##### 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, 2009
 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
    
    74-0484030(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)
 
 
  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
 Rule 12b-2
 Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ




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##### 



AMERICAN NATIONAL INSURANCE COMPANY
 TABLE OF CONTENTS
 PART IITEM 1. BUSINESS
    
    
    3ITEM 1A. RISK FACTORS
    
    
    14ITEM 1B. UNRESOLVED STAFF COMMENTS
    
    
    27ITEM 2. PROPERTIES
    
    
    27ITEM 3. LEGAL PROCEEDINGS
    
    
    27ITEM 4. RESERVED
    
    
    27PART IIITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    28ITEM 6. SELECTED FINANCIAL DATA
    
    
    30ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    31ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    94ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    97ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    149ITEM 9A. CONTROLS AND PROCEDURES
    
    
    149ITEM 9B. OTHER INFORMATION
    
    
    151PART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
    
    
    151ITEM 11. EXECUTIVE COMPENSATION
    
    
    151ITEM 12. SECURITIY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    
    151ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
    
    
    151ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
    
    
    151PART IVITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
    
    
    152INDEX
TO EXHIBITS
    
    
    152SIGNATURES
    
    
    154Exhibit 21.1Exhibit 23.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
  
  1




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Forward-Looking Statements
   2




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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.
 Annuity Segment
   4




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
    
    Variable annuities; and
 
    
    Fixed annuities.
 Variable Annuities.
 Fixed Annuities.
 Single Premium Immediate Annuity.
 Equity- Indexed Annuity.
 Health Segment
   
    
    Medicare Supplement;
 
    
    Supplemental insurance;
 
    
    Hospital surgical;
 
    
    Stop-loss; and
 
    
    Credit disability.
  5




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Medicare Supplement.
 Supplemental Insurance.
 Hospital Surgical.
 Stop-Loss.
 Specific Stop-Loss.
 Aggregate Stop Loss.
 Credit Disability.
 Property and Casualty Segment
   
    
    Auto insurance;
 
    
    Homeowners insurance;
 
    
    Agribusiness and commercial insurance; and
 
    
    Credit property and casualty insurance.
 Auto Insurance.
 Homeowners Insurance.
 Agribusiness and Commercial Insurance.
  6




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Credit Property and Casualty Insurance.
 
    
    Credit involuntary unemployment insurance, which pays a limited number of monthly
payments on a loan or credit account if the borrower becomes involuntarily unemployed
during the term of coverage; and
 
    
    Credit property insurance, which pays funds to pay off the entire debt on a piece of
property serving as collateral for a loan if the property is lost or damaged.
 Corporate and Other Segment
   Our Marketing Channels
   
    
    Independent Marketing Group;
 
    
    Career Sales & Services Division;
 
    
    Multiple Line;
 
    
    Health/Senior Age Marketing Division;
 
    
    Direct Marketing; and
 
    
    Credit Insurance Division.
  7




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##### Table of Contents



Primary Means ofSegment
    
    Marketing Channels
    
    Companies
    
    DistributionLife
    
    Independent Marketing Group; 
Multiple Line; 
Career Sales & Service
Division; Health/Senior Age
Marketing Division; 
Direct Marketing; 
Credit Insurance Division
    
    American National Insurance Company; 
Farm Family Life Insurance Company; 
Garden State 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; 
Multiple Line; 
Career Sales & Service
Division; Health/Senior Age
Marketing Division
    
    American National Insurance Company;
Standard Life and Accident Insurance
Company; Farm Family Life Insurance
Company
    
    Independent agents; 
Employee agents; 
Exclusive agentsProperty 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
    
    Multiple Line:
Exclusive agents
and General agents;
Credit Insurance
Division:
Independent agentsHealth
    
    Career Sales & Service
Division; Health/Senior Age
Marketing Division; 
Credit Insurance Division
    
    American National Insurance Company; 
Standard Life and Accident Insurance
Company; 
American National Life Insurance
Company of Texas; Farm Family Life
Insurance Company
    
    Employee agents; 
Exclusive agents; 
Independent agents; 
Managing general
underwriters
  Independent Marketing Group
  Career Sales & Service Division
   8




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Multiple Line
  Health/Senior Age Marketing Division
  Direct Marketing
  Credit Insurance Division
  Policyholder Liabilities
      9




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Reserves.
 Risk Management
       10




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Pricing
    Competition
   Our Ratings
   11




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
    
    A.M. Best Company: A (Excellent)(1)
 
    
    Standard & Poors: AA- (Very 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 AA is in the very strong category and represents
very strong financial security characteristics, differing only slightly from those rated
higher. AA- is the fourth highest of twenty active company ratings. Regulation
  Limitations on Dividends By Insurance Subsidiaries.
 Holding Company Regulation.
 Price Regulation.
    12




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Involuntary Markets.
 Guaranty Funds.
 Investment Regulation.
 Exiting Geographic Markets; Canceling and Non-Renewing Policies.
 Variable Life Insurance and Variable Annuities. SEC FINRA
 Broker-Dealer, Investment Adviser and Investment Companies.
  13




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Privacy Regulation.
 Environmental Considerations.
 Employees
  
 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.
     14




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Differences between risk assumptions used to price our products and actual experience could
materially affect our profitability
  Increased claims activity resulting from catastrophic events, whether natural or man-made, may
result in significant losses.
      15




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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.
    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
results of operations or financial position.
     16




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Our investment portfolio includes fixed-income 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.
      Concentration of our investment portfolios in any particular segment of the economy may have
adverse effects on the results of our operations and financial position.
   17




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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 financial results of our investment products.
    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;
  18




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
    
    Our 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,
annuity and investment product industries that are highly competitive.
   We may be unable to attract and retain sales representatives and third-party independent agents for
our products.
    19




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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.
  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.
   20




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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 consolidated financial
condition and results of operations.
   Changes in market interest rates may lead to a significant decrease in the sales and profitability
of our spread-based products.
     21




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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.
   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, annuities, and investment 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;
 
    
    adversely affecting our ability to obtain reinsurance at reasonable prices or at
all; and
 
    
    adversely affecting our relationships with credit counterparties.
 The continued threat of terrorism and ongoing military actions may adversely affect the level of
claim losses we incur and the value of our investment portfolio.
   22




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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.
    23




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Changes in tax laws may decrease sales and profitability of certain products.
   Changes in U.S. federal and state securities laws and regulations may affect our operations and our
profitability.
    24




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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.
   25




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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.
  Our business operations depend on our ability to appropriately execute and administer our policies
and claims.
   26




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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
  
 ITEM 2. PROPERTIES
  
    
    We own and occupy four buildings in League City, Texas, consisting of a total of
approximately 298,000 square feet. Approximately one-third 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. RESERVED
  27




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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)2009: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$
    3.082008:Fourth quarter
    
    $
    94.40
    
    
    $
    55.00
    
    
    $
    0.77Third quarter
    
    
    111.76
    
    
    
    81.68
    
    
    
    0.77Second quarter
    
    
    119.65
    
    
    
    97.50
    
    
    
    0.77First quarter
    
    
    133.60
    
    
    
    100.00
    
    
    
    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
    
    
    Weighted-average exercise
    
    
    available for future issuance underissued upon exercise of outstanding
    
    
    price outstanding options,
    
    
    equity compensation plans (excludingPlan category
    
    options, warrants and rights
    
    
    warrants and rights
    
    
    securities reflected in column (a))(a)
    
    
    (b)
    
    
    (c)Equity compensation plans
approved by security
holders
    
    
    
    
    
    $
    108.53
    
    
    
    2,366,390Equity compensation plans
not approved by security
holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    
    
    
    $
    108.53
    
    
    
    2,366,390
  28




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Performance Graph
  
  12/31/04
    
    
    12/31/05
    
    
    12/31/06
    
    
    12/31/07
    
    
    12/31/08
    
    
    12/31/09ANICO
    
    $
    100.000
    
    
    $
    115.083
    
    
    $
    115.193
    
    
    $
    125.023
    
    
    $
    82.504
    
    
    $
    129.613NASDAQ Total
    
    $
    100.000
    
    
    $
    102.131
    
    
    $
    112.196
    
    
    $
    121.670
    
    
    $
    58.624
    
    
    $
    84.201NASDAQ Insurance
    
    $
    100.000
    
    
    $
    112.076
    
    
    $
    126.722
    
    
    $
    126.984
    
    
    $
    117.626
    
    
    $
    122.845
   29




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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)
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Revenues
    
    $
    2,950
    
    
    $
    2,519
    
    
    $
    3,056
    
    
    $
    3,105
    
    
    $
    3,036Income (loss) from continuing operations
    
    
    15
    
    
    
    (173
    )
    
    
    245
    
    
    
    280
    
    
    
    245Net income (loss)
    
    
    15
    
    
    
    (154
    )
    
    
    240
    
    
    
    275
    
    
    
    238Net income (loss) attributed to American
National
Insurance Company and Subsidiaries
    
    
    16
    
    
    
    (154
    )
    
    
    241
    
    
    
    273
    
    
    
    236Per common shareIncome (loss) from continuing operations:- basic
    
    
    0.57
    
    
    
    (6.52
    )
    
    
    9.26
    
    
    
    10.58
    
    
    
    9.27- diluted
    
    
    0.57
    
    
    
    (6.52
    )
    
    
    9.21
    
    
    
    10.53
    
    
    
    9.23Net income (loss):- basic
    
    
    0.57
    
    
    
    (5.82
    )
    
    
    9.07
    
    
    
    10.37
    
    
    
    8.99- diluted
    
    
    0.57
    
    
    
    (5.82
    )
    
    
    9.02
    
    
    
    10.32
    
    
    
    8.96Net income (loss) attributed to American
National
Insurance Company and Subsidiaries:- basic
    
    
    0.59
    
    
    
    (5.82
    )
    
    
    9.09
    
    
    
    10.32
    
    
    
    8.91- diluted
    
    
    0.59
    
    
    
    (5.82
    )
    
    
    9.04
    
    
    
    10.27
    
    
    
    8.87Cash dividends per share
    
    
    3.08
    
    
    
    3.08
    
    
    
    3.05
    
    
    
    3.01
    
    
    
    2.97Selected dataReturn on American National Insurance
Company
and Subsidiaries stockholders equity
    
    
    11.3
    %
    
    
    (14.0
    )%
    
    
    6.9
    %
    
    
    8.2
    %
    
    
    4.7
    %Dividend payout ratio
    
    
    127.2
    %
    
    
    N/A
    
    
    
    38.1
    %
    
    
    38.7
    %
    
    
    43.9
    %
 Balances at December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Total assets
    
    $
    20,150
    
    
    $
    18,379
    
    
    $
    18,461
    
    
    $
    17,932
    
    
    $
    17,493Total American National Insurance Company
and Subsidiaries stockholders equity
    
    
    3,460
    
    
    
    3,134
    
    
    
    3,737
    
    
    
    3,576
    
    
    
    3,378Total equity
    
    
    3,472
    
    
    
    3,142
    
    
    
    3,741
    
    
    
    3,582
    
    
    
    3,380
  30




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ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Risk Factors
 INDEX
 Segments
    
    
    32Outlook
    
    
    33Critical Accounting Estimates
    
    
    37Consolidated Results of Operations
    
    
    49Life
    
    
    51Annuity
    
    
    56Health
    
    
    63Property and Casualty
    
    
    68Corporate and Other
    
    
    78Liquidity
    
    
    79Capital Resources
    
    
    80Contractual Obligations
    
    
    81Off-Balance Sheet Arrangements
    
    
    82Related Party Transactions
    
    
    82Investments
    
    
    82
  31




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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 and contract holders 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.
  Corporate & Other
   32




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Outlook
   General Trends
 Challenging Financial and Economic Environment:
  Low Interest Rates:
  33




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Focus on Operating Efficiencies:
 Changing Regulatory Environment
 Life and Annuity
    Demographics
   34




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Competitive Pressures
   
    
    Established in 2009, we have a project under way to establish a New York life
insurance subsidiary. We anticipate that sales will begin through this new company in
the first half of 2010. A variety of annuity products will be available for sale once
the subsidiary is established, followed in subsequent years by our life products.
Initial sales are anticipated 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 Services
Division increased in 2009. 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.
 
    
    We have repositioned the competitiveness of life products sold through our
Independent Marketing Group, particularly at older ages. While this repositioning
resulted in a slowing of sales in the last quarter of 2008 and 2009, it has and will
help improve the future profitability of these products.
 
    
    We believe there will be a continuing shift in sales emphasis to utilizing the
Internet, endorsed direct mail and innovative product/distribution combinations.
Although our direct sales of life insurance products were lower in 2009, we remain
committed to traditional life insurance products (term life and whole life) through our
Internet and third-party marketing distribution channels.
 Health
     35




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Property and Casualty
   Competition
   36




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Critical Accounting Estimates
   
    
    Deferred acquisition costs;
 
    
    Reserves;
 
    
    Reinsurance recoverable;
 
    
    Pension and postretirement benefit plans;
 
    
    Other-than-temporary impairment;
 
    
    Litigation contingencies; and
 
    
    Federal income taxes.
  Deferred Acquisition Costs
  Deferred Acquisition Costs
  Life and Annuity Reserves
  37




---



##### Table of Contents



Life and Annuity Reserves
      Increase/(Reduction) in DACIncrease in future investment margins of 25 basis points
    
    $
    26,666Decrease in future investment margins of 25 basis points
    
    $
    (31,810
    )Decrease in future life mortality by 1%
    
    $
    1,988Increase in future life mortality by 1%
    
    $
    (2,045
    )
 Reserves
 Life and Annuity Reserves:
 Liability for Future Policy Benefits and Policy Account Balances
  38




---



##### Table of Contents



Life Reserving Methodology
 Accounting and Reporting by Insurance Enterprises,
  39




---



##### Table of Contents



Accounting and Reporting by Insurance
Enterprise for Certain Long-Duration Contracts and for Realized Gains and Losses from the Sale of
Investments,
 Accounting and Reporting by
Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from
the Sale of Investments Accounting and Reporting by Insurance Enterprises for Certain Long-Duration
Contracts and Separate Accounts.
  Annuity Reserving Methodology
   Health Reserves:
 Overview
  40




---



##### Table of Contents



Reserving Methodology
 Completion Factor Approach
   Tabular Reserves :
  Case Reserves :
 Liability for Future Policy Benefits
  41




---



##### Table of Contents



Premium Deficiency Reserves
 Property and Casualty Reserves:
 Reserves for Loss and Loss Adjustment Expense (LAE)
 
    
    Case reserves  cost of claims that were reported to us but not yet paid, and
 
    
    Reserves for 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, which have been
incurred but not yet, reported.
  December 31, 2009
    
    
    December 31, 2008Gross
    
    
    Ceded
    
    
    Net
    
    
    Gross
    
    
    Ceded
    
    
    NetCase
    
    $
    491,163
    
    
    $
    11,639
    
    
    $
    479,524
    
    
    $
    475,738
    
    
    $
    47,888
    
    
    $
    427,850IBNR
    
    $
    425,827
    
    
    $
    48,693
    
    
    $
    377,134
    
    
    $
    437,275
    
    
    $
    17,265
    
    
    $
    420,010Total
    
    $
    916,990
    
    
    $
    60,332
    
    
    $
    856,658
    
    
    $
    913,013
    
    
    $
    65,153
    
    
    $
    847,860
 Case Reserves :
  IBNR:
   42




---



##### Table of Contents



Results of Operations and Related Information by Segment  Property and
Casualty, Prior Period Reserve Development
  Reserving Methodology
 
    
    Initial Expected Loss Ratio method: 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
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
a percentage of the expense is incurred when a claim is opened and the remaining
percentage is paid throughout the claims life.
   43




---



##### 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.
     Change in Reporting Pattern5 Day Speed Up
    
    
    5 Day Slow DownPersonal Auto
    
    $
    (2,499
    )
    
    $
    1,171Homeowner
    
    $
    (913
    )
    
    $
    822Agribusiness
    
    $
    (616
    )
    
    $
    2,749Commercial auto
    
    $
    (1,476
    )
    
    $
    4,857Other
    
    $
    (2,219
    )
    
    $
    5,990
  44




---



##### Table of Contents



Reserving by class of business:
  Short-tail business 
  Long-tail business 
 Credit business
 Loss adjustment expenses
 Reinsurance Recoverable
     45




---



##### Table of Contents



Pension and Postretirement Benefit Plans
   Employers Accounting for Defined Benefit
Pension and Other Postretirement Plan.
   Years Ended December 31,2009
    
    
    2008Used for Net Benefit
    
    
    Used for Benefit
    
    
    Used for Net Benefit
    
    
    Used for BenefitCost in Fiscal Year
    
    
    Obligations as of
    
    
    Cost in Fiscal Year
    
    
    Obligations as of1/1/2009 to 12/31/2009
    
    
    12/31/2009
    
    
    1/1/2008 to 12/31/2008
    
    
    12/31/2008Discount rate
    
    
    6.17
    %
    
    
    5.73
    %
    
    
    6.10
    %
    
    
    6.17
    %Rate of compensation
increase
    
    
    4.20
    %
    
    
    4.20
    %
    
    
    4.20
    %
    
    
    4.20
    %Long-term rate return
    
    
    7.65
    %
    
    
    7.65
    %
    
    
    7.65
    %
    
    
    7.65
    %
   46




---



##### Table of Contents



Other-Than-Temporary Impairment
   Litigation Contingencies
   Federal Income Taxes
    47




---



##### Table of Contents



48




---



##### Table of Contents



Consolidated Results of Operations
 Comparison of Years Ended December 31, 2009, 2008 and 2007
 Outlook Results of Operations and Related Information by Segment
 Years Ended December 31,
    
    
    Change Over Prior Years2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008amount
    
    
    percentage
    
    
    amount
    
    
    percentagePremiums and other revenues:Premiums
    
    $
    1,974,024
    
    
    $
    1,888,495
    
    
    $
    1,999,623
    
    
    $
    85,529
    
    
    
    4.5
    
    
    $
    (111,128
    )
    
    
    (5.6
    )Other policy revenues
    
    
    179,504
    
    
    
    174,899
    
    
    
    155,230
    
    
    
    4,605
    
    
    
    2.6
    
    
    
    19,669
    
    
    
    12.7Net investment income
    
    
    840,105
    
    
    
    796,177
    
    
    
    812,969
    
    
    
    43,928
    
    
    
    5.5
    
    
    
    (16,792
    )
    
    
    (2.1
    )Realized investments gains
(losses), net
    
    
    (75,697
    )
    
    
    (379,709
    )
    
    
    41,027
    
    
    
    304,012
    
    
    
    (80.1
    )
    
    
    (420,736
    )
    
    
    (1,025.5
    )Other income
    
    
    31,843
    
    
    
    38,779
    
    
    
    47,224
    
    
    
    (6,936
    )
    
    
    (17.9
    )
    
    
    (8,445
    )
    
    
    (17.9
    )Total revenues
    
    
    2,949,779
    
    
    
    2,518,641
    
    
    
    3,056,073
    
    
    
    431,138
    
    
    
    17.1
    
    
    
    (537,432
    )
    
    
    (17.6
    )Benefits, losses and expenses:Policy benefits
    
    
    1,709,899
    
    
    
    1,601,854
    
    
    
    1,551,698
    
    
    
    108,045
    
    
    
    6.7
    
    
    
    50,156
    
    
    
    3.2Interest credited to policy account balances
    
    
    370,563
    
    
    
    299,833
    
    
    
    295,894
    
    
    
    70,730
    
    
    
    23.6
    
    
    
    3,939
    
    
    
    1.3Commissions
    
    
    459,943
    
    
    
    475,345
    
    
    
    456,537
    
    
    
    (15,402
    )
    
    
    (3.2
    )
    
    
    18,808
    
    
    
    4.1Other operating costs and expenses
    
    
    485,409
    
    
    
    508,800
    
    
    
    465,140
    
    
    
    (23,391
    )
    
    
    (4.6
    )
    
    
    43,660
    
    
    
    9.4Change in deferred policy acquisition costs
    
    
    (63,611
    )
    
    
    (67,439
    )
    
    
    (60,442
    )
    
    
    3,828
    
    
    
    (5.7
    )
    
    
    (6,997
    )
    
    
    11.6Total benefits and expenses
    
    
    2,962,203
    
    
    
    2,818,393
    
    
    
    2,708,827
    
    
    
    143,810
    
    
    
    5.1
    
    
    
    109,566
    
    
    
    4.0Income (loss) before other items and federal
income taxes
    
    $
    (12,424
    )
    
    $
    (299,752
    )
    
    $
    347,246
    
    
    $
    287,328
    
    
    
    (95.9
    )
    
    $
    (646,998
    )
    
    
    (186.3
    )
 Summary
  
    
    Decreased realized investment losses and increased investment income; and
 
    
    Increase in immediate annuity premiums.
  
    
    Investment losses realized during 2008, including $367.0 million in
other-than-temporary impairment write-downs;
 
    
    Lower sales of our single premium immediate annuity products, caused by the drop in
interest rates, which made the product less desirable; and
 
    
    The declines were partially offset by other policy revenues arising primarily from
mortality charges and fees on the in-force block of universal life policies 2008
witnessed a continuation of increased sales of universal life products experienced in
2007.
  49




---



##### Table of Contents




    
    Increased policy benefits in annuities due to strong single premium immediate
annuity sales resulting in an increase of the related reserve balance;
 
    
    Increased interest credited to policy account balances due to an 18.2% increase in
average account balances; and
 
    
    These increases were partially offset by the decrease in other operating costs due
to non-recurring litigation costs and costs for preparing for compliance with SEC and
Sarbanes-Oxley requirements in 2008.
  
    
    The impact of increased catastrophe losses in our Property and Casualty business;
and
 
    
    Additional operating expenses incurred due to non-recurring litigation costs and
costs for preparing for compliance with SEC and Sarbanes-Oxley requirements.
 
    
    An increase in benefits paid on the growing block of annuity business.
  50




---



##### Table of Contents



Results of Operations and Related Information by Segment
 Life
 Comparison of Years Ended December 31, 2009, 2008 and 2007
   Years Ended December 31,
    
    
    Change Over Prior Years2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008amount
    
    
    percentage
    
    
    amount
    
    
    percentageRevenues:Premiums
    
    $
    284,530
    
    
    $
    299,338
    
    
    $
    315,893
    
    
    $
    (14,808
    )
    
    
    (4.9
    )
    
    $
    (16,555
    )
    
    
    (5.2
    )Other policy revenues
    
    
    164,748
    
    
    
    154,984
    
    
    
    130,744
    
    
    
    9,764
    
    
    
    6.3
    
    
    
    24,240
    
    
    
    18.5Net investment income
    
    
    222,611
    
    
    
    226,643
    
    
    
    229,092
    
    
    
    (4,032
    )
    
    
    (1.8
    )
    
    
    (2,449
    )
    
    
    (1.1
    )Other income
    
    
    2,720
    
    
    
    3,767
    
    
    
    3,967
    
    
    
    (1,047
    )
    
    
    (27.8
    )
    
    
    (200
    )
    
    
    (5.0
    )Total revenues
    
    
    674,609
    
    
    
    684,732
    
    
    
    679,696
    
    
    
    (10,123
    )
    
    
    (1.5
    )
    
    
    5,036
    
    
    
    0.7Benefits, losses and expenses:Policy benefits
    
    
    297,719
    
    
    
    296,078
    
    
    
    273,750
    
    
    
    1,641
    
    
    
    0.6
    
    
    
    22,328
    
    
    
    8.2Interest credited to policy account balances
    
    
    58,983
    
    
    
    62,221
    
    
    
    63,289
    
    
    
    (3,238
    )
    
    
    (5.2
    )
    
    
    (1,068
    )
    
    
    (1.7
    )Commissions
    
    
    91,968
    
    
    
    126,813
    
    
    
    141,517
    
    
    
    (34,845
    )
    
    
    (27.5
    )
    
    
    (14,704
    )
    
    
    (10.4
    )Other operating costs and expenses
    
    
    185,048
    
    
    
    222,908
    
    
    
    200,361
    
    
    
    (37,860
    )
    
    
    (17.0
    )
    
    
    22,547
    
    
    
    11.3Change in deferred policy acquisition costs
    
    
    1,536
    
    
    
    (42,103
    )
    
    
    (57,666
    )
    
    
    43,639
    
    
    
    (103.6
    )
    
    
    15,563
    
    
    
    (27.0
    )Total benefits, losses and expenses
    
    
    635,254
    
    
    
    665,917
    
    
    
    621,251
    
    
    
    (30,663
    )
    
    
    (4.6
    )
    
    
    44,666
    
    
    
    7.2Income (loss) before other items and
federal income taxes
    
    $
    39,355
    
    
    $
    18,815
    
    
    $
    58,445
    
    
    $
    20,540
    
    
    
    109.2
    
    
    $
    (39,630
    )
    
    
    (67.8
    )
  Perkins
  51




---



##### Table of Contents



Premiums
   Other Policy Revenues
  Net Investment Income
    Policy Benefits
   52




---



##### Table of Contents



Commissions
  Other Operating Costs and Expenses
 Farm Bureau Perkins
 Change in Deferred Policy Acquisition Costs
  Years Ended December 31,
    
    
    Change Over Prior Years2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008amount
    
    
    percentage
    
    
    amount
    
    
    percentageAcquisition cost capitalized
    
    $
    77,162
     
    
    $
    129,031
    
    
    $
    144,936
     
    
    $
    (51,869
    )
    
    
    40.2
    
    
    $
    (15,905
    )
    
    
    11.0Amortization of DAC
    
    
    (78,698
    )
    
    
    (86,928
    )
    
    
    (87,270
    )
    
    
    8,230
     
    
    
    9.5
    
    
    
    342
    
    
    
    0.4Change in deferred policy
acquisition costs
    
    $
    (1,536
    )
    
    $
    42,103
    
    
    $
    57,666
    
    
    $
    (43,639
   )
    
    
    103.6
    
    
    $
    (15,563
   )
    
    
    27.0
   53




---



##### Table of Contents



Reinsurance
  Reserves
    
    
    
    
    
    
    
    
    
    
    PremiumsYears Ended December 31,
    
    
    Years Ended December 31,2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    
    
    2007Reinsurance assumed
    
    $
    19,514
    
    
    $
    25,553
    
    
    $
    28,413
    
    
    $
    4,512
    
    
    $
    8,460
    
    
    $
    10,355Reinsurance ceded
    
    
    (160,934
    )
    
    
    (147,523
    )
    
    
    (124,316
    )
    
    
    (74,577
    )
    
    
    (80,826
    )
    
