
    448
    
    
    
    
    
    
    
    3,886States of the U.S. and political subdivisions
of the states
    
    
    540,210
    
    
    
    18,869
    
    
    
    (1,044
    )
    
    
    558,035Foreign governments
    
    
    5,000
    
    
    
    1,188
    
    
    
    
    
    
    
    6,188Corporate debt securities
    
    
    3,196,202
    
    
    
    126,742
    
    
    
    (69,932
    )
    
    
    3,253,012Residential mortgage-backed securities
    
    
    353,729
    
    
    
    8,507
    
    
    
    (6,671
    )
    
    
    355,565Collateralized debt securities
    
    
    23,064
    
    
    
    983
    
    
    
    (1,553
    )
    
    
    22,494Other debt securities
    
    
    14,401
    
    
    
    225
    
    
    
    (256
    )
    
    
    14,370Total bonds available-for-sale
    
    
    4,136,044
    
    
    
    156,962
    
    
    
    (79,456
    )
    
    
    4,213,550Total fixed maturity securities
    
    
    11,597,755
    
    
    
    523,649
    
    
    
    (201,378
    )
    
    
    11,920,026Equity securitiesCommon stockConsumer goods
    
    
    129,363
    
    
    
    47,093
    
    
    
    (2,336
    )
    
    
    174,120Energy and utilities
    
    
    83,284
    
    
    
    42,939
    
    
    
    (1,453
    )
    
    
    124,770Finance
    
    
    118,622
    
    
    
    40,296
    
    
    
    (2,174
    )
    
    
    156,744Healthcare
    
    
    81,454
    
    
    
    29,767
    
    
    
    (1,100
    )
    
    
    110,121Industrials
    
    
    58,900
    
    
    
    28,887
    
    
    
    (357
    )
    
    
    87,430Information technology
    
    
    102,171
    
    
    
    48,413
    
    
    
    (422
    )
    
    
    150,162Materials
    
    
    17,875
    
    
    
    7,317
    
    
    
    (22
    )
    
    
    25,170Mutual funds
    
    
    59,853
    
    
    
    6,426
    
    
    
    (77
    )
    
    
    66,202Telecommunication services
    
    
    32,272
    
    
    
    8,118
    
    
    
    (355
    )
    
    
    40,035Total common stock
    
    
    683,794
    
    
    
    259,256
    
    
    
    (8,296
    )
    
    
    934,754Preferred stock
    
    
    35,359
    
    
    
    5,269
    
    
    
    (4,911
    )
    
    
    35,717Total equity securities
    
    
    719,153
    
    
    
    264,525
    
    
    
    (13,207
    )
    
    
    970,471Total investments in securities
    
    $
    12,316,908
    
    
    $
    788,174
    
    
    $
    (214,585
    )
    
    $
    12,890,497
  106




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##### Table of Contents



Investment securities
  December 31, 2010Bonds Held-to-Maturity
    
    
    Bonds Available-for-SaleAmortized
    
    
    Estimated Fair
    
    
    Amortized
    
    
    Estimated FairCost
    
    
    Value
    
    
    Cost
    
    
    ValueDue in one year or less
    
    $
    444,961
    
    
    $
    455,798
    
    
    $
    226,340
    
    
    $
    229,529Due after one year through
five years
    
    
    3,995,818
    
    
    
    4,273,860
    
    
    
    1,873,992
    
    
    
    1,990,183Due after five years
through ten years
    
    
    2,992,353
    
    
    
    3,155,544
    
    
    
    1,248,564
    
    
    
    1,309,798Due after ten years
    
    
    1,074,567
    
    
    
    1,089,707
    
    
    
    571,421
    
    
    
    589,4918,507,699
    
    
    
    8,974,909
    
    
    
    3,920,317
    
    
    
    4,119,001Without single maturity date
    
    
    5,851
    
    
    
    4,925
    
    
    
    5,000
    
    
    
    4,612Total
    
    $
    8,513,550
    
    
    $
    8,979,834
    
    
    $
    3,925,317
    
    
    $
    4,123,613
  Years ended December 31,2010
    
    
    2009
    
    
    2008Proceeds from sales of available-for-sale securities
    
    $
    435,293
    
    
    $
    265,732
    
    
    $
    135,623Gross realized gains
    
    
    51,248
    
    
    
    42,101
    
    
    
    22,496Gross realized losses
    
    
    (3,590
    )
    
    
    (11,351
    )
    
    
    (31,304
    )
     107




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##### Table of Contents



Derivative Instruments
  Location of Asset (Liability)
    
    Estimated Fair ValueDerivatives Not Designated
    
    Reported in the Consolidated
    
    December 31,as Hedging  Instruments
    
    Statements of Financial Position
    
    2010
    
    
    2009Equity-indexed options
    
    Other invested assets
    
    $
    66,716
    
    
    $
    32,801Equity-indexed annuity embedded derivative
    
    Future policy benefits  Annuity
    
    
    (59,644
    )
    
    
    (22,487
    )
 Gains (Losses)Location of Gains (Losses)
    
    Recognized in Income on DerivativesDerivatives Not Designated
    
    Recognized in the
    
    Years Ended December 31,as Hedging  Instruments
    
    Consolidated Statements of Operations
    
    2010
    
    
    2009
    
    
    2008Equity-indexed options
    
    Net investment income
    
    $
    9,942
    
    
    $
    5,381
    
    
    $
    (24,400
    )Equity-indexed annuity embedded derivative
    
    Interest credited to policy account balances
    
    
    (6,604
    )
    
    
    (8,138
    )
    
    
    23,184
 Unrealized gains (losses) on securities
   Years ended December 31,2010
    
    
    2009
    
    
    2008Bonds available-for-sale
    
    $
    120,790
    
    
    $
    516,229
    
    
    $
    (393,429
    )Preferred stocks
    
    
    6,089
    
    
    
    12,254
    
    
    
    (3,359
    )Common stocks
    
    
    104,683
    
    
    
    218,338
    
    
    
    (295,988
    )Adjustment to deferred policy acquisition costs
    
    
    (52,650
    )
    
    
    (215,294
    )
    
    
    164,937178,912
    
    
    
    531,527
    
    
    
    (527,839
    )Less: Provision (benefit) for federal income taxes
    
    
    62,551
    
    
    
    185,700
    
    
    
    (185,273
    )116,361
    
    
    
    345,827
    
    
    
    (342,566
    )Change in unrealized (gains) losses of investments
attributable to participating policyholders interest
    
    
    (7,355
    )
    
    
    (13,140
    )
    
    
    10,738Cumulative adjustment for accounting change
on OTTI on fixed maturity securities
    
    
    
    
    
    
    50,411
    
    
    
    Total
    
    $
    109,006
    
    
    $
    383,098
    
    
    $
    (331,828
    )
  108




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##### Table of Contents



Year ended December 31, 2010Less than 12 months
    
    
    12 Months or more
    
    
    TotalUnrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    FairLosses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    ValueFixed maturity securitiesBonds held-to-maturityStates of the U.S. and
political subdivisions
of the states
    
    $
    6,898
    
    
    $
    195,634
    
    
    $
    22
    
    
    $
    878
    
    
    $
    6,920
    
    
    $
    196,512Corporate debt securities
    
    
    22,493
    
    
    
    912,554
    
    
    
    10,584
    
    
    
    128,721
    
    
    
    33,077
    
    
    
    1,041,275Residential mortgage-backed
securities
    
    
    579
    
    
    
    57,160
    
    
    
    2,819
    
    
    
    64,798
    
    
    
    3,398
    
    
    
    121,958Commercial mortgage-backed
securities
    
    
    
    
    
    
    
    
    
    
    17,758
    
    
    
    13,583
    
    
    
    17,758
    
    
    
    13,583Collateralized debt securities
    
    
    
    
    
    
    
    
    
    
    327
    
    
    
    5,465
    
    
    
    327
    
    
    
    5,465Total bonds
held-to-maturity
    
    
    29,970
    
    
    
    1,165,348
    
    
    
    31,510
    
    
    
    213,445
    
    
    
    61,480
    
    
    
    1,378,793Bonds available-for-saleU.S. treasury and other U.S.
government
corporations and agencies
    
    
    4
    
    
    
    7,040
    
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    7,040States of the U.S. and
political subdivisions
of the states
    
    
    4,193
    
    
    
    151,860
    
    
    
    
    
    
    
    
    
    
    
    4,193
    
    
    
    151,860Corporate debt securities
    
    
    8,378
    
    
    
    249,240
    
    
    
    18,209
    
    
    
    159,227
    
    
    
    26,587
    
    
    
    408,467Residential mortgage-backed
securities
    
    
    81
    
    
    
    26,909
    
    
    
    1,336
    
    
    
    29,393
    
    
    
    1,417
    
    
    
    56,302Collateralized debt securities
    
    
    
    
    
    
    
    
    
    
    218
    
    
    
    4,664
    
    
    
    218
    
    
    
    4,664Total bonds
available-for-sale
    
    
    12,656
    
    
    
    435,049
    
    
    
    19,763
    
    
    
    193,284
    
    
    
    32,419
    
    
    
    628,333Total fixed maturity securities
    
    
    42,626
    
    
    
    1,600,397
    
    
    
    51,273
    
    
    
    406,729
    
    
    
    93,899
    
    
    
    2,007,126Equity securitiesCommon stockConsumer goods
    
    
    440
    
    
    
    25,333
    
    
    
    612
    
    
    
    19,419
    
    
    
    1,052
    
    
    
    44,752Energy and utilities
    
    
    642
    
    
    
    7,093
    
    
    
    291
    
    
    
    1,289
    
    
    
    933
    
    
    
    8,382Finance
    
    
    1,217
    
    
    
    7,954
    
    
    
    354
    
    
    
    11,204
    
    
    
    1,571
    
    
    
    19,158Healthcare
    
    
    813
    
    
    
    14,927
    
    
    
    841
    
    
    
    5,523
    
    
    
    1,654
    
    
    
    20,450Industrials
    
    
    
    
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7Information technology
    
    
    156
    
    
    
    2,013
    
    
    
    5
    
    
    
    44
    
    
    
    161
    
    
    
    2,057Materials
    
    
    
    
    
    
    61
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    61Telecommunications services
    
    
    34
    
    
    
    393
    
    
    
    
    
    
    
    
    
    
    
    34
    
    
    
    393Total common stock
    
    
    3,302
    
    
    
    57,781
    
    
    
    2,103
    
    
    
    37,479
    
    
    
    5,405
    
    
    
    95,260Preferred stock
    
    
    231
    
    
    
    6,133
    
    
    
    36
    
    
    
    4,464
    
    
    
    267
    
    
    
    10,597Total Equity securities
    
    
    3,533
    
    
    
    63,914
    
    
    
    2,139
    
    
    
    41,943
    
    
    
    5,672
    
    
    
    105,857Total investments in securities
    
    $
    46,159
    
    
    $
    1,664,311
    
    
    $
    53,412
    
    
    $
    448,672
    
    
    $
    99,571
    
    
    $
    2,112,983
  109




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##### Table of Contents



Year ended December 31, 2009Less than 12 months
    
    
    12 Months or more
    
    
    TotalUnrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    FairLosses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    ValueFixed maturity securitiesBonds held-to-maturityU.S. Treasury and other U.S. government
corporations and agencies
    
    $
    58
    
    
    $
    6,387
    
    
    $
    
    
    
    $
    
    
    
    $
    58
    
    
    $
    6,387States of the U.S. and political subdivisions
of the states
    
    
    666
    
    
    
    24,819
    
    
    
    478
    
    
    
    5,849
    
    
    
    1,144
    
    
    
    30,668Corporate debt securities
    
    
    12,602
    
    
    
    543,459
    
    
    
    61,254
    
    
    
    700,718
    
    
    
    73,856
    
    
    
    1,244,177Residential mortgage-backed securities
    
    
    445
    
    
    
    23,750
    
    
    
    21,411
    
    
    
    182,315
    
    
    
    21,856
    
    
    
    206,065Commercial mortgage-backed securities
    
    
    
    
    
    
    
    
    
    
    23,941
    
    
    
    9,187
    
    
    
    23,941
    
    
    
    9,187Collateralized debt securities
    
    
    53
    
    
    
    2,844
    
    
    
    983
    
    
    
    2,310
    
    
    
    1,036
    
    
    
    5,154Other debt securities
    
    
    31
    
    
    
    3,428
    
    
    
    
    
    
    
    
    
    
    
    31
    
    
    
    3,428Total bonds
held-to-maturity
    
    
    13,855
    
    
    
    604,687
    
    
    
    108,067
    
    
    
    900,379
    
    
    
    121,922
    
    
    
    1,505,066Bonds available-for-saleStates of the U.S. and political subdivisions
of the states
    
    
    520
    
    
    
    58,622
    
    
    
    524
    
    
    
    18,941
    
    
    
    1,044
    
    
    
    77,563Corporate debt securities
    
    
    13,340
    
    
    
    318,569
    
    
    
    56,592
    
    
    
    506,881
    
    
    
    69,932
    
    
    
    825,450Residential mortgage-backed securities
    
    
    2,273
    
    
    
    49,066
    
    
    
    4,398
    
    
    
    36,649
    
    
    
    6,671
    
    
    
    85,715Collateralized debt securities
    
    
    269
    
    
    
    1,313
    
    
    
    1,284
    
    
    
    9,077
    
    
    
    1,553
    
    
    
    10,390Other debt securities
    
    
    256
    
    
    
    9,947
    
    
    
    
    
    
    
    
    
    
    
    256
    
    
    
    9,947Total bonds
available-for-sale
    
    
    16,658
    
    
    
    437,517
    
    
    
    62,798
    
    
    
    571,548
    
    
    
    79,456
    
    
    
    1,009,065Total fixed maturity securities
    
    
    30,513
    
    
    
    1,042,204
    
    
    
    170,865
    
    
    
    1,471,927
    
    
    
    201,378
    
    
    
    2,514,131Equity securitiesCommon stockConsumer goods
    
    
    837
    
    
    
    5,838
    
    
    
    1,499
    
    
    
    14,900
    
    
    
    2,336
    
    
    
    20,738Energy and utilities
    
    
    296
    
    
    
    7,949
    
    
    
    1,157
    
    
    
    7,006
    
    
    
    1,453
    
    
    
    14,955Finance
    
    
    1,712
    
    
    
    29,515
    
    
    
    462
    
    
    
    3,881
    
    
    
    2,174
    
    
    
    33,396Healthcare
    
    
    464
    
    
    
    6,124
    
    
    
    636
    
    
    
    5,316
    
    
    
    1,100
    
    
    
    11,440Industrials
    
    
    163
    
    
    
    2,567
    
    
    
    194
    
    
    