    
    (66,068
    )Total
    
    $
    (141,420
    )
    
    $
    (121,970
    )
    
    $
    (95,903
    )
    
    $
    (70,065
    )
    
    $
    (72,366
    )
    
    $
    (55,713
    )
  .
   54




---



##### Table of Contents



Percentage ofReinsurer
    
    A.M. Best Rating
    
    Ceded Premiums
    
    
    Total Gross PremiumSwiss Re Life and Health of America
    
    A
    
    $
    22,476
    
    
    
    6.3
    %Transamerica Life Insurance Company
    
    A
    
    
    10,728
    
    
    
    3.0
    %Munich
    
    A+
    
    
    10,782
    
    
    
    3.0
    %General Re Life Corporation
    
    A++
    
    
    8,175
    
    
    
    2.3
    %Revios/SCOR
    
    A-
    
    
    6,560
    
    
    
    1.9
    %Canada Life Reinsurance
    
    A+
    
    
    5,000
    
    
    
    1.4
    %Other Reinsurers with no single company
greater than 1% of the total
    
    
    
    
    7,323
    
    
    
    2.1
    %Total life reinsurance ceded
    
    
    
    $
    71,044
    
    
    
    20.0
    %
 Policy in-force information
  Years Ended December 31,
    
    
    Change Over Prior Years2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008amount
    
    
    percentage
    
    
    amount
    
    
    percentageLife insurance in-force:Traditional life
    
    $
    45,229,407
    
    
    $
    45,007,657
    
    
    $
    44,538,506
    
    
    $
    221,750
    
    
    
    0.5
    
    
    $
    469,151
    
    
    
    1.1Interest sensitive life
    
    
    24,218,843
    
    
    
    24,863,199
    
    
    
    24,144,561
    
    
    
    (644,356
    )
    
    
    (2.6
    )
    
    
    718,638
    
    
    
    3.0Total life insurance in-force
    
    $
    69,448,250
    
    
    $
    69,870,856
    
    
    $
    68,683,067
    
    
    $
    (422,606
    )
    
    
    (0.6
    )
    
    $
    1,187,789
    
    
    
    1.7
 Years Ended December 31,
    
    
    Change Over Prior Years2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008amount
    
    
    percentage
    
    
    amount
    
    
    percentageNumber of policies:Traditional life
    
    
    2,347,423
    
    
    
    2,451,748
    
    
    
    2,606,012
    
    
    
    (104,325
    )
    
    
    (4.3
    )
    
    
    (154,264
    )
    
    
    (5.9
    )Interest sensitive life
    
    
    174,738
    
    
    
    175,553
    
    
    
    176,628
    
    
    
    (815
    )
    
    
    (0.5
    )
    
    
    (1,075
    )
    
    
    (0.6
    )Total number of policies
    
    
    2,522,161
    
    
    
    2,627,301
    
    
    
    2,782,640
    
    
    
    (105,140
    )
    
    
    (4.0
    )
    
    
    (155,339
    )
    
    
    (5.6
    )
   55




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##### Table of Contents



Annuity
 Comparison of Years Ended December 31, 2009, 2008 and 2007
  Years Ended December 31,
    
    
    Change Over Prior Years2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008amount
    
    
    percentage
    
    
    amount
    
    
    percentageRevenues:Premiums
    
    $
    220,284
    
    
    $
    116,248
    
    
    $
    222,748
    
    
    $
    104,036
    
    
    
    89.5
    
    
    $
    (106,500
    )
    
    
    (47.8
    )Other policy revenues
    
    
    14,756
    
    
    
    19,915
    
    
    
    24,486
    
    
    
    (5,159
    )
    
    
    (25.9
    )
    
    
    (4,571
    )
    
    
    (18.7
    )Net investment income
    
    
    449,035
    
    
    
    374,023
    
    
    
    364,607
    
    
    
    75,012
    
    
    
    20.1
    
    
    
    9,416
    
    
    
    2.6Other income
    
    
    (3,870
    )
    
    
    (5,718
    )
    
    
    345
    
    
    
    1,848
    
    
    
    (32.3
    )
    
    
    (6,063
    )
    
    
    (1,757.4
    )Total revenues
    
    
    680,205
    
    
    
    504,468
    
    
    
    612,186
    
    
    
    175,737
    
    
    
    34.8
    
    
    
    (107,718
    )
    
    
    (17.6
    )Benefits, losses and expenses:Policy benefits
    
    
    249,709
    
    
    
    142,867
    
    
    
    249,878
    
    
    
    106,842
    
    
    
    74.8
    
    
    
    (107,011
    )
    
    
    (42.8
    )Interest credited to policy account balances
    
    
    311,580
    
    
    
    237,612
    
    
    
    232,605
    
    
    
    73,968
    
    
    
    31.1
    
    
    
    5,007
    
    
    
    2.2Commissions
    
    
    107,053
    
    
    
    79,213
    
    
    
    58,635
    
    
    
    27,840
    
    
    
    35.1
    
    
    
    20,578
    
    
    
    35.1Other operating costs and expenses
    
    
    59,254
    
    
    
    45,491
    
    
    
    35,030
    
    
    
    13,763
    
    
    
    30.3
    
    
    
    10,461
    
    
    
    29.9Change in deferred policy acquisition costs
    
    
    (62,013
    )
    
    
    (20,690
    )
    
    
    (911
    )
    
    
    (41,323
    )
    
    
    199.7
    
    
    
    (19,779
    )
    
    
    2,171.1Total benefits, losses and expenses
    
    
    665,583
    
    
    
    484,493
    
    
    
    575,237
    
    
    
    181,090
    
    
    
    37.4
    
    
    
    (90,744
    )
    
    
    (15.8
    )Income (loss) before other items and federal
income taxes
    
    $
    14,622
    
    
    $
    19,975
    
    
    $
    36,949
    
    
    $
    (5,353
    )
    
    
    (26.8
    )
    
    $
    (16,974
    )
    
    
    (45.9
    )
    56




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##### Table of Contents



Premiums
  Years Ended December 31,
    
    
    Change Over Prior Years2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008amount
    
    
    percentage
    
    
    amount
    
    
    percentageFixed deferred annuity
    
    $
    1,715,871
    
    
    $
    1,573,237
    
    
    $
    789,012
    
    
    $
    142,634
    
    
    
    9.1
    
    
    $
    784,225
    
    
    
    99.4Equity indexed deferred annuity
    
    
    239,664
    
    
    
    85,334
    
    
    
    90,327
    
    
    
    154,330
    
    
    
    180.9
    
    
    
    (4,993
    )
    
    
    (5.5
    )Single premium immediate annuity
    
    
    227,937
    
    
    
    121,952
    
    
    
    227,617
    
    
    
    105,985
    
    
    
    86.9
    
    
    
    (105,665
    )
    
    
    (46.4
    )Variable deferred annuity
    
    
    99,429
    
    
    
    103,233
    
    
    
    119,507
    
    
    
    (3,804
    )
    
    
    (3.7
    )
    
    
    (16,274
    )
    
    
    (13.6
    )Total
    
    
    2,282,901
    
    
    
    1,883,756
    
    
    
    1,226,463
    
    
    
    399,145
    
    
    
    21.2
    
    
    
    657,293
    
    
    
    53.6Less: policy deposits
    
    
    (2,062,617
    )
    
    
    (1,767,508
    )
    
    
    (1,003,715
    )
    
    
    (295,109
    )
    
    
    16.7
    
    
    
    (763,793
    )
    
    
    76.1Total earned premiums
    
    $
    220,284
    
    
    $
    116,248
    
    
    $
    222,748
    
    
    $
    104,036
    
    
    
    89.5
    
    
    $
    (106,500
    )
    
    
    (47.8
    )
        57




---



##### Table of Contents



Other Policy Revenues
  Net Investment Income
    Years Ended December 31,
    
    
    Change Over Prior Years2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008Derivative gain/(loss)
included in net investment income
    
    $
    5,380
    
    
    $
    (24,400
    )
    
    $
    (141
    )
    
    $
    29,780
    
    
    $
    (24,259
    )Embedded derivative gain/(loss)
included in interest credited
    
    $
    (8,138
    )
    
    $
    23,184
    
    
    $
    434
    
    
    $
    (31,322
    )
    
    $
    22,750
   58




---



##### Table of Contents



Interest Spread and Account Values
  Years Ended December 31,2009
    
    
    2008
    
    
    2007Fixed deferred annuityInterest spread (excluding first year sales inducements):Dollar amount
    
    $
    113,461
    
    
    $
    111,545
    
    
    $
    108,668Annualized rate
    
    
    1.51
    %
    
    
    1.70
    %
    
    
    1.76
    %Variable deferred annuityMortality and expense charge:Dollar amount
    
    $
    4,096
    
    
    $
    4,581
    
    
    $
    4,498Annualized rate
    
    
    1.15
    %
    
    
    1.24
    %
    
    
    1.18
    %Single premium immediate annuity (SPIA)Gross interest and mortality margins:Dollar amount
    
    $
    5,377
    
    
    $
    2,981
    
    
    $
    5,454Annualized rate
    
    
    0.71
    %
    
    
    0.43
    %
    
    
    0.87
    %Total annuity:Gross interest margins including SPIA mortality:Dollar amount
    
    $
    122,934
    
    
    $
    119,107
    
    
    $
    118,620Annualized rate
    
    
    1.46
    %
    
    
    1.65
    %
    
    
    1.70
    %
      59




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##### Table of Contents



.
  Reinsurance
 Account Values:
 Years Ended December 31,2009
    
    
    2008
    
    
    2007Fixed deferred annuity:Account value, beginning of period
    
    $
    6,918,365
    
    
    $
    6,210,456
    
    
    $
    6,121,475Net inflows/(outflows)
    
    
    930,417
    
    
    
    487,410
    
    
    
    (123,195
    )Fees
    
    
    (10,592
    )
    
    
    (15,363
    )
    
    
    (19,899
    )Interest credited
    
    
    313,175
    
    
    
    235,862
    
    
    
    232,075Account value, end of period
    
    $
    8,151,365
    
    
    $
    6,918,365
    
    
    $
    6,210,456Variable deferred annuity:Account value, beginning of period
    
    $
    309,011
    
    
    $
    429,505
    
    
    $
    331,971Net inflows
    
    
    20,452
    
    
    
    24,364
    
    
    
    66,571Fees
    
    
    (4,096
    )
    
    
    (4,582
    )
    
    
    (4,498
    )Change in market value and other
    
    
    75,257
    
    
    
    (140,276
    )
    
    
    35,461Account value, end of period
    
    $
    400,624
    
    
    $
    309,011
    
    
    $
    429,505Single premium immediate annuity:Reserve, beginning of period
    
    $
    701,141
    
    
    $
    693,137
    
    
    $
    557,866Net inflows/(outflows)
    
    
    84,785
    
    
    
    (26,330
    )
    
    
    107,861Interest and mortality
    
    
    34,369
    
    
    
    34,334
    
    
    
    27,410Reserve, end of period
    
    $
    820,295
    
    
    $
    701,141
    
    
    $
    693,137
 Fixed Deferred Annuity
  Other Policy Revenues
  60




---



##### Table of Contents



Variable Deferred Annuity:
  Single Premium Immediate Annuity:
  Policy Benefits
  Interest Credited to Policy Account Balances
   Commissions
  Other Operating Costs and Expenses
   61




---



##### Table of Contents



Change in Deferred Policy Acquisition Costs
  Years Ended December 31,
    
    
    Change Over Prior Years2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008amount
    
    
    percentage
    
    
    amount
    
    
    percentageAcquisition cost capitalized
    
    $
    126,768
    
    
    $
    96,544
    
    
    $
    71,723
    
    
    $
    30,224
    
    
    
    31.3
    
    
    $
    24,821
    
    
    
    34.6Amortization of DAC
    
    
    (64,755
    )
    
    
    (75,854
    )
    
    
    (70,812
    )
    
    
    11,099
    
    
    
    (14.6
    )
    
    
    (5,042
    )
    
    
    7.1Change in deferred policy
acquisition costs
    
    $
    62,013
    
    
    $
    20,690
    
    
    $
    911
    
    
    $
    41,323
    
    
    
    199.7
    
    
    $
    19,779
    
    
    
    2,171.1
 Policy Benefits Interest Credited to Policy Account Balances
  Reinsurance
   62




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##### Table of Contents



Health
 Comparison of Years Ended December 31, 2009, 2008 and 2007
  Years Ended December 31,
    
    
    Change Over Prior Years2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008amount
    
    
    percentage
    
    
    amount
    
    
    percentageRevenues:Premiums
    
    $
    309,701
    
    
    $
    290,883
    
    
    $
    283,765
    
    
    $
    18,818
    
    
    
    6.5
    
    
    $
    7,118
    
    
    
    2.5Net investment income
    
    
    15,992
    
    
    
    16,566
    
    
    
    16,710
    
    
    
    (574
    )
    
    
    (3.5
    )
    
    
    (144
    )
    
    
    (0.9
    )Other income
    
    
    10,382
    
    
    
    13,252
    
    
    
    13,048
    
    
    
    (2,870
    )
    
    
    (21.7
    )
    
    
    204
    
    
    
    1.6Total premiums and other
revenues
    
    
    336,075
    
    
    
    320,701
    
    
    
    313,523
    
    
    
    15,374
    
    
    
    4.8
    
    
    
    7,178
    
    
    
    2.3Benefits and expenses:Policy benefits
    
    
    239,407
    
    
    
    223,055
    
    
    
    209,840
    
    
    
    16,352
    
    
    
    7.3
    
    
    
    13,215
    
    
    
    6.3Commissions
    
    
    51,717
    
    
    
    43,219
    
    
    
    39,342
    
    
    
    8,498
    
    
    
    19.7
    
    
    
    3,877
    
    
    
    9.9Other operating costs and expenses
    
    
    62,134
    
    
    
    69,961
    
    
    
    57,975
    
    
    
    (7,827
    )
    
    
    (11.2
    )
    
    
    11,986
    
    
    
    20.7Change in deferred policy
acquisition costs
    
    
    5,017
    
    
    
    5,023
    
    
    
    5,774
    
    
    
    (6
    )
    
    
    (0.1
    )
    
    
    (751
    )
    
    
    (13.0
    )Total benefits and expenses
    
    
    358,275
    
    
    
    341,258
    
    
    
    312,931
    
    
    
    17,017
    
    
    
    5.0
    
    
    
    28,327
    
    
    
    9.1Income (loss) before other items
and federal income taxes
    
    $
    (22,200
    )
    
    $
    (20,557
    )
    
    $
    592
    
    
    $
    (1,643
    )
    
    
    8.0
    
    
    $
    (21,149
    )
    
    
    (3,572.5
    )
 other operating costs and expenses
 Perkins
   63




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##### Table of Contents



Premiums
    Year Ended December 31, 2009
    
    
    Year Ended December 31, 2008
    
    
    Year Ended December 31, 2007Premiums
    
    
    Premiums
    
    
    Premiumsdollars
    
    
    percentage
    
    
    dollars
    
    
    percentage
    
    
    dollars
    
    
    percentageMedicare Supplement
    
    $
    123,102
    
    
    
    39.7
    %
    
    $
    120,757
    
    
    
    41.5
    %
    
    $
    114,283
    
    
    
    40.3
    %Managing general underwriter
    
    
    34,015
    
    
    
    11.0
    %
    
    
    13,160
    
    
    
    4.5
    %
    
    
    15,054
    
    
    
    5.3
    %Group
    
    
    33,484
    
    
    
    10.8
    %
    
    
    33,758
    
    
    
    11.7
    %
    
    
    33,492
    
    
    
    11.8
    %Major medical
    
    
    29,580
    
    
    
    9.6
    %
    
    
    38,951
    
    
    
    13.4
    %
    
    
    49,313
    
    
    
    17.4
    %Hospital surgical
    
    
    51,136
    
    
    
    16.5
    %
    
    
    39,340
    
    
    
    13.5
    %
    
    
    24,228
    
    
    
    8.5
    %Long-term care
    
    
    1,970
    
    
    
    0.6
    %
    
    
    2,719
    
    
    
    0.9
    %
    
    
    3,437
    
    
    
    1.2
    %Supplemental insurance
    
    
    8,146
    
    
    
    2.6
    %
    
    
    8,213
    
    
    
    2.8
    %
    
    
    8,574
    
    
    
    3.0
    %Credit accident and health
    
    
    19,627
    
    
    
    6.3
    %
    
    
    24,676
    
    
    
    8.5
    %
    
    
    25,471
    
    
    
    9.0
    %All other
    
    
    8,641
    
    
    
    2.9
    %
    
    
    9,309
    
    
    
    3.2
    %
    
    
    9,913
    
    
    
    3.5
    %Total
    
    $
    309,701
    
    
    
    100.0
    %
    
    $
    290,883
    
    
    
    100.0
    %
    
    $
    283,765
    
    
    
    100.0
    %
  As of December 31, 2009
    
    
    As of December 31, 2008
    
    
    As of December 31, 2007Certificates/Policies
    
    
    Certificates/Policies
    
    
    Certificates/Policiesnumber
    
    
    percentage
    
    
    number
    
    
    percentage
    
    
    number
    
    
    percentageMedicare Supplement
    
    
    58,627
    
    
    
    8.9
    %
    
    
    60,264
    
    
    
    8.2
    %
    
    
    57,162
    
    
    
    7.5
    %Managing general
underwriter
    
    
    81,571
    
    
    
    12.4
    %
    
    
    124,829
    
    
    
    17.0
    %
    
    
    139,683
    
    
    
    18.4
    %Group
    
    
    23,890
    
    
    
    3.6
    %
    
    
    21,409
    
    
    
    2.9
    %
    
    
    20,882
    
    
    
    2.8
    %Major medical
    
    
    3,453
    
    
    
    0.5
    %
    
    
    4,884
    
    
    
    0.7
    %
    
    
    7,509
    
    
    
    1.0
    %Hospital surgical
    
    
    14,915
    
    
    
    2.3
    %
    
    
    15,468
    
    
    
    2.1
    %
    
    
    10,526
    
    
    
    1.4
    %Long-term care
    
    
    1,919
    
    
    
    0.3
    %
    
    
    2,055
    
    
    
    0.3
    %
    
    
    2,229
    
    
    
    0.3
    %Supplemental insurance
    
    
    44,138
    
    
    
    6.7
    %
    
    
    47,133
    
    
    
    6.4
    %
    
    
    51,409
    
    
    
    6.8
    %Credit accident and health
    
    
    309,695
    
    
    
    47.2
    %
    
    
    323,158
    
    
    
    44.0
    %
    
    
    319,285
    
    
    
    42.2
    %All other
    
    
    118,061
    
    
    
    18.1
    %
    
    
    135,921
    
    
    
    18.4
    %
    
    
    148,780
    
    
    
    19.6
    %Total
    
    
    656,269
    
    
    
    100.0
    %
    
    
    735,121
    
    
    
    100.0
    %
    
    
    757,465
    
    
    
    100.0
    %
  64




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##### Table of Contents



Net Investment Income
 Investments
 Policy Benefits
      Commissions
   Other Operating Costs and Expenses
   65




---



##### Table of Contents



Change in Deferred Policy Acquisition Costs
   Years Ended December 31,
    
    
    Change Over Prior Years2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008amount
    
    
    percentage
    
    
    amount
    
    
    percentageAcquisition cost
capitalized
    
    $
    16,729
    
    
    $
    22,762
    
    
    $
    18,735
    
    
    $
    (6,033
    )
    
    
    (26.5
    )
    
    $
    4,027
    
    
    
    21.5Amortization of DAC
    
    
    (21,746
    )
    
    
    (27,785
    )
    
    
    (24,509
    )
    
    
    6,039
    
    
    
    (21.7
    )
    
    
    (3,276
    )
    
    
    13.4Total change in DAC
    
    $
    (5,017
    )
    
    $
    (5,023
    )
    
    $
    (5,774
    )
    
    $
    6
    
    
    
    (0.1
    )
    
    $
    751
    
    
    
    (13.0
    )
     Reinsurance
    66




---



##### Table of Contents



A.M. Best
    
    Ceded
    
    
    Percentage ofReinsurer
    
    Rating
    
    Premiums
    
    
    Total Gross PremiumMotors Insurance Corp.
    
    A-
    
    $
    45,574
    
    
    
    10.4
    %Munich American Reinsurance Company
    
    A+
    
    
    15,437
    
    
    
    3.5
    %Transatlantic Re
    
    A
    
    
    14,458
    
    
    
    3.3
    %United States Fire Insurance Company
    
    A
    
    
    10,336
    
    
    
    2.4
    %Maiden Re
    
    A-
    
    
    6,764
    
    
    
    1.6
    %Other reinsurers with no single company
greater than 1% of the total
    
    
    
    
    34,416
    
    
    
    7.9
    %Total health reinsurance ceded
    
    
    
    $
    126,985
    
    
    
    29.1
    %
  67




---



##### Table of Contents



Property and Casualty
 Comparison of Years Ended December 31, 2009, 2008 and 2007
  
    
    Loss and loss adjustment expense ratio (loss ratio), which is calculated by dividing
policy benefits by net premiums earned;
 
    
    Underwriting expense ratio (expense ratio), which is calculated by dividing all
expenses related to the issuance of new and renewal policies by net premiums earned; and
 
    
    Combined ratio, which is the sum of the loss ratio and the expense ratio.
   Years Ended December 31,
    
    
    Change Over Prior Years2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008amount
    
    
    percentage
    
    
    amount
    
    
    percentageRevenues:Net premiums written
    
    $
    1,307,762
    
    
    $
    1,184,686
    
    
    $
    1,191,113
    
    
    $
    123,076
    
    
    
    10.4
    
    
    $
    (6,427
    )
    
    
    (0.5
    )Net premiums earned
    
    $
    1,159,509
    
    
    $
    1,182,026
    
    
    $
    1,177,217
    
    
    $
    (22,517
    )
    
    
    (1.9
    )
    
    $
    4,809
    
    
    
    0.4Net investment income
    
    
    66,175
    
    
    
    69,348
    
    
    
    75,041
    
    
    
    (3,173
    )
    
    
    (4.6
    )
    
    
    (5,693
    )
    
    
    (7.6
    )Other income
    
    
    7,064
    
    
    
    8,973
    
    
    
    8,623
    
    
    
    (1,909
    )
    
    
    (21.3
    )
    
    
    350
    
    
    
    4.1Total premiums and other revenues
    
    
    1,232,748
    
    
    
    1,260,347
    
    
    
    1,260,881
    
    
    
    (27,599
    )
    
    
    (2.2
    )
    
    
    (534
    )
    
    
    (0.0
    )Benefits and expenses:Policy benefits
    
    
    923,064
    
    
    
    939,854
    
    
    
    818,230
    
    
    
    (16,790
    )
    
    
    (1.8
    )
    
    
    121,624
    
    
    
    14.9Commissions
    
    
    209,203
    
    
    
    226,100
    
    
    
    217,043
    
    
    
    (16,897
    )
    
    
    (7.5
    )
    
    
    9,057
    
    
    
    4.2Other operating costs and expenses
    
    
    124,266
    
    
    
    132,601
    
    
    
    110,705
    
    
    
    (8,335
    )
    
    
    (6.3
    )
    
    
    21,896
    
    
    
    19.8Change in deferred policy acquisition costs
    
    
    (8,151
    )
    
    
    (9,669
    )
    
    
    (7,639
    )
    
    
    1,518
    
    
    
    (15.7
    )
    
    
    (2,030
    )
    
    
    26.6Total benefits and expenses
    
    
    1,248,382
    
    
    
    1,288,886
    
    
    
    1,138,339
    
    
    
    (40,504
    )
    
    
    (3.1
    )
    
    
    150,547
    
    
    
    13.2Income before other items and federal income taxes
    
    $
    (15,634
    )
    
    $
    (28,539
    )
    
    $
    122,542
    
    
    $
    12,905
    
    
    
    (45.2
    )
    
    $
    (151,081
    )
    
    
    (123.3
    )Loss ratio
    
    
    79.6
    %
    
    
    79.5
    %
    
    
    69.5
    %
    
    
    0.1
    
    
    
    
    
    
    
    10.0Underwriting expense ratio
    
    
    28.1
    %
    
    
    29.5
    %
    
    
    27.2
    %
    
    
    (1.4
    )
    
    
    
    
    
    
    2.3Combined ratio
    
    
    107.7
    %
    
    
    109.0
    %
    
    
    96.7
    %
    
    
    (1.3
    )
    
    
    
    
    
    
    12.3Effect of net catastrophe losses on combined ratio
    
    
    7.8
    %
    
    
    11.1
    %
    
    
    2.7
    %
    
    
    (3.3
    )
    
    
    
    
    
    
    8.4
    68




---



##### Table of Contents



Net Premiums Written and Earned
  Products
   , Business.
 Products
  Net Investment Income
  Policy Benefits
   69




---



##### Table of Contents



Products
     Commissions and Change in Deferred Policy Acquisition Costs
     70




---



##### Table of Contents



Other Operating Costs and Expenses
 Farm Bureau
  Products
  Product Discussion  Personal Products
 Years Ended December 31,
    
    
    Change Over Prior Years2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008amount
    
    
    percentage
    
    
    amount
    
    
    percentageNet premiums writtenAuto
    
    $
    456,960
    
    
    $
    462,545
    
    
    $
    484,310
    
    
    $
    (5,585
    )
    
    
    (1.2
    )
    
    $
    (21,765
    )
    
    
    (4.5
    )Homeowner
    
    
    217,963
    
    
    
    203,516
    
    
    
    207,093
    
    
    
    14,447
    
    
    
    7.1
    
    
    
    (3,577
    )
    
    
    (1.7
    )Other Personal
    
    
    38,815
    
    
    
    34,610
    
    
    
    30,452
    
    
    
    4,205
    
    
    
    12.1
    
    
    
    4,158
    
    
    
    13.7Total net premiums written
    
    
    713,738
    
    
    
    700,671
    
    
    
    721,855
    
    
    
    13,067
    
    
    
    1.9
    
    
    
    (21,184
    )
    
    
    (2.9
    )Net premiums earnedAuto
    
    
    452,754
    
    
    
    469,425
    
    
    
    479,722
    
    
    
    (16,671
    )
    
    
    (3.6
    )
    
    
    (10,297
    )
    
    
    (2.1
    )Homeowner
    
    
    208,558
    
    
    
    205,764
    
    
    
    199,126
    
    
    
    2,794
    
    
    
    1.4
    
    
    
    6,638
    
    
    
    3.3Other Personal
    
    
    37,283
    
    
    
    31,990
    
    
    
    30,241
    
    
    
    5,293
    
    
    
    16.5
    
    
    
    1,749
    
    
    
    5.8Total net premiums earned
    
    $
    698,595
    
    
    $
    707,179
    
    
    $
    709,089
    
    
    $
    (8,584
    )
    
    
    (1.2
    )
    
    $
    (1,910
    )
    
    
    (0.3
    )Loss ratioAuto
    
    
    83.9
    %
    
    
    78.0
    %
    
    
    76.0
    %
    
    
    5.9
    
    
    
    
    
    
    
    2.0Homeowner
    
    
    100.6
    %
    
    
    111.0
    %
    
    
    68.4
    %
    
    
    (10.4
    )
    
    
    
    
    
    
    42.6Other Personal
    
    
    44.9
    %
    
    
    87.7
    %
    
    
    84.4
    %
    
    
    (42.8
    )
    
    
    
    
    
    
    3.3Personal line loss ratio
    
    
    86.8
    %
    
    
    88.1
    %
    
    
    74.2
    %
    
    
    (1.3
    )
    
    
    
    
    
    
    13.9Combined RatioAuto
    
    
    104.9
    %
    
    
    101.6
    %
    
    
    97.3
    %
    
    
    3.3
    
    
    
    
    
    
    
    4.3Homeowner
    
    
    122.8
    %
    
    
    138.0
    %
    
    
    94.2
    %
    
    
    (15.2
    )
    
    
    
    
    
    
    43.8Other Personal
    
    
    51.3
    %
    
    
    110.1
    %
    
    
    90.5
    %
    
    
    (58.8
    )
    
    
    
    
    
    
    19.6Personal line combined ratio
    
    
    107.4
    %
    
    
    112.6
    %
    
    
    96.1
    %
    
    
    (5.2
    )
    
    
    
    
    
    
    16.5
 Personal Automobile
  71




---



##### Table of Contents



Homeowners
    Other
Operating Costs and Expenses
  Other Personal
  72




---



##### Table of Contents



Product Discussion  Commercial Products
 Years Ended December 31,
    
    
    Change Over Prior Years2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008amount
    
    
    percentage
    
    
    amount
    
    
    percentageNet premiums writtenAgribusiness
    
    $
    101,074
    
    
    $
    101,243
    
    
    $
    93,664
    
    
    $
    (169
    )
    
    
    (0.2
    )
    
    $
    7,579
    
    
    
    8.1Auto
    
    
    88,642
    
    
    
    95,155
    
    
    
    100,397
    
    
    
    (6,513
    )
    
    
    (6.8
    )
    
    
    (5,242
    )
    
    
    (5.2
    )Other Commercial
    
    
    127,291
    
    
    
    139,266
    
    
    
    144,281
    
    
    
    (11,975
    )
    
    
    (8.6
    )
    
    
    (5,015
    )
    
    
    (3.5
    )Total net premiums written
    
    
    317,007
    
    
    
    335,664
    
    
    
    338,342
    
    
    
    (18,657
    )
    
    
    (5.6
    )
    
    
    (2,678
    )
    
    
    (0.8
    )Net premiums earnedAgribusiness
    
    
    105,921
    
    
    
    105,230
    
    
    
    95,402
    
    
    
    691
    
    
    
    0.7
    
    
    
    9,828
    
    
    
    10.3Auto
    
    
    91,074
    
    
    
    96,574
    
    
    
    96,232
    
    
    
    (5,500
    )
    
    
    (5.7
    )
    
    
    342
    
    
    
    0.4Other Commercial
    
    
    125,855
    
    
    
    137,971
    
    
    
    139,051
    
    
    
    (12,116
    )
    
    
    (8.8
    )
    
    
    (1,080
    )
    
    
    (0.8
    )Total net premiums earned
    
    $
    322,850
    
    
    $
    339,775
    
    
    $
    330,685
    
    
    $
    (16,925
    )
    
    
    (5.0
    )
    
    $
    9,090
    
    
    
    2.7Loss ratioAgribusiness
    
    
    90.1
    %
    
    
    87.5
    %
    
    
    71.9
    %
    
    
    2.6
    
    
    
    
    
    
    
    15.6Auto
    
    
    74.3
    %
    
    
    76.3
    %
    
    
    75.6
    %
    
    
    (2.0
    )
    
    
    
    
    
    
    0.7Other Commercial
    
    
    76.9
    %
    
    
    71.2
    %
    
    
    61.0
    %
    
    
    5.7
    
    
    
    
    
    
    
    10.2Commercial line loss ratio
    
    
    80.5
    %
    
    
    77.7
    %
    
    
    68.4
    %
    
    
    2.8
    
    
    
    
    
    
    
    9.3Combined ratioAgribusiness
    
    
    126.8
    %
    
    
    117.7
    %
    
    
    105.1
    %
    
    
    9.1
    
    
    
    
    
    
    
    12.6Auto
    
    
    96.9
    %
    
    
    99.3
    %
    
    
    99.8
    %
    
    
    (2.4
    )
    
    
    
    
    
    
    (0.5
    )Other Commercial
    
    
    106.4
    %
    
    
    95.8
    %
    
    
    86.3
    %
    
    
    10.6
    
    
    
    
    
    
    
    9.5Commercial line combined ratio
    
    
    110.4
    %
    
    
    103.6
    %
    
    
    95.6
    %
    
    
    6.8
    
    
    
    
    
    
    
    8.0
 Agribusiness Product
   Commercial Automobile:
   73




---



##### Table of Contents



Other Commercial
  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;
  74




---



##### Table of Contents




    
    Facultative reinsurance, in which 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.
       Percent of Risk CoveredReinsurer
    
    AM Best Rating
    
    Non-catastrophe
    
    
    Catastrophe CoverageLloyds Syndicates
    
    A
    
    
    20.6
    %
    
    
    50.1
    %Hannover Re
    
    A
    
    
    38.5
    %
    
    
    1.6
    %Munich Re America
    
    A+
    
    
    17.7
    %
    
    
    2.2
    %Platinum Re
    
    A
    
    
    12.1
    %
    
    
    0.2
    %Catlin Insurance Co
    
    A
    
    
    4.5
    %
    
    
    4.7
    %Transatlantic QBE Reinsurance
    
    A
    
    
    2.4
    %
    
    
    0.4
    %Swiss Re America
    
    A
    
    
    2.2
    %
    
    
    0.0
    %Amlin Bermuda Ltd
    
    A
    
    
    2.0
    %
    
    
    3.7
    %Tokio Millenium Re Ltd
    
    A+
    
    
    0.0
    %
    
    
    6.2
    %Sompco Japan Insurance, Inc
    
    A+
    
    
    0.0
    %
    
    
    3.7
    %Scor Re
    
    A-
    
    
    0.0
    %
    
    
    3.4
    %Flagstone Reassurance Suisse SA
    
    A-
    
    
    0.0
    %
    
    
    2.6
    %Munchener Ruckversicherungs-Gesellschaft
    
    A+
    
    
    0.0
    %
    
    
    2.9
    %Partner Re, Bermuda
    
    A+
    
    
    0.0
    %
    
    
    2.0
    %Other reinsurers with no single company
greater than 2% of the total
    
    
    
    
    0.0
    %
    
    
    16.3
    %Total reinsurance coverage
    
    
    
    
    100.0
    %
    
    
    100.0
    %
  75




---



##### Table of Contents



Prior Period Reserve Development
    Loss Development Table
Property and Casualty Loss and Loss Adjustment Expense Liability Development-Net of Reinsurance
For the Years Ended December 31,
 1999
    
    
    2000
    
    
    2001
    
    
    2002
    
    
    2003
    
    
    2004
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009Liability for unpaid losses and
loss adjustment expenses, net
of reinsurance
(includes loss reserves, IBNR,
allocated and unalloc expense)
    
    
    331,431
    
    
    
    384,191
    
    
    
    425,129
    
    
    
    490,215
    
    
    
    590,365
    
    
    
    678,379
    
    
    
    796,267
    
    
    
    801,953
    
    
    
    809,500
    
    
    
    847,860
    
    
    
    856,658Cumulative paid losses and
loss expensesOne year later
    
    
    161,942
    
    
    
    192,167
    
    
    
    228,699
    
    
    
    233,074
    
    
    
    256,386
    
    
    
    274,810
    
    
    
    366,007
    
    
    
    296,620
    
    
    
    318,944
    
    
    
    345,346Two years later
    
    
    236,136
    
    
    
    280,667
    
    
    
    322,112
    
    
    
    338,459
    
    
    
    377,139
    
    
    
    405,748
    
    
    
    506,463
    
    
    
    453,042
    
    
    
    477,958Three years later
    
    
    280,004
    
    
    
    323,685
    
    
    
    370,179
    
    
    
    399,651
    
    
    
    445,702
    
    
    
    479,410
    
    
    
    590,643
    
    
    
    544,100Four years later
    
    
    297,942
    
    
    
    345,507
    
    
    
    396,758
    
    
    
    429,408
    
    
    
    479,524
    
    
    
    518,972
    
    
    
    640,003Five years later
    
    
    306,853
    
    
    
    356,119
    
    
    
    407,212
    
    
    
    443,161
    
    
    
    498,349
    
    
    
    541,627Six years later
    
    
    311,746
    
    
    
    362,307
    
    
    
    412,004
    
    
    
    452,256
    
    
    
    509,521Seven years later
    
    
    314,097
    
    
    
    365,331
    
    
    
    416,207
    
    
    
    457,972Eight years later
    
    
    315,750
    
    
    
    367,326
    
    
    
    420,045Nine years later
    
    
    317,270
    
    
    
    369,963Ten years later
    
    
    318,474Liabilites re-estimatedOne year later
    
    
    330,858
    
    
    
    368,951
    
    
    
    432,028
    
    
    
    488,595
    
    
    
    564,287
    
    
    
    638,910
    
    
    
    770,238
    
    
    
    711,880
    
    
    
    766,882
    
    
    
    798,583Two years later
    
    
    323,422
    
    
    
    372,991
    
    
    
    435,574
    
    
    
    488,455
    
    
    
    564,485
    
    
    
    617,374
    
    
    
    737,341
    
    
    
    713,339
    
    
    
    733,361Three years later
    
    
    324,838
    
    
    
    376,776
    
    
    
    441,564
    
    
    
    490,717
    
    
    
    553,163
    
    
    
    596,242
    
    
    
    739,825
    
    
    
    680,900Four years later
    
    
    323,853
    
    
    
    379,498
    
    
    
    441,309
    
    
    
    482,799
    
    
    
    538,459
    
    
    
    596,754
    
    
    
    714,995Five years later
    
    
    324,878
    
    
    
    379,318
    
    
    
    435,796
    
    
    
    476,615
    
    
    
    542,429
    
    
    
    585,370Six years later
    
    
    326,786
    
    
    
    380,050
    
    
    
    432,953
    
    
    
    478,201
    
    
    
    534,287Seven years later
    
    
    326,798
    
    
    
    379,270
    
    
    
    433,990
    
    
    
    472,502Eight years later
    
    
    326,345
    
    
    
    380,082
    
    
    
    430,722Nine years later
    
    
    327,685
    
    
    
    378,611Ten years later
    
    
    326,128Deficiency(redundancy), net
of reinsurance
    
    
    (5,303
    )
    
    
    (5,580
    )
    
    
    5,593
    
    
    
    (17,713
    )
    
    
    (56,078
    )
    
    
    (93,009
    )
    
    
    (81,272
    )
    
    
    (121,053
    )
    
    
    (76,139
    )
    
    
    (49,277
    )
  76




---



##### Table of Contents



Property and Casualty Loss and Loss Adjustment Expense Liability Development-Gross
For the Years Ended December 31,
 1999
    
    
    2000
    
    
    2001
    
    
    2002
    
    
    2003
    
    
    2004
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009Net reserve, as initially estimated
    
    
    331,431
    
    
    
    384,191
    
    
    
    425,129
    
    
    
    490,215
    
    
    
    590,365
    
    
    
    678,379
    
    
    
    796,267
    
    
    
    801,953
    
    
    
    809,500
    
    
    
    847,860
    
    
    
    856,658Reinsurance and other recoverables
as initially estimated
    
    
    35,677
    
    
    
    47,162
    
    
    
    65,327
    
    
    
    61,077
    
    
    
    61,600
    
    
    
    80,526
    
    
    
    86,186
    
    
    
    86,898
    
    
    
    79,071
    
    
    
    109,518
    
    
    
    70,837Gross reserve as initially
estimated
    
    
    366,943
    
    
    
    431,075
    
    
    
    490,103
    
    
    
    550,022
    
    
    
    646,397
    
    
    
    750,454
    
    
    
    869,781
    
    
    
    875,436
    
    
    
    875,963
    
    
    
    945,810
    
    
    
    916,990Net re-estimated reserve
    
    
    326,128
    
    
    
    378,611
    
    
    
    430,722
    
    
    
    472,502
    
    
    
    534,287
    
    
    
    585,370
    
    
    
    714,995
    
    
    
    680,900
    
    
    
    733,361
    
    
    
    798,583Re-estimated and other reinsurance
recoverables
    
    
    67,765
    
    
    
    82,797
    
    
    
    80,232
    
    
    
    83,520
    
    
    
    86,245
    
    
    
    84,763
    
    
    
    494,020
    
    
    
    93,619
    
    
    
    71,972
    
    
    
    102,963Gross re-estimated reserve
    
    
    393,893
    
    
    
    461,408
    
    
    
    510,954
    
    
    
    556,022
    
    
    
    620,532
    
    
    
    670,133
    
    
    
    1,209,015
    
    
    
    774,519
    
    
    
    805,333
    
    
    
    901,546Deficiency(redundancy), gross
of reinsurance
    
    
    26,950
    
    
    
    30,333
    
    
    
    20,851
    
    
    
    6,000
    
    
    
    (25,865
    )
    
    
    (80,321
    )
    
    
    339,234
    
    
    
    (100,917
    )
    
    
    (70,630
    )
    
    
    (44,264
    )
       77




---



##### Table of Contents



Corporate and Other
 Comparison of Years Ended December 31, 2009, 2008 and 2007
 Investment
  Years Ended December 31,
    
    
    Change Over Prior Years2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008amount
    
    
    percentage
    
    
    amount
    
    
    percentageRevenues:Net investment income
    
    $
    86,292
    
    
    $
    109,597
    
    
    $
    127,519
    
    
    $
    (23,305
    )
    
    
    (21.3
    )
    
    $
    (17,922
    )
    
    
    (14.1
    )Gain/(loss) from investments, net
    
    
    (75,697
    )
    
    
    (379,709
    )
    
    
    41,027
    
    
    
    304,012
    
    
    
    (80.1
    )
    
    
    (420,736
    )
    
    
    (1,025.5
    )Other Income
    
    
    15,547
    
    
    
    18,505
    
    
    
    21,241
    
    
    
    (2,958
    )
    
    
    (16.0
    )
    
    
    (2,736
    )
    
    
    (12.9
    )Total revenues
    
    
    26,142
    
    
    
    (251,607
    )
    
    
    189,787
    
    
    
    277,749
    
    
    
    (110.4
    )
    
    
    (441,394
    )
    
    
    (232.6
    )Benefits and expenses:Other operating costs and expenses
    
    
    54,709
    
    
    
    37,839
    
    
    
    61,069
    
    
    
    16,870
    
    
    
    44.6
    
    
    
    (23,230
    )
    
    
    (38.0
    )Total benefits and expenses
    
    
    54,709
    
    
    
    37,839
    
    
    
    61,069
    
    
    
    16,870
    
    
    
    44.6
    
    
    
    (23,230
    )
    
    
    (38.0
    )Income (loss) before other items
and federal income taxes
    
    $
    (28,567
    )
    
    $
    (289,446
    )
    
    $
    128,718
    
    
    $
    260,879
    
    
    
    (90.1
    )
    
    $
    (418,164
    )
    
    
    (324.9
    )
   Discontinued Operations
   78




---



##### Table of Contents



Liquidity
  Years Ended December 31,2009
    
    
    2008
    
    
    2007Net cash provided by (used in):Operating activities
    
    $
    491,390
    
    
    $
    171,681
    
    
    $
    462,913Investing activities
    
    
    (1,352,613
    )
    
    
    (690,441
    )
    
    
    (436,670
    )Financing activities
    
    
    956,610
    
    
    
    450,787
    
    
    
    (107,051
    )Net increase (decrease) in cash
    
    $
    95,387
    
    
    $
    (67,973
    )
    
    $
    (80,808
    )
 Comparison of Years Ended December 31, 2009, 2008 and 2007
    Results of
Operations  Annuity
    79




---



##### Table of Contents



Capital Resources
  Years Ended December 31,2009
    
    
    2008
    
    
    2007American National stockholders equity, excluding accumulated
other comprehensive income (loss), net of tax (AOCI)
    
    $
    3,342,805
    
    
    $
    3,355,004
    
    
    $
    3,590,812AOCI
    
    
    117,649
    
    
    
    (221,148
    )
    
    
    145,972Total American National stockholders equity
    
    $
    3,460,454
    
    
    $
    3,133,856
    
    
    $
    3,736,784
 Comparison of Years Ended December 31, 2009, 2008 and 2007
   Statutory Surplus and Risk-based Capital
     80




---



##### 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)
    
    $
    5,527,844
    
    
    $
    45,495
    
    
    $
    139,286
    
    
    $
    298,513
    
    
    $
    5,044,550Annuity obligations(1)
    
    
    10,969,319
    
    
    
    1,341,183
    
    
    
    3,945,324
    
    
    
    2,528,519
    
    
    
    3,154,293Property and casualty insurance obligations(2)
    
    
    1,003,143
    
    
    
    454,763
    
    
    
    379,362
    
    
    
    111,537
    
    
    
    57,481Accident and health insurance obligations(3)
    
    
    159,789
    
    
    
    92,449
    
    
    
    25,360
    
    
    
    10,274
    
    
    
    31,706Purchase obligations:
    
    
    Commitments to purchase and fund
investments(4)
    
    
    50,520
    
    
    
    28,281
    
    
    
    16,491
    
    
    
    2,767
    
    
    
    2,981Mortgage loan commitments(5)
    
    
    192,294
    
    
    
    192,294
    
    
    
    
    
    
    
    
    
    
    
    Operating leases(6)
    
    
    4,124
    
    
    
    562
    
    
    
    1,824
    
    
    
    1,360
    
    
    
    378Defined benefit pension plans(7)
    
    
    147,050
    
    
    
    10,183
    
    
    
    17,965
    
    
    
    18,482
    
    
    
    100,420Total
    
    $
    18,054,083
    
    
    $
    2,165,210
    
    
    $
    4,525,612
    
    
    $
    2,971,452
    
    
    $
    8,391,809
 (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 at present value. 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 results. 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 balance
sheet. All estimated cash payments represented 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 balance sheet, 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. This includes case reserves for reported claims and reserves for claims IBNR. Timing
of future payments is estimated based on the Companys historical payment patterns. The timing
of these payments may vary significantly from the amounts shown above. The ultimate losses may
vary materially from the recorded amounts, which are our best estimates.  81




---



##### 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, 2009. The estimate does not include
claim payments for claims incurred after December 31, 2008. 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, actual
results could vary greatly from the estimates shown here.(4)
    
    Expected payments to fund investments based on capital commitments and other related
contractual obligations.(5)
    
    Expected future payments to fund investments based on mortgage loan commitments and other
related contractual obligations.(6)
    
    Represents estimated obligations due to contracts and agreements entered into within the
ordinary course of business for items classified by ASC 840-20 (formerly FAS 13), Accounting
for Operating Leases. The Company rents office space, which qualifies as operating leases
under ASC 840-20 (formerly FAS 13).(7)
    
    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
(formerly FAS 158), Compensation-Retirement Benefits, including a provision for the effects
of future salary inflation on the accrued benefits. 
 Off-Balance Sheet Arrangements
  
 Related Party Transactions
  
 Investments
 General
    82




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##### Table of Contents



Composition of Invested Assets
  As of:December 31, 2009
    
    
    December 31, 2008amount
    
    
    percent
    
    
    amount
    
    
    percentBonds held-to-maturity, at amortized cost
    
    $
    7,461,711
    
    
    
    44.9
    %
    
    $
    6,681,837
    
    
    
    45.9
    %Bonds available-for-sale, at fair value
    
    
    4,213,550
    
    
    
    25.4
    %
    
    
    3,820,837
    
    
    
    26.3
    %Preferred stock, at fair value
    
    
    35,717
    
    
    
    0.2
    %
    
    
    48,822
    
    
    
    0.3
    %Common stock, at fair value
    
    
    934,754
    
    
    
    5.6
    %
    
    
    853,530
    
    
    
    5.9
    %Mortgage loans at amortized cost
    
    
    2,229,659
    
    
    
    13.4
    %
    
    
    1,877,053
    
    
    
    13.0
    %Policy loans, at outstanding balance
    
    
    364,354
    
    
    
    2.2
    %
    
    
    354,398
    
    
    
    2.4
    %Investment real estate, net of depreciation
    
    
    635,110
    
    
    
    3.8
    %
    
    
    528,905
    
    
    
    3.6
    %Short-term investments
    
    
    636,823
    
    
    
    3.9
    %
    
    
    295,170
    
    
    
    2.0
    %Other invested assets
    
    
    94,442
    
    
    
    0.6
    %
    
    
    85,151
    
    
    
    0.6
    %Total Invested Assets
    
    $
    16,606,120
    
    
    
    100
    %
    
    $
    14,545,703
    
    
    
    100
    %
   Fair Value Disclosures
    83




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##### Table of Contents



Other-Than-Temporary Impairments
    84




---



##### Table of Contents



Years Ended December 31,2009
    
    
    2008
    
    
    2007Corporate bonds
    
    $
    (10,046
    )
    
    $
    (165,802
    )
    
    $
    (1,089
    )Equities:Financial services
    
    
    (22,295
    )
    
    
    (125,518
    )
    
    
    Other
    
    
    (46,762
    )
    
    
    (74,231
    )
    
    
    (6,077
    )Mortgage loans
    
    
    (1,647
    )
    
    
    (740
    )
    
    
    Real estate
    
    
    (10,550
    )
    
    
    (745
    )
    
    
    Other invested assets
    
    
    (7,643
    )
    
    
    
    
    
    
    Total other-than-temporary impairment charges
    
    $
    (98,943
    )
    
    $
    (367,036
    )
    
    $
    (7,166
    )
    Bonds
   1.
    
    We determined if we intend to hold the bond until maturity.
 2.
    
    We determined if it is more likely than not that, we will have to sell the bond
before maturity.
 3.
    