    1,678
    
    
    
    357
    
    
    
    4,245Information technology
    
    
    358
    
    
    
    2,583
    
    
    
    64
    
    
    
    533
    
    
    
    422
    
    
    
    3,116Materials
    
    
    19
    
    
    
    453
    
    
    
    3
    
    
    
    45
    
    
    
    22
    
    
    
    498Mutual funds
    
    
    77
    
    
    
    4,372
    
    
    
    
    
    
    
    
    
    
    
    77
    
    
    
    4,372Telecommunications services
    
    
    232
    
    
    
    3,188
    
    
    
    123
    
    
    
    2,542
    
    
    
    355
    
    
    
    5,730Total common stock
    
    
    4,158
    
    
    
    62,589
    
    
    
    4,138
    
    
    
    35,901
    
    
    
    8,296
    
    
    
    98,490Preferred stock
    
    
    21
    
    
    
    4,169
    
    
    
    4,890
    
    
    
    15,210
    
    
    
    4,911
    
    
    
    19,379Total equity securities
    
    
    4,179
    
    
    
    66,758
    
    
    
    9,028
    
    
    
    51,111
    
    
    
    13,207
    
    
    
    117,869Total investments in securities
    
    $
    34,692
    
    
    $
    1,108,962
    
    
    $
    179,893
    
    
    $
    1,523,038
    
    
    $
    214,585
    
    
    $
    2,632,000
   110




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Bonds
 .
 Equity securities
  Mortgage loans
    Policy loans
   111




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Net investment income and realized investments gains (losses)
  Net Investment Income
    
    
    Realized Investments Gains (Losses)Years ended December 31,
    
    
    Years ended December 31,2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009
    
    
    2008Bonds
    
    $
    652,564
    
    
    $
    627,236
    
    
    $
    623,356
    
    
    $
    34,330
    
    
    $
    (9,954
    )
    
    $
    8,531Preferred stocks
    
    
    2,750
    
    
    
    3,419
    
    
    
    5,687
    
    
    
    (2,262
    )
    
    
    (1,590
    )
    
    
    (5,307
    )Common stocks
    
    
    22,561
    
    
    
    22,996
    
    
    
    28,242
    
    
    
    29,865
    
    
    
    38,634
    
    
    
    (7,849
    )Mortgage loans
    
    
    179,332
    
    
    
    141,124
    
    
    
    118,067
    
    
    
    
    
    
    
    
    
    
    
    Real estate
    
    
    107,929
    
    
    
    122,603
    
    
    
    114,198
    
    
    
    10,101
    
    
    
    1,523
    
    
    
    1,750Options
    
    
    11,933
    
    
    
    5,380
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other invested assets
    
    
    41,333
    
    
    
    41,165
    
    
    
    12,123
    
    
    
    (99
    )
    
    
    269
    
    
    
    (5,977
    )1,018,402
    
    
    
    963,923
    
    
    
    901,673
    
    
    
    71,935
    
    
    
    28,882
    
    
    
    (8,852
    )Investment expenses
    
    
    (106,487
    )
    
    
    (124,146
    )
    
    
    (106,231
    )
    
    
    
    
    
    
    
    
    
    
    Decrease (increase) in
valuation allowances
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,793
    
    
    
    (23,634
    )
    
    
    (4,631
    )Total
    
    $
    911,915
    
    
    $
    839,777
    
    
    $
    795,442
    
    
    $
    79,728
    
    
    $
    5,248
    
    
    $
    (13,483
    )
 Other-than-temporary impairments
  Years ended December 31,2010
    
    
    2009
    
    
    2008Bonds
    
    $
    
    
    
    $
    (10,046
    )
    
    $
    (165,803
    )Stocks
    
    
    (5,666
    )
    
    
    (69,057
    )
    
    
    (199,748
    )Total
    
    $
    (5,666
    )
    
    $
    (79,103
    )
    
    $
    (365,551
    )
   112




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##### Table of Contents



4. VARIABLE INTEREST ENTITIES
  December 31,2010
    
    
    2009Investment real estate
    
    $
    156,441
    
    
    $
    146,329Short-term investments
    
    
    1,991
    
    
    
    3,034Cash and cash equivalents
    
    
    1,164
    
    
    
    3,875Accrued investment income
    
    
    2,035
    
    
    
    2,533Other receivables
    
    
    16,524
    
    
    
    487Other assets
    
    
    3,884
    
    
    
    5,675Total assets of consolidated VIEs
    
    
    182,039
    
    
    
    161,933Notes payable
    
    
    161,126
    
    
    
    157,875Other liabilities
    
    
    3,499
    
    
    
    6,681Total liabilities of consolidated VIEs
    
    
    164,625
    
    
    
    164,556
  December 31,2010
    
    
    2009Maximum
    
    
    
    
    
    
    MaximumCarrying
    
    
    Exposure
    
    
    Carrying
    
    
    ExposureAmount
    
    
    to Loss
    
    
    Amount
    
    
    to LossInvestment in unconsolidated affiliates
    
    $
    36,226
    
    
    $
    36,226
    
    
    $
    6,813
    
    
    $
    6,813
   113




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Changes to selected financial statement line items
    
    Assets
    
    
    Liabilities 
and EquityInvestment real estate, net of accumulated depreciation
    
    $
    (127,155
    )
    
    $
    Investments in unconsolidated affiliates
    
    
    18,227
    
    
    
    Mortgage loans on real estate, net of allowance
    
    
    73,519
    
    
    
    Current and Long-term portions of notes payable
    
    
    
    
    
    
    (16,139
    )Other assets and liabilities, net
    
    
    9,652
    
    
    
    (7,156
    )Noncontrolling interest
    
    
    
    
    
    
    (2,462
    )Total impact on financial position
    
    $
    (25,757
    )
    
    $
    (25,757
    )
 5. CREDIT LOSSES
  Nonaccrual and Past Due Mortgage Loans
   December 31, 2010Commercial mortgagesRetail
    
    $
    3,685Total
    
    $
    3,685
  114




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##### Table of Contents



December 31, 201030-59 Days
    
    
    60-89 Days
    
    
    Greater Than
    
    
    Total Past
    
    
    
    
    
    
    TotalPast Due
    
    
    Past Due
    
    
    90 Days
    
    
    Due
    
    
    Current
    
    
    Mortgage LoansCommerical MortgagesOffice
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    798,651
    
    
    $
    798,651Industrial
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    935,540
    
    
    
    935,540Retail
    
    
    8,579
    
    
    
    
    
    
    
    3,685
    
    
    
    12,264
    
    
    
    530,267
    
    
    
    542,531Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    607,693
    
    
    
    607,693Total
    
    $
    8,579
    
    
    $
    
    
    
    $
    3,685
    
    
    $
    12,264
    
    
    $
    2,872,151
    
    
    $
    2,884,415
 Allowance for Credit Losses
    115




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##### Table of Contents



Year EndedDecember 31, 2010CommercialMortgage LoansAllowance for credit losses:Ending balance
    
    $
    13,788Ending balance: individually evaluated
for impairment
    
    $
    2,393Ending balance: collectively evaluated
for impairment
    
    $
    11,395Mortgage Loans:Ending balance
    
    $
    2,884,415Ending balance: individually evaluated
for impairment
    
    $
    341,024Ending balance: collectively evaluated
for impairment
    
    $
    2,543,391
 Impaired loans
   Year Ended December 31, 2010Unpaid
    
    
    
    
    
    
    Average
    
    
    InterestRecorded
    
    
    Principal
    
    
    Related
    
    
    Recorded
    
    
    IncomeInvestment
    
    
    Balance
    
    
    Allowance
    
    
    Investment
    
    
    RecognizedWith an allowance recorded:Office
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Industrial
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Retail
    
    
    6,679
    
    
    
    9,072
    
    
    
    2,393
    
    
    
    7,573
    
    
    
    406Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    6,679
    
    
    $
    9,072
    
    
    $
    2,393
    
    
    $
    7,573
    
    
    $
    406
 Credit Quality Indicators
   116




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##### Table of Contents



6. CREDIT RISK MANAGEMENT
  Bonds
  December 31,2010
    
    
    2009AAA
    
    
    10.0
    %
    
    
    11.6
    %AA
    
    
    10.2
    
    
    
    8.1A
    
    
    37.0
    
    
    
    35.7BBB
    
    
    37.2
    
    
    
    37.2BB and below
    
    
    5.6
    
    
    
    7.4Total
    
    
    100.0
    %
    
    
    100.0
    %
 Common stock
  December 31,2010
    
    
    2009Consumer goods
    
    
    20.7
    %
    
    
    18.6
    %Energy and utilities
    
    
    18.5
    
    
    
    13.3Financials
    
    
    16.6
    
    
    
    16.8Information technology
    
    
    16.3
    
    
    
    16.1Healthcare
    
    
    10.4
    
    
    
    11.8Industrials
    
    
    10.3
    
    
    
    9.3Communications
    
    
    4.2
    
    
    
    4.3Materials
    
    
    3.0
    
    
    
    2.7Mutual funds
    
    
    0.0
    
    
    
    7.1Total
    
    
    100.0
    %
    
    
    100.0
    %
  117




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##### Table of Contents



Mortgage loans and investment real estate
   Mortgage Loans
    
    
    Investment Real EstateDecember 31,
    
    
    December 31,2010
    
    
    2009
    
    
    2010
    
    
    2009Industrial
    
    
    31.5
    %
    
    
    28.1
    %
    
    
    24.1
    %
    
    
    36.8
    %Office buildings
    
    
    29.3
    
    
    
    31.3
    
    
    
    20.8
    
    
    
    15.1Shopping centers
    
    
    17.3
    
    
    
    18.6
    
    
    
    35.6
    
    
    
    18.7Hotels and motels
    
    
    12.5
    
    
    
    15.0
    
    
    
    2.0
    
    
    
    1.8Other
    
    
    9.4
    
    
    
    7.0
    
    
    
    17.5
    
    
    
    27.6Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
  Mortgage Loans
    
    
    Investment Real EstateDecember 31,
    
    
    December 31,2010
    
    
    2009
    
    
    2010
    
    
    2009West South Central
    
    
    23.0
    %
    
    
    22.4
    %
    
    
    61.2
    %
    
    
    58.4
    %East North Central
    
    
    20.4
    
    
    
    19.8
    
    
    
    5.6
    
    
    
    7.8South Atlantic
    
    
    19.3
    
    
    
    20.3
    
    
    
    18.4
    
    
    
    12.5Pacific
    
    
    9.4
    
    
    
    9.9
    
    
    
    2.2
    
    
    
    2.2Mountain
    
    
    7.4
    
    
    
    6.3
    
    
    
    1.3
    
    
    
    0.6East South Central
    
    
    6.5
    
    
    
    5.9
    
    
    
    10.1
    
    
    
    7.4Middle Atlantic
    
    
    6.2
    
    
    
    7.8
    
    
    
    0.0
    
    
    
    10.2New England
    
    
    3.1
    
    
    
    3.8
    
    
    
    0.0
    
    
    
    0.0West North Central
    
    
    4.1
    
    
    
    3.8
    
    
    
    1.2
    
    
    
    0.9Other
    
    
    0.6
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
  118




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##### Table of Contents



7. FAIR VALUE OF FINANCIAL INSTRUMENTS
  December 31, 2010
    
    
    December 31, 2009Carrying
    
    
    Estimated
    
    
    Carrying
    
    
    EstimatedAmount
    
    
    Fair Value
    
    
    Amount
    
    
    Fair ValueFinancial assets:Fixed maturity securitiesBonds held-to-maturityU.S. treasury and other U.S. government
corporations and agencies
    
    $
    23,117
    
    
    $
    23,405
    
    
    $
    21,222
    
    
    $
    21,347States of the U.S. and political subdivisions
of the states
    
    
    422,249
    
    
    
    422,446
    
    
    
    240,403
    
    
    
    247,878Foreign governments
    
    
    29,020
    
    
    
    33,930
    
    
    
    28,997
    
    
    
    32,603Corporate debt securities
    
    
    7,293,501
    
    
    
    7,738,777
    
    
    
    6,390,377
    
    
    
    6,644,056Residential mortgage-backed securities
    
    
    661,516
    
    
    
    691,820
    
    
    
    693,178
    
    
    
    695,972Commercial mortgage-backed securities
    
    
    31,340
    
    
    
    13,582
    
    
    
    33,128
    
    
    
    9,187Collateralized debt securities
    
    
    8,562
    
    
    
    8,315
    
    
    
    9,627
    
    
    
    8,676Other debt securities
    
    
    44,245
    
    
    
    47,559
    
    
    
    44,779
    
    
    
    46,757Total bonds held-to-maturity
    
    
    8,513,550
    
    
    
    8,979,834
    
    
    
    7,461,711
    
    
    
    7,706,476Bonds available-for-saleU.S. treasury and other U.S. government
corporations and agencies
    
    
    13,907
    
    
    
    13,907
    
    
    
    3,886
    
    
    
    3,886States of the U.S. and political subdivisions
of the states
    
    
    594,112
    
    
    
    594,112
    
    
    
    558,035
    
    
    
    558,035Foreign governments
    
    
    6,967
    
    
    
    6,967
    
    
    
    6,188
    
    
    
    6,188Corporate debt securities
    
    
    3,201,569
    
    
    
    3,201,569
    
    
    
    3,253,012
    
    
    
    3,253,012Residential mortgage-backed securities
    
    
    271,393
    
    
    
    271,393
    
    
    
    355,565
    
    
    
    355,565Collateralized debt securities
    
    
    20,709
    
    
    
    20,709
    
    
    
    22,494
    
    
    
    22,494Other debt securities
    
    
    14,956
    
    
    
    14,956
    
    
    
    14,370
    
    
    
    14,370Total bonds available-for-sale
    
    
    4,123,613
    
    
    
    4,123,613
    
    
    
    4,213,550
    
    
    
    4,213,550Total fixed maturity securities
    
    
    12,637,163
    
    
    
    13,103,447
    
    
    
    11,675,261
    
    
    
    11,920,026Equity securitiesCommon stock:Consumer goods
    
    
    216,592
    
    
    
    216,592
    
    
    
    174,120
    
    
    
    174,120Energy and utilities
    
    
    193,265
    
    
    
    193,265
    
    
    
    124,770
    
    
    
    124,770Finance
    
    
    173,579
    
    
    
    173,579
    
    
    
    156,744
    
    
    
    156,744Healthcare
    
    
    108,509
    
    
    
    108,509
    
    
    
    110,121
    
    
    
    110,121Industrials
    
    
    107,505
    
    
    
    107,505
    
    
    
    87,430
    
    
    
    87,430Information technology
    
    
    170,301
    
    
    
    170,301
    
    
    