    If it was determined, that we would hold the bond and we would not have to sell
it, then we would determine the present value of the future cash flows of the bond.
  85




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##### Table of Contents



Equity
  Real Estate, Mortgage Loans, and other Long-Lived Investment Assets
 Mortgage Loans
  Real Estate
   86




---



##### Table of Contents



Investments to Support Our Insurance Business
 Bonds
  As of December 31, 2009Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Estimated Fair
    
    
    % of FairCost
    
    
    Gains
    
    
    Losses
    
    
    Value
    
    
    ValueCorporate bonds
    
    $
    8,613,275
    
    
    $
    403,487
    
    
    $
    (139,823
    )
    
    $
    8,876,939
    
    
    
    74.5
    %Mortgage-backed securities
    
    
    1,094,943
    
    
    
    32,991
    
    
    
    (54,491
    )
    
    
    1,073,443
    
    
    
    9.0
    %States and political subdivisions
    
    
    779,425
    
    
    
    27,472
    
    
    
    (2,188
    )
    
    
    804,709
    
    
    
    6.8
    %Public utilities
    
    
    978,337
    
    
    
    56,393
    
    
    
    (3,945
    )
    
    
    1,030,785
    
    
    
    8.6
    %U.S. Treasury and government
agencies
    
    
    98,326
    
    
    
    2,591
    
    
    
    (593
    )
    
    
    100,324
    
    
    
    0.8
    %Foreign governments
    
    
    5,498
    
    
    
    559
    
    
    
    
    
    
    
    6,057
    
    
    
    0.1
    %Other
    
    
    27,951
    
    
    
    156
    
    
    
    (338
    )
    
    
    27,769
    
    
    
    0.2
    %Total Bonds
    
    $
    11,597,755
    
    
    $
    523,649
    
    
    $
    (201,378
    )
    
    $
    11,920,026
    
    
    
    100.0
    %
 As of December 31, 2008Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Estimated Fair
    
    
    % of FairCost
    
    
    Gains
    
    
    Losses
    
    
    Value
    
    
    ValueCorporate bonds
    
    $
    8,197,057
    
    
    $
    71,968
    
    
    $
    (943,424
    )
    
    $
    7,325,601
    
    
    
    73.5
    %Mortgage-backed securities
    
    
    1,205,379
    
    
    
    17,974
    
    
    
    (82,118
    )
    
    
    1,141,235
    
    
    
    11.5
    %States and political subdivisions
    
    
    742,175
    
    
    
    10,940
    
    
    
    (19,922
    )
    
    
    733,193
    
    
    
    7.4
    %Public utilities
    
    
    587,265
    
    
    
    8,440
    
    
    
    (35,668
    )
    
    
    560,037
    
    
    
    5.5
    %U.S. Treasury and government
agencies
    
    
    174,037
    
    
    
    3,355
    
    
    
    (3
    )
    
    
    177,389
    
    
    
    1.8
    %Foreign governments
    
    
    5,254
    
    
    
    1,618
    
    
    
    (87
    )
    
    
    6,785
    
    
    
    0.1
    %Other
    
    
    30,230
    
    
    
    2
    
    
    
    (4,932
    )
    
    
    25,300
    
    
    
    0.2
    %Total Bonds
    
    $
    10,941,397
    
    
    $
    114,297
    
    
    $
    (1,086,154
    )
    
    $
    9,969,540
    
    
    
    100.0
    %
   87




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##### Table of Contents



As of December 31, 2009Amortized
    
    
    
    
    
    
    EstimatedCost
    
    
    Percentage
    
    
    Fair Value
    
    
    PercentageBonds held-to-maturityDue in one year or less
    
    $
    147,317
    
    
    
    1.9
    %
    
    $
    147,303
    
    
    
    1.9
    %Due after one year through five years
    
    
    3,445,659
    
    
    
    46.2
    %
    
    
    3,609,070
    
    
    
    46.8
    %Due after five years through ten years
    
    
    3,130,532
    
    
    
    42.0
    %
    
    
    3,208,615
    
    
    
    41.6
    %Due after ten years
    
    
    732,353
    
    
    
    9.8
    %
    
    
    736,915
    
    
    
    9.6
    %Without single maturity date
    
    
    5,850
    
    
    
    0.1
    %
    
    
    4,573
    
    
    
    0.1
    %Total bonds held-to-maturity
    
    $
    7,461,711
    
    
    
    100.0
    %
    
    $
    7,706,476
    
    
    
    100.0
    %Bonds available-for-saleDue in one year or less
    
    $
    207,074
    
    
    
    5.0
    %
    
    $
    211,138
    
    
    
    5.0
    %Due after one year through five years
    
    
    1,948,476
    
    
    
    47.1
    %
    
    
    1,990,220
    
    
    
    47.2
    %Due after five years through ten years
    
    
    1,426,738
    
    
    
    34.5
    %
    
    
    1,453,903
    
    
    
    34.5
    %Due after ten years
    
    
    543,479
    
    
    
    13.2
    %
    
    
    549,006
    
    
    
    13.1
    %Without single maturity date
    
    
    10,277
    
    
    
    0.2
    %
    
    
    9,283
    
    
    
    0.2
    %Total bonds available-for-sale
    
    $
    4,136,044
    
    
    
    100.0
    %
    
    $
    4,213,550
    
    
    
    100.0
    %Total bonds
    
    $
    11,597,755
    
    
    
    
    
    
    $
    11,920,026
 As of December 31, 2008Amortized
    
    
    
    
    
    
    EstimatedCost
    
    
    Percentage
    
    
    Fair Value
    
    
    PercentageBonds held-to-maturityDue in one year or less
    
    $
    335,885
    
    
    
    5.0
    %
    
    $
    334,044
    
    
    
    5.4
    %Due after one year through five years
    
    
    2,880,344
    
    
    
    43.1
    %
    
    
    2,674,238
    
    
    
    43.5
    %Due after five years through ten years
    
    
    2,722,138
    
    
    
    40.8
    %
    
    
    2,436,099
    
    
    
    39.6
    %Due after ten years
    
    
    737,619
    
    
    
    11.0
    %
    
    
    700,052
    
    
    
    11.4
    %Without single maturity date
    
    
    5,851
    
    
    
    0.1
    %
    
    
    4,270
    
    
    
    0.1
    %Total bonds held-to-maturity
    
    $
    6,681,837
    
    
    
    100.0
    %
    
    $
    6,148,703
    
    
    
    100.0
    %Bonds available-for-saleDue in one year or less
    
    $
    154,877
    
    
    
    3.6
    %
    
    $
    153,727
    
    
    
    4.0
    %Due after one year through five years
    
    
    1,359,792
    
    
    
    31.9
    %
    
    
    1,237,037
    
    
    
    32.4
    %Due after five years through ten years
    
    
    2,012,462
    
    
    
    47.2
    %
    
    
    1,733,270
    
    
    
    45.3
    %Due after ten years
    
    
    722,153
    
    
    
    17.0
    %
    
    
    689,786
    
    
    
    18.1
    %Without single maturity date
    
    
    10,276
    
    
    
    0.3
    %
    
    
    7,017
    
    
    
    0.2
    %Total bonds available-for-sale
    
    $
    4,259,560
    
    
    
    100.0
    %
    
    $
    3,820,837
    
    
    
    100.0
    %Total bonds
    
    $
    10,941,397
    
    
    
    
    
    
    $
    9,969,540
  As of December 31, 2009
    
    
    As of December 31, 2008Amortized
    
    
    Estimated
    
    
    % of Fair
    
    
    Amortized
    
    
    Estimated
    
    
    % of FairCost
    
    
    Fair Value
    
    
    Value
    
    
    Cost
    
    
    Fair Value
    
    
    ValueAAA
    
    $
    1,357,021
    
    
    $
    1,387,783
    
    
    
    11.6
    %
    
    $
    1,671,644
    
    
    $
    1,644,482
    
    
    
    16.5
    %AA
    
    
    927,081
    
    
    
    967,274
    
    
    
    8.1
    %
    
    
    1,044,896
    
    
    
    984,250
    
    
    
    9.9
    %A
    
    
    4,080,455
    
    
    
    4,251,937
    
    
    
    35.7
    %
    
    
    4,278,795
    
    
    
    3,983,117
    
    
    
    40.0
    %BBB
    
    
    4,287,623
    
    
    
    4,428,359
    
    
    
    37.2
    %
    
    
    3,266,507
    
    
    
    2,801,027
    
    
    
    28.1
    %BB
    
    
    356,272
    
    
    
    336,393
    
    
    
    2.8
    %
    
    
    282,298
    
    
    
    222,591
    
    
    
    2.2
    %Below BB
    
    
    589,303
    
    
    
    548,280
    
    
    
    4.6
    %
    
    
    397,257
    
    
    
    334,073
    
    
    
    3.3
    %Total
    
    $
    11,597,755
    
    
    $
    11,920,026
    
    
    
    100.0
    %
    
    $
    10,941,397
    
    
    $
    9,969,540
    
    
    
    100.0
    %
  88




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##### Table of Contents



Mortgage Loans
   December 31,2009
    
    
    2008West South Central
    
    
    22
    %
    
    
    22
    %South Atlantic
    
    
    20
    %
    
    
    17
    %East North Central
    
    
    20
    %
    
    
    22
    %Pacific
    
    
    10
    %
    
    
    13
    %Middle Atlantic
    
    
    8
    %
    
    
    10
    %Mountain
    
    
    6
    %
    
    
    5
    %East South Central
    
    
    6
    %
    
    
    4
    %New England
    
    
    4
    %
    
    
    5
    %West North Central
    
    
    4
    %
    
    
    2
    %Total
    
    
    100
    %
    
    
    100
    %
 December 31,2009
    
    
    2008Office buildings
    
    
    31
    %
    
    
    30
    %Industrial
    
    
    28
    %
    
    
    25
    %Shopping centers
    
    
    19
    %
    
    
    21
    %Hotels and motels
    
    
    15
    %
    
    
    17
    %Other
    
    
    4
    %
    
    
    4
    %Commercial
    
    
    3
    %
    
    
    3
    %Total
    
    
    100
    %
    
    
    100
    %
      89




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##### Table of Contents



Investments Other Than Those Used to Support Our Insurance Business
 Equity Securities
   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
 December 31, 2008Unrealized
    
    
    UnrealizedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueCommon stock
    
    $
    820,908
    
    
    $
    115,692
    
    
    $
    (83,070
    )
    
    $
    853,530Preferred stock
    
    
    60,718
    
    
    
    3,609
    
    
    
    (15,505
    )
    
    
    48,822Total
    
    $
    881,626
    
    
    $
    119,301
    
    
    $
    (98,575
    )
    
    $
    902,352
  December 31,2009
    
    
    2008Consumer goods
    
    
    19
    %
    
    
    20
    %Financials
    
    
    17
    %
    
    
    16
    %Information technology
    
    
    16
    %
    
    
    13
    %Energy and utilities
    
    
    13
    %
    
    
    13
    %Health care
    
    
    12
    %
    
    
    13
    %Industrials
    
    
    9
    %
    
    
    8
    %Mutual funds
    
    
    7
    %
    
    
    10
    %Communication
    
    
    4
    %
    
    
    5
    %Materials
    
    
    3
    %
    
    
    2
    %Total
    
    
    100
    %
    
    
    100
    %
 Other-Than-Temporary Impairments
  90




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##### Table of Contents



Investment in Real Estate
 Other-Than-Temporary Impairments
  December 31,2009
    
    
    2008West South Central
    
    
    58
    %
    
    
    64
    %South Atlantic
    
    
    13
    %
    
    
    16
    %Middle Atlantic
    
    
    10
    %
    
    
    0
    %East North Central
    
    
    8
    %
    
    
    6
    %East South Central
    
    
    7
    %
    
    
    10
    %Pacific
    
    
    2
    %
    
    
    2
    %West North Central
    
    
    1
    %
    
    
    1
    %Mountain
    
    
    1
    %
    
    
    1
    %Total
    
    
    100
    %
    
    
    100
    %
 December 31,2009
    
    
    2008Industrial
    
    
    37
    %
    
    
    45
    %Shopping centers
    
    
    19
    %
    
    
    23
    %Other
    
    
    16
    %
    
    
    11
    %Office buildings
    
    
    15
    %
    
    
    18
    %Commercial
    
    
    11
    %
    
    
    1
    %Hotels and motels
    
    
    2
    %
    
    
    2
    %Total
    
    
    100
    %
    
    
    100
    %
 Policy Loans
   Short-Term Investments
  .
  91




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##### Table of Contents



Net Investment Income and Realized Gains/(Losses):
  Net Investment Income
    
    
    Gains (Losses) on InvestmentsYears Ended December 31,
    
    
    Years Ended December 31,2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    
    
    2007Bonds
    
    $
    627,236
    
    
    $
    623,356
    
    
    $
    620,035
    
    
    $
    (20,000
    )
    
    $
    (157,272
    )
    
    $
    366Preferred stocks
    
    
    3,419
    
    
    
    5,687
    
    
    
    4,561
    
    
    
    (1,590
    )
    
    
    (49,172
    )
    
    
    Common stocks
    
    
    23,324
    
    
    
    28,977
    
    
    
    27,002
    
    
    
    (32,265
    )
    
    
    (164,407
    )
    
    
    23,913Mortgage loans
    
    
    141,124
    
    
    
    118,067
    
    
    
    103,627
    
    
    
    (1,647
    )
    
    
    
    
    
    
    Real estate
    
    
    122,603
    
    
    
    114,198
    
    
    
    126,926
    
    
    
    (9,027
    )
    
    
    1,005
    
    
    
    18,563Other invested assets
    
    
    46,545
    
    
    
    12,123
    
    
    
    40,994
    
    
    
    (7,374
    )
    
    
    (5,977
    )
    
    
    (40
    )964,251
    
    
    
    902,408
    
    
    
    923,145
    
    
    
    (71,903
    )
    
    
    (375,823
    )
    
    
    42,802Investment expense
    
    
    (124,146
    )
    
    
    (106,231
    )
    
    
    (110,176
    )
    
    
    
    
    
    
    
    
    
    
    Increase in valuation
allowances
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,794
    )
    
    
    (3,886
    )
    
    
    (1,775
    )Total
    
    $
    840,105
    
    
    $
    796,177
    
    
    $
    812,969
    
    
    $
    (75,697
    )
    
    $
    (379,709
    )
    
    $
    41,027
  Results of Operations  Annuity
    92




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##### Table of Contents



Unrealized Gains and Losses:
  Part II  Item 8  Financial Statements and Supplementary Data  Note 3  Investments
  93




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##### Table of Contents



ITEM 7A. QUANTIVATIVE 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
 Investments
  94




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##### Table of Contents



Part II  Item 8  Financial Statements and Supplementary Data  Note 3  Investments
 Interest Rate sensitivity analysis:
 Increase/(Decrease) in Market Value Given an Interest rateIncrease/(Decrease) of X Basis Points(100)
    
    
    (50)
    
    
    50
    
    
    100As of December 31, 2009Investment portfolio
    
    $
    489,843
    
    
    $
    245,091
    
    
    $
    (245,773
    )
    
    $
    (489,148
    )As of December 31, 2008Investment portfolio
    
    $
    391,701
    
    
    $
    198,650
    
    
    $
    (203,759
    )
    
    $
    (406,628
    )
      95




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##### Table of Contents



Credit Risk
 Investments
   Equity Risk
  Changes in Accounting Principles
   96




---



##### Table of Contents



Item 8.
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 Index to Annual Consolidated Financial Statements
 Report of Independent Registered Public Accounting Firm
    
    
    98Consolidated Statements of Operations for the years ended December 31, 2009, 2008 and 2007
    
    
    99Consolidated Statements of Financial Position as of December 31, 2009 and 2008
    
    
    100Consolidated Statements of Changes in Equity for the years ended December 31, 2009, 2008 and 2007
    
    
    101Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2009, 2008 and 2007
    
    
    101Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008 and 2007
    
    
    102Notes to Consolidated Financial Statements
    
    
    103
  97




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
     Internal Control  Integrated
Framework
  
  98




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
 Internal Control 
Integrated Framework
    Internal Control  Integrated Framework
   
  99




---



##### Table of Contents



AMERICAN NATIONAL INSURANCE COMPANY
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
  Twelve Months Ended December 31,2009
    
    
    2008
    
    
    2007PREMIUMS AND OTHER REVENUEPremiumsLife
    
    $
    284,530
    
    
    $
    299,338
    
    
    $
    315,893Annuity
    
    
    220,284
    
    
    
    116,248
    
    
    
    222,748Accident and health
    
    
    309,701
    
    
    
    290,883
    
    
    
    283,765Property and casualty
    
    
    1,159,509
    
    
    
    1,182,026
    
    
    
    1,177,217Other policy revenues
    
    
    179,504
    
    
    
    174,899
    
    
    
    155,230Net investment income
    
    
    840,105
    
    
    
    796,177
    
    
    
    812,969Realized investments gains (losses)
    
    
    23,246
    
    
    
    (12,673
    )
    
    
    48,193Other-than-temporary impairments
    
    
    (98,943
    )
    
    
    (367,036
    )
    
    
    (7,166
    )Other income
    
    
    31,843
    
    
    
    38,779
    
    
    
    47,224Total revenues
    
    
    2,949,779
    
    
    
    2,518,641
    
    
    
    3,056,073BENEFITS, LOSSES AND EXPENSESPolicy BenefitsLife
    
    
    297,719
    
    
    
    296,078
    
    
    
    273,750Annuity
    
    
    249,709
    
    
    
    142,867
    
    
    
    249,878Accident and health
    
    
    239,407
    
    
    
    223,055
    
    
    
    209,840Property and casualty
    
    
    923,064
    
    
    
    939,854
    
    
    
    818,230Interest credited to policy account balances
    
    
    370,563
    
    
    
    299,833
    
    
    
    295,894Commissions for acquiring and servicing policies
    
    
    459,943
    
    
    
    475,345
    
    
    
    456,537Other operating costs and expenses
    
    
    485,409
    
    
    
    508,800
    
    
    
    465,140Increase in deferred policy acquisition costs
    
    
    (63,611
    )
    
    
    (67,439
    )
    
    
    (60,442
    )Total benefits, losses and expenses
    
    
    2,962,203
    
    
    
    2,818,393
    
    
    
    2,708,827Income (loss) from continuing operations before federal income tax,
and equity in earnings of unconsolidated affiliates
    
    
    (12,424
    )
    
    
    (299,752
    )
    
    
    347,246Provision (benefit) for federal income taxesCurrent
    
    
    (14,224
    )
    
    
    (34,642
    )
    
    
    80,324Deferred
    
    
    (17,583
    )
    
    
    (87,388
    )
    
    
    25,539Total provision (benefit) for federal income taxes
    
    
    (31,807
    )
    
    
    (122,030
    )
    
    
    105,863Equity in earnings (losses) of unconsolidated affiliates, net of tax
    
    
    (4,216
    )
    
    
    4,965
    
    
    
    3,866Income (loss) from continuing operations
    
    
    15,167
    
    
    
    (172,757
    )
    
    
    245,249Income (loss) from discontinued operations
    
    
    
    
    
    
    18,728
    
    
    
    (4,958
    )Net income (loss)
    
    
    15,167
    
    
    
    (154,029
    )
    
    
    240,291Less:Net income (loss) attributable to noncontrolling interest
    
    
    (458
    )
    
    
    (31
    )
    
    
    (482
    )Net income (loss) attributable to American National Insurance Company
and Subsidiaries
    
    $
    15,625
    
    
    $
    (153,998
    )
    
    $
    240,773Amounts attributable to American National Insurance Company
common stockholdersEarnings (loss) per share:Basic
    
    $
    0.59
    
    
    $
    (5.82
    )
    
    $
    9.09Diluted
    
    $
    0.59
    
    
    $
    (5.82
    )
    
    $
    9.04Unrestricted common shares outstanding
    
    
    26,528,832
    
    
    
    26,479,832
    
    
    
    26,479,832Unrestricted common shares outstanding and
dilutive potential common shares
    
    
    26,597,476
    
    
    
    26,479,832
    
    
    
    26,638,219
 See accompanying notes to consolidated financial statements.
  100




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AMERICAN NATIONAL INSURANCE COMPANY
 
 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
  December 31,2009
    
    
    2008ASSETSInvestments, other than investments in unconsolidated affiliatesFixed Securities:Bonds held-to-maturity
    
    $
    7,461,711
    
    
    $
    6,681,837Bonds available-for-sale
    
    
    4,213,550
    
    
    
    3,820,837Equity securities:Preferred stocks
    
    
    35,717
    
    
    
    48,822Common stocks
    
    
    934,754
    
    
    
    853,530Mortgage loans on real estate, net of allowance
    
    
    2,229,659
    
    
    
    1,877,053Policy loans
    
    
    364,354
    
    
    
    354,398Investment real estate, net of
accumulated depreciation of $209,115 and $191,435
    
    
    635,110
    
    
    
    528,905Short-term investments
    
    
    636,823
    
    
    
    295,170Other invested assets
    
    
    94,442
    
    
    
    85,151Total investments
    
    
    16,606,120
    
    
    
    14,545,703Cash
    
    
    161,483
    
    
    
    66,096Investments in unconsolidated affiliates
    
    
    156,809
    
    
    
    154,309Accrued investment income
    
    
    191,737
    
    
    
    184,801Reinsurance ceded receivables
    
    
    371,654
    
    
    
    482,846Prepaid reinsurance premiums
    
    
    53,545
    
    
    
    61,433Premiums due and other receivables
    
    
    282,865
    
    
    
    325,019Deferred policy acquisition costs
    
    
    1,330,981
    
    
    
    1,482,664Property and equipment, net
    
    
    88,705
    
    
    
    92,458Current federal income taxes
    
    
    29,474
    
    
    
    68,327Deferred federal income taxes
    
    
    5,034
    
    
    
    195,508Other assets
    
    
    152,722
    
    
    
    159,254Separate account assets
    
    
    718,378
    
    
    
    561,021Total assets
    
    $
    20,149,507
    
    
    $
    18,379,439LIABILITIESPolicyholder fundsFuture policy benefits:Life
    
    $
    2,485,886
    
    
    $
    2,436,001Annuity
    
    
    783,065
    
    
    
    664,136Accident and health
    
    
    97,407
    
    
    
    96,548Policy account balances
    
    
    9,567,860
    
    
    
    8,295,527Policy and contract claims
    
    
    1,293,791
    
    
    
    1,401,960Participating policyholder share
    
    
    162,794
    
    
    
    149,970Other policyholder funds
    
    
    919,864
    
    
    
    959,134Total policyholder liabilities
    
    
    15,310,667
    
    
    
    14,003,276Liability for retirement benefits
    
    
    180,909
    
    
    
    184,124Notes payable
    
    
    73,842
    
    
    
    111,922Other liabilities
    
    
    393,302
    
    
    
    376,863Separate account liabilities
    
    
    718,378
    
    
    
    561,021Total liabilities
    
    
    16,677,098
    
    
    
    15,237,206STOCKHOLDERS EQUITYCommon stock, $1.00 par value,  Authorized 50,000,000
Issued 30,832,449, Outstanding 26,820,166 shares
    
    
    30,832
    
    
    
    30,832Additional paid-in capital
    
    
    11,986
    
    
    
    7,552Accumulated other comprehensive income (loss)
    
    
    117,649
    
    
    
    (221,148
    )Retained earnings
    
    
    3,398,492
    
    
    
    3,414,946Treasury stock, at cost
    
    
    (98,505
    )
    
    
    (98,326
    )Total American National stockholders equity
    
    
    3,460,454
    
    
    
    3,133,856Noncontrolling interest
    
    
    11,955
    
    
    
    8,377Total stockholders equity
    
    
    3,472,409
    
    
    
    3,142,233Total liabilities and stockholders equity
    
    $
    20,149,507
    
    
    $
    18,379,439
 See accompanying notes to consolidated financial statements.
  101




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##### Table of Contents



AMERICAN NATIONAL INSURANCE COMPANY
 
 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
  Twelve Months Ended December 31,2009
    
    
    2008
    
    
    2007Common StockBalance at beginning and end of the year
    
    $
    30,832
    
    
    $
    30,832
    
    
    $
    30,832Additional Paid-In CapitalBalance at beginning of the year
    
    
    7,552
    
    
    
    6,080
    
    
    
    4,160Issuance of treasury shares as restricted stock
    
    
    179
    
    
    
    (1,139
    )
    
    
    (79
    )Tax benefit on excess restricted stock
    
    
    439
    
    
    
    
    
    
    
    Amortization of restricted stock
    
    
    3,816
    
    
    
    2,611
    
    
    
    1,999Balance as of December 31,
    
    $
    11,986
    
    
    $
    7,552
    
    
    $
    6,080Accumulated Other Comprehensive IncomeBalance at beginning of the year
    
    
    (221,148
    )
    
    
    145,972
    
    
    
    141,869Change in unrealized gains on marketable securities, net
    
    
    383,098
    
    
    
    (331,828
    )
    
    
    268Cumulative adjustment for accounting change onOther-than-temporary impairments on debt securities
    
    
    (50,411
    )
    
    
    
    
    
    
    Foreign exchange adjustments
    
    
    664
    
    
    
    (247
    )
    
    
    (17
    )Minimum pension liability adjustment
    
    
    5,446
    
    
    
    (35,045
    )
    
    
    3,852Balance as of December 31,
    
    $
    117,649
    
    
    $
    (221,148
    )
    
    $
    145,972Retained EarningsBalance at beginning of the year
    
    
    3,414,946
    
    
    
    3,653,365
    
    
    
    3,498,306Net income
(loss) attributable to American National Insurance Company and
Subsidiaries
    
    
    15,625
    
    
    
    (153,998
    )
    
    
    240,773Cash
dividends to common stockholders ($3.08, $3.08 and $3.05 per share)
    
    
    (82,490
    )
    
    
    (82,651
    )
    
    
    (81,531
    )ASC 740 implementation
    
    
    
    
    
    
    
    
    
    
    (4,183
    )Effect of ASC 715 change in measurement date
    
    
    
    
    
    
    (1,770
    )
    
    
    Cumulative adjustment for accounting change onOther-than-temporary impairments on debt securities
    
    
    50,411
    
    
    
    
    
    
    
    Balance as of December 31,
    
    $
    3,398,492
    
    
    $
    3,414,946
    
    
    $
    3,653,365TreasuryBalance at beginning of the year
    
    
    (98,326
    )
    
    
    (99,465
    )
    
    
    (99,544
    )Net issuance of restricted stock
    
    
    (179
    )
    
    
    1,139
    
    
    
    79Balance as of December 31,
    
    $
    (98,505
    )
    
    $
    (98,326
    )
    
    $
    (99,465
    )Noncontrolling InterestBalance at beginning of the year
    
    
    8,377
    
    
    
    4,539
    
    
    
    1,273Contributions
    
    
    4,392
    
    
    
    4,279
    
    
    
    4,284Distributions
    
    
    (109
    )
    
    
    (427
    )
    
    
    (5,575
    )Gain (loss) attributable to noncontrolling interest
    
    
    (705
    )
    
    
    (14
    )
    
    
    4,557Balance as of December 31,
    
    $
    11,955
    
    
    $
    8,377
    
    
    $
    4,539Total EquityBalance as of December 31,
    
    $
    3,472,409
    
    
    $
    3,142,233
    
    
    $
    3,741,323
 
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
  2009
    
    
    2008
    
    
    2007Net income
(loss) attributable to American National Insurance
Company common stockholders
    
    $
    15,625
    
    
    $
    (153,998
    )
    
    $
    240,773Other comprehensive income (loss), net of taxChange in unrealized gains on marketable securities, net
    
    
    383,098
    
    
    
    (331,828
    )
    
    
    268Foreign exchange adjustments
    
    
    664
    
    
    
    (247
    )
    
    
    (17
    )Defined benefit plans adjustment
    
    
    5,446
    
    
    
    (35,045
    )
    
    
    3,852Total other comprehensive income (loss)
    
    $
    389,208
    
    
    $
    (367,120
    )
    
    $
    4,103Total comprehensive income (loss) attributable to
American National Insurance
Company and Subsidiaries
    
    $
    404,833
    
    
    $
    (521,118
    )
    
    $
    244,876
 See accompanying notes to consolidated financial statements.
  102




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##### Table of Contents



AMERICAN NATIONAL INSURANCE COMPANY
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands)
 Years Ended December 31,2009
    
    
    2008
    
    
    2007OPERATING ACTIVITIESNet income (loss) attributable to American National Insurance Company and Subsidiaries
    
    $
    15,625
    
    
    $
    (153,998
    )
    
    $
    240,773Adjustments to reconcile net income (loss) to net cash provided by operating activities:Realized (gains) losses on investments
    
    
    (23,246
    )
    
    
    12,673
    
    
    
    (46,499
    )Other-than-temporary impairments
    
    
    98,943
    
    
    
    367,036
    
    
    
    Amortization of discounts and premiums on bonds
    
    
    16,215
    
    
    
    16,654
    
    
    
    15,619Net capitalized interest on policy loans and mortgage loans
    
    
    (27,881
    )
    
    
    3,511
    
    
    
    Depreciation
    
    
    44,744
    
    
    
    26,496
    
    
    
    35,327Interest credited to policy account balances
    
    
    370,563
    
    
    
    299,833
    
    
    
    295,894Charges to policy account balances
    
    
    (173,360
    )
    
    
    (191,238
    )
    
    
    (146,555
    )Deferred federal income tax (benefit) expense
    
    
    (17,583
    )
    
    
    (87,388
    )
    
    
    25,539Deferral of policy acquisition costs
    
    
    (477,419
    )
    
    
    (491,342
    )
    
    
    (465,362
    )Amortization of deferred policy acquisition costs
    
    
    413,808
    
    
    
    424,005
    
    
    
    405,024Equity in (earnings) losses of unconsolidated affiliates
    
    
    6,488
    
    
    
    (7,639
    )
    
    
    (5,947
    )Changes in:Policyholder funds liabilities
    
    
    32,629
    
    
    
    88,908
    
    
    
    72,663Reinsurance ceded receivables
    
    
    111,192
    
    
    
    (44,780
    )
    
    
    30,549Premiums due and other receivables
    
    
    42,154
    
    
    
    (38,419
    )
    
    
    9,552Accrued investment income
    
    
    (6,936
    )
    
    
    (1,952
    )
    
    
    (8,562
    )Current federal income tax liability (recoverable)
    
    
    38,853
    
    
    
    (65,182
    )
    
    
    Liability for retirement benefits
    
    
    (3,215
    )
    
    
    6,018
    
    
    
    5,963Prepaid reinsurance premiums
    
    
    7,888
    
    
    
    5,339
    
    
    
    9,298Other, net
    
    
    21,928
    
    
    
    3,146
    
    
    
    (10,363
    )Net cash provided by operating activities
    
    
    491,390
    
    
    
    171,681
    
    
    
    462,913INVESTING ACTIVITIESProceeds from sales of:Bonds available-for-sale
    
    
    82,861
    
    
    
    6,353
    
    
    
    68,004Common stocks
    
    
    182,871
    
    
    
    129,270
    
    
    
    277,429Real estate
    
    
    4,837
    
    
    
    4,500
    
    
    
    84,744Mortgage loans
    
    
    
    
    
    
    2,294
    
    
    
    Other invested assets
    
    
    1,806
    
    
    
    9,896
    
    
    
    104,743Disposals of property and equipment
    
    
    1,608
    
    
    
    1,380
    
    
    
    23,021Distributions from unconsolidated affiliates
    
    
    11,310
    
    
    
    12,332
    
    
    
    17,414Proceeds from maturities of:Bonds available-for-sale
    
    
    273,819
    
    
    
    269,566
    
    
    
    287,559Bonds held-to-maturity
    
    
    561,903
    
    
    
    580,515
    
    
    
    547,416Principal payments received on:Mortgage loans
    
    
    116,365
    
    
    
    144,497
    
    
    
    223,956Policy loans
    
    
    45,591
    
    
    
    9,459
    
    
    
    5,472Purchases of investments:Bonds available-for-sale
    
    
    (166,194
    )
    
    
    (626,623
    )
    
    
    (658,731
    )Bonds held-to-maturity
    
    
    (1,372,246
    )
    
    
    (644,151
    )
    
    
    (483,722
    )Common stocks
    
    
    (53,758
    )
    
    
    (290,979
    )
    
    
    (364,352
    )Real estate
    
    
    (127,281
    )
    
    
    (78,119
    )
    
    
    (46,295
    )Mortgage loans
    
    
    (477,275
    )
    
    
    (520,426
    )
    
    
    (386,137
    )Policy loans
    
    
    (32,129
    )
    
    
    (20,447
    )
    
    
    (10,237
    )Other invested assets
    
    
    (31,572
    )
    
    
    (21,795
    )
    
    
    (50,115
    )Additions to property and equipment
    
    
    (13,178
    )
    
    
    (25,024
    )
    
    
    (18,076
    )Contributions to unconsolidated affiliates
    
    
    (20,042
    )
    
    
    (38,514
    )
    
    
    (64,592
    )Net decrease (increase) in short-term investments
    
    
    (341,653
    )
    
    
    403,092
    
    
    
    19,881Other, net
    
    
    (256
    )
    
    
    2,483
    
    
    
    (14,052
    )Net cash used in investing activities
    
    
    (1,352,613
    )
    
    
    (690,441
    )
    
    
    (436,670
    )FINANCING ACTIVITIESPolicyholders deposits to policy account balances
    
    
    2,268,201
    
    
    
    1,996,836
    
    
    
    1,220,022Policyholders withdrawals from policy account balances
    
    
    (1,191,021
    )
    
    
    (1,446,521
    )
    
    
    (1,250,266
    )Increase (decrease) in notes payable
    
    
    (38,080
    )
    
    
    (16,877
    )
    
    
    4,724Dividends to stockholders
    
    
    (82,490
    )
    
    
    (82,651
    )
    
    
    (81,531
    )Net cash provided by (used in) financing activities
    
    
    956,610
    
    
    
    450,787
    
    
    
    (107,051
    )NET INCREASE (DECREASE) IN CASH
    
    
    95,387
    
    
    
    (67,973
    )
    
    
    (80,808
    )Cash:Beginning of the year
    
    
    66,096
    
    
    
    134,069
    
    
    
    214,877End of year
    
    $
    161,483
    
    
    $
    66,096
    
    
    $
    134,069
 See accompanying notes to consolidated financial statements.
  103




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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. NATURE OF OPERATIONS
  2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES
  BASIS FOR CONSOLIDATION
   (i)
    
    the form of our ownership interest and legal structure;(ii)
    
    our representation on the entitys governing body;(iii)
    
    the size of our investment (including loans);(iv)
    
    estimates of future cash flows;(v)
    
    our ability to participate in policy making decisions, including but not limited to, the
acquisition or disposition of investment properties and the incurrence or refinancing of debt;(vi)
    
    the rights of other investors to participate in the decision making process; and(vii)
    
    the ability for other partners or owners to replace us as manager and/or liquidate the
venture, if applicable.
   104




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
    
    Other-than-temporary impairment (OTTI);
    
    Deferred acquisition costs;
    
    Reserves;
    
    Reinsurance recoverable;
    
    Pension and postretirement benefit plans;
    
    Litigation contingencies; and
    
    Federal income taxes.
  INVESTMENTS
 Debt securities
  Preferred stocks
  Common stocks
  Unrealized gains and losses
  Mortgage loans
    105




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Policy loans
  Investment real estate
    Short-term investments
  Other invested assets
  Impairments
    106




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Derivative instruments and hedging activities
   Investments in unconsolidated affiliates
  CASH
  PROPERTY AND EQUIPMENT
  FOREIGN CURRENCIES
  INSURANCE SPECIFIC ASSETS AND LIABILITIES
 Deferred policy acquisition costs
   107




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Future policy benefits
   Reserves for losses and loss expenses
  PREMIUM REVENUE AND POLICY BENEFITS
 Traditional ordinary life and health
   108




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Annuities
  Universal life and single premium whole life
  Property and casualty
  PARTICIPATING INSURANCE POLICIES
   FEDERAL INCOME TAXES
     109




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STOCK-BASED COMPENSATION
 ,
 SEPARATE ACCOUNT ASSETS AND LIABILITIES
  ADOPTION OF NEW ACCOUNTING STANDARDS
    .
  1010




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111




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112




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FUTURE ADOPTION OF NEW ACCOUNTING STANDARDS
     113




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##### Table of Contents



3. INVESTMENTS
  Gross Unrealized
    
    
    Gross Unrealized
    
    
    Estimated FairDecember 31, 2009
    
    Amortized Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueDebt securitiesBonds held-to-maturity:U.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-sale:U.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 debt securities
    
    $
    11,597,755
    
    
    $
    523,649
    
    
    $
    (201,378
    )
    
    $
    11,920,026Marketable equity securitiesCommon stock:Consumer 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
    )
    
    
    25,170Telecommunication services
    
    
    32,272
    
    
    
    8,118
    
    
    
    (355
    )
    
    
    40,035Mutual funds
    
    
    59,853
    
    
    
    6,426
    
    
    
    (77
    )
    
    
    66,202Total common stock
    
    $
    683,794
    
    
    $
    259,256
    
    
    $
    (8,296
    )
    
    $
    934,754Preferred stock
    
    
    35,359
    
    
    
    5,269
    
    
    
    (4,911
    )
    
    
    35,717Total marketable equity securities
    
    $
    719,153
    
    
    $
    264,525
    
    
    $
    (13,207
    )
    
    $
    970,471Total investments in securities
    
    $
    12,316,908
    
    
    $
    788,174
    
    
    $
    (214,585
    )
    
    $
    12,890,497
  114




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Gross Unrealized
    
    
    Gross Unrealized
    
    
    Estimated FairDecember 31, 2008
    
    Amortized Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueDebt securitiesBonds held-to-maturity:U.S. treasury and other U.S. government
corporations and agencies
    
    $
    11,484
    
    
    $
    346
    
    
    $
    
    
    
    $
    11,830States of the U.S. and political subdivisions
of the states
    
    
    155,420
    
    
    
    4,485
    
    
    
    (1,611
    )
    
    
    158,294Foreign governments
    
    
    28,975
    
    
    
    3,481
    
    
    
    
    
    
    
    32,456Corporate debt securities
    
    
    5,602,250
    
    
    
    48,963
    
    
    
    (532,544
    )
    
    
    5,118,669Residential mortgage backed securities
    
    
    735,025
    
    
    
    13,557
    
    
    
    (39,288
    )
    
    
    709,294Commercial mortgage backed securities
    
    
    32,110
    
    
    
    
    
    
    
    (24,368
    )
    
    
    7,742Collateralized debt securities
    
    
    39,768
    
    
    
    330
    
    
    
    (5,274
    )
    
    
    34,824Other debt securities
    
    
    76,805
    
    
    
    81
    
    
    
    (1,292
    )
    
    
    75,594Total bonds held-to-maturity
    
    $
    6,681,837
    
    
    $
    71,243
    
    
    $
    (604,377
    )
    
    $
    6,148,703Bonds available-for-sale:U.S. treasury and other U.S. government
corporations and agencies
    
    
    3,462
    
    
    
    900
    
    
    
    
    
    
    
    4,362States of the U.S. and political subdivisions
of the states
    
    
    591,405
    
    
    
    6,281
    
    
    
    (19,477
    )
    
    
    578,209Foreign governments
    
    
    5,000
    
    
    
    2,332
    
    
    
    
    
    
    
    7,332Corporate debt securities
    
    
    3,195,355
    
    
    
    29,053
    
    
    
    (441,400
    )
    
    
    2,783,008Residential mortgage backed securities
    
    
    427,460
    
    
    
    4,355
    
    
    
    (14,618
    )
    
    
    417,197Collateralized debt securities
    
    
    25,649
    
    
    
    133
    
    
    
    (4,710
    )
    
    
    21,072Other debt securities
    
    
    11,229
    
    
    
    
    
    
    
    (1,572
    )
    
    
    9,657Total bonds available-for-sale
    
    $
    4,259,560
    
    
    $
    43,054
    
    
    $
    (481,777
    )
    
    $
    3,820,837Total debt securities
    
    $
    10,941,397
    
    
    $
    114,297
    
    
    $
    (1,086,154
    )
    
    $
    9,969,540Marketable equity securitiesCommon stock:Consumer goods
    
    
    159,068
    
    
    
    23,558
    
    
    
    (15,093
    )
    
    
    167,533Energy and utilities
    
    
    97,103
    
    
    
    25,105
    
    
    
    (8,889
    )
    
    
    113,319Finance
    
    
    128,866
    
    
    
    17,824
    
    
    
    (13,048
    )
    
    
    133,642Healthcare
    
    
    94,807
    
    
    
    21,076
    
    
    
    (6,380
    )
    
    
    109,503Industrials
    
    
    72,360
    
    
    
    10,786
    
    
    
    (9,618
    )
    
    
    73,528Information technology
    
    
    111,976
    
    
    
    7,910
    
    
    
    (15,207
    )
    
    
    104,679Materials
    
    
    30,725
    
    
    
    1,685
    
    
    
    (6,886
    )
    
    
    25,524Telecommunication services
    
    
    39,171
    
    
    
    5,359
    
    
    
    (3,840
    )
    
    
    40,690Mutual funds
    
    
    86,832
    
    
    
    2,389
    
    
    
    (4,109
    )
    
    
    85,112Total common stock
    
    $
    820,908
    
    
    $
    115,692
    
    
    $
    (83,070
    )
    
    $
    853,530Preferred stock
    
    
    60,718
    
    
    
    3,609
    
    
    
    (15,505
    )
    
    
    48,822Total marketable equity securities
    
    $
    881,626
    
    
    $
    119,301
    
    
    $
    (98,575
    )
    
    $
    902,352Total investments in securities
    
    $
    11,823,023
    
    
    $
    233,598
    
    
    $
    (1,184,729
    )
    
    $
    10,871,892
  115




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Debt securities
  Bonds Held-to-Maturity
    
    
    Bonds Available-for-SaleAmortized
    
    
    Estimated
    
    
    Amortized
    
    
    EstimatedCost
    
    
    Fair Value
    
    
    Cost
    
    
    Fair ValueDue in one year or less
    
    $
    147,317
    
    
    $
    147,303
    
    
    $
    207,074
    
    
    $
    211,138Due after one year through five years
    
    
    3,445,659
    
    
    
    3,609,070
    
    
    
    1,948,476
    
    
    
    1,990,220Due after five years through ten years
    
    
    3,130,532
    
    
    
    3,208,615
    
    
    
    1,426,738
    
    
    
    1,453,903Due after ten years
    
    
    732,353
    
    
    
    736,915
    
    
    
    543,479
    
    
    
    549,006$
    7,455,861
    
    
    $
    7,701,903
    
    
    $
    4,125,767
    
    
    $
    4,204,267Without single maturity date
    
    
    5,850
    
    
    
    4,573
    
    
    
    10,277
    
    
    
    9,283Total
    
    $
    7,461,711
    
    
    $
    7,706,476
    
    
    $
    4,136,044
    
    
    $
    4,213,550
  2009
    
    
    2008
    
    
    2007Proceeds from sales of available-for-sale securities
    
    $
    265,732
    
    
    $
    135,623
    
    
    $
    166,493Gross realized gains
    
    
    42,101
    
    
    
    22,496
    
    
    
    34,033Gross realized losses
    
    
    (11,351
    )
    
    
    (31,304
    )
    
    
    (2,069
    )
       116




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Derivative Instruments
  Location of Asset (Liability)
    
    Estimated Fair ValueDerivatives Not Designated as
    
    Reported in the Statements of
    
    For the Years Ended December 31,Hedging  Instruments
    
    Financial Position
    
    2009
    
    
    2008Equity indexed options
    
    Other invested assets
    
    $
    32,801
    
    
    $
    6,157Equity indexed annuity
embedded derivative
    
    Future policy benefits  Annuity
    
    $
    (22,487
    )
    
    $
    (6,208
    )
 Location of Gain (Loss)
    
    Amount of Gain (Loss) Recognized in Income    on DerivativesDerivatives Not Designated as
    
    Recognized in
    
    For the Years Ended December 31,Hedging  Instruments
    
    the Statements of Operations
    
    2009
    
    
    2008
    
    
    2007Equity indexed options
    
    Investment income
    
    $
    5,380
    
    
    $
    (24,400
    )
    
    $
    (141
    )Equity indexed annuity embedded derivative
    
    Policy benefits  Annuity
    
    $
    (8,138
    )
    
    $
    23,184
    
    
    $
    434
 Unrealized gains and (losses) on securities
   2009
    
    
    2008
    
    
    2007Bonds available-for-sale
    
    $
    516,229
    
    
    $
    (393,429
    )
    
    $
    (4,443
    )Preferred stocks
    
    
    12,254
    
    
    
    (3,359
    )
    
    
    (9,544
    )Common stocks
    
    
    218,338
    
    
    
    (295,988
    )
    
    
    11,161Amortization of deferred policy acquisition costs
    
    
    (215,294
    )
    
    
    164,937
    
    
    
    3,080531,527
    
    
    
    (527,839
    )
    
    
    254Provision (benefit) for federal income taxes
    
    
    185,700
    
    
    
    (185,273
    )
    
    
    130$
    345,827
    
    
    $
    (342,566
    )
    
    $
    124Change in unrealized gains (losses) of investments
attributable to participating policyholders interest
    
    
    (13,140
    )
    
    
    10,738
    
    
    
    144Impact of adoption of Recognition and Presentation of Other-Than-Temporary Impairments, FASB ASC Topic 320
    
    
    50,411Total
    
    $
    383,098
    
    
    $
    (331,828
    )
    
    $
    268
  117




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##### Table of Contents



Less than 12 months
    
    
    12 Months or more
    
    
    TotalUnrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    FairDecember 31, 2009
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    ValueDebt securitiesBonds held-to-maturity:U.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-sale:States 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 debt securities
    
    $
    30,513
    
    
    $
    1,042,204
    
    
    $
    170,865
    
    
    $
    1,471,927
    
    
    $
    201,378
    
    
    $
    2,514,131Marketable equity securitiesCommon stock:Consumer 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
    
    
    
    498Telecommunications services
    
    
    232
    
    
    
    3,188
    
    
    
    123
    
    
    
    2,542
    
    
    
    355
    
    
    
    5,730Mutual funds
    
    
    77
    
    
    
    4,372
    
    
    
    
    
    
    
    
    
    
    
    77
    
    
    
    4,372Total 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 marketable 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
  118




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##### Table of Contents



Less than 12 months
    
    
    12 Months or more
    
    
    TotalUnrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    FairDecember 31, 2008
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    ValueDebt securitiesBonds held-to-maturity:States of the U.S. and political
subdivisions
of the states
    
    $
    1,571
    
    
    $
    21,104
    
    
    $
    40
    
    
    $
    383
    
    
    $
    1,611
    
    
    $
    21,487Corporate debt securities
    
    
    280,110
    
    
    
    2,685,787
    
    
    
    252,434
    
    
    
    928,186
    
    
    
    532,544
    
    
    
    3,613,973Residential mortgage backed securities
    
    
    31,471
    
    
    
    186,404
    
    
    
    7,817
    
    
    
    50,425
    
    
    
    39,288
    
    
    
    236,829Commercial mortgage backed securities
    
    
    24,368
    
    
    
    7,742
    
    
    
    
    
    
    
    
    
    
    
    24,368
    
    
    
    7,742Collateralized debt securities
    
    
    613
    
    
    
    4,785
    
    
    
    4,661
    
    
    
    23,844
    
    
    
    5,274
    
    
    
    28,629Other debt securities
    
    
    1,292
    
    
    
    9,566
    
    
    
    
    
    
    
    
    
    
    
    1,292
    
    
    
    9,566Total bonds held-to-maturity
    
    $
    339,425
    
    
    $
    2,915,388
    
    
    $
    264,952
    
    
    $
    1,002,838
    
    
    $
    604,377
    
    
    $
    3,918,226Bonds available-for-sale:States of the U.S. and political
subdivisions
of the states
    
    
    15,383
    
    
    
    274,191
    
    
    
    4,094
    
    
    
    35,295
    
    
    
    19,477
    
    
    
    309,486Corporate debt securities
    
    
    247,590
    
    
    
    1,683,287
    
    
    
    193,810
    
    
    
    643,327
    
    
    
    441,400
    
    
    
    2,326,614Residential mortgage backed securities
    
    
    8,067
    
    
    
    102,382
    
    
    
    6,551
    
    
    
    51,327
    
    
    
    14,618
    
    
    
    153,709Collateralized debt securities
    
    
    1,822
    
    
    
    10,295
    
    
    
    2,888
    
    
    
    8,529
    
    
    
    4,710
    
    
    
    18,824Other debt securities
    
    
    1,572
    
    
    
    9,657
    
    
    
    
    
    
    
    
    
    
    
    1,572
    
    
    
    9,657Total bonds available-for-sale
    
    $
    274,434
    
    
    $
    2,079,812
    
    
    $
    207,343
    
    
    $
    738,478
    
    
    $
    481,777
    
    
    $
    2,818,290Total debt securities
    
    $
    613,859
    
    
    $
    4,995,200
    
    
    $
    472,295
    
    
    $
    1,741,316
    
    
    $
    1,086,154
    
    
    $
    6,736,516Marketable equity securitiesCommon stock:Consumer goods
    
    
    13,717
    
    
    
    66,398
    
    
    
    1,376
    
    
    
    5,014
    
    
    
    15,093
    
    
    
    71,412Energy and utilities
    
    
    8,203
    
    
    
    24,909
    
    
    
    686
    
    
    
    2,818
    
    
    
    8,889
    
    
    
    27,727Finance
    
    
    12,729
    
    
    
    49,150
    
    
    
    319
    
    
    
    1,190
    
    
    
    13,048
    
    
    
    50,340Healthcare
    
    
    5,177
    
    
    
    29,429
    
    
    
    1,203
    
    
    
    5,826
    
    
    
    6,380
    
    
    
    35,255Industrials
    
    
    9,496
    
    
    
    23,880
    
    
    
    122
    
    
    
    593
    
    
    
    9,618
    
    
    
    24,473Information technology
    
    
    13,859
    
    
    
    57,237
    
    
    
    1,348
    
    
    
    2,583
    
    
    
    15,207
    
    
    
    59,820Materials
    
    
    6,665
    
    
    
    15,164
    
    
    
    221
    
    
    
    456
    
    
    
    6,886
    
    
    
    15,620Telecommunications services
    
    
    3,838
    
    
    
    16,570
    
    
    
    2
    
    
    
    7
    
    
    
    3,840
    
    
    
    16,577Mutual funds
    
    
    4,107
    
    
    
    16,775
    
    
    
    2
    
    
    
    6
    
    
    
    4,109
    
    
    
    16,781Total common stock
    
    $
    77,791
    
    
    $
    299,512
    
    
    $
    5,279
    
    
    $
    18,493
    
    
    $
    83,070
    
    
    $
    318,005Preferred stock
    
    
    1,238
    
    
    
    7,853
    
    
    
    14,267
    
    
    
    31,835
    
    
    
    15,505
    
    
    
    39,688Total marketable equity securities
    
    $
    79,029
    
    
    $
    307,365
    
    
    $
    19,546
    
    
    $
    50,328
    
    
    $
    98,575
    
    
    $
    357,693Total investments in securities
    
    $
    692,888
    
    
    $
    5,302,565
    
    
    $
    491,841
    
    
    $
    1,791,644
    
    
    $
    1,184,729
    
    
    $
    7,094,209
  Bonds
 .
  119




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##### Table of Contents



Marketable equity securities
  Mortgage loans
   Policy loans
  Net investment income and realized investments gains (losses)
  Net Investment Income
    
    
    Realized Investments Gains/(Losses)2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    
    
    2007Bonds
    
    $
    627,236
    
    
    $
    623,356
    
    
    $
    620,035
    
    
    $
    (9,954
    )
    
    $
    8,531
    
    
    $
    1,455Preferred stocks
    
    
    3,419
    
    
    
    5,687
    
    
    
    4,561
    
    
    
    (1,590
    )
    
    
    (5,307
    )
    
    
    Common stocks
    
    
    23,324
    
    
    
    28,977
    
    
    
    27,002
    
    
    
    36,792
    
    
    
    (8,524
    )
    
    
    29,990Mortgage loans
    
    
    141,124
    
    
    
    118,067
    
    
    
    103,627
    
    
    
    
    
    
    
    
    
    
    
    Real estate
    
    
    122,603
    
    
    
    114,198
    
    
    
    126,926
    
    
    
    1,523
    
    
    
    1,750
    
    
    
    18,563Options
    
    
    5,380
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other invested assets
    
    
    41,165
    
    
    
    12,123
    
    
    
    40,994
    
    
    
    269
    
    
    
    (5,977
    )
    
    
    (40
    )964,251
    
    
    
    902,408
    
    
    
    923,145
    
    
    
    27,040
    
    
    
    (9,527
    )
    
    
    49,968Investment expenses
    
    
    (124,146
    )
    
    
    (106,231
    )
    
    
    (110,176
    )
    
    
    
    
    
    
    
    
    
    
    Increase in valuation
allowances
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,794
    )
    
    
    (3,146
    )
    
    
    (1,775
    )Total
    
    $
    840,105
    
    
    $
    796,177
    
    
    $
    812,969
    
    
    $
    23,246
    
    
    $
    (12,673
    )
    
    $
    48,193
  120




---



##### Table of Contents



Other-than-temporary impairments
  Year Ended December 31,2009
    
    
    2008
    
    
    2007Bonds
    
    $
    (10,046
    )
    
    $
    (165,803
    )
    
    $
    (1,089
    )Stocks
    
    
    (69,057
    )
    
    
    (199,748
    )
    
    
    (6,077
    )Mortgage loans
    
    
    (1,647
    )
    
    
    (740
    )
    
    
    Real estate
    
    
    (10,550
    )
    
    
    (745
    )
    
    
    Other invested assets
    
    
    (7,643
    )
    
    
    
    
    
    
    Total
    
    $
    (98,943
    )
    
    $
    (367,036
    )
    
    $
    (7,166
    )
   4. CREDIT RISK MANAGEMENT
  Bonds
  2009
    
    
    2008AAA
    
    
    12
    %
    
    
    17
    %AA+
    
    
    2
    %
    
    
    1
    %AA
    
    
    2
    %
    
    
    6
    %AA-
    
    
    5
    %
    
    
    4
    %A+
    
    
    8
    %
    
    
    11
    %A
    
    
    14
    %
    
    
    16
    %A-
    
    
    14
    %
    
    
    13
    %BBB+
    
    
    13
    %
    
    
    11
    %BBB
    
    
    16
    %
    
    
    12
    %BBB-
    
    
    8
    %
    
    
    4
    %BB+ and below
    
    
    6
    %
    
    
    5
    %Total
    
    
    100
    %
    
    
    100
    %
  121




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##### Table of Contents



Common stock
  2009
    
    
    2008Consumer goods
    
    
    19
    %
    
    
    20
    %Financials
    
    
    17
    %
    
    
    16
    %Information technology
    
    
    16
    %
    
    
    13
    %Energy and utilities
    
    
    13
    %
    
    
    13
    %Healthcare
    
    
    12
    %
    
    
    13
    %Industrials
    
    
    9
    %
    
    
    8
    %Mutual funds
    
    
    7
    %
    
    
    10
    %Communications
    
    
    4
    %
    
    
    5
    %Materials
    
    
    3
    %
    
    
    2
    %Total
    
    
    100
    %
    
    
    100
    %
 Mortgage loans and investment real estate
   Mortgage Loans
    
    
    Investment Real Estate2009
    
    
    2008
    
    
    2009
    
    
    2008Office buildings
    
    
    31
    %
    
    
    30
    %
    
    
    15
    %
    
    
    18
    %Industrial
    
    
    28
    %
    
    
    25
    %
    
    
    37
    %
    
    
    45
    %Shopping centers
    
    
    19
    %
    
    
    21
    %
    
    
    19
    %
    
    
    23
    %Hotels and motels
    
    
    15
    %
    
    
    17
    %
    
    
    2
    %
    
    
    2
    %Other
    
    
    4
    %
    
    
    4
    %
    
    
    16
    %
    
    
    11
    %Commercial
    
    
    3
    %
    
    
    3
    %
    
    
    11
    %
    
    
    1
    %Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
  Mortgage Loans
    
    
    Investment Real Estate2009
    
    
    2008
    
    
    2009
    
    
    2008West South Central
    
    
    22
    %
    
    
    22
    %
    
    
    58
    %
    
    
    64
    %East North Central
    
    
    20
    %
    
    
    22
    %
    
    
    8
    %
    
    
    6
    %South Atlantic
    
    
    20
    %
    
    
    17
    %
    
    
    13
    %
    
    
    16
    %Pacific
    
    
    10
    %
    
    
    13
    %
    
    
    2
    %
    
    
    2
    %Middle Atlantic
    
    
    8
    %
    
    
    10
    %
    
    
    10
    %
    
    
    0
    %Mountain
    
    
    6
    %
    
    
    5
    %
    
    
    1
    %
    
    
    1
    %East South Central
    
    
    6
    %
    
    
    4
    %
    
    
    7
    %
    
    
    10
    %New England
    
    
    4
    %
    
    
    5
    %
    
    
    0
    %
    
    
    0
    %West North Central
    
    
    4
    %
    
    
    2
    %
    
    
    1
    %
    
    
    1
    %Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
  122




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##### Table of Contents



5. FAIR VALUE OF FINANCIAL INSTRUMENTS
  December 31, 2009
    
    
    December 31, 2008Carrying
    
    
    Estimated
    
    
    Carrying
    
    
    EstimatedAmount
    
    
    Fair Value
    
    
    Amount
    
    
    Fair ValueFinancial assets:Fixed maturitiesHeld-to-maturity:U.S. treasury and other U.S. government
corporations and agencies
    