    150,162
    
    
    
    150,162Materials
    
    
    32,009
    
    
    
    32,009
    
    
    
    25,170
    
    
    
    25,170Mutual funds
    
    
    
    
    
    
    
    
    
    
    66,202
    
    
    
    66,202Telecommunication services
    
    
    44,128
    
    
    
    44,128
    
    
    
    40,035
    
    
    
    40,035Preferred stock
    
    
    36,867
    
    
    
    36,867
    
    
    
    35,717
    
    
    
    35,717Total equity securities
    
    
    1,082,755
    
    
    
    1,082,755
    
    
    
    970,471
    
    
    
    970,471Options
    
    
    66,716
    
    
    
    66,716
    
    
    
    32,801
    
    
    
    32,801Mortgage loans on real estate, net of allowance
    
    
    2,679,909
    
    
    
    2,865,187
    
    
    
    2,229,659
    
    
    
    2,267,157Policy loans
    
    
    380,505
    
    
    
    380,505
    
    
    
    364,354
    
    
    
    364,354Short-term investments
    
    
    486,206
    
    
    
    486,206
    
    
    
    636,823
    
    
    
    636,823Total financial assets
    
    $
    17,333,254
    
    
    $
    17,984,816
    
    
    $
    15,909,369
    
    
    $
    16,191,632Financial liabilities:Investment contracts
    
    $
    8,586,041
    
    
    $
    8,586,041
    
    
    $
    7,828,243
    
    
    $
    7,828,243Liability for embedded derivatives of
equity-indexed annuities
    
    
    59,644
    
    
    
    59,644
    
    
    
    22,487
    
    
    
    22,487Notes payable
    
    
    60,140
    
    
    
    60,140
    
    
    
    73,842
    
    
    
    73,842Total financial liabilities
    
    $
    8,705,825
    
    
    $
    8,705,825
    
    
    $
    7,924,572
    
    
    $
    7,924,572
  Level 1
    
    Unadjusted quoted prices in active markets for identical assets or
liabilities. American National defines active markets based on average trading volume
for equity securities. The size of the bid/ask spread is used as an indicator of
market activity for fixed maturity securities.
  119




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Level 2
    
    Quoted prices in markets that are not active or inputs that are observable
directly or indirectly. Level 2 inputs include quoted prices for similar assets or
liabilities other than quoted prices in Level 1; quoted prices in markets that are not
active; or other inputs that are observable or can be derived principally from or
corroborated by observable market data for substantially the full term of the assets or
liabilities.
 Level 3
    
    Unobservable inputs that are supported by little or no market activity and
are significant to the fair value of the assets or liabilities. Unobservable inputs
reflect American Nationals own assumptions about the assumptions that market
participants would use in pricing the asset or liability. Level 3 assets and
liabilities include financial instruments whose values are determined using pricing
models and third-party evaluation, as well as instruments for which the determination
of fair value requires significant management judgment or estimation.
        120




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121




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Fair Value Measurement as of December 31, 2010 Using:Estimated Fair
    
    
    Quoted Prices in
    
    
    
    
    
    
    SignificantValue at
    
    
    Active Markets for
    
    
    Significant Other
    
    
    UnobservableDecember 31,
    
    
    Identical Assets
    
    
    Observable Inputs
    
    
    Inputs2010
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Financial assets:Fixed maturity securitiesBonds held-to-maturityU.S. treasury and other U.S. government
corporations and agencies
    
    $
    23,405
    
    
    $
    
    
    
    $
    23,405
    
    
    $
    States of the U.S. and political subdivisions
of the states
    
    
    422,446
    
    
    
    
    
    
    
    422,308
    
    
    
    138Foreign governments
    
    
    33,930
    
    
    
    
    
    
    
    33,930
    
    
    
    Corporate debt securities
    
    
    7,738,777
    
    
    
    
    
    
    
    7,680,834
    
    
    
    57,943Residential mortgage-backed securities
    
    
    691,820
    
    
    
    
    
    
    
    689,487
    
    
    
    2,333Commercial mortgage-backed securities
    
    
    13,582
    
    
    
    
    
    
    
    13,582
    
    
    
    Collateralized debt securities
    
    
    8,315
    
    
    
    
    
    
    
    
    
    
    
    8,315Other debt securities
    
    
    47,559
    
    
    
    
    
    
    
    47,559
    
    
    
    Total bonds held-to-maturity
    
    
    8,979,834
    
    
    
    
    
    
    
    8,911,105
    
    
    
    68,729Bonds available-for-saleU.S. treasury and other U.S. government
corporations and agencies
    
    
    13,907
    
    
    
    
    
    
    
    13,907
    
    
    
    States of the U.S. and political subdivisions
of the states
    
    
    594,112
    
    
    
    
    
    
    
    591,587
    
    
    
    2,525Foreign governments
    
    
    6,967
    
    
    
    
    
    
    
    6,967
    
    
    
    Corporate debt securities
    
    
    3,201,569
    
    
    
    
    
    
    
    3,182,625
    
    
    
    18,944Residential mortgage-backed securities
    
    
    271,393
    
    
    
    
    
    
    
    271,376
    
    
    
    17Collateralized debt securities
    
    
    20,709
    
    
    
    
    
    
    
    20,447
    
    
    
    262Other debt securities
    
    
    14,956
    
    
    
    
    
    
    
    14,956
    
    
    
    Total bonds available-for-sale
    
    
    4,123,613
    
    
    
    
    
    
    
    4,101,865
    
    
    
    21,748Total fixed maturity securities
    
    
    13,103,447
    
    
    
    
    
    
    
    13,012,970
    
    
    
    90,477Equity securitiesCommon stockConsumer goods
    
    
    216,592
    
    
    
    216,592
    
    
    
    
    
    
    
    Energy and utilities
    
    
    193,265
    
    
    
    193,265
    
    
    
    
    
    
    
    Finance
    
    
    173,579
    
    
    
    173,579
    
    
    
    
    
    
    
    Healthcare
    
    
    108,509
    
    
    
    108,509
    
    
    
    
    
    
    
    Industrials
    
    
    107,505
    
    
    
    107,505
    
    
    
    
    
    
    
    Information technology
    
    
    170,301
    
    
    
    170,301
    
    
    
    
    
    
    
    Materials
    
    
    32,009
    
    
    
    32,009
    
    
    
    
    
    
    
    Telecommunication services
    
    
    44,128
    
    
    
    44,128
    
    
    
    
    
    
    
    Preferred stock
    
    
    36,867
    
    
    
    36,867
    
    
    
    Total equity securities
    
    
    1,082,755
    
    
    
    1,082,755
    
    
    
    
    
    
    
    Options
    
    
    66,716
    
    
    
    
    
    
    
    
    
    
    
    66,716Mortgage loans on real estate
    
    
    2,865,187
    
    
    
    
    
    
    
    2,865,187
    
    
    
    Short-term investments
    
    
    486,206
    
    
    
    
    
    
    
    486,206
    
    
    
    Total financial assets
    
    $
    17,604,311
    
    
    $
    1,082,755
    
    
    $
    16,364,363
    
    
    $
    157,193Financial liabilities:Liability for embedded derivatives of
equity-indexed annuities
    
    $
    59,644
    
    
    $
    
    
    
    $
    
    
    
    $
    59,644Total financial liabilities
    
    $
    59,644
    
    
    $
    
    
    
    $
    
    
    
    $
    59,644
  122




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Fair Value Measurement as of December 31, 2009 Using:Estimated Fair
    
    
    Quoted Prices in
    
    
    
    
    
    
    SignificantValue at
    
    
    Active Markets for
    
    
    Significant Other
    
    
    UnobservableDecember 31,
    
    
    Identical Assets
    
    
    Observable Inputs
    
    
    Inputs2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Financial assets:Fixed Maturity securitiesBonds held-to-maturityU.S. treasury and other U.S. government
corporations and agencies
    
    $
    21,347
    
    
    $
    
    
    
    $
    21,347
    
    
    $
    States of the U.S. and political subdivisions
of the states
    
    
    247,878
    
    
    
    
    
    
    
    247,878
    
    
    
    Foreign governments
    
    
    32,603
    
    
    
    
    
    
    
    32,603
    
    
    
    Corporate debt securities
    
    
    6,644,056
    
    
    
    
    
    
    
    6,635,387
    
    
    
    8,669Residential mortgage-backed securities
    
    
    695,972
    
    
    
    
    
    
    
    692,702
    
    
    
    3,270Commercial mortgage-backed securities
    
    
    9,187
    
    
    
    
    
    
    
    9,187
    
    
    
    Collateralized debt securities
    
    
    8,676
    
    
    
    
    
    
    
    624
    
    
    
    8,052Other debt securities
    
    
    46,757
    
    
    
    
    
    
    
    46,757
    
    
    
    Total bonds held-to-maturity
    
    
    7,706,476
    
    
    
    
    
    
    
    7,686,485
    
    
    
    19,991Bonds available-for-saleU.S. treasury and other U.S. government
corporations and agencies
    
    
    3,886
    
    
    
    
    
    
    
    3,886
    
    
    
    States of the U.S. and political subdivisions
of the states
    
    
    558,035
    
    
    
    
    
    
    
    558,035
    
    
    
    Foreign governments
    
    
    6,188
    
    
    
    
    
    
    
    6,188
    
    
    
    Corporate debt securities
    
    
    3,253,012
    
    
    
    
    
    
    
    3,238,004
    
    
    
    15,008Residential mortgage-backed securities
    
    
    355,565
    
    
    
    
    
    
    
    355,548
    
    
    
    17Collateralized debt securities
    
    
    22,494
    
    
    
    
    
    
    
    21,138
    
    
    
    1,356Other debt securities
    
    
    14,370
    
    
    
    
    
    
    
    14,370
    
    
    
    Total bonds available-for-sale
    
    
    4,213,550
    
    
    
    
    
    
    
    4,197,169
    
    
    
    16,381Total fixed maturity securities
    
    
    11,920,026
    
    
    
    
    
    
    
    11,883,654
    
    
    
    36,372Equity securitiesCommon stockConsumer goods
    
    
    174,120
    
    
    
    174,120
    
    
    
    
    
    
    
    Energy and utilities
    
    
    124,770
    
    
    
    124,770
    
    
    
    
    
    
    
    Finance
    
    
    156,744
    
    
    
    156,744
    
    
    
    
    
    
    
    Healthcare
    
    
    110,121
    
    
    
    110,121
    
    
    
    
    
    
    
    Industrials
    
    
    87,430
    
    
    
    87,430
    
    
    
    
    
    
    
    Information technology
    
    
    150,162
    
    
    
    150,162
    
    
    
    
    
    
    
    Materials
    
    
    25,170
    
    
    
    25,170
    
    
    
    
    
    
    
    Mutual funds
    
    
    66,202
    
    
    
    66,202
    
    
    
    
    
    
    
    Telecommunication services
    
    
    40,035
    
    
    
    40,035
    
    
    
    
    
    
    
    Preferred stock
    
    
    35,717
    
    
    
    35,123
    
    
    
    
    
    
    
    594Total equity securities
    
    
    970,471
    
    
    
    969,877
    
    
    
    
    
    
    
    594Options
    
    
    32,801
    
    
    
    
    
    
    
    
    
    
    
    32,801Mortgage loans on real estate
    
    
    2,267,157
    
    
    
    
    
    
    
    2,267,157
    
    
    
    Short-term investments
    
    
    636,823
    
    
    
    
    
    
    
    636,823
    
    
    
    Total financial assets
    
    $
    15,827,278
    
    
    $
    969,877
    
    
    $
    14,787,634
    
    
    $
    69,767Financial liabilities:Liability for embedded derivatives of
equity-indexed annuities
    
    $
    22,487
    
    
    $
    
    
    
    $
    
    
    
    $
    22,487Total financial liabilities
    
    $
    22,487
    
    
    $
    
    
    
    $
    
    
    
    $
    22,487
  123




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Liability forInvestment
    
    
    
    
    
    
    EmbeddedSecurities
    
    
    Options
    
    
    Derivatives
    
    
    TotalBalance at December 31, 2008
    
    $
    84,199
    
    
    $
    6,157
    
    
    $
    (6,208
    )
    
    $
    84,148Total realized and unrealized investment gains (losses)Included in other comprehensive income
    
    
    1,237
    
    
    
    
    
    
    
    
    
    
    
    1,237Net fair value change included in realized gains (losses)
    
    
    416
    
    
    
    
    
    
    
    
    
    
    
    416Net gain for derivatives included in net investment income
    
    
    
    
    
    
    5,381
    
    
    
    
    
    
    
    5,381Net fair value change included in interest credited
    
    
    
    
    
    
    
    
    
    
    (16,279
    )
    
    
    (16,279
    )Purchases and settlements/maturitiesPurchases
    
    
    1,435
    
    
    
    21,263
    
    
    
    
    
    
    
    22,698Sales
    
    
    (559
    )
    
    
    
    
    
    
    
    
    
    
    (559
    )Settlements/maturities
    
    
    (727
    )
    
    
    
    
    
    
    
    
    
    
    (727
    )Gross transfers into Level 3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Gross transfers out of Level 3
    
    
    (49,035
    )
    
    
    
    
    
    
    
    
    
    
    (49,035
    )Balance at December 31, 2009
    
    $
    36,966
    
    
    $
    32,801
    
    
    $
    (22,487
    )
    
    $
    47,280Total realized and unrealized investment gains (losses)Included in other comprehensive income
    
    
    1,461
    
    
    
    
    
    
    
    
    
    
    
    1,466Net fair value change included in realized losses
    
    
    (289
    )
    
    
    
    
    
    
    
    
    
    
    (283
    )Net gain for derivatives included in net investment income
    
    
    
    
    
    
    9,942
    
    
    
    
    
    
    
    9,942Net fair value change included in interest credited
    
    
    
    
    
    
    
    
    
    
    (37,157
    )
    
    
    (37,157
    )Purchases and settlements/maturitiesPurchases
    
    
    65,033
    
    
    
    34,709
    
    
    
    
    
    
    
    99,749Sales
    
    
    (10,000
    )
    
    
    
    
    
    
    
    
    
    
    (10,000
    )Settlements/maturities
    
    
    (2,362
    )
    
    
    (10,736
    )
    
    
    
    
    
    
    (13,098
    )Gross transfers into Level 3
    
    
    5,913
    
    
    
    
    
    
    
    
    
    
    
    5,913Gross transfers out of Level 3
    
    
    (6,245
    )
    
    
    
    
    
    
    
    
    
    
    (6,263
    )Balance at December 31, 2010
    
    $
    90,477
    
    
    $
    66,716
    
    
    $
    (59,644
    )
    