    $
    21,222
    
    
    $
    21,347
    
    
    $
    11,484
    
    
    $
    11,830States of the U.S. and political
subdivisions
of the states
    
    
    240,403
    
    
    
    247,878
    
    
    
    155,420
    
    
    
    158,294Foreign governments
    
    
    28,997
    
    
    
    32,603
    
    
    
    28,975
    
    
    
    32,456Corporate debt securities
    
    
    6,390,377
    
    
    
    6,644,056
    
    
    
    5,602,250
    
    
    
    5,118,669Residential mortgage backed securities
    
    
    693,178
    
    
    
    695,972
    
    
    
    735,025
    
    
    
    709,294Commercial mortgage backed securities
    
    
    33,128
    
    
    
    9,187
    
    
    
    32,110
    
    
    
    7,742Collateralized debt securities
    
    
    9,627
    
    
    
    8,676
    
    
    
    39,768
    
    
    
    34,824Other debt securities
    
    
    44,779
    
    
    
    46,757
    
    
    
    76,805
    
    
    
    75,594Total fixed maturities,
held-to-maturity
    
    $
    7,461,711
    
    
    $
    7,706,476
    
    
    $
    6,681,837
    
    
    $
    6,148,703Available-for-sale:U.S. treasury and other U.S. government
corporations and agencies
    
    
    3,886
    
    
    
    3,886
    
    
    
    4,362
    
    
    
    4,362States of the U.S. and political
subdivisions
of the states
    
    
    558,035
    
    
    
    558,035
    
    
    
    578,209
    
    
    
    578,209Foreign governments
    
    
    6,188
    
    
    
    6,188
    
    
    
    7,332
    
    
    
    7,332Corporate debt securities
    
    
    3,253,012
    
    
    
    3,253,012
    
    
    
    2,783,008
    
    
    
    2,783,008Residential mortgage backed securities
    
    
    355,565
    
    
    
    355,565
    
    
    
    417,197
    
    
    
    417,197Collateralized debt securities
    
    
    22,494
    
    
    
    22,494
    
    
    
    21,072
    
    
    
    21,072Other debt securities
    
    
    14,370
    
    
    
    14,370
    
    
    
    9,657
    
    
    
    9,657Total fixed maturities,
available-for-sale
    
    $
    4,213,550
    
    
    $
    4,213,550
    
    
    $
    3,820,837
    
    
    $
    3,820,837Total fixed maturities
    
    $
    11,675,261
    
    
    $
    11,920,026
    
    
    $
    10,502,674
    
    
    $
    9,969,540Marketable equity securitiesCommon stock:Consumer goods
    
    
    174,120
    
    
    
    174,120
    
    
    
    167,533
    
    
    
    167,533Energy and utilities
    
    
    124,770
    
    
    
    124,770
    
    
    
    113,319
    
    
    
    113,319Finance
    
    
    156,744
    
    
    
    156,744
    
    
    
    133,642
    
    
    
    133,642Healthcare
    
    
    110,121
    
    
    
    110,121
    
    
    
    109,503
    
    
    
    109,503Industrials
    
    
    87,430
    
    
    
    87,430
    
    
    
    73,528
    
    
    
    73,528Information technology
    
    
    150,162
    
    
    
    150,162
    
    
    
    104,679
    
    
    
    104,679Materials
    
    
    25,170
    
    
    
    25,170
    
    
    
    25,524
    
    
    
    25,524Mutual funds
    
    
    66,202
    
    
    
    66,202
    
    
    
    85,112
    
    
    
    85,112Telecommunication services
    
    
    40,035
    
    
    
    40,035
    
    
    
    40,690
    
    
    
    40,690Preferred stock
    
    
    35,717
    
    
    
    35,717
    
    
    
    48,822
    
    
    
    48,822Total marketable equity securities
    
    $
    970,471
    
    
    $
    970,471
    
    
    $
    902,352
    
    
    $
    902,352Options
    
    
    32,801
    
    
    
    32,801
    
    
    
    6,157
    
    
    
    6,157Mortgage loans on real estate, net of allowance
    
    
    2,229,659
    
    
    
    2,267,157
    
    
    
    1,877,053
    
    
    
    1,891,895Policy loans
    
    
    364,354
    
    
    
    364,354
    
    
    
    354,398
    
    
    
    354,398Short-term investments
    
    
    636,823
    
    
    
    636,823
    
    
    
    295,170
    
    
    
    295,170Total financial assets
    
    $
    15,909,369
    
    
    $
    16,191,632
    
    
    $
    13,937,804
    
    
    $
    13,419,512Financial liabilities:Investment contracts
    
    
    7,828,243
    
    
    
    7,828,243
    
    
    
    6,626,561
    
    
    
    6,626,561Liability for embedded derivatives of
equity indexed annuities
    
    
    22,487
    
    
    
    22,487
    
    
    
    6,208
    
    
    
    6,208Notes payable
    
    
    73,842
    
    
    
    73,842
    
    
    
    111,922
    
    
    
    111,922Total financial liabilities
    
    $
    7,924,572
    
    
    $
    7,924,572
    
    
    $
    6,744,691
    
    
    $
    6,744,691
  123




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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.
 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.
       124




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125




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Fair Value Measurement at December 31, 2009 Using:QuotedPrices inActive
    
    
    SignificantMarkets for
    
    
    Other
    
    
    SignificantFair Value at
    
    
    Identical
    
    
    Observable
    
    
    UnobservableDecember 31,
    
    
    Assets
    
    
    Inputs
    
    
    Inputs2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Financial assets:Fixed maturitiesHeld-to-maturity:U.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 fixed maturities, held-to-maturity
    
    $
    7,706,476
    
    
    $
    
    
    
    $
    7,686,485
    
    
    $
    19,991Available-for-sale:U.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 fixed maturities,
available-for-sale
    
    $
    4,213,550
    
    
    $
    
    
    
    $
    4,197,169
    
    
    $
    16,381Total fixed maturities
    
    $
    11,920,026
    
    
    $
    
    
    
    $
    11,883,654
    
    
    $
    36,372Marketable equity securitiesCommon stock:Consumer 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 marketable equity securities
    
    $
    970,471
    
    
    $
    969,877
    
    
    $
    
    
    
    $
    594Options
    
    
    32,801
    
    
    
    
    
    
    
    
    
    
    
    32,801Mortgage loans on real estate, net of allowance
    
    
    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
  126




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Fair Value Measurement at December 31, 2008 Using:QuotedPrices inActive
    
    
    SignificantMarkets for
    
    
    Other
    
    
    SignificantFair Value at
    
    
    Identical
    
    
    Observable
    
    
    UnobservableDecember 31,
    
    
    Assets
    
    
    Inputs
    
    
    Inputs2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Financial assets:Fixed maturitiesHeld-to-maturity:U.S. treasury and other U.S. government
corporations and agencies
    
    $
    11,830
    
    
    $
    
    
    
    $
    11,830
    
    
    $
    States of the U.S. and political subdivisions
of the states
    
    
    158,294
    
    
    
    
    
    
    
    158,294
    
    
    
    Foreign governments
    
    
    32,456
    
    
    
    
    
    
    
    32,456
    
    
    
    Corporate debt securities
    
    
    5,118,669
    
    
    
    
    
    
    
    5,111,068
    
    
    
    7,601Residential mortgage backed securities
    
    
    709,294
    
    
    
    
    
    
    
    705,491
    
    
    
    3,803Commercial mortgage backed securities
    
    
    7,742
    
    
    
    
    
    
    
    7,742
    
    
    
    Collateralized debt securities
    
    
    34,824
    
    
    
    
    
    
    
    26,117
    
    
    
    8,707Other debt securities
    
    
    75,594
    
    
    
    
    
    
    
    75,584
    
    
    
    10Total fixed maturities, held-to-maturity
    
    $
    6,148,703
    
    
    $
    
    
    
    $
    6,128,582
    
    
    $
    20,121Available-for-sale:U.S. treasury and other U.S. government
corporations and agencies
    
    
    4,362
    
    
    
    
    
    
    
    4,362
    
    
    
    States of the U.S. and political subdivisions
of the states
    
    
    578,209
    
    
    
    
    
    
    
    578,209
    
    
    
    Foreign governments
    
    
    7,332
    
    
    
    
    
    
    
    7,332
    
    
    
    Corporate debt securities
    
    
    2,783,008
    
    
    
    
    
    
    
    2,752,640
    
    
    
    30,368Residential mortgage backed securities
    
    
    417,197
    
    
    
    
    
    
    
    407,753
    
    
    
    9,444Commercial mortgage backed securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Collateralized debt securities
    
    
    21,072
    
    
    
    
    
    
    
    18,062
    
    
    
    3,010Other debt securities
    
    
    9,657
    
    
    
    
    
    
    
    9,657
    
    
    
    Total fixed maturities, available-for-sale
    
    $
    3,820,837
    
    
    $
    
    
    
    $
    3,778,015
    
    
    $
    42,822Total fixed maturities
    
    $
    9,969,540
    
    
    $
    
    
    
    $
    9,906,597
    
    
    $
    62,943Marketable equity securitiesCommon stock:Consumer goods
    
    
    167,533
    
    
    
    167,533
    
    
    
    
    
    
    
    Energy and utilities
    
    
    113,319
    
    
    
    113,319
    
    
    
    
    
    
    
    Finance
    
    
    133,642
    
    
    
    133,642
    
    
    
    
    
    
    
    Healthcare
    
    
    109,503
    
    
    
    109,503
    
    
    
    
    
    
    
    Industrials
    
    
    73,528
    
    
    
    73,528
    
    
    
    
    
    
    
    Information technology
    
    
    104,679
    
    
    
    104,679
    
    
    
    
    
    
    
    Materials
    
    
    25,524
    
    
    
    25,524
    
    
    
    
    
    
    
    Mutual funds
    
    
    85,112
    
    
    
    85,112
    
    
    
    
    
    
    
    Telecommunication services
    
    
    40,690
    
    
    
    40,690
    
    
    
    
    
    
    
    Preferred stock
    
    
    48,822
    
    
    
    27,566
    
    
    
    
    
    
    
    21,256Total marketable equity securities
    
    $
    902,352
    
    
    $
    881,096
    
    
    $
    
    
    
    $
    21,256Options
    
    
    6,157
    
    
    
    
    
    
    
    
    
    
    
    6,157Mortgage loans on real estate, net of allowance
    
    
    1,891,895
    
    
    
    
    
    
    
    1,891,895
    
    
    
    Short-term investments
    
    
    295,170
    
    
    
    
    
    
    
    295,170
    
    
    
    Total financial assets
    
    $
    13,065,114
    
    
    $
    881,096
    
    
    $
    12,093,662
    
    
    $
    90,356Financial liabilities:Liability for embedded derivatives of
equity indexed annuities
    
    
    6,208
    
    
    
    
    
    
    
    
    
    
    
    6,208Total financial liabilities
    
    $
    6,208
    
    
    $
    
    
    
    $
    
    
    
    $
    6,208
  127




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Fair Value Measurements UsingSignificant Unobservable InputsLevel 3 TotalsBeginning balance  January 1, 2009
    
    $
    84,148Net gains included in other comprehensive income
    
    
    9,022Net gain (loss) for derivatives included in net investment income
    
    
    (18,267
    )Purchases, sales, and settlements of derivatives (net)
    
    
    21,413Transfers into Level 3
    
    
    175Transfers out of Level 3
    
    
    (49,211
    )Ending balance  December 31, 2009
    
    $
    47,280
    128




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##### Table of Contents



6. DEFERRED POLICY ACQUISITION COSTS
  Life
    
    
    Accident
    
    
    Property& Annuity
    
    
    & Health
    
    
    & Casualty
    
    
    TotalBalance at December 31, 2006
    
    $
    981,035
    
    
    $
    85,666
    
    
    $
    121,178
    
    
    $
    1,187,879Additions
    
    
    216,660
    
    
    
    18,735
    
    
    
    232,138
    
    
    
    467,533Amortization
    
    
    (156,017
    )
    
    
    (24,508
    )
    
    
    (224,499
    )
    
    
    (405,024
    )Effect of change in unrealized gains
on available-for-sale securities
    
    
    3,080
    
    
    
    
    
    
    
    
    
    
    
    3,080Net changes
    
    
    63,723
    
    
    
    (5,773
    )
    
    
    7,639
    
    
    
    65,589Acquisitions
    
    
    (2,170
    )
    
    
    
    
    
    
    
    
    
    
    (2,170
    )Foreign exchange effect
    
    
    (13
    )
    
    
    
    
    
    
    
    
    
    
    (13
    )Balance at December 31, 2007
    
    $
    1,042,575
    
    
    $
    79,893
    
    
    $
    128,817
    
    
    $
    1,251,285Additions
    
    
    225,575
    
    
    
    22,762
    
    
    
    243,005
    
    
    
    491,342Amortization
    
    
    (162,884
    )
    
    
    (27,785
    )
    
    
    (233,336
    )
    
    
    (424,005
    )Effect of change in unrealized gains
on available-for-sale securities
    
    
    164,937
    
    
    
    
    
    
    
    
    
    
    
    164,937Net changes
    
    
    227,628
    
    
    
    (5,023
    )
    
    
    9,669
    
    
    
    232,274Acquisitions
    
    
    (729
    )
    
    
    
    
    
    
    
    
    
    
    (729
    )Foreign exchange effect
    
    
    (166
    )
    
    
    
    
    
    
    
    
    
    
    (166
    )Balance at December 31, 2008
    
    $
    1,269,308
    
    
    $
    74,870
    
    
    $
    138,486
    
    
    $
    1,482,664Additions
    
    
    203,930
    
    
    
    16,729
    
    
    
    256,758
    
    
    
    477,417Amortization
    
    
    (143,453
    )
    
    
    (21,746
    )
    
    
    (248,607
    )
    
    
    (413,806
    )Effect of change in unrealized losses
on available-for-sale securities
    
    
    (215,294
    )
    
    
    
    
    
    
    
    
    
    
    (215,294
    )Net changes
    
    
    (154,817
    )
    
    
    (5,017
    )
    
    
    8,151
    
    
    
    (151,683
    )Balance at December 31, 2009
    
    $
    1,114,491
    
    
    $
    69,853
    
    
    $
    146,637
    
    
    $
    1,330,9812009 Premiums
    
    $
    504,814
    
    
    $
    309,701
    
    
    $
    1,159,509
    
    
    $
    1,974,0242008 Premiums
    
    $
    415,586
    
    
    $
    290,883
    
    
    $
    1,182,026
    
    
    $
    1,888,4952007 Premiums
    
    $
    538,641
    
    
    $
    283,765
    
    
    $
    1,177,217
    
    
    $
    1,999,623
      129




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7. LIABILITY FOR FUTURE POLICY BENEFITS AND POLICYHOLDER ACCOUNT BALANCES
            130




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##### Table of Contents



8. LIABILITY FOR UNPAID CLAIMS AND CLAIM ADJUSTMENT EXPENSES
  2009
    
    
    2008
    
    
    2007Balance at January 1
    
    $
    1,310,272
    
    
    $
    1,256,698
    
    
    $
    1,308,603Less reinsurance recoverables
    
    
    377,692
    
    
    
    363,140
    
    
    
    421,737Net beginning balance
    
    
    932,580
    
    
    
    893,558
    
    
    
    886,866Incurred related to:Current
    
    
    1,139,481
    
    
    
    1,158,452
    
    
    
    1,073,249Prior years
    
    
    (30,623
    )
    
    
    (43,045
    )
    
    
    (93,524
    )Total incurred
    
    
    1,108,858
    
    
    
    1,115,407
    
    
    
    979,725Paid related to:Current
    
    
    690,085
    
    
    
    709,705
    
    
    
    636,234Prior years
    
    
    407,129
    
    
    
    366,680
    
    
    
    336,799Total paid
    
    
    1,097,214
    
    
    
    1,076,385
    
    
    
    973,033Net balance at December 31
    
    
    944,224
    
    
    
    932,580
    
    
    
    893,558Plus reinsurance recoverables
    
    
    279,987
    
    
    
    377,692
    
    
    
    363,140Balance at December 31
    
    $
    1,224,211
    
    
    $
    1,310,272
    
    
    $
    1,256,698
   9. REINSURANCE
     131




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##### Table of Contents



2009
    
    
    2008
    
    
    2007Direct premiums
    
    $
    2,113,109
    
    
    $
    2,117,400
    
    
    $
    2,134,669Reinsurance premiums assumed from other companies
    
    
    182,848
    
    
    
    215,189
    
    
    
    176,357Reinsurance premiums ceded to other companies
    
    
    (321,933
    )
    
    
    (444,094
    )
    
    
    (302,650
    )Net premiums
    
    $
    1,974,024
    
    
    $
    1,888,495
    
    
    $
    2,008,376Reinsurance recoveries
    
    $
    193,529
    
    
    $
    301,397
    
    
    $
    198,553
  2009
    
    
    2008
    
    
    2007Direct life insurance in-force
    
    $
    68,584,383
    
    
    $
    68,820,212
    
    
    $
    67,604,695Reinsurance risks assumed from other companies
    
    
    863,867
    
    
    
    1,050,645
    
    
    
    1,078,371Total life insurance in-force
    
    
    69,448,250
    
    
    
    69,870,857
    
    
    
    68,683,066Reinsurance risks ceded to other companies
    
    
    (31,347,876
    )
    
    
    (31,241,255
    )
    
    
    (29,635,648
    )Net life insurance in-force
    
    $
    38,100,374
    
    
    $
    38,629,602
    
    
    $
    39,047,418
 10. NOTES PAYABLE
   132




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##### Table of Contents



11. FEDERAL INCOME TAXES
  For the Years Ended December 31,2009
    
    
    2008
    
    
    2007Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    RateIncome tax (benefit) on pre-tax income
    
    $
    (4,348
    )
    
    
    35.0
    %
    
    $
    (105,021
    )
    
    
    35.0
    %
    
    $
    121,536
    
    
    
    35.0
    %Tax-exempt investment income
    
    
    (9,351
    )
    
    
    75.3
    
    
    
    (8,791
    )
    
    
    2.9
    
    
    
    (6,360
    )
    
    
    (1.8
    )Dividend exclusion
    
    
    (8,432
    )
    
    
    67.9
    
    
    
    (12,028
    )
    
    
    4.0
    
    
    
    (6,589
    )
    
    
    (1.9
    )Miscellaneous tax credits, net
    
    
    (6,963
    )
    
    
    56.0
    
    
    
    (5,835
    )
    
    
    1.9
    
    
    
    (3,862
    )
    
    
    (1.1
    )Foreign operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,735
    
    
    
    0.5Other items, net
    
    
    (2,713
    )
    
    
    21.8
    
    
    
    9,645
    
    
    
    (3.1
    )
    
    
    (597
    )
    
    
    (0.2
    )Total
    
    $
    (31,807
    )
    
    
    256.0
    %
    
    $
    (122,030
    )
    
    
    40.7
    %
    
    $
    105,863
    
    
    
    30.5
    %
  For the Years Ended December 31,2009
    
    
    2008DEFERRED TAX ASSETS:Marketable securities, principally due to impairment losses
    
    $
    109,650
    
    
    $
    138,487Marketable securities, principally due to net unrealized losses
    
    
    
    
    
    
    146,191Investment in real estate and other invested assets
principally due to investment valuation allowances
    
    
    18,315
    
    
    
    1,279Policyholder funds, principally due to policy reserve discount
    
    
    211,547
    
    
    
    187,277Policyholder funds, principally due to unearned premium reserve
    
    
    31,312
    
    
    
    30,716Non-qualified pension
    
    
    29,109
    
    
    
    27,630Participating policyholders surplus
    
    
    28,505
    
    
    
    28,615Pension
    
    
    35,228
    
    
    
    36,968Commissions and other expenses
    
    
    16,209
    
    
    
    24,395Tax carryforwards
    
    
    8,666
    
    
    
    623Other assets
    
    
    5,952
    
    
    
    8,895Gross deferred tax assets
    
    
    494,493
    
    
    
    631,076Valuation allowance
    
    
    (400
    )
    
    
    (1,000
    )Net deferred tax assets
    
    $
    494,093
    
    
    $
    630,076DEFERRED TAX LIABILITIES:Marketable securities, principally due to net unrealized gains
    
    
    (114,861
    )
    
    
    Investment in bonds, principally due to accrual of discount on bonds
    
    
    (13,426
    )
    
    
    (18,221
    )Deferred policy acquisition costs, due to difference between GAAP
and tax amortization methods
    
    
    (356,014
    )
    
    
    (410,970
    )Property, plant and equipment, principally due to difference between GAAP and tax depreciation methods
    
    
    (4,758
    )
    
    
    (5,377
    )Gross deferred tax liabilities
    
    
    (489,059
    )
    
    
    (434,568
    )Total net deferred tax  asset
    
    $
    5,034
    
    
    $
    195,508
  133




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Accounting for Uncertainty in Income Taxes
 2009
    
    
    2008
    
    
    2007Unrecognized tax positionsBalance at beginning of year
    
    $
    1,054
    
    
    $
    4,618
    
    
    $
    5,832Tax positions related to prior years
    
    
    
    
    
    
    
    
    
    
    Current year tax positions
    
    
    
    
    
    
    
    
    
    
    Settlements during the year
    
    
    (1,054
    )
    
    
    (3,564
    )
    
    
    (1,214
    )Lapse in statute of limitations
    
    
    
    
    
    
    
    
    
    
    Balance at end of year
    
    $
    
    
    
    $
    1,054
    
    
    $
    4,618
      134




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##### Table of Contents



12. COMPONENTS OF COMPREHENSIVE INCOME (LOSS)
  Before
    
    
    FederalFederal
    
    
    Income Tax
    
    
    Net of FederalIncome Tax
    
    
    Expense
    
    
    Income TaxDecember 31, 2009Unrealized gains
    
    $
    746,821
    
    
    $
    332,846
    
    
    $
    413,975Less: reclassification adjustment for net losses realized in net loss
    
    
    (47,503
    )
    
    
    (16,626
    )
    
    
    (30,877
    )Net unrealized gain component of comprehensive income
    
    $
    699,318
    
    
    $
    316,220
    
    
    $
    383,098December 31, 2008Unrealized losses
    
    $
    (138,311
    )
    
    $
    (48,409
    )
    
    $
    (89,902
    )Less: reclassification adjustment for net losses realized in net loss
    
    
    (372,194
    )
    
    
    (130,268
    )
    
    
    (241,926
    )Net unrealized loss component of comprehensive loss
    
    $
    (510,505
    )
    
    $
    (178,677
    )
    
    $
    (331,828
    )December 31, 2007Unrealized losses
    
    $
    (20,082
    )
    
    $
    (7,029
    )
    
    $
    (13,053
    )Less: reclassification adjustment for net gains realized in net income
    
    
    20,494
    
    
    
    7,173
    
    
    
    13,321Net unrealized gain component of comprehensive income
    
    $
    412
    
    
    $
    144
    
    
    $
    268
 13. STOCKHOLDERS EQUITY AND NONCONTROLLING INTERESTS
 Common stock
  2009
    
    
    2008
    
    
    2007Common stockShares issued
    
    
    30,832,449
    
    
    
    30,832,449
    
    
    
    30,832,449Treasury shares
    
    
    4,012,283
    
    
    
    4,013,616
    
    
    
    4,099,617Restricted shares
    
    
    261,334
    
    
    
    339,001
    
    
    
    253,000Unrestricted outstanding shares
    
    
    26,558,832
    
    
    
    26,479,832
    
    
    
    26,479,832
 Stock-based compensation
    135




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##### Table of Contents



SAR Weighted-
    
    
    
    
    
    
    RS Weighted-Average Price
    
    
    
    
    
    
    Average PriceSAR Shares
    
    
    per Share
    
    
    RS Shares
    
    
    per ShareOutstanding at
December 31, 2006
    
    
    132,699
    
    
    $
    95.05
    
    
    
    247,000
    
    
    $
    4.51Granted
    
    
    4,500
    
    
    
    130.52
    
    
    
    6,000
    
    
    
    Exercised
    
    
    (34,795
    )
    
    
    91.36
    
    
    
    
    
    
    
    Forfeited
    
    
    (5,680
    )
    
    
    98.20
    
    
    
    Outstanding at
December 31, 2007
    
    
    96,724
    
    
    $
    97.84
    
    
    
    253,000
    
    
    $
    4.40Granted
    
    
    96,917
    
    
    
    115.92
    
    
    
    86,001
    
    
    
    Exercised
    
    
    (4,109
    )
    
    
    81.30
    
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    
    
    
    
    Outstanding at
December 31, 2008
    
    
    189,532
    
    
    $
    107.44
    
    
    
    339,001
    
    
    $
    3.28Granted
    
    
    2,999
    
    
    
    66.76
    
    
    
    1,333
    
    
    
    Exercised
    
    
    (18,184
    )
    
    
    92.50
    
    
    
    (79,000
    )
    
    
    Forfeited
    
    
    (12,898
    )
    
    
    105.46
    
    
    
    Outstanding at
December 31, 2009
    
    
    161,449
    
    
    $
    108.53
    
    
    
    261,334
    
    
    $
    
   Earnings (loss) per share
  2009
    
    
    2008
    
    
    2007Weighted average shares outstanding
    
    
    26,528,832
    
    
    
    26,479,832
    
    
    
    26,479,832Incremental shares from restricted stock
    
    
    68,644
    
    
    
    
    
    
    
    158,387Total shares for diluted calculations
    
    
    26,597,476
    
    
    
    26,479,832
    
    
    
    26,638,219Net
income (loss) attributable to American National Insurance Company and
Subsidiaries
    
    
    15,625,000
    
    
    
    (153,998,000
    )
    
    
    240,773,000Diluted earnings (losses) per share
    
    $
    0.59
    
    
    $
    (5.82
    )
    
    $
    9.04
   136




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##### Table of Contents



Dividends
    Noncontrolling interests
    14. 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, medical expense,
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 auto, homeowners, agribusiness 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.
  137




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##### Table of Contents




    
    Net investment income from fixed income 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 income 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 are allocated to Corporate and Other.
 