    $
    97,549
     124




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##### Table of Contents



8. DEFERRED POLICY ACQUISITION COSTS
  Accident
    
    
    Property &Life
    
    
    Annuity
    
    
    & Health
    
    
    Casualty
    
    
    TotalBalance at January 1, 2008
    
    $
    641,902
    
    
    $
    400,673
    
    
    $
    79,893
    
    
    $
    128,817
    
    
    $
    1,251,285Additions
    
    
    129,031
    
    
    
    96,544
    
    
    
    22,762
    
    
    
    243,005
    
    
    
    491,342Amortization
    
    
    (87,030
    )
    
    
    (75,854
    )
    
    
    (27,785
    )
    
    
    (233,336
    )
    
    
    (424,005
    )Effect of change in unrealized gains
on available-for-sale securities
    
    
    29,242
    
    
    
    135,695
    
    
    
    
    
    
    
    
    
    
    
    164,937Net change
    
    
    71,243
    
    
    
    156,385
    
    
    
    (5,023
    )
    
    
    9,669
    
    
    
    232,274Acquisitions
    
    
    (729
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (729
    )Foreign exchange effect
    
    
    (166
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (166
    )Balance at December 31, 2008
    
    $
    712,250
    
    
    $
    557,058
    
    
    $
    74,870
    
    
    $
    138,486
    
    
    $
    1,482,664Additions
    
    
    77,161
    
    
    
    126,769
    
    
    
    16,729
    
    
    
    256,758
    
    
    
    477,417Amortization
    
    
    (78,697
    )
    
    
    (64,756
    )
    
    
    (21,746
    )
    
    
    (248,607
    )
    
    
    (413,806
    )Effect of change in unrealized gains
on available-for-sale securities
    
    
    (38,651
    )
    
    
    (176,643
    )
    
    
    
    
    
    
    
    
    
    
    (215,294
    )Net change
    
    
    (40,187
    )
    
    
    (114,630
    )
    
    
    (5,017
    )
    
    
    8,151
    
    
    
    (151,683
    )Balance at December 31, 2009
    
    $
    672,063
    
    
    $
    442,428
    
    
    $
    69,853
    
    
    $
    146,637
    
    
    $
    1,330,981Additions
    
    
    80,789
    
    
    
    117,090
    
    
    
    18,087
    
    
    
    265,634
    
    
    
    481,600Amortization
    
    
    (78,826
    )
    
    
    (72,521
    )
    
    
    (22,973
    )
    
    
    (267,185
    )
    
    
    (441,505
    )Effect of change in unrealized gains
on available-for-sale securities
    
    
    (12,649
    )
    
    
    (40,001
    )
    
    
    
    
    
    
    
    
    
    
    (52,650
    )Net change
    
    
    (10,686
    )
    
    
    4,568
    
    
    
    (4,886
    )
    
    
    (1,551
    )
    
    
    (12,555
    )Balance at December 31, 2010
    
    $
    661,377
    
    
    $
    446,996
    
    
    $
    64,967
    
    
    $
    145,086
    
    
    $
    1,318,426PremiumsDecember 31, 2010
    
    $
    282,160
    
    
    $
    174,193
    
    
    $
    263,294
    
    
    $
    1,158,261
    
    
    $
    1,877,908December 31, 2009
    
    $
    284,530
    
    
    $
    220,284
    
    
    $
    309,701
    
    
    $
    1,159,509
    
    
    $
    1,974,024December 31, 2008
    
    $
    299,338
    
    
    $
    116,248
    
    
    $
    290,883
    
    
    $
    1,182,026
    
    
    $
    1,888,495
     125




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9. LIABILITY FOR FUTURE POLICY BENEFITS AND POLICYHOLDER ACCOUNT BALANCES
         126




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10. LIABILITY FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES
   2010
    
    
    2009
    
    
    2008Balance at January 1
    
    $
    1,219,233
    
    
    $
    1,320,272
    
    
    $
    1,265,500Less reinsurance recoverables
    
    
    266,530
    
    
    
    380,520
    
    
    
    364,715Net beginning balance
    
    
    952,703
    
    
    
    939,752
    
    
    
    900,785Incurred related to:Current
    
    
    1,188,052
    
    
    
    1,149,248
    
    
    
    1,166,787Prior years
    
    
    (100,726
    )
    
    
    (29,811
    )
    
    
    (43,258
    )Total incurred
    
    
    1,087,326
    
    
    
    1,119,437
    
    
    
    1,123,529Paid related to:Current
    
    
    715,422
    
    
    
    697,773
    
    
    
    716,528Prior years
    
    
    346,040
    
    
    
    408,713
    
    
    
    368,034Total paid
    
    
    1,061,462
    
    
    
    1,106,486
    
    
    
    1,084,562Net balance
    
    
    978,567
    
    
    
    952,703
    
    
    
    939,752Plus reinsurance recoverables
    
    
    235,855
    
    
    
    266,530
    
    
    
    380,520Balance at December 31
    
    $
    1,214,422
    
    
    $
    1,219,233
    
    
    $
    1,320,272
    127




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##### Table of Contents



11. REINSURANCE
      Years ended December 31,2010
    
    
    2009
    
    
    2008Direct premiums
    
    $
    2,049,426
    
    
    $
    2,113,109
    
    
    $
    2,117,400Reinsurance premiums assumed from other companies
    
    
    101,357
    
    
    
    182,848
    
    
    
    215,189Reinsurance premiums ceded to other companies
    
    
    (272,875
    )
    
    
    (321,933
    )
    
    
    (444,094
    )Net premiums
    
    $
    1,877,908
    
    
    $
    1,974,024
    
    
    $
    1,888,495
  December 31,2010
    
    
    2009
    
    
    2008Direct life insurance in-force
    
    $
    69,288,973
    
    
    $
    68,584,383
    
    
    $
    68,820,212Reinsurance risks assumed from other companies
    
    
    479,528
    
    
    
    863,867
    
    
    
    1,050,645Total life insurance in-force
    
    
    69,768,501
    
    
    
    69,448,250
    
    
    
    69,870,857Reinsurance risks ceded to other companies
    
    
    (31,616,049
    )
    
    
    (31,347,876
    )
    
    
    (31,241,255
    )Net life insurance in-force
    
    $
    38,152,452
    
    
    $
    38,100,374
    
    
    $
    38,629,602
  128




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##### Table of Contents



12. NOTES PAYABLE
   13. FEDERAL INCOME TAXES
  Years ended December 31,2010
    
    
    2009
    
    
    2008Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    RateIncome tax expense (benefit) on pre-tax income
    
    $
    70,918
    
    
    
    35.0
    %
    
    $
    (3,592
    )
    
    
    35.0
    %
    
    $
    (105,322
    )
    
    
    35.0
    %Tax-exempt investment income
    
    
    (8,852
    )
    
    
    (4.4
    )
    
    
    (9,336
    )
    
    
    91.0
    
    
    
    (8,770
    )
    
    
    2.9Dividend exclusion
    
    
    (5,173
    )
    
    
    (2.6
    )
    
    
    (8,422
    )
    
    
    82.0
    
    
    
    (12,002
    )
    
    
    4.0Miscellaneous tax credits, net
    
    
    (7,715
    )
    
    
    (3.8
    )
    
    
    (6,963
    )
    
    
    67.8
    
    
    
    (5,835
    )
    
    
    1.9Other items, net
    
    
    6,030
    
    
    
    3.0
    
    
    
    (2,715
    )
    
    
    26.5
    
    
    
    9,535
    
    
    
    (3.1
    )Total
    
    $
    55,208
    
    
    
    27.2
    %
    
    $
    (31,028
    )
    
    
    302.3
    %
    
    $
    (122,394
    )
    
    
    40.7
    %
  129




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##### Table of Contents



December 31,2010
    
    
    2009DEFERRED TAX ASSETS:Investments, principally due to impairment losses
    
    $
    106,445
    
    
    $
    115,012Investment in real estate and other invested assets
principally due to investment valuation allowances
    
    
    9,237
    
    
    
    15,236Policyholder funds, principally due to policy reserve discount
    
    
    230,496
    
    
    
    211,547Policyholder funds, principally due to unearned premium reserve
    
    
    31,840
    
    
    
    31,312Non-qualified pension
    
    
    29,345
    
    
    
    29,109Participating policyholders surplus
    
    
    31,180
    
    
    
    28,505Pension
    
    
    37,759
    
    
    
    35,765Commissions and other expenses
    
    
    13,870
    
    
    
    20,978Tax carryforwards
    
    
    26,599
    
    
    
    8,666Other assets
    
    
    
    
    
    
    181Gross deferred tax assets
    
    
    516,771
    
    
    
    496,311Valuation allowance
    
    
    
    
    
    
    (400
    )Net deferred tax assets
    
    
    516,771
    
    
    
    495,911DEFERRED TAX LIABILITIES:Available-for-sale securities, principally due to net unrealized gains
    
    
    (195,840
    )
    
    
    (114,861
    )Investment in bonds, principally due to accrual of discount on bonds
    
    
    (16,639
    )
    
    
    (13,426
    )Deferred policy acquisition costs, due to difference between GAAP
and tax amortization methods
    
    
    (350,981
    )
    
    
    (356,014
    )Property, plant and equipment, principally due to difference between
GAAP and tax depreciation methods
    
    
    (5,668
    )
    
    
    (6,576
    )Other liabilities
    
    
    (1,380
    )
    
    
    Gross deferred tax liabilities
    
    
    (570,508
    )
    
    
    (490,877
    )Total net deferred tax asset (liability)
    
    $
    (53,737
    )
    
    $
    5,034
   Years ended December 31,2010
    
    
    2009
    
    
    2008Uncertain tax positionsBalance at beginning of year
    
    $
    
    
    
    $
    1,054
    
    
    $
    4,618Settlements during the year
    
    
    
    
    
    
    (1,054
    )
    
    
    (3,564
    )Balance at end of year
    
    $
    
    
    
    $
    
    
    
    $
    1,054
    130




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##### Table of Contents



14. COMPONENTS OF COMPREHENSIVE INCOME (LOSS)
  Before Federal
    
    
    Federal Income
    
    
    Net of FederalIncome Tax
    
    
    Tax Expense
    
    
    Income TaxDecember 31, 2010Total holding gain during the period
    
    $
    279,566
    
    
    $
    97,815
    
    
    $
    181,751Reclassification adjustment for net gain realized in net income (loss)
    
    
    (48,004
    )
    
    
    (16,836
    )
    
    
    (31,168
    )Unrealized gains on securities
    
    
    231,562
    
    
    
    80,979
    
    
    
    150,583Adjustment to deferred policy acquisition costs
    
    
    (52,650
    )
    
    
    (18,428
    )
    
    
    (34,222
    )Unrealized gain on investments attributable to participating policyholders interest
    
    
    (11,315
    )
    
    
    (3,960
    )
    
    
    (7,355
    )Net unrealized gain component of comprehensive income
    
    $
    167,597
    
    
    $
    58,591
    
    
    $
    109,006December 31, 2009Total holding gain during the period
    
    $
    699,318
    
    
    $
    244,558
    
    
    $
    454,760Reclassification adjustment for net loss realized in net income (loss)
    
    
    47,503
    
    
    
    16,494
    
    
    
    31,009Unrealized gains on securities
    
    
    746,821
    
    
    
    261,052
    
    
    
    485,769Adjustment to deferred policy acquisition costs
    
    
    (215,294
    )
    
    
    (75,352
    )
    
    
    (139,942
    )Unrealized gain on investments attributable to participating policyholders interest
    
    
    (20,215
    )
    
    
    (7,075
    )
    
    
    (13,140
    )Cumulative effect of change in accounting
    
    
    77,555
    
    
    
    27,144
    
    
    
    50,411Net unrealized gain component of comprehensive income
    
    $
    588,867
    
    
    $
    205,769
    
    
    $
    383,098December 31, 2008Total holding loss during the period
    
    $
    (1,064,970
    )
    
    $
    (372,840
    )
    
    $
    (692,130
    )Reclassification adjustment for net loss realized in net income (loss)
    
    
    372,194
    
    
    
    130,208
    
    
    
    241,986Unrealized loss on securities
    
    
    (692,776
    )
    
    
    (242,632
    )
    
    
    (450,144
    )Adjustment to deferred policy acquisition costs
    
    
    164,937
    
    
    
    57,359
    
    
    
    107,578Unrealized losses on investments attributable to participating policyholders interest
    
    
    16,520
    
    
    
    5,782
    
    
    
    10,738Net unrealized gain component of comprehensive income
    
    $
    (511,319
    )
    
    $
    (179,491
    )
    
    $
    (331,828
    )
  131




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##### Table of Contents



15. STOCKHOLDERS EQUITY AND NONCONTROLLING INTERESTS
 Common stock
  December 31,2010
    
    
    2009
    
    
    2008Common stockShares issued
    
    
    30,832,449
    
    
    
    30,832,449
    
    
    
    30,832,449Treasury shares
    
    
    4,011,472
    
    
    
    4,012,283
    
    
    
    4,013,616Restricted shares
    
    
    261,334
    
    
    
    261,334
    
    
    
    339,001Unrestricted outstanding shares
    
    
    26,559,643
    
    
    
    26,558,832
    
    
    
    26,479,832
 Stock-based compensation
      132




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##### Table of Contents



RS Weighted-
    
    
    
    
    
    
    RSU Weighted-SAR Weighted-
    
    
    
    
    
    
    Average Grant
    
    
    
    
    
    
    Average GrantAverage Grant
    
    
    
    
    
    
    Date Fair
    
    
    
    
    
    
    Date FairSAR Shares
    
    
    Date Fair Value
    
    
    RS Shares
    
    
    Value
    
    
    RS Units
    
    
    ValueOutstanding at January 1, 2008
    
    
    96,724
    
    
    $
    97.84
    
    
    
    253,000
    
    
    $
    84.48
    
    
    
    
    
    
    $
    Granted
    
    
    96,917
    
    
    
    115.92
    
    
    
    86,001
    
    
    
    116.48
    
    
    
    
    
    
    
    Exercised
    
    
    (4,109
    )
    
    
    81.30
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at December 31, 2008
    
    
    189,532
    
    
    
    107.44
    
    
    
    339,001
    
    
    
    92.60
    
    
    
    
    
    
    
    Granted
    
    
    2,999
    
    
    
    66.76
    
    
    
    1,333
    
    
    
    40.85
    
    
    
    
    
    
    
    Exercised
    
    
    (18,184
    )
    
    
    92.50
    
    
    
    (79,000
    )
    
    
    57.39
    
    
    
    
    
    
    
    Forfeited
    
    
    (12,898
    )
    
    
    105.46
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at December 31, 2009
    
    
    161,449
    
    
    
    108.53
    
    
    
    261,334
    
    
    