    
    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.
   138




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##### Table of Contents



December 31, 2009
 Property &
    
    
    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
    
    
    
    86,292
    
    
    
    840,105Other income
    
    
    2,720
    
    
    
    (3,870
    )
    
    
    10,382
    
    
    
    7,064
    
    
    
    15,547
    
    
    
    31,843Total operating revenues
    
    
    674,609
    
    
    
    680,205
    
    
    
    336,075
    
    
    
    1,232,748
    
    
    
    101,839
    
    
    
    3,025,476Realized gains/(losses) on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (75,697
    )
    
    
    (75,697
    )Total revenues
    
    
    674,609
    
    
    
    680,205
    
    
    
    336,075
    
    
    
    1,232,748
    
    
    
    26,142
    
    
    
    2,949,779Benefits, 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
    
    
    
    54,707
    
    
    
    485,409Decrease (increase) 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
    
    
    
    54,709
    
    
    
    2,962,203Income (loss) from continuing operations before federal
income
taxes, and equity in losses of unconsolidated affiliates
    
    
    39,355
    
    
    
    14,622
    
    
    
    (22,200
    )
    
    
    (15,634
    )
    
    
    (28,567
    )
    
    
    (12,424
    )Provision (benefit) for federal income taxes
    
    
    (12,987
    )
    
    
    (4,825
    )
    
    
    7,326
    
    
    
    5,159
    
    
    
    37,134
    
    
    
    31,807Net loss attributable to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (458
    )
    
    
    (458
    )Equity in losses of unconsolidated affiliates
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,216
    )
    
    
    (4,216
    )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
    
    
    $
    20,149,507Return on Equity
    
    
    3.59
    %
    
    
    1.68
    %
    
    
    (10.35
    )%
    
    
    (2.15
    )%
    
    
    29.37
    %
    
    
    11.31
    %
 December 31, 2008
 Property &
    
    
    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
    
    
    
    109,597
    
    
    
    796,177Other income
    
    
    3,767
    
    
    
    (5,718
    )
    
    
    13,252
    
    
    
    8,973
    
    
    
    18,505
    
    
    
    38,779Total operating revenues
    
    
    684,732
    
    
    
    504,468
    
    
    
    320,701
    
    
    
    1,260,347
    
    
    
    128,102
    
    
    
    2,898,350Realized gains/(losses) on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (379,709
    )
    
    
    (379,709
    )Total revenues
    
    
    684,732
    
    
    
    504,468
    
    
    
    320,701
    
    
    
    1,260,347
    
    
    
    (251,607
    )
    
    
    2,518,641Benefits, 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
    
    
    
    37,839
    
    
    
    508,800Decrease (increase) 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
    
    
    
    37,839
    
    
    
    2,818,393Income (loss) from continuing operations before federal
income
taxes, and equity in losses of unconsolidated affiliates
    
    
    18,815
    
    
    
    19,975
    
    
    
    (20,557
    )
    
    
    (28,539
    )
    
    
    (289,446
    )
    
    
    (299,752
    )Provision (benefit) for federal income taxes
    
    
    (6,209
    )
    
    
    (6,592
    )
    
    
    6,784
    
    
    
    9,418
    
    
    
    118,629
    
    
    
    122,030Net loss attributable to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (31
    )
    
    
    (31
    )Equity in losses of unconsolidated affiliates
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,965
    
    
    
    4,965Income (loss) from continuing operations
    
    
    12,606
    
    
    
    13,383
    
    
    
    (13,773
    )
    
    
    (19,121
    )
    
    
    (165,821
    )
    
    
    (172,726
    )Income (loss) from discontinued operations
    
    
    18,728
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,728Net 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
    
    
    $
    18,379,439Return on Equity
    
    
    4.36
    %
    
    
    2.67
    %
    
    
    (9.67
    %)
    
    
    (3.95
    %)
    
    
    (28.17
    %)
    
    
    (13.99
    %)
  139




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##### Table of Contents



December 31, 2007
 Property &
    
    
    Corporate &Life
    
    
    Annuity
    
    
    Health
    
    
    Casualty
    
    
    Other
    
    
    TOTALPremiums and Other Revenues:Premiums
    
    $
    315,893
    
    
    $
    222,748
    
    
    $
    283,765
    
    
    $
    1,177,217
    
    
    $
    
    
    
    $
    1,999,623Other policy revenues
    
    
    130,744
    
    
    
    24,486
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    155,230Net investment income
    
    
    229,092
    
    
    
    364,607
    
    
    
    16,710
    
    
    
    75,041
    
    
    
    127,519
    
    
    
    812,969Other income
    
    
    3,967
    
    
    
    345
    
    
    
    13,048
    
    
    
    8,623
    
    
    
    21,241
    
    
    
    47,224Total operating revenues
    
    
    679,696
    
    
    
    612,186
    
    
    
    313,523
    
    
    
    1,260,881
    
    
    
    148,760
    
    
    
    3,015,046Realized gains/(losses) on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41,027
    
    
    
    41,027Total revenues
    
    
    679,696
    
    
    
    612,186
    
    
    
    313,523
    
    
    
    1,260,881
    
    
    
    189,787
    
    
    
    3,056,073Benefits, Losses and Expenses:Policy benefits
    
    
    273,750
    
    
    
    249,878
    
    
    
    209,840
    
    
    
    818,230
    
    
    
    
    
    
    
    1,551,698Interest credited to policy account balances
    
    
    63,289
    
    
    
    232,605
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    295,894Commissions for acquiring and servicing policies
    
    
    141,517
    
    
    
    58,635
    
    
    
    39,342
    
    
    
    217,043
    
    
    
    
    
    
    
    456,537Other operating costs and expenses
    
    
    200,361
    
    
    
    35,030
    
    
    
    57,975
    
    
    
    110,705
    
    
    
    61,069
    
    
    
    465,140Decrease (increase) in deferred policy acquisition costs
    
    
    (57,666
    )
    
    
    (911
    )
    
    
    5,774
    
    
    
    (7,639
    )
    
    
    
    
    
    
    (60,442
    )Total benefits, losses and expenses
    
    
    621,251
    
    
    
    575,237
    
    
    
    312,931
    
    
    
    1,138,339
    
    
    
    61,069
    
    
    
    2,708,827Income (loss) from continuing operations before federal
income
taxes, and equity in losses of unconsolidated affiliates
    
    
    58,445
    
    
    
    36,949
    
    
    
    592
    
    
    
    122,542
    
    
    
    128,718
    
    
    
    347,246Provision (benefit) for federal income taxes
    
    
    (19,287
    )
    
    
    (12,193
    )
    
    
    (195
    )
    
    
    (40,439
    )
    
    
    (33,749
    )
    
    
    (105,863
    )Net loss attributable to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (482
    )
    
    
    (482
    )Equity in losses of unconsolidated affiliates
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,866
    
    
    
    3,866Income (loss) from continuing operations
    
    
    39,158
    
    
    
    24,756
    
    
    
    397
    
    
    
    82,103
    
    
    
    99,317
    
    
    
    245,731Income (loss) from discontinued operations
    
    
    (4,958
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,958
    )Net Income (loss) attributable to American National
Insurance Company and Subsidiaries
    
    $
    34,200
    
    
    $
    24,756
    
    
    $
    397
    
    
    $
    82,103
    
    
    $
    99,317
    
    
    $
    240,773Selected Data:Total Assets
    
    $
    4,836,221
    
    
    $
    7,464,512
    
    
    $
    752,863
    
    
    $
    2,036,372
    
    
    $
    3,370,920
    
    
    $
    18,460,888Return on Equity
    
    
    6.44
    %
    
    
    5.29
    %
    
    
    0.28
    %
    
    
    16.40
    %
    
    
    5.81
    %
    
    
    6.85
    %
 15. RETIREMENT BENEFITS
 Pension benefits
      140




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##### Table of Contents



2009
    
    
    2008
    
    
    2007Reconciliation of benefit obligation:Obligation at beginning of year
    
    $
    328,783
    
    
    $
    302,657
    
    
    $
    283,344Service cost benefits earned during period
    
    
    11,163
    
    
    
    12,319
    
    
    
    9,326Interest cost on projected benefit
obligation
    
    
    20,319
    
    
    
    22,077
    
    
    
    16,483Participant contributions
    
    
    
    
    
    
    746
    
    
    
    730Actuarial gain
    
    
    19,141
    
    
    
    6,015
    
    
    
    8,461Benefits paid
    
    
    (19,032
    )
    
    
    (15,031
    )
    
    
    (15,687
    )Obligation at end of year
    
    
    360,374
    
    
    
    328,783
    
    
    
    302,657Reconciliation of fair value of plan assets:Fair value of plan assets at beginning of
year
    
    
    149,874
    
    
    
    183,018
    
    
    
    167,478Actual return on plan assets
    
    
    28,729
    
    
    
    (38,552
    )
    
    
    15,979Employer contributions
    
    
    24,929
    
    
    
    19,689
    
    
    
    14,580Participant contributions
    
    
    
    
    
    
    746
    
    
    
    731Benefits paid
    
    
    (19,032
    )
    
    
    (15,027
    )
    
    
    (15,750
    )Fair value of plan assets at end of year
    
    
    184,500
    
    
    
    149,874
    
    
    
    183,018Funded status at end of year
    
    $
    (175,874
    )
    
    $
    (178,909
    )
    
    $
    (119,639
    )
  2009
    
    
    2008
    
    
    2007Service cost
    
    $
    11,163
    
    
    $
    9,974
    
    
    $
    9,366Interest cost
    
    
    20,319
    
    
    
    19,003
    
    
    
    16,483Expected return on plan assets
    
    
    (13,736
    )
    
    
    (13,571
    )
    
    
    (12,375
    )Amortization of prior service cost
    
    
    3,469
    
    
    
    3,469
    
    
    
    3,666Amortization of transition obligation
    
    
    
    
    
    
    
    
    
    
    117Amortization of net gain
    
    
    9,134
    
    
    
    4,412
    
    
    
    6,197Net periodic benefit cost
    
    $
    30,349
    
    
    $
    23,287
    
    
    $
    23,454
  2009
    
    
    2008
    
    
    2007Prior service cost
    
    $
    3,469
    
    
    $
    3,469
    
    
    $
    3,711Net actuarial gain (loss)
    
    
    4,909
    
    
    
    (57,385
    )
    
    
    2,215Deferred tax benefit (expense)
    
    
    (2,932
    )
    
    
    18,871
    
    
    
    (2,074
    )Other comprehensive income (loss),
net of tax
    
    $
    5,446
    
    
    $
    (35,045
    )
    
    $
    3,852
  141




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##### Table of Contents



2009
    
    
    2008Prior service cost
    
    $
    (2,324
    )
    
    $
    (5,793
    )Net actuarial loss
    
    
    (95,851
    )
    
    
    (100,759
    )Deferred tax benefit
    
    
    34,361
    
    
    
    37,293Amounts included in accumulated other
comprehensive income (loss)
    
    $
    (63,814
    )
    
    $
    (69,259
    )
  Used for Net
    
    
    Used for BenefitBenefit Cost in Fiscal Year
    
    
    Obligations1/1/2009 to 12/31/2009
    
    
    as of 12/31/2009Discount rate
    
    
    6.17
    %
    
    
    5.73
    %Rate of compensation
increase
    
    
    4.20
    %
    
    
    4.20
    %Long-term rate of return
    
    
    7.65
    %
    
    
    7.65
    %
   Pension Benefit Payments2010
    
    $
    21,6112011
    
    
    18,8282012
    
    
    20,8902013
    
    
    21,0012014
    
    
    25,1912015-2019
    
    
    145,070
  142




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##### Table of Contents



Quoted Prices in
    
    
    SignificantActive Markets for
    
    
    ObservableIdentical Assets
    
    
    InputsTotal
    
    
    (Level 1)
    
    
    (Level 2)Asset CategoryCorporate Debt Securities
    
    $
    64,998
    
    
    $
    
    
    
    $
    64,998Residential Mortgage Backed
Securities
    
    
    473
    
    
    
    
    
    
    
    473Marketable Equity Securities by
Sector:Consumer Directory
    
    
    9,759
    
    
    
    9,759
    
    
    
    Consumer Staples
    
    
    10,377
    
    
    
    10,377
    
    
    
    Energy
    
    
    8,202
    
    
    
    8,202
    
    
    
    Finance
    
    
    14,583
    
    
    
    14,583
    
    
    
    Healthcare
    
    
    11,042
    
    
    
    11,042
    
    
    
    Industrials
    
    
    8,272
    
    
    
    8,272
    
    
    
    Information Technology
    
    
    14,432
    
    
    
    14,432
    
    
    
    Materials
    
    
    1,894
    
    
    
    1,894
    
    
    
    Telecom services
    
    
    4,075
    
    
    
    4,075
    
    
    
    Utilities
    
    
    2,839
    
    
    
    2,839
    
    
    
    Other types of investments:Commercial Paper
    
    
    26,418
    
    
    
    
    
    
    
    26,418Money Market
    
    
    16
    
    
    
    16
    
    
    
    Unallocated Group Annuity Contract
    
    
    6,643
    
    
    
    
    
    
    
    6,643Contribution receivable
    
    
    134
    
    
    
    134
    
    
    
    Other
    
    
    343
    
    
    
    343
    
    
    
    Total
    
    $
    184,500
    
    
    $
    85,968
    
    
    $
    98,532
       143




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##### Table of Contents



Postretirement life and health benefits
     Savings plans
  16. COMMITMENTS AND CONTINGENCIES
 Commitments
   144




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##### Table of Contents



Guarantees
  Litigation
 Farm Bureau Life Insurance
Company and Farm Bureau Mutual Insurance Company v. American National Insurance Company et al.,
 Rand v. American National Insurance Company,
    145




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##### Table of Contents



17. DISCONTINUED OPERATIONS
    18. RELATED PARTY TRANSACTIONS
  Related Party
    
    Financial Statement Line Impacted
    
    December 31, 2009Gal-Tex Hotel Corporation
    
    Mortgage loans on real estate
    
    $
    11,875Gal-Tex Hotel Corporation
    
    Investment income
    
    
    895Gal-Tex Hotel Corporation
    
    Other operating costs and expenses
    
    
    314Gal-Tex Hotel Corporation
    
    Accident and health premiums
    
    
    56Moody Insurance Group, Inc.
    
    Commissions
    
    
    2,813Moody Insurance Group, Inc.
    
    Other operating costs and expenses
    
    
    216National Western Life Ins. Co.
    
    Accident and health premiums
    
    
    226National Western Life Ins. Co.
    
    Other operating costs and expenses
    
    
    1,300Moody Foundation
    
    Accident and health premiums
    
    
    124Greer, Herz and Adams, LLP
    
    Other operating costs and expenses
    
    
    10,967
  146




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##### Table of Contents



19. SELECTED QUARTERLY FINANCIAL DATA
 Supplementary Financial Information
  Quarters Ended2009March 31,
    
    
    June 30,
    
    
    September 30,
    
    
    December 31,
    
    
    TotalTotal revenues
    
    $
    651,997
    
    
    $
    727,790
    
    
    $
    780,347
    
    
    $
    789,645
    
    
    $
    2,949,779Total benefits, losses and expenses
    
    
    728,777
    
    
    
    740,309
    
    
    
    745,280
    
    
    
    747,837
    
    
    
    2,962,203Income (loss) from continuing operations before federal
income
tax and equity in earnings of unconsolidated affiliates
    
    
    (76,780
    )
    
    
    (12,519
    )
    
    
    35,067
    
    
    
    41,808
    
    
    
    (12,424
    )Provision (benefit) for federal income taxes
    
    
    (31,023
    )
    
    
    (10,776
    )
    
    
    3,229
    
    
    
    6,763
    
    
    
    (31,807
    )Equity in earnings (losses) of unconsolidated affiliates,
net of tax
    
    
    (1,937
    )
    
    
    (3,180
    )
    
    
    2,110
    
    
    
    (1,209
    )
    
    
    (4,216
    )Income (loss) from continuing operations
    
    
    (47,694
    )
    
    
    (4,923
    )
    
    
    33,948
    
    
    
    33,836
    
    
    
    15,167Net income (loss)
    
    
    (47,694
    )
    
    
    (4,923
    )
    
    
    33,948
    
    
    
    33,836
    
    
    
    15,167Net income (loss) attributable to noncontrolling interest
    
    
    (1
    )
    
    
    (568
    )
    
    
    1,248
    
    
    
    (1,137
    )
    
    
    (458
    )Net income (loss) attributable to American National Insurance
Company and subsidiaries
    
    
    (47,693
    )
    
    
    (4,355
    )
    
    
    32,700
    
    
    
    34,973
    
    
    
    15,625Net income/(loss) per share attributable to American National
Insurance Company and subsidiaries:Basic
    
    
    (1.80
    )
    
    
    (0.16
    )
    
    
    1.23
    
    
    
    1.32
    
    
    
    0.59Diluted
    
    
    (1.80
    )
    
    
    (0.16
    )
    
    
    1.23
    
    
    
    1.32
    
    
    
    0.59
 Quarters Ended2008March 31,
    
    
    June 30,
    
    
    September 30,
    
    
    December 31,
    
    
    TotalTotal revenues
    
    $
    724,080
    
    
    $
    731,188
    
    
    $
    522,493
    
    
    $
    540,880
    
    
    $
    2,518,641Total benefits, losses and expenses
    
    
    681,137
    
    
    
    744,873
    
    
    
    707,635
    
    
    
    684,748
    
    
    
    2,818,393Income (loss) from continuing operations before federal
income
tax and equity in earnings of unconsolidated affiliates
    
    
    42,943
    
    
    
    (13,685
    )
    
    
    (185,142
    )
    
    
    (143,868
    )
    
    
    (299,752
    )Provision (benefit) for federal income taxes
    
    
    10,220
    
    
    
    (11,237
    )
    
    
    (62,526
    )
    
    
    (58,487
    )
    
    
    (122,030
    )Equity in earnings (losses) of unconsolidated affiliates,
net of tax
    
    
    7,648
    
    
    
    613
    
    
    
    (1,795
    )
    
    
    (1,501
    )
    
    
    4,965Income (loss) from continuing operations(a)
    
    
    40,371
    
    
    
    (1,709
    )
    
    
    (123,092
    )
    
    
    (88,327
    )
    
    
    (172,757
    )Income (loss) from discontinued operations
    
    
    (1,346
    )
    
    
    (1,100
    )
    
    
    (622
    )
    
    
    21,796
    
    
    
    18,728Net income (loss)
    
    
    39,025
    
    
    
    (2,809
    )
    
    
    (123,714
    )
    
    
    (66,531
    )
    
    
    (154,029
    )Net income (loss) attributable to noncontrolling interest
    
    
    
    
    
    
    126
    
    
    
    1,319
    
    
    
    (1,476
    )
    
    
    (31
    )Net income (loss) attributable to American National Insurance
Company and subsidiaries
    
    
    39,025
    
    
    
    (2,935
    )
    
    
    (125,033
    )
    
    
    (65,055
    )
    
    
    (153,998
    )Net income/(loss) per share attributable to American National
Insurance Company and subsidiaries:Basic
    
    
    1.47
    
    
    
    (0.11
    )
    
    
    (4.72
    )
    
    
    (2.46
    )
    
    
    (5.82
    )Diluted
    
    
    1.47
    
    
    
    (0.11
    )
    
    
    (4.72
    )
    
    
    (2.46
    )
    
    
    (5.82
    )
 (a)
    
    Effect of accounting change ASC 810 Consolidation-Noncontrolling Interest. Refer to Note
2. Unaudited  see accompanying accountants report.
  147




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##### Table of Contents



20. RECLASSIFICATIONS
  12/31/2008
    
    
    12/31/2008
    
    
    
    
    
    
    12/31/2007
    
    
    12/31/2007INVESTING ACTIVITIES
    
    (As filed)
    
    
    (Reclassified)
    
    
    Change
    
    
    (As filed)
    
    
    (Reclassified)
    
    
    ChangeProceeds from sales of:Bonds  available for sale
    
    
    104,093
    
    
    
    6,353
    
    
    
    97,740
    
    
    
    68,004
    
    
    
    68,004
    
    
    
    Stocks
    
    
    129,270
    
    
    
    129,270
    
    
    
    
    
    
    
    277,429
    
    
    
    277,429
    
    
    
    Real estate
    
    
    
    
    
    
    4,500
    
    
    
    (4,500
    )
    
    
    84,744
    
    
    
    84,744
    
    
    
    Mortgage loans
    
    
    6,794
    
    
    
    2,294
    
    
    
    4,500
    
    
    
    
    
    
    
    
    
    
    
    Other invested assets
    
    
    9,896
    
    
    
    9,896
    
    
    
    
    
    
    
    104,743
    
    
    
    104,743
    
    
    
    Disposals of property and equipment
    
    
    
    
    
    
    1,380
    
    
    
    (1,380
    )
    
    
    
    
    
    
    23,021
    
    
    
    (23,021
    )Distributions from unconsolidated affiliates
    
    
    
    
    
    
    12,332
    
    
    
    (12,332
    )
    
    
    
    
    
    
    17,414
    
    
    
    (17,414
    )Proceeds from maturity of:Bonds  available for sale
    
    
    249,769
    
    
    
    269,566
    
    
    
    (19,797
    )
    
    
    287,559
    
    
    
    287,559
    
    
    
    Bonds  held to maturity
    
    
    528,781
    
    
    
    580,515
    
    
    
    (51,734
    )
    
    
    547,416
    
    
    
    547,416
    
    
    
    Principal payments received on:Mortgage loans
    
    
    138,035
    
    
    
    144,497
    
    
    
    (6,462
    )
    
    
    223,956
    
    
    
    223,956
    
    
    
    Policy loans
    
    
    9,459
    
    
    
    9,459
    
    
    
    
    
    
    
    5,472
    
    
    
    5,472
    
    
    
    Purchases of investments:Bonds  available for sale
    
    
    (640,403
    )
    
    
    (626,623
    )
    
    
    (13,780
    )
    
    
    (658,731
    )
    
    
    (658,731
    )
    
    
    Bonds  held to maturity
    
    
    (656,580
    )
    
    
    (644,151
    )
    
    
    (12,429
    )
    
    
    (483,722
    )
    
    
    (483,722
    )
    
    
    Stocks
    
    
    (290,979
    )
    
    
    (290,979
    )
    
    
    
    
    
    
    (364,352
    )
    
    
    (364,352
    )
    
    
    Real estate
    
    
    (78,119
    )
    
    
    (78,119
    )
    
    
    
    
    
    
    (46,295
    )
    
    
    (46,295
    )
    
    
    Mortgage loans
    
    
    (513,964
    )
    
    
    (520,426
    )
    
    
    6,462
    
    
    
    (386,137
    )
    
    
    (386,137
    )
    
    
    Policy loans
    
    
    (20,447
    )
    
    
    (20,447
    )
    
    
    
    
    
    
    (10,237
    )
    
    
    (10,237
    )
    
    
    Other invested assets
    
    
    (21,795
    )
    
    
    (21,795
    )
    
    
    
    
    
    
    (50,115
    )
    
    
    (50,115
    )
    
    
    Decrease (increase) in short-term investments, net
    
    
    403,092
    
    
    
    403,092
    
    
    
    
    
    
    
    19,881
    
    
    
    19,881
    
    
    
    Decrease (increase) in investment in unconsolidated affiliates, net
    
    
    (34,453
    )
    
    
    
    
    
    
    (34,453
    )
    
    
    (44,826
    )
    
    
    
    
    
    
    (44,826
    )Contributions to unconsolidated affiliates
    
    
    
    
    
    
    (38,514
    )
    
    
    38,514
    
    
    
    
    
    
    
    (64,592
    )
    
    
    64,592Increase in property and equipment, net
    
    
    (12,890
    )
    
    
    
    
    
    
    (12,890
    )
    
    
    (11,459
    )
    
    
    
    
    
    
    (11,459
    )Additions to property and equipment
    
    
    
    
    
    
    (25,024
    )
    
    
    25,024
    
    
    
    
    
    
    
    (18,076
    )
    
    
    18,076Other, net
    
    
    
    
    
    
    2,483
    
    
    
    (2,483
    )
    
    
    
    
    
    
    (14,052
    )
    
    
    14,052Net cash used in investing activities
    
    
    (690,441
    )
    
    
    (690,441
    )
    
    
    
    
    
    
    (436,670
    )
    
    
    (436,670
    )
    
    
    
  148




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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 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 financial statements.
   149




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Internal
Control-Integrated Framework.
   Changes in internal control over financial reporting
   150




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##### Table of Contents



ITEM 9B.
    
    OTHER INFORMATION
  
 PART III
 
 ITEM 10.
    
    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
 Code of Business Conduct and Ethics
   
 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 ACCOUNTING FEES AND SERVICES
   151




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PART IV
 
 ITEM 15.
    