    102.98
    
    
    
    
    
    
    
    Granted
    
    
    2,411
    
    
    
    109.62
    
    
    
    
    
    
    
    
    
    
    
    10,230
    
    
    
    109.29Exercised
    
    
    (9,533
    )
    
    
    95.08
    
    
    
    
    
    
    
    
    
    
    
    (811
    )
    
    
    109.29Forfeited
    
    
    (7,100
    )
    
    
    113.55
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expired
    
    
    (2,500
    )
    
    
    90.86
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at December 31, 2010
    
    
    144,727
    
    
    
    109.40
    
    
    
    261,334
    
    
    
    102.98
    
    
    
    9,419
    
    
    
    109.29
     133




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##### Table of Contents



Earnings (loss) per share
  Years ended December 31,2010
    
    
    2009
    
    
    2008Weighted average shares outstanding
    
    
    26,559,035
    
    
    
    26,528,832
    
    
    
    26,479,832Incremental shares from restricted stock
    
    
    128,123
    
    
    
    68,644
    
    
    
    Total shares for diluted calculations
    
    
    26,687,158
    
    
    
    26,597,476
    
    
    
    26,479,832Net income (loss) from continuing operations attributable to
American National Insurance Company and Subsidiaries
    
    $
    145,301,000
    
    
    $
    17,006,000
    
    
    $
    (173,531,000
    )Net income (loss) from discontinued operations
    
    
    (1,275,000
    )
    
    
    (1,381,000
    )
    
    
    19,533,000Net income (loss) attributable to American National
Insurance Company and Subsidiaries
    
    $
    144,026,000
    
    
    $
    15,625,000
    
    
    $
    (153,998,000
    )Basic earnings (loss) per share from continued operations
    
    $
    5.47
    
    
    $
    0.64
    
    
    $
    (6.55
    )Basic earnings (loss) per share from discontinued operations
    
    
    (0.05
    )
    
    
    (0.05
    )
    
    
    0.73Basic earnings (loss) per share
    
    $
    5.42
    
    
    $
    0.59
    
    
    $
    (5.82
    )Diluted earnings (loss) per share from continued operations
    
    $
    5.45
    
    
    $
    0.64
    
    
    $
    (6.55
    )Diluted earnings (loss) per share from discontinued operations
    
    
    (0.05
    )
    
    
    (0.05
    )
    
    
    0.73Diluted earnings (loss) per share
    
    $
    5.40
    
    
    $
    0.59
    
    
    $
    (5.82
    )
 Dividends
    Noncontrolling interests
    134




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##### Table of Contents



16. SEGMENT INFORMATION
  
    
    The Life segment markets whole, term, universal and variable life insurance on a
national basis primarily through employee and multiple-line agents, direct marketing
channels and independent third-party marketing organizations.
 
    
    The Annuity segment develops sells and supports fixed, equity-indexed, and variable
annuity products. These products are primarily sold through independent agents and
brokers, but are also sold through financial institutions, multiple-line agents and
employee agents.
 
    
    The Health segments primary lines of business are Medicare Supplement, employer medical
stop loss, true group, other supplemental health products and credit disability insurance.
Health products are typically distributed through independent agents and managing general
underwriters.
 
    
    The Property and Casualty segment writes personal, commercial and credit-related
property insurance. These products are primarily sold through multiple-line agents and
independent agents.
 
    
    The Corporate and Other business segment consists of net investment income on the
capital not allocated to the insurance lines and the operations of non-insurance lines of
business.
  
    
    Net investment income from fixed maturity assets (bonds and mortgage loans) is allocated
based on the funds generated by each line of business at the average yield available from
these fixed maturity assets at the time such funds become available.
 
    
    Net investment income from all other assets is allocated to the operating segments in
accordance with the amount of equity invested in each segment, with the remainder going to
Corporate and Other.
 
    
    Expenses are allocated to the lines based upon various factors, including premium and
commission ratios within the respective operating segments.
 
    
    Realized gains or losses on investments and equity in earnings of unconsolidated
affiliates are allocated to Corporate and Other.
 
    
    Federal income taxes have been applied to the net earnings of each segment based on a
fixed tax rate. Any difference between the amount allocated to the segments and the total
federal income tax amount is allocated to Corporate and Other.
   135




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##### Table of Contents



Year ended December 31, 2010Property &
    
    
    Corporate &Life
    
    
    Annuity
    
    
    Health
    
    
    Casualty
    
    
    Other
    
    
    TOTALPremiums and Other Revenues:Premiums
    
    $
    282,160
    
    
    $
    174,193
    
    
    $
    263,294
    
    
    $
    1,158,261
    
    
    $
    
    
    
    $
    1,877,908Other policy revenues
    
    
    170,729
    
    
    
    15,076
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    185,805Net investment income
    
    
    223,753
    
    
    
    510,106
    
    
    
    14,855
    
    
    
    67,545
    
    
    
    95,656
    
    
    
    911,915Other income (expenses)
    
    
    3,547
    
    
    
    (7,900
    )
    
    
    10,384
    
    
    
    8,192
    
    
    
    3,175
    
    
    
    17,398Total operating revenues
    
    
    680,189
    
    
    
    691,475
    
    
    
    288,533
    
    
    
    1,233,998
    
    
    
    98,831
    
    
    
    2,993,026Realized gains (losses) on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    74,062
    
    
    
    74,062Total revenues
    
    
    680,189
    
    
    
    691,475
    
    
    
    288,533
    
    
    
    1,233,998
    
    
    
    172,893
    
    
    
    3,067,088Benefits, Losses and Expenses:Policy benefits
    
    
    294,177
    
    
    
    205,948
    
    
    
    184,554
    
    
    
    923,736
    
    
    
    
    
    
    
    1,608,415Interest credited to policy account balances
    
    
    59,149
    
    
    
    333,970
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    393,119Commissions for acquiring and servicing policies
    
    
    91,165
    
    
    
    95,701
    
    
    
    35,263
    
    
    
    226,748
    
    
    
    3
    
    
    
    448,880Other operating costs and expenses
    
    
    178,619
    
    
    
    62,791
    
    
    
    49,634
    
    
    
    124,410
    
    
    
    38,692
    
    
    
    454,146Change in deferred policy acquisition costs
    
    
    (1,963
    )
    
    
    (44,569
    )
    
    
    4,886
    
    
    
    1,551
    
    
    
    
    
    
    
    (40,095
    )Total benefits, losses and expenses
    
    
    621,147
    
    
    
    653,841
    
    
    
    274,337
    
    
    
    1,276,445
    
    
    
    38,695
    
    
    
    2,864,465Income (loss) from continuing operations before federal income
taxes, and equity in losses of unconsolidated affiliates
    
    
    59,042
    
    
    
    37,634
    
    
    
    14,196
    
    
    
    (42,447
    )
    
    
    134,198
    
    
    
    202,623Provision (benefit) for federal income taxes
    
    
    19,484
    
    
    
    12,419
    
    
    
    4,685
    
    
    
    (14,008
    )
    
    
    32,628
    
    
    
    55,208Equity in losses of unconsolidated affiliates
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,169
    )
    
    
    (3,169
    )Net loss attributable to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,055
    )
    
    
    (1,055
    )Income (loss) from continuing operations attributable to
American National Insurance Company and Subsidiaries
    
    
    39,558
    
    
    
    25,215
    
    
    
    9,511
    
    
    
    (28,439
    )
    
    
    99,456
    
    
    
    145,301Income (loss) from discontinued operations, net of income tax expense (benefit)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,275
    )
    
    
    (1,275
    )Net Income (loss) attributable to American National
Insurance Company and Subsidiaries
    
    $
    39,558
    
    
    $
    25,215
    
    
    $
    9,511
    
    
    $
    (28,439
    )
    
    $
    98,181
    
    
    $
    144,026Selected Data:Total Assets
    
    $
    4,968,385
    
    
    $
    10,672,524
    
    
    $
    558,970
    
    
    $
    2,404,190
    
    
    $
    2,808,969
    
    
    $
    21,413,039
 Year ended December 31, 2009Property &
    
    
    Corporate &Life
    
    
    Annuity
    
    
    Health
    
    
    Casualty
    
    
    Other
    
    
    TOTALPremiums and Other Revenues:Premiums
    
    $
    284,530
    
    
    $
    220,284
    
    
    $
    309,701
    
    
    $
    1,159,509
    
    
    $
    
    
    
    $
    1,974,024Other policy revenues
    
    
    164,748
    
    
    
    14,756
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    179,504Net investment income
    
    
    222,611
    
    
    
    449,035
    
    
    
    15,992
    
    
    
    66,175
    
    
    
    85,964
    
    
    
    839,777Other income (expenses)
    
    
    2,720
    
    
    
    (3,870
    )
    
    
    10,382
    
    
    
    7,064
    
    
    
    2,704
    
    
    
    19,000Total operating revenues
    
    
    674,609
    
    
    
    680,205
    
    
    
    336,075
    
    
    
    1,232,748
    
    
    
    88,668
    
    
    
    3,012,305Realized gains (losses) on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (73,855
    )
    
    
    (73,855
    )Total revenues
    
    
    674,609
    
    
    
    680,205
    
    
    
    336,075
    
    
    
    1,232,748
    
    
    
    14,813
    
    
    
    2,938,450Benefits, Losses and Expenses:Policy benefits
    
    
    297,719
    
    
    
    249,709
    
    
    
    239,407
    
    
    
    923,064
    
    
    
    
    
    
    
    1,709,899Interest credited to policy account balances
    
    
    58,983
    
    
    
    311,580
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    370,563Commissions for acquiring and servicing policies
    
    
    91,968
    
    
    
    107,053
    
    
    
    51,717
    
    
    
    209,203
    
    
    
    2
    
    
    
    459,943Other operating costs and expenses
    
    
    185,048
    
    
    
    59,254
    
    
    
    62,134
    
    
    
    124,266
    
    
    
    41,218
    
    
    
    471,920Change in deferred policy acquisition costs
    
    
    1,536
    
    
    
    (62,013
    )
    
    
    5,017
    
    
    
    (8,151
    )
    
    
    
    
    
    
    (63,611
    )Total benefits, losses and expenses
    
    
    635,254
    
    
    
    665,583
    
    
    
    358,275
    
    
    
    1,248,382
    
    
    
    41,220
    
    
    
    2,948,714Income (loss) from continuing operations before federal income
taxes, and equity in losses of unconsolidated affiliates
    
    
    39,355
    
    
    
    14,622
    
    
    
    (22,200
    )
    
    
    (15,634
    )
    
    
    (26,407
    )
    
    
    (10,264
    )Provision (benefit) for federal income taxes
    
    
    12,987
    
    
    
    4,825
    
    
    
    (7,326
    )
    
    
    (5,159
    )
    
    
    (36,355
    )
    
    
    (31,028
    )Equity in losses of unconsolidated affiliates
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,216
    )
    
    
    (4,216
    )Net loss attributable to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (458
    )
    
    
    (458
    )Income (loss) from continuing operations attributable to
American National Insurance Company and Subsidiaries
    
    
    26,368
    
    
    
    9,797
    
    
    
    (14,874
    )
    
    
    (10,475
    )
    
    
    6,190
    
    
    
    17,006Income (loss) from discontinued operations, net of income tax expense (benefit)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,381
    )
    
    
    (1,381
    )Net Income (loss) attributable to American National
Insurance Company and Subsidiaries
    
    $
    26,368
    
    
    $
    9,797
    
    
    $
    (14,874
    )
    
    $
    (10,475
    )
    
    $
    4,809
    
    
    $
    15,625Selected Data:Total Assets
    
    $
    4,875,165
    
    
    $
    9,683,972
    
    
    $
    613,539
    
    
    $
    2,066,477
    
    
    $
    2,910,354
    
    
    $
    20,149,507
  136




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##### Table of Contents



Year ended December 31, 2008Property &
    
    
    Corporate &Life
    
    
    Annuity
    
    
    Health
    
    
    Casualty
    
    
    Other
    
    
    TOTALPremiums and Other Revenues:Premiums
    
    $
    299,338
    
    
    $
    116,248
    
    
    $
    290,883
    
    
    $
    1,182,026
    
    
    $
    
    
    
    $
    1,888,495Other policy revenues
    
    
    154,984
    
    
    
    19,915
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    174,899Net investment income
    
    
    226,643
    
    
    
    374,023
    
    
    
    16,566
    
    
    
    69,348
    
    
    
    108,862
    
    
    
    795,442Other income (expenses)
    
    
    3,767
    
    
    
    (5,718
    )
    
    
    13,252
    
    
    
    8,973
    
    
    
    2,503
    
    
    
    22,777Total operating revenues
    
    
    684,732
    
    
    
    504,468
    
    
    
    320,701
    
    
    
    1,260,347
    
    
    
    111,365
    
    
    
    2,881,613Realized gains (losses) on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (379,034
    )
    
    
    (379,034
    )Total revenues
    
    
    684,732
    
    
    
    504,468
    
    
    
    320,701
    
    
    
    1,260,347
    
    
    
    (267,669
    )
    
    
    2,502,579Benefits, Losses and Expenses:Policy benefits
    
    
    296,078
    
    
    
    142,867
    
    
    
    223,055
    
    
    
    939,854
    
    
    
    
    
    
    
    1,601,854Interest credited to policy account balances
    
    
    62,221
    
    
    
    237,612
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    299,833Commissions for acquiring and servicing policies
    
    
    126,813
    
    
    
    79,213
    
    
    
    43,219
    
    
    
    226,100
    
    
    
    
    
    
    
    475,345Other operating costs and expenses
    
    
    222,908
    
    
    
    45,491
    
    
    
    69,961
    
    
    
    132,601
    
    
    
    22,946
    
    
    
    493,907Change in deferred policy acquisition costs
    
    
    (42,103
    )
    
    
    (20,690
    )
    
    
    5,023
    
    
    
    (9,669
    )
    
    
    
    
    
    
    (67,439
    )Total benefits, losses and expenses
    
    
    665,917
    
    
    
    484,493
    
    
    
    341,258
    
    
    
    1,288,886
    
    
    
    22,946
    
    
    
    2,803,500Income (loss) from continuing operations before federal income
taxes, and equity in losses of unconsolidated affiliates
    
    
    18,815
    
    
    
    19,975
    
    
    
    (20,557
    )
    
    
    (28,539
    )
    
    
    (290,615
    )
    
    
    (300,921
    )Provision (benefit) for federal income taxes
    
    
    6,209
    
    
    
    6,592
    
    
    
    (6,784
    )
    
    
    (9,418
    )
    
    
    (118,993
    )
    
    
    (122,394
    )Equity in losses of unconsolidated affiliates
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,965
    
    
    