    EXHIBITS, FINANCIAL STATEMENT SCHEDULES
 Page(a)(1) Financial Statements (See Item 8: Financial Statements and Supplementary Data)
    
    
    97(a)(2) Supplementary Data and Financial Statement SchedulesSchedules are attached hereto at the following pages:
 PageIndependent Auditors Report
    
    
    155I  Summary of Investments  Other than Investments in Related Parties, December 31, 2009
    
    
    156II  Condensed Financial Information of Registrant, Years ended December 31, 2009 and 2008
    
    
    157III  Supplementary Insurance Information, Years ended December 31, 2009, 2008 and 2007
    
    
    160IV  Reinsurance Information, Years ended December 31, 2009, 2008 and 2007
    
    
    161V  Valuation and Qualifying Accounts, Years ended December 31, 2009, 2008 and 2007
    
    
    162
  
  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
filed with the Securities and Exchange Commission, Registration
No. 001-34280)3.2
    
    
    Bylaws (incorporated by reference to Exhibit No. 3.2 to the
registrants Registration Statement on Form 10 filed with the
Securities and Exchange Commission, Registration No. 001-34280)4.1
    
    
    Specimen copy of Stock Certificate (incorporated by reference to
Exhibit No. 4.1 to the registrants Registration Statement on Form
10 filed with the Securities and Exchange Commission, Registration
No. 001-34280)10.1
    
    
    Administrative Services Agreement dated October 17, 2007 by and
between American National Insurance Company and Transaction
Applications Group, Inc. (incorporated by reference to Exhibit
No. 10.1 to the registrants Registration Statement on Form 10
filed with the Securities and Exchange Commission, Registration
No. 001-34280)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 filed with the Securities and
Exchange Commission, Registration No. 001-34280)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 filed with
the Securities and Exchange Commission, Registration No.
001-34280)10.4
    
    
    Form of Restricted Stock Agreement for Employees under the Stock
and Incentive Plan (incorporated by reference to Exhibit No. 10.4
to the registrants Registration Statement on Form 10 filed with
the Securities and Exchange Commission, Registration No.
001-34280)
  152




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ExhibitNumber:
    
    Basic Documents:10.5
    
    
    Form of Stock Appreciation Rights Agreement under the Stock and
Incentive Plan (incorporated by reference to Exhibit No. 10.5 to
the registrants Registration Statement on Form 10 filed with the
Securities and Exchange Commission, Registration No. 001-34280)10.6
    
    
    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 filed with the Securities and Exchange Commission,
Registration No. 001-34280)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 filed with the Securities and
Exchange Commission, Registration No. 001-34280)21.1
    
    
    Subsidiaries23.1
    
    
    Consent of KPMG LLP31.1
    
    
    Certification of Chief Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.31.2
    
    
    Certification of Chief Financial Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.32.1
    
    
    Certification of Chief Executive Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.32.2
    
    
    Certification of Chief Financial Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
  153




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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 11, 2010/s/ Stephen E. Pavlicek

Stephen E. Pavlicek
    
    Senior Vice President &
Chief Financial Officer
(principal financial officer
and principal accounting officer)
    
    March 11, 2010/s/ Arthur O. Dummer

Arthur O. Dummer
    
    Director
    
    March 11, 2010/s/ Dr. Shelby M. Elliott

Dr. Shelby M. Elliott
    
    Director
    
    March 11, 2010/s/ G. Richard Ferdinandtsen

G. Richard Ferdinandtsen
    
    Director
    
    March 11, 2010/s/ Frances Anne Moody-Dahlberg

Frances Anne Moody-Dahlberg
    
    Director
    
    March 11, 2010/s/ Russell S. Moody

Russell S. Moody
    
    Director
    
    March 11, 2010/s/ Frank P. Williamson

Frank P. Williamson
    
    Director
    
    March 11, 2010/s/ James D. Yarbrough

James D. Yarbrough
    
    Director
    
    March 11, 2010
  154




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Report of Independent Registered Public Accounting Firm
 
     
  155




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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)
 As of December 31, 2009Amount at whichMarket
    
    
    shown on theType of Investment
    
    Cost (a)
    
    
    Value
    
    
    Balance SheetFixed Maturities:Bonds held-to-maturity:U.S. treasury and other U.S. government corporations and
agencies
    
    $
    21,222
    
    
    $
    21,347
    
    
    $
    21,222States of the U.S. and political subdivisions of the states
    
    
    240,403
    
    
    
    247,878
    
    
    
    240,403Foreign governments
    
    
    28,997
    
    
    
    32,603
    
    
    
    28,997Corporate debt securities
    
    
    6,390,377
    
    
    
    6,644,056
    
    
    
    6,390,377Residential mortgage backed securities
    
    
    693,178
    
    
    
    695,972
    
    
    
    693,178Commercial mortgage backed securities
    
    
    33,128
    
    
    
    9,187
    
    
    
    33,128Collateralized debt securities
    
    
    9,627
    
    
    
    8,676
    
    
    
    9,627Other debt securities
    
    
    44,779
    
    
    
    46,757
    
    
    
    44,779Bonds available-for-sale:U.S. treasury and other U.S. government corporations and
agencies
    
    
    3,438
    
    
    
    3,886
    
    
    
    3,886States of the U.S. and political subdivisions of the states
    
    
    540,210
    
    
    
    558,035
    
    
    
    558,035Foreign governments
    
    
    5,000
    
    
    
    6,188
    
    
    
    6,188Corporate debt securities
    
    
    3,196,202
    
    
    
    3,253,012
    
    
    
    3,253,012Residential mortgage backed securities
    
    
    353,729
    
    
    
    355,565
    
    
    
    355,565Commercial mortgage backed securities
    
    
    
    
    
    
    
    
    
    
    Collateralized debt securities
    
    
    23,064
    
    
    
    22,494
    
    
    
    22,494Other debt securities
    
    
    14,401
    
    
    
    14,370
    
    
    
    14,370Redeemable preferred stock
    
    
    35,359
    
    
    
    35,717
    
    
    
    35,717Total fixed maturities
    
    $
    11,633,114
    
    
    $
    11,955,743
    
    
    $
    11,710,978Equity Securities:Common stock:Consumer goods
    
    $
    129,363
    
    
    $
    174,120
    
    
    $
    174,120Energy and utilities
    
    
    83,284
    
    
    
    124,770
    
    
    
    124,770Finance
    
    
    118,622
    
    
    
    156,744
    
    
    
    156,744Healthcare
    
    
    81,454
    
    
    
    110,121
    
    
    
    110,121Industrials
    
    
    58,900
    
    
    
    87,430
    
    
    
    87,430Information technology
    
    
    102,171
    
    
    
    150,162
    
    
    
    150,162Materials
    
    
    17,875
    
    
    
    25,170
    
    
    
    25,170Telecommunication services
    
    
    32,272
    
    
    
    40,035
    
    
    
    40,035Mutual funds
    
    
    59,853
    
    
    
    66,202
    
    
    
    66,202Total equity securities
    
    $
    683,794
    
    
    $
    934,754
    
    
    $
    934,754Other Investments:Mortgage loans, net of allowance
    
    $
    2,229,659
    
    
    $
    
    
    
    $
    2,229,659Investment real estate, net of accumulated depreciation
    
    
    600,857
    
    
    
    
    
    
    
    600,857Real estate acquired in satisfaction of debt
    
    
    34,253
    
    
    
    
    
    
    
    34,253Policy loans
    
    
    364,354
    
    
    
    
    
    
    
    364,354Other long-term investments
    
    
    61,641
    
    
    
    32,801
    
    
    
    94,442Short-term investments
    
    
    636,823
    
    
    
    
    
    
    
    636,823Total other investments
    
    $
    3,927,587
    
    
    $
    32,801
    
    
    $
    3,960,388Total investments
    
    $
    16,244,495
    
    
    $
    12,923,298
    
    
    $
    16,606,120
 (a)
    
    Original cost of equity securities and, as to fixed maturities, 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.
  156




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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
    
    2009
    
    
    2008
    
    
    2007Revenues:Premium and policy revenue
    
    $
    812,007
    
    
    $
    691,885
    
    
    $
    790,666Net investment income
    
    
    692,993
    
    
    
    643,855
    
    
    
    641,951Realized gain (loss) on investments
    
    
    (9,047
    )
    
    
    9,601
    
    
    
    4,656Other-than-temporary impairments
    
    
    (21,113
    )
    
    
    (152,840
    )
    
    
    (3,180
    )Other revenues
    
    
    5,346
    
    
    
    6,576
    
    
    
    11,840Total revenues
    
    $
    1,480,186
    
    
    $
    1,199,077
    
    
    $
    1,445,933Expenses:Benefits
    
    $
    596,729
    
    
    $
    471,590
    
    
    $
    556,543Other operating costs and expenses
    
    
    804,583
    
    
    
    771,899
    
    
    
    704,339Total expenses
    
    $
    1,401,312
    
    
    $
    1,243,489
    
    
    $
    1,260,882Income (loss) from continuing operations before federal income
tax, and equity in earnings of unconsolidated affiliates & subsidiaries
    
    $
    78,874
    
    
    $
    (44,412
    )
    
    $
    185,051Income taxes expense (benefit)
    
    $
    26,698
    
    
    $
    (15,844
    )
    
    $
    68,612Equity in net income (loss) of unconsolidated affiliates & subsidiaries
    
    
    (36,551
    )
    
    
    (144,158
    )
    
    
    129,292Income (loss) from continuing operations
    
    $
    15,625
    
    
    $
    (172,726
    )
    
    $
    245,731Income (loss) from discontinued operations
    
    $
    
    
    
    $
    18,728
    
    
    $
    (4,958
    )Net income (loss) attributable to American National Insurance companies and subsidiaries
    
    $
    15,625
    
    
    $
    (153,998
    )
    
    $
    240,773
 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.
  157




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AMERICAN NATIONAL INSURANCE COMPANY (Parent Company Only)
SCHEDULE II  CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(In thousands)
 As of December 31,Condensed Statements of Financial Position
    
    2009
    
    
    2008Assets:Fixed maturities
    
    $
    8,584,578
    
    
    $
    7,449,385Equity securities
    
    
    68,295
    
    
    
    71,925Mortgage loans on real estate
    
    
    2,342,630
    
    
    
    1,915,801Other invested assets
    
    
    1,872,011
    
    
    
    1,681,122Investment in subsidiaries
    
    
    1,669,054
    
    
    
    1,470,589Deferred policy acquisition costs
    
    
    1,034,550
    
    
    
    1,175,427Separate account assets
    
    
    718,378
    
    
    
    561,021Other assets
    
    
    651,047
    
    
    
    705,705Total assets
    
    $
    16,940,543
    
    
    $
    15,030,975Liabilities:Policyowner funds
    
    $
    2,737,141
    
    
    $
    2,577,472Policy account balances
    
    
    8,937,965
    
    
    
    7,690,775Separate account liabilities
    
    
    718,378
    
    
    
    561,021Other liabilities
    
    
    1,086,605
    
    
    
    1,067,851Total liabilities
    
    $
    13,480,089
    
    
    $
    11,897,119Shareholders equity:Capital stock
    
    $
    30,832
    
    
    $
    30,832Additional paid-in capital
    
    
    11,986
    
    
    
    7,552Other accumulated comprehensive income
    
    
    117,649
    
    
    
    (253,409
    )Retained earnings
    
    
    3,398,492
    
    
    
    3,447,207Less: Treasury stock at cost
    
    
    (98,505
    )
    
    
    (98,326
    )Total stockholders equity
    
    $
    3,460,454
    
    
    $
    3,133,856Total liabilities and stockholders
equity
    
    $
    16,940,543
    
    
    $
    15,030,975
 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.
  158




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##### Table of Contents



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
    
    2009
    
    
    2008
    
    
    2007Operating Activities:Net income (loss) attributable to American National Insurance companies and subsidiaries
    
    $
    15,625
    
    
    $
    (153,998
    )
    
    $
    240,773Adjustments to reconcile net income (loss) to net cash provided operating activities:Realized (gain) loss on investments
    
    
    9,047
    
    
    
    (9,601
    )
    
    
    (4,656
    )Other-than-temporary impairment
    
    
    21,113
    
    
    
    152,840
    
    
    
    3,180Amortization of discounts and premiums on bonds
    
    
    8,256
    
    
    
    10,345
    
    
    
    11,153Net capitalized interest on policy loans and mortgage
loans
    
    
    (24,331
    )
    
    
    5,896
    
    
    
    190Depreciation
    
    
    23,679
    
    
    
    9,121
    
    
    
    (12,563
    )Interest credited to policy account balances
    
    
    341,184
    
    
    
    272,700
    
    
    
    267,228Charges to policy account balances
    
    
    (170,071
    )
    
    
    (165,354
    )
    
    
    (145,386
    )Deferred federal income tax (benefit) expense
    
    
    (17,579
    )
    
    
    (87,389
    )
    
    
    25,539Deferral of policy acquisition costs
    
    
    (259,565
    )
    
    
    (437,287
    )
    
    
    (270,904
    )Amortization of deferred policy acquisition costs
    
    
    202,354
    
    
    
    221,432
    
    
    
    209,934Equity in earnings of unconsolidated affiliates
    
    
    (3,175
    )
    
    
    (378
    )
    
    
    (6,084
    )Net (income) loss of subsidiaries
    
    
    34,726
    
    
    
    125,808
    
    
    
    (118,250
    )Dividends from subsidiaries
    
    
    5,000
    
    
    
    
    
    
    
    Changes in:Policyholder fund liabilities
    
    
    38,149
    
    
    
    49,821
    
    
    
    121,284Reinsurance ceded receivable
    
    
    92,058
    
    
    
    (26,654
    )
    
    
    6,270Premiums due and other receivables
    
    
    15,443
    
    
    
    20,454
    
    
    
    (21,522
    )Accrued investment income
    
    
    (11,365
    )
    
    
    (878
    )
    
    
    (6,969
    )Current federal income tax (asset) liability
    
    
    42,013
    
    
    
    (94,955
    )
    
    
    1,340Liability for retirement benefits
    
    
    1,933
    
    
    
    52,263
    
    
    
    900Prepaid reinsurance premiums
    
    
    9,572
    
    
    
    6,682
    
    
    
    6,203Other, net
    
    
    7,833
    
    
    
    (12,299
    )
    
    
    76,483Net cash provided by (used in) operating activities
    
    
    381,899
    
    
    
    (61,431
    )
    
    
    384,143Investing Activities:Proceeds from sales of:Bonds
    
    
    31,761
    
    
    
    5,103
    
    
    
    283,085Stocks
    
    
    28,883
    
    
    
    55,084
    
    
    
    4,934Real estate
    
    
    4,837
    
    
    
    
    
    
    
    31,810Mortgage loans
    
    
    
    
    
    
    
    
    
    
    Other invested assets
    
    
    140,667
    
    
    
    188,493
    
    
    
    80,213Disposals of property and equipment
    
    
    1,553
    
    
    
    1,202
    
    
    
    22,915Distributions of unconsolidated affiliates
    
    
    10,698
    
    
    
    6,191
    
    
    
    9,289Proceeds from maturity of:Bonds
    
    
    564,997
    
    
    
    624,288
    
    
    
    453,765Principal payments received on:Mortgage loans
    
    
    114,207
    
    
    
    138,925
    
    
    
    234,165Policy loans
    
    
    43,386
    
    
    
    9,203
    
    
    
    9,217Purchases of:Bonds
    
    
    (1,279,627
    )
    
    
    (1,087,593
    )
    
    
    (908,103
    )Stocks
    
    
    (1,042
    )
    
    
    (47,002
    )
    
    
    (13,736
    )Real estate
    
    
    (12,971
    )
    
    
    (15,657
    )
    
    
    (22,686
    )Mortgage loans
    
    
    (548,748
    )
    
    
    (493,412
    )
    
    
    (368,223
    )Policy loans
    
    
    (30,881
    )
    
    
    (18,165
    )
    
    
    (16,363
    )Other invested assets
    
    
    (30,746
    )
    
    
    (216,468
    )
    
    
    (118,365
    )Additions to property and equipment
    
    
    (7,356
    )
    
    
    (11,475
    )
    
    
    (3,391
    )Contributions to unconsolidated affiliates
    
    
    (4,905
    )
    
    
    (7,162
    )
    
    
    (8,338
    )Decrease (increase) in short term investments, net
    
    
    (299,941
    )
    
    
    294,048
    
    
    
    (17,032
    )Decrease (increase) in investment in subsidiaries
    
    
    (53,039
    )
    
    
    157,089
    
    
    
    14,315Other, net
    
    
    (268
    )
    
    
    (581
    )
    
    
    (117
    )Net cash provided by (used in) investing activities
    
    
    (1,328,535
    )
    
    
    (417,889
    )
    
    
    (332,646
    )Financing activities:Policyholders deposits to policy account balances
    
    
    2,201,309
    
    
    
    1,931,709
    
    
    
    1,164,863Policyholders withdrawals from policy account balances
    
    
    (1,125,610
    )
    
    
    (1,385,625
    )
    
    
    (1,163,120
    )Dividends to stockholders
    
    
    (82,490
    )
    
    
    (82,651
    )
    
    
    (81,531
    )Net cash provided by (used in) financing activities
    
    
    993,209
    
    
    
    463,433
    
    
    
    (79,788
    )Net increase (decrease) in cash and cash equivalents
    
    
    46,573
    
    
    
    (15,887
    )
    
    
    (28,291
    )Cash:Beginning of the year
    
    
    (7,979
    )
    
    
    7,908
    
    
    
    36,199End of the year
    
    $
    38,594
    
    
    $
    (7,979
    )
    
    $
    7,908
 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.
  159




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##### Table of Contents



AMERICAN NATIONAL INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE III  SUPPLEMENTARY INSURANCE INFORMATION
(in thousands)
 Future Policy
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Benefits,
    
    
    AmortizationDeferred
    
    
    Benefits,
    
    
    
    
    
    
    Other Policy
    
    
    
    
    
    
    
    
    
    
    Losses, Claims
    
    
    of DeferredPolicy
    
    
    Losses, Claims
    
    
    
    
    
    
    Claims and
    
    
    
    
    
    
    Net
    
    
    and
    
    
    Policy
    
    
    OtherAcquisition
    
    
    and Loss
    
    
    Unearned
    
    
    Benefits
    
    
    Premium
    
    
    Investment
    
    
    Settlement
    
    
    Acquisition
    
    
    Operating
    
    
    PremiumsSegment
    
    Cost
    
    
    Expenses
    
    
    Premiums
    
    
    Payable
    
    
    Revenue
    
    
    Income (a)
    
    
    Expenses
    
    
    Costs
    
    
    Expenses (b)
    
    
    WrittenAs of December 31, 2009Corporate and other
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    86,292
    
    
    $
    
    
    
    $
    
    
    
    $
    54,709
    
    
    $
    Life
    
    
    672,016
    
    
    
    3,845,264
    
    
    
    100,204
    
    
    
    225,733
    
    
    
    284,530
    
    
    
    222,611
    
    
    
    257,422
    
    
    
    78,668
    
    
    
    199,884
    
    
    
    Annuities
    
    
    442,430
    
    
    
    8,991,547
    
    
    
    4
    
    
    
    49,092
    
    
    
    220,284
    
    
    
    449,035
    
    
    
    143,362
    
    
    
    64,785
    
    
    
    39,509
    
    
    
    Health
    
    
    69,871
    
    
    
    97,407
    
    
    
    78,525
    
    
    
    341,085
    
    
    
    309,701
    
    
    
    15,992
    
    
    
    239,045
    
    
    
    21,749
    
    
    
    97,119
    
    
    
    Property and casualty
    
    
    146,664
    
    
    
    
    
    
    
    798,232
    
    
    
    783,574
    
    
    
    1,159,509
    
    
    
    66,175
    
    
    
    923,064
    
    
    
    248,607
    
    
    
    76,711
    
    
    
    1,307,762Total
    
    $
    1,330,981
    
    
    $
    12,934,218
    
    
    $
    976,965
    
    
    $
    1,399,484
    
    
    $
    1,974,024
    
    
    $
    840,105
    
    
    $
    1,562,893
    
    
    $
    413,809
    
    
    $
    467,932
    
    
    $
    1,307,762As of December 31, 2008Corporate and other
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    109,597
    
    
    $
    
    
    
    $
    
    
    
    $
    37,839
    
    
    $
    Life
    
    
    712,234
    
    
    
    3,763,207
    
    
    
    111,846
    
    
    
    220,691
    
    
    
    299,338
    
    
    
    226,643
    
    
    
    251,992
    
    
    
    86,956
    
    
    
    220,662
    
    
    
    Annuities
    
    
    557,061
    
    
    
    7,631,985
    
    
    
    13
    
    
    
    52,126
    
    
    
    116,248
    
    
    
    374,023
    
    
    
    157,102
    
    
    
    75,826
    
    
    
    28,188
    
    
    
    Health
    
    
    74,887
    
    
    
    97,020
    
    
    
    93,956
    
    
    
    439,621
    
    
    
    290,883
    
    
    
    16,566
    
    
    
    220,848
    
    
    
    27,785
    
    
    
    90,418
    
    
    
    Property and casualty
    
    
    138,482
    
    
    
    
    
    
    
    816,249
    
    
    
    776,562
    
    
    
    1,182,026
    
    
    
    69,348
    
    
    
    939,854
    
    
    
    233,336
    
    
    
    115,696
    
    
    
    1,184,686Total
    
    $
    1,482,664
    
    
    $
    11,492,212
    
    
    $
    1,022,064
    
    
    $
    1,489,000
    
    
    $
    1,888,495
    
    
    $
    796,177
    
    
    $
    1,569,796
    
    
    $
    423,903
    
    
    $
    492,803
    
    
    $
    1,184,686As of December 31, 2007Corporate and other
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    127,519
    
    
    $
    
    
    
    $
    198
    
    
    $
    60,871
    
    
    $
    Life
    
    
    641,780
    
    
    
    3,762,745
    
    
    
    122,052
    
    
    
    233,691
    
    
    
    315,893
    
    
    
    229,092
    
    
    
    239,598
    
    
    
    1,040,208
    
    
    
    (755,996
    )
    
    
    Annuities
    
    
    400,678
    
    
    
    6,913,285
    
    
    
    13
    
    
    
    51,332
    
    
    
    222,748
    
    
    
    364,607
    
    
    
    150,318
    
    
    
    70,740
    
    
    
    22,014
    
    
    
    Health
    
    
    80,012
    
    
    
    94,072
    
    
    
    104,005
    
    
    
    422,948
    
    
    
    283,765
    
    
    
    16,710
    
    
    
    212,692
    
    
    
    24,508
    
    
    
    78,583
    
    
    
    Property and casualty
    
    
    128,815
    
    
    
    
    
    
    
    698,860
    
    
    
    852,455
    
    
    
    1,177,217
    
    
    
    75,041
    
    
    
    818,230
    
    
    
    224,499
    
    
    
    95,610
    
    
    
    1,191,113Total
    
    $
    1,251,285
    
    
    $
    10,770,102
    
    
    $
    924,930
    
    
    $
    1,560,426
    
    
    $
    1,999,623
    
    
    $
    812,969
    
    
    $
    1,420,838
    
    
    $
    1,360,153
    
    
    $
    (498,918
    )
    
    $
    1,191,113
 (a)
    
    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
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 and surplus.(b)
    
    Identifiable commissions and expenses are charged directly to the appropriate line of
business. The remaining expenses are allocated to the lines based upon various factors including
premium and commission
ratios within the respective lines. See accompanying Report of Independent Registered Public Accounting Firm.
  160




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AMERICAN NATIONAL INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE IV  REINSURANCE
(in thousands)
 Ceded to
    
    
    Assumed
    
    
    
    
    
    
    Percentage ofGross
    
    
    Other
    
    
    from Other
    
    
    Net
    
    
    AmountAmount
    
    
    Companies
    
    
    Companies
    
    
    Amount
    
    
    Assumed to NetFor the Year Ended December 31, 2009Life insurance in-force
    
    $
    68,584,383
    
    
    $
    31,347,876
    
    
    $
    863,867
    
    
    $
    38,100,374
    
    
    
    2.3
    %Premiums:Life insurance
    
    
    581,422
    
    
    
    81,120
    
    
    
    4,512
    
    
    
    504,814
    
    
    
    0.9
    %Accident and health insurance
    
    
    287,977
    
    
    
    151,138
    
    
    
    172,862
    
    
    
    309,701
    
    
    
    55.8
    %Property and liability
insurance
    
    
    1,243,710
    
    
    
    89,675
    
    
    
    5,474
    
    
    
    1,159,509
    
    
    
    0.5
    %Total premiums
    
    $
    2,113,109
    
    
    $
    321,933
    
    
    $
    182,848
    
    
    $
    1,974,024
    
    
    
    9.3
    %For the Year Ended December 31, 2008Life insurance in-force
    
    $
    68,820,212
    
    
    $
    31,241,255
    
    
    $
    1,050,645
    
    
    $
    38,629,602
    
    
    
    2.7
    %Premiums:Life insurance
    
    
    492,068
    
    
    
    84,942
    
    
    
    8,460
    
    
    
    415,586
    
    
    
    2.0
    %Accident and health insurance
    
    
    278,907
    
    
    
    134,904
    
    
    
    146,880
    
    
    
    290,883
    
    
    
    50.5
    %Property and liability
insurance
    
    
    1,346,425
    
    
    
    224,248
    
    
    
    59,849
    
    
    
    1,182,026
    
    
    
    5.1
    %Total premiums
    
    $
    2,117,400
    
    
    $
    444,094
    
    
    $
    215,189
    
    
    $
    1,888,495
    
    
    
    11.4
    %For the Year Ended December 31, 2007Life insurance in-force
    
    $
    67,604,695
    
    
    $
    29,635,648
    
    
    $
    1,078,371
    
    
    $
    39,047,418
    
    
    
    2.8
    %Premiums:Life insurance
    
    
    609,643
    
    
    
    72,604
    
    
    
    10,355
    
    
    
    547,394
    
    
    
    1.9
    %Accident and health insurance
    
    
    255,948
    
    
    
    126,417
    
    
    
    154,234
    
    
    
    283,765
    
    
    
    54.4
    %Property and liability
insurance
    
    
    1,269,078
    
    
    
    103,629
    
    
    
    11,768
    
    
    
    1,177,217
    
    
    
    1.0
    %Total premiums
    
    $
    2,134,669
    
    
    $
    302,650
    
    
    $
    176,357
    
    
    $
    2,008,376
    
    
    
    8.8
    %
 See accompanying Report of Independent Registered Public Accounting Firm.
  161




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AMERICAN NATIONAL INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE V  VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
 Deductions  DescribeBalance at
    
    
    Additions
    
    
    Amounts
    
    
    
    
    
    
    Balance atBeginning of
    
    
    Charged to
    
    
    Written off Due
    
    
    Amounts
    
    
    End ofPeriod
    
    
    Expense
    
    
    to Disposal (a)
    
    
    Commuted (b)
    
    
    Period2009Investment 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
    
    
    $
    
    
    
    $
    
    
    
    $
    19,4962007Investment valuation
allowances:Mortgage loans on real estate
    
    $
    13,835
    
    
    $
    1,775
    
    
    $
    
    
    
    $
    
    
    
    $
    15,610Total
    
    $
    13,835
    
    
    $
    1,775
    
    
    $
    
    
    
    $
    
    
    
    $
    15,610
 (a)
    
    Amounts written off due to disposal represent reductions or (additions) in the balance
due to sales, transfers or other disposals of the asset with which the allowance is associated.(b)
    
    Amounts commuted represent reductions in the allowance balance due to changes in requirements
or investments conditions. See accompanying Report of Independent Registered Public Accounting Firm.
  162