    4,965Net loss attributable to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (31
    )
    
    
    (31
    )Income (loss) from continuing operations attributable to
American National Insurance Company and Subsidiaries
    
    
    12,606
    
    
    
    13,383
    
    
    
    (13,773
    )
    
    
    (19,121
    )
    
    
    (166,626
    )
    
    
    (173,531
    )Income (loss) from discontinued operations, net of income
tax expense (benefit)
    
    
    18,728
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    805
    
    
    
    19,533Net Income (loss) attributable to American National
Insurance Company and Subsidiaries
    
    $
    31,334
    
    
    $
    13,383
    
    
    $
    (13,773
    )
    
    $
    (19,121
    )
    
    $
    (165,821
    )
    
    $
    (153,998
    )Selected Data:Total Assets
    
    $
    4,823,465
    
    
    $
    8,265,270
    
    
    $
    759,089
    
    
    $
    2,248,514
    
    
    $
    2,283,101
    
    
    $
    18,379,439
 17. PENSION AND POSTRETIREMENT BENEFITS
 Pension benefits
     137




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##### Table of Contents



2010
    
    
    2009Reconciliation of benefit obligation:Obligation at January 1,
    
    $
    360,374
    
    
    $
    328,783Service cost benefits earned during period
    
    
    12,937
    
    
    
    11,163Interest cost on projected benefit obligation
    
    
    20,884
    
    
    
    20,319Actuarial gain
    
    
    17,652
    
    
    
    19,141Benefits paid
    
    
    (16,674
    )
    
    
    (19,032
    )Obligation at December 31,
    
    
    395,173
    
    
    
    360,374Reconciliation of fair value of plan assets:Fair value of plan assets at January 1,
    
    
    184,500
    
    
    
    149,874Actual return on plan assets
    
    
    20,559
    
    
    
    28,729Employer contributions
    
    
    24,422
    
    
    
    24,929Benefits paid
    
    
    (16,674
    )
    
    
    (19,032
    )Fair value of plan assets at December 31,
    
    
    212,807
    
    
    
    184,500Funded status at December 31,
    
    $
    (182,366
    )
    
    $
    (175,874
    )
  Years ended December 31,2010
    
    
    2009
    
    
    2008Service cost
    
    $
    12,937
    
    
    $
    11,163
    
    
    $
    9,974Interest cost
    
    
    20,884
    
    
    
    20,319
    
    
    
    19,003Expected return on plan assets
    
    
    (15,637
    )
    
    
    (13,736
    )
    
    
    (13,571
    )Amortization of prior service cost
    
    
    2,324
    
    
    
    3,469
    
    
    
    3,469Amortization of net gain
    
    
    7,713
    
    
    
    9,134
    
    
    
    4,412Net periodic benefit cost
    
    $
    28,221
    
    
    $
    30,349
    
    
    $
    23,287
  Years ended December 31,2010
    
    
    2009
    
    
    2008Prior service cost
    
    $
    2,324
    
    
    $
    3,469
    
    
    $
    3,469Net actuarial gain (loss)
    
    
    (4,969
    )
    
    
    4,909
    
    
    
    (57,385
    )Deferred tax benefit (expense)
    
    
    926
    
    
    
    (2,932
    )
    
    
    18,871Other comprehensive income (loss), net of tax
    
    $
    (1,719
    )
    
    $
    5,446
    
    
    $
    (35,045
    )
  138




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##### Table of Contents



Years ended December 31,2010
    
    
    2009Prior service cost
    
    $
    
    
    
    $
    (2,324
    )Net actuarial loss
    
    
    (100,820
    )
    
    
    (95,851
    )Deferred tax benefit
    
    
    35,287
    
    
    
    34,361Amounts included in accumulated other comprehensive income (loss)
    
    $
    (65,533
    )
    
    $
    (63,814
    )
  Used for Net
    
    
    Used for BenefitBenefit Cost in Fiscal Year
    
    
    Obligations1/1/2010 to 12/31/2010
    
    
    as of 12/31/2010Discount rate
    
    
    6.17
    %
    
    
    5.34
    %Rate of compensation increase
    
    
    4.20
    %
    
    
    3.78
    %Long-term rate of return
    
    
    7.65
    %
    
    
    7.65
    %
   Pension Benefit Payments2011
    
    $
    23,2462012
    
    
    21,3132013
    
    
    20,7712014
    
    
    25,1352015
    
    
    27,7982016-2020
    
    
    147,677
  139




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##### Table of Contents



December 31, 2010Quoted Prices in
    
    
    SignificantActive Markets for
    
    
    ObservableIdentical Assets
    
    
    InputsTotal
    
    
    (Level 1)
    
    
    (Level 2)Asset CategoryCorporate debt securities
    
    $
    72,003
    
    
    $
    
    
    
    $
    72,003Residential mortgage-backed securities
    
    
    320
    
    
    
    
    
    
    
    320Equity securities by sector:Consumer goods
    
    
    25,992
    
    
    
    25,992
    
    
    
    Energy
    
    
    14,143
    
    
    
    14,143
    
    
    
    Finance
    
    
    17,254
    
    
    
    17,254
    
    
    
    Healthcare
    
    
    11,459
    
    
    
    11,459
    
    
    
    Industrials
    
    
    10,146
    
    
    
    10,146
    
    
    
    Information technology
    
    
    17,500
    
    
    
    17,500
    
    
    
    Materials
    
    
    2,411
    
    
    
    2,411
    
    
    
    Telecom services
    
    
    4,432
    
    
    
    4,432
    
    
    
    Utilities
    
    
    3,150
    
    
    
    3,150
    
    
    
    Commercial paper
    
    
    30,801
    
    
    
    
    
    
    
    30,801Money market
    
    
    14
    
    
    
    14
    
    
    
    Unallocated group annuity contract
    
    
    2,811
    
    
    
    
    
    
    
    2,811Contribution receivable
    
    
    276
    
    
    
    276
    
    
    
    Other
    
    
    95
    
    
    
    95
    
    
    
    Total
    
    $
    212,807
    
    
    $
    106,872
    
    
    $
    105,935
        140




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##### Table of Contents



Postretirement life and health benefits
     Savings plans
   141




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##### Table of Contents



18. COMMITMENTS AND CONTINGENCIES
 Commitments
    Guarantees
  Litigation
   142




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##### Table of Contents



143




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##### Table of Contents



19. DISCONTINUED OPERATIONS
   Years ended December 31,2010
    
    
    2009
    
    
    2008Revenues:Net investment income
    
    $
    145
    
    
    $
    328
    
    
    $
    735Realized investments gains (losses)
    
    
    847
    
    
    
    (1,842
    )
    
    
    (675
    )Other Income
    
    
    9,919
    
    
    
    12,843
    
    
    
    16,002Total revenues
    
    
    10,911
    
    
    
    11,329
    
    
    
    16,062ExpensesOther operating costs
    
    
    11,842
    
    
    
    13,430
    
    
    
    14,797Taxes, licenses and fees
    
    
    69
    
    
    
    59
    
    
    
    96Total expenses
    
    
    11,911
    
    
    
    13,489
    
    
    
    14,893Income (loss) from discontinued operations
    
    
    (1,000
    )
    
    
    (2,160
    )
    
    
    1,169Loss on sale
    
    
    (1,000
    )
    
    
    
    
    
    
    Income (loss) from discontinued operations before
income tax expense (benefit)
    
    
    (2,000
    )
    
    
    (2,160
    )
    
    
    1,169Income tax expense (benefit)
    
    
    (725
    )
    
    
    (779
    )
    
    
    364Income (loss) from discontinued operations, net of tax
    
    $
    (1,275
    )
    
    $
    (1,381
    )
    
    $
    805
     144




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##### Table of Contents



20. RELATED PARTY TRANSACTIONS
  Dollar Amount of Transactions
    
    
    Amount due toYears ended December 31,
    
    
    Years ended December 31,Related Party
    
    Financial Statement Line Impacted
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Gal-Tex Hotel Corporation
    
    Mortgage loans on real estate
    
    $
    924
    
    
    $
    860
    
    
    $
    10,951
    
    
    $
    11,875Gal-Tex Hotel Corporation
    
    Net investment income
    
    
    831
    
    
    
    895
    
    
    
    66
    
    
    
    72Gal-Tex Hotel Corporation
    
    Other operating costs and expenses
    
    
    254
    
    
    
    280
    
    
    
    21
    
    
    
    20Gal-Tex Hotel Corporation
    
    Accident and health premiums
    
    
    56
    
    
    
    56
    
    
    
    56
    
    
    
    Moody Insurance Group, Inc.
    
    Commissions for acquiring and servicing policies
    
    
    3,124
    
    
    
    2,813
    
    
    
    717
    
    
    
    388Moody Insurance Group, Inc.
    
    Other operating costs and expenses
    
    
    135
    
    
    
    171
    
    
    
    
    
    
    
    National Western Life Ins.
    
    Accident and health premiums
    
    
    135
    
    
    
    226
    
    
    
    14
    
    
    
    National Western Life Ins.
    
    Other operating costs and expenses
    
    
    1,328
    
    
    
    1,300
    
    
    
    71
    
    
    
    Moody Foundation
    
    Accident and health premiums
    
    
    263
    
    
    
    276
    
    
    
    7
    
    
    
    Greer, Herz and Adams, LLP
    
    Other operating costs and expenses
    
    
    10,785
    
    
    
    9,300
    
    
    
    251
    
    
    
    370
 Information Regarding Related Parties and Transactions
 Mortgage Loans to Gal-Tex Hotel Corporation (Gal-Tex)
 Management Contracts with Gal-Tex
 Transactions with Moody Insurance Group, Inc.
  Health Insurance Contracts with Certain Affiliates
  145




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##### Table of Contents



Transactions with Greer, Herz & Adams, L.L.P
 21. SELECTED QUARTERLY FINANCIAL DATA
 Supplementary Financial Information
  Three Months EndedMarch 31,
    
    
    June 30,
    
    
    September 30,
    
    
    December 31,2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Total revenues
    
    $
    748,733
    
    
    $
    650,650
    
    
    $
    744,540
    
    
    $
    724,301
    
    
    $
    790,456
    
    
    $
    776,868
    
    
    $
    783,359
    
    
    $
    786,631Total benefits, losses and expenses
    
    
    706,364
    
    
    
    725,517
    
    
    
    716,730
    
    
    
    736,648
    
    
    
    710,822
    
    
    
    741,974
    
    
    
    730,549
    
    
    
    744,575Income (loss) from continuing operations before federal income
tax and equity in earnings of unconsolidated affiliates
    
    
    42,369
    
    
    
    (74,867
    )
    
    
    27,810
    
    
    
    (12,347
    )
    
    
    79,634
    
    
    
    34,894
    
    
    
    52,810
    
    
    
    42,056Provision (benefit) for federal income taxes
    
    
    10,016
    
    
    
    (30,343
    )
    
    
    3,307
    
    
    
    (10,707
    )
    
    
    31,257
    
    
    
    3,178
    
    
    
    10,628
    
    
    
    6,844Equity in earnings (losses) of unconsolidated affiliates, net of tax
    
    
    7
    
    
    
    (1,937
    )
    
    
    62
    
    
    
    (3,180
    )
    
    
    (144
    )
    
    
    2,110
    
    
    
    (3,094
    )
    
    
    (1,209
    )Income (loss) from continuing operations
    
    
    32,360
    
    
    
    (46,461
    )
    
    
    24,565
    
    
    
    (4,820
    )
    
    
    48,233
    
    
    
    33,826
    
    
    
    39,088
    
    
    
    34,003Income (loss) from discontinued operations, net of income tax
expense (benefit)
    
    
    223
    
    
    
    (1,233
    )
    
    
    1,778
    
    
    
    (103
    )
    
    
    (513
    )
    
    
    122
    
    
    
    (2,763
    )
    
    
    (167
    )Net income (loss)
    
    
    32,583
    
    
    
    (47,694
    )
    
    
    26,343
    
    
    
    (4,923
    )
    
    
    47,720
    
    
    
    33,948
    
    
    
    36,325
    
    
    
    33,836Net income (loss) attributable to noncontrolling interest
    
    
    (2,195
    )
    
    
    (1
    )
    
    
    (279
    )
    
    
    (568
    )
    
    
    664
    
    
    
    1,248
    
    
    
    755
    
    
    
    (1,137
    )Net income (loss) attributable to American National Insurance
Company and subsidiaries
    
    
    34,778
    
    
    
    (47,693
    )
    
    
    26,622
    
    
    
    (4,355
    )
    
    
    47,056
    
    
    
    32,700
    
    
    
    35,570
    
    
    
    34,973Earnings (loss) per share attributable to American
National Insurance Company and subsidiaries:Basic
    
    
    1.31
    
    
    
    (1.80
    )
    
    
    1.00
    
    
    
    (0.16
    )
    
    
    1.77
    
    
    
    1.23
    
    
    
    1.34
    
    
    
    1.32Diluted
    
    
    1.30
    
    
    
    (1.80
    )
    
    
    1.00
    
    
    
    (0.16
    )
    
    
    1.76
    
    
    
    1.23
    
    
    
    1.33
    
    
    
    1.32
  146




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##### Table of Contents



ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A.
    
    CONTROLS AND PROCEDURES
 Disclosure controls and procedures
  Managements report on internal controls over financial reporting
  
    
    pertain to the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and dispositions of the assets of the Company;
 
    
    provide reasonable assurance that transactions are recorded as necessary to permit
preparation of consolidated financial statements in accordance with accounting principles
generally accepted in the United States of America, and that receipts and expenditures of
the company are being made only in accordance with authorizations of management and
directors of the Company; and
 
    
    provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the Companys assets that could have a material effect on
the consolidated financial statements.
  Internal
Control-Integrated Framework.
  147




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Changes in internal control over financial reporting
  
 ITEM 9B.
    
    OTHER INFORMATION
   148




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##### Table of Contents



PART III
 
 ITEM 10.
    
    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
  
 ITEM 11.
    
    EXECUTIVE COMPENSATION
  
 ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
  
 ITEM 13.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
  
 ITEM 14.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
   149




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##### Table of Contents



PART IV
 
 ITEM 15.
    
    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 Page(a)(1) Financial Statements (See Item 8: Financial Statements and Supplementary Data)
    
    
    87(a)(2) Supplementary Data and Financial Statement Schedules
  PageI  Summary of Investments  Other than Investments in Related Parties, December 31, 2010
    
    
    153II  Condensed Financial Information of Registrant, Years ended December 31, 2010 and 2009
    
    
    154III  Supplementary Insurance Information, Years ended December 31, 2010, 2009 and 2008
    
    
    157IV  Reinsurance Information, Years ended December 31, 2010, 2009 and 2008
    
    
    158V  Valuation and Qualifying Accounts, Years ended December 31, 2010, 2009 and 2008
    
    
    159
  
  ExhibitNumber:
    
    Basic Documents:3.1
    
    
    Articles of Incorporation (incorporated by reference to Exhibit No. 3.1 to
the registrants Registration Statement on Form 10-12B filed April 10, 2009)3.2
    
    
    Bylaws (incorporated by reference to Exhibit No. 3.2 to the registrants
Current Report on Form 8-K filed May 5, 2010)4.1
    
    
    Specimen copy of Stock Certificate (incorporated by reference to Exhibit No.
4.1 to the registrants Registration Statement on Form 10-12B filed April 10,
2009)10.1
    
    
    Administrative Services Agreement dated October 17, 2007 by and between the
registrant and Transaction Applications Group, Inc. (incorporated by
reference to Exhibit No. 10.1 to the registrants Registration Statement on
Form 10-12B filed April 10, 2009)10.2
    *
    
    American National Insurance Company Amended and Restated 1999 Stock and
Incentive Plan (the Stock and Incentive Plan) (incorporated by reference to
Exhibit No. 10.2 to the registrants Registration Statement on Form 10-12B
filed April 10, 2009)10.3
    *
    
    Form of Restricted Stock Agreement for Directors under the Stock and
Incentive Plan (incorporated by reference to Exhibit No. 10.3 to the
registrants Registration Statement on Form 10-12B filed April 10, 2009)10.4
    *
    
    Form of Restricted Stock Agreement for Employees (incorporated by reference
to Exhibit No. 10.4 to the registrants Registration Statement on Form 10-12B
filed April 10, 2009)10.5
    *
    
    Form of Stock Appreciation Rights Agreement under the Stock and Incentive Plan10.6
    *
    
    American National Insurance Company Nonqualified Retirement Plan for Certain
Salaried Employees (incorporated by reference to Exhibit No. 10.6 to the
registrants Registration Statement on Form 10-12B filed April 10, 2009)10.7
    *
    
    American National Insurance Company Nonqualified Retirement Plan
(incorporated by reference to Exhibit No. 10.7 to the registrants
Registration Statement on Form 10-12B filed April 10,2009)
  150




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##### Table of Contents



ExhibitNumber:
    
    Basic Documents:10.8
    *
    
    Amendment No. 4 to the American National Insurance Company Nonqualified
Retirement Plan10.9
    *
    
    Form of Restricted Stock Unit Agreement under the Stock and Incentive Plan21
    
    
    Subsidiaries23
    
    
    Consent of KPMG LLP31.1
    
    
    Certification of the principal executive officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.31.2
    
    
    Certification of the principal financial officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.32.1
    
    
    Certification of the principal executive officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.32.2
    
    
    Certification of the principal financial officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
  *
    
    Management contract or compensatory plan of arrangement.
  151




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SIGNATURES
  AMERICAN NATIONAL INSURANCE COMPANYBy:
    /s/  Robert L.  MoodyName:
    Robert L.  MoodyTitle:
    Chairman of the Board & Chief Executive Officer   Signature
    
    Title
    
    Date/s/ Robert L. Moody

Robert L. Moody
    
    Chairman of the Board &
Chief Executive Officer
(principal executive officer)
    
    March 2, 2011/s/ John J. Dunn, Jr.

John J. Dunn, Jr.
    
    Executive Vice President,
Corporate Chief Financial Officer
(principal financial officer)
    
    March 2, 2011/s/ Arthur O. Dummer

Arthur O. Dummer
    
    Director
    
    March 2, 2011/s/ Dr. Shelby M. Elliott

Dr. Shelby M. Elliott
    
    Director
    
    March 2, 2011/s/ G. Richard Ferdinandtsen

G. Richard Ferdinandtsen
    
    Director
    
    March 2, 2011/s/ Frances Anne Moody-Dahlberg

Frances Anne Moody-Dahlberg
    
    Director
    
    March 2, 2011/s/ Russell S. Moody

Russell S. Moody
    
    Director
    
    March 2, 2011/s/ Frank P. Williamson

Frank P. Williamson
    
    Director
    
    March 2, 2011/s/ James D. Yarbrough

James D. Yarbrough
    
    Director
    
    March 2, 2011
  152




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##### Table of Contents



AMERICAN NATIONAL INSURANCE COMPANY AND SUBSIDIARIES


SCHEDULE I  SUMMARY OF INVESTMENTS  OTHER THAN INVESTMENTS IN RELATED PARTIES
(in thousands)
 December 31, 2010Amount at WhichShown in theConsolidatedStatementsCost or
    
    
    Estimated
    
    
    of FinancialType of Investment
    
    Amortized Cost(1)
    
    
    Fair Value
    
    
    PositionFixed maturities:Bonds held-to-maturity:U.S.treasury and other U.S. government
corporations and agencies
    
    $
    23,117
    
    
    $
    23,405
    
    
    $
    23,117States of the U.S. and political subdivisions of the states
    
    
    422,249
    
    
    
    422,446
    
    
    
    422,249Foreign governments
    
    
    29,020
    
    
    
    33,930
    
    
    
    29,020Corporate debt securities
    
    
    7,293,501
    
    
    
    7,738,777
    
    
    
    7,293,501Residential mortgage-backed securities
    
    
    661,516
    
    
    
    691,820
    
    
    
    661,516Commercial mortgage-backed securities
    
    
    31,340
    
    
    
    13,582
    
    
    
    31,340Collateralized debt securities
    
    
    8,562
    
    
    
    8,315
    
    
    
    8,562Other debt securities
    
    
    44,245
    
    
    
    47,559
    
    
    
    44,245Bonds available-for-sale:U.S.treasury and other U.S. government
corporations and agencies
    
    
    13,268
    
    
    
    13,907
    
    
    
    13,907States of the U.S. and political subdivisions of the states
    
    
    583,163
    
    
    
    594,112
    
    
    
    594,112Foreign governments
    
    
    5,000
    
    
    
    6,967
    
    
    
    6,967Corporate debt securities
    
    
    3,030,671
    
    
    
    3,201,569
    
    
    
    3,201,569Residential mortgage-backed securities
    
    
    259,560
    
    
    
    271,393
    
    
    
    271,393Collateralized debt securities
    
    
    19,468
    
    
    
    20,709
    
    
    
    20,709Other debt securities
    
    
    14,187
    
    
    
    14,956
    
    
    
    14,956Total fixed maturity securities
    
    
    12,438,867
    
    
    
    13,103,447
    
    
    
    12,637,163Equity securities:Common stocks:Consumer goods
    
    
    154,106
    
    
    
    216,592
    
    
    
    216,592Energy and utilities
    
    
    121,727
    
    
    
    193,265
    
    
    
    193,265Finance
    
    
    119,975
    
    
    
    173,579
    
    
    
    173,579Healthcare
    
    
    78,256
    
    
    
    108,509
    
    
    
    108,509Industrials
    
    
    59,856
    
    
    
    107,505
    
    
    
    107,505Information technology
    
    
    108,178
    
    
    
    170,301
    
    
    
    170,301Materials
    
    
    16,469
    
    
    
    32,009
    
    
    
    32,009Telecommunication services
    
    
    31,678
    
    
    
    44,128
    
    
    
    44,128Preferred stock
    
    
    30,420
    
    
    
    36,867
    
    
    
    36,867Total equity securities
    
    
    720,665
    
    
    
    1,082,755
    
    
    
    1,082,755Other InvestmentsMortgage loans on real estate, net of allowance
    
    
    2,679,909
    
    
    
    2,865,187
    
    
    
    2,679,909Investment
real estate, net of accumulated depreciation
    
    
    506,772
    
    
    
    
    
    
    
    506,772Real estate acquired in satisfaction of debt
    
    
    14,996
    
    
    
    
    
    
    
    14,996Policy loans
    
    
    380,505
    
    
    
    380,505
    
    
    
    380,505Options
    
    
    66,716
    
    
    
    66,716
    
    
    
    66,716Other long-term investments
    
    
    52,535
    
    
    
    
    
    
    
    52,535Short-term investments
    
    
    486,206
    
    
    
    486,206
    
    
    
    486,206Total other investments
    
    
    4,187,639
    
    
    
    3,798,614
    
    
    
    4,187,639Total investments
    
    $
    17,347,171
    
    
    $
    17,984,816
    
    
    $
    17,907,557
 (1)
    
    Original cost of equity securities and, as to fixed maturity securities, original cost
reduced by repayments and valuation write-downs
and adjusted for amortization of premiums or accrual of discounts.
 See accompanying Report of Independent Registered Public Accounting Firm.
  153




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AMERICAN NATIONAL INSURANCE COMPANY (Parent Company Only)


SCHEDULE II  CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(In thousands)
 Years ended December 31,Condensed Statements of Operations
    
    2010
    
    
    2009
    
    
    2008RevenuesPremium and policy revenue
    
    $
    735,727
    
    
    $
    812,007
    
    
    $
    691,885Net investment income
    
    
    760,630
    
    
    
    692,993
    
    
    
    643,855Realized gain (loss) on investments
    
    
    46,561
    
    
    
    (9,047
    )
    
    
    9,601Other-than-temporary impairments
    
    
    (43
    )
    
    
    (21,113
    )
    
    
    (152,840
    )Other income
    
    
    2,114
    
    
    
    5,346
    
    
    
    6,576Total revenues
    
    
    1,544,989
    
    
    
    1,480,186
    
    
    
    1,199,077ExpensesPolicy benefits
    
    
    505,916
    
    
    
    596,729
    
    
    
    471,590Other operating costs and expenses
    
    
    820,240
    
    
    
    804,583
    
    
    
    771,899Total expenses
    
    
    1,326,156
    
    
    
    1,401,312
    
    
    
    1,243,489Income (loss) from continuing operations before federal income
tax, and equity in earnings of unconsolidated affiliates and subsidiaries
    
    
    218,833
    
    
    
    78,874
    
    
    
    (44,412
    )Provision (benefit) for federal income taxes
    
    
    78,823
    
    
    
    26,698
    
    
    
    (15,844
    )Equity in earnings (losses) of unconsolidated affiliates and subsidiaries, net of tax
    
    
    4,016
    
    
    
    (36,551
    )
    
    
    (125,430
    )Net income (loss)
    
    $
    144,026
    
    
    $
    15,625
    
    
    $
    (153,998
    )
 The condensed financial statements should be read in conjunction with the consolidated
financial statements and notes therein.
 See accompanying Report of Independent Registered Public Accounting Firm.
  154




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AMERICAN NATIONAL INSURANCE COMPANY (Parent Company Only)
SCHEDULE II  CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(In thousands)
 December 31,Condensed Statements of Financial Position
    
    2010
    
    
    2009AssetsFixed maturity securities
    
    $
    9,545,996
    
    
    $
    8,584,578Equity securities
    
    
    43,072
    
    
    
    68,295Mortgage loans on real estate, net of allowance
    
    
    2,708,023
    
    
    
    2,342,630Other invested assets
    
    
    1,739,574
    
    
    
    1,872,011Investment in subsidiaries
    
    
    1,704,346
    
    
    
    1,669,054Deferred policy acquisition costs
    
    
    1,040,332
    
    
    
    1,034,550Separate account assets
    
    
    780,563
    
    
    
    718,378Other assets
    
    
    607,342
    
    
    
    651,047Total assets
    
    
    18,169,248
    
    
    
    16,940,543LiabilitiesPolicyholder funds
    
    
    2,860,340
    
    
    
    2,737,141Policy account balances
    
    
    9,810,671
    
    
    
    8,937,965Separate account liabilities
    
    
    780,563
    
    
    
    718,378Other liabilities
    
    
    1,085,023
    
    
    
    1,086,605Total liabilities
    
    
    14,536,597
    
    
    
    13,480,089Shareholders equityCommon stock
    
    
    30,832
    
    
    
    30,832Additional paid-in capital
    
    
    15,190
    
    
    
    11,986Accumulated other comprehensive income
    
    
    225,212
    
    
    
    117,649Retained earnings
    
    
    3,459,911
    
    
    
    3,398,492Treasury stock at cost
    
    
    (98,494
    )
    
    
    (98,505
    )Total stockholders equity
    
    
    3,632,651
    
    
    
    3,460,454Total liabilities and stockholders equity
    
    $
    18,169,248
    
    
    $
    16,940,543
 The condensed financial statements should be read in conjunction with the consolidated
financial statements and notes therein.
 See accompanying Report of Independent Registered Public Accounting Firm.
  155




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AMERICAN NATIONAL INSURANCE COMPANY (Parent Company Only)
SCHEDULE II  CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(In thousands)
 Years Ended December 31,Condensed Statements of Cash Flows
    
    2010
    
    
    2009
    
    
    2008Operating activitiesNet income (loss)
    
    $
    144,026
    
    
    $
    15,625
    
    
    $
    (153,998
    )Adjustments to reconcile net income to net cash provided operating activities:Realized (gain) loss on investments
    
    
    (46,561
    )
    
    
    9,047
    
    
    
    (9,601
    )Other-than-temporary impairment
    
    
    43
    
    
    
    21,113
    
    
    
    152,840Amortization of discounts and premiums on bonds
    
    
    10,979
    
    
    
    8,256
    
    
    
    10,345Net capitalized interest on policy loans and mortgage loans
    
    
    (26,533
    )
    
    
    (24,331
    )
    
    
    5,896Depreciation
    
    
    21,511
    
    
    
    23,679
    
    
    
    9,121Interest credited to policy account balances
    
    
    364,107
    
    
    
    341,184
    
    
    
    272,700Charges to policy account balances
    
    
    (175,846
    )
    
    
    (170,071
    )
    
    
    (165,354
    )Deferred federal income tax (benefit) expense
    
    
    15,006
    
    
    
    (17,579
    )
    
    
    (87,389
    )Deferral of policy acquisition costs
    
    
    (262,291
    )
    
    
    (259,565
    )
    
    
    (437,287
    )Amortization of deferred policy acquisition costs
    
    
    211,423
    
    
    
    202,354
    
    
    
    221,432Equity in earnings of unconsolidated affiliates
    
    
    (6,027
    )
    
    
    (3,175
    )
    
    
    (378
    )Net (income) loss of subsidiaries
    
    
    2,011
    
    
    
    34,726
    
    
    
    125,808Dividends from subsidiaries
    
    
    
    
    
    
    5,000
    
    
    
    Changes in:Policyholder fund liabilities
    
    
    74,647
    
    
    
    38,149
    
    
    
    49,821Reinsurance ceded receivable
    
    
    20,260
    
    
    
    92,058
    
    
    
    (26,654
    )Premiums due and other receivables
    
    
    (1,725
    )
    
    
    15,443
    
    
    
    20,454Accrued investment income
    
    
    (8,040
    )
    
    
    (11,365
    )
    
    
    (878
    )Current
federal income tax asset/liability
    
    
    2,077
    
    
    
    42,013
    
    
    
    (94,955
    )Liability for retirement benefits
    
    
    4,222
    
    
    
    1,933
    
    
    
    52,263Prepaid reinsurance premiums
    
    
    8,086
    
    
    
    9,572
    
    
    
    6,682Other, net
    
    
    15,733
    
    
    
    7,833
    
    
    
    (12,299
    )Net cash provided by (used in) operating activities
    
    
    367,108
    
    
    
    381,899
    
    
    
    (61,431
    )Investing activitiesProceeds from sales of:Fixed maturity securities
    
    
    194,764
    
    
    
    31,761
    
    
    
    5,103Equity securities
    
    
    32,390
    
    
    
    28,883
    
    
    
    55,084Real estate
    
    
    29,732
    
    
    
    4,837
    
    
    
    Other invested assets
    
    
    19,407
    
    
    
    140,667
    
    
    
    188,493Disposals of property and equipment
    
    
    454
    
    
    
    1,553
    
    
    
    1,202Distributions of unconsolidated affiliates
    
    
    8,495
    
    
    
    10,698
    
    
    
    6,191Changes in intercompany loans
    
    
    (5,212
    )
    
    
    
    
    
    
    Return of capital from sale of subsidiary
    
    
    13,482
    
    
    
    
    
    
    
    Proceeds from maturity of fixed maturity securities
    
    
    845,302
    
    
    
    564,997
    
    
    
    624,288Principal payments received on:Mortgage loans
    
    
    154,514
    
    
    
    114,207
    
    
    
    138,925Policy loans
    
    
    39,774
    
    
    
    43,386
    
    
    
    9,203Purchases of:Fixed maturity securities
    
    
    (1,882,092
    )
    
    
    (1,279,627
    )
    
    
    (1,087,593
    )Equity securities
    
    
    (963
    )
    
    
    (1,042
    )
    
    
    (47,002
    )Real estate
    
    
    (13,628
    )
    
    
    (12,971
    )
    
    
    (15,657
    )Mortgage loans
    
    
    (526,672
    )
    
    
    (548,748
    )
    
    
    (493,412
    )Policy loans
    
    
    (33,466
    )
    
    
    (30,881
    )
    
    
    (18,165
    )Other invested assets
    
    
    (42,254
    )
    
    
    (30,746
    )
    
    
    (216,468
    )Additions to property and equipment
    
    
    (5,374
    )
    
    
    (7,356
    )
    
    
    (11,475
    )Contributions to unconsolidated affiliates
    
    
    (6,254
    )
    
    
    (4,905
    )
    
    
    (7,162
    )Changes in short term investments, net
    
    
    192,084
    
    
    
    (299,941
    )
    
    
    294,048Changes in investment in subsidiaries
    
    
    (10,010
    )
    
    
    (53,039
    )
    
    
    157,089Other, net
    
    
    19,088
    
    
    
    (268
    )
    
    
    (581
    )Net cash used in investing activities
    
    
    (976,439
    )
    
    
    (1,328,535
    )
    
    
    (417,889
    )Financing activitiesPolicyholders deposits to policy account balances
    
    
    1,641,541
    
    
    
    2,201,309
    
    
    
    1,931,709Policyholders withdrawals from policy account balances
    
    
    (957,096
    )
    
    
    (1,125,610
    )
    
    
    (1,385,625
    )Dividends to stockholders
    
    
    (82,607
    )
    
    
    (82,490
    )
    
    
    (82,651
    )Net cash provided by financing activities
    
    
    601,838
    
    
    
    993,209
    
    
    
    463,433Net increase (decrease) in cash and cash equivalents
    
    
    (7,493
    )
    
    
    46,573
    
    
    
    (15,887
    )Cash:Beginning of the year
    
    
    38,594
    
    
    
    (7,979
    )
    
    
    7,908End of the year
    
    $
    31,101
    
    
    $
    38,594
    
    
    $
    (7,979
    )
 The condensed financial statements should be read in conjunction with the consolidated
financial statements and notes therein.
 See accompanying Report of Independent Registered Public Accounting Firm.
  156




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AMERICAN NATIONAL INSURANCE COMPANY AND SUBSIDIARIES

SCHEDULE III  SUPPLEMENTARY INSURANCE INFORMATION
(in thousands)
 Future Policy
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Benefits,
    
    
    AmortizationDeferred
    
    
    Benefits, Policy and
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Claims, Losses
    
    
    of DeferredPolicy
    
    
    Contract Claims
    
    
    
    
    
    
    
    
    
    
    Net
    
    
    and
    
    
    Policy
    
    
    OtherAcquisition
    
    
    and Participating
    
    
    Unearned
    
    
    Premium
    
    
    Investment
    
    
    Settlement
    
    
    Acquisition
    
    
    Operating
    
    
    PremiumsSegment
    
    Cost
    
    
    Policyholder Share
    
    
    Premiums
    
    
    Revenue
    
    
    Income (1)
    
    
    Expenses
    
    
    Costs
    
    
    Expenses (2)
    
    
    Written2010Corportate & Other
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    95,656
    
    
    $
    
    
    
    $
    
    
    
    $
    38,692
    
    
    $
    Life
    
    
    661,377
    
    
    
    4,195,783
    
    
    
    92,364
    
    
    
    282,160
    
    
    
    223,753
    
    
    
    294,177
    
    
    
    78,826
    
    
    
    178,619
    
    
    
    Annuities
    
    
    446,996
    
    
    
    9,986,992
    
    
    
    4
    
    
    
    174,193
    
    
    
    510,106
    
    
    
    205,948
    
    
    
    72,521
    
    
    
    62,791
    
    
    
    Health
    
    
    64,967
    
    
    
    382,810
    
    
    
    66,516
    
    
    
    263,294
    
    
    
    14,855
    
    
    
    184,554
    
    
    
    22,973
    
    
    
    49,634
    
    
    
    Property & Casualty
    
    
    145,086
    
    
    
    927,637
    
    
    
    674,830
    
    
    
    1,158,261
    
    
    
    67,545
    
    
    
    923,736
    
    
    
    267,185
    
    
    
    124,410
    
    
    
    1,185,366Total
    
    $
    1,318,426
    
    
    $
    15,493,222
    
    
    $
    833,714
    
    
    $
    1,877,908
    
    
    $
    911,915
    
    
    $
    1,608,415
    
    
    $
    441,505
    
    
    $
    454,146
    
    
    $
    1,185,3662009Corportate & Other
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    85,964
    
    
    $
    
    
    
    $
    
    
    
    $
    41,218
    
    
    $
    Life
    
    
    672,063
    
    
    
    4,080,827
    
    
    
    100,204
    
    
    
    284,530
    
    
    
    222,611
    
    
    
    297,719
    
    
    
    78,697
    
    
    
    185,048
    
    
    
    Annuities
    
    
    442,428
    
    
    
    9,050,838
    
    
    
    4
    
    
    
    220,284
    
    
    
    449,035
    
    
    
    249,709
    
    
    
    64,756
    
    
    
    59,254
    
    
    
    Health
    
    
    69,853
    
    
    
    419,467
    
    
    
    78,525
    
    
    
    309,701
    
    
    
    15,992
    
    
    
    239,407
    
    
    
    21,746
    
    
    
    62,134
    
    
    
    Property & Casualty
    
    
    146,637
    
    
    
    897,871
    
    
    
    682,931
    
    
    
    1,159,509
    
    
    
    66,175
    
    
    
    923,064
    
    
    
    248,607
    
    
    
    124,266
    
    
    
    1,164,136Total
    
    $
    1,330,981
    
    
    $
    14,449,003
    
    
    $
    861,664
    
    
    $
    1,974,024
    
    
    $
    839,777
    
    
    $
    1,709,899
    
    
    $
    413,806
    
    
    $
    471,920
    
    
    $
    1,164,1362008Corportate & Other
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    108,862
    
    
    $
    
    
    
    $
    
    
    
    $
    22,946
    
    
    $
    Life
    
    
    712,250
    
    
    
    3,992,085
    
    
    
    111,846
    
    
    
    299,338
    
    
    
    226,643
    
    
    
    296,078
    
    
    
    86,928
    
    
    
    222,908
    
    
    
    Annuities
    
    
    557,058
    
    
    
    7,691,848
    
    
    
    13
    
    
    
    116,248
    
    
    
    374,023
    
    
    
    142,867
    
    
    
    75,854
    
    
    
    45,491
    
    
    
    Health
    
    
    74,870
    
    
    
    521,415
    
    
    
    93,956
    
    
    
    290,883
    
    
    
    16,566
    
    
    
    223,055
    
    
    
    27,785
    
    
    
    69,961
    
    
    
    Property & Casualty
    
    
    138,486
    
    
    
    904,193
    
    
    
    687,920
    
    
    
    1,182,026
    
    
    
    69,348
    
    
    
    939,854
    
    
    
    233,336
    
    
    
    132,601
    
    
    
    1,184,686Total
    
    $
    1,482,664
    
    
    $
    13,109,541
    
    
    $
    893,735
    
    
    $
    1,888,495
    
    
    $
    795,442
    
    
    $
    1,601,854
    
    
    $
    423,903
    
    
    $
    493,907
    
    
    $
    1,184,686
 (1)
    
    Net investment income from fixed income assets (bonds and mortgage loans on real estate)
is allocated to insurance lines based on the funds generated by each line at the average yield
available from these fixed income assets at the time such funds become available. Net investment
income from policy loans is allocated to the insurance lines according to the amount of loans made
by each line. Net investment income from all other assets is allocated to the insurance lines as
necessary to support the equity assigned to that line with the remainder allocated to capital &
surplus.(2)
    
    Identifiable expenses are charged directly to the appropriate line of business. The
remaining expenses are allocated to the lines based upon various factors including premium ratio
within the respective lines.
 See accompanying Report of Independent Registered Public Accounting Firm.
 
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##### Table of Contents



AMERICAN NATIONAL INSURANCE COMPANY AND SUBSIDIARIES


SCHEDULE IV  REINSURANCE
(in thousands)
 Ceded to
    
    
    Assumed
    
    
    
    
    
    
    Percentage ofDirect
    
    
    Other
    
    
    from Other
    
    
    Net
    
    
    AmountAmount
    
    
    Companies
    
    
    Companies
    
    
    Amount
    
    
    Assumed to NetYear Ended December 31, 2010Life insurance in-force
    
    $
    69,288,973
    
    
    $
    31,616,049
    
    
    $
    479,528
    
    
    $
    38,152,452
    
    
    
    1.3
    %Premiums earned:Life and Annuity
    
    $
    543,724
    
    
    $
    86,241
    
    
    $
    (1,130
    )
    
    $
    456,353
    
    
    
    (0.2
    )Accident and health
    
    
    247,301
    
    
    
    82,762
    
    
    
    98,755
    
    
    
    263,294
    
    
    
    37.5Property and casualty
    
    
    1,258,401
    
    
    
    103,872
    
    
    
    3,732
    
    
    
    1,158,261
    
    
    
    0.3Total premiums
    
    $
    2,049,426
    
    
    $
    272,875
    
    
    $
    101,357
    
    
    $
    1,877,908
    
    
    
    5.4Year Ended December 31, 2009Life insurance in-force
    
    $
    68,584,383
    
    
    $
    31,347,876
    
    
    $
    863,867
    
    
    $
    38,100,374
    
    
    
    2.3Premiums earned:Life and Annuity
    
    $
    581,422
    
    
    $
    81,120
    
    
    $
    4,512
    
    
    $
    504,814
    
    
    
    0.9Accident and health
    
    
    287,977
    
    
    
    151,138
    
    
    
    172,862
    
    
    
    309,701
    
    
    
    55.8Property and casualty
    
    
    1,243,710
    
    
    
    89,675
    
    
    
    5,474
    
    
    
    1,159,509
    
    
    
    0.5Total premiums
    
    $
    2,113,109
    
    
    $
    321,933
    
    
    $
    182,848
    
    
    $
    1,974,024
    
    
    
    9.3Year Ended December 31, 2008Life insurance in-force
    
    $
    68,820,212
    
    
    $
    31,241,255
    
    
    $
    1,050,645
    
    
    $
    38,629,602
    
    
    
    2.7Premiums earned:Life and Annuity
    
    $
    492,068
    
    
    $
    84,942
    
    
    $
    8,460
    
    
    $
    415,586
    
    
    
    2.0Accident and health
    
    
    278,907
    
    
    
    134,904
    
    
    
    146,880
    
    
    
    290,883
    
    
    
    50.5Property and casualty
    
    
    1,346,425
    
    
    
    224,248
    
    
    
    59,849
    
    
    
    1,182,026
    
    
    
    5.1Total premiums
    
    $
    2,117,400
    
    
    $
    444,094
    
    
    $
    215,189
    
    
    $
    1,888,495
    
    
    
    11.4
 See accompanying Report of Independent Registered Public Accounting Firm.
  158




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##### Table of Contents



AMERICAN NATIONAL INSURANCE COMPANY AND SUBSIDIARIES


SCHEDULE V  VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
 Balance at
    
    
    Deductions
    
    
    Balance atBeginning of
    
    
    Charged to
    
    
    
    
    
    
    Change in
    
    
    End ofPeriod
    
    
    Expense
    
    
    Written off
    
    
    Estimate (1)
    
    
    Period2010Investment valuation allowances:Mortgage loans on real estate
    
    $
    23,290
    
    
    $
    (394
    )
    
    $
    (1,676
    )
    
    $
    (7,432
    )
    
    $
    13,788Total
    
    $
    23,290
    
    
    $
    (394
    )
    
    $
    (1,676
    )
    
    $
    (7,432
    )
    
    $
    13,7882009Investment valuation allowances:Mortgage loans on real estate
    
    $
    19,496
    
    
    $
    3,794
    
    
    $
    
    
    
    $
    
    
    
    $
    23,290Total
    
    $
    19,496
    
    
    $
    3,794
    
    
    $
    
    
    
    $
    
    
    
    $
    23,2902008Investment valuation allowances:Mortgage loans on real estate
    
    $
    15,610
    
    
    $
    3,886
    
    
    $
    
    
    
    $
    
    
    
    $
    19,496Total
    
    $
    15,610
    
    
    $
    3,886
    
    
    $
    
    
    
    $
    
    
    
    $
    19,496
 (1)
    
    Decrease in the required valuation allowance for mortgage loans as a result of changes to
the estimate in calculating the mortgage loan allowance based on enhanced methodology.
 See accompanying Report of Independent Registered Public Accounting Firm.
  159